Document:

ex102.htm

OPTION AGREEMENT

BY THIS OPTION AGREEMENT

Effective as of February 3, 2011 (the “Effective Date”),

by and between GeoXplor CORP., a Nevada corporation, whose address is 3655 West Anthem Way, Anthem, Arizona 85086 (“GeoXplor”),

and

NEW AMERICA ENERGY CORP., a Nevada corporation whose address is 5614C Burbank Road SE, Calgary, Alberta, T2H 1Z4, Canada (“NECA”).

GeoXplor, in consideration of the agreements set forth herein, has granted certain rights to NECA under the following terms and conditions:

1.           Grant; Definitions

a.           Exploration License – GeoXplor hereby grants to NECA an exclusive license to enter upon the "Property" together with the right to conduct "Mineral Exploration" during a five-year evaluation and due diligence term.

b.           Definitions - The words and phrases used in this Agreement shall have the following meanings:

(1)           The "Property" shall include those certain unpatented mining claims situated in San Juan County, Utah, and more particularly described in Exhibit “A” attached hereto.

(2)           "Mineral Exploration and Development Testing" shall include those activities that NECA, in its sole judgment and discretion, may deem advisable for the purpose of ascertaining any facts relating to the occurrence, nature and extent of Vanadium & Uranium and related Vanadium & Uranium compounds or mineralization in and under the Property and the metallurgical and physical properties of such minerals; including, but not limited to, surface trenching, excavations, geophysical and geochemical surveys, drilling, the sinking of shafts for bulk sampling, and further including the right to use the surface for access, to place and use facilities on the surface and to use water and other surface resources that may be useful or convenient in connection with such activities.  Mineral Exploration and Development Testing shall specifically include such testing as may be required for filings with any applicable stock exchange.

(3)           “Shares” means fully paid and non-assessable common shares in the capital of NECA, issued pursuant to exemptions from registration and prospectus requirements contained in the United States Securities Act of 1933 and the rules and regulations promulgated thereunder, which Shares shall contain such restrictive legends regarding applicable hold periods as required by such securities laws.

  

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(4)           “Dollar(s)” or “$” shall mean currency of the United States.

c.           Transfer of Title – Upon NECA’s completion of its obligations under subsections a and b of Section 2 and subsection f of Section 4, GeoXplor shall transfer title of the Property to NECA subject to (1) NECA’s concurrent transfer to GeoXplor of a royalty on the production of Vanadium & Uranium and other commercially viable minerals from the Property as described in subsection c(2) of Section 2 and Exhibit “B” of this Agreement and (2) a further agreement to pay an additional bonus as specified in subsection c of Section 2 of this Agreement.

2.           Consideration to GeoXplor

a.           Payments - NECA shall pay GeoXplor in consideration of the grant of the exploration license and other rights granted under this Agreement the following:

(1)           February 28, 2011                                                                                    $50,000.00

(2)           May 31, 2011                                                                                        $50,000.00

                (3)           1st year anniversary of the Effective Date                                                                          $100,000.00

(4)           2nd year anniversary of the Effective Date                                                                         $100,000.00

(5)           3rd year anniversary of the Effective Date                                                                          $100,000.00

(6)           4th year anniversary of the Effective Date                                                                          $100,000.00

b.           Stock Transfer – As additional consideration, the Purchase Price shall include the issuance of 1,250,000 Shares, subject to such conditions as may be imposed by the rules and regulations of the United States Securities and Exchange Commission, as follows:

(1)           Five Hundred Thousand (500,000) Shares on execution of this Agreement;

(2)           Two Hundred Fifty Thousand (250,000) Shares on or before the date one year from the Effective Date of this Agreement; and

(3)           Two Hundred Fifty Thousand (250,000) Shares on or before the date two years from the Effective Date of this Agreement.

  

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(4)           Two Hundred Fifty Thousand (250,000) Shares on or before the date three years from the Effective Date of this Agreement;

provided, further, that NECA undertakes the obligation to perform any filings or other actions required to timely complete the stock transfers specified above.

c.           Conditions for Transfer of Title and Subsequent Limitations –

(1)           At such time as the NECA has completed the payments and stock transfers specified in subsections a and b of this Section 3, and has completed the expenditures for Work specified in subsection f of Section 4, the Property shall be transferred to NECA by Quitclaim Deed.

(2)           Concurrently with the transfer of title to NECA, NECA shall convey a “Net Value Royalty” on production of Vanadium & Uranium and other minerals from the Property measured by three percent (3.0%) of the gross proceeds received by the NECA from the sale or other disposition of Vanadium & Uranium or other Vanadium & Uranium compounds less (i) transportation of the product from the place of treatment to the purchaser, (ii) all handling and insurance charges associated with the transportation, and (iii) any taxes associated with the sale or disposition of the product (excluding any income taxes of NECA).  The Net Value Royalty shall be divided between GeoXplor and First Liberty Power Corp. (the transferor of rights in the Property under a prior Agreement), two and one-half percent (2.5%) to GeoXplor and one-half percent (0.5%) to First Liberty Power Corp.  NECA shall have the further right to purchase up to two percent (2%) of the Net Value Royalty from GeoXplor, in whole percentage points, for One Million Dollars ($1,000,000) for each one percent (1%).

(3)           If NECA, its assignee or a joint venture including NECA, (i) delivers to its Board of Directors or applicable other management a feasibility study recommending mining of Vanadium & Uranium carbonate or other Vanadium & Uranium compound from the Property and such Board of management authorizes implementation of a mining plan, or (ii) sells, options, assigns, disposes or otherwise alienates all or a portion of its interest in the Property, NECA shall pay GeoXplor an additional bonus of Five Hundred Thousand Dollars ($500,000) in cash or shares of NECA.  The election to obtain cash or shares of NECA shall be at the sole election of GeoXplor.

d.           Method of Making Payments - All payments required under this Agreement may be mailed or delivered to GeoXplor's address or to any single depository as GeoXplor may instruct.  Upon making payment to the authorized agent or depository, NECA shall be relieved of any responsibility for the distribution of such payment to GeoXplor.  The delivery or the deposit in the mail of any payment hereunder on or before the due date thereof shall be deemed timely payment hereunder.

  

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3.           Inspection

Both GeoXplor or NECA (or their respective agents), may enter upon the Property or processing facilities to inspect the same at such times and upon such notice to the other party as shall not unreasonably or unnecessarily hinder or interrupt the operations of NECA.  At such time as a royalty is conveyed to GeoXplor, the royalty document shall include a right of inspection of the Property and the books and records used for the calculation of royalty and the right to audit on an annual basis.

