Cooperation Contract Dated August 5, 1996

IN RELATION TO THE ESTABLISHMENT OF GUANGHUI HIGHWAY DEVELOPMENT COMPANY LIMITED


COOPERATIVE CONTRACT


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(TRANSLATION)


20th December 1996
Huizhou


TABLE OF CONTENTS


CHAPTER 1 GENERAL PROVISIONS CHAPTER 2 DEFINITIONS CHAPTER 3 PARTIES TO THE COOPERATIVE COMPANY CHAPTER 4 ESTABLISHMENT OF THE COOPERATIVE COMPANY CHAPTER 5 THE PURPOSE OF COOPERATION AND SCOPE OF BUSINESS CHAPTER 6 TOTAL INVESTMENT, REGISTERED CAPITAL AND CONDITIONS PRECEDENT CHAPTER 7 BOARD OF DIRECTORS CHAPTER 8 MANAGEMENT OFFICE CHAPTER 9 COOPERATIVE COMPANY TENURE CHAPTER 10 THE INCOME OF THE COOPERATIVE COMPANY AND ITS ALLOCATION CHAPTER 11 LABOUR MANAGEMENT CHAPTER 12 FOREIGN EXCHANGE MANAGEMENT CHAPTER 13 TAX, FINANCE AND AUDIT CHAPTER 14 TERMINATION AND LIQUIDATION CHAPTER 15 OTHERS CHAPTER 1 GENERAL PROVISIONS


Pursuant to the stipulation of the relevant laws and regulations of the People's Republic of China and a Cooperative Contract in relation to the establishment of Guanghui Highway Development Company Limited (hereinafter "Cooperative Contract") on 5 August, 1996 by Huizhou Highway Property Development Limited (hereinafter "Party A") and Guanghui Highway Project Company Limited (hereinafter "Party B"), the following Articles of Association is concluded:


CHAPTER 2 DEFINITIONS


Unless specified in this Articles of Association, the definition of the
following terms are as follows:


2.1 "Approving Authority" refers to the national authority or department which
exercises the approving right of the Cooperative Contract and this Articles
of Association in accordance with the laws and regulations of the People's
Republic of China.


2.2 "Cooperative Company" refers to the Company established by both Parties in
this Articles of Association in accordance with the Cooperative Contract
and this Articles of Association.


2.3 "Director" refers to an individual who is assigned by either Parties to
this Articles of Association and work in the Board of Directors of the


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Cooperative Company.


2.4 "Board of Directors" refers to the highest authority of the Cooperative
Company mentioned in Chapter 7 of this Articles of Association.


2.5 "Cooperative Company Tenure" refers to the tenure stipulated in Chapter 9
in this Articles of Association.


2.6 "Effective Date" refers to the effective date of this Articles of
Association and shall be the day on which the following conditions had been
fulfilled:


(1) This Articles of Association has been formally signed by both Parties;
and


(2) this Articles of Association has been approved by the approving
authority.


2.7 "Force Majeure" refers to earthquake, typhoon, fire, flood, war, starving
or other unforeseen events, and their happening and consequences are
unpreventable and unavoidable.


2.8 "Management Staff" refers to the general manager, deputy general manager,
chief accountant and other management staff appointed by the Board of
Directors.


2.9 "Road Sections of the Project" refers to Jinlong Highway, 71.776 kilometers
in total and is divided into two sections:


Section One:
Starting from Shierling, Young's Village (the intersection of Provincial
Expressway Route No. 1914 and National Expressway Route No. 205), through
Gongzhuang, Pingling and ends at Baisha Bridge, Longmen, 44.238 kilometers
in total.


Section Two:
From Yewu Village, Xiaojin Town, Huicheng District, through Donghang,
Liangtian, Taimei, Leigong, ends at Shierling, Boluo County, 27.538
kilometers in total.


The route of the road sections please see Appendix I of the Cooperative
Contract.


2 2.10 "Section for initial investment" refers to a section of Jinlong Highway
which is from Baisha Bridge, Longmen, passing through Pingling, to
Gongzhuang, 35 kilometers in total.


2.11 "Toll Booth" refers to Donghang Toll Booth and Pingling Toll Booth on the
road sections of the project or other toll booths agreed to be set up from
time to time by both Parties.


2.12 "Exclusive Operating Rights" refers to the exclusive rights in relation to
the operation, management, maintenance, repair and the collection of toll
fees granted by Government Department in accordance with the laws.


