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EXHIBIT 4.3
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
TBA ENTERTAINMENT CORPORATION
(Pursuant to Section 151 of the Delaware General Corporation Law)
TBA Entertainment Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Corporation"), hereby certifies that the following resolution was adopted
by the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $.001 per share, of the Corporation and hereby states the
designation and number of shares, and fixes the relative rights, preferences,
and limitations thereof as follows:
Series A Convertible Preferred Stock:
A. Number and Designation. This series of preferred stock shall
be known and designated as Series A Convertible Preferred
Stock (the "Series A Preferred Stock"), and shall consist of
557,143 shares, par value $.001 per share.
B. Rights, Preferences and Characteristics. The Series A
Preferred Stock shall have the rights, preferences and
characteristics as set forth below:
(1) Dividends. The holders of the Series A Preferred
Stock shall not have any preference on the payment of
dividends and shall participate in all dividends on a
parity basis with the Common Stock to be calculated
based upon the total shares of Series A Preferred
Stock outstanding as a percentage of the total shares
of Common Stock and Preferred Stock outstanding as
of such dividend declaration date.
(2) Voting Rights. Except as may be otherwise provided
in this designation of the Series A Preferred Stock
or by law, the Series A Preferred Stock shall have no
voting rights.
(3) Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary and
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after payment in full of all amounts due and owing to
creditors, if any, the holders of the shares of
Series A Preferred Stock shall first be entitled,
before any distribution or payment is made upon any
stock ranking on liquidation junior to the Series A
Preferred Stock, to be paid an amount equal to $.03
per share, such amount payable with respect to one
share of Series A Preferred Stock being sometimes
referred to as the "Series A Liquidation Preference
Payment" and with respect to all shares of Series A
Preferred Stock being sometimes referred to as the
"Series A Liquidation Preference Payments." If upon
such liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the
assets to be distributed among the holders of the
Series A Preferred Stock shall be insufficient to
permit payment in full to the holders of Series A
Preferred Stock of the Series A Liquidation
Preference Payments, then the entire assets of the
Corporation to be so distributed shall be distributed
ratably among the holders of Series A Preferred
Stock. After such distribution of the Series A
Liquidation Preference Payments to the holders of
each outstanding share of Series A Preferred Stock,
the holders of Series A Preferred Stock shall
participate ratably without preference with the
holders of all other shares of capital stock of the
Corporation in any future distribution of the
remaining assets of the Corporation.
The sale, conveyance or disposition of all or
substantially all of the assets of this Corporation
or a merger, consolidation or share exchange of the
Corporation into or with any other corporation or
corporations or the effectuation by this Corporation
of another transaction or series of related
transactions, in each case in which more than 50% of
the voting power of this Corporation is disposed of,
shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of
this Section B(3).
In case outstanding shares of Series A
Preferred Stock shall be subdivided into a greater
number of shares of Series A Preferred Stock, the
Series A Liquidation Preference Payment in effect
immediately prior to each such subdivision shall,
simultaneously with the effectiveness of such
subdivision, be proportionately reduced, and,
conversely in the case outstanding shares of Series A
Preferred Stock shall be combined into a smaller
number of shares of Series A Preferred Stock, the
Series A Liquidation Preference Payment in effect
immediately prior to each such combination, shall
simultaneously with the effectiveness of such
combination, be proportionately increased.
Written notice of any such liquidation,
dissolution or winding up, stating a payment due and
the place where said payment shall be made shall be
delivered in person, mailed by certified or
registered mail, return receipt requested, or sent by
telecopier or telex, not less than 10 days prior
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to the payment date stated therein, to the holders of
record of Series A Preferred Stock, such notice to be
addressed to each such holder at its address as shown
by the records of the Corporation.
(4) Conversion. Holders of the Series A Preferred Stock
shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series A
Preferred Stock shall be convertible, at the
office of the Corporation or any transfer
agent for such stock, into one fully paid and
nonassessable share of Common Stock, at the
option of the holder thereof, (i) at any time
during the five-year period following the
date on which the shares of Series A
Preferred Stock are first issued (the
"Original Issue Date") in the event that the
Corporation has after-tax net income
(determined according to generally accepting
accounting principles applied on a consistent
basis) for any fiscal year equal to or in
excess of Five Hundred Thousand Dollars
($500,000) or (ii) at any time after the
Original Issue Date, in the event that Eighty
Percent (80%) or more of the Common Stock is
acquired by an entity or individual not
previously affiliated with the Corporation,
and the shares of Common Stock have traded at
an average bid price per share of $7.50 or
more during the preceding ninety (90)
business days, or the acquisition price per
share for the Common Stock is $7.50 or more.
