Exhibit 4.1


  






    	 



    	 



    






 


EXHIBIT A


 


enerjex
resources, inc.


 


CERTIFICATE OF DESIGNATION OF PREFERENCES,



RIGHTS AND LIMITATIONS


OF


SERIES B
CONVERTIBLE PREFERRED STOCK


 


PURSUANT
TO SECTION 78.1955 OF THE


coropration
law of the state of nevada, as amended ("NRS")


 


EnerJex
Resources, Inc., a corporation organized and existing under the Corporations Law of the State of Nevada, as amended
(the "NRS"), in accordance with Section 78.1955 of the NRS, does hereby certify that:


 


1.          The
name of the corporation is EnerJex Resources, Inc. (the "Corporation").


 


2.          The
original Articles of Incorporation of the Corporation was filed with the Secretary of State of the State of Nevada on January 23,
2002.


 


3.          Pursuant
to the authority conferred upon the Board of Directors (the "Board") by the Articles of Incorporation of the Corporation,
as amended (the "Articles of Incorporation"), and pursuant to the provisions of Section 78.1955 of the NRS, said Board
of Directors, at a lawfully called meeting held on March 6, 2015, adopted a resolution amending and restating the rights, preferences,
privileges and restrictions of, and the number of shares comprising, the Corporation's Series B Preferred Stock, which resolution
is as follows:


 


WHEREAS, the certificate
of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 25,000,000
shares, $0.001 par value per share, issuable from time to time in one or more series;


 


WHEREAS, the Board of Directors
is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation
preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and the designation
thereof, of any of them; and


 


WHEREAS, it is the desire
of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters
relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase Agreement, up
to 1,764 shares of the preferred stock which the Corporation has the authority to issue, as follows:


 


NOW, THEREFORE, BE IT RESOLVED,
that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of other securities,
rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series
of preferred stock as follows:


 




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TERMS OF PREFERRED STOCK


 


Section 1.          Definitions.
For the purposes hereof, the following terms shall have the following meanings:


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.


 


“Alternate
Consideration” shall have the meaning set forth in Section 7(e).


 


“Alternative
Redemption Amount” means, for each share of Preferred Stock, the sum of (a) the greater of (i) 100% of the Stated Value
and (ii) the product of (y) the VWAP on the Trading Day immediately preceding the date of the Triggering Event and (z) the Stated
Value divided by the then Conversion Price, (b) all accrued but unpaid dividends thereon and (c) all liquidated damages and other
costs, expenses or amounts due in respect of the Preferred Stock.


 


“Bankruptcy
Event” means any of the following events: (a) the Corporation or any Significant Subsidiary (as such term is defined
in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Corporation or any Significant Subsidiary thereof, (b) there is commenced against the Corporation or any Significant Subsidiary
thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Corporation or any Significant
Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding
is entered, (d) the Corporation or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for
it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e)
the Corporation or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Corporation
or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring
of its debts, or (g) the Corporation or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting
any of the foregoing.


 


“Base
Conversion Price” shall have the meaning set forth in Section 7(b).


 


“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 6(d).


 




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“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.


 


“Buy-In”
shall have the meaning set forth in Section 6(c)(iv).


 


“Change
of Control” shall be deemed to have occurred on the date (i) that a “person,” “group” or “entity”
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the ultimate “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have beneficial ownership of
all shares of voting stock that such person or group has the right to acquire regardless of when such right is first exercisable),
directly or indirectly, of voting stock representing more than 50% of the total voting power of the Corporation's total voting
stock; (ii) that the Corporation sells, transfers, or otherwise disposes of all or substantially all of its assets; or (iii) of
the consummation of a merger or share exchange of us with another entity where the Corporation's stockholders immediately prior
to the merger or share exchange would not beneficially own, immediately after the merger or share exchange, securities representing
50% or more of the outstanding voting stock of the entity issuing cash or securities in the merger or share exchange (without consideration
of the rights of any class of stock to elect directors by a separate group vote), or where members of the Board immediately prior
to the merger or share exchange would not, immediately after the merger or share exchange, constitute a majority of the board of
directors of the entity issuing cash or securities in the merger or share exchange. For purposes of the foregoing, any "group"
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act) that exists on the date that shares of Preferred Stock are
first issued pursuant to this Certificate shall be disregarded.


