CAL-MAINE FOODS INC - FORM 10-K - EX-4.1 - July 19, 2021

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Exhibit 4.1
To Annual Report
 
on Form 10-K for Fiscal 2021
Of Cal-Maine Foods, Inc.
 
 
DESCRIPTION OF CAPITAL STOCK
 
The amount of capital stock which Cal-Maine Foods, Inc. (the “Company” or “Corporation”) is authorized to issue (the “Capital
Stock”) is 124,800,000
 
shares, consisting of
 
(a) 120,000,000 shares
 
of Common
 
Stock with a
 
par value
 
of One Cent
 
($.01) per
share and (b) 4,800,000 shares of Class A Common Stock with a par value of One Cent ($.01) per share.
 
The
 
following
 
summary
 
describes
 
the
 
Capital
 
Stock
 
under
 
the
 
Company’s
 
Second
 
Amended
 
and
 
Restated
 
Certificate
 
of
Incorporation (the “Restated Charter”).
 
The summary may not
 
be complete and is subject
 
to, and qualified in
 
its entirety by, the
applicable provisions
 
of Delaware
 
law and
 
the terms and
 
provisions of our
 
Restated Charter. You
 
should refer
 
to, and
 
read this
summary together
 
with, our
 
Restated Charter
 
to review
 
all provisions
 
applicable to
 
our Capital
 
Stock that
 
may be important
 
to
you.
 
Equal Treatment
 
Except as otherwise provided in the Restated
 
Charter as described below, or required by applicable
 
law, shares of Common Stock
and Class A
 
Common Stock shall have the same rights and powers, rank equally (including as
 
to dividends and distributions, and
upon any
 
liquidation, dissolution
 
or winding
 
up of
 
the Corporation),
 
share ratably
 
and be
 
identical in
 
all respects
 
and as
 
to all
matters.
 
Voting Rights
 
Holders of shares of Capital Stock vote as a single class on all matters submitted to a vote of the stockholders, with each share of
Common Stock
 
entitled to
 
one vote
 
and each
 
share of
 
Class A Common Stock
 
entitled to
 
ten votes.
 
Holders of
 
Capital Stock
have the right of cumulative voting in the election of directors.
 
Cumulative voting means that each stockholder is entitled to cast
as many
 
votes as
 
he or
 
she has the
 
right to
 
cast (before
 
cumulating votes),
 
multiplied by
 
the number
 
of directors
 
to be
 
elected,
and such stockholder may cast all of such votes for a single director or may distribute them among the number to be voted for, or
for any two or more of them as such stockholder may see fit.
 
Under Delaware
 
law, the affirmative
 
vote of the
 
holders of a
 
majority of the
 
outstanding shares of
 
any class of
 
Capital Stock is
required to approve, among other
 
things, any amendment to the
 
certificate of incorporation that would
 
alter or change the
 
powers,
preferences
 
or special
 
rights of
 
such class
 
so as
 
to affect
 
such class
 
adversely. In
 
addition, as
 
long as
 
any of
 
the shares
 
of the
Class A Common
 
Stock are
 
outstanding,
 
the consent
 
of not
 
less than
 
66 2/3
 
% of
 
the total
 
shares of
 
Class A Common
 
Stock
outstanding is required to
 
(1) alter or change the rights
 
and privileges of Class A Common Stock; (2) to
 
amend any provision of
Paragraph 4 of the Restated Charter affecting the Class A
 
Common Stock or (3) effect any re-classification or re-capitalization of
the Company’s Capital Stock.
 
Dividends
 
Holders of
 
shares of
 
Capital Stock
 
are entitled
 
to receive
 
such dividends
 
as may
 
be declared
 
by our
 
Board of
 
Directors out
 
of
funds legally available for such purpose.
 
Shares of Common
 
Stock and Class A Common Stock
 
are required to
 
be treated equally,
 
identically and ratably,
 
on a per
 
share
basis, with respect to any dividends or distributions as may be declared and paid from time to time by the Board of Directors out
of any assets of the Company legally available therefor.
 
However, in the event a dividend is paid in the form of shares of Capital Stock
 
(or rights to acquire such shares), then holders of
Common Stock shall receive
 
shares of Common Stock
 
(or rights) and holders of
 
Class A Common Stock shall receive shares of
Class A Common
 
Stock (or
 
rights), with
 
holders of
 
shares of
 
Common Stock
 
and Class A Common
 
Stock receiving,
 
on a
 
per
share basis, an identical number of shares of Common Stock or Class A Common Stock, as applicable.
Exhibit 4.1
To Annual Report
 
on Form 10-K for Fiscal 2021
Of Cal-Maine Foods, Inc.
 
