Stockholder Proposals for 2019 Annual Meeting of Stockholders and
2019 Proxy Materials
Proposals of holders of our voting securities intended
to be presented at our 2019 annual meeting of stockholders and included in our proxy statement and form of proxy relating to such
meeting pursuant to Rule 14a-8 of Regulation 14A must be received by us, addressed to our Secretary, at our principal executive
offices at 404 Broadway, Suite 425, San Antonio, Texas 77067, not earlier than the close of business on , 2018, and not later
than the close of business on , 2018, together with written notice of the stockholder’s intention to present a proposal
for action at the fiscal 2019 annual meeting of stockholders, unless our annual meeting date occurs more than 30 days before or
30 days after November , 2018. In that case, we must receive proposals not earlier than the close of business on the 120th day
prior to the date of the fiscal 2018 annual meeting and not later than the close of business on the later of the 90th day prior
to the date of the annual meeting or, if the first public announcement of the date of the Annual Meeting is less than 100 days
prior to the date of the meeting, the 10th day following the day on which we first make a public announcement of the date of the
meeting. The notice must be personally delivered to the Company or sent by first class certified mail, return receipt requested,
postage prepaid, and must include the name and address of the stockholder, the number of voting securities held by the stockholder
of record, a statement that the stockholder holds such shares beneficially and the text of the proposal to be presented for vote
at the meeting, a statement in support of the proposal, and must otherwise comply with Rule 14a-8 of Regulation 14A and the requirements
of our Bylaws.
The proposal should state as clearly as possible
the proposal and should be accompanied by a supporting statement. The proposal, including the accompanying supporting statement,
may not exceed 500 words. Upon receipt of any such proposal, the Company will determine whether or not to include such proposal
in the proxy statement and proxy in accordance with regulations governing the solicitation of proxies. The Company reserves the
right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these
and other applicable rules and requirements. As the rules of the SEC make clear, simply submitting a proposal does not guarantee
that it will be included.
Nominations for Directors
The Nominating and Governance Committee will consider
qualified director candidates recommended in good faith by stockholders, provided those nominees meet the requirements of NYSE
American and applicable federal securities law. The Nominating and Governance Committee’s evaluation of candidates recommended
by stockholders does not differ materially from its evaluation of candidates recommended from other sources. Any stockholder wishing
to recommend a nominee should submit the candidate’s name, credentials, contact information and his or her written consent
to be considered as a candidate. These recommendations should be submitted in writing to the Company, Attn: Secretary, Camber
Energy, Inc., 404 Broadway, Suite 425, San Antonio, Texas 77067. The proposing stockholder should also include his or her contact
information and a statement of his or her share ownership. The Committee may request further information about stockholder recommended
nominees in order to comply with any applicable laws, rules or regulations or to the extent such information is required to be
provided by such stockholder pursuant to any applicable laws, rules or regulations.
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Sincerely,
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/s/ Richard N. Azar II
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Richard N. Azar II
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Interim Chief Executive Officer
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San Antonio, Texas
October , 2017
APPENDIX
A
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*090204*
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BARBARA
K. CEGAVSKE
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201
(775) 684-5708
Website: www.nvsos.gov
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Certificate
of Amendment
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(PURSUANT
TO NRS 78.385 AND 78.390)
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USE
BLACK INK ONLY - DO NOT HIGHLIGHT
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ABOVE
SPACE IS FOR OFFICE USE ONLY
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Certificate
of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
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1.
Name of corporation:
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Camber
Energy, Inc.
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2.
The articles have been amended as follows: (provide article numbers, if available)
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Article
Four Capital Stock is deleted and replaced in its entirety with Article Four set forth on the attachment hereto (which shall
have no effect on any previously designated series of preferred stock)
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3.
The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting
power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may
be required by the provisions of the articles of incorporation* have voted in favor of the amendment is:
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4.
Effective date and time of filing: (optional)
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Date:
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Time:
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(must
not be later than 90 days after the certificate is filed)
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5.
Signature: (required)
*lf
any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding
shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders
of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations
or restrictions on the voting power thereof.
IMPORTANT:
Failure
to include any of the above information and submit with the proper fees may cause this filing to be rejected.
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This
form must be accompanied by appropriate fees.
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Nevada
Secretary of State Amend Profit-After
Revised: 1-5-15
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ARTICLE
FOUR
. CAPITAL STOCK
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A.
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General
Authorization.
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The
Corporation has the authority to issue Five Hundred Ten Million (510,000,000) shares of stock consisting of:
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(1)
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Common
Stock
. Five Hundred Million (500,000,000) shares of common stock, having a par value of $0.001 per share (the “
Common
Stock
”); and
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(2)
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Preferred
Stock
. Ten Million (10,000,000) shares of Preferred Stock having a par value of $0.001 per share (the “
Preferred
Stock
”).
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All
capital stock when issued shall be fully paid and nonassessable. No holder of shares of stock of this Corporation is entitled
as such to any pre-emptive or preferential rights to subscribe to any unissued stock or any other securities which the Corporation
may now or hereafter issue.
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(1)
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Number
of Shares
.
The Common Stock shall consist of Five Hundred Million (500,000,000) shares.
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(2)
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Voting
.
Except as provided in these Articles of Incorporation or by applicable law, each holder of Common Stock is entitled to one
vote for each share of Common Stock held of record on all matters as to which Common Stockholders are entitled to vote, which
voting rights shall not be cumulative in any election of Directors.
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(3)
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Other
Rights
. Each share of Common Stock issued and outstanding shall be identical in all respects with each other such
share, and no dividends shall be paid on any shares of Common Stock unless the same dividend is paid on all shares of Common
Stock outstanding at the time of such payment. Except for and subject to those rights expressly granted to the holders of
Preferred Stock and except as may be provided by the laws of the State of Nevada, the Common Stockholders shall have all other
rights of stockholders.
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Subject
to the terms contained in any designation of a series of Preferred Stock, the Board of Directors is expressly authorized, at any
time and from time to time, to fix, by resolution or resolutions, the following provisions for shares of any class or classes
of Preferred Stock of the Corporation:
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(1)
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The
designation of such class or series, the number of shares to constitute such class or series which may be increased (but not
below the number of shares of that class or series then outstanding) by a resolution of the Board of Directors;
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(2)
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Whether
the shares of such class or series shall have voting rights, in addition to any voting rights provided by law, and if so,
the terms of such voting rights;
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(3)
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The
dividends, if any, payable on such class or series, whether any such dividends shall be cumulative, and, if so, from what
dates, the conditions and dates upon which such dividends shall be payable, and the preference or relation which such dividends
shall bear to the dividends payable on any share of stock of any other class or any other shares of the same class;
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(4)
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Whether
the shares of such class or series shall be subject to redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption or a formula to determine the times, prices and such other conditions;
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(5)
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The
amount or amounts payable upon shares of such series upon, and the rights of the holders of such class or series in, the voluntary
or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation;
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(6)
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Whether
the shares of such class or series shall be subject to the operation of a retirement or sinking fund, and, if so, the extent
to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of
such class or series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;
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(7)
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Whether
the shares of such class or series shall be convertible into, or exchangeable for, shares of stock of any other class or any
other series of the same class or any other securities and, if so, the price or prices or the rate or rates of conversion
or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchanges;
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(8)
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The
limitations and restrictions, if any, to be effective while any shares of such class or series are outstanding upon the payment
of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation
of the Common Stock or shares of stock of any other class or any other series of the same class;
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(9)
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The
conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issuance of any additional
stock, including additional shares of such class or series or of any other series of the same class or of any other class;
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(10)
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The
ranking (be it pari passu, junior or senior) of each class or series vis-à-vis any other class or series of any class
of Preferred Stock as to the payment of dividends, the distribution of assets and all other matters;
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(11)
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Facts
or events to be ascertained outside the articles of incorporation of the Corporation, or the resolution establishing the class
or series of stock, upon which any rate, condition or time for payment of distributions on any class or series of stock is
dependent and the manner by which the fact or event operates upon the rate, condition or time of payment;
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(12)
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Any
other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations
and restrictions thereof, insofar as they are not inconsistent with the provisions of the Articles of Incorporation of this
Corporation, to the full extent permitted by the laws of the State of Nevada.
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The
powers, preferences and relative, participating, optional and other special rights of each class or series of Preferred Stock,
and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any
time outstanding.
APPENDIX
B
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*090204*
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BARBARA
K. CEGAVSKE
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201
(775) 684-5708
Website: www.nvsos.gov
|
|
|
|
|
Certificate
of Amendment
|
|
(PURSUANT
TO NRS 78.385 AND 78.390)
|
|
|
|
|
|
USE
BLACK INK ONLY - DO NOT HIGHLIGHT
|
ABOVE
SPACE IS FOR OFFICE USE ONLY
|
Certificate
of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
|
1.
Name of corporation:
|
Camber
Energy, Inc.
|
|
|
2.
The articles have been amended as follows: (provide article numbers, if available)
|
Article
Four Capital Stock is deleted and replaced in its entirety with Article Four set forth on the attachment hereto (which shall
have no effect on any previously designated series of preferred stock)
|
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|
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3.
The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting
power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may
be required by the provisions of the articles of incorporation* have voted in favor of the amendment is:
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4.
Effective date and time of filing: (optional)
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Date:
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Time:
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(must
not be later than 90 days after the certificate is filed)
|
5.
Signature: (required)
*lf
any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding
shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders
of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations
or restrictions on the voting power thereof.
IMPORTANT:
Failure
to include any of the above information and submit with the proper fees may cause this filing to be rejected.
|
|
This
form must be accompanied by appropriate fees.
|
Nevada
Secretary of State Amend Profit-After
Revised: 1-5-15
|
ARTICLE
FOUR
. CAPITAL STOCK
|
|
A.
|
General
Authorization.
|
The
Corporation has the authority to issue Five Hundred Ten Million (510,000,000) shares of stock consisting of:
|
|
|
|
(1)
|
Common
Stock
. Five Hundred Million (500,000,000) shares of common stock, having a par value of $0.001 per share (the “
Common
Stock
”); and
|
|
|
|
|
(2)
|
Preferred
Stock
. Ten Million (10,000,000) shares of Preferred Stock having a par value of $0.001 per share (the “
Preferred
Stock
”).
|
All
capital stock when issued shall be fully paid and nonassessable. No holder of shares of stock of this Corporation is entitled
as such to any pre-emptive or preferential rights to subscribe to any unissued stock or any other securities which the Corporation
may now or hereafter issue.
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|
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(1)
|
Number
of Shares
.
The Common Stock shall consist of Five Hundred Million (500,000,000) shares.
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(2)
|
Voting
.
Except as provided in these Articles of Incorporation or by applicable law, each holder of Common Stock is entitled to one
vote for each share of Common Stock held of record on all matters as to which Common Stockholders are entitled to vote, which
voting rights shall not be cumulative in any election of Directors.
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(3)
|
Other
Rights
. Each share of Common Stock issued and outstanding shall be identical in all respects with each other such
share, and no dividends shall be paid on any shares of Common Stock unless the same dividend is paid on all shares of Common
Stock outstanding at the time of such payment. Except for and subject to those rights expressly granted to the holders of
Preferred Stock and except as may be provided by the laws of the State of Nevada, the Common Stockholders shall have all other
rights of stockholders.
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Subject
to the terms contained in any designation of a series of Preferred Stock, the Board of Directors is expressly authorized, at any
time and from time to time, to fix, by resolution or resolutions, the following provisions for shares of any class or classes
of Preferred Stock of the Corporation:
|
|
|
|
(1)
|
The
designation of such class or series, the number of shares to constitute such class or series which may be increased (but not
below the number of shares of that class or series then outstanding) by a resolution of the Board of Directors;
|
|
|
|
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(2)
|
Whether
the shares of such class or series shall have voting rights, in addition to any voting rights provided by law, and if so,
the terms of such voting rights;
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|
|
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(3)
|
The
dividends, if any, payable on such class or series, whether any such dividends shall be cumulative, and, if so, from what
dates, the conditions and dates upon which such dividends shall be payable, and the preference or relation which such dividends
shall bear to the dividends payable on any share of stock of any other class or any other shares of the same class;
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(4)
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Whether
the shares of such class or series shall be subject to redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption or a formula to determine the times, prices and such other conditions;
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(5)
|
The
amount or amounts payable upon shares of such series upon, and the rights of the holders of such class or series in, the voluntary
or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation;
|
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(6)
|
Whether
the shares of such class or series shall be subject to the operation of a retirement or sinking fund, and, if so, the extent
to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of
such class or series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;
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(7)
|
Whether
the shares of such class or series shall be convertible into, or exchangeable for, shares of stock of any other class or any
other series of the same class or any other securities and, if so, the price or prices or the rate or rates of conversion
or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchanges;
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(8)
|
The
limitations and restrictions, if any, to be effective while any shares of such class or series are outstanding upon the payment
of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation
of the Common Stock or shares of stock of any other class or any other series of the same class;
|
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(9)
|
The
conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issuance of any additional
stock, including additional shares of such class or series or of any other series of the same class or of any other class;
|
|
|
|
|
(10)
|
The
ranking (be it pari passu, junior or senior) of each class or series vis-à-vis any other class or series of any class
of Preferred Stock as to the payment of dividends, the distribution of assets and all other matters;
|
|
|
|
|
(11)
|
Facts
or events to be ascertained outside the articles of incorporation of the Corporation, or the resolution establishing the class
or series of stock, upon which any rate, condition or time for payment of distributions on any class or series of stock is
dependent and the manner by which the fact or event operates upon the rate, condition or time of payment;
|
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(12)
|
Any
other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations
and restrictions thereof, insofar as they are not inconsistent with the provisions of the Articles of Incorporation of this
Corporation, to the full extent permitted by the laws of the State of Nevada.
|
The
powers, preferences and relative, participating, optional and other special rights of each class or series of Preferred Stock,
and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any
time outstanding.
