THIS CONTRACT OF
SINO-FOREIGN CONTRACTUAL JOINT VENTURE
is made on this 4th day of February, 1994
BETWEEN
HUI XIAN COPPER & METAL MINE, a company incorporated under the laws of
People's Republic of China with its legal office located in Zou Ping
County, Shandong Province, People's Republic of China
(hereinafter referred to as "Party A")
AND
GOLD FIELD (PACIFIC) LIMITED, a company incorporated under the laws of Hong
Kong with its legal address at 2203 Cameron Commercial Center, ▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇
(hereinafter referred to as "Party B")
WHEREAS
1. Party A and Party B wish to form a limited liability company that will
explore. for and mine copper and accompanying precious metals in Zou Ping
County, Shandong Province, and process and sell such minerals on
international markets permitted by relevant Chinese laws and regulations,
and
2. Party A and Party B wish to record their agreements relating to their
rights and obligations in respect of such company and between each other
as shareholders thereof, and
3. Party A and Party B agree that they will, in accordance with the
principle of friendly negotiation and mutual benefit, use their
respective investments to make the maximum possible profit.
NOW THEREFORE in consideration of the mutual covenants herein, Party A and Party
B hereby agree as follows:
ARTICLE 1: GENERAL PROVISIONS
1.1. Definitions: Party A and Party B agree that throughout this Contract,
unless otherwise specified, the following terms shall have the meanings
set forth below:
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1.1.1. "Approval Authority" means agencies of foreign trade of the
State Council or agencies or local governments authorized by the
State Council;
1.1.2. "Board" means the board of directors of the Company;
1.1.3. "Business Day" means Monday through Saturday, both inclusive,
except for statutory holidays recognized in China;
1.1.4. "Business License" means a license' issued by departments of the
State Administration of Industrial and Commerce to create the
Company, which license shall be valid for the Duration of the
Joint Venture and permit to conduct business as described in
4.1;
1.1.5. "Contractual Joint Venture Law" means the Law of the People's
Republic of China on Sino-Foreign Contractual Joint Venture;
1.1.6. "Company" means the limited liability company to be formed by
the Shareholders pursuant to Article 3 hereof and in accordance
with the Contractual Joint Venture Law;
1.1.7. "Duration of the Joint Venture" means a period of thirty (30)
years commencing on the date the Business License is issued;
1.1.8. "Exclusive Marketing and Sales Agreement" means the agreement to
be signed by the Company and Party B after the creation of the
Company;
1.1.9. "Existing Assets" means all the mining and processing equipment,
buildings for copper and accompanying precious metals, together
with other assets including the land usage right, exploration
rights, surface rights, electricity and water power usage
rights, etc., and all the inventory of copper and accompanying
precious metals of Hui Xian Copper & Metal Mine, all as more
fully described in Schedule "A" hereto;
1.1.10. "Feasibility Study Report" means the report and related
documents to be prepared by the geologists and mining engineers
of Party A and Party B to confirm the location and size of the
ore bodies, and to recommend the proper mining and processing
method and equipment;
1.1.11. "General Manager" means the senior managerial officer appointed
by the Company pursuant to section 9.1 of this Contract;
1.1.12. "Independent Valuator" means any one of the five (5) world
largest accounting firms registered in China, as selected by
party B in writing;
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1.1.13. "Investment" means for any Shareholder all of its right, title
and interest in and to the Company according to this Contract;
1.1.14. "Zou Ping County" means an area of approximately
1250 square kilometers excluding the ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇' ▇▇▇▇
currently occupied by Hui Xian Copper & Metal Mine;
1.1.15. "Hui Xian Copper & Metal Mine" means the mineral deposit within
the ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇' ▇▇▇▇ in Zou Ping County of Shandong
Province, as outlined in Schedule "B" hereto;
1.1.16. "Mining Authority" means the relevant government departments
approving the exploration and mining of the mineral resources
described in the Contract;
1.1.17. "Exploration License and Mining License" means the licenses
issued to the Company by the Mining Authority which shall grant
the Company for the entire Duration of the Joint Venture the
rights to explore and mine copper and accompanying precious
metals in Zou Ping County;
1.1.18. "Party A" means Hui Man Copper & Metal Mine, a company
incorporated under the laws of China, and being one of the two
parties of this Contract;
1.1.19. "Party B" means Gold Field (Pacific) Limited, a company
incorporated under the laws of Hong Kong, and being the other
Party of this Contract;
1.1.20. "SAIC" means the State Administration of Industry and Commerce;
1.1.21. "Shareholders" means Party A and Party B collectively, and
"Shareholder" means either one of them;
1.1.22. "Parties" means Party A and Party B collectively.
1.2. Interpretation: These interpretations are for the purposes of this
Contract only, except otherwise specified.
1.2.1 "Contract" means this version of the Contract, as it may be
supplemented, amended or restated from time to time.
1.2.2. All references to designated articles,' sections and subsections
are to the entire content of these designated articles, sections
and subsections.
1.2.3. The headings preceding the text, articles and articles hereof
are for convenience only, do not form a part hereof and are not
intended to interpret, define or limit the scope, extent or
intent of any provision hereof.
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1.2.4. All interpretations about the Company are applicable to the
successor or assignee of such entity.
1.2.5. The two (2) schedules attached to this Contract shall form
integral parts of this Contract:
Schedule "A" -- List of Existing Assets;
Schedule "B" -- Map of Zou Ping County.
