Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 21)
NEW GENERATION FOODS, INC.
(Name of Issuer)
COMMON STOCK, $0.01 PAR VALUE
(Title of Class of Securities)
644463-101
(CUSIP Number)
DAVID I. SCHAFFER, ESQ., MELTZER, LIPPE, GOLDSTEIN, WOLF & SCHLISSEL, P.C.,
190 WILLIS AVENUE, MINEOLA, NEW YORK 11501 (516) 747-0300
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications)
APRIL 15, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
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1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Response to Question 1: Jerome S. Flum
Response to Question 2: N/A
Response to Question 3: SEC USE ONLY
Response to Question 4: OO
Response to Question 5: N/A
Response to Question 6: New York
Response to Question 7: 3,748,353 (including the shares of Common Stock into
which the Senior Preferred Stock is convertible -
see Item 5)
Response to Question 8: 0
Response to Question 9: 3,748,353 (including the shares of Common Stock into
which the Senior Preferred Stock is convertible -
see Item 5)
Response to Question 10: 0
Response to Question 11: 3,748,353 (including the shares of Common Stock into
which the Senior Preferred Stock is convertible -
see Item 5)
Response to Question 12: N/A
Response to Question 13: 93.6% (including the shares of Common Stock into which
the Senior Preferred Stock is convertible -
see Item 5)
Response to Question 14: IN
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Response to Question 1: Flum Partners
Response to Question 2: N/A
Response to Question 3: SEC USE ONLY
Response to Question 4: OO
Response to Question 5: N/A
Response to Question 6: New York
Response to Question 7: 3,635,128 (including the shares of Common Stock into
which the Senior Preferred Stock is convertible -
see Item 5)
Response to Question 8: 3,635,128 (including the shares of Common Stock into
which the Senior Preferred Stock is convertible -
see Item 5)
Response to Question 9: 0
Response to Question 10: 0
Response to Question 11: 3,635,128 (including the shares of Common Stock into
which the Senior Preferred Stock is convertible -
see Item 5)
Response to Question 12: N/A
Response to Question 13: 90.9% (including the shares of Common Stock into which
the Senior Preferred Stock is convertible -
see Item 5)
Response to Question 14: PN
Item 1. Security and Issuer.
This statement relates to Common Stock, $.01 par value, of
New Generation Foods, Inc. (the "Company").
Item 3. Source and Amount of Funds or Other Consideration.
See Item 5.
Item 4. Purpose of Transaction.
See Item 5.
Item 5. Interest in Securities of the Issuer.
Under the terms of the Series A Preferred Stock and Series B Preferred
Stock previously held by Flum Partners, a sale or transfer of all or
substantially all of the assets of the Company was deemed to be a liquidation,
dissolution or winding up of the Company for purposes of determining the payment
of the liquidation preferences on the Series A Preferred Stock and Series B
Preferred Stock. Accordingly, the sale by the Company in 1993 of substantially
all of its assets to American Pacific Financial Corporation entitled Flum
Partners, the holder of all of the outstanding Series A Preferred Stock and
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Series B Preferred Stock, to payment of the applicable liquidation preferences
and accrued and unpaid dividends.
In November 1997, Flum Partners delivered a letter to the Company demanding
payment of the applicable liquidation preferences on the Series A Preferred
Stock and Series B Preferred Stock ($1,175,000 in the case of the Series A
Preferred Stock and $310,000 in the case of the Series B Preferred Stock) and
accrued and unpaid dividends on such shares. On the date of the delivery of the
demand, accrued dividends on the Series A Preferred Stock amounted to $787,500
and accrued dividends on the Series B Preferred Stock amounted to $111,600.
Accordingly, the aggregate amount payable pursuant to the demand of Flum
Partners was approximately $2,960,000.
As a result of such demand letter, the Board formed an Independent
Committee which engaged in dmately $1.8 million of cash and cash equivalents
available to pay the liquidation preferences and accrued dividends, leaving an
unpaid amount of approximately $1.16 million. Pursuant to its discussions with
the Company, Flum Partners agreed to accept, in payment of the unpaid $1.16
million of cash, shares of a new series of convertible senior preferred stock
("Senior Preferred Stock") with an aggregate liquidation preference equal to
$1.1 million, which was $60,000 less than the unpaid liquidation preferences and
accrued dividends on the Series A Preferred Stock and Series B Preferred Stock.