 


“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1 of the Purchase Agreement.


 


“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto and all conditions precedent to (i) each Holder’s obligations to pay the Subscription Amount and (ii) the
Corporation’s obligations to deliver the Securities have been satisfied or waived.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified or changed.


 




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“Common
Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof
to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.


 


“Conversion
Amount” means the sum of the Stated Value at issue.


 


“Conversion
Date” shall have the meaning set forth in Section 6(a).


 


“Conversion
Price” shall have the meaning set forth in Section 6(b).


 


“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in
accordance with the terms hereof.


 


“Dilutive
Issuance” shall have the meaning set forth in Section 7(b).


 


“Dilutive
Issuance Notice” shall have the meaning set forth in Section 7(b).


 


“Equity
Conditions” means, during the period in question, (a) the Corporation shall have duly honored all conversions
scheduled to occur or occurring by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates
so requested or required, if any, (b) the Corporation shall have paid all liquidated damages and other amounts owing to the applicable
Holder in respect of the Preferred Stock, (c)(i) there is an effective Conversion Shares Registration
Statement pursuant to which the Holders are permitted to utilize the prospectus thereunder to resell all of the shares of Common
Stock issuable pursuant to the Transaction Documents (and the Corporation believes, in good faith, that such effectiveness will
continue uninterrupted for the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant to the Transaction Documents
(and shares issuable in lieu of cash payments of dividends) may be resold pursuant to Rule 144 without volume or manner-of-sale
restrictions or current public information requirements as determined by the counsel to the Corporation as set forth in a written
opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders, (d) the Common Stock is
trading on a Trading Market and all of the shares of Common Stock issued at the Closing and then issuable pursuant to the Transaction
Documents are listed or quoted for trading on such Trading Market (and the Corporation believes, in good faith, that trading of
the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number
of authorized, but unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then issuable
pursuant to the Transaction Documents, (f) the issuance of the shares in question (or, in the case of a redemption, the shares
issuable upon conversion in full of the redemption amount) to the applicable Holder would not violate the limitations set forth
in Section 6(d) and Section 6(e) herein, and (g) the applicable Holder is not in possession of any information provided
by the Corporation that constitutes, or may constitute, material non-public information.


 




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“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Corporation
for services rendered to the Corporation pursuant to any stock or option plan duly adopted by a majority of the non-employee members
of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b)
securities upon the exercise or exchange of or conversion of any Securities issued pursuant to the Purchase Agreement and/or other
securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the
Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the
number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than
in connection with stock splits or combinations), and (c) securities issued pursuant to mergers, acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Corporation, provided that any such issuance shall only be to a Person
(or to the equityholders of a Person) which is, itself or through its subsidiaries, either an operating company or an owner of
an asset or assets that such disinterested directors of the Corporation determine to be synergistic with the business of the Corporation,
but shall not include a transaction in which the Corporation is issuing securities primarily for the purpose of raising capital.


 


“Fundamental
Transaction” shall have the meaning set forth in Section 7(e).


 


“GAAP”
means United States generally accepted accounting principles.


 


“Holder”
shall have the meaning given such term in Section 2.


 


“Issuable
Maximum” shall have the meaning set forth in Section 6(e).


 


“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities
which are explicitly senior or pari passu to the Preferred Stock in liquidation preference.


 


“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Liquidation”
shall have the meaning set forth in Section 5.


 


“New
York Courts” shall have the meaning set forth in Section 8(d).


 


“Notice
of Conversion” shall have the meaning set forth in Section 6(a).


