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EXHIBIT 3.1
MERITAGE HOSPITALITY GROUP INC.
ARTICLES OF INCORPORATION
ARTICLE I
The name of the corporation is Meritage Hospitality Group Inc.
ARTICLE II
The purpose or purposes for which the corporation is organized is to engage in
any activity within the purposes for which corporations may be organized under
the Business Corporation Act of Michigan.
ARTICLE III
The total authorized capital stock is:
Common Shares: 30,000,000 Par Value Per Share $0.01
1.
Preferred Shares: 5,000,000 Par Value Per Share $0.01
and/or shares without par value as follows:
Common Shares 0 Stated Value Per Share $0
2.
Preferred Shares 0 Stated Value Per Share $0
3. A statement of all or any of the relative rights, preferences and
limitations of the shares of each class is as follows:
Authority is hereby expressly reserved and granted to the Board of Directors of
this Corporation to determine in the resolution or resolutions providing for
the issuance of Common Stock and/or Preferred Stock the voting powers,
designations, preferences and relative participating, operational or other
special rights, qualifications, limitations or restrictions thereof which shall
be incident to the ownership of shares of such Common Stock and Preferred
Stock.
The Corporation has a series of Preferred Stock, designated as Series A
Convertible Preferred Stock, consisting of 200,000 shares, par value $.01, the
qualifications, limitations, restrictions and terms of which are as follows:
(1) Each of such Shares shall have an annual dividend rate of $.90 per
Share and no more. The right to payment of dividends shall be cumulative.
Said annual dividend shall be payable in equal quarterly installments upon
the 1st day of each January, April, July and October in each year to
holders of record as of the 15th day of the preceding month commencing
January 1, 1997, before any sum shall be set apart or applied to the
redemption or purchase of, or any dividends
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(other than dividends of Common Shares) shall be declared or paid upon or
set apart for, Common Shares. The first of such quarterly dividend
payments shall be prorated to reflect the number of days in the quarter
during which the particular Shares were outstanding.
(2) Upon any dissolution, liquidation or winding up of the Corporation,
the holders of each of said Shares, shall be entitled to receive, before
any payment to holders of Common Shares, all accrued but unpaid dividends,
plus a liquidation value of $10.00 per share and no more. The
consolidation or merger of the Corporation, at any time, with another
corporation, or a sale of substantially all of the assets of the
Corporation, shall not be construed as a dissolution, liquidation or
winding up of the Corporation within the meaning hereof.
(3) The Series A Convertible Preferred Shares shall be convertible into
Common Shares of the Corporation at a conversion price of $7.00 for each
Common Share, (taking such Preferred Shares at the liquidation value of
$10.00 per share) upon the following terms and conditions:
(3.1) In case the Common Shares issuable upon conversion of the Series
A Convertible Preferred Shares at any time outstanding shall be
subdivided into a greater or combined into a lesser number of Common
Shares (whether with or without par value), and whether by stock split
or stock dividend, the conversion price shall be decreased in the case
of a subdivision or increased in the case of a combination to an
amount which shall bear the same relation to the conversion price in
effect immediately prior to such subdivision or combination, and shall
bear the total number of Common Shares outstanding immediately after
such subdivision or combination.
(3.2) No adjustments shall be made for dividends accrued on any Shares
that shall be issuable upon the conversion of such Shares.
(3.3) In case of a merger or consolidation of the Corporation with or
into another corporation, or the reclassification of its Common Shares
(other than by way of split-up or contraction), the holders of Series
A Convertible Preferred Shares shall thereafter be entitled to receive
upon conversion the kind and amount of shares of stock and securities
and property which they would have received had they converted such
Series A Convertible Preferred Shares into Common Shares of the
Corporation as of the record date for determination of common
shareholders entitled to participate in such merger, consolidation, or
reclassification.
