EXHIBIT 3.01
ARTICLES OF INCORPORATION
OF
CLUCKER'S TEX-MEX VENTURE, INC.
The undersigned, acting as incorporator of a corporation under the Texas
Business Corporation Act, as amended (the "Act"), hereby adopts the following
Articles of Incorporation for such corporation.
ARTICLE ONE
NAME
----
The name of the corporation is CLUCKER'S TEX-MEX VENTURE, INC. (the
"Corporation").
ARTICLE TWO
PERIOD OF DURATION
------------------
The period of duration of the Corporation is perpetual.
ARTICLE THREE
PURPOSES AND POWERS
-------------------
Section 1. Purposes. The purposes for which the Corporation is organized
are to transact any and all lawful business for which corporations may be
incorporated under the Act.
Section 2. Powers. Subject to any specific written limitations or
restrictions imposed by the Act, by other law, or by these Articles of
Incorporation, and solely in furtherance thereof, but not in addition to the
limited purposes set forth in Section 1 of this Article, the Corporation shall
have and exercise all of the powers specified in the Act, which powers are not
inconsistent with these Articles.
ARTICLE FOUR
CAPITALIZATION, PREEMPTIVE RIGHTS AND VOTING
--------------------------------------------
Section 1. Authorized Shares. The Corporation shall have authority to issue
two classes of shares to be designated respectively, "Common Stock" and
"Preferred Stock". The total number of shares which the Corporation is
authorized to issue is FIFTEEN MILLION (15,000,000) shares of which TEN MILLION
(10,000,000) shall be Common Stock and FIVE MILLION (5,000,000) shall be
Preferred Stock. Each share of Common Stock shall have a par value of ONE CENTS
($.01), and each share of Preferred Stock shall have a par value of ONE DOLLAR
($1.00).
The Preferred Stock authorized by these Articles of Incorporation may be
issued from time to time in one or more series, each of which shall have such
designation(s) or title(s) as may be fixed by the Board of Directors prior to
the issuance of any shares thereof. The Board of Directors is hereby authorized
to fix or alter the redemption, including sinking fund provisions, the
redemption price or prices, voting rights and liquidation preferences of any
wholly unissued series of Preferred Stock, and the number of shares constituting
any such series and the designation thereof, or any of them. The rights, powers,
preferences, limitations and restrictions, if any, accompanying such shares of
Preferred Stock shall be set forth by resolution of the Board of Directors
providing for the issue thereof prior to the issuance of any shares thereof, in
accordance with the applicable provisions of the Act. Each share of any series
of Preferred Stock shall be identical with all other shares of such series,
except as to the date from which dividends, if any, shall accrue.
<PAGE>
Section 2. Preemptive Rights. No holder of shares of capital stock of the
Corporation shall, as such holder, have any right to purchase or subscribe for
any capital stock of any class which the Corporation may issue or sell, whether
or not exchangeable for any capital stock of the Corporation of any class or
classes, whether issued out of unissued shares authorized by these Articles of
Incorporation as originally filed or by any amendment thereof, or out of shares
of capital stock of the Corporation acquired by it after the issue thereof; nor
shall any holder of shares of capital stock of the Corporation, as such holder,
have any right to purchase, acquire or subscribe for any securities which the
Corporation may issue or sell whether or not convertible into or exchangeable
for shares of capital stock of the Corporation of any class or classes, and
whether or not any such securities have attached or appurtenant thereto
warrants, options or other instruments which entitle the holders thereof to
purchase, acquire or subscribe for shares of capital stock of any class or
classes.
Section 3. Voting. In the exercise of voting privileges, each holder of
shares of the capital stock of the Corporation shall be entitled to one (1) vote
for each share held in his name on the books of the Corporation. In all
elections of Directors of the Corporation, cumulative voting is expressly
prohibited. As such, each holder of shares of capital stock of the Corporation
entitled to vote at the election of Directors shall have the right to vote, in
person or by proxy, all or any portion of such shares for or against each
individual Director to be elected and shall not be entitled to vote for or
against any one Director more than the aggregate number of shares held by such
holder which are entitled to vote on the election of Directors. With respect to
any action to be taken by the Shareholders of the Corporation as to any matter,
the affirmative vote of the holders of a majority of the shares of the capital
stock of the Corporation entitled to vote thereon and represented in person or
by proxy at a meeting of the Shareholders at which a quorum is present shall be
sufficient to authorize, affirm, ratify or consent to such action. Any action
required by the Act to be taken at any annual or special meeting of Shareholders
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of a majority of the outstanding shares of the
capital stock of the Corporation entitled to vote thereon.
ARTICLE FIVE
COMMENCEMENT OF BUSINESS
------------------------
The Corporation shall not commence business until it has received for the
issuance of its shares of Common Stock consideration of the value of at least
ONE THOUSAND AND N0/100 DOLLARS ($1,000.00) consisting of money paid, labor
done, or property actually received.
ARTICLE SIX
REGISTERED AGENT AND OFFICE
---------------------------
Section 4. Registered Office. The address of the initial registered office
of the Corporation is Billy Blues Food Corporation, 1250 Northeast Loop 410,
Suite 430, San Antonio, Texas 78209.
<PAGE>
Section 5. Registered Agent. The name of the initial registered agent of
the Corporation at such address is William J. Gallagher.
ARTICLE SEVEN
DIRECTORS
---------
Section 1. Initial Board of Directors. The business and affairs of the
Corporation shall be managed by or be under the direction of the Board of
Directors of the Corporation. The initial Board of Directors shall consist of
four members who need not be residents of the State of Texas or Shareholders of
the Corporation. The number of Directors of the Corporation may from time to
time be changed in accordance with the Bylaws of the Corporation and the Act.
Section 2. Names and Addresses. The names and addresses of the persons who
are to serve as Directors until the first annual meeting of Shareholders or
until their successors are elected and qualified, or until their earlier death,
resignation, or removal are as follows:
NAME ADDRESS CITY, STATE
---- ------- -----------
William J. Gallagher 1250 NE Loop 410 San Antonio, Texas 78209
Suite 430
John H. Coleman, III 1250 NE Loop 410 San Antonio, Texas 78209
Suite 430
Dr. Henry Salzarulo 1250 NE Loop 410 San Antonio, Texas 78209
Suite 430
Sam Bell Steves 1250 NE Loop 410 San Antonio, Texas 78209
Rosser Suite 430
Section 3. Limitations on Liability of Directors. No Director of the
Corporation shall be personally liable to the Corporation or its Shareholders
for monetary damages for an act or omission in the Director's capacity as a
Director; provided, however, that the foregoing provision shall not eliminate or
limit the liability of a Director to the extent a Director is found liable for
(a) a breach of the Director's duty of loyalty to the Corporation or its
Shareholders, (b) an act or omission not in good faith that constitutes a breach
of duty of the Director to the Corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law, (c) a transaction from
which the Director received an improper benefit, whether or not the benefit
resulted from an action taken within the scope of the Director's office, or (d)
an act or omission for which the liability of the Director is expressly provided
by an applicable statute.
If the Texas Miscellaneous Corporation Laws Act or other applicable
provision of Texas law hereafter is amended to authorize further elimination or
limitation of the liability of Directors, then the liability of a Director of
the Corporation, in addition to the limitation on the personal liability
provided herein, shall be limited to the fullest extent permitted by the Texas
Miscellaneous Corporation Laws Act or other applicable provision of Texas law as
amended. Any repeal or modification of this Section 3 by the Shareholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a Director of the Corporation existing
at the time of such repeal or modification.
<PAGE>
ARTICLE EIGHT
SPECIAL POWERS OF BOARD OF DIRECTORS
------------------------------------
In furtherance of, and not in limitation of the powers and authorities
conferred under the Act, the Board of Directors is expressly authorized:
1. To make, alter, amend and rescind the Bylaws of the Corporation; to
fix, adjust and maintain from time to time the amount to be reserved as working
capital; and to authorize and cause to be executed mortgages and liens upon the
real and personal property of the Corporation.
2. From time to time, to determine whether and to what extent and at
what times and places and under what conditions and provisions the accounts and
books of the Corporation shall be maintained and made available for inspection
of any Shareholder, and no Shareholder shall have any right to inspect any
account or books or records of the Corporation, except as provided in the Act,
or authorized by the Board of Directors.
3. If the Bylaws so provide, to designate two or more of their number
to constitute an executive committee, which committee shall, as provided in said
resolution or in the Bylaws of the Corporation, have and exercise any or all of
the powers of the Board of Directors in the management of the business and
affairs of the Corporation, except to the extent that the Act requires a
particular matter to be authorized by the Board of Directors.
ARTICLE NINE
ADDITIONAL POWERS IN BYLAWS
---------------------------
The Corporation may in its Bylaws confer powers and authorities upon the
Board of Directors in addition to the foregoing and to those expressly conferred
upon them by the Act.
ARTICLE TEN
TRANSACTIONS WITH INTERESTED DIRECTORS AND OFFICERS
---------------------------------------------------
No contract or transaction between the Corporation and one or more of its
Directors or Officers, or between the Corporation and any other corporation,
partnership, association or other organization in which one or more of the
Directors or Officers of the Corporation are directors, officers or partners, or
have a financial interest, shall be void or voidable solely by reason of such
relationship, or solely because the Director or Officer is present at or
participates in the meeting of the Board of Directors of the Corporation or
committee thereof that authorizes the contract or transaction, or solely because
his or their votes are counted for such purposes, if any one of the following
conditions are met:
1. The material facts concerning the relationship or interest of the
Director or Officer and the material facts concerning the contract or
transaction are disclosed or are known to the Board of Directors of the
Corporation or the committee thereof that considers the contract or transaction,
and the Board of Directors of the Corporation or committee thereof in good faith
authorizes the contract or transaction by the affirmative vote of a majority of
the disinterested Directors, even though the disinterested Directors be less
than a quorum; or
2. The material facts concerning the relationship or interest of the
Director of Officer and the material facts concerning the contract or
transaction are disclosed or are known to the Shareholders of the Corporation
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by the Shareholders of the Corporation at any annual or
special meeting of Shareholders called for that purpose; or
<PAGE>
3. The contract or transaction is fair to the Corporation at the time
it is authorized, approved or ratified by the Board of Directors of the
Corporation, a committee thereof, or the Shareholders of the Corporation.
Common or interested Directors may be counted in determining the
presence of a quorum at a meeting or the Board of Directors of the Corporation
or of a committee thereof that authorizes such contract or transaction.
ARTICLE ELEVEN
INDEMNIFICATION
---------------
Section 1. Mandatory Indemnification and Advancement of Expenses. Each
person who was or is made a party or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, any
appeal in such action, suit or proceeding, and any inquiry or investigation that
could lead to such an action, suit, or proceeding ("Proceeding"), by reason of
the fact that he is or was a Director or Officer of the Corporation, or who,
while a Director or Officer of the Corporation, is or was serving at the request
of the Corporation as a director, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary of another corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise, shall be indemnified and held harmless by the Corporation to
the fullest extent permitted by the Act against all judgments, penalties
(including excise and similar taxes), fines, settlements, and reasonable
expenses (including attorneys' fees) actually incurred by such person in
connection with such Proceeding. Such right shall be a contract right and shall
include the right to require advancement by the Corporation of reasonable
expenses (including attorneys' fees) incurred in defending any such Proceeding
in advance of its final disposition; provided, however, that the payment of such
expenses in advance of the final disposition of such Proceeding shall be made by
the Corporation only upon delivery to the Corporation of a written affirmation
by such person of his good faith belief that he has met the standard of conduct
necessary for indemnification under the Act and a written undertaking, by or on
behalf of such person, to repay all amounts so advanced if it should be
ultimately determined that such person has not satisfied such requirements.
Section 2. Nature of Indemnification. The indemnification and advancement
of expenses provided for herein shall not be deemed exclusive of any other
rights permitted by law to which a person seeking indemnification may be
entitled under any Bylaw, agreement, vote of Shareholders or disinterested
Directors or otherwise, and shall continue as to a person who has ceased to be a
Director or Officer of the Corporation and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 3. Insurance. The Corporation shall have power to purchase and
maintain insurance or another arrangement on behalf of any person who is or was
a director, Officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article Eleven or the Act.
<PAGE>
ARTICLE TWELVE
AMENDMENT OF BYLAWS
-------------------
The Shareholders of the Corporation hereby delegate to the Board of
Directors the power to adopt, alter, amend or repeal the Bylaws of the
Corporation. Such power shall be vested exclusively in the Board of Directors
and shall not be exercised by the Shareholders.
ARTICLE THIRTEEN
POWER TO CALL SPECIAL SHAREHOLDERS' MEETINGS
--------------------------------------------
Special meetings of the Shareholders of the Corporation may be called by
the President of the Corporation, the Board of Directors or holders of not less
than ten percent (10%) of all the shares entitled to vote at the proposed
special meeting of the Shareholders.
ARTICLE FOURTEEN
AMENDMENTS
----------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation or in its Bylaws in the
manner now or hereafter prescribed by the Act or these Articles of
Incorporation, and all rights conferred on Shareholders herein are granted
subject to this reservation.
ARTICLE FIFTEEN
CAPTIONS
--------
The captions used in these Articles of Incorporation are for convenience
only and shall not be construed in interpreting the provisions hereof.
ARTICLE SIXTEEN
INCORPORATOR
------------
The name and address of the Incorporator are as follows:
NAME ADDRESS CITY, STATE
---- ------- -----------
George L. Diamond 901 Main Street, Dallas, Texas 75202-3714
Suite 3300
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this l1th of
June, 1993.
INCORPORATOR:
/s/ George L. Diamond
---------------------
George L. Diamond
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
CLUCKER'S TEX-MEX VENTURE, INC.
-------------------------------
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, CLUCKER'S TEX-MEX VENTURE, INC., the undersigned corporation
(the "Corporation") adopts the following Articles of Amendment to its Articles
of Incorporation:
ARTICLE ONE : NAME
The name of the corporation is CLUCKER'S TEX-MEX VENTURE, INC.
ARTICLE TWO : AMENDMENTS
The following amendment to the Articles of Incorporation of the Corporation
was adopted by the Board of Directors of the Corporation on June 18, 1993 in
order to change the name of the Corporation.
2.1 Article 1 of the Articles of Incorporation of the Corporation is hereby
amended to read in its entirety as follows:
ARTICLE ONE
NAME
----
The name of the corporation is TEX-MEX VENTURE, INC. (the "Corporation").
ARTICLE THREE : OUTSTANDING SHARES
The number of shares of the Corporation outstanding at the time of such
adoption was zero (0) shares of the Common Stock, $0.01 par value per share; and
the number of shares of the Common Stock entitled to vote thereon was zero (0).
As such, the Board of Directors of the Corporation, consisting of four (4)
members, authorized and adopted the foregoing by written consent on even date,
with said Articles of Amendment being executed by the following three (3)
Directors constituting a majority of the Board of Directors of the Corporation.
Executed this 18th day of June, 1993.
CLUCKER'S TEX-MEX VENTURE, INC.
By: /s/ William J. Gallagher
----------------------------
WILLIAM J. GALLAGHER,
Director
By: /s/ Steves Rosser
---------------------
SAM BELL STEVES ROSSER,
Director
By: /s/ John H. Coleman, III
----------------------------
JOHN H. COLEMAN, III,
Director
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of Article 4.0 of the Texas Business Corporation
Act, the undersigned corporation adopts the following Articles of Amendment to
its Articles of Incorporation:
ARTICLE I
The name of the corporation is TEX MEX VENTURES, INC.
ARTICLE II
The following amendment to the Articles of Incorporation was adopted by
shareholders of the corporation on April 28, 1995.
The amendment alters Article I of the Original Articles of Incorporation
and the full text of each provision added is as follows:
"The name of the Corporation is CLUCKCORP INTERNATIONAL, INC."
ARTICLE III
The number of shares of the corporation outstanding at the time of such
adoption was 2,475,000, and the number of shares entitled to vote thereon was
2,475,000.
ARTICLE IV
The number of shares voted for such amendment was 1,672,500, and the number
of shares voted against such amendment was 0.
-OR-
The holders of all of the shares outstanding and entitled to vote on said
amendment have signed a consent in writing adopting said amendment and any
notice required has been given.
