SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-19867
ESKIMO PIE CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-0571720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
901 Moorefield Park Drive, Richmond, VA 23236
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (804) 560-8400
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 July 31, 1996.
Class Outstanding at July 31, 1996
----- ----------------------------
Common Stock, $1.00 Par Value 3,444,586
<PAGE>
ESKIMO PIE CORPORATION
Index
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balanced Sheets
June 30, 1996 and December 31, 1995 1
Consolidated Condensed Statements of Income
Three and Six Months Ended June 30, 1996 and 1995 2
Consolidated Condensed Statements of Cash Flows
Three and Six Months Ended June 30, 1996 and 1995 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE>
Eskimo Pie Corporation
Consolidated Condensed Balance Sheets ( Unaudited )
June 30, December 31,
1996 1995
(In thousands)
ASSETS
Current assets :
Cash and cash equivalents $ 968 $ 717
Receivables 12,037 8,695
Inventories 7,417 5,323
Prepaid expenses 2,060 1,375
------ -----
Total current assets 22,482 16,110
Property, plant and equipment - net 8,819 9,055
Goodwill and other intangibles - net 18,390 18,864
Other assets 1,720 1,843
------- -------
$51,411 $45,872
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term borrowings $ 1,500 $ 1,200
Accounts payable 4,454 3,592
Accrued advertising and promotion 2,830 975
Accrued compensation and related amounts 448 430
Other accrued expenses 533 542
Income taxes 530 178
------ -----
Total current liabilities 10,295 6,917
Long term debt 6,000 6,000
Convertible subordinated notes 3,800 3,800
Postretirement benefits and other 3,584 3,468
Stockholders' equity:
Common stock 3,455 3,475
Additional capital 4,267 4,620
Retained earnings 20,010 17,592
------- -------
Total stockholders' equity 27,732 25,687
------- -------
$51,411 $45,872
======= =======
1
<PAGE>
Eskimo Pie Corporation
Consolidated Condensed Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
(In thousands, except share data)
<S> <C>
Net sales $25,324 $29,800 $45,093 $48,753
Cost of products sold 15,064 16,249 27,072 27,401
------- ------- ------- -------
Gross profit 10,260 13,551 18,021 21,352
Advertising and sales promotion 4,346 6,400 7,616 9,981
General and administrative 3,046 2,793 5,641 5,149
------ ------ ------ ------
Operating income 2,868 4,358 4,764 6,222
Interest income 34 38 63 99
Interest expense and other (172) (209) (354) (425)
----- ----- ------ ------
Income before income taxes 2,730 4,187 4,473 5,896
Income taxes 1,036 1,620 1,708 2,294
----- ----- ----- ------
Net income $ 1,694 $ 2,567 $ 2,765 $ 3,602
====== ====== ====== ======
Per common share
Primary
Weighted average number of
common shares outstanding 3,471,601 3,475,603 3,473,911 3,475,097
Net income $0.49 $0.74 $0.80 $1.04
===== ===== ===== =====
Fully diluted
Weighted average number of
common shares outstanding 3,634,168 3,638,170 3,636,478 3,637,664
Net income $0.47 $0.71 $0.77 $1.00
===== ===== ===== =====
Cash dividends $0.05 $0.05 $0.10 $0.10
===== ===== ===== =====
</TABLE>
2
<PAGE>
Eskimo Pie Corporation
Consolidated Condensed Statements of Cash Flows (Unaudited)
Six months ended
June 30,
1996 1995
(In thousands)
Operating activities
Net income $2,765 $3,602
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,250 1,274
Deferred income taxes and other assets (179) (55)
Increase in receivables (3,342) (6,561)
Increase in inventories and prepaid expenses (2,469) (2,549)
Increase in accounts payable
and accrued expenses 3,078 3,748
------ -----
Net cash provided by (used in) operating activities 1,103 (541)
Investing activities
Acquisition of business and
intangible assets - net of cash acquired (110) (6,330)
Capital expenditures (441) (534)
Sale of short term investments - 345
Other 172 (91)
---- ------
Net cash used in investing activities (379) (6,610)
Financing activities
Payment of cash dividends (347) (347)
Borrowings - net 300 3,975
Repurchase of common stock (426)
------ ------
Net cash (used in) provided by financing activities (473) 3,584
------ ------
Decrease (increase) in cash and cash equivalents 251 (3,567)
Cash and cash equivalents at beginning of period 717 4,797
----- ------
Cash and cash equivalents at end of period $968 $1,230
----- ------
3
<PAGE>
ESKIMO PIE CORPORATION
Notes to Consolidated Condensed financial statements
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements reflect all adjustments (consisting of only
normal recurring accruals) necessary for a fair presentation of the Company's
financial position as of June 30, 1996 and its results of operations for the
three and six months ended June 30, 1996 and 1995. The results of operations
for any interim period are not necessarily indicative of results for the full
year. These financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's 1995 Annual
Report.
NOTE B-INVENTORIES
Classifications of inventories are as follows:
June 30, December 31,
1996 1995
(In thousands)
Finished goods $4,912 $3,802
Raw materials and packaging supplies 3,655 2,631
----- -------
Total FIFO inventories 8,567 6,433
LIFO reserves (1,150) (1,110)
----- -------
$7,417 $5,323
======= ======
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company markets, primarily through a national network of licensed
manufacturers, a broad range of frozen novelty, frozen yogurt, ice cream and
sorbet products under the ESKIMO PIE, Welch's, Weight Watchers, SnackWell's,
OREO and RealFruit brand names. The Company also manufactures and markets
ingredients and packaging to the dairy industry.
RESULTS OF OPERATIONS
Net Sales And Gross Profit
Mild weather and higher costs for licensee ingredients continue to
impact the frozen dessert market which posted, in some categories, double
digit sales declines during the first six months of the year. Additionally,
fewer licensees resulted in lower licensee inventories and thus, reduced
sales. These sales declines, in combination with the slow start of the
reformulated line of NutraSweet products, resulted in the overall sales
decrease noted for the quarter and six months ended June 30, 1996.
There has been strong trade acceptance of the SnackWell's and OREO
products, introduced beginning in December 1995, and the incremental sales
resulting from these products helped to mitigate the sales decline discussed
above. Six month results were also favorably impacted by the inclusion of
RealFruit sales for the entire period in 1996 (only three months were included
in the comparable 1995 period) which offset the impact resulting from the sale
of Weight Watchers finished goods which were acquired and sold by the Company
upon execution of the respective licensing agreement in the first half of
1995.
Flavors, packaging and other sales increased 22.3% for the quarter and
13.3% for the six months ending June 30, 1996 as a result of increased private
label flavors and packaging activity.
Gross profit, as a percent of sales, decreased during both the quarter
and six month periods primarily as a result of changing product mix.
Sublicensed brand sales, which have increased as a percentage of sales,
historically provide lower gross margins due to the royalty costs associated
with the rights to use these brand names.
