<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 25, 1994
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-14190
DREYER'S GRAND ICE CREAM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware No. 94-2967523
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
5929 College Avenue, Oakland, California 94618
(Address of principal executive offices) (Zip Code)
(510) 652-8187
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
<TABLE>
<CAPTION>
Shares Outstanding
August 5, 1994
----------------
<S> <C>
Common stock, $1.00 par value 15,657,631
</TABLE>
<PAGE> 2
DREYER'S GRAND ICE CREAM, INC.
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 25, December 25,
1994 1993
---------------- --------------
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 31,430,000 $ 2,532,000
Trade accounts receivable, net of
allowance for doubtful accounts of
$511,000 in 1994 and $535,000 in 1993 72,510,000 46,293,000
Other accounts receivable 7,689,000 5,326,000
Inventories 37,191,000 27,817,000
Prepaid expenses and other 5,905,000 8,256,000
------------- -------------
Total current assets 154,725,000 90,224,000
Property, plant and equipment, net 154,924,000 142,275,000
Goodwill and distribution rights, net of
accumulated amortization of $8,989,000
in 1994 and $7,572,000 in 1993 86,810,000 72,988,000
Other assets 16,392,000 16,788,000
------------- -------------
Total assets $ 412,851,000 $ 322,275,000
============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
2
<PAGE> 3
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 25, December 25,
1994 1993
------------- -------------
(unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 49,295,000 $ 21,893,000
Accrued payroll and employee benefits 8,564,000 9,249,000
Current portion of long-term debt 4,675,000 1,685,000
------------- -------------
Total current liabilities 62,534,000 32,827,000
Long-term debt, less current portion 35,275,000 38,875,000
Convertible subordinated debentures 100,752,000 100,752,000
Deferred income 127,000 174,000
Deferred income taxes 26,625,000 26,613,000
------------- -------------
Total liabilities 225,313,000 199,241,000
------------- -------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $1 par value -
10,000,000 shares authorized; no shares
issued or outstanding in 1994 and 1993
Common stock, $1 par value -
30,000,000 shares authorized; 16,114,000
shares and 14,671,000 shares issued and
outstanding in 1994 and 1993, respectively 16,114,000 14,671,000
Capital in excess of par 160,155,000 59,145,000
Retained earnings 11,269,000 49,218,000
------------- -------------
Total stockholders' equity 187,538,000 123,034,000
------------- -------------
Total liabilities and stockholders' equity $ 412,851,000 $ 322,275,000
============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
3
<PAGE> 4
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------------ ------------------------------
June 25, 1994 June 26, 1993 June 25, 1994 June 26, 1993
------------- ------------- ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 147,727,000 $ 123,486,000 $ 259,728,000 $ 225,803,000
Other income 409,000 271,000 682,000 440,000
------------- ------------- ------------- -------------
148,136,000 123,757,000 260,410,000 226,243,000
------------- ------------- ------------- -------------
Costs and expenses:
Cost of goods sold 109,659,000 90,924,000 198,411,000 172,215,000
Selling, general and
administrative 38,398,000 20,179,000 57,126,000 36,245,000
Interest, net of interest
capitalized 2,424,000 1,818,000 4,633,000 3,486,000
------------- ------------- ------------- -------------
150,481,000 112,921,000 260,170,000 211,946,000
------------- ------------- ------------- -------------
Income (loss) before income taxes (2,345,000) 10,836,000 240,000 14,297,000
Income tax (provision) benefit 910,000 (3,961,000) (93,000) (5,304,000)
------------- ------------- ------------- -------------
Net income (loss) $ (1,435,000) $ 6,875,000 $ 147,000 $ 8,993,000
============= ============= ============= =============
Net income (loss) per share $ (.10) $ .47 $ .01 $ .62
============== ============= ============= =============
Dividends per share $ .06 $ .06 $ .12 $ .12
============= ============= ============= =============
Retained earnings, beginning of $ 49,288,000 $ 37,828,000 $ 49,218,000 $ 36,677,000
period
Net income (loss) (1,435,000) 6,875,000 147,000 8,993,000
Cash dividends declared (976,000) (877,000) (1,860,000) (1,753,000)
Repurchase and retirement of
common stock (35,608,000) (206,000) (36,236,000) (297,000)
-------------- ------------- ------------- -------------
Retained earnings, end of period $ 11,269,000 $ 43,620,000 $ 11,269,000 $ 43,620,000
============= ============= ============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
4
<PAGE> 5
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
------------------------------------------
June 25, 1994 June 26, 1993
------------- -------------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 147,000 $ 8,993,000
Adjustments to reconcile net income to cash provided from
operations:
Depreciation and amortization 8,507,000 7,268,000
Deferred income taxes 12,000 1,060,000
Deferred income (47,000) (47,000)
Changes in assets and liabilities, net of amounts acquired:
Trade accounts receivable (26,217,000) (18,499,000)
Other accounts receivable (2,363,000) (3,274,000)
Inventories (9,374,000) (5,850,000)
Prepaid expenses and other 2,351,000 3,419,000
Accounts payable and accrued liabilities 27,307,000 7,073,000
Accrued payroll and employee benefits (685,000) (246,000)
Income taxes payable 2,426,000
------------- -------------
(362,000) 2,323,000
------------- -------------
Cash flows from investing activities:
Acquisition of property, plant and equipment (19,210,000) (17,564,000)
Retirement of property, plant and equipment 405,000 124,000
Increase in goodwill and distribution rights (15,239,000) (4,394,000)
(Increase) decrease in other assets, net (538,000) 1,230,000
------------- -------------
(34,582,000) (20,604,000)
------------- -------------
Cash flows from financing activities:
Decrease in short-term bank borrowings (23,400,000) (29,000,000)
Increase in short-term bank borrowings 23,400,000
Proceeds from long-term debt 51,800,000
Reductions in long-term debt (610,000) (2,498,000)
Cash dividends paid (1,765,000) (1,750,000)
Net proceeds from issuance of common stock under Nestle Agreement 102,560,000
Repurchase of common stock (36,995,000)
Issuance of common stock under employee stock plans 1,573,000 629,000
Repurchase of common stock issued under employee stock plans (921,000) (308,000)
------------- -------------
63,842,000 18,873,000
------------- -------------
Increase in cash and cash equivalents 28,898,000 592,000
Cash and cash equivalents, beginning of period 2,532,000 606,000
------------ -------------
Cash and cash equivalents, end of period $ 31,430,000 $ 1,198,000
============= =============
Supplemental Cash Flow Information - cash paid during the year for:
Interest (net of amounts capitalized) $ 4,640,000 $ 3,281,000
Income taxes (net of refunds) 233,000 861,000
</TABLE>
See accompanying Notes to Consolidated Financial Statements
5
<PAGE> 6
DREYER'S GRAND ICE CREAM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - General:
Dreyer's Grand Ice Cream, Inc. and its subsidiaries (the "Company") is a
single segment industry company engaged in the business of manufacturing and
distributing premium ice cream and other frozen dairy products.
The consolidated financial statements for the thirteen and twenty-six week
periods ended June 25, 1994 and June 26, 1993, have not been audited by
independent public accountants, but include all adjustments, consisting of
normal recurring accruals, which management considers necessary for a fair
presentation of the consolidated operating results for the periods. The
statements have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, certain
information and footnote disclosure normally included in financial statements
prepared in conformity with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. The operating
results for interim periods are not necessarily indicative of results to be
expected for an entire year. The aforementioned statements should be read in
conjunction with the Company's Annual Report to Stockholders for the year ended
December 25, 1993.
NOTE 2 - Financial Statement Presentation:
Certain reclassifications have been made to the prior period financial
statements in order to conform to the current presentation.
NOTE 3 - Inventories:
Inventories are stated at the lower of cost (determined by the first-in,
first-out method) or market. Inventories at June 25, 1994 and December 25,
1993 consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 25, December 25,
1994 1993
-------- ------------
<S> <C> <C>
Raw materials $ 4,009 $ 2,050
Finished goods 33,182 25,767
-------- --------
$ 37,191 $ 27,817
======== ========
</TABLE>
6
<PAGE> 7
NOTE 4 - Net Income Per Share:
Net income per common share is computed using the weighted average number of
shares of common stock outstanding during the period which were 14,380,000 and
14,539,000 shares for the thirteen weeks and twenty-six weeks ended June 25,
1994 and 14,611,000 and 14,595,000 shares for the thirteen weeks and twenty-six
weeks ended June 26, 1993.
NOTE 5 - Goodwill and Distribution Rights:
On January 4, 1994, the Company entered into a long-term distribution
agreement with Sunbelt Distributors, Inc. (Sunbelt), the leading independent
direct-store-delivery ice cream distributor in Texas. Under the agreement, the
Company paid Sunbelt $10,970,000 in cash to secure the long-term exclusive
right to have its products distributed by Sunbelt in Texas and certain parts of
Louisiana and Arkansas. In conjunction with this transaction, the Company
recorded $11,321,000 in distribution rights, including $351,000 in transaction
costs.
NOTE 6 - Common Stock:
On June 14, 1994, the Company completed a transaction (the "Nestle
Agreement") with an affiliate of Nestle USA, Inc. ("Nestle"), whereby Nestle
purchased three million newly issued shares of common stock of the Company for
$32 per share and warrants to purchase an additional two million shares at an
exercise price of $32 per share. Warrants for one million shares will expire on
June 14, 1997 and warrants for the other million shares will expire on June 14,
1999. Nestle paid an aggregate of $10,000,000 for the two million warrants.
Total proceeds from the issuance of the initial three million shares and the
two million warrants was $106,000,000. In addition, the Company recorded a
decrease to capital in excess of par of $3,440,000 for related transaction
costs.
The Company has the right to cause Nestle to exercise the warrants at $24 per
share subject to certain conditions at any time before June 14, 1997. The
Company also has the right to cause Nestle to exercise the warrants at any time
through the warrant expiration dates at $32 per share if the average trading
price of the common stock exceeds $60 during a 130 trading day period, subject
to certain conditions. Furthermore, before June 14, 1999, if the average
trading price of the common stock equals or exceeds $60 during a 130 trading
day period, Nestle will be required to pay an additional $2 for each share
purchased by it and each share issued in respect of warrants exercised by it.
In addition to the Nestle Agreement, the Company entered into a distribution
agreement with Nestle Ice Cream Company to distribute Nestle's frozen novelty
and ice cream products in certain markets beginning in 1995.
On May 6, 1994, the Company entered into a credit agreement with a bank (the
"Credit Agreement") to borrow up to $100,000,000. Under the terms of the Credit
Agreement, the Company borrowed funds to finance the repurchase and retirement
of shares of its common stock. (See below.) Interest on borrowings was payable
at a same day funding rate plus an applicable margin, or at the bank's
reference rate. The Credit Agreement was terminated on June 14, 1994 and all
funds borrowed were repaid upon receipt of the proceeds from the issuance of
the common stock and warrants under the Nestle Agreement.
7
<PAGE> 8
During the quarter ended June 25, 1994, the Company repurchased and retired
1,644,000 shares of its common stock at prices ranging from $21.38 to $23.50
under a newly authorized plan to repurchase up to 5 million shares through open
market purchases and negotiated transactions. During fiscal 1994, the Company
repurchased and retired 37,000 shares of common stock at prices ranging from
$22.00 to $28.69 from employees who previously acquired shares under employee
stock plans.
NOTE 7 - Subsequent Event:
Subsequent to quarter end, the Company repurchased and retired 488,000
shares of common stock at prices ranging from $21.88 to $24.00 under the newly
authorized plan. (See Note 6.)
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percent which
the items in the Consolidated Statement of Income and Retained Earnings bear to
net sales and the percentage change of such items compared to the indicated
prior period:
<TABLE>
<CAPTION>
Period-to-Period
Percentage of Net Sales Increase (Decrease)
----------------------- -------------------------
Thirteen Twenty-Six
Thirteen Weeks Ended Twenty-Six Weeks Ended Weeks Weeks
--------------------- ----------------------- 1994 1994
June 25, June 26, June 25, June 26, Compared Compared
1994 1993 1994 1993 to 1993 to 1993
------------------------------------------------ -------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Net sales 100.0% 100.0% 100.0% 100.0% 19.6% 15.0%
Other income 0.3 0.2 0.3 0.2 50.9 55.0
----- ----- ----- -----
Total revenue 100.3 100.2 100.3 100.2 19.7 15.1
----- ----- ----- -----
Costs and expenses:
Costs of goods sold 74.2 73.6 76.4 76.3 20.6 15.2
Selling, general and
administrative 26.0 16.3 22.0 16.1 90.3 57.6
Interest, net of interest
capitalized 1.7 1.5 1.8 1.5 33.3 32.9
----- ----- ----- -----
Total costs and expenses 101.9 91.4 100.2 93.9 33.3 22.8
----- ----- ----- -----
Income (loss) before income taxes (1.6) 8.8 0.1 6.3 (121.6) (98.3)
Income tax (provision) benefit 0.6 (3.2) (0.0) (2.3) (123.0) (98.2)
----- ----- ----- -----
Net income (loss) (1.0) 5.6 0.1 4.0 (120.9) (98.4)
===== ===== ===== =====
</TABLE>
9
<PAGE> 10
RESULTS OF OPERATIONS
Thirteen Weeks Ended June 25, 1994 Compared with Thirteen Weeks Ended June 26,
1993
Consolidated net sales for the second quarter of 1994 increased 20% to
$147,727,000 compared with $123,486,000 for the same period last year. Sales
of the Company's brands increased 24% and represented 65% of consolidated net
sales as compared with 63% in the second quarter of 1993. The increase related
primarily to higher unit sales of the Company's established brands in all
markets, led by Dreyer's and Edy's Frozen Yogurt. To a lesser extent, the
increase related to higher unit sales of Dreyer's and Edy's Novelties (Dreyer's
and Edy's Ice Cream Bars, Tropical Fruit Bars, Yogurt Bars and Grand Cones),
led by the recent market introduction of Grand Cones. The effect of price
increases for the Company's brands was not significant. Sales of products
purchased from other manufacturers (partner brands) increased 12% and
represented 35% of consolidated net sales as compared with 37% in the second
quarter of 1993. The effect of price increases for partner brands was not
significant.
During the quarter, the Company embarked on a five year plan to accelerate the
sales of its Company brands by greatly increasing its consumer marketing
efforts and expanding its distribution system into additional markets (the
"Marketing Plan"). Under this Marketing Plan, the Company will increase the
amount of its spending for advertising and consumer promotion from a level of
approximately $12,000,000 in 1993 to approximately $40,000,000 in 1994, and
plans to spend approximately $50,000,000 annually on these marketing activities
from 1995 through 1998. The Company will begin selling its Edy's branded
products in the Boston, Charlotte and Albany markets this year, in addition to
the previously announced introduction of Dreyer's line of products into the
Houston market. The Company anticipates that the Marketing Plan will continue
to materially reduce earnings during the next twelve to twenty-four month
period below levels that would have been attained under the former business
plan. The potential benefits of the new strategy are increased market share and
future earnings above those levels that would be attained in the absence of the
strategy. Dreyer's believes that these benefits are not likely to impact the
Company's results until 1996 at the earliest. No assurance can be given that
the anticipated benefits of the strategy will be achieved. The success of the
strategy will depend upon, among other things, consumer responsiveness to the
Marketing Plan, competitors' activities, and general economic conditions.
Cost of goods sold increased $18,735,000 or 21% over the second quarter of
1993, while the overall gross margin decreased from 26.4% in the second quarter
of 1993 to 25.8% in the second quarter of 1994. The lower margin was primarily
the result of higher distribution expenses, offset partially by increased sales
of the Company's brands, which carry a higher margin than partner brands.
Selling, general and administrative expenses in the second quarter of 1994
increased $18,219,000 or 90% as compared to the same period of 1993. This
increase related primarily to an increase in overall marketing expenses of
$17,216,000. Included in the Company's overall marketing expenses was
$11,285,000 for advertising and consumer promotion costs associated with the
Company's previously announced Marketing Plan.
Interest expense was $606,000 or 33% higher in the second quarter of 1994 as
compared with the same period in 1993, due primarily to the higher interest
rate of the convertible subordinated debentures issued in the third quarter of
1993.
10
<PAGE> 11
Income taxes decreased $4,871,000 reflecting a pre-tax loss and a higher
effective tax rate of 38.8% in the second quarter of 1994 as compared to an
effective rate of 36.6% in 1993. The lower effective rate in 1993 resulted
primarily from the reversal of federal taxes provided in prior periods and, to
a lesser extent, a lower effective rate for state income taxes.
Twenty-Six Weeks Ended June 25, 1994 Compared With Twenty-Six Weeks Ended June
26, 1993
Consolidated net sales for the twenty-six weeks ended June 25, 1994
increased 15% to $259,728,000 compared with $225,803,000 for the same period
last year. Sales of the Company's brands increased 21% and represented 66% of
consolidated net sales as compared with 62% in the second quarter of 1993. The
increase related primarily to higher unit sales of the Company's established
brands in all markets, led by Dreyer's and Edy's Frozen Yogurt and, to a lesser
extent, higher unit sales of Dreyer's and Edy's Novelties. The effect of price
increases for the Company's brands was not significant. Sales of partner
brands increased 6%, and represented 34% of consolidated net sales as compared
with 38% in the same period last year. The effect of price increases for
partner brands was not significant.
Cost of goods sold increased $26,196,000 or 15% as compared with 1993, while
the overall gross margin decreased slightly from 23.7% in 1993 to 23.6% in
1994.
Selling, general and administrative expenses in the first two quarters of 1994
increased $20,881,000 or 58% as compared to the same period in 1993. This
increase related primarily to an increase in overall marketing expenses of
$19,431,000. Included in the Company's overall marketing expenses was
$17,635,000 for advertising and consumer promotion costs associated with the
Company's previously announced Marketing Plan.
Interest expense in the first two quarters of 1994 was $1,147,000 or 33% higher
than in the same period in the prior year due primarily to the higher interest
rate of the convertible subordinated debentures issued in the third quarter of
1993.
Income taxes decreased $5,211,000 reflecting substantially lower taxable
income. The effective tax rate for the first two quarters of 1994 was 38.8% as
compared to 37.1% for the same period in 1993. The lower effective rate in 1993
resulted primarily from the reversal of federal taxes provided in prior periods
and, to a lesser extent, a lower rate for state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 25, 1994 increased $34,794,000 from year end 1993 due
primarily to the increase in cash and cash equivalents and the seasonal
increase in trade receivables, offset in part by the increase in accounts
payable and accrued liabilities. Cash was provided primarily from the net
proceeds from the Nestle Agreement of $102,560,000. (See Note 6 of Notes to
Consolidated Financial Statements.) This was the primary source used to fund the
repurchase of common stock of $36,995,000, the $19,210,000 increase in
property, plant and equipment, and the $15,239,000 increase in goodwill and
distribution rights resulting primarily from the Sunbelt distribution rights
agreement. (See Note 5 of Notes to Consolidated Financial Statements.)
11
<PAGE> 12
On June 14, 1994, the Company completed a transaction with an affiliate of
Nestle USA, Inc., whereby Nestle purchased three million newly issued shares of
common stock of the Company for $32 per share and warrants to purchase an
additional two million shares at an exercise price of $32 per share. Total
proceeds from the issuance of the initial three million shares and the two
million warrants was $106,000,000. (See Note 6 of Notes to Consolidated
Financial Statements.)
The Company repurchased and retired 1,644,000 shares at prices ranging from
$21.38 to $23.50 under a newly authorized plan to repurchase up to 5 million
shares through open market purchases and negotiated transactions. Subsequent
to quarter end, the Company repurchased and retired 488,000 shares of common
stock at prices ranging from $21.88 to $24.00 under the newly authorized plan.
(See Note 6 of Notes to Consolidated Financial Statements.)
At June 25, 1994, the Company had $31,430,000 in cash and cash equivalents, and
an unused credit line of $50,000,000.
The Company believes that its cash and cash equivalents, its credit line, its
internally generated cash and financing capacity are adequate to meet
anticipated operating and capital requirements.
12
<PAGE> 13
PART II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 11, 1994, the Company held its 1994 Annual Meeting of
Stockholders. A total of 11,235,159 shares (76% of the outstanding shares) were
represented at the meeting either in person or by proxy. Matters submitted to
a vote of security holders at the meeting were as follows:
a. Election of two Class III directors to hold office until the 1997
Annual Meeting of Stockholders or until their successors are
elected and qualified;
b. Approving the amendment to the Company's Incentive Stock Option
Plan (1982);
c. Approving the amendment to the Company's Stock Option Plan (1992);
d. Approving the Company's Stock Option Plan (1993); and
e. Approving the appointment of Price Waterhouse as independent
public accountants for fiscal year 1994 and thereafter until a
successor is appointed.
At the Annual Meeting, T. Gary Rogers and William F. Cronk, III were
elected as directors of Class III of the Company's Board of Directors. Merril
M. Halpern, John W. Larson and Jack O. Peiffer continue to hold office as
directors of Class I of the Board of Directors until the 1995 Annual Meeting.
Jerome L. Katz and Edmund R. Manwell continue to hold office as directors of
Class II of the Board of Directors until the 1996 Annual Meeting.
The amendment to the Company's Incentive Stock Option Plan (1982) was
approved. The number of affirmative votes cast was 9,035,996. The number of
negative votes cast was 27,536.
The amendment to the Company's Stock Option Plan (1992) was approved.
The number of affirmative votes cast was 9,086,085. The number of negative
votes cast was 872,849.
The Company's Stock Option Plan (1993) was approved. The number of
affirmative votes cast was 8,585,823. The number of negative votes cast was
1,376,399.
Price Waterhouse was approved as the Company's independent public
accountants for the fiscal year 1994. The number of affirmative votes cast was
11,221,681. The number of negative votes cast was 3,932.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. (i) A Form 8-K was filed by the Company on May 9, 1994 reporting
the Company entering into a Stock and Warrant Purchase Agreement
(the "Agreement") with Nestle Holdings, Inc. ("Nestle") pursuant
to which Nestle agreed to purchase from the Company three million
shares of common stock, par value $1.00 per share, for a price of
$32 per share, and three-year warrants to purchase one million
shares for a price of $32 per share and five-year warrants to
13
<PAGE> 14
purchase one million shares for a price of $32 per share, the
aggregate purchase price for such warrants being $10 million. The
Form 8-K included the Agreement and exhibits thereto, a copy of
the press release issued by the Company on May 6, 1994 in
connection with the transactions contemplated by the Agreement and
a copy of the press release issued by the Company on May 6, 1994
reporting the Company's earnings for the first quarter of 1994.
(ii) A Form 8-K/A was filed by the Company on May 23, 1994 to make
technical corrections to the Form 8-K filed on May 9, 1994
reporting the Stock and Warrant Purchase Agreement with Nestle
Holdings, Inc.
b. Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
- - ----------- -----------
<S> <C>
2.1 First Amendment to the Stock and Warrant Purchase Agreement dated as of June 14, 1994 between the Company and Nestle
Holdings, Inc.
3.1 Certificate of Incorporation of the Company, as amended, including the Certificate of Designation of Series A
Convertible Preferred Stock setting forth the Powers, Preferences, Rights, Qualifications, Limitations and
Restrictions of such series of Preferred Stock and the Certificate of Designation of Series B Convertible Preferred
Stock, as amended, setting forth the Powers, Preferences, Rights, Qualifications, Limitations and Restrictions
of such series of Preferred Stock.
3.2 By-laws of the Company, as amended.
4.1 First Amendment to Amended and Restated Rights Agreement, dated as of June 14, 1994 between the Company and First
Interstate Bank of California ("FICAL") amending the Amended and Restated Rights Agreement between the Company and
FICAL (as successor Rights Agent to Bank of America NT & SA) dated March 4, 1991.
4.2 Registration Rights Agreement dated as of June 14, 1994 between the Company and Nestle Holdings, Inc.
4.3 Warrant Agreement dated as of June 14, 1994 between the Company and Nestle Holdings, Inc.
10.1 Third Amendment to Credit Agreement dated July 15, 1994, among the Company, Bank of America NT & SA (the "Bank") as
a participant and as Agent, ABN AMRO Bank N.V. ("ABN AMRO"), and Continental Bank N.A. amending the Credit Agreement
dated April 30, 1993 among the Company, the Bank and ABN AMRO.
10.2 Second Amendment to Standby Reimbursement Agreement, dated as of June 25, 1994 between the Company and Sanwa Bank of
California ("Sanwa") amending the Standby Reimbursement Agreement between the Company and Sanwa dated July 1, 1988.
11 Computation of Net Income (Loss) Per Share.
</TABLE>
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DREYER'S GRAND ICE CREAM, INC.
Dated: August 9, 1994 By: /s/ Paul R. Woodland
----------------------------
Paul R. Woodland
Vice President - Finance and
Administratio and Chief
Financial Officer
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<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- - ----------- -----------
<S> <C>
2.1 First Amendment to the Stock and Warrant Purchase Agreement dated as of June 14, 1994 between the Company and Nestle
Holdings, Inc.
3.1 Certificate of Incorporation of the Company, as amended, including the Certificate of Designation of Series A
Convertible Preferred Stock setting forth the Powers, Preferences, Rights, Qualifications, Limitations and
Restrictions of such series of Preferred Stock and the Certificate of Designation of Series B Convertible Preferred
Stock, as amended, setting forth the Powers, Preferences, Rights, Qualifications, Limitations and Restrictions
of such series of Preferred Stock.
3.2 By-laws of the Company, as amended.
4.1 First Amendment to Amended and Restated Rights Agreement, dated as of June 14, 1994 between the Company and First
Interstate Bank of California ("FICAL") amending the Amended and Restated Rights Agreement between the Company and
FICAL (as successor Rights Agent to Bank of America NT & SA) dated March 4, 1991.
4.2 Registration Rights Agreement dated as of June 14, 1994 between the Company and Nestle Holdings, Inc.
4.3 Warrant Agreement dated as of June 14, 1994 between the Company and Nestle Holdings, Inc.
10.1 Third Amendment to Credit Agreement dated July 15, 1994, among the Company, Bank of America NT & SA (the "Bank") as
a participant and as Agent, ABN AMRO Bank N.V. ("ABN AMRO"), and Continental Bank N.A. amending the Credit Agreement
dated April 30, 1993 among the Company, the Bank and ABN AMRO.
10.2 Second amendment to Standby Reimbursement Agreement, dated as of June 25, 1994 between the Company and Sanwa Bank of
California ("Sanwa") amending the Standby Reimbursement Agreement between the Company and Sanwa dated July 1, 1988.
11 Computation of Net Income (Loss) Per Share.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
FIRST AMENDMENT TO STOCK AND WARRANT PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK AND WARRANT PURCHASE AGREEMENT is dated
as of June 14, 1994 and entered into by and between DREYER'S GRAND ICE CREAM,
INC., a Delaware corporation (the "Company") and NESTLE HOLDINGS, INC., a
Delaware corporation (the "Purchaser") (this "Amendment").
RECITALS
WHEREAS, on May 6, 1994 the Company and the Purchaser entered into the
Stock and Warrant Purchase Agreement (the "Purchase Agreement"); and
WHEREAS, pursuant to Section 8.10(b) of the Purchase Agreement, the
Company and the Purchaser now wish to amend the Purchase Agreement to clarify
certain provisions.
AMENDMENT
NOW, THEREFORE, the parties agree as follows:
1. All capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Purchase Agreement.
2. The first parenthentical in Section 5.5 is hereby
amended to replace the phrase "individually, any of the events described in
clauses (i) and (ii) are referred to herein as a `Transaction'" with the phrase
"individually, any of the events described in clauses (i) or (ii) is referred
to herein as a `Transaction'" and the second parenthentical in Section 5.5 is
hereby amended to replace the phrase "any such initiation, solicitation,
pursuit, discussions or negotiations referred to in clauses (a) and (b) is
referred to herein as an `Initiating Event'" with the phrase "any such
initiation, solicitation, pursuit, discussions or negotiations referred to in
clauses (a) or (b) is referred to herein as an `Initiating Event'".
3. Clause (ii) of Section 6.2 is hereby amended to
replace the phrase "an additional $2.00 per share in cash for each Share and
Warrant Share acquired by the Purchaser pursuant to Sections 1.1 and 1.2 during
the Contingent Payment Period." with the phrase "an additional $2.00 per share
(subject to equitable adjustment to reflect stock splits, stock dividends,
stock reclassifications or recapitalizations of the Company) in cash for each
Share and Warrant Share acquired by the Purchaser pursuant to Sections 1.1 and
1.2 during the Contingent Payment Period.".
4. Clause (ii) of Section 6.3(a) is hereby amended to
replace the phrase "which have been consented to by the Company" with the
phrase "which have been consented to by the Company," and clause (iv) of
Section 6.3(a) is hereby amended to replace the phrase "if such tender or
exchange offer has been approved by the Board of Directors and" with the phrase
"if such tender or exchange offer has been approved by the Board of Directors
or".
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5. Clause (ii) of Section 8.13(c) is hereby amended to
replace the phrase "the occurrence of any of the events described in clauses
(b) and (c) of Section 1(ii) of the Ben & Jerry's Amendments," with the phrase
"the occurrence of any of the events described in clauses (b) or (c) of Section
1(ii) of the Ben & Jerry's Amendments,".
6. The definition of "Cronk Trust Agreement" in Section
7.1 is hereby amended to replace the phrase "and December 16, 1990, as in
effect on the Effective Date." with the phrase "December 16, 1990 and December
6, 1991, as in effect on the Effective Date."
7. The following definitions are hereby added to their
proper alphabetical location in Section 7.1: "`Four Rogers Trust' shall mean
the Four Rogers Trust created under the Four Rogers Trust Agreement." and
"`Four Rogers Trust Agreement' shall mean that certain Trust Agreement
Establishing Four Rogers Trust dated as of December 23, 1986, as in effect on
the Effective Date."
8. Unless otherwise indicated, all references in this
Amendment to designated "Sections" are to the designated Sections of the
Purchase Agreement.
9. This Amendment shall be effective as of May 6, 1994.
10. Except as modified by the foregoing, the terms and
conditions of the Purchase Agreement shall remain in full force and effect.
[SIGNATURE PAGE TO FOLLOW]
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<PAGE> 3
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Amendment to be executed and delivered by their respective officers thereunto
duly authorized, all as of the day and year first above written.
DREYER'S GRAND ICE CREAM, INC.
/s/ T. Gary Rogers
_____________________________________
By: T. Gary Rogers
Title: Chairman of the Board and
Chief Executive Officer
NESTLE HOLDINGS, INC.
/s/ Mario A. Corti
_____________________________________
By: Mario A. Corti
Title: Senior Vice President-Finance
S-1
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
DREYER'S GRAND ICE CREAM, INC.
FIRST: The name of this Corporation is DREYER'S GRAND ICE CREAM, INC.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the city of Wilmington, County of
New Castle, and the name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The name and mailing address of the incorporator of the
corporation is:
Edmund R. Manwell ................... Manwell & Wes
425 California Street, Suite 1301
San Francisco, CA 94104
FOURTH: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FIFTH: (A) The Corporation is authorized to issue two classes of shares
to be designated, respectively, "Preferred Stock" and "Common Stock." The
number of shares of Preferred Stock authorized to be issued is Ten Million
(10,000,000) and the number of shares of Common Stock authorized to be issued
is Fifteen Million (15,000,000). The stock, whether Preferred Stock or Common
Stock, shall have a par value of $1.00 per share.
(B) The shares of Preferred Stock may be issued from time to time in one
or more series. The Board of Directors is authorized, by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof, including but not
limited to the fixing or alteration of the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preferences of any wholly unissued series of shares of Preferred Stock; and to
increase or decrease the number of shares of any series subsequent to the issue
of shares of that series, but not below the number of shares of such series
then outstanding. In case the number of shares of any series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution originally fixing the number
of shares of such series.
