Exhibit 3.1
ARTICLES OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
NOBLE ROMAN'S, INC.
Pursuant to I.C. 23-1-25-2 of
the Indiana Business Corporation Law
The undersigned officer of Noble Roman's, Inc. (the "Corporation"), an
Indiana corporation incorporated on September 21, 1972 and existing under and
pursuant to the provisions of the Indiana Business Corporation Law, as amended,
desiring to give notice of corporate action effectuating amendment of certain
provisions of its Articles of Incorporation, does hereby certify the following
facts:
FIRST: Pursuant to the authority vested in the Board of Directors of the
Corporation in accordance with the provisions of its Articles of Incorporation,
as amended, a series of Preferred Stock of the Corporation be and it is hereby
created, pursuant to which Fifty-One Thousand (51,000) shares of the Preferred
Stock shall be designated Series B Convertible Preferred Stock (the "Series B
Preferred Shares") and the powers, preferences and relative, participating,
optional and other special rights of such Series B Preferred Shares, and the
qualifications, limitations or restrictions thereof are as follows (capitalized
terms used herein and not otherwise defined shall have the respective meanings
ascribed to them in Section 7 below):
Section 1. Liquidation.
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1.1 Preference. Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, each holder of Series B Preferred Shares will
be entitled to be paid, before any distribution or payment is made upon any
Common Shares, Common Share Equivalents or any other securities which may be
subordinated to the Series B Preferred Shares with respect to the liquidation
preference set forth in this Section 1.1, an amount in cash or other assets or
property equal to the aggregate Liquidation Value of all of such holder's Series
B Preferred Shares plus all accrued and unpaid dividends on such Series B
Preferred Shares. After payment of such aggregate Liquidation Value in respect
of the Series B Preferred Shares plus all accrued and unpaid dividends on such
Series B Preferred Shares, the entire remaining assets and funds of the
Corporation legally available for distribution, if any, shall be distributed
among the holders of Common Shares in proportion to the Common Shares then held
by them.
1.2 Insufficient Funds. If upon any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the assets available for
distribution to the shareholders of the Corporation (the "Distributable Funds")
are insufficient to permit the payment to the holders of Series B Preferred
Shares of the full preferential amount set forth in Section 1.1 above, then the
Distributable Funds shall be distributed to the holders of Series B Preferred
Shares, ratably in proportion to the number of Series B Preferred Shares held by
each such holder on the date of liquidation, dissolution or winding up of the
Corporation.
1.3 Notice. Unless such liquidation, dissolution or winding up of the
Corporation is waived by the holders of a majority of the Series B Preferred
Shares then outstanding in writing pursuant to Section 1.4, the Corporation will
mail written notice of such liquidation, dissolution or winding up not less than
30 days prior to the payment date stated therein to each record holder of Series
B Preferred Shares.
1.4 Other Liquidation Events. Any (a) sale or issuance or series of sales
and/or issuances of shares of the Corporation's capital stock by the Corporation
or any holders thereof, including without limitation pursuant to any merger,
consolidation or other Organic Change, which results in any Person or group of
affiliated Persons (other than the holders of Common Shares and Series B
Preferred Shares as of the date of the Closing under the Exchange Agreements)
owning capital stock of the Corporation possessing the voting power (under
ordinary circumstances) to elect a majority of the Board, (b) Organic Change in
which the shareholders of the Corporation immediately prior to the transaction
possess less than 50% of the voting power of the surviving entity (or its
parent) immediately after the transaction, (c) sale or transfer of all or
substantially all of the assets of the Corporation, or of the Corporation and
its Subsidiaries on a consolidated basis, in any transaction or series of
related transactions, (d) Insolvency Event, or (e) taking of any action
described in Section 5(b) without obtaining the necessary consent set forth in
such Section, shall be deemed to be a liquidation, dissolution or winding up for
purposes of Section 1.1 above, resulting in the redemption of the Series B
Preferred Shares upon payment of the aggregate Liquidation Value therefor in
accordance with Section 1.1, unless the holders of a majority of the Series B
Preferred Shares then outstanding elect by written notice to the Corporation
that such event shall not be deemed a liquidation.
Section 2. Dividends.
