Joint Venture Agreement
Exhibit
10.42
Between
[Shanxi
Hua Xx Xxxxxx Smelting Co.,]
and
[China
Global Mining Resources Limited]
for
the establishment of
[Sino-American
Hua Ze Nickel & Cobalt Metal Co., Ltd.]
Dated
14
April 2007
THIS
Joint Venture Agreement
(the
“Agreement”) is entered into by and between the following parties in Xian,
China. on [April 14, 2007],
[
Shanxi
Hua Xx Xxxxxx Smelting Co.,
], a
company duly incorporated and existing under the laws of PRC. (“Party
A”)
Address:
[High-Tech Zone in Xi’an, Shanxi Province, PRC]
[China
Global Mining Resources Limited],
a
company duly incorporated and existing under the laws of British Virgin Islands
(“ Party B”), a wholly-owned subsidiary of Wits Basin Precious Metal Inc, a
company duly incorporated and existing under the laws of USA;
(Party
A
and Party B are hereafter collectively referred to as “Parties”, and
individually as a “Party”)
Whereas
(1)
The
Parties agree to establish Sino-foreign equity joint venture called
[Sino-American Hua Ze Nickel & Cobalt Metal Co., Ltd.] (the “Company” or the
“Joint Venture”) in the city of Xi’an, PRC with Party A to contribute [assets
and equity interests] it held representing seventy five percent (75%) of the
equity interest in the Company, Party B to contribute cash representing twenty
five percent (25%) of the equity interest in the Company, based on this
Agreement as well as the joint venture contract (“JV Contract”) and articles of
association (“Articles of Association”) which shall be signed on the basis of
this Agreement for the establishment of the Company;
(2)
As of
the date of this Agreement, the equity interests which Party A proposes to
inject into the Company are held directly by Party A’ shareholders. Both Parties
agree that Party A may contribute the equity interests to the Company after
Party A has made agreements with its shareholders for the acquiring of the
equity interests;
(3)
Party
B acknowledge that the total value of the assets to be contributed and the
assets relating to the equity interest to be contributed by Party A is above
RMB
1 billion. Party B wishes to negotiate with Party on the establishment of the
Company.
NOW
THEREFORE,
it is
agreed as follows:
PART
A. JOINT
VENTURE ARRANGEMENT
Article
1 – Parties to the Joint Venture
The
Parties to the joint venture are:
| (1) |
PARTY
A,[ Shanxi Hua Xx Xxxxxx Smelting Co.,
]
|
|
Legal
Representative:
|
[
Wang Yinghu]
|
|
[Chairman
of Board]
|
|
|
Nationality:
|
[
Chinese ]
|
| (2) |
PARTY B,
China Global Mining Resources Limited.,
|
|
Legal
Representative:
|
[Xxxxxxx
Xxxxx]
|
2
|
Position:
|
[President]
|
|
Nationality:
|
[U.S.A.]
|
Article
2 – Establishment of the Company
| 2.1 |
Name
and Address
|
|
(a)
|
The
name of the Company shall include “Hua Ze” and be registered with the
company registration authority.
|
|
(b)
|
The
name of the Company in Chinese is:
[
]
|
|
The
name of the Company in English is: “[Sino-American Hua Ze Nickel &
Cobalt Metal Co.,
Ltd.]”
|
|
(c)
|
The
registered address of the Company shall be at: [High-Tech Zone in
Xi’an
Shanxi Province, PRC]
|
| 2.2 |
Local
Government Approval
|
The
establishment of the Company shall be subject to the approval by appropriate
government authorities. Party A shall apply, on behalf of the Parties and JV
Company, to such government authorities for the approval of any and all relevant
documents legally required for the establishment of the Company, including
the
issuance of the Approval Letter, Approval Certificate and Business License
of
the Company.
| 2.3 |
Hong
Kong & U.S. Approvals
|
Party
B
should apply for both government authorities for the approvals when it is
required by the relevant laws and regulations.
