THIS SUBSCRIPTION
AGREEMENT (this “
Agreement ”), dated as of July __, 2009, by and among
China Eco-Hospitality Operations, Inc., a Delaware corporation (the
“ Company ”), with an address at Room 405,
4/F., Wing Ming Industrial Centre, 15 Cheung Yue Street,
Cheung Sha Wan, Kowloon, Hong Kong, and the subscribers identified
on the signature page hereto (each a “ Subscriber
” and collectively “ Subscribers ”) (each
agreement with a Subscriber being deemed a separate and independent
agreement between the Company and such Subscriber, except that each
Subscriber acknowledges and consents to the rights granted to each
other Subscriber each, an “Other Subscriber” under such
agreement and the Transaction Documents, as defined in Section 5(c)
of this Agreement, referred to therein).
WHEREAS , the Company and the Subscribers are executing
and delivering this Agreement in reliance upon an exemption from
securities registration afforded by the provisions of Section 4(2),
Section 4(6), and Regulation S (“Regulation S”) as
promulgated by the United States Securities and Exchange Commission
(the “Commission”) under the Securities Act of 1933, as
amended (the “1933 Act”).
WHEREAS , the parties desire that, upon the terms and
subject to the conditions contained herein, the Company shall issue
and sell to the Subscribers, as provided herein, and the
Subscribers shall purchase up to $1,000,000 (the
“Maximum Offering”) of the Company's common stock,
$0.00001 par value (the “Common Stock”), at the
offering price of $1.50 per share (the “Offering
Price”), with a minimum subscription of 100 shares,
equivalent to $150.00 (the “Minimum Offering”). The
purchase price to be paid by each Subscriber, as identified on the
signature page to this Agreement, is referred to as the
“Purchase Price” and the shares being purchased by and
issued to such Subscriber, as identified on the signature page to
this Agreement, are referred to as the “Purchased
Shares.”
WHEREAS , subsequent to the closing of the Offering, the
Company intends to enter into a share exchange transaction with
Glorious Pie Limited, Inc., a BVI company (“Glorious
Pie”), pursuant to which the Company will become the holding
company of Glorious Pie (the “Share Exchange
Transaction”).
WHEREAS , the aggregate proceeds of the Offering
contemplated hereby shall be held in escrow (the
“Escrow”) pending the closing of the transactions
contemplated by this Agreement, pursuant to the foreign escrow
agreement entered into by and among ____ as of the date hereof
(the “Foreign Escrow Agreement”) and attached hereto as
Exhibit A .
NOW, THEREFORE
, in consideration of the mutual
covenants and other agreements contained in this Agreement, the
Company and the Subscribers hereby agree as follows:
1. Closing
Date . The closing of the Offering (the “Closing”)
shall occur simultaneously with the consummation of the Share
Exchange Transaction and in no event shall the Closing be later
than September 1, 2009 (the “Closing Date”),
unless extended by the Company and Glorious Pie, with written
consent, for up to an additional 60 day period.
(a) Subject
to the satisfaction or waiver of the terms and conditions of this
Agreement, on the Closing Date, each Subscriber, in the amounts set
forth on the signature page hereto, shall purchase and the Company
shall sell to each such Subscriber the Purchased Shares in the
amount set forth on the signature page hereto.
