EXHIBIT 10.1

 

SHARE EXCHANGE AGREEMENT

 

This Share Exchange Agreement (this “Agreement”) dated as of September 16, 2015,
is by and among General Steel Holdings, Inc., a Nevada Corporation (the
“Corporation” or “GSI”), Catalon Chemical Corp., a Delaware Corporation (the
“Catalon”), Anyuan Zhu (“Zhu”), Lindenburg Ventures Ltd., a British Virgin
Island Corporation (“Lindenburg”), and Honghui Du (“Du”) (each a “Selling
Stockholder” and together, the “Selling Stockholders”) who are the owners of
100% of the capital stock of Catalon.

 

RECITALS

 

A.           Whereas, GSI is a leading non-state-owned steelmaker headquartered
in Beijing, China.

 

B.           Whereas, Catalon is engaged in the business of producing and
supplying of catalysts and industrial ceramics headquartered in North Carolina.

 

C.           Whereas, GSI is a corporation presently subject to certain
reporting requirements under the Securities Exchange Act of 1934 (the “Exchange
Act”).  The common stock of GSI is presently listed on the New York Stock
Exchange under the symbol “GSI.”  

 

D.           Whereas, the Selling Stockholders are the owners of 100% of the
issued and outstanding shares of capital stock of Catalon.

 

E.           Whereas, in order to implement their common long-term business and
financial goals, the parties to this Agreement desire to implement a
consolidation strategy through a majority acquisition of Catalon by GSI.

 

F.           Whereas, the value of Catalon, including its Honeycomb Catalyst
Technology and its subsidiary Catalon Eden NC, is approximately $20 million.

 

G.           Whereas, GSI will acquire shares of the capital stock of Catalon
from the Selling Stockholders such that immediately thereafter, GSI will own
84.5% of the issued and outstanding capital stock of Catalon. Such shares will
be acquired in a stock-for-stock exchange for 13,000,000 shares of Common stock
of GSI newly issued by GSI at a price per share of $1.30, all as more fully set
forth herein below.

 

H.           Whereas, the Board of Directors of GSI have authorized its Officers
to consummate the transactions contemplated herein.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree to the following terms and
conditions:

 

 

 

 

ARTICLE 1

 

DEFINITIONS

 

1.1           Definitions.         The following terms have the following
meanings, unless the context indicates otherwise:

 

“Agreement” shall mean this Agreement, and all the exhibits, schedules and other
documents attached to or referred to in this Agreement, and all amendments and
supplements, if any, to this Agreement;

 

“Catalon Shares” shall mean 1,268 shares of Catalon common stock held in the
aggregate by the Selling Stockholders, which represents eighty four and one half
of one percent (84.50%) of the issued and outstanding capital stock of Catalon
and are held as follows: 539 shares by Zhu, 412 shares by Lindenburg, and 317
shares by Du;

 

“Closing” shall mean the completion of the Transaction, in accordance with
Article 8 hereof, at which the Closing Documents shall be exchanged by the
parties, except for those documents or other items specifically required to be
exchanged at a later time;

 

“Closing Date” shall mean a date mutually agreed upon by the parties hereto in
writing and in accordance with Article 8, following the satisfaction or waiver
by GSI and Catalon of the conditions precedent set forth in Sections 5.1, 6.1
and 6.2 respectively; the Closing Date shall be on or before September 30, 2015,
or as soon thereafter as practicable, unless otherwise agreed to in writing by
all parties hereto;

 

“Closing Documents” shall mean the papers, instruments and documents required to
be executed and delivered at the Closing pursuant to this Agreement;

 

“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as
amended;

 

“GAAP” shall mean United States generally accepted accounting principles applied
in a manner consistent with prior periods;

 

“GSI Accounting Date” is defined in section 4.11;

 

“GSI Material Adverse Effect” is defined in section 4.7;

 

“GSI SEC Documents” is defined is section 4.10;

 

“GSI Shares” shall mean 13,000,000 restricted shares of fully paid and
non-assessable common shares of GSI to be issued to the Selling Stockholders by
GSI on the Closing Date and held in escrow and subject to adjustment in
accordance with the terms and conditions hereof;

 

“Minimum Net Profit” shall mean $8.39 million in 2016 and $20.90 million in
2017, each as calculated in accordance with and verified by the annual financial
statements of Catalon for the respective year approved by GSI;

 

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“Minimum Sales Targets” shall mean $46.6 million of SCR catalysts in 2016 and
$116.09 million of SCR catalysts in 2017, each as calculated in accordance with
and verified by the annual financial statements of Catalon for the respective
year approved by GSI;

 

“Sales Period” shall mean fiscal years 2016 and 2017;

 

“SEC” shall mean the Securities and Exchange Commission;

 

“Taxes” shall include international, federal, state, provincial and local income
taxes, capital gains tax, value-added taxes, franchise, personal property and
real property taxes, levies, assessments, tariffs, duties (including any customs
duty), business license or other fees, sales, use and any other taxes relating
to the assets of the designated party or the business of the designated party
for all periods up to and including the Closing Date, together with any related
charge or amount, including interest, fines, penalties and additions to tax, if
any, arising out of tax assessments;

 

“Transaction” shall mean the acquisition of the Catalon Shares by GSI in
exchange for the issuance of the GSI Shares (as hereinafter defined).

 

ARTICLE 2

 

EXCHANGE OF SHARES

 

2.1           Exchange of Shares. Subject to all the terms and conditions set
forth in this Agreement, in exchange for the acquisition consideration (the
“Acquisition Consideration”), as set forth in paragraph 2.2 hereof, issued by
GSI to the Selling Stockholders, the Seller Stockholders shall transfer the
Catalon Shares to GSI.

 

2.2           Acquisition Consideration. The total Acquisition Consideration to
be paid by GSI for the Catalon Shares shall be a total of 13,000,000 shares of
the previously authorized but unissued unregistered and restricted shares of the
Common Stock, $0.001 par value per share of GSI.   Subject to all the terms and
conditions of this Agreement, GSI will issue the Acquisition Consideration of
13,000,000 Shares in the names of the Selling Stockholders, in 6 separate
certificates as follows, which shares shall be held in escrow, subject to
delivery and/or cancellation as set forth below:

 

I.              Certificates for an aggregate total of 4,333,333 shares (the
“2016 Certificates”), issued as follows:

 

1,843,111 shares in the name of and to Zhu, 1,406,889 shares in the name of and
to Lindenburg, and 1,083,333 shares in the name of and to Du;

 

II.             Certificates for an aggregate total of 8,666,667 shares (the
“2017 Certificates”), issued as follows:

 

3,686,222 shares in the name of and to Zhu, 2,813,778 shares in the name of and
to Lindenburg, and 2,166,667 shares in the name of and to Du.

 

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2.3           Deposit and Escrow of Acquisition Consideration Shares. GSI and
the Selling Stockholders hereby agree that GSI (through itself or its attorney),
during the respective Sales Period, shall hold in escrow the stock certificates
as set forth in Section 2.2, along with irrevocable stock powers issued in blank
(the “Stock Powers”) duly executed by each Seller Stockholder with signature
medallion guaranteed.

