JOINT VENTURE AGREEMENT

BETWEEN

ZTE CORP. AND PT GALIAN TAMBANG

WITHIN THE FRAMEWORK OF

LAW NUMBER 1 OF 1967 ON FOREIGN CAPITAL INVESTMENT

 

This joint venture agreement made and entered into as of the 24th of March 2006, by and between:

I.                     ZTE CORP, a corporation duly established and existing under the laws of Chicago,

United States of America, domiciled and having its registered office at Chicago

(hereinafter called as ZTE) in this matter represented by Mr. Benny Prasetyo, S. H., in her

capacity as the attorney-in fact, by virtue of a certain Power of Attorney dated 22nd March

2006, a photocopy of which is attached hereto, and as such for on behalf and in the name

of ZTE.

II.                   PT GALIAN TAMBANG, a limited liability company duly organized and existing under

the laws of Republic of Indonesia, domiciled in Jakarta, Indonesia, and having its principal

office at Menara Rajawali 26th floor Jl. Mega Kuningan Lot 5.1, Kawasan Mega Kuningan,

Jakarta (hereinafter called as GALIAN TAMBANG) in this matter represented by Mr.

Bambang Tetuko in his capacity as the President Director, and Mr. Andi Ahmad in his

capacity as the Commissioner of, and as such for and on behalf the name of GALIAN

TAMBANG.

 

WITNESSETH: That

 

A. WHEREAS, ZTE is a United State of America based company providing technology assistance to mining operations worldwide and its focus of operation is in a high technology exploration to determine the most productive mining deposits.

B. WHEREAS, GALIAN TAMBANG is a national advisory company operating in Indonesia.C. WHEREAS, ZTE intends to establish a joint venture company in Indonesia.D. WHEREAS, subject to the terms herein set forth and the approval of the President and Badan

Koordinasi Penanaman Modal (BKPM) in form and substance acceptable to the Parties, as the Parties have agreed to establish the company pursuant to the Investment Law and other prevailing laws and regulation in Indonesia.

E. WHEREAS, the parties have agreed to apply to the BKPM for approval to establish the company in the framework of the Investment Law, under such terms and conditions mutually approved by the parties.

 

Now, therefore, in consideration of mutual covenants and agreements contained herein, the parties

have agreed to enter into this agreement under the following forms and conditions.

 

Article 1

DEFINITIONS

 

In this agreement, the following terms shall, except where the context otherwise requires, bear the

meanings set out below:

a. Agreement means this joint venture agreement as from time to time amended or supplemented, including its exhibits and appendices, if any, attached thereto.

b. Article of association means the articles of association of the company, which are incorporated in the deed of establishment of the company substantially in the form and substance set out to this agreement.

c. Authorized capital means the authorized capital of the company.d. BKPM means Badan Koordinasi Penanaman Modal or the Indonesian Coordinating Board for

Capital Investment.e. Company means the joint venture company to be formed pursuant to Article 2 of this

agreement.f. Dollar or $ means the official currency of the United States of America.g. Exploration is an activity which goal is to get information about the geological condition to find

and to predict how much nature reserve of oil and gas in the specified work place of mining regulated by the government of Indonesia.

h. Investment Law means the Law Number 1 of the Year 1967 concerning Foreign Capital Investment as amended.

i. Mining advisory means advises based on the result of exploration which covered the benefit and loss about the geological condition.

j. MLHR means the Minister of Law and Human Rights.k. Parties mean ZTE, GALIAN TAMBANG, and shall include any other person. If any, who

becomes a shareholder of the company, and party means any one of them as the context shall require.

l. President means the President of the Republic Indonesia.m. Shares means certificates used as a proved of company ownership and giving the right to the

owner to get dividend and capital gain.

 

Article 2

FORMATION OF COMPANY

 

2.1        Formation

Both parties will cause a new company to be formed under the provisions of The Foreign

Investment Law (Act No. 1/1967, as amended) as Penanaman Modal Asing Company

(hereinafter referred to as company) to engage in the business described in Article 3 hereof,

both parties shall closely cooperate and consult with each other in respect to the procedures

and particulars of the organization registration of the company.

