SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (Fee Required)
For the fiscal year ended January 28, 1995.
[ ] Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (No Fee
Required)
For the transition period from to
Commission file number 0-14628
Brendle's Incorporated (Exact Name of Registrant as Specified in Charter)
North Carolina 56-497852
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1919 North Bridge Street, Elkin, North Carolina 28621
(Address of Principal Executive Offices) (Zip Code)
(910) 526-5600
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 par value per share
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.
<PAGE>
State the aggregate market value of the voting
stock held by non- affiliates of the Registrant. The
aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid
and asked prices of such stock, as of a specified date
within sixty (60) days prior to the date of filing:
$3,265,953 based on the average of the high and low sales
prices as of April 10, 1995, of the Registrant's Common
Stock (which is the Registrant's only outstanding class of
voting equity security) on the National Association of
Securities Dealers Automated Quotation System for National
Market Issues. The foregoing market value excludes the
dollar amount attributable to 6,226,811 shares of the
Registrant's Common Stock held by certain executive
officers and directors of the Registrant. A determination
of "affiliate" status for a particular individual for the
purpose of providing information in response to the
foregoing inquiry shall not be deemed a determination of
"affiliate" status for any other purpose.
Indicate by check mark whether the registrant has
filed all documents and reports required to be filed by
Section 12, 13, or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes X No
Indicate the number of shares outstanding of each
of the registrant's classes of common stock, as of the
latest practicable date.
Number outstanding at
Class April 10, 1995
Common Stock, $1.00 Par Value
Per Share. . . . . . . . . . . . . 12,758,717
Documents Incorporated by Reference: A part of the
Registrant's Annual Report to Security Holders for the
fiscal year ended January 28, 1995, pursuant to Rule
14a-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), is incorporated by
reference into Part I, Part II and Part IV of this
Annual Report on Form 10-K. A part of the Registrant's
definitive Proxy Statement for the Annual Meeting of
the Registrant's shareholders for the fiscal year ended
January 28, 1995, filed or to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A
promulgated under the Exchange Act is incorporated by
reference into Part III of this Annual Report on Form 10-K.
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Part I
Item 1. Business
Description and Development of Business
General
Brendle's Incorporated (the "Company") and its
subsidiaries originated in 1919 as a rural supply company,
and the parent company was incorporated in 1947 in North
Carolina. As of January 28, 1995, the Company operated
30 retail stores in North Carolina, South Carolina,
Virginia, and Tennessee offering, for the most part,
nationally advertised, brand-name merchandise at everyday
low prices. The operation of these stores constitutes
the sole industry segment in which the Registrant
operates and the above-named southeastern states
encompass its sole geographic area of operation. The
Registrant's stores, operating under the name "Brendle's,"
are merchandised as if they were a group of specialty
stores under one roof, and offer in-depth lines of
jewelry, consumer electronics, small appliances,
photographic equipment, sporting goods, toys, gifts,
house-wares, juvenile items, silver, crystal, lamps,
clocks, and other miscellaneous products. All sales
operations are the Registrant's and there are no leased
department sales. On April 29, 1994, Brendle's Stores,
Inc., the Company's wholly-owned operating subsidiary, was
merged into the Company. See "Holding Company Status."
Brendle's stores average approximately 50,000
square feet in size, approximately 55% of which is
selling space. The stores generally are among the
principal or so-called "anchor" tenants in strip
shopping centers, as opposed to shopping malls. While many
of the Registrant's stores are located in cities of less
than 100,000 people, the Registrant also competes in larger
markets including Greensboro, Raleigh, and
Winston-Salem, North Carolina. During Fiscal 1994, the
Company introduced its mail order business.
The Registrant monitors its inventory and sales,
both by store and by item, at cost, on a daily basis
through its computerized management information system
consisting of a central computer, point-of-sale terminals,
and administrative terminals. The Company commenced
implementation of a new computerized management information
system in Fiscal 1995 which is expected to be fully
operational by the end of the current fiscal year. The new
system has more powerful reporting capabilities and will
allow management to better monitor sales, inventory
levels, accounting data and trends in the Company's
performance. Specific item data captured at point-of-sale
using bar code and price look-up technology allows the
Registrant's merchandising staff to monitor sales and
inventory levels by reference to each inventory item's own
stock-keeping number, thus enabling prompt response to
rapidly selling or out- of-stock items. A typical store
carries approximately 15,000 different types of inventory
and is designed to direct customer attention and traffic
to higher profit margin products such as jewelry and gifts.
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The Registrant sells few apparel or soft goods
items. The Registrant believes that it offers broader
assortments of jewelry and other hard goods than are
normally carried by other retailers of similar size. In
addition, the Registrant maintains a program of direct
import purchases of jewelry which assists in a more
timely delivery and improved profit margins for jewelry
products.
Chapter 11 Proceedings
Near the end of the fiscal year ended February 1,
1992 ("Fiscal 1992"), significant steps were taken to
develop and implement a strategic turnaround plan for
the Company. The plan included restructuring bank
debt, organizational and administrative changes, and
strategic adjustments necessary, in management's
opinion, to meet the competition in the market place and
to manage in the current economic environment in retailing
in the Company's market area. The stated objective of the
Company's turnaround plan for the fiscal year ended January
30, 1993 ("Fiscal 1993"), was to reverse the trend of
declining earnings from recent years while developing an
improved merchandising strategy to become a more focused
specialty retailer.
The Company achieved moderate success during the
first two quarters of Fiscal 1993 in the implementation
of its strategic turnaround plan. As the Company previously
reported, pre-tax earnings for the second quarter and first
six months of Fiscal 1993 were improved over the results for
the corresponding periods in the previous year. The
Company was also encouraged by the fact that the results
for the second quarter and first six months of Fiscal 1993
were $1.5 million better than the Company's plan for the
second quarter and $1.9 million better than the Company's
planned six months results.
In September and October 1992, however, the Company
began experiencing increased pressure from its vendors and
a diminution in the credit terms that were available from
its vendors. This tightening of available credit terms from
vendors, coupled with unexpected significant decreases in
sales during the third quarter of Fiscal 1993, created
substantial cash management difficulties. The Company's
inability to obtain inventory on historical terms and the
decrease in sales prevented the Company from being able to
maintain required inventory levels and to purchase at
planned levels the inventory it required for the 1992
Christmas season. As the restriction in credit terms from
vendors persisted, the resulting decrease in inventory
levels compounded the Company's sales decrease due to lack
of sufficient inventory.
Management of the Company explored various
alternatives to the cash management crisis it faced,
including discussions with its primary lenders regarding
modification to its then existing Loan Agreements. After
careful consideration of all their alternatives on
November 12, 1992, management of the Company and its
Board of Directors determined that in order to give the
Company the time that it needed to implement its strategic
turnaround plan, it was in the best interest of its
shareholders, employees, and customers to seek protection
under Chapter 11 of the United States Bankruptcy Code.
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Ten days later, on November 22, 1992,
the Company and its then wholly-owned principal
operating subsidiary, Brendle's Stores, Inc. ("BSI"),
initiated Chapter 11 reorganization proceedings by filing
petitions with the United States Bankruptcy Court (the
"Bankruptcy Court") for the Middle District of North
Carolina (the "Chapter 11 Proceeding").
Significant Post-Petition Events
Subsequent to the filing of the voluntary petitions,
the Company and BSI sought and obtained numerous orders
from the Bankruptcy Court which were intended to
stabilize its business. These orders included, among
others, orders (i) authorizing the Company and BSI to
operate its cash management system substantially as it was
operated prior to the filing; (ii) approving a Vendor
Assurance Facility giving post-petition trade vendors a
super priority lien on inventory; (iii) approving the
assumption of certain credit card arrangements for the
processing of credit card purchases, including Discover,
Mastercard, Visa, and Brendle's credit cards; (iv)
authorizing certain pre- petition customer claims
including layaway and special order purchases; (v)
authorizing the Company and BSI to honor certain
pre-petition wages and benefits owing to its active
employees; (vi) approving a plan to pay the Company and
BSI's qualifying vendors reclamation claims; (vii)
authorizing Brendle's to return defective merchandise
to its vendors for pre-petition credit; (viii) approving a
$25 million post-petition line of credit from The CIT
Group/Business Credit, Inc. See also "Item 3 - Legal
Proceedings" for additional information regarding the
Chapter 11 Proceedings.
Following the date the Chapter 11 proceeding was
filed, the Company worked diligently to develop a Joint Plan
of Reorganization (the "Plan") which would set forth the
payment terms to creditors and provide for other
organizational and operational changes of the reorganized
Company. A Plan and D i sclosure Statement were
submitted to the Bankruptcy Court, and on November
10, 1993, a hearing was held resulting in the
approval of the Disclosure Statement. The Plan was
then voted on and accepted by the creditors and
stockholders. An Order confirming the Plan was entered
on December 20, 1993, for the Company and on December
23, 1993, for BSI. A Notice of Appeal of the Order
confirming the Plan was filed on December 28, 1993 by three
individual creditors and certain retiree claimants. The
appeal was subsequently dismissed pursuant to agreements
reached with the appellants.
The Plan developed by the Company and confirmed by
the Bankruptcy Court generally provided for the full
payment of all claims of The CIT Group/Business
Credit, Inc., the Company's debtor-in-possession lender,
and all allowed secured claims, priority claims and
administrative claims (as those claims were defined in
the Plan). The Plan further provided that general
unsecured creditors could elect to receive either (i) a
cash payment equal in amount to fifty-two percent (52%)
of the amount of their allowed unsecured claim, or (ii) a
Reorganization Note equal to eighty percent (80%) of their
allowed unsecured claims. The Reorganization Notes, which
were dated as of April 30, 1994, bear interest at
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the rate of eight percent (8%) per annum and are payable
over a ten (10)-year term. For the first two (2) years, the
Reorganization Notes accrue interest only, and no payments
are to be made to Reorganization Note holders. At the
end of two (2) years, the principal amount of the
Reorganization Note, plus accrued but unpaid interest, shall
be capitalized, and during the third year, interest on the
capitalized principal balance shall be paid
semi-annually. Thereafter, interest on the unpaid
principal balance shall be due and payable semi-annually.
Annual principal payments will be made at the end of years
four (4) through ten (10) in their respective amounts as
follows: 11%, 12%, 13%, 14.1%, 15.3%, 16.6%, and 18%. The
Reorganization Notes also include standard default
provisions. The creditors were solicited to make their
election in November, 1993, and over 99% of the
creditors, representing approximately $85 million in
unsecured obligations, elected to receive the cash
payment, with less than 1% of the creditors, representing
approximately $160,000 in unsecured obligations electing
to receive the Reorganization Notes.
In addition to the items set forth above, all
general unsecured creditors received, with respect to
their allowed claims, a pro rata distribution of stock
in the Company, which, in the aggregate, constitutes
thirty-five percent (35%) of the outstanding stock of the
Company at April 29, 1994, the date the Plan of
Reorganization was substantially consummated. As of April
10, 1995, the Company has outstanding 12,758,717 shares of
Common Stock, which includes 4,469,201 shares of Common
Stock that was issued for the benefit of the unsecured
creditors pursuant to the Plan of Reorganization. The stock
was initially issued to Arnold Zahn of Zahn & Associates,
Inc., as Escrow Agent for the unsecured creditors,
pending the resolution of certain disputed claims. As of
the date of this report, 4,112,000 shares have been
distributed to creditors and the remaining shares are
expected to be distributed during the current fiscal year.
The Plan further provided that certain of the
Company's creditors would have a right to appoint two (2)
directors to serve on the Company's Board of Directors for
a period of one (1) year following substantial
consummation. The creditors appointed Robert R. Dunn and
John A. Northen to serve as members of the Company's
Board of Directors for a period of one year. Information
regarding these directors is set forth in the Company's
Proxy Statement being used in connection with its Annual
Meeting of Shareholders to be held June 1, 1995. Both of
these directors are nominees for election to the Board of
Directors for the upcoming year, although the Plan of
Reorganization does not require the Company to afford
such right to creditors. The Nominating Committee of
the Board of Directors believes that these individuals have
made a valuable contribution to the Company and that the
Company will benefit from their continued service as
Directors.
The Plan also contained certain default provisions,
which, among other things, provided that if the cash
distributions contemplated by the Plan were not made on or
before April 30, 1994, an entity described in the Plan as
the Creditor Management Committee would take over
management of the Company and would be vested with the
powers and authorities of a Chapter 11 Trustee and the Board
of Directors. The Company achieved substantial consummation
of this Plan of Reorganization on April 29, 1994, and has
made
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its required payments to creditors under the terms of the
Plan. See "Item 3. Legal Proceedings."
Distribution Center
The Company's distribution and warehousing
activities have been conducted principally through a
distribution center which it previously owned. The
distribution center contains in excess of 388,000
square feet and is located in Elkin, North Carolina.
Due primarily to the reduction of the number of stores
that the Company will operate, management of the Company
determined that it no longer required 388,000 square
feet of distribution space. Consequently, the Company sold
the distribution center on January 31, 1994, for a
purchase price of $5,250,000. Under the terms of the sale,
the Company was permitted to lease back from the purchaser
approximately 224,000 square feet of the distribution
facility. The terms of the lease provide that the Company
will pay initial annual rent in the amount of $504,000
with increases annually fixed in accordance with the lease
terms. The initial term of this lease will expire on
January 31, 2003. The net sale proceeds of the distribution
center were used to pay the Company's secured lenders who
had perfected security interests in the distribution center
securing pre-petition debt.
During the fiscal year ended January 28, 1995
("Fiscal 1995"), the Company paid approximately $504,000 in
rent for its distribution center space and management
believes that leased space will be adequate for its
warehousing needs during the upcoming year.
Holding Company Status
From January 31, 1987, through April 29, 1994,
substantially all of the activities of the Company were
performed through subsidiaries wholly owned, directly or
indirectly, by the Company, thus making the corporate
structure of the Company and its subsidiaries as follows:
Brendle's Incorporated, a North Carolina holding company
owning the active wholly owned subsidiaries; Brendle's
Stores, Inc., which owned more than ninety-one percent (91%)
of the Company's operating assets; Brendle Transport, Inc.,
which owned or leased the transportation equipment utilized
in the Company's operations; The Electronic Sports
Collection USA, Inc., an import buying subsidiary of
the Company; Brendle's Acceptance Corporation, which was
formed to manage the Company's credit finance operations;
and BFS, Inc., an investment management and holding
subsidiary organized under the laws of the State of
Delaware.
As a component of the Company's substantial
consummation of its Plan of Reorganization, Brendle's
Stores, Inc. was merged into the Company effective as of
April 29, 1994. Management of the Company believes that
this merger will help to streamline its operations and that
the benefits once available to the Company through the
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holding company structure no longer provided the Company
with sufficient operational efficiencies to justify the
expense of retaining the previous corporate structure.
Seasonality
The Company's retail business (its sole industry
segment) is seasonal in nature, being strongest in the
Company's fourth fiscal quarter. The Company typically has
made, and anticipates to make in the future, in excess of
one-third of its revenues for the fiscal year during the
fourth fiscal quarter of operations.
Revenues, Profits, Assets, Working Capital and Other
Financial Items
For information relating to changes in revenues,
profits, assets, working capital and its components and
other financial information, reference is made to
Management's Discussion and Analysis appearing in the
Company's 1994-1995 Annual Report and incorporated
herein by reference and to the Company's financial
statements and the related notes thereto which appear in
such Annual Report.
Customers
No material part of the business of the Company is
dependent on a single customer or a limited number of
customers or a group of commonly controlled or affiliated
customers. No purchases by any such customer or group
comprised ten percent or more of the total revenues of the
Company for the fiscal year ended January 28, 1995.
Research and Development Activities
The Company is not engaged in manufacturing
operations. During the last three fiscal years, the Company
has not expended substantial dollar amounts in research and
development activities relating to its products or
services. However, the executive officers of the Company,
as well as its merchandising managers and staff, are
continually engaged, individually and through focus groups,
in evaluating the sales performance of various products
and in the development of operating efficiencies by the
use of marketing focus groups, normal market visits, and
discussions with key suppliers.
Inventory and Supplies: Products and Services
The Company has no long-term contracts with its
suppliers for inventory or supplies, but believes that
there are adequate sources of supply available for the
products which it
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sells or anticipates selling. The Company believes that it
is among the largest customers of many of its suppliers
in dollar volume of purchases and therefore believes that
it can purchase from these suppliers on terms at least as
favorable as those available to most of its competitors
from such suppliers. No single supplier accounts for a
material amount of the total inventory purchased by the
Company. During the last three fiscal years of the
Company, no class of similar products or services
accounted for ten percent or more of the Company's
consolidated revenue for such periods.
Competition
The Company has numerous and significant
competitors in the general merchandise retail and
discount retail areas, including large discount
retailers, department stores, catalog showrooms, mail order
houses, and other related operations. Many of these have
substantially greater assets, outlets, and facilities than
the Company. However, the Company believes that its price
structure generally allows it to compete with traditional
retailers, such as department stores, and specialty
retailers, while the environment, merchandise selection,
and services available in its stores generally allow it to
compete with most other discount retailers, and catalog
showrooms.
Employees
As of January 28, 1995, the Company had
approximately 1580 employees. The Company considers its
relations with its employees to be satisfactory.
Environmental Regulation
The Company's business activities are not
significantly affected by federal, state, or local
environmental regulation.
Foreign and Domestic Operations and Export Sales
During each of the Company's last three fiscal
years, the Company's operations and assets in foreign
areas and sales by domestic operations to foreign
customers, if any, were not material to the Company's
business as a whole. All of the Company's domestic
operations are conducted in a single four-state geographic
area of the southeastern United States.
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Patents and Trademarks
The Company believes that the name "Brendle's," used
both alone and with the distinctive diamond apostrophe,
has acquired commercial value and has helped to promote
the Company's reputation in its business. The Company has
obtained federal registered trademark protection for the
name used in these ways.
Item (unnumbered). Executive Officers of the Company
Pursuant to Item 401 (b) of Regulation S-K and
General Instruction G to Form 10-K, the following
information is furnished concerning the executive officers
of the Company. All officers are elected by the Board of
Directors to serve at the pleasure of the Board of Directors
for a period of one year or until the next annual
meeting of the Board of Directors, and until their
respective successors are duly elected. For information
regarding the share ownership of the executives named in
the Summary Compensation Table included in Item 11, see
"Item 12 - Security Ownership of Certain Beneficial Owners
and Management."
<TABLE>
<CAPTION>
All Positions and Offices with Periods of
Service, and business experience for last
five years (1)
Name Age
<S> <C> <C>
Douglas D. Brendle 66 Chairman of the Board of Directors
of the Registrant from February,
1 9 8 6 to February, 1995; Chief
Executive Officer and President of
the Company from April, 1993 to
February, 1995; Member of Office of
Chief Executive, January 15, 1992,
to June 2, 1992; Chief Executive
O f ficer of the Registrant from
November, 1984, to January 15, 1992;
and from November, 1984, to July,
1989, he served as President of the
Registrant.
Joseph M. McLeish, Jr. 46 President and Chief Executive Officer of
t h e Registrant since February, 1995;
President of Merchandisers Association,
Inc. from January, 1992 to February, 1995;
Executive Director of Merchandisers
Association, Inc. from February, 1991 to
December, 1991; Vice President of David
Weis Wholesale Jewelers, Inc. from
January, 1980 to February, 1991.
William V. Grady 48 Senior Vice President of Marketing -
Advertising and Store Operations of the
Registrant since
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December, 1992. National
Director of Field Marketing for General
Electric Capital Corporation from
February, 1988, to December, 1992.
Previously Mr. Grady was Operating Vice
President of Marketing and Sales Promotion
for Service Merchandise. Prior to Service
Merchandise, Mr. Grady retired from Lowe's
Companies, Inc., holding a variety of
positions over 19 years.
David R. Renegar 43 Vice President and Chief Financial Officer
of the Registrant since February, 1992.
Treasurer of the Registrant since April,
1990; Secretary and Controller of the
Registrant since February, 1986.
Gregory S. Stegall 43 Senior Vice President of Merchandise
for the Registrant since April,
1995; Vice President of Jewelry
Merchandising for the Registrant
from August, 1994 to March, 1995;
Divisional Vice President - Jewelry
for the Registrant from July, 1989
to August, 1994.
</TABLE>
(1) Each executive officer of the Company held the
identical offices held at such time (if any) with
Brendle's Stores Inc., previously a wholly owned subsidiary
of the Company which was merged into the Company
effective April 29, 1994. Brendle's Stores, Inc.
previously owned the substantial part of the operating
assets of the Company.
(2) Everett V. Purdy served as the Company's Sr.
Vice President of Merchandising from July, 1994 to
March, 1995 when he resigned his position with the Company.
Item 2. Properties
The corporate headquarters and principal
executive offices of the Company are located at 1919
North Bridge Street, Elkin, North Carolina 28621 in leased
premises of approximately 135,000 square feet (a substantial
portion of which is contiguous warehouse space) under a
lease, with an affiliate of the Company, scheduled to expire
on October 1, 1995, with options to renew for up to 20
additional years.
The Company's distribution center, opened in
December, 1986 in Elkin, North Carolina, previously
encompassed over 388,000 square feet of space. On February
1, 1994, the Company sold the distribution center for a
purchase price of $5,250,000. Pursuant to the terms of the
sales contract, the Company was permitted to lease back
244,000 square feet of distribution center space. The terms
of this lease are summarily described under "Item 1. -
Description of Business - Distribution Center."
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Set forth below is a list of all the
Company's stores open on January 28, 1995, the cities
in which the stores are located, the year in which the
stores were first opened in that city, and their present
approximate square footage, separately indicating both
selling space and warehouse (storage) space at each
store. Certain stores have changed or may change locations
within a given city.
<TABLE>
<CAPTION>
Year of Approximate Approximate
Store Open- Selling Area Warehouse Total
ing in Square Square Square
City Location Footage Footage Footage
<S> <C> <C> <C> <C> <C>
1967 (1) Elkin, NC 26,260 15,463 41,723
1968 (2) Winston-Salem, NC 25,000 35,000 60,000
1971 (3) Hickory, NC 24,000 38,000 62,000
1972 (4) Greensboro, NC 28,500 21,852 50,352
1974 (5) Chapel Hill, NC 32,067 27,933 60,000
1976 (6) Asheville, NC 33,000 37,000 70,000
1977 (7) Kingsport, TN 23,100 14,700 37,800
1978 (8) Concord, NC 30,277 7,881 38,158
1978 (9) Raleigh, NC 32,067 27,933 60,000
1978 (10) Winston-Salem, NC 20,000 7,000 27,000
1980 (11) Burlington, NC 35,000 25,000 60,000
1982 (12) Wilson, NC 30,993 29,007 60,000
1982 (13) Myrtle Beach, SC 30,993 29,007 60,000
1982 (14) Raleigh, NC 28,700 35,300 64,000
1982 (15) Greensboro, NC 32,000 31,747 63,747
1983 (16) Jacksonville, NC 23,000 29,471 52,471
1983 (17) Roanoke, VA 31,971 11,657 43,628
1985 (18) Boone, NC 30,000 27,000 57,000
1985 (19) Kinston, NC 28,516 33,024 61,540
1985 (20) Roanoke Rapids, NC 30,000 21,000 51,000
1985 (21) Salisbury, NC 28,779 15,221 44,000
1985 (22) Anderson, SC 20,000 20,000 40,000
1985 (23) Spartanburg, SC 20,000 25,000 45,000
1985 (24) Florence, SC 28,084 11,916 40,000
1986 (25) Enka/Candler, NC 27,263 32,612 59,875
1987 (26) Wilmington, NC 28,993 21,007 50,000
1988 (27) Greenville, NC 28,993 21,007 50,000
1989 (28) Christiansburg, VA 28,912 11,088 40,000
1989 (29) New Bern, NC 24,241 5,759 30,000
1990 (30) Fayetteville, NC 23,843 10,469 34,312
TOTAL FOR 30 OPEN STORES 834,552 679,054 1,513,606
</TABLE>
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The Company owned in fee two of these stores, one
each in Salisbury and Enka, North Carolina. These stores
are not pledged or encumbered under the terms of the
Company's credit facility with Foothills Capital
Corporation; however, they may at some future date
become additional collateral for the loan. See
"Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity." Thirteen (13) of
these stores are leased from affiliates of the Registrant,
and the remaining fifteen (15) stores are leased from third
parties.
For a discussion of capital and operating lease
commitments for the Company's store, equipment and
corporate headquarters facility, reference is made in
Notes to Consolidated Financial Statements, which
discussion is incorporated herein by reference.
Leases on stores closed during Fiscal 1994 were
rejected or assumed and assigned to third parties pursuant
to Bankruptcy Court orders.
Item 3. Legal Proceedings.
On November 22, 1992, the Company and BSI, its
then wholly-owned subsidiary of the Company which owned
the primary operating assets of the Company, filed for
protection under Chapter 11 of the United States Bankruptcy
Code. The following discussion provides general
background information regarding the Chapter 11
Proceeding, but it is not intended to be an exhaustive
summary. For additional information regarding the effect of
these cases on the Company, reference should be made to
the Bankruptcy Code and to the Bankruptcy Court proceedings
themselves.
Chapter 11 Reorganization Under the Bankruptcy Code
Although the Company and BSI were
authorized to operate the Company's business as a
debtor-in-possession, they were not permitted to
engage in transactions outside the ordinary course
of business without first complying with the notice
and hearing provisions of the Bankruptcy Code and
obtaining Bankruptcy Court approval when
necessary. The requirement to comply with the
notice and hearing provisions in the Bankruptcy Code
terminates once a Plan of Reorganization, having been
confirmed by the Bankruptcy Court, is substantially
consummated. The Company achieved substantial
consummation of its Plan of Reorganization on or
about April 30, 1994. By virtue of the
provisions of the Bankruptcy Code and the Plan,
substantial consummation of the Plan effected a
discharge of all indebtedness of the Company not
otherwise provided for in the Plan.
13
<PAGE>
Plan of Reorganization - Procedures
For 120 days after the date of the filing of the
voluntary Chapter 11 petition (or such larger period
as the Bankruptcy Court may allow), the
debtor-in-possession has the exclusive right to
propose and file a plan of reorganization with the
Bankruptcy Court. If the debtor-in- possession files
a plan of reorganization during the 120-day
exclusivity period (or such longer period as the
Bankruptcy Court may allow), no other party may file
a plan of reorganization until 180 days after the date
of filing of the Chapter 11 petition, during
which period the debtor-in-possession has the
exclusive right to solicit acceptances of the plan.
If a Chapter 11 debtor fails to file its plan during
the 120- day exclusivity period, or such additional
time period ordered by the Bankruptcy Court or
after such plan has been filed, fails to obtain
acceptance of such plan from impaired classes of
creditors and equity security holders during the
exclusive solicitation period, any party in interest,
including the debtor, a creditor, an equity security
holder, or a committee of creditors or equity
security holders may file a plan of reorganization for
such Chapter 11 debtor.
Given the magnitude of the Company's operations
and the number of interested parties possessing
claims that have to be resolved in the Chapter 11
Proceeding, the plan formulation process was very
complex. Accordingly, the Company and BSI were
granted an extension of the exclusivity period to
September 21, 1993. A plan of reorganization was
filed by the Company on that date and was
subsequently amended on November 10, 1993. A hearing
on the confirmation of the Company's Plan of
Reorganization was held on December 14, 1993, and an
Order approving the Plan was entered on December
20, 1993, for the Company, and on December 23, 1993,
for BSI. The Plan that was developed by the Company
and was confirmed by the Bankruptcy Court provided
for the full payment of all claims of The CIT
Group/Business Credit, Inc., the Company's
debtor-in-possession lender, and all allowed
secured claims, priority claims, and administrative
claims (as those claims are defined in the Plan). The
Plan further provided that general unsecured creditors
could elect to receive either (i) a cash payment
equal in amount to fifty-two percent (52%) of the
amount of their unsecured claim, or (ii) a
Reorganization Note equal to eighty percent
(80%) of their allowed unsecured claims. The
Reorganization Notes, which were dated as of April
30, 1994, bear interest at the rate of eight
percent (8%) per annum and will be payable over a ten
(10)-year term. For the first two (2) years, the
Reorganization Notes accrue interest only, and no
payments will be made to Reorganization Note holders.
At the end of two (2) years, the principal amount of
the Reorganization Note, plus accrued but unpaid
interest, shall be capitalized, and during the third
year, interest on the capitalized principal
balance shall be payable semi- annually. Thereafter,
interest on the unpaid principal balance shall be due
and payable semi-annually. Annual principal payments
will be made at the end of years four (4)
through ten (10) in their respective amounts as
follows: 11%, 12%, 13%, 14.1%, 15.3%, 16.6%, and 18%.
The Reorganization Notes also include standard
default
14
<PAGE>
provisions. The creditors were solicited to make
their election in November, 1994, and over 99% of the
creditors, representing approximately $85 million in
unsecured obligations, elected to receive the cash
payment, with less than 1% of the creditors,
representing approximately $160,000 in unsecured
obligations, electing to receive the Reorganization
Notes.
In addition to the items set forth above, all
general unsecured creditors have received, with
respect to their allowed claims, a pro rata
distribution of stock in the Company, which, in the
aggregate, will constitute thirty-five percent
(35%) of the outstanding stock of the Company. As
of the date of this report, the Company has
outstanding 12,758,717 shares of common stock,
which includes 4,469,201 shares of common stock that
were issued for the benefit of the unsecured
creditors. The stock was initially issued to
Arnold Zahn of Zahn & Associates, Inc., as Escrow
Agent for the unsecured creditors, pending the
resolution of certain disputed claims. As of the
date of this report, 4,112,000 shares have been
distributed to creditors and the remaining shares
are expected to be distributed during the current
fiscal year.
