EX-10.3 4 aa-ex103_454.htm EX-10.3 aa-ex103_454.htm

EXHIBIT 10.3

 

 

Amendment and restatement of the

Aluminium  Project  Framework Shareholders Agreement

 

 

between

 

SAUDI ARABIAN MINING COMPANY (MA'ADEN)

 

and

 

ALCOA INC (ALCOA)

 

 


 

 

THIS AMENDMENT AND RESTATEMENT AGREEMENT (hereinafter referred to as the "Agreement"),  is made and entered into on [          ] in the Hejerian calendar, corresponding to the [          ] day of [          ] [          ] in the Gregorian calendar, by and between:

 

(1)

SAUDI ARABIAN MINING COMPANY (MA'ADEN), a company organized under the laws and regulations of the Kingdom of Saudi Arabia with commercial registration No.1010164391, having its head office and address at PO Box 68861, Riyadh 11537, Kingdom of Saudi Arabia (together with its legal successors and permitted assigns, hereinafter referred to as "Ma'aden"); and

 

 

 

(2)

ALCOA INC., a corporation under the laws of the Commonwealth of Pennsylvania, USA, whose principal place of business is at 390 Park Avenue, New York, NY 1022, USA, (together with its legal successors and permitted assigns, hereinafter referred to as "Alcoa"),

 

 

(hereinafter jointly referred to as the "Parties" or individually as a "Party").

 

RECITALS

 

 

A.

The Parties entered into the Original Agreement on 3/1/1431 H corresponding to the 20th day of December 2009G pursuant to which the Parties desired to enter into the Joint Venture in respect of the Project (as such terms are defined in the Original Agreement)

 

 

B.

The Parties entered into a Signing Side Letter also on 3/1/1431 H corresponding to the 20th day of December 2009G clarifying certain matters in the Original Agreement

 

 

 

C.

The Original Agreement was amended by the parties in the First Supplemental Agreement on 14/4/1431 H, corresponding to 30th March 2010 G

 

 

 

D.

The Parties wish to reflect certain further amendments that have been agreed between them in relation to certain parts of the Original Agreement and have agreed to amend and restate certain parts of the Original Agreement on the terms set out in this Agreement as if such amendments had been included in the Original Agreement as from the date of execution of this Agreement by the Parties

 

 

NOW, IT IS  HEREBY AGREED  as follows:

 

1.DEFINITIONS AND INTERPRETATION

 

 

1.1

Definitions

 

In this Agreement:

 

"Original Agreement" means the Aluminium Project Framework Shareholders Agreement that was entered into on on 3/1/1431 H corresponding to the 20th day of December 2009G between the  Parties as amended by the Signing Side Letter of even date (as such terms are defined in the Original Agreement).

 

"Entire Agreement" means the Original Agreement as modified by the Signing Side Letter and the First Supplemental Agreement;

 

"First Supplemental Agreement" means the First Supplemental Agreement entered into between the Parties  on 14/4/1431H, corresponding to 30th March 2010 G

 

"Parties" means the signatories to this Amendment and Restatement Agreement; and

 

 


 

 

1.2

Incorporation  of  Definitions and Interpretation

 

Subject to clause 1.1, unless the context otherwise requires, words and expressions defined and references contained in the Original Agreement have the same meanings and construction in this Agreement.

 

 

2.

AMENDMENT  AND RESTATEMENT

 

 

2.1

Amendment and Restatement

 

The Parties hereby agree to amend and restate the Entire Agreement in the form as set out in Appendix l to this Agreement and that such amendments shall be deemed to take effect as from the date of execution of this Agreement as if such amendments had been included in the Entire Agreement from such time.

 

 

 

2.2

Continuing  Provisions

 

The Provisions of the Entire Agreement shall, except where expressly amended and restated under the provisions of clause 2.1 of this Agreement, continue in full force and effect in accordance with their terms.

 

 

3.

MISCELLANEOUS

 

 

3.1

Notices

 

Any notices to be given under or in connection with this Agreement shall be given in accordance with the requirements set out in Clause 23.1 of the Entire Agreement.

 

 

3.2

Counterparts

 

This Agreement may be executed in any number of counterparts and by the parties to it on separate counterparts and each such counterpart shall constitute an original of this Agreement but  all of which together constitute one and the same instrument. This Agreement shall not be effective until each party has executed at least one counterpart.

 

 


 

 

3.3

Governing Law

 

This Amendment shall be governed by, construed and interpreted according to English law and, for the avoidance of doubt, the dispute mechanisms in Article 21 of the Entire Agreement shall apply to this Amendment as though incorporated herein.

 

 

IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by its duly authorized representative as of the date first above written.

 

 

SUDI ARABIAN MINING COMPANY ALCOA INC (MA'ADEN)

 

 

 

 

 

 

     By    Khalid S Mudaifer – President     By      Ken Wisnoski                              

 

 

     Signed   /s/ Khalid S Mudaifer           Signed /s/ Ken Wisnoski                      

 

 

 


 

 

 

 

 

APPENDIX 1

AMENDED AND RESTATED

ALUMINIUM PROJECT FRAMEWORK SHAREHOLDERS' AGREEMENT

 

 

ALUMINIUM PROJECT FRAMEWORK SHAREHOLDERS' AGREEMENT

 

 

between

 

 

SAUDI ARABIAN MINING COMPANY (MA'ADEN)

 

 

and

 

 

ALCOA INC.

 

 

 

 


 

CONTENTS

Clauses

 

Pages

1

DEFINITIONS AND INTERPRETATION

10

 

1.1

Definitions

10

 

1.2

Interpretation

21

 

1.3

Third-Party Rights

21

2

Effective Date; Term of the Agreement; Parent Company Guarantee

21

 

2.1

Effective Date

21

 

2.2

Term of the Agreement

21

 

2.3

Parent Company Guarantee

22

 

Development Committee and Establishment of a particular Company

22

3

3.1

Development Committee

22

 

3.2

Project Costs and Pre-Financing Budget

22

 

3.3

Project Milestones

22

 

3.4

Establishment of each Company

23

 

3.5

Details of each Company

24

 

3.6

Purpose

24

4

Share Capital, Funding by Shareholders and Financing Completion Date

25

 

4.1

Share Capital as of Incorporation

25

 

4.2

Required Shareholder Funding

26

 

4.3

Shareholder Loans

26

 

4.4

Form and Manner of Funding by Shareholders

27

 

4.5

Default Commission Rate

27

 

4.6

Limitations and Shareholder Funding

28

 

4.7

Pledge

28

 

4.8

Adherence Agreement

28

 

4.9

Financing Completion Date

28

5

Responsibilities of the Parties

29

 

5.1

Roles of the Parties

29

 

5.2

Role of Ma’aden

29

 

5.3

Role of Alcoa

29

 

5.4

Aluminium Offtake

29

 

5.5

Support for Downstream Industry and Priority to the Domestic Market

30

 

5.6

Sales Agency Arrangements for Sales in the Kingdom

30

 

5.7

Sales Agency Arrangements for Sales Outside the Kingdom

30

 

 


 

 

5.8

Alumina Supply Arrangements and Excess Alumina

30

 

5.9

Capacity Expansions

31

 

5.10

Break-Off Projects

31

 

5.11

Value Added Projects

33

 

5.12

Responsibilities under the Gas Allocation Letter

33

 

5.13

Provision of Information by Parties and the Companies

34

6

Transfer of Existing Project Assets; Project Agreements

35

 

6.1

Transfer of Ma’aden Existing Project Assets

35

 

6.2

Transfer of Alcoa Existing Project Assets

35

 

6.3

Project Agreements signed post-Effective Date but before Company Formation

36

7

Shareholders’ Meetings

36

 

7.1

Shareholders’ Meetings

36

 

7.2

Supermajority Items

36

 

7.3

Language

37

8

Board of Managers

37

 

8.1

Appointment of Managers to each Company

37

 

8.2

Removal of Managers

38

 

8.3

Appointment of Senior Officers to each Company; Removal

38

 

8.4

Meetings of the Board of Managers of each Company

40

 

8.5

Voting Thresholds

40

 

8.6

Resolutions

41

 

8.7

Information

41

 

8.8

Duties of Managers

41

 

8.9

Company Policies

42

 

8.10

Project Steering Committee

42

9

Deadlock

43

 

9.1

Deadlock Arising

43

 

9.2

Deadlock Referral

43

 

9.3

Sole Remedies

44

10

Senior Debt Financing of the Project

44

 

10.1

Support For Financing Plan

44

 

10.2

Several Obligations

44

 

10.3

No Further Liability

45

11

Distributions Policy; Taxes

46

 

11.1

Distributions Policy

46

 

11.2

Local Community Projects; Research and Development Programme

46

 

11.3

Tax and Zakat

46

 

 


 

12

Accounting System, Books and Budgets

46

 

12.1

Accounting System and Standards

46

 

12.2

Language of Reporting to the Shareholders

47

 

12.3

Financial Statements

47

 

12.4

Books and Audit Rights

47

 

12.5

Statutory Obligations

48

 

12.6

Auditors

48

 

12.7

Rights of Managers not Limited

48

 

12.8

Annual and Special Budgets

48

 

12.9

Emergency Funding

49

13

Entry Payment, Pre-Incorporation Costs and Transfer of Pre-Incorporation Materials

49

 

13.1

Payment of Entry Payment and Pre-Incorporation Costs

49

 

13.2

Reimbursement of Pre-Incorporation Costs

51

14

Events of Default and Consequences

51

 

14.1

Events of Default

51

 

14.2

Consequences of Events of Default

52

 

14.3

Transfer Upon Event of Default of Alcoa

52

 

14.4

Additional Consequences of a Funding Default

54

 

14.5

Ma’aden as the Defaulting Party

55

 

14.6

Default Prior to Incorporation of any Company

56

 

14.7

Other Remedies

57

15

Failure to Achieve Financial Completion Date for Phase I by the Financing Longstop Date

57

 

15.1

Compensation on Buy-Out

57

 

15.2

Transfer on Financing Longstop Date

58

16

Termination and Expiry

59

 

16.1

Full Termination and Expiry

59

 

16.2

Partial Termination

60

 

16.3

Consequences of Termination at the Expiry of the Term

60

 

16.4

Consequences following Termination

60

 

16.5

Survival and Rights Unaffected

61

17

Sale or Transfer of Shares, Pledge

61

 

17.1

General Prohibitions

61

 

17.2

Transfers to Affiliates

62

 

173

Permitted Transfers

63

 

17.4

Transfers of Shares

63

 

17.5

Notice of Offers

63

 

17.6

Notice of Right to Match the Offer

63

 

 


 

 

17.7

Right of Remaining Party to Match the Offer

64

 

17.8

Transfer Requirements

64

 

17.9

Completion of Transfer

64

 

17.10

General

65

 

17.11

Further Assurances; Sole Shareholder

65

 

17.12

Further Assurances; Sole Shareholder

65

 

17.13

Further Assurances; Sole Shareholder

66

 

17.14

Further Assurances; Sole Shareholder

67

18

Valuations

68

 

18.1

Fair Market Value

68

 

18.2

Valuation Panel

68

 

18.3

Submission of Valuation

68

 

18.4

Valuation Approach

68

19

Assignment

69

20

Warranties

69

21

Governing Law, Dispute Resolution and Language

70

 

21.1

Governing Law

70

 

21.2

Reference to Senior Management

70

 

21.3

Dispute Resolution

70

 

21.4

Continuing Obligations

71

 

21.5

Jurisdiction

71

 

21.6

Process Agent

71

 

21.7

Language

72

22

Confidentiality and Public Announcements

72

 

22.1

Confidentiality

72

 

22.2

Disclosure of Information by Managers to Shareholders and Parties

73

 

22.3

Announcements

73

 

22.4

Survival

73

23

Notices

73

 

23.1

Notices

73

 

23.2

Effect

74

24

Further Assurances

74

 

24.1

Undertakings

74

 

24.2

Further Assurances

75

 

24.3

Business Conduct

75

25

Competing Businesses

76

 

25.1

Acknowledgement

76

 

 


 

 

25.2

No Obligation to Offer

76

 

25.3

Competing Projects Following Termination

76

26

General Provisions

76

 

26.1

Severability

76

 

26.2

Waiver

76

 

26.3

Compliance with Law and Permits

77

 

26.4

Intellectual Property

77

 

26.5

Entire Agreement

78

 

26.6

Improper Inducements

78

 

26.7

Language

79

 

26.8

Amendments

79

 

26.9

No Partnership

79

 

26.10

Priority of Documents

79

 

26.11

Waiver of Immunity

79

 

26.12

No Liability for Consequential Losses, etc

79

 

 

 


 

SCHEDULE 1

 

Parent Company Guarantee

81

SCHEDULE 2

 

