The life of the mine will be the life of the proposed mining operation on the tenement as proposed in the bankable feasibility study or until normal operations cease, whichever is the longer.
Environmental impact assessment and management plan
Paladin (Africa) shall comply with:
(a) the generally applicable environmental laws of Malawi including, Section 24 of the Environmental Management Act;
(b) the environmental management plan; and
(c) reporting requirements on the implementation of the environmental management plan and any other environmental problems arising as a result of the activities of Paladin (Africa) as provided in the environmental management plan.
Subject to compliance by Paladin (Africa) with the environmental management plan, the government will take action in enforcing any applicable environmental laws with the intent of:
(a) securing Paladin (Africa)'s earlier compliance with environmental laws and the timetable and conditions set out in the environmental management plan;
(b) imposing fines or penalties upon Paladin (Africa) payable under environmental laws (or enacting new fines and penalties under those environmental laws) which are payable due to non-compliance with environmental laws or the timetables for remedying non-compliance; and
(c) imposing fines or penalties in respect of the Paladin (Africa)'s breach of existing environmental laws.
The government may propose an amendment to the environmental management plan if:
(a) at any time the conduct of normal operations in accordance with such environmental management plan poses a material danger to public health and safety or may result in significant damage to the ecology of the area which was not contemplated in the environmental management plan and is irreversible or only be reversed after the end of the life of mine; or
(b) the environmental impact of normal operations shall prove substantially more adverse than anticipated in such environmental management plan; or
(c) technology or procedures shall have been available and economic subsequent to the adoption of the environmental management plan and, if applied to the operation of the project, could materially mitigate the environmental impact of normal operations.
Unless by notice of objection to the proposed variation is served on the government by Paladin (Africa), the proposed variation shall be deemed to have been agreed to by the parties.
Paladin (Africa):
(a) may, in consultation with the government, amend the environmental management plan from time to time; or
(b) shall amend the environmental management plan where either the International Atomic Energy Agency standards for management of the environment as it is affected by mining operations are changed, or
(c) shall amend the environmental management plan where either of the environmental laws are changed, provided that following such amendment the environmental management plan conforms to specifications and practices established by Malawian and International Atomic Energy Agency standards for the management of the environment as it is affected by mining operations, in order to reflect changes in operations and other circumstances considered to be appropriate.
Paladin (Africa) shall assist the government with:
(a) the provision of an office and the purchase of equipment for monitoring of the environmental management plan;
(b) educating Malawi citizens on the nuclear industry generally, and the mining of ore, the production of yellowcake and the business specifically; and
(c) capacity building in environmental management and monitoring of effects on both human health and the environment arising from uranium mining.
Paladin (Africa) shall maintain an environmental performance bond, equivalent to the specified amount in the bankable feasibility study for undertaking rehabilitation of the mining area. The environmental performance bond is to be in the form of an irrevocable letter of credit, with a commercial bank in Malawi and is to be in favor of the government. The environmental performance bond shall:
(i) cater for costs of rehabilitation in areas where Paladin (Africa) or its activities shall show signs of default during and after the mine life. Such activities shall include failure in performance of tailings storage facilities, contamination of water resources and the environment and their clean up, sensitization of the general public on the potential dangers associated with radioactive substances and procedures to prevent the general public from the negative effects of radioactive substances and revegetation; and
(ii) be increased or decreased as the case may be every 2 years over the life of mine, in order to ensure the size of the environmental performance bond is equivalent to the rehabilitation costs projected in the bankable feasibility study.
The environmental performance bond shall further be used for covering payments for any breaches by Paladin (Africa) of its duty to either prevent pollution or to undertake rehabilitation work.
The government and Paladin (Africa) shall agree upon the amounts (and qualities) of Paladin (Africa)'s annual and maximum daily water requirements for use in mining operations.
To the fullest extent reasonably practicable, Paladin (Africa) shall use water obtained from dewatering on the tenement for its purposes under this contract. Paladin (Africa) shall be liable for any damaged caused by dewatering or by any discharge of water obtained by dewatering.
Paladin (Africa) is at its cost and in collaboration with the government entitled to take water from any of the North Rukuru, Sere or Muswanga Rivers in order to meet its requirements, provided that it employs and retains experienced hydrological consultants to provide advice on the sustainability of taking the water.
