STOCKPURCHASEAGREEMENT

This STOCK PURCHASE AGREEMENT is made as of May 15, 2014 by and between CN Resources, Inc., a Nevada corporation (the “Company”), 1547698 Ontario Limited, a company organized under the laws of Ontario, Canada (“Ontario”), and Shanghai Yuankai Group Co., Ltd., a company organized under the law of the People's Republic of China (“Yuankai”). Each of Ontario and Yuankai shall also be referred to as “Purchaser,” and together, as “Purchasers”.

1. Ontario is indirectly controlled by Oliver Xing , a resident of Canada (“Xing”), who owns, beneficially and  of record, a total of 5,000,000 shares of Common  Stock prior  to the consummation of the transactions contemplated herein, which constitutes 19.16% of all issued and outstanding capital stock of the Company;

2. Yuankai owns, beneficially and of record, a total of 14,000,000 shares of Common Stock prior to the consummation of the transactions contemplated herein, which constitutes 53.64% of all issued and outstanding capital stock of the Company and which it acquired form Xing pursuant to a Stock Purchase Agreement dated April 25, 2014 (“SPA”);

3. The Company desires to sell to the Purchasers an aggregate of 30,000,000 shares of Common Stock (the “New Shares”) pursuant to the terms and conditions set forth in this Agreement.

4. NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree:

 

“Agreement” means this Stock Purchase Agreement and all schedules and exhibits attached hereto, as the same may be supplemented, modified or otherwise amended from time-to-time.

 

“CNRR-Canada”  means  CN  Resources,  Inc.,  a  corporation  incorporated  under  the  laws  of Ontario, Canada.

 

“Common Stock” means the common stock of the Company, par value $.00001 per share. “Company” shall have the meaning set forth in the preamble.

 

“Contract” means any contract, agreement, commitment, arrangement, undertaking or understanding of any kind whatsoever, written or oral, together with all related amendments, modifications, supplements, waivers and consents.

 

“Dollar or Dollars” means the United States dollar or dollars.

“Exchange Act” means the Securities Exchange Act of 1934, and the rules and regulations thereunder, each as amended.

 

“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, or preemptive right.

“Material Adverse Effect” means (i) a material adverse effect on the legality, validity or enforceability of the Agreement, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company or CNRR-Canada, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations hereunder.

 

“New Shares” shall have the meaning set forth in the Recitals. “Ontario” shall have the meaning set forth in the Recitals.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“Purchaser” or “Purchasers” shall have the meaning set forth in the Recitals. “SEC” means the U.S. Securities and Exchange Commission.

 

“Schedule” means each schedule attached hereto on which the parties hereto disclose information as part of their respective representations and warranties. The number of each Schedule corresponds to the section number of the related representation or warranty.

 

“Securities Act” means the Securities Act of 1933, and the rules and regulations thereunder, each as amended.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing). As of the date hereof the Trading Market is OTCQB.

 

“Yuankai” shall have the meaning set forth in the Recitals.

2.1. Purchase Price. Subject to and upon the terms and conditions of this Agreement, the Company hereby sells to , transfers, conveys, assigns and delivers to each of the Purchasers, and each Purchaser hereby severally purchases, acquires and accepts from the Company, the number of New Shares listed opposite its name below for the respective purchase price set forth below opposite its name (the “Purchase Price”).

2.2. Payment of Purchase Price. Simultaneously with the execution and delivery of this Agreement, each Purchaser shall pay to the Company, by wire transfer of immediately available funds in US Dollars, the Purchase Price listed above opposite the name of such Purchaser, to an account designated by the Company in writing.

2.3. Issuance of Certificate: Together with the execution and delivery of this Agreement, the Company will deliver to the transfer agent of the Company (the “Transfer Agent”) instructions directing the Transfer Agent to deliver to each Purchaser a certificate evidencing the New Shares hereby purchased by such Purchaser, issued to such Purchaser, duly signed by or on behalf of the appropriate officers of the Company.