Articles of Association of the Companies

87

SCHEDULE 3

 

Pre-Incorporation Costs

132

SCHEDULE 4

 

Gas Allocation Letter

133

SCHEDULE 5

 

Adherence Agreement

143

SCHEDULE 6

 

Cast House Users’ Agreement

145

SCHEDULE 7

 

Description of the Ras Az Zawr Complex

154

SCHEDULE 8

 

Description of the Mine

157

SCHEDULE 9

 

Project Agreements

159

SCHEDULE 10

 

Project Economics

166

 

Part 1 - Estimate of Project Costs

166

 

Part 2 - Pre-Financing Budget

168

 

Part 3 - Project Model

168

SCHEDULE 11

 

Ma’aden Existing Project Assets

170

SCHEDULE 12

 

Alcoa Existing Project Assets

171

SCHEDULE 13

 

Pre-Incorporation Development Committee, Project Account and Steering Committees

172

 

Part 1 - Development Committee Procedures

172

 

Part 2 - Payment Mechanism

178

 

Part 3 - Project Organisation (graphic depiction)

179

SCHEDULE 14

 

Alcoa Services

196

 

Part 1 - Alcoa Services

196

 

Part 2 - Technology Licenses and Support Services

201

SCHEDULE 15

 

Project Milestones

203

 

 

 


 

ALUMINIUM  PROJECT  FRAMEWORK AGREEMENT

THIS  FRAMEWORK  AGREEMENT  (hereinafter  referred  to as the "Agreement"),  is made and entered into on                         H, corresponding to the          day of          2009 G, by and between:

 

 

(1)

SAUDI ARABIAN MINING COMPANY (MA'ADEN), a company organized under the laws and regulations of the Kingdom of Saudi Arabia with commercial registration No.1010164391, having its head office and address at PO Box 68861, Riyadh 11537, Kingdom of Saudi Arabia (together with its legal successors and permitted assigns, hereinafter referred to as "Ma'aden"); and

 

 

 

(2)

ALCOA INC., a corporation under the laws of the Commonwealth of Pennsylvania, USA, whose principal place of business is at 390 Park Avenue, New York, NY 1022, USA, (together with its legal successors and permitted assigns, hereinafter referred to as "Alcoa"),

 

(hereinafter jointly referred to as the "Parties" or individually as a "Party").

RECITALS:

 

 

(A)

WHEREAS the Parties desire to enter into a joint venture for the development, construction, ownership and operation of an integrated mine, refinery, smelter and rolling mill in the Kingdom of Saudi Arabia (the "Joint Venture"), initially to be developed for (i) the extraction of approximately 4,000,000 tpa of bauxite from the Al Ba'itha bauxite deposit in the Kingdom, (ii) the production of approximately 1,800,000 tpa of alumina and approximately 740,000 tpa of aluminium, and (iii) the production of approximately 250,000 tpa, which may be increased to 460,000 tpa of rolling mill product ((i), (ii) and (iii) hereinafter referred to as the "Project"), as well as potential future expansions of the Project;

 

 

 

(B)

WHEREAS Ma'aden and Alcoa entered into a Memorandum of Understanding dated 15 July 2009 (the "MOU") for the implementation of the Project.

 

 

 

(C)

WHEREAS the Parties fully accept the obligations set out in the Gas Allocation Letter, without condition or qualification;

 

 

 

(D)

WHEREAS the Parties intend to establish several limited liability companies in, and under the laws of, the Kingdom, one for the Mine and Refinery, one for the Smelter, and one for the Rolling Mill (each referred to as a "Company" and collectively as the "Companies") to implement the Joint Venture and to undertake the Project;

 

 

 

(E)

WHEREAS the Parties wish to operate the Companies to undertake the Project as an integrated joint venture for the purposes and on the terms set out in this Agreement;

 

 

 

(F)

WHEREAS the Parties have agreed that they will offtake the Aluminium in accordance with the principles set out in this Agreement and the terms of the Offtake Agreements; and

 

 

 

(G)

WHEREAS the Parties are developing the Estimate of Project Costs, the Pre-Financing Budget and the Project Model as described in Schedule 10.

 

 

NOW, THEREFORE, in consideration of the covenants contained herein, the Parties hereto agree as follows:

 

 

1.

DEFINITIONS  AND INTERPRETATION

 

 

1.1

Definitions

 

Whenever used herein and written in initial capital letters, the following terms shall have the meanings respectively defined:

 

10


 

"Act of Insolvency" means, in respect of any person, the occurrence of one or more of the following events (or any event analogous to the following events in any jurisdiction):

 

 

(a)

such person is unable, or admits inability, to pay its debts as they fall due in the ordinary course;

 

 

 

(b)

a moratorium is declared in respect of any indebtedness of such person; or

 

 

(c)

any corporate action, legal proceedings or other procedure or step is taken in relation to:

 

 

(i)

the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, liquidation, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of such person other than a solvent liquidation or reorganisation of such person;

 

 

 

(ii)

a composition, compromise, assignment or arrangement with any creditor of such person; or

 

 

 

(iii)

the appointment of a liquidator (other than in respect of a solvent liquidation of such person), receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of such person or any of its assets,

 

 

and such action, legal proceedings or other procedure or step is acquiesced to by such person or shall result in the entry of an order for relief or shall remain undismissed for sixty (60) days;

 

"Additional Pre-Incorporation Costs" shall bear the meaning given in Clause 13.l(a):

 

"Additional Term" shall bear the meaning set out in Clause 2.2(b):

 

"Adherence Agreement" shall bear the meaning set out in Clause 4.8;

 

"Affiliate" means, in relation to any person, any entity which Controls, or is directly or indirectly Controlled by or under common Control with, such person, provided that (i) no Company shall be deemed to be an Affiliate of any Party, and (ii) no person shall be deemed to be an Affiliate of another person solely because both persons are under common Control of the Government of the Kingdom;

 

"Agent" means any person engaged to obtain business or regulatory advantage, develop customer relationships, or interface with Governmental Authorities and/or Government Officials;

 

"Agreed Form" means a form of document which has been agreed by or on behalf of the parties thereto and initialled by or on behalf of the parties thereto for the purposes of identification;

 

"Agreed Pre-Incorporation Costs" shall bear the meaning given in Clause 13.(a);

 

"Agreement" means this Framework Agreement;

 

"Alcoa" has the meaning set out in the parties clause;

 

"Alcoa Existing Project Assets" shall bear the meaning set out in Clause 6.2;

 

"Alcoa LOC" shall bear the meaning given in Clause 5.12(c):

 

"Alumina" means alumina produced by the Refinery as described in Clause 3.6(b)(ii):

 

11


 

"Aluminium" means aluminium produced by the Smelter (and does not include the products of the Rolling Mill) as described in Clause 3.6(b)(iii);

 

"Applicable Laws" means all legally binding and applicable laws, decrees, directives, orders, regulations or rules of any Governmental Authority, including (for the avoidance of doubt) laws relating to the prohibition of the corruption of public officials which are applicable to the relevant Party, Shareholder, Affiliate or Company (as the case may be) such as the U.S. Foreign Corrupt Practices Act;

 

"Ancillary Agreements" means the agreements set out in Part 1 of Schedule 9 and any other agreements that the Parties may agree to identify as Ancillary Agreements from time to time;

"Annual Programme and Budget" shall bear the meaning set out in Clause 12.8(a);

 

"Approved Accounting Firm" means an internationally recognised accounting firm as mutually agreed between the Parties or, failing agreement within five (5) Business Days of being required to agree such firm, any firm from among the largest four international accounting firms at the relevant time;

 

"Articles of Association" means the articles of association of a particular Company in effect from time to time;

 

"Auditors" means an Approved Accounting Firm providing audit services that has been appointed in accordance with this Agreement to audit the financial statements of a particular Company and otherwise to perform the functions of an auditor as set out herein;

 

"Base Case Model" means the base case financial model for each of the Phases which is to be developed and approved by the Parties or, following incorporation of a particular Company, the Board of Managers of that Company by the milestone dates therefor set out in Schedule 15, as the same may be amended, modified, implemented or replaced from time to time in accordance with this Agreement;

 

"Bauxite" means bauxite extracted from the Mine as described in Clause 3.6;

 

"Board of Managers" or "Board" means the board of managers from time to time of a particular Company appointed in accordance with this Agreement and the Articles of Association;

 

"Break-Off Project" shall bear the meaning set out in Clause 5.10(a);

"Break-Off Project Notice" shall bear the meaning set out in Clause 5.10(a);

 

"Break-Off Right" shall bear the meaning set out in Clause 5.10(a);

 

"Break-Off  Project Company" shall bear the meaning set out in Clause 5.10(a);

 

"Budget" means the Project Budget, an Annual Programme and Budget or a Special Programme and Budget and "approved Budget" means a Budget of a particular Company that is approved by the Parties and/or the Board of Managers of that Company (as applicable) in accordance with this Agreement;

 

"Business Day" means any day on which banks in the Kingdom and New York, U.S.A. are generally open for business and on which instructions to transfer same-day funds can be executed;

 

"Calculation Date" shall bear the meaning set out in Clause 13.l(a):

 

"Call Date" shall bear the meaning set out in Clause 14.3(a)(i);

 

12


 

"Cash Call" means all calls for (a) Equity Subscriptions and (b) if determined by the Parties in accordance with this Agreement, advances under Shareholder Loans, made by the relevant Board of Managers to the Parties in their respective Shareholder Percentages in accordance with Clause 4;

 

"Cast House" means the casting facilities owned and operated by the Smelter, in accordance with the Cast House Users' Agreement substantially in the form of Schedule 6.

 

"Chairman" means the chairman of the relevant Board of Managers;

 

"Closing Date" shall bear the meaning set out in Clause 14.3(a)(iv);

 

"Commercial Production Date" means the later of, (a) in respect of the Mine, the Refinery and the Smelter, the last day of the period of the first three (3) months of continuous and stable operations of each of the Mine, the Refinery and the Smelter at not less than ninety percent (90%) capacity, as determined by the Parties on written advice from each relevant Board of Managers; and (b) in respect of the Rolling Mill, after all major pieces of equipment and all instrumentation and systems related to process and quality control successfully complete acceptance testing, the date at which the first customer has given acceptance of qualification for supply of beverage can stock, provided that for the purpose of Clauses 8.5(b)(iv), l 2.3(d)(iii) and l 8.4(c) it shall mean the above date applicable to the relevant Company;

 

"Commercial Register" means the commercial register at the Ministry;

 

"Commercial Registration" means registration of a particular Company on the Commercial Register;

 

"Commission Rate" means a commission rate which is calculated as being equivalent to:

 

 

(1)

the offered rate per annum for one month deposits in US Dollars which appears on the appropriate page of the Reuters screen or such other page as may replace that page for the purpose of displaying offered rates of lending banks for London interbank deposits at or about 11:00 a.m. (London time) on the first London Banking Day of each month, or, if more than one such rate appears on such page on such day, the arithmetic mean of such rates (rounded upward to the nearest five decimal places); and

 

 

 

(2)

if no such rate appears on the Reuters screen page referred to in paragraph (1) above (or any such replacement page), the arithmetic mean (rounded upwards to the nearest five decimal places) of the offered rates per annum quoted by Barclays Bank, London Branch, and HSBC Bank, London Branch (or their successors in interest), at which deposits in US Dollars for one month are being offered by such banks (or their successors in interest) to prime banks in the London interbank market at or about 11:00 a.m. (London time) on the first London Banking Day of each month; or

 

 

 

(3)

if none or only one of the banks referred to in paragraph (2) above are offering rates for deposits on the terms referred to in that paragraph, the rate per annum quoted by such bank as the Party who does not owe such commission in consultation with the Party that owes such commission may select from time to time at which deposits in US Dollars for one month are being offered by such bank to prime banks in the London interbank market at or about l 1.00 a.m. (London time) on the first London Banking Day of each month;

 

 

"Commitment Date" shall bear the meaning set out in Clause 3.3(b):

 

"Companies11 and "Company" shall each bear the meaning set out in Recital D;

 

"Company Law" means the Saudi Arabian Regulations for Companies, Royal Decree No. M/6 dated 22/3/1385H, as amended from time to time;

 

13


 

"Company Policies" shall bear the meaning set out in Clause 8.9;

 

"Completion Agreements" means any and all completion debt service undertakings and/or obligations to fund construction cost overruns up to an agreed maximum amount granted by the Parties or members of their respective groups for the benefit of Senior Lenders in connection with the Senior Debt for the Project;

 

"Complex" means the manufacturing facility to be constructed by the Companies for the production of the Products, at Ras Az Zawr in the Kingdom, including the Refinery, Smelter and Rolling Mill together with certain related facilities to be owned by each relevant Company, as further described and defined in Schedule 7:

 

