Equity Transfer Heads of Agreement
Exhibit
10.45
Equity
Transfer Heads of Agreement
This
Equity Transfer Heads of Agreement sets out the proposed terms for a purchase
by
China Global Mining Resources Limited or its nominee (the “Purchaser”)
of 95%
of the equity in Yun County Changjiang Mining Company Limited [ ]
(the “Company”)
(the
“Transaction”).
1 The
Company
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(a)
|
The
Company is a limited liability company registered at Taogouhe Village,
Baisangguan Town, Yun County, Hubei, People’s Republic of China
(“PRC”).
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(b)
|
The
registered capital of the Company is RMB 0.5 million. The registered
capital is fully paid up and not pledged or subject to a court freezing
order or claims or disputes.
|
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(c)
|
The
Company holds a licence to explore for iron ore in Yun County, Hubei
Province (“Mining Site”
or the “Mine”),
which licence is described in Schedule 1 (“Licence”).
|
2 Purchaser
The
Purchaser is China Global Mining Resources Limited with its registered address
at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British
Virgin Islands or its nominee.
3 Selling Equityholders
The
selling equityholders of the Company (“Selling
Equityholders”)
the
percentage of equity in the registered capital of the Company held by each
Selling Equityholder; the equity that each Selling Equityholder is selling
to
the Purchaser; and the equity to be held by the Selling Equityholder at
completion of the Transaction is set out below:
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Selling
Equityholder
|
|
Percentage of
Equity Held
|
|
Percentage
of Equity to
be Sold to
the
Purchaser
|
|
Percentage of
Equity to be
held following
Completion of
the Transaction
|
|
|||
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Lu
Benzhao [ ] of Xxxx 000, Xx. 00 Xxxxxx Xxxxxxx,
Xxxxxxx District, Maanshan, Anhui with PRC identity card number
340505195112240018
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48
|
%
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43
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%
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5
|
%
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||||
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Xx
Xxx [ ] of Xxxx 000, Xx. 00 Xxxxxx Xxxxxxx, Xxxxxxx
District, Maanshan, Anhui with PRC identity card number
340503198603090238
|
42
|
%
|
42
|
%
|
0
|
%
|
||||
|
Xxx
Xxx Hui [ ] of Xxxx 000, Xxxx 0, Xxxxx 0, Xxxxx 11,
Qingshan Street, Xinwu District, Wuhu, Anhui with PRC identity card
number
340204198403130717
|
10
|
%
|
10
|
%
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0
|
%
|
||||
1
4 Transaction
The
Purchaser shall purchase 95% of the equity in the Company by purchasing 43%
from
Lu Benzhao [ ] (“Xx
Xx”),
42%
from Xx Xxx [ ] and 10% from J in Xxx Xxx [ ]. The price
to be paid by the Purchaser to the Selling Equityholders for 95% of the equity
in the Company shall be USD 57,000,000 or its RMB equivalent (“Purchase
Price”),
of
which not more than USD 15,000,000 shall be paid in cash and the balance in
shares in a listed company as shall be determined by the parties. The Purchase
Price shall be reduced by the amount to be paid to Xx Xx Benzhao pursuant to
the
MSC (as defined below in clause 13). Each Selling Equityholder shall be paid
that proportion of the Purchase Price which represents their proportion of
equityholding in the Company. Upon completion of the Transaction, the Company
shall be converted into a sino-foreign cooperative joint venture with registered
capital of 95% being held by the Purchaser and 5% being held by Xx Xx
Benzhao.
5 Due Diligence and Legal Documentation
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(a)
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The
Selling Equityholders shall at all times provide the Purchaser, its
representatives and professional advisers with access to the Company’s
premises, the Company’s documents and the Mining Site at all reasonable
times in order to conduct due diligence and the Selling Equityholders
shall keep the Purchaser promptly informed of all matters regarding
the
Company, the Mining Site and the application for a mining licence
that
covers the area covered by the
Licence.
|
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(b)
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The
Purchaser and the Selling Equityholders shall use their best endeavours
to
negotiate and execute the following documents in form and substance
satisfactory to the Purchaser:
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(ii)
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joint
venture contract;
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(iii)
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articles
of association;
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(iv)
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management
services contract; and
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(v)
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such
other transaction documents as the Purchaser may in its sole discretion
require,
|
(collectively,
the “Definitive
Documents”).
