EITHER] [OR]
Exhibit
99.2
[EITHER]
“[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE]
[CONVERTIBLE]] HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”
[OR]
“[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE]
[CONVERTIBLE]] HASBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES
ACT, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM REGISTRATION; HEDGING TRANSACTIONS INVOLVING THE SHARES
REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.”
|
No. 2009-[ ]
|
$
[AMOUNT]
|
SINO
CLEAN ENERGY, INC.
10%
Senior Secured Convertible Note
Due
June [ ], 2012
This
10% Senior Secured Convertible Note (the “Note”) is issued by
SINO CLEAN ENERGY, INC.
, a Nevada
corporation (the “Obligor”), to [NAME OF HOLDER] (the “Holder”), pursuant to
that certain Securities Purchase Agreement (the “Purchase Agreement”)
of even date herewith and is part of a series of notes (the “Notes”) that may be
issued from time to time by the Obligor in an aggregate principal amount not to
exceed twelve million dollars ($12,000,000) as provided in the Purchase
Agreement. Capitalized terms not otherwise defined shall have the
meaning set forth in the Purchase Agreement.
FOR VALUE RECEIVED , the
Obligor hereby promises to pay to the Holder or its successors and assigns the
principal sum of [AMOUNT] Dollars ($ [AMOUNT] ) together with
accrued but unpaid interest and premium thereon in one installment on or before
June [ ],
2012 (the “Maturity Date”) in
accordance with the following terms:
Interest
.. Subject to Section 2 below, interest
shall accrue on the outstanding principal balance hereof from the date of this
Note at an annual rate equal to ten percent (10%) and shall be payable quarterly
in cash on the first day of January, April, July and October of each year and on
the Maturity Date, commencing October 1, 2009 (each an “Interest Payment
Date”); provided that if such
Interest Payment Date is not a business day in either New York City or Beijing
then such interest payment may be made on the succeeding day that is a business
day in both New York City and Beijing. Interest shall be calculated
on the basis of a 365-day year and the actual number of days elapsed, to the
extent permitted by applicable law. Interest hereunder will be paid
to the Holder or its assignee in whose name this Note is registered on the
records of the Obligor regarding registration and transfers of Notes.
Notwithstanding anything to the contrary contained herein, this Note shall bear
interest (“Default
Interest”) at a rate equal to the lower of eighteen percent (18%) or the
highest rate permitted by law (the “Default Rate”) upon
the occurrence of an Event of Default retroactive to the Issuance Date of this
Note on the unpaid Principal Amount of this Note outstanding from time to time
through the date on which such Event of Default ceases to
exist.
Pledge
Agreement and Guaranty. This Note is secured by the pledge by
certain members of the management of the Company of 35,000,000 shares of common
stock of the Obligor for the benefit of the holders of this Note and the other
Notes pursuant to a pledge agreement of even date herewith (the “Pledge Agreement”)
and a Guaranty of even date herewith (the “Guaranty”) from ▇▇.
▇▇▇▇▇▇ ▇▇▇ (the “Founder”).
This Note
is subject to the following additional provisions:
Section
1. Events of
Default.
