Attached files
EXHIBIT
A
The Board of Directors and Majority
Shareholders do hereby fix and determine the rights, preferences, privileges,
restrictions and other matters relating to the Series A Convertible Preferred
Stock as follows:
1. Definitions. For purposes of this
Certificate of Designation, the following definitions shall
apply:
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1.1
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"Board" shall mean the Board of
Directors of the Company.
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1.2
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"Company" shall mean uKarma
Corporation, a Nevada
corporation.
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1.3
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"Common Stock" shall mean the
Common Stock, $.001 par value per share, of the
Company.
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1.4
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"Common Stock Dividend" shall mean
a stock dividend declared and paid on the Common Stock that is payable in
shares of Common Stock.
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1.5
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"Distribution" shall mean the
transfer of cash or property by the Company to one or more of its
stockholders without consideration, whether by dividend or otherwise
(except a dividend in shares of Company's
stock).
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1.6 “Net
Income” shall mean net income for the purposes of the preferred dividend shall
mean the amount stated on the year end audited financial statement of the
Company excluding any extraordinary items as determined by the board of
directors.
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1.7
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"Original Issue Date" shall mean
the date on which the first share of Series A Convertible Preferred Stock
is issued by the Company.
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1.8
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"Original Number of Shares" shall
mean 36,964,758 (as adjusted for any subsequent stock splits, stock
dividends, combinations and the
like.
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1.9
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"Series A Preferred Stock" shall
mean the Series A Convertible Preferred Stock, $.001 par value per share,
of the Company.
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2.
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Dividend
Rights
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2.1 Dividend Provisions. The
holders of shares of Series A Preferred Stock (the “Shareholders” or “holder”)
shall be entitled to accrue dividends based on the prior fiscal year’s
Net Income. Each share of Series A Preferred Stock shall accrue a
dividend equal to ten percent (10%) of the Company’s Net Income divided by the
number of shares of Series A Preferred Stock held by all holders but no less
than the Original Number of Shares.
2.2 Common Stock Dividends. No dividends (other than a
Common Stock Dividend) shall be paid, and no Distribution shall be made, with
respect to the Common Stock unless dividends in such amount shall have been paid
or declared and set apart for payment to the holders of the Series A Preferred
Stock as set forth in Section 2.1. Common stock dividends shall be
declared pro rata on the Common Stock \according to the number of shares of
Common Stock held by such holders.
2.3 Non-Cash Dividends. Whenever a dividend
or Distribution provided for in this Section 2 shall be payable in property
other than cash (other than a Common Stock Dividend), the value of such dividend
or Distribution shall be deemed to be the fair market value of such property as
determined in good faith by the Board.
3. Liquidation
Rights. In the
event of the liquidation, dissolution or winding up of the Company, the holders
of Series A Preferred Stock shall have a liquidation preference over holders of
common stock and other shares junior to the Series A Preferred Stock equal to
$2.00 per share subject to adjustment for any stock splits, stock dividends,
combinations or recapitalizations of Series A Preferred Stock.
4. Conversion
Rights. The outstanding
shares of Series A Preferred Stock shall be convertible into Common Stock as
follows:
4.1 Each
share of Series A Preferred Stock shall be convertible into one (1) share of the
Company’s Common Stock at any time at the option of the holder, subject to
adjustment by Sections 4.3 and 4.4. Each holder of Series A Preferred Stock
who elects to convert the same into shares of Common Stock shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Company or any transfer agent for the Series A Preferred Stock or Common Stock,
and shall give written notice to the Company (using the form attached hereto as
Exhibit “B”) at such office that such holder elects to convert the same and
shall state therein the number of shares of Series A Preferred Stock being
converted. Thereupon, the Company shall promptly issue and deliver at such
office to such holder a certificate or certificates for the number of shares of
Common Stock to which such holder is entitled upon such conversion. Such
conversion shall be deemed to have been made immediately on the close of
business on the date of such surrender of the certificate or certificates
representing the shares of Series A Preferred Stock to be converted, and the
person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
of Common Stock on such date.
4.2 The
Series A Preferred Stock shall automatically convert into shares of the
Company’s Common Stock upon any of the following events: (i) the sale by the
Company of all or substantially all of its assets; (ii) the consummation of a
merger or a consolidation in which the Company is not the survivor; (iii) the
sale or exchange of all or substantially all of the outstanding shares of the
Company’s common stock (including by way of merger, consolidation, or other
similar action) except in the case of (ii) or (iii), a transaction in which the
current Company shareholders hold more than 50% of the outstanding voting
securities in the successor company; or (iv) with and only with the Board of
Directors’ of the Company written consent, any underwritten public offering by
the Company of at least $10,000,000 in gross proceeds.
4.3 Adjustments
for Other Dividends and Distributions. If at any time or from time to time after
the Original Issue Date the Company pays a dividend or makes another
distribution to the holders of the Common Stock payable in securities of the
Company, then in each such event, provision shall be made so that the holders of
the Series A Preferred Stock shall receive upon conversion thereof, in addition
to the number of shares of Common Stock receivable upon conversion thereof, the
amount of securities of the Company which they would have received had their
Series A Preferred Stock been converted into Common Stock on the date of such
event (or such record date, as applicable) and had they thereafter, during the
period from the date of such event (or such record date, as applicable) to and
including the conversion date, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for during
such period under this section with respect to the rights of the holders of the
Series A Preferred Stock or with respect to such other securities by their
terms.
4.4 Adjustment for Reclassification,
Exchange and Substitution. If at any time or from time to time after the
Original Issue Date the Common Stock issuable upon the conversion of the Series
A Preferred Stock is changed into the same or a different number of shares of
any class or classes of stock, whether by recapitalization, reclassification or
otherwise (other than by a Common Stock Event or a stock dividend,
reorganization, merger, consolidation or sale of assets provided for elsewhere
herein), then in any such event each holder of Series A Preferred Stock shall
have the right thereafter to convert such stock into the kind and amount of
stock and other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the number of shares of Common
Stock into which such shares of Series A Preferred Stock could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.
4.5 Reservation of Stock Issuable Upon
Conversion. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Preferred Stock, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
5. No
Redemption. The Series A Preferred
Stock is not redeemable.
6. Notices. Any notices required by the
provisions of this Certificate of Designation to be given to the holders of
shares of Series A Preferred Stock shall be deemed given if deposited in the
United States mail, postage prepaid, and addressed to each holder of record
at its address appearing on the books of the Corporation. The
effective date of such Notice shall be deemed to be three (3) calendar days
following mailing of such notice. In the alternative, notices may be
given via overnight delivery whereupon notice shall be deemed to be given as of
the date of the actual receipt of such notice.
7. Voting
Provisions. Each holder of shares of the Series A
Preferred Stock shall be entitled to one (1) times the number of votes equal to
the number of shares of Common Stock into which such shares of Series A
Preferred Stock could be converted. Each holder of Series A Preferred Stock
shall have voting rights and powers equal to the voting rights and powers of the
Common Stock (except as otherwise required by law, voting together with the
Common Stock as a single class) and shall be entitled to notice of any
shareholders’ meeting in accordance with the Bylaws of the
Corporation. Each holder of Common Stock shall be entitled to one (l)
vote for each share of Common Stock held.