Document:

FIRST AMENDMENT TO EMPLOYMENT
AGREEMENT

 

THIS
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the
"Amendment") is dated to be effective as of June 30, 2012, by and between UNIQUE UNDERWRITERS, INC., a
Texas corporation (the “Employer”), and SAMUEL WOLFE (the “Employee”).

 

WITNESSETH:

 

WHEREAS, Employer
and Employee have entered into that certain Employment Agreement (the “Agreement”), dated August 8, 2011, pursuant
to which Employee agreed to be employed by Employer; and

 

WHEREAS,
Employer and Employee desire to enter into this Amendment, pursuant to certain provisions of the Agreement regarding compensation
and termination which have been revised; and

 

WHEREAS,
these recitals are incorporated in and made a part of this Amendment for all purposes;

 

NOW, THEREFORE,
for and in consideration of the premises, mutual promises, obligations and covenants contained herein, the parties
hereto agree as follows:

 

		1.	Section
                                                                                                                                                                                                             3.1
                                                                                                                                                                                                             a.
                                                                                                                                                                                                             and
                                                                                                                                                                                                             b.
                                                                                                                                                                                                             of
                                                                                                                                                                                                             Article
                                                                                                                                                                                                             III
                                                                                                                                                                                                             of
                                                                                                                                                                                                             the
                                                                                                                                                                                                             Agreement
                                                                                                                                                                                                             are
                                                                                                                                                                                                             hereby
                                                                                                                                                                                                             amended
                                                                                                                                                                                                             in
                                                                                                                                                                                                             their
                                                                                                                                                                                                             entireties
                                                                                                                                                                                                             to
                                                                                                                                                                                                             read
                                                                                                                                                                                                             as
                                                                                                                                                                                                             follows:
                                                                                                                                                                                                             

 

a.     
“an annual salary of $130,000.00, payable to Employee on a weekly basis; and

 

b.    
an amount equal to 5% of Total Annual Revenue received by Employer, described below, determined on a cash basis during
each fiscal year, provided and on the condition that Employee’s employment by Employer is not terminated by Employer
pursuant to Article IV hereof. “Total Annual Revenue” shall be defined herein the total revenue received by
Employer during its fiscal year from all sources, including but not limited to, insurance commissions, leads and sales of membership
packages. All payments due under this Section 3.1 shall be paid within thirty (30) days after determination of the Total Annual
Revenue by Employer.

 

2. Article IV, Section
4.1 d. of the Agreement is hereby amended in its entirety to read as 

follows:

 

“If
Employee should voluntarily terminate his employment with Employer.”

 

3. In
the event of any conflict between this Amendment and the Agreement, the terms and provisions of this Amendment shall control.
Except as otherwise provided in this Amendment, the remaining terms and provisions of the Agreement shall not be affected and
shall remain in full force and effect.

 

4. In
the event any term or provision of this Amendment is invalid or unenforceable for any reason the remaining terms and provisions
hereof shall remain in full force and effect.

 

5. This Amendment shall
be construed and enforced in accordance with the laws of

the State of Texas and is performable
in Dallas County, Texas.

 

 

EMPLOYER: 

 

UNIQUE UNDERWRITERS,
INC.

a Texas corporation

 

 

By:

Samuel Wolfe,
President & CEO

 

 

EMPLOYEE:

 

 

________________________________________________

SAMUEL WOLFE

 

    	(1)

    	 

    

 

 

EMPLOYMENT
AGREEMENT

 

 

This EMPLOYMENT
GREEMENT (the “Agreement”) is made and entered into as of the 8th day of August, 2011, by and between
UNIQUE UNDERWRITERS, INC., a Texas corporation (the “Employer”), and SAMUEL WOLFE (the “Employee”).

 

WITNESSETH:

 

WHEREAS, Employer
is engaged in business, among other things, of selling insurance products, through an agent network; and

 

WHEREAS,
Employer and Employee desire to enter into the Agreement, pursuant to which Employee will be employed by Employer; and

 

WHEREAS,
these recitals are incorporated in and made a part of this Agreement for all purposes;

 

NOW, THEREFORE,
for and in consideration of the premises, mutual promises, obligations and covenants contained herein, the parties hereto agree
as follows:

 

ARTICLE I

TERM OF EMPLOYMENT

 

Employer hereby
employs Employee, and Employee hereby accepts employment with Employer, for a period commencing on the date hereof (the “commencement
date”), and continuing until terminated as provided in this Agreement.

 

ARTICLE II

DUTIES OF EMPLOYEE

 

2.1General
Duties of Employee. Employee is hereby employed as President and CEO. Employee shall have general and active day to day management
of the business of Employer and shall see that all orders and resolutions of the board of directors are carried into effect. Employee
shall be responsible for development of business strategies, policies, and marketing programs for all of Employer’s insurance
divisions and for establishing strategic plans, short and long range goals, measurable objectives and time frames for implementing
such plans. Employee shall execute bonds, notes, documents, mortgages and any other contracts on behalf of Employer except where
the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the
corporation. In the absence of the chairman of the board or in the event the board of directors shall not have designated a chairman
of the board, the president shall preside at meetings of the shareholders and the board of directors.

