FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended: April 27, 1997
Commission File Number: 0-24442
GARDEN RIDGE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3671679
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19411 Atrium Place, Suite 170, Houston, Texas 77084
(Address of principal executive offices) (Zip Code)
(281) 579-7901
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JUNE 10, 1997
- ---------------------------- ----------------------------
Common Stock, $.01 Par Value 17,923,795 shares
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GARDEN RIDGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
January 26, April 27,
ASSETS 1997 1997
- ------ --------- ---------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents ................................... $ 32,494 $ 26,091
Marketable securities ....................................... 5,168 1,986
Accounts receivable ......................................... 1,725 1,838
Inventories ................................................. 43,617 58,554
Deferred income taxes ....................................... 480 480
Prepaid expenses ............................................ 2,950 3,256
Deposits .................................................... 225 74
--------- ---------
Total current assets ................................... 86,659 92,279
PROPERTY AND EQUIPMENT, at cost:
Land held for sale/leaseback ................................ 5,976 2,266
Leasehold improvements ...................................... 16,660 17,493
Furniture and fixtures ...................................... 11,327 12,987
Equipment ................................................... 18,015 20,204
--------- ---------
Total property and equipment .......................... 51,978 52,950
Less - Accumulated depreciation and amortization ............ (11,620) (12,877)
--------- ---------
Net property and equipment ............................ 40,358 40,073
OTHER ASSETS:
Intangibles and deferred charges, net ....................... 10,189 10,001
Other ....................................................... 176 --
--------- ---------
Total assets .......................................... $ 137,382 $ 142,353
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................ $ 15,011 $ 19,991
Accrued liabilities ......................................... 4,377 5,725
Federal income taxes payable ................................ 3,994 2,151
--------- ---------
Total current liabilities ............................. 23,382 27,867
LONG-TERM DEBT AND OTHER, net of current portion ................. 237 237
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, 17,830,764 and 17,832,819 shares outstanding .. 182 182
Paid-in capital ............................................. 92,542 92,558
Retained earnings ........................................... 21,079 21,549
Less - Treasury stock, 356,952 and 356,952 shares, at cost .. (40) (40)
--------- ---------
Total common stockholders' equity .................... 113,763 114,249
--------- ---------
Total liabilities and stockholders' equity ........... $ 137,382 $ 142,353
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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GARDEN RIDGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------------------
April 28, April 27,
1996 1997
----------- -----------
<S> <C> <C>
SALES ......................................................... $ 39,220 $ 59,493
...........
COST OF SALES ................................................. 25,097 38,893
----------- -----------
Gross profit ............................................ 14,123 20,600
OPERATING EXPENSES:
Store operating ........................................... 10,941 17,222
General and administrative ................................ 1,473 2,062
Amortization of intangibles and deferred charges .......... 153 188
Preopening costs .......................................... 691 773
----------- -----------
Total operating expenses ............................... 13,258 20,245
----------- -----------
Income from operations ................................. 865 355
INTEREST INCOME ............................................... 95 391
----------- -----------
Income before income taxes ............................. 960 746
INCOME TAXES .................................................. 374 276
----------- -----------
Net income ............................................ $ 586 $ 470
=========== ===========
INCOME PER COMMON AND COMMON
EQUIVALENT SHARE: ......................................... $ .04 $ .03
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING ..................... 16,404,856 18,354,712
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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GARDEN RIDGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------
April 28, April 27,
1996 1997
------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income .......................................................... $ 586 $ 470
------- --------
Adjustments to reconcile net income to net cash provided by
(used in) operating activities --
Depreciation and amortization of property and equipment .......... 872 1,523
Amortization of intangibles and deferred charges ................. 153 188
(Increase) decrease in assets -
Accounts receivable ........................................... 279 (113)
Notes receivable .............................................. 14 0
Inventories ................................................... (8,469) (14,937)
Prepaid expenses .............................................. (1,037) (306)
Intangibles and deferred charges .............................. (15) 327
Deposits and other ............................................ (3) --
Increase (decrease) in liabilities -
Accounts payable .............................................. 8,192 4,980
Accrued liabilities ........................................... 153 1,348
Federal income taxes payable .................................. (2,677) (1,843)
------- --------
Total adjustments ............................................. (2,538) (8,833)
------- --------
Net cash (used in) operating activities ....................... (1,952) (8,363)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Marketable securities .............................................. -- 3,182
Capital expenditures ................................................ (6,307) (1,238)
------- --------
Net cash provided by (used in) investing activities ........... (6,307) 1,944
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit agreement ......................... 800 --
Purchase of treasury stock .......................................... 37 --
Proceeds from exercise of stock options and warrants ................ 4 --
Net proceeds from sale of common stock .............................. -- 16
------- --------
Net cash provided by (used in) financing activities ........... 841 16
------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS ................................ (7,418) (6,403)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
------- --------
PERIOD ............................................................. 7,544 32,494
======= ========
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............................... $ 126 $ 26,091
======= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for --
Interest ....................................................... $ 27 $ 17
Income taxes ................................................... 3,010 2,051
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
GARDEN RIDGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The accompanying consolidated financial statements have been prepared by
the Company without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Pursuant to such regulations, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. In the opinion of the Company, all adjustments necessary
for the fair presentation of the unaudited results for the periods have been
included. Because of the seasonal nature of the Company's business, results for
such interim periods are not necessarily indicative of the results for the full
year. These interim consolidated financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for fiscal year ended
January 26, 1997.
Earnings per common share and common equivalent share were computed using
the treasury stock method and by dividing net income available to common
stockholders by the weighted average number of shares of common stock of the
Company and common stock equivalents, which consist of warrants and options,
outstanding during the periods.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." The new standard simplifies the computation of earnings per share (EPS)
and increases comparability to international standards. Under SFAS No. 128,
primary EPS is replaced by "Basic" EPS, which excludes dilution and is computed
by dividing income available to common shareholders by the weighted-average
number of common shares outstanding for the period. "Diluted" EPS, which is
computed similarly to fully diluted EPS, reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. Management believes the adaption of
SFAS No. 128 would have no material impact on the Company's EPS.
The Company's Board of Directors approved a 2 to 1 stock split effective
June 28, 1996. All share and per share information in the accompanying
consolidated financial statements and notes have been restated to reflect the
stock split as if it occurred as of the beginning of the earliest period
presented.
2. PUBLIC OFFERING:
The Company completed a secondary public offering of its common stock on
April 30, 1996 (the "Secondary Offering"), pursuant to which the Company sold
2,000,000 shares of Common Stock at the price of $25.88 per share (including
420,000 shares sold pursuant to the exercise of the underwriters' over-allotment
option). Net proceeds of the Secondary Offering, after deducting the
underwriting discount and expenses were approximately $48.7 million. Proceeds
were retained to fund expansion and for general working capital purposes.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company's fiscal year ends on the last Sunday in January in each year
resulting in either a 52 or 53 week year. References to fiscal years by date
refer to the fiscal year ending in that calendar year, for example, "fiscal
1998" refers to the fiscal year ending January 25, 1998.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated income statement
data expressed as a percentage of sales.
<TABLE>
<CAPTION>
Thirteen Weeks Ended
---------------------
April 28, April 27,
1996 1997
-------- --------
<S> <C> <C>
Sales ........................................................... 100.0% 100.0%
Cost of sales ................................................... 64.0 65.4
----- -----
Gross profit ............................................... 36.0 34.6
Operating expenses:
Store operating ............................................ 27.9 28.9
General and administrative ................................. 3.7 3.5
Amortization of intangibles and deferred charges .......... 0.4 0.3
Preopening costs ........................................... 1.8 1.3
----- -----
Income from operations ................................ 2.2 0.6
Interest income ................................................. 0.2 0.7
Income taxes .................................................... (0.9) (0.5)
----- -----
Net income ....................................... 1.5% 0.8%
===== =====
</TABLE>
FIRST QUARTER ENDED APRIL 27, 1997 COMPARED TO FIRST QUARTER ENDED APRIL 28,
1996
Sales in the first quarter of fiscal 1998 increased $20.3 million, or
51.7%, to $59.5 million from $39.2 million in the first quarter of fiscal 1997.
The increase was primarily attributable to (i) the opening of two stores in the
Atlanta area in March 1997, (ii) sales from five stores opened in the second and
third quarter of fiscal 1997 and (iii) the results of a full quarter's sales
volume from the Pineville (Charlotte) and Jacksonville stores which opened in
the first quarter of fiscal 1997. In addition, comparable store sales were 6%
higher than the same period last year.
Gross profit as a percentage of sales decreased to 34.6% in the first
quarter of fiscal 1998 as compared to 36.0% for the comparable period in fiscal
1997. This decrease in gross profit as a percentage of sales was due to an
increased reserve for inventory shrinkage (from 2% to 3% of sales) and higher
buying and occupancy costs.
6
<PAGE>
Store operating expenses increased $6.3 million, or 57.4%, in the first
quarter of fiscal 1998 primarily as a result of the opening of new stores.
General and administrative expenses increased $589,000, or 40.0%, to $2.1
million in the first quarter of fiscal 1998 as compared to $1.5 million in the
first quarter of fiscal 1997. This increase generally related to corporate
personnel additions. General and administrative expenses as a percentage of
sales decreased in the first quarter of fiscal 1998 to 3.5% from 3.7% in the
comparable period of 1997, reflecting the higher level of sales in the first
quarter of fiscal 1998.
Preopening costs of $773,000 in the first quarter of fiscal 1998 relate
to the opening of the two Atlanta stores in March 1997. The Company's policy is
to expense preopening costs in the month a store commences operations.
Interest income was $391,000, or 0.7% of sales in the first quarter of
fiscal 1998, as compared to $95,000, or 0.2% of sales in the comparable period
of 1997. This increase primarily resulted from the investment of the Company's
proceeds from the Secondary Offering and excess cash.
Income taxes were $276,000, representing an effective tax rate of 37.0%
for the first quarter of fiscal 1998, as compared to $374,000, or 39.0% in the
comparable period of fiscal 1997. The Company's lower effective tax rate is
attributable to the Company's geographic expansion resulting in a lower
effective state tax rate.
LIQUIDITY AND CAPITAL RESOURCES
The Company completed a secondary public offering of its common stock on
April 30, 1996 (the "Secondary Offering"), pursuant to which the Company sold
2,000,000 shares of Common Stock at the price of $25.88 per share (including
420,000 shares sold pursuant to the exercise of the underwriters' over-allotment
option). Net proceeds of the Secondary Offering, after deducting the
underwriting discount and expenses were approximately $48.7 million. Proceeds
were retained to fund expansion and for general working capital purposes.
The Company's primary sources of working capital are cash flow from
operations and borrowings under its lines of credit. The Company had working
capital of $64.4 million at April 27, 1997. The Company currently has a $15
million line of credit, with no outstanding borrowings under it. Management
believes the Company has sufficient working capital, cash flow from operating
activities and available unused credit capacity to sustain current growth plans.
7
<PAGE>
GARDEN RIDGE CORPORATION
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed with this report:
3.1 - Restated Certificate of Incorporation of the Company
3.2 - Amended and Restated By-laws of the Company
10.1 - Amended and Restated 1994 Stock Option Plan
10.2 - 1996 Independent Director Stock Option Plan
27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the
Company during the period covered by this
report.
8
<PAGE>
GARDEN RIDGE CORPORATION
SIGNATURE
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.
