Exhibit 4.1
CERTIFICATE OF DESIGNATION
OF
RED GIANT ENTERTAINMENT, INC.
(Pursuant to NRS 78.1955)
The undersigned hereby certifies that the following resolution has been
duly adopted by the Board of Directors (the "Board") of Red Giant Entertainment,
Inc. (the "Corporation"):
RESOLVED, that, pursuant to the authority granted to and vested in the
Board by the provisions of the Amended and Restated Articles of Incorporation of
the Corporation (the "Articles"), there hereby is created, out of the
100,000,000 shares of preferred stock, par value $0.0001 per share, of the
Corporation authorized by the Articles (the "Preferred Stock"), a series of
Series Z Preferred Stock (the "Series Z Preferred"), which shares of Series Z
Preferred shall have the following voting powers, designations, preferences,
limitations, restrictions, and relative rights:
1. Designation; Rank. This series of Preferred Stock shall be designated
and known as "Series Z Preferred Stock." The number of shares constituting the
Series Z Preferred shall be 5,000,000 shares. Except as otherwise provided
herein, the Series Z Preferred shall, with respect to rights on liquidation,
winding up and dissolution, rank senior to the Corporation's common stock, par
value $0.0001 per share (the "Common Stock"). The number of shares constituting
such series may, unless prohibited by the Articles or by applicable law of the
State of Nevada and subject to Section 4 herein, be increased or decreased from
time to time by a resolution or resolutions of the Board, provided, that no
decrease shall reduce the number of shares of Series Z Preferred to a number
less than the number of shares then outstanding plus the number of shares
issuable upon the exercise of outstanding options, rights, or warrants, or upon
the conversion of any outstanding securities issued by the Corporation
convertible into shares of Series Z Preferred. Shares of Series Z Preferred
repurchased or redeemed by the Corporation shall be canceled and shall revert to
authorized but unissued shares of Preferred Stock, undesignated as to series,
subject to reissuance by the Corporation as shares of Preferred Stock of any one
or more series other than the Series Z Preferred.
2. Liquidation Preference.
(a) Upon the liquidation, dissolution or winding up of the business of the
Corporation, whether voluntary or involuntary, each holder of shares of Series Z
Preferred shall be entitled to receive, for each share thereof, out of assets of
the Corporation legally available therefor, a preferential amount in cash equal
to (and not more than) the Original Issue Price (as defined below). All
preferential amounts to be paid to the holders of shares of Series Z Preferred
in connection with such liquidation, dissolution or winding up shall be paid
before the payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation to the holders of (i) any other
class or series of capital stock whose terms expressly provide that the holders
of Series Z Preferred should receive preferential payment with respect to such
distribution (to the extent of such preference) and (ii) the Common Stock. If
upon any such distribution the assets of the Corporation shall be insufficient
to pay the holders of the outstanding Series Z Preferred (or the holders of any
class or series of capital stock ranking on a parity with the Series Z Preferred
as to distributions in the event of a liquidation, dissolution or winding up of
the Corporation) the full amounts to which they shall be entitled, such holders
shall share ratably in any distribution of assets in accordance with the sums
which would be payable on such distribution if all sums payable thereon were
paid in full.
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(b) The Series Z Preferred "Original Issue Price" shall be $0.03 per share.
(c) Any distribution in connection with the liquidation, dissolution or
winding up of the Corporation, or any bankruptcy or insolvency proceeding, shall
be made in cash to the extent possible. Whenever any such distribution shall be
paid in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board.
(d) For purposes hereof, any transaction or series of related transactions
that constitute (i) the sale, conveyance, exchange, lease or other transfer of
all or substantially all of the assets of the Corporation taken as a whole; or
(ii) any acquisition of the Corporation by means of a consolidation, stock
exchange, stock sale, merger or other form of corporate reorganization of the
Corporation with any other entity in which the Corporation's stockholders prior
to the consolidation or merger own less than a majority of the voting securities
or economic interests of the surviving entity (or, if the surviving entity is a
wholly-owned subsidiary of another corporation following such merger or
consolidation, the parent corporation of such surviving entity) (any such event,
a "Reorganization Event") shall be deemed to be a liquidation unless otherwise
determined by the holders of at least a majority of the shares of Series Z
Preferred then outstanding.
3. Voting. Subject to the applicable rules and published guidance of (i)
any national securities exchange on which the Corporation's common stock is
listed; or (ii) any automated inter-dealer quotation system on which the
Corporation's common stock is quoted, for as long as the initial holder of
Series Z Preferred continues to hold 5,000,000 shares of Series Z Preferred:
(a) On all matters submitted to a vote of the holders of the Common Stock,
including, without limitation, the election of directors, the initial holder of
Series Z Preferred shall be entitled to the number of votes on such matters
equal to the number of shares of the Series Z Preferred held by such holder
multiplied by the Factor (as defined below), on the record date for the
determination of stockholders entitled to vote on such matters or, if no such
record date is established, at the date such vote is taken or any written
consent of stockholders is solicited. The initial holder of Series Z Preferred
shall not vote as a separate class, but shall vote with the holders of the
Common Stock, except as otherwise set forth herein, as required by law or as set
forth in the Articles.
