EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
KAHIKI FOODS, INC.
This Corporation is organized under Section 1707.01, et seq., Revised Code
of Ohio, as amended.
FIRST: The name of the Corporation (hereinafter called the "Corporation")
is
KAHIKI FOODS, INC.
SECOND: The place in the State of Ohio where the principal office of the
Corporation is to be located is the City of Gahanna, County of Franklin.
THIRD: The purposes for which the Corporation is formed shall be in the
authority to engage in any lawful act or activity for which corporations may be
formed under Chapter 1701 of the Revised Code of Ohio.
FOURTH: The number of shares of capital stock which the Corporation is
authorized to have outstanding is Ten Million (10,000,000), Nine Million
(9,000,000) of which shall be designated Common Stock with no par value (the
"Common Stock"), and One Million (1,000,000) of which shall be designated Series
A Convertible Preferred Stock with no par value (the "Series A Preferred
Stock").
The Corporation shall at all times reserve and keep available out of its
authorized but unissued Common Stock, shall obtain and keep in force such
authorizations as may be required, and shall comply with all requirements as to
registration or other qualification, in order to enable to Corporation lawfully
to issue and deliver solely for the purpose of effecting the conversion of the
Series A Preferred Stock and of any other securities of the Corporation which
may be convertible or exercisable into Common Stock, such number of shares of
Common Stock as shall from time to time be sufficient to effect such exercise
and conversion. The Corporation shall from time to time in accordance with the
laws of the State of Ohio increase the authorized amount of its shares of Common
Stock if at any time the number of shares of Common Stock remaining unissued and
available for issuance shall not be sufficient to permit conversion of the
Series A Preferred Stock and such other securities.
The rights and preferences of the Common Stock and the Series A Preferred
Stock shall be as follows:
COMMON STOCK
1. Parity. Each share of Common Stock shall be equal to each other share
of Common Stock in every respect.
2. Voting Rights. Each share of outstanding Common Stock shall entitle the
Holder thereof to one vote per share thereof upon all matters upon which
shareholders may have the right to vote, except as otherwise provided herein, in
the Code of Regulations of the Corporation, or by law.
3. Preemptive Rights. The holders of Common Stock shall not have any
preemptive or other preferential right to subscribe for, or to purchase any
shares of capital stock of the Corporation of any class, whether now or
hereinafter authorized, or any Securities exchangeable for or convertible into
such stock.
B. SERIES A PREFERRED STOCK
1. Preference. The Series A Preferred Stock shall rank senior to all other
classes of the Corporation's capital stock, including the Corporation's Common
Stock and all other classes of preferred stock (collectively, the "Junior
Stock") with respect to liquidation and dividend rights. The Series A Preferred
Stock shall have the powers, rights, preferences, qualifications, and
limitations set forth herein.
2. Dividends. The holders of record of Series A Preferred Stock shall each
be entitled to receive, when and as declared by the Board of Directors out of
funds legally available therefore, cumulative dividends, compounding annually,
at an annual rate equal to $0.1125 per share, respectively, adjusted for any
combinations, consolidations, subdivisions or stock splits with respect to such
shares (the "Preferred A Dividend Preference"), payable annually on each June 1
and December 1 of each year (or the next business day thereafter) when and as
declared by the Board of Directors, in preference and priority to any payment of
any dividend on any shares of Junior Stock (other than those payable solely in
Common Stock). The Preferred A Dividend Preference may be payable in-cash or in
additional shares of Series A Preferred Stock at the option of the Board of
Directors. If an "Event of Noncompliance" (as defined in Section 6 below)
occurs, then the Preferred A Dividend Preference shall be increased as provided
for in Section 6. No dividend shall be paid on or declared and set apart with
respect to the Common Stock or any other class of Junior Stock unless and until
cumulative dividends on the Series A Preferred Stock shall have been paid or
declared as set forth herein and set apart during that fiscal year and any prior
year in which dividends were not paid. Notwithstanding the foregoing, if during
any fiscal year of the Corporation, the Corporation pays dividends (cash or
otherwise) to the holders of the Corporation's Common Stock, then the holders of
record of the Series A Preferred Stock shall also be entitled to receive
dividends in an amount equal to the amount of any dividend declared payable with
respect to each share of Common Stock multiplied by the number of shares of
Common Stock into which each share of Series A Preferred Stock is convertible
pursuant to Section 5 hereof, as of the record date for the determination of
holders of Common Stock and Series A Preferred Stock entitled to receive such
dividend. No dividend shall be declared or paid with respect to the Common Stock
unless such a dividend is declared and paid with respect to the Series A
Preferred Stock (as provided above). The record date with
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respect to the payment of dividends with respect to the Series A Preferred Stock
arising from such dividends paid on the Common Stock shall be the same as the
record dates with respect to the payment of dividends with respect to the Common
Stock. The right to such dividends shall be cumulative as to the Series A
Preferred Stock.
