EXHIBIT 10.12
PROJECT CONSTRUCTION CONTRACT
(GF-91-0201)
(Document Stamp No. 7, Shandong Provincial Administration
of Industry and Commerce)
Drafted by:
State Administration of Industry and Commerce
and
Ministry of Construction of the People's Republic of China
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PROJECT CONSTRUCTION CONTRACT
AGREEMENT PROVISIONS
Party A: Weifang Fuhua Amusement Park Co., Ltd.
Party B: Construction Company No. 1 of Weifang Changda Construction (Group)
General Co.
In accordance with the principles of the Economic Contract Law of the People's
Republic of China (the "PRC") and the Construction and Installation Project
Contracting Ordinance, and in the light of the specific situation of this
project, the two parties hereby reach the following agreement.
ARTICLE 1. OVERVIEW OF THE PROJECT.
1.1. Name of project: Fuhua Indoor Water Park
Locality of project: The Water Palace at Fuhua Amusement Park
Project items: Civil engineering and steel frames
Scope of contract: Same as above (based on design drawing)
1.2. Starting date: Oct. 31, 2000.
Completion date: Apr. 30, 2001.
Total calendar days: 180 days.
1.3. Grade of quality: Excellent.
1.4. Price under this Contract: Total construction costs of 33,500,000 RMB for
labor and materials (in case of a budget overrun, price shall be based on
budget).
ARTICLE 2. CONTRACT DOCUMENTS AND PRIORITY OF INTERPRETATION: "Contract
Conditions" shall apply.
ARTICLE 3. LANGUAGE, STANDARDS, AND GOVERNING LAWS OF THE CONTRACT DOCUMENTS.
3.1. Contract language: Chinese.
3.2. Applicable laws: the Commercial Contract Law, Construction and
Installation Project Contracting Ordinance and other relevant
regulations.
3.3. Applicable standards and criterion: PRC Standards for Quality Inspection
and Rating of Construction and Installation Projects.
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ARTICLE 4. DRAWINGS.
4.1. Date on which drawings to be supplied: By Oct. 20, 2000.
4.2. Number of sets of drawings to be supplied: 3 sets.
4.3. Special confidentiality requirements for drawings and expense: not
stipulated in the agreement.
ARTICLE 5. PARTY A'S FIELD REPRESENTATIVE.
5.1. List of Party A's field representative and appointed persons:
5.2. Name of the chief supervisory engineer performing external supervision
and the scope of his authority (if applicable):
ARTICLE 6. PARTY B'S FIELD REPRESENTATIVE.
ARTICLE 7. PARTY A'S WORK RESPONSIBILITIES
7.1. Requirements with regard to conditions of Construction Site for start of
work and completion time: by Oct. 20, 2000.
7.2. Requirements with regard to time and location for laying water, electric
and telecommunication lines, etc. at Construction Site and for supplying
such services: by Oct. 20, 2000, to ensure that construction needs at
Construction Site are met.
7.3. Date on which the main thoroughfares within the construction site join
the public roads and the start and end points of such thoroughfares:
7.4. Time frame for supply information on project geology and underground
pipelines:
7.5. Names of certificates and approvals required and time frame for acquiring
such certificates:
7.6. Filing and inspection requirements with regard to locations of benchmarks
and control coordinates:
7.7. Time frame for joint examination of drawings and submission of design: by
Oct. 20, 2000
7.8. Requirements with regard to protecting buildings around Construction Site
and underground pipelines: "Contract Conditions" shall apply.
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ARTICLE 8. PARTY B'S WORK RESPONSIBILITIES
8.1. Name, completion time and requirements with regard to construction
drawings and matching designs: not stipulated in the agreement.
8.2. Names, time frame and number of copies of plans and statements that are
to be submitted:
8.3. Construction safety requirements: "Contract Conditions" shall apply.
8.4. Requirements with regard to supplying office and living facilities to
Party A's representative: not stipulated in the agreement
8.5. Requirements with regard to traffic and noise control at Construction
Site: "Contract Conditions" shall apply.
8.6. Requirements with regard to protecting completed product: Dependent upon
construction needs, protection costs for finished product shall be based
on regulations. With regard to other matters, "Contract Conditions" shall
apply.
8.7. Requirements with regard to protecting buildings and underground pipes
around Construction Site: "Contract Conditions" shall apply.
8.8. Requirements with regard to keeping Construction Site tidy and sanitary:
Materials, tools and rubbish shall be placed according to the layout
chart; construction shall be organized according to the Standards for
Inspection of Construction Sites established by the provincial
Construction Administration; Site shall be cleaned before the project is
delivered, according to the relevant standards established by the
authorities.
ARTICLE 9. PROGRESS SCHEDULES
9.1. Date by which Party B is to submit the organizational design of the
construction (or construction plan) and the progress schedule:
9.2. Date by which Party A's representative is to present its approval: within
5 days of receipt.
ARTICLE 10. POSTPONEMENT OF THE STARTING DATE: "Contract Conditions" shall
apply.
ARTICLE 11. SUSPENSION OF CONSTRUCTION: Same as above.
ARTICLE 12. DELAY IN CONSTRUCTION: Same as above.
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ARTICLE 13. COMPLETION AHEAD OF THE SCHEDULE: Same as above.
ARTICLE 14. INSPECTION AND REWORKING: Same as above.
ARTICLE 15. LEVELS OF THE PROJECT QUALITY: excellent.
15.1. The financial expenditures for meeting required levels of project
quality: not stipulated in the agreement.
15.2. Name of the department to perform the quality assessment: Quality
Inspection Station, Weifang City.
ARTICLE 16. CONCEALED WORK AND MID-POINT ACCEPTANCE CHECK.
16.1. Sections and time for mid-point acceptance: "Contract Conditions" shall
apply.
ARTICLE 17. TEST RUN.
ARTICLE 18. ACCEPTANCE CHECK AND RE-INSPECTION.
ARTICLE 19. CONTRACT COST AND ITS ADJUSTMENT.
19.1. Conditions for adjustment: "Contract Conditions" shall apply.
19.2. Methods of adjustment: "Contract Conditions" shall apply.
ARTICLE 20. ADVANCE PROJECT PAYMENT.
20.1. Total amount of advance project payment: see article 42.
20.2. Time frame and percentages for advance payment: see article 42.
20.3. Time frame and percentages for deduction: relevant rules established by
the authorities shall apply.
20.4. Party A's default liability for not paying on schedule: "Contract
Conditions" shall apply.
ARTICLE 21. VERIFICATION OF THE PROJECT WORK AMOUNT.
21.1. Time frame and requirements with regard to submission by Party B of
report on project work amount:
Submit current month's budget and next month's plan by the 25th of the current
month, one copy each.
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ARTICLE 22. PROJECT PAYMENT.
22.1. Project payment method: see article 42.
22.2. Project payment amounts and dates:
22.3. Party A's default liability: "Contract Conditions" shall apply.
ARTICLE 23. SUPPLY OF MATERIAL AND EQUIPMENT BY PARTY A.
23.1. Requirements with regard to Party A supplying material and equipment (see
attached list):
ARTICLE 24. PURCHASE OF MATERIAL AND EQUIPMENT BY PARTY B: Both Parties
shall view the samples and decide on the sources and prices of the
material and equipment. The portion of the prices that is in excess
of the budget shall be paid according to the actual price.
ARTICLE 25. DESIGN CHANGES: "Contract Conditions" shall apply.
ARTICLE 26. CHANGING THE CONTRACT COST: "Contract Conditions" shall apply.
ARTICLE 27. PROJECT COMPLETION ACCEPTANCE.
