REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.2
REGISTRATION
RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of March 20, 2008, by and between CHINA
SHOE HOLDINGS, INC.,
a Nevada
corporation (the “Company”),
and
MAGELLAN
GLOBAL FUND, L.P.,
a
Delaware limited partnership (the “Investor”).
WHEREAS:
A.
In
connection with the Equity Line Agreement by and between the parties hereto
of
even date herewith (the “Equity
Line Agreement”),
the
Company has agreed, upon the terms and subject to the conditions of the Equity
Line Agreement, to issue and sell to the Investor that number of shares of
the
Company’s common stock, par value $0.001 per share (the “Common
Stock”),
which
can be purchased pursuant to the terms of the Equity Line Agreement for an
aggregate purchase price of up to Two Million Dollars ($2,000,000).
Capitalized terms not defined herein shall have the meaning ascribed to
them in the Equity Line Agreement.
B.
To
induce
the Investor to execute and deliver the Equity Line Agreement, the Company
has
agreed to provide certain registration rights under the Securities Act of
1933,
as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “Securities
Act”),
and
applicable state securities laws.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and the Investor hereby agree as
follows:
1.
DEFINITIONS.
As
used
in this Agreement, the following terms shall have the following
meanings:
a.
“Person”
means
a
corporation, a limited liability company, an association, a partnership,
an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
b.
“Register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the Securities Act and pursuant
to Rule 415 under the Securities Act or any successor rule providing for
offering securities on a continuous or delayed basis (“Rule
415”),
and
the declaration or ordering of effectiveness of such Registration Statement(s)
by the United States Securities and Exchange Commission (the “SEC”).
c.
“Registrable
Shares”
means
the Investor’s Shares, as defined in the Equity Line Agreement, and all shares
of Common Stock issuable or issued to Investors pursuant to the Equity Line
Agreement.
d.
“Registration
Statement”
means
a
registration statement under the Securities Act which covers the Registrable
Shares.
2.
REGISTRATION.
a.
Registration.
Prior to the first sale to the Investor of the Company’s Common Stock
pursuant to the Equity Line Agreement the Company shall prepare and file
with
the SEC a Registration Statement on Form S-1, or on such other form as is
available cause such Registration Statement to be declared effective by the
SEC.
The Company shall insure that the Registration Statement and any
subsequent Registration Statements remain in effect until all of the Registrable
Shares which have been issued have been sold, or may be sold without restriction
pursuant to Rule 144 of the Securities Act.
b.
Sufficient
Number of Shares Registered.
In the event the number of shares available under a Registration Statement
filed pursuant to Section 2(a) is insufficient to cover all of the Registrable
Shares issued pursuant to the Equity Line Agreement, the Company shall amend
the
Registration Statement, or file a new Registration Statement (on the short
form
available therefore, if applicable), or both, so as to cover all of such
Registrable Shares pursuant to the Equity Line Agreement as soon as practicable,
but in any event not later than fifteen (15) days after the necessity therefore
arises. The Company shall use its best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof. For purposes of the foregoing provision, the
number of shares available under a Registration Statement shall be deemed
“insufficient to cover all of the Registrable Shares” if at any time the number
of Registrable Shares issuable on an Advance Notice Date is greater than
the
number of shares available for resale under such Registration
Statement.
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3.
RELATED
OBLIGATIONS.
a.
The
Company shall keep the Registration Statement effective pursuant to Rule
415 at
all times until the earlier of (i) the Investor has disposed of all the
Registrable Shares or (b) all Registrable Shares are may be freely resold
by the
Investor without any limitations under Rule 144 (the “Registration
Period”),
which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any 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 light of the circumstances in
which
they were made, not misleading.
b.
The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the Securities Act,
as may
be necessary to keep such Registration Statement effective at all times during
the Registration Period, and, during such period, comply with the provisions
of
the Securities Act with respect to the disposition of all Registrable Shares
of
the Company covered by such Registration Statement until such time as all
of
such Registrable Shares shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth
in
such Registration Statement. In the case of amendments and supplements to
a Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the Company’s
filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report
under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
the
Company shall have incorporated such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the Exchange Act report is filed which created
the
requirement for the Company to amend or supplement the Registration
Statement.
c.
