Document:

Consulting Agreement

 Exhibit 10.2 
 CONSULTING AGREEMENT 
 This Consulting Agreement
(“Agreement”) is dated as of the 3rd day of December, 2012 (the “Effective Date”), by and between Vermillion, Inc. (the “Company”) and Gail S. Page (“Consultant”). The Company
desires to retain Consultant as an independent contractor to perform consulting services for the Company, and Consultant is willing to perform such services, on terms set forth more fully below. In consideration of the mutual promises contained
herein, the parties hereto (the “Parties”) agree as follows: 
 1. SERVICES AND
CONSIDERATION 
 (a) Consultant shall act as a consultant and advisor to the Company and perform the services as
described in Exhibit A (the “Services”). 
 (b) The Company shall pay Consultant the compensation set
forth in Exhibit A for the performance of the Services. The Company shall also reimburse Consultant for approved reimbursable travel expenses incurred by Consultant in performing the Services pursuant to this Agreement, in accordance with the
Company’s expense reimbursement policy as in effect from time to time. 
 (c) Consultant shall submit all statements for
Services and reimbursable travel expenses on a monthly basis in a form approved by the Company. The Company shall pay each such statement within fifteen (15) days after receipt. 

2. CONFIDENTIALITY 
 (a) Definition. “Confidential Information” means any information, technical, data, trade secrets or know-how that the Company considers to be confidential or proprietary including,
but not limited to, research, product plans, products, services, suppliers, customer lists and customers, prices and costs, markets, software, developments, inventions, laboratory notebooks, processes, formulas, technology, designs, drawings,
engineering, hardware configuration information, marketing, licenses, finances, compensation packages, budgets or other business information disclosed by the Company either directly or indirectly in writing, orally or by drawings, or through
Consultant’s allowed observation of parts or equipment, or through creation by Consultant in the course of providing the Services during the term of this Agreement. Consultant also understands that Confidential Information includes, but is not
limited to, information pertaining to any aspects of the Company’s business that is either information not known by actual or potential competitors of the Company or is proprietary information of the Company or its customers or suppliers,
whether of a technical nature or otherwise. Further, Confidential Information, as defined herein, may include, but is not limited to, information disclosed to the Company by third parties. Confidential Information does not include information that
Consultant can establish: (i) was publicly known and made generally available in the public domain prior to the time of disclosure to Consultant by the Company; (ii) becomes publicly known and made generally available after the disclosure
to Consultant by the Company through no wrongful action or inaction of Consultant; (iii) is in the possession of Consultant, without confidentiality restrictions, at the time of disclosure to Consultant by the

 
Company as shown by Consultant’s files and records immediately prior to the time of disclosure; or (iv) has been approved for release by the Company’s prior written authorization.

 (b) Non-Use and Non-Disclosure. Consultant will not, during or subsequent to the term of this Agreement, use the
Company’s Confidential Information for any purpose whatsoever other than the performance of the Services on behalf of the Company. Consultant will not, during or subsequent to the term of this Agreement, disclose the Company’s Confidential
Information to any third party. Consultant shall not reverse engineer, disassemble or decompile any prototypes, software or other tangible objects, that embody the Company’s Confidential Information. Consultant further agrees to take all
reasonable precautions to prevent any unauthorized disclosure of such Confidential Information including, but not limited to, having each employee of Consultant, if any, with access to any Confidential Information, execute a non-disclosure agreement
containing provisions no less favorable to the Company and protective of Confidential Information unless Consultant has received prior written approval for such action from the Company; and in such event, Consultant shall reproduce on any such
approved copies any of Company’s proprietary rights and confidentiality notices in the same manner in which such notices were set forth in or on the original. Consultant shall immediately notify the Company in the event of any unauthorized use
or disclosure of Confidential Information. 
 (c) Former or Concurrent Employer’s Confidential Information.
Consultant agrees that Consultant will not, during the term of this Agreement, improperly use, disclose, or induce the Company to use any proprietary information or secrets of any third party. Consultant will not bring onto the premises of the
Company unpublished document or proprietary information belonging to any third party. Consultant will indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys’
fees and other legal expenses, arising out of or connection with any violation or claimed violation of a third party’s rights resulting in whole or in part from the Company’s use of the work product of Consultant under this Agreement.

