Attached files
| file | filename |
|---|---|
| 8-K - CHINA SHEN ZHOU MINING & RESOURCES, INC. | v208170_8k.htm |
| EX-99.1 - CHINA SHEN ZHOU MINING & RESOURCES, INC. | v208170_ex99-1.htm |
[This
document has been translated from Chinese to English]
Equity
Transfer Agreement
January
13, 2011
Party
A-1: Jia Xiangfu (Natural Person Shareholder)
ID Card
No.: 330725195401155914
Party
A-2: Yu Wuqiang (Natural Person Shareholder)
ID Card
No.: 340103196302024017
Party
A-3: Chen Qiaolin (Natural Person Shareholder)
ID Card
No.: 330725195806295923
Parties
A-1, A-2, and A-2 are collectively referred to as “Party A” or the “Transferor.”
Party
B-1: Xinjiang Xingzhen Mining Co., Ltd.
(hereinafter
referred to as “Xingzhen”)
Legal
Representative: Yu Xiaoming
Party
B-2: Min Yong
ID Card
No.: 362321195909110012
Party
B-3: Wang Changman
ID Card
No.: 342530195711100015
Parties
B-1, B-2, and B-3 are collectively referred to as “Party B” or the “Transferee.”
Party A
and Party B are collectively referred to as the “Parties”.
Recitals
Whereas:
1. Parties
A-1, A-2 and A-3 are Chinese Citizens, who respectively own eighty percent
(80%), twenty percent (20%) and ten percent (10%) of the equity of Xinyi
Fluorite Company Ltd. (“Xinyi”), which is a valid
existing corporation registered in Jingde County, Anhui Province, People’s
Republic of China (“China” or the “PRC”).
Xinyi
owns:
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·
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the
mining permit to the Qingzheng Fluorite Xinyi Mine No.1 of Xinyi, with the
permit number of C3418252009036120010379, covering an area of 0.151 square
kilometres (the “Qingzheng Mine”) the
permit of which is attached hereto as Exhibit
A;
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·
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the
mining permit to the Xinglong County Guangrong Fluorite Mine of Xinyi,
with the permit number of C3418002009046120011698, covering an area of
0.0695 square kilometres (the “Guangrong Mine”) the
permit of which is attached hereto as Exhibit
B;
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·
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the
mining rights and assets to the Sanxi Old Town flotation plant (the “Sanxi
Plant”).
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2. Party
B-1 is a valid existing limited liability company registered in Xinjiang Uygur
Autonomous Region, China.
3. Party
B-2 is a Chinese citizen, whose resident address is Room 101, Unit 1, Building
14, No.8, Binjiang East Road, Xinzhou District, Shangrao City, Jiangxi Province,
China.
4. Party
B-3 is a Chinese citizen, whose resident address is ICBC Dormitory 5, Shengli
East Road, Jinyang Town, Jingde County, Anhui Province, China.
In order to:
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1.
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give
full credit to the respective strengths of the Parties with respect to the
resources, technology and funding of the
Parties;
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2. expedite
the establishment of the fluorine chemical industry base with fluorite
exploitation as the foundation and high value-added fluorine chemicals as the
core product;
3. leverage
Party A’s superior resources to create superior products and economic benefits;
and
4. make
contributions to the local economic development, under the uniform deployment of
the Jingde County Government,
Party B
agrees to consolidate the Qingzheng Mine, the Guangrong Mine and the Sanxi Plant
by acquiring an equity interest of Xinyi owned by Party A.
The
Parties, upon fair and friendly negotiation, enter into this Equity Transfer
Agreement (the “Agreement”) with respect to
the transfer of equity of Xinyi and other related matters as
follows:
Terms
1. Target
Equity.
Party A
agrees to transfer seventy percent (70%) of the equity of Xinyi it owns
(hereinafter referred to as the “Target Equity”) to Party
B. In such transfer, Party A-1 will transfer sixty percent (60%) of
the total equity of Xinyi, and Party A-2 will transfer ten percent (10%) of the
total equity of Xinyi. Party A-3, however, will not transfer any
portion of the ten percent (10%) of the total equity of Xinyi that it
owns. Party B agrees to acquire the Target Equity in the following
proportion: Party B-1 will acquire fifty-five percent (55%) of the total equity
of Xinyi, Party B-2 will acquire ten percent (10%) of the total equity of Xinyi,
and Party B-3 will acquire five percent (5%) of the total equity of
Xinyi.