Reverse
Stock Split of Outstanding Common Stock
Effective
as of the effective date set forth under “
Effective date and time of filing
” on this Certificate of
Amendment to Articles of Incorporation (or in the absence of such date, on the date such Amendment to the Articles of Incorporation
is filed with the Secretary of State of Nevada)(the “
Effective Time
”), every
[10 to 50, depending
on the final ratio approved by the Board of Directors]
shares of the Corporation’s common stock (but not any
shares of Preferred Stock), issued and outstanding immediately prior to the Effective Time, or held in treasury prior to the Effective
Time (collectively the “
Old Capital Stock
”), shall be automatically reclassified and combined into One
(1) share of common stock (the “
Reverse Stock Split
”). Any stock certificate that, immediately prior
to the Effective Time, represented shares of Old Capital Stock will, from and after the Effective Time, automatically and without
the necessity of presenting the same for exchange, represent the number of shares as equals the quotient obtained by dividing
the number of shares of Old Capital Stock represented by such certificate immediately prior to the Effective Time by
[10
to 50, depending on the final ratio approved by the Board of Directors]
, subject to any adjustments for fractional
shares as set forth below; provided, however, that each person holding of record a stock certificate or certificates that represented
shares of Old Capital Stock shall receive, upon surrender of such certificate or certificates, a new certificate or certificates
evidencing and representing the number of shares of capital stock to which such person is entitled under the foregoing reclassification.
No fractional shares of capital stock shall be issued as a result of the Reverse Stock Split. In lieu of any fractional share
of capital stock to which a stockholder would otherwise be entitled, the Corporation shall issue that number of shares of capital
stock as rounded up to the nearest whole share. The Reverse Stock Split shall have no effect on the number of authorized shares
of capital stock, previously designated series of preferred stock (except to the extent such split adjusts the conversion ratio
thereof) or the par value thereof as set forth above in the preceding paragraphs.
APPENDIX
C
STOCK PURCHASE AGREEMENT
This Stock Purchase
Agreement (“
Agreement
”) is made and entered into on October 4, 2017 (“
Effective Date
”), by
and between Camber Energy, Inc., a Nevada corporation (“
Company
”), and the investor whose name appears on the
signature page hereto (“
Investor
”).
Recitals
A.
The parties desire that,
upon the terms and subject to the conditions herein, Investor will purchase $16 million in shares of Series C Redeemable Convertible
Preferred Stock of the Company; and
B.
The offer and sale of
the Securities provided for herein are being made pursuant to the exemptions from registration under Section 4(a)(2) of the Act
as a transaction by an issuer not involving any public offering, and as an offshore private placement of restricted securities
pursuant to Regulation S and Rule 506 of Regulation D.
Agreement
In consideration of
the foregoing, the receipt and adequacy of which are hereby acknowledged, Company and Investor agree as follows:
I.
Definitions
.
In addition to the terms defined elsewhere in this Agreement and the Transaction Documents, capitalized terms that are not otherwise
defined have the meanings set forth in the Glossary of Defined Terms attached hereto as
Exhibit 1
or
the other Transaction Documents.
II.
Purchase and
Sale
.
A.
Purchase Amount
.
Subject to the terms and conditions herein and the satisfaction of the conditions to Closings set forth below, Investor hereby
irrevocably agrees to purchase 1,684 Preferred Shares of Company at $10,000.00 per share with a 5.0% original issue discount (“
OID
”)
for the sum of $16,000,000.00 (“
Purchase Amount
”).
B.
Deliveries
.
The following documents will be fully executed and delivered at the Closing:
1.
This Agreement;
2.
Legal Opinion, in
the form attached hereto as
Exhibit 2
;
3.
Officer’s Certificate,
in the form attached hereto as
Exhibit 3
;
4.
Secretary’s
Certificate, in the form attached hereto as
Exhibit 4
; and
5.
A stock certificate
or transfer Agent book entry for the number of purchased Preferred Shares in the name of Investor.
C.
Closing Conditions
.
The consummation of the transactions contemplated by this Agreement (each, a “
Closing
”)
is subject to the satisfaction of each of the following conditions:
1.
All documents, instruments
and other writings required to be delivered by Company to Investor pursuant to any provision of this Agreement or in order to implement
and effect the transactions contemplated herein have been fully executed and delivered, including without limitation those enumerated
in
Section II.B
above;
2.
Except as described
on
Schedule II.C.2
with regard to the first four Closings only, the Common Stock is listed for and currently trading on
the same or higher Trading Market and, subject to
Section IV.L
below, Company is in compliance with all requirements to
maintain listing on the Trading Market, and there is no notice of any suspension or delisting with respect to the trading of the
shares of Common Stock on such Trading Market
3.
The representations
and warranties of Company and Investor set forth in this Agreement are true and correct in all material respects as if made on
such date (except for representations and warranties expressly made as of a specified date, which will be true as of such date);
4.
Except for those prior
breaches known or identified by Investor prior to the Effective Date, no material breach or default has occurred under any Transaction
Document or any other agreement between Company and Investor;
5.
Except as described
on
Schedule II.C.5
with regard to the first four Closings only, Company has duly authorized shares of Common Stock reserved
for issuance to Investor in an amount equal to thrice the number of shares sufficient to immediately issue all Conversion Shares
potentially issuable under this Agreement and any other agreements with Investor at such time;
6.
Except as described
on
Schedule II.C.6
with regard to the first four Closings only, there is not then in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated in any Transaction Document, or requiring any consent or approval which
will not have been obtained, other than Approval, nor is there any completed, pending, threatened or, to Company’s knowledge,
contemplated proceeding or investigation which may have the effect of prohibiting or adversely affecting any of the transactions
contemplated by this Agreement, including without limitation the sale, issuance, listing, trading, or resale of any Shares on the
Trading Market; no statute, rule, regulation, executive order, decree, ruling or injunction will have been enacted, entered, promulgated
or adopted by any court or governmental authority of competent jurisdiction that prohibits the transactions contemplated by this
Agreement, and no actions, suits or proceedings will be completed, in progress, pending, threatened or, to Company’s knowledge,
contemplated by any person other than Investor or any Affiliate of Investor, that seek to enjoin or prohibit the transactions contemplated
by this Agreement;
7.
Any rights of first
refusal, preemptive rights, rights of participation, or any similar right to participate in the transactions contemplated by this
Agreement, if any, have been waived in writing; and
8.
Except with regard to
the initial Closing only, Company has obtained Approval and listing of all Conversion Shares on NYSE American.
D.
Initial Closing
.
Immediately when all conditions set forth in
Section II.C
have
been fully satisfied, Company will issue and sell to Investor and Investor will purchase 212 Preferred Shares by payment to Company
of $2,000,000.00, by wire transfer of immediately available funds to an account designated by Company.
E.
Subsequent Closings
.
Subject to the terms and conditions herein, 10 days after the initial Closing Investor will purchase
106 Preferred Shares by payment to Company of $1,000,000.00, 10 days after the second Closing Investor will purchase 105 Preferred
Shares by payment to Company of $1,000,000.00, 10 days after the third Closing Investor will purchase 105 Preferred Shares by payment
to Company of $1,000,000.00, 10 days after the fourth Closing Investor will purchase 105 Preferred Shares by payment to Company
of $1,000,000.00, 30 days after the fifth Closing Investor will purchase 525 Preferred Shares by payment to Company of $5,000,000.00,
and 30 days after the sixth Closing Investor will purchase 525 Preferred Shares by payment to Company of $5,000,000.00; provided
that on each respective Closing date, all conditions in
Section II.C
must have been fully
satisfied as of such date, with respect to the second through fifth Closings the Floor Price and Base Volume must have occurred,
and with respect to the final two Closings five times the Base Volume must have occurred since the prior Closing, and that if such
conditions and Base Volume are not met on the date initially set for such Closing, each Closing will occur as soon thereafter as
they are met. At each subsequent Closing, Company will issue and deliver to Investor a Transfer Agent book entry representing the
purchased Preferred Shares, and Investor will purchase and make payment for the specified number of additional Preferred Shares
by payment to Company of the relevant amount by wire transfer of immediately available funds to an account designated by the Company.
III.
Representations
and Warranties
.
A.
Representations
Regarding Transaction
.
Except as set forth under the corresponding section of the Disclosure
Schedules, if any, Company hereby represents and warrants to, and as applicable covenants with, Investor as of the Closing:
1.
Organization and
Qualification
.
Company and each Subsidiary is an entity duly incorporated or otherwise organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or organization, as applicable, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted, except where the failure
to do so would not reasonably be expected to result in a Material Adverse Effect. Neither Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational
or charter documents, except as would not reasonably be expected to result in a Material Adverse Effect. Each of Company and each
Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure
to be so qualified or in good standing, as the case may be, would not reasonably be expected to result in a Material Adverse Effect
and there is no completed, pending or, to the knowledge of Company, contemplated or threatened proceeding in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
2.
Authorization;
Enforcement
.
Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by each of the Transaction Documents and otherwise to carry out its obligations hereunder or thereunder. The execution and delivery
of each of the Transaction Documents by Company and the consummation by it of the transactions contemplated hereby or thereby have
been duly authorized by all necessary action on the part of Company and no further consent or action is required by Company. Each
of the Transaction Documents has been, or upon delivery will be, duly executed by Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of Company, enforceable against Company in accordance with its
terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (c) insofar as indemnification and
contribution provisions may be limited by applicable law.
3.
No Conflicts
.
The execution, delivery and performance of the Transaction Documents by Company, the issuance and sale of the Shares and the consummation
by Company of the other transactions contemplated thereby do not and will not (a) conflict with or violate any provision of Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (b) conflict
with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, credit facility,
debt or other instrument (evidencing Company or Subsidiary debt or otherwise) or other understanding to which Company or any Subsidiary
is a party or by which any property or asset of Company or any Subsidiary is bound or affected, (c) conflict with or result in
a violation of any material law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which Company or a Subsidiary is subject (including U.S. federal and state securities laws and regulations), or by
which any material property or asset of Company or a Subsidiary is bound or affected, or (d) conflict with or violate the terms
of any material agreement by which Company or any Subsidiary is bound or to which any property or asset of Company or any Subsidiary
is bound or affected; except in the case of each of clauses (b), (c) and (d), such as would not reasonably be expected to result
in a Material Adverse Effect.
4.
Litigation
.
Except as set forth in
Schedule III.A.4
, there is no action, suit, inquiry, notice of violation, proceeding or investigation
pending, threatened, or, to the knowledge of Company, contemplated against or affecting Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) (collectively, an “
Action
”), which would reasonably be expected to adversely
affect or challenge the legality, validity or enforceability of any of the Transaction Documents or the issuance, listing, trading,
or resale of any Shares on the Trading Market. The Commission has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by Company or any Subsidiary under the Exchange Act or the Act.
5.
Filings, Consents
and Approvals
.
Except as set forth in
Schedule III.A.5
, neither Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance
by Company of the Transaction Documents, other than required federal and state securities filings and such filings and approvals
as are required to be made or obtained under the applicable Trading Market rules in connection with the transactions contemplated
hereby, each of which has been, or if not yet required to be filed will be, timely filed.
6.
Issuance of Shares
.
The Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens.
7.
Disclosure; Non-Public
Information
.
Company will issue a press release and timely file a current report on Form 8-K (“
Current Report
”)
by 8:30 am Eastern time on the Trading Day after the Effective Date describing the material terms and conditions of this Agreement,
a copy of which will be provided to Investor prior to the Effective Date. All information that Company has provided to Investor
that constitutes or might constitute material, non-public information will be included in the Current Report. Notwithstanding any
other provision, except with respect to information that will be, and only to the extent that it actually is, timely publicly disclosed
by Company pursuant to the foregoing sentence, neither Company nor any other Person acting on its behalf has provided Investor
or its representatives, agents or attorneys with any information that constitutes or might constitute material, non-public information,
including without limitation this Agreement and the Exhibits and Disclosure Schedules hereto. No information contained in the Disclosure
Schedules constitutes material non-public information. There is no adverse material information regarding Company that has not
been publicly disclosed prior to the Effective Date. Company understands and confirms that Investor will rely on the foregoing
representations and covenants in effecting transactions in securities of Company. All disclosure provided to Investor regarding
Company, its business and the transactions contemplated hereby, including without limitation the Disclosure Schedules, furnished
by or on behalf of Company with respect to the representations and warranties made herein are true and correct in all material
respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were made, not misleading
.
8.
No Integrated
Offering
.
Neither Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering to be integrated with prior offerings by Company that cause a violation of the Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of the Trading Market.
9.
Financial Condition
.
Except as set forth on
Schedule III.A.9
, the Public Reports set forth as of the dates thereof all outstanding secured and
unsecured Indebtedness of Company or any Subsidiary, or for which Company or any Subsidiary has commitments, and any material default
with respect to any Indebtedness. Company does not intend to incur debts beyond its ability to pay such debts as they mature, taking
into account the timing and amounts of cash to be payable on or in respect of its debt.
10.
Section 5 Compliance.
No representation or warranty or other statement made by Company in the Transaction Documents contains any untrue statement or
omits to state a material fact necessary to make any of them, in light of the circumstances in which it was made, not misleading.
Company is not aware of any facts or circumstances that would cause the transactions contemplated by the Transaction Documents,
when consummated, to violate Section 5 of the Act or other federal or state securities laws or regulations.
11.
Investment Company
.
Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Preferred Shares, will not be
or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
Company will conduct its business in a manner so that it will not become subject to the Investment Company Act.
12.
