Document:

Exhibit 10.1

 

No. YDT/HT-396-1912

 

 

 

 

 

 

 

Yulin Yuyang Zhongneng Yuandatan Mining
Co., Ltd. 

General Contract for Advanced Treatment
Project BT (Build and Transfer) of Mine Water 

 

 

 

 

The Employer: Yulin Yuyang Zhongneng
Yuandatan Mining Co., Ltd.

 

The Contractor: Yantai Jinzheng Eco-Technology
Co., Ltd.

 

Date: December 2019

 

 

 

 

 

 

     

     

    

 

Part I Contract Agreement

 

The Employer: Yulin Yuyang Zhongneng Yuandatan
Mining Co., Ltd.

 

The Contractor: Yantai Jinzheng Eco-Technology
Co., Ltd.

 

Two parties of the contract hereto reach
consensus through discussions and hereby conclude the contract in relation to general contracting of advanced treatment project
of mine water for Yulin Yuyang Zhongneng Yuandatan Mining Co., Ltd. in accordance with Contract Law of P. R. China, Construction
Law of P. R. China, Tendering and Bidding Law of P. R. China and related laws and legislations, and by adhering to the
principle of equality, voluntary, just and credibility.

 

I. Project Profile

 

Project name: advanced treatment project
of mine water for Yulin Yuyang Zhongneng Yuandatan Mining Co., Ltd.

 

Project approval, verification or filing
document No.: 2019-610802-12-03-058753

 

Project content and scale:

 

Advanced treatment of newly built mine
water phase one project, scale is 1000m3/h;

 

Advanced treatment of pending mine water
phase two project, scale 500m3/h (general the contractor enjoys the sole collaboration right in construction of phase
two project).

 

Detailed address of the province and city
that the project is located: Bentan Village, Xiaojihan Town, Yuyang District, Yulin City

 

Scope of project contracting: all work
content within the scope of coordinate of boundary of advanced treatment project of mine water for Yuandatan coal mine, including
project management and detailed design (responsible for all technique, construction, structure, hydraulic, heating and ventilation,
instruments and automatic control, electrical, fire control, general plan and matching project in 1 meter radius outside of boundary),
procurement of equipment, purchase of materials, construction works, single commissioning, intermediate handover, coordination
in combined commissioning and performance appraisal, till completion and acceptance of the project demanded for constructing the
fixture successfully, and including training of workers, and instructions and support service provided for tender during warranty.

 

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II. Source of Main Production Technology
(or construction design plan) of the Project

 

General contracting bidding documents,
tender documents and technology agreement of advanced treatment project BT of mine water of Yuandatan coal mine.

 

III. Main Dates

 

Phase one project:

 

Design date of commencement (absolute date):
December 20, 2019

 

Date of construction commencement (absolute
date): March 15, 2020

 

Date of project completion (absolute date):
September 30, 2020

 

Phase two project:

 

Date of construction commencement (absolute
date or relative date): subject to notice in writing issued by The Employer.

 

IV. Project Quality Standard

 

Project design quality standard: shall
conform to current state design codes, industry standards and technical specification of The Employer.

 

Project construction quality standard:
qualified.

 

V. Contract Price and Currency of Payment

 

Contract price of the project is RMB (in
words): four hundred and ten million eighty-nine thousand and seven hundred only (amount in figure: RMB 410,089,700).

 

Wherein, phase one project contract price
is RMB (in words): three hundred and thirty-four million four hundred and eighty-four thousand and one hundred only (amount
in figure: RMB 334,484,100).

 

Phase two project contract price is RMB
(in words): seventy-five million six hundred and five thousand and six hundred only (amount in figure: 75,605,600).

 

Refer to items in contract price schedule.

 

VI. Definitions and Interpretations

 

Meaning of related words in the agreement
is the same as the definitions and interpretations provided in general terms.

 

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VII. Validity of the Contract

 

The contract is effective on the condition
that all the following conditions are met: 1 legal representative seals or signs, and signature of the authorized; 2
official seal of the company or special seal for contract is affixed.

 

The Employer (official seal or special
seal for contract): Yulin Yuyang Zhongneng Yuandatan Mining Co., Ltd.

 

Special Seal for Contract of Yulin Yuyang
Zhongneng Yuandatan Mining Co., Ltd. (seal)

 

Registered address in Administration for
Industry and Commerce: Yuyang District, Yulin City, Shaanxi Province

 

Enterprise organization code: 91610802078614125H

 

Post code: 719000

 

Legal representative or authorized representative
(signature): Wei Liu 

 

Telephone: 0912-3692000

 

Fax:

 

Email:

 

Opening bank: China Construction Bank Yulin
Shangjun Road Sub-branch

 

Account No.:

 

The Contractor (official seal or special
seal for contract): Yantai Jinzheng Eco-Technology Co., Ltd.

 

Registered address in Administration for
Industry and Commerce: Laishan District, Yantai City, Shandong Province

 

Enterprise organisation code: 913706135992875532

 

Post code: 264000

 

Legal representative or authorized representative
(signature): Yuebiao Li

 

Telephone: 0535-6264177

 

Fax: 0535-6262600

 

Email: jzhb@jinzhenghb.com

 

Opening bank: Bank of China Yantai Bonded
Port Area Sub-branch

 

Account No.:

 

Date of concluding the contract: December
18, 2019

 

Place of concluding the contract: Yulin
City, Shaanxi Province

 

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Part II
General Terms

 

Article 1 General Provisions

 

1.1 Definitions and Interpretations

 

1.1.1 Contract refers to the entirety composited
by the documents described in item 1.2.1.

 

1.1.2 General terms refer to general terms
that parties of the contract shall abide by in the process of performing general contract of the project, and are constituted by
article 1 to article 20 of the document.

 

1.1.3 Special terms and conditions refer
to the terms that parties of the contract elaborate, improve, amend, revise or agree otherwise the general terms as per conditions
of the engineering general contracting project, and agree to commonly abide by.

 

1.1.4 General contracting of the project
refers to entrusted by The Employer, The Contractor implements project contracting for the whole process or for a number of stages
including stages of design, procurement, construction (including completion test) and commissioning of engineering construction
project as per contractual stipulations.

 

1.1.5 The Employer refers to the party
or the legal successor gaining the qualification of the party set out in the contract agreement that has the qualification of contract
awarding body of the project and the ability in making payment of project price.

 

1.1.6 The Contractor refers to the party
set out in the contract agreement that has the qualification of general contracting body of the project accepted by the Employer,
including its legal successor.

 

1.1.7 Consortium refers to the temporary
institute of project contractors composited by two or two and above legal persons or other organizations under the consent of the
Employer, and parties of the coalition bear the joint liabilities for the Employer. Parties of the coalition shall nominate one
party as the leading party.

 

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1.1.8 Subcontractor refers to the legal
persons or other organizations with corresponding qualification that accept the Contractor’s outsourced subcontracts of part
of the project or the service as per terms of the contract.

 

1.1.9 Representative of the Employer refers
to the representative designated by The Employer who executes the contract.

 

1.1.10 Superintendent refers to the project
superintendent organization entrusted by the Employer that owns related qualification.

 

1.1.11 Project supervisor refers to the
general superintendent engineer authorized by superintendent who is responsible for performing superintendent contract.

 

1.1.12 Project manager refers to the representative
appointed by the Contractor as per terms of the contract who is responsible for executing the contract.

 

1.1.13 Project refers to permanent project
and (or) temporary project.

 

1.1.14 Permanent project refers to the
project that the Contractor implements design, construction, completion test, test after completion and commissioning assessment
and handover to the Employer for production operations or use as per terms of the contract.

 

1.1.15 Single project refers to the project
unit listed in special conditions that has a particular independent function, and is an integral part of permanent project.

 

1.1.16 Temporary project refers to the
temporary buildings and structures built according to site needs for the purpose of performing and completing permanent project
and rectifying any quality defects, and other temporary facilities that do not form into permanent project entity.

 

1.1.17 Site or field refers to any location
for on-site office, storage of project materials, machine tool equipment and project construction provided by the Employer as per
terms of the contract.

 

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1.1.18 Project basic files refer to the
documents, reports (i.e. factory selection report, resource report, survey report), files (i.e. meteorology, hydrology, geology),
agreements (i.e. materials, fuel, water, power, gas, transportation) and related data approved or verified by relevant authority
for the project, as well as other basic files demanded by design provided to the Contractor by the Employer.

 

1.1.19 Site obstacle files refer to coordinate
orientation, data and other related files of existing above-ground and underground buildings, structures, cable, pipeline, preserved
heritage buildings and ancient trees that the Employer shall provide to the Contractor to implement project design and construction
work at site.

 

1.1.20 Design stage refers to the stages
spanning planning design, overall design, initial design, technological design and design of construction drawing. Composition
of design stage is determined by conditions of the project.

 

1.1.21 Project materials refer to the equipment,
materials and members forming into permanent project entity, and materials demanded for implementing completion test and test after
completion regulated by design documents.

 

1.1.22 Construction refers to the process
that the Contractor transfers design documents into permanent project, including civil engineering, installation and completion
test works.

 

1.1.23 Completion test refers to the mechanical,
equipment, parts, cable and pipeline performance tests shall be implemented by the Contractor before the project (or) a single
project is accepted by the Employer.

 

1.1.24 Change refers to any changes performed
to the project notified in writing or approved in writing by the Employer under the condition that project functions and scale
are unchanged.

 

1.1.25 Construction completion refers to
the project completes civil engineering and installation as per contractual stipulations and design specifications, and passes
completion test.

 

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1.1.26 Project acceptance refers to the
process that to enable operators and users of the Employer to take up the positions to perform preparation on test after completion
and commissioning, the Contractor and the Employer perform project handover and the Employer issues acceptance certificate after
the project (or) a single project passes completion test.

 

1.1.27 Test after completion refers to
the production and (or) use function test of the project implemented voluntarily by the Employer or under the instruction of the
Contractor organized and led by the Employer as per contractual stipulations after the project is accepted by the Employer.

 

1.1.28 Commissioning assessment refers
to all tests including evaluation and acceptance of contractual objectives implemented voluntarily by the Employer or under the
instruction of the Contractor organized and led by the Employer as per contractual stipulations after completion test of the project
is completed.

 

1.1.29 Assessment acceptance certificate
refers to the acceptance certificate issued by the Employer after all tests for commissioning assessment are completed and pass
the acceptance.

 

1.1.30 Acceptance of project completion
refers to the project settlement and acceptance organized and performed by the Employer upon the Contractor receiving assessment
acceptance certificate, completing outstanding work and rectification of defects, and submitting completion acceptance report,
completion files and completion settlement documents as per contractual stipulations.

 

1.1.31 Contract time limit refers to the
period starting from the date that the contract becomes effective, till performance of obligations under the contract of the two
parties is completed.

 

1.1.32 Reference date refers to the date
of 30 days prior to deadline of submitting tender document.

 

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1.1.33 Project program refers to the time
schedule of all implementation stages (including design, procurement, construction, completion test, project acceptance, test after
completion till commissioning assessment) or a number of implementation stages as per contractual stipulations starting from the
date the contract becomes effective.

 

1.1.34 Construction commencement date refers
to the absolute date or relative date set out in contract agreement that the Contractor commences construction on site.

 

1.1.35 Date for completion refers to the
absolute date or relative date set out in contract agreement that the Contractor completes construction work of the project (including
completion test), including any extended date agreed by the contract.

 

1.1.36 Absolute date refers to the concrete
time limit stated by year, month and day in Gregorian calendar.

 

1.1.37 Relative date refers to the concrete
time limit stated by number of days in Gregorian calendar.

 

1.1.38 Critical path refers to the paths
of time schedule that directly influence date for completion in project program. The critical path is discussed and settled during
discussions on project program between the two parties of the contract.

 

1.1.39 Day, month and year refer to the
day, month and year in Gregorian calendar. Starting point at any period employed by the contract refers to the next day of the
date of occurrence of corresponding incident. If any starting time is counted as per the condition of expiration of a period, the
starting point counted is the next day of the date of expiration. Expiry date of any period is the day of the expiration date of
the period.

 

1.1.40 Working day refers to other Gregorian
calendar days other than statutory holidays in China.

 

1.1.41 Contract price refers to the price
for the Contractor to provide design, procurement, construction, completion test, test after completion, commissioning assessment
and service as agreed in contract agreement.

 

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1.1.42 Contract price adjustment refers
to corresponding adjustment made on contract price in accordance with the fees need to be increased or decreased regulated by laws
and contractual stipulations.

 

1.1.43 Total contract price refers to contract
settlement price adjusted according to contractual stipulations.

 

1.1.44 Prepayment refers to the payment
that the Employer makes to the Contractor in advance as per contractual stipulations.

 

1.1.45 Project progress payments refer
to the progress payments made to the Contractor for design, procurement, construction and completion test by the Employer by instalments
as per payment content and payment conditions agreed in the contract, as well as service fee for test after completion and commissioning
assessment and administration fee of general contracting of the project.

 

1.1.46 Project quality warranty liability
statement refers to the agreement signed by the Employer and the Contractor in terms of matters related to project quality warranty
as per regulations related to quality warranty set out by law.

 

1.1.47 Defect liability warranty premium
refers to the amount that the Employer deducts temporarily from project progress payments as the Contractor performing defect liability
guarantee during construction and defect liability period.

 

1.1.48 Defect liability period refers to
the period that the Contractor bears the liability of defect warranty as per contractual stipulations, and generally it shall be
12 months. The maximum period shall not exceed 24 months due to extension of defect liability. Detailed period is agreed in special
terms and conditions.

 

1.1.49 Written form refers to the form
of the stated content can be visibly expressed in contract, letters and data message. Data message includes: telex, fax, digital
data exchange and email.

 

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1.1.50 Liabilities for breach refer to
the liabilities shall be borne due to one party fails to perform obligations of the contract, or performance of obligations of
the contract fails to comply with contractual stipulations.

 

1.1.51 Force majeure refers to unpredictable,
unavoidable and insurmountable objective conditions. Concrete situation shall be agreed in special terms and conditions by the
two parties.

 

1.1.52 Other definitions need to be complemented
and agreed as per characters of the contract project shall be set out in special terms and conditions.

