Document:

Unassociated Document

    FORM OF
GUARANTY

    

    GUARANTY,
dated as of November 30, 2009 (this “Guaranty”), made by
the signatory hereto (together with any other entity that may become a party
hereto as provided herein, (each, a “Guarantor”), in favor
of the purchasers signatory (the “Purchasers”) to
certain Securities Purchase Agreements, dated on or after the date hereof, by
and among, inter alia,
Sino Gas  International Holdings, Inc., a Utah corporation (the “Company”) and the
Purchasers party thereto (the “Purchase
Agreements”). Capitalized terms not otherwise defined shall have the
meaning set forth in the Purchase Agreements.

    

    WITNESSETH:

    

    WHEREAS,
  the Company shall
issue and sell to the Purchasers, as provided in the Purchase Agreements, and
the Purchasers shall purchase up to Ten Million Dollars ($10,000,000) of the
Notes and Warrants (subject to a 20% over-allotment provision);

    

    WHEREAS,
the Guarantor is the Chairman, Chief Executive Officer and largest shareholder
of the Company and will therefore derive substantial benefits from the issuance
and sale of the Notes and the Warrants; and

    

    WHEREAS,
the Company has agreed to pledge 10,000,000 common shares of GAS Investment
China co., Ltd, a corporation organized under the laws of the British Virgin
Islands (the “BVI
Company”), representing all of the outstanding shares of the BVI Company
owned by the Company pursuant to a Pledge Agreement dated as of the date hereof
upon the expiration of the lock-up agreement pursuant to which such shares are
currently encumbered (the “Pledge
Agreement”).

    

    NOW,
THEREFORE, in consideration of the premises and to induce the Purchasers to
enter into the Purchase Agreements and to carry out the transactions
contemplated thereby, each Guarantor hereby guarantees as follows:

    

    1.           Guaranty.

    

    1.1                      Guaranty.  Guarantor
hereby unconditionally and irrevocably guarantees, jointly and severally with
any other Guarantor, the punctual payment, performance and observance when due,
whether at stated maturity, by acceleration or otherwise, of all of the
obligations of the Company under the Purchase Agreements, the Pledge Agreement
and the Notes (collectively, the “Obligations”) now or
hereafter existing, whether for principal, interest (including, without
limitation, all interest that accrues after the commencement of any insolvency,
bankruptcy or reorganization of the Company, whether or not constituting an
allowed claim in such proceeding), fees, commissions, expense reimbursements,
liquidated damages, indemnifications or otherwise (such obligations, to the
extent not paid by the Company being the “Guaranteed
Obligations”), and agrees to pay any and all reasonable costs, fees and
expenses (including reasonable counsel fees and expenses) incurred by the
Collateral Agent (as defined in the Pledge Agreement) and the Purchasers in
enforcing any rights under the guaranty set forth herein.  Without
limiting the generality of the foregoing, Guarantor’s liability shall extend to
all amounts that constitute part of the Guaranteed Obligations and would be owed
by the Company to Collateral Agent and the Purchasers, but for the fact that
they are unenforceable or not allowable due to the existence of an insolvency,
bankruptcy or reorganization involving the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.2                      Guaranty
Absolute.  Guarantor guarantees that the Guaranteed Obligations
will be paid strictly in accordance with the terms of the Guaranteed
Obligations, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of
Collateral Agent or the Purchasers with respect thereto.  The
obligations of Guarantor under this Guaranty are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and prosecuted
against Guarantor to enforce such obligations, irrespective of whether any
action is brought against the Company or any other Guarantor or whether Company
or any other Guarantor is joined in any such action or actions.  The
liability of Guarantor under this Guaranty constitutes a primary obligation, and
not a contract of surety, and to the extent permitted by law, shall be
irrevocable, absolute and unconditional irrespective of, and Guarantor hereby
irrevocably waives any defenses it may now or hereafter have in any way relating
to, any or all of the following:

     

    (a)         any
lack of validity or enforceability of the Notes or any agreement or instrument
relating to any Guaranteed Obligation;

     

    (b)         any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from the Notes, including, without limitation, any increase
in the Guaranteed Obligations resulting from the extension of additional credit
to the Company or otherwise;

     

    (c)         any
taking, exchange, release, subordination or non-perfection of any Collateral (as
defined in the Pledge Agreement), or any taking, release or amendment or waiver
of or consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;

     

    (d)         any
change, restructuring or termination of the corporate, limited liability company
or partnership structure or existence of the Company; or

     

    (e)         any
other circumstance (including, without limitation, any statute of limitations)
or any existence of or reliance on any representation by Collateral Agent or the
Company that might otherwise constitute a defense available to, or a discharge
of, the Company or any other guarantor or surety.

