<PAGE>
UNITED STATES
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(Amendment No. _____ )*
BIGMAR, INC.
(Name of Issuer)
COMMON STOCK, $0.01 PAR VALUE
(Title of Class of Securities)
089893 10 1
(CUSIP Number)
Cynthia R. May
Jericho II, LLC
13260 Spencer Road
Hemlock, Michigan 48626
(517) 797-5502
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
May 28, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
(Continued on following pages)
(Page 1 of 8 pages)
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* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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13D
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CUSIP NO. 089893 10 1 PAGE 2 OF 2 PAGES
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NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
JERICHO II, LLC IRS Identification No. 38-3328404
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
WC
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Michigan
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SOLE VOTING POWER
7
NUMBER OF 1,500,000
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 1,500,000
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,500,000
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
26.4%
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TYPE OF REPORTING PERSON*
14
00
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP NO. 089893 10 1 13D Page 3 of 8 Pages
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Item 1. Security and Issuer
This statement on Schedule 13D (the "Statement") relates to shares of
common stock, par value $.01 per share ("Common Stock") of Bigmar, Inc.
("Bigmar" or the "Issuer"), a Delaware corporation. The principal executive
offices of the Issuer are located at 9711 Sportsman Club Road, Johnstown, Ohio
43031.
Item 2 Identity and Background
(a) - (c) and (f) This statement is being filed by Jericho II LLC
("Jericho"), a Michigan limited liability company. The principal executive
offices of Jericho are located at 13260 Spencer Road, Hemlock, Michigan 48626.
Jericho is a private company engaged in investing the funds of its principals in
equity and debt securities.
The name, principal occupation, business address and citizenship of each of
the members of Jericho is set forth on Schedule I hereto.
(d) and (e) During the last five years, neither Jericho nor, to the best
of Jericho's knowledge, any of the individuals named in Schedule I hereto, has
been (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
As more fully described in Item 4 below, pursuant to the terms of a
currently exercisable Common Stock Warrant and a currently exercisable Preferred
Stock Warrant (each as defined below and collectively, the "Warrants"), Jericho
has acquired the right to purchase up to 1,500,000 shares of newly issued Bigmar
Common Stock. The exercise price of the Common Stock Warrant is $5.00 per
share. The Preferred Warrant is exercisable for Series A Convertible Preferred
Stock (the "Preferred Stock") at the price of $2.5625 per share. Under the
Company's Certificate of Designation, Preferences and Rights relating to the
Preferred Stock, the Preferred Stock is convertible at the option of the holder
into shares of Common Stock, initially at the rate of one-to-one. Should
Jericho purchase Bigmar Common Stock pursuant to the Warrants, Jericho expects
that it would finance such purchase from various sources, including cash on hand
or the liquidation of securities held by Jericho.
Item 4. Purpose of Transaction
Common Stock Warrant. On October 23, 1997, Protyde Pharmaceuticals, Inc.
("Protyde"), a Delaware corporation of which Jericho was a stockholder, sold to
Jericho a Warrant to purchase 500,000 shares of Common Stock of Bigmar (the
"Common Stock Warrant") in exchange for a
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CUSIP NO. 089893 10 1 13D Page 4 of 8 Pages
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payment of $10,000 by Jericho to Protyde. The Common Stock Warrant has an
exercise price of $5.00 per share and expires on July 24, 2002. The Common
Stock Warrant is filed as Exhibit 1 hereto.
Preferred Stock Warrant. Jericho received a warrant to purchase 1,000,000
shares of Bigmar's Preferred Stock on May 28, 1998 (the "Preferred Stock
Warrant"), as consideration for the execution and delivery of a guaranty by
Jericho of Bigmar's obligations to a commercial bank in the amount of up to
$6,000,000. The Preferred Stock Warrant has a term of ten years and is
currently exercisable at the price of $2.5625 per share. The Preferred Stock is
convertible to Common Stock on a one-to-one basis. The conversion rate of the
Preferred Stock will adjust for stock splits, dividends, combinations and
similar events as well as an anti-dilution adjustment for issuances below
$2.5625. The Preferred Stock votes together with the Common Stock and
outstanding shares of Preferred Stock carry a vote equal to five times the
number of shares of Common Stock into which the Preferred Stock is then
convertible. The Preferred Stock has a liquidation preference equal to $2.5625
per share. The Preferred Stock Warrants include a net exercise clause which
permits the holder to convert the Preferred Stock Warrants into a number of
shares of Common Stock having a fair market value equal to the spread between
the exercise price and then fair market value of the Bigmar Common Stock. The
Preferred Stock Warrant also provides that shares of Common Stock issued on
conversion of the Preferred Stock are entitled to certain piggyback registration
rights. The Preferred Stock Warrant is filed as Exhibit 2 hereto. The
Certificate of Designation, Preferences and Rights of the Preferred Stock is
filed as Exhibit 3 hereto.
The foregoing summary of the contents of the Warrants is qualified in its
entirety by reference to the exhibits hereto.
Except as set forth in this Item 4, neither Jericho nor, to the best of
Jericho' knowledge, any of the individuals named in Schedule I hereto, has any
plans or proposals that relate to or that would result in any of the actions
specified in clauses (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) and (b) Jericho has sole investment power and voting power with
respect to the shares of Bigmar Common Stock issuable on exercise of the
Warrants. In the aggregate, assuming exercise of the Warrants, Jericho may thus
be deemed the beneficial owner of 26.4% of the aggregate of (i) the 4,185,000
shares of Bigmar Common Stock outstanding at May 25, 1998 (as reported on
Bigmar's Proxy Statement for the Annual Meeting of Stockholders on June 30,
1998) plus (ii) the 1,500,000 shares issuable on exercise of the Warrants.
John Tramontana, a member of Jericho and the President and Chief Executive
Officer of Bigmar is the beneficial owner of 2,392,031 shares of Bigmar, which
includes 125,000 shares issuable on exercise of currently exercisable options.
<PAGE>
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CUSIP NO. 089893 10 1 13D Page 5 of 8 Pages
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Except as set forth above, neither Jericho nor, to the best of Jericho's
knowledge, any of the individuals named in Schedule I hereto, is the beneficial
owner of Bigmar Common Stock.
(c) Neither Jericho nor, to the best of Jericho's knowledge, any of the
individuals named in Schedule I hereto, has effected any transaction in Bigmar
Common Stock during the past 60 days.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Bigmar Common Stock issuable on exercise of the Warrants.
(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Except as provided in the Warrants and the Certificate of Designation,
Preferences and Rights of the Preferred Stock, or as set forth herein, neither
Jericho nor, to the best of Jericho's knowledge, any of the individuals named in
Schedule I hereto, has any contracts, arrangements, understandings or
relationships (legal or otherwise) with any person with respect to any
securities of Bigmar, including, but not limited to, transfer or voting of any
securities, finder's fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, division of profits or losses, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits
Exhibit 1 - Common Stock Purchase Warrants issued by Bigmar, Inc. to
Jericho II LLC dated October 23, 1997.
Exhibit 2 - Series A Convertible Preferred Stock Purchase Warrant issued
by Bigmar, Inc. to Jericho II, LLC dated May 28, 1997.
Exhibit 3 - Certificate of Designation, Preferences and Rights of Series
A Convertible Preferred Stock of Bigmar, Inc., as filed with
the Secretary of State of Delaware, June 5, 1998.
