A share issuance agreement is a contract between a company and participant that sets forth the terms and conditions of the issuance of stock. The document includes details about how much stock is being issued and how much equity in the company is being put up to back up the shares. It also includes information about the proposed price per share and when the shares are expected to go live and be available for investors to obtain. If other shares are being diluted as a result of the stock issuance, that information is also included in the agreement.
Below is a list of common sections included in Share Issuance Agreements. These sections are linked to the below sample agreement for you to explore.
THE SECURITIES BEING SUBSCRIBED TO HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY JURISDICTION. THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF FEDERAL AND STATE SECURITIES LAWS.
THE SECURITIES BEING SUBSCRIBED TO MAY NOT BE SOLD, OFFERED, OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A “U.S. PERSON” (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE 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 SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
SHARE ISSUANCE AGREEMENT
THIS SHARE ISSUANCE AGREEMENT (this “ Agreement ”), dated as of August 18, 2020 (the “Execution Date”), is entered into by and among American Education Center, Inc., a Nevada corporation (the “ Company ”), and each of the individuals and entities listed in Exhibit A (each a “ Subscriber ” and collectively, the “ Subscribers ”).
W I T N E S S E T H :
WHEREAS , subject to the terms and conditions set forth in this Agreement and pursuant to the Securities Act of 1933, as amended (the “ Securities Act ”) and Regulation S promulgated thereunder, the Company desires to issue and sell to each of the Subscribers, and the Subscriber, severally and not jointly with other purchasers, desires to purchase from the Company, securities of the Company as more fully described in this Agreement;
WHEREAS , the Subscribers together, hold in the aggregate, 100% of the equity interests of Shenzhen Chongwei Technology Co., Ltd., a company incorporated pursuant to the laws of the PRC (the “ PRC OpCo ”). The Company, the Subscribers as shareholders of PRC OpCo, and the PRC Op Co, desire to enter into a series of contractual arrangements, including an Equity Pledge Agreement, an Exclusive Business Cooperation Agreement, an Exclusive Option Agreement, and Irrevocable Powers of Attorney (collectively, the “ VIE Agreements ”) no later than September 30, 2020;
WHEREAS , as consideration for the Subscribers to enter into the VIE Agreements, the Company desires to issue to the Subscribers as a group up to an aggregate of 2,640,690 shares of the Company’s common stock, par value $0.001 (the “ Common Stock ”) (collectively, the “ Shares ”), representing in the aggregate, up to 4.47% of the Company’s issued and outstanding Common Stock, as of the date of this Agreement, in such amount set forth next to each Subscriber’s name on Exhibit A , based on the terms and conditions set forth herein; and
WHEREAS , the offer and issuance of the Shares by the Company (the “ Offering ”) is being made in reliance upon the provisions of Regulation S (“ Regulation S ”) promulgated by the Securities and Exchange Commission (the “ SEC ”) under the Securities Act.
NOW, THEREFORE , in consideration of and subject to the mutual agreements, terms and conditions herein contained, the receipt and sufficiency of which are hereby acknowledged, the Company and Subscribers agree as follows:
| 1. | ISSUANCE OF SHARES OF COMMON STOCK |
1.1 Consideration . Subject to the terms and conditions set forth herein, the Subscribers agree to cause the PRC OpCo to enter into the VIE Agreements contemporaneously with the date of this Agreement in exchange for the Shares to be issued to each Subscriber pursuant to the terms hereof.
1.2 Issuance of Common Stock . Subject to the terms and conditions set forth herein, the Company agrees to issue to each of the Subscribers that number of Shares set forth next to each Subscriber’s name on Exhibit A , subject to forfeiture pursuant to Section 1.4 of this Agreement.
1.3 Closing . The closing of the transactions contemplated hereby shall take place as agreed by the Company and each Subscriber (the “ Closing ” and such date and time the “ Closing Date ”) within [7] business days following the execution of the VIE Agreements by and among the Company, the Subscribers as shareholders of PRC OpCo, and the PRC Op Co. At the Closing, the Company shall deliver to the Subscribers such certificates in the names of the Subscribers (“C ertificates ”), representing such number of Shares as set forth next to each Subscriber’s name on Exhibit A . The Certificates shall be released to the Subscribers pursuant to the terms and conditions of the Escrow Agreement (as defined below). The Company is not obligated to complete transactions underlying the Closing if the VIE Agreements are not duly executed by the Company, the Subscribers as shareholders of PRC OpCo, and the PRC Op Co.
| 2. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
The Company represents and warrants to the Subscribers that:
2.1 Organization . The Company is duly incorporated in [Nevada] and is validly existing in good standing under the laws of [Nevada]. The Company is not in violation of any of the provisions of its articles of incorporation, by-laws or other organizational or charter documents, each as may be amended (the “ Internal Documents ”). The Company has no subsidiaries and does not have an equity interest in any other firm, partnership, association or other entity. The Company is qualified to transact business as a foreign corporation and is in good standing under the laws of each jurisdiction where the location of its properties or the conduct of its business makes such qualification necessary, except where the failure to be so qualified would not have a material adverse effect on the business, assets, liabilities, results of operations, condition (financial or otherwise), properties or prospects of the Company.
