FORM 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
or
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from June 29, 1997 to May 30, 1998
Commission File No.: 1-8739
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Exact Name of Registrant as specified in its charter)
State or other jurisdiction: Delaware
I.R.S. Employer incorporation or
organization Identification No.: 22-1970303
1830 Route 130, Burlington, New Jersey 08016
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (609) 387-7800
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Common Stock, $1.00 par value per share
---------------------------------------
Name of each exchange
on which registered: New York Stock Exchange, Inc.
-----------------------------
Securities Registered pursuant to Section 12(g) of the Act:
Title of Class: None
----
Page 1 of 181<PAGE>
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES X NO___.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the Common Stock, $1.00 par value
("Common Stock"), of the registrant held by non-affiliates of the
registrant, as determined by reference to the closing price of
the Common Stock on the New York Stock Exchange as of July 31,
1998, was $448,123,693.
As of July 31, 1998, the number of shares of Common Stock, $1.00
par value, outstanding was 47,350,427.
The documents incorporated by reference into this Form 10K:
Registrant's Proxy Statement to be filed pursuant to Regulation 14A
The Part of the Form 10-K into which the document is incorporated
Part III
Page 2 of 181<PAGE>
PART I
Item 1. Business
--------
Burlington Coat Factory Warehouse Corporation and its
subsidiaries (the "Company" or "Burlington Coat") operate a chain
of "off-price" apparel stores which offer a broad range of moderate
to higher priced, current brand name merchandise for men, women and
children at prices substantially below traditional full retail
prices generally charged by department and specialty stores. In
addition, Burlington Coat offers customers a complete line of
men's, women's and children's wear as well as a linens, bath shop
items, gifts and accessories department in 196 of its stores and a
children's furniture department in 176 of its stores. The
Company's policy of buying significant quantities of merchandise
throughout the year, maintaining inventory control and using a "no-
frills" merchandising approach, allows it to offer merchandise at
prices below traditional full retail prices. The sale of irregular
or discontinued merchandise represents only a small portion of the
Company's business. Merchandise is displayed on easy access racks,
and sales assistance generally is available. Clothing alteration
services are available on a limited basis in many stores for an
additional charge.
Burlington Coat's practice of purchasing outerwear early in
each fashion season and of reordering in rapid response to sales
has enabled it to maintain a large, current and varied selection of
outerwear throughout each year. Although the Company believes that
this practice helps attract customers to its stores, to the extent
the Company maintains a relatively large volume of merchandise,
particularly outerwear, the risks related to style changes, weather
and other seasonal factors, and economic conditions are necessarily
greater than if the Company maintained smaller inventories.
An important factor in Burlington Coat's operations has been
its continued ability to purchase desirable, first-quality current
brand labeled merchandise directly from manufacturers on terms at
least as favorable as those offered large retail department and
specialty stores. The Company estimates that over 1,000
manufacturers of apparel, including over 300 manufacturers of
outerwear, are represented at the Company's stores, and that no
manufacturer accounted for more than 5% of the Company's purchases
during the last full fiscal year. The Company does not maintain
any long term or exclusive commitments or arrangements to purchase
from any manufacturer. No assurance can be given that the Company
will be able to continue to purchase such merchandise directly from
manufacturers or to continue its current selling price structure.
See "Competition."
Page 3 of 181<PAGE>
The Company sells its merchandise to retail customers for cash
and accepts checks and most major credit cards. The Company's
"Cohoes" division also offers its own credit card. In addition,
the Company maintains a layaway plan and offers special orders on
selected merchandise. It does not offer refunds, except on furs,
defective merchandise and certain sales from specialty retail
operations, but will exchange merchandise or give store merchandise
exchange slips for merchandise returned within a prescribed period
of time.
The Company advertises primarily on television and, to a
lesser extent, in regional and local newspapers and radio. During
the past three fiscal years, advertising expenditures have averaged
approximately 2.61% of total revenues.
The Stores
- ----------
As of July 31, 1998, the Company operated 251 stores, all but
22 of which are located in leased facilities ranging in size
(including storage space) from approximately 16,000 to
approximately 163,000 square feet, with an average area of
approximately 69,000 square feet. Selling space accounts for over
four-fifths of the total area in most stores.
All of the Company's stores are either free-standing or are
located in shopping malls or strip shopping centers. The Company
believes that its customers are attracted to its stores principally
by the availability of a large assortment of first-quality current
brand name merchandise at attractive prices.
The Company also operates stores under the names "Cohoes
Fashions," "Decelle," "Luxury Linens," "Totally 4 Kids," and "Baby
Depot". Cohoes Fashions offers merchandise in the middle to higher
price range. Decelle offers merchandise in the moderate price
range for the entire family with an emphasis on children's and
youth wear. Luxury Linens is a specialty store for linens, bath
shop items, gifts and accessories and offers merchandise in the
middle to higher range. Totally 4 Kids is a moderate to upscale
concept store offering maternity wear, baby furniture, children's
wear from toddlers up to teens, children's books, toys, computer
software for kids, and educational tapes, all in a family
environment. Baby Depot is a concept store specializing in infant
to toddler apparel, baby and juvenile furniture and furnishings and
accessories.
In general, Burlington Coat generally has selected sites for
its stores where there are suitable existing structures which can
Page 4 of 181<PAGE>
be refurbished, and, if necessary, enlarged, in a manner consistent
with the Company's merchandising concepts. In some cases, space
has been substantially renovated or built to specifications given
by Burlington Coat to the lessor. Such properties have been
available to the Company on lease terms which it believes have been
favorable. See "Growth and Expansion."
The stores generally are located in close proximity to
population centers, department stores and other retail operations
and are usually established near a major highway or thoroughfare,
making them easily accessible by automobile. It is likely that the
Company would be adversely affected by any conditions which were to
result in the reduction of automobile use.
The Company owns substantially all the equipment used in its
stores and believes that its selling space is well utilized and
that its equipment is well maintained and suitable for its
requirements.
Some stores contain departments leased by unaffiliated parties
for the sale of items such as shoes, jewelry and fragrances.
During the fiscal year ended May 30, 1998, the Company's rental
income from all of its leased departments aggregated less than 1%
of the Company's total revenues.
Central Distribution
- --------------------
Central distribution, warehousing, ticketing and marking
services are extended to approximately fifty percent of the dollar
volume of the Company's merchandise through its office and
warehouse/distribution facility in Burlington, New Jersey. This
facility services the Company's present stores. The Company is
leasing approximately 85,000 square feet of warehouse space (and
has signed a lease for a new facility of approximately 160,000
square feet to be completed in 1999 to replace this facility)
nearby to its existing warehouse distribution center for the
purpose of warehousing and distributing its juvenile furniture
inventory.
Safe Harbor Statement
- ---------------------
Statements made in this report that are forward-looking
(within the meaning of the Private Securities Litigation Reform Act
of 1995) are not historical facts and involve a number of risks and
uncertainties. Such statements include but are not limited to,
proposed store openings and closings, proposed capital
page 5 of 181<PAGE>
expenditures, projected financing requirements, proposed
developmental projects, projected sales and earnings, the Company's
ability to maintain selling margins, and the Company's anticipated
ability to resolve Year 2000 computer problems, if any. Among the
factors that could cause actual results to differ materially are
the following: general economic conditions; consumer demand;
consumer preferences; weather patterns; competitive factors,
including pricing and promotional activities of major competitors;
the availability of desirable store locations on suitable terms;
the availability, selection and purchasing of attractive
merchandise on favorable terms; import risks; the Company's ability
to control costs and expenses; unforeseen computer related
problems; any unforeseen material loss or casualty; the effect of
inflation; and other factors that may be described in the Company's
filings with the Securities and Exchange Commission. The Company
does not undertake to publicly update or revise its forward-looking
statements even if experience or future changes make it clear that
any projected results expressed or implied will not be realized.
Growth and Expansion
- --------------------
Since 1972 when its first store was opened in Burlington, New
Jersey, the Company has expanded to two hundred twenty-eight
Burlington Coat stores, four Cohoes Fashions stores, eight Decelle
stores, six stand-alone Luxury Linens stores, three Totally 4 Kids
store, and two stand alone Baby Depot stores as of July 31, 1998.
At July 31, 1998 the Company operated stores in 42 states and
is exploring expansion opportunities both within its current market
areas and in other regions. For fiscal 1999, the Company plans to
open approximately twenty additional Burlington Coat Factory
stores.* The Company also has planned store expansions for
approximately eleven stores.* In addition, the Company has plans to
relocate approximately seven of its stores to new locations within
the same trading market.* The Company continues to monitor store
profitability and should economic factors change, some store
closings could be possible.
The Company believes that its ability to find satisfactory
locations for its stores is essential for the continued growth of
its business. The opening of stores generally is contingent upon
a number of factors, including the availability of desirable
locations with suitable structures and the negotiation of
acceptable lease terms. There can be no assurance, however, that
the Company will be able to find suitable locations for new stores
or that even if such locations are found and acceptable lease terms
are obtained, the Company will be able to open the number of new
stores presently planned.
* Forward Looking Statement. See Safe Harbor Statement on Page 5
Page 6 of 181 <PAGE>
The Company operates its own jewelry department in fifteen
stores as of July 31, 1998. The jewelry program consists of karat
gold and precious and semi-precious stone jewelry, and in some
stores may include brand-name watches.
In fiscal 1997 the Company began to operate its own shoe
department. At July 31, 1998 the Company operated this department
in approximately 100 Burlington Coat Factory stores with plans to
expand to approximately 200 stores by the end of fiscal 1999.* The
shoe department offers a full line of mens and womens shoes in many
brands and styles.
The Company has begun offering merchandise for sale through
its internet web site (http://www.coat.com). Currently, ladies
coats, menswear, kids clothing and baby and infant products are
available for purchase via this medium. If this experiment is
successful, the Company plans to expand the merchandise mix offered
through its web site; however, no assurance can be given that this
venture will be successful.* To date, sales generated from its
internet web site have been negligible.
The Company seeks to maintain its competitive position and
improve its prospects by periodically reevaluating its methods of
operation, including its pricing and inventory policies, the format
of its stores and its ownership or leasing of stores.
Seasonality
- -----------
The Company's business is seasonal, with its highest sales
occurring in the months of September, October, November, December
and January of each year. For the past five fiscal years,
approximately 57% of the Company's net sales have occurred during
the period from September through January. Weather, however,
continues to be an important contributing factor to the sale of
clothing in the fall, winter and spring seasons. Generally, the
Company's sales are higher if the weather is cold during the fall
and warm during the early spring. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Operations
- ----------
Each store has a manager and one or more assistant managers,
as well as department managers. The Company also employs regional
and district managers to supervise overall store operating and
merchandising policies. Major merchandising decisions are made,
* Forward Looking Statement. See Safe Harbor Statement on Page 5.
Page 7 of 181 <PAGE>
overall policies are set, and accounting and general financial
functions for the Company's stores are conducted, at corporate
headquarters. In addition, the Company employs directors of
administration, store operations, loss prevention, merchandise
presentation, customer service, and human resources who are in
charge of those functions on a Company-wide basis.
Merchandise purchased by the Company is either shipped
directly from manufacturers to store locations or distributed
through the Company's warehousing and distribution facility. See
"Central Distribution." A computerized merchandise information
system provides regular detailed reports of sales and inventory
levels for each store and assists the merchandise managers and
buyers in monitoring and adjusting inventory levels.
At July 31, 1998, the Company had approximately 20,000
employees, including a large number of part-time and seasonal
employees which varies throughout the year. Of the Company's
employees, only those employed at one of its stores are covered by
a collective bargaining agreement. The Company cannot predict
whether any future attempts to unionize its employees will be
successful. The Company believes that its relationship with its
employees has been and remains satisfactory.
Competition
- -----------
General. The retail apparel business is highly competitive.
Competitors include other individual, regional, and national "off-
price" retailers offering similar merchandise at comparable prices
as well as individual and chain stores, some of which are regional
and national department and discount store chains. At various
times throughout the year department store chains and specialty
shops offer brand name merchandise at substantial markdowns, which
can result in prices approximating those offered by the Company.
Some of the Company's competitors are considerably larger than the
Company and have substantially greater financial and other
resources.
Resale Price Maintenance. Since it is the general policy of
the Company to sell at lower than the traditional full retail
price, its business may be adversely affected by manufacturers who
attempt to maintain the resale price of their merchandise by
refusing to sell, or to grant advertising allowances, to purchasers
who do not adhere to their suggested retail prices. Federal
legislation and regulations have been proposed from time to time
which, if enacted, would be helpful to manufacturers attempting to
establish minimum prices or withhold allowances. In addition, the
Page 8 of 181 <PAGE>
rules against resale price maintenance have been subject to
challenge in the courts from time to time.
The Company has, on several occasions in the past, brought
lawsuits against certain manufacturers and department store chains
and complained to the Federal Trade Commission seeking more
vigorous enforcement of existing Federal laws, as well as testified
before Congress in connection with proposed legislation concerning
the Federal antitrust laws.
Item 2. Properties
----------
The Company owns the land and building for twenty-two of its
stores and is a 50% partner in a partnership which owns the
building in which one store is located. Generally, however, the
Company's policy has been to lease its stores. Store leases
generally provide for fixed monthly rental payments, plus the
payment, in most cases, of real estate taxes and other charges with
escalation clauses. In many locations, the Company's store leases
contain formulas providing for the payment of additional rent based
on sales.
The following table shows the years in which store leases
existing at July 31, 1998 expire:
<TABLE>
<CAPTION>
Fiscal Years Number of Leases Expiring with
Ending May 30 Expiring Renewal Options
- ------------- ---------------- ---------------
<S> <C> <C>
1999-2000 15 14
2001-2002 3 31
2003-2004 7 33
2005-2006 8 26
2007-2008 12 23
Thereafter 32 39
-- ---
Total 77 166
== ===
</TABLE>
The Company owns five buildings in Burlington, New Jersey. Of
these buildings, two are used by the Company as retail space. In
addition, the Company owns approximately 97 acres of land in the
Townships of Burlington and Florence, New Jersey on which the
Company has constructed its office and warehouse/distribution
facility. The Company leases approximately 85,000 square feet of
space at a location nearby to the warehouse/distribution facility
Page 9 of 181 <PAGE>
to store its juvenile furniture inventory. The Company leases
approximately 20,000 square feet of office space in New York City
with a right of occupancy that expires in January, 2001.
Item 3. Legal Proceedings
-----------------
In late September 1994, three putative class action lawsuits,
P. Gregory Buchanan v. Monroe G. Milstein, et al., No. 94-CV-4663,
Jacob Turner v. Monroe G. Milstein, et al., No. 94-CV-4737, and
Ronald Abramoff v. Monroe G. Milstein, et al., No. 94-CV-4751
(collectively, the "Class Actions"), were filed against the
Company, Monroe G. Milstein, Stephen E. Milstein and Robert L.
LaPenta, Jr. in the United States District Court for the District
of New Jersey. By Order entered November 15, 1994, the Court
consolidated the Class Actions under the caption In re Burlington
Coat Factory Securities Litigation. On January 17, 1995,
plaintiffs filed their Consolidated Amended and Supplemental Class
Action Complaint (the "Amended Complaint"), naming as defendants,
in addition to those originally named in September 1994, Andrew R.
Milstein and Mark A. Nesci. The Amended Complaint sought
unspecified damages in connection with alleged violations of
Sections 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of
the Securities Exchange Act of 1934, as amended. The Amended
Complaint alleged material misstatements and omissions by the
Company and certain of its officers and directors that plaintiffs
alleged caused the Company's common stock to be artificially
inflated during the proposed Class Period, which was defined in the
Amended Complaint as the period from October 4, 1993 through
September 23, 1994. On March 3, 1995, the Company and the
individual defendants served a motion to dismiss plaintiffs'
Amended Complaint. On February 20, 1996, the District Court
granted the Company's motion and dismissed the plaintiffs' Amended
Complaint in its entirety. In March, 1996, the plaintiffs filed an
appeal from the District Court's decision in the United States
Court of Appeals for the Third Circuit (the "Appeal"). The Appeal
was orally argued before a panel of three judges on December 12,
1996. On June 10, 1997 the panel rendered a unanimous decision
affirming the District Court's dismissal of the action but ruled
that the District Court should allow the plaintiffs to attempt to
replead two of the six claims. After remand to the District Court,
the plaintiffs filed a further amended complaint in an effort to
cure the legal deficiencies of the two claims in question. Among
other changes, the amended complaint dropped all claims against
Andrew Milstein, Stephen Milstein and Mark Nesci. On July 1, 1998,
the Company filed a further motion to dismiss on the grounds that
the amended complaint failed to cure such deficiencies. The motion
has been fully briefed by both sides and the parties await word
Page 10 of 181 <PAGE>
from the District Court either scheduling oral argument or deciding
the motion without oral argument.
In the past, the Company has initiated several lawsuits in its
effort to stop what it believes to be unlawful practices on the
part of certain manufacturers and large retailers to control the
prices at which certain items of merchandise may be sold at the
Company's stores.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Company did not submit any matter to a vote of its
security holders during the fourth quarter of fiscal 1998.
PART II
Item 5. Market for Registrant's Common Equity and Related
-------------------------------------------------
Stockholder Matters
-------------------------------------------------
The Company's Common Stock is traded on the New York Stock
Exchange, Inc. and its trading symbol is "BCF."
The following table provides the high and low closing prices
on the New York Stock Exchange for each fiscal quarter for the
period from June 30, 1996 to May 30, 1998 and for the two months
ended July 31, 1998.
<TABLE>
<CAPTION>
Period Low Price High Price
------ --------- ----------
<S> <C> <C>
June 30, 1996 to
September 28, 1996 8 5/16 9 1/4
September 29, 1996 to
December 28, 1996 8 7/8 11 1/8
December 29, 1996 to
March 29, 1997 10 3/16 14 7/8
March 30, 1997 to
June 28, 1997 14 3/8 16 11/16
June 29, 1997 to
September 27, 1997 12 3/8 20
September 28, 1997 to
December 27, 1997 14 5/16 19 15/16
December 28, 1997 to
March 28, 1998 14 7/16 17 3/4
Page 11 of 181 <PAGE>
March 29, 1998 to
May 30, 1998 16 5/16 20 1/2
May 31, 1998 to
July 31, 1998 18 3/8 27 7/16
</TABLE>
At July 31, 1998 there were 355 record holders of the
Company's Common Stock. The number of record holders does not
reflect the number of beneficial owners of the Company's Common
Stock for whom shares are held by Cede & Co., certain brokerage
firms and others.
Dividend Policy
- ---------------
On September 8, 1997 the Board of Directors of the Company
declared the Company's first cash dividend in the amount of two
cents ($.02) per share payable annually. Maintenance of the cash
dividend policy or any change thereto in the future will be at the
discretion of the Company's Board of Directors and will depend upon
the financial condition, capital requirements and earnings of the
Company as well as other factors which the Board of Directors may
deem relevant. At present, the policy of the Board of Directors of
the Company is to retain the majority of earnings to finance the
growth and development of the Company's business.
Item 6. Selected Financial Data
-----------------------
The following tables set forth certain selected financial
data:
<TABLE>
<CAPTION>
Twelve Twelve Twelve Twelve Eleven
Months Ended Months Ended Months Ended Months Ended Months Ended
7/2/94 7/1/95 6/29/96 6/28/97 5/30/98
------------ ------------ ------------ ------------ ------------
(In thousands of dollars, except per share data)
Statement of Operations Data:
- ----------------------------
<S> <C> <C> <C> <C> <C>
Revenues $1,480,676 $1,597,028 $1,610,892 $1,776,823 $1,813,897
Net Income 45,383 14,866 29,013 56,515 63,639
Basic and Diluted Net
Income per Share .93(1) .30(1) .59(1) 1.17(1) 1.34
Balance Sheet Data:
- ------------------
Total Assets $ 725,439 $ 735,269 $ 704,731 $ 775,077 $ 909,807
Working Capital 278,590 245,468 288,107 319,736 368,459
Long-Term Debt 91,369 83,298 74,907 62,274 60,890
Stockholders' Equity 369,857 385,019 413,745 460,215 516,069
</TABLE>
__________________
(1) Adjusted to give retroactive effect to six for five stock
split effected in October, 1997.
Page 12 of 181 <PAGE>
The Company changed its fiscal year from a 52-53 week fiscal
year ending on the Saturday closest to June 30 to a fiscal year
ending on the Saturday closest to May 31. The following tables are
set forth below for comparative purposes.
<TABLE>
<CAPTION>
Eleven Months Ended
May 30, 1998 May 24, 1997
(48 weeks) (47 weeks)
(unaudited)
--------------------------------------------
(in thousands of dollars, except per share data)
Statement of Operations Data:
- ----------------------------
<S> <C> <C>
Net Sales $1,795,623 $1,645,679
Other Income 18,274 16,540
Cost of Sales 1,142,956 1,055,915
Selling and Administrative Expenses 528,725 470,899
Depreciation and Amortization 29,634 27,890
Interest Expense 6,829 7,325
--------- ----------
Income Before Provision for Income Taxes 105,753 100,190
Provision for Income Taxes 42,114 41,051
--------- ----------
Net Income 63,639 59,139
========= ==========
Balance Sheet Data:
- ------------------
Total Assets $ 909,807 $ 847,827
Working Capital 368,459 333,362
Long Term Debt 60,890 69,682
Stockholders' Equity 516,069 464,691
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-------------------------------------------------
The Company changed its fiscal year from a 52-53 week fiscal
year ending on the Saturday closest to June 30 to a fiscal year
ending on the Saturday closest to May 31. The following discussion
compares the eleven months (48 weeks) ended May 30, 1998 with the
eleven months (47 weeks) ended May 24, 1997 (unaudited).
Results of Operations
- ---------------------
Eleven Months Ended
-------------------
May 30, 1998 and May 24, 1997
-----------------------------
The following table sets forth certain items in the
consolidated statements of operations as a percentage of net sales
for the eleven months ended May 30, 1998 and May 24, 1997
(unaudited).
Page 13 of 181 <PAGE>
<TABLE>
<CAPTION>
Percentage of Net Sales
-----------------------
Eleven Months Ended
-------------------
May 30, 1998 May 24, 1997
------------ ------------
<S> <C> <C>
Net Sales 100.0% 100.0%
Costs and expenses:
Cost of sales 63.7 64.2
Selling and administrative expenses 29.4 28.6
Depreciation and amortization 1.6 1.7
Interest expense 0.4 0.4
---- ----
95.1 94.9
---- ----
Other income 1.0 1.0
---- ----
Income before income taxes 5.9 6.1
Provision for income taxes 2.4 2.5
---- ----
Net income 3.5% 3.6%
===== =====
</TABLE>
Performance for the Eleven Months (48 weeks) Ended May 30, 1998
- ---------------------------------------------------------------
Compared With the Eleven Months (47 weeks) Ended May 24, 1997
- ---------------------------------------------------------------
(unaudited)
- ---------------------------------------------------------------
Consolidated net sales increased $149.9 million (9.1%) for the
eleven months ended May 30, 1998 compared with the eleven months
ended May 24, 1997. Comparative stores sales for the Company's
Burlington Coat Factory stores increased 3.7% for the eleven months
ended May 30, 1998 compared with the similar period of a year ago.
This increase was realized despite a 5.3% decrease in coat sales,
the result of unseasonably mild temperatures during fiscal 1998.
Eleven new Burlington Coat Factory stores opened during fiscal 1998
contributed $60.6 million to this year's sales. The eleven month
period ended May 30, 1998 consisted of 48 weeks versus 47 weeks for
the comparative period ended May 24, 1997. Net sales for the
forty-eighth week in fiscal 1998 amounted to $25.7 million. Stores
which were in operation a year ago, but which were closed prior to
this year, contributed $12.0 million to last year's sales.
The Cohoes stores contributed $34.8 million to consolidated
sales for the eleven months ended May 30, 1998 compared with $39.0
million for the eleven months ended May 24, 1997. Cohoes
comparative store sales increased 4.4% for the eleven month period.
Net sales for the forty-eighth week in fiscal 1998 amounted to $.6
million. One Cohoes store closed during fiscal 1997 contributed
$5.9 million to last year's sales.
Page 14 of 181 <PAGE>
Sales in fiscal 1998 for the Decelle stores were $36.7 million
compared with $33.9 million for eleven months ended May 24, 1997.
Comparative store sales decreased 3.1% for the eleven months ended
May 30, 1998 compared with the similar eleven month period of a
year ago. One new Decelle store was opened during fiscal 1998 and
contributed $2.2 million to this year's sales. Net sales for the
forty-eighth week in fiscal 1998 amounted to $.7 million.
Other income (consisting of rental income from leased
departments, investment income and miscellaneous items) increased
to $18.3 million for the eleven months ended May 30, 1998 compared
with $16.5 million for the eleven months ended May 24, 1997.
Increases of $.4 million in interest income and miscellaneous non-
recurring income items of $2.5 million offset decreases in rent
income of $1.6 million, resulting from the conversion of lessee
shoe departments to Company operated shoe departments.
Cost of sales increased $87.0 million (8.2%) for the eleven
months ended May 30, 1998 compared with the eleven months ended May
24, 1997. The dollar increase in cost of sales was due to the
increase in net sales during the current fiscal year compared with
the prior year. Cost of sales, as a percentage of net sales,
decreased from 64.2% in the eleven months ended May 24, 1997 to
63.7% in fiscal 1998. This decrease is due mainly to higher
initial markons maintained throughout fiscal 1998 compared with the
prior year. In addition, shrinkage as a percentage of sales,
decreased slightly in fiscal 1998 compared with the eleven months
ended May 24, 1997. Cost of sales for the forty-eighth week of
fiscal 1998 amounted to approximately $17.1 million.
Selling and administrative expenses increased $57.8 million
(12.3%) from the 1997 period to the 1998 period. This increase in
expense was due mainly to an increase in payroll and payroll
related expenses. Comparative store payroll costs increased 9.0%
in the 1998 period compared to the 1997 period. Annual pay
increases, increased staffing levels at the stores due to the
rollout of the new shoe department and baby depot department and an
increase in the number of department managers at the store level,
contributed to this change. In addition, the Company incurred
increased staffing levels at both the home office and the
distribution center during the fiscal 1998 period. Selling and
administrative expenses approximated $10.8 million during the
forty-eighth week of fiscal 1998. As a percentage of net sales,
selling and administrative expenses were 29.4% in the 1998 fiscal
period compared with 28.6% for the prior comparable fiscal period.
Depreciation and amortization expense amounted to $29.6
million in fiscal 1998 compared with $27.9 million in the eleven
months ended May 24, 1997. This increase of $1.7 million in the
fiscal 1998 period compared with the fiscal 1997 period is
attributable to new stores opened during the year as well as
remodeling and refixturing of existing stores.
Page 15 of 181 <PAGE>
Interest expense decreased $0.5 million for the eleven months
ended May 30, 1998 compared with the similar period of a year ago.
The decrease in interest expense is the result of decreases in
borrowing levels associated with the Company's long term
subordinated notes and the industrial development bonds.
The provision for income taxes increased to $42.1 million for
the fiscal period ended May 30, 1998 from $41.1 million for the
similar fiscal period ended May 24, 1997. The effective tax rate
was 39.8% for the 1998 period compared with 40.9% for the fiscal
1997 period. This rate decrease is due primarily to a decrease in
the effective state tax rate and an increase in federal jobs tax
credits available to the Company.
Net income increased $4.5 million to $63.6 million for the
1998 period from $59.1 million for the comparative 1997 period.
The Company realized a net loss of approximately $.5 million for
the forty-eighth week of fiscal 1998. Income per share was $1.34
per share for fiscal 1998 compared with $1.22 for the comparable
1997 period.
Results of Operations
- ---------------------
Fiscal Years Ended
------------------
June 28, 1997 and June 29, 1996
-------------------------------
The following table sets forth certain items in the
consolidated statements of operations as a percentage of net sales
for the fiscal years ended June 28, 1997 and June 29, 1996.
<TABLE>
<CAPTION>
Percentage of Net Sales
-----------------------
Fiscal Year Ended
-----------------
June 28, 1997 June 29, 1996
------------- -------------
<S> <C> <C>
Net Sales 100.0% 100.0%
Costs and expenses:
Cost of sales 64.1 65.4
Selling and administrative expenses 29.3 30.1
Depreciation and amortization 1.8 1.9
Interest expense 0.4 0.7
---- ----
95.6 98.1
---- ----
Other income 1.0 1.2
---- ----
Income before income taxes 5.4 3.1
Provision for income taxes 2.2 1.3
---- ----
Net income 3.2% 1.8%
===== =====
</TABLE>
Page 16 of 181 <PAGE>
Performance in 1997 compared with 1996
- --------------------------------------
Net sales increased $166.4 million (10.5%) for fiscal 1997
compared with fiscal 1996. Comparative store sales increased 7.4%.
The Company believes the increase in comparative sales in fiscal
1997 was due mainly to an improved retail environment relative to
fiscal 1996. Eight new Burlington Coat Factory Warehouse stores
opened during fiscal 1997 contributed $42.8 million to this year's
sales. Stores which were in operation a year ago, but which were
closed prior to this year, contributed $10.2 million to last year's
sales.
