Document:

ex4pt1cd.htm

Exhibit 4.1

FORM OF

CERTIFICATE OF DESIGNATION

in respect of

SERIES A PREFERRED STOCK

of

TRI-VALLEY CORPORATION

Pursuant to Section 151 of the Delaware General Corporation Law

The undersigned, being President of Tri-Valley Corporation (the Corporation”), a corporation organized and existing under the Delaware General Corporation Law, hereby certifies that  the Corporation is establishing Series A  Preferred Stock as described in the Resolution below:

Resolved, that, pursuant to Section 151 of the Delaware General Corporation Law, the Corporation hereby establishes a series of Preferred Stock, par value $.001 per share, of the Corporation and fixes the number of shares of such series and the powers, designations, preferences and relative rights of such series, and the qualifications, limitations or restrictions thereof as follows:

The first series of Preferred Stock, par value $.001 per share, of the Corporation shall be, and hereby is, designated Series A  Preferred Stock (the “Series A Preferred Stock”), and the number of shares constituting such series shall be 355,000.  The relative rights and preferences of the Series A Preferred Stock shall be as follows:

ARTICLE 1

DIVIDENDS

1.01.           The Holders of the Series A Preferred Stock shall be entitled to receive, in preference to the holders of the Common Stock or any class or series of stock ranking junior to the Series A Preferred Stock, cumulative dividends at the rate of ten percent (10%) per annum, of the purchase price per share ($10.00) of the Series A Preferred Stock from and after the original issue date.  Such dividends are payable only as and when the Board of Directors declares and pays dividends in cash out of funds legally available therefor.  Dividends shall only be declared and be payable in cash on each share of Series A Preferred Stock from time to time as determined by the Board of Directors but shall accrue and be due and payable in full (i) upon redemption of Series A Preferred Stock in accordance with Article 3, or (ii) upon the dissolution of the Corporation as provided in Section 2.02.  The dividends are cumulative so that if for any dividend period the dividends on the outstanding Series A Preferred Stock are not paid and/or declared and set apart, the deficiency is fully paid or declared and set apart for payment, without interest, before any other distribution (by dividend or otherwise), is paid on, declared or set apart for the Series A Preferred Stock.  Any dividends paid by the Corporation to a holder shall first be applied in payment of accumulated dividends which are most in arrears on the shares owned by such holder.

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The Holders of the Series A Preferred Stock shall not be entitled to dividends except as aforesaid and except as set forth in this Section, nor shall they be entitled to any interest on any dividends which may be declared but not yet paid.

ARTICLE 2

PRIORITIES

2.01.           Dividends and Redemption.  No redemption or payment of dividends to Common Stock or any other class or series of stock ranking junior to the Series A Preferred Stock shall occur as to dividends or assets, except to the extent that sufficient stockholders’ equity exists to fully redeem all shares of Series A Preferred Stock issued and outstanding including any declared and unpaid dividends on Series A Preferred Stock, prior to the redemption or dividend payment, as of the dates of declaration and payment of such dividend or redemption on Common Stock or other junior stock.

2.02.           Dissolution.

a.           Preferences.  The Series A Preferred Stock shall have preference over the Common Stock and any class or series of stock ranking junior to the Series A Preferred Stock as to the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation and, in that event, subject to the provisions of applicable law, the Series A Holders shall be entitled to receive, out of the assets of the Corporation available for distribution to its stockholders, and in addition to any accrued and unpaid dividends on the Series A Preferred Stock, $10.00 per share of Series A Preferred Stock (the “Series A Liquidation Preference”).  Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full on any other securities which are senior as to distribution of assets to the Series A Preferred Stock, and after payment shall have been made in full on the Series A Preferred Stock, as provided in this Section, but not prior thereto, the holders of all remaining capital stock including Common Stock or other class or series of stock ranking junior to the Series A Preferred Stock as to distribution of assets shall, subject to the respective terms and provisions of the Certificate of Incorporation of the Corporation, if any, applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the Series A Holders shall not be entitled to share therein.  The merger or consolidation of the Corporation with another entity and/or the sale, lease, pledge or mortgage of all or substantially all of the assets of the Corporation shall not be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section.

