Document:

Exhibit
10.12

 

FORM
OF EMPLOYMENT AGREEMENT

 

This
EMPLOYMENT AGREEMENT (this “Agreement”), dated as of August 22, 2018, by and among [HF FOODS GROUP INC.], a
Delaware corporation having its principal executive offices in Greensboro, NC (the “Company”), and JIAN MING
NI (“Executive”).

 

WHEREAS,
the Company desires to employ Executive, and Executive desires to be employed by the Company, in accordance with the terms and
provisions herein contained;

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

 

1.
Employment.

 

(a)
The Company hereby employs Executive, and Executive hereby accepts such employment, on the terms and subject to the conditions
contained herein.

 

(b)
Executive shall serve as the Chief Financial Officer of the Company. At the request of the Company, Executive further agrees,
without additional compensation, to act as an officer and/or director of subsidiaries of the Company.

 

(c)
Executive shall devote substantially his full business time and attention and his best efforts to the performance of his duties
hereunder; provided, however, that Executive may engage in charitable, educational, civic and religious activities, and may participate
as an investor, officer or director with respect to passive investments owned by or for the benefit of Executive or members of
his immediate family, but only to the extent such activities and service do not result in a conflict of interest with the Company
or interfere with the performance of Executive’s duties and responsibilities hereunder.

 

2.
Term. The term of the employment of Executive with the Company commences on August 22, 2018 and shall continue under this
Agreement through December 31, 2018 (the “Initial Term”), subject to the terms and provisions of this Agreement.
After the expiration of the Initial Term, this Agreement shall be automatically renewed for additional one-year terms (each, a
“Renewal Term”) unless either the Company or Executive gives written notice to the other of the termination
of this Agreement at least ninety (90) days in advance of the next successive one-year term. Any election by the Company or Executive
not to renew such employment at the end of the Initial Term or any Renewal Term shall be at the sole, absolute discretion of the
Company or Executive, respectively. The period Executive is employed hereunder during the Initial Term and any such Renewal Terms
is referred to herein as the “Term”. For purposes of this Agreement, the phrase “Termination Date”
shall mean (a) in the case of the Employee’s death, his date of death; (b) in the case of Good Reason, 30 days from the
date the written notice of termination is given to the Company, provided the Company has not remedied such facts and circumstances
constituting Good Reason to the reasonable and good faith satisfaction of the Employee; (c) in the case of termination of employment
on or after the Term, the last day of employment; and (d) in all other cases, the date specified in the written notice of termination;
provided, however, if the Employee’s employment is terminated by the Company for any reason except Cause, the date specified
in the notice of termination shall be at least 30 days from the date the notice of termination is given to the Employee, and provided
further that in the case of Disability, the Employee shall not have returned to the full-time performance of his duties during
such period of at least 30 days.

 

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3.
Salary. Executive’s base salary (“Base Salary”) shall be at the rate of $70,000 per year, which
shall be payable in accordance with the Company’s customary payroll practices in effect from time to time. The Base Salary
shall be subject to possible increases at the sole discretion of the Board; provided, however, that in no event shall Executive’s
Base Salary during the Term be less than at the rate of $70,000 per year.

 

4.
Annual Bonus. For each complete fiscal year during the Term (or, on a prorated basis for any period representing less than
a full fiscal year), Executive will be eligible to be considered for an annual cash incentive bonus or any other type of award
each calendar year during the term of Executive’s Employment under this Agreement based upon the achievement of certain
objective or subjective criteria established by, and in the sole discretion of, the Company’s Board of Directors (the “Board”)
or any Compensation Committee of the Board (the “Committee”), as applicable.

 

5.
Equity and Long Term Incentive Awards. During the term of this Agreement, Employee shall be eligible to receive equity
or performance awards payable in shares, cash or other property pursuant to any long-term incentive compensation plan adopted
by the Committee or the Board. Equity awards shall be granted under the Company’s 2018 Equity Incentive Plan or such other
equity compensation plan as may be adopted by the Company in the discretion of the Committee or the Board. The actual grant date
value of any such awards shall be determined in the discretion of the Committee or Board and any such awards shall include such
vesting conditions and other terms and conditions as determined by the Committee or the Board.

 

6.
Deduction Limitations. In the event that the compensation payable to Executive hereunder becomes (or is reasonably likely
to become) subject to the deduction limitations of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),
taking into account the application of any applicable transition period under Section 162(m) of the Code and the regulations promulgated
thereunder, the parties agree to negotiate in good faith to implement as promptly as possible such revisions to the structure
(including the timing, form and type) of such compensation so as to achieve to the greatest extent possible full tax deductibility
of such compensation under Section 162(m) of the Code; provided, however, that in no event shall any such revisions
result in a reduction in the aggregate amount of compensation otherwise contemplated to be payable to Executive hereunder.

 

7.
Employee Benefits.

 

(a)
Generally. During the Term, Executive shall be entitled to participate in any and all Company employee benefit plans and
programs (except as otherwise provided in this Agreement or as determined by the Compensation Committee of the Board, excluding
bonus and equity-based plans), which generally are made available to senior officers of the Company, in accordance with, and subject
to, the terms and conditions of such plans and programs (including, without limitation, any eligibility limitations) as they may
be modified by the Company from time to time in its sole discretion.

 

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(b)
Life Insurance. During the Term, the Company shall pay the premiums, up to a maximum of $50,000 per annum, for the $5,000,000
whole life insurance policy presently maintained by Executive. Upon termination of this Agreement, Executive will reimburse to
the Company the amount of any such annual premium paid by it attributable to any period after the end of the Term.

 

(c)
Vacation. During the Term, Executive shall be entitled to five (5) weeks of paid vacation in each fiscal year of the Company.
Executive shall not forfeit any vacation time that remains unused at the end of any fiscal year.

 

(d)
Transportation. During the Term, the Company shall provide Executive with an automobile and driver for transportation to
and from the Company’s offices and for other business purposes. Such automobile shall be at least substantially equivalent
in price to the private vehicle operated by Executive on and immediately preceding the effective date of this Agreement.

 

(e)
Expense Reimbursement. During the Term, the Company shall reimburse Executive for all reasonable and necessary expenses
(including first class air travel and the use of a private jet leased by the Company or one of its affiliates for select trips,
as appropriate) incurred by Executive incident to the performance of his duties hereunder, in accordance with the Company’s
policies and procedures.

