UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 1, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 0-19526
Goody's Family Clothing, Inc.
(Exact name of registrant as specified in its charter)
Tennessee 62-0793974
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
400 Goody's Lane, Knoxville, Tennessee 37922
(Address of principal executive offices) (Zip Code)
(423) 966-2000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, no par value, 33,327,130 shares outstanding as of August 27, 1998.
<PAGE>
Goody's Family Clothing, Inc.
Index to Form 10-Q
August 1, 1998
Part I - Financial Information:
Item 1 - Financial Statements
Consolidated Statements of Operations......................... 3
Consolidated Balance Sheets................................... 4
Consolidated Statements of Cash Flows......................... 5
Notes to Consolidated Financial Statements................... 6 - 7
Independent Accountants' Review Report........................ 8
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations................................ 9 - 13
Item 3 - Quantitative and Qualitative Disclosures about Market Risk 13
Part II - Other Information............................................. 14
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. (a) Exhibits
Item 6. (b) Reports on Form 8-K
Signatures.............................................................. 15
<PAGE>
PART 1 - FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
Item 1 - Consolidated Financial Statements
Goody's Family Clothing, Inc. and Subsidiaries
Consolidated Statements of Operations - Unaudited
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Twenty-six
Weeks Ended Weeks Ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Sales $ 249,489 $ 212,206 $ 476,203 $ 402,263
Cost of sales and occupancy expenses 178,345 154,036 337,139 289,116
Gross profit 71,144 58,170 139,064 113,147
Selling, general and administrative
expenses 57,632 49,800 113,536 97,045
Earnings from operations 13,512 8,370 25,528 16,102
Interest expense 87 94 181 219
Investment income 462 392 998 878
Earnings before income taxes 13,887 8,668 26,345 16,761
Provision for income taxes 5,229 3,250 9,919 6,285
Net earnings $ 8,658 $ 5,418 $ 16,426 $ 10,476
Earnings per common share (a)
Basic $ 0.26 $ 0.17 $ 0.49 $ 0.32
Diluted $ 0.25 $ 0.16 $ 0.47 $ 0.31
Weighted average common
shares outstanding (a)
Basic 33,538 32,496 33,384 32,421
Diluted 34,989 33,579 34,836 33,406
</TABLE>
(a) Earnings per share and related data for the periods ended August 2,
1997 have been restated to reflect a two-for-one stock split effected in July
1998.
See accompanying Notes to Consolidated Financial Statements and Independent
Accountants' Review Report.
<PAGE>
Goody's Family Clothing, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
August 1, January 31, August 2,
1998 1998 1997
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 41,872 $ 64,174 $ 41,667
Investments - 1,555 1,512
Inventories 201,295 151,667 153,653
Accounts receivable and other current assets 23,178 10,519 15,836
Total current assets 266,345 227,915 212,668
Property and equipment, net 100,446 97,468 90,355
Other assets 3,037 2,933 3,200
Total assets $ 369,828 $ 328,316 $ 306,223
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 126,420 $ 105,231 $ 118,530
Accrued expenses 44,341 42,194 38,136
Income taxes payable - 6,674 -
Current portion of long- term debt 263 263 239
Total current liabilities 171,024 154,362 156,905
Long-term debt 608 608 871
Other long-term liabilities 3,381 3,023 2,639
Deferred income taxes 10,368 10,266 9,668
Total liabilities 185,381 168,259 170,083
Commitments and Contingencies
Shareholders' Equity
Preferred stock $1.00 par value;
Authorized - 2,000,000 shares;
Issued and outstanding - none
Class B Common stock no par value;
Authorized - 50,000,000 shares;
Issued and outstanding - none
Common stock no par value;
Authorized - 50,000,000 shares;
Issued and outstanding- 33,326,130, 32,703,716
and 32,590,214 shares, respectively 28,034 25,097 24,560
Paid-in capital 9,748 4,721 4,151
Retained earnings 146,665 130,239 107,429
Total shareholders' equity 184,447 160,057 136,140
Total liabilities and shareholders' equity $ 369,828 $ 328,316 $ 306,223
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Independent
Accountants' Review Report.
<PAGE>
Goody's Family Clothing, Inc. and Subsidiaries
Consolidated Statements of Cash Flows - Unaudited
(In thousands)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
August 1, August 2,
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities
Net earnings $ 16,426 $ 10,476
Adjustments to reconcile net earnings to net cash used
in operating activities:
Depreciation and amortization 6,587 5,522
Net loss on asset disposals and write-down 649 488
Changes in assets and liabilities:
Inventories (49,628) (46,159)
Accounts payable 17,862 33,634
Income taxes (12,754) (8,716)
Other assets and liabilities (3,035) (315)
Cash used in operating activities (23,893) (5,070)
Cash Flows from Investing Activities
Acquisitions of property and equipment (10,242) (7,414)
Proceeds from sale of property and equipment 28 4
Cash used in investing activities (10,214) (7,410)
Cash Flows from Financing Activities
Exercise of stock options 7,964 2,088
Changes in cash management accounts 3,841 8,743
Cash provided by financing activities 11,805 10,831
Cash and cash equivalents
Net decrease for the period (22,302) (1,649)
Balance, beginning of period 64,174 43,316
Balance, end of period $ 41,872 $ 41,667
Supplemental Disclosures
Income tax payments $ 17,205 $ 14,163
Interest payments 133 151
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Independent
Accountants' Review Report.
<PAGE>
Goody's Family Clothing, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying condensed consolidated financial statements of Goody's
Family Clothing, Inc. and subsidiaries (the "Company") are unaudited and have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Although certain information normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted, the Company believes that the disclosures are
adequate to make the information presented not misleading. In the opinion of the
Company's management, the accompanying unaudited consolidated financial
statements include all adjustments, consisting primarily of normal and recurring
adjustments, necessary for a fair presentation of the Company's financial
position, results of operations and cash flows for the interim periods
presented. Due to the seasonal nature of the Company's business, the results of
operations for the interim periods are not necessarily indicative of the results
that may be achieved for the entire year. The condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto contained in the Company's 1997 Annual Report
on Form 10-K for its fiscal year ended January 31, 1998.
(2) Credit Arrangements
On May 26, 1998, the Company amended its credit agreement with a consortium
of banks for an unsecured revolving line of credit which provides for cash
borrowings for general corporate purposes as well as for the issuance of letters
of credit of up to $130,000,000 and which expires on May 31, 2001. The Company
is committed to pay (i) interest on the cash borrowings at a fluctuating base
rate or LIBOR plus an applicable margin, as defined, (ii) letter of credit fees
based on the number of days a letter of credit is outstanding times the
applicable fee and (iii) an annual commitment fee payable quarterly in advance.
The terms of this credit agreement require, among other things, maintenance of
minimum levels of shareholders' equity, compliance with certain financial ratios
and Mr. Robert M. Goodfriend remaining as Chairman of the Board or Chief
Executive Officer of the Company, and place restrictions on additional
indebtedness, asset disposals, investments and capital expenditures.
(3) Stock Split
In June 1998, the Company's Board of Directors authorized a two-for-one stock
split to be effected as a dividend consisting of one share of the Company's
common stock for each share outstanding. The stock dividend was paid on July 17,
1998 to shareholders of record at the close of business on July 1, 1998. All
previously reported earnings per share and related data for the periods ended
August 2, 1997 have been restated to reflect such two-for-one stock split.
(4) Earnings per Share
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" as required in the fourth quarter of fiscal 1997.
Accordingly, all previously reported earnings per share and related data for the
periods ended August 2, 1997 have been restated to conform to this new standard.
Basic earnings per common share is computed by dividing net earnings by the
weighted average number of common shares outstanding. Diluted earnings per
common share is computed by dividing net earnings by the weighted average number
of common shares outstanding and potentially dilutive common shares (solely from
the effect of stock options outstanding).
<PAGE>
Goody's Family Clothing, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - continued
(Unaudited)
(5) Recent Accounting Pronouncements
Segment Reporting
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131, which is
effective beginning with the Company's fiscal year 1998, establishes new
standards for reporting information about key segments by public enterprises.
The Company does not expect the implementation of SFAS No. 131 to have an effect
on its current reporting and disclosure practices.
Accounting for Costs of Computer Software
In March 1998, the American Institute of Certified Public Accountants'
Accounting Standards Executive Committee issued Statement of Position No. 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" ("SOP No. 98-1"). SOP No. 98-1, which is effective beginning with
the Company's fiscal year 1999, requires that costs incurred to develop or
obtain software for internal use be capitalized. SOP No. 98-1 will be adopted
for the Company's fiscal year ending January 29, 2000 and is not expected to
have a material effect on the Company's financial statements.
(6) Reclassifications
Certain reclassifications have been made to the financial statements of prior
periods to conform to the current period presentation.
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Shareholders
Goody's Family Clothing, Inc.
Knoxville, Tennessee:
We have reviewed the accompanying condensed consolidated balance sheets of
Goody's Family Clothing, Inc. and subsidiaries as of August 1, 1998 and August
2, 1997 and the related consolidated statements of operations and cash flows for
the thirteen and twenty-six week periods then ended. These financial statements
are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to such financial statements for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Goody's Family Clothing, Inc. and
subsidiaries as of January 31, 1998 and the related consolidated statements of
operations, shareholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated March 18, 1998, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of January 31, 1998 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
/s/Deloitte & Touche LLP
Atlanta, Georgia
August 18, 1998
<PAGE>
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-looking Statements
This Quarterly Report contains certain forward-looking statements which are
based upon current expectations, plans and estimates and involve material risks
and uncertainties including, but not limited to, customer demand and trends in
the apparel and retail industry and acceptance of merchandise acquired for sale
by the Company, the effectiveness of planned advertising and promotional events,
the impact of competitors' pricing and store expansion, the ability to enter
into leases for new store locations, individual store performance, including new
stores, adverse weather conditions, employee relations, the general economic
conditions within the Company's markets and the effect of the Year 2000 issue on
the Company and third parties who provide goods and services to the Company. The
Company does not undertake to publicly update or revise its forward-looking
statements even if experience or future changes make it clear that any projected
results expressed or implied therein will not be realized. Additional
information on risk factors that could potentially affect the Company's
financial results may be found in the Company's public filings with the
Securities and Exchange Commission. Certain of such filings may be accessed
through the Securities and Exchange Commission's web site, http://www.sec.gov.
Results of Operations
The following table sets forth unaudited results of operations, as a percent of
sales, for the periods indicated:
<TABLE>
<CAPTION>
Thirteen Twenty-six
Weeks Ended Weeks Ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales and occupancy expenses 71.5 72.6 70.8 71.9
Gross profit 28.5 27.4 29.2 28.1
Selling, general and administrative expenses 23.1 23.5 23.8 24.1
Earnings from operations 5.4 3.9 5.4 4.0
Interest expense - - 0.1 -
Investment income 0.2 0.2 0.2 0.2
Earnings before income taxes 5.6 4.1 5.5 4.2
Provision for income taxes 2.1 1.5 2.1 1.6
Net earnings 3.5% 2.6% 3.4% 2.6%
</TABLE>
Thirteen Weeks Ended August 1, 1998 Compared with Thirteen Weeks Ended
August 2, 1997
Overview - During the second quarter of fiscal 1998, the Company opened five new
stores, relocated three stores, remodeled one store and closed one store,
bringing the total number of stores in operation at August 1, 1998 to 233,
compared with 212 at August 2, 1997. During the corresponding period of the
previous fiscal year, the Company opened four new stores, relocated two stores
and closed one store. Net earnings for the second quarter of fiscal 1998 were
$8,658,000, or 3.5% of sales, compared with $5,418,000, or 2.6% of sales, for
the second quarter of fiscal 1997.
Sales - Sales for the second quarter of fiscal 1998 were $249,489,000, a 17.6%
increase over the $212,206,000 in sales for the second quarter of fiscal 1997.
This increase of $37,283,000 consisted of (i) a 6.6% increase in comparable
store sales of $13,307,000 over such sales for the corresponding period of the
previous fiscal year and (ii) additional sales from new and transition stores of
$23,976,000. Sales for the thirteen weeks ended August 1, 1998 were driven by
continuing customer acceptance of certain brand-name and private label
merchandise.
<PAGE>
Gross Profit - Gross profit for the second quarter of fiscal 1998 was
$71,144,000, or 28.5% of sales, a $12,974,000 increase over the $58,170,000 in
gross profit, or 27.4% of sales, generated for the second quarter of the
previous fiscal year. The 1.1% increase in gross profit, as a percent of sales,
in the second quarter of fiscal 1998 compared with the second quarter of fiscal
1997 consists of (i) a decrease in cost of sales by 0.9% as a result of better
inventory management and control and continuing customer acceptance of certain
key merchandise items, including private label merchandise, and (ii) a decrease
in primarily fixed occupancy costs by 0.2% due to a substantial increase in
sales for the second quarter of fiscal 1998.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses for the second quarter of fiscal 1998 were $57,632,000,
or 23.1% of sales, an increase of $7,832,000 from $49,800,000, or 23.5% of
sales, for the second quarter of fiscal 1997. The 0.4% decrease in selling,
general and administrative expenses, as a percent of sales, for the second
quarter of fiscal 1998 compared with the second quarter of fiscal 1997 resulted
from (i) a 0.4% decrease in advertising and promotional expenses and (ii) a 0.3%
decrease in payroll expenses which were offset by (x) a 0.2% increase in the
provision for store relocation costs and (y) a 0.1% increase in other selling,
general and administrative expenses.
Interest Expense - Interest expense for the second quarter of fiscal 1998
decreased by $7,000 compared with the second quarter of the previous fiscal
year.
Investment Income - Investment income for the second quarter of fiscal 1998
increased by $70,000 compared with the second quarter of the previous fiscal
year primarily as a result of an increase in invested funds during the period.
Income Taxes - The provision for income taxes for the second quarter of fiscal
1998 was $5,229,000, an effective tax rate of 37.7% of earnings before income
taxes, compared with $3,250,000, an effective tax rate of 37.5% of earnings
before income taxes, for the second quarter of the previous fiscal year. The
increase in the effective tax rate is primarily due to a modest increase in the
combined state income tax rates.
Twenty-Six Weeks Ended August 1, 1998 Compared with Twenty-Six Weeks Ended
August 2, 1997
Overview - During the twenty-six weeks ended August 1, 1998, the Company opened
12 new stores, relocated four stores, remodeled two stores and closed two
stores, bringing the total number of stores in operation at August 1, 1998 to
233, compared with 212 at August 2, 1997. During the corresponding period of the
previous fiscal year, the Company opened 11 new stores, relocated four stores
and closed two stores. Net earnings for the twenty-six weeks ended August 1,
1998 were $16,426,000, or 3.4% as a percent of sales, compared with $10,476,000,
or 2.6% as a percent of sales, for the twenty-six weeks ended August 2, 1997.
Sales - Sales for the twenty-six weeks ended August 1, 1998 were $476,203,000,
an 18.4% increase over the $402,263,000 in sales for the corresponding period of
the previous fiscal year. This increase of $73,940,000 consisted of (i) a 6.9%
increase in comparable store sales of $26,451,000 over such sales for the
corresponding period of the previous fiscal year and (ii) additional sales from
new and transition stores of $47,489,000. Sales for the twenty-six weeks ended
August 1, 1998 were driven by continuing customer acceptance of certain
brand-name and private label merchandise.
Gross Profit - Gross profit for the twenty-six weeks ended August 1, 1998 was
$139,064,000, or 29.2% of sales, a $25,917,000 increase over the $113,147,000 in
gross profit, or 28.1% of sales, generated for the corresponding period of the
previous fiscal year. The 1.1% increase in gross profit, as a percent of sales,
for the twenty-six weeks ended August 1, 1998 compared with the twenty-six weeks
ended August 2, 1997 resulted from (i) a 0.9% increase in gross margins as a
result of better inventory management and control and continuing customer
acceptance of certain key merchandise items, including private label
merchandise, and (ii) a 0.2% decrease in primarily fixed occupancy costs
resulting from leverage achieved from higher sales.
<PAGE>
Selling, General and Administrative Expenses - Selling, general and
administrative expenses for the twenty-six weeks ended August 1, 1998 were
$113,536,000, or 23.8% of sales, an increase of $16,491,000 from $97,045,000, or
24.1% of sales, for the corresponding period of the previous fiscal year. The
0.3% decrease in selling, general and administrative expenses, as a percent of
sales, for the twenty-six weeks ended August 1, 1998 compared with the
twenty-six weeks ended August 2, 1997 resulted from (i) a 0.3% decrease in
advertising and promotional expenses and (ii) a 0.3% decrease in payroll
expenses which were offset by (x) a 0.2% increase in the provision for store
relocation costs and (y) a 0.1% increase in other selling, general and
administrative expenses.
Interest Expense - Interest expense for the twenty-six weeks ended August
1, 1998 decreased by $38,000 compared with the corresponding period of the
previous fiscal year.
Investment Income - Investment income for the twenty-six weeks ended August 1,
1998 increased by $120,000 compared with the corresponding period of the
previous fiscal year primarily as a result of an increase in invested funds
during the period.
Income Taxes - The provision for income taxes for the twenty-six weeks ended
August 1, 1998 was $9,919,000, an effective tax rate of 37.7% of earnings before
income taxes, compared with $6,285,000, an effective tax rate of 37.5% of
earnings before income taxes, for the corresponding period of the previous
fiscal year. The increase in the effective tax rate is primarily due to a modest
increase in the effective state income tax rates.
Liquidity and Capital Resources
Financial Position - The Company's primary sources of liquidity are cash flows
from operations, including credit terms from vendors and borrowings under its
credit agreement. At August 1, 1998, the Company's working capital was
$95,321,000 compared with $55,763,000 at August 2, 1997. For the twenty-six week
period ended August 1, 1998 compared with the corresponding period of the
previous year, (i) cash, cash equivalents and investment securities decreased by
$1,307,000, (ii) net property and equipment increased by $10,091,000, (iii)
inventories increased by $47,642,000 and (iv) accounts payable increased by
$7,890,000. The increase in inventories was primarily due to (i) inventories for
new stores and (ii) the strategic build-up of inventory for certain new
merchandise categories in all stores. Trade payables as a percent of inventories
decreased to 62.8% at August 1, 1998 as compared with 77.1% at August 2, 1997.
At August 1, 1998, the Company had an unsecured revolving line of credit from a
consortium of banks, which provides for cash borrowings for general corporate
purposes as well as for the issuance of letters of credit of up to $130,000,000
and which expires on May 31, 2001. The terms of this credit agreement require,
among other things, maintenance of minimum levels of shareholders' equity,
compliance with certain financial ratios and Mr. Robert M. Goodfriend remaining
as Chairman of the Board or Chief Executive Officer of the Company, and place
restrictions on additional indebtedness, asset disposals, investments and
capital expenditures. At August 1, 1998, the Company had no cash borrowings
under this credit agreement and $68,840,000 was in use for outstanding letters
of credit, compared with no cash borrowings and $64,466,000 utilized for
outstanding letters of credit at August 2, 1997. In addition, there were no cash
borrowings during the twenty-six weeks ended August 1, 1998 and August 2, 1997.
Letters of credit outstanding averaged $66,988,000 during the twenty-six weeks
ended August 1, 1998 compared with $53,984,000 during the twenty-six weeks ended
August 2, 1997. The highest balance of letters of credit outstanding during the
twenty-six weeks ended August 1, 1998 was $80,142,000 (in May 1998) compared
with $71,900,000 (in June 1997) during the twenty-six weeks ended August 2,
1997.
Cash Flows - Operating activities used cash of $23,893,000 in the twenty-six
weeks ended August 1, 1998 compared with $5,070,000 used in the corresponding
period of the previous fiscal year. Cash used for increases in inventory during
the twenty-six weeks ended August 1, 1998 and August 2, 1997 were $49,628,000
and $46,159,000, respectively. Accounts payable provided cash of $17,862,000 and
$33,634,000 in the twenty-six weeks ended August 1, 1998 and August 2, 1997,
respectively. Depreciation and amortization expenses were $6,587,000 and
$5,522,000 for the twenty-six weeks ended August 1, 1998 and August 2, 1997,
respectively.
<PAGE>
Cash flows from investing activities reflected a $10,214,000 and $7,410,000 net
use of cash for the twenty-six weeks ended August 1, 1998 and August 2, 1997,
respectively. Cash was used primarily to fund capital expenditures for new and
existing stores as well as relocated and remodeled stores during the first
twenty-six weeks of fiscal 1998 and 1997.
Cash provided by financing activities for the twenty-six weeks ended August 1,
1998 was $11,805,000 compared with $10,831,000 for the corresponding period of
the previous fiscal year. Cash management programs maintained by the Company
provided cash of $3,841,000 in the twenty-six weeks ended August 1, 1998
compared with $8,743,000 for the corresponding period of the previous fiscal
year. During the twenty-six weeks ended August 1, 1998, the Company received
$2,937,000 in cash and realized a tax benefit of $5,027,000, compared with
$1,196,000 in cash and a tax benefit of $892,000 during the corresponding period
of the previous year from the issuance of common stock upon the exercise of
stock options.
Outlook - The Company plans to open approximately 28 to 30 new stores, relocate
or remodel approximately 10 to 12 stores, close two stores and open four
temporary stores in four new test markets during fiscal 1998. During the third
quarter to date, the Company has opened five new stores and remodeled one store.
Management estimates that capital expenditures aggregating approximately
$20,000,000 will be required for opening new and temporary stores, relocating or
remodeling existing stores, purchasing computer systems and equipment and for
other capital expenditure requirements during the remainder of fiscal 1998.
The Company's primary needs for capital resources are for the purchase of store
inventories, capital expenditures and normal operating expenses. Management
believes that cash flows from operations, including credit terms from vendors
and the borrowings available under the credit agreement, will be sufficient to
meet the Company's operating and capital expenditure requirements through at
least the remainder of fiscal 1998.
Impact of the Year 2000 Issue
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in similar
normal business activities.
The State of Readiness
In the normal course of business, the Company initiated plans for replacements
or enhancements to its core business systems in fiscal 1996 which would also be
Year 2000 compliant. During fiscal 1998, the Company established an oversight
committee, consisting of individuals from each of its functional areas, to
review all of the Company's computer systems and programs, as well as the
computer systems of the third parties upon whose data or functionality the
Company relies in any material respect, and to assess their ability to process
transactions in the year 2000. This committee meets regularly to review the
progress of the Company's Year 2000 compliance issues. Based on this review, the
Company has determined that a significant portion of its computer systems and
programs still needs to be modified or replaced and tested to ensure that they
are Year 2000 compliant. The Company is currently utilizing significant internal
and external resources to modify or replace and test its various software
programs and systems for Year 2000 compliance. The Company anticipates that it
will complete the Year 2000 project during the first half of fiscal 1999 and
believes that all of its Year 2000 compliance issues will be adequately
addressed with the planned modifications, replacements and testing. However, if
such modifications, replacements and testing are not completed before the year
2000, there could be a material adverse impact on the Company.
In addition, the Company has contacted its significant suppliers and other
service providers to determine the extent to which the Company is vulnerable to
those third parties' failure to remediate their own Year 2000 issues. There can
be no guarantee that the computer systems of these third parties on which the
Company's systems rely will be timely converted, or that a failure to convert by
another company, or a conversion that is incompatible with the Company's
systems, would not have material adverse effect on the Company. The Company is
not yet in a position to assess any third party's compliance efforts with the
Year 2000 issues or the impact on the Company if any third party's Year 2000
compliance efforts fail.
Costs to Address Year 2000 Issues
During the twenty-six weeks ended August 1, 1998, the costs incurred by the
Company for Year 2000 issues amounted to approximately $140,000, including
$110,000 for external and existing internal resources that were expensed as
incurred. The remaining costs of compliance for the Company are estimated at
$1,200,000, which primarily consist of (i) $200,000 for the purchase of
capitalizable software and hardware and (ii) $1,000,000 representing external
and existing internal resources that will be expensed as incurred. The Company
does not believe that the costs relating to the Year 2000 issues will have a
material adverse impact on the Company.
Risks of Year 2000 Issues
The costs of the project and the date on which the Company plans to complete the
Year 2000 modifications and replacements to its systems are based on
management's best estimates, utilizing numerous assumptions of future events
including the continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those plans. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, the
failure of third parties on which the Company relies and similar uncertainties.
Contingency Plans
In an attempt to mitigate the above risks, the Company is in the process of
developing contingency plans for its core systems applications and any unplanned
interruptions arising from the date change as well as from the failure of any
third party's compliance.
Seasonality and inflation
The Company's business is seasonal by nature. The Christmas season
(beginning the Sunday before Thanksgiving and ending on the first Saturday after
Christmas), the back-to-school season (beginning approximately the first week of
August and continuing through the first week of September) and the Easter season
(beginning approximately two weeks before Easter Sunday and ending on the
Saturday preceding Easter) collectively accounted for approximately 34.5% of the
Company's annual sales based on the Company's last three fiscal years ended
January 31, 1998. In general, sales volume varies directly with customer
traffic, which is heaviest during the third and fourth quarters of a fiscal
year. Because of the seasonality of the Company's business, results for any
quarter are not necessarily indicative of the results that may be achieved for
the full year.
Inflation can affect the costs incurred by the Company in the purchase of its
merchandise, the leasing of its stores and certain components of its selling,
general, and administrative expenses. During the last three fiscal years ended
January 31, 1998, inflation has not adversely affected the Company's business,
although there can be no assurance that inflation will not have a material
adverse effect in the future.
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
The Company has no material investments or risks in market risk sensitive
instruments.
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings - None
Item 2. - Changes in Securities - None
Item 3. - Defaults Upon Senior Securities - None
Item 4. - Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders (the "Meeting") on June 17,
1998 at which the election of directors was submitted to a vote of shareholders.
At the Meeting, the following persons were elected as directors of the Company
for three year terms expiring at the 2001 Annual Meeting of Shareholders:
Robert M. Goodfriend - 15,202,043 shares of common stock were voted in favor of
his election; 98,669 shares of common stock were withheld; and 1,185,378 shares
of common stock were not voted.
Robert F. Koppel - 15,200,392 shares of common stock were voted in favor of his
election; 100,320 shares of common stock were withheld; and 1,185,378 shares of
common stock were not voted.
The other directors of the Company include Irwin L. Lowenstein and Cheryl L.
Turnbull, whose terms expire at the 1999 Annual Meeting of Shareholders, and
Harry M. Call and Samuel J. Furrow, whose terms expire at the 2000 Annual
Meeting of Shareholders.
Item 5. - Other Information - None
Item 6. - Exhibits and Reports on Form 8-K
a) Exhibits -
10.51 Third Amendment Agreement dated May 26, 1998 between the Registrant,
GOODY'S MS, L.P., GOODY'S IN, L.P., GFCTX, L.P., GFCTN, L.P., GFCGA, L.P. and
GFC FS, Inc. as borrowers, TREBOR of TN, Inc., SYDOOG, Inc. and GOFAMCLO, Inc.
as guarantors, Lenders as identified therein and First Tennessee Bank National
Association as Administrative Agent.
10.52 Employment Agreement between Goody's Family Clothing, Inc. and Harry
M. Call dated May 20, 1998.
10.53 Employment Agreement between Goody's Family Clothing, Inc. and Edward
R. Carlin dated May 20, 1998.
10.54 Employment Agreement between Goody's Family Clothing, Inc. and Thomas
R. Kelly, Jr. dated May 20, 1998.
10.55 Employment Agreement between Goody's Family Clothing, Inc. and David
R. Mullins dated May 20, 1998.
11 Statement re: Computation of Per Share Earnings
15 Accountants' Awareness Letter
27 Financial Data Schedule
b) Reports on Form 8-K - None
<PAGE>
GOODY'S FAMILY CLOTHING, INC.
SIGNATURES
Pursuant to the requirements 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.
GOODY'S FAMILY CLOTHING, INC.
(Registrant)
Date: September 9, 1998 /s/ Harry M. Call
Harry M. Call
Director, President and
Chief Operating Officer
Date: September 9, 1998 /s/ Edward R. Carlin
Edward R. Carlin
Executive Vice President,
Chief Financial Officer and Secretary
(Principal Financial Officer)
Date: September 9, 1998 /s/ David G. Peek
David G. Peek
Vice President, Corporate Controller
and Chief Accounting Officer
(Principal Accounting Officer)
<PAGE>
Exhibit - 10.51
THIRD AMENDMENT AGREEMENT
THIS THIRD AMENDMENT AGREEMENT ("Agreement") is entered into as of the
26th day of May, 1998 by and between GOODY'S FAMILY CLOTHING, INC., a Tennessee
corporation, GOODY'S MS, L.P., a Tennessee limited partnership, GOODY'S IN,
L.P., a Tennessee limited partnership, GFCTX, L.P., a Tennessee limited
partnership (collectively, the "Original Borrowers"), GFCTN, L.P., a Tennessee
limited partnership, GFCGA, L.P., a Tennessee limited partnership, GFC FS, Inc.,
a Tennessee corporation (the "Additional Borrowers"; the Original Borrowers and
the Additional Borrowers are sometimes referred to herein as the "Borrowers"),
TREBOR of TN, INC., a Tennessee corporation, SYDOOG, INC., a Delaware
corporation, GOFAMCLO, INC., a Delaware corporation (collectively, the
"Guarantors"),those several lenders who are or become parties to the Credit
Agreement (as hereinafter defined) (collectively, the "Lenders" and,
individually, a "Lender"), and FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a
national banking association with offices in Knoxville, Tennessee, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement dated May 25, 1995
between Goody's Family Clothing, Inc., the Administrative Agent and the Lenders,
as amended and restated by that certain Amended and Restated Credit Agreement
dated as of October 31, 1996 between the Original Borrowers (with the exception
of GFCTX, L.P.), Guarantors, Lenders and the Administrative Agent and as further
amended by that certain Amendment Agreement dated May 16, 1997 between the
Original Borrowers (with the exception of GFCTX, L.P.), Guarantors, Lenders and
the Administrative Agent and that certain Second Amendment Agreement dated
September 23, 1997 between the Original Borrowers, Lenders and the
Administrative Agent (collectively, the "Credit Agreement"), Lenders have
committed to make loans to the Original Borrowers in the principal amount of
$120,000,000 (the "Loans") pursuant to the terms and provisions thereof;
WHEREAS, pursuant to the Credit Agreement, the Original Borrowers
delivered a Second Amended and Restated Promissory Note dated September 23, 1997
to each Lender (collectively, the "Notes") in the amount of such Lender's
Commitment (as defined in the Credit Agreement);
WHEREAS, the Additional Borrowers have become direct or indirect
Subsidiaries of one or more of the Original Borrowers, and the parties wish to
revise and modify the Credit Agreement so as to add the Additional Borrowers as
Borrowers thereunder;
WHEREAS, the parties further wish to modify the Credit Agreement to
increase the amount of the Commitments, revise and modify certain obligations of
the parties specified therein, and extend the Termination Date of the Credit
Agreement from May 31, 1999 until May 31, 2001; and
<PAGE>
19
WHEREAS, all terms capitalized herein and not otherwise defined shall
have the meanings ascribed to them in the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Additional Borrowers. Each Additional Borrower hereby joins in the
Credit Agreement as a Borrower, and assumes all of the obligations,
representations and warranties of a Borrower thereunder, and shall hereafter be
treated as a Borrower thereunder for all purposes.
2. Termination Date. The definition of Termination Date in the Credit
Agreement is hereby amended in its entirety to state as follows:
"Termination Date" shall mean May 31, 2001.
All indebtedness of the Borrowers incurred under the Credit
Agreement shall be due and payable as of the Termination Date set forth above.
3. Commitments. Section 2.1.1 of the Credit Agreement is hereby amended
to increase the aggregate amount of the Commitments from $120,000,000 to
$130,000,000. The Commitment and Percentage of each Lender as set forth on the
signature pages to the Credit Agreement are hereby amended to be as follows:
Lender Commitment Percentage
First Tennessee Bank $26,000,000 20.00%
National Association
First American $19,500,000 15.00%
National Bank
AmSouth Bank of $22,750,000 17.50%
Alabama
Southtrust Bank, $22,750,000 17.50%
National Association
First Union National $22,750,000 17.50%
Bank of Tennessee
Wachovia Bank, N.A. $16,250,000 12.50%
<PAGE>
4. New Notes. The Borrowers shall deliver to each Lender a Third
Amended and Restated Promissory Note substantially in the form attached hereto
as Exhibit A (the "Third Amended Notes") reflecting the amount of such Lender's
Commitment as increased herein. Upon the execution and delivery of the Third
Amended Notes to the Lenders, the Lender shall return the original Notes to the
Borrowers marked "canceled".
5. Affiliate Agreements. Affiliate Agreements under the Credit
Agreement shall include (a) the License Agreements, substantially in the form of
Exhibit 4.1B to the Credit Agreement, between SYDOOG, INC. and GFCTN, L.P. and
GFCGA, L.P., dated May _20th, 1998, (b) the Master Supply Agreements,
substantially in the form of Exhibit 4.1C to the Credit Agreement, between
Goody's MS, L.P. and GFCTN, L.P. and GFCGA, L.P., dated May _20th, 1998, and (c)
the Management Services Agreements, substantially in the form of Exhibit 4.1D to
the Credit Agreement, between Goody's Family Clothing, Inc. and GFCTN, L.P.,
GFCGA, L.P. and GFC FS dated May _20th, 1998.
6. Commitment Fee; Interest and Fee Margins. The following amendments
are made to the provisions of Sections 2.11.1, 2.13.1, 2.13.2 and 2.13.3 of the
Credit Agreement:
a. Commitment Fees. Section 2.11.1 is hereby amended to change
the per annum fee for each Lender's agreement to participate
in the Facilities from fifteen one-hundredths of one percent
(0.15%) to eleven one-hundredths of one percent (0.11%).
b. Applicable LIBOR Margin. Section 2.13.1 is hereby amended
to change the Applicable LIBOR Margin from seventy-five
one-hundredths of one percent (.75%) to thirty one-hundredths
of one percent (.30%).
c. Applicable Commercial Letter of Credit Fee Percentage.
Section 2.13.2 is hereby amended to change the Applicable
Commercial Letter of Credit Fee Percentage from seventy
one-hundredths of one percent (.70%) to thirty one-hundredths
of one percent (.30%).
d. Applicable Standby Letter of Credit Fee Percentage. Section
2.13.3 is hereby amended to change the Applicable Standby
Letter of Credit Fee Percentage from one percent (1.00%) to
fifty one-hundredths of one percent (.50%).
7. Issuance of Letters of Credit by Wachovia Bank, N.A. Section 2.3.1
of the Credit Agreement is hereby amended to delete the phrase "(other than
Wachovia Bank, N.A.)"from the first sentence thereof and Section 2.16 of the
Credit Agreement is hereby amended to delete the phrase ", with the exception of
Wachovia Bank, N.A.," from the first sentence thereof.
8. Financial Covenants. Sections 10.1.1, 10.1.3 and 10.1.4 of the
Credit Agreement are hereby amended to state as follows:
<PAGE>
10.1.1 Current Ratio. Permit on a consolidated basis in
accordance with GAAP the Current Ratio as of the end of any
Fiscal Quarter to be less than 1.15 to 1.00 or permit the
Current Ratio as of the end of any Fiscal Year to be less than
1.30 to 1.00.
10.1.3. Shareholders Equity. Permit on a consolidated basis in
accordance with GAAP the Shareholders Equity of Borrowers and
Guarantors in the aggregate (a) to be less than $180,000,000
as of January 30, 1999, (b) to be less than $205,000,000 as of
January 29, 2000, or (c) to be less than $235,000,000 as of
February 3, 2001.
10.1.4. Capital Expenditures. Permit Capital Expenditures made
by Borrowers and Guarantors in the aggregate to exceed (a)
$36,000,000 during the Fiscal Year ending January 30, 1999,
and (b) $95,000,000 in the aggregate during the two Fiscal
Years ending February 3, 2001, provided, however, that the
Borrowers may increase such amount to $110,000,000 upon
written notice delivered to the Administrative Agent and
provided, further, that such increase must be used solely to
fund the construction of an additional distribution facility.
9. Dividends. Section 9.6 of the Credit Agreement is hereby deleted in
its entirety.
10. Additional Loan. Borrowers may at any time request in writing that
Lenders increase the aggregate amount of the Commitments to $150,000,000.
Lenders' shall have thirty (30) days after the Administrative Agent's receipt of
such request to respond in writing to the Borrowers either accepting or
rejecting such request. A failure by the Lenders to respond within such thirty
(30) day period shall be deemed to be a rejection of the Borrowers' request to
increase the amount of the Commitments. If the Lenders agree to increase the
aggregate amount of the Commitments to $150,000,000 the Borrowers and Lenders
shall promptly thereafter enter into an amendment of the Credit Agreement in the
form of prior amendments which amendment shall include such provisions as are
necessary to effect the increase in the aggregate amount of the Commitments. If
the Lenders reject the request to increase the amount of the Commitments, the
Lenders hereby agree to amend Section 9.1 of the Credit Agreement to permit a
loan from a third party to the Borrowers in the amount of $20,000,000 subject,
however, to the following conditions: (a) such loan shall be unsecured, (b) at
the time the Administrative Agent receives the request from the Borrowers to
increase the Commitments, the Borrowings under the Credit Agreement together
with the amount of Borrowers' request to increase the Commitments equals or
exceeds the aggregate amount of the Commitments, and (c) no Event of Default, as
defined in Article 11 of the Credit Agreement, nor any event which, upon notice,
lapse of time or both, would constitute an Event of Default under the Credit
Agreement, has occurred and is continuing as of the effective date of the
documents evidencing such loan.