The
Company shall furnish to the Investor without charge, (i) at least one copy
of
such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) ten (10) copies of the final prospectus included in such
Registration Statement and all amendments and supplements thereto (or such
other
number of copies as such Investor may reasonably request) and (iii) such
other
documents as such Investor may reasonably request from time to time in order
to
facilitate the disposition of the Registrable Shares owned by such
Investor.
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d.
The
Company shall use its best efforts to (i) register and qualify the Registrable
Shares covered by a Registration Statement under such other securities or
“blue
sky” laws of such jurisdictions in the United States as the Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations
and
qualifications as may be necessary to maintain the effectiveness thereof
during
the Registration Period, (iii) take such other actions as may be necessary
to
maintain such registrations and qualifications in effect at all times during
the
Registration Period, and (iv) take all other actions reasonably necessary
or
advisable to qualify the Registrable Shares for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (w) make any change to its certificate
of
incorporation or by-laws, (x) qualify to do business in any jurisdiction
where
it would not otherwise be required to qualify but for this Section 3(d),
(y)
subject itself to general taxation in any such jurisdiction, or (z) file
a
general consent to service of process in any such jurisdiction. The
Company shall promptly notify the Investor of the receipt by the Company
of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Shares for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of actual notice
of
the initiation or threat of any proceeding for such purpose.
e.
As
promptly as practicable after becoming aware of such event or development,
the
Company shall notify the Investor in writing of the happening of any event
as a
result of which the prospectus included in a Registration Statement, as then
in
effect, includes an untrue statement of a material fact or omission to state
a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and promptly prepare a supplement or amendment to
such
Registration Statement to correct such untrue statement or omission, and
deliver
ten (10) copies of such supplement or amendment to each Investor. The
Company shall also promptly notify the Investor in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been filed,
and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to the Investor
by facsimile on the same day of such effectiveness), (ii) of any request
by the
SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement
would
be appropriate.
f.
The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Shares for sale in any
jurisdiction within the United States of America and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension
at
the earliest possible moment and to notify the Investor of the issuance of
such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
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g.
At
the
reasonable request of the Investor, the Company shall furnish to each Investor,
on the date of the effectiveness of the Registration Statement and thereafter
from time to time on such dates as the Investor may reasonably request (i)
a
letter, dated such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
and (ii) an advance blanket legal opinion, dated as of such date, of counsel
representing the Company for purposes of such Registration Statement, relating
to (1) the issuance of the Registrable Shares without legend, and (2) the
subsequent sale of the Registrable Shares under the Registration Statement
(so
long as it is then effective) for cash at current market prices on the Principal
Market through a registered broker-dealer. Each Investor acknowledges that
until sold in the manner described above, the Registrable Shares shall continue
to represent “Restricted Stock” within the meaning of the federal securities
laws, and that any other transaction pursuant to which the Investor desires
to
remove such classification, including private sales of the Registrable Shares,
will require a separate legal opinion as of each such transaction establishing
conformity with the terms of the form of registration statement to be relied
upon (which is anticipated to be form S-1), notwithstanding that the Registrable
Shares do not bear a restrictive legend. Each Investor further
acknowledges that should it place the Registrable Shares in street name in
the
account of a broker-dealer, that such broker-dealer will be required to abide
by
the terms of the blanket advance legal opinion.
h.
The
Company shall make available for inspection by (i) the Investor and (ii)
one
firm of accountants or other agents retained by the Investor (collectively,
the
“Inspectors”) all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the “Records”), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information which any Inspector may reasonably request in connection
with the Registration Statement. The Investor agrees that Records obtained
by it as a result of such inspections which is conspicuously marked by the
Company as "Confidential" (subject to the Company’s obligations with respect to
material non-public information set forth in Section 8.1(a) herein) shall
be
deemed confidential and held in strict confidence by the Investor, unless
(a)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in any Registration Statement or is otherwise required under
the
Securities Act, (b) the release of such Records is ordered pursuant to a
final,
non-appealable subpoena or order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or
any
other agreement of which the Inspector and the Investor has knowledge. The
Investor agrees that it shall, upon learning that disclosure of such Records
is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company,
at
its expense, to undertake appropriate action to prevent disclosure of, or
to
obtain a protective order for, the Records deemed confidential.
5
i.