 

(f)
Continuation Benefits. “Continuation Benefits” shall be the continuation of the benefits described in the foregoing
subsections 7(a)-7(e), inclusive, for the period commencing on the termination date and terminating 12 months thereafter, or such
other period as specifically stated by this agreement (the “Continuation Period”) at the Company’s expense on
behalf of the Employee and his dependents; provided, however, that (a) in no event shall the Continuation Period exceed 18 months
from the Termination Date; and (b) the level and availability of benefits provided during the Continuation Period shall at all
times be subject to the post-employment conversion or portability provisions of the benefit plans. The Company’s obligation
hereunder with respect to the foregoing benefits shall also be limited to the extent that if the Employee obtains any such benefits
pursuant to a subsequent employer’s benefit plans, the Company may reduce the coverage of any benefits it is required to
provide the Employee hereunder as long as the aggregate coverage and benefits of the combined benefit plans is no less favorable
to the Employee than the coverage and benefits required to be provided hereunder. This definition of Continuation Benefits shall
not be interpreted so as to limit any benefits to which the Employee, his dependents or beneficiaries may be entitled under any
of the Company’s employee benefit plans, programs or practices following the Employee’s termination of employment,
including, without limitation, retiree medical and life insurance benefits.

 

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8.
Termination of Employment.

 

(a)
Death and Total Disability. Executive’s employment under this Agreement shall terminate immediately upon his death
or Total Disability (as defined below). For purposes of this Agreement, the term “Total Disability” shall mean
any mental or physical condition that: (i) prevents Executive from reasonably discharging his services and employment duties hereunder;
(ii) is attested to in writing by a physician who is licensed to practice in the State of New York and is mutually acceptable
to Executive and the Company (or, if the Executive and the Company are unable to mutually agree on a physician, the Company Board
may select a physician who is a chairman of a department of medicine at a university-affiliated hospital in the City of New York);
and (iii) continues, for any one or related condition, during any period of six (6) consecutive months or for a period aggregating
six (6) months in any twelve-month period. Total Disability shall be deemed to have occurred on the last day of such applicable
six-month period.

 

(b)
Cause. The Company shall at all times, upon written notice to Executive given at least ten (10) days prior to the Termination
Date, have the right to terminate this Agreement and the employment of Executive hereunder for Cause (as defined below); provided,
however, that prior to such termination taking effect, Executive shall have been given an opportunity to meet with the Board,
and a majority of the Board shall have thereafter voted to terminate Executive’s employment. For purposes of this Agreement,
the term “Cause” means the occurrence of any one of the following events: (i) Executive’s gross negligence,
willful misconduct or dishonesty in performing his duties hereunder; (ii) Executive’s conviction of a felony (other than
a felony involving a traffic violation); (iii) Executive’s commission of a felony involving a fraud or other business crime
against the Company or any of its subsidiaries; or (iv) Executive’s breach of any of the covenants set forth in Section
11 hereof; provided that, if such breach is curable, Executive shall have an opportunity to correct such breach within thirty
(30) days after written notice by the Company to Executive thereof.

 

(c)
Change of Control. Unless otherwise agreed by the Company and Executive, this Agreement shall automatically terminate upon
a Change of Control. For purposes of this Agreement, a “Change of Control” shall mean any of the following
events described in subsections 8(c)(i), 8(c)(ii), or 8(c)(iii):

 

(i)
(A) An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”)
by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended (the “1934 Act”)), other than a beneficial owner of more than five (5%) percent of the Company’s
outstanding Common Stock as of the date hereof, including, without limitation, Executive, as a result of the consummation of the
merger transaction between the Company, HF Group Holding Corporation and the stockholders of HF Group Holding Corporation which
acquisition occurs after the effective date of this Agreement, immediately after which such Person has “Beneficial Ownership”
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of forty percent (40%) or more of the combined voting power
of the Company’s then outstanding Voting Securities ; provided, however, that in determining whether a Change in Control
has occurred, Voting Securities which are acquired in a “Non-Control Acquisition” (as defined below) shall not constitute
an acquisition which would cause a Change in Control. A “Non-Control Acquisition” shall mean an acquisition by (1)
an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person
of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company
(a “Subsidiary”), or (2) the Company or any Subsidiary.

 

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(B) Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because a Person (the “Subject
Person”) gained Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases
the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but
for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition
by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage
of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.

 

(ii)
The individuals who, as of the date this Agreement is approved by the Board , are members of the Board (the “Incumbent Board”),
cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for
election by the Company’s stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement, be considered and defined as a member of the Incumbent Board;
and provided, further, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual “Election Contest” (as described in Rule 14a-11 promulgated under the 1934
Act) or other solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”).

(iii) Approval by stockholders of the Company of:

 

(A)
A merger, consolidation or reorganization involving the Company, unless: (1) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation
resulting from such merger or consolidation or reorganization (the “Surviving Corporation”) in substantially the same
proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (2) the
individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation,
and (3) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained
by the Company, the Surviving Corporation or any Subsidiary) becomes Beneficial Owner of twenty percent (20%) or more of the combined
voting power of the Surviving Corporation’s then outstanding voting securities as a result of such merger, consolidation
or reorganization, a transaction described in clauses (1) through (3) shall herein be referred to as a “Non-Control Transaction”;
or

 

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(B)
An agreement for the sale or other disposition of all or substantially all of the assets of the Company, to any Person, other
than a transfer to a Subsidiary, in one transaction or a series of related transactions; or

 

(C)
Any plan or proposal for the liquidation or dissolution of the Company.

 

(iv)
Notwithstanding anything contained in this Agreement to the contrary, if the Employee’s employment is terminated prior to
a Change in Control and the Employee reasonably demonstrates that such termination (i) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a Change in Control (a “Third Party”) or
(ii) otherwise occurred in connection with, or in anticipation of, a Change in Control, then for all purposes of this Agreement,
the date of a Change in Control with respect to the Employee shall mean the date immediately prior to the date of such termination
of the Employee’s employment.

 

(d)
Executive Termination Without Good Reason. Executive agrees that he shall not terminate his employment for any reason other
than Good Reason without giving the Company at least six months’ prior written notice of the effective date of such termination.
Executive acknowledges that the Company retains the right to waive the notice requirement, in whole or in part, and accelerate
the effective date of Executive’s termination. If the Company elects to waive the notice requirement, in whole or in part,
the Company shall have no further obligations to Executive under this Agreement other than to make the payments specified in Section
9(a). After Executive provides a notice of termination, the Company may, but shall not be obligated to, provide Executive with
work to do and the Company may, in its discretion, in respect of all or part of an unexpired notice period, (i) require Executive
to comply with such conditions as it may specify in relation to attending at, or remaining away from, the Company’s places
of business, or (ii) withdraw any powers vested in, or duties assigned to, Executive. For purposes of a notice of termination
given pursuant to this Section 8(d), the Termination Date (as defined below) shall be the last day of the six month notice period,
unless the Company elects to waive the notice requirement as set forth herein.