CHAPTER 3 PARTIES TO THE COOPERATIVE COMPANY


3.1 Party A
Name : Huizhou Highway Property Development Company
Place of Registration: Huizhou, Guangdong Province, China
Address : 12, Xidi Road, Huizhou, Guangdong Province, China
Legal Representation : Zhang Jisheng
Fax No. : (0752) 2232425


3.2 Party B
Name : Guanghui Highway Project Company Limited
Place of Registration: British Virgins Island
Address : Suite 5301, Central Plaza, 18 Harbour Road, Wanchai,
Hong Kong.
Legal Representation : Mr. Yiu Yat Hung
Fax No. : (852) 25190969


3.3 Qualifications


On the signing date and effective day of this Articles of Association,
each Party shall represent and guarantee to the other Party that:


(1) That Party is established in accordance with the laws of the places of
its establishment and setting up and shall ensure that its existence is
effective with good reputation;


(2) that Party shall have the rights, power and authorization required to
enter into this Articles of Association, and on the effective date, that
party shall have the rights, power and authorization required to fully
execute all the obligations in this Articles of Association;


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(3) that party has taken all necessary steps to ensure that it has the
right to enter into this Articles of Association and its representative of
that Party, of which signature attached, shall have the right to sign this
Articles of Association with a letter of attorney, this kind of signing
shall have the binding power to that Party.


(4) the signing and execution of this Articles of Association does not
infringe contravene and against the provisions of any rules, laws,
regulations, ordinance, any authorization or approvals from government
authorities, or any agreement or articles that that Party is one of the
signing parties.


(5) There is no litigation, arbitration, or other judicial, administration
or government investigation towards that Party which are pending or known
by that Party and going to happen soon.


(6) Disclosed all information received from the Chinese Government which
may affect the other party to fulfill its obligations of this Articles of
Association; and the disclosure of those information or documents,
representations may affect the willingness of the other party to sign the
document. And also the information that that party has supplied to other
party contains no material misstatement or has not made any information
which leads to misunderstanding.


(7) Disclosed all information received from the Chinese Government which
may affect the other party to fulfill its obligations of this Cooperative
Contract; and the disclosure of those information or documents,
representations may affect the willingness of the other party to sign the
document. And also the information that the party has supplied to other
party contains no material misstatement or has not made any information
which leads to misunderstanding.


CHAPTER 4 ESTABLISHMENT OF THE COOPERATIVE COMPANY


4.1 In accordance with the "Law of Sino-foreign Cooperative Company in the
People's Republic of China" and other relevant laws and regulations, both
Parties agree to establish a sino-foreign Cooperative Company in Huizhou,
Guangdong Province, China according to the provisions stipulated in the
Cooperative Contract and this Articles of Association. The Cooperative
Company shall comply with the laws and regulations in China and its legal
rights and benefits are protected by Chinese laws.


4.2 The name of the Cooperative Company is "Guanghui Highway Development
Company Limited".


4 4.3 The Cooperative Company shall register at Huizhou, Guangdong Province,
China. Its registered address shall be No. 12, Xidi Road, Huizhou.


4.4 The establishment date of the Cooperative Company shall be the date on
which the business license of the Cooperative Company is issued.


4.5 The organization form of the Cooperative Company shall be a limited
liability company and the Cooperative Company shall be an enterprise legal
person in the People's Republic of China. The Cooperative Company shall be
liable to the liabilities of the Cooperative Company with all of its
assets. Each Party to shall be liable to the Cooperative Company within the
limit of the capital subscribed by it. Both Parties shall not be liable for
the liabilities (individual or joint liabilities) of the Cooperative
Company directly.


4.6 All activities of the Cooperative Company in the People's Republic of China
shall be governed by the laws and regulations of the People's Republic of
China.


CHAPTER 5 THE PURPOSE OF COOPERATION AND SCOPE OF BUSINESS


5.1 The purpose of the Cooperative Company is in comformity with the principle
of enhancing the economic cooperation and technical exchanges, to reform
the road sections of the project, improve transportation conditions,
traveling safety and smooth traffic on the road sections, enhance the
economic relationship between Huizhou District and Beijing City, Hebei
Province, Henan Province, Hubei Province, Guangzhou, Shenzhen, Heyuan,
Zhuhai Delta, Yuebei, Gannan, Minxi, etc. and to ensure satisfactory
investment benefits of both Parties from the collection of vehicles passing
fees, fees from supplementary facilities and the fees from other aspects by
adopting technical and management experience of international standards.


5.2 The business scope of the Cooperative Company includes: Providing
improvement, management, operation and maintenance services for the "Road
Sections of Initial Investment".


5.3 Unless indicated in the Cooperative Contract, "management and operation"
also include the sole rights of handling vehicles passing fees and
collecting other fees.


5 CHAPTER 6 TOTAL INVESTMENT, REGISTERED CAPITAL AND CONDITIONS PRECEDENT


6.1 The total investment of the Cooperative Company shall be RMB560,000,000
(USD67,300,000) while the total initial investment shall be USD29,800,000.


6.2 The registered capital of the Cooperative Company shall be USD11,920,000.
Party A shall contribute USD2,384,000, accounting for 20% of the registered
capital and shall be contributed in assets. Party B shall contribute
USD9,536,000, accounting for 80% of the registered capital.


6.3 Both Parties agree the following conditions as the investment into the
Cooperative Company:


Party A: The rights and assets of Jinlong Highway (from Longmen to Qingxi,
7 kilometers in total), valued at USD5,960,000.


Party B: USD23,840,000 in cash.