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If at any time the Corporation pays any dividends or makes any other
distributions with respect to the Common Shares, the Corporation shall pay at
such time to each holder of Series B Preferred Shares the dividends or other
distributions which such holder would have been entitled to receive had such
holder converted all of its Series B Preferred Shares into Common Shares on the
date as of which the holders of Common Shares of record entitled to such
dividends or other distributions were determined.
In addition, the holders of Series B Preferred Shares shall be entitled to
receive, out of any funds legally available therefor, with respect to each
Series B Preferred Share, a cumulative cash dividend per annum equal to the
Applicable Dividend Rate of the Liquidation Value of such Series B Preferred
Share, which dividends shall accrue from the date of issuance of such Series B
Preferred Share. "Applicable Dividend Rate" means (i) during the period prior to
and through December 31, 2009, eight percent (8%), and (ii) during the period
beginning January 1, 2010 and thereafter, twelve percent (12%). Such dividends
shall accrue whether or not they have been declared and whether or not there are
profits, surplus or other funds of the Corporation legally available for the
payment of dividends. All accrued and unpaid dividends shall be fully paid or
declared with funds irrevocably set apart for payment before any dividend,
distribution or payment can be made with respect to any Common Stock or shares
other than Series B Preferred Shares (such Common Stock and shares other than
Series B Preferred Shares being herein referred to as "Junior Shares"). When
declared, accrued and unpaid dividends shall be paid on October 1, January 1,
April 1 and July 1 of each year, beginning October 1, 2005, out of funds legally
available for such purpose. The Board of Directors may fix a record date for the
determination of holders of Series B Preferred Shares entitled to receive
payment of a dividend declared thereon, which record date shall be not more than
60 days prior to the date fixed for the payment thereof.
Section 3. Conversion.
3.1 Conversion Procedure.
(a) At any time after December 31, 2006, any holder of Series B
Preferred Shares may convert all or any portion of the Series B Preferred
Shares held by such holder into the number of Common Shares computed by (i)
multiplying the number of Series B Preferred Shares to be converted by the
Liquidation Value of a Series B Preferred Share and (ii) dividing the
resulting product by the Conversion Price then in effect (as determined in
Section 3.2 below), with the Common Shares issuable upon conversion to any
shareholder to be aggregated and any resulting fractional Common Share
rounded to the nearest whole share, with 0.5 being rounded upwards.
(b) Each conversion of Series B Preferred Shares will be deemed to
have been effected as of the close of business on the date on which the
certificate or certificates representing the Series B Preferred Shares to
be converted have been surrendered at the principal office of the
Corporation accompanied by a written request for conversion. At such time
as such conversion has been effected, the rights of the holder of such
Series B Preferred Shares will cease and the Person or Persons in whose
name or names any certificate or certificates for Common Shares are to be
issued upon such conversion will be deemed to have become the holder or
holders of record of the Common Shares represented thereby.
(c) As soon as possible, but in no event longer than ten business
days, after a conversion has been effected, the Corporation will deliver to
the converting holder:
(i) a certificate or certificates representing the number of
Common Shares issuable by reason of such conversion in such name or
names and such denomination or denominations as the converting holder
has specified;
(ii) payment in an amount equal to the amount payable under
Section 3.1(f) below with respect to such conversion;
(iii) a certificate representing any Series B Preferred Shares
which were represented by the certificate or certificates delivered to
the Corporation in connection with such conversion but which were not
converted; and
(iv) payment of accrued and unpaid dividends on the converted
Series B Preferred Shares through the date of conversion.
(d) The issuance of certificates for Common Shares upon conversion of
Series B Preferred Shares will be made without charge to the holders of
such Series B Preferred Shares for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion
and the related issuance of Common Shares. Upon conversion of each Series B
Preferred Share, the Corporation will take all such actions as are
necessary in order to insure that the Common Shares issuable with respect
to such conversion will be validly issued, fully paid and nonassessable.
(e) The Corporation will not close its books against the transfer of
Series B Preferred Shares or Common Shares issued or issuable upon
conversion of Series B Preferred Shares in any manner which interferes with
the timely conversion of Series B Preferred Shares.
