AGREEMENT
Exhibit
99.1
AGREEMENT
dated this th
day of
February, 2007, by and among by and among Sinoenergy Corporation, a
Nevada
corporation (the “Company”),
the
investors (the “Investors”)
named
in Schedule A to a certain Securities
Purchase Agreement dated June 2, 2006 as amended by an amendment dated July
6,
2006, which agreement, as so amended, is referred to as the “Purchase
Agreement,”
and
Skywide Capital Management Limited, a British Virgin Islands corporation
(“Skywide”
and,
together with the Company and the Investors, the “Parties”
and
each, a “Party”).
WITNESSETH:
WHEREAS,
the Investors are the holders of shares of the Company’s Series A Convertible
Preferred Stock (the “Series
A Preferred Stock”)
and
warrants (the “Warrants”)
to
purchase shares of the Company’s common stock, par value $.001 per share;
and
WHEREAS,
the certificate of designation for the Series A Preferred Stock and the Warrants
have provisions which could result in an adjustment in the conversion rate
of
the Series A Preferred Stock and the exercise price of the Warrants if certain
earnings targets are not met; and
WHEREAS,
Skywide is a principal stockholder of the Company;
WHEREFORE,
the parties do hereby agree as follows:
1. Each
Investor severally represents and warrants that he or it has not transferred,
granted an option or security interest in, entered into an agreement to transfer
or otherwise encumbered any shares of Series A Preferred Stock or Warrants
acquired by such Investor from the Company pursuant to the Purchase Agreement
and that such Investor has the right to enter into this Agreement.
2. Each
Investor, by executing this Agreement, consents to the adoption of the following
resolution:
“RESOLVED,
that the certificate of designation for the Series A Convertible Preferred
Stock
of Sinoenergy Corporation be amended by deletion of Section 7(c) of said
certificate of designation and that the officers of this Corporation be
authorized to file either an amendment to such certificate of designation or
a
restated certificate of designation reflecting such change.”
3. Each
Investor, by executing this Agreement, agrees that each Warrant owned by such
Investor is hereby amended by deleting Section 7(e) in its entirety. Each
Investor shall promptly affix to each warrant the following legend:
“THIS
WARRANT HAS BEEN AMENDED BY THE DELETION OF SECTION 7(e) IN ITS
ENTIRETY.”
4. In
consideration of the agreement of the Investors pursuant to Sections 2 and
3 of
this Agreement, within ten (10) business days from the execution of this
Agreement, Skywide will place 1,000,000 shares of Common Stock into escrow
with
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP (the “Escrow Agent”), to be held as provided
in this Agreement. These shares are referred to as the Escrow Shares. Of the
Escrow Shares, 500,000 are referred to as the “2006 Shares,” and the remaining
500,000 Escrow Shares are referred to as the “2007 Shares.”
5. Skywide
hereby instructs the Escrow Agent to transfer to the Company, for no
consideration, some or all of the 2006 Shares and the 2007 Shares, in accordance
with the following provisions:
(a) If
the
Company’s consolidated Pre-Tax Income, as defined in the Purchase Agreement, for
the year ended December 31, 2006 is less than $.212 per share on a fully-diluted
basis, determined as provided in the Purchase Agreement, then Skywide shall
deliver to the Company for cancellation, such percentage of the 2006 Shares
as
the equals the shortfall from the $.212 per share target price, on a percentage
basis. Thus, if Pre-Tax Income for the year ended December 31, 2006 is $.1272
per share on a fully-diluted basis, representing a 40% shortfall, the Escrow
Agent shall deliver to the Company for cancellation 40% of the 2006 Shares
(i.e.,
200,000
shares) and the remaining 2006 Shares (i.e.,
300,000
shares) shall be returned to Skywide.
(b) If
the
Company’s consolidated Pre-Tax Income for the year ended December 31, 2007 is
less than $.353 per share on a fully-diluted basis, then Skywide shall deliver
to the Company for cancellation, such percentage of the 2007 Shares as the
equals the shortfall from the $.353 per share target price, on a percentage
basis. Thus, if Pre-Tax Income for the year ended December 31, 2007 is $.2118
per share on a fully-diluted basis, representing a 40% shortfall, the Escrow
Agent shall deliver to the Company for cancellation 40% of the 2007 Shares
(i.e.,
200,000
shares) from Skywide and the remaining 2007 Shares (i.e.,
300,000
shares) shall be returned to Skywide.
