AGREEMENT
This agreement dated September 21st, 1998 made between Integrated
Carbonics Corp. (Party A) and YiChang HengDa Graphite Group
Company Ltd. (Party B), executed in Yichang, Hubei Province, the
PRC.
Whereas the parties have successfully completed negotiations and
are desirous of developing a successful business relationship and
agree as follows;
They shall establish a cooperative joint venture company with a
30 years term in the County of YiChang and the name of the
company shall be Yichang Integrated Carbonics Company Limited,
which shall utilize a limited liability company in accordance
with the PRC's laws and shall carry out business within the
graphite industry in the following scope;
Mining right to a 6,000,000 tonne graphite deposit in Yichang
County.
8,000 tonne per annum flotation, mining and concentrate
production facility located at the orebody site (A) above.
Drying, screening, packing, and classification (15,000tpa)
plants; including a 98-99% high purity plant (leaching) and an
expandable graphite plant - capacity 1,000 tpa.
A 1,000 tonne per annum capacity graphite sheet plant comprised
of an existing sheet plant and the construction and installation
of a second graphite sheet plant.
The parties contributions:
Party A: will invest 55% of the capital in the form of cash
and/or equipment as required and has the option to increase its
investment to 70%. Party A shall also contribute western
standards of management, accounting, technology where required
and know how.
Party B: will invest 45% of total capital in the form of
depreciated assets, inclusive of mining rights and existing
operations etal, customers, marketing, management, labour, etc.
Total Investment:
The total investment if 52 million RMB of which 12 million shall
be its registered capital. The amount of total investment is
suggested by Party B and agreed upon by Party A. This could not
be changed unless agreed by both parties.
Board of Directors and Management:
The board shall be composed of 5 directors; 3 appointed by Party
A and 2 appointed by Party B. The Chairman by Party A, the Vice-
chairman by party B. The General Manager shall be appointed by
the board as shall the Vice General Manager.
Distribution of Profit:
Party A shall initially receive 75% of the profits until all of
its capital investment is repaid, during this period Party B
shall receive 25%. Subsequently, Party B shall receive 65% of
the profits until its investment is repaid and party A will
receive 35% of the profits during this period. Once both parties
investments have been fully repaid, profits will be distributed
proportionately to their respective investment in the Joint
Venture Company.
Marketing Agency:
The parties agree that a marketing agency (independent from the
JVC) may be established to co-ordinate sales and marketing and
administer the invoicing and collection of sales to customers.
First Right of Refusal:
Party A shall have the first right of refusal to purchase other
existing assets of the YiChang Graphite Group or participate in
other proposed projects or expansions of either Party B or the
YiChang Graphite Group, if or when they become available.
8. This agreement is legally binding upon the parties and may
be amended by the formal contract to be drafted by party A's
legal counsel within the next tow (2) weeks, and which shall be
executed by both parties in YiChang City formally upon the
earliest possible convenient date.
