UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 3, 2017 (October 30, 2017)
AMERICAN EDUCATION CENTER, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Nevada | 333-201029 | 38-3941544 | ||
|
(State or other jurisdiction
of incorporation) |
(Commission File Number) |
(IRS Employer
Identification No.) |
|
2 Wall Street, 8th Fl. New York, NY, 10005 |
| (Address of Principal Executive Offices) |
+212-825-0437
(Issuer’s telephone number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 1.01. | Entry into a Material Definitive Agreement. |
On October 30, 2017, American Education Center, Inc., a Nevada corporation (the “Company”) entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with China Cultural Finance Holdings Company Limited, a British Virgin Islands corporation (the “Purchaser”) pursuant to which the Company will issue 500,000 shares (the “Shares”) of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), at price of $4 per Share (the “Purchase Price Per Share”) to the Purchaser, with the rights, privileges and preferences set forth in the Certificate of Designation of Series A Convertible Preferred Stock (the “Certificate of Designation”), for the aggregate price of Two Million Dollars ($2,000,000) (the “Purchase Price”).
The transactions underlying the Share Purchase Agreement were closed on the same day (the “Closing Date”).
Uplisting and Buy-Back
Pursuant to the Share Purchase Agreement, the Company will use its commercially reasonable efforts to apply to be listed on the NASDAQ Capital Market or such other national securities exchange as is reasonably acceptable to the Purchaser (the “National Exchanges”), so that the Company’s common stock, par value $0.001 per share (the “Common Stock”) will commence trading on one of the National Exchanges (the “Uplisting”) within 365 days after the Closing Date (the “Uplisting Deadline”).
If the Company does not complete Uplisting on or before the Uplisting Deadline (the “Eligible Uplisting”), the Purchaser will, within 30 days following the Uplisting Deadline, have the right to request the Company to buy back any number of the Shares (the “Buy Back Shares”), for a payment of the Buy Back Shares times the Purchase Price Per Share and such interest payment at a rate of 5% per annum accruing from Closing Date, subject to the terms and conditions of the Shares Purchase Agreement.
Series A Convertible Preferred Stock
The following is a summary of certain terms and provisions of the Company’s Series A Convertible Preferred Stock.
The Company designated 500,000 shares as Series A Convertible Preferred Stock (the “Preferred Stock”) out of the 20,000,000 authorized number of preferred shares of the Company, par value $0.001 per share, with original issue price of $4 per share. The Preferred Stock is senior in right of payment, including dividend rights and liquidation preference, to the Company’s common stock.
Holder of shares of Preferred Stock will be entitled to vote with shareholders of Common Stock, voting together as a single class, except on matters that require a separate vote of the holders of Preferred Stock.
Each and every outstanding shares of Preferred Stock will automatically convert, without the payment of additional consideration by the holder thereof (the “Mandatory Conversion”) if and when Uplisting occurs (the “Mandatory Conversion Commencement”), into fully paid and non-assessable shares of Common Stock, at a conversion price which shall be the lesser of (i) $4.00 or (ii) 90% of the offering price in the occurrence of a secondary public offering of the Company’s Common Stock pursuant to a registration statement on Form S-1 (the “Conversion Price”). The Conversion Price will be subject to adjustment in the event of reorganization, reclassification, consolidation or merger.
The foregoing description of the terms of the Certificate of Designation and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Certificate of Designation, which is attached hereto as Exhibit 3.1 .
Item 3.02. Unregistered Sales of Equity Securities.
The information disclosed in Item 1.01 of this Current Report is incorporated by reference into this Item 3.02.
On November 3, 2017, the Company issued 500,000 shares of its Series A Convertible Preferred Stock to the Purchaser in accordance with the terms of the Share Purchase Agreement. The offer and issuance of the Series A Convertible Preferred Stock and the shares of Common Stock issuable upon conversion of the Series A Convertible Preferred Stock have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and therefore may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. For this issuance, the Company is relying on the exemption from registration pursuant to Regulation S promulgated under the Securities Act.
Item 3.03 Material Modification of Rights of Security Holders
On November 2, 2017, the Company filed with the Secretary of State of the State of Nevada the Certificate of Designation attached hereto as Exhibit 3.1 and incorporated herein by reference. The Certificate of Designation establishes and designates the Series A Convertible Preferred Stock and the rights, preferences, privileges and limitations thereof.
The disclosure provided under Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The disclosures set forth in Items 1.01 and 3.03 are incorporated by reference into this Item 5.03.
| ITEM 9.01 | EXHIBITS |
| (d) | Exhibits |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN EDUCATION CENTER, INC. | ||
| Dated: November 3, 2017 | ||
| By: | /s/ Max P. Chen | |
| Name: | Max P. Chen | |
| Title: |
Chief Executive Officer, President, Chairman,
Sole Director and Secretary |
|
Exhibit 3.1
AMERCIAN EDUCATION CENTER INC.
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
American Education Center Inc., a Nevada corporation (the “ Corporation ”), hereby certifies that the following resolution was duly adopted by action of the Board of Directors of the Corporation (the “ Board ”) on November 2, 2017 in accordance with the provisions of its Articles of Incorporation (as may be amended from time to time, the “ Articles of Incorporation ”) and bylaws and section 78.390 of the Nevada Revised Statutes (as amended, the “ Nevada Revised Statues ”).
WHEREAS, the Corporation is authorized pursuant to its Articles of Incorporation to issue up to 20 million shares of preferred stock, par value $0.001 per share, of the Corporation (the “ Preferred Stock ”) in one or more series, none of which are issued or outstanding;
WHEREAS, the Articles of Incorporation expressly authorizes the Board, to provide the classes, series, and number of each class or series of stock as provided in Nevada Revised Statutes (“ NRS ”) 78.195, 78.1955, and 78.196, as well as prescribe the voting powers, if any, designations, powers, preferences, and the relative, participating, optional, or other rights, if any, and the qualifications, limitations, or restrictions thereof, of any unissued class or series of Preferred Stock; to fix the number of shares constituting such class or series; and to increase or decrease the number of shares of any such class or series, but not below the number of shares thereof then outstanding; and
WHEREAS, it is the desire of the Board to designate a new series of Preferred Stock and fix the number of shares to be included in such new series and the designation, rights, preferences and limitations of the shares of such new series.