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<PAGE> 2
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind from time to time any or all of the By-laws of the
Corporation; provided, however, any By-law amendment adopted by the Board of
Directors increasing or reducing the authorized number of directors shall
require a resolution adopted by the affirmative vote of not less than
seventy-five percent of the directors. In addition, new by-laws may be adopted
or the By-laws may be amended or repealed by a vote of not less than eighty
percent (80%) of the outstanding stock of the Corporation entitled to vote
thereon.
SEVENTH: (A) The number of directors which shall constitute the whole
Board of Directors of this Corporation shall be as specified in the By-laws of
this Corporation, subject to the provisions of Article SIXTH and this Article
SEVENTH; and
(B) The Board of Directors shall be and is divided into three classes:
Class I, Class II and Class III, which shall be as nearly equal in number as
possible. Each director shall serve for a term ending on the date of the third
annual meeting of stockholders following the annual meeting at which the
director was elected; provided, however, that each initial director in Class I
shall hold office until the annual meeting of stockholders in 1986; each
initial director in Class II shall hold office until the annual meeting of
stockholders in 1987; and each initial director in Class III shall hold office
until the annual meeting of stockholders in 1988. In the event the number of
directors cannot be divided evenly among the three Classes, Class I shall
contain the smallest number of directors and Class III shall contain the
largest number of directors. Notwithstanding the foregoing provisions of this
Article SEVENTH, each director shall serve until his successor is duly elected
and qualified or until his death, resignation or removal.
(C) In the event of any increase or decrease in the authorized number of
directors, (1) each director then serving as such shall nevertheless continue
as a director of the class of which he is a member until the expiration of his
current term, or his earlier resignation, removal from office or death, and (2)
the newly created or eliminate directorship resulting from such increase or
decrease shall be apportioned by the Board of Directors among the three classes
of directors so as to maintain such classes as nearly equal as possible.
EIGHTH: No action shall be taken by the stockholders except at an annual
or special meeting of stockholders. No action shall be taken by stockholders
by written consent.
NINTH: Special meetings of the stockholders of this Corporation for any
purpose or purposes may be called at any time by the Board of Directors, the
Chairman of the Board of Directors, the President or by a committee of the
Board of Directors which has been duly designated by the Board of Directors and
whose powers and authority, as provided in a resolution of the Board of
Directors or in the By-laws of this Corporation, include the power to call such
meetings, but such special meetings may not be called by
2
<PAGE> 3
any other person or persons; provided, however, that if and to the extent that
any special meeting of stockholders may be called by any other person or
persons specified in any certificate filed under Section 151(g) of the Delaware
General Corporation Law designating the number of shares of Preferred Stock to
be issued and the rights, preferences, privileges and restrictions granted to
or imposed on the holders of such designated Preferred Stock, as permitted by
Article FIFTH hereof, then such special meeting may also be called by such
person or persons in the manner, at the times and for the purposes so
specified.
TENTH: Except as may be set forth in a certificate filed under Section
151(g) of the General Corporation Law of the State of Delaware pursuant to
Article FIFTH hereof requiring a specified percentage of the voting power of
any series of Preferred Stock created pursuant thereto, the approval or
authorization of any "Business Combination" (as defined in Article ELEVENTH
hereof) of the Corporation with any "Substantial Stockholder" (as defined in
Article ELEVENTH hereof) (i) shall require the affirmative vote of the holders
of not less than eighty percent (80%) of the total voting power of all
outstanding shares of stock of the Corporation having the right to vote in
respect of such Business Combination, and (ii) also shall require the
affirmative vote of the holders of not less than a majority of the voting power
of all outstanding shares of stock so entitled to vote held by stockholders
other than such Substantial Stockholder and its Affiliates and Associates;
provided, however, that the voting requirements provided by clauses (i) and
(ii) above shall not be applicable if:
(A) The Business Combination was approved by the Board of Directors of the
Corporation prior to the time the Substantial Stockholder in questions first
became a Substantial Stockholder; or
(B) The Business Combination was approved by the Board of Directors of the
Corporation after the time the Substantial Stockholder in question first became
a Substantial Stockholder, but only if such Substantial Stockholder obtained
the unanimous approval of the Board of Directors of the Corporation to his
becoming a Substantial Stockholder, which approval was obtained prior to his
becoming a Substantial Stockholder; or
(C) The Business Combination is solely between the Corporation and another
corporation, fifty percent (50%) or more of the voting stock of which is owned
by the Corporation and none of which is owned by a Substantial Stockholder,
provided that each stockholder of the Corporation receives the same type of
consideration in such transaction as every other stockholder of the same class
in proportion to his stockholdings and each holder of Common Stock of the
Corporation receives or retains Common Stock in the surviving corporation or in
any other corporation which is a party to such Business Combination; or
(D) All of the following conditions are satisfied:
3
<PAGE> 4
(1) The cash or fair market value of the property, securities or "Other
Consideration To Be Received" (as defined in Article ELEVENTH hereof) per
share by holders of Common Stock of the Corporation in the Business
Combination is not less than the higher of (i) the highest per share price
(including brokerage commissions, soliciting dealers' fees, dealer-management
compensation, and other expenses, including, but not limited to, costs of
newspaper advertisements, printing expenses and attorneys' fees) paid by such
Substantial Stockholder in acquiring any of its holdings of Common Stock of
the Corporation or (ii) an amount which bears the same or a greater percentage
relationship to the market price of the Common Stock of the Corporation
immediately prior to the announcement of such Business Combination as the
highest per share price determined in (i) above bears to the market price of
the Common Stock of the Corporation immediately prior to the commencement of
acquisition of the Common Stock of the Corporation by such Substantial
Stockholder, but in no event in excess of two times the highest per share
price determined in (i) above;
(2) After becoming a Substantial Stockholder and prior to the
consummation of such Business Combination, (i) such Substantial Stockholder
shall not have acquired any newly issued shares of capital stock, directly or
indirectly, from the Corporation (except in connection with any Stock Option
Plan of the Corporation or upon conversion of convertible securities acquired
by it prior to becoming a Substantial Stockholder or upon compliance with the
provision of this Article TENTH or as a result of a pro rata stock dividend or
stock split or other recapitalization) and (ii) such Substantial Stockholder
shall not have received the benefit, directly or indirectly (except
proportionately as a stockholder) of any loans, advances, guarantees, pledges
or other financial assistance or tax credits provided by the Corporation, or
made any major changes in the business or equity capital structure of the
Corporation; and
(3) A proxy statement meeting the requirements of the Securities Exchange
Act of 1934, as amended, and the applicable rules and regulations thereunder,
whether or not the Corporation is then subject to such requirements, shall be
mailed to the stockholders of the Corporation for the purpose of soliciting
stockholder approval of such Business Combination and shall contain,
prominently displayed, (i) any recommendations as to the advisability (or
inadvisability) of the Business Combination which the Continuing Directors, or
any Outside Directors, may choose to state, and (ii) the opinion of a
reputable national investment banking firm as to the fairness (or not) of the
terms of such Business Combination, from the point of view of the stockholders
of the Corporation who are not Substantial Stockholders or their Affiliates or
Associates (such investment banking firm to be engaged solely on behalf of the
stockholders who are not Substantial Stockholders or their Affiliates or
Associates, to be paid a reasonable fee for their services by the Corporation
upon receipt of such opinion, to be an investment banking firm which has not
previously been associated with any such Substantial
4
<PAGE> 5
Stockholder and, if there are then any such directors, to be selected by a
majority of the Continuing Directors and Outside Directors).
ELEVENTH: As used in this Certificate of Incorporation, the terms
hereafter defined shall have the following meanings:
(A) The terms "Affiliate" and "Affiliated with" shall mean, with respect
to a specific Person, a Person that, directly or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
(B) The term "Associate" shall mean, when used to indicate a relationship
with any Person, (1) any corporation, partnership, association or other
organization (other than the Corporation or a majority-owned subsidiary of the
Corporation) of which such Person is an officer, partner or, directly or
indirectly, Beneficial Owner of ten percent (10%) or more of any class of
equity securities or other beneficial or voting interest, (2) any trust or
other estate in which such Person has a substantial beneficial interest or as
to which such Person serves as trustee or in a similar fiduciary capacity, (3)
any relative or spouse of such Person, or any relative of such spouse, who has
the same home as such Person, or (4) any investment company registered under
the Investment Company Act of 1940 for which such Person or any Affiliate of
such Person serves as investment adviser.
(C) A Person shall be considered the "Beneficial Owner" of any shares or
other beneficial or voting interest (whether or not owned of record):
(1) With respect to which such Person or any Affiliate or Associate of
such Person directly or indirectly has or shares (i) voting power, including
the power to vote or to direct the voting of such shares or interests and/or
(ii) investment power, including the power to dispose of or to direct the
disposition of such shares or interests;
(2) Which such Person or Affiliate or Associate of such Person has (i)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, and/or (ii) the right to vote pursuant to
any agreement, arrangement or understanding (whether such right is
exercisable immediately or only after the passage of time); or
(3) Which are Beneficially Owned within the meaning of (1) or (2) of
this definition by any other Person with which such first-mentioned Person
or any of its Affiliates or Associates has any agreement, arrangement or
understanding, written or oral, with respect to acquiring, holding, voting
or
5
<PAGE> 6
disposing of any shares of stock of the Corporation or any subsidiary
of the Corporation or acquiring, holding or disposing of all or any
Substantial Part of the assets or business of the Corporation or a
subsidiary of the Corporation.
For the purpose only of determining whether a Person is the Beneficial
Owner of a percentage of outstanding shares of the Corporation specified
in this Certificate of Incorporation, such shares shall be deemed to
include any shares which may be issuable pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants, options or otherwise and which are deemed to
be Beneficially Owned by such Person pursuant to the foregoing provisions
of this definition.
(D) The term "Business Combination" shall mean (1) any merger or
consolidation of the Corporation or a subsidiary of the Corporation with or
into a Substantial Stockholder, (2) any sale, lease, exchange, transfer or
other disposition, including, without limitation, a mortgage or any other
security device, in a single transaction or series of related transactions, of
all or any Substantial Part of the assets of the Corporation (including
without limitation, any voting securities of a subsidiary) or of a subsidiary
of the Corporation to a Substantial Stockholder, (3) any merger or
consolidation of a Substantial Stockholder with or into the Corporation or a
subsidiary of the Corporation, (4) any sale, lease, exchange, transfer or
other disposition, including without limitation, a mortgage or other security
device, in a single transaction or series of related transactions, of all or
any Substantial Part of the assets of a Substantial Stockholder to the
Corporation or a subsidiary of the Corporation, (5) the issuance of any
securities of the Corporation or a subsidiary of the Corporation to a
Substantial Stockholder, except if such issuance is in connection with any
Stock Option Plan of the Corporation, (6) the acquisition by the Corporation
or a subsidiary of the Corporation of any securities of a Substantial
Stockholder, except if such acquisition is in connection with shares acquired
by the Corporation as consideration for shares issued pursuant to any Stock
Option Plan of the Corporation, (7) any reclassification of Common Stock of
the Corporation, or any recapitalization involving Common Stock of the
Corporation, consummated within five (5) years after a Substantial Stockholder
becomes a Substantial Stockholder, (8) any liquidation or dissolution of the
Corporation proposed, directly or indirectly, by or on behalf of a Substantial
Stockholder, (9) any merger or consolidation of the Corporation proposed by or
on behalf of a Substantial Stockholder, unless the surviving or consolidated
corporation, as the case may be, has a provision in its certificate of
incorporation substantially identical to Articles TENTH, ELEVENTH and TWELFTH
hereof, and (10) any agreement, contract or other arrangement providing for
any of the transactions described in this definition of Business Combination.
A Business Combination with a Person shall be deemed to be a
6
<PAGE> 7
Business Combination with a Substantial Stockholder if such Person is a
Substantial Stockholder at any of the following times: (i) the date any
definitive agreement relating to a Business Combination is entered into or
amended; (ii) the record date for the determination of stockholders entitled to
notice of and to vote on a Business Combination; and (iii) immediately prior
to the consummation of a Business Combination.
(E) The term "Continuing Director" shall mean a director who was a
member of the Board of Directors of the Corporation immediately prior to the
time that any Substantial Stockholder involved in the proposed Business
Combination first became a Substantial Stockholder.
(F) The term "Other Consideration To Be Received" shall include, without
limitation, shares of stock of the Corporation retained by any of its
stockholders other than a Substantial Stockholder or its Affiliates or
Associates in the event of a Business Combination with such Substantial
Stockholder in which the Corporation is the surviving entity.
(G) The term "Outside Director" shall mean a director who is not (1) an
officer or employee of the Corporation or any relative of an officer or
employee, (2) a Substantial Stockholder or an officer, director, employee,
Associate or Affiliate of a Substantial Stockholder, or a relative of any of
the foregoing, or (3) a Person having a direct or indirect material business
relationship with the Corporation.
(H) The term "Person" shall mean any person, partnership, corporation,
group or other entity (other than the Corporation, any subsidiary of the
Corporation, or a trustee holding stock for the benefit of any of the
employees of the Corporation or its subsidiaries, pursuant to one or more
employee benefit plans or arrangements, but only in such capacity). When two
or more persons act as a partnership, limited partnership, syndicate, joint
venture, association or other group for the purpose of acquiring, holding or
disposing of shares of stock, such partnerships, syndicate, joint venture,
association or group shall be deemed a "Person."
(I) The term "Substantial Stockholder" shall mean any Person which,
together with any Affiliate or Associate, is the Beneficial Owner of ten
percent (10%) or more of the outstanding Common Stock of the Corporation or of
the outstanding voting stock of the Corporation or any Person which, together
with any Affiliate or Associate, was at any time within the five (5) years
preceding the date for such determination the Beneficial Owner of ten percent
(10%) or more of the then outstanding Common Stock of the Corporation or of
the outstanding voting stock of the Corporation.
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<PAGE> 8
(J) The term "Substantial Part" shall mean more than ten percent (10%)
of the total assets of the individual, corporation, partnership or other
person or entity in question as of the end of its most recent fiscal year
ending prior to the time the determination is being made.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereinafter prescribed by statute, and all rights conferred by
Stockholders herein are granted subject to this reservation. Notwithstanding
the foregoing, the provisions set forth in Articles SIXTH, SEVENTH, EIGHTH,
NINTH, TENTH, ELEVENTH and this Article TWELFTH may not be amended, altered,
changed or repealed in any respect (nor may any cumulative voting provision be
adopted) nor may any other provision be amended, adopted or repealed which
would have the effect of modifying or permitting circumvention of such
provision, if there is then a Substantial Stockholder, unless such amendment,
alteration, change or repeal is approved by the affirmative vote of the holders
of at least eighty percent (80%) of the total voting power of the Corporation
and also by the affirmative vote of the holders of not less than a majority of
the total voting power of the Corporation other than a Substantial Stockholder
and any Affiliates and Associates of such a Substantial Stockholder.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation to do business both within and without the
State of Delaware, and in pursuance of the Delaware General Corporation Law,
does hereby make and file this Certificate.
Dated: April 5, 1985 /s/ Edmund R. Manwell
________________________
Edmund R. Manwell
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<PAGE> 9
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Dreyer's Grand Ice Cream, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That by a Unanimous Written Consent of the Board of Directors of
Dreyer's Grand Ice Cream, Inc., resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and calling a meeting of the
stockholders of said corporation for consideration thereof. The resolution
setting forth the proposed amendment is as follows:
RESOLVED, that Article Fifth, Paragraph A of this corporation's
Certificate of Incorporation be amended to read in its entirety as
follows:
"(A) The Corporation is authorized to issue two classes
of shares to be designated, respectively, "Preferred Stock" and
"Common Stock." The number of shares of Preferred Stock
authorized to be issued is Ten Million (10,000,000) and the
number of shares of Common Stock authorized to be issued is
Thirty Million (30,000,000). The stock, whether Preferred Stock
or Common Stock, shall have a par value of $1.00 per share."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Dreyer's Grand Ice Cream, Inc. has caused this
certificate to be signed by William F. Cronk, III, its President, and Edmund R.
Manwell, its Secretary, this 28th day of September, 1990.
BY: /s/ William F. Cronk
------------------------------------
William F. Cronk, III, President
ATTEST: /s/ Edmund R. Manwell
--------------------------------
Edmund R. Manwell, Secretary
<PAGE> 10
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
Dreyer's Grand Ice Cream, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
does hereby certify:
FIRST: That at a meeting of the Board of Directors of Dreyer's Grand
Ice Cream, Inc., resolutions were duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and calling a meeting of the stockholders of
said corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
"RESOLVED, that this corporation's Certificate of Incorporation be
amended to add Article Thirteenth to read in its entirety as follows:
'THIRTEENTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, as the same
exists or hereafter may be amended, or (iv) for any transaction from
which the director derived an improper personal benefit. If the
Delaware General Corporation Law hereafter is amended to authorize the
further elimination or limitation of the liability of directors, then
the liability of a director of the Corporation, in addition to the
limitation on personal liability provided herein, shall be limited to
the fullest extent permitted by the amended Delaware General
Corporation Law. Any repeal or modification of this paragraph by the
stockholders of the Corporation shall be prospective only and shall
not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or
modification.'
RESOLVED FURTHER, that any officer, acting alone, is hereby authorized
and directed to execute all documents and to take such necessary action as may
be required to effectuate the foregoing amendment, including the execution and
filing with the Secretary of State of the State of Delaware a Certificate of
Amendment to the Certificate of Incorporation."
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SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by T. Gary Rogers, its Chairman of the Board, and attested by Edmund R.
Manwell, its Secretary, this 8th day of May, 1987.
By: /s/ T. Gary Rogers
------------------------------
T. Gary Rogers
Chairman of the Board
Attest: /s/ Edmund R. Manwell
--------------------------
Edmund R. Manwell
Secretary
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DREYER'S GRAND ICE CREAM, INC.
CERTIFICATE OF DESIGNATION
OF SERIES A CONVERTIBLE
PREFERRED STOCK SETTING FORTH THE POWERS,
PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF
SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, Dreyer's Grand Ice Cream, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
of the Corporation by paragraph (B) of Article FIFTH of the Certificate of
Incorporation of the Corporation (the "Certificate of Incorporation"), and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation on June 24,
1993, adopted the following resolution creating a series of Preferred Stock
designated as Series A Convertible Preferred Stock.
RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the General Corporation Law of
the State of Delaware and the provisions of the Certificate of Incorporation, a
series of the class of authorized Preferred Stock, par value $1.00 per share,
of the Corporation is hereby created and that the designation and number of
shares thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations and restrictions thereof, are as follows:
Section 1. Designation and Number. (a) The shares of such series
shall be designated "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock"). The number of shares initially constituting the Series A
Preferred Stock shall be 1,007,522, which number may be decreased (but not
increased) by the Board of Directors without a vote of stockholders; provided,
however, that such number may not be decreased (i) prior to conversion or
redemption of all of the Corporation's 6.25% Subordinated Convertible Notes due
June 30, 2001 (the "Notes"), and, if the Notes are converted into shares of
Series B Convertible Preferred Stock, par value $1.00 per share (the "Series B
Preferred Stock"), prior
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to the conversion or redemption of all of the shares of Series B Preferred
Stock and (ii) after conversion or redemption of all of the Notes or shares of
Series B Preferred Stock, below the number of then outstanding shares of
Series A Preferred Stock.
(b) The Series A Preferred Stock shall, except as provided in
Section 3(b) hereof, with respect to dividend rights and rights on liquidation,
dissolution or winding up, rank senior to the Common Stock, par value $1.00 per
share, of the Corporation (the "Common Stock").
Section 2. Dividends and Distributions. (a) No dividend or
distribution in cash, shares of stock or other property on the Common Stock
shall be declared or paid or set apart for payment unless, at the same time,
the same dividend or distribution is declared or paid or set apart, as the case
may be, on the Series A Preferred Stock payable on the same date, at the rate
per share of Series A Preferred Stock based upon the number of shares of Common
Stock into which each share of Series A Preferred Stock is convertible (as
adjusted pursuant to Section 8) on the record date for such dividend or
distribution on the Common Stock.
(b) In the event that (i) any dividend payable on the Series A
Preferred Stock pursuant to Section 2(a) shall not have been paid in full, (ii)
the Corporation shall have breached in any material respect any of the
covenants (provided the applicable covenant shall then be in effect pursuant to
the terms of the Purchase Agreement (as defined in Section 11)) set forth in
Sections 6.1 through 6.4, 6.14, 6.16, 6.17, 6.18 and 13.10 of the Purchase
Agreement and such breach continues for a period of 30 days after notice in
writing by the holders of shares of Series A Preferred Stock (it being
understood that the Corporation shall not be deemed in breach of its obligation
under Section 13.10 with respect to any amount in dispute (but not any
undisputed portion of such amount) unless and until the Corporation shall have
specifically admitted in writing its obligation to pay such amount or there
shall have been a final non-appealable judgment that such amount is due and
owing by the Corporation), (iii) the Corporation shall have failed to redeem
shares of Series A Preferred Stock pursuant to Section 5(a), whether or not by
reason of the absence of legally available funds or (iv) default shall be made
with respect to any indebtedness of the Corporation with a principal amount
outstanding in excess of $5,000,000 with the result that such indebtedness has
become due and payable prior to the date on which the same would otherwise have
become due and payable, then, in any such case, the holders of Series A
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Preferred Stock shall be entitled to annual dividends (in addition to any
dividend payable pursuant to Section 2(a)) at a rate of 2% per annum from the
applicable dividend payment date or date of such breach, default or failure to
redeem, as the case may be, out of funds legally available therefor, payable
quarterly on the last Business Day of each March, June, September and December,
through the date of payment of such dividend, cure of such breach or default or
redemption, as the case may be.
Section 3. Voting Rights. In addition to any voting rights provided
by law, the holders of shares of Series A Preferred Stock shall have the
following voting rights:
(a) So long as any of the Series A Preferred Stock is outstanding,
each share of Series A Preferred Stock shall entitle the holder thereof to vote
on all matters submitted to a vote of the stockholders of the Corporation,
voting together as a single class with the holders of Common Stock. The
holders of each share of Series A Preferred Stock shall be entitled to vote
with respect to each share of Series A Preferred Stock held by each such holder
a number of votes equal to the number of votes which could be cast in such vote
by a holder of the number of shares of Common Stock into which such share of
Series A Preferred Stock is convertible (as adjusted pursuant to Section 8) on
the record date for such vote.
(b) The affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of Series A Preferred Stock, voting together as a class, in
person or by proxy, at a special or annual meeting of stockholders called for
the purpose, shall be necessary to (i) authorize, increase the authorized
number of shares of, or issue (including on conversion or exchange of any
convertible or exchangeable securities or by reclassification) any shares of
any class or classes or series within a class of the Corporation's capital
stock ranking prior to or pari passu with (either as to dividends or upon
voluntary or involuntary liquidation, dissolution or winding up) the Series A
Preferred Stock (other than the shares of Series B Preferred Stock and shares
of participating preferred stock issuable upon exercise of the Rights (as
defined in Section 11)); (ii) increase the authorized number of shares of, or
issue (including on conversion or exchange of any convertible or exchangeable
securities or by reclassification) any shares of, Series A Preferred Stock; or
(iii) authorize, adopt or approve an amendment to the Certificate of
Incorporation of the Corporation or this Certificate of Designation which would
increase or decrease the par value of the shares of Series A Preferred Stock,
or
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<PAGE> 15
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect such shares of Series A Preferred Stock
adversely.
(c) If on any date (i) any dividend payable on the Series A
Preferred Stock shall not have been paid in full, (ii) the Corporation shall
have breached in any material respect any of the covenants (provided the
applicable covenant shall then be in effect pursuant to the terms of the
Purchase Agreement) set forth in Sections 6.1 through 6.4, 6.14, 6.16, 6.17,
6.18 and 13.10 of the Purchase Agreement and such breach continues for a period
of 30 days after notice in writing by the holders of shares of Series A
Preferred Stock (it being understood that the Corporation shall not be deemed
in breach of its obligation under Section 13.10 with respect to any amount in
dispute (but not any undisputed portion of such amount) unless and until the
Corporation shall have specifically admitted in writing its obligation to pay
such amount or there shall have been a final non-appealable judgment that such
amount is due and owing by the Corporation), (iii) the Corporation shall have
failed to satisfy its obligation to redeem shares of Series A Preferred Stock
pursuant to Section 5(a), whether or not by reason of the absence of legally
available funds therefor or (iv) default shall be made with respect to any
indebtedness of the Corporation with a principal amount outstanding in excess
of $5,000,000 with the result that such indebtedness has become due and payable
prior to the date on which the same would otherwise have become due and
payable, then, in each such case, the number of directors constituting the
Board of Directors of the Corporation shall, without further action, be
increased by one and the holders of shares of Series A Preferred Stock shall
have, in addition to the other voting rights set forth herein, the exclusive
right, voting separately as a single class, to elect such director of the
Corporation who shall be in addition to the remaining directors elected or to
be elected by the other classes of stock entitled to vote therefor, at each
meeting of stockholders held for the purpose of electing directors who are
members of the class of directors which includes such director. Such
additional director shall continue as a director and such additional voting
right shall continue until such time as (A) all dividends accumulated on the
Series A Preferred Stock shall have been paid in full, (B) such breach shall
have been cured, (C) any mandatory redemption obligation provided in Section
5(a) which has become due shall have been satisfied, or (D) all defaults
described in clause (iv) above shall have been cured or waived, as the case may
be, at which time such additional voting right of the holders of Series A
Preferred Stock shall terminate, subject to revesting in the event of each and
every subsequent event of the character indicated above.
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(d) (i) The foregoing rights of holders of shares of Series A
Preferred Stock to take any actions as provided in this Section 3 may be
exercised at any annual meeting of stockholders or at a special meeting of
stockholders held for such purpose as hereinafter provided or at any
adjournment thereof.
So long as such right to vote continues, the Chairman of the Board of
the Corporation may call, and if the holders of Series A Preferred Stock are to
vote separately as a single class, upon the written request of holders of
record of 20% of the outstanding shares of Series A Preferred Stock, addressed
to the Secretary of the Corporation, at the principal office of the
Corporation, the Chairman of the Board of the Corporation shall call, a special
meeting of the holders of shares of Series A Preferred Stock entitled to vote
as provided herein. The Corporation shall use its best efforts to hold such
meeting within 60, but in any event not later than 90, days after delivery of
such request to the Secretary, at the place and upon the notice provided by law
and in the By-laws of the Corporation for the holding of meetings of
stockholders, provided that the Corporation shall not be required to call such
a special meeting if such request is received fewer than 90 days before the
date fixed for the next ensuing annual meeting of stockholders of the
Corporation, at which meeting such newly created directorship shall be filled
by the holders of the Series A Preferred Stock.
(ii) At each meeting of stockholders at which the holders of shares
of Series A Preferred Stock shall have the right, voting separately as a single
class, to elect one director of the Corporation as provided in this Section 3
or to take any action, the presence in person or by proxy of the holders of
record of one-third of the total number of shares of Series A Preferred Stock
then outstanding and entitled to vote on the matter shall be necessary and
sufficient to constitute a quorum. At any such meeting or at any adjournment
thereof:
(A) the absence of a quorum of the holders of shares of Series A
Preferred Stock shall not prevent the election of directors other than those to
be elected by the holders of shares of Series A Preferred Stock and the absence
of a quorum of the holders of shares of any other class or series of capital
stock shall not prevent the election of the directors to be elected by the
holders of shares of Series A Preferred Stock or the taking of any other action
as provided in this Section 3; and
(B) in the absence of a quorum of the holders of shares of Series
A Preferred Stock, a majority of the holders of such shares present in person
or by
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proxy shall have the power to adjourn the meeting as to the actions to be taken
by the holders of shares of Series A Preferred Stock from time to time and
place to place without notice other than announcement at the meeting
until a quorum shall be present.
For the taking of any action as provided in paragraphs (b) and (c) of this
Section 3 by the holders of shares of Series A Preferred Stock, each such
holder shall have one vote for each share of such stock standing in his name on
the transfer books of the Corporation as of any record date fixed for such
purpose or, if no such date be fixed, at the close of business on the Business
Day (as defined in Section 11) next preceding the day on which notice is given,
or if notice is waived, at the close of business on the Business Date next
preceding the day on which the meeting is held.
A director elected by the holders of shares of Series A Preferred
Stock as provided in paragraph (c) of this Section 3 shall, unless his term
shall expire earlier, hold office in accordance with Article SEVENTH of the
Certificate of Incorporation and the By-Laws of the Corporation or until his
successor, if any, is elected and qualified.
In case of the death, resignation or removal of a director elected by
the holders of shares of Series A Preferred Stock as provided in paragraph (c)
of this Section 3, such vacancy may be filled for the unexpired portion of the
term of such director, and the holders of Series A Preferred Stock then
outstanding and entitled to vote for such director may, at a special meeting of
such holders called as provided herein, elect the successor to hold office for
the unexpired term of the director whose place shall be vacant.
The director elected by the holders of shares of Series A Preferred
Stock voting separately as a single class may be removed from office with or
without cause by the vote of the holders of at least 66-2/3% of the outstanding
shares of Series A Preferred Stock. A special meeting of the holders of shares
of Series A Preferred Stock may be called in accordance with the procedures set
forth in subparagraph (d)(i) of this Section 3.
Section 4. Certain Restrictions. (a) Whenever dividends on the Series
A Preferred Stock shall not have been paid in full or any of the events set
forth in clauses (ii) through (iv) of Section 3(c) shall have occurred and
shall not have been remedied as provided in Section 3(c), the Corporation shall
not declare or
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pay dividends, or make any other distributions, on any shares of Parity Stock
or Junior Stock, except (1) dividends or distributions payable in Junior Stock
and (2) dividends or distributions paid ratably on the Series A Preferred
Stock and all Parity Stock on which dividends are payable or in arrears, in
proportion to the total amounts to which the holders of all shares of the
Series A Preferred Stock and such Parity Stock are then entitled.
(b) Whenever dividends on the Series A Preferred Stock shall not
have been paid in full or any of the events set forth in clauses (ii) through
(iv) of Section 3(c) shall have occurred and shall not have been remedied as
provided in Section 3(c), the Corporation shall not: (A) redeem, purchase or
otherwise acquire for consideration any shares of Parity Stock or Junior Stock;
provided, however, that (1) the Corporation may at any time redeem, purchase or
otherwise acquire shares of Parity Stock in exchange for any shares of Junior
Stock, (2) the Corporation may accept shares of any Parity Stock or Junior
Stock for conversion into shares of Junior Stock, and (3) the Corporation may
at any time redeem, purchase or otherwise acquire shares of any Parity Stock
pursuant to any mandatory redemption, put, sinking fund or other similar
obligation, pro rata with the Series A Preferred Stock in proportion to the
total amount then required to be applied by it to redeem, repurchase or
otherwise acquire shares of Series A Preferred Stock and shares of such Parity
Stock; or (B) redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock; provided, however, that the Corporation (1)
may accept shares of Series A Preferred Stock surrendered for conversion into
shares of capital stock of the Corporation pursuant to Section 8, (2) may elect
to redeem all outstanding shares of Series A Preferred Stock pursuant to
Section 5(a) or (3) may redeem shares of Series A Preferred Stock pro rata
pursuant to Section 5(a).
(c) Notwithstanding the foregoing, nothing herein shall prevent the
Corporation from redeeming the Rights (as defined in Section 11) at a price not
to exceed $.01 per Right.
(d) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, pursuant to
paragraph (b) of this Section 4, purchase such shares at such time and in such
manner.
Section 5. Redemption. (a) On June 30, 2001, the Corporation shall
redeem, out of funds legally available therefor, all outstanding shares of
Series A Preferred
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Stock, by paying therefor the Stated Value per share, plus an amount equal to
all accrued but unpaid dividends to such date, in cash (the "Redemption
Price").