(a) An
“Event of
Default”, wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):
(i) Any
default in the payment of the principal of, interest on or other charges in
respect of this Note, as and when the same shall become due and payable (whether
on a Conversion Date or the Maturity Date or by acceleration or
otherwise);
(ii) The
Obligor shall fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach or default of any
provision of this Note (except as may be covered by Section 1(a)(i) hereof) or
any Transaction Document (as defined in Section 5) which is not cured
with in fifteen (15) calendar days of receipt of written notice of such default
from the Holder;
(iii)
The Obligor or any Subsidiary shall commence, or there shall be commenced
against the Obligor or any Subsidiary under any applicable bankruptcy or
insolvency laws as now or hereafter in effect or any successor thereto, or the
Obligor or any Subsidiary commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Obligor or any material subsidiary of the
Obligor or there is commenced against the Obligor or any Subsidiary any such
bankruptcy, insolvency or other proceeding which remains undismissed for a
period of 61 days; or the Obligor or any Subsidiary is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Obligor or any Subsidiary suffers any appointment
of any custodian, private or court appointed receiver or the like for it or any
substantial part of its property which continues undischarged or unstayed for a
period of sixty one (61) days; or the Obligor or any Subsidiary makes a general
assignment for the benefit of creditors; or the Obligor or any Subsidiary shall
fail to pay, or shall state that it is unable to pay, or shall be unable to pay,
its debts generally as they become due; or the Obligor or any Subsidiary shall
call a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or the Obligor or any Subsidiary shall
by any act or failure to act expressly indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate or other action is taken
by the Obligor or any Subsidiary for the purpose of effecting any of the
foregoing;
(iv) The
Obligor or any Subsidiary shall default in any of its obligations under any
other Note or any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced any indebtedness for
borrowed money or money due under any long term leasing or factoring arrangement
of the Obligor or any Subsidiary is in an amount exceeding $500,000, whether
such indebtedness now exists or shall hereafter be created and such default
shall result in such indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise become due and
payable;
2
(v) Any
representation or warranty made by the Obligor under any of the Transaction
Documents was, when made, untrue or misleading, the result of which is
reasonably likely to have a Material Adverse Effect; or
(vi) The
Obligor shall provide notice to the Holder, including by way of public
announcement, at any time, of its intention not to comply with requests for
conversions of this Note in accordance with the terms hereof.
(b) If
at any time while this Note is outstanding any Event of Default has occurred,
the full principal amount of this Note, together with accrued and unpaid
interest and other amounts owing in respect thereof, to the date of acceleration
shall become at the Holder's election, immediately due and payable in cash,
provided however, the
Holder may request (but shall have no obligation to request) payment of such
amounts in Common Stock of the Obligor. In addition to any other remedies, the
Holder shall have the right (but not the obligation) to convert this Note and
all then accrued and unpaid interest at any time after an Event of Default at
the Conversion Price (as defined in Section 3(c)(i) ) then
in-effect. The Holder need not provide and the Obligor hereby waives
any presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by ▇▇▇▇▇▇ at any
time prior to payment hereunder. No such rescission or annulment shall affect
any subsequent Event of Default or impair any right consequent
thereon. Upon an Event of Default, notwithstanding any other
provision of this Note or any Transaction Document, the Holder shall have no
obligation to comply with or adhere to any limitations, if any, on the
conversion of this Note or the sale of the Underlying Shares.
Section
2. Holder’s Repurchase
Right. The Holder shall have the right to require the Obligor
to repurchase this Note in whole or in part at the Early Redemption Amount upon
the occurrence of any Change of Control Transaction or if the Common Stock shall
cease to be quoted for trading or listing for trading on either the OTC Bulletin
Board, or if then listed on the NASDAQ Capital Market, the New York Stock
Exchange or NYSE Amex Equities (each, a “Subsequent Market”)
shall cease to be quoted for trading or listing on such Subsequent Market and
shall not again be quoted or listed for trading on the OTC Bulletin Board or, if
then listed on a Subsequent Market, such Subsequent Market within fifteen (15)
Trading Days of such delisting. At any time following the occurrence
of an event described in the preceding sentence, the Holder may elect to
exercise such Holder’s repurchase right by sending the Obligor a notice briefly
describing the event that has given rise to such Holder’s repurchase right and
specifying the portion of this Note with respect to which such Holder wishes to
exercise such ▇▇▇▇▇▇’s repurchase right and a date not less than 30 days nor
more than 60 days from the date of the notice on which the Note is to be
repurchased. “Early Redemption Amount” shall mean an amount
equal to 100% of the aggregate principal amount of this Note plus a premium such
that the total cash yield to maturity of this Note (calculated to the date of
repurchase by the Obligor) shall be 15% per annum; provided that such yield to
maturity shall be 18% per annum if an Event of Default has occurred on or prior
to the date of repurchase.