Expenses and Other Income
Advertising and sales promotion expense decreased during the second
quarter and six months of 1996 due largely to the decline in sales volume
discussed above. The Company reimburses the retail trade for certain variable
promotional costs and as fewer products are sold through at retail, the
Company has reduced expense.
5
<PAGE>
General and administrative costs increased during the second quarter
due primarily to charges associated with a reduction in force. These steps
were taken in late June consistent with the Company's intent to reduce
expenses in response to market conditions. General and administrative costs
for the six months ended June 30, 1996 also increased as a result of first
quarter start-up costs associated with the Nabisco and Reduced Fat Eskimo Pie
products.
OPERATING OUTLOOK
During the second half of the year, the Company plans to increase its
marketing efforts relative to its reformulated Reduced Fat Eskimo Pie lines.
Additional advertising and sales promotion expenditures are also planned for
the sublicensed products which should stimulate consumer activity surrounding
these nationally recognized brands. Management believes that this high level
of expenditures is necessary to support the long term growth of these brands
and the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintained its strong financial position with an
approximate 80% increase in working capital at June 30, 1996 as compared to
the same period in 1995. This increase relates primarily to the repayment of
approximately $2.5 million of short term borrowings in the past twelve months.
The existing cash generated from operations and funds available under
borrowing arrangements continue to provide sufficient funds and financial
flexibility to support the Company's ongoing business, strategic objectives
and debt repayment requirements.
On May 31, 1996, the Company's Board of Directors increased its
authorization to repurchase the common stock of the Company by 112,000 shares
which, when combined with previously approved repurchase authorizations, would
allow the Company to repurchase up to 348,000 shares or 10% of the outstanding
stock. During June 1996, the Company acquired 25,000 shares of common stock
under the Board authorization.
6
<PAGE>
PART II, OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) At the Annual Meetings of Shareholders of the Company held on May 1,
1996, 2,858,349 of the Company's 3,477,919 shares were present in person or by
proxy and entitled to vote, which constituted a quorum.
(b) At the Annual Meeting, the following nominees were elected to serve
until the 1997 Annual Meeting:
David V. Clark
Terrence D. Daniels
Arnold H. Dreyfuss
William M. Fariss, Jr.
Wilson H. Flohr, Jr.
F. Claiborne Johnston, Jr.
(c) At the Annual Meeting, the following matters were voted upon and
received the vote set forth below:
(1) Election of Directors. Provided that a quorum is present,
the nominees receiving the greatest number of votes cast are elected as
directors and, as a result in tabulating the vote, votes withheld have no
effect upon the election of directors. Each nominee for director was elected,
having received the following vote:
Nominee FOR WITHHELD
-------
David V. Clark 2,737,240 121,109
Terrence D. Daniels 2,736,940 121,409
Arnold H. Dreyfuss 2,736,540 121,809
William M. Fariss, Jr. 2,737,140 121,209
Wilson H. Flohr, Jr. 2,737,240 121,109
F. Claiborne Johnston, Jr. 2,737,020 121,329
(2) Approval of the 1996 Incentive Stock Plan. Provided that a
quorum is present, approval of the 1996 Incentive Stock Plan requires the
affirmative vote of a majority of shares present and entitled to vote, and as
a result, in tabulating the vote, abstentions have the effect of a vote
against the proposal, while broker non-votes have no effect on the vote. The
Plan, including the options previously granted thereunder, was approved,
having received the following vote:
FOR: 1,804,943
---------
AGAINST: 181,440
-------
ABSTAIN: 23,531
------
NON-VOTES: 848,435
-------
7
<PAGE>
(3) Proposal to Approve Change in the Company's State of Incorporation.
Provided that a quorum is present, approval of the reincorporation proposal
requires the affirmative vote of a majority of all outstanding shares, and as
a result, in tabulating the vote, abstentions and broker non-votes have the
effect of votes against the proposal. The proposal was approved, having
received the following vote:
FOR: 1,928,357
---------
AGAINST: 42,605
------
ABSTAIN: 38,952
------
NON-VOTES: 848,435
-------
(4) Ratification of Designation of Ernst & Young LLP as Auditors for
the Current Year. Provided that a quorum is present, ratification of auditors
requires the affirmative vote of a majority of the shares present and entitled
to vote and, as a result, in tabulating the vote, abstentions have the effect
of a vote against ratification. Designation of the auditors was approved,
having received the following vote:
FOR: 2,849,835
---------
AGAINST: 5,534
-----
ABSTAIN: 2,980
-----
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2. Agreement and Plan of Merger dated as of March 15, 1996 by
and between Eskimo Pie Corporation and EPC of Virginia Inc., incorporated
herein by reference to Exhibit B to the Company's Proxy Statement for its 1996
Annual Meeting of Shareholders.
3. (i) Amended and Restated Articles of Incorporation of
Eskimo Pie Corporation, incorporated herein by reference to Exhibit C to the
Company's Proxy Statement for its 1996 Annual Meeting of Shareholders.
(ii) Amended and Restated Bylaws of Eskimo Pie
Corporation, filed herewith.
10.6 Executive Severance Agreement between the Company and
V. Stephen Kangisser dated May 15, 1996 filed herewith.
10.7 1996 Incentive Stock Plan, incorporated herein by
reference to Exhibit A to the Company's Proxy Statement for its 1996 Annual
Meeting of Shareholders.
27. Financial Data Schedules, filed herewith
(b) Reports on Form 8-K: None
8
<PAGE>
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.
ESKIMO PIE CORPORATION
Date: July 15, 1996 By /s/ David V. Clark
--------------------------- ---------------------------
David V. Clark
Chairman of the Board,
President and
Chief Executive Officer
Date: July 15, 1996 By /s/ Thomas M. Mishoe, Jr.
--------------------------- ---------------------------
Thomas M. Mishoe, Jr.
Chief Financial Officer
Date: July 15, 1996 By /s/ William T. Berry, Jr.
--------------------------- ---------------------------
William T. Berry, Jr.
Director Accounting Services
8
Amended and Restated Bylaws
of
ESKIMO PIE CORPORATION
(formerly, EPC of Virginia, Inc.)
(Incorporated under the Laws of Virginia)
ARTICLE I - Stock
1. Certificates for Stock. Certificates of Stock shall be issued in
numerical order, be signed by the Chairman of the Board of Directors, the
President or a Vice President, and by the Secretary or an Assistant Secretary,
or the Treasurer or an Assistant Treasurer, and sealed with the corporate seal;
provided, that where any Certificate of Stock is signed by a duly appointed and
authorized Transfer Agent or Registrar the signatures of the Chairman of the
Board of Directors, the President, Vice President, Secretary, Assistant
Secretary, Treasurer or Assistant Treasurer may be facsimile, engraved or
printed, and the seal of the corporation on any such Certificate of Stock may be
facsimile, engraved or printed. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.
