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Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF THE POWERS, PREFERENCES
AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS OF PREFERRED STOCK
AND QUALIFICATIONS,
LIMITATIONS AND
RESTRICTIONS THEREOF
of
SERIES C CONVERTIBLE
PREFERRED STOCK
of
GLOBALOPTIONS GROUP,
INC.
GLOBALOPTIONS GROUP,
INC. , a Delaware corporation (the “ Corporation
”), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this
Certificate of Designation and does hereby state and certify that
pursuant to the authority expressly vested in the Board of
Directors of the Corporation (the “ Board ”) by
the Certificate of Incorporation of the Corporation, as amended to
date (the “ Certificate of Incorporation ”),
which authorizes the issuance of 15,000,000 shares of preferred
stock, $0.001 par value per share, in one or more series, the Board
duly adopted the following resolutions, which resolutions remain in
full force and effect as of the date hereof:
RESOLVED, that,
pursuant to Article Fourth of the Certificate of Incorporation, the
Board hereby authorizes the issuance of, and fixes the designation
and preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions,
of a series of preferred stock of the Corporation consisting of
60,000 shares, par value $0.001 per share, to be designated
“Series C Convertible Preferred Stock” (hereinafter,
the “ Series C Preferred Stock ”); and be
it
RESOLVED, that each
share of Series C Preferred Stock shall rank equally in all
respects and shall be subject to the following terms and
provisions:
1. Voting Rights
.
(a) Except as otherwise
provided herein or as provided by law, the holders of the Series C
Preferred Stock shall have full voting rights and powers, subject
to the Beneficial Ownership Cap as defined in Section 4(h), if
applicable, equal to the voting rights and powers of holders of the
Corporation’s common stock, par value $.001 per share (the
“ Common Stock ”), and shall be entitled to
notice of any stockholders meeting in accordance with the Bylaws of
the Corporation, and shall be entitled to vote, with respect to any
question upon which holders of Common Stock are entitled to vote,
including, without limitation, the right to vote for the election
of directors, voting together with the holders of Common Stock as
one class. Each holder of shares of Series C Preferred Stock shall
be entitled to vote on an As-Converted Basis (as defined below),
determined on the record date for the taking of a vote, subject to
the applicable Beneficial Ownership Cap limitations set forth in
Section 4(h), or, if no record date is established, at the day
prior to the date such vote is taken or any written consent of
stockholders is first executed. Fractional votes shall not,
however, be permitted and any fractional voting rights resulting
from the above formula (after aggregating all shares into which
shares of Series
C Preferred Stock held by each holder
could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward). “ As-Converted
Basis ” means, as of the time of determination, that,
solely for the purpose of determining the applicable right (and
without limitation to any rights of the Series C Preferred Stock),
the Series C Preferred Stock shall be treated as if such Series C
Preferred Stock had been converted into that number of shares of
Common Stock which a holder of Series C Preferred Stock would hold
if all shares of Series C Preferred Stock held by such holder were
converted into shares of Common Stock pursuant to Section 4
hereof at the then applicable Conversion Value (as defined
below).
(b) In the event that the
holders of the Series C Preferred Stock are required to vote as a
class, the affirmative vote of holders of not less than a majority
of the outstanding shares of Series C Preferred Stock shall be
required to approve each such matter to be voted upon, and if any
matter is approved by such requisite percentage of holders of
Series C Preferred Stock, such matter shall bind all holders of
Series C Preferred Stock.
2. Rights on
Liquidation .