 




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“Optional
Redemption Amount” means the sum of (a) 100% of the aggregate Stated Value then outstanding, (b) accrued but unpaid dividends
and (c) all liquidated damages and other amounts due in respect of the Preferred Stock.


 


“Original
Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers
of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred
Stock.


 


“Parity
Securities” means any class or series of capital stock of the Corporation that is established after the date of this
Certificate and that is not expressly subordinated or made senior to the Series B Preferred Stock as to the payment of dividends
and as to the distribution of assets upon Liquidation of the Corporation, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share thereof differ from those of the Series B Preferred Stock.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Preferred
Stock” shall have the meaning set forth in Section 2.


 


“Purchase
Agreement” means the Securities Purchase Agreement, dated on or about the Original Issue Date, among the Corporation
and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.


 


“Redemption
Date” means the date fixed for redemption of the Series B Preferred Stock and specified in any notice to holders furnished
under Section 7(d) hereof.


 


“Securities”
means the Shares, Preferred Stock, the Warrants and the Underlying Shares.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


"Series
A Preferred Stock" means the Corporation's 10% Series A Cumulative Redeemable Perpetual Preferred Stock, having the rights,
preferences, and privileges, and subject to the restrictions and limitations, set forth in that certain Amended and Restated Certificate
of Designation of Preferences, Rights and Limitations of 10% Series A Cumulative Redeemable Perpetual Preferred Stock, as filed
with the Secretary of State of the State of Nevada on June 16, 2014.


 


“Share
Delivery Date” shall have the meaning set forth in Section 6(c).


 




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“Shares”
means the shares of Common Stock issued pursuant to the Purchase Agreement.


 


“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the NYSE MKT (or any successor
entity) from the shareholders of the Corporation with respect to the transactions contemplated by the Transaction Documents, including
the issuance of all of the Shares, Conversion Shares and Warrant Shares in excess of 19.99% of the number of issued and outstanding
shares of Common Stock on the Closing Date.


 


“Stated
Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.


 


“Subscription
Amount” shall mean, as to each Holder, the aggregate amount to be paid for the Shares, Preferred Stock and Warrants purchased
pursuant to the Purchase Agreement as specified below such Holder’s name on the signature page of the Purchase Agreement
and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.


 


“Subsidiary”
means any subsidiary of the Corporation as set forth on Schedule 3.1(a) of the Purchase Agreement and shall, where applicable,
also include any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Purchase Agreement.


 


“Successor
Entity” shall have the meaning set forth in Section 7(e).


 


“Trading
Day” means a day on which the principal Trading Market is open for business.


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the
New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Certificate of Designation, the Purchase Agreement, the Warrants, all exhibits and schedules thereto
and hereto and any other documents or agreements executed in connection with the transactions contemplated pursuant to the Purchase
Agreement.


 


“Transfer
Agent” means Standard Registrar & Transfer Company Inc., the current transfer agent of the Corporation with a mailing
address of 12528 South 1840 East, Draper, UT 84020 and a facsimile number of (801) 571-8844, and any successor transfer agent of
the Corporation.


 


“Underlying
Shares” means the Conversion Shares and the Warrant Shares.


 




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“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b) of the Purchase Agreement.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading
Market and if the Corporation’s shares are then traded on the OTC Bulletin Board, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the OTC Bulletin Board is not a Trading
Market and if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Corporation, the
fees and expenses of which shall be paid by the Corporation.


 


“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the under the Purchase Agreement at the Closing thereunder
and in the form of Exhibit C attached thereto, which Warrants shall be exercisable commencing six months following the date
of Closing under the Purchase Agreement and have a term of exercise equal to five years.


 


“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.


 


Section 2.          Designation,
Amount and Par Value. The series of preferred stock shall be designated as its Series B Convertible Preferred Stock (the “Preferred
Stock”) and the number of shares so designated shall be up to 1,764 (which shall not be subject to increase without the
written consent of all of the holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)).
Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value equal to $1,000, subject to increase
set forth in Section 3 below (the “Stated Value”).