<PAGE>
11. Continuing Effect of Documents. Except as expressly modified by or
provided for in this Agreement, the terms and provisions of the Credit Agreement
and all other documents relating to the Loans shall remain in full force and
effect as originally executed.
12. Representations and Warranties. The representations and warranties
of the Borrowers and Guarantors in the Credit Agreement are true and correct on
and as of the date hereof as though made on this date.
13. No Default. As of the date hereof, each Borrower and Guarantor is
in full compliance with all of the terms and provisions set forth in the Credit
Agreement as amended hereby, including without limitation the covenants and
agreements set forth in Articles 8, 9 and 10 of the Credit Agreement, and all of
the instruments and documents executed in connection therewith, and no Event of
Default, as defined in Article 11 of the Credit Agreement, nor any event which,
upon notice, lapse of time or both, would constitute an Event of Default, has
occurred or is continuing.
14. Completeness and Modification. This Agreement constitutes the
entire agreement between the parties hereto as to the transactions contemplated
hereby and supersedes all prior discussions, understandings or agreements
between the parties hereto.
15. No Novation. Except as set forth herein, this Agreement does not
constitute a discharge or novation of any promissory note existing prior to this
Agreement or any other documents executed in connection with the Loans, and such
documents shall continue in full force and effect and shall be fully binding
upon all parties hereto.
16. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BORROWERS:
GOODY'S FAMILY CLOTHING, INC.
By: /s/ Harry M. Call
Title: President
GOODY'S MS, L.P.
<PAGE>
34
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GOODY'S IN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCTX, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCTN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCGA, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFC FS, INC.
<PAGE>
By: /s/ Harry M. Call
Title: President
GUARANTORS:
SYDOOG, INC., a Delaware corporation
By: /s/ Francis B. Jacobs II
Title: President
GOFAMCLO, INC., a Delaware corporation
By: /s/ Francis B. Jacobs II
Title: President
TREBOR OF TN, INC., a Tennessee corporation
By: /s/ Harry M. Call
Title: President
[LENDERS' SIGNATURE PAGES FOLLOW]
<PAGE>
[Lender's Signature Page to Amendment Agreement dated May 26, 1998]
FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as a Lender and as
Administrative Agent
By: /s/ James H. Atchley
Title: Vice President
Address: First Tennessee Bank National Association
Corporate Lending Group
Plaza Tower
800 S. Gay Street
Knoxville, Tennessee 37929
Attn: James H. Atchley
Telecopy No. 423-971-2883
<PAGE>
[Lender's Signature Page to Amendment Agreement dated May 26, 1998]
FIRST AMERICAN NATIONAL BANK, as a Lender
By: /s/ Eric V. Schwarzentraub
Title: Sr. Vice President
Address: 505 S. Gay Street, Mezzanine
Knoxville, Tennessee 37902
Attn: Eric V. Schwarzentraub
Telecopy No. 615-521-5352
<PAGE>
[Lender's Signature Page to Amendment Agreement dated May 26, 1998]
AMSOUTH BANK OF ALABAMA, as a Lender
By: /s/ Robert B. Dehaven
Title: Vice President
Address: 1900 5th Avenue North, 7th floor
Birmingham, Alabama 35203
Attn: Donald M. Sinclair
Telecopy No. 205-583-4436
<PAGE>
[Lender's Signature Page to Amendment Agreement dated May 26, 1998]
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Alex Morton
Title: Commercial Loan Officer
Address: 420 North 20th Street
Birmingham, Alabama 35203
Attn: Alex Morton
Telecopy No. 205-254-8270
<PAGE>
[Lender's Signature Page to Amendment Agreement dated May 26, 1998]
FIRST UNION NATIONAL BANK OF TENNESSEE,
as a Lender
By: /s/ S. Scott Miler
Title: Sr. Vice President
Address: 150 Fourth Avenue North
First Union Tower, 2nd Floor
Nashville, Tennessee 37219
Attn: S. Scott Miler
Telecopy No. 615-251-0894
<PAGE>
[Lender's Signature Page to Amendment Agreement dated May 26, 1998]
WACHOVIA BANK, N.A., as a Lender
By: /s/ John B. Tibe
Title: Asst. Vice President
Address: 191 Peachtree Street, NE, 29th floor
Atlanta, Georgia 30303
Attn: John Tibe
Telecopy No. 404-332-5016
1025716.7
<PAGE>
EXHIBIT A
THIRD AMENDED AND RESTATED PROMISSORY NOTE
$__________ Knoxville, Tennessee May 26, 1998
FOR VALUE RECEIVED, on or before the Termination Date, as defined in
the hereinafter described Credit Agreement, the undersigned, GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited
partnership, GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a
Tennessee limited partnership, GFCTN, L.P., a Tennessee limited partnership,
GFCGA, L.P., a Tennessee limited partnership, and GFC FS, Inc., a Tennessee
corporation (collectively, the "Maker"), promises to pay to the order of
_______________________ ____________ ("Payee"; Payee, and any subsequent
holder[s] hereof, being hereinafter referred to collectively as "Holder"), the
principal sum of _____________________________ AND 00/100THS DOLLARS
($_____________) or, if less, the aggregate unpaid principal amount of all Loans
advanced here against pursuant to that certain Amended and Restated Credit
Agreement dated October 31, 1996, by and among Maker, First Tennessee Bank
National Association, a national banking association, as Administrative Agent,
and the Lenders party thereto, as amended by that certain Amendment Agreement
dated May 16, 1997, by that certain Second Amendment Agreement dated September
23, 1997, and by that certain Third Amendment Agreement of even date herewith
(together with any amendments thereto and/or modifications thereof, herein
referred to as the "Credit Agreement"; capitalized terms used but not otherwise
defined herein shall have the same meanings as in the Credit Agreement),
together with interest on the unpaid principal balance of the Loans evidenced
hereby at the rate(s) specified in the Credit Agreement; provided that in no
event shall the interest and loan charges payable in respect of the indebtedness
evidenced hereby exceed the maximum amounts from time to time allowed to be
collected under applicable law.
Principal and interest payable in respect of the indebtedness evidenced
by this Note shall be due and payable at the times and in the manner specified
in the Credit Agreement.
<PAGE>
Holder hereby is authorized to record and endorse the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on a
schedule annexed to and constituting a part of this Note, which recordation and
endorsement shall constitute prima facie evidence of the respective Loans made
by Holder to Maker and payments made by Maker to Holder, absent manifest error;
provided, however, that (a) Holder's failure to make any such recordation or
endorsement shall not in any way limit or otherwise affect the obligations of
Maker or the rights and remedies of Holder under this Note or the Credit
Agreement and (b) payments to Holder of the principal of and interest on the
Loans evidenced hereby shall not be affected by the failure to make any such
recordation or endorsement thereof. In lieu of making recordation or
endorsement, Holder hereby is authorized, at its option, to record the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on its
books and records in accordance with its usual and customary practice, which
recordation shall constitute prima facie evidence of the Loans made by Holder to
Maker and payments in respect thereof made by Maker to Holder, absent manifest
error.
Upon the occurrence of an Event of Default, the entire outstanding
principal balance of the indebtedness evidenced hereby, together with all
accrued and unpaid interest thereon, may be declared, and immediately shall
become, due and payable in full, all as provided in the Credit Agreement,
subject to applicable notice and cure provisions in the said Credit Agreement.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Maker and all other parties hereto, except
as provided in the Credit Agreement.
This Note is one of the "Notes" in the aggregate principal amount of
$130,000,000 issued by Maker pursuant to the Credit Agreement, and this Note is
entitled to the benefits of the Credit Agreement and the other Loan Documents.
It is the intention of Maker and Holder to conform strictly to all laws
applicable to the Holder that govern or limit the interest and loan charges that
may be charged in respect of the indebtedness evidenced hereby. Anything in this
Note, the Credit Agreement or any of the other Loan Documents to the contrary
notwithstanding, in no event whatsoever, whether by reason of advancement of
proceeds of the Loans or the Letters of Credit, acceleration of the maturity of
the unpaid balance of any of the Obligations or otherwise, shall the interest
and loan charges agreed to be paid to any of the Lenders for the use of the
money advanced or to be advanced under the Credit Agreement exceed the maximum
amounts collectible pursuant to applicable law. Pursuant to the Credit
Agreement, Maker and the Lenders have agreed that:
<PAGE>
(a) if for any reason whatsoever the interest or loan charges
paid or contracted to be paid by Maker to any of the Lenders in respect
of the Loans shall exceed the maximum amount collectible under the law
applicable to such Lender, then, in that event, and notwithstanding
anything to the contrary in the Credit Agreement, the Notes or any
other Loan Document (i) the aggregate of all consideration that
constitutes interest or loan charges under the law applicable to such
Lender that is contracted for, taken, reserved, charged or received
under the Credit Agreement, the Notes or any other Loan Document or
otherwise in connection with the Obligations under no circumstances
shall exceed the maximum amounts allowed by such applicable law, and
any excess paid to any Lender shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent the principal
amount outstanding under the Credit Agreement, the Notes and the other
Loan Documents has been or thereby would be paid in full, refunded to
Maker), and (ii) in the event that the maturity of any or all of the
Obligations is accelerated by reason of an election of the Lenders
resulting from any Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such
consideration that constitutes interest or loan charges under the law
applicable to any Lender may never include more than the maximum
amounts allowed by the law applicable to such Lender, and any excess
interest or loan charges provided for in the Credit Agreement or
otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
by such Lender on the principal amount of the Obligations (or, to the
extent the principal amount of the Obligations has been or thereby
would be paid in full, refunded by such Lender to Maker);
(b) all sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of sums due under the Credit Agreement
shall, to the extent permitted by applicable law, be prorated,
allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest and loan charges
on account of the Obligations will not exceed any applicable legal
limitation; and
(c) the right to accelerate the maturity of the Obligations
does not include the right to accelerate the maturity of any interest
or loan charges not otherwise accrued on the date of such acceleration,
and the Lenders do not intend to charge or collect any unearned
interest or loan charges in the event of any such acceleration.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, without reference to the
conflicts or choice of law principles thereof, except to the extent that Federal
law may be applicable to determining the maximum amount of interest that may be
charged by Holder in respect of the indebtedness evidenced hereby.
This Note amends and restates that certain Second Amended and Restated
Promissory Note of Maker in favor of Payee dated September 23, 1997 in its
entirety.
It is anticipated by Maker and the Lenders that additional parties
affiliated with Maker ("Additional Makers") will assume the obligations of and
become additional Makers of this Note. Each such Additional Maker shall be added
as a Maker of this Note by the execution of a Promissory Note Assumption
Agreement in the form attached hereto to be annexed to this Note. No signatures
by Lender or Maker (other than an Additional Maker) shall be required to add an
Additional Maker as a party to this Note.
<PAGE>
IN WITNESS WHEREOF, the undersigned Maker has caused this Note
to be executed by its duly authorized officers as of the date first above
written.
MAKER:
GOODY'S FAMILY CLOTHING, INC.
By:_______________________________
Title:_____________________________
GOODY'S MS, L.P.
By: TREBOR of TN, Inc., General Partner
By: ______________________________
Title:____________________________
GOODY'S IN, L.P.
By: TREBOR of TN, Inc., General Partner
By: _____________________________
Title:___________________________
GFCTX, L.P.
By: TREBOR of TN, Inc., General Partner
By:_______________________________
Title: _____________________________
<PAGE>
GFCTN, L.P.
By: TREBOR of TN, Inc., General Partner
By:_________________________________
Title: _______________________________
GFCGA, L.P.
By: TREBOR of TN, Inc., General Partner
By:_________________________________
Title: _______________________________
GFC FS, INC.
By:_________________________________
Title: _______________________________
1025716.7
<PAGE>
PROMISSORY NOTE ASSUMPTION AGREEMENT
This Promissory Note Assumption Agreement is executed this ____ day of
_________________, 199___ by ______________________________, a
___________________ (the "Additional Maker") to be affixed to the original Third
Amended and Restated Promissory Note dated May 26, 1998, in the original
principal amount of ___________________________ Dollars ($_______________) made
by GOODY'S FAMILY CLOTHING, INC., a Tennessee corporation, GOODY'S MS, L.P., a
Tennessee limited partnership, GOODY'S IN, L.P., a Tennessee limited
partnership, GFCTX, L.P., a Tennessee limited partnership, GFCTN, L.P., a
Tennessee limited partnership, GFCGA, L.P., a Tennessee limited partnership, and
GFC FS, L.P., a Tennessee corporation (the "Original Borrowers"), to the order
of __________________ _____________________ (the "Promissory Note") and any
additional makers who have joined in the execution of a prior Promissory Note
Assumption Agreement.
The undersigned Additional Maker hereby assumes and promises to pay to
the order of ___________________________________ the principal sum of
__________________________ ______________ Dollars ($__________________) with
interest on the disbursed and unpaid principal balance from the date of
disbursement, until paid, at the rate of interest specified in the Promissory
Note. The undersigned Additional Maker assumes all obligations under the
Promissory Note as specified therein.
IN WITNESS WHEREOF, the undersigned Additional Maker has executed this
Agreement on the ___ day of _________________, 199___, which Agreement shall be
so firmly affixed to the Promissory Note as to become a part thereof.
ADDITIONAL MAKER
----------------------------------------
<PAGE>
THIRD AMENDED AND RESTATED PROMISSORY NOTE
$26,000,000 Knoxville, Tennessee May 26, 1998
FOR VALUE RECEIVED, on or before the Termination Date, as defined in
the hereinafter described Credit Agreement, the undersigned, GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited
partnership, GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a
Tennessee limited partnership, GFCTN, L.P., a Tennessee limited partnership,
GFCGA, L.P., a Tennessee limited partnership, and GFC FS, Inc., a Tennessee
corporation (collectively, the "Maker"), promises to pay to the order of FIRST
TENNESSEE BANK NATIONAL ASSOCIATION ("Payee"; Payee, and any subsequent
holder[s] hereof, being hereinafter referred to collectively as "Holder"), the
principal sum of TWENTY-SIX MILLION AND 00/100THS DOLLARS ($26,000,000.00) or,
if less, the aggregate unpaid principal amount of all Loans advanced here
against pursuant to that certain Amended and Restated Credit Agreement dated
October 31, 1996, by and among Maker, First Tennessee Bank National Association,
a national banking association, as Administrative Agent, and the Lenders party
thereto, as amended by that certain Amendment Agreement dated May 16, 1997, by
that certain Second Amendment Agreement dated September 23, 1997, and by that
certain Third Amendment Agreement of even date herewith (together with any
amendments thereto and/or modifications thereof, herein referred to as the
"Credit Agreement"; capitalized terms used but not otherwise defined herein
shall have the same meanings as in the Credit Agreement), together with interest
on the unpaid principal balance of the Loans evidenced hereby at the rate(s)
specified in the Credit Agreement; provided that in no event shall the interest
and loan charges payable in respect of the indebtedness evidenced hereby exceed
the maximum amounts from time to time allowed to be collected under applicable
law.
Principal and interest payable in respect of the indebtedness evidenced
by this Note shall be due and payable at the times and in the manner specified
in the Credit Agreement.
<PAGE>
38
Holder hereby is authorized to record and endorse the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on a
schedule annexed to and constituting a part of this Note, which recordation and
endorsement shall constitute prima facie evidence of the respective Loans made
by Holder to Maker and payments made by Maker to Holder, absent manifest error;
provided, however, that (a) Holder's failure to make any such recordation or
endorsement shall not in any way limit or otherwise affect the obligations of
Maker or the rights and remedies of Holder under this Note or the Credit
Agreement and (b) payments to Holder of the principal of and interest on the
Loans evidenced hereby shall not be affected by the failure to make any such
recordation or endorsement thereof. In lieu of making recordation or
endorsement, Holder hereby is authorized, at its option, to record the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on its
books and records in accordance with its usual and customary practice, which
recordation shall constitute prima facie evidence of the Loans made by Holder to
Maker and payments in respect thereof made by Maker to Holder, absent manifest
error.
Upon the occurrence of an Event of Default, the entire outstanding
principal balance of the indebtedness evidenced hereby, together with all
accrued and unpaid interest thereon, may be declared, and immediately shall
become, due and payable in full, all as provided in the Credit Agreement,
subject to applicable notice and cure provisions in the said Credit Agreement.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Maker and all other parties hereto, except
as provided in the Credit Agreement.
This Note is one of the "Notes" in the aggregate principal amount of
$130,000,000 issued by Maker pursuant to the Credit Agreement, and this Note is
entitled to the benefits of the Credit Agreement and the other Loan Documents.
It is the intention of Maker and Holder to conform strictly to all laws
applicable to the Holder that govern or limit the interest and loan charges that
may be charged in respect of the indebtedness evidenced hereby. Anything in this
Note, the Credit Agreement or any of the other Loan Documents to the contrary
notwithstanding, in no event whatsoever, whether by reason of advancement of
proceeds of the Loans or the Letters of Credit, acceleration of the maturity of
the unpaid balance of any of the Obligations or otherwise, shall the interest
and loan charges agreed to be paid to any of the Lenders for the use of the
money advanced or to be advanced under the Credit Agreement exceed the maximum
amounts collectible pursuant to applicable law. Pursuant to the Credit
Agreement, Maker and the Lenders have agreed that:
<PAGE>
(a) if for any reason whatsoever the interest or loan charges
paid or contracted to be paid by Maker to any of the Lenders in respect
of the Loans shall exceed the maximum amount collectible under the law
applicable to such Lender, then, in that event, and notwithstanding
anything to the contrary in the Credit Agreement, the Notes or any
other Loan Document (i) the aggregate of all consideration that
constitutes interest or loan charges under the law applicable to such
Lender that is contracted for, taken, reserved, charged or received
under the Credit Agreement, the Notes or any other Loan Document or
otherwise in connection with the Obligations under no circumstances
shall exceed the maximum amounts allowed by such applicable law, and
any excess paid to any Lender shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent the principal
amount outstanding under the Credit Agreement, the Notes and the other
Loan Documents has been or thereby would be paid in full, refunded to
Maker), and (ii) in the event that the maturity of any or all of the
Obligations is accelerated by reason of an election of the Lenders
resulting from any Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such
consideration that constitutes interest or loan charges under the law
applicable to any Lender may never include more than the maximum
amounts allowed by the law applicable to such Lender, and any excess
interest or loan charges provided for in the Credit Agreement or
otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
by such Lender on the principal amount of the Obligations (or, to the
extent the principal amount of the Obligations has been or thereby
would be paid in full, refunded by such Lender to Maker);
(b) all sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of sums due under the Credit Agreement
shall, to the extent permitted by applicable law, be prorated,
allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest and loan charges
on account of the Obligations will not exceed any applicable legal
limitation; and
(c) the right to accelerate the maturity of the Obligations
does not include the right to accelerate the maturity of any interest
or loan charges not otherwise accrued on the date of such acceleration,
and the Lenders do not intend to charge or collect any unearned
interest or loan charges in the event of any such acceleration.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, without reference to the
conflicts or choice of law principles thereof, except to the extent that Federal
law may be applicable to determining the maximum amount of interest that may be
charged by Holder in respect of the indebtedness evidenced hereby.
This Note amends and restates that certain Second Amended and Restated
Promissory Note of Maker in favor of Payee dated September 23, 1997 in its
entirety.
It is anticipated by Maker and the Lenders that additional parties
affiliated with Maker ("Additional Makers") will assume the obligations of and
become additional Makers of this Note. Each such Additional Maker shall be added
as a Maker of this Note by the execution of a Promissory Note Assumption
Agreement in the form attached hereto to be annexed to this Note. No signatures
by Lender or Maker (other than an Additional Maker) shall be required to add an
Additional Maker as a party to this Note.
<PAGE>
IN WITNESS WHEREOF, the undersigned Maker has caused this Note
to be executed by its duly authorized officers as of the date first above
written.
MAKER:
GOODY'S FAMILY CLOTHING, INC.
By: /s/ Harry M. Call
Title: President
GOODY'S MS, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GOODY'S IN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCTX, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
<PAGE>
GFCTN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCGA, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFC FS, INC.
By: /s/ Harry M. Call
Title: President
1033319.1
<PAGE>
40
PROMISSORY NOTE ASSUMPTION AGREEMENT
This Promissory Note Assumption Agreement is executed this ____ day of
_________________, 199___ by ______________________________, a
___________________ (the "Additional Maker") to be affixed to the original Third
Amended and Restated Promissory Note dated May 26, 1998, in the original
principal amount of Twenty-Six Million and no/100ths Dollars ($26,000,000.00)
made by GOODY'S FAMILY CLOTHING, INC., a Tennessee corporation, GOODY'S MS,
L.P., a Tennessee limited partnership, GOODY'S IN, L.P., a Tennessee limited
partnership, GFCTX, L.P., a Tennessee limited partnership, GFCTN, L.P., a
Tennessee limited partnership, GFCGA, L.P., a Tennessee limited partnership, and
GFC FS, L.P., a Tennessee corporation (the "Original Borrowers"), to the order
of FIRST TENNESSEE BANK NATIONAL ASSOCIATION (the "Promissory Note") and any
additional makers who have joined in the execution of a prior Promissory Note
Assumption Agreement.
The undersigned Additional Maker hereby assumes and promises to pay to
the order of FIRST TENNESSEE BANK NATIONAL ASSOCIATION the principal sum of
Twenty-Six Million and no/100ths Dollars ($26,000,000.00) with interest on the
disbursed and unpaid principal balance from the date of disbursement, until
paid, at the rate of interest specified in the Promissory Note. The undersigned
Additional Maker assumes all obligations under the Promissory Note as specified
therein.
IN WITNESS WHEREOF, the undersigned Additional Maker has executed this
Agreement on the ___ day of _________________, 199___, which Agreement shall be
so firmly affixed to the Promissory Note as to become a part thereof.
ADDITIONAL MAKER
----------------------------------------
1033319.1
<PAGE>
THIRD AMENDED AND RESTATED PROMISSORY NOTE
$22,750,000 Knoxville, Tennessee May 26, 1998
FOR VALUE RECEIVED, on or before the Termination Date, as defined in
the hereinafter described Credit Agreement, the undersigned, GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited
partnership, GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a
Tennessee limited partnership, GFCTN, L.P., a Tennessee limited partnership,
GFCGA, L.P., a Tennessee limited partnership, and GFC FS, Inc., a Tennessee
corporation (collectively, the "Maker"), promises to pay to the order of
SOUTHTRUST BANK, NATIONAL ASSOCIATION ("Payee"; Payee, and any subsequent
holder[s] hereof, being hereinafter referred to collectively as "Holder"), the
principal sum of TWENTY-TWO MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100THS
DOLLARS ($22,750,000.00) or, if less, the aggregate unpaid principal amount of
all Loans advanced here against pursuant to that certain Amended and Restated
Credit Agreement dated October 31, 1996, by and among Maker, FIRST TENNESSEE
BANK NATIONAL ASSOCIATION, a national banking association, as Administrative
Agent, and the Lenders party thereto, as amended by that certain Amendment
Agreement dated May 16, 1997, by that certain Second Amendment Agreement dated
September 23, 1997, and by that certain Third Amendment Agreement of even date
herewith (together with any amendments thereto and/or modifications thereof,
herein referred to as the "Credit Agreement"; capitalized terms used but not
otherwise defined herein shall have the same meanings as in the Credit
Agreement), together with interest on the unpaid principal balance of the Loans
evidenced hereby at the rate(s) specified in the Credit Agreement; provided that
in no event shall the interest and loan charges payable in respect of the
indebtedness evidenced hereby exceed the maximum amounts from time to time
allowed to be collected under applicable law.
Principal and interest payable in respect of the indebtedness evidenced
by this Note shall be due and payable at the times and in the manner specified
in the Credit Agreement.
<PAGE>
46
Holder hereby is authorized to record and endorse the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on a
schedule annexed to and constituting a part of this Note, which recordation and
endorsement shall constitute prima facie evidence of the respective Loans made
by Holder to Maker and payments made by Maker to Holder, absent manifest error;
provided, however, that (a) Holder's failure to make any such recordation or
endorsement shall not in any way limit or otherwise affect the obligations of
Maker or the rights and remedies of Holder under this Note or the Credit
Agreement and (b) payments to Holder of the principal of and interest on the
Loans evidenced hereby shall not be affected by the failure to make any such
recordation or endorsement thereof. In lieu of making recordation or
endorsement, Holder hereby is authorized, at its option, to record the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on its
books and records in accordance with its usual and customary practice, which
recordation shall constitute prima facie evidence of the Loans made by Holder to
Maker and payments in respect thereof made by Maker to Holder, absent manifest
error.
Upon the occurrence of an Event of Default, the entire outstanding
principal balance of the indebtedness evidenced hereby, together with all
accrued and unpaid interest thereon, may be declared, and immediately shall
become, due and payable in full, all as provided in the Credit Agreement,
subject to applicable notice and cure provisions in the said Credit Agreement.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Maker and all other parties hereto, except
as provided in the Credit Agreement.
This Note is one of the "Notes" in the aggregate principal amount of
$130,000,000 issued by Maker pursuant to the Credit Agreement, and this Note is
entitled to the benefits of the Credit Agreement and the other Loan Documents.
It is the intention of Maker and Holder to conform strictly to all laws
applicable to the Holder that govern or limit the interest and loan charges that
may be charged in respect of the indebtedness evidenced hereby. Anything in this
Note, the Credit Agreement or any of the other Loan Documents to the contrary
notwithstanding, in no event whatsoever, whether by reason of advancement of
proceeds of the Loans or the Letters of Credit, acceleration of the maturity of
the unpaid balance of any of the Obligations or otherwise, shall the interest
and loan charges agreed to be paid to any of the Lenders for the use of the
money advanced or to be advanced under the Credit Agreement exceed the maximum
amounts collectible pursuant to applicable law. Pursuant to the Credit
Agreement, Maker and the Lenders have agreed that:
<PAGE>
(a) if for any reason whatsoever the interest or loan charges
paid or contracted to be paid by Maker to any of the Lenders in respect
of the Loans shall exceed the maximum amount collectible under the law
applicable to such Lender, then, in that event, and notwithstanding
anything to the contrary in the Credit Agreement, the Notes or any
other Loan Document (i) the aggregate of all consideration that
constitutes interest or loan charges under the law applicable to such
Lender that is contracted for, taken, reserved, charged or received
under the Credit Agreement, the Notes or any other Loan Document or
otherwise in connection with the Obligations under no circumstances
shall exceed the maximum amounts allowed by such applicable law, and
any excess paid to any Lender shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent the principal
amount outstanding under the Credit Agreement, the Notes and the other
Loan Documents has been or thereby would be paid in full, refunded to
Maker), and (ii) in the event that the maturity of any or all of the
Obligations is accelerated by reason of an election of the Lenders
resulting from any Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such
consideration that constitutes interest or loan charges under the law
applicable to any Lender may never include more than the maximum
amounts allowed by the law applicable to such Lender, and any excess
interest or loan charges provided for in the Credit Agreement or
otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
by such Lender on the principal amount of the Obligations (or, to the
extent the principal amount of the Obligations has been or thereby
would be paid in full, refunded by such Lender to Maker);
(b) all sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of sums due under the Credit Agreement
shall, to the extent permitted by applicable law, be prorated,
allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest and loan charges
on account of the Obligations will not exceed any applicable legal
limitation; and
(c) the right to accelerate the maturity of the Obligations
does not include the right to accelerate the maturity of any interest
or loan charges not otherwise accrued on the date of such acceleration,
and the Lenders do not intend to charge or collect any unearned
interest or loan charges in the event of any such acceleration.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, without reference to the
conflicts or choice of law principles thereof, except to the extent that Federal
law may be applicable to determining the maximum amount of interest that may be
charged by Holder in respect of the indebtedness evidenced hereby.
This Note amends and restates that certain Second Amended and Restated
Promissory Note of Maker in favor of Payee dated September 23, 1997 in its
entirety.
It is anticipated by Maker and the Lenders that additional parties
affiliated with Maker ("Additional Makers") will assume the obligations of and
become additional Makers of this Note. Each such Additional Maker shall be added
as a Maker of this Note by the execution of a Promissory Note Assumption
Agreement in the form attached hereto to be annexed to this Note. No signatures
by Lender or Maker (other than an Additional Maker) shall be required to add an
Additional Maker as a party to this Note.
<PAGE>
IN WITNESS WHEREOF, the undersigned Maker has caused this Note
to be executed by its duly authorized officers as of the date first above
written.
MAKER:
GOODY'S FAMILY CLOTHING, INC.
By: /s/ Harry M. Call
Title: President
GOODY'S MS, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GOODY'S IN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCTX, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
<PAGE>
GFCTN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCGA, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFC FS, INC.
By: /s/ Harry M. Call
Title: President
1033336.1
<PAGE>
PROMISSORY NOTE ASSUMPTION AGREEMENT
This Promissory Note Assumption Agreement is executed this ____ day of
_________________, 199___ by ______________________________, a
___________________ (the "Additional Maker") to be affixed to the original Third
Amended and Restated Promissory Note dated May 26, 1998, in the original
principal amount of Twenty-Two Million Seven Hundred Fifty Thousand and
no/100ths Dollars ($22,750,000.00) made by GOODY'S FAMILY CLOTHING, INC., a
Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited partnership,
GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a Tennessee
limited partnership, GFCTN, L.P., a Tennessee limited partnership, GFCGA, L.P.,
a Tennessee limited partnership, and GFC FS, L.P., a Tennessee corporation (the
"Original Borrowers"), to the order of SOUTHTRUST BANK, NATIONAL ASSOCIATION
(the "Promissory Note") and any additional makers who have joined in the
execution of a prior Promissory Note Assumption Agreement.
The undersigned Additional Maker hereby assumes and promises to pay to
the order of SOUTHTRUST BANK, NATIONAL ASSOCIATION the principal sum of
Twenty-Two Million Seven Hundred Fifty Thousand and no/100ths Dollars
($22,750,000.00) with interest on the disbursed and unpaid principal balance
from the date of disbursement, until paid, at the rate of interest specified in
the Promissory Note. The undersigned Additional Maker assumes all obligations
under the Promissory Note as specified therein.
IN WITNESS WHEREOF, the undersigned Additional Maker has executed this
Agreement on the ___ day of _________________, 199___, which Agreement shall be
so firmly affixed to the Promissory Note as to become a part thereof.
ADDITIONAL MAKER
----------------------------------------
1033336.1
<PAGE>
THIRD AMENDED AND RESTATED PROMISSORY NOTE
$22,750,000 Knoxville, Tennessee May 26, 1998
FOR VALUE RECEIVED, on or before the Termination Date, as defined in
the hereinafter described Credit Agreement, the undersigned, GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited
partnership, GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a
Tennessee limited partnership, GFCTN, L.P., a Tennessee limited partnership,
GFCGA, L.P., a Tennessee limited partnership, and GFC FS, Inc., a Tennessee
corporation (collectively, the "Maker"), promises to pay to the order of FIRST
UNION NATIONAL BANK OF TENNESSEE ("Payee"; Payee, and any subsequent holder[s]
hereof, being hereinafter referred to collectively as "Holder"), the principal
sum of TWENTY-TWO MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100THS DOLLARS
($22,750,000.00) or, if less, the aggregate unpaid principal amount of all Loans
advanced here against pursuant to that certain Amended and Restated Credit
Agreement dated October 31, 1996, by and among Maker, FIRST TENNESSEE BANK
NATIONAL ASSOCIATION, a national banking association, as Administrative Agent,
and the Lenders party thereto, as amended by that certain Amendment Agreement
dated May 16, 1997, by that certain Second Amendment Agreement dated September
23, 1997, and by that certain Third Amendment Agreement of even date herewith
(together with any amendments thereto and/or modifications thereof, herein
referred to as the "Credit Agreement"; capitalized terms used but not otherwise
defined herein shall have the same meanings as in the Credit Agreement),
together with interest on the unpaid principal balance of the Loans evidenced
hereby at the rate(s) specified in the Credit Agreement; provided that in no
event shall the interest and loan charges payable in respect of the indebtedness
evidenced hereby exceed the maximum amounts from time to time allowed to be
collected under applicable law.
Principal and interest payable in respect of the indebtedness evidenced
by this Note shall be due and payable at the times and in the manner specified
in the Credit Agreement.
<PAGE>
52
Holder hereby is authorized to record and endorse the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on a
schedule annexed to and constituting a part of this Note, which recordation and
endorsement shall constitute prima facie evidence of the respective Loans made
by Holder to Maker and payments made by Maker to Holder, absent manifest error;
provided, however, that (a) Holder's failure to make any such recordation or
endorsement shall not in any way limit or otherwise affect the obligations of
Maker or the rights and remedies of Holder under this Note or the Credit
Agreement and (b) payments to Holder of the principal of and interest on the
Loans evidenced hereby shall not be affected by the failure to make any such
recordation or endorsement thereof. In lieu of making recordation or
endorsement, Holder hereby is authorized, at its option, to record the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on its
books and records in accordance with its usual and customary practice, which
recordation shall constitute prima facie evidence of the Loans made by Holder to
Maker and payments in respect thereof made by Maker to Holder, absent manifest
error.
Upon the occurrence of an Event of Default, the entire outstanding
principal balance of the indebtedness evidenced hereby, together with all
accrued and unpaid interest thereon, may be declared, and immediately shall
become, due and payable in full, all as provided in the Credit Agreement,
subject to applicable notice and cure provisions in the said Credit Agreement.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Maker and all other parties hereto, except
as provided in the Credit Agreement.
This Note is one of the "Notes" in the aggregate principal amount of
$130,000,000 issued by Maker pursuant to the Credit Agreement, and this Note is
entitled to the benefits of the Credit Agreement and the other Loan Documents.
It is the intention of Maker and Holder to conform strictly to all laws
applicable to the Holder that govern or limit the interest and loan charges that
may be charged in respect of the indebtedness evidenced hereby. Anything in this
Note, the Credit Agreement or any of the other Loan Documents to the contrary
notwithstanding, in no event whatsoever, whether by reason of advancement of
proceeds of the Loans or the Letters of Credit, acceleration of the maturity of
the unpaid balance of any of the Obligations or otherwise, shall the interest
and loan charges agreed to be paid to any of the Lenders for the use of the
money advanced or to be advanced under the Credit Agreement exceed the maximum
amounts collectible pursuant to applicable law. Pursuant to the Credit
Agreement, Maker and the Lenders have agreed that:
<PAGE>
(a) if for any reason whatsoever the interest or loan charges
paid or contracted to be paid by Maker to any of the Lenders in respect
of the Loans shall exceed the maximum amount collectible under the law
applicable to such Lender, then, in that event, and notwithstanding
anything to the contrary in the Credit Agreement, the Notes or any
other Loan Document (i) the aggregate of all consideration that
constitutes interest or loan charges under the law applicable to such
Lender that is contracted for, taken, reserved, charged or received
under the Credit Agreement, the Notes or any other Loan Document or
otherwise in connection with the Obligations under no circumstances
shall exceed the maximum amounts allowed by such applicable law, and
any excess paid to any Lender shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent the principal
amount outstanding under the Credit Agreement, the Notes and the other
Loan Documents has been or thereby would be paid in full, refunded to
Maker), and (ii) in the event that the maturity of any or all of the
Obligations is accelerated by reason of an election of the Lenders
resulting from any Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such
consideration that constitutes interest or loan charges under the law
applicable to any Lender may never include more than the maximum
amounts allowed by the law applicable to such Lender, and any excess
interest or loan charges provided for in the Credit Agreement or
otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
by such Lender on the principal amount of the Obligations (or, to the
extent the principal amount of the Obligations has been or thereby
would be paid in full, refunded by such Lender to Maker);
(b) all sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of sums due under the Credit Agreement
shall, to the extent permitted by applicable law, be prorated,
allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest and loan charges
on account of the Obligations will not exceed any applicable legal
limitation; and
(c) the right to accelerate the maturity of the Obligations
does not include the right to accelerate the maturity of any interest
or loan charges not otherwise accrued on the date of such acceleration,
and the Lenders do not intend to charge or collect any unearned
interest or loan charges in the event of any such acceleration.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, without reference to the
conflicts or choice of law principles thereof, except to the extent that Federal
law may be applicable to determining the maximum amount of interest that may be
charged by Holder in respect of the indebtedness evidenced hereby.
This Note amends and restates that certain Second Amended and Restated
Promissory Note of Maker in favor of Payee dated September 23, 1997 in its
entirety.
It is anticipated by Maker and the Lenders that additional parties
affiliated with Maker ("Additional Makers") will assume the obligations of and
become additional Makers of this Note. Each such Additional Maker shall be added
as a Maker of this Note by the execution of a Promissory Note Assumption
Agreement in the form attached hereto to be annexed to this Note. No signatures
by Lender or Maker (other than an Additional Maker) shall be required to add an
Additional Maker as a party to this Note.
<PAGE>
IN WITNESS WHEREOF, the undersigned Maker has caused this Note
to be executed by its duly authorized officers as of the date first above
written.
MAKER:
GOODY'S FAMILY CLOTHING, INC.
By: /s/ Harry M. Call
Title: President
GOODY'S MS, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GOODY'S IN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCTX, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
<PAGE>
GFCTN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCGA, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFC FS, INC.