NOW, THEREFORE, BE IT RESOLVED, that the Board does hereby provide for the issue of a series of Preferred Stock and does hereby in this Certificate of Designation (the “ Certificate of Designation ”) establish and fix and herein state and express the designation, rights, preferences, powers, restrictions and limitations of such series of Preferred Stock as follows:
1. Designation . The Corporation shall be authorized to issue a series of Preferred Stock that shall be designated as “Series A Convertible Preferred Stock” (the “ Series A Preferred Stock ”) and the number of shares of which so designated are 500,000, with original issue price of $4 per share, and will not be subject to increase without any consent of the holders of the Series A Preferred Stock that may be required by applicable law. The rights, preferences, powers, restrictions and limitations of the Series A Preferred Stock shall be as set forth herein.
2. Defined Terms .
2.1 Capitalized terms used herein, but not defined herein, shall have the meaning given to such terms in the Purchase Agreement (as defined hereinafter).
2.2 For purposes hereof, the following terms shall have the following meanings:
“ Articles of Incorporation ” has the meaning set forth in the Recitals.
“ Board ” has the meaning set forth in the Recitals.
“ Certificate of Designation ” has the meaning set forth in the Recitals.
“ Common Stock ” means the common stock, par value $0.001 per share, of the Company.
“ Corporation ” has the meaning set forth in the Preamble.
“ Conversion Price ” has the meaning set forth in Section 7.1 .
“ Conversion Shares ” means the shares of Common Stock or other capital stock of the Corporation then issuable upon conversion of the Series A Preferred Stock in accordance with the terms of Section 7 .
“ Date of Issuance ” means, for any share of Series A Preferred Stock, the date on which the Corporation initially issues such share (without regard to any subsequent transfer of such share or reissuance of the certificate(s) representing such share).
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“ Deemed Liquidation Event ” has the meaning set forth in Section 5.1(b) .
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ Qualifying Financing ” means the occurrence of a secondary public offering of the Company’s Common Stock pursuant to a registration statement on Form S-1.
“ Junior Stock ” shall mean all classes of common stock of the Corporation and each other class of capital stock or series of preferred stock established after the Date of Issuance, by the Board, the terms of which expressly provide that such class or series ranks junior to the Series A Preferred Stock as to dividend rights, redemption rights or rights upon the liquidation, dissolution or winding-up of the Corporation in all respects.
“ Liquidated Damages ” has the meaning set forth in Section 7.2 .
“ Liquidation ” has the meaning set forth in Section 5.1(a) .
“ Liquidation Value ” means, with respect to any share of Series A Preferred Stock on any given date, $4 (as adjusted for any stock splits, stock dividends, combinations, recapitalizations or similar transaction with respect to the Series A Preferred Stock).
“ Mandatory Conversion ” has the meaning set forth in Section 7.1 .
“ Mandatory Conversion Commencement ” has the meaning set forth in Section 7.1 .
“ Options ” means any options to subscribe for or purchase Common Stock or Convertible Securities.
“ Parity Stock ” shall mean any other class of capital stock or series of preferred stock established after the Date of Issuance by the Board, the terms of which expressly provide that such class or series will rank on parity with the Series A Preferred Stock as to dividend rights, redemption rights or rights upon the liquidation, dissolution or winding-up of the Corporation.
“ Person ” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association or other entity.
“ Preferred Stock ” has the meaning set forth in the Recitals.
“ Purchase Agreement ” has the meaning set forth in Section 5.1 .
“ Purchasers ” has the meaning set forth in Section 5.1 .
“ Registrable Securities ” means Common Stock, Series A Preferred Stock or other securities issuable at any time while any shares of Series A Preferred Stock are outstanding, that have not been (i) sold to a broker, dealer or underwriter in a public distribution or public securities transaction or (ii) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Act”) pursuant to Rule 144 thereunder.
“ SEC ” means the United States Securities Exchange Commission.
“ Senior Stock ” shall mean each class of capital stock or series of preferred stock established after the Date of Issuance by the Board, the terms of which expressly provide that such class or series will rank senior to the Series A Preferred Stock as to dividend rights, redemption rights or rights upon the liquidation, dissolution or winding-up of the Corporation.
“ Series A Preferred Stock ” has the meaning set forth in Section 1 .
“ Uplisting ” means the commencement of trading of the Company’s Common Stock on NASDAQ Capital Market or such other national securities exchange.
3. Rank . The Series A Preferred Stock will rank (i) pari passu with the Common Stock, and (ii) senior to the Common Stock with respect to rights upon a Liquidation. All shares of Series A Preferred Stock will, with respect to dividend rights, redemption rights and rights upon Liquidation, dissolution or winding-up of the Corporation, rank (i) senior to all Junior Stock including but not limited to Common Stock, (ii) on parity with all other Parity Stock, and (iii) junior to all Senior Stock.
4. [ Reserved. ]
5. Liquidation .
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5.1 Liquidation; Deemed Liquidation Event
(a) Liquidation . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (collectively with a Deemed Liquidation Event, a “ Liquidation ”), the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Common Stock, by reason of their ownership thereof, an amount equal to the Liquidation Value of all shares of Series A Preferred Stock held by such holder, plus any dividends accrued but unpaid on all such shares of Series A Preferred Stock. Following the distribution in full of the Liquidation Value to each outstanding share of Series A Preferred Stock, the remaining assets of the Corporation shall be distributed pro rata to the holders of the Common Stock.
(b) Deemed Liquidation . Each of the following events shall be considered a “ Deemed Liquidation Event ” unless the holders of a majority of the Series A Preferred Stock elect otherwise by written notice sent to the Corporation (which election may be made or not made in their sole and absolute discretion) at least five (5) days prior to the effective date of any such event:
| (i) | A merger or consolidation in which the Corporation is a constituent party, except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; | |
| (ii) | The acquisition of the Corporation by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation), unless the Corporation’s stockholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Corporation’s acquisition or sale or otherwise) hold at least fifty one percent (51%) of the voting power of the surviving or acquiring entity substantially in the same proportion as their ownership of the Corporation; or | |
| (iii) | The sale, lease, transfer, license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, license or other disposition is to a wholly owned subsidiary of the Corporation. |
Upon the consummation of any such Deemed Liquidation Event, the holders of the Series A Preferred Stock shall, in consideration for cancellation of their shares of Series A Preferred Stock, be entitled to the same rights such holders are entitled to under this Section 5 upon the occurrence of a Liquidation, including the right to receive the full preferential payment from the Corporation of the amounts payable with respect to the Series A Preferred Stock under Section 5.1(a) hereof. Notwithstanding anything to the contrary in this Section 5.1 , the transactions contemplated by that certain Preferred Stock Purchase Agreement, dated October 30, 2017 (the “ Purchase Agreement ”), between the Corporation and the purchasers identified therein (the “ Purchasers ”) shall not be a Deemed Liquidation Event.
