Exhibit 10.4

 

PREFERRED STOCK EXCHANGE AGREEMENT

 

This Exchange Agreement (the “Agreement”) is entered into as of the 10th day of
October, 2019, by and among Muliang Agritech, Inc., a Nevada corporation (the
“Company”), and the shareholder Mr. Lirong Wang signatory hereto (the
“Shareholder”), with reference to the following facts:

 

WHEREAS, the Shareholder desires to cancel his beneficial ownership of
15,000,000 shares of Company’s common stock, par value $0.0001 per share (the
“Existing Shares”) for the Company’s 15,000,000 shares of Series A preferred
stocks (the “Exchange Shares”);

 

WHEREAS, the Company desires to issue the Exchange Shares to induce the
Shareholder cancel the Existing Shares.

 

WHEREAS, Each of the Company and the Shareholder desire to effectuate the
Exchange on the basis and subject to the terms and conditions set forth in this
Agreement.

 

Capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Securities Purchase Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:

 

1. Exchange of Series A Preferred Stock. Each of the Company and Shareholder
agrees that, on the date hereof, Shareholder cancel 15,000,000 shares of common
stock and the Company shall issue to Shareholder in exchange therefore
15,000,000 shares of Series A Preferred Stock. The exchange of the common stocks
for the Series A Preferred Stock will be made in reliance upon the exemption
from registration provided by Section 4(a)(2) of the Securities Act.:

 

2. Representations and Warranties of the Company. The Company represents and
warrants to the Shareholder, as of the date hereof, and as of the time of
consummation of the Exchange, that:

 

(a) Organization and Qualification. The Company and each of its subsidiaries
(the “Subsidiaries”) are duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), 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 any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents except, with
respect to the Subsidiaries, for violations which would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. The Company and each Subsidiary are duly qualified to conduct its
respective businesses and are in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.

 

 

 

 

(b) Authorization and Binding Obligation. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement,
the Exchange Shares and each of the other agreements and certificates entered
into by the parties hereto in connection with the transactions contemplated by
this Agreement (collectively, the “Exchange Documents”) and to issue the
Exchange Shares in accordance with the terms hereof and thereof. The execution
and delivery of the Exchange Documents by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Exchange Shares, have been duly
authorized by the Board of Directors of the Company and, other than (i) such
filings required under applicable securities or “Blue Sky” laws of the states of
the United States, (ii) no further filing, consent, or authorization is required
by the Company or of its Board of Directors or its shareholders. This Agreement
and the other Exchange Documents have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

 

(c) No Conflict; Required Filings and Consents.

 

(i) The execution, delivery and performance of the Exchange Documents by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby will not (A) result in a violation of the certificate of
Incorporation of the Company, the terms of any share capital of the Company or
any of its Subsidiaries, the bylaws of the Company or any of the organizational
documents of the Company or any of its Subsidiaries or (B) 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 to which the Company or any of its Subsidiaries is a party, or (C)
result in a violation of any law, rule, regulation, order, judgment or decree
(including U.S. federal and state securities laws, rules, and regulations, and
the rules and regulations of the Nasdaq Capital Market (the “Principal Market”))
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected, except, in
the case of (B) or (C), as would not be reasonably expected to result in a
Material Adverse Effect.

 

(ii) Neither the Company nor any of its Subsidiaries is required to obtain any
consent, authorization or order of, or, make any filing or registration with,
any court, governmental agency or any regulatory or self-regulatory agency or
any other Person in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Exchange Documents, in each case in
accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations (which the Company is required to obtain
pursuant to the preceding sentence) have been obtained or effected, or will have
been obtained or effected, on or prior to the date hereof, and the Company and
its Subsidiaries are unaware of any facts or circumstances that might prevent
the Company from obtaining or effecting any of the registration, application or
filings pursuant to the preceding sentence. The Company has no knowledge of any
facts that would reasonably lead to delisting or suspension of the shares of
Common Stock by the Principal Market in the foreseeable future.

 

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(d) No Integration. None of the Company, its Subsidiaries, any of their
affiliates, or any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of any of Exchange
Shares under the Securities Act or cause this offering of the Exchange Shares to
be integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated. None of the Company, its Subsidiaries, their affiliates or any
Person acting on their behalf will take any action or steps referred to in the
preceding sentence that would require registration of any of Exchange Shares
under the Securities Act or cause the offering of the Exchange Shares to be
integrated with other offerings.