After further negotiations with the Independent Committee, Mr. Flum agreed
to a termination of his existing Employment Agreement effective December 1,
1997, saving the Company approximately $190,000 in salary expense through the
end of the term of such Agreement, in consideration of which the Company
transferred to Mr. Flum an automobile and computer equipment with an aggregate
value not exceeding $10,000. Mr. Flum also agreed to continue as Chairman of the
Board and Chief Executive Officer of the Company, without pay, on an "at will"
basis. Mr. Flum also agreed for a twelve month period, to attempt to identify
and consummate a transaction which would increase the value of the Company.
In accordance with the foregoing, the Company issued to Flum Partners
1,100,000 shares of the Senior Preferred Stock and $1.8 million of cash in
payment of the liquidation preferences and accrued dividends on the Series A
Preferred Stock and Series B Preferred Stock.
The filing persons have the following interest in the securities of the
issuer:
As of the date hereof, Jerome S. Flum has the sole power to vote and the
sole power to dispose of 113,225 shares of Common Stock. Flum Partners, of which
Mr. Flum is the sole general partner, owns 36,829 shares of Common Sock and
1,100,000 shares of Senior Preferred Stock, which is currently convertible at
any time into 3,598,299 shares of Common Stock for a total of 3,635,128 shares
of Common Stock, or approximately 90.9% of the outstanding shares of Common
Stock, computed pursuant to Rule 13d-3(d)(i) and the note thereto, and based on
the number of shares of Common Stock reported by the Company and the Form 10-QSB
outstanding as of September 30, 1997. As sole general partner of Flum Partners,
Mr. Flum has the sole power to vote and sole power
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to dispose of the 36,829 shares of Common Stock and the shares of Common Stock
into which the Senior Preferred Stock may be converted. Accordingly, Mr. Flum
beneficially owns, in the aggregate, 3,748,353 shares of Common Stock, or
approximately 93.6% of the outstanding shares of Common Stock, computed pursuant
to Rule 13d-3(d)(1) and the note thereto, and based on the number of shares of
Common Stock reported by the Company in the Form 10-QSB outstanding as of
September 30, 1997. The 3,748,353 shares of Common Stock, or approximately 93.6%
of the outstanding shares of Common Stock, may also be deemed to be owned,
beneficially and collectively, by Flum Partners and Mr. Flum, as a "group",
within the meaning of Section 13(d)(3) of the Act.
Item 7. Material to be Filed as Exhibits.
Exhibit No. Description of Exhibit
1. Letter from Flum Partners to the Company dated as of November 17, 1997.
2. Letter Agreement by and among the Company, Flum Partners and Jerome S.
Flum dated as of November 18, 1997 (exhibits attached).
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Signature.
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: April 15, 1998
/s/Jerome S. Flum
-----------------
Jerome S. Flum
FLUM PARTNERS, L.P.
By: /s/ Jerome S. Flum
----------------------
Jerome S. Flum, General Partner
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Exhibit - 1
FLUM PARTNERS
45 Graham Road
Scarsdale, New York 10583
November 17, 1997
New Generation Foods, Inc.
45 Graham Road
Scarsdale, New York 10583
Attn: Board of Directors
Gentlemen:
Please be advised that the undersigned, the owner of (x) 2,333,333
shares (the "Series A Shares") of the Series A Convertible Preferred Stock of
New Generation Foods, Inc. (the "Company") and (y) 310,000 shares (the "Series B
Shares") of the Series B Convertible Preferred Stock of the Company, in each
such case representing all of the issued and outstanding shares of such series
of Preferred Stock, hereby demands the payment of the liquidation preference,
and accrued dividends, in respect of all of the Series A Shares and all of the
Series B Shares. Schedule I to this letter sets forth the liquidation preference
and accrued dividends (as of the date hereof) payable in respect of the Series A
Shares and Series B Shares. Enclosed are certificates for all of the Series A
Shares and all of the Series B Shares, accompanied by appropriately executed and
endorsed stock powers.
The foregoing demand is made pursuant to (i) Section 5.1 of the Second
Certificate of Amendment of the Certificate of Designations of Series A
Preferred Stock and (ii) Section 5.1 of the Certificate of Designations of
Series B Preferred Stock, in each such case as a result of the prior sale by the
Company of substantially all of the Company's property and assets, which is
deemed to be a liquidation of the Company under each such provision.
