<PAGE> -1-
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 July 31, 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 1-7898
LOWE'S COMPANIES, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0578072
State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
P.O. BOX 1111, NORTH WILKESBORO, N.C. 28656
(Address of principal executive offices)
(Zip Code)
(336) 658-4000
(Registrant's telephone number, including area code)
NONE
(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 .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 28, 1998
Common Stock, $.50 par value 352,519,932
65
TOTAL PAGES
<PAGE> -2-
LOWE'S COMPANIES, INC.
- INDEX -
Page No.
PART I - Financial Information:
Consolidated Balance Sheets - July 31, 1998,
August 1, 1997 and January 30, 1998 3
Consolidated Statements of Current and
Retained Earnings - quarter and six months
ended July 31, 1998 and August 1, 1997 4
Consolidated Statements of Cash Flows - six
months ended July 31, 1998 and August 1, 1997 5
Notes to Consolidated Financial Statements. 6-7
Management's Discussion and Analysis of Results
of Operations and Financial Condition 8-10
Independent Accountants' Report 11
PART II - Other Information 12-13
Item 4 - Submission of Matters to a Vote of Security Holders
Item 6 (a) - Exhibits
Item 6 (b) - Reports on Form 8-K
EXHIBIT INDEX 14
<PAGE> -3-
Lowe's Companies, Inc.
Consolidated Balance Sheets
In thousands
<TABLE>
<CAPTION>
July 31, August 1, January 30,
1998 1997 1998
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 513,190 $ 35,673 $ 195,146
Short-term investments 43,680 135,826 16,155
Accounts receivable - net 159,613 149,547 118,408
Merchandise inventory 1,968,270 1,748,931 1,714,592
Deferred income taxes 43,566 22,957 34,116
Other assets 84,742 43,106 31,185
Total current assets 2,813,061 2,136,040 2,109,602
Property, less accumulated
depreciation 3,243,681 2,719,711 3,005,199
Long-term investments 36,775 30,328 35,161
Other assets 68,221 49,742 69,315
Total assets $6,161,738 $4,935,821 $5,219,277
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $ 93,975 $ 84,375 $ 98,104
Current maturities of
long-term debt 39,391 11,750 12,478
Accounts payable 1,201,630 966,432 969,777
Employee retirement plans 55,194 59,822 64,669
Accrued salaries and wages 78,474 61,588 83,377
Other current liabilities 340,785 278,871 220,915
Total current liabilities 1,809,449 1,462,838 1,449,320
Long-term debt, excluding
current maturities 1,323,689 934,329 1,045,570
Deferred income taxes 126,629 105,708 123,778
Total liabilities 3,259,767 2,502,875 2,618,668
Shareholders' equity
Preferred stock - $5 par value,
none issued - - -
Common stock - $.50 par value;
Issued and Outstanding
July 31, 1998 352,301
August 1, 1997 348,621
January 30, 1998 350,632 176,150 174,310 175,316
Capital in excess of par 953,486 850,193 892,666
Retained earnings 1,804,856 1,423,699 1,565,133
Unearned compensation-restricted
stock awards (32,679) (15,287) (32,694)
Accumulated other comprehensive income-
unrealized gain on available-for-
sale securities 158 31 188
Total shareholders' equity 2,901,971 2,432,946 2,600,609
Total liabilities and
shareholders' equity $6,161,738 $4,935,821 $5,219,277
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> -4-
Lowe's Companies, Inc.
Consolidated Statements of Current and Retained Earnings
In Thousands, Except Per Share Data
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 31, 1998 August 1, 1997 July 31, 1998 August 1, 1997
Current Earnings Amount Percent Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $3,425,685 100.00 $2,808,086 100.00 $6,325,225 100.00 $5,208,840 100.00
Cost of sales 2,522,649 73.64 2,076,993 73.96 4,662,151 73.71 3,854,044 73.99
Gross margin 903,036 26.36 731,093 26.04 1,663,074 26.29 1,354,796 26.01
Expenses:
Selling, general
and administrative 545,166 15.91 447,303 15.93 1,061,239 16.78 878,783 16.87
Store opening costs 14,952 0.44 12,289 0.44 26,317 0.42 20,541 0.40
Depreciation 66,273 1.94 58,569 2.09 131,005 2.07 115,282 2.21
Interest 17,247 0.50 16,005 0.57 36,910 0.58 33,290 0.64
Total expenses 643,638 18.79 534,166 19.03 1,255,471 19.85 1,047,896 20.12
Pre-tax earnings 259,398 7.57 196,927 7.01 407,603 6.44 306,900 5.89
Income tax provision 94,020 2.74 70,431 2.51 147,760 2.33 110,021 2.11
Net earnings $165,378 4.83 $126,496 4.50 259,843 4.11 196,879 3.78
Shares outstanding
(weighted average) 351,994 348,107 351,513 347,507
Basic Earnings Per Share $0.47 $0.36 $0.74 $0.57
Diluted Earnings Per Share $0.47 $0.36 $0.74 $0.57
Retained Earnings
Balance at beginning
of period $1,649,988 $1,306,755 1,565,133 1,245,888
Net earnings 165,378 126,496 259,843 196,879
Cash dividends (10,510) (9,552) (20,120) (19,068)
Balance at end of period $1,804,856 $1,423,699 $1,804,856 $1,423,699
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> -5-
Lowe's Companies, Inc.
Consolidated Statements of Cash Flows
In Thousands
<TABLE>
<CAPTION>
For the six months ended
July 31, August 1,
1998 1997
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $259,843 $196,879
Adjustments to Reconcile Net Earnings to
Net Cash Provided By Operating Activities:
Depreciation 131,005 115,282
Amortization of Original Issue Discount 221 86
Increase (Decrease) in Deferred
Income Taxes (6,599) 7,004
Loss on Disposition/Writedown of Fixed
and Other Assets 14,722 10,397
Changes in Operating Assets and Liabilities:
Accounts Receivable - Net (41,205) (31,985)
Merchandise Inventory (253,678) (143,051)
Other Operating Assets (53,439) (11,516)
Accounts Payable 231,853 52,265
Employee Retirement Plans 35,123 33,032
Other Operating Liabilities 133,602 73,498
Net Cash Provided by Operating Activities 451,448 301,891
Cash Flows from Investing Activities:
Net Increase in Short-Term Investments (16,059) (97,339)
Purchases of Long-Term Investments (13,632) (4,547)
Proceeds from Sale/Maturity of
Long-Term Investments 522 2,022
Decrease in Other Long-Term Assets (7,768) (2,357)
Fixed Assets Acquired (371,703) (321,741)
Proceeds from the Sale of Fixed
and Other Long-Term Assets 12,188 7,594
Net Cash Used in Investing Activities (396,452) (416,368)
Cash Flows from Financing Activities:
Long-Term Debt Borrowings 296,160 142,028
Net Increase (Decrease) in
Short-Term Borrowings (4,129) 3,470
Proceeds from Stock Options Exercised 8,022 145
Repayment of Long-Term Debt (7,298) (16,812)
Cash Dividend Payments (29,707) (19,068)
Net Cash Provided By Financing Activities 263,048 109,763
Net Increase (Decrease) in Cash
and Cash Equivalents 318,044 (4,714)
Cash and Cash Equivalents,
Beginning of Period 195,146 40,387
Cash and Cash Equivalents,
End of Period $513,190 $35,673
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> -6-
Lowe's Companies, Inc.
Notes to Consolidated Financial Statements
Note 1: The accompanying Consolidated Financial Statements (unaudited) have
been reviewed by an independent certified public accountant, and in
the opinion of management, they contain all adjustments necessary to
present fairly the financial position as of July 31, 1998, and the
results of operations for the quarters and six months ended July 31,
1998 and August 1, 1997, and the cash flows for the six months ended
July 31, 1998 and August 1, 1997.
These interim financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended January 30, 1998.
On May 29, 1998, the Board of Directors declared a two-for-one stock
split on the Company's common stock. As a result, one additional
share was issued on June 26, 1998 for each share held by shareholders
of record on June 12, 1998. Par value remained unchanged at $.50 and
$88.0 million was transferred to common stock from capital in excess
of par as of the record date. The accompanying Consolidated Financial
Statements, including per share data, have been adjusted to reflect
the effect of the stock split.
Diluted earnings per share are calculated on the weighted average
shares of common stock as adjusted for the dilutive effects of stock
options outstanding during the period. The dilutive effects of stock
options were incremental shares of 1,746,000 and 136,000 for the
quarters and 1,591,000 and 135,000 for the six months ended July 31,
1998 and August 1, 1997, respectively. Weighted average shares
outstanding, as adjusted for dilution, were 353,740,000 and
348,243,000 for the quarters ended July 31, 1998 and August 1, 1997,
respectively, and 353,104,000 and 347,642,000 for the six months ended
July 31, 1998 and August 1, 1997, respectively.
Note 2: The Company has a cash management program which provides for the
investment of excess cash balances in financial instruments which have
maturities of up to five years. Investments with original maturities
of three months or less when purchased are classified as cash
equivalents. Investments with a maturity of between three months and
one year from the balance sheet date are classified as short-term
investments. Investments with maturities greater than one year are
classified as long-term.
At July 31, 1998 and August 1, 1997, the Company had no derivative
financial instruments.
Note 3: Net interest expense is composed of the following (in thousands):
<TABLE>
<CAPTION>
Quarter ended Six months ended
July 31, August 1, July 31, August 1,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Long-term debt $16,048 $ 8,309 $31,529 $14,885
Capitalized leases 9,711 9,914 19,678 19,924
Short-term debt 1,387 1,624 2,816 5,058
Amortization of loan cost 188 115 394 205
Short-term interest income (6,657) (2,188) (11,595) (3,687)
Interest capitalized on
construction in progress (3,430) (1,769) (5,912) (3,095)
Net interest expense $17,247 $16,005 $36,910 $33,290
</TABLE>
<PAGE> -7-
Note 4: Inventory is stated at the lower of cost or market using the last-
in, first-out inventory accounting method. If the first-in, first out
method of inventory accounting had been used, inventories would have
been $64.6 million higher at July 31, 1998, $80.2 million higher at
August 1, 1997 and $67.6 million higher at January 30, 1998.
Note 5: Property is shown net of accumulated depreciation of $901.4 million
at July 31, 1998, $708.3 million at August 1, 1997 and $789.8 million
at January 30, 1998.
Note 6: Supplemental disclosures of cash flow information (in thousands):
<TABLE>
<CAPTION>
Six months ended
July 31, 1998 August 1, 1997
<S> <C> <C>
Cash paid for interest
(net of capitalized) $ 44,681 $ 38,305
Cash paid for income taxes 120,847 81,005
Non-cash investing and financing
activities:
Common stock issued to ESOP 44,597 33,980
Fixed assets acquired under
capital lease 12,597 30,873
</TABLE>
Note 7: In January 1998, the Board of Directors authorized the funding of the
Fiscal 1997 ESOP contribution primarily with the issuance of new
shares of the Company's common stock. During the first half of Fiscal
1998, the Company issued the post-split equivalent of 1,232,485
shares, with a market value of $44.9 million.
Note 8: In February 1998, the Company issued $300 million of 6.875% Debentures
due February 2028. The debentures were issued at an original price of
$987.20 per $1,000 principal amount, which represented an original
issue discount of .405% payable at maturity and an underwriters'
discount of .875%. The debentures may not be redeemed prior to
maturity.
Note 9: Total comprehensive income, comprised of net earnings and unrealized
holding gains (losses) on available-for-sale securities, was $165.5
and $126.7 million for the quarters ended July 31, 1998 and August 1,
1997, respectively, and $259.8 and $197.3 million for the six months
ended July 31, 1998 and August 1, 1997, respectively.
<PAGE> -8-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
This discussion should be read in conjunction with the financial statements
and notes thereto included in the Company's most recent Form 10-K.
For the second quarter of fiscal 1998, sales increased 22% to $3.4 billion,
comparable store sales had a 6% gain and net earnings increased 31% to $165.4
million compared to last year's second quarter results. For the large store
group (more than 80,000 square feet), comparable store sales increased 7.5%
compared to last year's second quarter. Diluted earnings per share were $.47
compared to $.36 for the comparable quarter of last year. For the six months
ended July 31, 1998, sales increased 21% to $6.3 billion, net earnings
increased 32% to $259.8 million and diluted earnings per share were $.74
compared to $.57 in the first six months of fiscal 1997. Comparable store
sales increased 5.5% year-to-date, while comparable sales for the large store
group increased 7.5%.
The sales increase in the second quarter was partially attributable to the
addition of 6.9 million square feet of retail selling space at new and
existing locations since last year's second quarter. Additionally, sales
performances in our basic businesses were strong for the quarter. The Company
experienced strong sales increases in tools, outdoor hardlines, appliances,
kitchen cabinets and home decor categories.
Gross margin was 26.36% of sales for the quarter ended July 31, 1998
compared to 26.04% for last year's comparable quarter. Of the 32 basis point
increase in gross margin rate, 12 basis points were due to favorable changes
in product mix and ongoing store pricing disciplines. The other 20 basis
points were due to deflation in inventory costs resulting in a LIFO credit of
$3.0 million in this year's second quarter compared to a charge of $3.1
million in last year's second quarter. Gross margin for the six months ended
July 31, 1998 was 26.29% versus 26.01% last year. The 28 basis point increase
in gross margin rate consisted of 12 basis points related to favorable changes
in product mix and continuing store pricing disciplines and 16 basis points
resulting from a LIFO credit of $3.0 million for the first six months of
fiscal 1998 compared to a LIFO charge of $5.6 million for the comparable
period last year.
