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LONGWEI
PETROLEUM INVESTMENT HOLDING LIMITED
CERTIFICATE
OF DESIGNATIONS OF PREFERENCES,
RIGHTS
AND LIMITATIONS
OF
SERIES
A CONVERTIBLE PREFERRED STOCK
The
undersigned, Cai Yongjun does hereby certify that:
1. He is the
Chief Executive Officer of Longwei Petroleum Investment Holding Limited, a
Colorado Company (the “Company”).
2. The
Company is authorized to issue One Hundred Million shares of Preferred Stock, no
par value per share (“Preferred
Stock”), none of which have been previously issued.
3. The
following resolutions were duly adopted by the Board of Directors:
WHEREAS, the Certificate of
Incorporation of the Company provides for a class of its authorized stock known
as Preferred Stock, comprised of One Hundred Million no par value, issuable from
time to time in one or more series;
WHEREAS, the Board of
Directors has the authority, without action by the shareholders, to
issue all or any portion of the authorized but unissued Preferred Stock in one
or more series and to determine the voting rights, preferences as to dividends
and liquidation, conversion rights, and other rights of such series;
and
WHEREAS, it is the desire of
the Board of Directors, pursuant to its authority as aforesaid, to fix the
rights, preferences, restrictions and other matters relating to a series of the
preferred stock, which shall consist of up to Fourteen Million (14,000,000)
shares of the Preferred Stock, which the Company has the authority to issue, as
follows:
NOW, THEREFORE, BE IT
RESOLVED, that the Board of Directors does hereby provide for the
issuance of a series of Preferred Stock and does hereby fix and determine the
rights, preferences, restrictions and other matters relating to such series of
Preferred Stock as follows:
TERMS
OF PREFERRED STOCK
Section
1. Definitions. Capitalized terms used and
not otherwise defined herein that are defined in the Purchase Agreement (as
defined below) shall have the meanings given such terms in the Purchase
Agreement. For the purposes hereof, the following terms shall have
the following meanings:
“4.9% Limitation” shall have
the meaning set forth in the Purchase Agreement.
“Board of Directors” means the
Board of the Directors of the Company
“Certificate” means this
Certificate of Designations, Preferences and Rights.
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“Closing Date” means the
Closing Date, as defined in the Purchase Agreement.
“Commission” means the
Securities and Exchange Commission.
“Common Stock” means the
Company’s common stock, no par value per share, and stock of any other class
into which such shares may hereafter have been reclassified or
changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would entitle the
holder thereof to acquire at any time Common Stock, including without
limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
“Conversion Date” shall have
the meaning set forth in Section 6(a).
“Conversion Ratio” shall mean
the number of shares of Common Stock issuable upon conversion of one share of
Series A Preferred Stock. Each share of Series A Preferred Stock
shall be initially convertible into one (1) share of Common Stock, subject to
adjustment as provided in this Certificate.
“Conversion Price” shall mean
One Dollar Ten Cents ($1.10), subject to adjustment as provided in this
Certificate.
“Conversion Shares” means,
collectively, the shares of Common Stock into which the shares of Series A
Preferred Stock are convertible in accordance with the terms
hereof.
“Conversion Shares Registration
Statement” means a registration statement that meets the requirements of
the Registration Rights Agreement and registers the resale of the Conversion
Shares by the Holder, who shall be named as a “selling stockholder” thereunder,
all as provided in the Registration Rights Agreement.
“Conversion Value” means an
amount determined by multiplying the number of Conversion Shares as to which a
value is to be determined by the average of the closing prices of the Common
Stock on the principal market or exchange on which the Common Stock is traded or
quoted for the five days prior to the date as of which a Conversion Value is
being determined.
“Effective Date” means the
date that the Conversion Shares Registration Statement is declared effective by
the Commission.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Fundamental Transaction”
shall have the meaning set forth in Section 7(f) hereof.
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“Holder” shall have the
meaning given such term in Section 2 hereof.
“Investors” shall mean the
persons named in Schedule A to the Purchase Agreement.