3. Representations and Warranties of Company. The Company hereby represents and warrants to the Purchasers as follows:

3.1. Company.  Each of the Company and CNRR-Canada is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor CNRR-Canada is in violation or default of any of the provisions of its respective certificate or articles of incorporation or bylaws. Each of the Company and CNRR-Canada is duly qualified to conduct business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

3.2. Subsidiaries. The Company owns, of record, all of the issued and outstanding capital stock or other equity interests of CNRR-Canada, free and clear of any Liens. All of the issued and outstanding shares of capital stock of CNRR-Canada are duly authorized, validly issued, fully paid, and non-assessable. There are no outstanding options, warrants, rights, agreements, contracts, calls, commitments or demands of any character obligating CNRR-Canada to issue any authorized but unissued capital stock or securities, including securities convertible into or evidencing the right to purchase any capital stock or other securities of CNRR-Canada. Other than CNRR-Canada, the Company does not own, directly or indirectly, any equity interests of any other entity.

3.3. Capital Stock. Prior to the consummation of the transactions contemplated herein, the Company has a total of 26,100,000 shares of the Common Stock issued and outstanding. All of such shares are validly issued, fully-paid and non-assessable, and have been issued in accordance with applicable securities laws. None of the Company’s preferred stock has been issued. There are no outstanding options, warrants, rights, agreements, contracts, calls, commitments or demands of any character obligating the Company to issue any authorized but unissued stock or to redeem any capital stock or securities, including securities convertible into or evidencing the right to purchase any capital stock or other securities of the Company. After the consummation of the transactions contemplated herein, the Company will have a total of 56,100,000 shares of the Common Stock issued and outstanding; Yuankai will own 39,000,000 shares of Common Stock, constituting 69.52% of all issued and outstanding capital of the Company, and Xing will own, beneficially and of record, together with the New Shares purchased by Ontario hereunder, a total of 10,000,000 shares of Common, constituting 17.82% of all issued and outstanding capital stock of the Company.

3.4. Authorization; Enforcement. The Company has the requisite power, authority and power to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the performance of its obligations hereunder by the Company have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders. This Agreement has been duly executed by the Company and, when delivered, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law or public policy.

3.5. No  Conflicts.  The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s or CNRR-Canada’s certificate of incorporation or bylaws, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or result in the creation of any Lien upon any of the properties or assets of the Company or CNRR- Canada under any agreement, instrument or other understanding to which the Company or CNRR-Canada is a party or by which any property or asset of the Company or CNRR-Canada is bound, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or CNRR-Canada is subject, or by which any property or asset of the Company or CNRR-Canada is bound; except in the case of each of clauses (ii) and (iii), such as could not reasonably be expected to result in a Material Adverse Effect.

3.6. SEC Reports. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

3.7. Financial Statements. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited interim financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited interim statements, to normal, immaterial, year-end audit adjustments.

3.8. Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in an SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the SEC, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, or any of their family members or Affiliates except pursuant to existing Company stock option plans, if any. The Company does not have pending before the SEC any request for confidential treatment of information. Except for the transfer of the Shares contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists, or is reasonably expected to occur or exist, with respect to the Company or its subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one trading day prior to the date that this representation is made.

3.9. Sarbanes-Oxley; Internal Accounting Controls. The Company and its subsidiaries are in compliance in all material respects with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof. The Company and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that:  (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and its subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and its subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and its subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its subsidiaries that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of the Company or its subsidiaries.

 

 

3.10. Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

3.11. No  Prior  Offering. Other than the sale by Xing pursuant to the SPA, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, has made any offers or sales of any security or solicited any offers to buy any security of the Company in the last six months.

3.12. Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has: (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale of the New Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, the New Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.

3.13. Intangibles. The Company does not own any trademarks, trademark registrations or applications therefor, trade names, patents or applications therefor, copyrights, copyright registrations or applications therefor. No claim has been made against the Company that the Company has infringed any unexpired patent, trademark, trademark registration, trade name, copyright, copyright registration, trade secret or any other proprietary or intellectual property right of any party in connection with the operation of its business.

3.14. Title to Assets. Neither the Company nor CNRR-Canada owns any real property. The Company and CNRR-Canada have good and marketable title in all personal property, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and CNRR-Canada and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and the payment of which is neither delinquent nor subject to penalties.