 




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Section 3.          Dividends.


 


a)           Dividends.
Holders shall be entitled to receive, and the Corporation shall pay, dividends on shares of Preferred Stock equal (on an as-if-converted-to-Common-Stock
basis) to and in the same form as dividends (other than dividends in the form of Common Stock) actually paid on shares of the Common
Stock when, as and if such dividends (other than dividends in the form of Common Stock) are paid on shares of the Common Stock.
Other than as set forth in the previous sentence, no other dividends shall be paid on shares of Preferred Stock; and the Corporation
shall pay no dividends (other than dividends in the form of Common Stock) on shares of the Common Stock unless it simultaneously
complies with the previous sentence. At the election of the Holder, any unpaid dividends hereunder shall be accreted to, and shall
increase, the outstanding Stated Value.


 


b)           Other
Securities. During the one year period following the date that Shareholder Approval is obtained and deemed effective, neither
the Corporation nor any Subsidiary thereof shall redeem, purchase or otherwise acquire directly or indirectly any Junior Securities.
So long as any Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall directly or indirectly
pay or declare any dividend or make any distribution upon (other than a dividend or distribution described in Section 6 or dividends
due and paid in the ordinary course on preferred stock of the Corporation at such times when the Corporation is in compliance with
its payment and other obligations hereunder), nor shall any distribution be made in respect of, any Junior Securities as long as
any dividends due on the Preferred Stock remain unpaid, nor shall any monies be set aside for or applied to the purchase or redemption
(through a sinking fund or otherwise) of any Junior Securities or shares pari passu with the Preferred Stock. For
the avoidance of doubt, the Corporation's shares of Series A Preferred Stock are senior to the shares of Preferred Stock issuable
hereunder and are not affected by the forgoing provisions of this Section 3(b).


 


Section 4.          Voting
Rights. Except as otherwise provided herein or as otherwise required by law, and subject to and subordinate to the rights of
the holders of the Corporations’ Series A Preferred Stock, the Preferred Stock shall have no voting rights. However, as long
as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority
of the then outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to
the Preferred Stock or alter or amend this Certificate of Designation, (b) authorize or create any class of stock ranking as to
redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or otherwise pari passu
with (provided that, for the avoidance of doubt, the Corporation's shares of Series A Preferred Stock are senior to the
shares of Preferred Stock issuable hereunder and are not affected by the forgoing provisions of this Section 4), the Preferred
Stock, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of
the Holders, (d) increase the number of authorized shares of Preferred Stock, or (e) enter into any agreement with respect to any
of the foregoing. By way of clarification and not limitation ̧ nothing in this Certificate of Designation shall not,
and no provision herein shall be interpreted to, limit the Corporation's ability and authority to: (x) authorize additional shares
of Series A Preferred Stock or issue additional shares of Series A Preferred Stock, or (y) authorize or create any class of stock
ranking as to redemption or distribution of assets upon a Liquidation that is pari passu to the Preferred Stock.


 




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Section
5.           Liquidation.
Subject to and subordinate to the rights of the holdres of the Corporation's Series A Preferred Stock, upon any liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled
to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value, plus any other
fees, liquidated damages and dividends then due and owing thereon under this Certificate of Designation, for each share of Preferred
Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation
shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed
among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon
were paid in full. The Corporation shall mail written notice of any such Liquidation, not less than 45 days prior to the payment
date stated therein, to each Holder.


 


Section
6.           Conversion.


