SUPPLEMENTARY CONTRACT
Party A: Huizhou Highway Property Development Company
Party B: Guanghui Highway Project Company Limited
Through friendly consultation, Parties A and B both agree to establish a
Sino-foreign Joint Venture called Guanghui Highway Development Company Limited
(hereinafter "Joint Venture") and have signed a Joint Venture Contract in
relation to the establishment of Guanghui Highway Development Company Limited
(hereinafter "Joint Venture Contract") in the 5th day of August, 1996. The
following shall be added to the Joint Venture Contract:
1. The supplementary illustrations of the income of the Joint Venture and its
allocation in Section 1 of Chapter 12 in the Joint Venture Contract are as
follows:
Both Parties agree to allocate the income from the Joint Venture
according to the agreed ratio and methods below.
In order to guarantee the investment return (hereinafter "agreed return,
it will be calculated by installments in accordance with the actual amount
injected and the timing of injection into the bank account of the Joint Venture
by Party B) for the capital injected by Party B into the Joint Venture for the
first 7 years (ie. From the first to the seventh year) shall not be less than
22% (annual investment return rate), Party B shall take precedence to get the
remaining net amount (hereinafter "net amount for distribution") after the
deduction of 15% regular expenses, taxes and other expenses from the annual
revenue of the Joint Venture. In case the net amount for distribution is less
than the agreed return, Party A shall directly pay the insufficient portion to
Party B. The Joint Venture and Party A shall pay off the agreed return to Party
B quarterly (on 31 March, 30 June, 30 September and 31 December each year)
according to the above stipulation.
Both Parties agree that from the eighth year since the establishment of the
Joint Venture, Party A shall get 30% from the net amount for distribution from
the Joint Venture as the return for distribution (hereinafter "precedence to
distribute the return) that Party A shall take precedence to distribute the
return, until the total accumulated amount of the return that Party A takes the
precedence to distribute is equivalent to the principal and interest of the
capital injected by Party A (with an annual return rate of 13.5%). The above
period is called "period for Party A takes precedence to distribute". Both
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Parties anticipate that the period for Party A takes precedence for distribution
shall be less than 10 years.
The formula of the calculation of the distribution of return by Party A's
precedence is as follow:
In case Y is the total number of days that Party's precedence to distribute
the return:
The total accumulated amount of the return distributed in precedence to
Party A with the distribution period in precedence = total amount of
capital injected by Party A X [ 1+13.5% X (7+Y/365)]
During the period that Party A takes the precedence for distribution, the
remaining amount, after the deduction of the return for distribution in
precedence, of the net amount for distribution shall be distributed by Party A
and Party B according to the ratio of 2:8 respectively. Beyond the above period,
the total net amount for distribution shall be distributed by Party A and Party
B according to the ratio of 2:8 respectively.
2. The following shall be added to Section 1 of Chapter 12 in the Joint Venture
Contract about the settlement of disputes:
Any disputes arising from the execution of, or in connection with the contract
shall be settled through friendly consultations between both Parties. In case no
settlement can be reached through consultations, the disputes shall be submitted
to the Shenzhen Branch, China International Economic and Trade Arbitration
Commission for arbitration in accordance with its rules of procedure. The
arbitral award is final and binding upon both Parties. All expenses occurred by
the arbitration shall be borne by the Party who loses the arbitration
proceedings.
3. Others:
This supplementary contract shall be written in Chinese with two original
copies. They shall be signed and sealed by Party A and Party B and each Party
shall keep one copy.
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Party A: Huizhou Highway Property Development Company
Party B: Guanghui Highway Project Company Limited
Authorized Representative: Authorized Representative:
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Seal: Seal:
30th October, 1996
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