Exhibit 3.4
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 B CONVERTIBLE PREFERRED STOCK
OF
GLOBALOPTIONS GROUP, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
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 (the "CERTIFICATE"), 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 IV, of the Certificate, 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 B Convertible Preferred Stock" (hereinafter, the "SERIES B PREFERRED
STOCK"); and be it
RESOLVED, that each share of Series B Preferred Stock shall rank equally
in all respects and shall be subject to the following terms and provisions:
1. DIVIDENDS. The holders of the Series B Preferred Stock shall be
entitled to receive, when, if and as declared by the Board, out of funds legally
available therefor, and as set forth below, cumulative dividends payable as set
forth in this Section 1.
(a) Dividends on the Series B Preferred Stock shall accrue and shall
be cumulative from the date that is 18 months following the date of original
issuance of any shares of Series B Preferred Stock (the "DIVIDEND COMMENCEMENT
DATE"), whether or not declared by the Board. Until paid, the right to receive
dividends on the Series B Preferred Stock shall accumulate, and shall be
payable, to the extent not prohibited by applicable law, quarterly at the option
of the applicable holder of the Series B Preferred Stock in either cash or in
shares of the Corporation's Common Stock (the "COMMON STOCK"), as set forth
below, in arrears, on March 31, June 30, September 30 and December 31 of each
year (each, a "DIVIDEND PAYMENT DATE"), commencing on the first Dividend Payment
Date following the Dividend Commencement Date (the "INITIAL DIVIDEND PAYMENT
DATE") except that if such Dividend Payment Date is not a business day, then the
Dividend Payment Date will be the immediately preceding business day. The
dividend due on any Dividend Payment Date shall be paid to each holder of Series
B Preferred Stock in cash unless such holder shall elect in writing to receive
such dividend in shares of Common Stock as set forth in Section 1(e) below. If a
holder of Series B Preferred Stock elects to receive the dividend in shares of
Common Stock, the Corporation shall set aside a sufficient number of shares of
Common Stock for the payment of such declared dividends and shall deliver
certificates representing such shares of Common Stock to the applicable holders
of shares of Series B Preferred Stock as of the record date for such dividend in
payment of such declared dividends within five business days after such Dividend
Payment Date. Each such dividend declared by the Board on the Series B Preferred
Stock shall be paid to the holders of record of shares of the Series B Preferred
Stock as they appear on the stock register of the Corporation on the record date
which shall be the business day next preceding a Dividend Payment Date (each, a
"RECORD DATE"). Dividends in arrears for any past dividend period may be
declared by the Board and paid on shares of the Series B Preferred Stock on any
date fixed by the Board, whether or not a regular Dividend Payment Date, to
holders of record of shares of the Series B Preferred Stock as they appear on
the Corporation's stock register on the Record Date. Any dividend payment made
on shares of the Series B Preferred Stock shall first be credited against the
dividends accumulated with respect to the earliest dividend period for which
dividends have not been paid. If a dividend is to be paid in shares of Common
Stock, the Common Stock shall be valued at the Common Stock Dividend Price (as
defined below). In furtherance thereof, the Corporation shall reserve out of the
authorized but unissued shares of Common Stock, solely for issuance in respect
of the payment of dividends as herein described, a sufficient number of shares
of Common Stock to pay such dividends, when, if and as declared by the Board of
the Corporation. If any dividends are not paid on any Dividend Payment Date
because such payment is prohibited by applicable law, the Corporation shall pay
such dividends promptly following such time as such payment would no longer be
prohibited by applicable law.
(b) DIVIDEND PERIODS; DIVIDEND RATE; CALCULATION OF DIVIDENDS.
(i) DIVIDEND PERIODS. The dividend periods (each, a "DIVIDEND
PERIOD") shall be as follows: The initial Dividend Period shall begin on
the Dividend Commencement Date and end on the Initial Dividend Payment
Date, and each Dividend Period thereafter shall commence on the day
following the last day of the preceding Dividend Period and shall end on
the next Dividend Payment Date.
(ii) DIVIDEND RATE. The dividend rate on each share of Series
B Preferred Stock (the "DIVIDEND RATE"), to be paid per annum on the
Liquidation Preference (as defined below) shall be as follows:
(A) From the Dividend Commencement Date until the date
that is twelve (12) months following the Dividend Commencement Date,
the Dividend Rate shall be 6%; and
(B) From and after the date that is twelve (12) months
following the Dividend Commencement Date, the Dividend Rate shall be
8%.
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(iii) CALCULATION OF DIVIDENDS.
(A) The amount of dividends per share of Series B
Preferred Stock payable for each Dividend Period or part thereof
shall be computed by multiplying the Liquidation Preference by the
Dividend Factors (as defined below) for all Dividend Rates in effect
during the Dividend Period or part thereof.
(B) The "Dividend Factor" for each Dividend Rate in
effect from time to time shall be that Dividend Rate multiplied by a
fraction, the numerator of which is the number of days in the
applicable Dividend Period or part thereof on which both (1) the
share of Series B Preferred Stock was outstanding and (2) the
Dividend Rate was in effect, and the denominator of which is 365.
