QINGDAO FOOTWEAR, INC. WARRANT AGREEMENT
Exhibit
10.1
__________
___, 2010
▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, Incorporated
▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Qingdao
Footwear, Inc., a Delaware company (the “Company”), agrees to issue and sell to
you a warrant (the “Warrant”) to purchase the number of shares of common stock
of the Company set forth herein, subject to the terms and conditions contained
herein.
1. Issuance
of Warrant; Exercise Price. The Warrant, which shall be in the form
attached hereto as Exhibit A, shall be
issued to you concurrently with the execution hereof in consideration of the
payment by you to the Company of the sum of US $0.001 cash per share of common
stock subject to the Warrant, the receipt and sufficiency of which are hereby
acknowledged. The Warrant shall provide that you and such other holder(s) of the
Warrant, as such may be assigned in accordance herewith, shall have the right to
purchase an aggregate of up to _________ shares of common stock for an exercise
price equal to $_____ per share (the “Exercise Price”), as described more
fully herein. The number, character and Exercise Price of such shares are
subject to adjustment as hereinafter provided, and the term “shares” shall mean,
unless the context otherwise requires, the shares of common stock and other
securities and property receivable upon exercise of the Warrant. The term
“Exercise Price” shall mean, unless the context otherwise requires, the price
per share purchasable under the Warrant as set forth in this
Section 1, as adjusted from time to time pursuant to
Section 5.
2. Notices
of Record Date. In the event of (i) any taking by the Company of a
record date with respect to the holder(s) of any class of securities of the
Company for purposes of determining which of such holder(s) are entitled to
dividends or other distributions, or any right to subscribe for, purchase or
otherwise acquire shares of any class or any other securities or property, or to
receive any other right, (ii) any capital reorganization of the Company, or
reclassification or recapitalization of common stock of the Company or any
transfer in one or more related transactions of all or a majority of the assets
or revenue or income generating capacity of the Company to, or consolidation or
merger of the Company with or into, any other entity or person, or
(iii) any voluntary or involuntary dissolution or winding up of the
Company, then and in each such event the Company will mail or cause to be mailed
to each holder of a Warrant at the time outstanding a notice specifying, as the
case may be, (a) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right; or (b) the date on which
any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is to
take place and the time, if any is to be fixed, as of which the holders of
record of shares (or any other class of shares or securities of the Company, or
another issuer pursuant to Section 5, receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares (or such other shares or
securities) for securities or other property deliverable upon such event. Any
such notice shall be deposited in the United States mail, postage prepaid, at
least ten (10) days prior to the date therein specified, and the holder(s)
of the Warrant(s) may exercise the Warrant(s) and participate in such event as a
registered holder of shares, upon exercise of the Warrant(s) so held, within the
ten (10) day period from the date of mailing such notice.
3. No
Impairment. The Company shall not, by amendment of its organizational
documents or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other action, avoid or
seek to avoid the observance or performance of any other action, avoid or seek
to avoid the observance or performance of any of the terms of this Agreement or
of the Warrant, but will at all times in good faith take any and all action as
may be necessary in order to protect the rights of the holder(s) of the Warrant
against impairment. Without limiting the generality of the foregoing, the
Company (a) will at all times reserve and keep available, solely for
issuance and delivery upon exercise of the Warrant, shares issuable from time to
time upon exercise of the Warrant, (b) will not increase the par value of
any common stock receivable upon exercise of the Warrant above the amount
payable in respect thereof upon such exercise, and (c) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares upon the exercise of the
Warrant, or any portion of it.
4. Exercise
of Warrant.
(a) Exercise
for Cash. At any time and from time to time on and after one hundred
eighty (180) days after the date of effectiveness or commencement of sales
of the Company’s offering (the “Offering”) and expiring on ___________ at 11:59
p.m., Richmond, Virginia time (the “Exercise Period”), the Warrant may be
exercised as to all or any portion of the whole number of shares covered by the
Warrant by the holder thereof by surrender of the Warrant, accompanied by a
subscription for shares to be purchased in the form attached hereto
as Exhibit
B and by a check payable to the order of the Company in the amount
required for purchase of the shares as to which the Warrant is being exercised,
delivered to the Company at its principal office at 269 First Huashan Road, Jimo
City, Qingdao, Shandong, PRC, Attention: ▇▇▇ ▇▇▇▇, Chief Executive
Officer.