“Junior Securities” shall mean
any equity security of any kind which the Company shall at any time issue or be
authorized to issue other than the Series A Preferred Stock.
“Liquidation Price” shall mean
One Dollar Ten Cents ($1.10)
“Original Issue Date”
shall mean the date of the first issuance of any shares of the Series A
Preferred Stock regardless of the number of transfers of any particular shares
of Series A Preferred Stock and regardless of the number of certificates which
may be issued to evidence such Series A Preferred Stock.
“Purchase Agreement” means the
Securities Purchase Agreement, relating to the issuance of the Company’s Series
A Preferred Stock and Warrants for an aggregate purchase price of up to
$15,000,000, as amended, modified or supplemented from time to time in
accordance with its terms, a copy of which is on file at the principal offices
of the Company.
“Registration Rights Agreement”
means the Registration Rights Agreement, dated as of the Closing Date, to
which the Company and the original Holders are parties, as amended, modified or
supplemented from time to time in accordance with its terms.
“Series A Preferred
Stock” shall have the meaning set forth in Section 2.
“Trading Day” means a day on
which the Common Stock is traded on a Trading Market.
“Trading Market” means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.
“VWAP” means, for any date,
the price determined by the first of the following clauses that applies: (a) if
the Common Stock is then listed or quoted on a Trading Market, the daily volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the primary Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day
from 9:30 a.m. EST to 4:02 p.m. Eastern Time) using the VAP function;
(b) if the Common Stock is not then listed or quoted on the Trading Market
and if prices for the Common Stock are then reported in the “Pink Sheets”
published by the National Quotation Bureau Incorporated (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported; or (c) in
all other cases, the fair market value of a share of Common Stock as determined
by a nationally recognized-independent appraiser selected in good faith by
persons holding a majority of the principal amount of Series A
Preferred Stock then outstanding.
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“Warrants” shall have the
meaning set forth in the Purchase Agreement.
Section
2. Designation
and Amount. This series
of Preferred Stock shall be designated as the Company’s Series A Convertible
Preferred Stock (the “Series A
Preferred Stock”) and the number of shares so designated shall be
Fourteen Million (14,000,000) (which shall not be subject to increase without
the consent of all of the holders of the then outstanding shares of Series A
Preferred Stock (each a “Holder” and collectively, the
“Holders”). In
the event of conversion of shares of Series A Preferred Stock into Common Stock,
pursuant to Section 6 hereof, or in the event that the Company shall otherwise
acquire and cancel any shares of Series A Preferred Stock, the shares of Series
A Preferred Stock so converted or otherwise acquired and canceled shall have the
status of authorized but unissued shares of preferred stock, without designation
as to series until such stock is once more designated as part of a particular
series by the Board of Directors.
Section
3. Dividends. The
holders of the Series A Preferred Stock shall be entitled to receive dividends
payable at the rate of 6% of the Liquidation Price payable
quarterly. Dividends shall begin to accrue and accumulate on the
Original Issuance Date and each subsequent dividend payment date and shall be
computed on the basis of a 360-day year consisting of twelve 30-day months and
shall be payable quarterly in arrears on January 1, April 1, July 1, October 1
of each year (each, a "Dividend Date") with the first Dividend
Date being January 1, 2010. If a Dividend Date is not a
Business Day, then the dividend shall be due and payable on the Business Day
immediately following such Dividend Date. Dividends shall be payable
in cash on each Dividend Date provided that, at the option of the Company,
dividends may be paid in shares (“Dividend Shares”) provided, that, (i) at least
five (5) days prior to the applicable Dividend Date the Company shall provide
written notice (the "Dividend
Notice") to each holder indicating that the dividend is to be paid in
Dividend Shares (ii) all Dividend Shares must have been registered with the
Commission pursuant to an effective Registration
Statement. Dividends paid in Dividend Shares shall be
paid in a number of fully paid and non-assessable registered shares (rounded up
to the nearest whole share) of Common Stock equal to the (i) the amount of
interest payable divided by (ii) a twenty percent discount to the
average VWAP price for the twenty days prior to the Dividend Date. If
any Dividend Shares are to be issued on a Dividend Date, then the Company shall
within five (5) Business Days of the applicable Dividend Date, issue and deliver
to such holder a certificate, registered in the name of the Holder or its
designee, for the number of shares of Common Stock to which the Holder shall be
entitled. No dividends shall be payable with respect to any
shares of Junior Securities while the Series A Preferred Stock is
outstanding.