Acknowledgments
Regarding Investor
.
Company’s decision to enter into this Agreement has been based solely on the independent evaluation
by Company and its representatives, and Company acknowledges and agrees that:
a.
Investor is not, has never
been, and as a result of the transactions contemplated by the Transaction Documents will not become an officer, director, insider,
control person, to Company’s knowledge, 10% or greater shareholder, or otherwise an affiliate of Company as defined under
Rule 12b-2 of the Exchange Act;
b.
Investor and Investor’s
representatives have not made and do not make any representations, warranties or agreements with respect to the Shares, this Agreement,
or the transactions contemplated by the Transaction Documents other than those specifically set forth in
Section III.C
below;
Company has not relied upon, and expressly disclaims reliance upon, any and all written or oral statements or representations made
by any persons prior to this Agreement;
c.
The conversion of Preferred
Shares and resale of Conversion Shares will result in dilution, which may be substantial; the number of Conversion Shares will
increase in certain circumstances; and Company’s obligation to issue and deliver Conversion Shares in accordance with this
Agreement and the Certificate of Designations is absolute and unconditional regardless of the dilutive effect that such issuances
may have; and
d.
Investor is acting solely
in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby; neither
Investor nor any of its Affiliates, agents or representatives has or is acting as a legal, financial, investment, accounting, tax
or other advisor to Company, or fiduciary of Company, or in any similar capacity; neither Investor nor any of its Affiliates, agents
or representatives has provided any legal, financial, investment, accounting, tax or other advice to Company; any statement made
in connection with this Agreement or the transactions contemplated hereby is not advice or a recommendation, and is merely incidental
to Investor’s purchase of the Shares.
13.
Prior Agreements
.
Investor has at all times fully and completely complied in all respects with the Prior Agreements. All Delivery Notices and all
calculations relating to the Prior Agreements provided to Company by Investor or its representatives prior to the Effective Date
of this Agreement were and are fully correct and accurate in all respects. All Delivery Notices and calculations provided to Company
by Investor or its representatives prior to the Effective Date are hereby acknowledged and deemed to be correct for any and all
purposes.
14.
Approval
.
Shareholder approval for the Prior Securities was obtained on August 23, 2016. The limitations of Section I.G.7.b of Certificate
of Designations will not apply to the Preferred Shares. Company will obtain an exception to any shareholder approval requirement
from NYSE American or obtain shareholder approval.
15.
No Bad Actor
Disqualification
.
Neither Company, any predecessor of Company, any affiliate of Company, any director, executive officer,
other officer of Company participating in the offering, or any beneficial owner of 20% or more of Company’s outstanding voting
equity securities is subject to any bad actor disqualification as provided in Rule 506(d) of Regulation D, and Company is not aware
of any facts or circumstances that, with the passage of time, would reasonably be expected to cause such disqualification.
16.
Offshore Transaction
.
Company has not, and will not, engage in any directed selling efforts in the United States in respect of the Shares. Company and
its Affiliates have complied, and will comply, with the offering restriction requirements of Regulation S. Company has offered,
and will offer, the Shares only to Investor.
17.
Shell Status
.
Company is not now and has never been a shell company as defined in Rule 12b-2 of the Exchange Act.
B.
Representations
Regarding Company
.
Except as set forth in any Public Reports or attached exhibits as of the
Effective Date, or under the corresponding section of the Disclosure Schedules, if any, Company hereby represents and warrants
to, and as applicable covenants with, Investor as of the Closing:
1.
Capitalization
.
The capitalization of the Company as of the Effective Date is as described in the Public Reports. No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by
the Transaction Documents which has not been waived or satisfied. Except as a result of the purchase and sale of the Shares, the
Prior Securities, or as otherwise disclosed on
Schedule III.B.1
, there are no outstanding options, warrants, script rights
to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible
into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which Company or any Subsidiary is or may become bound to issue additional shares
of Common Stock or securities convertible into or exercisable for shares of Common Stock. The issuance and sale of the Shares will
not obligate Company to issue shares of Common Stock or other securities to any Person, other than Investor, and will not result
in a right of any holder of Company securities to adjust the exercise, conversion, exchange, or reset price under such securities.
All of the outstanding shares of capital stock of Company are validly issued, fully paid and nonassessable, have been issued in
material compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase securities. Except as disclosed on
Schedule III.B.1
,
no further approval or authorization of any stockholder, the Board of Directors of Company or others is required for the issuance
and sale of the Shares. There are no stockholders agreements, voting agreements or other similar agreements with respect to Company’s
capital stock to which Company is a party or, to the knowledge of Company, between or among any of Company’s stockholders.
2.
Subsidiaries
.
All of the direct and indirect subsidiaries of Company are set forth in the Public Reports or the corresponding section of
the Disclosure Schedules. Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary,
and all of such directly or indirectly owned capital stock or other equity interests are owned free and clear of any Liens. All
the issued and outstanding shares of capital stock of each Subsidiary are duly authorized, validly issued, fully paid, nonassessable
and free of preemptive and similar rights to subscribe for or purchase securities.
3.
Public Reports;
Financial Statements
.
Except with regard to the Quarterly Report on Form 10-Q for the period ending June 30, 2017 which
will be filed within 30 days after the Effective Date, Company has filed all required Public Reports for the one year preceding
the Effective Date. As of their respective dates or as subsequently amended, the Public Reports complied in all material respects
with the requirements of the Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as
applicable, and none of the Public Reports, when filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of Company included in the Public Reports, as amended, comply
in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto
as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise
specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the financial position of Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject,
in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
4.
Material Changes
.
Since the end of the most recent year for which an Annual Report on Form 10-K has been filed with the Commission, except as disclosed
on
Schedule III.B.4
, (a) there has been no event, occurrence or development that has had, or that would reasonably be expected
to result in, a Material Adverse Effect, (b) Company has not incurred any liabilities (contingent or otherwise) other than (i)
trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice, and (ii) liabilities
not required to be reflected in Company’s financial statements pursuant to GAAP or required to be disclosed in filings made
with the Commission, (c) Company has not altered its method of accounting, (d) Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock, and (e) Company has not issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company equity incentive plans. Company does not have pending before the Commission any request for confidential
treatment of information.
5.
Litigation
.
Except as disclosed on
Schedule III.B.8
, there is no Action completed, pending, threatened or, to the knowledge of
Company, contemplated, that would reasonably be expected to result in a Material Adverse Effect. Neither Company nor any Subsidiary,
nor any director or officer thereof, nor to the knowledge of Company any greater than 5% shareholder or any director or officer
thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, is not pending or threatened, or to the knowledge of Company,
is not contemplated, any investigation by the Commission, Department of Justice or law enforcement involving Company or any current
or former director or officer of Company, or to the knowledge of Company greater than 5% shareholder of Company.
6.
No Bankruptcy
.
There has not been any petition or application filed, or any judicial or administrative proceeding commenced which has not been
discharged, by or against the Company or any Subsidiary or with respect to any of the properties or assets of Company or any Subsidiary
under any applicable law relating to bankruptcy, insolvency, reorganization, fraudulent transfer, compromise, arrangement of debt,
creditors’ rights and no assignment has been made by the Company or any Subsidiary for the benefit of creditors.
7.
Labor Relations
.
No material labor dispute exists or, to the knowledge of Company, is imminent with respect to any of the employees of Company,
which would reasonably be expected to result in a Material Adverse Effect.
8.
Compliance
.
Except as disclosed on
Schedule III.B.8
with regard to the initial Closing only, neither Company nor any Subsidiary
(a) is in material default under or in material violation of (and no event has occurred that has not been waived that, with notice
or lapse of time or both, would result in a default by Company or any Subsidiary under), nor has Company or any Subsidiary received
notice of a claim that it is in material default under or that it is in material violation of, any indenture, loan or credit agreement
or any other similar agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (b) is in violation of any order of any court, arbitrator or governmental body,
or (c) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws applicable to its business, except in each case as would not reasonably be expected
to have a Material Adverse Effect.
9.
Regulatory Permits
.
Company and each Subsidiary possess all certificates, authorizations and permits issued by the appropriate federal, state, local
or foreign regulatory authorities necessary to conduct their respective businesses as described in the Public Reports, except where
the failure to possess such permits would not, individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect (“
Material Permits
”), and neither Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
10.
Title to Assets
.
Except as disclosed on
Schedule III.B.10
, Company and each Subsidiary have good and marketable title in fee simple to all
real property owned by them that is material to the business of Company and each Subsidiary and good and marketable title in all
personal property owned by them that is material to the business of Company and each Subsidiary, in each case free and clear of
all Liens, except for Liens that do not materially affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by Company and each Subsidiary and Liens for the payment of federal, state or other
taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by
Company and each Subsidiary are held by them under valid, subsisting and enforceable leases of which Company and each Subsidiary
are in compliance.
11.
Patents and Trademarks
.
Company and each Subsidiary have, or have rights to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection
with their respective businesses as described in the Public Reports and which the failure to so have would have a Material Adverse
Effect (collectively, “
Intellectual Property Rights
”). Neither Company nor any Subsidiary has received a written
notice that the Intellectual Property Rights used by Company or any Subsidiary violates or infringes upon the rights of any Person.
To the knowledge of Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights of Company or each Subsidiary.
12.
Insurance
.
Company and each Subsidiary are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which Company and each Subsidiary are engaged, including but
not limited to directors and officers insurance coverage at least equal to the Purchase Amount. To Company’s knowledge, such
insurance contracts and policies are accurate and complete in all material respects. Neither Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its business without an increase in cost that would constitute
a Material Adverse Effect.
13.
Transactions with
Affiliates and Employees
.
None of the officers or directors of Company and, to the knowledge of Company, none of the employees
of Company is presently a party to any transaction with Company or any Subsidiary (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of Company, any entity in which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $120,000 other than (i) for payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf of Company and (iii) for other employee benefits,
including stock option agreements under any equity incentive plan of Company.
14.
Sarbanes-Oxley;
Internal Accounting Controls
. Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002,
which are applicable to it as of the date of the Closing. Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness of Company’s disclosure controls and procedures
based on their evaluations as of the evaluation date. Since the date of the most recently filed periodic Public Report, there have
been no significant changes in Company’s internal accounting controls or its disclosure controls and procedures or, to Company’s
knowledge, in other factors that could materially affect Company’s internal accounting controls or its disclosure controls
and procedures.
15.
Certain Fees
.
No brokerage or finder’s fees or commissions are or will be payable to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. Notwithstanding
any other provision, Investor will have no obligation with respect to any fees or with respect to any claims made by or on behalf
of other Persons for fees of a type contemplated in this section that may be due in connection with the transactions contemplated
by this Agreement or the other Transaction Documents.
16.
Registration Rights
.
Except as disclosed on
Schedule III.B.16
no Person has any right to cause Company to effect the registration under the Act
of any securities of Company.
17.
Listing and Maintenance
Requirements
.
The Common Stock is registered pursuant to Section 12 of the Exchange Act, and Company has taken no action
designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under
the Exchange Act nor has Company received any notification that the Commission is contemplating terminating such registration.
Except as disclosed on
Schedule III.B.17
, Company has not, in the 12 months preceding the Effective Date, received notice
from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that Company is not in compliance
with the listing or maintenance requirements of such Trading Market. Company is, and has no reason to believe that it will not
in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.
18.
Application of
Takeover Protections
.
Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under Company’s Certificate of Incorporation (or similar charter documents) or the laws of
its state of incorporation that is or could become applicable to Investor as a result of Investor and Company fulfilling their
obligations or exercising their rights under the Transaction Documents, including without limitation Company’s issuance of
the Shares and Investor’s ownership of the Shares.
19.
Tax Status
.
Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and only to the extent that Company and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes). Company
has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal,
statute or local tax. None of Company’s tax returns is presently being audited by any taxing authority. Company would not
be classified as a PFIC for its most recently completed taxable year, and does not expect to be classified as a PFIC for its current
taxable year.
20.
Foreign Corrupt
Practices
.
Neither Company, nor to the knowledge of Company, any agent or other person acting on behalf of Company, has
(a) directly or indirectly, used any corrupt funds for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (b) made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from corporate funds, (c) failed to disclose fully any contribution
made by Company, or made by any person acting on its behalf of which Company is aware, which is in violation of law, or (d) violated
in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.
21.
Accountants
.
Company’s accountants are set forth in the Public Reports and such accountants are an independent registered public accounting
firm.
22.
No Disagreements
with Accountants or Lawyers
.
There are no material disagreements presently existing, or reasonably anticipated by Company
to arise, between Company and the accountants or lawyers formerly or presently employed by Company.
23.
Powers of Attorney
.
There are no outstanding powers of attorney executed on behalf of the Company or any Subsidiary, except such as would not reasonably
be expected to result in a Material Adverse Effect.
24.
Computer and Technology
Security.
Company has taken all reasonable steps to safeguard the information technology systems utilized in the operation
of the business of Company, including the implementation of procedures to minimize the risk that such information technology systems
have any disabling codes or instructions, timer, copy protection device, clock, counter or other limiting design or routing and
any back door, virus, malicious code or other software routines or hardware components that in each case permit unauthorized access
or the unauthorized disablement or unauthorized erasure of data or other software by a third party, and, to Company’s knowledge,
to date there have been no successful unauthorized intrusions or breaches of the security of the information technology systems.
25.
Data Privacy.
Company has: (a) complied with, and is presently in compliance with, all applicable laws in connection with data privacy, information
security, data security and/or personal information; (b) complied with, and is presently in material compliance with, its policies
and procedures applicable to data privacy, information security, data security, and personal information; (c) not experienced any
incident in which personal information or other sensitive data was or may have been stolen or improperly accessed; and Company
is not aware of any facts suggesting the likelihood of the foregoing, including without limitation, any breach of security or receipt
of any notices or complaints from any Person regarding personal information or other data.