Section
3. Conversion.
(a)
Conversion at Option of
Holder.
(i) This
Note shall be convertible into validly issued, fully paid and non-assessable
shares of Common Stock at the option of the Holder, in whole or in part, at any
time. On or prior to the Maturity Date, the number of shares of Common Stock
issuable upon a conversion hereunder equals the quotient obtained by dividing
(x) the outstanding principal amount of this Note as of the Conversion Date by
(y) the Conversion Price. After the Maturity Date, the number of shares of
Common Stock issuable upon a conversion hereunder equals the quotient obtained
by dividing (x) the then outstanding principal amount of this Note together with
all accrued and unpaid interest thereon as of the Conversion Date by (y) the
Conversion Price.
3
(ii) The
Holder shall effect conversion by delivering to the Obligor a completed notice
in the form attached hereto as Exhibit A (a “Conversion
Notice”). The date on which a Conversion Notice is delivered
is a “Conversion
Date.” The Holder is required to physically surrender this Note to the
Obligor in order to effect the conversion hereof. In case of less than full
conversion, the Obligor shall, upon each such conversion, execute and deliver to
the Holder a new certificate representing the unconverted portion of this
Note.
(b)
Conversion Price
and Adjustments to Conversion Price.
(i) The
conversion price in effect on any Conversion Date shall be $0.19 (the “Conversion Price”).
The Conversion Price may be adjusted pursuant to the other terms of this Note
and shall automatically reset effective as of January 1, 2010 to a new
Conversion Price that is 75% of the Conversion Price then in effect if the
Obligor does not meet the Fiscal Year 2009 Performance
Threshold. “Fiscal Year 2009 Performance
Threshold” shall mean, for the fiscal year ending December 31, 2009, (A)
if at least $6,000,000 aggregate principal amount of Notes are issued on or
prior to July 20, 2009, the achievement by the Obligor of Revenue of at least
$40 million and Net Income of at least $10 million or (B) if less than
$6,000,000 aggregate principal amount of Notes are so issued on or prior to July
20, 2009, the achievement by the Obligor of Revenue of at least $35 million and
Net Income of at least $8 million. Additionally, the Conversion Price
may be adjusted pursuant to the other terms of this Note and shall automatically
reset effective as of January 1, 2011 to a new Conversion Price that is 80% of
the Conversion Price then in effect if the Obligor does not meet the Fiscal Year
2010 Performance Threshold. “Fiscal Year 2010 Performance
Threshold” shall mean, for the fiscal year ending December 31, 2010, the
achievement by the Obligor of Revenue of at least $70 million and Net Income of
at least $15 million. “Revenue” shall mean
audited revenue as reported in the Obligor’s annual report on Form 10-K for such
fiscal year (the “Annual
Report”). “Net Income” shall
mean the sum of (A) the audited net income as reported in the Annual Report plus
(B) any non-cash charges incurred by the Obligor in such fiscal year as a result
of the transactions contemplated by the Transaction Documents.
(ii) If
the Obligor, at any time while this Note is outstanding, shall (a) pay a
stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a
larger number of shares, (c) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (d) issue
by reclassification of shares of the Common Stock any shares of capital stock of
the Obligor, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.
(iii) If
the Obligor, at any time while this Note is outstanding, shall issue rights,
options or warrants to all holders of Common Stock (and not to the Holder)
entitling them to subscribe for or purchase shares of Common Stock at a price
per share less than the Conversion Price (the “New Securities Issuance
Price”), then the Conversion Price shall be reduced effective
concurrently with such issuance to the New Securities Issuance
Price.
