EXHIBIT 10.1
CERTIFICATE OF DESIGNATION, PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
CALIBRE ENERGY, INC.
PURSUANT to Section 78.1955 of the Nevada Revised Statutes (the "NRS"),
CALIBRE ENERGY, INC., a corporation organized and existing under the NRS (herein
referred to as the "Corporation"), DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors of
the Corporation (the "Board of Directors") by its Articles of Incorporation, as
amended, and pursuant to the provisions of Section 78.1955 of the NRS, such
Board of Directors, duly adopted a resolution providing for the establishment of
a series of 8,000,000 shares of the Corporation's preferred stock, par value
$.001 per share ("Preferred Stock"), to be designated "Series A Convertible
Preferred Stock", and fixing the voting powers, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof, which resolution is as follows;
RESOLVED, that pursuant to the authority expressly granted and vested
in the Board of Directors of the Corporation in accordance with the provisions
of its Articles of Incorporation, as amended, there shall be established and
authorized for issuance a series of the Corporation's Preferred Stock, par value
$.001 per share, designated "Series A Convertible Preferred Stock", consisting
of 8,000,000 shares, each of the par value of $0.001 per share, and having the
voting powers, preferences and relative, participating, optional and other
rights, and the qualifications, limitations or restrictions set forth below:
A. Designation. The Series A Convertible Preferred Stock
having the rights, preferences, privileges and restrictions set forth below
shall be designated and known as "Series A Convertible Preferred Stock."
B. Number of Shares of Series A Convertible Preferred Stock.
The number of shares constituting all of the Series A Convertible Preferred
Stock shall be 8,000,000.
C. Dividends. Dividends shall be payable on the Series A
Convertible Preferred Stock if, as and when dividends are declared and paid
by the Corporation on its common stock, $.001 par value per share ("Common
Stock"), so that each holder of a share of Series A Convertible Preferred
Stock shall be entitled to receive the amount of dividends such holder
would have received if its shares of Series A Convertible Preferred Stock
had already been converted into shares of Common Stock pursuant to the
terms hereof.
D. Voting. The voting power of each share of Series A
Convertible Preferred Stock shall be equal to the number of votes required
to cause the aggregate of the votes entitled to be cast by all of the
issued and outstanding Series A Convertible Preferred Stock to equal 51% of
all votes entitled to be cast by all classes of stock of the Corporation.
The Series A Convertible Preferred Stock shall be entitled to vote on any
and all matters brought to a vote of holders of Common Stock. Holders of
Series A Convertible Preferred Stock shall be entitled to notice of all
shareholder meetings or written consents with respect to which they would
be entitled to vote, which notice would be provided to the holders of the
Common Stock pursuant to the Corporation's Bylaws and applicable statutes.
E. Liquidation Preference.
(1) In the event of any liquidation, dissolution or winding
up of the Corporation, either voluntary or involuntary (a "liquidation event"),
a holder of the Series A Convertible Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for distribution to its
shareholders, prior to the holders of the common stock of the Corporation and
the holders of Preferred Stock with rights junior to the Series A Convertible
Preferred Stock, for each share of Series A Convertible Preferred Stock held by
such holder, $.625 per share (the "Liquidation Preference").
(2) After payment has been made to the holders of the Series
A Convertible Preferred Stock of the full preferential amounts to which they
shall be entitled pursuant to this Section E(1), if any, except as otherwise set
forth in the Corporation's Article of Incorporation or any other document
establishing an additional series of Preferred Stock, the entire remaining
assets and funds of the Corporation legally available for distribution, if any,
shall be distributed pro rata among the holders of Common Stock. After the
payment or distribution to the holders of the Series A Convertible Preferred
Stock of their full preferential amounts have been made, the holders of Series A
Convertible Preferred Stock shall not be entitled to any additional
distributions with respect to the Series A Convertible Preferred Stock.
(3) Prior to a liquidation event, the Corporation shall (to
the extent practicable), no later than fifteen (15) days prior to the
liquidation event, give written notice of such liquidation event to all holders
of Series A Convertible Preferred Stock.
F. Conversion Rights.
(1) Each holder of shares of Series A Convertible Preferred
Stock shall be entitled at any time to cause any or all of such shares to be
converted into shares of Common Stock on the basis of the Conversion Ratio then
in effect, as determined pursuant to the provisions of this Section F, provided,
however, that the conversion of the Series A Convertible Preferred Stock shall
not be effective until the Articles of Incorporation of the Company have been
amended to increase the number of authorized shares of Common Stock to at least
200,000,000 shares (the "Amendment").