ARTICLE 2: CONTRACTING PARTIES
2.1. Parties: The parties of this Contract are as follows.
2.1.1. Hui Xian Copper & Metal Mine
Address: Zou Ping County, Shandong Province, China
Legal Representative:
Name: ▇▇▇▇ ▇▇▇ Min
Position: Mine Director
Nationality: Chinese
2.1.2. Gold Field (Pacific) Limited
Address: 2203 Cameron Commercial Center
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇.
Legal Representative:
Name: Po Sun Liu
Position: Chairman and Chief Executive Officer
Nationality: Canadian
2.2. Representations of Party B: Party B represents and-warrants to Party A
as follows.
2.2.1. Party B is a duly organized company validly existing under the
laws of Hong Kong;
2.2.2. Party B has full corporate capacity, power and authority and all
necessary governmental approvals (other than those referred to
in article 7.2.1) to enter into and perform each of its
obligations hereafter;
2.2.3. the execution and delivery of this Contract and the observance
and performance hereof have been duly authorized by all
necessary corporate action on the part of party B;
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2.2.4. once signing this Contract, Party B is kept within the bounds of
this Contract according to relevant laws;
2.2.5. the execution, delivery and performance by Party B of this
Contract not constitute a default under any material agreement
to which it is a party, any governmental regulation, approval or
order to which it is subject; or any provision of its
incorporation documents;
2.2.6. no governmental approvals of any kind are required from any
governmental authority in Hong Kong in respect of this Contract
or the operations of the Company as contemplated hereafter.
2.3. Representations of Party A: Party A represents and warrants to Party B
as follows:
2.3.1. Party A is a duly organized company validly existing under the
laws of People's Republic of china;
2.3.2. Party A has full corporate capacity, power and authority and all
necessary governmental approvals (other than those referred to
in article 7.2.1) to enter into and perform each of its
obligations hereafter;
2.3.3. the execution and delivery of this Contract and the observance
and performance hereof have been duly authorized by all
necessary corporate action on the part of Party A;
2.3.4. once signing this Contract, Party A is kept within the bounds of
this Contract according to relevant laws;
2.3.5. the execution, delivery and performance by party A of this
Contract does not and will not constitute a default under any
material agreement to which it is a party, any governmental
regulation, approval or order to which it is subject, or any
provision of its incorporation documents;
2.3.6. only government approvals from government authorities stated in
article 7.2.1 are required in respect of this contract or the
operation of the company as contemplated hereafter;
2.3.7. the Company shall be required to pay no taxes, duties,
commissions and other payments except for those described in
section 12.1;
2.3.8. Party A shall deliver to Party B all the accurate information
concerning copper and accompanying precious metals in Zou Ping
County that is in party A's possession or control;
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2.3.9. before Party A and Party B jointly explore and mine copper and
accompanying precious metals, any environmental pollution
resulted from exploration and mining the above mineral resources
by Party A and any other party has nothing to do with the
Company, and Party A warrants that no such pollution has
occurred before the cooperation of both parties
2.3.10. Party A is the owner of all the Existing Assets that are free
and clear of all liens, mortgages or other encumbrances of any
kind.
2.4. Indemnity: If any representation or warranty given herein by any party
is inaccurate, such party shall indemnify and hold harmlessly the other
party for any loss or damage caused to such other party.
ARTICLE 3: ESTABLISHMENT OF THE JOINT VENTURE COMPANY
3.1. Contractual Joint Venture: In accordance with the Sino-Foreign
Contractual Joint Venture law and other relevant Chinese laws and
regulations, Party A and Party B agree that the Company shall be
established as a contractual joint venture.
3.2. Name: the name of the Company shall be
3.2.1. Chinese: [GRAPHIC OMITTED]
3.2.2. English: SHANDONG ZOUPING HUIXIAN GOLD FIELD (PACIFIC) CO.
LTD.
3.3. Legal Address: The legal address of the Company shall be Zou Ping
County, Shandong Province, People's Republic o China.
3.4. Laws of China: All activities of the Company shall be governed by the
published and publicly available laws, decrees, rules and regulations of
China.
3.5. Limited Liability: The Company shall be a limited liability company.
Each shareholder shall be liable for the Company's liabilities only to
the proportion by which the shareholder has contributed to the Company's
registered capital outlined in Article 5 hereof. Each shareholder shall
not be liable for the Company's and other shareholders' liabilities and
loss.
3.6. Legal Person: The Company shall be a legal person existing as a
separate entity from the Shareholders.
3.7. No Partnership: The parties expressly disclaim any intent to create a
partnership with respect to the administration or assets of the Company.
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3.8. No Agency: Neither party shall have any authority, actual or implied,
to act as agent for or to bind the other party or the Company.
ARTICLE 4: BUSINESS SCOPE
4.1. Business Scope: The parties agree that the business scope of the
Company shall include the following:
4.1.1. the exclusive right to explore, mine, smelt, process and extract
copper and accompanying precious metals deposit throughout Zou
Ping County;
4.1.2. the exclusive right to market and sell copper and accompanying
precious metals on the international and domestic market based
on the Marketing and Sales Agreement, in accordance to the laws
in China; '
4.1.3. all such complementary activities as may be necessary or
desirable for the Company to fully engage in all activities
permitted by the Business License or the Mining License.
ARTICLE 5: TOTAL INVESTMENT AND REGISTERED CAPITAL
5.1. Total Investment and Registered Capital: The total investment
amount of the Company is set at U.S. $9,800,000 consisting of registered
capital of the Company of U.S. $9,000,000 (or the equivalent RMB) and
U.S. $800,000 in working capital provided as debt by banks. Each Party
shall invest U.S. $4,500,000 which shall be contributed to the Company
at the times and in the forms set out in articles 5.2 and 5.3 below.