 

2.4           Delivery and/or Cancellation of Escrow Shares.

 

(a) To the extent that Catalon does not meet the Minimum Sales Targets or
Minimum Net Profit applicable to 2016, then the 2016 Certificates will be
cancelled and GSI will issue and release a reduced portion of the GSI Shares
evidenced by the 2016 Certificates calculated by multiplying such shares by the
aggregate percentage that (i) the actual sales (if lower than the Minimum Sales
Targets), were of the Minimum Sales Targets, and (ii) the actual profit (if
lower than the Minimum Net Profits) was of the Minimum Net Profits. For example,
(I) if only 85% of the Minimum Sales Targets and 75% of the Minimum Net Profit
are achieved for 2016, then certificates for an aggregate share amount of 2.6
million GSI shares (representing a forty percent reduction) would be issued
pro-rata to the Selling Stockholders, and (II) if the Minimum Sales Targets is
exceeded but only 75% of the Minimum Net Profit is achieved for 2016, then
certificates for an aggregate share amount of 3.25 million GSI shares
(representing a twenty five percent reduction) would be issued. If Catalon does
meet both the Minimum Sales Targets and Minimum Net Profit applicable to 2016,
then the 2016 Certificates will be released from escrow and mailed to the Seller
Stockholders in accordance with instructions they provide.

 

(b) To the extent that Catalon does not meet the Minimum Sales Targets or
Minimum Net Profit applicable to 2017, then the 2017 Certificates will be
cancelled and GSI will issue and release a reduced portion of the GSI Shares
evidenced by the 2017 Certificates calculated by multiplying such shares by the
aggregate percentage that (i) the actual sales (if lower than the Minimum Sales
Targets), were of the Minimum Sales Targets, and (ii) the actual profit (if
lower than the Minimum Net Profits) was of the Minimum Net Profits. For example,
if (I) only 85% of the Minimum Sales Targets and 75% of the Minimum Net Profit
are achieved for 2017, then certificates for an aggregate share amount of 5.2
million GSI shares (representing a forty percent reduction) would be issued
pro-rata to the Selling Stockholders, and (II) if the Minimum Sales Targets is
exceeded but only 75% of the Minimum Net Profit is achieved for 2017, then
certificates for an aggregate share amount of 6.5 million GSI shares
(representing a twenty five percent reduction) would be issued. If Catalon does
meet both the Minimum Sales Targets and Minimum Net Profit applicable to 2017,
then the 2017 Certificates will be released from escrow and mailed to the Seller
Stockholders in accordance with instructions they provide.

 

To the extent the stock certificates are to be cancelled as provided above, in
the event that GSI or its transfer agent requires a particular stock power or
assignment to be executed by the Selling Stockholder, the Selling Stockholder
agrees to promptly execute and deliver the original thereof as directed by GSI.

 

2.5           Exemption from Registration. The parties hereto intend that the
GSI Shares to be exchanged shall be exempt from the registration requirements of
the United States Securities Act of 1933, as amended (the “Act”), pursuant to
Section 4(2) of the Act and the rules and regulations promulgated thereunder and
exempt from the registration requirements of the applicable states. The Selling
Stockholders agree to abide by all applicable resale restrictions and holding
periods imposed by all applicable securities legislation.  

 

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The Selling Stockholders understand and agree that the certificates evidencing
GSI Shares issued to the Selling Stockholders will bear the following legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS
AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN
WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO GSI AN OPINION OF
COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO GSI, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN
THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

 

Other Legends. The certificates representing such GSI Shares, and each
certificate issued in transfer thereof, will also bear any other legend required
under any applicable Law, including, without limitation, any U.S. state
corporate and state securities law, or contract.

 

2.6           Share Exchange Procedure. At the Closing, the Selling Shareholders
will exchange his, her or its certificate(s) representing the Catalon Shares by
delivering such certificate to GSI, with the reverse side duly executed and
endorsed in blank (or accompanied by a separate duly executed Irrevocable Stock
Power endorsed in blank), in each case in proper form for transfer, with
signatures guaranteed, and, if applicable, with all stock transfer and any other
required documentary stamps affixed thereto and with appropriate instructions to
allow the transfer agent to issue certificates for the GSI Shares to the holder
thereof, to be held in escrow as set forth above.

 

2.7           Fractional Shares. Notwithstanding any other provision of this
Agreement, no certificate for fractional shares of the GSI Shares will be issued
in the Transaction. In lieu of any such fractional shares, if any of the Selling
Stockholders would otherwise be entitled to receive a fraction of a share of the
GSI Shares upon surrender of certificates representing the Catalon Shares for
exchange pursuant to this Agreement, the Selling Stockholders will be entitled
to receive from GSI a stock certificate representing the nearest whole number of
GSI Shares.

 

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2.8           Closing Date. The date on which the Closing occurs is referred to
herein as the “Closing Date.” The closing of this transaction (the “Closing”),
unless the parties to this Agreement shall otherwise agree, shall take place by
the delivery of all required executed documents by the parties at the offices of
Burns & Levinson LLP, 125 Summer Street, Boston, MA 02110, on or prior to
September 30, 2015, or as soon as practicable thereafter, provided that this
Agreement has not been terminated pursuant to Article 10, of this Agreement by
any party.

 

2.9           Restricted Shares. The Selling Stockholders acknowledge that the
GSI Shares are being issued pursuant to the terms and conditions set forth in
this Agreement, including that the GSI Shares have not been registered under the
Act or any state securities laws, and as a result may not be sold, transferred
or otherwise disposed, except pursuant to an effective registration statement
under the Act, or pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Act and in each case only in accordance
with all applicable securities laws. Each Selling Shareholder agrees that
he/she/it has sought and obtained independent legal advice as to the resale
restrictions applicable in their jurisdiction of residence, and under US
securities laws generally. GSI has not undertaken, and will have no obligation,
to register any of the GSI Shares under the Act. Restricted Shares are acquired
in unregistered, private sales from an issuer or from an affiliate of the
issuer.  Restricted Shares, as defined under Rule 144 of the Act (“Rule 144”),
are not fully transferable until certain conditions have been met. Upon
satisfaction of those conditions, the shares become transferable by the person
or entity holding them. If the Selling Stockholders want to sell their GSI
Shares to the public, they can follow the conditions set forth in Rule 144. The
rule is not the exclusive means for selling the GSI Shares, but provides a “safe
harbor” exemption to the Selling Stockholders. The parties further intend that
the issuance of the common stock by GSI to the Selling Stockholders shall be
exempt from the provisions of Section 5 of the Act pursuant to Section 4(2) of
said Act as set forth herein.

 

2.10         Lock-Up. Each of the Selling Stockholders hereby further agrees
that they will not, without the prior written consent of the GSI, until April
30, 2018, directly or indirectly, (i) offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of, the GSI Shares, (ii) enter into any
swap, hedge or other agreement or arrangement that transfers, in whole or in
part, the economic risk of ownership of the GSI Shares, common stock of GSI or
securities convertible into or exercisable or exchangeable for common stock of
GSI, or (iii) engage in any short selling of any GSI Shares, common stock of GSI
or securities convertible into or exercisable or exchangeable for common stock
of GSI. Following April 30, 2018, with respect to any of the GSI Shares released
to the Selling Stockholders, the Selling Stockholders shall not sell, or be
entitled to sell more than an aggregate of 250,000 shares of GSI common stock,
per quarter in either private transactions or open market trading.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF GSI

 

GSI represents and warrants to Catalon and the Selling Stockholders, and
acknowledges that Catalon and the Selling Stockholders are relying upon such
representations and warranties, in connection with the execution, delivery and
performance of this Agreement, as follows:

 

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3.1           Corporate Status. GSI is a corporation duly organized, validly
existing and in good standing pursuant to the laws of the State of Nevada, with
all requisite power and authority to carry on its business as presently
conducted in all jurisdictions where presently conducted, to enter into this
Agreement and to consummate the transactions set forth in this Agreement.
Schedule 3.1 sets forth true, correct and complete copies of the Articles of
Incorporation and By-laws of GSI, and no action has been taken to amend or
repeal such Organizational Documents. GSI is not in violation or breach of any
of the provisions of its Articles of Incorporation or By-laws, except for such
violations or breaches as would not have a Material Adverse Effect.