     

    
      
        
        

      

      
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    This
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Guaranteed Obligations is rescinded or
must otherwise be returned by Collateral Agent, any Purchaser or any other
entity upon the insolvency, bankruptcy or reorganization of the Company or
otherwise (and whether as a result of any demand, settlement, litigation or
otherwise), all as though such payment had not been made.

     

    1.3       Waiver.  Guarantor
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that Collateral Agent or the Purchasers exhaust any right or take
any action against the Company or any other person or entity or any
Collateral.  Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waiver set forth in this Section 1.3 is
knowingly made in contemplation of such benefits.  Guarantor hereby
waives any right to revoke this Guaranty, and acknowledges that this Guaranty is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.

     

    1.4       Continuing Guaranty;
Assignments.  This Guaranty is a continuing guaranty and shall
(a) remain in full force and effect until the later of the indefeasible cash
payment in full of the Guaranteed Obligations and all other amounts payable
under this Guaranty, the Purchase Agreements and Notes, (b) be binding upon
Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Purchasers and their successors, pledgees, transferees and
assigns.  Without limiting the generality of the foregoing
clause (c), any Purchaser may pledge, assign or otherwise transfer all or
any portion of its rights and obligations under this Guaranty (including,
without limitation, all or any portion of its Notes owing to it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted such Collateral Agent or Purchaser herein or
otherwise.

     

    1.5        Subrogation.  No
Guarantor will exercise any rights that it may now or hereafter acquire against
the Collateral Agent or any Purchaser or other Guarantor (if any) that arise
from the existence, payment, performance or enforcement of such Guarantor’s
obligations under this Guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Collateral Agent or any Purchaser or other Guarantor (if any),
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security solely on account of such claim, remedy or right,
unless and until all of the Guaranteed Obligations and all other amounts payable
under this Guaranty shall have been indefeasibly paid in full in
cash.

     

    1.6       Maximum Obligations.
Notwithstanding any provision herein contained to the contrary, Guarantor’s
liability with respect to the Obligations shall be limited to an amount not to
exceed, as of any date of determination, the amount that could be claimed by the
Purchasers from Guarantor without rendering such claim voidable or avoidable
under Section 548 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law.

     

    
      
        
        

      

      
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    2.           Miscellaneous.

     

    2.1           Expenses.  Guarantor
shall pay to the Collateral Agent and the Purchasers, on demand, the amount of
any and all reasonable expenses, including, without limitation, attorneys' fees,
legal expenses and brokers' fees, which they may incur in connection with
exercise or enforcement of any the rights, remedies or powers of the Collateral
Agent or the Purchasers hereunder or with respect to any or all of the
Obligations.

    

    2.2           Waivers, Amendment and
Remedies.  No course of dealing by the Purchasers and no
failure by the Collateral Agent or the Purchasers to exercise, or delay by the
Collateral Agent or any Purchaser in exercising, any right, remedy or power
hereunder shall operate as a waiver thereof, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right, remedy or power of the Collateral Agent or any
Purchaser.  No amendment, modification or waiver of any provision of
this Guaranty and no consent to any departure by Guarantor therefrom, shall, in
any event, be effective unless contained in a writing signed by the holders of a
majority of the outstanding Notes or the Holder or Holders against whom such
amendment, modification or waiver is sought, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.  The rights, remedies and powers of the Collateral
Agent and the Purchasers, not only hereunder, but also under any instruments and
agreements evidencing or securing the Obligations and under applicable law are
cumulative, and may be exercised by the Collateral Agent and the Purchasers from
time to time in such order as they may elect.

    

    2.3           Notices.  All
notices or other communications given or made hereunder shall be in writing and
shall be personally delivered or deemed delivered the first business day after
being faxed (provided that a copy is delivered by first class mail) to the party
to receive the same at its address set forth below or to such other address as
either party shall hereafter give to the other by notice duly made under this
Section:

    

    To
Guarantor, to:

    

    Sino Gas
International Holdings, Inc.

    No.18
Zhong Guan Cun Dong St.

    Haidian
District

    Beijing,
P.R. China

    Attention:
Yuchuan Liu, Chairman and CEO

    

    With a
copy to:

    

    Jiannan Zhang

    Cadwalader,
Wickersham & Taft LLP

    2301
China Central Place Tower 2

    No. 79
Jianguo Road, Beijing 100025, China

    Fax:
(86-10) 6599-7300

     

    
      
        
        

      

      
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    To
Purchasers:                   To
the addresses and telecopier numbers set

    forth in
the Purchase Agreements

    

    With a
copy by telecopier only to:

    

    To the
Collateral Agent:

    

    Salvatore
M. Di Costanzo, Esq.

