CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
TRIMEDIA ENTERTAINMENT GROUP, INC.
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Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
The undersigned officers of TriMedia Entertainment Group, Inc. (the
"Corporation"), a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware, do hereby certify:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, the said Board of Directors
authorized the series of Preferred Stock hereinafter provided for and
established the voting powers thereof and has adopted the following resolution
creating a series of 15,000 shares of Preferred Stock designated as Series A
Convertible Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Certificate of
Incorporation, a new series of Preferred Stock of the Corporation is hereby
created and designated as Series A Convertible Preferred Stock, par value $.001
per share (the "Series A Preferred Stock").
The designation and amount and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of
Series A Preferred Stock, and the qualifications, limitations or restrictions
thereof are as set forth below:
1. Definitions. For purposes of this resolution, the following definitions
shall apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Common Stock" shall mean the Common Stock, $0.001 par value per
share, of the Corporation.
(c) "Common Stock Dividend" shall mean a stock dividend declared and
paid on the Common Stock that is payable in shares of Common Stock.
(d) "Distribution" shall mean the transfer of cash or property by
the Corporation to one or more of its stockholders without consideration
regardless of whether such transfer is in the form of a dividend or
otherwise (except a dividend in shares of Corporation's stock), but not
including Permitted Repurchases (as defined below).
(e) "Original Conversion Ratio" shall mean 6,418 shares of Common
Stock for every for 1 share of Series A Preferred Stock.
(f) "Original Issue Date" shall mean the date on which the first
share of Series A Preferred Stock is issued by the Corporation.
(g) "Series A Preferred Stock" shall mean the Series A Preferred
Stock, $0.001 par value per share, of the Corporation.
2. Dividend Rights.
(a) Dividends. Dividends on the Series A Preferred Stock shall only
be granted when, as and if declared by the Board, and shall not accrue.
Any dividends declared by the Board out of funds legally available shall
be declared among the holders of the then outstanding Common Stock and the
Series A Preferred Stock pro rata according to the number of shares of
Common Stock held by such holders, where, for this purpose, holders of
shares of Series A Preferred Stock will be deemed to hold (in lieu of
their Series A Preferred Stock) the greatest whole number of shares of
Common Stock then issuable upon conversion in full of such shares of
Series A Preferred Stock pursuant to Section 5.
(b) Non-Cash Dividends. Whenever a dividend provided for in this
Section 2 shall be payable in property other than cash, the value of such
dividend or Distribution shall be deemed to be the fair market value of
such property as determined in good faith by the Board.
(c) Payment on Conversion. If the Corporation shall have any
declared and unpaid dividends with respect to any Series A Preferred
Stock, then immediately prior to, and upon a conversion of any of the
Series A Preferred Stock as provided in Section 5, the Corporation shall,
subject to the legal availability of funds and assets therefor, pay in
cash or Common Stock (or a combination thereof) to the holder of the
shares of Series A Preferred Stock being converted the full amount of any
dividends declared and unpaid on such shares. Upon any such conversion, if
the Board elects to pay dividends with respect to any Series A Preferred
Stock in Common Stock, the Board shall determine in good faith the total
fair market value of such shares, equal to the balance of all declared but
unpaid dividends not paid in cash.
3. Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the funds and
assets of the Corporation that may be legally distributed to the Corporation's
stockholders (the "Available Funds and Assets"), shall be distributed to
stockholders in the following manner:
(a) Liquidation Preferences. The holders of each share of Series A
Preferred Stock then outstanding shall be entitled to be paid out of the
Available Funds and Assets and prior and in preference to any payment or
distribution of any Available Funds and Assets, an amount per share that
will provide the holders of all outstanding shares of Series A Preferred
Stock with an aggregate distribution of Ten Thousand Dollars ($10,000). If
upon any liquidation, dissolution or winding up of the Corporation the
Available Funds and Assets shall be insufficient to permit the payment to
the holders of the Series A Preferred Stock of their full preferential
amounts described in this subsection, then all the remaining Available
Funds and Assets shall be distributed among the holders of the then
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outstanding Series A Preferred Stock pro rata in proportion to the amount
of stock owned by such holder on an as converted basis. After payment has
been made to the holders of the Series A Preferred Stock of the full
liquidation preference to which such holders are entitled as set forth
above, all remaining Available Funds and Assets shall be distributed among
the holders of the then outstanding Common Stock and the Series A
Preferred Stock pro rata according to the number of shares of Common Stock
held by such holders, where, for this purpose, holders of shares of Series
A Preferred Stock will be deemed to hold (in lieu of their Series A
Preferred Stock) the greatest whole number of shares of Common Stock then
issuable upon conversion in full of such shares of Series A Preferred
Stock pursuant to Section 5.