The Cohoes stores showed a comparative stores sales increase
of 6.1%, while contributing $42.2 million to consolidated sales for
the fiscal year. During fiscal 1997, one Cohoes store was closed.
This store contributed $5.9 million to net sales in fiscal 1997
compared with $6.6 million in fiscal 1996.
Sales in fiscal 1997 for the Decelle stores were $37.5 million
compared with $34.6 million in fiscal 1996. Fiscal 1997
comparative store sales were flat for the Decelle division. During
fiscal 1997, there was one new store opening within the Decelle
division. This store contributed $1.2 million to net sales.
In addition, fiscal 1997 saw the opening of a new Totally 4
Kids store in Ontario, California and a Baby Depot store in
Arlington Heights, Illinois. In addition to the store closings in
the Burlington Coat Factory Warehouse, Cohoes, and Decelle
divisions, one Luxury Linens store, one Totally 4 Kids store, and
the Fit for Men store were closed during fiscal 1997.
Other income (consisting of rental income from leased
departments, investment income and miscellaneous items) decreased
to $18.5 million for the year ended June 28, 1997 compared with
$18.9 million for the year ended June 29, 1996. An increase in
investable funds in fiscal 1997 generated an increase of approx-
imately $4.5 million in investment income over fiscal 1996.
Offsetting this increase was a decrease of approximately $1.7
million in rental income during fiscal 1997 compared with fiscal
1996. The Company recorded a net loss on the disposition of
property of $1.1 million during fiscal 1997. During fiscal 1996
the Company recorded a net loss in the disposition of property from
closed stores of $1.8 million. Offsetting this loss in fiscal 1996
was a $1.8 million gain on the sale of the Company's Secaucus, New
Jersey facility. In addition, the Company recorded miscellaneous
non-recurring income items of approximately $1.1 million during
fiscal 1997 compared with $4.0 million during fiscal 1996.
Page 17 of 181 <PAGE>
Cost of sales increased $86.6 million (8.3%) for fiscal 1997
compared with fiscal 1996. The dollar increase in cost of sales
was due to the increase in net sales during the current fiscal year
compared with the prior year. Cost of sales, as a percentage of
net sales, decreased from 65.4% in fiscal 1996 to 64.1% in fiscal
1997. This decrease is due mainly to higher initial markons
maintained throughout fiscal 1997 compared with the prior year. In
addition, markdowns, as a percentage of sales, were down slightly
in fiscal 1997 compared with fiscal 1996 due to lower comparative
inventory levels.
Selling and administrative expenses increased $35.1 million
(7.3%) from fiscal 1996 to fiscal 1997. This increase in expense
was due mainly to an increase in payroll and payroll related
expenses. Comparative store payroll costs increased 5.0% in fiscal
1997 compared with fiscal 1996. Annual pay increases and increased
staffing levels at the stores contributed to this change. In
addition, the Company incurred increased staffing levels at both
the home office and the distribution center during fiscal 1997. As
a percentage of net sales, selling and administrative expenses were
29.3% in the 1997 fiscal year compared with 30.1% for the prior
fiscal year, a decrease of .8%. This improvement is primarily the
result of the increase in comparative store sales realized by the
Company in fiscal 1997.
Depreciation and amortization expense amounted to $31.0
million in fiscal 1997 compared with $29.9 million in fiscal 1996.
This increase of $1.1 million in the fiscal 1997 period compared
with fiscal 1996 is attributable to new stores opened during the
year as well as remodeling and fixturing of existing stores.
Interest expense decreased $3.7 million for the fiscal year
ended June 28, 1997 compared with the fiscal year ended June 29,
1996. The decrease in interest expense is the result of decreases
in borrowing levels associated with the Company's revolving credit
and term loan agreements, the refinancing of its industrial
development bonds, and the repayment of $13.4 million of its
subordinated bonds.
The provision for income taxes increased to $39.2 million for
the fiscal year ended June 28, 1997 from $20.0 million for the
fiscal year ended June 29, 1996. The effective tax rate was 41.0%
for the year ended June 28, 1997 compared with 40.8% for fiscal
1996.
Net income increased $27.5 million to $56.5 million for fiscal
1997 from $29.0 million for fiscal 1996. Income per share was
$1.17 per share for fiscal 1997 compared with $.59 for fiscal 1996.
Page 18 of 181 <PAGE>
The Company's business is seasonal, with its highest sales
occurring in the months of September, October, November, December,
and January of each year. The Company's net income generally
reflects the same seasonal pattern as its net sales. In the past,
substantially all of the Company's profits have been derived from
operations during the months of September, October, November,
December, and January.
Liquidity and Capital Resources
- -------------------------------
During the eleven months ended May 30, 1998, the Company
opened twelve stores, including eleven Burlington Coat Factory
Warehouse stores and one Decelle store. The Company closed eight
stores during the fiscal period ended May 30, 1998. Of the eight
stores which were closed, four were moved to a new location within
the same trading area. Expenditures incurred to acquire, set up
and fixture new stores opened during fiscal 1998 were approximately
$8.9 million. In addition, the Company expended approximately
$22.0 million for capital improvements and refurbishing of existing
stores. During fiscal 1998, the Company purchased the land and
building associated with two new stores for $5.3 million. Other
capital expenditures, consisting primarily of computer system
enhancements and distribution center improvements amount to $6.7
million for fiscal 1998. For fiscal 1999, the Company estimates
that it will spend approximately $50.0 million for capital
expenditures (i.e., fixtures, equipment and leasehold improvements)
in connection with the opening of approximately twenty new stores,
remodeling and expansion of existing stores, expansion of the
Company's warehouse facilities, and computer enhancement projects.*
The Company repurchased 622,360 shares of its stock, costing
approximately $8.1 million in the current fiscal period. These
purchases are reflected as treasury stock in the equity section of
the balance sheet. As of May 30, 1998 the Company had authority to
purchase an additional $7.9 million of its stock.
Working capital increased to $368.5 million at May 30, 1998
from $319.7 million at June 28, 1997. At June 29, 1996, working
capital was $288.1 million.
Total funds provided from operations for the fiscal years
ended June 29, 1996 and June 28, 1997 and the eleven months ended
May 30, 1998 were $66.9 million, $97.1 million, and $98.2 million,
respectively. Total funds from operations are calculated by adding
back to net income non-cash expenditures such as depreciation and
deferred taxes.
* Forward Looking Statement. See Safe Harbor Statement on Page 5.
Page 19 of 181<PAGE>
Net cash provided by operating activities of $47.4 million for
the fiscal period ended May 30, 1998, decreased from $141.6 million
in net cash provided from operating activities for fiscal 1997.
This decrease in net cash from operations was due primarily to the
following:
1) increases in outerwear inventories, resulting from lower
than expected sales during the fiscal 1998 period;
2) opportunistic purchases of additional basic coat
inventory from coat manufacturers' excess inventory,
resulting from the sluggish outerwear selling season;
3) inventory purchases for the Company's new shoe
departments, which have been opened in approximately 80
stores during the current fiscal period;
4) inventory purchased to stock new stores and store
expansions.
The Company's long-term borrowings at May 30, 1998 include
$59.2 million of long term subordinated notes issued by the Company
to institutional investors in June, 1990 ("the Notes") and an
industrial development refunding bond of $9.3 million issued by the
New Jersey Economic Development Authority (the "Refunding Bonds").
The Notes mature on June 27, 2005 and bear interest at the
rate of 10.6% per annum. The Notes have a remaining average
maturity of 4.0 years and are subject to mandatory payment in
installments of $8.0 million each without premium on June 27 of
each year beginning in 1996. The Notes are subordinated to senior
debt, including, among others, bank debt and indebtedness for
borrowed money. In July 1996, the Company repurchased an
additional $5.4 million of the Notes, which reduced the Company's
mandatory prepayment to $7.4 million annually. The Company has no
current plans to repurchase or repay any additional amounts earlier
than scheduled due to prohibitive prepayment penalties but may
consider doing so in the future should conditions favorable to the
Company present themselves.*
The Refunding Bonds consist of serial and term bonds. The
serial bonds aggregate $3.6 million and mature in series annually
on September 1, beginning in 1996 and continuing to and including
2003. The term bonds consist of two portions, $1.4 million
maturing on September 1, 2005 and $5.0 million maturing on
September 1, 2010. The serial bonds bear interest ranging from
3.75% to 5.4% per annum, and the term bonds bear interest at the
rates of 5.60% for the portion maturing on September 1, 2005 and
* Forward Looking Statement. See Safe Harbor Statement on Page 5.
Page 20 of 181 <PAGE>
6.125% per annum for the portion maturing on September 1, 2010.
The average interest rate and average maturity of the Refunding
Bonds are 5.6% and 8 years, respectively. During the eleven month
ended May 30, 1998, the Company expended approximately $.4 million
for the repayment of the Refunding Bonds.
The Company has in place a committed line of credit agreement
in the amount of $50.0 million and $100.0 million in uncommitted
lines of credit. The Company had no borrowings under these credit
lines during the fiscal 1998 and fiscal 1997 periods.
The Company believes that its current capital expenditures and
operating requirements can be satisfied from internally generated
funds, from short term borrowings under its revolving credit and
term loan agreement as well as uncommitted lines of credit.*
Furthermore, to the extent that the Company decides to purchase
additional store locations, it may be necessary to finance such
acquisitions with additional long term borrowings.*
On or about September 23, 1994 three separate putative class
actions were filed against the Company. These three actions were
consolidated and an amended complaint was served on January 17,
1995. The Company filed a motion to dismiss on May 17, 1995 and a
hearing on the motion was held on July 20, 1995. On February 20,
1996, the District Court dismissed the plaintiff's amended
complaint in its entirety. In March, 1996, plaintiffs filed an
appeal from the District Court's decision. In June, 1997 the U.S.
Court of Appeals for the Third Circuit affirmed the District
Court's dismissal of the class action suits but held that
plaintiffs should be granted leave to attempt to replead two of the
six claims that were dismissed. After remand to the District
Court, the plaintiffs filed a further amended complaint in an
effort to cure the legal deficiencies of the two claims in
question. Among other changes, the amended complaint dropped all
claims against Andrew Milstein, Stephen Milstein and Mark Nesci.
On July 1, 1998, the Company filed a further motion to dismiss on
the grounds that the amended complaint failed to cure such
deficiencies. The motion has been fully briefed by both sides and
the parties await word from the District Court either scheduling
oral argument or deciding the motion without oral argument. (See
Part I - Item 3 Legal Proceedings.) The Company is unable to
determine the probability of any potential loss with respect to
these class action suits or the materiality thereof at this time
and accordingly has not established any reserve for this matter.*
* Forward Looking Statement. See Safe Harbor Statement on Page 5.
Page 21 of 181 <PAGE>
Year 2000 *
- ---------
The inability of computers, software, or any equipment
utilizing microprocessors to properly recognize and process data
information at the turn of the century is commonly referred to as
the Year 2000 (Y2K) compliance issue.
The Company continues its assessment of how Year 2000 will
impact operations. Considerable progress has been achieved in the
areas of identifying, remediating, testing, and implementing Y2K
products and services which are critical to the business computing
systems infrastructure. Inventory of all in-house software has
been completed and is currently being reviewed for compliance. An
inventory of third-party and purchased software is being conducted
in order to determine the impact of external data feeds into the
corporate information process. The Company is in the process of
attempting to identify critical third party vendors whose inability
to reach Y2K compliance may impact business connectivity and
viability. Hardware systems have been examined and appropriate
paths charted to ensure complete Y2K compatibility. The goal for
completing Year 2000 compliance for all critical computing system
environments is early to mid calendar year 1999.
All costs associated with the Year 2000 project to date have
been expensed as incurred. The Company's total estimated cost of
the Year 2000 compliance program is approximately $2 million to $3
million, of which approximately $.2 million was incurred as of May
30, 1998. The remaining expenses are expected to be incurred
primarily in Fiscal 1999. A significant portion of these costs are
not likely to be incremental costs to the Company, but rather will
represent the redeployment of existing information technology
resources. Based upon current benchmarks, the Company believes
that it has the necessary resources in-house to complete all
required Year 2000 remediation. In the event that internal
resources are insufficient to complete the project in a timely
manner, out-sourcing the Y2K project, either in part or whole, to
a Year 2000 Service Provider may be necessary.
Until all inventory and analysis phases are completed the
Company will not know with absolute certainty how the transition
from 1999 to 2000 will affect its operations. Moreover, there is
no guarantee that computing systems and associated applications of
other companies with which the Company conducts business will be
converted on a timely basis or that a failure by said companies to
address their Year 2000 compliance problems would not have a
material adverse impact on the Company.
To date, the Company has not established a formal contingency
plan for dealing with a failure by either the Company or its third
party vendors to achieve Year 2000 Compliance.
* Forward Looking Statement. See Safe Harbor Statement on Page 5.
Page 22 of 181 <PAGE>
Inflation
- ---------
Historically, the Company has been able to increase its
selling prices as the costs of merchandising and related operating
expenses have increased, and therefore, inflation has not had a
significant effect on operations.*
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
See Index to Financial Statements and following pages.
Item 9. Changes in and Disagreements with Accountants
---------------------------------------------
on Accounting and Financial Disclosure
---------------------------------------------
None
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
Item 11. Executive Compensation
----------------------
Item 12. Security Ownership of Certain Beneficial Owners
-----------------------------------------------
and Management
----------------------------------------------
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
In accordance with General Instruction G(3) of the General
Instructions to Form 10-K, the information called for by Items 10,
11, 12 and 13 is omitted from this Report and is incorporated by
reference to the definitive Proxy Statement to be filed by the
Company pursuant to Regulation l4A of the General Rules and
Regulations under the Securities Exchange Act of 1934, which the
Company will file not later than 120 days after May 30, 1998.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
--------------------------------------------
Reports on Form 8-K
--------------------------------------------
(a) The following documents are filed as part of this
Report.
* Forward Looking Statement. See Safe Harbor Statement on Page 5.
Page 23 of 181 <PAGE>
Page No.
--------
1. Financial Statements
Index to Consolidated Financial Statements 29
Independent Auditors' Report 30
Consolidated Balance Sheets 31
May 30, 1998 and June 28, 1997
Consolidated Statements of Operations 32
for the Eleven Months Ended
May 30, 1998 and the Twelve Months
Ended June 28, 1997 and June 29, 1996
Consolidated Statements of Stockholders' 33
Equity for the Twelve Months Ended
June 29, 1996 and June 27, 1997 and for
the Eleven Months Ended May 30, 1998
Consolidated Statements of Cash 34
Flows for the Eleven Months Ended
May 30, 1998, and the Twelve Months
ended June 28, 1997 and June 29, 1996
Notes to Consolidated Financial Statements 36
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts 54
Schedules I, III, IV and V are omitted because
they are not applicable or not required or
because the required information is included
in the consolidated financial statements or
notes thereto.
3. Exhibits
3.1 Articles of Incorporation, as amended 60
3.2 By-laws 85
*10.1 1993 Stock Incentive Plan 113
*10.2 1998 Stock Incentive Plan 143
Page 24 of 181 <PAGE>
Page No.
--------
10.3 Revolving Credit Agreement dated August 30, 1/
1985 between the Company and BancOhio
National Bank, as amended through
Amendment No. 6.
10.4 Amendment No. 7 to Revolving Credit Agreement 170
dated June 1, 1998 between the Company and
National City Bank.
10.5 Burlington Coat Factory Warehouse Corporation 2/
401(k) Profit-Sharing Plan (as amended and
restated effective June 29, 1997.)
10.6 Instrument of Amendment to Burlington Coat 173
Factory Warehouse Corporation 401(k)
Profit-Sharing Plan effective January 1, 1999
10.7 Loan Agreement dated as of August 1, 1995 by 3/
and between New Jersey Economic Development
Authority and Burlington Coat Factory Ware-
house of New Jersey, Inc.
10.8 Assignment of Leases dated as of August 1, 3/
1995 from Burlington Coat Factory Warehouse
of New Jersey, Inc. to First Fidelity
Bank, National Association
10.9 Mortgage and Security Agreement dated as of 3/
August 1, 1995 between Burlington Coat
Factory Warehouse of New Jersey, Inc. and
First Fidelity Bank, National Association
10.10 Indenture of Trust dated as of August 1, 1995 3/
by and between New Jersey Economic Development
Authority and Shawmut Bank Connecticut,
National Association
____________________
(1) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended June
29, 1996, File No. 1-8739.
(2) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended June
28, 1997, File No. 1-8739.
(3) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended July
1, 1995. File No. 1-8739.
Page 25 of 181 <PAGE>
Page No.
--------
10.11 Guaranty and Suretyship dated as of August 1, 3/
1995 from the Company to First Fidelity Bank,
National Association
10.12 Letter of Credit Reimbursement Agreement dated 3/
as of August 1, 1995 between Burlington Coat
Factory Warehouse of New Jersey, Inc. and
First Fidelity Bank, National Association
10.13 Environmental Indemnity Agreement dated as of 3/
August 1, 1995 between Burlington Coat Factory
Warehouse of New Jersey, Inc. and First
Fidelity Bank, National Association
10.14 Note Agreement dated June 27, 1990 3/
21 Subsidiaries of Registrant 176
23 Consent of Deloitte & Touche LLP, independent 178
certified public accountants, to the use of
their report on the financial statements of
the Company for the eleven months in the
period ended May 30, 1998 in the Registration
Statements of the Company on Form S-8,
Registration No. 2-96332, No. 33-21569,
No. 33-51965 and No. 333-41077
27 Financial Data Schedule 180
*Executive Compensation Plan
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
---------------------------------------------
Description Location
----------- --------
1) 1993 Stock Incentive Plan Filed as Exhibit 10.1
2) 1998 Stock Incentive Plan Filed as Exhibit 10.2
(b) Reports on Form 8-K
During the period ended May 30, 1998 the Company did not
file any report on Form 8-K.
Page 26 of 181 <PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)
By: /s/Monroe G. Milstein
Monroe G. Milstein, President
Dated: August 25, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/Monroe G. Milstein Chief Executive Officer August 25, 1998
Monroe G. Milstein and President (Principal
Executive Officer);
Director
/s/Robert L.LaPenta, Jr. Controller (Principal August 25, 1998
Robert L. LaPenta, Jr. Financial and
Accounting Officer)
/s/Bernard Brodsky Treasurer August 25, 1998
Bernard Brodsky
/s/Henrietta Milstein Director August 25, 1998
Henrietta Milstein
/s/Harvey Morgan Director August 25, 1998
Harvey Morgan
/s/Andrew R. Milstein Director August 25, 1998
Andrew R. Milstein
/s/Stephen E. Milstein Director August 25, 1998
Stephen E. Milstein
/s/Mark A. Nesci Director August 25, 1998
Mark A. Nesci
/s/Irving Drillings Director August 25, 1998
Irving Drillings
Page 27 of 181 <PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
Page 28 of 181 <PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Page No.
--------
Independent auditors' report 30
Consolidated balance sheets 31
May 30, 1998 and June 28, 1997
Consolidated statements of operations for the 32
eleven months ended May 30, 1998, and the twelve
months ended June 28, 1997 and June 29, 1996
Consolidated statements of stockholders' equity 33
for the twelve months ended June 29, 1996,
June 28, 1997 and for the eleven months ended
May 30, 1998
Consolidated statements of cash flows for the 34
eleven months ended May 30, 1998, and the twelve
months ended June 28, 1997 and June 29, 1996
Notes to consolidated financial statements 36
Financial Statement Schedules
Schedule II -- Valuation and Qualifying Accounts 54
Schedules I, III, IV and V are omitted because
they are not applicable or not required
because the required information is included
in the consolidated financial statements or
notes thereto.
Page 29 of 181 <PAGE>
INDEPENDENT AUDITORS' REPORT
- ----------------------------
Board of Directors and Stockholders
Burlington Coat Factory Warehouse Corporation
Burlington, New Jersey
We have audited the accompanying consolidated balance
sheets of Burlington Coat Factory Warehouse Corporation and its
subsidiaries as of May 30, 1998 and June 28, 1997, and the related
consolidated statements of operations, stockholders' equity, and
cash flows for the eleven months in the period ended May 30, 1998
and for each of the two years in the period ended June 28, 1997.
Our audits also included the financial statement schedule listed in
the Index at Item 14(a)(2). These financial statements and
financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion
on the financial statements and financial statement schedule based
on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements
present fairly, in all material respects, the financial position of
Burlington Coat Factory Warehouse Corporation and subsidiaries at
May 30, 1998 and June 28, 1997, and the results of their operations
and their cash flows for the eleven months in the period ended May
30, 1998 and for each of the two years in the period ended June 28,
1997 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material
respects the information set forth therein.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
July 28, 1998
Page 30 of 181 <PAGE>
<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands except share data)
May 30, June 28,
1998 1997
-------- ---------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $153,964 $157,394
Accounts Receivable (Net of Allowance for Doubtful
Accounts of 1998-$1,103 and 1997-$953) 17,578 17,160
Merchandise Inventories 474,817 366,233
Deferred Tax Asset 11,207 9,201
Prepaid and Other Current Assets 22,993 7,150
------- -------
Total Current Assets 680,559 557,138
Property and Equipment Net of Accumulated
Depreciation and Amortization 222,813 209,864
Other Assets 6,435 8,075
------- -------
Total Assets $909,807 $775,077
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts Payable $198,597 $143,840
Income Taxes Payable 10,372 10,657
Accrued Insurance Costs 17,532 16,500
Other Current Liabilities 76,807 58,574
Current Maturities of Long-Term Debt 8,792 7,831
-------- --------
Total Current Liabilities 312,100 237,402
Long-Term Debt 60,890 62,274
Other Liabilities 16,977 8,763
Deferred Tax Liability 3,771 6,423
Commitments and Contingencies
Stockholders' Equity:
Preferred Stock, Par Value $1; Authorized
5,000,000 shares; none issued and outstanding - -
Common Stock, Par Value $1; Authorized
100,000,000 shares; 49,593,616 shares issued
at May 30, 1998; 41,258,621 shares issued
at June 28, 1997 49,594 41,259
Capital in Excess of Par Value 18,710 25,997
Retained Earnings 468,958 406,123
Unearned Compensation (29) (54)
Treasury Stock at Cost; 1998-2,214,624 shares;
1997-1,592,264 shares (21,164) (13,110)
--------- ---------
Total Stockholders' Equity 516,069 460,215
-------- ---------
Total Liabilities and Stockholders' Equity $909,807 $775,077
======== ========
</TABLE>
See notes to consolidated financial statements
Page 31 of 181 <PAGE>
<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands except share data)
Eleven Months Twelve Months
Ended Ended
-------------------------------------
May 30, June 28, June 29,
1998 1997 1996
---------- ---------- ----------
REVENUES:
<S> <C> <C> <C>
Net Sales $1,795,623 $1,758,368 $1,591,964
Other Income 18,274 18,455 18,928
---------- ---------- ----------
1,813,897 1,776,823 1,610,892
---------- ---------- ----------
COSTS AND EXPENSES:
Cost of Sales (Exclusive of
Depreciation and Amortization) 1,142,956 1,126,975 1,040,388
Selling and Administrative Expenses 528,725 514,959 479,852
Depreciation and Amortization 29,634 31,047 29,913
Interest Expense 6,829 8,080 11,735
---------- ---------- ----------
1,708,144 1,681,061 1,561,888
---------- ---------- ----------
Income Before Provision for
Income Taxes 105,753 95,762 49,004
Provision for Income Taxes 42,114 39,247 19,991
---------- ---------- ----------
Net Income $ 63,639 $ 56,515 $ 29,013
========== ========== ==========
Basic and Diluted Net Income Per Share $ 1.34 $ 1.17 $ 0.59
========== ========== ==========
Weighted Average Shares Outstanding 47,420,726 48,253,996 48,876,619
========== ========== ==========
Dividends Per Share $ .02 -- --
========== ========== ==========
</TABLE>
See notes to consolidated financial statements
Page 32 of 181 <PAGE>
<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
TWELVE MONTHS ENDED JUNE 29, 1996, JUNE 28, 1997
and ELEVEN MONTHS ENDED MAY 30, 1998
(All amounts in thousands)
Capital in
Common Excess of Retained Treasury Unearned Valuation
Stock Par Value Earnings Stock Compensation Allowance Total
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1995 $41,139 $25,143 $320,595 ($ 1,850) - ($8) $385,019
Net Income 29,013 29,013
Stock Options Exercised 16 116 132
Tax Benefit From Exercise of
Stock Options 26 26
Net Unrealized Gain on Noncurrent
Marketable Securities 8 8
Unearned Compensation 10 99 (87) 22
Treasury Stock Transactions (475) (475)
------- ------ -------- ------- ----- ----- ---------
Balance at June 29, 1996 41,165 25,384 349,608 (2,325) (87) - 413,745
Net Income 56,515 56,515
Stock Options Exercised 94 551 645
Tax Benefit From Exercise of
Stock Options 62 62
Unearned Compensation 33 - 33
Treasury Stock Transactions (10,785) (10,785)
------- ------ -------- -------- ---- ----- --------
Balance at June 28, 1997 41,259 25,997 406,123 (13,110) (54) - 460,215
Net Income 63,639 63,639
Stock Options Exercised 78 444 522
Tax Benefit From Exercise
of Stock Options 526 526
Unearned Compensation 25 25
Treasury Stock Transactions (8,054) (8,054)
Stock Dividend 8,257 (8,257) -
Dividends (804) (804)
------- ------- -------- ------- ---- ----- --------
Balance at May 30, 1998 $49,594 $18,710 $468,958 ($21,164) ($29) - $516,069
======= ======= ======== ========= ===== ===== ========
</TABLE>
See notes to consolidated financial statements
Page 33 of 181 <PAGE>
<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
Eleven Months Twelve Months
Ended Ended
-----------------------------------
May 30, June 28, June 29,
1998 1997 1996
-----------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 63,639 $ 56,515 $ 29,013
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 29,634 31,047 29,913
Provision for Losses on Accounts Receivable 7,187 7,203 6,068
Provision for Deferred Income Taxes (4,658) (395) 489
(Gain) Loss on Disposition of Fixed Assets 794 1,165 (100)
Non-Cash Rent Expense and Other 1,047 1,521 1,438
Changes in Assets and Liabilities:
Accounts Receivable (7,931) (9,865) (5,965)
Merchandise Inventories (108,584) 4,204 81,589
Prepaids and Other Current Assets (15,843) 12,652 (13,876)
Accounts Payable 54,757 24,940 17,854
Accrued and Other Current Liabilities 19,506 12,621 16,957
Deferred Rent Incentives 7,887 - -
------- ------ -------
Net Cash Provided by Operating Activities 47,435 141,608 163,380
------- ------- -------
INVESTING ACTIVITIES
Acquisition of Property and Equipment (43,320) (35,797) (29,346)
Proceeds From Sale of Fixed Assets 13 390 17,839
Issuance of Long-Term Notes Receivable - - (516)
Receipts Against Long-Term Notes Receivable 1,118 1,085 4,539
Minority Interest 56 (110) (62)
Other 2 (42) (2,485)
------- ------- -------
Net Cash Used in Investing Activities (42,131) (34,474) (10,031)
-------- -------- --------
FINANCING ACTIVITIES
Principal Payments on Long-Term Debt (423) (13,193) (8,066)
Issuance of Common Stock Upon Exercise of
Stock Options 547 678 132
Purchase of Treasury Stock (8,054) (10,785) (475)
Net Payments Under Lines of Credit - - (85,900)
Payment of Dividends (804) - -
------- -------- --------
Net Cash Used in Financing Activities (8,734) (23,300) (94,309)
-------- -------- ---------
Increase (Decrease) in Cash and Cash Equivalents (3,430) 83,834 59,040
Cash and Cash Equivalents at Beginning of Period 157,394 73,560 14,520
--------- -------- ---------
Cash and Cash Equivalents at End of Period $153,964 $157,394 $ 73,560
======== ======== ========
Supplemental Disclosure of Cash Flow Information:
Interest Paid $ 4,000 $ 8,092 $ 12,062
======== ======== ========
Income Taxes Paid $ 42,240 $ 34,212 $ 16,339
======== ======== ========
</TABLE>
See notes to consolidated financial statements
Page 34 of 181 <PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Schedule of Non-Cash Financing:
During fiscal 1996, the Company granted a restricted stock
award of 10,000 shares of its common stock to an officer of the
Company with a fair market value of $108,800 as of the award's
measurement date. This award vests over a four year period from
the date of grant.
See notes to consolidated financial statements
Page 35 of 181 <PAGE>
Notes to Consolidated Financial Statements
A. Summary of Significant Accounting Policies
1. Business
Burlington Coat Factory Warehouse Corporation operates
253 stores, in 42 states, which sell "off-price" apparel for
men, women and children. A majority of those stores offer a
home linens department and a baby room furniture department.