"Confidentiality & Non-Disclosure Agreement" means the confidentiality and non-disclosure agreement dated 26/4/1430 H, corresponding to 22/4/2009 G, between Ma'aden and Alcoa;

 

"Construction Agreement" means (i) any engineering, procurement and construction contract entered into by a particular Company in respect of any material component of the Project or any relevant Expansion, (ii) any engineering, procurement and construction management (EPCM) contract entered into by a particular Company in respect of any material component of the Project or any relevant Expansion or (iii) any contract, agreement or arrangement substantially similar to the foregoing;

 

"Control" shall mean in relation to any non-natural person (the "First Person"), the right of another person or persons acting together, whether in law or in fact (including by way of contract), to secure by means of the holding of shares bearing fifty percent (50%) or more of the voting rights attaching to all the shares in the First Person, or by having the power to control the composition of the board of managers/directors or other governing body of the First Person, that all or a substantial proportion of the affairs of the First Person are conducted in accordance with the wishes of that person or persons acting together, and the expressions "Controls" or "Controlled" shall be construed accordingly;

 

"Cure Period" shall bear the meaning set out in Clause 14.4(e)(ii):

 

"Deadlock" shall bear the meaning set out in Clause 9.1(a):

 

"Deadlock Committee" shall bear the meaning set out in Clause 9.2(b)(i):

 

"Deadlock Referral Notice" shall bear the meaning set out in Clause 9.2(a):

 

"Deadlock Resolution Procedure" shall bear the meaning set out in Clause 9.2(b):

 

"Default Amount" shall bear the meaning set out in Clause 14.1(a);

 

"Default Commission" shall bear the meaning set out in Clause 4.5;

 

"Default Notice" shall bear the meaning set out in Clause 14.4(a);

 

"Defaulting Party" shall bear the meaning set out in Clause 14.1;

 

"Development Committee" shall bear the meaning set out in Clause 3.1;

 

"Development Committee Funding Call" shall bear the meaning set out in Clause 4.2(a);

 

"Distribution" means: (i) any Share Distribution; (ii) any payment by a particular Company to any of its Shareholders or any of that Shareholder's Affiliates in respect of any Shareholder Loan; or (iii) any payment by a particular Company of any other amount (including by way of loan) to any of its

 

14


 

Shareholders or any of that Shareholder's Affiliates (other than pursuant to the terms of any Project Agreement);

 

"DZIT" means the Department of Zakat and Income Tax of the Kingdom;

"EBIT" means earnings before interest and taxes;

 

"Effective Date" shall mean the date determined in accordance with Clause 2.1;

 

"Encumbrance" means any interest or equity of any person (including any right to acquire, option or right of pre emption) and any mortgage, charge, pledge, lien (other than liens arising by operation of law and securing indebtedness arising in the ordinary course of business not more than seven (7) days overdue), assignment, hypothecation or other priority interest, deferred purchase,  title retention, rental, hire purchase, conditional sale, trust, leasing, sale and repurchase and sale and leaseback arrangements, rights of set off and any other agreement or arrangement whatsoever having the same commercial or economic effect as security (including any hold back or "flawed asset" arrangement) over or in any property, asset or right of whatsoever nature and including any agreement for any of the foregoing;

 

"Entry Payment" shall bear the meaning set out in Clause 13.1(b):

 

"Equity Subscription" means the subscription by the Parties (or any of them) directly or through any of their respective Affiliates for additional Shares on the basis of a subscription price of ten thousand Saudi Riyals (SR10,000) per Share, or such other basis as may be approved by the relevant Board in accordance with this Agreement and the Applicable Laws of the Kingdom;

 

"Estimate of Project Costs" means the Parties' estimate as at the Effective Date of the Project Costs, as may be amended from time to time by mutual agreement of the Parties, as more fully described in Part 1 of Schedule 10 and which shall be superseded by the Project Budget;

"Event of Default" shall bear the meaning set out in Clause 14.1;

 

"Excess Alumina" means, in any period, any Alumina produced at the Refinery that is not required for the production of Aluminium at the Smelter and/or to maintain normal Alumina inventory levels during such period;

 

"Expansion"  shall bear the meaning set out  in Clause 5.9(a);

 

"Fair Market Value" shall bear the meaning set out in Clause 18.1;

 

"Financial Close" means the date on which all conditions precedent to first draw down under the Financing Agreements for the relevant Phase of the Project have been satisfied or, if capable of waiver, waived;

 

"Financial Year" means the financial year of a particular Company from January 1 to December 31 each year;

 

"Financing Agreements" means the credit agreements and associated documents entered into or to be entered into by a particular Company pursuant to which credit facilities will be made available to such Company in connection with the Project;

 

"Financing Completion Date" shall mean the date on which the Financing Agreements are signed on behalf of each relevant Company and the Senior Lenders for the relevant Phase;

 

"Financing Longstop Date" means 31 December 2010 being the date by which the Parties require the Financing Completion Date for Phase I to have occurred as may be extended in accordance with Clause  15.1(a);

 

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"Financing Plan" means the financing plan to be developed by the Parties for each Phase and which is intended to be approved by the Parties by the milestone date therefor set out in Schedule 15;

"Foreign Investment Licence" means the foreign investment licence issued by SAGIA authorizing the formation of a particular Company, as the same may be amended from time to time;

 

"Free Cash" in respect of each relevant Financial Year, means (i) the net profit after allowing for Income Tax and Zakat of a particular Company for such Financial Year as reflected in the audited financial statements of that Company for such Financial Year, (ii) plus depreciation and amortization, (iii) plus adjustments for movement between opening and closing working capital, (iv) less amounts disbursed in the Financial Year on account of capital expenditures, (v) less amounts paid by that Company in respect of such Financial Year pursuant to Clause 11.3, and (vi) less amounts paid or reserved for repayment of debt, (vii) plus cumulative undistributed Free Cash from previous Financial Years;

 

"Funding Deadline" shall bear the meaning set out in Clause 4.4(a)(ii);

 

"Funding Default" shall bear the meaning set out in Clause 14.1(a);

 

"Gas Allocation Letter" means the gas allocation letter dated 28/10/1430 H, corresponding to 17/10/2009 G, reference 3157/P/F, as may be amended from time to time, in respect of the Project from Saudi Aramco (based on the authorisation of the Ministry of Petroleum) to Ma'aden and SWCC, a copy of the current version of which is attached at Schedule 4;

 

"Gate 3 Review" means the formal review of the final feasibility report produced at the completion of the stage 2 engineering for each component of the Project in accordance with the agreed stage gate process. This report shall describe the basic engineering of the facilities, class 1 cost estimate within a range of +/- ten percent (10%) (or such other level as agreed by the Parties), HAZOP study, technical and financial risk assessment, constructability and operability review, operational readiness review, level I master schedule, value improving processes, final project execution plan, EPC/EPCM contract documentation and any other items as agreed by the Parties;

 

"GCC countries" means Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates and any other country which may be designated as a Gulf Cooperative Country from time to time;

 

"Governmental Authority" means any court or governmental authority, department, commission, board, agency or other instrumentality of any country or jurisdiction or any part thereof having jurisdiction over this Agreement, a Company, a Shareholder, a Party or any asset or transaction contemplated by this Agreement;

 

"Government Official" means an employee, officer or representative of, or any person otherwise acting in an official capacity for or on behalf of a Governmental Authority;

 

"IFRS" shall bear the meaning set out in Clause 12.1;

 

"Initial Term" shall bear the meaning set out in Clause 2.2(a);

 

"Intellectual Property" means rights in and in relation to confidential information, trade marks, service marks, trade and business names, logos and get up (including any and all goodwill associated with or attached to any of the same), domain names, patents, inventions (whether or not patentable), registered designs, design rights, copyrights (including rights in software) and moral rights, database rights, semi-conductor topography rights, utility models and all rights or forms of protection having an equivalent or similar nature or effect anywhere in the world, whether enforceable, registered, unregistered or registrable (including, where applicable, all applications for registration) and the right to sue for damages for past and current infringement (including passing off and unfair competition) in respect of any of the same;

 

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"IP Information" shall bear the meaning set out in Clause 26.4(d):

"Joint Venture" shall bear the meaning set out in Recital A;

"Kingdom" means the Kingdom of Saudi Arabia;

 

"KSA Controlled Transferee" shall bear the meaning set out in Clause 17.3(a):

 

"LME" means the London Metals Exchange;

 

"London Banking Day" means any day on which banks in London, England are generally open for business;

 

"Ma'aden" has the meaning set out in the parties clause;

 

"Ma'aden  Existing Project Assets" shall bear the meaning set out in Clause 6.l(a):

 

"Ma'aden LOC" shall bear the meaning given in Clause 5.12(a):

 

"Manager" means a member from time to time of the relevant Board of Managers;

 

"Material Adverse Effect" means any effect or result which is, or is reasonably likely to be, materially adverse to the business, operations, assets, liabilities, properties, financial condition, effective management, results or prospects of a particular Company or a subsidiary Controlled by such Company (if any);

 

"Material Breach" shall bear the meaning set out in Clause 14. l(d);

 

"Mine" means the Al Ba'itha mine in the Kingdom for extracting approximately 4,000,000 tpa of bauxite as more fully described in Schedule 8. as modified pursuant to any Expansion that may occur in accordance with this Agreement;

 

"Mining & Refining Company" shall bear the meaning set out in Clause 3.5 (c);

 

"Mining Licenses" means the mining and quarrying licenses in respect of the Mine referred to in Schedule 8 and included in Schedule 11;

 

"Ministry" means the Ministry of Commerce and Industry of the Kingdom;

 

"Ministry of Petroleum" means the Ministry of Petroleum and Mineral Resources of the Kingdom;

 

"MOU" shall bear the meaning set out in Recital B;

 

"Non-Defaulting Party" means the Party who is not the Defaulting Party;

 

"Notice of the Right to Match the Offer" shall bear the meaning set out in Clause 17.6:

"NTP for Phase l" means an irrevocable written notice to proceed in full or substantially in full with construction or similar steps given by the relevant Company pursuant to the Construction Agreements in respect of Phase 1 in accordance with Clause 3.3;

 

"Offer" shall bear the meaning set out in Clause 17.4;

 

"Offtake Agreements" means the offtake agreements in the Agreed Form in respect of Aluminium and the Excess Alumina to be entered into by the relevant Companies with each of the Parties;

"Other Project Agreements" means the Project Agreements set out in Part 2 of Schedule 9;

 

17


 

"Paid In Capital" means the aggregate amount of money paid by each Party directly or through any of their respective Affiliates to a Company in connection with the subscription for Shares by such Party or Affiliates in that Company from time to time in accordance with this Agreement including the amount of money set out under the headings "Paid In Capital" in Clause 4.1;

 

"Phase" means Phase 1 or Phase 2, as the case may be and "Phases" means both  Phase 1 and Phase 2;

 

"Phase l" means (following the Gate 3 Review) the design, construction and operation of the Smelter and the Rolling Mill;

 

"Phase 2" means (following the Gate 3 Review) the design, construction and operation  of  the  Mine and  the Refinery;

 

"Pre-Financing Budget" means the development budget for the Project detailing the Project Costs which the Parties have incurred and estimate will be likely to be incurred on the Project up to Financial Close for each Phase, including an appropriate level of contingency, as attached in Part 2 of Schedule 10;

 

"Pre-Incorporation Costs" means the aggregate of the costs properly incurred by a Party prior to the incorporation of each Company in accordance with Clause 13;

 

"Pre-Incorporation Materials" means the relevant documents and materials developed by the Parties jointly or otherwise provided by a Party for the purposes of the Project prior to the incorporation of the Companies;

 

"President" means the president of a particular Company as appointed in accordance with Clause 8.3(a);

 

"Product" or "Products" means Alumina, Aluminium and Rolling Mill products produced at the Complex as described in Clause 3.6;

 

"Project" shall bear the meaning set out in Recital A;

 

"Project Account" means the joint bank account set up by the Parties for the purposes of funding Project costs approved by the Parties through the Development Committee prior to the incorporation of each particular Company and appointment of the Board of such Company;

 

"Project Agreements" means the agreements entered into or to be entered into by a particular Company and/or the Parties and/or either of the Parties (on behalf of that Company) in connection with the Project, with the inclusion of the Anci11ary Agreements, the Other Project Agreements, the Financing Agreements and any other agreements which are identified as Project Agreements in accordance with the terms of this Agreement;

 

"Project Budget" means the overall budget of the Project Costs for the Project to be developed and approved by the Parties by the milestone date therefor set out in Schedule 15, as may be amended, modified, implemented or replaced from time to time pursuant to a resolution of the Parties pursuant to Clause 7.2 and which shall supersede the Pre-Financing Budget and the Estimate of Project Costs;

 

