Execution
Copy
Shandong Quanxin
Stainless Steel Co., Ltd.
Amended and
Restated
Joint Venture
Contract
Amended
March 26,
2006
Chapter 1: General
Provisions
In accordance with the
Law of the People’s Republic of China on
Sino-Foreign Equity Joint Ventures (the “Joint Venture
Law”) and other relevant laws and regulations, Zibo Mingtai
Recycled Resources Co., Ltd., Zouping Huatong Copper Industry Co.,
Ltd. and Terra Nostra Resources Corp. (hereinafter referred to as
the “Parties”), in accordance with the principles of
equality and mutual benefit, and through friendly consultations,
agree to enter into this Joint Venture Contract (hereinafter
referred to as this “Contract”), which amends and fully
restates the original Joint Venture Contract signed on December 23,
2002 and amended on January 2, 2005, for the purpose to jointly
invest in a Sino Foreign Equity Joint Venture: Shandong Quanxin
Stainless Steel Co., Ltd. (the “Joint Venture”) in
Shandong Province of the People’s Republic of China
(excluding Hong Kong, Macau and Taiwan for the purpose of this
Contract, the “PRC”).
Chapter 2: Parties of
the Joint Venture
Article
2.1
Parties to this Joint
Venture are as follows:
1.
Zibo Mingtai Recycled
Resources Co., Ltd. (hereinafter referred to as
“Mingtai Resources”), registered in Shandong Province,
PRC, and its legal address is at No. 138, Zhong Run Road, Gaoxin
District, Zibo, Shandong Province, PRC.
Legal
representative:
Name:
Zhang Yanwei
Position:
Chairman of the
Board
Nationality:
Chinese
2.
Zouping Huatong
Copper Industry Co., Ltd. (hereinafter referred to as
“Zouping Huatong”), registered in Shandong Province,
PRC, and its legal address is at Da Qi Cun, Chanshan County,
Zouping, Shandong Province, PRC.
Legal
representative:
Name:
Zhang Sen
Position:
Chairman of the
Board
Nationality:
Chinese
Mingtai Resources and
Zouping Huatong hereinafter are collectively referred to as the
“Chinese Parties.”
3.
Terra Nostra
Resources Corp. (hereinafter referred to as
“TNRO”), a Nevada corporation with its common shares
presently listed for trading on the United States Over the Counter
Bulletin Board (“OTC/BB”) under the trading symbol
TNRO, and having an office address of 55 S. Lake Avenue, Suite 700,
Pasadena, CA 91101.
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Current Legal
representative:
Name:
Donald C.
Nicholson
Position:
Chief Administration
Officer, Director
Nationality:
Canada
Chapter 3:
Establishment of the Joint Venture
Article
3.1
In accordance with the
Joint Venture Law and other relevant PRC laws and regulations, the
Parties agree to invest in a Sino Foreign Equity Joint
Venture.
Article
3.2
The name of the Joint
Venture is:
In English:
Shandong Quanxin
Stainless Steel Co., Ltd.
In Chinese:
山东泉信不锈钢有限公司
Registered
Office:
Dongshou, Zhongrun Road,
Development District, Zibo
Article
3.3
All activities of the
Joint Venture shall be governed by the laws, regulations and rules
of the PRC.
Article
3.4
The organizational form
of the Joint Venture is a limited liability company. Each
party of the Joint Venture shall be liable to the Joint Venture
within the limit of the capital contributed by it. The
profits, risks and losses of the Joint Venture shall be shared or
burdened by the Parties in proportion to their contributions to the
registered capital.
Chapter 4: Business
Scope
Article
4.1
The purposes of the
Parties of the Joint Venture are to strengthen economic cooperation
and technology communication, to adopt advanced and appropriate
technology and operational management methods, to enhance
production quality, to develop new product, to be able to compete
in international markets in production quality and price, to
enhance economic benefit and to obtain economic benefit to satisfy
all the Parties.
Article
4.2
The business scope of
the Joint Venture includes: manufacturing of stainless steel
plates, stainless
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steel tubes, stainless
steel strips and other stainless steel products.
Chapter 5: Total
Investment and the Registered Capital
Article
5.1
The total amount of
investment of the Joint Venture is US$ 79,800,000.
Article
5.2
The registered capital
of the Joint Venture shall be US$ 26,600,000, among
which:
Mingtai Resources shall
contribute US$ 10,374,000, accounting for 39%;
Zouping Huatong shall
contribute US$ 2,660,000, accounting for 10%; and
TNRO shall contribute
US$ 13,566,000 accounting for 51%.