(b) Automatic Conversion. Each share of Series A
Preferred Stock shall automatically be
converted into shares of Common Stock
immediately upon the consummation of a
transaction meeting the requirements set
forth in Section B(4)(a)(ii) above.
All holders of record of shares of Series A
Preferred Stock will be given at least 30
days' prior written notice of the date fixed
and the place designated for automatic
conversion of all such shares of Series A
Preferred Stock pursuant to this Section
B(4). On or before the date fixed for
conversion, each holder of shares of Series A
Preferred Stock shall surrender his or its
certificate or certificates for all such
shares to the Corporation at the place
designed in such notice, and shall thereafter
receive certificates for the number of shares
of Common Stock to which such holder is
entitled pursuant to this Section B(4). On
the date fixed for conversion, all rights
with respect to the Series A Preferred Stock
so converted, including the rights, if any,
to receive notices and vote, will terminate,
except only the rights of the holders
thereof, upon surrender of their certificate
or certificates therefor, to receive
certificates for the number of shares of
Common Stock into which such Series A
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Preferred Stock has been converted (and cash
with respect to any fraction of a share as
provided in Section B(4)(i). If so required
by the Corporation, certificates surrendered
for conversion shall be endorsed or
accompanied by written instrument or
instruments of transfer, in form satisfactory
to the Corporation, duly authorized in
writing. As soon as practicable after the
date of such automatic conversion and the
surrender of the certificate or certificates
for Series A Preferred Stock, the Corporation
shall cause to be issued and delivered to
such holder, or on his or its written order,
a certificate or certificates for the number
of full shares of Common Stock issuable on
such conversion in accordance with the
provisions hereof and cash as provided in
Section B(4)(i) in respect of any fraction of
a share of Common Stock otherwise issuable
upon such conversion.
All certificates evidencing shares of Series
A Preferred Stock which are required to be
surrendered for conversion in accordance with
the provisions hereof shall, from and after
the date such certificates are so required to
be surrendered, be deemed to have been
retired and cancelled and the shares of
Series A Preferred Stock represented thereby
converted into Common Stock for all purposes,
notwithstanding the failure of the holder or
holders thereof to surrender such
certificates on or prior to such date. The
Corporation may thereafter take such
appropriate action as may be necessary to
reduce the authorized Series A Preferred
Stock accordingly.
(c) Mechanics of Conversion. Before any holder
of Series A Preferred Stock shall be entitled
to convert such shares into shares of Common
Stock, he shall surrender the certificate or
certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer
agent for the Series A Preferred Stock, and
shall give written notice to the Corporation
at such office that he elects to convert the
same and shall state therein the name or
names in which he wishes the certificate or
certificates for shares of Common Stock to be
issued. If required by the Corporation,
certificates surrendered for conversion shall
be endorsed or accompanied by a written
instrument or instruments of transfer, in
form satisfactory to the Corporation, duly
executed by the registered holder or his or
its attorney duly authorized in writing. The
Corporation shall, as soon as practicable
thereafter, issue and deliver at such office
to such holder of Series A Preferred Stock, a
certificate or certificates for the number of
shares of Common Stock to which he shall be
entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior
to the close
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of business on the date of surrender of the
shares of Series A Preferred Stock to be
converted, and the person or persons entitled
to receive the shares of Common Stock
issuable upon such conversion shall be
treated for all purposes at the record holder
or holders of such shares of Common Stock on
such date.