The Plan further provides that certain of the
Company's creditors have a right to appoint two
(2) directors to serve on the Company's Board of
Directors for a period of one year following
substantial consummation. The creditors have
appointed Robert R. Dunn and John A. Northen to
serve as directors on the Company's Board of
Directors. Information regarding these directors is
set forth under Item 10 hereof entitled "Directors and
Executive Officers of the Registrant."
The Plan also contained certain default
provisions, which, among other things, provided
that if the cash distributions contemplated by the
Plan were not made on or before April 30, 1994, an
entity described in the Plan as the Creditor
Management Committee would take over management of
the Company and would be vested with the powers
and authorities of a Chapter 11 Trustee and the
Board of Directors. The Company achieved substantial
consummation of this Plan of Reorganization on April
29, 1994 and has made its required payments to
creditors under the terms of the Plan.
The Company is involved in various other
litigation matters in the ordinary course of
business. In the opinion of management, settlement of
these matters will not have a material effect on
the financial condition of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security
holders of the Company during the fourth quarter of the
Company's fiscal year covered by this report.
15
<PAGE>
Part II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters.
The Company's Common Stock is traded on the
NASDAQ National Market system under the symbol BRDL. At
January 28, 1995, there were approximately 2585
shareholders of record. The Company has not declared any
cash dividends since January 31, 1983. The current
policy of the Board of Directors is to retain earnings in
order to help finance the Company's business. Other
information required by Item 5 of Form 10-K appears under
the heading "Market and Dividend Information" on page
28 of the Registrants 1994-1995 Annual Report to
Shareholders and is incorporated herein by reference.
ITEM 6. Selected Financial Data.
The information required by Item 6 of Form 10-K
appears under the heading "Selected Financial Data" on
page 3 of the Registrant's 1994-1995 Annual Report to
Shareholders and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
The information required by Item 7 of Form 10-K
appears under the heading "Management's Discussion and
Analysis" on pages 4 through 7 of the Registrant's
1994-1995 Annual Report to Shareholders and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements of the
Registrant and the related notes (including unaudited
quarterly data), together with the report thereon of Price
Waterhouse LLP, dated March 17, 1995, appearing on pages 8
through 26 of the Registrant's 1994-1995 Annual Report to
Shareholders are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
No such changes in accountants or disagreements
on accounting or financial disclosure occurred in Fiscal
1995.
16
<PAGE>
Part III
Item 10. Directors and Executive Officers of the
Registrant.
With respect to the directors of the
Registrant, the information required by Item 10 of Form
10-K appears on pages 5 through 7 of the Registrant's
1995 Annual Meeting Proxy Statement and is incorporated
herein by reference.
Item 11. Executive Compensation.
The information required by Item 11 of Form 10-K
appears on pages 8 through 18 of the Registrant's 1995
Annual Meeting Proxy Statement and is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
The information required by Item 12 of Form 10-K
appears on pages 2 through 4 and pages 5 through 8 of the
Registrant's 1995 Annual Meeting Proxy Statement and is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information required by Item 13 of Form 10-K
appears on pages 19 through 21 of Registrant's 1995
Annual Meeting Proxy Statement and is incorporated
herein by reference.
17
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
(a) The following documents are filed as part of this report:
<TABLE>
<CAPTION>
(1) Financial Statements: Page in
1994-1995
Annual Report*
<S> <C>
Report of Independent Accountants 27
Consolidated Balance Sheets at
January 28, 1995 and January 29, 1994 8
Consolidated Statements of Income
for the three years ended January 28, 1995 9
Consolidated Statements of Shareholders' Equity
for the three years ended January 28, 1995 10
Consolidated Statements of Cash Flows
for the three years ended January 28, 1995 11
Notes to Consolidated Financial Statements 12
*Incorporated by Reference from the indicated
pages of the Registrant's 1995 Report to
Shareholders.
</TABLE>
(b) The Company did not file any reports on
Form 8-K during the fiscal year ended January 28, 1995.
(c) See the Exhibit Index attached hereto for
reference to the required exhibits to this report.
(d) All required financial statements and
schedules are filed herewith.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BRENDLE'S INCORPORATED
(Registrant)
Date: April 18, 1995 By:Joseph M. McLeish, Jr. /s/
Joseph M. McLeish, Jr.
President and Chief Executive Officer
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Date: April 27, 1995 Douglas D. Brendle /s/
Director and Chairman Emeritus
Date: April 27, 1995 S. Floyd Brendle /s/
S. Floyd Brendle,*
Director
Date: April 27, 1995 William F. Cosby /s/
William F. Cosby,*
Director
Date: April 27, 1995 Thomas H. Davis /s/
Thomas H. Davis,*
Director
Date: April 27, 1995 Robert R. Dunn /s/
Robert R. Dunn,*
Director
Date: April 27, 1995 James B. Edwards /s/
James B. Edwards,*
Director
Date: April 27, 1995 John D. Gray /s/
John D. Gray,*
Director
Date: April 27, 1995 John A. Northen /s/
John A. Northen, *
Director
Date: April 27, 1995 Patty Brendle Redway /s/
Patty Brendle Redway,*
Director
Date: April 27, 1995 David R. Renegar /s/
David R. Renegar,
Chief Financial Officer
(principal accounting officer) *
* Executed pursuant to Power of Attorney included with this
report as an Exhibit.
20
<PAGE>
EXHIBIT INDEX
Any document referred to below as being incorporated by reference
is so incorporated to the files of the Securities and Exchange
Commission, Washington, DC 20549. The term "Company" herein refers to
Brendle's Incorporated or its wholly-owned subsidiary, Brendle's Stores,
Inc.
Number in
Exhibit Number per Sequential
Item 601 of Numbering
Regulation S-K Description of Exhibit* System
3 Articles of Incorporation and By-Laws (incorporated
by reference to Exhibit 3 of the Company's Annual
Report on Form 10-K for the fiscal year ended
February 2, 1991)
3.1 The Company's Restated charter, as amended by: (1)
Articles of Amendment dated May 13, 1986, and (2)
Articles of Amendment dated June 3, 1988
(incorporated by reference to Exhibit 3.1 of the
Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1988)
3.2 The Company's By-Laws, as amended on April 20,
1994 (incorporated by reference to Exhibit 3.2 of
the Company's Annual Report on Form 10-K for the
fiscal year ended January 29, 1994)
3.3 Articles of Amendment amending the Company's
Articles of Incorporation effective April 27, 1994
(incorporated by reference to Exhibit 3.3 of the
Company's Annual Report on Form 10-K for the
fiscal year ended January 29, 1994)
3.4 Articles and Plan of Merger providing for the
merger of Brendle's Stores, Inc. into the Company
effective April 29, 1994 (incorporated by
reference to Exhibit 3.4 of the Company's Annual
Report on Form 10-K for the fiscal year ended
January 29, 1994)
4 Instruments defining the rights of security
holders, including indentures: Not Applicable.
(See the Company's Restated Charter, as amended,
incorporated by reference to Exhibit 3.1 above,
and the Company's By-Laws,
<PAGE>
as amended, incorporated by reference to Exhibit 3.2
above)
9 Voting Trust Agreement: Not Applicable. (See the
Shareholders' Agreement dated April 10, 1986,
incorporated by reference to Exhibit 10.15 to the
Company's report on Form 10-K for the fiscal year
ended January 31, 1988
10 Material Contracts:
10.1 Brendle's Incorporated Amended and Restated
Employee's Profit-Sharing Plan and Trust Agreement
effective February 1, 1989 (incorporated by
reference to the company's report on Form 10-K for
the fiscal year ended January 31, 1989; as amended
by the First Amendment dated December 29, 1989) as
further amended by the Second Amendment dated
December 1, 1990 (incorporated by reference to the
Company's Annual Report on Form 10-K for the
fiscal year ended February 2, 1991).
10.2 Brendle's Incorporated 1986 Incentive Stock Option
Plan, as amended (incorporated by reference to
Exhibit 4(a) to the Company's Registration
Statement on Form S-8 dated April 24, 1987; Reg.
No. 33-13622)
10.3 Brendle's Incorporated 1986 Nonqualified Stock
Option Plan, as amended (incorporated by reference
to Exhibit 4(b) to the Company's Registration
Statement on Form S-8 dated April 24, 1987; Reg.
No. 33-13622)
10.4 Brendle's Incorporated 1990 Stock Option Plan
(incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended
February 2, 1991).
10.5 Aircraft Lease between Brendle Transport, Inc. and
Sky-Lease, Inc. dated February 4, 1990
(incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended
February 2, 1991).
-2-
<PAGE>
10.6 Hold Harmless Agreement between the Company and
John D. Gray (incorporated by reference to Exhibit
10.9 to the Company's Registration Statement on
Form S-1 dated April 11, 1986)
10.7 Hold Harmless Agreement between the Company and
James B. Edwards (incorporated by reference to
Exhibit 10.10 to the Company's Registration
Statement on Form S-1 dated April 11, 1986)]
10.8 Hold Harmless Agreement between the Company and
Thomas H. Davis (incorporated by reference to
Exhibit 10.14 to the Company's report on form 10-K
for the fiscal year ended January 31, 1988)
10.9 Shareholders' Agreement dated April 10, 1986,
among the then shareholders of the Company
(incorporated by reference to Exhibit 10.11 to the
Company's Registration Statement on Form S-1 dated
April 11, 1986)
10.10 Last Will and Testament of James Harold Brendle
(incorporated by reference to Exhibit 10.12 to the
Company's Registration Statement on Form S-1 dated
April 11, 1986)
10.11 Split-Dollar Life Insurance Agreement dated
January 8, 1982, between the Company and the
Trustee of the Douglas D. Brendle Irrevocable Life
Insurance Trust (incorporated by reference Exhibit
10.13 to the Company's Registration Statement on
Form S-1 dated April 11, 1986)
10.12 Split-Dollar Life Insurance Agreement dated
January 8, 1982, between the Company and the
Trustee of the Sidney Floyd Brendle Irrevocable
Life Insurance Trust (incorporated by reference
Exhibit 10.14 to the Company's Registration
Statement on Form S-1 dated April 11, 1986)
10.13 Form of Split-Dollar Life Insurance Trust Agreement
adopted April 7, 1986 (incorporated by reference
Exhibit 10.16 to
-3-
<PAGE>
the Company's Registration Statement on Form S-1
dated April 11, 1986)
10.14 Schedule Identifying Omitted Split-Dollar Life
Insurance Agreements dated April 7 and April 8,
1986, which are substantially identical to the
form of Split-Dollar Life Insurance Agreement
(incorporated by reference Exhibit 10.21 to the
Company's report on form 10-K for the fiscal year
ended January 31, 1988) and to the Company's
Registration Statement on form S-1 dated April 11,
1986 (incorporated by reference Exhibit 10.17 to
the Company's Registration Statement on Form S-1
dated April 11, 1986)
10.15 Split-Dollar Life Insurance Agreement dated June
1, 1988, between the Company and Douglas D.
Brendle (incorporated by reference to the
Company's report on Form 10-K for the fiscal year
ended January 31, 1989)
10.16 Split-Dollar Life Insurance Agreement dated
September 13, 1988, between the Company and
Jeffrey D. Mick (incorporated by referenced to the
Company's report on Form 10-K for the fiscal year
ended January 31, 1989)
10.17 Split-Dollar Life Insurance Agreement dated
September 13, 1989, between the Company and
Johanna L. Johnson (wife of Dennis B. Johnson)
10.18 Triple Net Lease between Edna A. Brendle and the
Company dated October 1, 1985 re: a portion of
former Store #1, (now service center location)
Elkin, NC (incorporated by reference to Exhibit
10.18 to the Company's Registration Statement on
Form S-1 dated April 11, 1986)
10.19 Triple Net Lease between Brendle Brothers and the
Company dated October 1, 1985 re: former Store
#1, Elkin, NC (now service center location)
(incorporated by reference to
-4-
<PAGE>
Exhibit 10.19 to the Company's Registration
Statement on Form S-1 dated April 11, 1986)
10.20 First Amendment to Triple Net Lease (re: former
Store #1, Elkin, NC) among Brendle Brothers, the
Company and a subsidiary, dated August 2, 1987
(incorporated by reference to Exhibit 10.25 to the
Company's report on Form 10-K for the fiscal year
ended January 31, 1988)
10.21 Triple Net Lease between Brenco and the Company
effective November 18, 1988 re: Store #1, Elkin,
NC (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year
ended February 2, 1991).
10.22 Triple Net Lease between Brenco and the Company
dated October 1, 1985 re: Store #2, Winston-Salem,
NC (incorporated by reference to Exhibit
10.20 to the Company's Registration Statement on
Form S-1 dated April 11, 1986)
10.23 Triple Net Lease between Brenco and the Company
dated October 1, 1985 re: Store #3, Hickory, NC
(incorporated by referenced to Exhibit 10.21 to
the Company's Registration Statement on Form S-1
dated April 11, 1986)
10.24 Triple Net Lease between Brenco and the Company
dated October 1, 1985 re: Store #5, Chapel Hill,
NC (incorporated by reference to Exhibit 10.22 to
the Company's Registration Statement on Form S-1
dated April 11, 1986)
10.25 Shopping Center Store-Space Lease between Brenco
and the Company dated October 1, 1985 re: Store
#6, Asheville, NC (incorporated by reference to
Exhibit 10.23 to the Company's Registration
Statement on Form S-1 dated April 11, 1986)
10.26 Triple Net Lease between Brenco and the Company
dated October 1, 1985 re: Store #7, Kingsport, TN
(incorporated by reference to
-5-
<PAGE>
Exhibit 10.24 to the Company's Registration
Statement on Form S-1 dated April 11, 1986)
10.27 Shopping Center Store-Space Lease between Brenco
and the Company dated October 1, 1985 re: Store
#12, Salem, VA (incorporated by reference to
Exhibit 10.25 to the Company's Registration
Statement on Form S-1 dated April 11, 1986)
10.28 Triple Net Lease between Brenco and the Company
dated October 1, 1985 re: Store #13, Burlington,
NC (incorporated by reference to Exhibit 10.26 to
the Company's Registration Statement on Form S-1
dated April 11, 1986)
10.29 Triple Net Lease between Brenco and the Company
dated October 1, 1985 re: Store #14, Wilson, NC
(incorporated by reference to Exhibit 10.27 to the
Company's Registration Statement on Form S-1 dated
April 11, 1986)
10.30 Triple Net Lease between Brenco and the Company
dated October 1, 1985 re: Store #15, Myrtle
Beach, SC (incorporated by reference to Exhibit
10.28 to the Company's Registration Statement on
Form S-1 dated April 11, 1986)
10.31 Shopping Center Store-Space Lease between Brenco
and the Company dated October 1, 1985 re: Store
#16, Raleigh, NC (incorporated by reference to
Exhibit 10.29 to the Company's Registration
Statement on Form S-1 dated April 11, 1986)
10.32 Shopping Center Store-Space Lease between Brenco
and the Company dated October 1, 1985 re: Store
#17, Greensboro, NC (incorporated by reference to
Exhibit 10.30 to the Company's Registration
Statement on Form S-1 dated April 11, 1986)
10.33 Triple Net Lease between Brenco and the Company
dated October 1, 1985 re: Store #23, Boone, NC
(incorporated by reference to
-6-
<PAGE>
Exhibit 10.31 to the Company's Registration
Statement on Form S-1 dated April 11, 1986)
10.34 Triple Net Lease between Brenco and the Company
dated October 1, 1985 re: Elkin, NC Corporate
Headquarters and Warehouse Facility (incorporated
by reference to Exhibit 10.32 to the Company's
Registration Statement on Form S-1 dated April 11,
1986)
10.35 Master First Amendment to Leases (re: Leases
between the Company and Brenco in effect on August
2, 1987) among Brenco, the Company and a
subsidiary, dated August 2, 1987 (incorporated by
reference to Exhibit 10.39 to the Company's report
on Form 10-K for the fiscal year ended January 31,
1988)
10.36 Triple Net Lease between Brenco and the Company
dated as of September 14, 1987, re: Store #38,
Wilmington, NC (incorporated by reference to the
Company's report on Form 10-K for the fiscal year
ended January 31, 1989)
10.37 Triple Net Lease between Brenco and the Company
dated April 29, 1988, re: Store #42, Greenville,
NC (incorporated by reference to the Company's
report on Form 10-K for the fiscal year ended
January 31, 1989)
10.38 Consulting Agreement with S. Floyd Brendle, dated
February 17, 1989 (incorporated by reference to
the Company's report on Form 10-K for the fiscal
year ended February 3, 1990)
10.39 Brendle's Incorporated Stock Savings Plan and
Trust Agreement dated August 1, 1989 (incorporated
by reference to the Company's report on Form 10-K
for the fiscal year ended February 3, 1990)
10.40 Brendle's Key Employee Stock Appreciation Rights
Plan, dated effective August 18, 1989
(incorporated by reference to the Company's report
on Form 10-K for the fiscal year ended February 3,
1990)
-7-
<PAGE>
10.41 Brendle's Unaffiliated Directors' Stock
Appreciation Rights Plan, dated effective August
18, 1989 (incorporated by reference to the
Company's report on Form 10-K for the fiscal year
ended February 3, 1990)
10.42 Bill of Sale and Lease Termination dated September
29, 1989 (incorporated by reference to the
Company's report on Form 10-K for the fiscal year
ended February 3, 1990)
10.43 Employment Agreement dated May 12, 1990 between
the Company and Dennis B. Johnson (incorporated by
reference to the Company's Annual Report on Form
10-K for the fiscal year ended February 2, 1991).
10.44 Loan Agreement between the Company and its Lender
banks dated October 18, 1991 in connection with
its $49,000,000 Revolving Line of Credit and
$20,000,000 Term Loan. (Incorporated by reference
to the Company's report on Form 10-K for the
fiscal year ended February 1, 1992.)
10.45 Agency Agreement between the Company and
Schottenstein Stores Corporation with amendments.
(Incorporated by reference to the Company's report
on Form 10-K for the fiscal year ended February 1,
1992.)
10.46 Master amendment to leases and amended and
restated master amendment to leases entered into
between the Company and Brenco. (Incorporated by
reference to the Company's report on Form 10-K for
the fiscal year ended February 1, 1992.)
10.47 AirCraft Lease Termination Agreement.
(Incorporated by reference to the Company's report
on Form 10-K for the fiscal year ended February 1,
1992.)
-8-
<PAGE>
10.48 Letter Agreement between the Company and The GDL
Group, Inc. for consulting services.
(Incorporated by reference to the Company's report
on Form 10-K for the fiscal year ended February 1,
1992.)
10.49 First amendment to Brendle's Incorporated Stock
Savings Plan and Trust Agreement. (Incorporated
by reference to the Company's report on Form 10-K
for the fiscal year ended February 1, 1992.)
10.50 Employment Agreement dated December 9, 1992
between the Company and William V. Grady.
(Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended
January 30, 1993.)
10.51 Employment Agreement dated November 17, 1992
between the Company and Steve W. Luka.
(Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended
January 30, 1993.)
10.52 Employment Agreement dated November 17, 1992
between the Company and A.L. Miller, Jr.
(Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended
January 30, 1993.)
10.53 Employment Agreement dated November 17, 1992
between the Company and David R. Renegar.
(Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended
January 30, 1993.)
10.54 Employment Agreement dated November 17, 1992
between the Company and W. Steven Day.
(Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended
January 30, 1993.)
-9-
<PAGE>
10.55 Employment Agreement dated November 17, 1992
between the Company and Gregory S. Stegall.
(Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended
January 30, 1993.)
10.56 Letter Amendment Agreement dated June 2, 1992
between the Company and The GDL Group, Inc. for
consulting services. (Incorporated by reference
to the Company's Annual Report on Form 10-K for
the fiscal year ended January 30, 1993.)
10.57 Management and Consulting Contract dated November
17, 1992 between The GDL Group, Inc. and Brendle's
Stores, Inc. for consulting services.
(Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended
January 30, 1993.)
10.58 First Amendment to Loan Agreement dated May 14,
1992 between the Company (and Brendle's Stores,
Inc.) and its primary lender banks. (Incorporated
by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended January 30,
1993.)
10.59 Lease Agreement effective February 1, 1994 between
the Company and P.B. Realty, Inc. for the lease of
distribution center space (incorporated by
reference to Exhibit 10.59 of the Company's Annual
Report on Form 10-K for the fiscal year ended
January 29, 1994)
10.60 Loan and Security Agreement between the Company
and Foothill Capital Corporation dated April 21,
1994 (incorporated by reference to Exhibit 10.60
of the Company's Annual Report on Form 10-K for
the fiscal year ended January 29, 1994)
10.61 Employment Agreement between the Company and
Everett V. Purdy dated July 25, 1994.
-10-
<PAGE>
10.62 Employment Agreement between the Company and David
R. Renegar dated August 1, 1994.
10.63 Employment Agreement between the Company and
Gregory S. Stegall dated August 1, 1994.
10.64 Retirement and Consulting Agreement between the
Company and Douglas D. Brendle dated March 1,
1995.
10.65 Employment Agreement between the Company and
Joseph M. McLeish, Jr. dated February 27, 1995.
10.66 Employment Severance Agreement between the Company
and Everett V. Purdy dated March 31, 1995.
10.67 Stock Option Grant Agreement between the Company
and Joseph M. McLeish, Jr. dated February 27,
1995.
10.68 Form of Three-Year Vesting Stock Option Grant
Agreement under the Company's 1990 Stock Option
Plan.
10.69 Form of Three-Year Vesting Stock Option Grant
Agreement under the Company's 1986 Incentive Stock
Option Plan.
10.70 Form of Two-Year Vesting Stock Option Grant
Agreement for the Company's 1986 Incentive Stock
Option Plan.
11 Statement regarding computation of per share
earnings: no statement setting forth the
computation of per share earnings has been made
since the computation can be clearly determined
from material contained in this report, including
the consolidated financial statements and related
notes, with particular reference to Note 1
thereto.
12 Statement regarding computation of ratios: Not
Applicable
-11-
<PAGE>
16 Letter regarding change in certifying accountants:
Not Applicable
18 Letter regarding change in accounting principles:
Not Applicable
19 Previously unfiled documents: Not Applicable
22 Subsidiaries of the Company: Not Applicable
23 Published report regarding matters submitted to
vote of security holders: Not Applicable
24 Consent of Price Waterhouse LLP
25 Powers of Attorney
28 Additional Exhibits: Not Applicable
29 Information from reports furnished to state
insurance regulatory authorities: Not Applicable
*The Company's Registration Statement on Form S-1 dated April 11, 1986
to which certain documents are incorporated by reference herein is
Registration No. 33-4774.
<PAGE>
EXHIBIT 10.61
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective the 25th
day of July, 1994 by and between BRENDLE'S INCORPORATED, a North
Carolina corporation ("Brendle's"), and EVERETT PURDY, (the
"Executive").
W I T N E S S E T H:
WHEREAS, Executive is a very valued Executive employee of
Brendle's, and the parties desire to continue such employment and cause
the terms and conditions of such employment relationship to be reduced
to writing as set forth herein and to establish certain new employment
terms for the Executive which constitute new and valuable consideration;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto agree as follows:
1. Employment and Duties. Brendle's hereby agrees to continue to
employ Executive on the terms and conditions contained herein and
Executive agrees to continue his employment with Brendle's in the office
and capacity of Senior Vice President, or in such other position of the
same or greater stature as Brendle's may direct or desire, subject at
all times to the control of Brendle's Chief Executive Officer ("CEO")
and of the Brendle's Board of Directors (the "Board"). Executive shall
perform such other or additional duties as shall reasonably be assigned
to him from time to time by the CEO, which duties shall be those
customarily performed by a corporate officer having executive
responsibilities in a business similar to Brendle's.
2. Extent of Services. Executive shall devote his entire
attention and energy to the business and affairs of Brendle's on a
full-time basis and shall not be engaged in any other business activity,
whether or not such business activity is pursued for gain, profit or
other pecuniary advantage, unless the CEO or the Board otherwise
consents. This provision shall not be construed as preventing Executive
from investing his assets in such form or manner as will not require any
services on the part of Executive in the operation of the affairs of the
companies in which such investments are made. Executive shall use his
best efforts, skills and abilities to promote the interest of Brendle's,
and, subject to Paragraph 1, will perform such duties as are assigned to
him by the Board or by the President or CEO of Brendle's. Full-time, as
used above, shall mean a minimum forty (40) hour work week.
3. Term. The term of this Agreement shall commence on July 25,
1994 and shall thereafter continue until terminated as herein provided.
Unless this Agreement is earlier terminated in accordance with the terms
hereof, the term of this Agreement shall be renewed for new two (2) year
periods on January 1st of each year, and shall be automatically extended
by one additional calendar quarter successively on the first day of each
calendar
<PAGE>
quarter thereafter. The term of this Agreement shall be subject to the
following conditions and limitations:
a. Termination by Brendle's for Cause or Material Breach:
(1) Brendle's may terminate this Agreement at any time
for Cause or Material Breach hereof by Executive. As used
herein, "Cause" is defined to mean:
(i) any act of fraud, misappropriation,
embezzlement or like act of dishonesty;,
(ii) conviction of a felony;
(iii) material failure to perform the services and
duties described herein (except in the case of death or
disability), material violation of any of the provisions
set forth herein, or material breach of any fiduciary
duty to Brendle's, if the material failure, violation or
breach unreasonably continues after written notice
thereof is given to Executive by Brendle's;
(iv) if Executive is guilty of gross misconduct,
misfeasance or malfeasance in connection with his
employment hereunder which shall include, but not be
limited to, excessive absences from work, failure to
follow reasonable directives from the Chief Executive
Officer of the Company, neglect of duty, negligence,
disloyalty, dishonesty, intemperance, immorality,
disobedience of Brendle's rules, disrespect,
unnecessarily endangering, damaging or destroying life or
property, or similar conduct injurious to Brendle's; or
(v) other behavior which adversely reflects on the
reputation of Brendle's such as substance abuse, public
intoxication, etc.
As used herein "Material Breach" is defined to mean
a material violation of any of the provisions and conditions
set forth herein. In the event of termination for Cause or
Material Breach by Executive, Brendle's shall continue to pay
Executive his then current salary for thirty (30) days
following the date of the delivery of the notice of
termination, which date shall be for all purposes of this
Agreement, the date of termination of his employment.
b. Disability: In the event that Executive becomes disabled
(as hereinafter defined) Brendle's may terminate his employment by
furnishing him notice of such termination, and Brendle's shall be
obligated to pay Executive his then
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<PAGE>
existing salary on a monthly basis for a period of twelve (12)
months from the date that the Executive becomes disabled as defined
herein. As used herein, Executive shall be deemed to be "disabled"
if he:
(1) has been declared legally incompetent by a final
decree of a court of competent jurisdiction (the date of such
decree being deemed to be the date on which the disability
occurred);
(2) receives, for a period of six (6) consecutive
months, disability insurance benefits from any disability
income insurance policy; or
(3) has become "permanently disabled," which shall be
deemed to exist upon a determination by the CEO of Brendle's:
(i) that Executive has become physically or
mentally incapacitated or disabled; and
(ii) that such incapacity or disability has
continued for a period of six (6) consecutive months or
for shorter periods aggregating nine (9) months during
any consecutive fifteen (15)-month period.
In determining disability under item (3) above, the CEO
or Board of Brendle's shall rely upon the written opinion of
the physician regularly attending Executive in determining
whether a disability is deemed to exist. If the CEO or Board
disagrees with the opinion of such physician, the CEO or Board
may choose a second physician, and the two (2) physicians
shall choose a third physician, and the written opinion of a
majority of the three (3) physicians shall be conclusive as to
Executive's disability. The date of any written opinion
conclusively finding Executive to be disabled is the date on
which the disability will be deemed to have occurred. The
expenses associated with the utilization of any physician
other than the physician regularly attending Executive shall
be borne solely by Brendle's. Executive hereby consents to
any required medical examination, agrees to furnish any
medical information requested by Brendle's and to waive any
applicable physician/patient privilege that may arise because
of such determination.
c. Death: If Executive shall die during the term of this
Agreement, thereupon his employment shall terminate, and Brendle's
shall pay his then current salary on a monthly basis for a period
of twelve (12) months commencing on the first of the month
following the date of his death.
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<PAGE>
d. Early Retirement: Brendle's currently does not have an
early retirement policy, and, therefore, no rights to early
retirement shall obtain for Executive.
e. Severance Payment: In the event Brendle's terminates or
attempts to terminate this Agreement or Executive's employment with
Brendle's or its subsidiaries is terminated for any reason other
than (1) Executive voluntarily terminating his employment, or (2)
as specifically permitted or delineated in this Agreement,
Executive shall be entitled to a lump sum severance payment equal
to two-years' salary as then in effect. The lump sum payment shall
be made within thirty (30) days of said termination of employment.
In addition, Executive shall be reimbursed his actual,
out-of-pocket packing [ZW] and moving expenses, including
specifically the expenses of the moving van to move his furniture
back to a home in Florida, or such other place as he relocates from
Elkin, North Carolina.