 

1.2 Contract Documents

 

1.2.1 Composition of contract documents.
Contract documents are explained and illustrated reciprocally. Unless being set out in special terms and conditions otherwise,
documents compositing the contract and the priority of explanation is as follows,

 

(1) The contract agreement

 

(2) Special terms and conditions of the
contract

 

(3) Notification of award

 

(4) Bidding and tender documents and annex

 

(5) General terms of the contract

 

(6) Annex to the contract

 

(7) Standards, codes and related technical
documents

 

(8) Design documents, files and drawings

 

(9) Other documents form an integral part
of the contract agreed by the two parties

 

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Documents in written form such as meeting
minutes, memo, amended documents, changes and negotiations signed by authorized representatives of the two parties in the process
of executing the contract form an integral part of the contract.

 

1.2.2 In the event that content of terms
of contract documents are ambiguous or inconsistent, and fail to be illustrated explicitly in line with priority of explanation
set out by the contract, parties concerned discuss to settle without affecting normal progress of the project. In the event that
parties concerned fail to reach consensus through discussions, it shall be settled in accordance with stipulations in relation
to disputes and adjudication in article 16.3.

 

1.2.3 Titles of the terms in the contract
are for the convenience of reading, and shall not be the basis of interpretations of contractual terms.

 

1.3 Language and Characters

 

Contract documents are compiled, explained
and illustrated in Chinese simplified language and characters in China. In the event that parties of the contract use two and above
languages in special terms and conditions, Chinese is the leading language for priority of explanation and illustration of the
contract.

 

In ethnic group areas, parties concerned
are entitled to agree to use the ethnic group language to compile, explain and illustrate the contract documents.

 

1.4 Applicable Laws

 

The contract abides by laws in P. R. China,
and they refer to laws, legislations, department regulations of P. R. China and local regulations, autonomous ordinance, specific
regulations and local government regulations where the project is located. Names of applicable state and local laws shall be stated
clearly shall be stipulated in special terms and conditions.

 

After reference date, if the Contractor’s
expenses increase as a result of change in laws, the Employer shall reasonably increase contract price; and if critical path period
is delayed due to change in laws, construction period therefrom shall be extended reasonably.

 

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1.5 Standards and Codes

 

1.5.1 Name (or number) of national standards
and (or) industry standards and (or) local standard where the project is located and (or) company specifications that are applicable
to the project are set out in special terms and conditions.

 

1.5.2 In the event that the Employer applies
foreign standards and codes, original copy and translated version in Chinese shall be provided, and name, number of copies and
date of the standards and codes provided shall be stipulated in special terms and conditions.

 

1.5.3 In the absence of written standards
and codes, the Employer states explicitly technical specifications at appointed time in special terms and conditions, the Contractor
raises execution methods as per agreed time and technical specifications, and shall be executed after gaining The Employer’s
consent. In the event that the Contractor needs to implement research and development experiments for execution methods, or needs
to provide special training for construction workers, unless the fee is included in contract price otherwise, the two parties shall
sign agreement separately as annex to the contract, and the expense shall be covered by the Employer.

 

1.5.4 After reference date, if the Contractor’s
expenditures increase as a result of newly enacted national compulsory codes and standards, the Employer shall increase contract
price reasonably. If critical path period is delayed, the Employer shall reasonably extend construction period.

 

1.6 Confidentiality 

 

Commercial secrets and technological secrets
of the other party known to one party during concluding and performing the contract, and other information required clearly for
confidentiality by any one party, the party concerned bear the liability of keeping the secrets, and shall not disclose externally
or use for the purposes outside of the contract without consent. In the event that one party discloses or uses confidential information
such as the commercial secrets and technological secrets outside of the contract and causes losses to the other party, indemnity
liability to the losses shall be borne. The other party shall provide information needed for performing the contract by the party
concerned. The party concerned is entitled to sign confidentiality as annex to the contract when necessary.

 

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Article 2 The Employer

 

2.1 The Employer’s Main Rights
and Obligations

 

2.1.1 Is responsible for handling procedures
of reviewing, approval or filing of the project, gaining tenure right of the project land, completing compensation for demolition
and removal, enabling the project to possess construction conditions regulated by laws and the contract, and providing documents
for project approval.

 

2.1.2 Performs obligations of adjustment
of contract price, payment, and completion settlement set out in the contract.

 

2.1.3 Has the right in making suggestions,
modifications and changes on implementation work performed by the Contractor including design, procurement, construction and completion
test in accordance with contractual stipulations and regulations set out by compulsory standards and codes related to safety, quality,
environmental protection and occupational health in applicable laws. However, regulations of compulsory national standards and
codes shall not be violated.

 

2.1.4 Has the right in claiming for indemnity
for any losses or damages brought about by the Contractor to the Employer due to the Contractor’s causes as per contractual
stipulations.

 

2.1.5 The Employer is entitled to send
notice of suspension in writing when necessary. As for suspension caused by the Employer therein, resultant increase in the Contractor’s
expenditures shall be borne by the Employer, and for delayed critical path being caused, date for completion defers accordingly.

 

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2.2 The Employer’s Representative

 

Representative authorized by the Employer
exercises the rights authorized by the Employer and performs the Employer’s obligations, but the Employer’s representative
has no right in revising the contract. The Employer’s representative performs his/her duties within the authorized scope
as per the contract. The written notice sent by the Employer’s representative to the Contractor according to agreed scope
and matters of the contract is submitted to project manager after being signed in person. Name, position and responsibilities of
the Employer’s representative are stipulated in special terms and conditions. In the event that the Employer decides to replace
its representative, name, position, authority and time of appointment of the new representative shall be informed to the Contractor
in writing in 15 days before assuming the post.

 

2.3 Superintendent

 

2.3.1 As to the Employer implements supervision
on the project, name, project supervisor, scope of supervision, content and rights of superintendent shall be stated in special
terms and conditions.

 

Superintendent performs supervision on
the Contractor on behalf of the Employer as per the scope, content and limit of authority of the supervision authorized by the
Employer. The notice sent by superintendent to the Contractor shall be signed by project supervisor in writing and handed over
to the Contractor for execution afterwards, and shall be copied to The Employer.

 

2.3.2 In the event that authority of project
supervisor overlaps authority of the Employer’s representative or is unclear, the Employer shall coordinate and make clear,
and shall inform the Contractor in writing.

 

2.3.3 Unless being agreed in special terms
and conditions otherwise, project supervisor has no right in changing any rights and obligations of parties of the contract.

 

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2.3.4 In the event that the Employer replaces
project supervisor, the Contractor shall be notified in writing 5 days in advance, and name, position, authority, limits of authority
and time of appointment of the replacing person shall be stated in the notice.

 

2.4 Safety Guarantee

 

2.4.1 Unless agreed in special terms and
conditions otherwise, the Employer is responsible for coordinating to handle safety protection work such as existing underground
and above-ground facilities, adjacent buildings, structures, ancient trees, antiques and grave surrounding construction site, maintaining
order surrounding the site and bearing relevant fees.

 

2.4.2 Unless agreed in special terms and
conditions otherwise, the Employer shall be responsible for setting up separation facility and erecting conspicuous signage of
no entry, prohibition of fire for the buildings, structures, production apparatus, facilities and equipment that are being used
or operating proximate to the Employer at project site, or the Employer uses for production, and notifying the Contractor in writing
the safety rules and range of location shall be abided by. The Employer shall bear the losses and damages incurred to Contract
due to the Employer’s causes.

 

2.4.3 In the absence of stipulations in
the contract, the Employer requires performing decoration project involved with change in main structure and load bearing structure
of the construction, or involved in major change in technique, the two parties are entitled to sign commission contract separately
as annex to the contract.

 

As for the Employer voluntarily decides
this type of decoration or the Employer signs commission contract with a third party, the Employer shall bear the liability for
losses and damages as a result of design plan and construction works raised by the Employer or the third party entrusted separately
by the Employer.

 

2.4.4 The Employer is responsible for providing
safety training for its representative, employees, superintendent and other personnel entrusted, and abides by safety rules of
project site set out by the Contractor. The Contractor shall visibly show related safety rules in sign at site, or send the safety
rules to the Employer. The Employer shall be liable for personal injuries and safety incidents incurred due to the Employer’s
representative, employees, superintendent and entrusted other personnel’s failure in abiding by the safety rules of project
site set out by the Contractor.

 

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2.4.5 The Employer, the Employer’s
representative, employees, superintendent and other personnel entrusted shall abide by article 7.8 related stipulations on health,
safety and environmental protection.

 

2.5 Security Liabilities

 

2.5.1 Subject of liability for security
work on site is stipulated by special terms and conditions. The party undertaking security work of the site is responsible for
liaison, communication and coordination with local related public security department, and shall bear related cost incurred.

 

2.5.2 The Employer and the Contractor discuss
to determine the partition of security responsibilities of implementation stages and area of the project, and compile related security
scheme, responsibility system and reporting system as annex to the contract.

 

2.5.3 As for areas occupied by the Employer,
a single project and project accepted as per contractual stipulations, the Employer undertakes related security work, as well as
costs, damages and liabilities incurred.

 

Article 3 The Contractor

 

3.1 The Contractor’s Main Rights
and Obligations

 

3.1.1 The Contractor shall complete design,
procurement, construction, completion test and (or) instruction on test after completion work as per the standards, codes, functions
of the project, scale, appraisal objectives and date for completion set out by the contract, and shall not violate regulations
set out by national compulsory standards and codes.

 

Detailed scope of contracting of the project
shall be based on stipulations set out by item I ‘project overview’ regarding ’scope of project contracting’
in the contract agreement.

 

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3.1.2 The Contractor shall rectify at own
expenses the defects in design, documentation, equipment, materials, parts and construction due to the Contractor’s causes,
or the defects uncovered during completion test and test after completion as per agreed contractual terms.

 

3.1.3 The Contractor shall submit related
statements according to contractual stipulations and the Employer’s request. Types, name, content, date of report, date of
submission and number of copies of the statements are set out in special terms and conditions.

 

3.1.4 The Contractor is entitled to send
suspension notice in writing to the Employer as per item 4.6.4 the Contractor’s request of resuming work, article item 14.9
delay in time of payment and article 17 force majeure. Other than that, the Contractor shall cover the increase in expenses of
the Contractor as a result of suspension due to the Contractor’s causes, and delay in critical path caused shall be caught
up at own expenses.

 

3.1.5 As for any losses, damages or delay
in critical path of the project brought forward to the Contractor due to the Employer’s causes, the Contractor is entitled
to claim indemnity and (or) extend date for completion.

 

3.2 Project Manager

 

3.2.1 Project manager shall be the candidate
confirmed by both parties concerned. Project manager is authorized and is responsible for performing the contract on behalf of
the Contractor. Name, duties and limits of authority of project manager is set out in special terms and conditions.

 

Project manager shall be the Contractor’s
employee. The Contractor shall submit labor contract between project manager and the Contractor, as well as valid verification
documents of the Contractor paying social insurance for project manager to the Employer within 10 days after the contract is effective.
If the Contractor fails to submit the above-stated documents, project manager has no right in performing the duties, and the Contractor
bears the liability for the resulting adverse affect on project progress or other issues incurred.

 

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Project manager shall be on site on a regular
basis, and the time spent on site shall not be less than agreed number of days in special terms and conditions. Project manager
shall not simultaneously act as project manager for other projects. If project manager definitely needs to be off project site,
prior consent shall be granted by the Employer, and one experienced person shall be nominated to perform his/her duties temporarily
on his/her behalf.

 

If the Contractor violates the above-stated
stipulations, liabilities for breach shall be borne as per stipulations set out by special terms and conditions.

 

3.2.2 Project manager shall organize project
implementation as per project program agreed by the contract, and the order given by the Employer’s representative and (or)
project supervisor in accordance with the contract. Under the circumstances of emergency, and failure in gaining contact with the
Employer’s representative and (or) project supervisor, project manager has the right in undertaking necessary measures to
ensure personal, project and asset safety, and must submit written report to the Employer’s representative and (or) project
supervisor within 48 hours after the incident.

 

3.2.3 In the event that the Contractor
replaces project manager, notice in writing shall be sent to the Employer 15 days in advance, and consent shall be granted by the
Employer. The succeeded project manager shall continue to perform the duties and limits of authority regulated by item 3.2.1. The
Contractor shall not voluntarily replace project manager without The Employer’s consent. If the Contractor takes the liberty
of replacing project manager, liabilities for breach shall be borne as per stipulations of special terms and conditions.

 

3.2.4 The Employer is entitled to notify
in writing to replace the project manager he/she believes to be unqualified, and the reasons for the replacement shall be stated.
The Contractor shall propose written improvement report to the Employer within 15 days after receiving the notice of replacement.
If the Employer informs in writing to replace after receiving the improvement report, the Contractor shall perform the replacement
within 30 days after receiving the second notice of replacement, and shall notify in writing to the Employer name and resume of
newly appointed project manager. Newly appointed project manager continue to perform the duties and limits of authority set out
in item 3.2.1.

 

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3.3 Project Quality Assurance

 

The Contractor shall ensure the quality
of work such as design, procurement, processing and production, construction and completion test as per the quality standard agreed
by the contract, establish effective quality assurance system, and set out scope of warranty, warranty term and warranty liabilities
in the form of quality warranty liability certificate as per related state regulations.

 

3.4 Safety Guarantee

 

3.4.1 Project safety performance

 

The Contractor shall perform design, procurement,
construction and completion test to ensure safety performance of the project as per contractual stipulations and regulations set
out by related state safe production law.

 

3.4.2 Safe construction work

 

The Contractor shall comply with stipulations
on occupational health, safety and environmental protection in item 7.8.

 

3.4.3 The Contractor shall be liable for
the losses and injuries caused by the Contractor’s failure in complying with safety rules and limits of location range notified
by item 2.4.2.

 

3.4.4 The Contractor is fully responsible
for safety management of construction site, and ensures the safety of all personnel entry into the construction site. The Contractor
is liable for personal injury and safety incidents due to the Contractor’s causes.

 

3.5 Occupational Health and Environmental
Protection Guarantee

 

3.5.1 Project design

 

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The Contractor shall perform environmental
protection design and occupational health protection design of the project as per contractual stipulations, and by abiding by Regulations
on Survey and Design of Construction Projects, Regulations on Environmental Protection of Construction Projects and
other regulations set out by law, to ensure the project to comply with regulations of laws and standard on environmental protection
and occupational health.