(iv) If
the Obligor or any subsidiary thereof, as applicable, at any time while this
Note is outstanding, shall issue shares of Common Stock or Common Stock
Equivalents, other than Excluded Issuances, entitling any Person to acquire
shares of Common Stock, at a New Securities Issuance Price less than the
Conversion Price (if the holder of the Common Stock or Common Stock Equivalents
so issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights per share which is issued in connection
with such issuance, be entitled to receive shares of Common Stock at a price per
share which is less than the Conversion Price, such issuance shall be deemed to
have occurred for less than the Conversion Price), then the Conversion Price
shall be reduced effective concurrently with such issuance to the New Securities
Issuance Price. The Obligor shall notify the Holder in writing, no later than
one (1) business day following the issuance of any Common Stock or Common Stock
Equivalents subject to this subsection, indicating therein the applicable
issuance price, or of applicable reset price, exchange price, conversion price
and other pricing terms. No adjustment under this Section shall be made as a
result of issuances and exercises of options to purchase shares of Common Stock
issued for compensatory purposes pursuant to any of the Obligor's stock option
or stock purchase plans. “Excluded Issuances”
means (i) Common Stock issued in connection with the conversion or exercise of
any Common Stock Equivalents outstanding on the date of the Purchase
Agreement and (ii) issuances of Common Stock and Common Stock Equivalents
described in Schedule 2.1(c)(8) to the Purchase Agreement .
4
(v) If
the Obligor, at any time while this Note is outstanding, shall distribute to all
holders of Common Stock (and not to the Holder) evidences of its indebtedness or
assets or rights or warrants to subscribe for or purchase any security (other
than Common Stock or Common Stock Equivalents), then in each such case the
Conversion Price at which this Note shall thereafter be convertible shall be
determined by multiplying the Conversion Price in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Closing Bid
Price determined as of the record date mentioned above, and of which the
numerator shall be such Closing Bid Price on such record date less the then fair
market value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
(vi) In
case of any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities,
cash or property, the Holder shall have the right thereafter to, at its
option, (A) convert the then outstanding principal amount, together
with all accrued but unpaid interest and any other amounts then owing hereunder
in respect of this Note into the shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of the Common Stock
following such reclassification or share exchange, and the Holder of this Note
shall be entitled upon such event to receive such amount of securities, cash or
property as the shares of the Common Stock of the Obligor into which the then
outstanding principal amount, together with all accrued but unpaid interest and
any other amounts then owing hereunder in respect of this Note could have been
converted immediately prior to such reclassification or share exchange would
have been entitled, or (B) require the Obligor to prepay the outstanding
principal amount of this Note, plus all interest and other amounts due and
payable thereon. The entire prepayment price shall be paid in
cash. This provision shall similarly apply to successive
reclassifications or share exchanges.
(vii) All
calculations under this Section 3 shall be rounded up
to the nearest $0.001 or whole share.
(viii) Whenever
the Conversion Price is adjusted pursuant to Section 3 hereof, the Obligor
shall promptly mail to the Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment.
(ix) If
(A) the Obligor shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Obligor shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Obligor shall authorize the
granting to all holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Obligor shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Obligor is a party, any sale or transfer of all or substantially all of the
assets of the Obligor, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property; or (E) the Obligor shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Obligor; then, in each case, the Obligor shall cause to be
filed at each office or agency maintained for the purpose of conversion of this
Note, and shall cause to be mailed to the Holder at its last address as it shall
appear on the records of the Obligor, at least twenty (20) calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to convert this Note during
the 20-day calendar period commencing the date of such notice to the effective
date of the event triggering such notice.