Date: June 10, 1997 GARDEN RIDGE CORPORATION
(Registrant)
By:/s/Jane L. Arbuthnot
Jane. L. Arbuthnot
Chief Financial Officer
9
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EXHIBIT INDEX
-------------
Exhibit Number Description
- -------------- -----------
3.1 Restated Certificate of Incorporation of the Company
3.2 Amended and Restated By-laws of the Company
10.1 Amended and Restated 1994 Stock Option Plan
10.2 1996 Independent Director Stock Option Plan
27 Financial Data Schedule
10
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
GARDEN RIDGE CORPORATION
Garden Ridge Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation") hereby certifies as follows:
1. The present name of the Corporation is GARDEN RIDGE
CORPORATION, and the date of filing of the original certificate of
incorporation of the Corporation with the Secretary of State of Delaware
is June 30, 1992. The Corporation was originally incorporated under the
name Garden Ridge Pottery Corp.
2. This Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of the
Corporation, as heretofore amended and restated.
3. Pursuant to resolution of the Board of Directors, the
stockholders of the Corporation considered the amendments and the
restatement and duly adopted them by unanimous written consent in
accordance with the applicable provisions of Sections 228, 242 and 245 of
the General Corporation Law of the State of Delaware.
4. The Restated Certificate of Incorporation of the Corporation,
as amended and restated herein, shall read as follows:
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
GARDEN RIDGE CORPORATION
1. NAME. The name of the corporation is GARDEN RIDGE CORPORATION
(hereinafter called the "Corporation").
2. ADDRESS; REGISTERED OFFICE AND AGENT. The address of the Corporation's
registered office is 1013 Centre Road, City of Wilmington, County of New Castle,
State of Delaware; and its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
3. PURPOSES. The purpose of the Corporation is to engage in, carry on and
conduct any lawful act or activity for which corporations may be organized under
the Delaware General Corporation Law ("GCL").
4. SHARES. The total number of shares of stock which the Corporation
shall have authority to issue is Forty-Two Million Five Hundred Thousand
(42,500,000) consisting of (a) Forty Million (40,000,000) shares of Common
Stock, par value $.01 per share (the "Stock"), and (b) Two Million Five Hundred
Thousand (2,500,000) Shares of Preferred Stock, par value $.01 per share (the
"Preferred Stock").
4.1 The Board of Directors is authorized at any time, and from
time to time to divide the Preferred Stock into series to fix and
determine separately for each series any or all of the relative rights
and preferences, to issues shares of any series then or previously
designated, fixed and determined, and to increase or decrease the number
of shares within any series. The relative rights and
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preferences of shares of Preferred Stock may vary between series in any
and all respects. Without limiting the foregoing, each series may vary
from any other series with respect to the following relative rights and
preferences:
(1) the rate of dividend payable with respect to the shares of any
series and the dates, terms and other conditions on which such
dividends shall be payable;
(2) the nature of the dividend payable with respect to shares of any
series as cumulative, non-cumulative or personally cumulative;
(3) the price at and the terms and conditions in which shares may be
redeemed;
(4) the amount payable upon shares in the event of involuntary
liquidation;
(5) the amount payable upon shares in the event of voluntary
liquidation;
(6) sinking fund provisions (if any) for the redemption or purchase of
shares;
(7) the terms and conditions on which shares may be converted if the
shares of any series are issued with the privilege of conversion;
(8) voting rights (including with a number of votes per share, the
matters on which the shares can vote, and the contingencies which
make the voting rights effective); and
(9) repurchase obligations of the corporation with respect to the
shares of any series.
5. ELECTION OF DIRECTORS. The business and affairs of the Corporation
shall be managed by and under the direction of the Board of Directors of the
Corporation. Members of the Board of Directors may be elected either by written
ballot or by voice vote. Any Director, or the entire Board of Directors, may be
removed from office at any time, but only for cause
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<PAGE>
and any only by the affirmative vote of at least 66 2/3% of the shares entitled
to vote in the election of Directors of the Corporation.
6. LIMITATION OF LIABILITY. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (a) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) under Section 174 of the GCL or
(d) for any transaction from which the director derived any improper personal
benefits.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
7. INDEMNIFICATION.
7.1 To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a
party to any threatened, pending or completed action, suit or proceeding
(hereinafter a "Proceeding"), whether civil, criminal, administrative or
investigative, including, without limitation, an action by or in the
right of the Corporation to procure a judgment in its favor, by reason of
the fact that such person, or a person of whom such person is the legal
representative, is or was a director or officer of the Corporation, or is
or was serving in any capacity at the request of the Corporation for any
other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise (an "Other Entity"), against judgments, fines,
penalties, excise taxes, amounts paid in settlement and costs, charges
and expenses
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(including attorneys' fees and disbursements). Persons who are not
directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation to an Other Entity at the request
of the Corporation to the extent the Board at any time specifies that
such persons are entitled to the benefits of this Section 7.
7.2 The Corporation shall, from time to time, reimburse or advance
to any director or officer or other person entitled to indemnification
hereunder the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any
Proceeding, in advance of the final disposition of such Proceeding;
PROVIDED, HOWEVER, that, if required by the GCL, such expenses incurred
by or on behalf of any director or officer or other person may be paid in
advance of the final disposition of a Proceeding only upon receipt by the
Corporation of an undertaking, by or on behalf of such director or
officer (or other person indemnified hereunder), to repay any such amount
so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right of appeal that such
director, officer or other person is not entitled to be indemnified for
such expenses.
7.3 The right to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Section 7 shall not
be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, this Certificate of
Incorporation, the By-laws of the Corporation (the "By-laws"), any
agreement, any vote of stockholders or disinterested directors or
otherwise, both as to
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action in his or her official capacity and as to action in another
capacity while holding such office.
7.4 The right to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Section 7 shall
continue as to a person who has ceased to be a director or officer (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.
7.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of an Other
Entity, against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Section 7, the By-laws or under Section 145 of the GCL or any other
provision of law.
7.6 The provisions of this Section 7 shall be a contract between
the Corporation, on the one hand, and each director and officer who
serves in such capacity at any time while this Section 7 is in effect and
any other person indemnified hereunder, on the other hand, pursuant to
which the Corporation and each such director, officer, or other person
intend to be legally bound. No repeal or modification of this Section 7
shall affect any rights or obligations then existing with respect to any
state of facts then or
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<PAGE>
therefore existing or any proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
7.7 The right to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Section 7 shall be
enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent
jurisdiction. The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on
the Corporation. Neither the failure of the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders)
to have made a determination prior to the commencement of such action
that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the
Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) that such person is not entitled to such
indemnification or reimbursement or advancement of expenses shall
constitute a defense to the action or create a presumption that such
person is not so entitled. Such a person shall also be indemnified for
any expenses incurred in connection with successfully establishing his or
her right to such indemnification or reimbursement or advancement of
expenses, in whole or in part, in any such proceeding.
7.8 Any director or officer of the Corporation serving in any
capacity (a) another corporation of which a majority of the shares
entitled to vote in the election of its directors is held, directly or
indirectly, by the Corporation or (b) any employee
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<PAGE>
benefit plan of the Corporation or any corporation referred to in clause
(a) shall be deemed to be doing so at the request of the Corporation.
7.9 Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 7
may elect to have the right to indemnification or reimbursement or
advancement of expenses interpreted on the basis of the applicable law in
effect at the time of the occurrence of the event or events giving rise
to the applicable Proceeding, to the extent permitted by law, or on the
basis of the applicable law in effect at the time such indemnification or
reimbursement or advancement of expenses is sought. Such election shall
be made, by a notice in writing to the Corporation, at the time
indemnification or reimbursement or advancement of expenses is sought;
PROVIDED, HOWEVER, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be
determined by the law in effect at the time indemnification or
reimbursement or advancement of expenses is sought.
8. ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS. The Board of Directors
may from time to time make, alter or repeal the By-laws by a vote of the
majority of the entire Board of Directors that would be in office if no vacancy
existed, whether or not present at a meeting; PROVIDED, HOWEVER, that any
By-laws made, amended or repealed by the Board of Directors may be amended or
repealed, and any By-laws may be made, by the stockholders of the Corporation by
the affirmative vote of at least 66 2/3% of the shares entitled to vote in the
election of Directors of the Corporation.
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<PAGE>
9. AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION. The Restated
Certificate of Incorporation may be (and may only be) amended by the affirmative
vote of at least 66 2/3% of the issued and outstanding shares of stock of the
Corporation entitled to vote in the election of Directors of the Corporation.
10. SHAREHOLDER ACTION. Any action required or permitted to be taken by
the stockholders of the Corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by a consent in writing
of any such holders.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate
of Incorporation to be signed by Armand Shapiro, its Chairman and Chief
Executive Officer, and Jane L. Arbuthnot, its Secretary, this 4th, day of June,
1997.
By:/s/ARMAND SHAPIRO
Armand Shapiro
Chairman and Chief Executive Officer
Attest:/s/Jane L. Arbuthnot
Jane L. Arbuthnot
Secretary
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AMENDED AND RESTATED BY-LAWS
of
GARDEN RIDGE CORPORATION
(A Delaware Corporation)
---------------------------
ARTICLE 1
DEFINITIONS
-----------
As used in these By-laws, unless the context otherwise requires, the
term:
1.1 "Assistant Secretary" means as Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws means the initial by-laws of the Corporation, as amended
from time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or
restated from time to time.
1.6 "Chairman" means the Chairman of the Board of Directors of the
Corporation.
1.7 "Corporation" means Garden Ridge Corporation.
1.8 "Directors" means directors of the Corporation.
1.9 "Entire Board" means all directors of the Corporation in office,
whether or not present at a meeting of the Board, but disregarding
vacancies.
1.10 "General Corporation Law" means the General Corporation Law of the
State of Delaware, as amended from time to time.
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1.11 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation
Law to the contrary notwithstanding.
1.12 "President" means the President of the Corporation.
1.13 "Secretary" means the Secretary of the Corporation.
1.14 "Stockholders" means stockholders of the Corporation.
1.15 "Treasurer" means the Treasurer of the Corporation.
1.16 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
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2.1 PLACE OF MEETINGS. Every meeting of stockholders shall be held at the
office of the Corporation or at such other place within or without the State of
Delaware as shall be specified or fixed in the notice of such meeting or in the
waiver of notice thereof.
2.2 ANNUAL MEETING. A meeting of stockholders shall be held annually for
the election of Directors and the transaction of other business at such hour and
on such business day in November or as may be determined by the Board and
designated in the notice of meeting.
2.3 DEFERRED MEETING FOR ELECTION OF DIRECTORS, ETC. If the annual
meeting of stockholders for the election of Directors and the transaction of
other business is not held within the months specified in Section 2.2 hereof,
the Board shall call a meeting of stockholders for the election of Directors and
the transaction of other business as soon thereafter as convenient.
2.4 OTHER SPECIAL MEETINGS. A special meeting of stockholders (other than
a special meeting for the election of Directors), unless otherwise prescribed by
statute, may be called at
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any time by the Board or by the President or by the Secretary. At any special
meeting of stockholders only such business may be transacted as is related to
the purpose or purposes of such meeting set forth in the notice thereof given
pursuant to Section 2.6 hereof or in any waiver of notice thereof given pursuant
to Section 2.7 hereof.