(a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of
the Corporation (any such event being hereinafter referred to as a
“ Liquidation ”), the holders of record of the
shares of the Series C Preferred Stock shall be entitled to
receive, immediately after any distributions required by the
Certificate of Incorporation and any certificate(s) of designation,
powers, preferences and rights in respect of any securities of the
Corporation having priority over the Series C Preferred Stock with
respect to the distribution of the assets of the Corporation upon
Liquidation, and before and in preference to any distribution or
payment of assets of the Corporation or the proceeds thereof may be
made or set apart with respect to the Corporation’s Series A
Convertible Preferred Stock, par value $.001 per share (the “
Series A Preferred Stock ”), the Corporation’s
Series B Convertible Preferred Stock, par value $.001 per share
(the “ Series B Preferred Stock ”), and any
other securities of the Corporation over which the Series C
Preferred Stock has priority with respect to the distribution of
the assets of the Corporation upon Liquidation (“ Junior
Securities ”), an amount in cash with respect to each
share of Series C Preferred Stock held by such holders, equal to
$1,000 per share (subject to adjustment in the event of stock
splits, combinations or similar events with respect to the Series C
Preferred Stock) (the “ Liquidation Preference
”). If, upon such Liquidation, the assets of the Corporation
available for distribution to the holders of Series C Preferred
Stock and any securities of the Corporation having equal priority
with the Series C Preferred Stock with respect to the distribution
of the assets of the Corporation upon Liquidation (“
Parity Securities ”) shall be insufficient to permit
payment in full to the holders of the Series C Preferred Stock and
Parity Securities, then the entire assets and funds of the
Corporation legally available for distribution to such holders of
the Series C Preferred Stock and Parity Securities then outstanding
shall be distributed ratably among such holders based upon the
proportion the total amount distributable on each share upon
liquidation bears to the aggregate amount available for
distribution on all shares of the Series C Preferred Stock and of
such Parity Securities, if any.
(b) Upon the completion of
the distributions required by paragraph (a) of this
Section 2, if assets remain in the Corporation, they shall be
distributed to holders of Series C Preferred Stock pro rata with
holders of Junior Securities, based on the number of shares of
Common Stock into which the Series C Preferred Stock is convertible
at the then effective Conversion Value (as defined
below).
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(c) A Change of Control (as
defined below) of the Corporation shall not be deemed a
Liquidation, but shall instead be governed by the terms of
Section 6 below.
3. Actions Requiring the
Consent of Holders of Series C Preferred Stock . As long as at
least 25% of the shares of Series C Preferred Stock issued on the
date of original issuance of any shares of Series C Preferred Stock
(the “ Date of Original Issue ”) remain
outstanding, the consent of the holders of at least a majority of
the shares of Series C Preferred Stock at the time outstanding,
given in accordance with the Certificate of Incorporation and
Bylaws of the Corporation, as amended, shall be necessary for
effecting or validating any of the following transactions or acts,
whether by merger, consolidation or otherwise:
(a) Any amendment, alteration
or repeal (whether by merger, consolidation or otherwise) of any of
the provisions of this Certificate of Designation, including any
increase in the number of authorized shares of Series C Preferred
Stock;
(b) Any amendment, alteration
or repeal (whether by merger, consolidation or otherwise) of
(i) the Certificate of Incorporation or (ii) the Bylaws
of the Corporation that will adversely affect the rights or
privileges of the holders of the Series C Preferred
Stock;
(c) The authorization or
creation by the Corporation of, or the increase in the number of
authorized shares of, any stock of any class, or any security
convertible into stock of any class, or the authorization or
creation of any new class of preferred stock (or any action which
would result in another series of preferred stock), in each case,
ranking in terms of liquidation preference, redemption rights or
dividend rights pari passu with or senior to the Series C Preferred
Stock in any manner (any such securities pari passu with the Series
C Preferred Stock, the “ Pari Passu Securities ”
and any such securities senior to the Series C Preferred Stock, the
“ Senior Securities ”);
(d) The issuance of any
equity securities ranking in terms of liquidation preference,
redemption rights or dividend rights pari passu with or senior to
the Series C Preferred Stock in any manner; and
(e) any act or thing not
authorized or contemplated by this Certificate of Designations
which would result in taxation of the holders of shares of the
Series C Preferred Stock under Section 305 of the Internal
Revenue Code of 1986, as amended (or any comparable provision of
the Internal Revenue Code as hereafter from time to time
amended).
4. Conversion
.
(a) Right to Convert .