Selling, general and administrative expenses (SG&A) were 15.91% of sales
versus 15.93% in last year's second quarter. SG&A and sales both increased
22% for the quarter. Although the control of store payroll and general office
expenses provided positive leverage in SG&A for the second quarter, these
decreases were offset by increases in rent expense due to the higher
percentage of new store leases being operating leases rather than capital
leases. These increases in rent expense have a corresponding reduction in
depreciation and interest expense. For the six months ended July 31, 1998,
SG&A was 16.78% of sales versus 16.87% for the first six months of fiscal
Expense controlsspecifically relating to store payroll and general office
expenses contributed to the positive leverage in SG&A for the first six
months of 1998.
Store opening costs were $15.0 million for the quarter ended July 31, 1998
compared to $12.3 million last year, representing costs associated with the
opening of 15 stores during the current year's second quarter (8 new and 7
relocated) compared to 9 stores for the comparable period last year (4 new
<PAGE> -9-
and 5 relocated). Charges in this quarter for future and prior openings were
$5.4 million compared to $5.5 million in last year's second quarter. Charges
totaling $3.6 and $1.7 million related to stores opening in the
second quarter 1998 and 1997, respectively, were expensed prior
to the respective quarter. For the six months ended July 31, 1998, store
opening costs were $26.3 million versus $20.5 million last year, representing
costs associated with the opening of 24 stores this year (15 new and 9
relocated) compared to 17 stores in the comparable period last year (10 new
and 7 relocated). The Company's 1998 expansion plans are discussed under
"Liquidity and Capital Resources" below.
Depreciation was $66.3 million for the quarter ended July 31, 1998 and
$131.0 million for the six months then ended. This is an increase of 13% and
14% over the respective comparable periods last year. The increase is due
primarily to additions of buildings, fixtures, displays and computer equipment
relating to the Company's expansion program.
Interest expense increased by $1.2 and $3.6 million to $17.2 and $36.9
million for the second quarter and six months ended July 31, 1998,
respectively. Interest has increased primarily due to interest expense on
medium-term notes and debentures issued since last year's second quarter.
The Company's effective income tax rate was 36.25% for the quarter ended
July 31, 1998 and 35.77% for last year's second quarter. The effective rate
was 36.25% compared to 35.85% for the six months ended July 31, 1998 and
August 1, 1997, respectively. The higher rate in 1998 is primarily related to
expansion into states with higher state tax rates.
The "Year 2000 Problem" arose because many existing computer programs use
only the last two digits to refer to a year. If not addressed, computer
programs that are date sensitive may not have the ability to properly
recognize dates in year 2000 and beyond. The result could be a temporary
disruption of operations and the processing of transactions. The Company has
completed an analysis of the impact and costs relating to the Year 2000
Problem and has developed an implementation plan to address the issue. The
implementation plan is scheduled to be substantially complete by the end of
1998, with continued testing of compliance throughout 1999. Additionally, the
Company will soon send year 2000 questionnaires to merchandise vendors and
other entities with which the Company conducts business in order to assess
whether they are year 2000 compliant or have adequately addressed their system
conversion requirements. The Company cannot predict how many, if any, of the
responses it receives may prove later to be inaccurate or overly optimistic.
As a result, the Company has begun developing contingency plans to address
unanticipated interruptions or down time in both the Company's and third
parties' systems and services. Costs to convert the Company's systems are not
estimated to be material and are being expensed as incurred. As of July 31,
1998 the Company is more than 50% complete with its implementation plan. The
Company is continuing to closely monitor adherence to the implementation plan
and is currently satisfied that it will be adequately completed in the
scheduled time frame. If the Company encounters unforeseen complications or
issues not previously addressed in the comprehensive plan, additional
resources from internal and external sources would be committed to complete
the necessary conversions in the required time frame. Since the use of these
additional resources is considered unlikely, no estimates as to the costs of
them have been made at this time.
LIQUIDITY AND CAPITAL RESOURCES
Primary sources of liquidity are cash flows from operating activities and
certain financing activities. Net cash provided by operating activities was
$451 million for the six months ended July 31, 1998 compared to $302 million
for the first six months of fiscal 1997. The $149 million increase in the
current year resulted primarily from increased earnings and a smaller use of
cash in 1998 for the
<PAGE> -10-
increase in inventory net of the larger increase in accounts payable. The
Company's working capital was $1.0 billion at July 31, 1998 compared to $673
million at August 1, 1997 and $660 million at January 30, 1998.
The primary component of net cash used in investing activities continues to
be new store facilities in connection with the Company's expansion plan. Cash
acquisitions of fixed assets were $372 million and $322 million for the six
months ended July 31, 1998 and August 1, 1997, respectively. At July 31, 1998,
the Company had 457 stores in 26 states and 38.8 million square feet of retail
selling space, a 22% increase over the selling space as of August 1, 1997.
Cash flows provided by financing activities were $263 million for the six
months ended July 31, 1998 compared to $110 million for the six months ended
August 1, 1997. Net proceeds from borrowings (long-term and short-term) were
$292 million for the first six months of fiscal 1998 versus $145 million for
the comparable period last year. In February 1998, the Company issued $300
million principal amount of 6.875% Debentures due February 15, 2028. The
debentures may not be redeemed prior to maturity.
Property has increased as a result of the Company's plan to continue
expansion of retail sales floor square footage by expanding into new markets
and relocating from older, smaller stores to larger stores. The Company's
1998 capital budget is approximately $1.4 billion, inclusive of approximately
$400 million in operating or capital leases. More than 80% of this planned
commitment is for store expansion. Expansion plans for 1998 consist of
approximately 75 to 80 new stores with about 60% in new markets and the
balance being relocations of existing stores, the combination of which will
increase retail selling space by approximately 20%. Approximately 30% of the
1998 projects will be leased and 70% will be owned. Expansion in the first
six months of fiscal 1998 included 15 new stores and 9 relocations
representing 2.3 million square feet of new incremental retail space.
The Company believes that funds from operations, funds from debt issuances,
leases and existing credit agreements will be adequate to finance the 1998
expansion plan and other operating needs.
As discussed in the annual report for the year ending January 30, 1998, the
Company's major market risk exposure is the potential loss arising from
changing interest rates and its impact on long-term investments and long-term
debt. The Company's policy is to manage interest rate risks by maintaining a
combination of fixed and variable rate financial instruments. The risks
associated with long-term investments at July 31, 1998 have not changed
materially since January 30, 1998. Long-term debt has increased primarily due
to the issuance of $300 million principal amount of 6.875% Debentures due
February 15, 2028. Disclosures of the Company's principal cash outflows for
long-term debt and related interest rates have changed since January 30, 1998
due to the new fixed rate debt.
FORWARD-LOOKING STATEMENTS
This Securities and Exchange Commission Form 10-Q may include "forward-
Looking statements" within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to be correct.
Important factors that could cause actual results to differ from expectations
include, but are not limited to, general economic trends, availability and
development of real estate for expansion, commodity markets, and the nature of
competition and weather conditions, all which are described in detail in the
Company's 1997 Annual Report.
<PAGE> -11-
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Directors
Lowe's Companies, Inc.
North Wilkesboro, North Carolina:
We have reviewed the accompanying consolidated balance sheet of Lowe's
Companies, Inc. and subsidiary companies as of July 31, 1998, and the related
consolidated statements of current and retained earnings for the quarter and
six months ended July 31, 1998 and August 1, 1997, and of cash flows for the
six months ended July 31, 1998 and August 1, 1997. These financial statements
are the responsibility of the Company's management.
We conducted our review 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 review, we are not aware of any material modifications that
should be made to such consolidated 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 Lowe's Companies, Inc. and
subsidiary companies as of January 30, 1998, and the related consolidated
statements of earnings, shareholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated February 19, 1998, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
balance sheet as of January 30, 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
Charlotte, North Carolina
August 11, 1998
<PAGE> -12-
Part II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders.
(a)-The annual meeting of shareholders was held May 29, 1998.
(b)-Directors elected at the meeting: Richard K. Lochridge, Peter C.
Browning, Leonard L. Berry, Paul Fulton, James F. Halpin and Robert L.
Tillman
-Incumbent Directors whose terms expire in subsequent years are: William
Andres, John M. Belk, Carol A. Farmer, Leonard G. Herring, Claudine
B. Malone, Robert G. Schwartz and Robert L. Strickland
(c)-The matters voted upon at the meeting and the results of the voting
were as follows:
<TABLE>
<CAPTION>
(1) Election of Directors: FOR ABSTAIN
<S> <C> <C>
Class I:
Richard K. Lochridge 158,627,325 1,441,889
Class II:
Peter C. Browning 158,618,023 1,451,191
Class III:
Leonard L. Berry 157,552,583 2,516,631
Paul Fulton 158,602,450 1,466,764
James F. Halpin 158,629,279 1,439,935
Robert L. Tillman 158,638,017 1,431,197
</TABLE>
Item 6 (a) - Exhibits
(3.1) Restated and Amended Charter, June 3, 1998
(3.2) Bylaws, as Amended and Restated May 28, 1998
Refer to the Exhibit Index on page 14.
<PAGE> -13-
Item 6 (b) - Reports on Form 8-K
There were no reports filed on Form 8-K during the quarter ended July
31, 1998.
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.
LOWE'S COMPANIES, INC.
September 14, 1998 /s/ Kenneth W. Black, Jr.
Date ___________________ _________________________________________
Kenneth W. Black, Jr.
Vice President and Corporate Controller
<PAGE> -14-
EXHIBIT INDEX
Page No.
Exhibit 3.1 - Restated and Amended Charter, June 3, 1998 15 - 49
Exhibit 3.2 - Bylaws, as Amended and Restated May 28, 1998 50 - 65
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-29-1999
<PERIOD-END> JUL-31-1998
<CASH> 513,190
<SECURITIES> 43,680
<RECEIVABLES> 159,613
<ALLOWANCES> 0
<INVENTORY> 1,968,270
<CURRENT-ASSETS> 2,813,061
<PP&E> 3,243,681
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,161,738
<CURRENT-LIABILITIES> 1,809,449
<BONDS> 0
0
0
<COMMON> 176,150
<OTHER-SE> 2,725,821
<TOTAL-LIABILITY-AND-EQUITY> 6,161,738
<SALES> 6,325,225
<TOTAL-REVENUES> 6,325,225
<CGS> 4,662,151
<TOTAL-COSTS> 4,662,151
<OTHER-EXPENSES> 1,218,561
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,910
<INCOME-PRETAX> 407,603
<INCOME-TAX> 147,760
<INCOME-CONTINUING> 259,843
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 259,843
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
<PAGE> -15-
EXHIBIT 3.1
RESTATED AND AMENDED CHARTER
OF
LOWE'S COMPANIES, INC.
The undersigned Corporation, pursuant to action by its
shareholders, hereby executes this Restated and Amended Charter
for the purpose of integrating into one document its original
articles of incorporation and all amendments thereto:
1. Name. The name of the Corporation is Lowe's Companies,
Inc.
2. Duration. The period of duration of the Corporation is
perpetual.
3. Purpose. The purpose for which the Corporation is
organized is to engage in any lawful act or activity for which
corporations may be organized under the Business Corporation Act
of North Carolina.
4. Authorized Stock. The Corporation shall have the
authority to issue 5,000,000 shares of Preferred Stock of a par
value of $5 per share and 120,000,000 shares of Common Stock of a
par value of $.50 per share.
Preferred Stock. Authority is expressly vested in the Board
of Directors to divide the Preferred Stock into series and,
within the following limitations, to fix and determine the
relative rights and preferences as between series so established
and to provide for the issuance thereof. Each series shall be so
designated as to distinguish the shares thereof from the shares
of all other series and classes. All shares of Preferred Stock
shall be identical except as to the following relative rights and
preferences, as to which there may be variations between
different series:
(1) The rate of dividend;
(2) The price at and the terms and conditions on which
shares may be redeemed;
(3) The amount payable upon shares in event of
involuntary liquidation;
(4) The amount payable upon shares in event of
voluntary liquidation;
(5) Sinking fund provisions for the redemption or
purchase of shares;
(6) The terms and conditions on which shares may be
converted if the shares of any series are issued with the
privilege of conversion; and
(7) The terms and conditions on which shares may be
voted in the election of Directors or otherwise, either as a
class or together with other voting securities.
<PAGE> -16-
Prior to the issuance of any shares of a series of Preferred
Stock the Board of Directors shall establish such series by
adopting a resolution setting forth the designation of the series
and the preferences, limitations and relative rights thereof to
the extent that variations are permitted by the provisions
hereof.
All series of Preferred Stock shall rank on a parity as to
dividends and assets with all other series according to the
respective dividend rates and amounts distributable upon any
voluntary or involuntary liquidation of the Corporation fixed for
each such series; but all shares of Preferred Stock shall be
preferred over Common Stock as to both dividends and amounts
distributable upon any voluntary or involuntary liquidation of
the Corporation. All shares of any one series shall be
identical.
Common Stock. The holders of Common Stock shall, to the
exclusion of the holders of any other class of stock of the
Corporation, have the sole and full power to vote for the
election of Directors and for all other purposes without
limitation except only (i) as otherwise provided in the
resolutions establishing and designating a particular series of
Preferred Stock and (ii) as otherwise expressly provided by the
then existing statutes of the State of North Carolina. The
holders of Common Stock shall have one vote for each share of
Common Stock held by them.
Subject to the provisions of resolutions establishing and
designating series of Preferred Stock, the holders of shares of
Common Stock shall be entitled to receive dividends if, when and
as declared by the Board of Directors out of funds legally
available therefor and to the net assets remaining after payment
of all liabilities upon voluntary or involuntary liquidation of
the Corporation.
5. Stated Capital. The stated capital of the Corporation
is $18,550,694 as of April 4, 1986, being the date that the Board
of Directors adopted a resolution setting forth this Restated and
Amended Charter for submission to the shareholders for approval.