3. Liquidation, Dissolution, or Winding Up.
In the event of a "Liquidation Event" (as defined below), each
holder of Series A Preferred Stock shall be entitled to be paid out of the
assets of the Corporation available for distribution to holders of the
Corporation's capital stock, before any payment or declaration and setting apart
for payment of any amount shall be made in respect of the Corporation's Junior
Stock, an amount equal to the greater of (a) if the Liquidation Event occurs (i)
prior to December 21, 2006, $2.8125 per share, respectively (as adjusted to
reflect any share split, combination, reclassification, or similar event
involving the Series A Preferred Stock), plus all accrued but unpaid dividends
thereon (whether or not declared), up to and including the date when full
payment shall be tendered to the holders of the Series A Preferred Stock with
respect to such Liquidation Event or (ii) on or after December 21, 2006, $3.375
per share, respectively (as adjusted to reflect any share split, combination,
reclassification, or similar event involving the Series A Preferred Stock), plus
all accrued but unpaid dividends thereon (whether or not declared), up to and
including the date when full payment shall be tendered to the holders of the
Series A Preferred Stock with respect to such Liquidation Event (either (i) or
(ii), the "Liquidation Preference") and (b) the amount per share that the
holders of Series A Preferred Stock would have been entitled to receive if each
share of Series A Preferred Stock held by such holders had been converted into
Common Stock, pursuant to Section 5 hereof, immediately prior to the Liquidation
Event. If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Series A Preferred Stock of the
Liquidation Preference, then the entire assets of the Corporation available for
such distribution shall be distributed ratably among the holders of the Series A
Preferred Stock in proportion to the Liquidation Preference that each such
holder is otherwise entitled to receive based upon the aggregate Liquidation
Preference of the Series A Preferred Stock held by each such holder and the
aggregate Liquidation Preference of all Series A Preferred Stock. After such
payment shall have been made in full to the holders of the Series A Preferred
Stock or funds necessary for such payment shall have been set aside by the
Corporation in trust for the account of holders of the Series A Preferred Stock
so as to be available for such payment, distributions may be made on the Junior
Stock. For purposes of this Section 3, a "Liquidation Event" of this Corporation
shall be deemed to be occasioned by, or to include, by means of any transaction
or series of related transactions, any of the following: (A) any liquidation,
dissolution, or winding up of the Corporation, whether voluntary or involuntary;
(B) the acquisition of the stock of the Corporation by another entity or person
(including, without limitation, any reorganization, merger, or consolidation
but, excluding any merger effected exclusively for the purpose of changing the
domicile of the Corporation), unless the Corporation's stockholders of record,
as constituted immediately prior to such acquisition will, immediately after
such acquisition (by virtue of securities issued or sold as consideration for
the Corporation's acquisition or otherwise), hold at least 50% of the voting
power of the surviving or acquiring entity; (C) the sale of all or substantially
all of the assets of the Corporation, unless the Corporation's stockholders of
record, as constituted immediately prior to such acquisition or sale will,
immediately after such acquisition or sale (by virtue of securities issued as
consideration for the Corporation's acquisition or sale or otherwise), hold at
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least 50% of the voting power of the surviving or acquiring entity; or (D) the
Corporation's making an assignment for the benefit of creditors or commencing
any bankruptcy, dissolution, termination of corporate existence, or any similar
action. Notwithstanding the foregoing, the holders of at least fifty-one percent
(51%) of the outstanding Series A Preferred Stock voting together as a
single-class (based on the number of shares held by the holders on an
as-converted to Common Stock basis) (the "Convertible Preferred Majority"), may
waive any Liquidation Event for purposes of the distributions set forth in this
Section 3.