"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 B
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 B
Preferred Stock and one of which shall be selected by the
Corporation.
"COMMON STOCK DIVIDEND PRICE" means the average of the Current
Market Prices pursuant to paragraph 2 of the definition thereof, over a period
beginning on the trading day that is twenty (20) trading days prior to the date
of a Dividend Election Notice (as defined below) and ending on the date of such
Dividend Election Notice.
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(c) No dividends shall be declared or paid or set apart for payment
on the shares of Common Stock or any other class or series of capital stock of
the Corporation that is not expressly senior to or pari passu in dividend rights
with the Series B Preferred Stock for any dividend period unless full cumulative
dividends have been or contemporaneously are declared and paid on the Series B
Preferred Stock through the most recent Dividend Payment Date. Without prejudice
to the foregoing, if full cumulative dividends have not been paid on shares of
the Series B Preferred Stock and any class or series of capital stock of the
Corporation that is expressly pari passu in dividend rights to the Series B
Preferred Stock ("PARI PASSU STOCK"), all dividends declared on shares of the
Series B Preferred Stock and the Pari Passu Stock shall be paid pro rata to the
holders of outstanding shares of the Series B Preferred Stock and outstanding
shares of such Pari Passu Stock. The Series A Convertible Preferred Stock of the
Company (the "SERIES A PREFERRED STOCK") is junior in all respects to the Series
B Preferred Stock.
(d) The holders of the Series B Preferred Stock shall be entitled to
receive any dividends or other distributions from the Corporation that are
declared on the Common Stock, in which case holders of Series B Preferred Stock
shall each be entitled to receive, on an As-Converted Basis (as defined below,
but without regard to the Beneficial Ownership Cap limitations set forth in
Section 5(g) hereof), any dividends or distributions (other than dividends
payable solely in additional Common Stock) declared by the Board and paid to the
holders of Common Stock, out of any assets legally available therefor, pari
passu with the amount of such dividends to be distributed to the holders of
Common Stock immediately prior to the declaration of such dividend or
distribution. "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 B Preferred Stock), the Series B
Preferred Stock shall be treated as if such Series B Preferred Stock had been
converted into that number of shares of Common Stock which a holder of Series B
Preferred Stock would hold if all shares of Series B Preferred Stock held by
such holder were converted into shares of Common Stock pursuant to Section 5
hereof at the then applicable Conversion Value (as defined below).
(e) If a holder of Series B Preferred Stock elects to receive
payment of the dividends payable on any Dividend Payment Date in the form of
Common Stock, then such holder shall deliver to the Corporation a written notice
of such election (a "DIVIDEND ELECTION NOTICE") no later than the date that is
thirty (30) days prior to the applicable Dividend Payment Date. It shall be a
condition of the payment of such dividends in shares of Common Stock that such
Dividend Election Notice shall contain a representation by such holder that such
holder has not traded in the Common Stock during the period that begins twenty
(20) trading days prior to the date of the Dividend Election Notice and ends on
the date of the Dividend Election Notice.
2. VOTING RIGHTS.
(a) Except as otherwise provided herein or as provided by law, the
holders of the Series B Preferred Stock shall have full voting rights and
powers, subject to the Beneficial Ownership Cap as defined in Section 5(g), if
applicable, equal to the voting rights and powers of holders of 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
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Series B Preferred Stock shall be entitled to vote on an As-Converted Basis,
determined on the record date for the taking of a vote, subject to the
applicable Beneficial Ownership Cap limitations set forth in Section 5(g), 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 B
Preferred Stock held by each holder could be converted) shall be rounded to the
nearest whole number (with one-half being rounded upward).
(b) In the event that the holders of the Series B 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 B 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 B Preferred Stock,
such matter shall bind all holders of Series B Preferred Stock.
3. 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 B Preferred Stock shall be entitled to receive, immediately after any
distributions required by the Corporation's 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 B 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 Series A Preferred Stock and any other securities of the
Corporation over which the Series B 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 B 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 B Preferred Stock) (the "LIQUIDATION PREFERENCE"). If, upon such
Liquidation, the assets of the Corporation available for distribution to the
holders of Series B Preferred Stock and any securities of the Corporation having
equal priority with the Series B 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 B Preferred Stock and Parity Securities, then the entire assets and
funds of the Corporation legally available for distribution to such holders of
the Series B 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 B Preferred Stock
and of such Parity Securities, if any.
(b) Upon the completion of the distributions required by paragraph
(a) of this Section 3, if assets remain in the Corporation, they shall be
distributed to holders of Series B Preferred Stock pro rata with holders of
Junior Securities, based on the number of shares of Common Stock into which the
Series B 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 7 below.