 (d) Third Party Confidential Information. Consultant recognizes that the Company has received and in the future will
receive confidential or proprietary information of third parties subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. Consultant agrees that Consultant owes
the Company and such third parties, during the terms of the Agreement and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm, corporation or other entity
or to use it except as necessary in carrying out the Services for the Company consistent with the Company’s agreement with such third party. 
 (e) Return of Materials. All documents and other tangible objects containing or representing Confidential Information and all copies thereof that are in the possession of Consultant shall be and
remain the property of the Company, and Consultant shall promptly return such Confidential Information and all copies thereof to the Company upon termination of this Agreement or upon the Company’s earlier request. 

  
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 3. OWNERSHIP 

(a) Assignment. Consultant agrees that all copyrightable material, notes, records, drawings, designs, inventions, improvements,
developments, discoveries and trade secrets (collectively, “Inventions”) conceived, made or discovered by Consultant, solely or in collaboration with others, during the period of this Agreement that relate in any manner to the
business of the Company that Consultant may be directed to undertake, investigate or experiment with, or that Consultant may become associated with in work, investigation or experimentation in the line of business of the Company in performing the
Services hereunder, are the sole property of the Company. In addition, any Inventions made by Consultant that constitute copyrightable subject matter shall be considered “works made for hire” as that term is defined in the United States
Copyright Act. Consultant hereby assigns fully (and agrees to further assign or cause to be assigned, as necessary to effect such full assignment) to the Company all Inventions and any copyrights, patents, or other intellectual property rights
relating thereto. 
 (b) Further Assurances. Consultant agrees to assist the Company, or its designee, at the
Company’s expense, in every proper way to secure the Company’s rights in the Inventions and any copyrights, patents, or other intellectual property rights relating thereto in any and all countries, including in the disclosure to the
Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments that the Company shall deem necessary in order to apply for and obtain such rights
and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive right, title and interest in and to such Inventions, and any copyrights, patents, or other intellectual property rights relating thereto.
Consultant further agrees that Consultant’s obligation to execute or cause to be executed any such instrument or papers, when it is in Consultant’s power to do so, shall continue after the termination of this Agreement. 

(c) Pre-Existing Materials. Consultant agrees that if, in the course of performing the Services, Consultant incorporates into any
Invention developed hereunder any invention, improvement, development, concept, discovery or other proprietary information owned by Consultant or in which Consultant has an interest (i) Consultant shall inform the Company, in writing, before
incorporating such invention, improvement, development, concept, discovery or other proprietary information into any Invention; and (ii) the Company is hereby granted and shall have a nonexclusive, royalty-free, perpetual, irrevocable,
worldwide, transferable license (with the right to sublicense) to make, have made, modify, use, sell and/or import such item as part of or in connection with such Invention. In addition, Consultant agrees that Consultant will promptly make full
written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company, or its designees, all Consultant’s right, title and interest in and to any Inventions created within three
(3) years after the termination of this Agreement that are based upon or derived from Confidential Information, and Consultant agrees that such Inventions are and shall be the sole and exclusive property of the Company. Nothing in the preceding
sentence shall be construed to limit Consultant’s obligations under Section 2 (“Confidentiality”) of this Agreement. Consultant shall not incorporate any invention, improvement development, concept, discovery or other proprietary
information owned by any third party into any Invention without Company’s prior written permission. 

  
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 (d) Attorney in Fact. Consultant agrees that if the Company is unable, because of
Consultant’s unavailability, dissolution, mental or physical incapacity, or for any other reason, to secure Consultant’s signature to apply for or to pursue any application for any United States or foreign jurisdiction’s patents or
copyright registrations covering the Inventions assigned to the Company above, then Consultant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Consultant’s agent and attorney in fact, to act
for and in Consultant’s behalf and to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents and copyright registrations with the same legal force and effect as if
executed by Consultant. 
 4. NON-COMPETE AND NON-SOLICITATION 

