join 芎 芔芈芅 WHEREAS, the Contractor desires to and assist the Government 裪腀 饈 development and utilization for commercial purposes of chromite and 腂 associated mineral deposits existing in the Contract Area (as herein defined); _-.WHEREAS, the Contractor has access to all the financing, technical competence, technology and environmental management skills required to promptly and effectively carry out the objectives of this Agreement; NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual covenants, terms and conditions hereinafter set forth, it is hereby stipulated and agreed as follows: sEcTtoN I SCOPE This Agreement is a Mineral Production Sharing Agreement entered into pursuant to the provisions of the Act and its implementing rules and regulations. The primary purpose of this Agreement is to provide for the sustainable development and commercial utilization of chromite and other assocrafed mineral deposits existing within the Contract Area, with all necessary services, technology and financing to be furnished or arranged by the Contractor in accordance with the provisions of this Agreement. The Contractor shall not, by virtue of this Agreement, acquire any title over the ContracVMining Area without prejudice to the acquisition by the Contractor of the land/surface rights through any mode of acquisition provided for by law. and execute, for and on behalf of the 12shall undertake The Contractor 腀腩 Government, regpolgiqle mining aperations in accordance with the provisions 腀 of this Agreement, and is hereby constituted and appointed, for the purpose 腨 of this Agreement, as the exclusive entity to conduct mining operations in the Contract Area. Agreement, the total value of production and sale of 13of this During the term minerals derived from the mining operations contemplated herein shall be accounted for and divided between the Government and the Contractor in accordance with Section Vl hereof. SECTION II DEFINITIONS As used in this Agreement, the following words and terms, whether singular or n plural, shall have the following respective meaning: \l \ Act refers to Republic Act No. 7942, otherwise known as the "Philippine I \2.1. Mining Act of 1ee5." \ \ \ I , Aqreement means this Mineral Production Sharing Agreement. [\ -3+<_ $L \r V2 \ 2.3. Associated Minerals mean other ores/minerals, which occur together with the principal ore/mineral. 2.4. Banoko Sentral means Bangko Sentral ng Pilipinas. 2.5. Budqet means an estimate of expenditures to be made by Contractor in mining operations contemplated hereunder to accomplish the Work Program for each particular period. 2.6. Bureau means Mines and Geosciences Bureau. 2.7. Calendar Year or Year means a period of twelve 12) consecutive months starting with the first day of January and ending on December 31, while "Calendar Quarter" means a period of three consecutive months with the first calendar quarter starting with the first day of January. 2.8. Commercial Production means the production of sufficient quantity of minerals to sustain economic viability of mining operations reckoned from the date of commercial operation as declared by the Contractor or as stated in the feasibility study, whichever comes first. 2.9. Constitution or Philippine constitution means the 1987 Constitution of the Republic of the Philippines adopted by the Constitutional Convention of 1986 on bctober 15, 1986 and ratified by the People of the Republic of the Philippines on February 2, 1987. 2.10. Contract Area means the area onshore or offshore delineated under the Mineral Production Sharing Agreement subject to the relinquishment obligations of the Contractor and properly defined by latitude and longitude or bearing and distance. 2.11. Conhact Year means a period of twelve (12) consecutive months counted from the Effective Date of this Agreement or from the anniversary of such Effective Date. 2.12. Contractor means Krominco, lnc. or its assignee(s) of interest under this Agreement: Provided, That the assignment of any of such interest is accomplished pursuant to the pertinent provisions of the implementing rules and regulations of the Act. 2.13. Declaration of Mininq Proiect Feasibility means a document proclaiming the presence of minerals in a specific site, which are recoverable by socially acceptable, environmentally safe and economically sound methods specified in the Project Feasibility Study. Natural DENRof Environment and 2 14 Department o腵means the Department Resources 2.'17. Environment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 2.18. Exploration means searching or prospecting for mineral resources by geological, geophysical and geochemical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quality and quantity of mineral resources and the feasibility of mining them for profit. 2.19. Force Maieure means acts or circumstances beyond the reasonable control of the Contractor including, but not limited to war, rebellion, insurrection, riots, civil disturbances, blockade, sabotage, embargo, strike, lockout, any dispute with surface owners and other labor disputes, epidemics, earthquake, storm, flood or other adverse weather conditions, explosion, fire, adverse action by the Government or by any of its instrumentality or subdivision thereof, act of God or any public enemy and any cause as herein described over which the affected party has no reasonable control. 