Document:

exh10-2.htm

 

Exhibit 10.2

Share Pledge Agreement

Between and Amongst

Party A: Hangzhou Kunjiang Education Technology Co., Ltd., a Chinese Corporation

and

Party B: Shareholders of Peng Tuo Information Technology Co., Ltd.

 

 

and

Peng Tuo Information Technology Co., Ltd.

December 30, 2011

  

  

  

 

This Share Pledge Agreement (this “Agreement”) is entered into by and between the following parties at Beijing, China, on December 30, 2011:

Pledgee:  Hangzhou Kunjiang Education Technology Co., Ltd., A Chinese corporation  (“Party A”)

Pledgor: Tang Weijiao, and Cao Xiaoya, the Shareholders of Peng Tuo Information Technology Co., Ltd. (“Party B”)

Whereas:

(1) Party A, entered into Exclusive Cooperation Agreement with Peng Tuo Information Technology Co., Ltd., , China (“PTIT”), on December 30, 2011 (“Exclusive Cooperation Agreement”);

(2) Pledgor(s) is the shareholder of PTIT, holding 100% of its equity;

(3) Pledgor(s) agree(s) to pledge all of his/her equity interest in the PTIT to Pledgee as a security for its performance of its obligations under the Exclusive Cooperation Agreement;

NOW THEREFORE, the Parties agree as follows after friendly consultations:

	
1.  

	
Definitions

1.1 Unless otherwise specified herein, all of the following terms shall have the meanings defined below.

1.1.1 “Secured Debt” means the payment obligation and other relevant obligations of Pledgee and PTIT under Exclusive Cooperation Agreement, liquidated damage and other relevant costs, and all costs (including attorney fees) and other amounts paid by Pledgee to realize Pledgee’s rights under Exclusive Cooperation Agreement in the event that PTIT commits a breach. If PTIT controls a new subsidiary by means of acquisition or incorporation or otherwise in the future and such new subsidiary enters into certain new Exclusive Cooperation Agreement with Pledgee, then such new subsidiary’ obligations under the new Exclusive Cooperation Agreement will be automatically included in the “Secured Debt” herein.

1.1.2 “Pledged Equity” means the 100% equity owned by Pledgor in PTIT and all rights relating to such equity. With Pledgee’s prior consent, Pledgor may increase the capital of Party B. The increased registered capital contributed by Pledgor shall also be deemed part of the Pledged Equity.

2. Equity Pledge

2.1 Pledgor hereby pledges the Pledged Equity to Pledgee (“Pledge”) as a security for the full discharge of the Secured Debt.

2.2 Pledgor and Pledgee shall promptly register the Pledge with the administrative authorities for industry and commerce upon execution of this Agreement if requested by Pledgee. The Parties also acknowledge that, upon execution of this Agreement, the Parties will not raise any question or objection to the effectiveness of this Agreement because of failure to register the Pledge with the administrative authorities for industry and commerce.

3. Scope of Security

3.1 The Pledged Equity hereunder offers security for:

3.1.1 The Secured Debt defined in Section 1.1.1 hereof; and

3.1.2 The costs paid by Pledgee to realize the pledge to which Pledgee is entitled hereunder.

  

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4. Term of Pledge

4.1 The term of valid existence of the pledge to which Pledgee is entitled hereunder is from the effective date of this Agreement to the date all Secured Debt is fully discharged (the “Term of Pledge”). Pledgee shall exercise the Pledge within the statute of limitations for the Secured Debt.

5. Exercise of Pledge

5.1 If (a) PTIT fails to fulfill its payment obligation or other related obligations in accordance with the provisions of Exclusive Cooperation Agreement, or (b) Pledgor breaches their duties or obligations hereunder, Pledgee shall have the right to manage the pledge in any manner at any time it deems appropriate to the extent permitted by applicable laws during the Term of Pledge, including without limitation:

5.1.1 To negotiate with Pledgor to discharge the Secured Debt with the Pledged Equity at a discount rate;

5.1.2 To sell off the Pledged Equity and use the proceeds thereof to discharge the Secured Debt;

5.1.3 To retain a relevant agency to auction all or part of the Pledged Equity; and/or

5.1.4 To otherwise dispose of the Pledged Equity appropriately to the extent permitted by applicable laws.

5.2 In the course of Pledgee’s disposal of the Pledged Equity as specified in the preceding section, Pledgee shall have the right to take any actions permitted by law to realize any of its rights hereunder.

5.3 As requested by Pledgee, Pledgor shall assist Pledgee in obtaining all necessary approvals or consents in connection with Pledgee’s realization of its rights to debt and pledge.