4. ACTIONS REQUIRING THE CONSENT OF HOLDERS OF SERIES B PREFERRED STOCK.
As long as at least 25% of the shares of Series B Preferred Stock issued on the
date of original issuance of any shares of Series B Preferred Stock (the "DATE
OF ORIGINAL ISSUE") remain outstanding, the consent of the holders of at least a
majority of the shares of Series B 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
B Preferred Stock;
(b) Any amendment, alteration or repeal (whether by merger,
consolidation or otherwise) of (i) the Certificate or (ii) the Bylaws of the
Corporation that will adversely affect the rights or privileges of the holders
of the Series B 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 B Preferred Stock in any manner (any such securities pari passu with
the Series B Preferred Stock, the "PARI PASSU SECURITIES" and any such
securities senior to the Series B Preferred Stock, the "SENIOR SECURITIES");
(d) The issuance of any securities ranking in terms of liquidation
preference, redemption rights or dividend rights, pari passu with or senior to,
the Series B Preferred Stock in any manner;
(e) The redemption, purchase or other acquisition, directly or
indirectly, of any shares of capital stock of the Corporation or any of its
subsidiaries or any option, warrant or other right to purchase or acquire any
such shares, or any other such security, other than pursuant to the repurchase
rights of the Corporation under options or restricted stock grants to directors,
employees or consultants of the Corporation, in each case, granted under equity
incentive plans approved by the Board and other than Senior Securities pursuant
to rights expressly set forth in reasonable detail (with specific details as to
the terms of such redemption, puchase or other acquisition) in the terms of such
Senior Securities as approved by the holders of the Series B Preferred Stock
pursuant to Section 4(c);
(f) The declaration or payment of any dividend or other distribution
(whether in cash, stock or other property, but excluding a split or reverse
split with respect to the Common Stock) with respect to the capital stock of the
Corporation or any subsidiary, except for such dividends or other distributions
on the Series B Preferred Stock and except for such dividends or other
distributions as are expressly set forth in reasonable detail (specifying the
nature, amounts and timing of payment of such dividends) in the terms of any
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Pari Passu Securities or Senior Securities approved by the holders of the Series
B Preferred Stock pursuant to Section 4(c); and
(g) 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 B 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).
5. CONVERSION.
(a) RIGHT TO CONVERT. Subject to the limitations set forth in
Section 5(g) hereof, the holder of any share or shares of Series B 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 B 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 B Preferred Stock to be converted plus accrued and unpaid dividends
thereon and declared and unpaid dividends thereon by (ii) the Conversion Value
(as defined below) then in effect for such Series B Preferred Stock. No
fractional shares or scrip representing fractional shares shall be issued upon
the conversion of any Series B 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.
(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 B Preferred Stock (the "NOTICE") that the Corporation intends to convert
all of the outstanding Series B Preferred Stock into Common Stock, then, subject
to the limitations set forth in Section 5(g) hereof, as of the date that is
thirty days following the date that such Notice is given (the "MANDATORY
CONVERSION DATE"), the Series B 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 B
Preferred Stock to be converted plus accrued and unpaid dividends thereon and
declared and unpaid dividends thereon by (ii) the applicable Conversion Value
(as hereinafter defined) then in effect for such Series B Preferred Stock (the
"MANDATORY CONVERSION"). Nothing in this Section 5(b) shall be construed so as
to limit the right of a holder of Series B Preferred Stock to convert pursuant
to Section 5(a) at any time.
"CONVERSION TRIGGERING EVENT" shall mean, at any time after twelve
months after the Closing Date (as defined in the Purchase Agreement), such time
as:
(i) the Current Market Price (as determined by paragraph (2)
of such definition) is greater than $4.50 (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 100,000 shares per such
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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 B
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 B
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
Investor 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.
(c) MECHANICS OF CONVERSION.
(i) Such right of conversion (other than mandatory conversion)
shall be exercised by the holder of shares of Series B 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 B 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 B
Preferred Stock (the "CONVERSION SHARES") (and certificates for
unconverted Series B 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 or in payment of dividends
hereunder, provided the Corporation's transfer agent is participating in
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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 or dividend payment 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, and for delivery of Common Stock in
payment of dividends hereunder, 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 Shares at the
close of business on the Conversion Date. If the conversion has not been
rescinded in accordance with this paragraph and the Corporation
intentionally or willfully fails to deliver to the holder such certificate
or certificates (or shares through DTC) pursuant to this Section 5 (free
of any restrictions on transfer or legends, if such shares have been
registered) in accordance herewith, prior to the seventh trading day after
the Conversion Date (assuming timely surrender of the Series B Preferred
Stock certificates), the Corporation shall pay to such holder, in cash, on
a per diem basis, an amount equal to 2% of the Liquidation Preference of
all Series B Preferred Stock held by such holder per month until such
delivery takes place.
(iii) The Corporation's obligation to issue Common Stock upon
conversion of Series B Preferred Stock shall be absolute, is independent
of any covenant of any holder of Series B Preferred Stock, and shall not
be subject to: (A) any offset or defense; or (B) any claims against the
holders of Series B Preferred Stock whether pursuant to this Certificate
of Designation, the Convertible Note Purchase Agreement dated on or about
the Filing Date (the "PURCHASE AGREEMENT"), the Investor Rights Agreement,
the Warrants or otherwise.
