Jinlong Highway Project Construction

JINLONG HIGHWAY PROJECT CONSTRUCTION TURN-KEY CONTRACT


Party A: Huizhou Guanghui Highway Development Company Limited (hereinafter "
Party A")


Party B: Huizhou Highway Property Development Company (hereinafter "Party B")


Party C: Huizhou Highway Bureau (hereinafter "the guarantor")


In accordance with the principles of "The Economic Contract Law of the People's Republic of China", "The Ordinances of Contract Agreement for Construction and Installation Project" and "Cooperative Contract Concerning the Establishment of Guanghui Highway Development Company Limited" and with the combination of the specific situation and the implementation of this Contract guaranteed by Huizhou Highway Bureau, the following provisions of the contract (hereinafter "the Contract") are concluded by Parties A, B and C (hereinafter "the three Parties").


Article 1 Project Description


1.1 Name: Construction Project of Jinlong Highway


Location: A 71.776 km long highway extends from Xiaojinkou to Baishaqiao,
Longmen, Huizhou, Guangdong Province. The first stage of the project
extends from Baishaqiao, Longmen, passing Pingling, to the junction of
Gongzhuang Town and Yangcun Town, Boluo, with a total length 35 km.


Content: The first stage of the project extends from Baishaqiao, Longmen,
passing Pingling, to the junction of Gongzhuang Town and Yangcun Town,
Boluo, with a total length 35 km.


Scope of Turn-key Contract: The road bed of the first stage of the project
is 18m in width and will be gradually increased to 23m.


1.2 Date of Commencement: The project commences on the date of the


1
establishment of the Cooperative Company.


Date of Completion: At the end of December, 1997.


1.3 Quality Standard: The quality of the project shall meet the qualified
standard of the national or professional quality examination standard (in
accordance with Article 3.3 of this Contract).


1.4 Cost: Jinlong Highway is 71.776 km long and its total cost of the contract
agreement is RMB560 million ( US$67.3 million).The total cost of the first
stage of the contract agreement (a 35 km highway from Baishaqiao, Longmen,
passing Pingling, to the junction of Gongzhuang Town and Yangcun Town,
Boluo) is RMB247.93 million (US$29.8 million). Party B shall gain the
profit upon the deduction of the exact amount from the above receivable
payment. In case there is a loss, Party B shall raise the capital by itself
to make up for the loss.


1.5 Form of payment for the capital required: It is executed in accordance with
Article 6.4 of "Cooperative Contract Concerning the Establishment of
Guanghui Highway Development Company Limited".


Article 2 Contract and Interpretation in Sequence


All the contract documents shall interpret and illustrate each other. Unless otherwise indicates in this Contract, the formation and interpretation shall be as follows:


2.1 The provisions of this Contract;


2.2 terms of the Cooperative Contract;


2.3 summary and agreement concerning the negotiation and changes of clarifying
the substantial rights and obligations of both parties;


2.4 tender notice, tender and tender documents of tender contract;


2.5 checklist of the work load or the budget report and blueprints of the
confirmation of the project price;


2 2.6 standard, specification and other related technical data and technical
requirement.


When there is ambiguity or inconsistency in the contract, it shall be
solved through consultation by both parties (for those who have social
inspector shall be explained by chief inspection engineer first) provided
that the project progress will not be affected. In case the common
understanding of both parties still cannot be reached, it can be solved in
accordance with the stipulation in Article 31.


Article 3 Language, Standard and Applicable Law Used in the Contract


3.1 This Contract is written, interpreted and illustrated in Chinese.


3.2 This Contract is applicable to the rules and regulations of the People's
Republic of China and the construction specification and technical
requirement of highway construction stipulated by the Ministry of
Transportation of the People's Republic of China.


3.3 This project is applicable to the technical specification and standard of
JTJ033-86, JTJ034-85, GBJ97 and JTJ071-85 issued by the Ministry of
Transportation of the People's Republic of China.


Article 4 Blueprints


Party B shall organize, design, carry out construction and execute turn-key contract towards Party A in accordance with the "Feasibility Report of the Construction of Jinlong Highway".


Article 5 Party A shall issue a written notice separately to include the list of its representatives and appointees.


3 Article 6 Party B shall issue written notice separately to include the list of its representative and appointees.


Article 7 Party C shall issue written notice separately to include the list of its representative and appointees.