 

3.2           Capitalization. GSI’s authorized capital stock consists of (i)
200,000,000 shares of Common Stock, $0.001 Par Value of which 69,984,282 shares
were issued and outstanding as of June 30, 2015 and 2,472,306 are issued as
treasury stock, and (ii) 50,000,000 shares of Preferred Stock of which 3,092,899
shares are issued and outstanding. All shares of Common Stock have been validly
issued, fully paid and non-assessable. GSI has no option plans and there are no
subscriptions, options, warrants, rights or other agreements outstanding to
acquire shares of stock of GSI or any other equity security or security
convertible into an equity security. There are no agreements or commitments to
increase, decrease or otherwise alter the authorized capital stock of GSI prior
to the Closing Date. GSI has not granted any registration rights with respect to
any shares of GSI Common Stock or any options to acquire shares of GSI capital
stock. Upon issuance in accordance with the terms of this Agreement, the GSI
Common Stock will be validly issued, fully paid and non-assessable.

 

3.3           Authority of GSI. GSI has the full corporate power and authority
to execute, deliver, and perform this Agreement and has taken all corporate
action and has obtained all necessary consents and approvals required by law and
its organizational documents to authorize the execution and delivery of this
Agreement and the consummation of the transactions set forth in this Agreement.
This Agreement and the consummation by GSI of the transactions set forth in this
Agreement have been duly and validly authorized, executed, and delivered by the
Board of Directors of GSI, and this Agreement is valid and binding upon GSI and
enforceable against GSI in accordance with their terms (except as the
enforceability thereof may be limited by bankruptcy, bank moratorium or similar
laws affecting creditors’ rights generally and laws restricting the availability
of equitable remedies and may be subject to general principles of equity whether
or not such enforceability is considered in a proceeding at law or in equity).
The Board of Directors of GSI have unanimously consented to, and authorized this
Agreement and the transactions contemplated by this Agreement. No other
corporate approvals are required for GSI to execute, deliver and perform this
Agreement.

 

3.4           Compliance with the Law and Other Instruments.

 

  (a)          The business and operations of GSI have been and are being
conducted in all material respects in accordance with all applicable laws, rules
and regulations of all authorities which affect GSI or its properties, assets,
businesses or prospects.

 

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  (b)          GSI shall has all material governmental licenses, permits,
authorizations and approvals (the “Permits”) necessary and required by GSI to
conduct its business. To the knowledge of GSI, the Permits are validly held by
GSI, and GSI is in compliance with the Permits, except for instances of
noncompliance that would not, individually or in the aggregate, have a material
adverse effect. To the knowledge of GSI, the Permits constitute all of the
governmental licenses, permits, authorizations and approvals required to carry
on the business of GSI as such business is presently conducted, except where the
failure to have any such license, permit, authorization or approval would not,
individually or in the aggregate, have a material adverse effect.

 

3.5           Absence of Conflicts. The execution and delivery of this Agreement
and the issuance of the securities of GSI, and the consummation by GSI of the
transactions set forth in this Agreement: (i) do not and shall not conflict with
or result in a breach of any provision of GSI’s Articles of Incorporation or
By-Laws, (ii) do not and shall not result in any breach of, or constitute a
default or cause an acceleration under any arrangement, agreement or other
instrument to which GSI is a party to or by which any of its assets are bound,
(iii) do not and shall not cause GSI to violate or contravene any provision of
law or any governmental rule or regulation, and (iv) will not and shall not
result in the imposition of any lien, or encumbrance upon, any property of GSI.
GSI has performed in all material respects all of its obligations which are, as
of the date of this Agreement, required to be performed, pursuant to the terms
of any such agreement, contract or commitment.

 

3.6           Financial Statements. GSI’s financial statements contained in
GSI’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed
with the SEC (collectively, the “GSI Financial Statements”) have been prepared
using generally accepted accounting principles (“GAAP”) applied on a consistent
basis. The GSI Financial Statements fairly present the financial condition and
results of operations for GSI. Since the date of GSI Form 10-Q for the quarter
ended June 30, 2015 (the “Form 10-Q”), there has not been any material adverse
change in GSI’s financial condition, assets, liabilities or business, or any
damage, destruction or loss, whether or not covered by insurance, materially
affecting GSI’s properties, assets or business, and GSI has not incurred any
indebtedness, liability or other obligation of any nature whatsoever except in
the ordinary course of business and GSI has not made any change in its
accounting methods or practices.

 

3.7           Title to Assets. GSI owns all right, title, and interest in and to
each of its assets material to its business.

 

3.8           Litigation. Except as set forth in GSI’s SEC Filings, there are no
legal, administrative, arbitration, or other proceeding or governmental
investigations adversely affecting GSI or its properties, assets or businesses,
or with respect to any matter arising out of the conduct of GSI’s business
pending or to its knowledge threatened, by or against, any officer or director
of GSI in connection with its affairs, whether or not covered by insurance.
Except as set forth in the Form 10-Q, neither GSI nor its officers or directors
are subject to any order, writ, injunction, or decree of any court, department,
agency, or instrumentality affecting GSI. Except as set forth on the Form 10-Q
GSI is not presently engaged in any legal action. The reserves for litigation
set forth on the GSI Financial Statements are adequate to cover the cost of any
adverse judgment in any pending litigation and GSI will not be obligated to pay
the costs, including, without limitation, attorney’s fees, of any pending
litigation after the Closing Date.

 

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3.9           Reporting Company Status. GSI is a reporting company registered
with the SEC whose common stock is listed for quotation on the New York Stock
Exchange under the symbol GSI.

 

3.10         SEC Filings. GSI has timely filed and will continue to timely file
all forms, reports and documents required to be filed by GSI with the SEC
(collectively, the “SEC Reports”) and the SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the Act
and the Securities Exchange Act of 1934, as amended, as the case may be, (ii)
did not, to GSI’s knowledge, at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
fact required to be stated in such SEC Reports or necessary in order to make the
statements in such SEC Reports, in the light of the circumstances under which
they were made, not materially misleading and (iii) adequately described all
material transactions, which transactions were consummated on commercially
reasonable terms and were in the best interests of GSI’s stockholders.

 

3.11         Absence of Changes. Except for transactions consummated on
commercially reasonable terms and in the best interests of GSI’s stockholders,
subsequent to the date of the Form 10-Q for the quarter ended June 30, 2015, and
through the date of this Agreement, and except as in the ordinary course of
business and with respect to any items reserved by GSI and reflected in the GSI
Financial Statements, there has not been any material adverse change in, or any
event or condition (financial or otherwise) affecting the business, properties,
assets, liabilities, historical operations or prospects of GSI, there are no
liabilities or obligations of any nature, whether absolute, contingent or
otherwise, whether due or to become due (including, without limitation,
liabilities for taxes with respect to or measured by income of GSI for any
period prior to, and/or subsequent to, the date of the Form 10-Q or arising out
of any transaction of GSI prior to, and/or subsequent to, such date). Subsequent
to the date of the Form 10-Q, there has not been any declaration, or setting
aside, or payment of any dividend or other distribution with respect to GSI
securities, or any direct or indirect redemption, purchase, or other acquisition
of any of GSI securities. To GSI’s knowledge, there has not been an assertion
against GSI of any liability of any nature or in any amount not fully reflected
or reserved against in the Form 10-Q.

 

3.12         No Approvals. No approval of any governmental authority is required
in connection with the consummation of the transactions set forth in this
Agreement.