(iv) Subject to the provisions of Section 5(g), in the event
that a Conversion Triggering Event has occurred and the Corporation has
given the Notice as required by Section 5(b), all the shares of Series B
Preferred Stock shall be converted on the Mandatory Conversion Date as if
the holders thereof had delivered a Conversion Notice with respect to such
shares on such date. Promptly thereafter, the holders of the Series B
Preferred Stock shall deliver their certificates evidencing the Series B
Preferred Stock to the Corporation or its duly authorized transfer agent,
and upon receipt thereof, the Corporation shall issue or cause its
transfer agent to issue and deliver the certificates evidencing the Common
Stock into which the shares Series B Preferred Stock have been converted
in accordance with Section 5(c)(ii).
(d) BENEFICIAL OWNERSHIP CAP. To the extent that any shares of
Series B Preferred Stock are not automatically converted upon the occurrence of
a Mandatory Conversion on account of the application of Section 5(g), such
shares of Series B Preferred Stock shall be deemed converted automatically under
this Section 5 at the first moment thereafter when Section 5(g) would not
prevent such conversion. Notwithstanding the preceding sentence, upon the
occurrence of the Mandatory Conversion, the right to: (a) the Liquidation
Preference of the Series B Preferred Stock, including, without limitation, the
right to be treated as holders of Series B Preferred Stock in the event of a
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merger or consolidation; (b) the veto rights described in Section 4 hereof; and
(c) the right to receive dividends pursuant to Section 1 hereof (other than
unpaid dividends accrued as of the date of such Mantatory Conversion or
dividends payable pursuant to Section 1(d)) shall cease immediately.
(e) CONVERSION VALUE. The initial conversion value for the Series B
Preferred Stock shall be $2.00, such value to be subject to adjustment in
accordance with the provisions of this Section 5. Such conversion value in
effect from time to time, as adjusted pursuant to this Section 5, is referred to
herein as a "CONVERSION VALUE." All of the remaining provisions of this Section
5 shall apply separately to each Conversion Value in effect from time to time
with respect to Series B Preferred Stock.
(f) STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
prior to the Date of Original Issue or while the Series B Preferred Stock is
outstanding, the Corporation shall:
(i) cause the holders of its Common Stock to be entitled to
receive a dividend payable in, or other distribution of, additional shares
of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then in each such case the Conversion Value shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
Paragraph 5(f) shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clauses (ii) or (iii) of this Paragraph 5(f)
shall become effective immediately after the effective date of such subdivision
or combination. If any event requiring an adjustment under this paragraph occurs
during the period that a Conversion Value is calculated hereunder, then the
calculation of such Conversion Value shall be adjusted appropriately to reflect
such event.
(g) BLOCKING PROVISION.
(i) Except as provided otherwise in this Section 5(g)(i), the
number of Conversion Shares that may be acquired by any holder, and the
number of shares of Series B Preferred Stock that shall be entitled to
voting rights under Section 2(a) hereof, shall be limited to the extent
necessary to insure that, following such conversion (or deemed conversion
for voting purposes), the number of shares of Common Stock then
beneficially owned by such holder and its Affiliates and any other persons
or entities whose beneficial ownership of Common Stock would be aggregated
with the holder's for purposes of Section 13(d) of the Exchange Act of
1934, as amended (the "EXCHANGE ACT") (including shares held by any
"group" of which the holder is a member, but, for avoidance of doubt,
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excluding shares of Common Stock issuable upon conversion or exercise of
securities or rights to acquire securities that have limitations on the
right to convert, exercise or purchase similar to the limitation set forth
herein) does not exceed 4.99% of the total number of shares of Common
Stock of the Corporation then issued and outstanding (the "BENEFICIAL
OWNERSHIP CAP"). For purposes hereof, "group" has the meaning set forth in
Section 13(d) of the Exchange Act and applicable regulations of the
Securities and Exchange Commission, and the percentage held by the holder
shall be determined in a manner consistent with the provisions of Section
13(d) of the Exchange Act. As used herein, the term "AFFILIATE" means any
person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control
with a person or entity, as such terms are used in and construed under
Rule 144 under the Securities Act. With respect to a holder of Series B
Preferred Stock, any investment fund or managed account that is managed on
a discretionary basis by the same investment manager as such holder will
be deemed to be an Affiliate of such holder. Each delivery of a Conversion
Notice by a holder of Series B Preferred Stock will constitute a
representation by such Holder that it has evaluated the limitation set
forth in this paragraph and determined, subject to the accuracy of
information filed under the Securities Act and the Exchange Act by the
Corporation with respect to the outstanding Common Stock of the
Corporation, that the issuance of the full number of shares of Common
Stock requested in such Conversion Notice is permitted under this
paragraph. This paragraph shall be construed and administered in such
manner as shall be consistent with the intent of the first sentence of
this paragraph. Any provision hereof which would require a result that is
not consistent with such intent shall be deemed severed herefrom and of no
force or effect with respect to the conversion contemplated by a
particular Conversion Notice.
(ii) In the event the Corporation is prohibited from issuing
shares of Common Stock as a result of any restrictions or prohibitions
under applicable law or the rules or regulations of any stock exchange,
interdealer quotation system or other self-regulatory organization, the
Corporation shall as soon as possible seek the approval of its
stockholders and take such other action to authorize the issuance of the
full number of shares of Common Stock issuable upon the full conversion of
the then outstanding shares of Series B Preferred Stock.