2.20. Foreiqn Exchanqe means any currency other than the currency of the Republic of the Philippines acceptable to the Government and the Contractor. 2.21. Government means the Government of the Republic of the Philippines or any of its agencies and instrumentalities. 2.22. Gross Output means lhe actual market value of the minerals or mineral products from each mine or mineral land operated as a separate entity, without any deduction for mining, processing, relining, transporting, handling, marketing or any other expenses: Provided, That if the minerals or mineral products are sold or consigned abroad by the Contractor under C.l.F. terms, the actual cost of ocean freight and insurance shall be deducted: Provided further, That in the case of mineral concentrates which are not traded in commodity exchanges in the Philippines or abroad such as copper concentrate, the actual market value shall be the world price quotation of the refined mineral products contained thereof prevailing in the said commodity exchanges, after deducting the smelting, refining, treatment, insurance, transportation and other charges incurred in the process of converting mineral concentrates into refined metal traded in those commodity exchanges. 2.23. Mine Development refers to work undertaken to prepare an ore body or a mineral deposit for mining, including the construclion of necessary infrastructure and related facilities. 2.24. Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy. 2.25. Mineral Products mean materials derived from mineral ores/rocks and prepared into marketable state by metallurgical processes which include beneficiation, cyanidation, leaching, smelting, calcination and other similar processes. 4 2.26. Minino Area means that portion of the Contract Area identified by the Contractor as defined and delineated in a Survey Plan duly approved by the Director/Regional Director concerned for purposes of development and/or utilization and sites for support facilities. 2.27. Mininq Ooerations means mining activities involving exploration, feasibility study, environmental impact assessment, development, utilization, mineral processing and mine rehabilitation. 2.28. Notice means notice in writing, telex or telecopy (authenticated by answer back or confirmation received) addressed or sent as provided in Section 13.2 of this Agreement. 2.29. Orc means naturally occurring substance or material from which a mineral or element can be mined and/or processed for profit. 2.30. Pollution means any alteration of the physical, chemical and/or biological properties of any water, air and/or land resources of the Philippines, or any discharge thereto of any liquid, gaseous or solid wastes or any production of unnecessary noise or any emission of objectionable odor, as will or is likely to create or render such water, air, and land resources harmful, detrimental or injurious to public health, safety or welfare or which will adversely affect their utilization for domestic, commercial, industrial, agricultural, recreational or other legitimate purposes. 2.31. Secretarv means the Secretary of the Department of Environment and Natural Resources. 腄腀 腀 腀 2.32. State means the Republic ofthe Philippines. 腀 腀 腀 腌腀 腀 腀 腀 腀 腀 presents plan major mining 腀 2.33. Work Prooram means a document which the of 腨腀 腀 腀 operations and the corresponding expenditures of the Contractor in its 腀腌 Contract Area during a given period of time, including the plan and expenditures for development of host and neighboring communities and of local geoscience and mining technology, as submitted and approved in accordance with the implementing rules and regulations of the Act. SECTION III TERM OF AGREEMENT 31(25) years This Agreement shall have a term of twenty five from Effective Date, and may be renewed thereafter for another term not exceeding twenty five (25) years. The renewal of this Agreement, as well as the changes in the terms and conditions thereof, shall be upon mutual consent by the parties. ln the event the Government decides to allow mining operations thereafter by other Contractor, this must be through competitive public bidding. After due publication of notice, the Contractor shall have the right to equal the highest bid upon reimbursement of all reasonable expenses of the highest bidder. 臧 躅 5 荲 sEcTtoN tv CONTRACT AREA 4.1. Size, Shape, and Location of Contract Area - This Agreement covers a total area of Seven Hundred Fifty Seven and 118/1000 hectares (757.118 hectares), situated in the Municipality of Loreto, Province of Dinagat lslands, within Parcel lll of the Surigao Mineral Reservation, and bounded by the following technical description (please refer to ANNEX "B") LatitudeLongitude Corner 10腅 19' 30'125膋 37' 30'' 1 125膋 37' 30'' 10膋 20' 00" 2 10腅 20' 30''125腅 37' 00'' 3 10腅 21' 00"125膋 37' 00'' 4 40腅 21' 00'125膋 37' 30'' 10腅 21' 30"125膋 37' 30'' 6 10腅 24' 30"125膋 38' 30'' 7 10腅 21' 00"125膋 38' 30'' I o 125腅 39' 00腅 10腅 21' 00'' '10 125腅 39' 00' 10腅 20' 30'' 10腅 20' 30''125腅 38' 30腅 11 20' 00"125腅 38' 00腅 10腅 12 10腅 19' 30"125腅 38' 00腅 13 4.2. Survey Plan of the Contract Area - The Contractor shall submit to the Regional Director concerned for approval within one ( l) year from receipt of the Order of Survey, the survey returns accompanied with the complete mandatory requirements stated in the implementing rules and regulations of