Document:

Exhibit 10.29

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (the “Agreement”) is made and entered into on July 26, 2013 (the “Effective Date”), by and between MEEKER NURSING, LLC, a Georgia limited liability company (hereinafter called “Owner”), and ADCARE OKLAHOMA MANAGEMENT, LLC, a Georgia limited liability company (hereinafter called “Manager”).

 

Owner and Manager agree that Manager shall manage that certain nursing facility commonly known as “Meeker Nursing Center”, and located at 500 North Dawson, Meeker, Oklahoma (the “Facility”), operated by Owner, on the following terms and conditions:

 

SECTION ONE: MANAGEMENT DUTIES AND OBLIGATIONS

 

1.01                        Management of Facility.  During the term of this Agreement, Manager shall supervise the management of the Facility including but not limited to staffing, accounting, billing, collections, setting of rates and charges and general administration. In connection therewith, Manager (either directly or through supervision of employees of the Facility) shall:

 

(a)                                 Hire on behalf of Owner and maintain (to the extent such personnel are reasonably available in the community in which the Facility is located) an adequate staff of nurses, technicians, office and other employees, including an administrator, at wage and salary rates for various jobs classifications approved from time to time by Owner; and release employees at Manager’s discretion.

 

(b)                                 Recommend and institute, subject to approval of Owner, appropriate employee benefits. Employee benefits may include pension and profit sharing plans, insurance benefits, and incentive plans for key employees and vacation policies.

 

(c)                                  Design and maintain accounting, billing, patient and collection records; prepare and file insurance, and any and all other necessary or desirable reports and claims related to revenue production.

 

(d)                                 Order, supervise and conduct a program of regular maintenance and repair of the Facility except that physical improvements costing more than $5,000.00, shall be subject to prior approval of Owner which shall not be unreasonably withheld.

 

(e)                                  Purchase supplies, drugs, solutions, equipment, furniture, and furnishings on behalf of Owner, except that purchases of items of equipment which cost more than $5,000.00, shall be subject to prior approval of Owner which shall not be unreasonably withheld.

 

(f)                                   Administer and schedule all services of the Facility.

 

 

(g)                                  Supervise and provide the operation of food service facilities.

 

(h)                                 Provide for the orderly payment (to the extent funds of Owner are available) of accounts payable, employee payroll, taxes and insurance premiums.

 

(i)                                     Institute standards and procedures for admitting patients, for charging patients for services, and for collecting the charges from the patients or these parties.

 

(j)                                    Advise and assist Owner in obtaining and maintaining adequate insurance coverage with Owner, Manager and such other persons as requested by Owner named as insured for the Facility. Manager shall advise Owner with regard to the availability, nature and desirable policy limits of insurance coverage for the Facility, and shall request and receive bids for such coverage.

 

(k)                                 Negotiate on behalf of Owner (and in conjunction with Owner’s counsel) with any labor union lawfully entitled to represent employees of the Owner who work at the Facility, but any collective bargaining agreement of labor contract must be submitted to Owner for approval and execution.

 

(l)                                     Make periodic evaluation of the performance of all departments of the Facility paying particular attention to those departments where there is an inconsistency between expenditures and budget.

 

(m)                             Establish and maintain books of account using accounts and classifications consistent with those used by Manager at other facilities owned or lease by it or its affiliates.

 

(n)                                 Advise and assist Owner in designing an adequate and appropriate public and personnel relations program.

 

1.02                        Reports to Owner.  Manager shall prepare and deliver to Owner monthly financial statements (unaudited) containing a balance sheet and statement of income in reasonable detail, and such monthly financial statements will be delivered to Owner within 30 days after the close of each calendar month. Manager shall submit to Owner each month a census report for the Facility.

 

1.03                        Bank Accounts and Working Capital.  Manager shall deposit all funds received from the operation of the Facility in and Operating Account in a bank or banks presently being used by the Facility or such other banks as are designated from time to time by Owner. Owner shall provide sufficient working capital for the operation of the Facility and shall made deposits in the Operating Accounts of such working capital from time to time upon the request of Manager. All costs and expenses incurred in operation of the Facility shall be paid out of the Operating Accounts. All checks or other documents withdrawal must be signed by the Owner. Deposits may be made by Comptroller of the Manager or his designee.