The Company operates stores under the names "Burlington Coat
Factory Warehouse"(two hundred twenty-nine stores), "Cohoes
Fashions" (four stores), "Decelle" (nine stores), "Luxury
Linens" (six stores), "Totally 4 Kids" (three stores), and
"Baby Depot" (two stores). Cohoes Fashions offers merchandise
in the middle to higher price range. Decelle offers
merchandise in the moderate price range for the entire family
with an emphasis on children's and youth wear. Luxury Linens
is a specialty store for linens, bath shop items, gifts and
accessories and offers merchandise in the middle to higher
price range. Totally 4 Kids is a moderate to upscale concept
store offering maternity wear, baby furniture, children's wear
from toddlers up to teens, children's books, toys, computer
software for kids and educational tapes in a family
environment. Baby Depot is a stand alone infant and toddler
store specializing in infant and toddler apparel, furnishings
and accessories.
2. Principles of Consolidation
The consolidated financial statements include the
accounts of Burlington Coat Factory Warehouse Corporation and
its subsidiaries (the "Company"). All intercompany
transactions and balances have been eliminated in
consolidation.
3. Use of Estimates
The Company's consolidated financial statements have been
prepared in conformity with generally accepted accounting
principles. Certain amounts included in the consolidated
financial statements are estimated based on currently
available information and management's judgment as to the
outcome of future conditions and circumstances. While every
effort is made to ensure the integrity of such estimates,
including the use of third party specialists where
appropriate, actual results could differ from these estimates.
Page 36 of 181 <PAGE>
4. Cash and Cash Equivalents
Cash and cash equivalents represent cash and short-term,
highly liquid investments with maturities of three months or
less at time of purchase. Cash equivalent investments
amounted to $145.9 million at May 30, 1998 and $142.3 million
at June 28, 1997.
5. Inventories
Merchandise inventories are valued at the lower of cost,
on a First In First Out (FIFO) basis or market, as determined
by the retail inventory method.
6. Property and Equipment
Property and equipment are stated at cost and
depreciation is computed on the straight line method over the
estimated useful lives of the assets. The estimated useful
lives are between 20 and 40 years for buildings, depending
upon the expected useful life of the facility, and three to
ten years for store fixtures and equipment. Leasehold
improvements are amortized over a ten year period or lease
term, whichever is less. Repairs and maintenance expenditures
are charged to expense as incurred. Renewals and betterments
which significantly extend the useful lives of existing
property and equipment are capitalized.
7. Other Current Liabilities
Other current liabilities primarily consisted of sales
tax payable, accrued operating expenses, payroll taxes payable
and other miscellaneous items.
8. Store Opening Expenses
Expenses related to new store openings are charged to
operations in the period incurred.
9. Income Taxes
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 Accounting
for Income Taxes. Deferred income taxes have been recorded to
recognize temporary differences which result from revenues and
expenses being recognized in different periods for financial
reporting purposes than for income tax purposes.
Page 37 of 181 <PAGE>
10. Basic and Diluted Net Income Per Share
In February 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No.
128, Earnings Per Share. This new standard requires dual
presentation of basic and diluted earnings per share and
requires reconciliation of the numerators and denominators of
the basic and diluted earnings per share calculation.
Basic and diluted net income per share is based on the
weighted average number of shares outstanding during each
period. The amounts used in calculation of basic and dilutive
net income per share are as follows:
<TABLE>
<CAPTION>
Eleven Months Twelve Months Twelve Months
Ended Ended Ended
May 30, 1998 June 28, 1997 June 29, 1996
-------------------------------------------------
(all amounts in thousands except share data)
<S> <C> <C> <C>
Net Income $63,639 $56,515 $29,013
======= ======= =======
Weighted Average Shares
Outstanding 47,421 48,254 48,877
Effect of Dilutive Stock
Options 99 96 138
------- ------- -------
Weighted Average Shares Out-
standing, Assuming Dilution 47,520 48,350 49,015
======= ======= =======
Basic and Diluted Net
Income Per Share $ 1.34 $ 1.17 $ .59
======= ======= =======
</TABLE>
Options to purchase 30,120 shares of common stock were
outstanding during fiscal 1998, but were not included in the
computation of weighted average shares outstanding, assuming
dilution, because the options' exercise price is greater than
the average market price of common shares and therefore would
be antidilutive.
11. Fiscal Year End Date
The Company's fiscal year was a 52-53 week year with its
year ending on the Saturday closest to June 30th. Fiscal 1997
and Fiscal 1996 ended on June 28, 1997 and June 29, 1996,
respectively, and comprised 52 weeks each. During Fiscal
1998, the Board voted in favor of a resolution to change the
Company's fiscal year to a 52-53 week year ending on the
Saturday closest to May 31. Fiscal 1998 ended on May 30, 1998
and consisted of 48 weeks. Below are set forth financial data
for the eleven months ended May 30, 1998 and the eleven months
ended May 24, 1997 (47 weeks).
Page 38 of 181 <PAGE>
<TABLE>
<CAPTION>
Eleven Months Ended
May 30, 1998 May 24, 1997
(48 weeks) (47 weeks)
(unaudited)
----------------------------------
(in thousands except per share data)
<S> <C> <C>
Revenues $1,813,897 $1,662,219
Gross Profit 652,667 589,764
Selling and Administration
Expenses 528,725 470,899
Provision for Income Taxes 42,114 41,051
Net Income 63,639 59,139
Basic and Diluted Net Income
Per Share 1.34 1.22
</TABLE>
12. Other Income
Other income is primarily rental income received from
leased departments and interest income. In addition, the
Company realized approximately $2.5 million and $1.1 million
in income from settlement of contractual obligations during
fiscal 1998 and fiscal 1997, respectively.
13. Advertising Costs
The Company's net advertising costs consist primarily of
newspaper and television costs. The production costs of net
advertising are charged to expenses as incurred. Net
advertising expenses for the eleven months ended May 30, 1998,
twelve months ended June 28, 1997 and June 29, 1996 were $44.5
million, $45.4 million, and $44.2 million, respectively.
14. Impairment of Long Lived Assets
In March 1995, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of. This
statement requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset
may not be recoverable. Also, in general, long-lived assets
and certain intangibles to be disposed of should be reported
at the lower of carrying amount or fair value less cost to
sell. The Company considers historical performance and future
estimated results in its evaluation of potential impairment
and then compares the carrying amount of the asset to the
estimated future cash flows expected to result from the use of
the asset. If the carrying amount of the asset exceeds
estimated expected undiscounted future cash flows, the Company
Page 39 of 181 <PAGE>
measures the amount of the impairment by comparing the
carrying amount of the asset to its fair value. The
estimation of fair value is generally measured by discounting
expected future cash flows at the rate the Company utilizes to
evaluate potential investments. The Company estimates fair
value based on the best information available making whatever
estimates, judgments and projections are considered necessary.
15. Stock-Based Compensation
SFAS No. 123, Accounting for Stock Based Compensation,
encourages, but does not require companies to record
compensation cost for stock-based employee compensation plans
at fair value. The Company has chosen to continue to account
for stock-based compensation using the intrinsic method
prescribed in Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related
Interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted
market price of the Company's stock at the date of the grant
over the amount an employee must pay to acquire the stock (See
Note L).
16. Recent Accounting Pronouncements
a. In June 1997, the FASB issued SFAS No. 130,
Reporting Comprehensive Income. This statement, which
establishes standards for reporting and disclosure of
comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general-purpose financial
statements, is effective for fiscal years beginning after
December 15, 1997. As this statement only requires additional
disclosures in the Company's consolidated financial
statements, its adoption will not have any impact on the
Company's consolidated financial position or results of operations.
The Company will adopt SFAS No. 130 in its 1999 fiscal year.
b. In June 1997, the FASB issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information. This statement, which establishes standards for
the reporting of information on operating segments and
requires the reporting of selected information about operating
segments in interim financial statements, is effective for
fiscal years beginning after December 15, 1997. The Company
does not expect adoption of this statement to result in
Page 40 of 181 <PAGE>
significant changes to its presentation of financial data.
The Company will adopt SFAS No. 131 in its 1999 fiscal year.
c. In February 1998, the FASB issued SFAS No. 132,
Employers' Disclosure about Pensions and Other Post-retirement
Benefits. This statement, which establishes standards for the
reporting of information about pensions and other post-
retirement benefits, is effective for fiscal years beginning
after December 15, 1997. The Company does not expect adoption
of this statement to result in significant changes to its
presentation of pension and other post-retirement benefit
information. The Company will adopt SFAS No. 132 in its 1999
fiscal year.
d. In June 1998, the FASB issued Statement of Financial
Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded
in other contracts (collectively referred to as derivatives),
and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those
instruments at fair value. This statement is effective for
all fiscal quarters of fiscal years beginning after June 15,
1999. Adoption of SFAS No. 133 is not anticipated to have a
material impact on the Company's financial statements.
e. In March 1998, the AICPA issued Statement of
Position ("SOP") 98-1, Accounting For the Costs of Computer
Software Developed For or Obtained for Internal-Use. The SOP
is effective for the Company in fiscal 2000. The SOP will
require the capitalization of certain costs incurred after the
date of adoption in connection with developing or obtaining
software for internal use. The Company has not yet assessed
what the impact of the SOP will be on the Company's future
earnings or financial position.
17. Reclassifications
Certain reclassifications have been made to the prior
years' financial statements to conform to the classifications
used in the current year.
Page 41 of 181 <PAGE>
B. Stock Split
On September 8, 1997, the Board of Directors declared a
six-for-five split of the Company's common stock effective
October 16, 1997, to stockholders of record on October 1,
1997. This stock split was effected in the form of a 20%
stock dividend by the distribution of one additional share for
every five shares of stock already issued. The par value of
the Common Stock remained at $1.00 per share. As a result,
$8.3 million, representing the total par value of the new
shares issued, were transferred from the capital in excess of
par value account to common stock. Prior years' weighted
average shares outstanding and net income per share amounts
have been restated to reflect the six-for-five stock split.
C. Property and Equipment
<TABLE>
<CAPTION>
Property and equipment consists of:
-----------------------------------------------------------------------
May 30, June 28,
1998 1997
(in thousands)
----------------------------------------------------------------------
<S> <C> <C>
Land $ 20,690 $ 19,044
Buildings 78,542 71,409
Store Fixtures and
Equipment 211,470 191,871
Leasehold Improvements 76,918 67,871
Construction in Progress 867 526
-------- ---------
388,487 350,721
-------- ---------
Less Accumulated Depreciation
and Amortization (165,674) (140,857)
--------- ----------
$222,813 $209,864
======== ========
</TABLE>
D. Accounts Payable
<TABLE>
<CAPTION>
Accounts payable consists of:
------------------------------------------------------------------------
May 30, June 28,
1998 1997
(in thousands)
-----------------------------------------------------------------------
<S> <C> <C>
Accounts Payable-Trade $176,914 $125,827
Accounts Payable-Due Banks 9,851 7,657
Other 11,832 10,356
-------- --------
$198,597 $143,840
======== ========
</TABLE>
Page 42 of 181 <PAGE>
E. Lines of Credit
The Company had a committed line of credit of $50.0
million at both May 30, 1998 and June 28, 1997. The Company's
committed line of credit renews annually and is available
through December 1999. The Company also had an uncommitted
line of credit of $100.0 million and $150.0 million at May 30,
1998 and June 29, 1997 respectively. The uncommitted lines of
credit are cancelable by the bank at any time. Letters of
credit outstanding against these lines were $33.8 million and
$53.3 million at May 30, 1998 and June 28, 1997, respectively.
The Company had no borrowings under these credit lines
during fiscal 1998 or 1997.
Short-term borrowings against these lines of credit bear
interest at or below the lending bank's prime rate (8 1/2% at
May 30, 1998). The $50 million committed line of credit
requires a commitment fee on the unused portion of 1/5 of 1
percent.
F. Long-Term Debt
<TABLE>
<CAPTION>
Long-term debt consists of:
------------------------------------------------------------------------
May 30, June 28,
1998 1997
(in thousands)
------------------------------------------------------------------------
<S> <C> <C>
Subordinated Notes, 10.6%, due in
annual principal payments of $7.4
million from June 1998 to June 2005
with interest due semiannually $59,200 $59,200
Industrial Revenue Bonds, 5.84%,
due in semi-annual payments of
various amounts from September 1,
1998 to September 1, 2010 9,330 9,680
Urban Development Action Grant, non-
interest bearing, due April 1999 917 917
Promissory note, due at various dates
through 2000 (interest rate
imputed at 10.6%) 235 308
_______ _______
Subtotal 69,682 70,105
Less current portion (8,792) (7,831)
-------- -------
Long-Term Debt $60,890 $62,274
======= =======
</TABLE>
Page 43 of 181 <PAGE>
The Industrial Revenue Bonds and Urban Development Action
Grant were issued in connection with the construction of the
Company's distribution center. The Bonds are secured by a
first mortgage on the Company's distribution center. The
Urban Development Action Grant was secured by a second
mortgage on the facility. Indebtedness totaling $10.2 million
are secured by land and buildings with a net book value of
$19.4 million at May 30, 1998.
On July 1, 1996 the Company paid $5.4 million of the
Subordinated Notes as an early retirement of debt. As a
result of this payment, the annual installments due from June
1997 to June 2005 have decreased to $7.4 million from $8.0
million.
Long-term debt maturing in each of the next five fiscal
years is as follows: million; 1999 - $8.8 million; 2000 - $7.9
million; 2001 - $7.9 million; 2002 - $7.9 million, and 2003 -
$8.0 million.
As of May 30, 1998, the Company was in compliance with
all covenants related to its loan agreements. Several loan
agreements of the Company contain restrictions which, among
other things, require maintenance of certain financial ratios,
restrict encumbrance of assets and creation of indebtedness,
and limit the payment of dividends. At May 30, 1998, $243.9
million of the Company's retained earnings of $469.0 million
were unrestricted and available for the payment of dividends
under the most restrictive terms of the agreements.
G. Sales from Leased Departments
Retail sales from certain leased departments, included in
net sales, amounted to $39.4 million, $34.8 million, and $34.9
million in fiscal 1998, fiscal 1997 and fiscal 1996,
respectively.
H. Lease Commitments
The Company leases 231 stores and office spaces under
operating leases that will expire principally during the next
twenty years. The leases typically include renewal options
and escalation clauses and provide for contingent rentals
based on a percentage of gross sales.
Page 44 of 181 <PAGE>
The following is a schedule of future minimum lease
payments under the operating leases:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Fiscal Year (in thousands)
----------------------------------------------------------------------
<S> <C>
1999 $ 69,166
2000 66,145
2001 62,635
2002 58,574
2003 54,007
Thereafter 307,039
________
Total minimum lease payments $617,566
========
</TABLE>
The above schedule of future minimum lease payments has
not been reduced by future minimum sublease rental income of
$6.3 million under non-cancelable subleases and other
contingent rental agreements.
Total rental expenses under operating leases for the
periods ended May 30, 1998, June 28, 1997 and June 29, 1996
were $66.2 million, $67.0 million and $62.7 million,
respectively, including contingent rentals of $2.3 million,
$1.8 million, and $1.8 million respectively. Rent expense for
the above periods has not been reduced by sublease rental
income of $2.1 million, $4.0 million and $5.7 million which
has been included in other income for the periods ended May
30, 1998, June 28, 1997, and June 29, 1996, respectively.
The Company has irrevocable letters of credit in the
amount of $19.8 million to guarantee payment and performance
under certain leases, insurance contracts and utility
agreements.
I. Employee Retirement Plans
The Company has a noncontributory profit-sharing plan
covering employees who meet age and service requirements. The
Company also provides additional retirement security to
participants through a cash or deferred (salary deferral)
feature qualifying under Section 401(k) of the Internal
Revenue Code. Membership in the salary deferment feature is
voluntary. Employees may, up to certain prescribed limits,
contribute to the 401(k) plan and a portion of these
contributions are matched by the Company. In addition, under
the profit sharing feature, the Company's contribution to the
Page 45 of 181 <PAGE>
plan is determined annually by the Board of Directors. The
provision for Company profit sharing and 401(k) contributions
for the eleven months ended May 30, 1998 and the twelve months
ended June 28, 1997 were $6.5 million and $5.4 million
respectively. The provision for profit sharing contribution
was $4.2 million for the fiscal year ended June 29, 1996.
J. Income Taxes
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Period Ended 1998 1997 1996
(in thousands)
----------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $40,214 $32,504 $17,112
State and Other 6,559 7,138 2,390
------- ------- -------
Subtotal 46,773 39,642 19,502
Deferred (4,659) (395) 489
------- -------- -------
Total $42,114 $39,247 $19,991
======= ======= =======
</TABLE>
A reconciliation of the Company's effective tax rate with
the statutory federal tax rate is as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Period Ended 1998 1997 1996
-----------------------------------------------------------------------
<S> <C> <C> <C>
Tax at statutory rate 35.0% 35.0% 35.0%
State income taxes, net
of federal benefit 3.9 4.8 3.9
Other charges .9 1.2 1.9
----- ----- -----
Effective tax rate 39.8% 41.0% 40.8%
===== ===== =====
</TABLE>
Deferred income taxes for 1998 and 1997 reflect the
impact of "temporary differences" between amounts of assets
and liabilities for financial reporting purposes and such
amounts as measured by tax laws. These temporary differences
are determined in accordance with SFAS No. 109.
Page 46 of 181 <PAGE>
Temporary differences which give rise to deferred tax
assets and liabilities at May 30, 1998 and June 28, 1997 are
as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Period Ended 1998 1997
Deferred Deferred Tax Deferred Deferred Tax
Tax Assets Liabilities Tax Assets Liabilities
(in thousands)
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current:
Allowance for doubtful accounts $ 444 $ 384
Compensated absences 838 781
Inventory costs and reserves
capitalized for tax purposes 4,381 2,548
Insurance reserves 6,982 6,459
Prepaid items deductible
for tax purposes $ 1,582 $ 1,276
Other 144 305
------- ------- ------ -------
$12,789 $ 1,582 $10,477 $ 1,276
------- ------- ------- -------
Non-Current:
Depreciation 11,116 10,287
Accounting for rent expense 4,855 1,476
Pre-opening costs 2,502 2,410
Other 12 22
_______ _______ _______ _______
$ 7,357 $11,128 $ 3,886 $10,309
======= ======= ======= =======
</TABLE>
No valuation account is deemed necessary.
K. Supplementary Income Statement Information
<TABLE>
<CAPTION>
_______________________________________________________________________
Period Ended 1998 1997 1996
(in thousands)
-----------------------------------------------------------------------
<S> <C> <C> <C>
Repairs and Maintenance $19,977 $19,913 $16,631
</TABLE>
All other required items are omitted since they are less
than 1% of total revenues.
L. Incentive Plans
In April 1983, the stockholders of the Company adopted a
Stock Option and Stock Appreciation Rights Plan (the "1983
Plan") which authorized the granting of options for the
issuance of 1,125,000 shares of common stock. During 1988 the
stockholders authorized the issuance of an additional 675,000
shares of common stock for a total of 1,800,000 shares under
this Plan. The 1983 Plan provided for the issuance of
incentive stock options, nonqualified stock options and stock
appreciation rights. This plan expired in April, 1993. In
November, 1993, the stockholders of the Company approved a
stock incentive plan (the "1993 Plan"), authorizing the
granting of incentive stock options, non-qualified stock
Page 47 of 181 <PAGE>
options, stock appreciation rights, restricted stock,
performance stock and other stock based compensation. A total
of 540,000 shares of common stock have been reserved for
issuance under the 1993 Plan. A summary of stock options
transactions in fiscal periods 1996, 1997 and 1998 is as
follows (all share information has been restated to reflect
the six for five stock split):
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Weighted Average
Number Exercise Price
of Shares Per Share
----------------------------------------------------------------------
<S> <C> <C>
Options outstanding
July 1, 1995 . . . . . 401,461 $ 6.98
Options issued . . . . 46,680 $ 9.48
Options cancelled . . . ( 7,830) $ 5.23
Options exercised . . . (18,547) $ 7.12
________ ______
Options outstanding
June 29, 1996. . . . . 421,764 $ 7.28
Options issued. . . . . 20,880 $ 8.90
Options cancelled . . . (202) $ 4.56
Options exercised . . . (112,318) $ 5.74
_________ ______
Options outstanding
June 28, 1997 . . . . 330,124 $ 7.91
Options issued . . . . 75,700 $16.28
Options cancelled. . . (2,813) $ 6.62
Options exercised. . . (85,337) $ 6.12
-------- ------
Options outstanding
May 30, 1998. . . . . 317,674 $10.40
Options exercisable. . 241,974 $ 8.56
------- ------
</TABLE>
The following table summarizes information about the
stock options outstanding under the Company's option plans as
of May 30, 1998:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Options Outstanding Options Exercisable
------------------------------------------------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 5/30/98 Life Price at 5/30/98 Price
-------- ----------- ---------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$ 4.56 111,294 1.5 yrs $ 4.56 111,294 $ 4.56
$8.85-$9.58 100,560 7.3 yrs $ 9.38 100,560 $ 9.38
$16.28 75,700 9.8 yrs $16.28 - -
$20.57 30,120 5.8 yrs $20.57 30,120 $20.57
------- -------
317,674 241,974
======= =======
</TABLE>
Page 48 of 181 <PAGE>
The Company adopted the disclosure requirements of
Statement of Financial Accounting Standards No. 123 ("SFAS
123"), Accounting for Stock Based Compensation, effective with
the 1997 financial statements, but elected to continue to
measure compensation expense in accordance with APB Opinion
No. 25, Accounting for Stock Issued to Employees.
Accordingly, no compensation expense for stock options has
been recognized. If compensation expense had been determined
based on the estimated fair value of options granted in 1996,
1997 and 1998, consistent with the methodology in SFAS 123,
the pro forma effects on the Company's net income per share
would have been as follows (in thousands, except per share
amounts):
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
------- ------- -------
Net Income:
As reported $63,639 $56,515 $29,013
Pro forma $63,540 $56,146 $28,971
Net Income per Share:
As reported $1.34 $1.17 $0.59
Pro forma $1.34 $1.17 $0.59
</TABLE>
The fair value of each stock option granted is estimated
on the date of grant using the Black-Scholes option pricing
model with the following weighted average assumptions used for
grants in 1998, 1997 and 1996.
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
Risk-free interest rate 5.65% 6.5% 6.5%
Expected volatility 42.9% 42.9% 42.9%
Expected life 10 years 10 years 10 years
Contractual life 10 years 10 years 10 years
Fair value of options granted $10.38 $5.62 $6.50
</TABLE>
During the fiscal year ended June 29, 1996, a restricted
stock award of 10,000 shares of the Company's common stock was
made to an officer of the Company. The fair market value on
the date of the award was $108,800. The shares become vested
to the officer over a four year period based on certain
employment criteria. The unearned compensation related to
this award is being amortized over the vesting period.
Page 49 of 181 <PAGE>
M. Interim Financial Information (Unaudited)
(All amounts in thousands except per share data.)
<TABLE>
<CAPTION>
Basic and
Provision Diluted
(Benefit) Net Income
for Income Net Income (Loss) per
Quarter Net Sales Gross Profit Taxes (Loss) Share (1)(2)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998:
First $335,270 $118,835 ($ 7,054) ($10,207) ($ .21)
Second 778,230 288,755 46,876 70,373 1.48
Third 397,110 139,021 268 443 .01
Fourth 285,013 106,056 2,024 3,030 .06
(2 months)
1997:
First $307,240 $103,930 ($ 7,430) ($10,874) ($ .32)
Second 739,958 268,534 45,519 66,049 1.36
Third 382,420 134,171 2,885 3,852 .08
Fourth 328,750 124,758 ( 1,727) ( 2,512) ( .05)
</TABLE>
____________________
(1) Net income per share is based on the weighted average
number of shares outstanding during each of the quarters.
The sum of the four quarters may not equal the full year
computation due to rounding.
(2) Adjusted to give retroactive effect to six for five stock
split effective October, 1997.
On an interim basis the Company values inventory using
the gross profit method and at year-end values inventory at
the lower of FIFO cost or market as determined by the retail
inventory method. The annual adjustment for the difference
between actual gross profit and interim estimated gross profit
is recorded in the fourth quarter of the fiscal year. This
adjustment was not material for the fiscal years ended May 30,
1998 and June 28, 1997. Results of quarterly operations are
impacted by the highly seasonal nature of the Company's
business, timing of certain holiday selling seasons and the
comparability of calendar weeks within a quarter as a result
of the 52/53 week fiscal years.
Page 50 of 181 <PAGE>
N. Fair Value of Financial Instruments
The carrying values of cash and cash equivalents,
accounts receivable and accounts payable approximate fair
value because of the short maturities of these items.
Interest rates that are currently available to the
Company for issuance of notes payable and long-term debt
(including current maturities) with similar terms and
remaining maturities are used to estimate fair value for debt
issues. The estimated fair value of long-term debt (including
current maturities) is as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
May 30, 1998 June 28, 1997
Carrying Fair Carrying Fair
Amount Value Amount Value
(in thousands)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-Term Debt
(including current maturities) $69,682 $70,864 $70,105 $71,132
</TABLE>
The fair values presented herein are based on pertinent
information available to management as of the respective year
ends. Although management is not aware of any factors that
could significantly affect the estimated fair value amounts,
such amounts have not been comprehensively revalued for
purposes of these financial statements since that date, and
current estimates of fair value may differ from amounts
presented herein.
O. Legal Matters
In late September, 1994, the Company received summons and
complaint in three separate purported class action lawsuits.
Each of the complaints was consolidated into a single amended
complaint which sought unspecified damages and alleged a cause
of action arising under certain federal securities laws for
alleged material misstatements and omissions in public
statements by the Company and five executive officers
purportedly causing the market price of the Company's common
stock to be artificially inflated during the period October 4,
1993 through September 23, 1994, inclusive. On February 20,
1996, the District Court dismissed the plaintiffs' amended
complaint in its entirety. In March, 1996, plaintiffs filed
an appeal from the District Court's decision in the United
States Court of Appeals for the Third Circuit. The appeal was
orally argued before a panel of three judges on December 12,
1996. On June 12, 1997 the panel rendered an unanimous
Page 51 of 181 <PAGE>
decision affirming the District Court's dismissal of the
action but ruled that the District Court should allow the
plaintiffs to attempt to replead two of the six claims. The
matter was then remanded to the District Court where
plaintiffs filed a further amended complaint in an effort to
cure such deficiencies. Among other changes, the amended
complaint dropped all claims against Andrew Milstein, Stephen
Milstein and Mark Nesci. On July 1, 1998 the Company brought
a motion to dismiss plaintiffs' latest pleading on the grounds
that it is legally insufficient under the Court of Appeals'
decision. The motion has been fully briefed and the parties
await word from the court either deciding the motion or
scheduling oral argument thereof. The Company is unable to
determine the probability of any settlement loss with respect
to these class action suits or the materiality thereof at this
time and accordingly has not established any reserve for this
matter in the accompanying consolidated financial statements.
From time to time in the ordinary course of business, the
Company is party to other litigation. The Company has
established reserves relating to its legal claims and believes
that potential liabilities in excess of those recorded will
not have a material adverse effect on the Company's
Consolidated Financial Statements; however, there can be no
assurances to this effect.
Dividend Policy
On September 8, 1997, the Board of Directors of the Company
declared the Company's first cash dividend in the amount of two
cents ($.02) per share payable annually. Maintenance of the cash
dividend policy or any change thereto in the future will be at the
discretion of the Company's Board of Directors and will depend upon
the financial condition, capital requirements and earnings of the
Company as well as other factors which the Board of Directors may
deem relevant. At present, the policy of the Board of Directors is
to retain the majority of earnings to finance the growth and
development of the Company's business. At May 30, 1998, $243.9
million of the Company's retained earnings were unrestricted and
available for the payment of dividends under the most restrictive
terms of certain loan agreements.
Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's Common Stock is traded on the New York Stock
Exchange, Inc. and its trading symbol is "BCF." The following
Page 52 of 181 <PAGE>
table provides the high and low closing prices on the New York
Stock Exchange for each fiscal quarter for the period from July 2,
1995 to May 30, 1998 and for the two months ended July 31, 1998:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Period Low Price High Price
- -----------------------------------------------------------------
<S> <C> <C>
June 30, 1996 to
September 28, 1996 8 5/16 9 1/4
- -----------------------------------------------------------------
September 29, 1996 to
December 28, 1996 8 7/8 11 1/8
- -----------------------------------------------------------------
December 29, 1996 to
March 29, 1997 10 3/16 14 7/8
- -----------------------------------------------------------------
March 30, 1997 to
June 28, 1997 14 3/8 16 11/16
- -----------------------------------------------------------------
June 29, 1997 to
September 27, 1997 12 3/8 20
- -----------------------------------------------------------------
September 28, 1997 to
December 27, 1997 14 5/16 19 15/16
- -----------------------------------------------------------------
December 28, 1997 to
March 28, 1998 14 7/16 17 3/4
- -----------------------------------------------------------------
March 29, 1998 to
May 30, 1998 16 5/16 20 1/2
- -----------------------------------------------------------------
May 31, 1998 to
July 31, 1998 18 3/8 27 7/16
- -----------------------------------------------------------------
</TABLE>
As of July 31, 1998, there were 355 record holders of the
Company's Common Stock. The number of record holders does not
reflect that number of beneficial owners of the Company's Common
Stock for whom shares are held by Cede & Co., certain brokerage
firms and others.
