Exhibit 10.5 
 
TIGRENT INC.
 

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ROYALTY PAYMENT AGREEMENT
 

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ROYALTY PAYMENT AGREEMENT
 

 
This Royalty Payment Agreement (this “Agreement”) is made as of the 15th day of
March 2013 (the “Effective Date”) between Tigrent Inc., a Colorado
corporation (the “Company”), and Rich Dad Operating Company, LLC, a Nevada
limited liability company (“Holder”).
 
RECITAL
 
A.           The Company and Holder entered into that certain Licensing
Agreement with an effective date of March 16, 2010 (as amended, restated, or
otherwise modified from time to time, the “Licensing Agreement”).
 
B.           The Company and Holder agree that Holder will permit the Company,
at the Company’s option, to pay any royalties owing under the terms of the
Licensing Agreement all in cash or in a combination of cash and [***] [and, with
the consent of Holder [***]] of each royalty payment due under the License
Agreement in unsecured convertible promissory notes.
 
AGREEMENT
 
Now,  Therefore, in consideration of the foregoing, and the representations,
warranties, covenants and conditions set forth below, the Company and Holder,
intending to be legally bound, hereby agree as follows:
 
1.             Amount and Terms of the Note(S)
 

1.1          The Note(s). Subject to the terms of this Agreement, the Company
may, at its option, issue and deliver and Holder agrees to accept at each
Closing (as hereinafter defined) a convertible promissory note in substantially
the form attached hereto as Exhibit A (each, a “Note” and collectively, the
“Notes”) as payment for [***] of each royalty payment owing under the terms of
the Licensing Agreement. In addition, the Company may, with the consent of
Holder, issue and deliver and Holder agrees to accept at each Closing a Note as
payment for [***] of each royalty payment owing under the terms of the Licensing
Agreement. The principal amount of each Note shall equal the portion of such
royalty payment that the Company has elected to pay via a Note (each, an
“Advance”)

 
1.2          Closing Date(s). Each closing of a Note (each a “Closing”) shall be
held on a date mutually acceptable to the Company and Holder (each a “Closing
Date”).
 
1.3          Delivery. At each Closing the Company shall issue and deliver to
Holder a Note in favor of Holder payable in the principal amount of the Advance.
In addition, upon the execution of this Agreement, Company shall issue, and
Holder agrees to accept, Notes as payment for royalties that have accrued but
are unpaid under the License Agreement as of the Effective Date and upon the
delivery of such Notes, the Company shall be deemed to be in compliance with its
obligation to pay royalties under the License Agreement through the Effective
Date.
 

1.

 

 

 
1.4          Conversion. Each Note shall automatically convert into shares of
Preferred Stock upon a Change of Control as provided in such Note. For purposes
of this Agreement, the term “Preferred Stock” shall mean shares of the Company’s
Series A Preferred Stock pursuant to the Certificate of Designation in
substantially the form attached hereto as Exhibit B (the “Certificate of
Designation”). The Company shall at all time reserve or cause to be reserved a
sufficient number of shares of Preferred Stock to cover conversion of all
outstanding Notes. The Company may not issue any shares of Preferred Stock, or
any securities convertible into Preferred Stock, to any person other than Holder
(or its successors, assigns and designees).
 
2.             Repurchase at the Option of the Holder
 
2.1          Repurchase. Holder shall have the right, at Holder’s option, to
require the Company to repurchase, for cash, all of Holder’s Notes, or any
portion of the principal amount thereof that is equal to [***] or an integral
multiple of [***], at a repurchase price equal to [***] of the principal amount
thereof. Repurchases of Notes under this Section 2.1 shall be made, at the
option of Holder, upon delivery to the Company by Holder of (a) a written notice
at least five (5) business days prior to the date of repurchase (the “Repurchase
Date”), stating the portion of the principal amount of Notes to be repurchased
and the Repurchase Date, and (b) the Notes to be repurchased on or prior to the
Repurchase Date. Any Notes that are to be repurchased only in part shall be
surrendered to the Company, and the Company shall execute and deliver to Holder
without service charge, a new Note or Notes, containing identical terms and
conditions, in an authorized denomination in aggregate principal amount equal to
and in exchange for the unrepurchased portion of the principal of the Notes so
surrendered. Notwithstanding the foregoing, no Notes may be repurchased at the
option of Holder under this Section 2.1 if the principal amount of the Notes has
been accelerated, and such acceleration has not been rescinded, on or prior to
the Repurchase Date (except in the case of an acceleration resulting from an
Event of Default by the Company in the payment of the repurchase price with
respect to such Notes).
 
3.             Conditions Precedent
 
3.1          Conditions to Effectiveness. Holder shall not be obligated to take,
fulfill or perform any action under this Agreement, unless and until the
following conditions have been satisfied or performed, on or prior to the
Effective Date, to Holder’s complete satisfaction or waived in writing by
Holder:
 
(a)           The Company shall have filed the Certificate of Designation with
the Secretary of State of the State of Colorado establishing the rights,
preferences and privileges of the Preferred Stock in a form acceptable to
Holder.
 
(b)           An officer of the Company shall deliver to Holder at the Effective
Date a certificate certifying (i) the Company’s Articles of Incorporation, as
amended (the “Charter”), (ii) the Bylaws of the Company (the “Bylaws”) and (iii)
resolutions of the Board of Directors of the Company approving the Transaction
Documents (as hereinafter defined) and the transactions contemplated hereby and
thereby.
 

2.