 

1.04                        Access to Records and Facility.  The books and records kept by Manager for the Owner shall be maintained by the Facility, although Manager shall have the right to maintain 

 

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copies of such records at its home office for the purpose of providing services under this Agreement. Manager shall make available to Owner, its agents, accountants and attorneys, during normal business hours, all books and records pertaining to the Facility and Manager shall promptly respond to any questions of Owner with respect to such books and records and shall confer with Owner at all reasonable times, upon request, concerning operation of the Facility. In addition, Owner shall have access to the Facility at all reasonable hours for the purpose of examining or inspecting the Facility.

 

1.05                        Licenses.

 

(a)                                 Manager shall use its best efforts to manage the Facility in a manner necessary to maintain all necessary licenses, permits, consents, and approvals from all governmental agencies, which have jurisdiction over the operation of the Facility. Manager shall not assume the liability for any employee action or negligence prohibiting the intent of this provision to be met.

 

(b)                                 Neither Owner nor Manager shall knowingly take any action which may (1) cause any governmental authority having jurisdiction over the operation of the Facility to institute any proceeding for the rescission or revocation of any necessary license, permit, consent or approval, or (2) adversely affect Owner’s right to accept and obtain payments under Medicare, Medicaid, or any other public or private medical payment program; however, this Agreement in no way guarantees or warrants that any or all of the above will not or could not occur.

 

(c)                                  Manager shall, with the written approval of Owner, have the right to contest by appropriate legal proceedings, diligently conducted in good faith, in the name of the Owner, the validity or application of any law, ordinance, rule, ruling, regulation, order or requirement of any governmental agency having jurisdiction over the operation of similar facilities. Owner, after having given its written approval, shall cooperate with Manager with regard to the contest, and Owner shall pay the reasonable attorney’s fees incurred with regard to the contest. Counsel for any such contest shall be mutually selected by Manager and Owner. Manager shall have the right, without the written consent of the Owner, to process all third-party payment claims for the services of the Facility, including the full right to contest adjustments and denials by governmental agencies (or their fiscal intermediaries) as third-party payor.

 

(d)                                 Manager shall provide to Owner all correspondence from any governmental entity involving surveys, taxes or other actions relating to the Facility, within five (5) days of receipt.

 

1.06                        Taxes.  Any taxes or other governmental obligations properly imposed on the Facility are the obligations of the Owner, not of Manager, and shall be paid out of the Operating Accounts of the Facility. With the Owner’s written consent, Manager may contest the validity or amount of any such tax or imposition of the Facility in the same manner as described in Section 1.05(c).

 

1.07                        Use of Manager’s Personnel.  Manager shall actively utilize Manager staff specialists in such areas as accounting, auditing, budgeting, computer services, dietary services, 

 

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housekeeping, industrial engineering, interior design, legal, nursing, personnel, pharmaceutical, purchasing, systems and procedures, and third-party payments for services of facilities in the management of the Facility when considered desirable by Manager or upon the reasonable request of Owner.

 

SECTION TWO: TERM AND TERMINATION

 

2.01                        Term.  The Term of this Agreement shall commence on the Effective Date and shall continue for a period of five (5) years thereafter, unless sooner terminated. Following the end of the initial term, this Agreement shall thereafter, automatically renew for one (1) year terms, unless sooner terminated.

 

2.02                        Termination.  Owner may terminate this Agreement upon giving Manager thirty (30) days written notice. Manager may terminate this Agreement at any time upon giving the Owner thirty (30) days written notice.

 

SECTION THREE: MANAGEMENT FEE

 

3.01                        Fee to Manager.  During each month of this Agreement, Owner shall pay Manager a fee in an amount equal to five percent (5%) of the aggregate gross revenues of the Business computed in accordance with GAAP.

 

SECTION FOUR: COVENANTS OF OWNER

 

4.01                        Insurance.  Owner shall provide and maintain throughout the Term, the following insurance with responsible companies naming Owner and Manager (as its interest may appear) as insured thereunder in amounts approved by Owner and Manager.