Page 53 of 181 <PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
Schedule II - Valuation and Qualifying Accounts
(All amounts in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
COL.A COL.B COL.C COL.D COL.E
- ----------------------------------------------------------------------------------
BALANCE AT CHARGED TO BALANCE
BEGINNING CHARGED TO OTHER ACCOUNTS AT END OF
DESCRIPTION OF PERIOD EXPENSE ACCOUNTS WRITTEN OFF PERIOD
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Period ended 5/30/98
- --------------------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS -
ACCOUNTS RECEIVABLE $ 953 $7,187 $0 ($7,037) $1,103
Period ended 6/28/97
- --------------------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS -
ACCOUNTS RECEIVABLE $ 990 $7,203 $0 ($7,240) $ 953
Period ended 6/29/96
- --------------------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS -
ACCOUNTS RECEIVABLE $3,711 $6,068 $0 ($8,789) $ 990
</TABLE>
Page 54 of 181 <PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
Page 55 of 181 <PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
Page 56 of 181 <PAGE>
File No. 1-8739
============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
EXHIBITS FILED WITH
FORM 10-K
FOR FISCAL YEAR ENDED
MAY 30, 1998
under
The Securities Exchange Act of 1934
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
(Exact Name of Registrant as specified in its Charter)
Page 57 of 181 <PAGE>
INDEX TO EXHIBITS
Exhibits Page No.
- -------- --------
3.1 Articles of Incorporation, as Amended 60
3.2 By-laws 85
10.1 1993 Stock Incentive Plan 113
10.2 1998 Stock Incentive Plan 143
10.3 Revolving Credit Agreement dated 1/
August 30, 1995 between the Company
and BancOhio National Bank, as amended
through Amendment No. 6
10.4 Amendment No. 7 to Revolving Credit 170
Agreement dated June 1, 1998 between
the Company and National City Bank.
10.5 Burlington Coat Factory Warehouse 1/
Corporation 401(k) Profit Sharing Plan
(as amended and restated effective
June 19, 1997)
10.6 Instrument of Amendment to Burlington 173
Coat Factory Warehouse Corporatio
401(k) Profit Sharing Plan effective
January 1, 1999.
10.7 Loan Agreement dated as of 3/
August 1, 1995 by and between
New Jersey Economic Development
Authority and Burlington Coat Factory
Warehouse of New Jersey, Inc.
________________________
(1) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended June
29, 1996, File No. 1-8739
(2) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended June
28, 1997, File No. 1-8739
(3) Incorporated by reference to Exhibit filed with the Company's
Annual Report on Form 10-K for the year ended July 1, 1995.
File No. 1-8739.
Page 58 of 181 <PAGE>
Exhibits Page No.
- -------- --------
10.8 Assignment of Leases dated as of 3/
August 1, 1995 from Burlington
Coat Factory Warehouse of New
Jersey, Inc. to First Fidelity Bank,
National Association
10.9 Mortgage and Security Agreement dated 3/
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank, National
Association
10.10 Indenture of Trust dated as of 3/
August 1, 1995 by and between
New Jersey Economic Development
Authority and Shawmut Bank
Connecticut, National Association
10.11 Guaranty and Suretyship Agreement dated 3/
as of August 1, 1995 from the Company
to First Fidelity Bank, National
Association
10.12 Letter of Credit Reimbursement Agreement 3/
dated as of August 1, 1995 between
Burlington Coat Factory Warehouse of
New Jersey, Inc. and First Fidelity
Bank, National Association
10.13 Environmental Indemnity Agreement dated 3/
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank, National
Association
10.14 Note Agreement dated June 27, 1990 3/
21 Subsidiaries of Registrant 176
23 Consent of Deloitte & Touche LLP inde- 178
pendent certified public accountants,
to the use of their report on the
financial statements of the Company for
the eleven months in the period ended
May 30, 1998 in the Registration
Statements of the Company on Form S-8,
Registration No. 2-96332, No. 33-21569,
No. 33-51965 and No. 333-41077
27 Financial Data Schedule 180
Page 59 of 181 <PAGE>
Exhibit 3.1
Page 60 of 181 <PAGE>
CERTIFICATE OF INCORPORATION
of
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
FIRST: The name of the Corporation is
Burlington Coat Factory Warehouse Corporation.
SECOND: The address of the registered office
of the Corporation in the State of Delaware is 306 South
State Street, in the City of Dover, County of Kent. The
name of its registered agent at that address is the United
States Corporation Company.
THIRD: The purpose of the Corporation is to
engage in any lawful act or activity for which a corpora-
tion may be organized under the General Corporation Law of
Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").
FOURTH: I. The total number of shares of stock
which the Corporation shall have authority to issue is
55,000,000 shares of which 50,000,000 shares, par value
$1.00 per share, shall be of a class designated "Common
Stock" and of which 5,000,000 shares, par value $1.00 per
share, shall be designated "Preferred Stock."
II. The Board of Directors of the Corporation
is authorized, subject to limitations prescribed by law
and the provisions of this Article FOURTH, to provide for
the issuance from time to time in one or more series of
any number of shares of Preferred Stock, and, by filing a
certificate pursuant to the GCL, to establish the number
of shares to be included in each such series, and to fix
the designation, relative rights, preferences, qualifica-
tions and limitations of the shares of each such series.
The authority of the Board of Directors with respect to
each series shall include, but not be limited to, deter-
mination of the following:
1
Page 61 of 181 <PAGE>
A. The number of shares constituting that
series and the distinctive designation of that
series;
B. The dividend rate on the shares of
that series, whether dividends shall be cumula-
tive, and, if so, from which date or dates, and
whether they shall be payable in preference to,
or in another relation to, the dividends payable
on any other class or classes or series of
stock;
C. Whether that series shall have voting
rights, in addition to the voting rights pro-
vided by law, and, if so, the terms of such
voting rights;
D. Whether that series shall have conver-
sion or exchange privileges, and, if so, the
terms and conditions of such conversion or
exchange, including provision for adjustment of
the conversion or exchange rate in such events
as the Board of Directors shall determine;
E. Whether or not the shares of that
series shall be redeemable, and, if so, the
terms and conditions of such redemption, in-
cluding the manner of selecting shares for
redemption if less than all shares are to be
redeemed, the date or dates upon or after which
they shall be redeemable, and the amount per
share payable in case of redemption, which
amount may vary under different conditions and
at different redemption dates;
F. Whether that series shall be entitled
to the benefit of a sinking fund to be applied
to the purchase or redemption of shares of that
series, and, if so, the terms and amounts of
such sinking fund;
G. The right of the shares of that series
to the benefit of conditions and restrictions
upon the creation of indebtedness of the Corpo-
ration or any subsidiary, upon the issue of any
additional stock (including additional shares of
such series or of any other series) and upon the
payment of dividends or the making of other
distributions on, and the purchase, redemption
or other acquisition by the Corporation or any
subsidiary of any outstanding stock of the
Corporation;
2
Page 62 of 181 <PAGE>
H. The right of the shares of that series
in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation and whether such rights shall be in
preference to, or in another relation to, the
comparable rights of any other class or classes
or series of stock; and
I. Any other relative, participating, optional
or other special rights, qualifications, limitations
or restrictions of that series.
III. Shares of any series of Preferred Stock
which have been redeemed (whether through the operation of
a sinking fund or otherwise) or which, if convertible or
exchangeable, have been converted into or exchanged for
shares of stock of any other class or classes shall have
the status of authorized and unissued shares of Preferred
Stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be
reclassified and reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions
of the Board of Directors or as part of any other series
of Preferred Stock, all subject to the conditions and the
restrictions on issuance set forth in the resolution or
resolutions adopted by the Board of Directors providing
for the issue of any series of Preferred Stock.
IV. Subject to the provisions of any applicable
law, or except as otherwise provided by the resolution or
resolutions providing for the issue of any series of
Preferred Stock, the holders of outstanding shares of
Common Stock shall exclusively possess voting power for
the election of directors and for all other purposes, each
holder of record of shares of Common Stock being entitled
to one vote for each share of Common Stock standing in his
name on the books of the Corporation.
V. Except as otherwise provided by the resolu-
tion or resolutions providing for the issue of any series
of Preferred Stock, after payment shall have been made to
3
Page 63 of 181 <PAGE>
the holders of Preferred Stock of the full amount of
dividends to which they shall be entitled pursuant to the
resolution or resolutions providing for the issue of any
series of Preferred Stock, the holders of Common Stock
shall be entitled, to the exclusion of the holders of
Preferred Stock of any and all series, to receive such
dividends as from time to time may be declared by the
Board of Directors.
VI. Except as otherwise provided by the reso-
lution or resolutions providing for the issue of any
series of Preferred Stock, in the event of any liquida-
tion, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment shall have
been made to the holders of Preferred Stock of the full
amount to which they shall be entitled pursuant to the
resolution or resolutions providing for the issue of any
series of Preferred Stock, the holders of Common Stock
shall be entitled, to the exclusion of the holders of
Preferred Stock of any and all series, to share, ratably
according to the number of shares of Common Stock held by
them, in all remaining assets of the Corporation available
for distribution to its stockholders.
VII. The number of authorized shares of any
class may be increased or decreased by the affirmative
vote of the holders of a majority of the stock of the
Corporation entitled to vote.
FIFTH: The name and mailing address of the
Sole Incorporator is as follows:
Name Mailing Address
Nesa E. Hassanein c/o Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
SIXTH: I. The business and affairs of the
Corporation shall be managed by or under the direction of
a Board of Directors consisting of not less than three
directors, the exact number of directors to be determined
from time to time by resolution adopted by the affirmative
vote of a majority of the entire Board of Directors. Any
vacancy on the Board of Directors that results from an
increase in the number of directors may be filled by a
majority of the Board of Directors then in office, and
4
Page 64 of 181 <PAGE>
any other vacancy occurring in the Board of Directors may
be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining di-
rector.
Notwithstanding the foregoing, whenever the
holders of any one or more classes or series of Preferred
Stock issued by the Corporation shall have the right,
voting separately by class or series, to elect directors
at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other
features of such directorships shall be governed by the
terms of this Certificate of Incorporation applicable
thereto.
II. Except to the extent prohibited by law, the
Board of Directors shall have the right (which, to the
extent exercised, shall be exclusive) to establish the
rights, powers, duties, rules and procedures that from
time to time shall govern the Board of Directors and each
of its members, including without limitation the vote
required for any action by the Board of Directors, and
that from time to time shall affect the directors' power
to manage the business and affairs of the Corporation; and
no By-Law shall be adopted by stockholders which shall
impair or impede the implementation of the foregoing.
SEVENTH: Meetings of stockholders may be held
within or without the State of Delaware, as the By-Laws
may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Di-
rectors or in the By-Laws of the Corporation.
EIGHTH: Whenever a compromise or arrangement
is proposed between the Corporation and its creditors or
any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the
application in a summary way of the Corporation or of any
creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation
under the provisions of Section 291 of Title 8 of the GCL
or on the application of trustees in dissolution or of any
receiver or receivers appointed for the Corporation
5
Page 65 of 181 <PAGE>
under the provisions of Section 279 of Title 8 of the GCL,
order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree
to any compromise or arrangement and to any reorganization
of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the
said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on
all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation,
as the case may be, and also on the Corporation.
NINTH: I. Subject to paragraph III of this
Article NINTH, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of
the Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation
(for purposes of this Article NINTH, "Corporation" shall
include Burlington Coat Factory Warehouse, a New Jersey
corporation), or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation,
provided, however, that with respect to any such action,
suit or proceeding voluntarily initiated by any such
person, indemnification shall be mandatory only if the
initiation of such action, suit or proceeding was autho-
rized by a majority of the entire Board of Directors or if
such person has been successful on the merits, and, with
respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea
6
Page 66 of 181 <PAGE>
of nolo contendere or its equivalent, shall not, of it-
self, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his
conduct was unlawful.
II. Subject to paragraph III of this Article
NINTH, the Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its
favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a direc-
tor, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation;
except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corpora-
tion unless and only to the extent that the Court of
Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem
proper.
III. Any indemnification under this Article
NINTH (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director,
officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set
forth in paragraphs I and II of this Article NINTH, as the
case may be. Such determination shall be made (i) by the
Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable a quorum of disin-
7
Page 67 of 181 <PAGE>
terested directors so directs, by independent legal coun-
sel in a written opinion, or (iii) by the stockholders. To
the extent, however, that a director, officer, employee or
agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding
described above, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably
incurred by him in connection therewith, without the
necessity of authorization in the specific case.
IV. For purposes of any determination under
paragraph III of this Article NINTH, a person shall be
deemed to have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable
cause to believe his conduct was unlawful, if his action
is based on the records or books of account of the Corpo-
ration or another enterprise, or on information supplied
to him by the officers of the Corporation or another
enterprise in the course of their duties, or on the advice
of legal counsel for the Corporation or another enterprise
or on information or records given or reports made to the
Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other
expert selected with reasonable care by the Corporation or
another enterprise. The term "another enterprise" as used
in this paragraph IV shall mean any other corporation or
any partnership, joint venture, trust or other enterprise
of which such person is or was serving at the request of
the Corporation as a director, officer, employee or agent.
The provisions of this paragraph IV shall not be deemed to
be exclusive or to limit in any way the circumstances in
which a person may be deemed to have met the applicable
standard of conduct set forth in paragraphs I and II of
this Article NINTH, as the case may be.
V. Notwithstanding any contrary determination
in the specific case under paragraph III of this Article
NINTH, and notwithstanding the absence of any determina-
tion thereunder, any director, officer, employee or agent
may apply to any court of competent jurisdiction in the
State of Delaware for indemnification to the extent oth-
erwise permissible under paragraphs I and II of this
Article NINTH. The basis of such indemnification by a
court shall be a determination by such court that indem-
8
Page 68 of 181 <PAGE>
nification of the director, officer, employee or agent is
proper in the circumstances because he has met the appli-
cable standards of conduct set forth in paragraphs I and
II of this Article NINTH, as the case may be. Notice of
any application for indemnification pursuant to this
paragraph V shall be given to the Corporation promptly
upon the filing of such application.
VI. Expenses incurred in defending or investi-
gating a threatened or pending criminal or civil action,
suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to
repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the Corporation
as authorized in this Article NINTH.
VII. The indemnification provided by this
Article NINTH shall not be deemed exclusive of any other
rights to which those seeking indemnification may be
entitled under any By-Law, agreement, contract, vote of
stockholders or disinterested directors or pursuant to the
direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in their of-
ficial capacity and as to action in another capacity while
holding such office, it being the policy of the
Corporation that indemnification of the persons specified
in paragraphs I and II of this Article NINTH shall be made
to the fullest extent permitted by law. The provisions of
this Article NINTH shall not be deemed to preclude the
indemnification of any person who is not specified in
paragraphs I and II of this Article NINTH but whom the
Corporation has the power or obligation to indemnify under
the provisions of the GCL or otherwise. The
indemnification provided by this Article NINTH shall
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit
of the heirs, executors and administrators of such a
person.
VIII. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corpo-
ration, partnership, joint venture, trust or other enter-
9
Page 69 of 181 <PAGE>
prise, 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 would
have the power or the obligation to indemnify him against
such liability under the provisions of this Article NINTH.
IX. For purposes of this Article NINTH, refer-
ences to "the Corporation" shall include, in addition to
the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence
had continued, would have had power and authority to
indemnify its directors officers, and employees or agents,
so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is
or was serving at the request of such constituent
corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise, shall stand in the same position under
the provisions of this Article NINTH with respect to the
resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate
existence had continued.
X. For purposes of this Article NINTH, refer-
ences to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of
the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee
benefit plan, its participants, or beneficiaries; and a
person who acted in good faith and in a manner he
reasonably believed to be in the interest of the partici-
pants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the
best interests of the Corporation" as referred to in this
Article NINTH.
TENTH: The Corporation reserves the right to
amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred
10
Page 70 of 181 <PAGE>
upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the incorporator
hereinbefore named, for the purpose of forming a corpora-
tion pursuant to the GCL, do make this Certificate, hereby
declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have
hereunto set my hand this 20th day of April, 1983.
/s/Nesa E. Hassanein
_____________________
11
Page 71 of 181 <PAGE>
STATE OF DELAWARE
KENT COUNTY
RECORDED, In the Office for the Recording of Deeds, Etc.
at Dover, In and for the said County of Kent, In Corp.
Record V Vol. 80 Page 257 Etc.
the 20th day of April A. D. 19 83
WITNESS my Hand and the Seal of said office.
/s/ Robert J. Donaway
____________________ , Recorder
Page 72 of 181 <PAGE>
State
of
DELAWARE
Office of SECRETARY OF STATE
I, Glenn C. Kenton, Secretary of State of the State of Delaware,
do hereby certify that the attached is a true and correct copy of
Certificate of Amendment
filed in this office on April 27, 1983.
/s/ Glenn C. Keaton
___________________________________
RECEIVED FOR RECORD Glenn C. Kenton, Secretary of State
BY: /s/ L. King
______________
DATE: April 27, 1983
Form 130
Page 73 of 181 <PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
Burlington Coat Factory Warehouse Corporation
-----------------------------------------
In accordance with the provisions of
Section 242 of the General Corporation
Law of the State of Delaware
--------------------------------------
The undersigned officers of Burlington Coat
Factory Warehouse Corporation (the "Corporation"), a
corporation organized and existing under the laws of the
State of Delaware, do hereby certify as follows:
FIRST: That the Board of Directors of the
Corporation has duly adopted, by unanimous written con-
sent in lieu of a meeting of the Board of Directors,
resolutions to amend the Certificate of Incorporation of
the Corporation by adding a new Article ELEVENTH which
shall be and read in its entirety as follows:
"ELEVENTH: The By-Laws of the
Corporation may be amended, altered, changed or
repealed, in whole or in part, and any new By-Law adopted,
by the affirmative vote of (i) the holders of a
majority of the outstanding shares
of stock of the Corporation entitled to vote
thereon, subject to paragraph II of Article
SIXTH of this Certificate of Incorporation, or
(ii) a majority of the entire Board of Direc-
tors."
Page 74 of 181 <PAGE>
SECOND: That such amendment to the
Certificate of Incorporation of the Corporation has been
duly adopted in accordance with the provisions of the
General Corporation Law of the State of Delaware by the
written consent of the holders of not less than a
majority of the outstanding stock entitled to vote
thereon and that written notice of the corporate action
has been given to those stockholders of the Corporation
who have not so consented in writing, all in accordance
with the provisions of Section 228 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, we, the undersigned, do
make this Certificate of Amendment, hereby declaring and
certifying that this is the act and deed of the Corpora-
tion and that the facts herein stated are true, and ac-
cordingly have hereunto set our hands this 27th day of
April, 1983.
/s/ Monroe G. Milstein
______________________
Monroe G. Milstein
President
Attest:
/s/ Henrietta Milstein
______________________
Henrietta Milstein
Secretary
2
Page 75 of 181 <PAGE>
STATE OF DELAWARE
KENT COUNTY
RECORDED, In the Office for the Recording of Deeds, Etc.
at Dover, In and for the said County of Kent, In Corp.
Record Z Vol. 80 Page 201 Etc.
the 28th day of April A. D. 19 83
WITNESS my Hand and the Seal of said office.
/s/Robert J. Donaway
___________________ , Recorder
Page 76 of 181 <PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL HARKINS. SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND
COPY OF THE CERTIFICATE OF AMENDMENT OF BURLINGTON COAT
FACTORY WAREHOUSE CORPORATION FILED IN THIS OFFICE ON THE
TWENTY-SEVENTH DAY OF MARCH. A.D. 1987, AT 9 O'CLOCK A.M.
RECEIVED FOR RECORD
RECORDER
$3.00 STATE DOCUMENT FEE PAID
/s/ Michael Harkins
_______________________________________
Michael Harkins, Secretary of State
AUTHENTICATION: | 1187019
Page 77 of 181 <PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
(Pursuant to Section 242 of the Delaware
General Corporation Law)
IT is hereby certified that:
1. The Certificate of Incorporation of Burlington Coat Factory
Warehouse Corporation (the "Corporation") was filed by the Secretary of
State of Delaware on April 20, 1983.
2. The following amendment to the Certificate of Incorporation of
the Corporation was duly adopted by at least a majority of the outstanding
stock of the Corporation entitled to vote thereon at a meeting duly called
and held on March 25, 1987 pursuant to the provisions of Sections 222 and
242 of the Delaware General Corporation Law:
(1) Article NINTH of the Certificate of Incorporation is
hereby amended by deleting paragraphs I through VIII, inclusive,
thereof and replacing them with the following:
I. Elimination of Certain Liability of Directors.
A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
II. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Corporation
Page 78 of 181 <PAGE>
(for the purposes of this Article NINTH, "Corporation"
shall include Burlington Coat Factory Warehouse, a New Jersey
corporation) or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized
by the Delaware General Corporation Law, as the same exists
or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said
law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as
provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection
with a proceeding (or part thereof) initiated by such person
only if such proceeding (or part thereof) was authorized by the
board of directors of the Corporation. The right to indemnif-
ication conferred in this Paragraph shall be a contract right
and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if
the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be
indemnified under this Paragraph or otherwise. The Corporation
may, by action of its Board of Directors, provide indemni-
fication to employees and agents of the Corporation with the
same scope and effect as the foregoing indemnification of
directors and officers.
2
Page 79 of 181 <PAGE>
(b) Right of Claimant to Bring Suit. If a claim under
subparagraph (a) of this Paragraph is not paid in full by the
Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense
of prosecuting such claim. It shall be a defense to any
such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its
final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it
permissible under the Delaware General Corporation Law for the
Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the claimant has not met such
applicable standard or conduct, shall be a defense to the action
or create a presumption that the claimant has not met the
applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to
indemnification and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in this
Paragraph shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or
otherwise.
3
Page 80 of 181 <PAGE>
(d) Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer,
employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against
any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware
General Corporation Law.
(2) Paragraphs IX and X of Article NINTH are hereby
renumbered as Paragraphs III and IV, respectively.
3. The Certificate of Incorporation of the Corporation, so
amended, shall remain the Certificate of Incorporation of the Corporation
until further changed or amended pursuant to the provisions of the
Delaware General Corporation Law.
IN WITNESS WHEREOF, the undersigned have hereunto signed their
names affirming that the statements made herein are true under the
penalties of perjury this 25th day of March, 1987.
/s/ Monrore G. Milstein
_______________________
Monroe G. Milstein,
Chairman of the Board,
Chief Executive Officer
and President
Attest:
/s/ Henrietta Milstein
_____________________________
Henrietta Milstein, Secretary
-4-
Page 81 of 181 <PAGE>
STATE OF DELAWARE
KENT COUNTY
RECORDED, In the Office for the Recording of Deeds, Etc.
at Dover, In and for the said County of Kent, In Corp.
Record O Vol. 104 Page 346 Etc.
the 31th day of March A. D. 19 87
WITNESS my Hand and the Seal of said office.
/s/
___________________________, Recorder
Page 82 of 181 <PAGE>
State of Delaware
PAGE 1
Office of the Secretary of State
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE
OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND
CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF
"BURLINGTON COAT FACTORY WAREHOUSE CORPORATION" FILED IN
THIS OFFICE ON THE TWENTY-FOURTH DAY OF NOVEMBER, A.D. 1992,
AT 3:15 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED
TO NEW CASTLE COUNTY RECORDER OF DEEDS ON THE FOURTH DAY
OF DECEMBER, A.D. 1992 FOR RECORDING.
* * * * * * * *
/s/ Michael Ratchford
____________________________________
Michael Ratchford, Secretary of State
AUTHENTICATION:
* 3695504
923305002 DATE: 12/04/1992
Page 83 of 181 <PAGE>
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is Burlington coat Factory Warehouse Corporation.
2. The Certificate of Incorporation or the Corporation is hereby
amended by striking out Article FOURTH: I, thereof and by substituting in
lieu of said Article FOURTH: I. the following new Article FOURTH: I. :
"FOURTH: I. The total number of shares of stock which the
Corporation shall have authority to issue is 105,000,000 shares of
which 100,000,000 shares, par value $1.00 per share, shall be of a
class designated "Common Stock" and of which 5,000,000 shares par
value $1.00 per share, shall be designated "Preferred Stock."
3. The amendment of the Certificate of Incorporation herein
certified has been duly adopted in accordance with the provisions of
Section 243 of the General Corporation Law of the State of Delaware.
Signed and attested to on November 10, 1992.
/s/ Monroe G. Milstein
____________________________
Monroe G. Milstein, President
Attest:
/s/ Henrietta Milstein
_____________________________
Henrietta Milstein, Secretary
Page 84 of 181 <PAGE>
Exhibit 3.2
Page 85 of 181 <PAGE>
BY-LAWS
OF
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered
office of the Corporation shall be in the City of Dover,
County of Kent, State of Delaware.
Section 2. Other Offices. The Corporation may
also have offices at such other places both within and
without the State of Delaware as the Board of Directors
may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of
the stockholders for the election of directors or for
any other purpose shall be held at such time and place,
either within or without the State of Delaware as shall
be designated from time to time by the Board of
Directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meet-
Page 86 of 181 <PAGE>
ing of Stockholders shall be held on such date and at
such time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meet-
ing, at which meeting the stockholders shall elect by a
plurality vote a class of the Board of Directors as set
forth in the Certificate of Incorporation, and transact
such other business as may properly be brought before the
meeting. Written notice of the Annual Meeting stating
the place, date and hour of the meeting shall be given to
each stockholder entitled to vote at such meeting not
less than twenty nor more than sixty days before the date
of the meeting.
Section 3. Special Meetings. Unless otherwise
prescribed by law or by the Certificate of Incorporation,
Special Meetings of Stockholders, for any purpose or
purposes, may be called by either (i) the Chairman, if
there be one, or (ii) the President, (iii) any Vice Pres-
ident, if there be one, (iv) the Secretary or (v) any
Assistant Secretary, if there be one, and shall be called
by any such officer at the request in writing of a major-
ity of the Board of Directors or of stockholders owning a
majority of the capital stock of the Corporation issued
and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting.
Written notice of a Special Meeting stating the place,
2
Page 87 of 181 <PAGE>
date and hour of the meeting and the purpose or purposes
for which the meeting is called shall be given not less
than twenty nor more than sixty days before the date of
the meeting to each stockholder entitled to vote at such
meeting.
Section 4. Quorum. Except as otherwise pro-
vided by law or by the Certificate of Incorporation, the
holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum
at all meetings of the stockholders for the transaction
of business. If, however, such quorum shall not be pre-
sent or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have power to ad-
journ the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be
present or represented, provided, however, that if the
adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given
to each stockholder entitled to vote at the meeting. At
any such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted
3
Page 88 of 181 <PAGE>
which might have been transacted at the meeting as origi-
nally noticed.
Section 5. Voting. Unless otherwise required
by law, the Certificate of Incorporation or these By-
Laws, any question brought before any-meeting of stock
holders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote
thereat. Each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for each
share of the capital stock entitled to vote thereat held
by such stockholder. Such votes may be cast in person or
by proxy but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a
longer period. The Board of Directors, in its discre-
tion, or the officer of the Corporation presiding at a
meeting of stockholders, in his discretion, may require
that any votes cast at such meeting shall be cast by
written ballot.
Section 6. Consent of Stockholders in Lieu of
Meeting. Unless otherwise provided in the Certificate of
Incorporation, any action required or permitted to be
taken at any Annual or Special Meeting of Stockholders of
the Corporation, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing,
4
Page 88 of 181 <PAGE>
setting forth the act in so taken, shall be signed by the
holders of outstanding stock having not less than the
minimum number of votes that would be necessary to autho-
rize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be
given to those stockholders who have not consented in
writing.
Section 7. List of Stockholders Entitled to
Vote. The officer of the Corporation who has charge of
the stock ledger of the Corporation shall prepare and
make, at least ten days before every meeting of stock-
holders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and
showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such
list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at
the place where the meeting is to be held. The list
5
Page 90 of 181 <PAGE>
shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be
inspected by any stockholder of the Corporation who is
present.
Section 8. Stock Ledger. The stock ledger of
the Corporation shall be the only evidence as to who are
the stockholders entitled to examine the stock ledger,
the list required by Section 7 of this Article II or the
books of the Corporation, or to vote in person or by
proxy at any meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors.