5.2. Party B's Capital Contribution: Party B shall make its
contribution under article 5 in the form of cash, equipment, machinery,
feasibility study, technology and technical support services.
After the issuance of all the required Exploration, Mining, and Business
Licenses, Party B shall contribute a minimum of U.S. $1,000,000 in 1994,
and U.S. $1,000,000 in 1995 and 1996 respectively. The remaining capital
would be contributed in accordance with the working schedule as approved
by the Board. The Shareholders agree that Party B's obligation to
contribute its capital share is subject to the fulfillment of each of
the following conditions precedent to the satisfaction of Party B:
5.2.1. this Contract and the Charter of Association' of Shandong Zouping
Huixian Gold Fields (Pacific) Co. Ltd. have been approved in
writing by the Approval Authority;
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5.2.2. the Business License has been issued by the SAIC to the Company;
5.2.3. the Exploration License and Mining License have been issued by
the Mining Authority to the Company;
5.2.4. the Existing Assets has been transferred to the company, free
and clear of all liens, mortgages, and encumbrances of any kind;
5.2.5. Party B has received a written legal opinion acceptable to Party
B from a Chinese law firm confirming:
A. the issuance and sufficiency of the foregoing approvals and
licenses and the granting of the Exploration Rights to the
Company;
B. the legality and validity of this Contract and its
Schedules;
C. the completion of the transfer of the ownership of the
Existing Assets to the Company, free and clear of all liens,
mortgages, and encumbrances of any kind;
D. the accuracy of the tax description in the Contract;
5.2.6. Party B has received all audited financial statements of Hui
Xian Copper & Metal Mine's production history;
5.2.7. the Company has signed and delivered the Marketing and Sales
Agreement to Party B;
5.2.8. the Parties have submitted the Feasibility Study Report based on
the exploration, . geology and other reliable data about Hui
Xian Copper & Metal Mine provided by Party A;
5.2.9. the representations and warranties made by party A in article
2.3 are true and correct as confirmed by a certificate to that
effect signed by the legal representative of party A and
delivered to party B.
5.3. Party A's Capital Contribution: Party A may make contribution under
this article 5 in the form of cash, or in kind, the Existing Assets that
includes inventory, equipment, vehicles, buildings, land, exploration
rights, surface rights, water right, electricity power supply and any
other rights and assets required to allow the Company to explore and
mine copper and accompanying precious metals (see Schedule "A" for
details).
As part of Party A's initial U.S. 52,000,000 capital investment, Party A
shall transfer its current assets (free of encumbrances) to N Company no
later than ninety (90) days after the Business License is issued to the
Company.
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5.3.1. Party A shall be solely responsible for the following expenses,
which can not be part of the Company's expenses or require the
Company pay:
A. the expenses paid to individuals, companies or governmental
departments to obtain the Exploration and Mining Licenses
for the Company;
B. the cost of settling disputes between individuals, companies
and governmental departments on the ownership of copper and
accompanying precious metals mine from the ore body;
C. the cost of relocating any individuals, entity or
governmental departments in Zou Ping County during the whole
cooperation period;
D. the pension and dismissal expenses of any individual,
employee of Hui Xian Copper & Metal Mine, and government
employee who are retired or dismissed due to the signing of
the Contract and the transferring of the Existing Assets;
E. the outstanding liability, taxes, or any other debts of
Party A to any person, company, entity or government
department before the cooperation of the Parties.
5.3.2. Upon the transfer of the Exploration License, Mining License,
Business License and the Existing Assets to the Company and the
payment of all the amounts contemplated by section 5.3.1, Party
A shall be deemed to have made a contribution to the Company's
registered capital of $2,000,000 US.
5.3.3. After the initial contribution of U.S. $2,000,000 by Party B,
upon each payment of the remaining U.S. $2,500,000 or the
equivalent amount in RMB by Party B, Party A shall be deemed to
have made the same amount of contribution to the Company's
registered capital by the same time.
5.4. Bank Loans: If the Company requires bank loans, the Company shall use
its best efforts to obtain such funds from Chinese or foreign banks. The
Company shall use its assets as collateral.
5.5. Additional Shareholder Contributions: If the Company requires funds in
addition to the bank loans, the Shareholders shall contribute such funds
to the Company subject to the following conditions:
5.5.1. neither Shareholder shall be required to make any additional
contribution unless both parties are satisfied with the new
mineral exploration plan, and such contributions shall be
invested in such exploration and mining projects as may be
recommended by the General Manger or Management Committee and
approved by the Board by a duly passed resolution;
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5.5.2. neither Shareholder shall be required to make any additional
contribution in excess of the expenditure schedule unless
approved by the Board by a duly passed resolution and further
consented to in writing by both parties;
5.5.3. the additional investment which will be governed by Chinese law
on ratio of debt to profit and right from the shareholders shall
be treated as loan or registered capital, within the extent
permitted by Chinese laws;
5.5.4. if the Shareholders are required to make additional
contributions under this article 5.5, whether in the form of
shareholders' loans or registered capital, each Shareholder
shall provide one-half of such contribution.
ARTICLE 6: ASSIGNMENT, ENCUMBRANCES AND TRANSFERS
6.1. Assignment: The assets and/or shares in whole or in part of each
Shareholder in this Contract can at any time be assigned by any
Shareholder to a subsidiary upon written notice to the other
shareholder.
