EXHIBIT 10.35

 

FORM OF NOTE EXCHANGE AGREEMENT

 

THIS NOTE EXCHANGE AGREEMENT (the “Agreement”) is made and entered in this ____
day of February, 2014 by and among Armco Metals Holdings, Inc., a Nevada
corporation (the “Corporation”), Henan Armco & Metawise Trading Co., Ltd., a
Chinese company (the “Subsidiary”) and ___________ (the “Lender”).

 

RECITALS:

 

WHEREAS, the Corporation is a U.S. publicly traded company, listed on the NYSE
MKT (the “Exchange”), and the shares of its common stock are registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”).

 

WHEREAS, the Subsidiary is a wholly-owned subsidiary of the Corporation.

 

WHEREAS, on _____________, 2013 the Subsidiary borrowed RMB__________ (the
“Loan”) from the Lender under the terms of a Loan Contract, a copy of which is
attached hereto as Exhibit A and incorporated herein by such reference (the
“Loan Contract”).

 

WHEREAS, the Subsidiary and the Corporation desire to exchange the Loan Contract
for a convertible promissory note in the principal amount of the Loan and the
Lender has agreed to such exchange (the “Note Exchange”).

 

WHEREAS, it is the intention of the parties hereto that the Note Exchange shall
qualify as a transaction in securities exempt from registration or qualification
under the Securities Act of 1933, as amended (the “Securities Act”) in reliance
on an exemption provided by Regulation S promulgated thereunder.

 

NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:

 

Section 1. Note Exchange

 

1.1     The Lender hereby exchanges the Loan Contract for the convertible
promissory note (the “Note”) in the form attached hereto as Exhibit B in full
and complete satisfaction of all obligations of the Subsidiary under the Loan
Contract. The Lender waives the payment of any accrued but unpaid interest due
under the Loan Contract. Following the execution of this Agreement, the Lender
shall tender the original Loan Contract to the Corporation for cancellation. The
failure, however, of the Lender to deliver the original Loan Contract to the
Corporation shall not effect the cancellation of all obligations thereunder as
set forth herein.

 

1.2     The Corporation will use its reasonable best efforts to hold a special
meeting of its stockholders as soon as practicable for the purpose of obtaining
the consent of the holders of its issued and outstanding common stock (the
“Shares”) to the conversion terms and conditions of the Note in accordance with
the Nevada Revised Statutes, which such meeting shall be called and held in
accordance with the continued listing requirements of the Exchange and the rules
and regulations of the United States Securities and Exchange Commission,
including under the Exchange Act (the “Stockholder Approval”).

 

Section 2. Representations and Warranties of the Lender

 

The Lender represents and warrants to the Corporation as follows:

 

2.1     The Lender is the sole and exclusive owner of the Loan Contract which is
owned and held free and clear of all rights, claims, liens and encumbrances. The
Lender has the power to enter into this Agreement and to carry out its
obligations hereunder. This Agreement has been duly executed by the Lender and
constitutes the valid and binding obligation of the Lender, enforceable against
the Lender in accordance with its terms, except as may be limited by bankruptcy,
moratorium, insolvency or other similar laws generally affecting the enforcement
of creditors’ rights.

 

 
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2.2     Neither the Lender nor any person or entity for whom the Lender is
acting as fiduciary is a “U.S. Person.” For the purposes of this Agreement, a
“U.S. Person” means any one of the following: (i) any natural person resident in
the United States of America; (ii) any partnership or corporation organized or
incorporated under the laws of the United States; (iii) any estate of which any
executor or administrator is a U.S. Person; (iv) any trust of which any trustee
is a U.S. Person; (v) any agency or branch of a foreign entity located in the
United States; (vi) 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; (vii) 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; or (viii) any
partnership or corporation if (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.

 

2.3     The Lender acknowledges that the Note shall not be convertible until
such time, if ever, that the Stockholder Approval is obtained. In the event the
Stockholder Approval is not obtained despite the best efforts of the
Corporation, the Note shall become due and payable in accordance with its terms
and the Lender shall have no right to convert such Note into equity of the
Corporation. The Lender further acknowledges that should it elect to convert the
Note, the Corporation makes no representations or warranties as to either (i)
continued existence of a public market for the Corporation’s securities and/or
the future the market price of its Common Stock, or (ii) the ability of the
Lender to sell the Shares and receive net proceeds equal to or greater than the
amount of the Note. The Corporation shall not be obligated to pay the Lender any
amount or otherwise issue the Lender any additional Shares to make up any “short
fall” between the value of the Shares the Lender may receive upon their ultimate
sale and the amount of the Loan.

 

2.4     The Lender is acquiring the Note for the Lender’s own account and the
Lender is not acquiring the Note on behalf of any U.S. Person. The Lender is not
an “affiliate” of the Corporation as such term is defined in the Exchange Act.

