Unassociated Document


    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 Bill 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/
      Yang
      Baoyin                                                              


    By:
      Yang
      Baoyin

    Its:
      Director

     

     

    
      
        
        

      

      
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