5.4 All amounts received due to Pledgee’s exercise of its pledge shall be used in the following order of priority subject to the other provisions hereof:

5.4.1 First, such amounts shall be used to pay all taxes and costs incurred by Pledgee because of its exercise of the pledge and/or other rights hereunder;

5.4.2 Second, such amounts shall be used by Pledgee to discharge the Secured Debt according to law;

5.4.3 Any remaining balance shall be paid to Pledgor or anyone who is entitled to such balance (without interest).

6. Termination of Pledge

6.1 The pledge shall be terminated automatically upon termination of Exclusive Cooperation Agreement and full discharge of the Secured Debt. In such case, as requested by Pledgor, Pledgee shall sign a written document to terminate the equity pledge created hereunder and submit such documentation to Pledgor, or assist Pledgor in handling other procedures for terminating the equity pledge hereunder.

6.2 Subject to the provisions in the preceding paragraph, the equity pledge hereunder shall not be terminated without Pledgee’s prior written consent.

7. Nature of Security

7.1 The security created hereunder shall not be affected by any other security held by Pledgee for the Secured Debt, and shall not affect the effectiveness of any other security.

7.2 The security created hereunder and Pledgee’s rights hereunder shall not be terminated or affected due to the following circumstances:

  

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7.2.1 Any grace period, termination or relief granted by Pledgee in connection with any person’s debt;

7.2.2 Any amendment, modification or supplement to Exclusive Cooperation Agreement;

7.2.3 Any disposal, modification or termination of any other security in connection with the Secured Debt;

7.2.4 A settlement entered into between the Pledgee and any person in connection with any claims of such person;

7.2.5 Any delay, act or omission of Pledgee in the exercise of its rights;

7.2.6 Any other event that may affect Pledgor’s obligations hereunder.

8. Special Provisions

8.1 Without Pledgee’s prior written consent, Pledgor shall not assign any of his rights or obligations hereunder to any other party.

8.2 Pledgee shall have the right to assign to any third party any of its rights or obligations hereunder and any of its rights or obligations under other agreements contemplated by this Agreement without Pledgor’s prior consent. In such case, Pledgor must unconditionally cooperate with Pledgee in handling the procedures for the transfer of relevant rights and obligations, including without limitation signing an agreement on the change of the relevant contractual party and re-registering the equity pledge with the administrative authorities for industry and commerce.

8.3 Upon effectiveness of this Agreement, unless Pledgee makes a written decision to the contrary and notify Pledgor of such decision, Pledgor shall be obligated to continue to comply with legal requirements relating to the Pledged Equity and perform all rights and obligations in connection with the Pledged Equity, and perform the due care and good faith obligations that a shareholder shall perform.

8.4 Pledgor shall promptly notify Pledgee of any event that may affect the Pledged Equity or the value thereof, or that may impede, prejudice or delay Pledgee’s performance of its rights as a shareholder of PTIT. Pledgor hereby agrees to sign a power of attorney (“Power of Attorney”) on the even date herewith, appointing Party A as its initial attorney-in-fact to: (i) exercise all voting rights it enjoys as a shareholder of PTIT, and (ii) sign on behalf of Pledgor any resolutions adopted by the shareholders’ meetings of PTIT, and any other documents that are related to Pledgor’s performance of its rights as a shareholder of PTIT. The attorney-in-fact shall perform its duties in good faith, aiming to maximize the value of the Pledged Equity hereunder, and its acts shall be in compliance with applicable Chinese laws in all respects. The form of the initial Power of Attorney to be signed by Pledgor is set forth in Appendix 1 attached hereto.

8.5 During the term of pledge, Pledgee shall have the right to collect any yield on the Pledged Equity.

8.6 Without Pledgee’s prior written consent, Pledgor shall not conduct any of the following activities:

8.6.1 Making a proposal to amend the articles of association of PTIT or causing the making of such proposal; increasing or reducing its registered capital, or otherwise changing its registered capital structure;

8.6.2 Creating any further security, encumbrances and any third party’s rights on the Pledged Equity in addition to the pledge created hereunder;

8.6.3 Performing any act that may prejudice any rights of Pledgee hereunder, or any act that may materially affect the assets, business and/or operations of PTIT;

8.6.4 Distributing dividends to the shareholders in any form; however, upon Pledgee’s request, Pledgor shall immediately distribute all of her distributable profits to the shareholders.

8.7 Without Pledgee’s prior written consent, Pledgor shall not transfer or dispose of the Pledged Equity in any way.

8.8 Pledgor agrees to take other necessary actions and enter into other necessary agreements to give effect to the provisions hereof and other agreements contemplated hereby.

