18
INDEPENDENT AUDITORS' REPORT
Cracker Barrel Old Country Store, Inc.:
We have audited the accompanying balance sheets of Cracker Barrel Old Country
Store, Inc. (the "Company") as of July 28, 1995 and July 29, 1994, and the
related statements of income, changes in stockholders' equity, and cash flows
for each of the three fiscal years in the period ended July 28, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at July 28, 1995 and July 29,
1994, and the results of its operations and its cash flows for each of the
three fiscal years in the period ended July 28, 1995 in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Nashville, Tennessee
September 6, 1995
CRACKER BARREL OLD COUNTRY STORE, INC.
Hartmann Drive
Lebanon, Tennessee 37088-0787
__________________
Notice of Annual Meeting of Shareholders
to be held on Tuesday, November 28, 1995
___________________
Notice is hereby given that the Annual Meeting of Shareholders of
Cracker Barrel Old Country Store, Inc. (hereinafter called the "Company"),
will be held at the offices of the Company located on Hartmann Drive,
Lebanon, Tennessee, on Tuesday, November 28, 1995 at 10:00 a.m., local time,
for the following purposes:
(1) To elect 14 directors to serve until the next Annual Meeting and
until their successors are duly elected and qualified;
(2) To consider and vote upon a proposed amendment to the Company's
1987 Stock Option Plan to increase the number of shares of the
Company's Common Stock available under the Plan from 8,550,607 to
11,550,607.
(3) To approve the selection of Deloitte & Touche LLP as the Company's
independent auditors for the 1996 fiscal year.
(4) To consider and take action on a shareholder proposal requesting
that the Board of Directors prepare a report in which the primary
emphasis would be to explore ways to link executive compensation to
social issues.
(5) To consider and take action on a shareholder proposal requesting
that the Board of Directors prepare a report ascertaining the costs
incurred by the Company due to the alleged "continuing controversy"
regarding its policies towards gay men and lesbians.
(6) To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 2,
1995, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
Your attention is directed to the Proxy Statement accompanying this
notice for a more complete statement regarding matters to be acted upon at
the meeting.
By Order of the Board of Directors
Michael J. Zylstra, Secretary
Lebanon, Tennessee
October 23, 1995
1
YOUR REPRESENTATION AT THE MEETING IS IMPORTANT. TO ENSURE YOUR
REPRESENTATION, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD. SHOULD YOU
DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AS PROVIDED IN THE
ACCOMPANYING PROXY STATEMENT, AT ANY TIME BEFORE IT IS VOTED.
2
CRACKER BARREL OLD COUNTRY STORE, INC.
Hartmann Drive
Lebanon, Tennessee 37088-0787
____________________
PROXY STATEMENT
____________________
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Cracker Barrel Old Country Store, Inc. (the "Company"), for use
at the Annual Meeting of Shareholders to be held on November 28, 1995, and
any adjournment thereof, notice of which is attached hereto.
This Proxy Statement and the Annual Report of the Company for the fiscal
year ended July 28, 1995, have been mailed on or about October 23, 1995, to
all shareholders of record on October 2, 1995.
The purpose of the Annual Meeting is to elect fourteen directors; to
consider and vote upon a proposed amendment to the Company's 1987 Stock
Option Plan (the "1987 Plan") which would increase the number of shares of
the Company's Common Stock available under the 1987 Plan from 8,550,607 to
11,550,607; to approve the selection of Deloitte & Touche LLP as the
Company's independent auditors for the next fiscal year; to vote on a
shareholder proposal requesting that the Board of Directors prepare a report
in which the primary emphasis would be to explore ways to link executive
compensation to social issues; and to vote on a shareholder proposal
requesting that the Board of Directors prepare a report ascertaining the
costs incurred by the Company due to the alleged "continuing controversy"
regarding its policies towards gay men and lesbians.
A shareholder of record who signs and returns a proxy in the
accompanying form may revoke the same at any time before the authority
granted thereby is exercised by attending the Annual Meeting and electing to
vote in person, by filing with the Secretary of the Company a written
revocation or by duly executing a proxy bearing a later date. Unless so
revoked, the shares represented by the proxy will be voted at the Annual
Meeting. Where a choice is specified on the proxy, the shares represented
thereby will be voted in accordance with such specifications. If no
specification is made, such shares will be voted for the election of all
director nominees, the approval of the proposed amendment to the 1987 Plan
and the approval of Deloitte & Touche LLP as the Company's independent
auditors for the 1996 fiscal year. If no specification is made, such shares
will be voted against the two proposals by shareholders.
Directors shall be elected by a plurality of the votes cast in the
election by the holders of Common Stock represented and entitled to vote at
the Annual Meeting, at which a quorum is present. Assuming the existence of
a quorum, all other proposals submitted to the shareholders shall be approved
if the votes cast favoring the proposal exceed the votes cast opposing it.
Abstentions will be counted as present for purposes of determining the
existence of a quorum and for determining the total number of votes cast.
Abstentions are disregarded in determining if a director receives a plurality
of the votes cast or whether votes cast for a proposal exceed votes cast
against it. Broker non-votes are disregarded for the purpose of determining
the total number of votes cast with respect to a proposal.
3
The Board of Directors knows of no other matters which are to be brought
to a vote at the Annual Meeting. However if any other matter does come
before the meeting, the persons appointed in the proxy or their substitutes
will vote in accordance with their best judgment on such matters.
The Board of Directors has fixed the close of business on October 2,
1995, as the record date for the Annual Meeting. The Company's only class of
securities is its Common Stock, $.50 par value per share. On October 2, 1995
the Company had outstanding 60,233,997 shares of Common Stock. Only
shareholders of record at the close of business on that date will be entitled
to vote at the Annual Meeting. Shareholders will be entitled to one vote for
each share so held, which may be given in person or by proxy authorized in
writing.
The cost of solicitation of proxies will be borne by the Company,
including expenses in connection with preparing, assembling and mailing this
Proxy Statement. Such solicitation will be made by mail, and may also be
made by the Company's officers or employees personally or by telephone or
telegram. No officers or employees of the Company will receive additional
compensation for soliciting proxies. The Company may reimburse brokers,
custodians and nominees for their expenses in sending proxies and proxy
material to beneficial owners. The Company retains Corporate Communications,
Inc., 523 Third Avenue South, Nashville, Tennessee to assist in the
management of the Company's investor relations and other shareholder
communications issues, for a fee of approximately $2,000 per month, plus
reimbursement of out-of-pocket expenses. As part of its duties, Corporate
Communications, Inc. may assist in the solicitation of proxies. See
"Transactions with Management" below.