6.2. Encumbrance In Favor of Lenders: If the Company agrees to borrow funds
from a lender, any Shareholder giving a guarantee to the lender may, if
required by the lender, mortgage or otherwise encumber its investment or
any part thereof in favor of such lender as security for the loan but
only if such lender enters into an agreement with both Shareholders
(satisfactory in form and substance to both of them) agreeing to be
bound by the provisions of this Contract.
6.3. Transfers: It is not a breach of this Contract when one Shareholder
transfers all or part of its investment at any time to a subsidiary if
notice is given to the other Shareholder.
ARTICLE 7: RESPONSIBILITIES OF EACH SHAREHOLDER
7.1. Responsibilities of Party B: Party B shall be responsible for and
hereby agrees to perform each of the following matters in a timely
manner:
7.1.1. assist the Company in engaging any foreign consultants, experts
or agents the Company may wish to hire to evaluate all the
historical geological, exploration and mining data delivered to
it by Party A;
7.1.2. provide registered capital and shareholder's loans to the
Company subject to and in accordance with the terms and
conditions of articles 5.2 and 5.5 above;
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7.1.3. entrusted to purchase on behalf of the Company, any equipment,
vehicles, and machinery the Company may need to purchase from
outside China;
7.1.4. entrusted to sell copper, other minerals and related products on
the Company's behalf on the international and domestic market;
7.1.5. handling any other matter entrusted by the Company.
7.2. Responsibilities of Party A: Party A shall be responsible for and
hereby agrees to perform each of the following matters at its own cost
and in a timely manner:
7.2.1. obtaining all approvals, licenses, permits, export rights,
registrations and renewals necessary for establishing the
Company and enabling the Company to engage in the activities
contemplated hereafter, including but not limited to (1) the
Business License, (2) the Exploration and Mining License and (3)
all access permits, rights-of-way, easements, occupation
permits, surface rights and other such rights in respect of
places in Zou Ping County as the Company may reasonably request
and provided those such licenses:
A. shall be renewed on application by the Company (which
application shall be submitted at least 3 months and no more
than 6 months prior to its expiration date) for a further
period of thirty (30) years so long only as the Company is
engaged in exploration and/or mining operations in Zou Ping
County during such period;
B. shall not be cancelable except only if the Company fails for
a period of two (2) consecutive years to carry out
exploration and/or mining of copper and accompanying
precious metals in Zou Ping County, or it has proven
uneconomic for the Company to carry on exploration and
mining during such period, and the Company has failed to
commence mining operations within six (6) months after
receiving the mining notice from the Mining Authority;
7.2.2. granting the Company for the entire Duration of the Joint
Venture the following rights, in each case the Company and Party
B shall be free and clear of any and all liens, charges,
reservations and encumbrances:
A. the exclusive right to explore for, mine and extract copper
and accompanying precious metals throughout Zou Ping County;
B. the exclusive right to process and refine copper and
accompanying precious metals mined or extracted by the
Company;
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C. the exclusive right to market and sell such copper and
accompanying precious metals on the international and
domestic market through Party B under the Exclusive
Marketing and Sales Agreement;
D. all access, occupation, surface, water, power and other
complementary rights necessary or desirable for the Company
to enjoy all of the above rights;
E. Party A shall be responsible for the renewal of all the
licenses and rights listed in article 7.2.1.
7.2.3. immediately deliver to Party B upon request accurate and
complete copies of all the audited financial statements,
production and inventory record of Hui Xian Copper & Metal Mine
for the past three years, and the geological data including
maps, reports, surveys, exploration data and other historical
data relating to the finding and mining of copper and
accompanying precious metals in Zou Ping County;
7.2.4. provide consultation to Party B and its technical experts and
help them to obtain the data of mining and processing copper and
accompanying precious metals referred to in article 7.2.3 above;
7.2.5. ensure that the Company may obtain at prices not higher than
prices normally paid by Chinese Joint venture enterprises, each
of the followings:
A. all necessary public facilities, including the right of
using electrical power, as may be required for the Company's
operation;
B. office space in copper & metal mine in Zou Ping to enable
the Company to carry out its work and business;
C. all necessary labor and personnel as may be deemed necessary
by the Company;
7.2.6. assist the Company to deal with all local, county, provincial
and central government authorities, and any other parties as may
be necessary to ensure that the Company shall be able to operate
in the manner contemplated herein, and to ensure that all of
Party B's rights are also protected;
7.2.7. handle such other matters as may be entrusted to it by the
Company.
ARTICLE 8: THE BOARD OF DIRECTORS
8.1. Date of Establishment: The Board shall be established on the date the
Business License is issued.
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8.2. Representation: The Board shall comprise seven (7) directors, of which
three (3) shall be appointed by Party A and four (4) shall be appointed
by party B. Any director may be removed and replaced at any time and for
any reason by the shareholder that appointed such director.
8.3. Chairman and Vice-Chairman: The Company shall have one Chairman of the
Board and one Vice-Chairman. The Chairman of the Board shall be selected
by Party B from amongst the Board members appointed by Party B, and the
Vice Chairman shall be one of the directors selected by party A from
amongst the Board members appointed by Party A.
8.4. Term of Office: The directors, Chairman and Vice-Chairman of the Board
shall hold office for terms of three (3) years, and such terms of office
may be renewed by the continuous appointment of the relevant
Shareholder.
8.5. Legal Representative: The Chairman of the Board shall be the legal
representative of the Company. If the Chairman is unable to exercise his
responsibilities for any reason, he may temporarily delegate such
responsibilities to the Vice-Chairman or any other director by a written
authorization sent to such person and copied to the Company and each
Shareholder.