4. Voting Rights.
(a) Except as otherwise expressly required by law, each holder of
Series A Preferred Stock shall be entitled to vote on all matters submitted to a
vote of the holders of Common Stock and shall be entitled to that number of
votes equal to the maximum whole number of Common Stock into which such holder's
Series A Preferred Stock, as applicable, is convertible pursuant to the
provisions of Section 5 on the record date for the determination of stockholders
entitled to vote on such matter or, if no record date is established, on the
date such vote is taken or any written consent of stockholders is first
executed. Except as otherwise expressly provided below in this Section 4 or as
required by law and except for the voting rights of the holders of the Series A
Preferred Stock to elect a director of the Corporation pursuant to the Voting
Agreement dated as of the Closing Date, the holders of Series A Preferred Stock
and Common Stock shall vote together as a single class on all matters, and
neither the Common Stock nor any of the Series A Preferred Stock shall be
entitled to vote as a separate class on any matter to be voted on by
stockholders of the Corporation.
(b) The Corporation shall not take any of the following actions
without the affirmative vote (in writing or at a meeting of holders of Series A
Preferred Stock) of the holders of at least the Convertible Preferred Majority:
(i) The Corporation shall not amend, alter, waive, or repeal
the preferences, privileges, special rights, or other powers of the Series
A Preferred Stock, as set forth herein;
(ii) The Corporation shall not increase or decrease (other
than by conversion in accordance with these Amended and Restated Articles
of Incorporation) the authorized number of shares of Series A Preferred
Stock;
(iii) The Corporation shall not amend, waive or repeal any
provisions of or add any provisions to, the Corporation's Amended and
Restated Articles of Incorporation or Code of Regulations;
(iv) Declare or pay any dividend or other distribution upon
any class of the Junior Stock;
(v) Authorize or designate, whether by reclassification or
otherwise, any new class or series of shares or any other securities
convertible into equity securities of the Corporation that has rights,
preferences, or privileges senior to or pari passu with the Series A
Preferred Stock; or
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(vi) Increase the size of the Corporation's Board of
Directors.
(c) Notwithstanding the provisions of paragraph (b) above, the
actions of the Corporation specified therein shall not require the separate
affirmative vote of Convertible Preferred Majority, if less than twenty-five
percent (25%) of the aggregate number of shares of Series A Preferred Stock
theretofore issued by the Corporation are at the time outstanding.
5. Conversion.
(a) Optional Conversion.
(i) Each holder of the Series A Preferred Stock may at any
time, upon surrender of the certificates therefore, convert all or any
portion of his or its Series A Preferred Stock into fully paid and
nonassessable Common Stock of the Corporation, at the Series A Conversion
Price set forth below, plus declared and unpaid dividends thereon.
(ii) Before any holder of Series A Preferred Stock shall be
entitled to convert the same into full shares of Common Stock, such holder
shall surrender the certificate or certificates therefore, endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or
by his, her or its attorney duly authorized in writing, at the office of
the Corporation or of any transfer agent for the Series A Preferred Stock,
and shall give written notice to the Corporation at its office that the
holder elects to convert the same and shall state therein the holder's
name or the names of the nominees in which the holder wishes the
certificate or certificates for shares of Common Stock to be issued. As
soon as practicable thereafter, the Corporation shall issue and deliver at
its office to the holder of the Series A Preferred Stock, or to the
holder's nominee or nominees, a certificate or certificates for the number
of shares of Common Stock to which the holder shall be entitled as
aforesaid, together with cash in lieu of any fraction of a share. A
conversion shall be deemed to have been made immediately prior to the
close of business on the date of the surrender of the shares of Series A
Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of the shares of
Common Stock at the close of business on that date. From and after that
date, all rights of the holder with respect to the Series A Preferred
Stock so converted shall terminate, except only the right of the holder to
receive certificates for the number of shares of Common Stock
issuable-upon conversion thereof and cash for fractional shares. No
fractional shares of Common Stock shall be issued upon conversion of the
Series A Preferred Stock. In lieu of any fractional shares to which the
holder would otherwise be entitled, the Corporation shall pay cash equal
to such fraction multiplied by the then-effective Conversion Price.