 


a)           Conversions
at Option of Holder. Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the
Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations
set forth in Section 6(d) and Section 6(e)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion
Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex
A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares of Preferred
Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of
Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date
may not be prior to the date the applicable Holder delivers by facsimile such Notice of Conversion to the Corporation (such date,
the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall
be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. No ink-original Notice of Conversion
shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form
be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest
or mathematical error. To effect conversions of shares of Preferred Stock, a Holder shall not be required to surrender the certificate(s)
representing the shares of Preferred Stock to the Corporation unless all of the shares of Preferred Stock represented thereby are
so converted, in which case such Holder shall deliver the certificate representing such shares of Preferred Stock promptly following
the Conversion Date at issue. Shares of Preferred Stock converted into Common Stock in accordance with the terms hereof shall be
canceled and shall not be reissued.


 


b)           Conversion
Price. The conversion price for the Preferred Stock shall equal $1.75, subject to adjustment herein (the “Conversion
Price”).


 




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c)           Mechanics
of Conversion


 


i.            Delivery
of Conversion Shares Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder (A) the number of
Conversion Shares being acquired upon the conversion of the Preferred Stock, which Conversion Shares shall be free of restrictive
legends and trading restrictions, and (B) a bank check in the amount of accrued and unpaid dividends thereon. The Corporation shall
deliver the Conversion Shares electronically through the Depository Trust Company or another established clearing corporation performing
similar functions.


 


ii.         Failure
to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as
directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Corporation
at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation shall
promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation and the Holder shall promptly
return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.


 


iii.         Obligation
Absolute; Partial Liquidated Damages. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion
of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by
a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against
any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation
of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation
of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that
such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder.
In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation may not refuse
conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation
of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining
conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the Corporation posts
a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock which is subject to the
injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the
proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Corporation
shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation fails to deliver
to a Holder such Conversion Shares pursuant to Section 6(c)(i) on the second Trading Day after the Share Delivery Date applicable
to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000
of Stated Value of Preferred Stock being converted, $50 per Trading Day (increasing to $100 per Trading Day on the third Trading
Day and increasing to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for each Trading Day after
such second Trading Day after the Share Delivery Date until such Conversion Shares are delivered or Holder rescinds such conversion.
Nothing herein shall limit a Holder’s right to pursue actual damages for the Corporation’s failure to deliver Conversion
Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.


 




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iv.         Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to the
Holder, if the Corporation fails for any reason to deliver to a Holder the applicable Conversion Shares by the Share Delivery Date
pursuant to Section 6(c)(i), and if after such Share Delivery Date such Holder is required by its brokerage firm to purchase (in
an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver
in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash to such Holder
(in addition to any other remedies available to or elected by such Holder) the amount, if any, by which (x) such Holder’s
total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by
(2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage
commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of Preferred Stock equal to the number
of shares of Preferred Stock submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver to
such Holder the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its delivery
requirements under Section 6(c)(i). For example, if a Holder purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of shares of Preferred Stock with respect to which the actual
sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of
$10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder $1,000. The
Holder shall provide the Corporation written notice indicating the amounts payable to such Holder in respect of the Buy-In and,
upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue
any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Corporation’s failure to timely deliver the Conversion Shares upon conversion
of the shares of Preferred Stock as required pursuant to the terms hereof.


 




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v.           Reservation
of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock, free from
preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the
Preferred Stock), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions
set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion
of the then outstanding shares of Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.


 


vi.         Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Stock.
As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.


 


vii.         Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Preferred Stock shall be made without charge to
any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion
Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares
of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person
or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established
to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees required
for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares and all fees to the
Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic
delivery of the Conversion Shares.


 




