-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EUtBYyV5nIIzpnWWhmFPcYW6RUR2mENy8f5uAX+gmCrPLMXBc1HVNwf4wN5n1zxT L/LpUxh647ln6jf+S+l+YQ== 0000950123-97-008549.txt : 19971015 0000950123-97-008549.hdr.sgml : 19971015 ACCESSION NUMBER: 0000950123-97-008549 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19970830 FILED AS OF DATE: 19971014 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BED BATH & BEYOND INC CENTRAL INDEX KEY: 0000886158 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES [5700] IRS NUMBER: 112250488 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20214 FILM NUMBER: 97695427 BUSINESS ADDRESS: STREET 1: 715 MORRIS AVE CITY: SPRINGFIELD STATE: NJ ZIP: 07081 BUSINESS PHONE: 2013791520 MAIL ADDRESS: STREET 1: 715 MORRIS AVENUE CITY: SPRINGFIELD STATE: NJ ZIP: 07081 10-Q 1 BED BATH & BEYOND 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ COMMISSION FILE NUMBER 0-20214 BED BATH & BEYOND INC. (Exact name of registrant as specified in its charter) NEW YORK 11-2250488 (State of incorporation) (I.R.S. Employer Identification No.) 650 LIBERTY AVENUE, UNION, NEW JERSEY 07083 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (908) 688-0888 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK:
CLASS OUTSTANDING AT AUGUST 30, 1997 ----- ------------------------------ Common Stock - $0.01 par value 68,868,588
================================================================================ 2 INDEX PAGE NO. PART I - FINANCIAL INFORMATION Consolidated Balance Sheets As of August 30, 1997 and March 1, 1997 3 Consolidated Statements of Earnings For the Three Month and Six Month Periods Ended August 30, 1997 and August 25, 1996 4 Consolidated Statements of Cash Flows For the Six Month Periods Ended August 30, 1997 and August 25, 1996 5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10 Exhibit Index 11 3 BED BATH & BEYOND INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
August 30, March 1, 1997 1997 ---- ---- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 49,162 $ 38,765 Merchandise inventories 257,717 187,185 Prepaid expenses and other current assets 2,452 1,605 -------- -------- Total current assets 309,331 227,555 -------- -------- Property and equipment, net 99,686 88,332 Other assets 16,004 14,038 -------- -------- $425,021 $329,925 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 93,491 $ 47,821 Accrued expenses and other current liabilities 62,424 47,923 Income taxes payable 9,743 10,132 -------- -------- Total current liabilities 165,658 105,876 -------- -------- Deferred rent 11,370 9,688 -------- -------- 177,028 115,564 -------- -------- Shareholders' equity: Preferred stock - $0.01 par value; authorized - 1,000,000 shares; no shares issued or outstanding -- -- Common stock - $0.01 par value; authorized - 150,000,000 shares; issued and outstanding - August 30, 1997, 68,868,588 shares and March 1, 1997, 68,603,022 shares 689 686 Additional paid-in capital 58,424 54,149 Retained earnings 188,880 159,526 -------- -------- Total shareholders' equity 247,993 214,361 -------- -------- $425,021 $329,925 ======== ========
See accompanying Notes to Consolidated Financial Statements. -3- 4 BED BATH & BEYOND INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
Three Months Ended Six Months Ended ------------------ ---------------- August 30, August 25, August 30, August 25, 1997 1996 1997 1996 ---- ---- ---- ---- Net sales $ 266,895 $ 203,503 $ 480,557 $ 363,161 Cost of sales, including buying, occupancy and indirect costs 157,395 119,566 283,699 213,436 ----------- ----------- ----------- ----------- Gross profit 109,500 83,937 196,858 149,725 Selling, general and administrative expenses 77,730 58,903 149,278 112,030 ----------- ----------- ----------- ----------- Operating profit 31,770 25,034 47,580 37,695 Interest income 504 37 1,141 179 ----------- ----------- ----------- ----------- Earnings before provision for income taxes 32,274 25,071 48,721 37,874 Provision for income taxes 12,827 9,966 19,367 15,055 ----------- ----------- ----------- ----------- Net earnings $ 19,447 $ 15,105 $ 29,354 $ 22,819 =========== =========== =========== =========== Net earnings per share $ 0.27 $ 0.21 $ 0.41 $ 0.32 =========== =========== =========== =========== Weighted average shares outstanding 71,117,266 70,439,687 70,914,456 70,464,644 =========== =========== =========== ===========
See accompanying Notes to Consolidated Financial Statements. -4- 5 BED BATH & BEYOND INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS, UNAUDITED)
Six Months Ended ---------------- August 30, August 25, 1997 1996 ---- ---- Cash Flows from Operating Activities: Net earnings $ 29,354 $ 22,819 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 8,415 6,132 Increase in assets: Merchandise inventories (70,532) (41,644) Prepaid expenses and other current assets (847) (716) Other assets (1,966) (2,046) Increase (decrease) in liabilities: Accounts payable 45,670 20,255 Accrued expenses and other current liabilities 14,501 11,026 Income taxes payable (389) 47 Deferred rent 1,682 1,290 -------- -------- Net cash provided by operating activities 25,888 17,163 -------- -------- Cash Flows from Investing Activities: Capital expenditures (19,769) (13,938) -------- -------- Net cash used in investing activities (19,769) (13,938) -------- -------- Cash Flows from Financing Activities: Net decrease in long-term debt -- (5,000) Proceeds from exercise of stock options 4,278 5,267 -------- -------- Net cash provided by financing activities 4,278 267 -------- -------- Net increase in cash and cash equivalents 10,397 3,492 Cash and cash equivalents: Beginning of period 38,765 10,267 -------- -------- End of period $ 49,162 $ 13,759 ======== ========
See accompanying Notes to Consolidated Financial Statements. -5- 6 BED BATH & BEYOND INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1) BASIS OF PRESENTATION The accompanying consolidated financial statements, except for the March 1, 1997 consolidated balance sheet, have been prepared without audit. In the opinion of Management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of Bed Bath & Beyond Inc. and subsidiaries (the "Company") as of August 30, 1997 and March 1, 1997 and the results of their operations for the three month and six month periods ended August 30, 1997 and August 25, 1996, respectively, and cash flows for the six month periods ended August 30, 1997 and August 25, 1996. Because of the seasonality of the specialty retailing business, operating results of the Company on a quarterly basis may not be indicative of operating results for the full year. The accompanying unaudited consolidated financial statements are presented in accordance with the requirements for Form 10-Q and consequently do not include all the disclosures normally required by generally accepted accounting principles. Reference should be made to Bed Bath & Beyond Inc.'s Annual Report for the fiscal year ended March 1, 1997 for additional disclosures, including a summary of the Company's significant accounting policies. 2) CLASSIFICATION OF THE BOARD OF DIRECTORS In June 1997, the Company's Certificate of Incorporation was amended to provide for the classification of the Board of Directors into three separate classes. 3) RECENT ACCOUNTING PRONOUNCEMENT In February 1997, Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128), was issued. SFAS No. 128 simplifies the standards for computing earnings per share and makes the United States standards for computing earnings per share more comparable to international standards. SFAS No. 128 requires presentation of "basic" earnings per share (which excludes dilution) and "diluted" earnings per share. SFAS No. 128 is effective for financial statements issued for periods ending after December 15, 1997 and requires restatement of all prior period earnings per share presented. The Company will adopt SFAS No. 128 before its fiscal year end, February 28, 1998, and does not believe the adoption will have a material impact on the Company's reported earnings per share. -6- 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months August 30, 1997 vs. Three Months August 25, 1996 Net sales for the second quarter ended August 30, 1997 were $266.9 million, an increase of $63.4 million or approximately 31.2% over net sales of $203.5 million for the corresponding quarter last year. Approximately 81.8% of the increase was attributable to new store net sales. The increase in comparable store net sales in the second quarter of 1997 was approximately 5.8%. The increase in comparable net sales reflects a number of factors, including but not limited to, the continued consumer acceptance of the Company's merchandise offerings and customer service and the generally favorable retailing environment. Approximately 55% and 45% of net sales for the second quarter were attributable to sales of domestics merchandise and home furnishings merchandise, respectively. Gross profit for the second quarter of 1997 was $109.5 million or 41.0% of net sales compared with $83.9 million or 41.2% of net sales during the second quarter of 1996. The decrease in gross profit, as a percentage of net sales, was attributable to a number of factors, including a different mix of sales during the second quarter of 1997 compared to the mix of sales during the second quarter of 1996, and an increase in coupons redeemed associated with the Company's marketing program. Selling, general and administrative expenses ("SG&A") were $77.7 million in the second quarter of 1997 compared with $58.9 million in the same quarter last year and as a percentage of net sales were 29.1% and 28.9%, respectively. The increase in SG&A, as a percentage of net sales, primarily reflects increases in occupancy costs, which were partially offset by a decrease in payroll and payroll related items. Operating profit in the second quarter of 1997 increased to $31.8 million from $25.0 million in the second quarter of 1996, reflecting primarily the increase in net sales which was partially offset by increases in cost of sales and SG&A. Six Months August 30, 1997 vs. Six Months August 25, 1996 Net sales for the six months ended August 30, 1997 were $480.6 million, an increase of $117.4 million or approximately 32.3% over net sales of $363.2 million for the corresponding period last year. Approximately 80.7% of the increase was attributable to new store net sales. The increase in comparable store net sales for the first six months of 1997 was approximately 6.2%. Gross profit for the first six months of 1997 was $196.9 million or 41.0% of net sales compared with $149.7 million or 41.2% of net sales during the same period last year. The decrease in gross profit, as a percentage of net sales, was attributable to a number of factors, including a different mix of sales during the first six months of this year compared with the mix of sales in the corresponding period last year, and an increase in coupons redeemed associated with the Company's marketing program. -7- 8 SG&A was $149.3 million in the second quarter of 1997 compared with $112.0 million in the same quarter last year and as a percentage of net sales were 31.1% and 30.8%, respectively. The increase in SG&A, as a percentage of net sales, primarily reflects increases in occupancy costs, which were partially offset by a decrease in payroll and payroll related items. Operating profit in the first six months of 1997 increased to $47.6 million from $37.7 million for the same period last year, primarily resulting from the increase in net sales, which was partially offset by an increase in cost of sales and SG&A expenses. EXPANSION PROGRAM The Company is engaged in an ongoing expansion program involving the opening of new stores in both existing and new markets and the expansion or replacement of existing stores with larger stores. As a result of this program, the total number of stores has increased to 122 stores at the end of the second quarter of 1997 compared with 90 stores at the end of the corresponding quarter last year. Total square footage grew to 4,916,000 square feet at the end of the second quarter of 1997, from 3,619,000 square feet at the end of the second quarter of last year. During the first six months of fiscal 1997, the Company opened 14 new superstores and expanded one store resulting in an aggregate addition of 569,000 square feet to total store space. The Company anticipates opening approximately 19 additional superstores and expanding two stores by the end of the fiscal year, aggregating approximately 850,000 square feet of store space. FINANCIAL CONDITION Total assets at August 30, 1997 were $425.0 million compared with $329.9 million at March 1, 1997, an increase of $95.1 million. Of the total increase, $81.8 million represented an increase in current assets and $13.3 million represented an increase in non-current assets. The increase in current assets was primarily attributable to an increase in merchandise inventories, which resulted from new store space and, to a lesser extent, the changes in merchandising mix. Total liabilities at August 30, 1997 were $177.0 million compared with $115.6 million at March 1, 1997, an increase of $61.5 million. The increase was primarily attributable to a $45.7 million increase in accounts payable (resulting from an increase in inventories) and a $14.5 million increase in accrued expenses and other current liabilities. Shareholders' equity was $248.0 million at August 30, 1997 compared with $214.4 million at March 1, 1997. The increase primarily reflects net earnings for the first six months of fiscal 1997 and additional paid-in capital from the exercise of stock options. Capital expenditures for the first six months of fiscal 1997 were $19.8 million compared with $13.9 million for the corresponding period last year. The increase is primarily attributable to furniture and fixtures and leasehold improvements for the 14 new superstores opened and one store expanded during the first six months compared to furniture and fixtures and leasehold improvements for the ten new superstores opened and one expanded store in the same period last year. -8- 9 FORWARD LOOKING STATEMENTS This Form 10-Q may contain forward looking statements. Important factors which may affect these statements are contained in the Company's Annual Report to shareholders for the fiscal year ended March 1, 1997. -9- 10 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The exhibits to this report are listed on the Exhibit Index included elsewhere herein. (b) No reports on Form 8-K were filed by the Company during the three month period ended August 30, 1997. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BED BATH & BEYOND INC. (Registrant) Date: October 14, 1997 By: /s/ Ronald Curwin ------------------------------------- Ronald Curwin Chief Financial Officer and Treasurer -10- 11 EXHIBIT INDEX
Exhibit No. Exhibit Page No. - ----------- ------- -------- 3.1 Certificate of Amendment of Certificate 12 - 14 of Incorporation 3.2 Certificate of Change of Bed Bath & Beyond Inc. 15 - 16 (Under Section 805-A of the Business Corporation Law) 3.3 Amended and Restated By-Laws 17 - 27 (As amended through June 26, 1997) 10.1 Employment Agreement between the Company and 28 - 43 Warren Eisenberg (Dated as of June 30, 1997) 10.2 Employment Agreement between the Company and 44 - 59 Leonard Feinstein (Dated as of June 30, 1997) 10.3 Stock Option Agreement between the Company and 60 - 62 Warren Eisenberg (Dated as of August 26, 1997) 10.4 Stock Option Agreement between the Company and 63 - 65 Leonard Feinstein (Dated as of August 26, 1997) 10.5 Company's 1992 Stock Option Plan 66 - 73 (As amended through August 26, 1997) 10.6 Company's 1996 Stock Option Plan 74 - 80 (As amended through August 26, 1997) 11 Computation of Per Share Earnings 81 27 Financial Data Schedule 82 (Filed electronically with SEC only)
-11- EX-3.1 2 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORP 1 Exhibit 3.1 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BED BATH & BEYOND INC. (UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW) It is hereby certified that: 1. The name of the corporation (hereinafter called the "Corporation") is BED BATH & BEYOND INC. 2. The original Certificate of Incorporation of the Corporation was filed by the Department of State of the State of New York on October 5, 1971. It was filed under the original name of B&B TEXTILE CORPORATION. 3. The certificate of incorporation of the Corporation is hereby amended by striking out Article SEVENTH thereof and by substituting in lieu of said Article the following new Article SEVENTH: "SEVENTH: (a) The number of directors comprising the entire Board of Directors shall be fixed from time to time in accordance with the specific provisions of the By-laws of the corporation. (b) The Board of Directors shall be divided into three classes, each class to be as nearly equal in number as possible. The classes shall be designated as Class A, Class B and Class C. The term of office of the initial Class A directors shall expire at the 1998 annual meeting of shareholders; that of the initial Class B directors at the 1999 annual meeting of shareholders; and that of the initial Class C directors at the 2000 annual meeting of shareholders. At each annual meeting of shareholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third - 12 - 2 succeeding annual meeting of shareholders after their election. Each director shall be elected by a plurality of votes cast at the annual meeting of shareholders by the holders of shares entitled to vote thereon to serve until his or her respective successor is duly elected and qualified. Except as otherwise provided by law, if the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible; provided, however, that no decrease in the number of directors shall shorten the term of any incumbent director. Any vacancies in the Board of Directors that occur for any reason prior to the expiration of the term of office of the class in which the vacancy occurs, including vacancies that occur by reason of an increase in the number of directors, may be filled only by a plurality of the votes cast at a meeting of shareholders by the holders of shares entitled to vote thereon or by the Board of Directors of the corporation, acting by the affirmative vote of a majority of the remaining directors then in office (even if less than a quorum). A director elected to fill a vacancy shall hold office during the term to which his or her predecessor had been elected and until his or her successor shall have been elected and shall qualify, or until his or her earlier death, resignation or removal. (c) Notwithstanding anything contained in this Certificate of Incorporation to the contrary, any amendment or modification of this Paragraph SEVENTH, or any amendment or modification of this Certificate of Incorporation that has the effect of amending or modifying this Paragraph SEVENTH, shall require the affirmative vote of the holders of at least 80% of voting power of all the then-outstanding shares of voting stock of the corporation entitled to vote at an election of directors ("Voting Stock"), voting together as a single class. (d) The provisions of the By-laws of the corporation relating to the Board of Directors and meetings of shareholders may be amended or modified only by (i) the affirmative vote of the holders of at least 80% of voting power of all the then-outstanding shares of Voting Stock, voting together as a single class, or (ii) the affirmative vote of a majority of the total number of directors then in office." 