27.1. Date by which Party B is to submit the completion documents and the
acceptance check report: 10 days before acceptance check.
27.2. Date by which Party B is to submit completion drawings and number of
copies of such drawings to be submitted: "Contract Conditions" shall
apply.
ARTICLE 28. SETTLEMENT UPON COMPLETION.
28.1. Settlement method: construction drawing budget plus certification.
28.2. Date by which Party B is to submit settlement report: within 10 days
after completion.
28.3. Date by which Party A is to approve the settlement report: within 40 days
after receipt.
28.4. Date by which Party A is to notify the handling bank of fund allocation:
see Article 42.
28.5. Party A's default liability: "Contract Conditions" shall apply.
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ARTICLE 29. WARRANTY.
29.1. Items and scope of the warranty: Xxxxxxxxxx Xx.00 of the Ministry of
Construction (1993) shall apply.
29.2. Warranty period: Same as above.
29.3. Warranty amount and method of payment: Same as above.
29.4. Rate of interest on warrant amount: Same as above.
ARTICLE 30. DISPUTES
30.1. Procedures for settling disputes: negotiation, arbitration.
30.2. Resolution of disputes: Article 30.3 of "Contract Conditions" shall
apply.
ARTICLE 31. BREACH OF CONTRACT.
31.1. Handling of contract breach: "Contract Conditions" shall apply.
31.2. Amount of default penalty: to be calculated according to the losses
actually incurred
31.3. Method of calculating the losses: "Contract Conditions" shall apply.
31.4. Interest rate on amount overdue from Party A:
ARTICLE 32. CLAIMS: "Contract Conditions" shall apply.
ARTICLE 33. SAFETY IN CONSTRUCTION: "Contract Conditions" shall apply.
ARTICLE 34. PATENT TECHNOLOGY, SPECIAL PROCESSES, AND RATIONALIZATION
PROPOSALS: "Contract Conditions" shall apply.
ARTICLE 35. UNDERGROUND OBSTACLES AND CULTURAL RELICS.
ARTICLE 36. SUBCONTRACTING THE PROJECT.
36.1. Subcontractors and subcontracted items: not accepted.
36.2. Method of settling subcontract cost: not accepted.
ARTICLE 37. FORCE MAJEURE.
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37.1. Criteria for recognizing natural calamities as force majeure: "Contract
Conditions" shall apply in the case of the following natural calamities:
earthquakes above 6 on the Xxxxxxx Scale, lightning strikes, winds above
10 on the wind scale, rainfalls of 7,200 mm per day [sic].
ARTICLE 38. INSURANCE: not accepted.
ARTICLE 39. CANCELLATION OR SUSPENSION OF THE PROJECT: Contract Conditions"
shall apply.
ARTICLE 40. VALIDITY AND TERMINATION OF THE CONTRACT: Effective upon signing by
both Parties; termination shall be in compliance with "Contract Conditions".
40.1 Date on which contract takes effect:
ARTICLE 41. COPIES OF THE CONTRACT: 10 copies
41.1. Number of Contract duplicates: 8 duplicates
41.2. Obligation to distribute Contract duplicates:
41.3. Expense for producing the Contract: (illegible)
ARTICLE 42. OTHER:
42.1. Amount of advance contract payment and method of payment: from the time
when this Contract is signed to the end of the year, advance payments
shall equal 30% (approximately 9,000,000 RMB). Subsequently, payment
is to be made according to construction progress. After the acceptance of
the completed project, which shall meet established standards, payment
shall total 75% of the final amount. The balance shall be paid at one
time upon expiration of the warranty period.
42.2. Party A shall be responsible for providing sources of water and
electricity needed by the construction.
42.3. At the request of Party A, Party B agrees to follow grade 3 state-run
enterprise standards for pricing as a discount at the time of completion
settlement.
42.4. This project shall not be subcontracted. Party A shall have the right to
impose a financial penalty upon Party B or terminate this Contract if
Party A witnesses the presence of construction personnel at the
construction site who are other than those from Wei Changda.
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This Contract is made on Oct.7, 2000
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Contract-letting party (seal): Weifang Contractor (seal): Special Seal for
Fuhua Amusement Park Co., Ltd. Economic Contracts, Construction
Address: Company No. 1 of Weifang Changda
Legal representative: Construction (Group) General Co.
(Seal:) Mingcheng Ma Address: 52 (Illegible) Tel:
Proxy: 0000000
Telephone:
Cable: Address:
Account-holding bank: Legal representative:
Account number: (Illegible), Xxxx Xx
Postal Code: Proxy:
Telephone:
Cable:
Account-holding bank:
Account number:
Postal Code:
--------------------------------------------------------------------------------
Comments by Construction Comments by Bank of Certification Authority:
Commission: Construction Certification Number:
Certified by:
Date: Date: Date:
------------------------------ ----------------------- ------------------------
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CONDITIONS OF THE PROJECT CONSTRUCTION CONTRACT
SECTION I DEFINITION OF TERMS AND CONTRACT DOCUMENTS
ARTICLE 1 DEFINITION OF TERMS. The Project Construction Contract Documents
consist of the Conditions of the Project Construction Contract ("Contract
Conditions") and the Agreement Provisions of the Project Construction Contract
("Agreement Provisions"). Unless otherwise stated in the Agreement Provisions,
the terms used in the Contract Documents shall have the definitions listed
herein:
1.1 Contract-letting Party ("Party A"): The qualified contract-letting entity
having the ability to make payments of the project costs, as specified in the
Agreement Provisions.
1.2 Party A's Field Representative ("Party A's Representative"): The
representative appointed by Party A in the Agreement Provisions.
1.3 Subcontractor ("Party B"): The qualified contractor accepted by the
contract-letting party, as specified in the Agreement Provisions.
1.4 Party B's Field Representative ("Party B's Representative"): The
representative appointed by Party B in the Agreement Provisions.
1.5 External Supervisor: A legally qualified project supervision agency or
individual entrusted by Party A with the supervision of the project.
1.6 Chief Supervisory Engineer: The person appointed by the project supervision
unit to be in charge of the supervision of the project.
1.7 Design Firm: The design firm appointed by Party A and having the required
qualifications.
1.8 Project Cost Control Offices: Relevant departments under the State Council,
competent administrative offices for construction at all levels of authority, or
their authorized project cost control offices.
1.9 Project Quality Supervision Offices: Relevant departments under the State
Council, competent administrative offices for construction at all levels of
authority, or their authorized project quality supervision offices.
1.10 Project: The permanent project whose details are specified in the Agreement
Provisions.
1.11 Contract Cost: The total cost calculated according to the various rates
specified in
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relevant rules or the Agreement Provisions and paid to Party B for the
completion of the project pursuant to the requirements of the Contract.
1.12 Financial Expenditures: The contract cost that is incurred during
construction and that, having been verified by Party A, shall be paid through an
expanded budget.
1.13 Fees: The expenses to be paid directly by Party A in addition to the
contract cost and the expenses to be borne by Party B.
1.14 Term of Construction: The contract construction period as specified in the
Agreement Provisions.
1.15 Starting Date of the Construction: The starting date of the project
construction as specified in the Agreement Provisions.
1.16 Completion Date of the Construction: The completion date of the project
construction as specified in the Agreement Provisions.
1.17 Drawings: All the drawings provided by Party A or by Party B with the
approval of Party A's Representative for Party B's use in the construction
(including supplemental instructions and relevant information).
1.18 Construction Site: The site approved by Party A and defined in the
organizational design of the construction or the general site plan of the
construction.
1.19 Written Forms: All handwritten, typed, reproduced, or printed notices,
letters of appointment, powers of attorney, certificates, visas, memoranda,
minutes of meetings, correspondence, and verified telegrams and facsimiles that
occur in the performance of the Contract.