 

2.2Adherence
to Rules. Employee shall adhere to and obey all rules, regulations and policies as may be adopted governing the conduct of
employees of Employer. Employee also agrees to abide by all rules and regulations imposed by any governing authority having jurisdiction
over Employer’s business operations and applicable to Employee in the course of his employment by Employer.

2.3Engagement
in Other Employment. During the term of this Agreement, Employee shall devote his entire productive time, ability and attention
to the business operations of Employer. Employee shall not, without the consent of Employer, directly or indirectly, alone or as
a partner, officer, director, stockholder, employee or consultant of any other person, entity, association, agency, organization
or institution be engaged in any other profession or business which would necessitate Employee’s giving any portion of his
time and effort to such activity as deemed significant by Employer. Furthermore, during the term of this Agreement, and for a period
of thirty-six (36) months thereafter, Employee shall not circumvent Employer financially, or in any other way, or to a client of
Employer pursuant to this Agreement.

 

    	(2)

    	 

    
 

ARTICLE III

COMPENSATION

 

3.1Compensation.
As total compensation for Employee’s services rendered hereunder, Employee shall be entitled to receive from Employer the
following:

 

		a.	an annual salary of $100,000.00, payable to Employee on a weekly basis; and

 

		b.	an
                                                                                                                                                   amount
                                                                                                                                                   equal
                                                                                                                                                   to
                                                                                                                                                   5%
                                                                                                                                                   of
                                                                                                                                                   Submitted
                                                                                                                                                   Production
                                                                                                                                                   from
                                                                                                                                                   the
                                                                                                                                                   Mortgage
                                                                                                                                                   and
                                                                                                                                                   Final
                                                                                                                                                   Expense
                                                                                                                                                   divisions,
                                                                                                                                                   described
                                                                                                                                                   below,
                                                                                                                                                   determined
                                                                                                                                                   on
                                                                                                                                                   a
                                                                                                                                                   cash
                                                                                                                                                   basis
                                                                                                                                                   during
                                                                                                                                                   each
                                                                                                                                                   fiscal
                                                                                                                                                   year,
                                                                                                                                                   provided
                                                                                                                                                   and
                                                                                                                                                   on
                                                                                                                                                   the
                                                                                                                                                   condition
                                                                                                                                                   that
                                                                                                                                                   Employee’s
                                                                                                                                                   employment
                                                                                                                                                   by
                                                                                                                                                   Employer
                                                                                                                                                   is
                                                                                                                                                   not
                                                                                                                                                   terminated
                                                                                                                                                   by
                                                                                                                                                   Employer
                                                                                                                                                   pursuant
                                                                                                                                                   to
                                                                                                                                                   Article
                                                                                                                                                   IV
                                                                                                                                                   hereof.
                                                                                                                                                   “Submitted
                                                                                                                                                   Production”
                                                                                                                                                   shall
                                                                                                                                                   be
                                                                                                                                                   defined
                                                                                                                                                   herein
                                                                                                                                                   as
                                                                                                                                                   any
                                                                                                                                                   insurance
                                                                                                                                                   business
                                                                                                                                                   submitted
                                                                                                                                                   to
                                                                                                                                                   Employer
                                                                                                                                                   through
                                                                                                                                                   the
                                                                                                                                                   efforts
                                                                                                                                                   of
                                                                                                                                                   Employee.
                                                                                                                                                   “Mortgage
                                                                                                                                                   and
                                                                                                                                                   Final
                                                                                                                                                   Expense
                                                                                                                                                   divisions”
                                                                                                                                                   shall
                                                                                                                                                   be
                                                                                                                                                   defined
                                                                                                                                                   herein
                                                                                                                                                   as
                                                                                                                                                   two
                                                                                                                                                   different
                                                                                                                                                   distribution
                                                                                                                                                   channels
                                                                                                                                                   with
                                                                                                                                                   different
                                                                                                                                                   agents
                                                                                                                                                   and
                                                                                                                                                   sales
                                                                                                                                                   platforms,
                                                                                                                                                   such
                                                                                                                                                   that
                                                                                                                                                   “Mortgage”
                                                                                                                                                   generates
                                                                                                                                                   leads
                                                                                                                                                   from
                                                                                                                                                   people
                                                                                                                                                   that
                                                                                                                                                   are
                                                                                                                                                   new
                                                                                                                                                   and
                                                                                                                                                   existing
                                                                                                                                                   home
                                                                                                                                                   owners
                                                                                                                                                   and
                                                                                                                                                   from
                                                                                                                                                   people
                                                                                                                                                   that
                                                                                                                                                   have
                                                                                                                                                   refinanced
                                                                                                                                                   on
                                                                                                                                                   their
                                                                                                                                                   homes
                                                                                                                                                   and
                                                                                                                                                   “Final
                                                                                                                                                   Expense”
                                                                                                                                                   generates
                                                                                                                                                   leads
                                                                                                                                                   from
                                                                                                                                                   lower
                                                                                                                                                   income
                                                                                                                                                   seniors
                                                                                                                                                   ages
                                                                                                                                                   50
                                                                                                                                                   –
                                                                                                                                                   85.
                                                                                                                                                   All
                                                                                                                                                   payments
                                                                                                                                                   due
                                                                                                                                                   under
                                                                                                                                                   this
                                                                                                                                                   Section
                                                                                                                                                   3.1
                                                                                                                                                   shall
                                                                                                                                                   be
                                                                                                                                                   paid
                                                                                                                                                   within
                                                                                                                                                   thirty
                                                                                                                                                   (30)
                                                                                                                                                   days
                                                                                                                                                   after
                                                                                                                                                   determination
                                                                                                                                                   of
                                                                                                                                                   the
                                                                                                                                                   Submitted
                                                                                                                                                   Production
                                                                                                                                                   by
                                                                                                                                                   Employer
                                                                                                                                                   for
                                                                                                                                                   the
                                                                                                                                                   period
                                                                                                                                                   in
                                                                                                                                                   question.