3. The amendment of the certificate of incorporation herein certified was authorized first by vote of the Board of Directors of the corporation and then by the vote of the majority of all outstanding shares entitled to vote thereon. - 13 - 3 IN WITNESS WHEREOF, we have subscribed this document on June 26, 1997, and do hereby affirm, under penalties of perjury, that the statements contained herein have been examined by us and are true and correct. /s/ Leonard Feinstein ------------------------------------------- Leonard Feinstein, President /s/ Warren Eisenberg ------------------------------------------- Warren Eisenberg, Secretary - 14 - EX-3.2 3 CERTIFICATE OF CHANGE 1 Exhibit 3.2 CERTIFICATE OF CHANGE OF BED BATH & BEYOND INC. UNDER SECTION 805-A OF THE BUSINESS CORPORATION LAW FIRST: The name of the corporation (hereinafter called the "Corporation") is BED BATH & BEYOND INC. SECOND: The original Certificate of Incorporation of the Corporation was filed by the Department of State of the State of New York on October 5, 1971. It was filed under the original name of B & B TEXTILE CORPORATION. THIRD: The change in the Certificate of Incorporation effected by this certificate of change is as follows: To change the post office address to which the Secretary of State of the State of New York shall mail a copy of any process against the Corporation served upon said Secretary of State. FOURTH: To accomplish the foregoing change, Article SIXTH of the Certificate of Incorporation is hereby stricken out in its entirety, and the following new Article SIXTH is substituted in lieu thereof: "SIXTH: The Secretary of State is designated as the agent of the corporation upon whom process against the corporation may be served, and the address to which the Secretary of State shall mail a copy of any process against the corporation served upon him is Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, New Jersey 07083, Attention: Chairman." - 15 - 2 FIFTH: The foregoing change was approved by the Board of Directors. IN WITNESS WHEREOF, we have subscribed our names to this document on the date set forth below and do hereby affirm, under the penalties of perjury, that the statements contained herein have been examined by us and are true and correct. Date: July 23, 1997 /s/ Leonard Feinstein ------------------------------------------------- Leonard Feinstein President /s/ Warren Eisenberg ------------------------------------------------- Warren Eisenberg Secretary -16- EX-3.3 4 AMENDED AND RESTATED BY-LAWS 1 Exhibit 3.3 AMENDED AND RESTATED BY-LAWS* OF BED BATH & BEYOND INC. (A NEW YORK CORPORATION) ARTICLE I - OFFICES The Corporation may have such offices within and without the State of New York as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II - MEETINGS OF SHAREHOLDERS SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders shall be held at such place within or without the State of New York as the Board of Directors may from time to time determine. SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on such date and at such hour as shall from time to time be fixed by the Board of Directors. The Board of Directors acting by resolution may postpone and reschedule any previously scheduled annual meeting of shareholders. SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders for any purpose or purposes shall be called and may be held at any time upon the written request of the Board of Directors, the Chairman or the President. Any such request shall state the purpose or purposes of the proposed meeting. The business transacted at any special meeting shall be confined to the purposes stated in the notice of the meeting. The Board of Directors acting by resolution may postpone and reschedule any previously scheduled special meeting of shareholders. SECTION 4. NOTICE OF MEETINGS. Written notice of each annual and special meeting of shareholders shall state the date, time, place and purpose or purposes of each such meetings of shareholders and, unless it is the annual meeting, shall indicate that it is being issued at the direction of the person or persons requesting the meeting. SECTION 5. FIXING RECORD DATE. For the purpose of determining the - -------- * As amended through June 26, 1997 -17- 2 shareholders entitled to notice of or to vote at any meeting of the shareholders or any adjournment thereof, or to express consent to or dissent from any taking of corporate action without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or other distribution or the allotment of any rights, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be less than ten (10) nor more than fifty (50) days before the date of any such meeting, nor more than fifty (50) days before any other action. When a determination of shareholders of record entitled to notice of or to vote at any meeting of shareholders has been made as provided in this Section 4, such determination shall apply to any adjournment thereof, unless the Board of Directors fixes a new record date for the adjourned meeting or further notice is required by statute. If no record date is fixed, it shall be determined by statute. SECTION 6. QUORUM. Unless otherwise provided by statute or by the Certificate of Incorporation, the holders of a majority of the shares issued and outstanding and entitled to vote thereat, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders for the transaction of business. When a quorum is once present to organize a meeting, it shall not be broken by the subsequent withdrawal of any shareholders. At any time a quorum is not present at a meeting of the shareholders, a majority of the shareholders present in person or by proxy and entitled to vote thereat may adjourn the meeting from time to time, without notice other than an announcement at the meeting of the place, date and hour of the adjourned meeting, until a quorum shall be present, and at the adjourned meeting at which a quorum is present any business may be transacted that might have been transacted at the meeting as originally called. SECTION 7. WAIVERS. Notice of meeting need not be given to any shareholder who signs and submits a waiver of notice, in person or by proxy, whether before or after the meeting. The attendance of any shareholder at a meeting, in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting shall constitute a waiver of notice by such shareholder. SECTION 8. PROXIES. Every shareholder entitled to vote at a meeting of shareholders or to express consent or dissent without a meeting may authorize another person or other persons to act for him or her by proxy. Unless otherwise provided by statute, every proxy must be in writing and signed by the shareholder or his or her attorney-in-fact. No proxy shall be valid after expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Unless and until voted, every proxy shall be revocable at the pleasure of the shareholder executing it, except as otherwise provided by statute. SECTION 9. QUALIFICATION OF VOTERS. Every shareholder of record shall be entitled at every meeting of the shareholders to one vote for each share standing in his or her name on the record of shareholders of the Corporation, unless otherwise provided by statute, by the Certificate of Incorporation or by these By-laws. SECTION 10. ORDER OF BUSINESS. For business properly to be brought before a -18- 3 meeting by a shareholder (including, without limitation, the nomination of a person or persons to the Board of Directors), the shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual or special meeting of shareholders, not fewer than fifty (50) days or more than ninety (90) days prior to the meeting at which such business will be considered; provided, however, that, if fewer than fifty (50) days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be received not later than the close of business on the earlier of (i) the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made or (ii) the last business day prior to the meeting date; and (b) in the case of an annual meeting of shareholders, not fewer than fifty (50) days in advance of the date of the previous year's annual meeting of shareholders. To be in proper written form, a shareholder's notice to the Secretary shall set forth in writing as to each matter the shareholder proposes to bring before the meeting: (w) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting; (x) the name and address, as they appear on the Corporation's books, of the shareholder proposing such business; (y) the class and number of shares of the Corporation that are held of record and that are beneficially owned by such shareholder; and (z) any material interest of such shareholder in such business. If the business proposed to be brought before the meeting by a shareholder involves the nomination of a person or persons to the Board of Directors, the notice to the Secretary also shall set forth all the information relating to the person or persons that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, pursuant to Regulation 14A under the Securities Exchange Act of 1934. Notwithstanding anything else in these By-laws to the contrary, no business shall be conducted at a meeting of shareholders that contravenes the procedures set forth in this Section 10. The chairman of a meeting shall, if the facts warrant, determine that business was not properly brought before the meeting in accordance with the provisions of this Section 10 and, if the chairman of the meeting should so determine, any such business not properly brought before the meeting shall not be transacted and a declaration to such effect shall be made to the meeting. SECTION 11. VOTING. Unless otherwise provided by statute or by the Certificate of Incorporation, all elections for directors shall be determined by a plurality of the votes cast, whether in person or by proxy, at a meeting of shareholders by the holders of shares entitled to vote in the election, and all other corporate action shall be by a majority of the votes properly cast at a meeting of shareholders, whether in person or by proxy. All voting for the election of directors shall be by ballot. SECTION 12. LIST OF SHAREHOLDERS. A list of shareholders as of the record date, certified by the corporate officer responsible for its preparation or by a transfer agent, shall be produced at any meeting upon the request thereat or prior thereto of any shareholder. If the right to vote at any meeting is challenged, the inspectors of the election, or person presiding thereat, shall require such list of shareholders to be produced as evidence of the right of the persons challenged to vote at such meeting, and all persons who appear from such list to be shareholders entitled to vote thereat may vote at such meeting. -19- 4 SECTION 13. INSPECTORS OF ELECTION. Prior to the holding of each annual or special meeting of the shareholders, one or more inspectors of election to serve thereat shall be appointed by the Board of Directors, or, if the Board shall not have made such appointment, by the Chairman of the Board or the President. If there shall be a failure to appoint an inspector, or if, at any such meeting, the inspector or inspectors so appointed shall be absent or shall fail to act or the office shall become vacated, the chairman of the meeting may, and at the request of a shareholder present in person and entitled to vote at such meeting shall, appoint such inspector or inspectors of election to act thereat. The inspector or inspectors of election so appointed to act at any meeting of the shareholders, before entering upon the discharge of their duties, shall be sworn faithfully to execute the duties of inspector at such meeting, with strict impartiality and according to the best of his or her ability, and the oath so taken shall be subscribed by such inspector. Such inspector or inspectors of election shall take charge of the polls, and, after the voting on any question, shall make a certificate of the results of the vote taken. No director or candidate for the office of director shall act as an inspector of an election of directors. Inspectors need not be shareholders. ARTICLE III - BOARD OF DIRECTORS SECTION 1. NUMBER, QUALIFICATION AND TERM OF OFFICE. The business of the Corporation shall be managed under the direction of the Board of Directors. The number of directors that shall constitute the whole Board of Directors shall be fixed exclusively by one or more resolutions adopted by the Board of Directors. The directors need not be residents of the State of New York and need not be shareholders. No decrease in the number of directors shall shorten the term of an incumbent director. Members of the Board of Directors shall be elected at each annual meeting of shareholders in accordance with and subject to the provisions of the Certificate of Incorporation. Directors so elected shall serve until their successors have been elected and qualified or until an earlier resignation, removal or other displacement from office as provided in these By-laws. SECTION 2. PLACE OF MEETINGS. The Board of Directors may hold its meetings, regular or special, at such place or places, within or without the State of New York, as the Board of Directors may from time to time determine or as may be specified in the notice of any meeting. SECTION 3. ANNUAL MEETINGS. An annual meeting of the Board of Directors shall be held following the annual meeting of the shareholders for the purposes of electing officers of the Corporation and the committees of the Board of Directors and transacting any other business which may properly come before the meeting. Notice of annual meetings of the Board of Directors need not be given in order legally to constitute the meeting, provided a quorum shall be present. SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at times and dates fixed by the Board or at such other times and dates as the Chairman or President shall determine and as shall be specified in the notice of such meetings. -20- 5 Notice of regular meetings of the Board of Directors need not be given except as otherwise required by statute or these By-laws. SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Secretary of the Corporation upon the written request of the Chairman or President or any two directors. SECTION 6. NOTICE OF MEETINGS. Notice of each special meeting of the Board of Directors (and of each regular meeting for which notice shall be required) shall be given by the Secretary as hereinafter provided in this Section 6, which notice shall state the time, place and, if required by statute or these By-laws, the purposes of such meeting. Notice of each such meeting shall be mailed, postage thereon prepaid, to each director, by first-class mail, at least four days before the day on which such meeting is to be held, or shall be sent by facsimile transmission or comparable medium, or be delivered personally or by telephone, at least twenty-four hours before the time at which such meeting is to be held. Any meeting of the Board of Directors shall be a legal meeting without notice thereof having been given, if all the directors of the Corporation then holding office shall be present thereat. SECTION 7. WAIVERS. Notice of a meeting need not be given to any director who signs a waiver of notice, whether before or after the meeting. The attendance of any director at a meeting without protesting prior to the meeting or at its commencement the lack of notice of such meeting, shall constitute a waiver of notice by such director. SECTION 8. QUORUM. Unless otherwise provided by statute, the Certificate of Incorporation or these By-laws, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business or of any specified item of business. At any time a quorum is not present at a meeting of the Board of Directors, a majority of the directors participating may adjourn the meeting from time to time until a quorum shall be present thereat; and notice of any adjournment to another time or place shall be given to the directors who were absent at the time of the adjournment and, unless the new time and place are announced at the meeting to be adjourned, to the other directors. SECTION 9. MEETING PARTICIPATION WITHOUT PHYSICAL PRESENCE. Any one or more members of the Board of Directors or of any committee thereof may participate in a meeting of the Board of Directors or of such committee by means of conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. SECTION 10. ACTION OF THE BOARD. Unless otherwise provided by statute, the Certificate of Incorporation or these By-laws, the vote of a majority of the directors at any meeting at which a quorum is present shall be the act of the Board of Directors. Each director shall have one vote regardless of the number of shares, if any, which he or she may hold. SECTION 11. ACTION BY CONSENT WITHOUT A MEETING. Any action required or -21- 6 permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or of such committee consent in writing to the adoption of a resolution authorizing such action. The written consent or consents to each such action, including the resolutions adopted thereby, shall be filed with the minutes of the proceedings of the Board of Directors or of the committee taking such action. SECTION 12. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors, by resolution adopted by a majority of the entire Board, may designate from among its members an executive committee and other committees, each consisting of three (3) or more directors, and each of which shall have all the authority of the Board of Directors to the extent provided in the resolution, except as otherwise provided by statute. Each such committee shall serve at the pleasure of the Board of Directors and shall keep minutes of its meetings and report the same to the Board of Directors as and when requested by the Board and shall observe such other procedures with respect to its meetings as are provided in these By-laws or, to the extent not provided herein, as may be provided by the Board of Directors in the resolution appointing such committee or as may be adopted by the Board of Directors thereafter. SECTION 13. REMOVAL. Unless otherwise provided by statute, any or all directors may be removed for cause by vote of the shareholders or by action of the Board of Directors at a special meeting called for that purpose. SECTION 14. RESIGNATION. Any director may resign at any time by giving written notice to the Board of Directors, the President or the Secretary of the Corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Board of Directors or such officer, and acceptance of the resignation shall not be necessary to make it effective. SECTION 15. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board of Directors for any reason shall be filled in accordance with and subject to the provisions of the Certificate of Incorporation. SECTION 16. COMPENSATION. The Board of Directors, by resolution and irrespective of any personal interest of any of its members, shall have the authority to establish reasonable compensation and fix reimbursement for reasonable expenses of all directors for their services to the Corporation as directors, officers or otherwise. ARTICLE IV - OFFICERS SECTION 1. OFFICERS. The officers of the Corporation shall include the Chairman, the President, one or more Vice Presidents (one or more of whom may be designated as Executive Vice Presidents or as Senior Vice Presidents or by other designations), the Secretary, the Treasurer and such other officers as the Board of Directors may from time to time deem necessary, each of whom shall have such duties, powers and functions as provided in these -22- 7 By-laws and as may be determined from time to time by resolution of the Board of Directors. Two or more offices, except those of President and Secretary, may be held by the same person; provided, however, that no officer shall execute, acknowledge or verify any instrument in more than one capacity. Each of the officers shall, when requested, consult with and advise the other officers of the corporation. SECTION 2. ELECTION OR APPOINTMENT AND TERM OF OFFICE. Each officer shall be elected or appointed by the Board of Directors to hold office until the next annual meeting of the Board of Directors and until his or her successor is elected or appointed and qualified, or until such earlier date as shall be prescribed by the Board of Directors at the time of his or her election or appointment or until an earlier resignation, removal or displacement from office. Any officer elected or appointed by the Board of Directors may be removed at any time, with or without cause, by vote of a majority of the Board of Directors. SECTION 3. VACANCIES. In the event of the resignation, removal or other displacement from office of an officer elected or appointed by the Board of Directors, the Board, in its sole discretion, may elect or appoint a successor to fill the unexpired term. SECTION 4. THE CHAIRMAN. The Chairman shall, together with the President, have general direction over the day-to-day business of the Corporation, subject to the control and direction of the Board of Directors. The Chairman shall, when present, preside as chairman at all meetings of the shareholders and of the Board of Directors. The Chairman shall, in the absence or incapacity of the President, perform all duties and functions and exercise all the powers of the President. The Chairman shall also have such other powers and perform such other duties required by statute or by these By-laws or as the Board of Directors may from time to time determine. SECTION 5. THE PRESIDENT. The President shall, together with the Chairman, have general direction over the day-to-day business of the Corporation, subject to the control and direction of the Board of Directors. In the absence of the Chairman, the President shall preside at meetings of the shareholders and of the Board of Directors. The President shall, in the absence or incapacity of the Chairman, perform all duties and functions and exercise all the powers of the Chairman. The President shall also have such other powers and perform such other duties required by statute or by these By-laws or as the Board of Directors may from time to time determine. SECTION 6. VICE PRESIDENTS. Each Vice President shall have such powers and perform such duties as from time to time may be assigned to him or her by the Board of Directors or be delegated to him or her by the Chairman or by the President. In the absence or inability to perform of the Chairman and the President, the Vice President (or if there is more than one Vice President, then the Executive Vice President) shall have all the powers and functions of the President. -23- 8 SECTION 7. TREASURER. The Treasurer shall have the safekeeping and custody of the corporate funds and other valuable effects, including securities, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, and shall deposit all money and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation under the direction of the President or the Chairman, taking proper vouchers for such disbursements, and render to the President and the Chairman at the annual and regular meetings of the Board of Directors, or whenever the President or the Chairman require it, an account of all transactions as