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<P id=PARA5 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>FORM 8-K</B></FONT></P>
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<P id=PARA7 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">CURRENT REPORT</FONT></P>
<P id=PARA8 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">PURSUANT TO SECTION 13 OR 15(d) OF THE</FONT></P>
<P id=PARA9 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">SECURITIES EXCHANGE ACT OF 1934</FONT></P>
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<P id=PARA12 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Date of report (Date of earliest event reported) November 25, 2014</FONT></P>
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<P id=PARA14 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman, Times, serif"><B>PSM Holdings, Inc.</B></FONT></P>
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<P id=PARA17 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Delaware</B></FONT></P></TD>
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<P id=PARA18 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>000-54988</B></FONT></P></TD>
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<P id=PARA19 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>90-0332127</B></FONT></P></TD></TR>
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<P id=PARA25 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>5900 Mosteller Drive, Oklahoma City, OK</B></FONT></P></TD>
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<P id=PARA26 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>73112</B></FONT></P></TD></TR>
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<P id=PARA27 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Address of Principal Executive Offices)</FONT></P></TD>
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<P id=PARA31 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Registrant&#8217;s telephone number, including area code: <B>(575) 624-4170</B></FONT></P>
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<P id=PARA33 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P>
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<P id=PARA49 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 1.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B><B>Entry into a Material Definitive Agreement.</B></FONT></P>
<P id=PARA50 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA51 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On November 26, 2014, PSM Holdings, Inc., a Delaware corporation (the &#8220;<B>Company</B>&#8221;) entered into a Stock Purchase Agreement dated effective November 24, 2014 (the &#8220;<B>Series E </B><B>SPA</B>&#8221;) providing for the issuance and sale of up to $1,250,000 of the Company&#8217;s Series E 6% Convertible Preferred Stock (1,250 shares) at a purchase price of $1,000 per share (the &#8220;<B>Series E Preferred Stock</B>&#8221;). The first closing of the Series E SPA occurred on November 26, 2014, with 612.5 shares of Series E Preferred Stock being sold to LB Merchant PSMH-3, LLC, an entity controlled by Michael Margolies, a director and principal shareholder of the Company (the &#8220;<B>Purchaser</B>&#8221;). Each share of Series E Preferred Stock is convertible into a number of shares of common stock of the Company equal to the quotient of (i) $1,000 (subject to adjustment for stock splits, stock dividends, recapitalizations, and the like) plus the amount of accrued but unpaid dividends, divided by (ii) the conversion price then in effect. The initial conversion price is $0.01, subject to adjustment, and the 612.5 shares issued in the first closing would be convertible into 61,250,000 common shares. If all of the shares of Series E Preferred Stock being offered were converted at the present conversion price, the Company would be obligated to issue 125,000,000 shares of common stock to the holders of the Series E Preferred Stock. The holders of Series E Preferred Stock are entitled to certain voting rights designated in the certificate of designation for the series. Holders of the shares of Series E Preferred Stock are entitled to receive cumulative cash dividends at the rate per share (as a percentage of the stated value per share) of 6% per annum from the date of issuance, payable quarterly in arrears on April 15, July 15, October 15 and January 15, beginning on January 15, 2015. The offering of the Series E Preferred Stock will terminate not later than December 15, 2014.</FONT></P>
<P id=PARA52 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA53 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Littlebanc Advisors, LLC, an associate of Wilmington Capital Securities, LLC (the &#8220;<B>Placement Agent</B>&#8221;) acted as exclusive placement agent for the offering. In accordance with the placement agent agreement for the offering, warrants to purchase 16% of the common stock into which the Series E Preferred Stock sold in the offering may be converted (the &#8220;<B>Warrants</B>&#8221;) will be issued in connection with the offering. The Warrants will be exercisable at $0.011 per share and will expire on November 26, 2019. The Series E SPA, the form of the Warrants, and the Certificate of Designation with respect to the Series E Preferred Stock are filed herewith as Exhibits 10.1, 10.2, and 3.1, respectively.</FONT></P>
<P id=PARA54 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA55 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The shares of Series E Preferred Stock, as well as the Warrants, were sold without registration under the Securities Act of 1933, as amended (the &#8220;<B>Securities Act</B>&#8221;) by reason of the exemption from registration afforded by the provisions of Section 4(a)(5) and/or Section 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving any public offering. The initial purchaser of the Series E Preferred Stock and the Placement Agent were accredited investors as defined in Rule 501(a) of Regulation D promulgated by the SEC. The securities sold in this transaction were not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.</FONT></P>
<P id=PARA56 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA57 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Holders of the Series E Preferred Stock will have demand and piggyback registration rights for the common stock issuable upon conversion of the Series E Preferred Stock. The registration rights are <U>pari</U> <U>passu</U> with the registration rights of the Company&#8217;s Series A 6% Convertible Preferred Stock (&#8220;<B>Series A Preferred Stock</B>&#8221;), Series B 6% Convertible Preferred Stock (&#8220;<B>Series B Preferred Stock</B>&#8221;), Series C 6% Convertible Preferred Stock (&#8220;<B>Series C Preferred Stock</B>&#8221;), and Series D 6% Convertible Preferred Stock (&#8220;<B>Series D Preferred Stock</B>&#8221;).</FONT></P>
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<P id=PARA59 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In connection with the first closing of the Series E SPA, the Company amended the Stock Purchase Agreement dated February 3, 2013 and amended on April 1, 2014 (the &#8220;<B>Series A &amp; B</B><B> SPA</B>&#8221;), entered into in connection with the sale of the Series A Preferred Stock and Series B Preferred Stock and also amended the original Stock Purchase Agreement dated April 1, 2014 (the &#8220;<B>Series C &amp; D</B><B> SPA</B>&#8221;), entered into in connection with the sale of the Series C Preferred Stock and Series D Preferred Stock. The amendments permitted the issuance of the Series E Preferred Stock senior to dividend and liquidation rights of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock. Amendments to the Series A &amp; B SPA and the Series C &amp; D SPA are filed herewith as Exhibits 10.3 and 10.4, respectively.</FONT></P>
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<P id=PARA61 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Pursuant to the provisions of the Certificates of Designation for the Series A Preferred Stock and Series B Preferred Stock regarding adjustments in conversion price, because the Company issued and sold additional shares at a price less than the current $0.24 conversion price of the Series A Preferred Stock and Series B Preferred Stock, the conversion price was adjusted to $0.10 per share. After this adjustment to the conversion price of the Series A Preferred Stock and Series B Preferred Stock, the Series A Preferred Stock and Series B Preferred Stock would convert into a total of 57,000,000 shares of Common Stock (adjusted from 24,782,609).</FONT></P>
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<P id=PARA63 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Pursuant to the provisions of the Certificates of Designation for the Series C Preferred Stock and Series D Preferred Stock regarding adjustments in conversion price, because the Company issued and sold additional shares at a price less than the current $0.08 conversion price of the Series C Preferred Stock and Series D Preferred Stock, the conversion price was adjusted to $0.04 per share. After this adjustment to the conversion price of the Series C Preferred Stock and Series D Preferred Stock, the Series C Preferred Stock and Series D Preferred Stock would convert into a total of 80,000,000 shares of Common Stock (adjusted from 40,000,000).</FONT></P>
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<P id=PARA65 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The 454,000 Common Stock Purchase Warrants issued in February and March 2014, as amended, contained provisions requiring adjustment to the exercise price in the event the Company were to issue or sell additional shares of Common Stock pursuant to convertible securities or Common Stock equivalents at a price per share less than the exercise price of these warrants. Given the exercise price of the Series E Preferred Stock of $0.01 (less than the exercise price of the Common Stock Warrants of $0.24), the adjusted exercise price of these warrants became $0.10 at the first closing of the Series E SPA.</FONT></P>
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<P id=PARA67 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The 76,000 Common Stock Purchase Warrants issued in September and November 2014 contained provisions requiring adjustment to the exercise price in the event the Company were to issue or sell additional shares of Common Stock pursuant to convertible securities or Common Stock equivalents at a price per share less than the exercise price of these warrants. Given the exercise price of the Series E Preferred Stock of $0.01 (less than the exercise price of the Common Stock Warrants of $0.40), the adjusted exercise price of these warrants became $0.125 at the first closing of the Series E SPA.</FONT></P>
<P id=PARA68 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA69 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Assuming the issuance of all of the shares of Series E Preferred Stock, and the restating of the conversion price of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock, the Company will not have sufficient shares of Common Stock to reserve for 130% of the shares issuable upon conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock, and Series E Preferred Stock as required in the Series E SPA, the Series A &amp; B SPA and the Series C &amp; D SPA. Pursuant to the terms of these agreements, the Company is required to amend its Certificate of Incorporation to increase the number of authorized shares of Common Stock at its next annual shareholders&#8217; meeting or upon request of the preferred shareholders.</FONT></P>
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<P id=PARA71 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 3.02&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unregistered Sales of Equity Securities.</B></FONT></P>
<P id=PARA72 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA73 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The information contained in Item 1.01 of this Current Report on Form 8-K with respect to the securities sold in the above transaction is hereby incorporated by reference into this item. The securities sold in this transaction have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements</FONT></P>
<P id=PARA74 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA75 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 5.03&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.</B></FONT></P>
<P id=PARA76 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA77 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In connection with the Series E SPA transaction, the Company designated a new series of preferred stock, the Series E Preferred Stock. A copy of the Certificate of Designation, Preferences, and Rights for the Series E Preferred Stock as filed with the Secretary of State of the State of Delaware effective November 25, 2014, is attached hereto as Exhibit 3.1 (the &#8220;<B>Certificate of Designation</B>&#8221;). The Certificate of Designation of the Series E Preferred Stock authorizes 2,000 shares of Series E Preferred Stock. Under the terms of the Certificate of Designation, the holders of the Series E Preferred Stock are granted the following rights and preferences:</FONT></P>
<P id=PARA78 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