(b) Cashless
Exercise. In addition, during the Exercise Period and to the extent that
the Company has failed to register the shares issuable hereunder in accordance
with Section 7 hereof within 90 days of the notification of the Company of
the exercise of such demand registration right, the Warrant may be exercised as
to all or any portion of the whole number of shares covered by the Warrant by
the holder thereof by surrender of Warrant together with irrevocable
instructions to the Company to issue in exchange for the Warrant the number of
shares equal to the product of (i) the number of shares as to which the
Warrant is being exercised multiplied by (ii) a fraction the numerator of
which is the Current Value of any share less the Exercise Price therefor and the
denominator of which is such Current Value. In the case of the purchase of less
than all the shares purchasable under the Warrant, the Company shall cancel such
Warrant and shall execute and deliver a new Warrant of like tenor for the
unexercised balance. For the purposes hereof, “Exercise Date” shall mean the
date on which all deliveries required to be made to the Company upon exercise of
the Warrant pursuant to this Section 4 shall have been made.
(c) Issuance
of Certificates. Upon the exercise of a Warrant in whole or in part, the
Company will within five (5) days thereafter, at its expense (including the
payment by the Company of any applicable issue or transfer taxes), cause to be
issued in the name of and delivered to the Warrant holder a certificate or
certificates for the number of fully paid and non-assessable shares to which
such holder is entitled upon exercise of the Warrant. In the event such holder
is entitled to a fractional share, in lieu thereof such holder shall be paid a
cash amount equal to such fraction, multiplied by the Current Value of one full
share on the date of exercise. Certificates for shares issuable by reason of the
exercise of the Warrant shall be dated and shall be effective as of the date of
the surrendering of the Warrant for exercise, notwithstanding any delays in the
actual execution, issuance or delivery of the certificates for the shares so
purchased. In the event the Warrant is exercised as to less than the aggregate
amount of all shares issuable upon exercise of the Warrant held by such person,
the Company shall issue a new Warrant to the holder of the Warrant so
exercised covering the aggregate number of shares as to which the Warrant
remains unexercised. In addition to the foregoing, should the Company fail to
issue the share certificate or certificates within the time limits referenced in
the first sentence of this Section 4(c), if and to the extent not already
utilized as to the Warrant or the shares underlying the Warrant, the holder may
utilize the cashless exercise contained in Section 4(b)
hereof.
(d) Current
Value. For purposes of
this section,
“Current
Value” is defined
(i) in the case for which a public market exists for the shares at the time
of such exercise, at a price per share equal to (A) the average of the
means between the closing bid and asked prices of the shares in the over-the-counter market for 20
consecutive business days commencing 30 business days before the date of such
notice, (B) if the shares are quoted on the NASDAQ Capital Market, at the
average of the means of the daily closing bid and asked prices of the
shares for 20 consecutive business days
commencing 30 business days before the date of such notice, or (C) if the
shares are listed on any national securities exchange or The NASDAQ National
Market, at the average of the daily closing prices of the shares for 20 consecutive business days commencing
30 business days before the date of such notice, and (ii) in the case no public market exists at
the time of such exercise, at the Appraised Value. For the purposes of this
Agreement, “Appraised
Value” is the value
determined in accordance with the
following procedures. For a period of five (5) days after the date of an event (a
“Valuation
Event”) requiring
determination of Current Value at a time when no public market exists for the
shares (the “Negotiation
Period”), each party to this Agreement agrees to
negotiate in good faith to reach agreement upon the Appraised Value of the
securities or property at issue, as of the date of the
Valuation Event,
which will be the fair market value of such securities or property,
without premium for
control or discount for minority interests, illiquidity or restrictions on
transfer. In the event that the parties are unable to agree upon the Appraised
Value of such securities or other property by the end of the Negotiation Period,
then the Appraised Value of such
securities or property will be determined for purposes of this Agreement by a
recognized appraisal or investment banking firm mutually agreeable to the
holder(s) of the Warrant and the Company (the “Appraiser”). If the holder(s) of the Warrant and the Company
cannot agree on an Appraiser within two (2) business days after the end of
the Negotiation Period, the Company, on the one hand, and the holder(s) of the
Warrant, on the other hand, will each select an Appraiser within ten (10) business days after the end
of the Negotiation Period and those Appraisers will determine the fair market