The number of directors of the Corporation which shall
constitute the entire Board of Directors shall be such
number as initially fixed by the Incorporator and there-
after as fixed by the Board of Directors in accordance
with the Certificate of Incorporation. Except as provid-
ed in Section 2 of this Article, directors shall be
elected by a plurality of the votes cast at Annual Meet-
ings of Stockholders, and each director so elected shall
hold office until the next Annual Meeting and until his
successor is duly elected and qualified, or until his
earlier resignation or removal. Any director may resign
6
Page 91 of 181 <PAGE>
at any time upon notice to the Corporation. Directors
need not be stockholders.
Section 2. Vacancies. Vacancies and newly
created directorships resulting from any increase in the
authorized number of directors, death, resignation or
removal may be filled by the directors then in office in
accordance with the Certificate of Incorporation.
Section 3. Duties and Powers. The business of
the Corporation shall be managed by or under the direc-
tion of the Board of Directors which may exercise all
such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certifi-
cate of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of
the Corporation may hold meetings, both regular and spe-
cial, either within or without the State of Delaware.
Regular meetings of the Board of Directors may be held
without notice at such time and at such place as may from
time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called
by the Chairman, if there be one, the President, or any
two directors. Notice thereof stating the place, date
and hour of the meeting shall be given to each director
7
Page 92 of 181 <PAGE>
either by mail not less than forty-eight (48) hours be-
fore the date of the meeting, by telephone or telegram on
twenty-four (24) hours' notice, or on such shorter notice
as the person or persons calling such meeting may deem
necessary or appropriate in the circumstances.
Section 5. Quorum. Except as may be otherwise
specifically provided by law, the Certificate of Incorpo-
ration or these By-Laws, at all meetings of the Board of
Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any
meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present
at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meet-
ing, until a quorum shall be present.
Section 6. Actions of Board. Unless otherwise
provided by the Certificate of Incorporation or these By-
Laws, any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all the mem-
bers of the Board of Directors or committee, as the case
may be, consent thereto in writing, and the writing or
8
Page 93 of 181 <PAGE>
writings are filed with the minutes of proceedings of the
Board of Directors or committee.
Section 7. Meetings by Means of Conference
Telephone. Unless otherwise provided by the Certificate
of Incorporation or these By-Laws, members of the Board
of Directors of the Corporation, or any committee desig-
nated by the Board of Directors, may participate in a
meeting of the Board of Directors or such committee by
means of a conference telephone or similar communications
equipment by means of which all persons participating in
the meeting can hear each other, and participation in a
meeting pursuant to this Section 7 shall constitute pres-
ence in person at such meeting.
Section 8. Committees. The Board of Directors
may, by resolution passed by a majority of the entire
Board of Directors, designate one or more committees,
each committee to consist of two or more of the directors
of the Corporation. The Board of Directors may designate
one or more directors as alternate members of any commit-
tee, who may replace any absent or disqualified member at
any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the
absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified
9
Page 94 of 181 <PAGE>
member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified mem-
ber. Any committee, to the extent allowed by law and
provided in the resolution establishing such committee,
shall have and may exercise all the powers and authority
of the Board of Directors in the management of the busi-
ness and affairs of the Corporation. Each committee
shall keep regular minutes and report to the Board of
Directors when required.
Section 9. Compensation. The directors may be
paid their expenses, if any, of attendance at each meet-
ing of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. Mem-
bers of special or standing committees may be allowed
like compensation for attending committee meetings.
Section 10. Interested Directors. No contract
or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and
10
Page 95 of 181 <PAGE>
any other corporation, partnership, association, or other
organization in which one or more of its directors or
officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this rea-
son, or solely because the director or-officer is present
at or participates in the meeting of the Board of Direc-
tors or committee thereof which authorizes the contract
or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to
his or their relationship or interest and as to the con-
tract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board of
Directors or committee in good faith authorizes the con-
tract or transaction by the affirmative votes of a major-
ity of the disinterested directors, even though the dis-
interested directors be less than a quorum; or (ii) the
material facts as to his or their relationship or inter-
est and as to the contract or transaction are disclosed
or are known to the stockholders entitled to vote there-
on, and the contract or transaction is specifically ap-
proved in good faith by vote of the stockholders; or
(iii) the contract or transaction is fair as to the Cor-
poration as of the time it is authorized, approved or
ratified, by the Board of Directors, a committee thereof
11
Page 96 of 181 <PAGE>
or the stockholders. Common or interested directors may
be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
12
Page 97 of 181 <PAGE>
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Cor-
poration shall be chosen by the Board of Directors and
shall be a President, a Secretary and a Treasurer. The
Board of Directors, in its discretion, may also choose a
Chairman of the Board of Directors (who must be a direc-
tor) and one or more Vice-Presidents, Assistant Secretar-
ies, Assistant Treasurers and other officers. Any number
of offices may be held by the same person, unless other-
wise prohibited by law, the Certificate of Incorporation
or these By-Laws. The officers of the Corporation need
not be stockholders of the Corporation nor, except in the
case of the Chairman of the Board of Directors, need such
officers be directors of the Corporation.
Section 2. Election. The Board of Directors
at its first meeting held after each Annual Meeting of
Stockholders shall elect the officers of the Corporation
who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors;
and all officers of the Corporation shall hold office
until their successors are chosen and qualified, or until
their earlier resignation or removal. Any officer elect-
13
Page 98 of 181 <PAGE>
ed by the Board of Directors may be removed at any time
by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the
Corporation shall be filled by the Board of Directors.
The salaries of all officers of the Corporation shall be
fixed by the Board of Directors.
Section 3. Voting Securities Owned by the
Corporation. Powers of attorney, proxies, waivers of
notice of meeting, consents and other instruments relat-
ing to securities owned by the Corporation may be execut-
ed in the name of and on behalf of the Corporation by the
President or any Vice-President and any such officer may,
in the name of and on behalf of the Corporation, take all
such action as any such officer may deem advisable to
vote in person or by proxy at any meeting of security
holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and
may exercise any and all rights and power incident to the
ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and pos-
sessed if present. The Board of Directors may, by reso-
lution, from time to time confer like powers upon any
other person or persons.
14
Page 99 of 181 <PAGE>
Section 4. Chairman of the Board of Directors.
The Chairman of the Board of Directors, if there be one,
shall preside at all meetings of the stockholders and of
the Board of Directors. He shall be the Chief Executive
Officer of the Corporation, and except where by law the
signature of the President is required, the Chairman of
the Board of Directors shall possess the same power as
the President to sign all contracts, certificates and
other instruments of the Corporation which may be autho-
rized by the Board of Directors. During the absence or
disability of the President, the Chairman of the Board of
Directors shall exercise all the powers and discharge all
the duties of the President. The Chairman of the Board
of Directors shall also perform such other duties and may
exercise such other powers as from time to time may be
assigned to him by these By-Laws or by the Board of Di-
rectors.
Section 5. President. The President shall,
subject to the control of the Board of Directors and, if
there be one, the Chairman of the Board of Directors,
have general supervision of the business of the Corpora-
tion and shall see that all orders and resolutions of the
Board of Directors are carried into effect. He shall
execute all bonds, mortgages, contracts and other instru-
15
Page 100 of 181 <PAGE>
ments of the Corporation requiring a seal, under the seal
of the Corporation, except where required or permitted by
law to be otherwise signed and executed and except that
the other officers of the Corporation may sign and exe-
cute documents when so authorized by these By-Laws, the
Board of Directors or the President. In the absence or
disability of the Chairman of the Board of Directors, or
if there be none, the President shall preside at all
meetings of the Stockholders and the Board of Directors.
If there be no Chairman of the Board of Directors, the
President shall be the Chief Executive Officer of the
Corporation. The President shall also perform such other
duties and may exercise such other powers as from time to
time may be assigned to him by these By-Laws or by the
Board of Directors.
Section 6. Vice-Presidents. At the request of
the President or in his absence or in the event of his
inability or refusal to act (and if there be no Chairman
of the Board of Directors), the Vice-President or the
Vice-Presidents if there is more than one (in the order
designated by the Board of Directors) shall perform the
duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions
upon the President. Each Vice-President shall perform
16
Page 101 of 181 <PAGE>
such other duties and have such other powers as the Board
of Directors from time to time may prescribe. If there
be no Chairman of the Board of Directors and no Vice-
President, the Board of Directors shall designate the
officer of the Corporation who, in the absence of the
President or in the event of the inability or refusal of
the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers
of and be subject to all the restrictions upon the Presi-
dent.
Section 7. Secretary. The Secretary shall
attend all meetings of the Board of Directors and all
meetings of stockholders and record all the proceedings
thereat in a book or books to be kept for that purpose;
the Secretary shall also perform like duties for the
standing committees when required. The Secretary shall
give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Direc-
tors, and shall perform such other duties as may be pre
scribed by the Board of Directors or President, under
whose supervision he shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all
meetings of the stockholders and special meetings of the
Board of Directors, and if there be no Assistant Secre-
17
Page 102 of 181 <PAGE>
tary, then either the Board of Directors or the President
may choose another officer to cause such notice to be
given. The Secretary shall have custody of the seal of
the Corporation and the Secretary or any Assistant Secre-
tary, if there be one, shall have authority to affix the
same to any instrument requiring it and when so affixed,
it may be attested by the signature of the Secretary or
by the signature of any such Assistant Secretary. The
Board of Directors may give general authority to any
other officer to affix the seal of the Corporation and to
attest the affixing by his signature. The Secretary
shall see that all books, reports, statements, certifi-
cates and other documents and records required by law to
be kept or filed are properly kept or filed, as the case
may be.
Section 8. Treasurer. The Treasurer shall
have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in
the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Direc-
tors. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors,
18
Page 103 of 181 <PAGE>
taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so
requires, an account of all his transactions as Treasurer
and of the financial condition of the-Corporation. If
required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such
surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties
of his office and for the restoration to the Corporation,
in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or
under his control belonging to the Corporation.
Section 9. Assistant Secretaries. Except as
may be otherwise provided in these By-Laws, Assistant
Secretaries, if there be any, shall perform such duties
and have such powers as from time to time may be assigned
to them by the Board of Directors, the President, any
Vice-President, if there be one, or the Secretary, and in
the absence of the Secretary or in the event of his dis-
ability or refusal to act, shall perform the duties of
the Secretary, and when so acting, shall have all the
19
Page 104 of 181 <PAGE>
powers of and be subject to all the restrictions upon the
Secretary.
Section 10. Assistant Treasurers. Assistant
Treasurers, if there be any, shall perform such duties
and have such powers as from time to time may be assigned
to them by the Board of Directors, the President, any
Vice-President, if there be one, or the Treasurer, and in
the absence of the Treasurer or in the event of his dis-
ability or refusal to act, shall perform the duties of
the Treasurer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the
Treasurer. If required by the Board of Directors, an
Assistant Treasurer shall give the Corporation a bond in
such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the res-
toration to the Corporation, in case of his death, resig-
nation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to
the Corporation.
Section 11. Other Officers. Such other offi-
cers as the Board of Directors may choose shall perform
such duties and have such powers as from time to time may
20
Page 105 of 181 <PAGE>
be assigned to them by the Board of Directors. The Board
of Directors may delegate to any other officer of the
Corporation the power to choose such other officers and
to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder
of stock in the Corporation shall be entitled to have a
certificate signed, in the name of the Corporation (i) by
the Chairman of the Board of Directors, the President or
a Vice-President and (ii) by the Treasurer or an Assis-
tant Treasurer, or the Secretary or an Assistant Secre-
tary of the Corporation, certifying the number of shares
owned by him in the Corporation.
Section 2. Signatures. Where a certificate is
countersigned by (i) a transfer agent other than the
Corporation or its employee, or (ii) a registrar other
than the Corporation or its employee, any other signature
on the certificate may be a facsimile. In case any offi-
cer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be
issued by the Corporation with the same effect as if he
21
Page 106 of 181 <PAGE>
were such officer, transfer agent or registrar at the
date of issue.
Section 3. Lost Certificates. The Board of
Directors may direct a new certificate to be issued in
place of any certificate theretofore issued by the Corpo-
ration alleged to have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the per-
son claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new cer-
tificate, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed cer-
tificate, or his legal representative, to advertise the
same in such manner as the Board of Directors shall re-
quire and/or to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may
be made against the Corporation with respect to the cer-
tificate alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corpora-
tion shall be transferable in the manner prescribed by
law and in these By-Laws. Transfers of stock shall be
made on the books of the Corporation only by the person
named in the certificate or by his attorney lawfully
constituted in writing and upon the surrender of the
22
Page 107 of 181 <PAGE>
certificate therefor, which shall be cancelled before a
new certificate shall be issued.
Section 5. Record Date. In order that the
Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to express consent
to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion
or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in ad-
vance, a record date, which shall not be more than sixty
days nor less than ten days before the date of such meet-
ing, nor more than sixty days prior to any other action.
A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, howev-
er, that the Board of Directors may fix a new record date
for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation
shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold
23
Page 108 of 181 <PAGE>
liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound
to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person,
whether or not it shall have express or other notice
thereof, except as otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice
is required by law, the Certificate of Incorporation or
these By-Laws, to be given to any director, member of a
committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee
or stockholder, at his address as it appears on the re-
cords of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time
when the same shall be deposited in the United States
mail. Written notice may also be given personally or by
telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any
notice is required by law, the Certificate of Incorpora-
tion or these By-Laws, to be given to any director, mem-
ber of a committee or stockholder, a waiver thereof in
writing, signed by the person or persons entitled to said
24
Page 109 of 181 <PAGE>
notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the
capital stock of the Corporation, subject to the provi-
sions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or
special meeting, and may be paid in cash, in property, or
in shares of the capital stock. Before payment of any
dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as
the Board of Directors from time to time, in its absolute
discretion, deems proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for re-
pairing or maintaining any property of the Corporation,
or for any proper purpose, and the Board of Directors may
modify or abolish any such reserve.
Section 2. Disbursements. All checks or de-
mands for money and notes of the Corporation shall be
signed by such officer or officers or such other person
or persons as the Board of Directors may from time to
time designate.
25
Page 110 of 181 <PAGE>
Section 3. Fiscal Year. The fiscal year of
the Corporation shall be fixed by resolution of the Board
of Directors.
Section 4. Corporate Seal. The corporate seal
shall have inscribed thereon the name of the Corporation,
the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or repro-
duced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. Subject to paragraph II of Article
SIXTH of the Certificate of Incorporation, these By-Laws
may be altered, amended or repealed, in whole or in part,
or new By-Laws may be adopted by the stockholders or by
the Board of Directors, provided, however, that notice of
such alteration, amendment, repeal or adoption of new By-
Laws be contained in the notice of such meeting of stock-
holders or Board of Directors as the case may be. All
such amendments must be approved by either the holders of
a majority of the outstanding capital stock entitled to
vote thereon or by a majority of the entire Board of
Directors then in office.
Section 2. Entire Board of Directors. As used
26
Page 111 of 181 <PAGE>
in this Article VIII and in these By-Laws generally, the
term "entire Board of Directors" means the total number
of directors which the Corporation would have if there
were no vacancies.
27
Page 112 of 181 <PAGE>
Exhibit 10.1
Page 113 of 181 <PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
1993 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to assist Burlington Coat
Factory Warehouse Corporation, a Delaware corporation (the
"Company"), in achieving and maintaining its corporate objectives
of growth and successful operations by providing incentive to its
key officers and other selected employees, and thereby
encouraging them to devote their abilities and industry to the
success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to key officers and
other selected employees of the Company and its Subsidiaries a
proprietary interest in the growth and performance of the Company
and its Subsidiaries and added long-term incentive for high
levels of performance through the grant of awards under the Plan.
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event
of a Change in Control, the greater of (i) the highest price per
Share paid to holders of the Shares in any transaction (or series
of transactions) constituting or resulting in a Change in Control
or (ii) the highest Fair Market Value of a Share during the
ninety (90) day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between
the Company and an Optionee or Grantee evidencing the grant of an
Option or Award and setting forth the terms and conditions
thereof.
2.3 "Award" means a grant of any form of Option,
Restricted Stock, Stock Appreciation Right, Performance Award or
any or all of them, whether granted singly, in combination or in
tandem pursuant to any applicable terms, conditions and
limitations as the Committee may establish in order to fulfill
the objectives of the Plan.
2.4 "Board" means the Board of Directors of the
Company.
1
Page 114 of 181 <PAGE>
2.5 "Cause" means the commission of an act of fraud or
intentional misrepresentation or an act of embezzlement,
misappropriation or conversion of assets or opportunities of the
Company or any Subsidiary.
2.6 "Change in Capitalization" means any increase or
reduction in the number of Shares, or any change (including, but
not limited to, a change in value) in the Shares or exchange of
Shares for a different number or kind of shares or other
securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-
off, split-up, issuance of warrants or rights or debentures,
stock dividend, stock split or reverse stock split, cash
dividend, property dividend, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence
during the term of the Plan of:
(a) An acquisition (other than directly from the
Company) of any voting securities of the Company (the
"Voting Securities") by any 'Person' (as the term person is
used for purposes of Section 13(d) or 14(d) of the Exchange
Act), other than the Founders or any of their affiliates
(individually or in the aggregate), immediately after which
such Person has 'Beneficial Ownership' (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of fifty-
one percent (51%) or more of the combined voting power of
the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a 'Non-
Control Acquisition' (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in
Control. A 'Non-Control Acquisition' shall mean an
acquisition by (i) an employee benefit plan (or a trust
forming a part thereof) maintained by (A) the Company or (B)
any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity
interest is owned, directly or indirectly, by the Company
(for purposes of this definition, a 'Subsidiary'), (ii) the
Company or its Subsidiaries, or (iii) any Person in
connection with a 'Non-Control Transaction' (as hereinafter
defined);
2
Page 115 of 181 <PAGE>
(b) The individuals who, as of August 1, 1993, are
members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least two-thirds of the members of
the Board; provided, however, that if the election, or
nomination for election by the Company's common
stockholders, of any new director was approved by a vote of
at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be considered as
a member of the Incumbent Board; provided further, however,
that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office
as a result of either an actual or threatened 'Election
Contest' (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest
or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation or
reorganization, own, directly or indirectly
immediately following such merger, consolidation
or reorganization, at least sixty percent (60%) of
the combined voting power of the outstanding
voting securities of the corporation resulting
from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their
ownership of the Voting Securities immediately
before such merger, consolidation or
reorganization,
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution
of the agreement providing for such merger,
consolidation or reorganization constitute at
least two-thirds of the members of the board of
directors of the Surviving Corporation,
3
Page 116 of 181 <PAGE>
(C) no Person other than the Company, any
Subsidiary, any employee benefit plan (or any
trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any
Subsidiary, or any Person who, immediately prior
to such merger, consolidation or reorganization
had Beneficial Ownership of fifty-one percent
(51%) or more of the then outstanding Voting
Securities has Beneficial Ownership of fifty-one
percent (51%) or more of the combined voting power
of the Surviving Corporation's then outstanding
voting securities, and
(D) a transaction described in clauses (A)
through (C) shall herein be referred to as a 'Non-
Control Transaction';
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of the assets
of the Company to any Person (other than a transfer to
a Subsidiary).
Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the
"Subject Person") acquired Beneficial Ownership of more than the
permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases
the proportional number of shares Beneficially Owned by the
Subject Persons, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
2.8 "Code" means the Internal Revenue Code of 1986, as
amended.
2.9 "Committee" means a committee consisting of at
least two (2) Disinterested Directors appointed by the Board to
administer the Plan and to perform the functions set forth
herein.
4
Page 117 of 181 <PAGE>
2.10 "Company" means Burlington Coat Factory Warehouse
Corporation, a Delaware corporation.
2.11 "Disability" means a physical or mental infirmity
which impairs the Optionee's ability to perform substantially his
or her duties for a period of one hundred eighty (180)
consecutive days.
2.12 "Disinterested Director" means a director of the
Company who is "disinterested" within the meaning of Rule 16b-3
under the Exchange Act.
2.13 "Division" means any of the operating units or
divisions of the Company designated as a Division by the
Committee.
2.14 "Eligible Individual" means any officer or
employee of the Company or a Subsidiary designated by the
Committee as eligible to receive Options or Awards subject to the
conditions set forth herein.
2.15 "Employee Option" means an Option granted
pursuant to Section 5.
2.16 "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
2.17 "Fair Market Value" on any date means the average
of the high and low sales prices of the Shares on such date on
the principal national securities exchange on which such Shares
are listed or admitted to trading, or if such Shares are not so
listed or admitted to trading, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such
date as quoted on the National Association of Securities Dealers
Automated Quotation System or such other market in which such
prices are regularly quoted, or, if there have been no published
bid or asked quotations with respect to Shares on such date, the
Fair Market Value shall be the value established by the Board in
good faith and, in the case of an Incentive Stock Option, in
accordance with Section 422 of the Code.
2.18 "Founders" means Monroe G. Milstein, Henrietta M.
Milstein, Lazer Milstein, Andrew R. Milstein and Stephen E.
Milstein.
5
Page 118 of 181 <PAGE>
2.19 "Grantee" means a person to whom an Award has
been granted under the Plan.
2.20 "Incentive Stock Option" means an Option
satisfying the requirements of Section 422 of the Code and
designated by the Committee as an Incentive Stock Option.
2.21 "Nonqualified Stock Option" means an Option which
is not an Incentive Stock Option.
2.22 "Option" means an Employee Option.
2.23 "Optionee" means a person to whom an Option has
been granted under the Plan.
2.24 "Parent" means any corporation which is a parent
corporation (within the meaning of Section 424(e) of the Code)
with respect to the Company.
2.25 "Performance Awards" means Performance Units,
Performance Shares or either or both of them.
2.26 "Performance Cycle" means the time period
specified by the Committee at the time a Performance Award is
granted during which the performance of the Company, a Subsidiary
or a Division will be measured.
2.27 "Performance Shares" means Shares issued or
transferred to an Eligible Individual under Section 9.3.
2.28 "Performance Unit" means Performance Units
granted to an Eligible Individual under Section 9.2.
2.29 "Restricted Stock" means Shares issued or
transferred to an Eligible Individual pursuant to Section 8.
2.30 "Plan" means the Burlington Coat Factory
Warehouse Corporation 1993 Stock Incentive Plan.
2.31 "Shares" means the common stock, par value $1.00
per share, of the Company.
2.32 "Stock Appreciation Right" means a right to
receive all or some portion of the increase in the value of the
Shares as provided in Section 7 hereof.
6
Page 119 of 181 <PAGE>
2.33 "Subsidiary" means any corporation which is a
subsidiary corporation (within the meaning of Section 424(f) of
the Code) with respect to the Company.
2.34 "Successor Corporation" means a corporation, or a
parent or subsidiary thereof within the meaning of Section 424(a)
of the Code, which issues or assumes a stock option in a
transaction to which Section 424(a) of the Code applies.
2.35 "Ten-Percent Stockholder" means an Eligible
Individual, who, at the time an Incentive Stock Option is to be
granted to him or her, owns (within the meaning of Section
422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock
of the Company, or of a Parent or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee
which shall hold meetings at such times as may be necessary for
the proper administration of the Plan. The Committee shall keep
minutes of its meetings. A quorum shall consist of not less than
two members of the Committee and a majority of a quorum may
authorize any action. Any decision or determination reduced to
writing and signed by a majority of all of the members shall be
as fully effective as if made by a majority vote at a meeting
duly called and held. Each member of the Committee shall be a
Disinterested Director. No member of the Committee shall be
liable for any action, failure to act, determination or
interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his
or her own willful misfeasance, gross negligence or reckless
disregard of his or her duties. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses
and, to the extent permitted by applicable law, any liability
incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any
claim, cause of action or dispute of any kind arising in
connection with any actions in administering this Plan or in
authorizing or denying authorization to any transaction
hereunder.
3.2 Subject to the express terms and conditions set
forth herein, the Committee shall have the power from time to
time to:
7
Page 120 of 181 <PAGE>
(a) determine those individuals to whom Employee
Options shall be granted under the Plan and the number of
Incentive Stock Options and/or Nonqualified Stock Options to
be granted to each Eligible Individual and to prescribe the
terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share
subject to each Option, and make any amendment or
modification to any Agreement consistent with the terms of
the Plan; and
(b) select those Eligible Individuals to whom Awards
shall be granted under the Plan and to determine the number
of Stock Appreciation Rights, Performance Units, Performance
Shares, and/or Shares of Restricted Stock to be granted
pursuant to each Award, the terms and conditions of each
Award, including the restrictions or performance criteria
relating to such Units or Shares, the maximum value of each
Performance Unit and Performance Share and make any
amendment or modification to any Agreement consistent with
the terms of the Plan.
3.3 Subject to the express terms and conditions set
forth herein, the Committee shall have the power from time to
time:
(a) to construe and interpret the Plan and the Options
and Awards granted hereunder and to establish, amend and
revoke rules and regulations for the administration of the
Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency
in the Plan or in any Agreement, in the manner and to the
extent it shall deem necessary or advisable so that the Plan
complies with applicable law including Rule 16b-3 under the
Exchange Act and the Code to the extent applicable, and
otherwise to make the Plan fully effective. All decisions
and determinations by the Committee in the exercise of this
power shall be final, binding and conclusive upon the
Company, its Subsidiaries, the Optionees and Grantees and
all other persons having any interest therein;
(b) to determine the duration and purposes for leaves
of absence which may be granted to an Optionee or Grantee on an
individual basis without constituting a termination of
employment or service for purposes of the Plan;
(c) to exercise its discretion with respect to the
powers and rights granted to it as set forth in the Plan;
and
8
Page 121 of 181 <PAGE>
(d) generally, to exercise such powers and to perform
such acts as are deemed necessary or advisable to promote
the best interests of the Company with respect to the Plan.
3.4 Board Reservation and Delegation. The Board may,
in its discretion, reserve to itself or delegate to another
committee of the Board any or all of the authority and
responsibility of the Committee with respect to Options and
Awards granted hereunder to Eligible Individuals who are not
subject to Section 16 of the Exchange Act at the time any such
delegated authority or responsibility is exercised. Such other
committee may consist of one or more directors who may, but need
not be, officers or employees of the Company or of any of its
Subsidiaries. To the extent that the Board has reserved to
itself or delegated the authority and responsibility of the
Committee to such other committee, all references to the
Committee in the Plan shall be to the Board or to such other
committee.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be issued
pursuant to Options and Awards granted under the Plan is 450,000.
Upon a Change in Capitalization the maximum number of Shares
shall be adjusted in number and kind pursuant to Section 11. The
Company shall reserve for the purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the
Company's treasury, or partly out of each, such number of Shares
as shall be determined by the Board.
4.2 Upon the granting of an Option or an Award, the
number of Shares available under Section 4.1 for the granting of
further Options and Awards shall be reduced as follows:
(a) In connection with the granting of an Option or an
Award (other than the granting of a Performance Unit
denominated in dollars), the number of Shares shall be
reduced by the number of Shares in respect of which the
Option or Award is granted or denominated.
(b) In connection with the granting of a Performance
Unit denominated in dollars, the number of Shares shall be
reduced by an amount equal to the quotient of (i) the dollar
amount in which the Performance Unit is denominated, divided
9
Page 122 of 181 <PAGE>
by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted; provided, however, that no
reduction of the number of Shares shall be made if the terms
and conditions of the Performance Unit determined by the
Committee are such that no reduction of Shares shall be
required pursuant to Rule 16b-3 under the Exchange Act.
4.3 Whenever any outstanding Option or Award or
portion thereof expires, is canceled or is otherwise terminated
for any reason without having been exercised or payment having
been made in respect of the entire Option or Award, the Shares
allocable to the expired, canceled or otherwise terminated
portion of the Option or Award may again be the subject of
Options or Awards granted hereunder. In addition, Shares
delivered to the Company or withheld by the Company upon the
exercise of an Option or Award may again be subject to Options
and Awards granted hereunder but only for Options or Awards
granted to Eligible Individuals who are not subject to the
provisions of Section 16 of the Exchange Act; provided, that the
actual number of Shares issued pursuant to Options and Awards
granted under this Plan shall not exceed the maximum number of
Shares provided in Section 4.1 above.
4.4 Notwithstanding anything contained in this Section
4, the number of Shares available for Options and Awards at any
time under the Plan shall be reduced to such lesser amount as may
be required pursuant to the methods of calculation necessary so
that the exemptions provided pursuant to Rule 16b-3 under the
Exchange Act will continue to be available for transactions
involving all current and future Options and Awards. In
addition, during the period that any Options and Awards remain
outstanding under the Plan, the Committee may make good faith
adjustments with respect to the number of Shares attributable to
such Options and Awards for purposes of calculating the maximum
number of Shares available for the granting of future Options and
Awards under the Plan, provided that following such adjustments
the exemptions provided pursuant to Rule 16b-3 under the Exchange
Act will continue to be available for transactions involving all
current and future Options and Awards.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions
of the Plan and to Section 4.1 above, the Committee shall have
full and final authority to select those Eligible Individuals who
will receive Employee Options, the terms and conditions of which
10
Page 123 of 181 <PAGE>
shall be set forth in an Agreement; provided, however, that no
person shall receive any Incentive Stock Options unless he or she
is an employee of the Company, a Parent or a Subsidiary at the
time the Incentive Stock Option is granted.