6. Shareholders' Preemptive Right. No holder of stock of
the Corporation shall have any preemptive right to subscribe for
or purchase any additional or increased stock of the Corporation
of any class, whether now or hereafter authorized, including
treasury stock, or obligations convertible into any class of
stock, or stock of any class convertible into stock of any other
class, or obligations, stock or other securities carrying
warrants or rights to subscribe to stock of the Corporation of
any class, whether now or hereafter authorized, but any and all
shares of stock, bonds, debentures or other securities or
obligations, whether or not convertible into stock or carrying
warrants entitling the holders thereof to subscribe to stock, may
be issued, sold or disposed of from time to time by authority of
the Board of Directors to such persons, firms, corporations or
employee stock ownership plans and for such consideration, as far
as it may be permitted by law, as the Board of Directors shall
from time to time determine.
7. Registered Office. The address of the registered
<PAGE> -17-
office of the Corporation in the State of North Carolina is Elkin
Highway, Wilkes County, North Wilkesboro, North Carolina 28659;
and the name of its registered agent at such address is L. G.
Herring.
8. Incorporators. The names and addresses of the original
incorporators of the Corporation are as follows:
NAME ADDRESS
H. C. Buchan, Jr. North Wilkesboro, N.C.
Ruth Lowe Buchan North Wilkesboro, N.C.
Hal E. Church North Wilkesboro, N.C.
9. Board of Directors.
(a) Number, Election & Term of Directors. The number
of Directors shall be set forth in the Bylaws, but in the absence
of such a provision in the Bylaws, the number of Directors of the
Corporation shall be nine, provided that the number of Directors
set forth in the Bylaws cannot be increased by more than two
during any 12 month period except by the affirmative vote of the
holders of at least 70% of the outstanding Voting Shares.
Commencing with the 1986 Annual Meeting of Shareholders, the
Board of Directors shall be divided into three classes, Class I,
Class II and Class III, as nearly equal in number as possible.
At the 1986 Annual Meeting of Shareholders, Directors of the
first class (Class I) shall be elected to hold office for a term
expiring at the 1987 Annual Meeting of Shareholders; Directors of
the second class (Class II) shall be elected to hold office for a
term expiring at the 1988 Annual Meeting of Shareholders; and
Directors of the third class (Class III) shall be elected to hold
office for a term expiring at the 1989 Annual Meeting of
Shareholders. At each Annual Meeting of Shareholders after 1986,
the successors to the class of Directors whose term shall then
expire shall be identified as being of the same class as the
Directors they succeed and elected to hold office for a term
expiring at the third succeeding Annual Meeting of Shareholders.
When the number of Directors is changed, any newly-created
directorships or any decrease in directorships shall be so
apportioned among the classes by the Board of Directors as to
make all classes as nearly equal in number as possible.
(b) Newly-Created Directorships and Vacancies.
Subject to the rights of the holders of Preferred Stock then
outstanding, any vacancy occurring in the Board of Directors,
including a vacancy resulting from an increase by not more than
two in the number of Directors, may be filled by the affirmative
vote of a majority of the remaining Directors though less than a
quorum of the Board of Directors, and Directors so chosen shall
hold office for a term expiring at the Annual Meeting of
Shareholders at which the term of the class to which they have
been elected expires. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any
incumbent Director.
(c) Removal of Directors. Subject to the rights of
the holders of Preferred Stock then outstanding, any Director may
<PAGE> -18-
be removed, with or without cause, only by the affirmative vote
of the holders of at least 70% of the outstanding Voting Shares.
(d) Amendment or Repeal. The provisions of this
Article shall not be amended or repealed, nor shall any provision
of this Charter be adopted that is inconsistent with this
Article, unless such action shall have been approved by the
affirmative vote of either:
(i) the holders of at least 70% of the
outstanding Voting Shares; or
(ii) a majority of those Directors who are
Disinterested Directors and the holders of the
requisite number of shares specified under applicable
North Carolina law for the amendment of the charter of
a North Carolina corporation.
(e) Certain Definitions. For purposes of this
Article:
(i) "Disinterested Director" means any member of
the Board of Directors who:
(A) was elected to the Board of Directors at
the 1986 Annual Meeting of Shareholders; or
(B) was recommended for election by a
majority of the Disinterested Directors then on
the Board, or was elected by the Board to fill a
vacancy and received the affirmative vote of a
majority of the Disinterested Directors then on
the Board.
(ii) "Voting Shares" shall mean the outstanding
shares of all classes or series of the Corporation's
stock entitled to vote generally in the election of
Directors.
10. (a) Vote Required for Certain Business Combinations.
(i) Higher Vote for Certain Business
Combinations. In addition to any affirmative vote
required by law or this Charter, and except as
otherwise expressly provided in Section (b) of this
Article:
(A) any merger or consolidation of the
Corporation or any Subsidiary (as hereinafter
defined) with (a) any Interested Stockholder (as
hereinafter defined) or (b) any other Corporation
which immediately before such merger or
consolidation is an Affiliate or Associate (as
hereinafter defined) of an Interested Stockholder;
or
(B) any statutory share exchange in which
any Interested Stockholder or any Affiliate or
Associate of an Interested Stockholder acquires
the issued and outstanding shares of any class of
Capital Stock of the Corporation or a Subsidiary;
or
<PAGE> -19-
(C) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one
transaction or a series of transactions during any
12 month period) to or with any Interested
Stockholder or any Affiliate or Associate of any
Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate
Fair Market Value (as hereinafter defined) in
excess of 5% of the Corporation's consolidated
assets as of the date of the most recently
available financial statements; or any guaranty by
the Corporation or any Subsidiary (in one
transaction or a series of transactions during any
12 month period) of indebtedness of any Interested
Stockholder or any Affiliate or Associate of any
Interested Stockholder in excess of 5% of the
Corporation's consolidated assets as of the date
of the most recently available financial
statements; or any transaction or series of
transactions involving in excess of 5% of the
Corporation's consolidated assets as of the date
of the most recently available financial
statements to which the Corporation or any
Subsidiary and any Interested Stockholder or any
Affiliate or Associate of any Interested
Stockholder is a party; or
(D) the sale or other disposition by the
Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate or Associate of any
Interested Stockholder (in one transaction or a
series of transactions during any 12 month period)
of any securities of the Corporation or any
Subsidiary having an aggregate Fair Market Value
in excess of 5% of the aggregate Fair Market Value
of all outstanding Voting Shares of the
Corporation as of the date on which the Interested
Stockholder became an Interested Stockholder (the
"Determination Date") except pursuant to a share
dividend or the exercise of rights or warrants
distributed or offered on a basis affording
substantially proportionate treatment to all
holders of the same class or series; or
(E) the adoption of any plan or proposal for
the liquidation or dissolution of the Corporation
proposed by or on behalf of an Interested
Stockholder or any Affiliate or Associate of any
Interested Stockholder; or
(F) any reclassification of securities
(including any reverse stock split), or
recapitalization of the Corporation, or any merger
or consolidation of the Corporation with any of
its Subsidiaries or any other transaction (whether
or not with or into or otherwise involving an
Interested Stockholder) which has the effect,
<PAGE> -20-
directly or indirectly (in one transaction or a
series of transactions during any 12 month
period), of increasing by more than 5% the
percentage of any class of securities of the
Corporation or any Subsidiary directly or
indirectly owned by any Interested Stockholder or
any Affiliate or Associate of any Interested
Stockholder;
shall require the affirmative vote of the holders of at
least 70% of the outstanding Voting Shares. Such
affirmative vote shall be required notwithstanding the
fact that no vote may be required, or that a lesser
percentage may be specified, by law or in any agreement
with any national securities exchange or otherwise.
(ii) Definition of "Business Combination." The
term "Business Combination" as used in this Article
shall mean any transaction which is referred to in any
one or more of clauses (A) through (F) of paragraph (i)
of this Section (a).
(b) When Higher Vote is Not Required for Certain
Business Combination. The provisions of Section (a) of this
Article shall not be applicable to any particular Business
Combination, and such Business Combination shall require
only such approval as is required by law and any other
provision of these Articles of Incorporation, if
consideration will be paid to the holders of each class or
series of Voting Shares and all of the conditions specified
in either of the following paragraphs (i) or (ii) are met.
(i) Approval by Disinterested Directors. The
Business Combination shall have been approved by a
majority of those persons who are Disinterested
Directors (as hereinafter defined).
(ii) Price and Procedure Requirements.
(A) The aggregate amount of the cash and the
Fair Market Value as of the Valuation Date of
consideration other than cash to be received per
share by holders of each class or series of Voting
Shares in such Business Combination shall be at
least equal to the highest of the following
(taking into account all stock dividends and stock
splits):
(I) (If applicable) the highest per
share price (including any brokerage
commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested
Stockholder for any shares of such class or
series acquired by it (1) within the two year
period (the "Preannouncement Period") ending
at 11:59 p.m., Eastern time, on the date of
the first public announcement of the proposal
of the Business Combination (the
"Announcement Date") or (2) in the
transaction in which it became an Interested
<PAGE> -21-
Stockholder, whichever is higher;
(II) the Fair Market Value per share of
such class or series on the Determination
Date or on the day after the Announcement
Date, whichever is higher;
(III) (if applicable) the price per
share equal to the Fair Market Value per
share of such class or series determined
pursuant to paragraph (ii)(A)(II) above,
multiplied by the ratio of (1) the highest
per share price (including any brokerage
commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested
Stockholder for any shares of such class or
series acquired by it within the
Preannouncement Period, to (2) the Fair
Market Value per share of such class or
series on the first day during the
Preannouncement Period upon which the
Interested Stockholder acquired any shares of
such class or series; and
(IV) (if applicable), the highest
preferential amount, if any, per share to
which the holders of such class or series are
entitled in the event of any voluntary or
involuntary dissolution of the Corporation.
(B) The consideration to be received by the
holder of outstanding shares in such Business
Combination shall be in cash or in the same form
as the Interested Stockholder has previously paid
for shares of the same class or series. If the
Interested Stockholder has paid for shares with
varying forms of consideration, the form of
consideration shall be either cash or the form
used to acquire the largest number of shares of
such class or series previously acquired by the
Interested Stockholder.
(C) During such portion of the three year
period preceding the Announcement Date that such
Interested Stockholder has been an Interested
Stockholder, except as approved by a majority of
the Disinterested Directors: (a) there shall have
been no failure to declare and pay at the regular
date therefor any full periodic dividends (whether
or not cumulative) on any outstanding shares of
the Corporation; (b) there shall have been (1) no
reduction in the annual rate of dividends paid on
any class or series of Voting Shares, (except as
necessary to reflect any subdivision of the class
or series) and (2) an increase in such annual rate
of dividends as necessary to reflect any
reclassification (including any reverse stock
split), recapitalization, reorganization or any
similar transaction which has the effect of
reducing the number of outstanding shares of the
<PAGE> -22-
class or series; and (c) such Interested
Stockholder shall have not become the beneficial
owner of any additional Voting Shares except as
part of the transaction which results in such
Interested Stockholder becoming an Interested
Stockholder.
(D) During such portion of the three year
period preceding the Announcement Date that such
Interested Stockholder has been an Interested
Stockholder, except as approved by a majority of
the Disinterested Directors, such Interested
Stockholder shall not have received the benefit,
directly or indirectly (except proportionately as
a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance
or any tax credits or other tax advantages
provided by the Corporation, whether in
anticipation of or in connection with such
Business Combination or otherwise.
(E) Except as otherwise approved by a
majority of the Disinterested Directors, a proxy
or information statement describing the proposed
Business Combination and complying with the
requirements of the Securities Exchange Act of
1934 and the rules and regulations thereunder (or
any subsequent provisions replacing such Act,
rules or regulations) shall be mailed to
stockholders of the Corporation at least 20 days
prior to the consummation of such Business
Combination (whether or not such proxy or
information statement is required to be mailed
pursuant to such Act or subsequent provisions).
(c) Certain Definitions.
For the purposes of this Article:
(i) A "person" shall mean any individual, firm,
corporation, partnership, joint venture, or other
entity.
(ii) "Interested Stockholder" shall mean any
person who or which is the beneficial owner, directly
or indirectly, of 20% or more of the outstanding Voting
Shares of the Corporation; provided, however, the term
Interested Stockholder shall not include the
Corporation, any Subsidiary, or any savings, employee
stock ownership or other employee benefit plan of the
Corporation or any Subsidiary, or any fiduciary with
respect to any such plan when acting in such capacity.
For the purposes of determining whether a person is an
Interested Stockholder, the number of shares of Voting
Shares deemed to be outstanding shall include shares deemed
owned through application of paragraph (iii) of this Section
(c) but shall not include any other Voting Shares that may
be issuable pursuant to any contract, arrangement or
understanding, or upon exercise of conversion rights,
<PAGE> -23-
exchange rights, warrants or options, or otherwise.
(iii) A person shall be a "beneficial owner" of
any Voting Shares as to which such person and any of
such person's Affiliates or Associates, individually or
in the aggregate, have or share directly, or indirectly
through any contract, arrangement, understanding,
relationship, or otherwise:
(A) voting power, which includes the power
to vote, or to direct the voting of the Voting
Shares;
(B) investment power, which includes the
power to dispose or to direct the disposition of
the Voting Shares;
(C) economic benefit, which includes the
right to receive or control the disposition of
income or liquidation proceeds from the Voting
Shares; or
(D) the right to acquire voting power,
investment power or economic benefit (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any contract,
arrangement or understanding or upon the exercise
of conversion rights, exchange rights, warrants or
options, or otherwise;
provided, that in no case shall a Director of the
Corporation be deemed to be the beneficial owner of
Voting Shares beneficially owned by another Director of
the Corporation solely by reason of actions undertaken
by such persons in their capacity as Directors of the
Corporation,
(iv) "Affiliate" means a person that directly, or
in directly through one or more intermediaries,
controls or is controlled by, or is under common
control with the person specified.
