Document:

ESCROW
        AGREEMENT

       

      This
        Escrow Agreement, dated as of August 14, 2007 (this “Agreement”),
        is
        entered into by and among Sino Gas International Holdings, Inc., a corporation
        organized under the laws of the State of Utah (the “Company”),
        Roth
        Capital Partners, LLC, a California limited liability company (the “Placement
        Agent”)
        and
        Tri-State Title & Escrow, LLC, with its principal offices located at 360
        Main Street, P.O. Box 391, Washington, VA 22747 (the “Escrow
        Agent”).
        The
        Placement Agent and the Company are sometimes referred to herein as the
        Escrowing Parties.

      

      WITNESSETH:

      

      WHEREAS,
        the Company, with the assistance of the Placement Agent, proposes to raise
        up to
        THIRTY MILLION DOLLARS ($30,000,000) through a private offering of its common
        stock pursuant to Rule 506 of Regulation D of the Securities Act of 1933,
        as
        amended and the exercise of existing warrants (the “Offering”
        and the
“Act,”
        respectively) on a “best efforts” basis pursuant to a Securities Purchase
        Agreement, such Offering to be made solely to accredited investors, as that
        term
        is defined in the Act; and

      

      WHEREAS,
        the Company and the Placement Agent desire to deposit all proceeds received
        from
        subscriptions for the common stock and warrant exercises in the Offering
        (the
“Escrowed Funds”) with the Escrow Agent, to be held in escrow until joint
        written instructions are received by the Escrow Agent from the Company and
        the
        Placement Agent, from time to time, at which time the Escrow Agent will disburse
        the Escrowed Funds in accordance with the instructions (a “Closing”);
        and

      

      WHEREAS,
        Escrow Agent is willing to hold the Escrowed Funds in escrow subject to the
        terms and conditions of this Agreement.

      

      NOW,
        THEREFORE, in consideration of the mutual promises herein contained and
        intending to be legally bound, the parties hereby agree as follows:

      

      1.
        Appointment
        of Escrow Agent.
        The
        Company and the Placement Agent hereby appoint Escrow Agent as escrow agent
        in
        accordance with the terms and conditions set forth herein and the Escrow
        Agent
        hereby accepts such appointment.

      

      2.
        Delivery
        of the Escrowed Funds. 

      

      2.1
         The
        Placement Agent and/or the Company will direct subscribers in the Offering
        to
        deliver the Escrowed Funds to the Escrow Agent, addressed to following account
        of the Escrow Agent:

      

      Account
        Name: Tri-State Title &
Escrow, LLC

      Bank:
        Cardinal Bank, McLean, VA
        22102

      Account
        No.: 5060024931

      ABA
        No: 056008849 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.2 (a)
        All
        Subscribers’ checks shall be made payable to “TRI-STATE TITLE & ESCROW, LLC
        and shall be delivered to the Escrow Agent at the address set forth on
Exhibit
        A
        hereto
        and shall be
        accompanied by a written account of subscription in the form attached hereto
        as
Exhibit
        B
        (the
“Subscription Information”) The
        Escrow
        Agent shall, upon receipt of a Subscription, together with the related Purchase
        Price therefore, deposit the related Purchase Price of said Subscription
        in the
        Escrow Account for collection; or (b) all funds to be wired shall be wired
        to
        the account set forth in Section 2.1 above and written Subscription Information
        shall be faxed or emailed to the Escrow Agent in accordance with the information
        provided on Exhibit
        A.

      

      2.3 Any
        checks which are received by Escrow Agent that are made payable to a party
        other
        than the Escrow Agent shall be returned directly to the Placement Agent together
        with any documents delivered therewith. Simultaneously with each deposit,
        the
        Placement Agent shall provide the Escrow Agent with the Subscription Information
        to include the name, address and taxpayer identification number of each
        Subscriber and of the aggregate principal amount of Securities subscribed
        for by
        such Subscriber. The Escrow Agent is not obligated, and may refuse, to accept
        checks that are not accompanied by a Subscription containing the requisite
        information.

      

      2.4 In
        the
        event a wire transfer is received by the Escrow Agent and the Escrow Agent
        has
        not received Subscription Information, the Escrow Agent shall notify the
        Placement Agent. If the Escrow Agent does not receive the Subscription
        Information by such Subscriber prior to close of business on the third business
        day (days other than a Saturday or Sunday or other day on which the Escrow
        Agent
        is not open for business in the State of Virginia) after notifying Placement
        Agent of receipt of said wire, the Escrow Agent shall return the funds to
        the
        prospective purchaser.

      

      3.
        Escrow
        Agent to Hold and Disburse Escrowed Funds.
        The
        Escrow Agent will hold and disburse the Escrowed Funds received by it pursuant
        to the terms of this Escrow Agreement, as follows: 

      

      3.1 Upon
        receipt of joint instructions from the Company and the Placement Agent, in
        substantially the form of Exhibit
        C
        hereto,
        the Escrow Agent shall release the Escrowed Funds as directed in such
        instructions. 

      

      3.2 In
        the
        event this Agreement, the Escrowed Funds or the Escrow Agent becomes the
        subject
        of litigation, or if the Escrow Agent shall desire to do so for any other
        reason, the Company authorizes the Escrow Agent, at its option, to deposit
        the
        Escrowed Funds with the clerk of the court in which the litigation is pending,
        or a court of competent jurisdiction if no litigation is pending, and thereupon
        the Escrow Agent shall be fully relieved and discharged of any further
        responsibility with regard thereto. The Company also authorizes the Escrow
        Agent, if it receives conflicting claims to the Escrow Funds, is threatened
        with
        litigation or if the Escrow Agent shall desire to do so for any other reason,
        to
        interplead all interested parties in any court of competent jurisdiction
        and to
        deposit the Escrowed Funds with the clerk of that court and thereupon the
        Escrow
        Agent shall be fully relieved and discharged of any further responsibility
        hereunder to the parties from which they were received.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      3.3 In
        the
        event that the Escrow Agent does not receive any instructions by a date that
        is
        90 days from the date of this Agreement (the “Escrow Termination Date”), all
        Escrowed Funds shall be returned to the parties from which they were received,
        without interest thereon or deduction therefrom.

      

      4.
         Exculpation
        and Indemnification of Escrow Agent

      

      4.1
         The
        Escrow Agent shall haven no duties or responsibilities other than those
        expressly set forth herein. The Escrow Agent shall have no duty to enforce
        any
        obligation of any person to make any payment or delivery, or to direct or
        cause
        any payment or delivery to be made, or to enforce any obligation of any person
        to perform any other act. The Escrow Agent shall be under no liability to
        the
        other parties hereto or anyone else, by reason of any failure on the part
        of any
        party hereto or any maker, guarantor, endorser or other signatory of a document
        or any other person, to perform such person’s obligations under any such
        document. Except for amendments to this Escrow Agreement referenced below,
        and
        except for written instructions given to the Escrow Agent by the Escrowing
        Parties relating to the Escrowed funds, the Escrow Agent shall not be obligated
        to recognize any agreement between or among any of the Escrowing Parties,
        notwithstanding that references hereto may be made herein and whether or
        not it
        has knowledge thereof. 

      

      4.2 The
        Escrow Agent shall not be liable to the Company, the Placement Agent or to
        anyone else for any action taken or omitted by it, or any action suffered
        by it
        to be taken or omitted, in good faith and acting upon any order, notice,
        demand,
        certificate, opinion or advice of counsel (including counsel chosen by the
        Escrow Agent), statement, instrument, report, or other paper or document
        (not
        only as to its due execution and the validity and effectiveness of its
        provisions, but also as to the truth and acceptability of any information
        therein contained), which is believed by the Escrow Agent to be genuine and
        to
        be signed or presented by the proper person or persons. The Escrow Agent
        shall
        not be bound by any of the terms thereof, unless evidenced by written notice
        delivered to the Escrow Agent signed by the proper party or parties and,
        if the
        duties or rights of the Escrow Agent are affected, unless it shall give its
        prior written consent thereto.

      

      4.3 The
        Escrow Agent shall not be responsible for the sufficiency or accuracy of
        the
        form, or of the execution, validity, value or genuineness of, any document
        or
        property received, held or delivered to it hereunder, or of any signature
        or
        endorsement thereon, or for any lack of endorsement thereon, or for any
        description therein; nor shall the Escrow Agent be responsible or liable
        to the
        Company, the Placement Agent or to anyone else in any respect on account
        of the
        identity, authority or rights, of the person executing or delivering or
        purporting to execute or deliver any document or property or this Escrow
        Agreement. The Escrow Agent shall have no responsibility with respect to
        the use
        or application of the Escrowed Funds pursuant to the provisions
        hereof.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      4.4 The
        Escrow Agent shall have the right to assume, in the absence of written notice
        to
        the contrary from the proper person or persons, that a fact or an event,
        by
        reason of which an action would or might be taken by the Escrow Agent, does
        not
        exist or has not occurred, without incurring liability to the Company, the
        Placement Agent or to anyone else for any action taken or omitted to be taken
        or
        omitted, in good faith and in the exercise of its own best judgment, in reliance
        upon such assumption.

      

      4.5 To
        the
        extent that the Escrow Agent becomes liable for the payment of taxes, including
        withholding taxes, in respect of income derived from the investment of the
        Escrowed Funds, or any payment made hereunder, the Escrow Agent may pay such
        taxes; and the Escrow Agent may withhold from any payment of the Escrowed
        Funds
        such amount as the Escrow Agent estimates to be sufficient to provide for
        the
        payment of such taxes not yet paid, and may use the sum withheld for that
        purpose. The Escrow Agent shall be indemnified and held harmless against
        any
        liability for taxes and for any penalties in respect of taxes, on such
        investment income or payments in the manner provided in Section 4.6

      

      4.6 The
        Escrow Agent will be indemnified and held harmless by the Company from and
        against all expenses, including all counsel fees and disbursements, or loss
        suffered by the Escrow Agent in connection with any action, suit or proceedings
        involving any claim, or in connection with any claim or demand, which in
        any
        way, directly or indirectly, arises out of or relates to this Escrow Agreement,
        the services of the Escrow Agent hereunder, except for claims relating to
        gross
        negligence by Escrow Agent or breach of this Escrow Agreement by the Escrow
        Agent, or the monies or other property held by it hereunder. Promptly after
        the
        receipt of the Escrow Agent of notice of any demand or claim or the commencement
        of any action, suit or proceeding, the Escrow Agent shall, if a claim in
        respect
        thereof is to be made against an Escrowing Party, notify each of them thereof
        in
        writing, but the failure by the Escrow Agent to give such notice shall not
        relieve any such party from any liability which an Escrowing Party may have
        to
        the Escrow Agent hereunder. Notwithstanding any obligation to make payments
        and
        deliveries hereunder, the Escrow Agent may retain and hold for such time
        as it
        deems necessary such amount of monies or property as it shall, from time
        to
        time, in its sole discretion, seem sufficient to indemnify itself for any
        such
        loss or expense and for any amounts due it under Section 7. 

      

      4.7 For
        purposes hereof, the term “expense or loss” shall include all amounts paid or
        payable to satisfy any claim, demand or liability, or in settlement of any
        claim, demand, action, suit or proceeding settled with the express written
        consent of the Escrow Agent, and all costs and expenses, including, but not
        limited to, counsel fees and disbursements, paid or incurred in investigating
        or
        defending against any such claim, demand, action, suit or proceeding.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      5.
         Termination
        of Agreement and Resignation of Escrow Agent 

      

      5.1 This
        Escrow Agreement shall terminate upon disbursement of all of the Escrowed
        Funds,
        provided that the rights of the Escrow Agent and the obligations of the Company
        and the Placement Agent under Section 4 shall survive the termination
        hereof.

      

      5.2 The
        Escrow Agent may resign at any time and be discharged from its duties as
        Escrow
        Agent hereunder by giving the Company and the Placement Agent at least five
        (5)
        business days written notice thereof (the “Notice Period”). As soon as
        practicable after its resignation, the Escrow Agent shall, if it receives
        notice
        from the Company and the Placement Agent within the Notice Period, turn over
        to
        a successor escrow agent appointed by the Company and the Placement Agent
        all
        Escrowed Funds (less such amount as the Escrow Agent is entitled to retain
        pursuant to Section 7) upon presentation of the document appointing the new
        escrow agent and its acceptance thereof. If no new agent is so appointed
        within
        the Notice Period, the Escrow Agent shall return the Escrowed Funds to the
        parties from which they were received without interest or decoction.

      

      6.
         Form
        of Payments by Escrow Agent

      

      6.1 Any
        payments of the Escrowed Funds by the Escrow Agent pursuant to the terms
        of this
        Escrow Agreement shall be made by wire transfer unless directed to be made
        by
        check by the Escrowing Parties.

      

      6.2
         All
        amounts referred to herein are expressed in United States Dollars and all
        payments by the Escrow Agent shall be made in such dollars.