The Company will continue its practice of holding the votes of all
shareholders in confidence from Company directors, officers and employees
except (i) to allow the independent inspectors of election to certify the
results of the vote; (ii) as necessary to meet applicable legal requirements
and to assert or defend claims for or against the Company; (iii) in case of
a contested proxy solicitation; or (iv) in the event that a shareholder makes
a written comment on the proxy card or otherwise communicates his/her vote to
management. The Company will also continue, as it has in the past, to employ
an independent tabulator to receive and tabulate the proxies, and independent
inspectors of election to certify the results.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Bylaws provide that the Company's Board of Directors shall
consist of not more than fifteen persons. The Board of Directors has
resolved that the Board shall currently consist of fourteen persons. Proxies
cannot be voted for a greater number of persons. The terms of all present
directors will expire upon the election of new directors at the Annual
Meeting. The Board of Directors proposes the election of the nominees listed
below to serve until the next Annual Meeting and until their successors are
duly elected and qualified. Unless contrary instructions are received, it is
intended that the shares represented by proxies solicited by the Board of
Directors will be voted in favor of the election as directors of all the
nominees named below. If for any reason any nominee is unable to serve, the
persons named in the proxy have advised that they will vote for such
substitute nominee(s) as the Board of Directors of the Company may propose.
The Board of Directors has no reason to expect that any nominee will fail to
be a candidate at the meeting, and therefore, does not at this time have any
substitute nominees under consideration. Each nominee has consented to act
4
as a director, if elected. The information relating to the fourteen nominees
set forth below has been furnished to the Company by the individuals named.
All of the nominees are presently directors of the Company and were elected
at the annual meeting held on November 22, 1994, except Mr. Magruder, who was
elected by the Board of Directors in August 1995.
The Directors shall be elected by a plurality of the votes cast by the
shares entitled to vote in the election at the Annual Meeting. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES LISTED BELOW.
PROXIES, UNLESS INDICATED TO THE CONTRARY, WILL BE VOTED "FOR" THE LISTED
NOMINEES.
NAME, AGE, POSITION FIRST BECAME BUSINESS EXPERIENCE
WITH THE COMPANY A DIRECTOR DURING THE PAST FIVE YEARS
________________ __________ __________________________
James C. Bradshaw, 64 1970 Practicing physician, Lebanon,
Director Tennessee
Robert V. Dale, 59 1986 President of Windy Hill Pet Food
Director Company, Nashville, Tennessee since
March 1995; Partner in PFB
Partnership, Nashville, Tennessee
from August 1994 to March 1995;
President of Martha White Foods,
Inc., Nashville, Tennessee from
October 1985 to August 1994
Dan W. Evins, 60 1970 Chairman and Chief Executive
Director, Chairman and Chief Officer of the Company; President
Executive Officer(1) of the Company until August 1995;
Member of Board of Directors of
Clayton Homes, Inc.
Edgar W. Evins, 63 1970 Retired in June 1987; President,
Director(1) DeKalb County Bank and Trust
Company, Alexandria, Tennessee
from 1958 until June 1987
William D. Heydel, 66 1970 Retired in 1987; for the previous
Director five years, Tennessee manager of
American Family Life Assurance
Company, Nashville, Tennessee
Robert C. Hilton, 58 1981 Chairman, President and CEO of
Director Home Technology Healthcare, Inc.
Nashville, Tennessee since October
1991; Private investor from August
1988 to October 1991; Chairman and
CEO, American Healthcorp, Inc., from
September 1981 to August 1988
Charles E. Jones, Jr., 50 1981 President, Corporate Communications,
Director Inc., a financial public relations
firm, Nashville, Tennessee
5
Charles T. Lowe, Jr., 63 1970 Retired in 1993; previously
Director President of Travel World, Inc., a
travel agency, Lebanon, Tennessee
B. F. Lowery, 58 1971 Attorney; President and Chairman,
Director LoJac Companies, asphalt paving,
highway construction and building
materials supplier and contractor,
Lebanon, Tennessee
Ronald N. Magruder, 48 1995 President and Chief Operating
Director, President and Officer of the Company since August
Chief Operating Officer 1995; Vice-Chairman of Darden
Restaurants from December 1994 to
August 1995; Executive Vice
President, General Mills Restaurants
and President of Olive Garden from
1987 to 1994.
Gordon L. Miller, 61 1974 Dentist, Lebanon, Tennessee
Director
Martha M. Mitchell, 55 1993 Senior Vice President (since
Director January 1987) and Partner (since
January 1993) of Fleishman-Hillard,
Inc., a public relations firm, St.
Louis, Missouri
James H. Stewart, 70 1985 Retired in October 1987; President
Director and Chief Operating Officer,
Prepared Foods, Inc. from August
1986 to September 1987; Vice
President and Chief Financial
Officer, Prepared Foods, Inc. from
September 1985 to July 1986
Jimmie D. White, 54 1993 Senior Vice President - Finance and
Director, Senior Vice Chief Financial Officer of the
President - Finance and Company
Chief Financial Officer
______________________
(1) Dan W. Evins and Edgar W. Evins are brothers.
The Company's Stock Option Committee is currently composed of Robert C.
Hilton, Edgar W. Evins and Charles E. Jones, Jr. This committee, which met once
during the fiscal year ended July 28, 1995, is responsible for the
administration of the Company's Incentive Stock Option Plan of 1982 and its
1987 Stock Option Plan.
The Company's Audit Committee is currently composed of James H. Stewart,
William D. Heydel, Charles T. Lowe, Jr. and Gordon L. Miller. This committee,
which met three times during the fiscal year ended July 28, 1995, reviews the
Company's internal accounting controls and systems, the results of the Company's
annual audit and the Company's accounting policies and any change therein.
6
The Company's Compensation Committee is composed of Robert V. Dale, James
C. Bradshaw, Edgar W. Evins, Robert C. Hilton, Charles E. Jones, Jr. and B. F.
Lowery. This committee, which met once during the fiscal year ended July 28,
1995, reviews and recommends to the Board of Directors the salaries, bonuses and
other cash compensation of the executive officers of the Company.
During the fiscal year ended July 28, 1995, the Board of Directors held
four meetings and the Executive Committee held eight meetings. No incumbent
director attended fewer than 75 percent of the Board meetings in 1995. The
Company's Executive Committee has all the duties and powers of the Board of
Directors, subject to the general direction, approval and control of the
Board. The Executive Committee is currently composed of James C. Bradshaw,
Robert V. Dale, Dan W. Evins, Edgar W. Evins, Robert C. Hilton, Charles E.
Jones, Jr. and B. F. Lowery. The Executive Committee also reviews director
nominees and makes recommendations to the Board of Directors prior to each
annual meeting of shareholders. The Executive Committee will consider
nominees recommended in writing by shareholders who submit such nominations
to the Company prior to the deadline for shareholder proposals as further
described under "Proposals of Shareholders" herein.
The Company pays to each of its outside directors an annual retainer of
$14,000 and $900 as a director's fee for each board meeting attended. Outside
directors who are members of the Company's Executive Committee receive a fee of
$900 for each such committee meeting attended. Fees of $800 for the Company's
Audit Committee, Compensation Committee and Stock Option Committee are paid to
committee members for each such committee meeting attended. The chairmen of
these committees receive an additional fee of $400 for each committee meeting
attended. All outside directors are reimbursed by the Company for out-of-pocket
expenses incurred in connection with attendance at meetings. No fees are paid
to directors who are also employees of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following information pertains to the Common Stock of the Company
beneficially owned, directly or indirectly, by all directors and nominees and
by all directors and officers as a group, as of October 2, 1995. Unless
otherwise noted, the named persons have sole voting and investment power with
respect to the shares indicated.
