AGREEMENT
AGREEMENT
This
agreement (this "Agreement")
is
made and entered into as of May 15, 2007, by and among Sino
Gas International Holdings, Inc.,
a Utah
corporation (the "Company"),
Vision Opportunity Master Fund, Ltd., a limited liability company formed under
the laws of the Cayman Islands (“Vision”
and,
together with the Company, the “Parties”).
This
Agreement is being entered into with reference to (a) the Series B Convertible
Preferred Stock Purchase Agreement dated as of September 7, 2006 among the
Parties and the other purchasers named therein (the "Purchase
Agreement")
and
(b) the Series J Warrant to purchase 1,993,355 shares of common stock of the
Company (the “Common
Stock”),
issued to Vision by the Company on September 7, 2006 under the number X-X-06-01
and expiring on September 7, 2007 (the “Series
J Warrant”).
The
Company and Vision hereby agree as follows:
| 1. |
Definitions.
|
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement or the Series J Warrant.
“Exercise
Date” shall mean May 15, 2007.
| 2. |
Early
Exercise of Series J Warrant and Consideration Therefor.
|
On
the
Exercise Date, Vision shall exercise its right under the Series J Warrant (as
such right has been amended by this Agreement) to purchase 1,094,891 shares
of
Common Stock at an exercise price of $2.74 per share in an amount corresponding
to a total purchase price of $3,000,001.34 (the “Purchase
Price”;
such
1,094,891 shares, the “Exercise
Shares”).
In
consideration of Vision’s early exercise of the Series J Warrant (as such right
has been amended by this Agreement), the Company shall issue to Vision a new
warrant to purchase 1,094,891 shares of Common Stock in a form and containing
terms substantially identical to the form and terms of the warrant attached
hereto as Exhibit
1
(the
“Series
E Warrant”).
Vision shall retain its right under the Series J Warrant to purchase an
additional 898,464 shares of Common Stock under the terms set forth therein
(as
such right has been amended by this Agreement), which right shall be evidenced
by a new warrant certificate issued to it by the Company (the “New
Series J Warrant”
and
together with the Series E Warrant, the “Warrants”).
The
Warrants and the shares of Common Stock issuable upon exercise of the Warrants
are sometimes collectively referred to herein as the “Securities.”
| 3. |
Closing.
|
On
the
Exercise Date, Vision shall wire the Purchase Price according to the written
instructions provided by the Company as set forth on Exhibit
2
attached
hereto, and the Company shall deliver to Vision the Exercise Shares, the Series
E Warrant and the New Series J Warrant.
-1-
| 4. |
Representations
and Warranties of the Parties.
|
(a)
The
Company has the requisite power and authority to enter into and perform this
Agreement and to issue and sell the Securities in accordance with the terms
hereof. Vision has the requisite power and authority to enter into and perform
this Agreement and to purchase the Securities being sold to it hereunder. The
execution, delivery and performance of this Agreement by each Party and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further consent or
authorization of such Party or its Board of Directors, stockholders, members
or
partners, as the case may be, is required.
(b)
The
Securities to be issued at the closing hereunder have been duly authorized
by
all necessary corporate action on behalf of the Company. When the shares of
Common Stock issuable upon exercise of the Warrants are issued in accordance
with the terms of the Warrants, such shares will be duly authorized by all
necessary corporate action and validly issued and outstanding, fully paid and
nonassessable, and the holders thereof shall be entitled to all rights accorded
to a holder of Common Stock.
(c)
This
Agreement constitutes a valid and binding agreement and obligation of each
Party
enforceable against such Party in accordance with its terms, subject to
limitations on enforcement by general principles of equity and bankruptcy or
other laws affecting the enforcement of creditors' rights
generally.
(d)
The
Parties are executing and delivering this Agreement in accordance with and
in
reliance upon the exemption from securities registration afforded by Rule 506
of
Regulation D (“Regulation D”) as promulgated by the United States Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as
amended (the “Securities Act”) or Section 4(2) of the Securities
Act.
(e)
The
Company represents that the offer, issuance and sale of the Securities is exempt
from registration under the Securities Act pursuant to an exemption
thereunder.
(f)
Based
in material part upon the representations herein of Vision, the Company has
complied and will comply with all applicable federal and state securities laws
in connection with the offer, issuance and sale of the Securities hereunder.
Neither the Company nor anyone acting on its behalf, directly or indirectly,
has
taken or will take any action so as to exclude the issuance and sale of any
of
the Securities from exemption from registration under the Securities Act and
applicable state securities laws, including by selling, offering to sell or
soliciting offers to buy any of the Securities or securities similar thereto,
or
soliciting offers with respect thereto from, or entering into any preliminary
conversations or negotiations relating thereto with, any person and neither
the
Company nor any of its affiliates, nor any person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D under the Securities Act) in connection with the
offer or sale of any of the Securities.