 
 
Notwithstanding the foregoing, the
 
Board of Directors may
 
pay or make
 
a disparate dividend
 
or distribution per share
 
of Common
Stock or Class A Common
 
Stock (whether
 
in the amount
 
of such dividend
 
or distribution payable
 
per share,
 
the form
 
in which
such dividend
 
or distribution
 
is payable,
 
the timing
 
of the
 
payment, or
 
otherwise) if
 
such disparate
 
dividend or
 
distribution
 
is
approved in advance by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock and
 
Class A
Common Stock, each voting separately as a class.
 
Ownership of Class A Common Stock
 
The Class A Common
 
Stock may
 
only be issued
 
to Immediate
 
Family Members
 
and Permitted Transferees
 
(each as
 
defined in
the
 
Restated
 
Charter,
 
and
 
as summarized
 
below).
 
In
 
the
 
event
 
any
 
share
 
of
 
Class A Common
 
Stock,
 
by
 
operation
 
of
 
law
 
or
otherwise is, or
 
shall be deemed
 
to be owned
 
by any person
 
other than
 
an Immediate Family
 
Member or
 
Permitted Transferee,
such share of Class A Common Stock shall
 
automatically convert into
 
Common Stock, whereby the
 
voting power of such
 
stock
would be reduced from ten votes per share to one vote per share.
 
 
The term “Immediate Family Member”
 
includes: the spouse of our
 
late founder and Chairman
 
Emeritus Fred R.
 
Adams, Jr., (Mrs.
Jean Adams),
 
his
 
natural
 
children
 
(the
 
“Daughters”),
 
his
 
sons-in-law
 
(including
 
our
 
Chairman
 
and
 
Chief
 
Executive
 
Officer
Adolphus B. Baker), and his grandchildren, including the estates of all of
 
such persons.
 
The term “Permitted Transferee” includes:
 
(i)
 
an Immediate Family Member;
 
(ii)
 
a trust
 
held for
 
the sole
 
or primary
 
benefit of
 
one or
 
more Immediate
 
Family Members
 
or Permitted
 
Transferees,
including any trustee in such trustee’s capacity as such, provided
 
that if a trust is not for the sole benefit of one or
 
more
Immediate
 
Family
 
Members
 
or
 
Permitted
 
Transferees,
 
an
 
Immediate
 
Family
 
Member
 
or
 
Permitted
 
Transferee
 
must
retain sole
 
dispositive and
 
exclusive power
 
to direct
 
the voting
 
of the
 
shares of
 
Class A Common Stock
 
held by
 
such
trust;
 
(iii)
 
a corporation, limited liability company or partnership, including but not limited to, a family limited partnership or
similar limited liability
 
company or corporation,
 
or a single member
 
limited liability company,
 
provided that all
 
of the
equity interest in
 
such entity is owned,
 
directly or indirectly, by
 
one or more Immediate
 
Family Members or
 
Permitted
Transferees and an
 
Immediate Family Member
 
or Permitted Transferee retains
 
sole dispositive and
 
exclusive power to
direct the voting of the shares of Class A Common Stock held by such entity;
 
 
(iv)
 
a qualified
 
Individual Retirement
 
Account, pension,
 
profit sharing,
 
stock bonus
 
or other
 
type of
 
plan or
 
trust of
which an Immediate
 
Family Member or Permitted
 
Transferee is a participant
 
or beneficiary, provided that
 
in each case
an Immediate Family Member or
 
Permitted Transferee retains sole dispositive and
 
exclusive power to direct the voting
of the shares of Class A Common Stock held by such account, plan or trust; or
 
(v)
 
any guardianship, conservatorship or custodianship
 
for the benefit of an Immediate Family
 
Member who has been
adjudged
 
disabled,
 
incapacitated,
 
incompetent
 
or
 
otherwise
 
unable
 
to
 
manage
 
his
 
or
 
her
 
own
 
affairs
 
by
 
a
 
court
 
of
competent jurisdiction, including any
 
guardian, conservator or
 
custodian in such guardian’s,
 
conservator’s or custodian’s
capacity as such.
 
Other Provisions
 
The holders of Common Stock and Class A Common Stock are not entitled to preemptive or subscription rights.
 
Exhibit 4.1
To Annual Report
 
on Form 10-K for Fiscal 2021
Of Cal-Maine Foods, Inc.
 
 
Unless approved in advance by the affirmative vote of the holders of a majority of
 
the outstanding shares of Common Stock and
Class A Common
 
Stock,
 
each
 
voting
 
separately
 
as
 
a
 
class,
 
shares
 
of
 
Common
 
Stock
 
or Class
 
A Common
 
Stock
 
may
 
not
 
be
subdivided, combined
 
or reclassified unless
 
the shares of
 
the other class
 
are concurrently therewith
 
proportionately subdivided,
combined
 
or
 
reclassified
 
in
 
a
 
manner
 
that
 
maintains
 
the
 
same
 
proportionate
 
equity
 
ownership
 
between
 
the
 
holders
 
of
 
the
outstanding Common Stock and Class A
 
Common Stock on the record date for such subdivision, combination or reclassification.
 