If investigations prove to the satisfaction of the government that water can continue to be drawn on by Paladin (Africa) without seriously affecting either the sustainability or quality of water in that water source or either the availability (to the extent utilized by local villagers) or quality of water in the adjacent areas the government shall consider granting Paladin (Africa) the necessary license to develop and draw from that source at Paladin (Africa)'s cost at a prescribed fee.
The license, if granted, is to be on such terms and conditions as are necessary to ensure good water resource management as the government may require. Should that source in the opinion of the government prove hydrologically inadequate to meet the mining water requirements, the government may limit the amount of water which may be taken from that source at any one time.
In the event of water supplies from available sources proving insufficient to meet the mining water requirements Paladin (Africa) shall collaborate with the government in an investigation of ground water, surface water, water catchments and storage dams.
Paladin (Africa) shall permit the government to inspect its books of account and records relative to operations under this contract and to any sale of yellowcake and any additional mineral, including sales contracts, and to take copies or extracts of them.
In calculating net profit for the purpose of calculating income tax, Paladin (Africa) is allowed to immediately depreciate the full amount of all capital expenditures it incurs on the business. Paladin (Africa) may also write off against any of its profits all exploration costs incurred (both prior to and after the contract date) on any mining or exploration tenement in which Paladin (Africa) may hold either a direct or indirect interest. Paladin (Africa) may also write off all losses it may have accrued while operating in Malawi.
The Taxation Act imposes a resources rent tax of 10% on profits after tax if Paladin (Africa)'s rate of return exceeds 20% per year. However, in this case, the resources rent tax is not to be payable by Paladin (Africa) for the life of mine.
The Government shall do what is required to ensure the fiscal regime for Paladin (Africa) set out in Attachment “B” is valid and enforceable. To do so the government is to ensure:
(i) that a validly constituted board of the Malawi Revenue Authority passes a resolution making a
recommendation to the Minister of Finance:
A. containing the criteria or factors for the grant of any exemption, mitigation, deferment or remission of any revenue, and the procedures to be followed for that purpose; and
B. that the Minister of Finance shall by order publish such criteria or factors and procedures; and
(ii) that the Minister of Finance will then exercise his powers to ensure the fiscal regime in Attachment “B” is valid and enforceable and exempt that revenue of Paladin (Africa) from the taxes referred to in Attachment "B".
The consideration for the 15% equity in Paladin (Africa) to the government is the advance payment by Paladin (Africa) of:
(i) 2.5% of the corporate tax rate; and
(ii) the rent resource tax,
the net impact of which is that Paladin (Africa) is only required to pay a 27.5% corporate tax rate on its profits.
For the stability period Paladin (Africa) is exempted from paying tax (both import duty and import value added tax) on the costs, insurance and the freight value of all equipment, consumables used in the mining and processing of ore, materials, fuels and lubricants which are acquired for and utilized in the business but does not include equipment, consumables or materials imported by any person working for Paladin (Africa). For the stability period Paladin (Africa) is also exempted from any thin capitalization rules that may be introduced by the government after the contract date.
Restrictions on transactions with affiliated parties
Paladin (Africa) may market and export all mine product and shall have sole control and management of sale of the mine product, including by term contract, and shall assume all risks provided that:
(a) Paladin (Africa) sells its products on arms’ length terms; and
(b) the government has not notified Paladin (Africa) that the export of the mine product would:
(i) breach an obligation of the government arising under international law; or
(ii) result in dealing with nationals of a state with which the government is in a state of declared war,
and Paladin (Africa) has obtained whatever licenses or consents are required.
Paladin (Africa) shall advise the government of each material agreement concerning sales or processing of mine product, marketing, patent licensing, engineering, construction or management services which is entered into with an affiliate. Such agreements shall be on arms’ length terms. Copies of such agreements shall be copied to the government. If, in the opinion of the government, any such agreement is not on arms’ length terms, the government may give notice to Paladin (Africa) of the terms which the government considers to be arms’ length terms. If the parties disagree with the terms they may refer the dispute to the independent expert to determine what are arms’ length terms. Upon that determination, Paladin (Africa) shall renegotiate the agreement, if necessary, or terminate the agreement.
The government acknowledges that arm's length terms may not comprise a sale of the mine product at the highest price obtainable on the date of sale as it may be that Paladin (Africa) determines to sell the mine product through a series of spot sales and term contracts.