Section
4. Voting
Rights. (a) The Series A
Preferred Stock shall have no voting rights except as required by Colorado
law.
(b) However,
so long as any shares of Series A Preferred Stock are outstanding, the Company
shall not, without the affirmative approval of the Holders of 75% of the shares
of the Series A Preferred Stock then outstanding, (i) alter or change adversely
the powers, preferences or rights given to the Series A Preferred Stock or alter
or amend this Certificate, (ii) authorize or create any class of stock ranking
as to dividends or distribution of assets upon a Liquidation (as defined in
Section 5) senior to or otherwise pari passu with the Series A Preferred Stock,
or any series of preferred stock possessing greater voting rights or the right
to convert at a more favorable price than the Series A Preferred Stock, (iii)
amend its certificate of incorporation or other charter documents in breach of
any of the provisions hereof, (iv) increase the authorized number of shares of
Series A Preferred Stock or the number of authorized shares of Preferred Stock,
or (v) enter into any agreement with respect to the
foregoing. Notwithstanding any other provision of the
Certificate the provisions of Section 4(b) of this Certificate may not be
amended or waived.
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Section
5. Liquidation. In the event of
the liquidation, dissolution or winding up of the Company, voluntary or
involuntary (a “Liquidation”), the holders of
Series A Preferred Stock shall be entitled to be paid out of the assets of the
Company available therefore, an amount in cash equal to One Dollar Ten Cents
($1.10) per share of Series A Preferred Stock plus accrued and unpaid dividends
(the “Liquidation
Preference”). No distribution shall be made on any Junior
Securities by reason of any Liquidation of the Company unless each Holder of
Series A Preferred Stock shall have received all amounts in full to which such
Holder shall be entitled under this Section 5. If the assets of
the Company are insufficient to pay in full such amounts, then the entire assets
to be distributed to the Holders of Series A Preferred Stock shall be
distributed among such Holders ratably in accordance with the
respective amounts that would be otherwise be payable on such
shares. At the election of a Holder, made by written notice delivered
to the Company at least two (2) Business Days prior to the effective date of the
subject transaction, as to the shares of Series A Preferred Stock held by such
Holder, a Fundamental Transaction or Change of Control shall be treated as a
Liquidation as to such Holder.
Section
6. Conversion.
(a) Conversions at Option of
Holder. At any time and from time to time after the Original
Issue Date the Series A Preferred Stock shall be initially convertible (subject
to the limitations set forth in Section 6(b)), into such number of shares of
Common Stock based on the Conversion Ratio at the option of the
Holders. Holders shall effect conversions by providing the
Company with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”)
executed by the Holder, together with the delivery by the Holder to the Company
of the stock certificate(s) representing the number of shares of Series A
Preferred Stock so converted, with such stock certificates being duly endorsed
in full for transfer to the Company or with an applicable stock power duly
executed by the Holder in the manner and form as deemed reasonable by the
transfer agent of the Common Stock. Each Notice of Conversion shall specify the
number of shares of Series A Preferred Stock to be converted, the number of
shares of Series A Preferred Stock owned prior to the conversion at issue, the
number of shares of Series A Preferred Stock owned subsequent to the conversion
at issue, the stock certificate number and the shares of Series A Preferred
Stock represented thereby which are accompanying the Notice of Conversion, and
the date on which such conversion is to be effected, which date may not be prior
to two Trading Days following the date the Holder mails such Notice of
Conversion and the applicable stock certificates to the Company by overnight
delivery service (the “Conversion
Date”). If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the Trading Day immediately following
the date that such Notice of Conversion and applicable stock certificates are
received by the Company. The calculations and entries set forth in the Notice of
Conversion shall control in the absence of manifest or mathematical
error. Shares of Series A Preferred Stock converted into Common Stock
in accordance with the terms hereof shall be canceled and may not be
reissued. If the Conversion Price is adjusted pursuant to Section 7
or as otherwise provided in this Certificate, the Conversion Ratio shall
likewise be adjusted and the new Conversion Ratio shall determined by
multiplying the Conversion Ratio in effect by a fraction, the numerator of which
is the Conversion Price in effect before the adjustment and the denominator of
which is the new Conversion Price. Thereafter, subject to any further
adjustments in the Conversion Price, each share of Series A Preferred Stock
shall be initially convertible into Common Stock based on the new Conversion
Ratio.