ARTICLE 3

REDEMPTION OF SERIES A PREFERRED STOCK

3.01.           Subject to the restrictions imposed herein and by Delaware law, the Corporation may, at its option, redeem the shares  of the Series A Preferred Stock in whole or in part, at any time upon 60 days’ advance written notice, in exchange for the payment of the Series A Liquidation Preference.  Redemption shall be accomplished using the procedures set forth below:

a.           Notice Procedure.  The Corporation shall give notice to the holder of record (the “Holder”) by certified mail, return receipt requested, at least 30 days in advance of the date set forth in such notice as the date on which such redemption is to be effected. 

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 The shares shall be redeemed upon payment by the Corporation to the Holder of the Series A Liquidation Preference, together with the amount of any dividends declared and unpaid thereon, as of the redemption date.  The Corporation shall be required to redeem pro rata, based on the number of shares of Series A Preferred Stock held by Holder in relation to the number of shares of Series A Preferred Stock issued and outstanding as of the record date for redemption, at any time it elects to redeem the Series A Preferred Stock in part.  Any redemptions hereunder shall be subject to restrictions imposed by Delaware law regarding the circumstances under which such a redemption may be effected.

b.           Payment Procedures.  To facilitate the redemption of any shares of Series A Preferred Stock, as provided in this Article 3, the Board of Directors shall be authorized to cause the transfer books of the Corporation to be closed not more than 30 days prior to the designated redemption date.  Any notice mailed by the Corporation shall contain the information required by Delaware law and shall be mailed to the Holder at his, her or its address, certified mail, return receipt requested, as the same shall appear on the books of the Corporation.  If fewer than all the outstanding shares of Series A Preferred Stock are to be redeemed, the redemption shall be made pro rata as set forth in subsection a above.  From and after the date fixed in any notice from the Corporation as the date of redemption, and after all amounts necessary to effect such redemption have been set aside for such purpose, all rights of the Holder thereof as a shareholder of the Corporation with respect to the shares redeemed, except the right to receive the redemption price and any declared and unpaid dividends, shall cease and terminate.

c.           Delivery of Certificates.  The Holder shall be entitled to receive the redemption price plus any unpaid dividends upon actual delivery to the Corporation or to such other entity as may be designated by the notice referred to in subsection b of this Section of certificates for the number of shares to be redeemed, duly endorsed in blank or accompanied by proper instruments of assignment and transfer duly endorsed in blank.  Series A Preferred Stock redeemed pursuant to the provisions of this Section may, in the sole discretion of the Board of Directors, be held in the treasury of the Corporation or retired and canceled and given the status of authorized and unissued Series A Preferred Stock.

d.           No Sinking Fund.  The Corporation is authorized but not required to redeem the Series A Preferred Stock, and no sinking fund will be created for the redemption or purchase of such shares.  The Series A Preferred Stock is not redeemable at the option of the Holder.

ARTICLE 4

NO VOTING RIGHTS

4.01.           Voting Rights.  The Series A Preferred Stock shall be non-voting and holders thereof shall not be entitled to cast any vote on any matter presented to the shareholders of the Corporation, unless otherwise required by the laws of Delaware.

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ARTICLE 5

MISCELLANEOUS

5.01.           Notices of Record Date.  In the event of any taking by the Corporation of record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property or to receive any other right, the Corporation shall mail to each Holder of Series A Preferred Stock at least ten (10) days prior to such record date, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution or right, and the amount and character of such dividend or right.

5.02.           No Fractional Shares.  No fractional shares of Common Stock shall be issued upon any conversion or redemption of Series A Preferred Stock.  If any fraction of a share would be issuable on a conversion or redemption, the fractional interest shall be rounded up to the nearest whole share.

In testimony whereof, Tri-Valley Corporation has caused this Certificate to be signed by its President on September 30, 2010.

	  	
TRI-VALLEY CORPORATION

	  	  	  
	  	  	  
	  	  	  
	  	
By:

	_______________________________  
	  	  	
Maston N. Cunningham, President

	  	  	
and Chief Executive Officer

Series A Preferred Stock                                                                                                                                                                                                                                                                                                                                                                    Page 4ex10pt1sa.htm

Exhibit 10.1

FORM OF

SUBSCRIPTION AGREEMENT

Private Placement of Series A Preferred Stock

THIS SUBSCRIPTION AGREEMENT (“Agreement”) is made and entered into by and between Tri-Valley Corporation, a Delaware corporation (“Company”), and G. Thomas Gamble (“Purchaser”), effective as of September 30, 2010 (the “Subscription Date”).