 

ARTICLE IV

TERMINATION
OF EMPLOYMENT

 

4.1Events
Causing Termination. Employee’s employment with Employer and all Employer’s obligations under this Agreement shall
immediately terminate, without liability to Employer, upon the occurrence of any one of the following events:

 

		a.	Employee’s death;

 

		b.	Employee’s permanent disability as determined by the Employer;

 

		c.	Employee is convicted by a court of competent jurisdiction of fraud, misappropriation, embezzlement,
dishonesty, or other similar act; or

 

		d.	both Employee and Ralph Simpson agree that Employee should voluntarily terminate his employment
with Employer.

 

4.2Effect
of Termination:

4.2.1Benefits
Generally. In the event of Employee’s ceasing to be employed by Employer for any reason whatsoever, all benefits shall
immediately cease, subject to applicable law regarding continuation of benefits beyond a term of employment. Furthermore, if the
Agreement shall be terminated then any rights that Employee may have to any stock options, warrants, right to receive shares or
similar rights to receive stock in the Employer shall become immediately null and void and of no further force and effect.

 

4.2.2 Books
and Records. Upon termination of Employee pursuant to this Agreement, all books, records, journals, diaries, devices, records,
data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory notebooks, materials,
flow charts, equipment, other documents or property, or reproductions of any of the aforementioned items or personal and regular
files concerning Employer, Employer’s business operations and the employment of Employee with Employer (collectively, the
“Books and Records”) shall belong to and remain the property of Employer. Employee agrees that at the time of
his termination he shall deliver the Books and Records to the Employer (and will not keep in his possession, recreate or deliver
the Books and Records to anyone else). Employee further agrees that any property situated on the Employer’s premises and
owned by the Employer, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by
Employer personnel at any time with or without notice.

 

4.3Survival
of Remedies. No termination of the Employee’s employment with Employer or of this Agreement shall prejudice any other
remedy that Employer may be entitled to, either at law, in equity, or under this Agreement.

 

ARTICLE V

RESTRICTIVE COVENANTS

 

5.1Restrictive Covenant.
In consideration of the specialized training provided and to be provided by Employer to Employee, during Employee’s employment
with Employer, with respect to the insurance business, Employee agrees that, for a period of thirty six (36) months following the
termination of his employment by Employer pursuant to the Agreement, Employee shall not (i) perform services in any manner of the
kind performed for Employer hereunder for any person entity, association, agency, organization or institution that is a competitor
of Employer and is located or doing business in the State of Texas, or (ii) perform services in a manner of the kind performed
for Employer hereunder for any person, entity, association, agency, organization or institution that is a competitor of Employer
and that had a material contract or arrangement with Employer for services during Employee’s term of employment. For purposes
of this Section 5.1, a person, entity, association, agency, organization or institution will constitute a competitor of
Employer if he, she or it is, or his, her or its business is reasonably characterized as being similar to Employer’s business.

 

It is understood
and agreed that the covenants contained in this Section 5.1 are reasonable as to time, area, and scope and do not impose
a greater restraint on Employee in light of the Employee’s activities on behalf of Employer and the business of Employer
and its future plans on the date of execution of the Agreement. Employee further agrees that the covenants and agreements contained
in this Section 5.1 are supported by the independent valuable consideration of the inducement for the Employer to retain
the services of the Employee.

 

5.2Confidential
Information: Intellectual Property.

 

a.               
Employee acknowledges that Employee will have access to various confidential or proprietary information concerning Employer
of a special and unique value, which information may include, without limitation, (i) books and records relating to operations,
financial condition, sales, personnel, payroll and management, (ii) policies and matters relating to the operations of Employer;
(iii) various trade or business secrets, including business strategies, insurance policies and products, plans and programs, business
opportunities, marketing or business diversification plans, business development and bidding techniques, methods and processes,
financial data and the like, and (iv) selling techniques, operations information, sales information, distribution information,
customer and prospect lists, customer needs, marketing concepts, and methods and techniques in conducting Employer’s business
operations and similar materials (all such information concerning Employer being hereinafter collectively referred to as the “Protected
Information”). Employee further recognized, acknowledges and agrees that all aspects of Employer’s business operations
are, and shall remain, as between Employer and Employee, Employer’s exclusive property and are special and unique.