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP(1) OF CLASS
_________________ _______________________ ________
James C. Bradshaw 545,719(2) *
Robert V. Dale 155,352 *
Dan W. Evins 616,667 1.0%
Edgar W. Evins 69,157(3) *
William D. Heydel 549,352(2) *
Robert C. Hilton 99,299 *
Charles E. Jones, Jr. 102,761 *
Charles T. Lowe, Jr. 994,228(4) 1.6%
B. F. Lowery 240,125 *
Ronald N. Magruder 91,333 *
Gordon L. Miller 267,167 *
Martha M. Mitchell 41,872 *
James H. Stewart 66,734 *
Jimmie D. White 144,552 *
7
All Officers and
Directors as a group
(26 persons) 4,943,541 7.9%
*Less than one percent
______________________
(1) Includes the following shares which are not currently outstanding but
which the named holders are entitled to receive within 60 days upon
exercise of options:
James C. Bradshaw 142,670
Robert V. Dale 142,670
Dan W. Evins 216,667
Edgar W. Evins 66,734
William D. Heydel 142,670
Robert C. Hilton 92,046
Charles E. Jones, Jr. 92,046
Charles T. Lowe, Jr. 66,734
B. F. Lowery 142,670
Ronald N. Magruder 83,333
Gordon L. Miller 66,734
Martha M. Mitchell 41,422
James H. Stewart 66,734
Jimmie D. White 79,167
All Officers and Directors as a group 2,384,146
The shares described in this note are deemed to be outstanding for the
purpose of computing the percentage of outstanding Common Stock owned by
each named individual and by the group, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) Includes shares owned jointly with wife, with whom voting and investment
power is shared: Dr. Bradshaw 403,049 and Mr. Heydel 406,682.
(3) Includes 223 shares owned by Mr. Evins' wife in her SEP, for which
voting and investment power is shared.
(4) Voting and investment power with respect to 43,491 shares is shared by
Mr. Lowe and his wife, the owner of these shares.
REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK OPTION
COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company's compensation policies for its executive officers are
administered by two committees of the Board of Directors - the Compensation
Committee and the Stock Option Committee. All members of these committees
are outside, non-employee directors.
The primary components of executive compensation are base salary, bonus
and longer-term incentives such as stock options. The Compensation Committee
recommends to the Board of Directors the salaries and bonus plan for the
executive officers. The Stock Option Committee administers the stock option
plans pursuant to which employee stock options are granted. In addition, a
study prepared by independent consultants, specializing in executive
8
compensation, is used to review salaries and bonuses to determine their
competitiveness in relation to other selected companies in the restaurant and
food service industry.
BASE SALARY
In setting the fiscal 1995 base salary for each executive officer the
Compensation Committee reviewed the then-current salary for each of the
officers in relation to average salaries within the industry for comparable
areas of responsibility from a report prepared for the Company by independent
executive compensation consultants. In addition, they considered the
contribution made by each executive officer during fiscal 1994, as reported
by the Chief Executive Officer, as well as salary recommendations from
management for the executive officers other than the Chairman and Chief
Executive Officer, Dan W. Evins. The Compensation Committee employed
procedures similar to those used for each of the other executive officers to
determine the fiscal 1995 salary for Dan W. Evins.
BONUS
The Compensation Committee has established that the financial
performance of the Company should be a significant factor in rewarding its
executive officers. Therefore, in July of each year, the Compensation
Committee reviews the expected financial performance of the Company for the
then-ending fiscal year and the internal budget established for the next
fiscal year in setting the criteria for executive officer bonuses.
The basic plan compensates executive officers on the basis of the amount
of increase in the Company's pretax income over the previous fiscal year. If
pretax income is equal to or less than that of the previous fiscal year, no
bonuses are paid to any of the executive officers.
For fiscal 1995, as in recent years, a bonus pool of 12% of the amount
by which the current fiscal year's pretax income exceeds that of the previous
fiscal year, plus an additional 2% of any amount in excess of the internally
budgeted pretax income, is distributed among the executive officers. The
bonus pool is distributed by determining each executive officer's pro rata
share of an aggregate bonus participation amount arrived at by multiplying
each officer's salary by the bonus participation percent set by the
Compensation Committee (60% for Mr. Evins, 36% for senior officers, 24% for
all other executive officers, and 16% for assistant officers). Bonuses
earned for fiscal 1995, as a percent of total salary and bonuses, were 63%
for Mr. Evins, 51% for Senior Officers, 41% for all other executive officers
and 31% for assistant officers.
STOCK OPTIONS
In contrast to salary and bonus awards, which are generally for past
work performance, stock options are based on future performance of stock
price appreciation. They are granted at an exercise price which is equal to
the closing market price of the Company's Common Stock on the day before the
date of grant, and therefore have no value until the stock price increases.
The Stock Option Committee has generally granted nonqualified stock
options annually. In recent years, the Committee has extended option grants
down into the organization as far as the top hourly level positions in the
stores. See "Stock Option Plans" below.
9
STOCK PERFORMANCE GRAPH
The following graph sets forth the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock during the
preceding five fiscal years ended July 28, 1995 compared with the Standard &
Poor's 400 MidCap Index and a Total Return Index comprised of all NASDAQ
companies with the same two digit SIC (Standard Industrial Classification)
code as the Company.
1990 1991 1992 1993 1994 1995
Cracker Barrel Old
Country Store, Inc. 100 193 285 332 297 269
NASDAQ SIC-58 100 107 136 158 144 161
S&P 400 MIDCAP 100 122 144 168 174 216
(1) Assumes that the value of the investment in the Company's Common Stock
and each Index was $100 on August 3, 1990, and that all dividends were
reinvested.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
of the Chief Executive Officer and the four other most highly compensated
executive officers who served in such capacities as of July 28, 1995.
Long Term
Annual Compensation Compensation
___________________________ ____________
All Other
Principal Fiscal # Options Compensation
Name Position Year Salary(1) Bonus Granted (2)
____ ________ ____ _________ _____ _______ ___
Dan W. Evins Chairman of the Board, 1995 $385,000 $661,495 40,000 $28,541
President and Chief 1994 360,000 879,900 40,000 29,223
Executive Officer 1993 326,600 861,748 60,000 30,647
Jimmie D. White Senior Vice President/ 1995 215,000 221,644 25,000 16,514
Finance and Chief 1994 195,000 285,997 25,000 16,991
Financial Officer 1993 163,000 276,324 37,500 17,111
Reginald M. Mudd Senior Vice President/ 1995 210,000 216,489 25,000 8,441
Operations and Chief 1994 165,083 222,014 25,000 8,962
Operations Officer 1993 130,000 146,921 18,000 8,753
Frank J. McAvoy Vice President/ 1995 155,000 106,526 12,000 12,200
Operations Services 1994 145,000 141,776 12,000 12,197
1993 133,000 150,311 18,000 12,619
Richard G. Parsons Vice President/ 1995 155,000 106,526 12,000 7,596
Merchandising 1994 134,000 131,021 12,000 8,506
1993 122,000 137,879 18,000 8,436
(1) Salary includes director's fees received by Mr. Evins in the amount of
$21,600 for 1993. Effective August 1993, no director's fees are paid to
directors who are also employees of the Company.
(2) Includes premiums paid on Life and Disability insurance for coverage
above that available to all salaried employees and the Company's
contributions to 401(k) Employee Savings Plan.