Registered capital shall
be increased based on each Party’s respective proportion of
shareholding in the Joint Venture, unless written consent letter
has been otherwise entered into by the Parties.
Article 5.3 Chinese
Parties’ Contributions
Chinese Parties shall
fulfill their capital contribution requirement totaling US$
13,034,000.
Article
5.4 TNRO’s
Contribution
TNRO shall fulfill its
capital contribution requirement totaling US$
13,566,000.
Article
5.5
The Chinese Parties are
hereby granting to TNRO, subject to approvals by relevant PRC
government, the right to acquire up to their entire 49% of
shareholding of the Joint Venture, at such time as agreed upon by
the Chinese Parties. The consideration for this acquisition
shall be determined by the Parties acting in good faith, and based
upon a valuation performed by an independent valuator satisfactory
by all the Parties.
Chapter 6:
Responsibilities of the Parties of the Joint Venture
Article
6.1
The Chinese Parties and
TNRO shall be respectively responsible for the following
matters:
The Chinese
Parties:
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6.1.1 Handling
applications for approval, registration, business license and other
matters concerning the establishment of the Joint Venture to
relevant authorities in PRC;
6.1.2 Processing
application on land use right of workshop to the authority in
charge of land;
6.1.3 Organizing the
design and construction of the workshop and other construction
facilities of the Joint Venture;
6.1.4 Assisting the
Joint Venture in purchasing or leasing equipment, material, raw
materials, articles for office use, means of transportation and
communication facilities etc.;
6.1.5 Assisting the
Joint Venture in contacting and settling the infrastructure
facilities such as water, electricity, transportation
etc.;
6.1.6 Assisting the
Joint Venture in recruiting management personnel, technical
personnel, workers and other personnel as needed:
6.1.7 Assisting foreign
workers and staff in applying for entry visas, work permits and
handling their travel procedures;
6.1.8 Responsible for
handling other matters as requested by the Joint
Venture.
TNRO:
6.2.1 Sourcing strategic
partners, services, and markets outside the PRC.
6.2.2 Arranging all
foreign affairs, foreign contracts and other matters outside the
PRC.
6.2.3 Responsible for
handling other matters as requested by the Joint
Venture.
Chapter 7: The Board
of Directors
Article
7.1
The highest authority of
the Joint Venture shall be its board of directors (the “Board
of Directors”).
Article
7.2
The Board of Directors
is comprised of five (5) directors, of which two (2)
shall be appointed by
the Chinese Parties jointly and three (3) by TNRO. The chairman of the
Board of Directors shall be appointed by TNRO and the vice-chairman
shall be appointed by the Chinese Parties jointly. The term
of office for the directors, chairman and vice-chairman is four
years, and their term of office may be renewed if re-appointed by
the relevant Parties.
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Article
7.3
Subject to the other
provisions of this Article, at least four (4) directors must be
present in person or represented by proxy to constitute a quorum.
Notice of any board meeting must be given in writing to all
directors at least 30 days before the date of such board meeting.
If a quorum is not reached on a duly convened board meeting,
a second meeting shall be convened two (2) days later by the
chairman of the Board of Directors with immediate notice to all
directors of such second meeting. If a quorum is still not
reached at this second meeting, the directors present or
represented by proxy at the second meeting shall constitute a
quorum regardless of the number of directors present or represented
by proxy at the second meeting.
Article
7.4
A simple majority
approval by the directors present or represented by proxy at a duly
convened meeting of the Board of Directors shall decide on all
major matters concerning the Joint Venture. Unanimous
approval by all directors present or represented by proxy at a duly
constituted meeting of the Board of Directors shall be required for
the following major issues:
7.4.1 Amendment of the
Articles of Association of the Joint Venture;
7.4.2 Division or merger
with another organization of the Joint Venture;
7.4.3 Dissolution of the
Joint Venture;
7.4.4 Adjustment of the
registered capital of the Joint Venture; and
Article
7.5
If the chairman is
unable to exercise his responsibilities for any reason, he shall
authorize the vice-chairman or any of the other directors to
represent the Joint Venture temporarily. The chairman shall
be the legal representative of the Joint Venture.
Article
7.6
The Board of Directors
shall convene at least one meeting every year. The meeting
shall be called and presided over by the chairman of the Board of
Directors. The chairman may convene an interim meeting based
on a proposal made by a simple majority of the Board of Directors.
Meetings may be attended by members of the Board of Directors
in person, by proxy, or by telephone. Minutes of the meetings
shall be kept in English and Chinese and shall be filed.