Dated: April 28, 1995
CLUCKCORP INTERNATIONAL, INC.
/s/ William J. Gallagher
------------------------
William J. Gallagher
Secretary
<PAGE>
STATEMENT OF CHANGE OF REGISTERED OFFICE/REGISTERED AGENT
---------------------------------------------------------
OF
CLUCKCORP INTERNATIONAL, INC.
(Formerly Tex Mex Venture, Inc.)
(A Profit Corporation)
1. The name of the corporation is:
Cluckcorp International, Inc.
2. The address, including street and number, of its present registered office
as shown in the records of the Secretary of State of Texas before filing
this statement is:
Billy Blues Food Corporation
1250 Northeast Loop 410, Suite 430
San Antonio, Texas 78209
3. The address, including street and number, to which its registered office is
to be changed is:
Gunn, Lee & Miller, P.C.
300 Convent Street, Suite 1650
San Antonio, Texas 78205
4. The name of its present registered agent, as shown in the records of the
Secretary of State of the State of Texas, before filing this statement is:
William Gallagher
5. The name of its new registered agent is:
Mark H. Miller
6. The address of its registered office and the address of the office of its
registered agent, as changed, will be identical.
7. Such change was authorized by:
|X| The Board of Directors
|_| An officer of the corporation so authorized by the Board of Directors
/s/ William Gallagher
---------------------
William Gallagher, Chairman of Board
<PAGE>
CLUCKCORP INTERNATIONAL, INC.
(a Texas corporation)
STATEMENT OF RESOLUTION
ESTABLISHING SERIES OF PREFERRED STOCK
Series A Redeemable Convertible Preferred Stock
To: The Secretary of State
of the State of Texas
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act (the "Act"), the undersigned corporation, CLUCKCORP
INTERNATIONAL, INC. (the "Corporation"), hereby submits the following statement
for the purpose of establishing and designating a series of shares of preferred
stock to be known as Series A Redeemable Convertible Preferred Stock and fixing
and determining the relative rights and preferences thereof:
ARTICLE ONE
NAME
----
1. The name of the Corporation is CLUCKCORP INTERNATIONAL, INC. and the
charter number of the Corporation is 01274398.
ARTICLE TWO
CORPORATE RESOLUTIONS
---------------------
1. The following resolution establishing and designating a series of
preferred stock, to-wit: the Series A Redeemable Convertible Preferred Stock
(the "Series A Preferred Stock"), and fixing and determining the relative rights
and preferences thereof was duly adopted by the Board of Directors of the
Corporation on May 19, 1997:
BE IT RESOLVED that, pursuant to the authority expressly granted and vested
in the Board of Directors of the Corporation in accordance with Article Four,
Section I of the Corporation's Articles of Incorporation, authorizing 5,000,000
shares of Preferred Stock (the "Preferred Stock"), $1.00 par value per share,
approved and adopted on June 17, 1993 by the affirmative vote of the holders of
more than the requisite majority of the issued and outstanding shares of Common
Stock of the Corporation entitled to vote thereon (being the only voting capital
stock of the Corporation then outstanding) in accordance with and pursuant to
the provisions of Article 2.13 of the Texas Business Corporation Act (the
"Act"), the Board of Directors of the Corporation does hereby approve and adopt
the following resolutions designating and authorizing for issuance, in
accordance with the provisions of Article 2.13 of the Act, the Series A
Preferred Stock of the Corporation, said resolutions hereby effected being prior
to the issuance of any shares of Preferred Stock, such shares of Series A
Preferred Stock to consist of 3,000,000 shares, each having a par value of $1.00
per share, and each of which shares of Series A Preferred Stock shall have the
dividend rights, voting powers, redemption provisions, liquidation preferences
and the relative, optional or other special rights, and shall be subject to the
qualifications, limitations or restrictions set forth below and the remaining
2,000,000 authorized shares of the Preferred Stock shall remain undesignated and
reserved for future issuance subject to the future action of the Board of
Directors of the Corporation.
<PAGE>
Rights and Preferences of Series A Preferred Stock
--------------------------------------------------
2. Dividends.
(a) Amount and Payment of Dividend. Subject to the limitations hereinafter
set forth, the holders of Series A Preferred Stock shall be entitled to receive,
but only when, if and as declared by the Board of Directors, dividends at the
rate of twelve percent (12%) per annum of the original issue price thereof of
Ten and No/100 Dollars ($10.00) per share, and no more, payable in arrears
quarterly in installments out of the funds of the Corporation legally available
therefor on March 31, June 30, September 30 and December 31 of each year (the
"Dividend Payment Date") commencing September 30, 1997. Such dividends may be
paid in cash or in shares of Common Stock of the Corporation as determined by
the Corporation's Board of Directors in its sole discretion; provided, however,
no fractional shares of Common Stock may be issued for dividends, any fractional
shares of Common Stock will be rounded to the nearest whole share, and provided
further that if any such dividend is paid in whole or in part by shares of
Common Stock, the number of shares of Common Stock to be issued as a stock
dividend shall be determined by the reported market price of a share of Common
Stock on the last day of the calendar quarter for such stock dividend. Any
shares of Series A Preferred Stock issued after the date hereof shall accrue
dividends from the date of issuance.
(b) Cumulative Rights. To the extent, if any, that dividends at the rate
set forth in Section 1(a) above shall not be paid or set apart in full for the
Series A Preferred Stock, the aggregate deficiency shall be cumulated and must
be fully paid or set apart for payment before any dividends may be paid upon or
set apart for the Common Stock of the Corporation or before the Corporation may
purchase any of its Common Stock or otherwise make any distribution on account
of its Common Stock or any other class of capital stock now or hereafter
authorized or issued by the Corporation which ranks on a parity with or junior
to the Series A Preferred Stock (other than (i) a dividend payable in Common
Stock, or (ii) by conversion into or exchange for capital stock of the
Corporation ranking junior to the Series A Preferred Stock as to dividends).
(c) No Interest on Accrued Dividends. Any accumulations of dividends on the
Series A Preferred Stock shall not bear interest.
(d) Declaration. Dividends on the Series A Preferred Stock shall be
declared if, when and as the Board of Directors of the Corporation shall in its
sole discretion deem advisable, and only from the surplus of the Corporation as
such shall be fixed and determined by the said Board of Directors. The
determination of the Board of Directors at any time of the amount of surplus
available for the payment of dividends shall be binding and conclusive on the
holders of the shares of Series A Preferred Stock then outstanding. If dividends
are not paid in full upon the Series A Preferred Stock and any other Preferred
Stock ranking on a parity as to dividends with the Series A Preferred Stock, all
dividends declared upon shares of Series A Preferred Stock and upon such other
shares of Preferred Stock will be declared pro rata so that in all cases the
amount of dividends declared per share on the Series A Preferred Stock and such
other Preferred Stock shall bear the same ratio to each other that the
accumulated dividends per share on the shares of the Series A Preferred Stock
and such other shares of Preferred Stock bear to each other. The holders of the
Series A Preferred Stock shall not be entitled to receive any dividends thereon
other than the dividends provided for in the preceding provisions of this
Section.
<PAGE>
2. Voting Rights and Notice of Meetings. The holders of the Common Stock
shall have the exclusive right and power to vote on any matter submitted to a
vote of the shareholders of the Corporation and the holders of the Series A
Preferred Stock shall have no right or power whether authorized by the Act or
otherwise to vote on any matter or in any proceeding or to be represented at or
to receive notice of any meeting of the shareholders.
3. Redemption.
(a) Selection of Shares for Redemption. At any time on or after nine months
from the initial date of issuance of the Series A Preferred Stock, the
Corporation may purchase or redeem all, or from time to time any part of, the
shares of Series A Preferred Stock then issued and outstanding; provided,
however, no shares of Series A Preferred Stock may be redeemed until all accrued
and unpaid dividends, if any, on all outstanding shares of Series A Preferred
Stock have been paid in full. If less than all of the shares of Series A
Preferred Stock then issued and outstanding are to be redeemed at one time, the
shares of Series A Preferred Stock to be redeemed shall be selected pro rata or
by lot in such manner as may be prescribed by the resolution of the Board of
Directors of the Corporation. The Corporation shall on the redemption date pay
the holders of the shares of Series A Preferred Stock so purchased or redeemed
the Redemption Price (as hereinafter defined) for such shares out of the funds
of the Corporation legally available therefor or through the issuance of Common
Stock of the Company in its sole discretion. Such redemption shall be effected
by call and written or printed notice (the "Redemption Notice") shall be given
to each holder of record of Series A Preferred Stock shares being called, either
personally or by mail to such holders last known address as shown on the records
of the Corporation, not less than thirty (30) days before the date fixed for
redemption. The Redemption Notice shall set forth (i) the shares of Series A
Preferred Stock, or part thereof, to be redeemed, (ii) the date fixed for
redemption, (iii) the Redemption Price, whether payable in cash or in Common
Stock, and (iv) the place at which the holders of Series A Preferred Stock may
obtain payment of the Redemption Price upon surrender of their respective share
certificates. The redemption price (the "Redemption Price") for the shares of
Series A Preferred Stock being redeemed shall be 110% of the average bid price
per share of the Series A Preferred Stock as quoted on the NASDAQ, or other
national securities exchange, for the 20 trading days prior to the redemption
date, plus all dividends accrued and unpaid on such shares of Series A Preferred
Stock.
(b) Surrender of Shares. On or after the date fixed for redemption, each
holder of Series A Preferred Stock called for redemption shall, unless such
holder shall have previously exercised such holder's option to convert the
Series A Preferred Stock into Common Stock in the manner set forth in Section 4
below, surrender such holder's certificates for such shares of Series A
Preferred Stock to the Corporation at the place designated in the Redemption
Notice and shall thereupon be entitled to receive the Redemption Price. Should
less than all the shares of Series A Preferred Stock represented by any
surrendered certificate be redeemed, a new certificate for the unredeemed shares
shall be issued to the holder of record of such unredeemed shares.
(c) Cessation of Rights as Shareholder. From and after the redemption date
(unless default shall be made by the Corporation in duly paying the Redemption
Price in which case all rights of the holders of Series A Preferred Stock shall
continue), the holders of the shares of the Series A Preferred Stock called for
redemption shall cease to have any rights as shareholders of the Corporation
except the right to receive, without interest, the Redemption Price thereof upon
surrender of the certificate(s) representing the shares of Series A Preferred
Stock being redeemed, and such shares shall not thereafter be transferred
(except with the consent of the Corporation) on the books of the Corporation and
shall not be deemed outstanding for any purpose whatsoever.
<PAGE>
(d) Cancellation of Redeemed Shares. All shares of Series A Preferred Stock
that are redeemed shall be canceled and such shares shall be restored to the
status of authorized but unissued shares of Preferred Stock.
(e) Deposit of Redemption Price into Trust. If, on or prior to any date
fixed for redemption of shares of Series A Preferred Stock as provided in this
Section, the Corporation deposits with any bank or trust company in Texas, or
any bank or trust company in the United States duly appointed and acting as
transfer agent for the Corporation, as a trust fund, a sum sufficient to redeem,
on the date fixed for redemption, the shares called for redemption, with
irrevocable instructions and authority to the bank or trust company to publish
the notice of redemption, or to complete such publication if already commenced,
and to pay, on and after the date fixed for redemption or prior to such date,
the Redemption Price of the shares to their respective holders on surrender of
their share certificates, then from and after the date of the deposit, even
though such date may be prior to the date fixed for redemption, the shares so
called shall be deemed to be redeemed and dividends on those shares shall cease
to accrue after the date fixed for redemption. The deposits shall be deemed to
constitute full payment of the shares to their holders and from and after the
date of the deposit the shares shall be deemed to be no longer outstanding, and
the holders of the shares shall cease to be shareholders with respect to such
shares and shall have no rights with respect to such shares, except the right to
receive from the bank or trust company payment of the Redemption Price of the
shares, without interest, on surrender of their certificates, or the right to
convert said shares to Common Stock as provided in Section 4 below. Any money so
deposited on account of the Redemption Price of Series A Preferred Stock shares
converted after the making of the deposit shall be repaid immediately to the
Corporation on the conversion of such preferred shares. Money so deposited and
unclaimed at the end of three (3) years shall be repaid to the Corporation and
thereafter the holders of such shares of Series A Preferred Stock called for
redemption shall look only to the Corporation for payment.
4. Conversion of Series A Preferred Stock.
(a) Conversion Right of Holder. Each share of the Series A Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after
nine months from the date of initial issuance of such share of Series A
Preferred Stock (or, if such share is called for redemption, at any time up to
and including, but not after, the close of business on the fifth full business
day prior to the date fixed for such redemption, unless default shall be made by
the Corporation in providing funds for the payment of the Redemption Price) into
fully-paid and nonassessable whole shares of Common Stock upon the terms and
conditions set forth in the following paragraphs of this Section.
(b) Mandatory Automatic Conversion. If at any time after nine months from
the date of initial issuance of such share of Series A Preferred Stock, the
closing price of the Series A Preferred Stock for a period of ten (10)
consecutive trading days equals or exceeds Twenty and No/100 Dollars ($20.00)
per share, all outstanding Series A Preferred Stock will automatically convert
into Common Stock at the Conversion Ratio set forth in Section 4(d) below.
(c) Exercise of Conversion Right. Any holder of the Series A Preferred
Stock electing to convert such stock into Common Stock pursuant to Section 4(a)
hereof shall deposit the certificates for the Series A Preferred Stock at the
Corporation's principal office, with the form of written notice to the
Corporation endorsed on such certificate(s) of his election to convert such
Series A Preferred Stock into Common Stock duly filled out and executed. The
<PAGE>
holder of any Series A Preferred Stock converted into Common Stock pursuant to
the provisions of Section 4(b) hereof shall deposit the certificates for the
Series A Preferred Stock at the Corporation's principal office within thirty
(30) days after receipt of written notice from the Corporation of the automatic
mandatory conversion. If the holder of the Series A Preferred Stock fails to
deliver the certificates for the Series A Preferred Stock to the Corporation
within such thirty (30) day period, the Corporation may nevertheless without
further notice to such holder treat such shares as being canceled upon issuance
of the appropriate number of shares of Common Stock to such holder. The
conversion right in respect of any such Series A Preferred Stock shall be deemed
to have been exercised at either (i) the date on which the certificates therefor
and such notice of election duly filled out and executed shall have been so
deposited with the Corporation in the event the conversion right is being
exercised by the holder of the Series A Preferred Stock pursuant to Section 4(a)
hereof, or (ii) thirty (30) days after the Corporation mails written notice to
the Series A Preferred Stock holder in the event the conversion is a mandatory
automatic conversion pursuant to Section 4(b). The person entitled to receive
the Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such Common Stock on such date; provided, however, that
the conversion right in respect of any certificate(s) so deposited after the
close of business on any day shall not be deemed to have been exercised until
the next succeeding business day. As soon as practicable, and in any event
within thirty (30) business days after the date of conversion of any Series A
Preferred Stock into Common Stock pursuant to Section 4(a) or 4(b) hereof, the
Corporation shall deliver to the person entitled thereto, certificate(s)
representing the shares of Common Stock to which such person shall be entitled
on such conversion. The Corporation, as a condition to the exercise of such
rights of conversion, may require the payment of a sum equal to any transfer tax
or other governmental charge (but not including any tax payable upon the issue
of stock deliverable upon such conversion) that may be imposed or required by
law, upon any transfer incidental or prior thereto, or the submission of proper
proof that the same has been paid.
(d) Conversion Ratio. For each share of Series A Preferred Stock converted
as provided in Section 4(a) or 4(b) hereof the Corporation shall deliver to the
holder thereof 2.7 shares of Common Stock subject to adjustment as provided in
Section 4(e) below; provided, however, the Corporation shall not be required, in
connection with any such conversion, to issue a fraction of a share of its
Common Stock nor to deliver any stock certificate representing a fraction
thereof.