(b) Notice of any redemption of shares of Series A Preferred
Stock pursuant to this Section 5 shall be mailed at least 30 but not more than
60 days prior to the date fixed for redemption to each holder of shares of
Series A Preferred Stock to be redeemed, at such holder's address as it
appears on the transfer books of the Corporation. In order to facilitate the
redemption of shares of Series A Preferred Stock, the Board of Directors may
fix a record date for the determination of shares of Series A Preferred Stock
to be redeemed.
(c) On the date of any redemption being made pursuant to this
Section 5 which is specified in a notice given pursuant to paragraph (b) of
this Section 5, the Corporation shall wire transfer to such holder the
Redemption Price for the shares of Series A Preferred Stock so redeemed.
Section 6. Reacquired Shares. Any shares of Series A Preferred Stock
converted, redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares of Series A Preferred Stock shall upon their
cancellation, and upon the filing of any document required by the General
Corporation Law of the State of Delaware, become authorized but unissued shares
of Preferred Stock, $1.00 par value, of the Corporation and may be reissued as
part of another series of Preferred Stock, $1.00 par value, of the Corporation,
subject to the conditions or restrictions on issuance set forth in Section 3(b)
or elsewhere herein.
Section 7. Liquidation, Dissolution or Winding Up. (a) If the
Corporation shall commence a voluntary case under the Federal bankruptcy laws
or any other applicable Federal or state bankruptcy, insolvency or similar law,
or consent to the entry of an order for relief in an involuntary case under
such law or to the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation, or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due, or if a decree or order for relief in respect of the Corporation
shall be entered by a court having jurisdiction in the premises in an
involuntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Corporation or of any substantial part of its
property,
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or ordering the winding up or liquidation of its affairs, and any such decree
or order shall be unstayed and in effect for a period of 150 consecutive days
and on account of any such event the Corporation shall liquidate, dissolve or
wind up, or if the Corporation shall otherwise liquidate, dissolve or wind up,
no distribution shall be made (i) to the holders of shares of Junior Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock,
subject to Section 8, shall have received the Liquidation Preference (as
defined in Section 11) with respect to each share, or (ii) to the holders of
shares of Parity Stock unless the holders of shares of Series A Preferred
Stock, subject to Section 8, shall have received distributions made ratably to
the holders of the Series A Preferred Stock and the Parity Stock in proportion
to the total amounts to which the holders of all such shares of Series A
Preferred Stock and Parity Stock would be entitled upon such liquidation,
dissolution or winding up.
(b) Neither the consolidation, merger or other business
combination of the Corporation with or into any other Person or Persons nor
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 7.
Section 8. Conversion. (a)(i) Subject to the provisions for
adjustment hereinafter set forth, each share of Series A Preferred Stock shall
be convertible at the option of the holder at any time after the Issue Date
into shares of Common Stock at the Conversion Ratio (as defined in Section 11).
(b) Any conversion by the holders of the Series A Preferred Stock
shall be in an aggregate amount with a Stated Value equal to $5,000,000 or
$1,000,000 increments in excess thereof and, in the case of an individual
holder, the amount so converted shall be at least $1,000,000 or all shares of
Series A Preferred Stock of such holder. Conversion of the Series A Preferred
Stock may be effected by any such holder upon the surrender to the Corporation
at the principal office of the Corporation in the State of California or at the
office of any agent or agents of the Corporation, as may be designated by the
Board of Directors of the Corporation (the "Transfer Agent"), of the
certificate(s) for such Series A Preferred Stock to be converted, accompanied
by a written notice stating that such holder elects to convert all or a
specified whole number of such shares in accordance with the provisions of this
Section 8 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In case
any holder's notice shall specify a name or names other than that of such
holder, such notice shall be accompanied by payment of all
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transfer taxes payable upon the issuance of shares of Common Stock in such name
or names. Other than such taxes, the Corporation will pay any and all issue
and other taxes (other than taxes based on income) that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
Series A Preferred Stock pursuant hereto. As promptly as practicable, and in
any event within five Business Days after the surrender of such certificate or
certificates and the receipt of such notice relating thereto and, if
applicable, payment of all transfer taxes (or the demonstration to the
satisfaction of the Corporation that such taxes have been paid), the
Corporation shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Common Stock, to which the holder of shares of Series A Preferred
Stock being converted shall be entitled and (ii) if less than the full number
of shares of Series A Preferred Stock evidenced by the surrendered certificate
or certificates is being converted, a new certificate or certificates, of like
tenor, for the number of shares evidenced by such surrendered certificate or
certificates less the number of shares being converted. Such conversion shall
be deemed to have been made at the close of business on the date of giving such
notice so that the rights of the holder thereof as to the shares being
converted shall cease except for the right to receive shares of Common Stock,
in accordance herewith, and the person entitled to receive the shares of Common
Stock shall be treated for all purposes as having become the record holder of
such shares of Common Stock at such time, so long as certificates for such
holder's shares of Series A Preferred Stock are delivered to the Corporation
within two Business Days after the giving of notice. In any other case of
conversion at the holder's option, the date of delivery of the certificates for
the shares of Series A Preferred Stock shall be deemed to be the date of
conversion.
(c) The Conversion Ratio shall be subject to adjustment from time
to time in certain instances as hereinafter provided.
(d) In connection with the conversion of any shares of Series A
Preferred Stock into Common Stock, no fractions of shares of Common Stock shall
be issued, but in lieu thereof the Corporation shall pay a cash adjustment in
respect of such fractional interest in an amount equal to such fractional
interest multiplied by the Current Market Price per share of Common Stock on
the Trading Day on which such shares of Series A Preferred Stock are deemed to
have been converted. If more than one share of Series A Preferred Stock shall
be surrendered for conversion by the same holder at the same time, the number
of full shares of Common Stock issuable on conversion thereof shall be computed
on
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the basis of the total number of shares of Series A Preferred Stock so
surrendered. Promptly upon conversion, the Corporation shall pay to the holder
of shares of Series A Preferred Stock so converted out of funds legally
available, an amount equal to any accrued and unpaid dividends on the shares of
Series A Preferred Stock surrendered for conversion to the date of such
conversion, together with cash in lieu of any fractional interest of such
holder.
(e)(i) The Corporation shall at all times reserve and keep
available for issuance upon the conversion of the Series A Preferred Stock,
free from any preemptive rights such number of its authorized but unissued
shares of Common Stock as will from time to time be sufficient to permit the
conversion of all outstanding shares of Series A Preferred Stock into Common
Stock, and shall take all action required to increase the authorized number of
shares of Common Stock if necessary to permit the conversion of all outstanding
shares of Series A Preferred Stock.
(ii) Upon conversion of shares of Series A Preferred Stock as
contemplated by this Section 8, the Corporation shall issue together with each
such share of Common Stock one Right (or other securities in lieu thereof), or
any rights issued to holders of Common Stock of the Corporation in addition
thereto or in replacement therefor, whether or not such rights shall be
exercisable at such time, but only if such rights are issued and outstanding
and held by other holders of Common Stock of the Corporation at such time and
have not expired.
(f) The Conversion Ratio will be subject to adjustment from time to
time as follows:
(i) In case the Corporation shall at any time or from time to time
after the Issue Date (A) pay a dividend, or make a distribution, on the
outstanding shares of Common Stock in shares of Common Stock, (B) subdivide the
outstanding shares of Common Stock, (C) combine the outstanding shares of
Common Stock into a smaller number of shares or (D) issue by reclassification
of the shares of Common Stock any shares of capital stock of the Corporation,
then, and in each such case, the Conversion Ratio in effect immediately prior
to such event or the record date therefor, whichever is earlier, shall be
adjusted so that the holder of any shares of Series A Preferred Stock
thereafter surrendered for conversion into Common Stock shall be entitled to
receive the number of shares of Common Stock or other securities of the
Corporation which such holder would have owned or have been entitled to receive
after the happening of any of the events described
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above, had such shares of Series A Preferred Stock been surrendered for
conversion immediately prior to the happening of such event or the record date
therefor, whichever is earlier. An adjustment made pursuant to this clause
(i) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date for
the determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of such subdivision,
reclassification or combination, at the close of business on the day upon which
such corporate action becomes effective. No adjustment shall be made pursuant
to this clause (i) in connection with any transaction to which paragraph (g)
applies.
(ii) In case the Corporation shall issue shares of Common Stock (or
rights, warrants or other securities convertible into or exchangeable for
shares of Common Stock) after the Issue Date at a price per share (or having a
conversion price per share) less than the Current Market Price per share of
Common Stock as of the date of issuance of such shares (or, in the case of
convertible or exchangeable securities, at less than the Current Market Price
as of the date of issuance of the rights, warrants or other securities in
respect of which shares of Common Stock were issued), then, and in each such
case, the Conversion Ratio shall be adjusted so that the holder of each share
of Series A Preferred Stock shall be entitled to receive, upon the conversion
thereof into Common Stock, the number of shares of Common Stock determined by
multiplying (A) the Conversion Ratio in effect on the day immediately prior to
such date by (B) a fraction, the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding on such date and (2) the number of
additional shares of Common Stock issued (or into which the convertible
securities may convert), and the denominator of which shall be the sum of (x)
the number of shares of Common Stock outstanding on such date and (y) the
number of shares of Common Stock purchasable at the then Current Market Price
per share with the aggregate consideration receivable by the Corporation for
the total number of shares of Common Stock so issued (or into which the rights,
warrants or other convertible securities may convert). An adjustment made
pursuant to this clause (ii) shall be made on the next Business Day following
the date on which any such issuance is made and shall be effective
retroactively to the close of business on the date of such issuance. For
purposes of this clause (ii), the aggregate consideration receivable by the
Corporation in connection with the issuance of shares of Common Stock or of
rights, warrants or other securities convertible into shares of Common Stock
shall be deemed to be equal to the sum of the aggregate offering price (before
deduction of underwriting discounts or commissions and expenses
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<PAGE> 24
payable to third parties) of all such Common Stock, rights, warrants and
convertible securities plus the minimum aggregate amount, if any, payable upon
exercise or conversion of any such rights, warrants and convertible
securities into shares of Common Stock. The issuance or reissuance of any
shares of Common Stock (whether treasury shares or newly issued shares)
pursuant to (a) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the conversion ratio pursuant to clause (i) of this paragraph
(f), or (b) any restricted stock or stock option plan or program of the
Corporation involving the grant of options or rights (x) at below Current
Market Price (but not less than 85% of Current Market Price) so long as the
number of shares of Common Stock issuable in respect of such options or rights
granted in any fiscal year does not exceed 0.5% of the outstanding shares of
Common Stock as of the beginning of such fiscal year and so long as the
aggregate number of shares of Common Stock issuable in respect of such options
or rights granted after June 24, 1993 does not exceed 2% of the outstanding
shares of Common Stock as of June 24, 1993 or (y) pursuant to the average
trading price formula contained in stock option plans of the Corporation as in
effect on June 24, 1993 or (c) any option, warrant, right, or convertible
security outstanding as of the date hereof (other than the Rights or similar
securities), or (d) the terms of a firmly committed underwritten public
offering, shall not be deemed to constitute an issuance of Common Stock or
convertible securities by the Corporation to which this clause (ii) applies.
Upon the expiration unexercised of any options, warrants or rights to convert
any convertible securities for which an adjustment has been made pursuant to
this clause (ii), the adjustments shall forthwith be reversed to effect such
rate of conversion as would have been in effect at the time of such expiration
or termination had such options, warrants or rights or convertible securities,
to the extent outstanding immediately prior to such expiration or termination,
never been issued. Nothing herein shall limit the right of any holder to an
anti-dilution adjustment in the event that there shall occur a "flip-in" or
"flip-over" event under the Rights Agreement or any similar plan or agreement
of the Corporation. No adjustment shall be made pursuant to this clause (ii)
in connection with any transaction to which paragraph (g) applies.
(iii) In case the Corporation shall at any time or from time to time
after the Issue Date declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or other
securities or property or rights or warrants to subscribe for securities of the
Corporation or any of its Subsidiaries by way of dividend or spinoff), on its
Common Stock, other than (A) dividends not exceeding the amount permitted
pursuant to clause (i) of
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<PAGE> 25
Section 6.4 of the Purchase Agreement or (B) dividends or distributions of
shares of Common Stock which are referred to in clause (i) of this paragraph
(f), then, and in each such case, the Conversion Ratio shall be adjusted so
that the holder of each share of Series A Preferred Stock shall be entitled
to receive, upon the conversion thereof, the number of shares of Common Stock
determined by multiplying (1) the applicable Conversion Ratio on the day
immediately prior to the record date fixed for the determination of
stockholders entitled to receive such dividend or distribution by (2) a
fraction, the numerator of which shall be the Current Market Price of the
Common Stock for the period of 20 Trading Days preceding such record date, and
the denominator of which shall be such Current Market Price of the Common Stock
less the Fair Market Value (as defined in Section 11) per share of Common Stock
(as determined in good faith by the Board of Directors of the Corporation, a
certified resolution with respect to which shall be mailed to each holder of
shares of Series A Preferred Stock) of such dividend or distribution. No
adjustment shall be made pursuant to this clause (iii) in connection with any
transaction to which paragraph (g) applies.
(iv) For purposes of this paragraph (f), the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Corporation.
(v) The term "dividend," as used in this paragraph (h), shall
mean a dividend or other distribution upon stock of the Corporation.
(vi) Anything in this paragraph (f) to the contrary
notwithstanding, the Corporation shall not be required to give effect to any
adjustment in the Conversion Ratio (x) if such adjustment was previously taken
into account in determining the Conversion Ratio on the Issue Date, (y) if,
in connection with any event which would otherwise require an adjustment
pursuant to this paragraph (f), the holders of Series A Preferred Stock have
received the dividend or distribution to which such holders are entitled under
Section 2 hereof or (z) unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the Conversion Ratio by at least
one one-hundredth of one share of Common Stock, and when the cumulative net
effect of more than one adjustment so determined shall be to change the
Conversion Ratio by at least one one-hundredth of one share of Common Stock,
such change in Conversion Ratio shall thereupon be given effect.
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<PAGE> 26
(vii) The certificate of any firm of independent public accountants of
recognized national standing selected by the Board of Directors of the
Corporation (which may be the firm of independent public accountants regularly
employed by the Corporation) shall be presumptively correct for any computation
made under this paragraph (f).
(viii) If the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted by this
paragraph (f) or in the Conversion Ratio then in effect shall be required by
reason of the taking of such record.
(g) In the case of any consolidation or merger of the Corporation
with or into another corporation, or in case of any sale or conveyance to
another corporation of all or substantially all of the assets or property of
the Corporation (each of the foregoing being referred to as a "Transaction")
occurring in each case at any time, each share of Series A Preferred Stock then
outstanding shall thereafter be convertible into, in lieu of the Common Stock
issuable upon such conversion prior to consummation of such Transaction, the
kind and amount of shares of stock and other securities and property receivable
(including cash) upon the consummation of such Transaction by a holder of that
number of shares of Common Stock into which one share of Series A Preferred
Stock was convertible immediately prior to such Transaction. In case
securities or property other than Common Stock shall be issuable or deliverable
upon conversion as aforesaid, then all references in this Section 8 shall be
deemed to apply, so far as appropriate and nearly as may be, to such other
securities or property.
(h) In case at any time or from time to time the Corporation shall
pay any stock dividend or make any other non-cash distribution to the holders
of its Common Stock, or shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or any other
right, or there shall be any capital reorganization or reclassification of the
Common Stock of the Corporation or consolidation or merger of the Corporation
with or into another corporation, or any sale or conveyance to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety, or there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, then, in any one or more of said
cases the Corporation shall give at
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<PAGE> 27
least 20 days' prior written notice (the time of mailing of such notice shall
be deemed to be the time of giving thereof) to the registered holders of the
Series A Preferred Stock at the addresses of each as shown on the books
of the Corporation maintained by the Transfer Agent thereof of the date on
which (i) a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which paragraph (g) applies the Corporation shall give at least
30 days' prior written notice as aforesaid. Such notice shall also specify the
date as of which the holders of the Common Stock of record shall participate in
said dividend, distribution or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or winding up, as
the case may be. Failure to give such notice shall not invalidate any action
so taken.
Section 9. Reports as to Adjustments. Upon any adjustment of the
Conversion Ratio then in effect and any increase or decrease in the number of
shares of Common Stock issuable upon the operation of the conversion provisions
set forth in Section 8, then, and in each such case, the Corporation shall
promptly deliver to the Transfer Agent of the Series A Preferred Stock and
Common Stock, a certificate signed by the President or a Vice President and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was calculated
and specifying the Conversion Ratio then in effect following such adjustment
and the increased or decreased number of shares issuable upon the conversion
granted by Section 8, and shall set forth in reasonable detail the method of
calculation of each and a brief statement of the facts requiring such
adjustment. Where appropriate, such notice to holders of the Series A
Preferred Stock may be given in advance and included as part of the notice
required under the provisions of Section 8(h).
Section 10. Certain Covenants. Any registered holder of Series A
Preferred Stock may proceed to protect and enforce its rights and the rights of
such holders by any available remedy by proceeding at law or in equity to
protect and enforce any such rights, whether for the specific enforcement of
any provision in this Certificate of Designation or in aid of the exercise of
any power granted herein, or to enforce any other proper remedy.
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<PAGE> 28
Section 11. Definitions. For the purpose of this Certificate of
Designation of Series A Convertible Preferred Stock, the following terms shall
have the meanings indicated:
"Adjustment Period" shall mean the period of five consecutive
trading days preceding the date as of which the Fair Market Value
of a security is to be determined.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
"Business Date" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Commission" shall mean the Securities and Exchange Commission, and
any successor agency.
"Conversion Ratio" shall mean the Conversion Ratio (as set forth in
the Purchase Agreement or the Series B Certificate of Designation, as
the case may be) in effect on the Issue Date for the conversion into
Common Stock of the Notes or shares of Series B Preferred Stock which
were converted into shares of Series A Preferred Stock on the Issue
Date, subject to adjustment as provided in Section 8(f).
"Current Market Price," when used with reference to shares of Common
Stock or other securities on any date, shall mean the closing price
per share of Common Stock or such other securities on such date and,
when used with reference to shares of Common Stock or other securities
for any period shall mean the average of the daily closing prices per
share of Common Stock or such other securities for such period. The
closing price for each day shall be the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other
system then in use, or, if on any such date the Common Stock or such
other securities are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock or such other
securities selected by the
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<PAGE> 29
Board of Directors of the Corporation. If the Common Stock is listed
or admitted to trading on a national securities exchange, the closing
price shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if
the Common Stock or such other securities are not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Common Stock or such other securities are listed or admitted
to trading. If the Common Stock or such other securities are not
publicly held or so listed or publicly traded, "Current Market Price"
shall mean the Fair Market Value per share of Common Stock or of such
other securities as determined in good faith by the Board of Directors
of the Corporation based on an opinion of an independent investment
banking firm with an established national reputation as a valuer of
securities, which opinion may be based on such assumptions as such
firm shall deem to be necessary and appropriate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor Federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be
in effect at the time. Reference to a particular section of the
Securities Exchange Act of 1934, as amended, shall include reference
to the comparable section, if any, of any such successor Federal
statute.
"Fair Market Value" shall mean, as to shares of Common Stock or any
other class of capital stock or securities of the Corporation or any
other issuer which are publicly traded, the average of the Current
Market Prices of such shares of securities for each day of the
Adjustment Period. The "Fair Market Value" of any security which is
not publicly traded or of any other property shall mean the fair value
thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or
property selected in good faith by the Board of Directors of the
Corporation or a committee thereof, or, if no such investment banking
or appraisal firm is in the good faith judgment of the Board of
Directors or such committee available to make such determination, as
determined in good faith by the Board of Directors of the Corporation
or such committee.
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<PAGE> 30
"Issue Date" means the date of issuance of the shares of Serie A
Preferred Stock upon conversion of the Notes or Series B Preferred
Stock.
"Junior Stock" shall mean any capital stock of the Corporation ranking
junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock.
"Liquidation Preference" with respect to a share of Series A Preferred
Stock shall mean $100.00 per share, plus an amount equal to all
accrued but unpaid dividends.
"Parity Stock" shall mean any capital stock of the Corporation ranking
on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Preferred Stock.
"Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Preferred Stock" shall mean the shares of Preferred Stock, par value
$1.00 per share, of the Corporation.
"Purchase Agreement" shall mean the Securities Purchase Agreement,
dated as of June 24, 1993, between the Corporation and the Purchasers
named therein.
"Rights" shall mean the rights to purchase Preferred Stock
issued pursuant to the Amended and Restated Rights Agreement (the
"Rights Agreement") dated as of March 4, 1991, between the Corporation
and First Interstate Bank of California.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Series B Certificate of Designation" shall mean the Certificate of
Designation which sets forth the rights and privileges of the Series B
Preferred Stock, filed with the Secretary of State of the State of
Delaware.
"Stated Value" with respect to a share of Series A Preferred
Stock shall mean $100.00 per share.
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<PAGE> 31
"Subsidiary" of any Person means any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by
such Person.
"Trading Day" means a Business Day or, if the Common Stock is listed
or admitted to trading on any national securities exchange, a day
on which such exchange is open for the transaction of business.
IN WITNESS WHEREOF, the officers named below, acting for and on behalf
of Dreyer's Grand Ice Cream, Inc., have hereunto subscribed their names on this
30th day of June, 1993.
DREYER'S GRAND ICE CREAM, INC.
By: /s/ T. Gary Rogers
-------------------------------
Title: Chairman of the Board
Attest:
By: /s/ Paul R. Woodland
---------------------------------
Title: Chief Financial Officer
and Assistant Secretary
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DREYER'S GRAND ICE CREAM, INC.
CERTIFICATE OF DESIGNATION
OF SERIES B CONVERTIBLE
PREFERRED STOCK SETTING FORTH THE POWERS,
PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF
SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, Dreyer's Grand Ice Cream, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
of the Corporation by paragraph (B) of Article FIFTH of the Certificate of
Incorporation of the Corporation (the "Certificate of Incorporation"), and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation on June 24,
1993, adopted the following resolution creating a series of Preferred Stock
designated as Series B Convertible Preferred Stock.
RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the General Corporation Law of
the State of Delaware and the provisions of the Certificate of Incorporation, a
series of the class of authorized Preferred Stock, par value $1.00 per share,
of the Corporation is hereby created and that the designation and number of
shares thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations and restrictions thereof, are as follows:
Section 1. Designation and Number. (a) The shares of such series
shall be designated "Series B Convertible Preferred Stock" (the "Series B
Preferred Stock"). The number of shares initially constituting the Series B
Preferred Stock shall be 1,007,522, which number may be decreased (but not
increased) by the Board of Directors without a vote of stockholders; provided,
however, that such number may not be decreased (i) prior to conversion or
redemption of all of the Corporation's 6.25% Subordinated Convertible Notes due
June 30, 2001 (the "Notes"), and (ii) after conversion or redemption of all of
the Notes, below the
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<PAGE> 33
number of then outstanding shares of Series B Preferred Stock.
(b) The Series B Preferred Stock shall, except as provided in
Section 3(b) hereof, with respect to dividend rights and rights on liquidation,
dissolution or winding up, rank senior to the Common Stock, par value $1.00 per
share, of the Corporation (the "Common Stock").
Section 2. Dividends and Distributions. (a) The holders of shares of
Series B Preferred Stock, in preference to the holders of shares of Common
Stock and of any shares of other capital stock of the Corporation ranking
junior to the Series B Preferred Stock as to payment of dividends, shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
the assets of the Corporation legally available therefor, cumulative cash
dividends at an annual rate equal to the Adjusted Preferred Dividend Rate (as
defined in Section 11) from and after the date of issuance of the Series B
Preferred Stock (the "Issue Date"), as long as the shares of Series B Preferred
Stock remain outstanding. Dividends shall be computed on the basis of the
Stated Value, and shall accrue and be payable quarterly, in arrears, on the
last business day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date following the Issue
Date.
(b) Dividends payable pursuant to paragraph (a) of this Section 2
shall begin to accrue and be cumulative from the Issue Date, whether or not
earned or declared. The amount of dividends so payable shall be determined on
the basis of twelve 30-day months and a 360-day year. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series B
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 B Preferred Stock entitled to receive payment of a dividend declared
thereon, which record date shall be no more than sixty days prior to the date
fixed for the payment thereof.
(c) In the event that (i) dividends payable on the Series B
Preferred Stock shall have been in arrears and not paid in full for two
consecutive quarterly periods, (ii) the Corporation shall have breached in any
material respect any of the covenants (provided the applicable covenant shall
then be in effect pursuant to the terms of the Purchase Agreement (as defined
in Section 11)) set forth in Sections 6.1 through 6.4, 6.14, 6.16, 6.17, 6.18
and 13.10 of the Purchase
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<PAGE> 34
Agreement and such breach continues for a period of 30 days after notice in
writing by the holders of shares of Series B Preferred Stock (it being
understood that the Corporation shall not be deemed in breach of its obligation
under Section 13.10 with respect to any amount in dispute (but not any
undisputed portion of such amount) unless and until the Corporation shall have
specifically admitted in writing its obligation to pay such amount or there
shall have been a final non-appealable judgment that such amount is due and
owing by the Corporation), (iii) the Corporation shall have failed to redeem
shares of Series B Preferred Stock pursuant to Section 5(b) or Section 5(d),
whether or not by reason of the absence of legally available funds or (iv)
default shall be made with respect to any indebtedness of the Corporation with
a principal amount outstanding in excess of $5,000,000 with the result that
such indebtedness has become due and payable prior to the date on which the
same would otherwise have become due and payable, then, in any such case, the
dividend rate otherwise applicable shall increase by 2% per annum from the
applicable Quarterly Dividend Payment Date or date of such breach, default or
failure to redeem, as the case may be, through the date of payment of such
dividend, cure of such breach or default or redemption, as the case may be.
(d) The holders of shares of Series B Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
Section 3. Voting Rights. In addition to any voting rights provided
by law, the holders of shares of Series B Preferred Stock shall have the
following voting rights:
(a) So long as any of the Series B Preferred Stock is outstanding,
each share of Series B Preferred Stock shall entitle the holder thereof to vote
on all matters submitted to a vote of the stockholders of the Corporation,
voting together as a single class with the holders of Common Stock. The
holders of each share of Series B Preferred Stock shall be entitled to vote
with respect to each share of Series B Preferred Stock held by each such holder
a number of votes equal to the number of votes which could be cast in such vote
by a holder of the number of shares of Common Stock into which such share of
Series B Preferred Stock is convertible (as adjusted pursuant to Section 8) on
the record date for such vote.
(b) The affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of Series B Preferred Stock, voting together as a class, in
person or by proxy, at a special or annual meeting of stockholders called for
the purpose, shall be necessary to (i) authorize, increase the authorized
number of
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<PAGE> 35
shares of, or issue (including on conversion or exchange of any convertible or
exchangeable securities or by reclassification) any shares of any class or
classes or series within a class of the Corporation's capital stock ranking
prior to or pari passu with (either as to dividends or upon voluntary or
involuntary liquidation, dissolution or winding up) the Series B Preferred
Stock (other than the shares of Series A Convertible Preferred Stock, par value
$1.00 per share, of the Corporation (the "Series A Preferred Stock"), issuable
upon conversion of the Series B Preferred Stock and shares of participating
preferred stock issuable upon exercise of the Rights (as defined in Section
11); (ii) increase the authorized number of shares of, or issue (including on
conversion or exchange of any convertible or exchangeable securities (other
than the Notes) or by reclassification) any shares of, Series B Preferred
Stock; or (iii) authorize, adopt or approve an amendment to the Certificate of
Incorporation of the Corporation or this Certificate of Designation which would
increase or decrease the par value of the shares of Series B Preferred Stock,
or alter or change the powers, preferences or special rights of the Series B
Preferred Stock so as to affect such shares of Series B Preferred Stock
adversely.
(c) If on any date (i) dividends payable on the Series B Preferred
Stock shall have been in arrears and not paid in full for two consecutive
quarterly periods, (ii) the Corporation shall have breached in any material
respect any of its covenants (provided the applicable covenant shall then be in
effect pursuant to the terms of the Purchase Agreement) set forth in Sections
6.1 through 6.4, 6.14, 6.16, 6.17, 6.18 and 13.10 of the Purchase Agreement and
such breach shall have continued for 30 days after written notice by the
holders of shares of Series B Preferred Stock (it being understood that the
Corporation shall not be deemed in breach of its obligation under Section 13.10
with respect to any amount in dispute (but not any undisputed portion of such
amount) unless and until the Corporation shall have specifically admitted in
writing its obligation to pay such amount or there shall have been a final
non-appealable judgment that such amount is due and owing by the Corporation),
(iii) the Corporation shall have failed to satisfy its obligation to redeem
shares of Series B Preferred Stock pursuant to Section 5(b) or Section 5(d),
whether or not by reason of the absence of legally available funds therefor or
(iv) default shall be made with respect to any indebtedness of the Corporation
with a principal amount outstanding in excess of $5,000,000 with the result
that such indebtedness has become due and payable prior to the date on which
the same would otherwise have become due and payable, then, in each such case,
the number of directors constituting the Board of Directors of the Corporation
shall, without further action, be increased by one and the holders of shares of
Series B Preferred Stock shall have, in addition to the other voting rights set
forth herein, the exclusive right, voting separately as a single class, to
elect such director
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<PAGE> 36
of the Corporation who shall be in addition to the remaining directors elected
or to be elected by the other classes of stock entitled to vote therefor, at
each meeting of stockholders held for the purpose of electing directors who are
members of the class of directors which includes such director. Such
additional director shall continue as a director and such additional voting
right shall continue until such time as (A) all dividends accumulated on the
Series B Preferred Stock shall have been paid in full, (B) such breach shall
have been cured, (C) any mandatory redemption obligation provided in Section
5(b) or Section 5(d) which has become due shall have been satisfied, or (D) all
defaults described in clause (iv) above shall have been cured or waived, as the
case may be, at which time such additional voting right of the holders of
Series B Preferred Stock shall terminate, subject to revesting in the event of
each and every subsequent event of the character indicated above.
(d) (i) The foregoing rights of holders of shares of Series B
Preferred Stock to take any actions as provided in this Section 3 may be
exercised at any annual meeting of stockholders or at a special meeting of
stockholders held for such purpose as hereinafter provided or at any
adjournment thereof.
So long as such right to vote continues, the Chairman of the Board of
the Corporation may call, and if the holders of Series B Preferred Stock are to
vote separately as a single class, upon the written request of holders of
record of 20% of the outstanding shares of Series B Preferred Stock, addressed
to the Secretary of the Corporation, at the principal office of the
Corporation, the Chairman of the Board of the Corporation shall call, a special
meeting of the holders of shares of Series B Preferred Stock entitled to vote
as provided herein. The Corporation shall use its best efforts to hold such
meeting within 60, but in any event not later than 90, days after delivery of
such request to the Secretary, at the place and upon the notice provided by law
and in the By-Laws of the Corporation for the holding of meetings of
stockholders, provided that the Corporation shall not be required to call such
a special meeting if such request is received fewer than 90 days before the
date fixed for the next ensuing annual meeting of stockholders of the
Corporation, at which meeting such newly created directorship shall be filled
by the holders of the Series B Preferred Stock.
