<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 6, 1998
Registration No. 333-
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------
STROUDS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4107241
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
780 SOUTH NOGALES STREET
CITY OF INDUSTRY, CALIFORNIA 91748
(Address of principal executive offices) (Zip Code)
--------------
THE AMENDED AND RESTATED 1994 EQUITY PARTICIPATION PLAN OF STROUDS, INC.
(Full Title of the Plan)
--------------
CHARLES CHINNI
CHIEF EXECUTIVE OFFICER
STROUDS, INC.
780 SOUTH NOGALES STREET
CITY OF INDUSTRY, CALIFORNIA 91748
(626) 912-2866
(Name, address, including zip code, and telephone
number,including area code, of agent for service)
--------------
Copies to:
JOHN M. NEWELL, ESQ.
LATHAM & WATKINS
633 WEST FIFTH STREET
SUITE 4000
LOS ANGELES, CALIFORNIA 90071
(213) 485-1234
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Proposed
Amount Proposed Maximum
of Shares Maximum Aggregate Amount of
Title of Each Class of to be Offering Price Offering Registration
Securities to be Registered Registered (1) Per Share (2) Price (2) Fee
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $2.87
$.0001 par value 830,000 $3.25 $2,529,993.79 $746.35
$1.75
$2.06
$3.19
</TABLE>
(1) The Amended and Restated 1994 Equity Participation Plan of Strouds, Inc.
(the "1994 Plan") authorizes the issuance of a maximum of 1,680,000
shares of Common Stock of Strouds, Inc. (the "Company"). Of such
shares, 1,150,934 are subject to presently outstanding options
granted under the 1994 Plan as of the date hereof.
(2) For purposes of computing the registration fee only, pursuant to Rule
457(h), the Proposed Maximum Offering Price Per Share is based upon
(a)(i) the exercise price per share ($2.87) of outstanding options for
100,000 shares, (ii) the exercise price per share ($3.25) of outstanding
options of 129,700 shares, (iii) the exercise price per share ($1.75) of
outstanding options for 43,750 shares, and (iv) the exercise price per
share ($2.06) of outstanding options for 27,484 and (b) for the remaining
529,066 shares, the average of the high and low prices per share ($3.19) of
the Company's Common Stock on the Nasdaq National Market on June 30, 1998.
Page 1 of 17 pages.
Exhibit Index appears on page 8.
<PAGE>
PART I
Item 1. Plan Information
Not required to be filed with this Registration Statement.
Item 2. Registrant Information and Employee Plan Annual Information
Not required to be filed with this Registration Statement.
PART II
Item 3. Incorporation of Documents by Reference
The Company hereby incorporates the following documents in this
Registration Statement by reference:
A. The Company's Annual Report on Form 10-K for the year ended
February 28, 1998.
B. The Company's Prospectus dated October 11, 1994, filed in
connection with the Registration Statement referred to in Item
3.C below pursuant to Rule 424(b) under the Securities Act of
1933, as amended (the "Securities Act"); and
C. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form S-1 filed with the
Securities and Exchange Commission (the "Commission") on July
29, 1994 (Registration No. 33-82090), as amended by Amendment
No. 1 filed with the Commission on September 13, 1994,
Amendment No. 2 filed with the Commission on October 5, 1994
and a Prospectus dated October 11, 1994 filed with the
Commission on October 13, 1994.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, are incorporated by reference in this
registration statement and are a part hereof from the date of filing such
documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
2
<PAGE>
Item 6. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware
(the "Delaware Corporation Law") gives Delaware corporations broad powers to
indemnify their present and former directors and officers against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with threatened, pending or
completed actions, suits or proceedings to which they are parties or are
threatened to be made parties by reason of being or having been such
directors or officers, subject to specified conditions and exclusions; gives
a director or officer who successfully defends an action the right to be so
indemnified; and permits a corporation to buy directors' and officers'
liability insurance. Such indemnification is not exclusive of any other
rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or otherwise.
As permitted by Section 145 of the Delaware Corporation Law,
Article V of the Restated Bylaws of the Company provides for the
indemnification by the Company of its directors and officers against
liabilities and expenses incurred in connection with actions, suits or
proceedings brought against them by a third party or in the right of the
Company, by reason of the fact that they were or are such directors or
officers.
Article Tenth of the Company's Certificate of Incorporation
provides that to the fullest extent permitted by the Delaware Corporation Law
as the same exists or may hereafter be amended, a director of the Company
shall not be liable to the Company or its stockholders for monetary damages
for breach of fiduciary duty as a director.
The Company has also purchased insurance for its directors and
officers for certain losses arising from claims or charges made against them
in their capacities as directors and officers.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits.