During the terms of Consultant’s engagement and for a period of six (6) months immediately following the termination or
expiration of its engagement, Consultant shall not directly or indirectly (i) carry on any business or activity that competes directly or indirectly with the Company for a radius of fifty (50) miles from the present location of the Company
in Austin, Texas, (ii) solicit or induce any employee or consultant of the Company to quit their employment or cease doing business with the Company, or (iii) solicit any actual or potential customer of the Company for any business that
competes directly or indirectly with the Company, unless Consultant is specifically authorized to do (i), (ii) or (iii) with the prior written consent of the Company. Consultant acknowledges that the restrictions set forth in this
Section 4 are reasonable and necessary for the proper fulfillment of its consulting obligations. 
 5.
CONFLICTING OBLIGATIONS 
 Consultant certifies that Consultant has no outstanding agreement or obligation that is in
conflict with any of the provision of this Agreement, or that would preclude Consultant from complying with the provision hereof, and further certifies that Consultant will not enter into any such conflicting agreement. 

6. TERM AND TERMINATION 

(a) Term. This Agreement will commence on the Effective Date and will continue in full force and effect for an initial term of six
(6) months (the “Initial Term”). This Agreement may be renewed by the Parties, for an additional six-month (6-month) term, unless terminated pursuant to Section 6(b) below. 

(b) Termination. Either Party may termination this Agreement for any reason or no reason upon giving thirty (30) days’
prior written notice thereof to the other Party, but in no event shall the Company terminate this Agreement during the Initial Term. Any such notice shall be addressed to the other Party at the address shown below and shall be deemed given upon
delivery if personally delivered, or forty-eight (48) hours after deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested. 

(c) Survival. Upon termination of this Agreement, all rights and duties of the Parties toward each other shall cease except that:

  
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 (i) the Company shall be obliged to pay, within thirty (30) days of the effective date
of termination, any amounts owing to Consultant for Services or reimbursable travel expenses, if any, in accordance with the provision of Section 1 (“Services and Consideration”) hereof; and 

(ii) Sections 2 (“Confidentiality”), 3 (“Ownership”), 4 (“Non-Compete and Non-Solicitation”), 8
(“Independent Contractor”) and 10 (“Arbitration and Equitable Relief”) and such other provision that by their terms extend shall survive termination of this Agreement. 

7. ASSIGNMENT AND SUCCESSORS 
 Neither this Agreement nor any right hereunder or interest herein may be assigned or transferred by Consultant without the express written consent of the Company. The rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company. This Agreement shall be assignable by the Company in the event of a merger or similar transaction in which the Company is not
the surviving entity, or of a sale of all or substantially all of the Company’s assets. 
 8. INDEPENDENT
CONTRACTOR 
 The express intention of the Parties is that Consultant is an independent contractor to the Company
hereunder. Nothing in this Agreement shall in any way be construed to constitute Consultant as an agent, employee or representative of the Company, but Consultant shall perform the Services hereunder as an independent contractor. Consultant agrees
to furnish (or reimburse the Company for) all tools and materials necessary to accomplish this Agreement, and shall incur all expenses associated with performance without reimbursement from the Company, except as expressly provided herein.
Consultant acknowledges and agrees that Consultant is obligated to report as income to all applicable taxing authorities all compensation received by Consultant pursuant to this Agreement, and Consultant agrees to and acknowledges the obligation to
pay all self-employment and other taxes thereon. Consultant further agrees to indemnify and hold harmless the Company and its directors, officers, and employees from and against all taxes, losses, damages, liabilities, costs and expenses, including
attorneys’ fees and other legal expenses, arising directly or indirectly from (i) any negligent, reckless or intentionally wrongful act of Consultant or Consultant’s assistants, employees or agents, (ii) a determination by a
court or agency that Consultant is not an independent contractor, or (iii) any breach by Consultant or Consultant’s assistants, employees or agents of any of the covenants contained in this Agreement. 

9. BENEFITS 
 Consultant acknowledges and agrees and the Parties’ intent hereunder is that Consultant receive no Company-sponsored benefits from the Company either as a Consultant or an employee. Such benefits
include, but are not limited to, paid vacation, sick leave, medical insurance, and 401(k) participation. If Consultant is reclassified by a state or federal agency or court as an employee, the Company may elect to have Consultant become a
reclassified employee, receiving no benefits except those mandated by state or federal law, even if by the 

  
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terms of the Company’s standard benefit plans in effect at the time of such reclassification Consultant would otherwise be eligible for such benefits. 