(f) If a fractional interest in a Common Share would, but for this
Section 3.1(f), be deliverable upon any conversion of the Series B
Preferred Shares, the Corporation shall, in lieu of delivering a fractional
interest thereof, pay an amount to the holder thereof equal to the Market
Price of such fractional interest as of time of conversion.
(g) The Corporation shall at all times reserve and keep available out
of its authorized but unissued Common Shares, solely for the purpose of
issuance upon the conversion of the Series B Preferred Shares, such number
of Common Shares issuable upon the conversion of all outstanding Series B
Preferred Shares based upon the Conversion Price then in effect. All Common
Shares which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes (other than
taxes assessable on or against such holder), liens and charges. The
Corporation shall take all such actions as may be necessary to assure that
all such Common Shares may be so issued without violation of any applicable
law or governmental regulation applicable to the Corporation or generally
applicable to transactions of such type or any requirements of any domestic
securities exchange upon which Common Shares may be listed (except for
official notice of issuance which shall be immediately delivered by the
Corporation upon each such issuance).
3.2 Conversion Price.
(a) Initial Conversion Price. The initial Conversion Price per Series B
Preferred Share will be $2.25. In order to prevent dilution of the conversion
rights granted to holders of Series B Preferred Shares hereunder, the Conversion
Price will be subject to adjustment from time to time pursuant to this Section
3.2 and Sections 3.4 and 3.5 below. For purposes of this Section 3.2, the
Corporation shall be deemed to have issued or sold Common Shares as set forth in
Section 3.3 below.
(b) Adjustment for Dilutive Events. If and whenever on or after the Closing
Date (as defined in the Exchange Agreements) the Corporation issues or sells, or
in accordance with Section 3.3 below is deemed to have issued or sold, any
Common Shares for consideration per share less than the Conversion Price in
effect immediately prior to the time of such issue or sale (a "Dilutive Event"),
then forthwith upon the occurrence of any such Dilutive Event the Conversion
Price will be reduced so that the Conversion Price in effect immediately
following the Dilutive Event will equal the quotient derived by dividing (i) the
sum of (x) the product derived by multiplying the Conversion Price in effect
immediately prior to such Dilutive Event times the number of Common Shares
Deemed Outstanding immediately prior to such Dilutive Event, plus (y) the
consideration, if any, received by the Corporation pursuant to such Dilutive
Event, by (ii) the number of Common Shares Deemed Outstanding immediately after
such Dilutive Event. As used in this Section 3.2(b) and in Section 3.3 below,
the term "Common Shares" includes Common Share Equivalents.
3.3 Common Shares Deemed Outstanding. For purposes of determining the
adjusted Conversion Price pursuant to Section 3.2(b) above, each of the
following events shall be deemed to be an issuance and sale of Common Shares by
the Corporation and the "Common Shares Deemed Outstanding" shall be the number
of Common Shares actually issued and outstanding plus the number of Common
Shares deemed outstanding as a result of the following events as set forth
below:
(a) Issuance of Rights, Warrants or Options. If after the Closing Date (i)
the Corporation in any manner grants any rights, warrants or options to
subscribe for or to purchase Common Shares or any securities convertible into or
exchangeable for Common Shares (such rights or options referred to herein as
"Options" and such convertible or exchangeable stock or securities referred to
herein as "Convertible Securities") and (ii) the Price Per Share of Common
Shares issuable upon the exercise of such Options, or upon conversion or
exchange of such Convertible Securities is less than the Conversion Price in
effect immediately prior to the time of the granting of such Options, then (x)
the total maximum amount of such Common Shares issuable upon the exercise of
such Options or upon conversion or exchange of the total maximum number of
Convertible Securities issuable upon the exercise of such Options will be deemed
to be Common Shares issued and sold by the Corporation, (y) the consideration
received pursuant to the Dilutive Event will equal the Price Per Share times the
number of Common Shares so deemed issued and sold by the Corporation and (z) the
number of Common Shares so deemed issued and sold by the Corporation shall be
included in the Common Shares Deemed Outstanding. For purposes of this Section
3.3(a), the "Price Per Share" will be determined by dividing (i) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon exercise of all such Options, plus
in the case of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the Corporation
upon the issuance or sale of such Convertible Securities and the conversion or
exchange thereof, by (ii) the total maximum number of Common Shares issuable
upon the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options. No further
adjustment of the Conversion Price will be made when Convertible Securities are
actually issued upon the exercise of such Options or when Common Shares are
actually issued upon the exercise of such Options or the conversion or exchange
of such Convertible Securities.