Paladin (Africa) will pay the following royalty:
1.5% for years 1 to 3 following commencement of the sale of yellowcake; and
3% for years 4 and onward following commencement of the sale of yellowcake.
For the purposes of determining the gross value of yellowcake as contemplated in the Mines Act, allow the following deductions calculated on arms' length terms:
(a) during the period Paladin (Africa) is obliged to pay a royalty of 1.5%, any additional costs or expenses incurred as a consequence of a country, other than Malawi and through which the yellowcake is to pass for the purposes of export, imposing such costs or expenses on the
transport and export of that yellowcake; and
(b) during the period Paladin (Africa) is obliged to pay a royalty of 3% the costs or expenses:
(i) directly related discounts, commissions and marketing costs;
(ii) of ocean freight;
(iii) of marine insurance;
(iv) costs of compliance with international safeguard requirements;
(v) of port and handling charges at port of discharge;
(vi) of delivery (including warehousing costs) from port of discharge to the purchaser;
(vii) of weighing, sampling, assaying, inspection and representation costs incurred on discharge or delivery;
(viii) of shipping agency charges;
(ix) of import taxes payable in the country of the port of discharge;
(x) of demurrage incurred after loading and at port of discharge; and
(xi) of any transport costs or expenses imposed on Paladin (Africa) by a country through which the yellowcake is exported.
On the grant of the mining license the government shall be entitled to 15% percent of the issued capital of Paladin (Africa). The shares issued to the government are to be of a class which is the same as the shareholding which Paladin Energy Minerals and its affiliates hold in Paladin (Africa). However, the shares which Paladin Energy Minerals and its affiliates hold require them to provide all equity contributions to Paladin (Africa) to enable it to fund the project through the use of a combination of debt and equity and having regard to the thin capitalization agreement.
During the term of this contract and in order to ensure Paladin (Africa) complies with the thin capitalization agreement, Paladin Energy Minerals and affiliated parties will subscribe for additional shares in Paladin (Africa). When this occurs Paladin (Africa) will at no additional costs to the government, issue it additional shares in order to ensure the government maintains 15% of the issued capital of Paladin (Africa).
Paladin (Africa) shall:
(a) pay for 2 qualified Malawi doctors to come to Australia and be trained in the health effects of radiation, provided such doctors agree to return to Malawi and service the communities at Karonga and Kayelekera;
(b) construct at Kayelekera a primary school, housing for 4 teachers, an office for teachers working at the primary and secondary schools and a clinic to a typical standard for such facilities in Malawi using local labor to the extent practical; and
(c) use its best endeavors to carry out the activities set out in Attachment “C” on medical and social services.
Paladin (Africa) shall expend and/or cause third party agencies to spend the sum of US$ 10 million on the construction and fit out of:
(a) education facilities which are likely to include a boarding secondary school with teachers housing; and
(b) if after the construction of those facilities there is any portion of the US$ 10 million which has not been expended, medical facilities, within the northern region of Malawi ("Social Responsibility Plan"), it being the intention of the Company that the facilities be proximate to or be able to benefit the Kayelekera Community, and be of a standard consistent with similar recently constructed facilities in Malawi.
Paladin (Africa) will endeavor to support projects within the Kayelekera community that improve the quality of life and local economy through construction of wells and sinking of boreholes. Paladin (Africa) recognizes that the Kayelekera community requires assistance in developing improved agricultural production practices.
Paladin (Africa) shall employ and train Malawi citizens for the operations, development and extraction of yellowcake in accordance with the Mines Act and other instruments and shall contain requirements which are reasonable in all the circumstances. The government shall promptly grant permission to employ non-Malawi citizens only if:
(i) the skills and experience required by that post are not obtainable from the Malawi labor market; or
(ii) notwithstanding such skills and experience being available from within the Malawi labor market, where Paladin (Africa) determines that such candidate is not a fit and proper person to be employed by Paladin (Africa) and there are no other suitable candidates from within the Malawi labor market.
Where in the reasonable opinion of the government, Paladin (Africa) has, in breach of its undertaking continued to employ a non-Malawi citizen in any post where a suitably skilled and experienced Malawi citizen is available to fulfill that role, he may call upon Paladin (Africa) to show cause why the employment of such a non-Malawi citizen in a particular post should not be discontinued at the first available opportunity and replaced by a suitably skilled and experienced Malawi citizen. It shall be conclusive evidence of Paladin (Africa) not having to employ a particular Malawi citizen if Paladin (Africa) can demonstrate that the candidate is not a fit and proper person.