(ii) At each meeting of stockholders at which the holders
of shares of Series B Preferred Stock shall have the right, voting separately
as a single class, to elect one director of the Corporation as provided in this
Section 3 or to take any action, the presence in person or by proxy of the
holders of record of one-third of the total number of shares of Series B
Preferred Stock then outstanding and entitled to vote on the matter shall be
necessary and sufficient to
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<PAGE> 37
constitute a quorum. At any such meeting or at any adjournment thereof:
(A) the absence of a quorum of the holders of
shares of Series B Preferred Stock shall not prevent the
election of directors other than those to be elected by the
holders of shares of Series B Preferred Stock and the absence of
a quorum of the holders of shares of any other class or series
of capital stock shall not prevent the election of the directors
to be elected by the holders of shares of Series B Preferred
Stock or the taking of any other action as provided in this
Section 3; and
(B) in the absence of a quorum of the holders of
shares of Series B Preferred Stock, a majority of the holders of
such shares present in person or by proxy shall have the power
to adjourn the meeting as to the actions to be taken by the
holders of shares of Series B Preferred Stock from time to time
and place to place without notice other than announcement at the
meeting until a quorum shall be present.
For the taking of any action as provided in paragraphs (b) and
(c) of this Section 3 by the holders of shares of Series B Preferred Stock,
each such holder shall have one vote for each share of such stock standing in
his name on the transfer books of the Corporation as of any record date fixed
for such purpose or, if no such date be fixed, at the close of business on the
Business Day (as defined in Section 11) next preceding the day on which notice
is given, or if notice is waived, at the close of business on the Business Date
next preceding the day on which the meeting is held.
A director elected by the holders of shares of Series B
Preferred Stock as provided in paragraph (c) of this Section 3 shall, unless
his term shall expire earlier, hold office in accordance with Article SEVENTH
of the Certificate of Incorporation and the By-Laws of the Corporation or until
his successor, if any, is elected and qualified.
In case of the death, resignation or removal of a director
elected by the holders of shares of Series B Preferred Stock as provided in
paragraph (c) of this Section 3, such vacancy may be filled for the unexpired
portion of the term of such director, and the holders of Series B Preferred
Stock then outstanding and entitled to vote for such director may, at a special
meeting of such holders called as provided herein, elect the successor to hold
office for the unexpired term of the director whose place shall be vacant.
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The director elected by the holders of shares of Series B
Preferred Stock voting separately as a single class may be removed from office
with or without cause by the vote of the holders of at least 66-2/3% of the
outstanding shares of Series B Preferred Stock. A special meeting of the
holders of shares of Series B Preferred Stock may be called in accordance with
the procedures set forth in subparagraph (d)(i) of this Section 3.
Section 4. Certain Restrictions. (a) Whenever quarterly
dividends on the Series B Preferred Stock shall not have been paid in full or
any of the events set forth in clauses (ii) through (iv) of Section 3(c) shall
have occurred and shall not have been remedied as provided in Section 3(c), the
Corporation shall not declare or pay dividends, or make any other
distributions, on any shares of Parity Stock or Junior Stock (as such terms are
defined in Section 11), except (1) dividends or distributions payable in Junior
Stock and (2) dividends or distributions paid ratably on the Series B Preferred
Stock and all Parity Stock on which dividends are payable or in arrears, in
proportion to the total amounts to which the holders of all shares of the
Series B Preferred Stock and such Parity Stock are then entitled.
(b) Whenever quarterly dividends on the Series B Preferred
Stock shall not have been paid in full or any of the events set forth in
clauses (ii) through (iv) of Section 3(c) shall have occurred and shall not
have been remedied as provided in Section 3(c), the Corporation shall not: (A)
redeem, purchase or otherwise acquire for consideration any shares of Parity
Stock or Junior Stock; provided, however, that (1) the Corporation may at any
time redeem, purchase or otherwise acquire shares of Parity Stock in exchange
for any shares of Junior Stock, (2) the Corporation may accept shares of any
Parity Stock or Junior Stock for conversion into shares of Junior Stock, and
(3) the Corporation may at any time redeem, purchase or otherwise acquire
shares of any Parity Stock pursuant to any mandatory redemption, put, sinking
fund or other similar obligation, pro rata with the Series B Preferred Stock in
proportion to the total amount then required to be applied by it to redeem,
repurchase or otherwise acquire shares of Series B Preferred Stock and shares
of such Parity Stock; or (B) redeem, purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock; provided, however, that
the Corporation (1) may accept shares of Series B Preferred Stock surrendered
for conversion into shares of capital stock of the Corporation pursuant to
Section 8, (2) may elect to redeem all outstanding shares of Series B Preferred
Stock pursuant to Section 5(a), (3) may redeem shares of Series B Preferred
Stock pro rata pursuant to Section 5(a), (4) may redeem all outstanding shares
of Series B Preferred Stock pursuant to Section 5(b), (5) may redeem shares of
Series B Preferred Stock pursuant to Section 5(b) pro rata or (6) may
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<PAGE> 39
redeem shares of Series B Preferred Stock pursuant to Section 5(d).
(c) Notwithstanding the foregoing, nothing herein shall
prevent the Corporation from redeeming the Rights at a price not to exceed $.01
per Right.
(d) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, pursuant to
paragraph (b) of this Section 4, purchase such shares at such time and in such
manner.
Section 5. Redemption. (a) The Corporation shall have the
right, at its sole option and election made in accordance with paragraph (e) of
this Section 5, to redeem, out of funds legally available therefor, shares of
Series B Preferred Stock, (i) after June 30, 1996, in whole or in part, in
integral multiples of not less than $10,000,000, at any time and from time to
time, or (ii) on or prior to June 30, 1996, in whole but not in part, if the
Current Market Price per share of the Common Stock shall exceed the Scaled
Conversion Price (as defined in Section 11) multiplied by 150% for at least 20
of 30 consecutive Trading Days, subject, in the case of each of clauses (i) and
(ii), to the final paragraph of this Section 5(a), at a redemption price equal
to the Stated Value per share (the "Redemption Price"), plus an amount equal to
all accrued and unpaid dividends to the date of redemption, in cash.
In the event that any time a Change in Control (as defined in
Section 11) has occurred prior to a redemption pursuant to this Section 5(a),
the Redemption Price per share until the expiration of the 90 day period
referred to in Section 5(e)(ii) shall equal the greater of (i) the Redemption
Price calculated above and (ii) the Change in Control Price (as defined in
paragraph (d) below).
(b) On June 30, 2001, the Corporation shall redeem, out of
funds legally available therefor, all outstanding shares of Series B Preferred
Stock, by paying therefor the Stated Value per share, plus an amount equal to
all accrued but unpaid dividends to such date, in cash.
(c) If less than all shares of Series B Preferred Stock at
the time outstanding are to be redeemed, the shares to be redeemed shall be
selected pro rata; provided, however, that in the event that 100,000 or fewer
shares of Series B Preferred Stock are then outstanding, the Corporation shall
be required to redeem all of such outstanding shares if it elects to redeem any
such shares.
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<PAGE> 40
(d) In the event that there occurs a Change in Control, any
record holder of shares of Series B Preferred Stock, in accordance with the
procedures set forth in subparagraph (e)(ii) of this Section 5, may require the
Corporation to redeem, out of funds legally available therefor, any or all of
the shares of Series B Preferred Stock held by such holder for, at such
holder's option, an amount per share equal to (i) the Stated Value per share or
(ii) the form and amount of consideration that such holder would have received
had such holder converted such shares into Common Stock and had such holder
received the same consideration per share of Common Stock received or
receivable on a per share basis by T. Gary Rogers or William F. Cronk, III in
connection with such Change in Control (the "Change in Control Price") plus, in
each case, all accrued and unpaid dividends on the shares being redeemed to the
date of redemption, in cash.
(e) (i) Notice of any redemption of shares of Series B
Preferred Stock pursuant to paragraph (a) or (b) of this Section 5 shall be
mailed at least 30 but not more than 60 days prior to the date fixed for
redemption to each holder of shares of Series B Preferred Stock to be redeemed,
at such holder's address as it appears on the transfer books of the
Corporation. In order to facilitate the redemption of shares of Series B
Preferred Stock, the Board of Directors may fix a record date for the
determination of shares of Series B Preferred Stock to be redeemed.
(ii) Promptly following a Change in Control (but
in no event more than five Business Days thereafter), the Corporation shall
mail to each holder of shares of Series B Preferred Stock, at such holder's
address as it appears on the transfer books of the Corporation, notice of such
Change in Control, which notice shall set forth each holder's right to require
the Corporation to redeem any or all shares of Series B Preferred Stock held by
it. The Corporation shall thereafter during a period of 90 days from the date
of such notice (or the date the Corporation was required to give such notice)
redeem, out of funds legally available therefor, any shares of Series B
Preferred Stock, at the option of the holder, upon at least five days' written
notice to the Company by such holder specifying (i) the number of shares of
Series B Preferred Stock to be redeemed and (ii) the redemption date.
(f) On the date of any redemption being made pursuant to
paragraph (a), (b) or (d) of this Section 5 which is specified in a notice
given pursuant to paragraph (e) of this Section 5, the Corporation shall wire
transfer to such holder the Redemption Price for the shares of Series B
Preferred Stock so redeemed, together with all accrued and unpaid dividends
thereon to the date of redemption.
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Section 6. Reacquired Shares. Any shares of Series B
Preferred Stock converted, redeemed, purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares of Series B Preferred Stock
shall upon their cancellation, and upon the filing of any document required by
the General Corporation Law of the State of Delaware, become authorized but
unissued shares of Preferred Stock, $1.00 par value, of the Corporation and may
be reissued as part of another series of Preferred Stock, $1.00 par value, of
the Corporation, subject to the conditions or restrictions on issuance set
forth in Section 3(b) or elsewhere herein.
Section 7. Liquidation, Dissolution or Winding Up. (a) If
the Corporation shall commence a voluntary case under the Federal bankruptcy
laws or any other applicable Federal or state bankruptcy, insolvency or similar
law, or consent to the entry of an order for relief in an involuntary case
under such law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the
Corporation, or of any substantial part of its property, or make an assignment
for the benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction in
the premises in an involuntary case under the Federal bankruptcy laws or any
other applicable Federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Corporation or of any substantial part of
its property, or ordering the winding up or liquidation of its affairs, and any
such decree or order shall be unstayed and in effect for a period of 150
consecutive days and on account of any such event the Corporation shall
liquidate, dissolve or wind up, or if the Corporation shall otherwise
liquidate, dissolve or wind up, no distribution shall be made (i) to the
holders of shares of Junior Stock unless, prior thereto, the holders of shares
of Series B Preferred Stock, subject to Section 8, shall have received the
Liquidation Preference (as defined in Section 11) with respect to each share,
or (ii) to the holders of shares of Parity Stock unless the holders of shares
of Series B Preferred Stock, subject to Section 8, shall have received
distributions made ratably to the holders of the Series B Preferred Stock and
the Parity Stock in proportion to the total amounts to which the holders of all
such shares of Series B Preferred Stock and Parity Stock would be entitled upon
such liquidation, dissolution or winding up.
(b) Neither the consolidation, merger or other business
combination of the Corporation with or into any other Person or Persons nor the
sale of all or
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<PAGE> 42
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 7.
Section 8. Conversion. (a) (i) The shares of Series B
Preferred Stock shall be converted, in whole but not in part, at the direction
of the holders of not less than 66-2/3% of all outstanding shares of Series B
Preferred Stock, at any time after the Issue Date into shares of Series A
Preferred Stock, at a conversion ratio of one share of Series A Preferred Stock
for each outstanding share of Series B Preferred Stock.
(ii) Following notice of redemption by the
Corporation pursuant to clause (ii) of Section 5(a), the shares of Series B
Preferred Stock shall be converted into shares of Series A Preferred Stock, in
whole but not in part, at the direction of the holders of not less than 66-2/3%
of all outstanding shares of Series B Preferred Stock, at a conversion ratio of
one share of Series A Preferred Stock for each outstanding share of Series B
Preferred Stock; provided that the number of shares of Series A Preferred Stock
issuable upon such conversion shall equal that number of shares of Series A
Preferred Stock (rounded down to the nearest whole share) which, if converted
into Common Stock at the Early Conversion Ratio (as defined in Section 11) in
effect on the date of such notice of redemption, would result in the issuance
of a number of shares of Common Stock equal to the Maximum Number of Shares (as
defined in Section 11), and there shall be paid to each holder of shares of
Series B Preferred Stock, out of funds legally available therefor, in addition
to shares of Series A Preferred Stock, an amount in cash set forth on Appendix
A to the Purchase Agreement, based on the date of conversion, in respect of
each share of Series B Preferred Stock held by such holder immediately prior to
such conversion, plus an amount equal to all accrued and unpaid dividends to
the date of conversion, in cash.
(b) (i) Subject to the provisions for adjustment
hereinafter set forth, each share of Series B Preferred Stock shall be
convertible at the option of the holder at any time after the Issue Date into
shares of Common Stock at the Fixed Conversion Ratio (as defined in Section
11).
(ii) Following notice of redemption by the
Corporation pursuant to clause (ii) of Section 5(a), subject to the provisions
for adjustment hereinafter set forth, each share of Series B Preferred Stock
shall be convertible at the option of the holder into shares of Common Stock at
the Early Conversion Ratio in effect on the date of such notice of redemption;
provided that the number of shares of Common Stock issuable upon such
conversion shall be (x) the percentage of the authorized number of shares of
Series B Preferred Stock being
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<PAGE> 43
so converted, multiplied by (y) the Maximum Number of Shares, and there shall
be paid to each holder of shares of Series B Preferred Stock so converted, in
addition to shares of Common Stock, out of funds legally available therefor, an
amount in cash set forth on Appendix A to the Purchase Agreement, based on the
date of conversion, in respect of each share of Series B Preferred Stock held
by such holder which is so converted, plus an amount equal to all accrued and
unpaid dividends to the date of conversion, in cash.
(c) (i) On or prior to June 30, 1996, if the Current Market
Price of the Common Stock shall exceed the Scaled Conversion Price multiplied
by 150% for at least 20 of 30 consecutive Trading Days, and (ii) after June 30,
1996, if the Current Market Price of the Common Stock shall exceed the
Conversion Price multiplied by 140% for at least 20 of 30 consecutive Trading
Days, the shares of Series B Preferred Stock shall be converted in whole at the
direction of the Company into shares of Series A Preferred Stock, at a
conversion ratio of one share of Series A Preferred Stock for each outstanding
share of Series B Preferred Stock; provided that the number of shares of Series
A Preferred Stock issuable upon conversion pursuant to clause (i) of this
Section 8(c) shall be that number of shares of Series A Preferred Stock
(rounded down to the nearest whole share) which, if converted into Common Stock
at the Early Conversion Ratio in effect on the date of notice of conversion,
would result in the issuance of a number of shares equal to the Maximum Number
of Shares, and there shall be paid to each holder of shares of Series B
Preferred Stock, in addition to shares of Series A Preferred Stock, out of
funds legally available therefor, an amount in cash set forth on Appendix A to
the Purchase Agreement, based on the date of conversion, in respect of each
share of Series B Preferred Stock held by such holder immediately prior to such
conversion, plus an amount equal to all accrued and unpaid dividends to the
date of conversion, in cash.
(d) Any conversion by the holders of the Series B
Preferred Stock into Common Stock shall be in an aggregate amount with a Stated
Value equal to $5,000,000 or $1,000,000 increments in excess thereof and, in
the case of any individual holder, the amount so converted shall be at least
$1,000,000 or all shares of Series B Preferred Stock of such holder.
Conversion of the Series B Preferred Stock may be effected by any such holder
upon the surrender to the Corporation at the principal office of the
Corporation in the State of California or at the office of any agent or agents
of the Corporation, as may be designated by the Board of Directors of the
Corporation (the "Transfer Agent"), of the certificate(s) for such Series B
Preferred Stock to be converted, accompanied by a written notice stating that
such holder elects to convert all or a specified whole number of such shares in
accordance with the provisions of this Section 8 and specifying the name or
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<PAGE> 44
names in which such holder wishes the certificate or certificates for shares of
Series A Preferred Stock or Common Stock, as the case may be, to be issued;
provided that, in the case of the conversion of the Series B Preferred Stock
into Series A Preferred Stock in accordance with Section 8(c), the Corporation
shall provide each holder written notice stating that such holder's shares of
Series B Preferred Stock have been converted pursuant to Section 8(c), and each
holder shall thereupon promptly surrender to the Transfer Agent the
certificate(s) for the Series B Preferred Stock so converted specifying the
name or names in which such holder wishes the certificate or certificates for
shares of Series A Preferred Stock to be issued. In case any holder's notice
shall specify a name or names other than that of such holder, such notice shall
be accompanied by payment of all transfer taxes payable upon the issuance of
shares of Series A Preferred Stock or Common Stock in such name or names.
Other than such taxes, the Corporation will pay any and all issue and other
taxes (other than taxes based on income) that may be payable in respect of any
issue or delivery of shares of Series A Preferred Stock or Common Stock on
conversion of Series B Preferred Stock pursuant hereto. As promptly as
practicable, and in any event within five Business Days after the surrender of
such certificate or certificates and the receipt of such notice relating
thereto and, if applicable, payment of all transfer taxes (or the demonstration
to the satisfaction of the Corporation that such taxes have been paid), the
Corporation shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Series A Preferred Stock or Common Stock, as the case may be, to
which the holder of shares of Series B Preferred Stock being converted shall be
entitled and (ii) if less than the full number of shares of Series B Preferred
Stock evidenced by the surrendered certificate or certificates is being
converted, a new certificate or certificates, of like tenor, for the number of
shares evidenced by such surrendered certificate or certificates less the
number of shares being converted. Such conversion shall be deemed to have been
made at the close of business on the date of giving such notice so that the
rights of the holder thereof as to the shares being converted shall cease
except for the right to receive shares of Series A Preferred Stock or Common
Stock, as the case may be, in accordance herewith, and the person entitled to
receive the shares of Series A Preferred Stock or Common Stock shall be treated
for all purposes as having become the record holder of such shares of Series A
Preferred Stock or Common Stock at such time, so long as certificates for such
holder's shares of Series B Preferred Stock are delivered to the Corporation
within two Business Days after the giving of notice. In any other case of
conversion at the holder's option, the date of delivery of the certificates for
the shares of Series B Preferred Stock shall be deemed to be the date of
conversion.
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(e) In case any shares of Series B Preferred Stock are to
be redeemed pursuant to Section 5, such right of conversion shall cease and
terminate as to the shares of Series B Preferred Stock to be redeemed at the
close of business on the Business Day preceding the date fixed for redemption
unless the Corporation shall default in the payment of the Redemption Price or
the Change in Control Price, as the case may be.
(f) The Fixed Conversion Ratio and the Early Conversion
Ratio (collectively, the "Conversion Ratio") shall be subject to adjustment
from time to time in certain instances as hereinafter provided.
(g) In connection with the conversion of any shares of
Series B Preferred Stock into Common Stock, no fractions of shares of Common
Stock shall be issued, but in lieu thereof the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal to such
fractional interest multiplied by the Current Market Price per share of Common
Stock on the Trading Day on which such shares of Series B Preferred Stock are
deemed to have been converted. If more than one share of Series B Preferred
Stock shall be surrendered for conversion by the same holder at the same time,
the number of full shares of Common Stock issuable on conversion thereof shall
be computed on the basis of the total number of shares of Series B Preferred
Stock so surrendered. Promptly upon conversion, the Corporation shall pay to
the holder of shares of Series B Preferred Stock so converted, out of funds
legally available, an amount equal to any accrued and unpaid dividends on the
shares of Series B Preferred Stock surrendered for conversion to the date of
such conversion, together with cash in lieu of any fractional interest of such
holder.
(h) (i) The Corporation shall at all times reserve and
keep available for issuance upon the conversion of the Series B Preferred
Stock, free from any preemptive rights such number of its authorized but
unissued shares of Preferred Stock (as defined in Section 11) and Common Stock
as will from time to time be sufficient to permit the conversion of all
outstanding shares of Series B Preferred Stock into Series A Preferred Stock or
Common Stock, and shall take all action required to increase the authorized
number of shares of Preferred Stock or Common Stock if necessary to permit the
conversion of all outstanding shares of Series B Preferred Stock.
(ii) If the Corporation shall issue shares of
Common Stock upon conversion of shares of Series B Preferred Stock as
contemplated by this Section 8, the Corporation shall issue together with each
such share of Common Stock one Right (or other securities in lieu thereof), or
any rights issued to hold-
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<PAGE> 46
ers of Common Stock of the Corporation in addition thereto or in replacement
therefor, whether or not such rights shall be exercisable at such time, but
only if such rights are issued and outstanding and held by other holders of
Common Stock of the Corporation at such time and have not expired.
(i) The Conversion Ratio will be subject to adjustment
from time to time as follows:
(i) In case the Corporation shall at any time or
from time to time after June 21, 1993 (A) pay a dividend, or make a
distribution, on the outstanding shares of Common Stock in shares of Common
Stock, (B) subdivide the outstanding shares of Common Stock, (C) combine the
outstanding shares of Common Stock into a smaller number of shares or (D) issue
by reclassification of the shares of Common Stock any shares of capital stock
of the Corporation, then, and in each such case, the Conversion Ratio in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares of Series B
Preferred Stock thereafter surrendered for conversion into Common Stock shall
be entitled to receive the number of shares of Common Stock or other securities
of the Corporation which such holder would have owned or have been entitled to
receive after the happening of any of the events described above, had such
shares of Series B Preferred Stock been surrendered for conversion immediately
prior to the happening of such event or the record date therefor, whichever is
earlier. An adjustment made pursuant to this clause (i) shall become effective
(x) in the case of any such dividend or distribution, immediately after the
close of business on the record date for the determination of holders of shares
of Common Stock entitled to receive such dividend or distribution, or (y) in
the case of such subdivision, reclassification or combination, at the close of
business on the day upon which such corporate action becomes effective. No
adjustment shall be made pursuant to this clause (i) in connection with any
transaction to which paragraph (k) applies.
(ii) In case the Corporation shall issue shares of
Common Stock (or rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock) after June 21, 1993 at a price per
share (or having a conversion price per share) less than the Current Market
Price per share of Common Stock as of the date of issuance of such shares (or,
in the case of convertible or exchangeable securities, at less than the Current
Market Price as of the date of issuance of the rights, warrants or other
securities in respect of which shares of Common Stock were issued), then, and
in each such case, the Conversion Ratio shall be adjusted so that the holder of
each share of Series B Preferred Stock shall be entitled to receive, upon the
conversion thereof into Common Stock, the num-
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<PAGE> 47
ber of shares of Common Stock determined by multiplying (A) the Conversion
Ratio in effect on the day immediately prior to such date by (B) a fraction,
the numerator of which shall be the sum of (1) the number of shares of Common
Stock outstanding on such date and (2) the number of additional shares of
Common Stock issued (or into which the convertible securities may convert), and
the denominator of which shall be the sum of (x) the number of shares of Common
Stock outstanding on such date and (y) the number of shares of Common Stock
purchasable at the then Current Market Price per share with the aggregate
consideration receivable by the Corporation for the total number of shares of
Common Stock so issued (or into which the rights, warrants or other convertible
securities may convert). An adjustment made pursuant to this clause (ii) shall
be made on the next Business Day following the date on which any such issuance
is made and shall be effective retroactively to the close of business on the
date of such issuance. For purposes of this clause (ii), the aggregate
consideration receivable by the Corporation in connection with the issuance of
shares of Common Stock or of rights, warrants or other securities convertible
into shares of Common Stock shall be deemed to be equal to the sum of the
aggregate offering price (before deduction of underwriting discounts or
commissions and expenses payable to third parties) of all such Common Stock,
rights, warrants and convertible securities plus the minimum aggregate amount,
if any, payable upon exercise or conversion of any such rights, warrants and
convertible securities into shares of Common Stock. The issuance or reissuance
of any shares of Common Stock (whether treasury shares or newly issued shares)
pursuant to (a) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the conversion ratio pursuant to clause (i) of this paragraph
(i), or (b) any restricted stock or stock option plan or program of the
Corporation involving the grant of options or rights (x) at below Current
Market Price (but not less than 85% of Current Market Price) so long as the
number of shares of Common Stock issuable in respect of such options or rights
granted in any fiscal year does not exceed 0.5% of the outstanding shares of
Common Stock as of the beginning of such fiscal year and so long as the
aggregate number of shares of Common Stock issuable in respect of such options
or rights granted after June 24, 1993 does not exceed 2% of the outstanding
shares of Common Stock as of June 24, 1993 or (y) pursuant to the average
trading price formula contained in stock option plans of the Corporation as in
effect on June 24, 1993 or (c) any option, warrant, right, or convertible
security (including the Notes) outstanding as of the date hereof (other than
the Rights or similar securities), or (d) the terms of a firmly committed
underwritten public offering, shall not be deemed to constitute an issuance of
Common Stock or convertible securities by the Corporation to which this clause
(ii) applies. Upon the expiration unexercised of any options, warrants or
rights to convert any convertible securities for which an adjustment
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has been made pursuant to this clause (ii), the adjustments shall forthwith be
reversed to effect such rate of conversion as would have been in effect at the
time of such expiration or termination had such options, warrants or rights or
convertible securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued. Nothing herein shall limit the
right of any holder to an anti-dilution adjustment in the event that there
shall occur a "flip-in" or "flip-over" event under the Rights Agreement or any
similar plan or agreement of the Corporation. No adjustment shall be made
pursuant to this clause (ii) in connection with any transaction to which
paragraph (k) applies.
(iii) In case the Corporation shall at any time or
from time to time after June 21, 1993 declare, order, pay or make a dividend or
other distribution (including, without limitation, any distribution of stock or
other securities or property or rights or warrants to subscribe for securities
of the Corporation or any of its Subsidiaries by way of dividend or spinoff),
on its Common Stock, other than (A) dividends not exceeding the amount
permitted pursuant to clause (i) of Section 6.4 of the Purchase Agreement or
(B) dividends or distributions of shares of Common Stock which are referred to
in clause (i) of this paragraph (i), then, and in each such case, the
Conversion Ratio shall be adjusted so that the holder of each share of Series B
Preferred Stock shall be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock determined by multiplying (1) the applicable
Conversion Ratio on the day immediately prior to the record date fixed for the
determination of stockholders entitled to receive such dividend or distribution
by (2) a fraction, the numerator of which shall be the Current Market Price of
the Common Stock for the period of 20 Trading Days preceding such record date,
and the denominator of which shall be such Current Market Price of the Common
Stock less the Fair Market Value (as defined in Section 11) per share of Common
Stock (as determined in good faith by the Board of Directors of the
Corporation, a certified resolution with respect to which shall be mailed to
each holder of shares of Series B Preferred Stock) of such dividend or
distribution. No adjustment shall be made pursuant to this clause (iii) in
connection with any transaction to which paragraph (k) applies.
(iv) For purposes of this paragraph (i), the number
of shares of Common Stock at any time outstanding shall not include any shares
of Common Stock then owned or held by or for the account of the Corporation.
(v) The term "dividend," as used in this paragraph
(i), shall mean a dividend or other distribution upon stock of the Corporation.
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(vi) Anything in this paragraph (i) to the contrary
notwithstanding, the Corporation shall not be required to give effect to any
adjustment in the Conversion Ratio unless and until the net effect of one or
more adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the Conversion Ratio by at least
one one-hundredth of one share of Common Stock, and when the cumulative net
effect of more than one adjustment so determined shall be to change the
Conversion Ratio by at least one one-hundredth of one share of Common Stock,
such change in Conversion Ratio shall thereupon be given effect.
(vii) The certificate of any firm of independent
public accountants of recognized national standing selected by the Board of
Directors of the Corporation (which may be the firm of independent public
accountants regularly employed by the Corporation) shall be presumptively
correct for any computation made under this paragraph (i).
(viii) If the Corporation shall take a record of
the holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this paragraph (i) or in the Conversion Ratio then in effect shall
be required by reason of the taking of such record.
(j) In the case of any event which requires an adjustment
to the Conversion Ratio pursuant to paragraph (i) of this Section, the Maximum
Number of Shares and, solely for the purposes of clause (ii) of Section 5(a)
and Section 8(c), the Conversion Price shall also be appropriately adjusted to
reflect such event.
(k) In the case of any consolidation or merger of the
Corporation with or into another corporation, or in case of any sale or
conveyance to another corporation of all or substantially all of the assets or
property of the Corporation (each of the foregoing being referred to as a
"Transaction") occurring in each case at any time, each share of Series B
Preferred Stock then outstanding shall thereafter be convertible into, in lieu
of the Common Stock issuable upon such conversion prior to consummation of such
Transaction, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Transaction
by a holder of that number of shares of Common Stock into which one share of
Series B Preferred Stock was convertible immediately prior to such Transaction.
In case securities or property other than Common
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<PAGE> 50
Stock shall be issuable or deliverable upon conversion as aforesaid, then all
references in this Section 8 shall be deemed to apply, so far as appropriate
and nearly as may be, to such other securities or property.
(l) In case at any time or from time to time the
Corporation shall pay any stock dividend or make any other non-cash
distribution to the holders of its Common Stock, or shall offer for
subscription pro rata to the holders of its Common Stock any additional shares
of stock of any class or any other right, or there shall be any capital
reorganization or reclassification of the Common Stock of the Corporation or
consolidation or merger of the Corporation with or into another corporation, or
any sale or conveyance to another corporation of the property of the
Corporation as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, then, in any one or more of said cases the Corporation shall give
at least 20 days' prior written notice (the time of mailing of such notice
shall be deemed to be the time of giving thereof) to the registered holders of
the Series B Preferred Stock at the addresses of each as shown on the books of
the Corporation maintained by the Transfer Agent thereof of the date on which
(i) a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which paragraph (k) applies the Corporation shall give at least
30 days' prior written notice as aforesaid. Such notice shall also specify the
date as of which the holders of the Common Stock of record shall participate in
said dividend, distribution or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or winding up, as
the case may be. Failure to give such notice shall not invalidate any action
so taken.
Section 9. Reports as to Adjustments. Upon any adjustment of
the Conversion Ratio then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion
provisions set forth in Section 8, then, and in each such case, the Corporation
shall promptly deliver to the Transfer Agent of the Series B Preferred Stock
and Common Stock, a certificate signed by the President or a Vice President and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was calculated
and specifying the Conversion Ratio then in effect following such adjustment
and the increased or decreased number of shares issuable upon the conversion
granted by Section 8, and shall set
19
<PAGE> 51
forth in reasonable detail the method of calculation of each and a brief
statement of the facts requiring such adjustment. Where appropriate, such
notice to holders of the Series B Preferred Stock may be given in advance and
included as part of the notice required under the provisions of Section 8(l).
Section 10. Certain Covenants. Any registered holder of
Series B Preferred Stock may proceed to protect and enforce its rights and the
rights of such holders by any available remedy by proceeding at law or in
equity to protect and enforce any such rights, whether for the specific
enforcement of any provision in this Certificate of Designation or in aid of
the exercise of any power granted herein, or to enforce any other proper
remedy.
Section 11. Definitions. For the purpose of this Certificate
of Designation of Series B Convertible Preferred Stock, the following terms
shall have the meanings indicated:
"Adjusted Preferred Dividend Rate" shall mean such annual
dividend rate as shall cause a taxpaying holder's after tax dividend
yield to be equal to the after-tax yield a taxpaying holder would
receive in respect of a debt instrument bearing an interest rate of
6.25% per annum. The determination of the Adjusted Preferred Dividend
Rate shall be made assuming that a taxpaying holder pays taxes at the
highest marginal federal income tax rate in effect during the year in
which the Issue Date occurs, unless any Purchaser is subject to the
tax imposed by Section 55 of the Internal Revenue Code, in which case
such determination will be made by considering such Purchaser's actual
federal income tax position for such year. The Adjusted Preferred
Dividend Rate shall be calculated by the Chief Financial Officer of
the Corporation applying the foregoing principles. If such calculated
rate is approved by resolution of the Board of Directors of the
Corporation and thereafter approved in writing by the holders of
66-2/3% of the Series B Preferred Stock as of the date of issuance of
the Series B Preferred Stock, the rate so agreed upon shall be the
Adjusted Preferred Dividend Rate. If the Corporation and such holders
of Series B Preferred Stock cannot agree within 10 days of such
calculation as to the Adjusted Preferred Dividend Rate, such rate
shall be determined by an independent investment banking firm selected
by mutual agreement between the Corporation and such holders.