      

      7. Compensation.
        Escrow
        Agent shall be entitled to the following compensation from the
        Company:

       

      7.1 Documentation
        Fee: The
        Company shall pay a documentation fee to the Escrow Agent of $4,500, out
        of the
        first Closing. 

      

      7.2 Interest 
        : The
        Escrowing Parties hereby agree that Escrow Agent shall retain 100% of the
        interest (if any) earned during the time the Escrowed Funds are held in escrow
        hereunder. 

      

      8. Notices.
        All
        notices, requests, demands, and other communications provided herein shall
        be in
        writing, shall be delivered by hand or by first-class mail, shall be deemed
        given when received and shall be addressed to parties hereto at their respective
        addresses first set forth on Exhibit
        A
        hereto.

      

      9. Further
        Assurances From
        time
        to time on and after the date hereof, the Company and the Placement Agent
        shall
        deliver or cause to be delivered to the Escrow Agent such further documents
        and
        instruments and shall do and cause to be done such further acts as the Escrow
        Agent shall reasonably request (it being understood that the Escrow Agent
        shall
        have no obligation to make any such request) to carry out more effectively
        the
        provisions and purposes of this Escrow Agreement, to evidence compliance
        herewith or to assure itself that it is protected in acting
        hereunder.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      10. Consent
        to Service of Process 
        The
        Company and the Placement Agent hereby irrevocably consent to the jurisdiction
        of the courts of the State of Virginia and of any Federal court located in
        such
        state in connection with any action, suit or proceedings arising out of or
        relating to this Escrow Agreement or any action taken or omitted hereunder,
        and
        waives personal service of any summons, complaint or other process and agrees
        that the service thereof may be made by
        certified or registered mail directed to it at the address listed on Exhibit
        A
        hereto.

      

      11. Miscellaneous

      

      11.1 This
        Escrow Agreement shall be construed without regard to any presumption or
        other
        rule requiring construction against the party causing such instrument to
        be
        drafted. The terms “hereby,” “hereof,” “hereunder,” and any similar terms, as
        used in this Escrow Agreement, refer to the Escrow Agreement in its entirety
        and
        not only to the particular portion of this Escrow Agreement where the term
        is
        used. The word “person” shall mean any natural person, partnership, corporation,
        government and any other form of business of legal entity. All words or terms
        used in this Escrow Agreement, regardless of the number or gender in which
        they
        were used, shall be deemed to include any other number and any other gender
        as
        the context may require. This Escrow Agreement shall not be admissible in
        evidence to construe the provisions of any prior agreement. 

      

      11.2 This
        Escrow Agreement and the rights and obligations hereunder of the Company
        and
        Placement Agent may not be assigned. This Escrow Agreement and the rights
        and
        obligations hereunder of the Escrow Agent may be assigned by the Escrow Agent.
        This Escrow Agreement shall be binding upon and inure to the benefit of each
        party’s respective successors, heirs and permitted assigns. No other person
        shall acquire or have any rights under or by virtue of this Escrow Agreement.
        This Escrow Agreement may not be changed orally or modified, amended or
        supplemented without an express written agreement executed by the Escrow
        Agent,
        the Company and the Placement Agent. This Escrow Agreement is intended to
        be for
        the sole benefit of the parties hereto and their respective successors, heirs
        and permitted assigns, and none of the provisions of this Escrow Agreement
        are
        intended to be, nor shall they be construed to be, for the benefit of any
        third
        person.

      

      11.3 This
        Escrow Agreement shall be governed by, and construed in accordance with,
        the
        internal laws of the State of Virginia. The representations and warranties
        contained in this Escrow Agreement shall survive the execution and delivery
        hereof and any investigations made by any party. The headings in this Escrow
        Agreement are for purposes of reference only and shall not limit or otherwise
        affect any of the terms thereof. 

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      12.
         Execution
        of Counterparts This
        Escrow Agreement may be executed in a number of counterparts, by facsimile,
        each
        of which shall be deemed to be an original as of those whose signature appears
        thereon, and all of which shall together constitute one and the same instrument.
        This Escrow Agreement shall become binding when one or more of the counterparts
        hereof, individually or taken together, are signed by all the
        parties.

      

      IN
        WITNESS WHEREOF, the parties have executed and delivered this Escrow Agreement
        on the day and year first above written.

      

        
          	
                  ESCROW
                    AGENT:

                	 
	 	 
	
                  TRI-STATE
                    TITLE & ESCROW, LLC

                	 
	 	 
	
                  By:

                	
                  /s/ Guy W. Turner

                	 
	 	
                  
                    

                  

                	 
	 	
                  Guy
                    W. Turner, President

                	 
	 	 
	
                  SINO
                    GAS INTERNATIONAL HOLDINGS

                	 
	 	 
	
                  By:

                	/s/Chen
                  Fang	 
	 	
                  

                	 
	 	
                  Name:
                    Chen Fang

                	 
	 	
                  Title:
                    Chief Financial Officer

                	 
	 	 
	
                  ROTH
                    CAPITAL PARTNERS, LLC

                	 
	 	 
	
                  By:

                	
                  /s/
                    Aaron Gurewitz

                	 
	 	
                  

                	 
	 	
                  Name:

                	
                  Aaron
                    Gurewitz

                	 
	 	
                  Title:

                	
                  Managing
                    Director

                	 

        

      

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      

      EXHIBIT
        A

       

      PARTIES
        TO AGREEMENT

      
        
          	
                  Tri-State
                    Title & Escrow, LLC

                
	
                  360
                    Main Street

                
	
                  P.O.
                    Box 391 

                
	
                  Washington,
                    VA 22747

                
	
                  Attention:
                    Johnnie L. Zarecor

                
	
                  Telephone:
                    (540) 675-2155

                
	
                  Fax:

                	
                  (540)
                    675-3155

                
	
                  Email
                    escrow@tristatetitle.net

                
	 
	
                  Sino
                    Gas International Holdings, Inc.

                
	
                  c/o
                    Beijing Zhong Ran Wei Ye Gas Co., Ltd. 

                
	
                  No.18
                    Zhong Guan Cun Dong St.

                
	
                  Haidian
                    District

                
	
                  Beijing,
                    China

                
	
                  Attention:
                    Chen Fang

                
	
                  Tel.
                    No.: 011-86-10-826-00527

                
	
                  Fax
                    No.: 011-010-826-00042

                
	 
	
                  ROTH
                    CAPITAL PARTNERS, LLC

                
	 
	
                  Address:

                	
                  24
                    Corporate Plaza

                  
                    Newport
                      Beach, CA 92660

                  

                
	
                  Attention:

                	
                  Aaron
                    Gurewitz

                
	
                  Tel:

                	
                  (949)
                    720-5703

                
	
                  Fax:

                	
                  (949)
                    720-7227

                
	
                  Email:

                	
                  agurewitz@roth.com

                

        

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      

      EXHIBIT
        B

      

      SUBCRIPTION
        INFORMATION

       

      
        
          	
                  Name
                    of Subscriber

                	
                   

                  
                    

                  

                	 
	 	
                	 
	
                  Address
                    of Subscriber

                	
                   

                  
                    

                  

                	 
	 	
                	 
	 	
                  

                	 
	 	 	 
	 	
                  

                	 
	 	 	 
	
                  $
                    Amount of Securities

                	
                	 
	
                  Subscribed

                	
                   

                  
                    

                  

                	 
	 	 	 
	
                  Subscription
                    Amount

                	 	 
	
                  Submitted
                    Herewith

                	
                   

                  
                    

                  

                	 
	 	 	 
	
                  Taxpayer
                    ID Number/ 

                	 	 
	
                  Social
                    Security Number

                	
                   

                  
                    

                  

                	 

        

      

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        C

      
DISBURSEMENT
        REQUEST

      

      Pursuant
        to that certain Escrow Agreement dated effective as of __________2007 by
        and
        among Sino Gas International Holdings, Roth Capital Partners, LLC and Tri-State
        Title & Escrow, LLC, Sino Gas International Holdings and Roth Capital
        Partners, LLC hereby requests disbursement of funds in the amount and manner
        described below from Cardinal Bank account number 0560024931, styled Tri-State
        Title & Escrow, LLC Escrow Account.

       

      
        
          	
                  Please
                    disburse to:

                	 	 	 
	 	 	
                  

                	 
	 	 	 	 
	
                  Amount
                    to disburse:

                	 	
                   

                  
                    

                  

                   

                	 
	
                  Form
                    of distribution:

                	 	
                   

                  
                    

                  

                   

                	 
	 	 	 	 
	
                  Payee:

                	 	 	 
	
                  Name:

                	 	
                   

                  
                    

                  

                	 
	
                  Address:

                	 	
                   

                  
                    

                  

                	 
	
                  City/State:

                	 	
                   

                  
                    

                  

                	 
	
                  Zip:

                	 	
                   

                  
                    

                  

                	 
	 	 	 	 
	
                  Please
                    disburse to:

                	 	
                   

                  
                    

                  

                	 
	 	 	 	 
	
                  Amount
                    to disburse:

                	 	
                   

                  
                    

                  

                	 
	 	 	 	 
	
                  Form
                    of distribution:

                	 	
                   

                  
                    

                  

                   

                	 
	 	 	 	 
	
                  Payee:

                	 	 	 
	
                  Name:

                	 	
                   

                  
                    

                  

                	 
	
                  Address:

                	 	
                   

                  
                    

                  

                	 
	
                  City/State:

                	 	
                   

                  
                    

                  

                	 
	
                  Zip:

                	 	
                   

                  
                    

                  

                	 

        

        Subscriptions
          Accepted From

         

        

        
          	
                  Subscriber

                	 	
                  Amount

                
	
                  

                	 	
                  

                
	
                  

                	 	
                  

                
	
                  

                	 	
                  

                
	
                  

                	 	
                  

                
	 	 	 
	
                             Total:

                	 	
                   

                  
                    

                  

                

        

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      

      Statement
        of event or condition which calls for this request for
        disbursement:

      
        

        
          	
                  

                

        

      

      
        	
                

              

      

      
        	
                

              

      

       

      
        	 	 	 
	 	SINO
                GAS
                INTERNATIONAL HOLDINGS
	 
 	 
 	 
 
	 	By:  	
                 

                
                  

                

              
	 	Name:	
                 

                
                  

                

              
	 	Title:	
                 

                
                  

                

              
	 	Date:	 
	 	
                

              

      

      
        
          	 	 	 
	 	
                  ROTH
                    CAPITAL PARTNERS, LLC

                
	 	 
	 	By:  	
                   

                  
                    

                  

                
	 	Name:	
                   

                  
                    

                  

                
	 	Title:	
                   

                  
                    

                  

                
	 	Date:	 
	 	
                  

                

        

      

    

     

    
      
        
        

      

      
        11Unassociated Document

    WARRANT
      REPURCHASE AGREEMENT, AMENDMENT AND WAIVER

    

    This
      Warrant Purchase Agreement, Amendment and Waiver (the “WPA”)
      is
      made as of September 7, 2007, by and among Sino Gas International Holdings,
      Inc., a Utah corporation (the “Company”),
      Vision Opportunity Master Fund, Ltd. (“Vision”),
      and
      each of the other parties set forth on the signature page hereto (collectively,
      the “Investors”)(the
      Investors and the Company, collectively, the “Parties”).

    

    W
      I T N E
      S S E T H:

    

    WHEREAS,
      on September 7, 2006 and October 20, 2006, the Company and the Investors entered
      into Series B Convertible Preferred Stock Purchase Agreements (the “Stock
      Purchase Agreements”)
      pursuant to which Investors purchased from the Company units consisting
      of:

     

    (i) 3,387,446
      shares of the Company’s Series B Convertible Preferred Stock, par value $.001
      per share (the “Preferred
      Shares”),
      convertible into shares of the Company’s common stock, par value $.001 per share
      (the “Common
      Stock”),
      

     

    (ii) 3,387,446
      Series A Warrants (the “Series
      A Warrants”)
      to
      purchase Common Stock, and 

     

    (iii) 1,693,723
      Series B Warrants (the “Series
      B Warrants”)
      to
      purchase Common Stock; and 

     

    (iv) 3,083,588
      Series J Warrants (the “Series
      J Warrants”)
      to
      purchase Common Stock; and 

     

    (v) 3,083,588
      Series C Warrants (the “Series
      C Warrants”)
      to
      purchase Common Stock; and

     

    (vi)
       1,541,794
      Series D Warrants (the “Series
      D Warrants”)
      to
      purchase Common Stock; and

     

    WHEREAS,
      on May 15, 2007, Vision exercised 1,094,891 of the Series J Warrants, and in
      consideration thereof, received 1,094,891 new Series E Warrants (the
“Series
      E Warrants”)
      to
      purchase Common Stock; and

     

    WHEREAS,
      in connection with a new financing by the Company to be consummated on or before
      September 30, 2007, pursuant to which it will sell shares of its Common Stock
      to
      new investors for gross proceeds of not less than $10,000,000 (the “New
      Financing”),
      the
      Parties have agreed to sell certain of their warrants to the Company, amend
      the
      Stock Purchase Agreements and waive certain provisions of agreements entered
      into in connection with the Stock Purchase Agreements (the “Transaction
      Documents”).
      Capitalized terms not otherwise defined herein shall have the meanings assigned
      to such terms in the applicable Transaction Documents;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    NOW,
      THEREFORE, in consideration of the mutual terms, conditions and other agreements
      set forth herein, the parties hereto hereby agree as follows:

     

    ARTICLE
      I

     

    Agreements
      by the Parties

     

    Section
      1.1 The
      Parties’ Agreements.
       The
      Parties hereby agree that simultaneous with a New Financing (the occurrence
      of
      each of the events referenced in this Section 1.1 is referenced herein as the
      “Closing”):

     

    (a) Company
      Purchase of A and B Warrants.
       The
      Company agrees to purchase from the Investors, for an aggregate purchase price
      of $3,500,000 (the “Purchase
      Price”),
      all
      of the Series A Warrants and Series B Warrants owned by Investors (the
“Warrant
      Purchase”).
      The
      Purchase Price shall be paid to the Investors in proportion to their ownership
      of the Series A Warrants and Series B Warrants together, and upon payment of
      the
      Purchase Price, the Series A Warrants and Series B Warrants shall be cancelled
      and of no further force or effect. The Purchase Price shall be paid at the
      closing of the New Financing. Upon receipt of payment of the Purchase Price,
      Investors agree to return the Series A Warrants and Series B Warrants to the
      Company. 