3.15. Contracts. A true copy of each written Contract has been furnished to Purchasers, (i) each Contract is legal, binding, enforceable and in full force and effect; and will continue to be legal, binding, enforceable and in full force and effect on identical terms following the Closing; (ii) the Company has complied in all material respects with all provisions of each Contract, and to the knowledge of the Company and Seller, any other party to each Contract is not in breach or default under the Contract, and no event has occurred which with notice or lapse of time would constitute a breach or default by the Company or, to the knowledge of the Company and Seller, any other party; and (iii) no party has repudiated any provision of any Contract.

Compliance. Neither the Company nor CNRR-Canada: (i) is in default under or in violation of, nor has the Company or CNRR-Canada received notice of a claim that it is in default under or that it is in violation of, any agreement or any other instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree, or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

3.16. Taxes. A true copy of each such tax return has been furnished to the Purchasers. Except for matters that would not, individually or in the aggregate, have a Material Adverse Effect, the Company and CNRR-Canada each (i) has made or filed all United States federal, state and local income, and all foreign income, and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or CNRR-Canada know of no basis for any such claim.

3.17. Litigation. There is no Proceeding which (i) adversely affects or challenges the legality, validity or enforceability of the Agreement or the New Shares or (ii) would, if there were an unfavorable decision against the Company or CNRR-Canada, have or reasonably be expected to result in a Material Adverse Effect. There is not pending or, to the knowledge of the Company, contemplated, any investigation by the SEC or any other governmental authority involving the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.

3.18. Permits  and  Licenses.  The Company and CNRR-Canada have all certificates, authorizations, permits, licenses, orders and approvals (collectively, “Permits”) issued by all federal, state, local or foreign governmental or regulatory bodies required for each of them to carry on their respective business as presently conducted, except where the failure to possess such Permits could not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor CNRR-Canada has received any notice of proceedings relating to the revocation or modification of any Permit.

3.19. Broker Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Agreement. Neither Purchaser shall have any 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 the Agreement.

3.20. Approvals. Neither the execution and delivery by the Company of this Agreement, nor the consummation by the Company of the transactions contemplated by this Agreement, requires the consent or approval of, or the giving of advance notice by the Company to, or the registration by the Company with, any federal, state, local or foreign governmental authority.

 

3.21.  Employees.   Other than Xing, the Company does not have, and has never had any employees.

 

3.22. Employee Compensation Plans. Neither the Company nor CNRR-Canada maintains or contributes to, or has any obligation to contribute to or has any liability (including a liability arising out of an indemnification, guarantee, hold harmless or similar agreement) with respect to any plan, program, arrangement, agreement or commitment which is a written employment, consulting or deferred compensation agreement, or a written executive compensation, incentive bonus or other bonus, employee pension, profit sharing, savings, retirement, stock option, stock purchase, stock appreciation rights, severance pay, life, health, disability or accident insurance plan, or other written employee benefit plan, program, arrangement, agreement or commitment. Neither the Company nor CNRR-Canada has any liability with respect to an obligation to provide benefits, including death or medical benefits (whether or not insured) with respect to any Person.

 

3.23. Shareholder Loans; Transactions with Affiliates. Except as set forth in the Company’s periodic filing, there are no outstanding shareholder loans to either the Company or CNRR-Canada. Except as set forth in the SEC Reports and except for this Agreement and the SPA, none of the officers or directors of the Company or CNRR-Canada and, to the knowledge of the Company, none of the employees of the Company or CNRR-Canada is presently a party to any transaction with the Company or CNRR-Canada (other than for services as employees, officers and directors), other than for: (i) payment of salary or consulting fees for services rendered, and (ii) reimbursement for expenses incurred on behalf of the Company or CNRR-Canada.

 

 

3.24. Insurance. The Company and CNRR-Canada have obtained adequate insurance against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and CNRR-Canada are engaged.

3.25. Foreign Corrupt Practices. Neither the Company nor CNRR-Canada or any agent or other Person acting on behalf of the Company or CNRR-Canada, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or CNRR-Canada (or made by any Person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended.

3.26. Investment Company. The Company is not, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

3.27. Registration Rights. No Person has any right to cause the Company to effect  the registration under the Securities Act of any securities of the Company or CNRR-Canada.