10
OPTIONS GRANTED DURING FISCAL YEAR ENDED JULY 28, 1995
The following table sets forth all options to acquire shares of the
Company's Common Stock granted to the named executive officers during the
fiscal year ended July 28, 1995.
Individual Grants (1)
_______________________________________________
Potential Realizable Value
Percent of at Assumed Annual Rates
Total Options of Stock Price
Granted to Exercise or Appreciation for Option Term(2)
# Options Employees in Base Price Expiration _______________________________
Name Granted Fiscal Year $/Share Date 5% 10%
____ _______ ___________ _______ ____ ___ ____
Dan W. Evins 40,000 4.2% $25.25 08-25-04 $635,200 $1,609,600
Jimmie D. White 25,000 2.6% 25.25 08-25-04 397,000 1,006,000
Reginald M. Mudd 25,000 2.6% 25.25 08-25-04 397,000 1,006,000
Frank J. McAvoy 12,000 1.3% 25.25 08-25-04 190,560 482,880
Richard M. Parsons 12,000 1.3% 25.25 08-25-04 190,560 482,880
(1) The exercise price of the options granted is equal to the closing market
price of the Company's Common Stock on the day before the date of grant.
Options are exercisable as to not more than one-third of the total
number of shares under the option during each twelve-month period
following the grant. To the extent any optionee does not exercise an
option as to all shares for which the option was exercisable during any
twelve-month period, the balance of unexercised options shall accumulate
and the option will be exercisable with respect to such shares. Options
expire ten years after grant.
(2) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of
the term of these options, using 5 percent and 10 percent appreciation
rates, as required by the Securities and Exchange Commission, compounded
annually. These values are not intended to forecast possible future
appreciation, if any, of the Company's stock price. Additionally, these
values do not take into consideration the provisions of the options
providing for nontransferability, vesting over a period of years or
termination of the options following termination of employment.
11
OPTION EXERCISES AND FISCAL YEAR END VALUES
There were no options exercised during the fiscal year ended July 28,
1995 by the named executive officers. The following table sets forth the
number and value of unexercised options held by such executive officers at
fiscal year end.
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at FY-End at FY-End
_________________ _________
Exercisable Unexercisable Exercisable Unexercisable
___________ _____________ ___________ _____________
Dan W. Evins 190,000 40,000 $ 383,750 $0
Jimmie D. White 296,875 25,000 2,831,907 0
Reginald M. Mudd 151,000 25,000 1,286,250 0
Frank J. McAvoy 65,437 12,000 231,876 0
Richard M. Parsons 172,780 12,000 1,915,598 0
(1) The last trade of the Company's Common Stock as reported by NASDAQ on
July 28, 1995 was $20.875 and was used in calculating the value of
unexercised options.
EXECUTIVE EMPLOYMENT AGREEMENT
Employment agreements have been granted to Dan W. Evins (Chairman of the
Board and Chief Executive Officer), and Jimmie D. White (Senior Vice
President, Finance and Chief Financial Officer) which, upon the occurrence of
certain events, authorize a severance payment approximately equal to three
times their annual salary rate in effect on the date of termination. As
announced publicly on September 6, 1995, Jimmie D. White will retire from his
position once his successor is in place. The employment agreement with Mr.
White will terminate upon his retirement.
The Executive may terminate his employment and receive the three-year
severance payment if there is a "change in control of the Company" (as
defined in the Agreement), accompanied by: (1) a decrease in the Executive's
base salary or bonus percentage; or (2) a reduction in the importance of the
Executive's job responsibilities; or (3) a geographical relocation of the
Executive without his consent. The three-year severance payment shall also
be made to the Executive if the Company breaches the terms of the Agreement.
Additionally, the Agreement describes the Executive's rights to compensation
should his employment be terminated or suspended due to death, disability,
poor performance or wrongful activities. Although not intended primarily as
a standard employment contract, the Agreement does provide for payment to the
Executive of a specified annual salary which shall not be decreased, and
which may be increased from time to time. These agreements do not preclude
the Executives from participation in any other Company benefit plans or
arrangements.
12
STOCK OPTION PLANS
On February 25, 1982, the Company's Board of Directors adopted an
incentive stock option plan, which was subsequently approved by the
shareholders of the Company on November 23, 1982. The 1982 Plan authorized
the Stock Option Committee to issue options to certain key employees. In
1986, Congress adopted the Tax Reform Act of 1986, and in response to the
1986 Code amendments, the Company's Board of Directors voted to discontinue
the 1982 Plan and adopt in its place the 1987 Stock Option Plan. The
shareholders adopted the 1987 Plan at the 1987 annual meeting of
shareholders.
The 1987 Plan, like the 1982 Plan is administered by the Stock Option
Committee (the "Committee"). Members of the Committee are appointed by the
Board and consist of members of the Board. The Committee is authorized to
determine, at time periods within its discretion and subject to the direction
of the Board, which key employees shall be granted options, the number of
shares covered by the options granted to each, and within applicable limits,
the terms and provisions relating to the exercise of such options.
The Committee is currently authorized to grant options to purchase an
aggregate of 8,550,607 shares of the Company's Common Stock under the 1987
Plan. Options may be granted only to key executive personnel and other
employees who hold responsible positions with the Company. The Committee may
impose on the option, or the exercise thereof, such restrictions as it deems
reasonable and which are within the restrictions authorized by the 1987 Plan.
The option price per share under the 1987 Plan must be at least 100% of
the fair market value of a share of the Company's Common Stock on the day
next preceding the day the option is granted and options must be exercised
not later than ten years after the date on which granted.
During Fiscal 1995, the aggregate number of shares subject to options
granted was 955,500 including 170,750 shares granted to the Company's
executive officers as a group, including the individuals named in the summary
compensation table. These options were granted at $25.25 per share. These
options were granted pursuant to the 1987 Plan and are exercisable as to not
more than one-third of the total number of shares under the option during
each twelve-month period following the date of the granting of the option.
To the extent, however, any optionee does not exercise an option as to all
shares for which the option was exercisable during any twelve-month period,
the balance of unexercised options shall accumulate and the option will be
exercisable with respect to such shares. The aggregate number of shares
exercised during Fiscal 1995 was 90,731, including 33,280 exercised by the
Company's executive officers as a group. The net value of shares (market
value less option exercise price) or cash realized upon exercise of options
was $1,014,124 in the aggregate, including $617,510 relating to options
exercised by the Company's executive officers as a group.
In 1989, the directors and shareholders of the Company adopted the 1989
Stock Option Plan for Non-Employee Directors (the "1989 Plan"). The total
number of shares of Common Stock issuable upon the exercise of all options
granted under the 1989 Plan will not exceed in the aggregate 1,518,750
shares. Under the 1989 Plan, all non-employee directors of the Company
automatically receive an annual stock option grant for 25,312 shares of the
Company's Common Stock. However, due to the overall 1989 Plan limit, the
Fiscal 1995 grant was for 16,110 options each. Therefore, there are no more
shares available to be granted under the 1989 Plan.