     

    (b) Company
      Purchase of D Warrants.
       The
      Company agrees to purchase from the Investors, simultaneous with the Warrant
      Purchase, for a purchase price equal to 770,897 shares of Series B Preferred
      Stock (or one (1) newly issued share of Series B Convertible Preferred Stock
      for
      every two (2) shares of Common Stock issuable upon the exercise of all Series
      D
      Warrants) (the “Preferred
      Stock Purchase Price”),
      all
      of the Series D Warrants owned by Investors. The Preferred Stock Purchase Price
      shall be paid to the Investors in proportion to their ownership of the Series
      D
      Warrants together upon presentation of the original Series D Warrants. The
      shares of Common Stock issuable upon conversion of the Series B Convertible
      Preferred Stock issued to the Investors in connection with this Section 1.1(b)
      shall be registered for resale pursuant to the Vision Registration Rights
      Agreement (as defined below).

     

    (c) Cancellation
      of Series J and E Warrants.
       The
      Investors agree that simultaneous with the Warrant Purchase they shall surrender
      for cancellation all of their remaining 1,988,698 Series J Warrants and
      1,094,891 Series E Warrants in exchange for the right to participate in the
      New
      Financing and purchase up to 3,083,589 shares of Common Stock in the New
      Financing (subject to Vision’s beneficial ownership not exceeding 9.9% of the
      Company’s issued and outstanding shares of Common Stock at the closing of the
      New Financing). Upon receipt of the shares of Common Stock issued to the
      Investors in the New Financing, Investors agree to return the Series J Warrants
      and Series E Warrants to the Company for cancellation. For the avoidance of
      doubt, the cancellation of the Series J Warrants pursuant to this Section 1.1(c)
      shall be deemed to be exercised in full for purposes of determining of the
      number of shares of Common Stock issuable upon exercise of the Series C
      Warrants.

     

    (d) Termination
      of Lockup Agreement.
       The
      Investors agree that upon the payment of the Purchase Price and the Preferred
      Stock Purchase Price (together, the “Conditions”),
      the
      Lockup Agreement entered into on September 7, 2006 by and among the Investors
      and Company management in connection with the Stock Purchase Agreements shall
      be
      terminated and of no further force or effect; provided,
      however,
      that in
      connection with the New Financing, Company management shall have entered into
      a
      new lock-up agreement containing terms and provisions satisfactory to the
      Investors.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (e)  Termination
      of Registration Rights Agreements; New Registration Rights
      Agreement.
       The
      Investors agree that upon the Company meeting the Conditions, the Registration
      Rights Agreements dated September 7, 2006 and October 20, 2006 among the
      Investors and the Company shall be terminated and of no further force or effect,
      with no penalties or other payments due thereunder to Investors; provided,
      however,
      that in
      connection with this Agreement, the Company shall have entered into a new
      registration rights agreement with Vision, substantially in the form of
Exhibit
      A
      attached
      hereto (the “Vision
      Registration Rights Agreement”),
      containing terms and provisions satisfactory to Vision. The Vision Registration
      Rights Agreement shall provide, among other things, that all shares of Common
      Stock currently held by Vision as set forth below (other than the shares of
      Common Stock to be issued to Vision in the New Financing which shall be included
      in the registration statement to be filed in connection with the New Financing),
      including any shares of Common Stock underlying any convertible or exerciseable
      securities currently held by Vision (the “Vision
      Shares”),
      shall
      be registered for resale following a certain period of time after the
      effectiveness of the registration statement to be filed in connection with
      the
      New Financing. The number
      of
      Vision Shares required to be registered pursuant to the Vision Registration
      Rights Agreement is as follows: (i) 136,120 shares of Common Stock acquired
      from
      the prior “shell company” holders, (ii) 321,168 shares of Common Stock issued as
“make good” shares for 2006, (iii) 603,344 shares of Common Stock issuable upon
      conversion of the Preferred Shares issued to Vision pursuant to Section 1.1(h)
      hereof (which represents approximately 86.19% of the Preferred Shares issued
      to
      the Investors pursuant to Section 1.1(h) hereof),
      (iv)
      1,094,891 shares of Common Stock previously issued upon the exercise of certain
      Series J Warrants, (v) 2,919,708 shares of Common Stock issuable upon the
      conversion of shares of Series B Convertible Preferred Stock currently held,
      (vi) 664,452 shares of Common Stock issuable upon conversion of the new shares
      of Series B Convertible Preferred Stock issued pursuant to Section 1.1(b) issued
      in consideration of canceling the Series D Warrant held by Vision, (vii) 271,074
      shares of Common Stock issuable upon the exercise of warrants to be issued
      to
      Investors in connection with the New Financing, and (viii) 2,657,807 shares
      of
      Common Stock issuable upon the exercise of the Series C Warrant held by
      Vision.

     

    (f) Amendment
      to 2007 Make Good.
       The
      Investors agree that upon the Company meeting the Conditions, Section 3.21
      of
      the Stock Purchase Agreements (and the applicable sections of the Securities
      Escrow Agreement) shall be amended to reflect that the Company’s 2007 fiscal
      year net income target is $7,900,000 (not taking into account proceeds raised
      in
      the New Financing). In addition, in connection with the New Financing, the
      new
      securities purchase agreement to be entered into by the investors and the
      Company shall contain a make good provision containing terms and provisions
      satisfactory to the Investors, including, but not limited to, a 2008 fiscal
      year
      net income target of $11,000,000.

     

    (g) Amendment
      and Waiver of Series C Warrants.
       The
      Company and the Investors agree that upon the Company meeting the Conditions
      the
      Series C Warrant shall be amended as follows: (i) the Warrant Price of the
      Series C Warrants shall be equal to 150% of the per share purchase price for
      the
      Common Stock in the New Financing; (ii) Section 4(d) shall be waived and removed
      with respect to the New Financing and any future transaction and shall be
      deleted in its entirety, and (iii) the following provision shall be added as
      Section 2(j):

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    (j) The
      Issuer shall have the right to call the
      exercise of all, or the remaining portion of this Warrant outstanding and
      unexercised
      in the
      event (i) the Per Share Market Value equals or exceeds the Warrant Price for
      twenty (20) consecutive Trading Days during which (i) the average daily trading
      volume of the Common Stock equals or exceeds 200,000 shares of Common Stock
      and
      (ii) the lowest bid price of the Common Stock exceeds 200% of the Warrant Price,
      (ii) all Warrant Stock is registered for resale by the Holder under an effective
      registration statement from the date that is 30 days prior to the issuance
      of
      the Call Notice (as defined below) through the expiration of the Call Period
      (as
      defined below); (iii) the Issuer’s Common Stock is listed for trading on the New
      York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market
      or the Nasdaq Capital Market; (iv) trading
      in the Common Stock shall not have been suspended by the Securities and Exchange
      Commission; (v) the Issuer is in material compliance with the terms and
      conditions of this Warrant, the Registration Rights Agreement and the other
      Transaction Documents; and (vi) the Holder is not in possession of any material
      nonpublic information (the
      “Call Conditions”). Within ten (10) business days of the Call Conditions being
      satisfied, the Company shall deliver a written notice to each registered Holder
      (the “Call Notice”). Each Holder shall have thirty (30) calendar days from the
      receipt of the Call Notice to exercise the remaining balance of the Warrant
      (the
“Call Period”). Upon the expiration of the Call Period, any unexercised Warrant
      shall automatically expire. Notwithstanding
      anything in the foregoing to the contrary, if the Holder may not exercise this
      Warrant as a result of the restriction contained in Section 7 hereof the Call
      Notice shall be deemed automatically amended to apply only to such portion
      of
      this Warrant as may be exercised by the Holder in accordance with such Section
      7
      as then in effect. 

    

    Upon
      the
      written request of any of the Investors, the Company shall promptly issue to
      such Investor a new Series C Warrant reflecting the amended terms set forth
      in
      this Section 1.1(g).

     

    (h) Amendment
      to Stock Purchase Agreements, Definition of “Permitted Financing”, and
      Warrants.
       The
      Investors agree that upon the Company meeting the Conditions, the Stock Purchase
      Agreements shall be amended to delete Section 3.22 in its entirety; provided,
      however, that the Investors shall receive, upon the Closing, an aggregate of
      700,000 shares of Preferred Shares, or shares of preferred stock with the same
      designations, preferences and rights as the Preferred Shares, in proportion
      to
      their purchase of Preferred Shares pursuant to the Stock Purchase Agreements.
      The Investors shall also receive, upon the Closing, warrants to purchase 271,074
      shares of Common Stock, having a strike price equal to 110% of the Company’s
      Common Stock on the Closing Date and having a term of three years. The Investors
      further agree that upon the Company meeting the Conditions, the definition
      of
“Permitted Financing” contained in Section 3.23(b) of the Stock Purchase
      Agreements shall be amended to include the New Financing.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II 

     

    Miscellaneous

     

    Section
      2.1 Fees
      and Expenses.
      Each
      party shall pay the fees and expenses of its advisors, counsel, accountants
      and
      other experts, if any, and all other expenses, incurred by such party incident
      to the negotiation, preparation, execution, delivery and performance of this
      WPA;
      provided that
      the
      Company shall pay the reasonable, out-of-pocket fees and expenses, including
      all
      actual attorneys’ fees and expenses (including disbursements and out-of-pocket
      expenses), incurred by Vision in connection with the negotiation, execution
      and
      delivery of this WPA and the transactions contemplated hereunder, which payment
      shall be made at the closing of the New Financing.

     

    Section
      2.2 Specific
      Enforcement, Consent to Jurisdiction.

     

    (a) Each
      of
      the Company and the Investors (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
      WPA or the transactions contemplated hereby 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. Each of the Company and the Investors consents
      to process being served in any such suit, action or proceeding by mailing a
      copy
      thereof to such party at the address in effect for notices to it under this
      WPA
      and agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing in this Section 3.2 shall affect or limit
      any right to serve process in any other manner permitted by law.

     

    Section
      2.3 Entire
      Agreement; Amendment.
      This
      WPA contains the entire understanding and agreement of the Parties with respect
      to the matters covered hereby, except as specifically set forth herein, neither
      the Company nor any of the Investors makes any representations, warranty,
      covenant or undertaking with respect to such matters and they supersede all
      prior understandings and agreements with respect to said subject matter, all
      of
      which are merged herein. No provision of this WPA may be waived or amended
      other
      than by a written instrument signed by the Company and the Investors, and no
      provision hereof may be waived other than by an a written instrument signed
      by
      the party against whom enforcement of any such amendment or waiver is sought.
      

     

    Section
      2.4 Notices.
      Any
      notice, demand, request, waiver or other communication required or permitted
      to
      be given hereunder shall be in writing and shall be effective (a) upon hand
      delivery by telex (with correct answer back received), telecopy or facsimile
      at
      the address or number designated below (if delivered on a business day during
      normal business hours where such notice is to be received), or the first
      business day following such delivery (if delivered other than on a business
      day
      during normal business hours where such notice is to be received) or (b) on
      the
      second business day following the date of mailing by express courier service,
      fully prepaid, addressed to such address, or upon actual receipt of such
      mailing, whichever shall first occur. The addresses for such communications
      shall be:

    

    
      	 	
              If
                to the Company:

            	
              Sino
                Gas International Holdings, Inc. 

              N0.18
                Zhong Guan Cun Dong St.