(v) "Associate" means as to any specified
person:
(A) any entity (other than the Corporation
and its Subsidiaries) of which such person is an
Officer, Director or partner or is, directly or
indirectly, the beneficial owner of 10% or more of
the Voting Shares;
(B) any trust or other estate in which such
person has a substantial beneficial interest or as
to which such person serves as trustee or in a
similar fiduciary capacity; or
(C) any relative or spouse of such person,
or any relative of such spouse, who has the same
home as such person or who is an Officer or
Director of the Corporation or any of its
<PAGE> -24-
(vi) As to any Corporation, "Subsidiary" means
any other Corporation of which it owns directly or
indirectly a majority of the Voting Shares.
(vii) "Disinterested Director" means any member of
the Board of Directors who:
(A) was elected to the Board of Directors of
the Corporation at the 1986 Annual Meeting of
Shareholders; or
(B) was recommended for election by a
majority of the Disinterested Directors then on
the Board, or was elected by the Board to fill a
vacancy and received the affirmative vote of a
majority of the Disinterested Directors then on
the Board.
(viii) "Fair Market Value" means:
(A) in the case of stock the highest closing
sale price during the 30 day period ending at
11:59 p.m., Eastern time, on the date in question
of a share of such stock on the Composite Tape for
New York Stock Exchange Listed Stocks, or, if such
stock is not quoted on the Composite Tape on the
New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United
States securities exchange registered under the
Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed
on any such exchange, the highest closing bid
quotation with respect to a share of such stock
during the 30 day period ending at 11:59 p.m.,
Eastern time, on the date in question on the
National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in
use, or if no such quotations are available, the
Fair Market Value on the date in question of a
share of such stock as determined by a majority of
the Disinterested Directors; and
(B) in the case of property other than cash
or stock, the Fair Market Value of such property
on the date in question as determined by a
majority of the Disinterested Directors.
(ix) "Voting Shares" shall mean the outstanding
shares of all classes or series of the Corporation's
stock entitled to vote generally in the election of
Directors.
(x) "Control" shall mean the possession, directly
or indirectly, through the ownership of voting
securities, by contract, arrangement, understanding,
relationship or otherwise, of the power to direct or
cause the direction of the management and policies of
the person. The beneficial ownership of 20% or more of
the Corporation's Voting Shares shall be deemed to
constitute control.
<PAGE> -25-
(d) Certain Determinations.
Directors who are Disinterested Directors of the
Corporation shall have the power and duty to determine
for the purpose of this Article, on the basis of
information known to them after reasonable inquiry, (i)
whether a particular person is an Interested
Stockholder, (ii) the number of Voting Shares
beneficially owned by such person, (iii) whether any
person is an Affiliate or Associate of such person, and
(iv) whether the assets that are the subject of any
Business Combination involving such person have an
aggregate Fair Market Value in excess of 5% of the
Corporation's consolidated assets as of the date of the
most recently available financial statement, or the
securities to be issued or transferred by the
Corporation or any Subsidiary in any Business
Combination involving such person have an aggregate
Fair Market Value in excess of 5% of the aggregate Fair
Market Value of all outstanding Voting Shares of the
Corporation as of the Determination Date.
(e) No Effect on Certain Obligations.
Nothing contained in this Article shall be
construed to relieve any Interested Stockholder or any
Director of the Corporation from any obligation imposed
by law.
(f) Amendment or Repeal.
The provisions of this Article shall not be
amended or repealed, nor shall any provision of these
Articles of Incorporation be adopted that is
inconsistent with this Article, unless such action
shall have been approved by the affirmative vote of
either:
(i) the holders of at least 70% of the
outstanding Voting Shares; or
(ii) a majority of those Directors who are
Disinterested Directors and the holders of the
requisite number of shares specified under
applicable North Carolina law for the amendment of
the charter of a North Carolina corporation.
11. This Restated and Amended Charter was adopted by the
shareholders of the Corporation on the 16th day of June, 1986, in
the manner prescribed by law for adopting a charter amendment;
and it integrates the original Articles of Incorporation and all
amendments thereto.
12. The number of shares of Common Stock (the only class of
stock outstanding) of the Corporation outstanding at the time
shareholders voted was 39,618,225; and the number of shares of
Common Stock entitled to vote was 37,106,438.
13. The number of shares of Common Stock voted for
<PAGE> -26-
amendment of the Charter to authorize a class of Preferred Stock
consisting of 5 million shares was 24,999,783; the number of
shares of Common Stock voted against adoption of such proposal
was 5,900,610; and the number of shares of Common Stock
abstaining from voting on such proposal was 1,806,088.
14. The number of shares of Common Stock voted for
amendment of the Charter to provide for classification of the
Board of Directors into three classes and that directors cannot
be removed during their term of office without the affirmative
vote of holders of at least 70% of outstanding shares of Common
Stock was 24,641,126; the number of shares of Common Stock voted
against such proposal was 6,265,258; and the number of shares of
Common Stock abstaining from voting on such proposal was
1,800,097.
15. The number of shares of Common Stock voted for
amendment of the Charter to provide for certain minimum price
procedures or, alternatively, require a higher voting requirement
for certain transactions, was 24,941,586; the number of shares of
Common Stock voted against such proposal was 5,636,077; and the
number of shares of Common Stock abstaining from voting on such
proposal was 2,128,818.
16. The number of shares of Common Stock voted for approval
of a Restated and Amended Charter incorporating those of the
proposals described in paragraphs 13, 14 and 15 which were
approved by shareholders was 26,624,636; the number of shares of
Common Stock voted against such proposal was 4,978,302; and the
number of shares of Common Stock abstaining from voting on such
proposal was 1,103,543.
17. Adoption of the proposals described in paragraphs 13,
14, 15 and 16 did not give rise to (i) dissenter's rights,
because the amendments to the Charter and adoption of the
Restated and Amended Charter do not change the Corporation into a
non-profit corporation or cooperative organization and no shares
of the Corporation that are outstanding are entitled to any
preference as to dividends or liquidation, or (ii) class voting
rights, because the only class of stock outstanding is Common
Stock.
IN WITNESS WHEREOF, this statement is executed by the
president and secretary of the corporation this 25th day of
June, 1986.
LOWE'S COMPANIES, INC.
By /s/ Leonard G. Herring
President
By /s/ Richard D. Elledge
Secretary
<PAGE> -27-
STATE OF NORTH CAROLINA
COUNTY OF WILKES
I, Geraldine Bumgarner, a notary public, hereby certify that
on this 25th day of June, 1986, personally appeared before me
Leonard G. Herring and Richard D. Elledge, each of whom being by
me first duly sworn, declared that he signed the foregoing
document in the capacity indicated, that he was authorized so to
sign, and that the statements therein contained are true.
/s/ Geraldine Bumgarner
Notary Public
My Commission Expires: September 21, 1988
<PAGE> -28-
ARTICLES OF AMENDMENT OF
LOWE'S COMPANIES, INC.
The undersigned corporation hereby executes these Articles
of Amendment for the purpose of amending its charter:
1. The name of the corporation is Lowe's Companies, Inc.
2. The following amendment to the charter of the
corporation was adopted by its shareholders on the 5th day of
November, 1987, in the manner prescribed by law:
By adding the following sub-paragraph:
9.(f) To the full extent that the North Carolina
Business Corporation Act, as it exists on the date that this
Amendment became effective, permits the elimination of the
liability of Directors, a Director of the Company shall not be
liable for monetary damages for breach of his duty as a Director.
3. The number of shares of the corporation outstanding at
the time of such adoption was 39,630,050; and the number of
shares entitled to vote thereon was 39,630,050.
4. The designation and number of outstanding shares of
each class entitled to vote on such amendment as a class were as
follows:
Number of
Class Shares
Common 39,630,050
5. The number of shares voted for such amendment was
30,174,450; and the number of shares voted against such amendment
was 2,775,537. Voting within each class entitled to vote as a
class was as follows:
Number of Shares Voted
Class For Against
Common 30,174,450 2,775,537
6. The amendment herein effected does not give rise to
dissenter's rights to payment for the reason that the only effect
of such amendment is to add an article to the Articles of
Incorporation limiting the liability of Directors of the
Corporation.
<PAGE> -29-
IN WITNESS WHEREOF, these articles are signed by the
president and secretary of the corporation this 6th day of
November, 1987.
/s/ Leonard G. Herring
Leonard G. Herring, President
/s/ Richard D. Elledge
Richard D. Elledge, Secretary
STATE OF NORTH CAROLINA
COUNTY OF WILKES
I, Geraldine Bumgarner, a notary public, hereby certify that
on this 6th day of November, 1987, personally appeared before me
Leonard G. Herring and Richard D. Elledge, each of whom being by
me first duly sworn, declared that he signed the foregoing
document in the capacity indicated, that he was authorized so to
sign, and that the statements therein contained are true.
/s/ Geraldine Bumgarner
Notary Public
My Commission Expires: September 21, 1988
<PAGE> -30-
STATEMENT OF CLASSIFICATION OF SHARES
OF
LOWE'S COMPANIES, INC.
1. The name of the corporation is LOWE'S COMPANIES, INC.
2. On September 9, 1988, pursuant to Sections 55-41 and
55-42 of the North Carolina Business Corporation Act and the
authority conferred upon the Board of Directors by the Restated
and Amended Charter of Corporation, the Board of Directors of the
Corporation duly adopted the following resolutions creating a
series of 160,000 shares of Preferred Stock designated as
Participating Cumulative Preferred Stock, Series A:
RESOLVED, that it is hereby declared to be in the best
interests of the Corporation that a new series of Preferred
Stock be created to consist of 160,000 shares and to be
designated as Participating Cumulative Preferred Stock,
Series A, and to determine the preferences, limitations and
relative rights of the Participating Cumulative Preferred
Stock, Series A, by adopting a Statement of Classification
of Shares of Lowe's Companies, Inc. to read in the form
attached hereto as Appendix I
RESOLVED, that the Statement of Classification of
Shares of the Corporation attached hereto as Appendix I is
hereby adopted and that the appropriate officers of the
Corporation are authorized and directed to prepare and to
file with the North Carolina Secretary of State a Statement
of Classification of Shares of Lowe's Companies, Inc. to
give effect thereto.
3. That Appendix I hereto constitutes the Statement of
Classification of Shares of Lowe's Companies, Inc. referred to in
the foregoing resolutions.
4. That such Statement of Classification of Shares of
Lowe's Companies, Inc. was adopted before the issuance of the
Participating Cumulative Preferred Stock, Series A, by the Board
of Directors of the Corporation on September 9, 1988.
Shareholder action was not required.
Dated: September 9, 1988
LOWE'S COMPANIES, INC.
By: /s/ Robert L. Strickland
Robert L. Strickland
Chairman of the Board
Attest:
/s/ Richard D. Elledge
Secretary
[Corporate Seal]
<PAGE> -31-
Appendix I
The Corporation has designated 160,000 shares of the
authorized but unissued shares of the Corporation's Preferred
Stock, par value $5.00 per share, as Participating Cumulative
Preferred Stock, Series A (hereinafter referred to as "Series A
Preferred Stock"). The terms of the Series A Preferred Stock, in
the respect in which the shares of such series may vary from
shares of any and all other series of Preferred Stock, are as
follows:
(a) Dividends and Distributions.
(1) The holders of shares of Series A
Preferred Stock in preference to the holders of
Common Stock and of any other junior stock, shall
be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally
available therefor, dividends payable quarterly on
the last business day of each April, July, October
and January (each such date being referred to
herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock,
in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $120 or (b)
subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate
per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in
kind) of all non-cash dividends or other
distributions other than a dividend payable in
shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by
reclassification or otherwise), declared on the
Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction
of a share of Series A Preferred Stock. In the
event the Corporation shall at any time after
September 9, 1988 (the Rights Declaration Date"),
(i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the out-
standing Common Stock, or (iii) combine the out-
standing Common Stock into a smaller number of
shares, then in each such case the amount to which
holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under
clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of
Common Stock outstanding immediately after such
event and the denominator of which is the number
of shares of Common Stock that were outstanding
immediately prior to such event.
<PAGE> -32-
(2) The Corporation shall declare a dividend
or distribution on the Series A Preferred Stock as
provided in paragraph (1) above immediately after
it declares a dividend or distribution on the Com-
mon Stock (other than a dividend payable in shares
of Common Stock); provided that, in the event no
dividend or distribution shall have been declared
on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a
dividend of $120 per share on the Series A
Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(3) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of
such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the
record date for the first Quarterly Dividend
Payment Date, in which case dividends on such
shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue
is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of
holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid
on the shares of Series A Preferred Stock in an
amount less than the total amount of such
dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-
share basis among all such shares at the time
outstanding. The Board of Directors may fix a
record date for the determination of holders of
shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution
declared thereon, which record date shall be no
more than 30 days prior to the date fixed for the
payment thereof.
(b) Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following
voting rights:
(1) Subject to the provision for adjustment
hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote
of the shareholders of the Corporation. In the
event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend
on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or
<PAGE> -33-
(iii) combine the outstanding Common Stock into a
smaller number of votes per share to which holders
of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of
Common Stock outstanding immediately after such
event and the denominator of which is the number
of shares of Common Stock that were outstanding
immediately prior to such event.
