Document:

f8k081913ex10i_kitara.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

AGREEMENT dated as of July 22, 2013 between Lisa VanPatten, residing at  (“Executive”), and Ascend Acquisition Corp., a Delaware corporation having its principal office at 525 Washington Ave., Jersey City, NJ  (“Company”);

 

WHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, on the terms and conditions herein set forth.

 

 

IT IS AGREED:

 

 

1.   Employment, Duties and Acceptance.

 

1.1   General.  The Company hereby agrees to employ Executive as its Chief Financial Officer (“CFO”).  All of Executive’s powers and authority in any capacity shall at all times be subject to the direction and control of the Company’s Chief Executive Officer and/or the Company’s Board of Directors (“Board”).  The Board may assign to Executive such management and supervisory responsibilities and executive duties for the Company or any subsidiary of the Company, including serving as an executive officer and/or director of any subsidiary, as are consistent with Executive’s status as CFO.  The Company and Executive acknowledge that Executive’s primary functions and duties as CFO shall be to manage and supervise the Company’s and subsidiaries’ financial operations.

 

1.2   Full-Time Position.  Executive accepts such employment and agrees to devote substantially all of her business time, energies and attention to the performance of her duties hereunder.  Nothing herein shall be construed as preventing Executive from making and supervising personal investments, provided they will not interfere with the performance of Executive’s duties hereunder or violate the provisions of Section 5.4 hereof.

 

1.3   Location.  Executive will perform her duties at the Company’s principal executive offices.  Executive shall undertake such occasional travel, within or outside the United States, as is reasonably necessary in the interests of the Company.

 

2.   Employment At-Will.  Executive’s employment hereunder is on an “at will” basis and may be terminated by either party for any reason on 10 days’ prior written notice.

 

  

  

  

 

3.   Compensation and Benefits.

 

3.1   Salary.  The Company shall pay to Executive a salary (“Base Salary”) at the annual rate of $160,000.  Executive’s compensation shall be paid in equal, periodic installments in accordance with the Company’s normal payroll procedures, as such practices shall be established or modified from time to time, but the Base Salary shall be paid to Executive no less frequently than once each month.

 

3.2   Performance Bonus.  Executive will be eligible to earn an annual bonus for each year employed by the Company based upon Executive and the Company meeting certain performance objectives to be defined over a reasonable time frame.  The annual target bonus will be $40,000 if the performance objectives are met.  The bonus will be distributed upon the sooner of: (1) ninety (90) days following the Company’s fiscal year end; and (2) the filing by the Company of its annual report on Form 10-K.

 

3.3   Stock Option .  Subject to Board approval and execution of a stock option agreement, the Company shall grant the Executive options expiring in 5 years to purchase an aggregate of five hundred thousand (500,000) shares of common stock of the Company.  The purchase price shall be the price of the shares on the date of grant.  The option shall vest to Executive on a quarterly basis for four years from the date of grant (i.e. an option for 31,250 shares per quarter).

 

3.4   Other Stock and Option Grants .   The Board may from time to time authorize the issuance of additional equity grants (common stock or options) to the Executive.

 

3.5   Benefits.  Executive shall be entitled to such medical, life, disability and other benefits as are generally afforded to other executives of the Company, subject to applicable waiting periods and other conditions.

 

3.6   Vacation.  Executive shall be entitled to 20 days of paid vacation in each year of employment and to a reasonable number of other days off for religious and personal reasons in accordance with customary Company policy.

 

  

  

  

 

3.7   Expenses.  The Company shall pay or reimburse Executive for all transportation, hotel and other expenses reasonably incurred by Executive on business trips and for all other ordinary and reasonable out-of-pocket expenses actually incurred by her in the conduct of the business of the Company against itemized vouchers submitted with respect to any such expenses and approved in accordance with customary procedures.

 

3.8   Indemnification. Executive shall be entitled to the benefit of the indemnification provisions contained on the date hereof in the bylaws of the Company and any applicable Bylaws of any Affiliate, notwithstanding any future changes therein, to extent permitted by applicable law at the time of the assertion of any liability against the Company or any Affiliate, as the case may be.

 

4.   Payment upon Termination.

 

4.1   Payment Upon Termination by Company Without Cause.  In the event that Executive’s employment is terminated by Company without cause, the Company shall pay to Executive: (i) the Base Salary due Executive pursuant to Section 3.1 hereof through the date of termination; (ii) an amount equal to 2 months of Executive’s Base Salary; (iii) all valid expense reimbursements;  (iv) any accrued but unpaid bonus payments; and (v) all accrued but unused vacation pay; provided however, that in the event Executive is terminated without cause within 3 months of the date of this Agreement, the Company shall pay to Executive only the amounts described in (i), (iii), (iv) and (v) of this Section 4.1.