C.
Representations
and Warranties of Investor
.
Investor hereby represents and warrants to Company as of the
Closing as follows:
1.
Organization;
Authority
.
Investor is an entity validly existing and in good standing under the laws of the jurisdiction of its organization
with full right, company power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution, delivery and performance by Investor of the transactions
contemplated by this Agreement have been duly authorized by all necessary company or similar action on the part of Investor. Each
Transaction Document to which it is a party has been, or will be, duly executed by Investor, and when delivered by Investor in
accordance with the terms hereof, will constitute the valid and legally binding obligation of Investor, enforceable against it
in accordance with its terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (c) insofar as indemnification
and contribution provisions may be limited by applicable law.
2.
Investor Status
.
At the time Investor was offered the Preferred Shares, it was, and at the Effective Date it is: (a) an accredited investor
as defined in Rule 501(a) under the Act; (b) not a registered broker-dealer, member of FINRA, or an affiliate thereof; and (c)
not a U.S. Person, and is not acquiring the Preferred Shares for the account or beneficial ownership of any U.S. Person.
3.
Experience of
Investor
.
Investor, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares,
and has so evaluated the merits and risks of such investment. Investor is able to bear the economic risk of an investment in the
Shares and, at the present time, is able to afford a complete loss of such investment.
4.
Ownership
.
Investor is acquiring the Preferred Shares as principal for its own account. Investor will not engage in hedging transactions
with regard to the Conversion Shares unless in compliance with the Act. Investor will not resell, transfer or assign the Preferred
Shares, and will resell the Conversion Shares only pursuant to registration under the Act or an available exemption therefrom.
5.
No Short Sales
.
Neither Investor nor any Affiliate holds any short position in, nor has engaged in any Short Sales of the Common Stock, or engaged
in any hedging transactions with regard to the Shares prior to the Effective Date.
IV.
Securities and
Other Provisions
.
A.
Investor Due Diligence
.
Investor will have the right and opportunity to conduct customary due diligence with respect to any Registration Statement or Prospectus
in which the name of Investor or any Affiliate of Investor appears.
B.
Furnishing of
Information
.
Within 30 days after the Effective Date the Company will file its Quarterly
Report on Form 10-Q for the period ended June 30, 2017, and thereafter for as long as Investor owns any Shares, Company will timely
file all reports required to be filed by Company pursuant to the Exchange Act. As long as Investor owns any Shares, Company will
prepare and make publicly available such information as is required for Investor to sell its Conversion Shares under Rule 144.
Company further covenants that, as long as Investor owns any Shares, Company will take such further action as Investor may reasonably
request, all to the extent required from time to time to enable Investor to sell its Conversion Shares without registration under
the Act within the limitation of the exemptions provided by Rule 144.
C.
Integration
.
Company will not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security, as defined in Section 2 of the Act, that would be integrated with the offer or sale of the Shares to Investor
for purposes of the rules and regulations of any Trading Market such that it would require stockholder approval prior to the closing
of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.
D.
Disclosure and
Publicity
.
Company will provide to Investor for review and approval prior to filing or issuing
any current, periodic or public report, proxy or registration statement, press release, public statement or communication relating
to or referencing Investor, any Transaction Documents or the transactions contemplated thereby.
E.
Shareholders Rights
Plan
.
No claim will be made or enforced by Company or, to the knowledge of Company, any other
Person that Investor is an “Acquiring Person” under any shareholders rights plan or similar plan or arrangement in
effect or hereafter adopted by Company, or that Investor could be deemed to trigger the provisions of any such plan or arrangement,
in either such case, by virtue of receiving Shares under the Transaction Documents or under any other agreement between Company
and Investor. Company will conduct its business in a manner so that it will not become subject to the Investment Company Act of
1940, as amended.
F.
No Non-Public
Information
.
Company covenants and agrees that neither it nor any other Person acting on
its behalf will, provide Investor or its agents or counsel with any information that Company believes or reasonably should believe
may constitute material non-public information. Neither Investor nor any Affiliate of Investor has or will have any duty of trust
or confidence that is owed directly, indirectly, or derivatively, to Company or the stockholders of Company, or to any other Person
who is the source of material non-public information regarding Company. Company understands and confirms that Investor will be
relying on the foregoing in effecting transactions in securities of Company, including without limitation sales of the Conversion
Shares.
G.
Indemnification
of Investor
.
1.
Obligation to
Indemnify
. Subject to the provisions of this
Section IV.G
,
Company will indemnify and hold Investor, its Affiliates, managers and advisors, and each of their officers, directors, shareholders,
partners, employees, representatives, agents and attorneys, and any person who controls Investor within the meaning of Section
15 of the Act or Section 20 of the Exchange Act (collectively, “
Investor Parties
”
and each a “
Investor Party
”), harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, reasonable costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation (collectively, “
Losses
”)
that any Investor Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by Company in this Agreement or in the other Transaction Documents, (b) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, Prospectus, Prospectus Supplement, or any information
incorporated by reference therein, or arising out of or based upon any omission or alleged omission to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (c) any
action by a creditor or stockholder of Company who is not an Affiliate of an Investor Party, challenging the transactions contemplated
by the Transaction Documents; provided, however, that Company will not be obligated to indemnify any Investor Party for any Losses
finally adjudicated to be caused solely by (i) a false statement of material fact contained within written information provided
by such Investor Party expressly for the purpose of including it in the applicable Registration Statement, Prospectus, Prospectus
Supplement, or (ii) such Investor Party’s unexcused material breach of an express provision of this Agreement or another
Transaction Document.
2.
Procedure for
Indemnification
.
If any action will be brought against an Investor Party in respect of which indemnity may be sought pursuant
to this Agreement, such Investor Party will promptly notify Company in writing, and Company will have the right to assume the defense
thereof with counsel of its own choosing. Investor Parties will have the right to employ separate counsel in any such action and
participate in the defense thereof, but the reasonable fees and expenses of such counsel will be at the expense of Investor Parties
except to the extent that (a) the employment thereof has been specifically authorized by Company in writing, (b) Company has failed
after a reasonable period of time to assume such defense and to employ counsel or (c) in such action there is, in the reasonable
opinion of such separate counsel, a material conflict with respect to the dispute in question on any material issue between the
position of Company and the position of Investor Parties such that it would be inappropriate for one counsel to represent Company
and Investor Parties. Company will not be liable to Investor Parties under this Agreement (i) for any settlement by an Investor
Party effected without Company’s prior written consent, which will not be unreasonably withheld or delayed; or (ii) to the
extent, but only to the extent that a loss, claim, damage or liability is either attributable to Investor’s breach of any
of the representations, warranties, covenants or agreements made by Investor in this Agreement or in the other Transaction Documents.
In no event will the Company be liable for the reasonable fees and expenses for more than one separate firm of attorneys (plus
local counsel as applicable) to represent all Investor Parties.
3.
Other
than the liability of Investor to Company for uncured material breach of the express provisions of this Agreement, no Investor
Party will have any liability to Company or any Person asserting claims on behalf of or in right of Company as a result of acquiring
the
Shares under this Agreement.
H.
Reservation of
Shares
. Company will file a preliminary proxy within 10 days after the Effective Date to
effect a share combination without decreasing its authorized shares or, alternatively, to effect an increase in its authorized
number of shares of Common Stock, and if necessary for stockholder approval of this Agreement and the issuance of the Conversion
Shares, (collectively, “
Approval
”), set a meeting for the first possible date
after clearing Commission comments, and use its commercially reasonable best efforts to obtain Approval as soon as practicable,
and in any event within 90 days after the Effective Date. Company, its board of directors, and each of its officers and directors
will vote all common shares owned or controlled by them and all proxies given to them in favor of the proposal. Company will at
all times thereafter maintain a reserve from its duly authorized Common Stock for issuance pursuant to the Transaction Documents
authorized shares of Common Stock in an amount equal to thrice the number of shares sufficient to immediately issue all Conversion
Shares potentially issuable at such time.
I.
Activity Restrictions
.
Investor hereby grants an irrevocable proxy to Company’s board of directors to vote all
Conversion shares beneficially owned or controlled by Investor as of the record date in favor of Approval. Except for the foregoing,
for so long as Investor or any of its Affiliates holds any Shares, neither Investor nor any Affiliate will: (1) vote any shares
of Common Stock beneficially owned or controlled by it, sign or solicit any proxies, or seek to advise or influence any Person
with respect to any voting securities of Company; (2) engage or participate in any actions, plans or proposals which relate to
or would result in (a) acquiring additional securities of Company, alone or together with any other Person, which would result
in beneficially owning or controlling more than 9.99% of the total outstanding Common Stock or other voting securities of Company,
(b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Company or any of its Subsidiaries,
(c) a sale or transfer of a material amount of assets of Company or any of its Subsidiaries, (d) any change in the present board
of directors or management of Company, including any plans or proposals to change the number or term of directors or to fill any
existing vacancies on the board, (e) any material change in the present capitalization or dividend policy of Company, (f) any other
material change in Company’s business or corporate structure, including but not limited to, if Company is a registered closed-end
investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by Section
13 of the Investment Company Act of 1940, (g) changes in Company’s charter, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of Company by any Person, (h) a class of securities of Company being
delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association, (i) a class of equity securities of Company becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Act, or (j) any action, intention, plan or arrangement similar to any of those enumerated above;
or (3) request Company or its directors, officers, employees, agents or representatives to amend or waive any provision of this
section.
J.
No Shorting.
Provided no Trigger Event has occurred, for so long as Investor holds any Shares, neither Investor
nor any of its Affiliates will engage in or effect, directly or indirectly, any Short Sale of Common Stock. For the avoidance of
doubt, selling against delivery of Conversion Shares after delivery of a Conversion Notice is not a Short Sale. There will be no
restriction or limitation of any kind on Investor’s right or ability to sell or transfer any or all of the Conversion Shares
at any time, in its sole and absolute discretion. Investor may not sell, transfer or assign any Preferred Shares or any of its
rights under this Agreement.
K.
Stock Splits
.
If Company at any time on or after the Effective Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) or combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater or lesser number of shares, the share numbers, prices and other amounts set forth in this
Agreement, as in effect immediately prior to such subdivision or combination, will be proportionately reduced or increased, as
applicable, effective at the close of business on the date the subdivision or combination becomes effective.
L.
Subsequent Financings
.
As long as Investor holds any Preferred Shares, Company will not: (1) enter into any agreement that in any way restricts its ability
to enter into any agreement, amendment or waiver with Investor, including without limitation any agreement to offer, sell or issue
to Investor any preferred stock, common stock or other securities of Company; (2) issue or enter into or amend an agreement pursuant
to which it may issue any shares of Common Stock, other than (a) for restricted securities with no registration rights, (b) in
connection with a strategic acquisition, (c) in an underwritten public offering, or (d) at a fixed price; or (3) issue or amend
any debt or equity securities convertible into, exchangeable or exercisable for, or including the right to receive, shares of Common
Stock (a) at a conversion price, exercise price or exchange rate or other price that is based upon or varies with, the trading
prices of or quotations for the shares of Common Stock at any time after the initial issuance of the security or (b) with a conversion,
exercise or exchange price that is subject to being reset at some future date after the initial issuance of the security or upon
the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for
the Common Stock. For sake of clarity, Company may enter into an unregistered financing of debt or restricted stock at any fixed
price with no registration rights.
M.
Principal Market
.
Company will timely submit all necessary notification and supporting documentation required for
the listing of all possible Conversion Shares with NYSE American and will use its commercially reasonable best efforts to obtain
approval to list the Conversion Shares as soon as practicable.
N.
Restrictive Legend
.
The Shares have not been registered under the Act and may not be resold in the United States unless registered or an exemption
from registration is available. Company is required to refuse to register any transfer of the Conversion Shares not made pursuant
to registration under the Act or an available exemption from registration. Upon the issuance thereof, and only until such time
as the same is no longer required under the applicable securities laws and regulations, the certificates representing any of the
Shares will bear a legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED
OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT. IN
ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED unless in
compliance with the ACT
.
Certificates representing Conversion Shares will be issued
without such legend or at Investor’s option issued by electronic delivery at the applicable balance account at DTC, if either
(i) the Conversion Shares are registered for resale under the Act, or (ii) Investor provides an opinion of its counsel to the effect
that the Conversion Shares may be issued without restrictive legend.
O.
Prior Securities
.
Investor
acknowledges and agrees that a Trigger Event occurred with respect to all of the Prior Securities on June 30, 2016. Investor acknowledges
and agrees that, as of the Effective Date, no Trigger Event has occurred with respect to the Preferred Shares being issued pursuant
to this Agreement.
P.
Repurchase Right
.
Provided Company has not materially breached this Agreement, Company may at any time, in its
sole and absolute discretion, repurchase from Investor all, but not less than all, then outstanding Preferred Shares issued pursuant
to this Agreement by paying to Investor 110.0% of the aggregate Face Value of all such shares, by wire transfer of immediately
available funds to an account designated by Investor.
Q.
Piggyback Registration
Rights
.
Company will include on the next registration statement Company files with the Commission,
or on the subsequent registration statement if such registration statement is withdrawn, all potentially issuable Conversion Shares.
R.
Right of First
Refusal
.
