Joint Venture Agreement - Arabian Shield Development Co. and Al Mashreq Co. for Mining Investments
JOINT VENTURE AGREEMENT
This Agreement is made on the 5th day of November, 1997, by and between:
1. ARABIAN SHIELD DEVELOPMENT COMPANY (ASDC), a USA public stock company
(Delaware corporation), with corporate offices in Dallas, Texas, USA, and
a Saudi Arabian branch in Jeddah, Saudi Arabia, with Commercial
Registration number 4030097805, represented in this Agreement by its
president and CEO, Hatem Hussein El-Khalidi, hereinafter referred to as
the "FIRST PARTY".
2. AL MASHREQ COMPANY FOR MINING INVESTMENTS (AL MASHREQ), a Saudi Limited
Liability Company, with corporate office in Riyadh, Saudi Arabia, and
Commercial Registration number 1010146690, represented in this Agreement
by Mr. Nassir Ali Kadasah, hereinafter referred to as "SECOND PARTY".
Whereas, the First Party was awarded a Mining Lease in (Al Masane area) of 44
square kilometers area, located in the southwestern part of Saudi Arabia, by
Royal Decree no. M/17, dated 1/12/1413, for the initial period of 30 years, as
spelled out in the Mining Lease Agreement, attached to the said Royal Decree,
and,
Whereas the First Party has conducted extensive surveys, studies, laboratory
works and analysis to verify the viability of the project, and,
Whereas, the Second Party agrees to purchase from the First Party (50%) Fifty
percent of First Party's beneficial interest in the project valued as indicated
in Article (2) below,
And whereas the First Party desires to participate with the Second Party in the
investment of this Lease by entering into a joint venture and forming a Saudi
limited liability company which shall construct and operate the Mining
facilities upon formation and obtaining the Industrial License from The Saudi
Ministry of Industry and Electricity, and transferring the Lease to its name
for the purpose of processing the ore mined in the area covered by the Lease,
THEREFORE, the Parties agree as follows:
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ARTICLE 1. DEFINITIONS
The following terms shall have the following meanings for purposes of this
Agreement:
1.1 "AFFILIATE" means any legal person who directly controls, or is
directly or indirectly controlled by, or is under common control with
a Party to this Agreement. Control means ownership of and the right to
vote at least eighty (80%) percent of the voting stock of the legal
person and the power presently to designate a majority of the Board of
Managers or equivalent body of the legal person.
1.2 "AGREEMENT" means this Joint Venture Agreement.
1.3 "ARTICLES OF ASSOCIATION" means the Articles of Association of the
Arabian Shield company for Mining Industries Ltd. attached as Exhibit
A.
1.4 "COMPANY" means the limited liability company to be established
pursuant to the agreement of the Parties to implement the Project
under the name "The Arabian Shield Company for Mining Industries Ltd."
1.5 "COMPANY'S CONFIDENTIAL INFORMATION'S" means information that the
Company and Partners consider confidential, which includes but is not
limited to, all technical and other information relating to the Mining
Project, or generally to the manufacture of products and all economic,
customer, marketing, cost, pricing, financial and other information.
All of the information described in this definition constitutes
Confidential Information, whether it exists on the date of this
Agreement or is developed after the date of this Agreement and whether
or not the Company specifically identifies it as confidential.
However, confidential Information does not include information already
known to the public or those revealed or which have to be revealed by
due process of law.
1.6 "CONSTRUCTION SCHEDULE" means the schedule for construction of the
Mine(s) and its facilities.
1.7 "EFFECTIVE DATE" means the date on which this Agreement is executed by
the Parties and approved by the Board of directors of both (ASDC) and
(AL MASHREQ).
1.8 "FINANCIAL STATEMENTS" means the written record of the financial
status of the Company, including a Balance Sheet, an Income Statement,
a Statement of Cash Flow, and any
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other statements that are required or customary in Saudi Arabia.
1.9 "MATERIALS" means all written, drawn or otherwise recorded representations
of Confidential Information, whether recorded on paper, in computer
memory or other electronic devices, on magnetic tape or disks, on optical
disks or on other recording media (including, for example, but not
limited to, specifications, drawings, layouts and bills or materials) and
any and all copies thereof.
1.10 "PARTNERS" means the parties hereto, and any person(s) or entity(s) who
acquire Shares in the capital of the Company subsequent to the Effective
Date.