 

b.               
Employee shall not following the termination of his employment, knowingly make any independent use of or disclose to any
other person or organization any of the Protected Information.

 

c.               
Employee shall promptly disclose to Employer any and all strategies, policies, plans, programs and systems, marketing concepts
and other ideas and improvements to Employer’s business operations, whether or not capable of being protected under any intellectual
property law or common law concepts, which are conceived or made by Employee, solely or jointly with another person, during the
period of Employee’s employment with Employer and Employee hereby assigns and agrees to assign all Employee’s interests
therein to Employer or to Employer’s designee. Employee shall execute any and all applications, assignments or other instruments
which Employer shall deem necessary to protect Employer’s interest therein.

 

5.3Solicitation
of Employees, Consultants and Other Parties. Employee agrees that during the term of his employment pursuant to the Agreement,
and for a period thirty six (36) months following the termination of his employment by Employer pursuant to the Agreement,
Employee shall not either directly or indirectly solicit, induce, recruit or encourage any of the
Employer’s employees or consultants to terminate their relationship with the Employer, or take away, hire, or otherwise engage
the services of such employees or consultants, or attempt to solicit, induce, recruit, encourage or take away employees or consultants
of the Employer, either for himself or for any other person or entity. Furthermore, for a period of thirty six (36) months following
the termination of his employment with the Employer pursuant to the Agreement, Employee shall not solicit any licensor to or customer
of the Employer or licensee of the Employer’s products, in each case, that are known to him, with respect to any business,
products or services that are competitive to the products or services offered by the Employer or under development as of the date
of the termination of his employment with the Employer pursuant to the Agreement.

5.4Remedies.
In the event of a breach or threatened breach by Employee of the provisions of the Agreement, Employer and Employee agree that
Employer will be irreparably harmed thereby and that Employer shall be entitled to injunctive relief restraining or enjoining Employee
from competing with Employer, or from using or disclosing, in whole or in part, the Protected Information, and/or the Books and
Records, all as set forth in this Agreement. Nothing herein shall prohibit Employer from pursing any other remedy available to
it for such breach or threatened breach, including the recovery of damages and attorney’s fees from Employee.

 

5.5Survival
of Remedies. The covenants and agreements contained in this Article V shall survive the termination of Employee’s
employment with Employer.

 

    	(3)

    	 

    
 

ARTICLE
VI

GENERAL PROVISIONS

 

6.1Notice.
Any notices to be given hereunder by either party to the other may be effected either by personal delivery in writing or by mail
if sent certified, postage prepaid, with return receipt requested. Mailed notices shall be deemed given when mailed and shall be
addressed to the parties at the following addresses:

 

 

If to Employer:Unique
Underwriters, Inc.

5650 Colleyville
Blvd.

Colleyville,
TX 76034

Attn: President

 

If to Employee:SAMUEL
WOLFE

___________________________

___________________________

 

6.2Inclusion
of Entire Agreement Herein. The Agreement supersedes any and all other agreements, either oral or in writing, between the parties
hereto with respect to the employment of Employee by Employer and contains all of the covenants and agreements between the parties
with respect to such employment in any manner whatsoever.

 

6.3Successors
and Assigns. The Agreement shall inure to the benefit of Employer, its successors and assigns. Employee may not assign his
obligations under this Agreement or assign or otherwise convey any of his rights hereunder, nor subcontract or otherwise delegate
any of his obligations hereunder, to any third party. Any attempted or purported assignment, conveyance, subcontract, or delegation
shall be void and a material breach of the Agreement.

 

6.4Representation
and Warranty. Employee represents and warrants that Employee has not previously assumed any obligations inconsistent with those
of this Agreement or which would prevent or inhibit his performance of his duties pursuant to this Agreement.

 

6.5Waiver.
The waiver by any party of a default or a breach of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent default or breach. No waiver shall be binding unless reduced to a writing signed by the
party against whom the waiver is sought to be enforced.

 

6.6Governing
Law; Venue. The Agreement shall be governed by and construed in accordance with the laws of the State of Texas and the laws
of the United States applicable to transactions in the state of Texas. Any action or proceeding brought to enforce or interpret
the provisions of the Agreement shall be brought in the courts for the Northern District of Texas (if subject to the jurisdiction
of the federal courts) or the County of Tarrant, State of Texas (if not subject to the jurisdiction of the federal courts). Each
of the parties irrevocably submits itself to the jurisdiction and venue of such courts for purposes of any such action. The prevailing
party in any legal proceeding between the parties shall be entitled to recover, in addition to any other relief awarded, its costs
and expenses incurred in any such proceeding, including, without limitation, its attorneys fees, expert witnesses and court costs.

 

6.7Modification.
No modification or amendment to this Agreement shall be binding unless consented to in writing by both parties.