2.2 Authority . The Company has all power and authority to: (i) conduct its business as presently conducted and as proposed to be conducted as described herein; (ii) enter into and perform its obligations under this Agreement; and (iii) issue, sell and deliver the Shares. The execution and delivery of this Agreement and the issuance, sale and delivery of the Shares has been duly authorized by all necessary corporate action. Once executed and delivered, this Agreement will constitute, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, including the effect of statutory and other laws regarding fraudulent conveyances and preferential transfers, and except that no representation is made herein regarding the enforceability of the Company’s obligations to provide indemnification and contribution remedies under the securities laws and subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity).
2.3 Valid Issuance . The Shares will be duly and validly issued, fully paid and non-assessable, and free from all taxes or liens with respect to the issue thereof and shall not be subject to preemptive rights, rights of first refusal and/or other similar rights of shareholders of the Company and/or any other person.
2.4 No Litigation . No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or its property is pending or, to the best knowledge of the Company, threatened that (i) could reasonably be expected to have a material adverse effect on the performance of this Agreement by the Company or the consummation of any of the transactions contemplated hereby or thereby, and/or (ii) could reasonably be expected to have a material adverse effect on the Company’s operations.
2.5 No Material Violation . The Company is not in (i) violation or default of any provision of its Internal Documents; (ii) default or material violation of the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which it is a party or bound or to which its property is subject; and/or (iii) default or material violation of any statute, law, rule, regulation, judgment, order or decree applicable to the Company of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its properties, as applicable.
2.6 No Conflict . The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under any provision of any mortgage, indenture, lease or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or his properties or assets. Neither the execution and delivery of this Agreement by the Company, nor the consummation of the transaction contemplated hereby, will result in the imposition of any security interest upon the Shares.
2.7 Certain Fees . No brokers fees, finder’s fees or financial advisory fees or commissions will be payable by the Company with respect to the transactions contemplated by this Agreement. The Subscribers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this section that may be due in connection with the transactions contemplated by this Agreement.
| 3. | REPRESENTATIONS AND WARRANTIES OF EACH OF THE SUBSCRIBERS |
Each Subscriber hereby represents and warrants to the Company as follows:
3.1 Organization . Such Subscriber is either an individual or an entity, corporate, partnership, limited liability company, duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its formation, with full right, or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out his, her or its obligations hereunder and thereunder.
3.2 Authority . Such Subscriber has the requisite power and authority to enter into and perform this Agreement and to purchase the Shares being sold to him, her or it hereunder. The execution, delivery and performance of this Agreement by such Subscriber 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 Subscriber 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 Subscriber and constitutes, or shall constitute when executed and delivered, a valid and binding obligation of such Subscriber enforceable against such Subscriber in accordance with the terms hereof.
3.3 Purchase Entirely for Own Account . This Agreement is made with such Subscriber in reliance upon such Subscriber’s representation to the Company, which by such Subscriber’s execution of this Agreement, such Subscriber hereby confirms. The Shares to be acquired by such Subscriber will be acquired for investment for such Subscriber’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and such Subscriber has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, such Subscriber further represents that such Subscriber does not presently have any contract, undertaking, agreement or arrangement with any individual, corporation, partnership, limited liability company, joint venture, trust or other entity (“ Person ”) to sell, transfer or grant participations to any Person, with respect to any of the such Subscriber’s Shares.
3.4 Experience of Subscriber . Such Subscriber, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment.
3.5 Ability to Bear Risk . Such Subscriber understands and agrees that the purchase of the Shares is a high risk investment and that such Subscriber is able to afford and bear an investment in a speculative venture having the risks and objectives of the Company, including a risk of total loss of such investment. Such Subscriber must bear the substantial economic risks of the investment in the Shares indefinitely because the Shares may not be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration(s) is available.
3.6 Disclosure of Information . Such Subscriber has been given access to full and complete information regarding the Company and has utilized such access to such Subscriber’s satisfaction for the purpose of obtaining such information regarding the Company as such Subscriber has reasonably requested. In particular, such Subscriber: (i) has received and thoroughly read and evaluated all the disclosures contained in this Agreement; and (ii) has been given a reasonable opportunity to review such documents as such Subscriber has requested and to ask questions of, and to receive answers from, representatives of the Company concerning the Shares and the business and affairs of the Company and to obtain any additional information concerning the Company’s business to the extent reasonably available so as to understand more fully the nature of this investment and to verify the accuracy of the information supplied. Such Subscriber is satisfied that he, she or it has received adequate information with respect to all matters which he, she or it considers material to its decision to make this investment.