1.11 "PROJECT" means the construction and operation of the Mine(s) and its
facilities to be executed by the Company in Al Masane area as defined in
the Mining Lease Agreement attached thereto.
1.12 "PROJECT BUDGET" means the estimate of revenue and expenditure of the
Company for the period covered by the Construction Schedule.
1.13 "SHARES" means the capital shares of the Company having the
characteristics and capitalization described in Article 5 hereof.
1.14 "TOTAL INVESTMENT COST" means the total amount of capital required to
form the Company, to build the Mine(s) and its facilities (including
without limitation fees to be paid to Contractors, sub-contractors,
suppliers or equipments and materials) and to commence operation of the
Mine and the Processing Plant, including the initial working capital.
ARTICLE 2. TRANSFER OF (ASDC) INTEREST
2.1 "AL MASHREQ" acknowledges that (ASDC) has acquired the beneficial interest
in the project by obtaining the Mining Lease in its name and by incurring
a substantial expenses in connection therewith.
2.2 The Parties agreed to value that interest at (26) twenty six million US
Dollars.
2.3 (ASDC) offers to sell and (AL MASHREQ) accepts to purchase 50% (fifty
percent) of that interest at a lump-sum price of (13) thirteen million US
Dollars.
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2.4 (AL MASHREQ) agrees to pay to (ASDC) the sum noted in Par 2.3 above
promptly, in full, at the time the title to the Mining Lease is
transferred to the new Company "The Arabian Shield Company for
Mining Industries".
ARTICLE 3. ORGANIZATION OF THE COMPANY
3.1 LICENSE AND FINANCING
(a) The two Partners shall, commencing immediately as of the
Effective Date, work in good faith together to apply for and
to obtain a foreign capital investment license for the
Company pursuant to the Foreign Capital Investment Code of
Saudi Arabia, to establish the Company for the purposes set
forth in Article (4) of this Agreement and to transfer the
Mining Lease into the name of the Company.
(b) The Partner shall, commencing immediately as of the
Effective Date, work in good faith together to apply for and
obtain the maximum financing available on the most favorable
possible terms from the Saudi Industrial Development Fund
and local commercial or other financing as necessary so that
the sum of the total amount of debt and the stated capital
of the Company equals or exceeds the Total Investment Cost.
If they fail, within twelve months after the Effective Date,
to obtain firm commitments for financing the project on an
acceptable terms, then they shall be entitled to terminate
this Agreement upon notice to the other Partners, without
any liability or obligation whatsoever to the Company, any
Partner or any prospective Partner, except for amounts paid
to (ASDC) by (AL MASHREQ) in consideration of the beneficial
interest being assigned by (ASDC) to (AL MASHREQ), if any,
which amounts shall be promptly recovered by (AL MASHREQ)
upon liquidation of the Company or under any other possible
arrangements between the Parties. In this case, the full
title to the Mining Lease shall revert to (ASDC).
(c) The (ASDC) shall perform or cause one of its affiliates to
perform an economic feasibility study as reasonably required
to support the efforts to obtain the financing required for
the Company. Such study shall be in accordance with S.I.D.F.
requirements.
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(d) The Company will, after its formation, use its knowledge of
the Saudi legal and commercial system and its best efforts
to facilitate the financing referred to above. Both before
and after the formation of the Company, (Al Mashreq) shall
exert its best efforts to assist the Company to facilitate
the licensing and financing referred to above and to assist
the Company with the Project.
3.2 REGISTRATION OF THE COMPANY
The Partners shall begin immediately to prepare all required
procedures for the formation and registration of the Company as a
limited liability company in accordance with Part VII of the
Companies Law promulgated by Royal Decree No. M/6 of 22.3.1385 H.(as
amended) (the "Companies Law"). The Company shall have the
characteristics set out in the Articles of Association attached as
Exhibit A and incorporated herein by reference. The Arabic text of
these Articles of Association shall be used for registration
purposes in Saudi Arabia. To the extent that the terms of this
Agreement are not incorporated into the Articles of Association, the
unincorporated terms shall be deemed the by-laws of the Company.
3.3 CERTAIN OTHER APPLICATIONS
The Partners shall exert their best efforts to establish the Company
so as to qualify for the various incentives available under the
Foreign Capital Investments Law of Saudi Arabia and for other
benefits and protections available under the rules and regulations
of Saudi Arabia.
