Exhibit 99.2
Oxysure Systems, Inc.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES C CONVERTIBLE PREFERRED STOCK
PURSUANT
TO SECTION 151 OF THE
Delaware
GENERAL CORPORATION LAW
The undersigned,
Julian T. Ross, Chief Executive Officer, does hereby certify that:
1. He is the Chief Executive
Officer of Oxysure Systems, Inc., a Delaware corporation (the “Corporation”).
2. The Corporation is authorized
to issue up to twenty five million (25,000,000) shares of preferred stock, of which 518,750 shares of Series A Preferred Stock,
and 900 Series B Preferred Stock are presently issued and outstanding.
3. The following resolutions
were duly adopted by the board of directors of the Corporation (the “Board of Directors”):
WHEREAS, the certificate
of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 25,000,000
shares, $0.0005 par value per share, issuable from time to time in one or more series;
WHEREAS, the Board
of Directors is authorized to fix the dividend rights, dividend rate, 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; and
WHEREAS, it is the
desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other
matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase Agreement,
up to 770,000 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 or exchange
of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters
relating to such series of preferred stock as follows:
TERMS OF PREFERRED STOCK
Section 1.
Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.
“Alternate
Consideration” shall have the meaning set forth in Section 7(e).
“Bankruptcy
Event” means any of the following events: (a) the Corporation or any Significant Subsidiary (as such term is defined
in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Corporation or any Significant Subsidiary thereof, (b) there is commenced against the Corporation or any Significant Subsidiary
thereof any such case or proceeding that is not dismissed within 180 days after commencement, (c) the Corporation or any Significant
Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding
is entered, (d) the Corporation or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for
it or any substantial part of its property that is not discharged or stayed within 120 calendar days after such appointment, (e)
the Corporation or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Corporation
or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring
of its debts, or (g) the Corporation or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting
any of the foregoing.
“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 6(d).
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 1.1 of the Purchase Agreement.
“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto and all conditions precedent to (i) each Holder’s obligations to pay the Subscription Amount and (ii) the
Corporation’s obligations to deliver the Securities have been satisfied or waived.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the Corporation’s common stock, par value $0.0004 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Corporation or the Subsidiaries including without limitation the Corporation’s
Series A Preferred Stock, Series B Preferred Stock and any other class of preferred stock other than the Preferred Stock which
would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“Conversion
Amount” means the sum of the Stated Value at issue.
“Conversion
Date” shall have the meaning set forth in Section 6(a).
“Conversion
Price” shall have the meaning set forth in Section 6(b).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in
accordance with the terms hereof.
“Dividend
Conversion Price” shall have the meaning set forth in Section 3(a).
“Dividend
Conversion Shares” shall have the meaning set forth in Section 3(d).
“Dividend
Notice Period” shall have the meaning set forth in Section 3(a).
“Dividend
Payment Date” shall have the meaning set forth in Section 3(a).
“Dividend
Share Amount” shall have the meaning set forth in Section 3(a).
“Effective
Date” means the earliest of the date that (a) a registration statement has been declared effective by the Commission,
registering for public resale by the Holders thereof, of all of the Conversions Shares and Dividend Conversion Shares, or (b) all
of the Conversion and Dividend Conversion Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without
the requirement for the Company to be in compliance with the current public information requirement under Rule 144 and without
volume or manner-of-sale restrictions and Company counsel has delivered to the Transfer Agent and Holders a standing written unqualified
opinion that resales may then be made by Holders of the Conversion Shares and Dividend Conversion Shares pursuant to such exemption
which opinion shall be in form and substance reasonably acceptable to such holders.
