EXHIBIT 4.2
ARTICLES OF AMENDMENT
OF
KRISPY KREME DOUGHNUTS, INC.
Pursuant to Section 55-6-02 of the General Statutes of North Carolina, the
undersigned Corporation hereby submits these Articles of Amendment for the
purpose of amending its Articles of Incorporation:
1. The name of the Corporation is Krispy Kreme Doughnuts, Inc.
2. The following amendment to the Articles of Incorporation of the
Corporation was adopted by the Board of Directors in the manner prescribed by
law:
Article IV is hereby amended and restated in its entirety as follows:
"Article IV. The Corporation shall have the authority to issue not more
than (a) 100,000,000 shares of common stock, no par value ("Common
Stock") and (b) 10,000,000 shares of preferred stock, no par value
("Preferred Stock"). Of the 10,000,000 shares of authorized and
unissued Preferred Stock of the Corporation, a series of Preferred
Stock, no par value, of the Corporation, consisting of 1,000,000
shares, shall be designated and known as the "Series A Participating
Cumulative Preferred Stock" of the Corporation.
Holders of the Common Stock are entitled to the entire voting power,
all distributions declared and all assets of the corporation upon
dissolution, subject to the rights and preferences, if any, of the
holders of Preferred Stock to such voting powers, dividends and assets
upon dissolution pursuant to applicable law and the resolution or
resolutions of the Board of Directors providing for the issue of one or
more series of Preferred Stock.
The designation, number of shares, preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and
qualifications, of the Series A Participating Cumulative Preferred
Stock are as follows:
SECTION 1. DESIGNATION AND NUMBER OF SHARES. The shares of such series
shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "SERIES A PREFERRED STOCK"), and the number of shares
constituting such series shall be 1,000,000. Such number of shares of
the Series A Preferred Stock may be increased or decreased by
resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series A Preferred Stock
to a number less than the number of shares then outstanding plus the
number of shares issuable upon exercise or conversion of outstanding
rights, options or other securities issued by the Corporation.
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SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to
the shares of Series A Preferred Stock with respect to dividends, if
any, the holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable on the last day of March, June, September and December of each
year (each such date being referred to herein as a "QUARTERLY DIVIDEND
PAYMENT DATE"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of any share or fraction of a share of Series
A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 and (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount (payable in kind) of all cash dividends or other distributions
and 100 times the aggregate per share amount of all non-cash dividends
or other distributions (other than (i) a dividend payable in shares of
Common Stock, par value $.01 per share, of the Corporation (the "COMMON
STOCK") or (ii) a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise)), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred
Stock. If the Corporation shall at any time after JANUARY 18, 2000 (the
"RIGHTS DECLARATION DATE") declare or pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in SECTION 2(A) immediately after
it declares a dividend or distribution on the Common Stock (other than
as described in clauses (i) and (ii) of the first sentence of SECTION
2(A)); provided, however, that if no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date (or, with respect to the first Quarterly Dividend
Payment Date, the period between the first issuance of any share or
fraction of a share of Series A Preferred Stock and such first
Quarterly Dividend Payment Date), a dividend of $1.00 per share on the
Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
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(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is on or
before the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue and be
cumulative from the date of issue of such shares, or unless the date of
issue is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and on or before such Quarterly Dividend Payment Date, in
which case dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall not be more than 60 days prior to the date fixed for the
payment thereof.
SECTION 3. VOTING RIGHTS. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of shareholders of the
Corporation. If the Corporation shall at any time after the Rights
Declaration Date declare or pay any dividend on Common Stock payable in
shares of Common Stock or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as a single class on all matters submitted to
a vote of shareholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon
(whether or not consecutive), the occurrence of such contingency shall
mark the beginning of a period (herein called a "DEFAULT PERIOD") which
shall extend until such time when all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current quarterly
dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Series A Preferred Stock and
any other series of Preferred Stock then entitled as a class to elect
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directors, voting together as a single class, irrespective of series,
shall have the right to elect one Director.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to Section 3(C)(iii) or at any annual meeting
of shareholders, and thereafter at annual meetings of shareholders;
provided, however, that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be exercised
unless the holders of 10% in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The absence of a
quorum of holders of Common Stock shall not affect the exercise by
holders of Preferred Stock of such voting right. At any meeting at
which holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right,
voting as a class, to elect Directors to fill such vacancy, if any, in
the Board of Directors as may then exist up to one Director or, if such
right is exercised at an annual meeting, to elect one Director. If the
number which may be so elected at any special meeting does not amount
to the required number, the holders of the Preferred Stock shall have
the right to make such increase in the number of Directors as shall be
necessary to permit the election by them of the required number. After
the holders of the Preferred Stock shall have exercised their right to
elect Directors in any default period and during the continuance of
such period, the number of Directors shall not be increased or
decreased except by vote of the holders of Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Preferred Stock.