4.           Obligations of NECA

a.           Conduct of Operations – All work performed on the Property by NECA pursuant its rights under this Agreement or by GeoXplor pursuant to its activities as the operator to implement Work authorized by NECA, shall be done in a good and workmanlike manner and in compliance with all state or federal laws and regulations governing such operations.

b.           Protection from Liens – NECA shall pay all expenses incurred or authorized by it in its activities on the Property and shall allow no liens arising from any act of NECA to remain upon the Property; provided, however, that NECA shall not be required to remove any such lien as long as NECA is contesting in good faith the validity or amount thereof.

c.           Indemnity – NECA shall indemnify GeoXplor against and hold GeoXplor harmless from any suit, claim, judgment or demand whatsoever arising out of negligence on the part of NECA in the exercise of any of its rights pursuant to this Agreement, provided that if GeoXplor or any person or instrumentality acting on GeoXplor's behalf shall have been a contributing cause to the event giving rise to such suit, claim, demand or judgment, NECA 's obligation to indemnify GeoXplor shall not exceed NECA 's liability under the laws applicable to the event giving rise to such suit, claim, demand or judgment.  Likewise, GeoXplor shall similarly indemnify NECA from claims arising out of its negligence in the conduct of its activities as operator to implement Work authorized by NECA.

d.           Payment of Taxes – NECA shall pay all taxes levied against the Property and any improvements on the Property.  NECA shall have the right to contest, in the courts or otherwise, the validity or amount of any taxes or assessments, before it shall be required to pay the same.  If this Agreement is terminated or otherwise expires, any taxes that are NECA's responsibility shall be prorated for the calendar year of expiration or termination as of the date NECA has removed its equipment, facilities and improvements from the Property.

e.           Maintenance – NECA shall timely pay and make the appropriate record of the payment of the claim maintenance fee or any other fee required under state or federal law to maintain the unpatented mining claims included within the Property for each assessment year during which this Agreement continues in force beyond September 1 of the applicable assessment year.

  

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        f.           Work Commitment – Before the expiration of four (4) years from the Effective Date, NECA shall expend not less than One Million Dollars ($1,000,000) in Mineral Exploration and Development Testing ("Work").  The Work shall be scheduled to expend not less than One Hundred Fifty Thousand Dollars ($150,000) during the first year, Two Hundred Thousand Dollars ($200,000) during the second year, Three Hundred Fifty Thousand Dollars ($350,000) during the third year, Five Hundred Thousand Dollars ($500,000) during the fourth year, nothing during the fifth year, and Production during the sixth year. The nature, place and conduct of such Work shall be at the sole discretion of NECA and the amount of the expenditures shall be determined by the direct cost to NECA of Work performed.  GeoXplor shall undertake to perform such Work as directed by NECA under Work plans provided to GeoXplor on a periodic or as needed basis.  NECA’s performance of Work shall otherwise conform to the Work plan and shall conform to industry standards.  Any expenditure in excess of the amount required for any annual period shall be applicable against expenditures required for the succeeding year or years.

5.         Title Matters

a.           Representations and Warranties Related to the Property – GeoXplor represents and warrants to NECA that:  (1) the unpatented mining claims constituting the Property have been located and appropriate record made thereof in compliance with the laws of the United States and the laws of the State of Nevada, (2) the claim maintenance fees have been paid for the year beginning on September 1 prior to the effective date of this Agreement and appropriate record made thereof; (3) there is no claim of adverse mineral rights affecting the Property, (4) subject to the paramount interest of the United States, GeoXplor controls the full undivided possessory title to the Property, and (5) GeoXplor's possessory right to the Property is free and clear of all liens and encumbrances.

b.           Joint Representations – NECA and GeoXplor jointly represent and warrant that each company: (1) have the full right, power and capacity to enter into this Agreement upon the terms set forth herein, (2) is incorporated, organized and in good standing under the laws of the state of its incorporation and is qualified to do business and is in good standing in the State of Nevada; (3) has obtained all necessary corporate and shareholder approvals and no further action on the part of its directors or shareholders is necessary or desirable to make this Agreement valid and binding; and (4) neither the execution and delivery of this Agreement nor any of the agreement referred to herein or contemplated hereby, nor the consummation of the transactions hereby contemplated conflict with any agreement to which it is a party and by which it is currently bound.

c.           Title Documents; Data – Upon written request of NECA at any time during the term hereof, GeoXplor shall promptly deliver to NECA copies of all title documents affecting the Property that GeoXplor has in its possession.  If GeoXplor is in possession or knows the whereabouts of technical data concerning the mineral estate of the Property, GeoXplor shall, at NECA’s expense, furnish copies of such materials to NECA or notify NECA of the location of such information.

  

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d.           Title Defects, Defense and Protection – NECA has, during its initial due diligence examination of the Property prior to the Effective Date, examined and approved GeoXplor’s title to the Property.  If title to any of the Property is contested or questioned by any person, entity or governmental agency GeoXplor and NECA shall undertake such actions as may be required to perfect, defend or initiate litigation to protect such title.  In that event, all costs of such action shall be paid by NECA and shall be a credit toward the Work obligations of subsection f of Section 4.

e.           Amendment and Relocation of Mining Claims – NECA shall have the right, upon prior consultation with GeoXplor, to amend or relocate the unpatented claims which are subject to this Agreement.  The location notices of any such amended or related claims shall be approved by GeoXplor.

f.           Change of Law – If the law of the United States concerning acquisition of mineral rights on federally managed lands is repealed, amended, or new legislation is enacted, NECA shall have the right, at its expense, to take whatever action it deems appropriate to preserve a right to explore for, develop, and mine minerals from the Property.  If NECA elects to take any action under the terms of this subsection, it shall first notify GeoXplor in writing setting forth the nature of the proposed action and an explanation thereof.  GeoXplor agrees to cooperate with NECA and execute whatever documents are deemed necessary by NECA to accomplish such action.  Nothing in this subsection shall impose any obligation upon NECA to take any action, or diminish the right of GeoXplor to take action it deems appropriate; provided, however, that if GeoXplor chooses to take any action, it will first inform NECA of the nature of such contemplated action.

g.           General – Nothing herein contained and no notice or action which may be taken under this Section 5 shall limit or detract from NECA 's right to terminate this Agreement in the manner hereinafter provided.

6.           Termination; Removal of Property; Data

a.           Termination by GeoXplor – If NECA defaults in the performance of its obligations specified in this Agreement, GeoXplor shall give NECA written notice specifying the default.  If the default is not cured within thirty (30) days after NECA has received the notice, or if NECA has not within that time begun action to cure the default and does not thereafter diligently prosecute such action to completion, GeoXplor may terminate this Agreement by delivering to NECA written notice of such termination.  GeoXplor's right to terminate this Agreement shall be its sole remedy for any failure to make payments required under Section 2.  If NECA in good faith disputes the existence of a default, NECA shall initiate appropriate action in a court of competent jurisdiction within the 30-day period and the time to cure shall run from the date of a final determination that a default exists.  GeoXplor shall have no right to terminate this Agreement except as set forth in this subsection a of Section 6.