(2) Except as otherwise provided herein, in
the Restated and Amended Charter, or under
applicable law, the holders of shares of Series A
Preferred Stock and the holders of shares of
Common Stock shall vote together as one voting
group on all matters submitted to a vote of
stockholders of the Corporation
(3) (i) If at any time dividends on any
shares of Series A Preferred Stock shall be
in arrears in an amount equal to six
quarterly dividends thereon, the occurrence
of such contingency shall mark the beginning
of a period (a "default period") that shall
extend until such time when all accrued and
unpaid dividends for all previous quarterly
dividend periods and for the current
quarterly dividend period on all shares of
Series A preferred Stock then outstanding
shall have been declared and paid or set
apart for payment. During each default
period, all holders of the outstanding shares
of Series A Preferred Stock together with any
other series of Preferred Stock then entitled
to such a vote under the terms of the
Restated and Amended Charter, voting as a
separate voting group, shall be entitled to
elect two members of the Board of Directors
of the Corporation.
(ii) During any default period, such
voting right of the holders of Series A
Preferred Stock may be exercised initially at
a special meeting called pursuant to
subparagraph (iii) of this Subsection (b)(3)
or at any annual meeting of stockholders, and
thereafter at annual meetings of
stockholders, provided that neither such
voting right nor the right of the holders of
any other series of Preferred Stock, if any,
to increase, in certain cases, the authorized
number of Directors shall be exercised unless
the holders of ten percent (10%) in number of
shares of Preferred Stock outstanding shall
be present in person or by proxy. The
absence of a quorum of the holders of Common
Stock shall not affect the exercise by the
holders of Preferred Stock of such voting
right. At any meeting at which the holders
<PAGE> -34-
of Preferred Stock shall exercise such voting
right initially during an existing default
period, they shall have the right, voting as
a separate voting group, to elect Directors
to fill such vacancies, if any, in the Board
of Directors as may then exist up to two (2)
Directors, or if such right is exercised at
an annual meeting, to elect two (2)
Directors. If the number which may be so
elected at any special meeting does not
amount to the required number, the holders of
the Preferred Stock shall have the right to
make such increase in the number of Directors
as shall be necessary to permit the election
by them of the required number. After the
holders of the Preferred Stock shall have
exercised their right to elect Directors in
any default period and during the continuance
of such period, the number of Directors shall
not be increased or decreased except by vote
of the holders of Preferred Stock as herein
provided or pursuant to the rights of any
equity securities ranking senior to or pari
passu with the Series A Preferred Stock.
(iii) Unless the holders of Preferred
Stock shall, during an existing default
period, have previously exercised their right
to elect Directors, the Board of Directors
may order, or any stockholder or stockholders
owning in the aggregate not less than ten
percent (10%) of the total number of shares
of Preferred Stock outstanding, irrespective
of series, may request, the calling of a
special meeting of the holders of Preferred
Stock, which meeting shall thereupon be
called by the Chairman, President, a Vice-
President or the Secretary of the
Corporation. Notice of such meeting and of
any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant
to this paragraph (b)(3)(iii) shall be given
to each holder of record of Preferred Stock
by mailing a copy of such notice to him at
his last address as the same appears on the
books of the Corporation. Such meeting shall
be called for a time not earlier than 10 days
and not later than 60 days after such order
or request. In the event such meeting is not
called within 60 days after such order or
request, such meeting may be called on
similar notice by any stockholder or
stockholders owning in the aggregate not less
than ten percent (10%) of the total number of
shares of Preferred Stock outstanding.
Notwithstanding the provisions of this
paragraph (b)(3)(iii), no such special
meeting shall be called during the period
within 60 days immediately preceding the date
fixed for the next annual meeting of the
<PAGE> -35-
stockholders.
(iv) In any default period, the holders
of Common Stock, and other classes of stock
of the Corporation if applicable, shall
continue to be entitled to elect the whole
number of Directors until the holders of
Preferred Stock shall have exercised their
right to elect two (2) Directors voting as a
separate voting group, after the exercise of
which right (x) the Directors so elected by
the holders of Preferred Stock shall continue
in office until their successors shall have
been elected by such holders or until the
expiration of the default period, and (y) any
vacancy in the Board of Directors may (except
as provided in paragraph (b)(3)(ii)) be
filled by vote of a majority of the remaining
Directors theretofore elected by the voting
group which elected the Director whose office
shall have become vacant. References in this
paragraph (b)(3)(iv) to Directors elected by
a particular voting group shall include
Directors elected by such Directors to fill
vacancies as provided in clause (y) of the
foregoing sentence.
(v) Immediately upon the expiration of
a default period, (x) the right of the
holders of Preferred Stock, as a separate
voting group, to elect Directors shall cease,
(y) the term of any Directors elected by the
holders of Preferred Stock, as a separate
voting group, shall terminate, and (z) the
number of Directors shall be such number as
may be provided for in, or pursuant to, the
Restated and Amended Charter or bylaws
irrespective of any increase made pursuant to
the provisions of paragraph 5(b)(3)(ii) (such
number being subject, however, to change
thereafter in any manner provided by law or
in the Restated and Amended Charter or by-
laws). Any vacancies in the Board of
Directors affected by the provisions of
clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining
Directors, even though less than a quorum.
(4) Except as set forth herein or as
otherwise provided in the Restated and Amended
Charter, holders of Series A Preferred Stock shall
have no special voting rights and their consent
shall not be required (except to the extent they
are entitled to vote with holders of Common Stock
as set forth herein) for taking any corporate
action.
(c) Certain Restrictions.
(1) Whenever quarterly dividends or other
<PAGE> -36-
dividends or distributions payable on the Series A
Preferred Stock as provided in Subsection (a) are
in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay or set apart for
payment any dividends (other than dividends
payable in shares of any class or classes of
stock of the Corporation ranking junior to
the Series A Preferred Stock) or make any
other distributions on, any class of stock of
the Corporation ranking junior (either as to
dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock
and shall not redeem, purchase or otherwise
acquire, directly or indirectly, whether
voluntarily, for a sinking fund, or otherwise
any shares of any class of stock of the
Corporation ranking junior (either as to
dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock,
provided that, notwithstanding the foregoing,
the Corporation may at any time redeem,
purchase or otherwise acquire shares of stock
of any such junior class in exchange for, or
out of the net cash proceeds from the
concurrent sale of, other shares of stock of
any such junior class;
(ii) declare or pay dividends on or
make any other distributions on any shares of
stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred
Stock, except dividends paid ratably on the
Series A Preferred Stock and all such parity
stock on which dividends are payable or in
arrears in proportion to the total amounts to
which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock
ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock,
provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares
of any such parity stock in exchange for
shares of any stock of the Corporation
ranking junior (either as to dividends or
upon dissolution, liquidation or winding up)
to the Series A Preferred Stock;
(iv) purchase or otherwise acquire for
consideration any shares of Series A
Preferred Stock, or any shares of stock
<PAGE> -37-
ranking on a parity with the Series A
Preferred Stock, except in accordance with a
purchase offer made in writing or by
publication (as determined by the Board of
Directors) to all holders of such shares upon
such terms as the Board of Directors, after
consideration of the respective annual
dividend rates and other relative rights and
preferences of the respective series and
classes, shall determine in good faith will
result in fair and equitable treatment among
the respective series or classes.
(2) The Corporation shall not permit any
subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation
could, under Paragraph (1) of Subsection (c),
purchase or otherwise acquire such shares at such
time and in such manner.
(d) Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth
herein.
(e) Liquidation, Dissolution or Windinq Up.
(1) Upon any voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred
Stock shall have received $5.00 per share, plus an
amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the
date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount
of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of
Series A Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to
the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in subparagraph 3 below to
reflect such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock)
(such number in clause (ii) being hereinafter referred
to as the "Adjustment Number"). Following the payment
of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all
<PAGE> -38-
outstanding shares of Series A Preferred Stock and
Common Stock, respectively, holders of Series A
Preferred Stock and holders of shares of Common Stock
shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Series
A Preferred Stock and Common Stock, on a per share
basis, respectively.
(2) In the event, however, that there are not
sufficient assets available to permit payment in full
of the Series A Liquidation Preference and the
liquidation preferences of all other series of
Preferred Stock, if any, then such remaining assets
shall be distributed ratably to the holders of all such
shares in proportion to their respective liquidation
preferences. In the event, however, that there are not
sufficient assets available to permit payment in full
of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common
Stock.
(3) In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment
Number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding
immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(f) Consolidation, Merger, Share Exchange, etc. In
case the Corporation shall enter into any consolidation,
merger, share exchange, combination or other transaction in
which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any
other property, then in any such case the shares of Series A
Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to
1,000 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
<PAGE> -39-
outstanding immediately prior to such event.
(g) Redemption. The outstanding shares of Series A
Preferred Stock may be redeemed at the option of the Board
of Directors as a whole, but not in part, at any time, or
from time to time, at a cash price per share equal to (i)
100% of the product of the Adjustment Number times the
Average Market Value (as such term is hereinafter defined)
of the Common Stock, plus (ii) all dividends which on the
redemption date have accrued on the shares to be redeemed
and have not been paid or declared and a sum sufficient for
the payment thereof set apart, without interest. The
"Average Market Value" is the average of the closing sale
prices of a share of the Common Stock during the 30-day
period immediately preceding the date before the redemption
date on the Composite Tape for New York Stock Exchange
Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such exchange, on the principal
United States securities exchange registered under the
Securities Exchange Act of 1934, as amended, on which such
stock is listed, or, if such stock is not listed on any such
exchange, the average of the closing bid quotations with
respect to a share of Common Stock during such 30-day period
on the National Association of Securities Dealers, Inc.
Automated Quotation System or any system then in use, or if
no such quotations are available, the fair market value of a
share of the Common Stock as determined by the Board of
Directors in good faith.
(h) Ranking. The Series A Preferred Stock shall rank
on a parity with any and all other series of Preferred Stock
as to the payment of dividends and the distribution of
assets.
(i) Amendment. The Restated and Amended Charter shall
not be further amended in any manner that would adversely
affect the preferences, rights or powers of the Series A
Preferred Stock without the affirmative vote of the holders
of more than two-thirds of the outstanding shares of the
Series A Preferred Stock, if any, voting separately as one
voting group.
(j) Fractional Shares. Series A Preferred Stock may
be issued in fractions of one one-thousandth of a share (and
integral multiples thereof) which shall entitle the holder,
in proportion to such holders' fractional shares, to
exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
<PAGE> -40-
ARTICLES OF MERGER
OF
LOWE'S OF OHIO, INC.
INTO
LOWE'S COMPANIES, INC.
The undersigned corporations hereby execute these Articles
of Merger for the purpose of merging the wholly-owned subsidiary
corporation into its parent corporation:
I. The following Plan and Agreement of Merger was duly
approved by the Board of Directors of each of the undersigned
corporations in the manner prescribed by law:
SEE ATTACHED PLAN AND AGREEMENT OF MERGER
II. At the time of the approval of the foregoing Plan and
Agreement of Merger by the Board of Directors of each of the
undersigned corporations the surviving corporation was the owner
of all the outstanding shares of the other corporation; and the
foregoing Plan and Agreement of Merger does not provide for any
changes in the charter of, or the issuance of any shares by, the
surviving corporation.
III. The foregoing Plan and Agreement of Merger was approved
by the sole shareholder of Lowe's of Ohio, Inc. on the 2nd day of
December, 1988.
IV. The merger between the corporations shall be effective
as of the close of business for the corporations on December 31,
1988.
IN WITNESS WHEREOF, these articles are signed by the
President and Secretary of each corporation this 22nd day of
December, 1988 at 11:59 p.m.
LOWE'S OF OHIO, INC.
By: /s/ Leonard G. Herring (SEAL)
LEONARD, G. HERRING, President
ATTEST:
/s/ Richard D. Elledge
RICHARD D. ELLEDGE, Secretary
(CORPORATE SEAL)
LOWE'S COMPANIES, INC.
By: /s/ Leonard G. Herring (SEAL)
LEONARD, G. HERRING, President
ATTEST:
/s/ Richard D. Elledge
RICHARD D. ELLEDGE, Secretary
(CORPORATE SEAL)
<PAGE> -41-
STATE OF NORTH CAROLINA
COUNTY OF WILKES
I, Gaither M. Keener, Jr., a Notary Public, hereby certify
that on this 22nd day of December, 1988, personally appeared
before me LEONARD G. HERRING, President and RICHARD D. ELLEDGE,
Secretary of Lowe's of Ohio, Inc.; each of whom being by me first
duly sworn, declared that he signed the foregoing document in the
capacity indicated, that he was authorized so to sign, and that
the statements therein contained are true.
/s/ Gaither M. Keener, Jr. (SEAL)
NOTARY PUBLIC
My Commission Expires:
April 30, 1991
STATE OF NORTH CAROLINA
COUNTY OF WILKES
I, Gaither M. Keener, Jr., a Notary Public, hereby certify
that on this 22nd day of December, 1988, personally appeared
before me LEONARD G. HERRING, President and RICHARD D. ELLEDGE,
Secretary of Lowe's Companies, Inc; each of whom being by me
first duly sworn, declared that he signed the foregoing document
in the capacity indicated, that he was authorized so to sign, and
that the statements therein contained are true.
/s/ Gaither M. Keener, Jr. (SEAL)
NOTARY PUBLIC
My Commission Expires:
April 30, 1991
<PAGE> -42-
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (this "Agreement") is made
as of December 22nd, 1988 by Lowe's Companies, Inc., a North
Carolina corporation (the "Surviving Corporation") and Lowe's of
Ohio, Inc., an Ohio corporation (the "Merging Corporation").
RECITALS:
A. The Merging Corporation is a wholly-owned subsidiary of
the Surviving Corporation, with the Surviving Corporation owning
all 500 issued and outstanding shares of common stock of the
Merging Corporation.
B. The Surviving Corporation and the Merging Corporation
have agreed to reorganize by merging the Merging Corporation into
the Surviving Corporation as provided in this Agreement, with no
change to occur in the Articles of Merger of incorporation of the
Surviving Corporation after the effective date of the merger.