5
(x) In
case of any (1) merger or consolidation of the Obligor or any subsidiary of the
Obligor with or into another Person, or (2) sale by the Obligor or any
subsidiary of the Obligor of more than one-half of the assets of the Obligor in
one or a series of related transactions, a Holder shall have the right to (A)
exercise any rights under Section 2, (B) convert the
then outstanding principal amount of this Note into the shares of stock and
other securities, cash and property receivable upon or deemed to be held by
holders of Common Stock following such merger, consolidation or sale, and such
Holder shall be entitled upon such event or series of related events to receive
such amount of securities, cash and property as the shares of Common Stock into
which such principal amount of this Note could have been converted immediately
prior to such merger, consolidation or sales would have been entitled, or (C) in
the case of a merger or consolidation, require the surviving entity to issue to
the Holder a convertible note with a principal amount equal to the principal
amount of this Note then held by such Holder, plus all accrued and unpaid
interest and other amounts owing thereon, which newly issued convertible note
shall have terms identical (including with respect to conversion) to the terms
of this Note, and shall be entitled to all of the rights and privileges of the
Holder of this Note set forth herein and the agreements pursuant to which this
Note was issued. In the case of clause (C), the conversion price applicable for
the newly issued convertible notes shall be based upon the amount of securities,
cash and property that each share of Common Stock would receive in such
transaction and the Conversion Price in effect immediately prior to the
effectiveness or closing date for such transaction. The terms of any such
merger, sale or consolidation shall include such terms so as to continue to give
the Holder the right to receive the securities, cash and property set forth in
this Section upon any conversion or redemption following such event. This
provision shall similarly apply to successive such events.
(d) Other
Provisions.
(i) The
Obligor covenants that it will at all times reserve and keep available out of
its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of this Note as herein provided, free from preemptive
rights or any other actual contingent purchase rights of persons other than the
Holder, not less than such number of shares of the Common Stock as shall be
issuable (taking into account the adjustments of Section 3(c)) upon the
conversion of the outstanding principal amount of this Note and payment of
interest hereunder. The Obligor covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly and validly authorized, issued
and fully paid, nonassessable.
(ii) Upon
a conversion hereunder the Obligor shall not be required to issue stock
certificates representing fractions of shares of the Common Stock, but may if
otherwise permitted, make a cash payment in respect of any final fraction of a
share based on the Closing Bid Price at such time. If the Obligor elects not, or
is unable, to make such a cash payment, the Holder shall be entitled to receive,
in lieu of the final fraction of a share, one whole share of Common
Stock.
(iii) The
issuance of certificates for shares of the Common Stock on conversion of this
Note shall be made without charge to the Holder thereof for any documentary
stamp or similar taxes that may be payable in respect of the issue or delivery
of such certificate, provided that the Obligor shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate upon conversion in a name other than that of
the Holder of such Note so converted and the Obligor shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Obligor the amount of
such tax or shall have established to the satisfaction of the Obligor that such
tax has been paid.
6
(iv) Nothing
herein shall limit a Holder's right to pursue actual damages or declare an Event
of Default pursuant to Section
1 herein for the Obligor’s failure to deliver certificates representing
shares of Common Stock upon conversion and such Holder shall have the right to
pursue all remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief, in each
case without the need to post a bond or provide other security. The exercise of
any such rights shall not prohibit the Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable law.
Section
4. Transfer. This Note
has been issued subject to investment representations of the original Holder
hereof and may be transferred or exchanged only in compliance with the
Securities Act of 1933, as amended, and other applicable state and foreign
securities laws and the terms of the Purchase Agreement. In the event
of any proposed transfer of this Note, the Obligor may require, prior to
issuance of a new Note in the name of such other person, that it receive
reasonable transfer documentation that is sufficient to evidence that such
proposed transfer complies with the Act and other applicable state and foreign
securities laws and the terms of the Purchase Agreement. Prior to due
presentment for transfer of this Note, the Obligor and any agent of the Obligor
may treat the person in whose name this Note is duly registered on the records
of the Obligor as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this Note be overdue,
and neither the Obligor nor any such agent shall be affected by notice to the
contrary.
Section
5. Notices. Any notices,
consents, waivers or other communications required or permitted to be given
under the terms hereof must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party)
or electronic mail; or (iii) one (1) trading day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for
such communications shall be:
|
If
to the Company, to:
|
Sino
Clean Energy, Inc.
|
|
Room
1605, Suite B, Zhengxin Building
|
|
|
▇▇.
▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
|
|
|
Gaoxin
District, Xi’an
|
|
|
Attention: Baowen
Ren
|
|
|
Telephone: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇
|
|
|
Facsimile:
▇▇▇-▇▇-▇▇▇▇-▇▇▇▇
|
|
|
Email:
▇▇▇▇▇_▇▇@▇▇▇.▇▇▇
|
|
|
With
a copy to:
|
▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇, LLP
|
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|
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Los
Angeles, CA 90024
|
|
|
Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇, Esq.
|
|
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
Email:
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
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If
to the Holder:
|
At
the address specified on Schedule 1 to the Purchase
Agreement
|
7
or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party three (3) business days prior to the effectiveness of such
change. Written confirmation of receipt (i) given by the recipient of
such notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (iii) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
Section
6. Definitions.
For the purposes hereof, the following terms shall have the
following meanings:
“Change of Control
Transaction” means the occurrence of (a) an acquisition after the date
hereof by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Obligor, by
contract or otherwise) of in excess of fifty percent (50%) of the voting
securities of the Obligor (except that the acquisition of voting securities by
the Holder shall not constitute a Change of Control Transaction for purposes
hereof), (b) a replacement at one time or over time of more than one-half of the
members of the board of directors of the Obligor which is not approved by a
majority of those individuals who are members of the board of directors on the
date hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved by
a majority of the members of the board of directors who are members on the date
hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of
the assets of the Obligor or any subsidiary of the Obligor in one or a series of
related transactions with or into another entity (other than an entity
controlled by the Obligor), or (d) the execution by the Obligor of an agreement
to which the Obligor is a party or by which it is bound, providing for any of
the events set forth above in (a), (b) or (c).
“Closing Bid Price”
means the price per share in the last reported trade of the Common Stock on the
OTC Bulletin Board or on the Subsequent Market which the Common Stock
is then listed as quoted by Bloomberg, LP.
“Common Stock” means
the common stock, par value $0.001, of the Obligor and stock of any other class
into which such shares may hereafter be changed or reclassified.
“Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time shares of Common
Stock, including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that are at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, shares of
Common Stock.
“Conversion Date”
shall mean the date upon which the Obligor notifies the Holder of the mandatory
conversion of this Note into shares of the Company’s Common Stock, or upon which
the Holder gives the Obligor notice of their intention to effectuate a
conversion of this Note into shares of the Company’s Common Stock, both as
outlined herein; provided that no Event of Default has occurred.
“Transaction
Documents” means the Purchase Agreement or any other agreement delivered
in connection with the Purchase Agreement, including, without limitation, this
Note, the Warrant, the Guarantee and the Pledge Agreement.
Section
7.
Except as expressly provided herein, no provision of this Note shall alter
or impair the obligations of the Obligor, which are absolute and unconditional,
to pay the principal of, interest and other charges (if any) on, this Note at
the time, place, and rate, and in the coin or currency, herein
prescribed. This Note is a direct obligation of the Obligor. This
Note and the other notes issued pursuant to the Transaction Documents shall rank
senior to all indebtedness of the Company, second only to bank loans and working
capital facilities. As long as this Note is outstanding, the Obligor shall not
and shall cause the Subsidiaries not to, without the consent of the Holder, (i)
amend its certificate of incorporation, bylaws or other charter documents so as
to adversely affect any rights of the Holder; (ii) repay, repurchase or offer to
repay, repurchase or otherwise acquire shares of its Common Stock or other
equity securities other than as to the Underlying Shares to the extent permitted
or required under the Transaction Documents; or (iii) enter into any agreement
with respect to any of the foregoing.
8
Section
8. This
Note shall not entitle the Holder to any of the rights of a stockholder of the
Obligor, including without limitation, the right to vote, to receive dividends
and other distributions, or, subject to the provisions of the Purchase
Agreement, to receive any notice of, or to attend, meetings of stockholders or
any other proceedings of the Obligor, unless and to the extent converted into
shares of Common Stock in accordance with the terms hereof.
Section
9.