"Project Costs" means the total costs of the Project, including direct project costs, contingency, owner's development costs, penalties for delay to implement the Project by required deadlines, interest due on construction and other financing costs and net working capital funding requirements;

 

"Project Model" means the financial model for the Project at the Effective Date referred to in Part 3 of Schedule 10 from which the Base Case Model will be developed by the Parties;

"Project Steering Committee" shall bear the meaning set out in Clause 8.10;

 

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"Proposed Resolution" shall bear the meaning set out in Clause 9.l(a);

 

"Ras Az Zawr Site" means that portion of the industrial area at Ras Az Zawr as described in Schedule 7;

 

"Refinery" means the refinery to be constructed in Ras Az Zawr in the Kingdom initially to produce approximately 1,800,000 tpa of alumina, as more fully described in Schedule 7, as modified pursuant any Expansion that may take place in accordance with this Agreement;

 

"Remaining Party(s)" shall bear the meaning set out in Clause 17.5;

 

"Required Shareholder Funding" shall bear the meaning set out in Clause 4.2;

 

"Right to Match the Offer Period" shall bear the meaning set out in Clause 17.7(a):

 

"Rolling Company" shall bear the meaning set out in Clause 3.5 (c);

 

"Rolling Mill" means the rolling mill to be constructed at Ras Az Zawr in the Kingdom initially to produce approximately 250,000 tpa, which may be increased to 460,000 tpa of rolling mill product, as more fully described in Schedule 7. as modified pursuant to any Expansion that may take place in accordance with this Agreement;

 

"SAGIA" means the Saudi Arabian General Investment Authority;

 

"Saudi Riyal" or "SR" means the lawful currency of the Kingdom;

 

"Security Interest" shall bear the meaning set out in Clause 4.7;

 

"Selling Party" shall bear the meaning set out in Clause 17.4;

 

"Senior Debt" means the financing provided by the Senior Lenders for the Project;

 

"Senior Lenders" means one or more commercial banks, Islamic finance participants, Saudi Arabian public financing institutions and other financial institutions and/or capital markets investors (which for the avoidance of doubt, may include one or more of the Parties and any of their Affiliates) providing debt finance in respect of the Project other than in respect of Shareholder Loans;

 

"Senior Lenders Commitment Letters" means the letters issued by prospective Senior Lenders evidencing a commitment to provide Senior Debt to the relevant Companies undertaking the relevant Phase of the Project;

 

"Senior Officers" means the President and other senior officers of a particular Company as set out in Clause 8.3(a);

 

"Share" means  any share  of  SRI0,000  each in the  capital of any Company, and "Shareholding"

shall be construed accordingly;

 

"Share Capital" means the capital which constitutes the Paid In Capital from time to time of a Company as set out in its Articles of Association;

 

"Share Distribution" means any dividend (in cash, property or otherwise) or any other distribution or payment made by a particular Company on or in respect of its Shares, including any distribution of the distributable profits of such Company, or any distribution of the assets of such Company upon any liquidation or winding up of such Company;

 

"Shared Services Agreement" shall have the meaning set out in Clause 5.10(b):

 

19


 

"Shareholder" means any person directly holding Shares from time to time in accordance with the terms of this Agreement;

 

"Shareholder Loan" means a subordinated interest free loan by a Shareholder or its Affiliate to a Company pursuant to a Shareholder Loan Agreement;

 

"Shareholder Loan Agreements" shall bear the meaning set out in Clause 4.3;

 

"Shareholder Percentage" means, in respect of a Party, the amount (expressed as a percentage) equal to (a) the total Paid In Capital by such Party or its Affiliate in a Company at such time, divided by (b) the total Paid In Capital by all the Shareholders in such Company at such time, and "Shareholder Percentages" collectively refers to the Shareholder Percentage of each of the Parties, which, at the time of formation of a Company, are as set out in Clause 4.1;

 

"Smelter" means the smelter to be constructed in Ras Az Zawr in the Kingdom initially to produce approximately 740,000 tpa of aluminium, as more fully described in Schedule 7. as modified pursuant any Expansion that may take place in accordance with this Agreement;

 

"Smelter Onsite Services Agreement" or "Smelter OSA" means the agreement for the provision of onsite services to the Company by Rio Tinto Alcan Inc. relating to aluminium smelting technologies, as more fully described in Part 2 of Schedule 9;

 

"Smelter Technology Transfer Agreement" or "Smelter TT A" means the agreement for the licensing of certain of Aluminium Pechiney's Intellectual Property in aluminium smelting technologies and provision of related services to a particular Company, as more fully described in Part 2 of Schedule 9;

 

"Smelting Company" shall bear the meaning set out in Clause 3.5 (c):

 

"SOCPA" shall bear the meaning set out in Clause 12.1;

 

"Special Programme and Budget" shall bear the meaning set out in Clause 12.8(a);

 

"SWCC" means the Saline Water Conversion Corporation in the Kingdom;

 

"Transfer Date" means, in respect of any transfer of Shares, the date of signature before the competent notary public in the Kingdom of the amendment of the Articles of Association necessary to give effect to such transfer in accordance with Clause 17.9;

 

"Transferable Interests" means, in respect of any Party, all Shares and Shareholder Loans held by such Party and its Affiliates;

 

"Transfer Notice" shall bear the meaning set out in Clause 17.5;

 

"US Dollar" or "US$" shall mean the lawful currency of the United States of America;

"Value Added Project" means any capital investment project to be implemented after the date of this  Agreement  and   which  is  intended   to  be  located  within  the  Kingdom   which  relates to

(a)downstream add-on products which could be produced using outputs generated by the Project (for  the  avoidance  of  doubt,  not  including  the   Rolling  Mill   or  any  Expansions  thereto) or

 

(b)

upstream inputs used in the Project (for the avoidance of doubt, not including the Refinery or any Expansions thereto);

 

 

"Valuer" shall bear the meaning set out in Clause 18.2; and

 

"year", "month", "week" and "day" mean a calendar year, calendar week. calendar month and a calendar day respectively of the Gregorian calendar.

 

20


 

 

1.2

Interpretation

 

In this Agreement:

 

 

(a)

References to statutory provisions shall be construed as references to those provisions as respectively amended or re•enacted or as their application is modified from time to time by other provisions (whether before or after the date hereof).

 

 

 

(b)

References to Recitals, Clauses, Schedules and paragraphs are to Recitals and Clauses in, and to Schedules and paragraphs of Schedules to, this Agreement. The Recitals and Schedules shall be deemed to form part of this Agreement.

 

 

 

(c)

References to any document (including this Agreement) are references to that document as amended, consolidated, supplemented, novated or replaced from time to time.

 

 

 

(d)

Headings are inserted for convenience only and shall not affect construction.

 

 

(e)

References to the Shareholders include their respective successors and permitted assigns.

 

 

(f)

References to persons shall include any individual, any form of body corporate, unincorporated association, firm, partnership, joint venture, consortium, association, organization or trust (in each case whether or not having a separate legal personality).

 

 

 

(g)

The word "include" and its derivatives shall be deemed to include the proviso that it is "without limitation".

 

 

 

(h)

The  masculine gender shall include the feminine and neuter and the singular number shall include the plural, and vice versa.

 

 

 

1.3

Third Party Rights

Except insofar as this Agreement expressly provides that a third party may in his own right enforce a term of this Agreement, a person who is not a party to this Agreement has no right to rely upon or enforce any term of this Agreement.

 

 

2.

Effective Date; Term of the Agreement; Parent Company Guarantee

Effective Date

 

2.1

This Agreement shall be effective as of the date of execution of this Agreement by both Parties (the "Effective Date").

 

 

2.2

Term of the Agreement

 

 

(a)

The term of this Agreement and the Joint Venture shall be from the Effective Date until thirty (30) years after the date that the last of the three Companies is registered in the Commercial  Register (the "Initial Term").

 

 

 

(b)

At the expiry of the Initial Term, this Agreement shall be automatically renewed for an additional term of twenty (20) years on the same terms and conditions, unless the Parties agree otherwise at least two (2) years prior to the expiry of the Initial Term or unless terminated earlier in accordance with this Agreement ("Additional Term").

 

 

 

(c)

The Parties may agree to extend the term of this Agreement and the Joint Venture beyond the end of the Additional Term, by successive ten ( l0) year periods, by mutual agreement of the Shareholders at least five (5) years prior to expiry of the then current term

 

 

(d)

If the Parties are unable to agree on an extension of the term of this Agreement and the Joint Venture pursuant to paragraph (c) above, prior to a liquidation of the Companies

 

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pursuant to the provisions of Clause 16.3, the Parties will seek to negotiate a purchase by one Party of the other Party's Transferable Interests at a Fair Market Value pursuant to the procedures, and consistent with the valuation principles, set forth in Clause 18.

 

 

 

2.3

Parent Company Guarantee

 

Alcoa shall procure the issuance by its ultimate parent company of a parent company guarantee in respect of its Affiliates that are Shareholders in a Company in the form set out in Schedule 1. Such parent company guarantee shall be issued to Ma'aden prior to or simultaneously with the first issuance of Shares to any Alcoa Affiliate.

 

 

3.

Development Committee and Establishment of a particular Company

 

 

3.1

Development Committee

 

The Parties shall proceed to incorporate each Company and appoint the relevant Board of Managers as soon as possible after the Effective Date. If it is not practicable to incorporate a Company immediately following the Effective Date then, for the period between the Effective Date and the incorporation of such Company and appointment of its Board of Managers, a project development committee (the "Development Committee") shall be formed by the Parties for the overall co­ ordination of the development of the project in the period up to incorporation of such Company and appointment of its Board of Managers. The Development Committee shall have the authority and duties and shall act in accordance with the procedures set out in Part 1 of Schedule 13.

 

The Development Committee shall be subject to the same Company Policies as described in Clause 8.9 of the Agreement once such policies are determined by the Parties.

 

 

3.2

Project Costs and Pre-Financing Budget

 

Prior to the Effective Date, the Parties have agreed on:

 

(i)the Estimate of Project Costs;

 

(ii)the Project Model; and

 

(iii)the Pre-Financing Budget.

 

 

3.3

Project Milestones

 

 

(a)

From the Effective Date, the Parties shall use their best efforts to progress the development of the Project including achieving the milestones set out in Schedule 15 by the respective milestone dates. As the Project is progressed as aforesaid, the Parties shall, and shall procure that each Company shall, further develop and approve:

 

 

(i)

the Project Budget which shall supersede and replace the Estimate of Project Costs and Pre-Financing Budget;

 

 

(ii)

the Base Case Model for each Phase;

 

 

(iii)

the Financing Plan for each Phase including a commitment by each of the Parties to provide the Required Shareholder Funding specified in the Financing Plan together with the Senior Lenders Commitment Letters in respect of such Phase; and

 

 

(iv)

the material Project Agreements as specified in Schedule 15.

 

 

 

 

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(b)

Without prejudice to the above, the Parties shall use their best efforts to obtain signed Senior Lenders Commitment Letters and the key signed Construction Agreements (as agreed by the Parties) for Phase 1 by no later than 30 June 2010 (the "Commitment Date").

 

(c)

In the event that the Senior Lenders Commitment Letters and the key Construction Agreements (as aforesaid) have not been signed by the Commitment Date, the Parties will liaise with the Ministry of Petroleum to seek appropriate extensions of time or other relief under the Gas Allocation Letter and the Parties will continue to use all their respective best efforts to progress the Senior Lenders Commitment Letters and the key Construction Agreements so that they may be signed by the respective parties as soon as practicable following the Commitment Date. In the event that the Gas Allocation Letter is terminated or the gas allocation is withdrawn by reason of any failure to achieve the signing of the Senior Lenders Commitment Letters or the relevant key Construction Agreements by the Commitment Date, or for any other reason, then this Agreement will terminate in accordance with Clause 16.l(e) and neither Party shall have any liability to the other (including in respect of the reimbursement of Pre-Incorporation Costs or Paid In Capital or Shareholder Loans in respect of any Company) arising from any such termination.

 

(d)

Subject to obtaining signed Senior Lenders Commitment Letters for Phase 1, the Parties: agree to continue to develop the Project; commit to provide the Required Shareholder Funding in respect of Phase 1; and to procure that each relevant Company shall sign the Financing Agreements for Phase 1, subject only to the Financing Agreements being on materially the same terms as those contained in the Senior Lenders Commitment Letters.

 

(e)

Following the development and approval of all items listed in paragraph (a) above and, subject to paragraph (f) below, the occurrence of the Financing Completion Date for Phase 1 (or earlier, should the Parties so agree), the Parties shall procure that the NTP for Phase 1 is issued.

 

(f)

The Parties shall use their best efforts to progress the Project as aforesaid such that the Financing Completion Date for Phase 1 occurs no later than the Financing Longstop Date. In the event that the Financing Completion Date for Phase 1 has not occurred by the Financing Longstop Date, Clause 15 shall apply.

