EXHIBIT 10.2

 

CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS

 

 of

 

SERIES C PREFERRED STOCK

 

of

 

Signal Bay, Inc.

 

Signal Bay, Inc.. a corporation organized and existing under the laws of the
State of Colorado (the "Corporation"), hereby certifies that the Board of
Directors of the Corporation (the "Board of Directors" or the "Board"), pursuant
to authority of the Board of Directors, and in accordance with the provisions of
its Certificate of Incorporation and Bylaws, each as amended and restated
through the date hereof, has and hereby authorizes a series of the Corporation's
previously authorized Preferred Stock, par value $0.0001 per share (the "Series
C Preferred Stock"), and hereby states the designation and number of shares, and
fixes the relative rights, preferences, privileges, powers and restrictions
thereof, as follows:

 

I. DESIGNATION AND AMOUNT

 

A. Designation. The designation of this series, which consists of 500,000 shares
of Series C Convertible Preferred Stock, is the Series C Preferred Stock (the
"Series C Preferred Stock") and the face amount shall be $0.0001 per share (the
"Face Amount").

 

B. Dividends: Initially, there will be no dividends due or payable on the Series
C Preferred Stock. Any future terms with respect to dividends shall be
determined by the Board consistent with the Corporation's Certificate of
Incorporation. Any and all such future terms concerning dividends shall be
reflected in an amendment to this Certificate, which the Board shall promptly
file or cause to be filed.

 

II. RANK

 

All shares of the Series C Preferred Stock shall rank (i) senior to the
Corporation's Common Stock and any other class or series of capital stock of the
Corporation hereafter created, (ii) pari passu with any class or series of
capital stock of the Corporation hereafter created and specifically ranking, by
its terms, on par with the Series B Preferred Stock and (iii) junior to any
class or series of capital stock of the Corporation hereafter created
specifically ranking, by its terms, senior to the Series B Preferred Stock, in
each case as to distribution of assets upon liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary.

 

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III. LIQUIDATION PREFERENCE

 

In any liquidation, dissolution, or winding up of the Corporation, the holders
of the Series C Preferred Stock shall be entitled to receive (a) in preference
to the holders of the Common Stock (b) on a pari passu basis to any sum that the
holders of the Series B Preferred Stock shall be entitled to receive, but (c)
subordinate in preference to any sum that the holders of any shares of any other
series of the Corporation's Preferred Stock shall be entitled, an amount equal
to $1 per share (subject to appropriate adjustment in the event of any stock
dividend, forward stock split, or other similar recapitalization). After payment
of such sums, (i) the holders of the Series A Preferred Stock and (ii) the
holders of the Common Stock, shall be entitled to receive any remaining assets
of the Corporation on a pro rata, as-converted basis assuming conversion of the
Series A Preferred Stock into Common Stock at the then- current Conversion Rate.

 

IV. VOTING RIGHTS

 

Each holder of outstanding shares of Series C Preferred Stock shall be entitled
to the number of votes equal to five hundred (500) Common Shares for each share
of preferred stock. Except as provided by law, or by the provisions establishing
any other series of Preferred Stock, holders of Series C Preferred Stock and of
any other outstanding series of Preferred Stock shall vote together with the
holders of Common Stock as a single class. 

 

V. DIVIDEND RIGHTS

 

Initially, there will be no dividends due or payable on the Series C Preferred
Stock. Any future terms with respect to dividends shall be determined by the
Board consistent with the Corporation's Certificate of Incorporation. Any and
all such future terms concerning dividends shall be reflected in an amendment to
this Certificate, which the Board shall promptly file or cause to be filed.

 

VI. CONVERISON RIGHTS

 

A. Conversion at the Option of the Holder. Each holder of shares of Series C
Preferred Stock may, at any time and from time to time, convert (an "Optional
Conversion") each of its shares of Series C Preferred Stock into 500 of fully
paid and nonassessable shares of Common Stock; provided, however, that any
Optional Conversion must involve the issuance of at least 10,000 shares of
Common Stock.