Article
7.7
The Joint Venture shall
indemnify each director against all claims and liabilities incurred
by reason of serving as a director of the Joint Venture, provided
that such claims and liabilities do not constitute intentional
misconduct, gross negligence or violations of criminal
laws.
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Article
7.8
The chairman of the
Board of Directors is entrusted to hold all seals and/or chops of
the Joint Venture. If the chairman has delegated the holding
of any of the seals and/or chops, the chairman may, in his/her sole
discretion, immediately and without notice revoke this delegation
and have the seals and/or chops returned to the chairman without
convening a meeting of the Board of Directors.
Chapter 8: Business
Management
Article
8.1
The Board of Directors
shall appoint and remove (with or without cause) the key management
of the Joint Venture which shall be responsible for the daily
management of the Joint Venture. The key management will
consist of a general manager and other positions as decided by the
Board of Directors.
Article
8.2
The responsibility of
the general manager is to implement the decisions of the Board of
Directors, and organize and conduct the daily management and
operation of the Joint Venture. Several department managers
may be appointed by the general manager and they shall be
responsible for the work in their respective departments, handle
the matters delegated to them by the general manager and report to
the general manager.
Chapter 9: Labor
Management
Article
9.1
Labor contracts covering
the recruitment, employment, dismissal, registration, wages, labor
protection, welfare, bonus, penalties and other matters concerning
the staff and workers of the Joint Venture shall be entered into
between the Joint Venture and the individual employees of the Joint
Venture in accordance with the Regulations of the PRC on Labor
Management in Sino Foreign Joint Venture Enterprises and its
implementing rules. The labor contracts shall, after being
signed, be filed with the local labor management
department.
Article
9.2
The appointment of the
key management personnel recommended by the Parties, their
salaries, social insurance, welfare and the standard of traveling
expenses etc. shall be subject to approval by the Board of
Directors. All appointments are to be based on a combination
of merit, experience, education and suitability to job description,
and compensation commensurate with aforementioned.
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Chapter 10: Taxes,
Finance and Audit
Article
10.1
The Joint Venture shall
pay taxes in accordance with the provisions of PRC laws and other
applicable regulations.
Article
10.2
Staff and workers of the
Joint Venture shall pay individual income tax according to the
Individual Income Tax Law of the PRC .
Article
10.3
Allocations of reserve
funds, expansion funds of the Joint Venture, and welfare funds and
bonuses for staff and workers shall be set aside in accordance with
the provisions of the Joint Venture Law.
Article
10.4
All routine vouchers,
receipts, statistical statements and reports of the Joint Venture
shall be written in Chinese. All monthly, quarterly and
annual accounting statements, and other managerial reporting, of
the Joint Venture shall be made and kept in both Chinese and
English. All records and accounts shall be kept and
maintained using current accounting and reporting systems in
accordance with internationally recognized accounting standards as
determined by TNRO.
Article
10.5
Financial checking and
examination of the Joint Venture shall be conducted by a recognized
Chinese or international firm registered in PRC capable of
producing audited statements, as chosen by TNRO. Such reports shall
be submitted to the Board of Directors and the general manager both
in English and Chinese.
Article
10.6
Within the first one (1)
month of each fiscal year, or in such time period as required by
TNRO, the general manager shall prepare both in English and
Chinese, the previous fiscal year's financial statements, including
balance sheet, profit and loss statement, cash flow statement and
notes to the financial statements, in accordance with the United
States generally accepted accounting principles. The above
financial statements shall be kept both in Chinese and English and
shall be audited by a firm appointed by TNRO.
Within the first
forty-five (45) days of each fiscal year, or in such time period as
required by TNRO, the general manager shall also provide a proposal
regarding the allocation of profits from the previous fiscal year,
and submit the proposal to the Board of Directors for examination
and approval.
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Article
10.7
The Joint Venture shall
separately open a foreign exchange account and a Renminbi account
at an authorized bank approved by the State Administration of
Foreign Exchange. The Joint Venture’s foreign exchange
transactions shall be handled in accordance with the regulations of
the PRC relating to foreign exchange control.
Chapter 11: Duration
of the Joint Venture
Article
11.1
The term of the Joint
Venture is thirty years (“Term”). The
establishment date of the Joint Venture shall be the date on which
the business license of the Joint Venture is issued.
One (1) year prior to
the expiry of the Term, the Parties may discuss the extension of
the Term. If the Parties agree, an application for such
extension shall be submitted to the competent examination and
approval authority for approval no less than six (6) months prior
to the expiry of the Term.
Chapter 12:
Termination and Liquidation of the Joint Venture
Upon the expiration of
the Joint Venture, or early termination of th