Treasurer and of the financial condition of the Corporation. The Treasurer shall make a full financial report at the annual meeting of shareholders. The Treasurer shall also have such other powers and perform such other duties incident to the office of Treasurer required by statute or by these By-laws or as the Board of Directors may from time to time determine. SECTION 8. SECRETARY. The Secretary shall keep or cause to be kept in one or more books provided for such purpose, the minutes of all meetings of the Board of Directors, shareholders and committees of the Board of Directors, see that all notices are duly given in accordance with the provisions of these By-laws and as required by law and see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed. The Secretary shall also have such other powers and perform such other duties incident to the office of Secretary required by law or by these By-laws or as the Board of Directors may from time to time determine. SECTION 9. DESIGNATED OFFICERS. (a) Chief Executive Officer. Either the Chairman or the President, or both, as the Board of Directors may designate, shall be the Chief Executive Officer of the Corporation. The officer so designated shall have, in addition to the powers and duties applicable to his or her office set forth in this Article IV, general and active supervision and direction over the business and affairs of the Corporation and over its several officers, agents and employees, subject, however, to the control of the Board of Directors. The Chief Executive Officer shall also have such other powers and duties incident to the designated position of Chief Executive Officer as the Board of Directors may from time to time determine. Any reference to the Chief Executive Officer in these By-laws shall be deemed to mean, if there is a Co-Chief Executive Officer, either Co-Chief Executive Officer, each of whom may exercise the full powers and authorities of the designated position of Chief Executive Officer. (b) Other Designated Officers. The Board of Directors may from time to time designate officers to serve as Chief Financial Officer, Chief Accounting Officer and other such designated positions and to fulfill the responsibilities of such designated positions in addition to the powers and duties applicable to his or her office as set forth in this Article IV. Such designated officers shall also have such other powers and duties incident to his or her designated position as the Board of Directors may from time to time determine. SECTION 10. COMPENSATION. The salaries and other compensation of all officers elected by the Board of Directors shall be fixed from time to time by or under the direction of the Board of Directors. -24- 9 ARTICLE V - INDEMNIFICATION OF DIRECTORS AND OFFICERS The Corporation shall, to the fullest extent permitted by applicable law as in effect at any time, indemnify any director (and may indemnify any officer) made, or threatened to be made, a party to an action or proceeding, whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Corporation served in any capacity at the request of the Corporation, by reason of the fact that he or she, his or her testator or intestate, was a director or officer of the corporation, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including reasonable attorneys' fees incurred as a result of such action or proceeding, or any appeal therein; provided that to the extent prohibited by applicable law no indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to the director or officer establishes that his or her acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled. The right to indemnification pursuant to this Article V is intended to be retroactive and shall, to the extent permitted by applicable law, be available with respect to events occurring prior to the adoption hereof and shall continue to exist after any future rescission or restrictive modification hereof with respect to any alleged cause of action that accrues, or any other incident or matter that occurs, prior to such rescission or modification. ARTICLE VI - SHARES SECTION 1. CERTIFICATES FOR SHARES. The certificates for shares of the Corporation shall be in such form as shall be determined by the Board of Directors, and shall be numbered and entered in the books of the Corporation as they are issued. Each certificate shall exhibit the registered holder's name, the number and class of shares, and the designation of any series, if any, that it evidences, and shall set forth such other statements as may be required by statute. Each certificate shall be signed by the Chairman or the President and by the Secretary or the Treasurer, any or all of whose signatures may be facsimile if such certificate is countersigned by a transfer agent or registered by a registrar. Each certificate may be sealed with the seal of the Corporation or a facsimile thereof. In case any one or more of the officers who have signed or whose facsimile signatures appear on any such certificate shall cease to be such officer or officers of the Corporation, whether because of resignation, removal or other displacement from office, before such certificate is issued and delivered, it may nonetheless be issued and delivered with the same effect as if such officer or officers had continued in office. SECTION 2. LOST, MUTILATED, STOLEN OR DESTROYED CERTIFICATES. The Board of Directors may direct a new certificate or new certificates be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, mutilated, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may prescribe such terms and conditions as it deems -25- 10 expedient, and may require such indemnities as it deems adequate, to protect the Corporation from any claim that may be made against it with respect to any such certificate alleged to have been lost, mutilated, stolen or destroyed. SECTION 3. TRANSFER AGENT AND REGISTRAR; REGULATIONS. The Board of Directors may appoint transfer agents or registrars, or both, and may require all share certificates to bear the signature of either or both. The Board of Directors may make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the Corporation. SECTION 4. TRANSFER OF SHARES. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation shall issue or cause the transfer agent to issue a new certificate to the person entitled thereto, shall cancel the old certificate and shall record such transfer upon the books of the corporation. SECTION 5. CANCELLATION OF CERTIFICATES. Each certificate for shares to be canceled shall be marked "CANCELED" across the face thereof by the Secretary, with the date of cancellation, and the transaction shall be immediately recorded in the certificate book opposite the memorandum of issue. The canceled certificate should be inserted thereafter in the certificate book. SECTION 6. CONTINGENT INTEREST IN SHARES. No entry shall be made in the books of the Corporation or on any certificate for shares that any person is entitled to any future, limited or contingent interest in any share. SECTION 7. UNCERTIFICATED SHARES. The Board of Directors may in its discretion authorize the issuance of shares which are not represented by certificates and provide for the registration and transfer thereof on the books and records of the Corporation or any transfer agent or registrar so designated. SECTION 8. SHAREHOLDER RECORDS. The names and addresses of the persons to whom shares are issued, and the number of shares and the dates of issue and any transfer thereof, whether in certificated or uncertificated form, shall be entered on records kept for that purpose. The stock transfer records and the blank stock certificates shall be kept by the transfer agent, or by the treasurer, or such other officer as shall be designated by the Board of Directors for that purpose. ARTICLE VII - GENERAL SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall be fixed and may from time to time be changed by resolution of the Board of Directors. -26- 11 SECTION 2. SEAL. The seal of the Corporation, if any, shall be circular in form and bear the name of the Corporation, the year of its organization and the words "Corporate Seal New York." The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced directly on the instrument or writing to be sealed. SECTION 3. INSTRUMENTS AND DOCUMENTS. All corporate instruments and documents shall be signed, countersigned, executed, verified or acknowledged by such officers or other person or persons as the Board of Directors may from time to time designate. SECTION 4. AMENDMENTS. These By-laws may be amended or repealed or new By-laws may be adopted by the shareholders at any annual or special meeting if the notice thereof mentions that amendment or repeal or the adoption of new By-laws is one of the purposes of such meeting; provided, however, that the provisions of the By-laws relating to the Board of Directors and meetings of shareholders may be amended or modified only by (i) the affirmative vote of the holders of at least 80% of voting power of all the then-outstanding shares of voting stock of the corporation entitled to vote at an election of directors, voting together as a single class, or (ii) the affirmative vote of a majority of the total number of directors then in office. These By-laws may also be amended or repealed or new By-laws may be adopted by the affirmative vote of a majority of the Board of Directors given at any meeting, if the notice thereof mentions that amendment or repeal or the adoption of new By-laws is one of the purposes of such meeting. If any By-laws regulating an impending election of directors are adopted or amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of the shareholders for the election of directors the By-laws so adopted or amended or repealed, together with a concise statement of the changes made. -27- EX-10.1 5 EMPLOYMENT AGREEMENT RE W. EISENBERG 1 Exhibit 10.1 EMPLOYMENT AGREEMENT Dated as of June 30, 1997 The parties to this agreement are Bed Bath & Beyond Inc., a New York corporation (the "Company"), and Warren Eisenberg (the "Executive"). The Company wishes to continue to employ the Executive and enter into this agreement, which embodies the terms of such employment, and the Executive wishes to enter into this agreement and accept such continued employment on such terms. Accordingly, the parties agree as follows: 1. Positions, Duties and Responsibilities (a) During the Executive's employment under this agreement, the Executive shall be employed as the co-chief executive officer with Leonard Feinstein or chief executive officer of the Company and be responsible for the general management of the affairs of the Company. It is the intention of the parties that the Executive be elected to and serve as a member of the board of directors of the Company. The Executive, in carrying out his duties under this agreement, shall report to the board of directors of the Company. (b) Nothing in this agreement shall preclude the Executive from (i) serving on the boards of directors of a reasonable number of other corporations or the boards of a reasonable number of trade associations and/or charitable organizations, (ii) engaging in charitable activities and community affairs and (iii) managing his personal investments and affairs, provided that such activities do not materially interfere with the proper performance of his duties and responsibilities under this agreement. -28- 2 2. Term of Employment. The Executive's employment under this agreement shall continue until the earlier of (a) the fifth anniversary of this agreement (as may be extended from time to time by mutual agreement of the parties) (the "Final Date") or (b) the termination of his employment in accordance with this agreement. 3. Senior Status. Notwithstanding anything to the contrary in sections 1 and 2, at any time during the Executive's employment under this agreement and before the Final Date, the Executive may, at his option, upon 90 days' written notice given to the Company, elect to terminate his positions, duties and responsibilities under section 1, and during the period (the "Senior Status Period") commencing 90 days after such written notice is first given and continuing until the earlier of (a) the tenth anniversary of the termination of his positions, duties and responsibilities under section 1 or (b) the termination of the Executive's employment in accordance with this agreement, provide consulting (but not line executive) services as an employee. If the Executive shall not have exercised this option on or before the 90th day before the Final Date, then, at the written request of the Company given not later than 60 days before the Final Date, the Executive shall nonetheless be deemed to have exercised this option. It is the intention of the parties that, during the Senior Status Period, the Executive shall continue to be elected to and serve as a member of the board of directors of the Company. The Executive, in carrying out his duties during the Senior Status Period, shall report to the Company's chief executive officer or, if the board of directors of the Company so determines, to the board of directors of the Company. During the Senior Status Period, the Executive shall, at the request from time to time of the Company's chief executive officer or board of directors, make himself available to the Company, at times that are reasonably convenient for him, to provide advisory services (it being understood, however, that such services shall not require the Executive to travel -29- 3 to a location more than 25 miles from his residence from time to time or to devote more than fifty (50) hours in any three-month period to the Company). During the Senior Status Period, the Company shall provide the Executive an office (at a location specified by the Executive, which need not be where the Company's offices are located) and secretary that, in the Executive's good faith judgment, are appropriate to enable him to perform his duties under this agreement. 4. Salary. During his employment under this agreement and prior to the Senior Status Period, the Executive shall be entitled to an annual salary, payable in accordance with the regular payroll practices of the Company, of $750,000. During the Senior Status Period, the Executive shall be entitled to an annual salary, payable in accordance with the regular payroll practices of the Company, of $400,000. The Company may pay additional compensation to the Executive, whether in the form of an increase in salary, bonus or otherwise, if and to the extent authorized by the board of directors of the Company, in its sole discretion, from time to time, it being understood that the board of directors may give consideration to increasing such compensation at various intervals during the term of this agreement. 5. Employee Benefit Programs Generally. During the Executive's employment under this agreement, the Executive shall be entitled to participate in all employee pension and welfare benefits plans and programs available to the Company's senior level executives or to its employees generally, as such plans or programs may be in effect from time to time, including, without limitation, pension, profit sharing, savings and other retirement plans or programs, medical, dental, hospitalization, short-term and long-term disability and life insurance plans, accidental death and dismemberment protection, travel accident insurance, and any other pension or retirement plans or programs and any other employee welfare benefit plans or programs that may be sponsored by the Company from time to time, including any plans that supplement the -30- 4 above-listed types of plans or programs, whether funded or unfunded. 6. Reimbursement of Business and Other Expenses. The Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this agreement, and the Company shall promptly reimburse him for all business expenses incurred in carrying out the business of the Company, subject to documentation in accordance with the Company's policies. 7. Termination of Employment (a) In the event the Executive's employment terminates due to his death, his estate or his beneficiaries, as the case may be, shall be entitled to his salary for a period of 90 days following his death, any amount owing but not yet paid under section 6 and other or additional benefits in accordance with applicable plans and programs of the Company. (b) In the event the Executive's employment terminates due to his inability substantially to perform his duties and responsibilities under this agreement for a period of 180 consecutive days, he shall be entitled to his salary for a period of 90 days following the date of termination, any amount owing but not yet paid under section 6, continued participation at the Company's expense in medical, dental, hospitalization and life insurance coverage and in all other employee plans and programs in which he or his family was participating on the date of termination of his employment until the tenth anniversary of the date of termination and other or additional benefits in accordance with applicable plans and programs of the Company (and thereafter, at the Executive's option and expense, to the extent he or his family can be included in such plans and programs). If the Executive is precluded from continuing his participation in any benefit plan or program referred to in the immediately preceding sentence, he shall be provided the after-tax economic equivalent of the benefits provided under the plan or program in which he -31- 5 is unable to participate. The economic equivalent of any benefit foregone shall be deemed to be the lowest cost that would be incurred by the Executive in obtaining such benefit himself on an individual basis. In no event shall a termination of the Executive's employment under this section 7(b) occur, unless the party terminating the Executive's employment gives written notice to the other party in accordance with this agreement. (c) (i) As used in this agreement, the term "Cause" means (A) the Executive is convicted of a felony involving moral turpitude or (B) the Executive is guilty of willful gross neglect or willful gross misconduct in carrying out his duties under this agreement, resulting, in either case, in material economic harm to the Company, unless the Executive believed in good faith that such act or nonact was in the best interests of the Company. (ii) The Company may terminate the Executive's employment under this agreement for Cause. A termination for Cause shall not take effect, however, unless the provisions of this paragraph (c)(ii) are complied with. The Executive shall be given written notice by the board of directors of the Company of the intention to terminate his employment for Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based. The Executive shall have 10 days after the date that such written notice has been given in which to cure such conduct, to the extent a cure is possible. If he fails to cure such conduct, his employment shall be terminated for Cause. (iii) In the event the Company terminates the Executive's employment for Cause, he shall be entitled to his salary through the date of the termination of his employment, any amounts owing but not yet paid under section 6 and other or additional benefits in accordance with applicable plans or programs of the Company. -32- 6 (d) (i) As used in this agreement, the term "Constructive Termination Without Cause" means a termination of the Executive's employment at his initiative following the occurrence, without the Executive's prior written consent, of one or more of the following events (except in consequence of a prior termination): (A) a reduction in the Executive's salary or a material reduction of any employee benefit or perquisite enjoyed by him (other than as part of any across-the-board action applicable to all executive officers of the Company); (B) the failure to elect or reelect the Executive to any of the officer or director positions referred to in section 1(a) or removal of him from any of such positions; (C) a material diminution in the Executive's duties or the assignment to the Executive of duties materially inconsistent with his duties or that materially impair the Executive's ability to function, prior to the Senior Status Period, as the co-chief executive officer or chief executive officer of the Company; (D) the relocation of the Company's principal office, or the Executive's own office location as assigned to him by the Company, to a location more than twenty-five (25) miles from Union, New Jersey. (ii) In the event the Company terminates the Executive's employment without Cause, other than pursuant to section 7(a) or (b), or in the event there is a Constructive Termination Without Cause, the Executive shall be entitled to his salary through the date of termination of employment, his salary at the annual rate of $750,000 through the Final Date and thereafter at the annual rate of $400,000 through the 10th anniversary of the Final Date (provided that, at the Executive's option, exercised by written notice given to the Company, the Company -33- 7 shall pay him the present value of such salary continuation payments in a lump sum (using as the discount rate the Applicable Federal Rate for short-term Treasury obligations as published by the Internal Revenue Service for the month in which such termination occurs)), any amount owing but not yet paid under section 6, and he shall be afforded continued participation in all medical, dental, hospitalization and life insurance coverage and in other employee benefit plans or programs in which he was participating on the date of the termination of his employment until the earlier of: (A) the end of the period during which he is receiving salary continuation payments (or in respect of which a lump-sum payment is made); (B) the date, or dates, he receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverages and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis); (provided that (x) if the Executive is precluded from continuing his participating in any employee benefit plan or program as so provided, he shall be provided with the after-tax economic equivalent of the benefits provided under the plan or program in which he is unable to participate for the periods so specified, (y) the economic equivalent of any benefit foregone shall be deemed to be the lowest cost that would be incurred by the Executive in obtaining such benefit himself on an individual basis and (z) payment of such after-tax economic equivalent shall be made quarterly in advance), and he shall be afforded other or additional benefits in accordance with applicable plans and programs of the Company. (e) Subject to section 8(b), in the event of a termination of employment by the Executive on his own initiative other than a termination otherwise provided for in this section 7, -34- 8 the Executive shall have the same entitlements as provided in section 7(c)(iii) for a termination for Cause. A voluntary termination under this section 7(e) shall be effective upon 30 days written notice given to the Company and shall not be deemed a breach of this agreement. (f) In the event of any termination of employment under this section 7, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due the Executive under this agreement on account of any remuneration attributable to any subsequent employment that he may obtain, except as specifically provided in this section 7. 