the Act. sEcTtoN v OPERATING PERIOD - commercial utilization activity 51The Contractor shall continue Timetable immediately upon approval and registration of this Agreement. The Contractor shall conduct mining operations and other activities for the duration of the Operating Period in accordance with the duly approved Work Program and Budget and Certificate of Non-Coverage (please refer to ANNEXES "C" and "D"). Failure by the Contractor to undertake commercial utilization within the period in accordance with the said Work Program shall be considered a substantial breach of the Agreement. Commercial Operation Work Program and Budget - During the Operating Period, the Contractor shall submit to the Director, through the Regional Director concerned, Work Programs and Budgets covering a period of three (3) years each, which shall be submitted not later than thirty (30) days before the expiration of the period covered by the previous Work Program. 豔 The amount to be spent by the Contractor during the Operating Period under the term of this Agreement shall not be less than that specified in the approved Work Programs, such that during the first three (3) years of the Operating Period, this amount shall be as follows: First Contract Year PhP 44,876,300.00 Second Contact Year PhP 44,876,300.00 Third Contract Year PhP 44,876,300.00 Should the Government wish to propose a revision to a certain specific feature in the Work Program or Budget, it shall, within thirty (30) days after receipt thereof, provide a Notice to the Contractor specifying in reasonable detail its reasons therefore. Promptiy thereafter, the Government and Contractor will meet and endeavor to agree on the revision proposed by the Government. ln any event, any portion of said Work Program or Budget as to which the Government shall fail to notify the Contractor of proposed revision shall, in so far as possible, be carried out as prescribed herein. lf the Government should fail within sixty (60) days from receipt thereof to notify Contractor of the proposed revisions, the Work Program and Budget proposed by the Contractor shall be deemed to be approved. It is recognized by the Government and the Contractor that the details of any Work Program may require changes in the light of changing circumstances. The Contractor may make such changes: Provided, That it shall not change the general objective of the Work Program: Provided further, That changes which entail a negative variance of at least twenty percent (20%) shall be subject to the approval of the Director. ln case of any positive variance in the future, the Contractor shall submit to the Bureau and Regional Otfice concerned a copy each of the revised Work Programs, for information. The Government's approval of a proposed Work Program and Budget will not be unreasonably withheld. Moditlcation of Facilities - The Contractor may make 53Expansion and expansions, modifications, improvements, and replacements of the mining facilities and may add new facilities as the Contractor may consider necessary for the operations: Provided, That such plans shall be embodied in an appropriate Work Program approved by the Director. 54Reporting a. Quarterly Reports - Beginning with the first Calendar Quarter following the approval of this Agreement, the Contractor shall submit, within thirty (30) days after the end of each Calendar Quarter, to the Director, through the Regional Director concerned, a Quarterly Report stating the tonnage of production in terms of ores, concentrates, and their corresponding grades and other types of products; value, destinalion of sales or exports and to whom sold; terms of sales and expenditures' b. Annual Reports - During the Operating Period, the Contractor shall submit, within sixty (60) days from the end of each Calendar Year, to the Director through the Regional Director concerned, an Annual Report indicating in sufficient detail: b.1. The total tonnage of ore reserves whether proven, probable, or inferred, the total tonnage of ores, kind by kind, broken down between tonnage mined, tonnages transported from the minesite and their corresponding destination, tonnages stockpiled in the mine and elsewhere in the Philippines, tonnages sold or committed for export (whether actually shipped from the Philippines or not), tonnages actually shipped from the Philippines (with full details as to purchaser, destination and terms of sale), and if known to the Contractor, tonnages refined, processed or manufactured in the Philippines with full specifications as to the intermediate products, by-products or iinal products and of the terms at which they were disposed; b.2. Work accomplished and work in progress at the end of the year under consideration in relation to the Work Program, including the investment actually made or committed; and b.3. Profile of work force, including management and staff, stating particularly their nationalities, and for Filipinos, their place of origin (i.e., barangay, town, province, region). The Contractor shall also comply with other reporting requirements as provided in the implementing rules and regulations of the Act. sEcTtoN vt FISCAL REGIME V 6.'1. General Principle - The fiscal regime of this Agreement shall be governed by the principle according to which the Government expects a reasonable return in economic value for the utilization of non-renewable