(iii) Notwithstanding the foregoing provisions of Section
5(g), any holder of Series B Preferred Stock shall have the right prior to
the Closing Date (as defined in the Purchase Agreement) upon written
notice to the Corporation, or after the Closing Date (as defined in the
Purchase Agreement) upon (x) 61 days prior written notice to the
Corporation or (y) upon a Change of Control the terms of which require the
conversion of the Series B Preferred Stock into Common Stock, to choose
not to be governed by the Beneficial Ownership Cap provided herein.
(h) COMMON STOCK RESERVED. The Corporation shall at all times
reserve and keep available out of its authorized but unissued Common Stock,
solely for issuance upon the conversion of shares of Series B Preferred Stock as
herein provided, such number of shares of Common Stock as shall from time to
time be issuable upon the conversion of all the shares of Series B Preferred
Stock at the time outstanding (without regard to any ownership limitations
provided in Section 5(g)).
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(i) ADJUSTMENT UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.
(i) ADJUSTMENT TO CONVERSION VALUE. If at any time prior to
the Date of Original Issue or while any Series B Preferred Stock is
outstanding the Corporation shall issue or sell any additional shares of
Common Stock ("ADDITIONAL COMMON STOCK") in exchange for consideration in
an amount per share of Additional Common Stock less than the Conversion
Value at the time the shares of Additional Common Stock are issued or
sold, then, subject to Section 5(i)(v) below, the Conversion Value
immediately prior to such issue or sale shall be reduced to a price
determined by dividing:
(1) an amount equal to the sum of (a) the number of shares of
Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Conversion Value, plus (b) the
consideration, if any, received by the Corporation upon such issue
or sale; by
(2) the total number of shares of Common Stock outstanding
immediately after such issue or sale.
(ii) ISSUANCE OF COMMON STOCK EQUIVALENTS. If at any time
prior to the Date of Original Issue or while the Series B Preferred Stock
is outstanding the Corporation shall issue or sell any warrants or other
rights to subscribe for or purchase any additional shares of Common Stock
(regardless of the number of shares of Common Stock that the Corporation
is then authorized to issue) or any securities convertible, directly or
indirectly, into shares of Common Stock (collectively, "COMMON STOCK
EQUIVALENTS"), whether or not the rights to exchange or convert thereunder
are immediately exercisable, and the effective price per share for which
Common Stock is issuable upon the exercise, exchange or conversion of such
Common Stock Equivalents (the "COMMON STOCK EQUIVALENT PRICE") shall be
less than the current Conversion Value in effect immediately prior to the
time of such issue or sale, then the current Conversion Value shall be
adjusted as provided in Section 5(i)(i) on the basis that the additional
shares of Common Stock issuable pursuant to all such Common Stock
Equivalents shall be deemed to have been issued at the Common Stock
Equivalent Price, as of the date of the actual issuance of such Common
Stock Equivalents. No further adjustments to the current Conversion Value
shall be made under this Section 5(i) upon the actual issue of such Common
Stock upon the exercise, conversion or exchange of such Common Stock
Equivalents.
(iii) CERTAIN ISSUES OF COMMON STOCK OR COMMON STOCK
EQUIVALENTS EXCEPTED. The provisions of Paragraph 5(j) shall not apply to
any issuance of Additional Common Stock for which an adjustment is
provided under Paragraph 5(f). The Corporation shall not be required to
make any adjustment of the Conversion Value pursuant to Paragraph 5(j) in
the case of the issuance (each, an "EXEMPT ISSUANCE") of (A) shares of
Common Stock issued as dividends with respect to the Series B Preferred
Stock, (B) shares of Common Stock issued or issuable upon conversion of
any convertible securities outstanding as of the Closing Date in
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accordance with the terms thereof on the Closing Date, (C) shares of
Common Stock or Common Stock Equivalents issued in connection with any
stock-based compensation plans of the Corporation approved by the
stockholders of the Corporation and the Board including all (which shall
be at least three) independent directors, which shall not in the aggregate
exceed 20% of the Corporation's issued and outstanding Common Stock, (D)
shares of Series B Preferred Stock and Common Stock purchase warrants (the
"WARRANTS") issuable upon conversion of the Notes (as defined in the
Purchase Agreement) and conversion of the Existing Notes (as defined in
the Purchase Agreement) or shares of Common Stock issuable upon conversion
of the Series B Preferred Stock or upon exercise of the Warrants, (E)
securities or rights to acquire securities issued to financial
institutions in connection with commercial credit arrangements, equipment
financings, service agreements or similar transactions approved by the
Board and the primary purpose of which is not equity financing or (F)
securities or rights to acquire securities issued in connection with
strategic collaborations, development agreements, joint ventures or
licensing transactions, the terms of which are approved by the Board.