“Equity
Conditions” means, during the period in question, (a) the Corporation shall have paid all liquidated damages and other
amounts owing to the applicable Holder in respect of the Preferred Stock, (b) all of the Conversion Shares issuable pursuant to
the Transaction Documents (and shares issuable in lieu of cash payments of dividends) may be resold pursuant to Rule 144 or current
public information requirements as determined by the counsel to the Corporation as set forth in a written opinion letter to such
effect, addressed and acceptable to the Transfer Agent and the affected Holders, provided that, Holders shall be subject to the
following volume restrictions: Prior to the earlier of the 8 month anniversary of the Series C Preferred stock or an uplisting
(“Uplisting”) of the Corporation’s common stock to a national exchange such as NYSE Mkts or NasdaqNM, Holder(s)
shall agree to a volume restriction, defined as follows: The Holder(s) agrees that, with respect to any Common Stock received under
any Series C conversions, in any given calendar week its net sales of such Common Stock shall not exceed ten percent (10.0%) of
the Corporation’s prior weekly dollar trading volume in such week (which, for purposes hereof, means the sum of each days’
dollar trading volume for such prior week which shall be calculated by multiplying the number of shares traded each day by that
day’s closing trading price during such calendar week) with the caveat that the net sales shall not be less than $35,000
per week. This sale restriction shall terminate on the earlier of the 8 month anniversary of the Series C Preferred Stock
or an Uplisting, (c) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction
Documents are listed or quoted for trading on such Trading Market (and the Corporation believes, in good faith, that trading of
the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (d) there is a sufficient number
of authorized, but unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then issuable
pursuant to the Transaction Documents, (e) there is no existing Triggering Event and no existing event which, with the passage
of time or the giving of notice, would constitute a Triggering Event, (f) the issuance of the shares in question to the applicable
Holder would not violate the limitations set forth in Section 6(d) herein, (g) there has been no public announcement of a pending
or proposed Fundamental Transaction that has not been consummated, and (h) the applicable Holder is not in possession of any information
provided by the Corporation that constitutes, or may constitute, material non-public information.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Fundamental
Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d 5(b)(1) promulgated under the Exchange Act), other than a legal
entity majority owned by, or a group wholly consisting of, officers and directors of the Corporation and their Affiliates, of effective
control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise) of in excess
of 50% of the voting securities of the Corporation (other than by means of conversion or exercise of Preferred Stock and the Securities
issued together with the Preferred Stock), (b) the Corporation merges into or consolidates with any other Person, or any Person
merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders of the Corporation
immediately prior to such transaction own less than 50% of the aggregate voting power of the Corporation or the successor entity
of such transaction, (c) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance
or other disposition of all or substantially all of its assets in one or a series of related transactions, (d) any, direct or indirect,
purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders
of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted
by the holders of 50% or more of the outstanding Common Stock, (e) the Corporation, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (f) the
execution by the Corporation of an agreement to which the Corporation is a party or by which it is bound, providing for any of
the events set forth in clauses (a) through (e) above.
“GAAP”
means United States generally accepted accounting principles.
“Holder”
shall have the meaning given such term in Section 2.
“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation, at any time outstanding
or issuable, except the Series B Preferred Stock of the Company.
“Liquidation”
shall have the meaning set forth in Section 5.
“Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Uplisting”
means a listing of the Corporation’s Common Stock to be traded on a national exchange such as NasdaqCM, NYSE Mkts or OTCQX.
“New York
Courts” shall have the meaning set forth in Section 11(d).
“Notice
of Conversion” shall have the meaning set forth in Section 6(a).
“Original
Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers
of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred
Stock.
“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
Stock” shall have the meaning set forth in Section 2.
“Purchase
Agreement” means with respect to the Series C Preferred Shares, the Securities Purchase Agreement entered into at or
about June 25, 2015;.
“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“Securities”
means the Preferred Stock and the Underlying Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share
Delivery Date” shall have the meaning set forth in Section 6(c).
“Stated
Value” shall have the meaning set forth in Section 2.
“Subscription
Amount” shall mean, as to each Holder, the aggregate amount to be paid for the Preferred Stock purchased pursuant to
the Purchase Agreement as specified below such Holder’s name on the signature page of the Purchase Agreement and next to
the heading “Subscription Amount” and on the Exercise Notice in United States dollars and in immediately available
funds.
“Subsidiary”
means with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity of which (A) more than 50% of (i) the outstanding
capital stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other
managing body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital
or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture
or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination,
owned or controlled directly or indirectly through one or more intermediaries, by such entity, or (B) is under the actual control
of the Corporation.
“Successor
Entity” shall have the meaning set forth in Section 7(e).
“Trading
Day” means a day on which the principal Trading Market is open for business.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, the OTC Bulletin Board, the OTCQX or OTCQB or any markets or exchanges maintained by the OTC Markets Group,
Inc. (or any successors to any of the foregoing).
“Transaction
Documents” means this Certificate of Designation, the Purchase Agreement, the Warrants, the respective Escrow Agreements,
the exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions
contemplated pursuant to the Purchase Agreement.
“Transfer
Agent” means Action Stock Transfer, with offices located at 2469 E. Fort Union Blvd, Ste 214 Salt Lake City, UT
84121, and any successor transfer agent of the Corporation.
