JOINT VENTURE AGREEMENT
This
Joint Venture Agreement, effective 10 May 2006, is made by and among Xxxxx
Xxxxxxxx, and Xxxxxxx Xxxxx (the major shareholders of PT Borneo Mineral
Project) (hereinafter called “Party A”), Eastbay Management Limited,
(hereinafter called “Party B”) and PT Borneo Mineral Projects (hereinafter
called the “Company” or the “ JVCO”) in which all parties agreed as follows:
1.
JOINT VENTURE BUSINESS
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1.01
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Party
A and Party B (hereinafter called “the JV Partners”) agree to operate the
Company on an equity Joint Venture basis. The Company was formed
in
September 2005 and is currently a company registered in the country
of the
Republic of Indonesia and engaged in the business of coal mining
and
export.
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|
1.02
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Party
A owns and/or
controls the Company which has the
right of concession on coal mines in the territory of East Kalimantan
of
the Republic of Indonesia which has a right(s) of concession on a
total
area of 19,191 hectares and an estimated saleable reserve of coal
of
approximately 22 (twenty two) millions tons (the Concessions). A
certified
list of licenses and their renewals dated 26 April 2006 is attached
with
this agreement.
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|
1.03
|
Party
B is a company incorporated BVI and is a 100% subsidiary of NT Holdings
of
which the shares are listed on the Nasdaq OTC BB
market.
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|
1.04
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Both
Party A and B agree that the value of the Company, with its rights
to
exploit the Concessions, access to operating infrastructure and equipment,
is USD2,000,000, this valuation being subject to a due diligence
review by
Party B on the Company’s legal rights of exploitation and related
documents.
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|
1.05
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After
signing this Joint Venture Agreement, Party A and Party B will use
their
best endeavors to apply to the Government of Indonesia for the transfer
of
shares of the Company from Party A to Party B to reflect the terms
and
conditions as agreed below:
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2.
TERM
| 2.01 |
The
Company is now operational and will continue to identify, evaluate,
develop and operate all coal bearing deposits until concessions are
commercially exhausted or its licenses have expired and are not capable
of
being renewed.
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3. SHARE
CAPITAL AND LOANS
| 3.01 |
The
JV Partners shall participate in the assets, liabilities, profits
and
losses of the Company in the percentages shown beside their respective
names (their “Equity Shares”):
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|
Party A - Xxxxx Xxxxxxxx, Xxxxxxx Xxxxx and others
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30% |
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Party B- Eastbay Management Ltd.
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70% |
| 3.02 |
Party
A has already paid up US$300,000 of the capital of the JVCO and has
expended USD700,000 in a variety of expenditures in connection with
the
securing of the requisite licenses and permits, the purchase of certain
basic operating equipment some of which expenditures cannot be
substantiated by receipts.
|
| 3.03 |
Subject
to a due diligence review on the above expenditures, Party B agrees
to
subscribe USD1,400,000 towards the share capital of the Company to
result
in Party B owning such number of shares in the JVCO that represents
70% of
the issued ordinary and voting share capital of JVCO. The Company
will
have thus have a total paid up capital of US$1,000,000 plus a share
premium account of USD700,000 following the above mentioned capital
subscription by Party B.
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| 3.04 |
Party
A shall be entitled to be reimbursed its expenses of USD700,000,
which
shall be treated as an interest bearing shareholders loan from Party
A on
the following basis:
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|
a)
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all
receipted expenses may be reimbursed in cash to a maximum of USD200,000
within
30 days of the share subscription by Party B, subjected to a review
of all
receipted expenditures;
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| b) |
the
balance of USD500,000 in expenditures (whether receipted or not)
shall
bear interest at 6% (six percents) per annum interest payable
semi-annually and shall be paid out of positive cash flow from mining
operations in future years and such repayments shall not exceed more
than
10% of positive cash flow per year unless otherwise determined at
a board
meeting where both Party A and B shareholders are duly
represented.
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| 3.04 |
No
interest shall accrue on the JV Partner’s share capital contributions in
JVCO; however, if a JV Partner is required to provide financial assistance
in the form of cash advances to develop and support mining operations
beyond its share of the partnership (hereinafter called the “Additional
Advance”), such Additional Advances shall be treated as shareholders loans
to JVCO and shall be entitled to 6% (six percent) per annum interest
from
the JVCO on the Additional Advance until fully repaid by JVCO. Such
loan
repayments shall not exceed 10% of positive cash flow per year, unless
otherwise determined at a board meeting where both Party A and B
shareholders are duly represented .
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4.
BANKING ARRANGEMENT AND FINANCIAL RECORD
| 4.01 |
The
JVCO shall maintain a bank account on which cheques may be drawn
only on
the signature of both JV Partners.
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| 4.02 |
The
JVCO shall at all times maintain full and proper accounts of the
business
and such accounts shall be accessible to each of the JV Partners
at all
times on reasonable notice. Party B will assign personnel to supervise
the
JVCO’s administration, accounting and financial record
keeping.
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5.