              Haidian
                District

              Beijing,
                China

              Attention:
                Chen Fang

              Tel.
                No.: 011-86-10-82600527

              Fax
                No.: 011-010-82600042

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              with
                copies to:

            	
              GUZOV
                OFSINK, LLC

              600
                Madison Avenue, 14th Floor

              New
                York, New York 10022

              Attention:
                Darren Ofsink

              Tel.
                No.: (212) 371-8008, ext. 127

              Fax
                No.: (212)
                688-7273

            
	 	 	 
	 	
              If
                to any Investor:

            	
              At
                the address of such Investor set forth on Exhibit
                A
                to
                this WPA, with copies to Investor’s counsel as set forth on Exhibit
                A
                or
                as specified in writing by such Investor with copies
                to:

            
	 	 	 
	 	 	
              Kramer
                Levin Naftalis & Frankel LLP

              1177
                Avenue of the Americas

              New
                York, New York 10036

              Attention:
                Christopher S. Auguste

              Tel
                No.: (212) 715-9100

              Fax
                No.: (212) 715-8000

               

              Any
                party hereto may from time to time change its address for notices
                by
                giving at least ten (10) days written notice of such changed address
                to
                the other party hereto

            

    

     

    Section
      2.5 Waivers.
      No
      waiver by any Party of any default with respect to any provision, condition
      or
      requirement of this WPA shall be deemed to be a continuing waiver in the future
      or a waiver of any other provisions, condition or requirement hereof, nor shall
      any delay or omission of any party to exercise any right hereunder in any manner
      impair the exercise of any such right accruing to it thereafter. 

     

    Section
      2.6 Headings.
      The
      article, section and subsection headings in this WPA are for convenience only
      and shall not constitute a part of this WPA for any other purpose and shall
      not
      be deemed to limit or affect any of the provisions hereof.

     

    Section
      2.7  Successors
      and Assigns.
      This
      WPA shall be binding upon and inure to the benefit of the parties and their
      successors and assigns.  

     

    Section
      2.8 No
      Third Party Beneficiaries.
      This
      WPA is intended for the benefit
      of the parties hereto and their respective permitted successors and assigns
      and
      is not for the benefit of, nor may any provision hereof be enforced by, any
      other person.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Section
      2.9 Governing
      Law.
      This
      WPA shall be governed by and construed in accordance with the internal laws
      of
      the State of New York, without giving effect to any of the conflicts of law
      principles which would result in the application of the substantive law of
      another jurisdiction. This WPA shall not be interpreted or construed with any
      presumption against the party causing this WPA to be drafted.

     

    Section
      2.10 Counterparts.
      This
      WPA may be executed in any number of counterparts, each of which when so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same WPA and shall become effective when
      counterparts have been signed by each party and delivered to the other parties
      hereto, it being understood that all parties need not sign the same counterpart.
      In the event that any signature is delivered by facsimile transmission, such
      signature shall create a valid binding obligation of the party executing (or
      on
      whose behalf such signature is executed) the same with the same force and effect
      as if such facsimile signature were the original thereof.

     

    Section
      2.11 Severability.
      The
      provisions of this WPA are severable and, in the event that any court of
      competent jurisdiction shall determine that any one or more of the provisions
      or
      part of the provisions contained in this WPA or the Transaction Documents shall,
      for any reason, be held to be invalid, illegal or unenforceable in any respect,
      such invalidity, illegality or unenforceability shall not affect any other
      provision or part of a provision of this WPA and such provision shall be
      reformed and construed as if such invalid or illegal or unenforceable provision,
      or part of such provision, had never been contained herein, so that such
      provisions would be valid, legal and enforceable to the maximum extent
      possible.

     

    Section
      2.12 Further
      Assurances.
      From
      and after the date of this WPA, upon the request of any Investor or the Company,
      each of the Company and the Investors shall execute and deliver such instrument,
      documents and other writings as may be reasonably necessary
      or desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this WPA and each of the other Transaction Documents.

     

    Section
      2.13 Delivery
      of Securities.
      Within
      five (5) business days of the Closing, the Company shall deliver to the
      Investors all securities and other deliverables as contemplated by this WPA,
      including, without limitation, the newly issued shares of Series B Convertible
      Preferred Stock and/or other shares of preferred stock with the same rights
      and
      designations as the shares of Series B Convertible Preferred Stock, the newly
      issued warrants as contemplated by Section 1.1(h) and the new Series C Warrants
      (if requested in writing by the Investors).

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
       

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this WPA to be duly executed
      by
      their respective authorized officer as of the date first above
      written.

    

      
        	 	 	
                SINO
                  GAS INTERNATIONAL HOLDINGS, INC. 

              	 
	 	 	 	 	 
	 	 	
                By:

              	/s/
Chen
                Fang	 
	 	 	 	
                Name:
                  Chen Fang 

              	 
	 	 	 	
                Title:
                  Chief Financial Officer

              	 
	 	 	 	 	 
	 	 	
                VISION
                  OPPORTUNITY MASTER FUND, LTD.

              	 
	 	 	 	 	 
	 	 	
                By:

              	/s/
                Adam Benowitz	 
	 	 	 	
                Name:
                  Adam Benowitz

              	 
	 	 	 	
                Title:
                  Director

              	 

      

    

    

    
      	
              
                SEI
                  PRIVATE TRUST CO. FAO -

                THE
                  JM SMUCKER CO. MASTER TRUST

              

            	 	 
	 	 	 	 
	
              By:

            	
              /s/
                Authorized Officer

            	 	 
	
              Name:

            	 	 
	
              Title:

            	 	 
	 	 	 	 
	
              
                CORONADO
                  CAPITAL PARTNERS LP

              

            	 	 
	 	 	 	 
	
              By:

            	
              /s/
                Authorized Officer  

            	 	 
	
              Name:

            	 	 
	
              Title:

            	 	 
	 	 	 	 
	
              NITE
                CAPITAL LP

            	 	 
	 	 	 	 
	
              By:

            	
              /s/
                Authorized Officer

            	 	 
	
              Name:

            	 	 
	
              Title:

            	 	 
	 	
            	 	 
	/s/
              Ijak Malik	 	 
	
              Ijak
                Malik

            	 	 

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Exhibit
      A

    

    Form
      of Vision Registration Rights Agreement

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (this "Agreement")
      is
      made and entered into as of September __, 2007, by and among Sino Gas
      International Holdings, Inc., a Utah corporation (the "Company"),
      and
      the purchasers listed on Schedule
      I
      hereto
      (the "Purchasers").
      

    

    WHEREAS,
      on September 7, 2006 and October 20, 2006, the Company and the Purchasers
      entered into Series B Convertible Preferred Stock Purchase Agreements (the
      “Stock
      Purchase Agreements”)
      pursuant to which the Purchasers purchased from the Company shares of its Series
      B Convertible Preferred Stock and Warrants to purchase shares of Common Stock,
      and in connection therewith, the parties entered into Registration Rights
      Agreements with respect to the rights of the Purchasers to have certain of
      the
      Company’s securities issued pursuant to the Stock Purchase Agreements registered
      for resale;

    

    WHEREAS,
      in connection with a new financing by the Company to be consummated on or before
      September 30, 2007, pursuant to which it will sell shares of its Common Stock
      to
      new investors for gross proceeds of not less than $10,000,000 (the “New
      Financing”),
      the
      Purchasers and the Company deem it desirable to enter into this Agreement to
      memorialize the registration rights of the Purchasers and the investors in
      the
      New Financing;

    

    This
      Agreement is being entered into pursuant to the Warrant Repurchase Agreement,
      Amendment and Waiver dated as of the date hereof among the Company and the
      Purchasers (the "Amendment
      Agreement").

    

    The
      Company and the Purchasers hereby agree as follows:

    

    1. Definitions.

    

    Capitalized
      terms used and not otherwise defined herein shall have the meanings given such
      terms in the Amendment Agreement. As used in this Agreement, the following
      terms
      shall have the following meanings:

    

    "Advice"
      shall
      have meaning set forth in Section 3(m).

    

    "Affiliate"
      means,
      with respect to any Person, any other Person that directly or indirectly
      controls or is controlled by or under common control with such Person. For
      the
      purposes of this definition, "control,"
      when
      used with respect to any Person, means the possession, direct or indirect,
      of
      the power to direct or cause the direction of the management and policies of
      such Person, whether through the ownership of voting securities, by contract
      or
      otherwise; and the terms of "affiliated,"
      "controlling"
      and
      "controlled"
      have
      meanings correlative to the foregoing.

    

    "Board"
      shall
      have meaning set forth in Section 3(n).

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    "Business
      Day"
      means
      any day except Saturday, Sunday and any day which shall be a legal holiday
      or a
      day on which banking institutions in the state of New York generally are
      authorized or required by law or other government actions to close.

    

    "Closing
      Date"
      means
      the date of the Closing pursuant to the Amendment Agreement.

    

    "Commission"
      means
      the Securities and Exchange Commission.

    

    "Common
      Stock"
      means
      the Company's Common Stock, par value $.001 per share.

    

    “Conversion
      Shares”
means
      the shares of the Common Stock issuable upon conversion of the Preferred
      Stock.

    

    "Effectiveness
      Date"
      means,
      subject to Section 2(b) hereof, with respect to the Registration Statement,
      the
      earlier of (A) the ninetieth (90th)
      day
      following the Filing Date (or in the event the Registration Statement receives
      a
“full review” by the Commission, the one hundred twentieth (120th)
      day
      following the Filing Date) or (B) the
      date
      which is within three (3) Business Days after the date on which the Commission
      informs the Company that (i) the Commission will not review the Registration
      Statement or (ii) the
      Company may request the acceleration of the effectiveness of the Registration
      Statement and the Company makes such request; provided that,
      if the
      Effectiveness Date falls on a Saturday,
      Sunday or any other day which shall be a legal holiday or a day on which the
      Commission is authorized or required by law or other government actions to
      close, the Effectiveness Date shall be the following Business Day.

    

    "Effectiveness
      Period"
      shall
      have the meaning set forth in Section 2.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    "Event"
      shall
      have the meaning set forth in Section 7(e).

    

    "Event
      Date"
      shall
      have the meaning set forth in Section 7(e).

    

    "Exchange
      Act"
      means
      the Securities Exchange Act of 1934, as amended.

    

    "Filing
      Date"
      means,
      subject to Section 2(b), with respect to the Registration Statement,
the
      later
      of (i) sixty (60) days following the sale of substantially all of the
      registrable securities included in the last registration statement filed in
      connection with the New Financing and (ii) six (6) months following the
      effective date of the last registration statement filed in connection with
      the
      New Financing, or such earlier or later date as permitted or required by the
      Commission; provided that,
      if the
      Filing Date falls on a Saturday,
      Sunday or any other day which shall be a legal holiday or a day on which the
      Commission is authorized or required by law or other government actions to
      close, the Filing Date shall be the following Business Day.

    

    "Holder"
      or
      "Holders"
      means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

    

    "Indemnified
      Party"
      shall
      have the meaning set forth in Section 5(c).

    

    "Indemnifying
      Party"
      shall
      have the meaning set forth in Section 5(c).

     

    "Losses"
      shall
      have the meaning set forth in Section 5(a).

    

    “New
      Financing”
shall
      have the meaning ascribed to such term in the recitals to this
      Agreement.

    

    “New
      Warrants”
means
      warrants exercisable for 271,074 shares of Common Stock to be issued by the
      Company to the Purchasers at the Closing.

    

    "Person"
      means
      an individual or a corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or political subdivision thereof) or
      other entity of any kind.

    

    "Preferred
      Stock"
      means
      the shares of the Company’s Series B Convertible Preferred Stock issued to the
      Purchasers pursuant to Stock Purchase Agreements and the Amendment
      Agreement.

    

    "Proceeding"
      means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

    

    "Prospectus"
      means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by the Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference in such
      Prospectus.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    "Registrable
      Securities"
      means
      (i) the shares of Common Stock issuable upon conversion of the Preferred Stock
      (including, without limitation, 2,919,708
      shares issuable upon the conversion of shares of Preferred Stock held by Vision
      Opportunity Master Fund, Ltd. (“Vision”)
      and
      770,897 shares of Common Stock issuable upon conversion of the new shares of
      Preferred Stock issued to Vision pursuant to Section 1.1(b) of the Amendment
      Agreement),
      (ii)
      the shares of Common Stock issuable upon exercise of the Warrants (including,
      without limitation, 2,657,807
      shares of Common stock issuable upon the exercise of the Series C Warrant held
      by Vision),
      (iii)
      136,120 shares of Common Stock acquired by Vision from the Company’s prior
“shell company” holders, (iv) 321,168 shares of Common Stock issued to Vision as
“make good” shares for 2006 under the Stock Purchase Agreements, (v) 1,094,891
      shares of Common Stock issued upon the exercise of certain warrants held by
      Vision, and (vi) 271,074 shares of Common Stock issuable upon exercise of the
      New Warrants.
      

    

    "Registration
      Statement"
      means
      the registration statements and any additional registration statements
      contemplated by Section 2, including (in each case) the Prospectus, amendments
      and supplements to such registration statement or Prospectus, including pre-
      and
      post-effective amendments, all exhibits thereto, and all material incorporated
      by reference in such registration statement.