13
1989 Plan stock options become exercisable six (6) months after the date of
grant. The stock options are granted at an exercise price equal to the fair
market value of the underlying stock on the date of grant and have no
expiration date. On August 25, 1994 each director listed on page 6, except
Mr. Dan W. Evins, Mr. Ronald N. Magruder and Mr. Jimmie D. White, was granted
an option to purchase 16,110 shares at $25.00 per share. There were no
options exercised during Fiscal 1995.
EMPLOYEE SAVINGS PLANS
401K Employee Savings Plan - The Company has an Employee Savings Plan (the
"Plan") which provides for retirement benefits for employees. The Plan is
qualified under Section 401(k) of the Internal Revenue Code. Generally, all
employees of the Company who have completed one year of service with the
Company, who have worked in excess of 1,000 hours with the Company and who
have reached the age of twenty-one (21), are eligible to participate in the
Plan. Eligible employees may elect to participate in the Plan as of the
beginning of each calendar quarter. Each eligible employee who chooses to
participate in the Plan may elect to have up to sixteen percent (16%) (not to
exceed $9,240 in calendar 1995) of their compensation contributed to the
Plan. The Company matches twenty-five percent (25%) of employee
contributions for each participant up to 6% of the employee's compensation.
In addition to the above limits, employee contributions and the Company match
for highly compensated participants are limited by a special annual
nondiscrimination test imposed under Section 401(k) of the Internal Revenue
Code. This test uses the percentages of compensation contributed by and
matched for rank and file participants to limit the contributions of and
Company match for highly compensated participants.
Participants in the Plan have a fully vested interest in their Plan
contributions. A participant's interest in Company contributions begins to
vest one (1) year from the date of employment and continues to vest at the
rate of twenty percent (20%) per year until fully vested.
Generally participants may not withdraw either their contributions or
their vested interest in Company matching contributions prior to retirement
or termination of their employment with the Company. Limited hardship
withdrawals are tightly controlled by the provisions of the Plan and the
Internal Revenue Code.
Deferred Compensation Plan - Effective January 1, 1994, the Company's Board
of Directors adopted a Deferred Compensation Plan to provide retirement and
incidental benefits for certain executive employees and outside directors of
the Company. At the beginning of each calendar year, participants in this
plan may make an election to defer a portion of their compensation. Interest
is credited to each participant's account quarterly at a rate equal to the
ten-year Treasury Bill rate in effect as of the beginning of the quarter,
plus 1.5%. The total interest credited to all participants' accounts during
fiscal 1995 was $16,360.
14
TRANSACTIONS WITH MANAGEMENT
The Company leases its stores in Clarksville, Tennessee and Macon,
Georgia from B. F. Lowery, a director of the Company. Under the terms of an
August 1981 agreement, Mr. Lowery purchased the land, constructed the
restaurant buildings and facilities to the Company's specifications and
leased the stores to the Company for a fifteen-year term. The annual rental
for the Macon store is the greater of (i) 12% of the total initial cost of
the land, buildings and improvements or (ii) 5% of the total restaurant sales
plus 3% of the gift shop sales. The annual rental for the Clarksville store
is the greater of (i) 12% of the total initial cost of the land, building and
improvements or (ii) 5% of the total restaurant sales plus 3% of the gift
shop sales, provided the total of such percentages exceeds $65,000. Taxes,
insurance and maintenance are paid by the Company. The Company has options
to extend the Clarksville and Macon leases for up to 20 years. During the
fiscal year ended July 28, 1995, the Company paid a total of $310,006 in
lease payments to Mr. Lowery. During the fiscal year ended July 28, 1995,
the Company also paid $75,000 as a retainer to Mr. Lowery for corporate legal
services.
The Company uses the services of Corporate Communications, Inc., a
financial public relations firm in Nashville, Tennessee, of which Charles E.
Jones, Jr., a director of the Company, is president and the major
shareholder. During the past fiscal year, the Company paid $24,000 to
Corporate Communications for services and $565,571 for reimbursement of
direct expenses including preparation, distribution and design of the
Company's annual report, proxy materials, quarterly reports and a booklet
containing the history of the first twenty-five years of the Company
distributed to all employees.
The foregoing transactions were negotiated by the Company on an arms-
length basis, and management believes that such transactions are fair and
reasonable and on terms no less favorable than those which could be obtained
from unaffiliated parties.
PROPOSAL 2. INCREASE NUMBER OF SHARES OF COMMON
STOCK AVAILABLE UNDER 1987 STOCK OPTION PLAN
On August 31, 1995, the Executive Committee of the Board of Directors
approved an amendment to the 1987 Stock Option Plan increasing the number of
shares available under the 1987 Plan from 8,550,607 to 11,550,607, subject to
shareholder approval. Options under the 1987 Plan may be granted only to key
executive personnel and other employees holding responsible positions with
the Company, which includes store-level management and the highest level of
hourly employees in the stores. The proposed increase in the number of
shares available is to ensure the existence of sufficient shares for the
granting of options under the 1987 Plan in the future.
For adoption of this proposal, the votes cast favoring the proposal must
exceed the votes cast opposing it. THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSAL. PROXIES, UNLESS INDICATED TO THE
CONTRARY, WILL BE VOTED "FOR" THE PROPOSAL.
15
PROPOSAL 3. APPROVAL OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP as
independent auditors of the Company for the 1996 fiscal year, subject to
shareholder approval. Deloitte & Touche LLP have served as the Company's
independent auditors since the fiscal year ended July 31, 1973. A
representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting with the opportunity to make a statement, if such
representative so desires, and will be available to respond to appropriate
questions.
For adoption of this proposal, the votes cast favoring the proposal must
exceed the votes cast opposing it. THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSAL. PROXIES, UNLESS INDICATED TO THE
CONTRARY, WILL BE VOTED "FOR" THE PROPOSAL.
PROPOSAL 4. SHAREHOLDER PROPOSAL
The Sisters of Mercy Consolidated Asset Management Program, 20
Washington Square North, New York, NY, has stated that it is the beneficial
owner of 2,000 shares of the Common Stock of the Company, and has informed
the Company that it intends to present the following proposal at the meeting:
RESOLVED, Shareholders request that a committee of outside Directors of
the Board institute an Executive Compensation Review, and prepare a report
available to shareholders by October, 1996 with the results of the Review and
recommended changes in practice. The review shall cover pay, benefits,
perks, stock options and special arrangements in the compensation packages
for all the Company's top officers.
Supporting Statement
We recommend that the committee study and report on the following in its
review:
1. Ways to link executive compensation more closely to financial performance
with proposed criteria and formulae.
2. Ways to link compensation to social corporate performance (e.g. incentives
given for meeting or surpassing certain social and performance standards.)
3. Ways to link financial viability of the Company to long-term social
sustainability (e.g. linkages that avoid short-range thinking, and instead
encourage long-range planning).
4. A description of social and environmental criteria we take into account
(e.g. environmental performance standards, law suits, settlements,
penalties, violations, results of environmental audits).
5. The financial costs for the Company of the discrimination controversy.
For adoption of this proposal, the votes cast favoring it must exceed the
votes cast opposing it. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST"
THIS PROPOSAL FOR THE REASONS CITED BELOW. PROXIES, UNLESS INDICATED TO THE
CONTRARY, WILL BE VOTED "AGAINST" THE PROPOSAL.
