Purchase Agreement
Purchase
Agreement
This
Purchase Agreement (the “Agreement”) was signed by both parties in Yiyang,
Jiangxi, P.R.C. on Nov.
,
2007.
Party
A:
Jiangxi
Xxxxxx Xxxx Copper Co., Ltd.
Address:
Gejiaba, Huating Town, Yiyang County.
Party
B: Jiangxi
Moral Star Copper Technology Co., Ltd.Registered Address: Fengze Mall,
Guangchang Road, Yijiang Town, Yiyang County, Jiangxi Province.
Whereas,
1.
Party
A
is a company established in accordance with the laws of P.R.C., and registered
at Jiangxi Province, Yiyang Administration of Industry and Commerce Bureau,
with
the legally valid business license No. 3623262000077;
2.
Party
B
is a wholly-foreign owned company established under the laws of P.R.C., and
registered at Jiangxi Province, Shangrao Administration of Industry and Commerce
Bureau, with the legally valid business license No.361100510000102;
3.
Party
B
has controlled the business operation of Party A through various agreements
such
as the Entrusted Management Agreement, Shareholders’ Proxy Agreement, Exclusive
Option Agreement, and Shares Pledge Agreement signed between Party B and Party
A;
4.
The
goal
of both parties is to allow Party B own the entire business of Party A either
through equity acquisition or assets purchases;
5.
Before
the goal aforesaid realized, both parties agree that, Party B agrees to purchase
the equipment and patents, lease the manufacturing plants, land and remaining
equipment of Party A so that Party B can conduct its business in
China.
Both
parties reach the agreement as follows after friendly negotiation:
Article
1 Definition
1. Party
A
refers to Jiangxi Xxxxxx Xxxx Copper Co., Ltd.
2. Party
B
refers to Jiangxi Moral Star Copper Technology Co., Ltd.
3. Both
parties refer to Party A and Party B.
4. PRC
refers to People’s Republic of China.
5. Equipment
refers to the equipment Party A required.
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6. Net
value
of equipment refers to the net value of equipments after depreciation.
7. Supply
Channel refers to the suppliers of raw materials, accessories, equipment and
component parts of Party A, who shall have supplied raw materials to Party
A in
the past.
8. Sales
Channel refers to the distributors and customers of Party A, who shall have
purchased products from Party A directly or indirectly in the past.
9. Employees
refer to the personnel for production, including but not limited to
manufacturing personnel, technicians, administrative personnel and logistics
personnel.
10. Resource
refers to the total operational requirements, including but not limited to
governmental relationship, utility suppliers, information channel, the materials
purchased, semi-product and finished product.
11. ”Entrusted
Account” refers to the account opened in the name of Party A and controlled by
Party B and Party B shall maintain the signature samples(seals) of the account.
Pursuant to the Entrusted Management Agreement and this Agreement, all funds
of
Party A shall be deposited into this account and Party B shall have the absolute
right to decide the use of funds deposited in the account.
12. Profit
refers to sales revenues after costs and manufacturing expenses.
13. Transition
Period refers to the period from the date this agreement is signed to the date
all financial payment pf Party B arrives.
Article
2 The purchase of equipments
1. Party
B
purchase the equipments (the “Sold Equipments”) from Party A.The list of Sold
Equipments refers to the Annex 1, and the Sold Equipments were not set any
pledge.
2. Both
parties agree that the purchase price for the Sold Equipments shall be RMB
2,000,000.00 (two million)Yuan, and paid by the left financial payment after
the
purchase of new equipments.
3. Party
B
shall acquire the legal ownership of Sold Equipments immediately upon payment
of
the Purchase Price (RMB 2,000,000.00 Yuan) by Party B.
4. The
Purchase Price is payable within 10 days after the financial payment is arrived.
The payment shall be remitted to the Entrusted Account.
5. During
the Transition Period, if Party B required, Party A shall rent the equipments
to
Party B with charge free, to guarantee the operation management of Party
B.
6. Party
B
shall purchase other equipment from market and Party A shall provide necessary
help. Party B shall own all newly-purchased equipments.
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Article
3 The purchases of raw materials, inventories and accounts
receivable
1.
Party
B shall purchase from Party A, and Party A shall sell to Party B all the
inventories, raw materials, semi-products and accounts receivable of Party
A.
Pary B shall receive the accounts receivable, also own the payment. Party B
agrees to accept the purchase.
2.
The
price of all inventories, raw materials, semi-products and accounts receivable
sold by Party A is RMB 150,000.00 (one hundred and fifty thousand) Yuan, and
paid by the left financial payment after the purchase of new
equipments.
Article
4 Patent and Trademark purchases
1.