(b) The "Factor" shall be 100, as equitably adjusted for any
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, combination or other like changes in the Corporation's
capital structure. By way of illustration, and not in limitation, of the
foregoing (a) if the Corporation effectuates a 2:1 forward split of its Common
Stock, thereafter, the Factor adjusted to equal twice the Factor immediately
prior to such split; (b) if the Corporation effectuates a 1:10 reverse split of
its Common Stock, thereafter, the Factor shall be adjusted to equal one-tenth
times what it had been calculated to be immediately prior to such split.
(c) The initial holder of the Series Z Preferred shall have the right to
appoint one member to the Board (such appointee, the "Series Z Director"). The
Series Z Director may be removed without cause by, and only by, the affirmative
vote of initial holder of the Series Z Preferred, given pursuant to a written
consent of such initial holder. If the Series Z Director has not been elected or
the Series Z directorship is vacant for any reason, such directorship may not be
filled by stockholders of the Corporation other than by the initial holder of
Series Z Preferred, voting exclusively and as a separate class. Subject to the
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specific voting rights of any other preferred stock of the Corporation, the
holders of record of the shares of Common Stock and of any other class or series
of voting stock, exclusively and voting together as a single class, shall be
entitled to elect the balance of the total number of directors of the
Corporation.
4. Protective Provisions. In addition to any other voting rights provided
herein, by law, or in the Articles, the Corporation shall not, without the vote
or consent of the holders of a majority of the shares of Series Z Preferred then
outstanding:
(a) Increase the total number of authorized shares of Series Z Preferred or
any series of preferred stock with a senior liquidation preference or greater
voting rights (any "Senior Preferred") than the Series Z Preferred;
(b) Authorize or create (by reclassification or otherwise) any Senior
Preferred;
(c) Approve any Reorganization Event or voluntary liquidation or
dissolution of the Corporation;
(d) Approve any repurchase with respect to the Series Z Preferred (except
as otherwise provided in the Articles or pursuant to a Redemption (as defined
below)); or
(e) Amend or repeal any provision of or add any provision to the Articles
or the Bylaws of the Corporation if such action would adversely affect the
rights, privileges, preferences or restrictions created for the benefit of the
Series Z Preferred.
5. Redemption. To the extent that the Corporation in good faith determines
to submit an application to have its common stock listed on a national
securities exchange or quoted on an inter-dealer quotation system of any
national securities association and reasonably determines that the voting rights
set forth in this Certificate would cause the Corporation's application to be
rejected under the applicable rules and published guidance of such national
securities exchange or national securities association, the Corporation shall
have the option of redeeming the Series Z Preferred Stock for the Redemption
Price (as defined below), payable at each holder's option either (i) in cash; or
(ii) in shares of common stock equal to the number of shares of Series Z
Preferred Stock held by such holder multiplied by the Factor. As used herein,
"Redemption Price" means the number of shares of Series Z Preferred Stock held
by such holder multiplied the product of the Factor and the average closing
price of the Common Stock for the ten trading days immediately preceding the
Redemption Payment Date. The Redemption Price shall be due and payable or
issuable, as the case may be, within five trading days of the date on which the
notice of the payment therefor is provided by such holder (the "Redemption
Payment Date").
6. No Reissuance of Series Z Preferred. Any shares of Series Z Preferred
acquired by the Corporation by reason of purchase, conversion or otherwise shall
be cancelled, retired, and eliminated from the shares of Series Z Preferred that
the Corporation shall be authorized to issue. All such shares shall upon their
cancellation become authorized but unissued shares of preferred stock and may be
reissued as part of a new series of preferred stock subject to the conditions
and restriction on issuance set forth in the Articles or in any certificate of
determination creating a series of preferred stock or any similar stock or as
otherwise required by law.
7. Severability. If any right, preference or limitation of the Series Z
Preferred set forth herein is invalid, unlawful or incapable of being enforced
by reason of any rule, law or public policy, all other rights, preferences and
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limitations set forth herein that can be given effect without the invalid,
unlawful or unenforceable right preference or limitation shall nevertheless
remain in full force and effect, and no right, preference or limitation herein
shall be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.
8. No Other Preferences. The shares of the Class Z Preferred shall have no
other preferences, rights, restrictions, or qualifications, except as otherwise
provided by law or the Articles.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed and acknowledged by Benny R. Powell, its Chief
Executive Officer, as of this 10th day of November 2014.
RED GIANT ENTERTAINMENT, INC.
/s/ Benny R. Powell
-----------------------------------
By: Benny R. Powell
Its: Chief Executive Officer
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