 

4.2   Payment Upon Change in Control of the Company.  In the event that a Change in Control of the Company (as defined below) shall have occurred and such Change in Control of the Company results in Executive’s termination, the Company shall pay to Executive: (i) the Base Salary due Executive pursuant to Section 3.1 hereof through the date of termination; (ii) an amount equal to 4 months of Executive’s Base Salary; (iii) all valid expense reimbursements;  (iv) any accrued but unpaid bonus payments; and (v) all accrued but unused vacation pay.  For purposes of this Agreement, “Change in Control of the Company” shall be deemed to have occurred if any “person” (as such term is used in Sections 13 (d) and 14 (d) of the Exchange Act and the Regulations promulgated there under), other than the Company and/or any officers or directors of the Company as of the date of this Agreement, acquires, directly or indirectly, 50% or more of the Full Voting Power of the Company.  “Full Voting Power” shall mean the right to vote in the election of one or more directors through proxy or by the beneficial ownership of the common stock or other securities then entitled to vote in the election of one or more directors.  For purposes of calculating the percentage ownership of Full Voting Power of a person, all warrants, option or rights held by all persons with respect to the Company shall be deemed to have been exercised and all convertible or exchangeable securities shall be deemed to have been converted or exchanged, as the case may be disregarding for such purposes any restrictions on conversion, voting (such as proxies), exchange or exercise, in each case for the maximum number of shares of the common stock or other securities entitled to then vote in the election of one or more directors.

 

  

  

  

 

4.3   Payment Upon Termination for Any Reason Other than by Company Without Cause or Upon Change in Control.  In the event that Executive’s employment agreement is terminated hereunder for any reason other than by the Company without cause, the Company shall pay to Executive: (i) the Base Salary due Executive pursuant to Section 3.1 hereof through the date of termination; (ii) all valid expense reimbursements; (iii) any accrued but unpaid bonus payments; and (iv) all accrued but unused vacation pay.

 

5.   Protection of Confidential Information; Non-Competition.

 

5.1   Acknowledgment.  Executive acknowledges that:

 

(a)   As a result of her employment with the Company, Executive will obtain secret and confidential information concerning the business of the Company and its subsidiaries (referred to collectively in this Section 5 as the “Company”), including, without limitation, financial information, proprietary rights, trade secrets and “know-how,” customers and sources (“Confidential Information”).

 

(b)   The Company will suffer substantial damage which will be difficult to compute if, during the period of her employment with the Company, Executive should enter a business directly competitive with the Company or divulge Confidential Information.

 

(c)   The provisions of this Agreement are reasonable and necessary for the protection of the business of the Company.

 

  

  

  

 

5.2   Confidentiality.  Executive agrees that she will not at any time, during her employment or thereafter, divulge to any person or entity any Confidential Information obtained or learned by her as a result of her employment with the Company, except (i) in the course of performing her duties hereunder; (ii) with the Company’s prior written consent; (iii) to the extent that any such information is in the public domain other than as a result of Executive’s breach of any of her obligations hereunder; or (iv) where required to be disclosed by court order, subpoena or other government process.  If Executive shall be required to make disclosure pursuant to the provisions of clause (iv) of the preceding sentence, Executive promptly, but in no event more than 48 hours after learning of such subpoena, court order, or other government process, shall notify, confirmed by mail, the Company and, at the Company’s expense, Executive shall:  (a) take all reasonably necessary and lawful steps required by the Company to defend against the enforcement of such subpoena, court order or other government process, and (b) permit the Company to intervene and participate with counsel of its choice in any proceeding relating to the enforcement thereof.

 

5.3   Documents.  Upon termination of her employment with the Company, Executive will promptly deliver to the Company all memoranda, notes, records, reports, manuals, drawings, blueprints and other documents (and all copies thereof) relating to the business of the Company and all property associated therewith, which she may then possess or have under her control; provided, however, that Executive shall be entitled to retain copies of such documents reasonably necessary to document her financial relationship with the Company.

 

5.4   Non-competition.  During her employment and for a period of one (1) year thereafter, Executive, without the prior written permission of the Company, shall not, anywhere in the world, (i) be employed by, or render any services to, any person, firm or corporation engaged in the online video advertising business or any other business which is directly in competition with any “material” business conducted by the Company or any of its subsidiaries at the time of termination (as used herein “material” means a business which generated at least 30% of the Company’s consolidated revenues for the last full fiscal year for which audited financial statements are available)(“Competitive Business”); (ii) engage in any Competitive Business for her own account; (iii) be associated with or interested in any Competitive Business as an individual, partner, shareholder, creditor, director, officer, principal, agent, employee, trustee, consultant, advisor or in any other relationship or capacity; (iv)  employ or retain, or have or cause any other person or entity to employ or retain, any person who was employed or retained by the Company while Executive was employed by the Company (other than Executive’s personal secretary and assistant); or (v) solicit, interfere with, or endeavor to entice away from the Company, for the benefit of a Competitive Business, any of its customers or other persons with whom the Company has a contractual relationship.  Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive from investing her personal assets in any manner she chooses, provided, however, that Executive may not, during the period referred to in this Section 5.4, own more than 10% of the equity securities of any Competitive Business.