 

(a)                                 public liability insurance and insurance against theft of or damage to patient’s property in the Facility or its Premises;

 

(b)                                 workman’s compensation, employers’ liability or similar insurance as may be required by law;

 

(c)                                  such other insurance or additional insurance as Manager and Owner together shall reasonably deem necessary for protection against claims, liabilities and losses arising from the operation or ownership of the Facility.

 

SECTION FIVE: MISCELLANEOUS

 

5.01                        Binding on Successors and Assigns.  The terms, covenants, conditions, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto, their heirs, administrators, executors, successors and assigns.

 

5.02                        Negation of Partnership, Joint Venture and Agency.  Nothing in this Agreement contained shall constitute or be construed to be or to create a partnership, joint venture or lease 

 

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between Owner and Manager with respect to the Facility. the parties intend for the relationship of Manager to Owner under this Agreement to be that of an independent contractor, not that of an agent.

 

5.03                        Notices.  All notices hereunder by either party to the other shall be in writing. All notices, demands and requests shall be deemed given when mailed, postage prepaid, registered, or certified mail, return receipt requested,

 

	
(a)
    	
Owner:
    	
Two   Buckhead Plaza
    
	
 
    	
 
    	
3050   Peachtree Road, NW
    
	
 
    	
 
    	
Suite   355
    
	
 
    	
 
    	
Atlanta,   Georgia 30305
    
	
 
    	
 
    	
Attn:   Manager
    
	
 
    	
 
    	
 
    
	
(b)
    	
Manager:
    	
1145   Hembree Road
    
	
 
    	
 
    	
Roswell,   Georgia 30076
    
	
 
    	
 
    	
Attn:   Manager
    

 

or to such other address or to such other person as may be designated by notice given from time to time during the term by one party to the other.

 

5.04                        Entire Agreement.  This Agreement contains the entire agreement between the parties hereto, and no representations or agreements, oral or otherwise, between the parties not embodied herein or attached hereto shall be of any force and effect. Any additions or amendments to this Agreement subsequent hereto shall be of no force and effect unless in writing and signed by the party to be bound.

 

5.05                        Governing Law.  This Agreement has been executed and delivered in the State of Oklahoma, all the terms and provisions hereof and the rights and obligations of the parties hereto shall be construed and enforced in accordance with the laws thereof.

 

5.06                        Captions and Headings.  The captions and headings throughout this Agreement are for convenience and reference only, and the words contained therein shall in no way be held or deemed to define, limit, describe, explain, modify, amplify or add to the interpretation, construction or meaning of any provision of or the scope or intent of this Agreement nor in any way affect this Agreement.

 

5.07                        Disclaimer of Employment of Facility Employees.  No person employed by Owner in cooperation of the Facility will be an employee of Manager, and Manager will have no liability for payment of wages, payroll taxes and other expenses of employment, except that Manager shall have the obligation to exercise reasonable care on its management of the Facility to properly apply available Facility funds to the payment of such wages and payroll taxes.

 

5.08                        Impossibility of Performance.  Neither party to this Agreement shall be deemed to be in violation of this Agreement if it is prevented from performing any of its obligations hereunder for any reason beyond its control, including without limitation, acts of God or of the 

 

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public enemy, flood or storm, strikes or statutory regulation or rule of any federal, state, or local government, or any agency thereof.

 

5.09                        Non-Assumption of Liabilities.  Manager shall not, by entering into and performing this Agreement, become liable for any of the existing or future obligations, liabilities or debts of Owner, and Manager shall not be managing the Facility assume or become liable for any of the obligations, debts and liabilities of Owner, and Manager will in its role as Manager of the Facility have only the obligation to exercise reasonable care in its management and handling of the funds generated from the operation of the Facility.

 

5.10                        Responsibility for Misconduct of Employees and Other Personnel.  Manager will have no liability whatever for damages suffered on account of the dishonesty, willful misconduct or negligence of an employee of the Owner regarding the Facility in connection with damage or loss directly sustained by it by reason of the dishonesty, willful misconducts and gross negligence of employees in the operation of the Facility during the term of this Agreement.