 

For
purposes of this Agreement, “Good Reason” means and shall be deemed to exist if: (i) Executive is assigned
duties or responsibilities that are inconsistent in any material respect with the scope of the duties or responsibilities of his
title or position, as set forth in this Agreement; (ii) the Company fails to perform substantially any material term of this Agreement,
and, if such failure is curable, fails to correct such failure within thirty (30) days after written notice by Executive to the
Company; (iii) Executive’s office is relocated more than fifty (50) miles from its location immediately prior to such relocation;
(iv) the Company fails to have this Agreement assumed by a successor; (v) Executive’s duties or responsibilities are significantly
reduced, except with respect to any corporate action initiated or recommended by Executive and approved by the Board; (vi) Executive
is involuntarily removed from the Boards of the Company (other than in connection with a termination of employment for Cause,
voluntary termination without Good Reason, death or Total Disability); or (vii) the Board is managing the day-to-day operations
of the Company and, after receipt of written notice from Executive to such effect (and sufficient time to cease such involvement),
the Board continues to do so.

 

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(e)
Executive Termination for Good Reason. Executive may terminate his employment hereunder for Good Reason (and this Agreement
shall accordingly terminate) by providing written notice of his intention to terminate, and specifying the circumstances relating
thereto, to the Board within thirty (30) days following the occurrence of any of the events specified above as constituting Good
Reason and at least ten (10) days prior to the Termination Date.

 

9.
Consequences of Termination or Breach.

 

(a)
Termination Due to Death or Total Disability, for Cause, or Without Good Reason. If Executive’s employment under
this Agreement is terminated under Sections 8(a), 8(b), or 8(d) hereunder, or Executive terminates his employment for any reason
other than Good Reason, Executive shall not thereafter be entitled to receive any compensation and benefits under this Agreement
other than for (i) Base Salary earned but not yet paid prior to the Termination Date, and (ii) reimbursement of any expenses pursuant
to Section 7(e) incurred prior to the Termination Date (collectively, the “Accrued Obligations”).

 

(b)
Termination Upon Change of Control. In the event that within ninety days (90) days of a Change of Control, Employee is terminated,
or Employee’s status, title, position or responsibilities are materially reduced and Employee terminates his Employment,
the Company shall pay and/or provide to the Employee, the following compensation and benefits, in lieu of any other payments due
hereunder: (i) the Accrued Obligations; (ii) the Continuation Benefits; and (iii) a lump sum payment within ten (10) days of the
Termination Date equal to two times (A) Executive’s then current Base Salary plus (B) the Annual Bonus paid or payable to
Executive pursuant to Section 4 with respect to the Company’s last full fiscal year ended prior to the Termination Date.
Notwithstanding the foregoing, if the payment under this Section 9(b), either alone or together with other payments which the
Employee has the right to receive from the Company, would constitute an “excess parachute payment” as defined in Section
280G of the Internal Revenue Code of 1986, as amended (the “Code”), the aggregate of such credits or payments under
this Agreement and other agreements shall be reduced to the largest amount as will result in no portion of such aggregate payments
being subject to the excise tax imposed by Section 4999 of the Code. The priority of the reduction of excess parachute payments
shall be in the discretion of the Employee. The Company shall give notice to the Employee as soon as practicable after its determination
that Change of Control payments and benefits are subject to the excise tax, but no later than ten (10) days in advance of the
due date of such Change of Control payments and benefits, specifying the proposed date of payment and the Change of Control benefits
and payments subject to the excise tax. Employee shall exercise his option under this Section 9(b) by written notice to the Company
within five (5) days in advance of the due date of the Change of Control payments and benefits specifying the priority of reduction
of the excess parachute payments.

 

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(c)
Termination Without Cause or With Good Reason. If Executive’s employment under this Agreement is terminated by the
Company without Cause (which right the Company shall have at any time during the Term) and other than for the reasons provided
for in Sections 8(a) or 8(b) above, or Executive terminates his employment for Good Reason, the sole obligations of the Company
to Executive shall be: (i) to make the payments described in Section 9(a) for Accrued Obligations; (ii) to pay the Continuation
Benefits; (iii) to pay to Executive in a single lump sum payment, within thirty (30) days from the Termination Date, a separation
allowance equal to (A) two times Executive’s then current Base Salary plus (B) the Annual Bonus paid or payable to Executive
pursuant to Section 4 with respect to the Company’s last full fiscal year ended prior to the Termination Date; and (iv)
immediate accelerated vesting of any unvested Restricted Shares and unvested outstanding stock option(s). Executive acknowledges
and agrees that in the event the Company terminates Executive’s employment without Cause and other than for the reasons
provided for in Sections 8(a), 8(b) or 8(c), or Executive terminates his employment for Good Reason, Executive’s sole remedy
shall be to receive the payments and benefits specified in this Section 9(c).

 

(d)
No Duty to Mitigate. Executive shall not be required to mitigate the amount of any damages that Executive may incur or
other payments to be made to Executive hereunder as a result of any termination or expiration of this Agreement, nor shall any
payments to Executive be reduced by any other payments Executive may receive, except as set forth herein.

 

10.
Section 409A Compliance.

 

(a)
Tax Treatment. To the extent applicable, it is intended that any amounts payable under this Agreement shall either be exempt
from Section 409A of the Code or shall comply with Section 409A (including Treasury regulations and other published guidance related
thereto) so as not to subject Employee to payment of any additional tax, penalty or interest imposed under Section 409A of the
Code. The provisions of this Agreement shall be construed and interpreted to the maximum extent permitted to avoid the imputation
of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably
possible) the intended benefit payable to Employee. Notwithstanding the foregoing, the Company makes no representations regarding
the tax treatment of any payments hereunder, and the Employee shall be responsible for any and all applicable taxes, other than
the Company’s share of employment taxes on the severance payments provided by the Agreement. Employee acknowledges that
Employee has been advised to obtain independent legal, tax or other counsel in connection with Section 409A of the Code.

 

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(b)
Nonqualified Deferred Compensation. Notwithstanding any provisions of this Agreement to the contrary, if Employee is a
“specified employee” (within the meaning of Section 409A of the Code and the regulations adopted thereunder) at the
time of Employee’s separation from service and if any portion of the payments or benefits to be received by Employee upon
separation from service would be considered deferred compensation under Section 409A of the Code and the regulations adopted thereunder
(“Nonqualified Deferred Compensation”), amounts that would otherwise be payable pursuant to this Agreement during
the six-month period immediately following Employee’s separation from service that constitute Nonqualified Deferred Compensation
and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following Employee’s
separation from service that constitute Nonqualified Deferred Compensation will instead be paid or made available on the earlier
of (i) the first business day of the seventh month following the date of Employee’s separation from service and (ii) Employee’s
death. Notwithstanding anything in this Agreement to the contrary, distributions upon termination of Employee’s employment
shall be interpreted to mean Employee’s “separation from service” with the Company (as determined in accordance
with Section 409A of the Code and the regulations adopted thereunder). Each payment under this Agreement shall be regarded as
a “separate payment” and not of a series of payments for purposes of Section 409A of the Code.