(iii) Notwithstanding anything to the contrary contained in the
Corporation's Articles of Incorporation or Bylaws, unless the holders
of Preferred Stock shall, during an existing default period, have
previously exercised their right to elect Directors, the Board of
Directors may order, or any shareholder(s) owning in the aggregate not
less than ten percent (10%) of the total number of shares of Preferred
Stock outstanding, irrespective of series, may request, the calling of
a special meeting of holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice President or the Secretary
of the Corporation. Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote pursuant to this
Section 3(C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 20 days and not later than 60 days
after such order or request or in default of the calling of such
meeting within 60 days after such order or request, such meeting may be
called on similar notice by any shareholder(s) owning in the aggregate
not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series. Notwithstanding
the provisions of this SECTION 3(C)(iii), no such special meeting shall
be called during the period within 60 days immediately preceding the
date fixed for the next annual meeting of shareholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of
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Preferred Stock shall have exercised their right to elect one Director
voting as a class, after the exercise of which right (x) the Directors
so elected by the holders of Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until
the expiration of the default period, and (y) any vacancy in the Board
of Directors may (except as provided in Section 3(C)(ii) be filled by
vote of a majority of the remaining Directors theretofore elected by
the holders of the class of stock which elected the Director whose
office shall have become vacant. References in this Section 3(C) to
Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of
Preferred Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the Articles
of Incorporation or Bylaws irrespective of any increase made pursuant
to the provisions of Section 3(C)(ii) (such number being subject,
however, to change thereafter in any manner provided by law or in the
Articles of Incorporation or Bylaws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining
Directors.
(D) Except as otherwise provided herein, holders of Series A Preferred
Stock shall have no special voting rights, and their consent shall not
be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate
action.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding shares of Series
A Preferred Stock shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred Stock
and all such other parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for value any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided,
however, that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for
shares of stock of the Corporation ranking junior (as to dividends and
upon dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) redeem, purchase or otherwise acquire for value any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
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with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Preferred Stock and all such
other parity stock upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for value any shares of stock of the
Corporation unless the Corporation could, under SECTION 4(A), purchase
or otherwise acquire such shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock without
designation as to series and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board
of Directors as permitted by the Articles of Incorporation or as
otherwise permitted under North Carolina law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Preferred Stock unless, prior thereto,
the holders of shares of Series A Preferred Stock shall have received
$1.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such
payment; provided, however, that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per share to
holders of Common Stock, or (2) to the holders of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions
made ratably on the Series A Preferred Stock and all such other parity
stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding
up. If the Corporation shall at any time after the Rights Declaration
Date pay any dividend on Common Stock payable in shares of Common Stock
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
SECTION 7. CONSOLIDATION OR MERGER. If the Corporation shall enter into
any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other
stock or securities, cash or any other property, then in any such case
the shares of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into an amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 100 times
the aggregate amount of stock, securities, cash or any other property,
as the case may be, into which or for which each share of Common Stock
is exchanged or changed. If the Corporation shall at any time after the
Rights Declaration Date pay any dividend on Common Stock payable in
shares of Common Stock or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of
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shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares
of Series A Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 8. NO REDEMPTION. The Series A Preferred Stock shall not be
redeemable.
SECTION 9. RANK. The Series A Preferred Stock shall rank junior (as to
dividends and upon liquidation, dissolution and winding up) to all
other series of the Corporation's preferred stock, except any series
that specifically provides that such series shall rank junior to the
Series A Preferred Stock.
SECTION 10. FRACTIONAL SHARES. Series A Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Preferred Stock.
SECTION 11. AMENDMENT. The Articles of Incorporation of the Corporation
shall not be further amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of a majority or more of the outstanding shares of
Series A Preferred Stock, voting separately as a class."
3. The foregoing amendment was adopted on the 18th day of January, 2000 by
the Board of Directors of the Corporation in accordance with Section 55-6-02 of
the General Statutes of North Carolina.
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4. The foregoing amendment will become effective at 12:01 a.m. on the date
these Articles are filed with the Secretary of State of North Carolina.
This the 5th day of April, 2000.
KRISPY KREME DOUGHNUTS, INC.
By: /s/ Scott A. Livengood
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Name: Scott A. Livengood
Title: President
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