2.5 FIXING RECORD DATE. For the purpose of (a) determining the
stockholders entitled (i) to notice of or to vote at any meeting of stockholders
or any adjournment thereof, (ii) to express consent to corporate action in
writing without a meeting, or (iii) to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect to any change, conversion or exchange of stock; or (b) any other lawful
action, the Board may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date was adopted by the Board
and which record date shall not be (x) in the case of clause (a)(i) above, more
than 60 nor less than 10 days before the date of such meeting, (y) in the case
of clause (a)(ii) above, more than 10 days after the date upon which the
resolution fixing the record date was adopted by the Board, and (z) in the case
of clause (a)(iii) or (b) above, more than 60 days prior to such action. If no
such record date is fixed:
2.5.1 the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held;
2.5.2 the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the Board is required under the General Corporation Law,
shall be the first day on which a signed
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written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings
of meetings of stockholders are recorded; and when prior action by the
Board is required under the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the date
on which the Board adopts the resolution taking such prior action; and
2.5.3 the record date for determining stockholders for any purpose
other than those specified in Sections 2.5.1 and 2.5.2 shall be at the
close of business on the day on which the Board adopts the resolution
relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made a provided in this Section 2.5, such
determination shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting. Delivery made to the Corporation's
registered office in accordance with Section 2.5.2 shall be by hand or by
certified or registered mail, return receipt requested.
2.6 NOTICE OF MEETINGS OF STOCKHOLDERS. Except as otherwise provided in
Section 2.5 and 2.7 hereof, whenever under the provisions of any statute, the
Certificate of Incorporation or these By-laws, stockholders are required or
permitted to take any action at a meeting, written notice shall be given stating
the place, date and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. Unless otherwise
provided by any statute, the Certificate of Incorporation or these By-laws, a
copy of the notice of any
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meeting shall be given, personally or by mail, not less than ten nor more than
sixty days before the date of the meeting, to each stockholder entitled to
notice of or to vote at such meeting. If mailed, such notice shall be deemed to
be given when deposited in the United States mail, with postage prepaid,
directed to the stockholder at his or her address as it appears on the records
of the Corporation. An affidavit of the Secretary or an Assistant Secretary or
of the transfer agent of the Corporation that the notice required by this
Section 2.6 has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken,
and at the adjourned meeting any business may be transacted that might have been
transacted at the meeting as originally called. If, however, the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.7 WAIVERS OF NOTICE. Whenever the giving of any notice is required by
statute, the Certificate of Incorporation or these By-laws, a waiver thereof, in
writing, signed by the stockholder or stockholders entitled to said notice,
whether before or after the event as to which such notice is required, shall be
deemed equivalent to notice. Attendance by a stockholder at a meeting shall
constitute a waiver or notice of such meeting except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special
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meeting of the stockholders need be specified in any written waiver of notice
unless no required by statute, the Certificate of Incorporation or these
By-laws.
2.8 LIST OF STOCKHOLDERS. The Secretary shall prepare and make, or cause
to be prepared and made, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, the stockholder's agent or attorney, at the
stockholder's expense, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The Corporation shall maintain the
stockholder list in written form or in another form capable of conversion into
written form within a reasonable time. Upon the willful neglect or refusal of
the Directors to produce such a list at any meeting for the election of
Directors, they shall be ineligible for election to any office at such meeting.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list of stockholders or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
2.9 QUORUM OF STOCKHOLDERS; ADJOURNMENT. Except as otherwise provided by
any statute, the Certificate of Incorporation or these By-laws, the holders of
one-third of all outstanding shares of stock entitled to vote at any meeting of
stockholders, present in person or
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represented by proxy, shall constitute a quorum for the transaction of any
business at such meeting. When a quorum is once present to organize a meeting of
stockholders, it is not broken by the subsequent withdrawal of any stockholders.
The holders of a majority of the shares of stock present in person or
represented by proxy at any meeting of stockholders, including an adjourned
meeting, whether or not a quorum is present, may adjourn such meeting to another
time and place. Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; PROVIDED, HOWEVER, that the foregoing shall not limit the right of the
Corporation to vote stock including but not limited to its own stock, held by it
in a fiduciary capacity.
2.10 VOTING; PROXIES. Unless otherwise provided in the Certificate of
Incorporation, every stockholder of record shall be entitled at every meeting of
stockholders to one vote for each share of capital stock standing in his or her
name on the record of stockholders determined in accordance with Section 2.5
hereof. If the Certificate of Incorporation provides for more or less than one
vote for any share on any matter, each reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of such stock. The provisions of
Section 212 and 217 of the General Corporation Law shall apply in determining
whether any shares of capital stock may be voted and the persons, if any,
entitled to vote such shares; but the Corporation shall be protected in assuming
that the persons in whose names shares of capital stock stand on the stock
ledger of the Corporation are entitled to vote such shares. Holders of
redeemable shares of stock are not
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entitled to vote after the notice of redemption is mailed to such holders and a
sum sufficient to redeem the stock has been deposited with a bank, trust
company, or other financial institution under an irrevocable obligation to pay
the holders the redemption price on surrender of the shares of stock. At any
meeting of stockholders (at which a quorum was present to organize the meeting),
all matters, except as otherwise provided by statute or by the Certificate or
Incorporation or by these By-laws, shall be decided by a majority of the votes
cast at such meeting by the holders of shares present in person or represented
by proxy and entitled to vote thereon, whether or not a quorum is present when
the vote is taken. All elections of Directors shall be by written ballot unless
otherwise provided in the Certificate of Incorporation. In voting on any other
question on which a vote by ballot is required by law or is demanded by any
stockholder entitled to vote, the voting shall be by ballot. Each ballot shall
be signed by the stockholder voting or the stockholder's proxy and shall state
the number of shares voted. On all other questions, the voting may be VIVA VOCE.
Each stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by proxy. The
validity and enforceability of any proxy shall be determined in accordance with
Section 212 of the General Corporation Law. A stockholder may revoke any proxy
that is not irrevocable by attending the meeting and voting in person or by
filing an instrument in writing revoking the proxy or by delivering a proxy in
accordance with applicable law bearing a later date to the Secretary.
2.11 VOTING PROCEDURES AND INSPECTORS OF ELECTION AT MEETINGS OF
STOCKHOLDERS. The Board, in advance of any meeting of stockholders, may appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Board may designate one or more persons
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as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting, the person presiding at the
meeting may appoint, and on the request of any stockholder entitled to vote
thereat shall appoint, one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his or her duties, shall take
and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best or his or her ability. The inspectors
shall (a) ascertain the number of shares outstanding and the voting power of
each, (b) determine the shares represented at the meeting and the validity of
proxies and ballots, (c) count all votes and ballots, (d) determine and retain
for a reasonable period a record of the disposition of any challenges made to
any determination by the inspectors, and (e) certify their determination of the
number of shares represented at the meeting and their count of all votes and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of their duties. Unless otherwise
provided by the Board, the date and time of the opening and the closing of the
polls for each matter upon which the stockholder will vote at a meeting shall be
determined by the person presiding at the meeting and shall be announced at the
meeting. No ballot, proxies or votes, or any revocation thereof or change
thereto, shall be accepted by the inspectors after the closing of the polls
unless the Court of Chancery of the State of Delaware upon application by a
stockholder shall determine otherwise.
2.12 ORGANIZATION. At each meeting of stockholders, the Chairman, or in
the absence of the Chairman the President, or in the absence of the President a
Vice President, and in case more than one Vice President shall be present, that
Vice President designated by the Board (or in the absence of any such
designation, the most senior Vice President, based on age, present),
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shall act as chairman of the meeting. The Secretary, or in his or her absence
one of the Assistant Secretaries, shall act as secretary of the meeting. In case
none of the officers above designated to act as chairman or secretary of the
meeting, respectively, shall be present, a chairman or a secretary of the
meeting, as the case may be, shall be chosen by a majority of the votes cast at
such meeting by the holders of shares of capital stock present in person or
represented by proxy and entitled to vote at the meeting.
2.13 ORDER OF BUSINESS. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes case at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 NOTICE OF STOCKHOLDER NOMINATIONS OF DIRECTORS. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as Directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of the stockholders by or
at the direction of the Board of Directors, by any nominating committee or
person appointed by the Board of Directors or by any stockholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section 2.14. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than fifty (50) days nor more than seventy-five (75) days prior to the
meeting; provided,
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however, that in the event that less than sixty-five (65) 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 so received not later than the
close of business on the fifteenth (15th) day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
The stockholder's notice to the Secretary shall set forth (a) as to each
proposed nominee for election or reelection as a Director, (i) the name, age,
business address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class and number of shares of
the capital stock of the Corporation which are beneficially owned by the person
and (iv) any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of Directors pursuant to
Schedule 14A under the Securities Exchange Act of 1934, as amended; and (b) as
to the stockholder giving the notice (i) the name and record address of the
stockholder and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder. The Corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the Corporation to determine the eligibility of such proposed
nominee to serve as Director of the Corporation. No person shall be eligible for
election as a Director of the Corporation unless nominated in accordance with
the procedures set forth herein. The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he or she should so determine,
he or she shall so declare to the meeting and the defective nomination shall be
disregarded.
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2.15 NOTICE OF STOCKHOLDER PROPOSALS AND OTHER MATTERS. At an annual
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual meeting, business must be specified in the notice of the meeting (or any
supplement) given by or at the direction of the Board of Directors, otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or otherwise properly brought before the meeting by a stockholder. In
addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation, not less than fifty (50)
days nor more than seventy-five (75) days prior to the meeting; provided,
however, that in the event that less than sixty-five (65) days' notice or prior
public disclosure of the date of the meeting is given or made to the
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the fifteenth (15th) day following the day
on which such notice of the date of the annual meeting or such public disclosure
was made. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
record address of the stockholder proposing such business, (c) the class and
number of shares of the Corporation which are beneficially owned by the
stockholder, and (d) any material interest of the stockholder in such business.
Notwithstanding anything in the By-laws to the contrary, no business shall be
conducted at the
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annual meeting except in accordance with the procedures set forth in this
Section 2.15. The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 2.15, and
if he or she should so determine, he or she shall so declare to the meeting and
any such business not properly brought before the meeting shall not be
transacted.
ARTICLE 3
DIRECTORS
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3.1 GENERAL POWERS. Except as otherwise provided in the Certificate of
Incorporation, the business and affairs of the Corporation shall be managed by
or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these
By-laws or applicable laws, as it may deem proper for the conduct of its meeting
and the management of the Corporation. In addition to the powers expressly
conferred by these By-laws, the Board may exercise all powers and perform all
acts that are not required by these By-laws or the Certificate of Incorporation
or by statute to be exercised and performed by the stockholders.
3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. The Board shall consist of one
or more members. The number of Directors may only be altered by an affirmative
vote of the majority of the Board. Directors need not be stockholders. Each
Director shall hold office until a successor is elected and qualified or until
the Director's death, resignation or removal.
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3.3 ELECTION. Directors shall, except as otherwise required by statute or
by the Certificate of Incorporation, be elected by a plurality of the votes cast
at a meeting of stockholders by the holders of shares entitled to vote in the
election.
3.4 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Unless otherwise provided
in the Certificate of Incorporation, newly created directorships resulting from
an increase in the number of Directors and vacancies occurring in the Board for
any other reason may only be filled by the affirmative votes of a majority of
the entire Board, although less than a quorum, or by a sole remaining Director.
A Director elected to fill a vacancy shall be elected to hold office until a
successor is elected and qualified, or until the Director's earlier death,
resignation or removal.
3.5 RESIGNATION. Any Director may resign at any time by written notice to
the Corporation. Such resignation shall take effect at the time therein
specified, and, unless otherwise specified in such resignation, the acceptance
of such resignation shall not be necessary to make it effective.
3.6 REMOVAL. Any Director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of at least 66 2/3% of the shares entitled to vote in the
election of Directors.