5.2 Insufficient Assets . If upon any Liquidation (or Deemed Liquidation Event) the remaining assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of the shares of Series A Preferred Stock the full preferential amount to which they are entitled under Section 5.1 , then such assets will be distributed among the holders of the shares of Series A Preferred Stock at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled.
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5.3 Amount Deemed Paid or Distributed . The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any Deemed Liquidation Event shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm or other entity. The value of such property, rights or securities shall be determined in good faith by the Board; provided, however, that any shares of capital stock shall be valued based on:
(a) if traded on a securities exchange registered with the SEC or traded on a market that requires that participating companies be current in their reporting under the Exchange Act, then the value shall be deemed to be the average of the closing prices of the securities on such exchange or market, as the case may be, over the thirty (30) day period ending three (3) days prior to the closing of such transaction;
(b) if actively traded in any other market (which shall mean greater than $50,000 in dollar volume traded per day, determined by multiplying the number of shares traded per day by the daily volume weighted average price as reported by Bloomberg L.P.), the value shall be deemed to be the average of the closing bid prices over the thirty (30) day calendar period ending three (3) days prior to the closing of such transaction; or
(c) if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board.
5.4 Notice .
(a) Notice Requirement . In the event of any Liquidation (or Deemed Liquidation Event), the Corporation shall, within ten (10) days of the date the Board approves such action, or no later than twenty (20) days of any stockholders’ meeting called to approve such action, or within twenty (20) days of the commencement of any involuntary proceeding, whichever is earlier, give each holder of shares of Series A Preferred Stock written notice of the proposed action. Such written notice shall describe the material terms and conditions of such proposed action, including (i) a description of the stock, cash and property to be received by the holders of shares of Series A Preferred Stock upon consummation of the proposed action, (ii) the anticipated closing date of such proposed action and (iii) a copy of each definitive agreement related to such proposed action. If any material change in the facts set forth in the initial notice shall occur, the Corporation shall promptly give written notice to each holder of shares of Series A Preferred Stock of such material change.
6. Voting .
6.1 Voting Generally . Each holder of outstanding shares of Series A Preferred Stock shall be entitled to vote (i) with holders of outstanding shares of Common Stock, voting together as a single class, with respect to any and all matters presented to the stockholders of the Corporation for their action or consideration (whether at a meeting of stockholders of the Corporation, by written action of stockholders in lieu of a meeting or otherwise), and (ii) with respect to any non-waivable provisions of governing law or by the provisions of Section 5.1(b) above that require a separate vote of the holders of the Series A Preferred Stock, with holders of the Series A Preferred Stock, voting together as a separate and single class, with respect to any and all matters presented to the holders of the Series A Preferred Stock for their action or consideration (whether at a meeting of stockholders of the Corporation, by written action of stockholders in lieu of a meeting or otherwise). In any such vote, each share of Series A Preferred Stock shall be entitled to one vote per share. Each holder of outstanding shares of Series A Preferred Stock shall be entitled to notice of all stockholder meetings (or requests for written consent) in accordance with the Corporation’s bylaws.
6.2 Other Special Voting Rights . Except as required by non-waivable provisions of governing law (with any provisions subject to waiver being waived hereby) or as set forth herein, the holders of shares of Series A Preferred Stock will have no other special voting rights.
7. Conversion .
7.1 Mandatory Conversion . Subject to the provisions of this Section 7 , if and when Uplisting occurs (the “ Mandatory Conversion Commencement ”), each and every outstanding share of Series A Preferred Stock held by stockholders shall automatically convert, without the payment of additional consideration by the holder thereof or any action by the Corporation or holder thereof (the “ Mandatory Conversion ”), into fully paid and non-assessable shares of Common Stock, at a conversion price which shall be the lesser of (i) $4.00 or (ii) 90% of the offering price in the Qualifying Financing (the “ Conversion Price ”). The Conversion Price shall be subject to adjustment as provided in Section 7.3 below.
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7.2 No Charge or Payment . The issuance of certificates for shares of Common Stock upon conversion of shares of Series A Preferred Stock pursuant to Section 7.1 shall be made without payment of additional consideration by, or other charge, cost or tax to, the holder in respect thereof. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series A Preferred Stock pursuant to Section 7.1 . The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series A Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.
7.3 Adjustment to Conversion Price and Number of Conversion Shares . The Conversion Price and the number of Conversion Shares issuable on conversion of the shares of Series A Preferred Stock shall be subject to adjustment from time to time as provided in this Section 7.3 .
(a) Adjustment for Reorganization, Reclassification, Consolidation or Merger . Subject to the provisions of Section 5.1(b) , if there shall occur any reorganization, reclassification, consolidation or merger involving the Corporation in which the Common Stock is converted into or exchanged for securities, cash or other property, then, following any such reorganization, recapitalization, consolidation or merger, each share of Series A Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Series A Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this Section 7 with respect to the rights and interests thereafter of the holders of the Series A Preferred Stock, to the end that the provisions set forth in this Section 7 (including provisions with respect to changes in and other adjustments of the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Stock.
(b) Notices . In the event:
| (i) | that the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Series A Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or | |
| (ii) | of any capital reorganization of the Corporation, any reclassification of the Common Stock, any Liquidation (including a Deemed Liquidation Event) or any other consolidation or merger of the Corporation with or into another Person, or sale of all or substantially all of the Corporation’s assets to another Person; or | |
| (iii) | of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation; |
then, and in each such case, the Corporation shall send or cause to be sent to each holder of record of Series A Preferred Stock at the address specified for such holder in the books and records of the Corporation (or at such other address as may be provided to the Corporation in writing by such holder) at least ten (10) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (a) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (b) the effective date on which such Liquidation (including a Deemed Liquidation Event), reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Corporation shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon conversion of the Series A Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series A Preferred Stock and the Conversion Shares.
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7.4 Fractional Shares . No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall round up to the nearest whole number of shares in order to bring the number of shares held by such holder up to the next whole number of shares of Common Stock.