 

6.8Partial
Invalidity. If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to
be invalid, void, or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.

 

6.9Counterparts.
This Amendment may be executed in two counterparts, each of which will be deemed an original and all of which together will constitute
one instrument.

 

6.10Survival.
The terms and conditions of this Agreement shall survive the termination of the Agreement.

6.11ADVICE
OF COUNSEL. EMPLOYEE ACKNOWLEDGES THAT, IN EXECUTING THE AGREEMENT, HE HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT
LEGAL COUNSEL, AND HAS READ AND UNDERSTANDS ALL OF THE TERMS AND PROVISIONS OF THE AGREEMENT. THE AGREEMENT SHALL NOT BE CONSTRUED
AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION THEREOF.

EXECUTED as of the date first
written above.

 

 

EMPLOYER:

 

UNIQUE
UNDERWRITERS, INC.

a Texas
corporation

 

 

	By:	/s/ Ralph Simpson
	 	
        Ralph Simpson

        Chief Financial Officer and Controller,
        Chairman and Founder (Director)

	 	 	 

 

 

EMPLOYEE:

 

	/s/ Samuel Wolfe	 	CEO and President
	Samuel Wolfe	(Director)certdes.htm

CERTIFICATE OF DESIGNATION

OF

8% SERIES D CONVERTIBLE PREFERRED STOCK

OF

PREMIER ALLIANCE GROUP, INC.

Pursuant to Delaware General Corporation Law

Premier Alliance Group, Inc., a Delaware corporation (the “Company”), hereby certifies, that pursuant to the authority expressly vested in the Board of Directors of the Company by the Certificate of Incorporation (the “Certificate of Incorporation”), the Board of Directors has duly adopted the following resolutions.

 

RESOLVED, that, pursuant to Article FOURTH of the Certificate of Incorporation (which authorizes a total of 10,000,000 shares of preferred stock, $.001 par value per share (the “Preferred Stock”), the Board of Directors of the Company hereby sets forth the powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of a series of the Preferred Stock designated the 8% Series D Convertible Preferred Stock.

 

RESOLVED, that each share of such series of the 8% Series D Preferred Stock shall rank equally in all respects and shall be subject to the following provisions:

 

1.           Stated Value.  The stated value of the 8% Series D Preferred Stock shall be $1,000.00 per share, subject to adjustment for Series D Preferred Stock splits, dividends, combinations and related transactions with respect to the Series D Preferred Stock.

 

2.           Number and Designation.  15,000 shares of the Preferred Stock of the Company shall be designated as 8% Series D Convertible Preferred Stock (the “Series D Preferred Stock”).

 

3.           Rank.  The Series D Preferred Stock shall rank, with respect to rights on liquidation, dissolution and winding up, (i) senior to (A) the Company’s common stock, $.001 par value per share (“Common Stock”), and (B) each other class of capital stock of the Company or series of Preferred Stock of the Company established hereafter by the Board of Directors of the Company, the terms of which do not expressly provide that it ranks senior to, or on a parity with, the Series D Preferred Stock as to rights on

 

  

  

  

liquidation, dissolution and winding up of the Company (the securities in this clause (i) collectively referred to as “Junior Securities”); (ii) on a parity with the Company’s outstanding 7% Series B Convertible Preferred Stock, $.001 par value per share (the “Series B Preferred Stock”) and the Company’s outstanding 7% $2.10 Series C Preferred Stock (the “Series C Preferred Stock”) and each other class of capital stock of the Company or series of Preferred Stock of the Company established hereafter by the Board of Directors of the Company, the terms of which expressly provide that such class or series will rank on a parity with the Series D Preferred Stock as to rights on liquidation, dissolution and winding up of the Company (the securities in this clause (ii) collectively referred to as “Parity Securities”); and (iii) junior to each other class of capital stock of the Company or series of Preferred Stock of the Company established hereafter by the Board of Directors of the Company, the terms of which expressly provide that such class or series will rank senior to the Series D Preferred Stock as to rights on liquidation, dissolution and winding up of the Company (the securities in this clause (iii) collectively referred to as “Senior Securities”).  The definitions of Junior Securities, Parity Securities and Senior Securities also shall include any rights or options exercisable for or convertible into any of the Junior Securities, Parity Securities and Senior Securities, as the case may be.

 

4.Dividends.

 

(a) Dividend Periods.  Subject to the prior and superior right of the holders of any shares of any series of Preferred Stock ranking senior to the Series D Preferred Stock with respect to dividends, each holder of Series D Preferred Stock is entitled to receive out of funds legally available for the payment of dividends, semi-annual dividends payable in cash or Common Stock, at the Company’s discretion, on the 15th day of May and the 15th day of November of each year (the “Dividend Payment Dates” and each 6-month period preceding such date and ending April 30 and October 31. respectively, being a “Dividend Period”) in an amount per share determined at the rate of 8% per annum of the Original Issue Price (as defined below)(except that the first Dividend Period for each share of Series D Preferred Stock shall be from the date of issuance of such share to April 30, 2013.)  The Company, at its election, may pay some or all of the dividend on the Series D Preferred Stock (the elected amount being called the “Common Stock Dividend Amount”) by issuing to the holders of the Series D Preferred Stock, pari passu with the Series D Preferred Stock held by them, a number of shares of Common Stock of the Company, par value $.001 per share (“Common Stock”) computed by dividing the Common Stock Dividend Amount by the volume weighted average price of the Common Stock based on its closing price on the exchange where the same is traded, for the five (5) trading days prior to January 15 or July 15 of the year in question, as the case may be.

