5
CERTIFICATE OF DESIGNATION OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
CHINA CRESCENT ENTERPRISES, INC.
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is China
Crescent Enterprises, Inc., a Nevada corporation.
2. The Certificate of Incorporation of the Company authorizes the
issuance of Five Million (5,000,000) shares of preferred stock, no par value per
share, and expressly vests in the Board of Directors of the Company the
authority provided therein to issue any or all of said shares in one (1) or more
series and by resolution or resolutions to establish the designation and number
and to fix the relative rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series B issue of Preferred Stock:
RESOLVED, that five-thousand (5,000) of the Five Million (5,000,000)
authorized shares of Preferred Stock of the Company shall be designated Series B
Convertible Preferred Stock, $0.001 par value per share, the stated value of the
Series B Convertible Preferred Stock shall be $1,000 per share (the "Series B
Issue Price"), and shall possess the rights and preferences set forth below:
Section 1. Designation and Amount. The shares of such series shall have
no par value and shall be designated as Series B Convertible Preferred Stock
(the "Series B Preferred Stock") and the number of shares constituting the
Series B Convertible Preferred Stock shall be five-thousand (5,000).
Section 2. Rank. Series B Preferred shall have priority over all other
outstanding securities of the Company, except Series A, the Series B Preferred
Stock shall rank: (i) senior to any other class or series of outstanding
Preferred Shares or series of capital stock of the Company; except Series A
Preferred Stock (ii) prior to all of the Company's Common Stock, $0.001 par
value per share ("Common Stock"); (iii) prior to any class or series of capital
stock of the Company hereafter created not specifically ranking by its terms
senior to or on parity with any Series B Preferred Stock of whatever subdivision
(collectively, with the Common Stock and the Existing Preferred Stock); called
"Junior Securities" in each case as to distributions of assets upon liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary (all
such distributions being referred to collectively as "Distributions").
Section 3. Dividends. The Series B Preferred Stock shall bear
no dividend.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of the Company, either voluntary or involuntary, the Holders of shares of Series
B Preferred Stock shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Company's Certificate of
Incorporation or any certificate of designation, and prior in preference to any
distribution to Junior Securities but in parity with any distribution to Parity
Securities, an amount per share equal to $1,000 per share. If upon the
occurrence of such event, and after payment in full of the preferential amounts
with respect to the Senior Securities, the assets and funds available to be
distributed among the Holders of the Series B Preferred Stock shall be
insufficient to permit the payment to such Holders of the full preferential
amounts due to the Holders of the Series B Preferred Stock, then the entire
remaining assets and funds of the Company legally available for distribution
shall be distributed among the Holders of the Series B Preferred Stock and the
Parity Securities, pro rata, based on the respective liquidation amounts to
which such series of stock is entitled by the Company's Certificate of
Incorporation and any certificate(s) of designation relating thereto.
(b) Upon the completion of the distribution required by
subsection 4(a), if assets remain in the Company, they shall be distributed to
holders of Junior Securities in accordance with the Company's Certificate of
Incorporation including any duly adopted certificate(s) of designation.
Section 5. Conversion. The record Holders of this Series B
Preferred Stock shall have conversion rights as follows:
(i) Right to Convert. Subsequent to October 1, 2009, each
share of Series B Preferred Stock shall be convertible at the
option of the holder thereof (except as prohibited by law), in
full or in part, at the office of the Company or any transfer
agent for such shares, into the number of fully paid and
nonassessable shares of common stock of the Corporation provided
below.
(ii) Conversion Price. The number of shares of common stock
due upon conversion of Series B Preferred Stock shall be the
number of shares of Series B Preferred Stock to be converted,
multiplied by the Series B Issue Price, divided by the Series B
Conversion Price, determined as hereafter provided, in effect at
the time of the conversion. The Series B Conversion Price shall
be the average of the closing "volume weighted average price" of
the common stock of the Corporation for the five consecutive
trading days prior to conversion; provided, however, that such
Conversion Price shall be subject to adjustment as set forth
below. If there has been no trading in the common stock during
the five consecutive trading days prior to conversion, the Series
B Conversion Price shall be based on the average of the closing
"volume weighted average price" of the common stock for the next
immediately preceding five consecutive trading days during which
there has been trading in the common stock.
