--------------------------------------------------------------------------------

 

CERTIFICATE OF DESIGNATION
of
5% CUMULATIVE CONVERTIBLE PREFERRED SHARES, SERIES B
of
ECOLOGY COATINGS, INC.
       
ECOLOGY COATINGS, INC. is a Nevada corporation created and existing under the
laws of the state of Nevada (the “Company”), and DOES HEREBY CERTIFY:

Section 1. Designation; Number.
     
This series of Convertible Preferred Shares, Series B is designated as the
“Convertible Preferred Shares, Series B” (“Convertible Preferred Shares, Series
B”). The number of shares constituting the Convertible Preferred Shares, Series
B is 240 shares, par value $0.001 per share.

Section 2. Conversion.

     
The Convertible Preferred Shares, Series B can be converted at the Purchaser’s
option at any time into shares of the Company’s common stock at a conversion
price equal to seventy-seven (77%) percent of the average closing price of the
Company’s common stock as quoted on the Over the Counter Bulletin Board, or,
where applicable, other national exchange, for the five (5) business days
preceding the First Closing or, as applicable, any Additional Closing as defined
in that Securities Purchase Agreement dated September 30, 2009 (the “Conversion
Price”). The number of common shares will be determined by dividing the stated
value of the Convertible Preferred Shares, Series B to be converted by the
Conversion Price.
             
Any such conversion may be effected by the holder of Convertible Preferred
Shares, Series B by surrendering such holder’s certificate or certificates for
the shares of Convertible Preferred Shares, Series B to be converted, duly
endorsed, at the office of the Corporation or the office of any transfer agent
for the Common Stock, together with a written notice to the Corporation at such
office that such holder elects to convert all or a specified number of such
shares of Convertible Preferred Shares, Series B. Promptly thereafter, the
Corporation shall issue and deliver to such holder a certificate or certificates
for the number of shares of Common Stock to which such holder shall be entitled
as aforesaid. Such conversion shall be made at the close of business on the date
of such surrender and the person entitled to receive the shares of Common Stock
issuable on such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock on such date.
               

Section 3. Voting Rights.

The Company cannot alter or adversely change the rights of the Convertible
Preferred Shares, Series B,  amend its articles of incorporation or other
charter documents in such a way that it would adversely affect the rights of the
Convertible Preferred Shares, Series B.

Section 4. Dividends.
     
The holders of shares of Series A Convertible Preferred Shares, Series B shall
receive cumulative dividends of 5% payable semi-annually on June 1 and December
1 commencing December 1, 2009.  In the event that funds are not available to pay
any dividend on the Convertible Preferred Shares, Series B, the Company may pay
the amount of the dividend in additional Convertible Preferred Shares, Series B.

Section 5. Redemption.

In the event of any liquidation, dissolution, winding up or insolvency of the
Corporation, whether voluntary or involuntary, before any distribution or
payment is made to any holders of shares of Common Stock or any other class or
series of capital stock of the Company designated to be junior to the
Convertible Preferred Shares, Series B, and subject to the liquidation rights
and preferences of any class or series of preferred stock designated in the
future to be senior to, or on a parity with, the Convertible Preferred Shares,
Series B with respect to liquidation preferences, the holders of Convertible
Preferred Shares, Series B shall be entitled to be paid first out of the assets
of the Corporation available for distribution to holders of capital stock of all
classes whether such assets are capital, surplus or earnings together with the
amount of any accrued or capitalized dividends in respect thereof (the
“Liquidation Preference”). After payment in full to the holders of Convertible
Preferred Shares, Series B of the Liquidation Preference, holders of the
Convertible Preferred Shares, Series B shall, as such, have no right or claim to
any of the remaining Available Assets.

Section 6. Additional Definitions.

For purposes of these resolutions, the following terms shall have the following
meanings:
     
“Common Stock” refers to the common stock of the Corporation, par value $0.001
per share.
   
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations
to be executed by a duly authorized officer of the Corporation as of this 30th
day of September, 2009.

                 
      ECOLOGY COATINGS, INC.
       
 
 
By:  /s/ Robert G. Crockett
Name:  Robert G. Crockett
           
Title:  CEO
   

ANNEX TO
CERTIFICATE OF DESIGNATION
NOTICE OF CONVERSION
To: Ecology Coatings, Inc.

Reference is made to that certain Certificate of Designation of 5% Cumulative
Convertible Preferred Shares, Series B (the “5% Designation”). Capitalized terms
used but not defined herein have the meanings set forth in the 5% Designation.
Pursuant to the 5% Designation, the undersigned, being a holder of 5% Cumulative
Convertible Preferred Shares, Series B (an “Exercising Holder”), hereby elects
to exercise its conversion rights as to a portion or portions of its 5%
Cumulative Convertible Preferred Shares, Series B, all as specified opposite its
signature below:

Dated:

                 
NUMBER OF 5%
   
EXERCISING HOLDER
 
CUMULATIVE
       
CONVERTIBLE
       
PREFERRED SHARES,
       
SERIES A-1 TO BE
       
CONVERTED TO
 
 
 
 
 
Name
 
 
 
 
 
 
Signature
 
COMMON SHARES

 

 
 

--------------------------------------------------------------------------------