4. Salary, Other Compensation and Benefits. As compensation for
the services to be rendered by Executive to Brendle's pursuant to this
Agreement, Executive shall be paid the following compensation and shall
receive the following benefits:
a. Salary: Executive's annual salary shall be ONE HUNDRED
TWENTY-FIVE THOUSAND AND 00/100 DOLLARS ($125,000.00), subject to
change from time to time as approved by the CEO and the Board.
Such salary shall be payable in accordance with Brendle's regular
payroll procedures. In the event Executive receives any periodic
payments representing lost compensation under any health,
disability, accident and/or salary continuation insurance policy,
the premiums for which have been paid by Brendle's, the amount of
salary that Executive would be entitled to receive from Brendle's
shall be decreased by the amount of such payments.
b. Expenses: Executive shall be entitled to reimbursement
for all reasonable travel and other business expenses incurred by
him in the performance of services under this Agreement upon
presentation of expense statements or vouchers and such other
supporting information as Brendle's may reasonably request.
c. Other Compensation: In the discretion of the CEO and/or
the Board, Executive may be entitled to receive additional
compensation in excess of Executive's salary. Subject to the terms
of any of Brendle's employee benefit plans, agreements and
arrangements, Executive shall be entitled to participate in the
major medical, hospitalization, vacation, sick leave or disability,
pension or retirement, profit-sharing, stock-based incentive and
other fringe benefit plans maintained by Brendle's for the benefit
of employees of Brendle's in like positions of responsibility as
Executive.
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<PAGE>
5. Covenant Not to Compete:
a. Covenant: During the term of this Agreement and for a
two year period after the Executive's employment with the
Corporation has been terminated by either party, the Executive will
not directly or indirectly:
(1) enter into or attempt to enter into the "Restricted
Business" (as defined below) in the states of North Carolina
or South Carolina or within a fifty (50) mile radius of any
Brendle's store location existing as of the effective date
hereof in any state other than North Carolina or South
Carolina;
(2) induce or attempt to persuade any former, current or
future employee, agent, manager, consultant, director, or
other participant in the Corporation's business to terminate
such employment or other relationship in order to enter into
any relationship with the Executive, any business organization
in which the Executive is a participant in any capacity
whatsoever, or any other business organization in competition
with the Corporation's business; or
(3) use contracts, proprietary information, trade
secrets, confidential information, customer lists, mailing
lists, goodwill, or other intangible property used or useful
in connection with the Corporation's business.
b. Indirect Activity: The term "indirectly," as used in
this paragraph 5, includes acting as a paid or unpaid director,
officer, agent, representative, employee of, or consultant to any
enterprise, or acting as a proprietor of an enterprise, or holding
any direct or indirect participation in any enterprise as an owner,
partner, limited partner, joint venturer, shareholder, or creditor.
c. Restricted Business: The term "Restricted Business"
means the retail sale of general hard goods merchandise and/or
catalogue-showroom sales of hard good merchandise. In addition,
the Executive may own not more than five percent of the outstanding
equity securities of a corporation that is engaged in the
Restricted Business if the equity securities are listed for trading
on a national stock exchange or are registered under the Securities
Exchange Act of 1934. In the event that Executive shall be
employed by a national retailing chain of stores in the Restricted
Business which has stores not only in North Carolina or South
Carolina or within a fifty (50)-mile radius of any Brendle's store
location in any state other than North Carolina or South Carolina,
Executive hereby agrees not to be employed in a division or part of
the business of said national chain which would compete directly
with Brendle's in the states of North Carolina or South Carolina or
within a fifty (50)-mile radius of any Brendle's
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<PAGE>
store location existing as of the effective date hereof in any
state other than North Carolina or South Carolina.
6. Confidential Information and Discoveries: Executive agrees
that all information of a technical or business nature such as know-how,
trade secrets, secret business information, plans, data, processes,
techniques, customer information, inventions, discoveries, formulae,
patterns, devices, etc., except such information and skills generally
known in Brendle's trade and business, information made public by
Brendle's or generally of a public nature, and knowledge of Executive
not constituting a trade secret (the "Confidential Information"),
acquired by Executive in the course of his employment by Brendle's, is a
valuable business property right of Brendle's. Executive agrees that
such Confidential Information, whether in written, verbal or model form,
shall not be disclosed to anyone outside the employment of Brendle's
without the express written authorization of Brendle's. The Confidential
Information shall include, without limitation, vendor lists and records,
customer lists, business policies, business methods, financial
information and any other similar material of any kind relating to the
business of Brendle's.
Any and all improvements, inventions, discoveries, formulae or
processes materially related to Brendle's business which Executive may
conceive or make during his regular working hours or otherwise shall be
the sole and exclusive property of Brendle's and Executive will disclose
the same to Brendle's and will, whenever requested by Brendle's to do so
(either during the term of this Agreement or thereafter), execute and
assign any and all applications, assignments and/or other instruments
and do all things which Brendle's may deem necessary or appropriate in
order to apply for, obtain, maintain, enforce and defend patents,
copyrights, trademarks or other forms of protection, or in order to
assign and convey or otherwise make available to Brendle's the sole and
exclusive right, title and interest in and to said improvements,
inventions, discoveries, formulae, processes, applications or patents.
No provision in this Agreement is intended to require assignment of
any of Executive's rights in an invention if no equipment, supplies,
facilities or trade secret information of Brendle's was used, the
invention was developed entirely on Executive's own time, the invention
does not materially relate to the business of Brendle's or to Brendle's
actual or demonstrably anticipated research or development, and does not
result from any work performed by Executive for Brendle's.
7. Enforcement: Both parties recognize that the services to be
rendered under this Agreement by Executive are special, unique and of
extraordinary character and that in the event of the breach by Executive
of any of the terms and conditions of this Agreement to be performed by
him, then Brendle's shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either at
law or in equity, to obtain damages for any breach hereof, or to enjoin
Executive from
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<PAGE>
performing acts prohibited hereby, but nothing herein contained shall be
construed to prevent such other remedy in the courts as Brendle's may
elect to invoke.
8. Return of Documents and Equipment: Upon the termination of
this Agreement, Executive shall forthwith return and deliver to
Brendle's and shall not retain any original or copies of any books,
papers, price lists or vendor contracts, bids or customer lists, files,
books of account, notebooks and other documents, data relating to the
performance of services rendered by Executive hereunder or any
equipment, all of which materials are hereby agreed to be the property
of Brendle's.
9. Resignation upon Termination: In the event of termination of
this Agreement other than by death, Executive hereby agrees to resign
from all positions held with Brendle's, including without limitation,
any position as a director, officer, agent, trustee or consultant of
Brendle's or any affiliate of Brendle's.
10. Miscellaneous:
a. Notices: Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and if sent
by registered or certified mail to Executive or Brendle's at the
address set forth below their signatures at the end of this
Agreement or to such other address as they shall notify each other
in writing.
b. Assignment: This Agreement shall be binding upon and
inure to the benefit of Brendle's and its successors and assigns
and Executive and his personal representatives, heirs, legatees and
beneficiaries, but shall not be assignable by Executive.
c. Applicable Law: This Agreement shall be construed in
accordance with the laws of the State of North Carolina in every
respect, including without limitation, validity, interpretation and
performance.
d. Headings: Section headings and numbers herein are
included for convenience of reference only and this Agreement is
not to be construed with reference thereto. If there be any
conflict between such numbers and headings and the text hereof, the
text shall control.
e. Severability: If for any reason any portion of this
Agreement shall be held invalid or unenforceable, it is agreed that
the same shall not affect the validity or enforceability of the
remainder hereof.
f. Entire Agreement: This Agreement contains the
entire agreement of the parties with respect to its subject
-7-
<PAGE>
matter and supersedes all previous agreements between the
parties. No director, officer, employee or representative of Brendle's
has any authority to make any representations or promises in connection
with this Agreement or the subject matter hereof that is not contained
herein, and Executive represents and warrants that he has not executed
this Agreement in reliance upon any such representa- tion or promise. No
modification of this Agreement shall be valid unless made in writing and
signed by the parties hereto.
g. Waiver of Breach: The waiver by a party hereto of a
breach of any provision of this Agreement by the other party hereto
shall not operate or be construed as a waiver of any subsequent
breach by such party.
h. Counterparts: This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one agreement.
i. Implied Terms: The terms, conditions, obligations and
duties expressed in this Agreement are in addition to any duties
and obligations implied in law to an employment relationship except
where any expressed condition is contrary to the implied condition
and in which case, the express condition will apply and control.
j. Effective Date: For all purposes, this Agreement shall
be effective as of July 25, 1994.
IN WITNESS WHEREOF, Brendle's has caused this Agreement to be
executed by its duly authorized officer and Executive has signed this
Agreement all on the day and year first above written.
BRENDLE'S INCORPORATED
By: _________________________________
Douglas D. Brendle, President
and Chief Executive Officer
1919 N. Bridge Street Ext.
Elkin, North Carolina 28621
EXECUTIVE:
_______________________________(SEAL)
Address: 155 Warwick Place
Bermuda Run, NC 27006
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<PAGE>
EXHIBIT 10.62
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective the 1st
day of August, 1994 by and between BRENDLE'S INCORPORATED, a North
Carolina corporation ("Brendle's"), and GREGORY S. STEGALL, (the
"Executive").
W I T N E S S E T H:
WHEREAS, Executive is a very valued Executive employee of
Brendle's, and the parties desire to continue such employment and cause
the terms and conditions of such employment relationship to be reduced
to writing as set forth herein;
WHEREAS, Executive and Brendle's entered into an Employment
Agreement, effective November 17, 1992 and continuing to the
present, and hereby desire to enter into this Agreement which shall
supersede the prior Employment Agreement and which extends
Executive's contract terms and provides other new and valuable
consideration;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto agree as
follows:
1. Employment and Duties. Brendle's hereby agrees to
continue to employ Executive on the terms and conditions contained
herein and Executive agrees to continue his employment with
Brendle's in the office and capacity of Vice President, or in such
other position of the same or greater stature as Brendle's may
direct or desire, subject at all times to the control of Brendle's
Chief Executive Officer ("CEO") and of the Brendle's Board of
Directors (the "Board"). Executive shall perform such other or
additional duties as shall reasonably be assigned to him from time
to time by the CEO, which duties shall be those customarily
performed by a corporate officer having executive responsibilities
in a business similar to Brendle's.
2. Extent of Services. Executive shall devote his entire
attention and energy to the business and affairs of Brendle's on a
full-time basis and shall not be engaged in any other business
activity, whether or not such business activity is pursued for
gain, profit or other pecuniary advantage, unless the CEO or the
Board otherwise consents. This provision shall not be construed as
preventing Executive from investing his assets in such form or
manner as will not require any services on the part of Executive in
the operation of the affairs of the companies in which such
investments are made. Executive shall use his best efforts, skills
and abilities to promote the interest of Brendle's, and, subject to
Paragraph 1, will perform such duties as are assigned to him by the
Board or by the President or CEO of Brendle's. Full-time, as used
above, shall mean a minimum forty (40) hour work week.
<PAGE>
3. Term. The term of this Agreement shall commence on
August 1, 1994 and shall thereafter continue until terminated as
herein provided. Unless this Agreement is earlier terminated in
accordance with the terms hereof, the term of this Agreement shall
be renewed for new one (1)-year periods on January 1st of each
year, and shall be automatically extended by one additional
calendar quarter successively on the first day of each calendar
quarter thereafter. The term of this Agreement shall be subject to
the following conditions and limitations:
a. Termination by Brendle's for Cause or Material
Breach:
(1) Brendle's may terminate this Agreement at any
time for Cause or Material Breach hereof by Executive.
As used herein, "Cause" is defined to mean:
(i) any act of fraud, misappropriation,
embezzlement or like act of dishonesty;,
(ii) conviction of a felony;
(iii)material failure to perform the services
and duties described herein (except in the case of
death or disability), material violation of any of
the provisions set forth herein, or material breach
of any fiduciary duty to Brendle's, if the material
failure, violation or breach unreasonably continues
after written notice thereof is given to Executive
by Brendle's;
(iv) if Executive is guilty of gross
misconduct, misfeasance or malfeasance in
connection with his employment hereunder which
shall include, but not be limited to, excessive
absences from work, failure to follow reasonable
directives from the Chief Executive Officer of the
Company, neglect of duty, negligence, disloyalty,
dishonesty, intemperance, immorality, disobedience
of Brendle's rules, disrespect, unnecessarily
endangering, damaging or destroying life or
property, or similar conduct injurious to
Brendle's; or
(v) other behavior which adversely reflects
on the reputation of Brendle's such as substance
abuse, public intoxication, etc.
As used herein "Material Breach" is defined to
mean a material violation of any of the provisions and
conditions set forth herein. In the event of termination
for Cause or Material Breach by Executive, Brendle's
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<PAGE>
shall continue to pay Executive his then current salary
for thirty (30) days following the date of the delivery
of the notice of termination, which date shall be for all
purposes of this Agreement, the date of termination of
his employment.
b. Disability: In the event that Executive becomes
disabled (as hereinafter defined) Brendle's may terminate his
employment by furnishing him notice of such termination, and
Brendle's shall be obligated to pay Executive his then
existing salary on a monthly basis for a period of twelve (12)
months from the date that the Executive becomes disabled as
defined herein. As used herein, Executive shall be deemed to
be "disabled" if he:
(1) has been declared legally incompetent by a
final decree of a court of competent jurisdiction (the
date of such decree being deemed to be the date on which
the disability occurred);
(2) receives, for a period of six (6) consecutive
months, disability insurance benefits from any disability
income insurance policy; or
(3) has become "permanently disabled," which shall
be deemed to exist upon a determination by the CEO of
Brendle's:
(i) that Executive has become physically or
mentally incapacitated or disabled; and
(ii) that such incapacity or disability has
continued for a period of six (6) consecutive
months or for shorter periods aggregating nine (9)
months during any consecutive fifteen (15)-month
period.
In determining disability under item (3) above, the
CEO or Board of Brendle's shall rely upon the written
opinion of the physician regularly attending Executive in
determining whether a disability is deemed to exist. If
the CEO or Board disagrees with the opinion of such
physician, the CEO or Board may choose a second
physician, and the two (2) physicians shall choose a
third physician, and the written opinion of a majority of
the three (3) physicians shall be conclusive as to
Executive's disability. The date of any written opinion
conclusively finding Executive to be disabled is the date
on which the disability will be deemed to have occurred.
The expenses associated with the utilization of any
physician other than the physician regularly attending
Executive shall be borne solely by Brendle's. Executive
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<PAGE>
hereby consents to any required medical examination,
agrees to furnish any medical information requested by
Brendle's and to waive any applicable physician/patient
privilege that may arise because of such determination.
c. Death: If Executive shall die during the term of
this Agreement, thereupon his employment shall terminate, and
Brendle's shall pay his then current salary on a monthly basis
for a period of twelve (12) months commencing on the first of
the month following the date of his death.
d. Early Retirement: Brendle's currently does not have
an early retirement policy, and, therefore, no rights to early
retirement shall obtain for Executive.
e. Severance Payment: In the event Brendle's
terminates or attempts to terminate this Agreement or
Executive's employment with Brendle's or its subsidiaries is
terminated for any reason other than (1) Executive voluntarily
terminating his employment, or (2) as specifically permitted
or delineated in this Agreement, Executive shall be entitled
to a lump sum severance payment equal to one (1)-year's salary
as then in effect. The lump sum payment shall be made within
thirty (30) days of said termination of employment.
4. Salary, Other Compensation and Benefits. As compensation
for the services to be rendered by Executive to Brendle's pursuant
to this Agreement, Executive shall be paid the following
compensation and shall receive the following benefits:
a. Salary: Executive's annual salary shall be ONE
HUNDRED THREE THOUSAND AND 00/100 DOLLARS ($103,000.00),
subject to change from time to time as approved by the CEO and
the Board. Such salary shall be payable in accordance with
Brendle's regular payroll procedures. In the event Executive
receives any periodic payments representing lost compensation
under any health, disability, accident and/or salary
continuation insurance policy, the premiums for which have
been paid by Brendle's, the amount of salary that Executive
would be entitled to receive from Brendle's shall be decreased
by the amount of such payments.
b. Expenses: Executive shall be entitled to
reimbursement for all reasonable travel and other business
expenses incurred by him in the performance of services under
this Agreement upon presentation of expense statements or
vouchers and such other supporting information as Brendle's
may reasonably request.
c. Other Compensation: In the discretion of the CEO
and/or the Board, Executive may be entitled to receive
additional compensation in excess of Executive's salary.
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<PAGE>
Subject to the terms of any of Brendle's employee benefit
plans, agreements and arrangements, Executive shall be
entitled to participate in the major medical, hospitalization,
vacation, sick leave or disability, pension or retirement,
profit-sharing, stock-based incentive and other fringe benefit
plans maintained by Brendle's for the benefit of employees of
Brendle's in like positions of responsibility as Executive.
5. Covenant Not to Compete:
a. Covenant: During the term of this Agreement and for
a one (1)-year period after the Executive's employment with
the Corporation has been terminated by either party, the
Executive will not directly or indirectly:
(1) enter into or attempt to enter into the
"Restricted Business" (as defined below) in the states of
North Carolina or South Carolina or within a fifty (50)
mile radius of any Brendle's store location existing as
of the effective date hereof in any state other than
North Carolina or South Carolina;
(2) induce or attempt to persuade any former,
current or future employee, agent, manager, consultant,
director, or other participant in the Corporation's
business to terminate such employment or other
relationship in order to enter into any relationship with
the Executive, any business organization in which the
Executive is a participant in any capacity whatsoever, or
any other business organization in competition with the
Corporation's business; or
(3) use contracts, proprietary information, trade
secrets, confidential information, customer lists,
mailing lists, goodwill, or other intangible property
used or useful in connection with the Corporation's
business.
b. Indirect Activity: The term "indirectly," as used
in this paragraph 5, includes acting as a paid or unpaid
director, officer, agent, representative, employee of, or
consultant to any enterprise, or acting as a proprietor of an
enterprise, or holding any direct or indirect participation in
any enterprise as an owner, partner, limited partner, joint
venturer, shareholder, or creditor.
c. Restricted Business: The term "Restricted Business"
means the retail sale of general hard goods merchandise
and/or catalogue-showroom sales of hard good merchandise. In
addition, the Executive may own not more than five percent of
the outstanding equity securities of a corporation that is
engaged in the Restricted Business if the equity securities
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<PAGE>
are listed for trading on a national stock exchange or are
registered under the Securities Exchange Act of 1934.
6. Confidential Information and Discoveries: Executive
agrees that all information of a technical or business nature such
as know-how, trade secrets, secret business information, plans,
data, processes, techniques, customer information, inventions,
discoveries, formulae, patterns, devices, etc., except such
information and skills generally known in Brendle's trade and
business, information made public by Brendle's or generally of a
public nature, and knowledge of Executive not constituting a trade
secret (the "Confidential Information"), acquired by Executive in
the course of his employment by Brendle's, is a valuable business
property right of Brendle's. Executive agrees that such
Confidential Information, whether in written, verbal or model form,
shall not be disclosed to anyone outside the employment of
Brendle's without the express written authorization of Brendle's.
The Confidential Information shall include, without limitation,
vendor lists and records, customer lists, business policies,
business methods, financial information and any other similar
material of any kind relating to the business of Brendle's.
Any and all improvements, inventions, discoveries, formulae or
processes materially related to Brendle's business which Executive
may conceive or make during his regular working hours or otherwise
shall be the sole and exclusive property of Brendle's and Executive
will disclose the same to Brendle's and will, whenever requested by
Brendle's to do so (either during the term of this Agreement or
thereafter), execute and assign any and all applications,
assignments and/or other instruments and do all things which
Brendle's may deem necessary or appropriate in order to apply for,
obtain, maintain, enforce and defend patents, copyrights,
trademarks or other forms of protection, or in order to assign and
convey or otherwise make available to Brendle's the sole and
exclusive right, title and interest in and to said improvements,
inventions, discoveries, formulae, processes, applications or
patents.
No provision in this Agreement is intended to require
assignment of any of Executive's rights in an invention if no
equipment, supplies, facilities or trade secret information of
Brendle's was used, the invention was developed entirely on
Executive's own time, the invention does not materially relate to
the business of Brendle's or to Brendle's actual or demonstrably
anticipated research or development, and does not result from any
work performed by Executive for Brendle's.
7. Enforcement: Both parties recognize that the services to
be rendered under this Agreement by Executive are special, unique
and of extraordinary character and that in the event of the breach
by Executive of any of the terms and conditions of this Agreement
to be performed by him, then Brendle's shall be entitled, if it so
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elects, to institute and prosecute proceedings in any court of
competent jurisdiction, either at law or in equity, to obtain
damages for any breach hereof, or to enjoin Executive from
performing acts prohibited hereby, but nothing herein contained
shall be construed to prevent such other remedy in the courts as
Brendle's may elect to invoke.
8. Return of Documents and Equipment: Upon the termination
of this Agreement, Executive shall forthwith return and deliver to
Brendle's and shall not retain any original or copies of any books,
papers, price lists or vendor contracts, bids or customer lists,
files, books of account, notebooks and other documents, data
relating to the performance of services rendered by Executive
hereunder or any equipment, all of which materials are hereby
agreed to be the property of Brendle's.
9. Resignation upon Termination: In the event of
termination of this Agreement other than by death, Executive hereby
agrees to resign from all positions held with Brendle's, including
without limitation, any position as a director, officer, agent,
trustee or consultant of Brendle's or any affiliate of Brendle's.
10. Miscellaneous:
a. Notices: Any notice required or permitted to be
given under this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to Executive or
Brendle's at the address set forth below their signatures at
the end of this Agreement or to such other address as they
shall notify each other in writing.
b. Assignment: This Agreement shall be binding upon
and inure to the benefit of Brendle's and its successors and
assigns and Executive and his personal representatives, heirs,
legatees and beneficiaries, but shall not be assignable by
Executive.
c. Applicable Law: This Agreement shall be construed
in accordance with the laws of the State of North Carolina in
every respect, including without limitation, validity,
interpretation and performance.
d. Headings: Section headings and numbers herein are
included for convenience of reference only and this Agreement
is not to be construed with reference thereto. If there be
any conflict between such numbers and headings and the text
hereof, the text shall control.
e. Severability: If for any reason any portion of this
Agreement shall be held invalid or unenforceable, it is agreed
that the same shall not affect the validity or enforceability
of the remainder hereof.
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<PAGE>
f. Entire Agreement: This Agreement contains the
entire agreement of the parties with respect to its subject
matter and supersedes all previous agreements between the
parties. No director, officer, employee or representative of
Brendle's has any authority to make any representations or
promises in connection with this Agreement or the subject
matter hereof that is not contained herein, and Executive
represents and warrants that he has not executed this
Agreement in reliance upon any such representation or promise.
No modification of this Agreement shall be valid unless made
in writing and signed by the parties hereto.
g. Waiver of Breach: The waiver by a party hereto of
a breach of any provision of this Agreement by the other party
hereto shall not operate or be construed as a waiver of any
subsequent breach by such party.
h. Counterparts: This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one
agreement.
i. Implied Terms: The terms, conditions, obligations
and duties expressed in this Agreement are in addition to any
duties and obligations implied in law to an employment
relationship except where any expressed condition is contrary
to the implied condition and in which case, the express
condition will apply and control.
j. Effective Date: For all purposes, this Agreement
shall be effective as of August 1, 1994.
IN WITNESS WHEREOF, Brendle's has caused this Agreement to be
executed by its duly authorized officer and Executive has signed
this Agreement all on the day and year first above written.
BRENDLE'S INCORPORATED
By: _(Signature of Douglas D. Brendle appears here)_
Douglas D. Brendle, President
and Chief Executive Officer
1919 N. Bridge Street Ext.
Elkin, North Carolina 28621
EXECUTIVE:
_(Signature of David R. Renegar appears here)_ (SEAL)
Address: Rt. 2 Box 685
State Road, N.C. 28676
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EXHIBIT 10.63
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective the 1st
day of August, 1994 by and between BRENDLE'S INCORPORATED, a North
Carolina corporation ("Brendle's"), and GREGORY S. STEGALL, (the
"Executive").
W I T N E S S E T H:
WHEREAS, Executive is a very valued Executive employee of
Brendle's, and the parties desire to continue such employment and cause
the terms and conditions of such employment relationship to be reduced
to writing as set forth herein;
WHEREAS, Executive and Brendle's entered into an Employment
Agreement, effective November 17, 1992 and continuing to the present,
and hereby desire to enter into this Agreement which shall supersede the
prior Employment Agreement and which extends Executive's contract terms
and provides other new and valuable consideration;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto agree as follows:
1. Employment and Duties. Brendle's hereby agrees to continue to
employ Executive on the terms and conditions contained herein and
Executive agrees to continue his employment with Brendle's in the office
and capacity of Vice President, or in such other position of the same or
greater stature as Brendle's may direct or desire, subject at all times
to the control of Brendle's Chief Executive Officer ("CEO") and of the
Brendle's Board of Directors (the "Board"). Executive shall perform
such other or additional duties as shall reasonably be assigned to him
from time to time by the CEO, which duties shall be those customarily
performed by a corporate officer having executive responsibilities in a
business similar to Brendle's.
2. Extent of Services. Executive shall devote his entire
attention and energy to the business and affairs of Brendle's on a
full-time basis and shall not be engaged in any other business activity,
whether or not such business activity is pursued for gain, profit or
other pecuniary advantage, unless the CEO or the Board otherwise
consents. This provision shall not be construed as preventing Executive
from investing his assets in such form or manner as will not require any
services on the part of Executive in the operation of the affairs of the
companies in which such investments are made. Executive shall use his
best efforts, skills and abilities to promote the interest of Brendle's,
and, subject to Paragraph 1, will perform such duties as are assigned to
him by the Board or by the President or CEO of Brendle's. Full-time, as
used above, shall mean a minimum forty (40) hour work week.
<PAGE>
3. Term. The term of this Agreement shall commence on
August 1, 1994 and shall thereafter continue until terminated as herein
provided. Unless this Agreement is earlier terminated in accordance
with the terms hereof, the term of this Agreement shall be renewed for
new one (1)-year periods on January 1st of each year, and shall be
automatically extended by one additional calendar quarter successively
on the first day of each calendar quarter thereafter. The term of this
Agreement shall be subject to the following conditions and limitations:
a. Termination by Brendle's for Cause or Material Breach:
(1) Brendle's may terminate this Agreement at any time
for Cause or Material Breach hereof by Executive. As used
herein, "Cause" is defined to mean:
(i) any act of fraud, misappropriation,
embezzlement or like act of dishonesty;,
(ii) conviction of a felony;
(iii)material failure to perform the services and
duties described herein (except in the case of death or
disability), material violation of any of the provisions
set forth herein, or material breach of any fiduciary
duty to Brendle's, if the material failure, violation or
breach unreasonably continues after written notice
thereof is given to Executive by Brendle's;
(iv) if Executive is guilty of gross misconduct,
misfeasance or malfeasance in connection with his
employment hereunder which shall include, but not be
limited to, excessive absences from work, failure to
follow reasonable directives from the Chief Executive
Officer of the Company, neglect of duty, negligence,
disloyalty, dishonesty, intemperance, immorality,
disobedience of Brendle's rules, disrespect,
unnecessarily endangering, damaging or destroying life or
property, or similar conduct injurious to Brendle's; or
(v) other behavior which adversely reflects on the
reputation of Brendle's such as substance abuse, public
intoxication, etc.
As used herein "Material Breach" is defined to mean a
material violation of any of the provisions and conditions set
forth herein. In the event of termination for Cause or Material
Breach by Executive, Brendle's
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shall continue to pay Executive his then current salary for
thirty (30) days following the date of the delivery of the
notice of termination, which date shall be for all purposes of
this Agreement, the date of termination of his employment.
b. Disability: In the event that Executive becomes disabled
(as hereinafter defined) Brendle's may terminate his employment by
furnishing him notice of such termination, and Brendle's shall be
obligated to pay Executive his then existing salary on a monthly
basis for a period of twelve (12) months from the date that the
Executive becomes disabled as defined herein. As used herein,
Executive shall be deemed to be "disabled" if he:
(1) has been declared legally incompetent by a final
decree of a court of competent jurisdiction (the date of such
decree being deemed to be the date on which the disability
occurred);
(2) receives, for a period of six (6) consecutive
months, disability insurance benefits from any disability
income insurance policy; or
(3) has become "permanently disabled," which shall be
deemed to exist upon a determination by the CEO of Brendle's:
(i) that Executive has become physically or
mentally incapacitated or disabled; and
(ii) that such incapacity or disability has
continued for a period of six (6) consecutive months or
for shorter periods aggregating nine (9) months during
any consecutive fifteen (15)-month period.