(b) The
occurrence of the Closing is expressly contingent on
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the simultaneous closing of the
Share Exchange Transaction on or before the Closing Date, unless
extended by the Company and Glorious Pie, with written consent, for
up to an additional 60 days;
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payment by the Subscriber of the
Subscriber’s Purchase Price, which payment shall made in
immediately available funds to the escrow account maintained at
_____ by the Escrow Agent, in accordance with the following
instruction, and to be held in Escrow pending the
Closing;
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the delivery by the Subscriber of
the executed power of attorney as attached hereto in Exhibit
B ;
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the truth and accuracy, on the
Closing Date of the representations and warranties of the Company
and Subscriber contained in this Agreement;
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the continued compliance with the
covenants of the Company set forth in this Agreement through such
date,
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the non-occurrence prior to that
date of any event that with the passage of time or the giving of
notice could become an Event of Default, as defined in Section 7
hereof or other default by the Company of its obligations and
undertakings contained in this Agreement,
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the delivery by the Company on the
Closing Date of a certificate signed by its chief executive officer
or chief financial officer (1) representing the truth and accuracy
of all the representations and warranties made by the Company
contained in this Agreement, as of the Closing Date, as if such
representations and warranties were made and given on such date,
except for changes that will not have alone, or in any combination
in the aggregate, a Material Adverse Effect (as defined in Section
5(a) of this Agreement), (2) certifying that the information
contained in the schedules and exhibits hereto is substantially
accurate as of the Closing Date, except for changes that do not
constitute a Material Adverse Effect, (3) adopting and renewing the
covenants and representations set forth in this Agreement in
relation to the Closing Date and the Purchased Shares, and (4)
certifying that no Event of Default has occurred, and
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3. Acceptance of
Subscription . The Minimum Subscription of this Offering is 100
shares, equal to $150.00 in aggregate. However, the Company
reserves the right to accept or reject any subscription, in whole
or in part, and any subscription that is not accepted will be
returned without interest.
4.
Subscriber's Representations and Warranties
. Each Subscriber, for himself, herself or itself (but
not with respect to any other Subscriber), hereby represents and
warrants to, and agrees with the Company that:
(a)
Organization and Standing of the Subscriber . If the
Subscriber is an entity, such Subscriber is a corporation,
partnership or other entity duly incorporated or organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and has the requisite corporate
power to own its assets and to carry on its business.
(b)
Authorization and Power . The Subscriber has the
requisite power and authority to enter into and perform this
Agreement and to purchase the Purchased Shares. The execution,
delivery and performance of this Agreement by the Subscriber and,
if the Subscriber is an entity, the consummation by the Subscriber
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate or partnership action, and no
further consent or authorization of such Subscriber or its Board of
Directors, stockholders, partners, members, as the case may be, is
required. This Agreement has been duly authorized, executed and
delivered by the Subscriber and constitutes, or shall constitute
when executed and delivered, a valid and binding obligation of the
Subscriber enforceable against the Subscriber in accordance with
the terms thereof.
(c)
No Conflicts . The execution, delivery and
performance of this Agreement and the consummation by the
Subscriber of the transactions contemplated hereby or relating
hereto do not and will not (i) result in a violation of the
Subscriber’s charter documents or bylaws or other
organizational documents, each as currently in effect, 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 the Subscriber 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 Subscriber or its
properties (except for such conflicts, defaults and violations as
would not, individually or in the aggregate, have a material
adverse effect on the Subscriber). The Subscriber 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 or to purchase the Purchased Shares in
accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, the Subscriber is assuming
and relying upon the accuracy of the relevant representations and
agreements of the Company herein.
(d)
Information on Company . The Subscriber
has been furnished with or has had access at the EDGAR Website of
the Commission to all of the Company’s periodic and current
reports filed with the Commission (hereinafter referred to as the
“Reports”). In addition, the Subscriber has received in
writing from the Company such other information concerning its
operations, financial condition and other matters as the Subscriber
has requested in writing (such other information is collectively,
the “Other Written Information”), and considered all
factors the Subscriber deems material in deciding on the
advisability of investing in the Securities.
(e)
Information on Subscriber . The Subscriber understands that
the investment offered hereunder has not been registered under the
1933 Act and the Subscriber further understands that the Subscriber
is purchasing the Purchased Shares without being furnished any
offering literature or prospectus. The Subscriber is acquiring the
Purchased Shares for their own account, for investment purposes
only, and not with a view towards resale or
distribution.
