<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
COMMISSION FILE NUMBER 0-20214
BED BATH & BEYOND INC.
(Exact name of registrant as specified in its charter)
NEW YORK 11-2250488
(State of incorporation) (I.R.S. Employer Identification No.)
650 LIBERTY AVENUE, UNION, NEW JERSEY 07083
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (908) 688-0888
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
NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK:
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT AUGUST 30, 1997
----- ------------------------------
<S> <C>
Common Stock - $0.01 par value 68,868,588
</TABLE>
================================================================================
<PAGE> 2
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets
As of August 30, 1997 and March 1, 1997 3
Consolidated Statements of Earnings
For the Three Month and Six Month Periods Ended
August 30, 1997 and August 25, 1996 4
Consolidated Statements of Cash Flows
For the Six Month Periods Ended
August 30, 1997 and August 25, 1996 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Exhibit Index 11
<PAGE> 3
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
August 30, March 1,
1997 1997
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 49,162 $ 38,765
Merchandise inventories 257,717 187,185
Prepaid expenses and other current assets 2,452 1,605
-------- --------
Total current assets 309,331 227,555
-------- --------
Property and equipment, net 99,686 88,332
Other assets 16,004 14,038
-------- --------
$425,021 $329,925
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 93,491 $ 47,821
Accrued expenses and other current liabilities 62,424 47,923
Income taxes payable 9,743 10,132
-------- --------
Total current liabilities 165,658 105,876
-------- --------
Deferred rent 11,370 9,688
-------- --------
177,028 115,564
-------- --------
Shareholders' equity:
Preferred stock - $0.01 par value; authorized -
1,000,000 shares; no shares issued or
outstanding -- --
Common stock - $0.01 par value;
authorized - 150,000,000 shares;
issued and outstanding - August 30, 1997,
68,868,588 shares and March 1, 1997,
68,603,022 shares 689 686
Additional paid-in capital 58,424 54,149
Retained earnings 188,880 159,526
-------- --------
Total shareholders' equity 247,993 214,361
-------- --------
$425,021 $329,925
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-3-
<PAGE> 4
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
August 30, August 25, August 30, August 25,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 266,895 $ 203,503 $ 480,557 $ 363,161
Cost of sales, including buying,
occupancy and indirect costs 157,395 119,566 283,699 213,436
----------- ----------- ----------- -----------
Gross profit 109,500 83,937 196,858 149,725
Selling, general and administrative expenses 77,730 58,903 149,278 112,030
----------- ----------- ----------- -----------
Operating profit 31,770 25,034 47,580 37,695
Interest income 504 37 1,141 179
----------- ----------- ----------- -----------
Earnings before provision for income taxes 32,274 25,071 48,721 37,874
Provision for income taxes 12,827 9,966 19,367 15,055
----------- ----------- ----------- -----------
Net earnings $ 19,447 $ 15,105 $ 29,354 $ 22,819
=========== =========== =========== ===========
Net earnings per share $ 0.27 $ 0.21 $ 0.41 $ 0.32
=========== =========== =========== ===========
Weighted average shares outstanding 71,117,266 70,439,687 70,914,456 70,464,644
=========== =========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-4-
<PAGE> 5
BED BATH & BEYOND INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
----------------
August 30, August 25,
1997 1996
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 29,354 $ 22,819
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 8,415 6,132
Increase in assets:
Merchandise inventories (70,532) (41,644)
Prepaid expenses and other current assets (847) (716)
Other assets (1,966) (2,046)
Increase (decrease) in liabilities:
Accounts payable 45,670 20,255
Accrued expenses and other current liabilities 14,501 11,026
Income taxes payable (389) 47
Deferred rent 1,682 1,290
-------- --------
Net cash provided by operating activities 25,888 17,163
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (19,769) (13,938)
-------- --------
Net cash used in investing activities (19,769) (13,938)
-------- --------
Cash Flows from Financing Activities:
Net decrease in long-term debt -- (5,000)
Proceeds from exercise of stock options 4,278 5,267
-------- --------
Net cash provided by financing activities 4,278 267
-------- --------
Net increase in cash and cash equivalents 10,397 3,492
Cash and cash equivalents:
Beginning of period 38,765 10,267
-------- --------
End of period $ 49,162 $ 13,759
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-5-
<PAGE> 6
BED BATH & BEYOND INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) BASIS OF PRESENTATION
The accompanying consolidated financial statements, except for the March 1, 1997
consolidated balance sheet, have been prepared without audit. In the opinion of
Management, the accompanying consolidated financial statements contain all
adjustments (consisting of only normal recurring accruals) necessary to present
fairly the financial position of Bed Bath & Beyond Inc. and subsidiaries (the
"Company") as of August 30, 1997 and March 1, 1997 and the results of their
operations for the three month and six month periods ended August 30, 1997 and
August 25, 1996, respectively, and cash flows for the six month periods ended
August 30, 1997 and August 25, 1996. Because of the seasonality of the specialty
retailing business, operating results of the Company on a quarterly basis may
not be indicative of operating results for the full year.
The accompanying unaudited consolidated financial statements are presented in
accordance with the requirements for Form 10-Q and consequently do not include
all the disclosures normally required by generally accepted accounting
principles. Reference should be made to Bed Bath & Beyond Inc.'s Annual Report
for the fiscal year ended March 1, 1997 for additional disclosures, including a
summary of the Company's significant accounting policies.
2) CLASSIFICATION OF THE BOARD OF DIRECTORS
In June 1997, the Company's Certificate of Incorporation was amended to provide
for the classification of the Board of Directors into three separate classes.
3) RECENT ACCOUNTING PRONOUNCEMENT
In February 1997, Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS No. 128), was issued. SFAS No. 128 simplifies the
standards for computing earnings per share and makes the United States
standards for computing earnings per share more comparable to international
standards. SFAS No. 128 requires presentation of "basic" earnings per share
(which excludes dilution) and "diluted" earnings per share. SFAS No. 128 is
effective for financial statements issued for periods ending after December 15,
1997 and requires restatement of all prior period earnings per share presented.
The Company will adopt SFAS No. 128 before its fiscal year end, February 28,
1998, and does not believe the adoption will have a material impact on the
Company's reported earnings per share.
-6-
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months August 30, 1997 vs. Three Months August 25, 1996
Net sales for the second quarter ended August 30, 1997 were $266.9 million, an
increase of $63.4 million or approximately 31.2% over net sales of $203.5
million for the corresponding quarter last year. Approximately 81.8% of the
increase was attributable to new store net sales. The increase in comparable
store net sales in the second quarter of 1997 was approximately 5.8%. The
increase in comparable net sales reflects a number of factors, including but not
limited to, the continued consumer acceptance of the Company's merchandise
offerings and customer service and the generally favorable retailing
environment. Approximately 55% and 45% of net sales for the second quarter were
attributable to sales of domestics merchandise and home furnishings merchandise,
respectively.
Gross profit for the second quarter of 1997 was $109.5 million or 41.0% of net
sales compared with $83.9 million or 41.2% of net sales during the second
quarter of 1996. The decrease in gross profit, as a percentage of net sales, was
attributable to a number of factors, including a different mix of sales during
the second quarter of 1997 compared to the mix of sales during the second
quarter of 1996, and an increase in coupons redeemed associated with the
Company's marketing program.
Selling, general and administrative expenses ("SG&A") were $77.7 million in the
second quarter of 1997 compared with $58.9 million in the same quarter last year
and as a percentage of net sales were 29.1% and 28.9%, respectively. The
increase in SG&A, as a percentage of net sales, primarily reflects increases in
occupancy costs, which were partially offset by a decrease in payroll and
payroll related items.
Operating profit in the second quarter of 1997 increased to $31.8 million from
$25.0 million in the second quarter of 1996, reflecting primarily the increase
in net sales which was partially offset by increases in cost of sales and SG&A.
Six Months August 30, 1997 vs. Six Months August 25, 1996
Net sales for the six months ended August 30, 1997 were $480.6 million, an
increase of $117.4 million or approximately 32.3% over net sales of $363.2
million for the corresponding period last year. Approximately 80.7% of the
increase was attributable to new store net sales. The increase in comparable
store net sales for the first six months of 1997 was approximately 6.2%.
Gross profit for the first six months of 1997 was $196.9 million or 41.0% of net
sales compared with $149.7 million or 41.2% of net sales during the same period
last year. The decrease in gross profit, as a percentage of net sales, was
attributable to a number of factors, including a different mix of sales during
the first six months of this year compared with the mix of sales in the
corresponding period last year, and an increase in coupons redeemed associated
with the Company's marketing program.
-7-
<PAGE> 8
SG&A was $149.3 million in the second quarter of 1997 compared with $112.0
million in the same quarter last year and as a percentage of net sales were
31.1% and 30.8%, respectively. The increase in SG&A, as a percentage of net
sales, primarily reflects increases in occupancy costs, which were partially
offset by a decrease in payroll and payroll related items.
Operating profit in the first six months of 1997 increased to $47.6 million from
$37.7 million for the same period last year, primarily resulting from the
increase in net sales, which was partially offset by an increase in cost
of sales and SG&A expenses.
EXPANSION PROGRAM
The Company is engaged in an ongoing expansion program involving the opening of
new stores in both existing and new markets and the expansion or replacement of
existing stores with larger stores. As a result of this program, the total
number of stores has increased to 122 stores at the end of the second quarter of
1997 compared with 90 stores at the end of the corresponding quarter last year.
Total square footage grew to 4,916,000 square feet at the end of the second
quarter of 1997, from 3,619,000 square feet at the end of the second quarter of
last year.
During the first six months of fiscal 1997, the Company opened 14 new
superstores and expanded one store resulting in an aggregate addition of 569,000
square feet to total store space. The Company anticipates opening approximately
19 additional superstores and expanding two stores by the end of the fiscal
year, aggregating approximately 850,000 square feet of store space.
FINANCIAL CONDITION
Total assets at August 30, 1997 were $425.0 million compared with $329.9 million
at March 1, 1997, an increase of $95.1 million. Of the total increase, $81.8
million represented an increase in current assets and $13.3 million represented
an increase in non-current assets. The increase in current assets was primarily
attributable to an increase in merchandise inventories, which resulted from new
store space and, to a lesser extent, the changes in merchandising mix.
Total liabilities at August 30, 1997 were $177.0 million compared with $115.6
million at March 1, 1997, an increase of $61.5 million. The increase was
primarily attributable to a $45.7 million increase in accounts payable
(resulting from an increase in inventories) and a $14.5 million increase in
accrued expenses and other current liabilities.
Shareholders' equity was $248.0 million at August 30, 1997 compared with $214.4
million at March 1, 1997. The increase primarily reflects net earnings for the
first six months of fiscal 1997 and additional paid-in capital from the exercise
of stock options.
Capital expenditures for the first six months of fiscal 1997 were $19.8 million
compared with $13.9 million for the corresponding period last year. The increase
is primarily attributable to furniture and fixtures and leasehold improvements
for the 14 new superstores opened and one store expanded during the first six
months compared to furniture and fixtures and leasehold improvements for the ten
new superstores opened and one expanded store in the same period last year.
-8-
<PAGE> 9
FORWARD LOOKING STATEMENTS
This Form 10-Q may contain forward looking statements. Important factors which
may affect these statements are contained in the Company's Annual Report to
shareholders for the fiscal year ended March 1, 1997.
-9-
<PAGE> 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits to this report are listed on the Exhibit Index included
elsewhere herein.
(b) No reports on Form 8-K were filed by the Company during the three month
period ended August 30, 1997.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BED BATH & BEYOND INC.
(Registrant)
Date: October 14, 1997 By: /s/ Ronald Curwin
-------------------------------------
Ronald Curwin
Chief Financial Officer and Treasurer
-10-
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page No.
- ----------- ------- --------
<S> <C> <C>
3.1 Certificate of Amendment of Certificate 12 - 14
of Incorporation
3.2 Certificate of Change of Bed Bath & Beyond Inc. 15 - 16
(Under Section 805-A of the Business
Corporation Law)
3.3 Amended and Restated By-Laws 17 - 27
(As amended through June 26, 1997)
10.1 Employment Agreement between the Company and 28 - 43
Warren Eisenberg (Dated as of June 30, 1997)
10.2 Employment Agreement between the Company and 44 - 59
Leonard Feinstein (Dated as of June 30, 1997)
10.3 Stock Option Agreement between the Company and 60 - 62
Warren Eisenberg (Dated as of August 26, 1997)
10.4 Stock Option Agreement between the Company and 63 - 65
Leonard Feinstein (Dated as of August 26, 1997)
10.5 Company's 1992 Stock Option Plan 66 - 73
(As amended through August 26, 1997)
10.6 Company's 1996 Stock Option Plan 74 - 80
(As amended through August 26, 1997)
11 Computation of Per Share Earnings 81
27 Financial Data Schedule 82
(Filed electronically with SEC only)
</TABLE>
-11-
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BED BATH & BEYOND INC.
(UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW)
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
BED BATH & BEYOND INC.
2. The original Certificate of Incorporation of the Corporation was filed
by the Department of State of the State of New York on October 5, 1971. It was
filed under the original name of B&B TEXTILE CORPORATION.
3. The certificate of incorporation of the Corporation is hereby amended
by striking out Article SEVENTH thereof and by substituting in lieu of said
Article the following new Article SEVENTH:
"SEVENTH: (a) The number of directors comprising the entire Board of
Directors shall be fixed from time to time in accordance with the specific
provisions of the By-laws of the corporation.
(b) The Board of Directors shall be divided into three classes, each
class to be as nearly equal in number as possible. The classes shall be
designated as Class A, Class B and Class C. The term of office of the initial
Class A directors shall expire at the 1998 annual meeting of shareholders; that
of the initial Class B directors at the 1999 annual meeting of shareholders; and
that of the initial Class C directors at the 2000 annual meeting of
shareholders. At each annual meeting of shareholders, directors elected to
succeed those directors whose terms expire shall be elected for a term of office
to expire at the third
- 12 -
<PAGE> 2
succeeding annual meeting of shareholders after their election. Each director
shall be elected by a plurality of votes cast at the annual meeting of
shareholders by the holders of shares entitled to vote thereon to serve until
his or her respective successor is duly elected and qualified. Except as
otherwise provided by law, if the number of directors is changed, any increase
or decrease shall be apportioned among the classes so as to maintain the number
of directors in each class as nearly equal as possible; provided, however, that
no decrease in the number of directors shall shorten the term of any incumbent
director. Any vacancies in the Board of Directors that occur for any reason
prior to the expiration of the term of office of the class in which the vacancy
occurs, including vacancies that occur by reason of an increase in the number of
directors, may be filled only by a plurality of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote thereon or by the Board
of Directors of the corporation, acting by the affirmative vote of a majority of
the remaining directors then in office (even if less than a quorum). A director
elected to fill a vacancy shall hold office during the term to which his or her
predecessor had been elected and until his or her successor shall have been
elected and shall qualify, or until his or her earlier death, resignation or
removal.
(c) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, any amendment or modification of this Paragraph
SEVENTH, or any amendment or modification of this Certificate of Incorporation
that has the effect of amending or modifying this Paragraph SEVENTH, shall
require the affirmative vote of the holders of at least 80% of voting power of
all the then-outstanding shares of voting stock of the corporation entitled to
vote at an election of directors ("Voting Stock"), voting together as a single
class.
(d) The provisions of the By-laws of the corporation relating to the
Board of Directors and meetings of shareholders may be amended or modified only
by (i) the affirmative vote of the holders of at least 80% of voting power of
all the then-outstanding shares of Voting Stock, voting together as a single
class, or (ii) the affirmative vote of a majority of the total number of
directors then in office."
3. The amendment of the certificate of incorporation herein certified
was authorized first by vote of the Board of Directors of the corporation and
then by the vote of the majority of all outstanding shares entitled to vote
thereon.
- 13 -
<PAGE> 3
IN WITNESS WHEREOF, we have subscribed this document on June 26, 1997,
and do hereby affirm, under penalties of perjury, that the statements contained
herein have been examined by us and are true and correct.
/s/ Leonard Feinstein
-------------------------------------------
Leonard Feinstein,
President
/s/ Warren Eisenberg
-------------------------------------------
Warren Eisenberg,
Secretary
- 14 -
<PAGE> 1
Exhibit 3.2
CERTIFICATE OF CHANGE
OF
BED BATH & BEYOND INC.
UNDER SECTION 805-A OF THE BUSINESS CORPORATION LAW
FIRST: The name of the corporation (hereinafter called the "Corporation")
is BED BATH & BEYOND INC.
SECOND: The original Certificate of Incorporation of the Corporation was
filed by the Department of State of the State of New York on October 5, 1971. It
was filed under the original name of B & B TEXTILE CORPORATION.
THIRD: The change in the Certificate of Incorporation effected by this
certificate of change is as follows:
To change the post office address to which the Secretary of State of the
State of New York shall mail a copy of any process against the
Corporation served upon said Secretary of State.