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d)           Beneficial
Ownership Limitation. The Corporation shall not effect any conversion of the Preferred Stock, and a Holder shall not
have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the conversion set forth
on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a
group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially
owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Preferred
Stock with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are
issuable upon (i) conversion of the remaining, unconverted Stated Value of Preferred Stock beneficially owned by such Holder or
any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the
Corporation subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without
limitation, the Preferred Stock or the Warrants) beneficially owned by such Holder or any of its Affiliates.  Except as set
forth in the preceding sentence, for purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained
in this Section 6(d) applies, the determination of whether the Preferred Stock is convertible (in relation to other securities
owned by such Holder together with any Affiliates) and of how many shares of Preferred Stock are convertible shall be in the sole
discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination
of whether the shares of Preferred Stock may be converted (in relation to other securities owned by such Holder together with any
Affiliates) and how many shares of the Preferred Stock are convertible, in each case subject to the Beneficial Ownership Limitation.
To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it delivers a
Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Corporation
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder
may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s
most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by
the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares
of Common Stock outstanding.  Upon the written or oral request of a Holder, the Corporation shall within two Trading Days
confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Corporation, including the Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of Preferred Stock held by the applicable Holder. A Holder, upon notice to the Corporation, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 6(d) applicable to its Preferred Stock provided that the Beneficial Ownership Limitation
in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock upon conversion of this Preferred Stock held by the Holder and the provisions of this Section 6(d) shall
continue to apply. Any such increase of the Beneficial Ownership Limitation will not be effective until the 61st day
after such notice is delivered to the Corporation and shall apply only to such Holder and shall not apply to any other Holder.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 6(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of Preferred Stock.


 




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e)           Issuance
Limitations. Notwithstanding anything herein to the contrary, if the Corporation has not obtained Shareholder Approval, then
the Corporation may not issue, upon conversion of the Preferred Stock, a number of shares of Common Stock which, when aggregated
with any shares of Common Stock issued on or after the Original Issue Date and prior to such Conversion Date (i) in connection
with the issuance of the Shares pursuant to the Purchase Agreement, (ii) in connection with any conversion of Preferred Stock issued
pursuant to the Purchase Agreement and (iii) in connection with the exercise of any Warrants issued pursuant to the Purchase Agreement,
would exceed 1,528,621 shares of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations and
the like) (such number of shares, the “Issuable Maximum”). Each Holder shall be entitled to a portion of the
Issuable Maximum equal to the quotient obtained by dividing (x) the Holder’s original Subscription Amount pursuant to the
Purchase Agreement by (y) the aggregate original Subscription Amount of all holders pursuant to the Purchase Agreement. In addition,
each Holder may allocate its pro-rata portion of the Issuable Maximum among Shares, Preferred Stock and Warrants held by it in
its sole discretion. For avoidance of doubt, unless and until any required Shareholder Approval is obtained and effective, warrants
issued to any registered broker-dealer as a fee in connection with the Securities issued pursuant to the Purchase Agreement and
pursuant to such Holder’s Preferred Stock and Warrants was less than such Holder’s pro-rata share of the Issuable Maximum
as described in clause (iii) above shall provide that such warrants shall not be allocated any portion of the Issuable Maximum
and shall be unexercisable unless and until such Shareholder Approval is obtained and effective.


 




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Section
7.           Certain
Adjustments.


 


a)           Stock
Dividends and Stock Splits. If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common
Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion
of this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event
of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Price
shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury
shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of shares
of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 7(a) shall become effective
immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a subdivision, combination or re-classification.


 


b)           Subsequent
Equity Sales. From the Original Issue Date until the date immediately following the 10 consecutive Trading Days (the “Measurement
Period”), which Measurement Period shall have commenced only after the 12 month anniversary of the Closing Date, wherein
(i) the VWAP for each Trading Day during such Measurement Period exceeds $4.30 (subject to adjustment for forward and reverse stock
splits and the like) and (ii) for each Trading Day during such Measurement Period the daily trading volume for the Common Stock
on the principal Trading Market exceeds 200,000 shares per Trading Day (subject to adjustment for forward and reverse stock splits
and the like), if the Corporation or any Subsidiary, as applicable sells or grants any option to purchase or sells or grants any
right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition),
any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share
that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances,
collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued
shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled
to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall
be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price
shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 7(b) in respect of an Exempt Issuance.
If the Corporation enters into a Variable Rate Transaction, despite the prohibition thereon in the Purchase Agreement, the Corporation
shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at which such securities
may be converted or exercised. The Corporation shall notify the Holders in writing, no later than the Trading Day following the
issuance of any Common Stock or Common Stock Equivalents subject to this Section 7(b), indicating therein the applicable issuance
price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive
Issuance Notice”). For purposes of clarification, whether or not the Corporation provides a Dilutive Issuance Notice
pursuant to this Section 7(b), upon the occurrence of any Dilutive Issuance, the Holders are entitled to receive a number of Conversion
Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether a Holder accurately
refers to the Base Conversion Price in the Notice of Conversion.