 

(g)

The Parties acknowledge that the Project is an integrated project to be developed in two Phases. The Parties shall use their best efforts to obtain signed Senior Lenders Commitment Letters and the key signed Construction Agreements (as agreed by the Parties) for Phase 2 by no later than 30 June 2011. The Parties shall proceed to develop Phase 2 upon signing the relevant Financing Agreements.

 

3.4

Establishment of each Company

 

 

(a)

The Parties acknowledge and shall procure that each Company will be established by the relevant Shareholders in accordance with the Applicable Laws of the Kingdom.

 

 

 

(b)

Promptly following the Effective Date, the Parties shall procure that the relevant Shareholders shall apply to SAGIA for the issuance of the Foreign Investment Licence in relation to each Company.

 

 

 

(c)

Promptly following the issuance of the Foreign Investment Licence for each particular Company, the Articles of Association of such Company shall be submitted to the Ministry and the Parties shall procure that the relevant Shareholders shall use all reasonable efforts to complete the incorporation of each Company. The Parties agree that each Company's Articles of Association will be in the Agreed Form attached hereto as Schedule 2, an Arabic version of which shall be submitted to the Ministry for approval. If any changes are requested by the Ministry, the Articles of Association will be amended and resubmitted only

 

 

23


 

after the Parties have consented thereto, such consent not to be unreasonably withheld, conditioned or delayed. Promptly following approval of the Articles of Association by the Ministry, the Parties will cause the authorized representatives of the relevant Shareholders to execute the Articles of Association before the competent notary public in the Kingdom and thereafter shall take such further actions as shall be necessary to complete the incorporation and registration of each Company in the Commercial Register as soon as possible, and in accordance with the requirements of Clauses 3.5, 3.6 and 4.1 (a).

 

3.5

Details of each Company

 

The Parties acknowledge and agree that:

 

 

(a)

Each Company will be formed for a period of fifty (50) years starting from the date of its registration in the Commercial Register, as may be extended pursuant to the terms of the Articles of Association and this Agreement;

 

 

 

(b)

Notwithstanding paragraph (a) above, the term of the Joint Venture shall be as specified in Clause 2.2;

 

 

 

(c)

The names of the Companies shall be (i) Ma'aden Bauxite & Alumina Company, which will operate the Mine at Al Ba'itha and the Refinery at Ras Az Zawr (the "Mining & Refining Company"); (ii) Ma'aden Aluminium Company, which will operate the Smelter at Ras Az Zawr (the "Smelting Company"); and (iii) Ma'aden Rolling Company, which will operate the Rolling Mill at Ras Az Zawr (the "Rolling Company"), or in each case such other name as may be approved by the Parties from time to time in accordance with this Agreement and set out in, or in an amendment to the Articles of Association of such Company which have been duly filed and/or registered in the Commercial Register in accordance with Applicable Laws of the Kingdom;

 

 

 

(d)

The registered office of each Company shall be in Jubail in the Kingdom, or such other place in the Kingdom as may be approved by the Parties from time to time in accordance with this Agreement and set out in an amendment to the Articles of Association of such Company which has been duly filed and/or registered with the Commercial Register in accordance with Applicable Laws of the Kingdom;

 

 

 

(e)

Each Company shall be domiciled in the Kingdom and shall not conduct business in any jurisdiction other than the Kingdom, except as may be necessary or incidental to the Project, without the prior approval of the relevant Board of Managers given in accordance with this Agreement.

 

 

 

3.6

Purpose

 

 

(a)

The Parties acknowledge and agree that (i) the Companies are a profit centre separate to each of the Parties' other business(es), and (ii) subject to the terms and conditions of this Agreement, the Parties shall procure (either directly or through the relevant Shareholders appointed by them) that each Company shall conduct its affairs, and each of the Parties shall (and shall procure that the relevant Shareholders appointed by them shall) conduct its dealings with such Company, in such a way as to promote the Company's business and the profitability of the Project.

 

 

 

(b)

The Parties acknowledge and agree that the purpose of each Company is and shall be to engage in the following commercial activities, subject to the terms and conditions of this Agreement and in accordance with the contractual arrangements by which it is bound:

 

 

 

(i)

Collectively, the development, construction, ownership and operation of the Mine, the Refinery, the Smelter and the Rolling Mill in the Kingdom;

 

 

24


 

 

(ii)

In the case of the Mining & Refining Company, initially the extraction of approximately 4,000,000 tpa of Bauxite from the Al Ba'itha bauxite deposit in the Kingdom and the production of approximately 1,800,000 tpa of Alumina;

 

 

 

(iii)

In the case of the Smelting Company, initially the production of approximately 740,000 tpa of Aluminium;

 

 

 

(iv)

In the case of the Rolling Company, initially the production of approximately 250,000 tpa, which may be increased to 460,000 tpa of Rolling Mill products (the "Products"); and

 

 

 

(v)

Implementation of Expansions of the Project, and production of the resulting increased quantities of the Products.

 

 

 

(c)

The Parties acknowledge that priority on the allocation and marketing of Excess Alumina will be given to Expansions of the Smelter, followed by domestic demand and then to export to international markets.

 

 

 

(d)

In accordance with the Gas Allocation letter and as referred to in Clause 5.5, the Parties acknowledge and agree that the Companies are required to support the development of downstream businesses in the Kingdom.

 

 

 

4.

Share Capital, Funding by Shareholders and Financing Completion Date

 

4.1

Share Capital as of Incorporation

 

 

a.

The Parties acknowledge that each Company shall be incorporated with an initial Share Capital, and the ownership of such shares as at the date of incorporation shall be, as set out in the tables below:

 

 

(i) In the case of the Mining & Refining Company:

 

Shareholder

Shareholder Percentage

Number of Shares

Paid In Capital

Ma'aden

74.9%

381,990

SR 3,819,900,000

Alcoa

25.1%

128,010

SR 1,280,100,000

TOTAL

100%

510,000

SR 5,100,000,000

 

(ii)

In the case of the Smelting Company:

 

Shareholder

Shareholder Percentage

Number of Shares

Paid In Capital

Ma'aden

74.9%

381,990

SR 5,729,850,000

Alcoa

25.1%

128,010

SR 1,920,150,000

TOTAL

100%

510,000

SR 7,650,000,000

(iii)In the case of the Rolling Company:

 

Shareholder

Shareholder Percentage

Number of Shares

Paid In Capital

Ma'aden

74.9%

292,110

SR 2,921,100,000

Alcoa

25.1%

97,890

SR 978,900,000

TOTAL

100%

390,000

SR 3,900,000,000

 

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(b)

Each Share shall entitle the holder thereof to one (1) vote on each matter coming before the Shareholders.

 

 

 

(c)

Notwithstanding anything to the contrary contained in the Articles of Association of each Company, each Share shall entitle the holder thereof to receive Share Distributions in accordance with Clause 11 of this Agreement."

 

 

 

4.2

Required  Shareholder Funding

 

 

(a)

From the Effective Date until the date of incorporation of each Company and appointment of the Board of Managers for such Company, funding calls will be issued by the Development Committee (a "Development Committee Funding Call") in accordance with the Pre-Financing Budget and shall be funded by the Parties and/or their Affiliates into the Project Account in proportion to their proposed Shareholder Percentages for each relevant Company set out in Clause 4.1 within fourteen (14) days of the request, subject to the Parties' rights to reimbursement in accordance with Clause 13.

 

 

 

(b)

Following the incorporation of a Company and appointment of its Board of Managers, the Board of Managers may from time to time issue a Cash Call to the Shareholders in accordance with their Shareholder Percentages for Equity Subscriptions and, Shareholder Loans (in the proportions determined by the Parties), in accordance with approved Budgets including initially the Pre-Financing Budget and, when superseded, the Project Budget. The Equity Subscriptions and Shareholder Loans shall each separately be proportionate to the Shareholder Percentages of the respective Shareholders. The Parties shall procure that the relevant Shareholders nominated by them shall pay or advance such funds to such Company and, in respect of any Equity Subscription, the Paid In Capital of each of the Shareholders in the Company shall be adjusted accordingly. For the purposes of this Agreement, "Required Shareholder Funding" shall comprise all funding that the Shareholders (or any of them) have advanced or are required to advance (or procure the advancing ot) to each Company in accordance with the approved Budgets or as otherwise required in accordance with this Agreement, including by way of Equity Subscriptions and Shareholder Loans (but shall exclude any Senior Debt provided by a Shareholder or its Affiliates).

 

 

4.3

Shareholder Loans

 

In the event that the Parties determine that a Cash Call issued by a particular Board of Managers should comprise in whole or part Shareholder Loans, the Parties shall procure that the Shareholders shall each, and shall also procure that such Company shall, within fifteen (15) days of the request by the Board of Managers to do so, execute one or more subordinated loan agreements between the relevant Shareholders and such Company (the "Shareholder Loan Agreements") requiring the relevant Shareholders, conditional on achieving the Financing Completion Date for the relevant Phase, to advance amounts to such Company  pursuant  to  Cash  Calls  in  accordance  with  Clause 4.2(b).

 

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4.4

Form and Manner of Funding by Shareholders

 

 

(a)

Unless otherwise approved by the Board of Managers of a relevant Company in accordance with this Agreement, all Cash Calls by each Board of Managers shall:

 

 

 

(i)

be in an amount that corresponds to an approved Budget (which shall be referenced in the Cash Call), be given at such times and in respect of such amounts as correspond to the cash requirements of the particular Company and, to the extent possible, correspond with the timing contemplated by such approved Budget;

 

 

 

(ii)

be made by notice in writing to all Shareholders not less than ten (10) Business Days prior to the date (the "Funding Deadline"), which shall be a Business Day, by which such Required Shareholder Funding subject to the Cash Call is required to be made;

 

 

 

(iii)

specify the amount required to be advanced by the affected Shareholder(s) in accordance with this Agreement;

 

 

 

(iv)

specify whether the amount is required to be advanced by way of Equity Subscription and or Shareholder Loan;

 

 

 

(v)

specify the Funding Deadline; and

 

 

(vi)

set out details of the bank account of the Company into which the Required Shareholder Funding subject to the Cash Call should be deposited.

 

 

 

(b)

All Required Shareholder Funding pursuant to this Clause 4 shall be made in the form of cash and in respect of equity shall be made in Saudi Riyals and in respect of Shareholder Loans shall be made in either Saudi Riyals or US Dollars, as agreed by the Parties.

 

 

 

(c)

All Shareholder funding made under this Clause 4 shall be directly deposited into a separate bank account of the relevant Company established for such purpose which shall be specified in the relevant Cash Call and (together with any interest or investment income earned thereon) shall be the absolute property of such Company for its own account and used by such Company in accordance with this Agreement.

 

 

 

(d)

Subject to Applicable Laws in the Kingdom and Clause 7.2(a)(ii), when considered appropriate by the relevant Board of Managers, including for purposes of avoiding potential application of Article 180 of the Company Law, the Parties shall procure that the Shareholders shall promptly resolve and otherwise procure and take all steps and execute and deliver all instruments necessary or desirable, including without limitation  amending the Articles of Association of the relevant Company (without requiring separate approval under Clause 7.2(a)), to convert Shareholder Loans into Share Capital by releasing and discharging such principal amount of Shareholder Loans (then outstanding from each Shareholder to the relevant Company) in consideration for the issuance by the Company of that number of Shares so as to increase the Share Capital to an appropriate level. Any Shareholder Loans so converted shall be converted into Shares pro rata to the then Shareholder Percentages of the Shareholders and in a manner which does not vary the Shareholder Percentages of the Shareholders post conversion.

 

 

 

4.5

Default Commission Rate

 

If a Shareholder fails to pay or advance an amount in accordance with this Clause 4 by the Funding Deadline or the deadline specified in Clause 4.2(a) (in the case of a Development Committee Funding Call), the unpaid amount of such Required Shareholder Funding or under such Development Committee Funding Call (as the case may be) shall bear a commission  (the "Default

 

27


 

 

Commission") from and after the date due to the date such amount is paid at a rate per annum equal to the Commission Rate plus two percent (2%), payable upon demand by the relevant Company or the non-defaulting Shareholder or, failing such demand, monthly in arrears. Any calculation of Default Commission under this Clause 4.5 shall be made on the basis of the actual number of days elapsed and a three hundred and sixty (360) day year.

 

4.6

Limitations and Shareholder Funding

 

No Party, nor any of its Affiliates that are Shareholders in a particular Company, shall be under any obligation to provide  funding,  directly or  indirectly,  to a Company  except  pursuant  to this Clause 4 or Clause 10.