FOURTH: To accomplish the foregoing change, Article SIXTH of the
Certificate of Incorporation is hereby stricken out in its entirety, and the
following new Article SIXTH is substituted in lieu thereof:
"SIXTH: The Secretary of State is designated as the agent of the
corporation upon whom process against the corporation may be served, and
the address to which the Secretary of State shall mail a copy of any
process against the corporation served upon him is Bed Bath & Beyond
Inc., 650 Liberty Avenue, Union, New Jersey 07083, Attention: Chairman."
- 15 -
<PAGE> 2
FIFTH: The foregoing change was approved by the Board of Directors.
IN WITNESS WHEREOF, we have subscribed our names to this document on the
date set forth below and do hereby affirm, under the penalties of perjury, that
the statements contained herein have been examined by us and are true and
correct.
Date: July 23, 1997
/s/ Leonard Feinstein
-------------------------------------------------
Leonard Feinstein
President
/s/ Warren Eisenberg
-------------------------------------------------
Warren Eisenberg
Secretary
-16-
<PAGE> 1
Exhibit 3.3
AMENDED AND RESTATED BY-LAWS*
OF
BED BATH & BEYOND INC.
(A NEW YORK CORPORATION)
ARTICLE I - OFFICES
The Corporation may have such offices within and without the State of New
York as the Board of Directors may from time to time determine or the business
of the Corporation may require.
ARTICLE II - MEETINGS OF SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders
shall be held at such place within or without the State of New York as the Board
of Directors may from time to time determine.
SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders
for the election of directors and for the transaction of such other business as
may properly be brought before the meeting shall be held on such date and at
such hour as shall from time to time be fixed by the Board of Directors. The
Board of Directors acting by resolution may postpone and reschedule any
previously scheduled annual meeting of shareholders.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders
for any purpose or purposes shall be called and may be held at any time upon the
written request of the Board of Directors, the Chairman or the President. Any
such request shall state the purpose or purposes of the proposed meeting. The
business transacted at any special meeting shall be confined to the purposes
stated in the notice of the meeting. The Board of Directors acting by resolution
may postpone and reschedule any previously scheduled special meeting of
shareholders.
SECTION 4. NOTICE OF MEETINGS. Written notice of each annual and
special meeting of shareholders shall state the date, time, place and purpose or
purposes of each such meetings of shareholders and, unless it is the annual
meeting, shall indicate that it is being issued at the direction of the person
or persons requesting the meeting.
SECTION 5. FIXING RECORD DATE. For the purpose of determining the
- --------
* As amended through June 26, 1997
-17-
<PAGE> 2
shareholders entitled to notice of or to vote at any meeting of the shareholders
or any adjournment thereof, or to express consent to or dissent from any taking
of corporate action without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividend or other distribution
or the allotment of any rights, or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a date as the record date for any
such determination of shareholders. Such date shall not be less than ten (10)
nor more than fifty (50) days before the date of any such meeting, nor more than
fifty (50) days before any other action. When a determination of shareholders of
record entitled to notice of or to vote at any meeting of shareholders has been
made as provided in this Section 4, such determination shall apply to any
adjournment thereof, unless the Board of Directors fixes a new record date for
the adjourned meeting or further notice is required by statute. If no record
date is fixed, it shall be determined by statute.
SECTION 6. QUORUM. Unless otherwise provided by statute or by the
Certificate of Incorporation, the holders of a majority of the shares issued and
outstanding and entitled to vote thereat, represented in person or by proxy,
shall constitute a quorum at any meeting of shareholders for the transaction of
business. When a quorum is once present to organize a meeting, it shall not be
broken by the subsequent withdrawal of any shareholders. At any time a quorum is
not present at a meeting of the shareholders, a majority of the shareholders
present in person or by proxy and entitled to vote thereat may adjourn the
meeting from time to time, without notice other than an announcement at the
meeting of the place, date and hour of the adjourned meeting, until a quorum
shall be present, and at the adjourned meeting at which a quorum is present any
business may be transacted that might have been transacted at the meeting as
originally called.
SECTION 7. WAIVERS. Notice of meeting need not be given to any
shareholder who signs and submits a waiver of notice, in person or by proxy,
whether before or after the meeting. The attendance of any shareholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting shall constitute a waiver of
notice by such shareholder.
SECTION 8. PROXIES. Every shareholder entitled to vote at a
meeting of shareholders or to express consent or dissent without a meeting may
authorize another person or other persons to act for him or her by proxy. Unless
otherwise provided by statute, every proxy must be in writing and signed by the
shareholder or his or her attorney-in-fact. No proxy shall be valid after
expiration of eleven (11) months from the date thereof unless otherwise provided
in the proxy. Unless and until voted, every proxy shall be revocable at the
pleasure of the shareholder executing it, except as otherwise provided by
statute.
SECTION 9. QUALIFICATION OF VOTERS. Every shareholder of record
shall be entitled at every meeting of the shareholders to one vote for each
share standing in his or her name on the record of shareholders of the
Corporation, unless otherwise provided by statute, by the Certificate of
Incorporation or by these By-laws.
SECTION 10. ORDER OF BUSINESS. For business properly to be brought
before a
-18-
<PAGE> 3
meeting by a shareholder (including, without limitation, the nomination of a
person or persons to the Board of Directors), the shareholder must have given
timely notice thereof in proper written form to the Secretary of the
Corporation. To be timely, a shareholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation (a) in the
case of an annual or special meeting of shareholders, not fewer than fifty (50)
days or more than ninety (90) days prior to the meeting at which such business
will be considered; provided, however, that, if fewer than fifty (50) days'
notice or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be received not later
than the close of business on the earlier of (i) the tenth day following the day
on which such notice of the date of the meeting was mailed or such public
disclosure was made or (ii) the last business day prior to the meeting date; and
(b) in the case of an annual meeting of shareholders, not fewer than fifty (50)
days in advance of the date of the previous year's annual meeting of
shareholders. To be in proper written form, a shareholder's notice to the
Secretary shall set forth in writing as to each matter the shareholder proposes
to bring before the meeting: (w) a brief description of the business desired to
be brought before the meeting and the reasons for conducting such business at
the meeting; (x) the name and address, as they appear on the Corporation's
books, of the shareholder proposing such business; (y) the class and number of
shares of the Corporation that are held of record and that are beneficially
owned by such shareholder; and (z) any material interest of such shareholder in
such business. If the business proposed to be brought before the meeting by a
shareholder involves the nomination of a person or persons to the Board of
Directors, the notice to the Secretary also shall set forth all the information
relating to the person or persons that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
pursuant to Regulation 14A under the Securities Exchange Act of 1934.
Notwithstanding anything else in these By-laws to the contrary, no business
shall be conducted at a meeting of shareholders that contravenes the procedures
set forth in this Section 10. The chairman of a meeting shall, if the facts
warrant, determine that business was not properly brought before the meeting in
accordance with the provisions of this Section 10 and, if the chairman of the
meeting should so determine, any such business not properly brought before the
meeting shall not be transacted and a declaration to such effect shall be made
to the meeting.
SECTION 11. VOTING. Unless otherwise provided by statute or by the
Certificate of Incorporation, all elections for directors shall be determined by
a plurality of the votes cast, whether in person or by proxy, at a meeting of
shareholders by the holders of shares entitled to vote in the election, and all
other corporate action shall be by a majority of the votes properly cast at a
meeting of shareholders, whether in person or by proxy. All voting for the
election of directors shall be by ballot.
SECTION 12. LIST OF SHAREHOLDERS. A list of shareholders as of the
record date, certified by the corporate officer responsible for its preparation
or by a transfer agent, shall be produced at any meeting upon the request
thereat or prior thereto of any shareholder. If the right to vote at any meeting
is challenged, the inspectors of the election, or person presiding thereat,
shall require such list of shareholders to be produced as evidence of the right
of the persons challenged to vote at such meeting, and all persons who appear
from such list to be shareholders entitled to vote thereat may vote at such
meeting.
-19-
<PAGE> 4
SECTION 13. INSPECTORS OF ELECTION. Prior to the holding of each
annual or special meeting of the shareholders, one or more inspectors of
election to serve thereat shall be appointed by the Board of Directors, or, if
the Board shall not have made such appointment, by the Chairman of the Board or
the President. If there shall be a failure to appoint an inspector, or if, at
any such meeting, the inspector or inspectors so appointed shall be absent or
shall fail to act or the office shall become vacated, the chairman of the
meeting may, and at the request of a shareholder present in person and entitled
to vote at such meeting shall, appoint such inspector or inspectors of election
to act thereat. The inspector or inspectors of election so appointed to act at
any meeting of the shareholders, before entering upon the discharge of their
duties, shall be sworn faithfully to execute the duties of inspector at such
meeting, with strict impartiality and according to the best of his or her
ability, and the oath so taken shall be subscribed by such inspector. Such
inspector or inspectors of election shall take charge of the polls, and, after
the voting on any question, shall make a certificate of the results of the vote
taken. No director or candidate for the office of director shall act as an
inspector of an election of directors. Inspectors need not be shareholders.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. NUMBER, QUALIFICATION AND TERM OF OFFICE. The business
of the Corporation shall be managed under the direction of the Board of
Directors. The number of directors that shall constitute the whole Board of
Directors shall be fixed exclusively by one or more resolutions adopted by the
Board of Directors. The directors need not be residents of the State of New York
and need not be shareholders. No decrease in the number of directors shall
shorten the term of an incumbent director. Members of the Board of Directors
shall be elected at each annual meeting of shareholders in accordance with and
subject to the provisions of the Certificate of Incorporation. Directors so
elected shall serve until their successors have been elected and qualified or
until an earlier resignation, removal or other displacement from office as
provided in these By-laws.
SECTION 2. PLACE OF MEETINGS. The Board of Directors may hold its
meetings, regular or special, at such place or places, within or without the
State of New York, as the Board of Directors may from time to time determine or
as may be specified in the notice of any meeting.
SECTION 3. ANNUAL MEETINGS. An annual meeting of the Board of
Directors shall be held following the annual meeting of the shareholders for the
purposes of electing officers of the Corporation and the committees of the Board
of Directors and transacting any other business which may properly come before
the meeting. Notice of annual meetings of the Board of Directors need not be
given in order legally to constitute the meeting, provided a quorum shall be
present.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at times and dates fixed by the Board or at such other
times and dates as the Chairman or President shall determine and as shall be
specified in the notice of such meetings.
-20-
<PAGE> 5
Notice of regular meetings of the Board of Directors need not be given except as
otherwise required by statute or these By-laws.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Secretary of the Corporation upon the written
request of the Chairman or President or any two directors.
SECTION 6. NOTICE OF MEETINGS. Notice of each special meeting of
the Board of Directors (and of each regular meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 6, which notice shall state the time, place and, if required by statute
or these By-laws, the purposes of such meeting. Notice of each such meeting
shall be mailed, postage thereon prepaid, to each director, by first-class mail,
at least four days before the day on which such meeting is to be held, or shall
be sent by facsimile transmission or comparable medium, or be delivered
personally or by telephone, at least twenty-four hours before the time at which
such meeting is to be held. Any meeting of the Board of Directors shall be a
legal meeting without notice thereof having been given, if all the directors of
the Corporation then holding office shall be present thereat.
SECTION 7. WAIVERS. Notice of a meeting need not be given to any
director who signs a waiver of notice, whether before or after the meeting. The
attendance of any director at a meeting without protesting prior to the meeting
or at its commencement the lack of notice of such meeting, shall constitute a
waiver of notice by such director.
SECTION 8. QUORUM. Unless otherwise provided by statute, the
Certificate of Incorporation or these By-laws, a majority of the entire Board of
Directors shall constitute a quorum for the transaction of business or of any
specified item of business. At any time a quorum is not present at a meeting of
the Board of Directors, a majority of the directors participating may adjourn
the meeting from time to time until a quorum shall be present thereat; and
notice of any adjournment to another time or place shall be given to the
directors who were absent at the time of the adjournment and, unless the new
time and place are announced at the meeting to be adjourned, to the other
directors.
SECTION 9. MEETING PARTICIPATION WITHOUT PHYSICAL PRESENCE. Any
one or more members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board of Directors or of such committee by means
of conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
SECTION 10. ACTION OF THE BOARD. Unless otherwise provided by
statute, the Certificate of Incorporation or these By-laws, the vote of a
majority of the directors at any meeting at which a quorum is present shall be
the act of the Board of Directors. Each director shall have one vote regardless
of the number of shares, if any, which he or she may hold.
SECTION 11. ACTION BY CONSENT WITHOUT A MEETING. Any action
required or
-21-
<PAGE> 6
permitted to be taken by the Board of Directors or any committee thereof may be
taken without a meeting if all members of the Board or of such committee consent
in writing to the adoption of a resolution authorizing such action. The written
consent or consents to each such action, including the resolutions adopted
thereby, shall be filed with the minutes of the proceedings of the Board of
Directors or of the committee taking such action.
SECTION 12. EXECUTIVE AND OTHER COMMITTEES. The Board of
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an executive committee and other committees,
each consisting of three (3) or more directors, and each of which shall have all
the authority of the Board of Directors to the extent provided in the
resolution, except as otherwise provided by statute. Each such committee shall
serve at the pleasure of the Board of Directors and shall keep minutes of its
meetings and report the same to the Board of Directors as and when requested by
the Board and shall observe such other procedures with respect to its meetings
as are provided in these By-laws or, to the extent not provided herein, as may
be provided by the Board of Directors in the resolution appointing such
committee or as may be adopted by the Board of Directors thereafter.
SECTION 13. REMOVAL. Unless otherwise provided by statute, any or
all directors may be removed for cause by vote of the shareholders or by action
of the Board of Directors at a special meeting called for that purpose.
SECTION 14. RESIGNATION. Any director may resign at any time by
giving written notice to the Board of Directors, the President or the Secretary
of the Corporation. Unless otherwise specified in the notice, the resignation
shall take effect upon receipt thereof by the Board of Directors or such
officer, and acceptance of the resignation shall not be necessary to make it
effective.
SECTION 15. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly
created directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason shall be filled in
accordance with and subject to the provisions of the Certificate of
Incorporation.
SECTION 16. COMPENSATION. The Board of Directors, by resolution
and irrespective of any personal interest of any of its members, shall have the
authority to establish reasonable compensation and fix reimbursement for
reasonable expenses of all directors for their services to the Corporation as
directors, officers or otherwise.
ARTICLE IV - OFFICERS
SECTION 1. OFFICERS. The officers of the Corporation shall include
the Chairman, the President, one or more Vice Presidents (one or more of whom
may be designated as Executive Vice Presidents or as Senior Vice Presidents or
by other designations), the Secretary, the Treasurer and such other officers as
the Board of Directors may from time to time deem necessary, each of whom shall
have such duties, powers and functions as provided in these
-22-
<PAGE> 7
By-laws and as may be determined from time to time by resolution of the Board of
Directors. Two or more offices, except those of President and Secretary, may be
held by the same person; provided, however, that no officer shall execute,
acknowledge or verify any instrument in more than one capacity. Each of the
officers shall, when requested, consult with and advise the other officers of
the corporation.
SECTION 2. ELECTION OR APPOINTMENT AND TERM OF OFFICE. Each
officer shall be elected or appointed by the Board of Directors to hold office
until the next annual meeting of the Board of Directors and until his or her
successor is elected or appointed and qualified, or until such earlier date as
shall be prescribed by the Board of Directors at the time of his or her election
or appointment or until an earlier resignation, removal or displacement from
office. Any officer elected or appointed by the Board of Directors may be
removed at any time, with or without cause, by vote of a majority of the Board
of Directors.
SECTION 3. VACANCIES. In the event of the resignation, removal or
other displacement from office of an officer elected or appointed by the Board
of Directors, the Board, in its sole discretion, may elect or appoint a
successor to fill the unexpired term.
SECTION 4. THE CHAIRMAN. The Chairman shall, together with the
President, have general direction over the day-to-day business of the
Corporation, subject to the control and direction of the Board of Directors. The
Chairman shall, when present, preside as chairman at all meetings of the
shareholders and of the Board of Directors. The Chairman shall, in the absence
or incapacity of the President, perform all duties and functions and exercise
all the powers of the President. The Chairman shall also have such other powers
and perform such other duties required by statute or by these By-laws or as the
Board of Directors may from time to time determine.
SECTION 5. THE PRESIDENT. The President shall, together with the
Chairman, have general direction over the day-to-day business of the
Corporation, subject to the control and direction of the Board of Directors. In
the absence of the Chairman, the President shall preside at meetings of the
shareholders and of the Board of Directors. The President shall, in the absence
or incapacity of the Chairman, perform all duties and functions and exercise all
the powers of the Chairman. The President shall also have such other powers and
perform such other duties required by statute or by these By-laws or as the
Board of Directors may from time to time determine.