 




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c)           Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 7(a) above, if at any time the Corporation grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then each Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred
Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation
in Section 6(d) and the Issuance Limit in Section 6(c)) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).


 


d)           Pro
Rata Distributions. If, during such time as this Preferred Stock is outstanding, the Corporation declares or makes any dividend
or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by
way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a
"Distribution"), at any time after the issuance of this Preferred Stock, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete conversion of this Preferred Stock (without regard to any
limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation in Section 6(d) and the Issuance
Limit in Section 6(c)) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution
(provided, however, to the extent that the Holder's right to participate in any such Distribution would result in
the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution
to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and
the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).


 




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e)           Fundamental
Transaction. If, at any time while this Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in one
or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property or (v) the Corporation, directly or indirectly, in one or more
related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more
than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other
Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion
of this Preferred Stock, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon
such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section
6(d) and Section 6(e) on the conversion of this Preferred Stock), the number of shares of Common Stock of the successor or acquiring
corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common
Stock for which this Preferred Stock is convertible immediately prior to such Fundamental Transaction (without regard to any limitation
in Section 6(d) and Section 6(e) on the conversion of this Preferred Stock). For purposes of any such conversion, the determination
of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion
the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any conversion of this Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of
Designation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions
and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. The Corporation shall cause
any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Corporation under this Certificate of Designation and the other Transaction
Documents in accordance with the provisions of this Section 7(e) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall,
at the option of the holder of this Preferred Stock, deliver to the Holder in exchange for this Preferred Stock a security of the
Successor Entity evidenced by a written instrument substantially similar in form and substance to this Preferred Stock which is
convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to
the shares of Common Stock acquirable and receivable upon conversion of this Preferred Stock (without regard to any limitations
on the conversion of this Preferred Stock) prior to such Fundamental Transaction, and with a conversion price which applies the
conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital
stock and such conversion price being for the purpose of protecting the economic value of this Preferred Stock immediately prior
to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder.
Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that
from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designation and the other Transaction
Documents referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise every right
and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate of Designation and
the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.


 




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f)         Calculations.
All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.


 


g)           Notice
to the Holders.


 


i.            Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation
shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.


 


ii.         Notice
to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any
sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be
filed at each office or agency maintained for the purpose of conversion of this Preferred Stock, and shall cause to be delivered
to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least twenty (20) calendar days
prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date
as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein
or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the
extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Corporation
or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to convert the Conversion Amount of this Preferred Stock (or any part hereof) during
the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as
may otherwise be expressly set forth herein.


 




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Section 8.          Optional
Redemption at Election of Corporation. Subject to the provisions of this Section 8, (i) if connection with a Change of Control
or (ii) at any time after March __, 2016, the Corporation may deliver a notice to the Holders (an “Optional Redemption
Notice” and the date such notice is deemed delivered hereunder, the “Optional Redemption Notice Date”)
of its irrevocable election to redeem some or all of the then outstanding Preferred Stock, for cash in an amount equal to, if
the Equity Conditions are then met and met during the notice period, the Optional Redemption Amount, and if the Equity Conditions
are not then met or not met during the notice period, the Alternative Redemption Amount, on the 20th Trading Day following
the Optional Redemption Notice Date (such date, the “Optional Redemption Date” and such redemption, the “Optional
Redemption”). The Optional Redemption Amount is payable in full on the Optional Redemption Date. The Corporation may
only effect an Optional Redemption if each of the Equity Conditions shall have been met on each Trading Day occurring during the
period commencing on the Optional Redemption Notice Date through to the Optional Redemption Date and through and including the
date payment of the Optional Redemption Amount is actually made. The Corporation covenants and agrees that it will honor all Notices
of Conversion tendered from the time of delivery of the Optional Redemption Notice through the date the Optional Redemption Amount
is paid in full. If any portion of the cash payment for an Optional Redemption has not been paid by the Corporation on the Optional
Redemption Date, interest shall accrue thereon until such amount is paid in full at a rate equal to the lesser of 18% per annum
or the maximum rate permitted by applicable law.