    

    "Rule
      144"
      means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

    

    "Rule
      158"
      means
      Rule 158 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

    

    "Rule
      415"
      means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

    

      "Rule
      424"
      means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

    

    "Securities
      Act"
      means
      the Securities Act of 1933, as amended.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    "Special
      Counsel"
      means
      Kramer Levin Naftalis & Frankel LLP, for which the Holders will be
      reimbursed by the Company pursuant to Section 4.

    

    “Transaction
      Documents”
means
      this Agreement, the Stock Purchase Agreements (and any agreements entered into
      in connection with the execution of the Stock Purchase Agreements which have
      not
      been terminated pursuant to the Amendment Agreement) and the Amendment
      Agreement.

    

    "Warrants"
      means
      the Series C and Series D warrants held by the Purchasers which were purchased
      pursuant to the Stock Purchase Agreements and the New Warrants.

    

    “Warrant
      Shares”
means
      the Common Stock issuable by the Company upon exercise of the
      Warrants.

    

    2. Resale
      Registration.

    

    (a) On
      or
      prior to the Filing Date the Company shall prepare and file with the Commission
      a "resale" Registration Statement providing for the resale of all Registrable
      Securities for an offering to be made on a continuous basis pursuant to Rule
      415. The Registration Statement shall be on Form SB-2 (except if the Company
      is
      not then eligible to register for resale the Registrable Securities on Form
      SB-2, in which case such registration shall be on another appropriate form
      in
      accordance herewith and the Securities Act and the rules promulgated
      thereunder). Such Registration Statement shall cover to the extent allowable
      under the Securities Act and the rules promulgated thereunder (including Rule
      416), such indeterminate number of additional shares of Common Stock resulting
      from stock splits, stock dividends or similar transactions with respect to
      the
      Registrable Securities. The Company shall (i) not permit any securities other
      than the Registrable Securities and the securities to be listed on Schedule
      II
      hereto
      to be included in the Registration Statement and (ii) use its best efforts
      to
      cause the Registration Statement to be declared effective under the Securities
      Act as promptly as possible after the filing thereof, but in any event prior
      to
      the Effectiveness Date, and to keep such Registration Statement continuously
      effective under the Securities Act until such date as is the earlier of (x)
      the
      date when all Registrable Securities covered by such Registration Statement
      have
      been sold or (y) the date on which the Registrable Securities may be sold
      without any restriction pursuant to Rule 144(k) as determined by the counsel
      to
      the Company pursuant to a written opinion letter, addressed to the Company's
      transfer agent to such effect (the "Effectiveness
      Period").
      The
      Company shall request that the effective time of the Registration Statement
      is
      4:00 p.m. Eastern Time on the effective date. If at any time and for any reason,
      an additional Registration Statement is required to be filed because at such
      time the actual number of shares of Common Stock into which the Preferred Stock
      is convertible and the Warrants are exercisable plus the number of shares of
      Common Stock exceeds the number of Registrable Securities remaining under the
      Registration Statement, the Company shall have twenty (20) Business Days to
      file
      such additional Registration Statement, and the Company shall use its best
      efforts to cause such additional Registration Statement to be declared effective
      by the Commission as soon as possible, but in no event later than sixty (60)
      days after filing. 

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (b) Notwithstanding
      anything to the contrary set forth in this Section 2, in the event the
      Commission does not permit the Company to register all of the Registrable
      Securities in the Registration Statement because of the Commission’s application
      of Rule 415 or the Commission requires the Company to either exclude shares
      held
      by certain Holders or deem such Holders to be underwriters with respect to
      their
      Registrable Securities, the Company shall register in the Registration Statement
      such number of Registrable Securities as is permitted by the Commission without
      naming such Holder as an underwriter (unless such Holder agrees to be named
      as
      an underwriter), provided, however, that the number of Registrable Securities
      to
      be included in such Registration Statement or any subsequent registration
      statement shall be determined in the following order: (i) first, 136,120 shares
      of Common Stock acquired by Vision from the Company’s prior “shell company”
holders, (ii) second, 321,168 shares of Common Stock issued to Vision as “make
      good shares” for 2006 under the Stock Purchase Agreements, (iii) third,
      1,094,891 shares of Common Stock issued upon the exercise of certain warrants
      held by Vision, (iv) fourth, the
      shares of Common Stock issuable upon conversion of the Preferred Stock
      (including, without limitation, 2,919,708
      shares issuable upon the conversion of shares of Preferred Stock held by Vision
      and 770,897 shares of Common Stock issuable upon conversion of the new shares
      of
      Preferred Stock issued to Vision pursuant to Section 1.1(b) of the Amendment
      Agreement) shall be registered on a pro rata basis among the holders of the
      Preferred Stock,
      (v)
      fifth, the shares of Common Stock issuable upon exercise of the New Warrants,
      and (vi) sixth, the shares of Common Stock issuable upon exercise of any other
      outstanding Warrants (including, without limitation, 2,657,807
      shares of Common stock issuable upon the exercise of the Series C Warrant held
      by Vision) shall be registered on a pro rata basis among the holders of the
      Warrants.
      In
      the
      event the Commission does not permit the Company to register all of the
      Registrable Securities in the initial Registration Statement, the Company shall
      use its commercially reasonable efforts to file subsequent Registration
      Statements to register the Registrable Securities that were not registered
      in
      the initial Registration Statement as promptly as possible and in a manner
      permitted by the Commission. For purposes of this Section 2(b), “Filing Date”
means
      with respect to each subsequent Registration Statement filed pursuant hereto,
      the
      later
      of (i) sixty (60) days following the sale of substantially all of the
      Registrable Securities included in the initial Registration Statement or any
      subsequent Registration Statement and (ii) six (6) months following the
      effective date of the initial Registration Statement or any subsequent
      Registration Statement, as applicable, or such earlier or later date as
      permitted or required by the Commission. For
      purposes of this Section 2(b), “Effectiveness Date” means with respect to each
      subsequent Registration Statement filed pursuant hereto, the earlier of (A)
      the
      ninetieth (90th)
      day
      following the filing date of such Registration Statement (or in the event such
      Registration Statement is reviewed by the Commission, the one hundred twentieth
      (120th)
      day
      following such filing date) or (B) the date which is within three (3) Business
      Days after the date on which the Commission informs the Company (i) that the
      Commission will not review such Registration Statement or (ii) that
      the
      Company may request the acceleration of the effectiveness of such Registration
      Statement and the Company promptly makes such request; provided that, if the
      Effectiveness Date falls on a Saturday, Sunday or any other day which shall
      be a
      legal holiday or a day on which the Commission is authorized or required by
      law
      or other government actions to close, the Effectiveness Date shall be the
      following Business Day.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    3. Registration
      Procedures.

    

    In
      connection with the Company's registration obligations hereunder, the Company
      shall:

     

    (a)
       Prepare
      and file with the Commission on or prior to the Filing Date, a Registration
      Statement on Form SB-2 (or if the Company is not then eligible to register
      for
      resale the Registrable Securities on Form SB-2 such registration shall be on
      another appropriate form in accordance herewith and the Securities Act and
      the
      rules promulgated thereunder) in accordance with the plan of distribution as
      set
      forth on Exhibit
      A
      hereto
      and in accordance with applicable law, and cause the Registration Statement
      to
      become effective and remain effective as provided herein; provided,
      however,
      that
      not less than five (5) Business Days prior to the filing of the Registration
      Statement or any related Prospectus or any amendment or supplement thereto
      (including any document that would be incorporated therein by reference), the
      Company shall (i) furnish to the Holders and any Special Counsel, copies of
      all
      such documents proposed to be filed, which documents (other than those
      incorporated by reference) will be subject to the review of such Holders and
      such Special Counsel, and (ii) cause its officers and directors, counsel and
      independent certified public accountants to respond to such inquiries as shall
      be necessary, in the reasonable opinion of Special Counsel, to conduct a
      reasonable review of such documents. The Company shall not file the Registration
      Statement or any such Prospectus or any amendments or supplements thereto to
      which the Holders of a majority of the Registrable Securities or any Special
      Counsel shall reasonably object in writing within three (3) Business Days of
      their receipt thereof.

    

    (b) (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to the Registration Statement as may be necessary to keep the
      Registration Statement continuously effective as to the applicable Registrable
      Securities for the Effectiveness Period and prepare and file with the Commission
      such additional Registration Statements as necessary in order to register for
      resale under the Securities Act all of the Registrable Securities; (ii) cause
      the related Prospectus to be amended or supplemented by any required Prospectus
      supplement, and as so supplemented or amended to be filed pursuant to Rule
      424
      (or any similar provisions then in force) promulgated under the Securities
      Act;
      (iii) respond as promptly as possible, but in no event later than ten (10)
      Business Days, to any comments received from the Commission with respect to
      the
      Registration Statement or any amendment thereto and to provide the Holders,
      within such ten (10) Business Day period, true and complete copies of all
      correspondence from and to the Commission relating to the Registration
      Statement; (iv) file the final prospectus pursuant to Rule 424 of the Securities
      Act no later than 1:00 p.m. Eastern Time on the Business Day following the
      date
      the Registration Statement is declared effective by the Commission; and (v)
      comply in all material respects with the provisions of the Securities Act and
      the Exchange Act with respect to the disposition of all Registrable Securities
      covered by the Registration Statement during the Effectiveness Period in
      accordance with the intended methods of disposition by the Holders thereof
      set
      forth in the Registration Statement as so amended or in such Prospectus as
      so
      supplemented.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (c) Notify
      the Holders of Registrable Securities and any Special Counsel as promptly as
      possible (and, in the case of (i)(A) below, not less than three (3) Business
      Days prior to such filing, and in the case of (iii) below, on the same day
      of
      receipt by the Company of such notice from the Commission) and (if requested
      by
      any such Person) confirm such notice in writing no later than one (1) Business
      Day following the day (i)(A) when a Prospectus or any Prospectus supplement
      or
      post-effective amendment to the Registration Statement is filed; (B) when the
      Commission notifies the Company whether there will be a "review" of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement and (C) with respect to the Registration Statement or
      any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other Federal or state governmental authority
      for amendments or supplements to the Registration Statement or Prospectus or
      for
      additional information; (iii) of the issuance by the Commission of any stop
      order suspending the effectiveness of the Registration Statement covering any
      or
      all of the Registrable Securities or the initiation or threatening of any
      Proceedings for that purpose; (iv) if at any time any of the representations
      and
      warranties of the Company contained in any agreement contemplated hereby ceases
      to be true and correct in all material respects; (v) of the receipt by the
      Company of any notification with respect to the suspension of the qualification
      or exemption from qualification of any of the Registrable Securities for sale
      in
      any jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and (vi) of the occurrence of any event that makes any statement made
      in the Registration Statement or Prospectus or any document incorporated or
      deemed to be incorporated therein by reference untrue in any material respect
      or
      that requires any revisions to the Registration Statement, Prospectus or other
      documents so that, in the case of the Registration Statement or the Prospectus,
      as the case may be, it will not contain any untrue statement of a material
      fact
      or omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading.

    

    (d) Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of,
      as promptly as possible, (i) any order suspending the effectiveness of the
      Registration Statement or (ii) any suspension of the qualification (or exemption
      from qualification) of any of the Registrable Securities
      for sale in any jurisdiction.

    

    (e) If
      requested by the Holders of a majority in interest of the Registrable
      Securities, (i) promptly incorporate in a Prospectus supplement or
      post-effective amendment to the Registration Statement such information as
      the
      Company reasonably agrees should be included therein and (ii) make all required
      filings of such Prospectus supplement or such post-effective amendment as soon
      as practicable after the Company has received notification of the matters to
      be
      incorporated in such Prospectus supplement or post-effective
      amendment.

    

    (f) If
      requested by any Holder, furnish to such Holder and any Special Counsel, without
      charge, at least one conformed copy of each Registration Statement and each
      amendment thereto, including financial statements and schedules, all documents
      incorporated or deemed to be incorporated therein by reference, and all exhibits
      to the extent requested by such Person (including those previously furnished
      or
      incorporated by reference) promptly after the filing of such documents with
      the
      Commission.

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (g) Promptly
      deliver to each Holder and any Special Counsel, without charge, as many copies
      of the Prospectus or Prospectuses (including each form of prospectus) and each
      amendment or supplement thereto as such Persons may reasonably request; and
      subject to the provisions of Sections 3(m) and 3(n), the Company hereby consents
      to the use of such Prospectus and each amendment or supplement thereto by each
      of the selling Holders in connection with the offering and sale of the
      Registrable Securities covered by such Prospectus and any amendment or
      supplement thereto.