Upon the
completion of the transfer, the equity structure of Xinyi will be as follows:
Party A and Party B will hold thirty percent (30%) and seventy percent (70%)
respectively. Party A-1 will hold twenty percent (20%) and Party A-3
will hold ten percent (10%). Party A-2 will no longer hold any equity
of Xinyi after the Target Equity is transferred. Party B-1 will hold
fifty-five percent (55%), Party B-2 will hold ten percent (10%), and the Party
B-3 will hold five percent (5%).
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2.
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Transfer
Consideration.
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2.1.
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Given that Party A
guarantees that the amount of ore with an average ore grade of at least
sixty-five percent (65%) mined within the permitted area of the mining
permit of the Qingzheng Mine will exceed five hundred thousand (500,000)
metric tons, the Parties have agreed to a transfer price of Renminbi
(“RMB”) seventy million Yuan (RMB
70,000,000.00) for the Target
Equity.
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2.2.
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Party
B agrees to provide RMB twenty-eight million Yuan (RMB 28,000,000.00) to
Xinyi, out of which, RMB twenty million Yuan (RMB 20,000,000.00) shall be
used for the renovation of the Sanxi Plant and the
Guangrong Mine, and RMB eight million Yuan (RMB 8,000,000.00) shall be
paid to Party A.
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3.
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Terms of
Payment.
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The
parties agree, that the transfer consideration shall be paid in cash instalments
and in the form of common shares of China Shen Zhou Mining & Resources, Inc
(the “Parent Company”).
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3.1.
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On
the date of the execution of this Agreement, Party B shall pay RMB five
million Yuan (RMB 5,000,000.00) to Party A, and the Parties shall commence
the equity registration modification and financial
handover.
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3.2.
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Within
seven (7) business days as of the execution of this Agreement, Party B
shall pay RMB fifteen million Yuan (RMB 15,000,000.00) to Party A. Among
such payment, Party B-1 shall pay RMB ten million Yuan (RMB
10,000,000.00), and Party B-2 shall pay RMB three million Yuan (RMB
3,000,000.00), and Party B-3 shall pay RMB 2 million Yuan (RMB
2,000,000.00).
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3.3.
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Party B shall make
a payment in the form of the Parent Company’s common shares valued at RMB
fifty million Yuan (RMB 50,000,000.00) to Party A before June 30, 2011,
where the exchange rate is US 1 Dollar equals to RMB 6.6
Yuan.
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3.4.
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Party
B shall make a cash payment in the amount of RMB eight million Yuan (RMB
8,000,000.00) to Party A before February 28,
2011.
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3.5.
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Party
B shall make payment instalments to Party A in the amount of RMB twenty
million Yuan (RMB 20,000,000.00) as a renovation fund for the Guangrong
Mine and the Sanxi Plant after the execution of this
Agreement.
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4.
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Representation and
Warranties.
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4.1.
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Party
A warrants that it has the right to proceed with the transaction as set
forth in this Agreement, and it has obtained all necessary authorizations
from the Company and under the law to execute and perform this
Agreement.
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4.2.
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Party
A warrants that at the date of the execution of this Agreement, it
legitimately possesses the Target Equity shares, the mining rights of
Xinyi, and all related assets as well as the disposal rights for such
assets.
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4.3.
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Party A warrants
that prior to the execution date of this Agreement, it has obtained a
written approval of the cooperation between the parties of this Agreement
from Jingde County’s People’s Government, or Jingde
County’s People’s Government as an attesting party
of this Agreement stating approval of the Agreement and that Xinyi
continues to enjoy the preferential tax treatment of the “Attract Foreign Investment
Policy.”
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4.4.
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Party
A warrants that a total amount of five hundred thousand (500,000) metric
tons of ore can be extracted from within the mining permit area of the
Qingzheng Mine. If five hundred thousand (500,000) metric tons are not
extracted, Party A shall undertake such loss and compensate Party B for
each ton of shortage with RMB two hundred Yuan (RMB
200.00).