2
6 Loan for Acquisition of a Licence to Mine at the Mine Site
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(a)
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In
consideration for the Selling Equityholders entering into this Equity
Transfer Heads of Agreement and if the Selling Equityholders and
the
Purchaser execute an agreement for the exclusive supply of iron ore
from
the Mine to the Purchaser (“Exclusive
Supply Agreement”)
on terms satisfactory to the Purchaser, the Purchaser shall arrange
for
the Company to receive a loan. The value of the loan shall be calculated
on the basis of RMB2 per tonne of iron ore that constitutes the reserve
at
the Mine Site as certified by an internationally recognised mining
consultant, subject to such loan never being more than RMB 1.2 billion
(“Licence
Loan”)
and on terms and conditions to be agreed. Both the Selling Equityholders
and the Purchaser acknowledge that the Licence Loan must be used
for the
sole purpose of paying fees for the acquisition of a licence to mine
at
the Mine Site.
|
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(b)
|
The
Company shall open a new bank account to receive the Licence Loan
funds
(“Licence Loan Bank
Account”).
Xx Xx Benzhao and a representative of the Purchaser will be appointed
joint signatories of the Bank Account, such that the Licence Loan
Bank
Account may not be operated without obtaining the signature of Lu
Benzhao
and the Purchaser’s representative.
|
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(c)
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If
the Purchaser is not registered as a 95% holder of registered capital
in
the Company prior to receipt of the Licence Loan amount in the Licence
Loan Bank Account, then the Selling Equityholders shall procure that
the
Company restructure its board of directors with five (5) members
and that
four (4) members be nominated by the Purchaser and one (1) member
be
appointed by the Selling Equityholders. One (1) of the four (4) members
to
be nominated by the Purchaser shall also be appointed as the Chairman
and
Legal Representative of the Company and shall hold the Company chop.
The
Selling Equityholders and the Company undertake to prepare, sign,
file or
otherwise all documents necessary to effect the formal appointment
and
registration of such directors in accordance with PRC laws and
regulations.
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7 Loan
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(a)
|
In
consideration for the Selling Equityholders entering into this Equity
Transfer Heads of Agreement, the Purchaser shall arrange for the
Company
to receive a loan on or before 30 June 2007. The value of the loan
shall
be USD 10 million (“Loan”)
and the Selling Equityholders shall pledge their registered capital
in the
Company to the Purchaser (“Security”).
|
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(b)
|
The
Company shall open a new bank account to receive the Loan funds
(“Bank Account”).
Xx Xx Benzhao and a representative of the Purchaser will be appointed
joint signatories of the Bank Account, such that the Bank Account
may not
be operated without obtaining the signature of Lu Benzhao and the
Purchaser’s representative.
|
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(c)
|
The
Selling Equityholders and the Company shall be responsible for and
cooperate with the Purchaser to obtain registration of the Loan and
the
Security with all necessary PRC government
authorities.
|
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(d)
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Upon
completion of the Transaction, the Purchaser may, in its sole discretion,
elect to set-off the Loan against the Purchase Price such that the
Purchase Price is reduced by the amount of the
Loan.
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3
8 Exclusivity
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(a)
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In
consideration of the Purchaser entering into this Equity Transfer
Heads of
Agreement, the Selling Equityholders shall not, and shall procure
that
their affiliates shall not, from the date of signing this Equity
Transfer
Heads of Agreement and 3 May 2012:
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(i)
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solicit
offers from;
|
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(ii)
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negotiate
or hold discussions with; or
|
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(iii)
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enter
into any agreement or arrangement
with,
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any
person other than the Purchaser:
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(i)
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to
sell or transfer or encumber any part of their equity interest in
the
registered capital of the Company;
or
|
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(ii)
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to
sell or transfer or lease any assets owned or operated by the Selling
Equityholders in connection with the Mining Sites, including the
Licences;
or
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(iii)
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to
borrow, exchange for value, receive as a gift, or otherwise, any
amount
that is applied to, received or used in connection with the Mines
or the
Licences.
|
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(b)
|
In
consideration of the Purchaser entering into this Equity Transfer
Heads of
Agreement, the Selling Equityholder shall not, and shall procure
that
their affiliates shall not, from the date of signing this Equity
Transfer
Heads of Agreement and 3 May 2012, develop, finance, or mine at the
Mine
Site or sell, gift, or exchange for value any product derived from
the
Mine Site, without the consent of the
Purchaser.