(b) Non-Cash Consideration. If any assets of the Corporation
distributed to stockholders in connection with any liquidation,
dissolution, or winding up of the Corporation are other than cash, then
the value of such assets shall be their fair market value as reasonably
determined by the Board in good faith, except that any securities to be
distributed to stockholders in a liquidation, dissolution, or winding up
of the Corporation shall be valued as follows:
(1) The method of valuation of securities not subject to
investment letter or other similar restrictions on free
marketability shall be as follows:
(i) if the securities are then traded on a national
securities exchange or the NASDAQ National Market System (or a
similar national quotation system), then the value shall be
deemed to be the average of the closing prices of the
securities on such exchange or system over the 30-day period
ending three (3) days prior to the distribution; and
(ii) if actively traded over-the-counter, then the value
shall be deemed to be the average of the closing bid prices
over the 30-day period ending three (3) days prior to the
closing of such merger, consolidation or sale; and
(iii) if there is no active public market, then the
value shall be the fair market value thereof, as determined in
good faith by the Board.
(2) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall
be to make an appropriate discount from the market value determined
as above in Section 3(d)(1)(i),(ii) or (iii) to reflect the
approximate fair market value thereof, as reasonably determined in
good faith by the Board.
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4. Voting Rights.
(a) Number of Votes. Each holder of shares of Series A Preferred
Stock shall be entitled to the number of votes equal to the number of
whole shares of Common Stock into which such shares of Series A Preferred
Stock could be converted pursuant to the provisions of Section 5 below at
the record date for the determination of the stockholders entitled to vote
on such matters or, if no such record date is established, the date such
vote is taken or any written consent of stockholders is solicited,
assuming that, for purposes of this Section 4(a), the Authorization Date
(as defined in Section 5(a)) has occurred as of the date hereof.
(b) General. Subject to the foregoing provisions of this Section 4,
each holder of Series A Preferred Stock shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled to notice of any stockholders' meeting in
accordance with the bylaws of the Corporation (as in effect at the time in
question) and applicable law, and shall be entitled to vote, together with
the holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote, except as may otherwise be
provided by applicable law. Except as otherwise expressly provided herein
or as required by law, the holders of the Series A Preferred Stock and the
holders of Common Stock shall vote together and not as separate classes.
5. Conversion. The outstanding shares of Series A Preferred Stock shall be
convertible into Common Stock as follows:
(a) Automatic Conversion by the Corporation. Effective upon the
earlier of (i) the date on which the Corporation amends its Certificate of
Incorporation to increase its authorized shares of capital stock to
include at least Two Hundred Million (200,000,000) shares of common stock,
par value $.001 per share (the "Common Stock"), and the State of Delaware
has accepted a Certificate of Amendment approving such amendment (the
"Authorization Date"), or (ii) the Corporation affects a reverse split of
its issued and common stock that provides sufficient authorized but
unissued shares of Common Stock to complete such conversion, each share of
Series A Preferred Stock shall be converted into fully paid and
nonassessable shares of Common Stock without the need for any further
action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or its
transfer agent as provided herein, provided, however, that the Corporation
shall not be obligated to issue certificates evidencing the shares of
Common Stock issuable upon such conversion unless (i) the certificates
evidencing ownership of such shares of Series A Preferred Stock are either
delivered to the Corporation or its transfer agent as provided below, (ii)
the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
reasonably satisfactory to the Corporation to indemnify the Corporation
from any loss incurred by it in connection with such certificates or (iii)
if the shares of Series A Preferred Stock are not certificated, the
Corporation or its transfer agent cancels ownership of such shares of
Series A Preferred Stock on the Company's books and records.
(b) Conversion Ratio. Each share of Series A Preferred Stock shall
be convertible in accordance with Section 5(a) above into that number of
shares of Common Stock determined by multiplying the number of shares of
Series A Preferred Stock being converted by the Conversion Ratio then in
effect (the "Conversion Ratio"), which shall be the Original Conversion
Ratio, as adjusted from time to time as provided below.
