EXHIBIT 4.04
SCHEDULE I
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
CLASS B REDEEMABLE PREFERRED STOCK
OF
NEW FRONTIER MEDIA, INC.
New Frontier Media, Inc. (the "Company"), a corporation organized under
the Business Corporation Act of the State of Colorado, does hereby certify that,
pursuant to authority conferred upon the Board of Directors of the Company by
the Certificate of Incorporation, as amended, of the Company, and pursuant to
Section 8.2 of the Business Corporation Act of the State of Colorado, the Board
of Directors of the Company, at a meeting duly held, adopted resolutions (i)
authorizing a series of the Company's previously authorized preferred stock, par
value $.10 per share, and (ii) providing for the designations, preferences and
relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, of Preferred Stock of the Company, as
follows:
RESOLVED, that the Company is authorized to issue 2,469,136 shares of
Class B Redeemable Preferred Stock (the "Class B Preferred"), par value $.10 per
share, which shall have the following powers, designations, preferences and
other special rights.
TERMS OF PREFERRED STOCK
1. DIVIDENDS.
(a) The holders of the Class B Preferred shall be entitled to receive
out of any assets legally available therefor cumulative dividends at the rate of
10.0% per year, accrued daily and payable quarterly in arrears on March 30, June
30, September 30 and December 31 of each year in preference and priority to any
payment of any dividend on the Common Stock. Such dividends shall accrue on any
given share from the day of original issuance of such share and shall accrue
from day to day whether or not earned or declared. If at any time dividends on
the outstanding Class B Preferred at the rate set forth above shall not have
been paid or declared and set apart for payment with respect to all preceding
periods, the amount of the deficiency shall be fully paid or declared and set
apart for payment, but without interest, before any distribution, whether by way
of dividend or otherwise, shall be declared or paid upon or set apart for the
Common Stock of the Corporation.
(b) Any dividend payable on a dividend payment date shall be paid in
cash and in United States dollars.
(c) Nothing contained herein shall be deemed to establish or require
any payment or other charges in excess of the maximum permitted by applicable
law. In the event that any payment required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum shall be credited against amounts owed by the Corporation, the
holder and thus refunded to the Corporation.
2. 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 Class 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 $.81 per share plus any and all accrued but unpaid
dividends (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 Class 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 Class 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 Class B
Preferred in the manner provided by law for the giving of notice of meetings of
shareholders.
(c) The Corporation shall have the right to redeem any or all of the
shares of Class B Preferred at any time upon payment in cash of the Liquidation
Preference to the holders thereof.
(d) On October 10, 2004, the Corporation shall redeem all of the Class
B Preferred Stock for a redemption price, in cash, equal to the Liquidation
Preference (the "Redemption Price"). In addition, in the event of the earlier
occurrence of a Change in Control Transaction (as hereinbelow defined), each
Holder shall (in addition to all other rights it may have hereunder or under
applicable law), have the right, exercisable at the sole option of such Holder,
to require the Corporation to redeem all or a portion of the Class B Preferred
Stock then held by such Holder for a redemption price, in cash, equal to the
Redemption Price. In accordance with the foregoing, the Redemption Price shall
be due and payable on the earlier of: October 10, 2004 or, in the event of a
Change of Control Transaction, within fifteen (15) days of the date on which
written notice for the payment therefore is provided by a Holder. If the
Corporation fails to pay the Redemption Price hereunder in full pursuant to this
Section on the date such amount is due in accordance with this Section, the
Corporation will pay interest thereon at a rate of 18% per annum (or the lesser
amount permitted by applicable law), accruing daily from such date until the
Redemption Price, plus all such interest thereon, is paid in full.
(e) For the purposes hereof, a "Change of Control Transaction" means
the occurrence of any of: (i) a replacement of more than one-half of the members
of the Corporation's board of directors which is not approved by a majority of
those individuals who are members of the board of directors on the date hereof
(or by those individuals who are serving as members of the board of directors on
any date whose nomination to the board of directors was approved by a majority
of the members of the board of directors who are members on the date hereof),
(ii) the merger of the Corporation with or into another entity that is not
wholly owned by the Corporation, consolidation or sale of all or substantially
all of the assets of the Corporation in one or a series of related transactions,
or (iii) the execution by the Corporation of an agreement to which the
Corporation is a party or by which it is bound, providing for any of the events
set forth above in (i) or (ii).
3. 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 class of stock of the
Corporation if the effect of such action is to reduce the value or security of
the Class B Preferred.
4. VOTING RIGHTS. The Class B Preferred shall have the right to vote
together with the holders of the Corporation's Common Stock, on a one vote per
share basis (and not as a separate class), on all matters presented to the
holders of the Common Stock.
5. ATTORNEYS' FEES. Any holder of Class B Preferred shall be entitled
to recover from the Corporation the reasonable attorneys' fees and expenses
incurred by such holder in connection with enforcement by such holder of any
obligation of the Corporation hereunder.
6. ADDITIONAL RESTRICTIONS. For as long as any shares of the Class B
Preferred Stock are outstanding, the Corporation will not amend the terms of the
Class B Preferred Stock without the consent of the holders of the Class B
Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by Michael Weiner, its President, on this________day
of April, 2003.
NEW FRONTIER MEDIA, INC.
By: /s/ Michael Weiner
------------------------
Name: Michael Weiner
Its: President