The
Company shall hold in confidence and not make any disclosure of information
concerning the Investor provided to the Company unless (i) disclosure of
such
information is necessary to comply with federal or state securities laws,
(ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release
of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available
to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning the Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt
written notice to the Investor and allow the Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to
obtain
a protective order for, such information.
j.
The
Company shall use its best efforts either to cause all the Registrable Shares
covered by a Registration Statement (i) to be listed on each securities exchange
on which securities of the same class or series issued by the Company are
then
listed, if any, if the listing of such Registrable Shares is then permitted
under the rules of such exchange or to secure the inclusion for quotation
on the
Primary Market. The Company shall pay all fees and expenses in connection
with satisfying its obligation under this Section 3(j).
k.
The
Company shall cooperate with the Investor to the extent applicable, to
facilitate the timely preparation and delivery of certificates (not bearing
any
restrictive legend subject to the terms of the blanket advance opinion letter
referenced in Section 3(g)) representing the Registrable Shares to be offered
pursuant to a Registration Statement and enable such certificates to be in
such
denominations or amounts, as the case may be, as the Investor may reasonably
request and registered in such names as the Investor may request.
l.
The
Company shall use its best efforts to cause the Registrable Shares covered
by
the applicable Registration Statement to be registered with or approved by
such
other governmental agencies or authorities as may be necessary to consummate
the
disposition of such Registrable Shares.
m.
The
Company shall make generally available to its security holders as soon as
practical, but not later than one hundred(100) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month
period
beginning not later than the first day of the Company’s fiscal quarter next
following the effective date of the Registration Statement.
n.
The
Company shall otherwise use its best efforts to comply with all applicable
rules
and regulations of the SEC in connection with any registration
hereunder.
6
o.
Within
five (5) business days after a Registration Statement which covers Registrable
Shares is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel for the Company to deliver, to the transfer agent for
such
Registrable Shares (with copies to the Investor) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.
p.
The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of Registrable Shares pursuant to
a
Registration Statement.
4.
OBLIGATIONS
OF THE INVESTOR.
The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), the Investor will immediately discontinue disposition of
Registrable Shares pursuant to any Registration Statement(s) covering such
Registrable Shares until the Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or receipt
of
notice that no supplement or amendment is required. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended certificates for shares of Common Stock to a transferee of the
Investor in accordance with the terms of the Equity Line Agreement in connection
with any sale of Registrable Shares with respect to which the Investor has
entered into a contract for sale prior to the Investor’s receipt of a notice
from the Company of the happening of any event of the kind described in Section
3(f) or the first sentence of 3(e) and for which the Investor has not yet
settled.
a.
Each
Investor covenants and agrees that it will comply with the plan of distribution
and prospectus delivery requirements of the Securities Act as applicable
to it
or an exemption therefrom in connection with sales of Registrable Shares
pursuant to the Registration Statement.
b.
Each
Investor acknowledges that the Registration Statement relates solely to the
registration of the Registrable Shares in connection with their sale by such
Investor pursuant to the Plan of Distribution contained in the Prospectus
contained in the Registration Statement, and not to the issuance of the
Registrable Shares to the Investor, and that the Company may be required
to
periodically update the Registration Statement from time to time with respect
to
the holdings of all selling shareholders. Accordingly, anything herein to
the contrary notwithstanding, until such time as all Registrable Shares are
sold
pursuant to such Plan of Distribution or are otherwise eligible for sale
under
Rule 144, the Investor (or his, her or its successors to such Shares) shall
upon
reasonable request of the Company (which request may only be provided in
connection with a bona fide obligation to report such information in a
registration statements, proxy information, or annual reports or other report),
to promptly advise the Company of its current holdings of outstanding
Registrable Shares.
7
5.
EXPENSES
OF REGISTRATION.
All
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers, legal and accounting fees shall
be
paid by the Company.
6.
INDEMNIFICATION.
With
respect to Registrable Shares which are included in a Registration Statement
under this Agreement:
a.
