Merger and Acquisition Contract
Merger
and Acquisition Contract
This
agreement, dated as of Aug.31st, 2008, is made and entered into by two parties
at Heilongjiang Longmei Commercial Co., LTD.
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1.
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Transferor
(hereinafter Part A): Heilongjiang Longmei Commercial Co.,
LTD
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2.
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The
transferee (hereinafter Part B): Daqing Qingkelong Chain
Commerce&Trade Co., Ltd.
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Legal
representative: Xxxxxxxx Xxxx
For
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3.
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(1)
Party A is Heilongjiang Longmei Commercial Co., LTD (hereinafter Longmei),
hold 100% property of the company.
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(2) Party
A is willing to transfer the operation right, effective assets and inventory of
Longmei to Party B, Party B agreed to receive the operation rights, assets and
inventory.
In that
way, Party A and Party B enter into the terms as follow:
Article
1 Target Company
Longmei
is an enterprise entity set up continues to exist according to Chinese law and a
limited liability company controlled by Party A
Article
2 Operation Assets and inventory transferred
2.1 Party
A transferred operation rights of Longmei to Party B. Party A make sure the
properties include:
(1)
Longmei and relevant materials and certificates of ownership of power supply,
water supply facilities and other public facilities;
(2) From
the setup day of Longmei, it has all the original copies of approvals, licenses,
permits, taxes, etc. that all ordinary legal business required according to
business certificate.
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(3)
Till Aug.31st, 2008, Party A should transfer operation right of Longmei
to Party B.
(4) Till Aug.31st,
2008, Party B will take over all properties of Party A.
(5) Till Aug.31st,
2008, Party B will take over all current inventory of Party A.
(6) Till Aug.31st,
2008, Party B will take over part of employees of Party A, after that their
wages will be undertook by Party B.
2.2 As
agreed by two parties, Party B will undertake all operating losses or profits of
Longmei after Aug.31st, 2008. Before (including) that day, all of the claims,
debts, operating losses or profits will be taken by Party A.
Article
3 Transference price and payment
3.1 As
agreed by both parties, the transference price (hereinafter “Payment”) of
operating rights, properties and inventory of Longmei is RMB
22,740,000.
3.2 Party
B agrees to deposit the Payment into bank account in several periods according
to terms as follows:
(1) RMB 100,000,
first payment will be paid to Party A in 15 days from signing date as
deposit.
(2)
Second payment should be paid after two parties transfer properties and
inventory of Target Company and finish related to industrial and commercial
registration procedures changes. If any party fails to fulfill relevant duties,
it will be regarded as a breach of obligations, and will bear the liability for
breach of contract in accordance with Article VI of this
Agreement.
3.3
Affirmation of Transference Date
3.2,
Article 2 of this agreement defines the date that Party B finished all relevant
procedure changes with the help of Party A will be transference
date.
(1).Party
A should give relevant properties and materials to Party B in accordance with
2.1 under the agreement.
(2)Party
A guarantees clear all debts of the Target Company to outsiders before the
commercial registration procedure changes finished
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If any
party fails to fulfill relevant duties, it will be treated as breach of
obligation under the contract. According to Article 6 under the agreement, the
party will bear the liability for breach of contract.
3.4 The
cost incurred in processing the transfer of various operation rights and assets
delivery ruled in Chinese laws will be undertook by Party A in accordance with
relevant laws and regulations.
Article 4
Warranty
4.1 Legal
qualification
（1）Party A guarantees
Longmei is set up and continues to exist effectively according to Chinese laws,
with all governmental business licenses, certificates and permits required for
normal legal operation according to its business certificate.
（2）Party A guarantees
the operation right transferred to Party B is legal operation right according to
Article 2.1 in the agreement and has effective arrangement right to the
transferred operation right this time. Party A guarantees there is no mortgage
or other security rights related to the transferred operation right this time,
and is free to any recourse of the third party. Otherwise, party A will
undertake all economic and legal responsibilities.
