f8k0410ex4ii_silverpearl.htm


    Exhibit
4.2

     

    CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE

    SERIES
M CONVERTIBLE PREFERRED STOCK

    OF

    SILVER
PEARL ENTERPRISES, INC.

    


     

    The
Articles of Incorporation of Silver Pearl Enterprises, Inc., a Nevada
corporation (the “Company”),
provide that the Company is authorized to issue 20,000,000 shares of preferred
stock with a par value of $0.001, and that the Board of Directors have the
authority to attach such terms as they deem fit with respect to the preferred
stock.

     

    Pursuant
to the authority conferred upon the Board of Directors by the Articles of
Incorporation, and pursuant to Section 78.1955 of the Nevada Revised Statutes,
the Board of Directors, by Unanimous Written Consent, dated April 22, 2010,
adopted a resolution providing for the designation, rights, powers and
preferences and the qualifications, limitations and restrictions of 47,658
shares of Series M Convertible Preferred Stock, and that a copy of such
resolution is as follows:

     

    RESOLVED, that pursuant to the
authority vested in the Board of Directors of the Company, the provisions of its
Articles of Incorporation, and in accordance with the Nevada Revised Statutes,
the Board of Directors hereby authorizes the filing of a Certificate of
Designations, Preferences and Rights of Series M Convertible Preferred Stock of
the Company.  Accordingly, the Company is authorized to issue Series M
Convertible Preferred Stock with par value of $0.001 per share, which shall have
the powers, preferences and rights and the qualifications, limitations and
restrictions thereof, as follows:

     

    1. Designation and Rank.
The designation of such series of the Preferred Stock shall be the Series M
Convertible Preferred Stock, par value $0.001 per share (the “Series M
Preferred Stock”). The maximum number of shares of Series M Preferred
Stock shall be 47,658 shares. The Series M Preferred Stock shall rank pari passu
to the Company’s common stock, par value $0.001 per share (the “Common
Stock”), and junior to all other classes and series of equity securities
of the Company which by their terms do not rank pari passu, including the Series
A Convertible Preferred Stock. The Series M Preferred Stock shall be subordinate
to and rank junior to all indebtedness of the Company now or hereafter
outstanding.

     

    2. Dividends.

     

    The
Series M Preferred Stock shall not pay a dividend; provided that no cash
dividends or distributions shall be declared or paid or set apart for payment on
the Common Stock unless such cash dividend or distribution is likewise declared,
paid or set apart for payment on the Series M Preferred Shares.

     

    3. Voting
Rights.  Holders of the Series M Preferred Stock shall vote on
an “as converted” basis, together as a single class, with the Common Stock, on
all matters requiring the approval, ratification or consent of holders of Common
Stock of the Company. The Common Stock into which the Series M Preferred Stock
is convertible shall, when issued, have all of the same voting rights as other
issued and outstanding Common Stock of the Company, and none of the rights of
the Series M Preferred Stock.

     

    
      
         


      

      
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    4. Conversion. The
holder of Series M Preferred Stock shall have the following conversion rights
(the “Conversion
Rights”):

     

    (a) Mandatory Conversion.
On or after the Issuance Date, at such time when the Company amends its Articles
of Incorporation to increase the number of authorized shares of Common Stock to
such number that is equal to or greater than one hundred million (100,000,000),
the holder of any such shares of Series M Preferred Stock shall automatically
convert (a “Mandatory
Conversion”) all of the shares of Series M Preferred Stock held by such
person into a number of fully paid and nonassessable shares of Common Stock
equal to the product of (i) the number of shares of Series M Preferred Stock;
and (ii) the Conversion Multiple (as defined in Section 4(c)
below).

     

    (b) Mechanics of Mandatory
Conversion. The Mandatory Conversion of Series M Preferred Stock shall be
conducted in the following manner:

     

    (i) Holder's Delivery
Requirements. Upon the Mandatory Conversion, the holder thereof shall
surrender to a common carrier for delivery to the Company’s designated transfer
agent (the “Transfer
Agent”) as soon
as practicable following such Mandatory Conversion the original certificates
representing the shares of Series M Preferred Stock being converted (or an
indemnification undertaking with respect to such shares in the case of their
loss, theft or destruction) (the “Preferred
Stock Certificates”).

     

    (ii) Company's Response and
Common Stock Issuance. Upon the Mandatory Conversion, the Company shall
immediately send, via facsimile, a confirmation of receipt of such Preferred
Stock Certificates to such holder. Upon receipt by the Transfer Agent of the
Preferred Stock Certificates, the Company shall, within three (3) trading days
following the later of the (x) Mandatory Conversion, and (y) date of receipt of
the Preferred Stock Certificates by the Transfer Agent, issue and deliver to the
holder certificates registered in the name of the holder or its designee,
representing the number of shares of Common Stock to which the holder shall be
entitled.