SECTION 6. VICE PRESIDENTS. Each Vice President shall have such
powers and perform such duties as from time to time may be assigned to him or
her by the Board of Directors or be delegated to him or her by the Chairman or
by the President. In the absence or inability to perform of the Chairman and the
President, the Vice President (or if there is more than one Vice President, then
the Executive Vice President) shall have all the powers and functions of the
President.
-23-
<PAGE> 8
SECTION 7. TREASURER. The Treasurer shall have the safekeeping and
custody of the corporate funds and other valuable effects, including securities,
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation, and shall deposit all money 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 Directors. The Treasurer shall disburse the
funds of the Corporation under the direction of the President or the Chairman,
taking proper vouchers for such disbursements, and render to the President and
the Chairman at the annual and regular meetings of the Board of Directors, or
whenever the President or the Chairman require it, an account of all
transactions as Treasurer and of the financial condition of the Corporation. The
Treasurer shall make a full financial report at the annual meeting of
shareholders. The Treasurer shall also have such other powers and perform such
other duties incident to the office of Treasurer required by statute or by these
By-laws or as the Board of Directors may from time to time determine.
SECTION 8. SECRETARY. The Secretary shall keep or cause to be kept
in one or more books provided for such purpose, the minutes of all meetings of
the Board of Directors, shareholders and committees of the Board of Directors,
see that all notices are duly given in accordance with the provisions of these
By-laws and as required by law and see that the books, reports, statements,
certificates and other documents and records required by law to be kept and
filed are properly kept and filed. The Secretary shall also have such other
powers and perform such other duties incident to the office of Secretary
required by law or by these By-laws or as the Board of Directors may from time
to time determine.
SECTION 9. DESIGNATED OFFICERS. (a) Chief Executive Officer.
Either the Chairman or the President, or both, as the Board of Directors may
designate, shall be the Chief Executive Officer of the Corporation. The officer
so designated shall have, in addition to the powers and duties applicable to his
or her office set forth in this Article IV, general and active supervision and
direction over the business and affairs of the Corporation and over its several
officers, agents and employees, subject, however, to the control of the Board of
Directors. The Chief Executive Officer shall also have such other powers and
duties incident to the designated position of Chief Executive Officer as the
Board of Directors may from time to time determine. Any reference to the Chief
Executive Officer in these By-laws shall be deemed to mean, if there is a
Co-Chief Executive Officer, either Co-Chief Executive Officer, each of whom may
exercise the full powers and authorities of the designated position of Chief
Executive Officer.
(b) Other Designated Officers. The Board of Directors may from
time to time designate officers to serve as Chief Financial Officer, Chief
Accounting Officer and other such designated positions and to fulfill the
responsibilities of such designated positions in addition to the powers and
duties applicable to his or her office as set forth in this Article IV. Such
designated officers shall also have such other powers and duties incident to his
or her designated position as the Board of Directors may from time to time
determine.
SECTION 10. COMPENSATION. The salaries and other compensation of
all officers elected by the Board of Directors shall be fixed from time to time
by or under the direction of the Board of Directors.
-24-
<PAGE> 9
ARTICLE V - INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall, to the fullest extent permitted by
applicable law as in effect at any time, indemnify any director (and may
indemnify any officer) made, or threatened to be made, a party to an action or
proceeding, whether civil or criminal, including an action by or in the right of
any other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
which any director or officer of the Corporation served in any capacity at the
request of the Corporation, by reason of the fact that he or she, his or her
testator or intestate, was a director or officer of the corporation, or served
such other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity, against judgments, fines, amounts paid in
settlement and reasonable expenses, including reasonable attorneys' fees
incurred as a result of such action or proceeding, or any appeal therein;
provided that to the extent prohibited by applicable law no indemnification may
be made to or on behalf of any director or officer if a judgment or other final
adjudication adverse to the director or officer establishes that his or her acts
were committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that he
or she personally gained in fact a financial profit or other advantage to which
he or she was not legally entitled. The right to indemnification pursuant to
this Article V is intended to be retroactive and shall, to the extent permitted
by applicable law, be available with respect to events occurring prior to the
adoption hereof and shall continue to exist after any future rescission or
restrictive modification hereof with respect to any alleged cause of action that
accrues, or any other incident or matter that occurs, prior to such rescission
or modification.
ARTICLE VI - SHARES
SECTION 1. CERTIFICATES FOR SHARES. The certificates for shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors, and shall be numbered and entered in the books of the Corporation as
they are issued. Each certificate shall exhibit the registered holder's name,
the number and class of shares, and the designation of any series, if any, that
it evidences, and shall set forth such other statements as may be required by
statute. Each certificate shall be signed by the Chairman or the President and
by the Secretary or the Treasurer, any or all of whose signatures may be
facsimile if such certificate is countersigned by a transfer agent or registered
by a registrar. Each certificate may be sealed with the seal of the Corporation
or a facsimile thereof. In case any one or more of the officers who have signed
or whose facsimile signatures appear on any such certificate shall cease to be
such officer or officers of the Corporation, whether because of resignation,
removal or other displacement from office, before such certificate is issued and
delivered, it may nonetheless be issued and delivered with the same effect as if
such officer or officers had continued in office.
SECTION 2. LOST, MUTILATED, STOLEN OR DESTROYED CERTIFICATES. The
Board of Directors may direct a new certificate or new certificates be issued in
place of any certificate theretofore issued by the Corporation alleged to have
been lost, mutilated, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems
-25-
<PAGE> 10
expedient, and may require such indemnities as it deems adequate, to protect the
Corporation from any claim that may be made against it with respect to any such
certificate alleged to have been lost, mutilated, stolen or destroyed.
SECTION 3. TRANSFER AGENT AND REGISTRAR; REGULATIONS. The Board of
Directors may appoint transfer agents or registrars, or both, and may require
all share certificates to bear the signature of either or both. The Board of
Directors may make such additional rules and regulations as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of the Corporation.
SECTION 4. TRANSFER OF SHARES. Upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, the Corporation shall issue or cause the transfer agent
to issue a new certificate to the person entitled thereto, shall cancel the old
certificate and shall record such transfer upon the books of the corporation.
SECTION 5. CANCELLATION OF CERTIFICATES. Each certificate for
shares to be canceled shall be marked "CANCELED" across the face thereof by the
Secretary, with the date of cancellation, and the transaction shall be
immediately recorded in the certificate book opposite the memorandum of issue.
The canceled certificate should be inserted thereafter in the certificate book.
SECTION 6. CONTINGENT INTEREST IN SHARES. No entry shall be made
in the books of the Corporation or on any certificate for shares that any person
is entitled to any future, limited or contingent interest in any share.
SECTION 7. UNCERTIFICATED SHARES. The Board of Directors may in
its discretion authorize the issuance of shares which are not represented by
certificates and provide for the registration and transfer thereof on the books
and records of the Corporation or any transfer agent or registrar so designated.
SECTION 8. SHAREHOLDER RECORDS. The names and addresses of the
persons to whom shares are issued, and the number of shares and the dates of
issue and any transfer thereof, whether in certificated or uncertificated form,
shall be entered on records kept for that purpose. The stock transfer records
and the blank stock certificates shall be kept by the transfer agent, or by the
treasurer, or such other officer as shall be designated by the Board of
Directors for that purpose.
ARTICLE VII - GENERAL
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall
be fixed and may from time to time be changed by resolution of the Board of
Directors.
-26-
<PAGE> 11
SECTION 2. SEAL. The seal of the Corporation, if any, shall be
circular in form and bear the name of the Corporation, the year of its
organization and the words "Corporate Seal New York." The seal may be used by
causing it or a facsimile thereof to be impressed, affixed or reproduced
directly on the instrument or writing to be sealed.
SECTION 3. INSTRUMENTS AND DOCUMENTS. All corporate instruments
and documents shall be signed, countersigned, executed, verified or acknowledged
by such officers or other person or persons as the Board of Directors may from
time to time designate.
SECTION 4. AMENDMENTS. These By-laws may be amended or repealed or
new By-laws may be adopted by the shareholders at any annual or special meeting
if the notice thereof mentions that amendment or repeal or the adoption of new
By-laws is one of the purposes of such meeting; provided, however, that the
provisions of the By-laws relating to the Board of Directors and meetings of
shareholders may be amended or modified only by (i) the affirmative vote of the
holders of at least 80% of voting power of all the then-outstanding shares of
voting stock of the corporation entitled to vote at an election of directors,
voting together as a single class, or (ii) the affirmative vote of a majority of
the total number of directors then in office. These By-laws may also be amended
or repealed or new By-laws may be adopted by the affirmative vote of a majority
of the Board of Directors given at any meeting, if the notice thereof mentions
that amendment or repeal or the adoption of new By-laws is one of the purposes
of such meeting. If any By-laws regulating an impending election of directors
are adopted or amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of the shareholders for the election of
directors the By-laws so adopted or amended or repealed, together with a concise
statement of the changes made.
-27-
<PAGE> 1
Exhibit 10.1
EMPLOYMENT AGREEMENT
Dated as of June 30, 1997
The parties to this agreement are Bed Bath & Beyond Inc., a New York
corporation (the "Company"), and Warren Eisenberg (the "Executive").
The Company wishes to continue to employ the Executive and enter into
this agreement, which embodies the terms of such employment, and the Executive
wishes to enter into this agreement and accept such continued employment on such
terms.
Accordingly, the parties agree as follows:
1. Positions, Duties and Responsibilities
(a) During the Executive's employment under this agreement, the
Executive shall be employed as the co-chief executive officer with Leonard
Feinstein or chief executive officer of the Company and be responsible for the
general management of the affairs of the Company. It is the intention of the
parties that the Executive be elected to and serve as a member of the board of
directors of the Company. The Executive, in carrying out his duties under this
agreement, shall report to the board of directors of the Company.
(b) Nothing in this agreement shall preclude the Executive from
(i) serving on the boards of directors of a reasonable number of other
corporations or the boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable activities and community
affairs and (iii) managing his personal investments and affairs, provided that
such activities do not materially interfere with the proper performance of his
duties and responsibilities under this agreement.
-28-
<PAGE> 2
2. Term of Employment. The Executive's employment under this agreement
shall continue until the earlier of (a) the fifth anniversary of this agreement
(as may be extended from time to time by mutual agreement of the parties) (the
"Final Date") or (b) the termination of his employment in accordance with this
agreement.
3. Senior Status. Notwithstanding anything to the contrary in sections 1
and 2, at any time during the Executive's employment under this agreement and
before the Final Date, the Executive may, at his option, upon 90 days' written
notice given to the Company, elect to terminate his positions, duties and
responsibilities under section 1, and during the period (the "Senior Status
Period") commencing 90 days after such written notice is first given and
continuing until the earlier of (a) the tenth anniversary of the termination of
his positions, duties and responsibilities under section 1 or (b) the
termination of the Executive's employment in accordance with this agreement,
provide consulting (but not line executive) services as an employee. If the
Executive shall not have exercised this option on or before the 90th day before
the Final Date, then, at the written request of the Company given not later than
60 days before the Final Date, the Executive shall nonetheless be deemed to have
exercised this option. It is the intention of the parties that, during the
Senior Status Period, the Executive shall continue to be elected to and serve as
a member of the board of directors of the Company. The Executive, in carrying
out his duties during the Senior Status Period, shall report to the Company's
chief executive officer or, if the board of directors of the Company so
determines, to the board of directors of the Company. During the Senior Status
Period, the Executive shall, at the request from time to time of the Company's
chief executive officer or board of directors, make himself available to the
Company, at times that are reasonably convenient for him, to provide advisory
services (it being understood, however, that such services shall not require the
Executive to travel
-29-
<PAGE> 3
to a location more than 25 miles from his residence from time to time or to
devote more than fifty (50) hours in any three-month period to the Company).
During the Senior Status Period, the Company shall provide the Executive an
office (at a location specified by the Executive, which need not be where the
Company's offices are located) and secretary that, in the Executive's good faith
judgment, are appropriate to enable him to perform his duties under this
agreement.
4. Salary. During his employment under this agreement and prior to the
Senior Status Period, the Executive shall be entitled to an annual salary,
payable in accordance with the regular payroll practices of the Company, of
$750,000. During the Senior Status Period, the Executive shall be entitled to an
annual salary, payable in accordance with the regular payroll practices of the
Company, of $400,000. The Company may pay additional compensation to the
Executive, whether in the form of an increase in salary, bonus or otherwise, if
and to the extent authorized by the board of directors of the Company, in its
sole discretion, from time to time, it being understood that the board of
directors may give consideration to increasing such compensation at various
intervals during the term of this agreement.
5. Employee Benefit Programs Generally. During the Executive's employment
under this agreement, the Executive shall be entitled to participate in all
employee pension and welfare benefits plans and programs available to the
Company's senior level executives or to its employees generally, as such plans
or programs may be in effect from time to time, including, without limitation,
pension, profit sharing, savings and other retirement plans or programs,
medical, dental, hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection, travel accident
insurance, and any other pension or retirement plans or programs and any other
employee welfare benefit plans or programs that may be sponsored by the Company
from time to time, including any plans that supplement the
-30-
<PAGE> 4
above-listed types of plans or programs, whether funded or unfunded.
6. Reimbursement of Business and Other Expenses. The Executive is
authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this agreement, and the Company shall promptly reimburse
him for all business expenses incurred in carrying out the business of the
Company, subject to documentation in accordance with the Company's policies.
7. Termination of Employment
(a) In the event the Executive's employment terminates due to his
death, his estate or his beneficiaries, as the case may be, shall be entitled to
his salary for a period of 90 days following his death, any amount owing but not
yet paid under section 6 and other or additional benefits in accordance with
applicable plans and programs of the Company.
(b) In the event the Executive's employment terminates due to his
inability substantially to perform his duties and responsibilities under this
agreement for a period of 180 consecutive days, he shall be entitled to his
salary for a period of 90 days following the date of termination, any amount
owing but not yet paid under section 6, continued participation at the Company's
expense in medical, dental, hospitalization and life insurance coverage and in
all other employee plans and programs in which he or his family was
participating on the date of termination of his employment until the tenth
anniversary of the date of termination and other or additional benefits in
accordance with applicable plans and programs of the Company (and thereafter, at
the Executive's option and expense, to the extent he or his family can be
included in such plans and programs). If the Executive is precluded from
continuing his participation in any benefit plan or program referred to in the
immediately preceding sentence, he shall be provided the after-tax economic
equivalent of the benefits provided under the plan or program in which he
-31-
<PAGE> 5
is unable to participate. The economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be incurred by the Executive in
obtaining such benefit himself on an individual basis. In no event shall a
termination of the Executive's employment under this section 7(b) occur, unless
the party terminating the Executive's employment gives written notice to the
other party in accordance with this agreement.
(c) (i) As used in this agreement, the term "Cause" means (A) the
Executive is convicted of a felony involving moral turpitude or (B) the
Executive is guilty of willful gross neglect or willful gross misconduct in
carrying out his duties under this agreement, resulting, in either case, in
material economic harm to the Company, unless the Executive believed in good
faith that such act or nonact was in the best interests of the Company.
(ii) The Company may terminate the Executive's employment
under this agreement for Cause. A termination for Cause shall not take effect,
however, unless the provisions of this paragraph (c)(ii) are complied with. The
Executive shall be given written notice by the board of directors of the Company
of the intention to terminate his employment for Cause, such notice to state in
detail the particular act or acts or failure or failures to act that constitute
the grounds on which the proposed termination for Cause is based. The Executive
shall have 10 days after the date that such written notice has been given in
which to cure such conduct, to the extent a cure is possible. If he fails to
cure such conduct, his employment shall be terminated for Cause.
(iii) In the event the Company terminates the Executive's
employment for Cause, he shall be entitled to his salary through the date of the
termination of his employment, any amounts owing but not yet paid under section
6 and other or additional benefits in accordance with applicable plans or
programs of the Company.
-32-
<PAGE> 6
(d) (i) As used in this agreement, the term "Constructive
Termination Without Cause" means a termination of the Executive's employment at
his initiative following the occurrence, without the Executive's prior written
consent, of one or more of the following events (except in consequence of a
prior termination):
(A) a reduction in the Executive's salary or a material
reduction of any employee benefit or perquisite enjoyed by him
(other than as part of any across-the-board action applicable to
all executive officers of the Company);
(B) the failure to elect or reelect the Executive to any of
the officer or director positions referred to in section 1(a) or
removal of him from any of such positions;
(C) a material diminution in the Executive's duties or the
assignment to the Executive of duties materially inconsistent with
his duties or that materially impair the Executive's ability to
function, prior to the Senior Status Period, as the co-chief
executive officer or chief executive officer of the Company;
(D) the relocation of the Company's principal office, or
the Executive's own office location as assigned to him by the
Company, to a location more than twenty-five (25) miles from
Union, New Jersey.