3.7 COMPENSATION. Each Director, in consideration of his or her service
as such, shall be entitled to receive from the Corporation such amount per annum
or such fees for attendance at Directors' meetings, or both, as the Board may
from time to time determine, together with reimbursement for the reasonable
out-of-pocket expenses, if any, incurred by such Director in connection with the
performance of his or her duties. Each Director who shall serve as a
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member of any committee of Directors in consideration of serving as such shall
be entitled to such additional amount per annum or such fees for attendance at
committee meetings, or both, as the Board may from time to time determine,
together with reimbursement for the reasonable out-of-pocket expenses, if any,
incurred by such Director in the performance of his or her duties. Nothing
contained in this Section 3.7 shall preclude any Director from serving the
Corporation or its subsidiaries in any other capacity and receiving proper
compensation therefor.
3.8 TIMES AND PLACES OF MEETINGS. The Board may hold meetings, both
regular and special, either within or without the State of Delaware. The times
and places for holding meetings of the Board may be fixed from time to time by
resolution of the Board or (unless contrary to a resolution of the Board) in the
notice of the meeting.
3.9 ANNUAL MEETINGS. On the day when and at the place where the annual
meeting of stockholders for the election of Directors is held, and as soon as
practicable thereafter, the Board may hold its annual meeting, without notice of
such meeting, for the purposes of organization, the election of officers and the
transaction of other business. The annual meeting of the Board may be held at
any other time and place specified in a notice given as provided in Section 3.11
hereof for special meetings of the Board or in a waiver of notice thereof.
3.10 REGULAR MEETINGS. Regular meetings of the Board may be held without
notice at such times and at such places as shall from time to time be determined
by the Board.
3.11 SPECIAL MEETINGS. Special meetings of the Board may be called by the
Chairman, the President or the Secretary or by any two or more Directors then
serving on at least one day's notice to each Director given by one of the means
specified in Section 3.14 hereof other than by mail, or on at least three days'
notice if given by mail. Special meetings shall be called by
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the Chairman, President or Secretary in like manner and on like notice on the
written request of any two or more of the Directors then serving.
3.12 TELEPHONE MEETINGS. Directors or members of any committee
designated by the Board may participate in a meeting of the Board or of such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 3.12 shall constitute
presence in person at such meeting.
3.13 ADJOURNED MEETINGS. A majority of the Directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. At least one day's
notice of any adjourned meeting of the Board shall be given to each Director
whether or not present at the time of the adjournment, if such notice shall be
given by one of the means specified in Section 3.14 hereof other than by mail,
or at least three days' notice if by mail. Any business may be transacted at an
adjourned meeting that might have been transacted at the meeting as originally
called.
3.14 NOTICE PROCEDURE. Subject to Sections 3.11 and 3.17 hereof,
whenever, under the provisions of any statue, the Certificate of Incorporation
or these By-laws, notice is required to be given to any Director, such notice
shall be deemed given effectively if given in person or by telephone, by mail
addressed to such Director at such Director's address as it appears on the
records of the Corporation, with postage thereon prepaid, or by telegram, telex,
telecopy or similar means addressed as aforesaid.
3.15 WAIVER OF NOTICE. Whenever the giving of any notice is required by
statue, the Certificate of Incorporation or these By-laws, a waiver thereof, in
writing, signed by the person
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or persons entitled to said notice, whether before or after the event as to
which such notice is required, shall be deemed equivalent to notice. Attendance
by a person at a meeting shall constitute a waiver of notice of such meeting
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business on the
ground that the meeting has not been lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Directors or a committee of Directors need be specified in any written
waiver of notice unless so required by statute, the Certificate of Incorporation
or these By-laws.
3.16 ORGANIZATION. At each meeting of the Board, the Chairman, or in the
absence of the Chairman the President, or in the absence of the President a
chairman chosen by a majority of the Directors present, shall preside. The
Secretary shall act as secretary at each meeting of the Board. In case the
Secretary shall be absent from any meeting of the Board, an Assistant Secretary
shall perform the duties of secretary at such meeting; and in the absence from
any such meeting of the Secretary and all Assistant Secretaries, the person
presiding at the meeting may appoint any person to act as secretary of the
meeting.
3.17 QUORUM OF DIRECTORS. The presence in person of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business at any meeting of the Board, but a majority of a smaller
number may adjourn any such meeting to a later date.
3.18 ACTION BY MAJORITY VOTE. Except as otherwise expressly required by
statute, the Certificate of Incorporation or these By-laws, the act of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board.
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3.19 ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if all Directors or members of such committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
3.20 CHANGE OF CONTROL TRANSACTIONS. In the event the Corporation is the
target of an unsolicited tender offer, proxy fight or other proposed transaction
involving the change of control of the Corporation ("Change of Control
Transaction"), the Board of Directors is authorized to consider the interests of
its stockholders and, in its sole discretion, the interests of certain
non-stockholder constituencies, in responding to any such Change of Control
Transaction.
ARTICLE 4
COMMITTEES OF THE BOARD
-----------------------
The Board may, by resolution passed by a vote of the entire Board,
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation. The Board may designate one or more Directors
as alternate members of any committee to replace absent or disqualified members
at any meeting of such committee. If a member of a committee shall be absent
from any meeting, or disqualified from voting thereat, the remaining member or
members present and not disqualified from voting, whether or not such member or
members constitute a quorum, may, by a unanimous vote, appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified
member. Any such
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committee, to the extent provided in a resolution of the Board passed as
aforesaid, shall have and may exercise all the powers and authority of the Board
in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be impressed on all papers that may
require it, but no such committee shall have the power or authority of the Board
in reference to amending the Certificate of Incorporation, adopting an agreement
of merger or consolidation under Section 251 or 252 of the General Corporation
Law, selling, leasing or exchanging all or substantially all of the
Corporation's property and assets, dissolving or revoking the dissolution of the
Corporation or amending the By-laws of the Corporation; and, unless the
resolution designating it expressly so provides, no such committee shall have
the power and authority to declare a dividend, to authorize the issuance of
stock or to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board. Unless otherwise specified in the resolution of the Board designating
a committee, at all meetings of such committee a majority of the total number of
members of the committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members of the committee present at
any meeting at which there is a quorum shall be the act of the committee. Each
committee shall keep regular minutes of its meetings. Unless the Board otherwise
provides, each committee designated by the Board may make, alter and repeal
rules for the conduct of its business. In the absence of such rules each
committee shall conduct its business in the same manner as the Board conducts
its business pursuant to Article 3 of these By-laws.
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ARTICLE 5
OFFICERS
--------
5.1 POSITIONS. The officers of the Corporation shall be a Chairman, a
President, a Secretary, a Treasurer and such other officers as the Board may
appoint, including one or more Vice Presidents and one or more Assistant
Secretaries and Assistant Treasurers, who shall exercise such powers and perform
such duties as shall be determined from time to time by the Board. The Board may
designate one or more Vice Presidents as Executive Vice Presidents and may use
descriptive words or phrases to designate the standing, seniority or areas of
special competence of the Vice Presidents elected or appointed by it. Any number
of offices may be held by the same person unless the Certificate of
Incorporation or these by-laws otherwise provide.
5.2 APPOINTMENT. The officers of the Corporation shall be chosen by the
Board annually or at such other time or times as the Board shall determine.
5.3 COMPENSATION. The compensation of all officers of the Corporation
shall be fixed by the Board. No officer shall be prevented from receiving a
salary or other compensation by reason of the fact that the officer is also a
Director.
5.4 TERM OF OFFICE. Each officer of the Corporation shall hold office
until such officer's successor is chosen and qualifies or until such officer's
earlier death, resignation or removal. Any officer may resign at any time upon
written notice to the Corporation. Such resignation shall take effect at the
date of receipt of such notice or at such later time as is therein specified,
and, unless otherwise specified, the acceptance of such resignation shall not be
necessary to make it effective. The resignation of an officer shall be without
prejudice to the
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contract rights of the Corporation, if any. Any officer elected or appointed by
the Board may be removed a any time, with or without cause, by vote of a
majority of the entire Board. Any vacancy occurring in any office of the
Corporation shall be filled by the Board. The removal of an officer without
cause shall be without prejudice to the officer's contract rights, if any. The
election or appointment of an officer shall not of itself create contract
rights.
5.5 FIDELITY BONDS. The Corporation may secure the fidelity of any or all
of its officers or agents by bond or otherwise.
5.6 CHAIRMAN. The Chairman shall preside at all meetings of the Board and
shall exercise such powers and perform such other duties as shall be determined
from time to time by the Board. The Chairman shall be the Chief Executive
Officer of the Corporation and shall have general supervision over the business
of the Corporation, subject, however, to the control of the Board and of any
duly authorized committee of Directors. The Chairman may sign and execute in the
name of the Corporation deeds, mortgages, bonds, contracts and other instruments
except in cases in which the signing and execution thereof shall be expressly
delegated by the Board or by these By-laws to some other officer or agent of the
Corporation or shall be required by statute otherwise to be signed or executed
and, in general, the Chairman shall perform all duties incident to the office of
Chairman of a corporation and such other duties as may from time to time be
assigned to the Chairman by the Board.
5.7 PRESIDENT. The President shall be the Chief Operating Officer of the
Corporation. The President shall preside at all meetings of the stockholders and
at all meetings of the Board at which the Chairman is not present. The President
may sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts and other instruments except in cases in which
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the signing and execution thereof shall be expressly delegated by the Board or
by these By-laws to some other officer or agent of the Corporation or shall be
required by statute otherwise to be signed or executed and, in general, the
President shall perform all duties incident to the office of President of a
corporation and such other duties as may from time to time be assigned to the
President by the Board.
5.8 VICE PRESIDENTS. At the request of the President, or, in the
President's absence, at the request of the Board, the Vice Presidents shall (in
such order as may be designated by the Board or, in the absence of any such
designation, in order of seniority based on age) perform all of the duties of
the President and, in so performing, shall have all the powers of, and be
subject to all restrictions upon, the President. Any Vice President may sign and
execute in the name of the Corporation deeds, mortgages, bonds, contracts or
other instruments, except in cases in which the signing and execution thereof
shall be expressly delegated by the Board or by these By-laws to some other
officer or agent of the Corporation, or shall be required by statute otherwise
to be signed or executed, and each Vice President shall perform such other
duties as from time to time may be assigned to such Vice President by the Board
or by the President.
5.9 SECRETARY. The Secretary shall attend all meetings of the Board and
of the stockholders and shall record all the proceedings of the meetings of the
Board and of the stockholders in a book to be kept for that purpose, and shall
perform like duties for committees of the Board, when required. The Secretary
shall give, or cause to be given, notice of all special meetings of the Board
and of the stockholders and shall perform such other duties as may be prescribed
by the Board or by the President, under whose supervision the Secretary shall
be.
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The Secretary shall have custody of the corporate seal of the Corporation, and
the Secretary, or an Assistant Secretary, shall have authority to impress the
same on any instrument requiring it, and when so impressed the seal may be
attested by the signature of the Secretary or by the signature of such Assistant
Secretary. The Board may give general authority to any other officer to impress
the seal of the Corporation and to attest the same by such officer's signature.
The Secretary or an Assistant Secretary may also attest all instruments signed
by the President or any Vice President. The Secretary shall have charge of all
the books, records and papers of the Corporation relating to its organization
and management, shall see that the reports, statements and other documents
required by statute are properly kept and filed and, in general, shall perform
all duties incident to the office of Secretary of a corporation and such other
duties as may from time to time be assigned to the Secretary by the Board or by
the President.