2. Transfers of Stock. Transfers of stock shall be made only upon the
books of the corporation, and only by the person named in the certificate or by
attorney, lawfully constituted in writing, and only upon surrender of the
certificate therefor. The directors may by resolution make reasonable
regulations for the transfers of stock. To the extent that any provision of the
Rights Agreement between the corporation and First Union National Bank, as
Successor Rights Agent, dated as of January 21, 1993, is deemed to constitute a
restriction on the transfer of any securities of the corporation, including,
without limitation, the Rights, as defined therein, such restriction is hereby
authorized by the bylaws of the corporation.
3. Holders of Record. Registered shareholders only shall be entitled to
be treated by the corporation as the holders in fact of the stock 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 Virginia.
4. Lost or Destroyed Certificates. In case of loss or destruction of
any certificate of stock another may be issued in its place upon satisfactory
proof of such loss or destruction and upon the giving of a satisfactory bond of
indemnity to the corporation, all as determined either expressly by the
directors or pursuant to general authority granted by them.
ARTICLE II - Shareholders' Meetings
1. Place of Meetings. Meetings of the shareholders shall be held at
such place, within or outside the Commonwealth of Virginia, as the Board of
Directors may determine.
2. Annual Meeting. The annual meeting of the shareholders of the
corporation, for the election of directors to succeed those whose terms expire,
and for the transaction of such other business as may come before the meeting,
shall be held on the first Wednesday in May of each year, if not a legal
holiday, and if a legal holiday, then on the first business day following, at
ten o'clock in the forenoon, or on such other date and at such other time as may
be fixed by the Board of Directors. If the annual meeting of the shareholders be
not held as herein prescribed, the election of directors may be held at any
meeting thereafter called pursuant to these Bylaws.
3. Special Meetings. Special meetings of the shareholders may be
called by the Chairman of the Board, if one is elected, or the President or the
Board of Directors.
4. Notice of Meetings. Written notice of the place, date and hour of
the annual and of all special meetings of the shareholders and, in the case of
special meetings, of the purpose or purposes for which such special meeting is
called, shall be given in the manner specified in Section 1 of Article VII of
these Bylaws not less than ten (10) nor more than sixty (60) days prior to the
meeting (except that notice of a shareholders' meeting to act on an amendment of
the articles of incorporation, a plan of merger or share exchange, a proposed
sale of assets other than in the ordinary course of business, or the dissolution
of the corporation shall be given not less then twenty-five nor more than 60
days before the meeting date), to each shareholder of record of the corporation
entitled to vote thereat. Business transacted at all special meetings shall be
confined to the purposes stated in the notice.
5. Quorum. A quorum at any annual or special meeting of the
shareholders shall consist of shareholders holding a majority of the capital
stock of this corporation outstanding and entitled to vote thereat, represented
either in person or by proxy, except as otherwise specifically provided by law
or in the Articles of Incorporation.
6. Adjourned Meetings. A properly called shareholders' meeting may be
adjourned from time to time by a majority in interest of those present in person
or by proxy and entitled to vote thereat. At any such adjourned meeting at which
a quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified. If the adjournment is for more
than 120 days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting; otherwise, no notice of
such adjourned meeting need be given if the time and place thereof are announced
at the meeting at which the adjournment is taken. The absence from any meeting
of shareholders holding the number of shares of stock of the corporation
required by law, the Articles of Incorporation or these Bylaws for action upon
any given matter shall not prevent action at such meeting upon any other matter
or matters which may properly come before the meeting, if there shall be present
thereat in person or by proxy shareholders holding the number of shares of stock
of the corporation required in respect of such other matter or matters.
7. Inspectors of Election. In advance of any meeting of shareholders,
the Chairman of the Board, President, Treasurer or Secretary of the corporation
shall appoint one or more inspectors of election to serve at such meeting and to
make a written report with respect thereto. In addition, any such officer may,
but shall not be required to, designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is able to act at a meeting of shareholders, the presiding officer at
such meeting shall appoint one or more inspectors to act at the meeting. Each
inspector shall discharge his or her duties in accordance with applicable law
and shall, before entering upon the discharge of his or her duties, take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability.
8. List of Shareholders. A complete list of the shareholders entitled
to vote at each annual or special meeting of the shareholders of the
corporation, arranged in alphabetical order, showing the address of record of
each and the number of voting shares held by each, shall be prepared by the
Secretary or the transfer agent, who shall have charge of the stock ledger, and
at least ten (10) days before every such meeting shall be kept on file at the
principal office of the corporation or at the office of its transfer agent or
registrar, and shall, during the usual hours for business, be open to the
examination of any shareholder in accordance with Virginia law, and during the
whole time of said meeting be open to the examination of any shareholder for the
purposes thereof.
9. Voting. Subject to the provisions of Section 10 of this Article II
of these Bylaws, each holder of stock of a class which is entitled to vote in
any election or on any other questions at any annual or special meeting of the
shareholders shall be entitled to one vote, in person or by written proxy, for
each share of such class held of record. Except where, and to the extent that, a
different percentage of votes and/or a different exercise of voting power is
prescribed by law, the Articles of Incorporation or these Bylaws, the following
applies:
(i) Any corporate action, except the election of directors, an
amendment or restatement of the Articles of Incorporation, a merger, a
statutory share exchange, sale or other disposition of all or
substantially all the corporation's assets otherwise than in the usual
and regular course of business, or dissolution shall, for each voting
group entitled to vote on the matter, be approved at a meeting at which
a quorum of the voting group is present if the votes cast in favor of
the action exceed the votes cast against the action;
(ii) Directors shall be elected by a plurality of the votes
cast by the shares entitled to vote in the election at a meeting at
which a quorum is present; and
(iii) An amendment or restatement of the Articles of
Incorporation, a merger, statutory share exchange, sale or other
disposition of all or substantially all the corporation's assets
otherwise than in the usual and regular course of business, or
dissolution shall be approved by a majority of the votes present and
entitled to vote by each voting group entitled to vote on the
transaction at a meeting at which a quorum of the voting group is
present.
10. Determination of Shareholders of Record. The share transfer books
may be closed by order of the board of directors for not more than 70 days for
the purpose of determining shareholders entitled to notice of or to vote at any
meeting of the shareholders or any adjournment thereof (or entitled to receive
any distribution or in order to make a determination of shareholders for any
other purpose). In lieu of closing such books, the board of directors may fix in
advance as the record date for any such determination a date not more than 70
days before the date on which such meeting is to be held (or such distribution
made or other action requiring such determination is to be taken). If the books
are not thus closed or the record date is not thus fixed, the record date shall
be the close of business on the day before the effective date of the notice to
shareholders.