(b) Issuance of Convertible Securities. If after the Closing Date (i) the
Corporation in any manner issues or sells any Convertible Securities and (ii)
the Price Per Share of Common Shares issuable upon such conversion or exchange
is less than the Conversion Price in effect immediately prior to the time of
such issue or sale, then (A) the maximum number of Common Shares issuable upon
conversion or exchange of such Convertible Securities will be deemed to be
Common Shares issued and sold by the Corporation, (B) the consideration received
pursuant to the Dilutive Event will equal the Price Per Share times the number
of Common Shares so deemed issued and sold by the Corporation and (C) the number
of Common Shares so deemed issued and sold by the Corporation shall be included
in the Common Shares Deemed Outstanding. For the purpose of this Section 3.3(b),
the "Price Per Share" will be determined by dividing (i) the total amount
received or receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (ii) the total maximum number of Common Shares issuable
upon the conversion or exchange of all such Convertible Securities. No further
adjustment of the Conversion Price will be made when Common Shares are actually
issued upon the conversion or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustments to the Conversion Price had been or are to be
made pursuant to Section 3.3(a) above, no further adjustment of the Conversion
Price will be made by reason of such issue or sale.
(c) Change in Option Price or Conversion Rate; Expiration of Options,
Convertible Securities. If at any time there is a change in (i) the purchase
price provided for in any Options, (ii) the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities, or (iii)
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Shares, then the Conversion Price in effect at the time
of such change will be readjusted to the Conversion Price which would have been
in effect had those Options or Convertible Securities still been outstanding at
the time of such change provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time such
Options or Convertible Securities were initially granted, issued or sold;
provided that if such adjustment would result in an increase of the Conversion
Price then in effect, such adjustment will not be effective until 30 days after
written notice thereof has been given by the Corporation to all holders of the
Series B Preferred Shares. Any adjustment of the Conversion Price pursuant to
Section 3.2(b) that relates to an Option or Convertible Security shall be
disregarded to the extent that the right to exercise such Option or convert such
Convertible Security expires or is canceled without being exercised, so that the
Conversion Price in effect immediately after such expiration or cancellation
shall be equal to the Conversion Price in effect immediately prior to the time
of the issuance of the expired or canceled Option or Convertible Security, with
such additional adjustments as would have been made to that Conversion Price had
the expired or canceled Option or Convertible Security not been issued.
(d) Calculation of Consideration Received. If any Common Shares, Options or
Convertible Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor or the Price Per Share, as the
case may be, will be deemed to be the net amount received or to be received,
respectively, by the Corporation therefor. In case any Common Shares, Options or
Convertible Securities are issued or sold for a consideration other than cash,
the amount of the consideration other than cash received by the Corporation or
the non-cash portion of the Price Per Share, as the case may be, will be the
fair market value of such consideration received or to be received,
respectively, by the Corporation; except where such consideration consists of
securities, in which case the amount of consideration received or to be
received, respectively, by the Corporation will be the Market Price thereof as
of the date of receipt. If any Common Shares, Options or Convertible Securities
are issued in connection with any merger in which the Corporation is the
surviving corporation, the amount of consideration therefor will be deemed to be
the fair market value of such portion of the net assets and business of the
non-surviving corporation as is attributable to such Common Shares, Options or
Convertible Securities, as the case may be. The fair market value of any
consideration other than cash and securities will be determined in good faith by
the Corporation.
(e) Integrated Transactions. In case any Option is issued in connection
with the issuance or sale of other securities of the Corporation, together
comprising one integrated transaction in which no specific consideration is
allocated to such Option by the parties thereto, the Option will be deemed to
have been issued for aggregate consideration of $1.00.
(f) Treasury Shares. The number of Common Shares Deemed Outstanding at any
given time shall not include shares owned or held by or for the account of the
Corporation, and the disposition of any shares so owned or held shall be
considered an issuance or sale of Common Shares by the Corporation.