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<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA81 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA82 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series E Preferred Stock will be convertible into shares of our common stock at any time at a conversion rate of $0.01 per share, based upon the stated value of $1,000 per share of Series E Preferred Stock, subject to the following limitations and conditions: If we issue or sell shares of our common stock, or grant options or other convertible securities which are exercisable or convertible into our common shares (other than shares currently authorized under the existing management equity compensation plan and subsequently issued following approval by the Compensation Committee including, if required, the affirmative vote of the Director on the Compensation Committee appointed by the Directors elected by the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock) at prices less than the conversion price of our Series E Preferred Stock, then the conversion price of the Series E Preferred Stock will be reduced based upon a weighted average formula.</FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA85 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA86 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series E Preferred Stock will be entitled to the number of votes equal to the number of whole shares of common stock into which the shares of Series E Preferred Stock are convertible and vote together with the holders of the common stock, except (i) with respect to transactions upon which the Series E Preferred Stock will be entitled to vote separately, (ii) with respect to transactions upon which the Series E Preferred Stock will be entitled to vote with the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock as a single class, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to the election of the three directors whose election is reserved solely to the common shareholders, (v) with respect to certain transactions upon which the holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, or Series D Preferred Stock are entitled to vote separately as a class, and (vi) as otherwise required by Delaware General Corporation Law. With respect to the election of the Board, the Series E Preferred Stock will vote with the Series A Preferred Stock and Series C Preferred Stock. </FONT></P></TD></TR></TABLE>
<P id=PARA439.1 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
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<DIV id=PGHDR439  style="WIDTH: 100%; TEXT-ALIGN: left">&nbsp;</DIV></DIV>
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<P id=PARA89 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
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<P id=PARA90 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">A majority vote of the outstanding shares of Series E Preferred Stock voting as a single class is required for any of the following actions:</FONT></P></TD></TR></TABLE>
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<P id=PARA93 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
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<P id=PARA94 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any alteration, amendment, or change in the rights, preferences or privileges of the Series E Preferred Stock;</FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA97 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA98 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any amendment to the Company&#8217;s Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series E Preferred Stock; </FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA101 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA102 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in the redemption of any of the Company&#8217;s securities; </FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA105 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
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<P id=PARA106 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any termination without cause, reassignment, or other change of any executive personnel of the Company or its subsidiaries within 18 months after the issuance date of the Series E Preferred Stock; and </FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA109 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA110 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any agreement that would restrict the Company&#8217;s right or ability to perform its obligations under the Stock Purchase Agreement between the Company and the initial holders of the Series E Preferred Stock.</FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA113 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA114 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">A majority vote of the outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock voting together as a single class will be required for any of the following actions:</FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA117 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA118 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Creation (by reclassification or otherwise) of any new class or series of securities having rights, preferences or privileges senior to, or on a parity with, the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock or issuance of any junior class of securities, or options or warrants to purchase, or securities convertible into, any junior class of securities resulting in dilution of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock of 5% or more on an as-converted basis;</FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA121 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA122 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in any merger, other corporate reorganization, change of control, or any transaction in which substantially all of the assets of the Company are sold;</FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA125 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA126 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Payment or declaration of any dividends or distribution on the Company&#8217;s capital stock other than dividends on the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock; </FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA129 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA130 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any decrease or increase in the size of the Board of Directors; </FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA133 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA134 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in a related party transaction; </FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA137 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA138 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Unless otherwise approved by the Company&#8217;s Compensation Committee, including the member of the Compensation Committee appointed by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock, authorize the payment of compensation, including any equity compensation, to any individual in excess of $250,000 in any fiscal year; and</FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA141 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA142 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Make any payment or series of payments in any 12 month period in cash or securities in excess of $75,000 within 18 months after the issuance date of the Series A Shares (or in excess of $250,000 thereafter) for any purposes, including operating expenses, capital expenditures or acquisitions, except payments that are contemplated in a budget approved by the Board of Directors, including the affirmative vote of at least one director elected by the holder(s) of the Series A Preferred Stock Series C Preferred Stock and Series E Preferred Stock.</FONT></P></TD></TR></TABLE>
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<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA145 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA146 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In the event of any voluntary or involuntary liquidation, dissolution or winding up of our company (including a disposition of substantially all of our assets, whether by sale, merger or other reorganization, or a sale of over 50% of the ownership of the Company), the holders of the Series E Preferred Stock will be entitled to receive the greater of 150% of the purchase price of the Series E Preferred Stock, plus accrued dividends or the amount distributed to the holders of the common stock as though the Series E Preferred Stock were converted. Liquidating distributions will be in preference to the holders of common stock and the holders of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock.</FONT></P></TD></TR></TABLE>
<P id=PARA441.1 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<DIV id=PGBK441  style="WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
<DIV id=PGFTR441  style="WIDTH: 100%; TEXT-ALIGN: center">&nbsp;</DIV>
<DIV id=PGNUM441  style="FONT-SIZE: 10pt; WIDTH: 100%; TEXT-ALIGN: center">4</DIV>
<HR style="HEIGHT: 2px; WIDTH: 100%; PAGE-BREAK-AFTER: always; COLOR: #000000" noShade>

<DIV id=PGHDR441  style="WIDTH: 100%; TEXT-ALIGN: left">&nbsp;</DIV></DIV>
<P id=PARA441.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<TABLE id=MTAB148  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA149 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA150 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The holders of the Series E Preferred Stock are entitled to dividends equal to 6% of the stated value of the Series E Preferred Stock, paid quarterly in preference to any other class of stock, including the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock. Any unpaid dividends will accrue and the non-payment of dividends for two quarters is an event of default. Any event of default under the Certificate of Designations for the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, or Series D Preferred Stock shall constitute an event of default under the Certificate of Designations for the Series E Preferred Stock. </FONT></P></TD></TR></TABLE>
<TABLE id=MTAB152  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA153 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA154 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The holders of the Series E Preferred Stock have preemptive rights on a pro rata basis (based upon the percentage ownership of the Company on an as-converted basis) to purchase shares of our common stock in future equity offerings, other than in connection with shares issued in a public offering, bona fide acquisitions, strategic alliances, or any management equity plan approved by the Compensation Committee.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB156  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA157 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA158 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">There are no redemption or sinking fund provisions applicable to the Series E Preferred Stock.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB160  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA161 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA162 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series E Preferred Stock will be pari passu with the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock in regard to registration rights.</FONT></P></TD></TR></TABLE>
<P id=PARA163 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA164 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Also in connection with the closing of the Series E SPA, the Company amended its Certificates of Designation for the existing Series A Preferred Stock and Series B Preferred Stock. Copies of the Second Amended and Restated Certificates of Designation of Series A Preferred Stock and the Series B Preferred Stock as filed with the Secretary of State of the State of Delaware effective November 25, 2014, are attached hereto as Exhibits 3.2 and 3.3, respectively. As amended and restated, the Certificate of Designation of the Series A Preferred Stock authorizes 4,000 shares of Series A Preferred Stock and as amended and restated the Certificate of Designation for the Series B Preferred Stock authorizes 2,000 shares of Series B Preferred Stock. Under the terms of the Amended and Restated Certificates of Designation, the holders of the Series A Preferred Stock and the Series B Preferred Stock are granted the following rights and preferences:</FONT></P>
<P id=PARA165 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<TABLE id=MTAB167  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA168 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA169 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series A Preferred Stock and Series B Preferred Stock are convertible into shares of Common Stock at any time at a conversion rate of $0.10 per share, based upon the stated value of $1,000 per share of Series A Preferred Stock and Series B Preferred Stock, subject to the following limitations and conditions:</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB171  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA172 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA173 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">If we issue or sell shares of Common Stock, or grant options or other convertible securities which are exercisable or convertible into Common Stock (excluding securities granted under the Company&#8217;s 2012 Stock Incentive Plan or in connection with acquisitions of mortgage related businesses), at prices less than the conversion price of the Company&#8217;s Series A Preferred Stock and Series B Preferred Stock, then the conversion price of the Series A Preferred Stock and Series B Preferred Stock will be reduced based upon a weighted average formula. As a result of the closing of the Series E SPA disclosed in Item 1.01 above, the conversion price of the Company&#8217;s Series A Preferred Stock and Series B Preferred Stock was reduced to $0.10. </FONT></P></TD></TR></TABLE>