6. Skywide
shall deliver certificates for the Escrow Shares to the Escrow Agent accompanied
by two undated stock powers with signature medallion guaranteed and a resolution
authorizing the transfer signed by an officer of the transferring company.
If
the certificates delivered to the Escrow Agent represent more shares than the
Escrow Shares, the Escrow Agent shall send the stock certificates to Company’s
transfer agent with instructions to exchange the certificates for two
certificates for 500,000 shares each and one certificate for the remaining
shares. Skywide shall also deliver a resolution authorizing the potential
transfer pursuant to this Agreement.
7. Until
such time as any of the Escrow Shares are to be delivered to the Company,
Skywide shall have full voting rights with respect to such Escrow Shares and
the
right to receive any and all cash distributions or dividends. Any distributions
or dividends payable in shares of Common Stock in respect of the Escrow Shares
shall be treated in the same manner as the Escrow Shares with respect to which
they are issued.
8. The
following provisions shall apply for each of 2006 and 2007.
(a) Within
15
business days after the Company files its Form 10-KSB for each of 2006 and
2007
with the Securities and Exchange Commission, the Company will send (i) to each
of the Parties, a computation setting forth the consolidated Pre-Tax Income
per
Share on a fully-diluted basis for such year, the method of making such
computation and a statement setting forth the number of 2006 Shares or 2007
Shares, as the case may be, if any, to be returned to the Company and (ii)
to
the Escrow Agent, a letter setting forth the number of 2006 Shares or 2007
Shares, if any, to be returned to the Company.
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(b) The
Escrow Agent will send, by PDF, a copy of the letter from received from the
Company pursuant to Section 8(a) of this Agreement, to the Parties, by e-mail
to
the e-mail addresses set forth on the signature page of this
Agreement.
(c) If
the
Escrow Agent does not receive notice from any Party disputing the instructions
from the Company which were delivered pursuant to Section 8(b) of this Agreement
within fifteen (15) business days after the date on which it gave notice
pursuant to said Section 8(b), or if the Escrow Agent receives notice from
all
of the Parties accepting the disposition set forth in the notice, the Escrow
Agent shall deliver the 2006 Shares or the 2007 Shares, as the case may be,
in
accordance with such notice.
(d) If
the
Escrow Agent shall receive a conflicting instructions as to the delivery of
any
or all of the 2006 Shares or 2007 Shares or in the event that the Escrow Agent
shall be uncertain as to its obligations with respect to the 2006 Shares or
the
2007 Shares, or shall receive instructions, claims or demands from the Parties
which, in the Escrow Agent’s opinion, are in conflict with each other or with
any of the provisions of this Agreement, the Escrow Agent shall refrain from
taking any action other than to keep safely all Escrow Shares then held by
it
until the Escrow Agent shall have received joint written instructions from
all
of the Parties as to the disposition of the 2006 Shares and/or the 2007 Shares
or until the Escrow Agent is directed by a final judgment of a court of
competent jurisdiction final beyond right of review. In addition, in such
circumstances, the Escrow Agent may deposit the 2006 Shares and/or the 2007
Shares into any court of competent jurisdiction, there to abide a decision
of
the court. In this connection, each of the Parties consents to the exclusive
jurisdiction of the federal and state courts located in the City, County and
State of New York.
(e) The
obligations of the Escrow Agreement pursuant to this Agreement shall terminate
upon a distribution of all of the Escrow Shares pursuant to Section 8 (c) or
8(d) of this Agreement.
9. The
following provisions shall relate to the duties and obligations of the Escrow
Agent.
(a) The
Parties shall jointly and severally (i) reimburse the Escrow Agent for all
reasonable expenses incurred by the Escrow Agent in connection with its duties
hereunder and (ii) indemnify
and hold harmless the Escrow Agent against any and all losses, claims,
liabilities, costs, payments and expenses, including
reasonable legal fees for counsel who may be selected by the Escrow Agent,
which
may be imposed upon or incurred by the Escrow Agent hereunder, except as a
result of the gross negligence or will-ful misconduct of the Escrow
Agent.
