CHINA SHOE HOLDINGS, INC. REGULATION S SUBSCRIPTION AGREEMENT
EXHIBIT
10.1
REGULATION
S SUBSCRIPTION AGREEMENT
Subscription
agreement, dated as of January 30, 2008, by and between the person whose name(s)
appear(s) at the signature page of this agreement (the “Investor” or the
“undersigned”) and China Shoe Holdings, Inc., a Nevada corporation (the
“Company”), with an address of 488 Wai
Qingsong Road,
Waigang, Jiading District, Shanghai, People’x Xxxxxxxx xx Xxxxx
000000;
WHEREAS,
the Company is desirous of raising capital through the sale 4,230,769 shares
(the “Shares” or the “Securities”) of its authorized but un-issued common stock,
par value $0.0001 per share (the “Common Stock”) for $0.13 per share and upon
the other terms and conditions set forth herein; and
WHEREAS,
the Investor is desires to purchase the Shares upon the terms and conditions
set
forth herein;
NOW
THEREFORE, IT IS AGREED AS FOLLOWS:
SECTION
1
1.1 Subscription.
The
Investor, intending to be legally bound, hereby irrevocably subscribes for
and
agrees to purchase the Shares in a transaction exempt from the registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”)
for a price of US$550,000 (the “Purchase Price”). The Company agrees to sell the
Shares for the Purchase Price to the Investor in a private placement transaction
exempt from U.S. registration pursuant to Regulation S promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the “Securities Act”).
1.2 Purchase
of Shares.
The
undersigned understands and acknowledges that the purchase price to be remitted
to the Company in exchange for the Shares shall be Five Hundred Fifty Thousand
($550,000) Dollars ($.013 per Shares). Simultaneous with the execution and
delivery of this Agreement, the undersigned shall deliver to the Company the
aforementioned purchase price by wire transfer or cashiers or tellers check
drawn on an institution located in the Peoples Republic of China (“PRC”)
reasonably acceptable to the Company.
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1.3 Acceptance
or Rejection.
(a) The
undersigned understands and agrees that its subscription for the Shares is
irrevocable.
(b) In
the
event the sale of the Shares subscribed for by the undersigned is not
consummated by the Company for any reason (in which event this Subscription
Agreement shall be deemed to be rejected), this Subscription Agreement and
any
other agreement entered into between the undersigned and the Company relating
to
this subscription shall thereafter have no force or effect and the Company
shall
promptly return or cause to be returned to the undersigned the Purchase Price
remitted to the Company by the undersigned, without interest thereon or
deduction therefrom. If the Company has not consummated the sale of the Shares
within ten business days of the delivery of this agreement executed by the
Investor then this agreement shall be deemed to have been terminated by the
Company.
SECTION
2
2.1 Closing.
The
closing (the "Closing") of the purchase and sale of the Shares shall occur
simultaneously with the acceptance by the Company of the undersigned's
subscription, as evidenced by the Company's execution of this Subscription
Agreement. Upon Closing, the Company shall deliver the certificate(s) for the
Shares to the Investor.
SECTION
3
3.1 Investor
Representations and Warranties.
The
undersigned hereby acknowledges, represents and warrants to, and agrees with,
the Company and its affiliates as follows:
(a) The
undersigned has full power and authority to enter into this Agreement, the
execution and delivery of this Agreement has been duly authorized, if
applicable, and this Agreement constitutes a valid and legally binding
obligation of the undersigned.
(b) The
undersigned understands that the Company is under no obligation to register
the
Shares under the Securities Act, or to assist the undersigned in complying
with
the Securities Act or the securities laws of any state of the United States
or
of any foreign jurisdiction.
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(c) The
undersigned understands that an investment in the Shares is a speculative
investment that involves a high degree of risk and the potential loss of his
entire investment.
(d) The
undersigned's overall commitment to investments that are not readily marketable
is not disproportionate to the undersigned's net worth, and an investment in
the
Shares will not cause such overall commitment to become excessive.
(e) The
undersigned has received all documents, records, books and other information
pertaining to the undersigned’s investment in the Company that has been
requested by the undersigned. The understand has been advised that the Company
is subject to the reporting requirements of the Securities Exchange Act of
1934,
as amended (the “Exchange Act”), and pursuant thereto has filed reports and
other documents with the Securities and Exchange Commission which are available
to the Company for review at xxx.xxx.xxx (the “Filed Documents”). The
undersigned has made such review of the Filed Documents as the undersigned
has
deemed necessary, including, but not limited to the section entitled “RISK
FACTORS” in the Company’s Form 8-K, dated July 3, 2007 and filed on July 6,
2007.