  

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9. Representations, Undertakings and Warranties

9.1 Pledgor hereby represents, undertakes and warrants to Pledgee that:

9.1.1 Pledgor has the lawful eligibility and necessary authority to enter into this Agreement and has the capacity to fully perform any of their rights hereunder;

9.1.2 Pledgor has the sole ownership of the Pledged Equity; and they have lawful, complete and full ownership of her pledged equity hereunder;

9.1.3 Except the pledge created hereunder, Pledgor has not created or allowed the creation of any security rights or any third party’s rights or encumbrances on the Pledged Equity without Pledgee’s prior written consent; there is no dispute over the ownership of such Pledged Equity, which is not subject to any lien or other legal proceedings and can be used for pledge or transfer in accordance with applicable laws;

9.1.4 There is no existing, pending or threat of legal proceedings, arbitrations or administrative proceedings against the Pledged Equity;

9.1.5 Pledgor’s execution of this Agreement, exercise of its rights hereunder, or performance of his obligations hereunder will not violate any agreements, contracts or laws and regulations applicable to Pledgor and her property;

9.1.6 Upon request of Pledgee, Pledgor shall register the equity pledge hereunder with the administrative authorities for industry and commerce to cause the effective creation of the equity pledge; the pledge created hereunder shall constitute valid security for the Secured Debt after the registration procedures are completed, which can be executed on its terms;

9.1.7 All documents delivered by Pledgor to Pledgee in connection with this Agreement are true, complete and correct in all material respects, and there is no omission that may cause any information therein to become incorrect or misleading in any material respect;

9.1.8 This Agreement shall constitute a legal, valid and binding obligation of Pledgor, and may be enforced in accordance with the application of Pledgee to competent authorities under this Agreement;

9.1.9 From the date of this Agreement to the expiration of the term of pledge, Pledgor shall not transfer or dispose of any part or all of the interests in the Pledged Equity to any third party without Pledgee’s prior written consent.

9.2 Pledgee hereby represents, undertakes and warrants to Pledgor that:

9.2.1 Pledgee has the authority to enter into this Agreement and is able to perform its obligations hereunder;

9.2.2 Pledgee has obtained all authorities and consents necessary for the execution and performance of this Agreement.

10. Liability for Breach

10.1 Either Party’s direct or indirect violation of any provisions hereof or failure to assume its obligations hereunder or failure to assume such obligations in a timely and adequate manner shall constitute breach of this Agreement. The non-breaching Party (“Non-Breaching Party”) shall have the right to require the breaching Party (“Breaching Party”) by written notice to redress its breach and take adequate, effective and timely measures to eliminate the consequences of such breach, and indemnify against the losses incurred by the Non-Breaching Party due to the breach of the Breaching Party.

10.2 After the occurrence of the breach, if, according to the reasonable and objective judgment of the Non-Breaching Party, such breach has made it impossible or unfair for the Non-Breaching Party to perform its relevant obligations hereunder, then the Non-Breaching Party shall have the right to notify the Breaching Party in writing that the Non-Breaching Party will suspend the performance of its relevant obligations hereunder until the Breaching Party ceases such breach and takes adequate, effective and timely measures to eliminate the consequences of such breach, and indemnify against the losses incurred by Non-Breaching Party due to the breach.

  

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10.3 The losses incurred by the Non-Breaching Party which shall be indemnified against by the Breaching Party due to its breach are the direct economic losses incurred by the Non-Breaching Party due to the Breaching Party’s breach and any expectable indirect losses and additional costs, including without limitation attorney fees, litigation and arbitration costs, financial costs and travel expenses, etc.

 

11. Force Majeure

11.1 “Force Majeure” means any event that is beyond the reasonable control of any or all Parties hereto, unable to be foreseen or unable to be overcome even foreseen, which impedes, affects or delays any party’s performance of all or part of its obligations under this Agreement. Such event includes without limitation any government act, act of God, war, hacker attack or any other similar event.

11.2 The Party affected by a Force Majeure event may suspend the performance of its relevant obligations hereunder that cannot be performed due to the Force Majeure until the effect of such Force Majeure event is eliminated, and shall not be held liable for such suspension. However, such Party shall use its best endeavor to overcome such event and mitigate its negative effect.

11.3 The Party affected by a Force Majeure event shall provide the other Parties with a legitimate certificate issued by a notary public (or other proper agency) in the place where such event occurs to evidence the occurrence of such Force Majeure event. If such Party cannot provide such certificate, the other Parties may hold such Party liable for breach in accordance with the provisions hereof.

 

12. Effectiveness and Termination

12.1 This Agreement shall come into effect after it has been duly executed by Pledgor and Pledgee. The pledge hereunder is established after the registration specified in Section 2.3 is completed.

12.2 This Agreement shall be terminated upon any of the following circumstances:

12.2.1 in accordance with Section 6 hereof;

12.2.2 by mutual agreement of Pledgee and Pledgor;

12.2.3 by the consent of Pledgee.

12.3 The termination of this Agreement shall not affect the Parties’ rights and obligations arising hereunder prior to prior to the expiration date of this Agreement.