By: /s/ Harry M. Call
Title: President
1033336.1
<PAGE>
PROMISSORY NOTE ASSUMPTION AGREEMENT
This Promissory Note Assumption Agreement is executed this ____ day of
_________________, 199___ by ______________________________, a
___________________ (the "Additional Maker") to be affixed to the original Third
Amended and Restated Promissory Note dated May 26, 1998, in the original
principal amount of Twenty-Two Million Seven Hundred Fifty Thousand and
no/100ths Dollars ($22,750,000.00) made by GOODY'S FAMILY CLOTHING, INC., a
Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited partnership,
GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a Tennessee
limited partnership, GFCTN, L.P., a Tennessee limited partnership, GFCGA, L.P.,
a Tennessee limited partnership, and GFC FS, L.P., a Tennessee corporation (the
"Original Borrowers"), to the order of FIRST UNION NATIONAL BANK OF TENNESSEE
(the "Promissory Note") and any additional makers who have joined in the
execution of a prior Promissory Note Assumption Agreement.
The undersigned Additional Maker hereby assumes and promises to pay to
the order of FIRST UNION NATIONAL BANK OF TENNESSEE the principal sum of
Twenty-Two Million Seven Hundred Fifty Thousand and no/100ths Dollars
($22,750,000.00) with interest on the disbursed and unpaid principal balance
from the date of disbursement, until paid, at the rate of interest specified in
the Promissory Note. The undersigned Additional Maker assumes all obligations
under the Promissory Note as specified therein.
IN WITNESS WHEREOF, the undersigned Additional Maker has executed this
Agreement on the ___ day of _________________, 199___, which Agreement shall be
so firmly affixed to the Promissory Note as to become a part thereof.
ADDITIONAL MAKER
----------------------------------------
1033336.1
<PAGE>
THIRD AMENDED AND RESTATED PROMISSORY NOTE
$22,750,000 Knoxville, Tennessee May 26, 1998
FOR VALUE RECEIVED, on or before the Termination Date, as defined in
the hereinafter described Credit Agreement, the undersigned, GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited
partnership, GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a
Tennessee limited partnership, GFCTN, L.P., a Tennessee limited partnership,
GFCGA, L.P., a Tennessee limited partnership, and GFC FS, Inc., a Tennessee
corporation (collectively, the "Maker"), promises to pay to the order of AMSOUTH
BANK OF ALABAMA ("Payee"; Payee, and any subsequent holder[s] hereof, being
hereinafter referred to collectively as "Holder"), the principal sum of
TWENTY-TWO MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100THS DOLLARS
($22,750,000.00) or, if less, the aggregate unpaid principal amount of all Loans
advanced here against pursuant to that certain Amended and Restated Credit
Agreement dated October 31, 1996, by and among Maker, FIRST TENNESSEE BANK
NATIONAL ASSOCIATION, a national banking association, as Administrative Agent,
and the Lenders party thereto, as amended by that certain Amendment Agreement
dated May 16, 1997, by that certain Second Amendment Agreement dated September
23, 1997, and by that certain Third Amendment Agreement of even date herewith
(together with any amendments thereto and/or modifications thereof, herein
referred to as the "Credit Agreement"; capitalized terms used but not otherwise
defined herein shall have the same meanings as in the Credit Agreement),
together with interest on the unpaid principal balance of the Loans evidenced
hereby at the rate(s) specified in the Credit Agreement; provided that in no
event shall the interest and loan charges payable in respect of the indebtedness
evidenced hereby exceed the maximum amounts from time to time allowed to be
collected under applicable law.
Principal and interest payable in respect of the indebtedness evidenced
by this Note shall be due and payable at the times and in the manner specified
in the Credit Agreement.
<PAGE>
58
Holder hereby is authorized to record and endorse the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on a
schedule annexed to and constituting a part of this Note, which recordation and
endorsement shall constitute prima facie evidence of the respective Loans made
by Holder to Maker and payments made by Maker to Holder, absent manifest error;
provided, however, that (a) Holder's failure to make any such recordation or
endorsement shall not in any way limit or otherwise affect the obligations of
Maker or the rights and remedies of Holder under this Note or the Credit
Agreement and (b) payments to Holder of the principal of and interest on the
Loans evidenced hereby shall not be affected by the failure to make any such
recordation or endorsement thereof. In lieu of making recordation or
endorsement, Holder hereby is authorized, at its option, to record the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on its
books and records in accordance with its usual and customary practice, which
recordation shall constitute prima facie evidence of the Loans made by Holder to
Maker and payments in respect thereof made by Maker to Holder, absent manifest
error.
Upon the occurrence of an Event of Default, the entire outstanding
principal balance of the indebtedness evidenced hereby, together with all
accrued and unpaid interest thereon, may be declared, and immediately shall
become, due and payable in full, all as provided in the Credit Agreement,
subject to applicable notice and cure provisions in the said Credit Agreement.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Maker and all other parties hereto, except
as provided in the Credit Agreement.
This Note is one of the "Notes" in the aggregate principal amount of
$130,000,000 issued by Maker pursuant to the Credit Agreement, and this Note is
entitled to the benefits of the Credit Agreement and the other Loan Documents.
It is the intention of Maker and Holder to conform strictly to all laws
applicable to the Holder that govern or limit the interest and loan charges that
may be charged in respect of the indebtedness evidenced hereby. Anything in this
Note, the Credit Agreement or any of the other Loan Documents to the contrary
notwithstanding, in no event whatsoever, whether by reason of advancement of
proceeds of the Loans or the Letters of Credit, acceleration of the maturity of
the unpaid balance of any of the Obligations or otherwise, shall the interest
and loan charges agreed to be paid to any of the Lenders for the use of the
money advanced or to be advanced under the Credit Agreement exceed the maximum
amounts collectible pursuant to applicable law. Pursuant to the Credit
Agreement, Maker and the Lenders have agreed that:
<PAGE>
(a) if for any reason whatsoever the interest or loan charges
paid or contracted to be paid by Maker to any of the Lenders in respect
of the Loans shall exceed the maximum amount collectible under the law
applicable to such Lender, then, in that event, and notwithstanding
anything to the contrary in the Credit Agreement, the Notes or any
other Loan Document (i) the aggregate of all consideration that
constitutes interest or loan charges under the law applicable to such
Lender that is contracted for, taken, reserved, charged or received
under the Credit Agreement, the Notes or any other Loan Document or
otherwise in connection with the Obligations under no circumstances
shall exceed the maximum amounts allowed by such applicable law, and
any excess paid to any Lender shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent the principal
amount outstanding under the Credit Agreement, the Notes and the other
Loan Documents has been or thereby would be paid in full, refunded to
Maker), and (ii) in the event that the maturity of any or all of the
Obligations is accelerated by reason of an election of the Lenders
resulting from any Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such
consideration that constitutes interest or loan charges under the law
applicable to any Lender may never include more than the maximum
amounts allowed by the law applicable to such Lender, and any excess
interest or loan charges provided for in the Credit Agreement or
otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
by such Lender on the principal amount of the Obligations (or, to the
extent the principal amount of the Obligations has been or thereby
would be paid in full, refunded by such Lender to Maker);
(b) all sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of sums due under the Credit Agreement
shall, to the extent permitted by applicable law, be prorated,
allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest and loan charges
on account of the Obligations will not exceed any applicable legal
limitation; and
(c) the right to accelerate the maturity of the Obligations
does not include the right to accelerate the maturity of any interest
or loan charges not otherwise accrued on the date of such acceleration,
and the Lenders do not intend to charge or collect any unearned
interest or loan charges in the event of any such acceleration.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, without reference to the
conflicts or choice of law principles thereof, except to the extent that Federal
law may be applicable to determining the maximum amount of interest that may be
charged by Holder in respect of the indebtedness evidenced hereby.
This Note amends and restates that certain Second Amended and Restated
Promissory Note of Maker in favor of Payee dated September 23, 1997 in its
entirety.
It is anticipated by Maker and the Lenders that additional parties
affiliated with Maker ("Additional Makers") will assume the obligations of and
become additional Makers of this Note. Each such Additional Maker shall be added
as a Maker of this Note by the execution of a Promissory Note Assumption
Agreement in the form attached hereto to be annexed to this Note. No signatures
by Lender or Maker (other than an Additional Maker) shall be required to add an
Additional Maker as a party to this Note.
<PAGE>
IN WITNESS WHEREOF, the undersigned Maker has caused this Note
to be executed by its duly authorized officers as of the date first above
written.
MAKER:
GOODY'S FAMILY CLOTHING, INC.
By: /s/ Harry M. Call
Title: President
GOODY'S MS, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GOODY'S IN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCTX, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
<PAGE>
GFCTN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCGA, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFC FS, INC.
By: /s/ Harry M. Call
Title: President
1033334.1
<PAGE>
PROMISSORY NOTE ASSUMPTION AGREEMENT
This Promissory Note Assumption Agreement is executed this ____ day of
_________________, 199___ by ______________________________, a
___________________ (the "Additional Maker") to be affixed to the original Third
Amended and Restated Promissory Note dated May 26, 1998, in the original
principal amount of Twenty-Two Million Seven Hundred Fifty Thousand and
no/100ths Dollars ($22,750,000.00) made by GOODY'S FAMILY CLOTHING, INC., a
Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited partnership,
GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a Tennessee
limited partnership, GFCTN, L.P., a Tennessee limited partnership, GFCGA, L.P.,
a Tennessee limited partnership, and GFC FS, L.P., a Tennessee corporation (the
"Original Borrowers"), to the order of AMSOUTH BANK OF ALABAMA (the "Promissory
Note") and any additional makers who have joined in the execution of a prior
Promissory Note Assumption Agreement.
The undersigned Additional Maker hereby assumes and promises to pay to
the order of AMSOUTH BANK OF ALABAMA the principal sum of Twenty-Two Million
Seven Hundred Fifty Thousand and no/100ths Dollars ($22,750,000.00) with
interest on the disbursed and unpaid principal balance from the date of
disbursement, until paid, at the rate of interest specified in the Promissory
Note. The undersigned Additional Maker assumes all obligations under the
Promissory Note as specified therein.
IN WITNESS WHEREOF, the undersigned Additional Maker has executed this
Agreement on the ___ day of _________________, 199___, which Agreement shall be
so firmly affixed to the Promissory Note as to become a part thereof.
ADDITIONAL MAKER
----------------------------------------
1033334.1
<PAGE>
THIRD AMENDED AND RESTATED PROMISSORY NOTE
$19,500,000 Knoxville, Tennessee May 26, 1998
FOR VALUE RECEIVED, on or before the Termination Date, as defined in
the hereinafter described Credit Agreement, the undersigned, GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited
partnership, GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a
Tennessee limited partnership, GFCTN, L.P., a Tennessee limited partnership,
GFCGA, L.P., a Tennessee limited partnership, and GFC FS, Inc., a Tennessee
corporation (collectively, the "Maker"), promises to pay to the order of FIRST
AMERICAN NATIONAL BANK ("Payee"; Payee, and any subsequent holder[s] hereof,
being hereinafter referred to collectively as "Holder"), the principal sum of
NINETEEN MILLION FIVE HUNDRED THOUSAND AND 00/100THS DOLLARS ($19,500,000.00)
or, if less, the aggregate unpaid principal amount of all Loans advanced here
against pursuant to that certain Amended and Restated Credit Agreement dated
October 31, 1996, by and among Maker, FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
a national banking association, as Administrative Agent, and the Lenders party
thereto, as amended by that certain Amendment Agreement dated May 16, 1997, by
that certain Second Amendment Agreement dated September 23, 1997, and by that
certain Third Amendment Agreement of even date herewith (together with any
amendments thereto and/or modifications thereof, herein referred to as the
"Credit Agreement"; capitalized terms used but not otherwise defined herein
shall have the same meanings as in the Credit Agreement), together with interest
on the unpaid principal balance of the Loans evidenced hereby at the rate(s)
specified in the Credit Agreement; provided that in no event shall the interest
and loan charges payable in respect of the indebtedness evidenced hereby exceed
the maximum amounts from time to time allowed to be collected under applicable
law.
Principal and interest payable in respect of the indebtedness evidenced
by this Note shall be due and payable at the times and in the manner specified
in the Credit Agreement.
<PAGE>
61
Holder hereby is authorized to record and endorse the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on a
schedule annexed to and constituting a part of this Note, which recordation and
endorsement shall constitute prima facie evidence of the respective Loans made
by Holder to Maker and payments made by Maker to Holder, absent manifest error;
provided, however, that (a) Holder's failure to make any such recordation or
endorsement shall not in any way limit or otherwise affect the obligations of
Maker or the rights and remedies of Holder under this Note or the Credit
Agreement and (b) payments to Holder of the principal of and interest on the
Loans evidenced hereby shall not be affected by the failure to make any such
recordation or endorsement thereof. In lieu of making recordation or
endorsement, Holder hereby is authorized, at its option, to record the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on its
books and records in accordance with its usual and customary practice, which
recordation shall constitute prima facie evidence of the Loans made by Holder to
Maker and payments in respect thereof made by Maker to Holder, absent manifest
error.
Upon the occurrence of an Event of Default, the entire outstanding
principal balance of the indebtedness evidenced hereby, together with all
accrued and unpaid interest thereon, may be declared, and immediately shall
become, due and payable in full, all as provided in the Credit Agreement,
subject to applicable notice and cure provisions in the said Credit Agreement.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Maker and all other parties hereto, except
as provided in the Credit Agreement.
This Note is one of the "Notes" in the aggregate principal amount of
$130,000,000 issued by Maker pursuant to the Credit Agreement, and this Note is
entitled to the benefits of the Credit Agreement and the other Loan Documents.
It is the intention of Maker and Holder to conform strictly to all laws
applicable to the Holder that govern or limit the interest and loan charges that
may be charged in respect of the indebtedness evidenced hereby. Anything in this
Note, the Credit Agreement or any of the other Loan Documents to the contrary
notwithstanding, in no event whatsoever, whether by reason of advancement of
proceeds of the Loans or the Letters of Credit, acceleration of the maturity of
the unpaid balance of any of the Obligations or otherwise, shall the interest
and loan charges agreed to be paid to any of the Lenders for the use of the
money advanced or to be advanced under the Credit Agreement exceed the maximum
amounts collectible pursuant to applicable law. Pursuant to the Credit
Agreement, Maker and the Lenders have agreed that:
<PAGE>
(a) if for any reason whatsoever the interest or loan charges
paid or contracted to be paid by Maker to any of the Lenders in respect
of the Loans shall exceed the maximum amount collectible under the law
applicable to such Lender, then, in that event, and notwithstanding
anything to the contrary in the Credit Agreement, the Notes or any
other Loan Document (i) the aggregate of all consideration that
constitutes interest or loan charges under the law applicable to such
Lender that is contracted for, taken, reserved, charged or received
under the Credit Agreement, the Notes or any other Loan Document or
otherwise in connection with the Obligations under no circumstances
shall exceed the maximum amounts allowed by such applicable law, and
any excess paid to any Lender shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent the principal
amount outstanding under the Credit Agreement, the Notes and the other
Loan Documents has been or thereby would be paid in full, refunded to
Maker), and (ii) in the event that the maturity of any or all of the
Obligations is accelerated by reason of an election of the Lenders
resulting from any Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such
consideration that constitutes interest or loan charges under the law
applicable to any Lender may never include more than the maximum
amounts allowed by the law applicable to such Lender, and any excess
interest or loan charges provided for in the Credit Agreement or
otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
by such Lender on the principal amount of the Obligations (or, to the
extent the principal amount of the Obligations has been or thereby
would be paid in full, refunded by such Lender to Maker);
(b) all sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of sums due under the Credit Agreement
shall, to the extent permitted by applicable law, be prorated,
allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest and loan charges
on account of the Obligations will not exceed any applicable legal
limitation; and
(c) the right to accelerate the maturity of the Obligations
does not include the right to accelerate the maturity of any interest
or loan charges not otherwise accrued on the date of such acceleration,
and the Lenders do not intend to charge or collect any unearned
interest or loan charges in the event of any such acceleration.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, without reference to the
conflicts or choice of law principles thereof, except to the extent that Federal
law may be applicable to determining the maximum amount of interest that may be
charged by Holder in respect of the indebtedness evidenced hereby.
This Note amends and restates that certain Second Amended and Restated
Promissory Note of Maker in favor of Payee dated September 23, 1997 in its
entirety.
It is anticipated by Maker and the Lenders that additional parties
affiliated with Maker ("Additional Makers") will assume the obligations of and
become additional Makers of this Note. Each such Additional Maker shall be added
as a Maker of this Note by the execution of a Promissory Note Assumption
Agreement in the form attached hereto to be annexed to this Note. No signatures
by Lender or Maker (other than an Additional Maker) shall be required to add an
Additional Maker as a party to this Note.
<PAGE>
IN WITNESS WHEREOF, the undersigned Maker has caused this Note
to be executed by its duly authorized officers as of the date first above
written.
MAKER:
GOODY'S FAMILY CLOTHING, INC.
By: /s/ Harry M. Call
Title: President
GOODY'S MS, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GOODY'S IN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCTX, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
<PAGE>
GFCTN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCGA, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFC FS, INC.
By: /s/ Harry M. Call
Title: President
1033334.1
<PAGE>
64
PROMISSORY NOTE ASSUMPTION AGREEMENT
This Promissory Note Assumption Agreement is executed this ____ day of
_________________, 199___ by ______________________________, a
___________________ (the "Additional Maker") to be affixed to the original Third
Amended and Restated Promissory Note dated May 26, 1998, in the original
principal amount of Nineteen Million Five Hundred Thousand and no/100ths Dollars
($19,500,000.00) made by GOODY'S FAMILY CLOTHING, INC., a Tennessee corporation,
GOODY'S MS, L.P., a Tennessee limited partnership, GOODY'S IN, L.P., a Tennessee
limited partnership, GFCTX, L.P., a Tennessee limited partnership, GFCTN, L.P.,
a Tennessee limited partnership, GFCGA, L.P., a Tennessee limited partnership,
and GFC FS, L.P., a Tennessee corporation (the "Original Borrowers"), to the
order of FIRST AMERICAN NATIONAL BANK (the "Promissory Note") and any additional
makers who have joined in the execution of a prior Promissory Note Assumption
Agreement.
The undersigned Additional Maker hereby assumes and promises to pay to
the order of FIRST AMERICAN NATIONAL BANK the principal sum of Nineteen Million
Five Hundred Thousand and no/100ths Dollars ($19,500,000.00) with interest on
the disbursed and unpaid principal balance from the date of disbursement, until
paid, at the rate of interest specified in the Promissory Note. The undersigned
Additional Maker assumes all obligations under the Promissory Note as specified
therein.
IN WITNESS WHEREOF, the undersigned Additional Maker has executed this
Agreement on the ___ day of _________________, 199___, which Agreement shall be
so firmly affixed to the Promissory Note as to become a part thereof.
ADDITIONAL MAKER
----------------------------------------
1033334.1
<PAGE>
THIRD AMENDED AND RESTATED PROMISSORY NOTE
$16,250,000 Knoxville, Tennessee May 26, 1998
FOR VALUE RECEIVED, on or before the Termination Date, as defined in
the hereinafter described Credit Agreement, the undersigned, GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation, GOODY'S MS, L.P., a Tennessee limited
partnership, GOODY'S IN, L.P., a Tennessee limited partnership, GFCTX, L.P., a
Tennessee limited partnership, GFCTN, L.P., a Tennessee limited partnership,
GFCGA, L.P., a Tennessee limited partnership, and GFC FS, Inc., a Tennessee
corporation (collectively, the "Maker"), promises to pay to the order of
WACHOVIA BANK, N.A. ("Payee"; Payee, and any subsequent holder[s] hereof, being
hereinafter referred to collectively as "Holder"), the principal sum of SIXTEEN
MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100THS DOLLARS ($16,250,000.00) or, if
less, the aggregate unpaid principal amount of all Loans advanced here against
pursuant to that certain Amended and Restated Credit Agreement dated October 31,
1996, by and among Maker, FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national
banking association, as Administrative Agent, and the Lenders party thereto, as
amended by that certain Amendment Agreement dated May 16, 1997, by that certain
Second Amendment Agreement dated September 23, 1997, and by that certain Third
Amendment Agreement of even date herewith (together with any amendments thereto
and/or modifications thereof, herein referred to as the "Credit Agreement";
capitalized terms used but not otherwise defined herein shall have the same
meanings as in the Credit Agreement), together with interest on the unpaid
principal balance of the Loans evidenced hereby at the rate(s) specified in the
Credit Agreement; provided that in no event shall the interest and loan charges
payable in respect of the indebtedness evidenced hereby exceed the maximum
amounts from time to time allowed to be collected under applicable law.
Principal and interest payable in respect of the indebtedness evidenced
by this Note shall be due and payable at the times and in the manner specified
in the Credit Agreement.
<PAGE>
68
Holder hereby is authorized to record and endorse the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on a
schedule annexed to and constituting a part of this Note, which recordation and
endorsement shall constitute prima facie evidence of the respective Loans made
by Holder to Maker and payments made by Maker to Holder, absent manifest error;
provided, however, that (a) Holder's failure to make any such recordation or
endorsement shall not in any way limit or otherwise affect the obligations of
Maker or the rights and remedies of Holder under this Note or the Credit
Agreement and (b) payments to Holder of the principal of and interest on the
Loans evidenced hereby shall not be affected by the failure to make any such
recordation or endorsement thereof. In lieu of making recordation or
endorsement, Holder hereby is authorized, at its option, to record the date and
principal amount of each Loan made by it, and the amount of each payment of
principal and interest made to such Holder with respect to such Loans, on its
books and records in accordance with its usual and customary practice, which
recordation shall constitute prima facie evidence of the Loans made by Holder to
Maker and payments in respect thereof made by Maker to Holder, absent manifest
error.
Upon the occurrence of an Event of Default, the entire outstanding
principal balance of the indebtedness evidenced hereby, together with all
accrued and unpaid interest thereon, may be declared, and immediately shall
become, due and payable in full, all as provided in the Credit Agreement,
subject to applicable notice and cure provisions in the said Credit Agreement.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Maker and all other parties hereto, except
as provided in the Credit Agreement.
This Note is one of the "Notes" in the aggregate principal amount of
$130,000,000 issued by Maker pursuant to the Credit Agreement, and this Note is
entitled to the benefits of the Credit Agreement and the other Loan Documents.
It is the intention of Maker and Holder to conform strictly to all laws
applicable to the Holder that govern or limit the interest and loan charges that
may be charged in respect of the indebtedness evidenced hereby. Anything in this
Note, the Credit Agreement or any of the other Loan Documents to the contrary
notwithstanding, in no event whatsoever, whether by reason of advancement of
proceeds of the Loans or the Letters of Credit, acceleration of the maturity of
the unpaid balance of any of the Obligations or otherwise, shall the interest
and loan charges agreed to be paid to any of the Lenders for the use of the
money advanced or to be advanced under the Credit Agreement exceed the maximum
amounts collectible pursuant to applicable law. Pursuant to the Credit
Agreement, Maker and the Lenders have agreed that:
<PAGE>
(a) if for any reason whatsoever the interest or loan charges
paid or contracted to be paid by Maker to any of the Lenders in respect
of the Loans shall exceed the maximum amount collectible under the law
applicable to such Lender, then, in that event, and notwithstanding
anything to the contrary in the Credit Agreement, the Notes or any
other Loan Document (i) the aggregate of all consideration that
constitutes interest or loan charges under the law applicable to such
Lender that is contracted for, taken, reserved, charged or received
under the Credit Agreement, the Notes or any other Loan Document or
otherwise in connection with the Obligations under no circumstances
shall exceed the maximum amounts allowed by such applicable law, and
any excess paid to any Lender shall be credited by such Lender on the
principal amount of the Obligations (or, to the extent the principal
amount outstanding under the Credit Agreement, the Notes and the other
Loan Documents has been or thereby would be paid in full, refunded to
Maker), and (ii) in the event that the maturity of any or all of the
Obligations is accelerated by reason of an election of the Lenders
resulting from any Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such
consideration that constitutes interest or loan charges under the law
applicable to any Lender may never include more than the maximum
amounts allowed by the law applicable to such Lender, and any excess
interest or loan charges provided for in the Credit Agreement or
otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
by such Lender on the principal amount of the Obligations (or, to the
extent the principal amount of the Obligations has been or thereby
would be paid in full, refunded by such Lender to Maker);
(b) all sums paid or agreed to be paid to the Lenders for the
use, forbearance or detention of sums due under the Credit Agreement
shall, to the extent permitted by applicable law, be prorated,
allocated and spread throughout the full term of the Obligations until
payment in full so that the rate or amount of interest and loan charges
on account of the Obligations will not exceed any applicable legal
limitation; and
(c) the right to accelerate the maturity of the Obligations
does not include the right to accelerate the maturity of any interest
or loan charges not otherwise accrued on the date of such acceleration,
and the Lenders do not intend to charge or collect any unearned
interest or loan charges in the event of any such acceleration.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, without reference to the
conflicts or choice of law principles thereof, except to the extent that Federal
law may be applicable to determining the maximum amount of interest that may be
charged by Holder in respect of the indebtedness evidenced hereby.
This Note amends and restates that certain Second Amended and Restated
Promissory Note of Maker in favor of Payee dated September 23, 1997 in its
entirety.
It is anticipated by Maker and the Lenders that additional parties
affiliated with Maker ("Additional Makers") will assume the obligations of and
become additional Makers of this Note. Each such Additional Maker shall be added
as a Maker of this Note by the execution of a Promissory Note Assumption
Agreement in the form attached hereto to be annexed to this Note. No signatures
by Lender or Maker (other than an Additional Maker) shall be required to add an
Additional Maker as a party to this Note.
<PAGE>
IN WITNESS WHEREOF, the undersigned Maker has caused this Note
to be executed by its duly authorized officers as of the date first above
written.
MAKER:
GOODY'S FAMILY CLOTHING, INC.
By: /s/ Harry M. Call
Title: President
GOODY'S MS, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GOODY'S IN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCTX, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
<PAGE>
GFCTN, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFCGA, L.P.
By: TREBOR of TN, Inc., General Partner
By: /s/ Harry M. Call
Title: President
GFC FS, INC.
By: /s/ Harry M. Call
Title: President
1033338.1
<PAGE>
80
3-1399
EXHIBIT 4.1B
3-1399
PROMISSORY NOTE ASSUMPTION AGREEMENT
This Promissory Note Assumption Agreement is executed this ____ day of
_________________, 199___ by ______________________________, a
___________________ (the "Additional Maker") to be affixed to the original Third
Amended and Restated Promissory Note dated May 26, 1998, in the original
principal amount of Sixteen Million Two Hundred Fifty Thousand and no/100ths
Dollars ($16,250,000.00) made by GOODY'S FAMILY CLOTHING, INC., a Tennessee
corporation, GOODY'S MS, L.P., a Tennessee limited partnership, GOODY'S IN,
L.P., a Tennessee limited partnership, GFCTX, L.P., a Tennessee limited
partnership, GFCTN, L.P., a Tennessee limited partnership, GFCGA, L.P., a
Tennessee limited partnership, and GFC FS, L.P., a Tennessee corporation (the
"Original Borrowers"), to the order of WACHOVIA BANK, N.A. (the "Promissory
Note") and any additional makers who have joined in the execution of a prior
Promissory Note Assumption Agreement.
The undersigned Additional Maker hereby assumes and promises to pay to
the order of WACHOVIA BANK, N.A. the principal sum of Sixteen Million Two
Hundred Fifty Thousand and no/100ths Dollars ($16,250,000.00) with interest on
the disbursed and unpaid principal balance from the date of disbursement, until
paid, at the rate of interest specified in the Promissory Note. The undersigned
Additional Maker assumes all obligations under the Promissory Note as specified
therein.
IN WITNESS WHEREOF, the undersigned Additional Maker has executed this
Agreement on the ___ day of _________________, 199___, which Agreement shall be
so firmly affixed to the Promissory Note as to become a part thereof.
ADDITIONAL MAKER
---------------------------------
1033338.1
<PAGE>
Exhibit - 4.1 B
LICENSE AGREEMENT
This License Agreement (this "Agreement") is dated as of May
20, 1998, by and between SYDOOG, INC., a Delaware corporation having its only
place of business at 913 Market Street, Suite 817, Wilmington, Delaware 19801
(the "Licensor"), and GFCTN, L.P., a Tennessee limited partnership having a
place of business at 400 Goody's Lane, Knoxville, Tennessee 37933 (the
"Licensee").
BACKGROUND
The background of this Agreement is as follows:
1. Licensor is the proprietor of the tradenames, trademarks
and service marks, together with all registrations and/or applications for
registration associated therewith, identified on Exhibit A hereto, which may be
amended from time to time by consent of the parties hereto (all such tradenames,
trademarks and service marks are hereinafter collectively referred to as the
"Trademarks").
2. Licensee plans to open and operate retail clothing store(s)
under the tradename "GOODY'S". It is the desire and intention of the parties
that Licensee be permitted to use the Trademarks on a non-exclusive basis in the
United States in a manner reasonably related to the conduct of its retail and
distribution operations.
3. Licensor and Licensee have agreed to the terms of such
non-exclusive license of the Trademarks on the terms provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises
contained herein and for other good and valuable consideration received, the
receipt and sufficiency of which is hereby acknowledged, and of the
representations and covenants hereinafter set forth, the parties hereby agree as
follows:
1. GRANT OF LICENSE.
A. License of Trademarks for Use in Corporate Name and
Business. Subject to the provisions of this Agreement, Licensor hereby grants to
Licensee the non-exclusive right to make use of the Trademarks and all goodwill
associated therewith in its corporate name and its business throughout the
United States.
B. Identification of Status and Ownership of the Trademarks.
(i) Licensee acknowledges that Licensor owns the Trademarks and agrees
never to impugn or challenge, or to assist in any challenge of the validity of
the Trademarks, the registration of the Trademarks, or Licensor's ownership of
the Trademarks.
(ii) The Trademarks shall be clearly denoted as being trademarks by
utilizing the appropriate symbol of an encircled R "(R)" (for registered
trademarks) or the designation "(TM)" (for common law trademarks) or such other
symbol or legend as Licensor may designate from time to time.
(iii) As requested by Licensor in writing, Licensee shall also incorporate
an asterisk by each use of the Trademarks and shall incorporate a statement
which reads:
*Trademark of SYDOOG, Inc.
C. Rights of Licensee. Subject to the provisions of this
Agreement, Licensor hereby grants to Licensee the non-exclusive right to utilize
the Trademarks and all goodwill associated therewith in connection with the
manufacture, distribution and sale of such products and services as are approved
by Licensor (such approved products and services are collectively referred to as
"Approved Products"). It is expressly understood that the Approved Products
shall include all products and services which were provided, manufactured,
distributed or sold by Licensee in conjunction with one or more of the
Trademarks prior to the date of this Agreement and shall also include such other
products and services which fall within the description of goods of the
corresponding registrations or common law usages of the Trademarks, provided
that such products and services comply with the standards determined by Licensor
as set forth herein and/or issued pursuant to this Agreement. The standards to
be determined by Licensor shall include, without limitation, the quality of the
goods or services, the labeling and advertising uses of the Trademarks, and the
performance requirements of new products or services intended to be provided
under the Trademarks. Licensor reserves the right to withdraw its approval or
amend its standards at any time.
2. QUALITY CONTROLS.
A. In General. Licensee and Licensor acknowledge that
maintaining the high quality of the Approved Products provided in conjunction
with the Trademarks, in order to enhance goodwill as symbolized by the
Trademarks, is the essence of this Agreement. Notwithstanding anything in this
Agreement to the contrary, Licensee agrees that its services and products shall
be of such high standards and quality as to be adequate and suited to the
utilization to their best advantage and to the protection and enhancement of the
Trademarks, that such services shall be performed and such products shall be
completed and delivered in accordance with all applicable federal, state and
local laws and regulations, and that the policy of performance of such services
and of completion and delivery of such products by Licensee shall be one
requiring high standards and shall in no manner reflect adversely upon the good
name of Licensor or upon the reputation or value of the Trademarks.
B. Advertising. Licensor reserves the right to approve all
advertising in connection with the Approved Products and the use of the
Trademarks, including the type, color, size and design of signs or symbols
depicting the Trademarks. Accordingly, the quality and style of advertising,
promotional and other materials bearing the Trademarks, at the request of
Licensor, shall be subject to the prior written approval of Licensor, which may
be granted or withheld in Licensor's sole discretion. Licensor reserves the
right to withdraw such approval or to amend its requirements with respect to
advertising at any time. All advertising, promotional or other materials bearing
the Trademarks to be used by Licensee and differing substantially from those
approved herein shall be submitted to Licensor or its authorized representative
for its prior written approval. Any such advertising, promotional or other
materials submitted to and not disapproved by Licensor or its authorized
representative within ten (10) days after receipt by Licensor shall be deemed to
be approved. The entire cost of advertising and promoting the products and
services undertaken by Licensee shall be the sole obligation of Licensee, and
Licensor assumes no financial or other responsibility therefor. In advertising
and promoting the Approved Products, Licensee shall comply with all applicable
laws, rules and regulations.
C. Consumer Complaints. Licensee agrees to cause a prompt
response to be made to consumer complaints received by Licensee or Licensor
(upon prompt notice to Licensee) pertaining to Approved Products bearing the
Trademarks. Licensee shall promptly permit Licensor to inspect, upon request,
any written product liability claims and government reports in respect of any of
the products covered by this Agreement.
D. Quality Control Standards. With respect to any provision in
this Agreement referring to quality control standards, Licensor shall have the
right at all times and in good faith to issue standards in addition to, in
amendment of, or in replacement of, the standards set forth herein, together
with accompanying quality control policies and procedures, all of which shall be
attached hereto as Exhibit B (as it may be amended or supplemented from time to
time) and made a part hereof upon written consent of Licensee (to be evidenced
by its execution of such amendments or supplements to this Agreement), which
consent will not be unreasonably withheld.
E. Personnel Training. Both parties agree that high quality
personnel training programs covering quality control, customer relations policy,
sales and marketing techniques, and other matters are of prime importance to
this Agreement and are essential to the success of the sale of Approved Products
bearing the Trademarks. To accomplish this, the Licensee shall be responsible at
its cost for implementing and maintaining such programs and policies, including
providing a sufficient number of training sessions for Licensee's employees,
which training sessions shall be in accordance with the standards set forth
herein and issued pursuant to the terms of this Agreement. Licensor agrees that
the current practices with respect to training sessions are satisfactory to
Licensor, but Licensor reserves the right to withdraw its approval or to amend
the programs and policies at any time.
F. Compliance Reports. From time to time, and upon the written
request of Licensor, Licensee shall furnish to Licensor or its authorized
representative, free of cost, for its written approval as aforesaid,
descriptions of all activities currently performed and/or being completed by
Licensee relating to the Approved Products and of the manner of performing the
same, in order that Licensor may determine whether the high standards and
quality control measures are being maintained by Licensee. Licensor (or its
authorized representative) shall be the sole judge of whether the activities of
Licensee have complied or are complying with the aforesaid high standards and
quality control measures.
G. Records. Licensee shall keep accurate records in sufficient
detail to enable Licensor (or its authorized representative) to determine the
extent and the manner in which Licensee has used the Trademarks and Licensee
shall permit Licensor (or its authorized representative) to examine and make
copies of such records at all reasonable times. Licensee shall provide Licensor
(or its authorized representative) with access to the business offices,
factories, sales locations and other premises of Licensee at all reasonable
times, in order that Licensor may determine whether Licensee's uses of the
Trademarks conform with the quality control standards set forth herein and
issued in accordance herewith, and Licensee shall abide by the decision of
Licensor (or its authorized representative) in this respect. Upon Licensor's
request (or upon the request of Licensor's authorized representative), Licensee
shall deliver to Licensor (or its authorized representative) such reports, in
the form requested, which confirm for Licensor that such quality control
standards are being satisfied.
H. Change of Business Practices. In the event that Licensee at
any time makes any material changes in its business procedures that may alter
the performance of any of the services or the delivery of products upon or in
relation to which Licensee uses or intends to use the Trademarks, Licensee shall
promptly give notice in writing thereof to Licensor or its authorized
representative, so that Licensor or its authorized representative may determine
through supplemental investigation, if necessary, in the Licensor's sole
judgment, whether Licensee is conforming to the high standards and quality
control measures which have been set forth herein, and Licensee shall abide by
the decision of Licensor or its authorized representative in this respect.
I. Right to Obtain Samples. At the request of Licensor,
Licensee shall submit to Licensor representative samples from Licensee's
production of Approved Products and of raw materials used in the Approved
Products for such quality testing and review as Licensor in its sole discretion
shall deem appropriate.
J. Right to Inspect Premises. Licensor, upon reasonable notice
to Licensee, shall have the right to inspect the equipment, materials and
production facilities of Licensee to ensure compliance with Licensor's standards
of quality for the Approved Products.
3. FEES.
A. Privilege Fee. For the privilege of having the right to use
the Trademarks under the terms and conditions of this Agreement, Licensee agrees
to pay to Licensor annually during the term of this Agreement a privilege fee
(the "Privilege Fee") equal to $50,000 per fiscal year per Store without regard
to the level of Licensee's sales volume during such fiscal year. The first
annual Privilege Fee shall be due and payable on the execution and delivery of
this Agreement, and, thereafter, the annual Privilege Fee shall be due and
payable annually on the first (1st) day of the fourth (4th) fiscal quarter of
each fiscal year (based upon a fiscal year which ends on the Saturday nearest to
the last day of January of each year). The Privilege Fee shall not be pro-rated
or refunded to Licensee.