 

4.7

Pledge

 

Except as required pursuant to, and subject to, the terms of the Financing Agreements, no Shareholder may pledge, mortgage, charge or grant any other security interest ("Security Interest") over all or any part of its Shares or Shareholder Loans unless such Shareholder obtains the prior written consent of the other Shareholder to such Security Interest.

 

 

4.8

Adherence Agreement

 

Subject to Clause 4.9(b), a person who is not a Shareholder shall not acquire, or be permitted to acquire, any Shares or Shareholder Loans in a Company: (1) other than in accordance with and pursuant to the provisions of this Agreement; and (2) unless such person shall have first executed an Adherence Agreement to this Agreement in the form attached hereto as Schedule 5 ("Adherence Agreement") on or prior to the completion of such acquisition of any Shares or Shareholder Loans. Without limiting the foregoing, Alcoa intends to hold its Shares in each of the Companies through an Affiliate and shall procure that each such Affiliate shall enter into an Adherence Agreement on or prior to the issuance of any Shares to such Affiliate. The Parties acknowledge that on receipt of an Adherence Agreement in accordance with the terms of this Agreement, a New Shareholder (as defined in the form of the Adherence Agreement) shall be deemed to have been added as a party to this Agreement and all references to Shareholder or Shareholders, shall include the New Shareholder.

 

 

4.9

Financing Completion Date

 

 

(a)

The Parties intend that the Financing Completion Date for each Phase shall occur no later than the dates specified in Schedule 15 and, in any event, in respect of Phase 1 by no later than the Financing Longstop Date or such other dates as may be resolved by the relevant Board of Managers pursuant to Clause 8.5(a) (and provided that there is no obligation to agree on any change to such dates and a failure to agree on any change to such dates shall not constitute a Deadlock for the purposes of this Agreement).

 

 

 

(b)

As soon as is reasonably practical after the Financing Completion Date for each Phase, the Parties shall procure that the relevant Shareholders shall procure that the Foreign Investment Licence, Articles of Association and Commercial Register shall be amended so as to formalize the increase in capital and issuance of the additional Shares.

 

 

 

(c)

Subject to the provisions of Clause 6.3, as soon as is reasonably practical after the Financing Completion Date for each Phase, and in any event no later than the closing date of the first drawdown of funds pursuant the Financing Agreements for such Phase, the Parties shall procure that the relevant Shareholders shall procure that each relevant Company shall execute all material Project Agreements and Ancillary Agreements not executed prior to such date in respect of such Phase.

 

 

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5

Responsibilities of the Parties

 

5.1

Roles of the Parties

 

The organization, development, and operation of each Company and the Project will capitalize on the strengths and experience brought by each of the Parties, who will provide such assistance pursuant to the terms of this Agreement and the Ancillary Agreements.

 

 

 

5.2

Role of Ma'aden

 

Alcoa acknowledges and agrees that Ma'aden possesses extensive experience and know-how in respect of mining, infrastructure, local regulatory compliance, local procurement of goods and services, land related matters and project development in the Kingdom. Accordingly, the Parties shall ensure that each Company shall consult with Ma'aden, and Ma'aden (or as the case may be, its Affiliates) shall provide assistance and support to such Company and, as applicable, shall perform other specified services and obligations, with respect to such matters in the manner provided in, and upon and subject to the terms and conditions of, this Agreement and the relevant Ancillary Agreements entered into by Ma'aden (or as the case may be, its Affiliates) in the Agreed Forms, in accordance with Schedule 9. Such assistance and support and other obligations shall be performed on an "at cost" basis except where an arm's length Ancillary Agreement is to be entered into in accordance with Schedule 9. For the purposes of this Clause 5.2, "at cost" means: in relation to services and support provided by Ma'aden's or its Affiliates' personnel, the costs attributable to base salary plus benefits and burdens of such personnel for the periods in which such services and support are being performed; and in relation to other services and support, the actual direct costs properly incurred by Ma'aden or its Affiliates to third parties in performing the same.

 

5.3

Role of Alcoa

 

Ma'aden acknowledges and agrees that Alcoa possesses extensive experience and know-how with respect to bauxite mining, alumina refining, aluminium smelting and rolling mill operations. Accordingly, the Parties shall ensure that each Company shall consult with Alcoa, and Alcoa (or, as the case may be, its Affiliates) shall provide assistance and support to such Company and, as applicable, shall perform other specified services and obligations, with respect to such matters provided in, and upon and subject to the terms and conditions of, this Agreement and the relevant Ancillary Agreements entered into by Alcoa (or its Affiliates) in the Agreed Forms, as more particularly described in Schedule 14. Such assistance and support and other obligations shall be performed on an "at cost" basis except where an arm's length Ancillary Agreement is to be entered into in accordance with Schedule 9. For the purposes of this Clause 5.3 and Clause 16.4, "at cost" means: in relation to services and support provided by Alcoa's or its Affiliates' personnel, the costs attributable to base salary plus benefits and burdens of such personnel for the periods in which such services and support are being performed and subject to grossing up such costs to the extent that withholding tax is payable in respect of such costs; and in relation to other services and support, the actual direct costs properly incurred by Alcoa or its Affiliates to third parties in performing the same.

 

5.4

Aluminium Offtake

 

 

(a)

The Parties (or one of their respective Affiliates), the Smelting Company and the Rolling Company will enter into the Cast House Users' Agreement substantially in the form of Schedule 6 under which the Smelting Company will co-ordinate the provision of cast house services, including to the Rolling Company.

 

 

 

(b)

Subject to paragraph (c) below, the Parties or such of their respective Affiliates shall each enter into an offtake agreement with the Smelting Company in the Agreed Form in accordance with the timeline for execution specified in Schedule 9, for the purchase of their

 

 

29


 

 

pro rata share (based on their Shareholder Percentage) of each type of Aluminium product produced by the Smelting Company.

 

 

(c)

The Parties shall procure that the Smelting Company shall allocate such quantities of Aluminium to the Rolling Company as are required for the operation of the Rolling Mill and such allocated quantities shall be taken to reduce the amount of Aluminium provided by the Smelting Company and available to Parties pursuant to paragraph (b) above.

 

 

 

(d)

In the event that the Parties fail to achieve the milestone dates relating to the Rolling Mill as indicated in Schedule 15, the Parties acknowledge that the Smelting Company will be required to allocate 275,000 tpa of Aluminium to other entities determined by the Ministry of Petroleum in accordance with the Gas Allocation Letter. Such allocation shall be divided pro rata to each Parties' Shareholder Percentage and each Party shall be obliged to sell such amount of Aluminium at a price equal to the full cost of production to such entities determined by the Ministry of Petroleum.

 

 

 

(e)

The Parties shall use their reasonable efforts to (i) assist the Smelting Company in obtaining the required LME registration for Aluminium to be produced by it, and (ii) ensure that such registration is obtained in a timely manner. Each Party shall bear its own costs in relation to assisting the Smelting Company in obtaining the  LME  registration  pursuant  to  this Clause 5.4.

 

 

 

5.5

Support for Downstream Industry and Priority to the Domestic Market

 

 

(a)

In accordance with the Gas Allocation Letter, the Parties (or their Affiliates) shall, in priority to export markets, enter into long-term supply agreements with companies in the Kingdom that wish to purchase raw materials from among the Products produced by each Company and, where applicable, sold to the Parties (or their Affiliates) under each Parties' Offtake Agreement with the relevant Company (as specified in Schedule 9) or sold by the Rolling Company (if applicable).

 

 

 

(b)

Such supply agreements shall be long-term supply agreements based on competitive terms and conditions, including market based pricing, and, where applicable, on the terms outlined in the Parties' respective Offtake Agreements with the relevant Company. Furthermore, the Parties shall work diligently to promote and support the establishment of downstream industries in the Kingdom, based on the Products produced by the Smelting Company and/or the Rolling Company.

 

 

 

5.6

  S

 

 

(a)

[INTENTIONALLY OMITTED.

 

 

5.7

S[INTENTIONALLY OMITTED]

 

 

5.8

Alumina Supply Arrangements and Excess Alumina

 

(a)

During the period between the date on which the Smelter becomes operational and the date on which the Refinery begins to supply the Smelter's requirements for Alumina, upon request of the Smelting Company, Alcoa (or its Affiliates) will supply Alumina to the Smelting Company in such quantities and at such times as requested, and at a market price formula agreed by the Parties. If at any time thereafter the Mining & Refining Company becomes unable, including due to operational interruptions in Alumina production, to supply the Smelting Company's requirements for Alumina, Alcoa will offer its and its Affiliates' services as agent to locate other sources of Alumina in the market.

 

 

30


 

 

(b)

Alcoa will also offer, as agent, to market any Excess Alumina that the Mining & Refining Company may have available for sale from time to time at prevailing market prices and in return for a reasonable commission to be agreed.

 

 

5.9

Capacity Expansions

 

 

(a)

The Parties acknowledge that it is their intention to implement future capacity expansions across all elements of the Project in the manner described in this Agreement ("Expansion") and to consider engaging in or otherwise supporting downstream manufacturing.

 

 

 

(b)

Any Party may require a particular Company to undertake a feasibility study into any potential Expansion. The Parties agree that decisions to implement Expansions shall be taken, in good faith, based on the commercial, economic and strategic viability of the Expansion, following the completion of the feasibility study by such Company. Any decision to implement any Expansion shall be made in accordance with the provisions of Clause 8.5(b).

 

 

 

(c)

An Expansion shall be financed in accordance with a financing plan for such Expansion that has been approved by the relevant Board of Managers in accordance with this Agreement.

 

 

 

(d)

Each Party shall, and shall procure that the relevant Manager(s) appointed by it, act and vote reasonably and in good faith in connection with the approval of an Expansion and, if approved, in relation to the implementation and financing of the Expansion.

 

 

 

(e)

In the context of an Expansion carried out by a particular Company, the Parties shall endeavour to cause such Company (i) to minimise any disruption in the production levels of the Project, including the Mine and/or the Complex, during the period in which the Expansion is effected and (ii) to procure that the Expansion is effected in accordance with good industry practice.

 

 

 

(f)

Each Party shall, and shall procure that any of its Affiliates that are Shareholders shall, execute such documents as necessary in order to ensure the intent of this Clause 5.9 is achieved, including to effect such amendments as may be necessary to reflect the increase in capacity of the Mine and/or the Complex, the relevant Company's capital and its ownership, and to amend its Articles of Association and such Company's Commercial Registration accordingly. Where a decision to implement an Expansion within the relevant Company is taken by its Board of Managers in accordance with Clause 8, each Party shall, and shall procure that any of its Affiliates that are Shareholders shall, exercise their voting rights and do all such things and execute all such documents as may be required to give effect to such decision of such Board of Managers.

 

 

 

5.10

Break-Off Projects

 

 

(a)

If Ma'aden makes an Expansion proposal in accordance with Clause 5.9 and such Expansion proposal is not approved by the relevant Board of Managers in accordance with this Agreement at two (2) non-successive Board meetings of the relevant Company, held at least five (5) months apart, at which such Expansion proposal is presented for approval, then Ma'aden shall have the right (the "Break-Off Right") itself or through an Affiliate to proceed to develop, construct, own and operate the Expansion to which such Expansion proposal relates (the "Break-Off Project"). Ma'aden may develop, construct, own and/or operate the Break-Off Project either itself or through a special purpose project company (the "Break-Off Project Company") which it Controls. The Break-Off Right shall terminate if (i) Ma'aden has not given formal notice to the relevant Company (the "Break-Off Project Notice") of its intention to proceed with such Expansion within the period of sixty (60) days after the second of the two non-successive Board of Managers meetings where the relevant Board of  Managers resolved not to proceed with such  Expansion, or (ii) notice to proceed

 

 

31


 

 

under the relevant Construction Agreements for the Break-Off Project is not given within eighteen (18) months of the date of the Break-Off Project Notice. For the avoidance of doubt, if any Break-Off Right so terminates, the proposed Expansion (or any Expansion substantially similar to such proposed Expansion) must again be submitted to the relevant Company in accordance with Clause 5.9.

