CERTIFICATE OF DESIGNATION


OF THE RIGHTS, PREFERENCES, PRIVILEGES


AND RESTRICTIONS, WHICH HAVE NOT BEEN SET


FORTH IN THE CERTIFICATE OF INCORPORATION


OR IN ANY AMENDMENT THERETO,


OF THE


SERIES A CONVERTIBLE PREFERRED STOCK


OF


HPEV, INC.


 


 


The undersigned, Ted Banzhaf
and Judson W. Bibb, do hereby certify that they are the President and Secretary, respectively, of HPEV, Inc., a Nevada corporation
(the “Corporation”), and that the Board of Directors has fixed and determined the rights, preferences, restrictions
and other matters relating to the Series A Convertible Preferred stock of the Corporation as follows:


 


WHEREAS, the Certificate
of Incorporation of the Corporation authorizes a class of stock designated as Preferred Stock, with a par value of $.001 per share
(the “Preferred Class”), comprising Fifteen Million (15,000,000) shares and provides that the Board of Directors of
the Corporation may fix the terms, including any dividend rights, dividend rates, conversion rights, voting rights, rights and
terms of any redemption, redemption, redemption price or prices, and liquidation preferences, if any, of the Preferred Class;


 


WHEREAS, the corporation has not issued any
shares of the Preferred Class;


 


WHEREAS, the Board of Directors
believes it in the best interests of the Corporation to create a new series of preferred stock consisting of four hundred (400)
shares and designated as the “Series A Convertible Preferred Stock” having certain rights, preferences, privileges,
restrictions and other matters relating to the Series A Convertible Preferred Stock.


 


NOW, THEREFORE, BE IT RESOLVED,
that the Board of Directors does hereby fix and determine the rights, preferences, privileges, restrictions and other matters relating
do the Series A Convertible Preferred Stock as follows:


 


1.Definitions. For purposes
of this Certificate of Designation, the following definitions shall apply:


 


1.1 
“Board” shall mean the Board of Directors of the Corporation.


 


1.2 
 “Corporation” shall mean HPEV, Inc., a Nevada corporation.


 


1.3 
 “Common Stock” shall mean the common stock, $.001 par value per share, of
the Corporation.


 


1.4 
“Conversion Date” shall have the meaning set forth in Section 4(b).


 


1.5             
“Debentures” shall mean a series of Senior Convertible Debentures of the Corporation
in the form of Attachment 1. 


 


1.6             
“Holder” shall mean a holder of the Series A Convertible Preferred Stock.


 


1.7             
“Liquidation Price” shall mean $2,500.00 per share for the Series A Convertible
Preferred Stock.


 






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1.8 
 “Original Issue Date” shall mean the date on which the first share of Series
A Convertible Preferred Stock is issued by the Corporation.


 


1.9 
 “Person” shall mean an individual, a corporation, a partnership, an association,
a limited liability company, an unincorporated business organization, a trust or other entity or organization, and any government
or political subdivision or any agency or instrumentality thereof.


 


1.10         
 “Registration Statement” means a registration statement or registration
statements of the Company filed under the Securities Act of 1933, as amended (“Securities Act”), covering the Conversion
Shares, as defined in Section 4.1.


 


1.11         
 “Series A Convertible Preferred Stock” shall mean the Series A Convertible Preferred
Stock, $0.001 par value per share, of the Corporation.


 


 2.Dividend Rights. The Series
A Convertible Preferred Stock shall have no dividend rights.


 


3.Liquidation Rights. In the
event of any liquidation, dissolution or winding up of the Corporation; whether voluntary or involuntary, the funds and assets
of the Corporation that may be legally distributed to the Corporation's shareholders (the “Available Funds and Assets”)
shall be distributed to shareholders in the following manner:


 


3.1Series A Convertible Preferred
Stock. The holders of each share of Series A Preferred Stock then outstanding shall be entitled to be paid, out of the Available
Funds and Assets, and prior and in preference to any payment or distribution (or any setting apart of any payment or distribution)
of any Available Funds and Assets on any shares of Common Stock, an amount per share equal to the Liquidation Price of the Series
A Convertible Preferred Stock plus all declared but unpaid dividends on the Series A Convertible Preferred Stock. If upon any liquidation,
dissolution or winding up of the Corporation, the Available Funds and Assets shall be insufficient to permit the payment to holders
of the Series A Convertible Preferred Stock of their full preferential amount as described in this subsection, then all of the
remaining Available Funds and Assets shall be distributed among the holders of the then outstanding Series A Convertible Preferred
Stock pro rata, according to the number of outstanding shares of Series A Convertible Preferred Stock held by each holder
thereof.