3.4 PREVALENCE OF THIS AGREEMENT
The Articles of Association are intended by the Partners to be fully
consistent with this Agreement. If there is any discrepancy between
the provisions of this Agreement and the Articles of Association,
this Agreement shall govern as between the Partners. All Partners
shall exercise their voting rights at each of the general meetings
of the Partners, and they shall cause their representatives and
nominees on the Board of Managers of the Company, to do and perform
all acts, deeds and things as may be necessary or expedient to give
effect to the terms and intent of this Agreement.
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ARTICLE 4. OBJECTIVES AND PURPOSES
The main objectives and purposes of the Company shall be:
1) Yearly production of 35,000 tonnes of Copper Concentrate.
2) Yearly production of 59,000 tonnes of Zinc concentrate.
3) Yearly production of 7.650 ounces of Gold in Dore.
4) Yearly production of 375,000 ounces of Silver in Dore.
These amounts shall be processed from the Ore mined from AL MASANE mines at the
initial rate of (700,000) Seven Hundred Thousands tonnes per annum.
ARTICLE 5. CAPITALIZATION
5.1 STATED CAPITAL
The Company shall have a stated capital of Ninety Seven Million Five
Hundred Thousand Saudi Riyals (SR 97, 500,000 divided into Nine Thousands
Seven Hundred and Fifty (9,750) indivisible shares valued at Ten Thousand
Saudi Riyals (SR 10,000) each. Each Partner shall pay, in full, the
amount of its portion of capital as provided in Section 5.4.
5.2 EQUITY PERCENTAGES
Each of the two Partners shall own 50% of the shares of the Company.
5.3 SHARE REGISTER
In accordance with Article (166) of Part VII of the Saudi Companies Act,
the Company shall prepare and maintain a special register in which shall
be entered the names of the Partners, the number of shares owned by each
and any transfers of shares permitted by this Agreement.
5.4 CAPITAL ACCOUNT
The Company-under-formation shall establish at a bank in Saudi Arabia a
capital account which shall be funded on a timely basis with each
Partner's capital contribution, to be deposited in such bank which will
issue a certificate evidencing such deposit. No Partner shall receive
interest on such contribution, which shall be made in cash at the latest
time permitted by the Ministry of Commerce or other appropriate
authority. The funds shall be available to the
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Company upon satisfaction of the Company's obligations as set out in
Article 162 of the Companies Act.
5.5 PERCENTAGE INTEREST IN PROFITS AND LOSSES
The Partners shall share the profits and losses of the Company in
proportion to their respective shares of equity ownership. The profits of
the Company, if any, available for distribution after making provision for
the statutory reserve or for other reserves established by the unanimous
vote of Partners, shall, to the extent permitted by the terms of the
Company's financing, be distributed annually in full to the Partners in
accordance with the relevant provisions in the Saudi Company Law. The
losses shall be borne by the Partners up to the maximum of their
respective interests in the Share Capital of the Company.
5.6 COMPUTATION OF PROFITS
For the purpose of this Agreement, profits or losses shall mean gross
receipts from any and all operations carried out by the company less all
expenses, direct and indirect, properly attributable thereto, as
determined by the audited financial statements of the Company.
5.7 TAXATION
The Company shall withhold from each Partner and shall pay directly to the
Saudi Arabian government any and all applicable Saudi Arabian income
taxes, Zakat or social insurance levies which are due and payable. Each
Partner shall be responsible for all applicable income taxes, Zakat and
other liabilities relating to their respective portion of the Company's
distributed profits.
ARTICLE 6. TRANSFER OR DISPOSITION OF SHARES
(a) Subject to the provisions of the Company's Articles of Associations,
each of the Partners may transfer Shares to the other or to a designee
of the other that is permitted to own the transferred shares under
Saudi Law.
(b) (ASDC) and (Al Mashreq) may transfer Shares to any of their Affiliates
if the transferee agrees in writing to be bound by this Agreement and
any other obligations previously accepted by the transferor.