If at any time while any Preferred Shares are outstanding, Company has a bona fide
offer of equity capital or financing from any person, that Company intends to act upon, then Company must first offer such opportunity
to Investor to provide such capital or financing to Company on the same terms as each respective person’s terms. Except as
otherwise provided in any Transaction Documents, should Investor be unwilling or unable to provide such capital or financing to
Company within 10 Trading Days from Investor’s receipt of written notice of the offer from Company, then Company may obtain
such capital or financing from that respective person upon the exact same terms and conditions offered by Company to Investor,
which transaction must be completed within 90 days after the date of the notice. If Company does not receive the capital or financing
from the respective person within 90 days after the date of the respective notice, then Company must again offer the capital or
financing opportunity to Investor as described above, and the process detailed above shall be repeated. Notwithstanding anything
to the contrary in the foregoing, this provision shall not apply to a debt financing that is not convertible to stock.
S.
Favored Nations
.
So long as any Preferred Shares are outstanding, upon any issuance by Company or any of its subsidiaries
of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to Investor, then Company will notify Investor of such additional or more favorable term and such
term, at Investor’s option, shall become a part of the transaction documents with Investor. The types of terms contained
in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing
conversion discounts, prepayment rate, conversion look back periods, interest rates, original issue discounts, stock sale price,
private placement price per share, and warrant coverage.
U.
Use of Proceeds
.
The proceeds from the Purchase Amount will be used by Company as set forth in the Disclosure
Schedule.
V.
General Provisions
.
A.
Notice
.
Unless
a different time of day or method of delivery is specifically provided in the Transaction Documents, any and all notices or other
communications or deliveries required or permitted to be provided hereunder will be in writing and will be deemed given and effective
on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or electronic mail
prior to 5:00 p.m. Eastern time on a Trading Day and an electronic confirmation of delivery is received by the sender, (b) the
next Trading Day after the date of transmission, if such notice or communication is delivered later than 5:00 p.m. Eastern time
or on a day that is not a Trading Day, (c) the next Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses for
such notices and communications are such other address as may be designated in writing, in the same manner, by such Person.
B.
Amendments; Waivers
.
No provision of this Agreement may be waived or amended except in a written instrument signed,
in the case of an amendment, by Company and Investor or, in the case of a waiver, by the party against whom enforcement of any
such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement will
be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor will any delay or omission of either party to exercise any right hereunder in any manner impair the
exercise of any such right.
C.
No Third-Party
Beneficiaries
.
Except as otherwise set forth in
Section IV.G
,
this Agreement and the Transaction Documents will inure solely to the benefit of the parties hereto, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person. Other than the Investor Parties described in
Section
IV.G
, a Person who is not a party to this Agreement will not have any rights under the Contracts
(Rights of Third Parties) Law, 2014 of the Cayman Islands to enforce any term of this Agreement or any Transaction Document.
D.
Fees and Expenses
.
Company has paid a flat rate documentation fee of $10,000 to Investor’s counsel incurred
in connection with drafting this Agreement and the other Transaction Documents. Except as otherwise provided in this Agreement,
each party will pay the fees and expenses of its own advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents.
Company acknowledges and agrees that Investor’s counsel solely represents Investor, and does not represent Company or its
interests in connection with the Transaction Documents or the transactions contemplated thereby. Company will pay all stamp and
other taxes and duties, if any, levied in connection with the sale or issuance of the Shares to Investor.
E.
Severability
.
If any provision of this Agreement is held to be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of this Agreement will not in any way be affected or impaired
thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor,
and upon so agreeing, will incorporate such substitute provision in this Agreement.
F.
Replacement of
Certificates.
If any certificate or instrument evidencing any Shares is mutilated, lost,
stolen or destroyed, Company will issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate
or instrument under such circumstances will also pay any reasonable third-party costs associated with the issuance of such replacement
certificates.
G.
Governing Law
.
All matters between the parties, including without limitation questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents will be governed by and construed and enforced in accordance
with the laws of the Cayman Islands, without regard to the principles of conflicts of law that would require or permit the application
of the laws of any other jurisdiction, except for corporation law matters applicable to Company which will be governed by the corporate
law of its jurisdiction of formation. The parties hereby waive all rights to a trial by jury. In any action, arbitration or proceeding,
including appeal, arising out of or relating to any of the Transaction Documents or otherwise involving the parties, the prevailing
party will be awarded its reasonable attorneys’ fees and other costs and expenses reasonably incurred in connection with
the investigation, preparation, prosecution or defense of such action or proceeding.
H.
Arbitration
.
Any dispute, controversy, claim or action of any kind arising out of, relating to, or in connection
with this Agreement, or in any way involving Company and Investor or their respective Affiliates, including any issues of arbitrability,
will be resolved solely by final and binding arbitration in English before a retired judge at JAMS International, or its successor,
in the Territory of the Virgin Islands, pursuant to the most expedited and Streamlined Arbitration Rules and Procedures available.
Any interim or final award may be entered and enforced by any court of competent jurisdiction. The final award will include the
prevailing party’s reasonable arbitration, expert witness and attorney fees, costs and expenses. Notwithstanding the foregoing,
Investor may in its sole discretion bring an action in the U.S. District Court for the Southern District of Texas or the Southern
District of New York in aid of arbitration.
I.
Remedies
.
In addition to being entitled to exercise all rights provided herein or granted by law, including
recovery of damages, each of Investor and Company will be entitled to specific performance under the Transaction Documents, and
equitable and injunctive relief to prevent any actual or threatened breach under the Transaction Documents, to the full extent
permitted under applicable laws. Without limitation of the foregoing, Company acknowledges and agrees that the rights and benefits
of Investor pursuant to Section I.G.1. of the Certificate of Designations are unique and that no adequate remedy exists at law
if Company breaches or fails timely perform any of its obligations thereunder, that it would be difficult to determine the amount
of damages resulting therefrom, that it would cause irreparable injury to Investor, and that any potential harm to Company would
be adequately and fully compensable with monetary damages. Accordingly, Investor will be entitled to a compulsory remedy of immediate
specific performance, temporary, interim, preliminary and final injunctive relief to enforce the provisions thereof, including
without limitation requiring Company and its transfer agent, attorneys, officers and directors to immediately take all actions
necessary to issue and deliver the number of Conversion Shares stated by Investor, which requirements will not be stayed for any
reason, without the necessity of posting any bond. Company hereby absolutely, unconditionally and irrevocably waives all objections
and rights to oppose any motion, application or request by Investor to issue any number of Conversion Shares, and all rights to
stay or appeal any resulting order, and any opposition or appeal by Company or on its behalf will be immediately and automatically
dismissed. In addition, Company acknowledges and agrees that it would have an adequate remedy at law for any violation of Section
I.G.1. of the Certificate of Designations by Investor, that it would not be difficult to determine the amount of damages resulting
therefrom, that it would not cause irreparable injury to Company, and that any potential harm to Company would be adequately and
fully compensable with monetary damages. Accordingly, Company will not be entitled any equitable relief to restrain the provisions
thereof, including without limitation preventing Investor, Investor’s brokers or Company’s transfer agent from issuing,
receiving or reselling Conversion Shares. Company hereby absolutely, unconditionally and irrevocably waives all rights to bring
any action, motion, application or request to enjoin any issuance of Conversion Shares, and any action or motion by Company or
on its behalf will be immediately and automatically dismissed. Nothing provided for in this provision will limit either party’s
ability to recover monetary damages.
J.
Payment Set Aside
.
To the extent that Company makes a payment or payments to Investor pursuant to any Transaction
Document or Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to Company, a trustee, receiver or any other person under
any law, including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action, then
to the extent of any such restoration the obligation or part thereof originally intended to be satisfied will be revived and continued
in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
K.
Headings
.
The headings herein are for convenience only, do not constitute a part of this Agreement and
will not be deemed to limit or affect any of the provisions hereof
L.
Time of the Essence
.
Time is of the essence with respect to all provisions of this Agreement and all Transaction Documents.
M.
Survival
.
The representations and warranties contained herein will survive the Closing and the delivery
of the Shares until all Preferred Shares issued to Investor have been converted or repurchased. Neither party will be under any
obligation to update or supplement any of its representations or warranties following the Closing due to a change that occurred
after the Closing.
N.
Construction
.
The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity
to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party will not be employed in the interpretation of the Transaction Documents or any amendments hereto.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party. All currency references in any Transaction Document are to U.S.
dollars.
O.
Further Assurances
.
Each party will take all further actions and execute all further documents as may be reasonably
necessary to implement the provisions and carry out the intent of this Agreement fully and effectively.
P.
Execution
.
This Agreement may be executed in two or more counterparts, all of which when taken together
will be considered one and the same agreement and will become effective when counterparts have been signed by each party and delivered
to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is
delivered by portable document format, facsimile or electronic transmission, such signature will create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page
were an original thereof.
Q.
Entire Agreement
.
This Agreement, including the Exhibits hereto, which are hereby incorporated herein by reference,
contains the entire agreement and understanding of the parties, and supersedes all prior and contemporaneous agreements, term sheets,
letters, discussions, communications and understandings, both oral and written, which the parties acknowledge have been merged
into this Agreement. No party, representative, advisor, attorney or agent has relied upon any collateral contract, agreement, assurance,
promise, understanding, statement or representation not expressly set forth herein. The parties hereby absolutely, unconditionally
and irrevocably waive all rights and remedies, at law and in equity, directly or indirectly arising out of or relating to, or which
may arise as a result of, any Person’s reliance on any such statement or assurance.
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories on the Effective Date.
Company:
CAMBER ENERGY, INC.
Investor:
Investor Name
Exhibit 1
Glossary of Defined Terms
“
$
”
means the currency of the United States of America, in which all dollar amounts in the Transaction Documents will be expressed.
“
Act
”
means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder.
“
Action
”
has the meaning set forth in
Section III.A.4
.
“
Affiliate
”
means any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with a Person, as such terms are used in and construed under Rule 144 under the Act.
“
Agreement
”
means this Stock Purchase Agreement.
“
Approval
”
has the meaning set forth in
Section IV.H
.
“
Base Volume
”
means, with respect to each subsequent Closing, aggregate dollar trading volume of at least $10 million has traded on NYSE American
during regular trading hours, from the Trading Day after the immediately prior Closing until the Trading Day immediately before
the relevant Closing, but expressly excluding all volume traded on any Excluded Days.
“
CATI
”
means CATI Operating LLC, a Texas limited liability company.
“Certificate
of Designations”
means the Certificate of Designation for Series C Redeemable Convertible Preferred Stock filed by Company
with the Secretary of State of the State of Nevada on August 25, 2016, Document Number 00010398344-82.
“
Closing
” has the meaning
set forth in
Section II.D
.
“Commission”
means the U.S. Securities and Exchange Commission.
“Common Stock”
means the Common Stock of Company and any replacement or substitute thereof, or any share capital into which such Common Stock
will have been changed or any share capital resulting from a reclassification of such Common Stock.
“
Company
”
has the meaning set forth in the first paragraph of the Agreement.
“Conversion
Shares”
includes all shares of Common Stock potentially issuable in relation to the Preferred Shares, including Common
Stock that must be issued upon conversion of any Preferred Shares, and Common Stock that must or may be issued in payment of any
Dividends or Conversion Premium (as defined in the Certificate of Designations).
“Disclosure Schedules”
means the disclosure schedules of Company delivered concurrently herewith. The Disclosure Schedules will contain no material non-public
information.
“DTC”
means The Depository Trust Company, or any successor performing substantially the same function for Company.
“Exchange Act”
means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder.
“
Excluded Days
”
include any and all Trading Days on which Investor is prevented, delayed or unable to resell any Common Stock, including without
limitation any Conversion Shares issued pursuant to this Agreement or any other agreement with Investor into the open market for
any reason whatsoever, including without limitation Investor has issued a Delivery Notice but has not received the number of Conversion
Shares stated in the notice in electronic form and fully cleared for trading.
“
Effective
Date
” has the meaning set forth in the first paragraph of the Agreement.
“
Equity
Conditions
” has the meaning set forth in the Certificate of Designations.
“Floor Price”
means, with respect to each subsequent Closing, a volume weighted average price on NYSE American for the prior Trading Day
of at least $0.15 per share of Common Stock.
“GAAP”
means U.S. generally accepted accounting principles applied on a consistent basis during the periods involved.
“Indebtedness”
means (a) any liabilities for borrowed money or amounts owed in excess of $500,000, other than trade accounts payable incurred
in the ordinary course of business, (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness
of others, whether or not the same are or should be reflected in Company’s balance sheet, or the notes thereto, except guaranties
by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business,
and (c) the present value of any lease payments in excess of $500,000 due under leases required to be capitalized in accordance
with GAAP. Indebtedness does not include any of the foregoing set forth in clauses (a) through (c) with respect to CATI.
“
Intellectual
Property Rights
” has the meaning set forth in
Section III.B.10
.
“Legal Opinion”
has the meaning set forth in
Section I.B.3
.
“Liens”
means (a) a lien, charge, security interest or encumbrance in excess of $500,000, or (b) a right of first refusal, preemptive
right or other restriction (other than restrictions under securities laws). Liens does not include any of the foregoing set forth
in clauses (a) and (b) with respect to CATI.
“Material Adverse
Effect”
includes any material adverse effect on (a) the legality, validity or enforceability of any Transaction Document,
or (b) the results of operations, assets, business, or financial condition of Company and the Subsidiaries, taken as a whole, which
is not disclosed in the Public Reports prior to the Effective Date, or (c) Company’s ability to perform in any material respect
on a timely basis its obligations under any Transaction Document or (d) the sale, issuance, registration, listing, resale and trading
on the Trading Market of the Conversion Shares.
“
Material
Permits
” has the meaning set forth in
Section III.B.8
.
“
Officer’s
Certificate”
has the meaning set forth in
Section II.B.4
.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government, or an agency or subdivision thereof, or other entity of any kind.
“Preferred”
means the Series C Redeemable Convertible Preferred Stock of the Company.
“Preferred
Shares”
means the shares of Preferred Stock to be issued to Investor pursuant to this Agreement.