 

2.5     Providing that the Stockholder Approval has been obtained and the Note
becomes convertible by its terms, all subsequent offers and sales of the Shares
which may be issued upon the conversion of the Note will be made (a) outside the
United States in compliance with Rule 903 or Rule 904 of Regulation S, (b)
pursuant to registration of the Shares under the Securities Act, or (c) pursuant
to an exemption from such registration. The Lender acknowledges that the
Corporation has no obligation to register the Note or the Shares under the
Securities Act or otherwise. Each certificate representing the Shares will have
the following or substantially similar legend thereon:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO
A “U.S. PERSON” AS THAT TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE
SECURITIES ACT UNLESS THE SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OR ARMCO METALS HOLDINGS, INC. HAS BEEN PROVIDED WITH AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

 

2.6     The Lender represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with the Note Exchange
and the execution of this Agreement by the Lender, including (i) the legal
requirements within Lender’s jurisdiction, (ii) any foreign exchange
restrictions applicable to the Note Exchange and the acceptance of the Note in
full satisfaction of the Loan Contract, (iii) any governmental or other consents
that may need to be obtained by Lender, and (iv) the income tax and other tax
consequences, if any, that may be relevant to the Note Exchange, holding and/or
conversion of the Note, and sale or transfer of the Shares.

 

 
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Section 3. Representations and Warranties of

the Corporation and the Subsidiary

 

The Corporation and the Subsidiary each represent and warrant to the Lender as
follows:

 

3.1     The entity is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was formed, and is
entitled to own or lease its properties and to carry on its business as and in
the places where such properties are now owned, leased or operated and such
business is now conducted.

 

3.2     The entity has all necessary corporate power and authority to execute
this Agreement and perform its obligations hereunder. This Agreement constitutes
the valid and binding obligation of the entity enforceable against it in
accordance with its terms, except as may be limited by bankruptcy, moratorium,
insolvency or other similar laws generally affecting the enforcement of
creditors’ rights.

 

Section 4. Covenants

 

4.1     Each party hereto agrees to pay its own costs and expenses incurred in
negotiating this Agreement and consummating the transactions described herein.

 

4.2     The parties shall execute such documents and other papers and take such
further action as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.

 

Section 5. Survival of Representations and Warranties

of the Lender and the Corporation

 

Each party shall have the right to rely fully upon the representations,
warranties, covenants and agreements of the other party contained in this
Agreement or in any document delivered by such other party or any of its
representatives, in connection with the transactions contemplated by this
Agreement. All such representations, warranties, covenants and agreements shall
survive the execution and delivery hereof for 12 months following the date of
this Agreement.

 

Section 6. Miscellaneous

 

6.1     The waiver of a breach of this Agreement or the failure of any party
hereto to exercise any right under this agreement shall in no event constitute
waiver as to any future breach whether similar or dissimilar in nature or as to
the exercise of any further right under this Agreement.

 

6.2     This Agreement may be amended or modified only by an instrument of equal
formality signed by the parties or the duly authorized representatives of the
respective parties.

 

6.3     This Agreement shall be binding upon the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns. This
Agreement is not assignable except by operation of law.

 

6.4     Until otherwise specified in writing, the mailing addresses of both
parties of this Agreement shall be as follows:

 

If to the Corporation

One Waters Park Drive

and the Subsidiary:

Suite 98

 

San Mateo, CA 94403

 

Attention: Kexuan Yao, Chief Executive Officer

 

Telecopier: 650-212-7630

 

 

If to the Lender:

_________________________

 

_________________________

 

_________________________

  

 
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or such other place as may be designed by a party pursuant to the terms of this
Agreement. Any notice or statement given under this Agreement shall be deemed to
have been given if sent by certified mail, return receipt requested, overnight
courier or personal delivery, to the other party(ies) at the addresses indicated
above or at such other address or number as may be furnished in writing in
accordance with this paragraph.

 

6.5     This Agreement shall be governed and construed in accordance with the
laws of the State of Nevada, without regard to the conflicts of law provisions
thereof.

 

6.6     This Agreement (including the Exhibits hereto) and the Note executed and
delivered in connection with the consummation of the transactions contemplated
herein contain the entire agreement among the parties with respect to the Note
Exchange, and supersede all prior agreements, written or oral, with respect
thereto.

 

6.7     The headings in this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement.

 

6.8     The invalidity or unenforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement or other provision of this Agreement
shall in no way affect the validity or enforcement of any other provision or any
part thereof.

 

6.9     This Agreement may be executed in any number of counterparts, each of
which, when so executed, shall constitute an original copy hereof, but all of
which together shall consider but one and the same document. This Agreement may
be executed and delivered by facsimile transmission and when so executed and
delivered shall have the same effect as if the receiving party had received an
original counterpart of this Agreement.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.

 

 

ARMCO METALS HOLDINGS, INC.

 

 

 

  

 

 

By:

 

 

 

 

Kexuan Yao,

 

 

 

Chief Executive Officer

 

 

 

HENAN ARMCO & METAWISE

TRADING CO., LTD.

 

 

 

  

 

 

By:

 

 

 

 

Kexuan Yao,

 

 

 

Chief Executive Officer

 

           

LENDER:

 

_______________________________

___________

 

 

 

 

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