(iv) SUPERSEDING ADJUSTMENT. If, at any time after any
adjustment to the current Conversion Value shall have been made pursuant
to Section 5(i) as the result of any issuance of Common Stock Equivalents,
(x) the right to exercise, exchange or convert all of the Common Stock
Equivalents shall expire unexercised, or (y) the conversion rate or
consideration per share for which shares of Common Stock are issuable
pursuant to such Common Stock Equivalents shall be increased solely by
virtue of provisions therein contained for an automatic increase in such
conversion rate or consideration per share, as the case may be, upon the
occurrence of a specified date or event, then, unless any of such Common
Stock Equivalents have previously been converted or exercised at the
original price, any such previous adjustments to the Conversion Value
shall be rescinded and annulled and the additional shares of Common Stock
which were deemed to have been issued by virtue of the computation made in
connection with the adjustment so rescinded and annulled shall no longer
be deemed to have been issued by virtue of such computation. Upon the
occurrence of an event set forth in this Section 5(i)(iv) above, there
shall be a recomputation made of the effect of such Common Stock
Equivalents on the basis of treating any such Common Stock Equivalents
which then remain outstanding as having been granted or issued immediately
after the time of such increase of the conversion rate or consideration
per share for which shares of Common Stock or other property are issuable
under such Common Stock Equivalents; whereupon a new adjustment to the
current Conversion Value shall be made, which new adjustment shall
supersede the previous adjustment so rescinded and annulled.
(v) If an adjustment to the Conversion Value pursuant to the
formula set forth in Section 5(i)(i) above would result in a Conversion
Value of less than $0.765 (as adjusted for stock splits, reverse splits,
stock dividends and the like), then the Conversion value shall be $0.765
(as adjusted for stock splits, reverse splits, stock dividends and the
like).
13
6. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS. The following
provisions shall be applicable to the making of adjustments of the number of
shares of Common Stock into which the Series B Preferred Stock is convertible
and the current Conversion Value provided for in Section 5:
(a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by Section
5 shall be made whenever and as often as any specified event requiring an
adjustment shall occur, except that any adjustment to the Conversion Value that
would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for in
Section 5(f)) up to, but not beyond the Conversion Date if such adjustment
either by itself or with other adjustments not previously made adds or subtracts
less than 1% of the shares of Common Stock into which the Series B Preferred
Stock is convertible immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by Section 5 and not
previously made, would result in a minimum adjustment or on the Conversion Date.
For the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(b) FRACTIONAL INTERESTS. In computing adjustments under Section 5,
fractional interests in Common Stock shall be taken into account to the nearest
1/100th of a share.
(c) ESCROW OF STOCK. If after any property becomes distributable
pursuant to Section 5 by reason of the taking of any record of the holders of
Common Stock, but prior to the occurrence of the event for which such record is
taken, a holder of the Series B Preferred Stock either converts the Series B
Preferred Stock or there is a Mandatory Conversion during such period or such
holder is unable to convert shares pursuant to Section 5(g), such holder of
Series B Preferred Stock shall continue to be entitled to receive any shares of
Common Stock issuable upon conversion under Section 5 by reason of such
adjustment (as if such Series B Preferred Stock were not yet converted) and such
shares or other property shall be held in escrow for the holder of the Series B
Preferred Stock by the Corporation to be issued to holder of the Series B
Preferred Stock upon and to the extent that the event actually takes place.
Notwithstanding any other provision to the contrary herein, if the event for
which such record was taken fails to occur or is rescinded, then such escrowed
shares shall be canceled by the Corporation and escrowed property returned to
the Corporation.
7. MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS.
(a) If, after the Closing Date (as defined in the Purchase Agreement) and
while any share or shares of Series B Preferred Stock are outstanding, there
occurs, other than as a result of the sale of securities pursuant to the
Purchase Agreement: (i) an acquisition by an individual or legal entity or group
(as set forth in Section 13(d) of the Exchange Act) of more than 50% of the
voting rights or equity interests in the Corporation, whether in one transaction
or in a series of related transactions or (ii) a merger or consolidation of the
Corporation or a sale, transfer or other disposition of all or substantially all
the Corporation's property, assets or business to another corporation where the
holders of the Corporation's voting securities prior to such transaction fail to
continue to hold at least 50% of the voting power of the Corporation and such
transaction is approved by the Board (each, a "CHANGE OF CONTROL"), and,
14
pursuant to the terms of such Change of Control, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common stock of
the successor or acquiring corporation ("MERGER CONSIDERATION"), are to be
received by or distributed to the holders of Common Stock of the Corporation
then the successor or acquiring corporation (if other than the Corporation)
shall assume the Series B Preferred Stock pursuant to Section 7(b) below unless
the Corporation provides for all of the holders of the Series B Preferred Stock
to receive the Merger Consideration on an As-Converted Basis in exchange for
such holders' shares of Series B Preferred Stock upon the consummation of such
Change of Control transaction; PROVIDED THAT any such exchange may only be
effected by the Corporation in such a manner that it does not cause any holder
of the Series B Preferred Stock and its Affiliates and any other persons or
entities whose beneficial ownership would be aggregated with the holder's for
purposes of Section 13(d) of the Exchange Act to hold a higher percentage of any
class or series of a company's capital stock that is registered pursuant to
Section 12 of the Exchange Act than such holder would be permitted to hold of
the Common Stock pursuant to Section 5(g) hereof.