 

5.11                        Rights Cumulative, No Waiver.  No right or remedy herein conferred upon or reserved to either of the parties hereto is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder, or now or hereafter legally existing upon the occurrence of any event of default hereunder. The failure of either party hereto to insist at any time upon the strict observance or performance of any of the provisions of this Agreement or to exercise any right or remedy as provided in this Agreement shall not impair such right or remedy to be construed as a waiver or relinquishment thereof. Every right and remedy given by this Agreement to the parties hereto may be exercised from time to time and as often as may be deemed expedient by the parties hereto, as the case may be.

 

5.12                        Time of Essence.  Time is of the essence of this Agreement.

 

5.13                        Invalid or Unenforceable Provisions.  If any terms, covenants or conditions of this Agreement or the application thereof to any person or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law.

 

5.14                        Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original and all such counterparts together shall constitute one and the same instrument.

 

5.15                        Authorization of Agreement.  Manager and Owner represent and warrant, each to the other, that this Agreement has been duly authorized by its respective Board of Directors and, if required by law, shareholders; and that this Agreement constitutes a valid and enforceable obligation of Manager and Owner in accordance with its terms upon approval by OSDH of the CON Application for Exemption for a Licensed Nursing Facility Management Agreement.

 

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5.16                        Designation.  Owner agrees that, during the term of this Agreement, Manager shall have the right to designate and make public reference to the Facility as a Manager managed facility.

 

[Signatures on Next Page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, the day and year first above written.

 

 

	
 
    	
OWNER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MEEKER   NURSING, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher F. Brogdon
    
	
 
    	
 
    	
CHRISTOPHER   F. BROGDON,
    
	
 
    	
 
    	
MANAGER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MANAGER:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ADCARE   OKLAHOMA MANAGEMENT, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Boyd P. Gentry
    
	
 
    	
 
    	
BOYD   P. GENTRY, CEO
    

 

8Exhibit 4.6

 

CERTIFICATE OF DESIGNATION
 OF 
 REDEEMABLE PREFERRED STOCK 
 OF PROSPECT GLOBAL RESOURCES INC.

 

Pursuant to Section 78.1955 of the 
 Nevada Revised Statutes

 

Prospect Global Resources Inc., a Nevada corporation (the “Corporation”), certifies that pursuant to the authority conferred upon the Board of Directors of the Corporation (the “Board of Directors”) by the Second Amended and Restated Articles of Incorporation of the Corporation (as further amended from time to time, the “Articles of Incorporation”), and in accordance with the provisions of Section 78.1955 of the Nevada Revised Statutes, as amended (the “NRS”), the Board of Directors, on July 15, 2013, adopted the following resolution creating a series of its preferred stock, par value $0.001 per share:

 

RESOLVED, that (1) pursuant to the authority conferred upon the Board of Directors by the Articles of Incorporation, the Board of Directors hereby designates 15,000,000 shares of the preferred stock, par value $0.001 per share, of the Corporation as “Redeemable Preferred Stock” (the “Redeemable Preferred Stock”), and the powers, designations, preferences and relative, participating, optional and other rights of the Redeemable Preferred Stock and the qualifications, limitations and restrictions thereof, be, and they hereby are, as set forth in this certificate of designation (this “Certificate of Designation”), and (2) in connection therewith, the officers of the Corporation be, and each of them hereby is, authorized, empowered and directed on behalf of the Corporation and in its name to execute and to file this Certificate of Designation with the Nevada Secretary of State:

 

Section 1.                  Designation and Amount. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a series of preferred stock designated as “Redeemable Preferred Stock.” The number of shares constituting such series shall be 15,000,000. Such number of shares may be increased or decreased by resolution of the Board of Directors, provided that such number shall not be decreased below the number of shares of such series outstanding at the effective time of such decrease. The Redeemable Preferred Stock shall have par value $0.001 per share and the liquidation preference of the Redeemable Preferred Stock shall initially be $1.00 per share (the “Liquidation Preference”).