MANAGEMENT OF JV BUSINESS
| 5.01 |
Apart
from Concession rights and license renewals, Party A shall be responsible
as follows:
|
|
a)
|
assist the JVCO to undertake mining operations including the construction of access road, unloading terminals, mining and transportation equipment where required, and management or the subcontract procurement of labor if necessary. |
| b) | assist JVCO to control the cost of output approximately US$ 18 per ton under current conditions, which budgeted cost includes depreciation and amortization of construction costs of infrastructure and equipment mentioned in (a) above but excluding Government royalties and taxes. |
| (c) |
identify
on behalf of the JVCO additional coal concessions of high quality
having
gross calorific value of 6.000 Kcal/Kg or
higher.
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| 5.02 |
Party
A, representing two persons, shall receive an annual remuneration
as
follows:
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|
(a)
|
for
the CEO position, an annual salary of USD120,000 plus reasonable
housing
allowances and means of transportation and this salary shall be review
annually;
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(b)
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for
the COO position, an annual salary equal to 70% of the CEO’s salary plus
reasonable housing allowances and means of transportation and this
salary
shall be reviewed annually as and when the CEO’s position is reviewed
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| (c) |
10%
of Profits after as incentive bonus shall be reserved for management
of
JVCO and the allocation of this incentive bonus shall be recommended
by
the CEO and shall be subject to agreement by the board of
JVCO.
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| 5.02 |
Party
B will assist the JVCO in marketing, sales and export of coal, cash
flow
management, financial control, capital funding and financing of equipment
purchases.
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6.
TERMINATION OF PARTNERSHIP
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6.01
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The
JV may only be voluntarily dissolved during the life of the JV Partners
by
mutual agreement..
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|
6.02
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On
voluntary dissolution of JVCO, subject to any contrary agreement
binding
the former JV Partners and after making any necessary adjustments
in
accordance with generally accepted accounting principles to allow
for any
debit balances in the Joint Venture Partners’ separate capital accounts,
the business of JVCO shall be promptly liquidated and applied in
the
following order:
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| a) | to pay the debts and liabilities of the JV Partners; |
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b)
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to
refund any outstanding Additional Advances together with the accrued
interest;
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c)
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to
distribute the credit balances of the JV Partners’ separate income capital
accounts;
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d)
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to
distribute the credit balances of the JV Partners’ separate capital
accounts;
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e)
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to
distribute any residue to the JV Partners in proportion to their
respective equity interest..
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6.03
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A
JV Partner involuntarily ceases to be a partner on death or insolvency
or
on becoming mentally incompetent so found by a court of law
which does
not permit the JVCO to continue
operations.
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6.04
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On
a JV Partner involuntarily ceasing to be a partner subject to any
contrary
agreement binding the former JV Partner and the remaining JV Partners
and
after making any necessary adjustments in accordance with the generally
accepted accounting principles to allow for any debit balances in
the JV
Partners’ separate capital accounts, the remaining JV Partners shall pay
the JV Partner ceasing to be a JV Partner or his estate, as the case
may
be, any credit balances in his separate income and capital accounts
as
shown on the financial statements of the partnership for the next
month
end following the date of his ceasing to be a JV Partner (the “Payment
Calculation Statements”) and, upon payment, the JV Partner has no further
claims against the partnership or the remaining JV Partner in respect
of
their interest in the partnership. For clarity and greater
certainty, the Payment Calculation Statements shall not be adjusted
to
show value for goodwill or work-in-process but shall be adjusted
as though
for a fiscal year end.
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7.
ARBITRATION OF DISPUTES
| 7.01 |
Any
dispute between the JV Partners arising out of or related to this
agreement and any amendments to it, whether before or after dissolution
of
the partnership or a JV Partner involuntarily ceasing to be a JV
Partner,
shall be referred to and settled by a single arbitrator agreed upon
by the
JV Partners or, in default of such agreement, to a single arbitrator
appointed pursuant to the legislation governing submissions to
International Arbitration Centre. The decision of the arbitrator
is final
and binding with no right of appeal.
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8.
MISCELLANEOUS
| 8.01 |
In
this agreement, the singular includes the plural and the masculine
includes the feminine and neuter and vice versa unless the context
otherwise requires.
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| 8.02 |
The
capitalized headings in this agreement are only for convenience of
reference and do not form part of or affect the interpretation of
this
agreement.
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| 8.03 |
If
any provision or part of any provision in this agreement is void
for any
reason, it shall be severed without affecting the validity of the
balance
of the agreement.
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| 8.04 |
Time
is of essence of this agreement.
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| 8.05 |
The
term of this agreement may only be amended in writing dated and signed
by
all the JV Partners’
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Agreed
and executed in duplicate originals by
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Party
A
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Party
B-Easybay Management Ltd.
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/s/
Xxxxx
Xxxxxxxx
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/s/
Xxxxx
Xxxx
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Name:
Xxxxx Xxxxxxxx
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Name:
Xxxxx Xxxx
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|
Title:
President & Director
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Title: Director & CEO |
/s/
Xxxxxxx
Xxxxx
Xxxxxxx
Xxxxx
Title:
The
Company-PT Borneo Mineral Projects
/s/
Xxxxx
Xxxxxxxx
Name:
Xxxxx Xxxxxxxx
Title:
President & Director