(g) Record Date. If the Corporation takes a record of the holders of Common
Shares for the purpose of entitling them (i) to receive a dividend or other
distribution payable in Common Shares, Options or in Convertible Securities or
(ii) to subscribe for or purchase Common Shares, Options or Convertible
Securities, then such record date will be deemed to be the date of the issuance
or sale of the Common Shares deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other distribution or
the date of the granting of such right of subscription or purchase, as the case
may be.
(h) Exclusion. Notwithstanding the foregoing, the following shall not
constitute an issuance and sale of Common Shares by the Corporation for purposes
of Section 3.2:
(i) Common Shares issued or issuable upon conversion of Series B
Preferred Shares;
(ii) Common Shares issued or issuable as a dividend or distribution on
Series B Preferred Shares;
(iii) Common Shares issued to directors, officers or employees of, or
consultants to, the Corporation pursuant to an agreement or an option plan
or purchase plan or other stock incentive program for directors, officers,
employees or consultants approved by the Board of Directors (the "Employee
Stock Options");
(iv) Common Shares issued pursuant to the exercise of any Option
(other than an Employee Stock Option) or conversion of any Convertible
Security issued and outstanding on or before the Closing Date; and
(v) to the extent the Corporation declares a dividend or other
distribution with respect to its Common Shares generally and pays such
dividend or other distribution in the form of Common Shares, the Common
Shares issued or issuable by way of such dividend or other distribution
with respect to Common Shares excluded from the definition of Common Shares
Deemed Outstanding by this Section.
3.4 Subdivision or Combination of Common Shares. If the Corporation at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding Common Shares into a greater
number of shares, the Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Corporation at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding Common Shares into a smaller number of shares, the Conversion Price
in effect immediately prior to such combination will be proportionately
increased.
3.5 Organic Change.
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(a) Corporation Survives. Upon the consummation of an Organic Change (other
than a transaction in which the Corporation is not the surviving entity) the
terms of the Series B Preferred Shares shall be deemed modified, without payment
of any additional consideration therefor, so as to provide that upon the
conversion of Series B Preferred Shares following the consummation of such
Organic Change, the holder of such Series B Preferred Shares shall have the
right to acquire and receive (in lieu of or in addition to, the Common Shares
acquirable and receivable prior to the Organic Change) such shares of stock,
securities or assets as such holder would have received if such holder had
converted its Series B Preferred Shares into Common Shares immediately prior to
such Organic Change, in each case giving effect to any adjustment of the
Conversion Price made after the date of consummation of the Organic Change. All
other terms of the Series B Preferred Shares shall remain in full force and
effect following such an Organic Change. The provisions of this Section 3.5(a)
shall similarly apply to successive Organic Changes.
(b) Corporation Does Not Survive. The Corporation shall not enter into an
Organic Change that is a transaction in which the Corporation is not the
surviving entity unless the surviving entity issues new securities, without
payment of any additional consideration therefor, with terms that provide that
upon the conversion of such securities following the consummation of such
Organic Change, the holder of such securities shall have the right to acquire
and receive (in lieu of or in addition to the Common Shares acquirable and
receivable prior to the Organic Change) such shares of stock, securities or
assets as such holder would have received if such holder had converted its
Series B Preferred Shares into Common Shares immediately prior to such Organic
Change, in each case giving effect to any adjustment of the Conversion Price of
such new securities made after the date of consummation of the Organic Change on
an equivalent basis to the adjustments provided for the Series B Preferred
Shares Conversion Price herein. All other terms of the new securities shall be
equivalent to the terms of the Series B Preferred Shares provided for herein.
The provisions of this Section 3.5(b) shall similarly apply to successive
Organic Changes.
3.6 Notices.
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(a) Immediately upon any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of Series B
Preferred Shares specifying the Conversion Price in effect thereafter with
respect to the particular holder.
(b) The Corporation shall give written notice to all holders of Series B
Preferred Shares at least five days prior to the date on which the Corporation
closes its books or takes a record for determining rights to vote with respect
to any Organic Change, dissolution or liquidation. The Corporation shall also
give written notice to the holders of Series B Preferred Shares at least 20 days
prior to the date on which any Organic Change shall occur.