“Prior Agreements”
means the Stock Purchase Agreement and Securities Purchase Agreement between Investor and Company dated April 6, 2016, and all
Transaction Documents related thereto.
“Prior Securities”
include the $530,000 face amount redeemable convertible subordinated debenture, $4.5 million common stock purchase warrant, and
527 shares of Preferred previously issued to Investor in connection with the Prior Agreements.
“Public Reports”
includes all reports filed or required to be filed by Company under the Act or the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two full fiscal years preceding the Effective Date and thereafter.
“Purchase Amount”
has the meaning set forth in
Section II.A.1
.
“Investor”
has
the meaning set forth in the first paragraph of the Agreement.
“Regulation
D”
means Regulation D under the Securities Act and the rules promulgated by the Commission thereunder.
“
Regulation
S
” means Regulation S under the Securities Act and the rules promulgated by the Commission thereunder.
“Secretary’s
Certificate
” has the meaning set forth in
Section II.B.5
.
“
Shares
”
include the Preferred Shares and the Conversion Shares.
“Short Sale”
means a “short sale” as defined in Rule 200 of Regulation SHO of the Exchange Act.
“Subsidiary”
means any Person owned or controlled by the Company, or in which Company, directly or indirectly, owns a majority of the capital
stock or similar interest that would be disclosable pursuant to Regulation S-K, Item 601(b)(21).
“
Trading Day
”
means any day on which the Common Stock is traded on the Trading Market; provided that it will not include any day on which the
Common Stock is (a) scheduled to trade for less than 5 hours, or (b) suspended from trading.
“
Trading
Market
” has the meaning set forth in the Certificate of Designations.
“
Transaction
Documents
” means this Agreement, the Certificate of Designations, and the other agreements, certificates and documents
referenced herein or the form of which is attached hereto, and the exhibits, schedules and appendices hereto and thereto.
“
U.S. Person
”
has the meaning set forth in Regulation S.
Exhibit 2
Legal Opinion
1.
The Company is a corporation validly existing
and in good standing under the laws of the state of its incorporation.
2.
The Company has the requisite
corporate power and authority to execute, deliver and perform its obligations under the Transaction Documents, to sell and issue
the Shares under the Purchase Agreement and to issue the Common Stock issuable upon conversion of the Shares pursuant to the Certificate
of Designations (the “
Conversion Shares
”).
3.
The Shares have been duly
authorized by the Company, and upon issuance and delivery against payment therefor in accordance with the terms of the Purchase
Agreement, the Shares will be validly issued, fully paid and nonassessable. The Conversion Shares issuable upon conversion of the
Shares have been duly authorized and reserved for issuance, and upon issuance and delivery upon conversion thereof in accordance
with the terms of the Certificate of Designations, will be validly issued, fully paid and nonassessable. The rights, preferences
and privileges of the Shares are as stated in the Certificate of Designation. Such issuance of the Shares and the Conversion Shares
will not be subject to any statutory or, to our knowledge, contractual preemptive rights of any stockholder of the Company.
4.
The execution, delivery
and performance of the Transaction Documents have been duly authorized by all necessary corporate action on the part of the Company,
and the Transaction Documents have been duly executed and delivered by the Company.
5.
Each Transaction Document
constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws
affecting creditors’ rights, and subject to general equity principles and to limitations on availability of equitable relief,
including specific performance.
6.
The execution and delivery
of the Transaction Documents by the Company does not, and the Company’s performance of its obligations thereunder will not
(a) violate the Certificate of Incorporation or the Bylaws, each as in effect on the date hereof, (b) violate in any material respect
any federal or Nevada state law, rule or regulation, or judgment, order or decree of any state or federal court or governmental
or administrative authority, in each case that, to our knowledge, is applicable to the Company or its properties or assets (except
to the extent such violation would not have a material adverse effect on the Company’s business, properties, assets, financial
condition or results of operations or prevent the performance by the Company of any material obligation under the Transaction Documents),
or (c) to our knowledge, require the authorization, consent, approval of or other action of, notice to or filing or qualification
with, any Nevada state or federal governmental authority, except (i) as have been, or will be prior to the Closing, duly obtained
or made, (ii) any filings which may be required under applicable federal securities, state securities or blue sky laws, and (iii)
the filing and effectiveness of the Registration Statement, except to the extent failure to be so obtained or made would not have
a material adverse effect on the Company’s business, properties, assets, financial condition or results of operations or
its ability to consummate the transactions contemplated under the Transaction Documents.
7.
The Company is not, and
immediately after the consummation of the transactions contemplated by the Transaction Documents will not be, an investment company
within the meaning of Investment Company Act of 1940, as amended.
8.
To our knowledge, there
is no claim, action, suit, proceeding, arbitration, investigation or inquiry, pending or threatened, before any court or governmental
or administrative body or agency, or any private arbitration tribunal, against the Company that challenges the validity or enforceability
of, or seeks to enjoin the performance of, the Transaction Documents.
Exhibit 3
Officer’s Certificate
CAMBER ENERGY, INC.
October 4, 2017
The undersigned hereby certifies that:
The undersigned is
the duly appointed Chief Financial Officer of Camber Energy, Inc., a Nevada corporation (“
Company
”).
This Officer’s
Certificate (“
Certificate
”) is being delivered to Discover Growth Fund (“
Investor
”), by Company,
to fulfill the requirement under the Stock Purchase Agreement, dated October 4, 2017, between Investor and Company (“
Agreement
”).
Terms used and not defined in this Certificate have the meanings set forth in the Agreement.
The representations
and warranties of Company set forth in Sections III.A and III.B of the Agreement are true and correct in all material respects
as if made on the above date (except for any representations and warranties that are expressly made as of a particular date, in
which case such representations and warranties will be true and correct in all material respects as of such particular date), and
no default has occurred under the Agreement, or any other agreement with Investor or any Affiliate of Investor.
Company is not, and
will not be as a result of the Closing, in default of the Agreement, any other agreement with Investor or any Affiliate of Investor.
All of the conditions
to the Closing required to be satisfied by Company prior to the Closing have been satisfied in their entirety.
IN WITNESS WHEREOF,
the undersigned has executed this Officer’s Certificate as of the date set forth above.
Exhibit 4
Secretary’s Certificate
October 4, 2017
The undersigned hereby certifies that:
The undersigned is
the duly appointed Secretary of Camber Energy, Inc., a Nevada corporation (the “
Company
”).
This Secretary’s
Certificate (“
Certificate
”) is being delivered to Discover Growth Fund (“
Investor
”), by Company,
to fulfill the requirement under the Stock Purchase Agreement, dated October 4, 2017, between Investor and Company (“
Agreement
”).
Terms used and not defined in this Certificate have the meanings set forth in the Agreement.
Attached hereto as
Exhibit “A”
is a true, correct and complete copy of the Certificate of Incorporation of Company, as in effect
on the Effective Date.
Attached hereto as
Exhibit “B”
is a true, correct and complete copy of the Bylaws of Company, as in effect on the Effective Date.
Attached hereto as
Exhibit “C”
is a true, correct and complete copy of the resolutions of the Board of Directors of Company authorizing
the Agreement, the Transaction Documents, and the transactions contemplated thereby. Such resolutions have not been amended or
rescinded and remain in full force and effect as of the date hereof.
IN WITNESS WHEREOF,
the undersigned has executed this Secretary’s Certificate as of the date set forth above.
APPENDIX
D
LUCAS ENERGY, INC.
CERTIFICATE OF DESIGNATIONS OF PREFERENCES,
POWERS,
RIGHTS AND LIMITATIONS
OF
SERIES C REDEEMABLE CONVERTIBLE PREFERRED STOCK
The undersigned, Anthony C. Schnur, hereby
certifies that:
1. The
undersigned is the Chief Executive Officer and Acting Chief Financial Officer, respectively, of Lucas Energy, Inc., a Nevada corporation
(the “
Corporation
”);
2. The
Corporation is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value, of which (i) 2,000 shares are designated
as Series A convertible preferred stock, of which 500 shares are issued and outstanding, and (ii) 3,000 shares are designated as
Series B redeemable convertible preferred stock (the “
Series B Preferred Stock
”), of which no shares are issued
and outstanding; and
3. The
following resolutions were duly adopted by the Board of Directors:
WHEREAS, the Certificate
of Incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, comprised of 10,000,000
shares, $0.001 par value per share (the “
Preferred Stock
”), issuable from time to time in one or more series;
WHEREAS, the Board of Directors
of the Corporation is authorized to fix the dividend rights, dividend rate, powers, voting rights, conversion rights, rights and
terms of redemption and liquidation preferences of any wholly unissued series of Preferred Stock and the number of shares constituting
any Series and the designation thereof, of any of them;
WHEREAS, it is the desire
of the Board of Directors of the Corporation, pursuant to its authority as aforesaid and as set forth in this Certificate of Designations
of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock, to designate the rights, preferences,
restrictions and other matters relating to the Series C Redeemable Convertible Preferred Stock, which will consist of up to 5,000
shares of the Preferred Stock which the Corporation has the authority to issue, as follows:
NOW, THEREFORE, BE IT RESOLVED,
that the Board of Directors does hereby provide for the issuance of a series of Preferred Stock for cash, notes or exchange of
other securities, rights or property and does hereby fix and determine the powers, rights, preferences, restrictions and other
matters relating to such series of Preferred Stock as follows:
I.
Terms
of Preferred Stock
.
A.
Designation
and Amount
.
A series of Preferred Stock is hereby designated as the Corporation’s Series C Redeemable Convertible
Preferred Stock, par value of $0.001 per share (the “
Series C Preferred Stock
”), the number of shares of which
so designated are 5,000 shares of Series C Preferred Stock; which Series C Preferred Stock will not be subject to increase without
any consent of the holders of the Series C Preferred Stock (each a “
Holder
” and collectively, the “
Holders
”)
that may be required by applicable law.
B.
Ranking
and Voting
.
1.
Ranking
.
The Series C Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution,
rank: (a) senior to the Corporation’s Common Stock, $0.001 par value per share (“
Common Stock
”); (b) pari
passu with respect to the Series B Preferred Stock; (c) senior, pari passu or junior with respect to any other series of Preferred
Stock, as set forth in the Certificate of Designations of Preferences, Powers, Rights and Limitations with respect to such Preferred
Stock; and (d) junior to all existing and future indebtedness of the Corporation. Without the prior written consent of the Holders
of a majority of the outstanding shares of Series C Preferred Stock (voting separately as a single class), the Corporation may
not issue any additional shares of Series C Preferred Stock or, other than shares of Series B Preferred Stock issued in the Acquisition,
any other Preferred Stock (other than the Series B Preferred Stock) that is pari passu or senior to the Series C Preferred Stock
with respect to any rights for a period of 1 year after the earlier of such date (i) a registration statement is effective and
available for the resale of all Conversion Shares, or (ii) Securities Act Rule 144 is available for the immediate unrestricted
resale of all Conversion Shares.
2.
Voting
.
Except as required by applicable law or as set forth herein, the holders of shares of Series C Preferred Stock will have no
right to vote on any matters, questions or proceedings of this Corporation including, without limitation, the election of directors
except: (a) during a period where a dividend (or part of a dividend) is in arrears; (b) on a proposal to reduce the Company’s
share capital; (c) on a resolution to approve the terms of a buy-back agreement; (d) on a proposal to wind up the Company; (e)
on a proposal for the disposal of all or substantially all the Company’s property, business and undertaking; and (f) during
the winding-up of the entity.
C.
Dividends
.
1.
Commencing
on the date of the issuance of any such shares of Series C Preferred Stock (each respectively an “
Issuance Date
”),
each outstanding share of Series C Preferred Stock will accrue cumulative dividends (“
Dividends
”), at a rate
equal to 6.0% per annum, subject to adjustment as provided in this Certificate of Designations (“
Dividend Rate
”),
of the Face Value. Dividends will be payable with respect to any shares of Series C Preferred Stock upon any of the following:
(a) upon redemption of such shares in accordance with
Section I.F
; (b) upon conversion of such shares in accordance with
Section I.G
; and (c) when, as and if otherwise declared by the board of directors of the Corporation.
2.
Dividends,
as well as any applicable Conversion Premium payable hereunder, will be paid: (a) in the Corporation’s sole and absolute
discretion, immediately in cash; or (b) if Corporation notifies Holder it will not pay all or any portion in cash, or to the extent
cash is not paid and received as soon as practicable, and in any event within 1 Trading Day after the Notice Time, for any reason
whatsoever, in shares of Common Stock valued at (i) if there has never been a Trigger Event, (A) 95.0% of the average of the 5
lowest individual daily volume weighted average prices of the Common Stock on the Trading Market during the applicable Measurement
Period, which may be non-consecutive, less $0.05 per share of Common Stock, not to exceed (B) 100% of the lowest sales price on
the last day of such Measurement Period less $0.05 per share of Common Stock (ii) following any Trigger Event, (A) 85.0% of the
lowest daily volume weighted average price during any Measurement Period for any conversion by Holder, less $0.10 per share of
Common Stock, not to exceed (B) 85.0% of the lowest sales price on the last day of any Measurement Period, less $0.10 per share
of Common Stock. In no event will the value of Common Stock pursuant to the foregoing be below the par value per share. All amounts
that are required or permitted to be paid in cash pursuant to this Certificate of Designations will be paid by wire transfer of
immediately available funds to an account designated by Holder.
3.
So
long as any shares of Series C Preferred Stock are outstanding, the Company will not repurchase shares of Common Stock other than
as payment of the exercise or conversion price of a convertible security or payment of withholding tax, and no dividends or other
distributions will be paid, declared or set apart with respect to any Common Stock, except for Purchase Rights.
D.
Protective
Provision
.
1.