 

Section 2.                  Ranking. The Redeemable Preferred Stock shall, with respect to dividend rights and rights on liquidation, winding-up and dissolution of the Corporation, rank (i) on a parity with each other class or series of the Corporation’s preferred stock established prior to or after the Effective Date, the terms of which other class or series expressly provide that such class or series will rank on a parity with the Redeemable Preferred Stock as to dividend rights and rights on liquidation, winding-up and dissolution of the Corporation (such other classes and series of preferred stock collectively referred to as “Parity Securities”) and (ii) senior to the Corporation’s common stock (the “Common Stock”) and each other class or series of the Corporation’s capital stock outstanding or established after the Effective Date, the terms of which other class or series do not expressly provide that it ranks on a parity with or senior to the

 

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Redeemable Preferred Stock as to dividend rights and rights on liquidation, winding-up and dissolution of the Corporation (such other classes and series of capital stock collectively referred to as “Junior Securities”). The Corporation shall have the right to authorize, establish and/or issue additional shares or classes or series of Junior Securities without the consent of the Holders.

 

Section 3.                  Definitions. Unless the context or use indicates another meaning or intent, the following terms shall have the following meanings, whether used in the singular or the plural:

 

(a)                                 “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such first Person. As used in this definition, “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of securities, partnership interests or by contract or otherwise.

 

(b)                                 “Articles of Incorporation” has the meaning set forth in the preamble hereto.

 

(c)                                  “Beneficial Owner” has the meaning given such term in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this Certificate of Designation, such Person or group shall be deemed to have “beneficial ownership” of all shares that any such Person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time.

 

(d)                                 “Board of Directors” has the meaning set forth in the preamble hereto.

 

(e)                                  “Business Day” means any day other than a Saturday, Sunday or any other day on which banks in New York City, New York are generally required or authorized by law to be closed.

 

(f)                                   “Capital Stock” means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of the Corporation, including any Common Stock or any series of preferred stock of the Corporation, but excluding any debt securities convertible into such equity.

 

(g)                                  “Certificate of Designation” has the meaning set forth in the preamble hereto.

 

(h)                                 “Common Stock” has the meaning set forth in Section 2.

 

(i)                                     “Continuing Director” means any member of the Board of Directors who (i) was a member of the Board of Directors as of the effective date of this Certificate of Designation or (ii) was nominated for election, elected or appointed to the Board of Directors with the approval of a majority of the Continuing Directors who were members of the Board of Directors at the time of such nomination, election or appointment.

 

(j)                                    “Corporation” has the meaning set forth in the preamble hereto.

 

(k)                                 “Effective Date” means the date on which shares of the Redeemable Preferred Stock are first issued.

 

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(l)                                     “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

(m)                             “Fundamental Change” means one of the following:

 

(i)             a “person” or “group” (other than any “person” or “group” that includes either Holder or any of its respective Affiliates) within the meaning of Section 13d of the Exchange Act files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect ultimate Beneficial Owner of common equity of the Corporation representing more than 50% of the voting power of the outstanding Voting Stock;

 

(ii)          the occurrence of the consummation of any consolidation or merger of the Corporation or similar transaction or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Corporation and its subsidiaries, taken as a whole, with, into or to any Person other than one or more of the Corporation’s subsidiaries or any Holder or any of its respective Affiliates, in each case pursuant to which the Common Stock will be converted into cash, securities or other property, other than pursuant to a transaction in which the Persons that “beneficially owned” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, voting shares of the Corporation immediately prior to such transaction beneficially own, directly or indirectly, voting shares representing a majority of the continuing or surviving Person immediately after the transaction; or

 

(iii)       a majority of the members of the Board of Directors are not Continuing Directors.

 

(n)                                 “Holder” means, as of any date, each Person in whose name the shares of the Redeemable Preferred Stock are registered as of such date, which Person may be treated by the Corporation as the absolute owner of such shares of Redeemable Preferred Stock for any and all purposes, including, without limitation, for the purpose of making payment and settling redemptions.