(b) The
Escrow Agent shall have no duties or responsibilities except those expressly
set
forth in this Agreement. The Escrow Agent shall have no liability under, or
duty
to inquire into the terms and provisions of, any agreement between the parties,
or as to any computation as to the determination of the number, if any, of
Escrow Shares to be delivered to the Company.
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(c) No
person, firm or corporation will be recognized by the Escrow Agent as a
successor or assignee of any Party until there shall be presented to the Escrow
Agent evidence satisfactory to it of such succession or assignment.
(d) The
Escrow Agent may rely upon any instrument in writing believed in good faith
by
it to be genuine and sufficient and properly presented and shall not be liable
or responsible for any action taken or omitted in accordance with the provisions
thereof. The Escrow Agent shall not be liable or responsible for any act it
may
do or omit to do in connection with the performance of its duties as Escrow
Agent, except for its gross negligence or willful miscon-duct. The Escrow Agent
may consult with counsel, including partners or associates of and attorneys
who
are of counsel to the Escrow Agent, and shall be fully protected with respect
to
any action taken or omitted by it in good faith on written advice of
counsel.
(e) The
Escrow Agent may at any time resign hereunder by giving written notice of its
resignation to the other Parties hereto, at their addresses set forth below,
at
least twenty (20) business days prior to the date specified for such resignation
to take effect. If the Escrow Agent shall resign, and upon the effective date
of
the resignation of the Escrow Agent, all property then held by the Escrow Agent
pursuant to this Escrow Agreement shall be delivered by the Escrow Agent to
such
person as may be designated in writing by the joint instructions of the Parties,
whereupon all such Escrow Agent’s obligations hereunder shall cease and
terminate. If no such person shall have been designated by such date, all of
the
Escrow Agent’s obligations hereunder shall, nevertheless, cease and terminate.
The Escrow Agent’s sole responsibility thereafter shall be to keep safely all
property then held by the Escrow Agent and to deliver the same to a person
jointly designated by the Parties or, if the Parties shall have failed to
designate a successor escrow agent, the Escrow Agent may deposit the Escrow
Shares into a court of competent jurisdiction as provided in Section 8(d) of
this Agreement.
10. This
Agreement sets forth the entire agreement and understanding between the parties
and supersedes all prior
or
contemporaneous written or oral
agreements, promises, representations, understandings, letters
of intent and
negotiations, between
the parties with respect to the subject matter
of this
Agreement. No part of
this
Agreement
may be
modified or amended, nor may any right be waived,
except
by a written
instrument which expressly refers to this Agreement, states that it is a
modification or amendment of this Agreement or a waiver and is signed by all
of
the Parties, or, in the case of waiver, by the Party granting the waiver. No
course of conduct or dealing or trade usage or custom and no course of
performance shall be relied on or referred to by any party to contradict,
explain or supplement any provision of this Agreement, it being acknowledged
by
the Parties that this Agreement is intended to be, and is, the complete and
exclusive statement of the agreement with respect to its subject matter. Any
waiver shall be limited to the express terms thereof and shall not be construed
as a waiver of any other provisions or the same provisions at any other time
or
under any other circumstances. No delay or failure by either party to exercise
any right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other rights.
11. This
Agreement and the rights of the Parties shall be construed and enforced in
accordance with the laws of the State of New
York
applicable to agreements executed and to be performed wholly within such state
and without regard to
principles of conflicts of law.
Each
party irrevocably (a) consents to the jurisdiction of the federal and state
courts situated
in New
York County, New York in
any
action that may be brought pursuant to this Agreement, and (b)
submits to and accepts, with respect to its properties and assets, generally
and
unconditionally, the in personam jurisdiction of the aforesaid courts, waiving
any defense that such court is not a convenient forum. In any such litigation
to
the extent permitted by applicable law, each party waives personal service
of
any summons, complaint or other process, and agrees that the service thereof
may
be made either (i) in the manner for giving of notices provided in Section
10(c)
of this Agreement (other than by telecopier) or (ii) in any other manner
permitted by law.