Very truly yours,
FLUM PARTNERS
By:/s/ Jerome Flum
Jerome Flum, General Partner
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SCHEDULE I
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Liquidation Accrued
Preference Dividends Total
Series A Convertible Preferred Stock $1,750,000 $787,500 $2,537,500
Series B Convertible Preferred Stock 310,000 111,600 421,600
---------- -------- ---------
TOTAL $2,060,000 $899,100 $2,959,100
</TABLE>
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Exhibit - 2
NEW GENERATION FOODS, INC.
45 Graham Road
Scarsdale, New York 10583
November 18, 1997
Flum Partners
45 Graham Road
Scarsdale, New York 10583
Mr. Jerome Flum
45 Graham Road
Scarsdale, New York 11583
Gentlemen:
An Independent Committee of the Board of Directors of New Generation
Foods, Inc., a Nevada corporation (the "Company"), has considered the letter
from Flum Partners of November 17, 1997. Based on the current cash position of
the Company, and the requirement that a minor cash balance be maintained by the
Company to pay potential creditors' claims and other expenses and for working
capital, the cash amount of $1.8 million is available to pay a portion of the
liquidation preferences (and accrued dividends) on all of the shares of Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock owned by
Flum Partners and tendered for payment, leaving an unpaid amount of
approximately $1.16 million.
This letter will constitute the agreement of the Company and Flum
Partners that the unpaid amount of approximately $1.16 million referred to in
the preceding paragraph shall be paid by the issuance of 1,100,000 shares of a
new series of "Senior Preferred Stock" of the Company (the "Senior Preferred
Shares") having the rights, powers, privileges and preferences specified in the
attached form of "Certificate of Designations for Senior Preferred Stock". By
its execution below, Flum Partners also consents to the amendments effected by
the attached forms of "Third Certificate of Amendment of Series A Convertible
Preferred Stock" and "Certificate of Amendment of Series B Convertible Preferred
Stock," which are required in order to implement the issuance of the Senior
Preferred Stock.
In consideration for the issuance of the Senior Preferred Shares to Flum
Partners as provided in this letter agreement, Flum Partners agrees to cause its
affiliate, Mr. Jerome Flum, to agree to a termination of Mr. Flum's existing
Employmentin consideration therefor, the Company transfer and
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assign to Mr. Flum an automobile and certain computer equipment with an
aggregate value not exceeding $10,000, and provided further that Mr. Flum agrees
to continue to serve as Chairman of the Board and Chief Executive Officer of the
Company, without pay, on an "at will" basis.
As additional consideration for the issuance of the Senior Preferred Shares
to Flum Partners as provided in this letter agreement, Mr. Flum and Flum
Partners agree, for a period of one year from the date hereof, to attempt to
identify and consummate a transaction involving the Company which would increase
the value of the Company.
By his execution below, Mr. Flum agrees to the provisions of the two
preceding paragraphs.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York (other than with respect to matters solely
involving Nevada corporate law) without giving effect to principles of conflicts
of law applicable thereto. This letter agreement may be executed in
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
Please execute this letter where indicated below to signify your agreement
with the foregoing.
NEW GENERATION FOODS, INC.
By:/s/ Jerome Flum
Name: Jerome Flum
Title: Chairman of the board and Chief
Executive Officer
ACCEPTED AND AGREED
AS OF THIS ____ DAY OF
NOVEMBER, 1997
FLUM PARTNERS
By:/s/ Jerome Flum
Jerome Flum, General Partner
/s/ Jerome Flum
Jerome Flum
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CERTIFICATE OF DESIGNATIONS
OF
SENIOR PREFERRED STOCK
OF
NEW GENERATION FOODS, INC.
New Generation Foods, Inc. (the "Corporation"), a corporation organized and
existing under the Nevada Corporation Law;
DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of the
Corporation by its Articles of Incorporation, as amended, and pursuant to the
Nevada Corporation Law, on November 18, 1997, said Board of Directors adopted a
resolution providing for the issuance of a series of shares of preferred stock,
par value $.01 per share, which resolution is as follows:
RESOLVED, that pursuant to Article FOURTH of the Corporation's Articles of
Incorporation, as amended, relating to the shares of the corporation, the Board
of Directors hereby authorizes, fixes and creates a series of preferred stock
having the following powers, preferences, designations, rights and other
characteristics.