8. Change in Control (a) As used in this agreement, the term "Change in Control" means the occurrence of any one of the following events: (i) any "person," as such term is used in sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, becomes a "beneficial owner," as such term is used in Rule 13d-3 under that act, of 30% or more of the outstanding common stock of the Company, excluding a person that is an affiliate (as such term is used under that act) of the Company on the date of this agreement, or any affiliate of any such person; (ii) the majority of the board of directors of the Company consists of individuals other than Incumbent Directors, which term means the members of the board of directors of the Company on the date of this agreement; provided that any person becoming a director subsequent to such date whose election or nomination for election was supported by two-thirds of the directors who then comprised the Incumbent Directors shall be considered an Incumbent Director; (iii) the Company adopts any plan of liquidation providing for the -35- 9 distribution of all or substantially all its assets; (iv) all or substantially all the assets or business of the Company are disposed of pursuant to a merger, consolidation or other transaction (unless the shareholders of the Company immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they own the common stock of the Company, all the common stock or other ownership interests of the entity or entities, if any, that succeed to the business of the Company); or (v) the Company combines with another company and is the surviving corporation, but, immediately after the combination, the shareholders of the Company immediately prior to the combination hold, directly or indirectly, 50% or less of the common stock or other ownership interests of the combined company (there being excluded from the number of shares held by such shareholders, but not from the common stock or other ownership interests of the combined company, any shares other ownership interests received by affiliates of such other company in exchange for stock of such other company). (b) Following a Change in Control, the Executive may, at his option, upon 90 days' written notice given to the Company, terminate his employment under this agreement and, in lieu of any other amounts otherwise payable to him under section 7, (i) he will be entitled to receive, in a single lump sum on or before the 90th day after such written notice is given, an amount equal to (A) the product of (1) the Executive's annual salary then in effect and (2) three, if the written notice is given before the Senior Status Period, or (B) the product of (1) $200,000 and (2) the number of years (including fractions), if any, remaining in the Senior Status Period on the 90th day after such written notice is given, if the written notice is given during the Senior Status Period, and (ii) subject to the provisos set forth in (x), (y) and (z) of section 7(d)(ii), he -36- 10 shall be afforded continued participation in all medical, dental, hospitalization and life insurance coverage and in other employee benefit plans or programs in which he was participating on the date of the termination of his employment until the earlier of (A) the tenth anniversary of the termination of employment or (B) the date, or dates, he receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverages and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis). (c) In the event the amount provided to the Executive under section 8(b) is determined to constitute a Parachute Payment, as such term is defined in section 280G(b)(2) of the Internal Revenue Code of 1986 (the "Code"), notwithstanding anything to the contrary in this agreement, the amount so provided shall be reduced to the maximum amount (if any) that can be so provided without any of that amount being subject to any excise tax imposed by section 4999 of the Code ("Excise Tax"). The determination of whether the amount so provided constitutes a Parachute Payment and, if so, the amount to be paid to the Executive and the time of payment pursuant to this section 8(c) shall be made by an independent auditor (the "Auditor") jointly selected by the Company and the Executive and paid by the Company. The Auditor shall be a nationally recognized United States public accounting firm, which has not, during the two years preceding the date of its selection, acted in any way on behalf of the Company or any affiliate of the Company. If the Executive and the Company cannot agree on the firm to serve as the Auditor, the Executive and Company shall each select one accounting firm and those two firms shall jointly select the accounting firm to serve as the Auditor. 9. Indemnification (a) The Company agrees that, if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, -37- 11 administrative or investigation (a "Proceeding"), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive's alleged action in an official capacity while serving as director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Company to the fullest extent permitted or authorized by the Company's certificate of incorporation or bylaws or, if greater, by the laws of the state of New York, against all cost, expense, liability and loss (including, without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of the Executive's heirs, executors and administrators. The Company shall advance to the Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 days after receipt by the Company of a written request for such advance. Such request shall include a undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses. (b) Neither the failure of the Company (including its board or directors, independent legal counsel or shareholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by the Executive under section 9(a) that indemnification of the Executive is proper because he has met the applicable standard of conduct, nor a determination by the Company (including its board of -38- 12 directors, independent legal counsel or shareholders) that the Executive has not met such applicable standard of conduct, shall create a presumption that the Executive has not met the applicable standard of conduct. (c) The Company agrees to continue and maintain a director's and officers' liability insurance policy covering the Executive to the extent the Company provides such coverage for its other executive officers. 10. Confidentiality. The Executive shall at all times during the period of his employment and thereafter hold in confidence any and all Confidential Information (as defined below) that may have come or may come into his possession or within his knowledge concerning the products, services, processes, businesses, suppliers, customers and clients of the Company or its controlled affiliates. The Executive agrees that neither he nor any person or enterprise controlled by him will for any reason directly or indirectly, for himself or any other person, use or disclose any trade secrets, proprietary or confidential information, inventions, manufacturing or industrial processes or procedures, patents, trademarks, trade names, customer lists, service marks, service names, copyrights, applications for any of the foregoing or licenses or other rights in respect thereof (collectively, "Confidential Information"), owned or used by, or licensed to, the Company or any of its controlled affiliates, provided that the Executive may disclose Confidential Information that has become generally available to the public other than as a result of a breach of this agreement by the Executive or pursuant to an order of a court of competent jurisdiction or of a governmental agency, department or commission. Upon termination of his employment under this agreement, the Executive shall promptly surrender to the Company all documents he believes contain Confidential Information and that are within his possession or control, other than documents to which the Executive is or was a party or that relate to the -39- 13 Executive or the basis, or purported basis, on which his employment was terminated. 11. Noncompetition and Nonsolicitation (a) The Executive agrees that from the date of this agreement and subsequent to the termination of his employment under this agreement and continuing for the period (the "Non-Compete Period") after termination of employment under section 7 (but not under section 8) in respect of which salary continuation payments would be required to be made under section 7(d) (regardless of whether termination of employment occurs pursuant to section 7(d)), neither the Executive nor any person or enterprise controlled by him will become a shareholder, lender, director, officer, agent or employee of a corporation or member of or lender to a partnership, engage as a sole proprietor in any business, act as a consultant to any of the foregoing or otherwise engage directly or indirectly in any business that is in competition with the business then conducted by the Company or any of its controlled affiliates in any state in the United States or any other country in which the Company or any of its controlled affiliates has engaged in such business during the Executive's employment under this agreement; provided, however, that the foregoing shall not prohibit the Executive from owning less than two percent of the outstanding securities of any class of capital stock of a corporation the securities of which are regularly traded or quoted on a national securities exchange or on an inter-dealer quotation system. (b) The Executive agrees that, during the Non-Compete Period, neither he nor any person or enterprise controlled by him will (i) solicit for employment any person who was employed by the Company or any of its controlled affiliates at any time within one year prior to the time of the act of solicitation or (ii) in any way cause, influence or participate in the solicitation for employment of any such individual by anyone else. (c) The Executive acknowledges that there is no adequate remedy at law for a -40- 14 breach of this section 11 and that, in the event of such a breach or attempted breach, the Company shall be entitled to injunctive or other equitable relief to prevent any such breach, attempted breach or continuing breach, without prejudice to any other remedies for damages or otherwise. 12. Assignability; Binding Nature. This agreement shall inure to the benefit of the parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations of the Company under this agreement may be assigned or transferred by the Company, except pursuant to a merger or consolidation, or the sale or liquidation of all or substantially all the assets of the Company, provided that, in the case of such a sale or liquidation, the assignee or transferee assumes in writing the obligation to perform this agreement (it being understood, however, that no such assignment or transfer shall relieve the Company of its liabilities or obligations under this agreement). 13. Amendment or Waiver. This agreement may not be amended or waived, except by an instrument in writing signed by the party to be charged. 14. Severability. If any provision of this agreement is invalid or unenforceable, the remaining provisions of this agreement shall remain in effect. 15. Governing Law. This agreement shall be governed by and construed and interpreted in accordance with the law of the state of New York without reference to principles of conflict of laws. 16. Disputes. Except as otherwise expressly provided in this agreement, any dispute arising under or in connection with this agreement shall, at the election of the Executive, be resolved by binding arbitration to be held in New York City in accordance with the rules of the American Arbitration Association. Judgment upon the arbitrator's award may be entered in any -41- 15 court having jurisdiction. Costs of any arbitration or litigation, including, without limitation, attorneys' fees of both parties, shall be borne by the Company and advanced to the Executive as appropriate from time to time, provided that, if the arbitrator or judge, as the case may be, determines that the claims or defenses of the Executive were without any reasonable basis, each party shall bear his or its own costs. 17. Notices. All notices and other communications under this agreement shall be in writing and may be given by any of the following methods: (a) personal delivery; (b) facsimile transmission; (c) registered or certified mail, postage prepaid, return receipt requested; or (d) overnight delivery service. Notices shall be sent to the appropriate party at its or his address or facsimile number given below (or at such other address or facsimile number for that party as specified by notice given under this section 17): if to the Company, to it at: 650 Liberty Avenue Union, New Jersey 07083 Fax: 908-688-8385 if to the Executive, to him at: 245 Dale Drive Short Hills, New Jersey 07078 All such notices and communications shall be deemed given and received upon (a) actual receipt by the addressee, (b) actual delivery to the appropriate address or (c) in the case of a facsimile transmission, upon transmission by the sender and issuance by the transmitting machine of a confirmation slip confirming that the number of pages constituting the notice have been transmitted without error. In the case of notices sent by facsimile transmission, the sender shall -42- 16 contemporaneously mail a copy of the notice to the addressee at the address provided above; however, such mailing shall in no way alter the time at which the facsimile notice is deemed given and received. 18. Headings. The section headings in this agreement are for convenience only and shall not affect the meaning or construction of any provision of this agreement. 19. Counterparts. This agreement may be executed in counterparts. 20. Entire Agreement. This agreement contains the entire agreement and understanding of the parties concerning its subject matter and supersedes all prior agreements and understandings with respect to that subject matter. Nothing in this agreement is intended to or shall affect the rights or obligations of the parties under any agreement relating to the maintenance of life insurance or stock options. BED BATH & BEYOND INC. By: /s/ LEONARD FEINSTEIN -------------------------------------------- LEONARD FEINSTEIN, President and Co-Chief Executive Officer THE EXECUTIVE: /s/ Warren Eisenberg -------------------------------------------- Warren Eisenberg -43- EX-10.2 6 EMPLOYMENT AGREEMENT RE L. FEINSTEIN 1 Exhibit 10.2 EMPLOYMENT AGREEMENT Dated as of June 30, 1997 The parties to this agreement are Bed Bath & Beyond Inc., a New York corporation (the "Company"), and Leonard Feinstein (the "Executive"). The Company wishes to continue to employ the Executive and enter into this agreement, which embodies the terms of such employment, and the Executive wishes to enter into this agreement and accept such continued employment on such terms. Accordingly, the parties agree as follows: 1. Positions, Duties and Responsibilities (a) During the Executive's employment under this agreement, the Executive shall be employed as the co-chief executive officer with Warren Eisenberg or chief executive officer of the Company and be responsible for the general management of the affairs of the Company. It is the intention of the parties that the Executive be elected to and serve as a member of the board of directors of the Company. The Executive, in carrying out his duties under this agreement, shall report to the board of directors of the Company. (b) Nothing in this agreement shall preclude the Executive from (i) serving on the boards of directors of a reasonable number of other corporations or the boards of a reasonable number of trade associations and/or charitable organizations, (ii) engaging in charitable activities and community affairs and (iii) managing his personal investments and affairs, provided that such activities do not materially interfere with the proper performance of his duties and responsibilities under this agreement. -44- 2 2. Term of Employment. The Executive's employment under this agreement shall continue until the earlier of (a) the fifth anniversary of this agreement (as may be extended from time to time by mutual agreement of the parties) (the "Final Date") or (b) the termination of his employment in accordance with this agreement. 3. Senior Status. Notwithstanding anything to the contrary in sections 1 and 2, at any time during the Executive's employment under this agreement and before the Final Date, the Executive may, at his option, upon 90 days' written notice given to the Company, elect to terminate his positions, duties and responsibilities under section 1, and during the period (the "Senior Status Period") commencing 90 days after such written notice is first given and continuing until the earlier of (a) the tenth anniversary of the termination of his positions, duties and responsibilities under section 1 or (b) the termination of the Executive's employment in accordance with this agreement, provide consulting (but not line executive) services as an employee. If the Executive shall not have exercised this option on or before the 90th day before the Final Date, then, at the written request of the Company given not later than 60 days before the Final Date, the Executive shall nonetheless be deemed to have exercised this option. It is the intention of the parties that, during the Senior Status Period, the Executive shall continue to be elected to and serve as a member of the board of directors of the Company. The Executive, in carrying out his duties during the Senior Status Period, shall report to the Company's chief executive officer or, if the board of directors of the Company so determines, to the board of directors of the Company. During the Senior Status Period, the Executive shall, at the request from time to time of the Company's chief executive officer or board of directors, make himself available to the Company, at times that are reasonably convenient for him, to provide advisory services (it being understood, however, that such services shall not require the Executive to travel -45- 3 to a location more than 25 miles from his residence from time to time or to devote more than fifty (50) hours in any three-month period to the Company). During the Senior Status Period, the Company shall provide the Executive an office (at a location specified by the Executive, which need not be where the Company's offices are located) and secretary that, in the Executive's good faith judgment, are appropriate to enable him to perform his duties under this agreement. 4. Salary. During his employment under this agreement and prior to the Senior Status Period, the Executive shall be entitled to an annual salary, payable in accordance with the regular payroll practices of the Company, of $750,000. During the Senior Status Period, the Executive shall be entitled to an annual salary, payable in accordance with the regular payroll practices of the Company, of $400,000. The Company may pay additional compensation to the Executive, whether in the form of an increase in salary, bonus or otherwise, if and to the extent authorized by the board of directors of the Company, in its sole discretion, from time to time, it being understood that the board of directors may give consideration to increasing such compensation at various intervals during the term of this agreement. 