 

3.5.2 Occupational health and environmental
protection

 

The Contractor shall abide by the stipulations
on occupational health, safety and environmental protection in item 7.8.

 

3.6 Progress Guarantee

 

The Contractor shall organize resources
demanded by design, procurement, construction and completion test reasonably and orderly as per project program set out in item
4.1, shall send experienced instructors for test after completion, and shall adopt effective implementation methods and organizing
measures to ensure the achievement of project program.

 

3.7 Site Security

 

The Contractor bears the liability of site
security for access into the site, commencement of construction work till before the Employer accepts a single project and (or)
the project (including the Contractor’s pre-fabrication site, office and living zone), and is responsible for compiling related
security system, liability system and reporting system and submitting to the Employer.

 

3.8 Subcontracting

 

3.8.1 Subcontracting stipulations

 

The Contractor is eligible for subcontracting
on work items listed in special terms and conditions only (including design, procurement, construction, labor service and completion
test).

 

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As for subcontracting items that are not
listed in special terms and conditions, the Contractor is entitled to submit applications to the Employer in terms of subcontracting
matters by batches and by stages during project construction stages. The Employer grants approval or raises opinions within 15
days after receiving the applications for subcontracting matters. In the event that the Employer neither grants approval nor raises
opinions within 15 days, the Contractor has the right in performing subcontracting for the planned subcontracting matters proposed
from the 16th day after submitting the subcontracting matter.

 

3.8.2 Qualification of subcontractors

 

Subcontractors shall comply with enterprise
qualification level regulated by state laws, otherwise they are forbidden to be subcontractors. The Contractor is liable for reviewing
the qualification of the subcontractors.

 

3.8.3 The Contractor shall not transfer
subcontracting the contracted project, and shall not subcontract externally the contracted project as a whole by means of dismemberment.

 

3.8.4 Subcontractors in design, construction
and project materials shall firmly perform state related management regulations on subcontracting.

 

3.8.5 Payment to subcontractors

 

The Contractor shall make payments of contract
price to subcontractors on time as per subcontract terms. Unless being regulated by special terms and conditions otherwise, the
Employer shall not make any payments to subcontractors in any form without the Contractor’s consent.

 

3.8.6 The Contractor is liable for the
Employer

 

The Contractor is liable for the Employer
in terms of subcontractors’ conduct. The Contractor and subcontractors bear joint liabilities for the Employer in relation
to subcontracting work.

 

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Article 4 Program, Delay and Suspension

 

4.1 Project Program

 

4.1.1 Project program

 

The Contractor is responsible for drafting
project program, and construction time limit (including completion test) in project program shall comply with the stipulations
in contract agreement. Principle of determining critical path and change of critical path, number of copies and time of the Contractor
submitting project program are set out in special terms and conditions.

 

Project program is implemented after being
approved by the Employer, but the approval conducted by the Employer does not mitigate or exempt the Contractor’s contractual
liabilities.

 

4.1.2 Accelerating project program at own
expenses

 

In the event that actual project progress
remarkably lags behind project program due to the Contractor’s cause, the Contractor has the obligation, and the Employer
has the right in requiring the Contractor to adopt measures at own expenses to catch up with project program.

 

4.1.3 Adjustment in project program

 

Date for completion defers accordingly
if the following situations occur, and project program is adjusted,

 

(1) The project basic files and site barrier
files provided by the Contractor as per item 5.2.1 are untrue, incorrect, incomplete and not in time, or payment fails to be made
as per the agreed prepayment amount regulated in item 14.3.1 and time of payment regulated in item 14.3.2, resulting in delay in
design commencement date regulated in item 4.3.2, or delay in procurement commencement date regulated in item 4.4.2, or delay in
construction commencement date.

 

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(2) In accordance with stipulations in
item 4.2.4 sub-item 2, review meeting of a particular design stage is delayed due to the Employer’s cause.

 

(3) In accordance with stipulations in
item 4.2.4 sub-item 3, duration of approval by related design review authority is extended compared to agreed time in the contract.

 

(4) Other condition of extending date for
completion as per contractual stipulations.

 

4.1.4 The Employer’s request on acceleration
of works

 

If the Employer raises the request of accelerating
design, procurement, construction and completion test during execution of the contract and it is accepted by the Contractor, the
Contractor shall submit acceleration plan and undertake acceleration measures. Cost increase as a result of the acceleration of
works shall be performed as per change terms in item 13.2.4.

 

4.2 Design Program

 

4.2.1 Design program

 

The Contractor compiles design program
according to approved project program, design review stage agreed in item 5.3.1 and time schedule for review meeting of design
stage organized by the Employer. Design program is implemented under the Employer’s consent. The Employer’s consent
does not relieve the Contractor’s contractual liabilities.

 

4.2.2 Design commencement date

 

The 5th day after The Contractor receives
project basic files, site barrier files as per item 5.2.1, as well as prepayment as per item 14.3.2 from The Employer is design
commencement date.

 

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4.2.3 Delay in design commencement date

 

If design commencement date is delayed
due to the Employer fails to provide related files such as design basic files and site barrier files as per terms in item 5.2.1,
or fails to make prepayment according to the prepayment amount and payment time agreed in item 14.3.1 and item 14.3.2, design commencement
date and design completion date defer accordingly. Delay in design commencement date as a result of the Contractor’s causes
shall be caught up at own expenses as per item 4.1.2. As for economic losses incurred to the Contractor due to the Employer’s
causes, corresponding fees shall be paid.

 

4.2.4 Delay in date for design review stage

 

(1) In the event that design documents
of related stage fail to be submitted as per design review stage and the time schedule of review meeting stipulated in the contract,
or the submitted related design documents fail to comply with the requirements on the depth of design at related review stage due
to the Contractor’s causes, and design review meeting is delayed therefrom, the Contractor shall adopt measures to catch
up at own expenses according to terms in item 4.1.2. In the event that critical path is caused to be delayed, or losses are incurred
to the Employer (preparation fee for review meeting), the Contractor bears the costs.

 

(2) In the event that review meeting of
a particular design stage is delayed without complying with the time schedule of review meeting of design stage agreed by the contract
due to the Employer’s causes, date for completion defers accordingly. Losses on idling of labor force of the Contractor therefrom
shall be borne by the Employer.

 

(3) If the length of time for approval
by related design review governmental authority is extended compared to agreed time in the contract, date for completion defers
accordingly. Cost increase thereof brought forward to the two parties shall be borne by the two parties respectively.

 

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4.3 Procurement Program

 

4.3.1 Procurement program

 

The Contractor’s procurement program
shall comply with the time schedule set out by project program, and shall connect to the program including design, construction
and (or) completion test and test after completion. Number of submitted copies and date of procurement program shall be agreed
in special terms and conditions.

 

4.3.2 Procurement commencement date

 

Procurement commencement date is set out
in special terms and conditions.

 

4.3.3 Delay in procurement progress

 

The Contractor shall be liable for delay
in procurement and resultant losses on stoppage and idling of labor force and delay in date for completion due to the Contractor’s
causes. The Employer shall be liable for procurement delay due to the Employer’s causes and causes losses on stoppage and
idling of labor force to the Contractor. If delay in critical path is caused, date for completion defers accordingly.

 

4.4 Construction Program

 

4.4.1 Construction program

 

The Contractor shall submit one copy of
overall construction organizing blueprint including construction program 15 days before commencement of construction works at site.
Date of commencement and completion in construction program shall comply with the stipulations in contract agreement in relation
to date of commencement and date for completion of the project, and shall be consistent with the arrangement in project program.
If the Employer needs the Contractor to submit construction program for critical a single project and (or) critical subdivisional
project, the number of copies and time of submission shall be set out in special terms and conditions.

 

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4.4.2 Delay in construction commencement
date

 

If construction commencement date is delayed,
date for completion is confirmed to be extended in accordance with the following stipulations,

 

(1) The Contractor is unable to commence
construction works due to the Employer’s causes, date for commencement and completion defer accordingly. Economic losses
incurred to the Contractor thereof shall be compensated accordingly.

 

(2) As for construction works fail to commence
timely due to the Contractor’s causes, proper causes shall be stated, and for construction works commence as early as possible
at own expenses, date for completion shall not be extended.

 

(3) As for delay in date for commencement
due to force majeure, date for completion defers accordingly.

 

4.4.3 Date for completion

 

(1) If test stage of contracting project
includes completion test stage, planned date for completion and actual date for completion are determined as per the following
methods,

 

1) Date for completion of a single project
set out in special terms and conditions (item 9.1 project acceptance) is the planned date for completion of a single project; planned
date for completion of the last single project of the project is the planned date for completion of the project.

 

2) Date for the pass of the last completion
test item in a single project is the actual date for completion of a single project.

 

3) Date for the pass of completion test
of the last single project of the project is the actual date for completion of the project.

 

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(2) If implementation stage of contracting
project does not include completion test stage, planned date for completion and actual date for completion are determined as per
the following methods,

 

1) Date for completion of a single project
set out in special terms and conditions (item 9.1 project acceptance) is the planned date for completion of a single project; planned
date for completion of the last single project of the project is the planned date for completion of the project.

 

2) The date that The Contractor completes
all the construction works of a single project regulated by construction drawing as per the contract, and conforms to agreed quality
standard is the actual date for completion of a single project.

 

3) The date that the Contractor completes
all the construction works of the last single project in the project regulated by construction drawing, and complies with quality
standard set out by the contract is the actual date for completion of the project.

 

(3) Reserved construction work position
for completion test or test after completion by the Contractor, or reserved construction work position required by the Employer,
and fragmented outstanding work and rectification of defects that do not affect The Employer’s practical operations and use,
do not affect the determination of date for completion.

 

4.5 Indemnity for Delay

 

The Contractor shall bear the liability
of indemnity for the losses as a result of delay due to the delay in date for completion caused by the Contractor. Indemnity amount
for each day delayed as well as cumulative maximum indemnity amount, are set out in special terms and conditions. The Employer
is entitled to deduct the indemnity amount from progress payments, completion settlement payment or performance bond agreed to
be submitted.

 

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4.6 Suspension

 

4.6.1 Suspension due to The Employer’s
causes

 

As for suspension notified by the Employer,
date and estimated time limit of suspension shall be stated clearly. The two parties shall abide by related stipulations in item
2.1.5 and 3.1.4.

 

4.6.2 Suspension caused by force majeure

 

As for suspension of the project due to
force majeure, the two parties shall arrange their work respectively according to item 17.1 obligations upon occurrence of force
majeure and item 17.2 consequences of force majeure.

 

4.6.3 The Contractor’s work during
suspension

 

In the event that suspension in line with
item 4.6.1 the Employer’s suspension and item 4.6.2 suspension due to force majeure occurs, the Contractor shall stop the
construction work at site immediately, and be responsible for providing care and protection for the project, project materials
and the Contractor’s documents during suspension as per contractual stipulations. The Contractor shall be liable for the
damages, missing, the Employer’s cost increase and (or) delay in date for completion due to the Contractor’s failure
in fulfilling the liabilities in care and protection.

 

4.6.4 The Contractor’s request of
resuming work

 

As for suspension being notified by the
Employer, the Contractor is entitled to send notice requesting resuming work to the Employer 45 days after the suspension. If resuming
work is not permitted, the Contractor is entitled to make reduction on the part of project affected in the form of change as per
the terms of making reduction on part of the project set out in item 13.2.5.

 

In the event that suspension made by the
Employer exceeds 45 days and the suspension affects the project as a whole, or the suspension made by the Employer exceeds 180
days, or the contract is unable to be performed due to suspension as a result of force majeure, the Contractor is entitled to send
notice of terminating the contract in accordance with stipulations of termination of contract by the Contractor set out in item
18.2.

 

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4.6.5 Resuming work by the Employer

 

The Employer is entitled to organize the
Contractor to inspect the affected project, project materials by suspension after sending notice of resuming work. The Contractor
shall notify the inspection results, content need to be recovered and rectified and estimation to the Employer. The Employer bears
the price of recovery and rectification occurred after being confirmed by the Employer. As for delay in critical path caused by
the recovery and rectification, date for completion is extended accordingly.

 

4.6.6 Suspension due to the Contractor’s
causes

 

As for suspension of part of the project
or the project due to the Contractor’s causes, the Contractor shall be liable for the losses, damages and delay in date for
completion incurred.

 

4.6.7 Payment upon project suspension

 

After resuming work is suspended due to
the Employer’s cause, and implementation of the project as a whole is not affected, the two parties shall discuss the increased
reasonable costs incurred to the Contractor arising from the suspension as per terms set out in item 2.1.5. The Contractor shall
include the payment items in the payment claim in that period, and the Employer reviews and makes payment.

 

After resuming work is suspended due to
the Employer’s cause, and implementation of the project as a whole is affected, and the Contractor makes changes and reduction
on part of the project as per item 4.6.4 and is approved by the Employer, the Employer shall make changes and reduction on the
payment items from contract price. The two parties shall also discuss the increased reasonable costs incurred to the Contractor
arising from the suspension as per item 2.1.5. The Contractor shall include the added or reduced payment items into the payment
claim of the period, and the Employer shall review and make payment.

 

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In the event that the suspension due to
the Employer’s cause leads to inability to perform the contract, and the Contractor sends notice of terminating the contract
as per the stipulations in paragraph two in item 4.6.4, the two parties shall perform settlement and payment as per stipulations
related to the Contractor’s termination of the contract in item 18.2.

 

Article 5 Technology and Design

 

5.1 Production Process Technology, Construction
Design Plan

 

5.1.1 Process technology and (or) construction
design plan provided by the Contractor

 

In the event that the Contractor is responsible
for providing production process technology (including patent technology, proprietary technology, process package) and (or) construction
design plan (including general arrangements, division of functions, architectural modeling and main structure), the Contractor
shall be liable for provided process flow, process technology data, process conditions, software, analysis handbook, operation
guide, equipment manufacturing instructions and other requests on files, and (or) general arrangement, division of functions, architectural
modelling and its structure design.

 

The Contractor shall be liable for the
explanatory notes to commissioning assessment guarantee value, and (or) use function guarantee set out by special terms and conditions.
The explanatory notes to the commissioning assessment guarantee value and (or) use function guarantee is the basis of assessment
for the Employer to conduct commissioning assessment according to item 10.3.3.