 

(b) Computation.  Dividends paid on each Dividend Payment Date pursuant to paragraph 4(a) are payable in arrears with respect to the immediately preceding Dividend Period or portion thereof.  Such dividends will accrue from the date of issue whether or not in any Dividend Period

 

  

  

  

 or Periods there are funds of the Company legally available for the payment of such dividends.  Dividends will be computed on the actual number of days elapsed over six 30-day months and a 360-day year.  No interest, or sum of money in lieu of interest, will be payable in respect of any dividend payment or payments on the Series D Preferred Stock that may be in arrears.

 

(c) Parity Securities.  So long as any shares of the Series D Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, will be declared or paid or set apart for payment on Parity Securities, for any period unless (in addition to obtaining any consents required elsewhere in this Certificate of Designation) in each case (i) full dividends have been or contemporaneously are paid or a sum sufficient for such payment is set apart on the Series D Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of the dividend on such class or series of Parity Securities, and (ii) the holders of the Series D Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series D Preferred Stock in an amount at least equal to that dividend per share of Series D Preferred Stock as would equal the product of (A) the dividend payable on each share of such Parity Securities determined as if all shares of such Parity Securities had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Series D Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend.  When dividends are not paid in full or a sum sufficient for such payment is not set apart as aforesaid, all dividends to be paid upon shares of the Series D Preferred Stock and all dividends to be paid upon any other class or series of Parity Securities will be paid ratably in proportion to the respective amounts of dividends accrued on the Series D Preferred Stock and accrued and unpaid on such Parity Securities.

 

(d) Junior Securities.  So long as any shares of Series D Preferred Stock are outstanding, no dividends (other than dividends paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Securities) will be declared or paid or set apart for payment or other distribution on Junior Securities unless (in addition to obtaining any consents required elsewhere in this Certificate of Designation) in each case (i) the full dividends on all outstanding shares of the Series D Preferred Stock and any Parity Securities have been paid for all past Dividend Periods with respect to the Series D Preferred Stock and all past dividend periods with respect to such Parity Securities, (ii) sufficient funds will have been paid or set apart for the payment of the dividend for the current Dividend Period with respect to the Series D Preferred Stock and the current dividend period with respect to such Parity Securities, and (iii) the holders of the Series D Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series D Preferred Stock in an amount at least equal to that dividend per share of Series D Preferred Stock as would equal the product of (A) the dividend payable on each share of such Common Stock or other Junior Securities determined, if applicable, as if all shares of such Junior Securities had been converted into Common Stock and (B) the

 

  

  

  

number of shares of Common Stock issuable upon conversion of a share of Series D Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend.

 

5. Liquidation Preference.

 

(a) In the event of any merger, sale (of substantially all of the Company’s stock or assets) or liquidation of the Company, whether voluntary or involuntary (a “Liquidation Event”), before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of Junior Securities and after and subject to the payment in full of all amounts required to be distributed to the holders of the Senior Securities in the event of any liquidation, dissolution or winding up of the Company, the holders of Series D Preferred Stock shall be entitled to receive in preference to the holders of Common Stock and pari passu with the holders of the Company’s Series B and Series C Preferred Stock an amount per share (the "Liquidation Preference") equal to the sum of (a) the Purchase Price and (b) any declared but unpaid dividends. If, upon the occurrence of any Liquidation Event, the assets of the Company, or proceeds thereof, distributable after payment in full of the Senior Securities shall be insufficient to pay in full the preferential amount aforesaid to the holders of the shares of Series D Preferred Stock and liquidating payments on any Parity Securities, then the assets of the Company, or the proceeds thereof, shall be distributed among the holders of shares of Series D Preferred Stock and any such Parity Securities ratably in accordance with the respective amounts that would be payable on such shares of Series D Preferred Stock and any such Parity Securities if all amounts payable thereon were paid in full.

 

(b) Unless waived by the holders of a majority of the Series D Preferred Stock then outstanding, the occurrence of any of the following events shall be deemed to be a Liquidation Event:

 

(i) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which either (A) a majority of the outstanding shares of capital stock are exchanged for other securities or consideration or (B) the Company shall not be the continuing or surviving entity of such consolidation, merger or reorganization;

 

(ii) any transaction or related transactions occurring after the Original Issue Date (as defined below) as a result of which securities representing in excess of 50% of the Company’s voting power are transferred and/or issued; or

 

(iii) any sale or transfer (including, without limitation, by merger, consolidation or reorganization) in any transaction or series of related transactions of all or substantially all of the assets of the Company and its subsidiaries taken as a whole.