5. Employee Benefit Programs Generally. During the Executive's employment under this agreement, the Executive shall be entitled to participate in all employee pension and welfare benefits plans and programs available to the Company's senior level executives or to its employees generally, as such plans or programs may be in effect from time to time, including, without limitation, pension, profit sharing, savings and other retirement plans or programs, medical, dental, hospitalization, short-term and long-term disability and life insurance plans, accidental death and dismemberment protection, travel accident insurance, and any other pension or retirement plans or programs and any other employee welfare benefit plans or programs that may be sponsored by the Company from time to time, including any plans that supplement the -46- 4 above-listed types of plans or programs, whether funded or unfunded. 6. Reimbursement of Business and Other Expenses. The Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this agreement, and the Company shall promptly reimburse him for all business expenses incurred in carrying out the business of the Company, subject to documentation in accordance with the Company's policies. 7. Termination of Employment (a) In the event the Executive's employment terminates due to his death, his estate or his beneficiaries, as the case may be, shall be entitled to his salary for a period of 90 days following his death, any amount owing but not yet paid under section 6 and other or additional benefits in accordance with applicable plans and programs of the Company. (b) In the event the Executive's employment terminates due to his inability substantially to perform his duties and responsibilities under this agreement for a period of 180 consecutive days, he shall be entitled to his salary for a period of 90 days following the date of termination, any amount owing but not yet paid under section 6, continued participation at the Company's expense in medical, dental, hospitalization and life insurance coverage and in all other employee plans and programs in which he or his family was participating on the date of termination of his employment until the tenth anniversary of the date of termination and other or additional benefits in accordance with applicable plans and programs of the Company (and thereafter, at the Executive's option and expense, to the extent he or his family can be included in such plans and programs). If the Executive is precluded from continuing his participation in any benefit plan or program referred to in the immediately preceding sentence, he shall be provided the after-tax economic equivalent of the benefits provided under the plan or program in which he -47- 5 is unable to participate. The economic equivalent of any benefit foregone shall be deemed to be the lowest cost that would be incurred by the Executive in obtaining such benefit himself on an individual basis. In no event shall a termination of the Executive's employment under this section 7(b) occur, unless the party terminating the Executive's employment gives written notice to the other party in accordance with this agreement. (c) (i) As used in this agreement, the term "Cause" means (A) the Executive is convicted of a felony involving moral turpitude or (B) the Executive is guilty of willful gross neglect or willful gross misconduct in carrying out his duties under this agreement, resulting, in either case, in material economic harm to the Company, unless the Executive believed in good faith that such act or nonact was in the best interests of the Company. (ii) The Company may terminate the Executive's employment under this agreement for Cause. A termination for Cause shall not take effect, however, unless the provisions of this paragraph (c)(ii) are complied with. The Executive shall be given written notice by the board of directors of the Company of the intention to terminate his employment for Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based. The Executive shall have 10 days after the date that such written notice has been given in which to cure such conduct, to the extent a cure is possible. If he fails to cure such conduct, his employment shall be terminated for Cause. (iii) In the event the Company terminates the Executive's employment for Cause, he shall be entitled to his salary through the date of the termination of his employment, any amounts owing but not yet paid under section 6 and other or additional benefits in accordance with applicable plans or programs of the Company. -48- 6 (d) (i) As used in this agreement, the term "Constructive Termination Without Cause" means a termination of the Executive's employment at his initiative following the occurrence, without the Executive's prior written consent, of one or more of the following events (except in consequence of a prior termination): (A) a reduction in the Executive's salary or a material reduction of any employee benefit or perquisite enjoyed by him (other than as part of any across-the-board action applicable to all executive officers of the Company); (B) the failure to elect or reelect the Executive to any of the officer or director positions referred to in section 1(a) or removal of him from any of such positions; (C) a material diminution in the Executive's duties or the assignment to the Executive of duties materially inconsistent with his duties or that materially impair the Executive's ability to function, prior to the Senior Status Period, as the co-chief executive officer or chief executive officer of the Company; (D) the relocation of the Company's principal office, or the Executive's own office location as assigned to him by the Company, to a location more than twenty-five (25) miles from Farmingdale, New York. (ii) In the event the Company terminates the Executive's employment without Cause, other than pursuant to section 7(a) or (b), or in the event there is a Constructive Termination Without Cause, the Executive shall be entitled to his salary through the date of termination of employment, his salary at the annual rate of $750,000 through the Final Date and thereafter at the annual rate of $400,000 through the 10th anniversary of the Final Date (provided that, at the Executive's option, exercised by written notice given to the Company, the Company -49- 7 shall pay him the present value of such salary continuation payments in a lump sum (using as the discount rate the Applicable Federal Rate for short-term Treasury obligations as published by the Internal Revenue Service for the month in which such termination occurs)), any amount owing but not yet paid under section 6, and he shall be afforded continued participation in all medical, dental, hospitalization and life insurance coverage and in other employee benefit plans or programs in which he was participating on the date of the termination of his employment until the earlier of: (A) the end of the period during which he is receiving salary continuation payments (or in respect of which a lump-sum payment is made); (B) the date, or dates, he receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverages and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis); (provided that (x) if the Executive is precluded from continuing his participating in any employee benefit plan or program as so provided, he shall be provided with the after-tax economic equivalent of the benefits provided under the plan or program in which he is unable to participate for the periods so specified, (y) the economic equivalent of any benefit foregone shall be deemed to be the lowest cost that would be incurred by the Executive in obtaining such benefit himself on an individual basis and (z) payment of such after-tax economic equivalent shall be made quarterly in advance), and he shall be afforded other or additional benefits in accordance with applicable plans and programs of the Company. (e) Subject to section 8(b), in the event of a termination of employment by the Executive on his own initiative other than a termination otherwise provided for in this section 7, -50- 8 the Executive shall have the same entitlements as provided in section 7(c)(iii) for a termination for Cause. A voluntary termination under this section 7(e) shall be effective upon 30 days written notice given to the Company and shall not be deemed a breach of this agreement. (f) In the event of any termination of employment under this section 7, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due the Executive under this agreement on account of any remuneration attributable to any subsequent employment that he may obtain, except as specifically provided in this section 7. 8. Change in Control (a) As used in this agreement, the term "Change in Control" means the occurrence of any one of the following events: (i) any "person," as such term is used in sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, becomes a "beneficial owner," as such term is used in Rule 13d-3 under that act, of 30% or more of the outstanding common stock of the Company, excluding a person that is an affiliate (as such term is used under that act) of the Company on the date of this agreement, or any affiliate of any such person; (ii) the majority of the board of directors of the Company consists of individuals other than Incumbent Directors, which term means the members of the board of directors of the Company on the date of this agreement; provided that any person becoming a director subsequent to such date whose election or nomination for election was supported by two-thirds of the directors who then comprised the Incumbent Directors shall be considered an Incumbent Director; (iii) the Company adopts any plan of liquidation providing for the -51- 9 distribution of all or substantially all its assets; (iv) all or substantially all the assets or business of the Company are disposed of pursuant to a merger, consolidation or other transaction (unless the shareholders of the Company immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they own the common stock of the Company, all the common stock or other ownership interests of the entity or entities, if any, that succeed to the business of the Company); or (v) the Company combines with another company and is the surviving corporation, but, immediately after the combination, the shareholders of the Company immediately prior to the combination hold, directly or indirectly, 50% or less of the common stock or other ownership interests of the combined company (there being excluded from the number of shares held by such shareholders, but not from the common stock or other ownership interests of the combined company, any shares other ownership interests received by affiliates of such other company in exchange for stock of such other company). (b) Following a Change in Control, the Executive may, at his option, upon 90 days' written notice given to the Company, terminate his employment under this agreement and, in lieu of any other amounts otherwise payable to him under section 7, (i) he will be entitled to receive, in a single lump sum on or before the 90th day after such written notice is given, an amount equal to (A) the product of (1) the Executive's annual salary then in effect and (2) three, if the written notice is given before the Senior Status Period, or (B) the product of (1) $200,000 and (2) the number of years (including fractions), if any, remaining in the Senior Status Period on the 90th day after such written notice is given, if the written notice is given during the Senior Status Period, and (ii) subject to the provisos set forth in (x), (y) and (z) of section 7(d)(ii), he -52- 10 shall be afforded continued participation in all medical, dental, hospitalization and life insurance coverage and in other employee benefit plans or programs in which he was participating on the date of the termination of his employment until the earlier of (A) the tenth anniversary of the termination of employment or (B) the date, or dates, he receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverages and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis). (c) In the event the amount provided to the Executive under section 8(b) is determined to constitute a Parachute Payment, as such term is defined in section 280G(b)(2) of the Internal Revenue Code of 1986 (the "Code"), notwithstanding anything to the contrary in this agreement, the amount so provided shall be reduced to the maximum amount (if any) that can be so provided without any of that amount being subject to any excise tax imposed by section 4999 of the Code ("Excise Tax"). The determination of whether the amount so provided constitutes a Parachute Payment and, if so, the amount to be paid to the Executive and the time of payment pursuant to this section 8(c) shall be made by an independent auditor (the "Auditor") jointly selected by the Company and the Executive and paid by the Company. The Auditor shall be a nationally recognized United States public accounting firm, which has not, during the two years preceding the date of its selection, acted in any way on behalf of the Company or any affiliate of the Company. If the Executive and the Company cannot agree on the firm to serve as the Auditor, the Executive and Company shall each select one accounting firm and those two firms shall jointly select the accounting firm to serve as the Auditor. 9. Indemnification (a) The Company agrees that, if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, -53- 11 administrative or investigation (a "Proceeding"), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive's alleged action in an official capacity while serving as director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Company to the fullest extent permitted or authorized by the Company's certificate of incorporation or bylaws or, if greater, by the laws of the state of New York, against all cost, expense, liability and loss (including, without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of the Executive's heirs, executors and administrators. The Company shall advance to the Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 days after receipt by the Company of a written request for such advance. Such request shall include a undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses. (b) Neither the failure of the Company (including its board or directors, independent legal counsel or shareholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by the Executive under section 9(a) that indemnification of the Executive is proper because he has met the applicable standard of conduct, nor a determination by the Company (including its board of -54- 12 directors, independent legal counsel or shareholders) that the Executive has not met such applicable standard of conduct, shall create a presumption that the Executive has not met the applicable standard of conduct. (c) The Company agrees to continue and maintain a director's and officers' liability insurance policy covering the Executive to the extent the Company provides such coverage for its other executive officers. 10. Confidentiality. The Executive shall at all times during the period of his employment and thereafter hold in confidence any and all Confidential Information (as defined below) that may have come or may come into his possession or within his knowledge concerning the products, services, processes, businesses, suppliers, customers and clients of the Company or its controlled affiliates. The Executive agrees that neither he nor any person or enterprise controlled by him will for any reason directly or indirectly, for himself or any other person, use or disclose any trade secrets, proprietary or confidential information, inventions, manufacturing or industrial processes or procedures, patents, trademarks, trade names, customer lists, service marks, service names, copyrights, applications for any of the foregoing or licenses or other rights in respect thereof (collectively, "Confidential Information"), owned or used by, or licensed to, the Company or any of its controlled affiliates, provided that the Executive may disclose Confidential Information that has become generally available to the public other than as a result of a breach of this agreement by the Executive or pursuant to an order of a court of competent jurisdiction or of a governmental agency, department or commission. Upon termination of his employment under this agreement, the Executive shall promptly surrender to the Company all documents he believes contain Confidential Information and that are within his possession or control, other than documents to which the Executive is or was a party or that relate to the -55- 13 Executive or the basis, or purported basis, on which his employment was terminated. 11. Noncompetition and Nonsolicitation (a) The Executive agrees that from the date of this agreement and subsequent to the termination of his employment under this agreement and continuing for the period (the "Non-Compete Period") after termination of employment under section 7 (but not under section 8) in respect of which salary continuation payments would be required to be made under section 7(d) (regardless of whether termination of employment occurs pursuant to section 7(d)), neither the Executive nor any person or enterprise controlled by him will become a shareholder, lender, director, officer, agent or employee of a corporation or member of or lender to a partnership, engage as a sole proprietor in any business, act as a consultant to any of the foregoing or otherwise engage directly or indirectly in any business that is in competition with the business then conducted by the Company or any of its controlled affiliates in any state in the United States or any other country in which the Company or any of its controlled affiliates has engaged in such business during the Executive's employment under this agreement; provided, however, that the foregoing shall not prohibit the Executive from owning less than two percent of the outstanding securities of any class of capital stock of a corporation the securities of which are regularly traded or quoted on a national securities exchange or on an inter-dealer quotation system. (b) The Executive agrees that, during the Non-Compete Period, neither he nor any person or enterprise controlled by him will (i) solicit for employment any person who was employed by the Company or any of its controlled affiliates at any time within one year prior to the time of the act of solicitation or (ii) in any way cause, influence or participate in the solicitation for employment of any such individual by anyone else. (c) The Executive acknowledges that there is no adequate remedy at law for a -56- 14 breach of this section 11 and that, in the event of such a breach or attempted breach, the Company shall be entitled to injunctive or other equitable relief to prevent any such breach, attempted breach or continuing breach, without prejudice to any other remedies for damages or otherwise. 12. Assignability; Binding Nature. This agreement shall inure to the benefit of the parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations of the Company under this agreement may be assigned or transferred by the Company, except pursuant to a merger or consolidation, or the sale or liquidation of all or substantially all the assets of the Company, provided that, in the case of such a sale or liquidation, the assignee or transferee assumes in writing the obligation to perform this agreement (it being understood, however, that no such assignment or transfer shall relieve the Company of its liabilities or obligations under this agreement). 13. Amendment or Waiver. This agreement may not be amended or waived, except by an instrument in writing signed by the party to be charged. 14. Severability. If any provision of this agreement is invalid or unenforceable, the remaining provisions of this agreement shall remain in effect. 15. Governing Law. This agreement shall be governed by and construed and interpreted in accordance with the law of the state of New York without reference to principles of conflict of laws. 16. Disputes. Except as otherwise expressly provided in this agreement, any dispute arising under or in connection with this agreement shall, at the election of the Executive, be resolved by binding arbitration to be held in New York City in accordance with the rules of the American Arbitration Association. Judgment upon the arbitrator's award may be entered in any -57- 15 court having jurisdiction. Costs of any arbitration or litigation, including, without limitation, attorneys' fees of both parties, shall be borne by the Company and advanced to the Executive as appropriate from time to time, provided that, if the arbitrator or judge, as the case may be, determines that the claims or defenses of the Executive were without any reasonable basis, each party shall bear his or its own costs. 