 

  

  

  

 

5.5   Company Property.  As used in this Agreement, the term “Company Property” means all furniture, fixtures, utensils, documents, papers, computer printouts and disks, records, customer or prospect lists, files, manuals, supplies, computer hardware and software, equipment, inventory and other materials that have been created, used or obtained by the Company, or otherwise belonging to the Company, as well as any other materials containing Confidential Information as defined in Section 5.1 above.  Executive recognizes and agrees that:

 

(a)   All Company Property shall be and remain the property of the Company;

 

(b)   Executive will preserve, use and hold Company Property only for the benefit of the Company and to carry out the Company’s business; and

 

(c)   When Executive is no longer employed by the Company, Executive will within one (1) business day of termination deliver to the Company all Company Property, including all copies or any other types of reproductions that Executive has in her possession or control.

 

5.6   Inventions Retained and Licensed.  Executive represents and warrants that Executive has disclosed to the Company all inventions, original works of authorship, developments, improvements, and trade secrets which were conceived of, reduced to practice, created or otherwise developed prior to Executive’s employment with the Company which belong to Executive, which relate to the Company’s proposed business, products or research and development, and which are not assigned to the Company hereunder.  If in the course of Executive’s employment with the Company, Executive incorporates into a Company product, service or process any of the foregoing, Executive hereby grants to the Company a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use and sell same as part of or in connection with such product, process or machine.

 

  

  

  

 

5.7   Work Product.  Executive agrees that, during her employment with the Company:

 

(a)   Executive will disclose promptly and fully to the Company all works of authorship, ideas, inventions, discoveries, improvements, designs, processes, software, or any improvements, enhancements, or documentation of or to the same that Executive makes, works on, conceives, or reduces to practice, individually or jointly with others, in the course of Executive’s employment by the Company or with the use of the Company’s time, materials or facilities, in any way related or pertaining to or connected with the present or anticipated business, development, work or research of the Company or which results from or is suggested by any work Executive may do for the Company and whether produced during normal business hours or on personal time (collectively the “Work Product”);

 

(b)   All Work Product of Executive shall be deemed, as applicable, to be a “work made for hire” within the meaning of §101 of the Copyright Act.  All intellectual property rights, including patent, trademark, trade secret and copyright rights, in and to the Work Product are and shall be the sole property of the Company.  To the extent that the Work Product is deemed not to be “work made for hire,” this Agreement shall constitute an irrevocable assignment by the Executive to the Company of all right, title and interest in and to all intellectual property rights in and to the Work Product.  Any and all rights of whatever kind and nature, now or hereafter, to make, use, sell, license, distribute or otherwise transfer and reproduce such Work Product in any and all media throughout the world, are and shall be the sole property of the Company.  Executive hereby agrees to assist the Company in any manner as shall be reasonably requested by the Company to protect the Company’s interest in such intellectual property rights and to execute and deliver such legal instruments or documents as the Company shall request in order for the Company to obtain protection of the Work Product throughout the world, including but not limited to, declarations of inventorship, powers of attorney and assignment documents. Likewise, Executive hereby agrees to assist the Company by executing such other documents and instruments which the Company deems necessary to enable it to evidence, perfect and protect its rights, title and interest in and to the Work Product.  Executive further agrees that Executive’s obligation to execute or cause to be executed any such instrument or document shall continue after Executive’s cessation of employment with the Company, regardless of reason for cessation of employment.  

 

  

  

  

 

If the Company is unable because of Executive’s mental or physical incapacity or for any other reason to secure Executive’s signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations assigned to the Company in accordance herewith, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and in Executive’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by Executive.  Executive will at any time, including after termination of Executive’s employment with the Company, upon request, communicate to the Company, its successors, assigns, or other legal representatives, such facts relating to the Work Product as may be known to Executive, and to testify, at the Company’s expense, as to the same in any interference or other legal proceeding;

 

(c)   Executive shall make and maintain adequate and current written records and evidence of all Work Product, including drawings, work papers, graphs, computer code, documentation, records and any other document which shall be and remain the property of the Company, and which shall be surrendered to the Company upon request and upon the cessation of Executive’s employment with the Company, regardless of the reason for such cessation; and

 

(d)   Executive hereby waives, and further agrees not to assert, any moral rights in or to the Work Product, including, but not limited to, rights to attribution and identification of authorship, rights to approval of modifications or limitations on subsequent modifications, and rights to restrict, cause or suppress publication or distribution of the Work Product.