  

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b.           Termination by NECA – NECA shall have the right to terminate this Agreement at any time by written notice from NECA to GeoXplor.

c.           Termination of GeoXplor as Operator – If GeoXplor defaults in the performance of its duties and obligations to perform plans for the performance of Work as specified in subsection f of Section 4 of this Agreement, NECA shall give GeoXplor written notice specifying the default and the same provisions specified in subsection a of this Section 6 shall apply.  If the default is not cured, or other appropriate action taken, GeoXplor’s designation as operator shall terminate.  The termination of GeoXplor as operator shall not release the NECA from its obligation to complete the expenditures of Work required under subsection f of Section 4.

d.           Effect of Termination – From and after the date of termination of this Agreement by either party, all right, title and interest of the parties under this Agreement shall terminate, and neither party shall be required to make further payments or perform any further obligations hereunder concerning the Property, except payments and obligations, the commitment to pay or the due dates for the payment or performance of which occur prior to the termination date.

e.           Removal of Property – Upon any termination or expiration of this Agreement, NECA shall have a period of three (3) months from and after the effective date of termination within which it may elect to remove from the Property all of its machinery, buildings, structures, facilities, equipment and other property of every nature and description erected, placed or situated thereon, except supports placed in shafts, drifts or openings in the Property.  Failure of NECA to so remove the same shall constitute an abandonment by NECA to GeoXplor of the same; provided, however, that NECA may still be required to remove such property upon notice from GeoXplor at any time during the three-month period and thirty (30) days thereafter.

f.           Delivery of Data – If this Agreement is terminated, upon written request given by GeoXplor within thirty (30) days of said termination, NECA shall, within a reasonable time, furnish GeoXplor copies of all available noninterpretive exploration, development and mining data pertaining to the Property prepared by or for NECA.

g.           Relinquishment of Record - If this Agreement is terminated or otherwise expires, NECA shall provide GeoXplor with a recordable document sufficient to provide notice that NECA no longer asserts rights to the Property under this Agreement.

7.           Share Matters

GeoXplor represents and warrants to NECA that it is an “accredited” investor as that term is defined in Rule 501 of Regulation D promulgated under the United States Securities Act of 1933, as amended, and acknowledges and agrees that the Shares will be issued in accordance with all applicable securities laws and will be subject to hold periods and restrictions on resale in accordance with applicable securities laws and it is GeoXplor’s responsibility to determine what those hold periods and restrictions are before selling or otherwise transferring any Shares.

  

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8.           Notices

 

Any notice or communication required or permitted hereunder shall be effective when personally delivered or deposited, postage prepaid, certified or registered, in the United States mail to the addresses specified above.  Either party may, by notice to the other given as aforesaid, change its mailing address for future notices.

9.           Confidentiality

Each of the parties agrees that all information obtained under the terms of this Agreement will not be publicly disclosed or used other than for the activities contemplated hereunder except as required by law or by the rules and regulations of any regulatory authority or stock exchange having jurisdiction or with prior written consent of the other party, such consent not to be unreasonably withheld.

10.           Binding Effect; Assignment

This Agreement shall not be assigned by NECA except to a wholly owned subsidiary, in which case the NECA shall guarantee the performance of the assignee.  GeoXplor may assign all or any portion of its right to the royalty provided hereunder.

11.           Force Majeure

If NECA is delayed or interrupted in or prevented from exercising its rights or performing its obligations, as herein provided, by reasons of "force majeure," then, and in all such cases, NECA shall be excused, without liability, from performance of its obligations set forth in this Agreement (except as to obligations to pay money as set forth in Sections 2 and 4), but the provisions shall again come into full force and effect upon the termination of the period of delay, prevention, disability or condition.  "Force majeure" includes all disabilities arising from causes beyond the reasonable control of NECA; including, without limitation, acts of God, accidents, fires, damages to facilities, labor troubles, unavailability of fuels, supplies and equipment, orders or requirements of courts or government agencies, or the inability to obtain environmental clearance or operating permits that may be required by governmental authorities.  If a condition of force majeure is declared, the due dates for any performance (excluding time for payment of monies) hereunder shall be extended for the period of the disability.

12.           Memorandum

The parties to this Agreement agree to execute and record a Memorandum of this Agreement in a form sufficient to constitute record notice to third parties of the rights granted hereunder, which may be recorded in the official records of San Juan County, Utah.

  

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13.           Construction

a.           Governing Law - This Agreement shall be construed by the internal laws but not the laws of conflict of the State of Nevada.

b.           Headings - The headings used in this Agreement are for convenience only and shall not be deemed to be a part of this Agreement for purposes of construction.

c.           Entire Agreement - All of the agreements and understandings of the parties with reference to the Property are embodied in this Agreement, and this Agreement supersedes all prior agreements or understandings between the parties.

d.           No Implied Covenants – It is expressly agreed that no implied covenant or condition whatsoever shall be read into this Agreement relating to any time frame as the measure of diligence for any operations of NECA hereunder.

14.           Further Assurances

The parties agree to perform all acts and execute all documents that may be necessary to carry out the spirit and intent of this Agreement.

SIGNED, effective as of the date recited above.

GeoXplor CORP.                                                                           NEW AMERICA ENERGY CORP.

 

By: /s/ Clive Ashworth                                                   By /s/ Rick Walchuk                                                                

Authorized Signatory                                                                           Authorized Signatory

  

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Exhibit “A”

Property Description

The “Property” subject to the forgoing Agreement consists of the following unpatented lode mining claims situated in San Juan County, Utah, the names of which, the serial number assigned by the Utah State Office of the Bureau of Land Management, the situs of the claims on the ground according to the public land survey system and the place of record of the location notice thereof in the official records of San Juan County, are as follows:

	
Claim Name

	
BLM Serial No.

	
Township

	
Range

	
Section

	
County Record

	
FM 1

	
UMC 378055

	
28 South

	
25 East

	
25

	  
	
FM 2

	
UMC 378056

	
28 South

	
25 East

	
25

	  
	
FM 3

	
UMC 378057

	
28 South

	
25 East

	
25

	  
	
FM 4

	
UMC 378058

	
28 South

	
25 East

	
25

	  
	
FM 5

	
UMC 378059

	
28 South

	
25 East

	
25

	  
	
FM 6

	
UMC 378060

	
28 South

	
25 East

	
25

	  
	
FM 7

	
UMC 378061

	
28 South

	
25 East

	
25

	  
	
FM 8

	
UMC 378062

	
28 South

	
25 East

	
25

	  
	
FM 9

	
UMC 378063

	
28 South

	
25 East

	
25

	  
	
FM 10

	
UMC 378064

	
28 South

	
25 East

	
25

	  
	
FM11

	
UMC 378065

	
28 South

	
25 East

	
25

	  
	
FM12

	
UMC 378066

	
28 South

	
25 East

	
25

	  
	
FM 13

	
UMC 378067

	
28 South

	
25 East

	
25

	  
	
FM 15

	
UMC 378069

	
28 South

	
25 East

	
25

	  
	
FM 17

	
UMC 378071

	
28 South

	
25 East

	
25

	  
	
FM 19

	
UMC 378073

	
28 South

	
25 East

	
25

	  
	
FM 21

	
UMC 378075

	
28 South

	
25 East

	
25

	  
	
FM 23

	
UMC 378077

	
28 South

	
25 East

	
25

	  
	
FM 25

	
UMC 378079

	
28 South

	
25 East

	
25

	  
	  	  	  	  	  	  
	
FIRE 14

	
UMC 380829

	
28 South

	
25 East

	
25

	  
	