8.6. Quorum: A quorum shall be formed by any five (5) directors. For such
purpose, a director shall be deemed present at a meeting or conference
telephone call either if he participates in person or by the
representation of a duly appointed alternate director.
8.7. Board Decision: The Board shall manage the business and affairs of the
Company. Board issues shall be decided by the approval of a 51% majority
of the votes cast by the directors present at a duly constituted meeting
of the Board except that the approval of 75% of all the directors
present at a duly constituted meeting of the Board shall be required for
each of the issues set out below:
8.7.1. any amendment to the Company's Articles of Association;
8.7.2. any increase in the registered capital of the Company other than
an increase in the registered capital resulting from an increase
in the registered capital resulting from a requirement to
contribute moneys pursuant to article 5.5. Such increases are
hereby approved in advance by the shareholders, and the
Shareholders each agree to cause the Board to vote unanimously
in favor thereof,
8.7.3. any merger of the company with any other economic organization,
or the creation of another joint venture entity together with
some other economic organization;
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8.7.4. dissolution of the Company for any reason prior to the expiry of
the Duration of the Duration of the Joint Venture provided
always, however, that if unanimous approval of all the directors
is not achieved in this regard at any Board meeting duly
convened for such purpose, a resolution for such dissolution may
be effectively passed at the next Board meeting duly convened
for such purpose if approved by the votes of at least four (4)
of the seven (7) directors present at such later meeting.
8.8. Meetings: Board meetings shall be held at least once per year and
whenever any two (2) of the seven (7) directors may request. Directors
may appoint alternate directors to represent and vote for them, or by
written proxies authorize another director to vote on his behalf. Board
meetings may also be held by conference telephone call whereby each
participant is able to hear and speak to each other participant. The
Chairman or other person convening a meeting of the Board shall give
each director at least ten (10) days written notice of the time, place
and proposed agenda of the meeting. ,
8.9. Deemed Quorum: If a quorum is for any reason not present within one (1)
hour after the time set for a board meeting, such meeting shall
automatically stand adjourned to the fifth (5th) business day
immediately following at the same time and place, and the directors
present or deemed present at such meeting shall be deemed to constitute
a quorum and able to pass effective resolutions.
ARTICLE 9: GENERAL MANAGER
9.1. General Manager: The Board shall delegate the day-to-day management of
the Company to the General Manager. The General Manager shall be
nominated and hired by the Board.
9.2. Duties of the General Manager: The General Manager shall be responsible
for the overall management of the Company. The General Manager shall
report to the Board, and his duties shall include the following:
9.2.1. preparation of annual operating and capital budgeted, business
plans and financial projections for Board approval;
9.2.2. implementing budgets and plans approved by the Board;
9.2.3. obtaining and maintaining a financial accounting system and an
internal control system of financing and budgeting designed by
an international accounting firm registered in China or a joint
venture international accounting firm in China, and such system
shall be sent to the Board for approval;
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9.2.4. maintaining an accounting system of general ledgers, books and
records in accordance with internationally accepted accounting
principles and regulations;
9.2.5. payroll administration;
9.2.6. labor relations and personnel administration;
9.2.7. supervising and administering all exploration, mining,
processing and marketing operations;
9.2.8. implementing an international standard security system designed
by security experts in respect of the Company's copper and
accompanying precious metals and other assets that is
satisfactory to the Board;
9.2.9. doing all things necessary or advisable to ensure that the
business of the Company and is carried out in accordance with
this Contract.
9.3. The Vice-General Managers shall be nominated by the General Manager and
appointed by the Board of Directors.
9.3.1. The Vice-General Managers shall assist the General Manager in
carrying out his duties.
ARTICLE 10: PURCHASES AND CONTRACTS
10.1. Purchases Outside China: If the Company needs to purchase any
materials, equipment, vehicles, machinery or other items necessary from
outside China, Party B shall be entrusted to do so on behalf of the
Company.
ARTICLE 11: EMPLOYMENT MATTERS
11.1. Employment Contracts: All existing employees and retired employees of
party A is the responsibility of Party A. All employees required to be
engaged by the Company, including but not limited to the General
Manager, shall be hired pursuant to employment contracts approved by the
Board. Such contracts will set out, amongst other things, the title and
duties of the employee, the remuneration payable and the terms on which
such engagement may be terminated by the Company. Such employees, the
Company and the parties hereto shall be required to keep confidentially
all the terms of the engagement of such employees.
11.2. Labor Market: The Company shall be entitled to hire employees from the
labor market by placing advertisements or using other direct methods for
recruiting
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employees, either from China or from abroad, as it deems fit. Salaries
and benefits payable to any management level employee from China shall
be based on standards prevailing in the Chinese labor market for such
kind of employee, and salaries and benefits payable to any employee from
outside China shall be based on standards prevailing in the
international market for such kind of employee.
11.3 Independent Employment Procedure: the Company will handle employment
affair, including dismissal depending on the Company's benefit. Any
shareholder should not interfere.
ARTICLE 12: TAXES, FINANCE AND AUDIT
12.1. Company Taxes: The Company shall pay taxes in accordance with the
stipulations of published and publicly available Chinese laws and
regulations using the maximum deductions and allowable deductions and
preferential treatments allowed in the laws and regulations of the
Income Tax Law for Foreign Investment Enterprises and Foreign Companies.