    McMillan,
Constabile, Maker & Perone, LLP

    2180
Boston Post Road

    Larchmont,
New York 10538

    Telephone:
(914) 834-3500

    Facsimile:
(914) 834-0620

     

    

    Any party
may change its address by written notice in accordance with this
paragraph.

    

    2.4           Term; Binding
Effect.  This Guaranty shall (a) remain in full force and
effect until payment and satisfaction in full of all of the Obligations; (b) be
binding upon Guarantor and its successors and permitted assigns; and (c) inure
to the benefit of the Purchasers and their respective successors and
assigns.  All the rights and benefits granted by Guarantor to the
Collateral Agent and Purchasers hereunder and other agreements and documents
delivered in connection therewith are deemed granted to both the Collateral
Agent and the Purchasers.  Upon the payment in full of the
Obligations, (i) this Guaranty shall terminate and (ii) the Purchasers will,
upon Guarantor's request and at Guarantor's expense, execute and deliver to
Guarantor such documents as Guarantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse
whatsoever.

    

    2.5           Captions.  The
captions of Paragraphs, Articles and Sections in this Guaranty have been
included for convenience of reference only, and shall not define or limit the
provisions hereof and have no legal or other significance
whatsoever.

    

    2.6           Governing Law; Venue;
Severability.  This Guaranty shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts or choice of law.  Any legal action or
proceeding against Guarantor with respect to this Guaranty may be brought in the
courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Guaranty, Guarantor
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid
courts.  Guarantor hereby irrevocably waives any objection which they
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Guaranty brought in the
aforesaid courts and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.  If any
provision of this Guaranty, or the application thereof to any person or
circumstance, is held invalid, such invalidity shall not affect any other
provisions which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable and the
remaining, valid provisions shall remain of full force and
effect.  This
Guaranty shall be deemed an unconditional obligation of Guarantor for the
payment of money and, without limitation to any other remedies of the Collateral
Agent or the Purchasers, may be enforced against Guarantor by summary proceeding
pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar
rule or statute in the jurisdiction where enforcement is sought.  For
purposes of such rule or statute, any other document or agreement to which the
Collateral Agent or the Purchasers and Guarantor are parties or which Guarantor
delivered to the Purchasers or the Collateral Agent, which may be convenient or
necessary to determine Collateral Agent’s and Purchasers’ rights hereunder or
Guarantor’s obligations are deemed a part of this Guaranty, whether or not such
other document or agreement was delivered together herewith or was executed
apart from this Guaranty.

     

    
      
        
        

      

      
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    2.7           Satisfaction of
Obligations.  For all purposes of this Guaranty, the payment in
full of the Obligations shall be conclusively deemed to have occurred when
either the Obligations have been indefeasibly paid in cash or all outstanding
Notes have been converted to common stock pursuant to the terms of the Notes and
the Purchase Agreements.

    

    2.8           Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.

    

    

    

    [THE
BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the
undersigned have executed and delivered this Guaranty, as of the date first
written above.

    

    

    “GUARANTOR”

    

    

    

    

    By:
_____________________________________

    Yuchuan Liu

    

    

     

    

    

    

    

    

    

    

    

    This
Guaranty Agreement may be signed by facsimile signature and

    delivered
by confirmed facsimile transmission.

    

    
      
        
        

      

      
        7Unassociated Document

    VOTING
AGREEMENT

     

    THIS
VOTING AGREEMENT is made as of the 30 day of November, 2009, by and among
Investwide Capital LLC and LP and Jayhawk Private Equity Fund, LP (the “Lead Investor”) and
the shareholders listed on the signature pages hereto (the “Shareholders”).

     

    WHEREAS,
in order to induce the various purchasers (the “Purchasers”) of the
8% Senior Secured Convertible Notes  (the “Notes”) of Sino Gas
International Holdings Inc. (the “Company”) to purchase
the Notes, the Shareholders have agreed to execute this Voting Agreement
pursuant to the terms and conditions set forth below; and

     

    NOW,
THEREFORE, it is hereby agreed as follows:

     

    1.           Agreement to Vote.
Each of the Shareholders agrees to vote, or cause to be voted, at any meeting of
stockholders of the Company all shares of Common Stock of the Company owned by
such Shareholder or any entity affiliated with such Shareholder (“Subject Securities”),
or act by written consent of stockholders in lieu of any such meeting, as the
case may be, in favor of the election to the Board of Directors of the Company
of one person designated by the Lead Investor on behalf of the
Purchasers.