6.4 The capital contributed by Party A shall be transferred to the Cooperative
Company on the date of its establishment. The capital contributed by Party
B shall be paid in the following ways after the establishment of the
Cooperative Company and the provisions of the following documents by both
Parties: the first installment of USD5,000,000 shall be paid within a month
while the second installment of USD4,536,000 shall be paid within three
months. The balance of the investment shall be paid according to the
construction progress. Party A shall provide evidence on quality and the
completion time during the examination of the construction work.


(1) The valuation of the contribution by Party A shall be recognized
by the State-owned Assets Administration Bureau and Party B shall
agree the estimated value for Party A made by the above Bureau.


(2) The exclusive rights for not less than 30 years granted by the
relevant government department to both Parties and approval of capital
contribution of that kind of operation right of Party A.


(3) An Agreement on Supervision of the Specified Bank Account signed
by both Parties and the Bank.


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(4) Party B satisfies Party A's ability of the payment of investment
return (see 10.1, 10.2 and 10.3).


6.5 After the contribution of capital by both Parties, an accountant registered
in the People's Republic of China shall be appointed by the Cooperative
Company to verify the capital contributed and a report of it shall be
provided. A capital contribution certificate shall be issued by the Board
of Directors of the Cooperative Company in the name of the Cooperative
Company.


6.6 All assignment shall be approved by the approving authority. After its
approval, the Cooperative Company shall proceed the procedures for changes
from the relevant government authority (other than merge and listing).


6.7 In case any Party to the Cooperative Company assigns all or part of its
cooperation conditions and rights, the other Party to the Cooperative
Company shall have the priority to have the right of assignment (other than
merge and listing).


CHAPTER 7 BOARD OF DIRECTORS


7.1 In addition to its other obligations set forth in this Cooperative
Contract, Party A shall be responsible for the following matters:


(1) Handling of applications for approval, registration, the business
license, tax registration and other matters concerning the establishment of
the Cooperative Company from the relevant departments in China;


(2) Providing conditions of capital contribution and cooperation according
to the stipulation in Article 6 of this Cooperative Contract;


(3) Assisting the worker of Party B and the staff of the Cooperative
Company in applying for the entry visa, working permit and processing their
traveling matters;


(4) Responsible for handling other matters entrusted by the Cooperative
Company.


7 7.2 The Board of Directors shall be the highest authority of the Cooperative
Company. It shall have the following rights and authority:


(1) Providing conditions of capital contribution and cooperation according
to the stipulation in Article 6 of the Cooperative Contract;


(2) Responsible for handling other matters entrusted by the Cooperative
Company.


CHAPTER 8 REPRESENTATIONS AND WARRANTIES


8.1 The following represenations and warranties are made by Party A to Party B.


(1) The existing Company is legally established by Party A in Accordance
with the laws in the People's Republic of China. It is a enterprise legal
person in the People's Republic of China which solely bears the
liabilities, bear sole responsibility for its profits or losses and holds
an effective business license for enterprise legal person;


(2) Party A is a Company that have the right and ability to develop,
construct, operate and manage Jinlong Highway in accordance with the laws
in the People's Republic of China and have sufficient right and ability to
conclude this Cooperative Contract with Party B and fulfill all the
provisions stipulated in the Cooperative Contract;


(3) Pursuant to the laws in the People's Republic of China and the
authorization from the relevant government departments, Party A shall have
the exclusive operating right on Jinlong Highway at least for 30 years upon
the effective day of this Cooperative Contract. Party A shall have the
right to use the above exclusive operating right as the capital injected
into the Cooperative Company.


(4) There is no mortgage or in any other forms of pledge on the exclusive
operating right of the road section of initial investment of Jinlong
Highway which is contributed by Party A as capital;


(5) A necessary feasibility study for the reconfiguration and management of
the road sections of Jinlong Highway have been proceeded and all the
approval documents from the government as required have been received.
Party A shall provide Party B with all valid documents of the aforesaid
information before the signing of this Cooperative Contract. Party A shall
be responsible for handling all the applications for approval and
registrations (including but not limited to the procedures proceeded in the
department of foreign exchange management) in order to make this
Cooperative Company valid.


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approval documents from the government as required have been received.
Party A shall provide Party B with all valid documents of the aforesaid
information before the signing of this Cooperative Contract. Party A shall
be responsible for handling all the applications for approval and
registrations (including but not limited to the procedures proceeded in the
department of foreign exchange management) in order to make this
Cooperative Company valid.


CHAPTER 9 BOARD OF DIRECTORS


9.1 The date of registration of the Cooperative Company shall be the date of
the establishment of the Board of Directors of the Cooperative Company.


9.2 The Board of Directors shall be the highest authority of the Cooperative
Company. it shall have the following rights and authority:


(1) To determine the operation and investment plans;


(2) to determine the annual financial budget and accounting proposal;


(3) to determine the increase of the registered capital;


(4) to determine the merge, subdivision, change of the form of the
Coopertive Company and dissolution


(5) to determine the establishment of internal management office;


(6) to employ or dismiss the general manager, deputy general manager and
chief accountant and according to the nomination of the ...