FIRE 16

	
UMC 380830

	
28 South

	
25 East

	
25

	  
	
FIRE 18

	
UMC 380831

	
28 South

	
25 East

	
25

	  
	
FIRE 20

	
UMC 380832

	
28 South

	
25 East

	
25

	  
	
FIRE 22

	
UMC 380833

	
28 South

	
25 East

	
25

	  
	
FIRE 24

	
UMC 380834

	
28 South

	
25 East

	
25

	  
	
FIRE 26

	
UMC 380835

	
28 South

	
25 East

	
25

	  
	
FIRE 40

	
UMC 381077

	
28 South

	
25 East

	
25

	  
	  	  	  	  	  	  
	
FP 2

	
UMC 391722

	
28 South

	
25 East

	
25

	  
	
FP 3

	
UMC391723

	
28 South

	
25 East

	
25

	  
	
FP 4

	
UMC 391724

	
28 South

	
25 East

	
25

	  
	
FP 6

	
UMC 391725

	
28 South

	
25 East

	
25

	  
	
FP 8

	
UMC 391726

	
28 South

	
25 East

	
25

	  

  

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FM 59

	
UMC 386212

	
28 South

	
25 East

	
26

	  
	
FM 60

	
UMC 386213

	
28 South

	
25 East

	
26

	  
	
FM 61

	
UMC386214

	
28 South

	
25 East

	
26

	  
	
FM 62

	
UMC 386215

	
28 South

	
25 East

	
26

	  
	
FM 63

	
UMC 386216

	
28 South

	
25 East

	
26

	  
	
FM 64

	
UMC 386217

	
28 South

	
25 East

	
26

	  
	
FM 65

	
UMC 386218

	
28 South

	
25 East

	
26

	  
	
FM 67

	
UMC 391170

	
28 South

	
25 East

	
26

	  
	
FM 69

	
UMC 391171

	
28 South

	
25 East

	
26

	  
	
FM 71

	
UMC 391172

	
28 South

	
25 East

	
26

	  
	
FM 73

	
UMC 391173

	
28 South

	
25 East

	
26

	  
	
FM 75

	
UMC 391174

	
28 South

	
25 East

	
26

	  
	
FM 77

	
UMC 391175

	
28 South

	
25 East

	
26

	  
	
FM 79

	
UMC 391176

	
28 South

	
25 East

	
26

	  
	
FM 81

	
UMC 391177

	
28 South

	
25 East

	
26

	  
	
FM 66

	
UMC 386219

	
28 South

	
25 East

	
23

	  
	
FM 68

	
UMC 386221

	
28 South

	
25 East

	
23

	  
	
FM 70

	
UMC 386223

	
28 South

	
25 East

	
23

	  
	
FM 72

	
UMC 386225

	
28 South

	
25 East

	
23

	  
	
FM 74

	
UMC 386227

	
28 South

	
25 East

	
23

	  
	
FM 76

	
UMC 386229

	
28 South

	
25 East

	
23

	  
	
FM 78

	
UMC 386231

	
28 South

	
25 East

	
23

	  
	
FM 80

	
UMC 386233

	
28 South

	
25 East

	
23

	  
	
FM 82

	
UMC 391178

	
28 South

	
25 East

	
23

	  

 

  

11

  

	  	  	  	  	  	  
	
UV 1

	
UMC 409924

	
28 South

	
25 East

	
23

	  
	
UV 7

	
UMC 409930

	
28 South

	
25 East

	
23

	  
	
UV 8

	
UMC 409931

	
28 South

	
25 East

	
23

	  
	
UV 9

	
UMC 409932

	
28 South

	
25 East

	
23

	  
	
UV10

	
UMC409933

	
28 South

	
25 East

	
23

	  
	
UV 11

	
UMC409934

	
28 South

	
25 East

	
23

	  
	
UV 12

	
UMC 409935

	
28 South

	
25 East

	
23

	  
	
UV 13

	
UMC 409936

	
28 South

	
25 East

	
23

	  
	
UV 14

	
UMC 409937

	
28 South

	
25 East

	
23

	  
	
UV15

	
UMC 409938

	
28 South

	
25 East

	
26

	  
	
UV 16

	
UMC 409939

	
28 South

	
25 East

	
26

	  
	
UV 17

	
UMC 409940

	
28 South

	
25 East

	
26

	  
	
UV 18

	
UMC 409941

	
28 South

	
25 East

	
26

	  
	
UV 19

	
UMC 409942

	
28 South

	
25 East

	
26

	  
	
UV 20

	
UMC 409943

	
28 South

	
25 East

	
26

	  
	
UV 21

	
UMC 409944

	
28 South

	
25 East

	
26

	  
	  	  	  	  	  	  
	
FP 67

	
UMC 391728

	
28 South

	
25 East

	
24

	  
	
FP 69

	
UMC 391729

	
28 South

	
25 East

	
24

	  
	
FP 71

	
UMC 391730

	
28 South

	
25 East

	
24

	  

	
FP 73

	
UMC 391731

	
28 South

	
25 East

	
24

	  
	
FP 75

	
UMC 391732

	
28 South

	
25 East

	
24

	  
	
FP 77

	
UMC 391733

	
28 South

	
25 East

	
24

	  
	
FP 79

	
UMC 391734

	
28 South

	
25 East

	
24

	  
	
FP 81

	
UMC 391735

	
28 South

	
25 East

	
24

	  
	
FP 83

	
UMC 391736

	
28 South

	
25 East

	
24

	  
	
FP 85

	
UMC 391737

	
28 South

	
25 East

	
24

	  

  

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Exhibit “B”

(Royalty Provisions)

If the Property is conveyed to New America Energy Corp. (“NECA”), under the terms of the foregoing Purchase Agreement, NECA shall convey to GeoXplor Corp. (“GeoXplor”) and First Liberty Power Corp. (FLPC) (collectively the “Royalty Holders”), a “Royalty” on the Net Value of Vanadium & Uranium or other Vanadium & Uranium compounds or products (“Minerals”), as defined in the foregoing Purchase Agreement, which Royalty conveyance shall include the following terms and conditions:

1.           Payment of Royalty

a.           Frequency of Payment of Royalty.  Royalty shall be due and payable within thirty (30) business days after the sale proceeds are received from any purchaser of Mineral produced from the Property.

b.           Method of Making Payments.  All payments required hereunder may be mailed or delivered to any single depository as GeoXplor may instruct.  If the party paying the Royalty (the “Payor”) makes a payment or payments on account of the Royalty in accordance with the provision of this Exhibit “B,” it will have no further responsibility for distribution of the Royalty.  All charges of the agent, trustee or depository will be borne solely by the party (ies) receiving payments of Royalty.  The delivery or the deposit in the mail of any payment hereunder on or before the due date thereof shall be deemed timely payment hereunder.