So
long as any shares of Series C Preferred Stock are outstanding, the Corporation will not, without the affirmative approval of the
Holders of a majority of the shares of the Series C Preferred Stock then outstanding (voting separately as one class), (i) alter
or change adversely the powers, preferences or rights given to the Series C Preferred Stock or alter or amend this Certificate
of Designations, (ii) authorize or create any class of stock ranking as to distribution of dividends senior to the Series C Preferred
Stock, (iii) amend its certificate of incorporation or other charter documents in breach of any of the provisions hereof, (iv)
increase the authorized number of shares of Series C Preferred Stock or (v) enter into any agreement with respect to the foregoing.
2.
A
“
Deemed Liquidation Event
” will mean: (a) a merger or consolidation in which the Corporation is a constituent
party or a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant
to such merger or consolidation, except (i) any such merger or consolidation involving the Corporation or a subsidiary in which
the Corporation is the surviving or resulting corporation, (ii) any merger effected exclusively to change the domicile of the Corporation,
(iii) any transaction or series of transactions in which the holders of the voting securities of the Company outstanding immediately
prior to such transaction continue to retain more than 50% of the total voting power of such surviving entity, or (iv) the Acquisition;
(b) Corporation issues convertible or equity securities that are senior to the Series C Preferred Stock in any respect, (c) Holder
does not receive the number of Conversion Shares stated in a Delivery Notice with 5 Trading Days of the Notice Time; (d) trading
of the Common Stock is halted or suspended by the Trading Market or any U.S. governmental agency for 10 or more consecutive trading
days; (e) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions,
by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries
taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if
substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries,
except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.
3.
The
Corporation will not have the power to close or effect a voluntary Deemed Liquidation Event unless the agreement or plan of merger
or consolidation for such transaction provides that the consideration payable to the stockholders of the Corporation will be allocated
among the holders of capital stock of the Corporation in accordance with
Section I.E
, and the required amount is paid to
Holder prior to or upon closing, effectuation or occurrence of the Deemed Liquidation Event.
E.
Liquidation
.
1.
Upon
any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment or provision for
payment of debts and other liabilities of the Corporation, prior to any distribution or payment made to the holders of Preferred
Stock or Common Stock by reason of their ownership thereof, the Holders of Series C Preferred Stock will be entitled to be paid
out of the assets of the Corporation available for distribution to its stockholders an amount with respect to each share of Series
C Preferred Stock equal to $10,000.00 (“
Face Value
”), plus an amount equal to any accrued but unpaid Dividends
thereon (collectively with the Face Value, the “
Liquidation Value
”).
2.
If,
upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the amounts payable with
respect to the shares of Series C Preferred Stock are not paid in full, the holders of shares of Series C Preferred Stock will
share equally and ratably with the holders of shares of Preferred Stock and Common Stock in any distribution of assets of the Corporation
in proportion to the liquidation preference and an amount equal to all accumulated and unpaid Dividends, if any, to which each
such holder is entitled.
3.
If,
upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation will be insufficient to make
payment in full to all Holders, then the assets distributable to the Holders will be distributed among the Holders at the time
outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled.
F.
Redemption
.
1.
Corporation’s
Redemption Option
.
On the Dividend Maturity Date, the Corporation may redeem any or all shares of Series C Preferred Stock
by paying Holder in cash an amount per share equal to 100% of the Liquidation Value for the shares redeemed.
2.
Early
Redemption
.
Prior to the Dividend Maturity Date, provided that no Trigger Event has occurred, the Corporation will have
the right at any time upon 30 Trading Days’ prior written notice, in its sole and absolute discretion, to redeem all or any
portion of the shares of Series C Preferred Stock then outstanding by paying Holder in cash an amount per share of Series C Preferred
Stock (the “
Early Redemption Price
”) equal to the sum of the following: (a) 100% of the Face Value, plus (b)
the Conversion Premium, minus (c) any Dividends that have been paid, for each share of Series C Preferred Stock redeemed.
3.
Credit
Risk Adjustment
.
a.
The
Dividend Rate will adjust downward by an amount equal to the Spread Adjustment for each amount, if any, equal to the Adjustment
Factor that the Measuring Metric rises above the Maximum Triggering Level, down to a minimum of 0.0%.
b.
The
Dividend Rate will adjust upward by an amount equal to the Spread Adjustment for each amount, if any, equal to the Adjustment Factor
that the Measuring Metric falls below the Minimum Triggering Level, up to a maximum of 24.95%. In addition, the Dividend Rate will
adjust upward by 10.0% following the occurrence of any Trigger Event.
c.
The
adjusted Dividend Rate used for calculation of the Liquidation Value, Conversion Premium, Early Redemption Price and Dividend,
as applicable, and the amount of Dividends owed will be calculated and determined based upon the Measuring Metric at close of the
Trading Market immediately prior to the Notice Time.
4.
Mandatory
Redemption.
If the Corporation determines to liquidate, dissolve or wind-up its business and affairs, or upon closing or
occurrence of any Deemed Liquidation Event, the Corporation will prior to or concurrently with the closing, effectuation or occurrence
any such action, redeem the Series C Preferred Stock for cash, by wire transfer of immediately available funds to an account designated
by Holder, at the Early Redemption Price set forth in
Section I.F.2
if the event is prior to the Dividend Maturity Date,
or at the Liquidation Value if the event is on or after the Dividend Maturity Date.
5.
Mechanics
of Redemption
.
In order to redeem any of the Holders’ Series C Preferred Stock then outstanding, the Corporation
must deliver written notice (each, a “
Redemption Notice
”) to each Holder setting forth (a) the number of shares
of Series C Preferred Stock that the Corporation is redeeming, (b) the applicable Dividend Rate, Liquidation Value and Early Redemption
Price, and (c) the calculation of the amount paid. Upon receipt of full payment in cash for a complete redemption, each Holder
will promptly submit to the Corporation such Holder’s Series C Preferred Stock certificates. In connection with a mandatory
redemption, the notice will be delivered as soon as the number of shares can be determined, and in all other instances at least
30 Trading Days prior to payment. For the avoidance of doubt, the delivery of a Redemption Notice will not affect Holder’s
rights under
Section I.G
until after receipt of cash payment by Holder at the required time.
G.
Conversion
.
1.
Mechanics
of Conversion
.
a.
One
or more shares of the Series C Preferred Stock may be converted, in part or in whole, into shares of Common Stock, at any time
or times after the Issuance Date, in the sole and absolute discretion of Holder or, subject to the terms and conditions hereof,
the Corporation; (i) if at the option of Holder, by delivery of one or more written notices to the Corporation or its transfer
agent (each, a “
Holder Conversion Notice
”), of the Holder’s election to convert any or all of its Series
C Preferred Stock; or (ii) if at the option of the Corporation, if the Equity Conditions are met, delivery of written notice to
Holder (each, a “
Corporation Conversion Notice,
” with the Holder Conversion Notice, each a “
Conversion
Notice,
” and with the Redemption Notice, each an “
Initial Notice
”), of the Corporation’s election
to convert the Series C Preferred Stock.
b.
Each
Delivery Notice will set forth the number of shares of Series C Preferred Stock being converted, the minimum number of Conversion
Shares and the amount of Dividends and any applicable Conversion Premium due as of the time the Delivery Notice is given (the “
Notice
Time
”), and the calculation thereof.
b.
If
the Corporation notifies Holder by 10:00 a.m. Eastern time on the Trading Day after the Notice Time that it is paying all or any
portion of Dividends or Conversion Premium, and actually pays in cash by the next Trading Day, time being of the essence, the full
amount of Dividends and Conversion Premium stated in the Delivery Notice, no further amount will be due with respect thereto.
c.
As
soon as practicable, and in any event within 1 Trading Day of the Notice Time, time being of the essence, the Corporation will
do all of the following: (i) transmit the Delivery Notice by facsimile or electronic mail to the Holder, and to the Corporation’s
transfer agent (the “
Transfer Agent
”) with instructions to comply with the Delivery Notice; (ii) either (A)
if the Corporation is approved through The Depository Trust Corporation (“
DTC
”), authorize and instruct the
credit by the Transfer Agent the aggregate number of Conversion Shares set forth in the Delivery Notice, to Holder’s or its
designee’s balance account with the DTC Fast Automated Securities Transfer (FAST) Program, through its Deposit/Withdrawal
at Custodian (DWAC) system, or (B) only if the Corporation is not approved through DTC, issue and surrender to a common carrier
for overnight delivery to the address as specified in the Delivery Notice a certificate registered in the name of Holder or its
designee, for the number of Conversion Shares set forth in the Delivery Notice, bearing no restrictive legend unless a registration
statement covering the Conversion Shares is not effective and neither Company nor Investor provides an opinion of counsel to the
effect that Conversion Shares may be issued without restrictive legend; and (iii) if it contends that the Delivery Notice is in
any way incorrect, a through explanation of why and its own calculation, or the Delivery Notice will conclusively be deemed correct
for all purposes. The Corporation will at all times diligently take or cause to be taken all actions reasonably necessary to cause
the Conversion Shares to be issued as soon as practicable.
d.
If
during the Measurement Period the Holder is entitled to receive additional Conversion Shares with regard to an Initial Notice,
Holder may at any time deliver one or more additional written notices to the Corporation or its transfer agent (each, an “
Additional
Notice
” and with the Initial Notice, each a “
Delivery Notice
”) setting forth the additional number
of Conversion Shares to be delivered, and the calculation thereof.
e.
If
the Corporation for any reason does not issue or cause to be issued to the Holder within 3 Trading Days after the date of a Delivery
Notice, the number of Conversion Shares stated in the Delivery Notice, then, in addition to all other remedies available to the
Holder, as liquidated damages and not as a penalty, the Corporation will pay in cash to the Holder on each day after such 3rd Trading
Day that the issuance of such Conversion Shares is not timely effected an amount equal to 2% of the product of (i) the aggregate
number of Conversion Shares not issued to the Holder on a timely basis and to which the Holder is entitled and (ii) the highest
Closing Price of the Common Stock between the date on which the Corporation should have issued such shares to the Holder and the
actual date of receipt of Conversion Shares by Holder. It is intended that the foregoing will serve to reasonably compensate Holder
for any delay in delivery of Conversion Shares, and not as punishment for any breach by the Corporation. The Corporation acknowledges
that the actual damages likely to result from delay in delivery are difficult to estimate and would be difficult for Holder to
prove.
f.
Notwithstanding
any other provision: all of the requirements of
Section I.F
and this
Section I.G
are each independent covenants;
the Corporation’s obligations to issue and deliver Conversion Shares upon any Delivery Notice are absolute, unconditional
and irrevocable; any breach or alleged breach of any representation or agreement, or any violation or alleged violation of any
law or regulation, by any party or any other person will not excuse full and timely performance of any of the Corporation’s
obligations under these sections; and under no circumstances may the Corporation seek or obtain any temporary, interim or preliminary
injunctive or equitable relief to prevent or interfere with any issuance of Conversion Shares to Holder.
g.
If
for any reason whatsoever Holder does not timely receive the number of Conversion Shares stated in any Delivery Notice, Holder
will be entitled to a compulsory remedy of immediate specific performance, temporary, interim and, preliminary and final injunctive
relief requiring Corporation and its transfer agent, attorneys, officers and directors to immediately issue and deliver the number
of Conversion Shares stated by Holder, which requirement will not be stayed for any reason, without the necessity of posting any
bond, and which Corporation may not seek to stay or appeal.
h.
No
fractional shares of Common Stock are to be issued upon conversion of Series C Preferred Stock, but rather the Corporation will
issue to Holder scrip or warrants registered on the books of the Corporation (certificated or uncertificated) which will entitle
Holder to receive a full share upon the surrender of such scrip or warrants aggregating a full share. The Holder will not be required
to deliver the original certificates for the Series C Preferred Stock in order to effect a conversion hereunder. The Corporation
will pay any and all taxes which may be payable with respect to the issuance and delivery of any Conversion Shares.
2.
Holder
Conversion
.
In the event of a conversion of any Series C Preferred Stock pursuant to a Holder Conversion Notice, the Corporation
will (a) satisfy the payment of Dividends and Conversion Premium with respect to the shares of Series C Preferred Stock converted
as provided in
Section I.C.2,
and (b) issue to the Holder of such Series C Preferred Stock a number of Conversion Shares
equal to (i) the Face Value multiplied by (ii) the number of such Series C Preferred Stock subject to the Holder Conversion Notice
divided by (iii) the applicable Conversion Price with respect to such Series C Preferred Stock; all in accordance with the procedures
set forth in
Section I.G.1
.
3.
Corporation
Conversion
.
The Corporation will have the right to send the Holder a Corporation Conversion Notice at any time in its sole
and absolute discretion, if the Equity Conditions are met as of the time such Corporation Conversion Notice is given. Upon any
conversion of any Series C Preferred Stock pursuant to a Corporation Conversion Notice, the Corporation will on the date of such
notice (a) satisfy the payment of Dividends and Conversion Premium with respect to the shares of Series C Preferred Stock converted
as provided in
Section I.C.2
, and (b) issue to the Holder of such Series C Preferred Stock a number of Conversion Shares
equal to (i) the Face Value multiplied by (ii) the number of such Series C Preferred Stock subject to the Holder Conversion Notice
divided by (iii) the applicable Conversion Price with respect to such Series C Preferred Stock; all in accordance with the procedures
set forth in
Section I.G.1
.
4.
Stock
Splits
.