value of such securities or property, without premium for control or discount
for minority interests. Such independent Appraiser(s) will be directed to determine fair market value of
such securities or property as soon as practicable, but in no event later than
thirty (30) days after the date of its selection. The determination by
Appraiser(s) of the fair market value will be conclusive and binding on all parties to this Agreement. If
there are two Appraisers, and they do not agree as to fair market value, then
fair market value shall be determined to be the average of the fair market
values as determined by each Appraiser. Appraised Value of each share at a time when (i) the
Company is not a reporting company under the Securities Exchange Act of 1934 and
(ii) the shares are not traded in the organized securities markets, will,
in all cases, be calculated by determining the Appraised Value of the
entire Company taken as a whole and
dividing that value by the number of shares then outstanding, without premium
for control or discount for minority interests, illiquidity or restrictions on
transfer. The costs of the Appraiser(s) will be borne by the Company. In no event will the Appraised
Value of the shares be less than the per share consideration received or
receivable with respect to the shares or securities or property of the same
class in connection with a pending transaction involving a sale,
merger, recapitalization, reorganization,
consolidation, or share exchange, dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity, or
similar transaction.
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5. Protection
Against Dilution. The Exercise Price for the shares and number of shares
issuable upon exercise of the Warrant, in whole or in part, is subject to
adjustment from time to time as described in this Section 5.
Notwithstanding the foregoing, nothing in this Warrant Agreement is intended or
may be construed to violate any FINRA Rule. In particular, the anti-dilution
provisions of this Warrant Agreement shall be interpreted in compliance with
FINRA Rule 5110(f)(2)(H)(vi) and (vii) of the FINRA Rules.
(a) Dividends,
Subdivisions, Reclassifications,
Etc. In case at any time or from time to time after the date of execution
of this Agreement, the Company shall (i) take a record of the holders of
shares for the purpose of entitling them to receive a dividend or a distribution
on shares payable in shares or another class of securities, (ii) subdivide
or reclassify its outstanding share of shares into a greater number shares, or
(iii) combine or reclassify its outstanding shares into a smaller number of
shares, then, and in each such case, the Exercise Price in effect at the time of
the record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted in such a manner
that the Exercise Price for the shares issuable upon exercise of the Warrant
immediately after such event shall bear the same ratio to the Exercise Price in
effect immediately prior to any such event as the total number of shares
outstanding immediately prior to such event shall bear to the total number of
shares outstanding immediately after such event.
(b) Adjustment
of Number of Shares Purchasable. When any adjustment is required to be
made in the Exercise Price under this Section 5, (i) the number of
shares issuable upon exercise of the Warrant, in whole or in part, shall be
changed (upward to the nearest full share) to the number of shares determined by
dividing (x) an amount equal to the number of shares issuable pursuant to
the exercise of the Warrant immediately prior to the adjustment, multiplied by
the Exercise Price in effect immediately prior to the adjustment, by
(y) the Exercise Price in effect immediately after such adjustment, and
(ii) upon exercise of the Warrant, the holder will be entitled to receive
the number of shares of other securities referred to in Section 5(a) that
such holder would have received had the Warrant been exercised prior to the
events referred to in Section 5(a).
(c) Adjustment
for Reorganization, Consolidation, Merger, Etc. In the case of any reorganization or
consolidation of the
Company with, or any merger of the Company with or into, another entity (other
than a consolidation or merger in which the Company is the surviving
corporation) or in case of any sale or transfer to another entity of the
majority of assets of the Company, the entity resulting from such
reorganization or consolidation or surviving such merger or to which such sale
or transfer shall be made, as the case may be, shall make suitable provision (which
shall be fair and equitable to each holder of a Warrant) and shall assume the obligations of the
Company hereunder (by written instrument executed and mailed to each holder of a
Warrant then outstanding) pursuant to which, upon exercise of the Warrant, at
any time after the consummation of such reorganization, consolidation, merger or conveyance, the
holder shall be entitled to receive the common stock or other securities or
property that such holder would have been entitled to upon consummation if such
holder had exercised the Warrant immediately prior thereto, all subject to further adjustment as
provided in this Section 5.