    

    2.           Grant of Irrevocable
Proxy. EACH SHAREHOLDER HEREBY IRREVOCABLY GRANTS TO, AND APPOINTS, [LEAD
INVESTOR] AS SUCH SHAREHOLDER’S PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF
SUBSTITUTION), FOR AND IN THE NAME, PLACE AND STEAD OF SUCH SHAREHOLDER, TO VOTE
ALL SUCH SHAREHOLDER’S SUBJECT SECURITIES (OWNED OF RECORD OR BENEFICIALLY), OR
GRANT A CONSENT OR APPROVAL IN RESPECT OF SUCH SUBJECT SECURITIES WITH VOTING
POWER, IN FAVOR OF THE ELECTION TO THE COMPANY’S BOARD OF DIRECTORS OF ONE
PERSON DESIGNATED BY [LEAD INVESTOR]. Each Shareholder represents that any
proxies heretofore given in respect of such Shareholder’s Subject Securities are
not irrevocable, and that all such proxies are hereby revoked. Each Shareholder
hereby affirms that the irrevocable proxy set forth in this Section 2 is given
to secure the performance of such Shareholder’s duties under this Agreement.
Each Shareholder hereby further affirms that the irrevocable proxy set forth in
this Section 2 is coupled with an interest and may under no circumstances be
revoked unless and until this Agreement is terminated in accordance with Section
3 of this Agreement. Each Shareholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Each
such irrevocable proxy is executed and intended to be irrevocable in accordance
with the provisions of applicable law.

     

    3.           Termination. This
Agreement and all rights granted hereby shall terminate and will cease to be of
any further force or effect when less than $1,000,000 of the Notes remain
outstanding.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.           Amendments. This
Agreement may not be amended, supplemented, waived or otherwise modified or
terminated, except upon the execution and delivery of a written agreement
executed by the parties hereto.

    

    5.           Enforceability/Severability.
The parties hereto agree that each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law.
If any provision of this Agreement shall nevertheless be held to be prohibited
by or invalid under applicable law, (a) such provision shall be effective only
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement, and
(b) the parties shall, to the extent permissible by applicable law, amend this
Agreement, so as to make effective and enforceable the intent of this
Agreement.

    

    6.           Representations by
Shareholders. Each Shareholder hereby represents and warrants, severally
and not jointly, that the execution and delivery of this Agreement and
compliance with the provisions hereof do not and will not conflict with, or
result in any violation or breach of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of, or result in,
termination, cancellation or acceleration of any obligation, or to loss of a
material benefit under, or result in the creation of any lien in or upon any of
the Subject Securities under, or give rise to any increased, additional,
accelerated or guaranteed rights or entitlements under, any provision of (A) any
contract, agreement or instrument to which he is a party or (B) any statute,
law, ordinance, rule or regulation or judgment, order, writ, injunction,
stipulation or decree, in each case, applicable to him, other than any such
conflicts, violations, breaches, defaults, rights, losses, liens or entitlements
that individually or in the aggregate could not reasonably be expected to impair
in any material respect his ability to perform his obligations under this
Agreement.

    

    7.           Further Assurances.
Each Shareholder shall from time to time execute and deliver, or cause to be
executed and delivered, such additional or further consents, documents and other
instruments as Lead Investor may request for the purpose of effectuating the
matters covered by this Agreement, including the grant of the irrevocable
proxies set forth in Section 2.

    

    8.           Assignment. Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation of law or
otherwise, by any of the parties hereto without the prior written consent of the
other parties hereto. Any purported assignment in violation of this Section 8
shall be void.  Subject to the preceding sentences of this Section 8,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by, the parties hereto and their respective successors and assigns.

    

    9.           Governing Law. This
Agreement shall be governed by and construed under the laws of the State of New
York as applied to contracts among New York residents entered into and to be
performed entirely within New York.

    

    10.           Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. A telephone line facsimile transmission or an electronic
transmission of this Agreement bearing a signature on behalf of a party hereto
shall be legal and binding on such party.

     

    [Signature
page follows.]

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year herein above first written.

     

     

    Investwide Capital
LLC

    Jayhawk Private Equity Fund,
LP

    [Lead
Investor]

     

    

    SHAREHOLDERS:

    

    

     

    
      
         

      

      
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