3.7 Restricted Securities . Such Subscriber understands that the Shares have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act, which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Subscriber’s representations as expressed herein. Such Subscriber understands that the Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, Subscriber must hold the Shares indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Except as otherwise provided herein, such Subscriber acknowledges that the Company has no obligation to register or qualify the Shares. Such Subscriber further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period of the Shares, or requirements relating to the Company that are outside of such Subscriber’s control, and which the Company is under no obligation, and may not be able, to satisfy.
3.8 No Public Market . Such Subscriber understands that no public market now exists for the Shares and that the Company has made no assurances that a public market will ever exist for the Common Stock.
3.9 Exculpation Among Subscribers . Such Subscriber acknowledges that he, she or it is not relying upon any Person, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Such Subscriber agrees that he, she or it is not liable to any other purchasers participating in this Offering for any action heretofore taken or omitted to be taken by any of them in connection with the purchase of the Shares.
3.10 Residence . Such Subscriber is presently a bona fide resident of the state or country represented on the signature page hereof and has no present intention of becoming a resident of any other state, country, or jurisdiction, and the address and Social Security Number/National Insurance Number (or other applicable number) or Employer Identification Number/Corporate Tax Reference Number (or other applicable number) set forth on the signature page hereof are Subscriber’s true and correct residential or business address and Social Security Number/National Insurance Number (or other applicable number) or Employer Identification Number/Corporate Tax Reference Number (or other applicable number).
3.11 Trading Restrictions . Such Subscriber has been independently advised as to the restrictions with respect to trading the Shares and with respect to the resale restrictions imposed by applicable securities laws, hereby confirms that no representation has been made to him, her or it by or on behalf of the Company with respect thereto, hereby acknowledges the risks relating to an investment therein and of the fact that he, she or it may not be able to resell the Shares except in accordance with limited exemptions under applicable securities legislation and regulatory policy until expiry of the applicable restriction period and compliance with the other requirements of applicable law, that such Subscriber (or others for whom he, she or it is contracting hereunder) is solely responsible to find out what these restrictions are and that such Subscriber is solely responsible (and not the Company) for compliance with applicable resale restrictions and that such Subscriber is aware that he, she or it may not be able to resell the Shares except in accordance with limited exemptions under applicable securities laws, and he, she or it agrees that any certificates representing the Shares may bear a legend indicating that the resale of such securities is restricted.
3.12 Reporting Company Status . Such Subscriber is aware that the Company is not a “reporting company” (as such term is used in the Securities Exchange Act of 1934, as amended) in the U.S.
3.13 Additional Financings . The Company may complete additional financings, including project financing, in the future in order to develop the business of the Company and to fund its ongoing development; there is no assurance that such financings or project financings will be available and, if available, on reasonable terms; failure to obtain sufficient additional funds by way of debt or equity financings or through joint ventures will prevent the continued development of the business of the Company and any such future financings may have a dilutive effect on current security holders, including such Subscriber.
3.14 Holding Periods . Such Subscriber is solely responsible (and not the Company) for compliance with all applicable hold periods and resale restrictions to which the Shares are subject.
3.15 Confidential Information . The Subscriber agrees that such Subscriber and his, her or its employees, agents and representatives will keep confidential and will not disclose, divulge or use (other than for purposes of monitoring its investment in the Company) any confidential information which such Subscriber may obtain from the Company pursuant to financial statements, reports and other materials submitted by the Company to such Subscriber pursuant to this Agreement, unless such information is (i) known to the public through no fault of such Subscriber or his, her or its employees or representatives; (ii) becomes part of the public domain other than by a breach of this Agreement; (iii) becomes known by the action of a third party not in breach of a duty of confidence; or (iv) is required to be disclosed to a third party pursuant to any applicable law, government resolution, or decision of any court or tribunal of competent jurisdiction; provided, however, that a Subscriber may disclose such information (i) to his, her or its attorneys, accountants and other professionals in connection with their representation of such Subscriber in connection with such Subscriber’s investment in the Company, (ii) to any prospective permitted transferee of the Shares, or (iii) to any general partner or affiliate of such Subscriber, so long as the prospective transferee agrees to be bound by the provisions of this Section 3.15 .
3.16 Regulation S Exemption . Such Subscriber 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. Such Subscriber 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 the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Subscriber set forth herein in order to determine the applicability of such exemptions and the suitability of such Subscriber to acquire the Shares. In this regard, such Subscriber represents, warrants and agrees that:
(a) The Subscriber is not a U.S. Person and is not an affiliate (as defined in Rule 501(b) under the Securities Act) of the 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; |