(ii) In the event the Company terminates the Executive's
employment without Cause, other than pursuant to section 7(a) or (b), or in the
event there is a Constructive Termination Without Cause, the Executive shall be
entitled to his salary through the date of termination of employment, his salary
at the annual rate of $750,000 through the Final Date and thereafter at the
annual rate of $400,000 through the 10th anniversary of the Final Date (provided
that, at the Executive's option, exercised by written notice given to the
Company, the Company
-33-
<PAGE> 7
shall pay him the present value of such salary continuation payments in a lump
sum (using as the discount rate the Applicable Federal Rate for short-term
Treasury obligations as published by the Internal Revenue Service for the month
in which such termination occurs)), any amount owing but not yet paid under
section 6, and he shall be afforded continued participation in all medical,
dental, hospitalization and life insurance coverage and in other employee
benefit plans or programs in which he was participating on the date of the
termination of his employment until the earlier of:
(A) the end of the period during which he is receiving salary
continuation payments (or in respect of which a lump-sum
payment is made);
(B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent
employer (such coverages and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis);
(provided that (x) if the Executive is precluded from continuing his
participating in any employee benefit plan or program as so provided, he shall
be provided with the after-tax economic equivalent of the benefits provided
under the plan or program in which he is unable to participate for the periods
so specified, (y) the economic equivalent of any benefit foregone shall be
deemed to be the lowest cost that would be incurred by the Executive in
obtaining such benefit himself on an individual basis and (z) payment of such
after-tax economic equivalent shall be made quarterly in advance), and he shall
be afforded other or additional benefits in accordance with applicable plans and
programs of the Company.
(e) Subject to section 8(b), in the event of a termination of
employment by the Executive on his own initiative other than a termination
otherwise provided for in this section 7,
-34-
<PAGE> 8
the Executive shall have the same entitlements as provided in section 7(c)(iii)
for a termination for Cause. A voluntary termination under this section 7(e)
shall be effective upon 30 days written notice given to the Company and shall
not be deemed a breach of this agreement.
(f) In the event of any termination of employment under this section
7, the Executive shall be under no obligation to seek other employment and there
shall be no offset against amounts due the Executive under this agreement on
account of any remuneration attributable to any subsequent employment that he
may obtain, except as specifically provided in this section 7.
8. Change in Control
(a) As used in this agreement, the term "Change in Control" means
the occurrence of any one of the following events:
(i) any "person," as such term is used in sections 3(a)(9)
and 13(d) of the Securities Exchange Act of 1934, becomes a "beneficial owner,"
as such term is used in Rule 13d-3 under that act, of 30% or more of the
outstanding common stock of the Company, excluding a person that is an affiliate
(as such term is used under that act) of the Company on the date of this
agreement, or any affiliate of any such person;
(ii) the majority of the board of directors of the Company
consists of individuals other than Incumbent Directors, which term means the
members of the board of directors of the Company on the date of this agreement;
provided that any person becoming a director subsequent to such date whose
election or nomination for election was supported by two-thirds of the directors
who then comprised the Incumbent Directors shall be considered an Incumbent
Director;
(iii) the Company adopts any plan of liquidation providing
for the
-35-
<PAGE> 9
distribution of all or substantially all its assets;
(iv) all or substantially all the assets or business of the
Company are disposed of pursuant to a merger, consolidation or other transaction
(unless the shareholders of the Company immediately prior to such merger,
consolidation or other transaction beneficially own, directly or indirectly, in
substantially the same proportion as they own the common stock of the Company,
all the common stock or other ownership interests of the entity or entities, if
any, that succeed to the business of the Company); or
(v) the Company combines with another company and is the
surviving corporation, but, immediately after the combination, the shareholders
of the Company immediately prior to the combination hold, directly or
indirectly, 50% or less of the common stock or other ownership interests of the
combined company (there being excluded from the number of shares held by such
shareholders, but not from the common stock or other ownership interests of the
combined company, any shares other ownership interests received by affiliates of
such other company in exchange for stock of such other company).
(b) Following a Change in Control, the Executive may, at his
option, upon 90 days' written notice given to the Company, terminate his
employment under this agreement and, in lieu of any other amounts otherwise
payable to him under section 7, (i) he will be entitled to receive, in a single
lump sum on or before the 90th day after such written notice is given, an amount
equal to (A) the product of (1) the Executive's annual salary then in effect and
(2) three, if the written notice is given before the Senior Status Period, or
(B) the product of (1) $200,000 and (2) the number of years (including
fractions), if any, remaining in the Senior Status Period on the 90th day after
such written notice is given, if the written notice is given during the Senior
Status Period, and (ii) subject to the provisos set forth in (x), (y) and (z) of
section 7(d)(ii), he
-36-
<PAGE> 10
shall be afforded continued participation in all medical, dental,
hospitalization and life insurance coverage and in other employee benefit plans
or programs in which he was participating on the date of the termination of his
employment until the earlier of (A) the tenth anniversary of the termination of
employment or (B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such coverages
and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit,
basis).
(c) In the event the amount provided to the Executive under section 8(b)
is determined to constitute a Parachute Payment, as such term is defined in
section 280G(b)(2) of the Internal Revenue Code of 1986 (the "Code"),
notwithstanding anything to the contrary in this agreement, the amount so
provided shall be reduced to the maximum amount (if any) that can be so provided
without any of that amount being subject to any excise tax imposed by section
4999 of the Code ("Excise Tax"). The determination of whether the amount so
provided constitutes a Parachute Payment and, if so, the amount to be paid to
the Executive and the time of payment pursuant to this section 8(c) shall be
made by an independent auditor (the "Auditor") jointly selected by the Company
and the Executive and paid by the Company. The Auditor shall be a nationally
recognized United States public accounting firm, which has not, during the two
years preceding the date of its selection, acted in any way on behalf of the
Company or any affiliate of the Company. If the Executive and the Company cannot
agree on the firm to serve as the Auditor, the Executive and Company shall each
select one accounting firm and those two firms shall jointly select the
accounting firm to serve as the Auditor.
9. Indemnification
(a) The Company agrees that, if the Executive is made a party, or
is threatened to be made a party, to any action, suit or proceeding, whether
civil, criminal,
-37-
<PAGE> 11
administrative or investigation (a "Proceeding"), by reason of the fact that he
is or was a director, officer or employee of the Company or is or was serving at
the request of the Company as a director, officer, member, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is the Executive's alleged action in an official
capacity while serving as director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the Company to the fullest
extent permitted or authorized by the Company's certificate of incorporation or
bylaws or, if greater, by the laws of the state of New York, against all cost,
expense, liability and loss (including, without limitation, attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even if
he has ceased to be a director, member, employee or agent of the Company or
other entity and shall inure to the benefit of the Executive's heirs, executors
and administrators. The Company shall advance to the Executive all reasonable
costs and expenses incurred by him in connection with a Proceeding within 20
days after receipt by the Company of a written request for such advance. Such
request shall include a undertaking by the Executive to repay the amount of such
advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.
(b) Neither the failure of the Company (including its board or
directors, independent legal counsel or shareholders) to have made a
determination prior to the commencement of any proceeding concerning payment of
amounts claimed by the Executive under section 9(a) that indemnification of the
Executive is proper because he has met the applicable standard of conduct, nor a
determination by the Company (including its board of
-38-
<PAGE> 12
directors, independent legal counsel or shareholders) that the Executive has not
met such applicable standard of conduct, shall create a presumption that the
Executive has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a director's and
officers' liability insurance policy covering the Executive to the extent the
Company provides such coverage for its other executive officers.
10. Confidentiality. The Executive shall at all times during the period
of his employment and thereafter hold in confidence any and all Confidential
Information (as defined below) that may have come or may come into his
possession or within his knowledge concerning the products, services, processes,
businesses, suppliers, customers and clients of the Company or its controlled
affiliates. The Executive agrees that neither he nor any person or enterprise
controlled by him will for any reason directly or indirectly, for himself or any
other person, use or disclose any trade secrets, proprietary or confidential
information, inventions, manufacturing or industrial processes or procedures,
patents, trademarks, trade names, customer lists, service marks, service names,
copyrights, applications for any of the foregoing or licenses or other rights in
respect thereof (collectively, "Confidential Information"), owned or used by, or
licensed to, the Company or any of its controlled affiliates, provided that the
Executive may disclose Confidential Information that has become generally
available to the public other than as a result of a breach of this agreement by
the Executive or pursuant to an order of a court of competent jurisdiction or of
a governmental agency, department or commission. Upon termination of his
employment under this agreement, the Executive shall promptly surrender to the
Company all documents he believes contain Confidential Information and that are
within his possession or control, other than documents to which the Executive is
or was a party or that relate to the
-39-
<PAGE> 13
Executive or the basis, or purported basis, on which his employment was
terminated.
11. Noncompetition and Nonsolicitation
(a) The Executive agrees that from the date of this agreement and
subsequent to the termination of his employment under this agreement and
continuing for the period (the "Non-Compete Period") after termination of
employment under section 7 (but not under section 8) in respect of which salary
continuation payments would be required to be made under section 7(d)
(regardless of whether termination of employment occurs pursuant to section
7(d)), neither the Executive nor any person or enterprise controlled by him will
become a shareholder, lender, director, officer, agent or employee of a
corporation or member of or lender to a partnership, engage as a sole proprietor
in any business, act as a consultant to any of the foregoing or otherwise engage
directly or indirectly in any business that is in competition with the business
then conducted by the Company or any of its controlled affiliates in any state
in the United States or any other country in which the Company or any of its
controlled affiliates has engaged in such business during the Executive's
employment under this agreement; provided, however, that the foregoing shall not
prohibit the Executive from owning less than two percent of the outstanding
securities of any class of capital stock of a corporation the securities of
which are regularly traded or quoted on a national securities exchange or on an
inter-dealer quotation system.
(b) The Executive agrees that, during the Non-Compete Period,
neither he nor any person or enterprise controlled by him will (i) solicit for
employment any person who was employed by the Company or any of its controlled
affiliates at any time within one year prior to the time of the act of
solicitation or (ii) in any way cause, influence or participate in the
solicitation for employment of any such individual by anyone else.
(c) The Executive acknowledges that there is no adequate remedy at
law for a
-40-
<PAGE> 14
breach of this section 11 and that, in the event of such a breach or attempted
breach, the Company shall be entitled to injunctive or other equitable relief to
prevent any such breach, attempted breach or continuing breach, without
prejudice to any other remedies for damages or otherwise.
12. Assignability; Binding Nature. This agreement shall inure to the
benefit of the parties and their respective successors, heirs (in the case of
the Executive) and assigns. No rights or obligations of the Company under this
agreement may be assigned or transferred by the Company, except pursuant to a
merger or consolidation, or the sale or liquidation of all or substantially all
the assets of the Company, provided that, in the case of such a sale or
liquidation, the assignee or transferee assumes in writing the obligation to
perform this agreement (it being understood, however, that no such assignment or
transfer shall relieve the Company of its liabilities or obligations under this
agreement).
13. Amendment or Waiver. This agreement may not be amended or waived,
except by an instrument in writing signed by the party to be charged.
14. Severability. If any provision of this agreement is invalid or
unenforceable, the remaining provisions of this agreement shall remain in
effect.
15. Governing Law. This agreement shall be governed by and construed and
interpreted in accordance with the law of the state of New York without
reference to principles of conflict of laws.
16. Disputes. Except as otherwise expressly provided in this agreement,
any dispute arising under or in connection with this agreement shall, at the
election of the Executive, be resolved by binding arbitration to be held in New
York City in accordance with the rules of the American Arbitration Association.
Judgment upon the arbitrator's award may be entered in any
-41-
<PAGE> 15
court having jurisdiction. Costs of any arbitration or litigation, including,
without limitation, attorneys' fees of both parties, shall be borne by the
Company and advanced to the Executive as appropriate from time to time, provided
that, if the arbitrator or judge, as the case may be, determines that the claims
or defenses of the Executive were without any reasonable basis, each party shall
bear his or its own costs.
17. Notices. All notices and other communications under this agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its or his address or
facsimile number given below (or at such other address or facsimile number for
that party as specified by notice given under this section 17):
if to the Company, to it at:
650 Liberty Avenue
Union, New Jersey 07083
Fax: 908-688-8385
if to the Executive, to him at:
245 Dale Drive
Short Hills, New Jersey 07078
All such notices and communications shall be deemed given and received upon (a)
actual receipt by the addressee, (b) actual delivery to the appropriate address
or (c) in the case of a facsimile transmission, upon transmission by the sender
and issuance by the transmitting machine of a confirmation slip confirming that
the number of pages constituting the notice have been transmitted without error.
In the case of notices sent by facsimile transmission, the sender shall
-42-
<PAGE> 16
contemporaneously mail a copy of the notice to the addressee at the address
provided above; however, such mailing shall in no way alter the time at which
the facsimile notice is deemed given and received.
18. Headings. The section headings in this agreement are for convenience
only and shall not affect the meaning or construction of any provision of this
agreement.
19. Counterparts. This agreement may be executed in counterparts.
20. Entire Agreement. This agreement contains the entire agreement and
understanding of the parties concerning its subject matter and supersedes all
prior agreements and understandings with respect to that subject matter. Nothing
in this agreement is intended to or shall affect the rights or obligations of
the parties under any agreement relating to the maintenance of life insurance or
stock options.
BED BATH & BEYOND INC.
By: /s/ LEONARD FEINSTEIN
--------------------------------------------
LEONARD FEINSTEIN, President and
Co-Chief Executive Officer
THE EXECUTIVE:
/s/ Warren Eisenberg
--------------------------------------------
Warren Eisenberg
-43-
<PAGE> 1
Exhibit 10.2
EMPLOYMENT AGREEMENT
Dated as of June 30, 1997
The parties to this agreement are Bed Bath & Beyond Inc., a New York
corporation (the "Company"), and Leonard Feinstein (the "Executive").
The Company wishes to continue to employ the Executive and enter into this
agreement, which embodies the terms of such employment, and the Executive wishes
to enter into this agreement and accept such continued employment on such terms.
Accordingly, the parties agree as follows:
1. Positions, Duties and Responsibilities
(a) During the Executive's employment under this agreement, the
Executive shall be employed as the co-chief executive officer with Warren
Eisenberg or chief executive officer of the Company and be responsible for the
general management of the affairs of the Company. It is the intention of the
parties that the Executive be elected to and serve as a member of the board of
directors of the Company. The Executive, in carrying out his duties under this
agreement, shall report to the board of directors of the Company.
(b) Nothing in this agreement shall preclude the Executive from (i)
serving on the boards of directors of a reasonable number of other corporations
or the boards of a reasonable number of trade associations and/or charitable
organizations, (ii) engaging in charitable activities and community affairs and
(iii) managing his personal investments and affairs, provided that such
activities do not materially interfere with the proper performance of his duties
and responsibilities under this agreement.
-44-
<PAGE> 2
2. Term of Employment. The Executive's employment under this agreement
shall continue until the earlier of (a) the fifth anniversary of this agreement
(as may be extended from time to time by mutual agreement of the parties) (the
"Final Date") or (b) the termination of his employment in accordance with this
agreement.
3. Senior Status. Notwithstanding anything to the contrary in sections 1
and 2, at any time during the Executive's employment under this agreement and
before the Final Date, the Executive may, at his option, upon 90 days' written
notice given to the Company, elect to terminate his positions, duties and
responsibilities under section 1, and during the period (the "Senior Status
Period") commencing 90 days after such written notice is first given and
continuing until the earlier of (a) the tenth anniversary of the termination of
his positions, duties and responsibilities under section 1 or (b) the
termination of the Executive's employment in accordance with this agreement,
provide consulting (but not line executive) services as an employee. If the
Executive shall not have exercised this option on or before the 90th day before
the Final Date, then, at the written request of the Company given not later than
60 days before the Final Date, the Executive shall nonetheless be deemed to have
exercised this option. It is the intention of the parties that, during the
Senior Status Period, the Executive shall continue to be elected to and serve as
a member of the board of directors of the Company. The Executive, in carrying
out his duties during the Senior Status Period, shall report to the Company's
chief executive officer or, if the board of directors of the Company so
determines, to the board of directors of the Company. During the Senior Status
Period, the Executive shall, at the request from time to time of the Company's
chief executive officer or board of directors, make himself available to the
Company, at times that are reasonably convenient for him, to provide advisory
services (it being understood, however, that such services shall not require the
Executive to travel
-45-
<PAGE> 3
to a location more than 25 miles from his residence from time to time or to
devote more than fifty (50) hours in any three-month period to the Company).
During the Senior Status Period, the Company shall provide the Executive an
office (at a location specified by the Executive, which need not be where the
Company's offices are located) and secretary that, in the Executive's good faith
judgment, are appropriate to enable him to perform his duties under this
agreement.