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12. All
notices, requests or other communications required or permitted to be given
under this Agreement to any party shall be in writing and shall be deemed to
have been sufficiently given when delivered by personal service or sent by
registered mail, overnight
courier services with provided evidence of delivery or attempted
delivery,
or
facsimile or e-mail, to the recipient addressed to the parties at their
respective addresses set forth on the signature page of this Agreement to the
attention to the person who executed this Agreement on behalf of the
party.
Either
party may, be like notice, change the address or telecopy number or e-mail
or
the person to whom notice is to be given.
Notice
shall be deemed given when received or when attempted delivery is made, provided
that notice by telecopier shall be deemed given when receipt is acknowledged
by
the recipient.
13. The
descriptive headings of the several sections of this Agreement are inserted
for
convenience only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
14. If
any
provision of this Agreement or application thereof to any person or circumstance
shall to any extent be invalid, the remainder of this Agreement or the
application of such provision to persons, entities or circumstances other than
those as to which it is held invalid, shall not be affected thereby and each
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
15. This
Agreement shall not be construed more strongly against any Party regardless
of
who is responsible for its preparation. The Parties acknowledge each contributed
and is equally responsible for its preparation. In
resolving any dispute regarding, or construing any provision in, this Agreement,
there shall be no presumption made or inference drawn because of the drafting
history of the Agreement, or because of the inclusion of a provision not
contained in a prior draft or the deletion or modification of a provision
contained in a prior draft.
16. The
Parties understand that the Escrow Agent is counsel for the Company and, in
any
dispute arising under this Agreement, may represent the Company.
[Signatures
on following page]
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IN
WITNESS WHEREOF,
the
Investors and the Company have executed this Agreement as of the date first
written above.
| Signature |
Address,
Telecopier and e-mail
|
||
| SINOENERGY CORPORATION |
0000
Xxxxxxx Xxxx Xxxx. XX
Xxxx
000
Xxxxxxx
XX Xxxxxx X0X 0X0
|
||
| By: | /s/ Bo Xxxxx | ||
| Xx Xxxxx, Chief Executive Officer | E-mail: xxxxxx@000.xxx and xxxxxx@xxxxx.xxx | ||
|
XXXXXX
PARTNERS LP
By:
Xxxxxx Capital Advisors, LLC,
its
General Partner
|
000
Xxxxx Xxxxxx; 00xx
xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax:
000 000-0000
|
||
| By: |
/s/Xxxxxx
Xxxxxx Xxxxxx
|
||
| Xxxxxx Xxxxxx Xxxxxx, President | e-mail: xxx@xxxxxxxxxxxxxx.xxx | ||
| JCAR Funds Ltd. | |||
| By: |
/s/
Xxx X. Xxxxxx
|
|
|
| Xxx X.Xxxxxx, CEO | E-mail: xxxxxxx@xxxxxxxxxx.xxx | ||
|
/s/
Xxxxx Xxxxxx
|
|||
| Xxxxx Xxxxx | E-mail: XXxxxx@xxxxxx.xxx | ||
|
/s/
Xxx Xxxxxx
|
|||
| Xxx Xxxxxx | E-mail: XXxxxxx@xxxxxx.xxx | ||
|
XXX
FBO Xxxx X. X’Xxxx,
Xxxxxxxx
LLC, as
Custodian
|
000
Xxxx Xxxxxx, 0xx
xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
|
||
| By: | /s/ Xxxx X. X’Xxxx | ||
| Xxxx X. X’Xxxx | E-mail: xxxxxx@xxxxxxxxxxxxxxxxxxxxx.xxx | ||
| SKYWIDE CAPITAL MANAGEMENT LIMITED | 0000
Xxxxxxx Xxxx Xxxx. XX
Xxxx
000
Xxxxxxx
XX Xxxxxx X0X 0X0
|
||
| By: |
/s/
Tianzhou Deng
|
||
| Tianzhou Deng, Chairman | E-mail: xxxxxx00@000.xxx | ||
The
undersigned agrees to serve as Escrow Agreement pursuant to the foregoing
agreement.
| SICHENZIA XXXX XXXXXXXX XXXXXXX LLP |
00
Xxxxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax:
(000) 000-0000
|
||
| By: | /s/ Xxxxx X. Xxxxxxxx PC | ||
| Xxxxx X. Xxxxxxxx, PC, of counsel | E-mail: xxxxxxxxx@xxxx.xxx | ||
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