（3）Both parties own
the right of establishing and implementing this agreement, and guaranteeing this
agreement is legally binding on both parties. Both parties have already gained
necessary authorities to sign and implement this agreement, and the
representatives signed on this agreement has already gained authority to sign
it, which has legal binding force.
4.2
Financial Issues
（1）Party A has
already fully, honestly and accurately disclosed relevant information of the
company to Party B, and guarantee company assets and debts information relating
to this agreement is true, completed and exhaustive without any misleading
statements.
（2）Party A never did
any misleading or untruthful statements to Party B about company’s assets
situation, operation situation or operation future.
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4.3
Company Assets
（1）Party A guarantee
that it is not involved in any outstanding and probably occurred litigation,
arbitration, administrative punishment or other legal proceedings that would
make the property of Party B blinded or adverse impact to obligations that
undertook by Party B in this agreement.
（2）Party A ensure
there is no other right to company properties by any third party, no potential
right disputes, no any compulsory acquisition, seizure, requisition, development
proposals, notices, orders, decisions, judgments and so on from administrative
and judiciary departments to these assets.
（3）Party A guarantee
all the electricity and water facilities can be put into normal use on the
transference date without any debt disputes
4.4
Contract
（1）Party A declared
it has already notify and show Party B all contracts that company is involved or
ready to involved before signing the agreement.
（2）Besides the
contracts mentioned in last article, company don’t have any other obligations
of, or abnormal trading contracts, agreements, etc.
4.5 Party
A guarantees all operation of Target Company comply with requirements of
relevant rules and obligations of the country before transference
date.
Article 5: Obligations of Both
Parties
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5.1
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Party
B should make sure pay Party A at agreed price and date according to this
agreement as well as legal resource of the fund.
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5.2
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Party
A transfer operation right, deliver assets, inventory and staff to Party B
at agreed price and date according to this
agreement.
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Article
6 Breach of Obligation
6.1 After
signed this agreement, if any party lost promise or fails to fulfill obligations
under this agreement and does not take effective remedial measures within ten
(10) days after receiving the other party’s written notice, the non-defaulting
party is entitled to terminate the contract in written notice to defaulting
party. Moreover, whether non-defaulting party decides to terminate the
obligation of the agreement, defaulting party has to undertake the liability
according to Article 6.2 in this agreement.
6.2 If
Party B fails to fulfill obligations in this agreement, it has no right to ask
Party B to return deposit. If Party B fails to fulfill obligations in this
agreement, it should pay twice deposit. Any party would pay liquidated damages
to the other party for breach of the agreement which is RMB
2,000,000.
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Article
7 Applicable laws and dispute settlement
7.1 This
agreement conclusion and fulfilling is applicable to Chinese laws and follow
Chinese laws.
7.2 Any
dispute produced from this agreement or related to this agreement between Party
A and Party B should be settled with friendly negotiation. If it can’t be
settled in 60 days from the date of dispute, any party has the right to propose
to Daqing City People’s Court.
Article 8 Other
8.1
Before the disclosure of operation right transference and properties delivery in
accordance with relevant regulations, both parties involved in this operation
right transference and properties delivery has the obligation of confidentiality
to all issues referred in this agreement. If there is any consequence due to
leakage by people from any party, it should bear all responsibility of
it.
8.2 If
any or many provisions under this agreement are regarded as invalid, illegal or
unenforceable in applicable laws, the validity and enforceability of other
provisions in this agreement will not be effected or weakened.
8.3 Four
original copies of this Agreement by Party A and Party B holding two originals
have the same legal effect. Any unaccomplished matters will be negotiated and
solved with both parties.
8.4 Both
parties agree to enter into any further contract of operation right and
properties transference for cancelling industrial and commercial registration
and properties delivery. The agreement will prevail if there is any difference
between the contract and the agreement.
Signed by
both parties：
Party
A：Heilongjiang
Longmei Commercial Co., LTD
Party
B：Daqing
Qingkelong Chain Commerce&Trade Co., Ltd.
Legal
Representative：Zhuangyi,
Wang
Aug.31st,
2008
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