Exhibit 10.19
Construction
Agreement
Project name: Workshop of Wuhan
Generating Equipment Manufacturing Co., Ltd.
Project location: Cang Long Dao
Science Park, Jiangxia District, Wuhan
Construction unit: Wuhan
Generating Equipment Manufacturing Co., Ltd.
Contract issuing unit: Hubei
Gongchuang Real Estate Co., Ltd.
Construction undertaking unit:
Hubei Huadu Construction Co., Ltd.
Contract fulfillment location:
No.2 Laowuhuang Road
Signing date: March 28
th , 2006
Table
of contents
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1 Construction
project
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(4)
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(4)
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(4)
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(4)
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2 Contracting scope &
mode .
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(4)
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(4)
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(4)
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3 Construction
cost
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(5)
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3.1 Document to be
executed
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(5)
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3.2 Construction cost
calculation
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(5)
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4 Installment payment
verification & Paying
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4.2 About Installment payment
application & works that Party B shall complete
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5 Time schedule management
for project
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(6)
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5.1 Time limit for
project
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(6)
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5.2 Time limit for project schedule
control
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(7)
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5.3 Completion date
control
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(7)
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6 Quality
management
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(8)
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(8)
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6.2 Engineering
acceptance
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(8)
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7 Site
management
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(10)
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8
Material
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(10)
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(10)
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8.2 Material to be supplied by Party
A
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(11)
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9 Design
change
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(11)
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(11)
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9.2 Design change cost & time
limit for project
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(12)
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10 Party A’s site
representative
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(12)
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10.1 Party A’s site
representative
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(12)
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11 Supervision
Company’s representative on site
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(14)
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(14)
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12 Party B’s site
representative
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(15)
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12.1 Party B’s site
representative
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(15)
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12.2 Party B’s right &
obligation
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(15)
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13 Completion acceptance
& project transfer
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(17)
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13.1 Completion acceptance
reference
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(17)
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13.2 Completion acceptance
procedure
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(17)
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14 Building final
settlement
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(19)
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15 Warranty
clause
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(19)
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15.1 Warranty scope &
content
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(19)
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(19)
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15.3 Warranty
responsibility
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(19)
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15.4 Warranty fund
payment
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(20)
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(20)
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16
Insurance
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(20)
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17 Contract into
effect/termination
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(21)
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Construction contract
Contract issuing unit: Hubei
Gongchuang Real Estate Co., Ltd. (hereinafter referred to as
Party A)
Construction undertaking unit:
Hubei Huadu Construction Co., Ltd. (hereinafter referred to
as Party B)
According to <Contract Law of the
People’s Republic Of China> and <Construction Law of
the People’s Republic Of China>as well as other related
laws and regulations and regulations related to the engineering
construction by Hubei Province and detailed condition of this
project, both parties negotiate and reach an agreement regarding
the construction project of this engineering project and sign this
contract based on following the principles of equality,
voluntaries, fairness and good faith.
Chapter 1 Construction
project
1.1
Project name: Workshop of Wuhan
Generating Equipment Manufacturing Co., Ltd.
1.2
Project location: Cang Long Dao
Science Park, Jiangxia District, Wuhan
(1) Construction area of project:
19,872m2.
(2) Structure: Maximum span is
24m, 160t crane, single- story bent frame.
(3) Story number: One
story
(4). Building height:
26.7m.
Chapter 2 Contracting scope
& mode.
The contracting scope includes all
engineering, including pile foundation, civil work, steel
structure, and decoration within the scope of construction
drawings. (except the fire-fighting paint, equipment installation,
indoor terrace, and electrical installation, which are directly
subcontracted by Party A. For more details, please see the
construction drawings approved by four parties, namely, Design
Institute affiliated to Wuhan University of Technology, Wuhan
Generating Equipment Manufacturing Co., Ltd., Hubei Gongchuang Real
Estate Co., Ltd. and construction unit. These drawings were
reviewed and approved by Wuhan Drawing review & approval
office.)
The contractor shall carry out the
general project contracting as per the construction drawing. The
contractor shall not subcontract the whole of the project. The
professional engineering which must be subcontracted shall be
approved by Party A in writing.