 

3.13         Broker. GSI represents that it has not had any dealing with respect
to this transaction with any business broker, firm or salesman, or any person or
corporation, investment banker or financial advisor who is or shall be entitled
to any broker’s or finder’s fee or any other commission or similar fee with
respect to the transactions set forth in this Agreement. GSI agrees to indemnify
and hold harmless Catalon from and against any and all claims for brokerage
commissions or finder’s fees by any person, firm or corporation on the basis of
any act or statement alleged to have been made by GSI or its affiliates or
agents.

 

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ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES AND COVENANTS OF CATALON
AND THE SELLING STOCKHOLDERS

 

Catalon and the Selling Stockholders hereby jointly and severally represent,
warrant and covenant to GSI, and acknowledges that GSI is relying upon such
representations, warranties and covenants, in connection with the execution,
delivery and performance of this Agreement, notwithstanding any investigation
made by or on behalf of GSI, as follows:

 

4.1           Corporate Status. Catalon is a corporation duly organized, validly
existing and in good standing pursuant to the laws of Delaware with all
requisite power and authority to carry on its business as presently conducted in
all jurisdictions where presently conducted, to enter into this Agreement and to
consummate the transactions set forth in this Agreement. Copies of the
Certificate of Incorporation and By-Laws of Catalon have been delivered to GSI
prior to the execution of this Agreement are true and complete and have not been
amended or repealed. Catalon is not in violation or breach of any of the
provisions of the Organizational Documents, except for such violations or
breaches as, in the aggregate, will not have a Material Adverse Effect.

 

4.2           Capitalization and Value.

 

(a) Catalon’s authorized capital stock consists of 1,500 shares of Common Stock,
$0.00 Par Value of which all shares are issued and outstanding and held as
follows: 638 shares by Zhu, 487 shares by Lindenburg, and 375 shares by Du. All
shares of Common Stock have been validly issued, fully paid and non-assessable.
As of the date hereof no shares of Preferred Stock are authorized, issued or
outstanding. There are no subscriptions, options, warrants, rights or other
agreements outstanding to acquire shares of stock of Catalon or any other equity
security or security convertible into an equity security. There are no
agreements or commitments to increase, decrease or otherwise alter the
authorized capital stock of Catalon. Catalon has not granted any registration
rights with respect to any series of Catalon stock outstanding.

 

(b) The $17.5 million approximate value of the Honeycomb Catalyst Technology
described in the Valuation Memorandum dated as of September 9, 2015 provided by
Wharton Valuation Associates, Inc. represents an accurate valuation of
respective technology subject to such valuation, and the materials provided by
Catalon in support of such valuation were accurate and complete in all material
respects and there is no material agreement, document or fact relating to such
technology which would result in such appraised value being lower had the
appraisal company been aware of the same.

 

4.3           Subsidiaries. Catalon has one wholly owned subsidiary, Catalon
Eden NC, LLC, a limited liability company formed in the State of North Carolina
of which it holds all of the membership interests. Catalon has no other wholly
or partially owned subsidiaries.

 

4.4           Authority of Catalon. Catalon has the full corporate power and
authority to execute, deliver, and perform this Agreement and has taken all
corporate action and has obtained all necessary consents and approvals required
by law and its organizational documents to authorize the execution and delivery
of this Agreement and the consummation of the transactions set forth in this
Agreement. This Agreement and the consummation by Catalon of the transactions
set forth in this Agreement have been duly and validly authorized, executed, and
delivered by the Board of Directors and the Catalon Stockholders, and this
Agreement are valid and binding upon Catalon and enforceable against Catalon in
accordance with their terms (except as the enforceability thereof may be limited
by bankruptcy, bank moratorium or similar laws affecting creditors’ rights
generally and laws restricting the availability of equitable remedies and may be
subject to general principles of equity whether or not such enforceability is
considered in a proceeding at law or in equity).

 

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4.5           Ownership. The Selling Stockholders are record, beneficial and
equitable owners of 100% of the issued and outstanding shares of Common Stock of
Catalon and such Selling Stockholders have the full right and authority to
exchange their Catalon Common Stock for shares of GSI Common Stock.

 

4.6           Compliance with the Law and Other Instruments.

 

  (a)          The business and operations of Catalon have been and are being
conducted in all material respects in accordance with all applicable laws, rules
and regulations of all authorities which affect Catalon or its properties,
assets, businesses or prospects.

 

  (b)          Catalon has all material governmental licenses, permits,
authorizations and approvals (the “Permits”) necessary and required by Catalon
to conduct its business. To the knowledge of Catalon, the Permits are validly
held by Catalon, and Catalon is in compliance with the Permits, except for
instances of noncompliance that would not, individually or in the aggregate,
have a material adverse effect. To the knowledge of Catalon, the Permits
constitute all of the governmental licenses, permits, authorizations and
approvals required to carry on the business of Catalon as such business is
presently conducted, except where the failure to have any such license, permit,
authorization or approval would not, individually or in the aggregate, have a
material adverse effect.

 

4.7           Absence of Conflicts. The execution and delivery of this
Agreement, the transfer of the securities of Catalon, and the consummation by
Catalon of the transactions set forth in this Agreement: (i) do not and shall
not conflict with or result in a breach of any provision of Catalon’s
Certificate of Incorporation or By-Laws, (ii) do not and shall not result breach
of, or constitute a default or cause an acceleration under any arrangement,
agreement or other instrument to which Catalon is a party to or by which any of
its assets are bound, (iii) do not and shall not cause Catalon to violate or
contravene any provision of law or any governmental rule or regulation, and (iv)
will not and shall not result in the imposition of any lien, or encumbrance
upon, any property of Catalon. Catalon has performed in all material respects
all of its obligations which are, as of the date of this Agreement, required to
be performed, pursuant to the terms of any such agreement, contract or
commitment.

 

4.8           Environmental Compliance. To Catalon’s knowledge, it is in
compliance with all applicable Environmental Laws. Catalon is presently
authorized, if required, to generate, transport through third parties, store,
use, treat, dispose of, release, and conduct other handling of, as required,
those hazardous substances used in Catalon’s business, which consist of,
hazardous waste, hazardous material, hazardous constituents, toxic substances,
pollutants, contaminants, asbestos, radon, polychlorinated biphenyls, petroleum
product or waste (including crude oil or any fraction thereof), natural gas,
liquefied gas, synthetic gas and other material defined, regulated, controlled
or subject to any remediation requirement under any Environmental Law.

 

 11 

 

 

4.9           Compliance with Occupational and Safety Laws; Employment Matters.

 

  (a)          To Catalon’s knowledge, it is in compliance with all applicable
national, provincial and local laws, rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder and
other governmental requirements relating to occupational health and safety.

 

 (b)          Catalon does not owe any accrued but unpaid salary or other
compensation or benefits to any officer, director, employee or consultant of
Catalon. Except as set forth on the disclosure schedule which has been provided
to GSI in connection herewith (the “Catalon Disclosure Schedule”), Catalon has
no Benefit Plans. The Catalon Disclosure Schedule contains for each or its
officers, directors, employees and consultants his compensation and benefits for
the last two years.

 

4.10         Financial Statements. If the Form 8-k is required to be filed by
GSI in accordance with applicable law, within the time prescribed in Item 9.01
of Form 8-K, Catalon shall provide such financial statements for the filing of
such amendment Report on Form 8-K, as required therein.

 

4.11         Taxes. Catalon has timely filed all required national, provincial,
and local tax returns and has paid or made adequate provision for the payment of
all such taxes whether or not shown to be due on said returns.