(b) Automatic Conversion.
(i) All outstanding Series A Preferred Stock shall be (A)
converted automatically and without the need for any action by the holders
thereof, at the
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conversion ratio set forth below, plus declared and unpaid dividends
thereon, into fully paid and nonassessable shares of Common Stock
immediately upon and simultaneously with the achievement of the "Minimum
Common Price" (as defined below) at any time after the first anniversary
of the Closing Date or(B) converted automatically upon the affirmative
vote of at least the Convertible Preferred Majority. The "Minimum Common
Price" shall mean that the closing price of the Corporation's Common Stock
(exclusive of any trades by the Corporation's officers, directors or five
percent or greater stockholders) on any trading exchange or market for
which shares of Common Stock of the Corporation are then primarily traded
or sold, equals or exceeds $5.00 per share (adjusted for any combinations,
consolidations, subdivisions, or stock splits with respect to such shares)
for at least 180 consecutive trading days.
(ii) All holders of record of shares of Series A Preferred
Stock will be given written notice of the date of any automatic conversion
referenced in this Section 5(b). That notice will be sent by mail, first
class, postage prepaid, to each record holder of Series A Preferred Stock
at each holder's address appearing on the stock register. Promptly after
receiving the notice, each holder of shares of Series A Preferred Stock
shall surrender the holder's certificate or certificates for all affected
shares to the Corporation at the place designated in the notice, and
thereafter shall receive certificates for the number of shares of Common
Stock or other securities to which the holder is entitled. Upon the date
of any automatic conversion, all rights with respect to the Series A
Preferred Stock will terminate, except only the rights of the holders
thereof, upon surrender of their certificate or certificates therefor, to
receive certificates for the number of shares of Common Stock or other
securities into which their Series A Preferred Stock has been converted
and cash for fractional shares. From and after the date of the automatic
conversion, all certificates evidencing shares of Series A Preferred Stock
automatically converted in accordance with these provisions shall be
deemed to have been retired and canceled and the shares of Series A
Preferred Stock represented thereby converted into Common Stock for all
purposes, notwithstanding the failure of the holder or holders thereof to
surrender his, her or its certificates. As soon as practicable after the
date of any automatic conversion and the surrender of the certificate or
certificates for Series A Preferred Stock as aforesaid, the Corporation
shall cause to be issued and delivered to the holder, or pursuant to the
holder's written order, a certificate or certificates for the number of
full shares of Common Stock or other securities issuable on the conversion
in accordance with the provisions hereof and cash as provided herein in
respect of any fraction of a share of Common Stock otherwise issuable upon
the conversion. No fractional shares of Common Stock shall be issued upon
conversion of the Series A Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Corporation
shall pay cash equal to such fraction multiplied by the then-effective
Conversion Price.
(c) Conversion Ratio. Subject to adjustment in the event of certain
capital transactions including, without limitation, stock splits, stock
dividends, recapitalization and reorganizations, each share of the Series A
Preferred Stock may be converted into such number of shares of Common Stock as
is obtained by dividing $2.25 by the initial conversion price of $2.25 per share
or, in case any adjustment of such conversion price has taken place pursuant to
the provisions of this Section 5, by the conversion price as last adjusted and
in effect on the date
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any shares of Series A Preferred Stock are surrendered for conversion (such
conversion price, or such conversion price as last adjusted, being referred to
herein as the "Series A Conversion Price").