11. Matters to be Brought Before Shareholders' Meetings. Except as
otherwise provided by law, at any annual or special meeting of shareholders only
such business shall be conducted as shall have been properly brought before the
meeting in accordance with this Section.
In order to be properly brought before the meeting, such business must
have either been (i) specified in the written notice of the meeting (or any
supplement thereto) given to shareholders of record on the record date for such
meeting by or at the direction of the Board of Directors, (ii) brought before
the meeting at the direction of the Board of Directors or the officer presiding
over the meeting, or (iii) specified in a written notice given by or on behalf
of a shareholder of record on the record date for such meeting entitled to vote
thereat or a duly authorized proxy for such shareholder, in accordance with all
the following requirements.
A notice referred to in clause (iii) hereof must be delivered
personally to, or mailed to and received at, the principal executive office of
the corporation, addressed to the attention of the Secretary, not more than ten
(10) days after the date of the initial notice referred to in clause (i) hereof,
in the case of business to be brought before a special meeting of shareholders,
and not less than thirty (30) days prior to the first anniversary date of the
initial notice referred to in clause (i) hereof of the previous year's annual
meeting, in the case of business to be brought before an annual meeting of
shareholders, provided, however, that such notice shall not be required to be
given more than ninety (90) days prior to an annual meeting of shareholders.
Such notice referred to in clause (iii) hereof shall set forth:
(a) a full description of each such item of business proposed
to be brought before the meeting;
(b) the name and address of the person proposing to bring
such business before the meeting;
(c) the class and number of shares held of record, held
beneficially and represented by proxy by such person as of the record
date for the meeting (if such date has been made publicly available)
and as of the date of such notice;
(d) if any item of such business involves a nomination for
director, all information regarding each such nominee that would be
required to be set forth in a definitive proxy statement filed with the
Securities and Exchange Commission pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended, or any successor thereto
and the written consent of each such nominee to serve if elected; and
(e) all other information that would be required to be filed
with the Securities and Exchange Commission if, with respect to the
business proposed to be brought before the meeting, the person
proposing such business was a participant in a solicitation subject to
Section 14 of the Securities Exchange Act of 1934, as amended, or any
successor thereto.
Any matter brought before a meeting of shareholders upon the affirmative
recommendation of the Board of Directors where such matter is included in the
written notice of the meeting (or any supplement thereto) and accompanying proxy
statement given to shareholders of record on the record date for such meeting by
or at the direction of the Board of Directors is deemed to be properly before
the shareholders for a vote and does not need to be moved or seconded from the
floor of such meeting. No business shall be brought before any meeting of
shareholders of the corporation otherwise than as provided in this Section.
ARTICLE III - Board of Directors
1. Number; Term of Office; Powers. The business and affairs of the
corporation shall be under the direction of a Board of Directors, consisting of
a minimum of five (5) and a maximum of eight (8) persons, with the number to be
fixed or changed from time to time, within such minimum and maximum range, by
resolution of the Board of Directors. In the absence of a specific resolution to
the contrary, the number of directors shall be fixed at the number of persons
nominated by the Board of Directors for election as directors in connection with
the annual meeting of shareholders. Directors shall be elected for one year, and
shall hold office until their successors are elected and qualified. Directors
need not be shareholders. In addition to the power and authority expressly
conferred upon them by the Bylaws and the Articles of Incorporation, the Board
of Directors may exercise all such powers of the corporation and do all such
lawful acts and things as are not by law or by the Articles of Incorporation or
by these Bylaws directed or required to be exercised or done by the
shareholders.
2. Eligibility to Serve. No person shall be eligible to stand for
election or re-election to the Board of Directors in the corporation's fiscal
year in which such person shall have his or her 70th birthday, except that any
director serving at January 1, 1996 who was then 65 years old or older shall
continue to be eligible to serve until age 72.
3. Resignations. Any director may resign at any time by giving written
notice of resignation to the Board of Directors, to the Chairman of the Board of
Directors or to the Secretary of the corporation. Any such resignation shall
take effect at the time specified therein, or if the time be not specified
therein, the upon receipt thereof. The acceptance of such resignation shall not
be necessary to make it effective.
4. Vacancies. Except as otherwise specifically provided by law, the
Articles of Incorporation or these Bylaws, all vacancies in the Board of
Directors, whether caused by resignation, death, increase in the number of
authorized directors or otherwise, may be filled by a majority of the Board of
Directors then in office, even though less than a quorum, or by the shareholders
at a special meeting. A director thus elected to fill any vacancy shall hold
office until the next annual meeting of shareholders and until a successor is
elected and qualified.
5. Annual Meeting. The annual meeting of the Board of Directors, for
the election of officers and the transaction of other business, shall be held on
the same day and at the same place as, and as soon as practicable following, the
annual meeting of shareholders, or at such other date, time or place within or
outside the Commonwealth of Virginia as the directors may by resolution
designate.
6. Regular Meetings. Regular meetings of the Board of Directors shall
be held at such times, and at such place within or outside the Commonwealth of
Virginia, as the Board of Directors may from time to time by resolution
designate.
7. Special Meetings. Special meetings of the directors may be called at
any time by the Chairman of the Board of Directors or the President; or by the
Secretary upon written request of one-third of the directors, such request
stating the purpose for which the meeting is to be called. Special meetings
shall be held at the principal office of the corporation or at such office
within or outside the Commonwealth of Virginia as the directors may from time to
time designate.
8. Notice of Meetings. Except as otherwise required by law or a
resolution of the Board of Directors, notice of special meetings of the Board of
Directors or of any committee of the Board of Directors shall be given to each
director or to each committee member, as the case may be, by mail at least two
days before the day on which the meeting is to be held or by personal delivery,
word-of-mouth, telephone, telegraph, radio, cable or other comparable means at
least six hours before the time at which the meeting is to be held. Such notice
shall state the time and place of such meeting, but need not state the purposes
thereof unless otherwise required by law. No notice need be given of the annual
meeting of directors or of regular meetings of directors or of committees of the
Board of Directors, provided that, whenever the time or place of such meetings
shall be fixed or changed, notice of such action shall be given promptly to each
director or to each committee member, as the case may be, who shall not have
been present at the meeting at which such action was taken.
9. Quorum; Adjourned Meetings; Required Vote. A majority of the Board
of Directors as constituted from time to time shall be necessary and sufficient
at all meetings to constitute a quorum for the transaction of business. In the
absence of a quorum, a majority of those present may adjourn the meeting from
time to time and the meeting may be held as adjourned without further notice
provided a quorum be present at such adjourned meeting. Unless otherwise
specifically provided by the Articles of Incorporation or law, the act of a
majority of the directors present at any properly convened meeting at which
there is a quorum shall be the act of the Board of Directors.
