ASSET PURCHASE AGREEMENT
BETWEEN
SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED
AND
Xxxxxxxx Xxxx
DATED AS OF
January 8th, 2008
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INDEX OF SCHEDULES AND EXHIBITS
Schedules:
1. Purchased Asset Checklist
2. Leased Property Description
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This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of January
8th, 2008 (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" or "Purchaser"), a subsidiary of Gulf Resources,
Inc.("GFRE"); and
(2) Xxxxxxxx Xxxx, ("YANG"), an individual resident of China who owns private
land located in the Xxx Xxxx City Hanting Area.
WHEREAS: YANG wishes to sell, transfer and convey certain assets to SCHC, and
SCHC wishes to purchase and acquire the same from YANG.
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 YANG, 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 YANG 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 January 8th, 2008 (the
"Closing Date") or as soon thereafter as is practicable.
"GFRE" 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 YANG 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 used by
Yang in the operation of his bromine business on the Leased Property (as defined
below) including but not limited to the assets listed and described on Schedule
1 attached hereto and incorporated herein by reference (the "Purchased Assets").
In addition to the Purchased Assets, YANG agrees at Closing to convey to SCHC
all rights to the Lease (the "Lease") whereby YANG 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 ownership of the Leased Property from YANG 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 YANG the sum of
$9,722,222 (the "Purchase Price") of which $3,716,666 (the "Initial Payment")
shall be paid to YANG at the Closing and $6,005,556 shall be paid in cash or
readily available funds within 5 days after the Closing.
2.3 The Purchased Assets include, without limitation, annual estimated bromine
production capacity of 4,700 tons, buildings, equipment, xxxxx, pipelines, and
power circuits to be owned by SCHC. SCHC is not assuming and shall not be liable
for any and all debts, obligations and liabilities of YANG, including without
limitation, liabilities relating to the Purchased Assets and the Leased
Property.
2.4 YANG covenants that the $526,528 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 the Lease from YANG to SCHC, will be YANG'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 YANG the sum of $500,000 as liquidated
damages and not as a penalty.
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2.6 Three days after the Effective Date, SCHC and YANG 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 YANG represents and warrants to SCHC the following:
(a) Authority. YANG 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 YANG 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. YANG has good and marketable title to the Purchased Assets
and holds a valid leasehold interest to the Leased Property pursuant to the
Lease, in each case, 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 YANG 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 in connection with the production of
bromine as presently conducted on the Leased Property 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 YANG 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
YANG 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 YANG represents and warrants respectively to the other as
follows:
(a) Each of SCHC and YANG 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 YANG agrees to indemnify, hold harmless and reimburse SCHC 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 YANG
made in this Agreement, any other agreement or instrument delivered by YANG at
the Closing;
(b) any damages or claims asserted against the Purchaser on account of any
liability of YANG in connection with his ownership of the Purchased Assets and
the Leased Property ;
(c) any claims arising out of the operation's of YANG's business prior to the
date hereof; 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 YANG, including
without limitation claims or liabilities 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 YANG 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
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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
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
YANG 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 YANG 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
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Name: Xxxx Xxxx
Position: CEO
XXXXXXXX XXXX
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Xxxxxxxx Xxxx
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