(d) Adjustments. The Series A Conversion Price at which the Series A
Preferred Stock may or shall be converted into Common Stock shall be subject to
adjustment from time to time in certain cases as follows:
(i) In case the Corporation shall (A) pay a dividend on its
Common Stock in shares of its capital stock, (B) subdivide its outstanding
Common Stock, (C) combine its outstanding Common Stock into a smaller
number of shares, or (D) issue in any recapitalization, reorganization or
reclassification of its Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Corporation is
the continuing corporation) any shares of its capital stock, the
Conversion Price in effect immediately prior thereto shall be adjusted
proportionately so that the holder of any Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number and kind of shares of capital stock of the Corporation which such
holder would have owed or have been entitled to receive after the
happening of such event, had such Series A Preferred Stock been converted
immediately prior to the happening of such event. Such adjustment shall be
made whenever any of such events shall occur. An adjustment made pursuant
to this paragraph (i) shall become effective, retroactively to the record
date, immediately after the payment date in the case of a stock dividend
and shall become effective immediately after the effective date in the
case of a subdivision, combination, recapitalization, reorganization, or
reclassification.
(ii) In the event that, at any time, as a result of an
adjustment made pursuant to paragraph (i) above, the holder of any Series
A Preferred Stock thereafter surrendered for conversion shall become
entitled to receive any shares of capital stock of the Corporation other
than its Common Stock, thereafter the number of such other shares so
receivable upon conversion shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in paragraph (i)
above.
(iii) Whenever the amount of Common Stock or other securities
deliverable upon the conversion of the Series A Preferred Stock shall be
adjusted pursuant to the provisions hereof, the Corporation shall
forthwith file, at its principal office and with any transfer agent or
agents for the Series A and for Common Stock, and with any stock exchange
on which such Series A or Common Stock are listed, a statement, signed by
its President or one of its Vice Presidents or its Secretary or Treasurer,
stating the adjusted number of Common Stock or other securities
deliverable per share of Series A Preferred Stock, upon conversion thereof
calculated to the nearest share and setting forth in reasonable detail the
method of calculation and the facts requiring such adjustment and upon
which such calculation is based, and shall give notice thereof by mail,
postage prepaid, to the holders of record of the Series A Preferred Stock,
as applicable. Each adjustment shall remain in effect until a subsequent
adjustment hereunder is required.
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(iv) At all times, the Corporation shall reserve and keep
available unto its authorized but unissued Common Stock the full number of
shares of Common Stock deliverable upon the conversion of all the
then-outstanding Series A Preferred Stock and shall take all such action
and obtain all such permits or orders as may be necessary to enable the
Corporation lawfully to issue such Common Stock upon the conversion of
such Series A Preferred Stock.
(v) No fractional Common Stock shall be issued upon a
conversion of the Series A Preferred Stock. If any fractional interest in
a Common Stock share would be deliverable upon the conversion of any
Series A Preferred Stock, the Corporation shall round such fractional
interest to the nearest whole share, in lieu of delivering the fractional
share therefor.
(e) Adjustment of Conversion Price Upon Issuance of Common Stock.
(i) Mechanics of Adjustment. Except as provided in Subsection
5(e)(vii), if and whenever the Corporation shall issue or sell, or under
any of Subsections 5(e)(ii) through 5(e)(vi) is deemed to have issued or
sold, any shares of its Common Stock without consideration or for a
consideration per share less than the Series A Conversion Price for the
shares of its Series A Preferred Stock in effect immediately prior to the
time of such issuance or sale (the "Dilutive Price"), then such Series A
Conversion Price at such time shall be reduced to an amount (calculated to
the sixth decimal point) equal to (x) the Dilutive Price if such issuance
or sale occurs on or prior to December 21, 2006 and (y) if such issuance
or sale occurs after December 21, 2006, the price determined by dividing
(1) an amount equal to the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such issuance or sale (including as
outstanding all Common Stock issuable upon conversion of outstanding
Preferred Stock and all Common Stock issuable upon the exercise of Options
or the conversion of Convertible Securities, as such terms are defined in
Subsection 5(e)(ii)), multiplied by such Conversion Price at such time and
(B) the consideration, if any, received and/or receivable by the
Corporation in connection with such issuance or sale, by (2) the total
number of shares of Common Stock outstanding immediately after such
issuance or sale, including as outstanding all Common Stock issuable upon
conversion of outstanding Preferred Stock and all Common Stock issuable
upon the exercise of Options or the conversion of Convertible Securities.
The Dilutive Price shall be determined by the consideration, if any,
received and/or receivable by the Corporation in connection with such
dilutive issuance or sale as determined by the Board of Directors in good
faith.
