EX-3.1 2 ex3_1.htm ex3_1.htm

Exhibit 3.1

CERTIFICATE OF DESIGNATION

OF

SERIES G CONVERTIBLE PREFERRED STOCK

OF

FLINT TELECOM GROUP, INC.

_________________________


Flint Telecom Group, Inc., a Nevada corporation (the "Company") certifies that pursuant to the authority contained in ARTICLE IV of its Articles of Incorporation, as amended (the "Articles of Incorporation"), the Board of Directors of the Company (the "Board of Directors"), by unanimous written consent in lieu of a meeting effective June 17, 2010, duly approved and adopted the following resolution, which resolution remains in full force and effect on the date hereof:

RESOLVED, that pursuant to the authority vested in the Board of Directors by the Articles of Incorporation, the Board of Directors does hereby designate, create, authorize and provide for the issue of a series of preferred stock, having $0.001 par value per share, which shall be designated as Series G Convertible Preferred Stock, and which shall have the voting powers, designations, preferences, limitations, restrictions, and relative rights as follows:

 
 
 

CERTIFICATE OF DESIGNATION OF
SERIES G CONVERTIBLE PREFERRED STOCK
OF FLINT TELECOM GROUP, INC.

 
1.           Designation, Amount, Par Value, Liquidation Value and Rank.
 

a.  The Preferred Stock authorized under this Certificate of Designation shall be designated as the Series G Convertible Preferred Stock (the “Series G Preferred”), and the   number of shares so designated shall be 153,779.66 subject to adjustment for any stock splits, stock dividends or similar transactions affecting the Series G Preferred, and which shall not be subject to increase without the consent of each holder of the Series G Preferred (each, a “Holder”, and collectively, the “Holders”).  Each share of Series G Preferred, having $0.001 par value per share, shall have a liquidation value of $0.60 per share (the “Liquidation Value”).

b.  The Series G Preferred shall, with respect to dividends and distributions upon liquidation, dissolution or winding up of the Company, rank senior to all classes of Common Stock, and rank junior to the Series E and F Preferred and any other series of Preferred Stock that is not, expressly by its terms, made junior to the Series G Preferred.
 
2.           Dividends.  The Holders of the Series G Preferred shall not be entitled to dividend payments.
 
 
3.           Voting Rights. Except as expressly provided otherwise herein, or as required by law, the holders of shares of Series G Preferred Stock shall vote together as a single class with the holders of the Common Stock, on the basis of one vote per share of Series G Preferred Stock.
 

4.           Liquidation.

a.  Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of record of the Series G Preferred shall be entitled to receive, out of the assets of the Company and before any distribution or payment is made upon any shares of Common Stock or any series of Preferred Stock junior in rank to the Series G Preferred, for each share of Series G Preferred, an amount per share equal to the greater of (i) the Liquidation Value or (ii) the assets of the Company available for distribution to its stockholders, distributed ratably among the Holders of the outstanding Preferred Stock (determined on an “as converted” basis) and the holders of all of the outstanding capital stock of the Company.  If the assets of the Company shall be insufficient to pay in full all amounts due to the Holders of the Series G Preferred then the entire assets of the Company shall be distributed to such Holders ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.

b.  After setting apart or paying in full the amounts described in Section (4)(a) hereof, the holders of record of Common Stock and any Preferred Stock junior in rank to the Series G Preferred shall be entitled to participate in any distribution of any remaining assets of

 
 
 

the Company, and the Holders of the Series G Preferred shall not be entitled to participate in such distribution.

c.  The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

 
5.           Mechanics of Conversion.
 
a.           Holder’s Delivery Requirements.   Each share of Series G Preferred shall be convertible, at the option of the Holder thereof, at any time after the date on which the Company’s Articles of Incorporation shall have been amended to increase the number of total authorized shares of common stock to 900,000,000 or greater, into that number of fully paid and non-assessable shares of Common Stock as is determined by the conversion price of $0.01 per Preferred Share, for a full conversion of all 153,779.66 issued and outstanding shares of Series G Preferred into a maximum potential total of fifteen million three hundred and seventy seven thousand nine hundred and sixty six (15,377,966) shares of common stock.  A Holder shall effect conversions by surrendering to the Company the certificate or certificates representing the shares of Series G Preferred to be converted, together with a copy of the form of conversion notice attached hereto as Exhibit A (the “Conversion Notice”).  Each Conversion Notice shall specify the Holder, the number of shares of Series G Preferred to be converted and the date on which such conversion is to be effected, which date may not be prior to the date the Holder delivers such Conversion Notice by email (the “Conversion Date”).  If no Conversion Date is specified in a Conversion Notice the Conversion Date shall be the date that the Conversion Notice is deemed delivered pursuant to Section 11.  Subject to Section 5(b) hereof, each Conversion Notice, once given, shall be irrevocable.

b.  Company’s Response.  Not later than one (1) trading day after any Conversion Date, the Company will use  its best efforts to cause to be delivered to the Holder, or to such Holder’s designee, (i) a certificate or certificates which shall contain the number of shares of Common Stock being acquired upon the conversion of shares of Series G Preferred and (ii) if the Holder is converting less than all shares of Series G Preferred represented by the certificate or certificates tendered by the Holder with the Conversion Notice, one or more certificates representing the number of shares of Series G Preferred not converted.