10. ARBITRATION AND EQUITABLE RELIEF 
 (a) Disputes. Except as provided in Section 10(d) below, the Company and Consultant agree that any dispute or controversy arising out of, relating to or in connection with the interpretation,
validity, construction, performance, breach or termination of this Agreement shall be settled by binding arbitration to be held in Austin, Texas in accordance with the Commercial Arbitration Rules, supplemented by the Supplemental Procedures for
Large Complex Disputes, of the American Arbitration Association as then in effect (the “Rules”). The arbitrator may grant injunctions or other relief in such disputes or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court of competent jurisdiction. 
 (b) Consent to Personal Jurisdiction. The arbitrator(s) shall apply Texas law to the merits of any dispute or claim, without reference to conflicts of law rules. Consultant hereby consents to the
personal jurisdiction of the state and federal courts in Texas for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the Parties are participants. 

(c) Equitable Relief. The Parties may apply to any court of competent jurisdiction for a temporary restraining order, preliminary
injunction, or other interim or conservatory relief, as necessary, without breach of this arbitration provision and without abridgment of the powers of the arbitrator. Consultant further agrees, for the purposes of this Sections 10(a)
and 10(c) of this Agreement, that any breach of the covenants set forth in Sections 2 (“Confidentiality”), 3 (“Ownership”) and 4 (“Non-Compete and Non-Solicitation”) of this Agreement would cause the
Company irreparable injury for which it would not have an adequate remedy at law. Accordingly, Consultant agrees that if Consultant breaches Sections 2 (“Confidentiality”), 3 (“Ownership”), or 4 (“Non-Compete and
Non-Solicitation”) of this Agreement, the Company will be entitled, in addition to any other right or remedy available, to temporary or preliminary equitable relief (including, but not limited to, a temporary restraining order or a preliminary
injunction) from a court of competent jurisdiction restraining such breach or threatened breach and final and permanent equitable relief (including, but not limited to, the granting of a permanent injunction and the ordering of specific performance)
from the arbitrator restraining such breach or threatened breach. 
 (d) Acknowledgment. CONSULTANT HAS READ AND
UNDERSTANDS THIS SECTION 10 (“ARBITRATION AND EQUITABLE RELIEF”), WHICH DISCUSSES ARBITRATION. CONSULTANT UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, CONSULTANT AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION
WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION HEREOF, TO BINDING ARBITRATION, EXCEPT AS PROVIDED IN SECTION 10(c), AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF
CONSULTANT’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION 

  
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OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE RELATIONSHIP BETWEEN THE PARTIES. 
 11. GOVERNING LAW 
 This Agreement shall be governed by the
internal substantive laws, but not the choice of law rules, of the State of Texas. 
 12. ENTIRE AGREEMENT;
AMENDMENT 
 This Agreement is the entire agreement of the Parties and supersedes any prior agreements between them,
whether written or oral, with respect to the subject matter hereof. No waiver, alteration, or modification of any of the provisions of this Agreement shall be binding unless in writing and signed by duly authorized representatives of the Parties.

 13. ATTORNEYS’ FEES 
 In any court action at law or equity that is brought by one of the Parties to enforce or interpret the provisions of this Agreement, the prevailing Party will be entitled to reasonable attorneys’
fees and other legal expenses, in addition to any other relief to which that Party may be entitled. 
 14.
SEVERABILITY 
 If one or more of the provisions in this Agreement are deemed void by law, then the remaining
provisions will continue in full force and effect. 
 15. TITLES AND SUBTITLES 

The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting
this Agreement. 
 [Signatures appear on immediately following page.] 

  
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 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

  

									
	 	 	 	 	 	 	 VERMILLION, INC.