3.7 Certain Events. If any event similar to or of the type contemplated by
the provisions of this Section 3, but not expressly provided for by such
provisions, occurs, then the Board will make an appropriate and equitable
adjustment in the Conversion Price so as to protect the rights of the holders of
Series B Preferred Shares; provided that no such adjustment will increase the
Conversion Price as otherwise determined pursuant to this Section 3 or decrease
the number of Common Shares issuable upon conversion of each Preferred Share.
Section 4. Miscellaneous.
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4.1 Registration of Transfer. The Corporation shall keep at its principal
office a register for the registration of Series B Preferred Shares. Upon the
surrender of any certificate representing Series B Preferred Shares at such
place, the Corporation shall, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing in the aggregate
the number of Series B Preferred Shares represented by the surrendered
certificate. Each such new certificate will be registered in such name and will
represent such number of Series B Preferred Shares as is requested by the holder
of the surrendered certificate and will be substantially identical in form to
the surrendered certificate, and dividends will accrue on the Series B Preferred
Shares represented by such new certificate from the date to which dividends have
been fully paid on such Series B Preferred Shares represented by the surrendered
certificate.
4.2 Replacement. Upon receipt of evidence reasonably satisfactory to the
Corporation of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing Series B Preferred Shares, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation, or, in the case of any such mutilation upon
surrender of such certificate, the Corporation will (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the number of Series B Preferred Shares represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate, and dividends will accrue on the Series B
Preferred Shares represented by such new certificate from the date to which
dividends have been fully paid on such lost, stolen, destroyed or mutilated
certificate.
4.3 Notices. Except as otherwise expressly provided, all notices referred
to herein will be in writing and will be delivered by registered or certified
mail, return receipt requested, postage prepaid and will be deemed to have been
given when so mailed (a) to the Corporation, at its principal executive offices
and (b) to any shareholder, at such holder's address as it appears in the stock
records of the Corporation (unless otherwise indicated in writing by such
holder).
4.4 No Cumulative Voting Rights or Preemptive Rights. A Series B Preferred
Share does not entitle its holder to cumulative voting rights or preemptive
rights.
Section 5. Voting Rights.
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The Corporation may take the various actions listed below only upon satisfying
the one or more voting requirements, set forth below, applicable to such action.
(a) Whenever the Indiana Business Corporation Law provides for a vote of a
class of shareholders, the holders of the outstanding shares of any class shall
be entitled to vote as a class in respect of any such amendment or transaction
and the proposed amendment or transaction shall be approved upon receiving the
affirmative vote of the holders of a majority of the outstanding shares of each
class of shares entitled to vote as a class in respect thereof and of the total
outstanding shares entitled to vote.
(b) So long as any Series B Preferred Shares remain outstanding, the
Corporation shall not, without the affirmative vote or written consent by the
holders of a majority of the Series B Preferred Shares then outstanding:
(i) directly or indirectly declare or pay any dividends or make any
distributions upon any of its equity securities other than Series B
Preferred Shares;
(ii) authorize, issue, or enter into any agreement providing for the
issuance (contingent or otherwise) of (A) any notes or debt securities
containing equity features with rights superior to those of the Series B
Preferred Shares (including, without limitation, any notes or debt
securities convertible into or exchangeable for equity securities, issued
in connection with the issuance of equity securities or containing profit
participation features) or (B) any additional series of preferred shares of
the Corporation or any equity securities with rights superior to those of
the Series B Preferred Shares (or any securities convertible into or
exchangeable for any equity securities); or
(iii) make any amendment to the Corporation's articles of
incorporation or by-laws or enter into any agreements which alter, change
or otherwise amend or adversely affect the rights, preferences or
privileges of the Series B Preferred Shares.
(c) In all other events, except as required by the Indiana Business
Corporation Law all holders of shares of the Corporation will vote as a single
class, with each holder of Series B Preferred Shares being entitled to cast such
number of votes as is equal to the number of Common Shares into which the Series
B Preferred Shares of such holder would be converted on the date of such vote.
Section 6. Redemption.
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(a) At any time after December 31, 2008, the Corporation shall have the
right, but not the obligation, to redeem all Series B Preferred Shares for a
purchase price per Series B Preferred Share equal to the Liquidation Value of
such Series B Preferred Share plus all accrued and unpaid dividends on such
Series B Preferred Share. The Corporation shall exercise this right by
delivering written notice thereof to the holders of Series B Preferred Shares at
least 30 days prior to the date selected by the Corporation for the redemption.