STATEMENT OF AGREEMENT:
In consideration of the mutual covenants contained in this
Agreement, each of the Surviving Corporation and the Merging
Corporation agrees as follows;
ARTICLE 1
Merger into the Surviving Corporation
Section 1.1 Merger. As of the Effective Date (as
hereinafter defined), the Merging Corporation, as a constituent
corporation within the meaning of Section 1701.01 of the Ohio
Revised Code, shall be merged, pursuant to Sections 1701.79 and
1701.80 of the Ohio Revised Code and pursuant to Sections
55-108.1 and 55-111 of the North Carolina General Statutes, into
the Surviving Corporation as the surviving corporation within the
meaning of Section 1701.01 of the Ohio Revised Code and Section
55-110 of the North Carolina General Statutes. The existing
Articles of Merger of incorporation of the Surviving Corporation
shall be the Articles of Merger of incorporation of the Surviving
Corporation until amended in accordance with law.
Section 1.2 Effective Date. The Effective Date shall be
11:59 p.m., Eastern Standard Time, on December 31, 1988.
Section 1.3 Articles and Agreement of Merger. This
Agreement shall serve as the "Articles of Merger" within the
meaning of Section 55-109 of the North Carolina General Statutes,
as well as the "Agreement of Merger" within the meaning of
Sections 1701.79 and 1701.80 of the Ohio Revised Code.
ARTICLE 2
Extinguishment of Constituent Shares
Section 2.1 Extinguishment of Constituent Shares. At the
Effective Date and as a result of the merger of the Merging
<PAGE> -43-
Corporation into the Surviving Corporation, the shares of each
outstanding class of capital stock of the Merging Corporation
shall, automatically and without further act of either the
Merging Corporation or any holder of any such share, be
extinguished.
ARTICLE 3
Process; Qualification
Section 3.1 Service of Process. The Surviving Corporation
hereby agrees that it may be served with process in the State of
Ohio in any proceeding for enforcement of any obligation of the
Merging Corporation as well as for enforcement of any obligation
resulting from the merger, and hereby irrevocably appoints the
Secretary of State of the State of Ohio as its agent to accept
service of process in any such proceeding. The address to which
a copy of such process shall be mailed by the Secretary of State
of Ohio is Leonard G. Herring, President, Lowe's Companies, Inc.,
Box 1111, North Wilkesboro, North Carolina 28656-0001.
Section 3.2 Foreign Qualification. The Surviving
Corporation desires to transact business in the State of Ohio as
a foreign corporation. The Surviving Corporation does hereby
irrevocably consent that it may be served with any process in the
State of Ohio by service upon C. T. Corporation Systems, 815
Superior Avenue, North East, Cleveland, Ohio 44144 (the "Named
Agent") and any successor Named Agent that may be appointed
pursuant to Chapter 1703, Ohio Revised Code; and the Surviving
Corporation hereby irrevocably consents to the service of process
upon the Secretary of State of the State of Ohio as its agent to
receive such process in the event that the Named Agent cannot be
found or in any other event as provided in Chapter 1703, Ohio
Revised Code.
ARTICLE 4
Amendment
Section 4.1 Amendment. From time to time and at any time
prior to the Effective Date, this Agreement may be amended by an
agreement in writing authorized by the respective Boards of
Directors of the Surviving Corporation and the Merging
Corporation and executed in the same manner as this Agreement.
ARTICLE 5
Miscellaneous
Section 5.1 Headings. The captions or headings in this
Agreement are for convenience only and in no way define, limit or
describe the scope or intent of any of the provisions of this
Agreement.
Section 5.2 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original
and all of which shall constitute one and the same document.
<PAGE> -44-
Section 5.3 Severability. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any
jurisdiction for any reason, such invalidity, illegality or
unenforceability shall not affect the remainder of this
Agreement, and the remainder of this Agreement shall be construed
and enforced as if such invalid, illegal or unenforceable portion
were not contained herein.
Section 5.4 Governing Law. This Agreement shall be
governed by and construed under the laws of the State of North
Carolina.
The Surviving Corporation: The Merging Corporation:
Lowe's Companies, Inc. Lowe's of Ohio, Inc.
By: /s/ Leonard G. Herring By: /s/ Leonard G. Herring
Title: President Title: President
Attest: Attest:
/s/ Richard D. Elledge /s/ Richard D. Elledge
Secretary (Corporate Seal) Secretary (Corporate Seal)
STATE OF NORTH CAROLINA
COUNTY OF WILKES
I, Gaither M. Keener, Jr., a Notary Public, hereby certify
that on this 22nd day of December, 1988, personally appeared
before me LEONARD G. HERRING, President and RICHARD D. ELLEDGE,
Secretary of Lowe's of Ohio, Inc.; each of whom being by me first
duly sworn, declared that he signed the foregoing document in the
capacity indicated, that he was authorized so to sign, and that
the statements therein contained are true.
/s/ Gaither M. Keener, Jr. (SEAL)
NOTARY PUBLIC
My Commission Expires:
April 30, 1991
STATE OF NORTH CAROLINA
COUNTY OF WILKES
I, Gaither M. Keener, Jr., a Notary Public, hereby certify
that on this 22nd day of December, 1988, personally appeared
before me LEONARD G. HERRING, President and RICHARD D. ELLEDGE,
Secretary of Lowe's Companies, Inc; each of whom being by me
first duly sworn, declared that he signed the foregoing document
in the capacity indicated, that he was authorized so to sign, and
that the statements therein contained are true.
/s/ Gaither M. Keener, Jr. (SEAL)
NOTARY PUBLIC
My Commission Expires:
April 30, 1991
<PAGE> -45-
ARTICLES OF AMENDMENT
TO
RESTATED AND AMENDED CHARTER
OF
LOWE'S COMPANIES, INC.
The undersigned corporation hereby submits these Articles of
Amendment for the purpose of amending its Restated and Amended
Charter:
1. The name of the corporation is
LOWE'S COMPANIES, INC.
2. The Restated and Amended Charter is amended as follows:
The first paragraph of Article 4 of the Restated and
Amended Charter is struck out and the following is
substituted
therefor:
4. Authorized Stock. The Corporation shall have
the authority to issue 5,000,000 shares of
Preferred Stock of a par value of $5 per share and
240,000,000 shares of Common Stock of a par value
of $.50 per share.
3. No shares of Preferred Stock are issued and outstanding.
4. Each issued and unissued share of Common Stock, upon the
effectiveness of these Articles of Amendment, shall be
changed into two shares of Common Stock. The Corporation
shall deliver to each record holder of Common Stock on
March 16, 1994, a new certificate representing the number of
additional shares to which such record holder is entitled
pursuant to the foregoing amendment.
5. The foregoing amendment was adopted on the 7th day of March,
1994, by the Board of Directors of the Corporation pursuant
to North Carolina General Statutes 55-10-2(4) without
shareholder action.
6. These Articles of Amendment shall be effective as of 5:00
p.m. on March 16, 1994.
Dated: March 7, 1994 LOWE'S COMPANIES, INC.
By: /s/ Leonard G. Herring
Leonard G. Herring
President and CEO
<PAGE> -46-
ARTICLES OF AMENDMENT
TO
RESTATED AND AMENDED CHARTER
OF
LOWE'S COMPANIES, INC.
The undersigned corporation hereby submits these Articles of
Amendment for the purpose of amending its Restated and Amended
Charter:
1. The name of the corporation is LOWE'S COMPANIES, INC.
2. The Restated and Amended Charter is amended as follows:
The first paragraph of Article 4 of the Restated and
Amended Charter is revised as follows:
4. Authorized Stock. The Corporation shall have
the authority to issue 5,000,000 shares of
Preferred Stock of a par value of $5 per share and
700,000,000 shares of Common Stock of a par value
of $.50 per share.
3. The amendment was approved on May 27, 1994 by the
shareholders in the manner prescribed by North Carolina
General Statutes Section 55-10-03.
Dated: June 7, 1994 LOWE'S COMPANIES, INC.
By: /s/ Leonard G. Herring
Leonard G. Herring
President and CEO
<PAGE> -47-
ARTICLES OF AMENDMENT TO
RESTATED AND AMENDED CHARTER OF
LOWE'S COMPANIES, INC.
Lowe's Companies, Inc. executes these Articles of Amendment for
the purpose of amending its Restated and Amended Charter:
1. Name - The name of the corporation is
Lowe's Companies, Inc.
2. Amendment Adopted: The following amendment to the
Amended and Restated Charter was adopted by the shareholders on May
30, 1997, in the manner prescribed by Section 55-10-3 of the North
Carolina Business Corporation Act:
Strike Sections 9(a) and 9(b) and replace them with the
following:
9. Board of Directors. (a) Number, Election &
Term of Directors. The number of Directors shall be set forth in
the Bylaws, but shall not exceed at any time 15 members. The number
of Directors may not be increased or decreased by more than 30%
during any 12-month period except by the affirmative vote of the
holders of at least 70% of the outstanding Voting Shares, as defined
in this Article 9. The Board of Directors shall be divided into
three classes, ClassI, Class II and Class III, as nearly equal in
number as possible, and with each class' term expiring at the third
annual shareholders meeting after its election. At each Annual
Meeting of Shareholders, the successors to the class of Directors
whose term shall then expire shall be identified as being of the
same class as the Directors they succeed and elected to hold office
for a term expiring at the third succeeding Annual Meeting of
Shareholders. When the number of Directors is changed, any newly-
created directorships or any decrease in directorships shall be so
apportioned to one of the classes as to make all classes as nearly
equal in number as possible.
(b) Newly-Created Directorships and Vacancies.
Subject to the rights of the holders of Preferred Stock then
outstanding, any vacancy occurring in the Board of Directors,
including a vacancy resulting from an increase by not more than 30%
in the number
<PAGE> -48-
of Directors in any 12-month period, may be filled by the affirmative
vote of the majority of the remaining Directors, though less than a
quorum of the Board of Directors, and the Directors so chosen shall
hold office for a term expiring at the Annual Meeting of Shareholders
at which the term of the class to which they have been elected
expires, subject to any requirement that they be elected by the
shareholders at the annual meeting next following their election by
the Board of Directors. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any
incumbent Director.
3. Shares Outstanding. The number of shares outstanding on
May 30, 1997 was 173,382,339 shares of Common Stock. The number of
shares entitled to vote the amendment was 173,382,339 shares of
Common Stock. No shares of Preferred Stock were outstanding.
4. Shares Voted. The number of shares of Common Stock
voted for the amendment was 146,453,815. The number of shares of
Common Stock voted against the amendment was 736,014.
5. Signatures: These Articles are signed by the President
and the Secretary on July 17, 1997.
LOWE'S COMPANIES, INC.
By: /s/ Robert L. Tillman
President
And by: /s/ William C. Warden, Jr.
Secretary
STATE OF NORTH CAROLINA
COUNTY OF WILKES
I, Tanya C. Benfield, a notary public, hereby certify that on
This 17th day of July, 1997, personally appeared before me Robert L.
Tillman and William C. Warden, Jr., each of whom being by me first
duly sworn, declared that he signed the foregoing document in the
capacity indicated, that he was authorized so to sign, and that the
statements therein contained are true.
/s/ Tanya C. Benfield
Notary Public
My Commission Expires: 8/11/2001
<PAGE> -49-
ARTICLES OF AMENDMENT
TO
RESTATED AND AMENDED CHARTER
OF
LOWE'S COMPANIES, INC.
The undersigned corporation hereby submits these Articles of
Amendment for the purpose of amending its Restated and Amended
Charter:
1. The name of the Corporation is
LOWE'S COMPANIES, INC.
2. The Restated and Amended Charter is amended as follows:
The first paragraph of Article 4 of the Restated
and Amended Charter is struck out and the following is
substituted therefor:
4. Authorized Stock. The Corporation shall have
the authority to issue 5,000,000 shares of Preferred
Stock of a par value of $5 per share and
1,400,000,000 shares of Common Stock of a par value
of $.50 per share.
3. No shares of Preferred Stock are issued and outstanding.
4. Upon the effectiveness of these Articles of Amendment,
each issued and each unissued share of Common Stock shall
be changed into two shares of Common Stock. The
Corporation shall deliver to each record holder of
Common Stock on June 12, 1998, a new certificate
representing the number of additional shares to which
such record holder is entitled pursuant to the foregoing
amendment.
5. The foregoing amendment was adopted on May 28, 1998, by
the Board of Directors of the Corporation pursuant to
North Carolina Code Section 55-10-2(4) without
shareholder action.
6. These Articles of Amendment shall be effective as of
5:00 p.m. on June 12, 1998.
Dated: May 28, 1998 LOWE'S COMPANIES, INC.
By: /s/ William C. Warden, Jr.
William C. Warden, Jr.
Executive Vice President,
General Counsel and Secretary
<PAGE> -50-
EXHIBIT 3.2
BYLAWS OF
LOWE'S COMPANIES, INC.