10. Committees. Standing or Temporary Committees may be appointed from
their own number by the Board of Directors from time to time, and the directors
may from time to time vest such committees with such powers as the directors may
see fit, subject to such conditions as the directors may prescribe or as may be
prescribed by law. All committees shall consist of two or more directors. The
term of office of the members of each committee shall be as fixed from time to
time by the Board of Directors; provided, however, that any committee member who
ceases to be a director shall ipso facto cease to be a committee member. Any
member of any committee may be removed at any time with or without cause by the
Board of Directors, and any vacancy in any committee may be filled by the Board
of Directors. All committees shall keep regular minutes of their transactions
and shall cause them to be recorded in books kept for that purpose in the office
of the corporation, and shall report the same to the Board of Directors at their
regular meetings. Subject to this Section 9 and except as otherwise determined
by the Board of Directors, each committee may make rules for the conduct of its
business.
11. Compensation. Directors, as such, may receive, pursuant to
resolution of the Board of Directors, fixed fees, other compensation and
expenses for their services as directors, including, without limitation,
services as chairmen or as members of committees of the directors; provided,
however, that nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
12. Consents in Writing. Any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if all members of the Board of Directors or committee,
as the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or committee.
13. Participation by Conference Telephone. Members of the Board of
Directors or of any committee may participate in a meeting of such Board of
Directors or committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting by such means
shall constitute presence in person at the meeting.
ARTICLE IV - Officers
1. Officers. The officers of the corporation shall be a Chairman of the
Board of Directors, a President, one or more Vice Presidents, one or more of
whom may be an Executive Vice President, a Secretary, a Treasurer, and such
other officers and assistant officers as the Board of Directors shall deem
appropriate, all of whom shall be elected annually by the Board of Directors.
One person may hold more than one office.
2. Chairman of the Board. The Chairman of the Board of Directors shall
preside at all meetings of shareholders and directors, shall be the chief
executive officer of the corporation and, subject to the direction of the Board
of Directors, shall have general supervision and management of the business and
affairs of the corporation and shall perform all such other duties as are
incident to such office or are properly required by the Board of Directors.
3. President. The President shall be the chief operating officer of the
corporation and shall, subject to the direction of the Board of Directors and
the Chairman of the Board of Directors, direct and supervise the business and
affairs of the corporation and shall perform all such other duties as are
incident to such office or as are properly required by the Board of Directors or
the Chairman of the Board of Directors. During the absence or disability of the
Chairman of the Board of Directors, the President shall exercise all powers and
discharge all the duties of the Chairman of the Board of Directors.
4. Executive Vice Presidents and Other Vice Presidents. Each of the
Executive Vice Presidents and other Vice Presidents shall perform such duties as
are properly required by the Board of Directors, the Chairman of the Board of
Directors or the President.
5. Treasurer. The Treasurer shall have the custody of all moneys and
securities of the corporation and shall keep or cause to be kept accurate
accounts of all money received or payments made in books kept for that purpose.
The Treasurer shall deposit or cause to be deposited funds of the corporation in
accordance with Article V, Section 2 of these Bylaws and shall disburse the
funds of the corporation by checks or vouchers as authorized by the Board of
Directors. The Treasurer shall keep or cause to be kept all books of accounts
and accounting records of the corporation and shall keep and maintain, or cause
to be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation. The Treasurer shall prepare or cause
to be prepared appropriate financial statements for the corporation and shall
have such other powers and perform such other duties as may be incident to the
office of Treasurer.
6. Secretary. The Secretary shall keep the minutes of the meetings of
the shareholders and of the Board of Directors, and, when required, the minutes
of the meetings of the committees, and shall be responsible for the custody of
all such minutes. The Secretary shall be responsible for the custody of the
stock ledger and documents of the corporation. The Secretary shall have custody
of the corporate seal and shall affix and attest such seal to any instrument
whose execution under seal shall have been duly authorized and enjoy all other
powers incident to the office of Secretary.
7. Other Officers and Assistant Officers. All other officers and
assistant officers shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors, the Chairman of the
Board of Directors or the President.
8. Term of Office; Vacancies. Each officer shall hold office until the
annual meeting of the Board of Directors following the end of the term of the
Board by which such officer is elected, except in the case of earlier death,
resignation or removal. Vacancies in any office arising from any cause may be
filled by the directors at any regular or special meeting.
9. Removal. Any officer elected or appointed by the Board of Directors
may be removed at any time, with or without cause, by the Board of Directors.
10. Proxies. Unless otherwise prescribed by the Board of Directors, the
Chairman of the Board of Directors or the President may from time to time
himself, by such proxy or proxies, attorney or attorneys, agent or agents of the
corporation as he shall designate in the name and on behalf of the corporation,
cast the votes to which the corporation may be entitled as a shareholder or
otherwise in any other corporation, at meetings, or consent in writing to any
action by any such other corporation; and he may instruct the individual or
individuals so appointed as to the manner of casting such votes or giving such
consent, and execute or cause to be executed on behalf of the corporation such
written proxies, consents, waivers or other instruments as he may deem necessary
or desirable.
ARTICLE V - Dividends and Finance
1. Dividends. Dividends may be declared to the full extent permitted
by law at such times as the Board of Directors shall direct.
2. Deposits; Withdrawals; Notes and Other Instruments. The moneys of
the corporation shall be deposited in the name of the corporation in such banks
or trust companies as shall be designated by, and shall be drawn out only by
check signed by, persons designated from time to time, by the Board of Directors
or by an officer of this corporation to whom the Board of Directors has
delegated such authority. All notes and other instruments for the payment of
money shall be signed or endorsed by officers or other person authorized from
time to time by the Board of Directors or by an officer of this corporation to
whom the Board of Directors has delegated such authority.
3. Fiscal Year. The fiscal year of the corporation shall date from the
first day of January in each year.
ARTICLE VI - Books and Records; Offices
1. Books and Records. The books, accounts and records of the
corporation, except as may be otherwise required by the laws of the Commonwealth
of Virginia, may be kept within or outside of the said State at such places as
the Board of Directors may from time to time appoint.
2. Offices. The corporation may have offices in the City of Richmond,
Virginia and at such other places as the Board of Directors may from time to
time designate or the business of the corporation may require.
ARTICLE VII - Notices
1. Notices. Whenever any provision of law or these Bylaws requires
notice to be given to any director, officer or shareholder, such notice may be
given in writing by mailing the same to such director, officer or shareholder at
his or her address as the same appears in the books of the corporation, unless
such shareholder shall have filed with the Secretary a written request that
notices intended for him or her be mailed to some other address, in which case
it shall be mailed to the address designated in such request. The time when the
same shall be mailed shall be deemed to be the time of the giving of such
notice. This section shall not be deemed to preclude the giving of notice by
other means if permitted by the applicable provision of law or these Bylaws.
2. Waivers of Notice. A waiver of any notice in writing, signed by a
shareholder or director, whether before or after the time stated in said waiver
for holding a meeting, shall be deemed equivalent to a notice required to be
given to any shareholder or director.