    

    (h) Prior
      to
      any public offering of Registrable Securities, use its best efforts to register
      or qualify or cooperate with the selling Holders and any Special Counsel in
      connection with the registration or qualification (or exemption from such
      registration or qualification) of such Registrable Securities for offer and
      sale
      under the securities or Blue Sky laws of such jurisdictions within the United
      States as any Holder requests in writing, to keep each such registration or
      qualification (or exemption therefrom) effective during the Effectiveness Period
      and to do any and all other acts or things necessary or advisable to enable
      the
      disposition in such jurisdictions of the Registrable Securities covered by
      a
      Registration Statement; provided,
      however,
      that
      the Company shall not be required to qualify generally to do business in any
      jurisdiction where it is not then so qualified or to take any action that would
      subject it to general service of process in any such jurisdiction where it
      is
      not then so subject or subject the Company to any material tax in any such
      jurisdiction where it is not then so subject.

    

    (i) Cooperate
      with the Holders to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be sold pursuant to a
      Registration Statement, which certificates, to the extent permitted by the
      Transaction Documents and applicable federal and state securities laws, shall
      be
      free of all restrictive legends, and to enable such Registrable Securities
      to be
      in such denominations and registered in such names as any Holder may request
      in
      connection with any sale of Registrable Securities.

    

    (j) Upon
      the
      occurrence of any event contemplated by Section 3(c)(vi), as promptly as
      possible, prepare a supplement or amendment, including a post-effective
      amendment, to the Registration Statement or a supplement to the related
      Prospectus or any document incorporated or deemed to be incorporated therein
      by
      reference, and file any other required document so that, as thereafter
      delivered, neither the Registration Statement nor such Prospectus will contain
      an untrue statement of a material fact or omit to state a material fact required
      to be stated therein or necessary to make the statements therein, in the light
      of the circumstances under which they were made, not misleading.

    

    (k) Use
      its
      best efforts to cause all Registrable Securities relating to the Registration
      Statement to be listed on the OTC Bulletin Board or any other securities
      exchange, quotation system or market, if any, on which similar securities issued
      by the Company are then listed or traded as and when required pursuant to the
      Transaction Documents.

    

    (l) Comply
      in
      all material respects with all applicable rules and regulations of the
      Commission and make generally available to its security holders all documents
      filed or required to be filed with the Commission, including, but not limited,
      to, earning statements satisfying the provisions of Section 11(a) of the
      Securities Act and Rule 158 not later than 45 days after the end of any 12-month
      period (or 90 days after the end of any 12-month period if such period is a
      fiscal year) commencing on the first day of the first fiscal quarter of the
      Company after the effective date of the Registration Statement, which statement
      shall conform to the requirements of Rule 158.

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (m) The
      Company may require each selling Holder to furnish to the Company information
      regarding such Holder and the distribution of such Registrable Securities as
      is
      required by law to be disclosed in the Registration Statement, Prospectus,
      or
      any amendment or supplement thereto, and the Company may exclude from such
      registration the Registrable Securities of any such Holder who unreasonably
      fails to furnish such information within a reasonable time after receiving
      such
      request.

    

    If
      the
      Registration Statement refers to any Holder by name or otherwise as the holder
      of any securities of the Company, then such Holder shall have the right to
      require (if such reference to such Holder by name or otherwise is not required
      by the Securities Act or any similar federal statute then in force) the deletion
      of the reference to such Holder in any amendment or supplement to the
      Registration Statement filed or prepared subsequent to the time that such
      reference ceases to be required.

    

    Each
      Holder covenants and agrees that it will not sell any Registrable Securities
      under the Registration Statement until the Company has electronically filed
      the
      Prospectus as then amended or supplemented as contemplated in Section 3(g)
      and
      notice from the Company that the Registration Statement and any post-effective
      amendments thereto have become effective as contemplated by Section
      3(c).

    

    Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of any event of the
      kind
      described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n),
      such Holder will forthwith discontinue disposition of such Registrable
      Securities under the Registration Statement until such Holder's receipt of
      the
      copies of the supplemented Prospectus and/or amended Registration Statement
      contemplated by Section 3(j), or until it is advised in writing (the
      "Advice")
      by the
      Company that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement.

    

    (n) At
      any
      time following the date that the Registration Statement is declared effective
      by
      the Commission, if (i) there is material non-public information regarding the
      Company which the Company's Board of Directors (the "Board")
      determines not to be in the Company's best interest to disclose and which the
      Company is not otherwise required to disclose, (ii) there is a significant
      business opportunity (including, but not limited to, the acquisition or
      disposition of assets (other than in the ordinary course of business) or any
      merger, consolidation, tender offer or other similar transaction) available
      to
      the Company which the Board determines not to be in the Company's best interest
      to disclose, or (iii) the Company is required to file a post-effective amendment
      to the Registration Statement to incorporate the Company’s quarterly and annual
      reports and audited financial statements on Forms 10-QSB and 10-KSB, then the
      Company may postpone or suspend effectiveness of a registration statement for
      a
      period not to exceed twenty (20) consecutive days; provided that the Company
      may
      not suspend effectiveness of a registration statement under this Section 3(n)
      for more than forty-five (45) days in the aggregate during any three hundred
      sixty (360) day period; provided,
      however,
      that no
      such suspension shall be permitted for consecutive twenty (20) day periods
      arising out of the same set of facts, circumstances or
      transactions.

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    4. Registration
      Expenses.

    

    All
      fees
      and expenses incident to the performance of or compliance with this Agreement
      by
      the Company, except as and to the extent specified in this Section 4, shall
      be
      borne by the Company whether or not the Registration Statement is filed or
      becomes effective and whether or not any Registrable Securities are sold
      pursuant to the Registration Statement. The fees and expenses referred to in
      the
      foregoing sentence shall include, without limitation, (i) all registration
      and
      filing fees (including, without limitation, fees and expenses (A) with respect
      to filings required to be made with the OTC Bulletin Board and each other
      securities exchange or market on which Registrable Securities are required
      hereunder to be listed, if any, (B) with respect to filing fees required to
      be
      paid to the National Association of Securities Dealers, Inc. and the NASD
      Regulation, Inc. and (C) in compliance with state securities or Blue Sky laws
      (including, without limitation, fees and disbursements of counsel for the
      Holders in connection with Blue Sky qualifications of the Registrable Securities
      and determination of the eligibility of the Registrable Securities for
      investment under the laws of such jurisdictions as the Holders of a majority
      of
      Registrable Securities may designate)), (ii) printing expenses (including,
      without limitation, expenses of printing certificates for Registrable Securities
      and of printing prospectuses if the printing of prospectuses is requested by
      the
      holders of a majority of the Registrable Securities included in the Registration
      Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
      disbursements of counsel for the Company and Special Counsel for the Holders,
      in
      the case of the Special Counsel, up to a maximum amount of $7,500, (v)
      Securities Act liability insurance, if the Company so desires such insurance,
      and (vi) fees and expenses of all other Persons retained by the Company in
      connection with the consummation of the transactions contemplated by this
      Agreement, including, without limitation, the Company's independent public
      accountants (including the expenses of any comfort letters or costs associated
      with the delivery by independent public accountants of a comfort letter or
      comfort letters). In addition, the Company shall be responsible for all of
      its
      internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Agreement (including, without limitation,
      all
      salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit, the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder.

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    5. Indemnification.

    

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, managers, partners, members,
      shareholders, agents, brokers, investment advisors and employees of each of
      them, each Person who controls any such Holder (within the meaning of Section
      15
      of the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the fullest
      extent permitted by applicable law, from and against any and all losses, claims,
      damages, liabilities, costs (including, without limitation, costs of preparation
      and attorneys' fees) and expenses (collectively, "Losses"),
      as
      incurred, arising out of or relating to any violation of securities laws or
      untrue or alleged untrue statement of a material fact contained in the
      Registration Statement, any Prospectus or any form of prospectus or in any
      amendment or supplement thereto or in any preliminary prospectus, or arising
      out
      of or relating to any omission or alleged omission of a material fact required
      to be stated therein or necessary to make the statements therein (in the case
      of
      any Prospectus or form of prospectus or supplement thereto, in the light of
      the
      circumstances under which they were made) not misleading, except to the extent,
      but only to the extent, that such untrue statements or omissions are based
      solely upon information regarding such Holder or such other Indemnified Party
      furnished in writing to the Company by such Holder expressly for use therein.
      The Company shall notify the Holders promptly of the institution, threat or
      assertion of any Proceeding of which the Company is aware in connection with
      the
      transactions contemplated by this Agreement.

    

    (b) Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents and employees
      of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses (as determined by a court of competent jurisdiction
      in a final judgment not subject to appeal or review), as incurred, arising
      solely out of or based solely upon any untrue statement of a material fact
      contained in the Registration Statement, any Prospectus, or any form of
      prospectus, or arising solely out of or based solely upon any omission of a
      material fact required to be stated therein or necessary to make the statements
      therein (in the case of any Prospectus or form of prospectus or supplement
      thereto, in the light of the circumstances under which they were made) not
      misleading, to the extent, but only to the extent, that such untrue statement
      or
      omission is contained in any information so furnished in writing by such Holder
      or other Indemnifying Party to the Company specifically for inclusion in the
      Registration Statement or such Prospectus. Notwithstanding anything to the
      contrary contained herein, each Holder shall be liable under this Section 5(b)
      for only that amount as does not exceed the net proceeds to such Holder as
      a
      result of the sale of Registrable Securities pursuant to such Registration
      Statement.

    

    (c) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an "Indemnified
      Party"),
      such
      Indemnified Party promptly shall notify the Person from whom indemnity is sought
      (the "Indemnifying
      Party)
      in
      writing, and the Indemnifying Party shall be entitled to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided, that the failure of any Indemnified
      Party to give such notice shall not relieve the Indemnifying Party of its
      obligations or liabilities pursuant to this Agreement, except (and only) to
      the
      extent that it shall be finally determined by a court of competent jurisdiction
      (which determination is not subject to appeal or further review) that such
      failure shall have proximately and materially adversely prejudiced the
      Indemnifying Party.

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; or (2) the Indemnifying Party shall have failed promptly to assume
      the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and such parties shall have been advised by counsel
      that a conflict of interest is likely to exist if the same counsel were to
      represent such Indemnified Party and the Indemnifying Party (in which case,
      if
      such Indemnified Party notifies the Indemnifying Party in writing that it elects
      to employ separate counsel at the expense of the Indemnifying Party, the
      Indemnifying Party shall not have the right to assume the defense thereof and
      such counsel shall be at the expense of the Indemnifying Party). The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld or delayed. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending or
      threatened Proceeding in respect of which any Indemnified Party is a party
      and
      indemnity has been sought hereunder, unless such settlement includes an
      unconditional release of such Indemnified Party from all liability on claims
      that are the subject matter of such Proceeding.

    

    All
      fees
      and expenses of the Indemnified Party (including reasonable fees and expenses
      to
      the extent incurred in connection with investigating or preparing to defend
      such
      Proceeding in a manner not inconsistent with this Section) shall be paid to
      the
      Indemnified Party, as incurred, within ten (10) Business Days of written notice
      thereof to the Indemnifying Party (regardless of whether it is ultimately
      determined that an Indemnified Party is not entitled to indemnification
      hereunder; provided,
      that the Indemnified Party shall reimburse all such fees and expenses to the
      extent it is finally judicially determined that such Indemnified Party is not
      entitled to indemnification hereunder).

     

    (d) Contribution.
      If a
      claim for indemnification under Section 5(a) or 5(b) is due but unavailable
      to
      an Indemnified Party because of a failure or refusal of a governmental authority
      to enforce such indemnification in accordance with its terms (by reason of
      public policy or otherwise), then each Indemnifying Party, in lieu of
      indemnifying such Indemnified Party, shall contribute to the amount paid or
      payable by such Indemnified Party as a result of such Losses, in such proportion
      as is appropriate to reflect the relative benefits received by the Indemnifying
      Party on the one hand and the Indemnified Party on the other from the offering
      of the Preferred Stock and the Warrants. If, but only if, the allocation
      provided by the foregoing sentence is not permitted by applicable law, the
      allocation of contribution shall be made in such proportion as is appropriate
      to
      reflect not only the relative benefits referred to in the foregoing sentence
      but
      also the relative fault, as applicable, of the Indemnifying Party and
      Indemnified Party in connection with the actions, statements or omissions that
      resulted in such Losses as well as any other relevant equitable considerations.
      The relative fault of such Indemnifying Party and Indemnified Party shall be
      determined by reference to, among other things, whether any action in question,
      including any untrue or alleged untrue statement of a material fact or omission
      or alleged omission of a material fact, has been taken or made by, or relates
      to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the parties'
      relative intent, knowledge, access to information and opportunity to correct
      or
      prevent such action, statement or omission. The amount paid or payable by a
      party as a result of any Losses shall be deemed to include, subject to the
      limitations set forth in Section 5(c), any reasonable attorneys' or other
      reasonable fees or expenses incurred by such party in connection with any
      Proceeding to the extent such party would have been indemnified for such fees
      or
      expenses if the indemnification provided for in this Section was available
      to
      such party in accordance with its terms. In no event shall any selling Holder
      be
      required to contribute an amount under this Section 5(d) in excess of the net
      proceeds received by such Holder upon sale of such Holder’s Registrable
      Securities pursuant to the Registration Statement giving rise to such
      contribution obligation.

