Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF
JUNIPER GROUP, INC
It is hereby certified that:
The name of the corporation (hereinafter called the "Corporation) is JUNIPER
GROUP, INC.
The certificate of incorporation of the Corporation authorizes issuance of
875,000 shares of preferred stock, par value $0.10 per share, and expressly
vests in the board of directors of the Corporation the authority provided
therein to issue any or all of said shares in one or more series and by
resolution or resolutions to establish from time to time the number of shares to
be included in such series and to fix the designation, powers, preferences, and
rights of the shares of each such series and the qualifications, limitations, or
restrictions thereof.
The board of directors has previously designated 375,000 shares of preferred
stock as 12% Non-voting Convertible Redeemable Preferred Stock.
The board of directors of the Corporation, pursuant to the authority expressly
vested in it as aforesaid, has adopted the following resolutions creating a
further series issue of convertible preferred stock:
RESOLVED, that there shall be a series of shares of the Corporation designated
"Series B Convertible Preferred Stock"; that the number of shares of such series
shall be 135,000 and that the rights and preferences of such series (the "Series
B Preferred") and the limitations or restrictions thereon, shall be as set forth
herein;
The following shall be adopted and incorporated by reference into the foregoing
resolutions as if fully set forth therein:
1. Liquidation Preference; Redemption.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the Series B
Preferred shall be entitled to receive, prior and in preference to any
distribution of any assets of the Corporation to the holders of the Common
Stock, the amount of $20 per share (the "Liquidation Preference").
(b) A consolidation or merger of the Corporation with or into any other
corporation or corporations, or a sale of all or substantially all of the assets
of the Corporation (other than a sale or transfer to a wholly owned subsidiary
of the Corporation), shall, at the option of the holders of the Series B
Preferred, be deemed a liquidation, dissolution or winding up within the meaning
of this Section 2 if the shares of stock of the Corporation outstanding
immediately prior to such transaction represent immediately after such
transaction less than a majority of the voting power of the surviving
corporation (or of the acquirer of the Corporation's assets in the case of a
sale of assets). Such option may be exercised by the vote or written consent of
holders of a majority of the Series B Preferred at any time within thirty (30)
days after written notice (which shall be given promptly) of the essential terms
of such transaction shall have been given to the holders of the Series B
Preferred in the manner provided by law for the giving of notice of meetings of
shareholders.
2. Series B Preferred - Optional Conversion. The holders of the Series B
Preferred shall have optional conversion rights as follows:
(a) Right to Convert. From and after the earlier of: (i) forty-five (45) days
after last conversion of 8% Callable Secured Notes or (ii)12 months after the
effectiveness of the registration statement filed with the SEC relating to same
(herein, the "lock-up period"), shares of Series B Preferred shall be
convertible, at the option of the holder thereof, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing (x) the
Liquidation Preference of the Series B Preferred determined pursuant to Section
2 hereof on the date the notice of conversion is given, by (y) the Conversion
Price determined as hereinafter provided in effect on the applicable conversion
date.
(b) Mechanics of Conversion. To convert shares of Series B Preferred into shares
of Common Stock under Section 3(a), the holder shall give written notice to the
Corporation (which notice may be given by facsimile transmission) that such
holder elects (with the right to revoke) to convert the shares and shall state
therein date of the conversion, the number of shares to be converted and the
name or names in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued. Promptly thereafter, the holder shall
surrender the certificate or certificates representing the shares to be
converted, duly endorsed, at the office of the Corporation or of any transfer
agent for such shares, or at such other place designated by the Corporation;
provided, that the holder shall not be required to deliver the certificates
representing such shares if the holder is waiting to receive all or part of such
certificates from the Corporation. The Corporation shall immediately issue and
deliver to or upon the order of such holder, against delivery of the
certificates representing the shares which have been converted, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled. The Corporation shall cause such issuance to be effected within
five (5) business days and shall transmit the certificates by messenger or
overnight delivery service to reach the address designated by such holder within
five (5) business days after the receipt of such notice. The notice of
conversion may be given by a holder at any time during the day up to 5:00 p.m.
New York time and such conversion shall be deemed to have been made immediately
prior to the close of business on the date such notice of conversion is given.
The person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock at the close of business on such date.
( c ) Determination of Conversion Price.
(i) The "Conversion Price" shall be equal to the average of the volume weighted
average price of the Common Stock as reported by Bloomberg during the ten (10)
consecutive trading days preceding the conversion date (but not including such
date).
(ii) The term "trading day" means a day on which trading is reported on the
principal quotation system or market on which prices of the Common Stock are
reported.
(iii) If, during the period of consecutive trading days provided for above, the
Corporation shall declare or pay any dividend on the Common Stock payable in
Common Stock or in rights to acquire Common Stock, or shall effect a stock split
or reverse stock split, or a combination, consolidation or reclassification of
the Common Stock, the Conversion Price shall be proportionately decreased or
increased, as appropriate, to give effect to such event.