6. Reservation of Shares.  The Company covenants that it will use its best efforts to receive majority shareholder approval to increase the total authorized common stock to at least 900,000,000 shares by no later than August 15, 2010 and at all times thereafter reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of issuance upon conversion of the Series G Preferred and free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of Series G Preferred, not less than 100% of such number of shares of Common Stock as shall  be issuable (taking into account the adjustments of Section 7) upon the conversion of all outstanding shares of Series G Preferred (without regard to any limitations on conversion).  The Company shall, from time to time in accordance with Nevada law, take all steps necessary to increase the authorized amount of its Common Stock if at any time the authorized number of shares of Common Stock remaining unissued shall not be sufficient to permit the conversion of all of the shares of the Series G Preferred.  The Company covenants that all shares of Common Stock that shall be so issuable

 
 
 

shall, upon issue, be duly authorized, validly issued and fully paid, nonassessable and, subsequent to the effectiveness of a registration statement, freely tradable.

7. Maximum Conversion.  The Holder shall not be entitled to convert these shares of Series G Preferred into shares of common stock on an exercise date, in connection with that number of shares of Common Stock which would be in excess of the sum of the number of shares of Common Stock beneficially owned by the Holder and its affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the conversion of the shares of Series G Preferred with respect to which the determination of this limitation is being made on an exercise date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock on such date.  For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Rule 13d-3 thereunder.  Subject to the foregoing, the Holder shall not be limited to aggregate exercises which would result in the issuance of more than 4.99%.
 
8.           Adjustment of Conversion Price.
 

a.      Common Stock Dividends; Common Stock Splits; Reclassification.  If the Company, at any time after the Original Issue Date shall (a) subdivide outstanding shares of Common Stock into a larger or smaller number of shares or (b) issue by reclassification of shares of Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding before such event and the denominator of which shall be the number of shares of Common Stock outstanding after such event.  Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or re-classification.

b.      Rounding.  All calculations under this Section 7 shall be made to the nearest cent or the nearest l/l00th of a share, as the case may be.

c.      Notice of Adjustment.  Whenever the Conversion Price is adjusted pursuant to this Section 7 the Company shall promptly mail to the Holders a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.  Such notice shall be signed by the chairman, president or chief financial officer of the Company.

d.      Change of Control; Compulsory Share Exchange. In case of (A) any Change of Control Transaction or (B) any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property (each, an “Event”), lawful provision shall be made so that the Holders shall have the right thereafter to convert the shares of Series F Preferred for shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such Event, and the Holders shall be entitled upon such Event to receive such amount of shares of stock and other securities, cash or property as the shares of the Common Stock of the Company into which the shares of Series G Preferred could have been converted immediately prior to such Event (without taking into account any

 
 
 

limitations or restrictions on the convertibility of the Securities) would have been entitled.  The provisions of this Section 7(d) shall similarly apply to successive Events.

e.           Notice of Certain Events.  If:

(i)         the Company shall declare a dividend (or any other distribution) on its Common Stock;

(ii)         the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock;

 
(iii)
the Company shall authorize the granting to the holders of its Common Stock rights, options or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights;

(iv)         the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or

(v)         the Company shall authorize the Liquidation of the affairs of the Company;

then the Company shall cause to be filed at each office or agency maintained for the purpose of the conversion of the Series G Preferred, and shall cause to be delivered to the Holders at the address specified herein, at least 30 (thirty) calendar days prior to the applicable record or effective date hereinafter specified, a notice (provided such notice shall not include any material non-public information) stating (a) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, or granting of options, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights, options or warrants are to be determined or (b) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  Nothing herein shall prohibit the Holders from converting shares of Series G Preferred held by such Holder during the 30-day period commencing on the date of such notice to the effective date of the event triggering such notice.

9.   Transferability; Right of First Refusal. The holders of the Series G Preferred shall be entitled, at their option, to transfer the Series G Preferred to a third party, but only after giving the Company a right of first refusal.  The Company shall have a right of first refusal with respect to any offer to transfer the Series G Preferred to any third party(ies) undertaken by the holders, as follows.  In the event that the holders propose to sell, assign or otherwise transfer ownership of the shares (a “Proposed Transaction”), then the holders shall send to the Company a notice in

 
 
 

writing of all of the terms of the Proposed Transaction (such notice, the “Offer Notice”).  The Offer Notice shall constitute an irrevocable offer to sell the securities which are the subject of the Proposed Transaction (the “Offered Securities”) to the Company, on the basis described in the Proposed Transaction.