 

 

 
(c)           The representations and warranties made by the Company in Section
4 hereof shall be true and correct in all material respects as of the Effective
Date with the same force and effect as if they had been made as of the Effective
Date, and the Company shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the Effective Date.
 
(d)           No Event of Default has occurred that is continuing as of the
Effective Date.
 
3.2           Conditions to Each Closing. Holder shall not be obligated to
accept any Note as payment for any portion of a royalty payment owing under the
terms of the Licensing Agreement, unless and until the following conditions have
been satisfied or performed, on or prior to the proposed Closing Date for such
royalty payment, to Holder’s complete satisfaction or waived in writing by
Holder:
 
(a)           The representations and warranties of the Company contained
in Section 4 of this Agreement and in any other Transaction Document, shall be
(i) in the case of representations and warranties qualified by “materiality,”
“material adverse effect” or similar language, true and correct in all respects
and (ii) in the case of all other representations and warranties, true and
correct in all material respects, in each case on and as of the applicable
Closing Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct on the basis set forth above as of such earlier date.
 
(b)           No Event of Default has occurred that is continuing as of the
Closing Date.
 
4.             Representations, Warranties and Covenants of the Company
 
The Company hereby represents and warrants to Holder as follows:
 
4.1          Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado. The Company has the requisite corporate power to own
and operate its properties and assets and to carry on its business as now
conducted and as proposed to be conducted. The Company is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business.
 
4.2          Corporate Power. The Company will have at the Effective Date and
each Closing Date all requisite corporate power to execute and deliver this
Agreement and to issue each Note, collectively, in each case as the same may be
amended, modified or supplemented from time to time, and all other related
agreements and documents executed by the Company in favor of, and delivered to,
Holder in connection with or pursuant to any of the foregoing (collectively, the
“Transaction Documents”), and to carry out and perform its obligations under the
terms of this Agreement and under the terms of each Note.
 

3.

 

 

 
4.3          Authorization. All corporate action on the part of the Company, its
directors and its stockholders necessary for the authorization, execution,
delivery and performance of this Agreement by the Company and the performance of
the Company’s obligations hereunder, including the issuance and delivery of the
Notes and the reservation of the Preferred Stock issuable upon conversion of the
Notes has been taken or will be taken prior to the issuance of the Preferred
Stock. This Agreement and the Notes, when executed and delivered by the Company,
shall constitute valid and binding obligations of the Company enforceable in
accordance with their terms, subject to laws of general application relating to
bankruptcy, insolvency, the relief of debtors and, with respect to rights to
indemnity, subject to federal and state securities laws. The Preferred Stock,
when issued in compliance with the provisions of this Agreement and the Notes
will be validly issued, fully paid and nonassessable and free of any liens or
encumbrances and issued in compliance with all applicable federal and securities
laws.
 
4.4          Governmental Consents. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of the Company
in connection with the valid execution and delivery of this Agreement, the
offer, sale or issuance of the Notes and the Preferred Stock issuable upon
conversion of the Notes or the consummation of any other transaction
contemplated hereby shall have been obtained and will be effective as of the
Effective Date and at each Closing.
 
4.5          Compliance with Laws. To its knowledge, the Company is not in
violation of any applicable statute, rule, regulation, order or restriction of
any domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of its business or the ownership of its properties, which
violation of which would materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of the Company.
 
4.6          Compliance with Other Instruments. The Company is not in violation
or default of any term of the Charter or Bylaws, or of any provision of any
mortgage, indenture or contract to which it is a party and by which it is bound
or of any judgment, decree, order or writ, other than such violation(s) that
would not have a material adverse effect on the Company. The execution, delivery
and performance of this Agreement, the Notes, and the consummation of the
transactions contemplated hereby or thereby will not result in any such
violation or be in conflict with, or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, decree, order or writ or an event that results in the
creation of any lien, charge or encumbrance upon any assets of the Company or
the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization or approval applicable to the Company,
its business or operations or any of its assets or properties. Without limiting
the foregoing, the Company has obtained all waivers reasonably necessary with
respect to any preemptive rights, rights of first refusal or similar rights,
including any notice or offering periods provided for as part of any such
rights, in order for the Company to consummate the transactions contemplated
hereunder without any third party obtaining any rights to cause the Company to
offer or issue any securities of the Company as a result of the consummation of
the transactions contemplated hereunder.
 

4.

 

 

 
4.7          Capitalization; Voting Rights.
 
(a)           The authorized capital stock of the Company, immediately prior to
the Effective Date, consists of (i) 25,000,000 shares of the Company’s common
stock (the “Common Stock”), 13,888,587 shares of which are issued and
outstanding, and (ii) 10,000,000 shares of the Company’s preferred stock, 25,000
shares of which are designated Series A Preferred Stock, none of which are
issued and outstanding.
 
(b)           The rights, preferences, privileges and restrictions of the
Preferred Stock are as stated in the Charter. The Preferred Stock have been duly
and validly reserved for issuance. When issued in compliance with the provisions
of this Agreement and the Charter, the Preferred Stock will be validly issued,
fully paid and nonassessable, and will be free of any liens or encumbrances
other than (i) liens and encumbrances created by or imposed upon Holder;
provided, however, that the Preferred Stock may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein or as
otherwise required by such laws at the time a transfer is proposed. The issuance
and delivery of the Notes and the subsequent conversion of the Notes into
Preferred Stock are not and will not be subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.
 