(f) The
undersigned understands that the price of the Shares has been determined
arbitrarily by the Company and may exceed the market price of the Shares as
quoted on the over the counter bulletin board. The undersigned further
understands that there is a substantial risk of further dilution on his
investment in the Company.
(g) Other
than as set forth herein, the undersigned is not relying upon any other
information, representation or warranty by the Company or any officer, director,
stockholder, agent or representative of the Company in determining to invest
in
the Shares. The undersigned has consulted, to the extent deemed appropriate
by
the undersigned, with the undersigned’s own advisers as to the financial, tax,
legal and related matters concerning an investment in the Shares and on that
basis believes that his or its investment in the Shares is suitable and
appropriate for the undersigned.
(h) Compliance
with Local Laws.
Any
resale of the Securities during the ‘distribution compliance period’ as defined
in Rule 902(f) to Regulation S shall only be made in compliance with exemptions
from registration afforded by Regulation S. Further, any such sale of the
Securities in any jurisdiction outside of the United States will be made in
compliance with the securities laws of such jurisdiction. The Investor will
not
offer to sell or sell the Securities in any jurisdiction unless the Investor
obtains all required consents, if any.
(j) Regulation
S Exemption.
The
undersigned understands that the Securities are being offered and sold in
reliance on an exemption from the registration requirements of United States
federal and state securities laws under Regulation S promulgated under the
Securities Act and that the Company is relying upon the truth and accuracy
of
the representations, warranties, agreements, acknowledgments and understandings
of the Investor set forth herein in order to determine the applicability of
such
exemptions and the suitability of the undersigned to acquire the Securities.
In
this regard, the undersigned represents, warrants and agrees
that:
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1.
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The
undersigned is not a U.S. Person (as defined below) and is an affiliate
(as defined in Rule 501(b) under the Securities Act) of the Company
and is
not acquiring the Securities for the account or benefit of a U.S.
Person.
A U.S. Person means any one of the
following:
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any
natural person resident in the United States of
America;
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any
partnership or corporation organized or incorporated under the laws
of the
United States of America;
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any
estate of which any executor or administrator is a U.S.
person;
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any
trust of which any trustee is a U.S.
person;
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any
agency or branch of a foreign entity located in the United States
of
America;
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any
non-discretionary account or similar account (other than an estate
or
trust) held by a dealer or other fiduciary for the benefit or account
of a
U.S. person;
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any
discretionary account or similar account (other than an estate or
trust)
held by a dealer or other fiduciary organized, incorporated or (if
an
individual) resident in the United States of America;
and
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any
partnership or corporation if:
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(A)
organized or incorporated under the laws of any foreign jurisdiction;
and
(B)
formed by a U.S. person principally for the purpose of investing in securities
not registered under the Securities Act, unless it is organized or incorporated,
and owned, by accredited investors (as
defined in Rule 501(a) under the Securities Act) who are not natural persons,
estates or trusts.
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From
the
time of the origination of contact concerning this Agreement and the date of
the
execution and delivery of this Agreement, the undersigned was outside of the
United States.
(k)
The
undersigned will not, during the period commencing on the date of issuance
of
the Shares and ending on the six month anniversary of such date, or such shorter
period as may be permitted by Regulation S or other applicable securities law
(the “Restricted Period”), offer, sell, pledge or otherwise transfer the Shares
in the United States, or to a U.S. Person for the account or for the benefit
of
a U.S. Person, or otherwise in a manner that is not in compliance with
Regulation S.
(l)
The
undersigned will, after expiration of the Restricted Period, offer, sell, pledge
or otherwise transfer the Shares only pursuant to registration under the
Securities Act or an available exemption therefrom and, in accordance with
all
applicable state and foreign securities laws.
(m)
The
undersigned was not in the United States, engaged in, and prior to the
expiration of the Restricted Period will not engage in, any short selling of
or
any hedging transaction with respect to the Shares, including without
limitation, any put, call or other option transaction, option writing or equity
swap.
(n)
Neither
the undersigned nor or any person acting on his behalf has engaged, nor will
engage, in any directed selling efforts to a U.S. Person with respect to the
Shares and the undersigned and any person acting on his behalf have complied
and
will comply with the “offering restrictions” requirements of Regulation S under
the Securities Act.
(o)
The
transactions contemplated by this Agreement have not been pre-arranged with
a
buyer located in the United States or with a U.S. Person, and are not part
of a
plan or scheme to evade the registration requirements of the Securities Act.
(p)
Neither the undersigned nor any person acting on his behalf has undertaken
or
carried out any activity for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United States,
its territories or possessions, for any of the Shares. The undersigned agrees
not to cause any advertisement of the Shares to be published in any newspaper
or
periodical or posted in any public place and not to issue any circular relating
to the Shares, except such advertisements that include the statements required
by Regulation S under the Securities Act, and only offshore and not in the
U.S.
or its territories, and only in compliance with any local applicable securities
laws.