<TABLE id=MTAB175  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA176 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA177 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series B Preferred Stock may not be converted into Common Stock if the beneficial owner of such shares (together with such beneficial owner&#8217;s affiliates) would thereafter exceed 4.99% of the outstanding Common Stock whether through conversion of the Series B Preferred Stock or otherwise.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB179  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA180 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA181 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">We may require conversion of the Series A Preferred Stock and Series B Preferred Stock at any time if during a 90-day period Common Stock has traded an average of 100,000 shares per day at a price greater than $2.50 per share.</FONT></P></TD></TR></TABLE>
<P id=PARA442.1 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<DIV id=PGBK442  style="WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
<DIV id=PGFTR442  style="WIDTH: 100%; TEXT-ALIGN: center">&nbsp;</DIV>
<DIV id=PGNUM442  style="FONT-SIZE: 10pt; WIDTH: 100%; TEXT-ALIGN: center">5</DIV>
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<DIV id=PGHDR442  style="WIDTH: 100%; TEXT-ALIGN: left">&nbsp;</DIV></DIV>
<P id=PARA442.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<TABLE id=MTAB183  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA184 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA185 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series A Preferred Stock will be entitled to the number of votes equal to the number of whole shares of Common Stock into which the Series A Preferred Stock are convertible and vote together with the holders of the Common Stock, except (i) as provided by law, (ii) with respect to the election of the three directors to be elected by the holders of Common Stock, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to certain transactions upon which the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock are entitled to vote separately as a single class, and (v) with respect to certain transactions described below upon which the Series A Preferred Stock are entitled to vote separately as a single class. </FONT></P></TD></TR></TABLE>
<TABLE id=MTAB187  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA188 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA189 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series B Preferred Stock will be entitled to the number of votes equal to the number of whole shares of Common Stock into which the Series B Preferred Stock are convertible and vote together with the holders of the Common Stock, except (i) as provided by law, (ii) with respect to the election of the three directors to be elected by the holders of Common Stock, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to certain transactions upon which the Series A Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock are entitled to vote separately as a single class, and (v) with respect to certain transactions described below upon which the Series B Preferred Stock are entitled to vote separately as a single class.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB191  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA192 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA193 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">A majority vote of the outstanding Series A Preferred Stock voting separately as a class is required for any of the following actions:</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB195  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA196 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA197 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any alteration, amendment, or change in the rights, preferences or privileges of the Series A Preferred Stock;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB199  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA200 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA201 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any amendment to the Company&#8217;s Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series A Preferred Stock; </FONT></P></TD></TR></TABLE>
<TABLE id=MTAB203  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA204 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA205 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in the redemption of any of the Company&#8217;s securities; and</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB207  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA208 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA209 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any termination without cause, reassignment, or other change of any executive personnel of the Company or its subsidiaries within 18 months after the issuance date of the Series A Preferred Stock. </FONT></P></TD></TR></TABLE>
<TABLE id=MTAB211  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA212 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA213 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">A majority vote of the outstanding Series B Preferred Stock voting separately as a class is required for any of the following actions:</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB215  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA216 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA217 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any alteration, amendment, or change in the rights, preferences or privileges of the Series B Preferred Stock;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB219  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA220 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA221 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any amendment to the Company&#8217;s Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series B Preferred Stock; and </FONT></P></TD></TR></TABLE>
<TABLE id=MTAB223  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA224 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA225 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in the redemption of any of the Company&#8217;s securities.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB227  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA228 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA229 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">A majority vote of the outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock voting together as a single class will be required for any of the following actions:</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB231  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA232 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA233 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Creation (by reclassification or otherwise) of any new class or series of securities having rights, preferences or privileges senior to, or on a parity with, the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock or issuance of any junior class of securities, or options or warrants to purchase, or securities convertible into, any junior class of securities resulting in dilution of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock of 5% or more on an as-converted basis;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB235  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA236 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA237 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in any merger, other corporate reorganization, change of control, or any transaction in which substantially all of the assets of the Company are sold;</FONT></P></TD></TR></TABLE>
<P id=PARA443.1 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<DIV id=PGBK443  style="WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
<DIV id=PGFTR443  style="WIDTH: 100%; TEXT-ALIGN: center">&nbsp;</DIV>
<DIV id=PGNUM443  style="FONT-SIZE: 10pt; WIDTH: 100%; TEXT-ALIGN: center">6</DIV>
<HR style="HEIGHT: 2px; WIDTH: 100%; PAGE-BREAK-AFTER: always; COLOR: #000000" noShade>

<DIV id=PGHDR443  style="WIDTH: 100%; TEXT-ALIGN: left">&nbsp;</DIV></DIV>
<P id=PARA443.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<TABLE id=MTAB239  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA240 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA241 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Payment or declaration of any dividends or distribution on the Company&#8217;s capital stock other than dividends on the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock; </FONT></P></TD></TR></TABLE>
<TABLE id=MTAB243  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA244 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA245 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any decrease or increase in the size of the Board of Directors; </FONT></P></TD></TR></TABLE>
<TABLE id=MTAB247  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA248 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA249 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in a related party transaction; </FONT></P></TD></TR></TABLE>
<TABLE id=MTAB251  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA252 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA253 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Unless otherwise approved by the Company&#8217;s Compensation Committee, including the member of the Compensation Committee appointed by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock, authorize the payment of compensation, including any equity compensation, to any individual in excess of $250,000 in any fiscal year; and</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB255  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA256 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA257 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Make any payment or series of payments in any 12 month period in cash or securities in excess of $75,000 within 18 months after the issuance date of the Series A Preferred Stock (or in excess of $250,000 thereafter) for any purposes, including operating expenses, capital expenditures or acquisitions, except payments that are contemplated in a budget approved by the Board of Directors, including the affirmative vote of at least one director elected by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB259  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA260 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA261 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The majority of the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting together as a single class will have the right to elect two directors, who will have the right to appoint at least one member of the Compensation Committee. The holders of the Series B Preferred Stock are not entitled to elect any directors.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB263  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA264 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA265 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (including a disposition of substantially all of the Company&#8217;s assets, whether by sale, merger or other reorganization, or a sale of over 50% of the ownership of the Company), the holders of the Series A Preferred Stock and Series B Preferred Stock will be entitled to receive the greater of 150% of the purchase price of the Series A Preferred Stock and Series B Preferred Stock, plus accrued dividends or the amount distributed to the holders of the Common Stock as though the Series A Preferred Stock and Series B Preferred Stock were converted.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB267  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA268 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA269 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The holders of the Series A Preferred Stock and Series B Preferred Stock are entitled to dividends equal to 6% of the stated value of the Series A Preferred Stock and Series B Preferred Stock, paid quarterly. Any unpaid dividends will accrue and the non-payment of dividends for two consecutive quarters is an event of default.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB271  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA272 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA273 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The holders of the Series A Preferred Stock and Series B Preferred Stock have preemptive rights on a pro rata basis (based upon the percentage ownership of the Company on an as-converted basis) to purchase shares of Common Stock in future equity offerings, other than in connection with shares issued in a public offering, bona fide acquisitions, strategic alliances, or any management equity plan approved by the Compensation Committee.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB275  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA276 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA277 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">There are no redemption or sinking fund provisions applicable to the Series A Preferred Stock and Series B Preferred Stock.</FONT></P></TD></TR></TABLE>
<P id=PARA278 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA279 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Also in connection with the closing of the Series E SPA, the Company amended its Certificates of Designation for the existing Series C Preferred Stock and Series D Preferred Stock. Copies of the Amended and Restated Certificates of Designation of Series C Preferred Stock and the Series D Preferred Stock as filed with the Secretary of State of the State of Delaware effective November 25, 2014, are attached hereto as Exhibits 3.4 and 3.5, respectively. As amended and restated, the Certificate of Designation of the Series C Preferred Stock authorizes 4,000 shares of Series C Preferred Stock and as amended and restated the Certificate of Designation for the Series D Preferred Stock authorizes 2,000 shares of Series D Preferred Stock. Under the terms of the Amended and Restated Certificates of Designation, the holders of the Series C Preferred Stock and the Series D Preferred Stock are granted the following rights and preferences:</FONT></P>