12117 Bee Caves Road
 Building Three, Suite
100
 Austin TX 78738

					
	By:	 	 /s/ Gail S. Page
	 		 	By:	 	 /s/ Bruce A. Huebner

	Name:	 	Gail S. Page	 		 	Name:	 	Bruce A. Huebner
	Title:	 	Consultant	 		 	Title:	 	Interim President and Chief Executive Officer

 EXHIBIT A 
 1. Description of Services 
 Consultant shall provide
Services upon the Company’s request from time to time, which are anticipated to include, without limitation, advice and recommendations with respect to the development and commercialization of the Company’s existing and future diagnostic
tests, including, without limitation, OVA1, OVA2 and PAD tests, and managing and developing relationships with existing and future collaborators and partners (including Quest Diagnostics Incorporated) and advocacy of OVA1. Consultant shall provide
any additional Services upon the Company’s request from time to time. Consultant will provide services in Austin, Texas and will travel as needed, including to collaborator and partner locations, academic medical centers, banking and other
conferences, and other locations as necessary or advisable in performance of Consultant’s duties. 
 2.
Compensation 
 (a) An $18,000 per month retainer shall be paid on the date hereof and on each monthly anniversary
thereafter until this Agreement expires or is terminated in accordance with Sections 6(a) or 6(b) hereof, which amount shall be consideration for Consultant’s providing forty-eight (48) hours per month in the performance of the
Services during the month following the due date of any such retainer payment. For any Services in excess of the first forty-eight (48) hours per month of Services provided during the month following the due date of any such retainer payment,
the Company shall pay Consultant for the Services provided at the rate of $250 per hour, prorated for any partial hours. The Parties agree that Consultant will provide a minimum of forty-eight (48) hours per month during the term hereof in the
performance of the Services, but will not be required to provide more than ninety-six (96) hours per month during the term hereof in the performance of the Services. 
 (b) The Company will reimburse Consultant for all approved reimbursable travel expenses pursuant to Section 1(b) of this Agreement. 

  
 A-1Unassociated Document

  

ASSET PURCHASE AGREEMENT

BETWEEN

SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED,

GULF RESOURCES, INC.

AND

CHENGYONG ZHAO

DATED AS OF

November 26, 2012

 

  

  

  

 

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INDEX OF SCHEDULES AND EXHIBITS

 

1. Asset Checklist

 

  

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This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of November 26, 2012 (the "Effective Date") by and between the following parties:

(1) SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED, a company validly existing under the laws of China ("SCHC"), a subsidiary of Gulf Resources, Inc.;

(2) GULF RESOURCES, INC. (“GURE”),  a public company listed on NASDAQ and the parent company of SCHC.

(3) Chengyong Zhao, an individual resident of China (the “Seller”) owns private land use rights covering 7 square kilometers of bromine mining field include 9,780.75 square meters of production area, located at Guantai Village Shouguang City Yangkou Township (The “Leased Property”).

WHEREAS: the Seller wishes to sell, transfer and convey certain assets listed on Schedule 1 hereto with annual bromine production capacity of 2,800 tons to SCHC, its successors and assigns forever, by duly executed deed(s), bills of sale, assignment(s) or other instrument(s) of conveyance, for the consideration hereinafter provided, all of the Seller’ right, title and interest in and to all assets owned by the Seller located on the Leased Property, including, but not limited to, machinery, equipment, inventory, and any warranties associated therewith; said assets to be limited to those listed and described on Schedule 1 attached hereto and incorporated herein by reference (collectively the “Purchased Assets”), to SCHC, and SCHC wishes to purchase and acquire the same from the Seller.

The Seller guarantees that the major production equipment located in production area has been renovated during year 2012 and is fully capable for production. Although the Seller did not upgrade brine wells and aqueduct outside of the production area, but the amount of facilities are enough for the stated production capacity.

NOW, THEREFORE, in consideration of the mutual promises contained herein, and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

1. CERTAIN DEFINITIONS

"Ordinary Course of Business" shall mean an action taken by the Seller if such action is taken in normal operation of the assets, consistent with past practices.

 

  

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"Closing" The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at SCHC’s offices within 20 days from the date that SCHC receives a satisfactory report from its assessment team as set forth in Section 2.4 (the "Closing Date").

"GURE" shall mean Gulf Resources, Inc., a Delaware corporation and parent of SCHC.

"Person" shall mean any individual, entity or governmental body.