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CUSIP NO. 089893 10 1 13D Page 6 of 8 Pages
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SIGNATURE
---------
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
JERICHO II, LLC
Date: July 2, 1998 By: /s/Cynthia R. May
------------------------------------
Cynthia R. May
Title: Member
<PAGE>
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CUSIP NO. 089893 10 1 13D Page 7 of 8 Pages
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF JERICHO II LLC
-----------------
The name, present principal occupation or employment, and business address
of each of the members of Jericho II, LLC ("Jericho") is set forth below. Each
individual listed below is a citizen of the United States.
Members
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Cynthia R. May
Director, Saginaw Control & Engineering
95 Midland Road
Saginaw, MI 468603
Harold Baldauf
Director, Saginaw Control & Engineering
95 Midland Road
Saginaw, MI 468603
John Tramontana
Chairman, Bigmar, Inc.
via Cadepiano 24
CH-6917 Barbengo
SWITZERLAND
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CUSIP NO. 089893 10 1 13D Page 8 of 8 Pages
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EXHIBIT INDEX
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Exhibit Description
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Exhibit 1 - Common Stock Purchase Warrants issued by Bigmar, Inc. to
Jericho II LLC dated October 23, 1997.
Exhibit 2 - Series A Convertible Preferred Stock Purchase Warrant issued by
Bigmar, Inc. to Jericho II, LLC dated May 28, 1997.
Exhibit 3 - Certificate of Designation, Preferences and Rights of Bigmar,
Inc. relating to the Series A Convertible Preferred Stock, as
filed with the Secretary of State of Delaware, June 5, 1998.
<PAGE>
EXHIBIT 1
- CONFORMED COPY -
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO A REGISTRATION
STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE. THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE ARE FURTHER RESTRICTED AS DESCRIBED HEREIN.
BIGMAR, INC.
COMMON STOCK PURCHASE WARRANTS
500,000 SHARES
EXERCISABLE UNTIL 5:00 P.M., NEW YORK TIME, JULY 24, 2002
This Warrant Certificate certifies that Jericho II, L.L.C. or its
registered assigns, is the registered holder of Warrants to purchase initially
up to 500,000 fully-paid and non-assessable shares (the "Warrant Shares") of
common stock, $0.001 par value ("Common Stock") of Bigmar, Inc., a Delaware
corporation (the "Company"), at any time from July 24, 1997 until 5:00 p.m. New
York time on July 24, 2002 (the "Expiration Date"), at the initial exercise
price (the "Exercise Price") of $5.00 per share of Common Stock, subject to the
conditions set forth herein. The number of Warrant Shares issuable hereunder
and the Exercise Price are each subject to adjustment as provided herein. No
Warrant may be exercised after 5:00 p.m., New York time, on the Expiration Date,
after which time all Warrants evidenced hereby, unless exercised prior thereto,
shall be void.
1. CERTAIN DEFINITIONS. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
1.1 The term "Company" shall include Bigmar, Inc. and any corporation that
shall succeed or assume the obligations of Bigmar, Inc. hereunder.
1.2 The terms "Warrant" or "Warrants" mean these Warrants and any other
warrant or warrants issued in exchange or substitution for, or upon partial
exercise of, these Warrants.
1.3 The term "Holder" means the registered holder(s) of this Warrant
Certificate.
2. EXERCISE OF WARRANTS.
2.1 Warrants may be exercised by the Holder hereof, at any time until 5:00
p.m. New York time on the Expiration Date, as to the whole or any lesser number
of the Warrant Shares covered hereby, by the surrender of this Warrant
Certificate (with the election at the end hereof duly executed) to the Company
at its main office at 6660 Doubletree Avenue, Columbus, OH 43229 ("Main
Office"), or at such other place as may be designated in writing by the Company,
together with a certified or bank check payable to the order of the Company in
an amount equal to the Exercise Price multiplied by the number of Warrant Shares
for which such Warrants are being exercised.
2.2 Upon each exercise of the Holder's rights to purchase Warrant Shares,
the Holder shall be deemed to be the holder of record of the Warrant Shares
issuable upon such exercise, notwithstanding that the transfer books of the
Company shall then be closed or certificates representing such Warrant
<PAGE>
Shares shall not then have been actually delivered to the Holder. As soon as
practicable after each such exercise of a Warrant, the Company shall issue and
deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise, registered in the name of the Holder or its
designee. If a Warrant should be exercised in part only, the Company shall, upon
surrender of the Warrant Certificate evidencing such Warrant for cancellation,
execute and deliver a new Warrant Certificate evidencing the right of the Holder
to purchase the balance of the Warrant Shares (or portions thereof) subject to
purchase hereunder.
2.3 The issuance of any shares or other securities upon the exercise of
Warrants and the delivery of certificates or other instruments representing such
shares or other securities shall be made without charge to the Holder for any
tax or other charge (other than payment of the Exercise Price) in respect of
such issuance. The Company shall not, however, be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
3. ADJUSTMENT OF EXERCISE PRICE. Subject to the provisions of this Section 3,
the Exercise Price in effect from time to time shall be subject to adjustment as
follows:
3.1 If the Company shall at any time after the date hereof (i) declare a
dividend on the outstanding Common Stock payable in shares of its Common Stock,
(ii) subdivide the outstanding Common Stock, (iii) combine the outstanding
Common Stock into a smaller number of shares, or (iv) issue any shares of its
Common Stock by reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation, then, in each such case, the
Exercise Price in effect and the number of Warrant Shares issuable upon exercise
hereof at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, shall be proportionately
adjusted so that the Holder hereof after such time shall be entitled to receive
upon exercise hereof the aggregate number and kind of shares that such Holder
would have owned upon exercise of this Warrant immediately before such time and
been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification.
3.2 If the Company shall distribute to all holders of Common Stock
(including any such distribution made to the shareholders of the Company in
connection with a consolidation or merger in which the Company is the continuing
corporation) (i) evidences of its indebtedness, cash or assets (other than
ordinary cash dividends paid out of the net profits of the Company for its most
recent fiscal year), (ii) rights, options or warrants to subscribe for or
purchase Common Stock, or (iii) any equity securities of the Company (other than
Common Stock), including any securities convertible into or exchangeable for
shares of Common Stock, then, in each case, the Exercise Price shall be adjusted
by multiplying the Exercise Price in effect immediately before the record date
for the determination of shareholders entitled to receive such distribution by a
fraction, the numerator of which shall be the Current Market Price (as
determined pursuant to Section 3.6 hereof) per share of Common Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be conclusive
absent manifest error) of the portion of the evidences of indebtedness or assets
so to be distributed, or of such securities, rights, options, or warrants, or
the amount of such cash, applicable to one share, and the denominator of which
shall be such Current Market Price per share of Common Stock. Such adjustment
shall become effective at the close of business on such record date.
3.3 In any case in which this Section 3 shall require that an adjustment
in the number of Warrant Shares be made effective as of a record date for a
specified event (an "Event"), the Company may elect to defer, until the
occurrence of such Event, issuing to the Holder, if the Holder exercised this
Warrant after such record date, the shares of Common Stock, if any, issuable
upon such exercise over and above the number of Warrant Shares, if any, issuable
upon such exercise on the basis of the number of Warrant Shares in effect prior
to such adjustment; provided, however, that the Company shall deliver to the
Holder a due bill or other appropriate instrument evidencing the Holder's right
to receive such additional shares upon the occurrence of the Event requiring
such adjustment.