4. Salary. During his employment under this agreement and prior to the
Senior Status Period, the Executive shall be entitled to an annual salary,
payable in accordance with the regular payroll practices of the Company, of
$750,000. During the Senior Status Period, the Executive shall be entitled to an
annual salary, payable in accordance with the regular payroll practices of the
Company, of $400,000. The Company may pay additional compensation to the
Executive, whether in the form of an increase in salary, bonus or otherwise, if
and to the extent authorized by the board of directors of the Company, in its
sole discretion, from time to time, it being understood that the board of
directors may give consideration to increasing such compensation at various
intervals during the term of this agreement.
5. Employee Benefit Programs Generally. During the Executive's employment
under this agreement, the Executive shall be entitled to participate in all
employee pension and welfare benefits plans and programs available to the
Company's senior level executives or to its employees generally, as such plans
or programs may be in effect from time to time, including, without limitation,
pension, profit sharing, savings and other retirement plans or programs,
medical, dental, hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection, travel accident
insurance, and any other pension or retirement plans or programs and any other
employee welfare benefit plans or programs that may be sponsored by the Company
from time to time, including any plans that supplement the
-46-
<PAGE> 4
above-listed types of plans or programs, whether funded or unfunded.
6. Reimbursement of Business and Other Expenses. The Executive is
authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this agreement, and the Company shall promptly reimburse
him for all business expenses incurred in carrying out the business of the
Company, subject to documentation in accordance with the Company's policies.
7. Termination of Employment
(a) In the event the Executive's employment terminates due to his
death, his estate or his beneficiaries, as the case may be, shall be entitled to
his salary for a period of 90 days following his death, any amount owing but not
yet paid under section 6 and other or additional benefits in accordance with
applicable plans and programs of the Company.
(b) In the event the Executive's employment terminates due to his
inability substantially to perform his duties and responsibilities under this
agreement for a period of 180 consecutive days, he shall be entitled to his
salary for a period of 90 days following the date of termination, any amount
owing but not yet paid under section 6, continued participation at the Company's
expense in medical, dental, hospitalization and life insurance coverage and in
all other employee plans and programs in which he or his family was
participating on the date of termination of his employment until the tenth
anniversary of the date of termination and other or additional benefits in
accordance with applicable plans and programs of the Company (and thereafter, at
the Executive's option and expense, to the extent he or his family can be
included in such plans and programs). If the Executive is precluded from
continuing his participation in any benefit plan or program referred to in the
immediately preceding sentence, he shall be provided the after-tax economic
equivalent of the benefits provided under the plan or program in which he
-47-
<PAGE> 5
is unable to participate. The economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be incurred by the Executive in
obtaining such benefit himself on an individual basis. In no event shall a
termination of the Executive's employment under this section 7(b) occur, unless
the party terminating the Executive's employment gives written notice to the
other party in accordance with this agreement.
(c) (i) As used in this agreement, the term "Cause" means (A) the
Executive is convicted of a felony involving moral turpitude or (B) the
Executive is guilty of willful gross neglect or willful gross misconduct in
carrying out his duties under this agreement, resulting, in either case, in
material economic harm to the Company, unless the Executive believed in good
faith that such act or nonact was in the best interests of the Company.
(ii) The Company may terminate the Executive's employment
under this agreement for Cause. A termination for Cause shall not take effect,
however, unless the provisions of this paragraph (c)(ii) are complied with. The
Executive shall be given written notice by the board of directors of the Company
of the intention to terminate his employment for Cause, such notice to state in
detail the particular act or acts or failure or failures to act that constitute
the grounds on which the proposed termination for Cause is based. The Executive
shall have 10 days after the date that such written notice has been given in
which to cure such conduct, to the extent a cure is possible. If he fails to
cure such conduct, his employment shall be terminated for Cause.
(iii) In the event the Company terminates the Executive's
employment for Cause, he shall be entitled to his salary through the date of the
termination of his employment, any amounts owing but not yet paid under section
6 and other or additional benefits in accordance with applicable plans or
programs of the Company.
-48-
<PAGE> 6
(d) (i) As used in this agreement, the term "Constructive
Termination Without Cause" means a termination of the Executive's employment at
his initiative following the occurrence, without the Executive's prior written
consent, of one or more of the following events (except in consequence of a
prior termination):
(A) a reduction in the Executive's salary or a material
reduction of any employee benefit or perquisite enjoyed by him
(other than as part of any across-the-board action applicable to all
executive officers of the Company);
(B) the failure to elect or reelect the Executive to any of
the officer or director positions referred to in section 1(a) or
removal of him from any of such positions;
(C) a material diminution in the Executive's duties or the
assignment to the Executive of duties materially inconsistent with
his duties or that materially impair the Executive's ability to
function, prior to the Senior Status Period, as the co-chief
executive officer or chief executive officer of the Company;
(D) the relocation of the Company's principal office, or the
Executive's own office location as assigned to him by the Company,
to a location more than twenty-five (25) miles from Farmingdale, New
York.
(ii) In the event the Company terminates the Executive's
employment without Cause, other than pursuant to section 7(a) or (b), or in the
event there is a Constructive Termination Without Cause, the Executive shall be
entitled to his salary through the date of termination of employment, his salary
at the annual rate of $750,000 through the Final Date and thereafter at the
annual rate of $400,000 through the 10th anniversary of the Final Date (provided
that, at the Executive's option, exercised by written notice given to the
Company, the Company
-49-
<PAGE> 7
shall pay him the present value of such salary continuation payments in a lump
sum (using as the discount rate the Applicable Federal Rate for short-term
Treasury obligations as published by the Internal Revenue Service for the month
in which such termination occurs)), any amount owing but not yet paid under
section 6, and he shall be afforded continued participation in all medical,
dental, hospitalization and life insurance coverage and in other employee
benefit plans or programs in which he was participating on the date of the
termination of his employment until the earlier of:
(A) the end of the period during which he is receiving salary
continuation payments (or in respect of which a lump-sum
payment is made);
(B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer
(such coverages and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis);
(provided that (x) if the Executive is precluded from continuing his
participating in any employee benefit plan or program as so provided, he shall
be provided with the after-tax economic equivalent of the benefits provided
under the plan or program in which he is unable to participate for the periods
so specified, (y) the economic equivalent of any benefit foregone shall be
deemed to be the lowest cost that would be incurred by the Executive in
obtaining such benefit himself on an individual basis and (z) payment of such
after-tax economic equivalent shall be made quarterly in advance), and he shall
be afforded other or additional benefits in accordance with applicable plans and
programs of the Company.
(e) Subject to section 8(b), in the event of a termination of
employment by the Executive on his own initiative other than a termination
otherwise provided for in this section 7,
-50-
<PAGE> 8
the Executive shall have the same entitlements as provided in section 7(c)(iii)
for a termination for Cause. A voluntary termination under this section 7(e)
shall be effective upon 30 days written notice given to the Company and shall
not be deemed a breach of this agreement.
(f) In the event of any termination of employment under this section
7, the Executive shall be under no obligation to seek other employment and there
shall be no offset against amounts due the Executive under this agreement on
account of any remuneration attributable to any subsequent employment that he
may obtain, except as specifically provided in this section 7.
8. Change in Control
(a) As used in this agreement, the term "Change in Control" means
the occurrence of any one of the following events:
(i) any "person," as such term is used in sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934, becomes a "beneficial owner," as
such term is used in Rule 13d-3 under that act, of 30% or more of the
outstanding common stock of the Company, excluding a person that is an affiliate
(as such term is used under that act) of the Company on the date of this
agreement, or any affiliate of any such person;
(ii) the majority of the board of directors of the Company
consists of individuals other than Incumbent Directors, which term means the
members of the board of directors of the Company on the date of this agreement;
provided that any person becoming a director subsequent to such date whose
election or nomination for election was supported by two-thirds of the directors
who then comprised the Incumbent Directors shall be considered an Incumbent
Director;
(iii) the Company adopts any plan of liquidation providing for
the
-51-
<PAGE> 9
distribution of all or substantially all its assets;
(iv) all or substantially all the assets or business of the
Company are disposed of pursuant to a merger, consolidation or other transaction
(unless the shareholders of the Company immediately prior to such merger,
consolidation or other transaction beneficially own, directly or indirectly, in
substantially the same proportion as they own the common stock of the Company,
all the common stock or other ownership interests of the entity or entities, if
any, that succeed to the business of the Company); or
(v) the Company combines with another company and is the
surviving corporation, but, immediately after the combination, the shareholders
of the Company immediately prior to the combination hold, directly or
indirectly, 50% or less of the common stock or other ownership interests of the
combined company (there being excluded from the number of shares held by such
shareholders, but not from the common stock or other ownership interests of the
combined company, any shares other ownership interests received by affiliates of
such other company in exchange for stock of such other company).
(b) Following a Change in Control, the Executive may, at his option,
upon 90 days' written notice given to the Company, terminate his employment
under this agreement and, in lieu of any other amounts otherwise payable to him
under section 7, (i) he will be entitled to receive, in a single lump sum on or
before the 90th day after such written notice is given, an amount equal to (A)
the product of (1) the Executive's annual salary then in effect and (2) three,
if the written notice is given before the Senior Status Period, or (B) the
product of (1) $200,000 and (2) the number of years (including fractions), if
any, remaining in the Senior Status Period on the 90th day after such written
notice is given, if the written notice is given during the Senior Status Period,
and (ii) subject to the provisos set forth in (x), (y) and (z) of section
7(d)(ii), he
-52-
<PAGE> 10
shall be afforded continued participation in all medical, dental,
hospitalization and life insurance coverage and in other employee benefit plans
or programs in which he was participating on the date of the termination of his
employment until the earlier of (A) the tenth anniversary of the termination of
employment or (B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such coverages
and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit,
basis).
(c) In the event the amount provided to the Executive under section
8(b) is determined to constitute a Parachute Payment, as such term is defined in
section 280G(b)(2) of the Internal Revenue Code of 1986 (the "Code"),
notwithstanding anything to the contrary in this agreement, the amount so
provided shall be reduced to the maximum amount (if any) that can be so provided
without any of that amount being subject to any excise tax imposed by section
4999 of the Code ("Excise Tax"). The determination of whether the amount so
provided constitutes a Parachute Payment and, if so, the amount to be paid to
the Executive and the time of payment pursuant to this section 8(c) shall be
made by an independent auditor (the "Auditor") jointly selected by the Company
and the Executive and paid by the Company. The Auditor shall be a nationally
recognized United States public accounting firm, which has not, during the two
years preceding the date of its selection, acted in any way on behalf of the
Company or any affiliate of the Company. If the Executive and the Company cannot
agree on the firm to serve as the Auditor, the Executive and Company shall each
select one accounting firm and those two firms shall jointly select the
accounting firm to serve as the Auditor.
9. Indemnification
(a) The Company agrees that, if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal,
-53-
<PAGE> 11
administrative or investigation (a "Proceeding"), by reason of the fact that he
is or was a director, officer or employee of the Company or is or was serving at
the request of the Company as a director, officer, member, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is the Executive's alleged action in an official
capacity while serving as director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the Company to the fullest
extent permitted or authorized by the Company's certificate of incorporation or
bylaws or, if greater, by the laws of the state of New York, against all cost,
expense, liability and loss (including, without limitation, attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even if
he has ceased to be a director, member, employee or agent of the Company or
other entity and shall inure to the benefit of the Executive's heirs, executors
and administrators. The Company shall advance to the Executive all reasonable
costs and expenses incurred by him in connection with a Proceeding within 20
days after receipt by the Company of a written request for such advance. Such
request shall include a undertaking by the Executive to repay the amount of such
advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.
(b) Neither the failure of the Company (including its board or
directors, independent legal counsel or shareholders) to have made a
determination prior to the commencement of any proceeding concerning payment of
amounts claimed by the Executive under section 9(a) that indemnification of the
Executive is proper because he has met the applicable standard of conduct, nor a
determination by the Company (including its board of
-54-
<PAGE> 12
directors, independent legal counsel or shareholders) that the Executive has not
met such applicable standard of conduct, shall create a presumption that the
Executive has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a director's and
officers' liability insurance policy covering the Executive to the extent the
Company provides such coverage for its other executive officers.
10. Confidentiality. The Executive shall at all times during the period of
his employment and thereafter hold in confidence any and all Confidential
Information (as defined below) that may have come or may come into his
possession or within his knowledge concerning the products, services, processes,
businesses, suppliers, customers and clients of the Company or its controlled
affiliates. The Executive agrees that neither he nor any person or enterprise
controlled by him will for any reason directly or indirectly, for himself or any
other person, use or disclose any trade secrets, proprietary or confidential
information, inventions, manufacturing or industrial processes or procedures,
patents, trademarks, trade names, customer lists, service marks, service names,
copyrights, applications for any of the foregoing or licenses or other rights in
respect thereof (collectively, "Confidential Information"), owned or used by, or
licensed to, the Company or any of its controlled affiliates, provided that the
Executive may disclose Confidential Information that has become generally
available to the public other than as a result of a breach of this agreement by
the Executive or pursuant to an order of a court of competent jurisdiction or of
a governmental agency, department or commission. Upon termination of his
employment under this agreement, the Executive shall promptly surrender to the
Company all documents he believes contain Confidential Information and that are
within his possession or control, other than documents to which the Executive is
or was a party or that relate to the
-55-
<PAGE> 13
Executive or the basis, or purported basis, on which his employment was
terminated.
11. Noncompetition and Nonsolicitation
(a) The Executive agrees that from the date of this agreement and
subsequent to the termination of his employment under this agreement and
continuing for the period (the "Non-Compete Period") after termination of
employment under section 7 (but not under section 8) in respect of which salary
continuation payments would be required to be made under section 7(d)
(regardless of whether termination of employment occurs pursuant to section
7(d)), neither the Executive nor any person or enterprise controlled by him will
become a shareholder, lender, director, officer, agent or employee of a
corporation or member of or lender to a partnership, engage as a sole proprietor
in any business, act as a consultant to any of the foregoing or otherwise engage
directly or indirectly in any business that is in competition with the business
then conducted by the Company or any of its controlled affiliates in any state
in the United States or any other country in which the Company or any of its
controlled affiliates has engaged in such business during the Executive's
employment under this agreement; provided, however, that the foregoing shall not
prohibit the Executive from owning less than two percent of the outstanding
securities of any class of capital stock of a corporation the securities of
which are regularly traded or quoted on a national securities exchange or on an
inter-dealer quotation system.
(b) The Executive agrees that, during the Non-Compete Period,
neither he nor any person or enterprise controlled by him will (i) solicit for
employment any person who was employed by the Company or any of its controlled
affiliates at any time within one year prior to the time of the act of
solicitation or (ii) in any way cause, influence or participate in the
solicitation for employment of any such individual by anyone else.
(c) The Executive acknowledges that there is no adequate remedy at
law for a
-56-
<PAGE> 14
breach of this section 11 and that, in the event of such a breach or attempted
breach, the Company shall be entitled to injunctive or other equitable relief to
prevent any such breach, attempted breach or continuing breach, without
prejudice to any other remedies for damages or otherwise.
12. Assignability; Binding Nature. This agreement shall inure to the
benefit of the parties and their respective successors, heirs (in the case of
the Executive) and assigns. No rights or obligations of the Company under this
agreement may be assigned or transferred by the Company, except pursuant to a
merger or consolidation, or the sale or liquidation of all or substantially all
the assets of the Company, provided that, in the case of such a sale or
liquidation, the assignee or transferee assumes in writing the obligation to
perform this agreement (it being understood, however, that no such assignment or
transfer shall relieve the Company of its liabilities or obligations under this
agreement).
13. Amendment or Waiver. This agreement may not be amended or waived,
except by an instrument in writing signed by the party to be charged.
14. Severability. If any provision of this agreement is invalid or
unenforceable, the remaining provisions of this agreement shall remain in
effect.
15. Governing Law. This agreement shall be governed by and construed and
interpreted in accordance with the law of the state of New York without
reference to principles of conflict of laws.
16. Disputes. Except as otherwise expressly provided in this agreement,
any dispute arising under or in connection with this agreement shall, at the
election of the Executive, be resolved by binding arbitration to be held in New
York City in accordance with the rules of the American Arbitration Association.
Judgment upon the arbitrator's award may be entered in any
-57-
<PAGE> 15
court having jurisdiction. Costs of any arbitration or litigation, including,
without limitation, attorneys' fees of both parties, shall be borne by the
Company and advanced to the Executive as appropriate from time to time, provided
that, if the arbitrator or judge, as the case may be, determines that the claims
or defenses of the Executive were without any reasonable basis, each party shall
bear his or its own costs.
