Document:

ex104.htm

    Exhibit
10.4

     

    NEITHER
THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES OF COMMON STOCK TO
BE ISSUED ON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND
NEITHER THE WARRANT NOR THE SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT, OR (2)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS AND THE COMPANY SHALL HAVE RECEIVED AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY AS TO SUCH EXEMPTION.

    

    IN
ADDITION, A SECURITIES PURCHASE AGREEMENT DATED AS
OF     OCTOBER 29, 2009, AS AMENDED (THE “PURCHASE
AGREEMENT”), A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS BETWEEN THE PARTIES
WITH RESPECT TO THIS WARRANT.

    

    
      
        

      

    LONGWEI
PETROEUM INVESTMENT HOLDING LIMITED

    

    COMMON
STOCK PURCHASE WARRANT

    

    Number of
Shares:  ___________                                                                                                                                                                                
  Holder: ___________

                                                                                         

    Expiration
Date: October 29, 2012

    

    Exercise Price per Share:
$2.255

    

    LONGWEI PETROEUM INVESTMENT HOLDING
LIMITED, a Colorado corporation (the “Company”),
hereby certifies that, for value received, ____________, or registered assigns (the
“Warrant
Holder”), is entitled, subject to the terms set forth below, to purchase
from the Company up to [_______]
(             )
shares (as adjusted from time to time as provided in Section 7 of this Warrant,
the “Warrant
Shares”) of common stock, no par value (the “Common
Stock”), of the Company at a price of $2.255 per Warrant Share (as
adjusted from time to time as provided in Section 7, the “Exercise
Price”), at any time and from time to time from and after the date
thereof and through and including 5:00 p.m. New York City time on October 29,
2012 (the “Expiration
Date”), and subject to the terms and conditions set forth
below.  This Warrant is issued pursuant to the terms of a Securities
Purchase Agreement dated as of October 29, 2009 by and among the Company and the
investors listed on the Schedule of Buyers attached hereto (the “SPA”).  Defined
terms not otherwise defined herein shall have the respective meanings set forth
in the SPA.

    

    1. Registration
of Warrant.  The Company shall
register this Warrant upon records to be maintained by the Company for that
purpose (the “Warrant
Register”), in the name of the record Warrant Holder hereof from time to
time.  The Company may deem and treat the registered Warrant Holder of
this Warrant as the absolute owner hereof for the purpose of any exercise hereof
or any distribution to the Warrant Holder, and for all other purposes, and the
Company shall not be affected by notice to the contrary.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2. Investment
Representation.  The Warrant
Holder by accepting this Warrant represents that the Warrant Holder is acquiring
this Warrant for its own account or the account of an affiliate (that is an
“accredited investor,” as defined under Regulation D promulgated under the
Securities Act (an “Accredited Investor”), which has
been identified to and approved by the Company for investment purposes and not
with the view to any offering or distribution and that the Warrant Holder will
not sell or otherwise dispose of this Warrant or the underlying Warrant Shares
in violation of applicable securities laws.  The Warrant Holder
acknowledges that the certificates representing any Warrant Shares will bear a
legend indicating that they have not been registered under the Securities Act,
and may not be sold by the Warrant Holder except pursuant to an effective
registration statement or pursuant to an exemption from registration
requirements of the Securities Act and in accordance with federal and state
securities laws.

     

    3. Validity
of Warrant and Issue of Shares.  The Company
represents and warrants that this Warrant has been duly authorized and validly
issued and warrants and agrees that all of the Warrant Shares, when issued on
exercise of this Warrant, shall be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, Liens and charges with respect to the
issue thereof other than those incurred by the Holder.  The Company
further warrants and agrees that during the Exercise Period, the Company will at
all times have authorized and reserved a sufficient number of Common Stock to
provide for the exercise of the rights represented by this Warrant.

     

    4. Registration of Transfers
and Exchange of Warrants.

     

    a. Subject
to compliance with the federal and state securities laws, the Company shall
register the transfer of any portion of this Warrant in the Warrant Register,
upon surrender of this Warrant with the Form of Assignment attached hereto duly
completed and signed to the Company at the office specified in or pursuant to
Section 12.  Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any such new
warrant, a “New
Warrant”), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Warrant Holder.  The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance of such transferee of all of the rights
and obligations of a Warrant Holder of a Warrant.

     

    b. This
Warrant is exchangeable, upon the surrender hereof by the Warrant Holder to the
office of the Company for one or more New Warrants, evidencing in the aggregate
the right to purchase the number of Warrant Shares which may then be purchased
hereunder.  Any such New Warrant will be dated the date of such
exchange.

     

    
      	
              5.  

            	
              Exercise of
      Warrants.