A shareholder's or director's attendance at or participation in a
meeting waives any required notice to him of the meeting unless he at the
beginning of the meeting or promptly upon his arrival objects to the holding of
the meeting or the transaction of business at the meeting and does not
thereafter vote for or assent to the action taken at the meeting.
ARTICLE VIII - Conflict of Interest
1. Interested Directors or Officers. No contract or transaction between
the corporation and one or more of its directors or officers, or between the
corporation and any other corporation, partnership, association or other
organization in which one or more of the directors or officers of the
corporation are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the director or
officer of the corporation is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if:
(i) the material facts of the transaction and the director's
or officer's interest are disclosed or known to the board of directors
or a committee of the board of directors, and the transaction was
authorized, approved or ratified by the affirmative vote of a majority
of the directors on the board of directors, or on the committee, who
have no direct or indirect personal interest in the transaction;
provided, however, that a transaction shall not be authorized, approved
or ratified by a single director; or
(ii) the material facts of the transaction and the director's
or officer's interest are disclosed to the shareholders entitled to
vote, and the transaction is authorized, approved or ratified by the
vote of a majority of the shares other than shares owned by or voted
under the control of a director or officer who has a direct or indirect
interest in the transaction; or
(iii) the transaction is fair to the corporation.
ARTICLE IX - Seal
1. Seal. The corporate seal of the corporation shall be a flat-face
circular die containing the name of the corporation, of which there may be any
number of counterparts or facsimiles, in such form as the Board of Directors
shall from time to time adopt.
ARTICLE X - Amendments
1. Amendments. These bylaws may be amended or repealed by the Board of
Directors except to the extent that: (i) this power is reserved exclusively to
the shareholders by law or the articles of incorporation; or (ii) the
shareholders in adopting or amending particular bylaws provide expressly that
the Board of Directors may not amend or repeal the same. These bylaws may be
amended or repealed by the shareholders even though the same also may be amended
or repealed by the Board of Directors.
EXECUTIVE SEVERANCE AGREEMENT
This Agreement ("Agreement") is entered into as of May 15, 1996 between
ESKIMO PIE CORPORATION, a Delaware corporation ("Eskimo Pie"), and V. Stephen
Kangisser ("Executive").
WHEREAS, the maintenance of a strong and experienced management is
essential in protecting and enhancing the best interests of Eskimo Pie and its
stockholders, and in this connection Eskimo Pie recognizes that the possibility
of a change in control may result in the departure or distraction of management
personnel to the detriment of Eskimo Pie and its stockholders; and
WHEREAS, the Compensation Committee and the Board of Directors of
Eskimo Pie have each determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of key members of
management to their regular duties without distraction arising from a possible
change in control of Eskimo Pie; and
WHEREAS, the Compensation Committee and the Board have each carefully
reviewed the information presented to them and have determined that the
anticipated benefits to Eskimo Pie from entering into this Agreement with
Executive, thereby encouraging his continued attention and dedication to his
duties, exceed the anticipated costs to Eskimo Pie of entering into such
Agreement; and
WHEREAS, the Compensation Committee and the Board have each concluded
this Agreement is in the best interests of Eskimo Pie and its stockholders; and
WHEREAS, Executive is a key executive of Eskimo Pie and has been
selected by the Compensation Committee to enter into such an agreement with
Eskimo Pie;
NOW, THEREFORE, to assure Eskimo Pie that it will have the continued
dedication of Executive and the availability of his advice and counsel
notwithstanding the possibility or occurrence of a change in control of Eskimo
Pie, and to induce Executive to remain in the employ of Eskimo Pie, and for
other good and valuable consideration, Eskimo Pie and Executive agree as
follows:
1. Definitions of Certain Terms. For purposes of this Agreement,
(a) a "Termination" shall occur if Executive's employment by Eskimo Pie
is terminated by Eskimo Pie at any time within three years following a Change in
Control for reasons other than:
(i) for Cause (as defined in Section 3(a);
(ii) as a result of Executive's death, permanent disability, or
retirement at or after the first day of the month following the
month in which Executive attains age 65 ("Normal Retirement
Date");
(b) a "Termination" shall also occur if Executive's employment by
Eskimo Pie is terminated by Executive for Good Reason (as defined in Section 4)
within three years following a Change in Control; and
1
<PAGE>
(c) "Change in Control" shall mean:
(i) the acquisition by any individual, entity or group (within the
meaning of Section 13 (d) (3) or 14 (d) (2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of Eskimo
Pie (the "Outstanding Common Stock") or (B) the combined voting
power of the then outstanding voting securities of Eskimo Pie
entitled to vote generally in the selection of directors (the
"Outstanding Voting Securities"). Notwithstanding the foregoing,
the following acquisitions shall not constitute a Change in
control: (A) any acquisition directly from Eskimo Pie, (B) any
acquisition by Eskimo Pie, (C) any acquisition by, or benefit
distribution from, any employee benefit plan (or related trust)
sponsored or maintained by Eskimo Pie or any Corporation
controlled by Eskimo Pie, (D) any acquisition pursuant to any
compensatory stock option or stock purchase plan for employees,
or (E) any acquisition pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B), and
(C) of Subsection (iii) of this Section 1(c) are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election
or nomination for election was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board (with his predecessor thereafter ceasing to
be a member); or
(iii) Approval by the shareholders of Eskimo Pie of the reorganization,
merger, or consolidation of Eskimo Pie unless, following such
reorganization, merger, or consolidation, (A) more than 60% of
the then outstanding shares of common stock and the then
outstanding voting securities of the resulting corporation is
then beneficially owned by all or substantially all of the
beneficial owners, respectively, of the Outstanding Common Stock
and Outstanding Securities immediately prior to such
reorganization, merger, or consolidation, (B) no Person
(excluding (I) Eskimo Pie, (II) any employee benefit plan (or
related trust) of Eskimo Pie or such corporation resulting from
such reorganization, merger, or consolidation, and (III) any
Person beneficially owning, immediately prior to such
reorganization, merger, or consolidation, 20% or more of the
Outstanding Common Stock or Outstanding Voting Securities, (as
the case may be) beneficially owns 20% or more of the then
outstanding shares of common stock or the combined voting power
of the then outstanding voting securities of the resulting
corporation, and (C) at least a majority of the members of the
board of directors of the resulting corporation were members of
the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger, or
consolidation; or
2
<PAGE>
(iv) Approval by the shareholders of Eskimo Pie of (A) a complete
liquidation or dissolution of Eskimo Pie, or (B) the sale or
other disposition of all or substantially all of the assets of
Eskimo Pie other than to a corporation with respect to which,
following such sale or other disposition, (I) more than 60% of
the outstanding shares of common stock and the then outstanding
voting securities of such corporation is beneficially owned by
all or substantially all of the beneficial owners, respectively,
of the Outstanding Common Stock and Outstanding Voting Securities
immediately prior to such sale or disposition; (II) no Person
(excluding (x) Eskimo Pie, (y) any employee benefit plan (or
related trust) of Eskimo Pie or such corporation, and (z) any
Person beneficially owning, immediately prior to such sale or
other disposition, 20% or more of the Outstanding Common Stock or
Outstanding Voting Securities, as the case maybe, beneficially
owns 20% or more of the then outstanding shares of common stock
or the combined voting power of the then outstanding voting
securities of such corporation, and (III) at least a majority of
the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of
the initial agreement providing for such sale or other
disposition of the assets of the corporation.