(d) Adjustments to Conversion Price for Stock
Dividends and for Combination or Subdivision
of Common Stock. In the event that this
Corporation at any time or from time to time
after the Original Issue Date shall declare
or pay, without consideration, any dividend
on the Common Stock payable in Common Stock
or in any right to acquire Common Stock for
no consideration, or shall effect a
subdivision of the outstanding shares of
Common Stock into a greater number of shares
of Common Stock (by stock split,
reclassification or otherwise than by payment
of a dividend in Common Stock or in any right
to acquire Common Stock), or in the event the
outstanding shares of Common Stock shall be
combined or consolidated, by reclassification
or otherwise, into a smaller number of shares
of Common Stock, then the number of shares
into which each share of Series A Preferred
Stock is convertible shall, concurrently with
the effectiveness of such event, be
proportionately decreased or increased, as
appropriate. In the event that this
Corporation shall declare or pay, without
consideration, any dividend on the Common
Stock payable in any right to acquire Common
Stock for no consideration, then the
Corporation shall be deemed to have made a
dividend payable in Common Stock in an amount
of shares equal to the maximum number of
shares issuable upon exercise of such rights
to acquire Common Stock.
(e) Adjustments for Reclassification and
Reorganization. If the Common Stock issuable
upon conversion of the Series A Preferred
Stock shall be changed into the same or a
different number of shares of any other class
or classes of stock, whether by capital
reorganization, reclassification or otherwise
(other than a subdivision or combination of
shares provided for in Section B(4)(c) above
or a merger or other reorganization referred
to in Section B(3) above), the number of
shares into which each share of Series A
Preferred Stock is convertible shall,
concurrently with the effectiveness of such
reorganization or reclassification, be
proportionately adjusted so that the Series A
Preferred Stock shall be convertible into, in
lieu of the number of shares of Common Stock
which the holders would otherwise have been
entitled to receive, a number of shares of
such other class or classes of stock
equivalent to the number of shares of Common
Stock that would
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have been subject to receipt by the holders
upon conversion of the Series A Preferred
Stock immediately before that change.
(f) No Impairment. The Corporation will not, by
amendment of its Certificate of Incorporation
or through any reorganization, transfer of
assets, consolidation, merger, dissolution,
issue or sale of securities or any other
voluntary action, avoid or seek to avoid the
observance or performance of any of the terms
to be observed or performed hereunder by the
Corporation, but will at all times in good
faith assist in the carrying out of all the
provisions of this Section and in the taking
of all such action as may be necessary or
appropriate in order to protect the
Conversion Rights of the holders of the
Series A Preferred Stock against impairment.
(g) Issue Taxes. The Corporation shall pay any
and all issue and other taxes that may be
payable in respect of any issue or delivery
of shares of Common Stock on conversion of
Series A Preferred Stock pursuant hereto;
provided, however, that the Corporation shall
not be obligated to pay any transfer taxes
resulting from any transfer request by any
holder in connection with any such
conversion.
(h) Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all
times while the Series A Preferred Stock is
outstanding 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
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.
(i) Fractional Shares. No fractional share shall
be issued upon the conversion of any share or
shares of Series A Preferred Stock. All
shares of Common Stock (including fractions
thereof) issuable upon conversion of more
than one share of Series A Preferred Stock 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
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Common Stock, the Corporation shall, in lieu
of issuing any fractional shares, 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.
(j) Notices. Any notice required by the
provisions of this Section B to be given to
the holders of shares of Series A Preferred
Stock shall be deemed given if deposited in
the United States mail, postage prepaid, and
addressed to each holder of record at his
address appearing on the books of the
Corporation.
(k) Surrendered Series A Preferred Stock. All
shares of Series A Preferred Stock that are
surrendered for conversion as herein provided
shall no longer be deemed to be outstanding
immediately prior to the close of business on
the date of surrender, and all rights with
respect to such shares, including the rights,
if any, to receive notices and to vote, shall
immediately cease and terminate, except only
the right of the holders thereof to receive
shares of Common Stock in exchange therefor.
Any shares of Series A Preferred Stock so
converted shall be retired and canceled and
shall not be reissued, and the Corporation
may from time to time take such appropriate
action as may be necessary to reduce the
authorized Series A Preferred Stock
accordingly.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its Chairman of the Board and attested by its
Assistant Secretary this 5th day of September, 1997.
/s/ Thomas J. Weaver III
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Thomas J. Weaver III,
Chairman of the Board
Attest:
/s/ Randall E. Roberts
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Randall E. Roberts,
Assistant Secretary
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