<P id=PARA280 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<TABLE id=MTAB282  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA283 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA284 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series C Preferred Stock and Series D Preferred Stock will be convertible into shares of Common Stock at any time at a conversion rate of $0.04 per share, based upon the stated value of $1,000 per share of Series C Preferred Stock and Series D Preferred Stock, subject to the following limitations and conditions:</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB286  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA287 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA288 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">If we issue or sell shares of Common Stock, or grant options or other convertible securities which are exercisable or convertible into Common Stock (other than shares currently authorized under the existing management equity compensation plan and subsequently issued following approval by the Compensation Committee including, if required, the affirmative vote of the Director on the Compensation Committee appointed by the directors elected by the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock) at prices less than the conversion price of the Company&#8217;s Series C Preferred Stock and Series D Preferred Stock, then the conversion price of the Series C Preferred Stock and Series D Preferred Stock will be reduced based upon a weighted average formula.</FONT></P></TD></TR></TABLE>
<P id=PARA445.1 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<DIV id=PGBK445  style="WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
<DIV id=PGFTR445  style="WIDTH: 100%; TEXT-ALIGN: center">&nbsp;</DIV>
<DIV id=PGNUM445  style="FONT-SIZE: 10pt; WIDTH: 100%; TEXT-ALIGN: center">7</DIV>
<HR style="HEIGHT: 2px; WIDTH: 100%; PAGE-BREAK-AFTER: always; COLOR: #000000" noShade>

<DIV id=PGHDR445  style="WIDTH: 100%; TEXT-ALIGN: left">&nbsp;</DIV></DIV>
<P id=PARA445.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<TABLE id=MTAB290  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA291 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA292 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series D Preferred Stock may not be converted into Common Stock if the beneficial owner of such shares (together with such beneficial owner&#8217;s affiliates) would thereafter exceed 4.99% of the outstanding Common Stock whether through conversion of the Series D Preferred Stock or otherwise.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB294  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA295 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA296 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">We may require conversion of the Series C Preferred Stock and Series D Preferred Stock at any time if during a 90-day period Common Stock has traded an average of 100,000 shares per day at a price greater than $2.50 per share.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB298  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA299 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA300 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series C Preferred Stock will be entitled to the number of votes equal to the number of whole shares of Common Stock into which the Series C Preferred Stock are convertible and vote together with the holders of the Common Stock, except (i) with respect to transactions upon which the Series C Preferred Stock will be entitled to vote separately, (ii) with respect to transactions upon which the Series C Preferred Stock will be entitled to vote with the Series A Preferred Stock, Series B Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock as a single class, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to the election of the three directors whose election is reserved solely to the common shareholders, (v) with respect to certain transactions upon which the holders of Series A Preferred Stock, Series B Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock are entitled to vote separately as a class, and (vi) as otherwise required by Delaware General Corporation Law. With respect to the election of the Board, the Series C Preferred Stock will vote with the Series A Preferred Stock and Series E Preferred Stock.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB302  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA303 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA304 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series D Preferred Stock will be entitled to the number of votes equal to the number of whole shares of Common Stock into which the Series D Preferred Stock are convertible and vote together with the holders of the Common Stock, except (i) with respect to transactions upon which the Series D Preferred Stock will be entitled to vote separately, (ii) with respect to transactions upon which the Series D Preferred Stock will be entitled to vote with the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock as a single class, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to the election of the three directors whose election is reserved solely to the common shareholders, (v) with respect to certain transactions upon which the holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, or Series E Preferred Stock are entitled to vote separately as a class, and (vi) as otherwise required by Delaware General Corporation Law. Similar to the Series B Preferred Stock, the Series D Preferred Stock will not be entitled to elect any directors.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB306  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA307 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA308 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">A majority vote of the outstanding Series C Preferred Stock voting as a single class is required for any of the following actions:</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB310  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA311 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA312 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any alteration, amendment, or change in the rights, preferences or privileges of the Series C Preferred Stock;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB314  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA315 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA316 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any amendment to the Company&#8217;s Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series C Preferred Stock;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB318  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA319 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA320 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in the redemption of any of the Company&#8217;s securities;</FONT></P></TD></TR></TABLE>
<P id=PARA446.1 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<DIV id=PGBK446  style="WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
<DIV id=PGFTR446  style="WIDTH: 100%; TEXT-ALIGN: center">&nbsp;</DIV>
<DIV id=PGNUM446  style="FONT-SIZE: 10pt; WIDTH: 100%; TEXT-ALIGN: center">8</DIV>
<HR style="HEIGHT: 2px; WIDTH: 100%; PAGE-BREAK-AFTER: always; COLOR: #000000" noShade>

<DIV id=PGHDR446  style="WIDTH: 100%; TEXT-ALIGN: left">&nbsp;</DIV></DIV>
<P id=PARA446.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<TABLE id=MTAB322  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA323 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA324 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any termination without cause, reassignment, or other change of any executive personnel of the Company or its subsidiaries within 18 months after the issuance date of the Series C Preferred Stock; and</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB326  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA327 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA328 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any agreement that would restrict the Company&#8217;s right or ability to perform its obligations under the Series E SPA.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB330  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA331 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA332 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">A majority vote of the outstanding Series D Preferred Stock voting as a single class is required for any of the following actions:</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB334  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA335 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA336 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any alteration, amendment, or change in the rights, preferences or privileges of the Series D Preferred Stock;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB338  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA339 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA340 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any amendment to the Company&#8217;s Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series D Preferred Stock;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB342  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA343 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA344 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in the redemption of any of the Company&#8217;s securities; and</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB346  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA347 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA348 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any agreement that would restrict the Company&#8217;s right or ability to perform its obligations under the Series E SPA.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB350  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA351 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA352 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">A majority vote of the outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock voting together as a single class will be required for any of the following actions:</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB354  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA355 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA356 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Creation (by reclassification or otherwise) of any new class or series of securities having rights, preferences or privileges senior to, or on a parity with, the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock or issuance of any junior class of securities, or options or warrants to purchase, or securities convertible into, any junior class of securities resulting in dilution of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock of 5% or more on an as-converted basis;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB358  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA359 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA360 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in any merger, other corporate reorganization, change of control, or any transaction in which substantially all of the assets of the Company are sold;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB362  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA363 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA364 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Payment or declaration of any dividends or distribution on the Company&#8217;s capital stock other than dividends on the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB366  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA367 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA368 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any decrease or increase in the size of the Board of Directors;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB370  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA371 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA372 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Any transaction resulting in a related party transaction;</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB374  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA375 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA376 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Unless otherwise approved by the Company&#8217;s Compensation Committee, including the member of the Compensation Committee appointed by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock, authorize the payment of compensation, including any equity compensation, to any individual in excess of $250,000 in any fiscal year; and</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB378  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 90pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA379 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">o</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA380 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Make any payment or series of payments in any 12 month period in cash or securities in excess of $75,000 within 18 months after the issuance date of the Series A Preferred Stock (or in excess of $250,000 thereafter) for any purposes, including operating expenses, capital expenditures or acquisitions, except payments that are contemplated in a budget approved by the Board of Directors, including the affirmative vote of at least one director elected by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB382  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA383 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA384 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (including a disposition of substantially all of the Company&#8217;s assets, whether by sale, merger or other reorganization, or a sale of over 50% of the ownership of the Company), the holders of the Series C Preferred Stock and Series D Preferred Stock will be entitled to receive the greater of 150% of the purchase price of the Series C Preferred Stock and Series D Preferred Stock, plus accrued dividends or the amount distributed to the holders of the Common Stock as though the Series C Preferred Stock and Series D Preferred Stock were converted.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB386  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA387 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA388 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The holders of the Series C Preferred Stock and Series D Preferred Stock are entitled to dividends equal to 6% of the stated value of the Series C Preferred Stock and Series D Preferred Stock, paid quarterly. Any unpaid dividends will accrue and the non-payment of dividends for two consecutive quarters is an event of default.</FONT></P></TD></TR></TABLE>