(iii) Delivery of Common Stock Upon Conversion. The Transfer
Agent or the Company (as applicable) shall, no later than the
close of business on the third (3rd) business day (the
"Deadline") after receipt by the Company or the Transfer Agent of
a facsimile copy of a Registration Effectiveness and receipt by
Company or the Transfer Agent of all necessary documentation duly
executed and in proper form required for conversion, including
the original Preferred Stock Certificates to be converted (or
after provision for security or indemnification in the case of
lost or destroyed certificates, if required), issue and surrender
to a common courier for either overnight or (if delivery is
outside the United States) two (2) day delivery to the Holder at
the address of the Holder as shown on the stock records of the
Company a certificate for the number of shares of Common Stock to
which the Holder shall be entitled as aforesaid.
(iv) No Fractional Shares. If any conversion of the Series B
Preferred Stock would create a fractional share of Common Stock
or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of
Common Stock issuable upon conversion, in the aggregate, shall be
the next lower number of shares.
(v) Date of Conversion. The date on which conversion occurs
(the "Date of Conversion") shall be deemed to be the date, the
person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes
as the record Holder or Holders of such shares of Common Stock on
the Date of Conversion.
(c) Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available or make provision to increase,
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the Series B
Preferred Stock, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all then outstanding Series B
Preferred Stock; and if at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of Series B Preferred Stock, the Company will take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
(d) Adjustment to Conversion Rate.
(i) Adjustment to Fixed Conversion Price Due to Stock Split,
Stock Dividend, Etc. If, prior to the conversion of all of the
Series B Preferred Stock, the number of outstanding shares of
Common Stock is increased by a stock split, stock dividend, or
other similar event, the Conversion Price shall be
proportionately reduced, or if the number of outstanding shares
of Common Stock is decreased by a combination or reclassification
of shares, or other similar event, the Conversion Price shall be
proportionately increased.
(ii) Adjustment Due to Merger, Consolidation, Etc. If, prior
to the conversion of all Series B Preferred Stock, there shall be
any merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which
shares of Common Stock of the Company shall be changed into the
same or a different number of shares of the same or another class
or classes of stock or securities of the Company or another
entity or there is a sale of all or substantially all the
Company's assets, then the Holders of Series B Preferred Stock
shall thereafter have the right to receive upon conversion of
Series B Preferred Stock, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common
Stock immediately theretofore issuable upon conversion, such
stock, securities and/or other assets which the Holder would have
been entitled to receive in such transaction had the Series B
Preferred Stock been converted immediately prior to such
transaction, and in any such case appropriate provisions shall be
made with respect to the rights and interests of the Holders of
the Series B Preferred Stock to the end that the provisions
hereof (including, without limitation, provisions for the
adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Series B Preferred Stock) shall
thereafter be applicable, as nearly as may be practicable in
relation to any securities thereafter deliverable upon the
exercise hereof.
(iii) No Fractional Shares. If any adjustment under this
Section 5(f) would create a fractional share of Common Stock or a
right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of
Common Stock issuable upon conversion shall be the next lower
number of shares.
Section 6. Redemption by Company. None. The company has no
redemption obligation but may elect, in its sole discretion, to redeem at the
liquidation price.
Section 7. Status of Converted or Redeemed Stock. In the event any
shares of Series B Preferred Stock shall be converted or redeemed pursuant to
Section 5 hereof, the shares so converted or redeemed shall be canceled, shall
return to the status of authorized but unissued Preferred Stock of no designated
series, and shall not be issuable by the Company as Series B Preferred Stock.
Section 8. Preference Rights. Nothing contained herein shall be
construed to prevent the Board of Directors of the Company from issuing one (1)
or more series of Preferred Stock with dividend and/or liquidation preferences
junior to the dividend and liquidation preferences of the Series B Preferred
Stock.
Signed on _____________, 2008
SIGNATURE PAGE
[Certificate of Designation of Series B Preferred Stock]
By:_____________________________________
President & Chief Executive Officer
STATE OF COLORADO )
) SS.
COUNTY OF DENVER )
I, _____________________, a Notary Public, hereby certify that on the
____ day of ______________, 2006, _____________________________ , personally
appeared before me, Kristi J. Kampmann, who being by me first duly sworn
declared that he is the person who signed the foregoing, and that the statements
therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal on the date
hereinbefore mentioned.
My commission expires _______________________.
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Notary Public
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5250 S. Cherry Creek Dr.
Apt. 18K
Denver, CO 80246