 

(o)                                 “Liquidation Preference” has the meaning set forth in Section 1.

 

(p)                                 “Liquidation Transaction” has the meaning set forth in Section 5(a).

 

(q)                                 “Market Value” means the aggregate market value of the Corporation’s outstanding Capital Stock , on any day, calculated on a per share value as follows:  (i) if the Common Stock is not then listed on a national securities exchange the volume weighted average price per share of Common Stock (as reported on the exchange, market or quotation system on which shares of Common Stock are admitted to trading or listed) for the five consecutive trading days ending on the Business Day prior to such exercise, (ii) if the Common Stock is then listed on a national securities exchange, the last sale price in respect of the Common Stock on the national securities exchange on which the Common Stock is then listed at the close of trading on the Business Day prior to such exercise or (iii) if not so available, Market Value shall be determined as follows: (A) if the parties hereto can agree on the Market Value, such agreed upon value shall constitute the Market Value; (B) if the parties cannot reach an agreement as to the

 

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Market Value within five Business Days from the onset of negotiations, then the Appraised Value (as defined below) shall constitute the Market Value.  “Appraised Value” as of any date herein shall mean the value of a share of Common Stock as of such date as determined by a nationally recognized valuation or appraisal firm (an “Appraiser”) selected jointly by Holders holding a majority of the Redeemable Preferred Stock (the “Majority Holders”) and the Company.  If the Company and the Majority Holders cannot agree on a mutually acceptable Appraiser, then the Company and the Majority Holders shall each choose one such Appraiser and the respective chosen firms shall jointly select a third Appraiser, which shall make the determination.  The Company and the Holders shall each pay half of the costs and fees of each such Appraiser, and the decision of the Appraiser making such determination of Appraised Value shall be final and binding on the Company and all affected holders of Redeemable Preferred Stock.  No discount shall be applied on account of any lack of liquidity of the Common Stock.

 

(r)                                    “Parity Securities” has the meaning set forth in Section 2.

 

(s)                                   “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company or trust.

 

(t)                                    “Redeemable Preferred Stock” has the meaning set forth in the preamble hereto.

 

(u)                                 “Trigger Date” means the date that is six months following the first day of the month following the month in which a minimum of 50,000 tonnes of potash has first been shipped for delivery from the Corporation’s potash facility in Holbrook, Arizona.

 

(v)                                 “Voting Stock” means securities of any class of Capital Stock of the Corporation entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors.

 

Section 4.                  Dividends and Distributions.

 

(a)                                 From and after the Effective Date, Holders shall be entitled to receive, out of the funds legally available therefor, cumulative dividends as set forth in Section 4(b), and no more.

 

(b)                                 Dividends shall commence accruing from the issue date of the Redeemable Preferred Stock and continue to accrue, whether or not declared, at an annual rate on the Liquidation Preference equal to 8%.  All accrued and unpaid dividends shall be payable on the Trigger Date, and dividends shall be payable thereafter quarterly in arrears on March 15, June 15, September 15 and December 15 of each year (each, a “Dividend Payment Date”) or, if any such day is not a Business Day, the next Business Day. Dividends will be computed on the basis of a 360-day year of 12 30-day months and, for any partial month will be computed on the basis of the actual number of days elapsed in the period divided by 360.

 

(c)                                  Each dividend will be payable to Holders of record as they appear in the records of the Corporation at the close of business on the Business Day prior to the Dividend Payment Date.

 

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Section 5.                  Liquidation.

 

(a)                                 In the event the Corporation voluntarily or involuntarily liquidates, dissolves or winds up (a “Liquidation Transaction”), each Holder at the time of such Liquidation Transaction shall be entitled to receive for each share of Redeemable Preferred Stock held by such Holder liquidating distributions in the amount of the then-current Liquidation Preference per share of Redeemable Preferred Stock, plus an amount equal to any accrued dividends, whether or not declared, thereon to and including the date of such Liquidation Transaction, out of assets legally available for distribution to the Corporation’s stockholders, before any distribution of assets is made to the holders of Common Stock or any other Junior Securities. After payment of the full amount of such liquidating distributions, Holders shall not be entitled to participate in any further distribution of the remaining assets of the Corporation.