2.           Records and Reports

a.           Records, Inspection and Audit. Within one hundred and forty (140) days following the end of each calendar year, commencing with the year in which the Property (or any portion thereof) is brought into commercial production (not inclusive of any bulk sampling programs or pilot plant or test operations), the Payor shall deliver to GeoXplor a statement of the Royalty paid for said calendar year.  GeoXplor (or its designated agent) shall have the right within a period of ninety (90) days from receipt of such statement to inspect the Payor’s books and records relating thereto and to conduct an independent audit of such books and records at its own cost and expense.

b.           Objections.  If GeoXplor does not request an inspection of the Payor’s books and records during the ninety (90) day period referred to in the preceding paragraph, all payments of Royalty for the annual period will be considered final and in full satisfaction of all obligations of the payor with respect thereto.  If GeoXplor elects to question any calculation of Royalty, GeoXplor shall deliver to the Payor a written notice (the “Objection Notice”) within ninety (90) days after receipt by GeoXplor of the final statement.  If such audit determines that there has been a deficiency or an excess in the payment made to GeoXplor, such deficiency or excess will be resolved by adjusting the next payment or due hereunder.  GeoXplor will pay all the costs and expenses of such

  

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audit unless a deficiency of five percent (5%) or more of the amount due is determined to exist.  The Payor will pay the costs and expenses of such audit if a deficiency of five percent (5%) or more of the amount due is determined to exist.  All books and records used and kept by the Payor to calculate the Royalty due hereunder will be kept in accordance with generally accepted accounting principles.

c.           Evidence of Maintenance of the Claims.  The Payor shall deliver to GeoXplor, not later than the date two weeks prior to the date for the payment of annual claim maintenance fees for the Property, evidence that the fee has been timely paid.

d.           Agent.  For purposes of exercising any rights under Sections 1 and 2 of these royalty provisions, GeoXplor (or its designated successor) shall be the agent of the Royalty Holders.

3.           Inurement

The Royalty shall run with the land and be binding on all subsequent owners of the Property, including any amendments, relocations, patents of the same or additional or alternative rights to mine as may be acquired for the same land included within the Property as a result of any changes in the mineral laws of the United States.

4.           Assignments by Royalty Holders

Any Royalty Holder may transfer, pledge, mortgage, charge or otherwise encumber all or any part of its rights, title and interest in and to its Royalty; provided, however, that the Payor shall be under no obligation to make its payments hereunder to such assignee, transferee, pledge or other third party until the Payor’s receipt of notice concerning the assignment or transfer.

 

  

14ex4-1.htm

EXHIBIT 4.1

 

CERTIFICATE OF DESIGNATION

OF

SERIES A PREFERRED STOCK

OF

MERISEL, INC.

 

	  	  	  

Pursuant to Section 151 of the

 

General Corporation Law of the State of Delaware

 

	  	  	  

Merisel, Inc., a Delaware corporation (the “Corporation”), DOES HEREBY CERTIFY:

 

That pursuant to the authority conferred upon the Board of Directors (the “Board”) by the Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), of the Corporation, the Board on January 19, 2011 adopted the following resolution creating a series of 360,000 shares of the authorized 1,000,000 shares of preferred stock, par value $0.01 per share, of the Corporation (the “Preferred Stock”) to be designated as its Series A Preferred Stock:

 

RESOLVED, that pursuant to the authority conferred upon the Board by the Certificate of Incorporation of the Corporation, the Board hereby authorizes the creation of and establishes a series of Preferred Stock and hereby states the designation and number of shares thereof and fixes the powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof as follows:

 

1.           Designation Amount.  The shares of such series shall be designated as Series A Preferred Stock (the “Series A Preferred Stock”).  Shares of Series A Preferred Stock redeemed or purchased by the Corporation shall be canceled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series; provided, however, that such issued and reacquired shares of such series may be reissued as shares of Series A Preferred Stock as a stock dividend on outstanding shares of Series A Preferred Stock.

 

(a)          Number of Shares.  The number of authorized shares of Series A Preferred Stock shall initially be 140,000 which number may from time to time be increased by the Board.

 

2.           Definitions.  For purposes of this “Certificate of Designation”, the following terms shall have the meanings indicated:

 

  

 

  

 

“Affiliate” shall mean, with respect to any specified Person (as defined below), any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Change of Control” shall mean the occurrence of any Person or group of Persons acquiring (a) beneficial ownership of at least a majority of the voting Common Stock on a fully diluted basis and at least a majority of the voting power of the Corporation entitled to vote for the election of members of the board of directors of the Corporation or (b) at least 75% of the fair market value of the assets of the Corporation and its subsidiaries by sale, lease, transfer or other disposition thereof, and provided that there is no subsequent liquidation, dissolution or winding-up of the affairs of the Corporation as a result of such sale, lease, transfer or other disposition.

 

“Change of Control Notice” shall have the meaning set forth in Section 6(f).

 

“Change of Control Price” shall mean a price per share equal to $101 plus accrued and unpaid dividends.

 

“Closing Date” shall mean, with respect to the Series A Preferred Stock, February 4, 2011, or such other date as the parties agree upon in writing.

 

“Common Stock” shall mean the shares of common stock, par value $0.01 per share, of the Corporation.

 

“Credit Agreement” shall mean that certain Revolving Credit and Security Agreement, dated as of August 13, 2010, by and among the Corporation, Merisel Americas, Inc., Color Edge LLC, Color Edge Visual LLC, Comp 24 LLC, Crush Creative LLC, Dennis Curtin Studios, LLC, MADP, LLC, Advertising Props, Inc., Fuel Digital, LLC, and PNC Bank, National Association, as amended, restated, supplemented, modified or replaced from time to time.

 

“Dividend Payment Date” shall have the meaning set forth in Section 4(a).

 

“Dividend Period” shall have the meaning set forth in Section 4(a).

 

“Dividend Shares” shall have the meaning set forth in Section 4(c).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Junior Securities” shall have the meaning set forth in Section 3.

 

“Liquidation Preference” shall have the meaning set forth in Section 5(a).

 

“Non-Business Day” shall have the meaning set forth in Section 4(a).

 

“Parity Securities” shall have the meaning set forth in Section 7(c).

 

  

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“Person” shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

 

“Senior Securities” shall have the meaning set forth in Section 7(c).

 

“Series A Original Issue Price” shall mean $100 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, stock distribution or combination, subdivision, reclassification or other corporate actions having the similar effect with respect to the Series A Preferred Stock.

 

“Series A Preferred Stock” shall have the meaning set forth in Section 1.

 

“Voting Stock” of a corporation shall mean all classes and series of stock of such corporation then outstanding and normally entitled to vote in the election of directors.

 

“Wholly Owned Subsidiary” shall mean a subsidiary, all the stock of which (other than directors’ qualifying shares and shares held by other Persons to the extent such shares are required by applicable law to be held by a Person other than the Corporation or a subsidiary) is owned by the Corporation or one or more Wholly Owned Subsidiaries.

 

3.           Rank.  The Series A Preferred Stock shall, with respect to dividend distributions and distributions on liquidation, winding up and dissolution, rank senior to all classes and series of stock of the Corporation now or hereafter authorized, issued or outstanding (collectively, the “Junior Securities”).