Article 8 Party A's Responsibilities


8.1 To raise fund for the project and make contribution according to the
progress of the project.


8.2 To have a joint checkup on the blueprints and design the documents.


8.3 To supervise and ensure the quality and progress of the project, and the
audit the cost of the project.


Article 9 Party B's Responsibilities


Party B shall perform the following duties according to the time and requirements stipulated in the contract.


9.1 Within the scope permitted by the Qualification Certificate, the
construction shall be carry out according to the stipulation in the
contract.


9.2 To provide Party A with a monthly, quarterly and annual plan concerning the
progress of the project and the corresponding statistic report and accident
report.


9.3 To provide the illumination, safeguard, fence and guards as well as their
maintenance services during daytime according to the requirement of the
project.


9.4 To provide Party A with houses and facilities on the work-site for working
and living according to the number and requirements stipulated in the
contract. Party B shall bear the expense of occurrence.


4 9.5 To comply with the rules stipulated by the local government and relevant
departments concerning the transportation and noise control in the
construction site.


9.6 Party B shall safeguard the completed section in accordance with the
stipulation in the contract before it is handed over to Party A. During
this maintenance period, Party B shall repair all damage with its own
expense.


9.7 To safeguard the underground pipelines on the work-site, buildings nearby
and its structures as required in the Contract.


9.8 To ensure the cleanliness of the construction site conforming to the
relevant stipulations.


9.9 To pay all related taxes during construction, such as business tax for the
construction.


Party B shall compensate the Party A for its failure to perform all the above duties resulting in any delay or loss.


Article 10 Party C's Responsibilities


Party C has agreed to bear all the liabilities of Party B and shall compensate Party A for the loss in case Party B fails to perform any provision of this Contract.


Article 11 Progress Plan


Party B shall submit a project organization plan (or construction proposal) and progress plan to the representative of Party A on the date stipulated in the contract. The representative of Party A shall approve or propose any opinion for improvement according to the time stipulated in the contract. The project organization plan (or construction proposal) and progress plan shall be regarded


5 to have been approved in case Party A fails to reply within the stipulated time.


Party B shall organize the construction according to the approved progress plan and accept the examination and supervision of the progress made by the representative of Party A. In the event that the actual progress does not accord with the progress plan, Party B shall submit a proposal of improvements as required by the representative of Party A and such proposal shall be executed after Party A's approval.


Article 12 Postponement of the Construction


Party B shall commence the construction according to the date stipulated in the contract. Should Party B fail to commence the construction on schedule, Party B shall inform the representative of Party A of the reason and demand for the postponement of the construction 10 days prior to the date of commencement as stipulated in the contract. The representative of Party A shall give its reply to Party B in 7 days. In case the representative of Party A agrees the demand for postponement or does not give reply in 7 days, the demand of Party B shall be regarded to have been agreed and the date of commencement shall be correspondingly postponed. In case the representative of Party A does not agree the demand of postponement or Party B does not propose the demand for postponement within the designated time, the date of completion shall not be postponed.


Having gained the consent of Party B, Party A shall postpone the date of commencement by written notice and correspondingly, postpone the date of completion.


Article 13 Suspension of the Construction


6 The representative of Party A, when necessary, shall ask Party B to suspend the construction and propose any opinion for improvement in 48 hours upon the demand has been made. Party B shall suspend the construction according to the demand of Party A and safeguard the completed section of construction. After the implementation of such opinion proposed by the representative of Party A, Party B shall propose the demand to return to work and the representative of Party A shall give approval to the commencement of the construction. In case Party A fails to propose any opinion for improvement within the designated time or does not reply within 48 hours upon the demand of return to work proposed by Party B, Party B shall return to work by itself. The responsibility of the suspension of construction shall be borne by Party A and the corresponding expense on postponement of construction shall be decided by the Board of Directors of Party A.


Article 14 Delay of the Construction


The followings are the delays resulting from the postponement of the date of completion. After obtaining the recognition of the representative of Party A, the date of completion shall be delayed.


14.1 The change of the work load and design;


14.2 the suspension of construction accumulates over 8 hours in a week due to
the suspension of the supply of water, electricity and gas which are not
caused by Party B;


14.3 force majeure;


14.4 other conditions stipulated in this Contract or the postponement agreed by
the representative of Party A.


Party B shall submit a report concerning the delay and the expenditure resulting from it to Party A within 5 days upon the occurrence of the above situation. The


7 representative of Party A shall rec ...