"Adjustment Period" shall mean the period of five consecutive
trading days preceding the date as of which the Fair Market Value of a
security is to be determined.
20
<PAGE> 52
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
"Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
"Change in Control" shall mean:
(a) the acquisition, other than from the Corporation, by
any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) a majority of
the combined voting power of the then outstanding voting securities of
the Corporation entitled to vote generally in the election of directors,
but excluding, for this purpose, any such acquisition by (i) the
Corporation or any of its subsidiaries, (ii) any employee benefit plan
(or related trust) of the Corporation or its subsidiaries, (iii) any
corporation with respect to which, following such acquisition, a
majority of the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by individuals and entities who were the beneficial owners
of voting securities of the Corporation immediately prior to such
acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the combined voting power of
the then outstanding voting securities of the Corporation entitled to
vote generally in the election of directors, (iv) any other entity in a
transaction in which the shares of capital stock and stock options of
the Corporation owned by Messrs. Rogers and Cronk are not eligible for
treatment which is any more favorable than that offered to the holders
of capital stock and stock options generally, or (v) any other entity,
if such transaction is approved by a majority of the Board of Directors
of the Corporation and also complies with clause (iv) hereof; or
(b) approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all the individuals and entities who were the
respective beneficial owners of the voting securities of the Corporation
immediately prior to such reorganization, merger or consolidation do
not, following such reorganization, merger or consolidation beneficially
own, directly or indirectly, more than 50% of the combined voting power
of the then outstanding voting secu-
21
<PAGE> 53
rities entitled to vote generally in the election of directors of the
corporation resulting from such reorganization, merger or consolidation;
or
(c) the sale or other disposition of all or substantially
all the assets or property of the Corporation in one transaction or
series of related transactions.
"Commission" shall mean the Securities and Exchange
Commission, and any successor agency.
"Conversion Price" shall mean $34.7421.
"Current Market Price," when used with reference to shares of
Common Stock or other securities on any date, shall mean the closing
price per share of Common Stock or such other securities on such date
and, when used with reference to shares of Common Stock or other
securities for any period shall mean the average of the daily closing
prices per share of Common Stock or such other securities for such
period. The closing price for each day shall be the last quoted sale
price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or
such other system then in use, or, if on any such date the Common Stock
or such other securities are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock or such
other securities selected by the Board of Directors of the Corporation.
If the Common Stock is listed or admitted to trading on a national
securities exchange, the closing price shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Common Stock or such other securities are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities
exchange on which the Common Stock or such other securities are listed
or admitted to trading. If the Common Stock or such other securities
are not publicly held or so listed or publicly traded, "Current Market
Price" shall mean the Fair Market Value per share of Common Stock or of
such other securities as determined in good faith by the Board of
Directors of the Corporation based on an opinion of an independent
investment banking firm
22
<PAGE> 54
with an established national reputation as a value of securities, which
opinion may be based on such assumptions as such firm shall deem to be
necessary and appropriate.
"Early Conversion Ratio," determined as of any date, shall
mean the ratio obtained by dividing the Stated Value per share of Series
B Preferred Stock by the Scaled Conversion Price, subject to adjustment
as provided in Section 8(i).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor Federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time. Reference to a particular section of the Securities
Exchange Act of 1934, as amended, shall include reference to the
comparable section, if any, of any such successor Federal statute.
"Fair Market Value" shall mean, as to shares of Common Stock
or any other class of capital stock or securities of the Corporation or
any other issuer which are publicly traded, the average of the Current
Market Prices of such shares of securities for each day of the
Adjustment Period. The "Fair Market Value" of any security which is not
publicly traded or of any other property shall mean the fair value
thereof as determined by an independent investment banking or appraisal
firm experienced in the valuation of such securities or property
selected in good faith by the Board of Directors of the Corporation or a
committee thereof, or, if no such investment banking or appraisal firm
is in the good faith judgment of the Board of Directors or such
committee available to make such determination, as determined in good
faith by the Board of Directors of the Corporation or such committee.
"Fixed Conversion Ratio" shall mean the ratio obtained by
dividing the Stated Value per share of Series B Preferred Stock by the
Conversion Price, subject to adjustment as provided in Section 8(i).
"Junior Stock" shall mean any capital stock of the Corporation
ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series B Preferred Stock.
"Liquidation Preference" with respect to a share of Series B
Preferred Stock shall mean $100.00 per share, plus an amount equal to
all accrued but unpaid dividends.
23
<PAGE> 55
"Maximum Number of Shares" shall mean 2,900,000 shares of
Common Stock, subject to adjustment as provided in Section 8(j).
"Parity Stock" shall mean any capital stock of the Corporation
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred Stock.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger
or otherwise) of such entity.
"Preferred Stock" shall mean the shares of Preferred Stock,
par value $1.00 per share, of the Corporation.
"Purchase Agreement" shall mean the Securities Purchase
Agreement, dated as of June 24, 1993, between the Corporation and the
Purchasers named therein.
"Purchaser" shall have the meaning set forth in the Purchase
Agreement.
"Rights" shall mean the rights to purchase Preferred Stock
issued pursuant to the Amended and Restated Rights Agreement (the
"Rights Agreement") dated as of March 4, 1991, between the Corporation
and First Interstate Bank of California.
"Scaled Conversion Price," determined as of any date, shall
mean the sum of (i) $28.7125 plus (ii) a premium equal to the product of
(x) 0.5833% of $28.7125, multiplied by (y) the number of full months
(not exceeding 36) elapsed from June 30, 1993 to such date of
determination. An example of the Scaled Conversion Price is set forth
in Appendix B to the Purchase Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor Federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Stated Value" with respect to a share of Series B Preferred
Stock shall mean $100.00 per share.
24
<PAGE> 56
"Subsidiary" of any Person means any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
"Trading Day" means a Business Day or, if the Common Stock is
listed or admitted to trading on any national securities exchange, a day
on which such exchange is open for the transaction of business.
25
<PAGE> 57
IN WITNESS WHEREOF, the officers named below, acting for and
on behalf of Dreyer's Grand Ice Cream, Inc., have hereunto subscribed their
names on this 24th day of June, 1993.
DREYER'S GRAND ICE CREAM, INC.
By: /s/ T. Gary Rogers
-------------------------
Title: Chairman of the Board
Attest:
By: /s/ Paul R. Woodland
--------------------------------
Title: Chief Financial Officer
and Assistant Secretary
26
<PAGE> 58
DREYER'S GRAND ICE CREAM, INC.
AMENDED CERTIFICATE OF DESIGNATION
OF SERIES B CONVERTIBLE PREFERRED STOCK
SETTING FORTH THE POWERS,
PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF
SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, Dreyer's Grand Ice Cream, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:
That no shares of Series B Convertible Preferred Stock have been
issued.
That pursuant to the authority conferred upon the Board of Directors
of the Corporation by paragraph (B) of Article FIFTH of the Certificate of
Incorporation of the Corporation, and in accordance with the provisions of
Section 151 of the General Corporation Law of the State of Delaware, the Board
of Directors of the Corporation on May 2, 1994, adopted the following
resolutions amending the Certificate of Designation of Series B Convertible
Preferred Stock adopted by the Board of Directors on June 24, 1993:
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Corporation by paragraph (B) of Article FIFTH of the
Certificate of Incorporation, and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Certificate of
Designation of Series B Convertible Preferred Stock adopted by the Board of
Directors on June 24, 1993 (the "Certificate of Designation"), is hereby
amended as set forth in these resolutions;
RESOLVED, that subsection (a) of Section 2 of the Certificate of
Designation is hereby amended to read in its entirety as follows:
"(a) The holders of shares of Series B Preferred
Stock, in preference to the holders of shares of
Common Stock and of any shares of other capital stock
of the Corporation ranking junior to the Series B
Preferred Stock as to payment of dividends, shall be
entitled to receive, when, as and if declared by the
Board of Directors, out of the assets of the
Corporation legally available there-
1
<PAGE> 59
for, cumulative cash dividends at an annual rate
equal to the Adjusted Preferred Dividend Rate (as
defined in Section 11) from and after the date of
issuance of the Series B Preferred Stock (the "Issue
Date"), as long as the shares of Series B Preferred
Stock remain outstanding; provided, however, that
such dividends shall cease to accrue and be
cumulative on a given share of Series B Preferred
Stock from and after October 1, 1997 if (i) the
holder has been notified under Section 5(e) hereof
that the share will be redeemed in 1997, and (ii) all
dividends and other amounts due with respect to such
share of Series B Preferred Stock are paid to the
holder thereof on the redemption date specified in
such notice or such dividends and other amounts are
segregated and held in trust by the Company for
payment upon surrender of such share in accordance
with such notice. Dividends shall be computed on the
basis of the Stated Value, and shall accrue and be
payable quarterly, in arrears, on the last business
day of March, June, September and December in each
year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date following the
Issue Date."
RESOLVED, that subsection (a) of Section 5 of the Certificate of
Designation is hereby amended to read in its entirety as follows:
"(a) The Corporation shall have the right, at its
sole option and election made in accordance with
paragraph (e) of this Section 5, to redeem, out of
funds legally available therefor, shares of Series B
Preferred Stock, (i) after December 15, 1997, in
whole or in part, in integral multiples of not less
than $10,000,000, at any time and from time to time,
or (ii) on or prior to December 15, 1997, in whole
but not in part, if the Current Market Price per
share of the Common Stock shall exceed the Scaled
Conversion Price (as defined in Section 11)
multiplied by 150% for at least 20 of 30 consecutive
Trading Days, subject, in the case of each of clauses
(i) and (ii), to the final paragraph of this Section
5(a), at a redemption price equal to the Stated Value
per share (the "Redemption Price"), plus an amount
equal to all accrued and unpaid dividends to the date
of redemption, in cash.
2
<PAGE> 60
In the event that any time a Change in
Control (as defined in Section 11) has occurred prior
to a redemption pursuant to this Section 5(a), the
Redemption Price per share until the expiration of
the 90 day period referred to in Section 5(e)(ii)
shall equal the greater of (i) the Redemption Price
calculated above and (ii) the Change in Control Price
(as defined in paragraph (d) below)."
RESOLVED, that subsection (e)(i) of Section 5 of the Certificate of
Designation is hereby amended to read in its entirety as follows:
"(e)(i) Notice of any redemption of shares of Series
B Preferred Stock pursuant to paragraph (a) or (b) of
this Section 5 which relate to a redemption date
after December 15, 1997 and prior to January 1, 1998
shall be mailed at least 60 but not more than 120
days prior to the date fixed for redemption to each
holder of shares of Series B Preferred Stock to be
redeemed, at such holder's address as it appears on
the transfer books of the Corporation. Notice of any
redemption of shares of Series B Preferred Stock
pursuant to paragraph (a) or (b) of this Section 5
which relate to a redemption date on or before
December 16, 1997 or after December 31, 1997 shall be
mailed at least 30 but not more than 60 days prior to
the date fixed for redemption to each holder of
shares of Series B Preferred Stock to be redeemed, at
such holder's address as it appears on the transfer
books of the Corporation. In order to facilitate the
redemption of shares of Series B Preferred Stock, the
Board of Directors may fix a record date for the
determination of shares of Series B Preferred Stock
to be redeemed."
IN WITNESS WHEREOF, the officers named below, acting for and on behalf
of Dreyer's Grand Ice Cream, Inc., have hereunto subscribed their names on this
23rd day of May, 1994.
DREYER'S GRAND ICE CREAM, INC.
By: /s/ William F. Cronk, III
__________________________
Title: President
Attest:
By: /s/ Paul R. Woodland
_____________________________________
Title: Vice President-Chief Financial
Officer and Assistant Secretary
3
<PAGE> 1
Exhibit 3.2
BY-LAWS
OF
DREYER'S GRAND ICE CREAM, INC.
<PAGE> 2
BY-LAWS OF
DREYER'S GRAND ICE CREAM, INC.
A DELAWARE CORPORATION
AS LAST AMENDED ON JUNE 14, 1994
ARTICLE I-OFFICES
Section 1.1. Principal Office.
(a) The principal executive office of DREYER'S GRAND ICE CREAM, INC.
(herein called the "Corporation") shall be 5929 College Avenue, Oakland,
California 94618.
(b) The Board of Directors (the "Board") shall have full power and
authority to change the location of the principal executive office.
Section 1.2. Registered Office.
The registered office in the State of Delaware is hereby fixed and
located at The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801. The Board is hereby granted full power and
authority to change the place of said registered office within the State of
Delaware.
Section 1.3. Other Offices.
The Corporation may also have from time to time branch or substitute
offices at such other places as the Board may deem appropriate.
ARTICLE II-STOCKHOLDERS' MEETINGS
Section 2.1. Place.
Meetings of the stockholders shall be at such place within or without
the State of Delaware as the Board shall designate by resolution. In the
absence of such designation, stockholders' meetings shall be held at the
principal executive office of the Corporation.
Section 2.2. Annual Meetings.
The annual meetings of stockholders shall be held on any day and at
any time during either the month of May or such other month as determined by
resolution of the Board. At such meeting directors shall be elected, reports
of the affairs of the Corporation shall be considered, and any other business
may be transacted which is within the powers of the stockholders if properly
brought before the meeting as provided herein.
Written notice of each annual meeting shall be mailed to each
stockholder entitled to vote, addressed to such stockholder at his address
appearing on the books of the Corporation or given by him to the Corporation
for the purpose of notice. If a stockholder gives no address, notice shall be
deemed to have been given if sent by mail or other means of written
communication addressed to the place where the principal executive office of
the Corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be mailed, postage prepaid, to each stockholder entitled thereto
not less than ten (10) days nor more than sixty (60) days before each annual
1
<PAGE> 3
meeting. Such notices shall specify the place, the day, and the hour of such
meeting, the names of the nominees for election and those matters which the
Board intends to present for action by the stockholders, and shall state such
other matters, if any, as may be expressly required by statute. Any previously
scheduled annual meeting of the stockholders may be postponed by resolution of
the Board upon public notice given on or prior to the date previously scheduled
for such meeting.
Section 2.3. Special Meetings.
Special meetings of the stockholders, for any purpose or purposes, may
be called at any time by the Board, the Chairman of the Board, the President,
or by a committee of the Board which has been duly designated by the Board and
whose powers and authority, as provided in a resolution of the Board or in the
By-Laws of the Corporation, include the power to call such meetings, but such
special meetings may not be called by any other person or persons; provided,
however, that if and to the extent that any special meeting of stockholders may
be called by any other person or persons specified in any provisions of the
Certificate of Incorporation or any amendment thereto, or any certificate filed
under Section 151(g) of the Delaware General Corporation law designating the
number of shares of Preferred Stock to be issued and the rights, preferences,
privileges and restrictions granted to or imposed on the holders of such
designated Preferred Stock, as permitted by Article Fifth of the Certificate of
Incorporation, then such special meeting may also be called by the person or
persons in the manner, at the times and for the purposes so specified. Except
in special cases where other express provision is made by statute, notice of
such special meeting shall be given in the same manner as for an annual meeting
of stockholders. Said notice shall specify the general nature of the business
to be transacted at the meeting. No business shall be transacted at a special
meeting except as stated in the notice sent to stockholders, unless by the
unanimous consent of all stockholders represented at the meeting, either in
person or by proxy. Upon written request to the Chairman of the Board, the
President or the Secretary or any Vice President of the Corporation by any
person (but not the Board) entitled to call a special meeting of stockholders,
the person receiving such request shall cause a notice to be given to
stockholders entitled to vote that a meeting will be held at a time requested
by the person calling the meeting not less than thirty-five (35) nor more than
sixty (60) days after the receipt of the request. Any previously scheduled
special meeting of the stockholders may be postponed by resolution of the Board
upon public notice given on or prior to the date previously scheduled for such
meeting.
Section 2.4. Nomination and Stockholder Business.
(a) Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board and
the proposal of business to be considered by the
stockholders may be made at an annual meeting of
stockholders (A) pursuant to the Corporation's notice
of meeting, (B) by or at the direction of the Board
or (C) by any stockholder of the Corporation who was
a stockholder of record at the time of giving of
notice provided for in this Section 2.4 who is
entitled to vote at the meeting and who complied with
the notice procedures set forth in this Section 2.4.
(2) For nominations or other business to be properly
brought before an annual meeting by a stockholder
pursuant to clause (c) of subparagraph (a)(1) of this
Section 2.4, the stockholder must have given timely
notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice
shall be delivered to the Secretary at the principal
executive office of the Corporation not less than 60
days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of
the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary
date,
2
<PAGE> 4
notice by the stockholder to be timely must be so
delivered not earlier than the 90th day prior to such
annual meeting and not later than the close of
business on the later of the 60th day prior to such
annual meeting or the 10th day following the day on
which public announcement of the date of such meeting
is first made. Such stockholder's notice shall set
forth (A) as to each person whom the stockholder
proposes to nominate for election or re-election as a
director all information relating to such person that
is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a
nominee and to serving as a director if elected); (B)
as to any other business that the stockholder
proposes to bring before the meeting, a brief
description of the business desired to brought before
the meeting, the reasons for conducting such business
at the meeting and any material interest in such
business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made;
and (C) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and
(ii) the class and number of shares of the
Corporation which are owned beneficially and of
record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of
subparagraph (a)(2) of this Section 2.4 to the
contrary, in the event that the number of directors
to be elected to the Board of the Corporation is
increased and there is no public announcement naming
all of the nominees for Director or specifying the
size of the increased Board made by the Corporation
at least 70 days prior to the first anniversary of
the preceding year's annual meeting, a stockholder's
notice required by this Section 2.4 shall also be
considered timely, but only with respect to nominees
for any new positions created by such increase, if it
shall be delivered to the Secretary at the principal
executive office of the Corporation not later than
the close of business on the 10th day following the
day on which such public announcement is first made
by the Corporation.
(b) Special Meetings of Stockholders. Nominations of persons for
election to the Board may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (A)
by or at the direction of the Board or (B) by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this Section 2.4, who shall be entitled to vote at the meeting
and who complies with the notice procedures set forth in this Section 2.4.
Nominations by stockholders of persons for election to the Board may be made at
such special meeting of stockholders if the stockholder's notice required by
subparagraph (a) (2) of this Section 2.4 shall be delivered to the Secretary at
the principal executive office of the Corporation not earlier than the 90th day
prior to such special meeting and not later than the close of business on the
later of the 60th day prior to such special meeting or the 10th day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board to be elected at such
meeting.
(c) General.
(1) Only such persons who are nominated in accordance
with the procedures set forth in this Section 2.4
shall be eligible to serve as directors and only such
business shall be conducted at a meeting of
stockholders as shall have been brought before the
meeting in accordance with the procedures set forth
in this Section 2.4. The
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Chairman of the meeting shall have the power and duty
to determine whether a nomination or any business
proposed to be brought before the meeting was made in
accordance with the procedures set forth in this
Section 2.4 and, if any proposed nomination or
business is not in compliance with this Section 2.4,
to declare that such defective proposal shall be
disregarded.
(2) For purposes of this Section 2.4, "public
announcement" shall mean disclosure in a press
release reported by the Dow Jones News Service,
Associated Press or comparable news service or in a
document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to
Sections 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this
Section 2.4, a stockholder shall also comply with all
applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the
matters set forth in this Section 2.4. Nothing in
this Section 2.4 shall be deemed to affect any rights
of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act.
Section 2.5. Waiver of Notice.
Transactions at a meeting of stockholders, however called and noticed
and wherever held, shall be valid as though transacted at a meeting duly held
after regular call and notice if a quorum is present either in person or by
proxy, and if, either before or after the meeting, each of the persons entitled
to vote, not present at the meeting in person or by proxy, signs a written
waiver of notice, a consent to the holding of the meeting, or an approval of
the minutes thereof. Attendance by a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened, and except that attendance at a
meeting is not a waiver of any right to object to the consideration of matters
required by law to be in the notice of the meeting but not so included, if that
objection is expressly made at the meeting. All such waivers, consents, or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. The waiver of notice or consent need not specify
either the business to be transacted or the purpose of any annual or special
meeting of stockholders.
Section 2.6. Action Without Meeting.
No action shall be taken by the stockholders except at an annual or
special meeting of stockholders.
Section 2.7. Quorum.
A majority of the shares entitled to vote, represented in person or by
proxy, constitutes a quorum for the transaction of business. No business may
be transacted at a meeting in the absence of a quorum other than the
adjournment of such meeting, except that if a quorum is present at the
commencement of a meeting, business may be transacted until the meeting is
adjourned even though the withdrawal of stockholders results in less than a
quorum. If a quorum is present at a meeting, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on any
matter shall be the act of the stockholders unless the vote of a larger number
is required by law, the Certificate of Incorporation or these By-Laws. If a
quorum is present at the commencement of a meeting but the withdrawal of
stockholders results in less than a quorum,
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the affirmative vote of the majority of shares required to constitute a quorum
shall be the act of the stockholders unless the vote of a larger number is
required by law, the Certificate of Incorporation or these By-Laws. Any
meeting of stockholders, whether or not a quorum is present, may be adjourned
by the Chairman of the meeting or by the vote of a majority of the shares
represented at the meeting.
Section 2.8. Adjourned Meetings and Notice Thereof.
Any stockholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the vote of a majority of the
shares, the holders of which are either present in person or represented by
proxy thereat.
Notice of an adjourned meeting need not be given if (a) the meeting is
adjourned for thirty (30) days or less, (b) the time and place of the adjourned
meeting are announced at the meeting at which the adjournment is taken, and (c)
no new record date is fixed for the adjourned meeting. Otherwise, notice of
the adjourned meeting shall be given as in the case of an original meeting.
Section 2.9. Voting.
Except as provided below or as otherwise provided by the Certificate
of Incorporation or by law, a stockholder shall be entitled to one vote for
each share held of record on the record date fixed for the determination of the
stockholders entitled to vote at a meeting or, if no such date is fixed, the
date determined in accordance with law. If any share is entitled to more or
less than one vote on any matter, all references herein to a majority or other
proportion of shares shall refer to a majority of other proportion of the
voting power of shares entitled to vote on such matter. The Board, in its
discretion, or the officer presiding at a meeting of stockholders in his
discretion, may require that any votes cast at such meeting, including a vote
for directors, be by written ballot.
Section 2.10. Proxies.
A stockholder may be represented at any meeting of stockholders by a
written proxy signed by the person entitled to vote or by such person's duly
authorized attorney-in-fact. A proxy must bear a date within three (3) years
prior to the meeting, unless the proxy specifies a different length of time. A
revocable proxy is revoked by a writing delivered to the Secretary of the
Corporation stating that the proxy is revoked or by a subsequent proxy executed
by, or attendance at the meeting and voting in person by, the person executing
the proxy.
Section 2.11. Inspectors of Election.
(a) In advance of a meeting of stockholders, the Board may appoint
inspectors of election to act at the meeting. If inspectors of election are
not so appointed, or if any persons so appointed fail to appear or refuse to
act, the Chairman of the meeting may, and on request of a stockholder shall,
appoint inspectors of election (or persons to replace those who so fail or
refuse) for the meeting. The number of inspectors shall be either one or
three. If appointments are to be made at a meeting on the request of a
stockholder, the majority of stockholder votes represented in person or by
proxy shall determine whether the number of inspectors shall be one or three.
Each inspector, before discharging his or her duties, shall take and sign an
oath faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability.
(b) Such inspectors of election shall (i) determine the number of
shares outstanding, the number of shares represented at the meeting, the voting
power of each share, the existence of a quorum, and the validity of proxies;
(ii) receive votes, ballots, or consents; (iii) hear and determine all
challenges and questions arising in connection with the right to vote; (iv)
count and tabulate votes or consents; (v) determine when the polls
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shall open and close; (vi) determine the result of an election; (vii) do such
other acts as may be proper in order to conduct the election with fairness to
all stockholders; and (viii) perform such other duties as may be prescribed by
law. The Chairman of the meeting shall announce at the meeting the date and
time of the opening and the closing of the polls for each matter upon which the
stockholders will vote at the meeting. If there are three inspectors of
election, the decision of a majority shall be effective in all respects as the
decision of all.
Section 2.12. List of Stockholders.
The Secretary of the Corporation shall prepare and make, at least ten
(10) days before every meeting of the stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at
the place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.
ARTICLE III-DIRECTORS
Section 3.1. Powers and Duties.
The business and affairs of the Corporation shall be managed and all
corporate powers shall be exercised, by or under the direction of the Board,
subject to any limitations contained in these By-Laws, the Certificate of
Incorporation or the General Corporation Law of Delaware. The Board may
delegate the management of the day-to-day operation of the business of the
Corporation to a management company or other person, provided that the business
and affairs of the Corporation shall remain under the ultimate direction of the
Board. Without limiting the generality of the foregoing, it is expressly
declared that the Board shall have the following powers:
(1) To conduct, manage and control the affairs and business of
the Corporation and to make such rules and regulations therefore, not
inconsistent with law, the Certificate of Incorporation or these
By-Laws, as the Board may deem advisable.
(2) To select or remove all officers, agents and employees of
the Corporation, to prescribe powers and duties for them, and to fix
their compensation.
(3) To adopt, make use of or alter the corporate seal and the
forms of certificates of stock.
(4) To authorize the issuance of shares of stock from time to
time, upon such terms and for such consideration as may be lawful.
(5) To borrow money and incur indebtedness for the purposes of
the Corporation, and to cause to be executed therefore, in the
Corporate name, evidences of indebtedness and securities of such
indebtedness.
Section 3.2. Number of Directors.
(a) Except as provided in any certificate filed pursuant to Section
151(g) of the General Corporation Law of Delaware designation the number of
shares of Preferred Stock to be issued and the rights, preferences,
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privileges and restrictions granted to or imposed on the holders of such
designated Preferred Stock, as permitted by Article Fifth of the Certificate of
Incorporation, the authorized number of directors of this Corporation shall not
be less than five (5) nor more than nine (9). The exact number of directors
shall be fixed from time to time by an amendment to subsection (b) of this
Section duly adopted by the Board or by a vote of not less than eighty percent
(80%) of the outstanding stock of the Corporation entitled to vote thereon.
(b) Subsection (a) of this Section provides for an indefinite number
of directors and requires this subsection, from time to time to specify the
exact number. Pursuant thereto it is hereby specified that this Corporation
shall have nine (9) directors.
Section 3.3. Election and Term of Office.
(a) The Board shall be and is divided into three classes: Class I,
Class II and Class III, which shall be as nearly equal in number as possible.
Each director shall serve for a term ending on the date of the third annual
meeting of stockholders following the annual meeting at which the director was
elected; provided, however, that each initial director in Class I shall hold
office until the annual meeting of stockholders in 1986; each initial director
in Class II shall hold office until the annual meeting of stockholders in 1987;
and each initial director in Class III shall hold office until the annual
meeting of stockholders in 1988. In the event the number of directors cannot
be divided evenly among the three Classes, Class I shall contain the smallest
number of directors and Class III shall contain the largest number of
directors. Notwithstanding the foregoing provisions of this Section 3.3, each
director shall serve until his successor is duly elected and qualified or until
his death, resignation or removal.
(b) In the event of any increase or decrease in the authorized number
of directors, (1) each director then serving as such shall nevertheless
continue as a director of the class of which he is a member until the
expiration of his current term, or his earlier resignation, removal from office
or death, and (2) the newly created or eliminated directorship resulting from
such increase or decrease shall be apportioned by the Board among the three
classes of directors so as to maintain such classes as nearly equal as
possible.
Section 3.4. Resignation, Removal and Vacancies.
(a) A director may resign by giving written notice to the Board, the
Chairman of the Board, the President or the Secretary. Such resignation shall
take effect upon receipt of such notice or at a later time specified therein;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective. If the resignation of a director
is effective at a future time, the Board may elect a successor to take office
when the resignation becomes effective.
(b) A director may be removed from office at any time, but only for
cause, and only by the affirmative vote of the holders of a majority of the
shares entitled to vote at an election of directors. No reduction in the
number of directors shall have the effect of removing any director prior to the
expiration of his term.
(c) Any vacancies in the Board for any reason, and any newly created
directorships resulting from any increase in the number of directors, may be
filled by the Board, acting by a majority of the directors then in office,
although less than a quorum or by a sole remaining director; and any directors
so chosen shall hold office until the next election of the class for which such
directors shall have been chosen, and until their successors shall be elected
and qualified.
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Section 3.5. Place of Meeting.
The Board may designate a place within or without the State of
Delaware where a regular or special meeting of the Board shall be held. In the
absence of such designation, regular meetings shall be held at the principal
executive office of the Corporation.
Section 3.6. Meetings by Conference Telephone.
A meeting of the Board may be held through the use of conference
telephone or similar communications equipment, so long as all members
participating in such meeting can hear one another. Participation in such a
meeting shall constitute presence at such meeting.
Section 3.7. Regular Meetings.
Regular meetings of the Board shall be held at any place within or
outside the State of Delaware and at such times as shall from time to time be
determined by resolution of the Board. No call or notice of any regular
meeting of the Board shall be necessary.
Section 3.8. Special Meetings and Notice.
A special meeting of the Board for any purpose may be called at any
time by the Chairman of the Board, the President, the Secretary, or any two
directors. Notice of each special meeting shall be given to each director, but
such notice need not specify the purpose of the meeting. Such notice shall be
given two days prior to the meeting if given by mail, or 24 hours prior to the
meeting if delivered personally or by telephone or telegraph. Such notice
shall be addressed or delivered to each director at such director's address as
shown upon the records of the Corporation or as may have been given to the
Corporation by the director for the purposes of notice. If such address is not
shown on the corporate records or is not readily ascertainable, notice may be
delivered to the place at which meetings of the Board are regularly held.
Notice need not be given to any director who signs a waiver of notice (whether
before or after the meeting) or who attends the meeting without protesting the
lack of notice prior to its commencement.
Section 3.9. Waiver of Notice.
Transactions at any meeting of the Board, however called and noticed
and wherever held, shall be valid as though transacted at a meeting duly held,
after regular call and notice, if (i) a quorum is present, (ii) no director
present protests lack of notice prior to the commencement of the meeting, and
(iii) each director not present at the meeting signs a written waiver of
notice, a consent to holding such meeting, or an approval of the minutes
thereof. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
Section 3.10. Quorum.
A majority of the directors then in office shall constitute a quorum
for the transaction of business, provided that unless the authorized number of
directors is one, the number constituting a quorum shall not be less than the
greater of one-third of the authorized number of directors or two directors.
Except as otherwise provided by the Certificate of Incorporation or these
By-Laws, every act or decision done or made by a majority of the directors
present at a meeting duly held at which a quorum is present is the act of the
Board. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for such
meeting. A majority of the directors present at a meeting, whether or not a
quorum is present, may adjourn the meeting to another time and place.
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Section 3.11. Adjournment and Notice Thereof.
Any meeting of the Board, whether or not a quorum is present, may be
adjourned by a majority vote of the directors present. If the meeting is
adjourned for more than 24 hours, notice of any adjournment to another time or
place shall be given prior to the time of the adjourned meeting to the
directors who were not present at the time of the adjournment.
Section 3.12. Action Without Meeting.
Any action required or permitted to be taken by the Board may be taken
without a meeting if all members of the Board individually or collectively
consent in writing to such action. Such written consent shall be filed with
the minutes of the proceedings of the Board. Such action by written consent
shall have the same force and effect as a unanimous vote of the directors at a
duly held meeting of the Board.
Section 3.13. Compensation.
Directors and members of committees may be paid such compensation for
their services as may be determined by resolution of the Board. This section
shall not be construed to preclude any director from serving the Corporation in
any other capacity as an officer, agent, employee, or otherwise, and receiving
compensation for those services.