1.20 Force Majeure: Wars, insurrections, explosions caused by falling aerial
objects or other causes out of Party A's control, fires, or natural calamities
such as strong winds, rain, snow or earthquakes of a magnitude over the levels
specified in the Agreement Provisions that cause damage to the project.
1.21 Agreement Provisions: The written agreement signed by Party A and Party B
after consultation with regard to the particular project.
ARTICLE 2 CONTRACT DOCUMENTS AND PRIORITY OF INTERPRETATION. The Contract
Documents complement each other with regard to the interpretation and
explanation of their contents. Unless otherwise stated in the Contract, the
components of the Contract Documents are listed below in the order of their
priority in interpretation:
2.1 The Agreement Provisions;
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2.2 The Conditions of the Contract;
2.3 Memoranda and agreements of consultations over, and modifications to, the
definitions of the Parties' rights and obligations;
2.4 Notices of award of contract, tender documents, and bid specifications
relevant to the project bidding;
2.5 Project work amount lists or other relevant technical information and
technical requirements used to determine the project costs, such as project
budgets, drawings, standards, and specifications.
Any ambiguity and inconsistency among the Contract Documents shall be resolved
by the Parties through consultation provided that the progress of the project
not be affected (for projects under the supervision of an External Supervisor,
the Chief Supervisory Engineer should first make an effort at interpretation);
when the Parties cannot reach an agreement, the issue shall be resolved
according to the procedure specified in Article 30.
ARTICLE 3 LANGUAGE, STANDARDS, AND GOVERNING LAWS OF THE CONTRACT DOCUMENTS. The
Contract Documents are written and shall be interpreted and explained in Chinese
or the language of the minority nationality specified in the Agreement
Provisions.
The governing laws applicable to the Contract Documents include national laws
and regulations, the departmental rules stipulated in the Agreement Provisions,
or the local regulations at the project site.
National standards and codes as specified in the Agreement Provisions shall be
followed in the course of the construction. When no applicable national
standards or codes exist, the industry standards and codes specified in the
Agreement Provisions or local standards and codes at the project site shall be
followed. Party A shall provide to Party B, within the time frame specified in
the Agreement Provisions, two identical copies of the stipulated standards and
codes.
When no applicable standards or codes exist in China, Party B shall, pursuant to
the time frame and requirements specified in the Agreement Provisions, propose
construction processes, which shall be implemented by Party B after obtaining
the approval by Party A's Representative. If Party A wants to use foreign
standards and codes, Party A shall provide the Chinese translations of said
standards and codes. Party A shall bear all the expenses arising from
purchasing, translating, and establishing said standards and codes.
ARTICLE 4 DRAWINGS. Party A shall, in accordance with the dates and quantities
stipulated in the Agreement Provisions, provide to Party B a complete set of
construction drawings 15 days prior to the starting date of the project
construction, and Party B shall comply with the confidentiality requirements
regarding the drawings as specified in the Agreement Provisions. If additional
confidentiality measures are needed, Party A shall
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bear all the expenses arising therefrom. If Party B needs additional copies of
the drawings, Party A shall make photocopies thereof and Party B shall bear the
expenses of the photocopying.
SECTION II GENERAL RESPONSIBILITIES OF THE PARTIES
ARTICLE 5 PARTY A'S REPRESENTATIVE. Party A shall appoint a field
representative, who shall, in accordance with the requirements below, exercise
the powers conferred by the Contract and perform the following duties specified
in the Contract:
5.1 Party A's Representative can appoint managers to assume part of its powers
and duties and can revoke such appointments at any time. Party A shall notify
Party B of any such appointment or revocation 5 days in advance.
5.2 Any instructions and notices sent by Party A's Representative to Party B's
Representative shall be in writing and signed by Party A's Representative; they
will not become effective until Party B's Representative has signed and dated
their receipt slips. When necessary, Party A's Representative may issue oral
instructions to be followed by a written confirmation within 48 hours, and Party
B shall implement such instructions from Party A's Representative. In the event
that Party A's Representative fails to send a written confirmation on time,
Party B shall submit a request for written confirmation within 3 days after
Party A's Representative issues the oral instructions. If Party A's
Representative does not respond within 3 days after Party B submits the request
for written confirmation, the failure to respond shall be construed as
confirmation of Party B's request. If Party B thinks Party A's Representative's
instructions are unreasonable, Party B shall submit a written statement within
24 hours after receiving said instructions. Party A's Representative shall
notify Party B, in writing and within 24 hours after receiving Party B's
statement, of any modification to the instructions or decisions to continue
implementing the original instructions. In emergencies when Party A's
Representative issues instructions which require immediate implementation by
Party B, or when Party A's Representative decides to go ahead with instructions
in spite of Party B's objections, Party B shall implement said instructions.
Party A shall be responsible for all expenses arising from incorrect
instructions as well as for the losses suffered by Party B, and the term of the
project shall be extended by the length of the delay thus caused.
5.3 Party A's Representative shall, pursuant to the Contract, promptly provide
to Party B the required instructions, approvals, and drawings and shall perform
other stipulated obligations; otherwise, Party B shall, within 24 hours after
the specified time, notify Party A's Representative of its specific requests,
reasons for such requests, and possible results of any delay in delivery. In the
event that Party A's Representative fails to respond within 48 hours after
receiving Party B's notice, Party A shall be responsible for the financial
expenditures incurred and compensate for Party B's losses, and the term of the
project shall be extended by the length of the delay thus caused.
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For projects under the supervision of an External Supervisor, the Chief
Supervisory Engineer appointed by Party A shall, pursuant to the Agreement
Provisions, exercise in full or in part the powers of Party A's Representative
specified in the Contract and perform the duties of Party A's Representative,
but shall not have the power to release Party B of its obligations specified in
the Contract.
If Party A's Representative or the Chief Supervisory Engineer is replaced, Party
A shall notify Party B of such replacement 7 days in advance, and the successor
shall continue to perform his predecessor's responsibilities (the obligations
and commitments within the limits of his authority as specified in the Contract
Documents).
ARTICLE 6 PARTY B'S FIELD REPRESENTATIVE. Party B shall appoint a field
representative, who shall, in accordance with the requirements below, exercise
the powers conferred by the Contract and perform the duties specified in the
Contract:
6.1 Any requests, petitions, and notices sent by Party B to Party A's
Representative shall be in writing and signed by Party B's Representative; they
will not become effective until Party A's Representative has signed and dated
their receipt slips.
6.2 Party B's Representative shall organize the construction work according to
the organizational design of the construction (or the construction plan)
approved by Party A's Representative and the instructions and requirements
issued by Party A's Representative pursuant to the Contract. In emergencies when
communications with Party A's Representative cannot be effected, Party B's
Representative may take emergency measures to protect the project and the safety
of the workers and the properties, and shall submit a report to Party A's
Representative within 24 hours after taking the emergency measures. If the
responsibility lies with Party A, Party A shall bear the financial expenditures
incurred and the term of the project shall be extended by the length of the
delay thus caused. If the responsibility lies with Party B, Party B shall bear
the expenses.
If Party B's Representative is replaced, Party B shall notify Party A of such
replacement 7 days in advance, and the successor shall continue to perform his
predecessor's responsibilities (the obligations and commitments within the
limits of his authority as specified in the Contract Documents).
ARTICLE 7 PARTY A'S WORK RESPONSIBILITIES. Party A shall, pursuant to the time
frame and requirements specified in the Agreement Provisions, complete the
following work all at once or in stages:
7.1 Acquisition of land, compensation for trees uprooted, removal of houses and
relocation of their occupants, and removal of surface, aerial and underground
obstacles to make the site ready for construction. Party A shall remain
responsible for solving any unsolved problems in these respects after
construction begins.