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(c) The parties agree and acknowledge that each Partner of the Company
has been selected on the basis of its unique contribution to the
Company and its activities. The parties also agree that it is
highly desirable that this ownership group be maintained and that
in the event that a Partner must dispose of its interest in the
Company that the other Partner be able to participate in the
selection of those entities that will acquire the departing
Partner's interest. Therefore, in any such event, the departing
Partner will cooperate to the maximum extent possible with the
remaining Partner to facilitate these objectives. For instance, if
a Partner is about to be liquidated or declared bankrupt or is
required by a court order to transfer any of its Shares, then that
Partner shall offer to the remaining Partner the right to purchase
its shares at a mutually agreed price.
ARTICLE 7. MEETING AND VOTING OF PARTNERS
7.1 ANNUAL GENERAL MEETINGS:
Partners Annual General Meetings, shall be conducted as provided in the
Articles of Association. The general meeting shall be at the Company's
principal office unless the Partners agree otherwise.
7.2 SPECIAL MEETINGS
Extraordinary general meetings shall be convened at any time, with at
least twenty-one (21) days written notice, upon the request of any
Partner, the request of (3) Board Managers or the request of the
Company's auditor. Such request shall clearly specify the matters to be
discussed.
7.3 VALIDITY OF PARTNER ACTION
Annual general meetings and extraordinary general meetings of the
Partners shall be valid if all Partners are present of duly represented,
and that they have been given the (21) days notice required under the
Articles of Association. No resolution or other action of the Partners
shall be considered adopted or approved unless it has received the
affirmative votes of all Partners.
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7.4 ACTS THAT REQUIRE PARTNERS ACTION
The following actions of the Company may not be taken unless approved by
a resolution of a General Meeting of Partners:
(a) Appointment and removal of the Company's auditors;
(b) Approval of the Financial Statements of the Company;
(c) Amending the Articles of Association of the Company;
(d) Changing the Stated Capital of the Company;
(e) Amalgamating the Company's business with that of another company;
(f) Dissolving or terminating the Company except as provided in this
Agreement;
(g) Changing the principal business or objectives of the Company;
(h) The disposition or encumbrance of all or substantially all of the
assets of the Company (by a single transaction or a series or
transactions) whether by sale, lease, mortgage or pledge;
(i) Any change in the scope of or nature of powers and authorities
vested in the Board of Managers and Executive General Manager.
(j) Approval of distribution of dividends; and
(k) Any other matters reserved to the exclusive jurisdiction of a
General Meeting under the law of Saudi Arabia.
ARTICLE 8. BOARD OF MANAGERS
8.1 BOARD OF MANAGERS
The Board of Managers of the Company shall be composed of Six persons.
8.2 APPOINTMENT OF MANAGERS
Upon issuance of the Company's Commercial Registration Certificate, the
Partners shall appoint the Managers comprising the Board of Managers as
set forth below. Each of the two Partners shall appoint three Managers
from its side and shall be entitled to dismiss and replace at will any of
such managers nominated from its side by giving written notice thereof to
the other Partners. If a Manager
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resigns, dies or if removed from office, the Partner that originally
appointed such Manager shall appoint his successor. The Chairman of the
Board of Managers shall be appointed by the Board from the Managers
designated by (Al Mashreq) and he shall not have a casting vote.
In its First meeting, the Board shall also appoint, by a formal
resolution, an "Executive Manager" from the Managers nominated by (ASDC).
8.3 MEETINGS OF BOARD OF MANAGERS
The Board of Managers shall meet from time to time, but no less often
than two times per year, for the purpose of (a) determining and
supervising the implementation of significant policy matters affecting
the business and affairs of the Company, (b) deciding those matters set
forth in Section 8.6 of this Agreement.
8.4 DUTIES OF CHAIRMAN
The Chairman shall be to preside at all meetings of the Board of
Managers, unless he is absent, in which case a Manager designated by the
present members shall preside. The Chairman shall also exercise, subject
to the approval of the Board when necessary, the following powers:
i. represent the Company in the execution of contracts and
agreements with governmental and non governmental
institutions.
ii. Pledge the Company's assets, fully or in part, before
appropriate judicial authorities.
iii. Opening of bank accounts and execution and issuance of bank
facilities, securities and guaranties for the Company and in
its name.
The Chairman may delegate any of these authorities to the Executive
Manager or to any other official of the Company.