 

4.12         Contracts. Catalon’s Disclosure Schedule sets forth a complete list
all of Catalon’s Material contracts including, but not limited to, license
agreements. All of the contracts so listed have been entered into in the
ordinary course of business and neither Catalon nor any other party to any such
contract is in default under any such contract.

 

4.13         Litigation. There are no legal, administrative, arbitration, or
other proceeding or governmental investigations adversely affecting Catalon or
its properties, assets or businesses, or with respect to any matter arising out
of the conduct of the Catalon’s business pending or to its knowledge threatened,
by or against, any officer or director of Catalon in connection with its
affairs, whether or not covered by insurance. Neither Catalon nor its officers
or directors are subject to any order, writ, injunction, or decree of any court,
department, agency, or instrumentality, affecting Catalon. Catalon is not
presently engaged in any legal action.

 

4.14         Absence of Changes. There has not been any material adverse change
in, or any event or condition (financial or otherwise) affecting the business,
properties, assets, liabilities, historical operations or prospects of Catalon,
and except as in the ordinary course of business and with respect to any items
reserved by Catalon and there are no liabilities or obligations of any nature,
whether absolute, contingent or otherwise, whether due or to become due
(including, without limitation, liabilities for taxes with respect to or
measured by income of Catalon or arising out of any transaction of Catalon prior
to the date of this Agreement.

 

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4.15         No Approvals. No approval of any governmental authority is required
in connection with the consummation of the transactions set forth in this
Agreement.

 

4.16         Broker; Finder’s Fee. Catalon represents that it has not had any
dealing with respect to this transaction with any business broker, firm or
salesman, or any person or corporation, investment banker or financial advisor
who is or shall be entitled to any broker’s or finder’s fee or any other
commission or similar fee with respect to the transactions set forth in this
Agreement, except as otherwise indicated herein. Catalon agrees to indemnify and
hold harmless GSI from and against any and all claims for brokerage commissions
or finder’s fees by any person, firm or corporation on the basis of any act or
statement alleged to have been made by Catalon or its affiliates or agents.

 

4.17         Complete Disclosure. No representation or warranty of Catalon which
is contained in this Agreement, or in a writing furnished or to be furnished
pursuant to this Agreement, to Catalon’s knowledge contains or shall contain any
untrue statement of a material fact, omits or shall omit to state any fact which
is required to make the statements which are contained herein or therein, in
light of the circumstances under which they were made, not materially
misleading. There is no fact relating to the business, affairs, operations,
conditions (financial or otherwise) or prospects of Catalon which would
materially adversely affect same which has not been disclosed to GSI in this
Agreement.

 

4.18         No Defense. It shall not be a defense to a suit for damages for any
misrepresentation or breach of covenant or warranty that GSI knew or had reason
to know that any covenant, representation or warranty in this Agreement
furnished or to be furnished to GSI contained untrue statements.

 

ARTICLE 5

 

INVESTMENT

 

Each Selling Stockholder hereby represents, warrants and covenants to GSI, and
acknowledges that GSI is relying upon such representations, warranties and
covenants, in connection with the execution, delivery and performance of this
Agreement, as follows:

 

5.1           The GSI Shares which are being acquired by the Selling Stockholder
are being acquired for the Selling Stockholder's own account and for investment
and not with a view to the public resale or distribution thereof.

 

5.2           The Selling Stockholder will not sell, transfer or otherwise
dispose of the GSI Shares unless, in the opinion of the GSI's counsel, such
disposition conforms with applicable securities laws requirements.

 

5.3           The Selling Stockholder is aware that the GSI Shares are
“restricted securities” as that term is defined in the Rule promulgated under
the Act.

 

5.4           The Selling Stockholder acknowledges that the Selling Stockholder
has had an opportunity to ask questions of and receive answers from duly
designated representatives of GSI concerning the finances of GSI and the
proposed business plan of GSI.

 

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5.5           The Selling Stockholder acknowledges and understands that the GSI
Shares are unregistered and must be held indefinitely unless they are
subsequently registered under the Act or an exemption from such registration is
available.

 

5.6           The Selling Stockholder further acknowledges that the Selling
Stockholder is fully aware of the applicable limitations on the resale of the
GSI Shares.  These restrictions for the most part are set forth in Rule 144.  
Rule 144 permits sales of “restricted securities” upon compliance with the
requirements of such Rule 144.  If and when the Rule 144 is available to the
Selling Stockholder, the Selling Stockholder may make only sales of the GSI
Shares in accordance with the terms and conditions of the rule (which may limit
the amount of GSI Shares that may be sold), as well as this Agreement.

 

5.7           By reason of the Selling Stockholder's knowledge and experience in
financial and business matters in general, and investments in particular, the
Selling Stockholder is capable of evaluating the merits and risks of an
investment by the Selling Stockholder in the GSI Shares.

 

5.8           The Selling Stockholder is capable of bearing the economic risks
of an investment in the GSI Shares.  The Selling Stockholder fully understands
the speculative nature of the GSI Shares and the possibility of loss.

 

5.9           The Selling Stockholder's present financial condition is such that
the Selling Stockholder is under no present or contemplated future need to
dispose of any portion of the GSI Shares to satisfy any existing or contemplated
undertaking, need, or indebtedness.

 

5.10         The Selling Stockholder further agrees that GSI shall have the
right to issue stop-transfer instructions to its transfer agent until such time
as sale is permitted under security laws and acknowledges that GSI has informed
the Selling Stockholder of its intention to issue such instructions.

 

ARTICLE 6

 

CLOSING CONDITIONS

 

6.1           Conditions Precedent to Closing by GSI. The obligation of GSI to
consummate the Transaction is subject to the satisfaction or written waiver of
the conditions set forth below by a date mutually agreed upon by the parties
hereto in writing and in accordance with Article 9. The Closing of the
Transaction contemplated by this Agreement will be deemed to mean a waiver of
all conditions to Closing. These conditions of closing are for the benefit of
GSI and may be waived by GSI in its sole discretion.

 

 (a)          Representations and Warranties of Catalon to be True. To Catalon’s
knowledge, the representations and warranties of Catalon set forth in this
Agreement shall be true in all material respects on the Closing Date with the
same effect as though made at such time, except to the extent waived or affected
by the transactions set forth in this Agreement.

 

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  (b)         Performance of Obligations of Catalon. Catalon shall have
performed all obligations and complied with all covenants set forth in this
Agreement to be performed or complied with in all material respects by it prior
to the Closing Date.

 

  (c)          No Adverse Change. There shall not have occurred any material
adverse change since the date of execution of this Agreement;

 

  (d)          Statutory Requirements. Any statutory requirement for the valid
consummation by Catalon of the transactions set forth in this Agreement shall
have been fulfilled; any authorizations, consents and approvals of all federal,
state and local governmental agencies and authorities required to be obtained,
in order to permit consummation by Catalon of the transactions set forth in this
Agreement and to permit the business presently carried on by Catalon to continue
unimpaired following the Closing Date.

 

  (e)          No Governmental Proceedings. No action or proceeding shall have
been instituted before a court or other governmental body by any governmental
agency or public authority to restrain or prohibit the transactions set forth in
this Agreement.

 

  (f)          Consents Under Agreements. Catalon shall have obtained the
consent or approval of each person whose consent or approval shall be required
in connection with the transactions set forth in this Agreement.

 

  (g)         Shareholder Approval. The approval of the transactions set forth
in this Agreement by the current holders of a majority of the issued and
outstanding shares of the Catalon Common Stock.