 

4.           Dividends.

 

(a)         From and after the date of the issuance of any shares of Series A Preferred Stock (which may be issued from time to time on one or more days, and including any shares of Series A Preferred Stock issued as a dividend pursuant to this Section 4(a)), the holders of the Series A Preferred Stock shall be entitled to receive when, as and if declared by the Board of the Corporation, out of funds legally available therefor, dividends per share at the rate of 12% per annum of the Series A Original Issue Price.  Such dividends shall be cumulative and shall be payable quarterly in arrears in four equal amounts (other than the initial dividend due on May 15, 2011) on February 15, May 15, August 15 and November 15 (each of such dates being a “Dividend Payment Date” and each calendar quarter being a “Dividend Period”), commencing May 15, 2011; provided, that if any such day shall be Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law to close, or a day which is or is declared a national or a New York state holiday (any of the foregoing, a “Non-Business Day”), then the Dividend Payment Date shall be the next succeeding day which is not a Non-Business Day.  Each such dividend shall be paid to stockholders of record on the respective date, not exceeding fifty (50) days preceding such Dividend Payment Date, as shall be fixed for this purpose by the Board in advance of payment of each particular dividend.  Any dividend payments made with respect to shares of Series A Preferred Stock will be made in either (i) cash, or (ii) additional fully paid and nonassessable shares of Series A Preferred Stock valued at $100 per share; provided, if dividend payments are not paid in cash at the rate of at least 8% per annum of the Series A Original Issue Price on a Dividend Payment Date, the holders of the Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of the Corporation, out of funds legally available therefor, dividends per share for the quarter ending on such Dividend Payment Date at the rate of 16% per annum of the Series A Original Issue Price; provided further, that notwithstanding anything to the contrary herein, any dividend payments with respect to such additional 4% per annum shall be made in additional fully paid and nonassessable shares of Series A Preferred Stock valued at $100 per share.  Any such payments in cash or in the issuance of such additional shares shall constitute full payment of such dividend.  The Corporation shall make such dividend payment on such Dividend Payment Date in cash and/or additional shares of Series A Preferred Stock to the extent permitted by applicable law, regardless of the terms of any other securities of the Corporation or any contract or other agreement to which it may be a party.  All dividends paid with respect to shares of Series A Preferred Stock pursuant to this Section 4(a) shall be paid pro rata to the holders entitled thereto.  The Corporation will issue, if necessary, fractions of a share (calculated to nearest 1/100 of a share) of Series A Preferred Stock as part of the payment of any dividend paid in additional shares of Series A Preferred Stock.  All shares of Series A Preferred Stock which may be issued as a dividend with respect to the Series A Preferred Stock will thereupon be duly authorized, validly issued, fully paid and nonassessable and free of all liens and charges.  Notwithstanding anything herein to the contrary, any dividend payments made with respect to shares of Series A Preferred Stock will be made in cash, and not in additional fully paid and nonassessable shares of Series A Preferred Stock, so long as (A) such cash payments are permitted under the Credit Agreement and related loan documents to which the Corporation is a party or by which its assets or properties are bound or may be subject and (B) the Board has determined, in its sole discretion, that such cash payments will not negatively impact the operations or prospects of the Corporation.

 

  

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(b)         Dividends on shares of Series A Preferred Stock issued on the Closing Date shall be fully cumulative and shall accrue whether or not declared and whether or not in any fiscal year there shall be net profits or surplus available for the payment of dividends in such fiscal year, so that if in any fiscal year or years, dividends in whole or in part are not paid upon the Series A Preferred Stock, unpaid dividends thereon shall accumulate; provided, however, that dividends on any share of Series A Preferred Stock issued as dividends shall be fully cumulative and shall accrue (whether or not earned or declared) from the applicable Dividend Payment Date.  Accumulated unpaid dividends for any past Dividend Periods may be declared by the Board and paid on any date fixed by the Board, whether or not a regular Dividend Payment Date, to holders of record on the books of the Corporation on such record date as may be fixed by the Board.  Holders of Series A Preferred Stock will not be entitled to any dividends in excess of full cumulative dividends.  No interest or sum of money in lieu of interest shall be payable in respect of any accumulated unpaid dividends.  Dividends payable on shares of Series A Preferred Stock for any period greater or less than a full Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

 

(c)          So long as any shares of Series A Preferred Stock are outstanding, the Corporation shall not (i) declare, pay or set apart for payment any dividend on the Common Stock or any other shares of Junior Securities, (ii) make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption, retirement, or other acquisition for value of any of, or redeem, purchase, retire or otherwise acquire for value any of, the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities (other than as a result of a reclassification of Junior Securities, or the exchange or conversion of one class or series of Junior Securities for or into another class or series of Junior Securities, or other than through the use of proceeds of a substantially contemporaneous sale of other Junior Securities) or (iii) make any distribution in respect of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, in any such case, either directly or indirectly, and whether in cash, obligations or shares of the Corporation or other property (other than distributions or dividends of a particular class or series of Junior Securities to holders of such Junior Securities), and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase, redeem or otherwise acquire for value any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, unless all dividends due and payable on the Series A Preferred Stock have been paid in cash or all shares of Series A Preferred Stock issued in lieu of cash dividends (“Dividend Shares”) have been redeemed or repurchased by the Corporation.

 

  

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5.           Liquidation Preference.

 

(a)         In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, then, before any distribution or payment shall be made to the holders of any Junior Securities, including the Common Stock, the holders of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to $100.00 for each share outstanding (which amount is herein referred to as the “Liquidation Preference”), together with an amount in cash equal to all accrued and unpaid dividends thereon, to the date fixed for liquidation, dissolution or winding-up.  Except as provided in the preceding sentence, holders of Series A Preferred Stock shall not be entitled to any distribution in the event of any liquidation, dissolution or winding-up of the affairs of the Corporation.  If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of Series A Preferred Stock, and all other shares of Series of stock of the Corporation ranking pari passu with respect to such payments, then the holders of all such shares shall share ratably with any other series of pari passu stock of the Corporation in any distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series A Preferred Stock and such other pari passu shares are entitled were paid in full.  After payment of the full amount of the Liquidation Preference to which each holder is entitled, such holders of shares of Series A Preferred Stock will not be entitled to any further participation in any distribution of the assets of the Corporation.

 

(b)         For the purpose of this Section 5, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with any other corporation shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, unless such voluntary sale conveyance, exchange or transfer shall be in connection with a plan of liquidation, dissolution or winding-up of the Corporation.

 

  

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6.           Redemption.

 

(a)         Subject to clause (h) of this Section 6, to the extent the Corporation shall have funds legally available for such redemption, the Corporation may, at any time or from time to time on or after February 4, 2013 (and at no time prior to such date), redeem in cash, in whole or in part, the shares of the Series A Preferred Stock at the time outstanding, upon notice given as hereinafter specified at a price equal to the Series A Original Issue Price, together with all accrued and unpaid dividends thereon.

 

(b)         Subject to clause (h) of this Section 6, the Corporation may redeem, in whole or in part, the shares of Series A Preferred Stock at the time outstanding at a price equal to the applicable Change of Control Price at any time after the Closing Date and on or within ninety (90) days after the date of a Change of Control.