    
      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

         

      

    

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph. No Person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of
      the Securities Act) shall be entitled to contribution from any Person who was
      not guilty of such fraudulent misrepresentation. The indemnity and contribution
      agreements contained in this Section are in addition to any liability that
      the
      Indemnifying Parties may have to the Indemnified Parties pursuant to the law.
      

     

    6. Rule
      144.

    

    As
      long
      as any Holder owns Preferred Stock, Warrants or Registrable Securities, the
      Company covenants to timely file (or obtain extensions in respect thereof and
      file within the applicable grace period) all reports required to be filed by
      the
      Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
      Act. As long as any Holder owns Preferred Stock, Warrants or Registrable
      Securities, if the Company is not required to file reports pursuant to Section
      13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders
      and make publicly available in accordance with Rule 144(c) promulgated under
      the
      Securities Act annual and quarterly financial statements, together with a
      discussion and analysis of such financial statements in form and substance
      substantially similar to those that would otherwise be required to be included
      in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
      as
      any other information required thereby, in the time period that such filings
      would have been required to have been made under the Exchange Act. The Company
      further covenants that it will take such further action as any Holder may
      reasonably request, all to the extent required from time to time to enable
      such
      Person to sell Conversion Shares and Warrant Shares without registration under
      the Securities Act within the limitation of the exemptions provided by Rule
      144
      promulgated under the Securities Act, including providing any legal opinions
      relating to such sale pursuant to Rule 144. Upon the request of any Holder,
      the
      Company shall deliver to such Holder a written certification of a duly
      authorized officer as to whether it has complied with such
      requirements.

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    7. Miscellaneous.

    

    (a) Remedies.
      In the
      event of a breach by the Company or by a Holder, of any of their obligations
      under this Agreement, such Holder or the Company, as the case may be, in
      addition to being entitled to exercise all rights granted by law and under
      this
      Agreement, including recovery of damages, will be entitled to specific
      performance of its rights under this Agreement.
      The Company and each Holder agree that monetary damages would not
      provide adequate
      compensation for any losses incurred by reason of a breach by it of any of
      the
      provisions of this Agreement and hereby further agrees that, in the event of
      any
      action for specific performance in respect of such breach, it shall waive the
      defense that a remedy at law would be adequate.

    

    (b) No
      Inconsistent Agreements.
      Except
      as contemplated by the New Financing or as disclosed in the Transaction
      Documents, neither the Company nor any of its subsidiaries has, as of the date
      hereof entered into and currently in effect, nor shall the Company or any of
      its
      subsidiaries, on or after the date of this Agreement, enter into any agreement
      with respect to its securities that is inconsistent with the rights granted
      to
      the Holders in this Agreement or otherwise conflicts with the provisions hereof.
      Except in connection with the New Financing or as disclosed in the Transaction
      Documents or on Schedule
      II
      hereto,
      neither the Company nor any of its subsidiaries has previously entered into
      any
      agreement currently in effect granting any registration rights with respect
      to
      any of its securities to any Person. Without limiting the generality of the
      foregoing, without the written consent of the Holders of a majority of the
      then
      outstanding Registrable Securities, the Company shall not grant to any Person
      the right to request the Company to register any securities of the Company,
      under the Securities Act unless the rights so granted are subject in all
      respects to the prior rights in full of the Holders set forth herein, and are
      not otherwise in conflict with the provisions of this Agreement.

    

    (c) No
      Piggyback on Registrations.
      Neither
      the Company nor any of its security holders (other than the Holders in such
      capacity pursuant hereto or as disclosed on Schedule
      II
      hereto)
      may include securities of the Company in the Registration Statement, and the
      Company shall not after the date hereof enter into any agreement providing
      such
      right to any of its securityholders, unless the right so granted is subject
      in
      all respects to the prior rights in full of the Holders set forth herein, and
      is
      not otherwise in conflict with the provisions of this Agreement.

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (d) Piggy-Back
      Registrations.
      Except
      in connection with the registration statement to be filed in connection with
      the
      New Financing, if at any time when there is not an effective Registration
      Statement providing for the resale of the Registrable Securities, the Company
      shall determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, the Company shall
      send to each holder of Registrable Securities written notice of such
      determination and, if within thirty (30) days after receipt of such notice,
      or
      within such shorter period of time as may be specified by the Company in such
      written notice as may be necessary for the Company to comply with its
      obligations with respect to the timing of the filing of such registration
      statement, any such holder shall so request in writing (which request shall
      specify the Registrable Securities intended to be disposed of by the
      Purchasers), the Company will cause the registration under the Securities Act
      of
      all Registrable Securities which the Company has been so requested to register
      by the holder, to the extent requisite to permit the disposition of the
      Registrable Securities so to be registered, provided that if at any time after
      giving written notice of its intention to register any securities and prior
      to
      the effective date of the registration statement filed in connection with such
      registration, the Company shall determine for any reason not to register or
      to
      delay registration of such securities, the Company may, at its election, give
      written notice of such determination to such holder and, thereupon, (i) in
      the
      case of a determination not to register, shall be relieved of its obligation
      to
      register any Registrable Securities in connection with such registration (but
      not from its obligation to pay expenses in accordance with Section 4 hereof),
      and (ii) in the case of a determination to delay registering, shall be permitted
      to delay registering any Registrable Securities being registered pursuant to
      this Section 7(d) for the same period as the delay in registering such other
      securities. The Company shall include in such registration statement all or
      any
      part of such Registrable Securities such holder requests to be registered;
      provided,
      however,
      that
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144(k)
      of the Securities Act. In the case of an underwritten public offering, if the
      managing underwriter(s) or underwriter(s) should reasonably object to the
      inclusion of the Registrable Securities in such registration statement, then
      if
      the Company after consultation with the managing underwriter should reasonably
      determine that the inclusion of such Registrable Securities would materially
      adversely affect the offering contemplated in such registration statement,
      and
      based on such determination recommends inclusion in such registration statement
      of fewer or none of the Registrable Securities of the Holders, then (x) the
      number of Registrable Securities of the Holders included in such registration
      statement shall be reduced pro-rata among such Holders (based
      upon the number of Registrable Securities requested to be included in the
      registration), if the Company after consultation with the underwriter(s)
      recommends the inclusion of fewer Registrable Securities, or (y) none of the
      Registrable Securities of the Holders shall be included in such registration
      statement, if the Company after consultation with the underwriter(s) recommends
      the inclusion of none of such Registrable Securities; provided,
      however,
      that if
      securities are being offered for the account of other persons or entities as
      well as the Company, such reduction shall not represent a greater fraction
      of
      the number of Registrable securities intended to be offered by the Holders
      than
      the fraction of similar reductions imposed on such other persons or entities
      (other than the Company).

    

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (e) Failure
      to File Registration Statement and Other Events.
      The
      Company and the Purchasers agree that the Holders will suffer damages if the
      Registration Statement is not filed on or prior to the Filing Date and not
      declared effective by the Commission on or prior to the Effectiveness Date
      and
      maintained in the manner contemplated herein during the Effectiveness Period
      or
      if certain other events occur. The Company and the Holders further agree that
      it
      would not be feasible to ascertain the extent of such damages with precision.
      Accordingly, if (A) the Registration Statement is not filed on or prior to
      the
      Filing Date, or (B) the Registration Statement is not declared effective by
      the
      Commission on or prior to the Effectiveness Date (or in the event an additional
      Registration Statement is filed because the actual number of shares of Common
      Stock into which the Warrants are exercisable exceeds the number of shares
      of
      Common Stock initially registered is not filed and declared effective with
      the
      time periods set forth in Section 2), or (C) the Company fails to file with
      the
      Commission a request for acceleration in accordance with Rule 461 promulgated
      under the Securities Act within three (3) Business Days of the date that the
      Company is notified (orally or in writing, whichever is earlier) by the
      Commission that a Registration Statement will not be "reviewed," or not subject
      to further review, or (D) the Registration Statement is filed with and declared
      effective by the Commission but thereafter ceases to be effective as to all
      Registrable Securities at any time prior to the expiration of the Effectiveness
      Period, without being succeeded promptly by a subsequent Registration Statement
      filed with and declared effective by the Commission in accordance with Section
      2
      hereof, or (E) the Company has breached Section 3(n), or (F) trading in the
      Common Stock shall be suspended or if the Common Stock is delisted from or
      no
      longer quoted on the OTC Bulletin Board (or other principal exchange on which
      the Common Stock is listed or traded) for any reason for more than three (3)
      Business Days in the aggregate (any such failure or breach being referred to
      as
      an "Event,"
      and
      for purposes of clauses (A) and (B) the date on which such Event occurs, or
      for
      purposes of clause (C) the date on which such three (3) Business Day period
      is
      exceeded, or for purposes of clause (D) after more than fifteen (15) Business
      Days, or for purposes of clause (F) the date on which such three (3) Business
      Day period is exceeded, being referred to as "Event
      Date"),
      the
      Company shall pay an amount in cash as liquidated damages to each Holder equal
      to two percent (2%) for each calendar month (prorated for shorter periods)
      of
      the Holder’s initial investment in the Preferred Stock from the Event Date until
      the applicable Event is cured; provided,
      however,
      that in
      no event shall the amount of liquidated damages payable at any time and from
      time to time to any Holder pursuant to this Section 7(e) exceed an aggregate
      of
      twenty percent (20%) of the amount of the Holder’s initial investment in the
      Preferred Stock. The Company shall not be liable for liquidated damages under
      this Agreement as to any Registrable Securities which are not permitted by
      the
      Commission to be included in a Registration Statement because of its application
      of Rule 415 until such time as the provisions of this Agreement as to the
      Registration Statements required to be filed pursuant to Section 2(b) are
      triggered, in which case the provisions of this Section 7(e) shall once again
      apply, if applicable. In such case, the liquidated damages shall be calculated
      to only apply to the percentage of Registrable Securities which are permitted
      by
      the Commission to be included in the Registration Statement. Notwithstanding
      anything to the contrary in this paragraph (e), if (i) any of the Events
      described in clauses (A), (B), (C), (D) or (F) shall have occurred, (II) on
      or
      prior to the applicable Event Date, the Company shall have exercised its rights
      under Section 3(n) hereof and (III) the postponement or suspension permitted
      pursuant to such Section 3(n) shall remain effective as of such applicable
      Event
      Date, then the applicable Event Date shall be deemed instead to occur on the
      second Business Day following the termination of such postponement or
      suspension. Liquidated damages payable by the Company pursuant to this Section
      7(e) shall be payable on the first (1st)
      Business Day of each thirty (30) day period following the Event Date.
      Notwithstanding anything to the contrary contained herein, in no event shall
      any
      liquidated damages be payable with respect to the Warrants or the Warrant
      Shares.

    

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (f) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of a majority of the Registrable
      Securities outstanding.

    

    (g) Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earlier of (i) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile telephone number specified for
      notice prior to 5:00 p.m., New York City time, on a Business Day, (ii) the
      Business Day after the date of transmission, if such notice or communication
      is
      delivered via facsimile at the facsimile telephone number specified for notice
      later than 5:00 p.m., New York City time, on any date and earlier than 11:59
      p.m., New York City time, on such date, (iii) the Business Day following the
      date of mailing, if sent by overnight delivery by nationally recognized
      overnight courier service or (iv) actual receipt by the party to whom such
      notice is required to be given. The addresses for such communications shall
      be
      with respect to each Holder at its address set forth under its name on
Schedule
      I
      attached
      hereto with copies to its legal counsel named therein, or with respect to the
      Company, addressed to:

    

    
      	 	
              Sino
                Gas International Holdings, Inc.

            
	 	
              N0.18
                Zhong Guan Cun Dong St.

            
	 	
              Haidian
                District

            
	 	
              Beijing,
                China

            
	 	
              Attention:
                Chen Fang

            
	 	
              Tel.
                No.: 011-86-10-82600527

            
	 	
              Fax
                No.: 011-010-82600042

            
	 	 
	
              with
                copies (which copies

            	 
	
              shall
                not constitute notice

            	 
	
              to
                the Company) to:

            	
              GUZOV
                OFSINK, LLC

            
	 	
              600
                Madison Avenue, 14th Floor

            
	 	
              New
                York, New York 10022

            
	 	
              Attention:
                Darren Ofsink

            
	 	
              Tel.
                No.: (212) 371-8008, ext. 127

            
	 	
              Fax
                No.: (212) 688-7273

            

    

    

    or
      to
      such other address or addresses or facsimile number or numbers as any such
      party
      may most recently have designated in writing to the other parties hereto by
      such
      notice. Copies of notices to each Holder (in addition to the legal counsel
      set
      forth on Schedule
      I
      hereto)
      shall be sent to Kramer Levin Naftalis & Frankel LLP, Kramer Levin Naftalis
& Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036,
      Attention: Christopher S. Auguste, Telephone No.: (212) 715-9100, Facsimile
      No.:
      (212) 715-8000.