17. Notices. All notices and other communications under this agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its or his address or
facsimile number given below (or at such other address or facsimile number for
that party as specified by notice given under this section 17):
if to the Company, to it at:
650 Liberty Avenue
Union, New Jersey 07083
Fax: 908-688-8385
if to the Executive, to him at:
80 Valentine Lane
Old Brookville, New York 11545
All such notices and communications shall be deemed given and received upon (a)
actual receipt by the addressee, (b) actual delivery to the appropriate address
or (c) in the case of a facsimile transmission, upon transmission by the sender
and issuance by the transmitting machine of a confirmation slip confirming that
the number of pages constituting the notice have been transmitted without error.
In the case of notices sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided above;
-58-
<PAGE> 16
however, such mailing shall in no way alter the time at which the facsimile
notice is deemed given and received.
18. Headings. The section headings in this agreement are for convenience
only and shall not affect the meaning or construction of any provision of this
agreement.
19. Counterparts. This agreement may be executed in counterparts.
20. Entire Agreement. This agreement contains the entire agreement and
understanding of the parties concerning its subject matter and supersedes all
prior agreements and understandings with respect to that subject matter. Nothing
in this agreement is intended to or shall affect the rights or obligations of
the parties under any agreement related to the maintenance of life insurance or
stock options.
BED BATH & BEYOND INC.
By: /s/ WARREN EISENBERG
-----------------------------------------------
Warren Eisenberg, Chairman and
Co-Chief Executive Officer
THE EXECUTIVE:
/s/ Leonard Feinstein
-----------------------------------------------
Leonard Feinstein
-59-
<PAGE> 1
Exhibit 10.3
STOCK OPTION AGREEMENT dated as of August 26, 1997 between BED BATH
& BEYOND INC., a New York corporation, and Warren Eisenberg (the "Optionee").
PRELIMINARY STATEMENT
Pursuant to the Bed Bath & Beyond Inc. 1992 Stock Option Plan (the
"1992 Plan") and the Bed Bath & Beyond Inc. 1996 Stock Option Plan (the "1996
Plan") (the 1992 Plan and the 1996 Plan hereinafter the "Plans"), the Stock
Option Committee for Senior Executives that administers the Plans (the
"Committee") has authorized the granting to Optionee of an option (the "Option")
to purchase 500,000 shares of the Company's common stock, par value $.01 per
share ("Common Stock"), subject to the Plans and the terms and conditions set
forth herein. The Option consists of a grant of 300,000 shares of Common Stock
pursuant to the 1992 Plan and a grant of 200,000 shares of Common Stock pursuant
to the 1996 Plan. The parties hereto desire to enter into this Agreement in
order to set forth the terms of such Option.
Accordingly, the parties hereto agree as follows:
1. Grant of Option. Subject to the Plans and the terms and
conditions of this Agreement, the Company hereby grants to Optionee the Option
to purchase from the Company up to 500,000 shares of Common Stock at a price of
$31.25 per share. The Option shall not be immediately exercisable but shall
become exercisable in installments, which shall be cumulative, as indicated
below (which installments may be accelerated as indicated below):
<TABLE>
<CAPTION>
Date on which Installment Number of Shares
First Vests and Becomes Exercisable In Installments
- ----------------------------------- ---------------
<S> <C>
August 26, 1998 (1992 Plan) 20% of the number of shares
originally subject to the Option
August 26, 1999 (1992 Plan) 20% of the number of shares
originally subject to the Option
August 26, 2000 (1992 Plan) 20% of the number of shares
originally subject to the Option
August 26, 2001 (1996 Plan) 20% of the number of shares
originally subject to the Option
August 26, 2002 (1996 Plan) 20% of the number of shares
originally subject to the Option
</TABLE>
The dates on which installments vest and become exercisable shall be accelerated
upon the death of the Optionee, or the termination of the Optionee's employment
with the Company pursuant to section 7(a) (i.e., death), 7(b) (i.e., disability)
or 7(d) (i.e., Constructive Termination Without Cause),
-60-
<PAGE> 2
or following a Change in Control, as defined in section 8(a), of the Optionee's
employment agreement with the Company dated as of June 30, 1997, and upon the
occurrence of any of such events, the total number of shares originally subject
to the Option shall vest and become immediately exercisable. In the event of any
acceleration pursuant to the immediately preceding sentence, the unexercised
portion of the Option shall continue to be exercisable for 12 months thereafter
as provided in paragraph 4 of this Agreement, but in no event later than the
tenth anniversary of the date hereof.
2. Plans Governing Terms of Option. Except as otherwise specifically
herein provided, the Option is subject in all respects to the terms and
conditions of the Plans, copies of which are attached hereto as Exhibits A and
B.
3. Type of Option. The Option is not intended to qualify as an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
4. Termination. The Option shall terminate on the tenth anniversary
of the date hereof, unless the Optionee's employment with the Company terminates
before that date, in which event the Option shall terminate upon termination of
the Optionee's employment with the Company, if the termination is for Cause
pursuant to section 7(c) of the Optionee's employment agreement or is on the
Optionee's own initiative pursuant to section 7(e) of the Optionee's employment
agreement, but the unexercised portion of the Option shall continue to be
exercisable for 12 months after such termination of employment (but in no event
later than the tenth anniversary of the date hereof), if such termination of
employment is for any other cause. The Optionee's election pursuant to section 3
of the Optionee's employment agreement to commence the Senior Status Period and
provide the limited consulting services contemplated therein shall not be deemed
a termination of the Optionee's employment for the purposes of this Agreement.
5. Exercise. The Option may be exercised by delivering to the
Company a written notice (signed by the Optionee) stating the number of shares
with respect to which the Option is being exercised, together with full payment
of the purchase price therefor. Payment may be made in cash or by certified
check, bank draft, or money order payable to the order of the Company or, if
permitted by the Committee, through delivery of shares of Common Stock (such
shares to be valued as provided in the Plans). As provided in the Plans, the
Committee may require the Optionee to remit to the Company an amount sufficient
to satisfy any federal, state or local withholding tax requirements (or make
other arrangements satisfactory to the Company with regard to such taxes) prior
to delivering to the Optionee any shares purchased upon exercise of the Option.
The Option may not be exercised with respect to a fractional share.
6. Restriction on Transfer. The Option may not be assigned or
transferred except by will or the laws of descent and distribution and except by
a written assignment (signed by the Optionee and delivered to the Company),
provided such assignment assigns all or a portion of the Option to the
Optionee's spouse, descendants or trusts for the sole benefit of the Optionee's
spouse or descendants. The Option may be exercised only by the Optionee, the
Optionee's assignee pursuant to an assignment permitted hereunder, or by the
executor or personal representative of the Optionee or of such assignee.
-61-
<PAGE> 3
7. Notice. Any notice or communication to the Company hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, or by United States mail, to the following address (or to such other
address as the Company shall from time to time specify):
Bed Bath & Beyond Inc.
C/O Petitti, Eisenberg & Gamache, P.C.
Attention: Todd Eisenberg
488 Pleasant Street
New Bedford, MA 02740
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
BED BATH & BEYOND INC.
By: /s/ LEONARD FEINSTEIN
----------------------------------
Leonard Feinstein, President and
Co-Chief Executive Officer
/s/ WARREN EISENBERG
----------------------------------
Warren Eisenberg
-62-
<PAGE> 1
Exhibit 10.4
STOCK OPTION AGREEMENT dated as of August 26, 1997 between BED BATH
& BEYOND INC., a New York corporation, and Leonard Feinstein (the "Optionee").
PRELIMINARY STATEMENT
Pursuant to the Bed Bath & Beyond Inc. 1992 Stock Option Plan (the
"1992 Plan") and the Bed Bath & Beyond Inc. 1996 Stock Option Plan (the "1996
Plan") (the 1992 Plan and the 1996 Plan hereinafter the "Plans"), the Stock
Option Committee for Senior Executives that administers the Plans (the
"Committee") has authorized the granting to Optionee of an option (the "Option")
to purchase 500,000 shares of the Company's common stock, par value $.01 per
share ("Common Stock"), subject to the Plans and the terms and conditions set
forth herein. The Option consists of a grant of 300,000 shares of Common Stock
pursuant to the 1992 Plan and a grant of 200,000 shares of Common Stock pursuant
to the 1996 Plan. The parties hereto desire to enter into this Agreement in
order to set forth the terms of such Option.
Accordingly, the parties hereto agree as follows:
1. Grant of Option. Subject to the Plans and the terms and
conditions of this Agreement, the Company hereby grants to Optionee the Option
to purchase from the Company up to 500,000 shares of Common Stock at a price of
$31.25 per share. The Option shall not be immediately exercisable but shall
become exercisable in installments, which shall be cumulative, as indicated
below (which installments may be accelerated as indicated below):
<TABLE>
<CAPTION>
Date on which Installment Number of Shares
First Vests and Becomes Exercisable In Installments
- ----------------------------------- ---------------
<S> <C>
August 26, 1998 (1992 Plan) 20% of the number of shares
originally subject to the Option
August 26, 1999 (1992 Plan) 20% of the number of shares
originally subject to the Option
August 26, 2000 (1992 Plan) 20% of the number of shares
originally subject to the Option
August 26, 2001 (1996 Plan) 20% of the number of shares
originally subject to the Option
August 26, 2002 (1996 Plan) 20% of the number of shares
originally subject to the Option
</TABLE>
The dates on which installments vest and become exercisable shall be accelerated
upon the death of the Optionee, or the termination of the Optionee's employment
with the Company pursuant to
-63-
<PAGE> 2
section 7(a) (i.e., death), 7(b) (i.e., disability) or 7(d) (i.e., Constructive
Termination Without Cause), or following a Change in Control, as defined in
section 8(a), of the Optionee's employment agreement with the Company dated as
of June 30, 1997, and upon the occurrence of any of such events, the total
number of shares originally subject to the Option shall vest and become
immediately exercisable. In the event of any acceleration pursuant to the
immediately preceding sentence, the unexercised portion of the Option shall
continue to be exercisable for 12 months thereafter as provided in paragraph 4
of this Agreement, but in no event later than the tenth anniversary of the date
hereof.
2. Plans Governing Terms of Option. Except as otherwise specifically
herein provided, the Option is subject in all respects to the terms and
conditions of the Plans, copies of which are attached hereto as Exhibits A and
B.
3. Type of Option. The Option is not intended to qualify as an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
4. Termination. The Option shall terminate on the tenth anniversary
of the date hereof, unless the Optionee's employment with the Company terminates
before that date, in which event the Option shall terminate upon termination of
the Optionee's employment with the Company, if the termination is for Cause
pursuant to section 7(c) of the Optionee's employment agreement or is on the
Optionee's own initiative pursuant to section 7(e) of the Optionee's employment
agreement, but the unexercised portion of the Option shall continue to be
exercisable for 12 months after such termination of employment (but in no event
later than the tenth anniversary of the date hereof), if such termination of
employment is for any other cause. The Optionee's election pursuant to section 3
of the Optionee's employment agreement to commence the Senior Status Period and
provide the limited consulting services contemplated therein shall not be deemed
a termination of the Optionee's employment for the purposes of this Agreement.
5. Exercise. The Option may be exercised by delivering to the
Company a written notice (signed by the Optionee) stating the number of shares
with respect to which the Option is being exercised, together with full payment
of the purchase price therefor. Payment may be made in cash or by certified
check, bank draft, or money order payable to the order of the Company or, if
permitted by the Committee, through delivery of shares of Common Stock (such
shares to be valued as provided in the Plans). As provided in the Plans, the
Committee may require the Optionee to remit to the Company an amount sufficient
to satisfy any federal, state or local withholding tax requirements (or make
other arrangements satisfactory to the Company with regard to such taxes) prior
to delivering to the Optionee any shares purchased upon exercise of the Option.
The Option may not be exercised with respect to a fractional share.
6. Restriction on Transfer. The Option may not be assigned or
transferred except by will or the laws of descent and distribution and except by
a written assignment (signed by the Optionee and delivered to the Company),
provided such assignment assigns all or a portion of the Option to the
Optionee's spouse, descendants or trusts for the sole benefit of the Optionee's
spouse or descendants. The Option may be exercised only by the Optionee, the
Optionee's assignee pursuant to an assignment permitted hereunder, or by the
executor or personal representative of the Optionee or of such assignee.
-64-
<PAGE> 3
7. Notice. Any notice or communication to the Company hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, or by United States mail, to the following address (or to such other
address as the Company shall from time to time specify):
Bed Bath & Beyond Inc.
C/O Petitti, Eisenberg & Gamache, P.C.
Attention: Todd Eisenberg
488 Pleasant Street
New Bedford, MA 02740
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
BED BATH & BEYOND INC.
By: /s/ WARREN EISENBERG
----------------------------------
Warren Eisenberg, Chairman and
Co-Chief Executive Officer
/s/ Leonard Feinstein
----------------------------------
Leonard Feinstein
-65-
<PAGE> 1
Exhibit 10.5
BED BATH AND BEYOND INC.
1992 STOCK OPTION PLAN, AS AMENDED**
1. PURPOSE
The purpose of the Bed Bath & Beyond Inc. 1992 Stock Option Plan (the
"Plan") is to encourage and enable key employees (which term, as used herein,
shall include officers), and directors of Bed Bath & Beyond Inc. or a parent (if
any) or subsidiaries thereof (collectively, unless the context otherwise
requires, the "Company"), consultants, and advisors to the Company, and other
persons or entities providing goods or services to the Company to acquire a
proprietary interest in the Company through the ownership of common stock of the
Company. (Such directors, members, consultants, advisors, and other persons or
entities providing goods or services to the Company and entitled to receive
options hereunder being collectively referred to as the "Associates," and the
relationship of the Associates to the Company being referred to as "association
with" the Company.) Such ownership will provide such employees and Associates
with a more direct stake in the future welfare of the Company and encourage them
to remain employed by or associated with the Company. It is also expected that
the Plan will encourage qualified persons to seek and accept employment or
association with the Company.
2. TYPE OF OPTIONS
Options granted pursuant to the Plan may be incentive stock options as
defined in Section 422 of the Internal Revenue Code of 1986 (as from time to
time amended, the "Code") (any option that is intended so to qualify as an
incentive stock option being referred to herein as an "incentive option"), or
options that are not incentive options, or both. Incentive options may only be
granted to "employees" as defined in the provisions of the Code or regulations
thereunder applicable to incentive stock options.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective upon satisfaction of the following
conditions: (i) the Plan shall have been approved by the shareholders of the
Company and (ii) the Certificate of Incorporation of the Company shall have been
amended to reclassify the Company's outstanding capital stock into common stock,
par value $0.01 per share ("Stock"), and to effect a 145.625 for 1 stock split
(the "Stock Split"). Grants of options under the Plan may be made prior to
satisfaction of such conditions, but after adoption of the Plan by the Board of
Directors of the Company (the "Board"), subject to the satisfaction of such
conditions.
No option shall be granted under the Plan on or after the tenth
anniversary of the date on which the Plan is adopted by the Board, but options
previously granted may extend beyond that date.
- ------------------
** As amended through August 26, 1997.
-66-
<PAGE> 2
4. ADMINISTRATION
(a) The Plan shall be administered by one or more committees appointed
from time to time by the Board (each such committee being referred to as a
"Committee"). In the event that more than one Committee is appointed by the
Board, the Board shall specify with respect to each Committee the group of
employees and Associates with respect to which such Committee shall have the
power to grant options. In the event that more than one Committee is appointed
by the Board, then each reference in the Plan to "the Committee" shall be deemed
a reference to each such Committee (subject to the last sentence of this
paragraph); provided, however, that each such Committee may only exercise the
power and authority granted to "the Committee" by the Plan with respect to those
employees and Associates that it has the power to grant options to as specified
in the resolution of the Board appointing such Committee. Each Committee shall
be comprised of two or more directors. A majority of the members of each
Committee shall constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any determination of any Committee
under the Plan may be made, without notice or meeting of the Committee, by a
writing signed by a majority of the Committee members. Following registration of
the Company's Stock under the Securities Exchange Act of 1934 (the "Act"), all
members of each Committee shall be "disinterested persons" within the meaning of
Rule 16(b)-3 under the Act and "outside directors" within the meaning of Section
162(m) of the Internal Revenue Code (the "Code"); provided, however, that the
foregoing shall not apply to any Committee that does not have the power to grant
options to officers or directors of the Company or otherwise make any decisions
with respect to the timing or the pricing of any options granted to such
officers and directors. If pursuant to the preceding sentence a Committee is
required to be comprised of "disinterested persons" and "outside directors,"
then the members of such Committee shall not be eligible to receive options
under the Plan. In the event that more than one Committee is appointed by the
Board, the power to amend the Plan granted by Section 10(b) hereof may only be
exercised by a Committee all of whose members are "disinterested persons" and
"outside directors" within the meaning of Rule 16(b)-3 under the Act and Section
162(m) of the Code.
