ASSET PURCHASE AGREEMENT
BETWEEN
SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED
AND
Xxxxxxx Xxxx
DATED AS OF
October 25th, 2007
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INDEX OF SCHEDULES AND EXHIBITS
Schedules:
1. Shouguang City Renjia Area Asset Checklist
2. Leased Property Description
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This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of October
25th, 2007 (the "Effective Date") and comes into effect on the same day by and
between the following two Parties:
(1) SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED, a company validly existing
under the laws of China ("SCHC"), a subsidiary of Gulf Resources, Inc.("GUFR");
and
(2) Xxxxxxx Xxxx, ("WANG"), an individual resident of China who owns private
land located in the Shouguang City Renjia Area.
WHEREAS: WANG wishes to sell, transfer and convey certain assets to SCHC, and
SCHC wishes to purchase and acquire the same from WANG.
NOW, THEREFORE, in consideration of the mutual promises contained herein, and
for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, SCHC, and WANG, both have reached an AGREEMENT reciprocally
as follows:
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1. CERTAIN DEFINITIONS
"Ordinary Course of Business" shall mean an action taken by WANG if such action
is taken in normal operation, consistent with past practices.
"Closing" The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at SCHC's offices, on October 25, 2007 (the "Closing
Date") or as soon thereafter as is practicable.
"GUFR" shall mean Gulf Resources, Inc., a Delaware corporation and parent of
SCHC.
"Person" shall mean any individual, entity or governmental body.
"Pre-Closing Period" shall mean the period commencing as of the date of the
Agreement and ending on the Closing Date.
2. TRANSFER OF THE ASSETS
2.1 WANG agrees that, upon the Closing, he will sell, transfer and deliver unto
SCHC, its successors and assigns forever, by duly executed deed(s), bills of
sale, assignment(s) or other instrument(s) of conveyance, for the consideration
hereinafter provided, all right, title and interest in and to all assets listed
and described on Schedule 1 attached hereto and incorporated herein by reference
(the "Purchased Assets"). In addition to the Purchased Assets, WANG agrees at
Closing to convey to SCHC all rights to the Lease (the "Lease") whereby Wang
leases the leased property described in Schedule 2 attached hereto (the "Leased
Property") and to execute and deliver such instruments of transfer and
conveyance to effect the transfer of the Lease from WANG to SCHC.
2.2 As full consideration for the sale, assignment, transfer and delivery of the
Purchased Assets and the Leased Property to SCHC, and upon the terms and subject
to all of the conditions contained herein, SCHC shall pay to WANG the sum of
$6,399,147 (the "Purchase Price") of which $2,519,664 (the "Initial Payment")
shall be paid to Wang at the Closing and $3,879,483 shall be paid in cash or
readily available funds within 5 days after the Closing.
2.3 As a result of Agreement, the Purchased Assets including, without
limitation, annual estimated bromine production capacity of 3,700 tons,
buildings, equipment, xxxxx, pipelines, and power circuits will be owned by
SCHC. SCHC is not assuming and shall not be liable for any and all debts,
obligations and liabilities of WANG relating to the Purchased Assets and the
Leased Property.
2.4 WANG covenants that the $1,106,519 lease payment due under the 50-year land
lease for the Leased Property has been paid. Any economic losses or legal
disputes relating to the ownership of the Leased Property, whether arising prior
to or after the transfer of ownership of the Leased Property from WANG to SCHC,
will be WANG's full responsibility.
2.5 If the transactions contemplated hereunder are not consummated within ten
days of the date hereof, this Agreement shall terminate, and each party shall
have no further obligation to the other party, except that if the transactions
contemplated hereunder are not consummated due to a material default or breach
on the part of SCHC, SCHC shall pay to Wang the sum of $319,957 as liquidated
damages and not as a penalty.
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2.6 Three days after the Effective Date, SCHC and WANG will both establish an
asset assessment team to assess all of the Purchased Assets and the Leased
Property for transfer and conveyance to SCHC.