            

    

     

    a. Upon
surrender of this Warrant with the Form of Election to Purchase attached hereto
duly completed and signed to the Company, at its address set forth in Section
12, and upon payment and delivery of the Exercise Price per Warrant Share
multiplied by the number of Warrant Shares that the Warrant Holder intends to
purchase hereunder, in lawful money of the United States of America, by wire
transfer or by certified or official bank check or checks, to the Company, all
as specified by the Warrant Holder in the Form of Election to Purchase, the
Company shall promptly (but in no event later than three Business Days after the
Date of Exercise (as defined herein)) issue or cause to be issued  and
cause to be delivered to or upon the written order of the Warrant Holder and in
such name or names as the Warrant Holder may designate (subject to the
restrictions on transfer described in the legend set forth on the face of this
Warrant), a certificate for the Warrant Shares issuable upon such exercise, with
such restrictive legend as required by the Securities Act.  Any Person
so designated by the Warrant Holder to receive Warrant Shares shall be deemed to
have become holder of record of such Warrant Shares as of the Date of Exercise
of this Warrant; provided, however, that in the
event the Warrant Shares are not registered for resale by the Warrant Holder,
such Person shall reasonably demonstrate to the Company its status as an
Accredited Investor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    b. A “Date
of Exercise” means the date on which the Company shall have received (i) this
Warrant (or any New Warrant, as applicable), with the Form of Election to
Purchase attached hereto (or attached to such New Warrant) appropriately
completed and duly signed, and (ii) payment of the Exercise Price for the number
of Warrant Shares so indicated by the Warrant Holder to be
purchased.

     

    c. This
Warrant shall be exercisable at any time and from time to time during the
Exercise Period for such number of Warrant Shares as is indicated in the
attached Form of Election To Purchase.  If less than all of the
Warrant Shares which may be purchased under this Warrant are exercised at any
time, the Company shall issue or cause to be issued, at its expense, a New
Warrant evidencing the right to purchase the remaining number of Warrant Shares
for which no exercise has been evidenced by this Warrant.

     

    d. (i) Notwithstanding anything
contained herein to the contrary, but subject to Section 5(e) and Section 6, the
holder of this Warrant may, at its election exercised in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash
payment otherwise contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net
Number” of shares of Common Stock determined according to the following
formula (a “Cashless
Exercise”):

     

    Net
Number = (A x (B - C))/B

     

    (ii)           For
purposes of the foregoing formula:

     

    A= the
total number shares with respect to which this Warrant is then being
exercised.

     

    B= the
last reported sale price (as reported by Bloomberg) of the Common Stock on the
trading day immediately preceding the date of the Exercise Notice.

     

    C= the
Warrant Exercise Price then in effect at the time of such exercise.

     

    e. The
holder of this Warrant may not make a Cashless Exercise if the resale of the
Warrant Shares by the Holder of the Warrant Shares is covered by an effective
registration statement.

     

    6. Maximum
Exercise.   The Warrant
Holder shall not be entitled to exercise this Warrant on a Date of
Exercise in connection with that number of shares of Common Stock which would be
in excess of the sum of (i) the number of shares of Common Stock beneficially
owned by the Warrant Holder and its affiliates on the Date of Exercise, and (ii)
the number of shares of Common Stock issuable upon the exercise of this Warrant
with respect to which the determination of this limitation is being made on an
Date of Exercise, which would result in beneficial ownership by the Warrant
Holder and its affiliates of more than 4.9% of the outstanding shares of Common
Stock on such date.  This Section 6 may be waived on 61 days prior
written notice.  As used in this Warrant, beneficial ownership shall
be determined in accordance with Section 13(d) of the Exchange Act and
Regulation 13d-3 thereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7. Adjustment
of Exercise Price and Number of Shares.  The character of the
shares of stock or other securities at the time issuable upon exercise of this
Warrant and the Exercise Price therefor, are subject to adjustment upon the
occurrence any of the following events which shall have occurred or which shall
occur at any time on or after the Closing Date and all such adjustments shall be
cumulative:

     

    a. Adjustment for Stock Splits, Stock
Dividends, Recapitalizations, Etc.  The Exercise Price of this
Warrant and the number of shares of Common Stock or other securities at the time
issuable upon exercise of this Warrant shall be appropriately adjusted to
reflect any stock dividend, stock split, stock distribution, combination of
shares, reverse split, reclassification, recapitalization or other similar event
affecting the number of outstanding shares of stock or securities.

     

    b. Adjustment for Reorganization,
Consolidation, Merger, Etc.  In case of any consolidation or
merger of the Company with or into any other corporation, entity or person, or
any other corporate reorganization, in which the Company shall not be the
continuing or surviving entity of such consolidation, merger or reorganization
(any such transaction being hereinafter referred to as a “Reorganization”),
then, in each case, the holder of this Warrant, on exercise hereof at any time
after the consummation or effective date of such Reorganization (the “Effective
Date”),
shall receive, in lieu of the shares of stock or other securities at any time
issuable upon the exercise of the Warrant issuable on such exercise prior to the
Effective Date, the stock and other securities and property (including cash) to
which such holder would have been entitled upon the Effective Date if such
holder had exercised this Warrant immediately prior thereto (all subject to
further adjustment as provided in this Warrant).