<P id=PARA447.1 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<DIV id=PGBK447  style="WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
<DIV id=PGFTR447  style="WIDTH: 100%; TEXT-ALIGN: center">&nbsp;</DIV>
<DIV id=PGNUM447  style="FONT-SIZE: 10pt; WIDTH: 100%; TEXT-ALIGN: center">9</DIV>
<HR style="HEIGHT: 2px; WIDTH: 100%; PAGE-BREAK-AFTER: always; COLOR: #000000" noShade>

<DIV id=PGHDR447  style="WIDTH: 100%; TEXT-ALIGN: left">&nbsp;</DIV></DIV>
<P id=PARA447.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P>
<TABLE id=MTAB390  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA391 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA392 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The holders of the Series C Preferred Stock and Series D Preferred Stock have preemptive rights on a pro rata basis (based upon the percentage ownership of the Company on an as-converted basis) to purchase shares of Common Stock in future equity offerings, other than in connection with shares issued in a public offering, bona fide acquisitions, strategic alliances, or any management equity plan approved by the Compensation Committee.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB394  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA395 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA396 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">There are no redemption or sinking fund provisions applicable to the Series C Preferred Stock and Series D Preferred Stock.</FONT></P></TD></TR></TABLE>
<TABLE id=MTAB398  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 100%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 54pt">&nbsp;</TD>
<TD style="WIDTH: 18pt; VERTICAL-ALIGN: top">
<P id=PARA399 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#9679;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U></U><U></U></FONT></P></TD>
<TD style="VERTICAL-ALIGN: top">
<P id=PARA400 style="MARGIN-BOTTOM: 0pt; TEXT-ALIGN: justify; MARGIN-TOP: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Series C Preferred Stock and Series D Preferred Stock will be <U>pari</U> <U>passu</U> with the Series A Preferred Stock, Series B Preferred Stock, and Series E Preferred Stock in regard to registration rights.</FONT></P></TD></TR></TABLE>
<P id=PARA401 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA402 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 9.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits.</B></FONT></P>
<P id=PARA403 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA404 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><I><B>(d) Exhibits.</B></I></FONT></P>
<P id=PARA405 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<TABLE id=TBL424  style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif; WIDTH: 98.8%; MARGIN-LEFT: 0%; TEXT-INDENT: 0px" cellSpacing=0 cellPadding=0 border=0>

<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: bottom">
<P id=PARA406 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Exhibit<BR>Number</B></FONT></P></TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: bottom">
<P id=PARA407 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Exhibit Title</B></FONT></P></TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: bottom">&nbsp;</TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: bottom">&nbsp;</TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA408 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">3.1</FONT></P></TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">
<P id=PARA409 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Certificate of Designation, Preferences, and Rights of Series E 6% Convertible Preferred Stock of the Company</FONT></P></TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">&nbsp;</TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">&nbsp;</TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA410 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">3.2</FONT></P></TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">
<P id=PARA411 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Second Amended and Restated Certificate of Designation, Preferences, and Rights of Series A 6% Convertible Preferred Stock</FONT></P></TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">&nbsp;</TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">&nbsp;</TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA412 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">3.3</FONT></P></TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">
<P id=PARA413 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Second Amended and Restated Certificate of Designation, Preferences, and Rights of Series B 6% Convertible Preferred Stock</FONT></P></TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">&nbsp;</TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">&nbsp;</TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA414 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">3.4</FONT></P></TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">
<P id=PARA415 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Amended and Restated Certificate of Designation, Preferences, and Rights of Series C 6% Convertible Preferred Stock</FONT></P></TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">&nbsp;</TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">&nbsp;</TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA416 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">3.5</FONT></P></TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">
<P id=PARA417 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Amended and Restated Certificate of Designation, Preferences, and Rights of Series D 6% Convertible Preferred Stock</FONT></P></TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">&nbsp;</TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">&nbsp;</TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA418 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">10.1</FONT></P></TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">
<P id=PARA419 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Stock Purchase Agreement dated November 24, 2014</FONT></P></TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">&nbsp;</TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">&nbsp;</TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA420 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">10.2</FONT></P></TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">
<P id=PARA421 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Amendment dated November 24, 2014, to Stock Purchase Agreement dated February 4, 2013, as amended April 1, 2014</FONT></P></TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">&nbsp;</TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">&nbsp;</TD></TR>
<TR>
<TD style="WIDTH: 10%; VERTICAL-ALIGN: top">
<P id=PARA422 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">10.3</FONT></P></TD>
<TD style="WIDTH: 91.1%; VERTICAL-ALIGN: top">
<P id=PARA423 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Amendment dated November 24, 2014, to Stock Purchase Agreement dated April 1, 2014</FONT></P></TD></TR></TABLE>
<P id=PARA425 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA426 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>&nbsp;</B></FONT></P>
<P id=PARA427 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>SIGNATURES</B></FONT></P>
<P id=PARA428 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA429 style="TEXT-ALIGN: justify; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</FONT></P>
<P id=PARA430 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
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<TR>
<TD vAlign=top width="50%">
<P id=PARA448.1 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P></TD>
<TD vAlign=top width="38%" colSpan=2>
<P id=PARA448.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></P>
<P id=PARA431 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>PSM Holdings, Inc.</B></FONT></P></FONT></TD>
<TD vAlign=top width="12%">
<P id=PARA448.3 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P></TD></TR>
<TR>
<TD vAlign=top width="50%">
<P id=PARA448.4 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P></TD>
<TD vAlign=top width="3%">
<P id=PARA448.5 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P></TD>
<TD vAlign=top width="35%">
<P id=PARA448.6 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P></TD>
<TD vAlign=top width="12%">
<P id=PARA448.7 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P></TD></TR>
<TR>
<TD vAlign=top width="50%">
<P id=PARA448.8 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&nbsp;</FONT></P></TD>
<TD vAlign=top width="3%">
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<TD style="BORDER-BOTTOM: #ffffff solid; TEXT-ALIGN: left" vAlign=top width="50%" align=left>
<P id=PARA448.12 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date: December 2, 2014&nbsp;</FONT></P></TD>
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<P id=PARA448.13 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By: </FONT></P></TD>
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<P id=PARA448.14 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/&nbsp;</FONT>Kevin Gadawski</P></TD>
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<P id=PARA448.18 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kevin Gadawski, President</FONT></P></TD>
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[{"type": "8-K", "sequence": "1", "filename": "psmh20141201_8k.htm", "description": "FORM 8-K", "secsgml_size_bytes": 141150}]
{"company-data": {"conformed-name": "PSM HOLDINGS INC", "cik": "0001362180", "assigned-sic": "6162", "irs-number": "900332127", "state-of-incorporation": "DE", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-54988", "film-number": "141260443"}, "business-address": {"street1": "5900 MOSTELLER DR., #11", "city": "OKLAHOMA CITY", "state": "OK", "zip": "73112", "phone": "(405) 753-1900"}, "mail-address": {"street1": "5900 MOSTELLER DR., #11", "city": "OKLAHOMA CITY", "state": "OK", "zip": "73112"}}
psmh20141201_8k.htm
United States
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 25, 2014
PSM Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
000-54988
90-0332127
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
5900 Mosteller Drive, Oklahoma City, OK
73112
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
(575) 624-4170
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
Item 1.01
Entry into a Material Definitive Agreement.
On November 26, 2014, PSM Holdings, Inc., a Delaware corporation (the "
Company
") entered into a Stock Purchase Agreement dated effective November 24, 2014 (the "
Series E
SPA
") providing for the issuance and sale of up to $1,250,000 of the Company's Series E 6% Convertible Preferred Stock (1,250 shares) at a purchase price of $1,000 per share (the "
Series E Preferred Stock
"). The first closing of the Series E SPA occurred on November 26, 2014, with 612.5 shares of Series E Preferred Stock being sold to LB Merchant PSMH-3, LLC, an entity controlled by Michael Margolies, a director and principal shareholder of the Company (the "
Purchaser
"). Each share of Series E Preferred Stock is convertible into a number of shares of common stock of the Company equal to the quotient of (i) $1,000 (subject to adjustment for stock splits, stock dividends, recapitalizations, and the like) plus the amount of accrued but unpaid dividends, divided by (ii) the conversion price then in effect. The initial conversion price is $0.01, subject to adjustment, and the 612.5 shares issued in the first closing would be convertible into 61,250,000 common shares. If all of the shares of Series E Preferred Stock being offered were converted at the present conversion price, the Company would be obligated to issue 125,000,000 shares of common stock to the holders of the Series E Preferred Stock. The holders of Series E Preferred Stock are entitled to certain voting rights designated in the certificate of designation for the series. Holders of the shares of Series E Preferred Stock are entitled to receive cumulative cash dividends at the rate per share (as a percentage of the stated value per share) of 6% per annum from the date of issuance, payable quarterly in arrears on April 15, July 15, October 15 and January 15, beginning on January 15, 2015. The offering of the Series E Preferred Stock will terminate not later than December 15, 2014.