Party
A
agrees to sell to Party B, and Party B agrees to purchase from Party A the
patent of utility model named Bending Water Pipe, and the patent number is
ZL 99
2 59230.5, the certificate number is No. 427197. The price is RMB ten thousand
(10,000.00 ) Yuan.
2.
Party
A agrees to sell the
trademark to Party B, which is named “富爵FURDHER”.
The trademark was registered on the following products (Serial No.11): Bathroom
equipment, flushing device and washing equipment, the registration number is
No.
3512752, registered by
the
Transferor, and the valid period is from 2005-1-28 to 2015-1-27. The price
is
RMB ten thousand (10,000.00 ) Yuan.
3.
With
respect to the patent and trademark owned by Party A referred to in subsection
1
and 2 of this Article 4, both parties shall enter into the Patent Transfer
Agreement (Annex 2) and Trademark Transfer Agreement (Annex3)ôwhen
this
contract signedô
to
transfer these patent and trademark, and shall complete the related transfer
procedures promptly.
4.
Before
the effectiveness of the patent and trademark transfers referred to in this
Article 3, Party A shall grant to Party B a non-exclusive right to use the
patent and trademark. After the effectiveness of the patent and trademark
transfers, Party B shall grant to Party A a non-exclusive right to use the
patent and trademark. All production of Party A shall managed by Party B in
accordance with the Entrusted Management Agreement.
5.
Party
A represents and warrants that there is no any legal prohibition for the
transfer of its patent and trademark, and that it has not transferred and
license these patent and trademark to any third party.
6.
The
application fees related to the transfer procedures shall be paid by Party
A. If
a patent agent is retained to handle the transfer procedures, the agent’ s fees
shall be borne equally by both parties.
Article
5 The lease of Real estates and Land use right
1.
The
real estates and land use right owned by Party A, which are situated at #00,
Xxxxxxxx Xxxx and Gejiaping, Huating Town, were set mortgage. Therefore, Party
A
shall rent the real estates and land use right aforesaid to Party
B.
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2.
Party
A represents and warrants that it has the legal ownership to the real estates
and land use right. Party A has the right to rent out the Leased Property to
Party B and such renting activity will not violate any laws. With respect to
the
real estates and land use right that have been mortgaged to banks, Party A
further represents and warrants that the mortgage will not have any substantive
affect on such renting activity.
3.
The
annual rent for the real estates and land use right is RMB 200,000.00 (two
hundred thousand) Yuan..
4.
Party
A shall be responsible for handling the registration procedures in connection
with the renting of the real estates and land use right.
Article
6 Secondary Lien on Land use right and Real
estates
Both
parties agree that, although Party A has already mortgaged the land use right
and real
estates
to
banks, Party A shall, to the extent it is permissible under the PRC laws and
the
rights and interests of banks as mortgager will not be impaired, grant a
secondary lien against the remaining value of the land use right and
real
estates
to Party
B. Party A shall be responsible for completing the related procedures to grant
such secondary lien to Party B (If the mortgage registration authority refuses
to process such registration due to reasons out of Party A’s control, Party A is
not liable for any breach of this Agreement caused by this refusal).
Article
7 Employees
1.
With
respect to employees needed by Party B for its operations and productions,
Party
B shall have the priority to employ Party A’s existing employees. Party B has
the right to decide at its sole discretion to employ all or part of Party A’s
employees at any time. With respect to the employees decided to be employed
by
Party B, Party A shall convince such employees to sign labor contracts with
Party B and terminate its employment relationship with Party A.
2.
Party
A shall promptly provide to Party B information about its entire work force
and
personnel, including but not limited to age, gender, specialty, experience
and
labor contact.
3.
Party
B shall be responsible for providing all labor and employee insurances to the
workers and employees employed from Party A.
Article
8 Supply Channel and Sales Channel
1.
Party
A shall provide all supply channels and sales channels to Party B and help
it to
establish new supply and sales contracts.
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Article
9 Other Resources
Party
B
has right to use the other resources of Party A in accordance with the Entrusted
Management Agreement.
Article
10 Entrusted
Account
Party
A
shall open or designate an entrusted bank account over which Party B shall
have
the sole control and access to make deposit and payment of funds. The management
of and the use of funds deposited in this entrusted account shall be carried
out
according to the Entrusted Management Agreement (Annex 4). The signature samples
(seals) of this account shall be those designated or confirmed by Party B.
During the Incorporating Period, Party A shall transfer all of its deposits
and
all cashes for daily operation to this Entrusted Account.
Article11
Operation
1.
Party
B shall commence productions independently after the registered capital is
prepared and Party A shall be managed by Party B in accordance with the
Entrusted Management Agreement.
2.