 

(c)
Expense Reimbursements. Except as otherwise specifically provided in this Agreement, if any reimbursement to which the
Employee is entitled under this Agreement would constitute deferred compensation subject to Section 409A of the Code, the following
additional rules shall apply: (i) the reimbursable expense must have been incurred, except as otherwise expressly provided in
this Agreement, during the term of this Agreement; (ii) the amount of expenses eligible for reimbursement during any taxable year
will not affect the amount of expenses eligible for reimbursement in any other taxable year; (iii) the reimbursement shall be
made as soon as practicable after Employee’s submission of such expenses in accordance with the Company’s policy,
but in no event later than the last day of Employee’s taxable year following the taxable year in which the expense was incurred;
and (iv) the Employee’s entitlement to reimbursement shall not be subject to liquidation or exchange for another benefit.

 

11.
Restrictive Covenants and Confidentiality.

 

(a)
Confidentiality. Recognizing that the knowledge, information and relationship with customers, suppliers and agents, and
the knowledge of the Company’s and its parents’, subsidiaries’ and affiliates’ business methods, systems,
plans and policies, which Executive shall hereafter establish, receive or obtain as an employee of the Company or any such parent,
subsidiary or affiliate, are valuable and unique assets of the businesses of the Company and its parents, subsidiaries and affiliates,
Executive agrees that, during and after the Term hereunder, he shall not (otherwise than pursuant to his duties hereunder) disclose,
without the prior written approval of the Board, any such knowledge or information pertaining to the Company or any of its parents,
subsidiaries and affiliates, their business, personnel or policies, to any person, firm, corporation or other entity, for any
reason or purpose whatsoever. The provisions of this Section 11(b) shall not apply to information which is or shall become generally
known to the public or the trade (except by reason of Executive’s breach of his obligations hereunder), information which
is or shall become available in trade or other publications and information which Executive is required to disclose by law or
an order of a court of competent jurisdiction. If Executive is required by law or a court order to disclose such information,
he shall notify the Company of such requirement and provide the Company an opportunity (if the Company so elects) to contest such
law or court order. Executive agrees that all tangible materials containing confidential information, whether created by Executive
or others which shall come into Executive’s custody or possession during Executive’s employment shall be and is the
exclusive property of the Company or its parents, subsidiaries and affiliates. Upon termination of Executive’s employment
for any reason whatsoever, Executive shall immediately surrender to the Company all confidential information and property of the
Company or its parents, subsidiaries or affiliates in Executive’s possession.

 

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(b)
Non-Compete. Executive agrees that during the Term, Executive will not engage in, or carry on, directly or indirectly,
either for himself or as an officer or director of a corporation or as an employee, agent, associate, or consultant of any person,
partnership, business or corporation, any business in competition with the business carried on by the Company and its parents,
subsidiaries and affiliates in any market in which the Company or its parents, subsidiaries and affiliates actively conduct business.
Notwithstanding the foregoing, except as otherwise agreed to in writing, Executive shall have the right to perform such incidental
services as are necessary in connection with (i) his private passive investments, (ii) his charitable or community activities,
(iii) his participation in trade or professional organizations, and (iv) his service as an executive or on the board of directors
(or comparable body) of any third-party corporate entity that is not a competitive entity, so long as these activities do not
materially interfere with Executive’s duties hereunder and, with respect to (iv), Executive obtains prior Company consent,
which consent will not be unreasonably withheld. Company’s consent under (iv) is provided by its execution of this Agreement,
with respect to Executive’s participation in ownership and management of the entities named on Exhibit I, attached hereto
and incorporated herein by reference. Executive may also provide limited services to other parties provided such services are
without remuneration.

 

12.
Injunction. It is recognized and hereby acknowledged by the parties hereto that a breach or violation by Executive of any
of the covenants or agreements contained in Section 11 of this Agreement may cause irreparable harm and damage to the Company
or its parents, subsidiaries or affiliates, the monetary amount of which may be virtually impossible to ascertain. Therefore,
Executive recognizes and hereby agrees that the Company and its parents, subsidiaries and affiliates shall be entitled to an injunction
from any court of competent jurisdiction enjoining and restraining any breach or violation of any or all of the covenants and
agreements contained in Section 11 of this Agreement by Executive and/or his employees, associates, partners or agents, or entities
controlled by one or more of them, either directly or indirectly, and that such right to injunction shall be cumulative and in
addition to whatever other rights or remedies the Company, and its parents, subsidiaries or affiliates may possess.

 

13.
Indemnification. To the extent permitted by law and the Company’s by-laws, the Company will indemnify Executive with
respect to any claims made against him as an officer, director or employee of the Company or any subsidiary of the Company, except
for acts taken in bad faith or in breach of his duty of loyalty to the Company. Executive shall be covered under a directors and
officers liability insurance policy with a coverage limit of at least $2,000,000, to be maintained by the Company during the Term
(and for as long thereafter as is practicable).

 

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14.
Attorney’s Fees. The Company shall pay or reimburse Executive for reasonable legal expenses (including reasonable
attorney’s fees and expenses) incurred in connection with the preparation or any subsequent renegotiation of this Agreement
up to a maximum of $25,000.

 

15.
Taxes. All payments to be made to and on behalf of Executive under this Agreement will be subject to required withholding
of federal, state and local income and employment taxes, and to related record reporting requirements.

 

16.
Executive’s Representations; No Delegation. Executive hereby represents and warrants that he is not precluded, by
any agreement to which he is a party or to which he is subject, from executing and delivering this Agreement, and that this Agreement
and his performance of the duties and responsibilities set forth herein does not violate any such agreement. Executive shall indemnify
and hold harmless the Company and its parents, subsidiaries and affiliates and their officers, directors, employees, agents and
advisors for any liabilities, losses and costs (including reasonable attorney’s fees) arising from any breach or alleged
breach of the foregoing representation and warranty. Executive shall not delegate his employment obligations under this Agreement
to any other person.

 

17.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina
applicable to agreements made and to be performed in that state, without regard to its conflict of laws provisions.

 

18.
Entire Agreement; Amendment. This Agreement supersedes all prior agreements between the parties with respect to its subject
matter, is intended (with the documents referred to herein) as a complete and exclusive statement of the terms of the agreement
between the parties with respect thereto and may be amended only by a writing signed by all parties hereto.