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(d) Certificate
as to Adjustments. In the event of adjustment as herein provided in the
paragraphs of this Section 5, the Company shall promptly mail to each
Warrant holder a certificate setting forth the Exercise Price and number of
shares issuable upon exercise after such adjustment and setting forth a brief
statement of facts requiring such adjustment. Such certificate shall also set
forth the kind and amount of shares or other securities or property into which
the Warrant shall be exercisable after any adjustment of the Exercise Price as
provided in this Agreement.
(e) Minimum
Adjustment. Notwithstanding the foregoing, no certificate as to
adjustment of the Exercise Price hereunder shall be made if such adjustment
results in a change in the Exercise Price then in effect of less than five cents
($0.05) and any adjustment of less than five cents ($0.05) of any Exercise Price
shall be carried forward and shall be made at the time of and together with any
subsequent adjustment that, together with the adjustment or adjustments so
carried forward, amounts to five cents ($0.05) or more; provided however, that
upon the exercise of a Warrant, the Company shall have made all necessary
adjustments (to the nearest cent) not theretofore made to the Exercise Price up
to and including the date upon which such Warrant is exercised.
7. Registration
Rights.
(a) Demand
Registration Under the Securities Act of 1933. To the extent that
sufficient shares have not been registered to permit exercise of the Warrant,
then at any time commencing after the closing of the Offering, through and
including ___________ parties who collectively hold a majority of the shares
issued or issuable upon the exercise of the Warrant shall have the right,
exercisable by written notice to the Company, to have the Company prepare and
file with the Securities and Exchange Commission (the “Commission”), on one
occasion, a registration statement and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for you and any other holder of a Warrant, in order to comply with
the provisions of the Act, so as to permit a public offering and sale of their
respective Warrant, the shares underlying the Warrant or other securities held
as a result of any adjustment made pursuant to Section 5 hereof
(collectively, the “Registrable Securities”). The Company shall notify each
holder of a Warrant and the shares underlying the Warrant of any such
demand registration request within ten (10) days of receipt of such
request. The notified holder(s) may participate in such demand registration by
notifying the Company within ten (10) days after receiving the Company’s
notification.
(b) Notice to
Be Delivered.
The Company covenants and agrees to give written notice of any registration
request under Section 7(a) by you or any holder(s) to you and to all other
holder(s) of a Warrant or the shares underlying a Warrant within ten
(10) days from the date of the receipt of any such registration
request.
(c) Covenants
of the Company With Respect to Registration. In connection with any
registration under Section 7(a) hereof, the Company covenants and agrees as
follows:
(i) The
Company shall use its best efforts to file a registration statement within
ninety (90) days of receipt of any demand therefore in accordance with
Section 7(a), shall use its best efforts to have any registration statement
declared effective at the earliest practicable time, and shall furnish you and
each holder desiring to sell the Registrable Securities held by you or the other
holder(s) as a result of any adjustment made pursuant to the provisions of
Section 5 hereof, such number of prospectuses as shall reasonably be
requested.
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(ii) The
Company shall pay all costs (excluding fees and expenses of counsel for you and
any other holder(s) and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Section 7(a) hereof including, without limitation, the Company’s legal and
accounting fees, printing expenses, and blue sky fees and expenses. If the
Company shall fail to comply with the provisions of Section 7(d), the
Company shall, in addition to any other equitable or other relief available to
you and any other holder(s), be liable for any or all actual damages (which may
include damages due to a loss of profit).
(iii) The Company will take all
necessary action which may be required in qualifying or registering the
Registrable Securities
included in a registration statement for offering and sale under the securities
or blue sky laws of such states as are reasonably requested by you and any other
holder(s), provided that the Company shall not be obligated to execute or file
any general consent to service of process or
to qualify as a foreign corporation to do business under the laws of any such
jurisdiction.