mineral resources under its national sovereignty while the Contractor expects a reasonable return on its investment with special account to be taken for the high risk of exploration, the terms and conditions prevailing elsewhere in the industry and any special efficiency to be gained by a particularly good performance of the Contractor. Registration Fees - Within fifteen (15) days upon receipt of the notice of approval of the Agreement from the Regional Office concerned, the Contractor shall cause the registration of this Agreement with the said Regional Office and pay the registration fee at the rate provided in the existing rules and regulations. Failure of the Contractor to cause the registration of this Agreement within the prescribed period shall be sufficient ground for cancellation of the same. 8 Y 6.3. Occupation Fees - Prior to registration of this Agreement and at the same date every year thereafter, the Contractor shall pay to the Municipal/City Treasurer concerned an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. lf the fee is not paid on the date specified, the Contractor shall pay a surcharge of twenty five percent (25%) of the amount due in addition to the occupation fees. 6.4. Share of the Government - The Government Share shall be the excise tax on mineral products at the time of removal and at the rate provided for in Republic Act No. 7729 amending Section 151 (a) of the National lnternal Revenue Code, as amended, in addition to a Royalty of not less than five percent (5%) of the gross outpul, as well as other taxes, duties and fees levied by existing laws. The Excise Tax shall be timely and completely paid to the nearest Bureau of lnternal Revenue Office in the province concerned while the Royalty shall be paid directly to the Bureau. For purposes of determining the amount of the herein Government Share, the Contractor shall strictly comply with the auditing and accounting requirements prescribed under existing laws and regulations. The Government Share shall be allocated in accordance with Sections 290 and 292 of Republic Act No. 7160, otheMise known as "The Local Government Code of 1991." 6.5. Pricing of Sales - The Contractor shall dispose of the minerals and by- products produced at the highest market price prevailing in the locality: The Contractor shall also pay the lowest achievable marketing commissions and related fees and shall negotiate for more advantageous terms and conditions subject to the right to enter into long-term sales or marketing contracts or foreign exchange and commodity hedging contracts, which the Government acknowledges to be acceptable notwithstanding that the sale price of the minerals and by-products may from time to time be lower, or the terms and conditions of sales are less favorable, than that available elsewhere. The Contractor shall seek to strike a balance between long-term sales or marketing contracts or foreign exchange and commodity hedging contracts comparable to policies followed by independent producers in the international mining industry. The Contractor shall likewise seek a balanced distribution among consumers. lnsofar as sales to Contractor's affiliate(s) are concerned, prices shall be at arm's length standard, and competing offers for large scale and long-term contracts shall be procured. Before any sale and/or shipment of mineral product is made, existing and future marketing contract(s)/sales agreement(s) shall be submitted to the Director, copy furnished the Regional Director concerned, for registration. At the same time, the Contractor shall regularly inform the Director in writing of any revisions, changes or additions in said contract(s)/agreement(s). The Contractor shall reflect in its Monthly/Quarterly Report on Production, Sales and lnventory of Minerals, as well as in the lntegrated Annual Report, the corresponding registration number(s) of the marketing contract(s)/agreement(s) governing the export or sale of minerals 2J-<\ 6.6. Associated Minerals - lf minerals other than chromite are discovered in commercial quantities in the Contract Area, the value thereof shall be added to the value of the principal mineral in computing the Government share. SECTION VII ENVIRONMENTAL PROTECTION AND MINE SAFEW AND HEALTH 7.1. The Contractor shall manage its lvlining Operations in a technically, financially, socially, culturally and environmentally responsible manner to achieve the sustainable development objectives and responsibilities as provided for under the implementing rules and regulations of the Act. 7.2. fhe Contractor shall ensure that the standards of environmental protection are met in the course of the lvlining Operations. To the extent possible, control of pollution and the transformation of the mined-out areas or materials into economically and socially productive forms must be done simultaneously with mining. 