|
9 Undertakings
9.1 Undertakings
by the Selling Equityholders
The
Selling Equityholders jointly and severally undertake to the Purchaser that
each
shall:
|
(a)
|
use
their best endeavours to negotiate and execute the Definitive
Documents;
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(b)
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provide
the Purchaser, its representatives and professional advisers with
access
to the Company’s premises, the Company’s documents and the Mining Site at
all reasonable times in order to conduct due diligence and keep the
Purchaser promptly informed of all matters regarding the Company,
the
Mining Site and the application for a licence to mine at the Mine
Site;
|
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(c)
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rectify
any irregularities in the corporate existence of the Company and
obtain
any approvals, licences, consents, registrations or otherwise that
the
Purchaser may, in its sole discretion, require the Selling Equityholder
or
the Company to obtain in connection with the
Transaction;
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4
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(d)
|
pay
any amounts owing in respect of the Licences and perfect any
irregularities in the Company’s title to the Exploration Licence held and
obtain any licence, including without limitation a licence to mine
at the
Mine Site (which hereinafter shall also be referred to as a “Licence”)
and any environmental licences, necessary or required by the Company,
in
the Purchaser’s sole discretion, to exploit the Mine Site for a period of
no less than 3 years; and
|
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(e)
|
execute
an agreement for the exclusive supply of iron ore from the Mines
to the
Purchaser (“Exclusive Supply Agreement”) on terms satisfactory to the
Purchaser
|
9.2 Undertakings
by the Purchaser
The
Purchaser undertakes to the Selling Equityholders that it shall:
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(a)
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use
its best endeavours to negotiate and execute the Definitive Documents;
and
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(b)
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execute
the Exclusive Supply Agreement on terms satisfactory to the
Purchaser.
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10 Damages
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(a)
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Following
receipt by the Company of the Loan or contribution by the Purchaser
of USD
15,000,000 to the registered capital of Maanshan Global Mining Resources
Limited [ ] if the Selling Equityholders breach any of their
obligations under this Equity Transfer Heads of Agreement, the Selling
Equityholders shall jointly and severally be liable
to:
|
|
(i)
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repay
the Loan in accordance with its
terms;
|
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(ii)
|
repay
the Licence Loan in accordance with its terms;
and
|
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(iii)
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pay
all direct and indirect costs incurred by the Purchaser in connection
with
the Transaction including, without limitation, all legal, accounting,
finance, tax and technical mining advisor
fees.
|
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(b)
|
Following
receipt by the Company of the Loan or contribution by the Purchaser
of USD
15,000,000 to the registered capital of Maanshan Global Mining Resources
Limited [ ] and in the event that the Selling
Equityholders:
|
|
(i)
|
breach
clause 8 (“Exclusivity”) of this Equity Transfer Heads of Agreement;
or
|
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(ii)
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breach
clause 9.1(e) (“Exclusive Supply Agreement”) of this Equity Transfer Heads
of Agreement; or
|
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(iii)
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breach
the Exclusive Supply Agreement; or
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(iv)
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do
not own or cease to own the equity in the Company;
or
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(v)
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do
not own or cease to own the Mine Site or the Licences;
or
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(vi)
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cease
business at the Mine Site or cease business or wind-up or deregister
the
Company; or
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5
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(vii)
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take
any action or fail to take any action that prevents the Selling
Equityholders and/or the Purchaser from entering into the Definitive
Documents or completing the Transaction contemplated by this Equity
Transfer Heads of Agreement,
|
then
the
Selling Equityholders shall jointly and severally be liable to:
|
(A)
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repay
the Loan in accordance with its
terms;
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(B)
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repay
the Licence Loan in accordance with its terms;
and
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(C)
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pay
to the Purchaser an amount of USD 27,500,000 (or its RMB equivalent)
as
liquidated damages (“Liquidated
Damages”).
|
The
Liquidated Damages are a genuine pre-estimate of the Purchaser’s loss. Any
amount payable by the Selling Equityholders pursuant to this clause 10(b)(B)
constitutes liquidated damages only. It shall not affect the validity of other
provisions in this Equity Transfer Heads of Agreement or any other remedies
that
the Purchaser may have against the Selling Equityholders for enforcement of
this
Equity Transfer Heads of Agreement.