17. Notices. All notices and other communications under this agreement shall be in writing and may be given by any of the following methods: (a) personal delivery; (b) facsimile transmission; (c) registered or certified mail, postage prepaid, return receipt requested; or (d) overnight delivery service. Notices shall be sent to the appropriate party at its or his address or facsimile number given below (or at such other address or facsimile number for that party as specified by notice given under this section 17): if to the Company, to it at: 650 Liberty Avenue Union, New Jersey 07083 Fax: 908-688-8385 if to the Executive, to him at: 80 Valentine Lane Old Brookville, New York 11545 All such notices and communications shall be deemed given and received upon (a) actual receipt by the addressee, (b) actual delivery to the appropriate address or (c) in the case of a facsimile transmission, upon transmission by the sender and issuance by the transmitting machine of a confirmation slip confirming that the number of pages constituting the notice have been transmitted without error. In the case of notices sent by facsimile transmission, the sender shall contemporaneously mail a copy of the notice to the addressee at the address provided above; -58- 16 however, such mailing shall in no way alter the time at which the facsimile notice is deemed given and received. 18. Headings. The section headings in this agreement are for convenience only and shall not affect the meaning or construction of any provision of this agreement. 19. Counterparts. This agreement may be executed in counterparts. 20. Entire Agreement. This agreement contains the entire agreement and understanding of the parties concerning its subject matter and supersedes all prior agreements and understandings with respect to that subject matter. Nothing in this agreement is intended to or shall affect the rights or obligations of the parties under any agreement related to the maintenance of life insurance or stock options. BED BATH & BEYOND INC. By: /s/ WARREN EISENBERG ----------------------------------------------- Warren Eisenberg, Chairman and Co-Chief Executive Officer THE EXECUTIVE: /s/ Leonard Feinstein ----------------------------------------------- Leonard Feinstein -59- EX-10.3 7 STOCK OPTION AGREEMENT RE W. EISENBERG 1 Exhibit 10.3 STOCK OPTION AGREEMENT dated as of August 26, 1997 between BED BATH & BEYOND INC., a New York corporation, and Warren Eisenberg (the "Optionee"). PRELIMINARY STATEMENT Pursuant to the Bed Bath & Beyond Inc. 1992 Stock Option Plan (the "1992 Plan") and the Bed Bath & Beyond Inc. 1996 Stock Option Plan (the "1996 Plan") (the 1992 Plan and the 1996 Plan hereinafter the "Plans"), the Stock Option Committee for Senior Executives that administers the Plans (the "Committee") has authorized the granting to Optionee of an option (the "Option") to purchase 500,000 shares of the Company's common stock, par value $.01 per share ("Common Stock"), subject to the Plans and the terms and conditions set forth herein. The Option consists of a grant of 300,000 shares of Common Stock pursuant to the 1992 Plan and a grant of 200,000 shares of Common Stock pursuant to the 1996 Plan. The parties hereto desire to enter into this Agreement in order to set forth the terms of such Option. Accordingly, the parties hereto agree as follows: 1. Grant of Option. Subject to the Plans and the terms and conditions of this Agreement, the Company hereby grants to Optionee the Option to purchase from the Company up to 500,000 shares of Common Stock at a price of $31.25 per share. The Option shall not be immediately exercisable but shall become exercisable in installments, which shall be cumulative, as indicated below (which installments may be accelerated as indicated below):
Date on which Installment Number of Shares First Vests and Becomes Exercisable In Installments - ----------------------------------- --------------- August 26, 1998 (1992 Plan) 20% of the number of shares originally subject to the Option August 26, 1999 (1992 Plan) 20% of the number of shares originally subject to the Option August 26, 2000 (1992 Plan) 20% of the number of shares originally subject to the Option August 26, 2001 (1996 Plan) 20% of the number of shares originally subject to the Option August 26, 2002 (1996 Plan) 20% of the number of shares originally subject to the Option
The dates on which installments vest and become exercisable shall be accelerated upon the death of the Optionee, or the termination of the Optionee's employment with the Company pursuant to section 7(a) (i.e., death), 7(b) (i.e., disability) or 7(d) (i.e., Constructive Termination Without Cause), -60- 2 or following a Change in Control, as defined in section 8(a), of the Optionee's employment agreement with the Company dated as of June 30, 1997, and upon the occurrence of any of such events, the total number of shares originally subject to the Option shall vest and become immediately exercisable. In the event of any acceleration pursuant to the immediately preceding sentence, the unexercised portion of the Option shall continue to be exercisable for 12 months thereafter as provided in paragraph 4 of this Agreement, but in no event later than the tenth anniversary of the date hereof. 2. Plans Governing Terms of Option. Except as otherwise specifically herein provided, the Option is subject in all respects to the terms and conditions of the Plans, copies of which are attached hereto as Exhibits A and B. 3. Type of Option. The Option is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. 4. Termination. The Option shall terminate on the tenth anniversary of the date hereof, unless the Optionee's employment with the Company terminates before that date, in which event the Option shall terminate upon termination of the Optionee's employment with the Company, if the termination is for Cause pursuant to section 7(c) of the Optionee's employment agreement or is on the Optionee's own initiative pursuant to section 7(e) of the Optionee's employment agreement, but the unexercised portion of the Option shall continue to be exercisable for 12 months after such termination of employment (but in no event later than the tenth anniversary of the date hereof), if such termination of employment is for any other cause. The Optionee's election pursuant to section 3 of the Optionee's employment agreement to commence the Senior Status Period and provide the limited consulting services contemplated therein shall not be deemed a termination of the Optionee's employment for the purposes of this Agreement. 5. Exercise. The Option may be exercised by delivering to the Company a written notice (signed by the Optionee) stating the number of shares with respect to which the Option is being exercised, together with full payment of the purchase price therefor. Payment may be made in cash or by certified check, bank draft, or money order payable to the order of the Company or, if permitted by the Committee, through delivery of shares of Common Stock (such shares to be valued as provided in the Plans). As provided in the Plans, the Committee may require the Optionee to remit to the Company an amount sufficient to satisfy any federal, state or local withholding tax requirements (or make other arrangements satisfactory to the Company with regard to such taxes) prior to delivering to the Optionee any shares purchased upon exercise of the Option. The Option may not be exercised with respect to a fractional share. 6. Restriction on Transfer. The Option may not be assigned or transferred except by will or the laws of descent and distribution and except by a written assignment (signed by the Optionee and delivered to the Company), provided such assignment assigns all or a portion of the Option to the Optionee's spouse, descendants or trusts for the sole benefit of the Optionee's spouse or descendants. The Option may be exercised only by the Optionee, the Optionee's assignee pursuant to an assignment permitted hereunder, or by the executor or personal representative of the Optionee or of such assignee. -61- 3 7. Notice. Any notice or communication to the Company hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, or by United States mail, to the following address (or to such other address as the Company shall from time to time specify): Bed Bath & Beyond Inc. C/O Petitti, Eisenberg & Gamache, P.C. Attention: Todd Eisenberg 488 Pleasant Street New Bedford, MA 02740 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. BED BATH & BEYOND INC. By: /s/ LEONARD FEINSTEIN ---------------------------------- Leonard Feinstein, President and Co-Chief Executive Officer /s/ WARREN EISENBERG ---------------------------------- Warren Eisenberg -62- EX-10.4 8 STOCK OPTION AGREEMENT RE L. FEINSTEIN 1 Exhibit 10.4 STOCK OPTION AGREEMENT dated as of August 26, 1997 between BED BATH & BEYOND INC., a New York corporation, and Leonard Feinstein (the "Optionee"). PRELIMINARY STATEMENT Pursuant to the Bed Bath & Beyond Inc. 1992 Stock Option Plan (the "1992 Plan") and the Bed Bath & Beyond Inc. 1996 Stock Option Plan (the "1996 Plan") (the 1992 Plan and the 1996 Plan hereinafter the "Plans"), the Stock Option Committee for Senior Executives that administers the Plans (the "Committee") has authorized the granting to Optionee of an option (the "Option") to purchase 500,000 shares of the Company's common stock, par value $.01 per share ("Common Stock"), subject to the Plans and the terms and conditions set forth herein. The Option consists of a grant of 300,000 shares of Common Stock pursuant to the 1992 Plan and a grant of 200,000 shares of Common Stock pursuant to the 1996 Plan. The parties hereto desire to enter into this Agreement in order to set forth the terms of such Option. Accordingly, the parties hereto agree as follows: 1. Grant of Option. Subject to the Plans and the terms and conditions of this Agreement, the Company hereby grants to Optionee the Option to purchase from the Company up to 500,000 shares of Common Stock at a price of $31.25 per share. The Option shall not be immediately exercisable but shall become exercisable in installments, which shall be cumulative, as indicated below (which installments may be accelerated as indicated below):
Date on which Installment Number of Shares First Vests and Becomes Exercisable In Installments - ----------------------------------- --------------- August 26, 1998 (1992 Plan) 20% of the number of shares originally subject to the Option August 26, 1999 (1992 Plan) 20% of the number of shares originally subject to the Option August 26, 2000 (1992 Plan) 20% of the number of shares originally subject to the Option August 26, 2001 (1996 Plan) 20% of the number of shares originally subject to the Option August 26, 2002 (1996 Plan) 20% of the number of shares originally subject to the Option
The dates on which installments vest and become exercisable shall be accelerated upon the death of the Optionee, or the termination of the Optionee's employment with the Company pursuant to -63- 2 section 7(a) (i.e., death), 7(b) (i.e., disability) or 7(d) (i.e., Constructive Termination Without Cause), or following a Change in Control, as defined in section 8(a), of the Optionee's employment agreement with the Company dated as of June 30, 1997, and upon the occurrence of any of such events, the total number of shares originally subject to the Option shall vest and become immediately exercisable. In the event of any acceleration pursuant to the immediately preceding sentence, the unexercised portion of the Option shall continue to be exercisable for 12 months thereafter as provided in paragraph 4 of this Agreement, but in no event later than the tenth anniversary of the date hereof. 2. Plans Governing Terms of Option. Except as otherwise specifically herein provided, the Option is subject in all respects to the terms and conditions of the Plans, copies of which are attached hereto as Exhibits A and B. 3. Type of Option. The Option is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. 4. Termination. The Option shall terminate on the tenth anniversary of the date hereof, unless the Optionee's employment with the Company terminates before that date, in which event the Option shall terminate upon termination of the Optionee's employment with the Company, if the termination is for Cause pursuant to section 7(c) of the Optionee's employment agreement or is on the Optionee's own initiative pursuant to section 7(e) of the Optionee's employment agreement, but the unexercised portion of the Option shall continue to be exercisable for 12 months after such termination of employment (but in no event later than the tenth anniversary of the date hereof), if such termination of employment is for any other cause. The Optionee's election pursuant to section 3 of the Optionee's employment agreement to commence the Senior Status Period and provide the limited consulting services contemplated therein shall not be deemed a termination of the Optionee's employment for the purposes of this Agreement. 5. Exercise. The Option may be exercised by delivering to the Company a written notice (signed by the Optionee) stating the number of shares with respect to which the Option is being exercised, together with full payment of the purchase price therefor. Payment may be made in cash or by certified check, bank draft, or money order payable to the order of the Company or, if permitted by the Committee, through delivery of shares of Common Stock (such shares to be valued as provided in the Plans). As provided in the Plans, the Committee may require the Optionee to remit to the Company an amount sufficient to satisfy any federal, state or local withholding tax requirements (or make other arrangements satisfactory to the Company with regard to such taxes) prior to delivering to the Optionee any shares purchased upon exercise of the Option. The Option may not be exercised with respect to a fractional share. 6. Restriction on Transfer. The Option may not be assigned or transferred except by will or the laws of descent and distribution and except by a written assignment (signed by the Optionee and delivered to the Company), provided such assignment assigns all or a portion of the Option to the Optionee's spouse, descendants or trusts for the sole benefit of the Optionee's spouse or descendants. The Option may be exercised only by the Optionee, the Optionee's assignee pursuant to an assignment permitted hereunder, or by the executor or personal representative of the Optionee or of such assignee. -64- 3 7. Notice. Any notice or communication to the Company hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, or by United States mail, to the following address (or to such other address as the Company shall from time to time specify): Bed Bath & Beyond Inc. C/O Petitti, Eisenberg & Gamache, P.C. Attention: Todd Eisenberg 488 Pleasant Street New Bedford, MA 02740 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. BED BATH & BEYOND INC. By: /s/ WARREN EISENBERG ---------------------------------- Warren Eisenberg, Chairman and Co-Chief Executive Officer /s/ Leonard Feinstein ---------------------------------- Leonard Feinstein -65- EX-10.5 9 COMPANY'S 1992 STOCK OPTION PLAN 1 Exhibit 10.5 BED BATH AND BEYOND INC. 1992 STOCK OPTION PLAN, AS AMENDED** 1. PURPOSE The purpose of the Bed Bath & Beyond Inc. 1992 Stock Option Plan (the "Plan") is to encourage and enable key employees (which term, as used herein, shall include officers), and directors of Bed Bath & Beyond Inc. or a parent (if any) or subsidiaries thereof (collectively, unless the context otherwise requires, the "Company"), consultants, and advisors to the Company, and other persons or entities providing goods or services to the Company to acquire a proprietary interest in the Company through the ownership of common stock of the Company. (Such directors, members, consultants, advisors, and other persons or entities providing goods or services to the Company and entitled to receive options hereunder being collectively referred to as the "Associates," and the relationship of the Associates to the Company being referred to as "association with" the Company.) Such ownership will provide such employees and Associates with a more direct stake in the future welfare of the Company and encourage them to remain employed by or associated with the Company. It is also expected that the Plan will encourage qualified persons to seek and accept employment or association with the Company. 2. TYPE OF OPTIONS Options granted pursuant to the Plan may be incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986 (as from time to time amended, the "Code") (any option that is intended so to qualify as an incentive stock option being referred to herein as an "incentive option"), or options that are not incentive options, or both. Incentive options may only be granted to "employees" as defined in the provisions of the Code or regulations thereunder applicable to incentive stock options. 3. EFFECTIVE DATE AND TERM OF PLAN The Plan shall become effective upon satisfaction of the following conditions: (i) the Plan shall have been approved by the shareholders of the Company and (ii) the Certificate of Incorporation of the Company shall have been amended to reclassify the Company's outstanding capital stock into common stock, par value $0.01 per share ("Stock"), and to effect a 145.625 for 1 stock split (the "Stock Split"). Grants of options under the Plan may be made prior to satisfaction of such conditions, but after adoption of the Plan by the Board of Directors of the Company (the "Board"), subject to the satisfaction of such conditions. No option shall be granted under the Plan on or after the tenth anniversary of the date on which the Plan is adopted by the Board, but options previously granted may extend beyond that date. - ------------------ ** As amended through August 26, 1997. -66- 2 4. ADMINISTRATION (a) The Plan shall be administered by one or more committees appointed from time to time by the Board (each such committee being referred to as a "Committee"). In the event that more than one Committee is appointed by the Board, the Board shall specify with respect to each Committee the group of employees and Associates with respect to which such Committee shall have the power to grant options. In the event that more than one Committee is appointed by the Board, then each reference in the Plan to "the Committee" shall be deemed a reference to each such Committee (subject to the last sentence of this paragraph); provided, however, that each such Committee may only exercise the power and authority granted to "the Committee" by the Plan with respect to those employees and Associates that it has the power to grant options to as specified in the resolution of the Board appointing such Committee. Each Committee shall be comprised of two or more directors. A majority of the members of each Committee shall constitute a quorum, and all determinations of the Committee shall be made by a majority of its members. Any determination of any Committee under the Plan may be made, without notice or meeting of the Committee, by a writing signed by a majority of the Committee members. Following registration of the Company's Stock under the Securities Exchange Act of 1934 (the "Act"), all members of each Committee shall be "disinterested persons" within the meaning of Rule 16(b)-3 under the Act and "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code (the "Code"); provided, however, that the foregoing shall not apply to any Committee that does not have the power to grant options to officers or directors of the Company or otherwise make any decisions with respect to the timing or the pricing of any options granted to such officers and directors. If pursuant to the preceding sentence a Committee is required to be comprised of "disinterested persons" and "outside directors," then the members of such Committee shall not be eligible to receive options under the Plan. In the event that more than one Committee is appointed by the Board, the power to amend the Plan granted by Section 10(b) hereof may only be exercised by a Committee all of whose members are "disinterested persons" and "outside directors" within the meaning of Rule 16(b)-3 under the Act and Section 162(m) of the Code. (b) The Committee shall have authority, not inconsistent with the express provisions of the Plan, (i) to grant options to such eligible employees and Associates of the Company as the Committee may select; provided, however, that the maximum number of options that may be granted under this Plan during any calendar year to any employee or Associate of the Company shall not exceed 100,000 shares (subject to any adjustment in accordance with Section 8(b)), and it is further provided that if the Committee grants to any employee or Associate during any calendar year options to purchase a number of shares that is less than 100,000, or does not grant any options during any calendar year to such employee or Associate, then the amount of such shortfall shall be carried forward and added to the maximum number of options which may be granted in a subsequent year to such employee or Associate, (ii) to determine the time or times when options shall be granted and the number of shares of Stock subject to each option; (iii) to determine which options are, and which options arc not, incentive options; (iv) to determine the terms and conditions of each option; (v) to prescribe the form or forms of instruments evidencing options and any other instruments required under the Plan and to change such forms from time to time; (vi) to adopt, amend and rescind rules and regulations for the administration of the Plan; and (vii) to interpret the Plan and to decide any -67- 3 questions and settle all controversies and disputes that may arise in connection with the Plan. Any