5.2 Purchase Price. The purchase price or the manner
in which the purchase price is to be determined for Shares under
each Employee Option shall be determined by the Committee and set
forth in the Agreement; provided, however, that the purchase
price per Share under each Employee Option shall not be less than
100% of the Fair Market value of a Share on the date the Employee
Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Employee Options granted
hereunder shall be for such term as the Committee shall
determine, provided that an Incentive Stock Option shall not be
exercisable after the expiration of ten (10) years from the date
it is granted (five (5) years in the case of an Incentive Stock
Option granted to a Ten-Percent Stockholder) and a Nonqualified
Stock Option shall not be exercisable after the expiration of ten
(10) years from the date it is granted. The Committee may,
subsequent to the granting of any Employee Option, extend the
term thereof but in no event shall the term as so extended exceed
the maximum term provided for in the preceding sentence.
5.4 Vesting. Subject to Section 6.4 hereof, each
Employee Option shall become exercisable in such installments
(which need not be equal) and at such times as may be designated
by the Committee and set forth in the Agreement; provided,
however, that an Option granted to a person subject to Section 16
of the Exchange Act shall not be exercisable at any time less
than six (6) months after the date of granting and an Incentive
Stock Option shall not be exercisable at any time less than one
(1) year after the date of granting. To the extent not
exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not
later than the date the Employee Option expires. The Committee
may accelerate the exercisability of any Option or portion
thereof at any time.
5.5 Modification or Substitution. The Committee may,
in its discretion, modify outstanding Employee Options or accept
the surrender of outstanding Employee Options (to the extent not
exercised) and grant new Employee Options in substitution for
them; provided, however, that, no modification or substitution
11
Page 124 of 181 <PAGE>
may reduce or have the effect of reducing the per share purchase
price of any outstanding Employee Option. Notwithstanding the
foregoing, no modification of an Employee Option shall adversely
alter or impair any rights or obligations under the Employee
Option without the Optionee's consent.
6. Terms and Conditions Applicable to All Options.
6.1 Non-transferability. No Option granted hereunder
shall be transferable by the Optionee to whom granted otherwise
than by will or the laws of descent and distribution, and an
Option may be exercised during the lifetime of such Optionee only
by the Optionee or his or her guardian or legal representative.
The terms of such Option shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and
successors of the Optionee.
6.2 Method of Exercise. The exercise of an Option
shall be made only by a written notice delivered in person or by
mail to the Committee or such person designated by the Committee
from time to time at the Company's principal executive office,
specifying the number of Shares to be purchased and accompanied
by payment therefor and otherwise in accordance with the
Agreement pursuant to which the Option was granted. The purchase
price for any Shares purchased pursuant to the exercise of an
Option shall be paid in full upon such exercise by any one or a
combination of the following: (i) cash, (ii) tendering Shares to
the Company upon such terms and conditions as determined by the
Committee, (iii) if permitted by the Committee, tendering or
surrendering another Option or Award, including Restricted Stock,
valued at Fair Market Value on the date of exercise less any
payment due to the Company upon exercise thereof, or (iv) if
permitted by the Committee, any combination of the foregoing.
Notwithstanding the foregoing, the Committee shall have
discretion to determine at the time of grant of each Employee
Option or at any later date (up to and including the date of
exercise) the form of payment acceptable in respect of the
exercise of such Employee Option. The Committee may provide
loans from the Company to permit the exercise or purchase of an
Option and may provide for procedures to permit the exercise of
an Option by use of proceeds to be received from the sale of
shares issuable pursuant to an Option. Unless otherwise provided
in the applicable Agreement, in the event shares of Restricted
Stock are tendered as consideration for the exercise of an
Option, a number of shares issued upon exercise of the Option,
equal to the number of shares of Restricted Stock used as
12
Page 125 of 181 <PAGE>
consideration therefor, shall be subject to the same restrictions
as the Restricted Stock so submitted as well as any other
additional restrictions that may be imposed by the Committee.
The written notice pursuant to this Section 6.2 may also provide
instructions from the Optionee to the Company that upon receipt
of the purchase price in cash from the Optionee's broker or
dealer, designated as such on the written notice, in payment for
any Shares purchased pursuant to the exercise of an Option, the
Company shall issue such Shares directly to the designated broker
or dealer. Any Shares transferred to the Company as payment of
the purchase price under an Option shall be valued at their Fair
Market Value on the day preceding the date of exercise of such
Option. If requested by the Committee, the Optionee shall
deliver the Agreement evidencing the Option to the Secretary of
the Company who shall endorse thereon a notation of such exercise
and return such Agreement to the Optionee. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an
Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
6.3 Rights of Optionees. No Optionee shall be deemed
for any purpose to be the owner of any Shares subject to any
Option unless and until (i) the Option shall have been exercised
pursuant to the terms thereof, (ii) the Company shall have issued
and delivered the Shares to the Optionee and (iii) the Optionee's
name shall have been entered as a stockholder of record on the
books of the Company. Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such
Shares.
6.4 Effect of Change in Control. Notwithstanding
anything contained in the Plan or an Agreement to the contrary,
in the event of a Change in Control, all Options outstanding on
the date of such Change in Control, shall become immediately and
fully exercisable. In addition, to the extent set forth in an
Agreement evidencing the grant of an Option, an Optionee will be
permitted to surrender for cancellation within sixty (60) days
after such Change in Control, any Option or portion of an Option
to the extent not yet exercised and the Optionee will be entitled
to receive a cash payment in an amount equal to the excess, if
any, of (x) (A) in the case of a Nonqualified Stock Option, the
greater of (1) the Fair Market Value, on the date preceding the
date of surrender, of the Shares subject to the Option or portion
thereof surrendered or (2) the Adjusted Fair Market Value of the
13
Page 126 of 181 <PAGE>
Shares subject to the Option or portion thereof surrendered or
(B) in the case of an Incentive Stock Option, the Fair Market
Value, on the date preceding the date of surrender, of the Shares
subject to the Option or portion thereof surrendered, over (y)
the aggregate purchase price for such Shares under the Option or
portion thereof surrendered; provided, however, that in the case
of an Option granted within six (6) months prior to the Change in
Control to any Optionee who may be subject to liability under
Section 16(b) of the Exchange Act, such Optionee shall be
entitled to surrender for cancellation his or her Option during
the sixty (60) day period commencing upon the expiration of six
(6) months from the date of grant of any such Option.
7. Stock Appreciation Rights. The Committee may, in its
discretion, either alone or in connection with the grant of an
Employee Option, grant Stock Appreciation Rights in accordance
with the Plan and the terms and conditions of which shall be set
forth in an Agreement. If granted in connection with an Employee
Option, a Stock Appreciation Right shall cover the Shares covered
by the Employee Option (or such lesser number of Shares as the
Committee may determine) and shall, except as provided in this
Section 7, be subject to the same terms and conditions as the
related Employee Option.
7.1 Time of Grant. A Stock Appreciation Right may be
granted (i) at any time if unrelated to an Option, or (ii) if
related to an Employee Option, either at the time of grant, or at
any time thereafter during the term of the Option.
7.2 Stock Appreciation Right Related to an Employee
Option.
(a) Exercise. Subject to Section 7.6, a Stock
Appreciation Right granted in connection with an Employee
Option shall be exercisable at such time or times and only
to the extent that the related Employee Option is
exercisable, and will not be transferable except to the
extent the related Employee Option may be transferable. A
Stock Appreciation Right granted in connection with an
Incentive Stock Option shall be exercisable only if the Fair
Market Value of a Share on the date of exercise exceeds the
purchase price specified in the related Incentive Stock
Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Employee Option, the
Grantee shall be entitled to receive an amount determined by
multiplying (A) the excess of the Fair Market Value of a
14
Page 127 of 181 <PAGE>
Share on the date preceding the date of exercise of such
Stock Appreciation Right over the per Share purchase price
under the related Employee Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may
limit in any manner the amount payable with respect to any
Stock Appreciation Right by including such a limit in the
Agreement evidencing the Stock Appreciation Right at the
time it is granted.
(c) Treatment of Related Options and Stock
Appreciation Rights Upon Exercise. Upon the exercise of a
Stock Appreciation Right granted in connection with an
Employee Option, the Employee Option shall be canceled to
the extent of the number of Shares as to which the Stock
Appreciation Right is exercised, and upon the exercise of an
Employee Option granted in connection with a Stock
Appreciation Right or the surrender of such Employee Option
pursuant to Section 6.4, the Stock Appreciation Right shall
be canceled to the extent of the number of Shares as to
which the Employee Option is exercised or surrendered.
7.3 Stock Appreciation Right Unrelated to an Option.
The Committee may grant to Eligible Individuals Stock
Appreciation Rights unrelated to Options. Stock Appreciation
Rights unrelated to Options shall contain such terms and
conditions as to exercisability (subject to Section 7.6), vesting
and duration as the Committee shall determine, but in no event
shall they have a term of greater than ten (10) years. Upon
exercise of a Stock Appreciation Right unrelated to an Option,
the Grantee shall be entitled to receive an amount determined by
multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock
Appreciation Right over the Fair Market Value of a Share on the
date the Stock Appreciation Right was granted, by (B) the number
of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may
limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement
evidencing the Stock Appreciation Right at the time it is
granted.
7.4 Method of Exercise. Stock Appreciation Rights
shall be exercised by a Grantee only by a written notice
delivered in person or by mail to the Committee or such person
15
Page 128 of 181 <PAGE>
designated by the Committee from time to time at the Company's
principal executive office, specifying the number of Shares with
respect to which the Stock Appreciation Right is being exercised.
If requested by the Committee, the Grantee shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised
and the Agreement evidencing any related Employee Option to the
Secretary of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Grantee.
7.5 Form of Payment. Payment of the amount determined
under Sections 7.2(b) or 7.3 may be made in the discretion of the
Committee, solely in whole Shares in a number determined at their
Fair Market Value on the date preceding the date of exercise of
the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make
full payment in Shares and the amount payable results in a
fractional Share, payment for the fractional Share will be made
in cash. Notwithstanding the foregoing, no payment in the form
of cash may be made upon the exercise of a Stock Appreciation
Right pursuant to Sections 7.2(b) or 7.3 to an officer of the
Company or a Subsidiary who is subject to liability under Section
16(b) of the Exchange Act, unless the exercise of such Stock
Appreciation Right is made either (i) during the period beginning
on the third business day and ending on the twelfth business day
following the date of release for publication of the Company's
quarterly or annual statements of earnings or (ii) pursuant to an
irrevocable election to receive cash made at least six months
prior to the exercise of such Stock Appreciation Right.
7.6 Restrictions. No Stock Appreciation Right may be
exercised before the date six (6) months after the date it is
granted.
7.7 Modification or Substitution. Subject to the
terms of the Plan, the Committee may modify outstanding Awards of
Stock Appreciation Rights or accept the surrender of outstanding
Awards of Stock Appreciation Rights (to the extent not exercised)
and grant new Awards in substitution for them. Notwithstanding
the foregoing, no modification of an Award shall adversely alter
or impair any rights or obligations under the Agreement without
the Grantee's consent.
7.8 Effect of Change in Control. Notwithstanding
anything contained in this Plan to the contrary, in the event of
a Change in Control, all Stock Appreciation Rights shall, subject
to Section 7.6, become immediately and fully exercisable.
16
Page 129 of 181 <PAGE>
Notwithstanding Sections 7.3 and 7.5, to the extent set forth in
an Agreement evidencing the grant of a Stock Appreciation Right
unrelated to an Option, upon the exercise of such a Stock
Appreciation Right or any portion thereof during the sixty (60)
day period following a Change in Control, the amount payable
shall be in cash and shall be an amount equal to the excess, if
any, of (A) the greater of (x) the Fair Market Value, on the date
preceding the date of exercise, of the Shares subject to Stock
Appreciation Right or portion thereof exercised and (y) the
Adjusted Fair Market Value, on the date preceding the date of
exercise, of the Shares over (B) the aggregate Fair Market Value,
on the date the Stock Appreciation Right was granted, of the
Shares subject to the Stock Appreciation Right or portion thereof
exercised; provided, however, that in the case of a Stock
Appreciation Right granted within six (6) months prior to the
Change in Control to any Grantee who may be subject to liability
under Section 16(b) of the Exchange Act, such Grantee shall be
entitled to exercise his Stock Appreciation Right during the
sixty (60) day period commencing upon the expiration of six (6)
months after the date of grant of any such Stock Appreciation
Right.
8. Restricted Stock.
8.1 Grant. The Committee may grant to Eligible
Individuals Awards of Restricted Stock, and may issue Shares or
Restricted Stock in payment in respect of vested Performance
Units (as hereinafter provided in Section 9.2), which shall be
evidenced by an Agreement between the Company and the Grantee.
Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its discretion, determine and
(without limiting the generality of the foregoing) such
Agreements may require that an appropriate legend be placed on
Share certificates. Awards of Restricted Stock shall be subject
to the terms and provisions set forth below in this Section 8.
8.2 Rights of Grantee. Shares of Restricted Stock
granted pursuant to an Award hereunder shall be issued in the
name of the Grantee as soon as reasonably practicable after the
Award is granted provided that the Grantee has executed an
Agreement evidencing the Award, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require
as a condition to the issuance of such Shares. If a Grantee
shall fail to execute the Agreement evidencing a Restricted Stock
Award, the appropriate blank stock powers and, in the discretion
17
Page 130 of 181 <PAGE>
of the Committee, an escrow agreement and any other documents
which the Committee may require within the time period prescribed
by the Committee at the time the Award is granted, the Award
shall be null and void. At the discretion of the Committee,
Shares issued in connection with a Restricted Stock Award shall
be deposited together with the stock powers with an escrow agent
(which may be the Company) designated by the Committee. Unless
the Committee determines otherwise and as set forth in the
Agreement, upon delivery of the Shares to the escrow agent, the
Grantee shall have all of the rights of a stockholder with
respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made
with respect to the Shares.
8.3 Non-transferability. Until any restrictions upon
the Shares of Restricted Stock awarded to a Grantee shall have
lapsed in the manner set forth in Section 8.4, such Shares shall
not be sold, transferred or otherwise disposed of and shall not
be pledged or otherwise hypothecated, nor shall they be delivered
to the Grantee.
8.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted
Stock awarded hereunder shall lapse at such time or times
and on such terms and conditions as the Committee may
determine, which restrictions shall be set forth in the
Agreement evidencing the Award.
(b) Effect of Change in Control. The Committee shall
determine at the time of the grant of an Award of Restricted
Stock the extent to which, if any, the restrictions upon
Shares of Restricted Stock shall lapse upon a Change in
Control. The Agreement evidencing the Award shall set forth
such provisions.
8.5 Modification or Substitution. Subject to the
terms of the Plan, the Committee may modify outstanding Awards of
Restricted Stock or accept the surrender of outstanding Shares of
Restricted Stock (to the extent the restrictions on such Shares
have not yet lapsed) and grant new Awards in substitution for
them. Notwithstanding the foregoing, no modification of an Award
shall adversely alter or impair any rights or obligations under
the Agreement without the Grantee's consent.
8.6 Treatment of Dividends. At the time the Award of
18
Page 131 of 181 <PAGE>
Shares of Restricted Stock is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on
such Shares by the Company shall be (i) deferred until the
lapsing of the restrictions imposed upon such Shares and (ii)
held by the Company for the account of the Grantee until such
time. In the event that dividends are to be deferred, the
Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional
Shares of Restricted Stock) or held in cash. If deferred
dividends are to be held in cash, there may be credited at the
end of each year (or portion thereof) interest on the amount of
the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, may determine. Payment of
deferred dividends in respect of Shares of Restricted Stock
(whether held in cash or as additional Shares of Restricted
Stock), together with interest accrued thereon, if any, shall be
made upon the lapsing of restrictions imposed on the Shares in
respect of which the deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon)
in respect of any Shares of Restricted Stock shall be forfeited
upon the forfeiture of such Shares.
8.7 Delivery of Shares. Upon the lapse of the
restrictions on Shares of Restricted Stock, the Committee shall
cause a stock certificate to be delivered to the Grantee with
respect to such Shares, free of all restrictions hereunder.
9. Performance Award.
9.1 Performance Objectives. Performance objectives
for Performance Awards may be expressed in terms of (i) earnings
per Share, (ii) pre-tax profits, (iii) net earnings or net worth,
(iv) return on equity or assets, (v) any combination of the
foregoing, or (vi) any other standard or standards deemed
appropriate by the Committee at the time the Award is granted.
Performance objectives may be in respect of the performance of
the Company and its Subsidiaries (which may be on a consolidated
basis), a Subsidiary or a Division. Performance objectives may
be absolute or relative and may be expressed in terms of a
progression within a specified range. Prior to the end of a
Performance Cycle, the Committee, in its discretion, may adjust
the performance objectives to reflect a Change in the
Capitalization, a change in the tax rate or book tax rate of the
Company or any Subsidiary, or any other event which may
materially affect the performance of the Company, a Subsidiary or
19
Page 132 of 181 <PAGE>
a Division, including, but not limited to, market conditions or a
significant acquisition or disposition of assets or other
property by the Company, a Subsidiary or a Division.
9.2 Performance Units. The Committee, in its
discretion, may grant Awards of Performance Units to Eligible
Individuals, the terms and conditions of which shall be set forth
in an Agreement between the Company and the Grantee. Performance
Units may be denominated in Shares or a specified dollar amount
and, contingent upon the attainment of specified performance
objectives within the Performance Cycle, represent the right to
receive payment as provided in Section 9.2(b) of (i) in the case
of Share-denominated Performance Units, the Fair Market Value of
a Share on the date the Performance Unit was granted, the date
the Performance Unit became vested or any other date specified by
the Committee, (ii) in the case of dollar-denominated Performance
Units, the specified dollar amount or (iii) a percentage (which
may be more than 100%) of the amount described in clause (i) or
(ii) depending on the level of performance objective attainment;
provided, however, that the Committee may at the time a
Performance Unit is granted, specify a maximum amount payable in
respect of a vested Performance Unit. Each Agreement shall
specify the number of the Performance Units to which it relates,
the performance objectives which must be satisfied in order for
the Performance Units to vest and the Performance Cycle within
which such objectives must be satisfied.
(a) Vesting and Forfeiture. A Grantee shall become
vested with respect to the Performance Units to the extent
that the performance objectives set forth in the Agreement
are satisfied for the Performance Cycle.
(b) Payment of Awards. Payment to Grantees in respect
of vested Performance Units shall be made within sixty (60)
days after the last day of the Performance Cycle to which
such Award relates unless the Agreement evidencing the Award
provides for the deferral of payment, in which event the
terms and conditions of the deferral shall be set forth in
the Agreement. Subject to Section 9.4, such payments may be
made entirely in Shares valued at their Fair Market Value as
of the last day of the applicable Performance Cycle or such
other date specified by the Committee, entirely in cash, or
in such combination of Shares and cash as the Committee in
its discretion, shall determine at any time prior to such
payment; provided, however, that if the Committee in its
discretion determines to make such payment entirely or
20
Page 133 of 181 <PAGE>
partially in Shares of Restricted Stock, the Committee must
determine the extent to which such payment will be in Shares
of Restricted Stock and the terms of such Restricted Stock
at the time the Award is granted.
9.3 Performance Shares. The Committee, in its
discretion, may grant Awards of Performance Shares to Eligible
Individuals, the terms and conditions of which shall be set forth
in an Agreement between the Company and the Grantee. Each
Agreement may require that an appropriate legend be placed on
Share certificates. Awards of Performance Shares shall be
subject to the following terms and provisions:
(a) Rights of Grantee. The Committee shall provide at
the time an Award of Performance Shares is made, the time or
times at which the actual Shares represented by such Award
shall be issued in the name of the Grantee; provided,
however, that no Performance Shares shall be issued until
the Grantee has executed and Agreement evidencing the Award,
the appropriate blank stock powers and, in the discretion of
the Committee, an escrow agreement and any other documents
which the Committee may require as a condition to the
issuance of such Performance Shares. If a Grantee shall
fail to execute the Agreement evidencing an Award of
Performance Shares, the appropriate blank stock powers and,
in the discretion of the Committee, an escrow agreement and
any other documents which the Committee may require within
the time period prescribed by the Committee at the time the
Award is granted, the Award shall be null and void. At the
discretion of the Committee, Shares issued in connection
with an Award of Performance Shares shall be deposited
together with the stock powers with an escrow agent (which
may be the Company) designated by the Committee. Except as
restricted by the terms of the Agreement, upon delivery of
the Shares to the escrow agent, the Grantee shall have, in
the discretion of the Committee, all of the rights of a
stockholder with respect to such Shares, including the right
to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
(b) Non-transferability. Until any restrictions upon
the Performance Shares awarded to a Grantee shall have
lapsed in the manner set forth in Sections 9.3(c) or 9.4,
such Performance Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee.
21
Page 134 of 181 <PAGE>
The Committee may also impose such other restrictions and
conditions on the Performance Shares, if any, as it deems
appropriate.
(c) Lapse of Restrictions. Subject to Section 9.4,
restrictions upon Performance Shares awarded hereunder shall
lapse and such Performance Shares shall become vested at
such time or times and on such terms, conditions and
satisfaction of performance objectives as the Committee may,
in its discretion, determine at the time an Award is
granted.
(d) Treatment of Dividends. At the time the Award of
Performance Shares is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid
on actual Shares represented by such Award which have been
issued by the Company to the Grantee shall be (i) deferred
until the lapsing of the restrictions imposed upon such
Performance Shares and (ii) held by the Company for the
account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine
whether such dividends are to be reinvested in shares of
Stock (which shall be held as additional Performance Shares)
or held in cash. If deferred dividends are to be held in
cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at
the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of
deferred dividends in respect of Performance Shares (whether
held in cash or in additional Performance Shares), together
with interest accrued thereon, if any, shall be made upon
the lapsing of restrictions imposed on the Performance
Shares in respect of which the deferred dividends were paid,
and any dividends deferred (together with any interest
accrued thereon) in respect of any Performance Shares shall
be forfeited upon the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the
restrictions on Performance Shares awarded hereunder, the
Committee shall cause a stock certificate to be delivered to
the Grantee with respect to such Shares, free of all
restrictions hereunder.
9.4 Effect of Change in Control. Notwithstanding
anything contained in the Plan or any Agreement to the contrary,
in the event of a Change in Control:
22
Page 135 of 181 <PAGE>
(a) With respect to the Performance Units, the Grantee
shall (i) become vested in a percentage of Performance Units
as determined by the Committee at the time of the Award of
such Performance Units and as set forth in the Agreement and
(ii) be entitled to receive in respect of all Performance
Units which become vested as a result of a Change in
Control, a cash payment within ten (10) days after such
Change in Control in an amount as determined by the
Committee at the time of the Award of such Performance Unit
and as set forth in the Agreement.
(b) With respect to the Performance Shares,
restrictions shall lapse immediately on all or a portion of
the Performance Shares as determined by the Committee at the
time of the Award of such Performance Shares and as set
forth in the Agreement.
(c) The Agreements evidencing Performance Shares and
Performance Units shall provide for the treatment of such
Awards (or portions thereof) which do not become vested as
the result of a Change in Control, including, but not
limited to, provisions for the adjustment of applicable
performance objectives.
9.5 Non-transferability. No Performance Awards shall
be transferable by the Grantee otherwise than by will or the laws
of descent and distribution.
9.6 Modification or Substitution. Subject to the
terms of the Plan, the Committee may modify outstanding
Performance Awards or accept the surrender of outstanding
Performance Awards and grant new Performance Awards in
substitution for them. Notwithstanding the foregoing, no
modification of a Performance Award shall adversely alter or
impair any rights or obligations under the Agreement without the
Grantee's consent.
10. Effect of a Termination of Employment.
The Agreement evidencing the grant of each Employee
Option and each Award shall set forth the terms and conditions
applicable to such Employee Option or Award upon a termination or
change in the status of the employment of the Optionee or Grantee
by the Company, a Subsidiary or a Division (including a
23
Page 136 of 181 <PAGE>
termination or change by reason of the sale of a Subsidiary or a
Division), as the Committee may, in its discretion, determine at
the time the Employee Option or Award is granted or by amendment
of the Agreement thereafter. In the event of such a termination,
the Committee may, in its discretion, provide for the extension
of the exercisability of an Option or Award, accelerate the
vesting thereof, eliminate or make less restrictive any
restrictions contained therein, or otherwise amend or modify the
Option or Award in any manner not adverse to the Eligible Person.
11. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate
adjustments, if any, to the (i) maximum number and class of
Shares or other stock or securities with respect to which Options
or Awards may be granted under the Plan, and (ii) the number and
class of Shares or other stock or securities which are subject to
outstanding Options or Awards granted under the Plan, and the
purchase price therefor, if applicable.
(b) Any such adjustment in the Shares or other stock
or securities subject to outstanding Incentive Stock Options
(including any adjustments in the purchase price) shall be made
in such manner as not to constitute a modification as defined by
Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a
Grantee of an Award shall be entitled to, or an Optionee shall be
entitled to exercise an Option with respect to, new, additional
or different shares of stock or securities, such new additional
or different shares shall thereupon be subject to all of the
conditions, restrictions and performance criteria which were
applicable to the Shares subject to the Award or Option, as the
case may be, prior to such Change in Capitalization.
12. Effect of Certain Transactions.
Subject to Sections 6.4, 7.8, 8.4(b) and 9.4 or as
otherwise provided in an Agreement, in the event of (i) the
liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), the Plan and the
Options and Awards issued hereunder shall continue in effect in
accordance with their respective terms and each Optionee and
Grantee shall be entitled to receive in respect of each Share
24
Page 137 of 181 <PAGE>
subject to any outstanding Options or Awards, as the case may be,
upon exercise of any Option or payment or transfer in respect of
any Award, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of a Share was
entitled to receive in the Transaction in respect of a Share.
13. Termination and Amendment of the Plan.
The Plan shall terminate on the day preceding the fifth
anniversary of the date of its adoption by the Board and no
Option or Award may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to
time amend, modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or
termination shall impair or adversely alter any Options or
Awards theretofore granted under the Plan, except with the
consent of the Optionee or Grantee, nor shall any amendment,
modification, suspension or termination deprive any Optionee
or Grantee of any Shares which he or she may have acquired
through or as a result of the Plan; and
(b) To the extent then necessary under Section 16(b)
of the Exchange Act and the rules and regulations
promulgated thereunder or other applicable law, no amendment
shall be effective unless approved by the stockholders of
the Company.
14. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be
construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on
the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in
specific cases.
15. Limitation of Liability.
As illustrative of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(i) give any person any right to be granted an Option
25
Page 138 of 181 <PAGE>
or Award other than at the sole discretion of the Committee;
(ii) give any person any right whatsoever with respect
to Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any
person at any particular rate of compensation or for any
particular period of time.
16. Regulations and Other Approvals; Governing Law.
16.1 Except as to matters of federal law, this Plan
and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State
of Delaware without giving effect to conflicts of law principles.
16.2 The obligation of the Company to sell or deliver
Shares with respect to Options and Awards granted under the Plan
shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as
may be deemed necessary or appropriate by the Committee.
16.3 The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall
interpret and administer the provisions of the Plan or any
Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
16.4 The Board may make such changes as may be
necessary or appropriate to comply with the rules and regulations
of any government authority, or to obtain for Eligible
Individuals granted Incentive Stock Options the tax benefits
under the applicable provisions of the Code and regulations
promulgated thereunder.
16.5 Each Option and Award is subject to the
requirement that, if at any time the Committee determines, in its
discretion, that the listing, registration or qualification of
Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the
26
Page 139 of 181 <PAGE>
consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with,
the grant of an Option or Award or the issuance of Shares, no
Options or Awards shall be granted or payment made or Shares
issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained
free of any conditions, except as acceptable to the Committee.
16.6 Notwithstanding anything contained in the Plan or
any Agreement to the contrary, in the event that the disposition
of Shares acquired pursuant to the Plan is not covered by a then
current registration statement under the Securities Act of 1933,
as amended, and is not otherwise exempt from such registration,
such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144
or other regulations thereunder. The Committee may require any
individual receiving Shares pursuant to an Option or Award
granted under the Plan, as a condition precedent to receipt of
such Shares, to represent and warrant to the Company in writing
that the Shares acquired by such individual are acquired without
a view to any distribution thereof and will not be sold or
transferred other than pursuant to an effective registration
thereof under said Act or pursuant to an exemption applicable
under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing
any of such Shares shall be appropriately amended to reflect
their status as restricted securities as aforesaid.
17. Restrictions. No Shares or other form of payment
shall be issued with respect to any Option or Award unless the
Company shall be satisfied based on the advice of its counsel
that such issuance will be in compliance with applicable federal
and state securities laws. It is the intent of the Company that
this Plan comply in all respects with Rule 16b-3, that any
ambiguities or inconsistencies in the construction of this Plan
be interpreted to give effect to such intention, and that if any
provision of this Plan is found not to be in compliance with Rule
16b-3, such provision shall be null and void to the extent
required to permit this Plan to comply with Rule 16b-3.