 

5.8   Injunctive Relief.  If Executive commits a breach, or threatens to commit a breach, of any of the provisions of Sections 5.2, 5.4, 5.5, 5.6, or 5.7, the Company shall have the right and remedy to seek to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed by Executive that the services being rendered hereunder to the Company are of a special, unique and extraordinary character and that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.  The rights and remedies enumerated in this Section 5.8 shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or equity.  In connection with any legal action or proceeding arising out of or relating to this Agreement, the prevailing party in such action or proceeding shall be entitled to be reimbursed by the other party for the reasonable attorneys’ fees and costs incurred by the prevailing party.

 

  

  

  

 

5.9   Modification.  If any provision of Sections 5.2, 5.4, 5.5, 5.6, or 5.7 is held to be unenforceable because of the scope, duration or area of its applicability, the tribunal making such determination shall have the power to modify such scope, duration, or area, or all of them, and such provision or provisions shall then be applicable in such modified form.

 

5.10   Survival.  The provisions of this Section 5 shall survive the termination of this Agreement for any reason.

 

6.   Miscellaneous Provisions.

 

6.1   Notices.  All notices provided for in this Agreement shall be in writing, and shall be deemed to have been duly given when (i) delivered personally to the party to receive the same, or (ii) when mailed first class postage prepaid, by certified mail, return receipt requested, addressed to the party to receive the same at her or its address set forth below, or such other address as the party to receive the same shall have specified by written notice given in the manner provided for in this Section 6.1.  All notices shall be deemed to have been given as of the date of personal delivery or mailing thereof.

 

If to Executive:

                                          

                                          

                                          

If to the Company:

Ascend Acquisition Corp.

525 Washington Ave.

Jersey City, NJ 07310

With a copy in either case to:

Graubard Miller

405 Lexington Avenue

New York, New York 10174

Attn: David Alan Miller and Jeffrey M. Gallant

 

  

  

  

 

6.2   Entire Agreement; Waiver.  This Agreement sets forth the entire agreement of the parties relating to the employment of Executive and is intended to supersede all prior negotiations, understandings and agreements.  No provisions of this Agreement may be waived or changed except by writing by the party against whom such waiver or change is sought to be enforced.  The failure of any party to require performance of any provision hereof or thereof shall in no manner affect the right at a later time to enforce such provision.

 

6.3   Governing Law.  All questions with respect to the construction of this Agreement, and the rights and obligations of the parties hereunder, shall be determined in accordance with the law of the State of New York applicable to agreements made and to be performed entirely in New York.

 

6.4   Binding Effect; Nonassignability.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company.  This Agreement shall not be assignable by Executive, but shall inure to the benefit of and be binding upon Executive’s heirs and legal representatives.

 

6.5   Severability.  Should any provision of this Agreement become legally unenforceable, no other provision of this Agreement shall be affected, and this Agreement shall continue as if the Agreement had been executed absent the unenforceable provision.

 

6.6   Section 409A.  This Agreement is intended to comply with the provisions of Section 409A of the Internal Revenue Code (“Section 409A”).  To the extent that any payments and/or benefits provided hereunder are not considered compliant with Section 409A, the parties agree that the Company shall take all actions necessary to make such payments and/or benefits become compliant.

 

  

  

  

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.

 

 

	 	ASCEND ACQUISITION CORP.	 
	 	 	 
	 	/s/ Robert Regular	 
	 	By:           Robert Regular, CEO	 
	 	 	 
	 	 	 
	 	/s/ Lisa VanPatten	 
	 	Lisa VanPattenf10k2013ex10v_avalonoil.htm

Exhibit 10.5

 

CERTIFICATE OF DESIGNATION

OF

SERIES B PREFERRED STOCK

OF

AVALON OIL & GAS, INC.