13. Dispute Resolution

13.1 If any dispute arises between the Parties in connection with the interpretation and performance of the provisions hereunder, the Parties shall resolve such dispute in good faith through discussions. If no agreement can be reached within sixty (60) days after one Party receives the notice of the other Party requesting the beginning of discussions or as otherwise agreed, either Party shall have the right to submit such dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with its then effective rules. The arbitration shall be held in Beijing. The award of the arbitration shall be final and binding upon the Parties.

13.2 If any dispute arises in connection with the interpretation and performance of this Agreement, or such dispute is under arbitration, either Party shall continue to have the rights hereunder other than those in dispute and perform the obligations hereunder other than those in dispute.

13.3 The conclusion, effectiveness, enforcement and interpretation of this Agreement shall be governed by the Chinese laws.

  

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14. Miscellaneous

14.1 The headings herein are for convenience only, and shall not affect the interpretation of any provisions hereof.

14.2 The Parties may amend and supplement this Agreement by written agreement. Any amendments or supplements executed by the Parties, if any, are part of this Agreement, and shall have the same force and effect as this Agreement.

14.3 If any provision herein becomes partly or wholly invalid or unenforceable for violation of laws or government regulations or other reasons, then the part of such provision that is affected shall be deemed as deleted. However, the deletion of such part of such provision shall not affect the legal effect of other parts of such provision or the other provisions herein. The Parties shall cease to execute such invalid or unenforceable provision, and modify such provision so that it has the closest intent to the original provision and becomes valid and enforceable in connection with such facts and circumstances.

14.4 Unless otherwise provided herein, either Party’s failure to exercise or delay in exercising any of its rights or powers hereunder shall not be construed as a waiver of such rights or powers. Any single or partial exercise of any rights or powers shall not preclude the exercise of other rights or powers.

14.5 This Agreement shall be binding upon the Parties and their respective successors and permitted assigns. Pledgee shall have the right to transfer to any other third party the rights hereunder and other agreements contemplated hereby at its sole discretion without Pledgor’s consent.

IN WITNESS WHEREOF, the duly authorized representatives of the Parties have executed this Agreement on the date first above written.

	
Pledgee:

Hangzhou Kunjiang Education Technology Co., Ltd., A Chinese corporation  (“Party A”)

 

 

 

By: /s/ Gary Gan

	  
	
Gary Gan, Chief Executive Officer

	  
	
 

Pledgor:

	  
	
 

Peng Tuo Information Technology Co., Ltd. Shareholders

	  
	  	  
	
By: /s/ Tang Weijiao

By: /s/ Cao Xiaoya

Tang Weijiao /Cao Xiaoya

	  

  

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Exhibit 10.4

 

OPTION AGREEMENT

This OPTION AGREEMENT (this “Agreement”) is made and entered into as of December 30, 2011 (the “Effective Date”), between  Mr. Tang Weijiao and Ms. Cao Xiaoya, both residents of 467 West Wenshan

Road, Suite 117, Hangzhou, Zhejiang Province, People’s Republic of China (the “Purchaser(s)”) and Crown Union Resources Limited , a British Virgin Islands company (“Seller”). Purchaser and Seller are also referred to herein together as the “Parties” and individually as a “Party.”

RECITALS

WHEREAS, pursuant to a Call Option Agreement (“Call Option Agreement”), dated as of the date hereof between China Education Schools Co., Ltd., a British Virgin Islands company (the “Company”), and the shareholder of Peng Tuo Information Technology Co. Ltd., a Chinese company (“PTIT”), the Company has the right to acquire 100% of the equity interests of PTIT; and

WHEREAS, pursuant to the Exclusive Cooperation Agreement, dated as of the date hereof, between Hangzhou Kunjiang Education and Technology Co., Ltd. A Chinese company (“Hangzhou Technology”) and PTIT (the “Cooperation Agreement”), Hangzhou Technology has the right to manage the operations of PTIT; and

WHEREAS, pursuant to the Share Pledge Agreement, dated as of the date hereof, between the Company and the shareholders of PTIT (the “Pledge Agreement”), the Company has the right to control the shares of PTIT;

WHEREAS, the Call Option Agreement, the Cooperation Agreement and the Pledge Agreement are collectively hereinafter referred to as the “School Agreements”; and

WHEREAS, Purchaser has agreed with Seller, as a condition to its entering into the School Agreements and to transfer Purchaser’s ownership interest in PTIT pursuant to the terms of the Call Option Agreement; and

WHEREAS, Seller has the right to receive 3,600,000 shares of China Education International, Inc., a Nevada corporation (“CEII”) $0.001 par value per share common stock (“Common Stock”) as additional consideration under the School Agreements and therefore, has determined that it is in Seller’s best interest to, and will receive benefits from the School Agreements and PTIT’s operational performance as set forth in the conditions included in section 1.1 of this Agreement and Seller or its affiliates entered into the School Agreements based on the possibility of such benefits; and

WHEREAS, Seller desires to grant to Purchaser an option to acquire a total of 3,600,000 shares of the CEII Common Stock it owns (the “CEII Shares”) pursuant to the terms and conditions set forth in this Agreement. Each Purchaser shall have the option to purchase the number of CEII  Shares set forth their respective names as set forth on Appendix A to this Agreement;

NOW, THEREFORE, the Parties, in consideration of the foregoing premises and the terms, covenants and conditions set forth below, and other good and valuable consideration, receipt of which is acknowledged, hereby agree as follows:

  

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1.  DEFINITIONS; INTERPRETATION.