3. REPRESENTATIONS AND WARRANTIES
3.1 WANG represents and warrants to SCHC the following:
(a) Authority. WANG has the power and authority to execute and deliver this
Agreement and to perform his obligations hereunder, and to consummate the
transactions hereby, and upon the execution and delivery of the instruments and
documents specified herein, no further action will be required of WANG to vest
legal title to and possession of the Purchased Assets and the Leased in the
Purchaser, its successors and assigns forever.
(b) Title to Assets. WANG has good and marketable title to the Purchased Assets
and holds a valid leasehold interest to the Leased Property pursuant to the
Lease, free and clear of liens or encumbrances of any kind and no person, firm
or corporation has any undisclosed adverse interest therein. The Lease pursuant
to which Wang holds the Leased Property is in full force and effect and the
assignment of the Lease to SCHC as provided for herein shall not give rise to a
breach of the Lease.
(c) Condition of Purchased Assets. The Purchased Assets are in operating
condition and repair, ordinary wear and tear excepted, and are suitable for
continued use by SCHC in the production of bromine. The material buildings,
plants, machinery and equipment necessary of in connection with the production
of bromine located on the Leased Property as presently conducted are
structurally sound, are in good operating condition and repair and are adequate
for the uses to which they are being put or would be put in the Ordinary Course
of Business, in each case, taken as a whole, and none of such buildings, plants,
machinery or equipment is in need of maintenance or repairs, except for
ordinary, routine maintenance and repairs that are not material in nature or
cost.
(d) Disclosure. No representation or warranty by WANG contained in this
Agreement or any written statement furnished to SCHC pursuant hereto, contains
any untrue statement of a material fact, or omits to state a material fact
necessary to make the statement contained herein true and not misleading.
(e) Reliance. The foregoing representations and warranties have been made by
WANG with the knowledge and expectation that SCHC is placing reliance thereon,
and all such representations and warranties shall survive the Closing for a
period of one (1) year.
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3.2 Each of SCHC and WANG represents and warrants respectively to the other as
follows:
(a) Each of SCHC and WANG warrants that has taken all necessary actions for the
execution and performance of this Agreement.
(b) The performance of the transaction contemplated hereunder is not subject to
the consent, approval or order of any governmental authorities or any other
third parties, nor is it subject to any conditions precedent as registration
with, qualification verification by or document delivery to any governmental
authorities or any other third parties.
4. INDEMNIFICATION
4.1 WANG agrees to indemnify, hold harmless and reimburse the Purchaser at all
times after the Closing, against and with respect to:
(a) any damage or deficiency resulting from any misrepresentation, breach of
warranty or non-fulfillment of any covenant or agreement on the part of WANG
made in this Agreement, any other agreement or instrument delivered by WANG at
the Closing;
(b) any damages or claims asserted against the Purchaser on account of any
liability of WANG in connection with his ownership of the Purchased Assets and
the Leased Property ; and
(c) all actions, suits, proceedings, demands, assessments, judgments, costs and
expenses, including reasonable attorneys' fees, incident to the foregoing.
5. MISCELLANEOUS PROVISIONS.
5.1 No Assumption of Liabilities. Except as specifically set forth in this
Agreement, nothing in this Agreement shall be construed to impose upon SCHC the
assumption of any claim against or liability or obligation of WANG, arising out
of his business, or the use, operation or possession of the Purchased Assets,
through the Closing, or thereafter.
5.2 Books and Records. Those books and records reasonably deemed primarily to
relate to the Purchased Assets and maintained separately from the other records
of WANG shall be delivered to and become the property of SCHC.
5.3 Expenses of Negotiation and Transfer. Each party to this Agreement shall pay
its own expenses and other costs incidental to or resulting from this Agreement,
whether or not the transactions contemplated hereby are consummated.