To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend the Investor, the directors, officers, partners,
employees, agents, representatives of, and each Person, if any, who controls
the
Investor within the meaning of the Securities Act or the Exchange Act (each,
an
“Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by
or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”),
to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement or alleged untrue statement of
a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Shares are offered (“Blue
Sky Filing”),
or
the omission or alleged omission to state a material fact required to be
stated
therein or necessary to make the statements therein not misleading;
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make
the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other
law,
including, without limitation, any state securities law, or any rule or
regulation there under relating to the offer or sale of the Registrable Shares
pursuant to a Registration Statement (the matters in the foregoing clauses
(i)
through (iii) being, collectively, “Violations”).
The Company shall reimburse the Investor and each such controlling person
promptly as such expenses are incurred and are due and payable, for any legal
fees or disbursements or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (x) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in reliance
upon
and in conformity with information furnished in writing to the Company by
such
Indemnified Person expressly for use in connection with the preparation of
the
Registration Statement or any such amendment thereof or supplement thereto;
(y)
shall not be available to the extent such Claim is based on a failure of
the
Investor to deliver or to cause to be delivered the prospectus made available
by
the Company, if such prospectus was timely made available by the Company
pursuant to Section 3(e); and (z) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent
of
the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person.
8
b.
In
connection with a Registration Statement, the Investor agrees to indemnify,
hold
harmless and defend, to the same extent and in the same manner as is set
forth
in Section 6(a), the Company, each of its directors, each of its officers
who
signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act (each
an
“Indemnified
Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar
as
such Claim or Indemnified Damages arise out of or is based upon any Violation,
in each case to the extent, and only to the extent, that such Violation occurs
in reliance upon and in conformity with written information furnished to
the
Company by the Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(d), the Investor will reimburse any
legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of
the
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only
that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds
to
the Investor as a result of the sale of Registrable Shares pursuant to such
Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified
Party. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to
any
prospectus shall not inure to the benefit of any Indemnified Party if the
untrue
statement or omission of material fact contained in the prospectus was corrected
and such new prospectus was delivered to the Investor prior to the Investor’s
use of the prospectus to which the Claim relates.
c.
Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to
assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided, however, that an Indemnified Person or Indemnified
Party
shall have the right to retain its own counsel with the fees and expenses
of not
more than one counsel for such Indemnified Person or Indemnified Party to
be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of
the
Indemnified Person or Indemnified Party and the indemnifying party would
be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such
counsel in such proceeding. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to
the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall
be liable for any settlement of any action, claim or proceeding effected
without
its prior written consent, provided, however, that the indemnifying party
shall
not unreasonably withhold, delay or condition its consent. No indemnifying
party shall, without the prior written consent of the Indemnified Party or
Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional
term
thereof the giving by the claimant or plaintiff to such Indemnified Party
or
Indemnified Person of a release from all liability in respect to such claim
or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party
or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under
this
Section 6, except to the extent that the indemnifying party is prejudiced
in its
ability to defend such action.
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d.
The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as
and
when bills are received or Indemnified Damages are incurred.
e.
The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7.
CONTRIBUTION.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with
respect
to any amounts for which it would otherwise be liable under Section 6 to
the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Shares guilty of fraudulent misrepresentation (within the meaning
of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any
seller of Registrable Shares who was not guilty of fraudulent misrepresentation;
and (ii) contribution by any seller of Registrable Shares shall be limited
in
amount to the net amount of proceeds received by such seller from the sale
of
such Registrable Shares.
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8.
REPORTS
UNDER THE EXCHANGE ACT.
With
a
view to making available to the Investor the benefits of Rule 144 promulgated
under the Securities Act or any similar rule or regulation of the SEC that
may
at any time permit the Investors to sell securities of the Company to the
public
without registration (“Rule
144”)
the
Company agrees to:
a.
make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
b.
file
with
the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements (it being understood that nothing herein
shall limit the Company’s obligations under Section 6.3 of the Equity Line
Agreement) and the filing of such reports and other documents is required
for
the applicable provisions of Rule 144; and
c.
furnish
to the Investor so long as the Investor owns Registrable Shares, promptly
upon
request (except to the extent available on the SEC XXXXX system), (i) a written
statement by the Company that it has complied with the reporting requirements
of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may
be
reasonably requested to permit the Investor to sell such securities pursuant
to
Rule 144 without registration.
9.
AMENDMENT
OF REGISTRATION RIGHTS.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a written agreement between the Company and the
Investor. Any amendment or waiver effected in accordance with this Section
9 shall be binding upon the Investor and the Company. No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this
Agreement.