     

    (iii) Record Holder. The
person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of the Series M Preferred Stock shall be treated for all purposes as
the record holder or holders of such shares of Common Stock from and after the
Conversion Date.

     

    (c) Conversion
Price.

     

    (i) The term
“Conversion
Multiple” shall mean 1,000.

     

    
      
         


      

      
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    (d) No Impairment. The
Company shall not, by amendment of its Articles 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, but shall at all times in good faith assist in the carrying out of
all the provisions of this Section 4 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 M Preferred Stock against impairment.

     

    (e) Issue Taxes. The
Company shall pay any and all issue and other taxes, excluding federal, state or
local income taxes, that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series M Preferred Stock
pursuant hereto; provided, however, that the
Company shall not be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such
conversion.

     

    (f) Notices. All notices
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or by facsimile or three (3) business days following
being mailed by certified or registered mail, postage prepaid, return-receipt
requested, addressed to the holder of record at its address appearing on the
books of the Company.

     

    (g) Fractional Shares. No
fractional shares of Common Stock shall be issued upon conversion of the Series
M Preferred Stock. In lieu of any fractional shares to which the holder would
otherwise be entitled, the Company shall round the number of shares to be issued
upon conversion up to the nearest whole number of shares.

     

    (h) Retirement of Series M
Preferred Stock. Conversion of Series M Preferred Stock shall be deemed
to have been effected on a Mandatory Conversion.

     

    5. No Preemptive Rights.
No holder of the Series M Preferred Stock shall be entitled to rights to
subscribe for, purchase or receive any part of any new or additional shares of
any class, whether now or hereinafter authorized, or of bonds or debentures, or
other evidences of indebtedness convertible into or exchangeable for shares of
any class, but all such new or additional shares of any class, or any bond,
debentures or other evidences of indebtedness convertible into or exchangeable
for shares, may be issued and disposed of by the Board of Directors on such
terms and for such consideration (to the extent permitted by law), and to such
person or persons as the Board of Directors in their absolute discretion may
deem advisable.

     

    6. Vote to Change the Terms of
or Issue Preferred Stock. The affirmative vote at a meeting duly called
for such purpose or the written consent without a meeting, of the Majority
Holders (in addition to any other corporate approvals then required to effect
such action), shall be required for any change to this Certificate of
Designation or the Company's Articles of Incorporation which would amend, alter,
change or repeal any of the powers, designations, preferences and rights of the
Series M Preferred Stock.

     

    
      
         


      

      
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    7. Lost or Stolen
Certificates. Upon receipt by the Company of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing the shares of Series M Preferred Stock, and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
holder to the Company and, in the case of mutilation, upon surrender and
cancellation of the Preferred Stock Certificate(s), the Company shall execute
and deliver new preferred stock certificate(s) of like tenor and date; provided, however, that the
Company shall not be obligated to re-issue Preferred Stock Certificates if the
holder contemporaneously requests the Company to convert such shares of Series M
Preferred Stock into Common Stock.

     

    8. Remedies, Characterizations,
Other Obligations, Breaches and Injunctive Relief. The remedies provided
in this Certificate of Designation shall be cumulative and in addition to all
other remedies available under this Certificate of Designation, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall limit a
holder's right to pursue actual damages for any failure by the Company to comply
with the terms of this Certificate of Designation. Amounts set forth or provided
for herein with respect to payments, conversion and the like (and the
computation thereof) shall be the amounts to be received by the holder thereof
and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the holders of the Series M Preferred Stock and that the remedy at law for any
such breach may be inadequate. The Company therefore agrees that, in the event
of any such breach or threatened breach, the holders of the Series M Preferred
Stock shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.

     

    9. Specific Shall Not Limit
General; Construction. No specific provision contained in this
Certificate of Designation shall limit or modify any more general provision
contained herein. This Certificate of Designation shall be deemed to be jointly
drafted by the Company and all initial purchasers of the Series M Preferred
Stock and shall not be construed against any person as the drafter
hereof.

     

    10. Failure or Indulgence Not
Waiver. No failure or delay on the part of a holder of Series M Preferred
Stock in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.

     

    


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    [Signature
page to the Certificate of Designations of Series M Convertible Preferred
Stock]

    


    


    IN
WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate
and does affirm the foregoing as true this 22nd day
of April, 2010.

     

    
      
        	 	SILVER
      PEARL ENTERPRISES, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Denis D.
      Smith                                               
      	 
	 	 	Name:
      Denise D. Smith 	 
	 	 	Title:  Chief
      Executive Officer and Chief Financial Officer	 
	 	 	 	 


      

    

     

    
 

     

     

     

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