“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Preferred Stock and
shares of Common Stock issued and issuable in lieu of the cash payment of dividends on the Preferred Stock in accordance with the
terms of this Certificate of Designation.
Section 2.
Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series C Convertible Preferred
Stock (the “Preferred Stock”) and the number of shares so designated shall be 770,000 (which shall not be subject
to increase without the written consent of the holders of a majority of the then outstanding shares of Preferred Stock (each, a
“Holder” and collectively, the “Holders”)). Each share of Preferred Stock shall have a par
value of $0.0005 per share and a stated value equal to $2.00 (the “Stated Value”).
Section 3.
Dividends.
a) Dividends in Cash or in Kind. Holders shall be entitled to receive, and the Corporation shall pay, cumulative dividends
at the annual rate per share (as a percentage of the Stated Value per share) of 6%, with respect to the Series C Preferred Shares
(subject to increase pursuant to Section 10(b)), payable quarterly on March 31, June 30, September 30, and December 31,
beginning on the second such date after the Original Issue Date and on each Conversion Date (with respect only to Preferred Stock
being converted) (each such date, a “Dividend Payment Date”) (if any Dividend Payment Date is not a Trading
Day, the applicable payment shall be due on the next succeeding Trading Day). Such Dividends may be paid, at the sole option of
the Corporation, in cash, or in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock as set forth
in this Section 3(a), or a combination thereof in each case (the amount to be paid in shares of Common Stock, the “Dividend
Share Amount”). Such shares of Common Stock which shall be valued solely for such purpose at the closing price of the
Trading Day prior to the Dividend Payment Date (the “Dividend Conversion Price”). The Holders shall have the same rights
and remedies with respect to the delivery of any such shares as if such shares were being issued pursuant to Section 6.
b) Corporation’s Ability to Pay Dividends in Cash or Kind. If the Corporation elects to pay the dividends in shares
of Common Stock, the Corporation shall, to the extent applicable, timely file a prospectus supplement pursuant to Rule 424
disclosing such election. The aggregate number of shares of Common Stock otherwise issuable to a Holder on a Dividend Payment Date
shall be reduced by the number of shares of Common Stock previously issued to such Holder in connection with such Dividend Payment
Date. The ranking of the Preferred Stock with respect to dividends shall be the same as that of liquidation rights.
c) Dividend Calculations. Dividends on the Preferred Stock shall be calculated on the basis of a 360-day year, consisting
of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date, and shall be deemed to accrue
from such date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends. Payment of dividends in shares of Common Stock (“Dividend Conversion Shares”)
shall otherwise occur pursuant to Section 6(c)(i) herein and, solely for purposes of the payment of dividends in shares, the Dividend
Payment Date shall be deemed the Conversion Date. Dividends shall cease to accrue with respect to any Preferred Stock converted,
provided that, the Corporation actually delivers the Conversion Shares within the time period required by Section 6(c)(i) herein.
Except as otherwise provided herein, if at any time the Corporation pays dividends partially in cash and partially in shares, then
such payment shall be distributed ratably among the Holders based upon the number of shares of Preferred Stock held by each Holder
on such Dividend Payment Date.
Section 4. Voting
Rights. Except as otherwise provided herein or as otherwise required by law, the Preferred Stock shall have no voting rights.
Holders of Preferred Stock shall vote together with the holders of Common Stock on an as converted basis but may not vote such
Preferred Stock, which would exceed the Beneficial Ownership Limitation. In any event, and notwithstanding the foregoing limitation,
as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders
of a majority of the then outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights
given to the Preferred Stock or alter or amend this Certificate of Designation, (b) amend its certificate of incorporation or other
charter documents in any manner that adversely affects any rights of the Holders, or (c) enter into any agreement with respect
to any of the foregoing.
Section 5. Liquidation.
Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”),
the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the
Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon
under this Certificate of Designation, for each share of Preferred Stock before any distribution or payment shall be made to the
holders of any Junior Securities and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the
entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective
amounts that would be payable on such shares if all amounts payable thereon were paid in full. Upon occurrence of a Liquidation
which is also a Fundamental Transaction, the Holder may elect to receive the rights and benefits of this section 5 and/or the rights
and benefits set forth in Section 7(e) or any other rights set forth in the Transaction Documents. The Corporation shall provide
notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.