Party
B will carry out its operations and productions independently using the
equipment to be bought or leased from Party A, the new equipment it purchases,
the patents to be bought, the employees to be employed, and the Leased Property.
3.
After
the Transition Period, although Party A will not continue any actual
productions, it has assets that are encumbered to banks to manage and debts
or
accounts payable to pay, all of which will be entrusted to Party B to manage
according to the Entrusted Management Agreement. Party B shall be responsible
for the management and operation of Party A, including controlling and managing
the funds disbursement in Entrusted Account. Party B has the full right to
control and administrate the financial affairs, operations, contract execution
and performance, and payment of taxes on behalf of Party A. Through the
performance of the Entrusted Management Agreement, Party B shall has the right
to all of the profits of Party A and shall bear the losses of Party
A.
4,
All of
Party A’s borrowings from banks will remain under Party A’s name and Party A
shall repay the loans in accordance with the contracts signed with banks. Party
B shall make up any shortages of the loans repayment. Party B agrees to
guarantee the payment and performance of Party A’s obligations under these bank
loans and to execute any necessary documents upon banks’ request.
5. Prior
to
the independent operation of Party B, Party A shall continue its currently
existing operation, and Party A’ s operation shall be managed by Party B
pursuant to the Entrusted Management Agreement.
6. Party
A
shall continue to perform all of its purchase contracts, sales contracts and
other contracts (besides the loan agreements with banks) before the independent
operation of Party B. Nevertheless, after the effectiveness of this Agreement,
Party A shall promptly notify the contracting parties of the contracts that
remain to be performed after the independent operation of Party B and assign
these contracts to Party B to perform the remaining obligations under the
contracts. Party A shall use its best efforts to convince the contracting
parties to consent to the assignment. If the contracting parties refuse to
consent to the assignment of these contracts to Party B, Party A shall continue
to perform these non-assigned contracts, and Party B shall lease back whatever
necessary equipment and manufacturing plants to Party A for free, and transfer
back all necessary raw materials, inventory, work-in-progress to Party A at
the
price Party A pays to Party B. All profits from Party B’s operations shall be
remitted to Party A by means of entrusted management fee.
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7.
Party
A shall pay a monthly entrusted management fee to Party B within 20 days after
the end of the preceding month. During the Incorporating Period, if Party B
needs Party A to pay any incorporation fees and expenses on Party B’s behalf,
Party B shall have the right to disburse the funds out of the Entrusted Account
under the Entrusted Management Agreement.
Article
12 Purchase of Shares or Assets
Any
shares or assets purchase of Party A by Party B and the determination of the
purchase price shall be carried out according to the Exclusive Option Agreement.
Article
13 Responsibilities of Both Parties
1.
Responsibility of Party A
(1) To
perform all sales, transfers and lease under this Agreement.
(2) To
promptly open or designate an account as the Entrusted Account.
(3) To
handle
all matters and procedures necessary for the entrusted management arrangement
between Party A and Party B.
(4) To
assist
Party B to complete its registration with the custom office, tax authority,
foreign currency administration and bank.
(5) To
assist
Party B to complete any required procedures when Party B purchase Party A’s
shares or assets in accordance with the Exclusive Option Agreement.
(6) To
assist
Party B to expand the channels of raw materials and sales.
(7) To
assist
Party B to employ the current personnel of Party A and, if Party B desires
to
employ more employees, additional employees from the job market.
(8) To
assist
Party B to purchase manufacturing equipment, transportation vehicles, office
supplies and communication equipment.
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(9) To
assist
Party B to obtain the preferential taxes or other special treatment permitted
by
the laws of PRC.
(10) To
comply
with the provisions of this Agreement.
2.
Responsibilities
of Party B
(1) To
perform the purchase under this Agreement and to accept the transfer and lease
under this Agreement.
(2) To
pay
the Purchase Price for the purchased equipment and other purchase prices under
this Agreement promptly upon receipt of financial payment.
(3) To
administrate the Entrusted Account.
(4) To
administrate all business activities of Party A.
(5) To
comply
with the provisions of this Agreement.
Article
14 Term of Agreement
1.
The
term of this Agreement shall commence from the effective date of this Agreement
when it is signed or sealed by authorized representatives from both parties,
until the date on which Party B completes the acquisition of all equity
interests or assets of Party A.
2.
Both
Parties agree not to terminate or modify this Agreement (other than as provided
in Article 3) before Party B completes acquisition of all equity interests
or
assets of Party A.
3.
If the
financial payment of first term from Party B has not been made or the Purchase
Prices under this Agreement have not been paid within 1
months
following execution of this Agreement, Party A shall have the right to terminate
this Agreement and withdraw the patents transferred and the equipments and
all
other resources supplied by Party A.