(iv) The
Company shall indemnify you and any other holder(s) of the Registrable
Securities to be sold pursuant to any registration statement and each person, if
any, who controls you or any other holder(s) within the meaning of
Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended (the “1934 Act”), against all loss, claim, damage, expense
or liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the 1934 Act or otherwise, arising from such
registration statement to the same extent and with the same effect as the
provisions pursuant to which the Company has agreed to indemnify you in the
Placement Agreement to be entered into by and between you and the Company (the
“Placement Agreement”) and to provide for just and equitable contribution as set
forth in the Placement Agreement.
(v) You
and any other holder(s) of the Registrable Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the 1934 Act, against all loss, claim, damage or
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the 1934 Act or otherwise, arising from
information furnished by or on behalf of such holder(s), or their successors or
assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in the Placement
Agreement pursuant to which you have agreed to indemnify the Company and to
provide for just and equitable contribution as set forth in the Placement
Agreement.
(vi)
Nothing contained in this Agreement shall be construed as requiring you or any
other holder(s) to exercise any portion of their Warrant prior to the initial
filing of any registration statement or the effectiveness thereof.
(vii) The
Company shall deliver promptly to you and any other holder(s) of the Registrable
Securities participating in the offering copies of all correspondence between
the Commission and the Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff with respect to the
registration statement and permit you and the other holder(s) of the Registrable
Securities to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the registration statement
as it deems reasonably necessary to comply with applicable securities laws or
rules of the Financial Industry Regulatory Authority (“FINRA”); provided that
you and each such holder of the Registrable Securities agree not to disclose
such information without the prior consent of the Company. Such investigation
shall include access to books, records and properties and opportunities to
discuss the business of the Company with its officers and independent auditors,
all to such reasonable extent and at such reasonable times and as often as you
and any other holder(s) of the Registrable Securities shall reasonably
request.
(viii) If required by the underwriters
in connection with an underwritten offering which includes Registrable Securities
pursuant to this Section 7, the Company shall enter into an underwriting
agreement with one or more underwriters selected for such underwriting. Such
underwriting agreement shall be satisfactory in form and substance to
the Company, you and each other holder
of the Registrable Securities, and shall contain such representations,
warranties and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the underwriters. If required by the underwriters, you and
the other holder(s) of the Registrable Securities shall be parties to any
underwriting agreement relating to an underwritten sale of their Registrable
Securities and may, at their option, require that any or all representations and warranties of the Company
to or for the benefit of such underwriters shall, to the extent that they may be
applicable, also be made to and for the benefit of you and the other holder(s)
of the Registrable Securities. You and the other holder(s) of the Registrable Securities shall not be required to
make any representations or warranties to or agreements with the Company or the
underwriters except as they may relate to you and the other holder(s) of the
Registrable Securities and their intended methods of
distribution.
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(ix) In
connection with any registration statement filed pursuant to Section 7
hereof, the Company shall furnish, or cause to be furnished, to you and each
holder participating in any underwritten offering and to each underwriter, a
signed counterpart, addressed to you, such holder(s) or underwriter, of
(i) an opinion of counsel to the Company, dated as of the effective date of
such registration statement (and, if such registration includes an underwritten
public offering, an opinion dated the date of the closing under the underwriting
agreement), and (ii) a “cold comfort” letter, dated the effective date of
such registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have issued a
report on the Company’s financial statements included in such registration
statement, in each case covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and, in the
case of such accountants’ letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer’s
counsel and in accountants’ letters delivered to underwriters in underwritten
public offerings of securities.
(x) The
Company shall promptly notify you and each holder of the Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Act, upon the Company’s discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and upon receipt of such
notice you and each holder shall not effect any sale of securities and shall
immediately cease utilizing or distributing such prospectus. At the request of
you or any such holder(s), the Company shall promptly prepare and furnish to you
or such holder(s) and each underwriter, if any, a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include 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 not misleading in the light of the circumstances under which
they were made.
(xi) For
purposes of this Agreement, the term “majority” in reference to you and the
other holder(s) of a Warrant or the shares underlying an unexercised Warrant,
shall mean in excess of fifty percent (50%) of the shares underlying the
then outstanding Warrant(s) that have not been resold to the public pursuant to
Rule 144 under the Act or a registration statement filed with the
Commission under the Act.