5.10 TREASURER. The Treasurer shall have charge and custody of, and be
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositaries as may be designated by the
Board; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized depositaries of the Corporation signed in such manner
as shall be determined by the Board and be responsible for the accuracy of the
amounts of all moneys so disbursed; regularly enter or cause to be entered in
books or other records maintained for the purpose full and adequate account of
all moneys received or paid for the account of the Corporation; have the right
to require from time to time reports or statements giving such information as
the Treasurer may desire with respect to any and all financial transactions of
the
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Corporation from the officers or agents transacting the same; render to the
President or the Board, whenever the President or the Board shall require the
Treasurer so to do, an account of the financial condition of the Corporation and
of all financial transactions of the Corporation; exhibit at all reasonable
times the records and books of account to any of the Directors upon application
at the office of the Corporation where such records and books are kept; disburse
the funds of the Corporation as ordered by the Board; and, in general, perform
all duties incident to the office of Treasurer of a corporation and such other
duties as may from time to time be assigned to the Treasurer by the Board or the
President.
5.11 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by the
Board or by the President.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
----------------------------------------------
6.1 EXECUTION OF CONTRACTS. The Board, except as otherwise provided in
these Bylaws, may prospectively or retroactively authorize any officer or
officers, employee or employees or agent or agents, in the name and on behalf of
the Corporation, to enter into any contract or execute and deliver any
instrument, and any such authority may be general or confined to specific
instances, or otherwise limited.
6.2 LOANS. The Board may prospectively or retroactively authorize the
President or any other officer, employee or agent of the Corporation to effect
loans and advances at any time for the Corporation from any bank, trust company
or other institution, or from any firm,
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corporation or individual, and for such loans and advances the person so
authorized may make, execute and deliver promissory notes, bonds or other
certificates or evidences of indebtedness of the Corporation, and, when
authorized by the Board so to do, may pledge and hypothecate or transfer any
securities or other property of the Corporation as security for any such loans
or advances. Such authority conferred by the Board may be general or confined to
specific instances, or otherwise limited.
6.3 CHECKS, DRAFTS, ETC. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all evidences of
indebtedness of the Corporation shall be signed on behalf of the Corporation in
such manner as shall from time to time be determined by resolution of the Board.
6.4 DEPOSITS. The funds of the Corporation not otherwise employed shall
be deposited from time to time to the order of the Corporation with such banks,
trust companies, investment banking firms, financial institutions or other
depositaries as the Board may select or as may be selected by an officer,
employee or agent of the Corporation to whom such power to select may from time
to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
-------------------
7.1 CERTIFICATES REPRESENTING SHARES. The shares of capital stock of the
Corporation shall be represented by certificates in such form (consistent with
the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the Chairman, the
President or a Vice President and by the Secretary or an Assistant
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Secretary or the Treasurer or an Assistant Treasurer, and may be impressed with
the seal of the Corporation or a facsimile thereof. The signatures of the
officers upon a certificate may be facsimiles, if the certificate is
countersigned by a transfer agent or registrar other than the Corporation itself
or its employee. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon any certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, such certificate may, unless otherwise ordered by the Board, be
issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
7.2 TRANSFER OF SHARES. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by the holder's duly authorized attorney appointed by a power of
attorney duly executed and filed with the Secretary or a transfer agent of the
Corporation, and on surrender of the certificate or certificates representing
such shares of capital stock properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged, returned or
surrendered to the Corporation shall be marked "Cancelled," with the date of
cancellation, by the Secretary or an Assistant Secretary or the transfer agent
of the Corporation. A person in whose name shares of capital stock shall stand
on the books of the Corporation shall be deemed the owner thereof to receive
dividends, to vote as such owner and for all other purposes as respects the
Corporation. No transfer of shares of capital stock shall be valid as against
the Corporation, its stockholders and creditors for any purpose, except to
render the transferee liable for the debts of the Corporation to the extent
provided by law, until such transfer shall have been entered on the books of the
Corporation by an entry showing from and to whom transferred.
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7.3 TRANSFER AND REGISTRY AGENTS. The Corporation may from time to time
maintain one or more transfer offices or agents and registry offices or agents
at such place or places as may be determined from time to time by the Board.
7.4 LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. The holder of any
shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen or
mutilated certificate, or his or her legal representatives, to make proof
satisfactory to the Board of such loss, destruction, theft or mutilation and to
advertise such fact in such manner as the Board may require, and to give the
Corporation and its transfer agents and registrars, or such of them as the Board
may require, a bond in such form, in such sums and with such surety or sureties
as the Board may direct, to indemnify the Corporation an its transfer agents and
registrars against any claim that may be made against any of them on account of
the continued existence of any such certificate so alleged to have been lost,
destroyed, stolen or mutilated and against any expense in connection with such
claim.
7.5 RULES AND REGULATIONS. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these By-laws or with the
Certificate of Incorporation, concerning the issue, transfer and registration of
certificates representing shares of its capital stock.
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7.6 RESTRICTION ON TRANSFER OF STOCK. A written restriction on the
transfer or registration of transfer of capital stock of the Corporation, if
permitted by Section 202 of the General Corporation Law and noted conspicuously
on the certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder, including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like responsibility for the person or estate of the
holder. Unless noted conspicuously on the certificate representing such capital
stock, a restriction, even though permitted by Section 202 of the General
Corporation Law, shall be ineffective except against a person with actual
knowledge of the restriction. A restriction on the transfer or registration of
transfer of capital stock of the Corporation may be imposed either by the
Certificate of Incorporation or by an agreement among any number of stockholders
or among such stockholders and the Corporation. No restriction so imposed shall
be binding with respect to capital stock issued prior to the adoption of the
restriction unless the holders of such capital stock are parties to an agreement
or voted in favor of the restriction.
7.7 DIVIDENDS, SURPLUS, ETC. Subject to the provisions of the Certificate
of Incorporation and of law, the Board:
7.7.1 may declare and pay dividends or make other distributions on
the outstanding shares of capital stock in such amounts and at such time
or times as it, in its discretion, shall deem advisable giving due
consideration to the condition of the affairs of the Corporation;
7.7.2 may use and apply, in its discretion, any of the surplus of
the Corporation in purchasing or acquiring any shares of capital stock of
the Corporation, or purchase
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warrants therefor, in accordance with law, or any of its bonds,
debentures, notes, scrip or other securities or evidences of
indebtedness; and
7.7.3 may set aside from time to time out of such surplus or net
profits such sum or sums as, in its discretion, it may think proper, as a
reserve fund to meet contingencies, or for equalizing dividends or for
the purpose of maintaining or increasing the property or business of the
Corporation, or for any purpose it may think conducive to the best
interests of the Corporation.
ARTICLE 8
IDENTIFICATION
--------------
8.1 INDEMNITY UNDERTAKING. To the extent not prohibited by law, the
Corporation shall indemnify any person who is or was made, or threatened to be
made, a party to any threatened, pending or completed action, suit or proceeding
(a "Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a Director or
officer of the Corporation, or is or was serving in any capacity at the request
of the Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees and disbursements). Persons who
are not Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request of
the Corporation to
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the extent the Board at any time specifies that such persons are entitled to the
benefits of this Section 8.
8.2 ADVANCEMENT OF EXPENSES. The Corporation shall, from time to time,
reimburse or advance to any Director or officer or other person entitled to
indemnification hereunder the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding,
in advance of the final disposition of such Proceeding; PROVIDED, HOWEVER, that,
if required by the General Corporation Law, such expenses incurred by or on
behalf of any Director or officer or other person may be paid in advance of the
final disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such Director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such Director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 RIGHTS NOT EXCLUSIVE. The rights to indemnification and reimbursement
or advancement of expenses provided by or granted pursuant to, this Section 8
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, the Certificate of Incorporation, these
By-laws, any agreement, any vote of stockholders or disinterested Directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office.
8.4 CONTINUATION OF BENEFITS. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Section 8 shall continue as
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to a person who has ceased to be a Director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
8.5 INSURANCE. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 8, the Certificate of Incorporation or
under Section 145 of the General Corporation Law or any other provision of law.
8.6 BINDING EFFECT. The provisions of this Section 8 shall be a contract
between the Corporation, on the one hand, and each Director and officer who
serves in such capacity at any time while this Section 8 is in effect and any
other person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such Director, officer or other person intend to be legally
bound. No repeal or modification of this Section 8 shall affect any rights or
obligations with respect to any state of facts then or theretofore existing or
thereafter arising or any proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
8.7 PROCEDURAL RIGHTS. The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses
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in any court of competent jurisdiction. The burden of proving that such
indemnification or reimbursement or advancement of expenses is not appropriate
shall be on the Corporation. Neither the failure of the Corporation (including
its Board of Directors, its independent legal counsel and its stockholders) to
have made a determination prior to the commencement of such action that such
indemnification or reimbursement or advancement of expenses is proper in the
circumstances nor an actual determination by the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) that
such person is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a
presumption that such person is not so entitled. Such a person shall also be
indemnified for any expenses incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
8.8 SERVICE DEEMED AT CORPORATION'S REQUEST. Any Director or officer of
the Corporation serving in any capacity (a) another corporation of which a
majority of the shares entitled to vote in the election of its directors is
held, directly or indirectly, by the Corporation or (b) any employee benefit
plan of the Corporation or any corporation referred to in clause (a) shall be
deemed to be doing so at the request of the Corporation.
8.9 ELECTION OF APPLICABLE LAW. Any person entitled to be indemnified or
to reimbursement or advancement of expenses as a matter of right pursuant to
this Section 8 may elect to have the right to indemnification or reimbursement
or advancement of expenses interpreted on the basis of the applicable law in
effect at the time of the occurrence of the event or events giving rise to the
applicable Proceeding, to the extent permitted by law, or on the basis
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of the applicable law in effect at the time such indemnification or
reimbursement or advancement of expenses is sought. Such election shall be made,
by a notice in writing to the Corporation, at the time indemnification or
reimbursement or advancement of expenses is sought; PROVIDED, HOWEVER, that if
no such notice is given, the right to indemnification or reimbursement or
advancement of expenses shall be determined by the law in effect at the time
indemnification or reimbursement or advancement of expenses is sought.
ARTICLE 9
BOOKS AND RECORDS
-----------------
9.1 BOOKS AND RECORDS. There shall be kept at the principal office of the
Corporation correct and complete records and books of account recording the
financial transactions of the Corporation and minutes of the proceedings of the
stockholders, the Board and any committee of the Board. The Corporation shall
keep at its principal office, or at the office of the transfer agent or
registrar of the Corporation, a record containing the names and addresses of all
stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 FORM OF RECORDS. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into clearly legible written
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
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9.3 INSPECTION OF BOOKS AND RECORDS. Except as otherwise provided by law,
the Board shall determine from time to time whether, and, if allowed, when and
under what conditions and regulations, the accounts, books, minutes and other
records of the Corporation, or any of them, shall be open to the stockholders
for inspection.
ARTICLE 10
SEAL
----
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be fixed, and may be changed, by
resolution of the Board.
ARTICLE 12
PROXIES AND CONSENTS
--------------------
Unless otherwise directed by the Board, the Chairman, the President, any
Vice President, the Secretary or the Treasurer, or any one of them, may execute
and deliver on behalf of the Corporation proxies respecting any and all shares
or other ownership interests of any Other Entity owned by the Corporation
appointing such person or persons as the officer executing the
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same shall deem proper to represent and vote the shares or other ownership
interests so owned at any and all meetings of holders of shares or other
ownership interests, whether general or special, and/or to execute and deliver
consents respecting such shares or other ownership interests; or any of the
aforesaid officers may attend any meeting of the holders of shares or other
ownership interests of such Other Entity and thereat vote or exercise any or all
other powers of the Corporation as the holder of such shares or other ownership
interests.