At any time within ten (10) business days after receipt by the Company of the Offer Notice (the “Option Period”), the Company may elect to accept the offer to purchase with respect to all of the Offered Securities under identical terms of the Proposed Transaction and shall give written notice of such election (the “Acceptance Notice”) to the Company within the Option Period.  The closing for any purchase of Offered Securities by the Company shall take place within thirty (30) days following the expiration of the Option Period.   After the expiration of the Option Period, if the Company has not provided to the holders an Acceptance Notice for all of the Offered Securities under identical terms of the Proposed Transaction, then the holders may offer such Offered Securities on identical terms to third parties.  However, in the course of negotiation with third parties, if the terms of the Proposed Transaction are materially modified, then the holders shall again send an Offer Notice to the Company outlining any such material modification of the Proposed Transaction (the “Revised Transaction”) and shall grant the Company a new Offering Period in which to accept such Revised Transaction

 
10.           Definitions. For the purposes hereof, the following terms shall have the following meanings:
 

“Affiliate” of any Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person.  For the purposes of this definition, “control” when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.

 “Appraiser” means a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing.

“Change of Control” means the sale, conveyance or disposition of all or substantially all of the assets of the Company, the effectuation by the Company of a transaction or series of related transactions in which more than 50% of the voting power of the Company is disposed of, or the consolidation, merger or other business combination of the Company with or into any other Person (as defined below) or Persons when the Company is not the survivor.

 “Common Stock” means the Company’s common stock, $.01 par value per share, and stock of any other class into which such shares may hereafter have been reclassified or changed.

“Liquidation Value” has the meaning set forth in Section 1 hereof.

 
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

 
 
 

 “Preferred Stock” means the preferred stock of the Company, having $0.001 par value per share.
 
11.           Notices.  Except as otherwise provided in the event of conversion of shares of Series G Preferred, all notices or other communications required hereunder shall be in email. The email address for the company shall be vbrowne@flinttelecomgroup.com and the email address for the Holder shall be asilberstein@agscapitalgroup.com
 

12.           Lost or Stolen Certificates.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any stock certificates representing the shares of Series G Preferred, and, in the case of loss, theft or destruction, of any indemnification undertaken by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of such Series G Preferred stock certificate(s), the Company shall execute and deliver new preferred stock certificate(s) of like tenor and date; provided, however, the Company shall not be obligated to re-issue preferred stock certificates if the Holder contemporaneously requests the Company to convert such Series G Preferred into Common Stock.

13.           Remedies Characterized; Other Obligations, Breaches and Injunctive Relief.  The remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available under this Certificate of Designation, at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Certificate of Designation.  The Company covenants to each Holder of Series G Preferred that there shall be no characterization concerning this instrument other than as expressly provided herein.  Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders of the Series G Preferred and that the remedy at law in the event of any such breach may be inadequate.  The Company therefore agrees that, in the event of any such breach or threatened breach, the Holders of the Series G Preferred shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

14.           Specific Shall Not Limit General; Construction.  No specific provision contained in this Certificate of Designation shall limit or modify any more general provision contained herein.  This Certificate of Designation shall be deemed to be jointly drafted by the Company and all Purchasers (as defined in this Purchase Agreement) and shall not be construed against any Person as the drafter hereof.

15.           Failure or Indulgence Not Waiver.  No failure or delay on the part of a Holder of Series G Preferred in the exercise of any power, right or privilege hereunder shall operate as a

 
 
 

waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

            16.     Fractional Shares. Upon a conversion hereunder, the Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the Per Share Market Value at such time. If the Company elects not, or is unable, to make such a cash payment, the Holder of a share of Series G Preferred shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock.

17.           Omitted.

18.           Shares Owned by Company Deemed Not Outstanding. In determining whether the Holders of the outstanding shares of Series G Preferred have concurred in any direction, consent or waiver under this Certificate of Designation, shares of Series G Preferred which are owned by the Company or any other obligor thereof shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided, that any Series G Preferred owned by the Holders shall be deemed outstanding for purposes of making such a determination.  Shares of the Series G Preferred so owned which have been pledged in good faith may be regarded as outstanding if (i) the pledgee establishes to the satisfaction of the Holders and the Company the pledgee’s right so to act with respect to such shares and (ii) the pledgee is not the Company or any other obligor of the Company.

19.           Communications.  The holders of the Series G Preferred shall be entitled to receive, and the Company shall deliver pursuant to Section 11 hereof, all  communications sent by the Company to the holders of the Common Stock.

20.           Reacquired Shares. Any shares of Series G Preferred redeemed, purchased, converted or otherwise acquired by the Company in any manner whatsoever shall not be reissued as part of the Company’s Series G Preferred and shall be retired promptly after the acquisition thereof.  All such shares shall become, upon their retirement (and the filing of any certificate required in connection therewith pursuant to the General Corporation Law of the state of Nevada), authorized but unissued shares of Preferred Stock.

           21.      Liquidated Damages. Company shall pay Holder 5% liquidated damages in cash on a weekly basis of the aggregate amount that Holder requests to convert and which Company has failed to convert within 5 business days after the Notice of Conversion has been sent to the Company. Liquidated damages will be assessed until the common shares have been delivered to Holder.

22.         Effect of Headings.  The section headings herein are for convenience only and shall not affect the construction hereof.

 
 
 


 
IN WITNESS WHEREOF, Flint Telecom Group, Inc. has caused this Certificate of Designation to be signed by its Chief Executive Officer on this 17th day of June, 2010.


By:      /s/ Vincent Browne
Name:  Vincent Browne
Title:    Chief Executive Officer