7.3. An Environmental Compliance Certificate (ECC) shall be secured first by the Contractor prior to the conduct of any development works, construction of production facilities and/or mine production activities in the Contract Area. 7.4. fhe Contractor shall submit within thirty (30) Calendar days after the issuance and receipt of the ECC, an Environmental Protection and Enhancement Program (EPEP) using MGB Form No. 16-2 covering all areas to be affected by development, utilization and processing activities under this Agreement. The Contractor shall allocate for its initial environment-related capital expenditures approximately ten percent ('10%) of the total project cost or in such amount depending on the environmental/geological condition, nature and scale of operations and technology to be employed in the Contract Area. 7.5. The Contractor shall submit, within thirty (30) days prior to the beginning of every calendar year, an Annual Environmental Protection and Enhancement Program (AEPEP), using MGB Form 16-3, which shall be based on the approved EPEP. The AEPEP shall be implemented during the year for which it was submitted. To implement its AEPEP, the Contractor shall allocate annually three to five percent (3o/o-5o/o) ol its direct mining and milling costs depending on the environmental/geologic condition, nature and scale of operations and technology employed in the Contract Area. The Contractor shall establish a Contingent Liability and Rehabilitation Fund (CLRF) which shall be in the form of the Mine Rehabilitation Fund (MRF) and the Mine Waste and Tailings Fee (MWTF). The MRF shall be based on the financial requirements of the approved EPEP as a reasonable environmental deposit to ensure satisfactory compliance with the commitments/strategies of the EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP during the specific project phase. The MRF shall be deposited as Trust Fund in a government depository bank and 40 shall be used for physical and social rehabilitation of areas affected by mining activities and for research on the social, technical and preventive aspects of rehabilitation. The MWTF shall be collected based on the amounts of mine waste and mill tailings generated during the conduct of Mining Operations. The MWTF collected shall accrue to a Mine Waste and Tailings Reserve Fund and shall be deposited in a government depository bank for payment of compensation for damages caused by the Mining Operations. 7.7. The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal system, mine rehabilitation or plan, water quality monitoring, etc. to minimize land degradation, air and water pollution, acid rock drainage and changes in hydrogeology. 7.8. The Contractor shall set up an Environmental and Safety Office at its minesite manned by qualified personnel to plan, implement and monitor its approved EPEP. 7.9. The Conkactor shall be responsible in the monitoring of environmental, safety and health conditions in the Contract Area and shall strictly comply with all the rules and regulations embodied under DENR Administrative Order No. 2000-98, otherwise known as the "Mine Safety and Health Standards." 7.1 0. The Contractor shall be responsible for the submission of a final mine rehabilitation and/or decommissioning plans, including its financial requirements and incorporating the details and particulars set forth in the implementing rules and regulations of the Act. sEcTtoN vm RIGHTS AND OBLIGATIONS OF THE PARTIES 81Obligations of the Contractor: V a. To exclusively conduct sustainable Mining Operations within the Contract Area in accordance with the provisions of the Act and its implementing rules and regulations; b. To construct and operate any facilities specified under the Mineral Agreement or approved Work Program; c. To determine the exploration, mining and treatment process to be utilized in the Mining Operations; d. To extract, remove, use and dispose of any tailings as authorized by an approved Work Program; e. To secure all permits necessary or desirable for the purpose of Mining Operations; 郧 t. To keep accurate technical records about the lvlining Operations, as well as financial and marketing accounts, and make them available to Government representatives authorized by the Director for the purpose of assessing the performance and compliance of the Contractor with the terms of this Agreement. Authorized representatives of other Government Agencies may also have access to such accounts in accordance with existing laws, rules and regulations; g To furnish the Bureau all the data and information gathered from the Contract Area and that all the books of accounts and records shall be open for inspection; h. To allow access to Government during reasonable hours in inspecting the Contract Area and examining pertinent records for purposes of monitoring compliance with the terms of this Agreement; To hold the Government free and harmless from all claims and accounls of all kinds, as well as demands and actions arising out of the accidents or injuries to persons or properties caused by Mining Operations of the Contractor and indemnify the Government for any expenses or costs incurred by the Government by reason of any such claims, accounts, demands or actions; ln the development of the community: j.1. To recognize and respect the rights, customs and traditions of indigenous cultural communities over their ancestral lands and to allocate royalty payment of not less than one percent (1%) of the value of the gross output of minerals sold; j.2. To coordinate with proper authorities in the development of the mining community and for those living in the host and neighboring communities through social infrastructure, livelihood programs, education, water, electricity and medical V services. Where traditional self-sustaining income and the community activities are identified to be