Littlebanc Advisors, LLC, an associate of Wilmington Capital Securities, LLC (the "
Placement Agent
") acted as exclusive placement agent for the offering. In accordance with the placement agent agreement for the offering, warrants to purchase 16% of the common stock into which the Series E Preferred Stock sold in the offering may be converted (the "
Warrants
") will be issued in connection with the offering. The Warrants will be exercisable at $0.011 per share and will expire on November 26, 2019. The Series E SPA, the form of the Warrants, and the Certificate of Designation with respect to the Series E Preferred Stock are filed herewith as Exhibits 10.1, 10.2, and 3.1, respectively.
The shares of Series E Preferred Stock, as well as the Warrants, were sold without registration under the Securities Act of 1933, as amended (the "
Securities Act
") by reason of the exemption from registration afforded by the provisions of Section 4(a)(5) and/or Section 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving any public offering. The initial purchaser of the Series E Preferred Stock and the Placement Agent were accredited investors as defined in Rule 501(a) of Regulation D promulgated by the SEC. The securities sold in this transaction were not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Holders of the Series E Preferred Stock will have demand and piggyback registration rights for the common stock issuable upon conversion of the Series E Preferred Stock. The registration rights are
pari
passu
with the registration rights of the Company's Series A 6% Convertible Preferred Stock ("
Series A Preferred Stock
"), Series B 6% Convertible Preferred Stock ("
Series B Preferred Stock
"), Series C 6% Convertible Preferred Stock ("
Series C Preferred Stock
"), and Series D 6% Convertible Preferred Stock ("
Series D Preferred Stock
").
In connection with the first closing of the Series E SPA, the Company amended the Stock Purchase Agreement dated February 3, 2013 and amended on April 1, 2014 (the "
Series A & B
SPA
"), entered into in connection with the sale of the Series A Preferred Stock and Series B Preferred Stock and also amended the original Stock Purchase Agreement dated April 1, 2014 (the "
Series C & D
SPA
"), entered into in connection with the sale of the Series C Preferred Stock and Series D Preferred Stock. The amendments permitted the issuance of the Series E Preferred Stock senior to dividend and liquidation rights of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock. Amendments to the Series A & B SPA and the Series C & D SPA are filed herewith as Exhibits 10.3 and 10.4, respectively.
Pursuant to the provisions of the Certificates of Designation for the Series A Preferred Stock and Series B Preferred Stock regarding adjustments in conversion price, because the Company issued and sold additional shares at a price less than the current $0.24 conversion price of the Series A Preferred Stock and Series B Preferred Stock, the conversion price was adjusted to $0.10 per share. After this adjustment to the conversion price of the Series A Preferred Stock and Series B Preferred Stock, the Series A Preferred Stock and Series B Preferred Stock would convert into a total of 57,000,000 shares of Common Stock (adjusted from 24,782,609).
Pursuant to the provisions of the Certificates of Designation for the Series C Preferred Stock and Series D Preferred Stock regarding adjustments in conversion price, because the Company issued and sold additional shares at a price less than the current $0.08 conversion price of the Series C Preferred Stock and Series D Preferred Stock, the conversion price was adjusted to $0.04 per share. After this adjustment to the conversion price of the Series C Preferred Stock and Series D Preferred Stock, the Series C Preferred Stock and Series D Preferred Stock would convert into a total of 80,000,000 shares of Common Stock (adjusted from 40,000,000).
2
The 454,000 Common Stock Purchase Warrants issued in February and March 2014, as amended, contained provisions requiring adjustment to the exercise price in the event the Company were to issue or sell additional shares of Common Stock pursuant to convertible securities or Common Stock equivalents at a price per share less than the exercise price of these warrants. Given the exercise price of the Series E Preferred Stock of $0.01 (less than the exercise price of the Common Stock Warrants of $0.24), the adjusted exercise price of these warrants became $0.10 at the first closing of the Series E SPA.
The 76,000 Common Stock Purchase Warrants issued in September and November 2014 contained provisions requiring adjustment to the exercise price in the event the Company were to issue or sell additional shares of Common Stock pursuant to convertible securities or Common Stock equivalents at a price per share less than the exercise price of these warrants. Given the exercise price of the Series E Preferred Stock of $0.01 (less than the exercise price of the Common Stock Warrants of $0.40), the adjusted exercise price of these warrants became $0.125 at the first closing of the Series E SPA.
Assuming the issuance of all of the shares of Series E Preferred Stock, and the restating of the conversion price of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock, the Company will not have sufficient shares of Common Stock to reserve for 130% of the shares issuable upon conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock, and Series E Preferred Stock as required in the Series E SPA, the Series A & B SPA and the Series C & D SPA. Pursuant to the terms of these agreements, the Company is required to amend its Certificate of Incorporation to increase the number of authorized shares of Common Stock at its next annual shareholders' meeting or upon request of the preferred shareholders.
Item 3.02     Unregistered Sales of Equity Securities.
The information contained in Item 1.01 of this Current Report on Form 8-K with respect to the securities sold in the above transaction is hereby incorporated by reference into this item. The securities sold in this transaction have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements
Item 5.03     Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
In connection with the Series E SPA transaction, the Company designated a new series of preferred stock, the Series E Preferred Stock. A copy of the Certificate of Designation, Preferences, and Rights for the Series E Preferred Stock as filed with the Secretary of State of the State of Delaware effective November 25, 2014, is attached hereto as Exhibit 3.1 (the "
Certificate of Designation
"). The Certificate of Designation of the Series E Preferred Stock authorizes 2,000 shares of Series E Preferred Stock. Under the terms of the Certificate of Designation, the holders of the Series E Preferred Stock are granted the following rights and preferences:
●
The Series E Preferred Stock will be convertible into shares of our common stock at any time at a conversion rate of $0.01 per share, based upon the stated value of $1,000 per share of Series E Preferred Stock, subject to the following limitations and conditions: If we issue or sell shares of our common stock, or grant options or other convertible securities which are exercisable or convertible into our common shares (other than shares currently authorized under the existing management equity compensation plan and subsequently issued following approval by the Compensation Committee including, if required, the affirmative vote of the Director on the Compensation Committee appointed by the Directors elected by the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock) at prices less than the conversion price of our Series E Preferred Stock, then the conversion price of the Series E Preferred Stock will be reduced based upon a weighted average formula.
●
The Series E Preferred Stock will be entitled to the number of votes equal to the number of whole shares of common stock into which the shares of Series E Preferred Stock are convertible and vote together with the holders of the common stock, except (i) with respect to transactions upon which the Series E Preferred Stock will be entitled to vote separately, (ii) with respect to transactions upon which the Series E Preferred Stock will be entitled to vote with the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock as a single class, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to the election of the three directors whose election is reserved solely to the common shareholders, (v) with respect to certain transactions upon which the holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, or Series D Preferred Stock are entitled to vote separately as a class, and (vi) as otherwise required by Delaware General Corporation Law. With respect to the election of the Board, the Series E Preferred Stock will vote with the Series A Preferred Stock and Series C Preferred Stock.
3
●
A majority vote of the outstanding shares of Series E Preferred Stock voting as a single class is required for any of the following actions:
o
Any alteration, amendment, or change in the rights, preferences or privileges of the Series E Preferred Stock;
o
Any amendment to the Company's Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series E Preferred Stock;
o
Any transaction resulting in the redemption of any of the Company's securities;
o
Any termination without cause, reassignment, or other change of any executive personnel of the Company or its subsidiaries within 18 months after the issuance date of the Series E Preferred Stock; and
o
Any agreement that would restrict the Company's right or ability to perform its obligations under the Stock Purchase Agreement between the Company and the initial holders of the Series E Preferred Stock.