 

6.2           Conditions Precedent to Closing by Catalon. The obligation of
Catalon and the Selling Stockholders to consummate the Transaction is subject to
the satisfaction or written waiver of the conditions set forth below by a date
mutually agreed upon by the parties hereto in writing and in accordance with
Article 9. The Closing of the Transaction will be deemed to mean a waiver of all
conditions to Closing. These conditions precedent are for the benefit of Catalon
and the Selling Stockholders and may be waived by Catalon and the Selling
Stockholders in their discretion.

 

  (a)         Representations and Warranties of GSI to be True. To GSI’s
knowledge, the representations and warranties of GSI set forth in this Agreement
shall be true in all material respects on the Closing Date with the same effect
as though made at such time, except to the extent waived or affected by the
transactions set forth in this Agreement.

 

  (b)         Performance of Obligations of GSI. GSI shall have performed all
obligations and complied with all covenants set forth in this Agreement to be
performed or complied with in all material respects by it prior to the Closing
Date.

 

  (c)          No Adverse Change. There shall not have occurred any material
adverse change since the date of the Form 10-Q for the quarter ended June 30,
2015 and through the date of the Closing Date in the business, properties,
results of operations or business or financial condition of GSI.

 

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  (d)         Statutory Requirements. Any statutory requirement for the valid
consummation by GSI of the transactions set forth in this Agreement shall have
been fulfilled; any authorizations, consents and approvals of all federal, state
and local governmental agencies and authorities required to be obtained, in
order to permit consummation by GSI of the transactions set forth in this
Agreement and to permit the business presently carried on by GSI to continue
unimpaired following the Closing Date, shall have been obtained.

 

  (e)          No Governmental Proceedings. No action or proceeding shall have
been instituted before a court or other governmental body by any governmental
agency or public authority to restrain or prohibit the transactions set forth in
this Agreement.

 

  (f)          Consents Under Agreements. GSI shall have obtained the consent or
approval of each person whose consent or approval shall be required in
connection with the transactions set forth in this Agreement.

 

ARTICLE 7

 

PRE-CLOSING AND POST-CLOSING COVENANTS

 

The Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing:

 

7.1           General. Each of the Parties will use its reasonable best efforts
to take all actions and to do all things necessary and advisable in order to
consummate and make effective the transactions contemplated by this Agreement,
including satisfaction, but not waiver, of the Closing conditions set forth in
Section 9 below.

 

7.2           Notices and Consents. Each of the Parties will give any notices
to, make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred herein.

 

7.3           Operation and Preservation of Business. GSI will continue to
operate the GSI Business, including its present operations, working conditions,
and relationships with, licensors, suppliers, customers, and employees subject
to the terms of Section 6.2 above. Further, GSI will not engage in any practice,
take any action, or enter into any transaction outside the ordinary course of
business. Without limiting the generality of the foregoing, GSI will not (i)
declare, set aside, or pay any dividend or make any distribution with respect to
its capital stock or redeem, purchase, or otherwise acquire any of its capital
stock; or, (ii) pay any amount to any third party with respect to any liability
or obligation including any costs and expenses GSI has incurred or may incur in
connection with this Agreement and the transactions contemplated hereby that
would not constitute an Assumed Liability if in existence as of the Closing.

 

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7.4           Confidentiality. All information regarding the business of GSI and
Catalon provided to each other during due diligence investigation will be kept
in strict confidence and will not be used (except in connection with due
diligence), dealt with, exploited or commercialized by either party or disclosed
to any third party (other than or GSI’s professional accounting and legal
advisors) without the prior written consent of the other party. If the
Transaction contemplated by this Agreement does not proceed for any reason, then
upon receipt of a written request from either party, each party will immediately
return to the requestor any information received regarding the others business.

 

7.5           Full Access. Catalon will permit representatives of GSI, including
legal counsel and accountants, to have full access at all reasonable times, and
in a manner so as not to interfere with the normal business operations of
Catalon to all premises, properties, personnel, books, records, contracts, and
documents of or pertaining to Catalon. GSI will treat and hold as such any
Confidential Information it receives from any Catalon Stockholder and Catalon in
the course of the reviews contemplated by this Section 7.5, will not use any of
the Confidential Information except in connection with this Agreement, and, if
this Agreement is terminated for any reason whatsoever, will return to Catalon
Stockholders and Catalon all tangible embodiments of the Confidential
Information that are in its possession.

 

7.6           Notice of Developments. Each Party will give prompt written notice
to the other Party of any material adverse development causing a breach of any
of its own representations and warranties in Section 3 and Section 4 above. No
disclosure by any Party pursuant to this Section 7.5, however, shall be deemed
to prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.

 

ARTICLE 8

 

ADDITIONAL COVENANTS OF THE PARTIES

 

8.1           Notification. Between the date of this Agreement and the Closing
Date, each of the parties to this Agreement will promptly notify the other
parties in writing if it becomes aware of any fact or condition that causes or
constitutes a material breach of any of its representations and warranties as of
the date of this Agreement, if it becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would cause or constitute a
material breach of any such representation or warranty had such representation
or warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the Schedules
relating to such party, such party will promptly deliver to the other parties a
supplement to the Schedules specifying such change. During the same period, each
party will promptly notify the other parties of the occurrence of any material
breach of any of its covenant in this Agreement or of the occurrence of any
event that may make the satisfaction of such conditions impossible or unlikely.

 

8.2           Exclusivity. Until such time, if any, as this Agreement is
terminated pursuant to this Agreement, Catalon, the Selling Stockholders and GSI
will not, directly or indirectly solicit, initiate, entertain or accept any
inquiries or proposals from, discuss or negotiate with, provide any non-public
information to, or consider the merits of any unsolicited inquiries or proposals
from, any person or entity relating to any transaction involving the sale of the
business or assets (other than in the ordinary course of business), or any of
the capital stock of Catalon or GSI, as applicable, or any merger,
consolidation, business combination, or similar transaction other than as
contemplated by this Agreement.

 

 17 

 

 

8.3           Conduct of Catalon and GSI Business Prior to Closing. From the
date of this Agreement to the Closing Date, and except to the extent that GSI
otherwise consents in writing, Catalon will operate its business substantially
as presently operated and only in the ordinary course and in compliance with all
applicable laws, and use its best efforts to preserve intact its good reputation
and present business organization and to preserve its relationships with persons
having business dealings with it. Likewise, from the date of this Agreement to
the Closing Date, and except to the extent that Catalon otherwise consents in
writing, GSI will operate its business substantially as presently operated and
only in the ordinary course and in compliance with all applicable laws, and use
its best efforts to preserve intact its good reputation and present business
organization and to preserve its relationships with persons having business
dealings with it.

 

8.4           Certain Acts Prohibited. Except as expressly contemplated by this
Agreement or for purposes in furtherance of this Agreement, between the date of
this Agreement and the Closing Date, neither Catalon nor GSI will not, without
the prior written consent of the other:

 

  (a)          amend its articles, bylaws or other incorporation documents;

 

  (b)          incur any liability or obligation other than in the ordinary
course of business or encumber or permit the encumbrance of any properties or
assets except in the ordinary course of business;

 

  (c)          dispose of or contract to dispose of any property or assets,
including the Intellectual Property Assets, except in the ordinary course of
business consistent with past practice;

 

  (d)          issue, deliver, sell, pledge or otherwise encumber or subject to
any lien any shares of the Common Stock, Preferred Stock, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities;

 

  (e)          (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of the Common Stock; or (ii) split, combine or
reclassify any Common Stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of Common
Stock; or

 

  (f)          not materially increase benefits or compensation expenses, other
than as contemplated by the terms of any employment agreement in existence on
the date of this Agreement, increase the cash compensation of any director,
executive officer or other key employee or pay any benefit or amount not
required by a plan or arrangement as in effect on the date of this Agreement to
any such person.