8. Stock
Exchange Listing. In the event the Company lists its shares on any
national securities exchange or market, the Company will, at its expense, also
list on such exchange, upon exercise of a Warrant, all shares issuable pursuant
to such Warrant.
9. Restrictive
Legend. Executed copies of this Agreement shall be filed in the principal
office of the Company. Instruments evidencing all or part of the Warrant shall
contain the legend shown on Exhibit A until
one hundred eighty (180) days after the date of effectiveness or
commencement of sales of the Company’s Offering, after which time such legend
may be removed at the request of the holder thereof.
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10. Successors
and Assigns; Binding
Effect. This Agreement shall be binding upon and inure to the benefit of
you and the Company and their respective successors and permitted
assigns.
11. Notices.
Any notice hereunder shall be given by registered or certified mail, if to the
Company, at its principal office referred to in Section 5 and, if to a
holder, to the holder’s address shown in the Warrant ledger of the Company,
provided that any holder may at any time on three (3) days’ written notice
to the Company designate or substitute another address where notice is to be
given. Notice shall be deemed given and received after a certified or registered
letter, properly addressed with postage prepaid, is deposited in the U.S.
mail.
12. Severability.
Every provision of this Agreement is intended to be severable. If any term or
provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the remainder of this
Agreement.
13. Assignment;
Replacement of Warrant. The Warrant and the shares underlying the Warrant
may be sold, transferred, assigned, pledged or hypothecated by you prior to one
hundred eighty (180) days after the date of effectiveness or commencement
of sales of the Company’s Offering only to bona fide officers of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Incorporated, who in turn shall be subject to the
same restriction. Any assignment shall be effected in accordance with the Form
of Assignment attached hereto as Exhibit C. If the
Warrant is assigned, in whole or in part, the Warrant shall be surrendered at
the principal office of the Company, and thereupon, in the case of a partial
assignment, a new Warrant shall be issued to the holder thereof covering the
number of shares not assigned, and the assignee shall be entitled to receive a
new Warrant covering the number of shares so assigned. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and appropriate bond or indemnification protection,
the Company shall issue a new Warrant of like tenor.
14. Rights of
Shareholders. Until exercised, the Warrant shall not entitle the holder
thereof to any of the rights of a shareholder of the Company.
15. Governing
Law. This Agreement shall be governed and construed in accordance with
the laws of the Commonwealth of Virginia without giving effect to the principles
of choice of laws thereof.
16. Definition.
All references to the word “you” in this Agreement shall be deemed to apply with
equal effect to any persons or entities to whom a Warrant has been transferred
in accordance with the terms hereof, and, where appropriate, to any persons or
entities holding shares issuable upon exercise of a Warrant.
17. Headings.
The headings herein are for purposes of reference only and shall not limit or
otherwise affect the meaning of any of the provisions hereof.
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Very
truly yours,
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By:
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Name:
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▇▇▇
▇▇▇▇
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Title:
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Chief
Executive Officer
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Accepted
as of the ___ day of _________ 2010.
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▇▇▇▇▇▇▇▇ & STRUDWICK,
INCORPORATED
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By:
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Name:
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▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, III
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Title:
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Managing
Director
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8
EXHIBIT
A
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No.
Shares
of Common Stock
(as
may be adjusted pursuant to the
terms
of the Warrant Agreement)
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COMMON
STOCK PURCHASE WARRANT
THIS IS
TO CERTIFY that ▇▇▇▇▇▇▇▇ & STRUDWICK, INCORPORATED or its assigns as
permitted in that certain Warrant Agreement (the “Warrant Agreement”) dated
___________ between the Company (as hereafter defined) and ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, Incorporated is entitled to purchase at any time or from time to time
on or after the closing of the offering of the Company’s common stock and before
____________, _________ shares of common stock of Qingdao Footwear, Inc., a
Delaware company (the “Company”), for an exercise price of $_____ per share.
This Warrant is issued pursuant to the Agreement, and all rights of the holder
of this Warrant are further governed by, and subject to the terms and provisions
of such Warrant Agreement, copies of which are available upon request to the
Company. The holder of this Warrant and the shares issuable upon the exercise
hereof shall be entitled to the benefits, rights and privileges and subject to
the obligations, duties and liabilities provided in the Warrant
Agreement.