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3.4 Whenever there shall be an adjustment as provided in this Section 3,
the Company shall within 15 days thereafter cause written notice thereof to be
sent by registered or certified mail, postage prepaid, to the Holder, at its
address as it shall appear in the Warrant Register, which notice shall be
accompanied by an officer's certificate setting forth the number of Warrant
Shares issuable hereunder and the Exercise Price thereof after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
3.5 All calculations under this Section 3 shall be made to the nearest
cent or to the nearest one-thousandth of a share, as the case may be. No
adjustment in the Exercise Price shall be required if such adjustment is less
than $0.05; provided, however, that any adjustments that by reason of this
Section 3.5 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise of Warrants. If any fraction of a share would be issuable on the
exercise of Warrants, the Company shall purchase such fraction for an amount in
cash equal to the same fraction of the Current Market Price (as hereinafter
defined) of such share of Common Stock on the date of exercise of the Warrants.
3.6 The Current Market Price per share of Common Stock as of any date
shall be the average of the daily closing prices for the 20 consecutive trading
days immediately preceding the date in question. The closing price for each day
shall be the last reported sales price regular way or, in case no such reported
sale takes place on such day, the closing bid price regular way, in either case
on the principal national securities exchange (including, for purposes hereof,
the Nasdaq National Market or Small Cap Market) on which the Common Stock is
listed or admitted to trading or, if the Common Stock is not listed or admitted
to trading on any national securities exchange, the highest reported bid price
of the Common Stock as furnished by the National Association of Securities
Dealers, Inc. through Nasdaq, or a similar organization if Nasdaq is no longer
reporting such information. If on any such date the Common Stock is not listed
or admitted to trading on any national securities exchange and is not quoted by
Nasdaq or any similar organization, the fair value of a share of Common Stock on
such date, as determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive absent manifest error, shall be used.
4. MERGERS; REORGANIZATIONS.
4.1 In each case of a consolidation with or merger of the Company with or
into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation and that does not result in
any reclassification of the outstanding shares of Common Stock or the conversion
of such outstanding shares of Common Stock into shares of other stock or other
securities or property), or in case of any sale, lease or conveyance to another
corporation of the property and assets of any nature of the Company as an
entirety or substantially as an entirety (such actions being hereinafter
collectively referred to as "Reorganizations"), there shall thereafter be
deliverable upon exercise of the Warrants (in lieu of the number of Warrant
Shares theretofore deliverable) the kind and amount of shares of stock or other
securities or property to which a holder of the number of Warrant Shares that
would otherwise have been deliverable upon the exercise hereof upon such
Reorganization if the Warrants had been exercised in full immediately before
such Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of the Warrants. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The Company
shall not effect any such Reorganization unless upon or before the consummation
thereof the successor corporation or, if the Company shall be the surviving
corporation in any such Reorganization and is not the issuer of the shares of
stock or other securities or property to be delivered to holders of shares of
the Common Stock outstanding at the effective time thereof, then such issuer,
shall assume by written instrument the obligation to deliver to the Holder such
shares of stock, securities, cash or other property as the Holder shall be
entitled to purchase in accordance with the foregoing provisions.
- 3 -
<PAGE>
4.2 In each case of a reclassification or change of the shares of Common
Stock issuable upon exercise of the Warrants (other than a change in par value
or from no par value to a specified par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), and in each case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the shares of Common Stock (other
than a change in par value, or from no par value to a specified par value, or as
a result of a subdivision or combination, but including any change in the shares
into two or more classes or series of shares), the Holder shall have the right
thereafter to receive upon exercise of the Warrants solely the kind and amount
of shares of stock and other securities, property, cash, or any combination
thereof receivable upon such reclassification, change, consolidation, or merger
by a holder of the number of shares of Common Stock for which the Warrants might
have been exercised immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.
5. NOTICE OF CERTAIN EVENTS. In case at any time the Company shall propose:
(a) to pay any dividend or make any distribution on shares of Common Stock
in shares of Common Stock or make any other distribution (other than regularly
scheduled cash dividends that are not in a greater amount per share than the
most recent such cash dividend) to all holders of Common Stock; or
(b) to issue any rights, warrants or other securities to all holders of
Common Stock entitling them to purchase any additional shares of Common Stock or
any other rights, warrants or other securities; or
(c) to effect any reclassification or change of outstanding shares of
Common Stock or any consolidation, merger, sale, lease or conveyance of property
described in Section 4; or
(d) to effect any liquidation, dissolution or winding-up of the Company;
then, and in any one or more of such cases, the Company shall give written
notice thereof by registered or certified mail, postage prepaid, to the Holder
at the Holder's address as it shall appear in the Warrant Register, mailed at
least 15 days before (i) the date as of which the holders of record of shares of
Common Stock to be entitled to receive any such dividend, distribution, rights,
warrants or other securities are to be determined or (ii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up is expected to become effective and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up.
6. WARRANT REGISTER; TRANSFERS OF WARRANTS.
6.1 This Warrant Certificate and any new Warrant Certificate issued upon
the transfer or exercise in part of any Warrants shall be numbered and shall be
registered in a Warrant Register as it is issued. The Company shall be entitled
to treat the holder of this Warrant Certificate registered on the Warrant
Register as the owner in fact of the Warrants evidenced hereby for all purposes,
shall not be bound to recognize any equitable or other claim to or interest in
such Warrants on the part of any other person, and shall not be liable for any
registration or transfer of a Warrant Certificate that is registered or to be
registered in the name of a fiduciary or the nominee of a fiduciary unless made
with the actual knowledge that a fiduciary or nominee is committing a breach of
trust in requesting such registration or transfer, or with the knowledge of such
facts that its participation therein amounts to bad faith. Warrants shall be
transferable only in the Warrant Register upon delivery of the Warrant
Certificate evidencing such Warrants duly endorsed by the Holder or by his or
its duly authorized attorney or representative, or accompanied by proper
evidence of succession, assignment, or authority to transfer. In all cases of
transfer by an attorney, executor, administrator, guardian or other legal
representative, duly authenticated evidence of his or its authority shall be
produced.
6.2 Upon any registration of transfer, the Company shall deliver to the
person entitled thereto
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<PAGE>
a new Warrant Certificate of like tenor and evidencing in the aggregate a like
number of Warrants in exchange for this Warrant Certificate, subject to the
limitations provided herein. This Warrant Certificate may be exchanged, at the
option of the Holder hereof, for another Warrant Certificate, or other Warrant
Certificates of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Warrant Shares (or portions
thereof), upon surrender to the Company or its duly authorized agent.
Notwithstanding the foregoing, the Company shall have no obligation to cause
Warrants to be transferred on its books to any person if, in the reasonable
opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations thereunder, or with any other restrictions set forth herein.
6.3 The Warrants and Warrant Shares shall be subject to a stop transfer
order and the certificate or certificates evidencing the Warrant Shares shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND SUCH SHARES MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE."
7. AUTHORIZED SHARES. The Company shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of providing for the exercise of the Warrants, such number of shares of
Common Stock as shall, from time to time, be sufficient therefor. The Company
covenants that all shares of Common Stock issuable upon exercise of the Warrants
shall, upon receipt by the Company of the full payment therefor, be validly
issued, fully paid, nonassessable, and free of preemptive rights.
