PURCHASE AGREEMENT
THIS
PURCHASE AGREEMENT (together with all schedules, exhibits and all ancillary
agreements contemplated herein are hereinafter referred to as this "Agreement"),
is entered into as of the 18th of May, 2007 by and between General
Steel Holdings, Inc. ("GSHO"),
a Nevada corporation and Victory New Holdings Limited, a British Virgin Islands
registered company (the "Selling Owner"). The Selling Owner is the minority
owner of Tianjin Daqiuzhuang Metal Sheet Co., Ltd. (the "Daqiuzhuang Metal"),
a
subsidiary of GSHO. The Daqiuzhuang Metal is the subject of an independent
valuation (the "Appraisal") by Tianjin Zhengtai Certified Public Accountants
Co., Ltd. The Appraisal is attached as Exhibit A to this Agreement. Hereinafter,
GSHO and the Selling Owner are each referred to individually as a "Party" and
collectively as "Parties".
PREMISES
Whereas,
GSHO believes the acquisition of the Daqiuzhuang Metal is of great importance
to
GSHO's expansion and complete operation control;
Whereas,
the Selling Owner owns 30% of the equity interest in the Daqiuzhuang Metal
(“Ownership Interest”);
NOW
THEREFORE, on the stated premises and for and in consideration of the mutual
covenants and agreements hereinafter set forth and the mutual benefits to the
Parties to be derived herefrom, it is hereby agreed as follows.
ARTICLE
I
REPRESENTATIONS,
COVENANTS, AND WARRANTIES
OF
THE
DAQIUZHUANG METAL AND THE SELLING OWNER
As
an
inducement to, and to obtain the reliance of GSHO, the Selling Owner, for
himself and on behalf of the Daqiuzhuang Metal, as applicable, represents and
warrants as follows:
Section
1.1 OWNERSHIP
INTEREST IN THE DAQIUZHUANG METAL. The Selling Owner is the legal and beneficial
owner of 30% equity interest in Daqiuzhuang Metal free and clear of any claims,
charges, equities, liens, security interests, and encumbrances
whatsoever.
Section
1.2 VALID
TRANSFER OF FULLY VESTED SHARES. The Selling Owner has full right, power, and
authority to transfer, assign, convey, and deliver his Ownership Interest in
Daqiuzhuang Metal. The delivery by the Selling Owner of the Ownership Interest
of Daqiuzhuang Metal at the Closing (as described in Section 3.03 herein) will
convey to GSHO good and marketable title to the Ownership Interest in
Daqiuzhuang Metal, free and clear of any claims, charges, equities, liens,
security interests, and encumbrances whatsoever.
Section
1.3 ORGANIZATION
OF DAQIUZHUANG METAL SHAREHOLDERS. The Selling Owner has taken, or will have
taken prior to Closing (as described in Section 3.03 herein), all actions
required by law, or otherwise to authorize the execution and delivery of this
Agreement. The Selling Owner has or will have prior to Closing (as described
in
Section 3.03 herein), the full power, authority, and legal right and has or
will
have prior to Closing (as described in Section 3.03 herein), taken all action
required by law to consummate the transactions herein contemplated.
Section
1.4 ENFORCEABLE
OBLIGATION. The transactions contemplated by this Agreement are the valid and
binding obligations of the Selling Owner, enforceable against the Selling Owner,
by GSHO in accordance with the terms of this Agreement.
Section
1.5 NO
CONFLICTS. The execution and delivery by the Selling Owner of this Agreement,
the performance by the Selling Owner of its obligations under this Agreement
and
the consummation of the transactions contemplated hereby and thereby do not
and
will not: (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require the Selling Owner or the Daqiuzhuang Metal to obtain any consent,
approval or action of, make any filing with or give any notice to any person
as
a result or under the terms of, (iv) result in or give to any person any right
of termination, cancellation, acceleration or modification in or with respect
to, (v) result in or give to any person any additional rights or entitlement
to
increased, additional, accelerated or guaranteed payments under, or (vi) result
in the creation or imposition of any lien upon the Selling Owner or the
Daqiuzhuang Metal or any of their respective assets and properties under, any
contract to which the Selling Owner or the Daqiuzhuang Metal is a party or
by
which any of the Ownership Interest is bound.
Section
1.6 GOVERNMENTAL
AUTHORIZATIONS AND LICENSES. The Selling Owner has, or will have upon Closing
(as described in Section 3.03 herein), all licenses, franchises, permits, and
other governmental authorizations that are legally required to enable it to
conduct its business in all material respects as conducted. No authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by the Selling Owner of this Agreement and consummation
by the Selling Owner of the transaction contemplated hereby.