The designation of the series of preferred stock created by this resolution
shall be "Senior Preferred Stock" (hereinafter referred to as "Senior Preferred
Stock") and shall consist of 1,100,000 shares. The powers, preferences, rights,
restrictions of, and other matters relating to, the Senior Preferred Stock are
as follows:
1. Dividends.
-------------
The holders of the Senior Preferred Stock shall be entitled to receive, out
of funds legally available therefor, dividends at the same rate as dividends
(other than dividends paid in additional shares of Common Stock) are paid with
respect to the Common Stock (treating each share of Senior Preferred Stock as
being equal to the number of shares of Common Stock into which each share of
Senior Preferred Stock is then convertible).
2. Liquidation Preference.
--------------------------
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Senior
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of the assets or surplus funds of the Corporation to the holders of
the Common Stock, the amount of $1.00 per share (as adjusted for any stock
dividends, combinations or splits with respect to such shares), plus all
accumulated and unpaid dividends on such share for each share of Senior
Preferred Stock held by them (the "Liquidation Preference"). If upon the
occurrence of any of the events described in this Section 2, the assets and
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funds thus distributed among the holders of the Senior Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amount, than the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the Senior
Preferred Stock in proportion to the preferential amount each such holder is
otherwise entitled to receive.
(b) For purposes of this Section 2, (i) any acquisition of the Corporation
by means of merger or other form of corporate reorganization in which
outstanding shares of the Corporation are exchanged for securities or other
consideration issued, or caused to be issued, by the acquiring corporation or
its subsidiary (other than a mere reincorporation transaction) or (ii) a sale of
all or substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation. Upon the occurrence
of any of the events described in paragraph (b), immediately after the holders
of Senior Preferred Stock shall have been paid in full the Liquidation
Preference, the remaining net assets of the Corporation available for
distribution shall be distributed ratably among the holders of Senior Preferred
Stock and Common Stock (with each share of Senior Preferred Stock being deemed,
for such purpose, to be equal to the number of shares of Common Stock into which
such share of Senior Preferred Stock is convertible immediately prior to the
close of business on the business day fixed for such distribution).
3. Redemption.
-- -----------
(a) At the option of the holders of a minimum of one-half of the aggregate
number of shares of Senior Preferred Stock then outstanding delivered in writing
to the Corporation at any time, the Corporation, on the thirtieth (30th) day
after delivery of such notice (the "Redemption Date"), shall redeem the
outstanding shares of the Senior Preferred Stock originally issued. The
redemption price of the Senior Preferred Stock (the "Redemption Price"), shall
be equal to the sum of (i) $1.00 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) and (ii) any accumulated and
unpaid dividends on any such share of Senior Preferred Stock.
(b) If the funds of the Corporation legally available for redemption of
shares of the Senior Preferred Stock are insufficient to redeem the total number
of shares of Senior Preferred Stock to be redeemed on the Redemption Date, those
funds which are legally available will be used to redeem the maximum possible
number of such shares ratably among the holders of such shares to be redeemed
based upon their holdings of Senior Preferred Stock. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
shares of Senior Preferred Stock, such funds will immediately be used to redeem
the balance of the shares which the Corporation has become obliged to redeem on
the Redemption Date, but which it has not redeemed.
(c) In the event the Corporation shall be required to redeem shares of
Senior Preferred Stock, notice of such redemption shall be given by first class
mail, postage prepaid, mailed not less than 20 days prior to the Redemption
Date, to each holder of record of the shares to be redeemed at such holder's
address as the same appears on the share register of the Corporation. Each such
notice shall state (i) the Redemption Date, (ii) the Redemption Price, (iii) the
place or places where certificates for such shares are to be surrendered for
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payment of the Redemption Price and (iv) that dividends on the shares to be
redeemed will cease to accrue on the Redemption Date.
(d) Notice having been mailed as aforesaid, from and after the Redemption
Date (unless default shall be made by the Corporation in providing money for the
payment of the Redemption Price of the shares called for redemption), dividends
on the shares of Senior Preferred Stock so called for redemption shall cease to
accrue, and said shares shall no longer be deemed to be outstanding and shall
have the status of authorized but unissued shares of Preferred Stock, and shall
not be reissued as shares of Senior Preferred Stock, and all rights of the
holders thereof as stockholders of the Corporation with respect to said shares
(except the right to receive from the Corporation the Redemption Price and
accrued but unpaid dividends) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such shares shall be redeemed by the
Corporation at the Redemption Price as aforesaid. In the event less than all the
shares represented by any certificate for such shares are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(e) Anything in this Section 3 to the contrary notwithstanding, the holder
of shares of Senior Preferred Stock to be redeemed in accordance with this
Section 3 shall have the right, exercisable at any time up to the close of
business on the Redemption Date (unless the Corporation is legally prohibited
from redeeming such shares on such date, in which event such right shall be
exercisable until the removal of such legal disability), to convert all or any
part of such shares to be redeemed as herein provided into shares of Common
Stock pursuant to Section 5 hereof.