Section 6. Conversion.
a) Conversions at Option of Holder. Each share of Preferred Stock shall be convertible, at any time and from time to
time from and after the Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (subject
to the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion
Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex
A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares of Preferred
Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of
Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date
may not be prior to the date the applicable Holder delivers by facsimile such Notice of Conversion to the Corporation (such date,
the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall
be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. To effect conversions of shares of
Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of Preferred Stock to the
Corporation, (although the Holder may surrender the Preferred Stock certificate to, and receive a replacement certificate from
the Corporation, at Holder’s election) unless all of the shares of Preferred Stock represented thereby are so converted,
in which case such Holder shall deliver the certificate representing such shares of Preferred Stock promptly following the Conversion
Date at issue. Shares of Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled
and shall not be reissued.
b) Conversion Price. The conversion price for the Preferred Stock shall be equal to the amount that is the higher of:
(i) $.0005; or (ii) a 35% discount to the then current market price of the Common Stock at the time of conversion, as defined by
the average of the two lowest closing prices during the ten trading days prior to the Conversion Date. This provision notwithstanding,
if within 180 days subsequent to the Closing Date the Corporation successfully completes an Uplisting, then the Conversion Price
is automatically amended to the higher of: (i) $.49; or (ii) the amount that is a 35% discount to the then current market price
of the Common Stock at the time of conversion, as defined by the average of the two lowest closing prices during the ten trading
days prior to the Conversion Date. Conversion, in part or in whole, shall be at the discretion of the Holder(s). Notwithstanding
the foregoing, in the event the Corporation successfully completes an Uplisting and the discounted conversion price that would
result from using the 35% discount would be less than $0.49 and remains less than $0.49 for 20 trading days, then the $0.49 floor
shall be removed and of no effect.
c) Mechanics of Conversion
i.
Delivery of Certificate Upon Conversion. Not later than one (1) Trading Day after each Conversion
Date (the “Share Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting
Holder (A) a certificate or certificates representing the Conversion Shares, which, on or after the Effective Date, shall be free
of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement), provided
that the Conversion Shares meet the requirements of the Securities Act for removing such restrictive legends, representing the
number of Conversion Shares being acquired upon the conversion of the Preferred Stock (including, if the Corporation has elected
pursuant to Section 3(c) for payment of dividends in shares of Common Stock at least 20 Trading Days prior to the date on which
the Notice of Conversion is delivered to the Corporation, shares of Common Stock representing the payment of accrued dividends
otherwise determined pursuant to Section 3(a) but assuming that the Dividend Notice Period is the 20 Trading Days period immediately
prior to the date on which the Notice of Conversion is delivered to the Corporation and excluding for such issuance the condition
that the Corporation deliver the Dividend Share Amount as to such dividend payment prior to the commencement of the Dividend Notice
Period), and (B) a bank check in the amount of accrued and unpaid dividends (if the Corporation has elected or is required to pay
accrued dividends in cash). On or after the Effective Date, the Corporation shall deliver any certificate or certificates required
to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company or another established
clearing corporation performing similar functions.
ii.
Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and
keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the
Preferred Stock and payment of dividends on the Preferred Stock, each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of Persons other than the Holder (and the other holders of the Preferred Stock), not less than
400% of such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase
Agreement) be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding
shares of Preferred Stock and payment of dividends hereunder. The Corporation covenants that all shares of Common Stock that shall
be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.
iii.
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion
of the Preferred Stock. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion,
the Corporation shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Conversion Price or round up to the next whole share.
iv.
Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Preferred
Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of
the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable
in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than
that of the Holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such certificates
unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax
or shall have established to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer
Agent fees required for same-day processing of any Notice of Conversion.
d)
Beneficial Ownership Limitation. The Corporation shall not effect any conversion of the Preferred Stock, and
a Holder shall not have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the
conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any
Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess
of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon
conversion of the Preferred Stock with respect to which such determination is being made, but shall exclude the number of shares
of Common Stock which are issuable upon (i) conversion of the remaining, unconverted Stated Value of Preferred Stock beneficially
owned by such Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Corporation subject to a limitation on conversion or exercise analogous to the limitation contained herein
(including, without limitation, the Preferred Stock or the Warrants) beneficially owned by such Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section 6(d), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation
contained in this Section 6(d) applies, the determination of whether the Preferred Stock is convertible (in relation to other securities
owned by such Holder together with any Affiliates) and of how many shares of Preferred Stock are convertible shall be in the sole
discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination
of whether the shares of Preferred Stock may be converted (in relation to other securities owned by such Holder together with any
Affiliates) and how many shares of the Preferred Stock are convertible, in each case subject to the Beneficial Ownership Limitation.