ARTICLE 13
EMERGENCY BY-LAWS
-----------------
Unless the Certificate of Incorporation provides otherwise, the following
provisions of this Article 13 shall be effective during an emergency, which is
defined as when a quorum of the Corporation's Directors cannot be readily
assembled because of some catastrophic event. During such emergency:
13.1 NOTICE TO BOARD MEMBERS. Any one member of the Board or any one of
the following officers: Chairman, President, any Vice President, Secretary, or
Treasurer, may call a meeting of the Board. Notice of such meeting need be given
only to those Directors whom it is practicable to reach, and may be given in any
practical manner, including by publication and radio. Such notice shall be given
at least six hours prior to commencement of the meeting.
13.2 TEMPORARY DIRECTORS AND QUORUM. One or more officers of the
Corporation present at the emergency Board meeting, as is necessary to achieve a
quorum, shall be considered to be Directors for the meeting, and shall so serve
in order of rank, and within the same rank, in order of seniority. In the event
that less than a quorum of the Directors are
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present (including any officers who are to serve as Directors for the meeting),
those Directors present (including the officers serving as Directors) shall
constitute a quorum.
13.3 ACTIONS PERMITTED TO BE TAKEN. The Board as constituted in Section
13.2, and after Notice as set forth in Section 13.1 may:
13.3.1 prescribe emergency powers to any officer of the
Corporation; 13.3.2 delegate to any officer or Director, any of the
powers of the Board; 13.3.3 designate lines of succession of officers and
agents, in the event that any of them are unable to discharge their
duties;
13.3.4 relocate the principal place of business, or designate
successive or simultaneous principal places of business; and
13.3.5 take any other convenient, helpful or necessary action to
carry on the business of the Corporation.
ARTICLE 14
AMENDMENTS
----------
These By-laws may be altered, amended or repealed and new By-laws may be
adopted by the vote of a majority of the Board of Directors or by an affirmative
vote of the holders of 66 2/3% of the shares entitled to vote in the election of
Directors. Any By-laws adopted, altered or amended by the Board may be altered,
amended or repealed by the stockholders entitled to vote thereon only to the
extent and in the manner provided in the Certificate of Incorporation and these
By-laws.
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GARDEN RIDGE CORPORATION
AMENDED AND RESTATED
1994 STOCK OPTION PLAN
Effective June 3, 1997
ARTICLE I
---------
PURPOSE
The purpose of this Amended and Restated 1994 Stock Option Plan (the
"Plan") of Garden Ridge Corporation, a Delaware corporation (the "Company"), is
to secure for the Company and its stockholders the benefits arising from stock
ownership by selected executive employees and other key employees of the Company
or its subsidiaries as the Board of Directors of the Company (the "Board"), or a
Committee constituted for such purpose, may from time to time determine. The
Plan will provide a means whereby (i) such employees may purchase shares of the
common stock, $0.01 par value per share (the "Common Stock"), of the Company
pursuant to stock options which will qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
(ii) such employees may purchase shares of the Common Stock of the Company
pursuant to "non-incentive" or "non-qualified" stock options.
ARTICLE II
----------
ADMINISTRATION
The Plan shall be administered by the Stock Option Committee (the
"Committee"), which shall at all times consist of not less than two members of
the Board, and all members of the Committee shall be "disinterested persons"
within the meaning of Rule 16b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "1934 Act"). All members of the
Committee shall be selected by (and serve at the pleasure of) the Board. Subject
to the express provisions of the Plan and the policies of each stock exchange on
which any of the Company's stock may at any time be traded, the Committee shall
have plenary authority, in its discretion, to recommend to the Board the
individuals within the class set forth in ARTICLE IV to whom, and the time and
price per share at which, stock options shall be granted, the number of shares
to be subject to each stock option and the other terms and provisions of their
respective Agreements (as defined herein), which need not be identical. In
making such recommendations and determinations, the Committee may take into
account the nature of the services rendered by the respective employees, their
present and potential contributions to the Company's success and such other
factors as the Committee in its discretion shall deem relevant.
Subject to the express provisions of the Plan, the Committee shall have
authority (i) to construe and interpret the Plan, (ii) to define the terms used
therein, (iii) to prescribe, amend and rescind rules and regulations relating to
the Plan, (iv) to recommend to the Board the terms
<PAGE>
and provisions of the respective stock options, (v) to approve and determine the
duration of leaves of absence which may be granted to participants without
constituting a termination of their employment for the purposes of the Plan, and
(vi) to make all other determinations necessary or advisable for the
administration of the Plan. All determinations and interpretations made by the
Committee shall be binding and conclusive on all participants in the Plan and
their legal representatives and beneficiaries. The Committee shall hold meetings
at such times and places as it may determine. Acts by the majority of the
Committee or acts reduced to or approved in writing by a majority of the members
of the Committee shall be the valid acts of the Committee. From time to time,
the Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause), and appoint new members in
substitution therefore, or fill vacancies however caused, subject to the
requirements that the members of the Committee shall be "disinterested persons"
as described above and that there always be at least two members of the
Committee. No member of the Committee shall be liable for any action, failure to
act, determination or interpretation made in good faith with respect to the Plan
or any transaction under the Plan.
ARTICLE III
-----------
SHARES SUBJECT TO PLAN AND DURATION OF PLAN
Under the Plan, the Board may, but only upon recommendation of the
Committee, grant to eligible persons incentive stock options (as defined in the
Code) and/or non-qualified stock options, to purchase up to but not exceeding an
aggregate amount of 519,176 shares of the Company's Common Stock (subject to
adjustment as provided in ARTICLE X). Shares subject to stock options under the
Plan may be either authorized and unissued shares or issued shares that have
been acquired by the Company and held in its treasury, in the discretion of the
Board. When stock options have been granted under the Plan and have lapsed
unexercised or partially unexercised or have been surrendered for cancellation
by the optionee thereof, the unexercised shares which were subject thereto may
be reoptioned under the Plan. No stock options shall be granted after April
2004.
ARTICLE IV
----------
ELIGIBILITY AND PARTICIPATION
To the fullest extent permitted by applicable laws, all executive
employees and other key employees of the Company or of any subsidiary
corporation (as defined in Section 424(f) of the Code) shall be eligible for
selection to fully participate in the Plan; provided, however, that no member of
the Committee shall be entitled to receive a stock option under this Plan while
serving as a member of the Committee. Directors of the Company who are not
regular employees of the Company are not eligible to participate in the Plan. An
individual who has been granted an option may, if such individual is otherwise
eligible, be granted an additional option or options if the Board or the
Committee shall so determine, subject to the other provisions of the Plan.
<PAGE>
ARTICLE V
---------
TERMS AND CONDITIONS OF STOCK OPTIONS
Each stock option granted under the Plan shall be evidenced by a stock
option agreement (the "Agreement"), the form of which shall have been approved
by the Committee. The Agreement shall be executed by the Company and the
optionee and shall set forth the terms and conditions of the stock option, which
terms and conditions shall include, but not be limited to the following:
(a) OPTION PRICE. The option price shall be determined by the
Committee, but shall not in any event be less than the par value of the Common
Stock.
(b) TERM OF STOCK OPTION. The term of the stock option shall be
selected by the Committee, but in no event shall such term exceed ten years from
the grant thereof. Each stock option shall be subject to earlier termination as
hereinafter provided.
(c) TRANSFERABILITY. The stock options granted hereunder shall
not be transferable other than by will or operation of the laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined in
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the rules thereunder. During the lifetime of the optionee,
stock options granted hereunder shall be exercisable only by the optionee, the
optionee's guardian or legal representative.
(d) VESTING. The Committee shall have complete discretion in
determining when stock options granted hereunder are to vest; provided, however,
that the sale of shares of Common Stock issued upon the exercise of a stock
option by any person subject to Section 16 of the 1934 Act shall not be allowed
until at least six months after the grant of the stock option. Such
determination for each stock option is to be made prior to or at the time that
stock option is granted and shall be set forth in each Agreement.
(e) TERMINATION OF EMPLOYMENT. In the event of an optionee's
termination of employment with the Company for any reason other than death, all
stock options shall terminate to the extent they were not exercisable at the
date of the optionee's termination, but to the extent they were then exercisable
by the optionee, the optionee shall be entitled to exercise such options for a
period of 30 days from the date of the optionee's termination. Upon the
termination of an optionee's employment by reason of death, the optionee's stock
options shall terminate to the extent they were not exercisable at the date of
the optionee's death, but to the extent they were then exercisable by the
optionee, the optionee's estate or the beneficiaries thereof shall be entitled
to exercise such options for a period of one year from the date of the
optionee's death but not thereafter. Notwithstanding any other provisions of
this subparagraph (e), no stock option shall be exercised after the expiration
of ten years from the date such stock option is granted.
<PAGE>
(f) OTHER CONDITIONS. At its sole discretion, the Committee may
impose other conditions upon the stock options granted hereunder, so long as
those conditions do not conflict with any other provisions of the Plan. Such
conditions may include, by way of illustration, but not by way of limitation,
percentage limitations upon the exercisability of stock options granted
hereunder.
ARTICLE VI
----------
INCENTIVE STOCK OPTIONS
The Committee, in recommending and granting stock options hereunder,
shall have the discretion to determine that certain stock options shall be
incentive stock options, as defined in Section 422 of the Code, while other
stock options shall be non-qualified stock options. Neither the members of the
Committee, the members of the Board nor the Company shall be under any
obligation or incur any liability to any person by reason of the determination
by the Committee or the Board whether a stock option granted under the Plan
shall be an incentive stock option or a non-qualified stock option. The
provisions of this ARTICLE VI shall be applicable to all incentive stock options
at any time granted or outstanding under the Plan.
All incentive stock options granted or outstanding under the Plan shall
be granted and held subject to and in compliance with terms and conditions
previously set forth in ARTICLES II, III, IV AND V hereof and, in addition,
subject to and in compliance with the following further terms and conditions:
(a) The per share option price of all incentive stock options
shall not be less than 100% of the Fair Market Value (as defined below) of one
share of the Company's Common Stock at the time the stock option is granted
(notwithstanding any provision of ARTICLE V hereof to the contrary);
(b) No incentive stock option shall be granted to any person who,
at the time of the grant, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
corporation of the Company; provided, however, that this ownership limitation
will be waived if at the time the option is granted the per share option price
is at least 110% of the Fair Market Value of one share of the Company's Common
Stock and such stock option by its terms is not exercisable after the expiration
of five years from the date such option is granted;
(c) An incentive stock option shall not be transferable other
than by will or the laws of descent and distribution, and shall be exercisable
during the lifetime of the optionee, only by the optionee; and
(d) The aggregate Fair Market Value of all shares of Common Stock
(determined at the time of the grant of the stock option) with respect to which
incentive stock options are exercisable for the first time by any optionee
during any one calendar year shall not exceed $100,000.
<PAGE>
ARTICLE VII
-----------
EXERCISE OF STOCK OPTIONS
Each stock option granted hereunder may be exercised in such installments
during the period prior to its expiration date as the Committee shall determine;
provided that, unless otherwise determined by the Committee, if the optionee
shall not in any given installment period purchase all of the shares which the
optionee is entitled to purchase in such installment period, then the optionee's
right to purchase any shares not purchased in such installment period shall
continue until the expiration date or sooner termination of the optionee's stock
option.
The purchase price of the shares of Common Stock acquired upon exercise
of a stock option shall be paid in full at the time of exercise in cash or by
certified or cashier's check payable to the order of the Company, or, upon
receipt of all required regulatory approvals, if any, by delivery of shares of
Common Stock of the Company already owned by, and in the possession of, the
stock option holder having a Fair Market Value equal to such stock option price,
or any combination thereof. Shares of Common Stock used to satisfy the exercise
price of a stock option shall be valued at their Fair Market Value determined as
of the close of business on the date such stock option is exercised, or if such
date is not a business day, on the business day immediately preceding the date
of exercise. Deliveries of cash, shares and notices to the Company shall be
directed to the Secretary of the Company.
