EXCHANGE AND AMENDMENT AGREEMENT
Exhibit
10.1
THIS
EXCHANGE AND AMENDMENT AGREEMENT (this “Agreement”) is made and entered into
this as of the ___th day of March, 2009, by and among Sino Clean Energy, Inc., a
Nevada corporation (the “Company”), and the undersigned Purchasers. Capitalized
terms used but not defined herein shall have the meanings set forth in that
certain Securities Purchase Agreement, the Debentures and/or the Warrants
(defined in the Recitals below).
RECITALS:
WHEREAS, reference is made to that
certain Securities Purchase Agreement dated as of September 16, 2008 and
September 19, 2008 (collectively the “Securities Purchase Agreement”), by and
among the Company and the undersigned Purchasers, and the 18% Secured
Convertible Debentures (the “Debentures”) and the Warrants (the “Warrants”)
issued to such Purchasers pursuant thereto (collectively the “Transaction
Documents”);
WHEREAS, the Conversion Price of the
Debentures and the Exercise Price of the Warrants are subject to certain
adjustments, as set forth in Sections 3(c) of the Debentures and in Section 10
of the Warrants;
WHEREAS, the Company has proposed that
the adjustments to the Conversion Price and the Exercise Price be amended on the
terms set forth below (the “Proposal”), which Proposal is acceptable to the
Purchasers;
WHEREAS, certain amendments to the
Transaction Documents are necessary to effectuate the Proposal; and
WHEREAS, the Company and the Purchasers
signatory hereto are executing and delivering this Agreement in reliance upon
the exemption from securities registration for offers and sales of securities
afforded, inter
alia, by
Section 3(a)(9) of the Securities Act of 1933, as amended (the “1933 Act”), Rule
506 under Regulation D as promulgated under the 1933 Act, Section 4(2) of the
1933 Act, and/or Rule 903 under Regulation S as promulgated under the 1933
Act;
NOW, THEREFORE, in consideration of the
foregoing recitals and the mutual agreements herein contained and for other good
and valuable consideration, the parties hereto agree as follows:
A. EXCHANGE
OF THE DEBENTURES AND WARRANTS. The Company and each Purchaser signatory
to this Agreement hereby agree to exchange (a) such Purchaser’s outstanding
Debenture for a new Debenture having the terms specified below in the principal
amount of such outstanding Debenture and (b) such Purchaser’s outstanding
Warrant for a new Warrant having the terms specified below for the purchase of
the same number of Common Shares as provided in the outstanding Warrant. The
Purchaser is not providing any other consideration for such exchange and no fees
are payable to any broker in connection with such exchange. The
exchange is being made under Section 3(a)(9) of the 1933 Act.
(1) Each
new Debenture shall have the same terms as the outstanding Debenture, except
follows:
(a) The
new Debenture shall contain a Section 1(a)(ix), which shall read in its entirety
as follows:
“At any
time while this Debenture is outstanding, the Obligor shall issue shares of
Common Stock or Common Stock Equivalents, other than Non-qualifying Issuances
(as such term is defined in the Purchase Agreement), entitling any Person to
acquire shares of Common, at a price per share of less than $0.05.”
(b) Section
3(c)(vii) of the new Debenture shall read in its entirety as
follows:
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“Except
as adjusted pursuant to Section 3(c)(ii), in no event shall the Conversion
Price, as adjusted pursuant to any other provisions of this Section 3, be less
than $0.05. In the event of any such adjustment that would result in the
Conversion Price to be less than $0.05, the Conversion Price as adjusted shall
be $0.05. All calculations under this Section 3 shall be rounded up
to the nearest $0.01 or whole share.”