     

    c. Certificate as to
Adjustments.  In case of any adjustment or readjustment in the
price or kind of securities issuable on the exercise of this Warrant, the
Company will promptly give written notice thereof to the holder of this Warrant
in the form of a certificate, certified and confirmed by the Secretary of the
Company, setting forth such adjustment or readjustment and showing in reasonable
detail the facts upon which such adjustment or readjustment is
based.

     

    d. Sales of Common Stock at less than
the Exercise Price. From the date hereof except for (i) issuances
covered by Sections 7(a), 7(b) and 7(e) 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(d) 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 Exercise Price (such lower sales
price, conversion or exercise price, as the case may be, being referred to as
the “Lower
Price”), then the Exercise Price shall be reduced and only reduced to
equal the Lower Price and the number of Warrant Shares issuable hereunder shall
be increased such that the aggregate Exercise Price payable hereunder, after
taking into account the decrease in the Exercise Price, shall be equal to the
aggregate Exercise Price prior to such adjustment..  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. Such adjustment shall be made successively whenever such an issuance
is made.

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    e. Price
Adjustments Based on Pre-Tax Income per Share.

     

    
      	
              i.  

            	
              In
      the event the Company’s After-Tax Income for the year ended June 30, 2010
      is less than the 2010 Guaranteed ATNI  then the Exercise Price
      shall be adjusted by multiplying the Exercise Price by a fraction the
      numerator of which shall be the After-Tax Net Income and the denominator
      shall be the 2010 Guaranteed ATNI (defined below) provided that in no
      event shall the Exercise Price be reduced by more than
      50%.  Thus, if  After-Tax Income for the year ended
      June 30, 2010 is 80% of the 2010 Guaranteed ATNI, the Exercise Price shall
      be multiplied by 80%. 

            

    

     

    
      	
              ii.  

            	
              Such
      reduction shall be made at the time the Company files its Form 10-K for
      the year ended June 30, 2010, and shall apply to the Warrants which are
      outstanding on the date the Form 10-K is filed, or, if not filed on time,
      on the date that filing was required, after giving effect to any extension
      pursuant to Rule 12b-25 of the Exchange Act.  In the event that
      the Form 10-K is not filed with the SEC within thirty (30) days after the
      date that filing was required, the Exercise Price shall automatically be
      reduced by 50%.

            

    

     

    8. Fractional
Shares.  The Company shall
not be required to issue or cause to be issued fractional Warrant Shares on the
exercise of this Warrant.  The number of full Warrant Shares that
shall be issuable upon the exercise of this Warrant shall be computed on the
basis of the aggregate number of Warrants Shares purchasable on exercise of this
Warrant so presented.  If any fraction of a Warrant Share would,
except for the provisions of this Section 8, be issuable on the exercise of this
Warrant, the Company shall, at its option, (i) pay an amount in cash equal to
the Exercise Price multiplied by such fraction or (ii) round the number of
Warrant Shares issuable, up to the next whole number.

     

    9. Sale or
Merger of the Company.  Upon a Merger
Transaction (as defined below), the restriction contained in Section 6 shall
immediately be released and the Warrant Holder will have the right to exercise
this Warrant concurrently with such Merger Transaction.  For purposes
of this Warrant, the term “Merger Transaction” shall
mean a consolidation or merger of the Company into another company or entity in
which the Company is not the surviving entity or the sale of all or
substantially all of the assets of the Company to another company or entity not
controlled by the then existing stockholders of the Company.

     

    10. Notice of
Intent to Sell or Merge the Company.  The Company will
give Warrant Holder ten (10) Business Days notice before any Merger
Transaction.

     

    11. Issuance
of Substitute Warrant. In the event of a merger,
consolidation, recapitalization or reorganization of the Company or a
reclassification of Company shares of stock, which results in an adjustment to
the number of shares subject to this Warrant and/or the Exercise Price
hereunder, the Company agrees to issue to the Warrant Holder a substitute
Warrant reflecting the adjusted number of shares and/or Exercise Price upon the
surrender of this Warrant to the Company.  However, in the event that
the Company does not issue a substitute warrant, the number and class of Warrant
Shares or other securities and the Exercise Price shall be adjusted as provided
in this Warrant, and this Warrant shall relate the adjusted number of Warrant
Shares and Exercise Price.

     

    12. Notice.  All notices and
other communications hereunder shall be in writing and shall be deemed to have
been given (i) on the date they are delivered if delivered in person; (ii) on
the date initially received if delivered by facsimile transmission followed by
registered or certified mail confirmation; (iii) on the date delivered by an
overnight courier service; or (iv) on the date of delivery after it is mailed by
registered or certified mail, return receipt requested with postage and other
fees prepaid as follows:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              If
      to the Company:

            	
              Longwei
      Petroleum Investment Holding Limited

              No.
      30, Guanghua Street, Xiaojingyu Xiang,

              Wanbailin
      District,

              Taiyan
      City, Shanxi Province 

              People’s
      Republic of China 030024

              
                Attn:
      Chief Executive Officer 

                  Facsimile:
      617-977-8618

                

              

            

    

     

    with a copy
to:

     

    
      
        	
              	
                
                  Sichenzia
      Ross Friedman Ference LLP

                  61
      Broadway, 32nd Floor

                  New
      York, NY 10006 

                    Facsimile:  212
      930 9725 

                      Attn.:  Darrin
      M Ocasio,
Esq.