Section 3.14. Committees.
(a) The Board may, by resolution adopted by a majority of the
authorized number of directors, designate one or more committees, each
consisting of two or more directors, to serve at the pleasure of the Board. In
the absence or disqualification of any member of a committee of the Board, the
other members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board to act in the place of such absent or disqualified member.
The Board may designate one or more directors as alternate members of a
committee who may replace any absent member at any meeting of the committee.
To the extent permitted by resolution of the Board, a committee may exercise
all of the authority of the Board to the extent permitted by Section 141 (c) of
the General Corporation Law of Delaware, except with respect to:
(1) the approval of any action which, under the General
Corporation Law of Delaware, also requires stockholders' approval or
approval of the outstanding shares;
(2) the filling of vacancies on the Board or in any committee;
(3) the fixing of compensation of the directors for serving on
the Board or on any committee;
(4) the amendment or repeal of the By-Laws or the adoption of
new By-Laws;
(5) the amendment or repeal of any resolution of the Board
which by its express terms is not so amendable or repealable;
(6) a distribution to the stockholders of the Corporation,
except at a rate or in a periodic amount or within a price range
determined by the Board; or
(7) the appointment of any other committees of the Board or
the members of these committees.
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(b) Meetings and action of committees shall be governed by, and held
and taken in accordance with, the provisions of Article III of these By-Laws,
Section 3.5 (place of meeting), Section 3.6 (meetings by conference telephone),
Section 3.7 (regular meetings), Section 3.8 (special meetings and notice),
Section 3.9 (waiver of notice), Section 3.10 (quorum), Section 3.11
(adjournment and notice), and Section 3.12 (action without meeting), with such
changes in the context of those By-Laws as are necessary to substitute the
committee and its members of the Board and its members, except that the time of
regular meetings of committees may be determined either by resolution of the
Board or by resolution of the committee; special meetings of committees may
also be called by resolution of the Board or by resolution of the committee;
special meetings of committees may also be called by resolution of the Board;
and notice of special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all meetings of the
committee. The Board may adopt rules for the government of any committee not
inconsistent with the provisions of these By-Laws.
Section 3.15. Right of Inspection.
Each director shall have the right at any reasonable time to inspect
and copy all books, records and documents of every kind and to inspect the
physical properties of the Corporation and its subsidiary corporations,
domestic or foreign. Such inspection by a director may be made in person or by
agent or attorney and includes the right to copy and make extracts.
ARTICLE IV-OFFICERS
Section 4.1. Officers.
The Corporation shall have (i) a Chairman of the Board or a President
(or both), (ii) a Vice President, (iii) a Secretary, and (iv) a Chief Financial
Officer. The Corporation may also have, at the discretion of the Board, one or
more other Vice Presidents, one or more Assistant Secretaries, a Treasurer, one
or more Assistant Treasurers, and such other officers as the Board may deem
appropriate. Any number of offices may be held by the same person.
Section 4.2. Additional Officers.
Officers other than the Chairman of the Board, the President, the
Secretary and the Chief Financial Officer are herein referred to as Additional
Officers. The Board may elect, and may empower the President to appoint, such
Additional Officers as the Board may deem appropriate. Each Additional Officer
shall hold office for such period, shall have such authority, and shall perform
such duties, as are provided in these By-Laws or as the Board may designate.
Section 4.3. Election and Term of Office.
Except as otherwise herein provided, the officers of the Corporation
shall be elected by the Board at its regular organizational meeting or at a
subsequent meeting. Each officer shall hold office at the pleasure of the
Board, or until his death, resignation or removal.
Section 4.4. Resignation and Removal.
(a) An officer may resign at any time by giving written notice to the
Corporation. Such resignation shall be without prejudice to any rights the
Corporation may have under any contract to which the officer is a party. Such
resignation shall take effect upon the receipt of such notice or at a later
time specified therein; and, unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
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(b) The Board may remove any officer with or without cause, and such
action shall be conclusive upon the officer so removed. The Board may
authorize any officer to remove subordinate officers. Any removal shall be
without prejudice to rights the officer may have under any employment contract
with the Corporation.
Section 4.5. Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification, or any other cause shall be filled in the manner prescribed
in these By-Laws for election or appointment to such office.
Section 4.6. Chairman of the Board.
The Chairman of the Board, if there be such an officer, shall preside
at all meetings of the Board at which he is present and shall exercise and
perform such other powers and duties as may be prescribed by the Board or
By-Laws. Even if there is a president, the Chairman of the Board shall in
addition be the Chief Executive Officer of the Corporation. The Chief
Executive Officer of the Corporation shall have and be vested with general
supervisory power and authority over the business and affairs of the
Corporation. He shall see that all orders and resolutions of the Board are
carried into effect. He shall sign or countersign or authorize another officer
of the Corporation to sign all certificates contracts, and other instruments of
the Corporation as authorized by the Board, shall make reports to the Board and
stockholders and shall perform all such other duties as may be directed by the
Board or the By-Laws. He shall vote, in the name of the Corporation, stock in
other corporations or interests in other associations held by the Corporation,
unless another officer is designated by the Board.
Section 4.7. President.
The President shall have and be vested with general supervisory power
and authority over the business and affairs of the Corporation and shall
perform all such duties as may be directed by the Board or these By-Laws,
subject at all times to the authority of the Chief Executive Officer. The
President shall also have and exercise all of the duties, power and authority
prescribed for the Chief Executive Officer except with respect to such specific
authority as the Chairman of the Board may from time to time reserve unto
himself.
Section 4.8. Vice Presidents.
Vice Presidents shall have such powers and duties as may be prescribed
by the Board or the President. A Vice President designated by the Board shall,
in the absence or disability of the President, perform all the duties of the
President; and when so acting such Vice President shall have all the powers of
the President.
Section 4.9. Chief Financial Officer.
The Chief Financial Officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The Chief Financial Officer shall deposit all monies and other
valuables in the name and to the credit of the Corporation with such
depositaries as may be designated by the Board. He shall disburse the funds of
the Corporation as may be ordered by the Board, shall render to the President
and directors, whenever they request it, an account of all of his transactions
as Chief Financial Officer and of the financial condition of the Corporation,
and shall have other powers and perform such other duties as may be prescribed
by the Board or the By-Laws.
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If there be any Treasurer, the Treasurer shall, in the event of
absence, disability or refusal to act of the Chief Financial Officer, perform
the duties and exercise the powers of the Chief Financial Officer, and shall
have such powers and discharge such duties as may be assigned from time to time
by the President or by the Board.
Section 4.10. Secretary.
(a) The Secretary shall keep or cause to be kept full and accurate
records of all meetings of stockholders and all meetings of directors. Such
records shall include books of minutes of all meetings of stockholders,
meetings of the Board, and meetings of committees. The information in such
books of minutes shall include the names of those present at Board and
committee meetings and the number of shares represented at stockholders'
meetings.
(b) The Secretary shall give or cause to be given notice of all
meetings of stockholders, of the Board, and of any committees, whenever such
notice is required by law or these By-Laws.
(c) The Secretary shall keep or cause to be kept at the principal
executive office, or at the office of the Corporation's transfer agent or
registrar if either be appointed, a share register, or a duplicate share
register, showing the names of the stockholders and their addresses, the number
and classes of shares held by each, the number and date of certificates issued
for such shares, and the number and date of cancellation of every certificate
surrendered for cancellation.
(d) The Secretary shall keep or cause to be kept a copy of the By-Laws
of the Corporation at the principal executive office.
(e) The Secretary shall keep the corporate seal in safe custody.
(f) The Secretary shall have all the powers and duties ordinarily
incident to the office of a secretary of a corporation and such other duties as
may be prescribed by the Board.
(g) If there be any Assistant Secretaries, one or more Assistant
Secretaries, in order of seniority, shall, in the event of the absence,
disability or refusal to act of the Secretary, perform the duties and exercise
the powers of the Secretary, and shall have such powers and discharge such
duties as may be assigned from time to time by the President or by the Board.
Section 4.11. Compensation.
The Board may fix, or may appoint a committee to fix, the compensation
of all officers and employees of the Corporation. The Board may authorize any
officer upon whom the power of appointing subordinate officers may have been
conferred to fix the compensation of such subordinate officers.
ARTICLE V-DIVIDENDS AND FINANCE
Section 5.1. Dividends.
(a) Dividends upon the capital stock of the Corporation, subject to
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board at any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock, subject to the
provisions of the Certificate of Incorporation.
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(b) Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 5.2. Deposits and Withdrawals.
The monies of the Corporation shall be deposited in the name of the
Corporation in such bank or banks or trust company or trust companies as the
Board shall designate, and shall be drawn out only by check signed by persons
designated by resolutions of the Board.
Section 5.3. Fiscal Year.
The fiscal year of the Corporation shall be a 52-53 week year ending
the last Saturday in December in each year unless otherwise provided by the
Board.
ARTICLE VI-MISCELLANEOUS
Section 6.1. Record Date.
The Board may fix a time, in the future, not more than sixty (60) nor
less than ten (10) days prior to the date of any meeting of stockholders, nor
more than sixty (60) days prior to the date fixed for the payment of any
dividend or distribution, or for the allotment of rights, or when any change or
conversion or exchange of shares shall go into effect, as a record date for the
determination of the stockholders entitled to notice of and to vote at any such
meeting, or entitled to receive any such dividend or distribution, or such
allotment of rights, or to exercise the rights in respect to any such change,
conversion, or exchange of shares, and in such case except as provided by law,
only stockholders of record on the date so fixed shall be entitled to notice of
and to vote at such meeting or to receive such dividend, distribution or
allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation
after any record date fixed as aforesaid. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting unless the Board fixes a new record
date. The Board shall fix a new record date if the adjourned meeting takes
place more than 30 days from the date set for the original meeting.
Section 6.2. Maintenance and Inspection of Share Register.
The Corporation shall keep at its principal executive office, or at
the office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the Board, a record of its stockholders, giving the
names and addresses of all stockholders and the number and class of shares held
by each stockholder.
Section 6.3. Registered Stockholders.
Registered stockholders only shall be entitled to be treated by the
Corporation as the holders in fact of the shares standing in their respective
names and the Corporation shall not be bound to recognize any equitable or
other claim to or interest in any share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
expressly provided by the laws of Delaware.
Section 6.4. Inspection of By-Laws.
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<PAGE> 15
The Corporation shall keep at its principal executive office the
original or a copy of these By-Laws as amended to date, which copy shall be
open to inspection by stockholders at reasonable times during office hours. If
it should ever occur that the principal executive office is outside of
California and the Corporation has no principal business office in California,
the Corporation shall, upon the written request of any stockholder, furnish
such stockholder with a copy of these By-Laws as amended to date.
Section 6.5. Inspection by Directors.
Every director shall have the absolute right at any reasonable time to
inspect all books, records, and documents of every kind and the physical
properties of the Corporation and each of its subsidiary corporations. This
inspection by a director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
Section 6.6. Corporate Seal.
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the Corporation, the date of its incorporation and the word
"Delaware."
Section 6.7. Certificates of Stock.
(a) Every holder of shares of the Corporation shall be entitled to
certificates certifying the number of shares owned by the stockholder and the
class or series of such shares. Each certificate shall be signed in the name
of the Corporation by (i) the Chairman of the Board, a Vice Chairman of the
Board, the President, or a Vice President, and (ii) the Chief Financial
Officer, Treasurer, an Assistant Treasurer, the Secretary, or an Assistant
Secretary. Any of the signatures on the certificate may be facsimile. If any
officer, transfer agent or registrar whose signature appears on the certificate
shall cease to be such an officer, transfer agent or registrar before such
certificate is issued, the certificate may be issued by the Corporation with
the same effect as if such person continued to be an officer, transfer agent or
registrar at the date of issue.
(b) Certificates for shares may be issued prior to full payment under
such restrictions and for such purposes as the Board may lawfully provide;
provided, however, that on any certificate issued to represent any partly paid
shares, the total amount of the consideration to be paid therefor and the
amount paid thereof shall be stated.
(c) Except as provided in this Section 6.7, no new certificate for
shares shall be issued in lieu of an old one unless the old certificate is
surrendered and cancelled at the same time. The Corporation may, however, in
case any certificate is alleged to have been lost, stolen or destroyed,
authorize the issuance of a new certificate in lieu thereof; and the
Corporation may require that it be given a bond or other adequate security
sufficient to indemnify the Corporation against any claim that may be made
against it (including expense or liability) on account of the alleged loss,
theft or destruction of such certificate or the issuance of such new
certificate.
(d) Prior to due presentation of transfers for registration in the
stock transfer book of the Corporation, the registered owner of shares shall be
treated as the person exclusively entitled to vote, to receive notice, and to
exercise all other rights and receive all other entitlements of stockholders,
except as may be provided otherwise by Delaware law.
Section 6.8. Execution of Written Instruments.
As used in these By-Laws, the term "written instruments" includes
without limitation any note, mortgage, evidence of indebt edness, contract,
share certificate, conveyance, and any assignment or
14
<PAGE> 16
endorsement of the foregoing. All written instruments shall be binding upon
the Corporation if signed on its behalf by the Chief Executive Officer or if
signed in such other manner as may be authorized by the Board, or within the
agency power of the officer executing it, so long as the party seeking to
enforce such obligations had no actual knowledge that the signing officer was
without authority to execute such written instrument.
Section 6.9. Representation of Shares of Other Corporations.
The Chairman of the Board, President, any Vice President, the
Secretary, the Chief Financial Officer and such other officers as the Board may
designate by resolution are each authorized to exercise on behalf of the
Corporation all rights incident to shares of any other corporation standing in
the name of the Corporation.
Section 6.10. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another company or of a partnership, joint venture, trust or other enterprise
including, without limitation, an employee benefit plan, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended, against all expense, liability and loss (including attorneys' fees,
judgments, fines, and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent of the Corporation and shall inure to the benefit of
his heirs, executors and administrators. The right to indemnification
conferred in this Section 6.10(a) shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance
of its final disposition; provided, however, that if the Delaware General
Corporation Law requires, the advance payment of such expenses incurred by a
director or officer in his capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this Section 6.10 or otherwise.
(b) Application to a Court. If a written claim for indemnification
under this Section 6.10 made by a director, officer, employee or agent of the
Corporation is not paid in full within thirty days after such claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall also be entitled to be paid
the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition where the
required undertaking, if any is required, has been tendered to the Corporation)
that the claimant has not met the standards of conduct which make it
permissible under the Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or stockholders)
to have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or stockholders)
that the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
15
<PAGE> 17
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section 6.10 is a contract right and shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Corporation's Certificate of Incorporation,
by-law, agreement, vote of stockholders or disinterested directors or
otherwise.
(d) Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such.
The extent of the protection afforded by such insurance need not be limited by
any restrictions on the Corporation's power to indemnify such persons.
Section 6.11. Construction.
Unless the context otherwise requires, the general provisions, rules
of construction and definitions contained in the General Provisions of the
General Corporation Law of Delaware shall govern the construction of these
By-Laws. Without limiting the generality of this provision, the singular
includes the plural, plural number includes the singular, and the term "person"
includes both a corporation and a natural person.
Section 6.12. Amendment of These By-Laws.
Except as set forth in the Corporation's Certificate of Incorporation,
new By-Laws of this Corporation may be adopted or these By-Laws may be amended
or rescinded by a vote of either a majority of directors of the Corporation or
a vote of not less than eighty percent (80%) of the outstanding stock of the
Corporation entitled to vote thereon.
16
<PAGE> 1
EXHIBIT 4.1
FIRST AMENDMENT TO AMENDED AND RESTATED RIGHTS AGREEMENT
This First Amendment (the "Amendment"), dated this 14th day of June,
1994, amends the Amended and Restated Rights Agreement (the "Rights Agreement")
by and between Dreyer's Grand Ice Cream, Inc., a Delaware corporation (the
"Company"), and First Interstate Bank of California, a state banking
corporation organized and existing under the laws of the State of California
(the "Rights Agent") (successor to the former Rights Agent, Bank of America,
N.T. & S.A.). All terms not otherwise defined herein shall have the meaning
given such terms in the Rights Agreement.
WHEREAS, the Board of Directors of the Company has approved the sale
of common stock of the Company and warrants to purchase common stock of the
Company (the "Securities") pursuant to a Stock and Warrant Purchase Agreement
(the "Stock Purchase Agreement"), Collateral Agreements (as defined in the
Stock Purchase Agreement) and Right of First Refusal Agreements (as defined in
the Stock Purchase Agreement) (all such agreements collectively referred to as
the "Agreements"), and such sale and related transactions would otherwise cause
the purchaser to become an Acquiring Person;
WHEREAS, the Board of Directors of the Company has determined that it
is desirable to amend the definition of Acquiring Person so that the purchaser
of the Securities will not be deemed an Acquiring Person upon consummation of
the Agreements;
WHEREAS, pursuant to Section 27 of the Rights Agreement the Company
may, subject to certain limitations, amend the Rights Agreement without the
approval of any holders of Rights Certificates to make any provisions with
respect to the Rights which the Company deems necessary or desirable.
NOW, THEREFORE, upon all of the terms and conditions set forth
hereinafter, the Company and the Rights Agent agree as follows:
1. AMENDMENT.
The first sentence of Section 1(a) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the Common
Shares of the Company then outstanding, but shall not include
(i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee
benefit plan of the Company or any Subsidiary of the Company
(iv) any entity holding Common Shares for or pursuant to the
terms of any such
- 1 -
<PAGE> 2
plan, (v) T. Gary Rogers, William F. Cronk, III, or any
Affiliate or Associate of T. Gary Rogers or William F. Cronk,
III, or (vi) Nestle Holdings, Inc., a Delaware corporation, or
any Affiliate or Associate of Nestle Holdings, Inc., so long
as Nestle Holdings, Inc. is not in breach of Section 6.1(d) or
proviso (B) to Section 6.1, as may be applicable at the time,
of the Stock and Warrant Purchase Agreement dated May 6, 1994
between the Company and Nestle Holdings, Inc. (each of the
foregoing in clauses (v) and (vi) an "Exempted Person")."
2. MISCELLANEOUS.
(a) Choice of Law. This Amendment shall be deemed to be
a contract made under the laws of the state of Delaware and for all purposes
shall be governed and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
(b) Counterparts. This Amendment may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
(c) Severability. If any term or provision of this
Amendment is held by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable, the remainder of the terms and provisions
of this Amendment shall in no way be affected, impaired or invalidated.
(d) Existing Terms. The existing terms and conditions
of the Rights Agreement shall remain in full force and effect except as such
terms and conditions are specifically amended or conflict with the terms of
this Amendment.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed and delivered by its duly authorized officer on the
day and year first above written.
THE COMPANY: RIGHTS AGENT:
DREYER'S GRAND ICE CREAM, INC. FIRST INTERSTATE BANK OF
CALIFORNIA
By: /s/ T. Gary Rogers By: /s/ Patricia D. Dedrick
------------------------- -------------------------
Its: Chief Executive Officer Its: Assistant Vice President
------------------------- -------------------------
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<PAGE> 1
EXHIBIT 4.2
===========================================================================
REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
DREYER'S GRAND ICE CREAM, INC.
AND
NESTLE HOLDINGS, INC.
DATED AS OF JUNE 14, 1994
===========================================================================
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<S> <C>
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Securities Subject to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Holders of Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. Demand Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Demand by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Effective Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Registration Statement Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) Selection of Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(e) Registration of Other Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(f) Priority in Requested Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4. Piggyback Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Underwriter's Cutback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) No Effect on Demand Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 5. Hold-Back Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Restrictions on Public Sale by Holders of
Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Restrictions on Public Sale by the Company and Others . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 6. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Indemnification by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Indemnification by Holder of Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9. Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
_______________________
* This Table of Contents does not constitute a part of this Agreement or
have any bearing upon the interpretation of any of its terms or provisions.
S-i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 10. Participation in Underwritten Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(e) Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(g) Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(i) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(j) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
S-ii
<PAGE> 4
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated
as of June 14, 1994 and entered into by and between DREYER'S GRAND ICE CREAM,
INC., a Delaware corporation (the "Company") and NESTLE HOLDINGS, INC., a
Delaware corporation (the "Purchaser").
This Agreement is made pursuant to the Stock and Warrant
Purchase Agreement dated as of May 6, 1994 by and between the Company and the
Purchaser (the "Purchase Agreement"). In order to induce the Purchaser to
enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution of this
Agreement is a condition to the Closing under the Purchase Agreement.
Capitalized terms used herein but not otherwise defined shall have the meaning
assigned such terms in the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. Definitions.
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Agent: Any Person authorized to act and who acts on behalf of
the Purchaser with respect to the transactions contemplated by this Agreement.
Common Shares: The shares of the common stock, par value
$1.00 per share, of the Company.
Exchange Act: The Securities Exchange Act of 1934, as amended
from time to time.
GECC Registration Rights Agreement: That certain Registration
Rights Agreement dated as of June 30, 1993 by and between the Company and
General Electric Capital Corporation ("GECC"), Trustees of General Electric
Pension Trust ("GEPT"), and GE Investment Private Placement Partners, I
("GEIPPP" and together with GECC and GEPT, "GE"), as in effect on the Effective
Date.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Preemptive Rights: The preemptive rights granted to the
Purchaser by the Company pursuant to Section 5.4 of the Purchase Agreement.
Preemptive Rights Shares: Any Common Shares acquired by the
Purchaser pursuant to the Preemptive Rights.
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<PAGE> 5
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
Registrable Securities: (i) the Common Shares acquired by the
Purchaser pursuant to the terms of the Purchase Agreement, (ii) the Warrant
Shares, (iii) the Right of First Refusal Shares, and (iv) the Preemptive Rights
Shares. Registrable Securities shall also include any securities which may be
issued or distributed with respect to, or in exchange for, such Registrable
Securities pursuant to a stock dividend, stock split or other distribution,
merger, consolidation, recapitalization or reclassification or similar
transaction; provided, however, that any such Registrable Securities shall
cease to be Registrable Securities to the extent (i) a Registration Statement
with respect to the sale of such Registrable Securities has been declared
effective under the Securities Act and such Registrable Securities have been
disposed of in accordance with the plan of distribution set forth in such
Registration Statement, (ii) such Registrable Securities are distributed
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, or (iii) such Registrable Securities shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
transfer under the Securities Act shall have been delivered by the Company and
they may be publicly resold without subsequent registration under the
Securities Act or in compliance with Rule 144 thereunder; provided, further,
however, that any securities that have ceased to be Registrable Securities
cannot thereafter become Registrable Securities, and any securities that are
issued or distributed in respect of securities that have ceased to be
Registrable Securities are not Registrable Securities.
Registration: A Demand Registration (as defined in Section 3)
or a Piggyback Registration (as defined in Section 4) of the Company's
securities for sale to the public under a Registration Statement.
Registration Expenses: See Section 7 hereof.
Registration Statement: Any registration statement of the
Company filed with the Securities and Exchange Commission under the rules and
regulations promulgated under the Securities Act which covers Registrable
Securities pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such Registration Statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in such Registration Statement.
Right of First Refusal Agreements: That certain Right of
First Refusal Agreement dated as of the date hereof by and between the
Purchaser and T. Gary Rogers, Kathleen T. Rogers, and the Rogers Revocable
Trust, and that certain Right of First Refusal Agreement dated as of the date
hereof by and between the Purchaser and William F. Cronk, III, Janet M. Cronk,
and the Cronk Revocable Trust.
2
<PAGE> 6
Right of First Refusal Shares: Any Common Shares and any
other voting securities of the Company acquired by the Purchaser pursuant to
the Right of First Refusal Agreements.
Securities Act: The Securities Act of 1933, as amended from
time to time.
SEC: The Securities and Exchange Commission.
Underwritten Registration or Underwritten Offering: A
Registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
Warrants: The Series A Warrants and Series B Warrants, each
to purchase Common Shares, issued and sold pursuant to the Purchase Agreement
and the Warrant Agreement dated as of the date hereof by and between the
Company and the Purchaser (the "Warrant Agreement").
Warrant Shares: Any Common Shares issued or issuable upon
exercise of any Warrant.
SECTION 2. Securities Subject to this Agreement.
(a) Registrable Securities. The securities entitled to
the benefits of this Agreement are the Registrable Securities.
(b) Holders of Registrable Securities. A Person is
deemed to be a holder of Registrable Securities whenever such Person owns
Registrable Securities or has the right to acquire such Registrable Securities,
whether or not such ownership or right was acquired pursuant to the Purchase
Agreement, the Warrant Agreement, the Right of First Refusal Agreements, or the
Preemptive Rights, and whether or not such acquisition has actually been
effected and disregarding any legal restrictions upon the exercise of such
right.
SECTION 3. Demand Registrations.
(a) Demand by Holders. Subject to the transfer
restrictions of Section 6.3 of the Purchase Agreement, the holders of
Registrable Securities, at any time from and after the Closing, may make three
written requests, in the aggregate with respect to all such holders, to the
Company for Registration of Registrable Securities representing, in each
instance, not less than 600,000 Common Shares under and in accordance with the
provisions of the Securities Act; provided, however, that the holders of Excess
Shares shall be entitled to make a written request to the Company for one
Registration of Excess Shares under and in accordance with the provisions of
the Securities Act without regard to the foregoing limitations as to number of
requests and minimum number of shares. Any such Registration requested shall
hereinafter be referred to as a "Demand Registration." Each request for a
Demand Registration shall specify the kind and aggregate amount of Registrable
Securities to be registered and the intended methods of disposition thereof.
Upon such request for a Demand Registration, the Company shall use its best
efforts to effect the Registration of such Registrable Securities under (i) the
3
<PAGE> 7
Securities Act, and (ii) the blue sky laws of such jurisdictions as any holder
of such Registrable Securities requesting such Registration or any underwriter,
if any, may reasonably request, provided that the Company shall not be required
to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not, but for the requirements of this paragraph,
be obligated to be so qualified or to consent to general service of process in
such jurisdiction. The Company shall also use its best efforts to have all
such Registrable Securities registered with or approved by such other federal
or state governmental agencies or authorities as may be necessary in the
opinion of counsel to the Company and counsel to the holders of a majority of
such Registrable Securities to consummate the disposition of such Registrable
Securities.
(b) Effective Registration. The Company shall be deemed
to have effected a Demand Registration if the Registration Statement relating
to such Demand Registration is declared effective by the SEC and remains
effective until the earlier of such time as all the Registrable Securities
covered by such Registration Statement have been sold or withdrawn, or 90 days;
provided, however, that no Demand Registration shall be deemed to have been
effected if (i) such Registration, after it has become effective, is interfered
with by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court for any reason not attributable to the
selling holders of Registrable Securities, or (ii) the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such Registration are not satisfied, other than by reason of a
failure on the part of the selling holders of Registrable Securities.
(c) Registration Statement Form. Registrations under
this Section 3 shall be on such appropriate registration form of the SEC as
shall be selected by the Company and as shall permit the disposition of such
Registrable Securities in accordance with the intended method or methods of
disposition specified in the request for such Registration; provided, however
that the Company shall include in such registration form, if reasonably
requested by the holders of a majority of the Registrable Securities for which
Registration is being requested under this Section 3, information which is
otherwise required under applicable SEC regulations to be incorporated by
reference in such registration form.
(d) Selection of Underwriters. If at any time or from
time to time any of the holders of the Registrable Securities covered by a
Registration Statement desires to sell Registrable Securities in an
Underwritten Offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the holders
of a majority of the Registrable Securities included in such offering;
provided, however, that the banker(s) and manager(s) so selected must be
nationally recognized in the securities field; provided, further, however, that
the Company shall have the right to make a reasonable objection to such
selection if such objection is based upon the Company's prior experience or
relationship with such banker(s) or manager(s).
(e) Registration of Other Securities. Whenever the
Company shall effect a Registration pursuant to this Section 3, no securities
other than Registrable Securities shall be included among the securities
covered by such Registration unless the selling holders of a majority of all
Registrable Securities to be covered by such Registration shall have consented
in writing to the inclusion of such other securities.
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(f) Priority in Requested Registration. If the Company
shall effect a Registration pursuant to this Section 3 in connection with an
Underwritten Offering by one or more holders of Registrable Securities, and if
the managing underwriter of such offering shall advise the Company in writing
(with a copy to each selling holder of Registrable Securities requesting
Registration) that, in its opinion, the number of securities requested to be
included in such Registration exceeds the number which can be sold in such
offering within a price range acceptable to the selling holders of a majority
of the Registrable Securities requested to be included in such Registration,
the Company will include in such Registration, to the extent of the number
which the Company is so advised can be sold in such offering, Registrable
Securities requested to be included in such Registration, selected pro rata
from the Registrable Securities of the selling holders requesting such
Registration on the basis of the percentage of the total amount of the
Registrable Securities which such selling holders requested to be so
registered.
SECTION 4. Piggyback Registrations.
(a) Participation. Subject to Section 4(b) hereof, if at
any time from and after the Closing under the Purchase Agreement the Company
proposes to file a Registration Statement under the Securities Act with respect
to any offering of any of its securities, whether or not by the Company for its
own account (other than (i) a registration on Form S-4 or S-8 or any successor
form to such Forms, or (ii) any registration of securities as it relates to an
offering and sale to management of the Company pursuant to any employee stock
plan or other employee benefit plan arrangement), then, as promptly as
practicable, the Company shall give written notice of such proposed filing to
each holder of Registrable Securities and such notice shall offer the holders
of Registrable Securities the opportunity to register such number of
Registrable Securities as each such holder may request (a "Piggyback
Registration"). Subject to Section 4(b), the Company shall include in such
Registration Statement all Registrable Securities requested within 30 days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder) to be
included in the Registration for such offering pursuant to a Piggyback
Registration; provided, however, that if such Registration Statement was the
subject of an exercise of a demand registration right pursuant to Section 2.1
of the GECC Registration Rights Agreement, then the Company shall not be
obligated to include any Registrable Securities in such Registration without
the consent of the selling holders of a majority of all "Registrable
Securities" (as defined in the GECC Registration Rights Agreement) included in
the Registration (the "GE Holders"); provided, further, however, that such
consent shall be deemed to have been given if the GE Holders allow any
securities other than "Registrable Securities" (as defined in the GECC
Registration Rights Agreement) to be included in such Registration. Each
holder of Registrable Securities shall be permitted to withdraw all or part of
such holder's Registrable Securities from a Piggyback Registration at any time
prior to the effective date thereof.
(b) Underwriter's Cutback. The Company shall use its
best efforts to cause the managing underwriter or underwriters of a proposed
Underwritten Offering to permit the Registrable Securities requested to be
included in the Registration for such offering under Section 4(a) or pursuant
to other piggyback registration rights granted by the Company, if any (the
"Piggyback Securities"), to be included on the same terms and conditions as any
similar securities included therein. Notwithstanding the foregoing, if the
managing underwriter or
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<PAGE> 9
underwriters of any such proposed Underwritten Offering informs the Company and
the holders of such Piggyback Securities in writing that the total amount or
kind of securities, including Piggyback Securities, which such holders and any
other persons or entities intend to include in such offering would be
reasonably likely to adversely affect the price or distribution of the
securities offered in such offering or the timing thereof, then the securities
to be included in the Registration for such offering shall be the number of
securities that, in the opinion of such underwriter or underwriters, can be
sold without an adverse effect on the price, timing or distribution of the
securities to be included, selected (i) first, from all securities proposed by
the Company to be sold for its own account, if any, (ii) second, and only if
all securities proposed by the Company to be sold for its own account have been
so included, from (A) the Piggyback Securities and (B) the securities requested
for inclusion in such Registration pursuant to the exercise of piggyback
registration rights under Section 2.2 of the GECC Registration Rights Agreement
(the "GE Piggyback Securities"), provided that if less than 100% of the
Piggyback Securities and GE Piggyback Securities are to be included in such
Registration, the securities to be so included shall be selected pro rata from
the Piggyback Securities and the GE Piggyback Securities, based upon the
percentage of the total amount of securities which such selling holders
requested to be so registered, and (iii) third, and only if all of the
Piggyback Securities and GE Piggyback Securities have been included in such
Registration, from any other securities eligible for inclusion in such
Registration; provided, however, that if such Registration Statement was the
subject of an exercise of a demand registration right pursuant to Section 2.1
of the GECC Registration Rights Agreement and the GE Holders have consented to
the inclusion of Piggyback Securities in such offering, then the securities to
be included in such Registration shall be selected, after all Registered
Securities (as defined in the GECC Registration Rights Agreement) originally
proposed to be included in such Registration have been so included, (i) first,
from the Piggyback Securities and (ii) second, and only if all the Piggyback
Securities have been included in such Registration, from any other securities
eligible for inclusion in such Registration.