8. [ Reserved. ]
9. Limitation of Conversion . Notwithstanding anything herein to the contrary, once and when the Corporation is approved by Nasdaq to trade on the Nasdaq, the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock at any time, when combined with the aggregate number of shares of Common Stock previously issued upon conversion of the Series A Preferred Stock issued by the Corporation pursuant to the Purchase Agreement, may not, in the absence of approval by the Corporation’s stockholders in accordance with applicable law and the rules and regulations of Nasdaq, exceed 19.9% of the number of shares of Common Stock issued and outstanding immediately prior to the issuance of the Series A Preferred Stock pursuant to the Purchase Agreement. Unless the Corporation obtains such requisite approval, the Series A Preferred Stock that could not be so converted into Common Stock shall continue to remain outstanding.
10. Protective Provision . So long as any shares of Series A Preferred Stock are outstanding, the Corporation will not, either directly or indirectly by amendment, merger, consolidation or otherwise, without (in addition to any other vote required by law or the Articles of Incorporation) the written consent or affirmative vote of the holders of at least seventy-five percent (75%) of the shares of Series A Preferred Stock then outstanding, given in writing or by vote at a meeting, consenting or voting separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect, amend, alter or repeal any provision of this Certificate of Designation of the Corporation, as amended in a manner that adversely affects the powers, preferences or rights of the Series A Preferred Stock in any respect.
11. Miscellaneous
11.1 Notices . Except as otherwise provided herein, all notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (i) when delivered by hand (with written confirmation of receipt); (ii) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (iii) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (iv) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent (a) to the Corporation, at its principal executive offices and (b) to any stockholder, at such holder’s address at it appears in the stock records of the Corporation (or at such other address for a stockholder as shall be specified in a notice given in accordance with this Section 12 ).
11.2 Headings . The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and will not be deemed to limit or affect any of the provisions hereof.
RESOLVED, FURTHER, that any authorized office of the Corporation be and hereby is authorized and directed to prepare and file this Certificate of Designation with the Nevada Secretary of State in accordance with the forgoing resolution and the applicable provisions of law.
| /s/ Max P. Chen | |
| Max P. Chen | |
| Chairman of the Board, and Chief Executive Officer | |
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Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this “ Agreemen t”), dated October 30, 2017 ( the “ Effective Date ”), by and between American Education Center Inc., a Nevada corporation (the “ Company ”) and China Cultural Finance Holdings Company Limited, a British Virgin Islands corporation (the “ Purchaser ”). Company and Purchaser are also hereinafter individually and jointly referred to as “ Party ” and/or “ Parties .”
RECITALS
WHEREAS, the Company desires to sell to Purchaser, and Purchaser desires to purchase from Company, 500,000 shares (the “ Shares ”) of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “ Series A Preferred Stock ”), at price of $4 per Share (the “ Purchase Price Per Share ”) to the Purchaser, with the rights, privileges and preferences set forth in the Certificate of Designation attached hereto as Exhibit B (the “ Certificate of Designation ”) on the terms and conditions contained in this Agreement. Capitalized terms that are not defined is this Agreement shall have the meaning as defined in the Certificate of Designation.
AGREEMENT
In consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
1. Purchase and Sale of Stock . Upon the following terms and conditions, the Company is offering to the Purchaser and, in consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Purchaser agrees to purchase the Share for the aggregate price of Two Million Dollars ($2,000,000) (the “ Purchase Price ”).
2. Closing . The closing of the purchase and sale of the Shares (the “ Reg S Closing ”) shall take place simultaneously with the execution of this Agreement via e-mail by means of PDF copies of signed documents (with the original signed documents to be delivered promptly after Reg S Closing), or at such other time and by such other means as shall be agreed to by the Company and the Purchaser. At the Reg S Closing, the Purchaser shall have delivered the Purchase Price by wire transfer or by check to the Company.
3. Restrictive Legend . The Shares (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form:
THESE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.
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4. [ Reserved ]
5. Uplisting . As soon as practicable after the Reg S Closing, the Company shall file an application to be listed on the NASDAQ Capital Market or such other national securities exchange as is reasonably acceptable to the Purchaser (together, the “National Exchanges”). Uplisting will be deemed completed when the Company’s Common Stock commences trading on one of the National Exchanges. The Company shall use its commercially reasonable efforts to effect the Uplisting within 365 days after the Reg S Closing Date (the “ Uplisting Deadline ”).
6. Buy-Back . If Company does not complete Uplisting on or before the Uplisting Deadline (the “ Eligible Uplisting ”), the Purchaser shall, within 30 days following the Uplisting Deadline, have the right to request the Company, made in writing, to pay in cash, all or a portion of the Shares (the “ Buy Back Shares ”), times the Purchase Price Per Share (the “Principal”) and such interest payment at a rate of 5% per annum (the “Interest Payment;” together with the Principal, the “Buy Back Payment”). The interest on the Principal shall accrue from the Reg S Closing Date, until such time when the Company pays the Buy Back Payment. The Purchaser and the Company agree that the Company is only obligated to pay the Buy Back Payment after the Purchaser returns and/or cancels all of the Shares. In the event after the Purchaser notifies the Company in writing the Purchaser’s request for the Company to make the Buy Back Payment (the “ Buy Back Written Notice ”), and the Purchaser does not return or cancel all Buy Back Shares within fifteen (15) business days from the date of the Buy Back Written Notice, the Company is only obligated to pay an amount of cash equal to the actual number of shares of Buy Back Shares that the Purchaser actually returns and/or cancels, times the Purchase Price Per Share, and such interest payment at a rate of 5% per annum.
7. [ Reserved. ]
8. Representations and Warranties of the Company and its Subsidiaries . The Company hereby represents and warrants to the Purchaser on behalf of itself, its Subsidiaries (as hereinafter defined), as of the date hereof (except as set forth on the Schedule of Exceptions attached hereto with each numbered Schedule corresponding to the section number herein), as follows:
(a) Organization, Good Standing and Power . The Company, and each of its Subsidiaries, is a corporation or other entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization (as applicable) and respectively, has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company and each of its Subsidiaries is duly qualified to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary except for any jurisdiction(s) (alone or in the aggregate) in which the failure to be so qualified will not have a Material Adverse Effect (as defined in Section 4(g) hereof).