 

(c) Subject to the rights of the holders of any Senior Securities or Parity Securities, after payment shall have been made in full to the holders of the Series D Preferred Stock, as provided in

 

  

  

  

paragraph 5(a), any other series or class or classes of Junior Securities shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed to holders of capital stock of the Company, and the holders of the Series D Preferred Stock shall not be entitled to share therein.

 

6. Redemption Rights.   In the event that the volume weighted average price of the Common Stock based on the closing price on the exchange in which the same is traded, shall exceed $2.50 for any 30 consecutive trading days (which $2.50 shall be adjusted for Common Stock dividends Common Stock splits, Common Stock combinations and recapitalizations involving the Common Stock), the Company may elect, within 60 days thereafter to redeem the Series D Preferred Stock for the sum per share of $1,000.00 plus all accrued but unpaid dividends, by notice given to the holders of the Series D Preferred Stock, stating that payment will be made within five (5) business days after the date such notice is given, upon tender of the certificates representing the Series D Preferred Stock and a completed transmittal letter in the form provided by the Company with such notice.

 

7. Conversion Rights.

 

(a) Conversion at the Option of the Holder.

 

(i) Subject to the provisions of this paragraph 7, each holder of Series D Preferred Stock shall have the right, at such holder’s option, at any time or from time to time, to convert each share of Series D Preferred Stock into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price by the “Conversion Price” at the time in effect for such share.  The initial “Conversion Price” per share for Series D Preferred Stock shall be $0.75; provided, however, that the Conversion Price in effect from time to time for each series of Preferred Stock shall be subject to adjustment as provided hereinafter. The holder of any shares of Series D Preferred Stock exercising the aforesaid right to convert such shares into shares of Common Stock shall be entitled to receive, in cash, an amount equal to all declared but unpaid dividends, if any, with respect to such shares of Series D Preferred Stock up to and including the respective conversion date of the Series D Preferred Stock.

 

(ii) Each share of Series D Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price immediately prior to the close of business on the date of any of the following events: (A) the closing of a public offering of Common Stock with a public offering price of at least 200% of the then Conversion Price and gross proceeds of at least $10 million; (B) the affirmative vote of the holders of a majority of the Series D Preferred Stock then outstanding; or (C) the second anniversary of the first date of issuance of the Series D Preferred Stock.

 

  

  

  

(iii) In order for any holder to exercise the conversion option set forth in paragraph 7(a)(i), such holder shall execute the conversion election on the reverse side of the certificate evidencing the Series D Preferred Stock being converted and shall deliver such certificate to the Company at its principal office, setting forth in the conversion election the name or names in which the certificate or certificates for shares of Common Stock are to be issued.  The conversion election shall be deemed to be effective upon receipt by the Company.  If the conversion election is received by the Company after 3:00 p.m. Eastern Time on any day, it shall be deemed to be received the next following business day (in either case, the “Effective Date”).  The Company shall, as soon as practicable, but not later than five (5) business days after the date of receipt of the conversion election, issue and deliver to the location designated by such holder, the certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as a result of such conversion.  The person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of the Effective Date of such conversion.

 

(b) No Fractional Shares.  The Company shall not issue fractional shares of Common Stock upon conversion of the Series D Preferred Stock, but in lieu of fractional shares, the Company shall round up to the nearest whole number of shares of Common Stock to be issued.

 

(c) Reservation of Shares.  The Company covenants and agrees that all shares of Common Stock that may be issued upon the conversion of the Series D Preferred Stock will, upon issuance, be validly issued and outstanding, fully paid and non-assessable, and free from all taxes, liens and charges with respect to the issuance thereof.  The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the conversion of the Series D Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to permit conversion of the Series D Preferred Stock, the Company will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

 

(d) Adjustments.  In case the Company shall at any time after the first date of issue of the Series D Preferred Stock (the “Original Issue Date”) (A) declare a dividend or make a distribution on Common Stock payable in Common Stock, (B) subdivide or split the outstanding Common Stock, (C) combine or reclassify the outstanding Common Stock into a smaller number of shares or (D) consolidate with, or merge with or into, any other Person (“Person” as used herein means any corporation, limited liability company, partnership, trust, organization, association, other entity or individual), or engage in any reorganization, reclassification or recapitalization that is effected in such a manner that the holders of Common Stock are entitled to receive stock, securities, cash or other assets with respect to or in exchange for Common Stock (other than as a cash dividend or distribution declared by the Company), then, the

 

  

  

  

number of shares of Common Stock and the kind and amount of stock, securities, cash or other assets issuable upon conversion of the Series D Preferred Stock in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, split, combination, consolidation, merger, reorganization, reclassification or recapitalization shall be adjusted so that the conversion of the Series D Preferred Stock after such time shall entitle the holder to receive the aggregate number of shares of Common Stock or securities, cash and other assets which, if the Series D Preferred Stock had been converted into Common Stock immediately prior to such time, such holder would have owned upon such conversion and been entitled to receive by virtue of such dividend, distribution, subdivision, split, combination, consolidation, merger, reorganization, reclassification or recapitalization.  Such adjustment shall be made successively whenever any event listed above shall occur.