(c) The
new Debenture shall contain a Section 17, which shall read in its entirety as
follows:
“Escrow of Principal and
Accrued Interest. The Company covenants and agrees that no later than 30
calendar days from the Maturity Date, the Company shall establish an escrow
account with a law firm in the People’s Republic of China and shall deposit an
amount of money equal to the outstanding principal balance of this Debenture and
accrued interest thereof (the “Escrowed Fund”) into such escrow account as
follows: fifty percent (50%) concurrently with the establishment of the escrow
account, and fifty percent (50%) no later than 15 calendar days from the
Maturity Date. On the Maturity Date, provided that this Debenture has not been
converted into shares of Common Stock pursuant to Section
3 hereof, the Escrowed Fund shall be paid from the escrow account to the
holder of this Debenture upon its surrender and cancellation to the Company. Any
money in the escrow account not paid in accordance herewith shall be released
back to the Company.”
(d) The
new Debenture shall contain a Section 18, which shall read in its entirety as
follows:
“Option to Extend Maturity
Date. For so long as this Debenture remains outstanding, the Holder shall
have the option, but not the obligation, to extend the Maturity Date by up to
one year. To exercise such option, the Holder shall notify the Company at least
30 calendar days prior to the Maturity Date or immediately after the Company’s
filing of its quarterly report on Form 10-Q for the quarter ended September 30,
2009, whichever is later, in accordance with Section 5 hereof, and after
receipt of such notice, the Company and the Holder shall exchange this Debenture
for a new Debenture of substantially the same terms but reflecting the Maturity
Date as extended hereby. Irrespective of the Holder’s exercise of such option,
on the original Maturity Date, the Company shall pay to the Holder from the
Escrowed Fund the accrued interest outstanding as of the original Maturity Date.
Exercise of such option shall be deemed a waiver by the Holder of the provisions
of Section 1(a)(i) hereof with respect to this Debenture.”
(e) References
to “Section 5” in Sections 1(a)(ii) and 1(a)(vi) of the new Debenture shall be
stricken and replaced with “Section 6”.
The new
Debenture will be deemed represented by the original Debenture as amended by
this Agreement.
(2) Each
new Warrant shall have the same terms as the outstanding Warrant, except that
Section 10(g) of the new Warrant shall read in its entirety as
follows:
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“Except
as adjusted pursuant to Section 10(a) or 10(b), in no event shall the
Exercise Price, as adjusted pursuant to any other provisions of this
Section 10, be less than $0.05. In the event of any such adjustment that
would result in the Exercise Price to be less than $0.05, the Exercise
Price as adjusted shall be $0.05. Additionally, no adjustment of the
Exercise Price shall be required if such adjustment is less than $0.01;
provided,
however, that any adjustments which by reason of this Section 10(g)
are not required to be made shall be carried forward and taken into
account for purposes of any subsequent
adjustment.”
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The new Warrant will be deemed represented by
the original Warrant as amended by this Agreement.
(3) Except
as expressly set forth herein, this Agreement shall not be deemed to be a
waiver, amendment or modification of any provisions of the Transaction
Documents, or of any right, power or remedy of the Purchasers, or
constitute a waiver, amendment or modification of any provision of the
Transaction Documents (except to the extent herein set forth), or any other
document, instrument and/or agreement executed or delivered in connection
therewith, in each case whether arising before or after the date hereof or as a
result of performance hereunder or thereunder, all of which (except as specified
herein) remain in full force and effect. Except as set forth
herein, the Purchasers reserve all rights, remedies, powers, or
privileges.
B. CONFLICTS. Except
as expressly set forth in this Agreement, the terms and provisions of each of
the Transaction Documents shall continue unmodified and in full force and
effect. In the event of any conflict between this Agreement and any
one of the Transaction Documents, this Agreement shall control.
C. GOVERNING
LAW. This Agreement shall be governed and construed under the
laws of the State of New York, and shall be binding on and shall inure to the
benefit of the parties and their respective successors and permitted
assigns.
D. COUNTERPARTS. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument. A
facsimile or other electronic transmission of this signed
Agreement shall be legal and binding on all parties
hereto.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first set forth above.
COMPANY:
Sino
Clean Energy, Inc.
By:
_____________________________
Name: Baowen
Ren
Title: Chief
Executive Officer
PURCHASER:
__________________________________
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[PURCHASER
NAME]
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By: _____________________________
Name: _____________________________
Title: _____________________________
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