 

5.1.2 Process technology and (or) construction
design plan provided by the Employer

 

In the event that the Employer is responsible
for providing production process technology (including patent technology, proprietary technology, process package) and (or) construction
design plan (including general arrangements, division of functions, architectural modeling and main structure, or construction
design plan provided by a third party architecture organization entrusted by the Employer), the Employer shall be liable for provided
process flow, process technology data, process conditions, software, analysis handbook, operation guide, equipment manufacturing
instructions and other document files of the Contractor, the Employer’s requirements, and (or) general arrangement, division
of functions, architectural modelling and main structure, or the construction design plan provided by the third party architecture
organization.

 

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The Employer is obliged in instructing
and reviewing the production process design and (or) construction design performed by the Contractor according to the above-stated
files provided by the Employer, and providing confirmation. Various guarantee value for commissioning assessment of the project
and (or) a single project, or explanatory notes to use function guarantee and appraisal liabilities that the two parties shall
bear shall be set out in special terms and conditions, and shall be the basis of assessment for the commissioning assessment and
appraisal liabilities conducted by the Employer as per item 10.3.3.

 

5.2 Design

 

5.2.1 The Employer’s obligations

 

(1) Provide project basic files. The Employer
shall provide project basic files to the Contractor in accordance with contractual stipulations, and regulations set out by laws
or industry, and shall be liable for their authenticity, accuracy, completeness and timeliness. In the event that the above project
basic files are not authentic, inaccurate or incomplete, the Employer has the obligation to provide further amendment files to
the Contractor as per agreed time. Types, content, number of copies and time of project basic files provided are set out in special
terms and conditions. As for reference coordinate files therein (including reference control points, reference control elevation
and reference coordinate control line), the Employer has the obligation in coordinating the Contractor’s actual measurement
and verification on site at appointed time. As for cost increase and (or) delay in construction period caused by the Contractor’s
correction of errors in coordinate files, the Employer is liable for related cost increase, and date for completion shall be reasonably
extended.

 

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As for technology or process package provided
by licenser contained in the project basic files provided by the Employer, or architectural modeling provided by the third party
architecture organization, the Employer shall organize the licenser or the third party architecture organization to perform exchange,
coordination and handover of data, conditions and files with the Contractor.

 

In the event that the Employer fails to
provide project basic files and amendment files, or files provided are inauthentic, inaccurate, incomplete or the Employer’s
plan is changed and causes the Contractor’s design to suspend, re-work or modify, the Employer shall compensate the loss
as per the extra design work load on the Contractor thereto. As for delay in project critical path caused, date for completion
defers accordingly.

 

(2) Provide site barrier files. Unless
agreed in special terms and conditions otherwise, the Employer shall provide site barrier files such as above-ground and underground
existing buildings and structures related to design and construction prior to design commencement as per contractual stipulations
and regulations set out by applicable laws, and shall be liable for their authenticity, accuracy, completeness and timeliness.
As for inauthenticity, inaccuracy, incompleteness and untimeliness of files provided causing the Contractor’s suspension,
re-work and modification of design, the Employer shall compensate the loss as per the extra design work load on the Contractor
thereto. As for delay in project critical path caused, date for completion defers accordingly. Types, content, number of copies
and time schedule of project barrier files provided are set out in special terms and conditions.

 

(3) If the Contractor is unable to verify
the data, conditions and files in the project basic files provided by the Employer, the Employer is obliged to provide further
confirmation.

 

5.2.2 The Contractor’s obligations

 

(1) The Contractor shall hand over the
project basic files related to design as per item 5.2.1 sub-item (1), and site barrier files related to design as per sub-item
(2) provided by the Employer in writing with the Employer (and its licenser and third party architecture organization). As for
shortage, omissions, errors and questions towards the files, the Contractor shall raise further request to the Employer within
15 days after receiving the above-stated files provided by the Employer. Loss incurred due to the Contractor fails to raise the
request within the above time frame shall be borne by the Contractor, and for the delay in project critical path therefrom, date
for completion is not allowed to be deferred. As to reference coordinate files of site of the project therein (including reference
control points, reference control elevation and reference coordinate control line), the Contractor has the obligation in booking
the time for actual measurement and verification and correcting errors (if any). The Contractor shall bear cost increase and delay
in critical path due to the Contractor’s delay in the work.

 

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(2) The Contractor has the obligation to
carry out project design according to project basic files, site barrier files provided by the Employer and the depth of design
regulated by related state authority, industry project construction standards and codes, and shall be liable for the designed process
technology and (or) construction functions, as well as project safety, environmental protection, occupational health standard,
quality of equipment and materials, project quality and completion time. The Contractor shall bear the cost increase and delay
in date for completion due to the Contractor’s design causes.

 

5.2.3 Compliance with standards and codes

 

(1) Standards and codes set out in item
1.5 are applicable to the Employer’s acceptance as per a single project and (or) acceptance of the project as a whole.

 

(2) In the event that new standards or
codes are enacted by state government during execution of the contract, the Contractor shall submit proposal related to the new
standards and the new codes to the Employer. As to the compulsory standards and codes thereto, the Contractor shall firmly abide
by, and the Employer shall treat them as variation. As to non-compulsory standards and codes, the Employer is entitled to decide
whether to adopt or not to adopt. If adoption is decided, it shall be treated as variation.

 

(3) Technical data and technical conditions
in design drawings and design documents completed as per the standards and codes regulated by applicable laws and the contract
are the basis of project materials procurement quality, construction quality and completion test quality.

 

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5.2.4 Operation and maintenance manual

 

As for the Contractor instructs test after
completion and commissioning assessment test, and compiles operation and maintenance manual, the Employer shall order its licenser
or the Employer’s other the Contractors to provide their operations guide and analysis handbook to the Contractor pursuant
to item 5.2.1 sub-item (1), and shall be liable for authenticity, accuracy, completeness and timeliness of their files, unless
regulated by special terms and conditions otherwise. Number of copies and deadline of submission for operation guide and analysis
handbook submitted by the Employer, and operation and maintenance manual submitted by the Contractor are stipulated in special
terms and conditions.

 

5.2.5 Number of copies and submission time
of design documents

 

Number of copies submitted and time of
design documents, files and drawings in related design stage are regulated in special terms and conditions.

 

5.2.6 Rectification and acceleration of
design defects at own expenses

 

As for omissions, errors, defects and deficiencies
in design documents due to the Contractor’s causes, the Contractor shall rectify, amend, correct and improve at own expenses.
If delay in design progress incurs, measures shall be undertaken to accelerate to catch up at own expenses.

 

5.3 Reviews at Design Stage

 

5.3.1 Organization and time arrangement
of design stage and review meetings of design stage of the project are set out in special terms and conditions. The Employer is
responsible for organizing review meetings of design stage, and shall bear cost of the meetings and the fees of superior unit and
related governmental departments attending to the review meetings.

 

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5.3.2 The Contractor shall submit design
documents at related design review stage to the Employer as per item 5.3.1, and the design documents shall comply with regulations
on design documents, drawings and depth of the files set out by related state authority and industry project construction standards
and codes. The Contractor has the obligation in participating in design review meetings organized by the Employer at own cost to
introduce, reply and explain the design documents to reviewers, and providing amendment files need to be submitted during the review
at own cost.

 

5.3.3 The Employer has the obligation in
providing approval documents and meeting minutes of the design review meeting to the Contractor. The Contractor has the obligation
to modify, amend and improve related design in accordance with the documents approved during related design review stage and meeting
minutes, and stipulations of the contract and related design regulations.

 

5.3.4 In the event that complete design
documents, drawings and files at related design review stage fail to be submitted to the Employer at agreed time in item 5.2.5
due to the Contractor’s causes, and the meeting at related design review stage is unable to be held or unable to be held
on time therefrom, the Contractor bears the liability for the delay in date for completion, loss on idling of labor force and the
Employer’s increased meeting organizing expenses.

 

5.3.5 The Employer is entitled to raise
suggestions on design documents, drawings and files at related design stage before various design review stages stipulated in item
5.3.1. Any suggestions, pre-review and confirmation made by the Employer do not mitigate or exempt the Contractor’s liabilities
and obligations towards the contract.

 

5.4 Training on Operations and Repair
Staff

 

As to the Employer entrusts the Contractor
to provide training for operations and repair staff of the Employer, training authorization contract shall be signed separately
as annex to the contract.

 

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5.5 Intellectual Property Right

 

The two parties are entitled to sign intellectual
property and confidentiality agreement in relation to intellectual property right such as technological patents, construction design
plan, proprietary technology, design documents copyright of one party concerned or two parties of the contract (including one party
or the two parties’ licenser, third party architecture organization or architecture), as an integral part of the contract.

 

Article 6 Project Materials

 

6.1 Supply of Project Materials

 

6.1.1 Project materials supplied by the
Employer

 

(1) The Employer is responsible for organizing
procurement of project materials as per technical parameters, technical conditions, performance specifications, use requirements
and quantity set out by design documents in item 5.2.3 sub-item (1), and is responsible for delivering to site, and is liable for
quantity of use, quality inspection results and performance.

 

Classes and quantity of project materials
shall be supplied by the Employer are listed in special terms and conditions.

 

(2) In the event that project materials
(including construction members) purchased and supplied by the Employer fail to comply with regulations set out by state compulsory
standards and codes, contain quality defects, and delay in arriving at site, and cause idling of labor force, stoppage to the Contractor
or delay in critical path, it shall be performed as per stipulations on variation and adjustment in contract price set out in article
13.

 

During execution of the contract, as to
compulsory standards and codes newly enacted by state government lead to the project materials (including construction members)
supplied by the Employer to fail to comply with newly enacted compulsory standards, the Employer is responsible for rectifying
or re-ordering the goods. If the Contractor is authorized to rectify, it shall be treated as variation.

 

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(3) As for the Employer invites the Contractor
to participate in procurement work from overseas, expenses incurred shall be borne by the Employer.

 

6.1.2 Project materials supplied by the
Contractor

 

(1) The Contractor is responsible for organizing
procurement of project materials (including spares and reserved parts, special tools and technical documents provided by manufacturer)
as per technical parameters, technical conditions, performance specifications, use requirements and quantity set out by design
documents in item 5.2.3 sub-item (3), and is responsible for delivering to site, and is liable for quantity of use, quality inspection
results and performance.

 

Classes and quantity of project materials
shall be supplied by the Contractor are listed in special terms and conditions.

 

(2) In the event that project materials
(including construction members) supplied by the Contractor fail to comply with regulations set out by state compulsory standards
and codes or standards and codes agreed by the contract, the Contractor shall be liable for rectification at own cost of the quality
defects thereof, and extension of date for completion is not permitted.

 

During execution of the contract, as to
compulsory standards and codes newly enacted by state government lead to the project materials (including construction members)
supplied by the Contractor to fail to comply with newly enacted compulsory standards despite complying to the standards agreed
by the contract, the Contractor is responsible for rectifying or re-ordering the goods, and shall be treated as variation.

 

(3) As for production materials for test
after completion supplied by the Contractor, classes and (or) inventory shall be listed in special terms and conditions.

 

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6.1.3 The Contractor’s choice of
suppliers

 

The Contractor shall select suppliers or
manufacturers of related project materials through competition methods such as tender. As for engineering construction projects
must be tendered by law, tender shall be performed as per related state regulations.

 

The Contractor shall not nominate suppliers
or manufacturers in design documents or by verbal suggestions, except exclusive manufacturer. The Employer shall not nominate suppliers
and manufacturers in any methods whatsoever.

 

6.1.4 Proprietary right over project materials

 

Project materials supplied by the Contractor
pursuant to item 6.1.2 arrive at place of delivery at site and procurement progress payment is made, proprietary right is thereafter
transferred to The Employer. Before the Employer accepts the project, the Contractor has the obligation in safekeeping, maintaining
and caring project materials, and shall not be shipped out from the site without the Employer’s approval.

 

6.2 Inspection

 

6.2.1 Factory inspection and report

 

(1) The Contractor shall abide by regulations
set out by related laws, and is responsible for mandatory inspection, tests, monitoring and experiments on permanent project equipment,
materials, parts, spares and reserved parts, and test after completion materials as stipulated in item 6.1.2, and submits related
report to the Employer. Report content, date of report and number of copies submitted are regulated in special terms and conditions.

 

(2) In the event that the Contractor invites
the Employer to participate in inspection, notice in writing shall be sent to the Employer the content, venue and time of the inspection
participated prior to examination, tests, monitoring and experiments of related fabrication and manufacturing stage. The Employer
shall notify in writing to the Contractor whether to participate in or not within 5 days after receiving the invitation.

 

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(3) The Employer is responsible for the
salary, allowance, travel expenses and accommodation of the personnel participating in the inspection during the inspection, and
the Contractor is responsible for handling the permit in access into related manufacturers, and shall provide convenience.

 

(4) If the Employer entrusts qualified
and experienced third party to participate in the inspection at own expenses on behalf of the Employer, notice in writing shall
be sent to the Contractor within 5 days after receiving the Contractor’s invitation letter, and organization name, name and
authorized power and functions of entrusted organization and entrusted personnel shall be stated.

 

(5) The inspection participated by the
Employer and its entrustee does not relieve the Contractor’s quality liabilities for the project materials being purchased.

 

6.2.2 Consequences of covering and packaging

 

In the event that The Employer has notified
in writing to the Contractor to participate in inspection within the date regulated by item 6.2.1, and arrives at appointed location
in advance or on time as per agreed date, but fabricated and manufactured project materials have been covered, packaged or delivered
to the location of shipment without the Employer’s site inspection, the Employer is entitled to order the Contractor to deliver
to original location, remove covering and packaging, and conduct re-examination or re-inspection or re-test or re-experiment till
restoration. The Contractor bears the cost incurred thereto. If delay in project critical path is caused, extension of date for
completion is not permitted.

 

6.2.3 Participating in inspection not on
time

 

If the Employer fails to participate in
inspection pursuant to item 6.2.1, the Contractor is entitled to organize examination, inspection, tests and experiments voluntarily,
and the quality inspection results are deemed as authentic. The Employer is entitled to notify the Contractor in change order to
re-examine, re-inspect, re-test and re-experiment, or add test details or change test location thereafter. As for project materials
pass the quality inspection, cost incurred shall be borne by the Contractor. As to delay in project critical path caused, extension
of date for completion is not permitted.