4.8          Offering. Assuming the accuracy of the representations and
warranties of Holder contained in Section 5 hereof, the offer, issue, and sale
of the Notes and the Preferred Stock are and will be exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the “Securities Act”), and have been registered or qualified (or are
exempt from registration and qualification) under the registration, permit, or
qualification requirements of all applicable state securities laws.
 
5.             Representations and Warranties of Holder
 
5.1          Requisite Power and Authority. Holder has all necessary power and
authority to execute and deliver this Agreement and the other Transaction
Documents it is a party to and to carry out their provisions. All action on
Holder’s part required for the lawful execution and delivery of this Agreement
and the other Transaction Documents it is a party to has been taken. Upon their
execution and delivery, this Agreement and the other Transaction Documents that
Holder is a party to will be valid and binding obligations of Holder,
enforceable in accordance with their terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights and (b) as limited by
general principles of equity that restrict the availability of equitable
remedies.
 
5.2          Purchase for Own Account. Holder represents that it is acquiring
the Notes and the Preferred Stock (collectively, the “Securities”) solely for
its own account and beneficial interest for investment and not for sale or with
a view to distribution of the Securities or any part thereof, has no present
intention of selling (in connection with a distribution or otherwise), granting
any participation in, or otherwise distributing the same, and does not presently
have reason to anticipate a change in such intention.
 
5.3          Information and Sophistication. Without lessening or obviating the
representations and warranties of the Company set forth in Section 4, Holder
hereby: (a)
 

5.

 

 

 
acknowledges that it has received all the information it has requested from the
Company and it considers necessary or appropriate for deciding whether to
acquire the Securities, (b) represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Securities and to obtain any additional
information necessary to verify the accuracy of the information given Holder and
(c) further represents that it has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risk of
this investment.
 
5.4          Ability to Bear Economic Risk. Holder acknowledges that investment
in the Securities involves a high degree of risk, and represents that it is
able, without materially impairing its financial condition, to hold the
Securities for an indefinite period of time and to suffer a complete loss of its
investment.
 
5.5          Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Holder further agrees not to make any
disposition of all or any portion of the Securities unless and until:
 
(a)           There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
 
(b)           Holder shall have notified the Company of the proposed disposition
and shall have furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and if reasonably requested
by the Company, Holder shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will not
require registration under the Securities Act or any applicable state securities
laws, provided that no such opinion shall be required for dispositions in
compliance with Rule 144, except in unusual circumstances.
 
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by Holder to a partner (or retired partner) or member (or retired member) of
Holder in accordance with partnership or limited liability company interests, or
transfers by gift, will or intestate succession to any spouse or lineal
descendants or ancestors, if all transferees agree in writing to be subject to
the terms hereof to the same extent as if it was Holder.

 
5.6          Accredited Investor Status. Holder is an “accredited investor” as
such term is defined in Rule 501 under the Securities Act.
 
5.7          Further Assurances. Holder agrees and covenants that at any time
and from time to time it will promptly execute and deliver to the Company such
further instruments and documents and take such further action as the Company
may reasonably require in order to carry out the full intent and purpose of this
Agreement and to comply with state or federal securities laws or other
regulatory approvals.
 

6.

 

 

 
6.             Miscellaneous
 
6.1          Binding Agreement. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, expressed or implied, is
intended to confer upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
 
6.2          Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Colorado as applied to agreements among Colorado
residents, made and to be performed entirely within the State of Colorado,
without giving effect to conflicts of laws principles.
 
6.3          Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
 
6.4          Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
 
6.5          Notices. All notices required or permitted hereunder and the Notes
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed telex,
electronic mail or facsimile if sent during normal business hours of the
recipient, if not, then on the next business day, (c) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All
communications shall be sent to the Company at 1612 East Cape Coral Parkway,
Cape Coral, Florida 33904; Attention General Counsel; Phone: (239) 443-1627;
Email: jamesmay@richdadeducation.com; Fax: (239) 540-6501, and to Holder at 4330
N. Civic Center Plaza, Suite 100, Scottsdale, AZ 8521, Attn: CEO or at such
other address(es) as the Company or Holder may designate by ten (10) days
advance written notice to the other parties hereto.
 
6.6          Modification; Waiver. No modification or waiver of any provision of
this Agreement or consent to departure therefrom shall be effective unless in
writing and approved by the Company and Holder. Any provision of the Notes may
be amended or waived by the written consent of the Company and Holder.
 
6.7          Expenses. The Company and Holder shall each bear its respective
expenses and legal fees incurred with respect to this Agreement and the
transactions contemplated herein.
 
6.8          Severability. If any provision of this Agreement is determined to
be invalid, illegal or unenforceable, in whole or in part, the validity,
legality and enforceability of any of the remaining provisions or portions of
this Agreement shall not in any way be affected or impaired thereby and this
Agreement shall nevertheless be binding between the Company and Holder.
 
6.9          Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to Holder, upon any breach or
default of the Company under this
 

7.

 

 

 
Agreement or any Note shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach or default, or any acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. It is further agreed that
any waiver, permit, consent or approval of any kind or character by Holder of
any breach or default under this Agreement, or any waiver by any Holder of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in writing and that all
remedies, either under this Agreement, or by law or otherwise afforded to the
Holder, shall be cumulative and not alternative.
 
6.10        Entire Agreement. This Agreement and the Exhibits hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and no party shall be liable or bound to any other party
in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein.
 
[Signature Page Follows]
 

8.