                    

                  

                

              

      

    

     

    If to the Warrant
Holder:

    

    at the
address or telecopier number and to the attention of the person shown on the
Company’s warrant register.

    

    with a copy
to:

     

    
      	
            	
              
                
                  National
      Securities Corporation

                  330
      Madison Avenue, 18th
      Floor,

                  New
      York, NY 10017 

                    Attn:
      Jonathan C. Rich

                  

                

              

            

    

     

    
      	
              13.  

            	
              Miscellaneous.

            

    

     

    a. This
Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.  This Warrant may
be amended only by a writing signed by the Company and the Warrant
Holder.

     

    b. Nothing
in this Warrant shall be construed to give to any person or corporation other
than the Company and the Warrant Holder any legal or equitable right, remedy or
cause of action under this Warrant; this Warrant shall be for the sole and
exclusive benefit of the Company and the Warrant Holder.

     

    c. This
Warrant shall be governed by, construed and enforced in accordance with the
internal laws of the State of New York without regard to the principles of
conflicts of law thereof.

     

    d. The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.

     

    e. In case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    f. The
Warrant Holder shall not, by virtue hereof, be entitled to any voting or other
rights of a stockholder of the Company, either at law or equity, and the rights
of the Warrant Holder are limited to those expressed in this
Warrant.

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by the
authorized officer as of the date first above stated.

    

    Date:          ,
2009                                                                                     

    

    

    LONGWEI
PETROLEUM INVESTMENT HOLDING LIMITED.

     

    By:________________________________________                     

    Name:_____________________________________

    Title:______________________________________

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FORM
OF ELECTION TO PURCHASE

    

    (To be
executed by the Warrant Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)

    

    To:  Longwei
Petroleum Investment Holding Limited:

    

    In
accordance with the Warrant enclosed with this Form of Election to Purchase, the
undersigned hereby irrevocably elects to purchase ______________ shares of
Common Stock (“Common Stock”), no par value, of Longwei Petroleum Investment
Holding Limited. and encloses the warrant and $____ for each Warrant Share being
purchased or an aggregate of $________________ in cash or certified or official
bank check or checks, which sum represents the aggregate Exercise Price (as
defined in the Warrant) together with any applicable taxes payable by the
undersigned pursuant to the Warrant.

    

    The
undersigned requests that certificates for the shares of Common Stock issuable
upon this exercise be issued in the name of:

    

                                                                               

    

                                                                               

    
      

    

    
      

    

    
    

    
      

    

                                                                             
(Please
print name and address)

     

     

    
      
 (Please
insert Social Security or Tax Identification Number)

    

    If the
number of shares of Common Stock issuable upon this exercise shall not be all of
the shares of Common Stock which the undersigned is entitled to purchase in
accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:

    

                                                                               

    

    
      
                                          
(Please
print name and address)

    

    Dated:________________________________________   Name of Warrant
Holder:____________________________________

    

                                                                    

     

    
      

    

    (Print)

     

    
      

    

     (By:)

     

    
      

    

    (Name:)

     

    
      

    

     (Title:)

     

    Signature
must conform in all respects to name of Warrant
Holder as specified on the face of the Warrantex105.htm

    Exhibit 10.5

     

    MAKE
GOOD ESCROW AGREEMENT

     

    This
Securities Escrow Agreement (the "Make Good Escrow
Agreement"), dated as of October 29, 2009, is entered into by and among
Longwei Petroleum Investment Holding Limited, a Colorado corporation (the "Company"), Mr. Cai
Yongjun and Mr. Xue Yongping (collectively the “Make Good Pledgors”),
the Investors (as defined below), National Securities Corporation, as placement
agent ("Placement
Agent) and Corporate Stock Transfer, Inc., as escrow agent ("Escrow
Agent").

     

    WHEREAS, each of the investors in the
private offering of securities of the Company (the “Investors”) has
entered into a Securities Purchase Agreement, dated as of the date hereof (the
“SPA”),
evidencing their participation in the Company's private offering (the “Offering”) of
securities.  As an inducement to the Investors to participate in the
Offering and as set forth in the SPA, the Make Good Pledgors have agreed to
place the “Escrow
Shares” (as defined in Section 2 hereto) into escrow for the benefit of
the Investors in the event the Company fails to satisfy certain financial
thresholds.