If this Note is mutilated, lost, stolen or destroyed, the Obligor shall execute
and deliver, in exchange and substitution for and upon cancellation of the
mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost,
stolen or destroyed but only upon receipt of evidence of such loss, theft or
destruction of such Note, and of the ownership hereof, and indemnity, if
requested, all reasonably satisfactory to the Obligor.
Section
10. Without
the Holder’s consent, the Obligor will not [and will not permit any of the
Subsidiaries to], directly or indirectly, enter into, create, incur, assume or
suffer to exist any indebtedness of any kind other than bank loans and working
capital facilities, whether unsecured or secured by any of its property or
assets now owned or hereafter acquired or any interest therein or any income or
profits therefrom that is senior in any respect to or on a parity with the
obligations of the Obligor under this Note.
Section
11. This
Note shall be governed by and construed in accordance with the laws of the State
of New York, without giving effect to conflicts of laws thereof. Each
of the parties consents to the jurisdiction of the Superior Courts of the State
of New York and the U.S. District Court for the District of New York
sitting in New York County in connection with any dispute arising under this
Note and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens to the
bringing of any such proceeding in such jurisdictions.
Section
12. If
the Obligor fails to strictly comply with the terms of this Note, then the
Obligor shall reimburse the Holder promptly for all fees, costs and expenses,
including, without limitation, attorneys’ fees and expenses incurred by the
Holder in any action in connection with this Note, including, without
limitation, those incurred: (i) during any workout, attempted workout, and/or in
connection with the rendering of legal advice as to the Holder’s rights,
remedies and obligations, (ii) collecting any sums which become due to the
Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any
proceeding or appeal; or (iv) the protection, preservation or enforcement of any
rights or remedies of the Holder.
Section
13. Any
waiver by the Holder of a breach of any provision of this Note shall not operate
as or be construed to be a waiver of any other breach of such provision or of
any breach of any other provision of this Note. The failure of the Holder to
insist upon strict adherence to any term of this Note on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this Note. Any
waiver must be in writing.
Section
14. If
any provision of this Note is invalid, illegal or unenforceable, the balance of
this Note shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder shall violate applicable laws governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum permitted rate of interest. The Obligor covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Obligor from paying all or any portion of the principal of or
interest on this Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this indenture, and the Obligor (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impeded the execution
of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.
9
Section
15. Whenever
any payment or other obligation hereunder shall be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business
Day.
Section
16. THE
PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.
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10
IN WITNESS WHEREOF, the
Obligor has caused this 10% Senior Secured Convertible Note to be duly executed
by a duly authorized officer as of the date set forth above.
|
SINO
CLEAN ENERGY, INC.
|
|||
|
By:
|
|||
|
Name: ▇▇▇▇▇▇
▇▇▇
|
|||
|
Title: Chief
Executive
Officer
|
|||
11
EXHIBIT
“A”
NOTICE OF
CONVERSION
(To
be executed by the Holder in order to convert the Note)
TO:
The
undersigned hereby irrevocably elects to convert $ of the principal amount and
$_________________________ of accrued and unpaid interest of the above Note into
Shares of Common Stock of Sino Clean Energy, Inc., according to the conditions
stated therein, as of the Conversion Date written below.
|
Conversion
Date:
|
||
|
Applicable
Conversion Price:
|
||
|
Signature:
|
||
|
Name:
|
||
|
Address:
|
$
|
|
|
Amount
to be converted:
|
$
|
|
|
Amount
unconverted:
|
$
|
|
|
Conversion
Price per share:
|
$
|
|
|
Number
of shares of Common Stock to be issued:
|
||
|
Please
issue the shares of Common Stock in the following name and to the
following address:
|
||
|
Issue
to:
|
||
|
Authorized
Signature:
|
||
|
Name:
|
||
|
Title:
|
||
|
Phone
Number:
|
||
|
Broker
DTC Participant Code:
|
||
|
Account
Number:
|
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of page intentionally left blank.]
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