3.1 Form of Restated Certificate of Incorporation of the
Company. Incorporated herein by reference to Amendment No. 1
to the Company's Form S-1, Registration No. 33-82090, as
filed with the Commission on September 13, 1994.
3.2 Restated By-laws of the Company. Incorporated herein by
reference to Amendment No. 1 to the Company's Form S-1,
Registration No. 33-82090, as filed with the Commission on
September 13, 1994.
4.1 Form of the Amended and Restated 1994 Equity Participation
Plan of the Company, including the forms of the individual
option agreements thereunder. Incorporated herein by
reference to Amendment No. 1 to the Company's Form S-1,
Registration No. 33-82090, as filed with the Commission on
September 13, 1994.
*4.2 (First) Amendment to the Amended and Restated 1994 Equity
Participation Plan dated July 6, 1995
3
<PAGE>
*4.3 (Second) Amendment to The Amended and Restated 1994 Equity
Participation Plan of Strouds, Inc. dated May 14, 1997
*4.4 Third Amendment to the Amended and Restated 1994 Equity
Participation Plan of Strouds, Inc. dated May 20, 1998
*5 Opinion of Latham & Watkins as to the legality of the
securities being registered hereby.
*23.1 Consent of KPMG Peat Marwick LLP, independent auditors.
*23.2 Consent of Latham & Watkins. Reference is hereby made to
Exhibit 5 hereto.
*24 Power of Attorney (included on signature page hereof).
_______________________
* Filed herewith
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(b) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement; Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(c) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
PROVIDED, HOWEVER, that paragraphs (1)(a) and (1)(b) shall not
apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement.
4
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Industry, State of California, on this 1st day of
July, 1998.
STROUDS, INC.
By: /s/ Charles R. Chinni
------------------------------
Charles R. Chinni
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Wilfred C. Stroud and Charles Chinni and each or either of them, his true and
lawful attorney-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in their capacities
and on the dates indicated.
<TABLE>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Wilfred C. Stroud
- ------------------------ Director and Chairman of July 1, 1998
Wilfred C. Stroud the Board
/s/ Charles R. Chinni
- ------------------------ President, Chief Executive July 1, 1998
Charles R. Chinni Officer and Director
(Principal Executive
Officer)
/s/ Douglas C. Felderman
- ------------------------- Senior Vice-President- July 1, 1998
Douglas C. Felderman Finance, Chief Financial
Officer (Principal
Financial Officer)
/s/ Joseph A. Imbrogulio
- ------------------------ Director July 1, 1998
Joseph A. Imbrogulio
/s/ Larry R. Bemis
- --------------------- Director July 1, 1998
Larry R. Bemis
6
<PAGE>
/s/ Dale D. Achabal
- --------------------- Director July 1, 1998
Dale D. Achabal
/s/ Marco F. Weiss
- --------------------- Director July 1, 1998
Marco F. Weiss
/s/ Richard F. Clayton
- ---------------------
Richard F. Clayton Director July 1, 1998
</TABLE>
7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
EXHIBIT PAGE
<S> <C> <C>
3.1 Form of Restated Certificate of Incorporation of the Company.
Incorporated herein by reference to Amendment No. 1 to the Company's
Form S-1, Registration No. 33-82090, as filed with the Commission on
September 13, 1994.
3.2 Restated By-laws of the Company. Incorporated herein by reference to
Amendment No. 1 to the Company's Form S-1, Registration No. 33-82090,
as filed with the Commission on September 13, 1994.
4.1 Form of the Amended and Restated 1994 Equity Participation Plan of the
Company, including the forms of the individual option agreements
thereunder. Incorporated herein by reference to Amendment No. 1 to
the Company's Form S-1, Registration No. 33-82090, as filed with the
Commission on September 13, 1994.
*4.2 (First) Amendment to the Amended and Restated 1994 Equity 9
Participation Plan dated July 6, 1995
*4.3 (Second) Amendment to The Amended and Restated 1994 Equity 11
Participation Plan of Strouds, Inc. dated May 14, 1997
*4.4 Third Amendment to the Amended and Restated 1994 Equity Participation 13
Plan of Strouds, Inc. dated May 20, 1998
*5 Opinion of Latham & Watkins as to the legality of the securities being 16
registered hereby.
*23.1 Consent of KPMG Peat Marwick LLP, independent auditors. 17
*23.2 Consent of Latham & Watkins. Reference is hereby made to Exhibit 5 16
hereto.