2.3
For the colorful plain tile, roof
boarding and peripheral maintenance panel in the newly-built
workshop of Wuhan Generating Equipment Manufacturing Co., Ltd., the
color and tile strip type shall be matched with the phase-I
construction engineering of
Wuhan Generating Equipment
Manufacturing Co., Ltd.
Chapter 3 Construction
cost
3.1
Document to be executed
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1.
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For pile foundation engineering,
civil engineering and steel structure engineering, the
<Construction engineering consumption quota and uniform base
price list in Hubei Province> issued in 2003 shall be
executed.
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2.
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For the decoration engineering, the
<Decoration engineering consumption quota and uniform base price
list in Hubei Province> issued in 2003 shall be
executed.
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3.
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For the expense quota, the Hubei
Construction [2003] no.44 document shall be executed.
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3.2
Construction cost
calculation
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1.
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For this project, the total cost is
calculated as per the category-III engineering quota and the final
settlement price of the account is calculated after it is decreased
by 3% based on the total cost.
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2.
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In order to be easy to pay the
installment payment in this project, the tentative unit price of
the project is 780Yuan/ m2 , and the tentative construction
area is 19872 m2 . The tentative contract sum is
15,500,160Yuan (Capital: FIFTEEN MILLION FIVE THOUSAND ONE
HUNDRED SIXTY ONLY) (this unit price does not include the material
to be supplied by Party A and this price is only the reference for
payment and it is not used as the pay-off evidence).
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3.
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For material price adjustment, the
material price of other materials and main materials for
installation engineering shall be fixed as per <Construction
engineering consumption quota and uniform base price list in Hubei
Province> issued in 2003 in addition that the quota price shall
be executed for general auxiliary material such as sand and stone
material and so on. If there is a price difference between them and
the budget price in <Material price information> from Wuhan
Quota Management Station during the same period, both parties shall
negotiate and determine the price difference. The price difference
part is only involved in the pre-tax construction price. It is not
involved in the service fee.
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4.
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Party A will not charge any other
fees except for unloading manpower cost and storage charge. The
calculation formula of unloading manpower cost and storage charge
is as follows: construction price of material to be supplied by
Party A x 1.0%. The material to be supplied by Party A is not
involved in the completion settlement and service fee as well as
decrement as well.
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5.
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The design amendments and on-site
certificates to occur in the project can be involved in the project
settlement only after they are signed and approved by Party A and
the supervisor. The settlement can be entered after the field
certification is provided with following conditions: description of
project property, scope, scheme measure and so on, clarification of
the project amount, material specification and model as well as
brand.
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6.
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The amount of metallic structure
part shall be calculated as per the dimension as shown in the
drawing.
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Chapter 4 Installment
payment verification & payment
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1.
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Party A will pay the 20% installment
payment of tentative contract sum to Party B after the civil
engineering amount of foundation part is completed.
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2.
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Party A will pay the 20% installment
payment of tentative contract sum to Party B after the installation
of steel structure member of main body (refer to steel column) is
completed.
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3.
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Party A will pay the 20% installment
payment of tentative contract sum to Party B after the installation
of steel structure member of main body (refer to steel column) is
completed and roof boarding installation is completed.
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4.
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Party A will pay the 20% installment
payment of tentative contract sum to Party B after the installation
of colorful steel plate is completed and the gate as well as
plastic steel window starts to enter in the jobsite.
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5.
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After the project is finished for
the record and the project material is transferred to the archives,
the complete set of completion data and drawing will be transferred
to Party A. Party A agrees to pay 10% of the tentative total
contract sum when the settlement between both parties is more than
2 months. Party A agrees to pay construction costs up to 95% of
project settlement payment. 5% of project settlement payment will
be left as the warranty payment.
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4.2
Application for the installment
payment and the workload that Party B shall complete.
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1.
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Party B submits the progress
description of completed engineering amount to the supervisor and
Party A’s representative.
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2.
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Party B prepares the progress budget
report and application form of installment payment in accordance
with the confirmed progress description and submits them to the
supervisor and on-site project department of Party A for review.
Then, the Finance department of Party A shall perform the final
review and approval and pay the installment payment of this part to
Party B.
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3.
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The installment payment for
engineering progress shall depend on the quality of work done. If
the engineering quality cannot meet the inspection and acceptance
requirements, Party A has the right to collect the penalty from
Party B and stop paying the payment for engineering progress of
this part temporarily.
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4.