12.2. Personal Taxes: Employees of the Company shall pay individual income
tax according to the Individual Income Tax Law of the People's Republic
of China.
12.3. Three Funds: The Company shall make annual allocations for a reserve
fund, an expansion fund and a welfare and bonus fund for its employees
from its after - tax profits as the Board may deem fit.
12.4. Dividend Policy: Party A and Party B agree that dividend will be
distributed in accordance with the ratio as set by the amount and
duration of capital investment. Unless the Board unanimously resolves
otherwise at a duly convened meeting, the following dividend policy
shall apply throughout the duration of the Joint Venture:
12.4.1. after the loan repayments contemplated in article 5.5 have been
paid to the lender the Company shall at least once each year,
distribute to the Shareholders all of the after-tax profits
remaining by declaring and paying dividends to them in equal
proportions:
12.4.2. the Company shall use United States dollars or RMB as decided
by the Board to distribute dividends:
12.4.3. if the United States Dollars available from the Company's
normal operations is sufficient, the Company shall pay the
dividends of both Shareholders with such United States Dollars;
12.4.4. if the United States Dollars available from the Company's
normal operation is insufficient to pay the dividends of both
Shareholders in foreign
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exchange, the Company shall use the United States Dollars that
it does have, if any, to pay Party B's dividend on a priority
basis.
12.5. Fiscal year: The Company's fiscal year shall commence on January 1 and
end on December 31 of each year, except for the first fiscal year that
will commence on the day the Business License is issued and end on
December 31 of the same year.
12.6. Books of Account: The Company shall keep its books of accounts in
English and Chinese, and in accordance with generally accepted
international accounting principles.
12.7. Accounting Currency: The Company shall use Chinese RMB as the base
accounting currency.
12.8. Reporting to Directors: The General Manger and the management committee
shall prepare and deliver the following statements and reports to each
member of the Board:
12.8.1. quarterly unaudited financial statements within four (4) weeks
of the end of each fiscal quarter;
12.8.2. annual unaudited financial statements by no later than the
forty-fifth (45th) day after the end of the previous fiscal
year;
12.8.3. annual audited financial statements and the auditor's report
thereon by no later than the sixtieth (60th) day after the end
of the previous fiscal year;
12.8.4. daily production record including inventory of copper and
accompanying precious metals for sales.
12.9. Rights to Inspect: Each director shall have the right to inspect
and copy the books of account of the Company at any time.
12.10. Auditors: The Company's books shall be audited by an international
accounting firms licensed to practice in china or which has established
a joint venture in China licensed to practice in China, as selected by
Party B in writing.
12.11. Bank Accounts: The Company shall open such bank accounts as
deemed necessary by the Board of Directors.
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ARTICLE 13: INSURANCE
13.1. Standards of Insurance: The Company shall purchase insurance of such
kind and of such value and duration as the Board considers necessary,
having due reference to international insurance practices in respect of
similar projects.
13.2. Choice of Insurer: The Company shall purchase such insurance from the
insurance provider that the Board considers to be the most competitive
in terms of coverage dependability and cost. If the People's Insurance
Company of China satisfies the Board that its competitors in respect of
all factors the Board considers material, the Company shall purchase its
insurance from that insurer.
ARTICLE 14: INITIAL DURATION OF THE JOINT VENTURE
14.1. Initial Duration: The Project shall have an initial duration (the
"Duration of the Joint Venture") of thirty (30) years commencing on the
day the Business License is issued.
14.2. Extended Duration: The Company and the Shareholders shall make an
application to the Approval Authority at least six (6) months prior to
the expiry date of the Duration of the Joint Venture for same to be
extended as follows:
14.2.1. if the Company has been profitable, for a further period of
thirty (30) years;
14.2.2. if any loan owed to Party B either by the Company or by Party A
or vice versa is not completely repaid, for such further period, if any, as
Party B may consider necessary to ensure that such loan is completely repaid.
14.3. Continuation of Contract and Licenses: If the Duration of the Joint
Venture is extended for any reason, notwithstanding any provision to the
contrary herein, this Contract shall continue in full force and effect,
as amended by such extension. Party A shall obtain such renewals of the
Business License, Exploration License and Mining License and other
rights and permits referred to in article 7.2.1 as may be necessary or
desirable.
ARTICLE 15: DISPOSAL OF COMPANY ASSETS ON EXPIRY OF DURATION
15.1. Liquidation of Assets: If the Duration of the Joint Venture expires
or is terminated pursuant to this Contract for any reason, the assets of
the Company shall be liquidated and the debts of the Company (including
any amounts owed to any Shareholder) shall be paid. The remaining cash
of the Company, if any, shall be distributed by the Company to the
Shareholders equally in accordance with the principles set forth in
article 12.4. Thereafter, the Company shall;
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15.1.1. make a full report of the liquidation to each of the
Shareholders;
15.1.2. cause the Business License to be canceled.
15.2. Sale of Assets: The liquidation committee shall use its best efforts
to sell the non-cash assets of the Company (including the Mining Rights
and Sales Rights) for the highest available price. Any Shareholder may
purchase all or part of those assets at a purchase price equal to their
fair market value, as determined by the parties by agreement (or by the
Independent Valuator, if no written agreement is reached within thirty
(30) days). Such price may be paid by way of set-off against any amount
that may be owed by the Company to the purchasing Shareholder.
15.3. Survival of Terms: The provisions of this Article 15 shall survive the
expiry or early termination of the Duration of the Joint Venture for any
reason.