(c) No Effect on Demand Registrations. No Registration
of Registrable Securities effected pursuant to a request under this Section 4
shall be deemed to have been effected pursuant to Section 3 hereof or shall
relieve the Company of its obligation to effect any Registration upon request
under Section 3 hereof.
SECTION 5. Hold-Back Agreements.
(a) Restrictions on Public Sale by Holders of Registrable
Securities. Each holder of Registrable Securities agrees:
(1) in the case of an Underwritten Registration
in which any such holder is participating, if requested by the
managing underwriters of such Underwritten Registration,
(2) in the case of an Underwritten Registration
in which any such holder is not participating and which is initiated
pursuant to the exercise of demand rights under Section 2.1 of the GE
Registration Rights Agreement, if requested by the managing
underwriters of such Underwritten Registration,
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(3) in the case of a Demand Registration in which
any such holder is participating and which is not an Underwritten
Registration, if requested by the holders of a majority of the
Registrable Securities requesting such Registration,
(4) in the case of a Piggyback Registration in
which any such holder is participating and which is not an
Underwritten Registration, if requested by the holders of a majority
of the securities requesting such registration, or
(5) in the case of a Registration in which any
such holder is not participating and which is initiated pursuant to
the exercise of demand rights under Section 2.1 of the GE Registration
Rights Agreement and which is not an Underwritten Registration, if
requested by the holders of a majority of the securities requesting
such registration
not to effect any public sale or distribution of securities of the Company the
same as or similar to those being registered, or any securities convertible
into or exchangeable or exercisable for such securities, in such Registration
Statement (or registration statement, as the case may be), including a sale
pursuant to Rule 144 under the Securities Act, (except as part of an
Underwritten Registration) during the 15-day period prior to, and during the
90-day period beginning on, the effective date of any Registration Statement
(or registration statement, as the case may be) (except as part of such
Registration), to the extent timely notified in writing by the managing
underwriters or the holders, as the case may be.
The foregoing provisions shall not apply to any holder of
Registrable Securities if such holder is prevented by applicable statute or
regulation from entering any such agreement; provided that any such holder
shall undertake, in its request to participate in any such Underwritten
Offering, not to effect any public sale or distribution of the applicable class
of Registrable Securities commencing on the date of sale of such applicable
class of Registrable Securities unless it has provided 60 days' prior written
notice of such sale or distribution to the underwriter or underwriters.
(b) Restrictions on Public Sale by the Company and
Others. The Company agrees:
(1) not to effect any public or private sale or
distribution of its equity securities, including a sale pursuant to
Regulation D under the Securities Act, during the 15-day period prior
to, and during the 90-day period beginning on, the effective date of a
Registration Statement filed underSection 3 or Section 4 hereof to the
extent timely notified in writing by a holder of Registrable
Securities covered by such Registration Statement or the managing
underwriters (the "Holdback Period") (except as part of such
Underwritten Registration or pursuant to registrations on Forms S-4 or
S-8 or any successor form to such forms), and
(2) to cause each holder of its privately placed
equity securities issued by the Company at any time on or after the
date of this Agreement to agree not to effect any public sale or
distribution of any such securities during the Holdback Period,
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including a sale pursuant to Rule 144 under the Securities Act (except
as part of such Underwritten Registration, if permitted).
SECTION 6. Registration Procedures.
In connection with the Company's registration obligations
pursuant to Sections 3 and 4 hereof, the Company will use its best efforts to
effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible:
(a) before filing a Registration Statement or Prospectus
or any amendments or supplements thereto (each a "Public Document"),
(i) furnish to the selling holders of the Registrable Securities
covered by each such Public Document, and the underwriters, if any,
copies of each such Public Document (including all drafts of such
Public Document which are distributed to the underwriters, and if the
subject offering is not an Underwritten Offering, all drafts of such
Public Document available to the Company during the 14 day period
prior to the initial filing of such Public Document), (ii) allow such
holders and underwriters a reasonable opportunity to review and
comment upon each such Public Document, (iii) make the Company's
representatives available for discussion and consultation regarding
the contents of each such Public Document and (iv) consider in good
faith all comments proposed by such holders on each such Public
Document;
(b) prepare and file with the SEC a Registration
Statement or Registration Statements relating to the applicable Demand
Registration or Piggyback Registration including all exhibits and
financial statements required by the SEC to be filed therewith, and
use its best efforts to cause such Registration Statement to become
effective under the Securities Act; and prepare and file with the SEC
such amendments and post-effective amendments to such Registration
Statement, and such supplements to the Prospectus, as may be requested
by any holder of Registrable Securities or any underwriter of
Registrable Securities or as may be required by the rules, regulations
or instructions applicable to the registration form utilized by the
Company or by the Securities Act or rules and regulations otherwise
necessary to keep the Registration Statement effective until the
earlier of such time as all the Registrable Securities covered by such
Registration Statement have been sold or withdrawn, or 90 days; and
cause the Prospectus as so supplemented to be filed pursuant to Rule
424 under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of
all securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(c) notify the selling holders of Registrable Securities
and the managing underwriters, if any, promptly, and (if requested by
any such Person) confirm such advice in writing,
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(1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and,
with respect to the Registration Statement or any
post-effective amendment, when the same has become effective,
(2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or
for additional information,
(3) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose,
(4) if at any time the representations and
warranties of the Company contemplated by paragraph (o) below
cease to be true and correct, if the effect of such breach
would be to cause a failure of a condition to the closing of
the underwriting or purchase agreement,
(5) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose, and
(6) of the existence of any fact which results in
the Registration Statement or the Prospectus containing an
untrue statement of material fact or omitting to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances in which they were made;
(d) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
(e) if requested by the managing underwriter or
underwriters or a holder of Registrable Securities being sold in
connection with an Underwritten Offering, immediately incorporate in a
Prospectus supplement or post-effective amendment such information as
the managing underwriters and the holders of a majority of the
Registrable Securities being sold agree should be included therein
relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to
the amount of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in
such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(f) furnish to each selling holder of Registrable
Securities and each managing underwriter, without charge, at least one
signed copy of the Registration Statement and
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<PAGE> 13
any post-effective amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference);
(g) deliver to each selling holder of Registrable
Securities and the underwriters, if any, without charge, as many
copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons may reasonably
request (it being understood that the Company consents to the use of
the Prospectus or any amendment or supplement thereto by each of the
selling holders of Registrable Securities and the underwriters, if
any, in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement
thereto) and such other documents as such selling holder may
reasonably request in order to facilitate the disposition of the
Registrable Securities by such holder and underwriters, if any;
(h) prior to any public offering of Registrable
Securities, register or qualify or cooperate with the selling holders
of Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under
the securities or blue sky laws of such jurisdictions as any selling
holder of Registrable Securities or any underwriter reasonably
requests in writing and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statement;provided
that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to
take any action which would subject it to general service of process
in any such jurisdiction where it is not then so subject;
(i) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale
of Registrable Securities to the underwriters;
(j) use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities;
(k) if any fact contemplated by paragraph (c)(6) above
shall exist, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any
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<PAGE> 14
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(l) cause all Registrable Securities covered by the
Registration Statement to be quoted on the Nasdaq National Market
System or listed on each securities exchange on which similar
securities issued by the Company are then listed if requested by the
holders of a majority of such Registrable Securities or the managing
underwriters, if any;
(m) not later than the effective date of the applicable
Registration Statement, provide the applicable transfer agent with
printed certificates for the Registerable Securities which are in a
form eligible for deposit with Depositary Trust Company;
(n) enter into agreements (including underwriting
agreements) and take all other appropriate actions in order to
expedite or facilitate the disposition of such Registrable Securities
and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an Underwritten
Registration:
(1) make such representations and warranties to
the holders of such Registrable Securities and the
underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in primary
Underwritten Offerings;
(2) obtain opinions of counsel to the Company
(which counsel shall have relevant expertise in the matters
opined upon) and updates thereof addressed to each selling
holder and the underwriters, if any, covering the matters
customarily covered in opinions requested in Underwritten
Offerings and such other matters as may be reasonably
requested by such holders and underwriters;
(3) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public
accountants addressed to the selling holders of Registrable
Securities and the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily
covered in "cold comfort" letters by underwriters in
connection with primary Underwritten Offerings;
(4) if an underwriting agreement is entered into,
cause the same to set forth in full the indemnification
provisions and procedures of Section 8 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(5) deliver such documents and certificates as
may be requested by the holders of a majority of the
Registrable Securities being sold and the managing
underwriters, if any, to evidence compliance with paragraph
(k) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the
Company.
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The above shall be done at the effectiveness of such Registration
Statement, each closing under any underwriting or similar agreement as
and to the extent required thereunder and from time to time as may be
requested by any selling holder in connection with the disposition of
Registrable Securities pursuant to such Registration Statement;
(o) make available for inspection by a representative of
the holders of a majority of the Registrable Securities, any
underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by the
sellers or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company to the extent
necessary to conduct a reasonable investigation within the meaning of
the Securities Act, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with
the registration; provided that any records, information or documents
that are designated by the Company in writing as confidential shall be
kept confidential by such Persons unless disclosure of such records,
information or documents is required by court or administrative order;
(p) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders, earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than 45
days after the end of any 12-month period (or 90 days, if such period
is a fiscal year) (1) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in an
Underwritten Offering, or, if not sold to underwriters in such an
offering, (2) beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Registration
Statement, which statements shall cover said 12-month periods;
(q) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter" that is required to be retained in accordance with the
rules and regulations of the NASD); and
(r) promptly prior to the filing of any document which is
to be incorporated by reference into the Registration Statement or the
Prospectus (after initial filing of the Registration Statement) (i)
furnish to the selling holders of the Registrable Securities covered
by the Registration Statement in which such document is incorporated
by reference, and the underwriters, if any, copies of each such
document (including all drafts of such document which are distributed
to the underwriters, and if the subject offering is not an
Underwritten Offering, all drafts of such document available to the
Company during the 14 day period prior to the initial filing of such
document), (ii) allow such holders and underwriters a reasonable
opportunity to review and comment upon each such document, (iii) make
the Company's representatives available for discussion and
consultation regarding the contents of each such document and (iv)
consider in good faith all comments proposed by such holders on each
such document.
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The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 6(k) hereof,
such holder will forthwith discontinue disposition of Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(k) hereof, or until it is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus, and, if so directed by the
Company, such holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such holder's possession, of
the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the time periods during which such Registration Statement shall be maintained
effective shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
each seller of Registrable Securities covered by such Registration Statement
either receives the copies of the supplemented or amended prospectus
contemplated by Section 6(k) hereof or is advised in writing by the Company
that the use of the Prospectus may be resumed.
SECTION 7. Registration Expenses.
(a) All expenses incident to the Company's performance of
or compliance with this Agreement will be paid by the Company, regardless of
whether the Registration Statement becomes effective, including without
limitation:
(1) all registration and filing fees (including with
respect to filings required to be made with the SEC and the NASD);
(2) fees and expenses of compliance with securities or
blue sky laws (including fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky
qualifications of the Registrable Securities and determination of
their eligibility for investment under the laws of such jurisdictions
as the managing underwriters or holders of a majority of the
Registrable Securities being sold may designate);
(3) printing (including expenses of printing certificates
for the Registrable Securities in a form eligible for deposit with the
Depositary Trust Company and of printing prospectuses), messenger,
telephone and delivery expenses;
(4) fees and disbursements of counsel for the (i)
Company, (ii) the underwriters and (iii) the sellers of the
Registrable Securities (subject to the provisions of Section 7(b)
hereof);
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(5) fees and disbursements of all independent certified
public accountants of the Company (including the expenses of any
special audit and "cold comfort" letters required by or incident to
such performance);
(6) fees and disbursements of underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals relating
to the distribution of the Registrable Securities or legal expenses of
any Person other than the Company, the underwriters and the selling
holders) customarily paid by issuers;
(7) fees and expenses of other Persons retained by the
Company; and
(8) fees and expenses associated with any NASD filing
required to be made in connection with the Registration Statement,
including, if applicable, the fees and expenses of any "qualified
independent underwriter" (and its counsel) that is required to be
retained in accordance with the rules and regulations of the NASD (all
such expenses being herein called Registration Expenses").
The Company will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed.
(b) In connection with each Registration Statement
required hereunder, the Company will reimburse the holders of Registrable
Securities being registered pursuant to such Registration Statement for the
reasonable fees and disbursements of not more than one counsel chosen by the
holders of a majority of such Registrable Securities.
SECTION 8. Indemnification.
(a) Indemnification by Company. The Company agrees to
indemnify and hold harmless each holder of Registrable Securities, its
officers, directors, employees and Agents and each Person who controls such
holder within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act (each such person being sometimes hereinafter referred
to as an "Indemnified Holder") from and against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and legal
expenses) arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
such untrue statement or omission or allegation thereof based upon information
furnished in writing to the Company by such holder expressly for use therein;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement
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or alleged untrue statement or omission or alleged omission in any Prospectus
or preliminary prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus or preliminary prospectus and if, having
previously been furnished by or on behalf of the Company with copies of the
Prospectus or preliminary prospectus as so amended or supplemented, such holder
thereafter fails to deliver such Prospectus or preliminary prospectus as so
amended or supplemented, prior to or concurrently with the sale of a
Registrable Security to the person asserting such loss, claim, damage,
liability or expense who purchased such Registrable Security which is the
subject thereof from such holder. This indemnity will be in addition to any
liability which the Company may otherwise have. The Company will also
indemnify underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who controls such Persons (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Indemnified
Holders of Registrable Securities.
If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against an Indemnified
Holder in respect of which indemnity may be sought from the Company, such
Indemnified Holder shall promptly notify the Company in writing, and the
Company shall assume the defense thereof, including the employment of counsel
satisfactory to such Indemnified Holder and the payment of all expenses. Such
Indemnified Holder shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Holder unless (a) the
Company has agreed to pay such fees and expenses or (b) the Company shall have
failed to assume the defense of such action or proceeding and has failed to
employ counsel reasonably satisfactory to such Indemnified Holder in any such
action or proceeding or (c) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Holder and the
Company, and such Indemnified Holder shall have been advised by counsel that a
conflict of interest exists between the Indemnified Holder and the Company (in
which case, if such Indemnified Holder notifies the Company in writing that it
elects to employ separate counsel at the expense of the Company, the Company
shall not have the right to assume the defense of such action or proceeding on
behalf of such Indemnified Holder, it being understood, however, that the
Company shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm
of attorneys at any time for such Indemnified Holder and any other Indemnified
Holders, which firm shall be designated in writing by such Indemnified
Holders). The Company shall not be liable for any settlement of any such
action or proceeding effected without its written consent, but if settled with
its written consent, or if there be a final judgment for the plaintiff in any
such action or proceeding, the Company agrees to indemnify and hold harmless
such Indemnified Holders from and against any loss or liability by reason of
such settlement or judgment in accordance with this Agreement.
(b) Indemnification by Holder of Registrable Securities.
Each holder of Registrable Securities agrees to indemnify and hold harmless the
Company, its directors and officers and each Person, if any, who controls the
Company within the meaning of either Section
15
<PAGE> 19
15 of the Securities Act or Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from the Company to such holder, but only with
respect to information relating to such holder furnished in writing by such
holder expressly for use in any Registration Statement or Prospectus, or any
amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its directors or
officers or any such controlling person, in respect of which indemnity may be
sought against a holder of Registrable Securities, such holder shall have the
rights and duties given the Company and the Company or its directors or
officers or such controlling person shall have the rights and duties given to
each holder by the preceding paragraph. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in amount than
the dollar amount of the proceeds received by such holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration Statement or any
amendment or supplement thereto, or any preliminary prospectus.
(c) Contribution. If the indemnification provided for in
this Section 8 is unavailable to an indemnified party under Section 8(a) or
Section 8(b) hereof (other than by reason of exceptions provided in those
Sections) in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and of the Indemnified Holder on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand
and of the Indemnified Holder on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Indemnified Holder and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 8(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and each holder of Registrable Securities agree
that it would not be just and equitable if contribution pursuant to this
Section 8(c) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the provisions of
this Section 8(c), an Indemnified Holder shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Securities sold by such Indemnified Holder or its affiliated Indemnified
Holders and distributed to the public were
16
<PAGE> 20
offered to the public exceeds the amount of any damages which such Indemnified
Holder, or its affiliated Indemnified Holder, has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
SECTION 9. Rule 144.
The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any holder of
Registrable Securities made after June 14, 1996, make publicly available such
information as necessary to permit sales pursuant to Rule 144 under the
Securities Act), and it will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any holder of Registrable Securities, the Company
will deliver to such holder a written statement as to whether it has complied
with such information and requirements.
SECTION 10. Participation in Underwritten Registrations.
No Person may participate in any Underwritten Registration
hereunder unless such Person (a) agrees to sell such Person's securities on the
basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting arrangements.
SECTION 11. Miscellaneous.
(a) Remedies. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein, in the
Purchase Agreement and granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on
or after the date of this Agreement enter into any agreement with respect to
its securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The Company represents and warrants that the rights granted
to the holders of Registrable Securities hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's securities under any
17
<PAGE> 21
agreement in effect on the date hereof, including, without limitation, the GECC
Registration Rights Agreement.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of holders of at least a majority of the outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof that relates exclusively to the rights of holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other holders of Registrable Securities may be given by the holders
of a majority of the Registrable Securities being sold.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, postage prepaid, telex, telecopier, or air courier
guaranteeing overnight delivery, if to:
A HOLDER OF REGISTRABLE SECURITIES, at the most current
address given by such holder to the Company in accordance with
the provisions of this Section 11(d), which address initially
is, with respect to the Purchaser:
President
Nestle Holdings, Inc.
c/o Nestle USA, Inc.
800 North Brand Boulevard
Glendale, California 91203
With copies to:
James H. Ball, Esq.
Senior Vice President and General Counsel
Nestle USA, Inc.
800 North Brand Boulevard
Glendale, California 91203
and
Wayne F. Erdelack, Esq.
Vice President and Deputy General Counsel
Nestle USA, Inc.
30003 Bainbridge Road
Solon, Ohio 44139
18
<PAGE> 22
THE COMPANY, initially to:
T. Gary Rogers
Chief Executive Officer and Chairman of the Board
Dreyer's Grand Ice Cream, Inc.
5929 College Avenue
Oakland, California 94618
and thereafter at such other address, notice of which is given
in accordance with the provisions of this Section 11(d),
With copies to:
Seth A. Kaplan, Esq.
Wachtell, Lipton, Rosen and Katz
51 West 52nd Street
New York, New York 10019
and
Edmund R. Manwell, Esq.
Manwell & Milton
101 California Street, Suite 3750
San Francisco, California 94111
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities; provided, however,
that after the Closing this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a holder of Registrable Securities unless
and to the extent such successor or assign acquired Registrable Securities from
such holder.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
19
<PAGE> 23
(h) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
(i) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the securities sold pursuant to the Purchase Agreement.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
[SIGNATURE PAGE TO FOLLOW]
20
<PAGE> 24
IN WITNESS WHEREOF, the Company and the Purchaser have caused
this Agreement to be executed and delivered by their respective officers
thereunto duly authorized, all as of the day and year first above written.
DREYER'S GRAND ICE CREAM, INC.
/s/ T. Gary Rogers
______________________________
By: T. Gary Rogers
Title: Chairman of the Board and
Chief Executive Officer
NESTLE HOLDINGS, INC.
/s/ Mario A. Corti
______________________________
By: Mario A. Corti
Title: Senior Vice President-Finance
S-1
<PAGE> 1
EXHIBIT 4.3
===============================================================================
WARRANT AGREEMENT
BY AND BETWEEN
DREYER'S GRAND ICE CREAM, INC.
AND
NESTLE HOLDINGS, INC.
DATED AS OF JUNE 14, 1994
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
SECTION 1. Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Execution of Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3. Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 4. Registration of Transfers and Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 5. Warrants; Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 6. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. Mutilated or Missing Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 8. Reservation of Warrant Shares; Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 9. Obtaining Stock Exchange Listings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares Issuable . . . . . . . . . . . . . . . . . . . . . . 6
(a) Adjustment for Change in Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Adjustment for Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Adjustment for Other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Adjustment for Common Stock Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Adjustment for Convertible Securities Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(f) Current Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(g) Consideration Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(h) When De Minimis Adjustment May Be Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(i) When No Adjustment Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(j) Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(k) Voluntary Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(l) Notice of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(m) Reorganization of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(n) Company Determination Final . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(o) When Issuance or Payment May Be Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(p) Adjustment in Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(q) Form of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 11. Fractional Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 12. Notices to Warrant holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 13. Notices to Company and Warrant Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 14. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 15. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 16. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 17. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 18. Benefits of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 19. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
ii
<PAGE> 4
THIS WARRANT AGREEMENT (the "Agreement") is dated as of June 14, 1994
and entered into by and between DREYER'S GRAND ICE CREAM, INC., a Delaware
corporation (the "Company"), and NESTLE HOLDINGS, INC., a Delaware corporation
("Nestle"). Capitalized terms used herein but not otherwise defined shall have
the meaning assigned such terms in the Purchase Agreement (as defined below).
WHEREAS, the Company proposes to issue to Nestle, or its designee,
Common Stock Purchase Warrants, in Series A and Series B, as hereinafter
described (the "Warrants"), to purchase up to an aggregate of 2,000,000 shares
(1,000,000 shares for each of Series A and Series B) of Common Stock, $1.00 par
value (the "Common Stock"), of the Company (the Common Stock issuable on
exercise of the Warrants being referred to herein as the "Warrant Shares"),
pursuant to a Stock and Warrant Purchase Agreement of even date herewith (the
"Purchase Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The certificates evidencing the
Warrants (the "Warrant Certificates") to be delivered pursuant to this
Agreement shall be in registered form only and shall be substantially in the
form set forth in Exhibits A and B attached hereto.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board or its
President or a Vice President and by its Secretary or an Assistant Secretary
under its corporate seal. Each such signature upon the Warrant Certificates
may be in the form of a facsimile signature of the present or any future
Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or disposed of he shall
have ceased to hold such office. The seal of the Company may be in the form of
a facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 3. Registration. The Company shall number and register the
Warrant Certificates in a register as they are issued.
1
<PAGE> 5
SECTION 4. Registration of Transfers and Exchanges. The Company shall
from time to time register the transfer of any outstanding Warrant Certificates
in a Warrant register to be maintained by the Company upon surrender of such
Warrant Certificates accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company, duly executed by the registered
holder or holders thereof or by the duly appointed legal representative thereof
or by a duly authorized attorney. Upon any such registration of transfer, a
new Warrant Certificate shall be issued to the transferee(s) and the
surrendered Warrant Certificate shall be cancelled and disposed of by the
Company.
The Warrant holders agree that each certificate representing Warrant
Shares will bear the following legend:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED BY AN AGREEMENT ON FILE AT THE OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH
ACT OR SUCH LAWS."
Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to the Company at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be cancelled and disposed of by the Company.
SECTION 5. Warrants; Exercise of Warrants. Subject to the terms of
this Agreement, each holder of Series A Warrants shall have the right, which
may be exercised commencing at the opening of business on June 14, 1994 and
until 5:00 p.m., Los Angeles time on June 14, 1997, to receive from the Company
the number of fully paid and nonassessable Warrant Shares which the holder may
at the time be entitled to receive on exercise of such Warrants and payment to
the Company of the Exercise Price (as defined below) then in effect for such
Warrant Shares. Each Series A Warrant not exercised prior to 5:00 p.m., Los
Angeles time on June 14, 1997 shall become void and all rights thereunder and
all rights in respect thereof under this Agreement shall cease as of such time.
Subject to the terms of this Agreement, each holder of Series B Warrants
shall have the right, which may be exercised commencing at the opening of
business on June 14, 1994 and until 5:00 p.m., Los Angeles time on June 14,
1999, to receive from the Company the number of fully paid and nonassessable
Warrant Shares which the holder may at the time be entitled to receive on
exercise of such Warrants and payment of the Exercise Price then in effect for
such Warrant Shares. Each Series B Warrant not exercised prior to 5:00 p.m.,
Los Angeles
2
<PAGE> 6
time on June 14, 1999 shall become void and all rights thereunder and all
rights in respect thereof under this Agreement shall cease as of such time.
In addition, the Company shall have the right, upon 10 business days'
prior written notice, to cause the holder of any Warrants to exercise such
Warrants: (i) at any time prior to June 14, 1997 at an Exercise Price that is
equal to $24.00 per share (subject to adjustment pursuant to Section 10), or
(ii) with respect to the Series A Warrants, at any time during the three-year
term of such Warrants, and with respect to the Series B Warrants, at any time
during the five-year term of such Warrants, at the Exercise Price then in
effect for such Warrant Shares, if the average of the Quoted Prices (as defined
in Section 10(f)) of the Common Stock for the 130 trading days preceding the
date of such requirement shall equal or exceed $60.00 per share (provided that
such $60.00 per share figure shall be subject to equitable adjustment to
reflect stock splits, stock dividends, or reclassifications or other similar
recapitalizations).
If the requirements of the HSR Act must be complied with in order for
Nestle to consummate the purchase of the Warrant Shares contemplated by this
Section 5, then (A) as soon as practicable, the Company and Nestle shall make
all filings required under the HSR Act and (B) consummation of the exercise of
the subject Warrants shall occur only after the applicable waiting period,
including any extension thereof, under the HSR Act shall have expired or been
terminated and neither the Department of Justice nor the Federal Trade
Commission shall have instituted any litigation to enjoin or delay the
consummation of such exercise.
Notwithstanding the foregoing paragraph, the Company shall have no right
to cause any exercise of the Warrants:
(a) pursuant to clause (i) of the second preceding paragraph during
such time as any GECC Event of Default is outstanding (without regard to
whether notice or passage of time has occurred and whether or not such GECC
Event of Default has been waived), unless Nestle waives in writing the
provisions of this clause (a), or
(b) pursuant to either clause (i) or clause (ii) of the second
preceding paragraph, after the delivery by Nestle Ice Cream Company ("NICC") to
the Company of an irrevocable notice of termination under the Distributor
Agreement, whether or not cause exists for such notice and whether or not the
Company has breached any of its obligations under such Distributor Agreement.
In the event that the Company elects to cause any exercise of the Warrants
pursuant to either clause (i) or clause (ii) of the foregoing paragraph during
such period as NICC is making a claim in good faith that the Company is in
breach of one or more of its commitments under the Distributor Agreement, then
Nestle shall be entitled to offset the aggregate Exercise Price due the Company
with respect to such exercise against the amounts owed by the Company to NICC
for (1) products purchased or (2) pursuant to the indemnification provisions of
Section 5(e) under the Distributor Agreement as of the date of such exercise,
if any.
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<PAGE> 7
A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 13
hereof) of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc., and upon payment to the Company of the
exercise price per share of Common Stock (the "Exercise Price") which is set
forth in the form of Warrant Certificate attached hereto as Exhibit A or B,
subject to adjustment pursuant to Section 10, for the number of Warrant Shares
in respect of which such Warrants are then exercised. Payment of the aggregate
Exercise Price shall be made in cash or by certified or official bank check
payable to the order of the Company.
Subject to the provisions of Section 6 hereof, upon such surrender of
Warrants and payment of the Exercise Price the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash as provided in Section 11;
provided, however, that if an agreement for a consolidation, merger or lease or
sale of all or substantially all of the assets of the Company shall have been
entered into or approved of by the Company's Board of Directors, or a tender
offer or an exchange offer for shares of Common Stock of the Company shall have
been made, upon such surrender of Warrants and payment of the Exercise Price as
aforesaid, the Company shall, as soon as possible, but in any event not later
than two business days thereafter, issue and cause to be delivered the full
number of Warrant Shares issuable upon the exercise of such Warrants in the
manner described in this sentence together with cash as provided in Section 11.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a
holder of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part, in minimum increments of
100,000 shares, and, in the event that a certificate evidencing Warrants is
exercised in respect of fewer than all of the Warrant Shares issuable on such
exercise at any time prior to the date of expiration of the Warrants, a new
certificate evidencing the remaining Warrant or Warrants will be issued and
delivered pursuant to the provisions of this Section and of Section 2 hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled and disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the holders during normal business hours at its office.
SECTION 6. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue of any Warrant Certificates or any
4
<PAGE> 8
certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the person or persons requesting the issuance 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.
SECTION 7. Mutilated or Missing Warrant Certificates. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also reasonably satisfactory to it. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
SECTION 8. Reservation of Warrant Shares; Rights. The Company will at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company shall issue, together with each Warrant Share issued upon
exercise of a Warrant, one Right (or other securities in lieu thereof), and any
rights issued to holders of Common Stock in addition thereto or in replacement
therefor, whether or not such rights shall be exercisable at such time, but
only if such rights are issued and outstanding and held by other holders of
Common Stock at such time and have not expired.
The Company or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of
the Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's
capital stock issuable upon the exercise of the rights of purchase represented
by the Warrants. The Company will furnish such Transfer Agent a copy of all
notices of adjustments and certificates related thereto, transmitted to each
holder pursuant to Section 12 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 10 hereof to reduce the Exercise Price below the then par value (if
any) of the Warrant Shares, the Company will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
5
<PAGE> 9
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof.
SECTION 9. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed
on the principal securities exchanges and markets within the United States of
America, if any, on which other shares of Common Stock are then listed.
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The Exercise Price and the number of Warrant Shares issuable upon
the exercise of each Warrant are subject to adjustment from time to time upon
the occurrence of the events enumerated in this Section 10. For purposes of
this Section 10, "Common Stock" means shares now or hereafter authorized of any
class of common stock of the Company and any other stock of the Company,
however designated, that has the right (subject to any prior rights of any
class or series of preferred stock) to participate in any distribution of the
assets or earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
(4) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock or preferred stock; or
(5) issues by reclassification of its Common Stock any shares of its
capital stock;
then the Exercise Price shall be adjusted in accordance with the formula:
O
E' = E x -
A
6
<PAGE> 10
Where:
E' = the adjusted Exercise Price
E = the current Exercise Price
O = the number of shares outstanding prior to such action
A = the number of shares outstanding immediately after such action
In the case of a dividend or distribution the adjustment shall become
effective immediately after the record date for determination of holders of
shares of Common Stock entitled to receive such dividend or distribution, and
in the case of a subdivision, combination or reclassification, the adjustment
shall become effective immediately after the effective date of such corporate
action.
If after an adjustment a holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege
and the Exercise Price of each class of capital stock shall thereafter be
subject to adjustment on terms comparable to those applicable to Common Stock
in this Section.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them at any time after the record date
mentioned below to purchase shares of Common Stock at a price per share less
than the current market price per share on that record date, the Exercise Price
shall be adjusted in accordance with the formula:
N x P
O + -----
M
E' = E x ---------
O + N
7
<PAGE> 11
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record
date.
N = the number of additional shares of Common Stock issuable upon
exercise of the rights, options or warrants offered.
P = the exercise price per share of the additional shares issuable
upon exercise of the rights, options or warrants.