No stock option granted hereunder shall be exercisable unless the Plan
and all shares issuable on the exercise thereof have been registered under the
Securities Act of 1933, as amended (the "1933 Act"), and all other applicable
securities laws, and there is available for delivery a prospectus meeting the
requirements of Section 10 of the 1933 Act, or the Company shall have first
received assurance that registration under the 1933 Act and all other applicable
securities laws is not required in connection with such issuance. At the time of
exercise, if the shares with respect to which the stock option is being
exercised have not been registered under the 1933 Act and all other applicable
securities laws, the Company may require the optionee to provide the Company
whatever written assurance counsel for the Company may require that the shares
are being acquired for investment and not with a view to the distribution
thereof, and that the shares will not be disposed of without the written opinion
of counsel acceptable to the Company that registration under the 1933 Act and
all other applicable securities laws is not required. Share certificates issued
to the optionee upon exercise of the stock option shall bear a legend to the
foregoing effect to the extent counsel for the Company deems it advisable.
ARTICLE VIII
------------
FAIR MARKET VALUE OF COMMON STOCK
For purposes of the Plan, the term "Fair Market Value" on any date shall
mean (i) if the Common Stock is not listed or admitted to trade on a national
securities exchange and if bid and asked prices for the Common Stock are not
furnished through NASDAQ or a similar organization as described below, the value
established by the Committee, in its sole discretion, for purposes of the Plan;
(ii) if the Common Stock is listed or admitted to trade on a national
<PAGE>
securities exchange or national market system, the closing price of the Common
Stock, as published in THE WALL STREET JOURNAL, so listed or admitted to trade
on such date or, if there is no trading of the Common Stock on such date, then
the closing price of the Common Stock on the next preceding date on which there
was trading in such shares; or (iii) if the Common Stock is not listed or
admitted to trade on a national securities exchange or national market system,
the mean between the bid and asked price for the Common Stock on such date, as
furnished by the National Association of Securities Dealers, Inc. through NASDAQ
or a similar organization if NASDAQ is no longer reporting such information. In
addition to the above rules, Fair Market Value shall be determined without
regard to any restriction other than a restriction which, by its terms, will
never lapse.
ARTICLE IX
----------
WITHHOLDING TAX
Upon (i) the disposition by an employee or other person of shares of
Common Stock acquired pursuant to the exercise of an incentive stock option
granted pursuant to the Plan within two years of the granting of the incentive
stock option or within one year after exercise of the incentive stock option, or
(ii) the exercise of "non-incentive" or "non-qualified" options, the Company
shall have the right to require such employee or such other person to pay the
Company the amount of any taxes (including but not limited to any federal, state
and local income taxes, old-age, survivors, and disability insurance premiums
and taxes, medicare taxes, FICA taxes and any other withholding taxes) which the
Company may be required to withhold with respect to such shares.
ARTICLE X
---------
ADJUSTMENTS
(a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the Company's directors and stockholders, the number of
shares provided for in each outstanding stock option and the price per share
thereof, and the number of shares provided for in the Plan, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of the Company's Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Common Stock), a stock split, a reverse stock split, or any other increase or
decrease in the number of such shares effected without receipt of consideration
by the Company, and shall also be proportionately adjusted in the event of a
spin-off, spin-out, or other distribution of assets to stockholders of the
Company, to the extent necessary to prevent dilution of the interests of
grantees pursuant to the Plan or of the other stockholders of the Company, as
applicable. If the Company shall engage in a merger, consolidation,
reorganization or recapitalization, each outstanding stock option (or if such
transaction involves less than all of the shares of the Company's Common Stock,
then a number of stock options proportionate to the number of such involved
shares), shall become exercisable for the securities and other consideration to
which a holder of the number of shares of the Company's Common Stock subject to
each such stock option would have been entitled to receive in any such merger,
consolidation, reorganization or recapitalization.
<PAGE>
(b) SIGNIFICANT EVENT. In the event of a potential merger or
consolidation involving the Company regardless of whether the Company is the
surviving entity of such merger or consolidation, a potential liquidation or
dissolution of the Company, a potential sale or other disposition by the Company
of all or substantially all of its assets, a potential sale or other disposition
by the stockholders of the Company of all or substantially all of the
outstanding Common Stock to one purchaser, or an underwritten public offering of
the Common Stock of the Company (any such merger, consolidation, liquidation,
dissolution, sale or offering being referred to herein as a "Significant
Event"), then the Company, upon obtaining approval of the Board, may (but shall
not be required to) waive any and all restrictions on the vesting of optionees'
rights under stock options granted pursuant to the Plan by providing written
notice thereof to the optionees. If the Company, upon obtaining approval of the
Board, elects to waive any such vesting restrictions, the optionees' rights
under their respective stock options shall vest in accordance with the terms of
such waiver, subject to the actual occurrence of the Significant Event. In
consideration for any such waiver of vesting restrictions by the Company, the
Company shall have the option (the "Termination Option") to require all
optionees to exercise their vested (determined after taking into account any
waiver of vesting restrictions) but unexercised stock options upon the
occurrence of the Significant Event, by providing written notice to all
optionees at least 10 days before the occurrence of the Significant Event. Any
exercise by an optionee in these circumstances may be conditioned upon the
occurrence of the Significant Event. If the Company exercises the Termination
Option under this paragraph (b), upon the actual occurrence of the Significant
Event, each stock option that is vested (determined after taking into account
any waiver of vesting restrictions) but unexercised as of such date shall
terminate. If the potential Significant Event does not in fact occur for any
reason, then any waiver by the Company of the vesting restrictions and any
exercise by the Company of the Termination Option under this paragraph (b) shall
have no effect, and the optionee's rights will be vested only to the extent that
they would be vested if no restrictions on vesting had been waived by the
Company herein.
(c) CHANGE OF PAR VALUE. In the event of a change in the
Company's Common Stock which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be Common Stock within the meaning of the Plan.
(d) MISCELLANEOUS. The adjustments provided for in this Article
shall be made by the Committee whose determination in that respect shall be
final, binding and conclusive. Except as hereinbefore expressly provided in this
Article, the holder of a stock option shall not be entitled to the privilege of
stock ownership as to any shares of Common Stock or other stock not actually
issued and delivered to the holder. Any issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
not affect and no adjustment by reason thereof shall be made with respect to the
number or price of shares of the Company's Common Stock subject to any stock
option. The grant of a stock option pursuant to the Plan shall not affect in any
way the right or power of the Company to, among other things, make adjustments,
reclassifications, reorganizations or changes of its capital or business
<PAGE>
structure or to merge or to consolidate or to dissolve or liquidate or sell or
transfer all or any part of its business or assets.
ARTICLE XI
----------
PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any stock option granted under the Plan
shall have any of the rights or privileges of a stockholder of the Company in
respect of any shares of stock issuable upon exercise of such stock option until
certificates representing such shares shall have been issued and delivered. Upon
exercise of a stock option, the person exercising the stock option shall be
entitled to one stock certificate evidencing the shares acquired upon such
exercise.
ARTICLE XII
-----------
CONTINUATION OF EMPLOYMENT
Nothing contained in the Plan (or in any stock option granted pursuant to
the Plan) shall confer upon any employee any right to continue in the employ of
the Company or any subsidiary corporation or constitute any contract or
agreement of employment or interfere in any way with the right of the Company or
any subsidiary corporation to reduce any person's compensation from the rate in
existence at the time of the granting of a stock option or to terminate such
person's employment. Nothing contained herein or in any Agreement shall affect
any other contractual rights of an employee.
ARTICLE XIII
------------
AMENDMENT OR DISCONTINUANCE
The Board or the Committee may at any time and from time to time amend,
rescind, suspend or terminate the Plan, as it shall deem advisable, provided
that the Plan may not be amended more than once every six months, other than to
comport with changes in the Code, ERISA, or the rules thereunder. In addition to
Board approval of any amendment to the Plan, if the Board or Committee further
determines on advice of counsel that it is necessary or desirable to obtain
stockholder approval of any amendment to the Plan in order to comply with Rule
16b-3 of the General Rules and Regulations under the 1934 Act, or any successor
rule, as it shall read as of the time of amendment, or for any other reason,
then the effectiveness of any such amendment may be conditioned upon its
approval by the affirmative votes of the holders of a majority of the
outstanding voting stock of the Company (voting as a single class) present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable laws of the state or other jurisdiction in which the Company is
incorporated.
No change may be made in, and no amendment, rescission, suspension or
termination of the Plan shall have an effect on, stock options previously
granted under the Plan which may impair or alter the rights or obligations of
the holders thereof, except that any change may be made in stock options
previously granted with the consent of the optionees.
<PAGE>
ARTICLE XIV
-----------
EFFECTIVE DATE OF PLAN; STOCKHOLDER APPROVAL
The Plan shall be effective as of March 6, 1996, the date on which it
received the approval of a majority of the disinterested members of the Board.
However, the Plan and all stock options granted under the Plan shall be void if
the Plan is not approved by the stockholders within twelve (12) months from the
date the Plan is approved by the Board. The Plan shall be deemed approved by the
holders of the outstanding voting stock of the Company by the affirmative votes
of the holders of a majority of the outstanding voting stock of the Company
present, or represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the state or other jurisdiction in which
the Company is incorporated. No stock option granted under the Plan shall be
exercisable in whole or in part unless and until such stockholder approval is
obtained.
GARDEN RIDGE CORPORATION
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE I
---------
PURPOSE
Garden Ridge Corporation, a Delaware corporation (the "Company"), is
dependent for the successful conduct of its business on the initiative, effort
and judgment of its directors. This 1996 Non-Employee Director Stock Option Plan
(the "Plan") is intended to provide the non-employee directors of the Company
additional compensation for their service as directors and an incentive, through
options to acquire stock in the Company, to increase the value of the Company's
Common Stock, par value $0.01 per share ("Common Stock").
ARTICLE II
----------
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(the "Board"). Subject to the express provisions of the Plan and the policies of
each stock exchange on which any of the Company's stock at any time may be
traded, the Board shall have plenary authority (i) to construe and interpret the
Plan, (ii) to define the terms used therein, (iii) to prescribe, amend and
rescind rules and regulations relating to the Plan, and (iv) to make all other
determinations necessary or advisable for the administration of the Plan. All
determinations and interpretations made by the Board shall be binding and
conclusive on all participants in the Plan and their legal representatives and
beneficiaries. No member of the Board shall be liable for any action, failure to
act, determination or interpretation made in good faith with respect to the Plan
or any transaction under the Plan.
ARTICLE III
-----------
SHARES SUBJECT TO PLAN AND DURATION OF PLAN
The Plan shall expire and terminate on the earlier of (i) the date ten
years from the effective date of this Plan, or (ii) the date on which there have
been granted to eligible non-employee Directors pursuant to the Plan stock
options to purchase an aggregate of 35,000 shares of the Common Stock. Shares
subject to stock options under the Plan may be either authorized and unissued
shares or issued shares that have been acquired by the Company and held in its
treasury, in the sole discretion of the Board. When stock options have been
granted under the Plan and have lapsed unexercised or partially unexercised or
have been surrendered for cancellation by the optionee thereof, the unexercised
shares which were subject thereto may be reoptioned under the Plan.
<PAGE>
ARTICLE IV
----------
ELIGIBILITY AND PARTICIPATION
Under the Plan, non-employee directors shall be entitled to receive stock
options to purchase from the Company the number of shares of Common Stock as set
forth below. For purposes of the Plan, the term "non-employee directors" shall
be limited to directors who, at the time of the grant, are not (i) serving as
officers or employees of the Company or any subsidiary, (ii) serving as
consultants to the Company or any subsidiary, or (iii) affiliates of consultants
to the Company.