8. MISCELLANEOUS.
8.1 Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant Certificate (and upon surrender
of any Warrant Certificate if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant Certificate of like date, tenor and denomination.
8.2 The Holder hereof shall not have, solely on account of such status,
any rights of a stockholder of the Company, either at law or in equity, or to
any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided herein.
8.3 This Warrant Certificate and the Warrants shall be construed in
accordance with the laws of the State of Delaware applicable to contracts made
and performed within such State, without regard to principles of conflicts of
law.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed as an instrument under seal as of October 23, 1997
BIGMAR, INC.
By: /s/ John Tramontana
-------------------
Title: President
- 5 -
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO Bigmar, Inc.:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, _______________
shares of Common Stock of Bigmar, Inc. and herewith makes payment of
$____________ therefor, and requests that the certificates for such shares be
issued in the name of, and delivered to
_____________________________________________________________________, whose
address is ______________________________________________________________.
Dated: __________
..................................................
(Signature must conform to the name of holder as
specified on the face of the Warrant)
..................................................
(Address)
____________________
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto __________________________________________ the right represented by the
within Warrant to purchase ______________________ shares of Common Stock of
Bigmar, Inc. to which the within Warrant relates, and appoints
___________________________________ attorney to transfer such right on the books
of Bigmar, Inc. with full power of substitution in the premises.
Dated: ___________
..................................................
(Signature must conform to name of the holder as
specified on the face of the Warrant)
..................................................
(Address)
- 6 -
<PAGE>
EXHIBIT 2
- CONFORMED COPY -
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST FURNISHING
TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER
IS NOT IN VIOLATION OF THE REGISTRATION REQUIREMENTS OF THE ACT OR ANY
STATE SECURITIES LAW.
SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE WARRANT
------------------------------------------------------
To Subscribe for Shares of
Series A Convertible Preferred Stock
of
BIGMAR, INC.
THIS CERTIFIES THAT, for value received Jericho II LLC (the "Holder") is
------
entitled to subscribe for and purchase from Bigmar, Inc, a Delaware corporation
(the "Company"), up to One Million (1,000,000) shares (subject to adjustment as
-------
provided herein, the "Shares") of the Company's Series A Convertible Preferred
------
Stock, $0.001 par value (as defined in Section 8.1, the "Series A Stock") at a
--------------
price of $2.5625 per share (with adjustments provided for herein, the "Warrant
-------
Price") at any time from the date hereof to and including 5:00 p.m. (EDT) on May
- -----
28, 2008 (or the next following business day if such day is not a business day),
subject to the terms and conditions stated in this Warrant.
1. Method of Exercise or Conversion; Payment; Issuance of New Warrant.
------------------------------------------------------------------
1.1. Exercise. The purchase right represented by this Warrant may be
--------
exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant (with the Notice of Exercise form attached hereto duly executed) at the
principal office of the Company and by the payment to the Company, by check or
wire transfer, of an amount equal to the then applicable Warrant Price per share
multiplied by the number of shares then being purchased. The Company agrees
that the shares so purchased shall be deemed to be issued to the holder hereof
as the record owner of such shares as of the close of business on the date on
which this Warrant shall have been surrendered and payment made for such shares
as aforesaid. In the event of any exercise of this Warrant, certificates for
the shares of stock so purchased shall be delivered to the holder hereof within
15 days thereafter and, unless this Warrant has been fully exercised or expired,
a new Warrant representing the
<PAGE>
portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the holder hereof within such 15
day period.
1.2. Conversion. The Holder may convert this Warrant (the "Conversion
----------
Right"), in whole or in part, into the number of shares of Series A Stock of the
Company calculated pursuant to the following formula by surrendering this
Warrant (with the Notice of Exercise form attached hereto duly executed) at the
principal office of the Company specifying the number of shares of Series A
Stock of the Company, the rights to purchase which the Holder desires to
convert:
<TABLE>
<CAPTION>
Y (A - B)
X = ---------
A
<C> <S> <C>
where: X = the number of shares of Series A Stock to be issued to the
Holder;
Y = the number of shares of Series A Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the fair market value of one share of Series A Stock;
B = the Warrant Price
</TABLE>
As used herein, the fair market value of a share of Series A Stock shall
mean (i) the number of shares of Common Stock then issuable upon conversion of a
share of Series A Stock multiplied by (ii) the closing price per share of the
Company's Common Stock on the principal national securities exchange on which
the Common Stock is then listed or admitted to trading or, if not then listed or
admitted to trading on any such exchange, on the NASDAQ National Market System,
or if not then listed or traded on any such exchange or system, the bid price
per share on NASDAQ Small-Cap Market or in the sole discretion of the Board of
Directors of the Company, acting in good faith, any other over-the-counter
market, including the OTC Bulletin Board, which reports bid, asked and last sale
prices and volume of sales, averaged over the 10 trading days consisting of the
day as of which the current fair market value of Common Stock is being
determined and the nine consecutive business days prior to such day. If at any
time such quotations are not available, the current fair market value of a share
of Common Stock shall be the highest price per share which the Company could
obtain from a willing buyer (not a current employee or director) for shares of
Common Stock sold by the Company, from authorized but unissued shares, as
determined in good faith by the Board of Directors of the Company, unless (i)
the Company shall become subject to a merger, acquisition or other consolidation
pursuant to which the Company is not the surviving party, in which case the
current fair market value of a share of Common Stock shall be deemed to be the
value received by the holders of the Company's Common Stock for each share of
Common Stock pursuant to the Company's acquisition; or
- 2 -
<PAGE>
(ii) the Holder shall exercise its Conversion Right to purchase such shares
within 15 days prior to the closing date of the underwritten public offering of
the Company's Common Stock pursuant to a registration statement filed under the
Act, in which case, the fair market value of a share of Common Stock shall be
the price per share at which all registered shares are sold to the public in
such offering if greater than the price determined in accordance with the second
sentence of this Section 1.2. The Company agrees that the shares so converted
shall be deemed to be issued to the holder hereof as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been surrendered as aforesaid. In the event of any conversion of this Warrant,
certificates for the shares of stock so converted shall be delivered to the
holder hereof within 15 days thereafter and, unless this Warrant has been fully
converted or expired, a new Warrant representing the portion of the shares, if
any, with respect to which this Warrant shall not then have been converted,
shall also be issued to the holder hereof within such 15 day period.
2. Partial Exercise of Warrant.
---------------------------
In the event of the partial exercise of the rights represented by this
Warrant, a new Warrant representing the number of Shares as to which this
Warrant shall not have been exercised shall be promptly issued to the holder.
3. Validity of Issue.
-----------------
The Company warrants and agrees that all Shares of Series A Stock which may
be issued upon the exercise of the rights represented by this Warrant, and all
shares of Common Stock of the Company which may be issued upon the conversion of
such Shares, will, upon issuance, be fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof. The Company
further warrants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized and reserved (i) a sufficient number of shares of Series A Stock to
provide for the exercise of the rights represented by this Warrant and (ii) a
number of shares of its authorized Common Stock which will be sufficient to
permit conversion of the Series A Stock issuable upon exercise of this Warrant.