(e) Adjustment of Conversion Ratio. The number of shares of Common Stock
into which, under the Conversion Ratio stated in Section 4(d) hereof, each share
of the Series A Preferred Stock is convertible, is based upon an assigned
conversion ratio of $3.70 (the "Conversion Price"). Such Conversion Ratio shall
be subject to adjustment from time to time in certain instances, as follows:
(1) On Recapitalization. On any recapitalization of the Corporation
through the subdivision or combination of its outstanding Common Stock
into a greater or smaller number of shares, the number of shares of
Common Stock into which the shares of Series A Preferred Stock may be
converted shall be increased or reduced in the same proportion.
(2) On Dividend or Distribution Payable in Common Stock or Convertible
Securities. If the Corporation takes a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend
or other distribution payable in Common Stock, or in securities
convertible into or exchangeable for Common Stock, the maximum number
of shares of Common Stock issuable in payment of such dividend or
distribution, or on conversion of or in exchange for the securities
convertible into or exchangeable for Common Stock, shall be deemed to
have been issued and to be outstanding as of such record date, and the
number of shares of Common Stock into which the shares of Series A
Preferred Stock may be converted shall be increased in proportion to
the increase of the number of outstanding shares of Common Stock
resulting therefrom.
<PAGE>
(3) On Capital Reorganization, Reclassification, Consolidation, Merger or
Sale of Corporate Assets. On any capital reorganization,
reclassification of the capital stock, consolidation, merger, or sale
or conveyance of all or substantially all of the assets of the
Corporation to another corporation, each share of Series A Preferred
Stock shall be convertible into the same kind and amounts of
securities, including share or other assets, or both, to which the
number of common shares of the Corporation which would have been
deliverable on conversion of such shares of Series A Preferred Stock
immediately prior to such reorganization, reclassification,
consolidation, merger, sale or conveyance would have been entitled.
Appropriate adjustments, as determined by the Board of Directors of
the Corporation, shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter
of the holders of the Series A Preferred Stock so that said
provisions, including the provisions with respect to changes in, and
other adjustments of, the Conversion Rate, shall thereafter be
applicable, as nearly as reasonably may be, in relation to any
securities or other assets thereafter deliverable on conversion of the
shares of Series A Preferred Stock.
(f) Statement of Adjusted Amount. Whenever the amount of shares of Common
Stock or other securities deliverable on the conversion of Series A Preferred
Stock shall be adjusted pursuant to the provisions hereof, the Corporation shall
forthwith maintain at its office and file with the transfer agent or agents for
the Series A Preferred Stock and for Common Stock, a statement signed by the
President or Vice President of the Corporation and by its Chief Financial
Officer, stating the adjusted amount of the Common Stock or other securities
deliverable for each share of Series A Preferred Stock, calculated to the
nearest one hundredth (1/100) share, and setting forth in reasonable detail the
method of calculation and the facts requiring such adjustment and on which the
calculation is based. Each adjustment shall remain in effect until a subsequent
adjustment hereunder is required.
(g) Fractional Shares. Neither fractional shares nor scrip or other
certificates evidencing such shares shall be issued on conversion of the Series
A Preferred Stock as herein provided, but the Corporation shall, in lieu
thereof, round all such fractional shares to the nearest whole share.
(h) Payment of Taxes on Conversion of Series A Preferred Stock. The
Corporation shall pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of Common Stock on conversion of shares of
Series A Preferred Stock pursuant hereto. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of Common Stock in a name other than that in which the
shares of Series A Preferred Stock so converted were registered and no such
issue or delivery shall be made unless and until the person requesting it has
paid to the Corporation the amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(i) Reservation of Sufficient Common Stock. So long as any shares of Series
A Preferred Stock shall remain outstanding and the holders thereof shall have
the right to convert said shares in accordance with the provisions of this
Section 4, the Corporation will at all times reserve from the authorized and
unissued shares of its Common Stock a sufficient number of shares to provide for
such conversions, and will take such other corporation action as may be
necessary from time to time in order that it may validly and legally issue
fully-paid and non-assessable shares of such Common Stock upon conversion of the
Series A Preferred Stock.
<PAGE>
(j) Definition of Common Stock. In each case where reference is made to the
Common Stock of the Corporation in this Section, unless a different intention is
expressed, such reference is to the class of Common Stock of the Corporation as
such class of stock exists at the date of the adoption of these provisions, or
stock into which the same may be changed from time to time.
(k) Status of Converted Preferred Shares. All shares of Series A Preferred
Stock so converted shall be canceled and such shares shall be restored to the
status of authorized but unissued shares of Preferred Stock.
5. Liquidation Rights.
(a) Liquidation Preference Amount. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the business or affairs of
the Corporation, and after payment of, or adequate provision for payment of, the
debts, liabilities and other claims of the Corporation as determined by its
Board of Directors, each holder of the Series A Preferred Stock shall be
entitled to receive, out of the remaining net assets of the Corporation legally
available for distribution to its shareholders, before any payment or
distribution shall be made on the Common Stock, or on any other class of stock
of the Corporation ranking junior to the shares of Series A Preferred Stock upon
liquidation, the amount of Ten and No/100 Dollars ($10.00) per share of Series A
Preferred Stock, plus all accrued and unpaid dividends on each such share up to
the date fixed for distribution.
(b) Proportionate Distribution Where Assets Insufficient. In the event the
assets of the Corporation available for distribution to the holders of shares of
Series A Preferred Stock upon dissolution, liquidation or winding up of the
Corporation whether voluntary or involuntary, shall be insufficient to pay in
full all amounts to which such holders are entitled pursuant to paragraph (a) of
this Section, no such distribution shall be made on account of any shares of any
class of capital stock of the Corporation ranking on a parity with the shares of
Series A Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
Series A Preferred Stock, ratably, in proportion to the full distributable
amounts for which holders of all such parity shares are respectively entitled
upon such dissolution, liquidation or winding up.
(c) Nonparticipation Right. After the payment to the holders of the shares
of Series A Preferred Stock of the full preferential amounts provided for in
either paragraph (a) or (b) of this Section, as applicable, the holders of
Series A Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
(d) Excluded Transactions. Neither the consolidation nor merger of the
Corporation with or into any other corporation, nor the sale, mortgage, exchange
or conveyance of all or substantially all of the properties, assets or business
of the Corporation, nor any liquidation, dissolution or winding up of the
Corporation occurring substantially concurrently with any such transaction shall
be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning hereof, unless otherwise determined by the Board of Directors
of the Corporation.
<PAGE>
6. No Preemptive Rights. No holder of shares of the Series A Preferred
Stock shall, as such holder, have any preemptive right to subscribe to or
purchase any shares of any class of capital stock of the Corporation now or
hereafter authorized or issued, whether or not exchangeable for any capital
stock of the Corporation of any class or classes now or hereafter authorized or
issued; nor shall any holder of shares of the Series A Preferred Stock, as such
holder, have any right to purchase, acquire or subscribe for any securities
which the Corporation may issue or sell whether or not convertible into or
exchangeable for shares of capital stock of the Corporation of any class or
classes, and whether or not any such securities have attached or appurtenant
thereto warrants, options or other instruments which entitle the holders thereof
to purchase, acquire or subscribe for shares of capital stock of any class or
classes of the Corporation.
7. Determination of Market Value of Common Stock and Preferred Stock. The
determination of the per share market value of Common Stock and Preferred Stock
as set forth in previous Sections shall be determined using the last sale price
of the day or, where no sale is made on that day, the average of the closing bid
and asked prices for that day as reported by the NASDAQ Small Cap - Issue System
if the Common Stock is at the time listed thereon or, if it is not so listed, on
any other national securities exchange selected by the Corporation on which it
is at the time listed. If the Common Stock or Preferred Stock is not at the time
listed on any national securities exchange, its market value for the purposes
hereof shall be the fair value as determined and certified to the Corporation by
a member of a national securities exchange selected by the Corporation. If no
market value can be ascertained in accordance with the foregoing provisions, the
market value shall be fixed by the Board of Directors of the Corporation.
8. Covenants of the Corporation. The Corporation will not, by amendment to
its Articles of Incorporation, as amended, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of the preferences and limitations of Series
A Preferred Stock to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
set forth herein relating to Series A Preferred Stock and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holders of the Series A Preferred Stock against dilution or other
impairment.
IN WITNESS WHEREOF, CLUCKCORP INTERNATIONAL, INC. has caused this Statement
of Resolution Establishing Series of Shares to be signed by William J.
Gallagher, its Chairman of the Board and Chief Executive Officer, and attested
by Steves Rosser, its Secretary, this 11th day of June, 1997.
CLUCKCORP INTERNATIONAL, INC.
By: /s/ William J. Gallagher
----------------------------
WILLIAM J. GALLAGHER,
Chairman of the Board and
Chief Executive Officer
By: /s/ Steves Rosser
---------------------
STEVES ROSSER,
Vice-President and Secretary
<PAGE>
HARVEST RESTAURANT GROUP, INC.
(a Texas corporation)
---------------------
SECOND AMENDED STATEMENT OF RESOLUTION
ESTABLISHING SERIES OF PREFERRED STOCK
--------------------------------------
Series B Convertible Preferred Stock
To: The Secretary of State
of the State of Texas
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act (the "Act"), the undersigned corporation, HARVEST RESTAURANT
GROUP, INC., formerly CluckCorp International, Inc. (the "Corporation"), hereby
submits the following statement for the purpose of establishing and designating
a series of shares of preferred stock to be known as Series B Convertible
Preferred Stock and fixing and determining the relative rights and preferences
thereof:
ARTICLE ONE
NAME
----
1. The name of the Corporation is HARVEST RESTAURANT GROUP, INC. and the
charter number of the Corporation is 01274398.
ARTICLE TWO
CORPORATE RESOLUTIONS
---------------------
1. Be it known that on May 19, 1997 the Corporation had established and
designated 3,000,000 shares of its preferred stock as Series A Redeemable
Convertible Preferred Stock ("Series A Preferred Stock").
2. The following resolution establishing and designating an additional
series of preferred stock, known as: the Series B Convertible Preferred Stock
(the "Series B Preferred Stock"), and fixing and determining the relative rights
and preferences thereof was duly adopted by the Board of Directors of the
Corporation on December 15, 1997. The Series B Preferred Stock shall rank junior
to the Series A Preferred Stock.
BE IT RESOLVED that, pursuant to the authority expressly granted and
vested in the Board of Directors of the Corporation in accordance with Article
Four, Section I of the Corporation's Articles of Incorporation, authorizing
5,000,000 shares of Preferred Stock (the "Preferred Stock"), $1.00 par value per
share, approved and adopted on June 17, 1993 by the affirmative vote of the
holders of more than the requisite majority of the issued and outstanding shares
<PAGE>
of Common Stock of the Corporation entitled to vote thereon (being the only
voting capital stock of the Corporation then outstanding) in accordance with and
pursuant to the provisions of Article 2.13 of the Texas Business Corporation Act
(the "Act"), the Board of Directors of the Corporation does hereby approve and
adopt the following resolutions designating and authorizing for issuance, in
accordance with the provisions of Article 2.13 of the Act, the Series B
Preferred Stock of the Corporation, said resolutions hereby effected being made
prior to the issuance of any shares of Series B Preferred Stock, such shares of
Series B Preferred Stock to consist of 1,000 shares, each having a par value of
$1.00 per share, and each of which shares of Series B Preferred Stock shall have
the dividend rights, voting powers, redemption provisions, liquidation
preferences and the relative, optional or other special rights, and shall be
subject to the qualifications, limitations or restrictions set forth below and
the remaining 1,999,000 authorized shares of the Preferred Stock shall remain
undesignated and reserved for future issuance subject to the future action of
the Board of Directors of the Corporation.
Rights and Preferences of Series B Preferred Stock
--------------------------------------------------
1. Dividends.
(a) Amount and Payment of Dividend. Subject to the limitations
hereinafter set forth, the holders of Series B Preferred Stock shall be entitled
to receive dividends at the rate of seven percent (7%) per annum of the original
issue price thereof of Ten Thousand and No/100 Dollars ($10,000.00) per share,
and no more, payable only at the time such shares are converted pursuant to
Section 4 hereof. Such dividends may be paid in cash or in shares of Series A
Preferred Stock or Common Stock of the Corporation as determined by the holders
of the Series B Preferred stock in its sole discretion; provided, however, no
fractional shares of either security may be issued for dividends, any fractional
shares will be rounded to the nearest whole share, and provided further that if
any such dividend is paid in whole or in part by shares of Series A Preferred
Stock or Common Stock, the number of shares of such security to be issued as a
stock dividend shall be determined by the reported market price of a share of
the respective security on the last day of the period for such stock dividend.
Any shares of Series B Preferred Stock issued after the date hereof shall accrue
dividends from the date of issuance.
(b) Cumulative Rights. To the extent, if any, that dividends at the
rate set forth in Section 1(a) above shall not be paid or set apart in full for
the Series B Preferred Stock, the aggregate deficiency shall be cumulated and
must be fully paid or set apart for payment before any dividends may be paid
upon or set apart for the Common Stock of the Corporation or before the
Corporation may purchase any of its Common Stock or otherwise make any
distribution on account of its Common Stock or any other class of capital stock
now or hereafter authorized or issued by the Corporation which ranks on a parity
with or junior to the Series B Preferred Stock (other than (i) a dividend
payable in Common Stock, or (ii) by conversion into or exchange for capital
stock of the Corporation ranking junior to the Series B Preferred Stock as to
dividends).
<PAGE>
(c) No Interest on Accrued Dividends. Any accumulations of dividends
on the Series B Preferred Stock shall not bear interest.
(d) Declaration. Dividends on the Series B Preferred Stock shall be
declared if, when and as the Board of Directors of the Corporation shall in its
sole discretion deem advisable, and only from the surplus of the Corporation as
such shall be fixed and determined by the said Board of Directors. The
determination of the Board of Directors at any time of the amount of surplus
available for the payment of dividends shall be binding and conclusive on the
holders of the shares of Series B Preferred Stock then outstanding. If dividends
are not paid in full upon the Series B Preferred Stock and any other Preferred
Stock ranking on a parity as to dividends with the Series B Preferred Stock, all
dividends declared upon shares of Series B Preferred Stock and upon such other
shares of Preferred Stock will be declared pro rata so that in all cases the
amount of dividends declared per share on the Series B Preferred Stock and such
other Preferred Stock shall bear the same ratio to each other that the
accumulated dividends per share on the shares of the Series B Preferred Stock
and such other shares of Preferred Stock bear to each other. The holders of the
Series B Preferred Stock shall not be entitled to receive any dividends thereon
other than the dividends provided for in the preceding provisions of this
Section.
2. Voting Rights and Notice of Meeting. The holders of the Common Stock
shall have the exclusive right and power to vote on any matter submitted to a
vote of the shareholders of the Corporation and the holders of the Series B
Preferred Stock shall have no right or power whether authorized by the Act or
otherwise to vote on any matter or in any proceeding or to be represented at or
to receive notice of any meeting of the shareholders.
3. Redemption.
Neither the Corporation nor the Holders of the Series B Preferred Stock
shall have any rights of redemption as to the shares of Series B Preferred Stock
issued and outstanding.
4. Conversion of Series B Preferred Stock.
(a) Conversion Right of Holder. Each share of the Series B Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of initial issuance of such share of Series B Preferred Stock and
up until 3 years thereafter, into either fully-paid and nonassessable whole
shares of Series A Preferred Stock or Common Stock upon the terms and conditions
set forth in the following paragraphs of this Section. However, that if by
choosing to convert into one security rather than the other would cause the
Corporation to be in violation of a NASDAQ or NASD rule or listing requirement,
then the holder shall be precluded from converting into such security. The
option of the holder to convert each share of Series B Preferred Stock into
shares of Common Stock is available only if: (i) the closing bid price of the
Company's Common Stock equals or exceeds $3.00 per share on the date of
conversion, or (ii) if a majority of the then current Board of Directors of the
Company approves a written notice of conversion submitted by the holder
requesting conversion into Common Stock, or (iii) if the holder was otherwise
precluded from converting into the Series A Preferred Stock.
<PAGE>
(b) Automatic Conversion. The holder's conversion right shall expire
three (3) years after the date of issuance. Upon three years from the date of
issuance, all shares of Series B Preferred Stock that remain outstanding will
automatically convert into shares of the Corporation's Series A Preferred Stock,
however, if the Series A Preferred Stock is not actively traded at the time,
then the Series B Preferred Stock shall automatically convert into shares of the
Corporation's Common Stock. The Conversion Rate to be utilized for the automatic
conversion shall the rate specified in Section 4(d) which yields the largest
number of shares to the holder.