To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it delivers a
Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Corporation
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder
may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s
most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by
the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of a Holder, the Corporation shall within five Trading Days
confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Corporation, including the Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.9% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of Preferred Stock held by the applicable Holder. The limitations contained in this paragraph shall apply to a successor holder
of Preferred Stock.
Section 7. Certain
Adjustments.
a) Stock Dividends and Stock Splits. If the Corporation, at any time while this Preferred Stock is outstanding: (i)
pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common
Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include Securities upon the exercise or exchange
of or conversion of any Securities issued or issuable pursuant to the Transaction Documents provided that such Securities and any
term thereof have not been amended since the Closing Date to increase the number of such Securities or to decrease the issue price,
exercise price, exchange price or conversion price of such Securities, any shares of Common Stock issued by the Corporation upon
conversion of, or payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock
of the Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant
to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 7(a) above, if at any time the Corporation
grants, issues or sells any Common Stock Equivalents 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 the Holder of will
be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could
have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s
Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
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 (provided, however, to the extent that the Holder’s right to participate in any such Purchase
Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro Rata Distributions. The Corporation, at any time while this Preferred Stock is outstanding, shall include Holders,
on an as-if-converted-to-Common-Stock basis, in all distributions of any kind (including cash and cash dividends) issued to all
holders of Common Stock.
d) Fundamental Transaction. If, at any time while this Preferred Stock is outstanding, a Fundamental Transaction occurs,
then, upon any subsequent conversion of this Preferred Stock, the Holder shall have the right to receive, for each Conversion Share
that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without
regard to any limitation in Section 6(d) on the conversion of this Preferred Stock), the number of shares of Common Stock of the
successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Preferred Stock is convertible immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 6(d) on the conversion of this Preferred Stock). For purposes of any such conversion, the determination
of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion
the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any conversion of this Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of
Designation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions
and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. The Corporation shall cause
any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Corporation under this Certificate of Designation and the other Transaction
Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 7(d) pursuant to written agreements
in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the holder of this Preferred Stock, deliver to the Holder in exchange for this
Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Preferred Stock which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or
its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Preferred Stock (without
regard to any limitations on the conversion of this Preferred Stock) prior to such Fundamental Transaction, and with a conversion
price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number
of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Preferred Stock
immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance
to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted
for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designation and the
other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise
every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate of Designation
and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.
e) Other Adjustments. If the Company issues shares of Common Stock at a price less than the Conversion Price in effect
(e.g. such that the issuance price results in a price less than $0.49 per share or less than the price obtained using the 35% discount
set forth herein, then the Conversion Price shall be adjusted downward to reflect the lower issuance price at which the shares
of Common Stock were issued.
f) Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a
share, as the case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation)
issued and outstanding.
g) Notice to the Holders.
i.
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section
7, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution
in whatever form) on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption
of the Common Stock, (C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants
to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of
the Corporation shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to
which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory
share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Corporation shall authorize
the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the
Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of this Preferred Stock,
and shall cause to be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation,
at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if
a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such
notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Corporation or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-K. The Holder shall remain entitled to convert the Conversion Amount of this Preferred Stock (or
any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.
Section 8. Voluntary Redemption.
The Corporation shall have the right for a period of time ending on the earlier of (i) the 6 months anniversary of the issuance
date of the Series C Preferred Stock or (ii) the effectives of a registration statement covering the Series C Preferred Stock,
to redeem, in whole or in part, the Series C Preferred Stock for cash with a 35% prepayment premium, calculated on the then Stated
Value of the Preferred Stock then outstanding.
Section 9. Participation
Rights. As long as at least 10% of the originally issued shares of Preferred Stock are outstanding, the Holder(s) of the Preferred
Stock shall have the right to participate in any debt or equity offering of the Corporation on a pro rata basis.