 

If at any time as a result of the provisions of this paragraph 7(d), the holder of the Series D Preferred Stock upon subsequent conversion shall become entitled to receive any securities other than Common Stock, the number and kind of such other securities so receivable upon conversion of this Series D Preferred Stock shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein.

 

(e) Upon the occurrence of each adjustment or readjustment pursuant to paragraph 7(d), the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series D Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.  The Company shall, upon the written request at any time of any holder of Series D Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment or readjustment, (B) the Conversion Price then in effect and (C) the number of shares of Common Stock that should be received upon conversion of a share of Series D Preferred Stock.

 

(f) Shares of Series D Preferred Stock that are converted into shares of Common Stock or any other class of the Company’s capital stock shall be cancelled and shall not be reissued.

 

(g) The Company will not, by amendment of its certificate of incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this paragraph 7 and in the taking of all such actions as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series D Preferred Stock against impairment.

 

8. Voting Rights.

 

  

  

  

(a) In addition to any voting rights required by law and the special voting rights provided in this Certificate of Designation, the holders of Series D Preferred Stock shall have the right to one vote for each share of Common Stock into which such share of Series D Preferred Stock could then be converted (with any fractional share determined on an aggregate conversion basis being rounded to the nearest whole share), and with respect to such vote such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of shares of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the by-laws of the Company, and shall be treated for all purposes (including, without limitation, the determination of the presence of a quorum), and entitled to vote, together with holders of Common Stock as a single class, with respect to any issue, election, question or matter upon which holders of Common Stock have the right to vote.

 

(b) Each issued and outstanding share of Series D Preferred Stock shall be entitled to one vote if entitled to vote as a separate class and the holders of a majority of the Series D Preferred Stock entitled to vote shall bind the entire class of Series D Preferred Stock.  The Company shall give the holders of the Series D Preferred Stock at least 20 days’ prior notice of any matter to be submitted to the Series D Preferred Stockholders for a vote as a separate class.

 

(c) In addition to any other rights provided by law or set forth herein, so long as any shares of Series D Preferred Stock are outstanding, the Company shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of a majority of the outstanding shares of Series D Preferred Stock:

 

(i) authorize, create or issue any shares of any class or series of stock (or issue any securities that are convertible into or exercisable for such a class or series) that are on a parity with or senior to the Series D Preferred Stock with respect to the payment of dividends or the distribution of assets on liquidation;

 

(ii) issue any additional Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock or any securities that are convertible into or exercisable for Series B Preferred Stock or Series C Preferred Stock or Series D Preferred Stock;

 

(iii) declare or pay any dividend on (including a dividend payable in stock of the Company), make any other distribution with respect to, or repurchase, any stock of the Company (or any other securities that are convertible into or exercisable for such stock) that is junior to or on a parity with the Series D Preferred Stock with respect to the payment of dividends or the distribution of assets upon liquidation; provided, however, that the Company may repurchase Common Stock owned by terminated employees of, or consultants to, the Company or its subsidiaries;

 

  

  

  

(iv) effect any merger or consolidation of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which either (A) a majority of the outstanding shares of capital stock are exchanged for other securities or consideration or (B) the Company shall not be the continuing or surviving entity of such consolidation, merger or reorganization;

 

(v)   sell, lease, exchange or otherwise dispose of, in a single transaction or a series of related transactions, all or substantially all of the assets of the Company, effect any recapitalization of the Company, or effect any other Liquidation Event;

 

(vi)   amend the Company’s certificate of incorporation or the Company’s by-laws in any manner that adversely affects, alters, repeals, changes or otherwise impairs any of the powers, preferences, rights or privileges of the Series D Preferred Stock (whether directly, by the filing of a certificate of designation, by reorganization, share exchange, consolidation, conversion or merger or otherwise),

 

(vii) change the nature of the Company’s and its subsidiaries’ business;

 

(viii) enter into a transaction with any affiliate of the Company other than a transaction determined by the Company’s Board of Directors to be on arm’s length terms; or

 

(ix) cause or permit any subsidiary of the Company directly or indirectly to take any actions described in clauses (i) through (viii) above, other than issuing securities to the Company.

 

9. Amendments and Other Actions.  Notwithstanding anything to the contrary in this Certificate of Designation and unless otherwise required by applicable law, the Company when authorized by resolutions of its Board of Directors, may amend or supplement its Certificate of Incorporation without the consent of any holder of Series D Preferred Stock or any holder of Common Stock to cure any ambiguity, defect or inconsistency in this Certificate of Designation that establishes the Series D Preferred Stock.

 

IN WITNESS WHEREOF, Premier Alliance Group, Inc. has caused this Certificate of Designation to be signed and attested by the undersigned this 19th day of December 2012.

 

PREMIER ALLIANCE GROUP, INC.

By:_________________________________

            Mark Elliott, CEO and President

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