determination, decision or action of the Committee in connection with the construction, interpretation, administration or application of the Plan shall be final and conclusive on all persons participating in the Plan. 5. SHARES SUBJECT TO THE PLAN (a) Number of Shares. Subject to adjustment as provided in Section 8, the aggregate number of shares of Stock that may be delivered upon the exercise of options granted under the Plan (taking into account the Stock Split) shall be 2,800,000. If any option granted under the Plan terminates without having been exercised in full, the number of shares of Stock as to which such option was not exercised shall be available for future grants within the limits set forth in this Section 5(a). (b) Shares to be Delivered. Shares delivered under the Plan shall be authorized but unissued Stock or, if the Committee so decides in its sole discretion, previously issued Stock acquired by the Company and held in treasury. No fractional shares of Stock shall be delivered under the Plan. 6. ELIGIBILITY FOR OPTIONS Employees and Associates of the Company eligible to receive options under the Plan shall be those employees and Associates who, in the opinion of the Committee, are in a position to make a significant contribution to the success of the Company. Receipt of options under the Plan or of awards under any other employee benefit plan of the Company shall not preclude an employee from receiving options or additional options under the Plan. 7. TERMS AND CONDITIONS OF OPTIONS (a) Special Rule for Incentive Options. Consistent with Section 422 of the Code and any regulations, notices or other official pronouncements of general applicability, to the extent the aggregate fair market value (determined in accordance with Section 7(b) as of the time the option is granted) of the shares of Stock with respect to which incentive options are exercisable for the first time by the optionee during any calendar year (under all plans of his employer corporation and its parent and subsidiary corporations) exceeds $100,000, such options shall not be treated as incentive options. Nothing in this special rule shall be construed as limiting the exercisability of any option, unless the Committee expressly provides for such a limitation at time of grant. (b) Exercise Price. The exercise price of each option shall be determined by the Committee, subject to the following: (i) in the case of an incentive option and all options granted by a Committee comprised of "disinterested persons" and "outside directors," the exercise price per share of stock shall not be less than 100% (110% for an incentive stock option granted to a greater than ten-percent shareholder) of the fair market value per share of Stock at the time the option is -68- 4 granted and (ii) in the case of all other options, the exercise price per share of Stock shall not be less than the par value per share (unless the Stock subject to the option is treasury stock). A "greater than ten-percent shareholder" shall mean for purposes of the Plan any employee who at the time of grant owns directly, or is deemed to own by reason of the attribution rules set forth in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. The fair market value of a share of Stock as of any date shall be determined for purposes of the Plan as follows: (i) if the Stock is listed on a securities exchange or quoted through the National Association of Securities Dealers Automatic Quotation ("NASDAQ") National Market System, the fair market value shall equal the mean between the high and low sales prices on such exchange or through such market system, as the case may be, on such day or in the absence of reported sales on such day, the mean between the reported bid and asked prices on such exchange or through such market system, as the case may be, on such day, (ii) if the Stock is not listed or quoted as described in the preceding clause but is quoted through NASDAQ (but not through the National Market System), the fair market value shall equal the mean between the bid and offered prices as quoted by the National Association of Securities Dealers through NASDAQ for such day and (iii) if the Stock is not listed or quoted on a securities exchange or through NASDAQ, then the fair market value shall be determined by such other method as the Committee determines to be reasonable and consistent with applicable requirements of the Code and the regulations issued thereunder applicable to incentive options; provided, however, that if pursuant to clause (i) or (ii) fair market value is to be determined based upon the mean of bid and asked prices and the Committee determines that such mean does not property reflect fair market value, then fair market value shall be determined by the Committee as provided in clause (iii). (c) Duration of Options. An option, shall be exercisable during such period or periods as the Committee may specify. The latest date on which an option may be exercised (the "Final Exercise Date") shall be the date which is ten years (five years, in the case of an incentive option granted to a "greater than ten-percent shareholder" as defined in Section 7(b)) from the date the option was granted or such earlier date as may be specified by the Committee at the time the option is granted. (d) Exercise of Options. (1) At the time of the grant of an option, the Committee shall specify whether the option shall be exercisable in full at any time prior to the Final Exercise Date or in installments (which may be cumulative or noncumulative). In the case of an option not immediately exercisable in full, the Committee may at any time accelerate the time at which all or any part of the option may be exercised. (2) The award forms or other instruments evidencing incentive options shall contain such provisions relating to exercise and other matters as are required of incentive options under the applicable provisions of the Code and the regulations thereunder, as from time to time in effect. (3) Any exercise of an option shall be in writing, signed by the proper person and delivered or mailed to the Company, accompanied by (a) the option certificate and any other -69- 5 documents required by the Committee and (b) payment in full for the number of shares for which the option is exercised. (4) In the case of an option that is not an incentive option, the Committee shall have the right to require that the individual exercising the option remit to the Company an amount sufficient to satisfy any federal, state, or local withholding tax requirements (or make other arrangements satisfactory to the Company with regard to such taxes) prior to the delivery of any Stock pursuant to the exercise of the option. In the case of an incentive option, if at the time the option is exercised the Committee determines that under applicable law and regulations the Company could be liable for the withholding of any federal, state or local tax with respect to a disposition of the Stock received upon exercise, the Committee may require as a condition of exercise that the individual exercising the option agree (i) to inform the Company promptly of any disposition (within the meaning of Section 424(c) of the Code and the regulations thereunder) of Stock received upon exercise, and (ii) to give such security as the Committee deems adequate to meet the potential liability of the Company for the withholding of tax, and to augment such security from time to time in any amount reasonably deemed necessary by the Committee to preserve the adequacy of such security. (5) If an option is exercised by the executor or administrator of a deceased employee or Associate, or by the person or persons to whom the option has been transferred by the employee's or Associate's will or the applicable laws of descent and distribution, the Company shall be under no obligation to deliver Stock pursuant to such exercise until the Company is satisfied as to the authority of the person or persons exercising the option. (e) Termination of Employment. An employee's options shall terminate immediately upon the termination of his employment with the Company, subject to the following exceptions: (i) if the termination is by reason of the death or disability of the employee, the unexercised portion of such options shall continue to be exercisable for 12 months after such termination and (ii) if the termination is for any other reason, excluding termination for cause, the unexercised portion of such options shall continue to be exercisable for three months after such termination. Notwithstanding the foregoing, the Committee in its discretion in any particular case may provide that upon termination of an employee's employment with the Company, the unexercised portion of his options shall continue to be exercisable for a longer or shorter period than the period provided for in the preceding sentence; provided, however, that (i) in the case of an incentive option, the Committee may not provide for a shorter or longer period after the option is granted and, in any event, may not provide for a longer period except in the case where the employee's employment is terminated by reason of death and (ii) in the case of an option that is not an incentive option, the Committee may not provide for a shorter period after the option is granted. For purposes of this Section 7(e), employment shall not be considered terminated (i) in the case of sick leave or other bona fide leave of absence approved for purposes of the Plan by the Committee, so long as the employee's right to reemployment is guaranteed either by statute or by contract, or (ii) in the case of a transfer of employment between the Company and a subsidiary or between subsidiaries, or to the employment of a corporation (or a parent or subsidiary corporation of such corporation) issuing or assuming an option in a transaction to which Section 424(a) of the Code applies. -70- 6 (f) Payment for Stock. Stock purchased under the Plan shall be paid for as follows: (i) in cash or by certified check, bank draft or money order payable to the order of the Company or (ii) if so permitted by the Committee (not later than the time of grant, in the case of an incentive option), (A) through the delivery of shares of Stock (including shares acquired under the option then being exercised) having a fair market value (determined as provided in Section 7(b)) on the date of exercise equal to the purchase price or (B) by a combination of cash and Stock as provided in clauses (i) and (ii)(A) above or (C) by delivery of a promissory note of the option holder to the Company, such note to be payable in the case of an incentive Option, on such terms as are specified in the option (except that, in lieu of a stated rate of interest, an incentive option may provide that the rate of interest on the note will be such rate as is sufficient, at the time the note is given, to avoid the imputation of interest under the applicable provisions of the Code), or by a combination of cash (or cash and Stock) and the option holder's promissory note; provided, that if the Stock delivered upon exercise of the option is an original issue of authorized Stock, at least so much of the exercise price as represents the par value of such Stock shall be paid in cash or by a combination of cash and Stock. (g) Delivery of Stock. An option holder shall not have the rights of a shareholder with regard to awards under the Plan except as to Stock actually received by him under the Plan. The Company shall not be obligated to deliver any shares of Stock (a) until, in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, and (b) if the outstanding Stock is at the time listed on any stock exchange, until the shares to be delivered have been listed or authorized to be listed on such exchange upon official notice of issuance, and (c) until all other legal matters in connection with the issuance and delivery of such shares have been approved by the Company's counsel. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the option, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act and may require that the certificates evidencing such Stock bear an appropriate legend restricting-transfer. (h) Transferability of Options. The Committee may provide that options may be transferred to the extent and subject to such limitations as the Committee may specify. (i) Restrictions on Stock. The Committee may provide that shares of Stock purchased through the exercise of options under the Plan be subject to such restrictions on resale, including restrictions requiring resale to the Company at or below fair market value, or such other restrictions, as the Committee in its sole discretion shall determine, and shall take such steps as it deems necessary or appropriate to carry out the purposes of any such restriction. 8. MERGERS, RECAPITALIZATIONS, ETC. (a) In the event of a consolidation or merger in which the Company is not the surviving corporation or in the event of any transaction that results in the acquisition of substantially all of the Company's outstanding Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all of the Company's assets (all the foregoing being referred to as "Acquisition Events"), then the Committee may in its discretion terminate all outstanding options by delivering notice of termination to each option holder, -71- 7 provided, however, that, during the 20-day period following the date on which such notice of termination is delivered, each option holder shall have the right to exercise in full all of his options that are then outstanding (without regard to limitations on exercise otherwise contained in the options). If an Acquisition Event occurs and the Committee does not terminate the outstanding options pursuant to the preceding sentence, then the provisions of Section 8(b) shall apply. (b) In the event of a stock dividend stock split (other than the Stock Split) or combination of shares, recapitalization or other change in the Company's capital stock, the number and kind of shares of stock of securities of the Company subject to options then outstanding or subsequently granted under the Plan, the maximum number of shares or securities that may be delivered under the Plan, the exercise price, and other relevant provisions shall be appropriately adjusted by the Committee. The Committee may also adjust the number of shares subject to outstanding options, the exercise price of outstanding options and the terms of outstanding options to take into consideration any other event (including, without limitation, accounting changes) if the Committee determines that such adjustment is appropriate to avoid distortion in the operation of the Plan. All determinations and adjustments made by the Committee pursuant to this Section 8(b) shall be binding on all persons. (c) The Committee may grant options under the Plan in substitution for options held by employees of another corporation who concurrently become employees of the Company or a subsidiary of the Company as the result of a merger or consolidation of the employing corporation with the Company or a subsidiary of the Company, or as the result of the acquisition by the Company of property or stock of the employing corporation. The Company may direct that substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances. 9. LIMITATION ON RIGHTS Neither the adoption of the Plan nor the grant of options shall confer upon any employee any right to continued employment with the Company or affect in any way the right of the Company to terminate the employment of an employee at any time. Except as specifically provided by the Committee in any particular case, the loss of existing or potential profit in options granted under this Plan shall not constitute an element of damages in the event of termination of the employment of an employee even if the termination is in violation of an obligation of the Company to the employee by contract or otherwise. 10. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION (a) Neither adoption of the Plan nor the grant of options to an employee shall affect the Company's right to grant to such employee options that are not subject to the Plan, to issue to such employees Stock as a bonus or otherwise, or to adopt other plans or arrangements under which Stock may be issued to employees. -72- 8 (b) The Committee may at any time discontinue granting options under the Plan. With the consent of the option holder, the Board may at any time cancel an existing option in whole or in part and grant the option holder another option for such number of shares as the Committee specifies. The Committee may at any time or times amend the Plan or any outstanding option for the purpose of satisfying the requirement of Section 422 of the Code or of any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law, or at any time terminate the Plan as to any further grants of options, provided that (except to the extent expressly required or permitted above) no such amendment shall, without the approval of the shareholders of the Company, (a) increase the maximum number of shares available under the Plan, (b) change the group of employees eligible to receive options under the Plan, (c) reduce the price at which incentive options may be granted, (d) extend the time within which incentive options may be granted, (e) extend the time within which options may be granted, (f) alter the Plan in such a way that incentive options already granted hereunder would not be considered incentive stock options under Section 422 of the Code, or (g) amend the provisions of this Section 8, and no such amendment shall adversely affect the rights of any option holder (without his consent) under any option previously granted. -73- EX-10.6 10 COMPANY'S 1996 STOCK OPTION PLAN 1 Exhibit 10.6 BED BATH AND BEYOND INC. 1996 STOCK OPTION PLAN*** 1 PURPOSE. The purpose of the Bed Bath & Beyond Inc. 1996 Stock Option Plan (the "Plan") is to encourage and enable key employees (which term, as used herein, shall include officers), and directors of Bed Bath & Beyond Inc. or a parent (if any) or subsidiaries thereof (collectively, unless the context otherwise requires, the "Company"), consultants, and advisors to the Company, and other persons or entities providing goods or services to the Company to acquire a proprietary interest in the Company through the ownership of common stock of the Company. (Such directors, members, consultants, advisors, and other persons or entities providing goods or services to the Company and entitled to receive options hereunder being collectively referred to as the "Associates," and the relationship of the Associates to the Company being referred to as "association with" the Company). Such ownership will provide such employees and Associates with a more direct stake in the future welfare of the Company and encourage them to remain employed by or associated with the Company. It is also expected that the Plan will encourage qualified persons to seek and accept employment or association with the Company. 2. TYPE OF OPTIONS. Options granted pursuant to the Plan may be incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986 (as from time to time amended, the "Code") (any option that is intended so to qualify as an incentive stock option being referred to herein as an "incentive option"), or options that are not incentive options, or both. Incentive options may only be granted to "employees" as defined in the provisions of the Code or regulations thereunder applicable to incentive stock options. 