7.2 Connection of water pipes, electric power lines, and telecommunications
lines
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from outside the construction site to the locations specified in the Agreement
Provisions. Also responsible for ensuring that such needs are met during
construction.
7.3 Building roads to connect the construction site to local highways and
thoroughfares within the construction site to meet the transportation needs of
construction and to ensure the smooth flow of traffic during construction.
7.4 Providing materials to Party B on project geology and on the underground
pipes and lines at the construction site to ensure the accuracy of data.
7.5 Obtaining all certificates and licenses needed for construction (excluding
certificates with regard to Party B's qualifications) as well as submitting
applications for temporary land use, easement on roads, and special railway
sidelines.
7.6 Providing to Party B, in writing, the information on benchmarks and
coordinate control points, and conducting field cross-checking.
7.7 Arranging a joint review of the drawings by Party B and the Design Firm, and
explaining the design rationale to Party B.
7.8 Coordinating the protection measures for the underground lines and surface
buildings and structures around the construction site and paying the expenses
thus incurred.
If Party A fails to complete the above-described work pursuant to the Contract
and thus causes delay in the construction, Party A shall be responsible for the
financial expenditures incurred and shall compensate Party B for its losses, and
the term of the project construction shall be extended by the length of the
delay thus caused.
ARTICLE 8 PARTY B'S WORK RESPONSIBILITIES. Party B shall, pursuant to the time
frame and requirements specified in the Agreement Provisions, complete the
following work:
8.1 Completing the construction drawing design or supplemental engineering
designs, subject to the restrictions in its design license and according to
Party A's Representative's requirements and, after obtaining Party A's approval,
making use of said designs.
8.2 Providing to Party A's Representative the annual, quarterly, and monthly
project progress schedules as well as relevant progress statistical reports and
project accident reports.
8.3 Providing and maintaining lighting for daylight construction work as well as
custodian service, fences, and security service at the site, as is necessary for
the project. Should any damage to the project, properties, or human life occur
due to Party B's failure to perform its obligations as listed above, Party B
shall be responsible for the resulting expenses.
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8.4 Providing, in accordance with the quantities and requirements set forth in
the Agreement Provisions, to Party A's Representative buildings and facilities
for business and private use. The expenses thus incurred shall be borne by Party
A.
8.5 Compliance with the rules and regulations set forth by the local government
and relevant departments regarding the traffic and noise control at the
construction site, and, after obtaining Party A's approval, performing the
relevant paperwork. Party A shall bear the expenses thus incurred, except for
any penalty for which Party B is responsible.
8.6 Protection, in accordance with the Agreement Provisions, of completed work
in the completed project prior to delivery. If any damage occurs during the
protection period, Party B shall be responsible for any repair expenses. If
Party A requires Party B to take any special protection measures regarding any
project sections, said sections and the related financial expenditures shall be
specified in the Agreement Provisions. If any damage occurs during use by Party
A prior to the delivery date, Party A shall be responsible for repair expenses.
8.7 Protection of lines under the construction site and adjacent buildings and
structures pursuant to the Contract.
8.8 Ensuring the cleanliness of the construction site pursuant to applicable
regulations, cleaning the site before delivering the project as specified in the
Contract Documents, and bearing the losses and penalty resulting from any
non-compliance (excluding any losses or penalty resulting from non-compliance
with regulations issued after the signing of the Contract or from causes not
attributable to Party B).
If Party B fails to complete all the work specified above, thus causing
construction delays and project losses, Party B shall compensate Party A for the
latter's losses.
SECTION III ORGANIZATIONAL DESIGN AND TERM OF THE CONSTRUCTION
ARTICLE 9 PROGRESS SCHEDULES. Party B shall submit, within the time frame
specified in the Agreement Provisions, the organizational design of the
construction (or construction plan) and the progress schedule to Party A's
Representative. Party A's Representative shall present its approval of, or
comments on, modification to said design and schedule within the time frame
specified in the Agreement Provisions. Any failure to approve or modify on time
may be construed as approval of said organizational design of the construction
(or construction plan) and progress schedule.
Party B shall organize the construction work pursuant to the approved schedule,
and shall allow Party A's Representative to inspect and monitor the progress.
When the actual progress of the project falls behind schedule, Party B shall, as
requested by Party A's
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Representative, submit a proposal of improvement measures, and, after obtaining
Party A's Representative's approval, shall implement said measures.
ARTICLE 10 POSTPONEMENT OF THE STARTING DATE. Party B shall start the
construction on the starting date as specified in the Agreement Provisions. If
the construction cannot start on the specified date, Party B shall submit a
request for postponement and state the reasons to Party A's Representative 5
days prior to the starting date specified in the Agreement Provisions. Party A's
Representative shall respond to Party B's request within 3 days. If Party A's
Representative approves the postponement or if it fails to respond within 3 days
(which failure to responde may be construed as approval of Party B's request),
the term of the project shall be extended by the length of the postponement. If
Party A's Representative does not approve the postponement or if Party B does
not submit its request for postponement within the prescribed time frame, the
completion date of the construction shall not be extended.
Party A may postpone the starting date of the construction if it notifies Party
B in writing and obtains Party B's approval, but Party A shall be responsible
for the financial expenditures thus incurred to Party B and the term of the
project shall be extended accordingly.
ARTICLE 11 SUSPENSION OF THE CONSTRUCTION. When necessary, Party A's
Representative may request that Party B suspend the construction and shall
provide further instructions within 48 hours after requesting the suspension.
Party B shall suspend the construction pursuant to Party A's request, protect
the completed sections of the project, and, after implementing Party A's
Representative's further instructions, request resumption of construction. Party
B shall then resume construction after obtaining Party A's Representative's
approval. If Party A's Representative fails to provide further instructions or
fails to respond within 48 hours after receiving Party B's request for
resumption of construction, Party B may resume construction without further
delay. If the responsibility for the suspension lies with Party A, Party A shall
bear the financial expenditures thus incurred and the term of the project shall
be extended accordingly. If the responsibility for the suspension lies with
Party B, Party B shall bear the expenses thus incurred. If construction cannot
resume due to Party A's Representative's failure to respond in time, Party B may
assume that Party A has cancelled the Contract in full or in part and therefore
bears responsibility for breach of contract.
ARTICLE 12 DELAY IN THE CONSTRUCTION. The term of construction shall be extended
if a delay results from the following causes, which shall have been verified by
Party A's Representative:
12.1 Changes in the project work amount and the design.
12.2 Over 8 hours of aggregate downtime within a week caused by interruption in
water, electricity or gas supply interruption due to no fault of Party B.
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12.3 Force majeure.
12.4 Other causes for an extension of the project as specified in the Contract
or approved by Party A's Representative.
Party B shall submit to Party A's Representative a report on the extent of the
delay and the financial expenditures thus incurred within 5 days after the
occurrence of any of the causes listed above. Party A's Representative shall
confirm and respond within 5 days after receiving said report. Any failure to
respond within said time frame may be construed by Party B as approval of its
request for the extension.
If the project cannot be completed pursuant to the specified construction term
for reasons other than those listed above, Party B shall be responsible for
breach of contract.
ARTICLE 13 COMPLETION AHEAD OF SCHEDULE. If it is necessary to move forward the
completion date, the Parties shall, after having reached an understanding
through consultations, sign a pre-schedule completion agreement. Party B shall
modify the construction schedule pursuant to the new agreement and submit it to
Party A. Party A shall approve the revised schedule within 5 days after
receiving it and provide support to facilitate the pre-schedule completion. The
pre-schedule completion agreement shall include:
13.1 The new completion time.
13.2 Party B's measures to speed up the completion.
13.3 Party A's support measures for speeding up the completion.
13.4 The financial expenditures and the responsibilities for the payment
resulting from the effort to speed up completion.