Certificates evidencing Shares delivered under this Plan may be
subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, any
securities exchange or transaction reporting system upon which
the Shares are then listed and any applicable federal and state
securities law. The Committee may cause a legend or legends to
27
Page 140 of 181 <PAGE>
be placed upon any certificates representing the Shares to make
appropriate reference to such restrictions.
18. Unfunded Plan. Insofar as it provides for awards
of cash, Shares or rights thereto, this Plan shall be unfunded,
although bookkeeping accounts may be established with respect to
Eligible Individuals who are entitled to cash, Shares or rights
thereto under this Plan. Any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required
to segregate any assets that may at any time be represented by
cash, Shares or rights thereto, nor shall this Plan be construed
as providing for such segregation, nor shall the Company nor the
Board nor the Committee be deemed to be a trustee of any cash,
Shares or rights thereto to be granted under this Plan. Any
liability or obligation of the Company to any Eligible Individual
with respect to a grant of cash, Shares or rights thereto under
this Plan shall be based solely upon any contractual obligations
that may be created by this Plan and any Agreement, and no such
liability or obligation of the Company shall be deemed to be
secured by any pledge of, or other encumbrance on, any property
of the Company. Neither the Company nor the Board nor the
Committee shall be required to give any security or bond for the
performance of any obligation that may be created by this Plan.
19. Miscellaneous.
19.1 Multiple Agreements. The terms of each Option or
Award may differ from other Options or Awards granted under the
Plan at the same time, or at some other time. The Committee may
also grant more than one Option or Award to a given Eligible
Individual during the term of the Plan, either in addition to, or
in substitution for, one or more Options or Awards previously
granted to that Eligible Individual.
19.2 Withholding of Taxes. (a) The Company shall
have the right to deduct from any distribution of cash to any
Optionee or Grantee, an amount equal to the federal, state and
local income taxes and other amounts as may be required by law to
be withheld (the "Withholding Taxes") with respect to any Option
or Award. If an Optionee or Grantee is to experience a taxable
event in connection with the receipt of Shares pursuant to an
Option exercise or payment of an Award (a "Taxable Event"), the
Optionee or Grantee shall pay the Withholding Taxes to the
Company prior to the issuance, or release of escrow, of such
Shares.
28
Page 141 of 181 <PAGE>
(b) If an Optionee makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to such Optionee
pursuant to the exercise of an Incentive Stock Option within the
two-year period commencing on the day after the date of the grant
or within the one-year period commencing on the day after the
date of transfer of such Share or Shares to the Optionee pursuant
to such exercise, the Optionee shall, within ten (10) days of
such disposition, notify the Company thereof, by delivery of
written notice to the Company at its principal executive office.
(c) The Committee shall have the authority, at the
time of grant of an Option or Award under the Plan or at any time
thereafter, to award tax bonuses to designated Optionees or
Grantees, to be paid upon their exercise of Employee Options or
payment in respect of Awards granted hereunder. The amount of
any such payments shall be determined by the Committee. The
Committee shall have full authority in its absolute discretion to
determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereof.
20. Effective Date. The effective date of the Plan shall
be as determined by the Board, subject only to the approval by
the affirmative vote of the holders of a majority of the
securities of the Company present, or represented, and entitled
to vote at a meeting of stockholders duly held in accordance with
the applicable laws of the State of Delaware within twelve (12)
months of the adoption of the Plan by the Board.
29
Page 142 of 181 <PAGE>
Exhibit 10.2
Page 143 of 181 <PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
1998 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to assist Burlington Coat
Factory Warehouse Corporation, a Delaware corporation (the
"Company"), in achieving and maintaining its corporate objectives
of growth and successful operations by providing incentive to its
key officers, directors, consultants, advisors and other selected
employees, and thereby encouraging them to devote their abilities
and industry to the success of the Company's business enterprise.
It is intended that this purpose be achieved by extending to key
officers, directors, consultants, advisors and other selected
employees of the Company and its Subsidiaries a proprietary
interest in the growth and performance of the Company and its
Subsidiaries and added long-term incentive for high levels of
performance through the grant of awards under the Plan.
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a
Change in Control, the greater of (i) the highest price per Share
paid to holders of the Shares in any transaction (or series of
transactions) constituting or resulting in a Change in Control or
(ii) the highest Fair Market Value of a Share during the ninety
(90) day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the
Company and an Optionee or Grantee evidencing the grant of an
Option or Award and setting forth the terms and conditions thereof.
2.3 "Award" means a grant of any form of Option, Restricted
Stock, Stock Appreciation Right, Performance Award or any or all of
them, whether granted singly, in combination or in tandem pursuant
to any applicable terms, conditions and limitations as the
Committee may establish in order to fulfill the objectives of the
Plan.
2.4 "Award Notice" means a written notice given to an
Optionee or Grantee evidencing the grant of an Award and setting
forth the terms and conditions thereof and used by the Committee or
Board in lieu of an Agreement in their sole discretion.
2.5 "Board" means the Board of Directors of the Company.
1
Page 144 of 181 <PAGE>
2.6 "Cause" means the commission of an act of fraud or
intentional misrepresentation or an act of embezzlement,
misappropriation or conversion of assets or opportunities of the
Company or any Subsidiary.
2.7 "Change in Capitalization" means any increase or
reduction in the number of Shares, or any change (including, but
not limited to, a change in value) in the Shares or exchange of
Shares for a different number or kind of shares or other securities
of the Company, by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, spin-off, split-up, issuance
of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination
or exchange of shares, repurchase of shares, change in corporate
structure or otherwise.
2.8 A "Change in Control" shall mean the occurrence during
the term of the Plan of:
(a) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any 'Person' (as the term person is used for
purposes of Section 13(d) or 14(d) of the Exchange Act), other than
the Founders or any of their affiliates (individually or in the
aggregate), immediately after which such Person has 'Beneficial
Ownership' (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of the combined voting
power of the Company's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a 'Non-Control
Acquisition' (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A 'Non-Control
Acquisition' shall mean an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any corporation or other Person of which a majority
of its voting power or its voting equity securities or equity
interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a 'Subsidiary'), (ii) the Company or
its Subsidiaries, or (iii) any Person in connection with a
'Non-Control Transaction' (as hereinafter defined);
(b) The individuals who, as of August 1, 1998, are
members of the Board (the "Incumbent Board"), cease for any reason
to constitute at least two-thirds of the members of the Board;
provided, however, that if the election, or nomination for election
by the Company's common stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of this Plan, be considered
2
Page 145 of 181 <PAGE>
as a member of the Incumbent Board; provided further, however, that
no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of either
an actual or threatened 'Election Contest' (as described in Rule
14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation or reorganization,
own, directly or indirectly immediately following such merger,
consolidation or reorganization, at least sixty percent (60%) of
the combined voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation,
(C) no Person other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the Surviving Corporation, or
any Subsidiary, or any Person who immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of fifty
percent (50%) or more of the then outstanding Voting Securities,
has Beneficial Ownership of fifty percent (50%) or more of the
combined voting power of the Surviving Corporation's then
outstanding voting securities, and
(D) a transaction described in clauses (A)
through (C) shall herein be referred to as a 'Non-Control
Transaction';
(ii) A complete liquidation or dissolution of the
Company; or
3
Page 146 of 181 <PAGE>
(iii) An agreement for the sale or other disposition
of all or substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person")
acquired Beneficial Ownership of more than the permitted amount of
the outstanding Voting Securities as a result of the acquisition of
Voting Securities by the Company which, by reducing the number of
Voting Securities outstanding, increases the proportional number of
shares Beneficially Owned by the Subject Persons, provided that if
a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by
the Company, and after such share acquisition by the Company, the
Subject Person becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
2.9 "Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
2.10 "Committee" means a committee consisting of at least two
(2) Directors appointed by the Board to administer the Plan and to
perform the functions set forth herein.
2.11 "Company" means Burlington Coat Factory Warehouse
Corporation, a Delaware corporation.
2.12 "Disability" means a physical or mental infirmity which
impairs the Optionee's ability to perform substantially his or her
duties for a period of one hundred eighty (180) consecutive days.
2.13 "Division" means any of the operating units or divisions
of the Company or a Subsidiary designated as a Division by the
Committee.
2.14 "Eligible Individual" means any officer, director,
consultant, advisor or employee of the Company, a Subsidiary or a
Division designated by the Committee as eligible to receive Options
or Awards subject to the conditions set forth herein.
2.15 "Employee Option" means an Option granted to an Eligible
Individual who is an employee of the Company, a Subsidiary or a
Division.
2.16 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
4
Page 147 of 181 <PAGE>
2.17 "Fair Market Value" on any date means the average of the
high and low sales prices of the Shares on such date on the
principal national securities exchange on which such Shares are
listed or admitted to trading, or if such Shares are not so listed
or admitted to trading, the arithmetic mean of the per Share
closing bid price and per Share closing asked price on such date as
quoted on the National Association of Securities Dealers Automated
Quotation System or such other market in which such prices are
regularly quoted, or, if there have been no published bid or asked
quotations with respect to Shares on such date, the Fair Market
Value shall be the value established by the Board in good faith
and, in the case of an Incentive Stock Option, in accordance with
Section 422 of the Code.
2.18 "Founders" means Monroe G. Milstein, Henrietta M.
Milstein, Lazer Milstein, Andrew R. Milstein and Stephen E.
Milstein.
2.19 "Grantee" means a person to whom an Award has been
granted under the Plan.
2.20 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the
Committee as an Incentive Stock Option.
2.21 "Nonqualified Stock Option" means an Option which
is not an Incentive Stock Option.
2.22 "Option" means an Option granted pursuant to Section 5,
including, without limitation, an Employee Option.
2.23 "Optionee" means a person to whom an Option has been
granted under the Plan.
2.24 "Parent" means any corporation which is a parent
corporation (within the meaning of Section 424(e) of the Code) with
respect to the Company.
2.25 "Performance Awards" means Performance Units, Performance
Shares or either or both of them.
2.26 "Performance Cycle" means the time period specified by
the Committee at the time a Performance Award is granted during
which the performance of the Company, a Subsidiary or a Division
will be measured.
2.27 "Performance Shares" means Shares issued or transferred
to an Eligible Individual under Section 9.3.
5
Page 148 of 181 <PAGE>
2.28 "Performance Unit" means Performance Units granted to an
Eligible Individual under Section 9.2.
2.29 "Restricted Stock" means Shares issued or transferred to
an Eligible Individual pursuant to Section 8.
2.30 "Plan" means the Burlington Coat Factory Warehouse
Corporation 1998 Stock Incentive Plan.
2.31 "Shares" means the common stock, par value $1.00
per share, of the Company.
2.32 "Stock Appreciation Right" means a right to receive all
or some portion of the increase in the value of the Shares as
provided in Section 7 hereof.
2.33 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with
respect to the Company.
2.34 "Successor Corporation" means a corporation, or a parent
or subsidiary thereof within the meaning of Section 424(a) of the
Code, which issues or assumes a stock option in a transaction to
which Section 424(a) of the Code applies.
2.35 "Ten-Percent Stockholder" means an Eligible Individual,
who, at the time an Incentive Stock Option is to be granted to him
or her, owns (within the meaning of Section 422(b)(6) of the Code)
stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, or of a Parent
or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee, (or if
at any time a Committee shall not have been appointed or if
appointed is not so acting, then by the Board of the Company at a
meeting at which a quorum is present or by action by consent in
lieu of a meeting as authorized by applicable law) which shall hold
meetings at such times as may be necessary for the proper
administration of the Plan. The Committee (which term shall
include and mean the Board when a Committee has not been appointed
or if not so acting) shall keep minutes of its meetings. A quorum
shall consist of not less than two members of the Committee and a
majority of a quorum may authorize any action. Any decision or
determination reduced to writing and signed by a majority of all of
the members shall be as fully effective as if made by a majority
vote at a meeting duly called and held. Each member of the
6
Page 149 of 181 <PAGE>
Committee shall be a Director. No member of the Committee shall be
liable for any action, failure to act, determination or
interpretation made in good faith with respect to this Plan or any
transaction hereunder, except for liability arising from his or her
own willful misfeasance, gross negligence or reckless disregard of
his or her duties. The Company hereby agrees to indemnify each
member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in
connection with defending against, responding to, negotiation for
the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any
actions in administering this Plan or in authorizing or denying
authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time to:
(a) determine those individuals to whom Options shall be
granted under the Plan and the number of Incentive Stock Options
and/or Nonqualified Stock Options to be granted to each Eligible
Individual and to prescribe the terms and conditions (which need
not be identical) of each Employee Option, including the purchase
price per Share subject to each Option, and make any amendment or
modification to any Agreement or Award Notice, as the case may be,
consistent with the terms of the Plan; and
(b) select those Eligible Individuals to whom Awards
shall be granted under the Plan, to determine the number of Stock
Appreciation Rights, Performance Units, Performance Shares, and/or
Shares of Restricted Stock to be granted pursuant to each Award,
the terms and conditions of each Award, including the restrictions
or performance criteria relating to such Units or Shares, the
maximum value of each Performance Unit and Performance Share and to
make any amendment or modification to any Agreement or Award Notice
consistent with the terms of the Plan.
3.3 Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options
and Awards granted hereunder and to establish, amend and revoke
rules and regulations for the administration of the Plan,
including, but not limited to, correcting any defect or supplying
any omission, or reconciling any inconsistency in the Plan or in
any Agreement or Award Notice, in the manner and to the extent it
shall deem necessary or advisable so that the Plan complies with
applicable law including Rule 16b-3 under the Exchange Act and the
Code to the extent applicable, and otherwise to make the Plan fully
7
Page 150 of 181 <PAGE>
effective. All decisions and determinations by the Committee in
the exercise of this power shall be final, binding and conclusive
upon the Company, its Subsidiaries, the Optionees and Grantees and
all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee or Grantee on an
individual basis without constituting a termination of employment
or service for purposes of the Plan;
(c) to exercise its discretion with respect to the
powers and rights granted to it as set forth in the Plan; and
(d) generally, to exercise such powers and to perform
such acts as are deemed necessary or advisable to promote the best
interests of the Company with respect to the Plan.
3.4 Board Reservation and Delegation. The Board may, in its
discretion, reserve to itself or delegate to another committee of
the Board any or all of the authority and responsibility of the
Committee with respect to Options and Awards granted hereunder to
Eligible Individuals. Such other committee may consist of one or
more directors who may, but need not be, officers or employees of
the Company or of any of its Subsidiaries. To the extent that the
Board has reserved to itself or delegated the authority and
responsibility of the Committee to such other committee, all
references to the Committee in the Plan shall be to the Board or to
such other committee.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be issued pursuant
to Options and Awards granted under the Plan is 350,000. Upon a
Change in Capitalization the maximum number of Shares shall be
adjusted in number and kind pursuant to Section 11. The Company
shall reserve for the purposes of the Plan, out of its authorized
but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each, such number of Shares as shall be
determined by the Board.
4.2 Upon the granting of an Option or an Award, the number of
Shares available under Section 4.1 for the granting of further
Options and Awards shall be reduced as follows:
In connection with the granting of an Option or an
Award (other than the granting of a Performance Unit denominated in
dollars), the number of Shares shall be reduced by the number of
8
Page 151 of 181 <PAGE>
Shares in respect of which the Option or Award is granted or
denominated.
4.3 Whenever any outstanding Option or Award or portion
thereof expires, is canceled or is otherwise terminated for any
reason without having been exercised or payment having been made in
respect of the entire Option or Award, the Shares allocable to the
expired, canceled or otherwise terminated portion of the Option or
Award may again be the subject of Options or Awards granted
hereunder. In addition, Shares delivered to the Company or
withheld by the Company upon the exercise of an Option or Award may
again be subject to Options and shares originally linked to Awards
that are actually settled in cash or consideration other than
shares; provided, that the actual number of Shares issued pursuant
to Options and Awards granted under this Plan shall not exceed the
maximum number of Shares provided in Section 4.1 above.
4.4 During the period that any Options and Awards remain
outstanding under the Plan, the Committee may make good faith
adjustments with respect to the number of Shares attributable to
such Options and Awards for purposes of calculating the maximum
number of Shares available for the granting of future Options and
Awards under the Plan.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the
Plan and to Section 4.1 above, the Committee shall have full and
final authority to select those Eligible Individuals who will
receive Options, the terms and conditions of which shall be set
forth in an Agreement; provided, however, that no person shall
receive any Incentive Stock Options unless he or she is an employee
of the Company, a Parent or a Subsidiary at the time the Incentive
Stock Option is granted.
5.2 Purchase Price. The purchase price or the manner in
which the purchase price is to be determined for Shares under each
Option shall be determined by the Committee and set forth in the
Agreement; provided, however, that the purchase price per Share
under each Option shall not be less than 100% of the Fair Market
value of a Share on the date the Option is granted (110% in the
case of an Incentive Stock Option granted to a Ten-Percent
Stockholder).
5.3 Maximum Duration. Options granted hereunder shall be for
such term as the Committee shall determine, provided that an
Incentive Stock Option shall not be exercisable after the
expiration of ten (10) years from the date it is granted (five (5)
9
Page 152 of 181 <PAGE>
years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date
it is granted. The Committee may, subsequent to the granting of
any Option, extend the term thereof but in no event shall the term
as so extended exceed the maximum term provided for in the
preceding sentence.
5.4 Vesting. Subject to Section 6.4 hereof, each Option
shall become exercisable in such installments (which need not be
equal) and at such times as may be designated by the Committee and
set forth in the Agreement; provided, however, that an Option
granted to a person subject to Section 16 of the Exchange Act shall
not be exercisable at any time less than six (6) months after the
date of granting and an Incentive Stock Option shall not be
exercisable at any time less than one (1) year after the date of
granting. To the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time
after becoming exercisable, but not later than the date the Option
expires. The Committee may accelerate the exercisability of any
Option or portion thereof at any time.
5.5 Modification or Substitution. The Committee may, in its
discretion, modify outstanding Options or accept the surrender of
outstanding Options (to the extent not exercised) and grant new
Options in substitution for them; provided, however, that, no
modification or substitution may reduce or have the effect of
reducing the per share purchase price of any outstanding Option.
Notwithstanding the foregoing, no modification of an Option shall
adversely alter or impair any rights or obligations under the
Employee Option without the Optionee's consent.
6. Terms and Conditions Applicable to All Options.
6.1 Non-transferability. Except as provided in the last
sentence of this Section 6.1, no Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise than by will
or the laws of descent and distribution, and an Option may be
exercised during the lifetime of such Optionee only by the Optionee
or his or her guardian or legal representative. The terms of such
Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of
the Optionee. The Committee, in its discretion, may permit the
assignment or transfer of an option on such other terms and subject
to such other conditions as the Committee may deem necessary or
appropriate or as otherwise may be required or allowed by
applicable law or regulation.
10
Page 153 of 181 <PAGE>
6.2 Method of Exercise. The exercise of an Option shall be
made only by a written notice delivered in person or by mail to the
Committee or such person designated by the Committee from time to
time at the Company's principal executive office, specifying the
number of Shares to be purchased and accompanied by payment
therefor and otherwise in accordance with the Agreement pursuant to
which the Option was granted. The purchase price for any Shares
purchased pursuant to the exercise of an Option shall be paid in
full upon such exercise by any one or a combination of the
following: (i) cash, (ii) tendering Shares to the Company upon
such terms and conditions as determined by the Committee, (iii) if
permitted by the Committee, tendering or surrendering another
Option or Award, including Restricted Stock, valued at Fair Market
Value on the date of exercise less any payment due to the Company
upon exercise thereof, or (iv) if permitted by the Committee, any
combination of the foregoing. Notwithstanding the foregoing, the
Committee shall have discretion to determine at the time of grant
of each Option or at any later date (up to and including the date
of exercise) the form of payment acceptable in respect of the
exercise of such Option. The Committee may provide loans from the
Company to permit the exercise or purchase of an Option and may
provide for procedures to permit the exercise of an Option by use
of proceeds to be received from the sale of shares issuable
pursuant to an Option. Unless otherwise provided in the applicable
Agreement or Award Notice, in the event shares of Restricted Stock
are tendered as consideration for the exercise of an Option, a
number of shares issued upon exercise of the Option, equal to the
number of shares of Restricted Stock used as consideration
therefor, shall be subject to the same restrictions as the
Restricted Stock so submitted as well as any other additional
restrictions that may be imposed by the Committee. The written
notice pursuant to this Section 6.2 may also provide instructions
from the Optionee to the Company that upon receipt of the purchase
price in cash from the Optionee's broker or dealer, designated as
such on the written notice, in payment for any Shares purchased
pursuant to the exercise of an Option, the Company shall issue such
Shares directly to the designated broker or dealer. Any Shares
transferred to the Company as payment of the purchase price under
an option shall be valued at their Fair Market Value on the day
preceding the date of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the
Option to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement to the
Optionee. No fractional Shares (or cash in lieu thereof) shall be
issued upon exercise of an Option and the number of Shares that may
be purchased upon exercise shall be rounded to the nearest number
of whole shares.
11
Page 154 of 181 <PAGE>
6.3 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless
and until (i) the Option shall have been exercised pursuant to the
terms thereof, (ii) the Company shall have issued and delivered the
Shares to the Optionee and (iii) the Optionee's name shall have
been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend
and other ownership rights with respect to such Shares.
6.4 Effect of Change in Control. Notwithstanding anything
contained in the Plan or an Agreement to the contrary, in the event
of a Change in Control, all Options outstanding on the date of such
Change in Control, shall become immediately and fully exercisable.
In addition, to the extent set forth in an Agreement evidencing the
grant of an Option, an Optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control,
any Option or portion of an Option to the extent not yet exercised
and the Optionee will be entitled to receive a cash payment in an
amount equal to the excess, if any, of (x) (A) in the case of a
Nonqualified Stock Option, the greater of (1) the Fair Market
Value, on the date preceding the date of surrender, of the Shares
subject to the Option or portion thereof surrendered or (2) the
Adjusted Fair Market Value of the Shares subject to the Option or
portion thereof surrendered or (B) in the case of an Incentive
Stock Option, the Fair Market Value, on the date preceding the date
of surrender, of the Shares subject to the Option or portion
thereof surrendered, over (y) the aggregate purchase price for such
Shares under the Option or portion thereof surrendered; provided,
however, that in the case of an Option granted within six (6)
months prior to the Change in Control to any Optionee who may be
subject to liability under Section 16(b) of the Exchange Act, such
Optionee shall be entitled to surrender for cancellation his or her
Option during the sixty (60) day period commencing upon the
expiration of six (6) months from the date of grant of any such
Option.
7. Stock Appreciation Rights. The Committee may, in its
discretion, either alone or in connection with the grant of an
Option, grant Stock Appreciation Rights in accordance with the Plan
and the terms and conditions of which shall be set forth in an
Agreement. If granted in connection with an Option, a Stock
Appreciation Right shall cover the Shares covered by the Option (or
such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 7, be subject to the same
terms and conditions as the related Option.
7.1 Time of Grant. A Stock Appreciation Right may be granted
(i) at any time if unrelated to an Option, or (ii) if related to an
12
Page 155 of 181 <PAGE>
Option, either at the time of grant, or at any time thereafter
during the term of the Option.
7.2 Stock Appreciation Right Related to an Option.
(a) Exercise. Subject to Section 7.6, a Stock
Appreciation Right granted in connection with an Option shall be
exercisable at such time or times and only to the extent that the
related Option is exercisable, and will not be transferable except
to the extent the related Option may be transferable. A Stock
Appreciation Right granted in connection with an Incentive Stock
Option shall be exercisable only if the Fair Market Value of a
Share on the date of exercise exceeds the purchase price specified
in the related Incentive Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Option, the Grantee shall be
entitled to receive an amount determined by multiplying (A) the
excess of the Fair Market Value of a Share on the date preceding
the date of exercise of such Stock Appreciation Right over the per
Share purchase price under the related Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit
in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement
evidencing the Stock Appreciation Right at the time it is granted.
(c) Treatment of Related Options and Stock Appreciation
Rights Upon Exercise. Upon the exercise of a Stock Appreciation
Right granted in connection with an Option, the Option shall be
canceled to the extent of the number of Shares as to which the
Stock Appreciation Right is exercised, and upon the exercise of an
Option granted in connection with a Stock Appreciation Right or the
surrender of such Option pursuant to Section 6.4, the Stock
Appreciation Right shall be canceled to the extent of the number of
Shares as to which the Option is exercised or surrendered.
7.3 Stock Appreciation Right Unrelated to an Option. The
Committee may grant to Eligible Individuals Stock Appreciation
Rights unrelated to Options. Stock Appreciation Rights unrelated
to Options shall contain such terms and conditions as to
exercisability (subject to Section 7.6), vesting and duration as
the Committee shall determine, but in no event shall they have a
term of greater than ten (10) years. Upon exercise of a Stock
Appreciation Right unrelated to an Option, the Grantee shall be
entitled to receive an amount determined by multiplying (A) the
excess of the Fair Market Value of a Share on the date preceding
the date of exercise of such Stock Appreciation Right over the Fair
13
Page 156 of 181 <PAGE>
Market Value of a Share on the date the Stock Appreciation Right is
granted, by (B) the number of Shares as to which the Stock
Appreciation Right is being exercised. Notwithstanding the
foregoing, the Committee may limit in any manner the amount payable
with respect to any Stock Appreciation Right by including such a
limit in the Agreement evidencing the Stock Appreciation Right at
the time it is granted.
7.4 Method of Exercise. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in person
or by mail to the Committee or such person designated by the
Committee from time to time at the Company's principal executive
office, specifying the number of Shares with respect to which the
Stock Appreciation Right is being exercised. If requested by the
Committee, the Grantee shall deliver the Agreement evidencing the
Stock Appreciation Right being exercised and the Agreement
evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such
Agreement to the Grantee.
7.5 Form of Payment. Payment of the amount determined under
Sections 7.2(b) or 7.3 may be made in the discretion of the
Committee, solely in whole Shares in a number determined at their
Fair Market Value on the date preceding the date of exercise of the
Stock Appreciation Right, or solely in cash, or in a combination of
cash and Shares. If the Committee decides to make full payment in
Shares and the amount payable results in a fractional Share,
payment for the fractional Share will be made in cash.
7.6 Restrictions. No Stock Appreciation Right may be
exercised before the date six (6) months after the date it is
granted.
7.7 Modification or Substitution. Subject to the terms of
the Plan, the Committee may modify outstanding Awards of Stock
Appreciation Rights or accept the surrender of outstanding Awards
of Stock Appreciation Rights (to the extent not exercised) and
grant new Awards in substitution for them. Notwithstanding the
foregoing, no modification of an Award shall adversely alter or
impair any rights or obligations under the Agreement without the
Grantee's consent.
7.8 Effect of Change in Control. Notwithstanding anything
contained in this Plan to the contrary, in the event of a Change in
Control, all Stock Appreciation Rights shall, subject to Section
7.6, become immediately and fully exercisable. Notwithstanding
Sections 7.3 and 7.5, to the extent set forth in an Agreement
evidencing the grant of a Stock Appreciation Right unrelated to an
14
Page 157 of 181 <PAGE>
Option, upon the exercise of such a Stock Appreciation Right or any
portion thereof during the sixty (60) day period following a Change
in Control, the amount payable shall be in cash and shall be an
amount equal to the excess, if any, of (A) the greater of (x) the
Fair Market Value, on the date preceding the date of exercise, of
the Shares subject to Stock Appreciation Right or portion thereof
exercised and (y) the Adjusted Fair Market Value, on the date
preceding the date of exercise, of the Shares over (B) the
aggregate Fair Market Value, on the date the Stock Appreciation
Right was granted, of the Shares subject to the Stock Appreciation
Right or portion thereof exercised; provided, however, that in the
case of a Stock Appreciation Right granted within six (6) months
prior to the Change in Control to any Grantee who may be subject to
liability under Section 16(b) of the Exchange Act, such Grantee
shall be entitled to exercise his Stock Appreciation Right during
the sixty (60) day period commencing upon the expiration of six (6)
months after the date of grant of any such Stock Appreciation
Right.
8. Restricted Stock.
8.1 Grant. The Committee may grant to Eligible Individuals
Awards of Restricted Stock, and may issue Shares or Restricted
Stock in payment in respect of vested Performance Units (as
hereinafter provided in Section 9.2), which shall be evidenced by
an Agreement between the Company and the Grantee. Each Agreement
shall contain such restrictions, terms and conditions as the
Committee may, in its discretion, determine and (without limiting
the generality of the foregoing) such Agreements may require that
an appropriate legend be placed on Share certificates. Awards of
Restricted Stock shall be subject to the terms and provisions set
forth below in this Section 8.