2.2               Name and Domicile

(i)       The name of the company is PT ZTE GALIAN TAMBANG or any other name as will be

acceptable to the parties and MLHR.

(ii)     Part of the name of the company that reflects ZTE gets a fully protection that it will not be

changed though ZTE become a minority in the company or ZTE has to pull out from

Indonesia for some reason.

(iii)    The company shall be domiciled in Jakarta, Indonesia but shall be entitled to open

branch offices and or representative offices both elsewhere in Indonesia and abroad.

2.3        Articles of Association

(i)       The Articles of associations of the company shall be made and executed in the form and

substance which shall incorporate the substantive provisions may be provided for in the

articles of association.

(ii)     In the event that by reason of MLHR policies or otherwise it shall in any respect proven

not to be possible to have the Articles of Association in consistence with this agreement,

the parties hereto shall use their best efforts to negotiate and arrive at mutually

acceptable solutions which shall be nearest to the extent agreed in this agreement among

the parties hereto.

 

Article 3

OBJECTS AND PURPOSES

 

The objects and purposes to be offered and performed by and through the company inside Indonesia

in connection with this agreement shall include the following:

To explore the most productive mining deposits in Indonesia which operate with high technology and

to give mining advisory based on the exploration results.

 

Article 4

THE CAPITAL, SHARES, AND SHAREHOLDING RATIO

 

4.1               The Capital

(i)       The authorized capital of the company shall be US $ 5.000.000,00 (five millions dollars)

which amount shall be fully paid in within 5 (five) years from the date of incorporation of

the company as to be determined in connection with tax facilities period and achievement

of the production target.

(ii)     The issued capital of the company shall be 25% (twenty five percent) of the authorized

capital at the establishment of the company.

(iii)    The paid-up capital of the company shall be US $ 2.500.000,00 (two millions and five

hundred thousand dollars), which amount is to be fully paid in at the date of incorporation

of the company in proportion to their respective share ratio in the form of cash or in

kind/capital goods.

(iv)    The capital investment of the company consists of in cash or in kind/capital goods.

4.2               Participation

(i)       The following parties will be participants and shareholders in the company:

ZTE: 85% (eighty five percent) of the total shares

GALIAN TAMBANG: 15% (fifteen percent) of the total shares

(ii)     The shares shall be issued to the parties in the ratios mentioned in paragraph 4.2 of this

Article and these ratios shall not be deviated from except as agreed to by both parties.

 

Article 5

PROFIT

 

5.1               All profit accrued from the undertaking shall not be divided between the both parties in

proportion to the ratios of shares held by each party. Based on the agreement between both

parties, all profits will be divided by the proportion of:

            ZTE: receive 80% (eighty percent) of total amount profit

            GALIAN TAMBANG: receive 20% (twenty percent) of total amount profit

5.2               Within 5 (five) years after the establishment of the company, all profits shall be divided

between the both parties in proportion to the ratio of shares held by each party as mentioned

in paragraph 4.2 article 4 above.

 

Article 6

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Article 7

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Article 8

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Article 9

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Article 10

APPLICABLE LAW

 

The validity, construction, and performance of this agreement shall be governed by and interpreted in

accordance with the laws of Indonesia.

 

Article 11

ARBITRATION

 

Any dispute arising from this agreement or the breach thereof which cannot be resolved by mutual

agreement shall be finally settled under the Rules of Arbitration of the Indonesian National Board of

Arbitration (Badan Arbitrase Nasional Indonesia) BANI, by arbitrators appointed in accordance with

said rules and decision of such arbitration shall be accepted as final and binding by the parties. The

place of arbitration will be Jakarta.

 

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed in duplicate

original in English language on this 26th day of March 2006 at Jakarta, and retain one copy each.

 

ZTE                                                                              GALIAN TAMBANG