3. EFFECTIVE DATE AND TERM OF THE PLAN. (a) The Plan shall become effective upon approval by the shareholders of the Company. (b) No option shall be granted under the Plan on or after the tenth anniversary of the date on which the Plan is adopted, but options previously granted may extend beyond that date. 4. ADMINISTRATION. (a) The Plan shall be administered by one or more committees appointed from time to time by the Board (each such committee being referred to as a "Committee"). In the event that more than one Committee is appointed by the Board, the Board shall specify with respect to each Committee the group of employees and Associates with respect to which such Committee shall have the power to grant options. In the event that more than one Committee is appointed by the Board, then each reference in the Plan to "the Committee" shall be deemed a reference to each such Committee (subject to the last sentence of this paragraph); provided, however, that each such Committee may only exercise the power - ------------------ *** As amended through August 26, 1997. -74- 2 and authority granted to "the Committee" by the Plan with respect to those employees and Associates that it has the power to grant options to as specified in the resolution of the Board appointing such Committee. Each Committee shall be comprised of two or more directors. A majority of the members of each Committee shall constitute a quorum, and all determinations of the Committee shall be made by a majority of its members. Any determination of any Committee under the Plan may be made, without notice or meeting of the Committee, by a writing signed by a majority of the Committee members. All members of each Committee shall be "disinterested persons" within the meaning of Rule 16(b)-3 under the Act and "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code (the "Code"); provided, however, that the foregoing shall not apply to any Committee that does not have the power to grant options to officers or directors of the Company or otherwise make any decisions with respect to the timing or the pricing of any options granted to such officers and directors. If pursuant to the preceding sentence a Committee is required to be comprised of "disinterested persons" and "outside directors", then the members of such Committee shall not be eligible to receive options under the Plan. In the event that more than one Committee is appointed by the Board, the power to amend the Plan granted by Section 10(b) hereof may only be exercised by a Committee all of whose members are "disinterested persons" and "outside directors" within the meaning of Rule 16(b)-3 under the Act and Section 162(m) of the Code. (b) The Committee shall have authority, not inconsistent with express provisions of the Plan, (i) to grant options to such eligible employees and Associates of the Company as the Committee may select; provided, however, that the maximum number of options that may be granted under this Plan during any calendar year to any employee or Associate of the Company shall not exceed 100,000 shares (subject to any adjustment in accordance with Section 8(b)), and it is further provided that if the Committee grants to any employee or Associate during any calendar year options to purchase a number of shares that is less than 100,000, or does not grant any options during any calendar year to such employee or Associate, then the amount of such shortfall shall be carried forward and added to the maximum number of options which may be granted in a subsequent year to such employee or Associate; (ii) to determine the time or times when options shall be granted and the number of shares of Stock subject to each option; (iii) to determine which options are, and which options are not, incentive options; (iv) to determine the terms and conditions of each option; (v) to prescribe the form or forms of instruments evidencing options and any other instruments required under the Plan and to change such forms from time to time; (vi) to adopt, amend and rescind rules and regulations for the administration of the Plan; and (vii) to interpret the Plan and to decide any questions and settle all controversies and disputes that may arise in connection with the Plan. Any determination, decision or action of the Committee in connection with the construction, interpretation, administration or application of the Plan shall be final and conclusive on all persons participating in the Plan. 5. SHARES SUBJECT TO THE PLAN. (a) Number of Shares. Subject to adjustment as provided in Section 8, the aggregate number of shares of Stock that may be delivered upon the exercise of options granted under the Plan shall be 2,000,000. If any option granted under the Plan terminates without having been exercised in full, the number of shares of Stock as to which such option was not exercised shall be available for future grants within the limits set forth in this Section 5(a). -75- 3 (b) Shares to be Delivered. Shares delivered under the Plan shall be authorized but unissued Stock or, if the Committee so decides in its sole discretion, previously issued Stock acquired by the Company and held in treasury. No fractional shares of Stock shall be delivered under the Plan. 6. ELIGIBILITY FOR OPTIONS. Employees and Associates of the Company eligible to receive options under the Plan shall be those employees and Associates who, in the opinion of the Committee, are in a position to make a significant contribution to the success of the Company. Receipt of options under the Plan or of awards under any other employee benefit plan of the Company shall not preclude an employee from receiving options or additional options under the Plan. 7. TERMS AND CONDITIONS OF OPTIONS. (a) Special Rule for Incentive Options. Consistent with Section 422 of the Code and any regulations, notices or other official pronouncements of general applicability, to the extent the aggregate fair market value (determined in accordance with Section 7(b) as of the time the option is granted) of the shares of Stock with respect to which incentive options are exercisable for the first time by the optionee during any calendar year (under all plans of his employer corporation and its parent and subsidiary corporations) exceeds $100,000, such options shall not be treated as incentive options. Nothing in this special rule shall be construed as limiting the exercisability of any option, unless the Committee expressly provides for such a limitation at time of grant. (b) Exercise Price. The exercise price of each option shall be determined by the Committee, subject to the following: (i) in the case of an incentive option and all options granted by a Committee comprised of "disinterested persons" and "outside directors", the exercise price per share of stock shall not be less than 100% (110% for an incentive stock option granted to a greater than ten-percent shareholder) of the fair market value per share of Stock at the time the option is granted and (ii) in the case of all other options, the exercise price per share of Stock shall not be less than the par value per share (unless the Stock subject to the option is treasury stock). A "greater than ten-percent shareholder" shall mean for purposes of the Plan any employee who at the time of grant owns directly, or is deemed to own by reason of the attribution rules set forth in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. The fair market value of a share of Stock as of any date shall be determined for purposes of the Plan as follows: (i) if the Stock is listed on a securities exchange or quoted through the National Association of Securities Dealers Automatic Quotation ("NASDAQ") National Market System, the fair market value shall equal the mean between the high and low sales prices on such exchange or through such market system, as the case may be, on such day or in the absence of reported sales on such day, the mean between the reported bid and asked prices on such exchange or through such market system, as the case may be, on such day, (ii) if the Stock is not listed or quoted as described in the preceding clause but is quoted through NASDAQ (but not through the National Market System), the fair market value shall equal the mean between the bid and offered prices as quoted by the National Association of Securities Dealers through NASDAQ for such day and (iii) if the Stock is not listed or quoted on a securities exchange or through NASDAQ, then the fair market value shall be determined by such other method as the Committee -76- 4 determines to be reasonable and consistent with applicable requirements of the Code and the regulations issued thereunder applicable to incentive options; provided, however, that if pursuant to clause (i) or (ii) fair market value is to be determined based upon the mean of bid and asked prices and the Committee determines that such means does not properly reflect fair market value, then fair market value shall be determined by the Committee as provided in clause (iii). (c) Duration of Options. An option shall be exercisable during such period or periods as the Committee may specify. The latest date on which an option may be exercised (the "Final Exercise Date") shall be the date which is ten years (five years, in the case of an incentive option granted to a "greater than ten-percent shareholder" as defined in Section 7(b)) from the date the option was granted or such earlier date as may be specified by the Committee at the time the option is granted. (d) Exercise of Options. (1) At the time of the grant of an option, the Committee shall specify whether the option shall be exercisable in full at any time prior to the Final Exercise Date or in installments (which may be cumulative or noncumulative). In the case of an option not immediately exercisable in full, the Committee may at any time accelerate the time at which all or any part of the option may be exercised. (2) The award forms or other instruments evidencing incentive options shall contain such provisions relating to exercise and other matters as are required of incentive options under the applicable provisions of the Code and the regulations thereunder, as from time to time in effect. (3) Any exercise of an option shall be in writing, signed by the proper person and delivered or mailed to the Company, accompanied by (a) the option certificate and any other documents required by the Committee and (b) payment in full for the number of shares for which the option is exercised. (4) In the case of an option that is not an incentive option, the Committee shall have the right to require that the individual exercising the option remit to the Company an amount sufficient to satisfy any federal, state, or local withholding tax requirements (or make other arrangements satisfactory to the Company with regard to such taxes) prior to the delivery of any Stock pursuant to the exercise of the option. In the case of an incentive option, if at the time the option is exercised the Committee determines that under applicable law and regulations the Company could be liable for the withholding of any federal, state or local tax with respect to a disposition of the Stock received upon exercise, the Committee may require as a condition of exercise that the individual exercising the option agree (i) to inform the Company promptly of any disposition (within the meaning of Section 424(c) of the Code and the regulations thereunder) of Stock received upon exercise, and (ii) to give such security as the Committee deems adequate to meet the potential liability of the Company for the withholding of tax, and to augment such security from time to time in any amount reasonably deemed necessary by the Committee to preserve the adequacy of such security. -77- 5 (5) If an option is exercised by the executor or administrator of a deceased employee or Associate, or by the person or persons to whom the option has been transferred by the employee's or Associate's will or the applicable laws of descent and distribution, the Company shall be under no obligation to deliver Stock pursuant to such exercise until the Company is satisfied as to the authority of the person or persons exercising the option. (e) Termination of Employment. An employee's options shall terminate immediately upon the termination of his employment with the Company, subject to the following exceptions: (i) if the termination is by reason of the death or disability of the employee, the unexercised portion of the such options shall continue to be exercisable for 12 months after such termination and (ii) if the termination is for any other reason, excluding termination for cause, the unexercised portion of such options shall continue to be exercisable for three months after such termination. Notwithstanding the foregoing, the Committee in its discretion in any particular case may provide that upon termination of an employee's employment with the Company, the unexercised portion of his options shall continue to be exercisable for a longer or shorter period than the period provided for in the preceding sentence; provided, however, that (i) in the case of an incentive option, the Committee may not provide for a shorter or longer period after the option is granted and, in any event, may not provide for a longer period except in the case where the employee's employment is terminated by reason of death and (ii) in the case of an option that is not an incentive option, the Committee may not provide for a shorter period after the option is granted. For purposes of this Section 7(e), employment shall not be considered terminated (i) in the case of sick leave or other bona fide leave of absence approved for purposes of the Plan by the Committee, so long as the employee's right to reemployment is guaranteed either by statute or by contract, or (ii) in the case of a transfer of employment between the Company and a subsidiary or between subsidiaries, or to the employment of a corporation (or a parent or subsidiary corporation of such corporation) issuing or assuming an option in a transaction to which Section 424(a) of the Code applies. (f) Payment for Stock. Stock purchased under the Plan shall be paid for as follows: (i) in cash or by certified check, bank draft or money order payable to the order of the Company or (ii) if so permitted by the Committee (not later than the time of grant, in the case of an incentive option), (A) through the delivery of shares of Stock (including shares acquired under the option then being exercised) having a fair market value (determined as provided in Section 7(b)) on the date of exercise equal to the purchase price or (B) by a combination of cash and Stock as provided in clauses (i) and (ii)(A) above or (C) by delivery of a promissory note of the option holder to the Company, such note to be payable in the case of an incentive option, on such terms as are specified in the option (except that, in lieu of a stated rate of interest, an incentive option may provide that the rate of interest on the note will be such rate as is sufficient, at the time the note is given, to avoid the imputation of interest under the applicable provisions of the Code), or by a combination of cash (or cash and Stock) and the option holder's promissory note; provided, that if the Stock delivered upon exercise of the option is an original issue of authorized Stock, at least so much of the exercise price as represents the par value of such Stock shall be paid in cash or by a combination of cash and Stock. -78- 6 (g) Delivery of Stock. An option holder shall not have the rights of a shareholder with regard to awards under the Plan except as to Stock actually received by him under the Plan. The Company shall not be obligated to deliver any shares of Stock (a) until, in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, and (b) if the outstanding Stock is at the time listed on any stock exchange, until the shares to be delivered have been listed or authorized to be listed on such exchange upon official notice of issuance, and (c) until all other legal matters in connection with the issuance and delivery of such shares have been approved by the Company's counsel. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the option, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act and may require that the certificates evidencing such Stock bear an appropriate legend restricting transfer. (h) Transferability of Options. The Committee may provide that options may be transferred to the extent and subject to such limitations as the Committee may specify. (i) Restrictions on Stock. The Committee may provide that shares of Stock purchased through the exercise of options under the Plan be subject to such restrictions on resale, including restrictions requiring resale to the Company at or below fair market value, or such other restrictions, as the Committee in its sole discretion shall determine, and shall take such steps as it deems necessary or appropriate to carry out the purposes of any such restriction. 8. MERGERS, RECAPITALIZATIONS, ETC. (a) In the event of a consolidation or merger in which the Company is not the surviving corporation or in the event of any transaction that results in the acquisition of substantially all of the Company's outstanding Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all of the Company's assets (all the foregoing being referred to as "Acquisition Events"), then the Committee may in its discretion terminate all outstanding options by delivering notice of termination to each option holder; provided, however, that, during the 20-day period following the date on which such notice of termination is delivered, each option holder shall have the right to exercise in full all of his options that are then outstanding (without regard to limitations on exercise otherwise contained in the options). If an Acquisition Event occurs and the Committee does not terminate the outstanding options pursuant to the preceding sentence, then the provisions of Section 8(b) shall apply. (b) In the event of a stock dividend stock split or combination of shares, recapitalization or other change in the Company's capital stock, the number and kind of shares of stock of securities of the Company subject to options then outstanding or subsequently granted under the Plan, the maximum number of shares or securities that may be delivered under the Plan, the exercise price, and other relevant provisions shall be appropriately adjusted by the Committee. The Committee may also adjust the -79- 7 number of shares subject to outstanding options, the exercise price of outstanding options and the terms of outstanding options to take into consideration any other event (including, without limitation, accounting changes) if the Committee determines that such adjustment is appropriate to avoid distortion in the operation of the Plan. All determinations and adjustments made by the Committee pursuant to this Section 8(b) shall be binding on all persons. (c) The Committee may grant options under the Plan in substitution for options held by employees of another corporation who concurrently become employees of the Company or a subsidiary of the Company as the result of a merger or consolidation of the employing corporation with the Company or a subsidiary of the Company, or as the result of the acquisition by the Company of property or stock of the employing corporation. The Company may direct that substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances. 9. LIMITATION ON RIGHTS. Neither the adoption of the Plan nor the grant of options shall confer upon any employee any right to continued employment with the Company or affect in any way the right of the Company to terminate the employment of an employee at any time. Except as specifically provided by the Committee in any particular case, the loss of existing or potential profit in options granted under this Plan shall not constitute an element of damages in the event of termination of the employment of an employee even if the termination is in violation of an obligation of the Company to the employee by contract or otherwise. 10. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION. (a) Neither adoption of the Plan nor the grant of options to an employee shall affect the Company's right to grant to such employee options that are not subject to the Plan, to issue to such employees Stock as a bonus or otherwise, or to adopt other plans or arrangements under which Stock may be issued to employees. (b) The Committee may at any time discontinue granting options under the plan. With the consent of the option holder, the Board may at any time cancel an existing option in whole or in part and grant the option holder another option for such number of shares as the Committee specifies. The Committee may at any time or times amend the Plan or any outstanding option for the purpose of satisfying the requirement of Section 422 of the Code or of any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law, or at any time terminate the Plan as to any further grants of options, provided that (except to the extent expressly required or permitted above) no such amendment shall, without the approval of the shareholders of the Company, (a) increase the maximum number of shares available under the Plan, (b) change the group of employees eligible to receive options under the Plan, (c) reduce the price at which incentive options may be granted, (d) extend the time within which incentive options may be granted, (e) extend the time within which options may be granted, (f) alter the Plan in such a way that incentive options already granted hereunder would not be considered incentive stock options under Section 422 of the Code, or (g) amend the provisions of this Section 10, and no such amendment shall adversely affect the rights of any option holder (without his consent) under any option previously granted. -80- EX-11 11 COMPUTATION OF PER SHARE EARNINGS 1 Exhibit 11 BED BATH & BEYOND INC. AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS
Three Months Ended Six Months Ended ------------------ ---------------- August 30, August 25, August 30, August 25, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Weighted average number of shares outstanding 68,802,138 68,424,120 68,715,322 68,308,680 Dilutive effect of common equivalent shares (stock options) outstanding 2,315,128 2,015,567 2,199,134 2,155,964 ----------- ----------- ----------- ----------- Weighted average number of shares and dilutive common equivalent shares (stock options) outstanding 71,117,266 70,439,687 70,914,456 70,464,644 =========== =========== =========== =========== Net earnings $19,447,000 $15,105,000 $29,354,000 $22,819,000 =========== =========== =========== =========== Net earnings per share $ .27 $ .21 $ .41 $ .32 =========== =========== =========== ===========
-81- EX-27 12 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF AUGUST 30, 1997, AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTH PERIOD ENDED AUGUST 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS FEB-28-1998 JUN-01-1997 AUG-30-1997 49,162 0 0 0 257,717 309,331 150,234 (50,548) 425,021 165,658 0 0 0 689 247,304 425,021 480,557 480,557 283,699 283,699 149,278 0 (1,141) 48,721 19,367 29,354 0 0 0 29,354 .41 .41
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