UNTIL ONE
HUNDRED EIGHTY (180) DAYS AFTER THE DATE OF EFFECTIVENESS OR COMMENCEMENT
OF SALES OF THE OFFERING OF QINGDAO FOOTWEAR, INC., NEITHER ▇▇▇▇▇▇▇▇ &
STRUDWICK, INCORPORATED NOR ANY ASSIGNEE OF ALL OR A PORTION OF THE RIGHTS
PURSUANT TO THIS WARRANT MAY SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE ANY
OF ITS RIGHTS PURSUANT TO THIS WARRANT OTHER THAN TO BONA FIDE OFFICERS OF
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, INCORPORATED.
Subject
to the provisions of the Securities Act of 1933, of the Warrant Agreement and of
this Warrant, this Warrant and all rights hereunder are transferable, in whole
or in part, only to the extent expressly permitted in such documents and then
only at the office of the Company at Qingdao Footwear, Inc., 269 First Huashan
Road, Jimo City, Qingdao, Shandong, PRC, Attention: ▇▇▇ ▇▇▇▇, Chief Executive
Officer, by the holder hereof or by a duly authorized attorney-in-fact, upon
surrender of this Warrant duly endorsed, together with the Assignment hereof
duly endorsed. Until transfer hereof on the books of the Company, the Company
may treat the registered holder hereof as the owner hereof for all
purposes.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
proper corporate officers thereunto duly authorized.
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By:
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Name:
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Title:
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ATTEST:
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By:
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Name:
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Title:
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9
EXHIBIT
B
FORM
OF SUBSCRIPTION
To
Qingdao Footwear, Inc.:
The
undersigned, the holder of Warrant Number
, hereby
irrevocably elects to exercise the purchase right represented by such Warrant,
and to purchase thereunder
* shares
of common stock of Qingdao Footwear, Inc.
As
payment therefor, the undersigned (▇▇▇▇ one):
herewith
makes a payment in cash or by check of
U.S. $ ,
or
requests
to utilize the cashless exercise provision in Section 4(b) of the Warrant
Agreement.
Further,
the undersigned requests that the certificate or certificates for such shares be
issued in the name of and delivered to the undersigned. The undersigned
acknowledges and agrees that shares to be received by the undersigned are
subject to the restrictions on transfer set forth in the Warrant.
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(Signature)
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(Address)
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Dated:
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*
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Insert
here the number of shares of common stock set forth on the face of the
Warrant (or, in the case of a partial exercise, the portion thereof as to
which the Warrant is being exercised), in either case without making any
adjustment (which adjustment will be made in the issuance of such shares,
other stock, securities, property, or cash) for additional shares of
common stock or any other stock or other securities or property or cash
that, pursuant to the adjustment provisions of the Warrant, is deliverable
upon exercise.
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10
EXHIBIT
C
FORM
OF ASSIGNMENT
(To be
signed only upon transfer of Warrant)
For value
received, ▇▇▇▇▇▇▇▇ & Strudwick, Incorporated, the registered holder of
the Warrant issued by Qingdao Footwear, Inc. to purchase
shares of common stock represented by Warrant
, hereby sells, assigns and
transfers
of such Warrants to officers of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Incorporated as
set forth below, with the remaining
balance ( )
to be reissued to ▇▇▇▇▇▇▇▇ & Strudwick, Incorporated:
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Assignee/Transferee
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Amount
Assigned/Transferred
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▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, Incorporated does hereby irrevocably constitute and appoint the
undersigned’s attorney to make such transfer on the books of the Warrant Agent
maintained for that purpose, with full power of substitution in the
premises.
The
undersigned represents and warrants that the transfer of the attached Warrant is
permitted by the terms of the Warrant Agreement pursuant to which the attached
Warrant has been issued, and the transferees hereof, by acceptance of this
Agreement, agrees to be bound by the terms of the Warrant Agreement with
the same force and effect as if a signatory thereto.
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▇▇▇▇▇▇▇▇ &
STRUDWICK, INCORPORATED
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By:
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Name:
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Title:
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Date:
Signature
Guaranteed by:
THE
SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO S.E.C RULE 17
Ad-15.
11