●
A majority vote of the outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock voting together as a single class will be required for any of the following actions:
o
Creation (by reclassification or otherwise) of any new class or series of securities having rights, preferences or privileges senior to, or on a parity with, the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock or issuance of any junior class of securities, or options or warrants to purchase, or securities convertible into, any junior class of securities resulting in dilution of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock of 5% or more on an as-converted basis;
o
Any transaction resulting in any merger, other corporate reorganization, change of control, or any transaction in which substantially all of the assets of the Company are sold;
o
Payment or declaration of any dividends or distribution on the Company's capital stock other than dividends on the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock;
o
Any decrease or increase in the size of the Board of Directors;
o
Any transaction resulting in a related party transaction;
o
Unless otherwise approved by the Company's Compensation Committee, including the member of the Compensation Committee appointed by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock, authorize the payment of compensation, including any equity compensation, to any individual in excess of $250,000 in any fiscal year; and
o
Make any payment or series of payments in any 12 month period in cash or securities in excess of $75,000 within 18 months after the issuance date of the Series A Shares (or in excess of $250,000 thereafter) for any purposes, including operating expenses, capital expenditures or acquisitions, except payments that are contemplated in a budget approved by the Board of Directors, including the affirmative vote of at least one director elected by the holder(s) of the Series A Preferred Stock Series C Preferred Stock and Series E Preferred Stock.
●
In the event of any voluntary or involuntary liquidation, dissolution or winding up of our company (including a disposition of substantially all of our assets, whether by sale, merger or other reorganization, or a sale of over 50% of the ownership of the Company), the holders of the Series E Preferred Stock will be entitled to receive the greater of 150% of the purchase price of the Series E Preferred Stock, plus accrued dividends or the amount distributed to the holders of the common stock as though the Series E Preferred Stock were converted. Liquidating distributions will be in preference to the holders of common stock and the holders of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock.
4
●
The holders of the Series E Preferred Stock are entitled to dividends equal to 6% of the stated value of the Series E Preferred Stock, paid quarterly in preference to any other class of stock, including the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock. Any unpaid dividends will accrue and the non-payment of dividends for two quarters is an event of default. Any event of default under the Certificate of Designations for the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, or Series D Preferred Stock shall constitute an event of default under the Certificate of Designations for the Series E Preferred Stock.
●
The holders of the Series E Preferred Stock have preemptive rights on a pro rata basis (based upon the percentage ownership of the Company on an as-converted basis) to purchase shares of our common stock in future equity offerings, other than in connection with shares issued in a public offering, bona fide acquisitions, strategic alliances, or any management equity plan approved by the Compensation Committee.
●
There are no redemption or sinking fund provisions applicable to the Series E Preferred Stock.
●
The Series E Preferred Stock will be pari passu with the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock in regard to registration rights.
Also in connection with the closing of the Series E SPA, the Company amended its Certificates of Designation for the existing Series A Preferred Stock and Series B Preferred Stock. Copies of the Second Amended and Restated Certificates of Designation of Series A Preferred Stock and the Series B Preferred Stock as filed with the Secretary of State of the State of Delaware effective November 25, 2014, are attached hereto as Exhibits 3.2 and 3.3, respectively. As amended and restated, the Certificate of Designation of the Series A Preferred Stock authorizes 4,000 shares of Series A Preferred Stock and as amended and restated the Certificate of Designation for the Series B Preferred Stock authorizes 2,000 shares of Series B Preferred Stock. Under the terms of the Amended and Restated Certificates of Designation, the holders of the Series A Preferred Stock and the Series B Preferred Stock are granted the following rights and preferences:
●
The Series A Preferred Stock and Series B Preferred Stock are convertible into shares of Common Stock at any time at a conversion rate of $0.10 per share, based upon the stated value of $1,000 per share of Series A Preferred Stock and Series B Preferred Stock, subject to the following limitations and conditions:
o
If we issue or sell shares of Common Stock, or grant options or other convertible securities which are exercisable or convertible into Common Stock (excluding securities granted under the Company's 2012 Stock Incentive Plan or in connection with acquisitions of mortgage related businesses), at prices less than the conversion price of the Company's Series A Preferred Stock and Series B Preferred Stock, then the conversion price of the Series A Preferred Stock and Series B Preferred Stock will be reduced based upon a weighted average formula. As a result of the closing of the Series E SPA disclosed in Item 1.01 above, the conversion price of the Company's Series A Preferred Stock and Series B Preferred Stock was reduced to $0.10.
o
The Series B Preferred Stock may not be converted into Common Stock if the beneficial owner of such shares (together with such beneficial owner's affiliates) would thereafter exceed 4.99% of the outstanding Common Stock whether through conversion of the Series B Preferred Stock or otherwise.
o
We may require conversion of the Series A Preferred Stock and Series B Preferred Stock at any time if during a 90-day period Common Stock has traded an average of 100,000 shares per day at a price greater than $2.50 per share.
5
●
The Series A Preferred Stock will be entitled to the number of votes equal to the number of whole shares of Common Stock into which the Series A Preferred Stock are convertible and vote together with the holders of the Common Stock, except (i) as provided by law, (ii) with respect to the election of the three directors to be elected by the holders of Common Stock, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to certain transactions upon which the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock are entitled to vote separately as a single class, and (v) with respect to certain transactions described below upon which the Series A Preferred Stock are entitled to vote separately as a single class.
●
The Series B Preferred Stock will be entitled to the number of votes equal to the number of whole shares of Common Stock into which the Series B Preferred Stock are convertible and vote together with the holders of the Common Stock, except (i) as provided by law, (ii) with respect to the election of the three directors to be elected by the holders of Common Stock, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to certain transactions upon which the Series A Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock are entitled to vote separately as a single class, and (v) with respect to certain transactions described below upon which the Series B Preferred Stock are entitled to vote separately as a single class.
●
A majority vote of the outstanding Series A Preferred Stock voting separately as a class is required for any of the following actions:
o
Any alteration, amendment, or change in the rights, preferences or privileges of the Series A Preferred Stock;
o
Any amendment to the Company's Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series A Preferred Stock;
o
Any transaction resulting in the redemption of any of the Company's securities; and
o
Any termination without cause, reassignment, or other change of any executive personnel of the Company or its subsidiaries within 18 months after the issuance date of the Series A Preferred Stock.
●
A majority vote of the outstanding Series B Preferred Stock voting separately as a class is required for any of the following actions:
o
Any alteration, amendment, or change in the rights, preferences or privileges of the Series B Preferred Stock;
o
Any amendment to the Company's Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series B Preferred Stock; and
o
Any transaction resulting in the redemption of any of the Company's securities.
●
A majority vote of the outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock voting together as a single class will be required for any of the following actions:
o
Creation (by reclassification or otherwise) of any new class or series of securities having rights, preferences or privileges senior to, or on a parity with, the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock or issuance of any junior class of securities, or options or warrants to purchase, or securities convertible into, any junior class of securities resulting in dilution of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock of 5% or more on an as-converted basis;
o
Any transaction resulting in any merger, other corporate reorganization, change of control, or any transaction in which substantially all of the assets of the Company are sold;
6
o
Payment or declaration of any dividends or distribution on the Company's capital stock other than dividends on the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock;
o
Any decrease or increase in the size of the Board of Directors;
o
Any transaction resulting in a related party transaction;
o
Unless otherwise approved by the Company's Compensation Committee, including the member of the Compensation Committee appointed by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock, authorize the payment of compensation, including any equity compensation, to any individual in excess of $250,000 in any fiscal year; and
o
Make any payment or series of payments in any 12 month period in cash or securities in excess of $75,000 within 18 months after the issuance date of the Series A Preferred Stock (or in excess of $250,000 thereafter) for any purposes, including operating expenses, capital expenditures or acquisitions, except payments that are contemplated in a budget approved by the Board of Directors, including the affirmative vote of at least one director elected by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock.
●
The majority of the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting together as a single class will have the right to elect two directors, who will have the right to appoint at least one member of the Compensation Committee. The holders of the Series B Preferred Stock are not entitled to elect any directors.
●
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (including a disposition of substantially all of the Company's assets, whether by sale, merger or other reorganization, or a sale of over 50% of the ownership of the Company), the holders of the Series A Preferred Stock and Series B Preferred Stock will be entitled to receive the greater of 150% of the purchase price of the Series A Preferred Stock and Series B Preferred Stock, plus accrued dividends or the amount distributed to the holders of the Common Stock as though the Series A Preferred Stock and Series B Preferred Stock were converted.
●
The holders of the Series A Preferred Stock and Series B Preferred Stock are entitled to dividends equal to 6% of the stated value of the Series A Preferred Stock and Series B Preferred Stock, paid quarterly. Any unpaid dividends will accrue and the non-payment of dividends for two consecutive quarters is an event of default.
●
The holders of the Series A Preferred Stock and Series B Preferred Stock have preemptive rights on a pro rata basis (based upon the percentage ownership of the Company on an as-converted basis) to purchase shares of Common Stock in future equity offerings, other than in connection with shares issued in a public offering, bona fide acquisitions, strategic alliances, or any management equity plan approved by the Compensation Committee.