13.5 The sharing of the benefits (if any) of the pre-schedule completion.
SECTION IV QUALITY CONTROL AND ACCEPTANCE CHECK
ARTICLE 14 INSPECTION AND REWORKING. Party B shall conscientiously follow
relevant standards, specifications, and design requirements as well as
instructions issued by Party A's Representative pursuant to the Contract, shall
allow Party A's Representative and its appointed inspectors to conduct
inspections of the project, and shall provide support to facilitate the
inspections. Party B shall comply with any requests for reworking and
modification made by Party A's Representative and its appointed inspectors and
shall bear the cost of the reworking and modification necessitated by its own
faults. Party A shall be responsible for any financial expenditures resulting
from its incorrect modification requests or from other causes for which Party B
is not responsible.
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If, after the project passes the inspections specified herein, additional
quality problems occur due to Party B's fault, Party B shall be responsible for
the correction of the problems and the expenses thus incurred and shall
compensate Party A for its losses, and the term of construction shall be
extended accordingly.
Said inspections shall not affect the normal progress of construction. If they
affect the progress of construction, and if construction does not pass the
inspections, the expenses arising out of the interruption to the normal progress
of construction shall be borne by Party B. In all other cases, expenses arising
out of the interruption shall be borne by Party A, and the term of construction
shall be extended accordingly.
ARTICLE 15 LEVELS OF PROJECT QUALITY. The quality of the project shall meet the
standards of quality inspection at the national or industry level. If Party A
requests that the project, in full or in part, meet the premium quality level,
Party A shall be responsible for any additional financial expenditures thus
incurred and, if such requests affect the progress of construction, the term of
the project shall be extended accordingly.
If Party A's Representative finds any part of the project below the quality
level specified in the Contract, Party A's Representative may request reworking
and Party B shall perform the reworking, within the time frame requested by
Party A, until the specified requirements are met. If the non-compliance is due
to Party B's fault, Party B shall be responsible for the cost of the reworking
and the term of construction shall not be extended. If the specified
requirements are not met even after reworking, Party B shall be responsible for
breach of contract. If the non-compliance is due to Party A's fault, Party A
shall be responsible for the financial expenditures associated with the
reworking and the term of construction shall be extended accordingly.
Any dispute over the quality of the project between the Parties shall be
submitted for arbitration by quality supervision offices specified in the
Agreement Provisions. The expenses of the arbitration and the resultant losses
shall be borne by the party found to be at fault.
ARTICLE 16 CONCEALED WORKS AND MID-POINT ACCEPTANCE CHECKS. When work is to be
covered, or when a mid-point acceptance check is required according to the
Agreement Provisions, Party B shall, after successfully performing its own
inspections, notify Party A's Representative 48 hours prior to the specified
time for the concealed work or mid-point acceptance inspection. The notice shall
include records of Party B's own inspections as well as the scope, time and
place of the concealed work and mid-point acceptance inspections. Party B shall
prepare the acceptance check records. If the work passes the acceptance check,
Party A's Representative shall sign the acceptance check forms before the work
can be concealed and construction be resumed. If the work fails the acceptance
check, Party B shall correct the problems within the specified time frame and
prepare for another acceptance check.
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If the project quality meets the specifications but Party A's Representative
fails to sign the acceptance check forms within 24 hours after the inspection,
such a situation may be construed as Party A's Representative's approval of the
inspection and Party B may conceal the work or resume the construction.
ARTICLE 17 TEST RUN. If installed equipment meets single-unit no-load test run
requirements, Party B shall arrange for the test run and notify Party A's
Representative 48 hours prior to the test run. The notice shall include the
scope, time, and place of the test run. Party B shall prepare the test run
record forms. Party A shall provide support needed for the test run. After the
test run is successfully performed, Party A's Representative shall sign the test
run record forms.
If installed equipment meets linked-unit no-load test run requirements, Party A
shall arrange for the test run and notify Party B 48 hours prior to the test
run. The notice shall include the scope, time, and place of the test run as well
as requirements for the preparation work to be performed by Party B. Party B
shall complete the required preparation work and prepare the test run forms.
After the test run is successfully performed, both Parties shall sign the test
run forms before proceeding to project completion and acceptance.
If design defects result in failure of the test run to meet acceptance
requirements, Party A shall modify the design and Party B shall re-install the
equipment pursuant to the modified design. Party A shall be responsible for the
expenses of modifying the design as well as of removing and reinstalling the
equipment. The term of construction shall be extended accordingly.
If manufacturing defects in the equipment result in failure of the test run to
meet acceptance requirements, the party that purchased the equipment shall be
responsible for the repurchase or repair of the equipment. Party B shall be
responsible for removing and reinstalling the equipment. If the equipment was
purchased by Party B, Party B shall be responsible for the expenses of repairing
or repurchasing as well as of removing and reinstalling the equipment, and the
term of construction shall not be extended. If the equipment was purchased by
Party A, Party A shall be responsible for all the expenses listed above and the
term of construction shall be extended accordingly.
If the test run fails to meet acceptance requirements due to problems in Party
B's construction work, Party A's Representative shall present opinions on
modification within 24 hours after the test run. Party B shall complete the
modification and conduct the test run again. Party B shall be responsible for
the expenses of the modification and the re-run, and the term of construction
shall not be extended.
Party A shall bear the cost of the test run excluding the amount already
included in the contract cost or otherwise specified in the Agreement
Provisions.
If Party A's Representative does not present any modification opinions within
the specified time frame or does not sign the test run record forms after the
test run is successfully
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performed, the record forms shall automatically become valid 24 hours after the
test run, and Party B may resume the construction or perform project completion
procedures.
ARTICLE 18 ACCEPTANCE CHECK AND RE-INSPECTION. If Party A's Representative is
not able to participate in the acceptance check or the test run on time, Party
A's Representative shall submit to Party B, 24 hours prior to the start of the
acceptance check or the test run, a postponement request for a period not
exceeding two days. If Party A's Representative fails to submit a postponement
request within the time frame specified herein and fails to be present at the
acceptance check or the test run, Party B may arrange the acceptance check or
the test run on its own and Party A shall acknowledge the acceptance check
records or the test run records.
If Party A's Representative, no matter whether it has participated in the
acceptance check, requests a re-inspection of concealed work, Party B shall
uncover the work as requested and shall re-cover or repair the work after the
re-inspection. If the sections pass the re-inspection, Party A shall be
responsible for the financial expenditures thus incurred and compensate Party B
for its losses, and the term of construction shall be extended accordingly. If
the sections fail the re-inspection, Party B shall be responsible for the
expenses thus incurred and the term of construction shall be extended
accordingly.
SECTION V CONTRACT COST AND ITS PAYMENT
ARTICLE 19 CONTRACT COST AND ITS ADJUSTMENT. The contract cost is specified in
the Agreement Provisions and shall not be altered by either party. However, the
contract cost may be modified the Agreement Provisions stipulate otherwise or in
the event of one of the following circumstances:
19.1 Increase or decrease of the project work amount as verified by Party A's
Representative.
19.2 Design changes or project discussions as verified by Party A's
Representative.
19.3 Cost adjustments declared by Project Cost Control Offices.
19.4 Over 8 hours of aggregate downtime within a week caused by interruption to
the supply of water, electricity or gas due to no fault of Party B.