8.5 VALIDITY OF BOARD OF MANAGERS ACTION
Meetings of the Board of Managers shall be valid if and only if a quorum
of at least (four) Managers is present in person or by proxy and all
Managers have received a (15) days prior written notice of the meeting
and of the agenda for the meeting, or consented in writing to waive the
agenda requirement and/or to such shorter notice as the members may agree
to. Meetings of the Board of Managers may
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be held inside or outside Saudi Arabia. If a quorum is not present, the
meeting shall be reconvened upon notice to all Managers at a date not
less than four (4) and no more than ten (10) days thereafter. The quorum
for such reconvened meeting shall be at least four Managers. No
resolution or other action of the Board of Managers shall be considered
adopted unless it has received the affirmative votes of at least four
managers.
8.6 ACTS THAT REQUIRE BOARD OF MANAGERS ACTION
The Executive Manager shall not cause the Company to take any of the
following actions without the adoption of a resolution specifically
approving such action by the Board of Managers:
(a) Recommendation of dividends to the General Meeting;
(b) Other than as set forth in the Project Budget, any expenditure or
commitment by the Company in excess of one million Saudi Riyals
(SR 1,000,000) in the aggregate in any one year or four hundred
thousand Saudi Riyals (SR 400,000) for any one transaction.
(c) Any loans by the Company to any Partner;
(d) Authorizing the Company to take loans or leases with a term longer
than five years;
(e) Authorizing loans to Managers, employees or third parties other
than advances to trade debtors or expense advances to employees in
the ordinary course of business;
(f) Selling or otherwise disposing of real property;
(g) Selling or otherwise disposing of any assets of the Company having
a value of more than one million Saudi Riyals (SR 1,000,000) in
the aggregate in any one transaction, other than sales of
inventory in the ordinary course of business; and
(h) Approval of the Project Budget and Construction Schedule.
8.7 PARTICIPATION BY PROXY
Managers may attend and vote at meetings of the Board of Managers in
person or by proxy given to another Manager consistent with the Articles
or Association.
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8.8 ACTION BY WRITTEN CONSENT
The Board of Managers shall be entitled to adopt a valid resolution
without a meeting by a written resolution approved and signed by (all) of
the Managers.
ARTICLE 9. MANAGEMENT
9.1 EXECUTIVE MANAGER IN OVERALL CHARGE
The day-to-day management of the Company shall be entrusted to the
Executive Manager who shall report to the Board of Managers in connection
with his duties.
9.2 POWERS OF MANAGEMENT
In its first meeting, the Board of Managers shall adopt a resolution
specifying the authorities and responsibilities of the Executive Manager.
9.3 VIEWS ON THE PERFORMANCE OF THE CHAIRMAN AND THE EXECUTIVE MANAGER
If any of the Partners have any complaints or views with respect to the
performance of the person appointed as Chairman or Executive Manager, as
the case may be, such a Partner shall promptly advise the other Partner
of those views or concerns. In this case both Partners shall sit together
to consider and resolve such complaints or views. If no agreement is
reached in that respect within (60) days period, the Board of Managers
shall adopt a resolution removing the Chairman or Executive Manager
whose performance or behaviour is under discussion. The relevant Partner
shall then name an other person to substitute the one so removed.
9.4 SUPERVISION OF CONSTRUCTION
The Partners acknowledge and agree that, while the project is under
construction, (ASDC) or one of its Affiliates will provide a project
manager for the Project. The project manager shall have overall
responsibility and authority for the construction and supervision of the
project. The project manager shall keep the Board advised of his
activities and of all significant developments with respect to the
project. The Project Manager appointed per this clause is a Company's
officer, and as such, the Company will be responsible for his
compensation.
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9.5 COMPANY TO APPOINT CERTAIN OFFICIAL
Upon recommendation from the Executive Manager, the Board shall appoint
qualified persons to serve as (Financial Director), (Operations Director)
and (Marketing Director) of the Company. The Finance Director, Operations
Director and Marketing Director may be removed from office by a
resolution of the Board of Managers as may be recommended by the Chairman
of the Board or by the Executive Manager.
9.6 OTHER EMPLOYEE ACTIONS
The Executive Manager will have the responsibility and right to engage
and dismiss all other employees of the Company.
9.7 GENERAL MANAGER'S AUTHORITY TO SIGN
The Parties agree that it shall require the signature of the Executive
Manager to bind the Company toward third persons, except where a
resolution of the Board of Managers expressly authorizes another person
to sign, or when the matter falls under the authority of the Chairman as
per the Company's Articles of Association. From time to time, the Board
shall take such action as may be necessary to effect the grant of
authority which action may include the granting of further or more
specific powers of attorney.