In determining disability under item (3) above, the CEO
or Board of Brendle's shall rely upon the written opinion of
the physician regularly attending Executive in determining
whether a disability is deemed to exist. If the CEO or Board
disagrees with the opinion of such physician, the CEO or Board
may choose a second physician, and the two (2) physicians
shall choose a third physician, and the written opinion of a
majority of the three (3) physicians shall be conclusive as to
Executive's disability. The date of any written opinion
conclusively finding Executive to be disabled is the date on
which the disability will be deemed to have occurred. The
expenses associated with the utilization of any physician
other than the physician regularly attending Executive shall
be borne solely by Brendle's. Executive
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<PAGE>
hereby consents to any required medical examination, agrees to
furnish any medical information requested by Brendle's and to
waive any applicable physician/patient privilege that may
arise because of such determination.
c. Death: If Executive shall die during the term of this
Agreement, thereupon his employment shall terminate, and Brendle's
shall pay his then current salary on a monthly basis for a period
of twelve (12) months commencing on the first of the month
following the date of his death.
d. Early Retirement: Brendle's currently does not have an
early retirement policy, and, therefore, no rights to early
retirement shall obtain for Executive.
e. Severance Payment: In the event Brendle's terminates or
attempts to terminate this Agreement or Executive's employment with
Brendle's or its subsidiaries is terminated for any reason other
than (1) Executive voluntarily terminating his employment, or (2)
as specifically permitted or delineated in this Agreement,
Executive shall be entitled to a lump sum severance payment equal
to one (1)-year's salary as then in effect. The lump sum payment
shall be made within thirty (30) days of said termination of
employment.
4. Salary, Other Compensation and Benefits. As compensation for
the services to be rendered by Executive to Brendle's pursuant to this
Agreement, Executive shall be paid the following compensation and shall
receive the following benefits:
a. Salary: Executive's annual salary shall be ONE HUNDRED
THREE THOUSAND AND 00/100 DOLLARS ($103,000.00), subject to change
from time to time as approved by the CEO and the Board. Such
salary shall be payable in accordance with Brendle's regular
payroll procedures. In the event Executive receives any periodic
payments representing lost compen- sation under any health,
disability, accident and/or salary continuation insurance policy,
the premiums for which have been paid by Brendle's, the amount of
salary that Executive would be entitled to receive from Brendle's
shall be decreased by the amount of such payments.
b. Expenses: Executive shall be entitled to reimbursement
for all reasonable travel and other business expenses incurred by
him in the performance of services under this Agreement upon
presentation of expense statements or vouchers and such other
supporting information as Brendle's may reasonably request.
c. Other Compensation: In the discretion of the CEO and/or
the Board, Executive may be entitled to receive additional
compensation in excess of Executive's salary.
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<PAGE>
Subject to the terms of any of Brendle's employee benefit plans,
agreements and arrangements, Executive shall be entitled to
participate in the major medical, hospitalization, vacation, sick
leave or disability, pension or retirement, profit-sharing,
stock-based incentive and other fringe benefit plans maintained by
Brendle's for the benefit of employees of Brendle's in like
positions of responsibility as Executive.
5. Covenant Not to Compete:
a. Covenant: During the term of this Agreement and for a
one (1)-year period after the Executive's employment with the
Corporation has been terminated by either party, the Executive will
not directly or indirectly:
(1) enter into or attempt to enter into the "Restricted
Business" (as defined below) in the states of North Carolina
or South Carolina or within a fifty (50) mile radius of any
Brendle's store location existing as of the effective date
hereof in any state other than North Carolina or South
Carolina;
(2) induce or attempt to persuade any former, current or
future employee, agent, manager, consultant, director, or
other participant in the Corporation's business to terminate
such employment or other relationship in order to enter into
any relationship with the Executive, any business organization
in which the Executive is a participant in any capacity
whatsoever, or any other business organization in competition
with the Corporation's business; or
(3) use contracts, proprietary information, trade
secrets, confidential information, customer lists, mailing
lists, goodwill, or other intangible property used or useful
in connection with the Corporation's business.
b. Indirect Activity: The term "indirectly," as used in
this paragraph 5, includes acting as a paid or unpaid director,
officer, agent, representative, employee of, or consultant to any
enterprise, or acting as a proprietor of an enterprise, or holding
any direct or indirect participation in any enterprise as an owner,
partner, limited partner, joint venturer, shareholder, or creditor.
c. Restricted Business: The term "Restricted Business"
means the retail sale of general hard goods merchandise and/or
catalogue-showroom sales of hard good merchandise. In addition,
the Executive may own not more than five percent of the outstanding
equity securities of a corporation that is engaged in the
Restricted Business if the equity securities
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<PAGE>
are listed for trading on a national stock exchange or are
registered under the Securities Exchange Act of 1934.
6. Confidential Information and Discoveries: Executive agrees
that all information of a technical or business nature such as know-how,
trade secrets, secret business information, plans, data, processes,
techniques, customer information, inventions, discoveries, formulae,
patterns, devices, etc., except such information and skills generally
known in Brendle's trade and business, information made public by
Brendle's or generally of a public nature, and knowledge of Executive
not constituting a trade secret (the "Confidential Information"),
acquired by Executive in the course of his employment by Brendle's, is a
valuable business property right of Brendle's. Executive agrees that
such Confidential Information, whether in written, verbal or model form,
shall not be disclosed to anyone outside the employment of Brendle's
without the express written authorization of Brendle's. The
Confidential Information shall include, without limitation, vendor lists
and records, customer lists, business policies, business methods,
financial information and any other similar material of any kind
relating to the business of Brendle's.
Any and all improvements, inventions, discoveries, formulae or
processes materially related to Brendle's business which Executive may
conceive or make during his regular working hours or otherwise shall be
the sole and exclusive property of Brendle's and Executive will disclose
the same to Brendle's and will, whenever requested by Brendle's to do so
(either during the term of this Agreement or thereafter), execute and
assign any and all applications, assignments and/or other instruments
and do all things which Brendle's may deem necessary or appropriate in
order to apply for, obtain, maintain, enforce and defend patents,
copyrights, trademarks or other forms of protection, or in order to
assign and convey or otherwise make available to Brendle's the sole and
exclusive right, title and interest in and to said improvements,
inventions, discoveries, formulae, processes, applications or patents.
No provision in this Agreement is intended to require assignment of
any of Executive's rights in an invention if no equipment, supplies,
facilities or trade secret information of Brendle's was used, the
invention was developed entirely on Executive's own time, the invention
does not materially relate to the business of Brendle's or to Brendle's
actual or demonstrably anticipated research or development, and does not
result from any work performed by Executive for Brendle's.
7. Enforcement: Both parties recognize that the services to be
rendered under this Agreement by Executive are special, unique and of
extraordinary character and that in the event of the breach by Executive
of any of the terms and conditions of this Agreement to be performed by
him, then Brendle's shall be entitled, if it so
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elects, to institute and prosecute proceedings in any court of competent
jurisdiction, either at law or in equity, to obtain damages for any
breach hereof, or to enjoin Executive from performing acts prohibited
hereby, but nothing herein contained shall be construed to prevent such
other remedy in the courts as Brendle's may elect to invoke.
8. Return of Documents and Equipment: Upon the termination of
this Agreement, Executive shall forthwith return and deliver to
Brendle's and shall not retain any original or copies of any books,
papers, price lists or vendor contracts, bids or customer lists, files,
books of account, notebooks and other documents, data relating to the
performance of services rendered by Executive hereunder or any
equipment, all of which materials are hereby agreed to be the property
of Brendle's.
9. Resignation upon Termination: In the event of termination of
this Agreement other than by death, Executive hereby agrees to resign
from all positions held with Brendle's, including without limitation,
any position as a director, officer, agent, trustee or consultant of
Brendle's or any affiliate of Brendle's.
10. Miscellaneous:
a. Notices: Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and if sent
by registered or certified mail to Executive or Brendle's at the
address set forth below their signatures at the end of this
Agreement or to such other address as they shall notify each other
in writing.
b. Assignment: This Agreement shall be binding upon and
inure to the benefit of Brendle's and its successors and assigns
and Executive and his personal representatives, heirs, legatees and
beneficiaries, but shall not be assignable by Executive.
c. Applicable Law: This Agreement shall be construed in
accordance with the laws of the State of North Carolina in every
respect, including without limitation, validity, interpretation and
performance.
d. Headings: Section headings and numbers herein are
included for convenience of reference only and this Agreement is
not to be construed with reference thereto. If there be any
conflict between such numbers and headings and the text hereof, the
text shall control.
e. Severability: If for any reason any portion of this
Agreement shall be held invalid or unenforceable, it is agreed that
the same shall not affect the validity or enforceability of the
remainder hereof.
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<PAGE>
f. Entire Agreement: This Agreement contains the entire
agreement of the parties with respect to its subject matter and
supersedes all previous agreements between the parties. No
director, officer, employee or representative of Brendle's has any
authority to make any representations or promises in connection
with this Agreement or the subject matter hereof that is not
contained herein, and Executive represents and warrants that he has
not executed this Agreement in reliance upon any such
representation or promise. No modification of this Agreement shall
be valid unless made in writing and signed by the parties hereto.
g. Waiver of Breach: The waiver by a party hereto of a
breach of any provision of this Agreement by the other party hereto
shall not operate or be construed as a waiver of any subsequent
breach by such party.
h. Counterparts: This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one agreement.
i. Implied Terms: The terms, conditions, obligations and
duties expressed in this Agreement are in addition to any duties
and obligations implied in law to an employment relationship except
where any expressed condition is contrary to the implied condition
and in which case, the express condition will apply and control.
j. Effective Date: For all purposes, this Agreement shall
be effective as of August 1, 1994.
IN WITNESS WHEREOF, Brendle's has caused this Agreement to be
executed by its duly authorized officer and Executive has signed this
Agreement all on the day and year first above written.
BRENDLE'S INCORPORATED
By: _________________________________
Douglas D. Brendle, President
and Chief Executive Officer
1919 N. Bridge Street Ext.
Elkin, North Carolina 28621
EXECUTIVE:
_______________________________(SEAL)
Address:-----------------------
-----------------------
<PAGE>
EXHIBIT 10.64
<PAGE>
RETIREMENT AND CONSULTING AGREEMENT
THIS AGREEMENT (the "Agreement") is made this the 1st day of March,
1995, between BRENDLE'S INCORPORATED (the "Company") and DOUGLAS D.
BRENDLE ("Brendle").
R E C I T A L S :
The services of Brendle in various managerial and executive
capacities for the Company, including Chairman of the Board, President
and Chief Executive Officer of the Company, and his experience and
knowledge of the affairs of the Company and his reputation and contacts
in the industry have been extremely valuable to the Company; and
The Company desires Brendle to remain as a Consultant to the
Company and wishes to receive the benefit of his knowledge, experience,
reputation and contacts for a period of five (5) years after his
retirement from the day-to-day executive leadership and management of
the Company; and
In recognition of his ongoing duties as a Consultant to the
Company, and in exchange for his agreement not to compete with the
Company for a five (5)-year period, it is right and appropriate that the
Company provide the following retirement and consulting compensation;
In consideration of the foregoing recitals, and the mutual
covenants herein contained, IT IS, THEREFORE, AGREED:
1. OBLIGATION OF THE COMPANY:
a. Compensation:
(1) Commencing on March 1, 1995, the Company shall pay
Brendle a yearly amount of TWO HUNDRED THOUSAND AND 00/100 DOLLARS
($200,000.00) per year for five (5) years, except as hereafter
noted. For the first twelve (12) months, this annual payment will
be paid in twelve (12) equal monthly installments of SIXTEEN
THOUSAND SIX HUNDRED SIXTY-SIX AND 67/100 DOLLARS ($16,666.67),
commencing March 1,
<PAGE>
1995. Commencing on March 1, 1996, the TWO HUNDRED THOUSAND AND
00/100 DOLLAR ($200,000.00) annual payment shall be made in a lump
sum payment of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) beginning
on March 1, 1996, and the said payments shall be made in a lump sum
payment of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) on March 1 of
each succeeding year during the remainder of the five-year term,
subject, however, to the following provisions: All such lump sum
retirement payments will be further conditioned upon the Company's
maintaining compliance with any and all of its financial covenants
or financial ratios agreed to by the Company with its lenders from
time to time. In the event that a lump sum payment would violate
any financial covenant or financial ratio with the Company's
lenders, such lump sum payment would be suspended and would be paid
in monthly installments of SIXTEEN THOUSAND SIX HUNDRED SIXTY-SIX
AND 67/100 DOLLARS ($16,666.67) until such time as the Company is
able to pay said lump sum payments and still meet its financial
covenant and financial ratio obligations. In the event that the
Company discovers that a lump-sum payment would violate any
financial covenant or financial ratio with the Company's lenders,
the Company will give written notice to Brendle of said fact, along
with a copy of the financial covenant or financial ratio which
would be violated by a lump-sum payment. All payments of the
aforesaid compensation and all other benefits hereunder shall
always be subject to Brendle being in compliance with this
Agreement.
(2) The Possible Acceleration of Payments. The
aforesaid retirement payments can be accelerated at Brendle's
option in the event of the sale of all or substantially all of the
Company's assets in an asset sale, as distinguished from a stock
sale or a merger or acquisition by another company of Brendle's in
a stock sale. In addition, Brendle could accelerate any payments
due hereunder in the event the Company is in default of any
material term of this Agreement. For this purpose the Company's
payments to Brendle hereunder shall not be in default so long as
they are mailed from the Company or otherwise delivered to Brendle
no later than ten (10) days after the due date under this
Agreement, to the last address that Brendle supplies to the Company
for this purpose.
(3) If Brendle dies prior to receiving all compensation
due him under this Agreement, the remaining compensation due will
be payable to his wife, Lydia U. Brendle, during her life, or to
the estate of the last to die of Brendle or Lydia U. Brendle. Upon
receipt of any key-man insurance proceeds on account of the death
of Brendle during the term of this Agreement, the Company shall use
such proceeds as shall be necessary to pay in full the
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<PAGE>
balance of any compensation due under this Paragraph 1.a.(3) of
this Agreement by the use of the said insurance proceeds.
b. Health and Life Insurance: The Company shall continue
coverage under the Company's health insurance plan(s) for Brendle and
his wife, Lydia U. Brendle, for the remainder of their respective lives.
The Company shall also continue the present life insurance policies and
benefits on the life of Brendle, during the life of Douglas D. Brendle.
c. Company Merchandise: The Company shall continue to allow
Brendle to purchase merchandise at any Company store at Company cost for
and during the lifetime of Brendle.
d. Reimbursement of Expenses: The Company shall reimburse
Brendle for all reasonable expenses, as determined by the President of
the Company, incurred by Brendle in connection with his service to the
Company requested by the President or the Board of Directors.
e. Office and Secretary: The Company shall pay Brendle an
allowance of FIVE THOUSAND DOLLARS ($5,000.00) per year for a total of
three (3) years from April 1, 1995, as an allowance to assist Brendle in
paying for office space, telephone, a secretary and the like to assist
him with his paper work, at some location outside of the Company
headquarters. Mr. Brendle will vacate his office at the Company on or
before April 1, 1995.
f. Chairman Emeritus: On February 2, 1995, the Board of
Directors named Brendle Chairman Emeritus. No additional compensation
is to be paid Brendle for being named Chairman Emeritus.
2. BENEFITS FORFEITURE: All of the benefits enumerated
above in Paragraph 1 shall be subject to forfeiture in the event that
Mr. Brendle takes any action which results in material harm to the
Company or interferes with the management of the Company in such a
manner so as to render ineffective the efforts of such management in
carrying out their day-to-day responsibilities. In the event that the
Board should determine that Brendle has interfered with management as
prohibited above, the Company shall give Brendle five (5) days' notice
to cease and desist, and then if Brendle does not cease and desist, the
Company can exercise its right of forfeiture. This notice and
opportunity to cure requirement shall only be useable once by Brendle,
and thereafter the Company can exercise its right of forfeiture upon
further occurrences of interference thereafter without notice or a right
to cure. The exercise of this right of forfeiture shall be in the
discretion of the Board of Directors
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upon receipt of substantial and substantially persuasive evidence that
Brendle has taken such action or interfered as set forth above. In
addition, Mr. Brendle will not compete with the Company and will not
solicit Company employees to enter into competition with the Company
during the time he is receiving benefits under this Agreement, as more
fully described on "Exhibit A" hereto. Nothing herein shall be construed
to limit the rights and duties of Brendle while serving as Director of
the Company.
3. DUTIES OF BRENDLE: During the period of five (5)
years from March 1, 1995, Brendle shall perform all duties delegated to
him by the Board of Directors as a Consultant to the Company which the
Board or the President of the Company shall request on an as-needed
basis, in order that the Company may continue to benefit from Brendle's
experience, knowledge, reputation and contacts in the industry. Brendle
shall be available to advise and counsel the Company's Officers and
Directors upon reasonable notice at all reasonable times by telephone,
mail or in person. However, Brendle shall not be required to devote a
substantial part of his time, and Brendle's failure to render such
services or to give such advice and counsel due to illness or other
incapacity shall not affect his right to receive compensation during the
term of this Agreement.
4. BINDING EFFECT: This Agreement shall be binding
upon and shall inure to the benefit of the Company and Brendle and their
respective heirs and legal representatives and, as to the Company, its
successors and assigns. In the event of the consolidation or merger of
the Company into or with another entity, or the sale of all or
substantially all of the Company's assets to another entity, such entity
shall assume this contract and become obligated to perform all of its
terms and conditions required of the Company to be performed.
5. ENTIRE AGREEMENT: This Agreement supersedes all
other agreements previously made between the parties relating to this
subject matter. There are no other understandings or agreements.
6. NOTICE: Any notice to be delivered under this
Agreement shall be given in writing and delivered, personally or by
certified mail, postage prepaid, addressed to the Company or Brendle at
their last known addresses.
7. NON-WAIVER: No delay or failure by either party to
exercise any right under this Agreement, and no partial or single
exercise of that right, shall constitute a waiver of that or any other
right.
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8. GOVERNING LAW: This Agreement shall be governed by
and construed in accordance with the laws of the State of North
Carolina.
9. SEVERABILITY: The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision hereof.
10. AMENDMENTS: This Agreement may be amended only by a
written agreement executed by the parties hereto.
IN WITNESS WHEREOF, Brendle has signed this Agreement, and Company
has caused this Agreement to be executed by its appropriate officers,
pursuant to a resolution adopted by the Board of Directors of the
Company.
"COMPANY"
BRENDLE'S INCORPORATED
ATTEST:
By: (Signature of J. M. Leish appears here)
(Signature of David R. Pungo appears here)
_____________________________ __________ President
__________ Secretary
(AFFIX CORPORATE SEAL)
"BRENDLE"
(Brendle's Incorporate
Corporate Seal appears here)
(Signature of Douglas D. Brendle appears here)(SEAL)
Douglas D. Brendle
5
<PAGE>
STATE OF NORTH CAROLINA - COUNTY OF ________________
I, a Notary Public of ___Yadkin____ County and State aforesaid, certify
that __David R. Renegar___ personally appeared before me this day and
acknowledged that she/he is the _____________ Secretary of BRENDLE'S
INCORPORATED, a North Carolina Corporation, and that by authority duly given
and as the act of the Corporation, the foregoing instrument was signed in its
name by its____________ President, sealed with its Corporate Seal and attested
by her/him as its _______________ Secretary.
WITNESS my hand and Notarial Seal or Stamp, this the _17_ day of
____April____, 1995.
My commission expires:
__(Signature of Patty W. Harrison appears here)__
__November 19, 1996____. Notary Public
NOTARIAL SEAL/STAMP:
(Stamp of Notarial Stamp appears here for Patty W. Harrison)
STATE OF NORTH CAROLINA - COUNTY OF ___Forsyth________
I, a Notary Public of __Stokes_____ County and State aforesaid, certify
that DOUGLAS D. BRENDLE personally appeared before me this day and acknowledged
the due execution of the foregoing instrument.
WITNESS my hand and Notarial Seal or Stamp, this the _12_ day of
___September 29__, 1995.
My commission expires:
___April____, 1995________. ___(Signature of Pat Mickey appears here)__
Notary Public
NOTARIAL SEAL/STAMP:
(Notarial Seal of Pat Mickey appears here)
<PAGE>
<PAGE>
"EXHIBIT A"
COVENANT NOT TO COMPETE
1. Covenant. During the period of March 1, 1995 through February
29, 2000 (the "Restricted Period") Brendle shall not directly or
indirectly:
(a) enter into or attempt to enter into the "Restricted
Business" (as defined below) anywhere in the states of North
Carolina or South Carolina, or within a fifty (50) mile radius of
any then existing Brendle's store location during said Restricted
Period in any state other than North Carolina or South Carolina;
(b) induce or attempt to persuade any former employee within
one (1) year of his or her termination of employment from the
Company, or any employee, agent, manager, consultant, director, or
other participant in the Company's business to terminate his or her
employment or other relationship with the Company in order to enter
into any relationship with Brendle, any business organization in
which Brendle is a participant in any capacity whatsoever, or any
other business organization in competition with the Company's
business; or
(c) use contracts, proprietary information, trade secrets,
confidential information, customer lists, mailing lists, goodwill,
or other intangible property used or useful in connection with the
Company's business, except as may be necessary for Brendle to
fulfill his obligation to consult for the Company.
2. Indirect Activity. The term "indirectly", as used in this
Covenant Not to Compete, includes acting as a paid or unpaid director,
officer, agent, representative, employee of, or consultant to any
enterprise, or acting as a proprietor of an enterprise, or holding any
direct or indirect participation in any enterprise as an owner, partner,
limited partner, joint venturer, shareholder, or creditor.
3. Restricted Business. The term "Restricted Business" means the
retail sale of general hard goods merchandise and/or catalogue-showroom
sales of hard goods merchandise; provided, however, that Brendle may own
not more than five percent (5%) of the outstanding equity securities of
a corporation that is engaged in the Restricted Business if the equity
securities are listed for trading on a national stock exchange or are
registered under the Securities Exchange Act of 1934.
<PAGE>
<PAGE>
EXHIBIT 10.65
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective the
27th day of February, 1995 by and between BRENDLE'S INCORPORATED,
a North Carolina corporation ("Brendle's"), and JOSEPH M. McLEISH,
(the "Executive").
W I T N E S S E T H:
WHEREAS, Executive was employed by Brendle's on February 27,
1995, and the parties desire to cause the terms and conditions of
such employment relationship to be reduced to writing as set forth
herein;
WHEREAS, Executive is a very valued Executive employee of
Brendle's, and the parties desire to continue such employment in
accordance with the terms and conditions set forth in this
Employment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto agree as
follows:
1. Employment and Duties. Brendle's hereby employs
Executive on the terms and conditions contained herein and
Executive accepts such employment with Brendle's in the office and
capacity of President and Chief Executive Officer, or in such other
position of the same or greater stature as Brendle's may direct or
desire, subject at all times to the control of the Brendle's Board
of Directors (the "Board"). Executive shall perform such other or
additional duties as shall reasonably be assigned to him from time
to time by the Board, which duties shall be those customarily
performed by a corporate officer having executive responsibilities
in a business similar to Brendle's.
2. Extent of Services. Executive shall devote his entire
attention and energy to the business and affairs of Brendle's on a
full-time basis and shall not be engaged in any other business
activity, whether or not such business activity is pursued for
gain, profit or other pecuniary advantage, unless the Board
otherwise consents. This provision shall not be construed as
preventing Executive from investing his assets in such form or
manner as will not require any services on the part of Executive in
the operation of the affairs of the companies in which such
investments are made. Executive shall use his best efforts, skills
and abilities to promote the interest of Brendle's, and, subject to
Paragraph 1, will perform such duties as are assigned to him by the
Board. Full-time, as used above, shall mean a minimum forty (40)
hour work week.
<PAGE>
3. Term. The term of this Agreement shall commence on
February 27, 1995, and shall thereafter continue until terminated
as herein provided. Unless this Agreement is earlier terminated in
accordance with the terms hereof, the term of this Agreement shall
be renewed for new two (2) year periods on January 1st of each
year, and shall be automatically extended by one additional
calendar quarter successively on the first day of each calendar
quarter thereafter. The term of this Agreement shall be subject to
the following conditions and limitations:
a. Termination by Brendle's for Cause or Material
Breach:
(1) Brendle's may terminate this Agreement at any
time for Cause or Material Breach hereof by Executive.
As used herein, "Cause" is defined to mean:
(i) any act of fraud, misappropriation,
embezzlement or like act of dishonesty;,
(ii) conviction of a felony involving moral
turpitude;
(iii) material failure to perform the services
and duties described herein (except in the case of
death or disability), material violation of any of
the provisions set forth herein, or material breach
of any fiduciary duty to Brendle's, if the material
failure, violation or breach unreasonably continues
after thirty (30) days written notice thereof is
given to Executive by Brendle's;
(iv) if Executive is guilty of gross
misconduct, misfeasance or malfeasance in
connection with his employment hereunder which
shall include, but not be limited to, excessive
absences from work, failure to follow reasonable
directives from the Board, neglect of duty,
negligence, disloyalty, dishonesty, intemperance,
immorality, disobedience of Brendle's rules,
disrespect, unnecessarily endangering, damaging or
destroying life or property, or similar conduct
injurious to Brendle's; or
(v) other behavior which adversely reflects
on the reputation of Brendle's such as substance
abuse, public intoxication, etc.
As used herein "Material Breach" is defined to
mean a material violation of any of the provisions and
conditions set forth herein. In the event of termination
for Cause or Material Breach by Executive, Brendle's
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<PAGE>
shall continue to pay Executive his then current salary
for thirty (30) days following the date of the delivery
of the notice of termination, which date shall be for all
purposes of this Agreement, the date of termination of
his employment.
b. Disability: In the event that Executive becomes
unable to perform any essential function of his job duties
with or without reasonable accommodation, Brendle's may
terminate his employment by furnishing him notice of such
termination, and Brendle's shall be obligated to pay Executive
his then existing salary on a monthly basis for a period of
six (6) months from the date that the Executive becomes
disabled as defined herein.
c. Death: If Executive shall die during the term of
this Agreement, thereupon his employment shall terminate, and
Brendle's shall pay to his estate his then current salary on
a monthly basis for a period of three (3) months commencing on
the first of the month following the date of his death and
shall also pay a pro-rated bonus in accordance with paragraph
4(b) below based on the performance of the Company for that
portion of the fiscal year preceding the date of death of
Executive.
d. Early Retirement: Brendle's currently does not have
an early retirement policy, and, therefore, no rights to early
retirement shall obtain for Executive.
e. Severance Payment: In the event Brendle's
terminates or attempts to terminate this Agreement or
Executive's employment with Brendle's or its subsidiaries is
terminated for any reason other than (1) Executive voluntarily
terminating his employment, or (2) as specifically permitted
or delineated in this Agreement, Executive shall be entitled
to a lump sum severance payment equal to two-years' salary as
then in effect. The lump sum payment shall be made within
sixty (60) days of said termination of employment.
Notwithstanding the foregoing, in the event the Company
consummates a transaction (whether by sale, merger or other
business combination) which results in a change in the
majority control of the Company, Executive shall have the
right, at his sole option, to continue his employment or to
terminate this Agreement and receive a lump sum severance
payment equal to two (2) years salary as in effect as of the
date of the consummation of the transaction giving rise to the
change in control. Any such election shall be made by
Executive by giving written notice to the Board of Directors,
at least thirty (30) days in advance of his anticipated
termination date.
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<PAGE>
4. Salary, Other Compensation and Benefits. As compensation
for the services to be rendered by Executive to Brendle's pursuant
to this Agreement, Executive shall be paid the following
compensation and shall receive the following benefits:
a. Salary: Executive's annual salary shall be ONE
HUNDRED SEVENTY-FIVE THOUSAND AND 00/100 DOLLARS
($175,000.00), subject to change from time to time as approved
by the Board. Such salary shall be payable in accordance with
Brendle's regular payroll procedures. In the event that
Brendle's adopts a plan whereby all of its executive officers
are required to take pro rata reductions in annual salary,
Executive's annual salary shall be reduced in accordance with
such plan. In the event Executive receives any periodic
payments representing lost compensation under any health,
disability, accident and/or salary continuation insurance
policy, the premiums for which have been paid by Brendle's,
the amount of salary that Executive would be entitled to
receive from Brendle's shall be decreased by the amount of
such payments.
b. Bonus: In addition to Executive's salary as
described above, for each of Brendle's fiscal years during the
term of this Agreement, Executive shall receive incentive
compensation based upon the formula set forth on "Exhibit A"
attached hereto and made a part hereof. Such bonus shall be
paid in cash in a lump sum no later than thirty (30) days
following the determination of the incentive compensation
amount. The formula incentive compensation amount as
determined pursuant to Exhibit A shall be subject to review
and modification for all fiscal years subsequent to the year
in which this Employment Agreement is entered. The Board of
Directors may make such modifications as they deem appropriate
and such modifications shall be in their sole discretion.
c. Relocation Expenses: Executive shall be entitled to
relocation expenses in an amount not to exceed $10,000.00.
Alternatively, the Company may pay a monthly amount to
Executive as a rental allowance which amount shall not exceed
$600.00 per month for a period of twelve (12) months.
d. Automobile Expenses: Executive shall be entitled to
receive an amount equal to $15,300.00, which shall be paid
within in thirty (30) days of the date of execution of this
Employment Agreement for use by Executive of his personal
automobile in furtherance of his duties as President and Chief
Executive Officer of Brendle's. There shall be no future
amounts paid for such use and Brendle's shall not provide a
Company car to Executive, however, Executive shall be entitled
to reimbursement at the rate of 27(cents) per mile (subject to
periodic adjustment by the Board) for automobile expenses
4
<PAGE>
incurred in the performance of his duties as President and
Chief Executive Officer.
e. Life Insurance: Brendle's shall provide Executive
with a policy of life insurance which provides for $500,000 of
coverage. Executive shall submit to any medical or other
examinations and execute and deliver any application or other
instrument reasonably necessary to effectuate the procurement
of such insurance.
f. Expenses: Executive shall be entitled to
reimbursement for all reasonable travel and other business
expenses incurred by him in the performance of services under
this Agreement upon presentation of expense statements or
vouchers and such other supporting information as Brendle's
may reasonably request.
g. Other Compensation: In the discretion of the Board,
Executive may be entitled to receive additional compensation
in excess of Executive's salary. Subject to the terms of any
of Brendle's employee benefit plans, agreements and
arrangements, Executive shall be entitled to participate in
the major medical, hospitalization, vacation, sick leave or
disability, pension or retirement, profit-sharing, stock-based
incentive and other fringe benefit plans maintained by
Brendle's for the benefit of employees of Brendle's in like
positions of responsibility as Executive.
