Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On
March 30, 2017, Cardinal Energy Group, Inc. (the “Company”) filed with the Nevada Secretary of State an amendment
to the Certificate of Designation for the Company’s Series A Preferred Stock via an Amended and Restated Certificate of
Designation of Series A Preferred Stock (the “Amendment”) pursuant to which (i) the number of shares of authorized
Series A Preferred Stock was increased from 1,000,000 shares to 10,000,000 shares, (ii) the capital raise required by the Company
prior to the Series A Preferred Stock being automatically converted was increased from $5,000,000 to $10,000,000; (iii) the percentage
of common stock of the Company, par value $0.00001 per share (the “Common Stock”) into which the Series A Preferred
Stock is convertible was reduced from 15% to 10% and (iv) the time in which the Series A Preferred Stock can be converted was
changed from being at any time during the three years after issuance to any time from the date that is six months after issuance
until three years after issuance. The Amendment is attached hereto as Exhibit 3.1(a).
Also
on March 30, 2017, the Company filed three additional Certificates of Designation with the Nevada Secretary of State to designate
(i) the Series B Preferred Stock; (ii) the Series C Preferred Stock; and (iii) the Series D Preferred Stock, in each case of the
Company.
Series
B Preferred Stock
There
are 1,000,000 shares of Series B Preferred Stock authorized. No dividends are payable on the shares of Series B Preferred Stock.
The Series B Preferred Stock has no right to vote on any matter submitted to the shareholders of the Company for a vote, provided,
however, that as long as any shares of Series B Preferred Stock are outstanding, the vote of at least 51% of the then-outstanding
shares of the Series B Preferred Stock is required to (a) alter or change adversely the powers, preferences or rights given to
the Series B Preferred Stock or to amend the Certificate of Designation for the Series B Preferred Stock, (b) amend the Articles
of Incorporation of the Company (the “Articles”) or other charter documents in any manner that adversely affects any
rights of the holders of the Series B Preferred Stock, (c) increase the number of authorized shares of Series B Preferred Stock,
or (d) enter into any agreement with respect to any of the foregoing.
All
of the shares of Series B Preferred Stock issued and outstanding at any time are convertible from time to time at the option of
each holder thereof, at any time from six months after the date of issuance of the applicable shares of Series B Preferred Stock
until the three year anniversary thereof, for no consideration to be paid, into shares of Common Stock equal to 10% of the issued
and outstanding shares of Common Stock as of the date of conversion, with any debt or equity of the Company that is convertible
into shares of Common Stock being included in such calculation on an as-converted basis, with any other any debt or equity of
the Corporation which is convertible into a percentage of the Common Stock being deemed converted immediately prior to the conversion
of the Series B Preferred Stock, with each share of Series B Preferred Stock being convertible into a pro-rata portion of the
total 10% of Common Stock.
All
shares of Series B Preferred Stock will be automatically converted into Common Stock on the date that is six months after the
Company has completed one or more raises of capital following the date that the Certificate of Designation was filed with the
Secretary of State of the State of Nevada (through the issuance of any equity securities of the Company) which collectively result
in total capital raised and received by the Company of at least $10,000,000.
The
conversion of the Series B Preferred Stock is subject to a limitation that the holder does not have the right to convert any portion
of the Series B Preferred Stock to the extent that after giving effect to such conversion, the holder (together with the holder’s
affiliates and any persons acting as a group together with such parties) would beneficially own in excess of the 4.99% of the
Common Stock, provided, however, that this limitation may be waived by the holder.
Series
C Preferred Stock
There
are 4,500,000 shares of Series C Preferred Stock authorized. The Series C Preferred Stock has a “Stated Value” of
$1.00 per share. Each share of Series C Preferred Stock is entitled to receive an annual dividend, payable semi-annually in arrears,
in an amount equal to 10% of the Stated Value, prior and in preference to any declaration or payment of any dividend on the Common
Stock (the “Series C Dividend”). The Series C Dividend is cumulative and may be paid or accrued by the Company, in
its sole discretion. Any holder of the Series C Preferred Stock may elect to have all accrued but unpaid Series C Dividends be
paid to them in cash prior to any conversion of the applicable shares of Series C Preferred Stock, as discussed below. At the
option of the Company, the Series C Dividend may be deferred until the expiration of the 36-month period commencing on the issuance
date of the applicable share(s) of Series C Preferred Stock, at which time all accrued but unpaid Dividends on such shares will
be paid on a cumulative basis.
The
Series C Preferred Stock has no right to vote on any matter submitted to the shareholders of the Company for a vote, provided,
however, that as long as any shares of Series C Preferred Stock are outstanding, the vote of at least 51% of the then-outstanding
shares of the Series C Preferred Stock is required to (a) alter or change adversely the powers, preferences or rights given to
the Series C Preferred Stock or to amend the Certificate of Designation for the Series C Preferred Stock, (b) amend the Articles
or other charter documents in any manner that adversely affects any rights of the holders of the Series C Preferred Stock, (c)
increase the number of authorized shares of Series C Preferred Stock, or (d) enter into any agreement with respect to any of the
foregoing.