 


3.2Participation Rights. If
there are any Available Funds and Assets remaining after the payment or distribution (or the setting aside for payment or distribution)
to the holders of the Series A Convertible Preferred Stock of their full preferential amounts described above in this Section 3,
then all such remaining Available Funds and Assets shall be distributed among the holders of the then outstanding Common Stock
and Preferred Stock pro rata according to the number and preferences of the shares of Common Stock and Preferred Stock (as converted
to Common Stock) held by such holders.


 


3.3Merger or Sale of Assets.
A reorganization or any other consolidation or merger of the Corporation with or into any other corporation, or any other sale
of all or substantially all of the assets of the Corporation, shall not be deemed to be a liquidation, dissolution or winding up
of the Corporation within the meaning of this Section 3, and the Series A Convertible Preferred Stock shall be entitled only to
(i) the right provided in any agreement or plan governing the reorganization or other consolidation, merger or sale of assets transaction,
(ii) the rights contained in the General Corporation Law of the State of Nevada and (iii) the rights contained in other Sections
hereof.


 


3.4Non-Cash
Consideration. If any assets of the Corporation distributed to shareholders in connection with any liquidation, dissolution
or winding up of the Corporation are other than cash, then the value of such assets shall be their fair market value as determined
by the Board.


 






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4.Conversion Rights.


 


4.1Conversion of Preferred Stock
to Common Stock. Each share of Series A Convertible Preferred Stock shall be convertible, at the option of the holder thereof,
at any time into twenty thousand (20,000) fully paid and nonassessable shares of Common Stock of the Corporation (the “Conversion
Shares”).


 


4.2Procedures for Exercise of Conversion
Rights. The holders of any shares of Series A Convertible Preferred Stock may exercise their conversion rights as to all such
shares or any part thereof by delivering to the Corporation during regular business hours, at the office of any transfer agent
of the Corporation for the Series A Convertible Preferred Stock, or at the principal office of the Corporation or at such other
place as may be designated by the Corporation, the certificate or certificates for the shares to be converted, duly endorsed for
transfer to the Corporation (if required by the Corporation), accompanied by written notice stating that the holder elects to convert
such shares. Conversion shall be deemed to have been effected on the date when such delivery is made, and such date is referred
to herein as the “Conversion Date.” Within three (3) business days after the Conversion Date, the Corporation shall
issue and deliver to or upon the written order of such holder, at such office or other place designated by the Corporation, a certificate
or certificates for the number of full shares of Common Stock to which such holder is entitled and a check for cash with respect
to any fractional interest in a share of Common Stock as provided in section 4.3 below. The holder shall be deemed to have become
a shareholder of record on the Conversion Date. Upon conversion of only a portion of the number of shares of Series A Convertible
Preferred Stock represented by a certificate surrendered for conversion, the Corporation shall issue and deliver to or upon the
written order of the holder of the certificate so surrendered for conversion, at the expense of the Corporation, a new certificate
covering the number of shares of Series A Convertible Preferred Stock representing the unconverted portion of the certificate so
surrendered.


 


4.3No Fractional Shares. No
fractional shares of Common Stock or scrip shall be issued upon conversion of shares of Series A Convertible Preferred Stock. If
more than one share of Series A Convertible Preferred Stock shall be surrendered for conversion at any one time by the same holder,
the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number
of shares of Series A Convertible Preferred Stock so surrendered. Instead of any fractional shares of Common Stock which would
otherwise be issuable upon conversion of any shares of Series A Convertible Preferred Stock, the Corporation shall pay a cash adjustment
in respect of such fractional interest equal to the fair market value of such fractional interest as determined by the corporation's
Board of Directors.


 


4.4Payment of Taxes for Conversions.
The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion pursuant hereto of Series A Convertible Preferred Stock. The Corporation shall not, however, be required
to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in
a name other than that in which the shares of Series A Convertible Preferred Stock so converted were registered, and no such issue
or delivery shall be made unless and until the person requesting such issue has paid to the corporation the amount of any such
tax, or has established, to the satisfaction of the Corporation, that such tax has been paid.


 


4.5Reservation of Common Stock.
The Corporation shall at all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series A Convertible Preferred Stock, the full number of shares of Common Stock deliverable
upon the conversion of all shares of all series of preferred stock from time to time outstanding.


 


4.6Status of Common Stock Issued
Upon Conversion. All shares of Common Stock which may be issued upon conversion of the shares of Series A Convertible Preferred
Stock will upon issuance by the Corporation be validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.






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4.7Status of Converted Preferred
Stock. In case any shares of Series A Convertible Preferred Stock shall be converted pursuant to this section 4, the shares
so converted shall be canceled and shall not be issuable by the Corporation.


 


4.8 Reserved.





 


5.Adjustment of Conversion Price.