ARTICLE 16: AMENDMENT AND TERMINATION OF THE CONTRACT
16.1. Amendment: This Contract and its two (2) schedules may only be amended
by a written amendment agreement signed by both Party A and party B, and
shall come into effect on the day such amendment agreement is approved
by the Approval Authority.
16.2. Term of Contract: This Contract and its two (2) schedules shall come
into effect upon approval by the Approval Authority and, subject to
article 16.3, shall remain in force until the procedures set forth in
Article 15 above have been completed following the expiry or early
termination of the Duration of the Joint Venture pursuant.
16.3. Rescission of Contract: If for any reason the conditions precedent set
forth in article 5.2 and 5.3 have not all been fulfilled or waived in
writing by Party B on or prior to the 180th day after the Business
License has been issued, this Contract shall be deemed terminated and of
no force and effect, the Company shall be dissolved. The party that has
suffered damages resulted from the breach of contract can claim such
damages against the other party.
16.4. Early Termination: Either Shareholder may by written notice to the
Chairman and Vice-Chairman of the Company, request the Board to consider
and approve a resolution pursuant to article 8.6 to terminate the
Duration of the Joint Venture prior to its expiry date only for any of
the following reasons:
16.4.1. one party has caused an Event of Default, and has failed or
unable to cure such Event within thirty (30) days of written
notice from the other party; or if such event of default cannot
be cured within thirty (30) days the other shareholder has
failed to use its efforts to fix such default; or
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16.4.2. there has been a material change in the applicable laws,
regulations or policies of the pertinent governmental
authorities that adversely affect the interests of such
Shareholder;
16.4.3. when the exploration shows the mining is economically
unfeasible.
16.5. Government Approval: If any Shareholder gives a notice requesting
early termination under article 16.4 and the board resolves according to
article 8.6.4 to dissolve the Company, the Shareholders shall and shall
cause the Company arid the Board to make such applications to the
Approval Authority, and to take all such other steps as may be necessary
to complete the dissolution of the Company in accordance herewith.
16.6. Survival of Certain Provisions and Obligations: The provisions of
Article 15 and this article 16.6 and all other provisions of this
Contract necessary to give full force and effect thereto shall survive
the expiration or early, termination of the Duration of the Joint
Venture for any reason. Notwithstanding the termination of this
Contract, no Shareholder shall by reason of such termination be relieved
of any obligation or liability accrued prior to such termination, all of
which shall remain enforceable until fully satisfied.
ARTICLE 17: BREACH OF CONTRACT
17.1. Events of Default: Each of the following events shall be deemed to
bean Event of Default:
17.1.1. if any Shareholder shall be in breach of any of its material
obligations and such breach shall continue for a period of
thirty (30) days from the receipt of a written notice of breach
from the other Shareholder, or if such breach cannot be cured
within thirty (30) days, such Shareholder has failed or unable
to ▇▇▇ its best efforts to cure such breach;
17.1.2. if any Shareholder demands a liquidation, or an order is made
for the liquidation of such Shareholder;
17.1.3. if a receiver or receiver-manager is appointed in respect to
the whole or a substantial part of the affairs or assets of any
Shareholder;
17.1.4. if a Shareholder is adjudged bankrupt or insolvent or files a
proposal bankruptcy.
17.2. Remedies: If an Event of Default occurs, the Non-Defaulting Shareholder
shall be entitled to exercise against the Defaulting Party any and all
rights, remedies and recourses permitted or at law, including without
limitation, the right to obtain an
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injunction or order from a court of competent jurisdiction setting aside
the act giving rise to such Event of Default. All such means shall not
be prevented by the other party.
17.3. Interest: Unless otherwise provided herein, any sum at any time owing
by any Shareholder to the Company that is not paid when due shall bear
interest from its due date at an interest rate equal to the Prime Rate
of the Bank of Nova Scotia of Canada until payment in full.
ARTICLE 18: FORCE MAJEURE
18.1. Event of Force Majeure: An Event of Force Majeure includes any
fire, explosion, accident, earthquake, tidal wave, strike,. picketing,
lockout, labor dispute, flood, drought, embargo, war, riot or
insurrection, uprising, rebellion, or any other event whether similar or
dissimilar to the foregoing that shall be beyond the reasonable control
of the Shareholder affected.
18.2. Notice of Force Majeure: A Shareholder affected by an Event of
Force Majeure shall promptly give notice thereof to the other
Shareholder and shall indicate in such notice, as accurately as
possible, the effect of such Event of force Majeure on its capacity to
perform its obligations.
18.3. Effect of an Event of Force Majeure: Subject to the giving of
notice provided for in the immediately preceding article:
18.3.1. the non-fulfillment of any obligation of any Shareholder by
reason of an Event of Force Majeure shall not constitute a
breach or an Event of Default;
18.3.2. any time period provided for the performance of any obligation
of any Shareholder shall be postponed or extended for and by a
duration equal to the period during which the Event of Force
Majeure shall continue to exist.
18.4. No Termination: An Event of Force Majeure shall not be a cause for the
early termination of this Contract or of the Duration of the Joint
venture unless the . Event of Force Majeure continues for a period in
excess of 12 months. Under this circumstance, the Shareholders who are
not directly affected by the Event of Force Majeure may request the
early termination of the Project pursuant to the provisions of article
16.4.
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ARTICLE 19: APPLICABLE LAW
19.1. Published Laws of China: The formation, validity and interpretation of
this Contract shall be governed by the published and publicly available
laws of the People's Republic of china.