Article
3 – Purpose and Scope of Business
| 3.1 |
Purpose
|
The
purpose of the Company shall be to adopt advanced technology and such other
management methods in order to achieve favourable economic results and an
acceptable rate of return for the Parties on their respective capital
contributions as well as to make a contribution to PRC.
| 3.2 |
Scope
of Business
|
The
scope
of the business of the Company shall be Nickel and Cobalt smelting, mines
development and other metal’s development and producing. And it subjects to any
legally required government approvals and/or registrations.
| 3.3 |
Production
and Operation Scale
|
After
the
further financing and development of the Company’s business, the annual
production capacity of electric xxxxxxx products of the Company expected for
the
year of 2010 is 10,000 tons and with the annual profit no less than RMB780
million.
3
Article
4 – Total Investment and Registered Capital
| 4.1 |
Total
Investment
|
The
Company’s total investment shall be RMB two and one half billion
(RMB2,500,000,000].
| 4.2 |
Registered
Capital
|
The
Company’s registered capital shall be RMB one billion four hundred and forty
nine million three hundred and seventy five thousand
(RMB1,449,375,000).
| 4.3 |
Capital
Contribution and Equity Ratio
|
|
(a)
|
Party
A’s contribution to the registered capital of the Company shall be
in the
form of assets and equity interest of its controlling subsidiary,
in the
amount of RMB1,087,031,250, representing seventy five percent (75%)
of the
equity interest of the Company. (The value of related assets and
interest
contributed should include the unsecured liabilities of RMB a hundred
and
sixty million (RMB 160,000,000) recorded as accounts payable or
shareholders’ loans specified in the Appendix 1 of this
Agreement.)
|
The
equity interest that Party A will contribute to the Company is detailed in
Appendix 1 attached hereto.
|
(b)
|
Party
B’s contribution to the registered capital of the Company shall be
in the
form of cash in the amount of RMB362,343,750, representing twenty
five
percent (25%) of the equity interest of the Company. Purpose of use
of
such contribution and use of the loans specified in Article 4.4 and
Article 4.6 is detailed in Appendix 2 attached
hereto.
|
| 4.4 |
Contribution
and Loan Arrangement Schedule
|
| 4.4.1 |
Subject
to the satisfaction of the conditions set forth in Article 4.5 below,
Party A shall:
|
|
(a)
|
contribute
40% of its contribution in the amount of RMB434,812,500 within 30
days
after the date of issuance of the Company’s Business License (the
“Establishment Date”); and
|
|
(b)
|
contribute
the balance of its contribution of the registered capital of the
Company
before 31st
December, 2007.
|
|
4.4.2
|
Subject
to the satisfaction of the conditions set forth in Article 4.5 below,
Party B shall make the following contribution and loan
arrangement:
|
|
(a)
|
RMB
154,648,313 is equity contribution by cash within 90 days of signing
of
the Agreement;
|
|
(b)
|
The
remaining RMB 347,850,000 will be equity contribution and shareholder’s
loan before December 31 2007. The equity contribution shall be 59.71
% of
this part of payment and the shareholder’s loan shall be
40.29%.
|
4
| 4.5 |
Conditions
Precedents
|
Each
Party shall not be obligated to make its respective capital contributions to
the
registered capital of the Company until and unless each of the following
conditions has been satisfied without delay, unless waived by the Party in
writing:
|
(a)
|
The
following documents or certificates required for the legal establishment
of the Company have been issued:
|
|
(i)
|
an
approval document issued by appropriate government authorities approving
the Feasibility Study Report and all its appendices jointly prepared
by
the Parties relating to the establishment and operations of the
Company;
|
|
(ii)
|
the
Approval Letter and Approval Certificate issued by appropriate government
authorities approving the establishment of the Company, the JV Contract
and the Articles of Association of the Company (including their respective
Exhibits) without varying their terms unless any such variation has
first
been agreed by the Parties in
writing;
|
|
(iii)
|
the
Business License of the Company issued by appropriate government
authority.