RECITALS

WHEREAS, the Company is indebted to the Purchaser in the amount of $3,550,000, resulting from the purchase of $2,700,000 of membership interests in Great Valley Production Services, LLC, from the Purchaser and a prior advance of $850,000 (together, the membership interest purchase obligation and the prior advance are called the “Obligations”) , the Company is offering shares of Series A Preferred Stock bearing the rights and preferences outlined in the Certificate of Designation of Series A Preferred Stock that is attached as Exhibit A; and

WHEREAS, the Purchaser desires to purchase and the Company desires to offer and sell to the Purchaser 355,000 shares of Series A Preferred Stock (the “Stock”) in exchange for and release of obligations to the Company to the Purchaser of $3,550,000;

AGREEMENT

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1

EXCHANGE OF SHARES; RELEASE

1.1           Sale of Units.  The Company will issue to the Purchaser the Stock in exchange for and settlement of the Obligations.

1.2           Release.  In exchange for and complete settlement of the issuance of the Stock to the Purchaser, the Purchaser hereby releases and forever discharges The Company and its, successors, assigns, administrators, agents, attorneys and legal representatives from all claims, demands, damages, actions, causes of action, including but not limited to tort or contract, statute, regulation, common law, or suits in equity, or suits of any kind or nature, asserted or which could have been asserted, whether known or unknown on this date, for or because of any matter or thing done, omitted, or suffered to be done in any way directly or indirectly arising out of the Obligations.  This Release does not extend to any future acts, business dealings, or contractual relationships among or between the parties.

ARTICLE 2

CLOSING; DELIVERY

2.1           Closing.  The closing (“Closing”) of the purchase and sale of the Units to the Purchaser hereunder shall be held at the Company’s offices at 4550 California Blvd., Suite 600, Bakersfield,

  

  

  

California 93309, on the Subscription Date, or at such other time and place as the Company and the Purchaser mutually agree upon.

2.2   Delivery.  At the Closing, the Company shall execute and deliver to Purchaser this Agreement and a certificate evidencing Stock.  Purchaser shall execute and deliver to the Company this Agreement.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Company with respect to this Agreement as follows:

3.1           Power.  The Purchaser has all requisite power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.

3.2           Authorization.  The execution, delivery, and performance of this Agreement by the Purchaser has been duly authorized by all requisite action, and this Agreement constitutes the legal, valid, and binding obligation of the Purchaser enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights.

3.3           Purchase for Investment Only.  The Purchaser is purchasing the Stock for the Purchaser’s own account for investment purposes only and not with a view to, or for resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933, as amended (“Act”).  By executing this Agreement, the Purchaser further represents that it does not have any contract, undertaking, agreement, or arrangement with any person to sell, transfer, or grant participation to such person or to any third person, with respect to any of the Stock.  The Purchaser understands that the Stock has not been registered under the Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

3.4           Receipt of Information.  The Purchaser has had an opportunity to review the Company’s filings under the Securities Exchange Act of 1934 (including risks factors set forth therein).  The Purchaser has received all such information that the Purchaser deems necessary and appropriate to enable the Purchaser to evaluate the financial risk inherent in making an investment in the Stock.  The Purchaser has received satisfactory and complete information concerning the business and financial condition of the Company in response to the Purchaser’s inquiries.

3.5           Risk of Investment; Accredited Investor.  The Purchaser realizes that the purchase of the Units and the underlying securities subject thereto will be a highly speculative investment.  The Purchaser is able, without impairing the Purchaser’s financial condition, to hold such securities for an indefinite period of time and to suffer a complete loss of the Purchaser’s investment.  The Purchaser understands all of the risks related to the purchase of the Units.  By virtue of the Purchaser’s experience in evaluating and investing in private placement transactions of securities in companies similar to the Company, the Purchaser is capable of evaluating the merits and risks of the Purchaser’s investment in the Company and has the capacity to protect the Purchaser’s own interests.  Furthermore, the Purchaser qualifies as an “accredited investor” as defined in Rule 501(a) of Regulation D under the Act because, among other things, the Purchaser is a director of the Company.