9.8 SIGNATURE OF CHECKS
The Partners agree that all Company checks shall require co-signature,
except as the Board of Managers may otherwise provide. The Board of
Managers by duly made resolution shall designate persons authorized to
sign checks made on behalf of the Company.
ARTICLE 10. BOOKKEEPING AND ACCOUNTING
10.1 FISCAL YEAR: The fiscal year of the Company shall commence as of January
1 of each year, except for the first fiscal year which, to the extent
permitted by Saudi laws, will commence on the date of issuance of the
Commercial Registration Certificate of the Company, and shall end on
December 31 of that year or the following year, as the Company elects.
10.2 FINANCIAL STATEMENTS AND OTHER RECORDS: The financial books and records
of the Company, including annual Financial Statements, shall conform to
generally accepted
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international accounting principles a Saudi Arabia's legal requirements.
Each of the Partners shall be granted the right at any reasonable time
during normal business hours of the Company, to have full access to the
books and records of the Company in order to review and examine same at
the expense of the requesting party.
10.3 REPORTS TO PARTNERS: The Company shall provide to each of the Partners
quarterly accounts and such periodical or incidental reports concerning
the financial status of the Company as the Partners, may reasonably
request.
10.4 ANNUAL FINANCIAL STATEMENTS: The annual Financial Statements of the
Company shall be audited by a firm of registered public accountants of
international standing having an office in Saudi Arabia, designated by a
resolution of the Partners in accordance with the provisions of this
Agreement.
ARTICLE 11. CONFIDENTIALITY AND COMPETITION
11.1 CONFIDENTIALITY:
(a) The Company, and each Partner shall keep strictly secret and
confidential any and all Confidential Information relating to the
Company and/or to the project and shall not, in any manner
whatsoever, disclose or permit any of its agents, representatives,
employees, attorneys, accountants or advisors to disclose any
Confidential Information to any person or entity whatsoever
without the prior written consent of the relevant authority. The
Company and each other Partner shall take all necessary steps to
safeguard the secrecy and confidentiality of all Confidential
Information and all Materials and to ensure that such Confidential
Information and Materials obtained in connection with this
Agreement are disclosed only to Authorized Persons who need to
know such information for the purpose of performing their duties
on behalf of the Company (or their required official government
functions).
(b) The confidentiality obligation under this section shall not apply
to such a portion of the Confidential Information (if any) which
is or become generally available to the public other than as a
result of a disclosure by the Company, any Partner, any Affiliate,
any of their respective representatives or any other
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person or entity that has an obligation not to disclose such
information.
(c) Each Partner shall be responsible and liable to the Company for
any breach of this Section (11) by its Affiliates, agents,
representatives, employees, attorneys, accountants or advisors.
(d) A disclosure by Partners to any of their Affiliates or their
officers, directors or employees does not constitute a violation
of this Article (11).
(e) All of the provisions of Article (11) shall continue to apply to
each Partner (a) even if he or it ceases to be a Partner for any
reason; or (b) if this Agreement is terminated for any reason.
11.2 COMPETITION
Each of the Partners agrees that during the term of this agreement it
shall not: (I) directly, or indirectly through affiliates or through
other related entities as to which it has significant influence over
management decisions, enter into activities within the Company activity
domain which are in competition with the Company's mining business or
(ii)own or hold an ownership interest in or grant any license or provide
any technical information to any entity(s) which does business in the
Company's Area in competition with the Company's business.
Each of the Partners agrees that for a period of (10) years beginning as
of the date on which ground is broken for the construction of the
project, it shall not own, hold an ownership interest in or grant any
technology license to any entity having or intending to have the same or
similar business within the Company's Area.
ARTICLE 12. DURATION, TERMINATION AND DEFAULT
12.1 PERPETUAL DURATION OF THE COMPANY
The duration of the Company shall be an initial term of (50) years from
the date of issuance of its Commercial Registration Certificate with
automatic renewal(s) for successive terms of (15) years each unless, at
least one year before the expiration of any term, a Partner(s) owning at
least 50% of the Company's shares notify the other Partner(s) of its
intention to cause the liquidation of the Company. The Company will
continue in existence
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notwithstanding the death, cessation of existence or withdrawal of a
Partner.