 

 

(b)

If Ma'aden gives a Break-Off Project Notice pursuant to paragraph (a) above, the relevant Company shall, and the Parties shall procure that the other Shareholders shall procure that such Company shall, negotiate in good faith with Ma'aden, its Affiliates and/or the Break­ Off Project Company with a view to such Company entering into a shared services agreement (a "Shared Services Agreement") with Ma'aden, its Affiliate and/or the Break­ Off Project Company pursuant to which such Company shall provide certain services and/or make available certain facilities in order to support and facilitate the development, construction and operation of the Break-Off Project. In connection with any such negotiations, the Parties shall ensure that the following principles shall be applied by the parties to such negotiations:

 

 

 

(i)

the relevant Company and Ma'aden, its Affiliates and/or the Break-Off Project Company shall cooperate in relation to the conduct of the Project and the Break-Off Project;

 

 

 

(ii)

the relevant Company shall, to the extent that doing so does not disrupt the Project, seek to accommodate the needs of the Break-Off Project, including, for the avoidance of doubt, allowing the Break-Off Project to interface with and share the plant and facilities of the Project, at the cost of Ma'aden, its Affiliates and/or the Break-Off Project Company; and

 

 

 

(iii)

the relevant Company shall provide such reasonable supplies including intermediate Products, services, leases, licences, easements and other rights and facilities as are reasonably requested by the Break-Off Project, provided that such Company shall only be obliged to provide services to the Break-Off Project:

 

 

 

(A)

to the extent that it has spare capacity, taking into account its current or reasonably predicted future usage of that capacity;

 

 

 

(B)

provided that there are no technical incompatibilities which reasonably could be expected to have an adverse effect on the Project and which cannot reasonably be overcome;

 

 

 

(C)

provided that no capital expenditures are required of such Company, or alternatively the Break-Off Project funds such capital expenditure;

 

 

 

(D)

provided that the arrangements do not adversely impact on the security and regularity of supplies of energy and raw materials to such Company; and

 

 

 

(E)

provided that the provision of such services would not prejudice the efficient current and planned future production of Aluminium by the Project.

 

 

For the purpose of this Clause 5.10(b)(iii). services, leases, easements and utilities shall be provided on a "full cost" basis (including capital and operating costs). If so required by the Break-Off Project, any intermediate Products, intellectual property licences or other rights and facilities shall be provided on a reasonable basis to be agreed with reference to the cost to the relevant Company of providing such, as well as to the advantage to the Break-Off Project in receiving rather than resorting to a third party provider (if available).

 

32


 

The Parties shall ensure that the Shared Services Agreement shall contain provisions requiring the Break-Off Project Company to comply with detailed reporting requirements, including as regards submitting to the relevant Company monthly progress reports during the  pre-commercial operation phase of the Break-Off Project and quarterly operations reports post commercial operation of the Break-Off Project. All  reports shall be  in such  form  and  provide such  information  as is customary and shall further contain such additional information  as  the  relevant  Company  may  reasonably request  from time to time.

 

 

5.11

Value Added Projects

 

 

(a)

If a Party or any of its Affiliates wishes to develop, construct, operate or otherwise implement, or participate in, any Value Added Project, it may, but shall not be obliged to, inform the relevant Company and the other Party proposing that such Company implement, or participate in, the Value Added Project. In such event, the Party shall set out such details of the proposed Value Added Project as are reasonably necessary to enable the relevant Board to make a reasoned judgement concerning the merits of such Value Added Project. Notwithstanding the foregoing, if any such Value Added Project is likely to be a substantial supplier to, or customer of, a Company (measured either by revenues or by percentage of total purchases or sales), the relevant Party shall inform the other Party and the relevant Company, and the Parties shall consult on the effects on the relevant Company of any arrangement proposed to be entered into between the Value Added Project and such Company but, for the avoidance of doubt, informing the other Party and such Company as aforesaid should not be deemed to be an offer to participate in the Value Added Project.

 

 

 

(b)

If the implementation of, or the participation in, a Value Added Project proposed by a Party in accordance with paragraph (a) above is approved by the relevant Board of Managers in accordance with this Agreement, the Parties shall procure that the relevant Company proceeds to implement, or participate in (as applicable), such Value Added Project in such manner as is determined by such Board of Managers.

 

 

 

(c)

If the implementation of, or participation in, a Value Added Project proposed by a Party in accordance with paragraph (a) above is not approved by the relevant Board of Managers within ninety (90) days of such Board meeting at which the proposal was first presented to the Board of Managers for approval, then the Party whose appointed Manager(s) voted in favour of such Value Added Project at such Board of Managers meeting shall be entitled itself or through an Affiliate to implement, or participate in, the Value Added Project (on a basis substantially similar to that set out in the relevant notice) outside the relevant Company in partnership, joint venture or in such other relationship with any other person as such Party may determine.

 

 

 

(d)

Notwithstanding the foregoing provisions of this Clause 5.11, each Party shall use its reasonable efforts to procure that the relevant Company shall not implement, or participate in, any Value Added Project in a manner that would constitute, or cause such Company to commit, a breach of such Company's obligations under any Project Agreements or Financing Agreements.

 

 

 

5.12

Responsibilities under the Gas Allocation Letter

 

 

(a)

The Parties acknowledge that the Gas Allocation Letter contains requirements in respect of the implementation of the Project which are to be supported by the provision by Ma'aden (on behalf of the Companies) of an irrevocable letter of credit in the amount of US$ three hundred and fifty million (US$350,000,000) (the "Ma'aden LOC"). The Ministry of Petroleum has the right to call on the Ma'aden LOC in the event that the requirements of the Gas Allocation Letter are not met.

 

 

33


 

 

 

(b)

The Parties agree and acknowledge that a failure to satisfy the requirements of the Gas Allocation Letter resulting in a claim under the Gas Allocation Letter or a call under the Ma'aden LOC is a risk of the Project to be borne by the Parties in proportion to their respective  Shareholder Percentages.

 

 

 

(c)

Alcoa shall provide to Ma'aden, within fourteen (14) days of Ma'aden's written request, and in any case prior to the deadline under the Gas Allocation Letter for provision of a letter of credit to the Ministry of Petroleum, a separate irrevocable and unconditional letter of credit issued by a financial institution acceptable to Ma'aden in an amount equal to Alcoa's pro rata share of the amount stated in paragraph (a) above based on its Shareholder Percentage (the "Alcoa LOC"). The Alcoa LOC shall have a term of not less than one (I) year and at least thirty (30) days prior to its expiry, Alcoa shall either (i) cause the issuing bank to provide a notice of renewal satisfactory to Ma'aden or (ii) provide a notice of replacement to Ma'aden together with a replacement letter of credit fulfilling the requirements of this Clause 5.12(c).

 

 

 

(d)

Ma'aden shall be entitled to call on the Alcoa LOC in the event that Ma'aden is required to make payment for a failure to meet the requirements of the Gas Allocation Letter or the Ministry of Petroleum calls under the Ma'aden LOC, provided that any liability incurred to the Ministry of Petroleum under the Gas Allocation Letter shall be borne by the Parties in proportion to their Shareholder Percentages.

 

 

 

(e)

On satisfaction of the requirements of the Gas Allocation Letter and the return of the Ma'aden LOC to Ma'aden, Ma'aden shall, within five Business days thereafter, return the Alcoa LOC to Alcoa.

 

 

 

(f)

Any failure by Alcoa to comply with the requirements of this Clause 5.12 for any reason whatsoever shall be deemed to be an Event of Default by Alcoa under Clause 14.l(e).

 

 

 

5.l 3

Provision of lnformation by Parties and the Companies

 

 

(a)

In regard to the operations of the Companies and all matters governed by this Agreement, if a Party, a Shareholder or a Company becomes aware that any of its (or its Affiliate's) or the Companies' directors, employees or Agents have, or in the future will, pay, offer, promise, or authorize the payment of money or anything of value, directly or indirectly, to a Government Official while knowing that any portion of such exchange is for the purpose of:

 

 

 

(i)

influencing any act or decision of a Government Official in its official capacity, including the failure to perform an official function, in order to assist itself, a Company or any other person in obtaining or retaining business, or directing business to any third party;

 

 

 

(ii)

securing an improper advantage;

 

 

(iii)

inducing a Government Official to use its influence to affect or influence any act or decision of a Governmental Authority in order to assist itself, a Company or any other person in obtaining or retaining business, or directing business to any third party; or

 

 

 

(iv)

providing an unlawful personal gain or benefit, of financial or other value, to a Government Official,

 

 

that Party, Shareholder or Company, as the case may be, shall promptly inform the Board of the relevant Company.

 

 

(b)

Where as a result of an activity carried on or proposed to be carried on by a Company a Government  Authority makes an enquiry or request  for information in relation  to a legal,

 

 

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compliance or regulatory requirement of such Company or Party under Applicable Laws, the Parties shall co-operate with one another and the Company in relation to that enquiry or request for information. Upon request by a Party or a Company, as the case may be, the other Party (or Parties in the case of a request made by a Company) shall provide all reasonable information and assistance required by such Party or Company in respect of such enquiry or request for information.

 

 

6.

Transfer of Existing Project Assets; Project Agreements

 

6.1

Transfer of Ma'aden Existing Project Assets

 

 

(a)

As soon as reasonably practicable after the incorporation of each relevant Company, Ma'aden shall sell, transfer and assign all of its right, title and interest (including all accrued rights) in and to each of Ma'aden's existing Project assets as listed in  Schedule 11 ("Ma'aden Existing Project Assets") to the relevant Company (as determined by the Parties) and the Parties shall procure that such Company purchases or, as the case may be, receives and accepts the transfer and assignment of each of the Ma'aden Existing Project Assets. The sale, transfer and assignment of any Ma'aden Existing Project Assets pursuant to this Clause 6.1 shall not be subject to, or conditional upon, the sale, transfer or assignment of any other of the Ma'aden Existing Project Assets or any of the Alcoa Existing Project Assets.

 

 

 

(b)

Ma'aden shall use its best efforts to give effect to the provisions of paragraph (a) above and, without limiting the generality of the foregoing, shall:

 

 

 

(i)

execute appropriate Deeds of Transfer transferring each of the Ma'aden Existing Project Assets to the relevant Company;

 

 

 

(ii)

procure (if appropriate) the re-issuance of, or transfer by, the appropriate Governmental Authority (on terms not materially less favourable to the relevant Company) of any relevant Ma'aden Existing Project Assets to the relevant Company; and

 

 

 

(iii)

execute and procure the execution of any additional documents and take further action as is necessary or reasonably requested by Alcoa to effectuate the intent of this Clause 6.1.

 

 

 

6.2

Transfer of Alcoa Existing Project Assets

 

(a)

As soon as reasonably practicable after the incorporation of each relevant Company, Alcoa shall sell, transfer and assign all of its right, title and interest (including all accrued rights) in and to each of the Alcoa existing Project assets as listed in Schedule 12 ("Alcoa Existing Project Assets") (if any) to the relevant Company (as determined by the Parties) and the Parties shall procure that such Company purchases or, as the case may be, receives and accepts the transfer and assignment of each of the Alcoa Existing Project Assets. The sale, transfer and assignment of any Alcoa Existing Project Assets pursuant to this Clause 6.2 shall not be subject to, or conditional upon, the sale, transfer or assignment of any of the other of Alcoa Existing Project Assets or any of the Ma'aden Existing Project Assets.

 

 

 

(b)

Alcoa shall use its best efforts to give effect to the provisions of paragraph (a) above and, without limiting the generality of the foregoing, shall:

 

 

 

(i)

execute appropriate Deeds of Transfer transferring each of the Alcoa Existing Project Assets to the relevant Company; and

 

 

35


 

 

 

(ii)

execute and procure the execution of any additional documents and take further action as is necessary or reasonably requested by Ma'aden to effectuate the intent of this Clause 6.2.

 

 

 

6.3

Project Agreements signed post-Effective Date but before Company Formation

 

 

(a)

Promptly following the Effective Date, the Party that is identified as a party to any Ancillary Agreements shall, or shall procure that its relevant Affiliates that are identified as parties thereto shall, use its reasonable efforts to approve Agreed Forms of such Ancillary Agreements (with the exception of Ancillary Agreements that are in Agreed Form on or prior to the Effective Date), and shall execute, and the Parties shall procure that the relevant Company shall execute, the Ancillary Agreements in the Agreed Form forthwith after the Effective Date in accordance with Schedule 9. The Parties agree and acknowledge that all Ancillary Agreements shall be entered into on arm's length commercial terms.

 

 

 

(b)

The Parties shall use their reasonable efforts to ensure that, with the exception of such of the Project Agreements that are in the Agreed Form, the Project Agreements (other than the Ancillary Agreements and the Financing Agreements) are negotiated and executed on the most favourable terms and conditions for the relevant Company as may be reasonably obtainable and, where applicable, in accordance with the timeline for the execution as specified by the Board of Managers.

 

 

7.

Shareholders’ Meetings

 

 

7.1

Shareholders' Meetings

 

The Shareholders shall act through general meetings and resolutions duly held and adopted in accordance with the terms and conditions of this Agreement, the Articles of Association and Applicable Laws in the Kingdom. To the extent permitted by Applicable Laws in the Kingdom, a Shareholder may participate in Shareholders' Meetings in person or by video conference or tele­ conference, and/or may appoint a proxy or proxies to represent it in such meetings.