(c) Exercise of Conversion Right. Any holder of the Series B Preferred
Stock electing to convert such stock into Series A Preferred Stock or Common
Stock pursuant to Section 4(a) hereof shall deliver the certificates for the
Series B Preferred Stock to the Corporation's principal office or the office of
the Corporations Transfer Agent, with the form of written notice to the
Corporation endorsed on such certificate(s) of his election to convert such
Series B Preferred Stock into either Series A Preferred Stock or Common Stock
duly filled out and executed. The conversion right in respect of any such Series
B Preferred Stock pursuant to Section 4(a) hereof shall be deemed to have been
exercised at the date on which the holder delivers such notice of conversion
duly filled out and executed to the Corporation or the Corporation's transfer
agent (the "Date of Election"). A facsimile notice of conversion will be
accepted by the Corporation as a valid notice of election, so long as the holder
then delivers the original certificates within three business days thereafter.
The person entitled to receive the Series A Preferred Stock or Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder of such security on such date; provided, however, that the conversion
right in respect of any notice received after the close of business (11:59 PM
EST) on any day shall not be deemed to have been exercised until the next
succeeding business day. As soon as practicable, and in any event within three
(3) business days after the date of receipt of the original certificates of any
Series B Preferred Stock to be converted pursuant to Section 4(a) hereof, the
Corporation shall deliver to the person entitled thereto, certificate(s)
representing the shares of Series A Preferred Stock or Common Stock to which
such person shall be entitled on such conversion. The Corporation, as a
condition to the exercise of such rights of conversion, may require the payment
of a sum equal to any transfer tax or other governmental charge (but not
including any tax payable upon the issue of stock deliverable upon such
conversion) that may be imposed or required by law, upon any transfer incidental
or prior thereto, or the submission of proper proof that the same has been paid.
(d) Conversion Rate. The number of shares of Series A Preferred Stock
or Common Stock issuable upon conversion of each share of Series B Preferred
Stock shall be as follows:
<PAGE>
(1) Conversion into Series A Preferred Stock: Equal to $10,000,
divided by the lower of: (1) 105% of the average closing bid price of the Series
A Preferred Stock during the five trading day period immediately proceeding the
Date of Issuance or (2) 80% of the average closing bid price of the Series A
Preferred Stock during the five trading day period immediately proceeding the
Date of Election as defined in Section 4(c) hereof, provided, however, the
Corporation shall not be required, in connection with any such conversion, to
issue a fraction of a share of its Series A Preferred Stock nor to deliver any
stock certificate representing a fraction thereof.
(2) Conversion into Common Stock. Equal to $10,000, divided by
80% of the average closing bid price of the Common Stock during the five trading
day period immediately proceeding the Date of Election as defined in Section
4(a) hereof; provided, however, in order for any conversion into Common Stock to
take place, the price of the Common Stock must be above the minimum price level
as set forth in Section 4(a) hereof. Notwithstanding the preceding sentence,
Buyer or holder can convert into Common Stock regardless of its price if
approved by a majority of the then current Board of Directors, or if he
otherwise would be precluded from converting into Company's Series A Preferred.
In addition, the Corporation shall not be required, in connection with any such
conversion, to issue a fraction of a share of its Common Stock nor to deliver
any stock certificate representing a fraction thereof.
(3) Limitations on Conversion. Any holder of the Series B
Preferred Stock will be allowed to convert 50% of the aggregate amount of such
holder's Series B Preferred Stock beginning the day after the registration
statement registering the underlying shares of Series A Preferred Stock or
Common Stock has been declared effective, but no sooner than 60 days from the
date the Series B Preferred Stock is issued. Any holder of the Series B
Preferred Stock will be allowed to convert any and all remaining shares of
holder's Series B Preferred Stock beginning 120 days after the issuance of the
Series B Preferred Stock; provided, however, that if on the 120th day after the
issuance of the Series B Preferred Stock the registration statement has not yet
been declared effective all holders must wait until the registration statement
is declared effective before converting any and all of their Series B Preferred
Stock.
(e) Adjustment of Conversion Rate. The number of shares of Series A
Preferred Stock and Common Stock into which share of the Series B Preferred
Stock is convertible shall be subject to adjustment from time to time in certain
instances, as follows:
(1) On Recapitalization. On any recapitalization of the
Corporation through the subdivision or combination of its outstanding Series A
Preferred Stock or Common Stock into a greater or smaller number of shares, the
number of shares of Common Stock into which the shares of Series B Preferred
Stock may be converted shall be increased or reduced in the same proportion.
<PAGE>
(2) On Capital Reorganization, Reclassification, Consolidation,
Merger or Sale of Corporate Assets. On any capital reorganization,
reclassification of the capital stock, consolidation, merger, or sale or
conveyance of all or substantially all of the assets of the Corporation to
another corporation, each share of Series B Preferred Stock shall be convertible
into the same kind and amounts of securities, including share or other assets,
or both, into which the number of shares of capital stock of the Corporation
which would have been deliverable on conversion of such shares of Series B
Preferred Stock immediately prior to such reorganization, reclassification,
consolidation, merger, sale or conveyance would have been entitled. Appropriate
adjustments, as determined by the Board of Directors of the Corporation, shall
be made in the application of the provisions herein set forth with respect to
the rights and interests thereafter of the holders of the Series B Preferred
Stock so that said provisions, including the provisions with respect to changes
in, and other adjustments of, the Conversion Rate, shall thereafter be
applicable, as nearly as reasonably may be, in relation to any securities or
other assets thereafter deliverable on conversion of the shares of Series B
Preferred Stock.
(f) Statement of Adjusted Amount. Whenever the amount of shares of
Series A Preferred Stock or Common Stock or other securities deliverable on the
conversion of Series B Preferred Stock shall be adjusted pursuant to the
provisions hereof, the Corporation shall forthwith maintain at its office and
file with the transfer agent or agents, a statement signed by the President or
Vice President of the Corporation and by its Chief Financial Officer, stating
the adjusted amount of any securities deliverable for each share of Series B
Preferred Stock, calculated to the nearest one hundredth (1/100) share, and
setting forth in reasonable detail the method of calculation and the facts
requiring such adjustment and on which the calculation is based. Each adjustment
shall remain in effect until a subsequent adjustment hereunder is required.
(g) Fractional Shares. Neither fractional shares nor scrip or other
certificates evidencing such shares shall be issued on conversion of the Series
B Preferred Stock as herein provided, but the Corporation shall, in lieu
thereof, round all such fractional shares to the nearest whole share.
(h) Payment of Taxes on Conversion of Series B Preferred Stock. The
Corporation shall pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of Series A Preferred Stock or Common Stock on
conversion of shares of Series B Preferred Stock pursuant hereto. The
Corporation shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of Series A
Preferred Stock or Common Stock in a name other than that in which the shares of
Series B Preferred Stock so converted were registered and no such issue or
delivery shall be made unless and until the person requesting it has paid to the
Corporation the amount of any such tax, or has established, to the satisfaction
of the Corporation, that such tax has been paid.
(i) Reservation of Sufficient Series A Preferred Stock and Common
Stock. So long as any shares of Series B Preferred Stock shall remain
outstanding and the holders thereof shall have the right to convert said shares
in accordance with the provisions of this Section 4, the Corporation will at all
times reserve from the authorized and unissued shares of its Series A Preferred
Stock and Common Stock a sufficient number of shares to provide for such
conversions, and will take such other corporation action as may be necessary
from time to time in order that it may validly and legally issue fully-paid and
non-assessable shares of such Series A Preferred Stock or Common Stock upon
conversion of the Series B Preferred Stock.
<PAGE>
(j) Definition of Series A Preferred Stock and Common Stock. In each
case where reference is made to the Series A Preferred Stock or Common Stock of
the Corporation in this Section, unless a different intention is expressed, such
reference is to the series or class of Series A Preferred Stock or Common Stock
of the Corporation as such series or class of stock exists at the date of the
adoption of these provisions, or stock into which the same may be changed from
time to time.
(k) Status of Converted Preferred Shares. All shares of Series B
Preferred Stock so converted shall be canceled and such shares shall be restored
to the status of authorized but unissued shares of Preferred Stock.
5. Liquidation Rights.
(a) Liquidation Preference Amount. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the business or affairs of
the Corporation, and after payment of, or adequate provision for payment of, the
debts, liabilities and other claims of the Corporation as determined by its
Board of Directors, each holder of the Series B Preferred Stock shall be
entitled to receive, out of the remaining net assets of the Corporation legally
available for distribution to its shareholders, before any payment or
distribution shall be made on the Common Stock, or on any other class of stock
of the Corporation ranking junior to the shares of Series B Preferred Stock upon
liquidation, the amount of Ten Thousand and No/100 Dollars ($10,000.00) per
share of Series B Preferred Stock, plus all accrued and unpaid dividends on each
such share up to the date fixed for distribution.
(b) Proportionate Distribution Where Assets Insufficient. In the event
the assets of the Corporation available for distribution to the holders of
shares of Series B Preferred Stock upon dissolution, liquidation or winding up
of the Corporation whether voluntary or involuntary, shall be insufficient to
pay in full all amounts to which such holders are entitled pursuant to paragraph
(a) of this Section, no such distribution shall be made on account of any shares
of any class of capital stock of the Corporation ranking on a parity with the
shares of Series B Preferred Stock upon such dissolution, liquidation or winding
up unless proportionate distributive amounts shall be paid on account of the
shares of Series B Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
(c) Nonparticipation Right. After the payment to the holders of the
shares of Series B Preferred Stock of the full preferential amounts provided for
in either paragraph (a) or (b) of this Section, as applicable, the holders of
Series B Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
<PAGE>
(d) Excluded Transactions. Neither the consolidation nor merger of the
Corporation with or into any other corporation, nor the sale, mortgage, exchange
or conveyance of all or substantially all of the properties, assets or business
of the Corporation, nor any liquidation, dissolution or winding up of the
Corporation occurring substantially concurrently with any such transaction shall
be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning hereof, unless otherwise determined by the Board of Directors
of the Corporation.
6. No Preemptive Rights. No holder of shares of the Series B Preferred
Stock shall, as such holder, have any preemptive right to subscribe to or
purchase any shares of any class of capital stock of the Corporation now or
hereafter authorized or issued, whether or not exchangeable for any capital
stock of the Corporation of any class or classes now or hereafter authorized or
issued; nor shall any holder of shares of the Series B Preferred Stock, as such
holder, have any right to purchase, acquire or subscribe for any securities
which the Corporation may issue or sell whether or not convertible into or
exchangeable for shares of capital stock of the Corporation of any class or
classes, and whether or not any such securities have attached or appurtenant
thereto warrants, options or other instruments which entitle the holders thereof
to purchase, acquire or subscribe for shares of capital stock of any class or
classes of the Corporation.
7. Determination of Market Value of Capital Stock of Corporation. The
determination of the per share market value of Common Stock and Preferred Stock
as set forth in previous Sections shall be determined using the previous five
day average closing bid price for the day or, where no sale is made on that day,
the average of the closing bid and asked prices for that day as reported by the
NASDAQ Small Cap - Issue System if the securities are at the time listed thereon
or, if it is not so listed, on any other national securities exchange selected
by the Corporation on which it is at the time listed. If the Common Stock or
Preferred Stock is not at the time listed on any national securities exchange,
its market value for the purposes hereof shall be the average closing bid price
for the last three trading days the Preferred Stock or Common Stock was listed
on any national securities exchange.
8. Covenants of the Corporation. The Corporation will not, by amendment to
its Articles of Incorporation, as amended, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of the preferences and limitations of Series
B Preferred Stock to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
set forth herein relating to Series B Preferred Stock and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holders of the Series B Preferred Stock against dilution or other
impairment.
<PAGE>
IN WITNESS WHEREOF, HARVEST RESTAURANT GROUP, INC. has caused this Second
Amended Statement of Resolution Establishing Series of Shares to be signed by
Steves Rosser, its Vice-President and Secretary, this 12th day of May, 1998.
HARVEST RESTAURANT GROUP, MC.
By: /s/ Steves Rosser
STEVES ROSSER,
Vice-President and Secretary
<PAGE>
HARVEST RESTAURANT GROUP, INC.
(a Texas corporation)
---------------------
STATEMENT OF RESOLUTION
ESTABLISHING SERIES OF PREFERRED STOCK
--------------------------------------
Series C Convertible Preferred Stock
To: The Secretary of State
of the State of Texas
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act (the "Act"), the undersigned corporation, HARVEST RESTAURANT
GROUP, INC., formerly CluckCorp International, Inc. (the "Corporation"), hereby
submits the following statement for the purpose of establishing and designating
a series of shares of preferred stock to be known as Series C Convertible
Preferred Stock and fixing and determining the relative rights and preferences
thereof:
ARTICLE ONE
NAME
----
1. The name of the Corporation is HARVEST RESTAURANT GROUP, INC. and the
charter number of the Corporation is 01274398.
ARTICLE TWO
CORPORATE RESOLUTIONS
---------------------
1. Be it known that on May 19, 1997, the Corporation had established and
designated 3,000,000 shares of its preferred stock as Series A Redeemable
Convertible Preferred Stock ("Series A Preferred Stock") and on December 22,
1997, the Corporation had established and designated 1,000 shares of its
preferred stock as Series B Convertible Preferred Stock.
2. The following resolution establishing and designating an additional
series of preferred stock, known as: the Series C Convertible Preferred Stock
(the "Series C Preferred Stock, and fixing and determining the relative rights
and preferences thereof was duly adopted by the Board of Directors of the
Corporation on July 2, 1998. The Series C Preferred Stock shall rank junior to
the Series A Preferred Stock and on parity with the Series B Preferred Stock.
<PAGE>
BE IT RESOLVED that, pursuant to the authority expressly granted and
vested in the Board of Directors of the Corporation in accordance with Article
Four, Section 1 of the Corporation's Articles of Incorporation, authorizing
5,000,000 shares of Preferred Stock (the "Preferred Stock"), $1.00 par value per
share, approved and adopted on June 17, 1993 by the affirmative vote of the
holders of more than the requisite majority of the issued and outstanding shares
of Common Stock of the Corporation entitled to vote thereon (being the only
voting capital stock of the Corporation then outstanding) in accordance with and
pursuant to the provisions of Article 2.13 of the Texas Business Corporation Act
(the "Act"), the Board of Directors of the Corporation does hereby approve and
adopt the following resolutions designating and authorizing for issuance, in
accordance with the provisions of Article 2.13 of the Act, the Series C
Preferred Stock of the Corporation, said resolutions hereby effected being made
prior to issuance of any shares of Series C Preferred Stock, such shares of
Series C Preferred Stock to consist of 1,000 shares, each having a par value of
$1.00 per share, and each of which shares of Series C Preferred Stock shall have
the dividend rights, voting powers. redemption provisions, liquidation
preferences and the relative, optional or other special rights, and shall be
subject to the qualifications, limitations or restrictions set forth below and
the remaining authorized shares of the Preferred Stock shall remain undesignated
and reserved for future issuance subject to the future action of the Board of
Directors of the Corporation.
Rights and Preferences of Series C Preferred Stock
--------------------------------------------------
1. Dividends.
(a) Amount and Payment of Dividend. Subject to the limitations
hereinafter set forth, the holders of Series C Preferred Stock shall be entitled
to receive dividends at the rate of seven percent (7%) per annum of the original
issue price thereof of Ten Thousand and No/100 Dollars ($10,000.00) per share,
and no more, payable only at the time such shares are converted pursuant to
Section 4 hereof. Such dividends may be paid in cash or in shares of Common
Stock of the Corporation as determined by the holders of the Series C Preferred
stock in its sole discretion; provided, however, no fractional shares of either
security may be issued for dividends any fractional shares will be rounded to
the nearest whole share, and provided further that it any such dividend is paid
in whole or in part by shares of Common Stock, the number of Shares of such
security to be issued as a stock dividend shall be determined by the reported
market price of a share of the respective security on the last day of the period
for such stock dividend. Any shares of Series C Preferred Stock issued after the
date hereof shall accrue dividends from the date of issuance.