 

19.
Notices. Any notice or other communication made or given in connection with this Agreement shall be in writing and shall
be deemed to have been duly given when delivered by hand, by facsimile transmission, by a nationally recognized overnight delivery
service or mailed by registered mail, return receipt requested, to a party at his or its address set forth below or at such other
address as a party may specify by notice to the others:

 

	If
    to the Company:
	 
	c/o [HF Foods Group], Inc. 

                                                                                6001 West Market Street 

                                                                                Greensboro, NC 27409 

                                                                                Fax: 

                                                                                Attention: 

 

     11

     

    

 

	If
    to Executive:
	 
	At
                                         the home address on file with the Company

 

or
to such other addresses as either party hereto may from time to time specify to the other. Any notice given as aforesaid shall
be deemed received upon actual delivery.

 

20.
Assignment and Binding Effect. This Agreement shall be binding upon and inure to the benefit of Executive and Executive’s
heirs, executors, personal representatives, assigns, administrators and legal representatives. Because of the unique and personal
nature of Executive’s duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement
shall be assignable by Executive. This Agreement shall be binding upon and inure to the benefit of the Company and its successors,
assigns and legal representatives. Any such successor of the Company will be deemed substituted for the Company under the terms
of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business
entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of
the assets or business of the Company.

 

21.
Severability. The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this
Agreement shall not affect the enforceability of the remaining portions of this Agreement, or any part thereof, all of which are
inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses
or sections contained in this Agreement shall be declared invalid, this Agreement shall be construed as if such invalid word or
words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been inserted.

 

22.
Waiver. The failure of any party to insist upon strict adherence to any term or condition of this Agreement on any occasion
shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in writing.

 

23.
Section Headings. The section headings contained in this Agreement are for reference purpose only and shall not affect
in any way the meaning or interpretation of this Agreement.

 

24.
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be considered an original,
but all of which together shall constitute the same instrument.

 

25.
Arbitration. Any dispute or claim between the parties hereto arising out of, or in connection with, this Agreement and/or
Executive’s employment shall become a matter for arbitration; provided, however, that Executive acknowledges and agrees
that in the event of any alleged violation of Section 11 hereof, the Company and any of its parents, subsidiaries and affiliates
shall be entitled to obtain from any court in the State of North Carolina, temporary, preliminary or permanent injunctive relief
as well as damages, which rights shall be in addition to any other rights or remedies to which it may be entitled. The arbitration
shall take place in Greensboro, North Carolina, and shall be before a neutral arbitrator in accordance with the Commercial Rules
of the American Arbitration Association; provided however, that to the extent such arbitration involves any allegation(s) of a
violation of any law, rule or regulation which prohibits discrimination in employment, the arbitrator shall apply the National
Rules for the Resolution of Employment Disputes (as modified) of the American Arbitration Association then existing in determining
the damages, if any, to be awarded and the allocation of costs and attorneys fees between or among the parties. The decision or
award of the arbitrator shall be final and binding upon the parties hereto. The parties shall abide by all awards recorded in
such arbitration proceedings, and all such awards may be entered and executed upon in any court having jurisdiction over the party
against whom or which enforcement of such award is sought.

 

     12

     

    

 

IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.

 

	 	[HF
    FOODS GROUP], INC.
	 	 	 
	 	By:	 
	 	 	Name:
                                         ____________________ 

        Title:
        ____________________

	 	 	 
	 	 	JIAN
    MING NI

 

     13

     

    

 

EMPLOYMENT
AGREEMENT

 

AMENDMENT
NO.1

 

This
Amendment No. 1 to EMPLOYMENT AGREEMENT (this “Agreement”), dated as of August 23, 2018, by and among HF GROUP
HOLDING CORPORATION, a North Carolina corporation having its principal executive offices in Greensboro, NC (the “Company”),
HF Foods Group Inc., a Delaware corporation having its principal place of business in Greensboro, NC (“Parent Company”)
and Jian Ming Ni (“Executive”).

 

WHEREAS,
the Company has entered into an employment agreement with Executive dated as of August 22, 2018 (Prior Agreement”) to continue
his employment with the Company and its subsidiaries;

 

WHEREAS,
as contemplated by the parties, the Company completed its business combination with the Parent Company effective August 22, 2018
whereby the Company became a wholly-owned subsidiary of the Parent Company and the parties desire to confirm their mutual understanding
and agreement that the Executive’s employment includes being an officer and of the Parent Company as well as the Company.

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

 

1.
Employment.

 

(a)
The Company hereby employs Executive, and Executive hereby accepts such employment by the Company and Parent Company, on the terms
and subject to the conditions contained herein and the Prior Agreement.

 

(b)
Executive shall serve as the Chief Financial Officer and Principal Accounting Officer of the Company and the Parent Company. At
the request of the Company, Executive further agrees, without additional compensation, to act as an officer and/or director of
subsidiaries of the Company.

 

2.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina
applicable to agreements made and to be performed in that state, without regard to its conflict of laws provisions.

 

3.
Effect of Agreement upon Prior Agreement. All other terms and conditions of the Prior Agreement shall remain in full force
and effect and shall govern the terms of employment of Executive with the Company and Parent Company.

 

4.
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be considered an original,
but all of which together shall constitute the same instrument.

 

[signature
page is next]

 

     14

     

    

 

[Amendment
No. 1 to Employment Agreement – Jian Ming Ni] 

 

IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.

	 	 
	 	Jian Ming Ni

 

	HF FOODS GROUP INC.	 
	 	 	 
	By:	 	 
	Zhou Min Ni	 
	Chief Executive Officer	 
	 	 	 
	HF GROUP HOLDING CORPORATION	 
	 	 	 
	By:	 	 
	Zhou Min Ni	 
	Chief Executive Officer	 

 

     15

     

    

 

EXHIBIT
I

 

North
Carolina Good Taste Noodle, Inc. 

Green
Tunnel International, LLC 

Majestic
Nail Supply, LLC 

ANG
Service, LLC 

Business
Consulting Services

 

     16chke-ex41_98.htm

 

Exhibit 4.1

EXECUTION

CHEROKEE INC.

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of August 3, 2018, by and between Cherokee Inc., a Delaware corporation (the “Company”) and the investors listed on the signature pages hereto (each, a “Purchaser”) and such other Persons, if any, from time to time, that become a party hereto as holders of Registrable Securities (as defined below).  Unless otherwise defined herein, capitalized terms used in this Agreement have the meanings ascribed to them in that certain Financing Agreement dated as of August 3, 2018, by and between the Company, certain Subsidiaries of the Company, the Purchasers and the other parties thereto (as may be amended or restated from time to time, the “Financing Agreement”).