 

 

 
In Witness Whereof, the parties have executed this Royalty Payment Agreement as
of the date first written above.

             
Company:
  Holder:         Tigrent Inc.   Rich Dad Operating Company, LLC        
By:
  (-s- anthony humpage) [img001_v1.jpg]  
By:
 
 (signature) [img002_v1.jpg]
Name:
ANTHONY HUMPAGE  
Name:
 
Title: 
CEO.  
Title:
 

 
SIGNATURE PAGE TO ROYALTY PAYMENT AGREEMENT

 

 

 

Exhibit A
 
Form of Convertible Promissory Note

THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN
COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
 
CONVERTIBLE PROMISSORY NOTE
 

$[________________] [DATE] No. [__] Cape Coral, Florida

 
For value received Tigrent Inc., a Colorado corporation (“Company”), promises to
pay to Rich Dad Operating Company, LLC, a Nevada limited liability company, or
its assigns (“Holder”), the principal sum of $[____________] (the “Advance”),
due and payable on the dates and in the manner set forth below. This note (this
“Note”) is issued as part of a series of similar notes (collectively, the
“Notes”) to be issued pursuant to the terms of that certain Royalty Payment
Agreement, dated as of [__________ _], 2013 (as amended, restated or otherwise
modified from time to time, the “Agreement”). Capitalized terms utilized but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Agreement.
 
1.             Principal Repayment. Unless this Note has been paid or converted
in accordance with the terms of Section 3 below, the entire outstanding
principal balance shall become fully due and payable on December 31, 2014 (the
“Maturity Date”). All payments of principal shall be in lawful money of the
United States of America to Holder. All amounts payable hereunder shall be
payable at the office of Holder, _________________________________, unless
another place of payment shall be specified in writing by Holder. The Company
may prepay, in cash, this Note or any portion of the principal amount thereof
that is equal to [***], or an integral multiple of [***], prior to the Maturity
Date without the consent of Holder.
 
2.             Interest. This Note shall not bear interest, and the principal
amount thereof shall not accrete.
 
3.             Conversion. Upon a Change of Control, the outstanding principal
balance of this Note shall automatically convert in whole without any further
action by Holder into Preferred Stock at a conversion rate of one share of
Preferred Stock per [***] principal amount of Notes. The Company shall not issue
any fractional share of Preferred Stock upon conversion of the Notes and shall
instead pay cash in lieu of any fractional share of Preferred Stock.
 
“Change of Control” shall mean: (i) any “person” as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (other than
 

 

 

 

 

the Company, any trustee or other fiduciary holding securities under any
employee benefit plan of the Company, any company owned, directly or indirectly,
by the shareholders of the Company in substantially the same proportions as
their ownership of common stock of the Company, or Investor), is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing [***] or more of the
combined voting power of the Company’s then outstanding securities; (ii) during
any period of [***], individuals who at the beginning of such period constitute
the Company’s Board of Directors (the “Board”), and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in paragraphs (a), (c), or (d) of the
Memorandum of Understanding dated as of [August 31, 2012], by and between
Company and Holder) whose election by the Board or nomination for election by
the Company’s shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
[***] or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the Board; (iii) a
merger, consolidation, reorganization, or other business combination of the
Company with any other entity (other than Holder), other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than [***] of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person acquires [***] or more of the combined voting power of the
Company’s then outstanding securities shall not constitute a Change in Control;
or (iv) the shareholders of the Company approve a plan of complete liquidation
of the Company or the consummation of the sale or disposition by the Company of
all or substantially all of Company’s assets other than (x) the sale or
disposition of all or substantially all of the assets of the Company to Holder
or to a person or persons who beneficially own, directly or indirectly, at least
[***]or more of the combined voting power of the outstanding voting securities
of the Company at the time of the sale or (y) pursuant to a spin-off type
transaction, directly or indirectly, of such assets to the shareholders of the
Company.

 
4.            Events of Default. If there shall be any Event of Default
hereunder, at the option and upon the declaration of Holder and upon written
notice to the Company (which election and notice shall not be required in the
case of an Event of Default under Section 4(d) or 4 (e)), this Note shall
accelerate and all principal and unpaid accrued interest shall become due and
payable. The occurrence of any one or more of the following shall constitute an
“Event of Default”:
 
(a)           The Company fails to pay timely any of the principal amount due
under this Note on the date the same becomes due and payable;
 
(b)           The Company shall default in its performance of any covenant under
the Agreement and such default continues for a period of [***] days after notice
has been delivered by Holder;
 
(c)           The Company fails to comply with its obligation to convert the
Notes in accordance with this Note and the failure continues for [***] days;
 

 

 

 

 
(d)           The Company fails to repurchase this Note in accordance
with Section 2 of the Agreement;
 
(e)           The Company files any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law or any other law for
the relief of, or relating to, debtors, now or hereafter in effect, or makes any
assignment for the benefit of creditors or takes any corporate action in
furtherance of any of the foregoing; or
 
(f)           An involuntary petition is filed against the Company (unless such
petition is dismissed or discharged within sixty (60) days under any bankruptcy
statute now or hereafter in effect, or a custodian, receiver, trustee, assignee
for the benefit of creditors (or other similar official) is appointed to take
possession, custody or control of any property of the Company.
 
The Company hereby waives demand, notice, presentment, protest and notice of
dishonor.
 