11 Conditions Precedent
Conditions
precedent to completion of the Transaction and payment of the Purchase Price
in
the Equity Transfer Agreement shall include (but not be limited to) the
following:
|
(a)
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The
Company has been duly incorporated with fully paid up registered
capital;
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(b)
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The
Company and the Selling Equityholders have fully cooperated with
the
Purchaser, its representatives and professional advisers to assist
the
Purchaser to conduct its (i) technical mining due diligence, (ii)
financial due diligence, (iii) legal due diligence and (iv) commercial
due
diligence in respect of the Company and its rights to explore and
exploit
the Mining Site and, in each case, there is a successful completion
of
such due diligence and the results of which shall be satisfactory
to the
Purchaser;
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(c)
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The
execution of the Definitive Documents in form and substance satisfactory
to the Purchaser.
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(d)
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Execution
of a business plan between the Purchaser and Xx Xx regarding the
Company’s
future operations, including, without limitation, a plan for future
capitalisation of the Company;
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(e)
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Approval
by the board of directors of the
Purchaser;
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(f)
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All
necessary corporate approvals and consents having been obtained,
including
those of the Company’s board of directors and each of the Selling
Equityholders waiving their pre-emptive rights to purchase each other’s
equity interest in the Company;
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(g)
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All
Chinese government approvals, registrations, filings, consents and
permits
required for entry into the Definitive Documents, completion of the
Transactions contemplated by the Definitive Documents, transfer of
the
Licences, exploration and mining at the Mine Site, and the entry
into,
enforceability and performance of the Definitive Documents shall
have been
obtained and shall be in full force and effect, including without
limitation, any environmental or mining approvals or
licences;
|
6
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(h)
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The
Company holds a valid, effective and fully paid licence to explore
and
mine iron ore at the Mine Site, subject to such Licence being renewed
and/or expanded, for a period of no less than 3
years;
|
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(i)
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An
approval letter having been issued indicating that the Purchaser
has
received approval to own 95% of the registered capital of the
Company;
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(j)
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A
business licence having been issued indicating that the Purchaser
is the
registered owner of 95% of the registered capital of the Company
and that
the Company’s business licence has a business scope satisfactory to the
Purchaser, in its sole discretion;
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(k)
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Receipt
of a technical mining report issued by an internationally recognised
mining consultant indicating that the iron ore reserves at the Mine
Site
are no less than 600 million metric tonnes and that the iron ore
reserves
held at the processing facility are no less than 200 million metric
tonnes;
|
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(l)
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Issue
of a valuation report by the Company prepared by a PRC registered
valuation firm indicating that the Company’s valuation is no more than the
Purchase Price;
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(m)
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Evidence
that all taxes and fees incurred in connection with the Licence and
operation of the Mine Site have been duly paid as at the date of
completion of the Transaction;
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(n)
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Evidence
that the Company has good title to all buildings used in connection
with
the operation of the Mine Site and the processing of the iron ore
and has
obtained the consent of any landlord to the assignment of any leased
premises;
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(o)
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Evidence
that the Company has good title to all land used in connection with
the
operation of the Mine Site and the processing of iron ore or has
obtained
the consent of any landlord to the assignment of any leased
premises;
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(p)
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Evidence
that all loans between the Company and any other third party have
been
unwound;
|
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(q)
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Receipt
of a copy of each of the Selling Equityholders PRC identity
cards;
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(r)
|
There
being no material adverse change in the financial condition or business
prospects of the Company or the Mine Site or the Licences or the
estimated
iron ore reserves of the Mining Site since the conclusion of the
technical, financial, legal and commercial due diligence;
and
|
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(s)
|
Other
conditions precedent to be determined following the Purchaser’s due
diligence.