     

    WHEREAS, pursuant to the requirements
of the SPA, the Company and the Make Good Pledgors have agreed to establish an
escrow on the terms and conditions set forth in this Make Good
Agreement;

     

    WHEREAS, the Escrow Agent has agreed to
act as escrow agent pursuant to the terms and conditions of this Make Good
Agreement; and

     

    WHEREAS, all capitalized terms used but
not defined herein shall have the meanings assigned them in the
SPA;

     

    NOW, THEREFORE, in consideration of the
mutual promises of the parties and the terms and conditions hereof, the parties
hereby agree as follows:

     

    1.           Appointment of Escrow Agent.
The Make Good Pledgors and the Company hereby appoint Corporate Stock Transfer,
Inc. as Escrow Agent to act in accordance with the terms and conditions set
forth in this Make Good Agreement, and Escrow Agent hereby accepts such
appointment and agrees to act in accordance with such terms and
conditions.

     

    2.           Establishment of Escrow.
Within three Trading Days of the execution of the SPA, the Make Good Pledgors
shall deliver, or cause to be delivered, to the Escrow Agent certificates
evidencing 13,499,274 shares (the “Escrow Shares”) of
the Company's common stock, no par value per share (“Common Stock”), along
with medallion guaranteed stock powers (or such other signed instrument of
transfer acceptable to the Company’s transfer agent to enable the transfer of
such Escrow Shares in accordance with Section 4).  The Make Good
Pledgors hereby agree that their  obligation to transfer shares of
Common Stock to Investors pursuant to Section 4.11 of the SPA and this Make Good
Agreement shall continue to run to the benefit of any Investor who shall have
transferred or sold all or any portion of its Series A Preferred Stock, and that
Investors shall have the right to assign its rights to receive all or any such
shares of Common Stock to other Persons in conjunction with negotiated sales or
transfers of any of its Series A Preferred Stock.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    3.           Representations of Make Good Pledgors
and the Company.  The Make Good Pledgors and the Company hereby
represent and warrant, severally and not jointly, as to itself only, to the
Investors as follows:

     

    a.           The
Escrow Shares of the Make Good Pledgors are validly issued, fully paid and
nonassessable shares of the Company, and free and clear of all pledges, liens
and encumbrances.  Upon any transfer of Escrow Shares to Investors
hereunder, Investors will receive full right, title and authority to such shares
as holders of Common Stock of the Company.

     

    b.           Performance
of this Make Good Agreement and compliance with the provisions hereof will not
violate any provision of any applicable law and will not conflict with or result
in any breach of any of the terms, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon, any of the properties or assets of any of the Make Good
Pledgors pursuant to the terms of any indenture, mortgage, deed of trust or
other agreement or instrument binding upon any of the Make Good Pledgors, other
than such breaches, defaults or liens which would not have a material adverse
effect taken as a whole.

     

    4.           Disbursement
of Escrow Shares.

     

     

    a.           If
the After Tax Net Income reported in the 2010 Annual Report is less than
$23,900,000 (the “2010 Guaranteed ATNI),
then the Investors shall be entitled to receive on a “pro rata” basis (determined by dividing each Investor’s Investment
Amount by the aggregate of all Investment Amounts delivered to the Company by
the Investors under the SPA) for no consideration other than their part of their
respective Investment Amount at Closing, some or all of the Escrow Shares
determined according to the following formula:

    

    
      
        	
                E

              	
                Minus

              	
                C

              
	
                ((A
      / B) X D)

              

      

    For the
purposes of the foregoing formula:

     
 

    A =
Actual ATNI 2010

    B = 2010
Guaranteed ATNI  ($23,900,000)

    C =
Escrow Shares (13,499,274)

    D =
Initial Conversion Price of Series A Preferred Stock ($1.10)

    E = Total
Investment Amount ($14,849,201.50)

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    For
example if the actual ATNI was $ 20 million the number of Escrow Shares that
would be distributed prorate to the Investors would be 2,632,395 calculated as
follows:

    

    $14,849,201.50
                                                        Minus     13,499,274

    (20,000,000/23,900,000)
X 1.10

    

    

     

    b.           The
determination regarding the number and the distribution, if any, of the Escrow
Shares to be distributed to the Investors pursuant to this Section shall be made
by the Company and the Placement Agent within five (5) Business Days after the
date the Company is required to file its 2010 Annual Report with the Commission
(after giving effect to any extension pursuant to Rule 12b-25 of the Exchange
Act).  In the event that the Company does not file its 2010 Annual
Report with the Commission within thirty (30) days after the date such filing
was required, after giving effect to any extension pursuant to Rule 12b-25 of
the Exchange Act, all of the Escrow Shares shall be delivered to the Investors
on a pro rata basis within five (5) Business Days following the expiration of
such thirty (30) day period.

     

    c.           Within
five Business Days after the determination by the Company of the number of
Escrow Shares to which the Investors are entitled, calculated in the manner set
forth above, the Placement Agent and the Company shall give joint written
instructions to the  Escrow Agent to, and upon receipt of such written
instructions, the Escrow Agent shall, within five Business Days after receipt of
such instructions deliver to the Investors on a “pro rata” basis such number of
Escrow Shares as set forth in the  joint instructions.  If
less than all of the Escrow Shares are delivered to the Investors, the Escrow
Agent shall return the undistributed Escrow Shares to the Make Good Pledgors
pursuant to the joint instructions of the Placement Agent and the
Company.