 

(e) Securities Law Exemptions. Assuming the accuracy of the representations and
warranties of the Shareholder contained herein, the offer and issuance by the
Company of the Exchange Shares is exempt from registration under the Securities
Act, pursuant to the exemption provided by Section 3(a)(9) thereof, and
applicable state securities laws.

 

(f) Issuance of Exchange Shares. The issuance of the Exchange Shares is duly
authorized and upon issuance in accordance with the terms of the Exchange
Documents shall be validly issued, fully paid and non-assessable and free from
all taxes, liens, charges and other encumbrances with respect to the issue
thereof. The issuance of the Exchange Shares is duly authorized and upon
issuance in with the terms of the Exchange Documents will be validly issued,
fully paid and nonassessable and free from all preemptive or similar rights,
taxes, liens, charges and other encumbrances with respect to the issue thereof,
with the Shareholders being entitled to all rights accorded to a shareholder of
common stock. Upon issuance in accordance with the Exchange Shares, the Exchange
Shares, respectively, will be validly issued, fully paid and nonassessable and
free from all preemptive or similar rights, taxes, liens, charges and other
encumbrances with respect to the issue thereof, with the Shareholders being
entitled to all rights accorded to a Shareholder of Common Stock.

 

(g) No Consideration Paid. No commission or other remuneration has been paid by
Company for soliciting the exchange of the Existing Shares for the Exchange
Shares and Exchange Shares as contemplated hereby.

 

(h) Disclosure. Other than as set forth in the 8-K Filing (as defined below),
the Company confirms that neither it nor any other Person acting on its behalf
has provided the Shareholder or its agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, nonpublic
information. The Company understands and confirms that the Shareholder will rely
on the foregoing representations in effecting transactions in the Exchange
Shares. All disclosure provided to the Shareholder regarding the Company and its
Subsidiaries, their business and the transactions contemplated hereby, including
the schedules to this Agreement, furnished by or on behalf of the Company 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 the light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their business,
properties, prospects, operations or financial conditions, 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.

 

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3. Representations and Warranties of Shareholder. The Shareholder represents and
warrants to the Company, as of the date hereof, as follows:

 

(a) Organization and Authority. The Shareholder has the requisite power and
authority to enter into and perform its obligations under this Agreement. The
execution and delivery of this Agreement by the Shareholder and the consummation
by Shareholder of the transactions contemplated hereby has been duly authorized
by Shareholder’s board of directors or other governing body. This Agreement has
been duly executed and delivered by Shareholder and constitutes the legal, valid
and binding obligation of Shareholder, enforceable against Shareholder in
accordance with its terms.

 

(b) Ownership of Existing Shares. The Shareholder owns the Existing Shares free
and clear of any liens (other than the obligations pursuant to this Agreement,
the Transaction Documents and applicable securities laws).

 

(c) Reliance on Exemptions. The Shareholder understands that the Exchange Shares
are being offered and exchanged in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Shareholder’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Shareholder set forth herein and in
the Exchange Documents in order to determine the availability of such exemptions
and the eligibility of the Shareholder to acquire the Exchange Shares.

 

(d) Validity; Enforcement. This Agreement and the Exchange Documents to which
the Shareholder is a party have been duly and validly authorized, executed and
delivered on behalf of the Shareholder and shall constitute the legal, valid and
binding obligations of the Shareholder enforceable against the Shareholder in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

(e) No Conflicts. The execution, delivery and performance by the Shareholder of
this Agreement and the Exchange Documents to which the Shareholder is a party,
and the consummation by the Shareholder of the transactions contemplated hereby
and thereby will not (i) result in a violation of the organizational documents
of the Shareholder 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 to which the Shareholder
is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
the Shareholder, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of the Shareholder to perform its obligations hereunder.

 

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(f) No Consideration Paid. No commission or other remuneration has been paid by
the Shareholder for soliciting the exchange of the Existing Shares for the
Exchange Shares and Exchange Shares as contemplated hereby.