B. Royalty Fees. During the term of this Agreement, Licensee
agrees to pay Licensor for the license of the Trademarks for each fiscal quarter
(based upon a fiscal year which ends on the Saturday nearest to the last day of
January of each year) royalty fees ("Royalty Fees") equal to one percent (1%) of
Licensee's Royalty Base, as defined in Section 3C of this Agreement. Royalty
Fees shall be payable quarterly as set forth in Section 3E of this Agreement.
C. Royalty Base. For purposes of this Agreement, "Royalty Base" shall mean
the Licensee's net sales during the applicable fiscal quarter less:
(i) Allowances for returns, discounts or rebates as actually granted to a
customer on account of quantity purchased (but not discounts granted for
promptness of payment); and
(ii) All taxes levied, directly or indirectly, on the sale of Approved
Products by any government or governmental agency.
D. Report Requirements. On or before forty-five (45) days
after the last day of each fiscal period (based upon a fiscal year which ends on
the Saturday nearest to the last day of January of each year) through the date
of expiration or termination of this Agreement, Licensee shall produce and
forward to Licensor an itemized statement setting forth an sales report in
sufficient detail to show the basis upon which Royalty Fees are payable to
Licensor for such fiscal period. Licensor has the right to appoint a Certified
Public Accountant to audit Licensee's books and records, at Licensee's expense,
at any time.
E. Payment Requirements. On or before thirty (30) days after
invoice to Licensee sent by Licensor, Licensee shall pay to Licensor the amount
of Royalty Fees due to Licensor under Section 3B hereof on account of the
activities of Licensee under this Agreement during the period covered by the
invoice.
4. TRADEMARK PROTECTION.
A. Notice of Infringement. Licensee shall promptly give notice
to Licensor of any infringement of the Trademarks in the United States which
shall come to Licensee's attention during the term of this Agreement. Licensee
agrees, at Licensor's expense, to cooperate with Licensor, when requested, in
stopping such infringement, but Licensee shall not take any action against an
infringer in its own name or on behalf of Licensor without Licensor's prior
written approval.
B. Maintenance of Trademarks. Licensor agrees to pay all
governmental and legal fees involved in maintaining the continuing validity and
enforceability of the Trademarks within the United States, including the
maintenance and renewal of all registrations therefor in the United States,
provided, however, that Licensor shall determine at its sole option which of the
Trademarks shall be renewed. Without limiting the provisions of the preceding
sentence, Licensee acknowledges the validity of and Licensor's exclusive
ownership of all right, title and interest, in and to the Trademarks and agrees
that any use by Licensee of the Trademarks shall inure solely to the benefit of
Licensor. Licensee shall not at any time (either during or after the termination
of this Agreement) directly or indirectly take any action which might impair the
validity of or the rights of Licensor in the Trademarks, but Licensor makes no
representation or warranty that the Trademarks are valid or validly registered
in the United States or any other country. Licensee shall not at any time during
the term of this Agreement use any mark which shall be identical or confusingly
similar to any of the Trademarks, except as expressly permitted by this
Agreement. The termination of this Agreement shall not affect the obligation of
Licensee under this Section 4B.
C. Infringement of Other Marks by Licensee. Licensee shall
promptly notify Licensor in the event that Licensee shall acquire knowledge of
any claim that use of the Trademarks by Licensee infringes the rights of others
or of the institution of any action or proceeding against Licensee or otherwise
arising out of the use of the Trademarks by Licensee. Licensor and its duly
authorized representative shall have the right (but not the obligation), upon
written notification to Licensee within sixty (60) days of receipt of Licensee's
notification to Licensor of such infringement claim, to take charge of the
defense of any such claim, action or proceeding (and of any negotiations for the
settlement thereof). If Licensor declines, or fails to respond within sixty (60)
days after receipt of notification from Licensee, to defend any such claim,
action or proceeding, Licensee may do so. Licensor and Licensee each shall pay
their own expenses and retain any costs or damages awarded to each in any such
claim, action or proceeding. Licensor shall not make any settlement of any such
claim, action or proceeding, brought against Licensee involving a monetary
payment by Licensee without the consent in writing of Licensee. Licensor shall
not be liable in any event to Licensee in respect of any damages assessed or
asserted against Licensee in, or any liability incurred by or imposed upon
Licensee in connection with, any such claim, action or proceeding. Licensor and
Licensee agree to cooperate with each other in all respects in any such claim,
action or proceeding.
D. Infringement of the Trademarks. In the event that Licensee
shall acquire knowledge of any use by a third party (other than any party known
to have a license agreement with Licensor) of the Trademarks, it shall not take
any action whatsoever, unless otherwise authorized by Licensor, but shall
promptly notify Licensor in writing of such use. Licensor (and its duly
authorized representative) shall have the right (but not the obligation) to take
whatever action it deems appropriate, including the institution of any action or
proceeding against such third party or otherwise, to obtain a discontinuance of
such use. Licensor's (or its authorized representative's) right to take such
action, however, shall expire if Licensor (or its authorized representative)
does not notify Licensee in writing within thirty (30) days of receipt of the
aforementioned notice from Licensee of such third party use. If Licensor
exercises its right to take such action, Licensor shall pay its own expenses and
retain any costs or damages awarded to it therein. If Licensor does not exercise
its right to take such action, or such right expires, then Licensee may take
whatever action Licensee, in its sole opinion, deems to be necessary and
appropriate and Licensor shall reimburse Licensee for all costs, including but
not limited to attorneys' fees incurred by Licensee with respect to such action
in the form of a credit against fees due or to become due under this Agreement
or in such other form as mutually agreed between Licensor and Licensee. Licensee
and Licensor agree to cooperate with each other in all respects and to provide
each other with all assistance requested by the other with respect to all such
actions.
5. INDEMNIFICATION BY LICENSEE. Licensee shall indemnify, defend and
hold Licensor harmless against and from all claims, demands, actions and rights
of action that shall or may arise by virtue of anything done or omitted to be
done by the Licensee or by any of Licensee's agents, employees or other
representatives unless the claim, demand, action or right arises solely from an
act or omission of Licensor or any of its agents, employees or other
representatives. The rights and obligations of the parties hereto under this
Section 5 shall survive the termination of this Agreement.
6. TAXES. Licensee Responsible for Payment of Taxes. All payments or
reimbursements under this Agreement shall be made without setoff or counterclaim
and free and clear of and without deduction for any and all present and future
taxes, levies, imposts, duties or any other charges of a similar nature
("Taxes"). Licensee agrees to cause all Taxes imposed in connection with the
purchase and sale of the Approved Products to be paid directly to the
appropriate governmental authority.
7. TERM, TERMINATION AND DEFAULT.
A. Term. This Agreement shall continue in effect for a period
of one (1) year from the date of this Agreement and, unless terminated as
hereinafter provided, shall automatically renew for an additional one-year
period on each anniversary date of the date of this Agreement. This Agreement
may be terminated by either party upon thirty (30) days prior written notice of
termination. This Agreement may be terminated at any time by written consent of
the parties.
B. Default and Termination. This Agreement shall terminate at
the election of either party to this Agreement if the other party (the
"Defaulting Party") shall breach or default in the performance of any of its
obligations under this Agreement or any other agreement between Licensor and
Licensee, and such breach or default is not cured after notice is given as
provided in Section 7C of this Agreement or as provided in such other agreement.
Regardless of the foregoing provisions, the Licensor may terminate the Agreement
at any time if any of the following circumstances occur:
(i) Declaration of bankruptcy by Licensee.
(ii) Failure of the Licensee to pay royalties over a term in excess of six
(6) months following the due date.
(iii) In case of a transfer of rights by Licensee to a third party in
violation of Section 11 of this Agreement.
(iv) In case of any material breach of any provision of this Agreement, or
an intentional violation of the Licensor's rights in any Trademarks covered by
this Agreement.
C. Notice of Default. If either party desires to terminate
this Agreement in the event of a breach or default, such party shall give
written notice to the Defaulting Party of the breach or default by the
Defaulting Party and allow the Defaulting Party thirty (30) days thereafter
within which to cure such breach or default. Failure by either party to
terminate this Agreement for any one or more acts or omissions of the Defaulting
Party which constitute a breach or default hereunder shall in no way whatsoever
be construed as a waiver, express or implied, of that party's right to terminate
the Agreement for any other breach or default or for the same breach or default
at a later time.
D. Rights on Termination. Upon termination of this Agreement for any
reason, the rights, privileges and obligations of the parties shall be as
follows:
(i) Such termination shall be without prejudice to Licensor's rights to
recover royalties or other sums due from Licensee under the terms of this
Agreement.
(ii) Any remedy for any breach or default which has not previously been
cured shall be preserved.
(iii) Licensee shall immediately cease to use the Trademarks for any and
all purposes, and thereafter shall not adopt or use any similar trademarks or
combinations thereof which so resemble the Trademarks as to be likely to cause
confusion or mistake or to deceive, in connection with any products or services.
E. Survival. Without limiting any other provision of this Agreement, the
provisions of this Section 7 shall survive the termination of this Agreement.
8. SERVICES PERFORMED BY AUTHORIZED REPRESENTATIVE. Notwithstanding
anything in this Agreement to the contrary, Licensor may engage the services of
an authorized representative to act for and on behalf of Licensor for any part
of or all aspects of this Agreement. Accordingly, Licensee agrees to deal with
such representative upon written notice from Licensor, which notice shall
describe the scope of such representative's responsibilities.
9. AMENDMENT. This Agreement may be amended only by written amendment
executed by an authorized officer or agent of Licensee and Licensor. No
approval, permission or consent by either party to this Agreement shall have any
effect unless it is made in writing by an authorized representative of such
party.
10. PROHIBITION ON ASSIGNMENT. Nothing in this Agreement shall be
deemed to constitute or result in an assignment of the Trademarks to Licensee or
the creation of an equitable or any other interest in the Trademarks in
Licensee.
11. TRANSFERABILITY OF RIGHTS. Licensor's rights and obligations under
this Agreement shall be freely transferable and such rights and obligations
shall inure to the benefit of and be binding upon its respective successors and
assigns. Licensee's rights and obligations under this Agreement shall not,
without the prior written consent of Licensor, be transferred, sublicensed,
assigned or alienated in any manner, except as expressly provided hereunder.
12. GOVERNING LAW AND JURISDICTION; ARBITRATION. The validity,
interpretation and enforceability of this Agreement shall be determined in
accordance with the laws of the State of Delaware. All disputes arising from
this Agreement shall be finally decided by arbitration consisting of three (3)
arbitrators according to the Delaware Arbitration Act, 10 Del. C. ss. 5701, et
seq. All legal costs incurred to enforce the terms of this Agreement shall be
borne by the party responsible in accordance with the applicable laws and
customs.
13. SEVERABILITY. If any provision or any portion of any provision of
this Agreement shall be held to be void or unenforceable, the remaining
provisions of this Agreement and the remaining portion of any provision held
void or unenforceable in part are to continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement to be effective as of the day and year first above written.
[SEAL] LICENSEE:
Attest: GFCTN, L.P.
By: TREBOR OF TN, INC.
General Partner
By: /s/ Regis J. Hebbeler By: /s/ Harry M. Call
Regis J. Hebbeler Harry M. Call
Secretary President
[SEAL] LICENSOR:
Attest: SYDOOG, INC.
By: /s/ Peter J. Winnington By: /s/ Francis B. Jacobs, II
Peter J. Winnington Francis B. Jacobs, II
Vice President President
<PAGE>
EXHIBIT A
TO LICENSE AGREEMENT
LICENSED TRADEMARKS
Mark Registration No. Issuance Date
Goody's Family Clothing 1,606,015 July 10, 1990
Goody's Family Clothing, Inc.
& Design 1,949,198 January 16, 1996
<PAGE>
92
3-1399
3-1399
EXHIBIT B
TO LICENSE AGREEMENT
QUALITY CONTROL STANDARDS
[See attached Quality Control Standards]
<PAGE>
Exhibit - 4.1 B
LICENSE AGREEMENT
This License Agreement (this "Agreement") is dated as of May
20, 1998, by and between SYDOOG, INC., a Delaware corporation having its only
place of business at 913 Market Street, Suite 817, Wilmington, Delaware 19801
(the "Licensor"), and GFCGA, L.P., a Tennessee limited partnership having a
place of business at 400 Goody's Lane, Knoxville, Tennessee 37933 (the
"Licensee").
BACKGROUND
The background of this Agreement is as follows:
1. Licensor is the proprietor of the tradenames, trademarks
and service marks, together with all registrations and/or applications for
registration associated therewith, identified on Exhibit A hereto, which may be
amended from time to time by consent of the parties hereto (all such tradenames,
trademarks and service marks are hereinafter collectively referred to as the
"Trademarks").
2. Licensee plans to open and operate retail clothing store(s)
under the tradenmane "GOODY'S". It is the desire and intention of the parties
that Licensee be permitted to use the Trademarks on a non-exclusive basis in the
United States in a manner reasonably related to the conduct of its retail and
distribution operations.
3. Licensor and Licensee have agreed to the terms of such
non-exclusive license of the Trademarks on the terms provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises
contained herein and for other good and valuable consideration received, the
receipt and sufficiency of which is hereby acknowledged, and of the
representations and covenants hereinafter set forth, the parties hereby agree as
follows:
1. GRANT OF LICENSE.
A. License of Trademarks for Use in Corporate Name and
Business. Subject to the provisions of this Agreement, Licensor hereby grants to
Licensee the non-exclusive right to make use of the Trademarks and all goodwill
associated therewith in its corporate name and its business throughout the
United States.
B. Identification of Status and Ownership of the Trademarks.
(i) Licensee acknowledges that Licensor owns the Trademarks and agrees
never to impugn or challenge, or to assist in any challenge of the validity of
the Trademarks, the registration of the Trademarks, or Licensor's ownership of
the Trademarks.
(ii) The Trademarks shall be clearly denoted as being trademarks by
utilizing the appropriate symbol of an encircled R "(R)" (for registered
trademarks) or the designation "(TM)" (for common law trademarks) or such other
symbol or legend as Licensor may designate from time to time.
(iii) As requested by Licensor in writing, Licensee shall also incorporate
an asterisk by each use of the Trademarks and shall incorporate a statement
which reads:
*Trademark of SYDOOG, Inc.
C. Rights of Licensee. Subject to the provisions of this
Agreement, Licensor hereby grants to Licensee the non-exclusive right to utilize
the Trademarks and all goodwill associated therewith in connection with the
manufacture, distribution and sale of such products and services as are approved
by Licensor (such approved products and services are collectively referred to as
"Approved Products"). It is expressly understood that the Approved Products
shall include all products and services which were provided, manufactured,
distributed or sold by Licensee in conjunction with one or more of the
Trademarks prior to the date of this Agreement and shall also include such other
products and services which fall within the description of goods of the
corresponding registrations or common law usages of the Trademarks, provided
that such products and services comply with the standards determined by Licensor
as set forth herein and/or issued pursuant to this Agreement. The standards to
be determined by Licensor shall include, without limitation, the quality of the
goods or services, the labeling and advertising uses of the Trademarks, and the
performance requirements of new products or services intended to be provided
under the Trademarks. Licensor reserves the right to withdraw its approval or
amend its standards at any time.
2. QUALITY CONTROLS.
A. In General. Licensee and Licensor acknowledge that
maintaining the high quality of the Approved Products provided in conjunction
with the Trademarks, in order to enhance goodwill as symbolized by the
Trademarks, is the essence of this Agreement. Notwithstanding anything in this
Agreement to the contrary, Licensee agrees that its services and products shall
be of such high standards and quality as to be adequate and suited to the
utilization to their best advantage and to the protection and enhancement of the
Trademarks, that such services shall be performed and such products shall be
completed and delivered in accordance with all applicable federal, state and
local laws and regulations, and that the policy of performance of such services
and of completion and delivery of such products by Licensee shall be one
requiring high standards and shall in no manner reflect adversely upon the good
name of Licensor or upon the reputation or value of the Trademarks.
B. Advertising. Licensor reserves the right to approve all
advertising in connection with the Approved Products and the use of the
Trademarks, including the type, color, size and design of signs or symbols
depicting the Trademarks. Accordingly, the quality and style of advertising,
promotional and other materials bearing the Trademarks, at the request of
Licensor, shall be subject to the prior written approval of Licensor, which may
be granted or withheld in Licensor's sole discretion. Licensor reserves the
right to withdraw such approval or to amend its requirements with respect to
advertising at any time. All advertising, promotional or other materials bearing
the Trademarks to be used by Licensee and differing substantially from those
approved herein shall be submitted to Licensor or its authorized representative
for its prior written approval. Any such advertising, promotional or other
materials submitted to and not disapproved by Licensor or its authorized
representative within ten (10) days after receipt by Licensor shall be deemed to
be approved. The entire cost of advertising and promoting the products and
services undertaken by Licensee shall be the sole obligation of Licensee, and
Licensor assumes no financial or other responsibility therefor. In advertising
and promoting the Approved Products, Licensee shall comply with all applicable
laws, rules and regulations.
C. Consumer Complaints. Licensee agrees to cause a prompt
response to be made to consumer complaints received by Licensee or Licensor
(upon prompt notice to Licensee) pertaining to Approved Products bearing the
Trademarks. Licensee shall promptly permit Licensor to inspect, upon request,
any written product liability claims and government reports in respect of any of
the products covered by this Agreement.
D. Quality Control Standards. With respect to any provision in
this Agreement referring to quality control standards, Licensor shall have the
right at all times and in good faith to issue standards in addition to, in
amendment of, or in replacement of, the standards set forth herein, together
with accompanying quality control policies and procedures, all of which shall be
attached hereto as Exhibit B (as it may be amended or supplemented from time to
time) and made a part hereof upon written consent of Licensee (to be evidenced
by its execution of such amendments or supplements to this Agreement), which
consent will not be unreasonably withheld.
E. Personnel Training. Both parties agree that high quality
personnel training programs covering quality control, customer relations policy,
sales and marketing techniques, and other matters are of prime importance to
this Agreement and are essential to the success of the sale of Approved Products
bearing the Trademarks. To accomplish this, the Licensee shall be responsible at
its cost for implementing and maintaining such programs and policies, including
providing a sufficient number of training sessions for Licensee's employees,
which training sessions shall be in accordance with the standards set forth
herein and issued pursuant to the terms of this Agreement. Licensor agrees that
the current practices with respect to training sessions are satisfactory to
Licensor, but Licensor reserves the right to withdraw its approval or to amend
the programs and policies at any time.
F. Compliance Reports. From time to time, and upon the written
request of Licensor, Licensee shall furnish to Licensor or its authorized
representative, free of cost, for its written approval as aforesaid,
descriptions of all activities currently performed and/or being completed by
Licensee relating to the Approved Products and of the manner of performing the
same, in order that Licensor may determine whether the high standards and
quality control measures are being maintained by Licensee. Licensor (or its
authorized representative) shall be the sole judge of whether the activities of
Licensee have complied or are complying with the aforesaid high standards and
quality control measures.
G. Records. Licensee shall keep accurate records in sufficient
detail to enable Licensor (or its authorized representative) to determine the
extent and the manner in which Licensee has used the Trademarks and Licensee
shall permit Licensor (or its authorized representative) to examine and make
copies of such records at all reasonable times. Licensee shall provide Licensor
(or its authorized representative) with access to the business offices,
factories, sales locations and other premises of Licensee at all reasonable
times, in order that Licensor may determine whether Licensee's uses of the
Trademarks conform with the quality control standards set forth herein and
issued in accordance herewith, and Licensee shall abide by the decision of
Licensor (or its authorized representative) in this respect. Upon Licensor's
request (or upon the request of Licensor's authorized representative), Licensee
shall deliver to Licensor (or its authorized representative) such reports, in
the form requested, which confirm for Licensor that such quality control
standards are being satisfied.
H. Change of Business Practices. In the event that Licensee at
any time makes any material changes in its business procedures that may alter
the performance of any of the services or the delivery of products upon or in
relation to which Licensee uses or intends to use the Trademarks, Licensee shall
promptly give notice in writing thereof to Licensor or its authorized
representative, so that Licensor or its authorized representative may determine
through supplemental investigation, if necessary, in the Licensor's sole
judgment, whether Licensee is conforming to the high standards and quality
control measures which have been set forth herein, and Licensee shall abide by
the decision of Licensor or its authorized representative in this respect.
I. Right to Obtain Samples. At the request of Licensor,
Licensee shall submit to Licensor representative samples from Licensee's
production of Approved Products and of raw materials used in the Approved
Products for such quality testing and review as Licensor in its sole discretion
shall deem appropriate.
J. Right to Inspect Premises. Licensor, upon reasonable notice
to Licensee, shall have the right to inspect the equipment, materials and
production facilities of Licensee to ensure compliance with Licensor's standards
of quality for the Approved Products.
3. FEES.
A. Privilege Fee. For the privilege of having the right to use
the Trademarks under the terms and conditions of this Agreement, Licensee agrees
to pay to Licensor annually during the term of this Agreement a privilege fee
(the "Privilege Fee") equal to $50,000 per fiscal year per Store without regard
to the level of Licensee's sales volume during such fiscal year. The first
annual Privilege Fee shall be due and payable on the execution and delivery of
this Agreement, and, thereafter, the annual Privilege Fee shall be due and
payable annually on the first (1st) day of the fourth (4th) fiscal quarter of
each fiscal year (based upon a fiscal year which ends on the Saturday nearest to
the last day of January of each year). The Privilege Fee shall not be pro-rated
or refunded to Licensee.
B. Royalty Fees. During the term of this Agreement, Licensee
agrees to pay Licensor for the license of the Trademarks for each fiscal quarter
(based upon a fiscal year which ends on the Saturday nearest to the last day of
January of each year) royalty fees ("Royalty Fees") equal to one percent (1%) of
Licensee's Royalty Base, as defined in Section 3C of this Agreement. Royalty
Fees shall be payable quarterly as set forth in Section 3E of this Agreement.
C. Royalty Base. For purposes of this Agreement, "Royalty Base" shall mean
the Licensee's net sales during the applicable fiscal quarter less:
(i) Allowances for returns, discounts or rebates as actually granted to a
customer on account of quantity purchased (but not discounts granted for
promptness of payment); and
(ii) All taxes levied, directly or indirectly, on the sale of Approved
Products by any government or governmental agency.
D. Report Requirements. On or before forty-five (45) days
after the last day of each fiscal period (based upon a fiscal year which ends on
the Saturday nearest to the last day of January of each year) through the date
of expiration or termination of this Agreement, Licensee shall produce and
forward to Licensor an itemized statement setting forth an sales report in
sufficient detail to show the basis upon which Royalty Fees are payable to
Licensor for such fiscal period. Licensor has the right to appoint a Certified
Public Accountant to audit Licensee's books and records, at Licensee's expense,
at any time.
E. Payment Requirements. On or before thirty (30) days after
invoice to Licensee sent by Licensor, Licensee shall pay to Licensor the amount
of Royalty Fees due to Licensor under Section 3B. hereof on account of the
activities of Licensee under this Agreement during the period covered by the
invoice.
4. TRADEMARK PROTECTION.
A. Notice of Infringement. Licensee shall promptly give notice
to Licensor of any infringement of the Trademarks in the United States which
shall come to Licensee's attention during the term of this Agreement. Licensee
agrees, at Licensor's expense, to cooperate with Licensor, when requested, in
stopping such infringement, but Licensee shall not take any action against an
infringer in its own name or on behalf of Licensor without Licensor's prior
written approval.
B. Maintenance of Trademarks. Licensor agrees to pay all
governmental and legal fees involved in maintaining the continuing validity and
enforceability of the Trademarks within the United States, including the
maintenance and renewal of all registrations therefor in the United States,
provided, however, that Licensor shall determine at its sole option which of the
Trademarks shall be renewed. Without limiting the provisions of the preceding
sentence, Licensee acknowledges the validity of and Licensor's exclusive
ownership of all right, title and interest, in and to the Trademarks and agrees
that any use by Licensee of the Trademarks shall inure solely to the benefit of
Licensor. Licensee shall not at any time (either during or after the termination
of this Agreement) directly or indirectly take any action which might impair the
validity of or the rights of Licensor in the Trademarks, but Licensor makes no
representation or warranty that the Trademarks are valid or validly registered
in the United States or any other country. Licensee shall not at any time during
the term of this Agreement use any mark which shall be identical or confusingly
similar to any of the Trademarks, except as expressly permitted by this
Agreement. The termination of this Agreement shall not affect the obligation of
Licensee under this Section 4B.
C. Infringement of Other Marks by Licensee. Licensee shall
promptly notify Licensor in the event that Licensee shall acquire knowledge of
any claim that use of the Trademarks by Licensee infringes the rights of others
or of the institution of any action or proceeding against Licensee or otherwise
arising out of the use of the Trademarks by Licensee. Licensor and its duly
authorized representative shall have the right (but not the obligation), upon
written notification to Licensee within sixty (60) days of receipt of Licensee's
notification to Licensor of such infringement claim, to take charge of the
defense of any such claim, action or proceeding (and of any negotiations for the
settlement thereof). If Licensor declines, or fails to respond within sixty (60)
days after receipt of notification from Licensee, to defend any such claim,
action or proceeding, Licensee may do so. Licensor and Licensee each shall pay
their own expenses and retain any costs or damages awarded to each in any such
claim, action or proceeding. Licensor shall not make any settlement of any such
claim, action or proceeding, brought against Licensee involving a monetary
payment by Licensee without the consent in writing of Licensee. Licensor shall
not be liable in any event to Licensee in respect of any damages assessed or
asserted against Licensee in, or any liability incurred by or imposed upon
Licensee in connection with, any such claim, action or proceeding. Licensor and
Licensee agree to cooperate with each other in all respects in any such claim,
action or proceeding.
D. Infringement of the Trademarks. In the event that Licensee
shall acquire knowledge of any use by a third party (other than any party known
to have a license agreement with Licensor) of the Trademarks, it shall not take
any action whatsoever, unless otherwise authorized by Licensor, but shall
promptly notify Licensor in writing of such use. Licensor (and its duly
authorized representative) shall have the right (but not the obligation) to take
whatever action it deems appropriate, including the institution of any action or
proceeding against such third party or otherwise, to obtain a discontinuance of
such use. Licensor's (or its authorized representative's) right to take such
action, however, shall expire if Licensor (or its authorized representative)
does not notify Licensee in writing within thirty (30) days of receipt of the
aforementioned notice from Licensee of such third party use. If Licensor
exercises its right to take such action, Licensor shall pay its own expenses and
retain any costs or damages awarded to it therein. If Licensor does not exercise
its right to take such action, or such right expires, then Licensee may take
whatever action Licensee, in its sole opinion, deems to be necessary and
appropriate and Licensor shall reimburse Licensee for all costs, including but
not limited to attorneys' fees incurred by Licensee with respect to such action
in the form of a credit against fees due or to become due under this Agreement
or in such other form as mutually agreed between Licensor and Licensee. Licensee
and Licensor agree to cooperate with each other in all respects and to provide
each other with all assistance requested by the other with respect to all such
actions.
5. INDEMNIFICATION BY LICENSEE. Licensee shall indemnify, defend and
hold Licensor harmless against and from all claims, demands, actions and rights
of action that shall or may arise by virtue of anything done or omitted to be
done by the Licensee or by any of Licensee's agents, employees or other
representatives unless the claim, demand, action or right arises solely from an
act or omission of Licensor or any of its agents, employees or other
representatives. The rights and obligations of the parties hereto under this
Section 5 shall survive the termination of this Agreement.
6. TAXES. Licensee Responsible for Payment of Taxes. All payments or
reimbursements under this Agreement shall be made without setoff or counterclaim
and free and clear of and without deduction for any and all present and future
taxes, levies, imposts, duties or any other charges of a similar nature
("Taxes"). Licensee agrees to cause all Taxes imposed in connection with the
purchase and sale of the Approved Products to be paid directly to the
appropriate governmental authority.
7. TERM, TERMINATION AND DEFAULT.
A. Term. This Agreement shall continue in effect for a period
of one (1) year from the date of this Agreement and, unless terminated as
hereinafter provided, shall automatically renew for an additional one-year
period on each anniversary date of the date of this Agreement. This Agreement
may be terminated by either party upon thirty (30) days prior written notice of
termination. This Agreement may be terminated at any time by written consent of
the parties.
B. Default and Termination. This Agreement shall terminate at
the election of either party to this Agreement if the other party (the
"Defaulting Party") shall breach or default in the performance of any of its
obligations under this Agreement or any other agreement between Licensor and
Licensee, and such breach or default is not cured after notice is given as
provided in Section 7C. of this Agreement or as provided in such other
agreement. Regardless of the foregoing provisions, the Licensor may terminate
the Agreement at any time if any of the following circumstances occur:
(i) Declaration of bankruptcy by Licensee.
(ii) Failure of the Licensee to pay royalties over a term in excess of six
(6) months following the due date.
(iii) In case of a transfer of rights by Licensee to a third party in
violation of Section 11 of this Agreement.
(iv) In case of any material breach of any provision of this Agreement, or
an intentional violation of the Licensor's rights in any Trademarks covered by
this Agreement.
C. Notice of Default. If either party desires to terminate
this Agreement in the event of a breach or default, such party shall give
written notice to the Defaulting Party of the breach or default by the
Defaulting Party and allow the Defaulting Party thirty (30) days thereafter
within which to cure such breach or default. Failure by either party to
terminate this Agreement for any one or more acts or omissions of the Defaulting
Party which constitute a breach or default hereunder shall in no way whatsoever
be construed as a waiver, express or implied, of that party's right to terminate
the Agreement for any other breach or default or for the same breach or default
at a later time.
D. Rights on Termination. Upon termination of this Agreement for any
reason, the rights, privileges and obligations of the parties shall be as
follows:
(i) Such termination shall be without prejudice to Licensor's rights to
recover royalties or other sums due from Licensee under the terms of this
Agreement.
(ii) Any remedy for any breach or default which has not previously been
cured shall be preserved.
(iii) Licensee shall immediately cease to use the Trademarks for any and
all purposes, and thereafter shall not adopt or use any similar trademarks or
combinations thereof which so resemble the Trademarks as to be likely to cause
confusion or mistake or to deceive, in connection with any products or services.
E. Survival. Without limiting any other provision of this Agreement, the
provisions of this Section 7 shall survive the termination of this Agreement.
8. SERVICES PERFORMED BY AUTHORIZED REPRESENTATIVE. Notwithstanding
anything in this Agreement to the contrary, Licensor may engage the services of
an authorized representative to act for and on behalf of Licensor for any part
of or all aspects of this Agreement. Accordingly, Licensee agrees to deal with
such representative upon written notice from Licensor, which notice shall
describe the scope of such representative's responsibilities.
9. AMENDMENT. This Agreement may be amended only by written amendment
executed by an authorized officer or agent of Licensee and Licensor. No
approval, permission or consent by either party to this Agreement shall have any
effect unless it is made in writing by an authorized representative of such
party.
10. PROHIBITION ON ASSIGNMENT. Nothing in this Agreement shall be
deemed to constitute or result in an assignment of the Trademarks to Licensee or
the creation of an equitable or any other interest in the Trademarks in
Licensee.
11. TRANSFERABILITY OF RIGHTS. Licensor's rights and obligations under
this Agreement shall be freely transferable and such rights and obligations
shall inure to the benefit of and be binding upon its respective successors and
assigns. Licensee's rights and obligations under this Agreement shall not,
without the prior written consent of Licensor, be transferred, sublicensed,
assigned or alienated in any manner, except as expressly provided hereunder.
12. GOVERNING LAW AND JURISDICTION; ARBITRATION. The validity,
interpretation and enforceability of this Agreement shall be determined in
accordance with the laws of the State of Delaware. All disputes arising from
this Agreement shall be finally decided by arbitration consisting of three (3)
arbitrators according to the Delaware Arbitration Act, 10 Del. C. ss. 5701, et
seq. All legal costs incurred to enforce the terms of this Agreement shall be
borne by the party responsible in accordance with the applicable laws and
customs.
13. SEVERABILITY. If any provision or any portion of any provision of
this Agreement shall be held to be void or unenforceable, the remaining
provisions of this Agreement and the remaining portion of any provision held
void or unenforceable in part are to continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement to be effective as of the day and year first above written.
[SEAL] LICENSEE:
Attest: GFCGA, L.P.
By: TREBOR OF TN, INC.
General Partner
By: /s/ Regis J. Hebbeler By: /s/ Harry M. Call
Regis J. Hebbeler Harry M. Call
Secretary President
[SEAL] LICENSOR:
Attest: SYDOOG, INC.
By: /s/ Peter J. Winnington By: /s/ Francis B. Jacobs, II
Peter J. Winnington Francis B. Jacobs, II
Vice President President
<PAGE>
EXHIBIT A
TO LICENSE AGREEMENT
LICENSED TRADEMARKS
Mark Registration No. Issuance Date
Goody's Family Clothing 1,606,015 July 10, 1990
Goody's Family Clothing, Inc.
& Design 1,949,198 January 16, 1996
<PAGE>
99088-1
9/17/97
EXHIBIT 4.1C
[H:CBT\FINANCE\GFCTNAGR.DOC]
EXHIBIT B
TO LICENSE AGREEMENT
QUALITY CONTROL STANDARDS
[See attached Quality Control Standards]
<PAGE>
Exhibit - 4.1 C
MASTER SUPPLY AGREEMENT
(GFCTN, L.P.)
This MASTER SUPPLY AGREEMENT (this "Agreement") is made and entered
into this 20th day of May, 1998, to be effective as of May 20, 1998, by and
between GOODY'S MS, L.P., a Tennessee limited partnership ("Seller") and GFCTN,
L.P., a Tennessee limited partnership ("Purchaser").
WHEREAS, Purchaser shall operate one or more Goody's Family Clothing
retail locations, and in connection therewith, Purchaser desires to purchase on
a continuing basis, and Seller desires to sell on a continuing basis, various
items of inventory to be offered for sale in such locations, as well as various
supplies and other products (hereinafter, collectively, the "Products") that may
be used in connection with such retail operations, all as may be selected by
Purchaser and communicated to Seller from time to time; and
WHEREAS, to avoid repetitive negotiations, the parties desire to enter
into this Agreement establishing the terms and conditions of purchase and sale
which will be applicable to the Products.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereby agree as follows:
1. Scope of Agreement.
a. Unless otherwise agreed in writing by both parties hereto, this
Agreement shall apply to all purchase orders, electronic communications, and
other purchase documents or communications (hereinafter, collectively, the
"Orders") relating to the purchase of Products which may be placed with Seller
by or on behalf of Purchaser on and after the effective date of this Agreement.
The terms and conditions of this Agreement shall apply to any Order, whether or
not this Agreement or its terms and conditions are expressly referred to in the
Order. 1.
<PAGE>
101
b. Unless otherwise agreed in writing by both parties hereto with
respect to a specific purchase transaction, no inconsistent or additional term
or condition in any Order shall be applicable to a transaction within the scope
of this Agreement. Both parties hereto specifically agree that any terms and
conditions on any of their purchase or sale documents or other communications
utilized as Orders hereunder which are in any way inconsistent with this
Agreement shall not be applicable, and the terms of this Agreement shall govern.
2. Duration and Termination.
a. Unless earlier terminated according to the provisions of paragraph
2.b below, this Agreement shall be in force and effect for a period of one (1)
year from the effective date of this Agreement set forth above, and shall
thereafter be automatically renewed for successive terms of one (1) year each.
b. Either party hereto may terminate this Agreement upon thirty (30)
days advance written notice to the other party of such election to terminate;
provided, however, that the parties hereto may agree in writing to a shorter or
longer notice period.
c. The termination of this Agreement will not affect any Order which
has been communicated and acknowledged prior to the date of termination.
3. General Terms and Conditions.
a. Orders:
i. Orders will generally be limited to the Products
constituting the saleable inventory, or otherwise utilized in the operations, of
Goody's Family Clothing retail locations. Orders may, however, be issued for
products handled by Seller which are not so utilized. In such event, the
presumption will be that the terms and conditions of this Agreement apply to any
such Order unless Seller shall notify Purchaser of its objection to having such
product covered under this Agreement.
ii. Orders may be made in any form, including typewritten,
telephonic, electronic and telex. An Order may be unpriced or pre-priced.
1.
<PAGE>
iii. Purchaser shall be entitled to engage one or more other
parties to place Orders with Seller on Purchaser's behalf; provided, however,
that Seller shall not fulfill any Order placed by any party other than Purchaser
unless Purchaser has previously communicated written authorization to Seller to
accept Orders from such party. In such event, Purchaser shall remain responsible
for payment of any such Order.
ii. Purchaser shall be entitled to establish dollar limits
above which individual unpriced Orders are not to be accepted by Seller without
specific approval by a designated officer or representative of Purchaser. Such
dollar limits shall be set forth in a writing signed by both parties hereto. In
such event, when an unpriced Order exceeds the established dollar limit, not
including freight, Seller shall return the Order to Purchaser properly priced
within ten (10) days, with an estimated delivery date. Purchaser shall then have
the option of either accepting or rejecting the prices and delivery dates set
forth by Seller.
v. Pre-priced Orders, and unpriced Orders whose amount falls
below any limit that may be established pursuant to the preceding paragraph
2.b.iv, shall be considered as Orders by Seller, and Seller may accept such
Orders and fulfill the same without any further approvals of Purchaser.
b. Acknowledgments:
i. Within ten (10) days following Seller's receipt of any
Order placed by or on behalf of Purchaser, Seller shall respond either by
accepting such Order as submitted (subject to the above provisions regarding
pricing) or by notifying Purchaser or Purchaser's authorized representative of
proposed modifications. When an acknowledgment contains additions or
modifications to the Order, the acknowledged Order shall not become effective
until Seller is notified electronically or in writing by or on behalf of
Purchaser that the proposed additions or modifications are acceptable. 1.