19.5 Other increases/decreases or adjustments specified in the Contract.
Party B shall, within 10 days after the occurrence of any of the aforementioned
circumstances, notify Party A's Representative in writing of the adjustment
amount and reasons thereof. Upon approval, Party A's representative shall notify
the account-holding bank and Party B. If Party A's Representative fails to
respond within 10 days after receiving Party B's notice, the absence of the
response may be construed as approval of the
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adjustment.
ARTICLE 20 ADVANCE PAYMENT OF THE PROJECT COST. Party A shall make an advance
payment of the project cost to Party B in the time frame and the amount
specified in the Agreement Provisions. After the starting date of the
construction, Party A shall receive repayment of the project cost in
installments in the time frame and the proportions specified in the Agreement
Provisions. If Party A fails to make the advance payment as specified in the
Agreement Provisions, Party B may send a request for advance payment notice to
Party A 10 days after the specified payment date. If Party A still fails to make
the requested advance payment after receiving Party B's notice, Party B may
suspend the construction 5 days after sending the notice. Party A shall pay
interest on the amount due (with the calculation of the interest starting from
the date advance payment became due) and be responsible breach of contract.
ARTICLE 21 VERIFICATION OF THE PROJECT WORK AMOUNT. Party B shall submit to
Party A's Representative, within the time frame specified in the Agreement
Provisions, a report on the amount of work completed so far. Party A's
Representative shall design drawings [sic] verify the amount of work completed
("amount calculation") within 3 days after receiving the report and shall notify
Party B 24 hours prior to performing the amount calculation. Party B shall
provide support for the amount calculation and appoint some staff to participate
in it. If, without due cause, Party B fails to participate in the amount
calculation, Party A's Representative may conduct it on its own and the result
of the calculation shall be deemed a valid basis for making payments of the
project cost. If Party A's Representative fails to conduct the amount
calculation within 3 days after receiving Party B's report, then, beginning on
day 4, the work amount listed in Party B's reports shall be deemed verified and
shall serve as the basis for making payments of the project cost. If Party A's
Representative fails to notify Party B within the specified time frame and thus
causes Party B to miss the amount calculation, the result of the calculation
shall be deemed invalid.
Party A's Representative shall not calculate the amount of work completed by
Party B in excess of the amount specified in the project drawings or the amount
of work involved in reworking necessitated by Party B's own problems.
ARTICLE 22 PAYMENT OF THE PROJECT COST. Party A shall, within the time frame and
in the manner specified in the Agreement Provisions and in accordance with the
amount of work verified by Party A's Representative, use the unit prices and
cost standards of the component items in the contract cost to calculate the
project cost and make payments therefor. If Party A fails to make any payment
within 10 days after Party A's Representative calculates the amount and signs,
Party B may send a request for payment notice to Party A. If Party A still fails
to make the requested payment after receiving Party B's notice, Party B may
suspend construction 5 days after sending the notice. Party A shall be
responsible for the breach of contract.
Party A may postpone its payment of the project cost if Party B agrees and signs
an
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agreement with Party A. Said agreement shall specify the new payment date and
Party A's responsibility to pay interest on the payable project cost with the
calculation of the interest starting on the 11th day after Party A's
Representative calculates the amount and signs.
SECTION VI SUPPLY OF MATERIAL AND EQUIPMENT
ARTICLE 23 PARTY A SUPPLYING MATERIAL AND EQUIPMENT. Party A shall, at the time
and place specified in the Agreement Provisions, supply the material and
equipment and their quality-compliance certificates to Party B pursuant to a
list of material and equipment types, specifications, amounts, unit prices and
quality levels included in the Agreement Provisions. Party A's Representative
shall deliver a notice to Party B 24 hours prior to the acceptance check on the
material and equipment supplied. Party B shall appoint some staff to participate
in the acceptance check. No matter whether Party B appoints staff to participate
in the acceptance check or not, Party B shall safeguard the material and
equipment after the acceptance check. Then, Party B shall be responsible for
paying compensation for any loss or damage, and Party A shall pay for storage.
If Party A fails to notify Party B of the acceptance check as required, Party B
shall not be responsible for safeguarding the material and equipment. Then,
Party A shall be responsible for any loss or damage thereof.
In the event that the material and equipment supplied by Party A do not match
the items on the list, the discrepancy shall be handled as described below.
23.1 If the unit prices of the material or equipment do not match the list,
Party A shall be responsible for any price difference.
23.2 If the types, specifications, or quality levels of the material or
equipment do not match the list, Party B may refuse to safeguard it and Party A
shall remove it from the construction site and purchase a replacement. If, upon
delivery of the material and equipment, it is impossible to open and check the
boxes, the Parties may check the quantity of the boxes. When opening the boxes,
Party B shall invite Party A to be present. If there is any shortage or the
quality levels or specifications do not match the list, Party A shall be
responsible for supply the missing items or for purchasing a replacement.
23.3 If the model numbers or specifications of the material supplied by Party A
do not match the list, Party B may effect adjustments or replacements and Party
A shall be responsible for the financial expenditures thus incurred.
23.4 If the delivery destination does not match the list, Party A shall be
responsible for moving the material or equipment to the delivery destination
specified on the list.
23.5 If the quantity supplied is less than that specified on the list, Party A
shall supply the missing items. If the quantity supplied is more than that
specified on the list, Party A shall be responsible for removing the excess
quantity from the construction site.
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23.6 If the delivery date is ahead of that specified on the list, Party A shall
be responsible for the storage fees thus incurred.
Party A shall be responsible for expenses arising from the aforementioned
circumstances or from a delivery date falling behind that specified on the list.
Should there be a delay in the delivery, the term of construction shall be
extended accordingly and Party A shall compensate Party B for its losses.
If any new instances of discrepancy with the specifications or quality levels on
the list are found even after the items have passed an acceptance check
conducted by Party B, Party A shall still be responsible for the financial
expenditures of repurchasing, removing and reinstalling and the term of
construction shall be extended accordingly.
ARTICLE 24 PARTY B PURCHASING MATERIAL AND EQUIPMENT. Party B shall purchase the
material and equipment needed for the project and supply their
quality-compliance certificates pursuant to the design and specification
requirements as specified in the Agreement Provisions. Party B shall notify
Party A's Representative of the acceptance check 24 hours prior to the delivery
of the material and equipment. Party A's Representative shall refuse to accept
any product that does not meet the design and specification requirements. Then,
Party B shall remove such product from the construction site by the time
specified by Party A, purchase a qualified product, and be responsible for the
expenses thus incurred. In such circumstances, the term of construction shall
not be extended. If Party A is not able to come to the acceptance check in time,
but later finds some material or equipment that does not meet the design or
specification requirements, Party B shall still be responsible for repairing,
removing, or repurchasing, shall bear the expenses thus incurred, and shall
compensate Party A for its losses. In such circumstances, the term of
construction shall be extended by the length of the delay.
Depending on the needs of the project and with the approval of Party A's
Representative, Party B may use substitute materials. If the use of substitute
materials is caused by Party A's problems, Party A shall be responsible for the
financial expenditures thus incurred. If it is caused by Party B's problems,
Party B shall be responsible for the expenses thus incurred.
SECTION VII DESIGN CHANGES
ARTICLE 25 DESIGN CHANGES. If Party B wants to make design changes, Party B must
obtain Party A's Representative's approval and Party A must the following
approvals:
1 If the changes exceed the standards and scope of the original design, Party
A's Representative must obtain the approval of the departments that previously
reviewed the original design in order to get appropriate additional investment
and supply of materials.
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2 Party A's Representative shall submit the changes to the original design
firm for review in order to obtain the relevant drawings and instructions.