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(b) Corporate Power; Authority and Enforcement . The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, and to issue and sell the Shares in accordance with the terms hereof. The execution, delivery and performance of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or stockholders is required. This Agreement constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.
(c) Capitalization . The authorized capital stock of the Company and the shares thereof currently issued and outstanding as of the Effective Date is 41,350,000 shares of common stock, par value $0.001 (the “ Common Stock ”). The Company has furnished or made available to the Purchaser true and correct copies of the Company’s Articles of Incorporation, as amended and in effect on the date hereof (the “ Articles” ), and the Company’s Bylaws, as amended and in effect on the date hereof (the “ Bylaws ”).
(d) Issuance of Shares . The Shares to be issued at the Reg S Closing have been duly authorized by all necessary corporate action and the Shares, when paid for or issued in accordance with the terms hereof, shall be validly issued and outstanding, fully paid and non-assessable.
(e) Subsidiaries . Except as disclosed in Schedule 4(e), the Company does not own, directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise. For the purpose of this Agreement, “Subsidiary” shall mean any subsidiary of the Company as set forth on Schedule 4(e).
(f) Commission Documents, Financial Statements . The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the U.S. Securities and Exchange Commission (the “Commission” or “SEC”) pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), including the Form 10-Q and other material filed pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including filings incorporated by reference therein being referred to herein as the “ Commission Documents ”). The Company has not provided to the Purchaser any material non-public information or other information which, according to applicable law, rule or regulation, was required to have been disclosed publicly by the Company but which has not been so disclosed, other than (i) with respect to the transactions contemplated by this Agreement, or (ii) pursuant to a non-disclosure or confidentiality agreement signed by the Purchaser. At the time of the respective filings, the Form 10-K’s and the Form 10-Q’s complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such documents. As of their respective filing dates, none of the Form 10-K’s or Form 10-Q’s contained any untrue statement of a material fact; and none omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Commission Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
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(g) No Material Adverse Effect . As of the date of this Agreement, the Company, and its Subsidiaries have not experienced or suffered any Material Adverse Effect. For the purposes of this Agreement, “Material Adverse Effect” shall mean (i) any material adverse effect upon the assets, properties, financial condition, business or prospects of the Company, and its Subsidiaries, when taken as a consolidated whole, and/or (ii) any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to perform any of its material covenants, agreements and obligations under this Agreement.
(h) No Undisclosed Liabilities . Other than as disclosed in the Company’s Commission Documents or on Schedule 4(h ) to the knowledge of the Company, neither the Company, nor the Subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) other than those incurred in the ordinary course of the Company’s and the Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or would not have a Material Adverse Effect.
(i) No Undisclosed Events or Circumstances . To the Company’s knowledge, no event or circumstance has occurred or exists with respect to the Company, the Subsidiaries or their respective businesses, properties, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.
(j) Title to Assets . Except where non-compliance would not have a Material Adverse Effect, each of the Company and the Subsidiaries has good and marketable title to (i) all properties and assets purportedly owned or used by them as reflected in the Financial Statements, (ii) all properties and assets necessary for the conduct of their business as currently conducted, and (iii) all of the real and personal property reflected in the Financial Statements free and clear of any Lien. All leases are valid and subsisting and in full force and effect.
(k) Actions Pending . There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or any other proceeding pending or, to the knowledge of the Company, threatened against or involving the Company which questions the validity of this Agreement or the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or thereto.
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(l) Compliance with Law . The Company has all material franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of their respective business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
(m) No Violation. The business of the Company is not being conducted in violation of any Federal, state, local or foreign governmental laws, or rules, regulations and ordinances of any of any governmental entity, except for possible violations which singularly or in the aggregate could not reasonably be expected to have a Material Adverse Effect. The Company is not required under Federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement, or issue and sell the Shares in accordance with the terms hereof or thereof (other than (x) any consent, authorization or order that has been obtained as of the date hereof, (y) any filing or registration that has been made as of the date hereof or (z) any filings which may be required to be made by the Company with the Commission or state securities administrators subsequent to the Reg S Closing.
(n) No Conflicts . The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated herein and therein do not and will not (i) violate any provision of the Company’s Certificate or Bylaws, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company is a party or by which it or its properties or assets are bound, (iii) create or impose a lien, mortgage, security interest, pledge, charge or encumbrance (collectively, “ Lien ”) of any nature on any property of the Company under any agreement or any commitment to which the Company is a party or by which the Company is bound or by which any of its respective properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including Federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries are bound or affected, provided , however , that, excluded from the foregoing in all cases are such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect.
(o) Certain Fees . Except as set forth on Schedule 4(o) hereto , no brokers fees, finders fees or financial advisory fees or commissions will be payable by the Company with respect to the transactions contemplated by this Agreement.
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(p) Books and Record . Except as may have otherwise been disclosed in the Commission Documents, the books and records of the Company accurately reflect in all material respects the information relating to the business of the Company.
(q) Material Agreements . Any and all written or oral contracts, instruments, agreements, commitments, obligations, plans or arrangements, the Company and the Subsidiaries is a party to, that a copy of which would be required to be filed with the Commission as an exhibit to a registration statement on Form S-1 (collectively, the “ Material Agreements ”) if the Company or any subsidiary were registering securities under the Securities Act has previously been publicly filed with the Commission in the Commission Documents.
(r) Transactions with Affiliates . Except as set forth in the Financial Statements or in the Commission Documents, there are no loans, leases, agreements, contracts, royalty agreements, management contracts or arrangements or other continuing transactions between (a) the Company or any subsidiary on the one hand, and (b) on the other hand, any officer, employee, consultant or director of the Company, or any of Subsidiaries, or any person owning any capital stock of the Company or any subsidiary or any member of the immediate family of such officer, employee, consultant, director or stockholder or any corporation or other entity controlled by such officer, employee, consultant, director or stockholder, or a member of the immediate family of such officer, employee, consultant, director or stockholder.
9. Representations and Warranties of the Purchaser . The Purchaser hereby makes the following representations and warranties to the Company as of the date hereof:
(a) Organization and Good Standing of the Purchaser . The Purchaser is a corporation duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.
(b) Authorization and Power . The Purchaser has the requisite power and authority to enter into and perform this Agreement. The execution, delivery and performance of this Agreement and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate, partnership or limited liability company action, and no further consent or authorization of such Purchaser or its Board of Directors, stockholders, partners, members, or managers, as the case may be, is required. This Agreement has been duly authorized, executed and delivered by such Purchaser and constitutes, or shall constitute when executed and delivered, a valid and binding obligation of such Purchaser enforceable against such Purchaser in accordance with the terms hereof.