present, the Contractor shall assist in the preservation and/or enhancement of such activities; j.3. To allot annually a minimum of one percent (1%) of the direct mining and milling costs necessary to implement the activities undertaken in the development of the host and neighboring communities. Expenses for community development may be charged against the royalty payment of at least one percent ( l%) of the gross output intended for the concerned indigenous cultural community; j4preference have established To give to Filipino citizens who in the hiring of domicile in the neighboring communities, skills and personnel for its mining operations. lf necessary expertise are currently not available, the Contractor must immediately prepare and undertake a training and recruitment program at its expense; and -=-r<-- al 12 j.5. To incorporate in the Nlining Project Feasibility Study the planned expenditures necessary to implement (j.1) to 0.3) of this Section; k. ln the development of Mining Technology and Geosciences: k.1. ln the course of its operations, to produce geological, geophysical, geochemical and other types of maps and reports that are appropriate in scale and in format and substance which are consistent with the internationally accepted standards and practices. Such maps shall be made available to the scientific community in the most convenient and cost effective forms, subject to the condition that the Contractor may delay release of said information for a reasonable period of time which shall not exceed three (3) years; k.2. To systematically keep the data generated from the Contracu Mining Area such as cores, assays and other related information, including economic and financial data and make them accessible to students, researchers and other persons responsible for developing mining, geoscjence and processing technology subject to the condition that the Contractor may delay release of data to the science and technology community within a reasonable period of time which shall not exceed three (3) years; k.3. To transfer to the Government or local mining company the appropriate technology it may adapt in the exploration, development and commercial utilization of the minerals in the Contract Area; k.4. To allocate research and development budget for the advancement of mining technology and geosciences in coordination with the Bureau, research institutions, academe, etc.; and k.5. To replicate data, maps and reports cited in (k.1) and (k.2) and furnish the Bureau for archiving and systematic safekeeping which shall be made available to the science and technology community for conducting research and undertaking other activities which contribute to the development of mining, geoscience and processing technology and the corresponding national pool of manpower talents: Provided, however, that the release of data, maps and the like shall be similarly constrained in accordance with (k.1) and (k.2) above; To incorporate in the Mining Project Feasibility Study the planned expenditures necessary to implement all the plans and programs set forth in this Agreement; and m regulations. Y 8.2. Rights of the Contractor: a. To conduct Mining Operations within the confines of its ContracuMining Area in accordance with the terms and conditions hereof and without interfering with the rights of other Contractors/Lessees/Operators/ Permittees/Permit Holdersi b. Of possession of the Contract Area, with full right of ingress and egress and the right to occupy the same, subject to surface and easement rights; c. To use and have access to all declassified geological, geophysical, drilling, production and other data relevant to the mining operations; d. To sell, assign, transfer, convey or otheMise dispose of all its rights, interests and obligations under the Agreement subject to the approval of the Government; e. To employ or bring into the Philippines foreign technical and specialized personnel, including the immediate members of their families as may be required in the operations of the Contractor, subject to applicable laws and regulations: Provided, That if the employment connection of such foreign persons with the Contractor ceases, the applicable laws and regulations on immigration shall apply to them. Every time foreign technologies are utilized and where alien executives are employed, an effective program of training understudies shall be undertaken. The alien employment shall be limited to technologies requiring highly specialized training and experience subject to the required approval under existing laws, rules and regulations; f. To enjoy easement rights and use of timber, water and other nalural resources in the Contract Area subject to pertinent laws, rules and regulations and the rights of third partiesi g. Of repatriation of capital and remittance of profits, dividends and interest on loans, subject to existing laws and Eangko Sentral ng Pilipinas rules and regulations; and h. To import when necessary all equipment, spare parts and raw materials required in the operations in accordance with existing laws and regulations. 