5.            Subordination. The indebtedness evidenced by this Note is
subordinated in right of payment to the prior payment in full of any Senior
Indebtedness in existence on the date of this Note. “Senior Indebtedness” shall
mean, unless expressly subordinated to or made on a parity with the amounts due
under this Note, all amounts due in connection with (a) indebtedness of the
Company to Holder and Rich Global, LLC under that certain Credit Agreement,
dated as of March 25, 2011 (as amended, resatated or otherwise modified from
time to time), among the Company, Holder and Rich Global, LLC, (b) indebtedness
of The Company to banks or other lending institutions regularly engaged in the
business of lending money (excluding venture capital, investment banking or
similar institutions and their affiliates, which sometimes engage in lending
activities but which are primarily engaged in investments in equity securities),
and (c) any such indebtedness or any debentures, notes or other evidence of
indebtedness issued in exchange for such Senior Indebtedness, or any
indebtedness arising from the satisfaction of such Senior Indebtedness by a
guarantor.
 
6.            Binding Effect. The terms and conditions of this Note shall inure
to the benefit of and be binding upon the respective successors and assigns of
the parties. Nothing in this Note, expressed or implied, is intended to confer
upon any third party any rights, remedies, obligations, or liabilities under or
by reason of this Note, except as expressly provided in this Note.
 
7.            Governing Law. This Note shall be governed by and construed under
the laws of the State of Colorado, as applied to agreements among Colorado
residents, made and to be performed entirely within the State of Colorado,
without giving effect to conflicts of laws principles.
 
8.            Modification; Waiver. No modification or waiver of any provision
of this Note or consent to departure therefrom shall be effective unless in
writing and approved by the Company and Holder. Any provision of the Notes may
be amended or waived by the written consent of the Company and Holder.
 
9.            Expenses. The Company and Holder shall each bear its respective
expenses and legal fees incurred with respect to this Note and the transactions
contemplated herein.
 

 

 

 

 
 
10.          Transfer. This Note may be transferred only upon its surrender to
the Company for registration of transfer, duly endorsed, or accompanied by a
duly executed written instrument of transfer in form satisfactory to the
Company. Thereupon, this Note shall be reissued to, and registered in the name
of, the transferee, or a new Note for like principal amount and interest shall
be issued to, and registered in the name of, the transferee. Principal shall be
paid solely to the registered holder of this Note. Such payment shall constitute
full discharge of the Company’s obligation to pay such principal.
 
11.          Severability. If any provision of this Note is determined to be
invalid, illegal or unenforceable, in whole or in part, the validity, legality
and enforceability of any of the remaining provisions or portions of this Note
shall not in any way be affected or impaired thereby and this Note shall
nevertheless be binding between the Company and Holder.
 
12.          Titles and Subtitles. The titles and subtitles used in this Note
are used for convenience only and are not to be considered in construing or
interpreting this Note.
 
13.          No Rights as Stockholder. This Note, as such, shall not entitle
Holder to any rights as a stockholder of the Company.
 
*****

 
Tigrent Inc.
         
By:
        Name:       Title:  

 

 

 

 

 
Exhibit B
 
Form of Certificate of Designation
 
TIGRENT INC.
 
CERTIFICATE OF DESIGNATIONS
OF THE
SERIES A PREFERRED STOCK
 
PURSUANT TO SECTION 7-106-102 OF THE COLORADO BUSINESS
CORPORATION ACT OF THE STATE OF COLORADO1

 
THE UNDERSIGNED, being the [____________________] of Tigrent Inc., a Colorado
corporation (the “Company”), in accordance with the provisions of Section
7-110-106 of the Colorado Business Corporation Act (the “CBCA”) does hereby
certify to the Secretary of State of the State of Colorado (the “Secretary”)
that, in accordance with Section 7-106-102 of the CBCA, the following resolution
was duly adopted by the Board of Directors of the Company as of [●], 2013,
creating a series of 25,000 shares of Preferred Stock designated as “Series A
Preferred Stock”:
 
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors of the Company (the “Board of Directors”) by Article Three of the
Company’s Articles of Incorporation, as amended (the “Articles”), and Section
7-106-102 of the CBCA, a series of preferred stock (“Preferred Stock”), of the
Company be and hereby is created, and that the designation and number of shares
thereof and the voting and other powers, preferences and relative,
participating, optional or other rights of the shares of such series and the
qualifications, limitations and restrictions thereof are as follows:
 
Series A Preferred Stock
 
Designation and Number. A series of Preferred Stock, designated the “Series A
Preferred Stock” (the “Series A Preferred Stock”), is hereby established. The
number of shares of Series A Preferred Stock initially shall be 25,000.
 
Rank. The Series A Preferred Stock will rank, with respect to dividend rights
and rights upon voluntary or involuntary liquidation, dissolution or winding up
of the Company: (i) senior to all classes or series of the Company’s common
stock (the “Common Stock”), and all classes or series of capital stock of the
Company now or hereafter authorized, issued or outstanding expressly designated
as ranking junior to the Series A Preferred Stock as to dividend rights and
rights upon voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company; (ii) on parity with any class or series of capital
stock of the Company expressly designated as ranking on parity with the Series A
Preferred Stock as to dividend rights and rights upon voluntary or involuntary
liquidation, dissolution or winding up of the Company; and
 

--------------------------------------------------------------------------------

1    NTD: In connection with the filing of the Certificate of Designations, the
applicable electronic form with the Colorado Secretary of State will be
completed and filed.
 

5.