<PAGE>
ii. Seller agrees to make every reasonable effort to meet the
delivery dates specified on any Order. Each Order acknowledgment shall contain
either Seller's confirmation of the delivery dates as requested by or on behalf
of Purchaser, or Seller's own estimated delivery dates.
c. Follow-Up.
i. Seller agrees to provide follow-up with Seller's
distribution facility or its third-party suppliers on each acknowledged Order to
ensure that the delivery dates given are met, or that Purchaser is notified of
any rescheduling. Such notification of any possible rescheduling shall be
provided to Purchaser as soon as possible, and in any event before the confirmed
delivery dates contained in the acknowledged Order.
ii. Seller agrees to give special attention and frequent
follow-up on acknowledged Orders designated as "rush," since these represent
emergency requirements on the part of Purchaser.
iii. Purchaser or Purchaser's representative will contact
Seller on all "rush" Orders to establish the earliest delivery dates Seller can
meet. Seller agrees to give top priority to all "rush" Orders.
d. Shipping and Invoicing.
i. Seller and Purchaser will mutually agree upon detailed
delivery invoicing instructions. Since this Agreement and such delivery and
invoicing instructions will not be furnished with each Order, Seller shall
undertake all such actions as are reasonably necessary or appropriate to ensure
that all of Seller's personnel in charge of fulfilling Purchaser's Orders are
aware of such delivery and invoicing instructions. Seller shall be entitled to
have Products purchased by Seller hereunder delivered directly from third-party
vendors.
ii. Unless otherwise agreed between Seller and Purchaser with
respect to the fulfillment of an Order, ownership, legal title and all risk of
loss or damage with respect to Products shipped from Seller's facilities shall
pass to Purchaser at the time the Products are placed into transit, F.O.B.
Seller's place of shipment. 1.
<PAGE>
e. Payment.
i. Unless otherwise agreed between Purchaser and Seller with
respect to an Order, Purchaser or Purchaser's authorized representative shall
render to Seller any and all payments required to be made with respect to a
filled Order within thirty (30) days following Seller's notice to Purchaser of
all charges with respect to the Order. Payments may be made by check,
electronically by inter-bank or intra bank transfer, or (where Purchaser and
Seller are affiliates) by inter-company transfer.
ii. Seller may from time to time advise Purchaser of any
deposit required to be made by Purchaser prior to or at the time of Seller's
acceptance of any Order.
iii. Unless otherwise agreed between Purchaser and Seller, at
any time before, during or after termination of this Agreement, Seller shall
have the absolute right to set-off any and all amounts owed to it hereunder by
Purchaser, its subsidiaries and affiliates against any and all amounts then owed
by Seller to Purchaser. 4. Standard Terms and Conditions.
a. Modification and Assignment.
i. Any modification of this Agreement must be in writing and
signed by the authorized representatives of both Purchaser and Seller. Neither
this Agreement, nor any of the rights or interests of Purchaser or Seller
hereunder may be assigned, transferred or conveyed by operation of law or
otherwise without the prior written consent of the other party, except to a
parent or subsidiary thereof, or an entity wholly controlled thereby, in which
event the party so assigning shall remain obligated and liable to the other
party for the full and complete performance of this Agreement by the parent or
subsidiary or wholly controlled entity to which this Agreement is assigned.
b. Delays or Non-Delivery.
i. If after acknowledgment of an Order, Seller finds that the
Products cannot be delivered within the time specified in the Order, Seller
shall promptly notify Purchaser and advise Purchaser of the revised delivery
date. Purchaser shall then have the option of terminating the Order without
obligation for payment or of accepting the revised delivery date.
ii. In the event of delays in delivery due to a cause beyond
Seller's reasonable control, including acts of God, acts of Purchaser, acts of
civil or military authorities or governmental priorities, strikes, or other
labor disturbances, floods, epidemics, war, riot, delay in transportation or
transportation problems, the date of delivery shall be extended for a period
equal to the time lost by reason of such occurrence, provided, however,
Purchaser may, at its option, cancel the acknowledged Order, and any appropriate
cancellation charges will be negotiated between the parties.
c. Taxes. In addition to any price specified in any Order, Purchaser
shall pay the gross amount of any present or future sales, use, excise,
value-added, or other similar tax, applicable to the purchase sale, or delivery
of any Product or its use by Purchaser, unless Purchaser has furnished Seller
evidence of exemption acceptable to the taxing authorities.
d. Applicable Law. All aspects of any Order, this Agreement, and the
contract embodied herein including, but not limited to, its essential validity,
formation, content, performance or nonperformance, breach, damages, and
construction, shall be governed by the laws of the State of Tennessee.
e. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto and it may not be released, discharged, changed, or
modified except by an instrument in writing signed by duly authorized
representative of the parties. Any representation, promise, or condition not
contained herein shall not be binding upon Seller nor Purchaser. Acceptance of
this Agreement is expressly limited to the terms hereof and, in the event of any
conflict, the terms and conditions of this Agreement shall take precedence over
any terms or conditions appearing in any Order placed by or on behalf of
Purchaser with Seller.
1.
<PAGE>
99088-1
9/17/97
EXHIBIT 4.1C
[H:CBT\FINANCE\GFCGAAGRE.DOC]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
authorized representatives as of the date first set forth above.
SELLER:
GOODY'S MS, L.P.
By: TREBOR of TN, Inc.
General Partner
By: /s/ Harry M. Call
Harry M. Call
President
PURCHASER:
GFCTN, L.P.
By: TREBOR of TN, Inc.
General Partner
By: /s/ Harry M. Call
Harry M. Call
President
<PAGE>
Exhibit - 4.1 C
MASTER SUPPLY AGREEMENT
(GFCGA, L.P.)
This MASTER SUPPLY AGREEMENT (this "Agreement") is made and entered
into this 20th day of May, 1998, to be effective as of May 20, 1998, by and
between GOODY'S MS, L.P., a Tennessee limited partnership ("Seller") and GFCGA,
L.P., a Tennessee limited partnership ("Purchaser").
WHEREAS, Purchaser shall operate one or more Goody's Family Clothing
retail locations, and in connection therewith, Purchaser desires to purchase on
a continuing basis, and Seller desires to sell on a continuing basis, various
items of inventory to be offered for sale in such locations, as well as various
supplies and other products (hereinafter, collectively, the "Products") that may
be used in connection with such retail operations, all as may be selected by
Purchaser and communicated to Seller from time to time; and
WHEREAS, to avoid repetitive negotiations, the parties desire to enter
into this Agreement establishing the terms and conditions of purchase and sale
which will be applicable to the Products.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereby agree as follows:
4. Scope of Agreement.
a. Unless otherwise agreed in writing by both parties hereto, this
Agreement shall apply to all purchase orders, electronic communications, and
other purchase documents or communications (hereinafter, collectively, the
"Orders") relating to the purchase of Products which may be placed with Seller
by or on behalf of Purchaser on and after the effective date of this Agreement.
The terms and conditions of this Agreement shall apply to any Order, whether or
not this Agreement or its terms and conditions are expressly referred to in the
Order. 1.
<PAGE>
109
b. Unless otherwise agreed in writing by both parties hereto with
respect to a specific purchase transaction, no inconsistent or additional term
or condition in any Order shall be applicable to a transaction within the scope
of this Agreement. Both parties hereto specifically agree that any terms and
conditions on any of their purchase or sale documents or other communications
utilized as Orders hereunder which are in any way inconsistent with this
Agreement shall not be applicable, and the terms of this Agreement shall govern.
5. Duration and Termination.
a. Unless earlier terminated according to the provisions of paragraph
2.b below, this Agreement shall be in force and effect for a period of one (1)
year from the effective date of this Agreement set forth above, and shall
thereafter be automatically renewed for successive terms of one (1) year each.
b. Either party hereto may terminate this Agreement upon thirty (30)
days advance written notice to the other party of such election to terminate;
provided, however, that the parties hereto may agree in writing to a shorter or
longer notice period.
c. The termination of this Agreement will not affect any Order which
has been communicated and acknowledged prior to the date of termination.
6. General Terms and Conditions.
a. Orders:
i. Orders will generally be limited to the Products
constituting the saleable inventory, or otherwise utilized in the operations, of
Goody's Family Clothing retail locations. Orders may, however, be issued for
products handled by Seller which are not so utilized. In such event, the
presumption will be that the terms and conditions of this Agreement apply to any
such Order unless Seller shall notify Purchaser of its objection to having such
product covered under this Agreement.
ii. Orders may be made in any form, including typewritten,
telephonic, electronic and telex. An Order may be unpriced or pre-priced.
1.
<PAGE>
iii. Purchaser shall be entitled to engage one or more other
parties to place Orders with Seller on Purchaser's behalf; provided, however,
that Seller shall not fulfill any Order placed by any party other than Purchaser
unless Purchaser has previously communicated written authorization to Seller to
accept Orders from such party. In such event, Purchaser shall remain responsible
for payment of any such Order.
iv. Purchaser shall be entitled to establish dollar limits
above which individual unpriced Orders are not to be accepted by Seller without
specific approval by a designated officer or representative of Purchaser. Such
dollar limits shall be set forth in a writing signed by both parties hereto. In
such event, when an unpriced Order exceeds the established dollar limit, not
including freight, Seller shall return the Order to Purchaser properly priced
within ten (10) days, with an estimated delivery date. Purchaser shall then have
the option of either accepting or rejecting the prices and delivery dates set
forth by Seller.
v. Pre-priced Orders, and unpriced Orders whose amount falls
below any limit that may be established pursuant to the preceding paragraph
2.b.iv, shall be considered as Orders by Seller, and Seller may accept such
Orders and fulfill the same without any further approvals of Purchaser.
b. Acknowledgments:
i. Within ten (10) days following Seller's receipt of any
Order placed by or on behalf of Purchaser, Seller shall respond either by
accepting such Order as submitted (subject to the above provisions regarding
pricing) or by notifying Purchaser or Purchaser's authorized representative of
proposed modifications. When an acknowledgment contains additions or
modifications to the Order, the acknowledged Order shall not become effective
until Seller is notified electronically or in writing by or on behalf of
Purchaser that the proposed additions or modifications are acceptable. 1.
<PAGE>
ii. Seller agrees to make every reasonable effort to meet the
delivery dates specified on any Order. Each Order acknowledgment shall contain
either Seller's confirmation of the delivery dates as requested by or on behalf
of Purchaser, or Seller's own estimated delivery dates.
c. Follow-Up.
i. Seller agrees to provide follow-up with Seller's
distribution facility or its third-party suppliers on each acknowledged Order to
ensure that the delivery dates given are met, or that Purchaser is notified of
any rescheduling. Such notification of any possible rescheduling shall be
provided to Purchaser as soon as possible, and in any event before the confirmed
delivery dates contained in the acknowledged Order.
ii. Seller agrees to give special attention and frequent
follow-up on acknowledged Orders designated as "rush," since these represent
emergency requirements on the part of Purchaser.
iii. Purchaser or Purchaser's representative will contact
Seller on all "rush" Orders to establish the earliest delivery dates Seller can
meet. Seller agrees to give top priority to all "rush" Orders.
d. Shipping and Invoicing.
i. Seller and Purchaser will mutually agree upon detailed
delivery invoicing instructions. Since this Agreement and such delivery and
invoicing instructions will not be furnished with each Order, Seller shall
undertake all such actions as are reasonably necessary or appropriate to ensure
that all of Seller's personnel in charge of fulfilling Purchaser's Orders are
aware of such delivery and invoicing instructions. Seller shall be entitled to
have Products purchased by Seller hereunder delivered directly from third-party
vendors.
ii. Unless otherwise agreed between Seller and Purchaser with
respect to the fulfillment of an Order, ownership, legal title and all risk of
loss or damage with respect to Products shipped from Seller's facilities shall
pass to Purchaser at the time the Products are placed into transit, F.O.B.
Seller's place of shipment. 1.
<PAGE>
e. Payment.
i. Unless otherwise agreed between Purchaser and Seller with
respect to an Order, Purchaser or Purchaser's authorized representative shall
render to Seller any and all payments required to be made with respect to a
filled Order within thirty (30) days following Seller's notice to Purchaser of
all charges with respect to the Order. Payments may be made by check,
electronically by inter-bank or intra bank transfer, or (where Purchaser and
Seller are affiliates) by inter-company transfer.
ii. Seller may from time to time advise Purchaser of any
deposit required to be made by Purchaser prior to or at the time of Seller's
acceptance of any Order.
iii. Unless otherwise agreed between Purchaser and Seller, at
any time before, during or after termination of this Agreement, Seller shall
have the absolute right to set-off any and all amounts owed to it hereunder by
Purchaser, its subsidiaries and affiliates against any and all amounts then owed
by Seller to Purchaser. 4. Standard Terms and Conditions.
a. Modification and Assignment.
i. Any modification of this Agreement must be in writing and
signed by the authorized representatives of both Purchaser and Seller. Neither
this Agreement, nor any of the rights or interests of Purchaser or Seller
hereunder may be assigned, transferred or conveyed by operation of law or
otherwise without the prior written consent of the other party, except to a
parent or subsidiary thereof, or an entity wholly controlled thereby, in which
event the party so assigning shall remain obligated and liable to the other
party for the full and complete performance of this Agreement by the parent or
subsidiary or wholly controlled entity to which this Agreement is assigned.
5
b. Delays or Non-Delivery.
i. If after acknowledgment of an Order, Seller finds that the
Products cannot be delivered within the time specified in the Order, Seller
shall promptly notify Purchaser and advise Purchaser of the revised delivery
date. Purchaser shall then have the option of terminating the Order without
obligation for payment or of accepting the revised delivery date.
ii. In the event of delays in delivery due to a cause beyond
Seller's reasonable control, including acts of God, acts of Purchaser, acts of
civil or military authorities or governmental priorities, strikes, or other
labor disturbances, floods, epidemics, war, riot, delay in transportation or
transportation problems, the date of delivery shall be extended for a period
equal to the time lost by reason of such occurrence, provided, however,
Purchaser may, at its option, cancel the acknowledged Order, and any appropriate
cancellation charges will be negotiated between the parties.
c. Taxes. In addition to any price specified in any Order, Purchaser
shall pay the gross amount of any present or future sales, use, excise,
value-added, or other similar tax, applicable to the purchase sale, or delivery
of any Product or its use by Purchaser, unless Purchaser has furnished Seller
evidence of exemption acceptable to the taxing authorities.
d. Applicable Law. All aspects of any Order, this Agreement, and the
contract embodied herein including, but not limited to, its essential validity,
formation, content, performance or nonperformance, breach, damages, and
construction, shall be governed by the laws of the State of Tennessee.
e. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto and it may not be released, discharged, changed, or
modified except by an instrument in writing signed by duly authorized
representative of the parties. Any representation, promise, or condition not
contained herein shall not be binding upon Seller nor Purchaser. Acceptance of
this Agreement is expressly limited to the terms hereof and, in the event of any
conflict, the terms and conditions of this Agreement shall take precedence over
any terms or conditions appearing in any Order placed by or on behalf of
Purchaser with Seller.
1.
<PAGE>
106158-3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
authorized representatives as of the date first set forth above.
SELLER:
GOODY'S MS, L.P.
By: TREBOR of TN, Inc.
General Partner
By: /s/ Harry M. Call
Harry M. Call
President
PURCHASER:
GFCGA, L.P.
By: TREBOR of TN, Inc.
General Partner
By: /s/ Harry M. Call
Harry M. Call
President
<PAGE>
Exhibit - 4.1 D
MANAGEMENT SERVICE AGREEMENT
THIS MANAGEMENT SERVICE AGREEMENT ("Agreement"), is made and entered
into this 20th day of May, 1998, to be effective as of May 20, 1998 (the
"Effective Date") between GOODY'S FAMILY CLOTHING, INC., a Tennessee corporation
("GFC"), and GFCTN, L.P. a Tennessee limited partnership ("Customer").
RECITALS
A. GFC owns and manages several retail clothing stores (individually a
"Non-Store Location" and collectively, "Non-Store Locations") in several states
under the tradename Goody's.
B. Customer plans to own and operate retail clothing stores
(individually a "Store" and collectively, the "Stores") in the state of Georgia
under the tradename Goody's.
C. The purpose of this Agreement is to set forth the terms and
conditions whereunder GFC shall provide Customer and Customer shall procure from
GFC certain management, accounting and administrative services.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, GFC and Customer hereby agree as follows:
1. Appointment and Acceptance. The Customer hereby appoints GFC to provide to
Customer certain management, accounting and administrative services. GFC
hereby accepts such appointment and agrees to provide management, accounting
and administrative services to Customer in accordance with the terms of this
Agreement.
2. The Term.
(a) Unless earlier terminated according to the provisions of paragraph (b)
below, this Agreement shall be in force and effect for a period of one
(1) year from the Effective Date and shall thereafter be automatically
renewed for successive terms of one (1) year each (such one (1) year
period and any renewals thereof shall be referred to as the "Term").
(b) Either party hereto may terminate this Agreement upon thirty (30) days
advance written notice to the other party of such election to
terminate; provided, however, that the parties hereto may agree in
writing to a shorter or longer notice period.
3. Duties, Powers and Limitations of GFC.
3.1 Duties of GFC. GFC shall manage the business and affairs of Customer
in a manner consistent with GFC's management of the Non-Store
Locations. Such duties may include the following:
a. General. GFC shall control the day-to-day conduct of the business
activities of Customer relating to matters concerning marketing,
personnel, banking, credit policies, billing procedures,
collection matters and procurement in connection with Customer's
operations, and such other matters as may be necessary or
appropriate in connection with day-to-day conduct of Customer's
operations.
b. Inventory. GFC shall procure and maintain supplies used in
connection with the operations of the Stores.
c. Financial Reporting. GFC shall prepare and forward Customer, on
an annual, quarterly and monthly basis, financial statements of
Customer; GFC shall likewise furnish to the Customer such other
related financial information and reports concerning the conduct
of the business and affairs of Customer as the Customer may
reasonably request.
d. Audit. GFC shall maintain the books and records of the assets
owned by Customer and the Stores. At any time during the Term,
Customer shall have the right, upon ten (10) days prior notice,
at Customer's expense, to audit the books and records of GFC
relative solely to the Stores and only for the period of the Term
of this Agreement.
e. Compliance with Laws. GFC shall make good faith and reasonable
efforts to comply with all applicable statutes, ordinances, rules
and regulations of federal, state and local governmental bodies
having jurisdiction over the Stores, including the filing of
periodic reports and other governmental forms.
3.2 Powers of GFC. GFC, at Customer's expense, is hereby authorized and
empowered, in the name and on behalf of the Customer and without
further authorization from the Customer, to provide the following
services:
a. Policy Implementation. GFC shall have sole discretion to establish
all policies applicable to the Stores, including, without
limitation, purchasing, pricing, design and decor, maintenance,
employment policies and benefits, standards of operation, quality
of service, marketing and promotional activities, banking,
accounting, financial controls and any other matters affecting the
operation of the Stores.
b. Personnel. GFC shall have the right to hire, supervise, direct the work
of, promote, discharge and determine the compensation and other benefits of all
personnel working in or for the Stores. GFC may incur reasonable and customary
employment agency fees and employee relocation expenses for employees of the
Stores. GFC shall employ and pay for GFC's own account, the wages and other
compensation of certain management personnel to assist with the operations and
management at the Stores. GFC shall have the right to invoice Customer and
Customer shall have the obligation to reimburse GFC for all reasonable travel
and lodging expenses incurred by GFC employees while they are traveling on
behalf of the Customer.
c. Permits and Licenses. GFC, shall have the right to obtain, maintain
and review all licenses and permits that may be required for the
operation of the Stores.
d. Contracts. GFC, as the administrative manger for the Customer,
shall have the authority to enter into concessionaire, inventory,
product service and other contracts or agreements as are in GFC's
reasonable, professional judgment necessary for the operation,
supply and maintenance of the Stores.
e. Alterations. GFC shall have the right to make alterations,
additions or improvements to the Stores as it deems necessary or
required. The Customer shall bear all responsibility for the costs
of such alterations, additions or improvements.
f. Professional Service. GFC may, at Customer's expense, hire
independent contractors to provide such legal, accounting and other
professional or technical services as GFC reasonably deems
advisable for the management, operation and maintenance of the
Stores. During the Term of this Agreement, GFC's corporate staff
may be periodically provided to the Customer at Customer's expense
(including, but not limited to, out-of-pocket expenses).
g. Accounting. GFC may maintain books and records of accounts relating
to the operation and management of the Stores. The books and
records for the Stores shall be kept substantially in accordance
with the system currently utilized by GFC or hereafter modified by
GFC.
h. Insurance. GFC shall have the right to purchase and maintain
insurance coverages covering such risks in amounts for the benefit
of GFC and Customer, as their interests appear, as GFC determines
are necessary or appropriate.
i. Financial. GFC shall have the right, to open and close all bank
accounts, reconcile all accounts of Customer and prepare monthly,
quarterly and annual financial statements of Customer.
j. Miscellaneous Filing. GFC shall have the right to make tax,
regulatory and other filings relative to Customer or Customer's
Stores and to render periodic and other reports to governmental
agencies having jurisdiction over the Stores and the assets of the
Stores.
k. Conveyances. GFC shall have the right to buy, lease, sell, use,
invest, mortgage, encumber or otherwise acquire or dispose of, in
the ordinary course of business, assets of Customer.
l. Claims. GFC shall have the right to conduct litigation and incur
legal expenses and to otherwise settle claims or disputes of
Customer or related in any way to the Stores.
m. Store Adjustments. At any time during the Term, Customer may open
or operate or add a new Store or otherwise close an existing Store.
In such event, such new store shall then be referred to as a
"Store" and if a Store is closed, GFC and Customer may cease such
Store's rights and obligations of this Agreement. GFC and Customer
shall acknowledge that the respective rights, obligations and
duties described in this Agreement shall fully apply to any such
new Store.
3.3 Limitation on GFC's Powers. Notwithstanding Sections 3.1 and 3.2
above, without the prior written authority of Customer, GFC shall not
have the authority or take any action to cause Customer to: (a) sell,
lease or otherwise dispose of all or substantially all of its assets;
(b) borrow money, assume, guarantee or otherwise cause Customer to
become liable for indebtedness, other than indebtedness to trade
conditions in the ordinary course of Customer's business and
indebtedness; or (c) take any other extraordinary corporate action as
a result of GFC's actions related to this Agreement.
3.4 GFC's Application of Powers and Duties. GFC will not have any duty or
responsibility to provide services or to take or refrain from taking
any actions except as provided in this Agreement.
4. Duties of Customer. During the Term of this Agreement, Customer shall have
the following duties and obligations:
(a) Books and Records. Customer shall maintain appropriate books and
records and provide such documentation to GFC as necessary and proper for the
service of the business being provided for hereunder. Customer agrees to make
available to GFC the following information: (i) all invoices, statements, bills,
checks, purchase orders, cash register tapes, receipts and other evidence or
indicia of expenses for the purchase and income from the sale of goods at the
Stores; (ii) all other business records acquired, received or maintained at the
Stores which are reasonably requested by GFC; and (iii) all notices,
correspondence or communications between Customer and any party or governmental
agency having jurisdiction and/or rights over the business operations of the
Customer or the Stores.
(b) Compliance with Laws. The Customer shall operate the business in
such manner as to comply with all laws, statutes, ordinances and
governmental rules and regulations applicable to the operation of
the business and Customer shall comply with health, safety,
licensing and zoning requirements applicable to the business
operations at the Stores.
(c) Debts and Liabilities. All expenses, debts, obligations and other
liabilities arising in connection with the Stores shall be the
sole responsibility of the Customer.
(d) Conduct. Customer shall conduct itself and the operation of the
Stores with due regard to trade and business ethics, and shall not
engage in or knowingly permit any acts or practices which would
disparage or tend to disparage the Stores or the goodwill thereof.
5. Management Fee and Maintenance Expenses. In consideration of the services
rendered by GFC to Customer hereunder, Customer agrees to pay GFC a
management fee and other expenses as follows:
(a) Management Fee. As consideration of the services to be provided by GFC
to Customer, Customer shall pay GFC a management fee during the Term of
this Agreement: FIVE AND ONE-HALF PERCENT (5.50%) of Licensee's net
sales from or at the Stores (the "Management Fee"). This Management Fee
shall be due and payable in arrears on the thirtieth (30th) calendar day
of each calendar month during the Term, beginning , 1998. Fractional
months at the beginning or end of the Term hereof shall be appropriately
prorated.
The Management Fee shall be subsequently adjusted if there is: (i) an
increase in the Stores to be serviced by GFC by the Agreement; (ii) a
change in the services to be provided by GFC to Customer; or (iii) any
accounting adjustments made by GFC to reflect GFC's costs incurred,
without a mark-up, to provide the services referenced in Section 3
hereof to Customer.
(b) Expenses. Customer shall reimburse GFC on the thirtieth (30th) calendar
day of each month for all expenses incurred by GFC on behalf of Customer
(the "Maintenance Expenses") during the immediately preceding month in
connection with the management services being provided by GFC for
Customer, including, but not limited to, all purchases of product,
supplies, equipment and other items expressed or implied in the
Agreement.
(c) Payment of the Management Fee and Maintenance Expense. The Management
Fee and Maintenance Expense shall be paid in the time and manner
described in Sections 5.(a) and (b) above at GFC's offices located at
400 Goody's Lane, Knoxville Tennessee 37922, or at any other place
reasonably designated by GFC. Unless otherwise directed by GFC, Customer
shall render payment of the Management Fee and the Maintenance Expenses
by check, electronically by inter-bank or intra-bank transfer, or (where
GFC and Customer are affiliates) by inter-company transfer.
6. Default.
(a) If GFC or Customer fails to observe or perform any material term,
covenant or condition under this Agreement and such failure continues
for a period of ten (10) days after notice thereof is given to it by
the other, the other may terminate this Agreement by written notice. If
such failure is of such a nature that it cannot with due diligence be
cured within a period of ten (10) days, then such failure shall not be
deemed to continue if the failing party proceeds promptly and with due
diligence to cure the failure and diligently completes the curing
thereof.
(b) GFC or Customer may terminate this Agreement by notice to the other if:
(i) the other ceases to carry on its business, (ii) a receiver or
similar officer is appointed for the other and is not discharged within
thirty (30) days, (iii) the other becomes insolvent, admits in writing
its inability to pay its debts as they mature, is adjudicated bankrupt
or makes an assignment for the benefit of its creditors or another
arrangement of similar import; or (iv) proceedings under any bankruptcy
or insolvency law are commenced by or against the other and are not
dismissed within thirty (30) days.
(c) In the event of termination of this Agreement, the Customer will remain
liable to GFC, and GFC will remain liable to the Customer, for any
amounts and obligations owing to or accrued in favor of GFC or the
Customer, as the case may be, prior to the effective date of such
termination.
7. Limitations on Liability and Indemnification.
(a) Limitations on Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, GFC WILL NOT BE LIABLE TO THE CUSTOMER FOR ANY LOSS OR
DAMAGE OF ANY NATURE INCURRED OR SUFFERED BY THE CUSTOMER IN ANY WAY
RELATING TO OR ARISING OUT OF THE ACT OR DEFAULT OF GFC OR ANY OF ITS
EMPLOYEES OR AGENTS IN THE PERFORMANCE OR THE NON-PERFORMANCE OF THIS
AGREEMENT OR ANY PART HEREOF, EXCEPT LOSS OR DAMAGE TO THE CUSTOMER
CAUSED BY GFC 'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT UNDER THIS
AGREEMENT TO THE EXTENT TO WHICH THE SAME IS NOT COVERED BY INSURANCE.
IN NO EVENT WILL GFC BE LIABLE FOR THE CUSTOMER'S LOSS OF PROFITS
AND/OR OTHER CONSEQUENTIAL LOSS OR DAMAGE NOR WILL GFC BE IN ANY WAY
LIABLE FOR ANY ACT, DEFAULT OR NEGLIGENCE, WILLFUL OR OTHERWISE, OF ANY
INDEPENDENT CONTRACTOR EMPLOYED FOR THE PURPOSE OF PROVIDING SERVICES
TO THE CUSTOMER.
(b) Indemnification. Except as otherwise set forth in the first sentence of
Section 7.(a) hereof, GFC will not be liable for, and the Customer will
indemnify and save and hold GFC, and its officers, directors,
shareholders and employees, harmless from and against, any and all
damages, liabilities, losses, claims, actions, suits, proceedings,
fees, costs or expenses (including, but not limited to, reasonable
attorneys' fees and other costs and expenses incident to any suit,
proceeding or investigation of any claim) of whatsoever kind and nature
imposed on, incurred by or asserted against GFC at any time during or
after the Term of this Agreement (whether because of an act or omission
by GFC or otherwise unless such act or omission is determined to be a
result of the gross negligence or willful misconduct of GFC ) in any
way relating to or arising out of the performance by GFC of its duties
hereunder.
(c) Judgments in Good Faith. Notwithstanding any other provisions contained
herein to the contrary, in no event shall Customer, or any director,
officer, employee or shareholder of Customer make any claim against GFC
(or GFC directors, officers or employees) on account of any alleged
errors of judgment made in good faith in connection with the conduct of
GFC's operations hereunder, nor shall Customer object to any
expenditure made by GFC in good faith in the course of its management
of Customer's operations or in the settlement of any claim arising out
of the conduct of GFC's operations.
8. Notices.
(a) Notice Addresses. Written communications between GFC and Customer shall
be sent to their respective addresses (hereafter, "Notice Address"),
provided that GFC or Customer may change its Notice Address by giving
written notice of such change to the other party at least ten (10) days
in advance. The Notice Address shall be as follows:
If to GFC: Goody's Family Clothing, Inc.
400 Goody's Lane
Knoxville, Tennessee 37922
Attn: Chief Financial Officer
If to Customer: GFCTN, L.P..
400 Goody's Lane
Knoxville, Tennessee 37922
Attn: President
(b) Notices. Wherever this Agreement provides for notice, such notice shall
be in writing and shall be delivered to a party at its Notice Address,
either by hand delivery or by United States mail, certified, with
return receipt requested, by a nationally recognized overnight courier
service, or telexed or telecopied. A hand-delivered notice shall be
effective on the date of receipt by the party being served with the
notice. A mailed notice shall be effective on the earlier of: (i) the
date of receipt or refusal of receipt; or (ii) five (5) days after the
date of mailing.
9. General Provisions.
(a) The term "Agreement" as used herein, includes the Schedule attached
hereto, as well as any future written amendments, modifications or
supplements hereto. The provisions of this Agreement may not be waived,
altered, amended, or repealed, in whole or in part, except with the
written consent of all parties to this Agreement.
(b) The obligations of any party hereunder shall be suspended to the extent
that such party is hindered or suspended from complying therewith
because of strikes and other labor disputes, fire and other casualty,
and force majeure or any other cause beyond such party's control.
(c) GFC shall have the absolute right to assign, convey, or license this
Agreement at any time. This Agreement is personal to Customer and shall
not be assigned or otherwise transferred by it without the prior
written consent of GFC. Subject to the foregoing this Agreement shall
be binding on, and shall inure to the benefit of, the parities to it
and their respective successors, and assigns.
(d) It is intended that each section of this Agreement shall be viewed as
separate and divisible, and in the event that any section shall beheld
to be invalid, the remaining sections shall continue to be in full
force and effect.
(e) The provisions of this Agreement relating to the determination and
payment of Management Fee and Maintenance Expenses hereunder are
included solely for the purpose of providing a method whereby the said
Management Fee and Maintenance Expenses can be measured and
ascertained. GFC and Customer shall not be construed as joint
ventureres or partners of each other and neither shall have the power
to bind or obligate the other except as set forth in this Agreement.
(f) This Agreement shall be construed in accordance with and governed by
the laws of the State of Tennessee.
(g) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the date first shown above.
GFCTN, L.P. Goody's Family Clothing, Inc.
By: Trebor of TN, Inc.
General Partner
By: /s/ Regis J. Hebbeler By: /s/ Harry M. Call
Its: Vice President Its: President
<PAGE>
Exhibit - 4.1 D
MANAGEMENT SERVICE AGREEMENT
THIS MANAGEMENT SERVICE AGREEMENT ("Agreement"), is made and entered
into this 20th day of May, 1998, to be effective as of May 20, 1998 (the
"Effective Date") between GOODY'S FAMILY CLOTHING, INC., a Tennessee corporation
("GFC"), and GFCGA, L.P. a Tennessee limited partnership ("Customer").
RECITALS
A. GFC owns and manages several retail clothing stores (individually a
"Non-Store Location" and collectively, "Non-Store Locations") in several states
under the tradename Goody's.
B. Customer plans to own and operate retail clothing stores
(individually a "Store" and collectively, the "Stores") in the state of Georgia
under the tradename Goody's.
C. The purpose of this Agreement is to set forth the terms and
conditions whereunder GFC shall provide Customer and Customer shall procure from
GFC certain management, accounting and administrative services.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, GFC and Customer hereby agree as follows:
1. Appointment and Acceptance. The Customer hereby appoints GFC to provide to
Customer certain management, accounting and administrative services. GFC
hereby accepts such appointment and agrees to provide management, accounting
and administrative services to Customer in accordance with the terms of this
Agreement.
2. The Term.
(a) Unless earlier terminated according to the provisions of paragraph (b)
below, this Agreement shall be in force and effect for a period of one
(1) year from the Effective Date and shall thereafter be automatically
renewed for successive terms of one (1) year each (such one (1) year
period and any renewals thereof shall be referred to as the "Term").
(b) Either party hereto may terminate this Agreement upon thirty (30) days
advance written notice to the other party of such election to
terminate; provided, however, that the parties hereto may agree in
writing to a shorter or longer notice period.
3. Duties, Powers and Limitations of GFC.
3.1 Duties of GFC. GFC shall manage the business and affairs of Customer
in a manner consistent with GFC's management of the Non-Store
Locations. Such duties may include the following:
a. General. GFC shall control the day-to-day conduct of the business
activities of Customer relating to matters concerning marketing,
personnel, banking, credit policies, billing procedures,
collection matters and procurement in connection with Customer's
operations, and such other matters as may be necessary or
appropriate in connection with day-to-day conduct of Customer's
operations.
b. Inventory. GFC shall procure and maintain supplies used in
connection with the operations of the Stores.
c. Financial Reporting. GFC shall prepare and forward Customer, on
an annual, quarterly and monthly basis, financial statements of
Customer; GFC shall likewise furnish to the Customer such other
related financial information and reports concerning the conduct
of the business and affairs of Customer as the Customer may
reasonably request.
d. Audit. GFC shall maintain the books and records of the assets
owned by Customer and the Stores. At any time during the Term,
Customer shall have the right, upon ten (10) days prior notice,
at Customer's expense, to audit the books and records of GFC
relative solely to the Stores and only for the period of the Term
of this Agreement.
e. Compliance with Laws. GFC shall make good faith and reasonable
efforts to comply with all applicable statutes, ordinances, rules
and regulations of federal, state and local governmental bodies
having jurisdiction over the Stores, including the filing of
periodic reports and other governmental forms.
3.2 Powers of GFC. GFC, at Customer's expense, is hereby authorized and
empowered, in the name and on behalf of the Customer and without
further authorization from the Customer, to provide the following
services:
a. Policy Implementation. GFC shall have sole discretion to establish
all policies applicable to the Stores, including, without
limitation, purchasing, pricing, design and decor, maintenance,
employment policies and benefits, standards of operation, quality
of service, marketing and promotional activities, banking,
accounting, financial controls and any other matters affecting the
operation of the Stores.
b. Personnel. GFC shall have the right to hire, supervise, direct the work
of, promote, discharge and determine the compensation and other benefits of all
personnel working in or for the Stores. GFC may incur reasonable and customary
employment agency fees and employee relocation expenses for employees of the
Stores. GFC shall employ and pay for GFC's own account, the wages and other
compensation of certain management personnel to assist with the operations and
management at the Stores. GFC shall have the right to invoice Customer and
Customer shall have the obligation to reimburse GFC for all reasonable travel
and lodging expenses incurred by GFC employees while they are traveling on
behalf of the Customer.
c. Permits and Licenses. GFC, shall have the right to obtain, maintain
and review all licenses and permits that may be required for the
operation of the Stores.
d. Contracts. GFC, as the administrative manger for the Customer,
shall have the authority to enter into concessionaire, inventory,
product service and other contracts or agreements as are in GFC's
reasonable, professional judgment necessary for the operation,
supply and maintenance of the Stores.
e. Alterations. GFC shall have the right to make alterations,
additions or improvements to the Stores as it deems necessary or
required. The Customer shall bear all responsibility for the costs
of such alterations, additions or improvements.
f. Professional Service. GFC may, at Customer's expense, hire
independent contractors to provide such legal, accounting and other
professional or technical services as GFC reasonably deems
advisable for the management, operation and maintenance of the
Stores. During the Term of this Agreement, GFC's corporate staff
may be periodically provided to the Customer at Customer's expense
(including, but not limited to, out-of-pocket expenses).
g. Accounting. GFC may maintain books and records of accounts relating
to the operation and management of the Stores. The books and
records for the Stores shall be kept substantially in accordance
with the system currently utilized by GFC or hereafter modified by
GFC.
h. Insurance. GFC shall have the right to purchase and maintain
insurance coverages covering such risks in amounts for the benefit
of GFC and Customer, as their interests appear, as GFC determines
are necessary or appropriate.
i. Financial. GFC shall have the right, to open and close all bank
accounts, reconcile all accounts of Customer and prepare monthly,
quarterly and annual financial statements of Customer.
j. Miscellaneous Filing. GFC shall have the right to make tax,
regulatory and other filings relative to Customer or Customer's
Stores and to render periodic and other reports to governmental
agencies having jurisdiction over the Stores and the assets of the
Stores.
k. Conveyances. GFC shall have the right to buy, lease, sell, use,
invest, mortgage, encumber or otherwise acquire or dispose of, in
the ordinary course of business, assets of Customer.
l. Claims. GFC shall have the right to conduct litigation and incur
legal expenses and to otherwise settle claims or disputes of
Customer or related in any way to the Stores.
m. Store Adjustments. At any time during the Term, Customer may open
or operate or add a new Store or otherwise close an existing Store.