5. Covenant Not to Compete:
a. Covenant: During the term of this Agreement and for
a two year period after the Executive's employment with the
Corporation has been terminated by either party, the Executive
will not directly or indirectly:
(1) enter into or attempt to enter into the
"Restricted Business" (as defined below) in the states of
North Carolina or South Carolina or within a fifty (50)
mile radius of any Brendle's store location existing as
of the effective date hereof or the date of termination
of employment in any state other than North Carolina or
South Carolina;
(2) induce or attempt to persuade any former,
current or future employee, agent, manager, consultant,
director, or other participant in the Corporation's
business to terminate such employment or other
relationship in order to enter into any relationship with
the Executive, any business organization in which the
Executive is a participant in any capacity whatsoever, or
any other business organization in competition with the
Corporation's business; or
5
<PAGE>
(3) use contracts, proprietary information, trade
secrets, confidential information, customer lists,
mailing lists, goodwill, or other intangible property
used or useful in connection with the Corporation's
business.
b. Indirect Activity: The term "indirectly," as used
in this paragraph 5, includes acting as a paid or unpaid
director, officer, agent, representative, employee of, or
consultant to any enterprise, or acting as a proprietor of an
enterprise, or holding any direct or indirect participation in
any enterprise as an owner, partner, limited partner, joint
venturer, shareholder, or creditor.
c. Restricted Business: The term "Restricted Business"
means the retail sale of general hard goods merchandise
and/or catalogue-showroom sales of hard good merchandise. In
addition, the Executive may own not more than five percent of
the outstanding equity securities of a corporation that is
engaged in the Restricted Business if the equity securities
are listed for trading on a national stock exchange or are
registered under the Securities Exchange Act of 1934.
6. Confidential Information and Discoveries: Executive
agrees that all information of a technical or business nature such
as know-how, trade secrets, secret business information, plans,
data, processes, techniques, customer information, inventions,
discoveries, formulae, patterns, devices, etc., except such
information and skills generally known in Brendle's trade and
business, information made public by Brendle's or generally of a
public nature, and knowledge of Executive not constituting a trade
secret (the "Confidential Information"), acquired by Executive in
the course of his employment by Brendle's, is a valuable business
property right of Brendle's. Executive agrees that such
Confidential Information, whether in written, verbal or model form,
shall not be disclosed to anyone outside the employment of
Brendle's without the express written authorization of Brendle's.
The Confidential Information shall include, without limitation,
vendor lists and records, customer lists, business policies,
business methods, financial information and any other similar
material of any kind relating to the business of Brendle's.
Any and all improvements, inventions, discoveries, formulae or
processes materially related to Brendle's business which Executive
may conceive or make during his regular working hours or otherwise
shall be the sole and exclusive property of Brendle's and Executive
will disclose the same to Brendle's and will, whenever requested by
Brendle's to do so (either during the term of this Agreement or
thereafter), execute and assign any and all applications,
assignments and/or other instruments and do all things which
Brendle's may deem necessary or appropriate in order to apply for,
obtain, maintain, enforce and defend patents, copyrights,
6
<PAGE>
trademarks or other forms of protection, or in order to assign and
convey or otherwise make available to Brendle's the sole and
exclusive right, title and interest in and to said improvements,
inventions, discoveries, formulae, processes, applications or
patents.
No provision in this Agreement is intended to require
assignment of any of Executive's rights in an invention if no
equipment, supplies, facilities or trade secret information of
Brendle's was used, the invention was developed entirely on
Executive's own time, the invention does not materially relate to
the business of Brendle's or to Brendle's actual or demonstrably
anticipated research or development, and does not result from any
work performed by Executive for Brendle's.
7. Enforcement: Both parties recognize that the services to
be rendered under this Agreement by Executive are special, unique
and of extraordinary character and that in the event of the breach
by Executive of any of the terms and conditions of this Agreement
to be performed by him, then Brendle's shall be entitled, if it so
elects, to institute and prosecute proceedings in any court of
competent jurisdiction, either at law or in equity, to obtain
damages for any breach hereof, or to enjoin Executive from
performing acts prohibited hereby, but nothing herein contained
shall be construed to prevent such other remedy in the courts as
Brendle's may elect to invoke.
8. Return of Documents and Equipment: Upon the termination
of this Agreement, Executive shall forthwith return and deliver to
Brendle's and shall not retain any original or copies of any books,
papers, price lists or vendor contracts, bids or customer lists,
files, books of account, notebooks and other documents, data
relating to the performance of services rendered by Executive
hereunder or any equipment, all of which materials are hereby
agreed to be the property of Brendle's.
9. Resignation upon Termination: In the event of
termination of this Agreement other than by death, Executive hereby
agrees to resign from all positions held with Brendle's, including
without limitation, any position as a director, officer, agent,
trustee or consultant of Brendle's or any affiliate of Brendle's.
10. Miscellaneous:
a. Notices: Any notice required or permitted to be
given under this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to Executive or
Brendle's at the address set forth below their signatures at
the end of this Agreement or to such other address as they
shall notify each other in writing.
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<PAGE>
b. Assignment: This Agreement shall be binding upon
and inure to the benefit of Brendle's and its successors and
assigns and Executive and his personal representatives, heirs,
legatees and beneficiaries, but shall not be assignable by
Executive.
c. Applicable Law: This Agreement shall be construed
in accordance with the laws of the State of North Carolina in
every respect, including without limitation, validity,
interpretation and performance.
d. Headings: Section headings and numbers herein are
included for convenience of reference only and this Agreement
is not to be construed with reference thereto. If there be
any conflict between such numbers and headings and the text
hereof, the text shall control.
e. Severability: If for any reason any portion of this
Agreement shall be held invalid or unenforceable, it is agreed
that the same shall not affect the validity or enforceability
of the remainder hereof.
f. Entire Agreement: This Agreement contains the
entire agreement of the parties with respect to its subject
matter and supersedes all previous agreements between the
parties. No director, officer, employee or representative of
Brendle's has any authority to make any representations or
promises in connection with this Agreement or the subject
matter hereof that is not contained herein, and Executive
represents and warrants that he has not executed this
Agreement in reliance upon any such representation or promise.
No modification of this Agreement shall be valid unless made
in writing and signed by the parties hereto.
g. Waiver of Breach: The waiver by a party hereto of
a breach of any provision of this Agreement by the other party
hereto shall not operate or be construed as a waiver of any
subsequent breach by such party.
h. Counterparts: This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one
agreement.
i. Implied Terms: The terms, conditions, obligations
and duties expressed in this Agreement are in addition to any
duties and obligations implied in law to an employment
relationship except where any expressed condition is contrary
to the implied condition and in which case, the express
condition will apply and control.
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j. Effective Date: For all purposes, this Agreement
shall be effective as of February 27, 1995.
IN WITNESS WHEREOF, Brendle's has caused this Agreement to be
executed by its duly authorized officer and Executive has signed
this Agreement all on the day and year first above written.
BRENDLE'S INCORPORATED EXECUTIVE:
<TABLE>
<S> <C>
By: By: (Signature of Joseph M. McLeish appears here) (SEAL)
(Signature of David R. Renegar V.P. appears here) Joseph M. McLeish
</TABLE>
9
EXHIBIT A
Executive shall be entitled to incentive compensation based on
the formula set forth below. This formula shall be subject to
review and modification annually by the Board of Directors.
Executive shall be entitled to incentive compensation for the
fiscal year ending February 2, 1996 ("Fiscal 1996") in an amount
which shall not be less than $25,000 nor more than $75,000 upon the
achievement of "planned profitability." Planned profitability
shall mean for Fiscal 1996 earnings before interest, depreciation
and amortization of $2,300,000 ("EBIDA Earnings"). Upon
determination by the Company's accountants of EBIDA Earnings of
$2,300,000 for Fiscal 1996, the Executive shall be entitled to
incentive compensation in the amount of $25,000. If the
determination of EBIDA Earnings is equal to or greater than Four
Million and 00/100 Dollars ($4,000,000.00), for Fiscal 1996, then
Executive shall be entitled to incentive compensation in the amount
of Seventy-Five Thousand and 00/100 Dollars ($75,000.00). If the
determination of EBIDA Earnings for Fiscal 1996 is greater than
$2,300,000 but less than Four Million and 00/100 Dollars
($4,000,000.00) then Executive shall be entitled to incentive
compensation in a pro rata amount between Twenty-five Thousand and
00/100 ($25,000.00) and Seventy-Five Thousand and 00/100 Dollars
($75,000.00) based on the relation to the amount of EBIDA Earnings
achieved between $2,300,000 and Four Million and 00/100 Dollars
($4,000,000.00).
Each year hereafter, the Board shall set the level of planned
profitability for the fiscal year, which will be reduced to
writing, attached hereto, and shall govern the Executive's
incentive compensation as hereinabove outlined.
<PAGE>
EXHIBIT 10.66
<PAGE>
EMPLOYMENT SEVERANCE AGREEMENT
THIS EMPLOYMENT SEVERANCE AGREEMENT entered into this 31st day
of March, 1995, by and between BRENDLE'S INCORPORATED, a North
Carolina corporation (hereinafter "Company") and EVERETT PURDY
(hereinafter "Executive"),
W I T N E S S E T H :
WHEREAS, Executive has resigned as an employee and officer of
the Company effective March 22, 1995, and that date is the
effective date of this Agreement; and
WHEREAS, Company and Executive desire to settle and agree as
to all matters and issues existing between them, as set forth
below;
NOW, THEREFORE, for and in consideration of the premises and
of the promises and covenants set forth below, the parties hereto
agree as follows:
1. Compensation. Company shall pay to Executive his regular
salary through March 31, 1995.
2. Severance payments. At such time as Executive has signed
this Agreement and the time periods for review and approval by
Executive have expired, Company will pay to Executive the sum of
$218,750.07, minus the tax and payroll deductions required by law,
by either of the following methods at the option of Executive:
(a) A lump sum of $218,750.07; or
(b) By monthly amounts equal to Executive's regular salary
through December 31, 1995, followed by a lump sum payment
on January 1, 1996, such monthly payments and lump sum to
amount to $218,750.07.
<PAGE>
3. Health insurance. Executive's coverage under Company's
group health insurance plan ceases on the effective date of this
Agreement. Company thereupon shall provide Executive with COBRA
election notice and forms customarily provided to departing
employees.
4. Moving expenses. Company shall reimburse Executive for
Executive's actual, out-of-pocket packing and moving expenses,
including specifically the expenses of the moving van to move his
furniture back to Executive's home in Florida, or to such other
place as Executive relocates, from Elkin, North Carolina. Company
shall pay the said reimbursement to Executive upon Executive's
providing Company with proper authentication of such expenses.
5. Benefits. After the effective date of this Agreement,
Executive shall not be entitled to receive from Company any
benefits of any nature whatsoever, except for the COBRA coverage
and moving expenses described above, and except for vested
retirement benefits, if any. Specifically, Executive's stock
options granted on or about December 1, 1994 terminated and became
null and void on March 22, 1995.
6. Conduct and confidentiality. Executive agrees to keep
confidential the terms of this Severance Agreement perpetually, and
not to discuss it with anyone other than Executive's family,
accountants, and attorneys. Executive agrees perpetually to
refrain from making false statements about the Company or the
Company's officers, directors, employees, or business. Executive
agrees perpetually to keep confidential all matters regarding the
Company and its officers, directors, employees, and business that
were confidential during the time of Employee's active employment
with the Company.
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7. Release. For the consideration described in this
Agreement, Executive hereby releases and discharges the Company and
its officers, directors, agents, employees, subsidiaries, parents,
successors, and assigns from any and all claims of any kind which
Executive or his heirs, executors, personal representatives,
agents, or assigns ever had, now have, or may have, regardless of
whether known or unknown, of any nature whatsoever, including but
not limited to claims arising from Executive's employment by the
Company or the termination thereof; all contracts, agreements,
claims, actions, demands, rights, benefits, damages, and suits at
law or in equity, of any nature or description whatsoever, arising
under common law or any local, state, or federal statute, law,
rule, or regulation, for any matter whatsoever, including but not
limited to claims for salary, wages, commissions, vacation pay,
sick leave, personal days, expense reimbursement, fees, dues,
premiums, benefits, profit-sharing, pension, stock options,
compensation, reimbursement, claims under the Age Discrimination in
Employment Act of 1967, as amended, claims under Title VII of the
Civil Rights Act of 1964, claims under the Employee Retirement
Income Security Act, claims for wrongful discharge, unjust
dismissal, or constructive discharge, claims for breach of any
alleged oral, written, or implied contract of employment, claims
for salary or severance payments, claims for benefits, claims for
attorneys' fees, and any other claim. Executive agrees that this
release does not constitute, and shall not be construed to
constitute, any admission by the Company of any violation of any
law or duty. Executive acknowledges that the consideration
described in this Agreement is sufficient to make this a binding
agreement between the Company and Executive. Executive expressly
waives his right to file, and promises that he will not file, any
claim, complaint, grievance, or charge against the Company or its
officers, directors, agents, employees, subsidiaries, parents,
successors, or assigns, with any federal, state, or local court,
agency, commission, office, committee, department, division or
investigative or adjudicatory body of any nature whatsoever,
3
<PAGE>
including but not limited to the federal courts, state courts, U.S.
Department of Labor, any state department of labor, and the Equal
Employment Opportunity Commission. Executive acknowledges that he
is signing this Agreement of his own free will, and that the
consideration described in this Agreement is adequate and
satisfactory, and that Executive has had adequate opportunity to
consult with legal counsel regarding this Release or has chosen not
to so consult, and that neither the Company nor any representative
thereof has made any representation to Executive regarding the
terms or effects of this release other than as expressly set forth
herein. Executive acknowledges that he has been given at least 21
days in which to consider signing this release. Executive
acknowledges that he has had the opportunity to consult with an
attorney of his choice concerning this release. Executive has
carefully read and fully understands all the provisions of this
release, and acknowledges that he is entering into this release
voluntarily. Executive acknowledges that the consideration he is
receiving in exchange for executing this release is of value to him
and is greater than that which he would be entitled to receive in
the absence of this release. Executive understands that he has the
right to revoke this release within seven (7) days of signing it,
and that this release shall not become effective or enforceable nor
shall the consideration recited in this Agreement be payable until
after expiration of this seven-day period.
8. Governing law. This Agreement shall be governed by and
construed in accordance with the law of the State of North
Carolina.
9. Superseding effect. In the event of any contradiction
between the terms of this Agreement and the terms of that certain
Employment Agreement between the parties dated July 25, 1994
(hereinafter "Prior Agreement"), the terms of this Agreement shall
control. Furthermore, this Agreement shall be deemed to supersede
the said Prior Agreement, except that paragraphs 5, 6, 7, and 8 of
4
<PAGE>
the said Prior Agreement shall remain in full force and effect, and
shall be deemed incorporated herein.
10. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be but one instrument, each
of which shall be an original, and any one of which shall be
admissible into evidence without any requirement that the
counterparts be so admitted.
IN WITNESS WHEREOF, the parties hereto have set their hands
and seals as of the day and year first above written.
BRENDLE'S INCORPORATED
By: __(Signature of J. M. Leish__ appears here)
Title: ________________________
__(Signature of Everette Purdy appears here)_(SEAL)
Everette Purdy
Signature notarized by
(Signature of Martha P. Clopton appears here)
Notary Public
March 27, 1995
(Notary Seal of Martha P. Clopton appears here)
EHIXIBIT 10.67
<PAGE>
BRENDLE'S INCORPORATED 1986 INCENTIVE STOCK OPTION PLAN
THREE-YEAR VESTING
STOCK OPTION GRANT AGREEMENT
FOR
JOSEPH M. McLEISH
Date of Grant: February 27, 1995
THIS STOCK OPTION GRANT AGREEMENT, dated as of the date of
grant first stated above (the "Date of Grant"), is delivered by
BRENDLE'S INCORPORATED, a North Carolina corporation ("Brendle's"
or "Company") to JOSEPH M. McLEISH (the "Grantee"), who is a key
employee of Brendle's.
WHEREAS, the Board of Directors of Brendle's (the "Board") on
January 31, 1986, adopted, with subsequent stockholder approval,
the Brendle's Incorporated 1986 Incentive Stock Option Plan (the
"Plan");
WHEREAS, the Plan provides for the granting of incentive stock
options by a Stock Option Committee, which is now the Compensation
Committee of the Board, (the "Committee"), to unaffiliated
directors, certain officers and key employees of Brendle's or any
subsidiary of Brendle's to purchase, or to exercise certain rights
with respect to, shares of Brendle's $1.00 par value common stock
(the "Stock"), in accordance with the terms and provisions thereof;
and
WHEREAS, the Committee considers the Grantee to be a person
who is eligible for a grant of incentive stock options under the
Plan, and has determined that it would be in the best interest of
Brendle's to grant the incentive stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Grant of Options. Brendle's hereby grants to the
Grantee, as of the Date of Grant, the right, privilege and option
to purchase up to 50,000 shares of the Stock at a price of sixty-two and
one-half cents ($.625) per share, which price is one
hundred percent (100%) of the fair market value of the Stock as of
the Date of Grant. Such option is hereinafter referred to as the
"Option" and the shares of Stock purchasable upon exercise of the
Option are hereinafter sometimes referred to as "Option Shares."
The option is intended by the parties hereto to be, and shall be
treated as, an Incentive Stock Option [as such term is defined
under Section 422 of the Internal Revenue Code of 1986 (the
"Code")].
<PAGE>
2. Schedule of Exercise of Option. The Grantee shall have
the right to exercise the Option granted herein above in accordance
with the following schedule:
<TABLE>
<CAPTION>
Cumulative Percentage of
Option Shares Exercisable: Earliest Date of Exercise:
<S> <C>
Thirty Percent (30%) First Anniversary of the
Date of Grant
Sixty Percent (60%) Second Anniversary of the
Date of Grant
One Hundred Percent (100%) Third Anniversary of the
Date of Grant
</TABLE>
EXPLANATORY NOTE: On and after the Second Anniversary of the Date
of Grant, the Grantee may exercise an additional 30% of the Option
Shares for a cumulative total of 60% of the Option Shares, and on
and after the Third Anniversary, the Grantee may exercise an
additional 40% of the Option Shares, for a cumulative total of 100%
of the Option Shares.
3. Termination of Option.
(a) The Option granted hereunder, to the extent any Option
Shares shall remain unexercised, shall terminate and become null
and void after the expiration of five (5) years from the Date of
Grant (said five-year period hereafter called the "Option Term").
(b) The Grantee may not transfer, assign, pledge or
hypothecate in any way all or any portion of the Option granted
hereunder, nor shall the Option granted hereunder be subject to
execution, attachment or similar legal process. Upon any attempt
so to transfer, assign, pledge, hypothecate or otherwise dispose of
all or any portion of the Option granted hereunder, or upon the
levy or any attachment or similar legal process upon such Option,
such Option, and any right or pledge conferred thereby, shall
immediately terminate and become null and void.
(c) Upon the occurrence of the Grantee's ceasing for any
reason to be employed by the Company (such occurrence being a
"termination of the Grantee's employment"), the Option, to the
extent not previously exercised, shall terminate and become null
and void immediately upon such termination of the Grantee's
employment, except in a case where the termination of the Grantee's
employment is by reason of retirement at Retirement Date (as such
term is defined in the Plan), disability or death.
Upon a termination of the Grantee's employment by reason of
retirement or disability, the Option may be exercised during the
following periods, but only to the extent that the Option was
2
<PAGE>
outstanding and exercisable on any such date of retirement or
disability: (ii) the one-year period following the date of such
termination of the Grantee's employment in the case of a disability
(within the meaning of Section 22(e)(3) of the Code), and (ii) the
three-month period following the date of such termination in the
case of retirement upon the attainment of his Retirement Date. In
no event, however, shall any such period extend beyond the Option
Term.
(d) In the event of the death of the Grantee, the Option may
be exercised by the person or persons to whom the Option is
transferred by will or by the laws of descent and distribution, but
only to the extent that the Option would otherwise have been
exercisable by the Grantee.
(e) A transfer of the Grantee's employment between Brendle's
and any subsidiary of Brendle's, or between any subsidiaries of
Brendle's shall not be deemed to be a termination of the Grantee's
employment.
(f) Whether a leave of absence shall constitute a termination
of employment shall be determined by the Committee, whose decision
shall be final and conclusive.
(g) Notwithstanding any other provisions set forth herein or
in the Plan, if the Grantee shall (i) commit any act of malfeasance
or wrongdoing affecting Brendle's or any subsidiary of Brendle's,
(ii) breach any covenant not to compete, or employment contract,
with Brendle's or any subsidiary of Brendle's or (iii) engage in
conduct that would warrant the Grantee's discharge for cause
(excluding general dissatisfaction with the performance of the
Grantee's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon Brendle's or any
subsidiary of Brendle's), any unexercised portion of the Option
shall immediately terminate and be void.
4. Exercise of Option.
(a) The Grantee may exercise his rights hereunder with
respect to all or any part of the Option then exercisable hereunder
by giving the Corporate Secretary of Brendle's written notice of
intent to exercise as provided in Paragraph 11 hereof. The notice
of exercise shall specify the number of Option Shares as to which
the Option is to be exercised and the date of exercise thereof,
which date shall be at least five days after the giving of such
notice unless an earlier time shall have been mutually agreed upon.
(b) Upon the exercise of an Option, full payment (in U.S.
Dollars) by the Grantee of the option price for the Option Shares
purchased shall be made on or before the exercise date specified in
the notice of exercise in cash, or by check, bank draft or money
order payable to the order of the Company, or, with the prior
3
<PAGE>
written consent of the Committee, in whole or in part through the
surrender of previously acquired shares of Stock at their fair
market value on the exercise date.
On the exercise date specified in the Grantee's notice or as
soon thereafter as is practicable, Brendle's shall cause to be
delivered to the Grantee, a certificate or certificates for the
Option Shares then being purchased (out of theretofore unissued
Stock) upon full payment for such Option Shares. The obligation of
Brendle's to deliver Stock shall, however, be subject to the
condition that if at any time the Committee shall determine in its
discretion that the listing, registration or qualification of the
Option or the Option Shares upon any securities exchange or under
any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the Option or the issuance or
purchase of Option Shares thereunder, the Option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
(c) If the Grantee fails to pay for any of the Option Shares
specified in such notice or fails to accept delivery thereof, the
Grantee's right to purchase such Option Shares may be terminated by
Brendle's. The date specified in the Grantee's notice as the date
of exercise shall be deemed the date of exercise of the Option,
provided that payment in full for the Option Shares to be purchased
upon such exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of Brendle's. In the
event of a reorganization, recapitalization, change of shares,
stock split, spin-off, stock dividend, reclassification,
subdivision or combination of shares, merger, consolidation, rights
offering, or any other change in the corporate structure or shares
of capital stock of Brendle's, the Committee shall make such
adjustment as it deems appropriate in the number and kind of Option
Shares available for purchase pursuant to the Option or in the
option price; provided, however, that no such adjustment shall give
the Grantee any additional benefits under the Option.
Upon the effective date of the dissolution or liquidation of
the Company, or of a reorganization, merger or consolidation of the
Company in which the Company is not the surviving corporation, the
Option granted hereunder shall terminate, unless provision is made
in writing by the Committee stating otherwise.
6. Fair Market Value. As used herein, the "fair market
value" of the Option Shares shall be the mean of the bid and asked
prices at which the Company's shares of common stock are quoted or
traded in the market in which the Stock generally has the greatest
trading volume (currently the shares are primarily traded on the
NASDAQ National Market System) on the applicable date of reference
4
<PAGE>
hereunder, or if there is no trading on such date, then the average
of such high and low prices on the last previous day on which
trading is reported.
7. No Rights of Stockholders. Neither the Grantee nor any
personal representative shall be, or shall have any of the rights
and privileges of, a stockholder of Brendle's with respect to any
Option Shares purchasable upon the exercise of the Option, in whole
or in part, prior to the date of exercise of the Option.
8. Non-Transferability of Option. During the Grantee's
lifetime, the Option hereunder shall be exercisable only by the
Grantee or any guardian or legal representative of the Grantee, and
the Option shall not be transferable by action, document or
operation of law, except, in case of the death of the Grantee, by
will or by the laws of descent and distribution, nor shall the
Option be subject to attachment, execution or other similar
process. In the event of (a) any attempt by the Grantee to
alienate, assign, pledge, hypothecate or otherwise dispose of the
Option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or
interest hereby conferred, Brendle's may terminate the Option by
notice to the Grantee and such Option shall thereupon become null
and void.
9. Employment Not Affected. The granting of the Option or
its exercise shall not be construed as granting to the Grantee any
right with respect to continuance of employment with Brendle's.
Except as may otherwise be limited by a further written agreement
between Brendle's and the Grantee, the right of Brendle's to
terminate at will the Grantee's employment with Brendle's at any
time (whether by dismissal, discharge, retirement or otherwise) is
specifically reserved by Brendle's as the employer and acknowledged
by the Grantee.
10. Amendment of Option. The terms of this Agreement may be
amended by the Board or the Committee at any time (i) if the Board
or the Committee determines, in its sole discretion, that amendment
is necessary or advisable in the light of any addition to or change
in the Internal Revenue Code of 1986 or in the regulations issued
thereunder, or any federal or state securities law or other law or
regulation, which change occurs after the Date of Grant and by its
terms applies to the Option; or (ii) other than in the
circumstances described in clause (i), with the consent of the
Grantee.
11. Notice. Any notice to Brendle's provided for in this
instrument shall be addressed to it in care of its Corporate
Secretary (currently, David R. Renegar) at its executive offices at
1919 N. Bridge Street Ext., Elkin, North Carolina 28621, and any
notice to the Grantee shall be addressed to the Grantee at the
current address then shown on the payroll records of Brendle's.
Any notice shall be deemed to be duly given if and when properly
addressed and posted by registered or certified mail, postage
prepaid.
5
<PAGE>
12. Incorporation of Plan by Reference. The Option is
granted pursuant to the terms of the Plan, the terms of which are
incorporated herein by reference, and the Option shall in all
respects be interpreted in accordance with the Plan. The Committee
shall interpret and construe the Plan and this instrument, and its
interpretations and determinations shall be conclusive and binding
on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or
thereunder.
13. Governing Law. The validity, construction,
interpretation and effect of this instrument shall exclusively be
governed by and determined in accordance with the law of the State
of North Carolina, except to the extent preempted by federal law,
which shall to that extent govern.
14. Value of Securities; No Representations, Warranties.
Brendle's makes no representations, warranties or affirmations as
to the price, continuing value, appreciation of, or future market
for, any of the Stock purchased pursuant to this Grant. Grantee
acknowledges that Brendle's has provided to him all information
pertinent to his exercise of this grant, and that he is fully
informed of all factors which he deems relevant to any decision
made with respect to this Grant.
IN WITNESS WHEREOF, Brendle's has caused its duly authorized
Officer to execute this Stock Option Grant Agreement, and to apply
the corporate seal hereto, and the Grantee has placed his or her
signature hereon, effective as of the Date of Grant.
BRENDLE'S INCORPORATED
By: _(Signature of David R. Renegar V.P. appears here)_
ACCEPTED AND AGREED TO:
_(Signature of Joseph M. McLeish appears here)_(Seal)
Joseph M. McLeish, Executive
EXHIBIT 10.68
<PAGE>
BRENDLE'S INCORPORATED 1986 INCENTIVE STOCK OPTION PLAN
THREE-YEAR VESTING
STOCK OPTION GRANT AGREEMENT
FOR
___________________________
Date of Grant: December 1, 1994
THIS STOCK OPTION GRANT AGREEMENT, dated as of the date of grant
first stated above (the "Date of Grant"), is delivered by BRENDLE'S
INCORPORATED, a North Carolina corporation ("Brendle's" or "Company") to
___________________ (the "Grantee"), who is a key employee of Brendle's.
WHEREAS, the Board of Directors of Brendle's (the "Board") on
January 31, 1986, adopted, with subsequent stockholder approval, the
Brendle's Incorporated 1986 Incentive Stock Option Plan (the "Plan");
WHEREAS, the Plan provides for the granting of incentive stock
options by a Stock Option Committee, which is now the Compensation
Committee of the Board, (the "Committee"), to unaffiliated directors,
certain officers and key employees of Brendle's or any subsidiary of
Brendle's to purchase, or to exercise certain rights with respect to,
shares of Brendle's $1.00 par value common stock (the "Stock"), in
accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers the Grantee to be a person who is
eligible for a grant of incentive stock options under the Plan, and has
determined that it would be in the best interest of Brendle's to grant
the incentive stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Grant of Options. Brendle's hereby grants to the Grantee, as
of the Date of Grant, the right, privilege and option to purchase up to
____________ shares of the Stock at a price of $0.625 (5/8 of $1) per
share, which price is one hundred percent (100%) of the fair market
value of the Stock as of the Date of Grant. Such option is hereinafter
referred to as the "Option" and the shares of Stock purchasable upon
exercise of the Option are hereinafter sometimes referred to as "Option
Shares." The option is intended by the parties hereto to be, and shall
be treated as, an Incentive Stock Option [as such term is defined under
Section 422 of the Internal Revenue Code of 1986 (the "Code")].