12.2 TERMINATION
(a) At any time after construction of the Mining Plant(s) has
commenced, this Agreement may not be terminated except by
agreement of all Partners.
(b) If, at any time before construction of the Mining Plant begins,
either Partner;
(i) becomes bankrupt or insolvent or files a petition therefor;
(ii) makes an assignment for the benefit of creditors;
(iii) has a receiver appointed over all or substantial part of its
assets;
(iv) commences or has commenced against it proceedings for
winding up or dissolution except in connection with any
reorganization, recapitalization, restructuring or
amalgamation or merger; or
(v) commits a serious breach with respect to any significant
provision of this Agreement or any other agreement entered
into by it in accordance with this Agreement;
then the other "Aggrieved Party" may serve written notice of default upon
the defaulting Partner. In such event, the defaulting Partner shall be
allowed (30) days to cure the default. If the default is not cured on a
timely basis to the satisfaction of the Aggrieved Party, then the
Aggrieved Party shall be entitled to terminate this Agreement upon (30)
days written notice.
12.3 EFFECT OF TERMINATION FOR BREACH
If this Agreement is terminated as provided in Section 12.2(b) above,
then: (a) the Partner whose action or breach gave rise to the right to
terminate shall, subject to applicable Saudi Arabian law, sell all of its
shares of the Company to the Aggrieved Party or to a person or entity
designated by the Aggrieved Party; (b) the other Partner(s) other than
the Partner whose default occasioned the termination shall be entitled to
all damages or other remedies provided by applicable law; and (c) all of
the obligations of the Partners under all other Articles of
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this Agreement and any other Agreement executed pursuant to this
Agreement shall be terminated with respect to the Partner that has
defaulted, except for obligations of confidentiality, which shall survive
the termination of the Agreement.
12.4 EFFECT OF TERMINATION FOR FAILURE OF CONDITIONS
If this Agreement is terminated because of failure to obtain the
Industrial Licence or to transfer the Lease in the name of the Company
pursuant to Article 2.1(a), then any other agreement executed pursuant or
related to this Agreement and each Partners' obligations under any such
other agreement shall be terminated except for obligations of
confidentiality which shall survive the termination of the Agreement. If
this Agreement is terminated because of failure to provide sufficient
financing for the project pursuant to Article 2.1(b) and the Company has
received its Commercial Registration previously, then the Company shall
be liquidated in accordance with the Companies Law and any other
agreement executed pursuant or related to this Agreement and the
Partners' obligations under any such other agreement shall be terminated
except for obligations of confidentiality, which will survive the
termination of the Agreement.
ARTICLE 13. GOVERNING LAW AND LANGUAGE AND SETTLEMENT OF DISPUTES
13.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of Saudi Arabia.
13.2 LANGUAGE
This Agreement, all communications to each Partner hereunder, all
information, plans, specifications, instructions and services provided
hereunder, and the proceedings of the Partners shall be executed, given
and conducted in the English language. An Arabic translation of this
Agreement will be made available to each Partner at the expense of the
Company.
13.3 ARBITRATION
The procedure for resolution of disputed under this Agreement shall be as
follows:
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(a) Any dispute or claim between the Partners arising out of or in
connection with this Agreement or the breach, invalidity or
termination hereof shall be settled if possible in the first
instance amicably. If amicable settlement cannot be reached, the
matter under dispute shall be resolved by arbitration. This
arbitration clause shall be deemed to be an agreement independent
of the other terms of the Agreement.
(b) The arbitration shall be conducted in Saudi Arabia by a
three-member board of arbitrators in accordance with the
Arbitration Rules of the Kingdom of Saudi Arabia, pursuant to
Royal Decree No. M/46 of 12.7.1403. Each party shall select one
arbitrator and the two arbitrators so chosen will select the third
arbitrator, who shall be chairman of the board of arbitrators.
(c) The decision of the board of arbitrators, which shall be
determined by a majority vote, shall be final and the Partners
agree and acknowledge that any award rendered by such board may be
executed in any court of competent jurisdiction. In its
deliberations, the board of arbitrators shall apply the provisions
of this Agreement.
