Exhibit 10.22
Certain portions of this Exhibit have been omitted pursuant to a request for
"Confidential Treatment" under Rule 24b-2 of the Securities and Exchange
Commission. Such portions have been redacted and bracketed in the request and
appear as [ ] in the text of this Exhibit. The omitted confidential information
has been filed with the Securities and Exchange Commission.
SUPPLEMENTAL AGREEMENT
AS A REVISION OF THE AGREEMENT SIGNED ON 4/1/2000
Shangdong Huaguan Group Ltd. (hereinafter referred to as Party A) and
American Pacific Aviation & Technology Corporation (hereinafter referred to as
Party B) signed on 4/1/00 the Equipment Purchase Contract, the Technical Aid And
Know-how License Contract and the Raw Materials Supply And Products Sales
Contract, in relation to the purchase by Party A of Party B's production
facilities for the manufacture of the contactless smart cards. Now and hereby,
the parties, through friendly negotiations, conclude the following supplemental
agreement.
Article 1 Purchase of Raw Materials
1. Party B shall supply to the order of Party A after the former receives
and confirms the order by the latter for the procurement of production materials
for the non-contact smart cards.
2. The unit price for the needed raw material for each non-contact smart
card is CIF US$[ ] per piece (PVC and outer packaging material excluded).
3. Party A guarantees that the quality of the non-contact smart cards made
of the raw materials supplied are up to the ISO standard.
4. Party B shall, after receiving and confirming the order placed by Party
A, make delivery in accordance with quantity, variety, specifications, time of
shipment indicated in the order, so as to enable Party A to continue its normal
production. In case the stoppage of production by Party A is attributed to the
delay of Party B in delivering the material ordered, Party B shall be liable to
the economic loss suffered by Party A. Notwithstanding the aforesaid
stipulation, when Party B informs Party A by written notice of certain unusual
situation in which Party B needs to defer in the supply of the ordered goods,
the
1
latter shall give its consent to the requirement.
5. Party A shall, in accordance with the purchase order, make remittance
to the bank account designated by Party B for the payment under the sight L/C
for the buying of the raw materials. To ensure timely payments, the parties
agree that part of the payments will be made by remittance by American Huasu
Trading Inc., and the remaining part will be made by L/C opened by Party A in
favor of Party B. The specific amounts of each payment will be negotiated and
decided by the three parties.
Article 2 Sales of Products
1. Party B is willing to assist Party A to sell the contactless smart
cards produced by Party A. The sales price will be negotiated and fixed by the
parties every three years. The price is FOB US$[ ] per piece in the first three
years.
2. Party B shall provide Party A with annual sales plan and the exact
amount of sales shall be subject to each specific order. Party B shall provide
Party A with the needed new moulds free of charge before any change in the
varieties of the ordered products.
3. Party B shall open a three-year revolving L/C for the purchase of Party
A's products. Party A shall make delivery in conformity with the order.
Settlement of payment shall be subject to the amount of each order.
4. Party A shall produce and deliver the goods in accordance with the
varieties, specifications, quantities and shipment time under each order
confirmed by the parties, and shall be liable to the economic loss incurred to
Party B in case Party A fails to effect the shipment as regulated under the
confirmed order.
2
5. If Party A receives order from a third party, it shall send notice to
Party B 30 days in advance, to enable the latter to adjust the carrying-out of
the confirmed order.
6. These terms replace paragraph 1.2 of the Agreement for Purchase of
Equipment and the Agreement of Purchase of Raw Materials signed on 4/1/2000,
which is now eliminated.
Article 3 Force Majeure
In the course of the performance of the duties under this agreement, if
either party is prevented from performing its duties under the agreement due to
such events or incidents as earthquake, typhoon, flood, fire, war, government
action or restriction, industrial turmoil, riots or other domestic upheavals, or
any accident beyond control of the parties, the suffering party shall obtain a
certification issued by its government and express-mail or fax the certification
to the other party. The agreement shall be suspended after the notification.
When the suspension of the agreement is more than six months, the parties shall
decide whether to terminate the agreement or not.
Article 4 Liabilities for Breach
The contractual parties shall carry out the terms and conditions under the
agreement honestly. In case either party fails to perform any of the
above-mentioned stipulations and causes the other party economic loss, it shall
be liable to the compensation of the contract-honoring party. If the breaching
party fails to reply 30 days after the honoring party lodges a claim against the
breaching party, the claimed shall be deemed to accept the claim.
Article 5 Dispute Resolution
In case of any dispute in the course of the carrying-out of this
3
agreement, the parties should seek a settlement through friendly consultation
and negotiation. If the parties fail to reach a settlement by consultation, the
dispute shall be submitted to China International Economic And Trade Arbitration
Commission (CIETAC) for arbitration. CIETAC Rules shall apply and the venue
shall be in Beijing. The award shall be binding on the parties. Arbitration fees
shall be borne by the losing party.
Article 6 Validity
This agreement shall be valid and enforceable upon the signatures by the
parties. In view of the fact that the parties signed on 3/6/00 the Equipment
Purchase Contract, the Technical Aid and Know-how Licensing Contract and the Raw
Materials Supply and Products Sales Contract, if there is any discrepancy
between that of the three contracts and what is stipulated in this agreement,
the relevant stipulation in this agreement shall prevail.
Article 7 Originals
This agreement has 4 copies of originals being equally valid and each
party shall have two.
Party A Party B
Shandong Huaguan Group Ltd. American Pacific Aviation & Technology
Corporation
Authorized Representative Authorized Representative
Signature Signature
4