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4.5.
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Part
A warrants that after the execution of this Agreement, Party A shall
assume all of Xinyi’s outstanding claims and
debt.
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4.6.
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Party
A warrants safe production and normal operation in the mining mills during
the transaction period, and all assets will be kept safe without any loss
and damage during this period.
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4.7.
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Party
B warrants that it has the right to proceed with the transaction as set
forth in this Agreement , and it has obtained all necessary authorizations
from the Company and under the law to execute and perform this
Agreement.
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4.8.
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Party
B warrants the legitimacy of the source of funding for the equity transfer
consideration under this Agreement.
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4.9.
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Party
B warrants that the equity share value of the Parent Company in the amount
of RMB fifty million Yuan (50,000,000.00) will not devalue, otherwise
Party B shall make up the
difference.
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4.10.
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Party
B warrants that if income tax incurred from the first payment of RMB five
million Yuan (5,000,000.00) and the second payment of RMB fifteen million
Yuan (15,000,000.00), Xinyi shall bear such
cost.
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4.11.
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Party
B warrants that Xinyi will pay Party A a total amount of RMB three point
eight million Yuan (RMB 3,800,000) for the ore in
stock.
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4.12.
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Both
parties warrant that when Xinyi needs to make an investment, both Parties
will contribute to such investments according to their equity ownership
percentage (after the renovation fund of RMB twenty million Yuan
(20,000,000.00) for Guangrong Mine and Sanxi Plant is
exhausted).
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5.
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Profit
Sharing.
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The
condition precedent for profit sharing is keeping a sufficient amount of
relevant commissions for the company according to relevant PRC laws, regulations
and accounting rules.
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5.1.
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On
the condition that Party A guarantees five hundred thousand (500,000)
metric tons of production from Qingzheng Mine, the profit sharing plan
between Party A and Party B shall be based upon the equity ownership
percentage (tax shall be dealt with by each party respectively), that is,
Party A gets thirty percent (30%), and Party B gets seventy percent
(70%). If the Qingzheng Mine exceeds five hundred thousand
(500,000) metric tons of production, a conditional profit sharing plan
takes effect that Party A and Party B shall each get fifty percent (50%)
of the net income on the excess part respectively.
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5.2.
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If
ore is found deep within the Qingzheng Mine, application for expanding the
mining scope of the mining permit will be required, Xinyi will undertake
such application cost. After obtaining such mining permit, when all
investment costs on the deep mining are deducted from the operating
profit, Party A and Party B shall each obtain fifty percent (50%) on the
residual profit
respectively.
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6.
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Management
Handover.
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6.1.
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After
Party A receives the first RMB five million Yuan (RMB 5,000,000.00)
payment, both Parties shall commence the equity registration modification
and the financial handover.
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6.2.
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On
the day of receiving the second payment of equity transfer consideration,
both Parties shall complete the equity registration modification and the
legal procedures required for
re-registration.
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6.3.
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A
take-over team shall be organized and the majority of the team shall
comprise of personnel from Party B. The take-over team shall fully take
over Xinyi and designate the principal management personnel in Xinyi.
Party A shall coordinate with the take-over team accordingly. The
placement of Xinyi’s original employees shall be properly arranged by
negotiations of both Parties.
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6.4.
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Party
A shall handover all assets, rights and its related certificates or
documents (including company assets, documents, accounting books and
records, seals, etc.) of Xinyi within the scope of this transaction as set
forth in this Agreement, and jointly prepare a handover checklist, signed
and sealed by each party.
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7.
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The Administrative
Structure of the Company.
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The
Company shall form a Board of Directors (the “Board”), comprising of five
(5) people including two (2) people from Party A and three (3) people from Party
B. The Chairman of the Board shall be appointed by Party
B. The Board shall be formed after the execution of this Agreement to
determine the detailed administrative structure and the management model of the
company.
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8.
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Liabilities for
Breach.
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Both
Party A and Party B shall follow the terms of this Agreement strictly. In the
event that one Party breaches this Agreement, the breaching Party shall be
responsible for indemnifying the other Party for all economic
losses.
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9.
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Miscellaneous.