*24 Power of Attorney 6
</TABLE>
_______________________
* Filed herewith
8
<PAGE>
EXHIBIT 4.2
(FIRST)
AMENDMENT TO THE
AMENDED AND RESTATED
1994 EQUITY PARTICIPATION PLAN
OF
STROUDS, INC.
This Amendment to The Amended and Restated 1994 Equity Participation
Plan of Strouds, Inc. (the "Amendment") is adopted as of July 6, 1995 by the
Board of Directors (the "Board") of Strouds, Inc. (the "Company"), a corporation
organized under the laws of the State of Delaware.
RECITALS
WHEREAS, The Amended and Restated 1994 Equity Participation Plan of
Strouds, Inc. (the "Plan") was adopted by the Board of Directors of the Company
on September 1, 1994 and approved by the Company's stockholders in October 1994;
and
WHEREAS, the Company now desires to amend the Plan with respect to the
requirement that each option shall be evidenced by a written stock option
agreement; and
WHEREAS, the Company now desires to amend the Plan to provide that
options granted under the Plan may be evidenced by a certificate containing
certain basic terms and conditions of the option.
NOW, THEREFORE, the Committee hereby declares as follows:
1. OPTIONS MAY BE EVIDENCED BY A CERTIFICATE.
Upon the adoption of this Amendment by the Committee, options granted
under the Plan may be evidenced by a certificate containing certain basic terms
and conditions of the option. Such certificates may be issued to an optionee
after a written stock option agreement between such optionee and the Company has
been executed or in lieu of a written stock option agreement.
2. ADDITION OF NEW SECTION 1.25.5.
The following provision shall be added immediately after Section 1.25
as a new Section 1.25.5:
1.25.5 STOCK OPTION AGREEMENT. "Stock Option Agreement" shall mean a
Stock Option Agreement or a certificate as each is defined in Section 4.1.
9
<PAGE>
3. AMENDMENT TO ARTICLE 4.1 OF THE PLAN.
The first sentence of Article 4.1 shall be amended to read as follows:
Each Option shall be evidenced by either a written Stock Option
Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such
terms and conditions as the Committee (or the Board, in the case of
Options granted to Independent Directors) shall determine,
consistent with this Plan, or a certificate which shall be executed
by an authorized officer of the Company and which shall contain
certain basic terms and conditions of the Option as the Committee
(or the Board, in the case of Options granted to Independent
Directors shall determine, consistent with this Plan).
4. CONTINUING EFFECT OF THE PLAN.
All other provisions of the Plan shall remain in full force and
effect.
I hereby certify that the foregoing Amendment was duly adopted by the
Compensation Committee of the Board of Directors of Strouds, Inc. on July 6,
1995.
Executed on this 10th day of July, 1995.
/s/ Linda McNamara
--------------------------------
Asst. Secretary
10
<PAGE>
EXHIBIT 4.3
(SECOND) AMENDMENT TO
THE AMENDED AND RESTATED 1994 EQUITY PARTICIPATION PLAN OF STROUDS, INC.
WHEREAS, Strouds, Inc. (hereinafter the "Company"), a Delaware
corporation, maintains the Amended and Restated 1994 Equity Participation Plan
(the "Plan") of the Company, effective as of September 1, 1994; (hereinafter the
"Plan"); and
WHEREAS, pursuant to Section 10.2 of the Plan, the Board of Directors
of the Company (hereinafter the "Board") may amend the Plan from time to time.
NOW THEREFORE, BE IT RESOLVED, that the Plan be amended as follows,
effective May 14, 1997.
1. Section 1.13 shall be amended and restated in its entirety as follows:
1.13 FAIR MARKET VALUE. "Fair Market Value" of a share of Common
Stock as of a given date shall be (i) the closing price of a share of
Common Stock on the principal exchange on which shares of Common Stock are
then trading, on the date of grant, or if shares were not traded on such
date, then on the closest preceding date on which a trade occurred, or (ii)
if Common Stock is not traded on an exchange, the mean between the closing
representative bid and asked prices for the Common Stock on such date as
reported by NASDAQ or, if NASDAQ is not then in existence, by its successor
quotation system; or (iii) if Common Stock is not publicly traded, the Fair
Market Value of a share of Common Stock as established by the Committee (or
the Board, in the case of Options granted to Independent Directors) acting
in good faith.
2. Section 2.1(a) shall be amended and restated in its entirety as
follows:
2.1(a) The shares of stock subject to Options, awards of Restricted
Stock, Performance Awards, Dividend Equivalents, awards of Deferred Stock,
Stock Payments or Stock Appreciation Rights shall be Common Stock,
initially shares of the Company's Common Stock, par value $.0001 per share.