 

(c)         On February 4, 2017, the Corporation shall redeem, in whole and in cash, all of the shares of Series A Preferred Stock then outstanding, at a price equal to the Series A Original Issue Price, together with all accrued and unpaid dividends.

 

(d)         Notwithstanding clauses (a) and (b) of this Section 6, the Corporation may redeem, in whole or in part, any Dividend Shares outstanding, at any time or from time to time, at a price equal to $100 per share, together with all accrued and unpaid dividends thereon.

 

(e)         In the event of partial redemptions of Series A Preferred Stock pursuant to Sections 6(a) and 6(b), the shares to be redeemed will be determined on a pro rata basis (as determined by the number of shares of Series A Preferred Stock outstanding on a record date not less than thirty (30) days nor more than sixty (60) days prior to the optional redemption date), provided, however, that the Corporation may redeem all shares held by any holders of a number of shares not to exceed 1,000 as may be specified by the Corporation pursuant to Sections 6(a) and 6(b).  On and after a redemption date, unless the Corporation defaults in the payment of the redemption price, dividends will cease to accrue on shares of Series A Preferred Stock called for redemption and all rights of holders of such shares will terminate except for the right to receive the redemption price and accrued and unpaid dividends thereon to the redemption date.

 

(f)          Upon the occurrence of a Change of Control, each holder of record of shares of Series A Preferred Stock will have the right, as set forth below, to require that the Corporation redeem such holder’s shares in cash at the Change of Control Price; provided, however, that no rights under this Section 6(f), with respect to any holder of record of shares of Series A Preferred Stock, shall attach to, and the Corporation shall have no obligations under this Section 6(f) with respect to, any Change of Control in which such holder is party to, or an Affiliate of a party to, any transaction effectuating such Change of Control, provided, however, that for purposes of this clause (f) of this Section 6, the Corporation shall be deemed not to be an Affiliate of any such holder.  Following any Change of Control, notice (a “Change of Control Notice”) shall be mailed by first class mail, postage prepaid and mailed within thirty (30) days of such Change of Control addressed to the holders of record of the shares at their respective last addresses as they shall appear on the books of the Corporation.  Each such notice shall state:  (i) that a Change of Control has occurred and that such holder has the right to require the Corporation to redeem such holder’s shares at a redemption price in cash equal to the applicable Change of Control Price, together with all accrued and unpaid dividends, to the date of redemption; (ii) the circumstances and, to the extent available, relevant facts regarding such Change of Control (including information with respect to pro forma historical income, cash flow and capitalization of the Corporation or other relevant entity after giving effect to such Change of Control); (iii) the redemption date (which shall be not less than one hundred twenty (120) days from the date such notice is mailed); (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date, and (vi) the instructions determined by the Corporation, consistent with such provision, that a holder must follow in order to have its shares redeemed.

 

  

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(g)         Shares of Series A Preferred Stock which have been issued and reacquired in any manner, including shares purchased or redeemed, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of the Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of Preferred Stock; provided, however, that no such issued and reacquired shares of such series shall be reissued or sold as shares of Series A Preferred Stock unless reissued as a stock dividend on outstanding shares of Series A Preferred Stock.

 

(h)         Notwithstanding the foregoing provisions of Sections 6(a) and 6(b) hereof, unless the full cumulative dividends on all outstanding shares of Series A Preferred Stock shall have been paid or contemporaneously are declared and paid for all past dividend periods, none of the shares of Series A Preferred Stock shall be redeemed pursuant to Sections 6(a) and 6(b) hereof unless all outstanding shares of Series A Preferred Stock are simultaneously redeemed.

 

(i)           Notice of every redemption of shares of Series A Preferred Stock shall be mailed by first class mail, postage prepaid, and mailed not less than thirty (30) days nor more than sixty (60) days prior to the redemption date addressed to the holders of record of the shares to be redeemed at their respective last addresses as they shall appear on the books of the Corporation; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Corporation has failed to give such notice or except as to the holder to whom notice was defective.  Each such notice shall state:  (i) the redemption date; (ii) the total number of shares of Series A Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of shares of such holder to be redeemed; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date.

 

(j)           Notice having been mailed as aforesaid and provided that on or before the redemption date specified in such notice all funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares so called for redemption so as to be and to continue to be available therefor, then, from and after the redemption date, dividends on the shares of Series A Preferred Stock so called for redemption shall cease to accrue, and said shares shall no longer be deemed to be outstanding and shall not have the status of shares of Series A Preferred Stock, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price and all dividends accrued and unpaid to the date fixed for redemption) shall cease.  Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid.  In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the holder thereof.

 

  

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(k)          If such notice of redemption shall have been duly given and if, prior to the redemption date, the Corporation shall have irrevocably deposited the funds sufficient for the redemption with a bank or trust company in trust for the pro rata benefit of the holders of the shares called for redemption, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for cancellation, from and after the time of such deposit, all prohibitions on the Corporation set forth herein shall terminate, holders of the shares of Series A Preferred Stock called for redemption shall cease to be stockholders with respect to such shares and thereafter such shares shall no longer be transferable on the books of the Corporation and such holders shall have no interest in or claim against the Corporation with respect to such shares (including dividends thereon accrued after such redemption date) except the right to receive payment of the redemption price (including all dividends accrued and unpaid to the date for redemption) upon surrender of their certificates.  Any funds deposited and unclaimed at the end of one year and eleven months from the date fixed for redemption shall be repaid to the Corporation upon its request, after which repayment the holders of shares called for redemption shall look only to the Corporation for payment of the redemption price.  The aforesaid bank or trust company shall be organized and in good standing under the laws of the United States of America, or any state thereof, shall have capital, surplus and undivided profits aggregating at least $100,000,000 according to its last published statement of condition, and shall be identified in the notice of redemption.  Any interest accrued on such funds shall be paid to the Corporation from time to time.

 

7.           Voting Rights.

 

(a)         Except as otherwise provided in this Section 7 or as otherwise from time to time provided by law, the holders of shares of Series A Preferred Stock shall have no voting rights and all voting rights in the Corporation shall be vested exclusively in the holders of the Common Stock of the Corporation.

 

(b)          (i)           If and whenever dividends are not paid on shares of Series A Preferred Stock in cash at the rate of at least 8% per annum of the Series A Original Issue Price for four (4) consecutive Dividend Payment Dates, in addition to any other legal or equitable remedy available to any holder, the number of directors then constituting the Board of the Corporation shall be increased by one (1) director and the holders of the then outstanding shares of the Series A Preferred Stock shall be entitled to elect one director at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of such shares of Series A Preferred Stock called as hereinafter provided.

 

  

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(ii)           Whenever such voting right shall have vested, such right may be exercised initially either at a special meeting of the holders of the Series A Preferred Stock, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such annual meeting or by the written consent of the holders of Series A Preferred Stock pursuant to Section 228 of the Delaware General Corporation Law.  Such voting right of the Series A Preferred Stock shall continue until such time as (A) all dividends accumulated on the Series A Preferred Stock shall have been paid in full and (B) the Corporation has fulfilled all redemption obligations with respect to such series to the extent such obligations have matured, at which time such voting right of the holders of the Series A Preferred Stock shall terminate, subject to revesting in the event of each and every subsequent failure of the Corporation for the requisite period of time to pay dividends in cash or to discharge its redemption obligations, as described above.