In such event, such new store shall then be referred to as a
"Store" and if a Store is closed, GFC and Customer may cease such
Store's rights and obligations of this Agreement. GFC and Customer
shall acknowledge that the respective rights, obligations and
duties described in this Agreement shall fully apply to any such
new Store.
3.3 Limitation on GFC's Powers. Notwithstanding Sections 3.1 and 3.2
above, without the prior written authority of Customer, GFC shall not
have the authority or take any action to cause Customer to: (a) sell,
lease or otherwise dispose of all or substantially all of its assets;
(b) borrow money, assume, guarantee or otherwise cause Customer to
become liable for indebtedness, other than indebtedness to trade
conditions in the ordinary course of Customer's business and
indebtedness; or (c) take any other extraordinary corporate action as
a result of GFC's actions related to this Agreement.
3.4 GFC's Application of Powers and Duties. GFC will not have any duty or
responsibility to provide services or to take or refrain from taking
any actions except as provided in this Agreement.
4. Duties of Customer. During the Term of this Agreement, Customer shall have
the following duties and obligations:
(a) Books and Records. Customer shall maintain appropriate books and
records and provide such documentation to GFC as necessary and proper for the
service of the business being provided for hereunder. Customer agrees to make
available to GFC the following information: (i) all invoices, statements, bills,
checks, purchase orders, cash register tapes, receipts and other evidence or
indicia of expenses for the purchase and income from the sale of goods at the
Stores; (ii) all other business records acquired, received or maintained at the
Stores which are reasonably requested by GFC; and (iii) all notices,
correspondence or communications between Customer and any party or governmental
agency having jurisdiction and/or rights over the business operations of the
Customer or the Stores.
(b) Compliance with Laws. The Customer shall operate the business in
such manner as to comply with all laws, statutes, ordinances and
governmental rules and regulations applicable to the operation of
the business and Customer shall comply with health, safety,
licensing and zoning requirements applicable to the business
operations at the Stores.
(c) Debts and Liabilities. All expenses, debts, obligations and other
liabilities arising in connection with the Stores shall be the
sole responsibility of the Customer.
(d) Conduct. Customer shall conduct itself and the operation of the
Stores with due regard to trade and business ethics, and shall not
engage in or knowingly permit any acts or practices which would
disparage or tend to disparage the Stores or the goodwill thereof.
5. Management Fee and Maintenance Expenses. In consideration of the services
rendered by GFC to Customer hereunder, Customer agrees to pay GFC a
management fee and other expenses as follows:
(a) Management Fee. As consideration of the services to be provided by GFC
to Customer, Customer shall pay GFC a management fee during the Term of
this Agreement: OFICE AND ONE-HALF PERCENT (5.50%) of Licensee's net
sales from or at the Stores (the "Management Fee"). This Management Fee
shall be due and payable in arrears on the thirtieth (30th) calendar day
of each calendar month during the Term, beginning , 1998. Fractional
months at the beginning or end of the Term hereof shall be appropriately
prorated.
The Management Fee shall be subsequently adjusted if there is: (i) an
increase in the Stores to be serviced by GFC by the Agreement; (ii) a
change in the services to be provided by GFC to Customer; or (iii) any
accounting adjustments made by GFC to reflect GFC's costs incurred,
without a mark-up, to provide the services referenced in Section 3
hereof to Customer.
(b) Expenses. Customer shall reimburse GFC on the thirtieth (30th) calendar
day of each month for all expenses incurred by GFC on behalf of Customer
(the "Maintenance Expenses") during the immediately preceding month in
connection with the management services being provided by GFC for
Customer, including, but not limited to, all purchases of product,
supplies, equipment and other items expressed or implied in the
Agreement.
(c) Payment of the Management Fee and Maintenance Expense. The Management
Fee and Maintenance Expense shall be paid in the time and manner
described in Sections 5.(a) and (b) above at GFC's offices located at
400 Goody's Lane, Knoxville Tennessee 37922, or at any other place
reasonably designated by GFC. Unless otherwise directed by GFC, Customer
shall render payment of the Management Fee and the Maintenance Expenses
by check, electronically by inter-bank or intra-bank transfer, or (where
GFC and Customer are affiliates) by inter-company transfer.
6. Default.
(a) If GFC or Customer fails to observe or perform any material term,
covenant or condition under this Agreement and such failure continues
for a period of ten (10) days after notice thereof is given to it by
the other, the other may terminate this Agreement by written notice. If
such failure is of such a nature that it cannot with due diligence be
cured within a period of ten (10) days, then such failure shall not be
deemed to continue if the failing party proceeds promptly and with due
diligence to cure the failure and diligently completes the curing
thereof.
(b) GFC or Customer may terminate this Agreement by notice to the other if:
(i) the other ceases to carry on its business, (ii) a receiver or
similar officer is appointed for the other and is not discharged within
thirty (30) days, (iii) the other becomes insolvent, admits in writing
its inability to pay its debts as they mature, is adjudicated bankrupt
or makes an assignment for the benefit of its creditors or another
arrangement of similar import; or (iv) proceedings under any bankruptcy
or insolvency law are commenced by or against the other and are not
dismissed within thirty (30) days.
(c) In the event of termination of this Agreement, the Customer will remain
liable to GFC, and GFC will remain liable to the Customer, for any
amounts and obligations owing to or accrued in favor of GFC or the
Customer, as the case may be, prior to the effective date of such
termination.
7. Limitations on Liability and Indemnification.
(a) Limitations on Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, GFC WILL NOT BE LIABLE TO THE CUSTOMER FOR ANY LOSS OR
DAMAGE OF ANY NATURE INCURRED OR SUFFERED BY THE CUSTOMER IN ANY WAY
RELATING TO OR ARISING OUT OF THE ACT OR DEFAULT OF GFC OR ANY OF ITS
EMPLOYEES OR AGENTS IN THE PERFORMANCE OR THE NON-PERFORMANCE OF THIS
AGREEMENT OR ANY PART HEREOF, EXCEPT LOSS OR DAMAGE TO THE CUSTOMER
CAUSED BY GFC 'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT UNDER THIS
AGREEMENT TO THE EXTENT TO WHICH THE SAME IS NOT COVERED BY INSURANCE.
IN NO EVENT WILL GFC BE LIABLE FOR THE CUSTOMER'S LOSS OF PROFITS
AND/OR OTHER CONSEQUENTIAL LOSS OR DAMAGE NOR WILL GFC BE IN ANY WAY
LIABLE FOR ANY ACT, DEFAULT OR NEGLIGENCE, WILLFUL OR OTHERWISE, OF ANY
INDEPENDENT CONTRACTOR EMPLOYED FOR THE PURPOSE OF PROVIDING SERVICES
TO THE CUSTOMER.
(b) Indemnification. Except as otherwise set forth in the first sentence of
Section 7.(a) hereof, GFC will not be liable for, and the Customer will
indemnify and save and hold GFC, and its officers, directors,
shareholders and employees, harmless from and against, any and all
damages, liabilities, losses, claims, actions, suits, proceedings,
fees, costs or expenses (including, but not limited to, reasonable
attorneys' fees and other costs and expenses incident to any suit,
proceeding or investigation of any claim) of whatsoever kind and nature
imposed on, incurred by or asserted against GFC at any time during or
after the Term of this Agreement (whether because of an act or omission
by GFC or otherwise unless such act or omission is determined to be a
result of the gross negligence or willful misconduct of GFC ) in any
way relating to or arising out of the performance by GFC of its duties
hereunder.
(c) Judgments in Good Faith. Notwithstanding any other provisions contained
herein to the contrary, in no event shall Customer, or any director,
officer, employee or shareholder of Customer make any claim against GFC
(or GFC directors, officers or employees) on account of any alleged
errors of judgment made in good faith in connection with the conduct of
GFC's operations hereunder, nor shall Customer object to any
expenditure made by GFC in good faith in the course of its management
of Customer's operations or in the settlement of any claim arising out
of the conduct of GFC's operations.
8. Notices.
(a) Notice Addresses. Written communications between GFC and Customer shall
be sent to their respective addresses (hereafter, "Notice Address"),
provided that GFC or Customer may change its Notice Address by giving
written notice of such change to the other party at least ten (10) days
in advance. The Notice Address shall be as follows:
If to GFC: Goody's Family Clothing, Inc.
400 Goody's Lane
Knoxville, Tennessee 37922
Attn: Chief Financial Officer
If to Customer: GFCGA, L.P..
400 Goody's Lane
Knoxville, Tennessee 37922
Attn: President
(b) Notices. Wherever this Agreement provides for notice, such notice shall
be in writing and shall be delivered to a party at its Notice Address,
either by hand delivery or by United States mail, certified, with
return receipt requested, by a nationally recognized overnight courier
service, or telexed or telecopied. A hand-delivered notice shall be
effective on the date of receipt by the party being served with the
notice. A mailed notice shall be effective on the earlier of: (i) the
date of receipt or refusal of receipt; or (ii) five (5) days after the
date of mailing.
9. General Provisions.
(a) The term "Agreement" as used herein, includes the Schedule attached
hereto, as well as any future written amendments, modifications or
supplements hereto. The provisions of this Agreement may not be waived,
altered, amended, or repealed, in whole or in part, except with the
written consent of all parties to this Agreement.
(b) The obligations of any party hereunder shall be suspended to the extent
that such party is hindered or suspended from complying therewith
because of strikes and other labor disputes, fire and other casualty,
and force majeure or any other cause beyond such party's control.
(c) GFC shall have the absolute right to assign, convey, or license this
Agreement at any time. This Agreement is personal to Customer and shall
not be assigned or otherwise transferred by it without the prior
written consent of GFC. Subject to the foregoing this Agreement shall
be binding on, and shall inure to the benefit of, the parities to it
and their respective successors, and assigns.
(d) It is intended that each section of this Agreement shall be viewed as
separate and divisible, and in the event that any section shall beheld
to be invalid, the remaining sections shall continue to be in full
force and effect.
(e) The provisions of this Agreement relating to the determination and
payment of Management Fee and Maintenance Expenses hereunder are
included solely for the purpose of providing a method whereby the said
Management Fee and Maintenance Expenses can be measured and
ascertained. GFC and Customer shall not be construed as joint
ventureres or partners of each other and neither shall have the power
to bind or obligate the other except as set forth in this Agreement.
(f) This Agreement shall be construed in accordance with and governed by
the laws of the State of Tennessee.
(g) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the date first shown above.
GFCTN, L.P. Goody's Family Clothing, Inc.
By: Trebor of TN, Inc.
General Partner
By: /s/ Regis J. Hebbeler By: /s/ Harry M. Call
Its: Vice President Its: President
<PAGE>
Exhibit - 10.52
EMPLOYMENT AGREEMENT
BETWEEN
GOODY'S FAMILY CLOTHING, INC.
AND
HARRY M. CALL
<PAGE>
TABLE OF CONTENTS
1. Definitions.....................................................1
2. Employment......................................................3
3. Term............................................................3
4. Position and Duties; Business Time..............................3
5. Compensation....................................................4
6. Termination of Employment.......................................6
7. Obligations of the Company Upon Termination.....................6
8. Change of Control...............................................9
9. Non-exclusivity of Rights.......................................9
10. Full Settlement.................................................9
11. Arbitration of Disputes.........................................9
12. Confidential Information and Nonsolicitation...................10
13. Successors.....................................................10
14. Miscellaneous..................................................11
<PAGE>
106158-3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, by and between GOODY'S FAMILY CLOTHING,
INC., a Tennessee corporation (the "Company"), and HARRY M. CALL (the
"Executive"), shall be effective as of the _20th day of May, 1998.
RECITALS:
A. The Executive has for some time served as the President and Chief
Operating Officer of the Company. The Company and the Executive have entered
into an Employment Agreement dated January 16, 1995 (the "Existing Employment
Contract").
B. The Company wishes to assure the continued service of the Executive.
The Company desires to recognize the Executive's commitment to the Company and
to confirm the right of the Executive to certain employment, compensation and
severance benefits. To attain that end, the Company and the Executive wish to
terminate the Existing Employment Contract and to enter into this Employment
Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the Company and the
Executive do hereby agree as follows:
1. Definitions.
(a) "Accrued Obligations" shall mean (i) the Executive's Base
Salary through the Date of Termination and pro-rated portion of the guaranteed
bonus based upon the number of days the Executive was employed during the
applicable fiscal year, (ii) any amounts deferred by the Executive and not yet
paid by the Company pursuant to a valid election to defer the receipt of all or
a portion of such payments made in accordance with any plan of deferred
compensation sponsored by the Company and any earned but unpaid vacation pay for
the current year, (iii) any amounts or benefits owing to the Executive or to the
Executive's beneficiaries under the then applicable employee benefit plans or
policies of the Company and (iv) any amounts owing to the Executive for
reimbursement of expenses properly incurred by the Executive through the Date of
Termination and which are reimbursable in accordance with the reimbursement
policy of the Company described in Section 5(f).
(b) "Base Salary" shall have the meaning set forth in Section 5(b).
(c) "Board" shall mean the Board of Directors of the Company.
<PAGE>
10
106158-3
(d) "Cause" shall mean that the Executive has, in the judgment
of a majority of the Board (i) committed a felony, or committed an act of fraud,
embezzlement or theft in connection with his duties with the Company or in the
course of his employment with the Company; (ii) willfully caused damage to
property of the Company; (iii) been convicted of a criminal offense (either a
misdemeanor involving acts of dishonesty, theft or moral turpitude, or a
felony); or (iv) engaged in a willful and material breach of his obligations
under Section 4 of this Agreement which breach (under this clause iv) has been
communicated to the Executive with specificity by written notice, and which has
not been cured to the reasonable satisfaction of the Board within a reasonable
period of time, which shall not be less than ten (10) days, nor more than thirty
(30) days, following receipt of such written notice by the Executive. The Board
shall provide the Executive with an opportunity to meet with the Board in order
to provide the Executive an opportunity to refute or explain acts or omissions
referred to in such written notice. For the purpose of this Section, no act or
omission shall be considered willful unless done or omitted to be done in bad
faith and without reasonable belief that such act or omission was done in the
best interest of the Company.
(e) A "Change of Control" of the Company shall mean and shall
be deemed to have occurred if (i) any person or group (within the meaning of
Rule 13d-3 of the rules and regulations promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act Rules")), other than Robert M.
Goodfriend, members of his immediate family, his affiliates, trusts or private
foundations established by or on his behalf, and the heirs, executors or
administrators of Robert M. Goodfriend, shall acquire in one or a series of
transactions, whether through sale of stock or merger, more than 50% of the
outstanding voting securities of the Company or any successor entity of the
Company, (ii) all or substantially all of the Company's assets are sold, or
(iii) the shareholders of the Company shall approve a complete liquidation or
dissolution of the Company.
(f) "Change of Control Date" shall mean (i) the closing date
on which a Change of Control shall have occurred, (ii) in the case of a sale of
all or substantially all of the Company's assets, the closing date on which a
Change of Control shall have occurred after shareholder approval is obtained, or
(iii) in the case of a complete liquidation or dissolution of the Company, the
date on which shareholder approval is obtained.
(g) "Constructive Termination" shall mean a material breach by
the Company of its obligations under Section 4(a) or another material obligation
of the Company under this Agreement which failure has been communicated to the
Company with specificity by written notice, and which has not been cured within
a reasonable period of time, which shall not be less than ten (10) days, nor
more than thirty (30) days, following receipt of such written notice by the
Company.
(h) "Date of Termination" shall have the meaning set forth in Section 6(f).
(i) "Disability" shall mean disability whereby the Executive
is unable to render the services provided for by this Agreement by reason of
illness, injury or incapacity (whether physical, mental, emotional or
psychological) for a period of either (i) ninety (90) consecutive days or (ii)
one hundred eighty (180) days in any consecutive three hundred sixty-five (365)
day period.
(j) "Incentive Bonus" shall have the meaning as set forth in Section 5(c).
<PAGE>
(k) "Incentive Plan" shall have the meaning as set forth in Section 5(c).
(l) "Notice of Termination" shall have the meaning as set forth in Section
6(e).
(m) "Qualified Plan" shall mean any retirement plan maintained
by the Company which is intended to meet the requirements of the Internal
Revenue Code of 1986, as amended.
(n) "Subsidiary" shall mean any majority-owned subsidiary of the Company.
2. Employment. The Company has employed the Executive, and the
Executive has agreed to continue to be employed by the Company, as the President
and Chief Operating Officer of the Company. The Executive has held the title of
President and Chief Operating Officer of the Company since January _16_, 1995.
3. Term. The Executive shall be considered an at-will employee
and his employment may be terminated by either party subject to the obligations
of the parties upon such termination as set forth in this Agreement.
4. Position and Duties; Business Time.
(a) Position and Duties. The Executive shall continue his
service as the President and Chief Operating Officer of the Company or another
position which shall be either of comparable rank or a promotion and shall
continue to have such responsibilities and duties as assigned to him by the
Chief Executive Officer of the Company or the Board from time to time, provided:
(i) such assignment of such responsibilities and duties are those which are
customarily associated with the responsibilities of a president and chief
operating officer; (ii) the position in which the Executive shall serve, if
different from the position specified in this Subsection (a), shall not have
materially diminished responsibilities or authority as compared with those of
the position expressly set forth in this Subsection (a); provided, that the
expansion into other store concepts, whether acquired or developed, and the
staffing of such concepts by other employees shall not be deemed a breach of
this provision; and (iii) the Executive shall not be required to relocate by
reason of a change in the location of the Company's principal executive offices
of more than fifty (50) miles from its then current location.
(b) Business Time. The Executive agrees to devote his full
business time to the business and affairs of the Company and to use his best
efforts to perform faithfully and efficiently the responsibilities assigned to
him hereunder, to the extent necessary to discharge such responsibilities,
except for:
(i) time spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees, in each case
only if and to the extent not substantially interfering with the performance of
such responsibilities, and
<PAGE>
(ii) periods of vacation to which he is entitled, periods of illness and
other absences beyond his control.
It is expressly understood and agreed that the continued service by the
Executive on any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the date hereof, or his service on
any other boards and committees shall not be deemed to interfere with the
performance of the Executive's services to the Company; provided, that in the
case of boards or committees on which the Executive is not currently serving the
Executive provides written notice of his intention to serve and the Board
thereafter approves such service (other than non-compensatory positions with
local boards or committees e.g. charitable, chamber of commerce or homeowner
associations which shall not require approval).
5. Compensation. The Executive shall be entitled to the following
compensation and benefits for as long as the Executive remains an employee of
the Company:
(a) Existing Employment Contract. The Executive and Company
acknowledge that all the terms of the existing employment contract (the
"Existing Employment Contract") are in full force and effect and there has not
been any breach of such Existing Employment Contract.
(b) Base Salary. The Executive shall receive a base salary
(the "Base Salary") payable in equal bi-weekly installments (or such other
installments as are provided by the Company for employees generally) at an
annual rate of $325,000, which amount will increase to $350,000, effective
January 31, 1999. The Company shall review the Base Salary periodically and in
light of such review may, in its sole discretion, increase (but not decrease)
the Base Salary taking into account any change in the Executive's
responsibilities, increases in compensation of other executives with comparable
responsibilities, performance of the Executive and other pertinent factors, and
such adjusted Base Salary shall then constitute the "Base Salary" for purposes
of this Agreement. For each fiscal year of the Company during the term of this
Agreement, the Executive shall also be entitled to a guaranteed annual bonus of
$100,000 payable in full on the last Friday in March for the most recently
completed fiscal year. The Incentive Bonus hereinafter described shall be
reduced by the amount of any guaranteed bonus paid by the Company to the
Executive in respect of the applicable fiscal year.
(c) Short Term Incentive Plan Bonus. The Company has
established a "Short Term Incentive Plan" (the "Incentive Plan") under which the
Executive shall be eligible to participate for each fiscal year he holds the
position stated in Section 2 and shall be eligible to receive an annual
incentive target bonus of not less than 50% of Base Salary based on performance
and other specific objectives adopted by the Compensation Committee of the Board
(the "Incentive Bonus").
<PAGE>
(d) Incentive and Savings Plans; Retirement and Death Benefit
Programs. The Executive shall be entitled to participate in all incentive and
savings plans and programs, including stock option plans and other equity-based
compensation plans, and in all employee retirement, executive retirement and
executive death benefit plans on a basis no less favorable than that basis
generally available to executives of the Company holding comparable positions or
having comparable responsibilities.
(e) Other Benefit Plans. The Executive, his spouse and their
eligible dependents (as defined in, and to the extent permitted by, the
applicable plan), as the case may be, shall be entitled to participate in or be
covered under all medical, dental, group disability, group life, severance,
accidental death and travel accident insurance plans and programs of the Company
to the extent such plans and programs are generally available to executives of
the Company holding comparable positions or having comparable responsibilities.
In addition, the Company shall continue to pay for and provide to the Executive
the following additional benefits:
(i) An individual life insurance policy on the life of the Executive in the
amount of $500,000, the beneficiary or beneficiaries of which are designated by
the Executive, without cost to the Executive; and
(ii) An individual disability insurance policy or policies providing a
monthly benefit of no less than $12,200 per month, the annual premium for such
policy or policies to be shared between the Company and the Executive in such
proportion as is consistent with past practice.
If required, the Company shall replace any such policy currently in effect
with a policy or policies containing terms and conditions (including amounts of
coverage) which are not materially less favorable to the Executive and/or his
designated beneficiaries provided such replacement policy or policies may be
obtained at reasonable rates consistent with past practice.
(f) Other Perquisites. The Executive shall also be entitled to:
(i) prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies and procedures of the Company;
(ii) three (3) weeks paid vacation, such paid vacation time to be increased
(but not decreased) in accordance with Company policy;
(iii) an automobile at least comparable to the model currently furnished by
the Company shall be provided by the Company with expenses to be paid in
accordance with the Company's policies and procedures with respect thereto; and
(iv) an office or offices suitable for an executive officer with
secretarial and other assistance as shall reasonably be required by the
Executive.
<PAGE>
6. Termination of Employment.
(a) Disability; Death. The Company may terminate the
Executive's employment after having established the Executive's Disability, by
giving to the Executive written notice of its intention to terminate his
employment, and his employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice if the Executive shall fail to
return to full-time performance of his duties within thirty (30) days after such
receipt. If the Executive dies during the term of this Agreement, his employment
hereunder shall be deemed to cease as of the date of his death.
(b) Voluntary Termination by the Executive. Notwithstanding
anything in this Agreement to the contrary, the Executive may, upon not less
than thirty (30) days' written notice to the Company, voluntarily terminate
employment for any reason (including retirement under the terms of the Company's
retirement plan as in effect from time to time), provided that any termination
by the Executive pursuant to Section 6(d) on account of Constructive Termination
shall not be treated as a voluntary termination under this Section 6(b).
(c) Termination by the Company. The Company at any time may
terminate the Executive's employment for Cause or without Cause.
(d) Constructive Termination. The Executive may terminate his employment
for Constructive Termination.
(e) Notice of Termination. Any termination by the Company for
Cause or by the Executive for Constructive Termination shall be communicated by
a written Notice of Termination to the other party hereto given in accordance
with Section 14(c). For purposes of this Agreement, a "Notice of Termination"
means a written notice given in the case of a termination for Cause and in the
case of Constructive Termination which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty (30) days after the
receipt of such notice).
(f) Date of Termination. For the purpose of this Agreement,
the term "Date of Termination" means (i) in the case of a termination for which
a Notice of Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be, and
(ii) in all other cases, the actual date on which the Executive's employment
terminates.
7. Obligations of the Company Upon Termination. Upon
termination of the Executive's employment with the Company, the Company shall
have the following obligations:
<PAGE>
(a) Death, Disability and Retirement. If the Executive's
employment is terminated by reason of the Executive's death, Disability, or
retirement on or after the attainment of age sixty-five (65), the Company shall
have no further obligations to the Executive's legal representatives under this
Agreement other than payment of the Accrued Obligations. If the Executive's
employment is terminated by reason of the Executive's death or Disability, the
Company shall have the additional obligation, subject to the terms of the
Incentive Plan and further provided that the Executive has been employed by the
Company for the first six (6) months of the then applicable fiscal year, to pay
a cash amount equal to a portion of the Incentive Bonus, the product of a
fraction, the numerator of which is the number of days elapsed since the date
the Incentive Plan began for the applicable fiscal year through the date of the
Disability or the date of death of the Executive, and the denominator of which
is the total number of days of the applicable fiscal year for such Incentive
Plan. Unless otherwise directed by the Executive (or, in the case of the
Incentive Plan or a Qualified Plan, as may be required by such Incentive Plan or
Qualified Plan) all Accrued Obligations shall be paid to the Executive, his
beneficiaries or his estate, as applicable, in a lump sum in cash within thirty
(30) days of the Date of Termination. In the event of the termination of the
Executive by reason of retirement on or after the attainment of age sixty-five
(65), death or Disability, he and/or his named beneficiaries, as the case may
be, shall be entitled to the benefits available through the Company sponsored
plans and programs designated for such category of termination on Schedule A.
With regard to the termination of the Executive's employment by reason of
retirement on or after the attainment of age sixty-five (65) or Disability, the
Company shall pay the premiums (to the same extent paid prior to the termination
of employment) for the continued participation of the Executive for a period of
twelve (12) months after the Date of Termination in any individual life
insurance policy on the same terms as the Executive and the Company were
participating prior to the Date of Termination. Further, with regard to the
termination of the Executive's employment by reason of the Executive's death,
retirement on or after the attainment of age sixty-five (65) or Disability, the
Company shall, for a period of twelve (12) months after the Executive's Date of
Termination, pay the entire COBRA premium under any Company medical and dental
program that the Executive (and his spouse and eligible dependents) was
participating in prior to the termination of employment. The Company's premium
obligations in the preceding two sentences shall exclude normal employee
contributions paid by the Executive prior to the Date of Termination. In
addition to the foregoing, in the event of termination of the Executive's
employment by reason of the death or Disability of the Executive, all unvested
stock options held by the Executive shall become fully vested, effective on the
Date of Termination, and shall thereafter be exercisable in accordance with the
provisions of the applicable Option Plan (including, without limitation,
Sections 5 and 6 thereof) and Option Agreement.
<PAGE>
(b) Termination by the Company for Cause and Voluntary
Termination by the Executive. If the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than on account of
Constructive Termination), the Company shall pay the Executive the Accrued
Obligations. The Executive shall be paid all such Accrued Obligations in a lump
sum in cash within thirty (30) days of the Date of Termination and the Company
shall have no further obligations to the Executive under this Agreement, unless
otherwise required by a Qualified Plan or specified pursuant to a valid election
to defer the receipt of all or a portion of such payments made in accordance
with any plan of deferred compensation sponsored by the Company.
(c) Other Termination of Employment. If the Company terminates
the Executive's employment other than for Cause, death or Disability, or the
Executive terminates his employment for Constructive Termination, the Company
shall pay and provide to the Executive the following:
(i) Severance Payment. The Company shall pay to the Executive in a lump sum
in cash or certified check within fifteen (15) days after the Date of
Termination a severance payment equal to the sum of the following amounts (other
than amounts payable from the Incentive Plan or Qualified Plans, non-qualified
retirement plans and deferred compensation plans, which amounts shall be paid in
accordance with the terms of such plans):
(A) all Accrued Obligations;
(B) a cash amount equal to twelve (12) months of the Executive's Base
Salary at the rate in effect as of the date when the Notice of Termination was
given;
(C) subject to the terms of the Incentive Plan and further provided that
the Executive has been employed by the Company for the first six (6) months of
the then applicable fiscal year, a cash amount equal to a portion of the
Incentive Bonus, the product of a fraction, the numerator of which is the number
of days elapsed since the date the Incentive Plan began for the applicable
fiscal year through the date of such Constructive Termination or termination
without Cause, and the denominator of which is the total number of days of the
applicable fiscal year for such Incentive Plan.
(ii) Acceleration of Option Vesting. In the case of a Constructive
Termination, all unvested stock options held by the Executive shall become fully
vested, effective on the Date of Termination, and shall be thereafter
exercisable in accordance with the provisions of the applicable Option Plan
(including, without limitation, Sections 5 and 6 thereof) and Option Agreement.
(d) Release. As a condition precedent to the receipt of any
termination benefits payable to the Executive under this Section 7, the
Executive agrees to execute a general release among other things releasing the
Company from any obligation or liability (other than those contained in Sections
7, 8, 9, 10, 11, 13 and 14 hereof, to the extent an obligation under any such
section arose at or prior to the Date of Termination and remains unfulfilled).
Such release shall exclude the Executive's rights under any Qualified Plan.
<PAGE>
(e) Discharge of Company's Obligations. Subject to the
performance of its obligations under Sections 7, 8, 9, 10, 11, 13 and 14 (and
then, only to the extent an obligation under any such section arose at or prior
to the Date of Termination and remains unfulfilled), the Company shall have no
further obligations to the Executive under this Agreement in respect of any
termination of employment.
8. Change of Control. Upon the occurrence of a Change of
Control, the Company shall pay the Executive, as consideration for assisting the
Company in bringing about a successful transaction, an amount equal to eighteen
(18) months of the Executive's Base Salary at the rate in effect as of the
Change of Control Date. Such amount shall be payable in a lump sum in cash or
certified check within five (5) days after the Change of Control Date.
9. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company and
for which the Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under any other
agreements with the Company, including, but not limited to stock option
agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company at or
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.
10. Full Settlement. The Executive shall not be obligated to
seek other employment by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement. In the event that the
Executive shall in good faith give a Notice of Termination for Constructive
Termination and it shall thereafter be determined that Constructive Termination
did not take place, the employment of the Executive shall, unless the Company
and the Executive otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual consent of the
Company and the Executive and the Executive shall be entitled to receive only
those payments and benefits which he would have been entitled to receive at such
date had he terminated his employment voluntarily at such date under this
Agreement.
11. Arbitration of Disputes. In the event that a claim for
payment or benefits under this Agreement is disputed, the Company and the
Executive agree to submit such dispute to final and binding arbitration with
United States Arbitration and Mediation, Inc. ("USAM") in Knoxville, Tennessee
or such other arbitration firm as the Company and the Executive shall mutually
agree. Either party wishing to arbitrate any claim hereunder shall notify the
other party and USAM in writing whereupon USAM shall select a neutral arbitrator
and shall schedule an arbitration hearing within thirty (30) days of receipt of
such notice of arbitration. The arbitration shall be conducted in accordance
with the rules and procedures of USAM. The parties agree that any arbitrator's
award may be presented to a court of competent jurisdiction and judgment entered
thereon.
<PAGE>
12. Confidential Information and Nonsolicitation.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or
data, including without limitation all trade secrets, relating to the Company,
and its business, (i) obtained by the Executive during his employment by the
Company, and (ii) which is not otherwise publicly known (other than by reason of
an unauthorized act by the Executive) and is subject to efforts that are
reasonable under the circumstances to maintain its secrecy. After termination of
the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company, unless compelled pursuant to an order
of a court or other body having jurisdiction over such matter, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
(b) Upon termination of the Executive's employment for any
reason, the Executive, for the twelve (12) month period following the Notice of
Termination, shall not, on his own behalf or on behalf of any person or entity,
directly or indirectly solicit or aid in the solicitation of any employees of
the Company to leave their employment. In the event the Executive violates the
terms of Section 12(a) or this Section 12(b), the Employee shall forfeit the
right to all salary and benefits that the Executive and/or his family members
were otherwise entitled pursuant to the terms of Section 7. Also, in the event
that this Section 12 is determined to be unenforceable in part, it shall be
construed to be enforceable to the maximum extent permitted by law.
(c) The Executive agrees that the covenants of confidentiality
and non-solicitation contained in this Section 12 are reasonable covenants under
the circumstances and necessary to protect the business interests and properties
of the Company. The Executive agrees that irreparable loss and damage will be
suffered by the Company should the Executive breach any of the covenants
contained in this Section 12. Accordingly, the Executive agrees that the
Company, in addition to all remedies provided at law or in equity, shall be
entitled to a temporary restraining order and temporary and permanent
injunctions to prevent a breach or contemplated breach of any of the covenants
contained in this Section 12.
13. Successors.
(a) This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
<PAGE>
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. The Company shall require any
successor to all or substantially all of the business and/or assets of the
Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
14. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee, applied without
reference to principles of conflict of laws.
(b) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party, by
overnight delivery or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: at the address listed on the last page hereof
If to the Company: Goody's Family Clothing, Inc.
400 Goody's Lane
P.O. Box 22000
Knoxville, Tennessee 37933-2000
Attention: General Counsel
(with a copy to the attention of the Secretary or to such other address as
either party shall have furnished to the other in writing in accordance
herewith). Communications delivered by hand or by overnight delivery shall be
deemed received on the date of delivery and communications sent by registered or
certified mail shall be deemed received three (3) business days after the
sending thereof.
(d) Tax Withholding. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Captions. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
<PAGE>
(g) Entire Agreement. This Agreement expresses the entire
understanding and agreement of the parties regarding the terms and conditions
governing the Executive's employment with the Company, and all prior agreements
governing the Executive's employment with the Company (including the Existing
Employment Contract) shall have no further effect; provided, however, that
except as specifically provided herein, the terms of this Agreement do not
supersede the terms of any grant or award to the Executive under any stock
option or profit sharing program of the Company except as specifically set forth
in Sections 7(a) and 7(c)(ii) with respect to the vesting and exercisability of
stock options.
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and the Company has caused this Agreement to be executed in its name on its
behalf, and its corporate seal to be hereunto affixed and attested by its
Secretary, all effective as of the day and year first above written.
GOODY'S FAMILY CLOTHING, INC.
By:___\s\ Robert M. Goodfriend_________
Robert M. Goodfriend
Title: Chairman and Chief Executive Officer
ATTEST:
_______\s\ Regis J. Hebbeler_________
Title:____Assistant Secretary______
(CORPORATE SEAL)
EXECUTIVE:
______\s\ Harry M. Call_______________
Harry M. Call
Address:
<PAGE>
105535-2 ~ 03833-0 ~ 05/27/98 ~ 03:30 pm
SCHEDULE A -- HARRY M. CALL
The following is a summary list of benefits available to the
Executive upon termination of the Executive's employment by reason of retirement
on or after the attainment of age sixty-five (65), death or Disability through
Company sponsored plans and programs as of the date of this Agreement. Nothing
herein shall preclude the Company from amending, altering, suspending,
discontinuing or terminating any of such plans and programs in compliance with
applicable law and regulation.
COVERAGE TYPE BENEFIT AMOUNT
Group Life Insurance -- Basic $325,000
High Option $325,000
$650,000
Group Disability Insurance -- Basic 2 year $5,000/month
High Option
(benefit for 5 years) --
Coverage by group life and disability insurance policies terminates upon
termination of the Executive's employment for any reason, except death (in the
case of life insurance) and disability (in the case of disability insurance).
The Executive's beneficiaries are entitled to benefits under the group life
insurance policy if the Executive dies during the period he is receiving
disability payments as a result of such disability.
In addition, the Company has a 401(k) plan in which the Executive may
participate on a voluntary basis. Company contributions therein on his behalf
vest in accordance with the terms of the 401(k) plan, which provides that such
contributions become immediately vested in the event of death during the term of
employment. Upon termination for any reason, the Executive must withdraw his
vested funds by the end of the following fiscal quarter.
<PAGE>
Exhibit - 10.53
EMPLOYMENT AGREEMENT
BETWEEN
GOODY'S FAMILY CLOTHING, INC.
AND
EDWARD R. CARLIN
<PAGE>
TABLE OF CONTENTS
1. Definitions......................................................1
2. Employment.......................................................3
3. Term.............................................................3
4. Position and Duties; Business Time...............................3
5. Compensation.....................................................4
6. Termination of Employment........................................5
7. Obligations of the Company Upon Termination......................6
8. Change of Control................................................9
9. Non-exclusivity of Rights........................................9
10. Full Settlement..................................................9
11. Arbitration of Disputes..........................................9
12. Confidential Information and Nonsolicitation.....................9
13. Successors......................................................10
14. Miscellaneous...................................................11
<PAGE>
105535-2 ~ 03833-0 ~ 05/27/98 ~ 03:30 pm
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, by and between GOODY'S FAMILY CLOTHING,
INC., a Tennessee corporation (the "Company"), and EDWARD R. CARLIN (the
"Executive"), shall be effective as of the _20th day of May, 1998.
RECITALS:
A. The Executive has for some time served as Executive Vice President -
Chief Financial Officer of the Company. The Company and the Executive have
entered into an Employment Agreement dated October 14, 1994 (the "Existing
Employment Contract").