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(b) Beneficial Ownership
Limitation. The right of the Holder to convert the
Series A Preferred Stock shall be subject to the 4.9% Limitation, with the
result that Company shall not effect any conversion of the Series A Preferred
Stock, and the Holder shall not have the right to convert any portion of the
Series A Preferred Stock, to the extent that after giving effect to such
conversion, the Holder (together with the Holder’s affiliates), as set forth on
the applicable Notice of Conversion, would beneficially own in excess of 4.9% of
the number of shares of the Common Stock outstanding immediately after giving
effect to such conversion. For the purposes of this Agreement beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act, and Regulation 13d-3 thereunder. For purposes of this
Section 6(b), in determining the number of outstanding shares of Common Stock,
the Holder may rely on the number of outstanding shares of Common Stock as
reflected in the most recent of the following: (A) the Company’s most recent
quarterly reports (Form 10-Q), Annual Reports (Form 10-K), or definitive proxy
statement or information statement as filed with the Commission under the
Exchange Act, (B) a more recent public announcement by the Company, or (C) any
other written notice by the Company or the Company’s transfer agent setting
forth the number of shares of Common Stock outstanding. Upon the written
or oral request of the Holder, the Company shall within two (2) Trading Days
confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including the Series A Preferred Stock, by the Holder
or its affiliates since the date as of which such number of outstanding shares
of Common Stock was publicly reported by the Company. The 4.9%
Limitation may be waived on 61 days prior written notice.
(c) Mechanics of
Conversion
i. Delivery of Certificate Upon
Conversion. Except as otherwise set forth herein, not later
than three Trading Days after each Conversion Date (the “Share Delivery Date”), the
Company shall deliver to the Holder (A) a certificate or certificates which,
after the Effective Date, shall be free of restrictive legends and trading
restrictions (other than those required by the Purchase Agreement) representing
the number of shares of Common Stock being acquired upon the conversion of
shares of Series A Preferred Stock, and (B) if applicable, a bank check in the
amount of accrued and unpaid dividends. After the Effective Date, the
Company shall, at the request of the Holder, deliver any certificate or
certificates required to be delivered by the Company under this Section
electronically through the Depository Trust Company (or another established
clearing Company performing similar functions) if the Company’s transfer agent
has the ability to deliver shares of Common Stock in such manner. If
in the case of any Notice of Conversion such certificate or certificates are not
delivered to or as directed by the applicable Holder by the third Trading Day
after the Conversion Date, the Holder shall be entitled to elect by written
notice to the Company at any time on or before its receipt of such certificate
or certificates thereafter, to rescind such conversion, in which event the
Company shall immediately return the certificates representing the shares of
Series A Preferred Stock tendered for conversion.