 

8.5           Public Announcements. GSI and Catalon and the Selling Stockholders
each agree that they will not release or issue any reports or statements or make
any public announcements relating to this Agreement or the Transaction
contemplated herein without the prior written consent of the other party, except
as may be required upon written advice of counsel to comply with applicable laws
or regulatory requirements after consulting with the other party hereto and
seeking their reasonable consent to such announcement. Catalon and the Selling
Stockholders acknowledges that GSI must comply with securities laws requiring
full disclosure of material facts and agreements in which it is involved, and
will co-operate to assist GSI in meeting its obligations.

 

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ARTICLE 9

 

CLOSING

 

9.1           Closing. The Closing shall take place on the Closing Date at the
offices of Burns & Levinson LLP, 125 Summer Street, Boston, MA 02110 or at such
other location as agreed to by the parties. Notwithstanding the location of the
Closing, each party agrees that the Closing may be completed by the exchange of
undertakings between the respective legal counsel for Catalon and GSI, provided
such undertakings are satisfactory to each party’s respective legal counsel.

 

9.2           Closing Deliveries of Catalon and the Selling Stockholders. At
Closing, Catalon and the Selling Stockholders will deliver or cause to be
delivered the following, fully executed and in the form and substance reasonably
satisfactory to GSI:

 

  (a)          copies of all resolutions and/or consent actions adopted by or on
behalf of the board of directors and shareholders of Catalon evidencing approval
of this Agreement and the Transaction;

 

  (b)          share certificates representing the Catalon Shares as required by
Section 2.3 of this Agreement;

 

  (c)          all certificates and other documents required by Article 2, of
this Agreement; and

 

  (d)          any other necessary documents, each duly executed by Catalon or
the Selling Stockholders, as required to give effect to the Transaction.

 

9.3           Closing Deliveries of GSI. At Closing, GSI will deliver or cause
to be delivered the following, fully executed and in the form and substance
reasonably satisfactory to Catalon:

 

  (a)          copies of all resolutions and/or consent actions adopted by or on
behalf of the board of directors of GSI evidencing approval of this Agreement
and the Transaction;

 

  (b)          the share certificates representing 13,000,000 restricted GSI
Shares registered to the Selling Stockholders in such denominations pursuant to
Section 2.2;

 

  (c)          all certificates and other documents required by Article 2, of
this Agreement; and

 

  (d)          any other necessary documents, each duly executed by GSI, as
required to give effect to the Transaction.

 

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ARTICLE 10

 

TERMINATION

 

10.1         Termination. This Agreement may be terminated at any time prior to
the Closing Date contemplated hereby by:

 

  (a)          mutual agreement of GSI and Catalon;

 

  (b)          GSI, if there has been a material breach by Catalon or any of the
Selling Stockholders of any material representation, warranty, covenant or
agreement set forth in this Agreement on the part of Catalon or the Selling
Stockholders that is not cured, to the reasonable satisfaction of GSI, within
ten business days after notice of such breach is given by GSI (except that no
cure period will be provided for a breach by Catalon or the Selling Stockholders
that by its nature cannot be cured);

 

  (c)          Catalon, if there has been a material breach by GSI of any
material representation, warranty, covenant or agreement set forth in this
Agreement on the part of GSI that is not cured by the breaching party, to the
reasonable satisfaction of Catalon, within ten (10) business days after notice
of such breach is given by Catalon (except that no cure period will be provided
for a breach by GSI that by its nature cannot be cured);

 

  (d)          GSI or Catalon if any injunction or other order of a governmental
entity of competent authority prevents the consummation of the Transaction
contemplated by this Agreement.

 

10.2         Effect of Termination. In the event of the termination of this
Agreement as provided in Section 10.1, this Agreement will be of no further
force or effect, provided, however, that no termination of this Agreement will
relieve any party of liability for any breaches of this Agreement that are based
on a wrongful refusal or failure to perform any obligations.

 

ARTICLE 11

 

INDEMNIFICATION

 

11.1         Indemnification by GSI. In order to induce Catalon and the Selling
Stockholders to enter into and perform this Agreement, GSI hereby indemnifies,
protects, defends and saves and holds harmless Catalon and each of its
stockholders, affiliates, officers, directors, control persons, employees,
attorneys, agents, partners and trustees and personal representatives of any of
the foregoing (“Catalon Indemnified Parties”), from and against any loss
resulting to any of them from any loss, liability, cost, damage, or expense in
excess of $50,000 (the “Threshold”), which the Catalon Indemnified Parties may
suffer, sustain or incur arising out of or due to a breach by GSI of the
representations, warranties and covenants set forth in Article 2, of, and
elsewhere in, this Agreement or in any documents delivered pursuant hereto or of
a breach by GSI of any of its obligations pursuant to this Agreement or in any
documents delivered pursuant hereto.

 

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11.2         Indemnification by the Selling Stockholders. In order to induce GSI
to enter into and perform this Agreement, the Selling Stockholders (and Catalon,
provided Catalon’s obligations hereunder shall cease upon the Closing) hereby
jointly and severally indemnify, protect, defend and save and hold harmless GSI
and each of its stockholders, affiliates, officers, directors, control persons,
employees, attorneys, agents, partners and trustees and personal representatives
of any of the foregoing (“GSI Indemnified Parties”), from and against any loss
resulting to any of them from any loss, liability, cost, damage, or expense in
excess of the Threshold, which the GSI Indemnified Parties may suffer, sustain
or incur arising out of or due to a breach by Catalon or the Selling
Stockholders of the representations, warranties and covenants set forth in
Article 4, of, and elsewhere in, this Agreement or in any documents delivered
pursuant hereto or of a breach by Catalon or the Selling Stockholders of any of
their obligations pursuant to this Agreement, including, but not limited to, any
damages suffer by not meeting the Minimum Sales Targets in addition to the
remedies in Section 2.4, or in any documents delivered pursuant hereto.

 

11.3         Reasonable Costs, Etc. The indemnification, which is set forth in
this Article 11, of this Agreement shall be deemed to include not only the
specific liabilities or obligation with respect to which such indemnity is
provided, but also all counsel fees, reasonable costs, expenses and expenses of
settlement relating thereto, whether or not any such liability or obligation
shall have been reduced to judgment; provided, however, that, there shall be a
threshold of $50,000 in the aggregate which must be exceeded before GSI or the
Selling Stockholders, as the case may be, may recover any damages or costs
pursuant this Article 11. Once the Bucket has been exceeded, however, the party
seeking indemnity is entitled to recover all damages suffered or costs incurred,
and not just those damages suffered or costs incurred in excess of the
Threshold.