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Party A shall ensure that the
installment payment shall be paid in accordance with Article One
(within 15 workdays). If the installment payment cannot be paid in
time for a certain reason, the overdue fine will be paid at the
deposit interest rate of the bank for the same period.
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Chapter 5 Time schedule for
project
5.1
Time limit for project
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1.
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Commencement date of new building of
production workshop of Wuhan
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Generating Equipment Manufacturing
Co., Ltd.: March 29 th , 2006
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2.
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Complete date: October 29
th , 2006
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3.
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Total time limit for project is
210 calendar days (including official festivals and
holidays)
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4.
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Both Party A and B have already
taken into account such factors as seasonal rain, high wind,
high-temperature weather, water and power supply stop and festivals
as well as holidays and time limit for project and working content
to be subcontracted by Party A at the appointed completion date and
every control date.
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5.2
Time limit for project schedule
control
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1.
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Within the first week after Party B
enters in the jobsite, Party B shall report and submit the monthly
progress plan and key milestone of this project. The report and
plan shall be examined and approved by Party A and supervision
company.
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2.
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The engineering below±0.000
shall be completed prior to May 29 th , 2006 and Party B
shall conduct inspection and accept the eligible and qualified
work.
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3.
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The installation of steel column
shall be completed prior to June 29 th , 2006 and Party
B shall conduct inspection and accept the eligible and qualified
work of steel column.
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4.
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The installation of roof boarding
shall be completed prior to August 15 th , 2006 and
Party B shall conduct inspection and accept the eligible and
qualified work of the roof boarding.
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5.
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The installation of colorful steel
plate and workshop gate as well as plastic steel window shall be
completed prior to September 29 th , 2006 and Party B
shall conduct inspection and accept the eligible and qualified
work.
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6.
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All contents of construction
blueprints shall be completed prior to October 29 th ,
2006 and Party A shall conduct inspection and accept the eligible
and qualified work. Party B shall exit the jobsite at the same
time.
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5.3
Completion date control
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1.
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The completion date to be specified
in this contract refers to all completions of contracting
engineering content to be agreed in this contract and accepted by
formal completion acceptance to be organized by Party A. If any of
the partitioned projects and sub-divisional works in the
contracting content are not completed or it is not accepted after
acceptance to be organized by Party A, it will be considered as
though the time limit for project is delayed.
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2.
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If the project completion will be
performed ahead of time, both parties will sign the ahead-of-time
completion agreement after uniform negotiation. Party B will
re-prepare the new progress schedule as per the advanced completion
date and submit it to Party A. Party A shall reply to Party B in
written report within 3 days. Otherwise, Party A will not pay the
cost related to the advanced completion when the project is
completed in advance.
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3.
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If the completion time of project is
delayed, Party B will pay the delay indemnity to Party A as per
following modes: the indemnity of 25000Yuan will be paid in case of
3
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days later than the total time limit
for project and indemnity of 80,000Yuan will be paid in case of 10
days later than the total time limit for project. In case of
exceeding the above agreed time limit, the clause 5 in this item
will be executed. Party B shall pay the compensatory payment to
Party A according to the actual loss from Party A if the indemnity
to be paid for Party A’s loss caused by time limit delay from
Party B is not sufficient to compensate the loss.
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4.
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If the completion date or control
date is delayed due to force majeure, the time limit for the
project will be delayed accordingly after being confirmed by Party
A. Party A will not undertake the other responsibilities for Party
B, including downtime and stop construction fee.
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5.
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If Party B cannot control the time
schedule for the project in two time periods, Party B shall exit
the jobsite within one week automatically. Party A has the right to
change the construction unit until project completion. Afterwards,
Party A will charge the indemnity for Party B as per the actual
engineering amount and Party B will pay the indemnity of 10% of
total price of completed engineering.
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Chapter 6 Quality
management
The project construction and
acceptance shall be carried out as per the design drawing, design
change, specification, acceptance criteria and local related
regulation as well as Party A’s requirements. All partitioned
projects and sub divisional works shall reach to the conformity
standards. The unit construction quality must reach to the
conformity standards.
6.2
Engineering acceptance
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1.
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Party B must assign enough qualified
managing staffs at the construction site and establish the complete
quality and progress assurance system as well as perform the
rectification as per the requirement to be put forward by Party A
and supervision party.
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2.