|
|
(b)
|
Party
B has, according to Article 4.6 of the Agreement, arranged the loan
in the
amount of RMB seventy seven million three hundred thousand (RMB77,300,000)
to Party A or a third party designated by Party A and Party A or
the said
third party has received such loan before May 7,
2007.
|
| 4.6 |
Pre
Financing Arrangement
|
Party
B
shall arrange the loan in the amount of RMB seventy seven million three hundred
thousand (RMB77,300,000) to Party A or the third party designated by Party
A
before May 7, 2007 for the purpose of mining development and construction for
the subsidiary listed in the Appendix 1 hereof. The detailed payment schedule
and repayment of such loan may be further negotiated and determined by the
parties.
| 4.7 |
Further
Financing Arrangement
|
Both
Parties may arrange further financing arrangement for Company to the extent
permitted by PRC laws and according to the Company’s Articles of Association for
the Company’s business development.
| 4.8 |
Priority
Call Option
|
After
the
completion of loans provided in Article 4.4 and Article 4.6, Party B may remain
the right, in any time, to convert of the outstanding balance of such loans
into
equity interest in the Company to hold additional equity interest of the Company
to the extent permitted by the PRC laws and regulations.
After
the
establishment of the Company, Party B has the first right for call option for
acquiring another 40% of the equity interest of the Company when Party A has
the
intention to transfer such equity interest it holds. Detailed terms and
conditions shall be negotiated and determined by the Parties.
5
| 4.9 |
Priority
Future Acquisition Option
|
Party
B
has the priority right to acquire other mines which are and to be owned by
the
connected party of Party A, including zinc mines, moly mines and any other
mines. Detailed terms and conditions shall be negotiated and determined by
the
Parties.
Article
5 – Board of Directors and General Manager
| 5.1 |
Formation
|
The
date
of the issuance of the business license of the Company shall be the date of
the
establishment of the Company and the Board of Directors. The Board of Directors
is the highest authority of the Company and shall decide all major issues of
the
Company.
| 5.2 |
Board
Composition and Term of Office
|
The
Board
of Directors of the Company shall consist of [five (5)] persons. Party A shall
appoint [three (3)] persons, Party B shall appoint [two (2)] persons. The
Chairman shall be nominated by Party A. The Chairman is the legal representative
of the Company. The term of office of the Directors and the Chairman shall
be
three (3) years, provided that any Party may replace any of their appointed
Directors during the term of their office. Directors are eligible to serve
consecutive terms if they are re-appointed by the Parties. The names of the
members of the initial Board of Directors appointed by the Parties are set
forth
in Appendix 3 attached hereto.
| 5.3 |
Authority
of Board of Directors
|
The
following matters shall require the unanimous vote of all Directors present
at a
duly convened meeting of the Board of Directors or unanimous written consent
if
adopted by a written resolution without a meeting:
|
(a)
|
amendment
of the Articles of Association or the JV
Contract;
|
|
(b)
|
increase
or decrease in the registered capital of the
Company;
|
|
(c)
|
termination
or dissolution of the Company;
|
|
(d)
|
merger
with another organization, division or change of the form of the
Company.
|
Such
other matters as agreed to by the Parties in the JV Contract and the Articles
of
Association of the Company shall also require unanimous approval by the Board
of
Directors; provided that any matters that are not legally required to be
resolved by unanimous decision by the Board of the Directors shall be decided
upon by simple majority.
| 5.4 |
General
Manager
|
The
Company shall have one General Manager and Two Deputy General Managers, who
shall be nominated by Party A and officially appointed by the Board of
Directors. The name of the General Manager and Deputy General Managers are
set
forth in Appendix 4 attached hereto.
| 5.5 |
The
Company shall have one Financial Officer. The first Financial of
the
Company shall be nominated by Party B and officially appointed by
the
Board of Directors. The position of the Financial Officer shall be
concurrently held by one Director nominated by Party B. The powers
and
duty of the
|
6
Financial
Officer of the Company shall be further negotiated and determined by the Parties
in the Articles of Associations.
Article
6 – Profit Distribution
| 6.1 |
Dividends
|
The
Parties agree that the dividends to be distributed shall be paid to each Party
in accordance with the proportion of paid-up contribution by the Party in the
registered capital of the Company.