 

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6.2.4 Site inventory and inspection

 

(1) The Employer shall notify the Contractor
5 days before the project materials shall be supplied regulated in item 6.1.1. The Employer (or including the suppliers supplying
project materials for The Employer) and the Contractor (or including its Subcontractors) make inventory on quantity of cartons
and conduct inspection on appearance as per bill of lading of each batch of goods, and making inventory on quantity in cartons,
factory exit pass certificate, drawings, and documentation files according to packing list, and provide inspection on appearance.
Personnel of the two parties sign hand-over list after the inspection and inventory.

 

If shortage of cartons, shortage of quantity
of materials, drawings and files in cartons, or deficiency of appearance is discovered through site inspection and inventory, the
Employer shall be responsible for amending or rectifying at own cost, and the project materials must not be used in the project
before the defects are not rectified. In the event that the Employer entrusts the Contractor to rectify defects, additional contract
shall be signed separately. As to delay in project critical path due to the above-stated situations, date for completion defers
accordingly.

 

(2) The Contractor shall notify the Employer
5 days before the project materials shall be supplied regulated in item 6.1.2. The Contractor (or including the suppliers or subcontractors
supplying project materials for the Contractor) and the Employer (including representative or its superintendent) make inventory
on quantity of cartons and conduct inspection on appearance as per bill of lading of each batch of goods, and making inventory
on quantity in cartons, factory exit pass certificate, drawings, and documentation files according to packing list, and provide
inspection on appearance. Personnel of the two parties sign open-box inspection certificate after the inspection and inventory.

 

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If shortage of cartons, shortage of quantity
of materials, drawings and files in cartons, or deficiency of appearance is discovered through site inspection and inventory, the
Contractor shall be responsible for amending or rectifying at own cost, and the project materials must not be used in the project
before the defects are not rectified. The Contractor is liable for cost increase and delay in date for completion caused therefrom.

 

6.2.5 Inspection participated by quality
supervision authority, fire control and environmental protection authority

 

The Employer and the Contractor accept
the site inspection conducted by quality supervision authority, fire control authority, environmental protection authority, professional
inspectors of the industry and others on production, installation and test process at any time, and the cost shall be borne by
the Employer. The Contractor provides convenience thereto. As to delay in critical path caused, date for completion defers accordingly.

 

Relevant cost added arising from the recommendations
on modification and replacement proposed by the above-stated authorities shall be borne by the responsible party supplying the
project materials stipulated in item 6.1.1 or item 6.1.2. As to project critical path caused thereof, if the responsible party
is the Contractor, extension of date for completion is not allowed; and if the responsible party is the Employer, date for completion
defers accordingly.

 

6.3 Procurement, Customs Declaration,
Customs Clearance and Commodity Inspection of Imported Project Materials

 

6.3.1 Responsible party for procurement
of project materials by import, as well as procurement method are set out in special terms and conditions. Procurement responsible
party is responsible for Customs declaration, Customs clearance and commodity inspection, and the other party has the obligation
in providing assistance.

 

6.3.2 In the event that delay in Customs
declaration, Customs clearance and commodity inspection of project materials causes delay in project critical path, if the Contractor
is responsible for the import procurement, extension of date for completion is not allowed, and increased cost shall be borne by
the Contractor. If the Employer is responsible for the import procurement, date for completion is extended accordingly, and the
Contractor’s increased cost therefrom is borne by the Employer.

 

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6.4 Transportation and Transportation
of Overrun Materials

 

The Contractor is liable for the overrun
project materials (overweight, overlength, over-width, over-height) being responsible for purchase. Transportation cost of the
overrun materials and all costs for special measures, removal and indemnity during transportation are included in contract price.
The Contractor bears the cost increase incurred during transportation. As to delay in project critical path, extension of date
for completion is not allowed, excluding being regulated in special terms and conditions otherwise.

 

6.5 Re-ordering Goods and Consequences

 

6.5.1 If shortage exists in the project
materials that the Employer is responsible for supplying pursuant to item 6.1.1 and item 6.3.1, and are unqualified after the Employer
organizes rectification, the Employer is liable for re-ordering the goods and delivering to site. The Employer bears the actual
costs incurred arising from the Contractor’s suspension and idling of labor force thereof. As to delay in project critical
path caused, date for completion defers accordingly.

 

6.5.2 If defects exist in the permanent
project equipment, materials and parts that the Contractor is responsible for supplying pursuant to item 6.1.2 and item 6.3.1,
and are unqualified after the Contractor rectifies, the Contractor is liable for re-ordering the goods and delivering to site.
The Contractor is liable for cost increase and delay in date for completion thereof.

 

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6.6 Safekeeping and Surplus of Project
Materials 

 

6.6.1 Safekeeping of project materials

 

As for stipulations in item 6.1.1 the project
materials that the Employer is responsible for supplying, and item 6.1.2 the project materials that the Contractor is responsible
for supplying and the Contractor is authorized for safekeeping, classes and quantity of the project materials are regulated in
special terms and conditions.

 

The Contractor shall provide safekeeping,
maintenance, upkeep, prevention from deformation, deterioration, contamination and injury to human body for the project materials
according to related regulations in specification. Time for the Contractor to submit safekeeping and maintenance plan is set out
in special terms and conditions, and the safekeeping and maintenance plan shall include: classification and safekeeping, upkeep,
security, requisitioning system of project materials, as well as planning for warehouse, special safekeeping warehouse, storage
yard, road, lighting, fire control, facility and tools. All costs needed by safekeeping are included in contract price. Warehouse,
storage yard, facility and equipment provided by the Employer is regulated in special terms and conditions.

 

6.6.2 Transfer of surplus of project materials

 

Surplus of project materials (including
the project materials that the Contractor is responsible for purchasing and supplying and procurement progress payments are received,
and the project materials authorized by the Employer for safekeeping) maintained by the Contractor shall be transferred by the
Contractor to the Employer free of charge after completion test is completed, excluding being stipulated in special terms and conditions
otherwise.

 

Article 7 Construction

 

7.1 Obligations of the Employer

 

7.1.1 Reference coordinate data

 

If the Contractor requires the Employer
to contact relevant units for laying-out, the Employer shall be obliged to provide assistance.

 

7.1.2 Review on the overall construction
organization design

 

The Employer shall have the right to review
the overall construction organization design submitted by the Contractor pursuant to Article 7.2.2, and put forward suggestions
and requests within 20 days after receiving the overall construction organization design. The Employer’s suggestions and
requests shall not relieve or release the Contractor from any contractual liability. If the Employer fails to put forward any suggestions
and requests within 20 days, the Contractor shall have the right to implement it according to the overall construction organization
design submitted.

 

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7.1.3 Approach conditions and approach
date

 

Except as otherwise agreed in the special
terms and conditions, the Employer shall, in accordance with the approved preliminary design and the temporary occupation data
submitted by the Contractor as agreed in Article 7.2.3, agree upon the approach conditions and determine the approach date with
the Contractor. The Employer shall provide the construction site; complete the approach road, land use permit, demolition compensation
and other related work, to ensure that the Contractor can enter the site on time to start the preparation work. The approach conditions
and approach date are agreed in the special terms and conditions.

 

If the approach time of the Contractor
is delayed because of the Employer, the completion date shall be postponed accordingly. The Employer shall bear the expense of
idleness incurred therefrom by the Contractor.

 

7.1.4 Provision of temporary water, electricity,
etc. and node laying

 

Except as otherwise agreed in the special
terms and conditions, the Employer shall, as agreed in Article 7.2.4, connect the temporary water and electricity for construction
to the node location as agreed before the Contractor enters the site, and ensure its needs. The type and unit price of the said
water and electricity used temporarily are stipulated in the special terms and conditions, and the Employer shall charge according
to the actual measuring results. Water and electricity that cannot be provided by the Employer shall be stipulated in special terms
and conditions, and the relevant expenses shall be incorporated into the quotation and borne by the Contractor.

 

If the Employer fails to complete the node
laying according to the agreed type and time, resulting in the delay of the time for commencement, the completion date shall be
postponed accordingly. If the Employer fails to provide water and electricity according to the quality, quantity and time as agreed,
it shall bear the losses caused to the Contractor, and the completion date shall be postponed accordingly provided the critical
path of the project is delayed therefrom.

 

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7.1.5 Handling of approval procedures for
commencement of construction, etc.

 

Prior to the date of commencement, the
Employer shall complete the approval of commencement or construction permit, project quality supervision procedures and other necessary
permits, certificates, approval documents, etc.

 

7.1.6 Approval to be handled by the Employer
during construction

 

The Contractor shall, pursuant to Article
7.2.6, notify the Employer of the approval procedures to be handled by the Employer during construction, and the Employer shall
apply for handling them.

 

If the Employer fails to complete the said
approval procedures on time, it shall be liable for the work delay losses caused to the Contractor, and the completion date shall
be postponed accordingly provided the critical path of the project is delayed therefrom.

 

7.1.7 Provision of information on construction
obstacles

 

The Employer shall, according to the content
and time as agreed in the contract, provide the coordinate positions of underground and aboveground buildings, structures and other
facilities related to the construction site. For information that has been provided as agreed in Item (1) and (2) of Article 5.2.1,
the Employer may not provide it. The Contractor may submit a request for change to the obstacle data provided by the Employer after
the time agreed in the contract in accordance with the provisions about construction change of Article 13.2.3, and the Employer
shall approve the Contractor’s reasonable request. If the Employer fails to provide the said construction obstacle information
or the information provided is not true, accurate or complete, resulting in any loss or damage to the Contractor, the Employer
shall be liable for compensation, and the completion date shall be postponed accordingly provided the critical path of the project
is delayed therefrom.

 

7.1.8 Construction obstacles newly discovered
by the Contractor

 

The Employer shall, according to the notice
given by the Contractor in accordance with Article 7.2.8, contact the relevant units to coordinate and deal with the protection
of buildings, structures, historical and cultural relics, ancient trees, famous trees, underground pipelines, cables, facilities
and underground cultural relics, fossils and tombs around and near the construction site that may affect the implementation of
the project, and bear the relevant expenses.

 

For the construction obstacles newly discovered,
the Contractor may, in accordance with the provisions about the scope of construction change in Item (3) of Article 13.2.3, submit
a request for change, and the Employer shall approve the Contractor’s reasonable request. If the critical path of the project
is delayed due to the said construction obstacles, the completion date shall be postponed accordingly.

 

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7.1.9 Confirmation of occupational health,
safety and environmental protection management plan

 

The Employer shall, within 20 days upon
receipt of the “occupational health, safety and environmental protection” management plan submitted by the Contractor
in accordance with Article 7.8, confirm such management plan. The Employer shall have the right to inspect its implementation and
propose rectification suggestions for the problems discovered in the inspection, and the Contractor shall make rectification as
reasonably suggested by the Employer at his own expense.

 

7.1.10 Other obligations

 

The Employer shall perform other obligations
to be performed by the Employer as agreed in the special terms and conditions

 

7.2 Obligations of the Contractor

 

7.2.1 Laying-out

 

The Contractor shall be responsible for
the laying out of the project, single project and construction location, as well as for the accuracy of laying out.

 

7.2.2 Construction organization design

 

The Contractor shall submit the overall
construction organization design to the Employer 15 days before the commencement of construction or other time as agreed by both
parties hereto, and submit the construction organization design of main single projects and main sub-projects to the Employer with
the construction progress. As to the reasonable suggestions and requests by the Employer, the Contractor shall revise and perfect
at his own expense.

 

The copies and time of the overall construction
organization design to be submitted, as well as the name, copies and time of main single projects and main sub-projects to be submitted
for the construction organization design, shall be stipulated in the special terms and conditions.

 

7.2.3 Submission of temporary occupation
information

 

The Contractor shall submit the following
temporary occupation information to the Employer at the time as agreed in the special terms and conditions:

 

(1) The coordinate position, area, occupation
time and use description of the warehouse, storage yard and land for roads needed for the storage of project materials in accordance
with Article 6.6.1; the coordinate position, area, occupation time and use description of the land leased by the Employer shall
be listed separately;

 

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(2) The coordinate position, area, occupation
time and use description of the land for construction; the coordinate position, area, occupation time and use description of the
land leased by the Employer shall be listed separately;

 

(3) The coordinate position of the entrance
to the construction site road; the direction, length, width, grade, bridge and culvert bearing, turning radius and time requirements
of the roads to be laid by the Employer and connected with the urban and rural public road shall be specified.

 

If the Contractor fails to submit the said
information on time, resulting in the delay of the approach date as agreed in Article 7.1.3, the Contractor shall be responsible
for the additional fees and/or the delay of the completion date induced therefrom.

 

7.2.4 Temporary water, electricity, etc.

 

The Contractor shall, 30 days before the
commencement date of construction or other time as agreed by both parties hereto, submit the quality, normal consumption, peak
consumption, usage time and node location of the temporary water and electricity required by the construction (including the storage
of project materials) to the Employer, according to the types of temporary water and electricity that the Employer can provide
as agreed in the special terms and conditions. The Contractor shall be responsible for the purchase, installation and maintenance
of the measuring instrument at his own expense, and shall pay the fee to the Employer according to the unit price as agreed in
the special terms and conditions of Article 7.1.4, unless otherwise agreed by both parties hereto.

 

If the Contractor fails to submit the said
information as agreed herein, resulting in the Employer’s additional fee and the delay of the completion date, the Contractor
shall take corresponding responsibility.

 

7.2.5 Assistance in handling the approval
procedures for commencement of construction, etc.

 

The Contractor shall, 20 days before the
commencement of construction, notify the Employer to go through the approval for commencement of construction or construction permit,
project quality supervision procedures and other permits, certificates, approval documents, etc. that shall be handled by the Employer
to the relevant departments. When the Employer entrusts the Contractor to act as agent, which is accepted by the Contractor, both
parties hereto may sign a separate agreement as an appendix to this contract.