8.2 Rights of Grantee. Shares of Restricted Stock granted
pursuant to an Award hereunder shall be issued in the name of the
Grantee as soon as reasonably practicable after the Award is
granted provided that the Grantee has executed an Agreement
evidencing the Award, the appropriate blank stock powers and, in
the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the
issuance of such Shares. If a Grantee shall fail to execute the
Agreement evidencing a Restricted Stock Award, the appropriate
blank stock powers and, in the discretion of the Committee, an
escrow agreement and any other documents which the Committee may
require within the time period prescribed by the Committee at the
time the Award is granted, the Award shall be null and void. At
the discretion of the Committee, Shares issued in connection with
a Restricted Stock Award shall be deposited together with the stock
15
Page 158 of 181 <PAGE>
powers with an escrow agent (which may be the Company) designated
by the Committee. Unless the Committee determines otherwise and as
set forth in the Agreement, upon delivery of the Shares to the
escrow agent, the Grantee shall have all of the rights of a
stockholder with respect to such Shares, including the right to
vote the Shares and to receive all dividends or other distributions
paid or made with respect to the Shares.
8.3 Non-transferability. Until any restrictions upon the
Shares of Restricted Stock awarded to a Grantee shall have lapsed
in the manner set forth in Section 8.4, such Shares shall not be
sold, transferred or otherwise disposed of and shall not be pledged
or otherwise hypothecated, nor shall they be delivered to the
Grantee.
8.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted
Stock awarded hereunder shall lapse at such time or times and on
such terms and conditions as the Committee may determine, which
restrictions shall be set forth in the Agreement evidencing the
Award.
(b) Effect of Change in Control. The Committee shall
determine at the time of the grant of an Award of Restricted Stock
the extent to which, if any, the restrictions upon Shares of
Restricted Stock shall lapse upon a Change in Control. The
Agreement evidencing the Award shall set forth such provisions.
8.5 Modification or Substitution. Subject to the terms of
the Plan, the Committee may modify outstanding Awards of Restricted
Stock or accept the surrender of outstanding Shares of Restricted
Stock (to the extent the restrictions on such Shares have not yet
lapsed) and grant new Awards in substitution for them.
Notwithstanding the foregoing, no modification of an Award shall
adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
8.6 Treatment of Dividends. At the time the Award of Shares
of Restricted Stock is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of dividends,
or a specified portion thereof, declared or paid on such Shares by
the Company shall be (i) deferred until the lapsing of the
restrictions imposed upon such Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether
such dividends are to be reinvested in shares of Stock (which shall
be held as additional Shares of Restricted Stock) or held in cash.
16
Page 159 of 181 <PAGE>
If deferred dividends are to be held in cash, there may be credited
at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, may determine. Payment of
deferred dividends in respect of Shares of Restricted Stock
(whether held in cash or as additional Shares of Restricted Stock),
together with interest accrued thereon, if any, shall be made upon
the lapsing of restrictions imposed on the Shares in respect of
which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any
Shares of Restricted Stock shall be forfeited upon the forfeiture
of such Shares.
8.7 Delivery of Shares. Upon the lapse of the restrictions
on Shares of Restricted Stock, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such
Shares, free of all restrictions hereunder.
9. Performance Award.
9.1 Performance Objectives. Performance objectives for
Performance Awards may be expressed in terms of (i) earnings per
Share, (ii) pre-tax profits, (iii) net earnings, (iv) net worth,
(v) return on equity or assets, (vi) any combination of the
foregoing, or (vii) any other standard or standards deemed
appropriate by the Committee at the time the Award is granted.
Performance objectives may be in respect of the performance of the
Company and its Subsidiaries (which may be on a consolidated
basis), a Subsidiary or a Division. Performance objectives may be
absolute or relative and may be expressed in terms of a progression
within a specified range. Prior to the end of a Performance Cycle,
the Committee, in its discretion, may adjust the performance
objectives to reflect a Change in the Capitalization, a change in
the tax rate or book tax rate of the Company or any Subsidiary, or
any other event which may materially affect the performance of the
Company, a Subsidiary or a Division, including, but not limited to,
market conditions or a significant acquisition or disposition of
assets or other property by the Company, a Subsidiary or a
Division.
9.2 Performance Units. The Committee, in its discretion, may
grant Awards of Performance Units to Eligible Individuals, the
terms and conditions of which shall be set forth in an Agreement
between the Company and the Grantee. Performance Units may be
denominated in Shares or a specified dollar amount and, contingent
upon the attainment of specified performance objectives within the
Performance Cycle, represent the right to receive payment as
provided in Section 9.2(b) of (i) in the case of Share-denominated
17
Page 160 of 181 <PAGE>
Performance Units, the Fair Market Value of a Share on the date the
Performance Unit was granted, the date the Performance Unit became
vested or any other date specified by the Committee, (ii) in the
case of dollar-denominated Performance Units, the specified dollar
amount or (iii) a percentage (which may be more than 100%) of the
amount described in clause (i) or (ii) depending on the level of
performance objective attainment; provided, however, that the
Committee may at the time a Performance Unit is granted, specify a
maximum amount payable in respect of a vested Performance Unit.
Each Agreement shall specify the number of the Performance Units to
which it relates, the performance objectives which must be
satisfied in order for the Performance Units to vest and the
Performance Cycle within which such objectives must be satisfied.
(a) Vesting and Forfeiture. A Grantee shall become
vested with respect to the Performance Units to the extent that the
performance objectives set forth in the Agreement are satisfied for
the Performance Cycle.
(b) Payment of Awards. Payment to Grantees in respect
of vested Performance Units shall be made within sixty (60) days
after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the
deferral of payment, in which event the terms and conditions of the
deferral shall be set forth in the Agreement. Subject to Section
9.4, such payments may be made entirely in Shares valued at their
Fair Market Value as of the last day of the applicable Performance
Cycle or such other date specified by the Committee, entirely in
cash, or in such combination of Shares and cash as the Committee in
its discretion, shall determine at any time prior to such payment;
provided, however, that if the Committee in its discretion
determines to make such payment entirely or partially in Shares of
Restricted Stock, the Committee must determine the extent to which
such payment will be in Shares of Restricted Stock and the terms
of such Restricted Stock at the time the Award is granted.
9.3 Performance Shares. The Committee, in its discretion,
may grant Awards of Performance Shares to Eligible Individuals, the
terms and conditions of which shall be set forth in an Agreement
between the Company and the Grantee. Each Agreement may require
that an appropriate legend be placed on Share certificates. Awards
of Performance Shares shall be subject to the following terms and
provisions:
(a) Rights of Grantee. The Committee shall provide at
the time an Award of Performance Shares is made, the time or
times at which the actual Shares represented by such Award shall be
issued in the name of the Grantee; provided, however, that no
18
Page 161 of 181 <PAGE>
Performance Shares shall be issued until the Grantee has executed
and Agreement evidencing the Award, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow agreement
and any other documents which the Committee may require as a
condition to the issuance of such Performance Shares. If a Grantee
shall fail to execute the Agreement evidencing an Award of
Performance Shares, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other
documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the
Award shall be null and void. At the discretion of the Committee,
Shares issued in connection with an Award of Performance Shares
shall be deposited together with the stock powers with an escrow
agent (which may be the Company) designated by the Committee.
Except as restricted by the terms of the Agreement, upon delivery
of the Shares to the escrow agent, the Grantee shall have, in the
discretion of the Committee, all of the rights of a stockholder
with respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made
with respect to the Shares.
(b) Non-transferability. Until any restrictions upon
the Performance Shares awarded to a Grantee shall have lapsed in
the manner set forth in Sections 9.3(c) or 9.4, such Performance
Shares shall not be sold, transferred or otherwise disposed of and
shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee. The Committee may also impose such other
restrictions and conditions on the Performance Shares, if any, as
it deems appropriate.
(c) Lapse of Restrictions. Subject to Section 9.4,
restrictions upon Performance Shares awarded hereunder shall lapse
and such Performance Shares shall become vested at such time or
times and on such terms, conditions and satisfaction of performance
objectives as the Committee may, in its discretion, determine at
the time an Award is granted.
(d) Treatment of Dividends. At the time the Award of
Performance Shares is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on
actual Shares represented by such Award which have been issued by
the Company to the Grantee shall be (i) deferred until the lapsing
of the restrictions imposed upon such Performance Shares and (ii)
held by the Company for the account of the Grantee until such time.
In the event that dividends are to be deferred, the Committee shall
determine whether such dividends are to be reinvested in shares of
Stock (which shall be held as additional Performance Shares) or
19
Page 162 of 181 <PAGE>
held in cash. If deferred dividends are to be held in cash, there
may be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year
at a rate per annum as the Committee, in its discretion, may
determine. Payment of deferred dividends in respect of Performance
Shares (whether held in cash or in additional Performance Shares),
together with interest accrued thereon, if any, shall be made upon
the lapsing of restrictions imposed on the Performance Shares in
respect of which the deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon) in
respect of any Performance Shares shall be forfeited upon the
forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the
restrictions on Performance Shares awarded hereunder, the Committee
shall cause a stock certificate to be delivered to the Grantee with
respect to such Shares, free of all restrictions hereunder.
9.4 Effect of Change in Control. Notwithstanding anything
contained in the Plan or any Agreement to the contrary, in the
event of a Change in Control:
(a) With respect to the Performance Units, the Grantee
shall (i) become vested in a percentage of Performance Units as
determined by the Committee at the time of the Award of such
Performance Units and as set forth in the Agreement and (ii) be
entitled to receive in respect of all Performance Units which
become vested as a result of a Change in Control, a cash payment
within ten (10) days after such Change in Control in an amount as
determined by the Committee at the time of the Award of such
Performance Unit and as set forth in the Agreement.
(b) With respect to the Performance Shares, restrictions
shall lapse immediately on all or a portion of the Performance
Shares as determined by the Committee at the time of the Award of
such Performance Shares and as set forth in the Agreement.
(c) The Agreements evidencing Performance Shares and
Performance Units shall provide for the treatment of such Awards
(or portions thereof) which do not become vested as the result of
a Change in Control, including, but not limited to, provisions for
the adjustment of applicable performance objectives.
9.5 Non-transferability. No Performance Awards shall be
transferable by the Grantee otherwise than by will or the laws of
descent and distribution.
20
Page 163 of 181 <PAGE>
9.6 Modification or Substitution. Subject to the terms of
the Plan, the Committee may modify outstanding Performance Awards
or accept the surrender of outstanding Performance Awards and grant
new Performance Awards in substitution for them. Notwithstanding
the foregoing, no modification of a Performance Award shall
adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
10. Effect of a Termination of Employment.
The Agreement evidencing the grant of each Employee
Option and each Award shall set forth the terms and conditions
applicable to such Employee Option or Award upon a termination or
change in the status of the employment of the Optionee or Grantee
by the Company, a Subsidiary or a Division (including a termination
or change by reason of the sale of a Subsidiary or a Division), as
the Committee may, in its discretion, determine at the time the
Employee Option or Award is granted or by amendment of the
Agreement thereafter. In the event of such a termination, the
Committee may, in its discretion, provide for the extension of the
exercisability of an Option or Award, accelerate the vesting
thereof, eliminate or make less restrictive any restrictions
contained therein, or otherwise amend or modify the Option or Award
in any manner not adverse to the Eligible Individual.
11. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments,
if any, to the (i) maximum number and class of Shares or other
stock or securities with respect to which Options or Awards may be
granted under the Plan, and (ii) the number and class of Shares or
other stock or securities which are subject to outstanding Options
or Awards granted under the Plan, and the purchase price therefor,
if applicable.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options
(including any adjustments in the purchase price) shall be made in
such manner as not to constitute a modification as defined by
Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a
Grantee of an Award shall be entitled to, or an Optionee shall be
entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities, such new additional or
different shares shall thereupon be subject to all of the
21
Page 164 of 181 <PAGE>
conditions, restrictions and performance criteria which were
applicable to the Shares subject to the Award or Option, as the
case may be, prior to such Change in Capitalization.
12. Effect of Certain Transactions.
Subject to Sections 6.4, 7.8, 8.4(b) and 9.4 or as
otherwise provided in an Agreement, in the event of (i) the
liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), the Plan and the
Options and Awards issued hereunder shall continue in effect in
accordance with their respective terms and each Optionee and
Grantee shall be entitled to receive in respect of each Share
subject to any outstanding Options or Awards, as the case may be,
upon exercise of any Option or payment or transfer in respect of
any Award, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of a Share was
entitled to receive in the Transaction in respect of a Share.
13. Termination and Amendment of the Plan.
The Plan shall terminate on the day preceding the fifth
anniversary of the date of its adoption by the Board and no Option
or Award may be granted thereafter. The Board may sooner terminate
the Plan and the Board may at any time and from time to time,
without approval of stockholders unless required by applicable law,
rule or regulation, amend, modify or suspend the Plan; provided,
however, that no such amendment, modification, suspension or
termination shall impair or adversely alter any Options or Awards
theretofore granted under the Plan, except with the consent of the
Optionee or Grantee, nor shall any amendment, modification,
suspension or termination deprive any Optionee or Grantee of any
Shares which he or she may have acquired through or as a result of
the Plan.
14. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be
construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on
the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific
cases.
22
Page 165 of 181 <PAGE>
15. Limitation of Liability.
As illustration of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in the
Plan shall be construed to:
(i) give any person any right to be granted an Option
or Award other than at the sole discretion of the Committee;
(ii) give any person any right whatsoever with respect
to Shares except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at
any particular rate of compensation or for any particular period of
time.
16. Regulations and Other Approvals; Governing Law.
16.1 Except as to matters of federal law, this Plan and the
rights of all persons claiming hereunder shall be construed and
determined in accordance with the laws of the State of Delaware
without giving effect to conflicts of law principles.
16.2 The obligation of the Company to sell or deliver Shares
with respect to Options and Awards granted under the Plan shall be
subject to all applicable laws, rules and regulations, including
all applicable federal and state securities laws, and the obtaining
of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.
16.3 The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall
interpret and administer the provisions of the Plan or any
Agreement or Award Notice in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan.
16.4 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any
government authority, or to obtain for Eligible Individuals granted
Incentive Stock Options the tax benefits under the applicable
provisions of the Code and regulations promulgated thereunder.
23
Page 166 of 181 <PAGE>
16.5 Each Option and Award is subject to the requirement that,
if at any time the Committee determines, in its discretion, that
the listing, registration or qualification of Shares issuable
pursuant to the Plan is required by any securities exchange or
under any state or federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be
exercisable or payment made or Shares issued, in whole or in part,
unless listing, registration, qualification, consent or approval
has been effected or obtained free of any conditions, except as
acceptable to the Committee.
16.6 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of
Shares acquired pursuant to the Plan is not covered by a then
current registration statement under the Securities Act of 1933, as
amended, and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent required
by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual
receiving Shares pursuant to an Option or Award granted under the
Plan, as a condition precedent to receipt of such Shares, to
represent and warrant to the Company in writing that the Shares
acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or
pursuant to an exemption applicable under the Securities Act of
1933, as amended, or the rules and regulations promulgated
thereunder. The certificates evidencing any of such Shares shall
bear appropriate legend to reflect their status as restricted
securities as aforesaid.
17. Restrictions.
17.1 No Shares or other form of payment shall be issued with
respect to any Option or Award unless the Company shall be
satisfied based on the advice of its counsel that such issuance
will be in compliance with applicable federal and state securities
laws. It is the intent of the Company that this Plan comply in all
respects with Rule 16b-3, that any ambiguities or inconsistencies
in the construction of this Plan be interpreted to give effect to
such intention, and that if any provision of this Plan is found not
to be in compliance with Rule 16b-3, such provision shall be null
and void to the extent required to permit this Plan to comply with
Rule 16b-3. Certificates evidencing Shares delivered under this
Plan may be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules,
24
Page 167 of 181 <PAGE>
regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or transaction reporting system
upon which the Shares are then listed and any applicable federal
and state securities law. The Committee may cause a legend or
legends to be placed upon any certificates representing the Shares
to make appropriate reference to such restrictions.
17.2 No Eligible Individial may receive in any one calendar
year a number of Options and/or Stock Appreciation Rights which, in
the aggregate, exceeds 50,000.
18. Unfunded Plan. Insofar as it provides for awards of
cash, Shares or rights thereto, this Plan shall be unfunded,
although bookkeeping accounts may be established with respect to
Eligible Individuals who are entitled to cash, Shares or rights
thereto under this Plan. Any such accounts shall be used merely as
a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash,
Shares or rights thereto, nor shall this Plan be construed as
providing for such segregation, nor shall the Company nor the Board
nor the Committee be deemed to be a trustee of any cash, Shares or
rights thereto to be granted under this Plan. Any liability or
obligation of the Company to any Eligible Individual with respect
to a grant of cash, Shares or rights thereto under this Plan shall
be based solely upon any contractual obligations that may be
created by this Plan and any Agreement or Award Notice, and no such
liability or obligation of the Company shall be deemed to be
secured by any pledge of, or other encumbrance on, any property of
the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance
of any obligation that may be created by this Plan.
19. Miscellaneous.
19.1 Multiple Agreements. The terms of each Option or Award
may differ from other Options or Awards granted under the Plan at
the same time, or at some other time. The Committee may also grant
more than one Option or Award to a given Eligible Individual during
the term of the Plan, either in addition to, or in substitution
for, one or more Options or Awards previously granted to that
Eligible Individual.
19.2 Withholding of Taxes. (a) The Company shall have the
right to deduct from any distribution of cash to any Optionee or
Grantee, an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld
(the "Withholding Taxes") with respect to any Option or Award. If
an Optionee or Grantee is to experience a taxable event in
25
Page 168 of 181 <PAGE>
connection with the receipt of Shares pursuant to an Option
exercise or payment of an Award (a "Taxable Event"), the Optionee
or Grantee shall pay the Withholding Taxes to the Company prior to
the issuance, or release of escrow, of such Shares.
(b) If an Optionee makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to such Optionee pursuant
to the exercise of an Incentive Stock Option within the two-year
period commencing on the day after the date of the grant or within
the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such
exercise, the Optionee shall, within ten (10) days of such
disposition, notify the Company thereof, by delivery of written
notice to the Company at its principal executive office.
(c) The Committee shall have the authority, at the time
of grant of an Option or Award under the Plan or at any time
hereafter, to award tax bonuses to designated Optionees or
Grantees, to be paid upon their exercise of Employee Options or
payment in respect of Awards granted hereunder. The amount of any
such payments shall be determined by the Committee. The Committee
shall have full authority in its absolute discretion to determine
the amount of any such tax bonus and the terms and conditions
affecting the vesting and payment thereof.
20. Effective Date. The effective date of the Plan shall be
as determined by the Board, subject only to the approval by the
affirmative vote of the holders of a majority of the securities of
the Company present, or represented, and entitled to vote at a
meeting of stockholders duly held in accordance with the applicable
laws of the State of Delaware within twelve (12) months of the
adoption of the Plan by the Board.
26
Page 169 of 181<PAGE>
Exhibit 10.4
Page 170 of 181 <PAGE>
AMENDMENT NO. SEVEN TO REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. SEVEN TO REVOLVING CREDIT AGREEMENT ("Amendment No.
Seven") is made effective as of the 1st day of June 1998 to the Revolving
Credit Agreement dated August 30, 1985, (the "Agreement") executed by and
between BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, a corporation duly
organized under the laws of the State of Delaware and BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC., a corporation duly organized under the laws of
the State of New Jersey (herein collectively referred to as the "Borrower")
and NATIONAL CITY BANK, successor by merger to National City Bank of
Columbus, formerly known, as National City Bank, Columbus, formerly known as
BancOhio National Bank, a national banking association with a banking office
at 155 East Broad Street, Columbus, Ohio 43251 (herein called "Bank").
WITNESSETH:
WHEREAS, Borrower and Bank entered into the Agreement pursuant to which Bank
extended a revolving loan up to a maximum principal amount of Twenty-Five
Million and No/l00 Dollars ($25.000,000.00), said maximum principal amount
having previously been increased to $50,000,000.00 and each loan having been
made pursuant to the terms of the Agreement; and
WHEREAS, Borrower and Bank have previously entered into amendments of the
Agreement, as evidenced by an Amendment No. 1 dated January 7, 1987, by an
Amendment No. 2 dated February 3, 1987, by Amendment No. 3 dated August 30,
1985, by Amendment No. 4 dated August 30, 1985, by Amendment No. 5 dated
September 28, 1995, and by Amendment No. Six dated March 28, 1996 (the
"Amendments") (the Agreement together with the Amendments hereinafter
collectively referred to as the "Agreement"); and
WHEREAS, Borrower and Bank desire to amend the Agreement to reduce the
Commitment Fee, to amend Subsection 7.12(B) of the Agreement, and to make
such other amendments incident thereto.
NOW THEREFORE, the parties hereto, in consideration of the mutual promises
and covenants herein contained, agree as follows:
1. The following definition is added to Section 1.01 of the Agreement:
"U.S Agency Bonds" means bonds issued by any of the Federal National
Mortgage Association (FNMA), Federal Home Loan Bank, Federal Farm
Credit Bank and Student Loan Marketing Association.
2. Section 2.07 of the Agreement is hereby amended by deleting the phrase
"one-fourth of one percent (.250%)" as the same appears in such section
as amended by Amendment No. 3 and substituting therefor the phrase
"twenty one hundredths of one percent (.20%)".
3. Subsection 7.12(B) of the Agreement is hereby deleted in its entirety
and the following is hereby inserted in its place:
(B) investments in (i) direct obligations of the United States of
America; (ii) U.S. Agency Bonds having a final maturity no later
than five (5) years from the date incurred; (iii) certificates of
deposit; (iv) commercial paper acceptable to Bank; (v) repurchase
agreements; (vi) master notes; (vii) bank loan participations; or
(viii) taxable low floaters. Investments in (iii), (iv), (v), (vi),
and (vii) above must have short term credit ratings of no less than
P-2 by Moody's or A-2 by Standard and Poor's. Investments in (i),
(ii), and (viii) above must have long term credit ratings of no less
than Aa2 by Moody's or AA by Standard and Poor's;
Page 171 of 181 <PAGE>
4. Borrower hereby expressly acknowledges and confirms that the represent-
ations and warranties of Borrower set forth in Article VI of the Agree-
ment are true and accurate on this date with the same effect as if made
on and as of this date; that except as previously disclosed to Bank, no
financial condition or circumstances exists as to Borrower which would
inevitably result in the occurrence of an Event of Default under Article
VII of the Agreement, and that except as previously disclosed to Bank,
no event has occurred or no condition exists which constitutes, or with
the running of time or the giving of notice would constitute an Event of
Default under Article VIII of the Agreement.
5. Except as herein expressly modified, the parties hereto ratify and
confirm all of the terms, conditions, warranties and covenants of the
Agreement, including provisions for the payment of the Note pursuant to
the terms of the Agreement. This Amendment does not constitute the
extinguishment of any obligation or indebtedness previously incurred.
6. This Amendment shall be binding upon Borrower and Bank and their
respective successors and assigns, and shall inure to the benefit of
Bank and its respective successors and assigns.
Executed by the parties hereto in manner and form sufficient to bind them
effective as of the date and year first above written.
BURLINGTON COAT FACTORY WAREHOUSE
CORPORATION
/s/ Andrew R. Milstein
By:___________________________
Andrew R. Milstein
Its: Vice President
BURLINGTON COAT FACTORY WAREHOUSE
OF NEW JERSEY, INC.
/s/ Andrew R. Milstein
By:__________________________
Andrew R. Milstein
Its: Vice President
NATIONAL CITY BANK
/s/ George M. Gevas
By:___________________________
George M. Gevas
Its: Vice President
2
Page 172 of 181 <PAGE>
Exhibit 10.6
Page 173 of 181 <PAGE>
EXHIBIT A
INSTRUMENT OF AMENDMENT TO
THE BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
401(k) PROFIT SHARING PLAN
The Burlington Coat Factory Warehouse Corporation 401(k) Profit Sharing Plan,
as amended and restated effective June 29, 1997 (hereinafter referred to as
the "Plan"), is hereby amended as follows, effective as of January 1, 1998:
1. Section 4.2 of the Plan is hereby amended by deleting the first
sentence therein in its entirety and substituting in lieu thereof the
following:
"The amount contributed for any Plan Year shall be allocated
proportionately among the Profit Sharing Accounts of Eligible
Employees who completed a Year of Service during, and are employed
on the last day of, such Plan Year."
2. Section 7.3 of the Plan is hereby amended by renumbering the current
Section 7.3 as Section 7.3 (a), by amending the first two sentences thereof
to read as follows:
"Each Participant's Profit Sharing Account, Company Account,
Deferral Account, Rollover Account, Transfer Account and the
Participant-directed portion of his Prior Plan Account
(collectively, the "Self-Directed Account") will be invested in
one or more of the Investment Funds. Each Participant will
designate the portion (expressed as a percentage in multiples of
10%) of his Self-Directed Account to be invested in each Investment
Fund.";
and by adding the following new Sections 7.3(b) and (c) to the end thereof:
"(b) Notwithstanding the foregoing provisions of Section 7.3(a),
effective January 1, 1998:
(i) no more than 30% of a Participant's Self-Directed Account
may be invested in the Stock Fund; and
(ii) (A) any transfer of a Participant's interest in any
Investment Fund from such Investment Fund into the Stock Fund
and (B) any Participant-directed investment of any contribution
made under the Plan into the Stock Fund shall only be effected
to the extent that such transfer or investment does not result
in the value of such Participant's Self-Directed Account
Page 174 of 181 <PAGE>
which is invested in the Stock Fund exceeding 30% of the value
of such Participant's Self-Directed Account. For purposes of
determining the limitation under this Section 7.3(b)(ii), the
value of a Participant's Self-Directed Account as of the
Valuation Date immediately preceding the Valuation Date
on which the transfer or investment is to take place shall be
used.
(c) Any transfer or investment requested by a Participant
pursuant to Section 7.3(a) that does not satisfy the
requirements of Section 7.3(b) shall be null and void to the
extent that the implementation of such transfer or investment
would cause the value of such Participant's Self-Directed
Account invested in the Stock Fund to exceed the 30% limitation
under Section 7.3(b)."
2
Page 175 of 181<PAGE>
Exhibit 21
Page 176 of 181<PAGE>
SUBSIDIARIES OF THE COMPANY
Burlington Coat Factory Warehouse Corporation is the parent
corporation of two hundred fifty-three subsidiaries which operate
"off-price" retail apparel stores in the United States.
Burlington Coat Factory Realty Corp., a Delaware corporation, which
buys, sells and otherwise deals in real estate in connection with
the Company's business.
Burlington Coat Factory Warehouse, Inc., a Pennsylvania
corporation, which leases the Company's store in Clifton Heights,
Pennsylvania to one of the Company's operating subsidiaries.
Monroe G. Milstein, Inc., a New York corporation, which operates a
wholesale apparel business.
LC Acquisition Corp., a New York corporation, which owns an
interest in a manufacturer of coats.
C.L.B., Inc., a Delaware corporation, through which the Company
collects royalties from its subsidiaries for the use of its trade
names.
C.F.I.C. Corporation, a Delaware corporation, through which the
Company invests excess funds.
C.F.B., Inc., a Delaware Corporation, through which the Company
provides financing for its subsidiaries for the acquisition of
their merchandise inventory and store fixtures.
Burlington Coat Factory Direct Corporation, a New Jersey
corporation, formed for direct marketing purposes.
Page 177 of 181<PAGE>
Exhibit 23
Page 178 of 181<PAGE>
INDEPENDENT AUDITORS CONSENT
We consent to the incorporation by reference in Registration Statements
No. 2-96332, No. 33-21569, No. 33-51965, No. 333-41077 of Burlington Coat
Factory Warehouse Corporation and subsidiaries on Form S-8 of our report
dated July 28, 1998, appearing in this Annual Report on Form 10-K of
Burlington Coat Factory Warehouse Corporation and subsidiaries for the
eleven months in the period ended May 30, 1998.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
August 25, 1998
Page 179 of 181<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
Exhibit 27
Page 180 of 181 <PAGE>
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> MAY-30-1998
<PERIOD-END> MAY-30-1998
<CASH> 153,964,000
<SECURITIES> 0
<RECEIVABLES> 18,681,000
<ALLOWANCES> (1,103,000)
<INVENTORY> 474,817,000
<CURRENT-ASSETS> 680,559,000
<PP&E> 388,487,000
<DEPRECIATION> (165,674,000)
<TOTAL-ASSETS> 909,807,000
<CURRENT-LIABILITIES> 312,100,000
<BONDS> 60,890,000
49,594,000
0
<COMMON> 0
<OTHER-SE> 466,475,000
<TOTAL-LIABILITY-AND-EQUITY> 909,807,000
<SALES> 1,795,623,000
<TOTAL-REVENUES> 1,813,897,000
<CGS> 1,142,956,000
<TOTAL-COSTS> 1,142,956,000
<OTHER-EXPENSES> 551,172,000
<LOSS-PROVISION> 7,187,000
<INTEREST-EXPENSE> 6,829,000
<INCOME-PRETAX> 105,753,000
<INCOME-TAX> 42,114,000
<INCOME-CONTINUING> 63,639,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,639,000
<EPS-PRIMARY> 1.34
<EPS-DILUTED> 1.34
</TABLE>