 

11.4         Third Party Claims. If any demand, claim, action or cause of
action, suit, proceeding or investigation (collectively, the “Claim”) is brought
against an Indemnified Party for which the Indemnified Party intends to seek
indemnity from the other party hereto (the “Indemnifying Party”), then the
Indemnified Party within ten (10) days after such Indemnified Party’s receipt of
the Claim, shall notify the Indemnifying Party pursuant to this Article 11,
which notice shall contain a reasonably thorough description of the nature and
amount of the Claim (the “Claim Notice”). The Indemnifying Party shall have the
option to undertake, conduct and control the defense of such claim or demand.
Such option to undertake, conduct and control the defense of such claim or
demand shall be exercised by notifying the Indemnified Party within ten (10)
days after receipt of the Claim Notice pursuant to the terms of this Agreement
(such notice to control the defense is hereinafter referred to as the “Defense
Notice”). The failure of the Indemnified Party to notify the Indemnifying Party
of the Claim shall not relieve the Indemnifying Party from any liability which
the Indemnifying Party may have pursuant to this Article 11, except to the
extent that such failure to notify the Indemnifying Party prejudices the
Indemnifying Party. The Indemnified Party shall use all reasonable efforts to
assist the Indemnifying Party in the vigorous defense of the Claim. All costs
and expenses incurred by the Indemnified Party in defending the Claim shall be
paid by the Indemnifying Party. If, however, the Indemnified Party desires to
participate in any such defense or settlement, it may do so at its sole cost and
expense (it being understood that the Indemnifying Party shall be entitled to
control the defense). The Indemnified Party shall not settle the Claim. If the
Indemnifying Party does not elect to control the defense of the Claim, within
the aforesaid ten (10) day period by proper notice pursuant to the terms of this
Agreement, then the Indemnified Party shall be entitled to undertake, conduct
and control the defense of the Claim (a failure by the Indemnifying Party to
send the Defense Notice to the Indemnified Party within the aforesaid ten (10)
day period by proper notice pursuant to this Article 11, shall be deemed to be
an election by the Indemnifying Party not to control the defense of the Claim);
provided, however, that the Indemnifying Party shall be entitled, if it so
desires, to participate therein (it being understood that in such circumstances,
the Indemnified Party shall be entitled to control the defense). Regardless of
which party has undertaken to defend any claim, the Indemnifying Party may,
without the prior written consent of the Indemnified Party, settle, compromise
or offer to settle or compromise any such claim or demand; provided however,
that if any settlement would result in the imposition of a consent order,
injunction or decree which would restrict the future activity or conduct of the
Indemnified Party, the consent of the Indemnified Party shall be a condition to
any such settlement. Notwithstanding the foregoing provisions of this Article
11, as a condition to the Indemnifying Party either having the right to defend
the Claim, or having control over settlement as indicated in this Article 11,
the Indemnifying Party shall execute an agreement, satisfactory to the other
party acknowledging its liability for indemnification pursuant to this Article
11. Whether the Indemnifying Party shall control and assume the defense of the
Claim or only participate in the defense or settlement of the Claim, the
Indemnified Party shall give the Indemnifying Party and its counsel access,
during normal business hours, to all relevant business records and other
documents, and shall permit them to consult with its employees and counsel.

 

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ARTICLE 12

 

MISCELLANEOUS

 

12.1         Headings. Headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

 

12.2         Enforceability. If any provision which is contained in this
Agreement, should, for any reason, be held to be invalid or unenforceable in any
respect under the laws of any State of the United States, such invalidity or
unenforceability shall not affect any other provision of this Agreement and in
this Agreement shall be construed as if such invalid or unenforceable provision
had not been contained herein.

 

12.3         Notices. All notices, requests, demands and other communications
under this Agreement, shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given or within five (5) business days if mailed to the party to whom
notice is to be given, by first-class mail, registered, or certified, postage
prepaid (or similar mailing methods with respect to foreign jurisdictions) and
properly addressed as follows:

 

If to GSI:

 

General Steel Holdings, Inc.

Level 2, Building G,

No. 2A Chen Jia Lin, Ba Li Zhuang

Chaoyang District, Beijing, China 100025

 

With a copy to:

 

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Stephen D. Brook, Esq.
Burns & Levinson LLP
125 Summer Street
Boston, MA 02110-1624

 

If to Catalon:

 

Catalon Chemical Corp.

113 Barksdale Professional CTR

Newark, DE 19711

 

If to the Selling Security Holders:

 

Zhu: Suite 401, Block 2, No. 23 Huangsidajie Street, Xicheng District, Beijing
China 100120

 

Lindenburg: P.O. Box 957, offshore incorporation Center, road town, Tortola,
British Virgin Islands; and Mr. Qilin Li, Flat F, 22/F, tower 1, Star Crest, 9
Star St., Hong Kong )

 

Du: Suite 1301, Building 1, Huihuang International Center, Shangdi 10. St.,
Haidian District, Beijing, China 

 

Any notice mailed to any party hereunder will be deemed effective within five
(5) business days of deposit in the United States or other applicable foreign
mail.

 

12.4         Governing Law: Disputes. This Agreement shall in all respects be
construed, governed, applied and enforced under the internal laws of the State
of Nevada without giving effect to the principles of conflicts of laws and be
deemed to be an agreement entered into in the State of Nevada and made pursuant
to the laws of the State of Nevada.

 

12.5         Expenses. Each party to this Agreement shall bear and pay its own
costs and expenses incurred in connection with the preparation, execution, and
delivery of this Agreement and the transactions set forth in this Agreement.

 

12.6         Construction. Each of the parties hereto hereby further
acknowledges and agrees that each has been advised by counsel during the course
of negotiations and had significant input in the development of this Agreement
and this Agreement shall not, therefore, be construed more strictly against any
party responsible for its drafting regardless of any presumption or rule
requiring construction against the party whose attorney drafted this agreement.

 

12.7         Entire Agreement. This Agreement and all documents and instruments
refereed to herein (a) constitute the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof, and (b) except as provided in
Section 12.11 of this Article 12, are not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder. Each party
hereto agrees that, except for the representations and warranties contained in
this Agreement, neither GSI or Catalon or any Selling Stockholder makes any
other representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement or the transactions
contemplated hereby, notwithstanding the delivery or disclosure to the other or
the other’s representatives of any documentation or other with respect to any
one or more of the foregoing.

 

 23 

 

  

12.8         Further Assurances. The parties agree to execute any and all such
other further instruments and documents, and to take any and all such further
actions which are reasonably required to effectuate this Agreement and the
intents and purposes hereof.

 

12. 9        Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors, administrators,
personal representatives, successors and assigns.

 

12.10       Non-Waiver. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged; and (i) the failure of any party to insist in any one or
more cases upon the performance of any of the provisions, covenants or
conditions of this Agreement or to exercise any option herein contained shall
not be construed as a waiver or relinquishment for the future of any such
provisions, covenants or conditions, (ii) the acceptance of performance of
anything required by this Agreement to be performed with knowledge of the breach
or failure of a covenant, condition or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of one breach
by another party shall be construed as a waiver of any other or subsequent
breach.

 

12.11       Third Party Beneficiaries. This Agreement and all documents and
instruments referred to herein, except as provided in Section 2 of this
Agreement, are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.

 

12.12       Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

12.13       Exhibits. All Exhibits and schedules annexed or attached to this
Agreement are incorporated into this Agreement by reference thereto and
constitute an integral part of this Agreement.

 

12.14       Severability. The provisions of this Agreement shall be deemed
separable. Therefore, if any part of this Agreement is rendered void, invalid or
unenforceable, such rendering shall not affect the validity or enforceability of
the remainder of this Agreement; provided, however, that if the part or parts
which are void, invalid or unenforceable as aforesaid shall substantially impair
the value of this whole Agreement to any party, that party may cancel and
terminate this Agreement by giving written notice to the other party.

 

 24 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

GENERAL STEEL HOLDINGS, INC.   A Nevada Corporation       /s/ John Chen   By:
John Chen   Title: CFO       CATALON CHEMICAL CORP.   A Delaware Corporation    
  /s/ Anyuan Zhu   By: Anyuan Zhu   Title:       SELLING STOCKHOLDERS       /s/
Anyuan Zhu   Anyuan Zhu       Lindenburg Ventures, Ltd.       By: /s/ Qilin Li  
Name: Qilin Li   Title: President       /s/ Honghui Du   Honghui Du