 

(iii)           At any time after such voting power shall have been so vested in shares of Series A Preferred Stock and such right shall not already have been initially exercised, a proper officer of the Corporation may, and upon the written request of any holder of shares the Series A Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of shares of the Series A Preferred Stock for the election of the one director to be elected by them as herein provided, such call to be made by notice similar to that provided in the by-laws of the Corporation for a special meeting of the stockholders or as required by law.

 

Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders at the place for holding annual meetings of stockholders of the Corporation or if none, at a place designated by the Secretary of the Corporation.  If such meeting shall not be called by the proper officers of the Corporation within thirty (30) days after the personal service of such written request upon the Secretary of the Corporation, or within thirty (30) days after mailing the same within the United States by registered mail, addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authorities), then the holders of record of 10% of the shares of the Series A Preferred Stock then outstanding may designate in writing a holder of the Series A Preferred Stock to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders and shall be held at the same place as is elsewhere provided in this Section 7(b)(iii) or at such other place as is selected by such person so designated.  Any holder of Series A Preferred Stock which would be entitled to vote at any such meeting shall have access to the stockholders of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this paragraph.  Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called during a period within ninety (90) days immediately preceding the date fixed for the next annual meeting of stockholders.

 

  

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(iv)           At any meeting held for the purpose of electing directors at which the holders of Series A Preferred Stock shall have the right to elect a director as provided herein, the presence in person, or by proxy of the holders of the lesser of (A) a majority of the then outstanding shares of the Series A Preferred Stock or (B) a percentage of the then outstanding shares of the Series A Preferred Stock, which percentage is equal to the percentage of the then outstanding shares of Common Stock then required to constitute a quorum for the election of directors by holders of Common Stock, shall be required and be sufficient to constitute a quorum of the series for the election of directors by such series.  The director to be elected by the holders of Series A Preferred Stock pursuant to this Section 7 shall be elected by the affirmative vote of the holders of a majority of the then outstanding shares of Series A Preferred Stock.  At any such meeting or adjournment thereof (x) the absence of a quorum of the holders of the Series A Preferred Stock shall not prevent the election of directors other than the director to be elected by the holders of Series A Preferred Stock and the absence of a quorum or quorums of the holders of capital stock entitled to elect such other directors shall not prevent the election of directors to be elected by the holders of the Series A Preferred Stock and (y) in the absence of a quorum of the holders of any class or series of stock entitled to vote for the election of directors, a majority of the holders present in person or by proxy of such series shall have the power to adjourn the meeting for the election of directors which the holders of such series are entitled to elect, from time to time, without notice (except as required by law) other than announcement at the meeting, until a quorum shall be present.

 

(v)           The term of office of all directors elected by the holders of Series A Preferred Stock pursuant to Section 7(b)(i) hereof in office at any time when the aforesaid voting rights are vested in the holders of Series A Preferred Stock shall terminate in one year or upon the election of their successors at any meeting of stockholders for the purpose of electing directors, if later.  Upon any termination of the aforesaid voting rights in accordance with Section 7(b)(ii) hereof, the term of office of all directors elected by the holders of Series A Preferred Stock pursuant to Section 7(b)(i) hereof then in office thereupon shall terminate and upon such termination the number of directors constituting the Board shall, without further action, be reduced by, the number of directors elected by the holders of Series A Preferred Stock, subject always to the increase of the number of directors pursuant to Section 7(b)(i) hereof in case of the future right of the holders of Series A Preferred Stock to elect a director as provided herein.

 

(vi)           In case of any vacancy occurring among the directors so elected, the holders of the Series A Preferred Stock then outstanding may, at a special meeting of the respective holders called as provided above, elect a successor to hold office for the unexpired term of the director whose place shall be vacant.

 

(c)           In addition to any vote or consent of stockholders required by law or the Certificate of Incorporation, the consent of the holders of at least a majority of the shares of Series A Preferred Stock at the time outstanding, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:

 

(i)            Any amendment, alteration or repeal of any of the provisions of the Certificate of Incorporation, or of the by-laws of the Corporation, which affects adversely the voting powers, rights or preferences of the holders of shares of the Series A Preferred Stock, provided, that the amendment of the provisions of the Certificate of Incorporation so as to authorize or create, or to increase the authorized amount of, any of the Corporation’s Junior Securities, shall not be deemed to affect adversely the powers, rights or preferences of the holders of shares of Series A Preferred Stock; or

 

  

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(ii)            The amendment of this Certificate of Designation to allow for the authorization or creation of, or the increase in the authorized amount of, any shares of any class or any security convertible into any class or series of stock that ranks senior to (“Senior Securities”) or pari passu with (“Parity Securities”) the series of Series A Preferred Stock, provided, however, that no such consent of the holders of Series A Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect or when the issuance of any such Senior Security, Parity Security or convertible security is to be made, as the case may be, provision is made for the redemption of all shares of Series A Preferred Stock at the time outstanding; provided further that the limitation on redemptions set forth in Section 6(a) hereof shall apply to any such redemption or proposed redemption; or

 

(iii)           The creation, issuance, or guarantee of any debt security senior to the Series A Preferred Stock, if after such creation, issuance or guarantee the Corporation’s total indebtedness is greater than 3.5x the Corporation’s EBITDA, based on the twelve month period immediately prior to any date of determination; provided, that notwithstanding the foregoing, the Corporation shall at all times be permitted to borrow amounts under the Credit Agreement or any replacement credit facility thereof.

 

(d)           Subject to Sections 3, 4 and 7(c) hereof, none of (i) the creation, authorization or issuance of any shares of any Junior Securities (provided that the terms of such Junior Securities are not inconsistent, or do not in any way conflict, with the terms of the Series A Preferred Stock) or the creation, authorization or issuance of any obligation or security convertible into or evidencing the right to purchase any Junior Securities, (ii) the creation of any indebtedness of any kind of the Corporation (other than indebtedness described in Section 7(c)(iii) or convertible into any Senior Security or Parity Security), or (iii) the increase or decrease in the amount of authorized capital stock of any class, including the Series A Preferred Stock, or any increase, decrease or change in the par value of any such class other than the Series A Preferred Stock, shall be deemed to alter, change or affect adversely the powers, preferences and special rights of shares of Series A Preferred Stock and each of (i), (ii) and (iii) of this Section 7(d) may be effected without the consent of the holders thereof.

 

  

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IN WITNESS WHEREOF, Merisel, Inc. has caused this Certificate to be signed by its Chief Executive Officer and President and attested by its Secretary this   4th  day of February, 2011.

 

	 	MERISEL, INC.	 
	 	 	 	 
	 	
By: 

	/s/ Donald R. Uzzi	 
	 	 	Name:  Donald R. Uzzi	 
	 	 	Title:    Chairman of the Board, Chief Executive Officer and President	 

 

Attest:

 

 

	By:	/s/ Victor L. Cisario	 	 	 
	 	Name:  Victor L. Cisario	 	 	 
	 	Title:    Secretary

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