 

4. Disclosure of Transaction. The Company shall, on or before 8:30 a.m., New
York City time, on or prior to the fourth (4th) business day after the date of
this Agreement, file a Current Report on Form 8-K describing the terms of the
transactions contemplated hereby in the form required by the 1934 Act and
attaching the Exchange Documents, to the extent they are required to be filed
under the 1934 Act, that have not previously been filed with the Securities and
Exchange Commission by the Company (including, without limitation, the Exchange
Shares and this Agreement) as exhibits to such filing (including all
attachments, the “8-K Filing”).

 

5. Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State 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 brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. 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 to such
party at the address for such 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 manner permitted by law. NOTHING IN THIS AGREEMENT SHALL
AFFECT ANY RIGHT THAT THE SHAREHOLDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AGAINST COMPANY OR ITS PROPERTIES IN THE
COURTS OF ANY JURISDICTION. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

6. Counterparts. This Agreement may be executed in one or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided, that facsimile or PDF signature pages
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original and
not a facsimile or PDF signature.

 

7. Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.

 

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8. Severability. If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

9. No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

 

10. Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

11. No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

12. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns in
accordance with the terms of the hereof.

 

13. Notices. Any notice or other communication required or permitted under this
Agreement must be in writing and must be given by (a) certified or registered
mail, (b) recognized commercial overnight courier, (c) facsimile transmission
with a confirming copy by certified mail or recognized commercial overnight
courier, or (d) e-mail with a confirming copy by certified or registered mail or
recognized commercial overnight courier, all addressed as follows:

 

(i) If to the Company, to its address, email address and facsimile number set
forth on the signature page of the Company, with copies to the Company’s
representatives set forth on the signature page of the Company or to such other
address, email address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.

 

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(ii) If to the Shareholder, to its address, email address and facsimile number
set forth on the signature page of the Shareholder, with copies to the
Shareholder’s representatives set forth on the signature page of the Shareholder
or to such other address, email address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

14. Remedies. The Shareholder and each Shareholder of the Exchange Shares shall
have all rights and remedies set forth in the Exchange Documents and all rights
and remedies which such Shareholders have been granted at any time under any
other agreement or contract and all of the rights which such Shareholders have
under any law. Any Person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.
Furthermore, the Company recognizes that in the event that it fails to perform,
observe, or discharge any or all of its obligations under this Agreement, any
remedy at law may prove to be inadequate relief to the Shareholder. The Company
therefore agrees that the Shareholder shall be entitled to seek temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages and without posting a bond or other security.

 

15. Survival. The representations and warranties of the Company and the
Shareholder contained herein and the agreements and covenants set forth herein
shall survive the closing of the transactions contemplated hereby, including,
without limitation, the delivery and issuance of the Exchange Shares.

 

16. Indemnification. In consideration of the Shareholder’s execution and
delivery of the Exchange Documents and acquiring the Exchange Shares thereunder
and in addition to all of the Company’s other obligations under the Exchange
Documents, the Company shall defend, protect, indemnify and hold harmless the
Shareholder and all of its shareholders, partners, members, officers, directors,
employees and direct or indirect Shareholders and any of the foregoing Persons’
agents or other representatives (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”), as incurred, from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable and documented out-of-pocket
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Exchange Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Exchange Documents or
any other certificate, instrument or document contemplated hereby or thereby or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Exchange Documents or any other
certificate, instrument or document contemplated hereby or thereby, or (ii) the
status of the Shareholder as a Shareholder of the Exchange Shares pursuant to
the transactions contemplated by the Exchange Documents (unless such action,
suit or claim is based upon a breach of such Shareholder’s representations,
warranties or covenants under this Agreement and the other Exchange Documents or
any violations by Shareholder of state or federal securities laws or any conduct
by Shareholder that constitutes fraud, gross negligence, willful misconduct or
malfeasance). To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable under law.

 

17. Entire Agreement; Amendments. This Agreement supersedes all other prior oral
or written agreements between the Shareholder, the Company, their affiliates and
Persons acting on their behalf solely with respect to the Existing Shares, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Shareholder makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
Shareholder. No provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought.

 

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IN WITNESS WHEREOF, Shareholders and the Company have executed this Agreement as
of the date set forth on the first page of this Agreement.

 

  COMPANY:       MULIANG AGRITECH, INC.       By: /s/ Lirong Wang     Name: 
Lirong Wang     Title: Chief Executive Officer

 

 

  SHAREHOLDER:       Lirong Wang       By: /s/ Lirong Wang