(b) Unless all of the shares of Series B Preferred Stock are
exchanged for the Merger Consideration as set forth in Section 7(a) above, in
case of any such Change of Control, the successor or acquiring corporation (if
other than the Corporation) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of contained
in this Certificate of Designation to be performed and observed by the
Corporation and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board) in order to provide for adjustments of shares of the Common Stock into
which the Series B Preferred Stock is convertible which shall be as nearly
equivalent as practicable to the adjustments provided for in Section 5. For
purposes of Section 5, common stock of the successor or acquiring corporation
shall include stock of such corporation of any class which is not preferred as
to dividends or assets on liquidation over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock.
(c) The foregoing provisions of this Section 7 shall similarly apply
to successive Change of Control transactions.
8. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from time
to time the Corporation shall take any action in respect of its Common Stock,
other than the payment of dividends permitted by Section 5 or any other action
described in Section 5, then, unless such action will not have a materially
adverse effect upon the rights of the holder of Series B Preferred Stock, the
number of shares of Common Stock or other stock into which the Series B
Preferred Stock is convertible and/or the purchase price thereof shall be
adjusted in such manner as may be equitable in the circumstances.
9. CERTAIN LIMITATIONS. Notwithstanding anything herein to the contrary,
the Corporation agrees not to enter into any transaction or take any other
action which, by reason of any adjustment hereunder, would cause the current
Conversion Value to be less than the par value per share of Common Stock.
15
10. COVENANTS OF THE CORPORATION. The Corporation covenants and agrees
that, so long as shares of Series B Preferred Stock are outstanding, it will
perform the obligations set forth in this Section 10:
(a) TAXES AND LEVIES. The Corporation will promptly pay and
discharge all taxes, assessments, and governmental charges or levies imposed
upon the Corporation or upon its income and profits, or upon any of its
property, before the same shall become delinquent, as well as all claims for
labor, materials and supplies which, if unpaid, might become a lien or charge
upon such properties or any part thereof; provided, however, that the
Corporation shall not be required to pay and discharge any such tax, assessment,
charge, levy or claim so long as the validity thereof shall be contested in good
faith by appropriate proceedings and the Corporation shall set aside on its
books adequate reserves in accordance with generally accepted accounting
principles ("GAAP") with respect to any such tax, assessment, charge, levy or
claim so contested;
(b) MAINTENANCE OF EXISTENCE. The Corporation will do or cause to be
done all things reasonably necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises and comply with all laws
applicable to the Corporation, except where the failure to comply would not have
a material adverse effect on the Corporation;
(c) MAINTENANCE OF PROPERTY. The Corporation will at all times
maintain, preserve, protect and keep its property used or useful in the conduct
of its business in good repair, working order and condition, and from time to
time make all needful and proper repairs, renewals, replacements and
improvements thereto as shall be reasonably required in the conduct of its
business;
(d) INSURANCE. The Corporation will, to the extent necessary for the
operation of its business, keep adequately insured by financially sound
reputable insurers, all property of a character usually insured by similar
corporations and carry such other insurance as is usually carried by similar
corporations;
(e) BOOKS AND RECORDS. The Corporation will at all times keep true
and correct books, records and accounts reflecting all of its business affairs
and transactions materially in accordance with GAAP; and
(f) NOTICE OF CERTAIN EVENTS. The Corporation will give prompt
written notice (with a description in reasonable detail) to the holders of
Series B Preferred Stock in the event the Corporation shall:
(i) become insolvent or generally fail or be unable to pay, or
admit in writing its inability to pay, its debts as they become due;
16
(ii) apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, sequestrator or other custodian for the
Corporation or any of its property, or make a general assignment for
the benefit of creditors;
(iii) in the absence of such application, consent or acquiesce
in, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Corporation or for
any part of its property;
(iv) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of the
Corporation, and, if such case or proceeding is not commenced by the
Corporation or converted to a voluntary case, such case or
proceeding shall be consented to or acquiesced in by the Corporation
or shall result in the entry of an order for relief;
(v) enter into any agreement to merge or consolidate with any
other person or sell, transfer or lease all or substantially all of
its assets to any other person; or
(vi) declare any split of its outstanding shares of capital
stock, declare or make any dividend or distribution, or subdivide,
reclassify or combine any of its outstanding shares of capital
stock.
(g) OTHER NOTICES. The Corporation shall distribute to the holders
of the Series B Preferred Stock all communications sent by the Corporation to
the holders of the Common Stock.
11. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment
or readjustment of the Conversion Value, the Corporation, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series B Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon the written request at any time of any holder of Series B Preferred
Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Value
at the time in effect for the Series B Preferred Stock and (iii) the number of
shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of Series B Preferred Stock owned by
such holder (without regard to the ownership limitations set forth in Section
5(g)).
12. NOTICES OF RECORD DATE. In the event of any fixing by the Corporation
of a record date for the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend or a dividend set forth in Section 1 hereof) or other
distribution, any shares of Common Stock or other securities, or any right to
subscribe for, purchase or otherwise acquire, or any option for the purchase of,
any shares of stock of any class or any other securities or property, or to
receive any other right, the Corporation shall mail to each holder of Series B
17
Preferred Stock at least twenty (20) days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or rights, and the amount and character
of such dividend, distribution or right.