-2-
(g)
Neither the Company, nor any of its affiliates, nor any person acting on its
or
their behalf, has directly or indirectly made any offers or sales of any
security or solicited any offers to buy any security under circumstances that
would cause the offering of the Securities pursuant to this Agreement to be
integrated with prior offerings by the Company for purposes of the Securities
Act which would prevent the Company from selling the Securities pursuant to
Rule
506 under the Securities Act or any applicable exchange-related stockholder
approval provisions, nor will the Company or any of its affiliates or
subsidiaries take any action or steps that would cause the offering of the
Securities to be integrated with other offerings and the Company does not have
any registration statement pending before the Commission or currently under
the
Commission’s review.
(h)
The
Company understands and acknowledges that it has an obligation to issue
the
shares of Common Stock issuable upon exercise of the Warrants in
accordance with this Agreement and the Warrants and that such obligation is
not
affected, reduced or eliminated by any dilutive effect that such issuance may
have on the ownership interest of other stockholders of the
Company.
(i)
Vision is acquiring the Warrants solely for its own account for the purpose
of
investment and not with a view to or for sale in connection with distribution.
Vision does not have a present intention to sell the Warrants, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of the Warrants to or through any person or entity; provided,
however,
that by
making the representations herein and subject to Section 4(l) below, Vision
does
not agree to hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
federal and state securities laws applicable to such disposition. Vision
acknowledges that it is able to bear the financial risks associated with an
investment in the Warrants and has sufficient knowledge and experience in
investing in companies similar to the Company so as to be able to evaluate
the
risks and merits of an investment in the Company.
(j)
Vision is an “accredited investor” as defined in Regulation D, is not required
to be registered as a broker-dealer under Section 15 of the Securities Exchange
Act of 1934, and is not a broker-dealer.
(k)
Vision acknowledges that it has had full access to all the information it
considers necessary or appropriate to make an informed investment decision
with
respect to the Exercise Shares and the Warrants (and Common Stock issuable
upon
exercise thereof) to be issued under this Agreement.
(l)
Vision understands that the Securities must be held indefinitely unless they
are
registered under the Securities Act or an exemption from registration is
available, acknowledges that Vision is familiar with Rule 144 of the rules
and
regulations of the Commission, as amended, promulgated pursuant to the
Securities Act (“Rule 144”), and understands that Rule 144 permits resales only
under certain circumstances. Vision understands that to the extent that Rule
144
is not available, it will be unable to sell any Exercise Shares, Warrants or
shares issuable upon exercise thereof without either registration under the
Securities Act or the existence of another exemption from such registration
requirement.
-3-
5. Registration
Rights.
The
parties agree that the shares of Common Stock issuable
upon exercise of the Warrants are entitled to all of the benefits of the
registration rights granted by the Company pursuant to that certain Registration
Rights Agreement dated as of September 7, 2006 by and among the Parties
and
the
other purchasers listed
on Schedule I thereto (the “Registration
Rights Agreement”)
and the shares of Common Stock issuable upon exercise of the Warrants shall
constitute “Registrable Securities” pursuant to the Registration Rights
Agreement. The foregoing sentence notwithstanding, the Company is not obligated
at any time to register any shares the registration of which, at such time,
would entail a violation of Rule 415 under the Securities Act (“Rule 415”) or
the guidance of the Commission in connection therewith.
6.
Governing
Law; Jurisdiction. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without giving effect to
conflicts of law principles that would result in the application of the
substantive laws of another jurisdiction. Each Party (i) hereby irrevocably
submits to the jurisdiction of the United States District Court sitting in
the
Southern District of New York and the courts of the State of New York located
in
New York County for the purposes of any suit, action or proceeding arising
out
of or relating to this Note and (ii) hereby waives, and agrees not to assert
in
any such suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper.
7. Counterparts.
This Agreement may be executed by facsimile signature or electronic transmission
in “pdf” format and in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
8. Survival.
The representations and warranties of the Parties shall survive the closing
hereunder.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-4-
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized persons as of the date first indicated
above.
| VISION
OPPORTUNITY MASTER FUND, LTD. |
||
| |
|
|
| By: | /s/ Vision Opportunity Master Fund, Ltd. | |
|
|
||
-5-
Exhibit
1
Form
of Series E Warrant
-6-
Exhibit
2
Wiring
Instructions for Purchase Price
-7-