2. TRANSFER OF THE ASSETS

2.1 THE SELLER agree that, upon the Closing, they will sell, transfer and deliver the Purchased Assets.

2.2 The parties understand and acknowledge that the total purchase price for the Purchased Assets is RMB62, 000,000 Yuan (the "Purchase Price") and that the Purchase Price is based upon an approximate valuation of the Purchased Assets and the Leased Property. As full consideration for the sale, assignment, transfer and delivery of Purchased Assets to SCHC and for the value of the rights to the Leased Property and upon the terms and subject to all of the conditions contained herein, SCHC shall pay to the Seller  RMB62,000,000 Yuan in the aggregate at the Closing, including

(a) the sum of RMB31,000,000 in cash in the aggregate (the “Cash Purchase Price”);

(b) 3,806,728 shares of the GURE’s common stock, par value $0.0005 per share (the “Restricted Stock”), at a price of $1.295 per share (the “Purchase Price”), in the principal amount of RMB31,000,000 (approximately USD4,929,711.9) in the aggregate issued by GURE to the Seller’s designees as listed in the Exhibit 1 of this Agreement;

(c)The number of the Restricted Stock is based on the average closing price of the Company’s Common Stock on the NASDAQ Stock Market for the last 10 trading days prior to the Effective Date and an exchange rate of $1 = 6.2884 RMB(1:6.2884), which is the published average exchange rate of the People’s Bank of China on November 26, 2012.

The Seller understands and agrees that the Company shall cause the restrictive legends set forth below, or substantially equivalent legends, to be placed upon any certificate(s) evidencing ownership of the Restricted Stock, together with any other legends that may be required by the Company or by applicable laws of the United States:

 

  

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“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT.”

 

2.3 Upon execution of this Agreement by all of the parties, SCHC shall deliver to the Seller a security deposit of RMB6,200,000 Yuan (the "Security Deposit"). Within three days from the date hereof, SCHC will establish an asset assessment team to assess the condition and the operation of the Purchased Assets for transfer and conveyance to SCHC. Thereafter, SCHC shall pay the remainder of the Purchase Price on or before the Closing Date if it has received a receipt of a report from its assessment team that is acceptable to SCHC with respect to the Purchased Assets and Leased Property. If the report concludes that the condition of the Purchased Assets is not acceptable, SCHC and the Seller shall negotiate a reduction in the Purchase Price.  If such amount cannot be mutually agreed, SCHC shall have the right to terminate this Agreement and the Security Deposit shall be returned to SCHC.

2.4 If SCHC cannot pay off the remainder of the cash portion within the time period provided in Section 2.3 above, The Seller has the right to terminate this Agreement and to retain the Security Deposit with no further obligations or liabilities to SCHC or GURE.

2.5 As a result of this Agreement, the Purchased Assets including, without limitation, any and all bromine that can be produced on the Leased Property, buildings, equipment, wells, pipelines, and power circuits will be acquired by SCHC; provided, however, that any and all debts, obligations and liabilities (the “’Obligations”) of the Seller relating to the Purchased Assets and Property are specifically excluded from such Purchased Assets and shall remain the Obligations of the Seller after the Closing.

3. REPRESENTATIONS AND WARRANTIES

3.1 The Seller represents and warrants to SCHC the following:

 

  

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(a) Authority.  The Seller has the requisite power and authority to execute and deliver this Agreement and to perform his  obligations hereunder, and to consummate the transactions hereby, and upon the execution and delivery of the instruments and documents specified herein. No further action will be required of the Seller to vest legal title to and possession of the Purchased Assets in the name of the Purchaser, its successors and assigns forever.

(b) Title to Assets. the Seller has good and marketable title to the Purchased Assets and has the appropriate land use right certificates or other required governmental approval evidencing the rights to use the Leased Property and ability to transfer the Leased Property, free and clear of liens or encumbrances of any kind and no person, firm or corporation has any undisclosed adverse interest therein.

(c) Condition of Purchased Assets. The Purchased Assets, other than the brine wells and aqueduct that need necessary maintenance, all are in good operating condition and repair; ordinary wear and tear excepted, and are suitable for continued use by SCHC in the production of bromine.

(d) Disclosure. No representation or warranty by the Seller contained in this Agreement or any written statement furnished to SCHC pursuant hereto or in connection with the transactions contemplated by this Agreement, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statement contained herein or therein true and not misleading.