13. NO REDEMPTION AND UNISSUED SHARES.
(a) NO REDEMPTION. The Corporation may not redeem the outstanding
shares of Series B Preferred Stock and the holders shall not have any right, at
any time or under any circumstances, to require the Corporation to redeem any of
the Series B Preferred Stock.
(b) STATUS OF AUTHORIZED, BUT UNISSUED SHARES OF SERIES B PREFERRED
STOCK. Shares of Series B Preferred Stock shall be issued only upon conversion
of the Notes (as defined in the Purchase Agreement) or the Existing Notes (as
defined in the Purchase Agreement) or pursuant to Section 5.17 of the Purchase
Agreement. Any attempt of the Corporation to issue shares of Series B Preferred
Stock other than in accordance with this Section 13(b) shall be null and void.
14. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:00 p.m. (New York, NY time) on a business
day, (b) the next business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a business day or later than 5:00 p.m. (New
York, NY time) on any business day, or (c) the business day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service such
as Federal Express with next day delivery specified. The address for such
notices and communications shall be as follows: (i) if to the Corporation, to
GlobalOptions Group, Inc., 75 Rockefeller Plaza, 27th Floor, New York, New York
10019, Attn: President, Fax: 212-445-0053, or (ii) if to a holder of Series B
Preferred Stock, to the address or facsimile number appearing on the
Corporation's stockholder records or, in either case, to such other address or
facsimile number as the Corporation or a holder of Series B Preferred Stock may
provide to the other in accordance with this Section.
15. STOCK TRANSFER TAXES. The issue of stock certificates upon conversion
of the Series B Preferred Stock shall be made without charge to the converting
holder for any tax in respect of such issue; provided, however, that the
Corporation shall be entitled to withhold any applicable withholding taxes with
respect to such issue, if any. 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 shares in any name other than that of the holder of any of
the Series B Preferred Stock converted, and the Corporation shall not be
required to issue or deliver any such stock certificate unless and until the
person or persons requesting the issue thereof shall have paid to the
Corporation the amount of such tax or shall have established to the satisfaction
of the Corporation that such tax has been paid.
[signature page follows]
18
IN WITNESS WHEREOF, the undersigned being a duly authorized officer of
the Corporation, does file this Certificate of Designations, hereby declaring
and certifying that the facts stated herein are true and accordingly has
hereunto set his hand this 6th day of November, 2006.
GLOBALOPTIONS GROUP, INC.
By: /s/ Harvey W. Schiller, Ph.D.
----------------------------------------
Name: Harvey W. Schiller, Ph.D.
Title: Chairman and Chief Executive
Officer
19
EXHIBIT A
FORM OF CONVERSION NOTICE
(To be executed by the registered Holder in order to convert shares of Series
B Preferred Stock)
The undersigned hereby irrevocably elects to convert the number of shares
of Series B Cumulative Convertible Series B Preferred Stock (the "SERIES B
PREFERRED STOCK") indicated below into shares of common stock, par value $0.001
per share (the "COMMON STOCK"), of GlobalOptions Group, Inc., a Delaware
corporation (the "CORPORATION"), according to the Certificate of Designation of
the Series B Preferred Stock and the conditions hereof, as of the date written
below. The undersigned hereby requests that certificates for the shares of
Common Stock to be issued to the undersigned pursuant to this Conversion Notice
be issued in the name of, and delivered to, the undersigned or its designee as
indicated below. If the shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. A copy of the certificate representing the Series
B Preferred Stock being converted is attached hereto, the original of which will
be delivered to the Corporation promptly following the date hereof.
- --------------------------------------------------------------------------------
Date of Conversion (Date of Notice)
- --------------------------------------------------------------------------------
Number of shares of Series B Preferred Stock owned prior to Conversion
- --------------------------------------------------------------------------------
Number of shares of Series B Preferred Stock to be Converted
- --------------------------------------------------------------------------------
Stated Value of Series B Preferred Stock to be Converted
- --------------------------------------------------------------------------------
Amount of accumulated and unpaid dividends on shares of Series B Preferred
Stock to be Converted
- --------------------------------------------------------------------------------
Number of shares of Common Stock to be Issued (including conversion of
accrued but unpaid dividends on shares of Series B Preferred Stock to be
Converted)
- --------------------------------------------------------------------------------
Applicable Conversion Value
- --------------------------------------------------------------------------------
Number of shares of Series B Preferred Stock owned subsequent to Conversion
Conversion Information:[NAME OF HOLDER]
- -----------------------------------
Address of Holder:
- -----------------------------------
- -----------------------------------
20
Issue Common Stock to (if different than above):
Name:
-------------------------------
Address:
---------------------------
---------------------------
Tax ID #:
--------------------------
The undersigned represents, subject to the accuracy of information filed
under the Securities Act and the Exchange Act by the Corporation with respect to
the outstanding Common Stock of the Corporation, as of the date hereof that,
after giving effect to the conversion of Preferred Shares pursuant to this
Conversion Notice, the undersigned will not exceed the "Beneficial Ownership
Cap" contained in Section 5(g) of the Certificate of Designation of the Series B
Preferred Stock.
- ------------------------------------
Name of Holder
By:
--------------------------------
Name:
Title:
21