(ii) Issuance of Rights or Options. Except as provided in
Subsection 5(e)(vii), in case at any time the Corporation shall in any
manner grant (whether directly or by assumption in a merger or otherwise)
any rights to subscribe for or to purchase, or any options for the
purchase of, shares of Common Stock or any stock or securities convertible
into or exchangeable for Common Stock (such rights or options being
hereinafter referred to as "Options" and such Convertible or exchangeable
stock or securities being hereinafter referred to as "Convertible
Securities"), whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, and
the price per share for which a share of Common Stock is
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issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (A) the
total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the aggregate amount
of additional consideration payable to the Corporation upon the exercise
of all such Options, plus, in the case of such Options which relate to
Convertible Securities, the aggregate amount of additional consideration,
if any, payable upon the issuance or sale of such Convertible Securities
and upon the conversion or exchange thereof, by (B) the maximum number of
shares of Common Stock issuable upon the full exercise of such Option or
upon the full conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than such Series
A Conversion Price, as applicable, in effect immediately prior to the time
of the granting of such Options, then the maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of the maximum number of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to
have been issued for such price per share as of the date such Options were
granted and thereafter shall be deemed to be outstanding. Except as
otherwise provided in Subsection 5(e)(iv), no adjustment of such Series A
Conversion Price, as applicable, shall be made upon the actual issuance of
such Common Stock or of such Convertible Securities upon exercise of such
Options or upon the actual issuance of such Common Stock upon conversion
or exchange of such Convertible Securities if an appropriate adjustment
was previously made pursuant to this Subsection 5(e)(ii) upon the issuance
of such Options.
(iii) Issuance of Convertible Securities.Except as provided in
Subsection 5(e)(vii), in case the Corporation shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to exchange or convert
any such Convertible Securities are exercisable immediately, and the price
per share for which a share of Common Stock is issuable upon such
conversion or exchange (determined by dividing (A) the total amount, if
any, received or receivable by the Corporation as consideration for the
issuance or sale of such Convertible Securities, plus the aggregate amount
of additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (B) the maximum number of shares of
Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than such Series A Conversion Price
in effect immediately prior to the time of such issuance or sale, then the
maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued for such price per share as of the date of the issuance or sale of
such Convertible Securities and thereafter shall be deemed to be
outstanding; provided that (a) except as otherwise provided in Subsection
5(e)(iv), no adjustment of such Series A Conversion Price shall be made
upon the actual issuance of such Common Stock upon conversion or exchange
of such Convertible Securities if an appropriate adjustment was previously
made pursuant to this Subsection 5(e)(iii) upon the issuance of such
Convertible Securities, and (b) if any such issuance or sale of such
Convertible Securities is made upon the exercise of any Option to purchase
any such Convertible Securities for which adjustment of the Conversion
Price have been or are to be made pursuant to other provisions of this
Subsection 5(e), no further adjustment of such Series A Conversion Price
shall be made by reason of such issuance or sale.
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(iv) Change in Option Price or Conversion Rate. In the event
that the purchase price provided for in any Option referred to in
Subsection 5(e)(ii), the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities referred to in
Subsection 5(e)(ii) or 5(e)(iii), or the rate at which any Convertible
Securities referred to in Subsection 5(e)(ii) or 5(e)(iii) are convertible
into or exchangeable for shares of Common Stock, shall change at any time
(other than under or by reason of provisions designed to protect against
dilution), such Series A Conversion Price in effect at the time of such
event for any outstanding share of Series A Preferred Stock shall be
readjusted to the Conversion Price which would have been in effect at such
time had such Options or Convertible Securities still outstanding provided
for such purchase price, additional consideration, or conversion rate, as
the case may be, at the time such Options or Convertible Securities
initially were granted, issued or sold. In the event any Options or any
right to convert or exchange Convertible Securities shall expire or
terminate without being exercised, such Series A Conversion Price then in
effect hereunder for any outstanding shares of Series A Preferred Stock
shall be adjusted to the Series A which would have been in effect at the
time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration
or termination, never been issued, and the shares of Common Stock issuable
thereunder shall no longer be deemed to be outstanding. If the purchase
price provided for in any Option referred to in Subsection 5(e)(ii) or the
rate at which any Convertible Securities referred to in Subsection
5(e)(ii) or 5(e)(iii) are convertible into or exchangeable for shares of
Common Stock shall be reduced at any time under or by reason of provisions
with respect thereto designed to protect against dilution, then, in case
of the grant of any such, Option or upon conversion or exchange of any
such Convertible Securities, the Conversion Price then in effect hereunder
for any outstanding shares of Series A Preferred Stock shall be adjusted
to such respective amount as would have been obtained had such Option or
Convertible Securities never been issued as to such Common Stock and had
adjustments been made upon the issuance of the Common Stock delivered as
aforesaid, but only if, as a result of such adjustment, the Conversion
Price then in effect hereunder is hereby reduced.