Subject to the limitations set forth in Section 4(h) hereof,
the holder of any share or shares of Series C Preferred Stock shall
have the right at any time, at such holder’s option, to
convert all or any lesser portion of such holder’s shares of
Series C Preferred Stock into such number of fully paid and
non-assessable shares of Common Stock as is determined by dividing
(i) the aggregate Liquidation Preference of the shares of
Series C Preferred Stock to be converted by (ii) the
Conversion Value (as defined below) then in effect for
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such Series C Preferred Stock. No
fractional shares or scrip representing fractional shares shall be
issued upon the conversion of any Series C Preferred Stock. With
respect to any fraction of a share of Common Stock called for upon
any conversion, the Corporation shall pay to the holder an amount
in cash equal to such fraction multiplied by the Current Market
Price per share of the Common Stock. In lieu of converting shares
of Series C Preferred Stock into shares of Common Stock, a Blocked
Holder that exercised the Series D Option (as such terms are
defined in the Restructuring Agreement dated on or about the Filing
Date (the “ Restructuring Agreement ”)) shall
have the right at any time, at such Blocked Holder’s option,
to convert all or any lesser portion of such Blocked Holder’s
shares of Series C Preferred Stock into fully paid and
non-assessable shares of Series D Convertible Preferred Stock, par
value $.001 per share (the “ Series D Preferred Stock
”), of the Corporation at the Series D Conversion Rate (as
defined below). Any such optional conversion of the Series C
Preferred Stock into Series D Preferred Stock shall be governed by
the provisions of Section 4(d) below (except for the
provisions relating to delivery through the DWAC system), with
references to Common Stock being deemed to be replaced by
references to Series D Preferred Stock.
“ Current Market
Price ” means, in respect of any share of Common Stock on
any date herein specified:
(1) if there shall not then
be a public market for the Common Stock, the higher of (a) the
book value per share of Common Stock at such date, and (b) the
fair market value per share of Common Stock as determined in good
faith by the Board, or
(2) if there shall then be a
public market for the Common Stock, (i) the closing bid price
on such day on the principal stock exchange (including Nasdaq) on
which such Common Stock is then listed or admitted to trading, or
quoted, as applicable, (ii) if no sale takes place on such day
on any such exchange, the last reported closing bid price on such
day as officially quoted on any such exchange (including Nasdaq),
(iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange, the last reported closing bid price
on such day in the over-the-counter market, as furnished by the
National Association of Securities Dealers Automatic Quotation
System or the Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.), (iv) if neither such corporation at the time is
engaged in the business of reporting such prices, as furnished by
any similar firm then engaged in such business, or (v) if
there is no such firm, as furnished by any member of the National
Association of Securities Dealers, Inc. (the “ NASD
”) selected mutually by holders of a majority of the Series C
Preferred Stock and the Corporation or, if they cannot agree upon
such selection, as selected by two such members of the NASD, one of
which shall be selected by holders of a majority of the Series C
Preferred Stock and one of which shall be selected by the
Corporation.
(b) Mandatory
Conversion . If a Conversion Triggering Event (as defined
below) shall occur and within 5 business days following such
occurrence, the Corporation shall have delivered a written notice
to the holders of the Series C Preferred Stock (the “
Notice ”) that the Corporation intends to convert all
of the outstanding Series C Preferred Stock into Common
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Stock, then, subject to the limitations
set forth in Section 4(h) hereof and the provisions of
Section 4(e) hereof, as of the date that is thirty days
following the date that such Notice is given (the “
Mandatory Conversion Date ”), the Series C Preferred
Stock shall be converted into such number of fully paid and
non-assessable shares of Common Stock as is determined by dividing
(i) the aggregate Liquidation Preference of the shares of
Series C Preferred Stock to be converted by (ii) the
applicable Conversion Value (as hereinafter defined) then in effect
for such Series C Preferred Stock (the “ Mandatory
Conversion ”). Nothing in this Section 4(b) shall be
construed so as to limit the right of a holder of Series C
Preferred Stock to convert pursuant to Section 4(a) at any
time.
“ Conversion
Triggering Event ” shall mean, at any time after twelve
months after the Date of Original Issue, such time as:
(i) the Current Market Price
(as determined by paragraph (2) of such definition) is greater
than $22.50 (as adjusted for stock splits, reverse splits, stock
dividends and the like) for twenty consecutive trading
days;
(ii) the trading volume of
the Common Stock on the applicable exchange or market for at least
fifteen of the twenty consecutive trading days provided in clause
(i) above is not less than 50,000 shares per such trading day
(as adjusted for stock splits, reverse splits, stock dividends and
the like); and
(iii) the Registration
Statement (as hereinafter defined) covering all of the shares of
Common Stock into which the Series C Preferred Stock is convertible
is effective and sales may be made pursuant thereto (or all of the
shares of Common Stock into which the Series C Preferred Stock is
convertible may be sold without restriction pursuant to Rule 144(k)
promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the “ Securities
Act ”)).