The aggregate number of shares which may be issued upon exercise of such
options or rights or upon any such awards under the Plan shall not exceed
one million one hundred twenty-five thousand (1,125,000). The shares of
Common Stock issuable upon exercise of such options or rights or upon any
such awards may be either previously authorized but unissued shares or
treasury shares.
11
<PAGE>
3. Section 3.4(d) shall be amended and restated in its entirety as
follows:
3.4 During the term of the Plan, each person who is an Independent
Director as of the date of the initial public offering of Common Stock
automatically shall be granted an option to purchase ten thousand (10,000)
shares of Common Stock (subject to adjustment as provided in Section 10.3)
on the date of such initial public offering. When a person is initially
elected to the Board following the date of the initial public offering of
Common Stock and is then an Independent Director, each such new Independent
Director automatically shall (i) be granted an Option to purchase ten
thousand (10,000) shares of Common Stock (subject to adjustment as provided
in Section 10.3) on the date of his or her election to the Board, and (ii)
be granted an Option to purchase 2,000 shares of Common Stock (subject to
adjustment as provided in Section 10.3) on the date of each annual meeting
of stockholders after such initial election at which the Independent
Director is re-elected to the Board. Members of the Board who are
Employees who subsequently retire from the Company and remain on the Board
will not receive an Option grant pursuant to Section 3.4(d)(i) of the
preceding sentence, but to the extent that they are otherwise eligible,
will receive, after retirement from the Company, Options as described in
clause (ii) of the preceding sentence. All of the foregoing Option grants
authorized by this Section 3.4(d) are subject to stockholder approval of
the Plan.
* * * * *
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Strouds, Inc. on May 14, 1997.
By /s/ Jonathan W. Spatz
--------------------------------
Jonathan W. Spatz
SECRETARY
12
<PAGE>
EXHIBIT 4.4
THIRD AMENDMENT TO
THE AMENDED AND RESTATED 1994 EQUITY PARTICIPATION PLAN
OF STROUDS, INC.
WHEREAS, Strouds, Inc. (hereinafter the "Company"), a Delaware corporation,
maintains the Amended and Restated 1994 Equity Participation Plan of the
Company, effective as of September 1, 1994, (hereinafter the "Plan"); and
WHEREAS, pursuant to Section 10.2 of the Plan, the Board of Directors of
the Company (hereinafter the "Board") may amend the Plan from time to time;
NOW THEREFORE, BE IT RESOLVED, that from and after the effective date of
this Third Amendment to the Plan:
1. The "Amendment to the Amended and Restated 1994 Equity Participation
Plan of Strouds, Inc." as adopted by the Board on July 6, 1995 shall hereinafter
be referred to as the "First Amendment" to the Plan.
2. The "First Amendment to the Amended and Restated 1994 Equity
Participation Plan of Strouds, Inc." as adopted on May 14, 1997 shall
hereinafter be renumbered and referred to as the "Second Amendment" to the Plan.
3. Section 1.2 shall be amended and restated in its entirety as follows:
1.2 AWARD LIMIT. "Award Limit" shall mean 500,000 shares of Common
Stock.
4. Section 2.1(a) shall be amended and restated in its entirety as
follows:
2.1(a) The shares of stock subject to Options, Dividend Equivalents
or other awards shall be Common Stock, par value $.0001 per share. The
aggregate number of shares which may be issued upon exercise of such options or
upon any such awards under the Plan shall not exceed one million six hundred
eighty thousand (1,680,000). The shares of Common Stock issuable upon exercise
of such Options or upon any such awards may be either previously authorized but
unissued shares or treasury shares.
5. Section 3.4(d) shall be amended and restated in its entirety as
follows:
3.4. During the term of the Plan, each person who is an Independent
Director as of the date of the initial public offering of Common Stock
automatically shall be granted an option to purchase ten thousand (10,000)
shares of Common Stock (subject to adjustment as provided in Section 10.3) on
the date of such initial public offering. When a person is initially elected to
the Board following the date of the initial public offering of Common Stock and
is then an Independent Director, each such new Independent Director
automatically shall (i) be
13
<PAGE>
granted an Option to purchase ten thousand (10,000) shares of Common Stock
(subject to adjustment as provided in Section 10.3) on the date of his or her
election to the Board, and (ii) an Option to purchase 5,000 shares of Common
Stock (subject to adjustment as provided in Section 10.3) on the date of each
annual meeting of stockholders after such initial election at which the
Independent Director is re-elected to the Board. Members of the Board who
are Employees who subsequently retire from the Company and remain on the
Board will not receive an Option grant pursuant to Section 3.4(d)(i) of the
preceding sentence, but to the extent that they are otherwise eligible, will
receive, after retirement from the Company, Options as described in clause
(ii) of the preceding sentence. All of the foregoing Option grants
authorized by this Section 3.4(d) are subject to stockholder approval of the
Plan.