 

RECITALS

 

(Pursuant to Sections 78.035, 78.195, 78.196 of the Nevada Revised Statutes)

 

Avalon Oil & Gas, Inc., a Nevada corporation (the "Corporation"), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation:

 

RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation (the "Board") by the provisions of the Articles of Incorporation of the Corporation (the "Articles of Incorporation"), there is hereby created, out of the one million (1,000,000) shares of preferred stock, par value ten cents ($.10) per share, of the Corporation authorized in Article Fourth of the Articles of Incorporation (the "Preferred Stock"), a series of the Preferred Stock consisting of two thousand (2,000) shares, which series shall have the following powers, designations, preferences and relative, participating, optional or other rights, and the following qualifications, limitations and restrictions:

 

1.                Designation, Amount and Stated Value.

 

The series of Preferred Stock of the Corporation created pursuant to this Certificate of Designation (the "Certificate of Designation") shall be designated the "Series B Convertible Preferred Stock" (the "Series B Preferred Stock") and the authorized number of shares constituting such series shall be two thousand (2,000). The face amount of each share of the Series B Preferred Stock shall be one thousand dollars ($1,000) dollars which on an aggregate basis shall equal two million ($2,000,000) dollars (the "Stated Value"). Any and all shares of Series B Preferred Stock issued by the Corporation which have been paid for and delivered shall be deemed fully paid and holders of record of the outstanding shares of Series B Preferred Stock (the "Holders") shall not be liable for any further call or assessment thereon. Any and all shares of Series B Preferred Stock issued by the Corporation shall be registered with the Corporation in the name of the Holder, and shall appear on the share records of the Corporation in the name of the Holder.

 

2.                Junior Preferred Stock.

 

(A)       Any preferred stock of the Corporation ranking junior to the Series B Preferred Stock as to Dividends (defined in Article "3" of this Certificate of Designation), distributions and as to distributions of assets upon a Liquidating Transaction (defined in Paragraph "E" of Article "5" of this Certificate of Designation) shall be hereinafter referred to as "Junior Preferred Stock".

 

(B)       The one hundred (100) shares of Series A Preferred Stock which are presently issued and outstanding shall rank senior to the Series B Preferred Stock as to Dividends (defined in Article "3" of this Certificate of Designation), distributions and as to distributions of assets upon a Liquidating Transaction (defined in Paragraph "E" of Article "5" of this Certificate of Designation).

 

  

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3.                Dividends.

 

(A) Holders shall be entitled to receive, when and as authorized by the Board, the following dividends (the "Dividends"): (i) at a rate equal to eight percent (8.00%) percent per annum payable in cash Such Dividends shall accrue from the date upon which the Corporation receives the subscription funds for the Series B Preferred Stock (the "Issuance Date") from the Holder, and shall be payable annually in arrears on January 15th of each year or, if not a business day, on the next succeeding business day (each, a "Dividend Payment Date"). A "Dividend Period" shall mean, with respect to the first "Dividend Period", the period from and including the Issuance Date to and including the first Dividend Payment Date, and with respect to each subsequent "Dividend Period", the period from, but excluding, a Dividend Payment Date to and including the next succeeding Dividend Payment Date. Dividends shall be payable to Holders as they appear in the share records of the Corporation at the close of business on the applicable record date, which shall be the fifteenth (15th) day of the calendar month in which the applicable Dividend Payment Date falls (each, a "Dividend Record Date").

 

If the terms and provisions of any agreement of the Corporation entered into prior to the date of issuance of any share of the Series B Preferred Stock, including any agreement relating to its indebtedness, prohibit the Corporation's declaration of a Dividend, payment or setting apart for payment, or provide that such declaration of a Dividend, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law, then no Dividends on shares of Series B Preferred Stock shall be declared by the Corporation or paid or set apart for payment by the Corporation upon the Dividend Payment Date.

 

Notwithstanding the foregoing, Dividends on the Series B Preferred Stock shall accrue regardless of whether the terms and provisions of this Certificate of Designation at any time prohibit the current payment of Dividends, regardless of whether the Corporation has earnings and regardless of whether such Dividends are authorized or declared. Furthermore, Dividends shall be declared and paid when due in all events to the fullest extent permitted by law and, if revaluation of the Corporation or its assets would permit payment of Dividends which would otherwise be prohibited, then such revaluation shall be done. Accrued but unpaid Dividends on the Series B Preferred Stock shall accumulate as of the Dividend Payment Date upon which any Dividend first becomes payable.

 

If, on any Dividend Payment Date, the Corporation does not pay the entire amount of accrued and unpaid Dividends, but the Corporation does pay a portion of the accrued and unpaid Dividends, then all Dividends declared upon the Series B Preferred Stock shall be declared pro rata. 

 

  

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Any Dividend payment made upon shares of the Series B Preferred Stock shall first be credited against the earliest accrued but unpaid Dividend due with respect to such shares which remains payable. Holders shall not be entitled to any Dividend, whether payable in cash, property or shares in excess of full cumulative Dividends upon the Series B Preferred Stock as set forth in this Certificate of Designation.

 

4.                Dividend Received Deduction.

 

For federal income tax purposes, the Corporation shall report distributions on the Series B Preferred Stock as dividends, to the extent of the Corporation's current and accumulated earnings and profits (as determined for federal income tax purposes).