(b) The Committee shall have authority, not inconsistent with the express
provisions of the Plan, (i) to grant options to such eligible employees and
Associates of the Company as the Committee may select; provided, however, that
the maximum number of options that may be granted under this Plan during any
calendar year to any employee or Associate of the Company shall not exceed
100,000 shares (subject to any adjustment in accordance with Section 8(b)), and
it is further provided that if the Committee grants to any employee or Associate
during any calendar year options to purchase a number of shares that is less
than 100,000, or does not grant any options during any calendar year to such
employee or Associate, then the amount of such shortfall shall be carried
forward and added to the maximum number of options which may be granted in a
subsequent year to such employee or Associate, (ii) to determine the time or
times when options shall be granted and the number of shares of Stock subject to
each option; (iii) to determine which options are, and which options arc not,
incentive options; (iv) to determine the terms and conditions of each option;
(v) to prescribe the form or forms of instruments evidencing options and any
other instruments required under the Plan and to change such forms from time to
time; (vi) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (vii) to interpret the Plan and to decide any
-67-
<PAGE> 3
questions and settle all controversies and disputes that may arise in connection
with the Plan. Any determination, decision or action of the Committee in
connection with the construction, interpretation, administration or application
of the Plan shall be final and conclusive on all persons participating in the
Plan.
5. SHARES SUBJECT TO THE PLAN
(a) Number of Shares.
Subject to adjustment as provided in Section 8, the aggregate number of
shares of Stock that may be delivered upon the exercise of options granted under
the Plan (taking into account the Stock Split) shall be 2,800,000. If any option
granted under the Plan terminates without having been exercised in full, the
number of shares of Stock as to which such option was not exercised shall be
available for future grants within the limits set forth in this Section 5(a).
(b) Shares to be Delivered.
Shares delivered under the Plan shall be authorized but unissued Stock or,
if the Committee so decides in its sole discretion, previously issued Stock
acquired by the Company and held in treasury. No fractional shares of Stock
shall be delivered under the Plan.
6. ELIGIBILITY FOR OPTIONS
Employees and Associates of the Company eligible to receive options under
the Plan shall be those employees and Associates who, in the opinion of the
Committee, are in a position to make a significant contribution to the success
of the Company. Receipt of options under the Plan or of awards under any other
employee benefit plan of the Company shall not preclude an employee from
receiving options or additional options under the Plan.
7. TERMS AND CONDITIONS OF OPTIONS
(a) Special Rule for Incentive Options. Consistent with Section 422 of the
Code and any regulations, notices or other official pronouncements of general
applicability, to the extent the aggregate fair market value (determined in
accordance with Section 7(b) as of the time the option is granted) of the shares
of Stock with respect to which incentive options are exercisable for the first
time by the optionee during any calendar year (under all plans of his employer
corporation and its parent and subsidiary corporations) exceeds $100,000, such
options shall not be treated as incentive options. Nothing in this special rule
shall be construed as limiting the exercisability of any option, unless the
Committee expressly provides for such a limitation at time of grant.
(b) Exercise Price. The exercise price of each option shall be determined
by the Committee, subject to the following: (i) in the case of an incentive
option and all options granted by a Committee comprised of "disinterested
persons" and "outside directors," the exercise price per share of stock shall
not be less than 100% (110% for an incentive stock option granted to a greater
than ten-percent shareholder) of the fair market value per share of Stock at the
time the option is
-68-
<PAGE> 4
granted and (ii) in the case of all other options, the exercise price per share
of Stock shall not be less than the par value per share (unless the Stock
subject to the option is treasury stock). A "greater than ten-percent
shareholder" shall mean for purposes of the Plan any employee who at the time of
grant owns directly, or is deemed to own by reason of the attribution rules set
forth in Section 424(d) of the Code, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company. The fair market
value of a share of Stock as of any date shall be determined for purposes of the
Plan as follows: (i) if the Stock is listed on a securities exchange or quoted
through the National Association of Securities Dealers Automatic Quotation
("NASDAQ") National Market System, the fair market value shall equal the mean
between the high and low sales prices on such exchange or through such market
system, as the case may be, on such day or in the absence of reported sales on
such day, the mean between the reported bid and asked prices on such exchange or
through such market system, as the case may be, on such day, (ii) if the Stock
is not listed or quoted as described in the preceding clause but is quoted
through NASDAQ (but not through the National Market System), the fair market
value shall equal the mean between the bid and offered prices as quoted by the
National Association of Securities Dealers through NASDAQ for such day and (iii)
if the Stock is not listed or quoted on a securities exchange or through NASDAQ,
then the fair market value shall be determined by such other method as the
Committee determines to be reasonable and consistent with applicable
requirements of the Code and the regulations issued thereunder applicable to
incentive options; provided, however, that if pursuant to clause (i) or (ii)
fair market value is to be determined based upon the mean of bid and asked
prices and the Committee determines that such mean does not property reflect
fair market value, then fair market value shall be determined by the Committee
as provided in clause (iii).
(c) Duration of Options. An option, shall be exercisable during such
period or periods as the Committee may specify. The latest date on which an
option may be exercised (the "Final Exercise Date") shall be the date which is
ten years (five years, in the case of an incentive option granted to a "greater
than ten-percent shareholder" as defined in Section 7(b)) from the date the
option was granted or such earlier date as may be specified by the Committee at
the time the option is granted.
(d) Exercise of Options.
(1) At the time of the grant of an option, the Committee shall
specify whether the option shall be exercisable in full at any time prior
to the Final Exercise Date or in installments (which may be cumulative or
noncumulative). In the case of an option not immediately exercisable in
full, the Committee may at any time accelerate the time at which all or
any part of the option may be exercised.
(2) The award forms or other instruments evidencing incentive
options shall contain such provisions relating to exercise and other
matters as are required of incentive options under the applicable
provisions of the Code and the regulations thereunder, as from time to
time in effect.
(3) Any exercise of an option shall be in writing, signed by the
proper person and delivered or mailed to the Company, accompanied by (a)
the option certificate and any other
-69-
<PAGE> 5
documents required by the Committee and (b) payment in full for the number
of shares for which the option is exercised.
(4) In the case of an option that is not an incentive option, the
Committee shall have the right to require that the individual exercising
the option remit to the Company an amount sufficient to satisfy any
federal, state, or local withholding tax requirements (or make other
arrangements satisfactory to the Company with regard to such taxes) prior
to the delivery of any Stock pursuant to the exercise of the option. In
the case of an incentive option, if at the time the option is exercised
the Committee determines that under applicable law and regulations the
Company could be liable for the withholding of any federal, state or local
tax with respect to a disposition of the Stock received upon exercise, the
Committee may require as a condition of exercise that the individual
exercising the option agree (i) to inform the Company promptly of any
disposition (within the meaning of Section 424(c) of the Code and the
regulations thereunder) of Stock received upon exercise, and (ii) to give
such security as the Committee deems adequate to meet the potential
liability of the Company for the withholding of tax, and to augment such
security from time to time in any amount reasonably deemed necessary by
the Committee to preserve the adequacy of such security.
(5) If an option is exercised by the executor or administrator of a
deceased employee or Associate, or by the person or persons to whom the
option has been transferred by the employee's or Associate's will or the
applicable laws of descent and distribution, the Company shall be under no
obligation to deliver Stock pursuant to such exercise until the Company is
satisfied as to the authority of the person or persons exercising the
option.
(e) Termination of Employment. An employee's options shall terminate
immediately upon the termination of his employment with the Company, subject to
the following exceptions: (i) if the termination is by reason of the death or
disability of the employee, the unexercised portion of such options shall
continue to be exercisable for 12 months after such termination and (ii) if the
termination is for any other reason, excluding termination for cause, the
unexercised portion of such options shall continue to be exercisable for three
months after such termination. Notwithstanding the foregoing, the Committee in
its discretion in any particular case may provide that upon termination of an
employee's employment with the Company, the unexercised portion of his options
shall continue to be exercisable for a longer or shorter period than the period
provided for in the preceding sentence; provided, however, that (i) in the case
of an incentive option, the Committee may not provide for a shorter or longer
period after the option is granted and, in any event, may not provide for a
longer period except in the case where the employee's employment is terminated
by reason of death and (ii) in the case of an option that is not an incentive
option, the Committee may not provide for a shorter period after the option is
granted. For purposes of this Section 7(e), employment shall not be considered
terminated (i) in the case of sick leave or other bona fide leave of absence
approved for purposes of the Plan by the Committee, so long as the employee's
right to reemployment is guaranteed either by statute or by contract, or (ii) in
the case of a transfer of employment between the Company and a subsidiary or
between subsidiaries, or to the employment of a corporation (or a parent or
subsidiary corporation of such corporation) issuing or assuming an option in a
transaction to which Section 424(a) of the Code applies.
-70-
<PAGE> 6
(f) Payment for Stock. Stock purchased under the Plan shall be paid for as
follows: (i) in cash or by certified check, bank draft or money order payable to
the order of the Company or (ii) if so permitted by the Committee (not later
than the time of grant, in the case of an incentive option), (A) through the
delivery of shares of Stock (including shares acquired under the option then
being exercised) having a fair market value (determined as provided in Section
7(b)) on the date of exercise equal to the purchase price or (B) by a
combination of cash and Stock as provided in clauses (i) and (ii)(A) above or
(C) by delivery of a promissory note of the option holder to the Company, such
note to be payable in the case of an incentive Option, on such terms as are
specified in the option (except that, in lieu of a stated rate of interest, an
incentive option may provide that the rate of interest on the note will be such
rate as is sufficient, at the time the note is given, to avoid the imputation of
interest under the applicable provisions of the Code), or by a combination of
cash (or cash and Stock) and the option holder's promissory note; provided, that
if the Stock delivered upon exercise of the option is an original issue of
authorized Stock, at least so much of the exercise price as represents the par
value of such Stock shall be paid in cash or by a combination of cash and Stock.
(g) Delivery of Stock. An option holder shall not have the rights of a
shareholder with regard to awards under the Plan except as to Stock actually
received by him under the Plan. The Company shall not be obligated to deliver
any shares of Stock (a) until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, and
(b) if the outstanding Stock is at the time listed on any stock exchange, until
the shares to be delivered have been listed or authorized to be listed on such
exchange upon official notice of issuance, and (c) until all other legal matters
in connection with the issuance and delivery of such shares have been approved
by the Company's counsel. If the sale of Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of the option, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such Act and may require
that the certificates evidencing such Stock bear an appropriate legend
restricting-transfer.
(h) Transferability of Options. The Committee may provide that options may
be transferred to the extent and subject to such limitations as the Committee
may specify.
(i) Restrictions on Stock. The Committee may provide that shares of Stock
purchased through the exercise of options under the Plan be subject to such
restrictions on resale, including restrictions requiring resale to the Company
at or below fair market value, or such other restrictions, as the Committee in
its sole discretion shall determine, and shall take such steps as it deems
necessary or appropriate to carry out the purposes of any such restriction.
8. MERGERS, RECAPITALIZATIONS, ETC.
(a) In the event of a consolidation or merger in which the Company is not
the surviving corporation or in the event of any transaction that results in the
acquisition of substantially all of the Company's outstanding Stock by a single
person or entity or by a group of persons and/or entities acting in concert, or
in the event of the sale or transfer of substantially all of the Company's
assets (all the foregoing being referred to as "Acquisition Events"), then the
Committee may in its discretion terminate all outstanding options by delivering
notice of termination to each option holder,
-71-
<PAGE> 7
provided, however, that, during the 20-day period following the date on which
such notice of termination is delivered, each option holder shall have the right
to exercise in full all of his options that are then outstanding (without regard
to limitations on exercise otherwise contained in the options). If an
Acquisition Event occurs and the Committee does not terminate the outstanding
options pursuant to the preceding sentence, then the provisions of Section 8(b)
shall apply.
(b) In the event of a stock dividend stock split (other than the Stock
Split) or combination of shares, recapitalization or other change in the
Company's capital stock, the number and kind of shares of stock of securities of
the Company subject to options then outstanding or subsequently granted under
the Plan, the maximum number of shares or securities that may be delivered under
the Plan, the exercise price, and other relevant provisions shall be
appropriately adjusted by the Committee. The Committee may also adjust the
number of shares subject to outstanding options, the exercise price of
outstanding options and the terms of outstanding options to take into
consideration any other event (including, without limitation, accounting
changes) if the Committee determines that such adjustment is appropriate to
avoid distortion in the operation of the Plan. All determinations and
adjustments made by the Committee pursuant to this Section 8(b) shall be binding
on all persons.
(c) The Committee may grant options under the Plan in substitution for
options held by employees of another corporation who concurrently become
employees of the Company or a subsidiary of the Company as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as the result of the acquisition by the Company of
property or stock of the employing corporation. The Company may direct that
substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.
9. LIMITATION ON RIGHTS
Neither the adoption of the Plan nor the grant of options shall confer
upon any employee any right to continued employment with the Company or affect
in any way the right of the Company to terminate the employment of an employee
at any time. Except as specifically provided by the Committee in any particular
case, the loss of existing or potential profit in options granted under this
Plan shall not constitute an element of damages in the event of termination of
the employment of an employee even if the termination is in violation of an
obligation of the Company to the employee by contract or otherwise.
10. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
(a) Neither adoption of the Plan nor the grant of options to an employee
shall affect the Company's right to grant to such employee options that are not
subject to the Plan, to issue to such employees Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
employees.
-72-
<PAGE> 8
(b) The Committee may at any time discontinue granting options under the
Plan. With the consent of the option holder, the Board may at any time cancel an
existing option in whole or in part and grant the option holder another option
for such number of shares as the Committee specifies. The Committee may at any
time or times amend the Plan or any outstanding option for the purpose of
satisfying the requirement of Section 422 of the Code or of any changes in
applicable laws or regulations or for any other purpose which may at the time be
permitted by law, or at any time terminate the Plan as to any further grants of
options, provided that (except to the extent expressly required or permitted
above) no such amendment shall, without the approval of the shareholders of the
Company, (a) increase the maximum number of shares available under the Plan, (b)
change the group of employees eligible to receive options under the Plan, (c)
reduce the price at which incentive options may be granted, (d) extend the time
within which incentive options may be granted, (e) extend the time within which
options may be granted, (f) alter the Plan in such a way that incentive options
already granted hereunder would not be considered incentive stock options under
Section 422 of the Code, or (g) amend the provisions of this Section 8, and no
such amendment shall adversely affect the rights of any option holder (without
his consent) under any option previously granted.
-73-
<PAGE> 1
Exhibit 10.6
BED BATH AND BEYOND INC.
1996 STOCK OPTION PLAN***
1 PURPOSE.
The purpose of the Bed Bath & Beyond Inc. 1996 Stock Option Plan (the
"Plan") is to encourage and enable key employees (which term, as used herein,
shall include officers), and directors of Bed Bath & Beyond Inc. or a parent (if
any) or subsidiaries thereof (collectively, unless the context otherwise
requires, the "Company"), consultants, and advisors to the Company, and other
persons or entities providing goods or services to the Company to acquire a
proprietary interest in the Company through the ownership of common stock of the
Company. (Such directors, members, consultants, advisors, and other persons or
entities providing goods or services to the Company and entitled to receive
options hereunder being collectively referred to as the "Associates," and the
relationship of the Associates to the Company being referred to as "association
with" the Company). Such ownership will provide such employees and Associates
with a more direct stake in the future welfare of the Company and encourage them
to remain employed by or associated with the Company. It is also expected that
the Plan will encourage qualified persons to seek and accept employment or
association with the Company.
2. TYPE OF OPTIONS.
Options granted pursuant to the Plan may be incentive stock options as
defined in Section 422 of the Internal Revenue Code of 1986 (as from time to
time amended, the "Code") (any option that is intended so to qualify as an
incentive stock option being referred to herein as an "incentive option"), or
options that are not incentive options, or both. Incentive options may only be
granted to "employees" as defined in the provisions of the Code or regulations
thereunder applicable to incentive stock options.
3. EFFECTIVE DATE AND TERM OF THE PLAN.
(a) The Plan shall become effective upon approval by the shareholders of
the Company.
(b) No option shall be granted under the Plan on or after the tenth
anniversary of the date on which the Plan is adopted, but options previously
granted may extend beyond that date.