16
The Company's compensation policies for its executive officers are
administered by two committees of the Board of Directors - the Compensation
Committee and the Stock Option Committee. To help ensure impartiality, the
members of these committees are outside, non-employee directors. In
addition, a survey prepared by William M. Mercer, Inc. is used to review the
Company's executive salaries and bonuses in relation to those of other
selected companies in the restaurant and food service industry. The Board of
Directors believes that these means of setting executive compensation address
overall job performance and serve to enhance company profitability and
shareholder value. The Board does not feel that social issues should be
specifically singled out for separate consideration in setting executive
compensation.
THE BOARD OF DIRECTORS FOR THESE REASONS, RECOMMENDS A VOTE "AGAINST"
THIS SHAREHOLDER PROPOSAL.
PROPOSAL 5. SHAREHOLDER PROPOSAL
Mr. Carl R. Owens, P.O. Box 8233, Atlanta, Georgia, states that he is the
owner of at least $1,000 worth of the Common Stock of the Company, and has
informed the Company that he intends to present the following proposal at the
meeting:
Whereas, Cracker Barrel Old Country Store, Inc., has been involved in
serious controversy over the last four years relating to its policies towards
gay men and lesbians and
Whereas, this controversy has led to negative publicity, boycotts,
demonstrations, and legal actions, and
Whereas, the Company stated in legal papers that aspects of this
controversy have caused "substantial damages" to the Company,
Therefore, be it resolved that the shareholders request that the Board
appoint a committee to ascertain the costs to the Company caused by this
continuing controversy, and that a report on that cost be prepared and made
available to shareholders no later than November 28, 1996. This report shall
be prepared at a reasonable cost and should contain no proprietary
information.
Supporting Statement
The continuing dispute over the Company's policies towards the gay and
lesbian communities is a serious distraction and drains on management time.
We feel that the time has come for the Board to thoroughly re-examine the
Company's policies in this area with a view towards change leading to the
protection of human rights for all. Please vote your proxy FOR these
concerns.
For adoption of this proposal, the votes cast favoring it must exceed the
votes cast opposing it. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST"
THIS PROPOSAL FOR THE REASONS CITED BELOW. PROXIES, UNLESS INDICATED TO THE
CONTRARY, WILL BE VOTED "AGAINST" THE PROPOSAL.
In each of the past two years, Mr. Owens has submitted a proposal
requesting that the Board of Directors of the Company reflect the races,
genders and sexual orientations of the Stockholders of the Company. His
proposals have been soundly defeated each year.
17
This year Mr. Owens' proposal requests that a committee of the Company's
Board of Directors prepare a report ascertaining costs associated with the
Company's alleged "continuing controversy" concerning gay and lesbian issues.
The events surrounding the "continuing controversy" to which Mr. Ownes
apparently refers, happened in January 1991. As Cracker Barrel has publicly
stated on many occasions, it is an equal opportunity employer, and it adheres
to the letter and spirit of the law regarding non-discrimination in the
workplace.
Your management is convinced that Mr. Owens is more interested in gay and
lesbian concerns as social issues than in any economic effect his concerns
may have on your Company, and that he is using the Company's proxy as a forum
to promote his ideas.
The Board of Director's believes that Mr. Owens' proposal itself would
create unnecessary expense for the Company and that neither management nor
stockholders would gain any meaningful information from the preparation of
the report he proposes. Thus, the Board of Directors believes no further
consideration of Mr. Owens' proposal is warranted.
THE BOARD OF DIRECTORS, FOR THESE REASONS, RECOMMENDS A VOTE "AGAINST"
THIS SHAREHOLDER PROPOSAL.
PROPOSALS OF SHAREHOLDERS
Shareholders intending to submit proposals for presentation at the 1996
Annual Meeting of Shareholders of the Company and inclusion in the Proxy
Statement and form of proxy for such meeting should forward their proposals
to Dan W. Evins, Chief Executive Officer, Cracker Barrel Old Country Store,
Inc., P.O. Box 787, Hartmann Drive, Lebanon, Tennessee 37088-0787. Proposals
must be in writing and must be received by the Company prior to June 24,
1996. Proposals should be sent to the Company by certified mail, return
receipt requested.
ANNUAL REPORT AND FINANCIAL INFORMATION
A copy of the Company's Annual Report to Shareholders for fiscal 1995 is
being mailed to each shareholder herewith. A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K AND A LIST OF ALL EXHIBITS THERETO WILL BE SUPPLIED
WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO THE COMPANY,
ATTENTION: CORPORATE SECRETARY, AT THE COMPANY'S PRINCIPAL EXECUTIVE
OFFICES, HARTMANN DRIVE, LEBANON, TENNESSEE 37088-0787. EXHIBITS TO THE FORM
10-K ARE AVAILABLE FOR A REASONABLE FEE.
18
CRACKER BARREL OLD COUNTRY STORE, INC.
Proxy solicited by and on behalf of the Board of Directors for the Annual
Meeting of Shareholders to be held on Tuesday, November 28, 1995.
The undersigned hereby appoints Dan W. Evins and Michael J. Zylstra and
each of them, as proxies, with full power of substitution, to vote all shares
of the undersigned as shown below on this proxy at the Annual Meeting of
Shareholders of Cracker Barrel Old Country Store, Inc. to be held at the
Company's offices located on Hartmann Drive, Lebanon, Tennessee, on Tuesday,
November 28, 1995, at 10:00 a.m., local time, and any adjournment thereof.
The Board of Directors recommends a vote "FOR" proposals (1), (2) and (3).
(1) ELECTION OF DIRECTORS:
\ \ FOR all of the following nominees (except as indicated to the
contrary below): J. Bradshaw, R. Dale, D.W. Evins, E. W. Evins,
W. Heydel, R. Hilton, C. Jones, Jr., C. Lowe, Jr., B. Lowery,
R. Magruder, G. Miller, M. Mitchell, J. Stewart, and J. White
\ \ AGAINST the following nominee(s) (please print name(s)):
_________________________________________________________________
\ \ WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominee(s)
(please print name(s)):
_________________________________________________________________
\ \ AGAINST all nominees
\ \ WITHHOLD AUTHORITY (ABSTAIN) to vote for all nominees
(2) To consider and vote upon a proposed amendment to the Company's 1987
Stock Option Plan to increase the number of shares of the Company's
Common Stock available under the Plan from 8,550,607 to 11,550,607.
\ \ FOR \ \ AGAINST \ \ WITHHOLD AUTHORITY (ABSTAIN)
(3) To approve the selection of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year 1996.
\ \ FOR \ \ AGAINST \ \ WITHHOLD AUTHORITY (ABSTAIN)
The Board of Directors recommends a vote "AGAINST" proposals (4) and (5).
(4) To vote on a shareholder proposal requesting that the Board of Directors
prepare a report in which the primary emphasis would be to link
executive compensation to social issues.
\ \ AGAINST \ \ FOR \ \ WITHHOLD AUTHORITY (ABSTAIN)
(5) To vote on a shareholder proposal requesting that the Board of Directors
prepare a report ascertaining the costs incurred by the Company due to
the alleged "continuing controversy" regarding its policies toward gay
men and lesbians.