Paladin (Africa) shall annually invite the registration of legitimate established businesses in Malawi by reasonably effective means which would ensure adequate dissemination of the registration opportunity. This should include advertising in the local press, particularly in the vicinity of the contract area and with particular emphasis on businesses directly or indirectly majority owned by Malawi citizens) which are capable of supplying materials, consumables used in the mining and processing of ore, equipment and services to Paladin (Africa). To the extent Paladin (Africa) enters into a supply contract longer than 1 year then for the term of that contract Paladin (Africa) does not have to comply with this clause for the services of that contract.
Where materials, equipment and services required for the implementation of the scheduled programs are manufactured, substantially assembled or procurable within Malawi from qualified business(es), they shall have the opportunity to tender. If a tender submission from such businesses:
(a) meets the specifications of the invitation to tender;
(b) is competitive in cost with international sources;
(c) meets the delivery requirements of the project;
(d) meets the quality requirements of the project; and
(e) is bonafide,
then Paladin (Africa) shall give preference to those businesses in its award of the tender.
The supply of materials, equipment and services may be tendered for and procured internationally without restrictions, provided that where such materials are procurable within Malawi from registered businesses, those businesses shall have the opportunity to tender. If a tender submission from such business meets the specifications, such businesses shall be given preference over any tender submitted by an international supplier.
In assessing the tenders from local contractors and suppliers, Paladin (Africa) shall consider among other things, the extra costs it would incur if it were to grant the contract to a foreign supplier. These extra costs shall include wharfage costs, shipping costs, stevedoring costs, customs clearance costs, customs duties, and demurrage charges.
Paladin (Africa) shall:
(a) develop a program for the establishment or expansion of Malawian businesses which may be capable of providing goods and services and this program is to be part of the bankable feasibility study, but this clause does not require Paladin (Africa) to propose the establishment or expansion of a business which will be uncompetitive with another non-Malawian supplier;
(b) comply with the local business development program, to encourage and assist the establishment of businesses within Malawi (particularly in the district of Karonga and with a particular emphasis
on businesses directly or indirectly majority owned by Malawi citizens) to supply materials, equipment and services to Paladin (Africa). Paladin (Africa) shall not be obliged to train, supply, manage or supervise or grant or lend money to any person or organization;
(c) conduct an annual review of progress being made on the implementation of the local business development program and make necessary alterations;
(d) at all times designate a nominee to be the responsible person to:
(i) assist Malawi citizens who wish to or have set up businesses to service Paladin (Africa) and the project;
(ii) implement the local business development program;
(iii) liaise with the appropriate officials from the government; and
(iv) provide advice and assistance in the development and implementation of long term business enterprises which can continue after the approved program of operations is completed; and
(e) inform the government annually on the implementation and results of the local business development program.
The government shall at the request of Paladin (Africa) permanently remove any person occupying any unauthorized structure in the mining area or any such unauthorized structure, and Paladin (Africa) is not required to provide any indemnity to the government for the removal of such person or structure.
If in the course of establishing the project or in the course of normal operations any disturbance of a third party results in damage to any crops, trees, buildings, stock or works then Paladin (Africa) shall be liable to that party. If the disturbance or damage is caused to land the subject to the Land Act which results in the government being liable, the government shall pay to the person fair and reasonable compensation for the disturbance or damage according to their respective rights or interests. Paladin (Africa) shall indemnify the government against any such compensation provided it is determined in accordance with the applicable law. In the event the proposed disturbance requires the resettlement of any owner or occupier to some alternative location, then Paladin (Africa) shall meet the reasonable costs of resettlement and any associated compensation. The parties agree that the reasonable costs are intended to be limited to the costs which are determined by the relevant district commissioner.
Each party shall render whatever assistance it is able to, to enable the other to obtain a determination of compensation and, if required, the resettlement of any affected owners or occupiers in a timely manner.
Paladin (Africa) shall establish training programs prior to the production commencement date and shall implement such programs on an as needed basis after that date. In addition to Paladin (Africa)’s obligations to train Malawi citizens, it may in its sole discretion but as part of any such training, second some of its Malawi employees to operations of Paladin (Africa) or its Affiliates in other countries.