(c) No Conflicts . The execution, delivery and performance of this Agreement and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto do not and will not (i) result in a violation of such Purchaser’s charter documents, bylaws, operating agreement, partnership agreement or other organizational documents or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of any agreement, indenture or instrument or obligation to which such Purchaser is a party or by which its properties or assets are bound, or result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement, provided, that for purposes of the representation made in this sentence, such Purchaser is assuming and relying upon the accuracy of the relevant representations and agreements of the Company herein.
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(d) Status of Purchaser . The Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act and such Purchaser is not a broker-dealer, nor an affiliate of a broker-dealer.
(e) Reliance on Exemptions . The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.
(f) Information . The Purchaser and its advisors, if any, have had the opportunity to ask questions of management of the Company and its Subsidiaries and have been furnished with all information relating to the business, finances and operations of the Company and information relating to the offer and sale of the Shares which have been requested by the Purchaser or its advisors. Neither such inquiries nor any other due diligence investigation conducted by the Purchaser or any of its advisors or representatives shall modify, amend or affect the Purchaser’s right to rely on the representations and warranties of the Company contained herein. The Purchaser understands that its investment in the Shares involves a significant degree of risk. The Purchaser further represents to the Company that the Purchaser’s decision to enter into this Agreement has been based solely on the independent evaluation of the Purchaser and its representatives.
(g) Governmental Review . The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.
(h) Intent . The Purchaser is purchasing the Shares solely for investment purposes, for the Purchaser’s own account and not for the account or benefit of any U.S. Person (as defined below) or any other person or entity, and not with a view towards the distribution or dissemination thereof. The Purchaser has no present arrangement to sell the Shares to or through any person or entity. The Purchaser understands that the Shares must be held indefinitely unless such Shares are resold in accordance with the provisions of Regulation S, are subsequently registered under the Securities Act or an exemption from registration is available.
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(i ) Investment Experience . The Purchaser, or the Purchaser’s professional advisors, have such knowledge and experience in finance, securities, taxation, investments and other business matters as to evaluate investments of the kind described in this Agreement. By reason of the business and financial experience of the Purchaser or his or her professional advisors (who are not affiliated with or compensated in any way by Company or any of its affiliates or selling agents), the Purchaser can protect his or her own interests in connection with the transactions described in this Agreement. The Purchaser is able to afford the loss of his, her or its entire investment in the Shares.
(j) Independent Investigation . The Purchaser, in making the decision to purchase the Shares, has relied upon an independent investigation of Company and has not relied upon any information or representations made by any third parties or upon any oral or written representations or assurances from Company, its officers, directors or employees or any other representatives or agents of Company, other than as set forth in this Agreement. The Purchaser is familiar with the business, operations and financial condition of Company and has had an opportunity to ask questions of, and receive answers from, Company’s officers and directors concerning Company and the terms and conditions of the offering of the Shares and has had full access to such other information concerning Company as the Purchaser has requested.
(k) Authority . This Agreement has been validly authorized, executed and delivered by the Purchaser and is a valid and binding agreement enforceable in accordance with its terms, subject to the general principles of equity and to bankruptcy or other laws affecting the enforcement of creditors’ rights generally. The execution, delivery and performance of this Agreement by the Purchaser does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which the Purchaser is a party.
(l) No Advice from Company . The Purchaser acknowledges that he, she or it has had the opportunity to review this Agreement, the exhibit hereto and the transactions contemplated by this Agreement with the Purchaser’s own legal counsel and investment and tax advisors. Except for any statements or representations of Company made in this Agreement, the Purchaser is relying solely on such counsel and advisors and not on any statements or representations of Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.
(m) Reliance on Representations and Warranties . The Purchaser understands that the Shares are being offered and sold to the Purchaser in reliance on exemptions contained in specific provisions of United States federal and state securities laws and that Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth in this Agreement in order to determine the applicability of the exemptions contained in such provisions.
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(n) Regulation S Exemption . The Purchaser acknowledges and agrees that none of the Shares have been registered under the Securities Act, or under any state securities or “blue sky” laws of any state of the United States, and are being offered only in a transaction not involving any public offering within the meaning of the Securities Act, and, unless so registered, may not be offered or sold in the United States or to U.S. Persons (as defined herein), except pursuant to an effective registration statement under the Securities Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in each case only in accordance with applicable state and provincial securities laws. The Purchaser understands that the Shares are being offered and sold to him, her or it in reliance on an exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the Securities Act and that Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Shares. In this regard, the Purchaser represents, warrants and agrees that:
(i) The Purchaser is not a U.S. Person and is not an affiliate (as defined in Rule 501(b) under the Securities Act) of Company and is not acquiring the Shares for the account or benefit of a U.S. Person. A “U.S. Person” means any one of the following:
| (A) | any natural person resident in the United States of America; |
| (B) | any partnership, limited liability Company, corporation or other entity organized or incorporated under the laws of the United States of America; |
| (C) | any estate of which any executor or administrator is a U.S. Person; |
| (D) | any trust of which any trustee is a U.S. Person; |
| (E) | any agency or branch of a foreign entity located in the United States of America; |
| (F) | 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; |
| (G) | any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States of America; and |
| (H) | any partnership, Company, corporation or other entity if: |
| (1) | organized or incorporated under the laws of any foreign jurisdiction; and |
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| (2) | 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. |
(ii) At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, the Purchaser was outside of the United States.
(iii) The Purchaser realizes that the basis for the exemption may not be present if, notwithstanding such representations, the Purchaser has in mind merely acquiring the Shares for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise. The Purchaser does not have any such intention.
(iv) The Purchaser will not, during the period commencing on the date of issuance of the Shares and ending on the first anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S.
(v) The Purchaser will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable state and foreign securities laws.
(vi) The Purchaser was not in the United States engaged in, and prior to the expiration of the Restricted Period will not engage in, any short selling of or any hedging transaction with respect to the Shares, including without limitation, any put, call or other option transaction, option writing or equity swap.
(vii) Neither the Purchaser nor or any person acting on his behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Shares and the Purchaser and any person acting on his or her behalf have complied and will comply with the “offering restrictions” requirements of Regulation S under the Securities Act.