4. Voting Rights.
-- --------------
Each holder of shares of Senior Preferred Stock shall be entitled to the
number of votes equal to the number of shares of Common Stock into which such
shares of Senior Preferred Stock may be converted and shall have voting rights
and powers equal to the voting rights and powers of the Common Stock (except as
otherwise expressly provided herein or as required by law, voting together with
the Common Stock as a single class) and shall be entitled to notice of any
stockholders' meeting in accordance with the By-Laws of the Corporation.
Fractional votes shall not, however, be permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares into which
shares of Senior Preferred Stock held by each holder may be converted) shall be
rounded upward to the nearest whole number. Each holder of Common Stock shall be
entitled to one (1) vote for each whole share of Common Stock held.
5. Conversion.
-- -----------
The holders of the Senior Preferred Stock shall have conversion rights as
follows:
(a) Each share of Senior Preferred Stock shall be convertible, at the
option of the holder thereof, at any time and from time to time into the number
of fully paid and non-assessable shares of Common Stock of the Corporation as is
determined by dividing $1.00 by
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the Conversion Price (as hereinafter defined) in effect at the time of
conversion. The Conversion Price at which shares of Common Stock shall be
deliverable upon conversion of the Senior Preferred Stock shall initially be
$0.3057 per share.
(b) In order for a holder of Senior Preferred Stock to convert such shares
into shares of Common Stock, such holder shall surrender the certificate or
certificates representing such shares of Senior Preferred Stock, at the office
of the transfer agent for the Senior Preferred Stock, together with written
notice that such holder elects to convert all or any number of the shares of the
Senior Preferred Stock represented by such certificate or certificates. Such
notice shall state such holder's name or the names of the nominees in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued. If required by the Corporation, certificates surrendered for conversion
shall be endorsed or accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or its attorney duly authorized in writing. The date of
receipt of such certificates and notice by the transfer agent is referred to
herein as the "Conversion Date". The Corporation shall, as soon as practicable
after the Conversion Date, issue and deliver to such holder, or to its nominee,
at such holder's address as shown in the records of the Corporation, a
certificate or certificates for the number of whole shares of Common Stock (and
any shares of Senior Preferred Stock represented by the certificate delivered to
the transfer agent by the holder thereof which are not converted into Common
Stock) issuable upon such conversion in accordance with the provisions hereof,
together with cash in lieu of fractional shares calculated in accordance with
paragraph (c) of this Section 5. If less than all of the shares of Senior
Preferred Stock represented by a stock certificate are converted into shares of
Common Stock, the Corporation shall issue a new stock certificate in the amount
of the shares not so converted.
(c) No fractional shares of Common Stock shall be issued upon conversion of
shares of Senior Preferred Stock and any fractional share to which the holder
would otherwise be entitled shall be rounded up to the nearest whole number.
(d) The Corporation shall at all times when the Senior Preferred Stock
shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the Senior
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Senior Preferred Stock.
(e) All shares of Senior Preferred Stock which shall have been surrendered
for conversion as herein provided shall no longer be deemed to be outstanding,
and all rights with respect to such shares shall immediately cease and terminate
on the Conversion Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor and the payment of any declared and
unpaid dividends thereon. On the Conversion Date, the shares of Common Stock
issuable upon such conversion shall be deemed to be outstanding, and the holder
thereof shall be entitled to exercise and enjoy all rights with respect to such
shares of Common Stock. All shares of Senior Preferred Stock tendered for
conversion shall, from and after the
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Conversion Date, be deemed to have been retired and cancelled and shall not
be reissued as Senior Preferred Stock, and the Corporation may thereafter take
such appropriate action as may be necessary to reduce accordingly the authorized
number of shares of Senior Preferred Stock.