3.28. Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Company confirms that neither the Company, nor any other Person acting on its behalf has provided Purchasers or their agents or counsel with any information that they believe constitutes or might constitute material, non-public information. The Company understands and confirms that Purchasers may rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to Purchasers regarding the Company and CNRR-Canada, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that Purchasers have not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 4 hereof.

4. Representations and Warranties of Purchasers.  Each Purchaser hereby represents and warrants severally, but not jointly, to the Company as follows:

4.1. Organization; Authority. Such Purchaser is a business company duly formed under the laws of the jurisdiction in which it is formed, with full right, company power and authority to enter into and to consummate the transactions contemplated by the Agreement and to perform its obligations hereunder. The execution and delivery of the Agreement and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary company action on the part of such Purchaser. This Agreement has been duly executed by such Purchaser and, when delivered, will constitute the valid and legally binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law or by public policy.

4.2. Own  Account. Such Purchaser understands that the New Shares are "restricted securities." Such Purchaser is acquiring the New Shares for its own account and not with a view to or for distributing or reselling such New Shares or any part thereof in violation of the Securities Act or any applicable state securities law. Such Purchaser has no present intention of distributing any of such New Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such New Shares in violation of the Securities Act or any applicable state securities law.

 

 

4.3. Purchaser Status. Such Purchaser is either: (i) an "accredited investor" as defined in the Securities Act, (ii) a "qualified institutional buyer" as defined in the Securities Act, or (iii) a non U.S.-Person as such term is defined in Rule 902 of Regulation S promulgated under the Securities Act, and such Purchaser is able to bear the economic risk of an investment in the Securities. Such Purchaser is not required to be registered as a broker- dealer under Section 15 of the Exchange Act.

4.4. Experience   of   Purchaser. Such Purchaser, 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 New Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the New Shares and, at the present time, is able to afford a complete loss of such investment.

4.5. General Solicitation. Such Purchaser is not purchasing the New Shares as a result of any advertisement, article, notice or other communication regarding the New Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

4.6. No  Conflicts. The execution, delivery and performance by such Purchaser of this Agreement and the consummation by such Purchaser of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of such Purchaser’s Articles of Association or other charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under any agreement, instrument or other understanding to which such Purchaser is a party, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which such Purchaser is subject.

 

5.  Covenants of Parties.

5.1. Securities Laws Disclosure; Publicity. The Company shall (a) by 9:30 a.m. (New York City time) on the Trading Day immediately following the execution and delivery of this Agreement, issue a press release disclosing the material terms of the transactions contemplated hereby, (b) file a Current Report on Form 8-K, including the Agreement as exhibit thereto, with the SEC within the time required by the Exchange Act, and (c) file any other documents and instruments required by the Exchange Act in connection with the consummation of the transactions contemplated hereby with the SEC and any state securities regulatory authorities. From and after the issuance of such press release, the Company represents to Purchasers that it shall have publicly disclosed all material, non-public information delivered to Purchasers by the Company in connection with the transactions contemplated hereby.

 

5.2.  Transfer Restrictions.

(a) The New Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of New Shares other than pursuant to an effective registration statement under the Securities Act to the Company or to an Affiliate of either Purchaser (in a “no-sale transaction”), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by such transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Section.

 

 

(b) Each Purchaser agrees to the imprinting, so long as is required by this Section, of a legend on any of the certificates representing the New Shares in the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT 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 ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

6. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or e-mail at the facsimile number or e-mail address set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or e-mail at the facsimile number or e-mail address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, or (c) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

7. Fees and Expenses. Each party shall pay the fees and expenses of its own advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of the New Shares to Purchasers.

8. Entire  Agreement;  Amendment.  This Agreement represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior oral and written and all contemporaneous oral negotiations, commitments and understandings between such parties. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by all parties to this Agreement.

9. Severability. Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction.

10. Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

11. Language. This Agreement has been written in English, which shall be the controlling language of this Agreement. Any Chinese translation of this Agreement shall be for convenience purposes only.  In the event of any inconsistency between the English version and the Chinese version of this Agreement, the English version shall control.

12. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.

 

13. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

 

14. Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the New Shares.

15. Counterparts;  Facsimile  Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be one and the same document. This Agreement may be executed by facsimile signatures.

16. WAIVER  OF  JURY  TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.