(e) Reliance. The foregoing representations and warranties have been made by the Seller with the knowledge and expectation that SCHC is placing reliance thereon, and all such representations and warranties shall survive the Closing for a period of one (1) year.

(f) Regulation S. None of the Seller nor its Designees is a "U.S. Person" as defined in Rule 902 of Regulation S promulgated under the Securities Act (the “Securities Act”).  At the time this transaction was originated, the Seller and its Designees were outside the United States.  The Seller or its Designees are receiving the Restricted Stock solely for the their own accounts and not for the account or benefit of any U.S. person.

 

3.2 Each of SCHC and the Seller represents and warrants respectively to the other as follows:

(a) Each of SCHC and the Seller warrants that has taken all necessary actions for the execution and performance of this Agreement.

 

  

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(b) Except as otherwise disclosed, the performance of the transaction contemplated hereunder is not subject to the consent, approval or order of any governmental authorities or any other third parties, nor is it subject to any conditions precedent as registration with, qualification verification by or document delivery to any governmental authorities or any other third parties.

4.  COVENANTS OF the Seller

4.1 As of the Closing, the Seller shall cancel the employment contract with any previous employees and pay staff wages and compensation according to relevant national laws and regulations.

4.2 As of the Closing, the Seller shall settle all the contacts with original suppliers and customers, and shall pay at Closing, or be bound in their individual capacities to pay all the corresponding debt and obligations. .

4.3 SCHC is buying the Purchased Assets from the Seller , and has no relationship or affiliation with the Seller or the original operations of the Purchased Assets, and as a result is not assuming any rights and/or duties with respect to the operations of the Purchased Assets, including without limitation, no rights to (a) customers and supplier lists (other than such customers or suppliers who have pre-existing relationships with SCHC), (b) employees; (c) market distribution systems; (d) sales force; (e) operating rights; (f) production techniques, or (g) trade names.

 

5. INDEMNIFICATION

5.1 The Seller agrees to indemnify, hold harmless and reimburse SCHC at all times after the Closing, against and with respect to:

(a) any damage or deficiency resulting from any misrepresentation, breach of warranty or non-fulfillment of any covenant or agreement on the part of the Seller made in this Agreement, any other agreement or instrument delivered by the Seller at the Closing;

(b) any damages or claims asserted against the Purchaser on account of any liability of the Seller in connection with his ownership of the Purchased Assets and the Leased Property, whether arising prior to or after the transfer of ownership of the Leased Property from the Seller to SCHC,

 

  

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(c) All actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including reasonable attorneys' fees, incident to the foregoing.

6. MISCELLANEOUS PROVISIONS.

6.1 No Assumption of Liabilities. Except as specifically set forth in this

Agreement, nothing in this Agreement shall be construed to impose upon SCHC the assumption of any claim against or liability or obligation of the Seller, arising out of his business, or the use, operation or possession of the Purchased Assets, through the Closing, or thereafter.

6.2 Books and Records. Those books and records reasonably deemed primarily to relate to the Purchased Assets and maintained separately from the other records of the Seller shall be delivered to and become the property of SCHC.

6.3 Expenses of Negotiation and Transfer. Each party to this Agreement shall pay its own expenses and other costs incidental to or resulting from this Agreement, whether or not the transactions contemplated hereby are consummated.

6.4 Entire Agreement. This Agreement, along with the documents and agreements to be executed in connection herewith, constitutes the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement relating to the subject matter hereof and supersedes any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto. Except as otherwise specifically provided in this Agreement, no conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement shall be binding unless hereafter made in writing and signed by the party to be bound, and no modification shall be effected by the acknowledgment or acceptance of documents containing terms or conditions at variance with or in addition to those listed in this Agreement. No waiver by any party with respect to any breach or default or of any right or remedy and no course of dealing shall be deemed to constitute a continuing waiver of any other breach or default or of any other right or remedy, unless such waiver be expressed in writing signed by the party to be bound. Failure of a party to exercise any right shall not be deemed a waiver of such right or rights in the future.