Section 10. Redemption Upon
Triggering Events.
a) “Triggering Event” means, wherever used herein any of the following events (whatever the reason for such
event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or governmental body):
i.
the Corporation shall fail to have available a sufficient number of authorized and unreserved shares of Common Stock to
issue to such Holder upon a conversion hereunder;
ii.
unless specifically addressed elsewhere in this Certificate of Designation as a Triggering Event, the Corporation shall
fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of the Transaction
Documents, which failure or breach could have a Material Adverse Effect, and such failure or breach shall not, if subject to the
possibility of a cure by the Corporation, have been cured within 30 calendar days after the date on which such failure or breach
shall have first occurred;
iii. there shall have occurred a Fundamental Transaction;
iv.
there shall have occurred a Bankruptcy Event;
v.
the Common Stock shall fail to be listed or quoted for trading on a Trading Market for twenty or more Trading Days in any
twelve month period, which need not be consecutive Trading Days; or
vi. any monetary judgment, writ or similar final process shall be entered or filed against the Corporation, any subsidiary
or any of their respective property or other assets for more than $500,000, and such judgment, writ or similar final process shall
remain unvacated, unbonded or unstayed for a period of 90 calendar days; or
b)
Upon the occurrence of a Triggering Event, each Holder shall (in addition to all other rights it may have hereunder or under
applicable law) have the right, exercisable at the sole option of such Holder, to require the Corporation to, (A) with respect
to the Triggering Events set forth in Sections 10(a)(i), (iii), and (iv) (as to voluntary filings only), redeem all of the Preferred
Stock then held by such Holder for a redemption price, in cash, equal to the Triggering Redemption Amount (which is 150%) or (B)
at the option of each Holder and with respect to the Triggering Events set forth in Sections 10(a)(i), (ii), (iii) (as to Fundamental
Transactions not approved by the Board of Directors of the Corporation), (iv) (as to involuntary filings only), either (a) redeem
all of the Preferred Stock then held by such Holder for a redemption price, in shares of Common Stock, equal to a number of shares
of Common Stock equal to the Triggering Redemption Amount divided by the average of the 10 VWAPs immediately prior to the date
of election hereunder or (b) increase the dividend rate on all of the outstanding Preferred Stock held by such Holder to 8% per
annum thereafter. The Triggering Redemption Amount, in cash or in shares, shall be due and payable or issuable, as the case may
be, within ten Trading Days of the date on which the notice for the payment therefor is provided by a Holder (the “Triggering
Redemption Payment Date”). If the Corporation fails to pay in full the Triggering Redemption Amount hereunder on the
date such amount is due in accordance with this Section (whether in cash or shares of Common Stock), the Corporation will pay interest
thereon at a rate equal to 12% per annum, accruing monthly from such date until the Triggering Redemption Amount, plus all such
interest thereon, is paid in full. For purposes of this Section, a share of Preferred Stock is outstanding until such date as the
applicable Holder shall have received Conversion Shares upon a conversion (or attempted conversion) thereof that meets the requirements
hereof or has been paid the Triggering Redemption Amount in cash.
Section 11. Miscellaneous.
a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including,
without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service, addressed to the Corporation, at: 10880 John W. Elliott Drive, Suite 600, Frisco, TX 75033,
Attn: Julian T. Ross, Chief Executive Officer, facsimile: 972-294-6501, or such other facsimile number or address as the Corporation
may specify for such purposes by notice to the Holders delivered in accordance with this Section 11. Any and all notices or other
communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile,
or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such
Holder appearing on the books of the Corporation, or if no such facsimile number or address appears on the books of the Corporation,
at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date,
(ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile
number set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be given.
b) Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter
or impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends
and accrued interest, as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency,
herein prescribed.
c)
Lost or Mutilated Preferred Stock Certificate. If a Holder’s Preferred Stock certificate shall be mutilated,
lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of
a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the
shares of Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction
of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.
d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate
of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation,
enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto
or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out
of or relating to this Certificate of Designation or the transactions contemplated hereby. If any party shall commence an action
or proceeding to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.
e)
Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation
shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision
of this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon
strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive
that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this
Certificate of Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.
f) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance
of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance,
it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.
g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day.
h) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of
Designation and shall not be deemed to limit or affect any of the provisions hereof.
i) Status of Converted or Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the Purchase
Agreement. If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume
the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series C Convertible Preferred
Stock.
RESOLVED, FURTHER, that
the Chairman, the 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 this Certificate of Designation of Preferences, Rights and Limitations in
accordance with the foregoing resolution and the provisions of Delaware law.
IN WITNESS WHEREOF, the
undersigned has executed this Certificate this 29th day of June, 2015.
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Name: |
Julian T. Ross |
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Title: |
CEO |
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