8.3. Obligations of the Government: a. To ensure that the Contractor has the Government's full cooperation in the exercise of the rights granted to it under this Agreement; b. To use its best etforts to ensure the timely issuance of necessary permits and similar authorizing documents for use of the surface of the Contract Area; and 14 To cooperate with the Contractor in its efforts to obtain financing contemplated herein from banks or other financial institutions: Provided, That such financing arrangements will in no event reduce the Contractor's obligation on Government rights hereunder. sEcTtoN lx ASSETS AND EQUIPMENT 91 The Contractor shall acquire for the Mining Operations only such assets that are reasonably estimated to be required in carrying out such Mining Operations. plant 92All materials, equipment, and other installations of a movable nature erected or placed on the Contract Area by the Contractor shall remain the property of the Contractor. The Contractor shall have the right to remove and re-export such materials and equipment, plant and other installations from the Philippines, subject to existing rules and regulations. ln case of cessation of Mining Operations on public lands occasioned by its voluntary abandonment 腜 or withdrawal, the Contractor shall have a period of one (1) year from the time of cessation within which to remove its improvements; otherwise, all social infrastructures and facilities shall be turned over or donated tax free to the proper government authorities, national or local, to ensure that said infrastructures and facilities are continuously maintained and utilized by the host and neighboring communities. sEcTtoN x EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL 10.1. The Contractor agrees to employ, to the extent possible, qualified Filipino personnel in all types of mining operations for which they are qualified; and 莵 shall, in and with after Commercial Production commences consultation consent of the Government, prepare and undertake an extensive kaining programme suitable to Filipino nationals in all levels of employment. The objective of said programme is to reach within the timetable set forth below the following targets of "Filipinization:" edSki腡 Unski腡 (%) Year l 100 Year 3 100 Year 5 100 Year 7 100 Year 10 100 10.3. The Contractor shall not discriminate on the basis of gender and shall respect the right of women workers to participate in policy and decision-making processes affecting their rights and benefits. SECTION XI ARBITRATION 11.1. The Government and the Contractor shall consult with each other in good faith and shall exhaust all available remedies to settle any and all disputes or disagreements arising out of or relating to the validity, interpretations, enforceability, or performance of this Agreement before resorting to arbitration as provided for in Section 11.2. below. 11.2. Any disagreement or dispute which can not be settled amicably within a period of one (1) year from the time the issue is raised by a Party shall be settled by a tribunal of three (3) arbihators. This tribunal shall be constituted as follows: one to be appointed by the Contractor and the other to be appointed by the Secretary The first two appointed arbitrators shall consider names of qualified persons until agreement on a mutually acceptable Chairman of the tribunal is selected. Such arbitration shall be initiated and conducted pursuant to Republic Act No. 876, othenruise known as the "Arbitration Act." ln any event, the arbitration shall be conducted applying the substantive laws of the Republic of the Philippines. 11.3. Each party shall pay fifty percent (50%) of the fees and expenses ofthe Arbitrators and the costs of arbitration. Each party shall pay its own costs and attorney's fee. SECTION XII SUSPENSION OR TERMINATION OF CONTRACT, TAX INCENTIVES AND CREDITS 12.1 . This Agreement may be suspended for failure of the Contractor: (a) to comply with any provision or requirement of the Act and/or its implementing rules and regulations; (b) to pay on time the complete taxes, fees and/or other charges demandable and due the Government. 't2.2. This Agreement terminates or may be terminated for the following causes: (a) expiration of its term, whether original or renewal; (b) withdrawal from the Agreement by the Contractor; (c) violation by the Contractor of the Agreement's terms and conditions; (d) failure to pay taxes, fees/or charges or financial obligations for two (2) consecutive years; (e) false statement or omission of facts by the Contractor; and (f) any other cause or reason provided under the Act and its implementing rules and regulations, or any other relevant laws and regulations. 16 l. 12.3. All statements made in this Agreement shall be considered as conditions and essential parts hereof, and any falsehood in said statements or omission of facts which may alter, change or affect substantially the fact set forth in said statements shall be a ground for its revocation and termination. 12.4. The Contractor may, by giving due notice at any time during the term of this Agreement, apply for its cancellation due to causes which, in the opinion of the Contractor, render continued mining operation no longer feasible or viable. ln this case, the Secretary shall decide on the application within thirty (30) days from notice: Provided, That the Contractor has met all the financial, fiscal and legal obligations. 