     

    d.           Notwithstanding
anything to the contrary set forth herein, in the event of the conversion of
shares of Series A Preferred, the shares of Series A Preferred so converted
shall remain outstanding for the purpose of receiving distribution of Escrow
Shares pursuant to this Section.

     

    e.           Notwithstanding
anything to the contrary set forth herein, only those Investors who own shares
of Series A Preferred issued hereunder and remain shareholders of the Company at
the time that any Escrow Shares become deliverable hereunder shall be entitled
to their pro rata portion of the Escrow Shares calculated based on their
ownership interest at the time when the applicable Escrow Shares become
deliverable hereunder.

     

     f.           The
parties agree that for purposes of determining whether or not the 2010
Guaranteed ATNI has been achieved, (i) the release of any or
all of the Escrow Shares shall not be counted as an expense, charge, or other
deduction from revenues in calculating net income even though GAAP may require
contrary treatment, (ii) any registration delay
payments arising under the Registration Rights Agreement that are accrued or
paid by the Company to any Investor will be excluded from the calculation of
After-Tax Net Income, and (iii) any increase in
taxes payable by the Company or any Subsidiary as a result of PRC tax laws or
implementing regulations promulgated for the purpose of making more equal the
tax treatment of foreign invested entities (including sino-foreign joint
ventures) and domestic entities which may become effective and applicable to the
Company after the date of this Make Good Agreement shall not be included as an
expense.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    g.           For so long as the Escrow Shares remain in
escrow, such shares shall not be counted in calculating a quorum for stockholder
voting purposes nor shall such shares be voted at any meeting of stockholders or
included in a shareholders written consent.

     

    h.           The
Company will provide the Placement Agent with (i) the Company’s audited
financial statements for 2010, prepared in accordance with GAAP, on or before
September 30, 2010 (or such later date that the Company files its 2010 Annual
Report so as to allow the Placement Agent the opportunity to evaluate whether
the 2010 Guaranteed ATNI has been attained.

     

     

    5.           Duration. This Make Good
Agreement shall terminate on the distribution of all the Escrow
Shares.  The Company agrees to provide the Escrow Agent written notice
of the filing with the Commission of any financial statements or reports
referenced herein.

     

     

    6.           Escrow Shares.  If
any Escrow Shares are deliverable to the Investors pursuant to the SPA and in
accordance with this Make Good Agreement, (i) the Make Good Pledgors covenants
and agrees to execute all such instruments of transfer (including stock powers
and assignment documents) as are customarily executed to evidence and consummate
the transfer of the Escrow Shares from the Make Good Pledgors to the Investors
and (ii) following its receipt of the documents referenced in Section 6(i), the
Company covenants and agrees to promptly reissue such Escrow Shares in the
applicable Investor’s name and deliver the same as directed by such
Investor.  Until such time as (if at all) the Escrow Shares are
required to be delivered pursuant to the SPA and in accordance with this Make
Good Agreement, any dividends payable in respect of the Escrow Shares and all
voting rights applicable to the Escrow Shares shall be retained by the Make Good
Pledgors.  Should the Escrow Agent receive dividends or voting
materials, such items shall be passed immediately on to the Make Good Pledgors
and shall not be invested or held for any time longer than is needed to
effectively re-route such items to the Make Good Pledgors.

     

    7.           Interpleader.  Should
any controversy arise among the parties hereto with respect to this Make Good
Agreement or with respect to the right to receive the Escrow Shares, Escrow
Agent and/or National Securities Corp. shall have the right to consult counsel
and/or to institute an appropriate interpleader action to determine the rights
of the parties. Escrow Agent and/or National Securities Corp. are also each
hereby authorized to institute an appropriate interpleader action upon receipt
of a written letter of direction executed by the parties so directing either
Escrow Agent or National Securities Corp. . If Escrow Agent or National
Securities Corp. is directed to institute an appropriate interpleader action, it
shall institute such action not prior to thirty (30) days after receipt of such
letter of direction and not later than sixty (60) days after such date. Any
interpleader action instituted in accordance with this Section 7 shall be filed
in any court of competent jurisdiction in the State of New York, and the Escrow
Shares in dispute shall be deposited with the court and in such event Escrow
Agent and National Securities Corp. shall be relieved of and discharged from any
and all obligations and liabilities under and pursuant to this Make Good
Agreement with respect to the Escrow Shares and any other obligations
hereunder.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    8.           Exculpation
and Indemnification of Escrow Agent and National Securities Corp.