(b) If the funds of the Corporation legally available for redemption of
Series B Preferred Shares are insufficient to redeem the total number of Series
B Preferred Shares to be redeemed, those funds which are legally available shall
be used to redeem the Series B Preferred Shares, paid to the holders of the
Series B Preferred Shares ratably in proportion to the number of shares of
Series B Preferred Shares to be redeemed. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of Series B
Preferred Shares, such funds shall immediately be used to redeem the balance of
the Series B Preferred Shares which the Corporation had become obligated to
redeem but had not redeemed, paid to the holders of the Series B Preferred
Shares ratably in proportion to the number of shares of Series B Preferred
Shares to be redeemed. In case fewer than the total number of shares of Series B
Preferred Shares represented by any certificate are redeemed, a new certificate
representing the number of unredeemed shares of Series B Preferred Shares shall
be issued to the holder thereof without cost to such holder within three
business days after surrender of the certificate representing the redeemed
shares of Series B Preferred Shares.
(c) No Series B Preferred Share is entitled to any dividends declared or
accrued after the date on which the redemption price of such Series B Preferred
Share is paid to the holder thereof. On such date all rights of the holder of
such Series B Preferred Share shall cease, and such Series B Preferred Share
shall no longer be deemed to be outstanding.
(d) Any Series B Preferred Share that is redeemed or otherwise acquired by
the Corporation shall be considered an authorized but unissued share.
Section 7. Definitions.
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"Board" means the Corporation's Board of Directors.
"Common Share" means a share of the Corporation's common stock.
"Common Share Equivalent" means, collectively, any capital stock of any
class of the Corporation hereafter authorized which is not limited to a fixed
sum or percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Corporation.
"Exchange Agreements" means the Exchange Agreements, entered into on or
about the 25th day of August, 2005, by and between the Corporation and the
investor identified therein.
"Insolvency Event" means (i) the Corporation commencing any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or (C) making a general
assignment for the benefit of its creditors; or (ii) there is commenced against
the Corporation any case, proceeding or other action of a nature referred to in
clause (i) above; or (iii) there is commenced against the Corporation any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets; or (iv) the Corporation takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii) or (iii) above; or (v) the Corporation generally does
not pay its debts as they become due.
"Liquidation Value" of any Series B Preferred Share as of any particular
date will be equal to $40.00 (as adjusted for any divisions, whether by stock
split, stock dividend or otherwise, or combinations, whether by reverse stock
split or otherwise, of the Series B Preferred Shares).
"Market Price" of any security means the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on the primary
exchange on which such security is listed at the end of such day, or, if on any
day such security is not so listed, the average of the representative bid and
asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if
on any day such security is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a period of 21
days consisting of the day as of which "Market Price" is being determined and
the 20 consecutive business days prior to such day. The "Market Price" of a note
or other obligation which is not listed on a securities exchange or quoted in
the NASDAQ System or reported by the National Quotation Bureau, Incorporated,
the total consideration received by the Corporation (including interest) will be
discounted at the prime rate of interest announced by Bank of America (or its
successor) in effect at the time the note or obligation is deemed to have been
issued. If at any other time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" thereof shall be determined in good faith by the Corporation.
"Organic Change" means any capital reorganization, reclassification,
consolidation, merger, lease, or sale of all or substantially all of the
Corporation's assets to another Person which is effected in such a way that
holders of Common Shares are entitled to receive (either directly or upon
subsequent liquidation) shares, securities or assets with respect to or in
exchange for Common Shares.
"Person" means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
SECOND: These Articles of Amendment were duly adopted by the Board of
Directors of the Corporation on August 22, 2005 in full legal compliance with
the provisions of the Indiana Business Corporation Law, the Articles of
Incorporation and the By-Laws of the Corporation.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned hereby verifies, subject to the penalties of
perjury, that the statements contained herein are true, this 23rd day of August,
2005.
NOBLE ROMAN'S, INC.
By: /s/ Paul W. Mobley
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Paul W. Mobley, Chairman of the Board
and Chief Executive Officer