12.5. No delay or omissions or course of dealing by the Government shall impair any of its rights under this Agreement, except in the case of a written waiver. The Government's right to seek recourse and relief by all other means shall not be construed as a waiver of any succeeding or other default unless the contrary intention is reduced in writing and signed by the party authorized to exercise the waiver. '12.6. ln case of termination, the Conkactor shall pay all the fees and other liabilities due up to the end of the year in which the termination becomes effective. The Contractor shall immediately carry out the restoration of the Conhact Area in accordance with good mining industry practice. 12.7. The withdrawal by the Contractor from the Mineral Agreement shall not release it from any and all financial, environmental, legal and fiscal obligations under this Agreement. 12.8. The following acts or omission, inter a/ra shall constitute breach of contract, upon which the Government may exercise its right to terminate the Agreement: a. Failure of the Contractor without valid reason to commence Commercial Production within the period prescribed; and/or 莵to conduct mining operations and other b. Failure of the Contractor activities in accordance with the approved Work Programs and/or any modification thereof as approved by the Director. 12.9. The Government may suspend and cancel tax incentives and credits if the Contractor fails to abide by the terms and conditions of said incentives and credits. SECT:ON X蝖 OTHER PROV:S:ONS 13.2. Notice All notices, demands and other communicataons required or permitted hereunder shall be made in writing, telex or telecopy and shall be deemed to have been duly given notice, in the case of telex or telecopy, if answered back or confirmation received, or if delivered by hand, upon receipt or ten days after being deposited in the mail, airmail postage prepaid and addressed as follows: lf to the Government: THE SECRETARY Department of Environmenl and Natural Resources DENR Building, Visayas Avenue Diliman, Quezon City lf to the Contractor: THE PRESIDENT Krominco, lnc. 2232 Pasong Tamo Avenue Makati City Either party may substitute or change such address on notice thereof to the other party. 13.3. Governing Law This Agreement and the relation between the parties hereto shall be governed by and construed in accordance with the laws of the Republic of the Philippines. The Contractor hereby agrees and obliges itself to comply with the provisions of the Act, its implementing rules and regulations and other relevant laws and regulations. 13.4. Suspension of Obligation a. Any failure or delay on the part of any party in the performance of its obligation or duties hereunder shall be excused to the extent attributable to Force Majeure as defined in the Act: Provided, That the suspension of Mining Operations due to Force Maieure causes shall be subject to approval by the Director. b. lf Mining Operations are delayed, curtailed or prevented by such Force Majeure causes, then the time for enjoying the rights and carrying out the obligations thereby affected, the term of this Agreement and all rights and obligations hereunder shall be extended for a period equal to the period involved. c. The Party, whose ability to perform its obligations is affected by such Force Majeure causes, shall promptly give Notice to the other in writing of any such delay or failure of performance, the expected duration thereof and its anticipated effect and shall use its efforts to remedy 18 such delay, except that neither Party shall be under any obligation to settle a labor dispute: Provided, That the suspension of obligation by the Contractor shall be subject to prior approval by the Director. 13.5. Amendments This Agreement shall not be annulled, amended or modified in any respect except by mutual consent in writing of the herein parties. lN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the day and year first above written THE REPUBL:C OFTHE PH:L:PP:NES BY: W JR. 賻A銚: Department ahffilatural Resources 芪 T 閈  驍访 醽 腵 SENR022852 KROMiNCO,:NC. ||||||||| ||||||||||||||||llllll腡 銚IN:000-131-883-000 BY: PRESENCE OF: 膤 re over Printed 19 ACKNOWLEDGMENT Republic of the Philippines) Quezon City )SS Before me, a Notary Public for and in the City of Quezon, personally appeared JOSE L. ATIENZA, JR., with Community Tax Certificate No. l126\944 issued on Jit'paru 22,2ooq al au.zotl ctd , in his capacity as Secretary of ................ the Department of Environment and Natural Resources, and ROMEO S. PEREZ, with Community Tax Certificate No. 2C50?166 issued on J>,.,raruz2.z@9 al c/'NrA . Rtz..L , in his capacity as President of Krominco, lnc -b6ihTnown to-me ano o me tnown io be the same persons who executed the foregoing instrument consisting of twenty (20) pages, including this acknowledgment page, and acknowledged to me that the same is their voluntary acts and deeds. lN WITNESS WHEREOF, I have hereu4to set my hand and affix my notarial seal, this 2 ho't day of 0 cx.o k+ r-"i I 芵 0 菒o腡 t莋_膈腌 至 `l,20膌 :韲 腵 腓 躉 鋟::裕t苪 裩 芿 Doc. No. lo4 Page No. -- )f Book No. tX Series of ,t ^r,lJq 芵 20 't r OF REGISTRATION CERTIFICATE Mitres and Geosclences Burcau Nofih Ave., Diliman, Quezon CitY The registration fee therefor having been paid, the consisling of pages was leSislr"id foregoing inshument :@- \.,r,h tbis Ofiioe ot Ot,.c,ur o€,@ and recorded rn i . 'li n*o. ? of the tr;..of f{c.Gr'/}hbn ,IF'SA as Document No.i-. Registration fee paid under Offcial Receipt No' 4q91q5, N dated drob.t o5,@ irx the arnoult of Pbr, 90, ooo' - V 腒 腀腒 腒