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12 Warranties
The
Selling Equityholders will provide Warranties in the Equity Transfer Agreement
to the Purchaser that shall include, among others:
7
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(a)
|
The
Company is a corporation duly organized, validly existing and in
good
standing under the laws of the People’s Republic of China (“PRC”),
with fully paid up registered capital and full corporate power and
authority to own, lease and dispose of its assets and
properties;
|
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(b)
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The
identity of the Selling Equityholders and their existing
equityholding;
|
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(c)
|
The
equity to be sold in connection with the Transaction being free from
any
security interest or third party
claims;
|
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(d)
|
The
Company conducting business within its authorised business
scope;
|
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(e)
|
The
Company having all consents, licences and approvals required to conduct
its business, including but not limited to a current and valid Exploration
Licence [ ] and Mining Licence [ ], which
consents, licences and approvals are not subject to cancellation
or third
party claims as a result of this Transaction or
otherwise;
|
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(f)
|
The
Company having passed its annual inspection for 2006 and any other
inspections conducted by any governmental or administrative authority,
including without limitation any regarding mine safety and environmental
compliance;
|
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(g)
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There
being no disputes, investigations, litigation, administrative proceedings,
arbitration or mediation whether existing, threatened or potential
with
regard to the Company;
|
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(h)
|
All
documents provided by the Company and by the Selling Equityholders
to the
Purchaser is true, correct and not misleading in any
respect;
|
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(i)
|
The
Company’s audited balance sheet as at 31 December 2006, represents a true
and fair view of the Company’s accounts as at 31 December
2006;
|
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(j)
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The
Company has no undisclosed or contingent liabilities and no outstanding
loans;
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(k)
|
All
tax liabilities incurred by the Company as at the date of completion
of
the Transaction have been paid in full or accrued sufficiently in
the
Company’s accounts;
|
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(l)
|
Any
resource tax and resource compensation incurred in connection with
the
Licence and operation of the Mine Site has been fully paid or accrued
sufficiently in the Company’s accounts as at the date of completion of the
Transaction;
|
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(m)
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The
Company has good title to all buildings used in connection with the
operation of the Mine Site or has obtained the consent of any landlord
to
the assignment of any leased
premises;
|
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(n)
|
The
Company has good title to all land used in connection with the operation
of the Mine Site or has obtained the consent of any landlord to the
assignment of any leased premises;
|
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(o)
|
All
loans between the Company and any other third party have been
unwound;
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(p)
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All
environmental liabilities incurred by the Company have been paid
in full
or accrued sufficiently in the Company’s
accounts;
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8
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(q)
|
All
salaries, social security payments and any other employee benefits
of the
Company’s employees have been paid in full or accrued sufficiently in the
Company’s accounts;
|
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(r)
|
The
Company has complied with all relevant laws and regulations, including
without limitation, any laws regarding the environment, mine safety
and
worker safety;
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(s)
|
Selling
Equityholders are not aware of any matter which may result in the
loss of
the Licences or inability to renew the
Licences;
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(t)
|
Selling
Equityholders have not given any guarantees to any Selling Equityholder
or
any third party; and
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(u)
|
Other
warranties that would be standard for a transaction of this type,
as well
as any others that may arise as a result of continuing due diligence
by
the Purchaser, its representatives and professional
advisers.
|
13 Indemnities
The
Selling Equityholders will jointly and severally provide specific indemnities
to
the Purchaser and the Company in the Equity Transfer Agreement in respect of
the
following liabilities or obligations incurred by the Company prior to the
effective date of transfer of their equity interest to the
Purchaser:
|
(a)
|
taxation;
|
|
(b)
|
environmental
and land degradation;
|
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(c)
|
mine
and worker safety;
|
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(d)
|
all
liabilities that are not disclosed to the Purchaser by the Selling
Equityholders in writing;
|
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(e)
|
payment
of amounts owing in connection with the operation of the Mine Sites,
the
Licences, leases, licences or land use
rights
|
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(f)
|
payment
of employee salary and benefits;
|
|
(g)
|
breach
of any laws or regulations, including without limitation, any with
respect
to environment, mine safety, worker safety and the built environment;
and
|
|
(h)
|
other
appropriate matters that may become evident in the course of continuing
due diligence by the Purchaser, its representatives and professional
advisers.
|
14 Management Services Contract
Upon
completion of the Transaction, the Purchaser will enter into a management
services contract (“MSC”)
with
Xx Xx Benzhao or his nominee (“Consultant”).
The
key terms of the MSC are as follows:
9
|
(a)
|
Consultant
shall provide operational management services to the
Purchaser;
|
|
(b)
|
The
term of the MSC shall be eight (8) years on a full time basis from
completion of the Transaction; and
|
|
(c)
|
Consultant
shall be responsible for any approvals required for its entry into
the MSC
and all taxes, whether inside or outside the PRC, associated with
payment
of the Consultant’s salary.
