Exhibit 10.1
Exclusive Distribution Right Agreement
Document No: XJ0801
Party A: WuLaTeQianQi XiKai Mining Company Limited. (XiKai)
Address: BaYinHuaHeShunZhuang, WuLaTe, Inner Mongolia, PRC
Party B: JiangXi SheTai Jade Industrial Company Limited. (JST)
Address: GuoXiDaDao #39, YuJiang County, JiangXi Province, PRC
Party C: Guoxi Holding Limited ("GHL"), 100% holding company of JST.
1, XiKai is a company with all necessary legal documents to conduct Jade
Exploration Business in the People's Republic of China ("PRC").
2, JST is 100% owned by GHL, in PRC. JST's business involves: processing and
distributing jade and jade-carved artworks.
Parties A, B and C, through the negotiation and in consideration of the mutual
covenants and agreements contained herein, and other good and valuable
consideration, have reached an agreement as stated below:
Item 1 Period of Exclusive Distribution Right
This Agreement is effective for a period of 50 years from its execution date.
Item 2 Contents of Exclusive Distribution Right
Party A pledge:
1. Party A legally 100% owns the exclusive mining rights in the SheTai Jade Mine
located in WuLaTeQianQi KunDuLunGou, PRC and holds all approvals,
authorizations, concessions or the like, issued or granted by any governmental
or regulatory authority which are necessary to perform its responsibilities as
contemplated by this Agreement. No any other entity owns any right to mining and
exploration in the SheTai jade Mine and there are no encumbrances or other
restrictions which could in any way adversely affect the right or ability of
Party A to perform its responsibilities in accordance with this Agreement.
2. Party A commits to sell 90% raw jade materials produced annually from SheTai
Jade Mine to Party B and in no event less than 40,000 tons per year (the
"Minimum Commitment"). For the remaining 10% of She Tai's total output, Part A
cannot sell it for a price less than the price committed to Party B. Party A
cannot sign any other forms of exclusive distribution agreement with any other
third Party. Party B shall have no obligation to order the raw jade materials.
3. Party A commits to supply the ordered raw jade materials from Party B and
shall use its reasonable efforts to deliver all raw jade materials ordered in
accordance with the delivery dates requested by Party B. . Any failure to timely
raw jade materials to Party B shall not be credited toward satisfying the
Minimum Commitment and Party A shall be responsible for replacing materials
included in any such failed delivery.
4. Party A is responsible and fully liable for the transportation costs
associated with the Party B's distribution of the raw jade material from SheTai
Jade Mine to location(s) in PRC designated by Party B.
5. Party A is responsible and fully liable for the security protection prior to
delivery to location(s) in PRC designated by Party B in accordance with this
item, including during the production and transportation process. Party B is not
being held for any such liabilities.
Party B and Party C pledge:
1. In exchange for the exclusive rights granted to Party B under this Agreement,
Party C agrees to transfer 100% ownership interest in Jiangxi Xida Wooden
Carving Lacquerware Co., Ltd, its wholly owned subsidiary, to Party A. The
transfer should occur within four months after the execution of this Agreement
and is subject to Party B obtaining all requisite approvals and obtaining a
fairness opinion favorable to the proposed transaction.
2. Party C also agrees to pay cash of 25 million RMB to Party A with 7 days
after signing this Agreement, and pay cash of 35 million RMB to Party A with 90
days after signing this Agreement, for total cash consideration of 60 million
RMB.
3. Party B has no ownership interest in the SheTai Jade Mine.
4. Party C's obligations under this Item 2 are based upon and made subject to
the representations contained in Party A's pledge set forth in paragraph 1 of
this Item 2 being true and accurate upon the execution of this Agreement and at
the time Party C's obligations hereunder are due and owing.
Item 3 Price Policy
1. The price of raw jade materials varies based on the quality and weight of the
raw jade material. However, the quality and weight to be supplied under this
Agreement shall be consistent with an average price of not more than 2,000 RMB.
This price is being locked up for the next five fiscal years. Every five years,
both parties should have the opportunity to renew the price. (The revised price
should not be beyond 10% of the locked up price for the immediately preceding
five year period)
2. If Party C's delivery of Jiangxi Xida Wooden Carving Lacquerware Co., Ltd to
Party A is determined by an independent third-party acceptable to the parties
not to be fair to the shareholders of Party C or Party C otherwise timely fails
to deliver Jiangxi Xida Wooden Carving Lacquerware Co., Ltd to Party A, Party
A's exclusive remedy shall be to supply any raw jade material ordered by Party B
thereafter at the increased price of 15,000 RMB per ton, subject to price
adjustment as provided in paragraph 1 above of this Item 3.
3. Party B is obligated to submit payment to Party A within 3 months after its
receipt of delivery of any raw jade materials ordered. Payments not timely
submitted by Party B shall accrue interest on the unpaid amount after the 3
month period at the "prime rate" announced, from time to time, by Citibank at
its principal office in New York City plus 5% per annum until paid in full.
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Item 4 Default
1. Except for failure to submit payments or as otherwise provided in this
Agreement, the defaulting Party or Parties shall compensate the other party or
parties all direct or indirect economic loss caused by the default.
2. If Party A fails to supply to Party B the Minimum Commitment in any of the
first five fiscal years of this Agreement, then Party A shall pay to Party C an
amount equal to 18,000 RMB for each ton of raw jade material less than the
Minimum Commitment which was not supplied to Party B in accordance with this
Agreement during any such fiscal year.
3. Party A shall grant to Party C a security interest and first priority lien in
the 100% ownership interest of Party A in Jiangxi Xida Wooden Carving
Lacquerware Co., Ltd transferred to Party A under this Agreement. Party A
further agrees to cooperate with Party C to enable it to take all such acts and
file all such documentation as deemed necessary by Party C to effect and
maintain a security interest and first priority lien in the ownership interest
for the next five fiscal years.
Item 5 Termination
The Agreement can only be terminated by written consent singed by all three
parties.
Item 6 Governing Law and resolution for dispute
1. Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of PRC applicable to contracts executed and to be
wholly performed therein without giving effect to its conflicts of laws
principles or rules.
2. All parties agree that any dispute concerning this Agreement shall first go
to arbitration for the resolution. Arbitration will be venued in China.
Item 7 Entire Agreement
1. The provisions of this Agreement contain the entire Agreement between the
parties with respect to the distribution rights referenced herein and supersede
all prior Agreements and understandings (oral or written) relating to the
subject matter hereof.
2. The rights and obligations contained in this Agreement respecting the use of
the SheTai Jade Mine are binding on the parties hereto and their respective
successors and permitted assigns and shall run with the SheTai Jade Mine.
[Signature Page to Follow]
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This Agreement Agreementbecomes effective immediately after all parties hereto
have executed the Agreement, which Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Agreement
Party A
WuLaTeQianQi XiKai Mining Company Limited
By: /s/ Xiaobing Wu
-------------------------------------------------
Name/Title: Xiaobing Wu
Date: 2008.1.17
Party B
JiangXi SheTai Jade Industrial Company Limited
By: /s/ Hua-Cai Song
-------------------------------------------------
Name/Title: Hua-Cai Song, Chief Executive Officer
Date: 2008.1.17
Party C
Guoxi Holding Limited
By: /s/ Hua-Cai Song
-------------------------------------------------
Name/Title: Hua-Cai Song, Chief Executive Officer
Date: 2008.1.17
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