(v) Consideration for Stock. In case any shares of Common
Stock, Options, or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the amount
received by the Corporation therefor, without deduction of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Corporation in connection therewith. In case any shares of Common
Stock, Options, or Convertible Securities shall be issued or sold, in
whole or in part, for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be deemed
to be the fair market value of such consideration as determined in good
faith by a majority of the members of the Board of Directors of the
Corporation, without deduction of any expenses incurred or any
underwriting commission or concessions paid or allowed by the Corporation
in connection therewith.
(vi) Treasury Shares. The disposition of shares of Common
Stock owned or held by or for the account of the Corporation (other than a
result of a
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cancellation of treasury shares) shall be considered an issue or sale of
Common Stock for the purpose of this Subsection 5(e).
(vii) When Adjustment Is Not Required. Notwithstanding any
provision herein to the contrary, no adjustment shall be made in the
Conversion Price as a result of (1) the issuance of Common Stock upon
conversion of any shares of Series A Preferred Stock; (2) the issuance of
Series A Preferred Stock upon conversion of any outstanding convertible
notes in existence as of the Closing Date; (3) the issuance of dividends
or other distributions on the Series A Preferred Stock; (4) the issuance
of warrants or other securities to financial institutions or lenders in
connection with lease lines or loans approved by the Corporation's Board
of Directors; (5) the issuance of stock, warrants or options to employees,
directors or consultants of the Company as approved by the Corporation's
Board of Directors at a price not less than 85% of the then applicable
Series A Conversion Price; (6) the exercise of any warrants, options or
other convertible securities in existence as of the Closing Date for the
purchase of Common Stock; or (7) any subdivisions or combination affecting
the Common Stock or the issuance of shares of Common Stock pursuant to a
stock dividend or other distribution on Common Stock if an appropriate
adjustment to the Series A Conversion Price, is made pursuant to
Subsection 5(d).
(viii) Notices of Record Date. In the event of any taking by
this Corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend) or other distribution, any right
to subscribe for, purchase, or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other
right, this Corporation shall send via certified or overnight mail to each
holder of Series A Preferred Stock, at least ten (10) days prior to the
date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution, or
right.
(ix) Reservation of Stock Issuable Upon Conversion. At all
times, this Corporation shall reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the
Preferred Stock; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of
all then-outstanding shares of the Series A Preferred Stock, in addition
to such other remedies as shall be available to the holder of such Series
A Preferred Stock, this Corporation will take such corporate actions as
may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including, without limitation,
engaging in best efforts to obtain the requisite stockholder approval of
any necessary amendment to the Corporation's Amended and Restated
Certificate of Incorporation.
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(x) Notices. Any notice required by the provisions of this
Certificate to be given to the holders of shares of Series A Preferred
Stock shall be deemed given if deposited in the United States mail,
certified mail postage prepaid, or overnight mail, and addressed to each
holder of record at his address appearing on the books of this
Corporation.
6. Events of Noncompliance.
(a) An "Event of Noncompliance" will be deemed to have occurred if
any of the following actions occur and remain uncured after 30 days following
written notice to, or discovery by, the Corporation:
(i) the Corporation's default under, or material breach of,
any of the provisions of the definitive investment agreements entered
between the Corporation and Townsends, Inc. on or around the Closing Date,
including without limitation the provisions of these Amended and Restated
Articles of Incorporation, the Voting Agreement, Convertible Note Purchase
Agreement and Registration Rights Agreement;
(ii) the Corporation's default under, or material breach of,
any of the provisions of the Corporation's Supply Agreement dated on or
around the Closing Date, as amended from time to time with Townsends,
Inc.; and
(iii) the Corporation's default under, or material breach of,
any of the provisions of the Corporation's Co-Packing Agreement dated on
or around the Closing Date, as amended from time to time with Townsends,
Inc.