5 ( d ) Distributions. If the Corporation shall at any time or from time to time
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation or any of its subsidiaries other than additional
shares of Common Stock, then in each such event provision shall be made so that
the holders of Series B Preferred shall receive, upon the conversion thereof,
the securities of the Corporation which they would have received had they been
the owners on the date of such event of the number of shares of Common Stock
issuable to them upon conversion.
( f ) Notice of Record Date. In the event of any taking by the Corporation of a
record of the holders of any Series of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any security or right convertible into or
entitling the holder thereof to receive additional shares of Common Stock, or
any right to subscribe for, purchase or otherwise acquire any shares of stock of
any Series or any other securities or property, or to receive any other right,
the Corporation shall mail to each holder of Series B Preferred at least ten
(10) 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, security or right and the amount and character of such dividend,
distribution, security or right.
( g ) Reservation of Stock Issuable Upon Conversion. The Corporation shall use
its best efforts to at all times following the expiration of the lock-up period
to reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the shares
of the Series B Preferred, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of the Series B Preferred, and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series B Preferred, the
Corporation will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose, including, without limitation, engaging in best
efforts to obtain any requisite shareholder approval.
( h ) Fractional Shares. No fractional shares shall be issued upon the
conversion of any share or shares of Series B Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series B Preferred by a holder thereof shall be aggregated for purposes
of determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of a fraction of a share of Common Stock, the Corporation
shall, in lieu of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash equal to the fair market value of such
fraction on the date of conversion (as determined in good faith by the Board of
Directors of the Corporation or an authorized Committee thereof).
( i ) Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by fax (with correct answer back received), telecopy or
facsimile at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second (2nd) business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
to the Company: Juniper Group, Inc.
111 Great Neck Rd
Great Neck, New York 11021
Attn: VladoP. Hreljanovic, President and CEO
FAX (516) 829-4691
to the Holder: At the address set forth on the books
and records of the Company or as specified
in writing by Holder.
Any party hereto may from time to time change its address for notices by giving
at least ten (10) days' written notice of such changed address to the other
party hereto.
( k ) Reorganization or Merger. In case of any reorganization or any
reclassification of the capital stock of the Corporation or any consolidation or
merger of the Corporation with or into any other corporation or corporations or
a sale of all or substantially all of the assets of the Corporation to any other
person (other than a sale or transfer to a wholly owned subsidiary of the
Corporation), and the holders of Series B Preferred do not elect to treat such
transaction as a liquidation, dissolution or winding up as provided in Section 1
hereof, then, as part of such reorganization, consolidation, merger or sale,
provision shall be made so that each share of Series B Preferred shall
thereafter be convertible into the number of shares of stock or other securities
or property (including cash) to which a holder of the number of shares of Common
Stock deliverable upon conversion of such share of Series B Preferred would have
been entitled upon the record date of (or date of, if no record date is fixed)
such event and, in any case, appropriate adjustment (as determined by the Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the holders of the
Series B Preferred, to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as equivalent as is practicable, in relation
to any shares of stock or the securities or property (including cash) thereafter
deliverable upon the conversion of the shares of Series B Preferred.
3. Re-issuance of Certificates. In the event of a conversion (or, if applicable,
redemption) of Series B Preferred in which less than all of the shares of Series
B Preferred of a particular certificate are converted or redeemed, as the case
may be, the Corporation shall promptly cause to be issued and delivered to the
holder of such certificate, a certificate representing the remaining shares of
Series B Preferred which have not been so converted or redeemed.
4. Voting Rights. The holders of the Series B Preferred shall have the right to
vote together with the holders of the Corporation's Common Stock, on a 30 votes
per share basis (and not as a separate class), on all matters presented to the
holders of the Common Stock.
5. Dividends. The holders of the Series B Preferred shall not be entitled to any
dividends.
6. No Adverse Actions. The Corporation shall not in any manner, whether by
amendment of the Certificate of Incorporation (including, without limitation,
any Certificate of Designation), merger, reorganization, re-capitalization,
consolidation, sales of assets, sale of stock, tender offer, dissolution or
otherwise, take any action, or permit any action to be taken, solely or
primarily for the purpose of increasing the value of any Series of stock of the
Corporation if the effect of such action is to reduce the value or security of
the Series B Preferred.
7. Additional Restrictions. For as long as any shares of the Series B Preferred
Stock are outstanding, the Corporation will not amend the terms of the Series B
Preferred Stock without the consent of the holders of the Series B Preferred
Stock.
Executed as of December 15, 2005.
JUNIPER GROUP, INC.
By:/s/ Vlado P. Hreljanovic
Vlado P. Hreljanovic
President and CEO