If Party A makes changes to the original design during the course of the
construction, Party A shall, after obtaining the two aforementioned approvals,
notify Party B of the changes, and Party B gives notice that it is carrying out
the changes. Otherwise, Party B may refuse to make changes.
After consultation between the Parties over the changes, Party B shall make the
following changes pursuant to the requirements of Party A's Representative:
1 Increase or decrease the amount of the project work as specified in the
Contract.
2 Change the nature, quality, and specifications of the project.
3 Change the height scales, base lines, positions, and dimensions of some
sections.
4 Increase the amount of additional work needed for the project.
5 Change project-related construction schedules and priorities.
Party A shall be responsible for the financial expenditures arising from said
changes and for losses suffered by Party B, and the term of construction shall
be extended accordingly.
ARTICLE 26 CHANGING THE CONTRACT COST. When changes specified in Article 25
occur, Party B shall, after consultation with Party A, submit a request for
price changes based on the following methods and shall adjust the contract cost
and the completion date after obtaining Party A's Representative's approval:
26.1 If the Contract contains prices applicable to the revised project, use the
existing prices to calculate and adjust the contract cost.
26.2 If the Contract only contains prices similar to those for the changes,
calculate and adjust the contract cost on the basis of said prices.
26.3 If the Contract does not contain any similar or applicable prices, Party B
shall submit appropriate revised prices to Party A's Representative for
approval.
If Party A's Representative does not agree with Party B's revised price, Party
A's Representative shall notify Party B, within 10 days after Party B submits
the revised price, that the issue shall be submitted to relevant Project Cost
Control Offices for resolution (for projects under the supervision of an
External Supervisor, the chief supervisory engineer shall tentatively set the
price, and then the issue shall be submitted to the Project Cost Control Offices
for a decision). When the Parties still cannot reach an agreement after the
decision is made, the resolution procedure specified in Article 30 herein shall
be followed.
SECTION VIII PROJECT COMPLETION AND SETTLEMENT
25
ARTICLE 27 PROJECT COMPLETION ACCEPTANCE CHECKS. When the project is ready for
the completion acceptance checks, Party B shall, pursuant to the government
regulations regarding project completion checks, supply Party A's Representative
with detailed completion information and completion acceptance check reports.
Party B shall supply Party A with the project completion drawings on the date
and in the quantities specified in the Agreement Provisions. Party A's
Representative, after receiving the completion acceptance check reports, shall
arrange for the relevant departments to conduct the acceptance check within the
time frame specified in the Agreement Provisions and shall either approve or
present modification opinions within 5 days after the acceptance check. Party B
shall implement the changes as required. Party B shall also be responsible for
any expenses of modification arising from its own problems.
If Party A's Representative fails, without due cause, to arrange for an
acceptance check within 10 days after receiving Party B's completion acceptance
check reports or fails to approve the project or present modification opinions
within 5 days after the acceptance check, such failure may be construed as
approval of the completion acceptance check reports. In such circumstances,
Party B shall proceed to the settlement procedures, and the completion date
shall be the date when Party B submits the completion acceptance check reports.
For projects that need modifications before meeting the completion requirements,
the completion date shall be the date when Party B, after implementing the
modifications, invites Party A to conduct an acceptance check.
If Party A cannot arrange for an acceptance check on the date specified in the
Agreement Provisions, Party A shall be responsible for the expense of
safeguarding the works with the calculation of the fees starting on the day
after the last day of the specified time frame.
If, for some special reasons, some unit projects or sections are to be completed
and checked for acceptance one by one, the Parties shall sign a
differentiated-section project completion agreement to define each other's
responsibilities.
ARTICLE 28 SETTLEMENT UPON COMPLETION. After the completion acceptance check
reports have been approved, Party B shall, in accordance with the applicable
government regulations and within the time frame and in the manner specified by
the applicable the Agreement Provisions, submit a settlement report to Party A's
Representative. Party A's Representative shall, after receiving the settlement
report, promptly approve the report or present modification opinions. Then,
Party A's Representative shall, within the time frame specified in the Agreement
Provisions, send a fund allocation notice to the account-holding bank and a copy
of said notice to Party B. The bank shall verify the information and then send
payment for the project to Party B. Party B shall deliver the completed project
to Party A within 15 days after receiving the project payment.
If the account-holding bank is not able to make project payment due to Party A's
non-compliance with the applicable rules and stipulations, Party B shall have
the right to place a lien on the entire project or part of it and shall provide
proper protection therefor. Party A shall be responsible for the protection
expenses.
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If Party A fails without due cause to complete the settlement procedure within
30 days after receiving the project completion report, Party A shall pay
interest on the delinquent project payment with the calculation of the interest
starting on the 31st day at the rate charged for unplanned bank loans to
construction enterprises. Party A shall also be responsible for the breach of
contract.
ARTICLE 29 WARRANTY. Party B shall provide warranty services and pay warranty
fees pursuant to the applicable government regulations and in accordance with
the warranty items, coverage, scope, terms, coverage amounts and payment methods
stipulated in the Agreement Provisions. The warranty term starts on the day when
Party A's Representative signs the final acceptance check record forms. For
projects that are checked for acceptance section by section, warranty terms
shall be calculated on an individual section basis.
In the warranty period, Party B shall dispatch repair teams within 10 days after
receiving notices of repair. Otherwise, Party A may authorize other agencies or
personnel to perform the repair service. If the expense of reworking results
from Party B's problems, Party A shall deduct the expense from the warranty
funds and Party B shall be responsible for any remaining unpaid portion. If the
financial expenditures associated with reworking result from a causes other than
Party B, Party A shall assume responsibility.
For projects that retain a certain percentage of the contract cost as warranty
reserve funds with the funds being obtained from the project payments made by
Party A to Party B, Party A shall settle the account within 20 days after the
warranty expires and return to Party B the remainder of the warranty funds plus
the interest calculated at the rate specified in the Agreement Provisions. Party
B shall pay to cover insufficient funds.
SECTION IX DISPUTES, BREACH OF CONTRACT, AND CLAIMS
ARTICLE 30 DISPUTES. In the event that disputes arise with regard to or in
connection with the Contract, the Parties may seek mediation, arbitration, or
litigation pursuant to the Agreement Provisions. The Parties may use one or more
of the following procedures:
1 Seek mediation by departments or personnel as specified in the Agreement
Provisions.
2 File for arbitration by an economic contract arbitration authority that has
proper jurisdiction.
3 File for litigation at a People's Court that has proper jurisdiction.
When disputes occur, the Parties shall continue to perform the Contract,
continue with the project construction, and protect the completed works, except
in the following circumstances.
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1 It is impossible to continue to perform the Contract.
2 The Parties have agreed to stop the construction.
3 Mediation, accepted by both parties, results in a request for discontinuation
of construction.
4 The arbitration authority has asked for the discontinuation of construction.
5 The court has asked for the discontinuation of construction.
ARTICLE 31 BREACH OF CONTRACT. If Party A's Representative fails to issue the
necessary instructions, confirmations and approvals in a timely manner, fails to
perform its obligations or to make payments as provided hereunder, or engages in
other acts that prevent performance of the Contract, Party A's Representative
shall be liable for breach of contract (including payment to Party B for
additional financial expenditures caused by the breach of contract and the
interest on the accounts payable with the calculation starting on the due date
of said accounts) and the term of construction shall be extended accordingly;
Party A shall pay the penalty for breach of contract as specified in the
Agreement Provisions and shall compensate Party B for downtime losses caused by
the breach of contract.