Section
1.7 COMPLIANCE
WITH LAWS AND REGULATIONS. DAQIUZHUANG METAL and the Selling Owner each has
complied with all applicable statutes and regulations except to the extent
that
noncompliance would not result in the occurrence of any material liability
for
the Daqiuzhuang Metal or for the Selling Owner.
ARTICLE
II
REPRESENTATIONS,
COVENANTS, AND
WARRANTIES
OF GSHO
As
an
inducement to, and to obtain the reliance of the Selling Owner, GSHO represents
and warrants as follows:
Section
2.1 ORGANIZATION
AND DUE AUTHORIZATION. GSHO is a corporation duly organized, validly existing,
and in good standing under the laws of the state of Nevada and has the corporate
power and is duly authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public authorities
to
own all of its properties and assets. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not violate any provision of GSHO's articles of incorporation or bylaws.
GSHO has taken all action required by law, its articles of incorporation, its
bylaws, or otherwise to authorize the execution and delivery of this Agreement,
and GSHO has full power, authority, and legal right and has taken all action
required by law, its articles of incorporation, bylaws, or otherwise to
consummate the transactions herein contemplated.
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Section
2.2 APPROVAL
OF AGREEMENT. The board of directors of GSHO has approved this Agreement and
the
transactions contemplated herein.
ARTICLE
III
PURCHASE
Section
3.1 THE
PURCHASE. The Selling Owner agrees to assign, transfer, and deliver to GSHO,
free and clear of all liens, pledges, encumbrances, charges, restrictions or
known claims of any kind, nature, or description, the whole Ownership Interest,
as of the date of this Agreement, and GSHO agrees to issue and deliver the
aggregate of 3,092,899 shares of GSHO's Series A Preferred Stock at a price
of
$2.00 per share, which have a voting power of 30% of the combined voting power
of GSHO's common and preferred stocks for the entire life of GSHO as provided
in
Exhibit I attached hereto. The appraised value of the Ownership Interest,
according to the Appraisal Report attached as Exhibit A hereto, is $9,304,796
but the purchase price is $6,185,797 representing the historical value of the
Ownership Interest.
Section
3.2 Victory
New hereby agrees to relinquish its rights to any profit distribution relating
to the Ownership Interest from January 1, 2007 to the date of this Agreement.
Such amount of profit distribution shall belong to General Steel Holdings,
Inc.
Section
3.3 CLOSING.
The closing ("Closing") of the transactions contemplated by this Agreement
shall
be no sooner than twenty days after the mailing of an Information Statement
on
Form 14C on the authorization and issuance of the 3,092,899 shares of Series
A
Preferred Stock ("Closing Date").
Section
3.4 CLOSING
EVENTS. At the Closing, each of the Parties hereto shall execute, acknowledge,
and deliver (or shall ensure to be executed, acknowledged, and delivered) the
following:
(a) in
the
case of the Selling Owner, an originally-executed Xxxx of Sale for the Ownership
Interest; and,
(b) in
the
case of GSHO, stock certificates evidencing the share ownership of all 3,092,899
shares of Preferred Stock.
Each
Party shall also deliver such other items as may be reasonably requested by
the
other Party and/or their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
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ARTICLE
IV
CONDITIONS
PRECEDENT TO OBLIGATIONS OF GSHO
The
obligations of GSHO under this Agreement are subject to the satisfaction, at
or
before the Closing Date, of the following conditions:
Section
4.1 ACCURACY
OF REPRESENTATIONS. The representations and warranties made by the Selling
Owner
in this Agreement were true when made and shall be true at the Closing Date
with
the same force and effect as if such representations and warranties were made
at
and as of the Closing Date (except for changes therein permitted by this
Agreement), and the Selling Owner and each Daqiuzhuang Metal Shareholder shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by them prior to or at the
Closing.
Section
4.2 NO
MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there shall not have
occurred any material adverse change in the financial condition, business,
or
operations of the Daqiuzhuang Metal nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of the
Daqiuzhuang Metal.
ARTICLE
V
CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE SELLING OWNER
The
obligations of the Selling Owner under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section
5.1 ACCURACY
OF REPRESENTATIONS. The representations and warranties made by GSHO in this
Agreement were true when made and shall be true as of the Closing Date (except
for changes therein permitted by this Agreement) with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date, and GSHO shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by the
Daqiuzhuang Metal prior to or at the Closing.