 

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7.2.6 Approval procedures to be notified
during construction

 

The Contractor shall, due to the increase
of off-site temporary land, temporary requirements for water, power outages, interruption of road traffic, blasting operations,
or the possibility of damaging roads, pipelines, power, post and telecommunications, communications and other public facilities
during construction, notify the Employer 10 days in advance to go through the relevant application approval procedures, and provide
relevant documents, materials, certificates, etc. that need to be provided by the Contractor as requested by the Employer.

 

If the Contractor fails to notify the Employer
10 days in advance or fails to provide the relevant documents, materials, certificates, etc. of the Contractor necessary for the
Employer to handle the application on time, resulting in the Contractor’s work delay, work suspension and the delay of the
completion date, the Contractor shall be held responsible.

 

7.2.7 Provision of information on construction
obstacles

 

The Contractor shall, as stipulated in
the contract, submit to the Employer the specific scope and coordinate position of the construction site 20 days before commencement
of each underground or aboveground construction site, and the Employer shall provide the coordinate positions of the relevant underground
and aboveground buildings, structures and other facilities within the said scope (The site obstruction information provided by
the Employer pursuant to Item (1) and (2) of Article 5.2.1 is excluded). The site obstacle information provided by the Employer
after the time as agreed herein shall be handled in accordance with the construction change as agreed in Article 13.2.3.

 

After
the Employer has provided the said information, the Contractor shall be responsible for the loss, damage and liability caused by
the Contractor’s failure to perform the protection obligation. If the critical path of the project is delayed therefrom,
the Contractor shall, as agreed in Article 4.1.2, catch up with
the progress at his own expense.

 

7.2.8 Construction obstacles newly discovered

 

The Contractor shall immediately take protective
measures and promptly notify the Employer for the buildings, structures, historical and cultural relics, ancient trees and famous
trees, as well as underground pipelines, cables, structures, cultural relics, fossils and tombs newly discovered that may affect
the construction around and near the site during construction. Any construction obstacles newly discovered shall be handled in
accordance with the construction change agreement in Article 13.2.3.

 

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7.2.9 Construction resources

 

The Contractor shall ensure that its manpower,
machines and tools, equipment, facilities, measuring materials, consumable materials, revolving materials and other construction
resources meet the requirements for the implementation of the project.

 

7.2.10 Description and interpretation of
design documents

 

The Contractor shall, prior to the commencement
of construction, explain to the sub-Contractor and the supervisor the intention of the design document, explain the design document
and timely solve relevant problems during construction.

 

7.2.11 Protection and maintenance of the
project

 

The Contractor shall, from the date of
commencement to the date when the Employer receives the project or single project, be responsible for the care, protection, maintenance
and security of the project or a single project, and guarantee that the project or single project will not suffer any loss or damage
except for force majeure.

 

7.2.12 Site clearing

 

The Contractor shall clean up the site,
sort for stacking, and transport the residues, wastes and garbage to the site designated by the Employer or the local authorities
during and after the construction. The cost for cleaning up the site shall be stated in the special terms and conditions. The Contractor
shall evacuate the machines and tools, equipment, facilities and temporary works that are no longer used from the site or transport
them to the site designated by the Employer.

 

7.2.13 Other obligations

 

The Contractor shall perform other obligations
to be performed by the Contractor as agreed in the special terms and conditions.

 

7.3 Construction Technology and Methods

 

The Contractor’s construction technology
and methods shall comply with related operating procedures, safety procedures and quality standards.

 

The Employer shall, within 5 days after
receiving the method submitted by the Contractor, confirm or offer a proposal. Any such confirmation and recommendation by the
Employer shall not relieve or release the Contractor from any contractual liability.

 

7.4 Manpower, Machines and Tools Resources

 

7.4.1 The Contractor shall submit the construction
manpower resource plan schedule to the Employer according to the format, content, copies and submission time as agreed in the special
terms and conditions. The construction manpower resource plan shall meet the requirements of the construction program. In addition,
the Contractor shall provide the information about manpower resources entering the site according to the format, content, copies
and reporting period of the report form as agreed upon in the special terms and conditions.

 

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If the Contractor fails to input enough
types of work and manpower according to the construction manpower resource plan schedule, leading to that the actual construction
program falls significantly behind the construction schedule, the Employer shall have the right to inform the Contractor of dispatching
personnel to the site within a reasonable time as per the types of work and number of people listed in the plan schedule, and catching
up with the progress at his own expense. Otherwise, the Employer shall have the right to order the Contractor to subcontract the
construction of some single projects and sub-projects separately, and the expenses incurred and the time delayed therefrom shall
be borne by the Contractor.

 

7.4.2 The Contractor shall submit the main
construction machines and tools resources plan schedule to the Employer according to the format, content, copies and submission
time as agreed in the special terms and conditions. The construction machines and tools resources plan shall meet the requirement
of construction program. In addition, the Contractor shall provide the Employer with the information of the main construction machines
and tools entering the site according to the format, content, copies and reporting period of the report form as agreed in the special
terms and conditions.

 

If the Contractor fails to input enough
machines and tools according to the construction machines and tools resources plan schedule, leading to that the actual construction
program falls behind the construction schedule, the Employer shall have the right to inform the Contractor of dispatching machines
and tools to the site within a reasonable time according to the number of machines and tools listed in the schedule. Otherwise,
the Employer shall have the right to provide the Contractor with relevant machines and tools, and the expenses incurred and the
time delayed therefrom shall be borne by the Contractor.

 

7.5 Quality and Inspection

 

7.5.1 Quality and inspection

 

(1)
The Contractor and its subcontractors shall accept the safety and
quality supervision and inspection by the Employer and the supervisor at any time. The Contractor shall provide convenience for
such supervision and inspection.

 

(2) When the Employer entrusts a third
party to inspect, verify, detect and test the construction quality, it shall notify the Contractor in written form. The acceptance
result of the third party shall be deemed as the acceptance result of the Employer.

 

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(3)
The Contractor shall comply with relevant regulations on construction quality control, and shall be responsible for training and
assessment of operating personnel, disclosure of drawings, technical disclosure, and disclosure of
operating procedures, disclosure of safety procedures and disclosure of quality standards, as well as the elimination of accident
potentials.

 

(4) The Contractor shall, pursuant to the
design document, construction standards and contract, compile the construction test and inspection plan, shall inspect, verify,
detect and test the engineering materials (including the construction fittings), and shall not use those unqualified. The Contractor
shall have the obligation to repair and/or replace unqualified engineering materials at his own expense, and shall be responsible
for the completion date delayed therefrom. If the engineering materials provided by the Employer are unqualified after the inspection,
verification, detection and test by the Contractor, the Employer shall repair and/or replace them at his own expense. If the critical
path is delayed therefrom, the completion date shall be postponed accordingly. Any additional costs to the Contractor incurred
therefrom shall be borne by the Employer.

 

(5) The Contractor shall carry out the
construction in accordance with the quality standards as agreed in the contract. The construction quality evaluation shall be subject
to the quality inspection and evaluation standard as agreed in the contract. The Contractor shall repair, rework and replace the
construction parts that fail to meet the quality standards at his own expense. Any delay in the completion date induced therefrom
shall be borne by the Contractor.

 

7.5.2 Quality inspection parts and the
inspecting parties. Quality inspection parts include the parts inspected by the Employer, supervisor and Contractor, the parts
inspected by the supervisor and Contractor, and the parts inspected by the third part and/or the Contractor. The inspection parts,
inspection standards and acceptance form format for the construction quality shall be stipulated in the special terms and conditions.

 

The Contractor shall report the qualified
parts inspected by one party according to the said agreement to the Employer or supervisor for the record. The Employer and the
engineering director shall have the right to carry out spot check or overall inspection of the parts put on records at any time.

 

7.5.3 Inspection to be notified to the
inspecting parties. If the Contractor completes the inspection, verification, detection and test by itself with qualified results,
it shall notify the relevant inspecting units to participate in the inspection within 24 hours according to the inspection part
and the inspecting parties as agreed in the special terms and conditions of Article 7.5.2. If the inspecting parties fail to attend
on time, the Contractor shall deliver the qualified result in self-inspection to the Employer and/or the supervisor for signature
within 24 hours thereafter. Failing to sign after 24 hours, the Employer shall be deemed to have accepted the inspection result.
Within 3 days thereafter, the Contractor may give notice that the Employer and/or the supervisor have confirmed the result of the
quality inspection.

 

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7.5.4 The right to quality inspection.
The Employer and its authorized supervisor or third party shall have the right to supervise, inspect, verify, detect and test the
quality of any construction area without impeding the normal operation of the Contractor. The Contractor shall offer convenience
for such quality inspection activities. If the quality defect caused by the Contractor is discovered during the quality inspection,
the Employer shall have the right to give instructions for repair, suspension, demolition, reworking, re-construction and replacement.
The additional expenses incurred therefrom shall be borne by the Contractor and the completion date shall not be postponed.

 

7.5.5 Re-inspection of the quality. Subject
to the provisions of Article 7.5.3, the Employer shall have the right to re-inspect the quality of the qualified project parts
in the quality inspection without affecting the normal construction of the project. In the case that the results are unqualified
after the inspection, verification, detection and test, the expenses incurred thereby shall be borne by the Contractor, and the
completion date shall not be postponed if the critical path of the project is delayed therefrom. If the results are qualified,
the additional cost of the Contractor shall be borne by the Employer, and the completion date shall be postponed accordingly if
the critical path of the project is delayed therefrom.

 

7.5.6 The Employer shall bear the additional
construction expenses incurred due to incorrect instructions from the Employer’s representative and/or supervisor or other
reasons not caused by the Contractor, and the completion date shall be postponed accordingly if the critical path of the project
is delayed therefrom.

 

7.6 Concealed Works and Intermediate
Acceptance

 

7.6.1 Concealed works and intermediate
acceptance. The classification, location, quality inspection content, quality inspection standards, quality inspection forms and
inspecting parties of concealed works and intermediate acceptance parts for quality inspection shall be stipulated in the special
terms and conditions.

 

7.6.2 Acceptance notice and acceptance.
For the qualified concealed works or intermediate acceptance parts in the self-inspection, the Contractor shall notify the Employer
and/or the supervisor in writing 48 hours prior to the acceptance inspection of the concealed works or the intermediate acceptance.
The notice shall include the contents of the time and place of concealed works and intermediate acceptance. If it passes the acceptance
inspection, both parties hereto shall sign on the acceptance records before they can cover and carry out the follow-up operation,
compile and submit the completion data of concealed works and relevant data required by the Employer or supervisor.

 

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If the Employer and/or the supervisor do
not sign on the acceptance record 24 hours after the acceptance, the Employer and/or the supervisor shall be deemed to have approved
the acceptance record, and the Contractor may conceal or carry out the follow-up operation. Failing to pass the acceptance inspection
by the Employer and/or the supervisor, the Contractor shall, within the time limit set by the Employer and/or the supervisor, make
corrections and notify the Employer and/or the supervisor again for acceptance.

 

7.6.3 Failure to attend the acceptance
inspection on time. If the Employer and/or the supervisor cannot participate in the acceptance inspection of concealed works or
intermediate acceptance parts on time, they shall, within 24 hours after receiving the acceptance notice, submit a request for
extension in writing to the Contractor, while the extension shall not exceed 48 hours. If the Employer fails to request for the
extension of acceptance inspection according to the said time and fails to participate in the acceptance inspection, the Contractor
may organize the acceptance inspection by itself, and the acceptance record shall be deemed to have been approved by the Employer
and the supervisor.

 

If the critical path is delayed due to
the extension of acceptance as required by the Employer and/or the supervisor, the completion date shall be postponed accordingly;
the loss of work suspension and work delay caused to the Contractor shall be borne by the Employer.

 

7.6.4 Re-inspection. The Employer and/or
the supervisor shall, at any time, have the right to request re-inspection of the concealed works that have been accepted, and
the Contractor shall remove the covering, strip or perforate as required and re-cover or repair it after inspection. If the concealed
works fail to pass the re-inspection, the expenses incurred thereby shall be borne by the Contractor, and the completion date shall
not be postponed; If it passes the inspection, the additional costs to the Contractor caused thereby shall be borne by the Employer,
and if the critical path of the project is delayed, the completion date shall be postponed accordingly.

 

7.7 Disputes over the Result of Construction
Quality

 

7.7.1 In case of any dispute over the result
of construction quality between both parties hereto, it shall be settled through negotiation. If negotiation fails, a qualified
engineering quality testing institution agreed by both parties hereto shall be entrusted to carry out the test.

 

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According to the appraisal result of the
testing institution, if the responsible party is the Contractor, the Contractor shall be responsible for the additional cost or
the delay of completion date induced therefrom; If the responsible party is the Employer, the Employer shall bear the additional
cost caused thereby, and if the critical path of the project is delayed due to disputes, the completion date shall be postponed
accordingly.

 

7.7.2 According to the appraisal result
of the testing institution, if both parties hereto are at fault, the expenses incurred shall be shared through negotiation according
to the responsibilities of each party; if the critical path of the project is delayed, the extension of the completion date shall
be agreed. If both parties hereto fail to reach an agreement on the shared expenses and the extension of the completion date, the
disputes shall be settled in accordance with the agreed procedures for disputes and arbitration in Article 16.3.

 

7.8 Occupational Health, Safety and
Environmental Protection

 

7.8.1 Occupational health, safety and environmental
protection management

 

(1) It is the obligation of both parties
hereto to abide by the relevant laws and regulations on health, safety and environmental protection.

 

(2) Implementation plan of occupational
health, safety and environmental protection management. The Contractor shall submit the implementation plan of occupational health,
safety and environmental protection management to the Employer before commencement of construction on site or in other time agreed.
The cost of the management and implementation of the plan is included in the contract price. The Contractor shall, at his own expense,
revise the submission copies and time of the implementation plan of occupational health, safety and environmental protection management
according to the Employer’s suggestion, which shall be stipulated in the special terms and conditions.

 

(3) Where the Contractor implements the
implementation plan of occupational health, safety and environmental protection management, if the Employer needs to take special
measures outside the plan, it shall be treated as change according to the provisions about change and contract price adjustment
of Article 13.

 

(4) The Contractor shall ensure that all
its employees on site and employees of its sub-Contractors are adequately trained and experienced for the management of occupational
health, safety and environmental protection.

 

(5) The Contractor shall comply with all
laws and regulations about on-site occupational health, safety and environmental protection relating to the implementation of the
project and the use of the construction equipment, and shall go through the relevant procedures respectively according to the regulations.