(viii) The transactions contemplated by this Agreement have not been pre-arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act.
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(ix) Neither the Purchaser nor any person acting on its behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Shares. The Purchaser agrees not to cause any advertisement of the Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws.
(x) The Purchaser has carefully reviewed and completed the investor questionnaire annexed hereto as Exhibit A .
(o) No Advertisements or Direct Selling Effort . The Purchaser is not receiving the Shares as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio or via the Internet, or presented at any seminar or meeting. The Purchaser has not acquired the Shares as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S) in the United States in respect of any of the Shares which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Shares; provided, however, that the Purchaser may sell or otherwise dispose of any of the Shares pursuant to registration of any of the Shares pursuant to the Securities Act and any applicable state securities laws or under an exemption from such registration requirements and as otherwise provided herein.
(p) Legend . The Purchaser acknowledges and agrees that the Shares shall bear a restricted legend (the “Legend”), in the form and substance as set forth in Section 3(d) hereof, prohibiting the offer, sale, pledge or transfer of the securities, except (i) pursuant to an effective registration statement filed under the Securities Act, (ii) in accordance with the applicable provisions of Regulation S, promulgated under the Securities Act, (iii) pursuant to an exemption from registration provided by Rule 144 under the Securities Act (if available), and (iv) pursuant to any other exemption from the registration requirements of the Securities Act or for estate planning purposes (subject to any escrow restrictions).
(q) Economic Considerations . The Purchaser is not relying on Company, or its affiliates or agents with respect to economic considerations involved in this investment. The Purchaser has relied solely on his or her own advisors.
(r) Compliance with Laws . Any resale of the Shares during the “distribution compliance period” as defined in Rule 902(f) to Regulation S shall only be made in compliance with exemptions from registration afforded by Regulation S. Further, any such sale of the Shares in any jurisdiction outside of the United States will be made in compliance with the securities laws of such jurisdiction. The Purchaser will not offer to sell or sell the Shares in any jurisdiction unless the Purchaser obtains all required consents, if any.
(s) Investment Commitment . The Purchaser’s overall commitment to investments which are not readily marketable is not disproportionate to the Purchaser’s net worth, and an investment in the Shares will not cause such overall commitment to become excessive.
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(t) Receipt of Information . The Purchaser has received all documents, records, books and other information pertaining to the Purchaser’s investment in Company that has been requested by the Purchaser.
(u) No Reliance . Other than as set forth herein, the Purchaser is not relying upon any other information, representation or warranty by Company or any officer, director, stockholder, agent or representative of Company in determining to invest in the Shares. The Purchaser has consulted, to the extent deemed appropriate by the Purchaser, with the Purchaser’s own advisers as to the financial, tax, legal and related matters concerning an investment in the Shares and on that basis believes that its investment in the Shares is suitable and appropriate for the Purchaser.
(v) No Governmental Review . The Purchaser is aware that no federal or state agency has (i) made any finding or determination as to the fairness of this investment, (ii) made any recommendation or endorsement of the Shares or Company, or (iii) guaranteed or insured any investment in the Shares or any investment made by Company.
(w) Potential Loss of Investment . The Purchaser understands that an investment in the Shares is a speculative investment which involves a high degree of risk and the potential loss of his or her entire investment.
(x) Price Determined Arbitrarily . The Purchaser understands that the price of the Shares bear no relation to the assets, book value or net worth of Company and were determined arbitrarily by Company. The Purchaser further understands that there is a substantial risk of further dilution on his or her investment in Company.
10. Further Assurances . Each Party to this Agreement will use its best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement.
11. Entire Agreement; Amendments . This Agreement contains the entire understanding of the Parties with respect to the matters covered herein and therein and, except as specifically set forth herein, neither Company nor the Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters. No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by both Parties. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given.
12. Survival of Agreements, Representations and Warranties, etc . All representations and warranties contained herein shall survive the execution and delivery of this Agreement.
13. Successors and Assigns . This Agreement shall bind and inure to the benefit of and be enforceable by the Parties and their respective successors and assigns.
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14. Governing Law . This Agreement and the obligations, rights and remedies of the Parties hereto are to be construed in accordance with and governed by the laws of the State of New York, with any action/dispute concerning this Agreement to be commenced exclusively in the state and federal courts sitting in the City of New York.
15. Severability . In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
16. Miscellaneous . This Agreement embodies the entire agreement and understanding between the Parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof. If any provision of this Agreement shall be held invalid or unenforceable for whatever reason, the remainder of this Agreement shall not be affected thereby and every remaining provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. This Agreement may be executed in any number of counterparts and by the Parties hereto on separate counterparts but all such counterparts shall together constitute but one and the same instrument.
[ Signature Page Follows ]
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IN WITNESS WHEREOF , the Parties hereto have executed this Share Purchase Agreement as of the date first above written.
American Education Center Inc. (the “Company”):
| By: | /s/ Max P. Chen | |
| Name: Max P. Chen | ||
| Title: CEO, Chairman and Director | ||
Purchaser: China Cultural Finance Holdings Company Limited
| By: | /s/ Kai Shing Fong | |
| Name: Kai Shing Fong | ||
| Title: Sole Director | ||
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EXHIBIT A
INVESTOR SUITABILITY QUESTIONNAIRE
FOR NON-U.S. INVESTORS AS DEFINED IN RULE 902 OF REGULATION S
CONFIDENTIAL
American Education Center Inc. (the “ Company ”) will use the responses to this questionnaire to qualify prospective investors for purposes of federal and state securities laws.
Please complete , sign , date and return one copy of this questionnaire as soon as possible, via mail or facsimile, to:
[INSERT NAME AND CONTACT INFORMATION OF COMPANY OFFICER]
| Name: | |
| (EXACT NAME AS IT SHOULD APPEAR ON SECURITIES) |
| 1. | Please indicate the country in which you maintain your principal residence and how long you have maintained your principal residence in that country. |
| Country: | ||
| Duration: | ||
| Address: | ||
| Email Address: | ||
You agree that the Company may present this questionnaire to such parties as the Company deems appropriate to establish the availability of exemptions from registration under federal and state securities laws. You represent that the information furnished in this questionnaire is true and correct and you acknowledge that the Company and its counsel are relying on the truth and accuracy of such information to comply with federal and state securities laws. You agree to notify the Company promptly of any changes in the foregoing information that may occur prior to the investment.