1.1. Terms Defined in this Agreement. The following terms when used in this Agreement shall have the following definitions:

“Bankruptcy Law” means any Law of any jurisdiction relating to bankruptcy, insolvency, corporate reorganization, company arrangement, civil rehabilitation, special liquidation, moratorium, readjustment of debt, appointment of a conservator, trustee or receiver, or similar debtor relief.

“Business Day” means any day on which commercial banks are required to be open in the United States.

“Call Price” means, with respect to any exercise of the Call Right, $0.001 per share of the CEII Shares subject to any Call Exercise Notice.

“Conditions” means Conditions 1 through 3, as defined below, in the aggregate.

“Condition 1” means the entry by Purchaser, the Company and PTIT into the School Agreements, and the Purchaser and PITT providing audited PTIT financials for the current and past periods as required by the Company, as determined under United States Generally Accepted Accounting Principles consistently applied (“US GAAP”) in a form acceptable to the Company.

“Condition 2” means PTIT  achieving not less than $5,000,000 in in Gross Revenues, as determined under US GAAP, for any consecutive 12 months during the period from January 1, 2012 through December 31, 2013.

“Condition 3” means PTIT achieving not less than $3,600,000 in pre-tax profits, as determined under US GAAP for any consecutive 12 months during the period from January 1, 2012 through December 31, 2013.

“Government Authority” means any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Person and any court or other tribunal); or (d) individual, Person or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

 “Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, order, edict, decree, proclamation, treaty, convention, rule, regulation, permit, ruling, directive, pronouncement, requirement (licensing or otherwise), specification, determination, decision, opinion or interpretation that is, has been or may in the future be issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Government Authority.

“Person” means any individual, firm, company, corporation, limited liability company, unincorporated association, partnership, trust, joint venture, governmental authority or other entity, and shall include any successor (by merger or otherwise) of such entity.

  

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1.2. Interpretation.

(a) Certain Terms. The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” is not limited and means “including without limitation.”

(b) Section References; Titles and Subtitles. Unless otherwise noted, all references to Sections herein are to Sections of this Agreement. The titles, captions and headings of this Agreement are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

(c) Reference to Entities, Agreements, Statutes. Unless otherwise expressly provided herein, (i) references to a Person include its successors and permitted assigns, (ii) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments, restatements and other modifications thereto or supplements thereof and (iii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such statute or regulation.

2.  CALL RIGHT.

2.1. Call Right.

(a) Purchaser shall have, during the Exercise Period (as defined below), and when a Condition is met, the right and option to purchase from the Seller, and upon the exercise of such right and option the Seller shall have the obligation to sell to Purchaser, a portion of the CEII Shares identified in the Call Exercise Notice (the “Call Right”). Purchaser shall be permitted to purchase, and Seller shall be obligated to sell, the following numbers of CEII Shares upon the attainment of the following Conditions:

Condition        Number of CEII Shares as to which there is a Call Right

Condition 1     A Call Right  for 1,800,000 Shares upon the Purchaser, the Company and

PTIT signing the School Agreements, and the Purchaser and PITT providing audited PTIT financials for the current and past periods as determined under US GAAP and as required by the Company.

Condition 2     A Call Right  for 900,000 Shares based on PTIT achieving at least

$5,000,000 in Gross Revenues, as determined under U.S. GAAP for

any consecutive 12 months during the period from January 1, 2012 through December 31, 2013.

Condition 3     A Call Right  for 900,000 Shares based on PTIT achieving at least

$3,600,000 in Net Income, as determined under U.S. GAAP for

any consecutive 12 months during the period from January 1, 2012 through December 31, 2013.

  

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(b) The total number of shares of CEII which the Purchaser may purchase from Seller was determined based upon the Company’s projected net income for PTIT in U.S. dollars (the “Income Target”) for the 12 month period commencing on January 1, 2013 (the “Income Target Period”).  The Income Target for the 12 month period commencing on January 1, 2013 is $3,600,000 as set forth in Condition 3. The number of CEII Shares shall be reduced by 1 share for each $1.00 that the Income Target exceeds the actual income for PTIT during each and every 12 month consecutive period from January 1, 2012 through December 31, 2013 as computed in accordance with U.S. GAAP, and the number of Call Option Shares so reduced shall be returned to CEII for cancellation.