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The Subscriber is not a "US
Person" which is defined below:
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Any natural person resident in the
United States;
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Any partnership or corporation
organized or incorporated under the laws of the United
States;
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Any estate of which any executor or
administrator is a US person;
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Any trust of which any trustee is a
US person;
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Any agency or branch of a foreign
entity located in the United States;
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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 US
person;
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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
of the United States; and
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Any partnership or corporation if
(i) organized or incorporated under the laws of any foreign
jurisdiction and (ii) formed by a US person principally for the
purpose of investing in securities not registered under the 1933
Act, unless it is organized or incorporated, and owned, by
accredited investors (as defined in Rule 501(a) of Regulation D
promulgated under the 1933 Act) who are not natural persons,
estates or trusts.
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"United States" means the United
States of America, its territories and possessions, any State of
the United States, and the District of Columbia.
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The Subscriber (i) as of the
execution date of this Agreement is not located within the United
States, and (ii) is not purchasing the Purchased Shares for the
benefit of any US Person.
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The Subscriber will not resell the
Purchased Shares except in accordance with the provisions of
Regulation S (Rule 901 through 905 and Preliminary Notes thereto),
pursuant to a registration under the 1933 Act, or pursuant to an
available exemption from registration; and agrees not to engage in
hedging transactions with regard to such securities unless in
compliance with the 1933 Act.
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The Subscriber will not engage in
hedging transactions with regard to Securities of
the Company prior to the expiration of the distribution
compliance period specified in Category 2 or 3 (paragraph (b)(2) or
(b)(3)) in Rule 903 of Regulation S, as applicable, unless in
compliance with the 1933 Act; and as applicable, shall include
statements to the effect that the securities have not been
registered under the 1933 Act and may not be offered or sold in the
United States or to U.S. persons (other than distributors) unless
the securities are registered under the 1933 Act, or an exemption
from the registration requirements of the 1933 Act is
available.
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(f)
Purchase of Purchased Shares . On the Closing
Date, the Subscriber will purchase the Purchased Shares as
principal for its own account for investment only and not with a
view toward, or for resale in connection with, the public sale or
any distribution thereof, but Subscriber does not agree to hold the
Purchased Shares for any minimum amount of time.
(g)
Compliance with Securities Act . The Subscriber
understands and agrees that the Purchased Shares have not been
registered under the 1933 Act or any applicable state securities
laws, by reason of their issuance in a transaction that does not
require registration under the 1933 Act (based in part on the
accuracy of the representations and warranties of the Subscriber
contained herein), and that such Securities must be held
indefinitely unless a subsequent disposition is registered under
the 1933 Act or any applicable state securities laws or is exempt
from such registration. Notwithstanding anything to the
contrary contained in this Agreement, such Subscriber may transfer
(without restriction and without the need for an opinion of
counsel) the Securities to its Affiliates (as defined below)
provided that each such Affiliate is an “accredited
investor” under Regulation D or a non-US Person under
Regulation S and such Affiliate agrees to be bound by the terms and
conditions of this Agreement. For the purposes of this Agreement,
an “ Affiliate ” of any person or entity means
any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such
person or entity. For purposes of this definition, “
control ” means the power to direct the management and
policies of such person or firm, directly or indirectly, whether
through the ownership of voting securities, by contract or
otherwise.
(h)
Legends on Purchased Shares . The Purchased Shares shall
bear the following or similar legend:
“THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
CHINA ECO-HOSPITALITY OPERATIONS, INC. THAT SUCH REGISTRATION IS
NOT REQUIRED.”
(i)
Communication of Offer . The offer to sell the Purchased
Shares was directly communicated to the Subscriber by the Company.
At no time was the Subscriber presented with or solicited by any
leaflet, newspaper or magazine article, radio or television
advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than
in connection and concurrently with such communicated
offer.
(j)
Authority; Enforceability . This Agreement and
other agreements delivered together with this Agreement or in
connection herewith have been duly authorized, executed and
delivered by the Subscriber and are valid and binding agreements
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors’ rights generally and to general principles of
equity; and the Subscriber has full corporate power and authority
necessary to enter into this Agreement and such other agreements
and to perform its obligations hereunder and under all other
agreements entered into by the Subscriber relating
hereto.