RECITALS

WHEREAS, pursuant to the Financing Agreement, concurrently with the execution of this Agreement, on the Effective Date, the Purchasers will be issued the Warrants;

WHEREAS, the Warrants are exercisable for shares of Common Stock from time to time in accordance with the terms thereof; and

WHEREAS, in connection with the execution and delivery of the Financing Agreement and the consummation of the transactions contemplated thereby, the Company has agreed to grant the Purchasers certain registration rights as set forth below.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and other consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
Definitions  

1.1Definitions.  As used in this Agreement, the following terms shall have the meanings set forth below:

(a)“Additional Shares” means any shares of Common Stock issued to the Purchaser pursuant to a stock split, stock dividend, other distribution or otherwise with respect to, or in exchange or in replacement of, the Shares.

(b)“Affiliate” means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, is controlled by, or is under common control with such specified Person, including, without limitation, any general partner, limited partner, member, officer, director or manager of such Person and any venture capital or private equity fund now or hereafter existing that is controlled by one or more general partners or managing members of, or 

 

shares the same management company with, such Person.  For purposes of this definition, the terms “controls,” “controlled by,” or “under common control with” means the possession, direct or indirect, of power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract or otherwise).

(c)“Business Day” means a weekday on which banks are open for general banking business in San Diego, California.

(d)“Common Stock” means shares of the common stock of the Company, par value $0.02 per share.

(e)“Entity” means any corporation (including any non profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity.

(f)“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

(g)“Governmental Body” means any domestic or foreign multinational, federal, state, provincial, municipal or local government (or any political subdivision thereof) or any domestic or foreign governmental, regulatory or administrative authority or any department, commission, board, agency, court, tribunal, judicial body or instrumentality thereof, or any other body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature (including any arbitral body).

(h)“Holder” means the Purchaser and any transferee permitted under Section 3.1, in each case, to the extent holding Registrable Securities.

(i)“Person” means any individual, Entity, trust, Governmental Body or other organization.

(j)“register,” “registered” and “registration” refer to a registration effected by filing with the SEC a registration statement in compliance with the Securities Act, and the declaration or ordering by the SEC of the effectiveness of such registration statement.

(k)“Registrable Securities” means (i) the Shares, and (ii) any Additional Shares; provided, however, that Shares or Additional Shares shall cease to be treated as Registrable Securities on the earliest to occur of, (a) the date such security has been disposed of pursuant to an effective registration statement, (b) the date on which such security is sold pursuant to Rule 144, (c) the date on which such security ceases to be outstanding, and (d) the date on which the Holder thereof, together with its Affiliates, is able to dispose of all of its Registrable Securities without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144 (or any successor rule).

(l)“Registration Expenses” means any and all expenses incident to the performance of or compliance with this Agreement, including without limitation:  (i) all 

2

 

registration and filing fees; (ii) all fees and expenses associated with a required listing of the Registrable Securities on any securities exchange; (iii) fees and expenses with respect to filings required to be made with an exchange or any securities industry self-regulatory body; (iv) fees and expenses of compliance with securities or “blue sky” laws (including reasonable fees and disbursements of counsel for the underwriters or holders of securities in connection with blue sky qualifications of the securities and determination of their eligibility for investment under the laws of such jurisdictions); (v) printing, messenger, telephone and delivery expenses of the Company; (vi) fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company (including the expenses of any comfort letters, or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters, if such comfort letter or comfort letters is required by the managing underwriter); (vii) securities acts liability insurance, if the Company so desires; (viii) all internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties); (ix) the expense of any annual audit; and (x) the fees and expenses of any Person, including special experts, retained by the Company; provided, however that “Registration Expenses” shall not include underwriting fees, discounts or commissions attributable to the sale of the Registrable Securities or any legal fees and expenses of counsel to the Holder.

(m)“Rule 144” means Rule 144 under the Securities Act.

(n)“SEC” means the Securities and Exchange Commission.

(o)“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

(p)“Shares” means any and all shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE II
Registration Rights

2.1Resale Registration Statements.  Upon written request of any of the Purchasers at any time after the date that is 90 days following the Closing Date, the Company shall (a) file with the SEC, or (b) have filed with the SEC, a resale registration statement (together with any New Registration Statement (as defined below), the “Resale Registration Statement”) pursuant to Rule 415 under the Securities Act pursuant to which all of the Registrable Securities shall be included (on the initial filing or by supplement or amendment thereto) to enable the public resale on a delayed or continuous basis of the Registrable Securities by the Holder.  The Company shall file the Resale Registration Statement on such form as the Company may then utilize under the rules of the SEC and use its best efforts to have the Resale Registration Statement declared effective under the Securities Act as soon as practicable, but in no event more than five trading days after the date the Company receives written notification from the SEC that the Resale Registration Statement will not be reviewed.  The Company agrees to use its best efforts to maintain the effectiveness of the Resale Registration Statement, including by filing any necessary post-effective amendments and prospectus supplements, or, alternatively, by filing one or more new registration statements (each, a “New Registration Statement”) relating to the Registrable Securities as 

3

 

required by Rule 415 under the Securities Act, continuously until the date that is the earlier of (i) four years following the date of effectiveness of the Resale Registration Statement, and (ii) the date on which the Holder no longer holds any Registrable Securities covered by the Resale Registration Statement.

2.2Provisions Relating to Registration. 

(a)Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause (i) the Resale Registration Statement (as of the effective date of the Resale Registration Statement), any amendment thereof (as of the effective date thereof) or supplement thereto (as of its date), (A) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the SEC, and (B) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, and (ii) any related prospectus, preliminary prospectus and any amendment thereof or supplement thereto, as of its date, (A) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the SEC, and (B) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, the Company shall have no such obligations or liabilities with respect to any written information pertaining to the Holder and furnished to the Company by or on behalf of the Holder specifically for inclusion therein.

(b)The Company shall notify the Holder:  (i) when the Resale Registration Statement or any amendment thereto has been filed with the SEC and when the Resale Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the SEC for amendments or supplements to the Resale Registration Statement or the prospectus included therein or for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Resale Registration Statement or the initiation of any proceedings for that purpose and of any other action, event or failure to act that would cause the Resale Registration Statement not to remain effective; and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose.

(c)As promptly as practicable after becoming aware of such event, the Company shall notify the Holder of the happening of any event (a “Suspension Event”), of which the Company has knowledge, as a result of which the prospectus included in the Resale 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 not misleading, and use its best efforts promptly to prepare a supplement or amendment to the Resale Registration Statement to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to the Holder as the Holder may reasonably request; provided, however, that, for not more than 45 consecutive trading days (or a total of not more than 120 trading days in any 12 month period), the Company may delay, to the extent permitted by and in a manner not in violation of applicable securities laws, the disclosure of material non-public information concerning the Company (as well as prospectus or Resale Registration Statement 

4

 

updating), the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company; provided, further, that, if the Resale Registration Statement was not filed on Form S-3, such number of days shall not include the 15 calendar days following the filing of any Current Report on Form 8-K, Quarterly Report on Form 10-Q or Annual Report on Form 10-K, or other comparable form, for purposes of filing a post-effective amendment to the Resale Registration Statement.

