Exhibit
5.03 (i)
SPARTA COMMERCIAL SERVICES, INC.
CERTIFICATE
OF DESIGNATIONS OF PREFERENCES,
RIGHTS
AND LIMITATIONS
OF
SERIES C
CONVERTIBLE PREFERRED STOCK
The
undersigned, Anthony L. Havens
and Sandra L. Ahman
here
by certify that:
1.
They are the
Chairman and Chief Executive Officer
and
Secretary,
respectively, of Sparta Commercial Services, Inc., a
Nevada
corporation (the “Corporation”).
2. The
Corporation is authorized to issue 10
,000,000
shares of preferred stock. 35,850 have
been designated as Series A of which 125 shares are issued and outstanding and
1,000 shares of Series B. Preferred Stock, of which 90 shares are issued and
outstanding.
3. The
following resolutions were duly adopted by the Board of Directors:
WHEREAS,
the Certificate of Incorporation of the Corporation provides for a class of its
authorized stock known as preferred stock, comprised of 10
,000,000
shares, $
0.001
par value per share (the
Preferred Stock”), issuable from time to time in one or more
series;
WHEREAS,
the Board of Directors of the Corporation is authorized to fix the dividend
rights, dividend rate, voting rights, conversion rights, rights and terms of
redemption and liquidation preferences of any wholly unissued series of
Preferred Stock
and the number of shares
constituting any series and the designation thereof, of any of them;
and
WHEREAS,
it is the desire of the Board of Directors of the Corporation, pursuant to its
authority as aforesaid, to fix the rights, preferences, restrictions and other
matters relating to a series of
Preferred
Stock
, which shall consist of up to 200,000 shares of the Convertible
Preferred Stock
which the Corporation has
the authority to issue, as follows:
NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for
the issuance of a series of
Preferred Stock
for cash or exchange of other securities, rights or property and does hereby fix
and determine the rights, preferences, restrictions and other matters relating
to such series of
Preferred Stock
as
follows:
TERMS OF
PREFERRED STOCK
1. Designation,
Amount and Par Value. The series of
Preferred Stock
shall be designated as the
Corporation’s Series C Convertible Preferred Stock (the “Series C Preferred
Stock”) and the number of shares so designated shall be 200,000 (which shall not
be subject to increase without the consent of all of the holders of the Series C
referred Stock (each a “Holder” and collectively, the
“Holders”). Each share of Series C Preferred Stock shall have a par
value of $
0.001
per share.
2. Ranking. The
Series C Preferred Stock shall, with respect to dividend rights and rights upon
liquidation, winding-up or dissolution, rank:
a. senior
to the Corporation’s common stock, par value $
0.001
per share (“Common Stock”) and any other
class or series of Preferred Stock of the Corporation which by their terms are
junior to the Series C Preferred Stock (collectively, together with any
warrants, rights, calls or options exercisable for or convertible into such
Preferred Stock, the “Junior Shares”);
b. junior
to all existing and future indebtedness of the Corporation;
c. junior
to the Corporation’s Series A and Series B Preferred Stock.
3. Dividends
and Other Distributions. The Series C. Preferred Stock will not be
entitled to receive any dividends or other distributions except as specifically
set forth herein.
4. Protective
Provision. So long as any shares of Series C Preferred Stock are
outstanding, the Corporation shall not, without the affirmative approval of the
Holders of a majority of the shares of the Series C Preferred Stock then
outstanding, (a) alter or change adversely the powers, preferences or rights
given to the Series C Preferred Stock or alter or amend this Certificate of
Designations, (b) authorize or create any class of stock ranking as to
distribution of assets upon a liquidation senior to or otherwise pari passu with
the Series C Preferred Stock, (c) amend its
certificate or articles of incorporation or other
charter documents
in breach of any of the provisions hereof, (d) increase
the authorized number of shares of Series C Preferred Stock, (e) liquidate,
dissolve or wind-up the business and affairs of the Corporation or
(f) enter into any agreement with respect to the foregoing.
5.
Liquidation.
a. Upon
any liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, after payment or provision for payment of debts and other
liabilities of the Corporation, before any distribution or payment shall be made
to the holders of any Junior Shares by reason of their ownership thereof, the
Holders of Series C Preferred Stock shall first be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders an
amount with respect to each share of Series C Preferred Stock equal to $10.00
(the “Series C Liquidation Value”). If, upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the amounts payable with respect to the shares of Series C Preferred Stock are
not paid in full, the holders of shares of Series C Preferred Stock shall share
equally and ratably in any distribution of assets of the Corporation in
proportion to the liquidation preference each such holder is
entitled
b. After
payment has been made to the Holders of the Series C Preferred Stock of the full
amount of the Series C Liquidation Value, any remaining assets of the
Corporation shall be distributed among the holders of the Corporation
’
s Junior Shares in accordance with the
Corporation’s Certificates of Designation and Certificate of
Incorporation.
c. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation shall be insufficient to make payment in full to all Holders,
then such assets shall be distributed among the Holders at the time outstanding,
ratably in proportion to the full amounts to which they would otherwise be
respectively entitled.
6.