All
of the shares of Series C Preferred Stock issued and outstanding at any time are convertible from time to time at the option of
each holder thereof, at any time from six months after the date of issuance of the applicable shares of Series C Preferred Stock
until the three year anniversary thereof, for no consideration to be paid, into shares of Common Stock equal to 10% of the issued
and outstanding shares of Common Stock as of the date of conversion, with any debt or equity of the Company that is convertible
into shares of Common Stock being included in such calculation on an as-converted basis, with any other any debt or equity of
the Corporation which is convertible into a percentage of the Common Stock being deemed converted immediately prior to the conversion
of the Series C Preferred Stock, with each share of Series C Preferred Stock being convertible into a pro-rata portion of the
total 10% of Common Stock.
The
conversion of the Series C Preferred Stock is subject to a limitation that the holder does not have the right to convert any portion
of the Series C Preferred Stock to the extent that after giving effect to such conversion, the holder (together with the holder’s
affiliates and any persons acting as a group together with such parties) would beneficially own in excess of the 4.99% of the
Common Stock, provided, however, that this limitation may be waived by the holder.
At
any time that is six months following the earlier of (i) the date that the Company has completed one or more raises of capital
following the date of issuance of the applicable shares of Series C Preferred Stock (through the issuance of any equity securities
of the Company) which collectively result in total capital raised and received by the Company of at least $10,000,000 and (ii)
the date that the Company’s securities have been listed for trading on the New York Stock Exchange or the NASDAQ exchange,
the Company has the right to require the holders of the Series C Preferred Stock to elect to either (A) convert their shares of
Series C Preferred Stock into shares of Common Stock, or (B) cause the Company to redeem such holder’s shares of Series
C Preferred Stock (and if the holder does not make an election then option (A) is deemed to be elected). The redemption price
per share is the Stated Value increased by 10% for each full year from the issuance date to the date of redemption (and a proportionate
amount of 10% for any partial years).
Series
D Preferred Stock
There
are 4,600,000 shares of Series D Preferred Stock authorized. The Series D Preferred Stock has a “Stated Value” of
$1.00 per share. Each share of Series D Preferred Stock is entitled to receive an annual dividend, payable semi-annually in arrears,
in an amount equal to 5% of the Stated Value, prior and in preference to any declaration or payment of any dividend on the Common
Stock (the “Series D Dividend”). The Series D Dividend is cumulative and may be paid or accrued by the Company, in
its sole discretion. Any holder of the Series D Preferred Stock may elect to have all accrued but unpaid Series D Dividends be
paid to them in cash prior to any conversion of the applicable shares of Series D Preferred Stock, as discussed below. At the
option of the Company, the Series D Dividend may be deferred until the expiration of the 36-month period commencing on the issuance
date of the applicable share(s) of Series D Preferred Stock, at which time all accrued but unpaid Series D Dividends on such shares
will be paid on a cumulative basis.
The
Series D Preferred Stock has no right to vote on any matter submitted to the shareholders of the Company for a vote, provided,
however, that as long as any shares of Series D Preferred Stock are outstanding, the vote of at least 51% of the then-outstanding
shares of the Series D Preferred Stock is required to (a) alter or change adversely the powers, preferences or rights given to
the Series D Preferred Stock or to amend the Certificate of Designation for the Series D Preferred Stock, (b) amend the Articles
or other charter documents in any manner that adversely affects any rights of the holders of the Series D Preferred Stock, (c)
increase the number of authorized shares of Series D Preferred Stock, or (d) enter into any agreement with respect to any of the
foregoing.
All
of the shares of Series D Preferred Stock issued and outstanding at any time are convertible from time to time at the option of
each holder thereof, at any time from six months after the date of issuance of the applicable shares of Series D Preferred Stock
until the three year anniversary thereof, for no consideration to be paid, into shares of Common Stock equal to 55% of the issued
and outstanding shares of Common Stock as of the date of conversion, with any debt or equity of the Company that is convertible
into shares of Common Stock being included in such calculation on an as-converted basis, with any other any debt or equity of
the Corporation which is convertible into a percentage of the Common Stock being deemed converted immediately prior to the conversion
of the Series D Preferred Stock, with each share of Series D Preferred Stock being convertible into a pro-rata portion of the
total 55% of Common Stock.
The
conversion of the Series D Preferred Stock is subject to a limitation that the holder does not have the right to convert any portion
of the Series D Preferred Stock to the extent that after giving effect to such conversion, the holder (together with the holder’s
affiliates and any persons acting as a group together with such parties) would beneficially own in excess of the 4.99% of the
Common Stock, provided, however, that this limitation may be waived by the holder.
At
any time that is six months following the earlier of (i) the date that the Company has completed one or more raises of capital
following the date of issuance of the applicable shares of Series D Preferred Stock (through the issuance of any equity securities
of the Company) which collectively result in total capital raised and received by the Company of at least $10,000,000 and (ii)
the date that the Company’s securities have been listed for trading on the New York Stock Exchange or the NASDAQ exchange,
the Company has the right to require the holders of the Series D Preferred Stock to elect to either (A) convert their shares of
Series D Preferred Stock into shares of Common Stock, or (B) cause the Company to redeem such holder’s shares of Series
D Preferred Stock (and if the holder does not make an election then option (A) is deemed to be elected). The redemption price
per share is the Stated Value plus any accrued and unpaid Series D Dividends.
The
descriptions of the terms and conditions of the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock and the Series D Preferred Stock set forth herein are qualified in their entirety to the text of the respective Certificates
of Designation as attached hereto as Exhibits 3.1(a), 3.1(b), 3.1(c) and 3.1(d), respectively.