If Party B fails to complete the project in the time frame specified in the
Contract, if the quality of construction does not meet the design and
specification requirements, or if Party B engages in other acts that prevent
performance of the Contract, Party A's Representative may request Party B to pay
a penalty for breach of contract as specified in the Agreement Provisions and
compensate Party A for losses caused by the breach of contract.
Unless the Parties have both agreed to terminate the Contract or one of the
Parties' breach of contract has made it impossible to implement the Contract,
the party in default shall continue to implement the Contract after executing
its responsibilities as listed above.
In the event that one of the Parties wants to terminate or cancel the Contract
because the other party's breach of contract has made it impossible to implement
the Contract, the party seeking the termination should notify the defaulting
party 10 days in advance. The defaulting party shall be responsible for the
breach of contract.
ARTICLE 32 CLAIMS. If Party A fails to make payments, to extend the term of
construction, or to compensate for losses as specified in the Contract, Party B
may make claims against Party A pursuant to the following procedures:
1. Have proper reasons for claims and have proof regarding the occurrence of
the events leading to claims.
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2. Within 20 days after the occurrence of a claim event, notify Party A of the
claim.
3. Within 10 days after receiving the claim notice, Party A shall either
approve the claim or request Party B to provide supplemental reasons and proof.
If Party A fails to respond within 10 days, the absence of the response may be
construed as approval of the claim.
SECTION X OTHER
ARTICLE 33 SAFETY IN CONSTRUCTION. Party B shall adopt stringent safety measures
pursuant to the applicable regulations. Party B shall be responsible for any
accidents resulting from its failure to adopt effective safety measures and for
the expenses thus incurred. As for any injuries or deaths for which Party B is
not responsible, the responsible party shall bear responsibility and the
expenses thus incurred.
Should any major injury or death occur, Party B shall immediately report it to
the relevant departments and notify Party A's Representative pursuant to the
applicable regulations. Party B shall handle such matters pursuant to the
applicable government requirements. Party A shall provide necessary support for
rescue operations. The party responsible for the accident shall bear the
expenses thus incurred.
Before working in places near power equipment, high voltage lines, underground
pipes, sealed vibration-free rooms, zones with high risk of explosion or fire,
and major frontage thoroughfares, Party B shall submit a list of safety measures
to Party A's Representative and implement said measures after obtaining Party
A's approval. Party A shall be responsible for the expense of the protective
measures.
When working in a poisonous or hazardous environment, Party A shall provide
proper protective measures pursuant to the applicable regulations and bear the
financial expenditures thus incurred.
ARTICLE 34 PATENT TECHNOLOGY, SPECIAL PROCESSES, AND RATIONALIZATION PROPOSALS.
If Party A requests the use of patent technology and special processes, Party A
shall be responsible for filing applications and bear the expenses of the
applications and tests. Party B shall use such technology in accordance with
Party A's requirements and shall be responsible for performing the relevant
tests. If Party B proposes using patent technology and special processes, Party
B shall submit the request to Party A's Representative for approval and shall
then follow the aforementioned procedures.
If Party B makes rationalization proposals that will involve changes to the
drawings, designs and organizational construction design or replacement of
original materials and equipment, Party A's Representative must first approve
such proposals.
The Parties shall jointly bear and share, pursuant to an agreement between them,
any
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expenses and benefits that may occur in the circumstances mentioned above.
ARTICLE 35 UNDERGROUND OBSTACLES AND CULTURAL RELICS. If in the course of the
construction Party B discovers cultural relics, ancient tombs, foundations of
ancient buildings and structures, fossils, ancient coins, and other objects of
archaeological or geological value, or if Party B discovers obstacles that may
hinder the construction, Party B shall notify Party A's Representative within 4
hours, report the discovery to the control departments concerned, and take
effective protective measures. Party A's Representative shall, within 12 hours
after receiving Party B's notice, either approve Party B's measures or present
opinions about the handling of the situation. Party A shall bear the expenses of
the protective measures, and the term of construction shall be extended
accordingly.
ARTICLE 36 SUBCONTRACTING THE PROJECT. Party B may subcontract part of this
project pursuant to the tender documents and the Agreement Provisions. After
signing the subcontracting contracts with the subcontractors, Party B shall send
copies of said contracts to Party A's Representative. Should any discrepancy
occur between the subcontracting contracts and this Contract, this Contract
shall prevail.
The subcontracting contracts shall not release Party B of any obligations or
duties. Party B should station supervisory staff at the subcontractors' sites to
ensure the implementation of the Contract. Any breach of contract or negligence
by the subcontractors shall be deemed breach of contract or negligence by Party
B.
Unless otherwise stated in the Agreement Provisions, the subcontracting project
costs shall be settled between Party B and the subcontractors.
ARTICLE 37 FORCE MAJEURE. After a force majeure event occurs, Party B shall
immediately take measures to minimize losses and shall report the damage to
Party A's Representative within 24 hours. Party B shall report the losses as
well as the expenses for cleaning and repair to Party A within the time frame
specified in the Agreement Provisions. If the disaster persists, Party B shall
report the developments to Party A every 10 days until the disaster is over.
Party A should provide necessary support in disaster response.
Expenses arising from and in connection with the disasters shall be borne by
both Parties:
1. Party A shall bear the damages to the project itself.
2. Personnel injuries or deaths and expenses thus incurred shall be the
responsibility of the party involved.
3. Party B shall bear damage to its equipment and machinery and downtime losses.
4. The Parties shall sign a separate supplemental agreement to define each
other's responsibilities with regard to necessary cleaning and repair work and
the expenses thus incurred.
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ARTICLE 38 INSURANCE (IF APPLICABLE). Party A shall obtain life and property
insurance coverage for its personnel and third party personnel in the
construction site and for the construction project. Party A shall bear all
related expenses.
Party B shall obtain insurance for the life and property of its personnel and
equipment at the construction site. Party B shall bear all related expenses.
Should any accident occur after the purchase of insurance policies, Party B
shall report the losses and claim estimates to Party A within 15 days. If the
damage continues to occur, Party B should report to Party A every 10 days after
the first 15 days until the damage stops occurring.
ARTICLE 39 CANCELLATION OR SUSPENSION OF THE PROJECT. In the event that policy
changes, force majeure, or causes other than Party A or Party B cause the
project to be canceled or suspended with the result continued performance of
this Contract becomes impossible, Party B shall take steps to protect and
prepare the transfer of the completed sections and the purchased materials and
equipment. Party B shall also withdraw its own equipment and personnel from the
construction site pursuant to Party A's requirements. Party A shall provide
support to facilitate Party B's withdrawal, bear the financial expenditures for
the above, and, pursuant to the Contract, make payments for the completed
sections of the project and compensate Party B for its losses.
As for ordered material and equipment, the party that placed the orders shall
try to return them. Party A shall bear the costs of the orders that cannot be
returned as well as the expenses for returning orders. However, any loss due to
failure to return the orders in time shall be the negligent party's
responsibility.
ARTICLE 40 EFFECTIVENESS AND TERMINATION OF THE CONTRACT. The Contract goes into
effect on the date specified in the Agreement Provisions. After the settlement
upon completion is conducted, and after Party A has made all required payments
and Party B has delivered the project to Party A, the Contract shall terminate
except for the warranty clauses, which shall remain in force. When the warranty
expires, the warranty clauses shall terminate.
ARTICLE 41 COPIES OF THE CONTRACT. The Contract has two originals, both of which
have the same validity. Party A and Party B shall each keep one original after
signing and affixing their seals. The Agreement Provisions specifies the number
of copies. Party A and Party B shall deliver copies of the Contract to the
departments concerned.
Supervised by: Xxx Xxxx City Administration of Industry and Commerce
Printed by: Xxx Xxxx Technology Daily Printing Shop
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