4. ADMINISTRATION.
(a) The Plan shall be administered by one or more committees appointed
from time to time by the Board (each such committee being referred to as a
"Committee"). In the event that more than one Committee is appointed by the
Board, the Board shall specify with respect to each Committee the group of
employees and Associates with respect to which such Committee shall have the
power to grant options. In the event that more than one Committee is appointed
by the Board, then each reference in the Plan to "the Committee" shall be deemed
a reference to each such Committee (subject to the last sentence of this
paragraph); provided, however, that each such Committee may only exercise the
power
- ------------------
*** As amended through August 26, 1997.
-74-
<PAGE> 2
and authority granted to "the Committee" by the Plan with respect to those
employees and Associates that it has the power to grant options to as specified
in the resolution of the Board appointing such Committee. Each Committee shall
be comprised of two or more directors. A majority of the members of each
Committee shall constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any determination of any Committee
under the Plan may be made, without notice or meeting of the Committee, by a
writing signed by a majority of the Committee members. All members of each
Committee shall be "disinterested persons" within the meaning of Rule 16(b)-3
under the Act and "outside directors" within the meaning of Section 162(m) of
the Internal Revenue Code (the "Code"); provided, however, that the foregoing
shall not apply to any Committee that does not have the power to grant options
to officers or directors of the Company or otherwise make any decisions with
respect to the timing or the pricing of any options granted to such officers and
directors. If pursuant to the preceding sentence a Committee is required to be
comprised of "disinterested persons" and "outside directors", then the members
of such Committee shall not be eligible to receive options under the Plan. In
the event that more than one Committee is appointed by the Board, the power to
amend the Plan granted by Section 10(b) hereof may only be exercised by a
Committee all of whose members are "disinterested persons" and "outside
directors" within the meaning of Rule 16(b)-3 under the Act and Section 162(m)
of the Code.
(b) The Committee shall have authority, not inconsistent with express
provisions of the Plan, (i) to grant options to such eligible employees and
Associates of the Company as the Committee may select; provided, however, that
the maximum number of options that may be granted under this Plan during any
calendar year to any employee or Associate of the Company shall not exceed
100,000 shares (subject to any adjustment in accordance with Section 8(b)), and
it is further provided that if the Committee grants to any employee or Associate
during any calendar year options to purchase a number of shares that is less
than 100,000, or does not grant any options during any calendar year to such
employee or Associate, then the amount of such shortfall shall be carried
forward and added to the maximum number of options which may be granted in a
subsequent year to such employee or Associate; (ii) to determine the time or
times when options shall be granted and the number of shares of Stock subject to
each option; (iii) to determine which options are, and which options are not,
incentive options; (iv) to determine the terms and conditions of each option;
(v) to prescribe the form or forms of instruments evidencing options and any
other instruments required under the Plan and to change such forms from time to
time; (vi) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (vii) to interpret the Plan and to decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan. Any determination, decision or action of the Committee in
connection with the construction, interpretation, administration or application
of the Plan shall be final and conclusive on all persons participating in the
Plan.
5. SHARES SUBJECT TO THE PLAN.
(a) Number of Shares.
Subject to adjustment as provided in Section 8, the aggregate number of
shares of Stock that may be delivered upon the exercise of options granted under
the Plan shall be 2,000,000. If any option granted under the Plan terminates
without having been exercised in full, the number of shares of Stock as to which
such option was not exercised shall be available for future grants within the
limits set forth in this Section 5(a).
-75-
<PAGE> 3
(b) Shares to be Delivered.
Shares delivered under the Plan shall be authorized but unissued Stock or,
if the Committee so decides in its sole discretion, previously issued Stock
acquired by the Company and held in treasury. No fractional shares of Stock
shall be delivered under the Plan.
6. ELIGIBILITY FOR OPTIONS.
Employees and Associates of the Company eligible to receive options under
the Plan shall be those employees and Associates who, in the opinion of the
Committee, are in a position to make a significant contribution to the success
of the Company. Receipt of options under the Plan or of awards under any other
employee benefit plan of the Company shall not preclude an employee from
receiving options or additional options under the Plan.
7. TERMS AND CONDITIONS OF OPTIONS.
(a) Special Rule for Incentive Options. Consistent with Section 422 of the
Code and any regulations, notices or other official pronouncements of general
applicability, to the extent the aggregate fair market value (determined in
accordance with Section 7(b) as of the time the option is granted) of the shares
of Stock with respect to which incentive options are exercisable for the first
time by the optionee during any calendar year (under all plans of his employer
corporation and its parent and subsidiary corporations) exceeds $100,000, such
options shall not be treated as incentive options. Nothing in this special rule
shall be construed as limiting the exercisability of any option, unless the
Committee expressly provides for such a limitation at time of grant.
(b) Exercise Price. The exercise price of each option shall be determined
by the Committee, subject to the following: (i) in the case of an incentive
option and all options granted by a Committee comprised of "disinterested
persons" and "outside directors", the exercise price per share of stock shall
not be less than 100% (110% for an incentive stock option granted to a greater
than ten-percent shareholder) of the fair market value per share of Stock at the
time the option is granted and (ii) in the case of all other options, the
exercise price per share of Stock shall not be less than the par value per share
(unless the Stock subject to the option is treasury stock). A "greater than
ten-percent shareholder" shall mean for purposes of the Plan any employee who at
the time of grant owns directly, or is deemed to own by reason of the
attribution rules set forth in Section 424(d) of the Code, stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company. The fair market value of a share of Stock as of any date shall be
determined for purposes of the Plan as follows: (i) if the Stock is listed on a
securities exchange or quoted through the National Association of Securities
Dealers Automatic Quotation ("NASDAQ") National Market System, the fair market
value shall equal the mean between the high and low sales prices on such
exchange or through such market system, as the case may be, on such day or in
the absence of reported sales on such day, the mean between the reported bid and
asked prices on such exchange or through such market system, as the case may be,
on such day, (ii) if the Stock is not listed or quoted as described in the
preceding clause but is quoted through NASDAQ (but not through the National
Market System), the fair market value shall equal the mean between the bid and
offered prices as quoted by the National Association of Securities Dealers
through NASDAQ for such day and (iii) if the Stock is not listed or quoted on a
securities exchange or through NASDAQ, then the fair market value shall be
determined by such other method as the Committee
-76-
<PAGE> 4
determines to be reasonable and consistent with applicable requirements of the
Code and the regulations issued thereunder applicable to incentive options;
provided, however, that if pursuant to clause (i) or (ii) fair market value is
to be determined based upon the mean of bid and asked prices and the Committee
determines that such means does not properly reflect fair market value, then
fair market value shall be determined by the Committee as provided in clause
(iii).
(c) Duration of Options. An option shall be exercisable during such period
or periods as the Committee may specify. The latest date on which an option may
be exercised (the "Final Exercise Date") shall be the date which is ten years
(five years, in the case of an incentive option granted to a "greater than
ten-percent shareholder" as defined in Section 7(b)) from the date the option
was granted or such earlier date as may be specified by the Committee at the
time the option is granted.
(d) Exercise of Options.
(1) At the time of the grant of an option, the Committee shall
specify whether the option shall be exercisable in full at any
time prior to the Final Exercise Date or in installments
(which may be cumulative or noncumulative). In the case of an
option not immediately exercisable in full, the Committee may
at any time accelerate the time at which all or any part of
the option may be exercised.
(2) The award forms or other instruments evidencing incentive
options shall contain such provisions relating to exercise and
other matters as are required of incentive options under the
applicable provisions of the Code and the regulations
thereunder, as from time to time in effect.
(3) Any exercise of an option shall be in writing, signed by the
proper person and delivered or mailed to the Company,
accompanied by (a) the option certificate and any other
documents required by the Committee and (b) payment in full
for the number of shares for which the option is exercised.
(4) In the case of an option that is not an incentive option, the
Committee shall have the right to require that the individual
exercising the option remit to the Company an amount
sufficient to satisfy any federal, state, or local withholding
tax requirements (or make other arrangements satisfactory to
the Company with regard to such taxes) prior to the delivery
of any Stock pursuant to the exercise of the option. In the
case of an incentive option, if at the time the option is
exercised the Committee determines that under applicable law
and regulations the Company could be liable for the
withholding of any federal, state or local tax with respect to
a disposition of the Stock received upon exercise, the
Committee may require as a condition of exercise that the
individual exercising the option agree (i) to inform the
Company promptly of any disposition (within the meaning of
Section 424(c) of the Code and the regulations thereunder) of
Stock received upon exercise, and (ii) to give such security
as the Committee deems adequate to meet the potential
liability of the Company for the withholding of tax, and to
augment such security from time to time in any amount
reasonably deemed necessary by the Committee to preserve the
adequacy of such security.
-77-
<PAGE> 5
(5) If an option is exercised by the executor or administrator of
a deceased employee or Associate, or by the person or persons
to whom the option has been transferred by the employee's or
Associate's will or the applicable laws of descent and
distribution, the Company shall be under no obligation to
deliver Stock pursuant to such exercise until the Company is
satisfied as to the authority of the person or persons
exercising the option.
(e) Termination of Employment.
An employee's options shall terminate immediately upon the termination of
his employment with the Company, subject to the following exceptions: (i) if the
termination is by reason of the death or disability of the employee, the
unexercised portion of the such options shall continue to be exercisable for 12
months after such termination and (ii) if the termination is for any other
reason, excluding termination for cause, the unexercised portion of such options
shall continue to be exercisable for three months after such termination.
Notwithstanding the foregoing, the Committee in its discretion in any particular
case may provide that upon termination of an employee's employment with the
Company, the unexercised portion of his options shall continue to be exercisable
for a longer or shorter period than the period provided for in the preceding
sentence; provided, however, that (i) in the case of an incentive option, the
Committee may not provide for a shorter or longer period after the option is
granted and, in any event, may not provide for a longer period except in the
case where the employee's employment is terminated by reason of death and (ii)
in the case of an option that is not an incentive option, the Committee may not
provide for a shorter period after the option is granted. For purposes of this
Section 7(e), employment shall not be considered terminated (i) in the case of
sick leave or other bona fide leave of absence approved for purposes of the Plan
by the Committee, so long as the employee's right to reemployment is guaranteed
either by statute or by contract, or (ii) in the case of a transfer of
employment between the Company and a subsidiary or between subsidiaries, or to
the employment of a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an option in a transaction to which Section
424(a) of the Code applies.
(f) Payment for Stock.
Stock purchased under the Plan shall be paid for as follows: (i) in cash
or by certified check, bank draft or money order payable to the order of the
Company or (ii) if so permitted by the Committee (not later than the time of
grant, in the case of an incentive option), (A) through the delivery of shares
of Stock (including shares acquired under the option then being exercised)
having a fair market value (determined as provided in Section 7(b)) on the date
of exercise equal to the purchase price or (B) by a combination of cash and
Stock as provided in clauses (i) and (ii)(A) above or (C) by delivery of a
promissory note of the option holder to the Company, such note to be payable in
the case of an incentive option, on such terms as are specified in the option
(except that, in lieu of a stated rate of interest, an incentive option may
provide that the rate of interest on the note will be such rate as is
sufficient, at the time the note is given, to avoid the imputation of interest
under the applicable provisions of the Code), or by a combination of cash (or
cash and Stock) and the option holder's promissory note; provided, that if the
Stock delivered upon exercise of the option is an original issue of authorized
Stock, at least so much of the exercise price as represents the par value of
such Stock shall be paid in cash or by a combination of cash and Stock.
-78-
<PAGE> 6
(g) Delivery of Stock.
An option holder shall not have the rights of a shareholder with regard to
awards under the Plan except as to Stock actually received by him under the
Plan. The Company shall not be obligated to deliver any shares of Stock (a)
until, in the opinion of the Company's counsel, all applicable federal and state
laws and regulations have been complied with, and (b) if the outstanding Stock
is at the time listed on any stock exchange, until the shares to be delivered
have been listed or authorized to be listed on such exchange upon official
notice of issuance, and (c) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of the
option, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
(h) Transferability of Options.
The Committee may provide that options may be transferred to the extent
and subject to such limitations as the Committee may specify.
(i) Restrictions on Stock.
The Committee may provide that shares of Stock purchased through the
exercise of options under the Plan be subject to such restrictions on resale,
including restrictions requiring resale to the Company at or below fair market
value, or such other restrictions, as the Committee in its sole discretion shall
determine, and shall take such steps as it deems necessary or appropriate to
carry out the purposes of any such restriction.
8. MERGERS, RECAPITALIZATIONS, ETC.
(a) In the event of a consolidation or merger in which the Company is not
the surviving corporation or in the event of any transaction that results in the
acquisition of substantially all of the Company's outstanding Stock by a single
person or entity or by a group of persons and/or entities acting in concert, or
in the event of the sale or transfer of substantially all of the Company's
assets (all the foregoing being referred to as "Acquisition Events"), then the
Committee may in its discretion terminate all outstanding options by delivering
notice of termination to each option holder; provided, however, that, during the
20-day period following the date on which such notice of termination is
delivered, each option holder shall have the right to exercise in full all of
his options that are then outstanding (without regard to limitations on exercise
otherwise contained in the options). If an Acquisition Event occurs and the
Committee does not terminate the outstanding options pursuant to the preceding
sentence, then the provisions of Section 8(b) shall apply.
(b) In the event of a stock dividend stock split or combination of shares,
recapitalization or other change in the Company's capital stock, the number and
kind of shares of stock of securities of the Company subject to options then
outstanding or subsequently granted under the Plan, the maximum number of shares
or securities that may be delivered under the Plan, the exercise price, and
other relevant provisions shall be appropriately adjusted by the Committee. The
Committee may also adjust the
-79-
<PAGE> 7
number of shares subject to outstanding options, the exercise price of
outstanding options and the terms of outstanding options to take into
consideration any other event (including, without limitation, accounting
changes) if the Committee determines that such adjustment is appropriate to
avoid distortion in the operation of the Plan. All determinations and
adjustments made by the Committee pursuant to this Section 8(b) shall be binding
on all persons.
(c) The Committee may grant options under the Plan in substitution for
options held by employees of another corporation who concurrently become
employees of the Company or a subsidiary of the Company as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as the result of the acquisition by the Company of
property or stock of the employing corporation. The Company may direct that
substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.
9. LIMITATION ON RIGHTS.
Neither the adoption of the Plan nor the grant of options shall confer
upon any employee any right to continued employment with the Company or affect
in any way the right of the Company to terminate the employment of an employee
at any time. Except as specifically provided by the Committee in any particular
case, the loss of existing or potential profit in options granted under this
Plan shall not constitute an element of damages in the event of termination of
the employment of an employee even if the termination is in violation of an
obligation of the Company to the employee by contract or otherwise.
10. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION.
(a) Neither adoption of the Plan nor the grant of options to an employee
shall affect the Company's right to grant to such employee options that are not
subject to the Plan, to issue to such employees Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
employees.
(b) The Committee may at any time discontinue granting options under the
plan. With the consent of the option holder, the Board may at any time cancel an
existing option in whole or in part and grant the option holder another option
for such number of shares as the Committee specifies. The Committee may at any
time or times amend the Plan or any outstanding option for the purpose of
satisfying the requirement of Section 422 of the Code or of any changes in
applicable laws or regulations or for any other purpose which may at the time be
permitted by law, or at any time terminate the Plan as to any further grants of
options, provided that (except to the extent expressly required or permitted
above) no such amendment shall, without the approval of the shareholders of the
Company, (a) increase the maximum number of shares available under the Plan, (b)
change the group of employees eligible to receive options under the Plan, (c)
reduce the price at which incentive options may be granted, (d) extend the time
within which incentive options may be granted, (e) extend the time within which
options may be granted, (f) alter the Plan in such a way that incentive options
already granted hereunder would not be considered incentive stock options under
Section 422 of the Code, or (g) amend the provisions of this Section 10, and no
such amendment shall adversely affect the rights of any option holder (without
his consent) under any option previously granted.
-80-
<PAGE> 1
Exhibit 11
BED BATH & BEYOND INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
August 30, August 25, August 30, August 25,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Weighted average number of shares outstanding 68,802,138 68,424,120 68,715,322 68,308,680
Dilutive effect of common equivalent shares
(stock options) outstanding 2,315,128 2,015,567 2,199,134 2,155,964
----------- ----------- ----------- -----------
Weighted average number of shares and dilutive
common equivalent shares (stock options)
outstanding 71,117,266 70,439,687 70,914,456 70,464,644
=========== =========== =========== ===========
Net earnings $19,447,000 $15,105,000 $29,354,000 $22,819,000
=========== =========== =========== ===========
Net earnings per share $ .27 $ .21 $ .41 $ .32
=========== =========== =========== ===========
</TABLE>
-81-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF AUGUST 30, 1997, AND THE CONSOLIDATED STATEMENT
OF EARNINGS FOR THE SIX MONTH PERIOD ENDED AUGUST 30, 1997, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> AUG-30-1997
<CASH> 49,162
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 257,717
<CURRENT-ASSETS> 309,331
<PP&E> 150,234
<DEPRECIATION> (50,548)
<TOTAL-ASSETS> 425,021
<CURRENT-LIABILITIES> 165,658
<BONDS> 0
0
0
<COMMON> 689
<OTHER-SE> 247,304
<TOTAL-LIABILITY-AND-EQUITY> 425,021
<SALES> 480,557
<TOTAL-REVENUES> 480,557
<CGS> 283,699
<TOTAL-COSTS> 283,699
<OTHER-EXPENSES> 149,278
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,141)
<INCOME-PRETAX> 48,721
<INCOME-TAX> 19,367
<INCOME-CONTINUING> 29,354
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,354
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