5.4 Entire Agreement. This Agreement, along with the documents and agreements to
be executed in connection herewith, constitutes the full understanding of the
parties, a complete allocation of risks between them and a complete and
exclusive statement of the terms and conditions of their agreement relating to
the subject matter hereof and supersedes any and all prior agreements, whether
written or oral, that may exist between the parties with respect thereto. Except
as otherwise specifically provided in this Agreement, no conditions, usage of
trade, course of dealing or performance, understanding or agreement purporting
to modify, vary, explain or supplement the terms or conditions of this Agreement
shall be binding unless hereafter made in writing and signed by the party to be
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bound, and no modification shall be effected by the acknowledgment or acceptance
of documents containing terms or conditions at variance with or in addition to
those listed in this Agreement. No waiver by any party with respect to any
breach or default or of any right or remedy and no course of dealing shall be
deemed to constitute a continuing waiver of any other breach or default or of
any other right or remedy, unless such waiver be expressed in writing signed by
the party to be bound. Failure of a party to exercise any right shall not be
deemed a waiver of such right or rights in the future.
5.5 Binding Effect. All of the covenants, conditions, agreements and
undertakings set forth in this Agreement shall extend to and be binding upon
WANG and SCHC and their respective successors and assigns.
5.6 Assignability. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof nor any of the documents
executed in connection herewith may be assigned by any party without the consent
of the other parties
5.7 Headings. Headings as to the contents of particular Sections are for
convenience only and are in no way to be construed as part of this Agreement or
as a limitation of the scope of the particular Sections to which they refer.
5.8 Exhibits and Schedules. The Exhibits and Schedules (and any appendices
thereto) referred to in this Agreement are and shall be incorporated herein and
made a part hereof.
5.9 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together will constitute an integral
party of this Agreement.
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IN WITNESS HEREOF, SCHC and WANG have caused this Agreement to be executed by
their duly authorized representatives as of the date first hereinabove
mentioned.
SCHC: SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED
Signed by: /s/ Xxxx Xxxx
---------------------------------
Name: Xxxx Xxxx
Position: CEO
XXXXXXX XXXX
/s/ Xxxxxxx Xxxx
---------------------------------
Xxxxxxx Xxxx
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Schedule 1
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Shouguang City Renjia Area Asset checklist
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Check Time Fixed Asset Unit Quantity
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October/23/2007 Plant 7150 square meter 1
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October/23/2007 Garage 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Boiler 0.2 ton 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Unerwater pump 23
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Power cable 275 meter
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October/23/2007 Water container 4.5 square meter 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Generator 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Stove 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 PVC pipe 650 meter
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Vaporizer 2
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Stove Operating Room 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Shower Room 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Sulfur stove 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Washing Tower 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Precipitation Cylinder 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Water Pump 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 sulfuric acid container 15 cubic meter 1
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 Liquid Chlorine cylinder 30
----------------------- ------------------------------- -------------------------- --------------
October/23/2007 brimstone storage 3
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October/23/2007 Control Room 1
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October/23/2007 Laboratory 1
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October/23/2007 Blowing Tower 1
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October/23/2007 Receiving Tower 1
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October/23/2007 Brine Pool 10,000 cubic meter 1
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October/23/2007 High Voltage wire set 1250KVA 1
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October/23/2007 Bromine well 398
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October/23/2007 convey trench 7,830 meter
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Raw Material
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October/23/2007 Sulfuric Acid ton 8.2
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October/23/2007 Brimstone ton 17.45
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October/23/2007 Coal ton 30.15
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October/23/2007 Liquid Chlorine ton 13
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Checker: Xxx Xx Owner:Xxxxxxx Xxxx
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Schedule 2
Leased Property Description
Shouguang City Renjia Area
Area: 2165 Acres
Lease Period: 50 years (01/01/2005-12/31/2054)
Lease Payment: (Annual Rent of $10.22/ Acre, totaled $1,106,519)
Payment terms: One-time payment paid off by WANG.
Ownership: The properties and mining rights of the lands above and underground
120 meters are belonged to owner.
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