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15 Non-competition
15.1
Non-competition
|
(a)
|
Following
execution of this Equity Transfer Heads of Agreement for a period
of five
(5) years following completion of the Transaction, the Selling
Equityholders and their affiliates shall not directly or indirectly
or in
any manner whatsoever own or participate or be involved in any way
in any
business that explores, exploits, processes, purifies, transports,
trades
or deals in any other way in any mined product in the
PRC.
|
|
(b)
|
Notwithstanding
clause 15.1(a), the Selling Equityholdersmay hold a passive investment
of
less than 10% equity in listed companies that hold investments in
any
mined product and hold their investments in respect of Nanjing Sudan
Mining Co., Ltd [ ] and assets from Maanshan Zhaoyuan Mining
Co., Ltd [ ] and assets from Xiaonanshan Mining Co., Ltd
[ ].
|
15.2 Right
of First Refusal
Following
execution of this Equity Transfer Heads of Agreement, the Selling Equityholders
and their affiliates undertake to the Purchaser that if the Selling
Equityholders or any other companies in which the Selling Equityholders directly
or indirectly control 25% or more of the issued capital take(s) on or invest(s)
in any businesses and/or activities, either on their own or in the form of
a
joint venture, that is engaged in the mining or processing of any mined product,
then the Selling Equityholders undertake to grant and will use their best
efforts to procure such companies grant to the Purchaser a right of first
refusal to acquire such businesses from the Selling Equityholders or such
companies, as the case may be.
16 Time Schedule
It
is the
intention of the parties that, unless otherwise agreed among the Purchaser
and
the Selling Equityholders and the Company, due diligence shall take place from
1
July 2007 to 31 August 2007, that execution of the Definitive Documents and
submission of the Definitive Documents to the PRC government authorities for
approval and registration purposes shall take place before 30 September
2007.
10
17 Language, Governing Law and Dispute Resolution
17.1 Language
This
Equity Transfer Heads of Agreement and the Definitive Documents shall be
prepared in English and Chinese, and both languages shall be of equal
validity.
17.2 Governing
Law
This
Equity Transfer Heads of Agreement and the Definitive Documents shall be
governed by PRC law.
17.3 Dispute
Resolution
All
disputes arising from this Equity Transfer Heads of Agreement and the Definitive
Documents shall first be resolved by friendly consultation between the parties,
failing which the disputes shall be submitted to arbitration at the Hong Kong
International Arbitration Centre for arbitration.
18 General
18.1 General
Warranties
The
Purchaser warrants to the Selling Equityholders that:
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(a)
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it
has full legal right, power and authority to enter into this Equity
Transfer Heads of Agreement and to perform and comply with its obligations
thereunder; and
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(b)
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it
has in full force and effect the authorisations necessary for it
to enter
into this Equity and Assets Transfer Heads of Agreement;
and
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(c)
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its
obligations under this Equity Transfer Heads of Agreement are legal,
valid
and binding and are enforceable against it in accordance with its
terms;
and
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(d)
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it
is duly incorporated or established and validly existing at its place
of
registration and its equity and assets are not pledged or subject
to a
court freezing order or claims and disputes;
and
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(e)
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no
litigation, arbitration or administrative proceeding is currently
taking
place or pending or threatened against it or its
assets.
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The
Selling Equityholders warrant to the Purchaser that:
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(a)
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each
has full legal right, power and authority to enter into this Equity
Transfer Heads of Agreement and to perform and comply with its obligations
thereunder; and
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(b)
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their
obligations under this Equity Transfer Heads of Agreement are legal,
valid
and binding and are enforceable against them in accordance with its
terms;
and
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11
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(c)
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no
litigation, arbitration or administrative proceeding is currently
taking
place or pending or threatened against them or their
assets.
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18.2 Successors
and assignment
The
Purchaser is entitled to assign and/or nominate any of its affiliates to be
a
party to this Equity Transfer Heads of Agreement or any of the agreements
referred to in clause 5.
The
Selling Equityholders may not assign or otherwise dispose of their rights or
obligations under this Equity Transfer Heads of Agreement without the prior
written consent of the Purchaser.
18.3 No
partnership or agency
Nothing
in this Equity Transfer Heads of Agreement shall create, or be deemed to create,
a partnership between the parties or a relationship of agent and principal
between the parties.
18.4 Entire
agreement
This
Equity Transfer Heads of Agreement contains the entire agreement between the
parties with respect to its subject matter, supersedes all previous agreements
and understandings between the parties.
