Project Construction Contract

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: Memorandum No.29 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 Richter 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 - -------------------------------------------------------------------------------- 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: 8651039 Telephone: Cable: Address: Account-holding bank: Legal representative: Account number: (Illegible), Zhen Yi 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 takin ...