M = the current market price per share of Common Stock on the
record date.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or
warrants shall have been exercised, the Exercise Price shall be immediately
readjusted to what it would have been if "N" in the above formula had been the
number of shares actually issued.
(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock
any of its assets (including, but not limited to, cash), debt securities,
preferred stock, or any rights or warrants to purchase debt securities,
preferred stock, assets or other securities of the Company, the Exercise Price
shall be adjusted in accordance with the formula:
M - F
E' = E x -----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the
record date mentioned below.
8
<PAGE> 12
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of
Common Stock. The Board of Directors shall determine the fair
market value.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the
distribution.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 10, nor does it apply to
distributions by the Company of regular quarterly cash dividends to all holders
of its Common Stock to the extent such dividends do not exceed an aggregate
amount (when added to prior regular quarterly cash dividends distributed on or
since December 27, 1992) equal to 40% of the Company's cumulative net income
(or net loss), determined in accordance with generally accepted accounting
principles (but excluding after- tax gains from sales of material assets),
during the period (treated as one accounting period) commencing on December 27,
1992 and ending on the date any such dividend is paid.
(d) Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a
consideration per share less than the current market price per share on the
date the Company fixes the offering price of such additional shares, the
Exercise Price shall be adjusted in accordance with the formula:
P
O + -
M
E' = E x -----
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of issuance of
such additional shares.
9
<PAGE> 13
A = the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (b)
and (c) of this Section 10,
(2) the exercise of Warrants, or the conversion or
exchange of other securities convertible or exchangeable for Common
Stock,
(3) Common Stock issued to the Company's employees under
bona fide employee benefit plans adopted by the Board of Directors and
approved by the holders of Common Stock when required by law, if such
Common Stock would otherwise be covered by this subsection (d) (but
only to the extent that the aggregate number of shares excluded hereby
and issued after the date of this Warrant Agreement shall not exceed
10% of the Common Stock outstanding at the time of the adoption of
each such plan, exclusive of antidilution adjustments thereunder),
(4) Common Stock issued upon the exercise of rights or
warrants issued to the holders of Common Stock for which rights or
warrants an adjustment has been made pursuant to Section 10(b),
(5) Common Stock issued to shareholders of any person
which merges with the Company or an affiliate thereof in proportion to
their stock holdings of such person immediately prior to such merger,
upon such merger, or
(6) Common Stock issued in a bona fide public offering
pursuant to a firm commitment underwriting.
(e) Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or
exchangeable for Common Stock (other than securities issued in transactions
described in subsections (b) and (c) of this Section 10) for a consideration
per share of Common Stock initially deliverable upon conversion or exchange of
such securities less than the current market price per share on the date of
issuance of such securities, the Exercise Price shall be adjusted in accordance
with this formula:
10
<PAGE> 14
P
O + -
M
E' = E x -----
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of issuance of
such securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or
exchange of such securities have not been issued when such securities are no
longer outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This subsection (e) does not apply to:
(1) convertible securities issued to shareholders of any
person which merges into the Company, or with a subsidiary of the
Company, in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger, or
(2) convertible securities issued in a bona fide public
offering pursuant to a firm commitment underwriting.
(f) Current Market Price.
In subsections (b), (c), (d) and (e) of this Section 10, the
current market price per share of Common Stock on any date is the average of
the Quoted Prices of the Common Stock for 30 consecutive trading days
commencing 45 trading days before the date in question. The
11
<PAGE> 15
"Quoted Price" of the Common Stock is the last reported sales price of the
Common Stock as reported by Nasdaq National Market System, or if the Common
Stock is listed on a national securities exchange, the last reported sales
price of the Common Stock on such exchange (which shall be for consolidated
trading if applicable to such exchange), or if neither so reported or listed,
the last reported bid price of the Common Stock. In the absence of one or more
such quotations, the Board of Directors of the Company shall determine the
current market price on the basis of such quotations as it in good faith
considers appropriate.
(g) Consideration Received.
For purposes of any computation respecting consideration
received pursuant to subsections (d) and (e) of this Section 10, the following
shall apply:
(1) in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Company for any
underwriting of the issue or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors
(irrespective of the accounting treatment thereof), whose
determination shall be conclusive, and described in a Board
resolution;
(3) in the case of the issuance of securities convertible
into or exchangeable for shares, the aggregate consideration received
therefor shall be deemed to be the consideration received by the
Company for the issuance of such securities plus the additional
minimum consideration, if any, to be received by the Company upon the
conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (1) and (2) of
this subsection).
(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment.
All calculations under this Section shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(i) When No Adjustment Required.
No adjustment need be made for a transaction referred to in
subsections (a), (b), (c), (d) or (e) of this Section 10 if Warrant holders are
to participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and
notice on which holders of Common Stock participate in the transaction.
12
<PAGE> 16
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or
no par value of the Common Stock.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
(j) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall
provide the notices required by Section 12 hereof.
(k) Voluntary Reduction.
The Company from time to time may reduce the Exercise Price by
any amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period; provided, however, that in no event
may the Exercise Price be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail
to Warrant holders a notice of the reduction. The Company shall mail the
notice at least 15 days before the date the reduced Exercise Price takes
effect. The notice shall state the reduced Exercise Price and the period it
will be in effect.
A reduction of the Exercise Price does not change or adjust
the Exercise Price otherwise in effect for purposes of subsections (a), (b),
(c), (d) and (e) of this Section 10.
(l) Notice of Certain Transactions.
If:
(1) the Company takes any action that would require an
adjustment in the Exercise Price pursuant to subsections (a), (b),
(c), (d) or (e) of this Section 10 and if the Company does not arrange
for Warrant holders to participate pursuant to subsection (i) of this
Section 10;
(2) the Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (m) of this
Section 10; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company
13
<PAGE> 17
shall mail the notice at least 15 days before such date. Failure to mail the
notice or any defect in it shall not affect the validity of the transaction.
(m) Reorganization of Company.
If the Company consolidates or merges with or into, or
transfers or leases all or substantially all its assets to, any person, upon
consummation of such transaction the Warrants shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of a Warrant would have owned immediately after the consolidation,
merger, transfer or lease if the holder had exercised the Warrant immediately
before the effective date of the transaction. Concurrently with the
consummation of such transaction, the corporation formed by or surviving any
such consolidation or merger if other than the Company, or the person to which
such sale or conveyance shall have been made, shall enter into a supplemental
Warrant Agreement so providing and further providing for adjustments which
shall be as nearly equivalent as may be practical to the adjustments provided
for in this Section. The successor Company shall mail to Warrant holders a
notice describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of
Warrants under the supplemental Warrant Agreement is an affiliate of the
formed, surviving, transferee or lessee corporation, that issuer shall join in
the supplemental Warrant Agreement.
If this subsection (m) applies, subsections (a), (b), (c), (d)
and (e) of this Section 10 do not apply.
(n) Company Determination Final.
Any determination that the Company or the Board of Directors
must make pursuant to subsection (a), (c), (d), (e), (f), (g) or (i) of this
Section 10 is conclusive.
(o) When Issuance or Payment May Be Deferred.
In any case in which this Section 10 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record date
the Warrant Shares and other capital stock of the Company, if any, issuable
upon such exercise over and above the Warrant Shares and other capital stock of
the Company, if any, issuable upon such exercise on the basis of the Exercise
Price and (ii) paying to such holder any amount in cash in lieu of a fractional
share pursuant to Section 11; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument evidencing such
holder's right to receive such additional Warrant Shares, other capital stock
and cash upon the occurrence of the event requiring such adjustment.
14
<PAGE> 18
(p) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this
Section 10, each Warrant outstanding prior to the making of the adjustment in
the Exercise Price shall thereafter evidence the right to receive upon payment
of the adjusted Exercise Price that number of shares of Common Stock
(calculated to the nearest hundredth) obtained from the following formula:
E
N' = N x --
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise
of a Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon exercise
of a Warrant by payment of the Exercise Price prior to
adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(q) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement.
SECTION 11. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same time
by the same holder, the number of full Warrant Shares which shall be issuable
upon the exercise thereof shall be computed on the basis of the aggregate
number of Warrant Shares purchasable on exercise of the Warrants so presented.
If any fraction of a Warrant Share would, except for the provisions of this
Section 11, be issuable on the exercise of any Warrants (or specified portion
thereof), the Company shall pay an amount in cash equal to the current market
price (as defined in Section 10(f)) on the day immediately preceding the date
the Warrant is presented for exercise, multiplied by such fraction.
SECTION 12. Notices to Warrant holders. Upon any adjustment
of the Exercise Price pursuant to Section 10, the Company shall promptly
thereafter (i) cause to be filed with the Company a certificate of a firm of
independent public accountants of recognized standing selected by the Board of
Directors of the Company (who may be the regular auditors of the
15
<PAGE> 19
Company) setting forth the Exercise Price after such adjustment and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register
written notice of such adjustments by first-class mail, postage prepaid. Where
appropriate, such notice may be given in advance and included as a part of the
notice required to be mailed under the other provisions of this Section 12.
In case:
(a) the Company shall authorize the issuance to all
holders of shares of Common Stock of rights, options or warrants to
subscribe for or purchase shares of Common Stock or of any other
subscription rights or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in shares
of Common Stock or distributions referred to in subsection (a) of
Section 10 hereof); or
(c) of any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company
is required, or of the conveyance or transfer of the properties and
assets of the Company substantially as an entirety, or of any
reclassification or change of Common Stock issuable upon exercise of
the Warrants (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer made
by the Company for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company proposes to take any action (other than
actions of the character described in Section 10(a)) which would
require an adjustment of the Exercise Price pursuant to Section 10;
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, at
least 20 days (or 10 days in any case specified in clauses (a) or (b) above)
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by first-class mail, postage
prepaid, a written notice stating (i) the date as of which the holders of
record of shares of Common Stock to be entitled to receive any such rights,
options, warrants or distribution are to be determined, or (ii) the initial
expiration date set forth in any tender offer or exchange offer made by the
Company for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected
16
<PAGE> 20
to become effective or consummated, and the date as of which it is expected
that holders of record of shares of Common Stock shall be entitled to exchange
such shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section 12 or any defect therein shall not affect the legality or validity of
any distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the
right to vote or to consent or to receive notice as shareholders in respect of
the meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 13. Notices to Company and Warrant Holder. Any
notice or demand authorized by this Agreement to be given or made by the
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if delivered by a recognized overnight
delivery service, or deposited in the mail, first class or registered, postage
prepaid, addressed to the office of the Company expressly designated by the
Company for purposes of this Agreement (until the Warrant holders are otherwise
notified in accordance with this Section by the Company), as follows:
T. Gary Rogers
Chief Executive Officer and Chairman of the Board
Dreyer's Grand Ice Cream, Inc.
5929 College Avenue
Oakland, California 94618
Any notice pursuant to this Agreement to be given by the
Company to the registered holder(s) of any Warrant Certificate shall be
sufficiently given when and if delivered by a recognized overnight delivery
service, or deposited in the mail, first-class or registered, postage prepaid,
addressed (until the Company is otherwise notified in accordance with this
Section by such holder) to such holder at the address appearing on the warrant
register of the Company.
SECTION 14. Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval of any
holders of Warrant Certificates in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder which the Company may deem
necessary or desirable and which shall not in any way adversely affect the
interests of the holders of Warrant Certificates.
SECTION 15. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
17
<PAGE> 21
SECTION 16. Termination. This Agreement shall terminate at
5:00 p.m., Los Angeles time on June 14, 1999. Notwithstanding the foregoing,
this Agreement will terminate on any earlier date if all Warrants have been
exercised.
SECTION 17. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 18. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company and the registered holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company and the registered holders
of the Warrant Certificates.
SECTION 19. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
[SIGNATURE PAGE TO FOLLOW]
18
<PAGE> 22
IN WITNESS WHEREOF, the Company and Nestle have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all as of the day and year first above written.
DREYER'S GRAND ICE CREAM, INC.
/s/ T. Gary Rogers
________________________________
By: T. Gary Rogers
Title: Chairman of the Board and
Chief Executive Officer
NESTLE HOLDINGS, INC.
/s/ Mario A. Corti
________________________________
By: Mario A. Corti
Title: Senior Vice President-
Finance
S-1
<PAGE> 23
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY
AN AGREEMENT ON FILE AT THE OFFICES OF THE CORPORATION. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION
TO THE REGISTRATION REQUIREMENT OF SUCH ACT OR SUCH LAWS.
EXERCISABLE ON OR BEFORE JUNE 14, 1997
No. 1,000,000 Series A Warrants
Series A Warrant Certificate
DREYER'S GRAND ICE CREAM, INC.
This Warrant Certificate certifies that Nestle Holdings, Inc.,
or registered assigns, is the registered holder of 1,000,000 Series A Warrants
expiring at 5:00 p.m., Los Angeles time on June 14, 1997 (the "Warrants") to
purchase Common Stock, $1.00 par value (the "Common Stock"), of Dreyer's Grand
Ice Cream Inc., a Delaware corporation (the "Company"). Each Series A Warrant
entitles the holder upon exercise to receive from the Company prior to 5:00
p.m., Los Angeles time on June 14, 1997, one fully paid and nonassessable share
of Common Stock (a "Warrant Share") at the initial exercise price (the
"Exercise Price") of $32.00 payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office of the Company designated for such purpose, but only
subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon
the occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., Los Angeles time
on June 14, 1997, and to the extent not exercised by such time such Warrants
shall become void.
The Company shall have the right to cause the holder of this
Warrant to exercise this Warrant, in certain circumstances, pursuant to the
terms of the Warrant Agreement.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
A-1
<PAGE> 24
This Warrant Certificate shall not be valid unless
countersigned by the Company, as such term is used in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be signed by its President and by its Secretary and has caused
its corporate seal to be affixed hereunto or imprinted hereon.
Dated:
DREYER'S GRAND ICE CREAM, INC.
_______________________________
By:
President
_______________________________
By:
Secretary
A-2
<PAGE> 25
[Form of Series A Warrant Certificate]
[Reverse]
The Series A Warrants evidenced by this Warrant Certificate
are part of a duly authorized issue of Warrants expiring at 5:00 p.m., Los
Angeles time on June 14, 1997 entitling the holder on exercise to receive
shares of Common Stock, $1.00 par value, of the Company (the "Common Stock"),
and are issued or to be issued pursuant to a Warrant Agreement dated as of June
14, 1994 (the "Warrant Agreement"), duly executed and delivered by the Company,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants. A copy of the Warrant Agreement
may be obtained by the holder hereof upon written request to the Company.
Warrants may be exercised at any time prior to 5:00 p.m., Los
Angeles time on June 14, 1997. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price in cash at the office of
the Company designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised shall be less
than the total number of Warrants evidenced hereby, there shall be issued to
the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any
dividends on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject to
certain conditions, be adjusted. If the Exercise Price is adjusted, the
Warrant Agreement provides that the number of shares of Common Stock issuable
upon the exercise of each Warrant shall be adjusted. No fractions of a share
of Common Stock will be issued upon the exercise of any Warrant, but the
Company will pay the cash value thereof determined as provided in the Warrant
Agreement.
The holders of the Warrants are entitled to certain
registration rights with respect to the Common Stock purchasable upon exercise
thereof. Said registration rights are set forth in full in a Registration
Rights Agreement dated as of June 14, 1994, between the Company and Nestle
Holdings, Inc. A copy of the Registration Rights Agreement may be obtained by
the holder hereof upon written request to the Company.
Warrant Certificates, when surrendered at the office of the
Company by the registered holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
A-3
<PAGE> 26
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Company a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
A-4
<PAGE> 27
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive __________ shares of
Common Stock and herewith tenders payment for such shares to the order of
Dreyer's Grand Ice Cream, Inc. in the amount of $_________ in accordance with
the terms hereof. The undersigned requests that a certificate for such shares
be registered in the name of ________________, whose address is
_______________________________ and that such shares be delivered to
________________ whose address is __________________________________. If said
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________, whose address is _________________________, and that such
Warrant Certificate be delivered to _________________, whose address is
__________________.
Signature:____________________________________
Date: ________________________
Signature Guaranteed:____________________________________
A-5
<PAGE> 28
EXHIBIT B
[Form of Warrant Certificate]
[Face]
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY
AN AGREEMENT ON FILE AT THE OFFICES OF THE CORPORATION. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION
TO THE REGISTRATION REQUIREMENT OF SUCH ACT OR SUCH LAWS.
EXERCISABLE ON OR BEFORE JUNE 14, 1999
No. 1,000,000 Series B Warrants
Series B Warrant Certificate
DREYER'S GRAND ICE CREAM, INC.
This Warrant Certificate certifies that Nestle Holdings, Inc.,
or registered assigns, is the registered holder of 1,000,000 Series B Warrants
expiring at 5:00 p.m., Los Angeles time on June 14, 1999 (the "Warrants") to
purchase Common Stock, $1.00 par value (the "Common Stock"), of Dreyer's Grand
Ice Cream, Inc., a Delaware corporation (the "Company"). Each Series B Warrant
entitles the holder upon exercise to receive from the Company prior to 5:00
p.m., Los Angeles time on June 14, 1999, one fully paid and nonassessable share
of Common Stock (a "Warrant Share") at the initial exercise price (the
"Exercise Price") of $32.00 payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office of the Company designated for such purpose, but only
subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon
the occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., Los Angeles time
on June 14, 1999, and to the extent not exercised by such time such Warrants
shall become void.
The Company shall have the right to cause the holder of this
Warrant to exercise this Warrant, in certain circumstances, pursuant to the
terms of the Warrant Agreement.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
B-1
<PAGE> 29
This Warrant Certificate shall not be valid unless
countersigned by the Company, as such term is used in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be signed by its President and by its Secretary and has caused
its corporate seal to be affixed hereunto or imprinted hereon.
Dated:
DREYER'S GRAND ICE CREAM, INC.
_______________________________
By:
President
_______________________________
By:
Secretary
B-2
<PAGE> 30
[Form of Series B Warrant Certificate]
[Reverse]
The Series B Warrants evidenced by this Warrant Certificate
are part of a duly authorized issue of Warrants expiring at 5:00 p.m., Los
Angeles time on June 14, 1999 entitling the holder on exercise to receive
shares of Common Stock, $1.00 par value, of the Company (the "Common Stock"),
and are issued or to be issued pursuant to a Warrant Agreement dated as of June
14, 1994 (the "Warrant Agreement"), duly executed and delivered by the Company,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants. A copy of the Warrant Agreement
may be obtained by the holder hereof upon written request to the Company.
Warrants may be exercised at any time prior to 5:00 p.m., Los
Angeles time on June 14, 1999. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price in cash at the office of
the Company designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised shall be less
than the total number of Warrants evidenced hereby, there shall be issued to
the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any
dividends on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject to
certain conditions, be adjusted. If the Exercise Price is adjusted, the
Warrant Agreement provides that the number of shares of Common Stock issuable
upon the exercise of each Warrant shall be adjusted. No fractions of a share
of Common Stock will be issued upon the exercise of any Warrant, but the
Company will pay the cash value thereof determined as provided in the Warrant
Agreement.
The holders of the Warrants are entitled to certain
registration rights with respect to the Common Stock purchasable upon exercise
thereof. Said registration rights are set forth in full in a Registration
Rights Agreement dated as of June 14, 1994, between the Company and Nestle
Holdings, Inc. A copy of the Registration Rights Agreement may be obtained by
the holder hereof upon written request to the Company.
Warrant Certificates, when surrendered at the office of the
Company by the registered holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
B-3
<PAGE> 31
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Company a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
B-4
<PAGE> 32
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive __________ shares of
Common Stock and herewith tenders payment for such shares to the order of
Dreyer's Grand Ice Cream, Inc. in the amount of $_________ in accordance with
the terms hereof. The undersigned requests that a certificate for such shares
be registered in the name of ________________, whose address is
_______________________________ and that such shares be delivered to
________________ whose address is __________________________________. If said
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________, whose address is _________________________, and that such
Warrant Certificate be delivered to _________________, whose address is
__________________.
Signature:_______________________________
Date: ________________________
Signature Guaranteed:_______________________________
B-5
<PAGE> 1
EXHIBIT 10.1
SECOND AMENDMENT TO STANDBY REIMBURSEMENT AGREEMENT
This Second Amendment is made and entered into as of this 25th day of
June, 1994, by and between DREYER'S GRAND ICE CREAM, INC., a Delaware
corporation (the "Borrower") and SANWA BANK CALIFORNIA (the "Bank") with
reference to the following facts, which shall constitute recitals within the
meaning of California Evidence Code Section 622 and which shall be conclusively
presumed to be true as between the parties.
RECITALS
A. On or about July 1, 1988 Borrower made, executed and delivered to Bank
that certain Standby Reimbursement Agreement dated as of July 1, 1988 (the
"Agreement"). The Agreement was subsequently amended by a First Amendment To
Standby Reimbursement Agreement dated as of July 14, 1993 (the "First
Amendment") and the Agreement as amended by the First Amendment the ("Amended
Agreement"). Capitalized terms used in this Amendment and not otherwise
defined herein shall have the meanings given to such terms in the Amended
Agreement.
B. Borrower has requested that Bank amend certain financial covenants as
described below.
C. The Bank has agreed to so amend the financial covenants on the terms
and conditions stated in this Amendment.
AGREEMENT
NOW THEREFORE, for value received and hereby acknowledged, the
Borrower and the Bank agree as follows:
1. RECITALS. The Recitals are incorporated herein by this reference, as
are all exhibits and schedules, and the parties agree that the information
received above is true and correct.
2. AMENDMENTS. As of the Effective Date, the first full paragraph of
Subsection (a)(3) of Section 9 of the Amended Agreement is deleted in its
entirety and the following is substituted in its place:
"(3) a minimum Fixed Charge Coverage of 1,250 to 1.0 at the end of
each fiscal quarter ending on or after June, 1994, through and
including December, 1994, and 2.50 to 1 at the end of each fiscal
quarter ending on or after March, 1995;"
3. CONDITIONS PRECEDENT. The Bank's obligations under this Amendment are
subject to the condition precedent that no event shall have occurred or would
result from this Amendment which con-
1
<PAGE> 2
stitutes and Event of Default under the Amended Agreement, the Indenture, the
Loan Agreement or the Bonds, or would constitute and Event of Default but for
the requirement that notice be given or time elapse or both.
4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants
as follows:
(a) That the representations and warranties made by the Borrower
contained in Section 8 of the Amended Agreement or in any instrument
delivered pursuant to or in connection with the Amended Agreement are
true and correct in all material respects on and as of the date of
this Amendment and as of the Effective Date as though made on and as
of such dates;
(b) That the execution, delivery and performance of this Amendment
is within Borrower's corporate powers, has been duly authorized by all
necessary corporate action, and (i) does not contravene any law or any
contractual restrictions binding on the Borrower, and (ii) will not
violate any provision of law or regulation or any order of any
governmental authority, court, arbitration board or tribunal, or
Borrower's articles of incorporation or by-laws, or result in the
breach of, constitute a default under, contravene any provisions of,
or result in the creation of any security interest, lien charge, or
encumbrance upon, any of the property or assets of Borrower pursuant
to any indenture or agreement to which Borrower or any of its
properties are bound:
(c) That the Amended Agreement as amended by this Amendment is the
legal, valid and binding obligation of the borrower, enforceable
against the Borrower in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws or equitable principles
relating to or limiting creditors' rights generally or the
availability of equitable remedies; and
(d) That no event has occurred and is continuing or would result
from this Amendment which constitutes an Event of Default under the
Amended Agreement, the Indenture, the Loan Agreement or the Bonds, or
would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
5. REFERENCES. As of the Effective Date, each reference in the Amended
Agreement to "this Agreement," "the Agreement," "hereunder", "herein",
"hereof", or words of like import referring to the Amended Agreement, shall
mean and be a reference to the Amended Agreement, as amended by this Amendment.
2
<PAGE> 3
6. AFFIRMATION. Except as specifically amended above, the Amended
Agreement shall remain in full force and effect and is hereby ratified and
confirmed.
7. CHOICE OF LAW. THIS AMENDMENT SHALL BE DEEMED TO BA A CONTRACT UNDER
AND SUBJECT TO AND SHALL BE CONSTRUED FOR ALL PURPOSES AND IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
8. INTEGRATION. This Amendment and the documents and instruments
referred to herein constitute a single, integrated written contract expressing
the entire agreement of the parties hereto relative to the subject matter
hereof. No covenants, agreements, representations or warranties of any kind
whatsoever have been made by any party hereto, except as specifically set forth
in this Amendment.
9. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the date and year first written above.
BANK BORROWER:
SANWA BANK CALIFORNIA DREYER'S GRAND ICE CREAM, INC.
a Delaware corporation
/s/ Mark Brody By: /s/ William C. Collett
____________________________ _______________________
Mark Brody, Vice President William C. Collett,
and Manager Treasurer
3
<PAGE> 1
EXHIBIT 10.2
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as
of July 15, 1994, is entered into by and among DREYER'S GRAND ICE CREAM, INC.
(the "Company"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
agent for itself and the Banks (the "Agent"), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS, ABN AMRO BANK N.V., and CONTINENTAL BANK N.A. (collectively, the
"Banks").
RECITALS
A. The Company, Bank of America National Trust and Savings
Association, ABN AMRO Bank N.V., and Continental Bank N.A., and Agent are
parties to a Credit Agreement dated as of April 30, 1993 as amended by that
certain First Amendment to Credit Agreement dated as of May 24, 1993 and by
that certain Second Amendment to Credit Agreement dated as of May 6, 1994 (as
so amended, the "Credit Agreement") pursuant to which the Agent and the Banks
have extended certain credit facilities to the Company.
B. The Company and the Banks agreed, prior to June 25, 1994, to
an amendment to Section 7.17 of the Credit Agreement as set forth this
Amendment.
C. The Company and Banks are executing this Amendment to formally
memorialize such agreement.
ACCORDINGLY, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings, if any, assigned to them in the
Credit Agreement.
2. Amendments to Credit Agreement.
Section 7.17 of the Credit Agreement is amended by deleting it
in its entirety and restating it in full as follows:
"7.17 Minimum Fixed Charge Coverage Ratio. The Company shall
not permit its Fixed Charge Coverage Ratio (a) prior to its first
fiscal quarter of 1994 to be less than 2.50 to 1.00, (b) during its
first fiscal quarter of 1994 to be less than 2.40 to 1.00, and (c)
thereafter to be less than 1.25 to 1.00. For purposes of this
Section, Fixed Charge Coverage Ratio means the ratio of "A" to "B"
where:
"A" means the sum of earning before taxes plus current operating lease
expenses plus interest expense; and
<PAGE> 2
"B" means interest expense plus current operating lease expense;
in all cases computed on a consolidated basis and measured on the last
day of a fiscal quarter on a rolling four quarter basis."
3. Representations and Warranties. The Company hereby represents
and warrants to the Agent and the Banks as follows:
(a) No Default or Event of Default has occurred and is
continuing.
(b) The execution, delivery and performance by the
Company of this Amendment have been duly authorized by all necessary corporate
and other action and do not and will not require any registration with, consent
or approval of, notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable. The Credit Agreement as
amended by this Amendment constitutes the legal, valid and binding obligations
of the Company, enforceable against it in accordance with its respective terms,
without defense, counterclaim or offset.
(c) All representations and warranties of the Company
contained in the Credit Agreement are true and correct.
(d) The Company is entering into this Amendment on the
basis of its own investigation and for its own reasons, without reliance upon
the Agent and the Banks or any other Person.
4. Effective Date. This Amendment will become effective as of
June 25, 1994 (the "Effective Date") when the Agent has received from the
Company and the Majority Banks a duly executed original of this Amendment.
5. Reservation of Rights. The Company acknowledges and agrees
that the execution and delivery by the Agent and the Banks of this Amendment
shall not be deemed to create a course of dealing or otherwise obligate the
Agent or the Banks to forbear or execute similar amendments under the same or
similar circumstances in the future.
6. Miscellaneous.
(a) Except as herein expressly amended, all terms,
covenants and provisions of the Credit Agreement are and shall remain in full
force and effect and all references therein to such Credit Agreement shall
henceforth refer to the Credit Agreement as amended by this Amendment. This
Amendment shall be deemed incorporated into, and a part of, the Credit
Agreement.
(b) This Amendment shall be binding upon and inure to
the benefit of
<PAGE> 3
the parties hereto and thereto and their respective successors and assigns. No
third party beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of California.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
(e) This Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with
reference to the matters discussed herein and therein. This Amendment
supersedes all prior drafts and communications with respect thereto. This
Amendment may not be amended except in accordance with the provisions of
Section 10.1 of the Credit Agreement.
(f) If any term or provision of this Amendment shall be
deemed prohibited by or invalid under any applicable law, such provisions of
this Amendment or the Credit Agreement, respectively.
(g) Company covenants to pay or to reimburse the Agent
and the Banks, upon demand, for all costs and expenses (including allocated
costs of in-house counsel) incurred in connection with the development,
preparation, negotiation, execution and delivery of this amendment, including
without limitation appraisal, audit, search and filing fees incurred in
connection therewith.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Amendment as of the date first above written.
DREYER'S GRAND ICE CREAM, INC.
By: /s/ William C. Collett
_______________________________
Title: Treasurer
By: _______________________________
Title: ____________________________
<PAGE> 4
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS
AGENT
By: /s/ Ivo Bakovic
_______________________________
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS
BANK
By: /s/ Michael J. Dasher
_______________________________
Title: Vice President
ABN AMRO BANK, N.V.
By: /s/ Carol A. Levine
_______________________________
Title: Vice President
By: /s/ R. Clay Jackson
_______________________________
Title: Senior Vice President
CONTINENTAL BANK N.A.
By: /s/ R. Guy Stapleton
_______________________________
Title: Vice President
<PAGE> 1
EXHIBIT 11
DREYER'S GRAND ICE CREAM, INC.
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------------ ---------------------------
June 25, 1994 June 26, 1993 June 25, 1994 June 26, 1993
------------- ------------- ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
PRIMARY
Net income (loss) $ (1,435) $ 6,875 $ 147 $ 8,993
Weighted average number of shares of common
stock outstanding 14,380 14,611 14,539 14,595
--------- --------- --------- ---------
Net income (loss) per share, as reported $ (.10) $ .47 $ .01 $ .62
========= ========= ========= =========
Weighted average number of shares of common
stock outstanding 14,380 14,611 14,539 14,595
Common stock equivalent--assumed exercise of
common stock options 86 191 89 173
--------- --------- --------- ---------
Weighted average number of shares of common
stock outstanding, including common
stock equivalents 14,466 14,802 14,628 14,768
========= ========= ========= =========
Net income (loss) per share $ (.10)(1) $ .46(1) $ .01(1) $ .61(1)
========= ========= ========= =========
FULLY DILUTED
Net income (loss) $ (1,435) $ 6,875 $ 147 $ 8,993
Add interest expense on convertible
subordinated debentures issued June 1993,
due June 2006 and amortization of related
issuance costs, net of tax 1,048 2,049
--------- --------- --------- ---------
Adjusted net income (loss) $ (387) $ 6,875 $ 2,196 $ 8,993
========= ========= ========= =========
Weighted average number of shares of common
stock outstanding 14,380 14,611 14,539 14,595
Common stock equivalent--assumed exercise of
common stock options 86 219 89 219
Assumed conversion of debentures 2,900 2,900
--------- --------- --------- ---------
Adjusted shares 17,366 14,830 17,528 14,814
========= ========= ========= =========
Net income (loss) per share $ (.02)(2) $ .46(1) $ .13(2) $ .61(1)
========= ========= ========= =========
</TABLE>
(1) This calculation is submitted in accordance with Regulation S-K item 601
(b) (11) although it is not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
(2) This calculation is submitted in accordance with Regulation S-K item 601
(b) (11) although it is contrary to APB Opinion No. 15 because it produces
an anti-dilutive effect.