Article
7 – JV Documents
The
Parties hereby specifically agree to the following:
(1)
The
Agreement shall become effective after being signed by the authorized
representatives of the Parties and affixed with the official seals of the
Parties;
(2)
Once
the Agreement becomes effective, it shall supersede the Termsheet
for Convertible Bond Facility
signed
on March 27, 2007 by Party B and Shanxi Xingwang Group. The Termsheet
for Convertible Bond Facility
shall
become void and null upon the Agreement’s becoming effective;
(3)
Once
the Articles of Association and the JV Contract becomes effective, such
documents shall supersede this Agreement and this Agreement shall become void
and null; and
(4)
Party
A may terminate the Agreement in its absolute discretion if Party B fails to
arrange the loan as specified in Article 4.6 to Party A or the third party
designated by Party A within 15 business days after signing of this
Agreement.
(5)
The
use of the Party B’s contribution and loans in the Company shall be in strict
compliance with the purpose of use specified in Appendix 2 of the
Agreement.
Article
8 – JV Contract and Articles of Association
The
formal JV documents(including JV Contract and Articles of Association) shall
be
signed by both Parties within one month after signing of the
Agreement
Article
9 – Confidentiality and Non-Disclosure
Each
Party agrees to keep confidential and not disclose to any third party the terms
of this Agreement and/or any related matter without the prior written consent
of
the other Party.
Article
10 – Governing Law
The
formation of this Agreement, the JV Contract and the Articles of Association,
their validity, interpretation, execution and settlement of any disputes arising
thereunder shall be governed by, and construed in accordance with, the laws
of
the PRC excluding Hong Kong, Macao and Taiwan.
Article
11 – Dispute Resolution
The
Parties shall strive to settle any dispute, controversy or claim arising from
the interpretation or performance of, or in connection with the Agreement
through friendly consultations. In case no settlement can be reached through
consultations within sixty (60) days of the delivery of notice requesting such
consultation
by one Party to the other Party, then such dispute shall be submitted to China
International Economic and Trade Arbitration Commission for arbitration in
Beijing. The arbitration proceedings shall be conducted in Chinese. The
arbitration shall be legally final and binding on the Parties.
7
Article
12 – Language and Counterparts
This
Agreement is written in English and Chinese. Both language versions shall have
equal validity and any inconsistencies or conflicts between the two language
versions shall be resolved according to the intention of the Parties and the
purpose of this Agreement. This Agreement is executed in two (2) originals
of
each language version, with each Party having one (1) of each language
version.
IN
WITNESS WHEREOF, the Parties have caused their respective duly authorized
representatives to execute the Agreement and affix their respective office
seals
to this Agreement as of the date first written above.
(Below
is
left blank intentionally)
8
(signing
page)
[Shanxi
Huaze Nickle Smelting Co.,] (seal)
Authorized
Representative: ___________________________
Signature:
/s/
[China
Global Mining Resources Limited](seal)
Authorized
Representative:
Signature:
/s/
9
Appendix
1
[Equity
interest to be Contributed by Party A to the Company]
[Ping’an
Xinhai Resource Development Company Limited, 93.33% equity
interest]
10
Appendix
2
Purpose
of use of the Party B’s contribution and loans
|
Item
|
Capital
(RMB10,000)
|
|
|
Constructing
and equipment of Yuanshishan
|
10000
|
|
|
Repayment
|
16000
|
|
|
Develop
new mine
|
17000
|
|
|
Cash
flow for Mine
|
7000
|
|
|
Cash
flow for smelting plant
|
5000
|
|
|
Cash
flow for smelting technical system
|
2000
|
|
|
Total
|
57000
|
11
Appendix
3
[Initial
Members of the Company’s Board of Directors]
Director
nominated by Party A:
Director
nominated by Party B:
12
Appendix
4
[
Managers of the Company]
General
Manager nominated by Party A:
Deputy
General Manager nominated by Party A:
____________________________.
13