     

    a.           Escrow
Agent is not a party to, and is not bound by or charged with notice of any
agreement out of which this escrow may arise.  Escrow Agent acts under
this Make Good Agreement as a depositary only and is not responsible or liable
in any manner whatsoever for the sufficiency, correctness, genuineness or
validity of the subject matter of the escrow, or any part thereof, or for the
form or execution of any notice given by any other party hereunder, or for the
identity or authority of any person executing any such notice. Escrow Agent will
have no duties or responsibilities other than those expressly set forth
herein.  Escrow Agent will be under no liability to anyone by reason
of any failure on the part of any party hereto (other than Escrow Agent) or any
maker, endorser or other signatory of any document to perform such person's or
entity's obligations hereunder or under any such document.  Except for
this Make Good Agreement and instructions to Escrow Agent pursuant to the terms
of this Make Good Agreement, Escrow Agent will not be obligated to recognize any
agreement between or among any or all of the persons or entities referred to
herein, notwithstanding its knowledge thereof.  National Securities
Corp.’s sole obligation under this Make Good Agreement is to provide prompt
written instruction to Escrow Agent (following such time as the Company files
certain periodic financial reports as specified in Section 4 hereof) directing
the distribution of the Escrow Shares.  National Securities Corp. will
provide such written instructions upon review of the relevant earnings per share
and/or After-Tax Net Income amount reported in such periodic financial reports
as specified in Section 4 hereof.  National Securities Corp. is not
charged with any obligation to conduct any investigation into the financial
reports or make any other investigation related thereto.  If any
actual or alleged mistake or fraud of the Company, its auditors or any other
person (other than National Securities Corp.) in connection with such financial
reports of the Company, National Securities Corp. shall have no obligation or
liability to any party hereunder.

     

    b.           Escrow
Agent will not be liable for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, absent gross negligence or willful
misconduct.  Escrow Agent may rely conclusively on, and will be
protected in acting upon, any order, notice, demand, certificate, or opinion or
advice of counsel (including counsel chosen by Escrow Agent), statement,
instrument, report or other paper or document (not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained) which is reasonably
believed by Escrow Agent to be genuine and to be signed or presented by the
proper person or persons.  The duties and responsibilities of the
Escrow Agent hereunder shall be determined solely by the express provisions of
this Make Good Agreement and no other or further duties or responsibilities
shall be implied, including, but not limited to, any obligation under or imposed
by any laws of the State of New York upon fiduciaries.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    c.           The
Company and the Make Good Pledgors each hereby, jointly and severally, indemnify
and hold harmless each of Escrow Agent, National Securities Corp. and any of
their principals, partners, agents, employees and affiliates from and against any
expenses, including reasonable attorneys' fees and disbursements, damages or
losses suffered by Escrow Agent or National Securities Corp. in connection with
any claim or demand, which, in any way, directly or indirectly, arises out of or
relates to this Make Good Agreement or the services of Escrow Agent or National
Securities Corp.  hereunder; except, that if Escrow Agent or National
Securities Corp. is guilty of willful misconduct, gross negligence or fraud
under this Make Good Agreement, then Escrow Agent or National Securities Corp.,
as the case may be, will bear all losses, damages and expenses arising as a
result of such willful misconduct, gross negligence or
fraud.  Promptly after the receipt by Escrow Agent or National
Securities Corp.  of notice of any such demand or claim or the
commencement of any action, suit or proceeding relating to such demand or claim,
Escrow Agent or National Securities Corp., as the case may be, will notify the
other parties hereto in writing.  For the purposes hereof, the terms
“expense” and “loss” will include all amounts paid or payable to satisfy any
such claim or demand, or in settlement of any such claim, demand, action, suit
or proceeding settled with the express written consent of the parties hereto,
and all costs and expenses, including, but not limited to, reasonable attorneys'
fees and disbursements, paid or incurred in investigating or defending against
any such claim, demand, action, suit or proceeding.  The provisions of
this Section 8 shall survive the termination of this Make Good
Agreement.

     

    9.           Compensation of Escrow
Agent.  Escrow Agent shall be entitled to compensation for its
services as stated in the fee schedule attached hereto as Exhibit B, which
compensation shall be paid by the Company. The fee agreed upon for the services
rendered hereunder is intended as full compensation for Escrow Agent's services
as contemplated by this Make Good Agreement; provided, however, that in the
event that Escrow Agent renders any material service not contemplated in this
Make Good Agreement, or there is any assignment of interest in the subject
matter of this Make Good Agreement, or any material modification hereof, or if
any material controversy arises hereunder, or Escrow Agent is made a party to
any litigation pertaining to this Make Good Agreement, or the subject matter
hereof, then Escrow Agent shall be reasonably compensated by the Company for
such extraordinary services and reimbursed for all costs and expenses, including
reasonable attorney's fees, occasioned by any delay, controversy, litigation or
event, and the same shall be recoverable from the Company.  Prior to
incurring any costs and/or expenses in connection with the foregoing sentence,
Escrow Agent shall be required to provide written notice to the Company of such
costs and/or expenses and the relevancy thereof and Escrow Agent shall not be
permitted to incur any such costs and/or expenses prior to receiving written
approval from the Company, which approval shall not be unreasonably
withheld.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    10.           Resignation of Escrow
Agent.  At any time, upon ten (10) days' written notice to the
Company, Escrow Agent may resign and be discharged from its duties as Escrow
Agent hereunder. As soon as practicable after its resignation, Escrow Agent will
promptly turn over to a successor escrow agent appointed by the Company the
Escrow Shares held hereunder upon presentation of a document appointing the new
escrow agent and evidencing its acceptance thereof.  If, by the end of
the 10-day period following the giving of notice of resignation by Escrow Agent,
the Company shall have failed to appoint a successor escrow agent, Escrow Agent
may interplead the Escrow Shares into the registry of any court having
jurisdiction.