4. Investment Representation.
-------------------------
The holder by accepting this Warrant represents that this Warrant is
acquired for the holder's own account for investment purposes and not with a
view to any offering or distribution and that the holder has no present
intention of selling or otherwise disposing of this Warrant or the underlying
Shares. Upon exercise, the holder will confirm in respect of securities obtained
upon such exercise, that it is acquiring such securities for its own account and
not with a view to any offering or distribution in violation of applicable
securities laws.
- 3 -
<PAGE>
5. Adjustments to the Number of Shares and Warrant Price.
-----------------------------------------------------
5.1. Subdivisions, Stock Dividends and Stock Combinations. In case
----------------------------------------------------
the Company shall at any time prior to the expiration of this Warrant subdivide
its outstanding shares of Series A Stock into a greater number of shares, or
issue additional shares of its capital stock in payment of a stock dividend in
respect of the Series A Stock, the Warrant Price in effect immediately prior to
such subdivision shall be proportionately reduced, and the number of Shares
issuable upon exercise of this Warrant shall be proportionately increased; and
conversely, in case the outstanding shares of Series A Stock of the Company
shall be combined into a smaller number of shares the Warrant Price in effect
immediately prior to such combination shall be proportionately increased and the
number of shares issuable proportionately reduced. Notwithstanding the
foregoing, no adjustments shall be made pursuant to this Section to the extent
that such adjustments shall have been made pursuant to similar adjustment
provisions applicable to the Series A Stock, which will accrue to the benefit of
the holder hereof after exercise of this Warrant.
5.2. Corporate Transactions. Except as provided in Section 5.1, if
----------------------
any capital reorganization or reclassification of the capital stock of the
Company, or consolidation or merger of the Company with another corporation, or
the sale of all or substantially all of its assets or of any successor
corporation's property and assets to any other corporation or corporations (any
such corporation being included within the meaning of the term "successor
---------
corporation") shall be effected, then, as a condition of such recapitalization,
- -----------
reclassification, consolidation, merger, or conveyance, lawful and adequate
provision shall be made whereby the holder hereof shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the shares of Series A Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for a number of outstanding
shares of such Series A Stock equal to the number of shares of such Series A
Stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby had such recapitalization, reclassification,
consolidation, merger or conveyance not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
the holder of this Warrant to the end that the provisions hereof (including
without limitation provisions for adjustment of the Warrant Price and of the
number of shares purchasable upon the exercise of this Warrant) shall thereafter
be applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. Except as
hereinafter provided, the Company shall not effect any consolidation or merger
unless prior to the consummation thereof the successor corporation shall assume
by written instrument executed and mailed to the holder hereof at its address
registered on the books of the Company the obligation to deliver to the holder
hereof such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to purchase. Notwithstanding
the foregoing, in the event of a merger or consolidation in which the Company is
not the surviving entity, if the Company concludes that it will be unable to
- 4 -
<PAGE>
satisfy the conditions of this paragraph without a material adverse effect on
the terms of such proposed transaction, then the Company shall have the option,
prior to or contemporaneously with the closing of such merger or consolidation,
to purchase this Warrant from the holder thereof at its then fair value, having
regard to both the spread between the Warrant Price and the value of the
consideration to be received in the transaction and the remaining term of this
Warrant. The Company and the holder of this Warrant shall agree on such fair
value or, in the event they are unable to agree, shall submit the question of
fair value to binding arbitration before a single arbitrator sitting in Detroit,
Michigan, under the commercial rules of the American Arbitration Association
(any cost of arbitration to be borne by the Company).
5.3. Notice of Adjustments. Upon any adjustment of this Warrant
---------------------
under this Section 5, then and in each such case the Company shall give written
notice thereof, by first class mail, postage prepaid, addressed to the holder of
this Warrant at its address registered on the books of the Company, which notice
shall state (i) the increase or decrease, if any, in the Warrant Price resulting
from such adjustment, (ii) the increase or decrease, if any, in the number of
Shares purchasable at such price upon the exercise of this Warrant, and (iii)
any change in the type of security issuable upon exercise hereof, in accordance
with Section 4.3, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
6. Piggyback Registration Rights.
-----------------------------
6.1. Definition. As used herein, "Registrable Shares" means, at any
----------
time, the shares of Common Stock issued or issuable upon conversion of the
Series A Preferred Stock issued or issuable upon exercise of this Warrant,
provided that shares of Common Stock shall cease to be Registrable Shares when
(i) such shares have been sold into the public markets or (ii) such shares may
be sold into the public markets pursuant to Rule 144(k) or a successor rule or
regulation under the Securities Act of 1933, as amended (the "Securities Act").
6.2. Rights. If the Company at any time proposes for any reason to
------
register shares of the Company's Common Stock under the Securities Act (other
than on Form S-4 or Form S-8 promulgated under the Securities Act or any
successor forms thereto or other than in connection with an exchange offer or
offering solely to the Company's stockholders), it shall promptly give written
notice to the Holder of its intention to so register the such shares and, upon
the written request, given within 10 days after delivery of any such notice by
the Company, of the Holder to include in such registration Registrable Shares
held by the Holder (which request shall specify the number of Registrable Shares
proposed to be included in such registration), the Company shall use its
commercially reasonable efforts to cause all such Registrable Shares to be
included in such registration on the same terms and conditions as the securities
otherwise being sold in such registration; provided, however, that if the
-------- -------
managing underwriter advises the Company that the inclusion of all Registrable
Shares proposed to be included in such registration would interfere with the
successful marketing (including pricing) of the shares proposed to be registered
by the Company, then the number
- 5 -
<PAGE>
of Registrable Shares proposed to be included in such registration shall be
reduced or eliminated provided (i) that shares held by stockholders of the
Company other than the Holder being included in such registration shall be
reduced in the same proportion as the reduction to the Registrable Shares
requested for inclusion and (ii) no shares held by stockholders of the Company
shall be included except in accordance with written registration rights held by
such other stockholders.
6.3. Expenses. The Company shall bear the expense of all
--------
registrations effected pursuant to this section, including in each case, without
limitation, all registration and filing fees (including all expenses incident to
filing with the NASD), fees and expenses of complying with securities and blue
sky laws, printing expenses, and fees and expenses of the Company's counsel and
accountants, but excluding any underwriters' or brokers' discounts or
commissions.
7. Notice of Reorganizations, etc.
-------------------------------
In case at any time:
(a) The Company shall declare any dividend upon any class of
securities whether payable in cash, property or Common Stock or make any
distribution to the holders of any class of the Company's securities; or
(b) there shall be any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation or merger of the Company with
another corporation; or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company,
(d) the Company shall fix a record date for determining the holders
of Series A Stock or Common Stock who shall be granted rights as a class to
subscribe for or to purchase, or any options for the purchase of, Series A
Stock, Common Stock or evidences of indebtedness, shares (other than Common
Stock or shares of Series A Stock) or other securities directly or indirectly
convertible into or exchangeable for Common Stock
then, in each one or more of said cases, the Company shall give at least 20
days' prior written notice, by first class mail, postage prepaid, addressed to
the holder at its address registered on the books of the Company of (i) the date
on which the books of the Company shall close or a record shall be taken for
purposes of ascertaining which shareholders will be entitled to participate in
such dividend or distribution or subscription rights or will be entitled to vote
on such reclassification, reorganization, consolidation, merger, dissolution,
liquidation or winding up, as the case may be; (ii) the date on which the vote
shall be taken concerning such reclassification, reorganization, consolidation,
merger, dissolution,
- 6 -
<PAGE>
liquidation or winding up, as the case may be; and (iii) the date on which such
dividend or distribution is to be paid or such reclassification, reorganization,
consolidation, merger, dissolution, liquidation or winding up, as the case may
be, is to be effective. Such notice shall also specify the date as of which the
holders of securities of record shall participate in said dividend or
distribution or shall be entitled to exchange such securities for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, dissolution, liquidation, or winding up, as the case may
be.