19.2 Effect of Future Laws: The Shareholders agree that if any law or
regulation of China that is amended or changed or a new law has an
adverse effect on any Shareholder then, if such Shareholder requests,
the parties shall forthwith amend this Contract so that such adverse
effect is eliminated or adjusted to the least extent possible, and each
Shareholder shall and shall cause the Company to use its best efforts to
cause such amendment to be approved by the approval Authority.
ARTICLE 20: SETTLEMENT OF DISPUTES
20.1. Overriding Principle: Any dispute arising out of or relating to this
Contract shall be resolved exclusively by the procedures set out in this
Article 20. First, there shall be friendly discussions between
Shareholders based on the basis that the Shareholders have agreed to
establish the Company in order to generate the maximum profit for every
party.
20.2. Binding Arbitration: If the dispute is not resolved by friendly
discussions under the immediately preceding article, any Shareholder may
furnish the other Shareholder a written notice requesting the dispute to
be resolved. If the dispute is not resolved within forty (40) days after
such notice, either Shareholder shall be entitled to refer the dispute
for arbitration by the Arbitration Institute of the Stockholm
International Chamber of Commerce. The award of such arbitrators shall
be binding on the parties and may enter any court of competent
jurisdiction.
ARTICLE 21: MISCELLANEOUS
21.1. Notices: Any and all notices or other communications shall be in
writing and shall be:
21.1.1. personally delivered by courier or by a fax or telex thereof to
the addressees at the addresses referred to below. In the of
personal delivery, such notice shall conclusively be deemed to
have been given to the addressee thereof at the time of such
delivery or on the next business day if delivered not on a
business day;
21.1.2. telexed or faxed to the addressee at the numbers referred to
below, in which case such notice or other communication shall
conclusively be deemed to have been given to the addressee
thereof on the day upon which
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it was received if received prior to 3:00 p.m. (local time) on
such day or on the next business day if received after 3:00 P.M.
local time on a business day or on the next business day if
received not on a business day.
For Party A:
Hui Xian Copper & Metal Mine
Zou Ping County
Shandong Province
People's Republic of China
Attention: ▇▇▇▇ ▇▇▇ Min
Telephone: ▇▇-▇-▇▇▇▇-▇▇▇▇▇▇
Telephone: ▇▇-▇-▇▇▇▇-▇▇▇▇▇▇
For Party B:
Gold Field (Pacific) Limited
2203 Cameron Commercial Center
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
Attention: Po Sun Liu
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Each Shareholder may change its address for service by written
notice, given in the manner provided above, to the other
Shareholder and such change shall be effective upon the date the
notice shall be deemed to be received.
21.2. Entire Agreement: This Contract and its four (4) Schedules constitute
the entire agreement between the parties hereto. There are no, and shall
not be any, verbal or written statements, representations, warranties,
undertakings or agreements between the parties pertaining to the subject
matter hereof other than as expressly provided for herein. This Contract
supersedes the Agreement between the parties dated June 20, 1993. If any
provision hereof conflicts with any provision of the Articles of
Association of the Company or with anything in the Feasibility Study,
the provision of this Contract shall prevail.
21.3. Business Day: Where the time limit for the doing of anything expires
or falls upon a day that is not a business day the time so limited
extends to and the thing may be done on the day first following that is
a business Day.
21.4. Time of Essence: Time and each of the terms and conditions of this
Contract shall be of the essence of this Contract, and shall be strictly
complied with by each
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party. Otherwise, the party causing the default shall be responsible
for the consequence.
21.5. Further Assurances of Cooperation: Each of the parties hereto shall do
all things and execute all documents necessary or desirable in order to
carry out the intents of this Contract, and shall fully cooperate with
each other and the Company in all respect in good faith to ensure that
the Company operates in the manner contemplated herein and achieves its
goals
21.6. Corrective Actions: If at any time during the Duration of the Joint
venture, any governmental authority of China enacts a law or policy
(Unilateral Action), and if such a Unilateral Action has the effect
(Negative Effect) of preventing or constraining any right or of
materially increasing the burden of performing any obligation of Party B
or the Company, the Company shall, at the Company's cost, take such
measures (Corrective Actions) to restore Party B or the Company to the
position it would have retained had such Unilateral Action not been
taken. Such Corrective Actions may take any or all of the following
forms:
21.6.1. obtaining from the relevant authority an exemption from the
application of the Unilateral Action so as to eliminate any
direct or indirect Negative Effect,
21.6.2. causing the enactment of specific legislation to eliminate the
Negative Effect;
21.6.3. any other actions acceptable to Party B.
21.7. Language: This Contract has been written in Chinese and in
English and dully executed in Chinese and in English. The Parties agree
that both versions are equal, and legally binding on both Parties. In
case of discrepancy, the meaning and spirit of the Chinese version shall
be used to interpret the Contract, and the English version shall be use
as a reference.
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21.8 This Contract has binding power and continuity.
IN WITNESS WHEREOF duly authorized officers of each of the parties have
executed this Contract in Beijing, on this 4th day of February 1994.
Shandong Zou Ping Hui Xian Gold Field (Pacific) Limited
Copper & Metal Mine
Per: /s/ ▇▇▇▇ ▇▇▇ Min Per: /s/ Po Sun Liu
------------------------- -------------------------
Name: ▇▇▇▇ ▇▇▇ Min Name: Po Sun Liu
Title: Mine Director Title: Chairman and
Chief Executive Officer
Witness:
/s/ ▇▇▇ ▇▇▇▇ Fei
----------------------------------
Name: ▇▇▇ ▇▇▇▇ Fei
February 4, 1994