<PAGE>
2. Schedule of Exercise of Option. The Grantee shall have
the right to exercise the Option granted herein above in accordance
with the following schedule:
<TABLE>
<CAPTION>
Cumulative Percentage of
Option Shares Exercisable: Earliest Date of Exercise:
<S> <C>
Thirty Percent (30%) First Anniversary of the Date of Grant
Sixty Percent (60%) Second Anniversary of the Date of Grant
One Hundred Percent (100%) Third Anniversary of the Date of Grant
</TABLE>
EXPLANATORY NOTE: On and after the Second Anniversary of the Date
of Grant, the Grantee may exercise an additional 30% of the Option
Shares for a cumulative total of 60% of the Option Shares, and on
and after the Third Anniversary, the Grantee may exercise an
additional 40% of the Option Shares, for a cumulative total of 100%
of the Option Shares.
3. Termination of Option.
(a) The Option granted hereunder, to the extent any Option
Shares shall remain unexercised, shall terminate and become null
and void after the expiration of five (5) years from the Date of
Grant (said five-year period hereafter called the "Option Term").
(b) The Grantee may not transfer, assign, pledge or
hypothecate in any way all or any portion of the Option granted
hereunder, nor shall the Option granted hereunder be subject to
execution, attachment or similar legal process. Upon any attempt
so to transfer, assign, pledge, hypothecate or otherwise dispose of
all or any portion of the Option granted hereunder, or upon the
levy or any attachment or similar legal process upon such Option,
such Option, and any right or pledge conferred thereby, shall
immediately terminate and become null and void.
(c) Upon the occurrence of the Grantee's ceasing for any
reason to be employed by the Company (such occurrence being a
"termination of the Grantee's employment"), the Option, to the
extent not previously exercised, shall terminate and become null
and void immediately upon such termination of the Grantee's
employment, except in a case where the termination of the Grantee's
employment is by reason of retirement at Retirement Date (as such
term is defined in the Plan), disability or death.
2
<PAGE>
Upon a termination of the Grantee's employment by reason of
retirement or disability, the Option may be exercised during the
following periods, but only to the extent that the Option was
outstanding and exercisable on any such date of retirement or
disability: (ii) the one-year period following the date of such
termination of the Grantee's employment in the case of a disability
(within the meaning of Section 22(e)(3) of the Code), and (ii) the
three-month period following the date of such termination in the
case of retirement upon the attainment of his Retirement Date. In
no event, however, shall any such period extend beyond the Option
Term.
(d) In the event of the death of the Grantee, the Option may
be exercised by the person or persons to whom the Option is
transferred by will or by the laws of descent and distribution, but
only to the extent that the Option would otherwise have been
exercisable by the Grantee.
(e) A transfer of the Grantee's employment between Brendle's
and any subsidiary of Brendle's, or between any subsidiaries of
Brendle's shall not be deemed to be a termination of the Grantee's
employment.
(f) Whether a leave of absence shall constitute a termination
of employment shall be determined by the Committee, whose decision
shall be final and conclusive.
(g) Notwithstanding any other provisions set forth herein or
in the Plan, if the Grantee shall (i) commit any act of malfeasance
or wrongdoing affecting Brendle's or any subsidiary of Brendle's,
(ii) breach any covenant not to compete, or employment contract,
with Brendle's or any subsidiary of Brendle's or (iii) engage in
conduct that would warrant the Grantee's discharge for cause
(excluding general dissatisfaction with the performance of the
Grantee's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon Brendle's or any
subsidiary of Brendle's), any unexercised portion of the Option
shall immediately terminate and be void.
4. Exercise of Option.
(a) The Grantee may exercise his rights hereunder with
respect to all or any part of the Option then exercisable hereunder
by giving the Corporate Secretary of Brendle's written notice of
intent to exercise as provided in Paragraph 11 hereof. The notice
of exercise shall specify the number of Option Shares as to which
the Option is to be exercised and the date of exercise thereof,
which date shall be at least five days after the giving of such
notice unless an earlier time shall have been mutually agreed upon.
3
<PAGE>
(b) Upon the exercise of an Option, full payment (in U.S.
Dollars) by the Grantee of the option price for the Option Shares
purchased shall be made on or before the exercise date specified in
the notice of exercise in cash, or by check, bank draft or money
order payable to the order of the Company, or, with the prior
written consent of the Committee, in whole or in part through the
surrender of previously acquired shares of Stock at their fair
market value on the exercise date.
On the exercise date specified in the Grantee's notice or as
soon thereafter as is practicable, Brendle's shall cause to be
delivered to the Grantee, a certificate or certificates for the
Option Shares then being purchased (out of theretofore unissued
Stock) upon full payment for such Option Shares. The obligation of
Brendle's to deliver Stock shall, however, be subject to the
condition that if at any time the Committee shall determine in its
discretion that the listing, registration or qualification of the
Option or the Option Shares upon any securities exchange or under
any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the Option or the issuance or
purchase of Option Shares thereunder, the Option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
(c) If the Grantee fails to pay for any of the Option Shares
specified in such notice or fails to accept delivery thereof, the
Grantee's right to purchase such Option Shares may be terminated by
Brendle's. The date specified in the Grantee's notice as the date
of exercise shall be deemed the date of exercise of the Option,
provided that payment in full for the Option Shares to be purchased
upon such exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of Brendle's. In the
event of a reorganization, recapitalization, change of shares,
stock split, spin-off, stock dividend, reclassification,
subdivision or combination of shares, merger, consolidation, rights
offering, or any other change in the corporate structure or shares
of capital stock of Brendle's, the Committee shall make such
adjustment as it deems appropriate in the number and kind of Option
Shares available for purchase pursuant to the Option or in the
option price; provided, however, that no such adjustment shall give
the Grantee any additional benefits under the Option.
Upon the effective date of the dissolution or liquidation of
the Company, or of a reorganization, merger or consolidation of the
Company in which the Company is not the surviving corporation, the
Option granted hereunder shall terminate, unless provision is made
in writing by the Committee stating otherwise.
4
<PAGE>
6. Fair Market Value. As used herein, the "fair market
value" of the Option Shares shall be the mean of the bid and asked
prices at which the Company's shares of common stock are quoted or
traded in the market in which the Stock generally has the greatest
trading volume (currently the shares are primarily traded on the
NASDAQ National Market System) on the applicable date of reference
hereunder, or if there is no trading on such date, then the average
of such high and low prices on the last previous day on which
trading is reported.
7. No Rights of Stockholders. Neither the Grantee nor any
personal representative shall be, or shall have any of the rights
and privileges of, a stockholder of Brendle's with respect to any
Option Shares purchasable upon the exercise of the Option, in whole
or in part, prior to the date of exercise of the Option.
8. Non-Transferability of Option. During the Grantee's
lifetime, the Option hereunder shall be exercisable only by the
Grantee or any guardian or legal representative of the Grantee, and
the Option shall not be transferable by action, document or
operation of law, except, in case of the death of the Grantee, by
will or by the laws of descent and distribution, nor shall the
Option be subject to attachment, execution or other similar
process. In the event of (a) any attempt by the Grantee to
alienate, assign, pledge, hypothecate or otherwise dispose of the
Option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or
interest hereby conferred, Brendle's may terminate the Option by
notice to the Grantee and such Option shall thereupon become null
and void.
9. Employment Not Affected. The granting of the Option or
its exercise shall not be construed as granting to the Grantee any
right with respect to continuance of employment with Brendle's.
Except as may otherwise be limited by a further written agreement
between Brendle's and the Grantee, the right of Brendle's to
terminate at will the Grantee's employment with Brendle's at any
time (whether by dismissal, discharge, retirement or otherwise) is
specifically reserved by Brendle's as the employer and acknowledged
by the Grantee.
10. Amendment of Option. The terms of this Agreement may be
amended by the Board or the Committee at any time (i) if the Board
or the Committee determines, in its sole discretion, that amendment
is necessary or advisable in the light of any addition to or change
in the Internal Revenue Code of 1986 or in the regulations issued
thereunder, or any federal or state securities law or other law or
regulation, which change occurs after the Date of Grant and by its
terms applies to the Option; or (ii) other than in the
circumstances described in clause (i), with the consent of the
Grantee.
5
<PAGE>
11. Notice. Any notice to Brendle's provided for in this
instrument shall be addressed to it in care of its Corporate
Secretary (currently, David R. Renegar) at its executive offices at
1919 N. Bridge Street Ext., Elkin, North Carolina 28621, and any
notice to the Grantee shall be addressed to the Grantee at the
current address then shown on the payroll records of Brendle's.
Any notice shall be deemed to be duly given if and when properly
addressed and posted by registered or certified mail, postage
prepaid.
12. Incorporation of Plan by Reference. The Option is
granted pursuant to the terms of the Plan, the terms of which are
incorporated herein by reference, and the Option shall in all
respects be interpreted in accordance with the Plan. The Committee
shall interpret and construe the Plan and this instrument, and its
interpretations and determinations shall be conclusive and binding
on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or
thereunder.
13. Governing Law. The validity, construction,
interpretation and effect of this instrument shall exclusively be
governed by and determined in accordance with the law of the State of
North Carolina, except to the extent preempted by federal law, which
shall to that extent govern.
14. Value of Securities; No Representations, Warranties.
Brendle's makes no representations, warranties or affirmations as
to the price, continuing value, appreciation of, or future market
for, any of the Stock purchased pursuant to this Grant. Grantee
acknowledges that Brendle's has provided to him all information
pertinent to his exercise of this grant, and that he is fully
informed of all factors which he deems relevant to any decision
made with respect to this Grant.
IN WITNESS WHEREOF, Brendle's has caused its duly authorized
Officer to execute this Stock Option Grant Agreement, and to apply
the corporate seal hereto, and the Grantee has placed his or her
signature hereon, effective as of the Date of Grant.
BRENDLE'S INCORPORATED
By: ________________________________
ACCEPTED AND AGREED TO:
_______________________________(SEAL)
Signature of Employee
Printed/Typed Employee Name:
--------------------------------
EXHIBIT 10.69
<PAGE>
BRENDLE'S INCORPORATED 1990 STOCK OPTION PLAN
THREE-YEAR VESTING
STOCK OPTION GRANT AGREEMENT
FOR
___________________________
Date of Grant: December 1, 1994
THIS STOCK OPTION GRANT AGREEMENT, dated as of the date of
grant first stated above (the "Date of Grant"), is delivered by
BRENDLE'S INCORPORATED, a North Carolina corporation ("Brendle's"
or "Company") to ___________________ (the "Grantee"), who is a key
employee of Brendle's.
WHEREAS, the Board of Directors of Brendle's (the "Board") on
June 1, 1990, adopted, with subsequent stockholder approval, the
Brendle's Incorporated 1990 Stock Option Plan (the "Plan");
WHEREAS, the Plan provides for the granting of incentive stock
options by a Stock Option Committee, which is now the Compensation
Committee of the Board, (the "Committee"), to unaffiliated
directors, certain officers and key employees of Brendle's or any
subsidiary of Brendle's to purchase, or to exercise certain rights
with respect to, shares of Brendle's $1.00 par value common stock
(the "Stock"), in accordance with the terms and provisions thereof;
and
WHEREAS, the Committee considers the Grantee to be a person
who is eligible for a grant of incentive stock options under the
Plan, and has determined that it would be in the best interest of
Brendle's to grant the incentive stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Grant of Options. Brendle's hereby grants to the
Grantee, as of the Date of Grant, the right, privilege and option
to purchase up to ____________ shares of the Stock at a price of
$0.625 (5/8 of $1) per share, which price is one hundred percent
(100%) of the fair market value of the Stock as of the Date of
Grant. Such option is hereinafter referred to as the "Option" and
the shares of Stock purchasable upon exercise of the Option are
hereinafter sometimes referred to as "Option Shares." The option
is intended by the parties hereto to be, and shall be treated as,
an Incentive Stock Option [as such term is defined under
Section 422 of the Internal Revenue Code of 1986 (the "Code")].
<PAGE>
2. Schedule of Exercise of Option. The Grantee shall have
the right to exercise the Option granted herein above in accordance
with the following schedule:
<TABLE>
<CAPTION>
Cumulative Percentage of
Option Shares Exercisable: Earliest Date of Exercise:
<S> <C>
Thirty Percent (30%) First Anniversary of the Date of Grant
Sixty Percent (60%) Second Anniversary of the Date of Grant
One Hundred Percent (100%) Third Anniversary of the Date of Grant
</TABLE>
EXPLANATORY NOTE: On and after the Second Anniversary of the Date
of Grant, the Grantee may exercise an additional 30% of the Option
Shares for a cumulative total of 60% of the Option Shares, and on
and after the Third Anniversary, the Grantee may exercise an
additional 40% of the Option Shares, for a cumulative total of 100%
of the Option Shares.
3. Termination of Option.
(a) The Option granted hereunder, to the extent any Option
Shares shall remain unexercised, shall terminate and become null
and void after the expiration of five (5) years from the Date of
Grant (said five-year period hereafter called the "Option Term").
(b) The Grantee may not transfer, assign, pledge or
hypothecate in any way all or any portion of the Option granted
hereunder, nor shall the Option granted hereunder be subject to
execution, attachment or similar legal process. Upon any attempt
so to transfer, assign, pledge, hypothecate or otherwise dispose of
all or any portion of the Option granted hereunder, or upon the
levy or any attachment or similar legal process upon such Option,
such Option, and any right or pledge conferred thereby, shall
immediately terminate and become null and void.
(c) Upon the occurrence of the Grantee's ceasing for any
reason to be employed by the Company (such occurrence being a
"termination of the Grantee's employment"), the Option, to the
extent not previously exercised, shall terminate and become null
and void immediately upon such termination of the Grantee's
employment, except in a case where the termination of the Grantee's
employment is by reason of retirement at Retirement Date (as such
term is defined in the Plan), disability or death.
2
<PAGE>
Upon a termination of the Grantee's employment by reason of
retirement or disability, the Option may be exercised during the
following periods, but only to the extent that the Option was
outstanding and exercisable on any such date of retirement or
disability: (i) the one-year period following the date of such
termination of the Grantee's employment in the case of a disability
(within the meaning of Section 22(e)(3) of the Code), and (ii) the
three-month period following the date of such termination in the
case of retirement upon the attainment of his Retirement Date. In
no event, however, shall any such period extend beyond the Option
Term.
(d) In the event of the death of the Grantee, the Option may
be exercised by the person or persons to whom the Option is
transferred by will or by the laws of descent and distribution, but
only to the extent that the Option would otherwise have been
exercisable by the Grantee.
(e) A transfer of the Grantee's employment between Brendle's
and any subsidiary of Brendle's, or between any subsidiaries of
Brendle's shall not be deemed to be a termination of the Grantee's
employment.
(f) Whether a leave of absence shall constitute a termination
of employment shall be determined by the Committee, whose decision
shall be final and conclusive.
(g) Notwithstanding any other provisions set forth herein or
in the Plan, if the Grantee shall (i) commit any act of malfeasance
or wrongdoing affecting Brendle's or any subsidiary of Brendle's,
(ii) breach any covenant not to compete, or employment contract,
with Brendle's or any subsidiary of Brendle's or (iii) engage in
conduct that would warrant the Grantee's discharge for cause
(excluding general dissatisfaction with the performance of the
Grantee's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon Brendle's or any
subsidiary of Brendle's), any unexercised portion of the Option
shall immediately terminate and be void.
4. Exercise of Option.
(a) The Grantee may exercise his rights hereunder with
respect to all or any part of the Option then exercisable hereunder
by giving the Corporate Secretary of Brendle's written notice of
intent to exercise as provided in Paragraph 11 hereof. The notice
of exercise shall specify the number of Option Shares as to which
the Option is to be exercised and the date of exercise thereof,
which date shall be at least five days after the giving of such
notice unless an earlier time shall have been mutually agreed upon.
3
<PAGE>
(b) Upon the exercise of an Option, full payment (in U.S.
Dollars) by the Grantee of the option price for the Option Shares
purchased shall be made on or before the exercise date specified in
the notice of exercise in cash, or by check, bank draft or money
order payable to the order of the Company, or, with the prior
written consent of the Committee, in whole or in part through the
surrender of previously acquired shares of Stock at their fair
market value on the exercise date.
On the exercise date specified in the Grantee's notice or as
soon thereafter as is practicable, Brendle's shall cause to be
delivered to the Grantee, a certificate or certificates for the
Option Shares then being purchased (out of theretofore unissued
Stock) upon full payment for such Option Shares. The obligation of
Brendle's to deliver Stock shall, however, be subject to the
condition that if at any time the Committee shall determine in its
discretion that the listing, registration or qualification of the
Option or the Option Shares upon any securities exchange or under
any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the Option or the issuance or
purchase of Option Shares thereunder, the Option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
(c) If the Grantee fails to pay for any of the Option Shares
specified in such notice or fails to accept delivery thereof, the
Grantee's right to purchase such Option Shares may be terminated by
Brendle's. The date specified in the Grantee's notice as the date
of exercise shall be deemed the date of exercise of the Option,
provided that payment in full for the Option Shares to be purchased
upon such exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of Brendle's. In the
event of a reorganization, recapitalization, change of shares,
stock split, spin-off, stock dividend, reclassification,
subdivision or combination of shares, merger, consolidation, rights
offering, or any other change in the corporate structure or shares
of capital stock of Brendle's, the Committee shall make such
adjustment as it deems appropriate in the number and kind of Option
Shares available for purchase pursuant to the Option or in the
option price; provided, however, that no such adjustment shall give
the Grantee any additional benefits under the Option.
Upon the effective date of the dissolution or liquidation of
the Company, or of a reorganization, merger or consolidation of the
Company in which the Company is not the surviving corporation, the
Option granted hereunder shall terminate, unless provision is made
in writing by the Committee stating otherwise.
4
<PAGE>
6. Fair Market Value. As used herein, the "fair market
value" of the Option Shares shall be the mean of the bid and asked
prices at which the Company's shares of common stock are quoted or
traded in the market in which the Stock generally has the greatest
trading volume (currently the shares are primarily traded on the
NASDAQ National Market System) on the applicable date of reference
hereunder, or if there is no trading on such date, then the average
of such high and low prices on the last previous day on which
trading is reported.
7. No Rights of Stockholders. Neither the Grantee nor any
personal representative shall be, or shall have any of the rights
and privileges of, a stockholder of Brendle's with respect to any
Option Shares purchasable upon the exercise of the Option, in whole
or in part, prior to the date of exercise of the Option.
8. Non-Transferability of Option. During the Grantee's
lifetime, the Option hereunder shall be exercisable only by the
Grantee or any guardian or legal representative of the Grantee, and
the Option shall not be transferable by action, document or
operation of law, except, in case of the death of the Grantee, by
will or by the laws of descent and distribution, nor shall the
Option be subject to attachment, execution or other similar
process. In the event of (a) any attempt by the Grantee to
alienate, assign, pledge, hypothecate or otherwise dispose of the
Option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or
interest hereby conferred, Brendle's may terminate the Option by
notice to the Grantee and such Option shall thereupon become null
and void.
9. Employment Not Affected. The granting of the Option or
its exercise shall not be construed as granting to the Grantee any
right with respect to continuance of employment with Brendle's.
Except as may otherwise be limited by a further written agreement
between Brendle's and the Grantee, the right of Brendle's to
terminate at will the Grantee's employment with Brendle's at any
time (whether by dismissal, discharge, retirement or otherwise) is
specifically reserved by Brendle's as the employer and acknowledged
by the Grantee.
10. Amendment of Option. The terms of this Agreement may be
amended by the Board or the Committee at any time (i) if the Board
or the Committee determines, in its sole discretion, that amendment
is necessary or advisable in the light of any addition to or change
in the Internal Revenue Code of 1986 or in the regulations issued
thereunder, or any federal or state securities law or other law or
regulation, which change occurs after the Date of Grant and by its
terms applies to the Option; or (ii) other than in the
circumstances described in clause (i), with the consent of the
Grantee.
5
<PAGE>
11. Notice. Any notice to Brendle's provided for in this
instrument shall be addressed to it in care of its Corporate
Secretary (currently, David R. Renegar) at its executive offices at
1919 N. Bridge Street Ext., Elkin, North Carolina 28621, and any
notice to the Grantee shall be addressed to the Grantee at the
current address then shown on the payroll records of Brendle's.
Any notice shall be deemed to be duly given if and when properly
addressed and posted by registered or certified mail, postage
prepaid.
12. Incorporation of Plan by Reference. The Option is
granted pursuant to the terms of the Plan, the terms of which are
incorporated herein by reference, and the Option shall in all
respects be interpreted in accordance with the Plan. The Committee
shall interpret and construe the Plan and this instrument, and its
interpretations and determinations shall be conclusive and binding
on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or
thereunder.
13. Governing Law. The validity, construction,
interpretation and effect of this instrument shall exclusively be
governed by and determined in accordance with the law of the State
of North Carolina, except to the extent preempted by federal law,
which shall to that extent govern.
14. Value of Securities; No Representations, Warranties.
Brendle's makes no representations, warranties or affirmations as
to the price, continuing value, appreciation of, or future market
for, any of the Stock purchased pursuant to this Grant. Grantee
acknowledges that Brendle's has provided to him all information
pertinent to his exercise of this grant, and that he is fully
informed of all factors which he deems relevant to any decision
made with respect to this Grant.
IN WITNESS WHEREOF, Brendle's has caused its duly authorized
Officer to execute this Stock Option Grant Agreement, and to apply
the corporate seal hereto, and the Grantee has placed his or her
signature hereon, effective as of the Date of Grant.
BRENDLE'S INCORPORATED
By: ________________________________
ACCEPTED AND AGREED TO:
_______________________________(SEAL)
Signature of Employee
Printed/Typed Employee Name:
---------------------------------
6
EXHIBIT 10.70
<PAGE>
BRENDLE'S INCORPORATED 1986 INCENTIVE STOCK OPTION PLAN
TWO-YEAR VESTING
STOCK OPTION GRANT AGREEMENT
FOR
___________________________
Date of Grant: December 1, 1994
THIS STOCK OPTION GRANT AGREEMENT, dated as of the date of
grant first stated above (the "Date of Grant"), is delivered by
BRENDLE'S INCORPORATED, a North Carolina corporation ("Brendle's"
or "Company") to ___________________ (the "Grantee"), who is a key
employee of Brendle's.
WHEREAS, the Board of Directors of Brendle's (the "Board") on
January 31, 1986, adopted, with subsequent stockholder approval,
the Brendle's Incorporated 1986 Incentive Stock Option Plan (the
"Plan");
WHEREAS, the Plan provides for the granting of incentive stock
options by a Stock Option Committee, which is now the Compensation
Committee of the Board, (the "Committee"), to unaffiliated
directors, certain officers and key employees of Brendle's or any
subsidiary of Brendle's to purchase, or to exercise certain rights
with respect to, shares of Brendle's $1.00 par value common stock
(the "Stock"), in accordance with the terms and provisions thereof;
and
WHEREAS, the Committee considers the Grantee to be a person
who is eligible for a grant of incentive stock options under the
Plan, and has determined that it would be in the best interest of
Brendle's to grant the incentive stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Grant of Options. Brendle's hereby grants to the
Grantee, as of the Date of Grant, the right, privilege and option
to purchase up to ____________ shares of the Stock at a price of
$0.625 (5/8 of $1) per share, which price is one hundred percent
(100%) of the fair market value of the Stock as of the Date of
Grant. Such option is hereinafter referred to as the "Option" and
the shares of Stock purchasable upon exercise of the Option are
hereinafter sometimes referred to as "Option Shares." The option
is intended by the parties hereto to be, and shall be treated as,
an Incentive Stock Option [as such term is defined under
Section 422 of the Internal Revenue Code of 1986 (the "Code")].
<PAGE>
2. Schedule of Exercise of Option. The Grantee shall have
the right to exercise the Option granted herein above in accordance
with the following schedule:
<TABLE>
<CAPTION>
Percentage of
Option Shares Exercisable: Earliest Date of Exercise:
<S> <C>
Fifty Percent (50%) First Anniversary of the Date of Grant
One Hundred Percent (100%) Second Anniversary of the Date of Grant
</TABLE>
3. Termination of Option.
(a) The Option granted hereunder, to the extent any Option
Shares shall remain unexercised, shall terminate and become null
and void after the expiration of five (5) years from the Date of
Grant (said five-year period hereafter called the "Option Term").
(b) The Grantee maintains continuous employment with the
Company. In addition, the Grantee may not transfer, assign, pledge
or hypothecate in any way all or any portion of the Option granted
hereunder, nor shall the Option granted hereunder be subject to
execution, attachment or similar legal process. Upon any attempt
so to transfer, assign, pledge, hypothecate or otherwise dispose of
all or any portion of the Option granted hereunder, or upon the
levy or any attachment or similar legal process upon such Option,
such Option, and any right or pledge conferred thereby, shall
immediately terminate and become null and void.
(c) Upon the occurrence of the Grantee's ceasing for any
reason to be employed by the Company (such occurrence being a
"termination of the Grantee's employment"), the Option, to the
extent not previously exercised, shall terminate and become null
and void immediately upon such termination of the Grantee's
employment, except in a case where the termination of the Grantee's
employment is by reason of retirement at Retirement Date (as such
term is defined in the Plan), disability or death.
Upon a termination of the Grantee's employment by reason of
retirement or disability, the Option may be exercised during the
following periods, but only to the extent that the Option was
outstanding and exercisable on any such date of retirement or
disability: (i) the one-year period following the date of such
termination of the Grantee's employment in the case of a disability
(within the meaning of Section 22(e)(3) of the Code), and (ii) the
three-month period following the date of such termination in the
case of retirement upon the attainment of his Retirement Date. In
no event, however, shall any such period extend beyond the Option
Term.
2
<PAGE>
(d) In the event of the death of the Grantee, the Option may
be exercised by the person or persons to whom the Option is
transferred by will or by the laws of descent and distribution, but
only to the extent that the Option would otherwise have been
exercisable by the Grantee.
(e) A transfer of the Grantee's employment between Brendle's
and any subsidiary of Brendle's, or between any subsidiaries of
Brendle's shall not be deemed to be a termination of the Grantee's
employment.
(f) Whether a leave of absence shall constitute a termination
of employment shall be determined by the Committee, whose decision
shall be final and conclusive.
(g) Notwithstanding any other provisions set forth herein or
in the Plan, if the Grantee shall (i) commit any act of malfeasance
or wrongdoing affecting Brendle's or any subsidiary of Brendle's,
(ii) breach any covenant not to compete, or employment contract,
with Brendle's or any subsidiary of Brendle's or (iii) engage in
conduct that would warrant the Grantee's discharge for cause
(excluding general dissatisfaction with the performance of the
Grantee's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon Brendle's or any
subsidiary of Brendle's), any unexercised portion of the Option
shall immediately terminate and be void.
4. Exercise of Option.
(a) The Grantee may exercise his rights hereunder with
respect to all or any part of the Option then exercisable hereunder
by giving the Corporate Secretary of Brendle's written notice of
intent to exercise as provided in Paragraph 11 hereof. The notice
of exercise shall specify the number of Option Shares as to which
the Option is to be exercised and the date of exercise thereof,
which date shall be at least five days after the giving of such
notice unless an earlier time shall have been mutually agreed upon.
(b) Upon the exercise of an Option, full payment (in U.S.
Dollars) by the Grantee of the option price for the Option Shares
purchased shall be made on or before the exercise date specified in
the notice of exercise in cash, or by check, bank draft or money
order payable to the order of the Company, or, with the prior
written consent of the Committee, in whole or in part through the
surrender of previously acquired shares of Stock at their fair
market value on the exercise date.
3
<PAGE>
On the exercise date specified in the Grantee's notice or as
soon thereafter as is practicable, Brendle's shall cause to be
delivered to the Grantee, a certificate or certificates for the
Option Shares then being purchased (out of theretofore unissued
Stock) upon full payment for such Option Shares. The obligation of
Brendle's to deliver Stock shall, however, be subject to the
condition that if at any time the Committee shall determine in its
discretion that the listing, registration or qualification of the
Option or the Option Shares upon any securities exchange or under
any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the Option or the issuance or
purchase of Option Shares thereunder, the Option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
(c) If the Grantee fails to pay for any of the Option Shares
specified in such notice or fails to accept delivery thereof, the
Grantee's right to purchase such Option Shares may be terminated by
Brendle's. The date specified in the Grantee's notice as the date
of exercise shall be deemed the date of exercise of the Option,
provided that payment in full for the Option Shares to be purchased
upon such exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of Brendle's. In the
event of a reorganization, recapitalization, change of shares,
stock split, spin-off, stock dividend, reclassification,
subdivision or combination of shares, merger, consolidation, rights
offering, or any other change in the corporate structure or shares
of capital stock of Brendle's, the Committee shall make such
adjustment as it deems appropriate in the number and kind of Option
Shares available for purchase pursuant to the Option or in the
option price; provided, however, that no such adjustment shall give
the Grantee any additional benefits under the Option.