8. Miscellaneous
-------------
8.1. Definition. As used herein the term "Series A Stock" shall mean
---------- --------------
and include the Company's presently authorized Series A Convertible Preferred
Stock, $0.001 par value, and stock of any other class into which such presently
authorized Series A Stock may hereafter be changed.
8.2. No Rights as Stockholder. Except as set forth in the
------------------------
Certificate of Designation relating to the Series A Stock, this Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company, or to any other rights whatsoever except the rights
herein expressed, and no cash dividend paid out of earnings or surplus or
interest shall be payable or accrue in respect of this Warrant or the interest
represented hereby or the Shares which may be subscribed for and purchased
hereunder until and unless and except to the extent that the rights represented
by this Warrant shall be exercised.
8.3. Replacement Warrants. This Warrant is exchangeable, upon the
--------------------
surrender hereof at the office or agency of the Company, for new Warrants of
like tenor representing in the aggregate the right to subscribe for and purchase
the number of shares which may be subscribed for and purchased hereunder, each
of such new Warrants to represent the right to subscribe for and purchase such
number of shares as shall be designated by said holder hereof at the time of
such surrender.
9. Transfer and Registration
-------------------------
9.1. Compliance with Securities Laws. If any proposed transfer, in
-------------------------------
whole or in part, of this Warrant or the Shares issuable upon exercise of this
Warrant might reasonably involve a public offering of the same contrary to the
investment representations in Section 3, the Company may require, as a condition
precedent to such transfer, an opinion of counsel, satisfactory to it, that the
proposed transfer will not involve a public offering which is required to be
registered under the Securities Act of 1933.
9.2. Transfer. Subject to Section 9.1, this Warrant and all rights
--------
hereunder are transferable, in whole or in part, on the books of the Company to
be maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company, together
- 7 -
<PAGE>
with an assignment of this Warrant in the form attached hereto duly executed by
the holder or its agent or attorney.
9.3. Warrant Register. This Warrant and the name and address of the
----------------
holder have been registered in a Warrant Register that is kept at the principal
office of the Company, and the Company may treat the holder so registered as the
absolute owner of this Warrant for all purposes.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
as of the 28th day of May, 1998.
BIGMAR, INC.
By: /s/ John Tramontana
--------------------------------------
President
- 8 -
<PAGE>
NOTICE OF EXERCISE
TO: Bigmar, Inc.
1. Check Box that Applies:
[ ] The undersigned hereby elects to purchase _________ shares of Series A
Convertible Preferred Stock of Bigmar, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
[ ] The undersigned hereby elects to convert the attached warrant into
_________ shares of Series A Convertible Preferred Stock of Bigmar, Inc.
pursuant to the terms of Section 1.2 of the attached Warrant, in accordance with
the calculations attached hereto.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
------------------------------------------
(Name)
------------------------------------------
------------------------------------------
(Address)
------------------------------------
Signature
- 9 -
<PAGE>
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto _______________________ the right represented by the within Warrant to
purchase ____________ shares of Series A Convertible Preferred Stock of Bigmar,
Inc. to which the within Warrant relates, and appoints ______________________
as its Attorney to transfer such right on the books of Bigmar, Inc. with full
power of substitution in the premises.
Dated:
__________________________________
(Signature must conform to name of
holder as specified on the face of
this Warrant)
Signed in the presence of:
___________________________
- 10 -
<PAGE>
EXHIBIT 3
CONFORMED COPY
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
BIGMAR, INC.
Pursuant to Section 151 of the Corporation Law of
the State of Delaware
---------------------
We, the President and Secretary of Bigmar, Inc. (hereinafter called the
"Corporation"), a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, do hereby certify as follows:
Pursuant to the authority conferred upon the Board of Directors of the
Corporation by the Restated and Amended Certificate of Incorporation of the
Corporation filed with the Secretary of State of the State of Delaware on April
16, 1996, the Board of Directors of the Corporation on May 28, 1998, adopted the
following resolution creating a series of Preferred Stock designated as Series A
Convertible Preferred Stock:
RESOLVED: That a series of Preferred Stock of the Corporation be and it hereby
is created, and the designations, powers, preferences and rights of
the shares of such series, and the qualification, limitations or
restrictions thereof are as follows:
Series A Designation and Authorized Amount.
-------------------------------------------
One Million (1,000,000) shares of the authorized and unissued Preferred
Stock of the Corporation are hereby designated "Series A Convertible Preferred
Stock" (the "Series A Preferred Stock") with the rights, preferences, powers,
privileges and restrictions, qualifications and limitations set forth below.
1. Dividends.
---------
(a) When and as declared by the Corporation's Board of Directors, to
the extent permitted under the General Corporation Law of the State of Delaware
and before any cash dividends shall be paid upon or set aside for the Common
Stock, the Corporation shall pay dividends on each outstanding share of Series A
Preferred Stock in an amount not less than the amount of cash dividends payable
with respect to the number of shares of Common Stock then issuable upon
conversion of such share of Series A Preferred Stock.
<PAGE>
(b) Any dividends paid on the Series A Preferred Stock shall be
distributed ratably among the holders thereof based upon the aggregate number of
shares held by each such holder.
2. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series A Preferred Stock
(collectively referred to as "Senior Preferred Stock"), but before any payment
shall be made to the holders of Common Stock or any other class or series of
stock ranking on liquidation junior to the Series A Preferred Stock (such Common
Stock and other stock being collectively referred to as "Junior Stock") by
reason of their ownership thereof, an amount equal to $2.5625 per share (subject
to appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares), plus any
declared but unpaid dividends with respect thereof. If upon any such
liquidation, dissolution or winding up of the Corporation the remaining assets
of the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Series A Preferred Stock the full
amount to which they shall be entitled, the holders of shares of Series A
Preferred Stock and any class or series of stock ranking on liquidation on a
parity with the Series A Preferred Stock shall share ratably in any distribution
of the remaining assets and funds of the Corporation in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to
such shares were paid in full.
(b) After the payment of all preferential amounts required to be paid
to the holders of Senior Preferred Stock, Series A Preferred Stock and any other
class or series of stock of the Corporation ranking on liquidation on a parity
with the Series A Preferred Stock, upon the dissolution, liquidation or winding
up of the Corporation, the holders of shares of Junior Stock then outstanding
shall be entitled to receive, on a pro-rata basis (based, in the case of any
convertible securities, on the number of shares of Common Stock into which such
convertible securities are then convertible), the remaining funds and assets of
the Corporation available for distribution to its stockholders.