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ii. Obligation Absolute; Partial
Liquidated Damages. The Company’s obligations to issue and deliver the
Conversion Shares upon conversion of Series A Preferred Stock in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of such Conversion Shares. In
the event a Holder shall elect to convert any or all of its Series A Preferred
Stock, the Company may not refuse conversion based on any claim that such Holder
or any one associated or affiliated with the Holder has been engaged in any
violation of law, agreement or for any other reason (other than the inability of
the Company to issue shares of Common Stock as a result of the limitation set
forth in Section 6(c) hereof) unless an injunction from a court, on notice,
restraining and or enjoining conversion of all or part of this Series A
Preferred Stock shall have been sought and obtained and the Company posts a
surety bond for the benefit of the Holder in the amount of 150% of the
Conversion Value of Series A Preferred Stock which is subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation
of the dispute and the proceeds of which shall be payable to such Holder to the
extent it obtains judgment. In the absence of an injunction
precluding the same, the Company shall issue Conversion Shares upon a properly
noticed conversion. If the Company fails to deliver to the Holder such
certificate or certificates pursuant to Section 6(d)(i) within three Trading
Days of the Share Delivery Date applicable to such conversion, the Company shall
pay to such Holder, in cash, as liquidated damages and not as a penalty, for
each $5,000 of Conversion Value of Series A Preferred Stock being converted, $50
per Trading Day (increasing to $100 per Trading Day after three (3) Trading Days
and increasing to $200 per Trading Day six (6) Trading Days after such damages
begin to accrue) for each Trading Day after the Share Delivery Date until such
certificates are delivered. Nothing herein shall limit a Holder’s right to
pursue actual damages for the Company’s failure to deliver certificates
representing shares of Common Stock upon conversion within the period specified
herein and such Holder shall have the right to pursue all remedies available to
it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.
iii. Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Conversion. If the Company
fails to deliver to the Holder such certificate or certificates pursuant to
Section 6(d)(i) by a Share Delivery Date, and if after such Share Delivery Date
the Holder purchases (in an open market transaction or otherwise) Common Stock
to deliver in satisfaction of a sale by such Holder of the Conversion Shares
which the Holder was entitled to receive upon the conversion relating to such
Share Delivery Date (a “Buy-In”), then the
Company shall pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the Common
Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
of Common Stock that such Holder was entitled to receive from the conversion at
issue multiplied by (2) the price at which the sell order giving rise to such
purchase obligation was executed. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted conversion of shares of Series A Preferred Stock with respect to
which the aggregate sale price giving rise to such purchase obligation is
$10,000, the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In, together with applicable confirmations and
other evidence reasonably requested by the Company. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon conversion of the shares
of Series A Preferred Stock as required pursuant to the terms
hereof.
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iv. Reservation of Shares
Issuable Upon Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock solely for the purpose of issuance upon conversion of the Series A
Preferred Stock, each as herein provided, free from preemptive rights or any
other actual contingent purchase rights of persons other than the Holders, not
less than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Company as to reservation of such shares set
forth in the Purchase Agreement) be issuable (taking into account the
adjustments made and restrictions of Section 7) upon the conversion of all
outstanding shares of Series A Preferred Stock. The Company covenants
that all shares of Common Stock that shall be so issuable shall, upon issue, be
duly and validly authorized, issued and fully paid, nonassessable and, if the
Conversion Shares Registration Statement is then effective under the Securities
Act, registered for public sale in accordance with such Conversion Shares
Registration Statement provided that the holder or its broker delivers
confirmation to the Company or its transfer agent to the effect that the
Conversion Shares have been sold pursuant to such registration
statement.
v. Fractional Shares.
Upon a conversion of the Series A Preferred Stock, the Company shall not be
required to issue stock certificates representing fractional shares of Common
Stock. All fractional shares shall be carried forward and any fractional shares
which remain after a Holder converts all of his or her Series A Preferred Stock
shall be dropped and eliminated.
vi. Transfer
Taxes. The issuance of certificates for shares of the Common
Stock on conversion of the Series A Preferred Stock shall be made without charge
to the Holders thereof for any documentary stamp or similar taxes that may be
payable in respect of the issue or delivery of such certificate, provided that
the Company shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate
upon conversion in a name other than that of the Holder of such shares of Series
A Preferred Stock so converted and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been
paid.
vii. Absolute
Obligation. Except as expressly provided herein, no provision
of this Certificate shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the liquidated damages (if any) on, the
shares of Series A Preferred Stock at the time, place, and rate, and in the coin
or currency, herein prescribed.
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Section 7. Certain
Adjustments.