Unless approved in advance by the affirmative vote of the holders of a majority of
 
the outstanding shares of Common Stock and
Class A Common
 
Stock, each
 
voting separately
 
as a
 
class, upon
 
the dissolution,
 
liquidation or
 
winding up
 
of the
 
corporation,
whether voluntary
 
or involuntary,
 
holders of
 
Common Stock
 
and Class A Common
 
Stock will
 
be entitled
 
to receive
 
ratably all
assets of the Corporation available for distribution to its stockholders.
 
In the event of
 
(i) a merger,
 
consolidation or other business
 
combination requiring the approval of
 
the holders of the
 
Corporation’s
capital stock entitled to vote thereon, (ii) a tender or exchange offer to acquire any shares of Common Stock or Class
 
A Common
Stock by a third party pursuant to
 
an agreement to which the Corporation is
 
a party, or (iii) a tender or exchange offer
 
to acquire
any
 
shares of
 
Common
 
Stock or
 
Class A Common
 
Stock
 
by the
 
Corporation,
 
holders of
 
the
 
Common
 
Stock
 
and
 
the Class
 
A
Common Stock
 
shall have the
 
right to receive,
 
or the right
 
to elect to
 
receive, the
 
same form and
 
amount of
 
consideration on
 
a
per share basis.
 
 
Each share
 
of Class A Common
 
Stock is
 
convertible, at
 
the option
 
of its
 
holder, into
 
one share
 
of Common
 
Stock at
 
any time.
 
Once shares of Class A Common Stock
 
are converted into Common
 
Stock, the shares of
 
Class A Common Stock will be retired
and
 
may not
 
be reissued.
 
The number
 
of shares
 
of Common
 
Stock into
 
which
 
the shares
 
of Class A
 
Common
 
Stock may
 
be
converted is
 
subject to
 
adjustment from
 
time to
 
time in
 
the event
 
of any
 
capital reorganization,
 
reclassification of
 
stock of
 
the
Company or consolidation or merger of the Company with or into another corporation.
 
The
 
Restated
 
Charter
 
includes
 
a
 
sunset
 
provision
 
pursuant
 
to
 
which
 
all
 
of
 
the
 
outstanding
 
Class
 
A
 
Common
 
Stock
 
will
automatically
 
convert
 
to
 
Common
 
Stock
 
if:
 
(a)
 
less
 
than
 
4,300,000
 
shares
 
of
 
Class A
 
Common
 
Stock,
 
in
 
the
 
aggregate,
 
are
beneficially owned by Immediate Family
 
Members and/or Permitted Transferees,
 
or (b) if less than 4,600,000
 
shares of Class A
Common Stock
 
and Common Stock,
 
in the aggregate,
 
are beneficially owned
 
by Immediate Family
 
Members and/or Permitted
Transferees.
 
Control by Immediate Family Members, Anti-Takeover Considerations and Conflicts of Interest
 
General
 
Mr. Adams founded the Company
 
and served as its CEO
 
from the formation
 
of the Company in 1969
 
until 2010, when his son-
in-law, Mr. Baker, became CEO. Mr. Adams died on March 29, 2020.
 
As of July 19, 2021, Immediate Family Members beneficially
 
own all of the 4.8 million outstanding shares of Class A Common
Stock, representing 52.1% of the total voting power, and approximately 5.1 million shares of Common Stock, representing 5.6%
of the total voting power.
 
Such persons possess in the aggregate 57.7% of the total voting power of the outstanding shares
 
of our
Common Stock and Class A Common Stock, based on shares held directly or through related entities.
 
The Common
 
Stock is
 
listed on
 
The Nasdaq
 
Stock Market
 
(“NASDAQ”).
 
Because Mrs.
 
Adams,
 
Mr. Baker
 
and Mr.
 
Baker’s
spouse beneficially
 
own in
 
the aggregate
 
capital stock
 
of the
 
Company entitling
 
them to
 
57.7% of
 
the total
 
voting power,
 
the
Company
 
is a
 
“controlled
 
company” under
 
NASDAQ rules.
 
As a
 
controlled
 
company, the
 
Company is
 
not subject
 
to certain
NASDAQ
 
listing
 
standards,
 
such
 
as
 
those
 
that
 
would
 
otherwise
 
require
 
that
 
a
 
majority
 
of
 
a
 
listed
 
company’s
 
directors
 
be
independent
 
and
 
that
 
a
 
compensation
 
committee
 
and
 
nominating
 
committee
 
of
 
the
 
board
 
of
 
directors
 
composed
 
solely
 
of
independent directors be
 
established.
 