(b) Cumulative Rights. To the extent, if any, that dividends at the
rate set forth in Section 1(a) above shall not be paid or set apart in full for
the Series C Preferred Stock, the aggregate deficiency shall be cumulated and
must be fully paid or set apart for payment before any dividends may be paid
upon or set apart for the Common Stock of the Corporation or before the
Corporation may purchase any of its Common Stock or otherwise make any
distribution on account of its Common Stock or any other class of capital stock
now or hereafter authorized or issued by the Corporation which ranks on a parity
with or junior to the Series C Preferred Stock (other than (i) a dividend
payable in Common Stock, or (ii) by conversion into or exchange for capital
stock of the Corporation ranking junior to the Series C Preferred Stock as to
dividends).
<PAGE>
(c) No Interest on Accrued Dividends. Any accumulations of dividends
on the Series C Preferred Stock shall not bear interest.
(d) Declaration. Dividends on the Series C Preferred Stock shall be
declared if when and as the Board of Directors of the Corporation shall in its
sole discretion deem advisable, and only from the surplus of the Corporation as
such shall be fixed and determined by the said Board of Directors. The
determination of the Board of Directors at any time of the amount of surplus
available for the payment of dividends shall be binding and conclusive on the
holders of the shares of Series C Preferred Stock then outstanding. If dividends
are not paid in full upon the Series C Preferred Stock and any other Preferred
Stock ranking on a parity as to dividends with the Series C Preferred Stock, all
dividends declared upon shares of Series C Preferred Stock and upon such other
shares of Preferred Stock will be declared pro rata so that in all cases the
amount of dividends declared per share on the Series C Preferred Stock and such
other Preferred Stock shall bear the same ratio to each other that the
accumulated dividends per share on the shares of the Series C Preferred Stock
and such other shares of Preferred Stock bear to each other. The holders of the
Series C Preferred Stock shall not be entitled to receive any dividends thereon
other than the dividends provided for in the preceding provisions of this
Section.
2. Voting Rights and Notice of Meeting. The holders of the Common Stock
shall have the exclusive right and power to vote an any matter submitted to a
vote of the shareholders of the Corporation and the holders of the Series C
Preferred Stock shall have no right or power whether authorized by the Act or
otherwise to vote on any matter or in any proceeding or to be represented at or
to receive notice of any meeting of the shareholders.
3. Redemption.
Neither the Corporation nor the Holders of the Series C Preferred Stock
shall have any rights of redemption as to the shares of Series C Preferred Stock
issued and outstanding.
4. Conversion of Series C Preferred Stock.
(a) Conversion Right of Holder. Each share of the Series C preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the due of initial issuance of such share of Series C Preferred Stock and
up until 3 years thereafter, into either fully-paid and non-assessable whole
shares of Common Stock upon the terms and conditions set forth in the following
paragraphs of this Section. Nothing contained herein shall required the Company
to issue upon receipt of a notice of conversion in excess of 20% of its issued
and outstanding Common Stock as provided in NASDAQ Marketplace Rule
4320(e)(21)(H) (the "NASD 20% Rule") unless and until the shareholder approval
has been obtained by the Company. In the event that the Company does not issue
its Common Stock after receipt of a conversion notice because of the 20% Rule,
then in such event, the Company shall pay to the holder 125% of the principal
amount of Preferred Stock issued and outstanding plus accrued interest within
five (5) business days of receipt of the faxed notice of conversion from the
holder.
<PAGE>
(b) Automatic Conversion. The holder's conversion right shall expire
three (3) years after the date of issuance. Upon three years from the date of
issuance, all shares of Series C Preferred Stock that remain outstanding will
automatically convert into shares of the Corporation's Common Stock. The
Conversion Rate to be utilized for the automatic conversion shall the rate
specified in Section 4(d) which yields the largest number of shares to the
holder.
(c) Exercise of Conversion Right. Any holder of the Series C Preferred
Stock electing to convert such stock into Common Stock pursuant to Section 4(a)
hereof shall deliver the certificates for the Series C Preferred Stock to the
Corporation's principal office or the office of the Corporations Transfer Agent,
with the form of written notice to the Corporation endorsed on such
certificate(s) of his election to convert such Series C Preferred Stock into
Common Stock duly filled out and executed. The conversion right in respect of
any such Series C Preferred Stock pursuant to Section 4(a) hereof shall be
deemed to have been exercised at the date on which the holder delivers such
notice of conversion duly filled out and executed to the Corporation or the
Corporation's transfer agent (the "Date of Election"). A facsimile notice of
conversion will be accepted by the Corporation as a valid notice of election, so
long as the holder then delivers the original certificates within three business
days thereafter. The person entitled to receive the Series A Preferred Stock or
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder of such security on such date; provided, however, that the
conversion right in respect of any notice received after the close of business
(11:59 PM EST) on any day shall not be deemed to have been exercised until the
succeeding business day. As soon as practicable, and in any event within three
(3) business days after the date of receipt of the original certificates of any
Series C Preferred Stock to be converted pursuant to Section 4(a) hereof, the
Corporation shall deliver to the person entitled thereto, certificate(s)
representing the shares of Series A Preferred Stock or Common Stock to which
such person shall be entitled on such conversion. The Corporation, as a
condition to the exercise of such rights of conversion, may require the payment
of a sum equal to any transfer tax or other governmental charge (but not
including any tax payable upon the issue of stock deliverable upon such
conversion) that may be imposed or required by law, upon any transfer incidental
or prior thereto, or the submission of proper proof that the same has been paid.
(d) Conversion Rate. The number of shares of Common Stock issuable
upon conversion of each share of Series C Preferred Stock shall be as follows:
(1) [LEFT INTENTIONALLY BLANK]
<PAGE>
(2) Conversion into Common Stock. Equal to $10,000, divided by
80% of the average closing bid price of the Common Stock during the five trading
day period immediately proceeding the Date of Election as defined in Section
4(a) hereof. In addition, the Corporation shall not be required, in connection
with my such conversion, to issue a fraction of a share of its Common Stock nor
to deliver any stock certificate representing a fraction thereof.
(3) Limitations on Conversion. Any holder of the Series C
Preferred Stock will be allowed to convert 50% of the aggregate amount of such
holders Series C Preferred Stock beginning the day after the registration
statement registering the Common Stock has been declared effective, but no
sooner than 60 days from the date the Series C Preferred Stock is issued. Any
holder of the Series C Preferred Stock will be allowed to convert any and all
remaining shares of holder's Series C Preferred Stock be within 120 days after
the issuance of the Series C Preferred Stock; provided, however, that if on the
120th day after the issuance of the Series C Preferred Stock the registration
statement has not yet been declared effective all holders must wait until the
registration statement is declared effective before converting any and all of
their Series C Preferred Stock.
(e) Adjustment of Conversion Rate. The number of shares of Common
Stock into which share of the Series C Preferred Stock is convertible shall be
subject to adjustment from time to time in certain instances, as follows:
(1) On Recapitalization. On any recapitalization of the
Corporation through the subdivision or combination of its outstanding Common
Stock into a greater or smaller number of shares, the number of shares of Common
Stock into which the shares of Series C Preferred Stock may be converted shall
be increased or reduced in the same proportion.
(2) On Capital Reorganization, Reclassification, Consolidation,
Merger or Sale of Corporate Assets. On my capital reorganization,
reclassification of the capital stock, consolidation, merger, or sale or
conveyance of all or substantially all of the assets of the Corporation to
another corporation, each share of Series C Preferred Stock shall be convertible
into the same kind and amounts of securities, including shares or other assets,
or both, into which the number of shares of capital stock of the Corporation
which would have been deliverable on conversion of such shares of Series C
Preferred stock immediately prior to such reorganization, reclassification,
consolidation, merger, sale or conveyance would have been entitled. Appropriate
adjustments, as determined by the Board of Directors of the Corporation, shall
be made in the application of the provisions herein set forth with respect to
the rights and interests thereafter of the holders of the Series C Preferred
Stock so that said provisions, including the provisions with respect to changes
in, and other adjustments of, the Conversion Rate, shall thereafter be
applicable, as nearly as reasonably may be, in relation to any securities or
other assets thereafter deliverable on conversion of the shares of Series C
Preferred Stock.
<PAGE>
(f) Statement of Adjusted Amount. Whenever the amount of shares of
Common Stock deliverable on the conversion of Series C Preferred Stock shall be
adjusted pursuant to the provisions hereof, the Corporation shall forthwith
maintain at its office and file with the transfer agent or agents, a statement
signed by the President or Vice President of the Corporation and by its Chief
Financial Officer, stating the adjusted amount of any securities deliverable for
each share of Series C Preferred Stock, calculated to the nearest one hundredth
(1/100) share, and setting forth in reasonable detail the method of calculation
and the facts requiring such adjustment and on which the calculation is based.
Each adjustment shall remain in effect until a subsequent adjustment hereunder
is required.
(g) Fractional Shares. Neither fractional shares nor scrip or other
certificates evidencing such shares shall be issued on conversion of the Series
C Preferred Stock as herein provided, but the Corporation shall, in lieu
thereof, round all such fractional shares to the nearest whole share.
(h) Payment of Taxes on Conversion of Series C Preferred Stock. The
Corporation shall pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of Common Stock on conversion of shares of
Series C Preferred Stock pursuant hereto. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of Common Stock in a name other than that in which the
shares of Series C Preferred Stock so converted were registered and no such
issue or delivery shall be made unless and until the person requesting it has
paid to the Corporation the amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(i) Reservation of Sufficient Common Stock. So long as any shares of
Series C Preferred Stock shall remain outstanding and the holders thereof shall
have the right to convert said shares in accordance with the provisions of this
Section 4, the Corporation will at all times reserve from the authorized and
unissued shares of its Common Stock a sufficient number of shares to provide for
such conversions, and will take such other corporation action as may be
necessary from time to time in order that it may validly and legally issue
fully-paid and non-assessable shares of such Common Stock upon conversion of the
Series C Preferred Stock.
(j) Definition of Common Stock. In each case where reference is made
to the Common Stock of the Corporation in this Section, unless a different
intention is expressed, such reference is to the series or class of Common Stock
of the Corporation as such series or class of stock exists at the date of the
adoption of these provisions, or stock into which the same may be changed from
time to time.
(k) Status of Converted Preferred Shares. All shares of Series C
Preferred Stock so converted shall be canceled and such shares shall be restored
to the status of authorized but unissued shares of Preferred Stock.
<PAGE>
5. Liquidation Rights.
(a) Liquidation Preference Amount. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the business or affairs of
the Corporation, and after payment of, or adequate provision for payment of, the
debt liabilities and other claims of the Corporation as determined by its Board
of Directors, each holder of the Series C Preferred Stock shall be entitled to
receive, out of the remaining net assets of the Corporation legally available
for distribution to its shareholders, before any payment or distribution shall
be made on the Common Stock, or on any other class of stock of the Corporation
ranking junior to the shares of Series C Preferred Stock upon liquidation, the
amount of Ten Thousand and No/100 Dollars ($10,000.00) per share of Series C
Preferred Stock, plus all accrued and unpaid dividends on each such share up to
the date fixed for distribution.
(b) Proportionate Distribution Where Assets Insufficient. In the event
the assets of the Corporation available for distribution to the holders of
shares of Series C Preferred Stock upon dissolution, liquidation or winding up
of the Corporation whether voluntary or involuntary, shall be insufficient to
pay in full all amounts to which such holders are entitled pursuant to paragraph
(a) of this Section, no such distribution shall be made on account of any shares
of any class of capital stock of the Corporation ranking on a parity with the
shares of Series C Preferred Stock upon such dissolution, liquidation or winding
up unless proportionate distributive amounts shall be paid on account of the
shares of Series C Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
(c) Nonparticipation Right. After the payment to the holders of the
shares of Series C Preferred Stock of the full preferential amounts provided for
in either paragraph (a) or (b) of this Section, as applicable, the holders of
Series C Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
(d) Excluded Transactions. Neither the consolidation nor merger of the
Corporation with or into any other corporation, nor the sale, mortgage, exchange
or conveyance of all or substantially all of the properties, assets or business
of the Corporation, nor any liquidation, dissolution or winding up of the
Corporation occurring substantially concurrently with any such transaction shall
be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning hereof, unless otherwise determined by the Board of Directors
of the Corporation.
6. No Preemptive Rights. No holder of shares of the Series C Preferred
Stock shall, as such holder, have any preemptive right to subscribe to or
purchase any shares of any class of capital stock of the Corporation now or
hereafter authorized or issued, whether or not exchangeable for any capital
stock of the Corporation of any class or classes now or hereafter authorized or
issued; nor shall any holder of shares of the Series C Preferred Stock, as such
holder, have any right to purchase, acquire or subscribe for any securities
which the Corporation may issue or sell whether or not convertible into or
exchangeable for shares of capital stock of the Corporation of any class or
classes, and whether or not any such securities have attached or appurtenant
thereto warrants, options or other instruments which entitle the holders thereof
to purchase, acquire or subscribe for shares of capital stock of any class or
classes of the Corporation.
<PAGE>
7. Determination of Market Value of Capital Stock of Corporation. The
determination of the per share market value of Common Stock as set forth in
previous Sections shall be determined using the previous five day average
closing bid price for the day or, where no sale is made on that day, the average
of the closing bid and asked prices for that day as reported by the NASDAQ Small
Cap - Issue System if the securities are at the time listed thereon or, if it is
not so listed, on any other national securities exchange selected by the
Corporation on which it is at the time listed. If the Common Stock is not at the
time listed an any national securities exchange, its market value for the
purposes hereof shall be the average closing bid price for the last three
trading days the Common Stock was listed on any national securities exchange.
8. Covenants of the Corporation. The Corporation will not, by amendment to
its Articles of Incorporation, as amended, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of the preferences and limitations of Series
C Preferred Stock to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
set forth herein relating to Series C Preferred Stock and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holders of the Series C Preferred Stock against dilution or other
impairment.
IN WITNESS WHEREOF, HARVEST RESTAURANT GROUP, INC. has caused this
Statement of Resolution Establishing Series of Shares to be signed by Steves
Rosser, its Vice-President and Secretary, this 8th day of July, 1999.
HARVEST RESTAURANT GROUP, INC.
By: /s/ Steves Rosser
STEVES ROSSER,
Vice-President and Secretary
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE:
NAME
----
The name of the corporation is CLUCKCORP INTERNATIONAL, INC.
ARTICLE TWO:
AMENDMENTS
----------
The following amendments to the Articles of incorporation were adopted by
the Shareholders of the Corporation on September 30, 1997, in order to change
the name of the Corporation and increase the number of authorized shares of
common stock of the Corporation.
Article One of the Amended Articles of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
ARTICLE ONE:
NAME
----
The name of the corporation is HARVEST RESTAURANT GROUP, INC. (the
"Corporation").
2.2 Article Four, Section 1, of the Amended Articles of incorporation of
the Corporation is hereby amended to read in its entirety as follows.
ARTICLE FOUR:
CAPITALIZATION, PREEMPTIVE RIGHTS AND VOTING
--------------------------------------------
Section 1. Authorized Shares. The Corporation shall have authority to issue
two classes of shares to be designated respectively, "Common Stock" and
"Preferred Stock." The total number of shares which the Corporation is
authorized to issue is Twenty-Five Million (25,000,000) shares of which Twenty
Million (20,000,000) shall be Common Stock and five million (5,000,000) shall be
Preferred Stock. Each share of Common Stock shall have par value of ONE CENT
($.01), and each share of Preferred Stock shall have a par value of ONE DOLLAR
($1.00).
The Preferred Stock authorized by these Articles of Incorporation may be
issued from time to time in one or more series, each of which shall have such
designation(s) or title(s) as may be fixed by the Board of Directors prior to
the issuance of any shares thereof. The Board of Directors is hereby authorized
to fix or alter the redemption, including sinking fund provisions, the
redemption price or prices, voting rights and liquidation preferences of any
wholly unissued series of Preferred Stock, and the number of shares constituting
any such series and the designation thereof, or any of them. The rights, powers,
preferences, limitations and restrictions, if any, accompanying such shares of
Preferred Stock shall be set forth by resolution of the Board of Directors
providing for the issue thereof prior to the issuance of any shares thereof, in
accordance with the applicable provisions of the Act. Each share of any series
of Preferred Stock shall be identical with all other shares of such series,
except as to the date from which dividends, if any, shall accrue.