(2) Each share of Series A Convertible Preferred Stock shall
be convertible into shares of Common Stock based on the ratio required to cause
the number of shares of Common Stock issuable upon the conversion of 8,000,000
shares of Series A Preferred Stock to equal 75% of the number of shares of
Common Stock then issued and outstanding (the "Conversion Ratio").
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(3) Each holder of Series A Convertible Preferred Stock
desiring to convert any or all of such shares into shares of Common Stock
pursuant to paragraph (1) of this Section F shall surrender the certificate or
certificates representing the shares of Series A Convertible Preferred Stock
being converted, duly assigned or endorsed for conversion (or accompanied by
duly executed stock powers relating thereto), at the principal executive office
of the Corporation or the offices of the transfer agent for the Series A
Convertible Preferred Stock or such office or offices in the continental United
States of an agent for conversion as may from time to time be designated by
notice to the holders of the Series A Convertible Preferred Stock by the
Corporation or the transfer agent for the Series A Convertible Preferred Stock,
accompanied by written notice of conversion. Such notice of conversion shall
specify (a) the number of shares of Series A Convertible Preferred Stock to be
converted, and (b) the address to which such holder wishes delivery to be made
of such new certificates to be issued upon such conversion.
(4) Upon surrender of a certificate representing a share or
shares of Series A Convertible Preferred Stock for conversion pursuant to
paragraph (3) of this Section F, the Corporation shall, within five (5) business
days of such surrender, issue and send (with receipt to be acknowledged) to the
holder thereof, at the address designated by such holder, a certificate or
certificates for the number of validly issued, fully paid and non-assessable
shares of Common Stock to which such holder shall be entitled upon conversion.
In the event that there shall have been surrendered a certificate or
certificates representing shares of Series A Convertible Preferred Stock, only
part of which are to be converted, the Corporation shall issue and deliver to
such holder a new certificate or certificates representing the number of shares
of Series A Convertible Preferred Stock which shall not have been converted.
(5) The issuance by the Corporation of shares of Common
Stock pursuant to this Section F shall be effective as of the earlier of (a) the
delivery to such holder of the certificates representing the shares of Common
Stock issued upon conversion thereof, or (b) immediately prior to the close of
business on the day of surrender of the certificate or certificates for the
shares of Series A Convertible Preferred Stock to be converted, duly assigned or
endorsed for conversion (or accompanied by duly executed stock powers relating
thereto) as provided in this Certificate of Designation. On and after the
effective day of the conversion, the person or persons entitled to receive the
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock.
(6) The Corporation shall not be obligated to issue and
deliver any fractional share of Common Stock upon any conversion of shares of
Series A Convertible Preferred Stock, but in lieu thereof shall pay to the
holder converting such Series A Convertible Preferred Stock an amount of cash
equal to the fractional share of Common Stock that otherwise would have been
issued upon conversion rounded to the nearest 1/100th of a share of Common Stock
multiplied by the conversion price indicated by the Conversion Ratio and the
Liquidation Preference then in effect.
(7) After the Amendment becomes effective, the Corporation
shall at all times reserve and keep available out of its authorized and unissued
Common Stock or treasury shares, solely for issuance upon the conversion of
shares of Series A Convertible Preferred Stock as herein provided, free from any
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preemptive rights, such number of shares of Common Stock as shall be issuable
upon the conversion of all the shares of Series A Convertible Preferred Stock
then outstanding.
(8) The Series A Convertible Preferred Stock shall be
automatically converted without any action or notice from either the Corporation
or any holder of the Series A Convertible Preferred Stock into shares of Common
Stock as provided in this Paragraph F on April 30, 2009, provided, however, that
if for any reason the Amendment has not become effective as of such date, then
such automatic conversion shall be deferred and become effective when the
Amendment becomes effective.
G. Anti-dilution Adjustments. If, prior to the conversion of
all of the Series A Convertible Preferred Stock, there shall be any merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Corporation
shall be changed into the same or a different number of shares of the same or
another class or classes of stock or securities of the Corporation or another
entity, which is not deemed to be a liquidation event pursuant to Section E
hereof, then the holders of Series A Convertible Preferred Stock shall
thereafter have the right to receive upon conversion of Series A Convertible
Preferred Stock, upon the basis and upon the terms and conditions specified
herein and in lieu of shares of Common Stock, immediately theretofore issuable
upon conversion, such stock, securities and/or other assets which the holder
would have been entitled to receive in such transaction had the Series A
Convertible Preferred Stock been converted immediately prior to such
transaction, and in any such case appropriate provisions shall be made with
respect to the rights and interests of the holders of the Series A Convertible
Preferred Stock to the end that the provisions hereof (including, without
limitation, provisions for the adjustment of the Conversion Ratio and the number
of shares issuable upon conversion of the Series A Convertible Preferred Stock)
shall thereafter be applicable, as nearly as may be practicable in relation to
any securities thereafter deliverable upon the conversion thereof. The
Corporation shall not effect any transaction subject to this Section G unless
(a) it first gives fifteen (15) calendar days prior notice of such merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event (during which time the holders of the Series A Convertible
Preferred Stock shall be entitled to convert their Series A Convertible
Preferred Stock into shares of Common Stock to the extent permitted hereby), or
(b) the resulting successor or acquiring entity (if not the Corporation) assumes
by written instrument the obligation of the Corporation under the this
Designation and the Articles of Incorporation of the Corporation.