Article
15 Representations and Warranties
Either
party represents and warrants to the other party on the date of the Agreement
that it:
(1) has
the
right to enter into the Agreement and the ability to perform the
same;
(2) the
execution and delivery of this Agreement by each party have been duly authorized
by all necessary corporate action;
(3) the
execution of this Agreement by the officer or representative of each party
has
been duly authorized
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(4) each
party has no other reasons that will prevent this Agreement from becoming a
binding and effective agreement between both parties after
execution;
(5) the
execution and performance of the obligations under this Agreement will
not:
(a)violate
any provision of the business license, articles of association or other similar
documents of its own;
(b)violate
any provision of the laws and regulations of PRC or other governmental or
regulatory authority or approval;
(c)violate
or result in a breach of any contract or agreement to which the party is a
party
or by which it is bound.
Article
16 Liabilities for Breach of Contract
During
the term of this Agreement, any violation of any provisions herein by either
party constitutes breach of contract and the breaching party shall compensate
the non-breaching party for the loss incurred as a result of this
breach.
Article
17 Force Majeure
The
failure of either party to perform all or part of the obligations under the
Agreement due to force majeure shall not be deemed as breach of contract. The
affected party shall present promptly valid evidence of such force majeure,
and
the failure of performance shall be settled through consultations between the
parties hereto.
Article
18 Governing Laws
The
conclusion, validity, interpretation, and performance of this Agreement and
the
settlement of any disputes arising out of this Agreement shall be governed
by
the laws and regulations of the People’s Republic of China.
Article
19 Settlement of Disputes
Any
disputes under the Agreement shall be settled at first through friendly
consultation between the parties hereto. In case no settlement can be reached
through consultation, each party shall have the right to submit such disputes
to
China International Economic and Trade Arbitration Commission. The place of
arbitration is in Beijing. The arbitration award shall be final and binding
on
both parties.
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Article
20 Confidentiality
1
The
parties hereto agree to cause its employees or representatives who have access
to and knowledge of the terms and conditions of this Agreement to keep strict
confidentiality and not to disclose any of these terms and conditions to any
third party without the expressive requirements under law or request from
judicial authorities or governmental departments or the consent of the other
party, otherwise such party or personnel shall assume corresponding legal
liabilities.
2
The
obligations of confidentiality under Section 1 of this Article shall survive
after the termination of this Agreement.
Article
21 Severability
1
Any
provision of this Agreement that is invalid or unenforceable due to the laws
and
regulations shall be ineffective without affecting in any way the remaining
provisions hereof.
2
In the
event of the foregoing paragraph, the parties hereto shall prepare supplemental
agreement as soon as possible to replace the invalid provision through friendly
consultation.
Article
22 No-Waiver of Rights
1
Any
failure or delay by any party in exercising its rights under this Agreement
shall not constitute a waiver of such right.
2
Any
failure of any party to demand the other party to perform its obligations under
this Agreement shall not be deemed as a waiver of its right to demand the other
party to perform such obligations later.
3
If a
party excuses the non-performance by other party of certain provisions under
this Agreement, such excuse shall not be deemed to excuse any future
non-performance by the other party of the same provision.
Article
23 Prohibition on Assignment
Unless
otherwise specified under this Agreement, no party can assign or delegate any
of
the rights or obligations under this Agreement to any third party nor can it
provide any guarantee to such third party or carry out other similar activities
without the prior written from the other party.
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Article
24 Miscellaneous
1
Any
amendment entered into by the parties hereto after the effectiveness of this
Agreement shall be an integral part of this Agreement and have the same legal
effect as part of this Agreement. In case of any discrepancy between the
amendment and this Agreement, the amendment shall prevail. In case of several
amendments, the amendment with the latest date shall prevail.
2
This
Agreement is executed by Chinese and English in duplicate, and in case of any
conflict the Chinese version shall prevail. Each of the original Chinese and
English versions of this Agreement shall be executed in 6 copies. Each party
shall hold two original of each version, and the rest shall be used for
governmental registration or other necessary approval purposes.
3
In
witness hereof, the Agreement is duly executed by the parties hereto on the
date
first written above.
(No
Text Below)
(SIGNATURE
PAGE)
Party
A:
Jiangxi
Xxxxxx Xxxx Copper Co., Ltd (Seal).
Legal
Representative (signature):
Party
B:
Jiangxi
Moral Star Copper Technology Co., Ltd (Seal).
Legal
Representative (signature):
10
Annex
1:
The list of Sold Equipment
Annex
2:
Patent Transfer Agreement
Annex
3:
Trademark Transfer Agreement
Annex
4:
Entrusted Management Agreement
11