2. Benefit upon Termination. Except as provided in Section 3, upon
Termination, Eskimo Pie agrees to provide or cause to be provided to Executive
the benefits described in Section 2(a) below, subject to the limitations set
forth in Sections 2(b) and (c) below:
(a) Benefit Payment. Executive shall receive within five business days
of Termination a lump sum payment in cash in an amount equal to 2.99 times
Executive's Earnings (as defined in this Section 2(a)); provided, however, that
if there are fewer than 36 months remaining from the date of Termination to
Executive's Normal Retirement Date, the amount calculated pursuant to this
Section 2(a) shall be reduced by multiplying such amount by a fraction, the
numerator of which is the number of months (including any fraction of a month)
remaining to Executive's Normal Retirement Date and the denominator of which is
36.
For purposes of this Section 2(a), "Earnings" shall mean the average
annualcompensation payable by Eskimo Pie and includible in the gross income of
Executive for the taxable years during the period consisting of the most recent
three taxable years ending before the date on which the Change in Control occurs
(or such portion of such period during which Executive performed personal
services for Eskimo Pie).
(b) Other Benefit Plans and Perquisites. The benefit payable upon
Termination in accordance with this Section 2 is not intended to exclude
Executive's participation in any benefit plans or enjoyment of other perquisites
which are available to executive personnel generally in the class or category of
Executive or to preclude such other compensation or benefits as may be
authorized from time to time by the Board of Directors of Eskimo Pie or by its
Compensation Committee; provided, however, that any amount otherwise payable in
accordance with Section 2(a) above shall be reduced by any amounts payable to
Executive upon termination of employment pursuant to any termination allowance
policy or other severance pay plan covering Eskimo Pie employees.
3
<PAGE>
(c) Excise Taxes. If Executive becomes entitled to a payment under this
Section 2 ("Severance Payment"), and if any part or all of the Severance Payment
will be subject to the tax ("Excise Tax") imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), then the amount
otherwise payable to Executive in accordance with Section 2(a) above shall be
reduced as necessary so that no part of such payment shall be subject to the
Excise Tax.
(d) No Duty to Mitigate. Executive's entitlement to benefits
hereunder shall not be governed by any duty to mitigate his damages by seeking
further employment nor offset by any compensation which he may receive from
future employment.
3. Conditions to the Obligations of Eskimo Pie. Eskimo Pie shall have
no obligation to provide or cause to be provided to Executive the benefit
described in Section 2 hereof if either of the following events shall occur:
(a) Termination for Cause. Eskimo Pie shall terminate Executive's
employment for Cause. For purposes of this Agreement, termination of employment
for "Cause" shall mean termination solely for dishonesty, conviction of a
felony, or willful unauthorized disclosure of confidential information of Eskimo
Pie.
(b) Resignation as Director and/or Officer. Executive shall not,
promptly after Termination and upon receiving a written request to do so, resign
as a director and/or officer of Eskimo Pie and of each subsidiary and affiliate
of Eskimo Pie for which he is then serving as a director and/or officer.
4. Termination for Good Reason. Executive may terminate his employment
with Eskimo Pie following a Change in Control for Good Reason and shall be
entitled to receive the benefit described in Section 2 hereof. For purposes of
this Agreement, "Good Reason" shall mean:
(a) the assignment to Executive of any duties inconsistent with the
position (including status, offices, titles, and reporting requirements) or
authority in Eskimo Pie that Executive held immediately prior to the Change in
Control, or a significant adverse alteration in the nature or status of
Executive's responsibilities or the conditions of Executive's employment from
those in effect immediately prior to such Change in Control;
(b) reduction by Eskimo Pie in Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to time;
(c) the relocation of Eskimo Pie's principal executive offices to a
location outside the Richmond Metropolitan Area or Eskimo Pie's requiring
Executive to be based anywhere other than Eskimo Pie's principal executive
offices except for required travel on Eskimo Pie's business to an extent
substantially consistent with Executive's present business travel obligations;
(d) except in the event of reasonable administrative delay, the failure
by Eskimo Pie to pay to Executive any portion of Executive's current
compensation or to pay to Executive any portion of an installment of deferred
compensation under any deferred compensation program of Eskimo Pie within seven
(7) days of the date such compensation is due;
4
<PAGE>
(e) the failure by Eskimo Pie to continue in effect any compensation
plan in which Executive participates immediately prior to the Change in Control
that is material to Executive's total compensation or any substitute plans
adopted prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by Eskimo Pie to continue Executive's
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of Executive's participation relative to other participants, as it
existed at the time of the Change in Control;
(f) the failure by Eskimo Pie to continue to provide Executive with
benefits substantially similar to those enjoyed by Executive under any of Eskimo
Pie's life insurance, medical, health and accident, disability plans, or other
welfare and defined benefit plans (qualified and non-qualified) in which
Executive was participating at the time of the Change in Control, the taking of
any action by Eskimo Pie which would directly or indirectly materially reduce
any of such benefits or deprive Executive of any material fringe benefit enjoyed
by Executive at the time of the Change in Control, or the failure by Eskimo Pie
to provide Executive with the number of paid vacation days to which Executive is
entitled on the basis of years of service with Eskimo Pie in accordance with
Eskimo Pie's normal vacation policy in effect at the time of the Change in
Control; or
(g) the failure of Eskimo Pie to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement, as contemplated in
Section 10 hereof.
5. Other Covenants. Upon Termination, if Executive is entitled to
receive the benefit described in Section 2, then:
(a) If a leased automobile is assigned to Executive at the time of his
Termination, Executive shall have the right to purchase such automobile, free
and clear of any liens and encumbrances, at its fair market value (as determined
by the leasing company). If Executive wishes to exercise this right, he shall
(i) give Eskimo Pie notice to such effect within 10 days following the date of
Termination, (ii) tender the purchase price within 10 days after he is given
notice of the fair market value, and (iii) be solely responsible for maintaining
and insuring the automobile effective from the date of Termination.
(b) At Executive's request, Eskimo Pie shall arrange outplacement
services for Executive, at Eskimo Pie's expense, for a period of one year
following Termination.
(c) Executive and/or his qualified dependents shall be provided
coverage, at his/their expense, under any medical benefit plans covering him
and/or them at the time of Termination in accordance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to
time.