 

5.                Rights upon Liquidation, Dissolution or Winding Up.

 

(A) Upon any "Liquidating Transaction" (hereinafter defined), the holder of the one hundred (100) issued and outstanding shares of Series A Preferred Stock shall have priority over the Holders of Series B Preferred Stock to receive out of the assets of the Corporation legally available for distribution to its stockholders an amount on such date equal to:

 

(i)     Five thousand ($5,000) dollars per share of Series A Preferred Stock, which equals a total of five hundred thousand ($500,000) dollars (in view of the fact that the one hundred (100) issued and outstanding shares of Series A Preferred Stock were issued to satisfy loans made to the Corporation by the holder of said shares in the amount of five hundred thousand ($500,000) dollars); plus

 

(ii)    Any accrued and unpaid dividends on such shares of Series A Preferred Stock.

 

(B) Upon any "Liquidating Transaction", after the holder of shares of Series A Preferred Stock receives payment pursuant to Paragraph "A" of this Article "5" of this Certificate of Designation, then the Holders are entitled to be paid out of the remaining assets of the Corporation legally available for distribution to its stockholders an amount equal to:

 

(i)     The face amount of each share purchased by the Holder; plus

 

(ii)    Any accrued and unpaid dividends to the date of payment. Such payment shall be made before any payment shall be made or any assets distributed to the holders of any class or series of Common Stock or any other class or series of Junior Preferred Stock.

 

  

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(C) Following payment, first, to the holder of the Series A Preferred Stock of the full preferential amounts described in Paragraph "A" of this Article "5" of this Certificate of Designation and, second, to the Holders of the Series B Preferred Stock of the full preferential amounts described in Paragraph "B" of this Article "5" of this Certificate of Designation, the remaining assets (if any) of the Corporation available for distribution to stockholders of the Corporation shall be distributed, subject to the rights of the holders of shares of any other series of Junior Preferred Stock ranking senior to the Common Stock as to distributions upon a Liquidating Transaction, pro rata among (i) the holder of the then outstanding shares of Series A Preferred Stock (as if the Series A Preferred Stock had been converted into Common Stock as of the date immediately prior to the date fixed for determination of stockholders entitled to receive such distribution) (ii) the Holders of the then outstanding shares of Series B Preferred Stock (as if the Series B Preferred Stock had been converted into Common Stock as of the date immediately prior to the date fixed for determination of stockholders entitled to receive such distribution) and (iii) the holders of the Common Stock and any other shares of capital stock of the Corporation ranking on a parity with the Common Stock as to distributions upon a Liquidating Transaction. If upon a Liquidating Transaction the assets available for payment pursuant to this Paragraph "C" of this Article "5" of this Certificate of Designation are insufficient to permit the payment to the holders of (i) the Series A Preferred Stock and (ii) the Series B Preferred Stock of the full preferential amounts described in this Paragraph, then all the remaining available assets shall be distributed among the holders of the then outstanding Series A Preferred Stock and Series B Preferred Stock pro rata as if the Series B Preferred Stock had been converted into Common Stock as of the date immediately prior to the date fixed for determination of stockholders entitled to receive such distribution.

 

(D) After payment of the full amount of the liquidating distributions to which each Holder is entitled, the Holders shall have no right or claim to any of the remaining assets of the Corporation.

 

(E) For purposes of this Certificate of Designation, a "Liquidating Transaction" of the Corporation shall mean a (i) voluntary or involuntary liquidation, dissolution or winding up of the Corporation, (ii) the sale, transfer, conveyance, other disposal, exclusive lease, exclusive license or other disposition of all or substantially all of the assets, property or business of the Corporation, (iii) the effectuation of a transaction or series of related transactions in which more than fifty (50%) percent of the voting power of the Corporation is disposed of (other than as a direct result of normal, uncoordinated trading activities in the Common Stock generally), (iv) a transaction or series of transactions in which any person or "group" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) acquires more than fifty (50%) percent of the voting equity of the Corporation or (v) a transaction or series of transactions that constitutes or results in a "going private transaction" (as defined in Rule 13(e)-3 promulgated pursuant to the Securities Exchange Act of 1934 and the regulations of the Commission issued thereunder).

 

6.                Company Redemption.

 

(A) The Corporation may, at any time, or from time to time, in whole or in part, redeem shares of Series B Preferred Stock without prior written consent of the Holders. The Series B Preferred Stock may be redeemed by the Corporation for the following amounts:

 

	
i.

	
If prior to the two year anniversary of the Issuance Date, at one hundred five (105%) percent of the Stated Value, plus accrued and unpaid Dividends; 

 

	
ii. 

	
If on or after the two year anniversary of the Issuance Date, at one hundred (100%) percent of the Stated Value, plus accrued and unpaid Dividends;

 

  

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(B) Procedure for Redemption.