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| Title or capacity of signing party if the subscriber is partnership, corporation, trust or other non-individual entity |
Date:
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I. INDIVIDUAL INVESTORS :
(Investors other than individuals should turn to Part II)
INITIAL EACH BOX TRUE OR FALSE OR COMPLETE, AS APPROPRIATE
Disclosure of Foreign Citizenship .
| 1. |
______ ________ True False |
You are a citizen of a country other than the United States. | ||
| 2. | _________________ | If the answer to the preceding question is true, specify the country of which you are a citizen. |
Verification of Status as a Non - “U.S. Person” under Regulation S .
| 3. |
______ ________ True False |
You are a natural person resident in the United States. |
PLEASE PROVIDE COPIES OF THE IDENFICATION DOCUMENTS ISSUED BY THE COUNTRY OF WHICH YOU ARE A CITIZEN.
PLEASE TURN TO PART III AND SIGN AND DATE THIS QUESTIONNAIRE
| 16 |
II. NON-INDIVIDUAL INVESTORS :*
(Please answer Part II only if the purchase is proposed to be undertaken by a corporation, partnership, trust or other entity)
| · | If the investment will be made by more than one affiliated entity, please complete a copy of this questionnaire for EACH entity. |
| · | PLEASE PROVIDE COPIES OF THE FORMATION DOCUMENTS ISSUED BY THE COUNTRY IN WHICH YOU WERE FORMED. |
INITIAL EACH BOX TRUE OR FALSE
Disclosure of Foreign Ownership .
| 1. |
_____ _________ True False |
You are an entity organized under the laws of a jurisdiction other than those of the United States or any state, territory or possession of the United States (a “Foreign Entity”). | ||
| 2. |
_____ _________ True False |
You are a corporation of which, in the aggregate, more than one-fourth of the capital stock is owned of record or voted by Foreign Citizens, Foreign Entities, Foreign Corporations (as defined below) or Foreign partnerships (as defined below) (a “Foreign Corporation”) | ||
| 3. |
_____ _________ True False |
You are a general or limited partnership of which any general or limited partner is a Foreign Citizen, Foreign Entity, Foreign Government, Foreign Corporation or Foreign Partnership (as defined below) (a “Foreign Partnership”) | ||
| 4. |
_____ _________ True False |
You are a representative of, or entity controlled by, any of the entities listed in items 1 through 3 above. |
| 17 |
Verification of Status as a Non-“U.S. Person” under Regulation S .
| 18 |
| 19 |
EXHIBIT B
Certificate of Designation
| 20 |
Exhibit 99.1
American Education Center Announces Closing of $2 Million Convertible Preferred Stock Offering
NEW YORK, Nov. 3, 2017/ PRNewswire/ — American Education Center, Inc. (“AEC” or the “Company;”) (OTCQB: AMCT), an emerging growth company providing educational and career enrichment opportunities for Chinese students studying in the United States, and compliance training and advisory services to companies in China, today announced that the Company has completed a $2.0 million private placement of its Series A Convertible Preferred Stock (the “Offering”) to China Cultural Finance Holdings Company Limited (“CCF”), a BVI corporation controlled by Mr. Kai Shing Fong.
Pursuant to a Share Purchase Agreement executed on October 30, 2017, the Company issued 500,000 shares of its Series A Convertible Preferred Stock, par value of $0.001 per share (the “Shares”) to CCF for an aggregate consideration of $2.0 million, or $4 per share. As a condition of the Offering, AEC agreed to use its commercially reasonable efforts to effect the uplisting of its common stock on the Nasdaq Capital Market or such other national securities exchanges (the “Uplisting”) within 365 days after the Offering (the “Uplisting Deadline”). If and when the Uplisting occurs, the Shares are subject to mandatory conversion into shares of AEC common stock at a conversion price which shall be the lesser of (i) $4.00 or (ii) 90% of the offering price in any qualifying financing concurrent with the Uplisting. In the event that AEC fails to complete the Uplisting on or before the Uplisting Deadline, CCF has the option to redeem the Shares, either partially or in its entirety, at $4 per share plus interest payment at a rate of 5% per annum within 30 days following the Uplisting Deadline.
The Shares are restricted and have not been registered with the U.S. Securities and Exchange Commission (the “SEC’) in accordance with the exemption from registration pursuant to Regulation S of the U.S. Securities Act of 1933. The Company intends to use the proceeds of the Offering to provide additional funds for operations and for general corporate purposes.
Mr. Max P. Chen, Chairman and Chief Executive Officer of AEC, commented, “At an offering price of $4.00 per share which is well above the current trading price of our common stock, the investment from Mr. Fong is a vote of confidence in the prospects of our business and our Uplisting. Dr. Fong is well connected and respected in the educational and training services space in China and Hong Kong. We look forward to working with Mr. Fong not only as an investor but also a strategic business partner in the future as we actively look for opportunities to grow our business.”
Mr. Fong is involved in several philanthropy initiatives centered in education. He has set up The Kai Shing Scholarship, Harrow School United Kingdom which enables gifted pupils from families of limited means to study at Harrow for five years. Mr. Fong is an integral part of the Yan Oi Tong Kai Shing Mega Progress Grant Scheme where he first established the Scheme in 2010, with the vision of assisting qualified students in need of financial assistance to achieve the education level they aspire to, and followed by donating HK $5 million to Yan Oi Tong. Mr. Fong has donated RMB 1.36 million for the construction of Nong Lan Primary School in Guangxi province, PRC. He serves as a School Council Member at Beijing Bacui Bilingual School, and is an Honorary Director at Chinese Red Cross Foundation.
This press release does not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
About American Education Center, Inc. (OTCQB: AMCT)
Based in New York with operations in China, we are one of most experienced and recognizable total solutions education advisory services company in the United States (US). Our customized placement and career advisory services are designed to address the needs of the rising middle-class families in China for quality education and working experience in the US. We also deliver customized compliance training and advisory services to corporate clients in China in the food industry to help them meet the local regulatory and compliance requirements and standards. For more information, please visit: www.aec100.com .
Forward Looking Statements
This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management’s current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties, Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.
Contact :
American Education Center, Inc.
Nancy Qin
(212) 825-0437
f.qin@aec100.com
Investor Relations
Tony Tian, CFA
Weitian Group LLC
(732) 910-9692
tony.tian@weitian-ir.com