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9.1.
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This
Agreement shall be executed in six (6) copies, Party A and Party B shall
each keep three (3) copies , and all copies shall bear equal legal
effect.
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9.2.
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This
Agreement shall take effect on the date of execution and seal by both
Party A and Party B.
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9.3.
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Any
matters not provided herein shall be supplemented to this Agreement
subject to both parties’ Agreement, supplemental Agreement bears equal
legal effect.
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*Remainder
of page intentionally left blank*
6
No Text
Within This Page
Signing
Parties:
Party
A1: Jia Xiangfu
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Signature:
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/s/ Jia Xiangfu
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Party
A2: Yu Wuqiang
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Signature:
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/s/ Yu Wuqiang
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Party
A3: Chen Qiaoling
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Signature:
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/s/Chen Qiaoling
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Party
B1: Xingzhen Mining Co Ltd
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Authorized
signatory:
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/s/ Cui
Helin
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Party
B2: Min Yong
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Signature:
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/s/ Min Yong
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Party
B3: Wang Changman
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Signature:
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/s/ Wang Changman
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January
13, 2011 at Jingde County, Anhui Province, China
SIGNATURE
PAGE TO EQUITY TRANSFER AGREEMENT
Exhibit
A
Copy of
Mining Permit for Qingzheng Mine
People’s
Republic of China
Mining
Permit
(Duplicate)
Certificate
No.: C3418252009036120010379
Mining Right Owner: Jingde
County Xinyi Fluorite Co., Ltd.
Address: Sanxi Town, Jingde
County
Ore Mine Name: Jingde County
Xinyi Fluorite Company Ltd. Qingzheng Fluorite Xinyi No.1 Mine
Corporation Type: Limited
Liability Company
Ore Type: Fluorite
(normal)
Mining Method: Underground
Mining
Production Scale: 15,000 tons
per year
Mine Area: 0.151 square
kilometres
Validity Term: One year and
seven month, from October, 2009 to April, 2011.
Issuance
Organ: Land and Resources Bureau of Jingde County
October
20, 2009
Made and
Printed by Ministry of Land and Resources of People’s Republic of
China
Mine Area
Scope Coordinate:
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Point No.
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X Coordinate
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Y Coordinate
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1
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3353358.00
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40356650.00
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2
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3353358.00
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40356727.00
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3
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3353325.00
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40356798.70
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4
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3353582.90
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40357106.00
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5
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3353475.00
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40357255.00
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6
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3352900.00
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40356580.00
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7
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3352955.00
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40356453.00
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8
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3353318.50
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40356791.00
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9
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3353348.00
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40356727.00
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10
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3353348.00
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40356650.00
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Mining
Depth: 502 meters to 100 meters. Aggregately 10 points
Exhibit
B
Copy of
Mining Permit for Guangrong Mine
People’s
Republic of China
Mining
Permit
(Duplicate)
Certificate
No.: C3418002009046120011698
Mining Right Owner: Jingde
County Xinyi Fluorite Co., Ltd.
Address: Guangrong Village,
Xinglong Town, Jingde County
Ore Mine Name: Jingde County
Xinyi Fluorite Company Ltd. Xinglong County Guangrong Fluorite Mine
Corporation Type: Limited
Liability Company
Ore Type: Fluorite
(normal)
Mining Method: Underground
Mining
Production Scale: 20,000 tons
per year
Mine Area: 0.0695 square
kilometres
Validity Term: Two years, from
April, 2009 to April, 2011.
Issuance
Organ: State Territorial Resources Bureau of Jingde County
April 14,
2009
Made and
Printed by Ministry of Land and Resources of People’s Republic of
China
Mine Area
Scope Coordinate:
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Point No.
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X Coordinate
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Y Coordinate
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||
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1
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3356765.00
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39629625.00
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2
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3356875.00
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39629770.00
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3
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3357250.00
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39630110.70
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4
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3357290.00
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39630160.00
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5
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3357225.00
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39630210.00
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6
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3357185.00
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39630163.00
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7
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3356790.00
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39629825.00
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8
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3356683.00
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39629680.00
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Mining
Depth: 305 meters to 0 meter standard. Aggregately 10 points