(c) The merger or consolidation of the Corporation into or with
another corporation, or the sale of all or substantially all the assets of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 2 unless the holders of at least a
majority of the shares of Series A Preferred Stock then outstanding and issuable
upon exercise of the exercisable warrants for Series A Preferred Stock elect to
have such events not deemed to be a liquidation, dissolution or winding up of
the Corporation by giving written notice thereof to the Corporation at least 15
days before the effective date of such event. If such notice is given, the
provisions of Subsection 4(i) below shall apply. The amount deemed distributed
to the holders of Series A Preferred Stock upon any such merger or consolidation
shall be the cash or the value of the
-2-
<PAGE>
property, rights or securities distributed to such holders by the acquiring
person, firm or other entity. The value of such property, rights or other
securities shall be determined in good faith by the Board of Directors of the
Corporation.
3. Voting.
------
(a) Each holder of outstanding shares of Series A Preferred Stock
shall be entitled to the number of votes equal to five (5) times the number of
whole shares of Common Stock into which the shares of Series A Preferred Stock
held by such holder are convertible (as adjusted from time to time pursuant to
Section 4 hereof), at each meeting of stockholders of the Corporation (and
written actions of stockholders in lieu of meetings) with respect to any and all
matters presented to the stockholders of the Corporation for their action or
consideration. Except as provided by law or by the provisions establishing any
other series of Preferred Stock, holders of Series A Preferred Stock shall vote
together with the holders of Common Stock as a single class.
(b) Except as expressly provided herein or as required by law, so long
as any shares of the Series A Preferred Stock remain outstanding, the
Corporation shall not without the approval by vote or written consent by the
holders of at least a majority of the shares of the Series A Preferred Stock
then outstanding and issuable upon exercise of then exercisable warrants for
Series A Preferred Stock, each share of Series A Preferred Stock to be entitled
to one vote in each instance: (i) alter or change the rights, preferences or
privileges of the Series A Preferred Stock, (ii) create any new class or series
of stock having a liquidation or dividend preference over or on parity with the
Series A Preferred Stock, (iii) merge, consolidate, or reorganize the
Corporation, or sell all or substantially all of its assets, (vi) pay dividends
(other than in shares of Common Stock) on the Common Stock or (vii) repurchase
or otherwise acquire shares of its capital stock other than pursuant to the
provisions of the Certificate of Incorporation or restricted stock agreements
entered into at the time of the sale of such shares.
4. Optional Conversion. The holders of the Series A Preferred Stock
-------------------
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock shall be
----------------
convertible, at the option of the holder thereof, at any time and from time to
time, into such number of fully paid and nonassessable shares of Common Stock as
is determined by dividing $2.5625 by the Conversion Price (as defined below) in
effect at the time of conversion. The conversion price at which shares of
Common Stock shall be deliverable upon conversion of Series A Preferred Stock
without the payment of additional consideration by the holder thereof (the
"Conversion Price") shall initially be $2.5625. Such initial Conversion Price,
and the rate at which shares of Series A Preferred Stock may be converted into
shares of Common Stock, shall be subject to adjustment as provided below.
In the event of a liquidation, dissolution or winding up of the
Corporation, the Conversion Rights shall terminate at the close of business on
the first full day preceding the date fixed for the payment of any amounts
distributable on liquidation, dissolution or winding
-3-
<PAGE>
up to the holders of Series A Preferred Stock. The Corporation shall give the
holders of Series A Preferred Stock 30 days' prior notice of the date fixed for
such payment.
(b) Fractional Shares. No fractional shares of Common Stock shall be
-----------------
issued upon conversion of the Series A Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
applicable Conversion Price.
(c) Mechanics of Conversion.
-----------------------
(i) In order for a holder of Series A Preferred Stock to convert
shares of Series A Preferred Stock into shares of Common Stock, such holder
shall surrender the certificate or certificates for such shares of Series A
Preferred Stock, at the office of the transfer agent for the Series A Preferred
Stock (or at the principal office of the Corporation if the Corporation serves
as its own transfer agent), together with written notice that such holder elects
to convert all or any number of the shares of the Series A Preferred Stock
represented by such certificate or certificates. Such notice shall state such
holder's name or the names of the nominees in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. If
required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
his or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
("Conversion Date"). The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of Series A
Preferred Stock, or to his or its nominees, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share.
(ii) The Corporation shall at all times when the Series A Preferred
Stock shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the Series A
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series A Preferred Stock. Before taking any action which would
cause an adjustment reducing the Conversion Price below the then par value of
the shares of Common Stock issuable upon conversion of the Series A Preferred
Stock, the Corporation will take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
(iii) All shares of Series A Preferred Stock which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights, if
any, to receive notices and to vote, shall immediately cease and terminate on
the Conversion Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor. Any shares of Series A Preferred
Stock so converted shall be retired and canceled and shall not be
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<PAGE>
reissued, and the Corporation may from time to time take such appropriate action
as may be necessary to reduce the authorized Series A Preferred Stock
accordingly.
(d) Adjustments to Conversion Price for Diluting Issues:
---------------------------------------------------
(i) Special Definitions. For purposes of this Subsection 4(d),
-------------------
the following definitions shall apply:
(A) "Option" shall mean rights, options or warrants to subscribe for,
--------
purchase or otherwise acquire Common Stock or Convertible Securities, excluding
options granted to employees, consultants or directors of the Corporation to
acquire shares of Common Stock pursuant to plans adopted by the Board of
Directors of the Corporation.
(B) "Original Issue Date" shall mean the date on which a warrant to
---------------------
purchase shares of Series A Preferred Stock was first issued.
(C) "Convertible Securities" shall mean any evidences of indebtedness,
------------------------
shares or other securities directly or indirectly convertible into or
exchangeable for Common Stock.
(D) "Additional Shares of Common Stock" shall mean all shares of
-----------------------------------
Common Stock issued (or, pursuant to Subsection 4(d) (iii) below, deemed to be
issued) by the Corporation after the Original Issue Date, other than shares of
Common Stock issued or issuable:
(I) upon conversion of shares of Series A Preferred
Stock originally issued at a price of $2.5625 per
share;
(II) as a dividend or distribution on Series A
Preferred Stock;
(III) upon exercise of options, warrants or
convertible securities outstanding prior to the
date of filing this Certificate of Designation;
(IV) by reason of a dividend or distribution covered by
Subsection 4(f) hereof, a stock split or
subdivision of shares of Common Stock covered by
Subsection 4(e) hereof, or by reason of a
dividend, stock split, subdivision or other
distribution on shares of Common Stock excluded
from the definition of Additional Shares of Common
Stock by the foregoing clauses (I) and (II), (III)
or this clause (IV); or
-5-
<PAGE>
(VI) upon the exercise of options excluded from the
definition of "Option" in Subsection 4(d)(i)(A).
(ii) No Adjustment of Conversion Price. No adjustment in the number
---------------------------------
of shares of Common Stock into which the Series A Preferred Stock is convertible
shall be made, by adjustment in the applicable Conversion Price thereof: (a)
unless the consideration per share (determined pursuant to Subsection 4(d)(v))
for an Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the applicable Conversion Price in effect on the date
of, and immediately prior to, the issue of such Additional Shares, or (b) if
prior to such issuance, the Corporation receives written notice from the holders
of a majority of the shares of Series A Preferred Stock then outstanding and
issuable upon exercise of then exercisable warrants for Series A Preferred Stock
agreeing that no such adjustment shall be made as the result of the issuance of
Additional Shares of Common Stock.