“ Registration
Statement ” shall have the meaning established in the
Restructuring Registration Rights Agreement dated on or about the
filing date of this Certificate of Designation (the “
Filing Date ”), by and among the Corporation and the
other parties signatory thereto (the “ Restructuring
Registration Rights Agreement ”).
(c) Automatic
Conversion . If the Corporation consummates a firm commitment
underwritten public offering of shares of the Common Stock in which
the aggregate gross proceeds thereof to the Corporation shall be no
less than $20,000,000 (a “ Qualified Offering
”), then, subject to the limitations set forth in
Section 4(h) hereof and the provisions of Section 4(e)
hereof, upon the consummation of such Qualified Offering (the
“ Automatic Conversion Time ”), all of the
outstanding Series C Preferred Stock shall be converted
automatically into such number of fully paid and non-assessable
shares of Common Stock as is determined by dividing (i) the
aggregate Liquidation Preference of the shares of Series C
Preferred Stock to be converted by (ii) the applicable
Conversion Value (as hereinafter defined) then in effect for such
Series C Preferred Stock (the “ Automatic Conversion
”). Nothing in this Section 4(c) shall be construed so
as to limit the right of a holder of Series C Preferred Stock to
convert pursuant to Section 4(a) at any time.
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(d) Mechanics of
Conversion .
(i) Such right of conversion
(other than Mandatory Conversion or Automatic Conversion) shall be
exercised by the holder of shares of Series C Preferred Stock by
delivering to the Corporation a conversion notice in the form
attached hereto as Exhibit A (the “ Conversion
Notice ”), appropriately completed and duly signed and
specifying the number of shares of Series C Preferred Stock that
the holder elects to convert (the “ Converting Shares
”) into shares of Common Stock, and by surrender not later
than two (2) business days thereafter of the certificate or
certificates representing such Converting Shares. The Conversion
Notice shall also contain a statement of the name or names (with
addresses and tax identification or social security numbers) in
which the certificate or certificates for Common Stock shall be
issued, if other than the name in which the Converting Shares are
registered. Promptly after the receipt of the Conversion Notice,
the Corporation shall issue and deliver, or cause to be delivered,
to the holder of the Converting Shares or such holder’s
nominee, a certificate or certificates for the number of shares of
Common Stock issuable upon the conversion of such Converting
Shares. Such conversion shall be deemed to have been effected as of
the close of business on the date of receipt by the Corporation of
the Conversion Notice (the “ Conversion Date ”),
and the person or persons entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as
the holder or holders of record of such shares of Common Stock as
of the close of business on the Conversion Date.
(ii) The Corporation shall
issue certificates representing the shares of Common Stock to be
received upon conversion of the Series C Preferred Stock (the
“ Conversion Shares ”) (and certificates for
unconverted Series C Preferred Stock) within three
(3) business days of the Conversion Date and shall transmit
the certificates by messenger or reputable overnight delivery
service to reach the address designated by such holder within three
(3) business days after the receipt by the Corporation of such
Conversion Notice. If certificates evidencing the Conversion Shares
are not received by the holder within five (5) business days
of the Conversion Notice, then the holder will be entitled to
revoke and withdraw its Conversion Notice, in whole or in part, at
any time prior to its receipt of those certificates. In lieu of
delivering physical certificates representing the Conversion
Shares, provided the Corporation’s transfer agent is
participating in the Depository Trust Company (“ DTC
”) Fast Automated Securities Transfer (“ FAST
”) program, upon request of the holder, the Corporation shall
use its reasonable best efforts to cause its transfer agent to
electronically transmit the Common Stock issuable upon conversion
to the holder, by crediting the account of the holder’s prime
broker with DTC through its Deposit Withdrawal Agent Commission
(“ DWAC ”) system. The time periods for delivery
described above shall apply to the electronic transmittals through
the DWAC system. The parties agree to coordinate with DTC to
accomplish this objective. The person or persons entitled to
receive the Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such
Common Stock at the close of business on the Conversi
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