 

(b)                                 In the event the assets of the Corporation available for distribution to stockholders upon any Liquidation Transaction, whether voluntary or involuntary, shall be insufficient to pay in full the amounts payable with respect to all outstanding shares of the Redeemable Preferred Stock and the corresponding amounts payable on any Parity Securities, Holders and the holders of such Parity Securities shall share ratably in any distribution of assets of the Corporation in proportion to the full respective liquidating distributions to which they would otherwise be respectively entitled.

 

(c)                                  The Corporation’s consolidation or merger with or into any other entity, the consolidation or merger of any other entity with or into the Corporation, or the sale of all or substantially all of the Corporation’s property or business will not constitute its liquidation, dissolution or winding up; provided, that, a Fundamental Change shall be deemed a Liquidation Transaction unless waived by the vote or consent of the Holders of a majority of the shares of Redeemable Preferred Stock at the time outstanding voting as a single class.

 

Section 6.                  Maturity. The Redeemable Preferred Stock shall be perpetual unless redeemed in accordance with this Certificate of Designation.

 

Section 7.                  Redemptions.

 

(a)                                 Optional Redemption at Election of the Holder.  Subject to Section 7(c), at any time following the three year anniversary of the Trigger Date each Holder may deliver a notice to the Corporation of its irrevocable election to redeem for cash some (on a pro rata basis) or all of the such Holder’s then outstanding shares of Redeemable Preferred Stock for cash in a per share amount equal to the Liquidation Value plus all accrued and unpaid dividends through the date of redemption, which date shall be stated in the notice and must be a date at least 30 Business Days following delivery of the notice.

 

(b)                                 Optional Redemption at Election of the Corporation.  Subject to Section 7(c), at any time following the three year anniversary of the Effective Date the Corporation may deliver a notice to the Holders of its irrevocable election to redeem for cash some (on a pro rata basis) or all of the then outstanding shares of Redeemable Preferred Stock for cash in a per share amount equal to the Liquidation Value plus all accrued and unpaid dividends through the date of redemption, which date shall be stated in the notice.

 

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(c)                                  Limitation on Redemptions.  Notwithstanding anything to the contrary in Sections 7(a) and 7(b), in no event shall the Liquidation Value per share of Redeemable Preferred Stock exceed an amount such that the aggregate Liquidation Value upon a redemption of all of the Redeemable Preferred Stock would exceed an amount equal to 10% of the Corporation’s Market Value on the date of such redemption.

 

Section 8.                  Voting Rights.  Holders shall be not be entitled to vote on any matters that holders of other shares of capital stock of the Corporation are entitled to vote upon, unless required by Nevada law.

 

Section 9.                  Replacement Certificates.  The Corporation shall replace any mutilated certificate representing any Redeemable Preferred Stock at the Holder’s expense upon surrender of that certificate to the Corporation. The Corporation shall replace certificates representing any Redeemable Preferred Stock that become destroyed, stolen or lost at the Holder’s expense upon delivery to the Corporation of satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be required by the Corporation.

 

Section 10.           Notices.  All notices referred to herein shall be in writing, and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of receipt thereof or three Business Days after the mailing thereof if sent by registered or certified mail (unless first-class mail shall be specifically permitted for such notice under the terms of this Certificate of Designation) with postage prepaid, addressed: (i) if to the Corporation, to: Prospect Global Resources Inc., 1401 17th Street, Suite 1550, Denver, CO 80202, Attention: Corporate Secretary, or (ii) if to any Holder, to such Holder at the address of such Holder as listed in the stock record books of the Corporation, or (iii) to such other address as the Corporation or any such Holder, as the case may be, shall have designated by notice similarly given.

 

*                                         *                                         *                                         *

 

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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation of Redeemable Preferred Stock to be executed as of the date first above written.

 

 

	
 
    	
PROSPECT GLOBAL RESOURCES INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Damon G. Barber
    
	
 
    	
 
    	
Name: Damon G. Barber
   Title: President and Chief Executive Officer
    

 

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