As Amended and Restated May 28, 1998
INDEX
ARTICLE I. OFFICES 1
ARTICLE II. SHAREHOLDERS 1
SECTION 1. ANNUAL MEETING 1
SECTION 2. SPECIAL MEETINGS 1
SECTION 3. PLACE OF MEETING 1
SECTION 4. NOTICE OF MEETING 2
SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE 2
SECTION 6. VOTING LISTS 2
SECTION 7. QUORUM 3
SECTION 8. PROXIES; ELECTRONIC AUTHORIZATION 3
SECTION 9. VOTING OF SHARES 4
SECTION 10. CONDUCT OF MEETINGS 4
ARTICLE III. BOARD OF DIRECTORS 5
SECTION 1. GENERAL POWERS 5
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS 5
SECTION 3. FOUNDING DIRECTOR 5
SECTION 4. QUARTERLY MEETINGS 5
SECTION 5. SPECIAL MEETINGS 6
SECTION 6. NOTICE 6
SECTION 7. QUORUM 6
SECTION 8. MANNER OF ACTING 6
SECTION 9. VACANCIES 6
SECTION 10. COMPENSATION 6
SECTION 11. PRESUMPTION OF ASSENT 6
SECTION 12. ACTION WITHOUT MEETING 7
SECTION 13. INFORMAL ACTION BY DIRECTORS 7
SECTION 14. COMMITTEES GENERALLY 7
SECTION 15. EXECUTIVE COMMITTEE 7
SECTION 16. AUDIT COMMITTEE 8
SECTION 17. COMPENSATION COMMITTEE 8
SECTION 18. GOVERNANCE COMMITTEE 8
SECTION 19. GOVERNMENT/LEGAL AFFAIRS COMMITTEE 8
SECTION 20. SALARY ADMINISTRATION; DIRECTORS COMPENSATION 9
ARTICLE IV. INDEMNIFICATION 9
SECTION 1. INDEMNIFICATION 9
SECTION 2. LIMITATION ON INDEMNIFICATION 9
SECTION 3. BOARD DETERMINATION 9
SECTION 4. RELIANCE 9
SECTION 5. AGENTS AND EMPLOYEES 10
SECTION 6. EXPENSES 10
SECTION 7. INSURANCE 10
<PAGE> -51-
ARTICLE V. OFFICERS 10
SECTION 1. TITLES 10
SECTION 2. ELECTION AND TERM OF OFFICE 10
SECTION 3. REMOVAL 10
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS 11
SECTION 5. VICE CHAIRMEN OF THE BOARD OF DIRECTORS 11
SECTION 6. PRESIDENT 11
SECTION 7. VICE PRESIDENTS 11
SECTION 8. SECRETARY 11
SECTION 9. TREASURER 11
SECTION 10. CONTROLLER 11
ARTICLE VI. DEPARTMENTAL DESIGNATIONS 11
SECTION 1. DEPARTMENTAL DESIGNATIONS 11
ARTICLE VII. CERTIFICATES FOR SHARES AND THEIR TRANSFER 12
SECTION 1. CERTIFICATES FOR SHARES; NON-CERTIFICATED SHARES 12
SECTION 2. TRANSFER OF SHARES 12
SECTION 3. LOST CERTIFICATES 13
ARTICLE VIII. FISCAL YEAR 13
ARTICLE IX. DIVIDENDS 13
ARTICLE X. SEAL 13
ARTICLE XI. WAIVER OF NOTICE 14
ARTICLE XII. AMENDMENTS 14
<PAGE> -52-
BYLAWS
OF
LOWE'S COMPANIES, INC.
As Amended and Restated May 28, 1998
ARTICLE I. OFFICES
The principal and registered office of the corporation in the State of
North Carolina shall be located in the City of North Wilkesboro, County of
Wilkes. The corporation may have such other offices either within or without
the State of North Carolina, as the Board of Directors may designate or the
business of the corporation may require from time to time.
ARTICLE II. SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held on the last Friday in the month of May in each year, at an hour to be
designated by the Chairman of the Board, for the purpose of electing directors
and for the transaction of such other business as may come before the meeting.
The meeting shall be held on the following business day at the same time in the
event the last Friday in May shall be a legal holiday. If the annual meeting
shall not be held on the day designated by this Section 1, a substitute annual
meeting shall be called in accordance with the provisions of Section 2 of this
Article II. A meeting so called shall be designated and treated for all
purposes as the annual meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose or purposes may be called by the Chairman of the Board or by a majority
of the Board of Directors.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of North Carolina, as the place of
meeting for any annual meeting or for any special meeting called by the Board
of Directors. In the event the directors do not designate the place of meeting
for either an annual or special meeting of the shareholders, the Chairman of
the Board may designate the place of meeting. If the Chairman of the Board does
not designate the place of meeting, the meeting shall be held at the offices of
the corporation in North Wilkesboro, North Carolina.
SECTION 4. NOTICE OF MEETING. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given not less than 10 nor more than
60 days before the day of the meeting, by mail, by or at the direction of the
Secretary, or the officer or persons calling the meeting, to each shareholder
of record entitled to vote at such meeting. Such notice, when mailed, shall be
deemed to be delivered when deposited in the United States mail, addressed to
the shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid. When a meeting is adjourned it shall
not be necessary to give any notice of the adjourned meeting other than by
announcement at the meeting at which the adjournment is taken unless a new
record date for the adjourned meeting is or must be fixed, in which event
notice shall be given to shareholders as of the new record date.
<PAGE> -53-
SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at the
meeting or any adjournment thereof, or shareholders entitled to receive payment
of any dividend, or in order to make a determination of shareholders for any
other proper purpose, the Board of Directors of the corporation may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, 60 days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least 10 days
immediately preceding such meeting. In lieu of closing the stock transfer
books, the Board of Directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than 70 days and, in case of a meeting of shareholders, not less than 10 days
prior to the date on which the particular action, requiring such determination
of shareholders, is to be taken. If the stock transfer books are not closed and
no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders, or of shareholders entitled
to receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Section
5, such determination shall apply to any adjournment thereof if the meeting is
adjourned to a date not more than 120 days after the date fixed for the
original meeting.
SECTION 6. VOTING LISTS. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make before each meeting of
shareholders a complete list of the shareholders entitled to vote at such
meeting arranged in alphabetical order and by voting group (and within each
voting group by class or series of shares), with the address of and the number
of shares held by each. For a period beginning two business days after notice
of the meeting is given and continuing through the meeting, this list shall be
available at the corporation's principal office for inspection by any
shareholder at any time during usual business hours. The list shall also be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting. The original stock transfer books shall be prima facie evidence as to
who are the shareholders entitled to examine such list or transfer books or to
vote any meeting of shareholders.
SECTION 7. QUORUM. Shares entitled to vote as a separate voting group may
take action on a matter at a meeting if a quorum of that voting group exists
with respect to that matter. In the absence of a quorum at the opening of any
meeting of shareholders, the meeting may be adjourned from time to time by the
vote of the majority of the votes cast on the motion to adjourn. A majority of
the votes entitled to be cast on the matter by the voting group constitutes a
quorum of that voting group for action on that matter. Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of the
meeting unless a new record date is or must be set for the adjourned meeting.
If a quorum exists, action on a matter (other than the election of directors)
by a voting group is approved if the votes cast within the voting group
favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation, a Bylaw adopted by the shareholders, or the North
Carolina Business Corporation Act requires a greater number of affirmative
votes.
<PAGE> -54-
SECTION 8. PROXIES; ELECTRONIC AUTHORIZATION
(a) At all meetings of shareholders, a shareholder may vote by proxy
executed in writing by the shareholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the corporation before
or at the time of the meeting. No proxy shall be valid after 11 months from the
date of its execution, unless otherwise provided in the proxy. If a proxy for
the same shares confers authority upon two or more persons and does not other-
wise provide a majority of them present at the meeting or if only one is
present at the meeting then that one may exercise all the powers conferred by
the proxy; but if the proxy holders present at the meeting are divided as to
the right and manner of voting in any particular case, and there is no
majority, the voting of such shares shall be prorated.
(b) The secretary may approve procedures to enable a shareholder or a
shareholder's duly authorized attorney in fact to authorize another person or
persons to act for him or her as proxy by transmitting or authorizing the
transmission of a telegram, cablegram, internet transmission, telephone
transmission or other means of electronic transmission to the person who will
be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will be
the holder of the proxy to receive such transmission, provided that any such
transmission must either set forth or be submitted with information from which
the inspectors of election can determine that the transmission was authorized
by the shareholder or the shareholder's duly authorized attorney in fact. If
it is determined that such transmissions are valid, the inspectors shall
specify the information upon which they relied. Any copy, facsimile
telecommunications or other reliable reproduction of the writing or
transmission created pursuant to this Section 8 may be substituted or used in
lieu of the original writing or transmission for any and all purposes for which
the original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.
SECTION 9. VOTING OF SHARES. Except as otherwise provided by law, each
outstanding share of capital stock of the corporation entitled to vote shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. The vote of a majority of the shares voted on any matter at a
meeting of shareholders at which a quorum is present shall be the act of the
shareholders on that matter, unless the vote of a greater number is required
by law or by the Articles of Incorporation or Bylaws. Voting on all substantive
matters shall be by a ballot vote on that particular matter. Voting on
procedural matters shall be by voice vote or by a show of hands unless the
holders of one-tenth of the shares represented at the meeting shall demand a
ballot vote on procedural matters.
SECTION 10. CONDUCT OF MEETINGS. At each meeting of the stockholders, the
Chairman of the Board shall act as chairman and preside. In his absence, the
Chairman of the Board may designate another officer or director to preside. The
Secretary or an Assistant Secretary, or in their absence, a person whom the
Chairman of such meeting shall appoint, shall act as secretary of the meeting.
At any meeting of stockholders, only business that is properly brought
before the meeting may be presented to and acted upon by stockholders. To be
properly brought before the meeting, business must be brought (a) by or at the
direction of the Board of Directors or (b) by a stockholder who has given
written notice of business he expects to bring before the meeting to the
Secretary not less than 15 days prior to the meeting. If mailed, such notice
shall be sent by certified mail, return receipt requested, and shall be deemed
to have been given when received by the Secretary. A stockholder's notice to
<PAGE> -55-
the Secretary shall set forth as to each matter the stockholder proposes to
bring before the meeting (a) a brief description of the business to be brought
before the meeting and the reasons for conducting such business at the meeting,
(b) the name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (c) the class and number of shares of the
corporation's stock beneficially owned by the stockholder, and (d) any material
interest of the stockholder in such business. No business shall be conducted at
a meeting of stockholders except in accordance with the procedures set forth in
this Section 10. The chairman of a meeting of stockholders shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this Section
10, and if he should so determine, he shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted.
Any nomination for director made by a stockholder must be made in writing
to the Secretary not less than 15 days prior to the meeting of stockholders at
which Directors are to be elected. If mailed, such notice shall be sent by
certified mail, return receipt requested, and shall be deemed to have been
given when received by the Secretary. A stockholder's nomination for director
shall set forth (a) the name and business address of the stockholder's nominee,
(b) the fact that the nominee has consented to his name being placed in
nomination, (c) the name and address, as they appear on the corporation's
books, of the stockholder making the nomination, (d) the class and number of
shares of the corporation's stock beneficially owned by the stockholder, and
(e) any material interest of the stockholder in the proposed nomination.
Notwithstanding compliance with this Section 10, the chairman of a
meeting of stockholders may rule out of order any business brought before the
meeting that is not a proper matter for stockholder consideration. This Section
10 shall not limit the right of stockholders to speak at meetings of
stockholders on matters germane to the corporation's business, subject to any
rules for the orderly conduct of the meeting imposed by the Chairman of the
meeting. The corporation shall not have any obligation to communicate with
stockholders regarding any business or director nomination submitted by a
stockholder in accordance with this Section 10 unless otherwise required by
law.
ARTICLE III. BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by the Board of Directors except as otherwise provided by law,
by the Articles of Incorporation or by the Bylaws.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the Corporation shall be 13, divided into three classes: Class I, (five),
Class II, (four), and Class III, (four). One director shall be designated and
elected by the Board as Chairman of the Board of Directors, and shall preside
at all meetings of the Board of Directors. The Board may elect a Vice-Chairman
whose only duties shall be to preside at Board meetings in the absence of the
Chairman. Directors need not be residents of the State of North Carolina or
shareholders of the corporation. Subject to the Articles of Incorporation,
the Board of Directors shall each year, prior to the annual meeting, determine
by appropriate resolution the number of directors which shall constitute the
Board of Directors for the ensuing year, and the number of directors which
shall constitute the class of directors being elected at such annual meeting.
The directors may amend the Bylaws between meetings of shareholders to increase
or decrease the number of directors to make vacancies available for the election
of new directors.
<PAGE> -56-
SECTION 3. FOUNDING DIRECTOR. A Founding Director is a person who was a
director when it became a public company in 1961, who was a director on
November 7, 1980, and who has served continuously as a director since 1961.
SECTION 4. QUARTERLY MEETINGS. Quarterly meetings of the Board of
Directors shall be held at a time and place determined by the Chairman of the
Board of Directors. Any one or more of the directors or members of a committee
designated by the directors may participate in a meeting of the Board or
committee by means of a conference telephone or similar communications device
which allows all persons participating in the meeting to hear each other and
such participation in a meeting will be deemed presence in person.
SECTION 5. SPECIAL MEETINGS. Special Meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board of Directors or
two of the directors. The person or persons authorized to call special meetings
of the Board of Directors may fix any place, either within or without the State
of North Carolina, as the place for holding any special meeting of the Board of
Directors called by them.
SECTION 6. NOTICE. Notice of any special meeting shall be given by either
mail, facsimile or telephone. Notice of any special meeting given by mail shall
be given at least five days previous thereto. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail properly
addressed, with postage thereon prepaid. If notice is given by facsimile or by
telephone, it shall be done so at least two days prior to the special meeting
and shall be deemed given at the time the facsimile is transmitted or of the
telephone call itself. Any director may waive notice of any meeting. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at nor the
purpose of any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors shall constitute
a quorum for the transaction of business at any meeting of the Board of
Directors, but if less than such majority is present at a meeting, a majority
of the directors present may adjourn the meeting from time to time without
further notice.
SECTION 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors unless otherwise required by the Articles of Incorporation.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors
shall be filled as provided in the Articles of Incorporation.
SECTION 10. COMPENSATION. The directors may be paid such expenses as are
incurred in connection with their duties as directors. The Board of Directors
may also pay to the directors compensation for their service as directors.
SECTION 11. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as secretary of
the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
<PAGE> -57-
SECTION 12. ACTION WITHOUT MEETING. Action taken by a majority of the
Board, or a Committee thereof, without a meeting is nevertheless Board, or
Committee, action if written consent to the action in question is signed by all
of the directors, or Committee members, and filed with the minutes of the
proceedings of the Board, or Committee, whether done before or after the action
so taken.