(f) The initial conversion price as stated in paragraph (a) of this Section
5 shall be subject to adjustment from time to time and such conversion price as
adjusted shall likewise be subject to further adjustment, all as hereinafter set
forth. The term "Conversion Price" shall mean, as of any time, the conversion
price of the Senior Preferred Stock at that time, as specified in paragraph (a)
of this Section 5 in case no adjustment shall have been required, or such
conversion price as adjusted pursuant to this paragraph (f) of this Section 5,
as the case may be:
(i) If at any time the Corporation shall issue any shares of Common
Stock or any Convertible Securities, Rights or Related Rights (as herein
defined) (such Convertible Securities, Rights or Related Rights being
hereinafter referred to collectively as "Securities") (other than a dividend or
other distribution payable in Common Stock or such Securities) for a
consideration per share of Common Stock (the consideration in each case to be
determined in the manner provided in (E) and (F) below) less than the Conversion
Price in effect immediately prior to the issuance of such Common Stock or
Securities, then the Conversion Price in effect immediately prior to each such
issuance shall forthwith be reduced to the consideration per share of Common
Stock paid in connection with such issuance of Common Stock or Securities.
(ii) For the purpose of any adjustment of the Conversion Price
pursuant to this paragraph (f) of this Section 5, the following provisions shall
be applicable:
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(A) In the case of the issuance of options or warrants to
purchase or rights to subscribe for Common Stock (collectively, such "Rights"),
the aggregate maximum number of shares of Common Stock deliverable upon exercise
of such Rights shall be deemed to have been issued at the time such Rights were
issued, for a consideration equal to the consideration (determined in the manner
provided in (E) and (F) below), if any, received by the Corporation upon the
issuance of such Rights, plus the minimum purchase price provided in such Rights
for the Common Stock covered thereby.
(B) In the case of the issuance of securities by their terms
convertible into or exchangeable for Common Stock (collectively, such
"Convertible Securities"), or options or warrants to purchase or rights to
subscribe for securities by their terms convertible or exchangeable for Common
Stock (collectively, such "Related Rights") the aggregate maximum number of
shares of Common Stock deliverable upon conversion, exchange or exercise of any
such Convertible Securities or such Related Rights shall be deemed to have been
issued at the time such Convertible Securities or such Related Rights were
issued and for a consideration equal to the consideration received by the
Corporation upon issuance of such Convertible Securities or such Related Rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be received by the
Corporation upon the conversion, exchange or exercise of such Convertible
Securities or Related Rights (the consideration in each case to be determined in
the manner provided in (E) and (F) below).
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(C) On any change in the number of shares of Common Stock
deliverable upon the exercise of such Rights or Related Rights or upon the
conversion, exchange or exercise of such Convertible Securities or on any change
in the minimum purchase price of such Rights, Related Rights or Convertible
Securities other than any change resulting from the anti- dilution provisions of
such Rights, Related Rights or Convertible Securities, the Conversion Price
shall forthwith be readjusted to such Conversion Price as would have been in
effect had the adjustment that was made upon the issuance of such Rights,
Related Rights or Convertible Securities not converted, exchanged or exercised
prior to such change been made on the basis of such change, but no further
adjustment shall be made for the actual issuance of Common Stock upon the
exercise or conversion of any such Right, Related Right or Convertible Security.
(D) On the expiration of any such Rights, Related Rights or
Convertible Securities, the Conversion Price shall forthwith be readjusted to
the Conversion Price as would have been obtained had the adjustment made upon
the issuance of such Rights or Related Rights or the issuance of any such
Convertible Securities been made upon the basis of the issuance of only the
number of shares of Common Stock actually issued upon the exercise of such
Rights or Related Rights or the conversion, exchange or exercise of any such
Convertible Securities.
(E) In the case of the issuance of such Common Stock or
Securities for cash, the consideration shall be deemed to be the amount of cash
paid therefor.
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(F) In the case of the issuance of such Common Stock or
Securities for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair value thereof as
determined in good faith by the Board of Directors of the Corporation.
(G) In the event of any adjustment to the Conversion Price
resulting from the issuance of any Securities, no further adjustment shall be
made for the actual issuance of Common Stock upon the exercise or conversion of
any such Securities.
(iii) Anything to the contrary contained in this paragraph (f) of
Section 5 notwithstanding, no adjustment shall be made in the Conversion Price
as a result of or pursuant to (1) the granting of any Right or Related Right, or
the issuance of Common Stock to, officers, employees or directors of, or
consultants to, the Corporation, pursuant to any agreement, plan or arrangement
approved by the Board of Directors of the Corporation; (2) a dividend or
distribution on Senior Preferred Stock or (3) the conversion of shares of Senior
Preferred Stock.