 

 

 
(iii) junior to any class or series of capital stock of the Company expressly
designated as ranking senior to the Series A Preferred Stock as to dividend
rights and rights upon voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company. The term “capital stock” does not
include convertible or exchangeable debt securities, which will rank senior to
the Series A Preferred Stock prior to conversion or exchange. The Series A
Preferred Stock will rank junior in right of payment to the Company’s other
existing and future debt obligations.
 
Dividend Rights.
 
(a)           Holders of Series A Preferred Stock, in preference to the holders
of Common Stock, shall be entitled to receive, but only out of funds that are
legally available therefor, cash dividends at the rate of [***] of the Original
Issue Price (as defined below) per annum on each outstanding share of Series A
Preferred Stock. Such dividends shall be payable only when, as and if declared
by the Board of Directors.
 
(b)           The “Original Issue Price” of the Series A Preferred Stock shall
be [***] (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares after the filing date
hereof).
 
(c)           So long as any shares of Series A Preferred Stock are outstanding,
the Company shall not pay or declare any dividend (whether in cash or property),
or make any other distribution on the Common Stock, or purchase, redeem or
otherwise acquire for value any shares of Common Stock, until all dividends as
set forth in Section 3(a) above on the Series A Preferred Stock shall have been
paid or declared and set apart, except for:
 
acquisitions of Common Stock by the Company pursuant to agreements that permit
the Company to repurchase such shares at no more than cost upon termination of
services to the Company;
 
acquisitions of Common Stock in exercise of the Company’s right of first refusal
to repurchase such shares; or
 
distributions to holders of Common Stock in accordance with Section 4.
 
(d)           In the event dividends are paid on any share of Common Stock, the
Company shall pay an additional dividend on all outstanding shares of Series A
Preferred Stock in a per share amount equal (on an as-if-converted to Common
Stock basis) to the amount paid or set aside for each share of Common Stock.
 
(e)           The provisions of Sections 3(c) and 3(d) shall not apply to any
repurchase of any outstanding securities of the Company that is approved by (i)
the Board of Directors and (ii) the holders of a majority of Series A Preferred
Stock.
 
Liquidation Preference.
 

6.

 

 

 
(f)            Upon any liquidation, dissolution, or winding up of the Company,
whether voluntary or involuntary (a “Liquidation Event”), before any
distribution or payment shall be made to the holders of any Common Stock, the
holders of Series A Preferred Stock shall be entitled to be paid out of the
assets of the Company legally available for distribution (or the consideration
received by the Company or its stockholders in a Change of Control) for each
share of Series A Preferred Stock held by them, an amount per share of Series A
Preferred Stock equal to the Original Issue Price plus all declared and unpaid
dividends on the Series A Preferred Stock. If, upon any such Liquidation Event,
the assets of the Company shall be insufficient to make payment in full to all
holders of Series A Preferred Stock of the liquidation preference set forth in
this Section 4(a), then such assets (or consideration) shall be distributed
among the holders of Series A Preferred Stock at the time outstanding, ratably
in proportion to the full amounts to which they would otherwise be respectively
entitled.
 
(g)           After the payment of the full liquidation preference of the Series
A Preferred Stock as set forth in Section 4(a) above, the remaining assets of
the Company legally available for distribution (or the consideration received by
the Company or its stockholders in a Change of Control), if any, shall be
distributed ratably to the holders of the Common Stock.
 
(h)           A Change of Control (as defined below) shall be deemed a
Liquidation Event for purposes of this Section 4.
 

For the purposes of this Section 4: “Change of Control” shall mean: (A) any
“person” as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company,
any trustee or other fiduciary holding securities under any employee benefit
plan of the Company, any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of common stock of the Company, or Investor), is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing [***] or more of the
combined voting power of the Company’s then outstanding securities; (B) during
any period of [***], individuals who at the beginning of such period constitute
the Board of Directors, and any new director (other than a director designated
by a person who has entered into an agreement with the Company to effect a
transaction described in paragraphs (a), (c), or (d) of the Memorandum of
Understanding dated as of August 31, 2012, by and between the Company and Rich
Dad Operating Company, LLC, a Nevada limited liability company (“Rich Dad”))
whose election by the Board of Directors or nomination for election by the
Company’s shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
[***] or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the Board of
Directors; (C) a merger, consolidation, reorganization, or other business
combination of Company with any other entity (other than holders of the Series A
Preferred Stock), other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more [***] of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, provided, however,
that a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires

 

7.

 

 

 

[***] or more of the combined voting power of the Company’s then outstanding
securities shall not constitute a Change in Control; or (D) the shareholders of
the Company approve a plan of complete liquidation of the Company or the
consummation of the sale or disposition by the Company of all or substantially
all of Company’s assets other than (x) the sale or disposition of all or
substantially all of the assets of the Company to holders of the Series A
Preferred Stock or to a person or persons who beneficially own, directly or
indirectly, at least [***] or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale or (y)
pursuant to a spin-off type transaction, directly or indirectly, of such assets
to the shareholders of the Company.

 
In any Change of Control, if the consideration to be received is securities of a
corporation or other property other than cash, its value will be deemed its fair
market value as determined in good faith by the Board of Directors on the date
such determination is made.
 
The Company shall not have the power to effect a Change of Control unless the
definitive agreement for such transaction provides that the consideration
payable to the stockholders of the Company in connection therewith shall be
allocated among the holders of capital stock of the Company in accordance with
this Section 4.
 
Voting Rights.
 
(i)            Holders of the Series A Preferred Stock shall not have any voting
rights, except as set forth in this Section 5.
 