B. The Company wishes to assure the continued service of the Executive.
The Company desires to recognize the Executive's commitment to the Company and
to confirm the right of the Executive to certain employment, compensation and
severance benefits. To attain that end, the Company and the Executive wish to
terminate the Existing Employment Contract and to enter into this Employment
Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the Company and the
Executive do hereby agree as follows:
1. Definitions.
(a) "Accrued Obligations" shall mean (i) the Executive's Base
Salary through the Date of Termination, (ii) any amounts deferred by the
Executive and not yet paid by the Company pursuant to a valid election to defer
the receipt of all or a portion of such payments made in accordance with any
plan of deferred compensation sponsored by the Company and any earned but unpaid
vacation pay for the current year, (iii) any amounts or benefits owing to the
Executive or to the Executive's beneficiaries under the then applicable employee
benefit plans or policies of the Company and (iv) any amounts owing to the
Executive for reimbursement of expenses properly incurred by the Executive
through the Date of Termination and which are reimbursable in accordance with
the reimbursement policy of the Company described in Section 5(f).
(b) "Base Salary" shall have the meaning set forth in Section 5(b).
(c) "Board" shall mean the Board of Directors of the Company.
<PAGE>
10
105535-2 ~ 03833-0 ~ 05/27/98 ~ 03:30 pm
(d) "Cause" shall mean that the Executive has, in the judgment
of a majority of the Board (i) committed a felony, or committed an act of fraud,
embezzlement or theft in connection with his duties with the Company or in the
course of his employment with the Company; (ii) willfully caused damage to
property of the Company; (iii) been convicted of a criminal offense (either a
misdemeanor involving acts of dishonesty, theft or moral turpitude, or a
felony); or (iv) engaged in a willful and material breach of his obligations
under Section 4 of this Agreement which breach (under this clause iv) has been
communicated to the Executive with specificity by written notice, and which has
not been cured to the reasonable satisfaction of the Board within a reasonable
period of time, which shall not be less than ten (10) days, nor more than thirty
(30) days, following receipt of such written notice by the Executive. The Board
shall provide the Executive with an opportunity to meet with the Board in order
to provide the Executive an opportunity to refute or explain acts or omissions
referred to in such written notice. For the purpose of this Section, no act or
omission shall be considered willful unless done or omitted to be done in bad
faith and without reasonable belief that such act or omission was done in the
best interest of the Company.
(e) A "Change of Control" of the Company shall mean and shall
be deemed to have occurred if (i) any person or group (within the meaning of
Rule 13d-3 of the rules and regulations promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act Rules")), other than Robert M.
Goodfriend, members of his immediate family, his affiliates, trusts or private
foundations established by or on his behalf, and the heirs, executors or
administrators of Robert M. Goodfriend, shall acquire in one or a series of
transactions, whether through sale of stock or merger, more than 50% of the
outstanding voting securities of the Company or any successor entity of the
Company, (ii) all or substantially all of the Company's assets are sold, or
(iii) the shareholders of the Company shall approve a complete liquidation or
dissolution of the Company.
(f) "Change of Control Date" shall mean (i) the closing date
on which a Change of Control shall have occurred, (ii) in the case of a sale of
all or substantially all of the Company's assets, the closing date on which a
Change of Control shall have occurred after shareholder approval is obtained, or
(iii) in the case of a complete liquidation or dissolution of the Company, the
date on which shareholder approval is obtained.
(g) "Constructive Termination" shall mean a material breach by
the Company of its obligations under Section 4(a) or another material obligation
of the Company under this Agreement which failure has been communicated to the
Company with specificity by written notice, and which has not been cured within
a reasonable period of time, which shall not be less than ten (10) days, nor
more than thirty (30) days, following receipt of such written notice by the
Company.
(h) "Date of Termination" shall have the meaning set forth in Section 6(f).
(i) "Disability" shall mean disability whereby the Executive
is unable to render the services provided for by this Agreement by reason of
illness, injury or incapacity (whether physical, mental, emotional or
psychological) for a period of either (i) ninety (90) consecutive days or (ii)
one hundred eighty (180) days in any consecutive three hundred sixty-five (365)
day period.
(j) "Incentive Bonus" shall have the meaning as set forth in Section 5(c).
(k) "Incentive Plan" shall have the meaning as set forth in Section 5(c).
<PAGE>
(l) "Notice of Termination" shall have the meaning as set forth in Section
6(e).
(m) "Qualified Plan" shall mean any retirement plan maintained
by the Company which is intended to meet the requirements of the Internal
Revenue Code of 1986, as amended.
(n) "Subsidiary" shall mean any majority-owned subsidiary of the Company.
2. Employment. The Company has employed the Executive, and the
Executive has agreed to continue to be employed by the Company, as Executive
Vice President - Chief Financial Officer of the Company. The Executive has held
the title of Executive Vice President - Chief Financial Officer of the Company
since July 11, 1994.
3. Term. The Executive shall be considered an at-will employee
and his employment may be terminated by either party subject to the obligations
of the parties upon such termination as set forth in this Agreement.
4. Position and Duties; Business Time.
(a) Position and Duties. The Executive shall continue his
service as Executive Vice President - Chief Financial Officer of the Company or
another position which shall be either of comparable rank or a promotion and
shall continue to have such responsibilities and duties as assigned to him by
the Chief Executive Officer of the Company, the Chief Operating Officer of the
Company or the Board from time to time, provided: (i) such assignment of such
responsibilities and duties are those which are customarily associated with the
responsibilities of an executive vice president and chief financial officer;
(ii) the position in which the Executive shall serve, if different from the
position specified in this Subsection (a), shall not have materially diminished
responsibilities or authority as compared with those of the position expressly
set forth in this Subsection (a); provided, that the expansion into other store
concepts, whether acquired or developed, and the staffing of such concepts by
other employees shall not be deemed a breach of this provision; and (iii) the
Executive shall not be required to relocate by reason of a change in the
location of the Company's principal executive offices of more than fifty (50)
miles from its then current location.
(b) Business Time. The Executive agrees to devote his full
business time to the business and affairs of the Company and to use his best
efforts to perform faithfully and efficiently the responsibilities assigned to
him hereunder, to the extent necessary to discharge such responsibilities,
except for:
(i) time spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees, in each case
only if and to the extent not substantially interfering with the performance of
such responsibilities, and
<PAGE>
(ii) periods of vacation to which he is entitled, periods of illness and
other absences beyond his control.
It is expressly understood and agreed that the continued service by the
Executive on any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the date hereof, or his service on
any other boards and committees shall not be deemed to interfere with the
performance of the Executive's services to the Company; provided, that in the
case of boards or committees on which the Executive is not currently serving the
Executive provides written notice of his intention to serve and the Board
thereafter approves such service (other than non-compensatory positions with
local boards or committees e.g. charitable, chamber of commerce or homeowner
associations which shall not require approval).
5. Compensation. The Executive shall be entitled to the following
compensation and benefits for as long as the Executive remains an employee of
the Company:
(a) Existing Employment Contract. The Executive and Company
acknowledge that all the terms of the existing employment contract (the
"Existing Employment Contract") are in full force and effect and there has not
been any breach of such Existing Employment Contract.
(b) Base Salary. The Executive shall receive a base salary
(the "Base Salary") payable in equal bi-weekly installments (or such other
installments as are provided by the Company for employees generally) at an
annual rate of $250,000. The Company shall review the Base Salary periodically
and in light of such review may, in its sole discretion, increase (but not
decrease) the Base Salary taking into account any change in the Executive's
responsibilities, increases in compensation of other executives with comparable
responsibilities, performance of the Executive and other pertinent factors, and
such adjusted Base Salary shall then constitute the "Base Salary" for purposes
of this Agreement.
(c) Short Term Incentive Plan Bonus. The Company has
established a "Short Term Incentive Plan" (the "Incentive Plan") under which the
Executive shall be eligible to participate for each fiscal year he holds the
position stated in Section 2 and shall be eligible to receive an annual
incentive target bonus of not less than 40% of Base Salary based on performance
and other specific objectives adopted by the Compensation Committee of the Board
(the "Incentive Bonus").
(d) Incentive and Savings Plans; Retirement and Death Benefit
Programs. The Executive shall be entitled to participate in all incentive and
savings plans and programs, including stock option plans and other equity-based
compensation plans, and in all employee retirement, executive retirement and
executive death benefit plans on a basis no less favorable than that basis
generally available to executives of the Company holding comparable positions or
having comparable responsibilities.
<PAGE>
(e) Other Benefit Plans. The Executive, his spouse and their
eligible dependents (as defined in, and to the extent permitted by, the
applicable plan), as the case may be, shall be entitled to participate in or be
covered under all medical, dental, group disability, group life, severance,
accidental death and travel accident insurance plans and programs of the Company
to the extent such plans and programs are generally available to executives of
the Company holding comparable positions or having comparable responsibilities.
In addition, the Company shall continue to pay for and provide to the Executive
the following additional benefits:
(i) An individual life insurance policy on the life of the Executive in the
amount of $250,000, the beneficiary or beneficiaries of which are designated by
the Executive, without cost to the Executive; and
(ii) An individual disability insurance policy or policies providing a
monthly benefit of no less than $9,500 per month, the annual premium for such
policy or policies to be shared between the Company and the Executive in such
proportion as is consistent with past practice.
If required, the Company shall replace any such policy currently in effect
with a policy or policies containing terms and conditions (including amounts of
coverage) which are not materially less favorable to the Executive and/or his
designated beneficiaries provided such replacement policy or policies may be
obtained at reasonable rates consistent with past practice.
(f) Other Perquisites. The Executive shall also be entitled to:
(i) prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies and procedures of the Company;
(ii) three (3) weeks paid vacation, such paid vacation time to be increased
(but not decreased) in accordance with Company policy;
(iii) an automobile at least comparable to the model currently furnished by
the Company shall be provided by the Company with expenses to be paid in
accordance with the Company's policies and procedures with respect thereto; and
(iv) an office or offices suitable for an executive officer with
secretarial and other assistance as shall reasonably be required by the
Executive.
6. Termination of Employment.
<PAGE>
(a) Disability; Death. The Company may terminate the
Executive's employment after having established the Executive's Disability, by
giving to the Executive written notice of its intention to terminate his
employment, and his employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice if the Executive shall fail to
return to full-time performance of his duties within thirty (30) days after such
receipt. If the Executive dies during the term of this Agreement, his employment
hereunder shall be deemed to cease as of the date of his death.
(b) Voluntary Termination by the Executive. Notwithstanding
anything in this Agreement to the contrary, the Executive may, upon not less
than thirty (30) days' written notice to the Company, voluntarily terminate
employment for any reason (including retirement under the terms of the Company's
retirement plan as in effect from time to time), provided that any termination
by the Executive pursuant to Section 6(d) on account of Constructive Termination
shall not be treated as a voluntary termination under this Section 6(b).
(c) Termination by the Company. The Company at any time may
terminate the Executive's employment for Cause or without Cause.
(d) Constructive Termination. The Executive may terminate his employment
for Constructive Termination.
(e) Notice of Termination. Any termination by the Company for
Cause or by the Executive for Constructive Termination shall be communicated by
a written Notice of Termination to the other party hereto given in accordance
with Section 14(c). For purposes of this Agreement, a "Notice of Termination"
means a written notice given in the case of a termination for Cause and in the
case of Constructive Termination which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty (30) days after the
receipt of such notice).
(f) Date of Termination. For the purpose of this Agreement,
the term "Date of Termination" means (i) in the case of a termination for which
a Notice of Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be, and
(ii) in all other cases, the actual date on which the Executive's employment
terminates.
7. Obligations of the Company Upon Termination. Upon
termination of the Executive's employment with the Company, the Company shall
have the following obligations:
<PAGE>
(a) Death, Disability and Retirement. If the Executive's
employment is terminated by reason of the Executive's death, Disability, or
retirement on or after the attainment of age sixty-five (65), the Company shall
have no further obligations to the Executive's legal representatives under this
Agreement other than payment of the Accrued Obligations. If the Executive's
employment is terminated by reason of the Executive's death or Disability, the
Company shall have the additional obligation, subject to the terms of the
Incentive Plan and further provided that the Executive has been employed by the
Company for the first six (6) months of the then applicable fiscal year, to pay
a cash amount equal to a portion of the Incentive Bonus, the product of a
fraction, the numerator of which is the number of days elapsed since the date
the Incentive Plan began for the applicable fiscal year through the date of the
Disability or the date of death of the Executive, and the denominator of which
is the total number of days of the applicable fiscal year for such Incentive
Plan. Unless otherwise directed by the Executive (or, in the case of the
Incentive Plan or a Qualified Plan, as may be required by such Incentive Plan or
Qualified Plan) all Accrued Obligations shall be paid to the Executive, his
beneficiaries or his estate, as applicable, in a lump sum in cash within thirty
(30) days of the Date of Termination. In the event of the termination of the
Executive by reason of retirement on or after the attainment of age sixty-five
(65), death or Disability, he and/or his named beneficiaries, as the case may
be, shall be entitled to the benefits available through the Company sponsored
plans and programs designated for such category of termination on Schedule A.
With regard to the termination of the Executive's employment by reason of
retirement on or after the attainment of age sixty-five (65) or Disability, the
Company shall pay the premiums (to the same extent paid prior to the termination
of employment) for the continued participation of the Executive for a period of
twelve (12) months after the Date of Termination in any individual life
insurance policy on the same terms as the Executive and the Company were
participating prior to the Date of Termination. Further, with regard to the
termination of the Executive's employment by reason of the Executive's death,
retirement on or after the attainment of age sixty-five (65) or Disability, the
Company shall, for a period of twelve (12) months after the Executive's Date of
Termination, pay the entire COBRA premium under any Company medical and dental
program that the Executive (and his spouse and eligible dependents) was
participating in prior to the termination of employment. The Company's premium
obligations in the preceding two sentences shall exclude normal employee
contributions paid by the Executive prior to the Date of Termination. In
addition to the foregoing, in the event of termination of the Executive's
employment by reason of the death or Disability of the Executive, all unvested
stock options held by the Executive shall become fully vested, effective on the
Date of Termination, and shall thereafter be exercisable in accordance with the
provisions of the applicable Option Plan (including, without limitation,
Sections 5 and 6 thereof) and Option Agreement.
(b) Termination by the Company for Cause and Voluntary
Termination by the Executive. If the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than on account of
Constructive Termination), the Company shall pay the Executive the Accrued
Obligations. The Executive shall be paid all such Accrued Obligations in a lump
sum in cash within thirty (30) days of the Date of Termination and the Company
shall have no further obligations to the Executive under this Agreement, unless
otherwise required by a Qualified Plan or specified pursuant to a valid election
to defer the receipt of all or a portion of such payments made in accordance
with any plan of deferred compensation sponsored by the Company.
<PAGE>
(c) Other Termination of Employment. If the Company terminates
the Executive's employment other than for Cause, death or Disability, or the
Executive terminates his employment for Constructive Termination, the Company
shall pay and provide to the Executive the following:
(i) Severance Payment. The Company shall pay to the Executive in a lump sum
in cash or certified check within fifteen (15) days after the Date of
Termination a severance payment equal to the sum of the following amounts (other
than amounts payable from the Incentive Plan or Qualified Plans, non-qualified
retirement plans and deferred compensation plans, which amounts shall be paid in
accordance with the terms of such plans):
(A) all Accrued Obligations;
(B) a cash amount equal to twelve (12) months of the Executive's Base
Salary at the rate in effect as of the date when the Notice of Termination was
given;
(C) subject to the terms of the Incentive Plan and further provided that
the Executive has been employed by the Company for the first six (6) months of
the then applicable fiscal year, a cash amount equal to a portion of the
Incentive Bonus, the product of a fraction, the numerator of which is the number
of days elapsed since the date the Incentive Plan began for the applicable
fiscal year through the date of such Constructive Termination or termination
without Cause, and the denominator of which is the total number of days of the
applicable fiscal year for such Incentive Plan.
(ii) Acceleration of Option Vesting. In the case of a Constructive
Termination, all unvested stock options held by the Executive shall become fully
vested, effective on the Date of Termination, and shall be thereafter
exercisable in accordance with the provisions of the applicable Option Plan
(including, without limitation, Sections 5 and 6 thereof) and Option Agreement.
(d) Release. As a condition precedent to the receipt of any
termination benefits payable to the Executive under this Section 7, the
Executive agrees to execute a general release among other things releasing the
Company from any obligation or liability (other than those contained in Sections
7, 8, 9, 10, 11, 13 and 14 hereof, to the extent an obligation under any such
section arose at or prior to the Date of Termination and remains unfulfilled).
Such release shall exclude the Executive's rights under any Qualified Plan.
(e) Discharge of Company's Obligations. Subject to the
performance of its obligations under Sections 7, 8, 9, 10, 11, 13 and 14 (and
then, only to the extent an obligation under any such section arose at or prior
to the Date of Termination and remains unfulfilled), the Company shall have no
further obligations to the Executive under this Agreement in respect of any
termination of employment.
<PAGE>
8. Change of Control. Upon the occurrence of a Change of
Control, the Company shall pay the Executive, as consideration for assisting the
Company in bringing about a successful transaction, an amount equal to eighteen
(18) months of the Executive's Base Salary at the rate in effect as of the
Change of Control Date. Such amount shall be payable in a lump sum in cash or
certified check within five (5) days after the Change of Control Date.
9. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company and
for which the Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under any other
agreements with the Company, including, but not limited to stock option
agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company at or
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.
10. Full Settlement. The Executive shall not be obligated to
seek other employment by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement. In the event that the
Executive shall in good faith give a Notice of Termination for Constructive
Termination and it shall thereafter be determined that Constructive Termination
did not take place, the employment of the Executive shall, unless the Company
and the Executive otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual consent of the
Company and the Executive and the Executive shall be entitled to receive only
those payments and benefits which he would have been entitled to receive at such
date had he terminated his employment voluntarily at such date under this
Agreement.
11. Arbitration of Disputes. In the event that a claim for
payment or benefits under this Agreement is disputed, the Company and the
Executive agree to submit such dispute to final and binding arbitration with
United States Arbitration and Mediation, Inc. ("USAM") in Knoxville, Tennessee
or such other arbitration firm as the Company and the Executive shall mutually
agree. Either party wishing to arbitrate any claim hereunder shall notify the
other party and USAM in writing whereupon USAM shall select a neutral arbitrator
and shall schedule an arbitration hearing within thirty (30) days of receipt of
such notice of arbitration. The arbitration shall be conducted in accordance
with the rules and procedures of USAM. The parties agree that any arbitrator's
award may be presented to a court of competent jurisdiction and judgment entered
thereon.
12. Confidential Information and Nonsolicitation.
<PAGE>
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or
data, including without limitation all trade secrets, relating to the Company,
and its business, (i) obtained by the Executive during his employment by the
Company, and (ii) which is not otherwise publicly known (other than by reason of
an unauthorized act by the Executive) and is subject to efforts that are
reasonable under the circumstances to maintain its secrecy. After termination of
the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company, unless compelled pursuant to an order
of a court or other body having jurisdiction over such matter, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
(b) Upon termination of the Executive's employment for any
reason, the Executive, for the twelve (12) month period following the Notice of
Termination, shall not, on his own behalf or on behalf of any person or entity,
directly or indirectly solicit or aid in the solicitation of any employees of
the Company to leave their employment. In the event the Executive violates the
terms of Section 12(a) or this Section 12(b), the Employee shall forfeit the
right to all salary and benefits that the Executive and/or his family members
were otherwise entitled pursuant to the terms of Section 7. Also, in the event
that this Section 12 is determined to be unenforceable in part, it shall be
construed to be enforceable to the maximum extent permitted by law.
(c) The Executive agrees that the covenants of confidentiality
and non-solicitation contained in this Section 12 are reasonable covenants under
the circumstances and necessary to protect the business interests and properties
of the Company. The Executive agrees that irreparable loss and damage will be
suffered by the Company should the Executive breach any of the covenants
contained in this Section 12. Accordingly, the Executive agrees that the
Company, in addition to all remedies provided at law or in equity, shall be
entitled to a temporary restraining order and temporary and permanent
injunctions to prevent a breach or contemplated breach of any of the covenants
contained in this Section 12.
13. Successors.
(a) This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. The Company shall require any
successor to all or substantially all of the business and/or assets of the
Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
<PAGE>
14. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee, applied without
reference to principles of conflict of laws.
(b) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party, by
overnight delivery or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: at the address listed on the last page hereof
If to the Company: Goody's Family Clothing, Inc.
400 Goody's Lane
P.O. Box 22000
Knoxville, Tennessee 37933-2000
Attention: General Counsel
(with a copy to the attention of the Secretary or to such other address as
either party shall have furnished to the other in writing in accordance
herewith). Communications delivered by hand or by overnight delivery shall be
deemed received on the date of delivery and communications sent by registered or
certified mail shall be deemed received three (3) business days after the
sending thereof.
(d) Tax Withholding. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Captions. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
<PAGE>
(g) Entire Agreement. This Agreement expresses the entire
understanding and agreement of the parties regarding the terms and conditions
governing the Executive's employment with the Company, and all prior agreements
governing the Executive's employment with the Company (including the Existing
Employment Contract) shall have no further effect; provided, however, that
except as specifically provided herein, the terms of this Agreement do not
supersede the terms of any grant or award to the Executive under any stock
option or profit sharing program of the Company except as specifically set forth
in Sections 7(a) and 7(c)(ii) with respect to the vesting and exercisability of
stock options.
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and the Company has caused this Agreement to be executed in its name on its
behalf, and its corporate seal to be hereunto affixed and attested by its
Secretary, all effective as of the day and year first above written.
GOODY'S FAMILY CLOTHING, INC.
By:__\s\ Harry M. Call_______________
Harry M. Call
Title: President and Chief Operating Officer
ATTEST:
____\s\ Regis J. Hebbeler_______
Title:___Assistant Secretary___
(CORPORATE SEAL)
EXECUTIVE:
____\s\ Edward R. Carlin__________
Edward R. Carlin
Address:
<PAGE>
105435-2
SCHEDULE A -- EDWARD R. CARLIN
The following is a summary list of benefits available to the
Executive upon termination of the Executive's employment by reason of retirement
on or after the attainment of age sixty-five (65), death or Disability through
Company sponsored plans and programs as of the date of this Agreement. Nothing
herein shall preclude the Company from amending, altering, suspending,
discontinuing or terminating any of such plans and programs in compliance with
applicable law and regulation.
COVERAGE TYPE BENEFIT AMOUNT
Group Life Insurance -- Basic $250,000
High Option $250,000
$500,000
Group Disability Insurance -- Basic 2 year $5,000/month
High Option
(benefit for 5 years)$5,000/month
$5,000/month
Coverage by group life and disability insurance policies terminates upon
termination of the Executive's employment for any reason, except death (in the
case of life insurance) and disability (in the case of disability insurance).
The Executive's beneficiaries are entitled to benefits under the group life
insurance policy if the Executive dies during the period he is receiving
disability payments as a result of such disability.
In addition, the Company has a 401(k) plan in which the Executive may
participate on a voluntary basis. Company contributions therein on his behalf
vest in accordance with the terms of the 401(k) plan, which provides that such
contributions become immediately vested in the event of death during the term of
employment. Upon termination for any reason, the Executive must withdraw his
vested funds by the end of the following fiscal quarter.
<PAGE>
Exhibit - 10.54
EMPLOYMENT AGREEMENT
BETWEEN
GOODY'S FAMILY CLOTHING, INC.
AND
THOMAS R. KELLY, JR.
<PAGE>
TABLE OF CONTENTS
1. Definitions...................................................1
2. Employment....................................................3
3. Term..........................................................3
4. Position and Duties; Business Time............................3
5. Compensation..................................................4
6. Termination of Employment.....................................5
7. Obligations of the Company Upon Termination...................6
8. Change of Control.............................................9
9. Non-exclusivity of Rights.....................................9
10. Full Settlement...............................................9
11. Arbitration of Disputes.......................................9
12. Confidential Information and Nonsolicitation..................9
13. Successors...................................................10
14. Miscellaneous................................................11
<PAGE>
105435-2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, by and between GOODY'S FAMILY CLOTHING, INC., a
Tennessee corporation (the "Company"), and THOMAS R. KELLY, JR. (the
"Executive"), shall be effective as of the _20th day of May, 1998.
RECITALS:
A. The Executive has for some time served as Executive Vice President -
General Merchandise Manager of the Company. The Company and the Executive have
entered into an Employment Agreement dated January 30, 1995 (the "Existing
Employment Contract").
B. The Company wishes to assure the continued service of the Executive.
The Company desires to recognize the Executive's commitment to the Company and
to confirm the right of the Executive to certain employment, compensation and
severance benefits. To attain that end, the Company and the Executive wish to
terminate the Existing Employment Contract and to enter into this Employment
Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the Company and the
Executive do hereby agree as follows:
1. Definitions.
(a) "Accrued Obligations" shall mean (i) the Executive's Base
Salary through the Date of Termination and pro-rated portion of the guaranteed
bonus based upon the number of days the Executive was employed during the
applicable fiscal year, (ii) any amounts deferred by the Executive and not yet
paid by the Company pursuant to a valid election to defer the receipt of all or
a portion of such payments made in accordance with any plan of deferred
compensation sponsored by the Company and any earned but unpaid vacation pay for
the current year, (iii) any amounts or benefits owing to the Executive or to the
Executive's beneficiaries under the then applicable employee benefit plans or
policies of the Company and (iv) any amounts owing to the Executive for
reimbursement of expenses properly incurred by the Executive through the Date of
Termination and which are reimbursable in accordance with the reimbursement
policy of the Company described in Section 5(f).
(b) "Base Salary" shall have the meaning set forth in Section 5(b).
(c) "Board" shall mean the Board of Directors of the Company.
<PAGE>
10
105435-2
(d) "Cause" shall mean that the Executive has, in the judgment
of a majority of the Board (i) committed a felony, or committed an act of fraud,
embezzlement or theft in connection with his duties with the Company or in the
course of his employment with the Company; (ii) willfully caused damage to
property of the Company; (iii) been convicted of a criminal offense (either a
misdemeanor involving acts of dishonesty, theft or moral turpitude, or a
felony); or (iv) engaged in a willful and material breach of his obligations
under Section 4 of this Agreement which breach (under this clause iv) has been
communicated to the Executive with specificity by written notice, and which has
not been cured to the reasonable satisfaction of the Board within a reasonable
period of time, which shall not be less than ten (10) days, nor more than thirty
(30) days, following receipt of such written notice by the Executive. The Board
shall provide the Executive with an opportunity to meet with the Board in order
to provide the Executive an opportunity to refute or explain acts or omissions
referred to in such written notice. For the purpose of this Section, no act or
omission shall be considered willful unless done or omitted to be done in bad
faith and without reasonable belief that such act or omission was done in the
best interest of the Company.
(e) A "Change of Control" of the Company shall mean and shall
be deemed to have occurred if (i) any person or group (within the meaning of
Rule 13d-3 of the rules and regulations promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act Rules")), other than Robert M.
Goodfriend, members of his immediate family, his affiliates, trusts or private
foundations established by or on his behalf, and the heirs, executors or
administrators of Robert M. Goodfriend, shall acquire in one or a series of
transactions, whether through sale of stock or merger, more than 50% of the
outstanding voting securities of the Company or any successor entity of the
Company, (ii) all or substantially all of the Company's assets are sold, or
(iii) the shareholders of the Company shall approve a complete liquidation or
dissolution of the Company.
(f) "Change of Control Date" shall mean (i) the closing date
on which a Change of Control shall have occurred, (ii) in the case of a sale of
all or substantially all of the Company's assets, the closing date on which a
Change of Control shall have occurred after shareholder approval is obtained, or
(iii) in the case of a complete liquidation or dissolution of the Company, the
date on which shareholder approval is obtained.
(g) "Constructive Termination" shall mean a material breach by
the Company of its obligations under Section 4(a) or another material obligation
of the Company under this Agreement which failure has been communicated to the
Company with specificity by written notice, and which has not been cured within
a reasonable period of time, which shall not be less than ten (10) days, nor
more than thirty (30) days, following receipt of such written notice by the
Company.
(h) "Date of Termination" shall have the meaning set forth in Section 6(f).
(i) "Disability" shall mean disability whereby the Executive
is unable to render the services provided for by this Agreement by reason of
illness, injury or incapacity (whether physical, mental, emotional or
psychological) for a period of either (i) ninety (90) consecutive days or (ii)
one hundred eighty (180) days in any consecutive three hundred sixty-five (365)
day period.
(j) "Incentive Bonus" shall have the meaning as set forth in Section 5(c).
<PAGE>
(k) "Incentive Plan" shall have the meaning as set forth in Section 5(c).
(l) "Notice of Termination" shall have the meaning as set forth in Section
6(e).
(m) "Qualified Plan" shall mean any retirement plan maintained
by the Company which is intended to meet the requirements of the Internal
Revenue Code of 1986, as amended.
(n) "Subsidiary" shall mean any majority-owned subsidiary of the Company.
2. Employment. The Company has employed the Executive, and the
Executive has agreed to continue to be employed by the Company, as Executive
Vice President - General Merchandise Manager of the Company. The Executive has
held the title of Executive Vice President - General Merchandise Manager of the
Company since January 30, 1995.
3. Term. The Executive shall be considered an at-will employee
and his employment may be terminated by either party subject to the obligations
of the parties upon such termination as set forth in this Agreement.
4. Position and Duties; Business Time.
(a) Position and Duties. The Executive shall continue his
service as Executive Vice President - General Merchandise Manager of the Company
or another position which shall be either of comparable rank or a promotion and
shall continue to have such responsibilities and duties as assigned to him by
the Chief Executive Officer of the Company, the Chief Operating Officer of the
Company or the Board from time to time, provided: (i) such assignment of such
responsibilities and duties are those which are customarily associated with the
responsibilities of an executive vice president; (ii) the position in which the
Executive shall serve, if different from the position specified in this
Subsection (a), shall not have materially diminished responsibilities or
authority as compared with those of the position expressly set forth in this
Subsection (a); provided, that the expansion into other store concepts, whether
acquired or developed, and the staffing of such concepts by other employees
shall not be deemed a breach of this provision; and (iii) the Executive shall
not be required to relocate by reason of a change in the location of the
Company's principal executive offices of more than fifty (50) miles from its
then current location.
(b) Business Time. The Executive agrees to devote his full
business time to the business and affairs of the Company and to use his best
efforts to perform faithfully and efficiently the responsibilities assigned to
him hereunder, to the extent necessary to discharge such responsibilities,
except for:
(i) time spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees, in each case
only if and to the extent not substantially interfering with the performance of
such responsibilities, and
<PAGE>
(ii) periods of vacation to which he is entitled, periods of illness and
other absences beyond his control.
It is expressly understood and agreed that the continued service by the
Executive on any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the date hereof, or his service on
any other boards and committees shall not be deemed to interfere with the
performance of the Executive's services to the Company; provided, that in the
case of boards or committees on which the Executive is not currently serving the
Executive provides written notice of his intention to serve and the Board
thereafter approves such service (other than non-compensatory positions with
local boards or committees e.g. charitable, chamber of commerce or homeowner
associations which shall not require approval).
5. Compensation. The Executive shall be entitled to the following
compensation and benefits for as long as the Executive remains an employee of
the Company:
(a) Existing Employment Contract. The Executive and Company
acknowledge that all the terms of the existing employment contract (the
"Existing Employment Contract") are in full force and effect and there has not
been any breach of such Existing Employment Contract.
(b) Base Salary. The Executive shall receive a base salary
(the "Base Salary") payable in equal bi-weekly installments (or such other
installments as are provided by the Company for employees generally) at an
annual rate of $325,000, which amount will increase to $350,000, effective
January 31, 1999. The Company shall review the Base Salary periodically and in
light of such review may, in its sole discretion, increase (but not decrease)
the Base Salary taking into account any change in the Executive's
responsibilities, increases in compensation of other executives with comparable
responsibilities, performance of the Executive and other pertinent factors, and
such adjusted Base Salary shall then constitute the "Base Salary" for purposes
of this Agreement. For each fiscal year of the Company during the term of this
Agreement, the Executive shall also be entitled to a guaranteed annual bonus of
$100,000 payable in full on the last Friday in March for the most recently
completed fiscal year. The Incentive Bonus hereinafter described shall be
reduced by the amount of any guaranteed bonus paid by the Company to the
Executive in respect of the applicable fiscal year.
(c) Short Term Incentive Plan Bonus. The Company has
established a "Short Term Incentive Plan" (the "Incentive Plan") under which the
Executive shall be eligible to participate for each fiscal year he holds the
position stated in Section 2 and shall be eligible to receive an annual
incentive target bonus of not less than 50% of Base Salary based on performance
and other specific objectives adopted by the Compensation Committee of the Board
(the "Incentive Bonus").
<PAGE>
(d) Incentive and Savings Plans; Retirement and Death Benefit
Programs. The Executive shall be entitled to participate in all incentive and
savings plans and programs, including stock option plans and other equity-based
compensation plans, and in all employee retirement, executive retirement and
executive death benefit plans on a basis no less favorable than that basis
generally available to executives of the Company holding comparable positions or
having comparable responsibilities.
(e) Other Benefit Plans. The Executive, his spouse and their
eligible dependents (as defined in, and to the extent permitted by, the
applicable plan), as the case may be, shall be entitled to participate in or be
covered under all medical, dental, group disability, group life, severance,
accidental death and travel accident insurance plans and programs of the Company
to the extent such plans and programs are generally available to executives of
the Company holding comparable positions or having comparable responsibilities.
In addition, the Company shall pay for and provide to the Executive the
following additional benefits (provided the Executive is insurable and such
policies can be purchased at reasonable rates):
(i) An individual life insurance policy on the life of the Executive in the
amount of $250,000, the beneficiary or beneficiaries of which are designated by
the Executive, without cost to the Executive; and
(ii) An individual disability insurance policy or policies providing a
monthly benefit of no less than $12,000 per month, the annual premium for such
policy or policies to be shared between the Company and the Executive in such
proportion as is consistent with the Company's past practice in respect of
individual disability insurance policies provided by the Company to executives
of the Company holding comparable positions or having comparable
responsibilities.
(f) Other Perquisites. The Executive shall also be entitled to:
(i) prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies and procedures of the Company;
(ii) three (3) weeks paid vacation, such paid vacation time to be increased
(but not decreased) in accordance with Company policy;
(iii) an automobile at least comparable to the model currently furnished by
the Company shall be provided by the Company with expenses to be paid in
accordance with the Company's policies and procedures with respect thereto; and
(iv) an office or offices suitable for an executive officer with
secretarial and other assistance as shall reasonably be required by the
Executive.
6. Termination of Employment.
<PAGE>
(a) Disability; Death. The Company may terminate the
Executive's employment after having established the Executive's Disability, by
giving to the Executive written notice of its intention to terminate his
employment, and his employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice if the Executive shall fail to
return to full-time performance of his duties within thirty (30) days after such
receipt. If the Executive dies during the term of this Agreement, his employment
hereunder shall be deemed to cease as of the date of his death.
(b) Voluntary Termination by the Executive. Notwithstanding
anything in this Agreement to the contrary, the Executive may, upon not less
than thirty (30) days' written notice to the Company, voluntarily terminate
employment for any reason (including retirement under the terms of the Company's
retirement plan as in effect from time to time), provided that any termination
by the Executive pursuant to Section 6(d) on account of Constructive Termination
shall not be treated as a voluntary termination under this Section 6(b).
(c) Termination by the Company. The Company at any time may
terminate the Executive's employment for Cause or without Cause.
(d) Constructive Termination. The Executive may terminate his employment
for Constructive Termination.
(e) Notice of Termination. Any termination by the Company for
Cause or by the Executive for Constructive Termination shall be communicated by
a written Notice of Termination to the other party hereto given in accordance
with Section 14(c). For purposes of this Agreement, a "Notice of Termination"
means a written notice given in the case of a termination for Cause and in the
case of Constructive Termination which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty (30) days after the
receipt of such notice).
(f) Date of Termination. For the purpose of this Agreement,
the term "Date of Termination" means (i) in the case of a termination for which
a Notice of Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be, and
(ii) in all other cases, the actual date on which the Executive's employment
terminates.
7. Obligations of the Company Upon Termination. Upon
termination of the Executive's employment with the Company, the Company shall
have the following obligations:
<PAGE>
(a) Death, Disability and Retirement. If the Executive's
employment is terminated by reason of the Executive's death, Disability, or
retirement on or after the attainment of age sixty-five (65), the Company shall
have no further obligations to the Executive's legal representatives under this
Agreement other than payment of the Accrued Obligations. If the Executive's
employment is terminated by reason of the Executive's death or Disability, the
Company shall have the additional obligation, subject to the terms of the
Incentive Plan and further provided that the Executive has been employed by the
Company for the first six (6) months of the then applicable fiscal year, to pay
a cash amount equal to a portion of the Incentive Bonus, the product of a
fraction, the numerator of which is the number of days elapsed since the date
the Incentive Plan began for the applicable fiscal year through the date of the
Disability or the date of death of the Executive, and the denominator of which
is the total number of days of the applicable fiscal year for such Incentive
Plan. Unless otherwise directed by the Executive (or, in the case of the
Incentive Plan or a Qualified Plan, as may be required by such Incentive Plan or
Qualified Plan) all Accrued Obligations shall be paid to the Executive, his
beneficiaries or his estate, as applicable, in a lump sum in cash within thirty
(30) days of the Date of Termination. In the event of the termination of the
Executive by reason of retirement on or after the attainment of age sixty-five
(65), death or Disability, he and/or his named beneficiaries, as the case may
be, shall be entitled to the benefits available through the Company sponsored
plans and programs designated for such category of termination on Schedule A.