(3.4) The holder of any shares of Series A Convertible Preferred
Shares may convert such Shares by surrendering the certificate or
certificates to any transfer agent of the Corporation or to the
Secretary of the Corporation duly endorsed in blank transfer and
accompanied by written notice of election to convert such Shares, or
portion thereof, executed on the form set forth on such certificates
or on such other form as may be provided from time to time by the
Corporation. No fractional Common Shares shall be issued upon the
conversion of any Series A Convertible Preferred Shares but, in lieu
thereof,
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the Corporation shall pay an amount in cash equal to the current
market value of such fractional interest computed on the basis of the
value of the Common Shares at the time the preferred shares are
surrendered for conversion as determined in such reasonable manner as
the Corporation may adopt. In case of the voluntary dissolution,
liquidation or winding up of the Corporation, all conversion rights of
the holders of Series A Convertible Preferred Shares shall terminate
on a date fixed by the Board of Directors, but not more than Thirty
(30) days prior to the record date for determining the holders of the
Common Shares entitled to receive any distribution upon such
dissolution, liquidation and winding up.
(3.5) The right of the holder to convert the Series A Convertible
Preferred Shares shall commence upon issuance of such Shares.
(3.6) The Corporation may cause the Series A Convertible Preferred
Shares to be converted at its option at any time if the average of the
closing sale prices for the Corporation's Common Shares is at least
120 percent of the then effective conversion price, as described
above, for at least 20 trading days within the period of 30
consecutive trading days ending no earlier than 5 trading days prior
to the date of the notice of conversion.
(5) Voting. Holders of the Series A Convertible Preferred Shares shall
have no voting rights except as provided by law and except that if at any
time the Corporation fails to make six consecutive quarterly dividend
payments thereon, the number of directors constituting its Board of
Directors will be increased by two and the holders of the Shares, voting
as a class with each Share having one vote, will be entitled to elect two
directors to the Board as long as any arrearages in dividend payments
remain outstanding. Upon payment by the Corporation of all such dividend
arrearages, the two directors elected pursuant to this provision will
cease to be directors and the holders of Shares will have no further right
to elect directors on account of such arrearages.
(6) The Corporation shall not, except upon the affirmation vote of the
holders of two-thirds of the Series A Convertible Preferred Shares
outstanding at the time, amend these articles of incorporation in any
manner that would result in the Series A Convertible Preferred Shares
being subordinate in terms of preference as to payments of dividends or
payments on liquidation to any other Preferred Shares of the Corporation.
ARTICLE IV
1. The address of the registered office is:
40 Pearl Street, N.W., Suite 900
Grand Rapids, Michigan 49503
2. The mailing address of the registered office if different than above:
(same)
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3. The name of the resident agent at the registered office is: Christopher B.
Hewett
ARTICLE V
The name and address of the incorporator is as follows:
Donald W. Reynolds
940 W. Savidge
Spring Lake, MI 49456
ARTICLE VI
When a compromise or arrangement or a plan of reorganization of this
corporation is proposed between this corporation and its creditors or any class
of them or between this corporation and its shareholders or any class of them,
a court of equity jurisdiction within the state, on application of this
corporation or of a creditor or shareholder thereof, or on application of a
receiver appointed for the corporation, may order a meeting of the creditors or
class of creditors or of the shareholders or class of shareholders to be
affected by the proposed compromise or arrangement or reorganization, to be
summoned in such manner as the court directs. If a majority in number
representing 3/4 in value of the creditors or class of creditors, or of the
shareholders or class of shareholders to be affected by the proposed compromise
or arrangement or a reorganization, agree to a compromise or arrangement or a
reorganization of this corporation as a consequence of the compromise or
arrangement, the compromise or arrangement and the reorganization, if
sanctioned by the court to which the application has been made, shall be
binding on all the creditors or class of creditors, or on all the shareholders
or class of shareholders and also on this corporation.
ARTICLE VII
Any action required or permitted by the Act to be taken at an annual or special
meeting of shareholders may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so taken,
is signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to shareholders who have not
consented in writing.
ARTICLE VIII
The Corporation shall be, and is hereby declared to be, subject to the
provisions of Chapter 7a of the Business Corporation Act of the State of
Michigan, as enacted through the adoption of Act No. 115 of the Public Acts of
the State of Michigan of 1984. The requirements therein provided and made
applicable with respect to the Corporation shall be in addition to all other
requirements of law and other provision of the Articles of Incorporation, or
any thereto.