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (h) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns and shall inure to the benefit of each
      Holder and its successors and assigns. The Company may not assign this Agreement
      or any of its rights or obligations hereunder without the prior written consent
      of each Holder. Each Purchaser may assign its rights hereunder in the manner
      and
      to the Persons as permitted under the Transaction Documents.

    

    (i) Assignment
      of Registration Rights.
      The
      rights of each Holder hereunder, including the right to have the Company
      register for resale Registrable Securities in accordance with the terms of
      this
      Agreement, shall be automatically assignable by each Holder to any Person of
      all
      or a portion of
      the
      Preferred Stock or
      Registrable Securities if: (i) the Holder agrees in writing with the transferee
      or assignee to assign such rights, and a copy of such agreement is furnished
      to
      the Company within a reasonable time after such assignment, (ii) the Company
      is,
      within a reasonable time after such transfer or assignment, furnished with
      written notice of (a) the name and address of such transferee or assignee,
      and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned, (iii) following such transfer or assignment the further
      disposition of such securities by the transferee or assignees is restricted
      under the Securities Act and applicable state securities laws, (iv) at or before
      the time the Company receives the written notice contemplated by clause (ii)
      of
      this Section, the transferee or assignee agrees in writing with the Company
      to
      be bound by all of the provisions of this Agreement, and (v) such transfer
      shall
      have been made in accordance with the applicable requirements of the Transaction
      Documents. The rights to assignment shall apply to the Holders (and to
      subsequent) successors and assigns. 

    

    (j) Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other parties
      hereto, it being understood that all parties need not sign the same counterpart.
      In the event that any signature is delivered by facsimile transmission, such
      signature shall create a valid binding obligation of the party executing (or
      on
      whose behalf such signature is executed) the same with the same force and effect
      as if such facsimile signature were the original thereof.

     

    (a) (k) Governing
      Law; Jurisdiction.
      This Agreement shall be governed by and construed in accordance with the
      internal laws of the State of New York, without giving effect to any of the
      conflicts of law principles which would result in the application of the
      substantive law of another jurisdiction. This Agreement shall not be interpreted
      or construed with any presumption against the party causing this Agreement
      to be
      drafted. The Company and the Holders agree that venue for any dispute arising
      under this Agreement will lie exclusively in the state or federal courts located
      in New York County, New York, and the parties irrevocably waive any right to
      raise forum
      non conveniens
      or any other argument that New York is not the proper venue. The Company and
      the
      Holders irrevocably consent to personal jurisdiction in the state and federal
      courts of the state of New York. The Company and the Holders consent to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address in effect for notices to it under this Agreement
      and
      agrees that such service shall constitute good and sufficient service of process
      and notice thereof. Nothing in this Section 7(k) shall affect or limit any
      right
      to serve process in any other manner permitted by law. The Company and the
      Holders hereby agree that the prevailing party in any suit, action or proceeding
      arising out of or relating to this Agreement or the Transaction Documents,
      shall
      be entitled to reimbursement for reasonable legal fees from the non-prevailing
      party. The parties hereby waive all rights to a trial by
      jury.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    

    (l) Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

    

    (m) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held to be
      invalid, illegal, void or unenforceable in any respect, the remainder of the
      terms, provisions, covenants and restrictions set forth herein shall remain
      in
      full force and effect and shall in no way be affected, impaired or invalidated,
      and the parties hereto shall use their reasonable efforts to find and employ
      an
      alternative means to achieve the same or substantially the same result as that
      contemplated by such term, provision, covenant or restriction. It is hereby
      stipulated and declared to
      be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    (n) Headings.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

    

    (o) Shares
      Held by the Company and its Affiliates.
      Whenever the consent or approval of Holders of a specified percentage of
      Registrable Securities is required hereunder, Registrable Securities held by
      the
      Company or its Affiliates (other than any Holder or transferees or successors
      or
      assigns thereof if such Holder is deemed to be an Affiliate solely by reason
      of
      its holdings of such Registrable Securities) shall not be counted in determining
      whether such consent or approval was given by the Holders of such required
      percentage.

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    (p) Independent
      Nature of Purchasers.
      The
      Company acknowledges that the obligations of each Purchaser under the
      Transaction Documents are several and not joint with the obligations of any
      other Purchaser, and no Purchaser shall be responsible in any way for the
      performance of the obligations of any other Purchaser under the Transaction
      Documents. The Company acknowledges that the decision of each Purchaser to
      purchase Securities pursuant to the Transaction Documents has been made by
      such
      Purchaser independently of any other Purchaser and independently of any
      information, materials, statements or opinions as to the business, affairs,
      operations, assets, properties, liabilities, results of operations, condition
      (financial or otherwise) or prospects of the Company or of its Subsidiaries
      which may have made or given by any other Purchaser or by any agent or employee
      of any other Purchaser, and no Purchaser or any of its agents or employees
      shall
      have any liability to any Purchaser (or any other person) relating to or arising
      from any such information, materials, statements or opinions. The Company
      acknowledges that nothing contained herein, or in any Transaction Document,
      and
      no action taken by any Purchaser pursuant hereto or thereto (including, but
      not
      limited to, the (i) inclusion of a Purchaser in the Registration Statement
      and
      (ii) review by, and consent to, such Registration Statement by a Purchaser)
      shall be deemed to constitute the Purchasers as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Purchasers are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      The
      Company acknowledges that each Purchaser shall be entitled to independently
      protect and enforce its rights, including without limitation, the rights arising
      out of this Agreement or out of the other Transaction Documents, and it shall
      not be necessary for any other Purchaser to be joined as an additional party
      in
      any proceeding for such purpose. The Company acknowledges that for reasons
      of
      administrative convenience only, the Transaction Documents have been prepared
      by
      counsel for  one
      of
      the Purchasers and such counsel does not represent the other Purchasers and
      the
      other Purchasers
      have retained their own individual counsel with respect to the transactions
      contemplated hereby.  The Company acknowledges that it has elected to
      provide all Purchasers with the same terms and Transaction Documents for the
      convenience of the Company and not because it was required or requested to
      do so
      by the Purchasers. 

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Registration Rights
      Agreement to be duly executed by their respective authorized persons as of
      the
      date first indicated above.

    

    
      	 	
              SINO
                GAS INTERNATIONAL HOLDINGS, INC.

            	 
	 	 	 	 
	 	
              By:

            	  
	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	 	
              VISION
                OPPORTUNITY MASTER FUND, LTD.

            	 
	 	 	 	 
	 	
              By:

            	  
	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	 	
              
                SEI
                  PRIVATE TRUST CO. FAO -

                THE
                  JM SMUCKER CO. MASTER TRUST

              

            	 
	 	 	 	 
	 	
              By:

            	  
	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	 	
              
                CORONADO
                  CAPITAL PARTNERS LP

              

            	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	 	
              NITE
                CAPITAL LP

            	 
	 	 	 	 
	 	
              By:

            	  
	 
	 	Name:	 
	 	Title:	 
	 	 	 	 
	 	  
	 
	 	
              Ijaz
                Malik

            	 

    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    Schedule
      I

     

    List
      of
      Purchasers 

     

    
      	
              Names
                and Addresses

            	 	
              Number
                of Preferred Shares

            
	
              of
                Purchasers

            	 	
              &
                Warrants Purchased

            
	 	 	 
	
              Vision
                Opportunity Master Fund, Ltd.

            	 	
              Preferred
                Shares: _____________

            
	
              20
                W 55th St., 5th floor 

            	 	
              Series
                C Warrants: ______________

            
	
              New
                York, NY 10019

            	 	 
	
              Tax
                ID: 27-0120759

            	 	 
	 	 	 
	
              SEI
                Private Trust Co. FAO 

            	 	
              Preferred
                Shares: 140,000

            
	
              The
                JM Smucker Co. Master Trust

            	 	
              Series
                C Warrants: 127,442

            
	
              1
                Freedom Valley Dr

            	 	 
	
              Oaks,
                PA 19456

            	 	 
	
              Attn:
                Suzanne Rokosny

            	 	 
	
              Tax
                ID: 23-3060382

            	 	 
	 	 	 
	
              Coronado
                Capital Partners LP 

            	 	
              Preferred
                Shares: 180,000 

            
	
              c/o
                MS Howells 

            	 	
              Series
                C Warrants: 163,854

            
	
              20555
                N Pima Rd, Suite 100 

            	 	 
	
              Scottsdale,
                AZ 85255

            	 	 
	
              Attn:
                Christine Nichols

            	 	 
	
              Tax
                ID: 20-2427088 

            	 	 
	
              Scottsdale,
                AZ 85255

            	 	 
	
              Attn:
                Christine Nichols

            	 	 
	
              Tax
                ID: 20-2427088 

            	 	 
	 	 	 
	
              Nite
                Capital LP

            	 	
              Preferred
                Shares: _________

            
	 	 	
              Series
                C Warratns: ________

            
	 	 	 
	
              Izak
                Malik

            	 	
              Preferred
                Shares: _________

            
	 	 	
              Series
                C Warrants:__________

            

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    Securities
      Permitted to be Included on Registration Statement 

    

    None.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    Plan
      of Distribution

     

    The
      selling security holders and any of their pledgees, donees, assignees and
      successors-in-interest may, from time to time, sell any or all of their shares
      of common stock being offered under this prospectus on any stock exchange,
      market or trading facility on which shares of our common stock are traded or
      in
      private transactions. These sales may be at fixed or negotiated prices. The
      selling security holders may use any one or more of the following methods when
      disposing of shares:

     

    
      	 	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	 	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	 	
              ·

            	
              purchases
                by a broker-dealer as principal and resales by the broker-dealer
                for its
                account;

            

    

     

    
      	 	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	 	
              ·

            	
              privately
                negotiated transactions;

            

    

     

    
      	 	
              ·

            	
              to
                cover short sales made after the date that the registration statement
                of
                which this prospectus is a part is declared effective by the
                Commission;

            

    

     

    
      	 	
              ·

            	
              broker-dealers
                may agree with the selling security holders to sell a specified number
                of
                such shares at a stipulated price per
                share;

            

    

     

    
      	 	
              ·

            	
              a
                combination of any of these methods of sale;
                and

            

    

     

    
      	 	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      shares may also be sold under Rule 144 under the Securities Act of 1933, as
      amended (“Securities Act”), if available, rather than under this prospectus. The
      selling security holders have the sole and absolute discretion not to accept
      any
      purchase offer or make any sale of shares if they deem the purchase price to
      be
      unsatisfactory at any particular time.

     

    The
      selling security holders may pledge their shares to their brokers under the
      margin provisions of customer agreements. If a selling security holder defaults
      on a margin loan, the broker may, from time to time, offer and sell the pledged
      shares.

     

    Broker-dealers
      engaged by the selling security holders may arrange for other broker-dealers
      to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the selling security holders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, which
      commissions as to a particular broker or dealer may be in excess of customary
      commissions to the extent permitted by applicable law.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    If
      sales
      of shares offered under this prospectus are made to broker-dealers as
      principals, we would be required to file a post-effective amendment to the
      registration statement of which this prospectus is a part. In the post-effective
      amendment, we would be required to disclose the names of any participating
      broker-dealers and the compensation arrangements relating to such
      sales.

     

    The
      selling security holders and any broker-dealers or agents that are involved
      in
      selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
      sales. Commissions received by these broker-dealers or agents and any profit
      on
      the resale of the shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act. Any broker-dealers or agents
      that are deemed to be underwriters may not sell shares offered under this
      prospectus unless and until we set forth the names of the underwriters and
      the
      material details of their underwriting arrangements in a supplement to this
      prospectus or, if required, in a replacement prospectus included in a
      post-effective amendment to the registration statement of which this prospectus
      is a part.

     

    The
      selling security holders and any other persons participating in the sale or
      distribution of the shares offered under this prospectus will be subject to
      applicable provisions of the Exchange Act, and the rules and regulations under
      that act, including Regulation M. These provisions may restrict activities
      of,
      and limit the timing of purchases and sales of any of the shares by, the selling
      security holders or any other person. Furthermore, under Regulation M, persons
      engaged in a distribution of securities are prohibited from simultaneously
      engaging in market making and other activities with respect to those securities
      for a specified period of time prior to the commencement of such distributions,
      subject to specified exceptions or exemptions. All of these limitations may
      affect the marketability of the shares.

     

    If
      any of
      the shares of common stock offered for sale pursuant to this prospectus are
      transferred other than pursuant to a sale under this prospectus, then subsequent
      holders could not use this prospectus until a post-effective amendment or
      prospectus supplement is filed, naming such holders. We offer no assurance
      as to
      whether any of the selling security holders will sell all or any portion of
      the
      shares offered under this prospectus.

     

    We
      have
      agreed to pay all fees and expenses we incur incident to the registration of
      the
      shares being offered under this prospectus. However, each selling security
      holder and purchaser is responsible for paying any discounts, commissions and
      similar selling expenses they incur. 

     

    We
      and
      the selling security holders have agreed to indemnify one another against
      certain losses, damages and liabilities arising in connection with this
      prospectus, including liabilities under the Securities Act.

     

    
      
        
        

      

      
        34

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