Section
5.2 NO
MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there shall not have
occurred any material adverse change in the financial condition, business,
or
operations of GSHO nor shall any event have occurred which, with the lapse
of
time or the giving of notice, may cause or create any material adverse change
in
the financial condition, business or operations of GSHO.
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ARTICLE
VI
MISCELLANEOUS
Section
6.1 GOVERNING
LAW. This Agreement shall be governed by, enforced, and construed under and
in
accordance with the laws of the United States of America and, with respect
to
the matters of state law, with the laws of the State of New York.
Section
6.2 RESOLUTION
OF DISPUTES.
(a) Any
dispute, controversy or claim arising out of or relating to this Agreement,
or
the interpretation, breach, termination or validity hereof, shall first be
resolved through friendly consultation, if possible. Such consultation shall
begin immediately after one party has delivered to the other party a written
request for such consultation (the "Consultation Date"). If the dispute cannot
be resolved within 30 days following the Consultation Date, the dispute shall
be
submitted to arbitration upon the request of either party, with written notice
to the other party.
(b) ARBITRATION.
The arbitration shall be conducted in New York, New York under the auspices
of
the American Arbitration Association ("AAA") in accordance with the commercial
arbitration rules and supplementary procedures for international commercial
arbitration of the AAA. There shall be three arbitrators--one arbitrator shall
be chosen by each party to the dispute and those two arbitrators shall choose
the third arbitrator. All arbitration proceedings shall be conducted in English.
Each party shall cooperate with the other in making full disclosure of and
providing complete access to all information and documents requested by the
other party in connection with the arbitration proceedings. Arbitration shall
be
the sole, binding, exclusive and final remedy for resolving any dispute between
the parties; either party may apply to any court of competent jurisdiction
in
the State of New York for enforcement of any award granted by the
arbitrators.
(c) During
the period when a dispute is being resolved, except for the matter being
disputed, the parties shall in all other respects continue to abide by the
terms
of this Agreement.
Section
6.3 ATTORNEY'S
FEES. In the event that any party institutes any action or suit to enforce
this
Agreement or to secure relief from any default hereunder or breach hereof,
the
breaching party or parties shall reimburse the nonbreaching party or parties
for
all costs, including reasonable attorney's fees, incurred in connection
therewith and in enforcing or collecting any judgment rendered
therein.
Section
6.4 SCHEDULES;
KNOWLEDGE. Each party is presumed to have full knowledge of all information
set
forth in the other party's schedules delivered pursuant to this
Agreement.
Section
6.5 ENTIRE
AGREEMENT. This Agreement represents the entire agreement between the parties
relating to the subject matter thereof.
Section
6.6 SURVIVAL;
TERMINATION. The representations, warranties, and covenants of the respective
parties shall survive the Closing Date and the consummation of the transactions
herein contemplated for a period of three months. All rights and obligations
under this entire Agreement shall be binding upon and inure to the benefit
of
the heirs, executors, administrators and assigns of the parties.
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Section
6.7 COUNTERPARTS.
This Agreement may be executed in multiple counterparts, each of which shall
be
deemed an original and all of which taken together shall be but a single
instrument. For purposes of this Agreement, facsimile signatures may be deemed
originals.
Section
6.8 AMENDMENT
OR WAIVER. Every right and remedy provided herein shall be cumulative with
every
other right and remedy, whether conferred herein, at law, or in equity, and
may
be enforced concurrently herewith, and no waiver by any party of the performance
of any obligation by the other shall be construed as a waiver of the same of
any
other default then, theretofore, or thereafter occurring or existing. At any
time prior to the Closing Date, this Agreement may be amended by a writing
signed by all parties hereto, with respect to any of the terms contained herein,
and any term or condition of this Agreement may be waived or the time for
performance may be extended by a writing signed by the party or parties for
whose benefit the provision is intended.
Section
6.9 THIRD
PARTY CONSENTS AND CERTIFICATES. The Parties agree to cooperate with each other
in order to obtain any required third party consents to this Agreement and
the
transactions herein and therein contemplated.
IN
WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement to
be
duly executed as of the day and year first above written.
GENERAL
STEEL HOLDINGS, INC.
/s/
Yu
Zuosheng
By:
Yu
Zuosheng
Its:
Chairman and CEO
VICTORY
NEW HOLDINGS LIMITED
/s/
Xxxx
Xxxxxx
By:
Xxxx
Xxxxxx
Its:
Director
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