(d)Upon a Suspension Event, the Company shall give written notice (a “Suspension Notice”) to the Holder to suspend sales of the affected Registrable Securities, and such notice shall state that such suspension shall continue only for so long as the Suspension Event or its effect is continuing and the Company is pursuing with reasonable diligence the completion of the matter giving rise to the Suspension Event or otherwise taking all reasonable steps to terminate suspension of the effectiveness or use of the Resale Registration Statement.  In no event shall the Company, without the prior written consent of the Holder, disclose to the Holder any of the facts or circumstances giving rise to the Suspension Event.  The Holder shall not effect any sales of the Registrable Securities pursuant to the Resale Registration Statement (or such filings), at any time after they have received a Suspension Notice and prior to receipt of an End of Suspension Notice.  The Holder may resume effecting sales of the Registrable Securities under the Resale Registration Statement (or such filings), following further notice to such effect (an “End of Suspension Notice”) from the Company.  This End of Suspension Notice shall be given by the Company to the Holder in the manner described above promptly following the conclusion of any Suspension Event and its effect.  For the avoidance of doubt, a Suspension Notice shall not affect or otherwise limit sales of affected Registrable Securities under Rule 144 or otherwise outside of the Resale Registration Statement.

(e)The Company shall bear all Registration Expenses incurred by the Company in connection with the registration of the Registrable Securities pursuant to this Agreement.

(f)Notwithstanding anything to the contrary contained in this Agreement, the Company shall not be required to include Registrable Securities in the Resale Registration Statement unless the Holder owning the Registrable Securities to be registered on the Resale Registration Statement, following reasonable advance written request by the Company, furnishes to the Company, at least 10 Business Days prior to the scheduled filing date of the Resale Registration Statement, an executed stockholder questionnaire in customary form.

2.3Indemnification.

(a)In the event of the offer and sale of the Registrable Securities held by the Holder under the Securities Act, the Company agrees to indemnify and hold harmless the Holder and its directors, officers, employees, Affiliates and agents and each Person who controls the Holder within the meaning of the Securities Act or the Exchange Act (collectively, the “Holder Indemnified Parties”) from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof to which each Holder Indemnified Party may become subject under the Securities Act or the Exchange Act, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Resale Registration Statement or in any amendment thereof, in each 

5

 

case at the time such became effective under the Securities Act, or in the preliminary prospectus or other information that is deemed, under Rule 159 promulgated under the Securities Act to have been conveyed to purchasers of securities at the time of sale of such securities (“Disclosure Package”), in the prospectus or in any amendment thereof or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Disclosure Package or any prospectus, in the light of the circumstances under which they were made) not misleading, and shall reimburse, as incurred, the Holder Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or omission made in the Resale Registration Statement, the Disclosure Package, any prospectus or in any amendment thereof or supplement thereto in reliance upon and in conformity with written information pertaining to the Holder and furnished to the Company by or on behalf of the Holder Indemnified Party specifically for inclusion therein; provided further, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in the Disclosure Package, where (A) such statement or omission had been eliminated or remedied in any subsequently filed amended prospectus or prospectus supplement (the Disclosure Package, together with such updated documents, the “Updated Disclosure Package”), the filing of which the Holder had been notified in accordance with the terms of this Agreement, (B) such Updated Disclosure Package was available at the time the Holder sold Registrable Securities under the Resale Registration Statement, (C) such Updated Disclosure Package was not furnished by the Holder to the Entity asserting the loss, liability, claim, damage or liability, or an underwriter involved in the distribution of such Registrable Securities, at or prior to the time such furnishing is required by the Securities Act, and (D) the Updated Disclosure Package would have cured the defect giving rise to such loss, liability, claim, damage or action; and provided further, however, that this indemnity agreement will be in addition to any liability that the Company may otherwise have to the Holder Indemnified Party.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Holder Indemnified Parties and shall survive the transfer of the Registrable Securities by the Holder.

(b)As a condition to including any Registrable Securities to be offered by the Holder in any registration statement filed pursuant to this Agreement, the Holder agrees to severally and not jointly indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Resale Registration Statement, as well as any officers, employees, Affiliates and agents of the Company, and each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (a “Company Indemnified Party”) from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which a Company Indemnified Party may become subject under the Securities Act or the Exchange Act, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Resale Registration Statement or in any amendment thereof, in each case at the time such became effective under the Securities Act, or in any Disclosure Package, prospectus or in any amendment thereof or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of the Disclosure Package or any prospectus, in the light of the circumstances under which they were made) not 

6

 

misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to the Holder and furnished to the Company by or on behalf of the Holder specifically for inclusion therein; and, subject to the limitation immediately preceding this clause, shall reimburse, as incurred, the Company Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holder, or any such director, officer, employees, Affiliates and agents and shall survive the transfer of such Registrable Securities by the Holder, and the Holder shall reimburse the Company, and each such director, officer, employees, Affiliates and agents for any legal or other expenses reasonably incurred by them in connection with investigating, defending, or settling and such loss, claim, damage, liability, action, or proceeding; provided, however, that the indemnity amount contained in this Section 2.3(b) shall in no event exceed the gross proceeds from the offering received by the Holder.  Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer, employees, Affiliates and agents and shall survive the transfer by the Holder of such Registrable Securities.

(c)Promptly after receipt by the Holder Indemnified Party or a Company Indemnified Party (each, an “Indemnified Party”) of notice of the commencement of any action or proceeding (including a governmental investigation), such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 2.3, notify the indemnifying party of the commencement thereof; but the omission to so notify the indemnifying party will not relieve the indemnifying party from liability under Sections 2.3(a) or 2.3(b) unless and to the extent it did not otherwise learn of such action and the indemnifying party has been materially prejudiced by such failure. In case any such action is brought against any Indemnified Party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party (who shall not, except with the consent of the Indemnified Party, be counsel to the indemnifying party), and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof the indemnifying party will not be liable to such Indemnified Party under this Section 2.3 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such Indemnified Party in connection with the defense thereof; provided, however, if such Indemnified Party shall have been advised by counsel that there are one or more defenses available to it that are in conflict with those available to the indemnifying party (in which case the indemnifying party shall not have the right to direct the defense of such action on behalf of the Indemnified Party), the reasonable fees and expenses of such Indemnified Party’s counsel shall be borne by the indemnifying party.  In no event shall the indemnifying party be liable for the fees and expenses of more than one counsel (together with appropriate local counsel) at any time for any Indemnified Party in connection with any one action or separate but substantially similar or related actions arising in the same jurisdiction out of the same general allegations or circumstances.  No indemnifying party shall, without the prior written consent of the Indemnified Party (not to be unreasonably withheld or delayed), effect any settlement of any pending or threatened action in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party unless such settlement (i) includes an unconditional release of such 