(g) In case the Corporation shall effect a reorganization, shall merge with
or consolidate into another corporation, or shall sell, transfer or otherwise
dispose of all or substantially all of its property, assets or business and,
pursuant to the terms of such reorganization, merger (other than a
reincorporation transaction), consolidation or disposition of assets, shares of
stock or other securities, property or assets of the Corporation, successor or
transferee or an affiliate thereof are to be received by or distributed to the
holders of Common Stock, then each holder of Senior Preferred Stock shall be
provided with written notice from the Corporation informing each holder of
Senior Preferred Stock of the terms of such reorganization, merger,
consolidation or disposition of assets and of the record date thereof for any
distribution pursuant thereto, at least 30 days in advance of such record date,
and each holder of Senior Preferred Stock shall have, in addition to the rights
provided for herein, the right to receive, in addition to payment of the
Liquidation Preference pursuant to Section 2 hereof, at the holder's election,
either (i) upon conversion of such Senior Preferred Stock, the number of shares
of stock or other securities, property or assets of the Corporation, successor
or transferee or affiliate thereof or cash receivable by the holders of the
Common Stock upon or as a result of such reorganization, merger, consolidation
or disposition of assets or (ii) the securities into which the shares of Senior
Preferred Stock are converted, upon, or as a result of such reorganization,
merger, consolidation or disposition of assets. The provisions of this paragraph
(g) of this Section 5 shall similarly apply to successive reorganizations,
mergers, consolidations or dispositions of assets.
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(h) If the Corporation shall effect a subdivision of the outstanding Common
Stock, the Conversion Price then in effect immediately before such subdivision
shall be proportionately decreased. If the Corporation shall combine the
outstanding shares of Common Stock, the Conversion Price then in effect
immediately before the combination shall be proportionately increased. If the
Corporation shall make or issue a dividend or other distribution payable in
securities, then and in each such event provision shall be made so that the
holders of shares of the Senior Preferred Stock shall receive upon conversion
thereof in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities that they would have received had their
Senior Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter during the period from the date of such event to
and including the Conversion Date, retained such securities receivable by them
as aforesaid during such period giving effect to all adjustments called for
during such period under this paragraph, with respect to the rights of the
holders of the Senior Preferred Stock.
(i) Whenever the Conversion Price shall be adjusted as provided in this
Section 5, the Corporation shall forthwith file, at the office of the transfer
agent for the Senior Preferred Stock a statement, certified by the chief
financial officer of the Corporation, showing in detail the facts requiring such
adjustment and the Conversion Price that shall be in effect after such
adjustment. The Corporation shall also cause a copy of such statement to be sent
by first class mail, postage prepaid, to each holder of record of Senior
Preferred Stock at such holder's address as shown in the records of the
Corporation.
(j) If a state of facts shall occur which, without being specifically
controlled by the provisions of this Section 5, would not fairly protect the
conversion rights of the holders of the Senior Preferred Stock in accordance
with the essential intent and principles of such provisions, then the Board of
Directors of the Corporation shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such conversion rights.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by its duly authorized officers this ___ day of November, 1997, who
affirms under penalties of perjury that this Certificate is the act and deed of
the Corporation and that the facts stated herein are true.
NEW GENERATION FOODS, INC.
By:/s/ Jerome Flum
Jerome Flum, Chairman and Chief
Executive Officer
ATTEST:
By:
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<PAGE>
THIRD CERTIFICATE OF AMENDMENT OF
THE CERTIFICATE OF DESIGNATIONS
OF SERIES A PREFERRED STOCK
OF
NEW GENERATION FOODS, INC.