 

(i)       The Corporation shall give notice of its election to redeem any Series B Preferred Stock by providing written notice (the "Redemption Notice") pursuant to Paragraph "A" of Article "6" of this Certificate of Designation, not less than thirty (30) nor more than ninety (90) days prior to the date designated as the date for the redemption (the "Redemption Date"), to the Holders whose shares of Series B Preferred Stock are to be redeemed, addressed to them at their respective addresses appearing on the books of the Corporation.

 

(ii)      In addition to any information required by law or by the applicable rules of any exchange upon which Series B Preferred Stock may be listed or admitted to trading, the Redemption Notice shall state: (A) the redemption date; (B) the redemption price; (C) the number of shares of Series B Preferred Stock to be redeemed; (D) the place or places where the Series B Preferred Stock are to be surrendered for payment of the redemption price; and (E) that Dividends on the shares to be redeemed shall cease to accrue on such redemption date. If less than all of the Series B Preferred Stock held by any Holder is to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series B Preferred Stock held by such holder to be redeemed.

 

(iii)       Holders of Series B Preferred Stock to be redeemed shall surrender such Series B Preferred Stock at the place designated in the Redemption Notice and, upon surrender in accordance with the Redemption Notice of the certificates for shares of Series B Preferred Stock so redeemed (properly endorsed or assigned for transfer, if such endorsement or assignment is required pursuant to the Redemption Notice), such shares of Series B Preferred Stock shall be redeemed by the Corporation at the redemption price plus any accrued and unpaid dividends payable upon such redemption. If less than all the shares of Series B Preferred Stock represented by any such certificate are redeemed, a new certificate or certificates shall be issued evidencing the unredeemed shares of Series B Preferred Stock without cost to the holder thereof.

 

(iv)       Any balance of monies deposited by the Corporation for the purpose of redeeming Series B Preferred Stock but unclaimed by the holders of the Series B Preferred Stock entitled thereto at the expiration of two years from the applicable redemption dates shall be repaid, together with any interest or other earnings thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall have a claim against the Corporation for payment without interest or other earnings of the funds so repaid.

 

(C) If only a portion of Series B Preferred Stock then outstanding is to be redeemed at a given time, the Corporation shall select, out of all issued and outstanding shares of Series B Preferred Stock, the shares to be redeemed in whatever manner shall be determined by the Board in its sole and absolute discretion, including, but not limited to, selecting Holders at random whose shares of Series B Preferred Stock are to be redeemed.

 

  

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(D) As of the Redemption Date specified in the Redemption Notice, each Holder of shares of Series B Preferred Stock to be redeemed shall be entitled to receive for the shares of Series B Preferred Stock to be redeemed the price set forth in Paragraph "A" of this Article "6" of this Certificate of Designation, upon presentation and surrender of the certificate or certificates of Series B Preferred Stock held by the Holder at the place designated in the Redemption Notice, properly endorsed in blank for transfer or accompanied by proper instruments of assignment in blank and bearing all necessary stock transfer stamps affixed and cancelled.

 

(E) Immediately prior to or upon any redemption of Series B Preferred Stock, the Corporation shall pay the cash value of any accumulated and unpaid Common Stock Dividends, to and including the redemption date, unless a redemption date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series B Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.

 

	
7. 

	
Voting Rights.

 

(A) The Holders shall have no voting rights and their consent shall not be required for the taking of any corporate action, except as otherwise required by the Nevada Revised Statutes; provided, however, that as long as any shares of Series B Preferred Stock remain outstanding, the Corporation shall not, without the written consent or affirmative vote of the Holders of two-thirds of the outstanding shares of Series B Preferred Stock, (i) create, authorize or issue any class, series or shares of Preferred Stock or any other class of capital stock ranking either as to payment of dividends, distributions or as to distributions of assets upon Liquidation (x) prior to the Series B Preferred Stock, or (y) on a parity with the Series B Preferred Stock or (ii) take any action which would adversely affect the preferences and/or rights of the Holders.

 

(B) The Corporation shall not, from and after the date of the date of issuance of any share of the. Series B Preferred Stock, enter into any agreement, amend or modify any existing agreement or obligation, or issue any security which prohibits, conflicts or is inconsistent with, or would be breached by, the Corporation's performance of its obligations set forth in this Certificate of Designation.

 

	
8. 

	
Notice of Certain Corporate Action.