SECTION 13. INFORMAL ACTION BY DIRECTORS. Action taken by a majority of
the directors without a meeting is action of the Board of Directors if written
consent to the action is signed by all of the directors and filed with the
minutes of the proceedings of the Board of Directors, whether done before or
after the action so taken.
SECTION 14. COMMITTEES GENERALLY. Committees of the Board of Directors
shall be reestablished annually at the first Board of Directors Meeting held
subsequent to the Annual Shareholders Meeting. Directors designated to serve on
committees shall serve as members of such committees until the first Board of
Directors Meeting following the next succeeding Annual Shareholders Meeting or
until their successors shall have been duly designated. The Board of Directors
may designate a committee chairman and a committee vice chairman from the
membership for each committee established. In the absence of the designation
of a committee chairman or vice chairman by the Board, a committee by majority
vote may elect a chairman or vice chairman from its own membership.
SECTION 15. EXECUTIVE COMMITTEE. (a) The Board may establish an Executive
Committee comprising not less than three members. This Committee may exercise
all of the authority of the Board of Directors to the full extent permitted by
law, but shall not have power:
i) To declare dividends or authorize distributions;
ii) To approve or propose to shareholders any action that is required to
be approved by shareholders under the North Carolina Business
corporation Act;
iii) To approve an amendment to the Articles of Incorporation of the
Corporation;
iv) To approve a plan of dissolution; merger or consolidation;
v) To approve the sale, lease or exchange of all or substantially all
of the property of the Corporation;
vi) To designate any other committee, or to fill vacancies in the Board
of Directors or other committees;
vii) To fix the compensation of directors for serving on the Board of
Directors or any committee;
viii) To amend or repeal the Bylaws, or adopt new Bylaws;
ix) To authorize or approve reacquisition of shares, except according
to a formula or method approved by the Board of Directors;
x) To authorize or approve the issuance or sale or contract for sale
of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, unless
the Board of Directors specifically authorizes the Executive
committee to do so within limits established by the Board of
Directors;
<PAGE> -58-
xi) To amend, or repeal any resolution of the Board of Directors which
by its terms is not so amendable or repealable; or
xii) To take any action expressly prohibited in a resolution of the
Board of Directors.
SECTION 16. AUDIT COMMITTEE. The Board may establish an Audit Committee
comprising not less than three members, all of whom shall be non-employee
directors. The Committee shall aid the Board in carrying out its
responsibilities for accurate and informative financial reporting, shall assist
the Board in making recommendations with respect to management's efforts to
maintain and improve financial controls, shall review reports of examination by
the independent auditors, and except as otherwise required by law, shall have
authority to act for the Board in any matter delegated to this Committee by the
Board of Directors. The Committee shall recommend each year an independent
certified public accounting firm as independent auditors for the Corporation.
The Corporation's Head of Internal Audit shall report to the Audit Committee,
and his employment may only be terminated with the approval of the Committee.
SECTION 17. COMPENSATION COMMITTEE. The Board may establish a
Compensation Committee comprising not less than three members, all of whom
shall be non-employee directors. Except as otherwise required by law, the
Compensation Committee shall have authority to act for the Board in any matter
delegated to this Committee by the Board of Directors.
SECTION 18. GOVERNANCE COMMITTEE. The Board may establish a Governance
Committee comprising not less than three members, all of whom shall be non-
employee directors. Except as otherwise required by law, the Governance
Committee shall have authority to act for the Board in any matter delegated to
this Committee by the Board of Directors.
SECTION 19. GOVERNMENT/LEGAL AFFAIRS COMMITTEE. The Board may establish
a Government/Legal Affairs Committee to consist of not less than three
directors. Except as otherwise required by law, the Government/Legal Affairs
Committee shall have authority to act for the Board in any manner delegated to
this Committee by the Board of Directors.
SECTION 20. SALARY ADMINISTRATION; DIRECTORS COMPENSATION. The
compensation of employees not covered by the Compensation Committee duties
shall be the responsibility of the Chief Executive Officer. The compensation
of independent directors shall be recommended to the Board of Directors by the
Chief Executive Officer.
ARTICLE IV. INDEMNIFICATION
SECTION 1. INDEMNIFICATION. In addition to any indemnification required
or permitted by law, and except as otherwise provided in these Bylaws, any
person who at any time serves or has served as a director or officer of the
corporation, or in such capacity at the request of the corporation for any
other corporation, partnership, joint venture, trust or other enterprise, shall
have a right to be indemnified by the corporation to the fullest extent
permitted by law against (i) reasonable expenses, including attorneys' fees,
actually and necessarily incurred by him in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, seeking to hold him liable by reason of the
fact that he is or was acting in such capacity, and (ii) payments made by him
in satisfaction of any judgment, money decree, fine, penalty or reasonable
settlement for which he may have become liable in any such action, suit or
proceeding.
<PAGE> -59-
SECTION 2. LIMITATION ON INDEMNIFICATION. The corporation shall not
indemnify any person hereunder against liability or litigation expense he may
incur on account of his activities which were at the time taken known or
believed by him to be clearly in conflict with the best interests of the
corporation. The corporation shall not indemnify any director with respect to
any liability arising out of N.C.G.S. Section 55-8-33 (relating to unlawful
declaration of dividends) or any transaction from which the director derived
an improper personal benefit as provided in N.C.G.S. Section 55-2-02(b)(3).
SECTION 3. BOARD DETERMINATION. If any action is necessary or appropriate
to authorize the corporation to pay the indemnification required by this Bylaw
the Board of Directors shall take such action, including (i) making a good
faith evaluation of the manner in which the claimant for indemnity acted and of
the reasonable amount of indemnify due him, (ii) giving notice to, and
obtaining approval by, the shareholders of the corporation, and (iii) taking
any other action.
SECTION 4. RELIANCE. Any person who at any time after the adoption of
this Bylaw serves or has served in any of the capacities indicated in this
Bylaw shall be deemed to be doing or to have done so in reliance upon, and as
consideration for, the right of indemnification provided herein. Such right
shall inure to the benefit of the legal representatives of any such person and
shall not be exclusive of any other rights to which such person may be entitled
apart from the provision of this Bylaw.
SECTION 5. AGENTS AND EMPLOYEES. The provisions of this Bylaw shall not
be deemed to preclude the corporation from indemnifying persons serving as
agents or employees of the corporation, or in such capacity at the request of
the corporation for any other corporation, partnership, joint venture, trust or
other enterprise, to the extent permitted by law.
SECTION 6. EXPENSES. The corporation shall be entitled to pay the
expenses incurred by a director or officer in defending a civil or criminal
action, suit or proceeding in advance of final disposition upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Corporation against such expenses.
SECTION 7. INSURANCE. As provided by N.C.G.S. Section 55-8-57, the
Corporation
shall have the power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or who
is or was serving at the request of the corporation as a director, officer or
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise or as a trustee or administrator under an employee benefit
plan against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
has the power to indemnify him against such liability.
ARTICLE V. OFFICERS
SECTION 1. TITLES. The officers of the corporation may consist of the
Chairman of the Board of Directors, Vice Chairmen, the President, and such Vice
Presidents as shall be elected as officers by the Board of Directors. There
shall also be a Secretary, Treasurer, Controller and such assistants thereto as
may be elected by the Board of Directors. Any one person may hold one or more
offices in the corporation. No officer may act in more than one capacity where
action of two or more is required.
<PAGE> -60-
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at the first meeting of the
Board held after each annual meeting of the shareholders, or at any other
meeting of said Board. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
SECTION 3. REMOVAL. Since officers serve at the pleasure of the Board,
any officer may be removed at any time by the Board of Directors, with or
without cause. Termination of an officer's employment with the Corporation by
the appropriate official (and by the Audit Committee for the Head of Internal
Audit) shall also end his term as an officer.
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. There shall be a Chairman
of the Board of Directors elected by the directors from their members. The
Chairman shall preside at meetings of the Board of Directors, shall be the
Chief Executive Officer of the corporation, and shall have direct supervision
and control of all of the business affairs of the corporation, subject to the
general supervision and control of the Board of Directors. The Chairman shall
have power to sign certificates for shares of the corporation and any deeds,
mortgages, bonds, contracts, or any other instruments or documents which may
be lawfully executed on behalf of the corporation. The Chairman shall vote as
agent for the corporation the capital stock held or owned by the corporation in
any corporation. The Chairman is authorized to delegate the authority to vote
capital stock held or owned by the corporation and to execute and deliver
agreements and other instruments to other officers of the corporation.
SECTION 5. VICE CHAIRMEN OF THE BOARD OF DIRECTORS. The Board of
Directors may elect one or more Vice Chairmen from their members. A Vice
Chairman shall preside at meetings of the Board of Directors in the absence of
the Chairman.
SECTION 6. PRESIDENT. The President perform such duties and have such
responsibilities as are assigned by the Board of Directors or the Chief
Executive Officer.
SECTION 7. VICE PRESIDENTS. The Vice Presidents shall perform such duties
and have such responsibilities as are assigned by the Board of Directors or the
Chief Executive Officer.
SECTION 8. SECRETARY. The Secretary shall perform such duties and have
such responsibilities as are assigned by the Board of Directors or the Chief
Executive Officer.
SECTION 9. TREASURER. The Treasurer shall perform such duties and have
such responsibilities as are assigned by the Board of Directors or the Chief
Executive Officer.
SECTION 10. CONTROLLER. The Controller shall perform such duties and have
such responsibilities as are assigned by the Board of Directors or the Chief
Executive Officer.
<PAGE> -61-
ARTICLE VI. DEPARTMENTAL DESIGNATIONS
SECTION 1. DEPARTMENTAL DESIGNATIONS. The Chief Executive Officer may
establish such departmental or functional designations or titles pertaining to
supervisory personnel as the Chief Executive Officer in his discretion deems
wise. The designations or titles may be that of Senior Vice President, Vice
President or such other term or terms as the Chief Executive Officer desires to
utilize. The designation or title contemplated by this section is for the
purpose of administration within the department or function concerned and is
not with the intent of designating those individuals bearing such titles as
general officers of the corporation. These individuals bearing these titles
shall be known as administrative managers of the corporation.
ARTICLE VII. CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES; NON-CERTIFICATED SHARES
(a) Certificates representing shares of the corporation shall be in
such form as shall be determined by the Board of Directors. Such certificates
shall be signed by the Chairman of the Board and by the Secretary, provided
that where a certificate is signed by a transfer agent, assistant transfer
agent or co-transfer agent of the corporation or with the duly designated
transfer agent the signatures of such officers of the corporation upon the
certificate may be facsimile engraved or printed. Each certificate shall be
sealed with the seal of the corporation or a facsimile thereof. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and class and date of issue,
shall be entered on the stock transfer books of the corporation, as the
transfer agent. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed, or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the Board of Directors may prescribe.
(b) The Board of Directors may authorize the issuance of some or
all of
the shares of any or all of the corporation's classes or series of stock
without certificates. Such authorization shall not affect shares already
represented by certificates until such shares are surrendered to the
corporation. Within a reasonable time after the issuance or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement with information required on certificates by North Carolina General
Statutes 55-6-25(b) and (c), and, if applicable, North Carolina General
Statutes 55-6-27, or any successor law.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of records thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes. To
the extent that any provision of the Rights Agreement between the Company and
Wachovia Bank and Trust Company, N.A., Rights Agent, dated as of September 9,
1988, is deemed to constitute a restriction on the transfer of any securities
of the Company, including, without limitation, the Rights, as defined therein,
such restriction is hereby authorized by the Bylaws of the Company.
<PAGE> -62-
Transfer of shares not represented by certificates shall be made in
accordance with such requirements with respect to transfer as appear in Article
8 of the Uniform Commercial Code as in effect from time to time in North
Carolina.
SECTION 3. LOST CERTIFICATES. The Board of Directors may authorize the
issuance of a new certificate in place of a certificate claimed to have been
lost or destroyed, upon receipt of an affidavit of such fact from the person
claiming the loss or destruction. In authorizing such issuance of a new
certificate, the Board may require the claimant to give the corporation a bond
in such sum as it may direct to indemnify the corporation against loss from any
claim with respect to the certificate claimed to have been lost or destroyed;
or the Board, by resolution reciting that the circumstances justify such
action, may authorize the issuance of the new certificate without requiring
such a bond. This function or duty on the part of the Board may be assigned by
the Board to the transfer agents of the common stock of the corporation.
ARTICLE VIII. FISCAL YEAR
The fiscal year of the Corporation shall end on the Friday nearest to
January 31 of each year. The fiscal year shall consist of four quarterly
periods, each comprising 13 weeks, with the 13-week periods divided into three
periods of four weeks, five weeks, and four weeks. Every six to eight years,
the fiscal year shall be a 53-week year, with the fourth period comprising four
weeks, five weeks, and five weeks, to reflect the 365th day of each year and
the 29th day of February in leap year.
ARTICLE IX. DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and as provided in a resolution of the Board of
Directors.
ARTICLE X. SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation,
the state of incorporation, and the word "Seal".
ARTICLE XI. WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or director of
the corporation under the provisions of the charter or under the provisions of
applicable law, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
<PAGE> -63-
ARTICLE XII. AMENDMENTS
Unless otherwise prescribed by law or the charter, these Bylaws may be
amended or altered at any meeting of the Board of Directors by affirmative vote
of a majority of the directors. Unless otherwise prescribed by law or the
charter, the shareholders entitled to vote in respect of the election of
directors, however, shall have the power to rescind, amend, alter or repeal any
Bylaws and to enact Bylaws which, if expressly so provided, may not be amended,
altered or repealed by the Board of Directors.
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