The government shall at its sole cost upgrade the unsealed road from Karonga to the Mwesia River and then from the North Rukuru River to the turnoff to the contract area from the Karonga/Chitipa Road. Paladin (Africa) may negotiate with the government's construction contractor for the purpose of determining the construction priorities, and if Paladin (Africa) requires that any part of such works needs to be to a higher standard then the government acknowledges that Paladin (Africa) can negotiate a separate contract with the government's contractor to carry out such work at no extra cost to the government.
Paladin (Africa) shall be responsible for the cost of the construction and maintenance of all private roads used in its activities.
Paladin (Africa) shall confer with the government about any upgrading of existing aerodrome facilities and services in the Karonga district that it requires for business. The government will do all that is necessary to assist Paladin (Africa) to obtain the facilities and services it requires. Paladin (Africa) shall also confer with the government on the establishment of an unsealed airstrip on the contract area and the government will do all that is necessary to enable Paladin (Africa) to construct and operate an air service to and from the Karonga air field.
Paladin (Africa) shall at its cost construct, operate and maintain all necessary dams, bores, valves, distribution pipelines, reticulation, meters, tanks, equipment and appurtenances necessary to draw, transport, use, reticulate and dispose of water obtained by Paladin (Africa).
Where a road constructed by Paladin (Africa) within the contract area for its own use is subsequently required for public use, the government may, after consultation with Paladin (Africa) and so long as resumption shall not unduly interfere with business, designate the road as a public road.
The government shall ensure that in granting rights to minerals, petroleum or other substances over the area of any water sources from which Paladin (Africa) is drawing water, conditions are imposed on the third party in order to minimize any material prejudice or interference with business or Paladin (Africa)'s access to the water source.
Paladin (Africa) shall allow the public and the government to use, free of charge, any roads within the contract area constructed and/or maintained by Paladin (Africa) which by custom and practice have been freely available for public use. However, such use shall not unduly degrade security of mine facilities or equipment or prejudice or interfere with the Company’s operations. Paladin (Africa) may allow or consider allowing the general public to have access over the contract area, provided that such access neither degrades the security of mine facilities or equipment, nor unduly interferes with operations. Paladin (Africa) may allow the government to place, for a reasonable charge and at its own expense, telephone wires on the poles of the lines of Paladin (Africa), provided that such installation is carried out with prior notice, in cooperation with Paladin (Africa) and does not unduly interfere with the its efficient use of poles and lines.
Paladin (Africa) shall, subject to the terms of the Mines Act, the tenement and
this contract, implement the approved program of operations in accordance with the timetable contained in the approved programme of operations and in accordance with best mining, ore processing and environmental practices. Paladin (Africa) shall expend the investment commitment, on the terms and in the amounts set out in the schedule programs.
Disputes between the parties which cannot be settled through good faith and best endeavors or through negotiation and mediation shall be submitted to the International Centre for Settlement of Investment Disputes for arbitration according to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. Arbitration proceedings shall be held in Washington D.C. in English. To the extent the convention does not detail a matter of procedural law, the law of Malawi shall apply.
An award in any arbitration proceedings shall be binding on the parties and judgment thereon may be entered in any court having jurisdiction for the purpose. The government irrevocably waives any claim to immunity:
(a) in respect of proceedings to enforce any such award including immunity from service of process and from the jurisdiction of the court; and
(b) in respect of execution of any such award against the property of the government outside Malawi.
The government shall in relation to any confidential information:
(a) use such confidential information only for the purpose for which it was supplied to the government and not for any other purpose in accordance with the laws of Malawi;
(b) treat and safeguard as strictly private and confidential all confidential information including without limitation, the confidential information supplied to the government as a shareholder in the company being used by the government solely in that capacity; and
(c) ensure proper and secure storage of all confidential information.
Nothing contained in this contract shall prevent the government from using any such information as supplied by Paladin (Africa), except confidential information supplied to the government in its role as a shareholder, for purposes of preparing the government statistics and data or from publishing it in statistical format. Any information supplied by the company shall be treated by the government as confidential, but the government shall nevertheless be entitled at any time to make use of any information received from Paladin (Africa), other than confidential information provided to the government in its role as a shareholder, for the purpose of preparing and publishing aggregated returns and general reports on the extent of prospecting or ore mining operations in Malawi and for the purpose of any arbitration or litigation between the parties. In addition, the government may prepare and publish aggregated returns and general reports, which do not disclose confidential information specific to Paladin (Africa) or confidential information provided to the government in its role as a shareholder, on the extent of prospecting or ore mining operations in Malawi. Any information supplied by the government to Paladin (Africa) which is confidential information shall be treated by Paladin (Africa) and all persons in the employment or who are consulting to Paladin (Africa) as confidential.