If the Corporation at any time on or after the filing of this Certificate of Designations subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the applicable Conversion Price, Adjustment Factor, Maximum Triggering Level, Minimum Triggering Level, and other
share based metrics in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of
Common Stock issuable will be proportionately increased. If the Corporation at any time on or after such Issuance Date combines
(by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the applicable Conversion Price, Adjustment Factor, Maximum Triggering Level, Minimum Triggering Level, and other
share based metrics in effect immediately prior to such combination will be proportionately increased and the number of Conversion
Shares will be proportionately decreased. Any adjustment under this Section will become effective at the close of business on the
date the subdivision or combination becomes effective.
5.
Rights
.
In addition to any adjustments pursuant to
Section I.G.4
, if at any time the Corporation grants, issues or sells any
options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders
of any class of shares of Common Stock (the “
Purchase Rights
”), then Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights which Holder could have acquired if Holder had held
the number of shares of Common Stock acquirable upon conversion of all Preferred Stock held by Holder immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
6.
Notices.
The holders of shares of Series C Preferred Stock are entitled to the same rights as the holders of Common Stock with respect to
rights to receive notices, reports and audited accounts from the Company and with respect to attending stockholder meetings.
7.
Definitions
.
The following terms will have the following meanings:
a. “Adjustment
Factor
” means $0.10 per share of Common Stock.
b. “Acquisition”
means the closing of the acquisition of assets contemplated by that certain Asset Purchase Agreement dated December 30, 2015
between Company and the sellers named therein, as disclosed in the current report on Form 8-K filed with the Securities & Exchange
Commission on December 31, 2015.
c.
“
Closing
Price
” means, for any security as of any date, the last closing bid price for such security on the Trading Market, or,
if the Trading Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last
bid price of such security prior to 4:00 p.m., Eastern time, or, if the Trading Market is not the principal securities exchange
or trading market for such security, the last closing bid price of such security on the principal securities exchange or trading
market where such security is listed or traded, or if the foregoing do not apply, the last closing bid price of such security in
the over-the-counter market on the electronic bulletin board for such security, or, if no closing bid price is reported for such
security, the average of the bid prices of any market makers for such security as reported in the “pink sheets” by
Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
d.
“
Conversion
Premium
” for each share of Series C Preferred Stock means the Face Value, multiplied by the product of (i) the applicable
Dividend Rate, and (ii) the number of whole years between the Issuance Date and the Dividend Maturity Date.
e.
“
Conversion
Price
” means a price per share of Common Stock equal to $3.25 per share of Common Stock, subject to adjustment as otherwise
provided herein.
f.
“
Conversion
Shares
” means all shares of Common Stock that are required to be or may be issued upon conversion of Series C Preferred
Stock.
g. “Dividend
Maturity Date
” means the date that is 7 years after the Issuance Date.
h.
“
Equity
Conditions
” means on each day during the Measurement Period, (i) the Common Stock is not under chill or freeze from DTC,
the Common Stock is designated for trading on OTCQB or higher market and will not have been suspended from trading on such market,
and delisting or suspension by the Trading Market has not been threatened or pending, either in writing by such market or because
Company has fallen below the then effective minimum listing maintenance requirements of such market; (ii) the Corporation has delivered
Conversion Shares upon all conversions or redemptions of the Series C Preferred Stock in accordance with their terms to the Holder
on a timely basis; (iii) the Corporation will have no knowledge of any fact that would cause both of the following (A) a registration
statement not to be effective and available for the resale of all Conversion Shares, and (B) Section 3(a)(9) under the Securities
Act of 1933, as amended, not to be available for the issuance of all Conversion Shares, or Regulation S or Securities Act Rule
144 not to be available for the resale of all the Conversion Shares underlying the Series C Preferred Stock without restriction;
(iv) there has been a minimum of $5 million in aggregate trading volume over the last 20 consecutive Trading Days; (v) all shares
of Common Stock to which Holder is entitled have been timely received into Holder’s designated account in electronic form
fully cleared for trading; (vi) the Corporation otherwise will have been in compliance with and will not have breached any provision,
covenant, representation or warranty of any Transaction Document; (vii) the Measuring Metric is at least $1.50; (viii) no Trigger
Event will have occurred; (ix) the Corporation will have been assigned all right and title to the properties being acquired in
the Acquisition, or cumulative assignments representing not less than 90% of the value of the assets described; and (x) the properties
being assigned to the Corporation in the Acquisition will have daily production of not less than 700 barrels of oil equivalent
per day as of the most recent production data available, not more than 75 days old.
i.
“
Measurement
Period
” means the period beginning, if no Trigger Event has occurred 30 Trading Days, and if a Trigger Event has occurred
60 Trading Days, before the Notice Date, and ending, if no Trigger Event has occurred 30 Trading Days, and if a Trigger Event has
occurred 60 Trading Days, after the number of Conversion Shares stated in the initial Notice have actually been received into Holder’s
designated brokerage account in electronic form and fully cleared for trading; provided that for each day during the Measurement
Period on which less than all of the conditions set forth in
Section I.G.6.h
exist, 1 Trading Day will be added to what
otherwise would have been the end of the Measurement Period.
j.
“
Measuring Metric
” means the volume weighted average price of the Common Stock on any Trading Day following
the Issuance Date of the Series C Preferred Stock.
k. “Maximum
Triggering Level”
means $3.75 per share of Common Stock.
l.
“
Minimum
Triggering Level
” means $2.75 per share of Common Stock.
m.
“
Spread
Adjustment
” means 100 basis points.
n.
“
Stock Purchase Agreement
” means the Stock Purchase Agreement or other agreement pursuant to which any share
of Series C Preferred Stock is issued, including all exhibits thereto and all related Transaction Documents as defined therein.
o.
“
Trading
Day
” means any day on which the Common Stock is traded on the Trading Market.
p.
“
Trading
Market
” means the NYSE MKT or whatever is at the applicable time, the principal U.S. trading exchange or market for the
Common Stock. All Trading Market data will be measured as provided by the appropriate function of the Bloomberg Professional service
of Bloomberg Financial Markets or its successor performing similar functions.
7.
Issuance
Limitation
.
a.
Beneficial
Ownership
.
Notwithstanding any other provision, at no time may the Corporation issue shares of Common Stock to Holder which,
when aggregated with all other shares of Common Stock then deemed beneficially owned by Holder, would result in Holder owning more
than 4.99% of all Common Stock outstanding immediately after giving effect to such issuance, as determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder; provided, however, that Holder may increase such
amount to 9.99% upon not less than 61 days’ prior notice to the Corporation.. To the extent that any conversion would otherwise
result in exceeding the beneficial ownership limitation set forth in the preceding sentence, the Delivery Notice will specify the
number of shares that may be delivered without exceeding the limitation, and any issuance beyond such extent will be held in abeyance
until such time as it would not result in Holder exceeding the beneficial ownership limitation. No provision of this paragraph
may be waived by Holder or the Corporation.
b.
Principal
Market Regulation
.
Company will not issue any Conversion Shares under this Certificate of Designations, the Warrant issued
to Holder on the Issuance Date, the Securities Purchase Agreement with Investor dated the Issuance Date, the Debenture or the Common
Stock Purchase Warrant issued to Investor pursuant thereto, if the issuance would exceed the aggregate number of shares of Common
Stock the Company may issue without breaching Company’s obligations under NYSE MKT rules, except that such limitation will
not apply following stockholder approval in accordance with the requirements of NYSE MKT rules or a waiver from NYSE MKT (“
Approval
”).
8.
Conversion
at Maturity
.
On the Dividend Maturity Date, all remaining outstanding Series C Preferred Stock will automatically be converted
into shares of Common Stock.
H.
Trigger
Event
.
1.
Any
occurrence of any one or more of the following will constitute a “
Trigger Event
”:
(a)
Holder
does not timely receive the number of Conversion Shares stated in any Conversion Notice pursuant to this Certificate of Designations
or any other agreement with Holder for any reason whatsoever, time being of the essence, including without limitation the issuance
of restricted shares if counsel for Corporation or Holder provides a legal opinion that shares may be issued without restrictive
legend;
(b)
Any
violation of or failure to timely perform any covenant or provision of this Certificate of Designations, the Stock Purchase Agreement,
any Transaction Document or any other agreement with Holder, related to payment of cash, registration or delivery of Conversion
Shares, time being of the essence;
(c)
Any
violation of or failure to perform any covenant or provision of this Certificate of Designations, the Stock Purchase Agreement,
any Transaction Document or any other agreement with Holder, which in the case of a default that is curable, is not related to
payment of cash, registration or delivery of Conversion Shares, and has not occurred before, is not cured within 5 Trading Days
of written notice thereof;
(d)
Any
representation or warranty made in the Securities Purchase Agreement, any Transaction Document or any other agreement with Holder
will be untrue, incorrect, or misleading in any material respect as of the date when made or deemed made;
(e)
The
occurrence of any default or event of default under any material agreement, lease, document or instrument to which the Corporation
or any subsidiary other than CATI Operating LLC, a Texas limited liability company (“
CATI
”) is obligated, including
without limitation of an aggregate of at least $500,000 of indebtedness;
(f)
While
any Registration Statement is required to be maintained effective, the effectiveness of the Registration Statement lapses for any
reason, including, without limitation, the issuance of a stop order, or the Registration Statement, or the prospectus contained
therein, is unavailable to Holder sale of all Conversion Shares for any 5 or more Trading Days, which may be non-consecutive;
(g)
The
suspension from trading or the failure of the Common Stock to be trading or listed on the Trading Market;
(h)
The Corporation notifies Holder, including without limitation, by way of public announcement or through any of its attorneys, agents
or representatives, of its intention not to comply, as required, with a Conversion Notice pursuant to this Certificate of Designations
or any other agreement with Holder, at any time, including without limitation any objection or instruction to its transfer agent
not to comply with any notice from Holder;
(i)
Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors will be instituted by or against
the Corporation or any subsidiary other than CATI and, if instituted against the Corporation or any subsidiary other than CATI
by a third party, an order for relief is entered or the proceedings are not dismissed within 30 days of their initiation;
(j)
The
appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, or other similar official of the Corporation
or any subsidiary other than CATI or of any substantial part of its property, or the making by it of an assignment for the benefit
of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding,
or the admission by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action
by the Corporation or any subsidiary other than CATI in furtherance of any such action or the taking of any action by any person
to commence a foreclosure sale or any other similar action under any applicable law;
(k) A
final judgment or judgments for the payment of money aggregating in excess of $500,000 are rendered against the Corporation or
any of its subsidiaries other than CATI and are not stayed or satisfied within 30 days of entry;
(l)
The
Corporation does not for any reason timely comply with the reporting requirements of the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder, including without limitation timely filing when first due all periodic reports;
(m)
Any
regulatory, administrative or enforcement proceeding is initiated against Corporation or any subsidiary (except to the extent an
adverse determination would not have a material adverse effect on the Company’s business, properties, assets, financial condition
or results of operations or prevent the performance by the Company of any material obligation under the Transaction Documents);
or
(n)
Any
material provision of this Certificate of Designations shall at any time for any reason, other than pursuant to the express terms
thereof, cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof
will be contested by any party thereto, or a proceeding will be commenced by the Corporation or any subsidiary or any governmental
authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Corporation
or any subsidiary denies that it has any liability or obligation purported to be created under this Certificate of Designations.
2.
It
is intended that all adjustments made following a Trigger Event will serve to reasonably compensate Holder for the consequences
and increased risk following a Trigger Event, and not as a penalty or punishment for any breach by the Corporation. The Corporation
acknowledges that the actual damages likely to result from a Trigger Event are difficult to estimate and would be difficult for
Holder to prove.
II.
General
.
A.
Notices
.
Any and all notices to the Corporation will be addressed to the Corporation’s Chief Executive Officer at the Corporation’s
principal place of business on file with the Secretary of State of the State of Nevada. Any and all notices or other communications
or deliveries to be provided by the Corporation to any Holder hereunder will be in writing and delivered personally, by electronic
mail or facsimile, sent by a nationally recognized overnight courier service addressed to each Holder at the electronic mail, facsimile
telephone number or address of such Holder appearing on the books of the Corporation, or if no such electronic mail, facsimile
telephone number or address appears, at the principal place of business of the Holder. Any notice or other communication or deliveries
hereunder will be deemed given and effective on the earliest of (1) the date of transmission, if such notice or communication is
delivered via facsimile or electronic mail prior to 5:30 p.m. Eastern time, (2) the date after the date of transmission, if such
notice or communication is delivered via facsimile or electronic mail later than 5:30 p.m. but prior to 11:59 p.m. Eastern time
on such date, (3) the second business day following the date of mailing, if sent by nationally recognized overnight courier service,
or (4) upon actual receipt by the party to whom such notice is required to be given, regardless of how sent.
B.
Lost
or Mutilated Preferred Stock Certificate
.
Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit
of the registered Holder will be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series C Preferred Stock, and in the case of any such loss, theft or destruction upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the Holder is a financial institution or other institutional investor
its own agreement will be satisfactory) or in the case of any such mutilation upon surrender of such certificate, the Corporation
will, at its expense, execute and deliver in lieu of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
C.
Headings
.
The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designations and will
not be deemed to limit or affect any of the provisions hereof.
RESOLVED, FURTHER, that
the chairman, chief executive officer, chief financial officer, president or any vice-president, and the secretary or any assistant
secretary, of the Corporation be and they hereby are authorized and directed to prepare and file a Designation of Preferences,
Rights and Limitations of Series C Preferred Stock in accordance with the foregoing resolution and the provisions of Nevada law.
IN WITNESS WHEREOF, the
undersigned have executed this Certificate this 25th day of August 2016.
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Signed:
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/s/ Anthony C. Schnur
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Name:
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Anthony C. Schnur
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Title:
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Chief Executive Officer
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Signed:
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/s/ Anthony C. Schnur
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Name:
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Anthony C. Schnur
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Title:
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Acting Chief Financial Officer
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CAMBER
ENERGY, INC.