(a) Stock Dividends and Stock
Splits. If the Company, at any time subsequent to the Closing
Date as long as the Series A Preferred Stock is outstanding: (i) shall pay a
stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company pursuant to this Series A Preferred
Stock), (ii) subdivide outstanding shares of Common Stock into a larger number
of shares, (iii) combine (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (iv) issue by
reclassification of shares of the Common Stock any shares of capital stock of
the Company, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
(b) Price Adjustment.
From and after the Closing Date except for (i) issuances covered by
Sections 7(a) and 7(c) hereof or (ii) an issuance of Common Stock upon exercise
or upon conversion of warrants, options or other convertible securities for
which an adjustment has already been made pursuant to this Section 7, as to all
of which this Section 7(b) does not apply, if the Company closes on the sale or
issuance of Common Stock at a price, or issues warrants, options, convertible
debt or equity securities with a exercise price per share or conversion price
which is less than the Conversion Price then in effect (such lower sales price,
conversion or exercise price, as the case may be, being referred to as the
“Lower Price”),
the Conversion Price in effect from and after the date of such transaction shall
be reduced to the Lower Price. For purpose of determining the
exercise price of warrants issued by the Company, the price, if any, paid per
share for the warrants shall be added to the exercise price of the
warrants.
(c) Pro Rata
Distributions. If the Company, at any time after the Closing, shall
distribute to all holders of Common Stock (and not to Holders) evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase any
security, then in each such case the Conversion Price shall be determined by
multiplying such Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the VWAP determined as of the
record date mentioned above, and of which the numerator shall be such VWAP on
such record date less the then fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to
one outstanding share of the Common Stock as determined by the Board of
Directors in good faith. In either case the adjustments shall be
described in a statement provided to the Holders of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.
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(d) Calculations. All
calculations under this Section 7 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares
of Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company or any of its
subsidiaries. For purposes of this Section 7, the number of shares of
Common Stock deemed to be issued and outstanding as of a given date shall be the
sum of the number of shares of Common Stock (excluding treasury shares and
shares owned by subsidiaries, if any) actually issued and
outstanding.
(e) Notice to
Holders.
(i) Adjustment to Conversion
Price. Whenever the Conversion Price is adjusted pursuant to
any of this Section 7, the Company shall promptly mail to each Holder a notice
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.
(ii) Notices of Other
Events. If (A) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; (B) the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock or any Fundamental Transaction, (C) the
Company shall authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company; then in each case, the Company shall
cause to be filed at each office or agency maintained for the purpose of
conversion of the Series A Preferred Stock, and shall cause to be mailed to the
Holders at their last addresses as they shall appear upon the stock
books of the Company, at least 30 calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such rights or warrants,
or if a record is not to be taken, the date as of which the holders of the
Common Stock of record to be entitled to such rights or warrants are to be
determined or (y) the date on which such reclassification is expected to become
effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such
reclassification or Fundamental Transaction; provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.
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(f) Fundamental
Transaction. If, at any time while this Series A Preferred Stock is
outstanding, (i) the Company effects any merger or consolidation of the Company
with or into another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or property, or (iv)
the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property (in any such case, a “Fundamental
Transaction”), then upon any subsequent conversion of this Series A
Preferred Stock, the Holder shall have the right to receive, for each Conversion
Share that would have been issuable upon such conversion absent such Fundamental
Transaction, the same kind and amount of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of one share of Common Stock (the “Alternate
Consideration”). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders
of Common Stock are given any choice as to the securities, cash or property to
be received in a Fundamental Transaction, then the Holder shall be given the
same choice as to the Alternate Consideration it receives upon any conversion of
this Series A Preferred Stock following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall file a new Certificate with the same terms and conditions and
issue to the Holder new preferred stock consistent with the foregoing provisions
and evidencing the Holder’s right to convert such preferred stock into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (f)(iv) and
insuring that this Series A Preferred Stock (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction. Notwithstanding the foregoing or any other
provisions of this Certificate, in the event that the agreement relating to a
Fundamental Transaction provides for the conversion or exchange of the Series A
Preferred Stock into equity or debt securities, cash or other consideration and
the agreement is approved by the holders of a majority of the then-outstanding
shares of Series A Preferred Stock, then the holders of the Series A Preferred
Stock shall have only the rights set forth in such agreement.