 


Section 9.          Miscellaneous.


 


a)           Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by e-mail or sent by a nationally recognized
overnight courier service, addressed to the Corporation, at 4040 Broadway, Suite 508, San Antonio, TX 78209 Attention: Chief
Executive Officer, facsimile number (210) 829-1224, or such other facsimile number, address or address as the Corporation may specify
for such purposes by notice to the Holders delivered in accordance with this Section 8. Any and all notices or other communications
or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, or sent by
a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing
on the books of the Corporation, or if no such facsimile number or address appears on the books of the Corporation, at the principal
place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder
shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next
Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii)
the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be given.


 




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b)           Absolute
Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the
obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages and any accrued dividends, as applicable,
on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.


 


c)           Lost
or Mutilated Preferred Stock Certificate. If a Holder’s Preferred Stock certificate shall be mutilated, lost, stolen
or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated
certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of
Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of
such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.


 


d)           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation
shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to
the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Certificate of Designation or the transactions contemplated hereby. If any party shall commence an action or proceeding
to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution
of such action or proceeding.


 




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e)           Waiver.
Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as
or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate
of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to
any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or
any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of
Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.


 


f)         Severability.
If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation
shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable
to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum
rate of interest permitted under applicable law.


 


g)           Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.


 


h)           Headings.
The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not
be deemed to limit or affect any of the provisions hereof.


 


i)         Status
of Converted or Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the Purchase Agreement.
If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status
of authorized but unissued shares of preferred stock and shall no longer be designated as Series B Convertible Preferred Stock.


 


*********************


 




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RESOLVED, FURTHER, that the Chairman, or Chief
Executive Officer, or the president or any vice-president, of the Corporation be and each of them hereby is authorized and directed
to prepare and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution
and the provisions of Nevada law.


 


IN WITNESS WHEREOF, the
undersigned have executed this Certificate this ___ day of _______ 2015.


 


	 	 
	 	Name:  Robert G. Watson, Jr.
	 	Title:  Chief Executive Officer


 




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ANNEX A


 


NOTICE OF CONVERSION


 


(To
be Executed by the Registered Holder in order to Convert Shares of Preferred Stock)


 


The undersigned hereby elects to convert the
number of shares of Series ___ Convertible Preferred Stock indicated below into shares of common stock, par value $0.001 per share
(the “Common Stock”), of Enerjex Resources, Inc., a Nevada corporation (the “Corporation”),
according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as may be required by the Corporation in accordance with the Purchase Agreement. No fee will be
charged to the Holders for any conversion, except for any such transfer taxes.


 


Conversion calculations:


 


Date to Effect Conversion: _____________________________________________


 


Number of shares of Preferred Stock owned prior
to Conversion: _______________


 


Number of shares of Preferred Stock to be Converted:
________________________


 


Stated Value of shares of Preferred Stock to
be Converted: ____________________


 


Number of shares of Common Stock to be Issued:
___________________________


 


Applicable Conversion Price:____________________________________________


 


Number of shares of Preferred Stock subsequent
to Conversion: ________________


 


Address for Delivery: ______________________


or


DWAC Instructions:


Broker no: _________


Account no: ___________


 


	 	[HOLDER
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


 




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