●
There are no redemption or sinking fund provisions applicable to the Series A Preferred Stock and Series B Preferred Stock.
Also in connection with the closing of the Series E SPA, the Company amended its Certificates of Designation for the existing Series C Preferred Stock and Series D Preferred Stock. Copies of the Amended and Restated Certificates of Designation of Series C Preferred Stock and the Series D Preferred Stock as filed with the Secretary of State of the State of Delaware effective November 25, 2014, are attached hereto as Exhibits 3.4 and 3.5, respectively. As amended and restated, the Certificate of Designation of the Series C Preferred Stock authorizes 4,000 shares of Series C Preferred Stock and as amended and restated the Certificate of Designation for the Series D Preferred Stock authorizes 2,000 shares of Series D Preferred Stock. Under the terms of the Amended and Restated Certificates of Designation, the holders of the Series C Preferred Stock and the Series D Preferred Stock are granted the following rights and preferences:
●
The Series C Preferred Stock and Series D Preferred Stock will be convertible into shares of Common Stock at any time at a conversion rate of $0.04 per share, based upon the stated value of $1,000 per share of Series C Preferred Stock and Series D Preferred Stock, subject to the following limitations and conditions:
o
If we issue or sell shares of Common Stock, or grant options or other convertible securities which are exercisable or convertible into Common Stock (other than shares currently authorized under the existing management equity compensation plan and subsequently issued following approval by the Compensation Committee including, if required, the affirmative vote of the Director on the Compensation Committee appointed by the directors elected by the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock) at prices less than the conversion price of the Company's Series C Preferred Stock and Series D Preferred Stock, then the conversion price of the Series C Preferred Stock and Series D Preferred Stock will be reduced based upon a weighted average formula.
7
o
The Series D Preferred Stock may not be converted into Common Stock if the beneficial owner of such shares (together with such beneficial owner's affiliates) would thereafter exceed 4.99% of the outstanding Common Stock whether through conversion of the Series D Preferred Stock or otherwise.
o
We may require conversion of the Series C Preferred Stock and Series D Preferred Stock at any time if during a 90-day period Common Stock has traded an average of 100,000 shares per day at a price greater than $2.50 per share.
●
The Series C Preferred Stock will be entitled to the number of votes equal to the number of whole shares of Common Stock into which the Series C Preferred Stock are convertible and vote together with the holders of the Common Stock, except (i) with respect to transactions upon which the Series C Preferred Stock will be entitled to vote separately, (ii) with respect to transactions upon which the Series C Preferred Stock will be entitled to vote with the Series A Preferred Stock, Series B Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock as a single class, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to the election of the three directors whose election is reserved solely to the common shareholders, (v) with respect to certain transactions upon which the holders of Series A Preferred Stock, Series B Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock are entitled to vote separately as a class, and (vi) as otherwise required by Delaware General Corporation Law. With respect to the election of the Board, the Series C Preferred Stock will vote with the Series A Preferred Stock and Series E Preferred Stock.
●
The Series D Preferred Stock will be entitled to the number of votes equal to the number of whole shares of Common Stock into which the Series D Preferred Stock are convertible and vote together with the holders of the Common Stock, except (i) with respect to transactions upon which the Series D Preferred Stock will be entitled to vote separately, (ii) with respect to transactions upon which the Series D Preferred Stock will be entitled to vote with the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock as a single class, (iii) with respect to the election of the two directors to be elected by the holders of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock voting as a single class, (iv) with respect to the election of the three directors whose election is reserved solely to the common shareholders, (v) with respect to certain transactions upon which the holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, or Series E Preferred Stock are entitled to vote separately as a class, and (vi) as otherwise required by Delaware General Corporation Law. Similar to the Series B Preferred Stock, the Series D Preferred Stock will not be entitled to elect any directors.
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A majority vote of the outstanding Series C Preferred Stock voting as a single class is required for any of the following actions:
o
Any alteration, amendment, or change in the rights, preferences or privileges of the Series C Preferred Stock;
o
Any amendment to the Company's Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series C Preferred Stock;
o
Any transaction resulting in the redemption of any of the Company's securities;
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o
Any termination without cause, reassignment, or other change of any executive personnel of the Company or its subsidiaries within 18 months after the issuance date of the Series C Preferred Stock; and
o
Any agreement that would restrict the Company's right or ability to perform its obligations under the Series E SPA.
●
A majority vote of the outstanding Series D Preferred Stock voting as a single class is required for any of the following actions:
o
Any alteration, amendment, or change in the rights, preferences or privileges of the Series D Preferred Stock;
o
Any amendment to the Company's Certificate of Incorporation or Bylaws that would impair or reduce the rights of the Series D Preferred Stock;
o
Any transaction resulting in the redemption of any of the Company's securities; and
o
Any agreement that would restrict the Company's right or ability to perform its obligations under the Series E SPA.
●
A majority vote of the outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock voting together as a single class will be required for any of the following actions:
o
Creation (by reclassification or otherwise) of any new class or series of securities having rights, preferences or privileges senior to, or on a parity with, the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock or issuance of any junior class of securities, or options or warrants to purchase, or securities convertible into, any junior class of securities resulting in dilution of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock of 5% or more on an as-converted basis;
o
Any transaction resulting in any merger, other corporate reorganization, change of control, or any transaction in which substantially all of the assets of the Company are sold;
o
Payment or declaration of any dividends or distribution on the Company's capital stock other than dividends on the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock;
o
Any decrease or increase in the size of the Board of Directors;
o
Any transaction resulting in a related party transaction;
o
Unless otherwise approved by the Company's Compensation Committee, including the member of the Compensation Committee appointed by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock, authorize the payment of compensation, including any equity compensation, to any individual in excess of $250,000 in any fiscal year; and
o
Make any payment or series of payments in any 12 month period in cash or securities in excess of $75,000 within 18 months after the issuance date of the Series A Preferred Stock (or in excess of $250,000 thereafter) for any purposes, including operating expenses, capital expenditures or acquisitions, except payments that are contemplated in a budget approved by the Board of Directors, including the affirmative vote of at least one director elected by the holder(s) of the Series A Preferred Stock, Series C Preferred Stock, and Series E Preferred Stock.
●
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (including a disposition of substantially all of the Company's assets, whether by sale, merger or other reorganization, or a sale of over 50% of the ownership of the Company), the holders of the Series C Preferred Stock and Series D Preferred Stock will be entitled to receive the greater of 150% of the purchase price of the Series C Preferred Stock and Series D Preferred Stock, plus accrued dividends or the amount distributed to the holders of the Common Stock as though the Series C Preferred Stock and Series D Preferred Stock were converted.
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The holders of the Series C Preferred Stock and Series D Preferred Stock are entitled to dividends equal to 6% of the stated value of the Series C Preferred Stock and Series D Preferred Stock, paid quarterly. Any unpaid dividends will accrue and the non-payment of dividends for two consecutive quarters is an event of default.
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●
The holders of the Series C Preferred Stock and Series D Preferred Stock have preemptive rights on a pro rata basis (based upon the percentage ownership of the Company on an as-converted basis) to purchase shares of Common Stock in future equity offerings, other than in connection with shares issued in a public offering, bona fide acquisitions, strategic alliances, or any management equity plan approved by the Compensation Committee.
●
There are no redemption or sinking fund provisions applicable to the Series C Preferred Stock and Series D Preferred Stock.
●
The Series C Preferred Stock and Series D Preferred Stock will be
pari
passu
with the Series A Preferred Stock, Series B Preferred Stock, and Series E Preferred Stock in regard to registration rights.
Item 9.01     Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number
Exhibit Title
3.1
Certificate of Designation, Preferences, and Rights of Series E 6% Convertible Preferred Stock of the Company
3.2
Second Amended and Restated Certificate of Designation, Preferences, and Rights of Series A 6% Convertible Preferred Stock
3.3
Second Amended and Restated Certificate of Designation, Preferences, and Rights of Series B 6% Convertible Preferred Stock
3.4
Amended and Restated Certificate of Designation, Preferences, and Rights of Series C 6% Convertible Preferred Stock
3.5
Amended and Restated Certificate of Designation, Preferences, and Rights of Series D 6% Convertible Preferred Stock
10.1
Stock Purchase Agreement dated November 24, 2014
10.2
Amendment dated November 24, 2014, to Stock Purchase Agreement dated February 4, 2013, as amended April 1, 2014
10.3
Amendment dated November 24, 2014, to Stock Purchase Agreement dated April 1, 2014
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PSM Holdings, Inc.
Date: December 2, 2014
By:
/s/
Kevin Gadawski
Kevin Gadawski, President
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