(q)
Each
certificate representing the Shares shall be endorsed with the following
legends, in addition to any other legend required to be placed thereon by
applicable federal or state securities laws:
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“THE
SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED
IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES
ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED
UNDER THE SECURITIES ACT.”
“TRANSFER
OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF
REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT
TO
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
The
undersigned consents to the Company making a notation on its records or giving
instructions to any transfer agent of the Company in order to implement the
restrictions on transfer of the Securities set forth in this Section 3(q).
The
undersigned further understands that Rule 144 under the securities Act is not
available for resale of the Shares until six months after the Closing and then
only on meeting all of the other conditions of Rule 144.
(r)
The
undersigned is an “accredited investor” as that term is defined in Rule 501 of
the General Rules and Regulations under the Securities Act by reason of Rule
501(a)(3).
SECTION
4
The
Company represents and warrants to the undersigned as follows:
4.1 Organization
of the Company.
The
Company is a corporation duly organized and validly existing and in good
standing under the laws of the State of Nevada, and has all requisite power
and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
4.2 Authority.
(a) The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and to issue the Shares; (b) the
execution and delivery of this Agreement by the Company and the consummation
by
it of the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action and no further consent or authorization of
the
Company or its Board of Directors is required; and (c) this Agreement has been
duly executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with
its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
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4.3 Election
of a Director.
The
Company agrees and undertakes that upon the Closing under this Agreement and
so
long as the Investor owns at least 50% of the Shares, the Company will use
its
best efforts to nominate and cause to be elected to its Board of Directors
one
person nominated by the Investor reasonably acceptable to the present Board
of
Directors of the Company.
SECTION
5
5.1 Indemnity.
The
undersigned agrees to indemnify and hold harmless the Company, its officers
and
directors, employees and its affiliates and their respective successors and
assigns and each other person, if any, who controls any thereof, against any
loss, liability, claim, damage and expense whatsoever (including, but not
limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any false
representation or warranty or breach or failure by the undersigned to comply
with any covenant or agreement made by the undersigned herein or in any other
document furnished by the undersigned to any of the foregoing in connection
with
this transaction.
5.2 Modification.
Neither
this Agreement nor any provisions hereof shall be modified, discharged or
terminated except by an instrument in writing signed by the party against whom
any waiver, change, discharge or termination is sought.
5.3 Notices.
Any
notice, demand or other communication which any party hereto may be required,
or
may elect, to give to anyone interested hereunder shall be sufficiently given
if
(a) deposited, postage prepaid, registered or certified mail, return receipt
requested, addressed to such address as may be given herein, or (b) delivered
personally at such address.
5.4 Counterparts.
This
Agreement may be executed through the use of separate signature pages or in
any
number of counterparts and by facsimile, and each of such counterparts shall,
for all purposes, constitute one agreement binding on all parties,
notwithstanding that all parties are not signatories to the same counterpart.
Signatures may be facsimiles.
5.5 Binding
Effect.
Except
as otherwise provided herein, this Agreement shall be binding upon and inure
to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives and assigns. If the undersigned is more than
one person, the obligation of the undersigned shall be joint and several and
the
agreements, representations, warranties and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and his
heirs, executors, administrators and successors.
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5.6 Entire
Agreement.
This
Agreement and the documents referenced herein contain the entire agreement
of
the parties and there are no representations, covenants or other agreements
except as stated or referred to herein and therein.
5.7 Assignability.
This
Agreement is not transferable or assignable by the undersigned.
5.8 Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nevada as they are applied to contracts executed, delivered and to
be
performed entirely within such state, without giving effect to conflicts of
law
principles.
5.9 Pronouns.
The use
herein of the masculine pronouns "him" or "his" or similar terms shall be deemed
to include the feminine and neuter genders as well and the use herein of the
singular pronoun shall be deemed to include the plural as well.
IN
WITNESS WHEREOF, the undersigned has executed this Agreement on the 30 day
of
January 2008.
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Amount
of Investment:
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US$550,000
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Shares
Purchased:
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4,230,769
shares
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/s/
XX XXXXXX
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XX
XXXXXX
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Investor
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Print
Name
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Address:
Xx. 00, Xxxxx 0, 0 Xxx Xxxx Xxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx, XX
Xxxxx
ACCEPTANCE
OF SUBSCRIPTION
The
Company hereby accepts the above application for subscription for 4,230,769
Shares for US$550,000 on behalf of the Company.
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Dated:
January 30, 2008
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/s/
Gu Xianzhong
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Gu
Xianzhong, President
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