(a) GRANT UPON INITIAL ELECTION TO BOARD. Effective as of the date of a
non-employee director's initial election to the Board, each non-employee
director shall be granted a stock option to purchase from the Company a certain
number of shares of Common Stock at a price determined as set forth in ARTICLE V
below. The number of shares subject to such stock option shall be adjusted to
reflect the fiscal quarter in which the non-employee director is initially
elected to the Board, and shall be as follows: (i) second quarter election on or
prior to the date three days following the Company's release of financial
results for its first fiscal quarter, 0 shares, (ii) second quarter election
after the date three days following the Company's release of financial results
for its first fiscal quarter, 5,000 shares, (iii) third quarter election, 3,750
shares, (iv) fourth quarter election, 2,500 shares, and (v) first quarter
election, 1,250 shares.
(b) ANNUAL GRANTS. Effective each year on the date which is three days
following the Company's release of financial results for its first fiscal
quarter, each non-employee director shall be granted a stock option to purchase
from the Company 5,000 shares of Common Stock at a price determined as set forth
in ARTICLE V below.
ARTICLE V
---------
TERMS AND CONDITIONS OF STOCK OPTIONS;
STOCK OPTION PRICE; TRANSFERABILITY
Each stock option granted under the Plan shall be evidenced by a stock
option agreement (the "Agreement"), the form of which shall have been approved
by the Board. The Agreement shall be executed by the Company and the optionee,
and shall set forth the terms and conditions of the stock option, which terms
and conditions shall include, but not be limited to the following:
(a) OPTION PRICE. The per share stock option price shall be an amount
equal to the Fair Market Value (as defined below) of the Common Stock on the
date of grant of the stock option. In no event shall the stock option price be
less than the par value of the Company's Common Stock.
(b) TERM. The term of each stock option granted under the Plan shall be
for a period of five years from the grant thereof.
(c) TRANSFERABILITY. Except as set forth below, the stock options granted
hereunder shall not be transferable otherwise than by will or operation of the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined in the Internal Revenue Code of 1986, as amended (the "Code"),
or Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules thereunder. During the lifetime of the optionee, stock
options granted hereunder shall be exercisable only by the optionee, the
optionee's guardian or legal representative.
(d) VESTING. Each stock option granted under the Plan shall vest
immediately; provided, however, that the sale of the shares issued upon the
exercise of a stock option by any person subject to Section 16 of the Securities
Act of 1934 (the "1934 Act") shall not be allowed until at least six months
after the later of (i) the approval of this Plan by the stockholders of the
Company in accordance with ARTICLE XI hereof or (ii) the grant of the stock
option.
-2-
<PAGE>
ARTICLE VI
----------
EXERCISE OF STOCK OPTIONS
The purchase price of shares of Common Stock acquired upon exercise of a
stock option shall be paid in full at the time of exercise in cash or by
certified or cashier's check payable to the order of the Company, or, upon
receipt of all required regulatory approvals, if any, by delivery of shares of
Common Stock of the Company already owned, and in the possession of, the stock
option holder having a Fair Market Value equal to such stock option price, or
any combination thereof. Shares of Common Stock used to satisfy the exercise
price of a stock option shall be valued at their Fair Market Value determined as
of the close of business on the date such stock option is exercised, or if such
date is not a business date, on the business day immediately preceding the date
of exercise. Deliveries of cash, shares and notices to the Company shall be
directed to the Secretary of the Company.
No stock option granted hereunder shall be exercisable unless the Plan
and all shares issuable on the exercise thereof have been registered under the
Securities Act of 1933, as amended (the "1933 Act") and all other applicable
securities laws, and there is available for delivery a prospectus meeting the
requirements of Section 10 of the 1933 Act, or the Company shall have first
received the opinion of its counsel that registration under the 1933 Act and all
other applicable securities laws is not required in connection with such
issuance. At the time of exercise, if the shares with respect to which the stock
option is being exercised have not been registered under the 1933 Act and all
other applicable securities laws, the Company may require the optionee to
provide the Company whatever written assurance counsel for the Company may
require that the shares are being acquired for investment and not with a view to
the distribution thereof, and that the shares will not be disposed of without
the written opinion of such counsel that registration under the 1933 Act and all
other applicable securities laws is not required. Share certificates issued to
the optionee upon exercise of the stock option shall bear a legend to the
foregoing effect to the extent counsel for the Company deems it advisable.
ARTICLE VII
-----------
FAIR MARKET VALUE OF COMMON STOCK
For purposes of the Plan, the term "Fair Market Value" on any date shall
mean (i) if the Common Stock is not listed or admitted to trade on a national
securities exchange and if bid and asked prices for the Common Stock are not so
furnished through NASDAQ or a similar organization, the value established by the
Board for purposes of the Plan; (ii) if the Common Stock is listed or admitted
to trade on a national securities exchange or national market system, the
closing price of the Common Stock, as published in the WALL STREET JOURNAL, so
listed or admitted to trade on such date or, if there is no trading of the
Common Stock on such date, then the closing price of the Common Stock on the
next preceding date on which there was trading in such shares; or (iii) if the
Common Stock is not listed or admitted to trade on a national securities
exchange or national market system, the mean between the bid and asked price for
the Common Stock on such date, as furnished by the National Association of
Securities Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is
no longer reporting such
-3-
<PAGE>
information. In addition to the above rules, Fair Market Value shall be
determined without regard to any restriction other than a restriction which, by
its terms, will never lapse.
ARTICLE VIII
------------
ADJUSTMENTS
(a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the Company's directors and stockholders, the number of shares
provided for in each outstanding stock option and the price per share thereof,
and the number of shares provided for in the Plan, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of the
Company's Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend (but only on the Common Stock), a stock
split, a reverse stock split, or any other increase or decrease in the number of
such shares effected without receipt of consideration by the Company, and shall
also be proportionately adjusted in the event of a spin-off, spin-out, or other
distribution of assets to stockholders of the Company, to the extent necessary
to prevent dilution of the interests of grantees pursuant to the Plan or of the
other stockholders of the Company, as applicable. If the Company shall engage in
a merger, consolidation, reorganization or recapitalization, each outstanding
stock option (or if such transaction involves less than all of the shares of the
Company's Common Stock, then a number of stock options proportionate to the
number of such involved shares), shall become exercisable for the securities and
other consideration to which a holder of the number of shares of the Company's
Common Stock subject to each such stock option would have been entitled to
receive in any such merger, consolidation, reorganization or recapitalization.
(b) SIGNIFICANT EVENT. In the event of a potential merger or
consolidation involving the Company regardless of whether the Company is the
surviving entity of such merger or consolidation, a potential liquidation or
dissolution of the Company, a potential sale or other disposition by the Company
of all or substantially all of its assets, or a potential sale or other
disposition by the stockholders of the Company of all or substantially all of
the outstanding Common Stock to one purchaser (any such merger, consolidation,
liquidation, dissolution, or sale being referred to herein as a "Significant
Event"), then the Company shall have the option of terminating all outstanding
stock options upon the actual occurrence of the Significant Event, by notice to
all optionees at least 10 days before the occurrence of the Significant Event.
Any exercise by an optionee in these circumstances may be conditioned upon the
occurrence of the Significant Event. Upon the actual occurrence of the
Significant Event, each outstanding stock option shall terminate if the Company
exercises its option under this paragraph (b). If the potential Significant
Event does not in fact occur for any reason, then the Company's exercise of its
option under this paragraph (b) shall have no effect and his or her rights will
be the same as if the Company had never exercised its option under this
paragraph (b).
(c) CHANGE OF PAR VALUE. In the event of a change in the Company's
Common Stock which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be
Common Stock within the meaning of the Plan.
-4-
<PAGE>
(d) MISCELLANEOUS. The adjustments provided for in this Article shall be
made by the Board whose determination in that respect shall be final, binding
and conclusive. Except as hereinbefore expressly provided in this Article, the
holder of a stock option shall not be entitled to the privilege of stock
ownership as to any shares of Common Stock or other stock not actually issued
and delivered to the holder. Any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall not
affect and no adjustment by reason thereof shall be made with respect to the
number or price of shares of the Company's Common Stock subject to any stock
option. The grant of a stock option pursuant to the Plan shall not affect in any
way the right or power of the Company to, among other things, make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve or liquidate or sell or
transfer all or any part of its business or assets.
ARTICLE IX
----------
PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any stock option granted under the Plan
shall have any of the rights or privileges of stockholder of the Company in
respect of any shares of stock issuable upon exercise of such stock option until
certificates representing such shares shall have been issued and delivered. Upon
exercise of a stock option, the person exercising the stock option shall be
entitled to one stock certificate evidencing the shares acquired upon such
exercise.
ARTICLE X
---------
AMENDMENT OR DISCONTINUANCE
The Board may at any time and from time to time amend, rescind, suspend
or terminate the Plan, as it shall deem advisable, provided that the Plan may
not be amended more than once every six months, other than to comport with
changes in the Code, ERISA, or the rules thereunder. In addition to Board
approval of any amendment to the Plan, if the Board further determines on advice
of counsel that it is necessary or desirable to obtain stockholder approval of
any amendment to the Plan in order to comply with Rule 16b-3 of the General
Rules and Regulations under the 1934 Act, or any successor rule, as it shall
read as of the time of amendment, or for any other reason, then the
effectiveness of any such amendment may be conditioned upon its approval by the
affirmative votes of the holders of a majority of the outstanding voting stock
of the Company (voting as a single class), present, or represented, and entitled
to vote at a meeting duly held in accordance with the applicable laws of the
state or other jurisdiction in which the Company is incorporated.
No change may be made in, and no amendment, rescission, suspension or
termination of the Plan shall have an effect on, stock options previously
granted under the Plan which may impair or alter the rights or obligations of
the holders thereof, except that any change may made in stock options previously
granted with the consent of the optionees.
-5-
<PAGE>
ARTICLE XI
----------
EFFECTIVE DATE; STOCKHOLDER APPROVAL
The Plan shall be effective as of March 6, 1996, the date on which it
received the approval of a majority of the disinterested members of the Board.
However, the Plan and all stock options granted under the Plan shall be void if
the Plan is not approved by the stockholders within twelve (12) months from the
date the Plan is approved by the Board. The Plan shall be deemed approved by the
holders of the outstanding voting stock of the Company by the affirmative votes
of the holders of a majority of the outstanding voting stock of the Company
present, or represented, and entitled to vote at a meeting of such stockholders
duly held in accordance with the applicable laws of the state or other
jurisdiction in which the Company is incorporated. No stock option granted under
the Plan shall be exercisable in whole or in part unless and until such
stockholder approval is obtained.
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ITEM 8.,
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-25-1997
<PERIOD-END> APR-27-1997
<CASH> 26,091
<SECURITIES> 1,986
<RECEIVABLES> 1,838
<ALLOWANCES> 0
<INVENTORY> 58,554
<CURRENT-ASSETS> 92,279
<PP&E> 52,950
<DEPRECIATION> (12,877)
<TOTAL-ASSETS> 142,353
<CURRENT-LIABILITIES> 27,867
<BONDS> 0
0
0
<COMMON> 182
<OTHER-SE> 114,067
<TOTAL-LIABILITY-AND-EQUITY> 142,353
<SALES> 59,493
<TOTAL-REVENUES> 59,493
<CGS> 38,893
<TOTAL-COSTS> 20,245
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (391)
<INCOME-PRETAX> 746
<INCOME-TAX> 276
<INCOME-CONTINUING> 470
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 470
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