(d) The official language of the arbitration shall be Arabic unless
the arbitrators agree to conduct the same in English. The Partners
agree that an English translation of all submissions made to the
arbitration panel in Arabic will be provided to the other Party(s)
by the submitting party at the submitting party's cost. Each
Partner irrevocably consents to conducting any arbitration in
English, if the arbitrators will agree to do so.
(e) The award of the arbitrators will be final with respect to all
controversies. Each party shall bear its own costs in the
arbitration, including the fees and expenses of the arbitrator
selected by it. The arbitrators shall decide which party shall pay
the fees and expenses of the third arbitrator.
(f) The award of the arbitrators shall be enforceable by any court
having jurisdiction over the Party or Parties against which the
award has been rendered, or where assets of the Party or Parties
against which the award has been rendered can be located.
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(g) Each of the Parties agrees to pay the amount of any arbitration award
and of any costs and expenses of arbitration which the arbitrators
determine that it is required to pay within sixty (60) calendar days
after receipt of notice of the arbitrators' final award.
ARTICLE 14. ADDITIONAL OBLIGATIONS
14.1 RECRUITING SAUDI MANAGEMENT PERSONNEL
The Company shall make a diligent effort, to identify, recruit and train
management personnel from among Saudi Arabian national who, after training,
can gradually replace the expatriate technical employees of the (ASDC) who
are providing services for the Company on secondment basis. The Arabian
Shield Development Co. shall provide training to such individuals in the
Mining business in the most advanced technical and management methods and
techniques.
14.2 OTHER OBLIGATIONS OF (ASDC)
As long as the (ASDC) owns 50% of the Shares, it shall make available to
the Company all technical information, developments and modernization
necessary for the business improvement. Such an obligation shall extend to
the U.S.A, Delware, parent company the (Arabian Shield Development Co.),
who shall provide the Company and its Saudi Arabian subsidiary (ASDC) with
all technical support during the term of this Agreement in, connection with
the performance of the latters obligations under this Agreement.
ARTICLE 15. MISCELLANEOUS
15.1 NO ASSIGNMENT
No Party to this Agreement may assign, transfer or otherwise convey any or
all of its rights or delegate its duties hereunder without written consent
of the other Party(s), except as expressly provided in this Agreement or
in the Company's Articles of Association; and any attempt to do so will be
void. Permitted transfers can only be valid if the person or entity that
acquires Shares in a manner allowed by this Agreement binds itself in
writing, to the obligations and duties set forth in this Agreement.
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15.2 NOTICES
All notices and other communications pursuant to this Agreement shall be
in writing in the English language. Such notices and communications
shall be deemed to have been duly given if, and as of when, delivered by
messenger, established international air courier such as DHL or Federal
Express against receipt therefor or transmitted by telecopier and
delivered through registered air main and addressed to the respective
Parties as set forth below or at such other address as any Party may
specify to the other in writing:
* Al Mashreq Mining Investments Co. LTD. Address:
-----------------
Fax:
--------------------
* ARABIAN SHIELD DEVELOPMENT CO. LTD. Address:
-----------------
Fax:
--------------------
15.3 NO WAIVERS
The failure of any party to insist upon strict adherence to any provision
of this Agreement on any occasion shall not be considered as a waiver of
any right thereafter to insist upon strict adherence to that provision or
any other provision of this Agreement.
15.4 EXHIBITS
Exhibits attached to this Agreement are an integral part of this
Agreement in the same manner as if those exhibits had been fully
incorporated herein.
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15.5 ENTIRE AGREEMENT
This Agreement (together with the other agreements signed
contemporaneously herewith) sets forth the entire agreement and
understanding between the Parties, and supersedes any agreement or
understanding heretofore existing between them concerning the subject
matters provided for herein.
15.6 COUNTERPARTS
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.7 HEADINGS
The inserted headings are for convenience only and should not be used to
construe or interpret this Agreement.
15.8 CALENDAR
All references to month or year herein shall be deemed references to
Gregorian months and Gregorian years.
15.9 SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall be considered in all respects as if said provision was not
contained herein and such invalidity or unenforceability shall not affect
any other provision of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first written above.
AL MASHREQ MINING INVESTMENTS CO.
By:
---------------------------------
Name: Nassir Ali Kadasah
Title: Authorized Attorney
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ARABIAN SHIELD DEVELOPMENT CO. LTD.
By:
----------------------------------
Name: Hatem Hussein Al Khaldi
Title: President
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