With regard to the termination of the Executive's employment by reason of
retirement on or after the attainment of age sixty-five (65) or Disability, the
Company shall pay the premiums (to the same extent paid prior to the termination
of employment) for the continued participation of the Executive for a period of
twelve (12) months after the Date of Termination in any individual life
insurance policy on the same terms as the Executive and the Company were
participating prior to the Date of Termination. Further, with regard to the
termination of the Executive's employment by reason of the Executive's death,
retirement on or after the attainment of age sixty-five (65) or Disability, the
Company shall, for a period of twelve (12) months after the Executive's Date of
Termination, pay the entire COBRA premium under any Company medical and dental
program that the Executive (and his spouse and eligible dependents) was
participating in prior to the termination of employment. The Company's premium
obligations in the preceding two sentences shall exclude normal employee
contributions paid by the Executive prior to the Date of Termination. In
addition to the foregoing, in the event of termination of the Executive's
employment by reason of the death or Disability of the Executive, all unvested
stock options held by the Executive shall become fully vested, effective on the
Date of Termination, and shall thereafter be exercisable in accordance with the
provisions of the applicable Option Plan (including, without limitation,
Sections 5 and 6 thereof) and Option Agreement.
(b) Termination by the Company for Cause and Voluntary
Termination by the Executive. If the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than on account of
Constructive Termination), the Company shall pay the Executive the Accrued
Obligations. The Executive shall be paid all such Accrued Obligations in a lump
sum in cash within thirty (30) days of the Date of Termination and the Company
shall have no further obligations to the Executive under this Agreement, unless
otherwise required by a Qualified Plan or specified pursuant to a valid election
to defer the receipt of all or a portion of such payments made in accordance
with any plan of deferred compensation sponsored by the Company.
<PAGE>
(c) Other Termination of Employment. If the Company terminates
the Executive's employment other than for Cause, death or Disability, or the
Executive terminates his employment for Constructive Termination, the Company
shall pay and provide to the Executive the following:
(i) Severance Payment. The Company shall pay to the Executive in a lump sum
in cash or certified check within fifteen (15) days after the Date of
Termination a severance payment equal to the sum of the following amounts (other
than amounts payable from the Incentive Plan or Qualified Plans, non-qualified
retirement plans and deferred compensation plans, which amounts shall be paid in
accordance with the terms of such plans):
(A) all Accrued Obligations;
(B) a cash amount equal to twelve (12) months of the Executive's Base
Salary at the rate in effect as of the date when the Notice of Termination was
given;
(C) subject to the terms of the Incentive Plan and further provided that
the Executive has been employed by the Company for the first six (6) months of
the then applicable fiscal year, a cash amount equal to a portion of the
Incentive Bonus, the product of a fraction, the numerator of which is the number
of days elapsed since the date the Incentive Plan began for the applicable
fiscal year through the date of such Constructive Termination or termination
without Cause, and the denominator of which is the total number of days of the
applicable fiscal year for such Incentive Plan.
(ii) Acceleration of Option Vesting. In the case of a Constructive
Termination, all unvested stock options held by the Executive shall become fully
vested, effective on the Date of Termination, and shall be thereafter
exercisable in accordance with the provisions of the applicable Option Plan
(including, without limitation, Sections 5 and 6 thereof) and Option Agreement.
(d) Release. As a condition precedent to the receipt of any
termination benefits payable to the Executive under this Section 7, the
Executive agrees to execute a general release among other things releasing the
Company from any obligation or liability (other than those contained in Sections
7, 8, 9, 10, 11, 13 and 14 hereof, to the extent an obligation under any such
section arose at or prior to the Date of Termination and remains unfulfilled).
Such release shall exclude the Executive's rights under any Qualified Plan.
(e) Discharge of Company's Obligations. Subject to the
performance of its obligations under Sections 7, 8, 9, 10, 11, 13 and 14 (and
then, only to the extent an obligation under any such section arose at or prior
to the Date of Termination and remains unfulfilled), the Company shall have no
further obligations to the Executive under this Agreement in respect of any
termination of employment.
<PAGE>
8. Change of Control. Upon the occurrence of a Change of
Control, the Company shall pay the Executive, as consideration for assisting the
Company in bringing about a successful transaction, an amount equal to eighteen
(18) months of the Executive's Base Salary at the rate in effect as of the
Change of Control Date. Such amount shall be payable in a lump sum in cash or
certified check within five (5) days after the Change of Control Date.
9. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company and
for which the Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under any other
agreements with the Company, including, but not limited to stock option
agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company at or
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.
10. Full Settlement. The Executive shall not be obligated to
seek other employment by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement. In the event that the
Executive shall in good faith give a Notice of Termination for Constructive
Termination and it shall thereafter be determined that Constructive Termination
did not take place, the employment of the Executive shall, unless the Company
and the Executive otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual consent of the
Company and the Executive and the Executive shall be entitled to receive only
those payments and benefits which he would have been entitled to receive at such
date had he terminated his employment voluntarily at such date under this
Agreement.
11. Arbitration of Disputes. In the event that a claim for
payment or benefits under this Agreement is disputed, the Company and the
Executive agree to submit such dispute to final and binding arbitration with
United States Arbitration and Mediation, Inc. ("USAM") in Knoxville, Tennessee
or such other arbitration firm as the Company and the Executive shall mutually
agree. Either party wishing to arbitrate any claim hereunder shall notify the
other party and USAM in writing whereupon USAM shall select a neutral arbitrator
and shall schedule an arbitration hearing within thirty (30) days of receipt of
such notice of arbitration. The arbitration shall be conducted in accordance
with the rules and procedures of USAM. The parties agree that any arbitrator's
award may be presented to a court of competent jurisdiction and judgment entered
thereon.
12. Confidential Information and Nonsolicitation.
<PAGE>
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or
data, including without limitation all trade secrets, relating to the Company,
and its business, (i) obtained by the Executive during his employment by the
Company, and (ii) which is not otherwise publicly known (other than by reason of
an unauthorized act by the Executive) and is subject to efforts that are
reasonable under the circumstances to maintain its secrecy. After termination of
the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company, unless compelled pursuant to an order
of a court or other body having jurisdiction over such matter, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
(b) Upon termination of the Executive's employment for any
reason, the Executive, for the twelve (12) month period following the Notice of
Termination, shall not, on his own behalf or on behalf of any person or entity,
directly or indirectly solicit or aid in the solicitation of any employees of
the Company to leave their employment. In the event the Executive violates the
terms of Section 12(a) or this Section 12(b), the Employee shall forfeit the
right to all salary and benefits that the Executive and/or his family members
were otherwise entitled pursuant to the terms of Section 7. Also, in the event
that this Section 12 is determined to be unenforceable in part, it shall be
construed to be enforceable to the maximum extent permitted by law.
(c) The Executive agrees that the covenants of confidentiality
and non-solicitation contained in this Section 12 are reasonable covenants under
the circumstances and necessary to protect the business interests and properties
of the Company. The Executive agrees that irreparable loss and damage will be
suffered by the Company should the Executive breach any of the covenants
contained in this Section 12. Accordingly, the Executive agrees that the
Company, in addition to all remedies provided at law or in equity, shall be
entitled to a temporary restraining order and temporary and permanent
injunctions to prevent a breach or contemplated breach of any of the covenants
contained in this Section 12.
13. Successors.
(a) This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. The Company shall require any
successor to all or substantially all of the business and/or assets of the
Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
<PAGE>
14. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee, applied without
reference to principles of conflict of laws.
(b) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party, by
overnight delivery or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: at the address listed on the last page hereof
If to the Company: Goody's Family Clothing, Inc.
400 Goody's Lane
P.O. Box 22000
Knoxville, Tennessee 37933-2000
Attention: General Counsel
(with a copy to the attention of the Secretary or to such other address as
either party shall have furnished to the other in writing in accordance
herewith). Communications delivered by hand or by overnight delivery shall be
deemed received on the date of delivery and communications sent by registered or
certified mail shall be deemed received three (3) business days after the
sending thereof.
(d) Tax Withholding. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Captions. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
<PAGE>
(g) Entire Agreement. This Agreement expresses the entire
understanding and agreement of the parties regarding the terms and conditions
governing the Executive's employment with the Company, and all prior agreements
governing the Executive's employment with the Company (including the Existing
Employment Contract) shall have no further effect; provided, however, that
except as specifically provided herein, the terms of this Agreement do not
supersede the terms of any grant or award to the Executive under any stock
option or profit sharing program of the Company except as specifically set forth
in Sections 7(a) and 7(c)(ii).
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and the Company has caused this Agreement to be executed in its name on its
behalf, and its corporate seal to be hereunto affixed and attested by its
Secretary, all effective as of the day and year first above written.
GOODY'S FAMILY CLOTHING, INC.
By:___\s\ Harry M. Call____________
Harry M. Call
Title: President and Chief Operating Officer
ATTEST:
_____\s\ Regis J. Hebbeler_____
Title:____Assistant Secretary____
(CORPORATE SEAL)
EXECUTIVE:
______\s\ Thomas R. Kelly, Jr._________
Thomas R. Kelly, Jr.
Address:
<PAGE>
105541-2
SCHEDULE A --THOMAS R. KELLY, JR.
The following is a summary list of benefits available to the
Executive upon termination of the Executive's employment by reason of retirement
on or after the attainment of age sixty-five (65), death or Disability through
Company sponsored plans and programs as of the date of this Agreement. Nothing
herein shall preclude the Company from amending, altering, suspending,
discontinuing or terminating any of such plans and programs in compliance with
applicable law and regulation.
COVERAGE TYPE BENEFIT AMOUNT
Group Life Insurance -- Basic $325,000
High Option $325,000
$650,000
Group Disability Insurance -- Basic 2 year $5,000/month
High Option
(benefit for 5 years)$5,000/month
$5,000/month
Coverage by group life and disability insurance policies terminates upon
termination of the Executive's employment for any reason, except death (in the
case of life insurance) and disability (in the case of disability insurance).
The Executive's beneficiaries are entitled to benefits under the group life
insurance policy if the Executive dies during the period he is receiving
disability payments as a result of such disability.
In addition, the Company has a 401(k) plan in which the Executive may
participate on a voluntary basis. Company contributions therein on his behalf
vest in accordance with the terms of the 401(k) plan, which provides that such
contributions become immediately vested in the event of death during the term of
employment. Upon termination for any reason, the Executive must withdraw his
vested funds by the end of the following fiscal quarter.
<PAGE>
Exhibit - 10.55
EMPLOYMENT AGREEMENT
BETWEEN
GOODY'S FAMILY CLOTHING, INC.
AND
DAVID R. MULLINS
<PAGE>
TABLE OF CONTENTS
1. Definitions......................................................1
2. Employment.......................................................3
3. Term.............................................................3
4. Position and Duties; Business Time...............................3
5. Compensation.....................................................4
6. Termination of Employment........................................5
7. Obligations of the Company Upon Termination......................6
8. Change of Control................................................8
9. Non-exclusivity of Rights........................................9
10. Full Settlement..................................................9
11. Arbitration of Disputes..........................................9
12. Confidential Information and Nonsolicitation.....................9
13. Successors......................................................10
14. Miscellaneous...................................................10
<PAGE>
105541-2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, by and between GOODY'S FAMILY CLOTHING,
INC., a Tennessee corporation (the "Company"), and DAVID R. MULLINS (the
"Executive"), shall be effective as of the _20th_ day of May, 1998.
RECITALS:
A. The Executive has for some time served as Executive Vice President -
Stores of the Company. The Company and the Executive have entered into an
Employment Agreement dated October 14, 1994 (the "Existing Employment
Contract").
B. The Company wishes to assure the continued service of the Executive.
The Company desires to recognize the Executive's commitment to the Company and
to confirm the right of the Executive to certain employment, compensation and
severance benefits. To attain that end, the Company and the Executive wish to
terminate the Existing Employment Contract and to enter into this Employment
Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the Company and the
Executive do hereby agree as follows:
1. Definitions.
(a) "Accrued Obligations" shall mean (i) the Executive's Base
Salary through the Date of Termination, (ii) any amounts deferred by the
Executive and not yet paid by the Company pursuant to a valid election to defer
the receipt of all or a portion of such payments made in accordance with any
plan of deferred compensation sponsored by the Company and any earned but unpaid
vacation pay for the current year, (iii) any amounts or benefits owing to the
Executive or to the Executive's beneficiaries under the then applicable employee
benefit plans or policies of the Company and (iv) any amounts owing to the
Executive for reimbursement of expenses properly incurred by the Executive
through the Date of Termination and which are reimbursable in accordance with
the reimbursement policy of the Company described in Section 5(f).
(b) "Base Salary" shall have the meaning set forth in Section 5(b).
(c)"Board" shall mean the Board of Directors of the Company.
<PAGE>
10
105541-2
(d) "Cause" shall mean that the Executive has, in the judgment
of a majority of the Board (i) committed a felony, or committed an act of fraud,
embezzlement or theft in connection with his duties with the Company or in the
course of his employment with the Company; (ii) willfully caused damage to
property of the Company; (iii) been convicted of a criminal offense (either a
misdemeanor involving acts of dishonesty, theft or moral turpitude, or a
felony); or (iv) engaged in a willful and material breach of his obligations
under Section 4 of this Agreement which breach (under this clause iv) has been
communicated to the Executive with specificity by written notice, and which has
not been cured to the reasonable satisfaction of the Board within a reasonable
period of time, which shall not be less than ten (10) days, nor more than thirty
(30) days, following receipt of such written notice by the Executive. The Board
shall provide the Executive with an opportunity to meet with the Board in order
to provide the Executive an opportunity to refute or explain acts or omissions
referred to in such written notice. For the purpose of this Section, no act or
omission shall be considered willful unless done or omitted to be done in bad
faith and without reasonable belief that such act or omission was done in the
best interest of the Company.
(e) A "Change of Control" of the Company shall mean and shall
be deemed to have occurred if (i) any person or group (within the meaning of
Rule 13d-3 of the rules and regulations promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act Rules")), other than Robert M.
Goodfriend, members of his immediate family, his affiliates, trusts or private
foundations established by or on his behalf, and the heirs, executors or
administrators of Robert M. Goodfriend, shall acquire in one or a series of
transactions, whether through sale of stock or merger, more than 50% of the
outstanding voting securities of the Company or any successor entity of the
Company, (ii) all or substantially all of the Company's assets are sold, or
(iii) the shareholders of the Company shall approve a complete liquidation or
dissolution of the Company.
(f) "Change of Control Date" shall mean (i) the closing date
on which a Change of Control shall have occurred, (ii) in the case of a sale of
all or substantially all of the Company's assets, the closing date on which a
Change of Control shall have occurred after shareholder approval is obtained, or
(iii) in the case of a complete liquidation or dissolution of the Company, the
date on which shareholder approval is obtained.
(g) "Constructive Termination" shall mean a material breach by
the Company of its obligations under Section 4(a) or another material obligation
of the Company under this Agreement which failure has been communicated to the
Company with specificity by written notice, and which has not been cured within
a reasonable period of time, which shall not be less than ten (10) days, nor
more than thirty (30) days, following receipt of such written notice by the
Company.
(h) "Date of Termination" shall have the meaning set forth in Section 6(f).
(i) "Disability" shall mean disability whereby the Executive
is unable to render the services provided for by this Agreement by reason of
illness, injury or incapacity (whether physical, mental, emotional or
psychological) for a period of either (i) ninety (90) consecutive days or (ii)
one hundred eighty (180) days in any consecutive three hundred sixty-five (365)
day period.
(j) "Incentive Bonus" shall have the meaning as set forth in Section 5(c).
(k) "Incentive Plan" shall have the meaning as set forth in Section 5(c).
<PAGE>
(l) "Notice of Termination" shall have the meaning as set forth in Section
6(e).
(m) "Qualified Plan" shall mean any retirement plan maintained
by the Company which is intended to meet the requirements of the Internal
Revenue Code of 1986, as amended.
(n) "Subsidiary" shall mean any majority-owned subsidiary of the Company.
2. Employment. The Company has employed the Executive, and the
Executive has agreed to continue to be employed by the Company, as Executive
Vice President - Stores of the Company. The Executive has held the title of
Executive Vice President - Stores of the Company since December 18, 1996.
3. Term. The Executive shall be considered an at-will employee
and his employment may be terminated by either party subject to the obligations
of the parties upon such termination as set forth in this Agreement.
4. Position and Duties; Business Time.
(a) Position and Duties. The Executive shall continue his
service as Executive Vice President - Stores of the Company or another position
which shall be either of comparable rank or a promotion and shall continue to
have such responsibilities and duties as assigned to him by the Chief Executive
Officer of the Company, the Chief Operating Officer of the Company or the Board
from time to time, provided: (i) such assignment of such responsibilities and
duties are those which are customarily associated with the responsibilities of
an executive vice president; (ii) the position in which the Executive shall
serve, if different from the position specified in this Subsection (a), shall
not have materially diminished responsibilities or authority as compared with
those of the position expressly set forth in this Subsection (a); provided, that
the expansion into other store concepts, whether acquired or developed, and the
staffing of such concepts by other employees shall not be deemed a breach of
this provision; and (iii) the Executive shall not be required to relocate by
reason of a change in the location of the Company's principal executive offices
of more than fifty (50) miles from its then current location.
(b) Business Time. The Executive agrees to devote his full
business time to the business and affairs of the Company and to use his best
efforts to perform faithfully and efficiently the responsibilities assigned to
him hereunder, to the extent necessary to discharge such responsibilities,
except for:
(i) time spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees, in each case
only if and to the extent not substantially interfering with the performance of
such responsibilities, and
(ii) periods of vacation to which he is entitled, periods of illness and
other absences beyond his control.
<PAGE>
It is expressly understood and agreed that the continued service by the
Executive on any boards and committees on which he is serving or with which he
is otherwise associated immediately preceding the date hereof, or his service on
any other boards and committees shall not be deemed to interfere with the
performance of the Executive's services to the Company; provided, that in the
case of boards or committees on which the Executive is not currently serving the
Executive provides written notice of his intention to serve and the Board
thereafter approves such service (other than non-compensatory positions with
local boards or committees e.g. charitable, chamber of commerce or homeowner
associations which shall not require approval).
5. Compensation. The Executive shall be entitled to the following
compensation and benefits for as long as the Executive remains an employee of
the Company:
(a) Existing Employment Contract. The Executive and Company
acknowledge that all the terms of the existing employment contract (the
"Existing Employment Contract") are in full force and effect and there has not
been any breach of such Existing Employment Contract.
(b) Base Salary. The Executive shall receive a base salary
(the "Base Salary") payable in equal bi-weekly installments (or such other
installments as are provided by the Company for employees generally) at an
annual rate of $250,000. The Company shall review the Base Salary periodically
and in light of such review may, in its sole discretion, increase (but not
decrease) the Base Salary taking into account any change in the Executive's
responsibilities, increases in compensation of other executives with comparable
responsibilities, performance of the Executive and other pertinent factors, and
such adjusted Base Salary shall then constitute the "Base Salary" for purposes
of this Agreement.
(c) Short Term Incentive Plan Bonus. The Company has
established a "Short Term Incentive Plan" (the "Incentive Plan") under which the
Executive shall be eligible to participate for each fiscal year he holds the
position stated in Section 2 and shall be eligible to receive an annual
incentive target bonus of not less than 40% of Base Salary based on performance
and other specific objectives adopted by the Compensation Committee of the Board
(the "Incentive Bonus").
(d) Incentive and Savings Plans; Retirement and Death Benefit
Programs. The Executive shall be entitled to participate in all incentive and
savings plans and programs, including stock option plans and other equity-based
compensation plans, and in all employee retirement, executive retirement and
executive death benefit plans on a basis no less favorable than that basis
generally available to executives of the Company holding comparable positions or
having comparable responsibilities.
<PAGE>
(e) Other Benefit Plans. The Executive, his spouse and their
eligible dependents (as defined in, and to the extent permitted by, the
applicable plan), as the case may be, shall be entitled to participate in or be
covered under all medical, dental, group disability, group life, severance,
accidental death and travel accident insurance plans and programs of the Company
to the extent such plans and programs are generally available to executives of
the Company holding comparable positions or having comparable responsibilities.
In addition, the Company shall continue to pay for and provide to the Executive
the following additional benefits:
(i) An individual annuity policy (with a current cash surrender value of
approximately $16,000), the annual premium for such policy to be shared between
the Company and the Executive in such proportion as is consistent with past
practice.
(ii) An individual disability insurance policy or policies providing a
monthly benefit of no less than $3,500 per month, the annual premium for such
policy or policies to be shared between the Company and the Executive in such
proportion as is consistent with past practice.
If required, the Company shall replace any such policy currently in effect
with a policy or policies containing terms and conditions (including amounts of
coverage) which are not materially less favorable to the Executive and/or his
designated beneficiaries provided such replacement policy or policies may be
obtained at reasonable rates consistent with past practice.
(f) Other Perquisites. The Executive shall also be entitled to:
(i) prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies and procedures of the Company;
(ii) three (3) weeks paid vacation, such paid vacation time to be increased
(but not decreased) in accordance with Company policy;
(iii) an automobile at least comparable to the model currently furnished by
the Company shall be provided by the Company with expenses to be paid in
accordance with the Company's policies and procedures with respect thereto; and
(iv) an office or offices suitable for an executive officer with
secretarial and other assistance as shall reasonably be required by the
Executive.
6. Termination of Employment.
(a) Disability; Death. The Company may terminate the
Executive's employment after having established the Executive's Disability, by
giving to the Executive written notice of its intention to terminate his
employment, and his employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice if the Executive shall fail to
return to full-time performance of his duties within thirty (30) days after such
receipt. If the Executive dies during the term of this Agreement, his employment
hereunder shall be deemed to cease as of the date of his death.
<PAGE>
(b) Voluntary Termination by the Executive. Notwithstanding
anything in this Agreement to the contrary, the Executive may, upon not less
than thirty (30) days' written notice to the Company, voluntarily terminate
employment for any reason (including retirement under the terms of the Company's
retirement plan as in effect from time to time), provided that any termination
by the Executive pursuant to Section 6(d) on account of Constructive Termination
shall not be treated as a voluntary termination under this Section 6(b).
(c) Termination by the Company. The Company at any time may
terminate the Executive's employment for Cause or without Cause.
(d) Constructive Termination. The Executive may terminate his employment
for Constructive Termination.
(e) Notice of Termination. Any termination by the Company for
Cause or by the Executive for Constructive Termination shall be communicated by
a written Notice of Termination to the other party hereto given in accordance
with Section 14(c). For purposes of this Agreement, a "Notice of Termination"
means a written notice given in the case of a termination for Cause and in the
case of Constructive Termination which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty (30) days after the
receipt of such notice).
(f) Date of Termination. For the purpose of this Agreement,
the term "Date of Termination" means (i) in the case of a termination for which
a Notice of Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be, and
(ii) in all other cases, the actual date on which the Executive's employment
terminates.
7. Obligations of the Company Upon Termination. Upon
termination of the Executive's employment with the Company, the Company shall
have the following obligations:
<PAGE>
(a) Death, Disability and Retirement. If the Executive's
employment is terminated by reason of the Executive's death, Disability, or
retirement on or after the attainment of age sixty-five (65), the Company shall
have no further obligations to the Executive's legal representatives under this
Agreement other than payment of the Accrued Obligations. If the Executive's
employment is terminated by reason of the Executive's death or Disability, the
Company shall have the additional obligation, subject to the terms of the
Incentive Plan and further provided that the Executive has been employed by the
Company for the first six (6) months of the then applicable fiscal year, to pay
a cash amount equal to a portion of the Incentive Bonus, the product of a
fraction, the numerator of which is the number of days elapsed since the date
the Incentive Plan began for the applicable fiscal year through the date of the
Disability or the date of death of the Executive, and the denominator of which
is the total number of days of the applicable fiscal year for such Incentive
Plan. Unless otherwise directed by the Executive (or, in the case of the
Incentive Plan or a Qualified Plan, as may be required by such Incentive Plan or
Qualified Plan) all Accrued Obligations shall be paid to the Executive, his
beneficiaries or his estate, as applicable, in a lump sum in cash within thirty
(30) days of the Date of Termination. In the event of the termination of the
Executive by reason of retirement on or after the attainment of age sixty-five
(65), death or Disability, he and/or his named beneficiaries, as the case may
be, shall be entitled to the benefits available through the Company sponsored
plans and programs designated for such category of termination on Schedule A.
With regard to the termination of the Executive's employment by reason of
retirement on or after the attainment of age sixty-five (65) or Disability, the
Company shall pay the premiums (to the same extent paid prior to the termination
of employment) for the continued participation of the Executive for a period of
twelve (12) months after the Date of Termination in any individual life
insurance policy on the same terms as the Executive and the Company were
participating prior to the Date of Termination. Further, with regard to the
termination of the Executive's employment by reason of the Executive's death,
retirement on or after the attainment of age sixty-five (65) or Disability, the
Company shall, for a period of twelve (12) months after the Executive's Date of
Termination, pay the entire COBRA premium under any Company medical and dental
program that the Executive (and his spouse and eligible dependents) was
participating in prior to the termination of employment. The Company's premium
obligations in the preceding two sentences shall exclude normal employee
contributions paid by the Executive prior to the Date of Termination. In
addition to the foregoing, in the event of termination of the Executive's
employment by reason of the death or Disability of the Executive, all unvested
stock options held by the Executive shall become fully vested, effective on the
Date of Termination, and shall thereafter be exercisable in accordance with the
provisions of the applicable Option Plan (including, without limitation,
Sections 5 and 6 thereof) and Option Agreement.
(b) Termination by the Company for Cause and Voluntary
Termination by the Executive. If the Executive's employment shall be terminated
for Cause or voluntarily terminated by the Executive (other than on account of
Constructive Termination), the Company shall pay the Executive the Accrued
Obligations. The Executive shall be paid all such Accrued Obligations in a lump
sum in cash within thirty (30) days of the Date of Termination and the Company
shall have no further obligations to the Executive under this Agreement, unless
otherwise required by a Qualified Plan or specified pursuant to a valid election
to defer the receipt of all or a portion of such payments made in accordance
with any plan of deferred compensation sponsored by the Company.
(c) Other Termination of Employment. If the Company terminates
the Executive's employment other than for Cause, death or Disability, or the
Executive terminates his employment for Constructive Termination, the Company
shall pay and provide to the Executive the following:
<PAGE>
(i) Severance Payment. The Company shall pay to the Executive in a lump sum
in cash or certified check within fifteen (15) days after the Date of
Termination a severance payment equal to the sum of the following amounts (other
than amounts payable from the Incentive Plan or Qualified Plans, non-qualified
retirement plans and deferred compensation plans, which amounts shall be paid in
accordance with the terms of such plans):
(A) all Accrued Obligations;
(B) a cash amount equal to twelve (12) months of the Executive's Base
Salary at the rate in effect as of the date when the Notice of Termination was
given;
(C) subject to the terms of the Incentive Plan and further provided that
the Executive has been employed by the Company for the first six (6) months of
the then applicable fiscal year, a cash amount equal to a portion of the
Incentive Bonus, the product of a fraction, the numerator of which is the number
of days elapsed since the date the Incentive Plan began for the applicable
fiscal year through the date of such Constructive Termination or termination
without Cause, and the denominator of which is the total number of days of the
applicable fiscal year for such Incentive Plan.
(ii) Acceleration of Option Vesting. In the case of a Constructive
Termination, all unvested stock options held by the Executive shall become fully
vested, effective on the Date of Termination, and shall be thereafter
exercisable in accordance with the provisions of the applicable Option Plan
(including, without limitation, Sections 5 and 6 thereof) and Option Agreement.
(d) Release. As a condition precedent to the receipt of any
termination benefits payable to the Executive under this Section 7, the
Executive agrees to execute a general release among other things releasing the
Company from any obligation or liability (other than those contained in Sections
7, 8, 9, 10, 11, 13 and 14 hereof, to the extent an obligation under any such
section arose at or prior to the Date of Termination and remains unfulfilled).
Such release shall exclude the Executive's rights under any Qualified Plan.
(e) Discharge of Company's Obligations. Subject to the
performance of its obligations under Sections 7, 8, 9, 10, 11, 13 and 14 (and
then, only to the extent an obligation under any such section arose at or prior
to the Date of Termination and remains unfulfilled), the Company shall have no
further obligations to the Executive under this Agreement in respect of any
termination of employment.
<PAGE>
8. Change of Control. Upon the occurrence of a Change of
Control, the Company shall pay the Executive, as consideration for assisting the
Company in bringing about a successful transaction, an amount equal to eighteen
(18) months of the Executive's Base Salary at the rate in effect as of the
Change of Control Date. Such amount shall be payable in a lump sum in cash or
certified check within five (5) days after the Change of Control Date.
9. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company and
for which the Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under any other
agreements with the Company, including, but not limited to stock option
agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company at or
subsequent to the Date of Termination shall be payable in accordance with such
plan or program.
10. Full Settlement. The Executive shall not be obligated to
seek other employment by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement. In the event that the
Executive shall in good faith give a Notice of Termination for Constructive
Termination and it shall thereafter be determined that Constructive Termination
did not take place, the employment of the Executive shall, unless the Company
and the Executive otherwise mutually agree, be deemed to have terminated, at the
date of giving such purported Notice of Termination, by mutual consent of the
Company and the Executive and the Executive shall be entitled to receive only
those payments and benefits which he would have been entitled to receive at such
date had he terminated his employment voluntarily at such date under this
Agreement.
11. Arbitration of Disputes. In the event that a claim for
payment or benefits under this Agreement is disputed, the Company and the
Executive agree to submit such dispute to final and binding arbitration with
United States Arbitration and Mediation, Inc. ("USAM") in Knoxville, Tennessee
or such other arbitration firm as the Company and the Executive shall mutually
agree. Either party wishing to arbitrate any claim hereunder shall notify the
other party and USAM in writing whereupon USAM shall select a neutral arbitrator
and shall schedule an arbitration hearing within thirty (30) days of receipt of
such notice of arbitration. The arbitration shall be conducted in accordance
with the rules and procedures of USAM. The parties agree that any arbitrator's
award may be presented to a court of competent jurisdiction and judgment entered
thereon.
12. Confidential Information and Nonsolicitation.
<PAGE>
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or
data, including without limitation all trade secrets, relating to the Company,
and its business, (i) obtained by the Executive during his employment by the
Company, and (ii) which is not otherwise publicly known (other than by reason of
an unauthorized act by the Executive) and is subject to efforts that are
reasonable under the circumstances to maintain its secrecy. After termination of
the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company, unless compelled pursuant to an order
of a court or other body having jurisdiction over such matter, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
(b) Upon termination of the Executive's employment for any
reason, the Executive, for the twelve (12) month period following the Notice of
Termination, shall not, on his own behalf or on behalf of any person or entity,
directly or indirectly solicit or aid in the solicitation of any employees of
the Company to leave their employment. In the event the Executive violates the
terms of Section 12(a) or this Section 12(b), the Employee shall forfeit the
right to all salary and benefits that the Executive and/or his family members
were otherwise entitled pursuant to the terms of Section 7. Also, in the event
that this Section 12 is determined to be unenforceable in part, it shall be
construed to be enforceable to the maximum extent permitted by law.
(c) The Executive agrees that the covenants of confidentiality
and non-solicitation contained in this Section 12 are reasonable covenants under
the circumstances and necessary to protect the business interests and properties
of the Company. The Executive agrees that irreparable loss and damage will be
suffered by the Company should the Executive breach any of the covenants
contained in this Section 12. Accordingly, the Executive agrees that the
Company, in addition to all remedies provided at law or in equity, shall be
entitled to a temporary restraining order and temporary and permanent
injunctions to prevent a breach or contemplated breach of any of the covenants
contained in this Section 12.
13. Successors.
(a) This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. The Company shall require any
successor to all or substantially all of the business and/or assets of the
Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
14. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee, applied without
reference to principles of conflict of laws.
<PAGE>
(b) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party, by
overnight delivery or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: at the address listed on the last page hereof
If to the Company: Goody's Family Clothing, Inc.
400 Goody's Lane
P.O. Box 22000
Knoxville, Tennessee 37933-2000
Attention: General Counsel
(with a copy to the attention of the Secretary or to such other address as
either party shall have furnished to the other in writing in accordance
herewith). Communications delivered by hand or by overnight delivery shall be
deemed received on the date of delivery and communications sent by registered or
certified mail shall be deemed received three (3) business days after the
sending thereof.
(d) Tax Withholding. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Captions. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
(g) Entire Agreement. This Agreement expresses the entire
understanding and agreement of the parties regarding the terms and conditions
governing the Executive's employment with the Company, and all prior agreements
governing the Executive's employment with the Company (including the Existing
Employment Contract) shall have no further effect; provided, however, that
except as specifically provided herein, the terms of this Agreement do not
supersede the terms of any grant or award to the Executive under any stock
option or profit sharing program of the Company except as specifically set forth
in Sections 7(a) and 7(c)(ii) with respect to the vesting and exercisability of
stock options.
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and the Company has caused this Agreement to be executed in its name on its
behalf, and its corporate seal to be hereunto affixed and attested by its
Secretary, all effective as of the day and year first above written.
GOODY'S FAMILY CLOTHING, INC.
By:___\s\ Harry M. Call__________
Harry M. Call
Title: President and Chief Operating Officer
ATTEST:
_______\s\ Regis J. Hebbeler______
Title:___Assistant Secretary____
(CORPORATE SEAL)
EXECUTIVE:
____\s\ David R. Mullins_________
David R. Mullins
Address:
<PAGE>
SCHEDULE A -- DAVID R. MULLINS
The following is a summary list of benefits available to the
Executive upon termination of the Executive's employment by reason of retirement
on or after the attainment of age sixty-five (65), death or Disability through
Company sponsored plans and programs as of the date of this Agreement. Nothing
herein shall preclude the Company from amending, altering, suspending,
discontinuing or terminating any of such plans and programs in compliance with
applicable law and regulation.
COVERAGE TYPE BENEFIT AMOUNT
Group Life Insurance -- Basic $250,000
High Option $ ---
Group Disability Insurance -- Basic 2 year $5,000/month
High Option
(benefit for 5 years) --
Coverage by group life and disability insurance policies terminates upon
termination of the Executive's employment for any reason, except death (in the
case of life insurance) and disability (in the case of disability insurance).
The Executive's beneficiaries are entitled to benefits under the group life
insurance policy if the Executive dies during the period he is receiving
disability payments as a result of such disability.
In addition, the Company has a 401(k) plan in which the Executive may
participate on a voluntary basis. Company contributions therein on his behalf
vest in accordance with the terms of the 401(k) plan, which provides that such
contributions become immediately vested in the event of death during the term of
employment. Upon termination for any reason, the Executive must withdraw his
vested funds by the end of the following fiscal quarter.
<PAGE>
EXHIBIT 11
GOODY'S FAMILY CLOTHING, INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Thirteen Twenty-six
Weeks Ended Weeks Ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net earnings for the period $ 8,658,000 $5,418,000 $16,426,000 $10,476,000
Weighted average common shares
outstanding - Basic (a) 33,538,000 32,496,000 33,384,000 32,421,000
Common equivalent shares for outstanding stock
options 1,451,000 1,083,000 1,452,000 985,000
-----------------------------------------------------------------
Weighted average common shares
outstanding - Diluted (a) 34,989,000 33,579,000 34,836,000 33,406,000
-----------------------------------------------------------------
-----------------------------------------------------------------
Earnings per common share (a)
Basic $ 0.26 $ 0.17 $ 0.49 $ 0.32
=================================================================
Diluted $ 0.25 $ 0.16 $ 0.47 $ 0.31
=================================================================
</TABLE>
(a) The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" as required in the fourth quarter of fiscal 1997.
Accordingly, earnings per share and related data for the periods ended August 2,
1997 have been restated to conform to this new standard.
Earnings per share and related data for the periods ended August 2, 1997 have
also been restated to reflect a two-for-one stock split effected in July 1998.
<PAGE>
Exhibit 15
Goody's Family Clothing, Inc.
Knoxville, Tennessee
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim consolidated
financial information of Goody's Family Clothing, Inc. and subsidiaries for the
periods ended August 1, 1998 and August 2, 1997 as indicated in our report dated
August 18, 1998; because we did not perform an audit, we expressed no opinion on
that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended August 1, 1998, is
incorporated by reference in Registration Statements Nos. 33-32357, 33-51210,
33-68520, 333-00052 and 333-09595 on Form S-8 and 333-32409 on Form S-3.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statements prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
September 9, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF AUGUST 1, 1998 AND THE RELATED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE TWENTY-SIX WEEKS ENDED ON AUGUST 1, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000879123
<NAME> Goody's Family Clothing, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jan-30-1999
<PERIOD-START> Feb-01-1998
<PERIOD-END> Aug-01-1998
<CASH> 41,872
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 201,295
<CURRENT-ASSETS> 266,345
<PP&E> 158,333
<DEPRECIATION> 57,887
<TOTAL-ASSETS> 369,828
<CURRENT-LIABILITIES> 171,024
<BONDS> 608
0
0
<COMMON> 28,034
<OTHER-SE> 156,413
<TOTAL-LIABILITY-AND-EQUITY> 369,828
<SALES> 476,203
<TOTAL-REVENUES> 476,203
<CGS> 337,139
<TOTAL-COSTS> 113,536
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 181
<INCOME-PRETAX> 26,345
<INCOME-TAX> 9,919
<INCOME-CONTINUING> 16,426
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,426
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.47
</TABLE>