 


5.1General Provisions. In case,
at any time after the date hereof, of any capital reorganization, or any reclassification of the stock of the Corporation (other
than a change in par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation
or merger of the Corporation with or into another person (other than a consolidation or merger in which the Corporation is the
continuing entity and which does not result in any change in the Common Stock), or of the sale or other disposition of all or substantially
all the properties and assets of the Corporation as an entirety to any other person, the shares of Series A Convertible Preferred
Stock shall, after such reorganization, reclassification, consolidation, merger, sale or other disposition, be convertible into
the kind and number of shares of stock or other securities or property of the Corporation or of the entity resulting from such
consolidation or surviving such merger or to which such properties and assets shall have been sold or otherwise disposed to which
such holder would have been entitled if immediately prior to such reorganization, reclassification, consolidation, merger, sale
or other disposition it had converted its shares of Series A Convertible Preferred Stock into Common Stock. The provisions of this
section 5.1 shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or other dispositions.


 


5.2No Impairment. The Corporation
will not, through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, including amending this Certificate of Designation, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this section 5 and in the taking of all such action as may be necessary or appropriate in
order to protect the conversion rights of the holders of Series A Convertible Preferred Stock against impairment. This provision
shall not restrict the Corporation from amending its Articles of Incorporation in accordance with the Nevada Revised Statutes and
the terms hereof.


 


6. Conversion to Debentures.
The Series A Convertible Preferred Stock may be converted to Debentures, on the following terms:


 


6.1Right to Convert to Debentures.
In the event a Registration Statement has not been declared effective by the United States Securities Exchange Commission within
180 calendar days from and after the Original Issue Date, the holders of at least two-thirds (2/3) of the then outstanding shares
of Series A Convertible Preferred Stock may deliver a written notice to the Corporation under this Section 6 electing the conversion
of all Series A Convertible Preferred Stock to Debentures. Upon receipt of such notice, the outstanding shares of Series A Convertible
Preferred Stock shall be converted to Debentures as provided in this Section.


 


6.2Conversion Price. For purposes
of this Section 6, the conversion price of the Series A Convertible Preferred Stock, as the case may be, shall be equal to the
Liquidation Price.


 


 6.3Intentionally Omitted.


 






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6.4Procedures
– Conversion to Debentures. In the event of conversion under this Section 6:


 


(a) All shares
of Series A Convertible Preferred Stock shall be converted into Debentures as of the date notice of conversion under this Section
6 is delivered to the Corporation. Conversion shall be deemed to have been effected on the date when such delivery is made.


 


(b)Within three
(3) business days after the conversion date, the Corporation shall issue and deliver to each holder a Debenture in the original
principal amount to which such holder is entitled.


 


(c) The Corporation
shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of Debentures on conversion
pursuant hereto of Series A Convertible Preferred Stock. The Corporation shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of Debentures in a name other than that in which the shares
of Series A Convertible Preferred Stock so converted were registered, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the corporation the amount of any such tax, or has established, to the satisfaction
of the Corporation, that such tax has been paid.


 


(d) The Corporation
shall at all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the purpose of effecting
the conversion of the Debentures, the full number of shares of Common Stock deliverable upon the conversion of all Debentures from
time to time outstanding.


 


(e) If the
shares of Series A Convertible Preferred Stock shall be converted to Debentures pursuant to this section 6, the shares so converted
shall be canceled and shall not be issuable by the Corporation.


 


(f)In the
event a Registration Statement is declared effective by the United States Securities Exchange Commission within 180 days from
and after the Original Issue Date, the holders of shares of Series A Convertible Preferred Stock shall have no right to convert
Series A Convertible Preferred Stock to Debentures, in which case the Board of Directors of the Company may, without vote or approval
by the holders of Series A Convertible Preferred Stock or Common Stock, amend or amend and restate this Certificate of Designation,
or otherwise amend or amend and restate the Certificate of Incorporation, to delete this Section 6 therefrom and Attachment 1
hereto.


 





6.3Amendment
to Delete Debenture Conversion. In the event a Registration Statement has been declared
effective by the United States Securities Exchange Commission within 180 calendar days from and after the Original Issue
Date, this Certificate of Designation may be amended by the Board of Directors to delete this Section 6 from the
Certificate of Incorporation.


 


7.Voting Provisions. The Series
A Convertible Preferred Stock shall have voting rights as if each share of Series A Convertible Preferred Stock were converted
into twenty thousand (20,000) shares of Common Stock.


 






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IN WITNESS WHEREOF, the
Corporation has caused this Certificate of Designation of Series A Convertible Preferred Stock to be duly executed by its President
and attested to by its Secretary this 14th day of December, 2012.


 


 


	             /s/ Ted Banzhaf                     	            /s/ Judson W. Bibb                 
	            Ted Banzhaf, President	            Judson W. Bibb, Secretary
	 	 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Attachment 1 -Form of Debenture


 


 






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