11
Section 8.Redemption.
(a) Optional Redemption on
Change of Control. Upon the occurrence of a Change of Control (as defined
below), a Holder may by written notice require the Company to redeem all of the
Series A Preferred Stock held by such Holder for an amount equal to the
Liquidation Preference out of funds legally available
therefor A “Change of Control” means (i)
any sale of all or substantially all of the assets of the Company or (ii) any
merger, consolidation, sale of stock or other business combination in which the
Company is not the surviving entity or in which the stockholders of the Company,
after giving effect to such transaction, own less than 51% of the Company’s
voting power.
(b) No Redemption Junior
Securities. The Company shall not redeem or purchase any
Junior Securities while the Series A Preferred Stock is
outstanding.
Section 9. Miscellaneous.
(a) Notices. Any
and all notices or other communications or deliveries to be provided by the
Holders hereunder, including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service, addressed to the Company, at its principal
address as reflected in its most recent filing with the
Commission. Any and all notices or other communications or deliveries
to be provided by the Company hereunder shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile telephone number or address of
such Holder appearing on the books of the Company, or if no such facsimile
telephone number or address appears, at the principal place of business of the
Holder. Any notice or other communication or deliveries hereunder
shall be deemed given when received, and any notice by telecopier shall be
effective if confirmation of receipt is given by the party to whom the notice is
transmitted.
(b) Lost or Mutilated Preferred
Stock Certificate. If a Holder’s Series A Preferred Stock
certificate shall be mutilated, lost, stolen or destroyed, the Company shall
execute and deliver, in exchange and substitution for and upon cancellation of a
mutilated certificate, or in lieu of or in substitution for a lost, stolen or
destroyed certificate, a new certificate for the shares of Series A Preferred
Stock so mutilated, lost, stolen or destroyed but only upon receipt of evidence
of such loss, theft or destruction of such certificate, and of the ownership
thereof, and indemnity, if requested, all reasonably satisfactory to the
Company.
(c) Next Business
Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
(d) Headings. The
headings contained herein are for convenience only, do not constitute a part of
this Certificate and shall not be deemed to limit or affect any of the
provisions hereof.
(e) Amendment. Except
as other wise provide herein this Certificate may be amended with the approval
of the Board of Directors and the consent of the holders of seventy-five percent
(75%) of the outstanding shares of Series A Preferred Stock.
RESOLVED, FURTHER, that the
Chairman, the president or any vice-president, and the secretary or any
assistant secretary, of the Company be and they hereby are authorized and
directed to prepare and file a Certificate of Designation of Preferences, Rights
and Limitations in accordance with the foregoing resolution and the provisions
of Colorado law.
12
IN
WITNESS WHEREOF, the undersigned has executed this Certificate this 16th day
of October 2009.
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Cai
Yongjun
Name:
Cai Yongjun
Title: Chief
Executive Officer
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13
ANNEX
A
NOTICE
OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES A
PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series A
Convertible Preferred Stock indicated below, into shares of common stock, no par
value per share (the “Common Stock”), of
Longwei Petroleum Investment Holding Limited., a Colorado company (the “Company”), according
to the conditions hereof, as of the date written below. If shares are to be
issued in the name of a person other than undersigned, the undersigned will pay
all transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the Holder for any conversion, except for
such transfer taxes, if any.
Conversion
calculations:
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Date
to Effect Conversion:
___________________________________________________
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Number
of shares of Common Stock owned prior to Conversion:
_______________________
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Number
of shares of Series A Preferred Stock to be Converted:
_______________________
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Value
of shares of Series A Preferred Stock to be Converted:
_________________________
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Number
of shares of Common Stock to be Issued:
_________________________________
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Certificate
Number of Series A Preferred Stock attached
hereto:_______________________
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Number
of Shares of Series A Preferred Stock represented by attached
certificate:_________
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Number
of shares of Series A Preferred Stock subsequent to Conversion:
________________
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[HOLDER]
By:___________________________________
Name:
Title:
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