\ \ AGAINST \ \ FOR \ \ WITHHOLD AUTHORITY (ABSTAIN)
(6) In their discretion, to transact such other business as may properly be
brought before the meeting or any adjournment thereof.
(Please date and sign this proxy on the reverse side.)
Your shares will be voted in accordance with your instructions. If no
choice is specified, shares will be voted FOR the nominees in the election of
directors, FOR the proposed amendment to the Company's 1987 Stock Option
Plan, FOR the selection of Deloitte & Touche LLP, AGAINST the report linking
executive compensation to social issues and AGAINST the report on costs
related to gay and lesbian issues.
Date ____________________ , 1995. PLEASE SIGN HERE AND RETURN PROMPTLY
__________________________________
__________________________________
Please sign exactly as your name
appears at left. If registered in
the names of two or more persons,
each should sign. Executors,
administrators, trustees, guardians,
attorneys, and corporate officers
should show their full titles.
_____________________________________________________________________________
If you have changed your address, please PRINT your new address on this line.
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
Nos. 2-86602, 33-15775, 33-37567 and 33-45482 of Cracker Barrel Old
Country Store, Inc. on Forms S-8 and Registration Statement No. 33-59582
on Form S-3 of our report dated September 6, 1995, incorporated by
reference in the Annual Report on Form 10-K of Cracker Barrel Old
Country Store, Inc. for the year ended July 28, 1995.
Deloitte & Touche LLP
Nashville, Tennessee
October 23, 1995
5
1,000
YEAR
JUL-28-1995
JUL-30-1994
JUL-28-1995
48,124
11,104
3,193
0
51,515
120,366
576,854
94,941
604,515
76,766
19,500
29,996
0
0
466,087
604,515
783,093
783,093
264,810
370,817
44,746
0
722
105,333
39,289
66,043
0
0
0
66,043
1.09
1.09
RESTATED
BYLAWS
OF
CRACKER BARREL OLD COUNTRY STORE, INC.
ARTICLE I
MEETINGS OF SHAREHOLDERS
1. ANNUAL MEETING. The annual meeting of the shareholders shall be
held at such time and place, either within or without this State, as may be
designated from time to time by the directors.
2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by a majority of the board of directors, or, upon written demand
delivered to the secretary, by the holders of at least ten percent (10%) of
all the votes entitled to be cast on any issue proposed to be considered at
the proposed special meeting. The place of said meetings shall be the
principal office of the corporation, unless otherwise designated by the
directors.
3. NOTICE OF SHAREHOLDER MEETINGS. Written or printed notice stating
the place, day, and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called and the
person or persons calling the meeting, shall be delivered either personally
or by mail to each shareholder entitled to vote at the meeting. Such notice
shall be delivered not less than ten (10) days nor more than two (2) months
before the date of the meeting, and shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at his
address as it appears on the stock transfer books of the corporation, with
postage thereon prepaid. The person giving such notice shall certify that
the notice required by this paragraph has been given.
4. QUORUM REQUIREMENTS. A majority of the shares entitled to vote
shall constitute a quorum for the transaction of business. A meeting may be
adjourned despite the absence of a quorum, and notice of an adjourned meeting
need not be given if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken. When a quorum is
present at any meeting, a majority in interest of the stock there represented
shall decide any question brought before such meeting, unless the question is
one upon which, by express provision of the charter, these bylaws, or by the
laws of Tennessee, a larger or different vote is required, in which case such
express provision shall govern the decision of such question.
5. VOTING AND PROXIES. Every shareholder shall be entitled to one (1)
vote for each share of stock standing in his name on the books of the
Corporation at the time of any regular or special meeting. Every shareholder
entitled to vote at a meeting may do so either in person or by written proxy,
1
which proxy shall be filed with the secretary of the meeting before being
voted. Such proxy shall entitle the holders thereof to vote at any
adjournment of such meeting, but shall not be valid after the final
adjournment thereof. No proxy shall be valid after the expiration of eleven
(11) months from the date of its execution unless otherwise provided in the
proxy.
6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining the shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors of the corporation may provide that the stock transfer book shall
be closed for a stated period not to exceed in any case thirty days. If the
stock transfer book shall be closed for the purpose of determining
shareholders entitled to notice of and to vote at an annual or special
shareholders' meeting, such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the stock transfer
books, the board of directors may fix in advance a date as the record date
for any such determination of shareholders, such date in any case to be not
more than seventy (70) days and, in case of a meeting of shareholders, not
less than ten (10) days prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If the stock
transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend,
the date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
7. VOTING LISTS. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make available, within two
(2) business days after notice of a meeting is given, a complete list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each shareholder, which list, for a period beginning within two (2)
business days after notice of such meeting is given shall be kept on file at
the registered office of the corporation and shall be subject to inspection
by any shareholder at any time during usual business hours. Such list shall
be kept open at the time and place of the meeting and be subject to the
inspection of any shareholder during the entire time of the meeting. In the
event of any challenge to the right of any person to vote at the meeting, the
presiding officer at such meeting may rely on said list as proper evidence of
the right of parties to vote at such meeting.
2
ARTICLE II
BOARD OF DIRECTORS
1. QUALIFICATION AND ELECTION. Directors need not be shareholders or
Tennessee residents, but they must be of legal age. They shall be elected by
a plurality of the votes cast at the annual meetings of the shareholders.
Each director shall hold office until the expiration of the term for which he
is elected, and thereafter until his successor has been elected and
qualified.
2. NUMBER. The number of directors shall be fixed from time to time
by resolution of a majority of the board of directors, but shall never be
more than fifteen (15).
3. MEETINGS. The annual meeting of the board of directors shall be
held immediately after the adjournment of the annual meeting of the
shareholders, at which time the officers of the corporation shall be elected.
The board may also designate more frequent intervals for regular meetings.
Special meetings may be called at any time by the chairman of the board, the
president, or any two (2) directors.
4. NOTICE OF DIRECTORS' MEETINGS. The annual and all regular board
meetings may be held without notice. Special meetings shall be held upon
notice sent by any usual means of communication not less than the minimum
number of days before the meeting as permitted by law.
5. QUORUM AND VOTE. The presence of a majority of the directors shall
constitute a quorum for the transaction of business. A meeting may be
adjourned despite the absence of a quorum, and notice of an adjourned meeting
need not be given if the time and place to which the meeting is adjourned are
fixed at the meeting at which the adjournment is taken and if the period of
adjournment does not exceed one (1) month in any one adjournment. The vote
of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the board, unless the vote of a greater number is
required by the charter, these bylaws, or by the laws of Tennessee.
6. EXECUTIVE AND OTHER COMMITTEES. The board of directors may in its
discretion appoint from its own membership an executive committee consisting
of the chairman of the board and a minimum of three (3) other members,
determine their tenure of office and their powers and duties. The executive
committee shall have such powers as may, from time to time, be prescribed by
the board of directors and these duties and powers may be all the duties and
powers of the said board of directors, except those expressly prescribed by
statute, subject to the general discretion, approval and control of the board
of directors.
3
ARTICLE III
OFFICERS
1. NUMBER. The corporation shall have a president and a secretary,
and such other officers as the board of directors shall from time to time
deem necessary. Any two or more offices may be held be the same person,
except the offices of president and secretary.