 

If the Corporation (i) creates, authorizes or issues any class, series or shares of Preferred Stock or any other class of capital stock ranking either as to payment of dividends, distributions or as to distributions of assets upon Liquidation prior to the Series B Preferred Stock, or on a parity with the Series B Preferred Stock or (ii) takes any action which would adversely affect the preferences and/or rights of the Holders; then the Corporation shall cause to be filed at each office or agency maintained for such purpose, and shall cause a written notice to be mailed to all Holders pursuant to Paragraph "A" of Article "10" of this Certificate of Designation, at least thirty (30) days prior to the date of the applicable event set forth in clauses (i) or (ii) of this Article "9" of this Certificate of Designation or any stockholders' meeting called to approve such applicable event set forth in clauses (i) or (ii) of this Article "9" of this Certificate of Designation, stating the date upon which the Corporation shall create, authorize or issue any class, series or shares of Preferred Stock or any other class of capital stock ranking either as to payment of dividends, distributions or as to distributions of assets upon Liquidation prior to the Series B Preferred Stock, or on a parity with the Series B Preferred Stock, or take any action which would adversely affect the preferences and/or rights of the Holders. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action upon the number, kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon conversion of the Series B Preferred Stock. Neither the failure to give any such notice nor any defect therein shall affect the legality or validity of any action described in clauses (i) or (ii) of this Article "9" of this Certificate of Designation.

 

  

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9.

	
Miscellaneous.

 

(A) Notice. Any notice or other communication required or permitted pursuant to this Certificate of Designation shall be sufficiently given if sent by (i) mail by (a) certified mail, postage prepaid, return receipt requested and (b) first class mail, (ii) overnight delivery with confirmation of delivery or (iii) facsimile transmission with an original mailed by first class mail, postage prepaid, addressed as follows:

 

	
If to the Corporation:

	
Avalon Oil & Gas, Inc.

310 Fourth Avenue South, Suite 7000 

Minneapolis, MN 55415

Attn: Mr. Kent Rodriguez, CEO 

Facsimile No.: (952) 746-5216

	 	 
	
To the Holder:

	  	  
	  	  	  
	  	  	  

 

or in each case to such other address and facsimile number as shall have last been furnished by like notice. If all of the methods of notice set forth in this Paragraph "A" of this Article "10" of this Certificate of Designation are impossible for any reason, notice shall be in writing and personally delivered to the aforesaid addresses. Each notice or communication shall be deemed to have been given as of the date so mailed or delivered as the case may be; provided, however, that any notice sent by facsimile shall be deemed to have been given as of the date so sent if a copy thereof is also mailed by first class mail on the date sent by facsimile. If the date of mailing is not the same as the date of sending by facsimile, then the date of mailing by first class mail shall be deemed to be the date upon which notice is given; provided further, however, that any notice sent by overnight delivery shall be deemed to have been given as of the date of delivery.

 

  

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(B)Enforceability. If any provision which is contained in this Certificate of Designation, should, for any reason, be held to be invalid or unenforceable in any respect under the laws of any State of the United States, such invalidity or unenforceability shall not affect any other provision of this Certificate of Designation and this Certificate of Designation shall be construed as if such invalid or unenforceable provision had not been contained herein.

 

(C)Governing Law. This Certificate of Designation shall in all respects be construed, governed, pursuant to the internal laws of the State of Nevada without giving effect to the principles of conflicts of laws and be deemed to be an agreement entered into in the State of Nevada and made pursuant to the laws of the State of Nevada, and enforced by courts of the State of Minnesota. The Holder and the Corporation hereby consent and submit to the exclusive jurisdiction of the courts of the State of Minnesota in any action or proceeding and submit to personal jurisdiction over each of them by such courts. The Holder and Corporation hereby waive trial by jury and personal service of any and all process and specifically consent that in any such action or proceeding, any service of process may be effectuated upon any of them by certified mail, return receipt requested, in accordance with Paragraph "(C)" of this Article "10" of this Certificate of Designation. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

 

(D)Non-Waiver. Except as otherwise expressly provided herein, no waiver of any covenant, condition, or provision of this Certificate of Designation shall be deemed to have been made unless expressly in writing and signed by the Corporation against whom such waiver is charged; and (i) the failure of the Corporation to insist in any one or more cases upon the performance of any of the provisions, covenants or conditions of this Certificate of Designation or to exercise any option herein contained shall not be construed as a waiver or relinquishment for the future of any such provisions, covenants or conditions, (ii) the acceptance of performance of anything required by this Certificate of Designation to be performed with knowledge of the breach or failure of a covenant, condition or provision hereof shall not be deemed a waiver of such breach or failure and (iii) no waiver by the Corporation of one breach by another party shall be construed as a waiver of any other or subsequent breach.

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed in its name and on its behalf this 11th day of February, 2013.

 

	 	Avalon Oil & Gas, Inc. 	 
	 	 	 	 
	
 

	
By: 

	/s/ Kent Rodriguez	 
	 	 	Kent Rodriguez, President and CEO	 

 

 

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