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Exhibit 10.1(b)
SINO-FOREIGN CO-OPERATION
ZINDART TOYS (DONGGUAN) COMPANY LIMITED
SUPPLEMENTAL CONTRACT
Party A: Dongguan Hengli Trading General Company
Party B: Zindart Industrial Company Limited
By a Co-operation Contract dated 8 September 1994 signed and sealed by both
Party A and Party B ("the Co-op. Contract"), Zindart Toys (Dongguan) Company
Limited ("the Co-op. Company") was established. Owing to the fact that Party A
is unfamiliar with the international toys market, together with its lack of
experience in the operation and management of toys, the directors of both
parties negotiated with each other based on the principles of equality, mutual
benefit and mutual trust. Following Party B's request, Party A shall transfer
all the operation rights and business management of the Co-op. Company to Party
B, in accordance with the terms below:
1. Party B's Management Period
From the date of first production by the new factory premises to the
expiry of the Co-op. Contract.
2. Given that Party A shall not directly participate in management, and in
light of Clauses 4 and 5 of the Co-op. Contract in relation to profit
sharing and sales respectively, Party A shall not take part in the sales
activities, and both parties agree to adopt the following provision in
relation to profit sharing:
(i) Party B guarantees that Party A shall annually receive a sum of
RMBY300,000 representing depreciation charges and fixed profits,
which shall be paid in two equal half-yearly instalments.
3. Party B shall be solely responsible for the management and
administration of the Co-op. Company, together with the handling of its
receipts and outgoings.
4. All profits/losses in relation to the operation of the Co-op. Company
shall belong to Party B, and Party A shall not be responsible for any
such profits/losses.
5. At the expiry of this Contract, all water and electricity supply
facilities provided by Party A shall belong to Party B without
compensation.
6. Party B shall be responsible for fire prevention and safe production in
compliance with the regulations of the fire services authorities in the
district.
7. All activities in relation to production operation shall be in
compliance with the relevant laws and regulations of the PRC; Party B
shall be held responsible for any liability incurred and loss suffered
as a result of any breach of these PRC laws and regulations at any stage
of the internal or external production activities.
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8. Party A's Responsibilities
(i) Assist Party B in liaising with the various departments of this
district, including water supply, electricity supply, public
order, fire services, safety, health, environmental protection,
etc.;
(ii) Assist Party B in the proper resolution of any labour disputes
amongst the temporary labour;
(iii) Co-ordinate public relations and procedures for import/export
customs declarations; and
(iv) Assist Party B in employing labour and managing staff in
accordance with PRC's governmental policies.
9. Both parties agree that if, during this period, there are any important
changes to PRC governmental policies, rendering the contents of this
Contract inconsistent therewith, both parties shall accordingly make the
necessary adjustments or amendments to this Contract in the spirit of
friendly consultation.
10. This Contract shall become effective as from 1 January 1996. At the
expiry of the period of co-operation, this Contract shall terminate
accordingly.
Signed by Party A's Representative Signed by Party B's Representative
Chop of Dongguan Hengli Trading Chop of Zindart Industrial Co. Ltd
General Company
Date: 5 December 1995
