|
|
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
.