<PAGE>
ARTICLE THREE:
OUTSTANDING SHARES
------------------
The number of shares of common stock of the Corporation outstanding at the
time of the adoption of the foregoing amendments to the Articles of
Incorporation of the Corporation was 2,369,030; and the number of shares of
common stock entitled to vote thereon was 2,369,030. The number of shares of
preferred stock of the Corporation outstanding at the time of the adoption of
the foregoing amendments to the Articles of Incorporation of the Corporation was
515,000: and the number of shares of preferred stock entitled to vote thereon
was 0.
ARTICLE FOUR:
ADOPTING AMENDMENTS
-------------------
4.1 The total number of shares of common stock voted for the amendment of
Article One of the Articles of Incorporation as set forth above was 1,430,483;
and the number of shares of common stock voted against such amendment was
11,300. The owners of 927,247 shares of common stock did not vote. The owners of
the preferred stock were not entitled to vote on said amendment of Article One
of the Articles of Incorporation.
4.2 The number of shares of common stock voted for the amendment of Article
Four of the Articles of Incorporation as set forth above was 1,305,458; and the
number of shares of common stock voted against such amendment was 113,825. The
owners of 949,747 shares of common stock did not vote. The owners of the
preferred stock were not entitled to vote on said amendment of Article Four of
the Articles of Incorporation.
Executed this 30th day of September, 1997.
CLUCKCORP INTERNATIONAL, INC.
By:/s/ William J. Gallagher
---------------------------
William J. Gallagher
Chief Executive Officer
<PAGE>
HARVEST RESTAURANT GROUP, INC.
ARTICLES/CERTIFICATE OF CORRECTION
This correction is submitted pursuant to Article 1302-7.01, Texas
Miscellaneous Corporation Laws Act for a corporation, to correct a document
which is an inaccurate record of the entity action, contains an inaccurate or
erroneous statement, or was defectively or erroneously executed, sealed,
acknowledged or verified.
ARTICLE ONE
The name of the entity is HARVEST RESTAURANT GROUP, INC., fka CLUCKCORP
INTERNATIONAL, INC.
ARTICLE TWO
The document to be corrected is the Articles of Amendment to the Articles
of Incorporation which were filed in the Office of the Secretary of State on the
1st day of October, 1997.
ARTICLE THREE
The inaccuracy, error, or defect to be corrected is:
"4.1 The total number of shares of common stock voted for the amendment of
Article One of the Articles of Incorporation as set forth above was 1,430,483;
and the number of shares of common stock voted against such amendment was
11,300. The owners of 927,247 shares of common stock did not vote. The owners of
the preferred stock were not entitled to vote on said amendment of Article One
of the Articles of Incorporation.
4.2 The number of shares of common stock voted for the amendment of Article
Four of the Articles of Incorporation as set forth above was 1,305,458; and the
number of shares of common stock voted against such amendment was 113,825. The
owners of 949,747 shares of common stock did not vote. The owners of the
preferred stock were not entitled to vote on said amendment of Article Four of
the Articles of Incorporation."
ARTICLE FOUR
As corrected, the inaccurate, erroneous, or defective portion of the
document reads as follows:
"4.1 The total number of shares of common stock voted for the amendment of
Article One of the Articles of Incorporation as set forth above was 1,745,930;
the number of shares of common stock voted against such amendment was 11,300;
and 3,800 shares of common stock voted to abstain. The owners of 608,000 shares
of common stock did not vote. The owners of the preferred stock were not
entitled to vote on said amendment of Article One of the Articles of
Incorporation.
4.2 The number of shares of common stock voted for the amendment of Article
Four of the Articles of Incorporation as set forth above was 1,620,405; the
number of shares of common stock voted against such amendment was 113,825; and
26,800 shares of common stock voted to abstain. The owners of 608,000 shares of
common stock did not vote. The owners of the preferred stock were not entitled
to vote on said amendment of Article Four of the Articles of Incorporation."
By:/s/ William J. Gallagher
---------------------------
William J. Gallagher
Chief Executive Officer
<PAGE>
HARVEST RESTAURANT GROUP, INC.
(a Texas corporation)
---------------------
STATEMENT OF RESOLUTION
ESTABLISHING SERIES OF PREFERRED STOCK
--------------------------------------
Series D Convertible Preferred Stock
To: The Secretary of State
Of the State of Texas
Pursuant to the previous of Article 2.13 of the Texas Business Corporation
Act (the "Act"), the undersigned corporation, HARVEST RESTAURANT GROUP, INC.,
formerly CluckCorp International, Inc. (the "Corporation"), hereby submits the
following statement of the purpose of establishing and designating a series of
shares of preferred stock to be known as Series D Convertible Preferred Stock
and fixing and determining the relative rights and preferences thereof:
ARTICLE ONE
NAME
----
1. The name of the corporation is HARVEST RESTAURANT GROUP, INC. and the
charter number of the Corporation is 01274398.
ARTICLE TWO
CORPORATE RESOLUTIONS
---------------------
1. Be it known that on May 19, 1997, the Corporation had established and
designated 3,000,000 shares of its preferred stock as Series A Redeemable
Convertible Preferred Stock ("Series A Preferred Stock"); on December 15, 1997,
the Corporation had established and designated 1000 shares of its preferred
stock as Series B Convertible Preferred Stock ("Series B Preferred Stock"); and
on July 2, 1998, the Corporation had established and designated 1000 shares of
its preferred stock as Series C Convertible Preferred Stock ("Series C Preferred
Stock").
2. The following resolution establishing and designating an additional
series of preferred stock, known as: the Series D Convertible Preferred Stock
(the "Series D Preferred Stock"), and fixing and determining the relative rights
and preferences thereof was duly adopted by the Board of Directors of the
Corporation on December 22, 1998. This resolution supercedes the Statement of
Resolution Establishing Series of Preferred Stock, known as Series D Convertible
Preferred Stock, that was filed with the Secretary of State of Texas on January
14, 1999. The Series D Preferred Stock has been created as part of a
recapitalization of the Corporation and the Series D Preferred Stock will be
issued for cash and in exchange for all outstanding shares of Series B Preferred
Stock and all outstanding shares of Series C Preferred Stock. The Series D
Preferred Stock shall rank junior to the Series A Preferred Stock.
<PAGE>
BE IT RESOLVED that, pursuant to the authority expressly granted and vested in
the Board of Directors of the Corporation in accordance with Article Four,
Section 1 of the Corporation's Articles of Incorporation, authorizing 5,000,000
shares of Preferred Stock (the "Preferred Stock"), $1.00 par value per share,
approved and adopted on June 17, 1993 by the affirmative vote of the holders of
more than the requisite majority of the issued and outstanding shares of Common
Stock of the Corporation entitled to vote thereon (being the only voting capital
stock of the Corporation then outstanding) in accordance with and pursuant to
the provisions of Article 2.13 of the Texas Business Corporation Act (the
"Act"), the Board of Directors of the Corporation does hereby approve and adopt
the following resolutions designating and authorizing for issuance, in
accordance with the provisions of Article 2.13 of the Act, Nine Thousand Two
Hundred (9,200) shares of the Series D Preferred Stock of the Corporation, each
having a par value of $1.00 per share, said resolutions hereby effected being
made prior to the issuance of any shares of Series D Preferred Stock, such
shares of Series D Preferred Stock to be exchanged for the outstanding shares of
Series B Preferred Stock and the shares of Series C Preferred Stock, and
purchased for cash in the amount subscribed to, and each of which shares of
Series D Preferred Stock shall have the dividend rights, voting powers,
redemption provisions, liquidation preferences and the relative, optional and
other special rights, and shall be subject to the qualifications, limitations or
restrictions set forth below; and the remaining authorized shares of the
Preferred Stock shall remain undesignated and reserved for future issuance
subject to the future action of the Board of Directors of the Corporation.
ARTICLE THREE
RIGHTS AND PREFERENCES OF SERIES D PREFERRED STOCK
--------------------------------------------------
1. Dividends.
(a) Amount and Payment of Dividend. Subject to the limitations
hereinafter set forth, the holders of Series D Preferred Stock shall be entitled
to receive dividends at the rate of seven percent (7%) per annum of the original
issue price thereof of One Thousand and No/100 Dollars ($1,000.00) per share,
and no more, payable only at the time such shares are converted pursuant to
Section 4 hereof. Such dividends may be paid in cash or in shares of Common
Stock of the Corporation as determined by the holders of the Series D Preferred
Stock in their sole discretion; provided, however, no fractional shares of
either security may be issued for dividends, any fractional shares will be
rounded to the nearest whole share, and provided further that if any such
dividend is paid in whole or in part by shares of Common Stock, the number of
shares of such security to be issued as a stock dividend shall be determined by
the Market Value (as defined in Section 7 below) of a share of Common Stock as
of the last day of the period for such stock dividend. Any shares of Series D
Preferred Stock issued after the date hereof shall accrued dividends from the
date of issuance.
(b) Cumulative Rights. To the extent, if any, that dividends at the
rate set forth in Section 1(a) above shall not be paid or set apart in full for
the Series D Preferred Stock, the aggregate deficiency shall be cumulated and
must be fully paid or set apart for payment before any dividends may be paid
upon or set apart for the Common Stock of the Corporation or before the
Corporation may purchase any of its Common Stock or otherwise make any
distribution on account of its Common Stock or any other class of capital stock
now or hereafter authorized or issued by the Corporation which ranks on a parity
with or junior to the Series D Preferred Stock (other than (i) a dividend
payable in Common Stock, (ii) by conversion into or exchange for capital stock
of the Corporation ranking junior to the Series D Preferred Stock as to
dividends, or (iii) a dividend payable in compliance with Section 1(d) below).
<PAGE>
(c) No Interest on Accrued Dividends. Any accumulations of dividends
on the Series D Preferred Stock shall not bear interest.
(d) Declaration. Dividends on the Series D Preferred Stock shall be
declared if, when and as the Board of Directors of the Corporation shall in its
sole discretion deem advisable, and only from the surplus of the Corporation as
such shall be fixed and determined by the said Board of Directors. The
determination of the Board of Directors at any time of the amount of surplus
available for the payment of dividends shall be binding and conclusive on the
holders of the shares of Series D Preferred Stock then outstanding. If dividends
are not paid in full upon the Series D Preferred Stock and any other Preferred
Stock ranking on a parity as to dividends with the Series D Preferred Stock, all
dividends declared upon shares of Series D Preferred Stock and upon such other
shares of Preferred Stock will be declared pro rata so that in all cases the
amount of dividends declared per share on the Series D Preferred Stock and such
other Preferred Stock shall bear the same ratio to each other that that
accumulated dividends per share on the shares of the Series D Preferred Stock
and such other shares of Preferred Stock bear to each other. The holders of the
Series D Preferred Stock shall not be entitled to receive any dividends thereon
other than the dividends provided for in the preceding provisions of this
Section.
2. Voting Rights and Notice of Meetings. The holders of the Common Stock
shall have the exclusive right and power to vote on any matter submitted to a
vote of the shareholders of the Corporation, and the holders of the Series D
Preferred Stock shall have no right or power whether authorized by the Act or
otherwise to vote on any matter or in any proceeding or to be represented at or
to receive notice of any meeting of the shareholders.
3. Redemption.
Neither the Corporation nor the Holders of the Series D Preferred
Stock shall have any rights of redemption as to the shares of Series D Preferred
Stock issued and outstanding.
4. Conversion of Series D Preferred Stock.
(a) Conversion Right of Holder. Each share of the Series D Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of initial issuance of such share of Series D Preferred Stock
(subject to Section 4(d)(3) below) and up until three years thereafter, into
fully-paid and non-assessable whole shares of Common Stock upon the terms and
conditions set forth in the following paragraphs of this Section. Nothing
contained herein shall required the Company to issue upon receipt of a notice of
conversion in excess of 20% of its issued and outstanding Common Stock as
provided in NASDAQ Marketplace Rule 4320(e)(21)(H) (the "NASD 20% Rule") unless
and until the shareholder approval has been obtained by the Company. In the
event that the Company does not issue its Common Stock after receipt of a
conversion notice because of the 20% Rule, then in such event, the Company shall
pay to the holder 125% of the principal amount of Preferred Stock for which a
notice of conversion was given and which was not converted for such reason, plus
accrued interest within five (5) business days of receipt of the faxed notice of
conversion from such holder.
<PAGE>
(b) Automatic Conversion. The holder's conversion right shall expire
three (3) years after the date of issuance. Upon three years from the date of
issuance, all shares of Series D Preferred Stock that remain outstanding will
automatically convert into shares of the Corporation's Common Stock. The
Conversion Rate to be utilized for the automatic conversion shall the rate
specified in Section 4(d) which yields the largest number of shares to the
holder.
(c) Exercise of Conversion Right. Any holder of the Series D Preferred
Stock electing to convert such stock into Common Stock pursuant to Section 4(a)
hereof shall deliver the certificates for the Series D Preferred Stock to the
Corporation's principal office or the office of the Corporation's Transfer
Agent, with the form of written notice to the Corporation endorsed on such
certificate(s) of his election to convert such Series D Preferred Stock into
Common Stock duly filled out and executed. The conversion right in respect of
any such Series D Preferred Stock pursuant to Section 4(a) hereof shall be
deemed to have been exercised at the date on which the holder delivers such
notice of conversion duly filled out and executed to the Corporation or the
Corporation's transfer agent (the "Date of Election"). A facsimile notice of
conversion will be accepted by the Corporation as a valid notice of election, so
long as the holder then delivers the original certificates within three business
days thereafter. The person entitled to receive the Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder of such
security on such date; provided, however, that the conversion right in respect
of any notice receive after the close of business (11:59 PM EST) on any day
shall not be deemed to have been exercised until the next succeeding business
day. As soon as practicable, and in any event within three (3) business days
(five business days if the Common Stock is then being quoted on the OTC Bulletin
Board) after the date of receipt of the original certificates of any Series D
Preferred Stock to be converted pursuant to Section 4(a) hereof, the Corporation
shall deliver to the person entitled thereto, certificate(s) representing the
shares of Common Stock to which such person shall be entitled on such
conversion. The Corporation, as a condition to the exercise of such rights of
conversion, may require the payment of a sum equal to any transfer tax or other
governmental charge (but not including any tax payable upon the issue of stock
deliverable upon such conversion) that may be imposed or required by law, upon
any transfer incidental or prior thereto, or the submission of proper proof that
the same has been paid.
(d) Conversion Rate. The number of shares of Common Stock issuable
upon conversion of each share of Series D Preferred Stock shall be as follows:
(1) [LEFT INTENTIONALLY BLANK]
(2) Conversion into Common Stock. Equal to $1,000, divided by 80%
of the Market Value (as defined in Section 7 below) as of the Date of Elections
defined in Section 4(a) hereof. In addition, the Corporation shall not be
required, in connection with any such conversion, to issue a fraction of a share
of its Common Stock nor to deliver any stock certificate representing a fraction
thereof.
(3) Limitations on Conversion. Any holder of the Series D
Preferred Stock will be allowed to convert the aggregate amount of such holder's
Series D Preferred Stock beginning the day after the registration statement
registering the Common Stock has been declared effective by the Securities and
Exchange Commission, but no sooner than 120 days after the Corporation's
shareholders approve an amendment to the Corporation's Articles of Incorporation
increasing the number of authorized shares of Common Stock to not less than
100,000,000 (the "Shareholders Meeting"). If on the 120th day after the
Shareholders Meeting the registration statement has not yet been declared
effective, all holders must wait until the registration statement is declared
effective before converting any and all of their Series D Preferred Stock.
<PAGE>
(e) Adjustment of Conversion Rate. The number of shares of Common
Stock into which each share of the Series D Preferred Stock is convertible shall
be subject to adjustment from time to time in certain instances, as follows:
(1) On Recapitalization. On any recapitalization of the
Corporation through the subdivision or combination of its outstanding Common
Stock into a greater or smaller number of shares, the number of shares of Common
Stock into which the shares of Series D Preferred Stock may be converted shall
be increased or reduced in the same proportion.