(k)
No Governmental Review . The Subscriber
understands that no United States federal or state agency or any
other governmental or state agency has passed on or made
recommendations or endorsement of the Purchased Shares or the
suitability of the investment in the Purchased Shares, nor have
such authorities passed upon or endorsed the merits of the offering
of the Purchased Shares.
(l)
Correctness of Representations . The Subscriber represents
that the foregoing representations and warranties are true and
correct as of the date hereof and, unless the Subscriber otherwise
notifies the Company prior to the Closing Date, shall be true and
correct as of the Closing Date.
(m)
Survival . The foregoing representations and
warranties shall survive until three (3) years after the Closing
Date.
(n)
Residency . The Subscriber is a
resident of the jurisdiction set forth immediately below the
Subscriber’s name on the signature pages hereto.
(l)
Acknowledgement of Risk . The Subscriber agrees,
acknowledges and understands that its investment in the Purchased
Shares involves a significant degree of risk, including, without
limitation that: (a) the Company has limited operating history and
requires substantial funds in addition to the proceeds from the
sale of the Purchased Shares; (b) an investment in the Company is
highlight speculative and only subscribers who can afford the loss
of their entire investment should consider investing in the Company
and the Purchased Shares; (c) the Subscriber may not be able to
liquidate its investment; (d) transferability of the Purchased
Shares is extremely limited. The Subscriber agrees, acknowledges
and understands such risks.
5.
Company Representations and Warranties . The
Company represents and warrants to and agrees with each Subscriber
that:
(a) Due
Incorporation . The Company is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has the requisite
corporate power to own its properties and to carry on its business
as disclosed in the Reports. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each
jurisdiction where the nature of the business conducted or property
owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a
Material Adverse Effect. For purpose of this Agreement, a “
Material Adverse Effect ” shall mean a material
adverse effect on the financial condition, results of operations,
properties or business of the Company taken individually, or in the
aggregate, as a whole.
(b)
Subsidiaries . As of the date hereof, the Company does not
have any subsidiaries. For purposes of this Agreement, “
Subsidiary ” means, with respect to any entity at any
date, any corporation, limited or general partnership, limited
liability company, trust, estate, association, joint venture or
other business entity) of which more than 50% of (i) the
outstanding capital stock having (in the absence of contingencies)
ordinary voting power to elect a majority of the board of directors
or other managing body of such entity, (ii) in the case of a
partnership or limited liability company, the interest in the
capital or profits of such partnership or limited liability company
or (iii) in the case of a trust, estate, association, joint venture
or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of
determination, owned or controlled directly or indirectly through
one or more intermediaries, by such entity.
(c)
Authority; Enforceability . This Agreement, the
Foreign Escrow Agreement and any other agreements delivered
together with this Agreement or in connection herewith
(collectively, the “ Transaction Documents ”)
have been duly authorized, executed and delivered by the Company
are valid and binding agreements enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights
generally and to general principles of equity. The Company has full
corporate power and authority necessary to enter into and deliver
the Transaction Documents and to perform its obligations
thereunder.
(d)
No Additional Issuances . Other than this
Agreement with other Subscribers, there are no outstanding
agreements or preemptive or similar rights affecting the Company's
Common Stock or other equity securities and, no outstanding rights,
warrants or options to acquire, or instruments convertible into or
exchangeable for, or agreements or understandings with respect to
the sale or issuance of any shares of Common Stock or other equity
securities of the Company.
(e)
Consents . No consent, approval, authorization or
order of any court, governmental agency or body or arbitrator
having jurisdiction over the Company, or any of its Affiliates, nor
the Company’s shareholders is required for the execution by
the Company of the Transaction Documents and compliance and
performance by the Company of its obligations under the Transaction
Documents, including, without limitation, the issuance and sale of
the Securities.
(f)
No Violation or Conflict . Assuming the
representations and warranties of each of the Subscribers in
Section 3 are true and correct, neither the issuance and sale of
the Purchased Shares nor the performance of