(iii) Issue of Options and Convertible Securities Deemed Issue
--------------------------------------------------------
of Additional Shares of Common Stock.
------------------------------------
If the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then the maximum number
of shares of Common Stock (as set forth in the instrument relating thereto
without regard to any provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Subsection 4(d)(v) hereof)
of such Additional Shares of Common Stock would be less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in the Conversion Price shall be made upon
the subsequent issue of Convertible Securities or shares of Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
Securities;
(B) If such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the consideration
payable to the Corporation, or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities;
-6-
<PAGE>
(C) No readjustment pursuant to clause (B) above shall have the effect
of increasing the Conversion Price to an amount which exceeds the lower of (i)
the Conversion Price immediately prior to the adjustment effected upon the
original issue of Options or Convertible Securities (or upon the occurrence of a
record date with respect thereto) pursuant to the provisions hereof, or (ii) the
Conversion Price that would have resulted from any issuance of Additional Shares
of Common Stock between the original adjustment date and such readjustment date;
(D) Upon the expiration or termination of any unexercised Option, the
Conversion Price shall be readjusted to the Conversion Price which would have
been in effect at the time of such expiration or termination had such Option
never been issued (but including the recalculation of any intervening
adjustments), and the Additional Shares of Common Stock deemed issued as the
result of the original issue of such Option shall not be deemed issued for the
purposes of any subsequent adjustment of the Conversion Price; and
(E) In the event of any change in the number of shares of Common Stock
issuable upon the exercise, conversion or exchange of any Option or Convertible
Security, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Conversion Price then in effect shall
forthwith be readjusted to such Conversion Price as would have obtained had the
adjustment which was made upon the issuance of such Option or Convertible
Security (prior to such change) been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock upon
the exercise or conversion of any such Option or Convertible Security.
(iv) Adjustment of Conversion Price Upon Issuance of Additional
----------------------------------------------------------
Shares of Common Stock.
----------------------
In the event the Corporation shall at any time after the Original
Issue Date issue Additional Shares of Common Stock (including Additional Shares
of Common Stock deemed to be issued pursuant to Subsection 4(d)(iii), but
excluding shares issued as a dividend or distribution as provided in Subsection
4(f) or upon a stock split or combination as provided in Subsection 4(e)),
without consideration or for a consideration per share less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
then and in such event, such Conversion Price shall be reduced, concurrently
with such issue, to a price (calculated to the nearest cent) determined by
multiplying such Conversion Price by a fraction, (A) the numerator of which
shall be (1) the number of shares of Common Stock outstanding immediately prior
to such issue plus (2) the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of Additional
Shares of Common Stock so issued would purchase at such Conversion Price; and
(B) the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of such Additional
Shares of Common Stock so issued; provided that, for the purpose of this
-------- ----
Subsection 4(d)(iv), all shares of Common Stock issuable upon conversion of
shares of Series A Preferred Stock outstanding immediately prior to such issue
shall be deemed to be outstanding, and immediately after any Additional Shares
of Common Stock are deemed issued pursuant to Subsection 4(d)(iii) (other than
shares excluded from the definition of
-7-
<PAGE>
"Additional Shares of Common Stock" by virtue of clause (IV) of Subsection
4(d)(i)(D)), such Additional Shares of Common Stock shall be deemed to be
outstanding.
Notwithstanding the foregoing, the applicable Conversion Price shall not be
so reduced at such time if the amount of such reduction would be an amount less
than $.10, but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, carried forward, shall aggregate $.10 or more.
(v) Determination of Consideration. For purposes of this Subsection
------------------------------
4(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property: Such consideration shall:
-----------------
(I) insofar as it consists of cash, be computed at the aggregate
of cash received by the Corporation, excluding amounts paid or payable for
accrued interest or accrued dividends;
(II) insofar as it consists of property other than cash, be
computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(III) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the Corporation for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (I) and (II) above, as determined in
good faith by the Board of Directors.
(B) Options and Convertible Securities. The consideration per share
----------------------------------
received by the Corporation for Additional Shares of Common Stock deemed to have
been issued pursuant to Subsection 4(d) (iii), relating to Options and
Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
-8-
<PAGE>
(e) Adjustment for Stock Splits and Combinations. If the Corporation
--------------------------------------------
shall at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Stock, the Conversion Price then in effect
immediately before that subdivision shall be proportionately decreased. If the
Corporation shall at any time or from time to time after the Original Issue Date
combine the outstanding shares of Common Stock, the Conversion Price then in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this paragraph shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the event
--------------------------------------------------
the Corporation at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price then in effect shall be decreased as of the time of such issuance or, in
the event such a record date shall have been fixed, as of the close of business
on such record date, by multiplying the Conversion Price then in effect by a
fraction:
(1) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend
or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Conversion Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.
(g) Adjustments for Other Dividends and Distributions. In the event the
-------------------------------------------------
Corporation at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of Series A
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had the Series A Preferred Stock been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
giving application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Series A Preferred
Stock.
-9-
<PAGE>
(h) Adjustment for Reclassification, Exchange, or Substitution. If the
----------------------------------------------------------
Common Stock issuable upon the conversion of the Series A Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above, or a reorganization, merger, consolidation, or sale of assets
provided for below), then and in each such event the holder of each such share
of Series A Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by holders of the number of shares of Common Stock into which such shares of
Series A Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(i) Adjustment for Merger or Reorganization, etc. Subject to Section 2 of
--------------------------------------------
this Certificate of Designation, in case of any consolidation or merger of the
Corporation with or into another corporation or the sale of all or substantially
all of the assets of the Corporation to another corporation, each share of
Series A Preferred Stock shall thereafter be convertible into the kind and
amount of shares of stock or other securities or property to which a holder of
the number of shares of Common Stock of the Corporation deliverable upon
conversion of such Series A Preferred Stock would have been entitled upon such
consolidation, merger or sale; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Section 4 set forth with respect to the
rights and interest thereafter of the holders of the Series A Preferred Stock,
to the end that the provisions set forth in this Section 4 (including provisions
with respect to changes in and other adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the conversion of
the Series A Preferred Stock.
(j) No Impairment. The Corporation will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock against impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each adjustment
-----------------------------
or readjustment of the Conversion Price pursuant to this Section 4, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, furnish or cause to be furnished
to such holder a similar certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price then in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion of Series A Preferred Stock.
-10-
<PAGE>
(1) Notice of Record Date. In the event:
---------------------
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or
other securities of the Corporation;
(ii) that the Corporation splits, subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the Corporation
(other than a stock split, subdivision or combination of its
outstanding shares of Common Stock or a stock dividend or stock
distribution thereon), or of any consolidation or merger of the
Corporation into or with another corporation, or of the sale of
all or substantially all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series A Preferred Stock, and shall cause to
be mailed to the holders of the Series A Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the record date specified in (A) below or twenty days before the
date specified in (8) below, a notice stating
(A) the record date of such dividend, distribution, stock split,
subdivision or combination, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, stock split,
subdivision or combination are to be determined, or
(B) the date on which such reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger,
sale, dissolution or winding up.
[The remainder of this page has been intentionally left blank.]
-11-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Designation to be executed as of this
28th day of May, 1998.
BIGMAR, INC.
By:/s/ John G. Tramontana
----------------------
Title: President
By:/s/ Michael K. Medors
---------------------
Title: Secretary
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