Articles Of Incorporation

Articles Of Incorporation
Of
Advanced Nutraceuticals, Inc.


The undersigned natural person of the age of eighteen years or more, acting as an incorporator of the Corporation under the Texas Business Corporation Act, adopts the following Articles of Incorporation for such Corporation.


FIRST: The name of the Corporation is ADVANCED NUTRACEUTICALS, INC.


SECOND: The period of its duration is perpetual.


THIRD: The purposes for which this Corporation is organized are to engage in and do any lawful act concerning any and all lawful business which corporations may be organized under the laws of Texas, now or hereafter in effect.


FOURTH: The aggregate number of shares which the Corporation shall have authority to issue is 20,000,000 shares of common stock, par value of $.01 and 1,000,000 shares of preferred stock, par value of $.001. All shares shall be fully paid and non-assessable for any purpose.


The Board of Directors is hereby expressly authorized, by resolution or resolutions, to provide, out of the unissued shares of preferred stock, for the issuance of one or more series of preferred stock, with such voting powers, if any, and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be expressed in the resolution or resolutions providing for the issuance thereof adopted by the Board of Directors, including, without limiting the generality of the foregoing, the following:


(a) The designation of such series, the number of shares to constitute such series and the stated value thereof if different from the par value thereof;


(b) whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be general or limited;


(c) the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of this class;


(d) whether the shares of such series shall be subject to redemption by the Corporation, and, if so, the times, prices and other terms and conditions of such redemption;


(e) the amount or amounts payable upon shares of such series upon, and the rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation;


(f) whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;


(g) whether the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or classes or of any other series of this class or any other class or classes of capital stock and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of such conversion or exchange;


(h) the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the corporation of, the common stock or shares of stock of any other class or any other series of this class; and


(i) the conditions or restrictions, if any, upon the creation of indebtedness of the corporation or upon the issue of any additional stock, including additional shares of such series or of any other series of this class or of any other series of this class or of any other class or classes.


The powers, preferences and relative participating, optional and other special rights of each series of preferred stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. All shares of any one series of preferred stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall be cumulative.


The following is the Statement of Designation of Series A Preferred Stock:


A. 500,000 authorized shares of the Corporation's $.001 par value preferred stock (the "Preferred Stock") are established as a series of Preferred Stock designated as the "Series A Preferred Stock," which have the following powers, preferences, limitations and rights:


1. Liquidation Preference.
----------------------


a. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, subject to the rights of holders of Series A Preferred Stock and any other series of Preferred Stock that may from time to time come into existence, the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Common Stock by reason of their ownership thereof, $28.40 (as adjusted for any stock dividends, combinations or splits with respect to such shares) for each share of Series A Preferred Stock then held by them. If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire assets and funds of the Corporation


-2-


legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive.


b. After payment (if any) to the holders of the Series A Preferred Stock of the amounts set forth in Section A.1(a) above, the entire remaining assets and funds of the Corporation legally available for distribution, if any, shall be distributed among the holders of the Common Stock in proportion to the shares of Common Stock then held by them.


c. Whenever the distribution provided for in this Section A.1 shall be payable in securities or property other than cash, the value of such distribution shall be the fair market value of such securities or other property as determined in good faith by the Board of Directors.


2. Voting. Except as may be specifically required by the provisions
------ of the Texas Business Corporation Act, the holders of shares of the Series A Preferred Stock shall have no right to vote on any matter.


3. Conversion. The holders of the Series A Preferred Stock shall
---------- have conversion rights as follows (the "Conversion Rights"):


a. Automatic Conversion. No share of Series A Preferred Stock
-------------------- may be converted into common stock without the approval of such conversion by a majority of the total votes cast on a proposal to convert by shareholders of the Corporation in person or by Proxy at a meeting duly held by the Corporation's shareholders (the "Shareholder Approval"). Upon the attainment of Shareholder Approval, each share of Series A Preferred Stock shall automatically be converted into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing $28.40 by the Series A Conversion Price applicable to such share, determined as hereinafter provided, in effect on the date of "Shareholder Approval." The price at wh ...