6. Confidentiality: Non-Solicitation: Cooperation.
(a) Confidentiality. At all times following Termination, Executive
will not, without the prior written consent of Eskimo Pie, disclose to any
person, firm or corporation any confidential
5
<PAGE>
information of Eskimo Pie or its subsidiaries or affiliates which is now known
to him or which hereafter may become known to him as a result of his employment
or association with Eskimo Pie and which could be helpful to a competitor;
provided, however, that the foregoing shall not apply to confidential
information which becomes publicly disseminated by means other than a breach of
this Agreement.
(b) Non-Solicitation. For a period of three years following the date
of Termination (or until Executive's Normal retirement Date, whichever is
sooner), Executive will not induce or attempt to induce, either directly or
indirectly, any management or executive employee of Eskimo Pie or of any of its
subsidiaries or affiliates to terminate his or her employment.
(c) Cooperation. At all times following Termination, Executive will
furnish such information and render such assistance and cooperation as may
reasonably be requested in connection with any litigation or legal proceedings
concerning Eskimo Pie or any of its subsidiaries or affiliates (other than any
legal proceedings concerning Executive's employment). In connection with such
cooperation, Eskimo Pie will pay or reimburse Executive for reasonable expenses
actually incurred.
(d) Remedies for Breach. It is recognized that damages in the event of
breach of Sections 6(a) and (b) above by Executive would be difficult, if not
impossible, to ascertain, and it is therefore specifically agreed that Eskimo
Pie, in addition to and without limiting any other remedy or right it may have,
shall have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach. The existence of this right
shall not preclude Eskimo Pie from pursuing any other rights and remedies at law
or in equity which Eskimo Pie may have.
7. Term of Agreement. This Agreement shall commence on the date hereof
and shall remain in force until December 31, 1996; provided, however, that on
each anniversary of such date, the term of this Agreement shall be automatically
renewed for successive one year terms, unless at least 60 days prior to the
expiration of the then current term, Eskimo Pie shall give notice to Executive
that the Agreement shall not be renewed; and further provided, however, that if
a Change in Control occurs during the term of this Agreement, this Agreement
shall continue in effect for a period of 36 months beyond the month in which the
Change in Control occurred. Notwithstanding the foregoing, this Agreement shall
terminate if either Eskimo Pie or Executive terminates the employment of
Executive before a Change in Control occurs. Except as otherwise provided in
Section 9(b), this Agreement shall also terminate upon the Executive's death or
permanent disability or his Normal Retirement Date.
8. Adjudication and Expenses.
(a) If a dispute or controversy arises under or in connection with this
Agreement, Executive shall be entitled to an adjudication in an appropriate
court of the State of Delaware, or in any other court of competent jurisdiction.
Alternatively, Executive, at Executive's option, may seek an award in
arbitration to be conducted by a single arbitrator under the Commercial
Arbitration Rules of the American Arbitration Association.
6
<PAGE>
(b) Eskimo Pie shall pay or reimburse Executive for all costs and
expenses, including without limitation court costs and attorneys' fees, incurred
by Executive as a result of any claim, action or proceeding (including without
limitation a claim, action or proceeding by Executive against Eskimo Pie)
arising out of, or challenging the validity or enforceability of, this Agreement
or any provision hereof, if Executive is successful on the merits or otherwise
in such claim, action or proceeding.
9. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of and be binding upon
Eskimo Pie and its successors and assigns. Eskimo Pie will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of Eskimo Pie to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that Eskimo Pie would be required to perform it if no such succession had
taken place. As used in this Agreement, "Eskimo Pie" shall mean Eskimo Pie as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount would still be payable hereunder if Executive had continued to
live, any such amount, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's devisee, legatee or
other designee or, if there is no such designee, Executive's estate.
10. Miscellaneous.
(a) Assignment. No right, benefit or interest here-under shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, except by will or the laws of descent and
distribution, and any attempt thereat shall be void; and no right, benefit or
interest hereunder shall, prior to receipt of payment, be in any manner liable
for or subject to the recipient's debts, contracts, liabilities, engagements or
torts.
(b) Construction of Agreement. Nothing in this Agreement shall be
construed to amend any provision of any plan or policy of Eskimo Pie. This
Agreement is not, and nothing herein shall be deemed to create, a commitment of
continued employment of Executive by Eskimo Pie or by any of its subsidiaries
and affiliates.
(c) Statutory References. Any reference in this Agreement to a specific
statutory provision shall include that provision and any comparable provision or
provisions of future legislation amending, modifying, supplementing or
superseding the referenced provision.
(d) Amendment. This Agreement may not be amended, modified or
terminated except by written agreement of both parties.
(e) Waiver. No provision of this Agreement may be waived except by a
writing signed by the party to be bound thereby.
7
<PAGE>
Executive may at any time or from time to time waive any or all of the benefits
provided for herein which have not been received by Executive at the time of
such waiver. In addition, prior to the last day of the calendar year in which
Executive's Termination occurs, Executive may waive any or all rights and
benefits provided for herein which have been received by Executive; provided
that Executive repays to Eskimo Pie the amount of the benefits received
(together with interest at the rate provided in Section l274(b)(2)(B) of the
Code). Any waiver of benefits pursuant to this section shall be irrevocable.
(f) Severability. If any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall remain in full force and effect to the
fullest extent permitted by law.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original and all of which
together shall constitute one agreement.
(h) Taxes. Any payment required under this Agreement shall be subject
to all requirements of the law with regard to withholding of taxes, filing,
making of reports and the like, and Eskimo Pie shall use its best efforts to
satisfy promptly all such requirements.
(i) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
(j) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters covered
hereby.
Each of the parties has therefore caused this Agreement to be executed
on its or his behalf as of the date first written above.
ESKIMO PIE CORPORATION
By /s/ David V. Clark
_____________________________
David V. Clark
EXECUTIVE
By /s/ V. Stephen Kangisser
_______________________________
V. Stephen Kangisser
8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 968
<SECURITIES> 0
<RECEIVABLES> 12,037
<ALLOWANCES> 0
<INVENTORY> 7,417
<CURRENT-ASSETS> 22,482
<PP&E> 21,533
<DEPRECIATION> 12,714
<TOTAL-ASSETS> 51,411
<CURRENT-LIABILITIES> 10,295
<BONDS> 9,800
0
0
<COMMON> 3,455
<OTHER-SE> 24,277
<TOTAL-LIABILITY-AND-EQUITY> 51,411
<SALES> 45,093
<TOTAL-REVENUES> 45,093
<CGS> 27,072
<TOTAL-COSTS> 40,329
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 354
<INCOME-PRETAX> 4,473
<INCOME-TAX> 1,708
<INCOME-CONTINUING> 2,765
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,765
<EPS-PRIMARY> .80
<EPS-DILUTED> .77
</TABLE>