The Company is, however,
 
subject to NASDAQ listing
 
standards requiring that the Audit
Committee be composed solely
 
of independent directors. Delaware
 
law provides that
 
the holders of
 
a majority of
 
the voting power
Exhibit 4.1
To Annual Report
 
on Form 10-K for Fiscal 2021
Of Cal-Maine Foods, Inc.
 
 
of shares entitled to vote must approve certain fundamental corporate transactions such as a merger, consolidation and sale of all
or substantially
 
all of
 
a corporation’s
 
assets.
 
Immediate Family
 
Members currently
 
hold a
 
majority of
 
the voting
 
power of
 
all
shares of capital stock of the
 
Company and have indicated that they
 
intend to retain ownership of a sufficient
 
amount of Common
Stock and Class
 
A Common Stock
 
to assure continued ownership of
 
more than 50% of the
 
voting power of our
 
outstanding shares
of capital stock.
 
Accordingly, a merger, consolidation, sale of
 
all or substantially all of
 
the assets or other business combination
or
 
transaction
 
involving
 
the
 
Company,
 
which
 
requires
 
a
 
stockholder
 
vote,
 
cannot
 
be
 
effected
 
without
 
the
 
approval
 
of
 
the
Immediate Family Members.
 
As a result, majority control may make an unsolicited acquisition of the
 
Company more difficult and discourage certain types of
transactions involving a change of control of our Company, including transactions in which the holders of Common Stock might
otherwise
 
receive a
 
premium for
 
their shares
 
over then
 
current market
 
prices.
 
Also, the
 
controlling
 
ownership
 
of our
 
Capital
Stock
 
by
 
Immediate
 
Family
 
Members
 
may
 
adversely
 
affect
 
the
 
market
 
price
 
of
 
our
 
Common
 
Stock,
 
due
 
in
 
part
 
to
 
lack
 
of
speculation that there may be a change in control.
 
Delaware Anti-Takeover Law
 
We
 
are subject
 
to Section
 
203 (“Section
 
203”) of
 
the Delaware
 
General
 
Corporation
 
Law.
 
Under
 
this provision,
 
we may
 
not
engage
 
in
 
any
 
“business
 
combination”
 
with
 
any
 
interested
 
stockholder
 
for
 
a
 
period
 
of
 
three
 
years
 
following
 
the
 
date
 
the
stockholder became an interested stockholder, unless:
 
i.
 
prior to that date our Board of Directors approved either the business combination
 
or the transaction that resulted in the
stockholder becoming an interested stockholder;
 
ii.
 
upon
completion of
 
the transaction
 
that resulted
 
in the
 
stockholder becoming
 
an interested
 
stockholder, the
 
interested
stockholder owned at least 85% of the voting stock outstanding at the time the transaction began;
 
or
 
iii.
 
on or following
 
that date, the busi
ness combination is
 
approved by our Board
 
of Directors and
 
authorized at an
 
annual
or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that
 
is not owned
by the interested stockholder.
 
Section 203 defines “business combination” to include, subject to limited
 
exceptions:
 
i.
 
any merger or consolidation involving the corporation and the interested stockholder;
 
 
ii.
 
any sale,
 
transfer, pledge
 
or other
 
disposition of
 
10% or
 
more of
 
the assets
 
of the
corporation involving
 
the interested
stockholder;
 
iii.
 
any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested
 
stockholder;
 
iv.
 
any transaction
 
involving the
 
corporation
 
that has
 
the e
ffect of
 
increasing the
 
proportionate share
 
of the
 
stock of
 
any
class or series of the corporation beneficially owned by the interested stockholder; or
 
v.
 
the receipt
 
by the
 
interested
 
stockholder of
 
the benefit
 
of any
 
loans, advances,
 
guarantees, pledges
 
or other
 
financial
benefits provided by or through the corporation.
 
In
 
general,
 
Section 203
 
defines
 
an
 
“interested
 
stockholder”
 
as
 
any
 
entity
 
or
 
person
 
beneficially
 
owning
 
15%
 
or
 
more
 
of
 
the
outstanding voting
 
stock of the
 
corporation and
 
any entity or
 
person affiliated
 
with or controlling
 
or controlled
 
by the entity
 
or
person.
Exhibit 4.1
To Annual Report
 
on Form 10-K for Fiscal 2021
Of Cal-Maine Foods, Inc.
 
 
 
The restrictions of
 
Section 203 of the
 
Delaware General Corporation
 
Law do not
 
apply to corporations
 
that have elected,
 
in the
manner provided therein, not to
 
be subject to Section
 
203 of the
 
Delaware General Corporation Law.
 
The Company has not
 
made
such an election.
 
Accordingly, the Company would be subject to Section 203 in the event of a business combination.
 
 
Transfer Agent
 
 
 
Computershare Trust Company of Louisville, Kentucky, is the Transfer Agent and Registrar for our Common Stock.
 

CAL-MAINE FOODS INC Reports