6. Section 4.2 shall be amended and restated in its entirety as follows:
4.2 OPTION PRICE. The price per share of the shares subject to each
Option shall be equal to 100% of the Fair Market Value of a share of Common
Stock on the date the Option is granted and in the case of Incentive Stock
Options such price shall not be less than the greater of: (i) 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted, or
(ii) 110% of the fair market value of a share of Common Stock on the date such
Option is granted in the case of an individual then owning (within the meaning
of Section 424(d) of the Code) more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary.
7. Section 4.3 shall be amended and restated in its entirety as follows:
4.3 OPTION TERM. The term of an Option, other than an Option
granted to an Independent Director, shall be set by the Committee in its
discretion; PROVIDED, HOWEVER, that, (a) in the case of Incentive Stock Options,
the term shall not be more than ten (10) years from the date the Incentive Stock
Option is granted, or five (5) years from such date if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary and (b) in the case of a Non
Qualified Stock Option, the term shall not be more than ten (10) years and one
(1) day from the date the Non Qualified Stock Option is granted. In the case of
an Option granted to an Independent Director, the term of each such Option shall
be ten years without variation or acceleration hereunder, except as provided in
Section 10.4.
8. A new Article XI shall be added to the Plan as follows:
ARTICLE XI
LIMITATIONS
11.1 Notwithstanding any provisions in Articles VI, VII, VIII or
otherwise contained in the Plan, from and after the effective date of this
Amendment No. 3 to the Plan, the Board shall be prohibited from granting any
awards of (i) restricted stock, (ii) performance awards, (iii) stock payments
(iv) deferred stock or (v) stock appreciation rights.
14
<PAGE>
11.2 Notwithstanding any provisions in the Plan, from and after the
effective date of this Amendment No. 3 to the Plan, the Board or the
Compensation Committee shall be prohibited from any further repricing of
Options.
* * * * * *
I hereby certify that the foregoing Third Amendment to the Plan was duly
adopted by the Board of Directors of Strouds, Inc. on May 20, 1998.
By /s/ Douglas C. Felderman
-------------------------------------
Douglas C. Felderman
SECRETARY
15
<PAGE>
EXHIBIT 5
LATHAM & WATKINS
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
(213) 485-1234
July 6, 1998
Strouds, Inc.
780 South Nogales Street
City of Industry, California 91748
Re: Strouds, Inc.
Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-8
(the "Registration Statement"), which you intend to file with the Securities and
Exchange Commission in connection with the registration under the Securities Act
of 1933, as amended, of 830,000 shares of Common Stock, par value $.0001 per
share (the "Shares"), to be sold by Strouds, Inc., a Delaware corporation (the
"Company"), under The Amended and Restated 1994 Equity Participation Plan of
Strouds, Inc. (the "1994 Plan").
In our capacity as your special counsel in connection with such
registration, we are familiar with the proceedings taken and proposed to be
taken by the Company in connection with the authorization, issuance and sale of
the Shares, and for the purposes of this opinion, have assumed such proceedings
will be timely completed in the manner presently proposed. In addition, we have
made such legal and factual examinations and inquiries, including an examination
of originals or copies certified or otherwise identified to our satisfaction of
such documents, corporate records and instruments, as we have deemed necessary
or appropriate for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies.
We are opining herein as to the effect on the subject transaction only of
the General Corporation Law of the State of Delaware, and we express no opinion
with respect to the applicability thereto, or the effect thereon, of the laws of
any other jurisdiction or, in the case of Delaware, any other laws.
Subject to the foregoing and in reliance thereon, it is our opinion that
the Shares have been duly authorized, and upon the issuance of the Shares under
the terms of the Plan and delivery and payment therefor of legal consideration
in excess of the aggregate par value of the Shares issued, the Shares will be
validly issued, fully paid and nonassessable.
We consent to your filing this opinion as an exhibit to the Registration
Statement.
Very truly yours,
LATHAM & WATKINS
16
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Strouds, Inc.:
We consent to the use of our report incorporated herein by reference in the
registration statement on Form S-8 of Strouds, Inc. of our report dated April
1, 1998, relating to the balance sheets as of February 28, 1998 and March 1,
1997 and the related statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended February 28, 1998,
which report appears in the Form 10-K filed by Strouds, Inc., on May 27, 1998.
KPMG Peat Marwick LLP
Los Angeles, California
July 5, 1998
17