 

 

7.2

Supermajority Items

 

 

(a)

The Parties agree that no action taken by any Company with respect to any of the following matters shall have any effect, in each case unless and until such matter shall have been approved by a resolution passed at a duly convened meeting of the Shareholders of the relevant Company at which a quorum is present by the affirmative votes of the relevant Shareholders in attendance or duly represented at such meeting who are entitled to vote on such resolution in accordance with this Agreement and holding in the aggregate not less than seventy five percent (75%) of the Share Capital:

 

 

 

(i)

Any amendment of the Articles of Association (including any change of name of the Company) other than in accordance with Clauses 4.4(d) and 4.9(b);

 

 

(ii)

Any change in the business object or shareholding structure of the Company, including any increase or reduction in the Share Capital or issuance of Shares or options on Shares by the Company (other than any increase in the Share Capital or issuance of Shares previously authorised in connection with the Required Shareholder Funding);

 

 

 

(iii)

Any liquidation or winding up of the Company (including voluntary dissolution of the Company);

 

 

 

(iv)

Any sale or other disposition of all or a substantial part of the Company's business or assets, or any merger of the Company with or into any other entity;

 

 

36


 

 

 

(v)

Appointment, replacement, or removal of the Company's Auditors;

 

 

(vi)

Any decision regarding the distribution of the Company's available profits other than in accordance with Clause 11.3, including without limitation, any decision to establish reserves other than the statutory reserve or to carry forward the Company's profit balance in whole or in part to the next Financial Year;

 

 

 

(vii)

Any decision regarding Managers' remuneration; or

 

 

(viii)

The approval and any subsequent amendment of the Project Budget.

 

 

(b)

The Parties shall, and shall ensure that any of their Affiliates that are Shareholders shall, vote for any amendment to the Articles of Association, change in shareholding structure of a Company, or decision regarding distribution of a Company's available profits where required to give effect to the rights and obligations of the Shareholders specifically provided for in this Agreement.

 

 

 

(c)

Other than as regards matters enumerated in Clause 7.2(a), the Parties agree that no action by a Company which requires Shareholder approval pursuant to this Agreement or under Applicable Laws of the Kingdom shall have any effect until such matter shall have been approved by a resolution passed at a duly convened meeting of the Shareholders at which a quorum is present by the affirmative votes of the relevant Shareholders in attendance or duly represented at such meeting who are entitled to vote on such resolution in accordance with this Agreement and holding in the aggregate at least fifty one percent (51%) of the Share Capital of the relevant Company.

 

 

 

(d)

If any matter has been approved by the relevant Board of Managers in accordance with the Agreement or any action is required to be taken by a Company or any Shareholder in accordance with the Agreement, and such matter requires the approval or ratification by the Shareholders in accordance with Applicable Laws of the Kingdom, then the Parties shall procure that such approval or ratification is promptly given.

 

 

7.3

Language

 

The resolutions of the meeting of Shareholders shall be laid down in writing in the Arabic language and the English language. For purposes of any proceedings conducted pursuant to Clause 21.3 the English language version of any such resolution shall prevail.

 

 

8.

Board of Managers

 

 

8.1

Appointment of Managers to each Company

 

 

(a)

Except in relation to those matters reserved to the Shareholders, each Company shall be managed by a Board of Managers, which will consist of five (5) Managers. Promptly after the incorporation of a Company in accordance with Clause 3.4, to the extent it has not already occurred, the required appointments shall be made such that Ma'aden will appoint three (3) Managers, and Alcoa (or its Affiliate) will appoint two (2) Managers, to such Company. Each of Ma'aden and Alcoa (or its Affiliate, as aforesaid) will also appoint an Alternate Manager, who will also participate in meetings of the relevant Board of Managers, but will have no vote unless expressly authorized to vote pursuant to sub-paragraph (f) below.

 

 

 

(b)

Unless otherwise agreed between the Shareholders of a particular Company, Ma'aden shall appoint the Chairman of each Company.

 

 

37


 

 

 

(c)

The relevant Board of Managers shall have full authority to act on behalf of the Company to which they have been appointed, in accordance with the terms and conditions of this Agreement and the Articles of Association. All appointments of Managers shall be effected by written notice to such Company and the other Party.

 

 

 

(d)

To the extent permissible under Applicable Laws of the Kingdom, meetings of the Board of Managers may be held by conference call or video conference. Meetings of the Board of Managers shall be held on a quarterly basis.

 

 

 

(e)

Meetings of the relevant Board of Managers shall be held at the head office of such Company or at such other places as may be agreed by a majority of the Managers of that Company. Meetings shall be held at such times as specified by the Chairman of that Company. The notice shall include the agenda and all documents pertaining to the business to be transacted at the meeting. The relevant Board of Managers may waive or modify the requirement for notice (including the duration of the notice) with the written consent of all the relevant Managers either prior to or at the commencement of the meeting and before any other business is transacted.

 

 

 

(f)

A Manager may grant a proxy to any other Manager appointed by the Shareholder appointing such Manager to attend meetings of the Board of Managers and  to  vote on his behalf.

 

 

 

(g)

Resolutions of the Board of Managers may be passed by written resolution.

 

 

(h)

Unless otherwise agreed between the Parties, vacancies will be promptly filled by the Shareholder having the right to appoint a Manager to the vacant seat, such that the composition of the Board of Managers of any particular Company shall at all times be in accordance with this Agreement.

 

 

 

(i)

Subject to paragraph (f) above and Clause 8.5(a), each Manager shall have one (1) vote, and the Chairman shall not have any additional voting power (including any casting vote) by virtue of his position.

 

 

 

(j)

The Chairman shall be a Manager and shall have the authority set out in the Articles of Association, such authority to be exercised in accordance with the decision of the Board of Managers.

 

 

 

8.2

Removal of Managers

The Party or its Affiliate being a Shareholder who appointed a Manager (or an alternate) may remove that Manager (or such alternate) at any time by written notice to the relevant Company and the other Party. In the event that a Manager is removed or resigns or becomes incapacitated or otherwise unable to serve for any reason, the Party or its Affiliate being a Shareholder who appointed him shall promptly appoint a replacement. Any Party or its Affiliate being a Shareholder removing a Manager appointed by it or them in accordance with the relevant provisions of the Articles of Association shall be responsible for and shall hold harmless the other Party and the relevant Company from and against any claim for unfair or wrongful dismissal arising out of such removal and any reasonable costs and expenses incurred in defending such proceedings, including, but without prejudice to the generality of the foregoing, legal costs actually incurred.

 

 

8.3

Appointment of Senior Officers to each Company: Removal

 

 

(a)

The relevant Board of Managers shall appoint officers of the relevant Company from time to time, including the following officers of such Company ("Senior Officers"):

 

 

 

(i)

the President for one or more Companies;

 

38


 

 

 

(ii)

the Vice President of Operations (or such other position as the parties may determine);

 

 

 

(iii)

the Vice President for Finance for one or more Companies; and

 

 

(iv)

the Vice President for Human Resources.

 

 

(b)

The appointment and removal of each Senior Officer will be subject to approval by the relevant Board of Managers pursuant to Clause 8.5(a).

 

 

 

(c)

Except as otherwise agreed by the Parties, the President shall be nominated by Ma'aden to each Board of Managers for approval and shall be the primary executive officer of each Company and shall be fully responsible for the general and executive management and daily administration of the operations and business of each Company. If more than one President is nominated by Ma'aden, Ma'aden will identify which executive will maintain overall responsibility for common operations and functions between the Companies (the "MA President"). The person nominated by Ma'aden as President shall serve as President for each Company. The President shall report directly to the relevant Board of Managers and carry into effect all decisions and resolutions of the relevant Board of Managers and, if and to the extent determined by special majority approval of the relevant Board of Managers, any duly authorised committee of the relevant Board of Managers.

 

 

 

(d)

Except as otherwise agreed by the Parties, there shall be one Vice President for Operations reporting to the MA President who shall be nominated by Alcoa, subject to the approval of each Board of Managers. The scope of each Vice President for Operations' role and responsibilities shall be as determined by the relevant Board of Managers from time to time.

 

 

 

(e)

Except as otherwise agreed by the Parties, there shall be one Vice President for Finance reporting to the MA President who shall be nominated by Ma'aden Subject to the approval of each Board of Managers.. The scope of the Vice President for Finance's role and responsibilities shall be as determined by the relevant Board of Managers from time to time.

 

 

 

(f)

The scope of the Vice President for Human Resources' role and responsibilities shall be as determined by the relevant Board of Managers from time to time. The Vice President for Human Resources shall report directly to the MA President. The Vice President for Human Resources Officer shall be a suitable qualified Saudi national.It is acknowledged that the services of the Vice President for Humand Resources position(s) may be provided by way of consolidated or shared services from Ma' aden.

 

 

 

(g)

The Parties agree that the initial management team will be designated for a transitional period of approximately six (6) years from incorporation of the Companies, during which time the Parties shall use their best efforts to ensure that suitably qualified Saudi professionals will be selected and prepared to assume key management positions of each Company.

 

 

 

(h)

In the case of a disagreement between the Parties regarding the appointment or removal of one of the Senior Officers, the Parties will first attempt to resolve such disagreement amicably, including reference to senior management consistent with the provisions  of Clause 21.1 (without, however, the required formality of the written declaration of "dispute" and the issuance of a "dispute notice" and without recourse to arbitration pursuant to Clause 21.3).

 

 

 

(i)

If a Party loses faith in a Senior Officer nominated by it, it may immediately propose the replacement of such Senior Officer. If a Party loses faith in a Senior Officer nominated by the other Party, it will promptly so inform the other Party, and the Parties will consult on the necessary steps  required  to either (1)  place such Senior Officer  under  review,  or (2)  to

 

 

39


 

 

remove such Senior Officer. If the Parties cannot agree on the review or removal of such Senior Officer, the Deadlock provisions of Clause 9 shall apply for a period not to exceed one (1) year; and thereafter, if the loss of faith in such Senior Officer continues, he or she will be removed from the present position, and the Party entitled to nominate such Senior Officer will nominate a replacement.

 

 

8.4

Meetings of the Board of Managers of each Company

 

 

(a)

A meeting of the Board of Managers may be requested by any two (2) Managers. The secretary shall circulate to the relevant Managers a proposed agenda for each Board meeting along with notice of such meeting. Except as may be agreed by all Managers present and entitled to attend and vote at a meeting of the Board of Managers, no resolution or business shall be passed or transacted at any such meeting that is not included in the agenda for such meeting.

 

 

 

(b)

No business shall be transacted at any duly convened Board meeting unless a quorum is present. Subject to paragraph (c) below, the quorum for the transaction of business at any Board meeting shall be at least one (1) Manager appointed by each Shareholder. The Parties shall procure that the relevant Shareholders shall use their reasonable efforts to ensure that the Managers appointed by them attend each Board meeting and that a quorum is present throughout the meeting.

 

 

 

(c)

If within two (2) hours of the time appointed for a Board meeting a quorum is not present, the meeting shall, subject to compliance with the next sentence, be adjourned to the same day of the next week at the same time and the same place or such other time, date and place as agreed by the relevant Managers so long as it takes place not later than one (1) month following the initially scheduled meeting. Each Manager shall be notified in writing by the relevant Company of the date, time and place of the adjourned meeting as soon as practicable once such date, time and place have been determined by the Managers. Unless otherwise approved by the relevant Board of Managers in accordance with this Agreement, if at the adjourned meeting a quorum is not present within two (2) hours of the time appointed for the meeting, those Managers present shall constitute a quorum.

 

 

 

8.5

Voting Thresholds

 

 

(a)

Subject to Clause 8.5(b). each Board of Managers shall adopt its resolutions with the affirmative simple majority vote of the Managers being present in person or by proxy, and entitled to vote, at a duly convened Board meeting at which a quorum is present (or in the case of a written resolution taken without a Board meeting, the total number of Managers). The decisions requiring the affirmative simple majority vote of the Managers shall comprise all such decisions of the Managers other than those for which a special majority resolution is required pursuant to Clause 8.5(b).

 

 

 

(b)

The following decisions relating to each Company shall require the affirmative special majority vote of seventy five percent (75%) of the relevant Managers being present in person or by proxy, and entitled to vote, at a duly convened Board meeting at which a quorum is present (or in the case of a written resolution taken without a Board meeting, seventy five percent (75%) of the Managers entitled to vote):

 

 

 

(i)

Appointment, removal and remuneration of the Senior Officers;

 

 

(ii)

Approval of the Project Budget and any material change thereto having a value in excess of the lower of fifty million US Dollars (US$50 million) or ten (10) percent of the Project Budget;

 

 

 

(iii)

Approval of the issuing of the NTP for each Phase.

 

40


 

 

(iv)

Approval of the annual operating budgets and any material change thereto (having a value in excess of the lower of fifty million US Dollars (US$50 million) or ten (I 0) percent of the annual operating budget) of the relevant Company following the Commercial Production Date;