Upon the effective date of the dissolution or liquidation of
the Company, or of a reorganization, merger or consolidation of the
Company in which the Company is not the surviving corporation, the
Option granted hereunder shall terminate, unless provision is made
in writing by the Committee stating otherwise.
6. Fair Market Value. As used herein, the "fair market
value" of the Option Shares shall be the mean of the bid and asked
prices at which the Company's shares of common stock are quoted or
traded in the market in which the Stock generally has the greatest
trading volume (currently the shares are primarily traded on the
NASDAQ National Market System) on the applicable date of reference
hereunder, or if there is no trading on such date, then the average
of such high and low prices on the last previous day on which
trading is reported.
4
<PAGE>
7. No Rights of Stockholders. Neither the Grantee nor any
personal representative shall be, or shall have any of the rights
and privileges of, a stockholder of Brendle's with respect to any
Option Shares purchasable upon the exercise of the Option, in whole
or in part, prior to the date of exercise of the Option.
8. Non-Transferability of Option. During the Grantee's
lifetime, the Option hereunder shall be exercisable only by the
Grantee or any guardian or legal representative of the Grantee, and
the Option shall not be transferable by action, document or
operation of law, except, in case of the death of the Grantee, by
will or by the laws of descent and distribution, nor shall the
Option be subject to attachment, execution or other similar
process. In the event of (a) any attempt by the Grantee to
alienate, assign, pledge, hypothecate or otherwise dispose of the
Option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or
interest hereby conferred, Brendle's may terminate the Option by
notice to the Grantee and such Option shall thereupon become null
and void.
9. Employment Not Affected. The granting of the Option or
its exercise shall not be construed as granting to the Grantee any
right with respect to continuance of employment with Brendle's.
Except as may otherwise be limited by a further written agreement
between Brendle's and the Grantee, the right of Brendle's to
terminate at will the Grantee's employment with Brendle's at any
time (whether by dismissal, discharge, retirement or otherwise) is
specifically reserved by Brendle's as the employer and acknowledged
by the Grantee.
10. Amendment of Option. The terms of this Agreement may be
amended by the Board or the Committee at any time (i) if the Board
or the Committee determines, in its sole discretion, that amendment
is necessary or advisable in the light of any addition to or change
in the Internal Revenue Code of 1986 or in the regulations issued
thereunder, or any federal or state securities law or other law or
regulation, which change occurs after the Date of Grant and by its
terms applies to the Option; or (ii) other than in the
circumstances described in clause (i), with the consent of the
Grantee.
11. Notice. Any notice to Brendle's provided for in this
instrument shall be addressed to it in care of its Corporate
Secretary (currently, David R. Renegar) at its executive offices at
1919 N. Bridge Street Ext., Elkin, North Carolina 28621, and any
notice to the Grantee shall be addressed to the Grantee at the
current address then shown on the payroll records of Brendle's.
Any notice shall be deemed to be duly given if and when properly
addressed and posted by registered or certified mail, postage
prepaid.
5
<PAGE>
12. Incorporation of Plan by Reference. The Option is
granted pursuant to the terms of the Plan, the terms of which are
incorporated herein by reference, and the Option shall in all
respects be interpreted in accordance with the Plan. The Committee
shall interpret and construe the Plan and this instrument, and its
interpretations and determinations shall be conclusive and binding
on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or
thereunder.
13. Governing Law. The validity, construction,
interpretation and effect of this instrument shall exclusively be
governed by and determined in accordance with the law of the State
of North Carolina, except to the extent preempted by federal law,
which shall to that extent govern.
14. Value of Securities; No Representations, Warranties.
Brendle's makes no representations, warranties or affirmations as
to the price, continuing value, appreciation of, or future market
for, any of the Stock purchased pursuant to this Grant. Grantee
acknowledges that Brendle's has provided to him all information
pertinent to his exercise of this grant, and that he is fully
informed of all factors which he deems relevant to any decision
made with respect to this Grant.
IN WITNESS WHEREOF, Brendle's has caused its duly authorized
Officer to execute this Stock Option Grant Agreement, and to apply
the corporate seal hereto, and the Grantee has placed his or her
signature hereon, effective as of the Date of Grant.
BRENDLE'S INCORPORATED
By: ________________________________
ACCEPTED AND AGREED TO:
_______________________________(SEAL)
Signature of Employee
Printed/Typed Employee Name:
---------------------------------
6
1994-1995
ANNUAL REPORT
(Brendles Logo appears here)
<PAGE>
To the Shareholders of Brendle's Incorporated:
After emerging from Chapter 11 on April 29, 1994, Brendle's Incorporated
began the all-important task of rebuilding its customer base. Through
strong promotional and other advertising campaigns, the Company was able
to achieve a 5.7% growth in sales volume on same store sales during the
past fiscal year. Although these promotions were successful in
increasing customer traffic in our stores, they had a negative effect on
our gross margin. The Company achieved a gross margin of 25.6% this
past fiscal year compared to a gross margin of 26.8% a year ago. The
net effect of these reduced margins was that the Company had an
operating loss of approximately $432,000 compared to an operating profit
of $2.5 million the previous year. Although we are disappointed in
these final results, we are, at the same time, excited about this
comparable store sales increase. In future months, we will attempt to
leverage these increased sales with a heightened focus on higher margin
product categories.
The Company's net income, after interest, depreciation, restructuring
charges and extraordinary income (which includes $32.3 million of debt
forgiveness) was 22.0 million dollars compared to a loss of 19.7 million
dollars the previous year.
With the Chapter 11 proceedings successfully behind us, and the strong
support of our vendors and our primary lender, Foothill Capital
Corporation, the Brendle's organization is completely focused on
achieving our objectives in all areas of our business for the current
fiscal year. Some of our key objectives for this year are:
(bullet) continue our strong growth in our jewelry business which
achieved a same store sales increase of 10.6% over the
previous year and produces some of our highest gross margins.
(bullet) focus on improving under-performing categories through
improved merchandising and promotions.
(bullet) develop a program of special events to create more sales and
customer interest.
(bullet) evaluate opportunities for relocating stores in key markets.
These are all key elements to a successful year and many have already
been put in place.
We are also in the final stages of installing a new
merchandise/financial management system, the Richter system, which we
expect to be fully operational by June 15, 1995. This system includes
automatic replenishment, event planning and in-depth financial analysis
of all the components of our business. This will greatly aid our
merchants in controlling inventory and planning successful promotions.
1
<PAGE>
In addition, we are constantly looking for new product categories to
enhance our appeal to our customers. It is a very competitive
marketplace today, and we plan to be a leader in aggressive
merchandising and marketing. We are confident that our plans will help
us fulfill our goals of providing the best values to our customers,
opportunities for our employees, successful partnerships with our
vendors and returns for our stockholders.
On a personal note, I am very proud to be a part of the Brendle's
management team. We are a company with a powerful potential in the
marketplace. We are the leading fine jewelry retailer in North
Carolina. We offer the best values and one of the largest selections of
name brand small kitchen appliances, floor care, personal care, audio
products and many other categories. We plan to build on these strengths
to return this Company to profitability again. By focusing on a precise
execution of our management's key objectives, we believe we can achieve
our goals. Thank you for your continued support.
Sincerely,
Joseph M. McLeish, Jr.
President and Chief Executive Officer
2
<PAGE>
Selected Financial Data.
The following selected financial data of Brendle's at and for each year
on the five-year period ended January 28, 1995, have been extracted from
audited financial statements filed with the Securities and Exchange
Commission. The selected financial data should be read in conjunction
with Management's Discussion and Analysis and Brendle's consolidated
financial statements and the notes thereto.
(In thousands, except share, per share and ratios and rates data)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Revenues $166,520 $171,073 $235,090 $301,359 $311,001
Income (loss) before interest,
depreciation, amortization,
restructuring and taxes
(OPEARN) (432) 2,487 (3,216) 6,457 14,325
Net income (loss) 21,963 (19,619)(a) (19,899)(a) (26,374)(a) 1,242
Net income (loss) per share 1.88 (2.36) (2.45) (3.28) 0.15
RATIOS & RATES:
Gross margin to total revenues 25.62% 26.92% 28.16% 26.63% 27.21%
Selling, operating and
administrative expenses to
total revenues 25.88% 25.47% 29.53% 24.49% 22.61%
OPEARN to total revenues (.26%) 1.45% (1.37)% 2.14% 4.61%
Effective tax rate - - - (7)% 38%
Net income (loss) to total
revenues 13.19% (11.47)% (8.46)% (8.75)% 0.40%
Current ratio 2.10 0.93 0.91 1.32 1.30
Weighted average shares
outstanding 11,671 8,297 8,120 8,041 8,021
Number of shareholders 2,607 1,130 1,138 1,163 1,115
Number of stores 30 30 43 52 57
FINANCIAL POSITION:
Inventories $48,451 $54,133 $57,893 $78,757 $103,553
Working capital 27,506 (b) (b) 21,216 24,972
Total assets 62,128 107,563 147,487 136,591 166,628
Long-term obligations (c) 2,713 (b) (b) 14,973 9,557
Shareholders' equity 34,357 5,460 24,766 44,172 69,606
Book value per share 2.94 0.66 3.05 5.49 8.68
Sales per square foot of
selling space 187 187 160 185 212
</TABLE>
(a) Net income (loss) has been reduced/increased by $3,473,000,
$16,090,000, $4,572,000, and $20,350,000 as a result of the
provision for restructuring for the years ended January 28,
1995, January 29, 1994, January 30, 1993, and February 1, 1992,
respectively.
(b) Not applicable. The majority of the amounts comprising this
item have been reclassed to liabilities subject to compromise.
(c) Includes both long-term debt and capitalized lease obligations.
3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Comparison of Operations
Net sales for the fiscal year ended January 28, 1995 ("Fiscal
1995") were $166,278,000 compared to net sales of $170,345,000 for the
fiscal year ended January 29, 1994 ("Fiscal 1994"), a decrease of
$4,067,000, or 2.4%. This decrease in sales was primarily the result of
operating 13 fewer stores during the first four months of Fiscal 1995
compared to Fiscal 1994. This decrease was partially offset by a 5.7%
increase in sales for the 30 stores open a full year in both years. This
increase in the comparable store sales was primarily the result of a
planned increase in promotional activity designed to increase sales and
market share. These promotional activities included Senior Citizen
Days, VIP Nights, additional pages of advertising and increased
circulation. Net sales for Fiscal 1994 were $170,345,000 compared to
$233,889,000 for Fiscal 1993, a decrease of $63,544,000, or 27.2%. This
decrease in sales resulted primarily from operating fewer stores in
Fiscal 1994 partially offset by a 6.0% comparable stores sales increase
for the year.
The Company's business is a seasonal one with a significant portion
of its sales occurring in the fourth quarter of its fiscal year. Fourth
quarter revenues accounted for 45.1% of total revenues in Fiscal 1995,
compared to 42.5% of total revenues in Fiscal 1994 and 41.3% in Fiscal
1993.
Other income for Fiscal 1995, 1994 and 1993 was $242,000, $728,000
and $1,201,000, respectively. Fiscal 1995 other income included
miscellaneous receipts from sale of scrap materials., NSF check fees,
and other nonrecurring items. Fiscal 1994 Other Income included
nonrecurring items such as rental income from the distribution center
and prior-year bad debt recovery. Fiscal 1993 Other Income included
shelf allowances, proceeds from insurance recoveries and other
nonrecurring items. Interest on short-term investments which was
classified as other income in Fiscal 1993 was offset against
Reorganization expense in Fiscal 1994 in accordance with AICPA Statement
of Position 90-7 (Financial Reporting by Entities Reorganizing under the
Bankruptcy Code).
The Cost of Merchandise Sold in Fiscal 1995 was $123,851,000, or
$1,164,000 less than Fiscal 1994 primarily due to the sales decline
discussed above. The gross margin as a percentage of revenues for
Fiscal 1995 was 25.6% compared to 26.9% for Fiscal 1994. The decrease
in gross margin percentage was primarily the result of the increased
promotional activity and the continuing competitive retail environment
offset, partially, by an increase in the jewelry sales mix, which
typically has a higher gross margin percentage.
Selling, Operating and Administrative expenses ("SO & A") for
Fiscal 1995 were $43,101,000, compared to $43,571,000 for Fiscal 1994.
This decrease in SO & A is primarily the result of operating fewer
stores, offset by an increase in advertising expense. The
4
<PAGE>
increase in advertising expense is due to the increased promotional
activities and reduced vendor co-op recovery which was the result of
decreased purchase of inventory in Fiscal 1995 compared to Fiscal 1994.
SO & A expenses, as a percentage of revenues, were 25.9% and 25.5%,
respectively, for Fiscal 1995 and Fiscal 1994.
Depreciation and amortization for Fiscal 1995 and Fiscal 1994 was
$3,561,000 and $4,877,000, respectively. Expenses for fixed asset
depreciation and amortization are less for Fiscal 1995 because the
Company is operating fewer stores. Also, the Company no longer owns the
distribution center in Elkin, North Carolina, and certain other assets
have become fully depreciated.
Interest on capital leases for Fiscal 1995, Fiscal 1994 and Fiscal
1993 were $454,000, $756,000 and $1,199,000, respectively. No
additional capital leases have been signed during the three-year period
discussed, and all remaining capital leases are in the later years of
their term resulting in a book expense reduction.
Interest expense on debt other than capital leases was $2,484,000,
$383,000 and $3,728,000 for Fiscal 1995, 1994 and 1993, respectively.
The increase in interest expense is due to increased borrowings under
the Company $45 million Revolving Credit Facility and the rising
interest rates during the fiscal year. The borrowings increased
because, upon emerging from Chapter 11, the Company paid its creditors
approximately $48 million of which the Company had approximately $30
million on cash. The balance of the payments to creditors, as well as
the Company's working capital needs for Fiscal 1995, were funded from
the Company's $45 million Revolving Credit Facility. Fiscal 1994
interest reflected the fact that the Company discontinued accruing
interest on its interest-bearing, pre-petition debt obligations on the
petition date in accordance with the Bankruptcy Code and AICPA Statement
of Position 90-7 (Financial Reporting by Entities Reorganizing under the
Bankruptcy Code).
Reorganization costs for Fiscal 1995 are $3,473,000 compared to
$16,090,000 for Fiscal 1994. Reorganization costs for Fiscal 1995
include professional fees associated with the Chapter 11 Proceedings,
expenses for stores closed in prior years and employee severance costs.
The Reorganization costs for Fiscal 1994 primarily relate to the costs
associated with the closing of certain stores, including the write-off
of the remaining book value of assets, the loss on the sale of real
property, lease liabilities, employee severance costs, inventory,
liquidation, and professional fees incurred by the Company and the
Creditor's Committee.
Debt Forgiveness for Fiscal 1995 was $32,367,000. This amount
represents prepetition debt of $39,630,000 that was forgiven under the
Plan of Reorganization, reduced by $7,263,000, the ascribed value at the
date of issuance of 4,469,191 shares of stock issued to the Unsecured
Creditors per the Plan of Reorganization.
5
<PAGE>
Net income for Fiscal 1995 was $21,963,000, or $1.88 per share,
compared to a net loss for Fiscal 1994 and Fiscal 1993 of $19,619,000
and $19,899,000, or ($2.36) and ($2.45) per share, respectively. The
net income for Fiscal 1995 reflects reorganization costs of $3,473,000
and debt forgiveness of $32,367,000, both a result of the Company's
Chapter 11 Proceeding. For Fiscal 1995, the Company experienced an
Operating Loss (Net income before interest, taxes, depreciation,
restructuring costs and extraordinary items) of $432,000 compared to
Operating Income of $2,487,000 for Fiscal 1994. The loss was primarily
the result of increased promotional activities which produced lower
margins and which increased the Company's advertising expense. The
Fiscal 1994 net loss reflected reorganization costs from the Chapter 11
Proceeding and store closings of $16,090,000. The Fiscal 1993 loss
included a restructuring charge of $4,572,000 which was a result of the
effects of the Chapter 11 Proceeding on operations.
Liquidity and Capital Resources
The Company's cash balance at January 28, 1995 was $1.8 million
compared to $34.8 million at January 29, 1994. The decrease in the cash
balance was the result of the Company's substantial consummation of its
Plan of Reorganization which included making payments to creditors of
approximately $48 million. Those payments were funded from the cash on
hand of approximately $30 million with the balance from borrowings from
the Company's $45 million Revolving Credit Facility.
Merchandise inventories were $48.5 million at January 28, 1995,
compared to $54.1 million at January 29, 1994. The decline in
inventories is the result of a planned reduction in the number of units
kept in stock.
Current liabilities at January 28, 1995 were $25.1 million,
compared to $6.4 million at January 29, 1994. This increase in current
liabilities is due to increased accounts payable resulting from improved
vendor credit terms; the reclassification of the current portion of
capitalized lease obligations from liabilities subject to compromise to
current liabilities; and the increase in notes payable due to borrowings
against the Revolving Credit Facility to fund payments to creditors and
working capital needs.
"Liabilities Subject to Compromise," which represented the
pre-petition debt of the Company, had been settled as of January 28,
1995. "Liabilities Subject to Compromise" at January 29, 1994 were
$95.7 million and included $42.7 million of pre-petition debt borrowings
under credit agreements with lender banks; $1.6 million of debt
borrowings from related parties; and $51.4 million of pre-petition
liabilities for accounts payable and other liabilities.
On April 20, 1994, the Company received Bankruptcy Court Approval
for a five-year, $45 million Revolving Credit Facility which was used to
fund payments to creditors described above while the balance of the
facility may be used to fund working capital, inventory purchases,
capital expenditures, and other general corporate purposes. The $45
6
<PAGE>
million Revolving Credit Facility includes restrictions on capital
expenditures as well as standard covenants found in similar agreements.
These include two financial ratio covenants: (1) current ratio, and (2)
total liabilities to tangible net worth ratio. At January 28, 1995, the
Company was in compliance with all covenants.
Under the Revolving Credit Facility, the lender agrees to make
revolving loans and issue or guarantee letters of credit for the Company
in an amount not exceeding the lesser of the Borrowing Base (as defined
in the Loan Agreement), or $45 million. The Revolving Credit Facility
includes a sublimit of $10 million for documentary and stand-by letters
of credit.
The Revolving Credit Facility provides that each loan shall bear
interest at a rate of prime plus one and forty-four one hundredths
(1.44) percentage points. Interest on these loans shall be payable
monthly in arrears on the first day of each month. Also, under the
Revolving Credit Facility, the Company pays an unused line fee for an
amount equal to one-half of one percent (.50%) per annum on the unused
portion of the Revolving Credit Facility and a letter of credit fee
equal to two and one-half percent (2.5%) per annum on the average daily
balance of the aggregate undrawn letters of credit and letter of credit
guarantees outstanding during the immediately preceding month and
certain other fees. The Revolving Credit Facility also requires an
annual facility fee equal to one-half of one percent (.50%) of the
maximum amount of the facility payable on each anniversary of the
Facility closing date and a monthly servicing fee of $3,500 per month.
The Company also paid an initial, one-time fee of $450,000 in order to
establish the Revolving Credit Facility.
At January 28, 1995, the Company had borrowed $15,368,000 from the
Revolving Credit Facility and had outstanding $1,062,000 in open letters
of credit, for a total of $16,430,000. At January 28, 1995, the total
available under the Revolving Credit Facility based on the borrowing
base formula was $24,697,000.
The Company's capacity to continue as a going concern is dependent,
in part, on the Company's ability to obtain merchandise on a timely
basis from its vendors under favorable credit terms. Since the filing
of the Chapter 11 Proceeding, the Company's ability to obtain credit
through arrangements such as the Revolving Credit Facility, and vendor
credit lines has continued to improve and is at the highest level
experienced since the Chapter 11 filing. Management of the Company
believes that its ability to obtain credit should continue to improve
based on the acceptable performance of the Company.
In Fiscal 1995, the Company used approximately $536,000 for capital
expenditures. The Company anticipates capital expenditures for Fiscal
1996 of approximately $1,300,000, primarily for normal facility
maintenance and the implementation of the new fully integrated
merchandising and financial information system, including point-of-sale
equipment.
Management believes the Revolving Credit Facility, together with
the cash from operations and vendor credit, should be adequate to cover
working capital requirements and capital expenditures.
7
<PAGE>
Brendle's Incorporated
Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
January 28, January 29,
1995 1994
<S> <C> <C>
Assets
Current assets:
Cash and temporary cash investments (Note 2) $ 1,781 $ 34,774
Receivables (Note 3) 971 1,480
Merchandise inventories (Note 2) 48,451 54,133
Other current assets 1,361 970
Total current assets 52,564 91,357
Property and equipment, less accumulated depreciation
and amortization (Notes 2 and 4) 8,776 15,767
Other assets 788 439
$ 62,128 $ 107,563
Liabilities and Shareholders' Equity
Current liabilities:
Revolving credit facility (Note 7) $ 15,368 $ -
Accounts payable - trade 5,245 3,002
Current portion of capitalized lease obligations (Note 6) 1,241 -
Current portion of other long-term liabilities 139 -
Current portion of restructuring reserve (Note 5) 445 509
Other accrued liabilities 2,620 2,843
Total current liabilities 25,058 6,354
Capitalized lease obligations, less current portion (Note 6) 449 -
Restructuring reserve, less current portion (Note 5) 980 -
Other long-term liabilities 1,284 -
Liabilities subject to compromise (Notes 1 and 6) - 95,749
Total liabilities 27,771 102,103
Shareholders' equity:
Common stock, $1 par value, 20,000,000 shares
authorized, 12,758,717 shares issued and outstanding
at January 28, 1995 and 8,299,454 shares issued and
outstanding at January 29, 1994 12,759 8,299
Capital in excess of par value 20,896 18,112
Retained earnings (deficit) 702 (20,951)
Total shareholders' equity 34,357 5,460
$ 62,128 $ 107,563
</TABLE>
The accompanying Notes to Financial Statements are an integral
part of these statements.
8
<PAGE>
Brendle's Incorporated
Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal year ended
January 28, January 29, January 30,
1995 1994 1993
<S> <C> <C> <C>
Net sales $ 166,278 $ 170,345 $ 233,889
Other income 242 728 1,201
Total revenues 166,520 171,073 235,090
Costs and expenses:
Cost of merchandise sold 123,851 125,015 168,879
Selling, operating and
administrative expenses 43,101 43,571 69,427
Depreciation and amortization 3,561 4,877 7,184
Interest expense 2,484 383 3,728
Capitalized lease interest expense 454 756 1,199
Provision for restructuring (Note 5) 3,473 16,090 4,572
176,924 190,692 254,989
Loss before provision for income taxes
and extraordinary item (10,404) (19,619) (19,899)
Provision for income taxes (Note 9) - - -
Loss before extraordinary item (10,404) (19,619) (19,899)
Extraordinary item - gain from forgiveness
of debt (Note 1) 32,367 - -
Net income (loss) $ 21,963 $ (19,619) $ (19,899)
Net income (loss) per share: (Note 2)
Loss before extraordinary item $ (.89) $ (2.36) $ (2.45)
Extraordinary item - gain from forgiveness
of debt (Note 1) 2.77 - -
Net income (loss) per share $ 1.88 $ (2.36) $ (2.45)
Weighted average number of shares outstanding 11,671 8,297 8,120
</TABLE>
The accompanying Notes to Financial Statements are an integral
part of these statements.
9
<PAGE>
Brendle's Incorporated
Statements of Changes in Shareholders' Equity
(In thousands, except share data)
<TABLE>
<CAPTION>
Common Common Capital in Retained Total
Stock Stock Excess of Earnings Shareholders'
Shares Amount Par Value (Deficit) Equity
<S> <C> <C> <C> <C> <C>
Balance, February 1, 1992 8,053,702 $ 8,054 $ 17,816 $ 18,302 $ 44,172
Net loss - - - (19,899) (19,899)
Reclassification to other
deferred credit (Note 8) - - - (37) (37)
Issuance of stock 235,574 235 295 - 530
Balance, January 30, 1993 8,289,276 8,289 18,111 (1,634) 24,766
Net loss - - - (19,619) (19,619)
Reclassification from other
deferred credit (Note 8) - - - 302 302
Issuance of stock 10,178 10 1 - 11
Balance, January 29, 1994 8,299,454 8,299 18,112 (20,951) 5,460
Net income - - - 21,963 21,963
Reclassification from other
deferred credit (Note 8) - - - (310) (310)
Issuance of stock 4,469,701 4,470 2,793 - 7,263
Retirement of stock (10,438) (10) (9) - (19)
Balance, January 28, 1995 12,758,717 $12,759 $20,896 $ 702 $ 34,357
</TABLE>
The accompanying Notes to Financial Statements are an integral
part of these statements.
10
<PAGE>
Brendle's Incorporated
Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Fiscal year ended
January 28, January 29, January 30,
1995 1994 1993
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ 21,963 $ (19,619) $ (19,899)
Items not requiring (providing) cash:
Depreciation and amortization 3,561 4,877 7,184
Loss on sale of property and equipment 75 11,839 712
Restructuring reserve 916 (4,109) (6,239)
Extraordinary item - gain from forgiveness of debt (32,367) - -
Other - - (1,040)
Changes in assets and liabilities:
Accounts receivable 509 4,856 (2,246)
Income taxes refundable - - 2,851
Merchandise inventories 5,682 3,760 20,864
Other current assets (391) 4,664 (4,237)
Accounts payable and other liabilities 2,159 (4,278) 19,745
Cash provided by operating activities 2,107 1,990 17,695
Investing activities:
Additions to property and equipment (870) (823) (1,630)
Proceeds from sale of property and equipment 4,225 8,704 880
Other (659) 529 49
Cash provided (used) by investing activities 2,696 8,410 (701)
Financing activities:
Payment of liabilities subject to compromise (56,119) - -
Increase (decrease) in capitalized lease obligations 1,690 (1,356) (2,028)
Net borrowings on revolving credit facility 15,368 (10,875) 28,239
Increase (decrease) in other long-term liabilities 1,284 - (8,375)
Issuance of common stock - 11 530
Retirement of common stock (10) - -
Decrease in capital in excess of par value (9) - -
Cash (used) provided by financing activities (37,796) (12,220) 18,366
Net (decrease) increase in cash and temporary
cash investments (32,993) (1,820) 35,360
Cash and temporary cash investments
- beginning of year 34,774 36,594 1,234
Cash and temporary cash investments
- end of year $ 1,781 $ 34,774 $ 36,594
Interest paid during the year $ 2,547 $ 383 $ 3,746
Supplemental disclosure of non-cash financing activities:
During fiscal year 1995, the company issued 4,469,201 shares of common stock valued at $7,263,000 to creditors
under the terms of its Plan of Reorganization which resulted in an increase in capital in excess of par value of
$2,793,000.
</TABLE>
The accompanying Notes to Financial Statements are an integral
part of these statements.
11
<PAGE>
Brendle's Incorporated
Notes to Financial Statements
NOTE 1 - EMERGENCE FROM CHAPTER 11
On November 22, 1992 (the Petition Date), Brendle's Incorporated and its
primary operating subsidiary, Brendle's Stores, Inc., filed a voluntary
petition for relief under Chapter 11 of the Federal Bankruptcy Code in
the U.S. Bankruptcy Court for the Middle District of North Carolina (the
Bankruptcy Court). As of the Petition Date, actions to collect
prepetition indebtedness were stayed and other contractual obligations
could not be enforced against the Company. Certain prepetition
liabilities were approved by the Bankruptcy Court for payment in the
ordinary course of business.
The Bankruptcy Code allows a debtor to either assume or reject certain
executory contracts, subject to approval of the Bankruptcy Court.
Parties to contracts which are rejected are entitled to file claims for
losses or damages sustained as a result of the rejection. Claims that
resulted from contracts that management rejected were included within
liabilities subject to compromise. Liabilities subject to compromise
represent those liabilities and obligations whose disposition was
dependent upon the outcome of the Chapter 11 proceedings (See Note 6).
On December 23, 1993, the Bankruptcy Court confirmed the Company's plan
of reorganization (the "Plan") contingent upon the Company's obtaining
exit financing in order to fund payments to creditors under the Plan.
The Company obtained this reorganization revolving credit facility (the
"Credit Facility") for $45,000,000 from Foothill Capital Corporation on
April 21, 1994 (See Note 7). Interest will be paid monthly with the
facility expiring on April 29, 1999. As further discussed in Note 2, at
January 29, 1994, cash of $31,032,000 was provided by the Company to
fund a portion of the payments of secured and general unsecured,
undisputed claims. On April 29, 1994, the Company disbursed $45,382,000
in payment of secured and general unsecured claims. This payment was
funded through cash on hand and borrowings under the Credit Facility.
In addition on April 29, 1994, Brendle's Incorporated issued 4,469,201
shares of Brendle's Incorporated Common Stock to Arnold Zahn (the
"Escrow Agent"). These shares will be issued to creditors as the
remaining claim amounts are reconciled. As of January 28, 1995 there
were 357,094 shares remaining with the Escrow agent. See discussion of
specific provisions related to claim payments under "General Unsecured
Claims" below.
Extraordinary Gain
An extraordinary gain of $32,367,000 on the forgiveness of prepetition
debt was recorded during fiscal 1995. The extraordinary gain does not
reduce the Company's net operating loss carryforwards for income tax
purposes, and accordingly has no income tax effect. The extraordinary
gain has been included in the Company's results of operations for the
year ended January 28, 1995.
The federal income tax law generally limits the use of net operating
loss carryforwards in the event of a change in ownership of a company.