7

 

Indemnified Party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.  If the indemnification provided for in this Section 2.3 is unavailable or insufficient to hold harmless an Indemnified Party under Sections 2.3(a) or 2.3(b), then each indemnifying party shall contribute to the amount paid or payable by such Indemnified Party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in Sections 2.3(a) or 2.3(b) in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and the Indemnified Party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations.  The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Holder or Holder Indemnified Party, as the case may be, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this Section 2.3 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any action or claim that is the subject of this Section 2.3(c).  The parties agree that it would not be just and equitable if contributions were determined by pro rata allocation (even if the Holder was treated as one Entity for such purpose) or any other method of allocation that does not take account of the equitable considerations referred to above.  Notwithstanding any other provision of this Section 2.3(c), the Holder shall not be required to contribute any amount in excess of the amount by which the net proceeds received by the Holder from the sale of the Registrable Securities pursuant to the Resale Registration Statement exceeds the amount of damages that the Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(d)The agreements contained in this Section 2.3 shall survive the sale of the Registrable Securities pursuant to the Resale Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any Indemnified Party.

ARTICLE III
Transfer Restrictions

3.1Transfer Restrictions.  The Holder acknowledges and agrees that the following legend shall be imprinted on any certificate or book-entry security entitlement evidencing any of the Registrable Securities:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT 

8

 

AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

This legend shall be removed by the Company from any certificate or book-entry security entitlement evidencing the Registrable Securities upon delivery by the holder thereof to the Company of a written request to that effect if at the time of such written request (i) a registration statement under the Securities Act is at that time in effect with respect to the legended security, or (ii) the legended security can be transferred in a transaction in compliance with Rule 144 under the Securities Act, and, in the case of (ii), upon the request and in the reasonable discretion of the Company’s transfer agent, the holder of such Registrable Securities executes and delivers a representation letter that includes customary representations regarding the holding requirements and whether such holder is an “affiliate” for purposes of Rule 144 under the Securities Act.  The Company represents and warrants to the Purchaser that the Company is not currently a shell company (as defined in Rule 405 promulgated under the Securities Act).

ARTICLE IV
Miscellaneous. 

4.1Further Assurances.  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 any 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.

4.2Notices.  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:  (a) upon receipt, when delivered personally; (b) upon receipt, when sent by e-mail (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (c) one calendar day (excluding Saturdays, Sundays, and national banking holidays in the United States) after deposit with an overnight courier service, in each case properly addressed to the party to receive the same.

The addresses and e-mail addresses for such communications shall be: 

If to the Company:

Cherokee Inc.

5990 Sepulveda Boulevard, Suite 600

Sherman Oaks, CA 91411

E-mail:  henrys@cherokeeglobalbrands.com  

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Attn:  Henry Stupp

With a copy (which shall not constitute notice) to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

3580 Carmel Mountain Road, Suite 300

San Diego, CA 92130

E-mail:  smstanton@mintz.com  

Attn:  Scott Stanton, Esq.

If to the Purchaser:  To the address set forth on the Purchaser’s signature page hereto;

or to such other address and/or e-mail address and/or to the attention of such other person as the recipient party has specified by written notice given to each other party at least five (5) days prior to the effectiveness of such change.

4.3Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

4.4Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a .pdf or other form of electronic signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a .pdf or other form of electronic signature.

4.5Governing Law; Arbitration; Venue.  This Agreement shall be construed under the laws of the State of Delaware, without regard to principles of conflicts of law or choice of law that would permit or require the application of the laws of another jurisdiction.  The Company and the Purchaser hereby agree that all actions or proceedings arising directly or indirectly from or in connection with this Agreement shall be litigated only in the applicable state court in the State of Delaware or the United States District Court for the District of Delaware.  The Company and the Purchaser consent to the exclusive jurisdiction and venue of the foregoing courts and consents that any process or notice of motion or other application to either of said courts or a judge thereof may be served inside or outside the State of Delaware or the District of Delaware by generally recognized overnight courier or certified or registered mail, return receipt requested, directed to such party at its or his address set forth below (and service so made shall be deemed “personal service”) or by personal service or in such other manner as may be permissible under the rules of said courts.  THE COMPANY AND THE PURCHASER HEREBY WAIVE ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS AGREEMENT.

4.6Assignment and Successors.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any transferees of the Warrants.

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4.7Entire Agreement; Amendments.  This Agreement supersedes all other prior oral or written agreements between the Purchaser, the Company, their Affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser make any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be amended, waived or modified other than by an instrument in writing signed by the Company and the Purchaser.  Any such amendment, waiver or modification effected in accordance with this Section 4.7 shall be binding upon the Purchaser and each transferee of the Warrants (or the Shares), each future holder of all such securities and the Company.

4.8Severability.  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.

4.9Termination.  This Agreement shall terminate on the date when there are no longer any remaining Registrable Securities or upon the dissolution, liquidation or winding up of the Company; provided that Section 2.3 of this Agreement shall survive such termination.

4.10No Third Party Beneficiaries.  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.

4.11Language; Currency.  This Agreement has been prepared in the English language and the English language shall control its interpretation.  In addition, all notices required or permitted to be given hereunder, and all written, electronic, oral or other communications between the parties regarding this Agreement, shall be in the English language.  All references to “$” contained in this Agreement shall refer to United States Dollars unless otherwise stated.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

	
COMPANY:

	
CHEROKEE INC.

	
 
	
 

	
By:
	
/s/ Henry Stupp

	
Name:
	
Henry Stupp

	
Title:
	
Chief Executive Officer

[Signature Page to Registration Rights Agreement]

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

	
PURCHASER:

	
GORDON BROTHERS FINANCE COMPANY, LLC

	
 
	
 

	
By:
	
/s/ Felicia Galeota

	
 
	
Name:
	
Felicia Galeota

	
 
	
Title:
	
Vice President

 

	
Address:

	
800 Boylston Street, 27th Floor

Boston, MA  02199

[Signature Page to Registration Rights Agreement]

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

	
PURCHASER:

	
GORDON BROTHERS BRANDS, LLC

	
 
	
 

	
By:
	
/s/ Ramez Toubassy

	
 
	
Name:
	
Ramez Toubassy

	
 
	
Title:
	
President

 

	
Address:

	
800 Boylston Street, 27th Floor

Boston, MA  02199

 

[Signature Page to Registration Rights Agreement]

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