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(c) Adjustment Upon Common Stock Event. Upon the happening of a
Common Stock Event (as hereinafter defined), the Conversion Ratio of the
Series A Preferred Stock shall, simultaneously with the happening of such
Common Stock Event, be adjusted by multiplying the Conversion Ratio of the
Series A Preferred Stock in effect immediately prior to such Common Stock
Event by a fraction, (i) the denominator of which shall be the number of
shares of Common Stock issued and outstanding immediately prior to such
Common Stock Event, and (ii) the numerator of which shall be the number of
shares of Common Stock issued and outstanding immediately after such
Common Stock Event, and the product so obtained shall thereafter be the
Conversion Ratio for the Series A Preferred Stock. The Conversion Ratio
for a series of Preferred Stock shall be readjusted in the same manner
upon the happening of each subsequent Common Stock Event. As used herein,
the term "Common Stock Event" shall mean (i) the issue by the Corporation
of additional shares of Common Stock as a dividend or other distribution
on outstanding Common Stock, (ii) a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common Stock, or (iii)
a combination of the outstanding shares of Common Stock into a smaller
number of shares of Common Stock.
(d) Adjustments for Other Dividends and Distributions. If at any
time or from time to time after the Original Issue Date the Corporation
pays a dividend or makes another distribution to the holders of the Common
Stock payable in securities of the Corporation other than shares of Common
Stock, then in each such event provision shall be made so that the holders
of the Series A Preferred Stock shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable upon
conversion thereof, the amount of securities of the Corporation which they
would have received had their Series A Preferred Stock been converted into
Common Stock on the date of such event (or such record date, as
applicable) and had they thereafter, during the period from the date of
such event (or such record date, as applicable) to and including the
conversion date, retained such securities receivable by them as aforesaid
during such period, subject to all other adjustments called for during
such period under this Section 5 with respect to the rights of the holders
of the Series A Preferred Stock or with respect to such other securities
by their terms.
(e) Adjustment for Reclassification, Exchange and Substitution. If
at any time or from time to time after the Original Issue Date, the Common
Stock issuable upon the conversion of the Series A Preferred Stock is
changed into the same or a different number of shares of any class or
classes of stock, whether by recapitalization, reclassification or
otherwise (other than by a Common Stock Event or a stock dividend,
reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 5), then in any such event each holder of Series
A Preferred Stock shall have the right thereafter to convert such stock
into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change by
holders of the number of shares of Common Stock into which such shares of
Series A Preferred Stock could have been converted immediately prior to
such recapitalization, reclassification or change, all subject to further
adjustment as provided herein or with respect to such other securities or
property by the terms thereof.
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(f) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Conversion Ratio for the Series A Preferred Stock, the
Corporation, at its expense, shall cause its Chief Financial Officer or
other executive officer to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing
such adjustment or readjustment, and shall mail such certificate, by first
class mail, postage prepaid, to each registered holder of the Series A
Preferred Stock at the holder's address as shown in the Corporation's
books.
(g) Fractional Shares. No fractional shares of Common Stock shall be
issued upon any conversion of the Series A Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the
Corporation shall pay the holder cash equal to the product of such
fraction multiplied by the Common Stock's fair market value as determined
in good faith by the Board as of the date of conversion.
(h) Notices. Any notice required by the provisions of this Section 5
to be given to the holders of shares of the Series A Preferred Stock shall
be deemed given upon the earlier of actual receipt or deposit in the
United States mail, by certified or registered mail, return receipt
requested, postage prepaid, addressed to each holder of record at the
address of such holder appearing on the books of the Corporation.
(i) No Impairment. The Corporation shall not avoid or seek to avoid
the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but shall at all times in good
faith assist in carrying out all such action as may be reasonably
necessary or appropriate in order to protect the conversion rights of the
holders of the Series A Preferred Stock against impairment.
(j) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times after the Authorization Date 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 A
Preferred Stock, such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock; 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 A Preferred Stock, the Corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
6. Adjustments for Stock Splits, Etc. Wherever in this Certificate there
is a reference to a specific number of shares of Common Stock or Series A
Preferred Stock of the Corporation of any class or series, then, upon the
occurrence of any subdivision, combination or stock dividend of such class or
Series of stock, the specific number of shares so referenced in this Certificate
shall automatically be proportionally adjusted to reflect the effect on the
outstanding shares of such class or Series of stock by such subdivision,
combination or stock dividend.
7. No Reissuance of Preferred Stock. No share or shares of Series A
Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations, Preferences and Rights to be signed in its name and on its behalf
on this 6th day of November 2007 by a duly authorized officer of the
Corporation.
TRIMEDIA ENTERTAINMENT GROUP, INC.
By: S// Christopher Schwartz
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Name: Christopher Schwartz
Title: President
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