2. ELECTION AND TERM. The officers shall be elected by the board at
its annual meeting. Each officer shall serve until the expiration of the
term for which he is elected, and thereafter until his successor has been
elected and qualified.
3. DUTIES. All officers shall have such authority and perform such
duties in the management of the corporation as are normally incident to their
offices and as the board of directors may from time to time provide. If not
specified, the duties shall be as follows:
(a) Chairman of the Board: The chairman of the board shall
preside at all meetings of shareholders and of the board of
directors, unless he requests another officer to preside in
his stead. He shall have the general powers and duties of
management usually vested in the office of chairman of the
board of a corporation. He shall have such powers and duties
as are prescribed by the board of directors.
(b) Chief Executive Officer: The chief executive officer shall
have general supervision, general direction and control of the
business and the officers of the corporation, and shall have
such other duties as the board of directors shall assign from
time to time.
(c) President: The president shall have general charge and
control of the operation of the corporation, subject to the
direction of the chief executive officer, board of directors
and to these bylaws.
(d) Vice-President: The vice-presidents shall have such powers
and perform such duties as may be assigned to them by the
president, chief executive officer and the board of directors.
(e) Secretary: The secretary shall keep and preserve the minutes
of the meetings of the board of directors and of the
shareholders; he shall attend to the giving and serving of
notice; he may sign with the president in the name of the
corporation all stock certificates, contracts, and instruments
authorized by the board of directors; he shall have charge of
the certificate books and other books or papers as the board
of directors may direct; all of which shall at all reasonable
times be open to the examination of any director or
shareholder, to the extent required by law, upon application
4
at the office of the corporation during business hours; he
shall authenticate records of the corporation; and he shall in
addition perform all duties incident to the office of
secretary, subject to the control of the president, chief
executive officer and the board of directors. He shall submit
such reports to the board of directors as may be required by
it.
(f) Treasurer: The treasurer shall have the custody of all funds
and securities of the corporation and shall keep proper
accounts of same; when necessary or proper, he shall endorse,
on behalf of the corporation, all checks, notes, and other
obligations and shall deposit the same to the credit of the
corporation in such bank or banks as the board of directors
may designate. He shall enter regularly in the books of the
corporation to be kept by him for that purpose a full and
accurate account of all monies received and paid out by him on
account of the corporation, and he shall at all reasonable
times exhibit his books and accounts to any director or
shareholder upon application at the office of the corporation
during business hours; he shall perform all acts incident to
the position of the treasurer, subject to the control of the
president, chief executive officer and the board of directors.
(g) Assistant Officers: The board of directors may elect one (1)
or more assistant secretaries and one (1) or more assistant
treasurers. In the absence of the secretary, an assistant
secretary shall, except as the president, chief executive
officer or the board of directors may otherwise provide,
perform all of the duties of the secretary, and when so acting
shall have the powers of the secretary. In the absence of the
treasurer, an assistant treasurer shall, except as the
president, chief executive officer or the board of directors
may otherwise provide, perform all of the duties of the
treasurer, and when so acting shall have the powers of the
treasurer.
ARTICLE IV
RESIGNATIONS, REMOVALS, AND VACANCIES
1. RESIGNATIONS. Any officer or director may resign at any time by
giving written notice to the chairman of the board, the president, or the
secretary. Any such resignation shall take effect at the time specified
therein, or, if no time is specified, then upon its delivery to the
corporation.
2. REMOVAL OF OFFICERS. Any officer may be removed by the board at
any time, with or without cause.
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3. REMOVAL OF DIRECTORS. Any or all of the directors may be removed
either with or without cause by a proper vote of the shareholders; and, as
provided in the charter, may be removed with cause by a majority vote of the
entire board. "Cause shall include a director willfully or without
reasonable cause being absent from any regular or special meeting for the
purpose of obstructing or hindering the business of the corporation.
4. VACANCIES OF DIRECTORS. Newly created directorships resulting from
an increase in the number of directors, and vacancies occurring in any
directorship for any reason, including removal of a director, may be filled
by the vote of a majority of the directors then in office, even if less than
a quorum exists.
ARTICLE V
INDEMNIFICATION
1. LIABILITY OF OFFICERS AND DIRECTORS. No person shall be liable for
any loss or damage suffered on account of any action taken or omitted to be
taken by him as a director or officer of the corporation in good faith and in
accordance with the standard of conduct set forth in T.C.A. subsection
48-18-502.
2. INDEMNIFICATION OF OFFICERS AND DIRECTORS. The corporation shall
indemnify to the fullest extent permitted by law any and all persons who may
serve or who have served at any time as directors or officers, or who at the
request of the board of directors of the corporation may serve or at any time
have served as directors or officers of another corporation in which the
corporation at such time owned or may own shares of stock or of which it was
or may be a creditor, and their respective heirs, administrators, successors,
and assigns, against any and all expenses, including amount paid upon
judgments, counsel fees, and amount paid in settlement (before or after suit
is commenced), actually and necessarily incurred by such persons in
connection with the defense or settlement of any claim, action, suit, or
proceeding in which they, or any of them, are made parties, or a party, or
which may be asserted against them or any of them, by reason of being or
having been directors or officers or a director or officer of the corporation
or such other corporation, except in relation to such matters to which any
such director or officer or former director or officer or person shall be
adjudged in any action, suit, or proceeding to be liable for his own
negligence or misconduct in the performance of his duty. Such
indemnification shall be in addition to any other rights to which those
indemnified may be entitled under any law, bylaw, agreement, vote of
shareholders, or otherwise.
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ARTICLE VI
CAPITAL STOCK
1. STOCK CERTIFICATES. Every shareholder shall be entitled to a
certificate or certificates of capital stock of the corporatioin in such form
as may be prescribed by the board of directors. Unless otherwise decided by
the board, such certificates shall be signed by the president and the
secretary of the corporation.
2. TRANSFER OF SHARES. Shares of stock may be transferred on the
books of the corporation by delivery and surrender of the properly assigned
certificate, but subject to any restrictions on transfer imposed by either
the applicable securities laws or any shareholder agreement.
3. LOSS OF CERTIFICATES. In the case of the loss, mutilation, or
destruction of a certificate of stock, a duplicate certificate may be issued
upon such terms as the board of directors shall prescribe.
ARTICLE VII
ACTION BY CONSENT
Whenever the shareholders or directors are required or permitted to take
any action by vote, such action may be taken without a meeting on written
consent, setting forth the action so taken, signed by all the persons or
entities entitled to vote thereon and indicating each person or entity's vote
or abstention on the action. The action must receive the affirmative vote of
the number of votes that would be necessary to authorize or take such action
at a meeting.
ARTICLE VIII
AMENDMENT OF BYLAWS
Except as otherwise permitted by law, these bylaws may be amended, added
to, or repealed either by: (1) a majority vote of the shares represented at
any duly constituted shareholders' meeting, or (2) a majority vote of the
entire board of directors. Any change in the bylaws made by the board of
directors, however, may be amended or repealed by the shareholders.
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ARTICLE IX
GENDER AND NUMBER
Whenever the context of this document requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural.
CERTIFICATION
I certify that these bylaws were adopted by the organizational meeting
of the corporation held on the 31st day of August, 1995.
/s/Michael J. Zylstra
Secretary