2.2. Call Period. The Call Right shall be exercisable by Purchaser, by delivering a Call Exercise Notice at any time during the period (the “Exercise Period”) commencing on the date hereof and ending at 6:30 p.m. (New York time) on the fifth anniversary date hereof (such date or the earlier expiration of the Call Right is referred to herein as the “Expiration Date”).

2.3. Exercise Process. In order to exercise the Call Right during the Exercise Period, Purchaser shall deliver to the Seller, a written notice of such exercise substantially in the form attached hereto as Appendix B (a “Call Exercise Notice”) to such address or facsimile number set forth therein. The Call Exercise Notice shall indicate the number of CEII Shares as to which Purchaser is then exercising its Call Right and the aggregate Call Price. Provided the Call Exercise Notice is delivered in accordance with Section 7.4 to Seller on or prior to 6:30 p.m. (New York time) on a Business Day, the date of exercise (the “Exercise Date”) of the Call Right shall be the date of such delivery of such Call Exercise Notice. In the event the Call Exercise Notice is delivered after 6:30 p.m. (U.S. Pacific time) on any day or on a date which is not a Business Day, the Exercise Date shall be deemed to be the first Business Day after the date of such delivery of such Call Exercise Notice. The delivery of a Call Exercise Notice in accordance herewith shall constitute a binding obligation (a) on the part of Purchaser to purchase, and (b) on the part of Seller to sell, the CEII Shares subject to such Call Exercise Notice in accordance with the terms of this Agreement.

2.4. Call Price. If the Call Right is exercised pursuant to this Section 2, as payment for the Shares being purchased by Purchaser pursuant to the Call Right, Purchaser shall pay the aggregate Call Price to the Seller (but no later than fifteen (15) Business Days of the Exercise Date).

3.  ENCUMBRANCES; TRANSFERS, SET-OFF AND WITHHOLDINGS.

3.1.  Encumbrances. Upon exercise of the Call Right, CEII Shares being purchased shall be sold, transferred and delivered to Purchaser free and clear of any claim, pledge, charge, lien, preemptive rights, restrictions on transfers (except as required by securities laws of the United States), proxies, voting agreements and any other encumbrance whatsoever.

3.2 Transfers. Prior to the Expiration Date, Seller shall continue to own, free and clear of any hypothecation, pledge, mortgage or other encumbrance, except pursuant to this Agreement and except for the benefit of the Purchaser, such amount of the CEII Shares as may be required from time to time to in order for Purchaser to exercise its Call Right in full.

  

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3.3 Escrow of CEII Shares.

(a) Upon execution of this Agreement, Seller shall deliver to CEII, as Collateral Agent (the “Collateral Agent”), a certificate or certificates representing CEII Shares. The certificates representing the CEII Shares (together with duly executed stock powers in blank) shall be held by the Collateral Agent.

 (b) Upon receipt of a Call Exercise Notice, the Collateral Agent shall promptly deliver the CEII Shares being purchased pursuant to such Call Exercise Notice in accordance with the instructions set forth therein. In the event that the Collateral Agent shall receive notice from the Parties that the Conditions have not been met, the CEII Shares shall be distributed in accordance with their instructions.

4.  REPRESENTATIONS AND WARRANTIES.

4.1. Representations and Warranties by Seller. Seller represents and warrants to Purchaser, that:

 (a)  Due Authorization. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereunder to be carried out by it have been duly authorized by all necessary action on the part of Seller. This Agreement, and all agreements and documents executed and delivered pursuant to this Agreement, constitute valid and binding obligations of Seller, enforceable against Seller in accordance with its terms, subject to applicable Bankruptcy Laws and other laws or equitable principles of general application affecting the rights of creditors generally.

(b)  No Conflicts. The execution or delivery of this Agreement by Seller nor the fulfillment or compliance by Seller with any of the terms hereof shall, with or without the giving of notice and/or the passage of time, (i) conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under any contract or any judgment, decree or order to which Seller is subject or by which the Seller is bound, or (ii) require any consent, license, permit, authorization, approval or other action by any Person or Government Authority which has not yet been obtained or received. The execution, delivery and performance of this Agreement by Seller or compliance with the provisions hereof by the Seller does not, and shall not, violate any provision of any Law to which the Seller is subject or by which Seller is bound.

(c) No Actions. There are no lawsuits, actions (or to the best knowledge of Seller, investigations), claims or demands or other proceedings pending or, to the best of the knowledge of Seller, threatened against the Seller which, if resolved in a manner adverse to the Seller, would adversely affect the right or ability of the Seller to carry out Seller’s obligations set forth in this Agreement.

(d) Title. Seller owns the CEII Shares free and clear of any claim, pledge, charge, lien, preemptive rights, restrictions on transfers, proxies, voting agreements and any other encumbrance whatsoever, except as contemplated by this Agreement. The Seller has not entered into or is a party to any agreement that would cause the Seller to not own CEII Shares free an clean of any encumbrance, except as contemplated by this Agreement.