11
10.
MISCELLANEOUS.
a.
A
Person
is deemed to be a holder of Registrable Shares whenever such Person owns
or is
deemed to own of record such Registrable Shares. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Shares, the Company shall act upon the basis
of
instructions, notice or election received from the registered owner of such
Registrable Shares.
b.
Any
notices, consents, waivers or other communications required or permitted
to be
given under the terms of this Agreement 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 (iii) one business 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:
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If
to the Company, to:
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000
Xxx Xxxxxxxx Xxxx
Xxxxxxx,
Jiading District,
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Shanghai
People's Republic of China 201800
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Attention:
Gu
Xianzhong
President
and Chief Executive Officer
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Telephone:
000-00-00-00000000
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With
a copy to:
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Xxxx
Xxxxxx
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If
to the Investor, to:
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Magellan
Global Fund, L.P.
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0000
Xxxxxxx Xxx Xxxxx 0
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Xxx
Xxxxx, XX
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Attention:
Xxxxx Xxxxxxx
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Portfolio
Manager
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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With
a copy to:
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Magellan
Global Fund, L.P.
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0000
Xxxxxx Xx.
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Xxxxxxx,
XX 00000
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Attention:
Xxxx Xxxxxxx
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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12
Any
party
may change its address by providing written notice to the other parties hereto
at least five days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) 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 (C) provided
by a
courier or overnight courier 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.
c.
Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate
as a
waiver thereof.
d.
The
corporate laws of the State of California shall govern all issues concerning
the
relative rights of the Company and the Investor. All other questions
concerning the construction, validity, enforcement and interpretation of
this
Agreement shall be governed by the internal laws of the State of California,
without giving effect to any choice of law or conflict of law provision or
rule
(whether of the State of California or any other jurisdiction) that would
cause
the application of the laws of any jurisdiction other than the State of
California. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the Superior Courts of the State of California, sitting in
San
Diego County, California and the Federal District Court for the District
of
Southern California sitting in San Diego, California, for the adjudication
of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it
is not
personally subject to the jurisdiction of any such court, that such suit,
action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in
any
such suit, action or proceeding by mailing a copy thereof to such party at
the
address for such notices to it under this Agreement and agrees that such
service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR
IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
13
e.
This
Agreement and the Equity Line Agreement constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement and
the Equity Line Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f.
This
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
h.
This
Agreement may be executed in identical counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement bearing
the
signature of the party so delivering this Agreement.
i.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
j.
The
language used in this Agreement will be deemed to be the language chosen
by the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
k.
This
Agreement 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.
14
IN
WITNESS WHEREOF,
the
parties have caused this Registration Rights Agreement to be duly executed
as of
day and year first above written.
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By:
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Name:
Gu Xianzhong
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Title:
President and Chief Executive Officer
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Magellan
Global Fund, L.P.
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By:
Orinda
Advisors, LLC
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Its:
Investment Manager
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By:
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Name:
Xxxxx Xxxxxxx
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Title:
Managing Partner
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15
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Attention:
Ladies
and Gentlemen:
We
are
counsel to China Shoe Holdings, Inc. (the “Company”),
and
have represented the Company in connection with that certain Equity Line
Agreement (the “Equity
Line Agreement”)
entered into by and between the Company and Magellan Global Fund, L.P. (the
“Investor”)
pursuant to which the Company issued to the Investor shares of its Common
Stock,
par value $0.001 per share (the “Common
Stock”).
Pursuant to the Equity Line Agreement, the Company also has entered into
a
Registration Rights Agreement with the Investor (the “Registration
Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the
Registrable Shares (as defined in the Registration Rights Agreement) under
the
Securities Act of 1933, as amended (the “Securities
Act”).
In connection with the Company’s obligations under the Registration Rights
Agreement, on ____________ ____, the Company filed a Registration Statement
on
Form ________ (File No. 333-_____________) (the “Registration
Statement”)
with
the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Shares which names the Investor as a selling
stockholder thereunder.
In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the Securities Act at [ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and we
have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that
any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC
and
the Registrable Shares are available for resale under the Securities Act
pursuant to the Registration Statement.
Very
truly yours,
By:
cc:
Magellan
Global Fund, L.P.
16