Further, such net operating loss carryforwards are generally reduced
where the debts of a company are reduced, and cancellation of
indebtedness income is realized. However, such reduction in net
operating loss carryforwards can be avoided where stock is issued to
creditors in a Chapter 11 proceeding in exchange for debt reduction.
12
<PAGE>
The limitation due to a change in ownership generally occurs when more
than 50% of the outstanding shares change hands in any three year
period. Complex rules govern the measurement of this 50% change. It is
management's view that no change in ownership which warrants the
limitation of net operating loss carryforwards has occurred as a result
of the Plan.
As a general rule the cancellation of debt requires a taxpayer to reduce
tax attributes to the extent of the cancellation of debt income. An
exception to the general rule provides a reduction in net operating loss
carryforwards can be avoided under income tax law where stock is issued
to creditors in a Chapter 11 proceeding in exchange for a debt
reduction. For this "stock for debt exception" to apply, among other
tests; 1) the stock issued must not be "nominal or token", 2) the stock
must not be redeemable, and 3) the distribution of shares must be fairly
proportionate to the amount of debt reduction for each creditor. It is
the Company's view that these tests are met, and that the issuance of
Common Stock to creditors called for by the Plan will have the result of
preventing any reduction of the net operating loss carryforwards of the
Company.
The Plan provided for the following:
Secured Claims
The Bank Group received the sum of $16,000,000 less all amounts paid to
the Bank Group by the Company subsequent to July 8, 1993 in full and
complete satisfaction of the allowed secured portion of their claim.
The Brenco and Douglas D. Brendle secured claims were treated similarly,
receiving a recovery in the same proportion as the Bank Group's
recovery. The balance of the Bank Group claim, approximately
$35,000,000 was treated as a general unsecured claim.
General Unsecured Claims
Holders of unsecured claims received the following for their claims in
accordance with the Plan (a) the claim-holder's pro rata share of a
total distribution to all general unsecured claim holders of 35% of the
issued and outstanding Common Stock of the reorganized Company; and (b)
the opportunity to elect one of the following options: (i) a cash
payment equal to 52% of the amount of the general unsecured claim ("the
cash option"); or (ii) a reorganization note in a principal amount equal
to 80% of the general unsecured claim, bearing interest at the rate of
8% per annum and payable over ten years ("the note option").
During the balloting, all of the holders of unsecured claims elected the
cash option with the exception of holders of approximately $161,000 in
unsecured claims.
Common Stock
The holders of the outstanding shares of the Company's existing Common
Stock retained their stock and are entitled to all the rights and
privileges of shareholders.
13
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The Company's consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and
the payment of liabilities in the ordinary course of business. The
continued viability of the Company subsequent to Chapter 11 is dependent
upon, among other factors, the ability to generate sufficient cash from
operations and financing sources to meet obligations. The consolidated
financial statements do not include any adjustments or reclassifications
that might be necessary should the Company be unable to continue as a
going concern.
Basis of consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. During fiscal 1995, all subsidiaries of
Brendle's Incorporated were merged into the parent company. The merger
of the subsidiaries had no financial statement impact since all
intercompany balances and transactions are eliminated in consolidation.
Cash and temporary cash investments
Temporary cash investments are defined as short-term investments having
an original maturity of three months or less. Cash at January 29, 1994
included $31,032,000, of restricted cash related to the bankruptcy
proceedings. There was no such restricted cash at January 28, 1995.
Merchandise inventories
Merchandise inventories are stated at the lower of cost or market, with
cost being determined by the last-in, first-out (LIFO) method. The
stated LIFO value of merchandise inventories approximates replacement
cost.
Property and equipment
Property and equipment are stated at cost. Expenditures for maintenance
and repairs which do not improve or extend the life of an asset are
charged to expense as incurred. Major renewals and betterments are
capitalized. Upon retirement or sale of an asset, its cost and related
accumulated depreciation or amortization are removed from the property
accounts and any gain or loss is recorded as income or expense.
Depreciation and amortization of property and equipment owned or leased
under capital leases are provided on the straight-line method over their
estimated useful lives.
14
<PAGE>
Net income (loss) per share
Net income or loss per share is computed using the weighted average
number of common shares outstanding during each period.
Fair value of financial instruments
In December 1991, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments" (SFAS 107). SFAS 107 is effective
for the Company's financial statements issued subsequent to December 15,
1995.
Income taxes
Income taxes are provided based upon income reported for financial
statement purposes. See discussion of deferred income taxes in Note 9.
Issuance of stock
During fiscal 1995, 4,469,701 shares were issued to the Company's
creditors in accordance with the plan of reorganization. In fiscal
1994, 12,378 shares were issued to the Company's defined contribution
retirement savings plan, a voluntary compensation deferral plan under
Section 401(k) of the Internal Revenue Code. See further discussion in
Note 10.
Reclassifications
Certain prior year amounts have been reclassified to conform with
current year classification.
NOTE 3 - RECEIVABLES
Receivables consist of the following:
January 28, January 29,
(In thousands) 1995 1994
Customer $ 127 $ 131
Advertising rebates 242 281
Other 602 1,068
Total $ 971 $ 1,480
15
<PAGE>
NOTE 4 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Estimated January 28, January 29,
(In thousands) useful life 1995 1994
<S> <C> <C> <C>
Land and improvements $ 434 $ 1,666
Buildings:
Capitalized leases 10 to 25 years 10,703 10,703
Owned 19 to 25 years 1,818 5,379
12,521 16,082
Property and equipment:
Furniture, fixtures and equipment 5 to 10 years 23,590 23,570
Leasehold improvements 10 years 9,666 9,380
Transportation equipment 3 to 7 years 681 691
Construction in progress - 334 141
34,271 33,782
47,226 51,530
Less - Accumulated depreciation
and amortization 38,450 35,763
$ 8,776 $ 15,767
</TABLE>
Accumulated depreciation and amortization includes $10,112,000 at
January 28, 1995 and $9,562,000 at January 29, 1994 relating to capital
leases. The charge to operations resulting from amortization of capital
leases is included in depreciation and amortization expense in the
consolidated statements of operations.
NOTE 5 - RESTRUCTURING CHARGES
During fiscal 1995, the Company recorded charges of $3,473,000 for
restructuring. These charges are comprised of professional fees,
severance packages for certain employees which left as a result of the
Company's reorganization and other costs associated with the completion
of the Chapter 11 proceedings.
Unpaid restructuring costs related to this reorganization were
$1,425,000 and $4,628,000 at January 28, 1995 and January 29, 1994,
respectively. Of these costs at January 29, 1994, $4,119,000 related to
leases for closed stores and were classified as liabilities subject to
compromise.
16
<PAGE>
NOTE 6 - LIABILITIES SUBJECT TO COMPROMISE AND CONTINGENCIES
At January 29, 1994, liabilities subject to compromise included
substantially all of the current and noncurrent liabilities of the
Company as of the Petition Date. As discussed further in Note 1,
prepetition liabilities, including the maturity of debt obligations,
were stayed while the Company continued to operate. Certain prepetition
obligations were secured by both real and personal prepetition property
of the Company; however, these obligations were recorded as liabilities
subject to compromise as the ultimate adequacy of security for any
secured prepetition debt could not be determined until a plan of
reorganization was confirmed.
Liabilities subject to compromise are summarized as follows:
January 29,
(In thousands) 1994
Revolving credit facility from banks $ 32,722
Term loan from banks 10,029
Notes payable to affiliated parties 1,613
Capitalized lease obligations 4,657
Restructuring expenses 4,119
Accounts payable and other liabilities 42,609
Total $ 95,749
In accordance with the American Institute of Certified Public
Accountants' Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code," interest on
secured prepetition obligations after the Petition Date ceased accruing
as the outstanding debt and accrued interest exceeded the estimated fair
value of the collateral. Interest on the unsecured debt also ceased
accruing on the Petition Date. Interest accrued on prepetition secured
debt through the Petition Date was $257,000. While future debt service
and related interest expense could not be determined before conclusion
of the reorganization period, had interest been accrued on all debt
under prefiling terms and conditions, interest expense would have
increased by approximately $853,000 and $4,225,000 in fiscal 1995 and
fiscal 1994, respectively, and the gain from forgiveness of debt would
be increased by a corresponding amount.
17
<PAGE>
Loans payable to banks
In October 1991, the Company obtained a revolving credit facility for up
to $49,000,000 from its primary lenders. In February 1992, the facility
was amended and extended through April 1993. Under the amended agreement
the facility was seasonally adjusted with a maximum amount of
$44,000,000. The revolving credit facility was to bear interest at the
lender banks' prime rate plus two percent with step-downs to prime plus
one percent based on debt reduction. There was $32,722,000 outstanding
under this agreement at January 29, 1994. No amounts were outstanding
at January 28, 1995. In addition, there was no accrued interest on this
agreement at January 28, 1995 and January 29, 1994.
In October 1991, the Company obtained a $20,000,000 term loan from its
primary lenders. In February 1992, the term loan was amended, resulting
in a reduction to $13,000,000 and an extension to December 31, 1993.
The payment schedule for the term loan required a $3,000,000 payment on
September 30, 1992, a $4,000,000 payment on July 31, 1993 and a final
payment of $2,982,000 on December 31, 1993. The term note was to bear
interest at the lenders' prime rate plus two percent with step-downs to
prime plus one percent based on debt reduction. There was $10,029,000
outstanding under this agreement at January 29, 1994. No amounts were
outstanding at January 28, 1995. In addition, there was no accrued
interest on this agreement at January 28, 1995 and January 29, 1994.
The revolving credit facility and term loan were secured by
substantially all the assets of the Company, excluding inventory, prior
to the Chapter 11 filing with the Bankruptcy Court. The amended
agreements contained covenants which stipulated minimum net worth levels
and financial ratios.
Notes payable to affiliated parties
In October 1991, the Company entered into two $1,000,000 note payable
agreements with an affiliate entity owned by executive officers of the
Company and with an executive officer of the Company. The notes had a
stated interest rate of prime plus two percent payable monthly and a
maturity date of December 31, 1993. There was $1,613,000 outstanding
under these agreements at January 29, 1994. No amounts were outstanding
at January 28, 1995. In addition, there was no accrued interest on
these agreements at January 28, 1995 and January 29, 1994. These notes
were secured by substantially all assets of the Company, excluding
inventory, prior to the Chapter 11 filing with the Bankruptcy Court.
18
<PAGE>
Capital lease obligations
The Company has capital and operating lease commitments for stores,
equipment and its corporate headquarters facility expiring on varying
dates from fiscal 1996 to 2007. The leases generally include renewal
options and rental escalation clauses. Future minimum lease
commitments, including leases with affiliates (See Note 11) at January
28, 1995 are as follows:
<TABLE>
<CAPTION>
(In thousands) Capitalized Operating
Fiscal year leases leases
<S> <C> <C>
1996 $ 1,410 $ 3,231
1997 235 2,859
1998 226 2,609
1999 99 1,834
2000 - 1,507
Thereafter - 3,333
Total minimum lease payments 1,970 $ 15,373
Less - Amount representing interest 280
Present value of capitalized lease obligations 1,690
Less - Current maturities 1,241
Long-term capitalized lease obligations $ 449
</TABLE>
NOTE 7 - REVOLVING CREDIT FACILITY
As discussed in Note 1, on April 21, 1994, the Company entered into a
five year, $45,000,000 revolving credit facility. The Credit Facility
was used to fund the negotiated Plan payments to creditors, with the
balance of the facility to be used to fund working capital requirements,
inventory purchases, capital expenditures, and other general corporate
purposes. The Credit Facility includes restrictions on capital
expenditures as well as standard covenants found in similar agreements.
The Company was in compliance with such covenants at January 28, 1995.
Under the Credit Facility, the lender agrees to make revolving loans and
issue or guarantee letters of credit for the Company. The Credit
Facility includes a sublimit of $10,000,000 for documentary and stand-by
letters of credit. The Company had borrowed $15,368,000 against the
Credit Facility at January 28, 1995. The weighted average interest rate
on borrowings against the Credit Facility was 9.21% during the year
ended January 28, 1995.
The Credit Facility provides that each loan shall bear interest at a
rate of prime plus one and forty-four one hundredths percent. Interest
on these loans is payable monthly in arrears on the first day of each
month. Also under the Credit Facility, the Company pays an unused line
fee for an amount equal to one-half of one percent per annum on the
unused portion of the Credit Facility and a letter of credit fee equal
to two and one-half percent per annum on the average daily balance of
the aggregate undrawn letters of credit and letter of credit guarantees
outstanding during the immediately preceding month and certain other
fees. The Credit Facility requires an annual facility fee equal to
one-half of one percent of the maximum amount of the facility payable on
each anniversary of the
19
<PAGE>
Credit Facility closing date and a monthly servicing fee of $3,500 per
month. The Company also paid an initial, one-time fee of $450,000 in
order to establish the Credit Facility.
NOTE 8 - SHAREHOLDERS' EQUITY
In April 1986, four shareholders of the Company entered into an
agreement whereby they cannot transfer or sell their Common Stock to any
unrelated party (as defined) without the written consent of the other
parties to the agreement. In addition, in the event of the death of one
of the four shareholders, the Company can be required to purchase their
Common Stock at fair value up to the life insurance proceeds, consisting
of policies with a face value of $5,250,000, $5,000,000, $3,070,000 and
$3,000,000, respectively. Outstanding borrowings against the cash
surrender value of these policies were approximately $1,835,000 and
$1,828,000 at the January 28, 1995 and January 29, 1994, respectively.
An amount equal to the cash surrender value of these policies not
borrowed against at January 28, 1995 and January 29, 1994 of $529,000
and $219,000, respectively, has been shown as an other deferred credit
on the balance sheet and as a liability subject to compromise with a
corresponding reduction in retained earnings.
20
<PAGE>
NOTE 9 - PROVISION FOR INCOME TAXES
The provision for income taxes consists of the following:
Fiscal Fiscal Fiscal
(In thousands) 1995 1994 1993
Currently payable (refundable):
Federal $ - $ - $ -
State and local - - -
- - -
Deferred taxes - - -
Total income taxes $ - $ - $ -
The components of the deferred provision for income taxes are as follows:
Deferred income taxes:
Depreciation $ (601) $(1,728) $ 493
Capital lease book charges (over) under
rental charges for tax purposes 918 (37) (222)
Additional inventory costs capitalized
for tax purposes 37 30 (157)
Deferred compensation 20 4 (7)
Provision for store closings 208 - (59)
Restructuring reserve 876 1,561 (2,064)
Other 411 89 203
Interaction of net operating loss carryforward (1,869) 81 1,813
$ $ $
21
<PAGE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the deferred tax liabilities and
assets are as follows:
Fiscal Fiscal
(In thousands) 1995 1994
Deferred tax liabilities:
Book-tax basis difference in property and equipment $ 228 $ 228
Other 81 127
Gross deferred tax liabilities 309 355
Deferred tax assets:
Net operating loss carryforward 24,920 20,967
Reorganization cost 541 1,418
Capital leases for books 428 1,346
Additional inventory costs capitalized for tax purposes 508 555
Other 842 914
Gross deferred tax assets 27,239 25,200
Valuation allowance for deferred tax assets 26,930 24,845
Net deferred tax assets 309 355
Net deferred taxes $ - $ -
The following is a reconciliation of the effective income tax rate with
the statutory rate:
Fiscal Fiscal Fiscal
1995 1994 1993
Statutory federal income tax rate (34)% (34)% (34)%
Limitation of tax loss carrybacks 34 34 34
22
<PAGE>
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (SFAS 109). SFAS 109 mandates the use of the liability
method in accounting for deferred income taxes. SFAS 109 is effective
for fiscal year 1994 and permits restatement of earlier years or
presentation of the cumulative effect of the change in the year of
adoption. The Company has adopted SFAS 109 prospectively in fiscal 1994
and the adoption has not materially impacted the Company's financial
condition or results of operations and has not resulted in a material
cumulative effect of a change in accounting principles.
No income tax payments were made in fiscal 1995, 1994 and 1993. The
Company has net operating loss carryforwards of approximately
$66,000,000 for financial reporting purposes and approximately
$64,000,000 for tax purposes at January 28, 1995. These net operating
loss carryforwards expire beginning in fiscal 2007.
NOTE 10 - EMPLOYEE BENEFIT PLANS
The Company had a defined contribution profit-sharing plan covering
substantially all employees who had met certain age and length of
service requirements. Effective September 17, 1993, all assets of the
defined contribution profit sharing plan were merged with the defined
contribution retirement savings plan. Contributions to the
profit-sharing plan were determined by the Board of Directors. No
contribution was made for fiscal year 1995, 1994 or 1993.
The Company has a defined contribution retirement savings plan (the
"Plan"), a voluntary compensation deferral plan under Section 401(k) of
the Internal Revenue Code. The Plan allows participants to contribute
up to 15% of their annual compensation to the Plan. As of January 31,
1993, the Board of Directors of the Company adopted an amendment to the
Plan whereby the employer matching contribution was discontinued with
respect to salary reduction contributions made for compensation earned
after January 31, 1993. The Company has made no contributions in fiscal
1995 and contributed the minimum contribution of $40,000 and $169,000
for fiscal years 1994 and 1993, respectively.
The Brendle's Incorporated 1990 Stock Option Plan approved by the
shareholders on May 31, 1990, authorizes the grant of stock options for
the purchase of up to 300,000 shares of Common Stock to be made to
unaffiliated directors, officers and other key employees of the Company
in order to provide incentives to remain in the employment of the
Company. The plan permits the issuance of incentive stock options,
nonqualified stock options and stock appreciation rights ("Right") in
tandem with stock options. Incentive stock options may be granted at
not less than 100%, and nonqualified stock options may be granted at not
less than 95%, of market value. Options granted are exercisable only
after one year of continuous employment with the Company immediately
following the date of grant. The Stock Option Committee may prescribe
longer time periods and additional requirements with respect to the
exercise of a stock option or Right.
23
<PAGE>
The Brendle's Incorporated 1986 Incentive Stock Option Plan, as adopted
by the shareholders of the Company on January 31, 1986, authorizes the
grant of both incentive stock options and nonqualified options to
purchase up to 400,000 shares of Common Stock to officers and other key
employees of the Company. Incentive stock options may be granted at not
less than 100%, and nonqualified options at not less that 95%, of market
value. Options granted to date become exercisable at the rate of 20%
annually, subject to continuous employment with the Company, beginning
one year and expiring six years from the date of grant.
On April 10, 1986, the shareholders of the Company adopted the Brendle's
Incorporated 1986 Nonqualified Stock Option Plan, which authorizes the
grant of stock options to non-employee directors of the Company for the
purchase of up to 10,000 shares of Common Stock. All of these options
have been granted as of January 28, 1995.
On December 1, 1994, the shareholders of the Company granted stock
options for the purchase of 500,000 shares of Common Stock to officers
and other key employees of the Company in order to provide incentives to
remain in the employment of the Company. These options were issued
under both the 1986 and the 1990 Brendle's Incorporated Stock Option
Plans.
The following table summarizes the changes in stock options for the
plans for the three years ended January 28, 1995.
Shares subject to option:
Number Per share
of shares option price
Balance, February 1, 1992 221,790 $5.50-$14.50
Granted - -
Exercised - -
Cancelled 25,790 $7.00-$14.50
Balance, January 30, 1993 196,000 $5.50-$14.50
Granted - -
Exercised - -
Cancelled 25,680 $7.00-$14.50
Balance, January 29, 1994 170,320 $5.50-$14.50
Granted 500,000 $.625
Exercised -
Cancelled 153,250 $.625-$14.50
Balance, January 28, 1995 517,070 $.625-$14.50
Exercisable at end of year 26,570
Shares reserved for future grant:
Beginning of year 539,680
End of year 192,930
24
<PAGE>
Effective February 1, 1988, the Company entered into deferred
compensation agreements with three former employees. The agreements
provide monthly payments for a period of fifteen years commencing on the
respective retirement dates. The present value of the obligations
totalled $384,000 for fiscal year ended January 28, 1995, and is
included in other long-term liabilities on the accompanying balance
sheet. The present value of the obligations totalled $436,000 for
fiscal year ended January 29, 1994, and was included in liabilities
subject to compromise on the accompanying balance sheet.
Effective August 18, 1989, the Board of Directors of the Company adopted
the Brendle's Key Employee Stock Appreciation Rights Plan and the
Brendle's Incorporated Unaffiliated Directors Stock Appreciation Rights
Plan. The Key Employee SAR Plan and the Unaffiliated Directors' SAR
Plan provide for the issuance of up to a maximum of 75,000 and 15,000
stock appreciation rights, respectively. The Company, at January 28,
1995 and January 29, 1994, had 40,000 outstanding stock appreciation
rights under the plans, at prices from $7.00 to $8.25. Compensation
expense for stock appreciation rights, measured by the difference
between the market value and the option price, was zero for each of the
fiscal years ending January 28, 1995, January 29, 1994 and January 30,
1993.
NOTE 11 - RELATED PARTIES
The Company has capital and operating lease commitments with affiliates
of certain executive officers for stores, equipment and its corporate
headquarters facility. Real estate leases, as amended, generally
provide for renewal options and escalation of rent to reflect 60% of any
increase in the Consumer Price Index at the lease extension dates.
Additionally, certain of these leases provide for contingent rental
payments in that annual rental payments are the greater of a base rental
amount or a defined percentage of the sales of a particular location.
Also, the Company can be required to purchase the properties at
appraised market value, subject to approval by the outside directors.
Future minimum lease commitments to affiliates at January 28, 1995 are
as follows:
(In thousands) Capitalized Operating
Fiscal year leases leases
1996 $ 945 $ 850
1997 - 684
1998 - 488
1999 - 150
Total minimum lease payments $ 945 $ 2,172
Less amount representing interest 60
Present value of capitalized lease obligations $ 885
Lease payments to affiliates of the Company were $2,312,000, $2,501,000
and $2,724,000 for the years ended January 28, 1995, January 29, 1994
and January 30, 1993, respectively.
25
<PAGE>
NOTE 12 - GOING CONCERN
In response to past performance, Management has evaluated markets and
closed under-performing stores, sold its distribution center, reduced
corporate office staffing and implemented other cost control measures.
The Company has purchased fully integrated point-of-sale merchandising
and financial systems which will enable the Company to better monitor
inventory and financial performance, as well as make it more responsive
to changes in customer preference. In addition, the Company has revised
its advertising strategy to include more targeted distribution of its
promotional flyers and catalogs, and has continued to refine its
merchandise mix in response to the changing needs of its customers.
Management believes these changes will facilitate the Company's return
to profitability.
26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Brendle's Incorporated
In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of operations, of changes in
shareholders' equity and of consolidated cash flows present
fairly, in all material respects, the financial position of
Brendle's Incorporated (the Company) at January 28, 1995 and
January 29, 1994, and the results of its operations and its cash
flows for each of the three fiscal years in the period ended
January 28, 1995, in conformity with generally accepted accounting
principles. 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 of these statements in accordance with
generally accepted auditing standards which 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, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. Since its
emergence from Chapter 11 bankruptcy as discussed in Note 1 to the
financial statements, the Company has continued to suffer
recurring losses from operations which raises substantial doubt
about its ability to continue as a going concern. The continued
viability of the Company in its present form is dependent upon,
among other factors, the Company's ability to generate sufficient
cash from operations or other sources that will meet ongoing
obligations over a sustained period. Managements' plans in regard
to these matters are described in Note 12. The accompanying
financial statements do not include any adjustments relating to
the recoverability and classification of reported asset amounts or
the amounts and classification of liabilities that might be
necessary should the Company be unable to continue as a going
concern.
(Signature of Price Waterhouse LLP appears here)
PRICE WATERHOUSE LLP
Winston-Salem, North Carolina
March 17, 1995
27
<PAGE>
Market and Dividend Information.
The Company's Common Stock is traded on the NASDAQ National Market
system under the symbol BRDL. At January 28, 1995, there were
approximately 2,607 shareholders of record. The Company has not
declared any cash dividends since January 31, 1983. The current policy
of the Board of Directors is to retain earnings in order to finance the
development of the Company's business.
The following table shows quarterly high and low prices for the Common
Stock from January 31, 1994 to January 28, 1995.
Fiscal Year Fiscal Year
1995 1994
High Low High Low
First Quarter $1 7/8 $1 1/4 $1 3/8 $7/8
Second Quarter $2 1/8 $1 1/2 $1 1/8 $7/8
Third Quarter $2 1/8 $7/8 $1 1/4 $3/8
Fourth Quarter $1 1/8 $9/16 $2 1/8 $1
28
<PAGE>
<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS
<S> <C>
EXECUTIVE OFFICERS BOARD OF DIRECTORS
Joseph M. McLeish, Jr. Douglas D. Brendle
President and Director
Chief Executive Officer
S. Floyd Brendle
William V. Grady Director
Senior Vice President of Marketing,
Advertising and Store Operations William F. Cosby
Director
Gregory S. Stegall
Senior Vice President of Merchandising Patty Brendle Redway
Director
David R. Renegar
Vice President and Thomas H. Davis
Chief Financial Officer Director
Retired Chairman of the
CORPORATE DATA Executive Committee of
Piedmont Aviation, Inc.
CORPORATE OFFICES Robert R. Dunn
Brendle's Incorporated Director
1919 North Bridge Street Extension President of The Finley Group, Inc.
Elkin, North Carolina 28621
(910) 526-5600 James B. Edwards, D.M.D.
Director
TRANSFER AGENT President of the Medical
Wachovia Bank and Trust University of South Carolina
Winston-Salem, North Carolina
John D. Gray
LEGAL COUNSEL Director
Blanco Tackabery Combs & Matamoros, P.A. Chairman Emeritus of the Board
Winston-Salem, North Carolina and Retired Chief Executive Officer of
Hartmarx Corporation
INDEPENDENT ACCOUNTANTS
Price Waterhouse John A. Northen
Winston-Salem, North Carolina Director
Partner in the law firm of
ANNUAL MEETING Northen, Blue, Rooks, Thibaut,
Time: 10:00 AM (EDT) Anderson & Woods
Date: June 1, 1995
Place: Elkin/Jonesville
Holiday Inn Jonesville,
North Carolina
</TABLE>
FORM 10-K
Information about Brendle's Incorporated, including a copy of the Company's
Annual Report on Form 10-K, may be obtained without charge by writing to
Mr. David R. Renegar, Chief Financial Officer, at the Company's corporate
offices.
EXHIBIT 24
<PAGE>
Exhibit 24
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-13622) of Brendle's Incorporated of our
report dated March 17, 1995 appearing on page 27 of the Annual Report
to Shareholders which is incorporated in this Annual Report on Form 10-K.
(Signature of Price Waterhouse LLP appears here)
PRICE WATERHOUSE LLP
Winston-Salem, North Carolina
April 26, 1995
EXHIBIT 25
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints David R. Renegar his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, for the singular purpose of signing the Annual Report on
Form 10-K of Brendle's Incorporated for the fiscal year-ended January
28, 1995 and any or all amendments to such Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission
and with the National Association of Securities Dealers, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Date: April 27, 1995 Signature:
Douglas D. Brendle
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints David R. Renegar his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, for the singular purpose of signing the Annual Report on
Form 10-K of Brendle's Incorporated for the fiscal year-ended January
28, 1995 and any or all amendments to such Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission
and with the National Association of Securities Dealers, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Date: April 27, 1995 Signature:
S. Floyd Brendle
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints David R. Renegar his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, for the singular purpose of signing the Annual Report on
Form 10-K of Brendle's Incorporated for the fiscal year-ended January
28, 1995 and any or all amendments to such Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission
and with the National Association of Securities Dealers, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Date: April 27, 1995 Signature:
William F. Cosby
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints David R. Renegar his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, for the singular purpose of signing the Annual Report on
Form 10-K of Brendle's Incorporated for the fiscal year-ended January
28, 1995 and any or all amendments to such Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission
and with the National Association of Securities Dealers, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Date: April 27, 1995 Signature:
Thomas H. Davis
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints David R. Renegar his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, for the singular purpose of signing the Annual Report on
Form 10-K of Brendle's Incorporated for the fiscal year-ended January
28, 1995 and any or all amendments to such Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission
and with the National Association of Securities Dealers, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Date: April 27, 1995 Signature:
Robert R. Dunn
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints David R. Renegar his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, for the singular purpose of signing the Annual Report on
Form 10-K of Brendle's Incorporated for the fiscal year-ended January
28, 1995 and any or all amendments to such Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission
and with the National Association of Securities Dealers, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Date: April 27, 1995 Signature:
James B. Edwards
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints David R. Renegar his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, for the singular purpose of signing the Annual Report on
Form 10-K of Brendle's Incorporated for the fiscal year-ended January
28, 1995 and any or all amendments to such Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission
and with the National Association of Securities Dealers, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Date: April 27, 1995 Signature:
John D. Gray
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints David R. Renegar his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, for the singular purpose of signing the Annual Report on
Form 10-K of Brendle's Incorporated for the fiscal year-ended January
28, 1995 and any or all amendments to such Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission
and with the National Association of Securities Dealers, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Date: April 27, 1995 Signature:
John A. Northen
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints David R. Renegar his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, for the singular purpose of signing the Annual Report on
Form 10-K of Brendle's Incorporated for the fiscal year-ended January
28, 1995 and any or all amendments to such Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission
and with the National Association of Securities Dealers, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Date: April 27, 1995 Signature:
Patty Brendle Redway
<PAGE>
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