 

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(6) The Contractor shall establish occupational
health assurance conditions, set up safety facilities and take environmental protection measures for the project of the starting
part on site, and provide conditions for the Employer to apply for the construction permit. If the approval of the construction
permit is delayed due to the Contractor’s reason, resulting in the additional cost or the delay of the critical path of the
project, the Contractor shall be held responsible.

 

(7) The Contractor shall assign full-time
engineers or managers to manage supervise and guide the occupational health, safety and environmental protection work of employees,
and shall be responsible for the conduct of his sub-contractor.

 

(8) The Contractor shall, at any time,
accept and offer facilities for the supervision and inspection of occupational health, safety and environmental protection from
the inspectors of the government related administrative departments, industry organizations, the Employer and the supervisor.

 

7.8.2 On-site occupational health management

 

(1) The Contractor shall comply with applicable
laws and contractual provisions on occupational health (including provisions on employment, occupational health, safety, welfare,
etc.), and shall be responsible for the occupational health and protection of its employees during the implementation on site.

 

(2) The Contractor shall observe the applicable
labor regulations, protect the legitimate rights and interests of its employees such as the right to vacation, and provide its
on-site employees with labor protection supplies, protective devices, heatstroke prevention supplies, necessary on-site board and
lodging conditions and safety production facilities.

 

(3) The Contractor shall provide its constructors
with occupational health knowledge training, disclosure of dangerous and hazardous factors, disclosure of safe operation procedures
and effective measures, and provide protective equipment against personal injury according to relevant regulations.

 

(4) The Contractor shall set up warning
signs and instructions in the toxic and harmful operation area. If the Employer and its entrusted personnel enter such operation
area without the Contractor’s permission and without wearing relevant protective equipment, resulting in the damage, the
Employer shall bear the related responsibility and costs.

 

(5) The Contractor shall carry out prevention
and control inspection on toxic and harmful positions, and timely rectify unqualified protective facilities, appliances and installations,
to eliminate hidden dangers to occupational health.

 

(6) The Contractor shall take hygiene and
disease control measures by providing medical personnel and first-aid facilities, keep the canteen food safe and clean and the
environment of the living area and its surroundings clean, to maintain the health of constructors.

 

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7.8.3 Site safety management

 

(1) The Employer and the supervisor shall
carry out safety education, provide necessary personal safety supplies for their personnel on site, and shall be responsible for
the safety accidents caused by them. The Employer and the supervisor shall not force the Contractor to violate the relevant safety
regulations on safe construction, safe operation, completion test and/or post-completion test. For the personal injury and property
loss caused by the Employer, the supervisor and their on-site staff, the Employer shall bear the relevant liabilities and expenses
thus induced. If the critical path of the project is delayed thereby, the completion date shall be postponed.

 

In the case of the personal injury, property
loss and the delay of the critical path of the project caused by violation of safety regulations on safe construction, safe operation,
completion test and/or post-completion test due to the reason of the Contractor, the Contractor shall be held responsible.

 

(2) Employees of both parties hereto shall
comply with the instructions on No Entry, including no entry to the work site and specific areas adjacent to the work site. Any
injury, damage and loss caused due to failure to abide by this agreement shall be borne by the breaching party.

 

(3) The Contractor shall be responsible
for the safety of the site, including the site of its sub-contractors, as agreed in the contract, and implement the closed management
for the site where conditions permit. In addition, the Contractor shall, according to the characteristics of the project, make
the corresponding safety technical measures in the construction organization design document, and prepare special safety construction
organization design for the professional project part, including the measures about safety maintenance, danger prevention, fire
prevention, etc.

 

(4) The Contractor (including the Contractor’s
sub-contractor, supplier and its transportation unit) shall take preventive measures to prevent damage to the roads, bridges and
underground facilities in the site and on the way in and out of the site, except as otherwise agreed in special terms and conditions.
The Contractor shall be liable for any damage and/or delay in the completion date because of failure to take preventive measures
as agreed.

 

(5) The Contractor shall conduct safe operation
training for its constructors disclose safe operation procedures, take safety protection measures, set up safety warning signs
and instructions, conduct safety inspection to eliminate accident potentials.

 

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(6) The Contractor shall, when operating
in power equipment, power transmission lines, underground pipelines, sealed shockproof workshops, high temperature and high pressure,
inflammable and explosive areas and sections, as well as near the street traffic arteries, take safety protection measures against
possible damage caused by the construction site and adjacent buildings, structures and special operating environment. Prior to
the commencement of construction, the Contractor shall submit to the Employer and/or the supervisor a plan of safety measures,
which shall be implemented after approval. The approval of the Employer and/or the supervisor shall not relieve or release the
Contractor from any liability.

 

(7) The Contractor shall, while performing
blasting, radioactive, electrifying, and toxic operations and using (transporting, storing and keeping) flammable, explosive, toxic
and corrosive items, notify the Employer and/or the supervisor in writing 10 days prior to the construction and submit the corresponding
safety protection plan for implementation after approval. The approval of the Employer and/or the supervisor shall not relieve
or release the Contractor from any liability.

 

(8) Safety protection inspection. Prior
to the start of the operation, the Contractor shall notify the Employer’s representative and/or the supervisor of the security
measures plan submitted and the inspection of on-site erection of safety facilities, safety passageway, safety equipment and firefighting
equipment configuration, potential hazards to the safety of the surrounding environment, etc., and make rectifications at the his
own expense according to the rectification suggestions put forward by the Employer and/or the supervisor. The inspection and suggestion
of the Employer and/or the supervisor shall not relieve or release the Contractor from any contractual liability.

 

7.8.4 Environmental protection management
on site

 

(1) The Contractor shall protect the buildings,
structures, historical and cultural relics, ancient and famous trees, underground pipelines, cables, structures, cultural relics,
fossils and tombs around the site during construction. If the Contractor fails to notify the Employer and fails to get further
instructions from the Employer, resulting in additional costs for damage, loss, compensation and/or the delay of the completion
date, the Contractor shall be held responsible.

 

(2) The Contractor shall take measures
and shall be responsible for controlling and/or disposing of the pollution and hazards to environment from dust, exhaust gas, waste
water, solid waste and noise on site. Additional costs for damage, loss, fine and/or the delay of the completion date shall be
borne by the Contractor.

 

(3) The Contractor shall timely or regularly
transport the residual and discarded garbage on the construction site to the site designated by the Employer or the relevant local
administrative department, so as to prevent the pollution to the surrounding environment and the impact on the operation. The Contractor
shall bear any additional expenses, such as fines and compensation, from the local administrative department because of the violation
of the said provisions.

 

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7.8.5 Accident handling

 

(1) When death or injury occurs to the
employees of the Contractor (including its sub-Contractor) during the on-site operation, the Contractor shall immediately take
rescue measures and report it to the Employer and/or the rescue unit, and the Employer shall be obliged to provide necessary conditions
for the rescue. The Contractor shall maintain the site and take appropriate measures to prevent the spread of the accident.

 

(2) For heavy casualties, major property,
environmental damage and other safety accidents, the Contractor shall immediately report it to the relevant department according
to relevant regulations, immediately notify the Employer’s representative and the supervisor, and handle it as required by
the relevant government department.

 

(3) Where both parties hereto have disputes
over the liability for the accident, it shall be settled in accordance with the agreed procedures for disputes and arbitration
in Article 16.3.

 

(4) If the construction project causes
personal and property damage during the reasonable use period and equipment warranty period due to the Contractor’s reason,
the Contractor shall be liable for damages.

 

(5) If the food poisoning or occupational
health incident occurs to employees due to the Contractor’s reason, the Contractor shall bear relevant responsibilities.

 

Article 8 Completion Test

 

This contract project includes the completion
test, which shall comply with the provisions of this article.

 

8.1 Obligations in the Completion Test

 

8.1.1 Obligations of the Contractor

 

(1) The Contractor shall, before starting
the completion test of the single project and/or project, complete the construction of the corresponding single project and/or
project (excluding the construction parts that must be reserved for the completion test and post-completion test, defect repair
and sporadic wind-up works that will not affect the completion test); and complete the inspection, verification, detection and
test of the construction parts as agreed herein before starting the completion test.

 

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(2)
The Contractor shall, before starting the completion test, submit the relevant quality inspection data and completion data to the
Employer in accordance with the provisions about concealed works and intermediate acceptance sites in Article 7.6.

 

(3)
If the Contractor guides the Employer to carry out the post-completion test in accordance with the provisions about post-completion
test in Article 10, the Contractor shall complete the training of operation and maintenance personnel as agreed in Article
5.4, and submit the operation and maintenance manual as agreed in Article
5.2.4 before the completion test.

 

(4) The Contractor shall submit the completion
test plan to the Employer 20 days before reaching the completion test conditions. The Employer shall offer suggestions and comments
on the plan within 10 days, and the Contractor shall revise the completion test plan at his own expense according to the reasonable
suggestions and comments put forward by the Employer. After confirmed by the Employer, the completion test plan shall be attached
to the contract and implemented by the Contractor. The confirmation of the Employer shall not relieve or release the Contractor
from any contractual liability. The completion test plan shall cover the following contents:

 

1) The basis and principles for the completion
of the completion test plan;

 

2) Organizational settings and division
of responsibilities;

 

3) Test procedures and test conditions
for the completion test of single projects;

 

4) Test procedures and test conditions
for single, monomer, linkage test;

 

5) Types, performance standards, test and
acceptance formats of equipment, materials and parts for completion test;

 

6) Quality and usage requirements for water,
electricity, power and other conditions;

 

7) Safety procedures, safety measures and
protective facilities;

 

8) Program, measure plan, manpower and
machines and tools plan arrangement for completion test;

 

9) Other.

 

The submission copies and time of the completion
test plan shall be specified in the special terms and conditions.

 

(5) The completion test of the Contractor
shall include the completion test of the construction materials provided by the Contractor as agreed in Article 6.1.2 and the completion
test of the construction materials entrusted to the Contractor by the Employer as agreed in Item (3) of Article 8.1.2.

 

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(6) The Contractor shall finish the completion
test in accordance with the test conditions, test procedures, and the standards, specifications and data agreed in Item (3) of
Article 5.2.3.

 

8.1.2 Obligations of the Employer

 

(1) The Employer shall provide electricity,
water and power as well as consumable materials provided by the Employer according to the completion test plan confirmed by the
Employer. The electricity, water, power and related consumable materials provided shall meet the requirements for quality, quantity
and time of the completion test.

 

(2) If the consumable materials and spare
parts for the completion test provided by the Contractor as stipulated herein are used up or insufficient, the Employer shall be
obliged to provide the related consumable materials and spare parts necessary for the completion test from its inventory. If the
damage is caused by the Contractor or the Contractor fails to provide enough, the Employer shall have the right to deduct the corresponding
amount from the contract price; If it is caused by reasonable consumption or by reason of the Employer, the Employer shall provide
it free of charge.

 

(3)
The service fee for the completion test of the project materials provided by the Employer as agreed in Article 6.1.1
that the Employer entrusts the Contractor to do has been included in the contract price. If the Employer entrusts the Contractor
to carry out the completion test during the implementation of the contract, it shall be treated as change according to the provisions
about change and contract price adjustment in Article 13.

 

(4) The Contractor shall, according to
the test conditions and test procedures provided by the Employer, conduct the completion test on the construction materials entrusted
to the Contractor by the Employer according to Item (3) in this Article. The test results shall conform to the standards, specifications
and data as agreed in Item (3) of Article 5.2.3. The Employer shall be responsible for the test results of this part.

 

8.1.3 The leading organization of the completion
test. The leading organization of the completion test is responsible for the leadership, organization and coordination of completion
test. The Contractor shall provide the manpower, machines and tools necessary for the completion test and shall be responsible
for finishing the completion test. The Employer shall be responsible for organizing, coordinating and providing the relevant conditions
agreed in the completion test plan and the acceptance of the completion test.

 

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8.2 Inspection and Acceptance of Completion
Test 

 

8.2.1 The Contractor shall carry out the
inspection and acceptance in accordance with the standards, specifications and data agreed in Item (3) of Article 5.2.3 and the
provisions in Sub-item5) of the completion test scheme in Item (4) of Article 8.1.1.

 

8.2.2 The Contractor shall, before starting
the completion test, check and implement the test conditions provided by both parties hereto in accordance with the provisions
of Article 8.1.1. If the conditions are met, the personnel of both parties hereto shall sign for confirmation. The Employer shall
be responsible for any work delay loss caused to the Contractor due to the delay of completion test conditions provided by the
Employer. If the completion test progress is delayed, the completion date shall be postponed accordingly; If the completion test
conditions are not fulfilled on time due to the Contractor’s reason, resulting in the delay of the completion test progress,
the Contractor shall catch up with the progress at his own expense as agreed in Article 4.1.2.

 

8.2.3
The Contractor shall, 36 hours before starting a completion test, give notice to the Employer and/or the supervisor of the items,
contents, and location and acceptance time of the test. The Employer
and/or the supervisor shall reply in written form within 24 hours after receiving the notice, and both parties hereto shall sign
on the test record and the acceptance form after the items are tested qualified.

 

If the Employer and/or the supervisor do
not sign on the test record and the acceptance form 24 hours after the qualified acceptance, the Employer and/or the supervisor
shall be deemed to have approved the acceptance, and the Contractor may conduct the concealed and/or follow-up operation.

 

If the items are accepted unqualified,
the Contractor shall make corrections within the time specified by the Employer and/or the supervisor, and notify the Employer
and/or the supervisor for acceptance inspection again.

 

8.2.4 If the Employer and/or the supervisor
cannot participate in the test and acceptance on time, they shall, within 24 hours after receiving the notice, submit a request
for extension in writing to the Contractor, while the extension shall not exceed 24 hours. If the Employer and/or the supervisor
fail to submit the test extension according to the said time and fail to participate in the test and acceptance, the Contractor
may organize the test based on the test items as notified, and the test results shall be deemed to be approved by the Employer
and/or the supervisor.