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Party B shall carry out the
construction as per the related codes and design requirement as
well as instruction from Party A and supervision party and accept
the inspection at any time as well as perform the rectification as
per the inspection result. In order to provide the convenient
condition for inspection, Party B shall provide the technical data
related to the engineering quality to Party A and the supervision
party as required in time.
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3.
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After Party B checks partitioned
projects and subdivisional works and they are acceptable after
partitioned projects and subdivisional works reach to the concealed
condition, Party B shall inform Party A and the supervision party
24 hours before acceptance and provide the related conformity data.
The concealed work construction can be carried out after acceptance
and signature. During the concealment process, the acceptance shall
be re-carried out if Party B makes any modifications for conformity
part. For the key concealed work acceptance (foundation acceptance
and structure acceptance), the quality supervision station and
design unit shall be informed
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in advance to join the acceptance
together. If the concealed work is not handled according to above
procedures, the responsible party will undertake all
responsibilities and losses.
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4.
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The acceptance must be carried out
per the <detailed rules and regulations of acceptance for
partitioned projects and subdivisional works> after construction
completion. To be convenient for maintenance, Party B shall have
the as-built drawing as per Party A’s requirement before
concealed work.
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5.
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When Party A has any doubts on the
construction quality and requests Party B to double check the
construction quality, Party B shall cooperate with Party A. If it
is acceptable after double check, the repairing and inspection fee
will be charged by Party A and the time limit for the project will
be delayed accordingly. If it is not acceptable after double check,
the rectification and repairing as well as the inspection fee will
be charged by Party B and the time limit for project is prohibited
to delay.
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6.
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In order to assure the construction
quality, Party B must submit the construction scheme regarding main
processes and the construction template can be made upon the
approval from supervision party and Party A. Party B can carry out
the large-area construction as per the template after the template
is accepted by Party A.
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6.3
Party B shall know clearly and take
into account the surrounding environment, traffic road, field
geologic information of jobsite, contracting scope, construction
drawing, and construction organization design before signing this
contract. Additionally, Party B also shall take into account such
factors as construction technique measure, safety maintenance and
civilization site construction and the like.
Chapter 7 Site
management
7.1
In this project, the construction
site is within the red line in the general plan. The construction
unit shall provide the construction organization design before
commencement and the construction unit shall execute the
construction organization design upon the approval from Party
A’s site representative. The construction plan layout shall
be considered completely and perfectly and the construction can be
carried out after Party A and supervision party reviews and
approves it in written version. The removal and movement expense of
temporary facility due to the construction demand shall be charged
by Party B. The site drainage and blowing can be drained in the
municipal drainage network after they must be treated in the
settling tank and septic tank made by Party B. Otherwise, Party B
will charge the penalty given by municipal department.
7.2
Party B shall abide by code and
regulation of safety construction and civilization construction
issued by national and local governments and abide by the
management regulation of field civilization construction from Party
A.
7.3
Party A will carry out random
inspections periodically. If Party A finds the non-conformity item
regarding safety construction and civilization construction as well
as management, Party B shall deal with it as scheduled and as
required within 24 hours after receiving the notice. If Party B
cannot meet this requirement, Party B shall stop construction and
carry out rectification immediately. Party B will charge the stop
loss.
7.4
Party B shall draw up the complete
safeguard measure before carrying out the construction under the
dangerous status. During the construction process, Party B will
undertake all responsibilities for any quality issues and safety
accidents and\or other results resulting from Party B’s
responsibilities.
7.5
For water and power utilization,
Party B must install the water meter and ammeter. They can be used
after they are inspected by Party A. The water meter and ammeter
installation and movement shall be reported to Party A and approved
by Party A. Both parties shall record the reference reading
together after installation and signature approval. Party A is
responsible for providing the water source interface and interface
of power distribution box. Party B is responsible for meter
connection and laying the line to water and power utilization
location. Both Party A and B will record the reading of Party
B’s water-meter and ammeter together at the end of every
month. Party A will calculate the water rate and power rate
according to the reading record and deduct the corresponding
expense from Party B’s installment payment.
Chapter 8
Material
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1.
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For various materials used for
construction, manufacturer plans and the qualification certificate
as well as material sample shall report to Party A.
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2.
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The materials must meet the design
requirements and acceptance criteria as well as related government
regulatio
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