3.6           Advisors.  The Purchaser has reviewed with its own tax advisors the federal, state, and local tax consequences of an investment in the Units and the transactions contemplated by this

  

  

  

Agreement.  The Purchaser acknowledges that it has had the opportunity to review this Agreement with the Purchaser’s own legal counsel.  The Purchaser is relying solely on its legal counsel and tax advisors and not on any statements or representations of the Company or any of the Company’s agents for legal or tax advice with respect to this investment or the transactions contemplated by this Agreement.

3.7           Finder.  The Purchaser is not obligated and will not be obligated to pay any broker commission, finders’ fee, success fee, or commission in connection with the transactions contemplated by this Agreement.

3.8           Restricted Securities.  The Purchaser understands that the Stock must be held indefinitely unless subsequently registered under the Act or unless an exemption from registration is otherwise available.  Moreover, the Purchaser understands that except as set forth in the Registration Rights Agreement, the Company is under no obligation to register the Restricted Securities.  The Purchaser is aware of Rule 144 promulgated under the Act that permits limited resales of securities purchased in a private placement subject to the satisfaction of certain conditions.  The Purchaser understands that all certificates evidencing the Restricted Securities will be imprinted with a legend, which prohibits the transfer of the Restricted Securities unless they are registered or such registration is not required in the opinion of counsel reasonably satisfactory to the Company.

3.9           Legend.  It is understood by the Purchaser that any certificate representing any Restricted Securities and each certificate representing the Shares shall be endorsed with the following legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT.  THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.”

3.10           Subscription Irrevocable.  Except as otherwise provided under applicable laws, this Agreement is and shall be irrevocable, except that Purchaser shall have no obligation hereunder in the event this Agreement is for any reason rejected or the Offering of the Units is for any reason canceled or terminated prior to the acceptance of this Agreement.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Purchaser with respect to this Agreement as follows:

           4.1           Organization and Qualification. Each of the Company and its Subsidiaries (which for purposes of this Agreement means any "Significant Subsidiary" as such term is defined in Rule 1-02 of Regulation S-X of the 1933 Act) is an entity duly organized and validly existing and in good standing under the laws of the jurisdiction in which it is formed, and has the requisite power and authorization to own its properties and to carry on its business as now being conducted and as presently proposed to be conducted.

  

  

  

                4.2           Power.  The Company has all requisite power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.

4.3           Authorization.  The execution, delivery, and performance of this Agreement by the Company has been duly authorized by all requisite action, and this Agreement constitutes the legal, valid, and binding obligation of the Purchaser enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights.

4.4           Finder.  The Company is not obligated and will not be obligated to pay any broker commission, finders’ fee, success fee, or commission in connection with the transactions contemplated by this Agreement.

ARTICLE 5

MISCELLANEOUS

5.1           Survival.  The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the Units.

5.2           Assignment; Successors and Assigns.  This Agreement may not be assigned by either party without the prior written consent of the other party.  This Agreement and all provisions thereof shall be binding upon, inure to the benefit of, and are enforceable by the parties hereto and their respective successors and permitted assigns.

5.4           Governing Law; Jurisdiction.  This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to rules concerning conflicts of laws.  If any dispute hereunder becomes the subject of litigation, venue for such litigation shall be non-exclusive in the state or federal court(s) of competent jurisdiction in Bakersfield, California.  The parties waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the bringing of any such action or proceeding in such jurisdiction.

5.5           Severability.  In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. The provisions hereof are severable, and in the event any provision hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect any other provision hereof.

5.6           Headings.  The descriptive headings of this Agreement are for convenience of reference only, are not to be considered a part hereof and shall not be construed to define or limit any of the terms or provisions hereof.

5.7           Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.  The exchange of copies of this Agreement and of signature pages by facsimile or other electronic transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original for all purposes.  Signatures of the parties transmitted by facsimile or other electronic transmission shall be deemed to be their original signatures for all purposes.

  

  

  

5.8           Entire Agreement.  This Agreement embodies the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to the subject matter hereof.

IN WITNESS WHEREOF, the undersigned have caused this Subscription Agreement to be duly executed by their respective authorized signatories as of the Subscription Date.

 

	
Tri-Valley Corporation

 

 

	  	
G. Thomas Gamble

	
By:

	Maston N. Cunningham  	  	  
	
Title:

	President and Chief Executive Officer

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