(j)            Each holder of shares of the Series A Preferred Stock shall be
entitled to 1,000 votes per share of the Series A Preferred Stock and shall be
entitled to notice of any stockholders’ meeting in accordance with the bylaws of
the Company (the “Bylaws”). Except as otherwise provided herein or as required
by law, the Series A Preferred Stock shall vote together with the Common Stock
at any annual or special meeting of the stockholders and not as a separate
class, and may act by written consent in the same manner as the Common Stock.
 
(k)           Separate Vote of Series A Preferred Stock. For so long as any
shares of Series A Preferred Stock remain outstanding (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to
such shares after the filing date hereof), in addition to any other vote or
consent required herein or by law, the vote or written consent of the holders of
a majority of the outstanding Series A Preferred Stock shall be necessary for
effecting or validating the following actions (whether by merger,
recapitalization or otherwise):
 
Any agreement by the Company or its stockholders regarding a merger, sale of all
or substantially all the assets, liquidation, dissolution or winding up of the
Company (including a Change of Control (as defined in Section 4 hereof));
 
Any amendment, alteration, or repeal of any provision of the Articles (including
any filing of a Certificate of Designation) or any agreement by the Company that
alters or changes the voting or other powers, preferences, or other special
rights, privileges or restrictions of the Series A Preferred Stock so as to
affect them adversely;
 

8.

 

 

 
Any increase or decrease in the authorized number of shares of Common Stock or
Preferred Stock;
 
Any authorization or any designation (or any obligation to authorize or
designate), whether by reclassification or otherwise, of any new class or series
of stock or any other securities convertible into equity securities of the
Company ranking on a parity with or senior to the Series A Preferred Stock in
right of redemption, liquidation preference, voting or dividend rights or any
increase in the authorized or designated number of any such class or series;

 
Any redemption, repurchase, payment or declaration of dividends or other
distributions with respect to Common Stock or Preferred Stock other than
dividends required pursuant to Section 3 hereof (except for acquisitions of
Common Stock by the Company with the approval of the Board of Directors
permitted by Section 3(c)(i), (ii) and (iii) hereof, and redemptions pursuant to
Section 7 hereof);
 
Any amendment, alteration, or repeal of any provision of the Articles or the
Bylaws of the Company;

 
Any increase or decrease in the authorized number of members of the Board of
Directors.

 
Any transaction that encumbers all or substantially all of Company’s property or
business or grants an exclusive license for all or substantially all of its
intellectual property, or
 
Any incurrence of indebtedness in excess of $1 million individually or $5
million in the aggregate in any 12-month period;
 
provided, that the restrictions in subclauses (viii) and (ix) shall not apply in
connection with commercial credit arrangements, equipment financings or similar
transactions with financial institutions, equipment lessors or similar entities,
the terms of which are approved by the Board of Directors.

 
(l)            Election of Board of Directors.
 
For so long as any shares of Series A Preferred Stock remain outstanding (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares after the filing date hereof) and the
Licensing Agreement with and effective date of March 16, 2010 between the
Company and Rich Dad is no longer effective, resulting in Rich Dad no longer
being entitled to designate any member of the Board of Directors, then the
holders of Series A Preferred Stock, voting as a separate class, shall be
entitled to elect one (1) member of the Board of Directors at each meeting or
pursuant to each consent of the Company’s stockholders for the election of
directors, and to remove from office such directors in accordance with
applicable law and to fill any vacancy caused by the resignation, death or
removal of such directors.
 
The holders of Common Stock and Series A Preferred Stock, voting together as a
single class on the basis of 1,000 votes per share of Series A Preferred Stock,
shall be entitled to elect all remaining members of the Board of Directors at
each meeting or pursuant to each
 

9.

 

 

 
consent of the Company’s stockholders for the election of director, and to
remove from office such directors in accordance with applicable law and to fill
any vacancy caused by the resignation, death or removal of such director.
 
Notwithstanding the provisions of Section 7-108-110 of the CBCA, any vacancy,
including newly created directorships resulting from any increase in the
authorized number of directors or amendment of the Articles, and vacancies
created by removal or resignation of a director, may be filled pursuant to the
procedures in the Bylaws; provided, however, that where such vacancy occurs
among the directors elected by the holders of a class or series of stock, the
holders of shares of such class or series may override the Board of Directors’
action to fill such vacancy by (i) voting for their own designee to fill such
vacancy at a meeting of the Company’s stockholders or (ii) written consent, if
the consenting stockholders hold a sufficient number of shares to elect their
designee at a meeting of the stockholders in which all members of such class or
series are present and voted. Any director may be removed during his or her term
of office without cause, by, and only by, the affirmative vote of the holders of
the shares of the class or series of stock entitled to elect such director or
directors, given either at a special meeting of such stockholders duly called
for that purpose or pursuant to a written consent of stockholders, and any
vacancy thereby created may be filled by the holders of that class or series of
stock represented at the meeting or pursuant to written consent. At any meeting
held for the purpose of electing a director, the presence in person or by proxy
of the holders of a majority of the outstanding shares of the class or series
entitled to elect such director shall constitute a quorum for the purpose of
electing such director.
 
Conversion Rights. The Series A Preferred Stock will not be convertible into
Common Stock or any other securities of the Company.
 
Redemption.
 
