-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QvbfWIFP0mWC2VCPVDdUXSxcw18zLv09wXgu9omkrOdAF6C+hscuvEQlfmhUF1mN O4k4FmoOad1dn0+bk914/A== 0000916641-96-000691.txt : 19960816 0000916641-96-000691.hdr.sgml : 19960816 ACCESSION NUMBER: 0000916641-96-000691 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESKIMO PIE CORP CENTRAL INDEX KEY: 0000787520 STANDARD INDUSTRIAL CLASSIFICATION: ICE CREAM & FROZEN DESSERTS [2024] IRS NUMBER: 540571720 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19867 FILM NUMBER: 96613438 BUSINESS ADDRESS: STREET 1: 901 MOOREFIELD PARK DR CITY: RICHMOND STATE: VA ZIP: 23236 BUSINESS PHONE: 8045608400 MAIL ADDRESS: STREET 1: 901 MOOREFIELD PARK DR CITY: RICHMOND STATE: VA ZIP: 23236 10-Q 1 ESKIMO PIE CORPORATION 10-Q 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 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 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 Eskimo Pie Corporation Consolidated Condensed Statements of Income (Unaudited)
Three months ended Six months ended June 30, June 30, 1996 1995 1996 1995 (In thousands, except share data) 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 ===== ===== ===== =====
2 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 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 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 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 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 (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 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 EX-3 2 EXHIBIT 3(II) 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. EX-10.6 3 EXHIBIT 10.6 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 (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 (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 (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 (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 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 (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 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 EX-27 4 EXHIBIT 27
5 1,000 6-MOS DEC-31-1996 JUN-30-1996 968 0 12,037 0 7,417 22,482 21,533 12,714 51,411 10,295 9,800 0 0 3,455 24,277 51,411 45,093 45,093 27,072 40,329 0 0 354 4,473 1,708 2,765 0 0 0 2,765 .80 .77
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