  

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4.2 Representations and Warranties by Purchaser. Purchaser represents and warrants to the Sellers, that:

(a)  Due Authorization. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereunder to be carried out by it have been duly authorized by all necessary action on the part of Purchaser. This Agreement, and all agreements and documents executed and delivered pursuant to this Agreement, constitute valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable Bankruptcy Laws and other laws or equitable principles of general application affecting the rights of creditors generally.

(b)  No Conflicts. The execution or delivery of this Agreement by Purchaser nor the fulfillment or compliance by Purchaser with any of the terms hereof shall, with or without the giving of notice and/or the passage of time, (i) conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under any contract or any judgment, decree or order to which Purchaser is subject or by which Purchaser is bound, or (ii) require any consent, license, permit, authorization, approval or other action by any Person or Government Authority which has not yet been obtained or received. The execution, delivery and performance of this Agreement by Purchaser or compliance with the provisions hereof by Purchaser does not, and shall not, violate any provision of any Law to which Purchaser is subject or by which Purchaser is bound.

(c) No Actions. There are no lawsuits, actions (or to the best knowledge of Purchaser), investigations, claims or demands or other proceedings pending or, to the best of the knowledge of Purchaser, threatened against Purchaser which, if resolved in a manner adverse to Purchaser, would adversely affect the right or ability of Purchaser to carry out Purchaser’s obligations set forth in this Agreement.

5. EVENTS OF DEFAULT AND TERMINATION

5.1 Events of Default. The occurrence at any time with respect to a Party (the “Defaulting Party”) of any of the following events shall constitute an event of default (an “Event of Default”) with respect to such party:

(a) Failure to Pay or Deliver. The failure by a Party to make, when due, any payment under this Agreement or deliver the CEII Shares in accordance with this Agreement, if such failure is not remedied on or before the fifteenth (25th) Business Day after notice of such failure is given to the Defaulting Party;

(b) Breach of Agreement. The failure by a Party to comply with or perform any agreement, covenant or obligation (other than a failure described in Section 5.1(a)) to be complied with or performed by such Party in accordance with this Agreement if such failure is not remedied on or before the thirtieth (30th) Business Day after notice of such failure is given to the Defaulting Party; or

  

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(c) Bankruptcy. A Party (1) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (2) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (3) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any relief under any Bankruptcy Law, or a petition is presented for its winding-up or liquidation, and in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 60 days of the institution or presentation thereof; (4) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or rescinded, in each case within 60 days thereafter; or (5) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

5.2 Termination and Remedies Upon Default. If at any time an Event of Default with respect to a Party has occurred and is continuing, the other party may terminate this Agreement and deem the Expiration Date to have occurred by giving written notice to the Defaulting Party specifying the relevant Event of Default. In no event shall the Party exercising its right under this Section be precluded by the exercise of such termination right from pursuing, subject to the terms of this Agreement and applicable law, any cause of action or other claim it may then or at any time thereafter have against the other Party in respect of any Event of Default by the other Party hereunder including the remedy of specific performance.

6.  INDEMNIFICATION.

6.1 Indemnity by the Seller.  The Seller agrees to indemnify and hold the Buyer harmless from all Buyer Indemnified Liabilities.  For this purpose, “Buyer Indemnified Liabilities” shall mean all suits, proceedings, claims, expenses, losses, costs, liabilities, judgments, deficiencies, assessments, actions, investigations, penalties, fines, settlements, interest and damages (including reasonable attorneys’ fees and expenses), whether suit is instituted or not and, if instituted, whether at any trial or appellate level, and whether raised by the parties hereto or a third party, incurred or suffered by the Buyer or any of them arising from, in connection with or as a result of any default or breach in the performance of any of the covenants or agreements made by the Seller in or pursuant to this Agreement.

6.2  Indemnity by the Buyer.  The Buyer agrees that it will indemnify and hold the Seller from all Seller Indemnified Liabilities.  For this purpose, “Seller Indemnified Liabilities” incurred by the Seller means all suits, proceedings, claims, expenses, losses, costs, liabilities, judgments, deficiencies, personal income taxes of Seller incurred by Seller in connection with the purchase of CEII’s Shares from the Company and the sale of such shares to Purchaser under this Agreement, assessments, actions, investigations, penalties, fines, settlements, interest and damages (including reasonable attorneys’ fees and expenses), whether suit is instituted or not and, if instituted, whether at any trial or appellate level, and whether raised by the parties hereto or a third party, incurred or suffered by the Seller, arising from, in connection with or as a result of (a) Seller’s performance of its obligations under this Agreement and the School Agreements; or (b) any default or breach in the performance of any of the covenants or agreements made by the Buyer in this Agreement.