H. Amendment. The Corporation may amend this Certificate of
Designation only with the approval of a majority of the Series A Convertible
Preferred Stock issued and outstanding.
I. Miscellaneous.
(1) Except as specifically set forth herein, all notices or
communications provided for or permitted hereunder shall be made in writing by
hand delivery, express overnight courier, registered first class mail, or
telecopier addressed (a) if to the Corporation, to its office at 1667 K Street
NW, Suite 1230, Washington, D.C. 20006, Telecopier: 202/223-4406, and (b) if to
the holder of the Series A Convertible Preferred Stock, to such holder at the
address of such holder as listed in the stock record books of the Corporation or
to such other address as the Corporation or such holder, as the case may be,
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shall have designated by notice similarly given. All such notices and
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; five (5) business days after being deposited in the
mail, registered or certified mail, return receipt requested, postage prepaid,
if mailed; when received after being deposited in the regular mail; the next
business day after being deposited with an overnight courier, if deposited with
a nationally recognized, overnight courier service; and when receipt is
acknowledged, if by telecopier, so long as followed up on the same day by
overnight courier.
(2) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Series A Convertible Preferred Stock or shares of Common
Stock or other securities issued on account of Series A Convertible Preferred
Stock pursuant hereto or certificates representing such shares or securities.
The Corporation shall not, however, be required to pay any such tax which may be
payable in respect of any transfer involved in the issuance or delivery of
shares of Series A Convertible Preferred Stock or Common Stock or other
securities in a name other than that in which the shares of Series A Convertible
Preferred Stock with respect to which such shares or other securities are issued
or delivered were registered, or in respect of any payment to any person with
respect to any such shares or securities other than a payment to the registered
holder thereof, and shall not be required to make any such issuance, delivery or
payment described in this sentence unless and until the person otherwise
entitled to such issuance, delivery or payment has paid to the Corporation the
amount of any such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid or is not payable.
(3) In the event that the holder of shares of Series A
Convertible Preferred Stock shall not by written notice designate the address to
which the certificate or certificates representing shares of Common Stock to be
issued upon conversion of such shares should be sent, the Corporation shall be
entitled to send the certificate or certificates representing such shares to the
address of such holder shown on the records of the Corporation or any transfer
agent for the Series A Convertible Preferred Stock.
(4) The Corporation may appoint, and from time to time
discharge and change, a transfer agent of the Series A Convertible Preferred
Stock. Upon any such appointment or discharge of a transfer agent, the
Corporation shall send notice thereof by first-class mail, postage prepaid, to
each holder of record of Series A Convertible Preferred Stock.
(5) The Corporation shall appoint, and from time to time may
replace, a conversion agent for the Series A Convertible Preferred Stock. Upon
any such replacement of the conversion agent, the Corporation shall send notice
thereof by first-class mail, postage prepaid, to each holder of record of Series
A Convertible Preferred Stock.
(6) Any Series A Convertible Preferred Stock redeemed,
purchased, converted or otherwise acquired by the Corporation in any manner
whatsoever shall not be reissued as part of such Series A Convertible Preferred
Stock and shall be retired promptly after the acquisition thereof and returned
to the authorized and unissued shares of Preferred Stock of the Corporation.
(7) The Series A Convertible Preferred Stock shall be
transferable by the holders, provided that such transfer is made in compliance
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with applicable federal and state securities laws and any applicable agreements
between the Corporation and the holders of Series A Convertible Preferred Stock.
(8) Nothing contained herein shall be construed to
prevent the Board of Directors of the Corporation from issuing one or more
series of preferred stock with dividend and/or liquidation preferences junior to
the Series A Convertible Preferred Stock.
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IN WITNESS WHEREOF, Calibre Energy, Inc. has caused this Certificate of
Designation to be signed by a duly authorized representative on this 13th day of
April, 2007.
CALIBRE ENERGY, INC.
By:
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Name:
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Title:
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