(2) On Capital Reorganization, Reclassification, Consolidation,
Merger or Sale of Corporate Assets. On any capital reorganization,
reclassification of the capital stock, consolidation, merger, or sale or
conveyance of all or substantially all of the assets of the Corporation to
another corporation, each share of Series D Preferred Stock shall be convertible
into the same kind and amounts of securities, including shares or other assets,
or both, that the holder of such share would have received had he converted such
share of Series D Preferred Stock into Common Stock immediately prior to such
reorganization, reclassification, consolidation, merger, sale or conveyance.
Appropriate adjustments, as determined by the Board of Directors of the
Corporation, shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the holders of the Series
D Preferred Stock so that said provisions, including the provisions with respect
to changes in, and other adjustments of, the Conversion Rate, shall thereafter
be applicable, as nearly as reasonably may be, in relation to any securities or
other assets thereafter deliverable on conversion of the shares of Series D
Preferred Stock.
(f) Statement of Adjusted Amount. Whenever the amount of shares of
Common Stock deliverable on the conversion of Series D Preferred Stock shall be
adjusted pursuant to the provisions hereof, the Corporation shall forthwith
maintain at its office and file with the transfer agent or agents, a statement
signed by the President or Vice President of the Corporation and by its Chief
Financial Officer, stating the adjusted amount of any securities deliverable for
each share of Series D Preferred Stock, calculated to the nearest one hundredth
(1/100) share, and setting forth in reasonable detail the method of calculation
and the facts requiring such adjustment and on which the calculation is based.
Each adjustment shall remain in effect until a subsequent adjustment hereunder
is required.
(g) Fractional Shares. Neither fractional shares nor scrip or other
certificates evidencing such shares shall be issued on conversion of the Series
D Preferred Stock as herein provided, but the Corporation shall, in lieu
thereof, round all such fractional shares to the nearest whole share.
(h) Payment of Taxes on Conversion of Series D Preferred Stock. The
Corporation shall pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of Common Stock on conversion of shares of
Series D Preferred Stock pursuant hereto. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of Common Stock in a name other than that in which the
shares of Series D Preferred Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting it has
paid to the Corporation the amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
<PAGE>
(i) Reservation of Sufficient Common Stock. So long as any shares of
Series D Preferred Stock shall remain outstanding and the holders thereof shall
have the right to convert said shares in accordance with the provisions of this
Section 4, the Corporation will at all times after the Shareholders Meeting
reserve from the authorized and unissued shares of its Common Stock a sufficient
number of shares to provide for such conversions, and will take such other
corporation action as may be necessary from time to time in order that it may
validly and legally issue fully-paid and non-assessable shares of such Common
Stock upon conversion of the Series D Preferred Stock.
(j) Definition of Common Stock. In each case where reference is made
to the Common Stock of the Corporation in this Section, unless a different
intention is expressed, such reference is to the series or class of Common Stock
of the Corporation as such series or class of stock exists at the date of the
adoption of these provisions, or stock into which the same may be changed from
time to time.
(k) Status of Converted Preferred Shares. All shares of Series D
Preferred Stock so converted shall be canceled and such shares shall be restored
to the status of authorized but unissued shares of Preferred Stock.
5. Liquidation Rights.
(a) Liquidation Preference Amount. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the business or affairs of
the Corporation, and after payment of, or adequate provision for payment of, the
debts, liabilities and other claims of the Corporation as determined by its
Board of Directors, each holder of the Series D Preferred Stock shall be
entitled to receive, out of the remaining net assets of the Corporation legally
available for distribution to its shareholders, before any payment or
distribution shall be made on the Common Stock, or on any other class of stock
of the Corporation ranking junior to the shares of Series D Preferred Stock upon
liquidation, the amount of One Thousand and No/100 Dollars ($1,000.00) per share
of Series D Preferred Stock, plus all accrued and unpaid dividends on each such
share up to the date fixed for distribution.
(b) Proportionate Distribution Where Assets Insufficient. In the event
the assets of the Corporation available for distribution to the holders of
shares of Series D Preferred Stock upon dissolution, liquidation or winding up
of the Corporation, whether voluntary or involuntary, shall be insufficient to
pay in full all amounts to which such holders are entitled pursuant to paragraph
(a) of this Section, no such distribution shall be made on account of any shares
of any class of capital stock of the Corporation ranking on a parity with the
shares of Series D Preferred Stock upon such dissolution, liquidation or winding
up unless proportionate distributive amounts shall be paid on account of the
shares of Series D Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
(c) Nonparticipation Right. After the payment to the holders of the
shares of Series D Preferred Stock of the full preferential amounts provided for
in either paragraph (a) or (b) of this Section, as applicable, the holders of
Series D Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
<PAGE>
(d) Excluded Transactions. Neither the consolidation nor merger of the
Corporation with or into any other corporation, nor the sale, mortgage, exchange
or conveyance of all or substantially all of the properties, assets or business
of the Corporation, nor any liquidation, dissolution or winding up of the
Corporation occurring substantially concurrently with any such transaction shall
be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning hereof, unless otherwise determined by the Board of Directors
of the Corporation.
6. No Preemptive Rights. No holder of shares of the Series D Preferred
Stock shall, as such holder, have any preemptive right to subscribe to or
purchase any shares of any class of capital stock of the Corporation nor or
hereafter authorized or issued, whether or not exchangeable for any capital
stock of the Corporation of any class or classes now or hereafter authorized or
issued; nor shall any holder of shares of the Series D Preferred Stock, as such
holder, have any right to purchase, acquire or subscribe for any securities
which the Corporation may issue or sell whether or not convertible into or
exchangeable for shares of capital stock of the Corporation of any class or
classes, and whether or not any such securities have attached or appurtenant
thereto warrants, options or other instruments which entitle the holders thereof
to purchase, acquire or subscribe for shares of capital stock of any class or
classes of the Corporation.
7. Determination of Market Value of Capital Stock of Corporation. The
determination of the per share "Market Value" of Common Stock as set forth in
previous Sections shall be determined using the previous five day average
closing bid price for the day or, where no sale is made on that day, the average
of the closing bid and asked prices for that day on the NASDAQ Stock Market or
the OTC Bulletin Board if the securities are at the time listed or quoted
thereon, respectively, or, if it is not so listed or quoted, on any other
national securities exchange selected by the Corporation on which it is at the
time listed. If at the applicable time the Common Stock is quoted on the OTC
Bulletin Board, the foregoing calculations shall be based on a Trade and Quote
Summary Report from the OTC Bulletin Board Research Service if available, and if
not, on any other publicly available data reasonably deemed reliable by the
Corporation.
8. Covenants of the Corporation. The Corporation will not, by amendment to
its Articles of Incorporation, as amended, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of the preferences and limitations of Series
D Preferred Stock to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
set forth herein relating to Series D Preferred Stock and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holders of the Series D Preferred Stock against dilution or other
impairment.
IN WITNESS WHEREOF, HARVEST RESTAURANT GROUP, INC. has caused this
Statement of Resolution Establishing Series of Shares to be signed by Timothy R.
Robinson, its Chief Financial Officer, this 11th day of February, 1999.
HARVEST RESTAURANT GROUP, INC.
By: /s/ Timothy R. Robinson
Name: Timothy R. Robinson
Title: Vice President, Chief Financial
Officer
<PAGE>
HARVEST RESTAURANT GROUP, INC.
(a Texas corporation)
---------------------
STATEMENT OF RESOLUTION
ESTABLISHING SERIES OF PREFERRED STOCK
--------------------------------------
Series E Convertible Preferred Stock
To: The Secretary of State
of the State of Texas
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act (the "Act"), the undersigned corporation, HARVEST RESTAURANT
GROUP, INC., (the "Corporation"), hereby submits the following statement for the
purpose of establishing and designating a series of shares of preferred stock to
be known as Series E Convertible Preferred Stock and fixing and determining the
relative rights and preferences thereof:
ARTICLE ONE
NAME
----
1. The name of the Corporation is HARVEST RESTAURANT GROUP, INC., and the
charter number of the Corporation is 01274398.
ARTICLE TWO
CORPORATE RESOLUTIONS
---------------------
1. Be it known that on May 19, 1997 the Corporation had established and
designated 3,000,000 shares of its preferred stock as Series A Redeemable
Convertible Preferred Stock ("Series A Preferred Stock") and on December 22,
1997 the Corporation had established and designated 1,000 shares of its
preferred stock as Series B Convertible Preferred Stock ("Series B Preferred
Stock"), on July 2, 1998 the Corporation had established and designated 1,000
shares of its preferred stock as Series C Convertible Preferred Stock ("Series C
Preferred Stock"), and on December 22, 1998, the Corporation had established and
designated 8,600 shares of its preferred stock as Series D Convertible Preferred
Stock ("Series D Preferred Stock") for which all outstanding shares of Series B
Preferred Stock and Series C Preferred Stock were exchanged.
2. The following resolution establishing and designating an additional
series of preferred stock, known as: the Series E Convertible Preferred Stock
(the "Series E Preferred Stock"), and fixing and determining the relative rights
and preferences thereof was duly adopted by the Board of Directors of the
Corporation on December 22, 1998. The Series E Preferred Stock shall rank junior
to the Series A Preferred Stock and the Series D Preferred Stock.
<PAGE>
BE IT RESOLVED that, pursuant to the authority expressly granted and vested
in the Board of Directors of the Corporation in accordance with Article Four,
Section 1 of the Corporation's Articles of Incorporation, authorizing 5,000,000
shares of Preferred Stock (the "Preferred Stock"), $1.00 par value per share,
approved and adopted on June 17, 1993 by the affirmative vote of the holders of
more than the requisite majority of the issued and outstanding shares of Common
Stock of the Corporation entitled to vote thereon (being the only voting capital
stock of the Corporation then outstanding) in accordance with and pursuant to
the provisions of Article 2.13 of the Texas Business Corporation Act (the
"Act"), the Board of Directors of the Corporation does hereby approve and adopt
the following resolutions designating and authorizing for issuance, in
accordance with the provisions of Article 2.13 of the Act, 745,000 shares of the
Series E Preferred Stock of the Corporation, each having a par value of $1.00
per share, said resolutions hereby effected being made prior to the issuance of
any shares of Series E Preferred Stock, and each of which shares of Series E
Preferred Stock shall have the dividend rights, voting powers, redemption
provisions, liquidation preferences and the relative, optional or other special
rights, and shall be subject to the qualifications, limitations or restrictions
set forth below and the remaining authorized shares of the Preferred Stock shall
remain undesignated and reserved for future issuance subject to the future
action of the Board of Directors of the Corporation.
Rights and Preferences of Series E Preferred Stock
--------------------------------------------------
1. Dividends.
(a) Amount and Payment of Dividend. Subject to the limitations hereinafter
set forth, the holders of Series E Preferred Stock shall be entitled to receive
dividends at the rate of eight percent (8%) per annum of the original issue
price thereof of Ten and No/100 Dollars ($10.00) per share, and no more, payable
only at the time such shares are converted pursuant to Section 4 hereof. Such
dividends may be paid in cash or in shares of Common Stock of the Corporation as
determined by the Board of Directors of the Corporation in its sole discretion;
provided, however, no fractional shares may be issued for dividends, any
fractional shares will be rounded to the nearest whole share, and provided
further that if any such dividend is paid in whole or in part by shares of
Common Stock, the number of shares of such security to be issued as a stock
dividend shall be determined by the Market Value (as defined in Section 7 below)
of a share of Common Stock on the last day of the period for such stock
dividend. Any shares of Series E Preferred Stock issued after the date hereof
shall accrue dividends from the date of issuance.
(b) Cumulative Rights. To the extent, if any, that dividends at the rate
set forth in Section 1(a) above shall not be paid or set apart in full for the
Series E Preferred Stock, the aggregate deficiency shall be cumulated and must
be fully paid or set apart for payment before any dividends may be paid upon or
set apart for the Common Stock of the Corporation or before the Corporation may
purchase any of its Common Stock or otherwise make any distribution on account
of its Common Stock or any other class of capital stock now or hereafter
authorized or issued by the Corporation which ranks on a parity with or junior
to the Series E Preferred Stock (other than (i) a dividend payable in Common
Stock, (ii) by conversion into or exchange for capital stock of the Corporation
ranking junior to the Series E Preferred Stock as to dividends, or (iii) a
dividend payable in compliance with Section 1(d) below).
<PAGE>
(c) No Interest on Accrued Dividends. Any accumulations of dividends on the
Series E Preferred Stock shall not bear interest.
(d) Declaration. Dividends on the Series E Preferred Stock shall be
declared if, when and as the Board of Directors of the Corporation shall in its
sole discretion deem advisable, and only from the surplus of the Corporation as
such shall be fixed and determined by the said Board of Directors. The
determination of the Board of Directors at any time of the amount of surplus
available for the payment of dividends shall be binding and conclusive on the
holders of the shares of Series E Preferred Stock then outstanding. If dividends
are not paid in full upon the Series E Preferred Stock and any other Preferred
Stock ranking on a parity as to dividends with the Series E Preferred Stock, all
dividends declared upon shares of Series E Preferred Stock and upon such other
shares of Preferred Stock will be declared pro rata so that in all cases the
amount of dividends declared per share on the Series E Preferred Stock and such
other Preferred Stock shall bear the same ratio to each other that the
accumulated dividends per share on the shares of the Series E Preferred Stock
and such other shares of Preferred Stock bear to each other. The holders of the
Series E Preferred Stock shall not be entitled to receive any dividends thereon
other than the dividends provided for in the preceding provisions of this
Section.
2. Voting Rights and Notice of Meetings. The holders of the Common Stock shall
have the exclusive right and power to vote on any matter submitted to a vote of
the shareholders of the Corporation and the holders of the Series E Preferred
Stock shall have no right or power whether authorized by the Act or otherwise to
vote on any matter or in any proceeding or to be represented at or to receive
notice of any meeting of the shareholders.
3. Redemption by Corporation.
The Corporation shall have the right to redeem the shares of Series E
Preferred Stock at any time after six months from the date of issuance for $.01
per share, if the Market Value of the Common Stock exceeds $3.50 per share as of
the date of redemption. Notice of redemption must be mailed at least 30 days in
advance to each holder of record of the Series E Preferred Stock to the holder's
address as shown on the stock transfer books of the Corporation. On the
redemption date, the shares of Series E Preferred Stock will automatically
convert to into Common Stock at the conversion rate as set forth in Section 4
below. Upon conversion all rights of the holders of such Series E Preferred
Stock will terminate.
4. Conversion of Series E Preferred Stock
(a) Conversion Right of Holder. Each share of the Series E Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after six
months from the date of issuance of such share of Series E Preferred Stock into
fully paid and nonassessable whole shares of Common Stock upon the terms and
conditions set forth in the following paragraphs of this Section.
(b) Exercise of Conversion Right. Any holder of the Series E Preferred
Stock electing to convert such stock into Common Stock pursuant to Section 4(a)
hereof shall deliver the certificates for the Series E Preferred Stock to the
Corporation's principal office or the office of the Corporation Transfer Agent,
with the form of written notice to the Corporation endorsed on such
certificate(s) of his election to convert such Series E Preferred Stock into
Common Stock duly filled out and executed. The conversion right in respect of
any such Series E Preferred Stock pursuant to Section 4(a) hereof shall be
deemed to have been exercised at the date on which the holder delivers such
notice of conversion duly filled out and executed to the Corporation or the
Corporation's transfer agent to the Corporation (the "Date of Election"). A
facsimile notice of conversion will be accepted by the Corporation as a valid
<PAGE>
notice of election, so long as the holder then delivers the original
certificates within three business days thereafter. The person entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder of such security on such date; provided, however,
that the conversion right in respect of any notice receive after the close of
business (11:59 PM EST) on any day shall not be deemed to have been exercised
until the next succeeding business day. As soon as practicable, and in any event
within three (3) business days (five business days if the Common Stock is then
being quoted on the OTC Bulletin Board) after the date of receipt of the
original certificates of any Series E Preferred Stock to be converted pursuant
to Section 4(a) hereof, the Corporation shall deliver to the person entitled
thereto, certificate(s) representing the shares of Common Stock to which such
person shall be entitled on such conversion. The Corporation, as a condition to
the exercise of such rights of conversion, may require the payment of a sum
equal to any transfer tax or other governmental charge (but not including any
tax payable upon the issue of stock deliverable upon such conversion) that may
be imposed or required by law, upon any transfer incidental or prior thereto, or
the submission of proper proof that the same has been paid.