     

    11.           Records.  Escrow
Agent shall maintain accurate records of all transactions
hereunder.  Promptly after the termination of this Make Good Agreement
or as may reasonably be requested by the parties hereto from time to time before
such termination, Escrow Agent shall provide the parties hereto, as the case may
be, with a complete copy of such records, certified by Escrow Agent to be a
complete and accurate account of all such transactions.  The
authorized representatives of each of the parties hereto shall have access to
such books and records at all reasonable times during normal business hours upon
reasonable notice to Escrow Agent and at the requesting party’s
expense.

     

    12.           Notice.  All
notices, communications and instructions required or desired to be given under
this Make Good Agreement must be in writing and shall be deemed to be duly given
if sent by registered or certified mail, return receipt requested, or overnight
courier, to the addresses listed on the signature page hereto.

     

    13.           Execution in
Counterparts.  This Make Good Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     

    14.           Assignment and
Modification.  This Make Good Agreement and the rights and
obligations hereunder of any of the parties hereto may not be assigned without
the prior written consent of the other parties hereto and the
Investors.  Subject to the foregoing, this Make Good Agreement will be
binding upon and inure to the benefit of each of the parties hereto and their
respective successors and permitted assigns.  No other person will
acquire or have any rights under, or by virtue of, this Make Good
Agreement.  No portion of the Escrow Shares shall be subject to
interference or control by any creditor of any party hereto, or be subject to
being taken or reached by any legal or equitable process in satisfaction of any
debt or other liability of any such party hereto prior to the disbursement
thereof to such party hereto in accordance with the provisions of this Make Good
Agreement.  This Make Good Agreement may be amended or modified only
in writing signed by all of the parties hereto and the Investors.

     

    15.           Applicable
Law.  This Make Good Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the principles of conflicts of laws thereof.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    16.           Headings.  The
headings contained in this Make Good Agreement are for convenience of reference
only and shall not affect the construction of this Make Good
Agreement.

     

    17.           Attorneys' Fees.  If
any action at law or in equity, including an action for declaratory relief, is
brought to enforce or interpret the provisions of this Make Good Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees from
the other party (unless such other party is the Escrow Agent or National
Securities Corp. . Inc.), which fees may be set by the court in the trial of
such action or may be enforced in a separate action brought for that purpose,
and which fees shall be in addition to any other relief that may be
awarded.

     

    18.           Authorized
Signers.  The Company will execute Exhibit C-1 and
deliver an executed Exhibit C-2 to this
Make Good Agreement concurrent with the execution hereof.

     

     

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        8

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the parties have
duly executed this Make Good Agreement as of the date set forth opposite their
respective names.

     

    
      
        	 	

                LONGWEI
      PETROLEUM INVESTMENT HOLDING LIMITED.

              	 
	 	 	 	 
	
              	
                By:
      

              	/s/ Cai
      Yongjun	 
	 	 	

                Name: Cai
      Yongjun

                Title:
      Chief Executive Officer

              	 
	 	 	
              	 
	 	 	 	 

      

    

     

    
      
        
 

      

    

     

     

     

    
      
        
          	 	Make Good Pledgors	 
	 	 	 	 
	
                	
                	Cai Yongjun	 
	 	 	

                  Cai
      Yongjun

                   

                	 
	 	 	
                  Mr.
      Xue Yongping

                	 
	 	 	

                  Mr.
      Xue Yongping

                	 

        

      

       

    

    
 

    

    

    

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                    INVESTORS:

                     

                     

                  	 
	 	 	 	 
	
                  	
                  	By:	 
	 	 	

                     

                  	 
	 	 	Address	 
	 	 	 	 

          

        

         

      

    

     

    
       

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

     

    

    
      	
            	
              ESCROW
      AGENT:

               

              CORPORATE
      STOCK TRANSFER, INC.

            	 
	 	 	 	 
	
            	
            	By:	 
	 	 	

               

            	 
	 	 	Address	 
	 	 	 	 

       

       

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    

     

    
      	
            	
              

                NATIONAL SECURITIES
      CORP:

              

               

            	 
	 	 	 	 
	
            	
            	By:	 
	 	 	

               

            	 
	 	 	Address	 
	 	 	 	 

       

       

    

    

    12

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