 

  

8

  

 

6.5 Binding Effect. All of the covenants, conditions, agreements and undertakings set forth in this Agreement shall extend to and be binding upon the Seller and SCHC and their respective successors and assigns.

6.6 Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof nor any of the documents executed in connection herewith may be assigned by any party without the consent of the other parties

6.7 Headings. Headings as to the contents of particular Sections are for

convenience only and are in no way to be construed as part of this Agreement or as a limitation of the scope of the particular Sections to which they refer.

6.8 Exhibits and Schedules. The Exhibits and Schedules (and any appendices

thereto) referred to in this Agreement are and shall be incorporated herein and made a part hereof.

6.9 Counterparts. This Agreement may be executed in three (3) or more

counterparts, each of which will be deemed to be an original copy of this

Agreement and all of which, when taken together will constitute an integral party of this Agreement.

[Signature page follows]

 

  

9

  

 

IN WITNESS HEREOF the Parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first hereinabove mentioned.

SCHC: SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED

Signed by:

 

/s/ Naihui Miao

Name:  Naihui Miao

Position:  Director & Vice Manager

THE SELLER: Owner of Leased Property, located at 3 kilometers south of Youyi Road, in Shouguang City Yangkou Township, west of the Yangzhuang Village Signed by:

 

/s/ Chengyong Zhao

Name:  Chengyong Zhao

 

AGREED as of the date first above written:

GULF RESOURCES, INC.

Signed by:

 

/s/ Xiao Bin Liu

Name:  Xiao Bin Liu

Position:  CEO

 

  

10

  

 

 

SCHEDULE 1

SCHEDULE 1

ASSET CHECKLIST

	
No.11 Asset List

	
Index

	
Name

	
Units

	
1

	
Production Area

	
1

	
2

	
Garage

	
1

	
3

	
Office

	
6

	
4

	
Depositing Tank

	
1

	
5

	
Stripping Tower

	
1

	
6

	
Absorbency

	
1

	
7

	
Mist Eliminator

	
1

	
8

	
Draught Fan

	
1

	
9

	
Hardware warehouse

	
1

	
10

	
Guard Room

	
2

	
11

	
Boiler Room

	
1

	
12

	
Boiler

	
1

	
13

	
Halogen Water Pump

	
1

	
14

	
Chemical Laboratory

	
2

	
15

	
Brine Reservoir

	
2

	
16

	
Carburetor

	
1

	
17

	
Sulfur Warehouse

	
2

	
18

	
Sulphur-furnace room

	
1

 

  

11

  

 

	
19

	
head tank

	
1

	
20

	
Acid Pot

	
4

	
21

	
Dilute Acid Pool

	
1

	
22

	
fresh water tank(production)

	
1

	
23

	
Liquid chlorine cylinders

	
19

	
24

	
Finished Liquids Pool

	
1

	
25

	
Water Feeder

	
1

	
26

	
Water Scrubber

	
1

	
27

	
Ground Scales

	
2 Sets

	
28

	
Air Lift

	
1 Set

	
29

	
Bromine Tank(

	
3

	
30

	
Central Control Room

	
1

	
31

	
Power Distribution Room

	
3

	
32

	
Distillation Tower

	
4 Floors

	
33

	
Toilet

	
1

	
34

	
Kitchen

	
2

	
35

	
Maintenance Room

	
2

	
36

	
Tractor

	
1 set

	
37

	
Accommodation

	
7

 

  

12

  

 

	
38

	
Pump Storage

	
1

	
39

	
Fire-Fighting Pool

	
3

	
40

	
Production Office

	
2

	
41

	
Deep Well

	
1

	
42

	
Water Feeder

	
1

	
43

	
Brine Wells

	
857

	
44

	
Brine Aqueduct

	
32700 Meters

	
45

	
Pump

	
28

	
46

	
Sulphur-furnace

	
1 Set

 

  

13

  

 

Exhibit 1

	
Designee of the Seller

	
Number of Shares to Be Issued

	
Chengyong Zhao

	
1,713,028(45%)

	
Han Wang

	
1,713,028(45%)

	
Min Liu

	
190,336(5%)

	
Lirong Zhang

	
190,336(5%)

	  	
Total: 3,806,728 (100%)

 

14

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