(b) Upon the occurrence of an Event of Noncompliance, the dividends
payable on the then outstanding shares of Series A Preferred Stock shall
increase to $0.225 per share. The right to increased dividends pursuant to the
preceding sentence shall cease upon the earlier of (w) the conversion of all
outstanding shares of Series A Preferred Stock into Common Stock pursuant to
Section 5 of these Amended and Restated Articles of Incorporation; (x) the
payment in full of the Liquidation Preference (or such higher amount, as
applicable) on all outstanding shares of Series A Preferred Stock pursuant to
Section 3 of these Amended and Restated Articles of Incorporation; (y) the
Corporation's cure of the facts and circumstances resulting in the Event of
Noncompliance; or (z) the waiver of the Event of Noncompliance by the
Convertible Preferred Majority.
7. Reissuance of Preferred Stock. No shares of Series A Preferred Stock
redeemed, purchased, or acquired by the Corporation or converted into Common
Stock shall be reissued, and all such shares shall be cancelled and eliminated
from the shares of the Corporation shall be authorized to issue.
FIFTH: The period of existence of the Corporation is perpetual.
SIXTH: 1. Notwithstanding any provision in the Revised Code of Ohio
requiring for any purpose the vote, consent, waiver, or release of the holders
of a designated greater proration (but less than all) of the shares of any
particular class or of each class, if the shares are classified, the vote,
consent, waiver, or release of the holders of at least a majority of
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the voting power or of at least a majority of the shares entitled to vote, as
the case may be, of such particular class or of each class, if the shares are
classified, shall be required in lieu of any such designated greater proportion
otherwise required by any provision of said Revised Code of Ohio.
2. Whenever the Revised Code of Ohio shall fail to prescribe a designated
proportion of voting power required for any purpose, the vote, consent, waiver,
or release of at least a majority of the voting power represented at a meeting
of shareholders at which a quorum is present shall be sufficient for any such
purpose; and at any such meeting the shareholders entitled to exercise at least
a majority of the voting power relating to any such purpose constitute a quorum.
SEVENTH: The Corporation shall, to the fullest extent permitted by Section
1701.13 of the Revised Code of Ohio, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities, or other matters referred to or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled under the
Regulations, any agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, trustee, officer, employee, or agent, and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
EIGHTH. Subject to the provisions of Article FOURTH hereof, the Board of
Directors is hereby authorized to fix and determine, and to vary, the amount of
working capital of the Corporation, to determine whether any, and, if any, what
part of the surplus, however created or arising, shall be disposed of, or
declared in dividends, or paid to shareholders, and without action by the
shareholders, to use and apply such surplus, or any part thereof; or such part
of the stated capital of the Corporation as is permitted under the provision of
Section 1701.35 of the Revised Code of Ohio, or any statute of like tenor or
effect which is hereafter enacted, at any time or from time to time, in the
purchase or acquisition of shares of any class, voting trust, certificates for
shares, bonds, debentures, notes, script, warrants, obligations, evidence of
indebtedness of the Corporation, or other securities, evidences of indebtedness
of the Corporation, or other securities of the Corporation, to such extent or
amount and in such manner and upon such terms as the Board of Directors shall
deem expedient.
NINTH: From time to time any of the provisions of these Amended and
Restated Articles of Incorporation may be amended, altered, or repealed and
other provisions authorized by the Revised Code of Ohio and the laws of the
State of Ohio at the time in force may be added or inserted in the manner and at
the time prescribed by said laws, and all rights at any time conferred upon the
shareholders of the Corporation
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by the Articles of Incorporation are granted subject to the provisions of this
Article NINTH.
TENTH: These Amended and Restated Articles of Incorporation supersede the
existing Articles of Incorporation of the Corporation.
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