18.5 Variation
and waiver
Unless
this Equity Transfer Heads of Agreement expressly states otherwise, a provision
of this Equity Transfer Heads of Agreement, or right created under it, may
not
be waived or varied except in writing signed by the party or parties to be
bound. Any waiver by the Purchaser of a breach of any provision of this Equity
Transfer Heads of Agreement shall not be considered as a waiver of any
subsequent breach of the same or any other provision.
18.6 Copies
This
Equity and Assets Transfer Heads of Agreement shall be executed in six copies
in
English and six copies in Chinese.
18.7 Foreign
Exchange
Where
any
amounts are to be converted between USD and RMB, the relevant exchange rate
shall be the middle rate published by the People’s Bank of China on the relevant
date.
18.8 Partial
invalidity
If
at any
time any provision of this Equity Transfer Heads of Agreement is or becomes
illegal, invalid or unenforceable in any respect in any jurisdiction, the
remaining provisions of this Equity Transfer Heads of Agreement shall not in
any
way be affected or impaired thereby.
18.9 Amendment
This
Equity Transfer Heads of Agreement may only be amended in writing signed by
the
parties.
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18.10 Binding
effect
This
Equity Transfer Heads of Agreement shall be binding on all the parties from
the
date first set out on the execution page.
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Executed
on 4 May 2007 by the following
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EXECUTED
by CHINA GLOBAL
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MINING
RESOURCES LIMITED
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by
its authorised director:
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)
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)
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For
and on behalf of
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Signature
of director
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CHINA
GLOBAL MINING RESOURCES LIMITED
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[ ]
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/s/
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Name
of director (block letters)
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Authorised
Signature(s)
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)
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)
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)
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SIGNED
by LU, BENZHAO [ ]:
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/s/
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/s/
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Signature
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Witness
Signature
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Print
Name
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SIGNED
by Xx Xxx [ ]
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/s/
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Signature
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Print
Name
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SIGNED
by Xxx Xxx Hui [ ]
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/s/
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Signature
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Print
Name
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14
SCHEDULE
1
Exploration
Licence
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Exploration
Licence
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Licence
number
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4200000630337
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Licence
holder
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Hubei
Yun County Changjiang Mining Company Limited
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Project
name
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General
exploration of Laowan Iron Mine in Yun County, Hubei
Province
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Geological
location
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Yun
County, Hubei Province
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Plot
Number
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I49E019012,
I49E019013
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Exploration
area
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17.78
km2
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Exploration
unit
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No.
4 Geological Team of Henan Coloured Metal Geological Mining
Bureau
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Licence
period
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26
Oct 2006 to 25 Oct 2007
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15
SCHEDULE
2
Joint
Venture Contract
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1.
Registered Capital
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Within
30 days of the issue of the Company’s amended business licence evidencing
that it is registered as a sino-foreign joint venture, the Purchaser
shall
contribute RMB100 million and Xx Xx shall contribute RMB5,000,000
to the
registered capital of the Company.
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2.
Board of Directors
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(a) The
Board of Directors of the Company (the “Board”)
shall be comprised of 5 directors. Of these 5 directors, 4 directors
are
to be appointed by the Purchaser (one of whom shall be appointed
as
Chairman) and 1 director is to be nominated by the Xx Xx
Benzhao.
(b) All
Board resolutions other than those that are required under PRC law
to be
passed unanimously shall be passed by a simple majority of the
directors.
(c) Quorum
for meetings of the Board shall be two-thirds of all
directors.
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3.
Disposal of Equity
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Pre-emptive
rights shall apply to equityholders seeking to dispose of equity
to third
parties.
Xx
Xx shall waive his pre-emptive rights against the Purchaser with
respect
to the transfer of equity by the Purchaser to its affiliate.
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4.
Future Financing
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(a) Additional
Capital Increase by both Parties
If
the Company requires capital, then the parties shall contribute capital
to
the Company in proportion to their respective equityholdings in the
Company. However, if either party is not in a position or not willing
to
make such additional capital contribution, the party that does not
contribute additional capital shall have their equityholding diluted
and
each party shall take all steps necessary to ensure that the adjustment
and dilution are approved and registered with the relevant government
authorities.
(b) Bank
Loans and Guarantees
If
the Company requires capital, then the parties may borrow that capital
from a bank. If the Company borrows money from a bank, then each
equityholder shall be responsible for providing a guarantee for that
proportion of the loan that represents their equityholding in the
Company.
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16