(m)          The Company, to the extent it may lawfully do so, may redeem any or
all of the Series A Preferred Stock at any time as follows:
 
At least thirty (30) days but no more than sixty (60) days prior to the date of
redemption (the “Redemption Date”), the Company shall send written notice (a
“Redemption Notice”) to all holders of Series A Preferred Stock setting forth
(A) the total amount to be paid for the Series A Preferred Stock for the shares
to be redeemed (the “Redemption Price”); and (B) the place at which such holders
may obtain payment of the Redemption Price upon surrender of their share
certificates.
 
The Company shall effect such redemption on the Redemption Date by paying in
cash in exchange for the shares of Series A Preferred Stock to be redeemed on
the Redemption Date a sum equal to the Original Issue Price per share of Series
A Preferred Stock plus declared and unpaid dividends with respect to such
shares.
 
(n)           On or prior to the Redemption Date, the Company shall deposit the
Redemption Price of all shares to be redeemed with a bank or trust company
having aggregate capital and surplus in excess of $100,000,000, as a trust fund,
with irrevocable instructions and authority to the bank or trust company to pay,
on and after such Redemption Date, the Redemption Price of
 

10.

 

 

 
the shares to their respective holders upon the surrender of their share
certificates. The balance of any funds deposited by the Company pursuant to this
Section 7(b) remaining unclaimed at the expiration of one (1) year following
such Redemption Date shall be returned to the Company promptly upon its written
request.
 
(o)           On or after the Redemption Date, each holder of shares of Series A
Preferred Stock to be redeemed shall surrender such holder’s certificates
representing such shares to the Company in the manner and at the place
designated in the Redemption Notice, and thereupon the Redemption Price of such
shares shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. From and after such Redemption Date, unless there
shall have been a default in payment of the Redemption Price or the Company is
unable to pay the Redemption Price due to not having sufficient legally
available funds, all rights of the holder of such shares as holder of Series A
Preferred Stock (except the right to receive the Redemption Price without
interest upon surrender of their certificates), shall cease and terminate with
respect to such shares; provided that in the event that shares of Series A
Preferred Stock are not redeemed due to a default in payment by the Company or
because the Company does not have sufficient legally available funds, such
shares of Series A Preferred Stock shall remain outstanding and shall be
entitled to all of the rights and preferences provided herein until redeemed.
 
Record Holders. The Company and its transfer agent may deem and treat the record
holder of any Series A Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Company nor its transfer agent shall be affected
by any notice to the contrary.
 
Registration Rights. Holders of the Series A Preferred Stock will not have any
registration rights with respect to the Series A Preferred Stock.
 
No Maturity or Sinking Fund. The Series A Preferred Stock has no maturity date,
no sinking fund has been established for the retirement or redemption of Series
A Preferred Stock, and the Company is not required to redeem the Series A
Preferred Stock at any time.
 
Exclusion of Other Rights. The Series A Preferred Stock shall not have any
preferences, conversion or other rights, registration rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption other than as expressly set forth in the
Articles and this Certificate of Designations.
 
Headings of Subdivisions. The headings of the various subdivisions hereof are
for convenience of reference only and shall not affect the interpretation of any
of the provisions hereof.
 
Severability of Provisions. If any preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption of the Series A Preferred
Stock set forth in the Articles and this Certificate of Designations are
invalid, unlawful or incapable of being enforced by reason of any rule of law or
public policy, all other preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of Series A Preferred Stock set forth in
the Articles which can be given effect without the invalid, unlawful or
unenforceable provision thereof shall, nevertheless,
 

11.

 

 

 
remain in full force and effect and no preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption of the Series A Preferred
Stock herein set forth shall be deemed dependent upon any other provision
thereof unless so expressed therein.
 
No Preemptive Rights. No holder of Series A Preferred Stock shall be entitled to
any preemptive rights to subscribe for or acquire any unissued shares of capital
stock of the Company (whether now or hereafter authorized) or securities of the
Company convertible into or carrying a right to subscribe to or acquire shares
of capital stock of the Company.
 
Legends. All of the Series A Preferred Stock will bear a legend substantially to
the following effect, unless otherwise agreed by the Company and the holder
thereof:
 
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER AGREES (1) THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY
EVIDENCED HEREBY, EXCEPT (A) TO THE ISSUER OR A SUBSIDIARY OF THE ISSUER; (B)
UNDER A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT AND CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH RESALE OR
TRANSFER; (C) TO A PERSON THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A ADOPTED UNDER THE SECURITIES ACT)
THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED
INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, ALL IN COMPLIANCE WITH RULE 144A (IF AVAILABLE); (D)
OUTSIDE OF THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE
904 UNDER THE SECURITIES ACT; OR (E) UNDER ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; IN EACH CASE IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION; (2) THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS
SECURITY, FURNISH TO THE TRANSFER AGENT AND THE ISSUER SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3) THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE AS TO THE ABOVE RESTRICTIONS.

*****

 
The Series A Preferred Stock has been classified and designated by the Board of
Directors under the authority contained in the Articles.

 

12.

 

 

 
This Certificate of Designations has been approved by the Board of Directors in
the manner and by the vote required by law.
 
This Certificate of Designations shall be effective at the time the Secretary
accepts this Certificate of Designations for record.
 
The undersigned [_______________________] of the Company acknowledges this
Certificate of Designations to be the corporate act of the Company and, as to
all matters or facts required to be verified under oath, the undersigned
[______________________] acknowledges that to the best of [his/her] knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties for perjury.
 
[SIGNATURE PAGE FOLLOWS]
 

13.