(c) Conversion Rate. The number of shares of Common Stock issuable upon
conversion of each share of Series E Preferred Stock shall be equal to $10.00,
divided by $2.50; provided, however, the Corporation shall not be required, in
connection with any such conversion, to issue a fraction of a share of its
Common nor to deliver any stock certificate representing a fraction thereof.
(d) Adjustment of Conversion Rate. The number of shares of Common Stock
into which share of the Series E Preferred Stock is convertible shall be subject
to adjustment from time to time in certain instances, as follows:
(1) Recapitalization. On any recapitalization of the Corporation
through the split, reverse split, subdivision or combination of its
outstanding Common Stock into a greater or smaller number of shares, the
number of shares of Common Stock into which the shares of Series E
Preferred Stock may be converted shall be increased or reduced in the same
proportion by an adjustment to the conversion rate.
(2) On Capital Reorganization, Reclassification, Consolidation, Merger
or Sale of Corporate Assets. On any capital reorganization,
reclassification of the capital stock, consolidation, merger, or sale or
conveyance of all or substantially all of the assets of the Corporation to
another corporation, each share of Series E Preferred Stock shall be
convertible into the same kind and amounts of securities, including share
or other assets, or both, that the holder of such share would have received
had he converted such share of Series E Preferred Stock into Common Stock
immediately prior to such reorganization, reclassification, consolidation,
merger, sale or conveyance. Appropriate adjustments, as determined by the
Board of Directors of the Corporation, shall be made in the application of
the provisions herein set forth with respect to the rights and interests
thereafter of the holders of the Series E Preferred Stock so that said
provisions, including the provisions with respect to changes in, and other
adjustments of, the Conversion Rate, shall thereafter be applicable, as
nearly as reasonably may be, in relation to any securities or other assets
thereafter deliverable on conversion of the shares of Series E Preferred
Stock.
(e) Statement of Adjusted Amount. Whenever the amount of shares of Common
Stock deliverable on the conversion of Series E Preferred Stock shall be
adjusted pursuant to the provisions hereof, the Corporation shall forthwith
<PAGE>
maintain at its office and file with the transfer agent or agents, a statement
signed by the President or Vice President of the Corporation and by its Chief
Financial Officer, stating the adjusted amount of any securities deliverable for
each share of Series E Preferred Stock, calculated to the nearest one hundredth
(1/100th) share, and setting forth in reasonable detail the method of
calculation and the facts requiring such adjustment and on which the calculation
is based. Each adjustment shall remain in effect until a subsequent adjustment
hereunder is required.
(f) Fractional Shares. Neither fractional shares nor scrip or other
certificates evidencing such shares shall be issued on conversion of the Series
E Preferred Stock as herein provided, but the Corporation shall, in lieu
thereof, round all such fractional shares to the nearest whole share.
(g) Payment of Taxes on Conversion of Series E Preferred Stock. The
Corporation shall pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of Common Stock on conversion of shares of
Series E Preferred Stock pursuant hereto. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of Common Stock in a name other than that in which the
shares of Series E Preferred Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting it has
paid to the Corporation the amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(h) Reservation of Sufficient Common Stock. So long as any shares of Series
E Preferred Stock shall remain outstanding and the holders thereof have the
right to convert said shares in accordance with the provisions of this Section
4, the Corporation will at all times reserve from the authorized and unissued
shares of its Common Stock a sufficient number of shares to provide for such
conversions, and will take such other corporation action as may be necessary
from time to time in order that it may validly and legally issue fully-paid and
non-assessable shares of such Common Stock upon conversion of the Series E
Preferred Stock.
(i) Definition of Common Stock. In each case where reference is made to the
Common Stock of the Corporation in this Section, unless a different intention is
expressed, such reference is to the series or class of Common Stock of the
Corporation as such series or class of stock exists at the date of the adoption
of these provisions, or stock into which the same may be changed from time to
time.
(j) Status of Converted Preferred Shares. All shares of Series E Preferred
Stock so converted shall be canceled and such shares shall be restored to the
status of authorized but unissued shares of Preferred Stock.
5. Liquidation Rights.
(a) Liquidation Preference Amount. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the business or affairs of
the Corporation, and after payment of, or adequate provision for payment of, the
debts, liabilities and other claims of the Corporation as determined by its
Board of Directors, each holder of the Series E Preferred Stock shall be
entitled to receive, out of the remaining net assets of the Corporation legally
available for distribution to its shareholders, before any payment or
distribution shall be made on the Common Stock, or on any other class of stock
of the Corporation ranking junior to the shares of Series E Preferred Stock upon
liquidation, the amount of Ten Dollars ($10.00) per share of Series E Preferred
Stock, plus all accrued and unpaid dividends on each such share up to the date
fixed for distribution.
<PAGE>
(b) Proportionate Distribution Where Assets Insufficient. In the event the
assets of the Corporation available for distribution to the holders of shares of
Series E Preferred Stock upon dissolution, liquidation or winding up of the
Corporation whether voluntary or involuntary, shall be insufficient to pay in
full all amounts to which such holders are entitled pursuant to paragraph (a) of
this Section, no such distribution shall be made on account of any shares of any
class of capital stock of the Corporation ranking on a parity with the shares of
Series E Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
Series E Preferred Stock, ratably, in proportion to the full distributable
amounts for which holders of all such parity shares are respectively entitled
upon such dissolution, liquidation or winding up.
(c) Nonparticipation Right. After the payment to the holders of the shares
of Series E Preferred Stock of the full preferential amounts provided for in
either paragraph (a) or (b) of this Section, as applicable, the holders of
Series E Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
(d) Excluded Transactions. Neither the consolidation nor merger of the
Corporation with or into any other corporation, nor the sale, mortgage, exchange
or conveyance of all or substantially all of the properties, assets or business
of the Corporation, nor any liquidation, dissolution or winding up of the
Corporation occurring substantially concurrently with any such transaction shall
be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning hereof, unless otherwise determined by the Board of Directors
of the Corporation.
6. No Preemptive Rights. No holder of shares of the Series E Preferred Stock
shall, as such holder, have any preemptive right to subscribe to or purchase any
shares of any class of capital stock of the Corporation now or hereafter
authorized or issued, whether or not exchangeable for any capital stock of the
Corporation of any class or classes now or hereafter authorized or issued; nor
shall any holder of shares of the Series E Preferred Stock, as such holder, have
any right to purchase, acquire or subscribe for any securities which the
Corporation may issue or sell whether or not convertible into or exchangeable
for shares of capital stock of the Corporation of any class or classes, and
whether or not any such securities have attached or appurtenant thereto
warrants, options or other instruments which entitle the holders thereof to
purchase, acquire or subscribe for shares of capital stock of any class or
classes of the Corporation.
7. Determination of Market Value of Capital Stock of Corporation. The
determination of the per share "Market Value" of Common Stock as set forth in
previous Sections shall be determined using the previous five day average
closing bid price for the day or, where no sale is made on that day, the average
of the closing bid and asked prices for that day on the NASDAQ Stock Market or
the OTC Bulletin Board if the securities are at the time listed or quoted
thereon, respectively, or, if it is not so listed or quoted, on any other
national securities exchange selected by the Corporation on which it is at the
time listed. If at the applicable time the Common Stock is quoted on the OTC
Bulletin Board, the foregoing calculations shall be based on a Trade and Quote
Summary Report from the OTC Bulletin Board Research Service if available, and if
not, on any other publicly available data reasonably deemed reliable by the
Corporation.
8. Covenants of the Corporation. The Corporation will not, by amendment to its
Articles of Incorporation, as amended, or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the preferences and limitations of Series E Preferred
Stock to be observed or performed hereunder by the Corporation, but will at all
times in good faith assist in the carrying out of all the provisions set forth
herein relating to Series E Preferred Stock and in the taking of all such action
as may be necessary or appropriate in order to protect the rights of the holders
of the Series E Preferred Stock against dilution or other impairment.
<PAGE>
IN WITNESS WHEREOF, HARVEST RESTAURANT GROUP, INC. has caused this
Statement of Resolution Establishing Series of Shares to be signed by William J.
Gallagher, its Chairman of the Board and Chief Executive Officer, and attested
by Joseph Fazzone, its Secretary, this _______th day of December, 1998.
HARVEST RESTAURANT GROUP, INC.
By:/s/ William J. Gallagher
---------------------------
WILLIAM J. GALLAGHER,
Chairman of the Board and
Chief Executive Officer
By:/s/ Joseph Fazzone
---------------------
JOSEPH FAZZONE,
Chief Financial Officer and
Secretary
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE:
NAME
----
The name of the corporation is HARVEST RESTAURANT GROUP, INC.
ARTICLE TWO:
AMENDMENTS
----------
The following amendments to the Articles of Incorporation were adopted by
the Shareholders of the Corporation on March 12, 1999, in order to change the
name of the Corporation and increase the number of authorized shares of common
stock of the Corporation.
2.1 Article One of the Articles of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
ARTICLE ONE:
NAME
----
The name of the corporation is TANNER'S RESTAURANT GROUP, INC. (the
"Corporation").
2.2 Article Four, Section 1, of the Articles of Incorporation of the
Corporation is hereby amended to read in its entirety as follows:
ARTICLE FOUR:
CAPITALIZATION, PREEMPTIVE RIGHTS AND VOTING
--------------------------------------------
Section 1. Authorized Shares. The Corporation shall have authority to issue
two classes of shares to be designated respectively, "Common Stock" and
"Preferred Stock". The total number of shares that the Corporation is
authorized to issue is Two Hundred Five Million (205,000,000) shares, of
which Two Hundred Million (200,000,000) shall be Common Stock and Five
Million (5,000,000) shall be Preferred Stock. Each share of Common Stock
shall have a par value of ONE CENT ($.01), and each share of Preferred
Stock shall have a par value of ONE DOLLAR ($1.00).
The Preferred Stock authorized by these Articles of Incorporation may be
issued from time to time in one or more series, each of which shall have
designation(s) or title(s) as may be fixed by the Board of Directors prior to
the issuance of any shares thereof. The Board of Directors is hereby authorized
to fix or alter the redemption, including sinking fund provisions, the
<PAGE>
redemption price or prices, voting rights and liquidation preferences of any
wholly unissued series of Preferred Stock, and the number of shares constituting
any such series and the designation thereof, or any of them. The rights, powers,
preferences, limitations and restrictions, if any, accompanying such shares of
Preferred Stock shall be set forth by resolution of the Board of Directors
providing for the issue thereof prior to the issuance of any shares thereof, in
accordance with the applicable provisions of the Act. Each share of any series
of Preferred Stock shall be identical with all other shares of such series,
except as to the date from which dividends, if any, shall accrue.
ARTICLE THREE:
OUTSTANDING SHARES
------------------
The number of shares of common stock of the Corporation outstanding on the date
of record for determining the shareholders entitled to vote upon the adoption of
the foregoing amendments to the Articles of Incorporation of the Corporation was
8,241,609; and the number of shares of common stock entitled to vote thereon was
8,241,609. The number of shares of preferred stock of the Corporation
outstanding on the date of record for determining the shareholders of record
entitled to vote upon the adoption of the foregoing amendments to the Articles
of Incorporation of the Corporation was 1,247,552; and the number of shares of
preferred stock entitled to vote thereon was 0.
ARTICLE FOUR:
ADOPTING AMENDMENTS
-------------------
4.1 The total number of shares of common stock voted for the amendment of
Article One of the Articles of Incorporation as set forth above was
7,352,794, and the number of shares of common stock voted against such
amendment was 31,480. The owners of 857,335 shares of common stock did
not vote. The owners of the preferred stock were not entitled to vote
on said amendment of Article One of the Articles of Incorporation.
4.2 The number of shares of common stock voted for the amendment of
Article Four of the Articles of Incorporation as set forth above was
7,228,549 and the number of shares of common stock voted against such
amendment was 151,674. The owners of 861,386 shares of common stock
did not vote. The owners of the preferred stock were not entitled to
vote on said amendment of Article Four of the Articles of
Incorporation.
Executed this 12th day of March, 1999
HARVEST RESTAURANT GROUP, INC.
By: /s/ Clyde E. Culp, III
--------------------------
Clyde E. Culp, III
Chairman and Chief Executive Officer
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
ARTICLE ONE:
NAME
----
The name of the corporation is TANNER'S RESTAURANT GROUP, INC.
ARTICLE TWO:
AMENDMENTS
----------
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
The following amendments to the Articles of Incorporation were adopted by
the Shareholders of the Corporation on September 8, 2000, in order to change the
name of the Corporation and increase the number of authorized shares of common
stock of the Corporation.
2.1 Article One of the Articles of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
ARTICLE ONE:
NAME
----
The name of the corporation is CORZON, INC. (the "Corporation").
2.2 Article Four, Section 1, of the Articles of Incorporation of the
Corporation is hereby amended to read in its entirety as follows:
ARTICLE FOUR:
CAPITALIZATION, PREEMPTIVE RIGHTS AND VOTING
--------------------------------------------
Section 1. Authorized Shares. The Corporation shall have authority to issue
two classes of shares to be designated respectively, "Common Stock" and
"Preferred Stock". The total number of shares that the Corporation is authorized
to issue is Five Hundred Five Million (505,000,000) shares, of which Five
Hundred Million (500,000,000) shall be Common Stock and Five Million (5,000,000)
shall be Preferred Stock. Each share of Common Stock shall have a par value of
ONE CENT ($.01), and each share of Preferred Stock shall have a par value of ONE
DOLLAR ($1.00).
The Preferred Stock authorized by these Articles of Incorporation may be
issued from time to time in one or more series, each of which shall have
designation(s) or title(s) as may be fixed by the Board of Directors prior to
the issuance of any shares thereof. The Board of Directors is hereby authorized
to fix or alter the redemption, including sinking fund provisions, the
redemption price or prices, voting rights and liquidation preferences of any
wholly unissued series of Preferred Stock, and the number of shares constituting
any such series and the designation thereof, or any of them. The rights, powers,
preferences, limitations and restrictions, if any, accompanying such shares of
Preferred Stock shall be set forth by resolution of the Board of Directors
providing for the issue thereof prior to the issuance of any shares thereof, in
accordance with the applicable provisions of the Act. Each share of any series
of Preferred Stock shall be identical with all other shares of such series,
except as to the date from which dividends, if any, shall accrue.
<PAGE>
ARTICLE THREE:
OUTSTANDING SHARES
------------------
The number of shares of common stock of the Corporation outstanding on the
date of record for determining the shareholders entitled to vote upon the
adoption of the foregoing amendments to the Articles of Incorporation of the
Corporation was 66,857,197; and the number of shares of common stock entitled to
vote thereon was 66,857,197. The number of shares of preferred stock of the
Corporation outstanding on the date of record for determining the shareholders
of record entitled to vote upon the adoption of the foregoing amendments to the
Articles of Incorporation of the Corporation was 1,199,751.5; and the number of
shares of preferred stock entitled to vote thereon was 0.
ARTICLE FOUR:
ADOPTING AMENDMENTS
-------------------
4.1 The total number of shares of common stock voted for the amendment of
Article One of the Articles of Incorporation as set forth above was 46,289,795,
and the number of shares of common stock voted against such amendment was
336,517. The owners of 20,230,885 shares of common stock did not vote. The
owners of the preferred stock were not entitled to vote on said amendment of
Article One of the Articles of Incorporation.
4.2 The number of shares of common stock voted for the amendment of Article
Four of the Articles of Incorporation as set forth above was 45,885,827 and the
number of shares of common stock voted against such amendment was 725,873. The
owners of 20,245,497 shares of common stock did not vote. The owners of the
preferred stock were not entitled to vote on said amendment of Article Four of
the Articles of Incorporation.
[the remainder of this page has been left blank intentionally.]
<PAGE>
Executed this 8th day of September, 2000.
TANNER'S RESTAURANT GROUP, INC.
By: /s/ Lawrence Shatsoff
---------------------
Lawrence Shatsoff
President