Redemption
.
a. Corporation
’
s Redemption Option. At any time
after the issuance of shares of Series C Preferred Stock, and so long as the
Corporation is not otherwise restricted from so doing, the Corporation shall
have the right, at the Corporation
’
s
option, to redeem all or a portion of the shares of Series C Preferred Stock, at
a price per share of the Series C Preferred Stock equal to the Series C
Liquidation Value (the “Corporation Redemption Price”).
b. Mechanics
of Redemption. If the Corporation elects to redeem any of the
Holders
’
Series C Preferred Stock then
outstanding, it shall deliver written notice thereof via facsimile and overnight
courier (“Notice of Redemption at Option of Corporation”) to each Holder, which
Notice of Redemption at Option of Corporation shall indicate (A) the number of
shares of Series C Preferred Stock that the Corporation is electing to redeem
and (B) the Corporation Redemption Price.
c. Payment
of Redemption Price. Upon receipt by any Holder of a Notice of
Redemption at Option of Corporation, such Holder shall promptly submit to the
Corporation such Holder’s Series C Preferred Stock certificates. Upon
receipt of such Holder’s Series C Preferred Stock certificates, the Corporation
shall pay the Corporation Redemption Price in cash to such Holder.
7.
Conversion.
a. Option
to Convert. The Holders of the Series C Preferred Stock shall have
the right, from time to time, to convert the shares of Series C Preferred Stock
held by them into shares of the Corporation’s Common Stock. The
number of such shares of Common Stock to be received for each share of Series C
Preferred Stock so converted shall be determined by (A) dividing the number of
shares of Series C Preferred Stock to be converted by the weighted average
closing price per share of the Corporation’s Common Stock for the ten (10)
trading days immediately preceding the date on which the Corporation agrees to
issue shares of Series C Preferred Stock to such Holder multiplied by (B) the
Series C Liquidation Value.
b. Mechanics
of Conversion. If a Holder of Series C Preferred Stock elects to
convert some of all of such Holder’s Series C Preferred stock into shares of the
Corporation’s Common Stock, such Holder shall deliver written notice thereof via
facsimile and overnight courier (“Notice of Conversion”) to the Corporation
setting forth the number of shares of shares of Series C Preferred Stock that
such Holder is electing to convert. In no event shall a Holder elect
to convert less than twenty percent (20%) of the original number of shares of
Series C Preferred Stock held by such Holder.
c. Issuance
of Shares of Common Stock . Upon receipt by the Corporation of any
Holder’s Notice of Conversion, the Corporation shall calculate the number of
shares of Common Stock to be issued to such Holder and shall promptly cause a
certificate or certificates evidencing such shares of Common Stock to be issued
to such Holder.
8.
Transferability
. The Series C
Preferred Stock may only be sold, transferred, assigned, pledged or otherwise
disposed of (“Transfer”) in accordance with state and federal securities
laws. The Corporation shall keep at its principal office
, or at the offices of the Transfer Agent,
a
register of the Series C Preferred Stock. Upon the surrender of any
certificate representing Series C Preferred Stock at such place, the
Corporation, at the request of the record Holder of such certificate, shall
execute and deliver (at the Corporation
’
s
expense) a new certificate or certificates in exchange therefor representing in
the aggregate the number of shares represented by the surrendered
certificate. Each such new certificate shall be registered in such
name and shall represent such number of shares as is requested by the Holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate.
9.
Miscellaneous.
a. Notices. Any
and all notices to the Corporation shall be addressed to the Corporation
’
s President or Chief Executive Officer at the
Corporation
’
s principal place of business
on file with the Secretary of State of the State of
Nevada
. Any and all notices or other
communications or deliveries to be provided by the Corporation to any Holder
hereunder shall be in writing and delivered personally, by facsimile, sent by a
nationally recognized overnight courier service addressed to each Holder at the
facsimile telephone number or address of such Holder appearing on the books of
the Corporation, or if no such facsimile telephone number or address appears, at
the principal place of business of the Holder. Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this section prior to
5:30 p.m. Eastern time, (ii) the date after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this section later than 5:30 p.m. but prior to 11:59 p.m.
Eastern time on such date, (iii) the second business day following the date of
mailing, if sent by nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be
given.
b. Lost
or Mutilated Preferred Stock Certificate. Upon receipt of evidence
reasonably satisfactory to the Corporation (an affidavit of the registered
Holder shall be satisfactory) of the ownership and the loss, theft, destruction
or mutilation of any certificate evidencing shares of Series C Preferred Stock,
and in the case of any such loss, theft or destruction upon receipt of indemnity
reasonably satisfactory to the Corporation
o
r in the case of any such mutilation upon
surrender of such certificate, the Corporation shall, at its expense, execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.
c. Headings. The
headings contained herein are for convenience only, do not constitute a part of
this Certificate of Designations and shall not be deemed to limit or affect any
of the provisions hereof.
IN
WITNESS WHEREOF, the undersigned
have
executed this Certificate this 13
th
day of
November, 2009.
/s/ A.L.
Havens
Anthony
L. Havens
Chairman
and Chief Executive Officer
/s/ Sandra L.
Ahman
Sandra L.
Ahman, Secretary