  

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6.3  Procedure for Indemnification.  In the event any Party makes any demand or claim under this Section 6, the indemnified party shall give written notice to the indemnifying party promptly upon becoming aware of any event giving rise to a claim for indemnification.  In such event, the indemnifying party shall assume full control of the defense thereof and hire counsel (which counsel shall be reasonably satisfactory to the indemnified party) to defend any such demand, claim or lawsuit (provided, however, that the failure to give such Notice shall not relieve the indemnifying party of its obligations hereunder unless such party is prejudiced by such failure).  The indemnified party shall be permitted to participate in such defense at its sole cost and expense.

7.  MISCELLANEOUS.

7.1. Governing Law; Jurisdiction. This Agreement shall be construed according to, and the rights of the Parties shall be governed by, the laws of the State of Florida, without reference to any conflict of laws principle that would cause the application of the laws of any jurisdiction other than Florida. Each Party hereby irrevocably submits to the exclusive jurisdiction of the federal and state courts in Palm Beach County, Florida, for the adjudication of any dispute hereunder or in connection herewith, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of 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.

7.2. Successors and Assigns. Each of the Parties shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the other Party. The provisions hereof shall inure to the benefit of, and be binding upon, the successors and permitted assigns of the Parties.

7.3. Entire Agreement; Amendment. This Agreement constitutes the full and entire understanding and agreement between the Parties with regard to the subject matter hereof. Any term of this Agreement may be amended only with the written consent of each Party.

7.4. Notices and Other Communications. Any and all notices, requests, demands and other communications required or otherwise contemplated to be made under this Agreement shall be in writing and shall be provided by one or more of the following means and shall be deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile, on the date of transmission with receipt of a transmittal confirmation, or (c) if by an internationally recognized overnight courier service, one Business Day after deposit with such courier service. All such notices, requests, demands and other communications shall be addressed as follows:

To Purchaser at:  Tang Weijiao, 467, Wenshan Road, Suite 117, Hangzhou, Zeijiang Province

To Seller at:                      Crown Union Resources Limited

Fax:                      +86.571.8885.5286

With a copy to:                                Joshua Kallan

E-Mail:                                Josh.Kallan@gmail.com

or to such other address or facsimile number as a party may have specified to the other parties in writing delivered in accordance with this Section 7.4.

  

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7.5. Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Person hereunder, upon any breach or default under this Agreement, shall impair any such right, power or remedy nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Person hereunder of any breach or default under this Agreement, or any waiver on the part of any Person of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing and signed by the waiving or consenting Person.

7.6. Severability. If any provision of this Agreement is found to be invalid or unenforceable, then such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties. In such event, the Parties shall use best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly affects the Parties’ intent in entering into this Agreement.

7.7 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.

7.8. Further Assurances. The Parties shall perform such acts, execute and deliver such instruments and documents and do all other such things as may be reasonably necessary to effect the transactions contemplated hereby.

7.9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Execution and delivery of this Agreement by exchange of facsimile copies bearing the facsimile signature of a Party shall constitute a valid and binding execution and delivery of this Agreement by such Party.

  

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

Purchaser:

 

 

Sign: /s/ Tang Weijiao

Print Name: Tang Weijiao

Purchaser:

 

 

Sign: /s/ Cao Xiaoya

Print Name: Cao Xiaoya

Seller: Crown Union Resources Limited, Ltd.

 

 

Sign: /s/ Joshua Kallan

Print Name:  Joshua Kallan

Acknowledged and agreed to:

Collateral Agent:

China Education International, Inc. as Collateral Agent

By /s/ Joel Mason

Name: Joel Mason

Title: Chief Executive Officer

 

 

  

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APPENDEX A

CEII Share Allocation

 

 

	
Purchaser Name

	
No. of Shares

	
Mr. Tang

 

	
3,600,000

	
None

 

	
None

	
None

 

	
None

	
 

Total

	
 

3,600,000

  

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APPENDIX B

Form of Call Exercise Notice

Date:______________________

Re: Call Option Agreement dated December  30, 2011 (the “Option Agreement”), between Mr. Tang (“Purchaser”) and Crown Union Resources Limited (BVI) (“Seller”).

To:  Crown Union Resources Limited

Dear Sirs [________________]:

In accordance with Section 2.3 of the Option Agreement, Purchaser hereby provides this notice of exercise of the Call Right in the manner specified below:

	
(a)  

	
The Purchaser hereby exercises its Call Rights with respect to CEII’s Shares pursuant to the Option Agreement.

	
  

	
(b)

	
The Purchaser intends that payment of the Call Exercise Price shall be made as a cash exercise and shall pay the sum of $____________ to the Seller.

	
  

	
(c)

	
Pursuant to this exercise, the Seller shall deliver to Purchaser, CEII’s Shares in accordance with the instructions attached hereto.

Dated: ____________________

By:  _________________________________________

 

 

  

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