 

B. Mechanics of Conversion. In order to effect an Optional Conversion, a holder
shall: (i) fax (or otherwise deliver) a copy of the fully executed Notice of
Conversion to the Corporation and (ii) surrender or cause to be surrendered the
original certificates representing the Series C Preferred Stock being converted
(the "Preferred Stock Certificates"), duly endorsed with a medallion stamp,
along with a copy of the Notice of Conversion as soon as practicable thereafter
to the Corporation's Transfer Agent with a copy sent to the Corporation
(Attention: Secretary). The Corporation shall be obligated to issue shares of
Common Stock upon a conversion upon either the Preferred Stock Certificates are
delivered to the Corporation's Transfer Agent as provided above, or the holder
notifies the Corporation that such Preferred Stock Certificates have been lost,
stolen or destroyed and delivers the documentation (and pays any bond that may
be required) to the Corporation required by Corporation and its transfer agent.

 

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(i) Delivery of Common Stock Upon Conversion. Upon the surrender of Preferred
Stock Certificates accompanied by a Notice of Conversion, the Corporation
(itself, or through its transfer agent) shall, no later than the later of (a)
the third business day following the Conversion Date and (b) the business day
following the date of such surrender (or, in the case of lost, stolen or
destroyed certificates, after provision of indemnity pursuant to this
Designation) (the "Delivery Period"), issue and deliver (i.e., deposit with a
nationally recognized overnight courier service postage prepaid) to the holder
or its nominee (x) that number of shares of Common Stock issuable upon
conversion of such shares of Series C Preferred Stock being converted and (y) a
certificate representing the number of shares of Series C Preferred Stock not
being converted, if any. Notwithstanding the foregoing, if the Corporation's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, and so long as the certificates therefor
do not bear a legend (pursuant to the terms of the Securities Purchase
Agreement) and the holder thereof is not then required to return such
certificate for the placement of a legend thereon (pursuant to the terms of the
Securities Purchase Agreement), the Corporation shall cause its transfer agent
to promptly electronically transmit the Common Stock issuable upon conversion to
the holder by crediting the account of the holder or its nominee with DTC
through its Deposit Withdrawal Agent Commission system ("DTC Transfer"). If the
aforementioned conditions to a DTC Transfer are not satisfied, the Corporation
shall deliver as provided above to the holder physical certificates representing
the Common Stock issuable upon conversion. Further, a holder may instruct the
Corporation to deliver to the holder physical certificates representing the
Common Stock issuable upon conversion in lieu of delivering such shares by way
of DTC Transfer. 

 

(ii) Taxes. The Corporation shall pay any and all taxes that may be imposed upon
it with respect to the issuance and delivery of the shares of Common Stock upon
the conversion of the Series C Preferred Stock.

 

(iii) No Fractional Shares. If any conversion of Series C Preferred Stock would
result in the issuance of a fractional share of Common Stock (aggregating all
shares of Series C Preferred Stock being converted pursuant to a given Notice of
Conversion), such fractional share shall be payable in cash based upon the ten
day average Closing Sales Price of the Common Stock at such time, and the number
of shares of Common Stock issuable upon conversion of the Series C Preferred
Stock shall be the next lower whole number of shares. If the Corporation elects
not to, or is unable to, make such a cash payment, the holder shall be entitled
to receive, in lieu of the final fraction of a share, one whole share of Common
Stock.

 

(iv) Conversion Disputes. In the case of any dispute with respect to a
conversion, the Corporation shall promptly issue such number of shares of Common
Stock in accordance with subparagraph (i) above as are not disputed. If such
dispute involves the calculation of the Conversion Price, and such dispute is
not promptly resolved by discussion between the relevant holder and the
Corporation, the Corporation shall submit the disputed calculations to an
independent outside accountant via facsimile within three business days of
receipt of the Notice of Conversion. The accountant, at the Corporation's sole
expense, shall promptly audit the calculations and notify the Corporation and
the holder of the results no later than three business days from the date it
receives the disputed calculations. The accountant's calculation shall be deemed
conclusive, absent manifest error. The Corporation shall then issue the
appropriate number of shares of Common Stock in accordance with subparagraph (i)
above.

 

(v) Payment of Fees. Holder shall pay for any and all fees from the Company's
Transfer Agent regarding the conversion of the Series C Preferred into Common
Stock.

 

C. Effect of Reverse and Forward Splits. In the event of a reverse split the
conversion ratio stated in Article VI(a) shall not be change. However, in the
event a forward split shall occur then the conversion ratio stated in Article
VI(a) shall be modified to be increased by the same ratio as the forward split.

 

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IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the
Corporation this 24th Day of May 2016.

 

 

Signal Bay, Inc.

By:

/s/ William Waldrop

Name:

William Waldrop

Title:

Director

  

 

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