New Generation Foods, Inc. (the "Corporation"), a corporation organized and
existing under the Nevada Corporation Law,
DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of the
Corporation by its Articles of Incorporation, as amended, and pursuant to
Section 7.1 of the Certificate of Designations of the Series A Preferred Stock
of the Corporation, as previously amended (the "Certificate of Designations"),
on November 18, 1997, said Board of Directors adopted a resolution providing for
the further amendment of the Certificate of Designations, subject to the consent
of the holder of all of the outstanding shares of Series A Preferred Stock of
the Corporation, which consent has been duly obtained, which resolution is as
follows:
RESOLVED, that pursuant to ARTICLE FOURTH of the Corporation's Articles of
Incorporation, as amended, relating to the shares of the Corporation, and
Section 7.1 of the Certificate of Designations of the Series A Preferred Stock,
as amended to date (the "Certificate of Designations"), and subject to the
written consent of the holder of all of the outstanding shares of Series A
Preferred Stock of the Corporation, the Board of Directors hereby amends Section
5.2 of the Certificate of Designations to read in its entirety as follows:
"5.2 Ratable Distribution. If after payment or provision for corporate
debts, the assets available for distribution upon liquidation to the holders of
Series A Preferred Stock and other capital stock ranking on a parity therewith
upon liquidation are not sufficient to pay such holders in full the amounts to
which they are entitled, the holders of Series A Preferred Stock and any other
stock ranking on a parity therewith upon liquidation shall be entitled to a
distribution of assets ratably, in proportion to the sums that would be payable
to such holders of all such sums were paid in full, and any remaining unpaid
amount may be paid, at the ders of all the outstanding shares of Series A
Preferred Stock and subject to applicable law, by the issuance of equity
securities of the Corporation (including without limitation shares of a new
series of Preferred Stock) having a fair market value (as determined by a
majority of the members of the Board of Directors who are independent and not
affiliated with any holder of shares of Series A Preferred Stock) equal to the
unpaid amount payable to the holders of Series A Preferred Stock upon
liquidation of the Corporation and which shall include such other terms and
conditions as the Board and the holders of all of the outstanding shares of
Series A Preferred Stock may otherwise agree."
21
<PAGE>
IN WITNESS WHEREOF, New Generation Foods, Inc. has caused this Certificate
to be signed by its duly authorized officers this ____ day of November, 1997.
NEW GENERATION FOODS, INC.
By:/s/ Jerome Flum
Jerome Flum, Chairman and
Chief Executive Officer
ATTEST:
By:/s/ David I. Schaffer
Title: David I. Schaffer,
Assistant Secretary
22
<PAGE>
CERTIFICATE OF AMENDMENT OF
THE CERTIFICATE OF DESIGNATIONS
OF SERIES B PREFERRED STOCK
OF
NEW GENERATION FOODS, INC.
New Generation Foods, Inc. (the "Corporation"), a corporation organized and
existing under the Nevada Corporation Law,
DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of the
Corporation by its Articles of Incorporation, as amended, and pursuant to
Section 7.1 of the Certificate of Designations of the Series B Preferred Stock
of the Corporation (the "Certificate of Designations"), on November 18, 1997,
said Board of Directors adopted a resolution providing for the further amendment
of the Certificate of Designations, subject to the consent of the holder of all
of the outstanding shares of Series B Preferred Stock of the Corporation, which
consent has been duly obtained, which resolution is as follows:
RESOLVED, that pursuant to ARTICLE FOURTH of the Corporation's Articles of
Incorporation, as amended, relating to the shares of the Corporation, and
Section 7.1 of the Certificate of Designations of the Series B Preferred Stock,
as amended to date (the "Certificate of Designations"), and subject to the
written consent of the holder of all of the outstanding shares of Series B
Preferred Stock of the Corporation, the Board of Directors hereby amends Section
5.2 of the Certificate of Designations to read in its entirety as follows:
"5.2 Ratable Distribution. If after payment or provision for corporate
debts, the assets available for distribution upon liquidation to the holders of
Series B Preferred Stock and other capital stock ranking on a parity therewith
upon liquidation are not sufficient to pay such holders in full the amounts to
which they are entitled, the holders of Series B Preferred Stock and any other
stock ranking on a parity therewith upon liquidation shall be entitled to a
distribution of assets ratably, in proportion to the sums that would be payable
to such holders of all such sums were paid in full, and any remaining unpaid
amount may be paid, at the discretion of the Boardding shares of Series B
Preferred Stock and subject to applicable law, by the issuance of equity
securities of the Corporation (including without limitation shares of a new
series of Preferred Stock) having a fair market value (as determined by a
majority of the members of the Board of Directors who are independent and not
affiliated with any holder of shares of Series B Preferred Stock) equal to the
unpaid amount payable to the holders of Series B Preferred Stock upon
liquidation of the Corporation and which shall include such other terms and
conditions as the Board and the holders of all of the outstanding shares of
Series B Preferred Stock may otherwise agree."
23
<PAGE>
IN WITNESS WHEREOF, New Generation Foods, Inc. has caused this Certificate
to be signed by its duly authorized officers this ____ day of November, 1997.
NEW GENERATION FOODS, INC.
By:/s/ Jerome Flum
Jerome Flum, Chairman and
Chief Executive Officer
ATTEST:
By:____________________________
Title:
24