If during the stability period there is a change in law that has the consequence of creating a more favorable fiscal regime for Paladin (Africa) than the one in this contract then the parties shall amend this contract such that Paladin (Africa) can enjoy the fiscal benefits of the change in law.
The parties agree that it is in their best interests to have the Taxation Act amended to acknowledge that the government can enter into agreements such as this contract for the purposes of providing the fiscal regime and stability as contemplated in this contract. The government shall use its best endeavors to have a law enacted to give effect to this intention. The government also acknowledges and will not prevent the right of Paladin (Africa) to take whatever action it is lawfully capable of taking to have the amount it pays for the social responsibility plan being treated by the Malawi Revenue Authority as tax deductible against the income of Paladin (Africa).
The government agrees that throughout the stability period, it will, wherever possible, seek to ensure that any enactment, domestic or international agreement or treaty, any legislation or regulation or policy, as interpreted by a court or other authority, does not impair, conflict, interfere with, or adversely affect the value of commercial operations or any returns or receipts from commercial operations to Paladin (Africa) or its shareholders.
If because of a change in law, a failure by government to take the actions to establish the fiscal regime proposed, or the government subsequently takes any action which results in an adverse impact on that fiscal regime and the economic equilibrium is disrupted or negatively affected, the government shall use its best endeavors to take all actions available to restore the economic equilibrium.
If the government is unable to establish or restore the economic equilibrium within 5 months and Paladin (Africa) claims a negative effect on either itself, the business or its shareholders, the government shall indemnify or pay monetary compensation for any loss or damage which is caused or arises from any failure, whether due to action or inaction, to establish or to maintain the economic equilibrium. The level of compensation shall be what is required to place Paladin (Africa), its shareholders or the business in the position it would have been in had the economic equilibrium been established or maintained.
Upon expiry of the stability period, the government shall, in any event, ensure that no law, statute, regulation or enactment is passed or made which would discriminate against Paladin (Africa) or its affiliates in its conduct of normal operations under this contract when compared to other mining companies conducting similar operations. The government will ensure that all employees (regardless of their country of citizenship) of Paladin (Africa) or its affiliates are dealt with in a uniform way (including with respect to taxation matters) provided that the government will be at liberty to pass or make any such law, structure, regulation or enactment to enable the performance or amendment of a development agreement entered into by it and another mining company or joint venture prior to the expiry of such period.
The government undertakes for the stability period to do all things in its power to prevent any local or other authority of government from interfering with or imposing levies on ore movements.
During the stability period the government shall not impose or permit any governmental agency to impose discriminatory taxes, rates or charges or undertake any discriminatory act of any nature whatsoever related to the titles, property or other assets, products, materials or services used or produced by or through the activities of Paladin (Africa) in the conduct of its business. The government shall also not take any other discriminatory action which would deprive Paladin (Africa) of full enjoyment of the rights granted and intended to be granted under this contract.
In entering into this contract the parties recognize that the determination of the amount of the royalty and the setting of the fiscal regime affecting Paladin (Africa)'s mining operations have been set by the government in the full knowledge of the potential impact of a rise or fall in the pricing of yellowcake. If required by one party then the parties are to hold discussions on whether this contract should be reviewed either:
(a) to take into account:
(i) new advances in the scientific and technological fields relative to mineral exploration and mining and processing; or
(ii) other than as a consequence of any change in law, new financial circumstances which would adversely affect the viability of the project, it being the intention of the parties to ensure that to the extent circumstances permit each will be in a similar financial position by operation of this contract as was envisaged at the contract date;
or
(b) to accommodate:
(i) matters for which it was impractical to make provisions on the contract date; and
(ii) hardship which is experienced during the course of the performance of this contract,
it being the intention of the parties that this contract operate between them with fairness and without prejudice to the interest of the other and operate in a manner to achieve the economic equilibrium, and where it is shown that the contract should be amended then the parties will use their best endeavors to agree on the appropriate amendments.