 

8.2.5 Regardless of whether the Employer
and/or the supervisor participate in the completion test and acceptance, the Employer has the right to order a new test. If the
Contractor fails to pass the retest due to the Contractor’s reason, the Contractor shall bear the additional expenses incurred
therefrom, and the completion date shall not be postponed if the completion test progress is delayed thereby; in the event of successful
retest, any additional expenses of the Contractor and/or the extension of the completion date shall be treated as change in accordance
with the provisions about change and contract price adjustment of Article 13.

 

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8.2.6 Agreement on the acceptance date
of completion test

 

(1) Acceptance date and time of a completion
test: The date and time on which the completion test is passed shall be taken as the acceptance date and time of the completion
test;

 

(2) Acceptance date and time of completion
test of the single project: The date and time on which the final completion test is passed shall be taken as the acceptance date
and time for the completion test of the single project;

 

(3) Date and time of completion test of
the project: The date and time on which the last single project passes the completion test shall be taken as the acceptance date
and time of the completion test of the whole project.

 

8.3 Safety and Inspection of Completion
Test

 

8.3.1 The Contractor shall, pursuant to
the provisions of Article 7.8 Occupational Health, Safety and Environmental Protection, and the characteristics of power supply,
water supply, ventilation, pressure test, leakage test, purging, rotation, etc. of the completed test, formulate the safe operation
plan including the safety procedure, safety system, fire prevention measures, accident reporting system and accident handling plan
for the completion test, in terms of electric shock hazard, inflammables and explosives, high temperature and high pressure, pressure
test, mechanical equipment operation, etc. The Contractor shall submit the plan to the Contractor for confirmation, and shall,
in accordance with reasonable suggestions; opinions and requirements put forward by the Employer revise the plan at his own expense
and implement it after confirmation by the Employer. The confirmation of the Employer shall not relieve or release the Contractor
from any contractual liability. The expenses of safety measures and protective equipment provided by the Contractor for the completion
test have been included in the contract price.

 

8.3.2 The Contractor shall carry out the
safety training on completion test for its personnel, and disclose the safe operation procedure, site environment, operation system
and emergency treatment measures of completion test.

 

8.3.3 The Employer and/or the supervisor
shall, in accordance with the safety regulations, safety systems and safety measures in the confirmed completion test safety plan,
conduct safety education about completion test for its management personnel and operation and maintenance personnel, and provide
at his own expense protective facilities for the personnel participating in the supervision and inspection.

 

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8.3.4 The Employer and/or the supervisor
shall have the right to supervise and inspect the work listed in the completion test safety plan and its implementation, and to
propose safety rectifications and issue rectification instructions. The Contractor shall be obliged to carry out rectification
in accordance with the instructions, and the additional costs shall be borne by the Contractor. If the project completion test
program is delayed thereby, the Contractor shall catch up with the progress at his own expense in accordance with the provisions
of Article 4.1.2.

 

8.3.5 In accordance with the decision of
the leading organization of the completion test in Article 8.1.3, both parties hereto shall cooperate closely in the organization,
coordination and implementation of the completion test to prevent personal injury and accidents.

 

If the accident is caused because of the
Employer, the Employer shall bear the corresponding liabilities, expenses and compensation. If the project completion test program
is delayed thereby, the completion date shall be postponed accordingly.

 

If the accident is caused because of the
Contractor, the Contractor shall bear the corresponding liabilities, expenses and compensation. If the project completion test
program is delayed thereby, the Contractor shall catch up with the progress at his own expense in accordance with the provisions
of Article 4.1.2.

 

8.4 Delayed Completion Tests

 

8.4.1
If a project or a single project falls behind the completion test
program due to the Contractor’s reason, the Contractor shall take measures at his own expense to catch up with the completion
test program in accordance with the provisions of Article 4.1.2.

 

8.4.2 If the completion test is delayed
due to the Contractor’s reason, leading to the delay of the project completion date as agreed in the contract, the Contractor
shall assume the compensation for the delay in accordance with the agreement on liquidated damages for delay in Article 4.5.

 

8.4.3 If the Contractor fails to perform
a completion test in accordance with the completion test program decided by the leading organization of completion test without
justified reasons, and fails to carry out the completion test within 10 days after receiving the notice from the leading organization
of completion test, causing a delay in the completion date, the Contractor shall be liable for compensation for delay. The Contractor
has the right to organize the completion test by itself, and the costs incurred therefrom shall be borne by the Contractor.

 

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8.4.4 If the Employer fails to perform
its obligations as agreed in Article 8.1.2, resulting in the delay of the completion test of the Contractor, the Employer shall
bear the reasonable expenses incurred therefrom by the Contractor. If the completion test program is delayed thereby, the completion
date shall be postponed accordingly.

 

8.5 Retest and Acceptance

 

8.5.1 If the Contractor fails to pass the
completion test, it may carry out such test again in accordance with the provisions in Item (6) of Article 8.1.1 and carry out
the inspection and acceptance in accordance with Article 8.2.

 

8.5.2 Regardless of whether the Employer
and/or the supervisor participate in the completion test and acceptance, if the Contractor fails to pass the completion test, the
Employer shall have the right to notify the Contractor to conduct such completion test again in accordance with the provisions
in Item (6) of Article 8.1.1 and carry out the inspection and acceptance in accordance with Article 8.2.

 

8.6 Failure to Pass the Completion Test

 

8.6.1 If the completion test fails due
to the following reasons of the Employer, the cost of the completion test carried out by the Contractor shall be borne by the Employer,
and if the completion test program is delayed thereby, the completion date will be postponed accordingly:

 

(1) The Employer fails to provide test
conditions such as electricity, power and water according to the technical parameters, time, and quantity in the confirmed completion
test plan, resulting in the failure of completion test;

 

(2) The Employer instructs the Contractor
to conduct the test and completion test in accordance with the Employer’s completion test conditions, test procedures and
test methods, resulting in the failure of completion test;

 

(3) The Employer’s interference with
the completion test of the Contractor leads to the failure of the completion test;

 

(4) The completion test fails due to other
reasons of the Employer.

 

8.6.2 If the completion test fails due
to the Contractor’s reason, the completion test may be repeated, but not more than twice. If the acceptance conditions are
still not met after two tests, the relevant expenses, completion date and related matters shall be handled according to the following
agreement:

 

(1) If the completion test fails, which
has no material impact on the operation or use, the Contractor shall repair it at his own expense. If it cannot be repaired, the
Employer shall have the right to deduct the corresponding payment of this part, which shall be deemed to be approved;

 

(2) If the completion test fails, which
has no substantial impact on the operation and use of the single project, the Employer may deduct the contract price of the single
project accordingly, which shall be deemed to be approved. If the completion date is delayed thereby, the Contractor shall be liable
for damages for the delay.

 

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(3) If the completion test fails, which
has a substantial impact on operation or use, the Employer has the right to instruct the Contractor to replace the relevant parts
and carry out the completion test. The Contractor’s additional costs incurred therefrom shall be borne by the Contractor.
If the completion date is delayed thereby, the Contractor shall be liable for damages for delay.

 

(4) If the completion test fails, resulting
in that any major part of an single project loses the production and use functions, the Employer has the right to instruct the
Contractor to replace the relevant part, and the Contractor shall bear the additional costs incurred therefrom. If the completion
date is delayed thereby, the Contractor shall be liable for damages for delay. The addition costs of the Employer induced thereby
shall be borne by the Contractor.

 

(5)
If the completion test fails, resulting in the loss of production and/or use functions of the entire project, the Contractor has
the right to instruct the Contractor to redesign and reset relevant parts, and the Contractor shall bear the additional costs (including
the Contractor’s costs) incurred therefrom. If the completion date is delayed thereby, the Contractor shall be liable for
damages for delay. The Employer shall have the right to lodge a claim with the Contractor in accordance with the provisions about
the Employer’s claim in Article 16.2.1, or terminate the
contract in accordance with the provision in Item (7) of Article 18.1.2.

 

8.7 Dispute over the Completion Test
Results

 

8.7.1 Settlement through negotiation. Any
dispute between both parties hereto over the results of the completion test shall be settled through negotiation first.

 

8.7.2 Entrusting an appraisal agency. After
negotiation, if both parties hereto still have disputes over the completion test results, they shall jointly entrust a testing
institution with corresponding qualifications to conduct the appraisal. After testing and identification, it shall be handled as
follows:

 

(1) If the responsible party is the Contractor,
the necessary cost of appraisal and the reasonable cost increased by the Employer shall be borne by the Contractor, and the completion
date shall not be postponed;

 

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(2) If the responsible party is the Employer,
the necessary cost of appraisal and the reasonable cost increased by the Contractor shall be borne by the Employer, and the completion
date shall be postponed accordingly;

 

(3) If both parties hereto have responsibilities,
the cost shall be shared through negotiation according to the responsibility of each party, and the completion date shall be extended
according to the delay of the completion test plan.

 

8.7.3 Where both parties hereto have disputes
over the appraisal result of the testing institution, it shall be settled in accordance with the provisions about disputes and
arbitration in Article 16.3.

 

Article 9 Project Taking-over

 

9.1 Project Taking-over

 

9.1.1 Taking over by single project and/or
by project. According to the specific conditions and characteristics of the project, it shall be agreed to receive by single project
and/or by project in the special terms and conditions.

 

(1) In accordance with the provisions about
post-completion test in Article 10, if the Contractor is responsible for guiding the Employer to carry out the single project and/or
post-completion test, and for the assessment of the trial run, the special terms and conditions shall stipulate the sequence and
time arrangement of taking over the single project or the time arrangement of taking over the project.

 

If the Employer is responsible for the
single project and/or post-completion test, and for the assessment of the trial run, the special terms and conditions shall stipulate
the date of taking over the project or the sequence and time arrangement of taking over the single project.

 

(2) For single projects and/or projects
without completion test or post-completion test, if the Contractor completes the outstanding work and defect repair, which meets
the acceptance standards agreed in the contract, the project taking-over and completion acceptance shall be handled in accordance
with the contract.

 

9.1.2 Information submitted by the Contractor
when taking over the project. Except for the materials that have been submitted as agreed in Items (1) - (3) of Article 8.1.1,
the categories, contents, copies and submission time of the acceptance materials for the completion test to be submitted shall
be stipulated in the special terms and conditions.

 

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9.2 Taking-over Certificate

 

9.2.1 The Contractor shall, within 10 days
after the project and/or single project meet the acceptance conditions, submit the application for the taking-over certificate
to the Employer, and the Employer shall, within 10 days after receiving the application, organize the taking-over and issue the
taking-over certificate for the project and/or single project.

 

The date agreed in Paragraph (2) of Article
8.2.6 shall be the date of taking over the single project.

 

The date agreed in Item (3) of Article
8.2.6 shall be the date of taking over the project.

 

9.2.2 Outstanding works and defect repairs.
Outstanding works and defect repairs that have no substantial impact on the operation or use of the project and/or single project
shall not be taken as a reason for the Employer not to accept the project. The reasonable time for the Contractor to complete the
outstanding works and defect repairs as determined by the Employer and the Contractor through consultation shall be attached to
the taking-over certificate.

 

9.3 Responsibility for Taking over the
Project

 

9.3.1 Security responsibility. From the
date of taking over the single project and/or project, the Employer shall assume its security responsibility.

 

9.3.2 Care responsibility. From the date
of taking over the single project and/or project, the Employer shall assume its care responsibility. The Employer is responsible
for the maintenance and repair of the single project and/or project, excluding defect repairs and outstanding project parts and
areas that need to be completed by the Contractor.

 

9.3.3
Insurance responsibility. If the insuring party of the project during construction as agreed in the contract is the Contractor,
the Contractor shall be responsible for insuring the project and maintaining the insurance period until the date when the Employer
takes over the project as agreed in Article 9.2.1. After this date,
the Employer is responsible for insuring the project.

 

9.4 Failure to Take over the Project

 

9.4.1 Failing to take over the project.
If the Employer does not take over within 15 days after receipt of application for taking-over certificate for the single project
and/or project submitted by the Contractor, it shall be deemed that the application for the taking-over certificate of the single
project and/or project has been approved by the Employer. From the 16th day, the Employer shall bear relevant responsibilities
in accordance with the provisions of Article 9.3.

 

9.4.2 Failing to accept the project as
agreed. If the Contractor fails to submit an application for the taking-over certificate of the single project and/or project as
agreed, or fails to meet the conditions for taking over the single project or project, the Employer has the right to refuse to
take over the single project and/or project.

 

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If
the Employer fails to comply with the provisions of this paragraph, and uses or compels to take over the single project and/or
project that does not meet the acceptance conditions, it will bear the relevant responsibilities as agreed in Article 9.3,
and the liability for loss, failure, damage and/or compensation arising from the operation, use, etc. of the single project and/or
project which have been used or forcibly taken over.

 

Article 10 Post-completion Test

 

If the contract project includes post-completion
tests, the provisions of this article shall be observed.

 

10.1 Rights and Obligations

 

10.1.1 Rights and obligations of the Employer

 

(1) The Employer has the right to review
and approve the post-completion test plan prepared by the Employer with the assistance of the Contractor as agreed in Item (2)
of Article 10.1.2. The approval of the Employer shall not relieve or release the Contractor from any contractual liability.

 

(2) The joint coordinating leading organization
for post-completion test shall be set up by the Employer. Under the organization and leadership of the Employer and the guidance
of the Contractor, the organization shall divide the work according to the approved post-completion test plan, organize the preparation
of post-completion test, and conduct post-completion test and trial run assessment. The plan of setting up the joint coordinating
leading organization and its division of responsibilities shall be an integral part of this contract.

 

(3) The Employer shall have the right to
notify the Contractor of its non-acceptance or acceptance of the proposal made by the Contractor under Item (4) of Article 10.1.2.

 

If the Employer fails to accept the above
proposal made by the Contractor, the Contractor shall be obliged to follow the organizational arrangement in Item (2) of this Article.
If the Contractor has any accident, personal injury or engineering damage due to the execution of the Employer’s arrangement,
the Employer shall bear the liability.

 

(4) The organizational arrangements, instructions
and notices issued by the Employer to the Contractor during the post-completion test shall be sent to the project manager of the
Contractor in writing, and the project manager shall sign the receipt date, time and signature on the return receipt.

 

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(5) The Employer has the right to issue
urgent instructions to the Contractor orally or in writing in case of emergency, and the Contractor shall execute them immediately.
If the Contractor fails to follow the instructions of the Employer, it shall be liable for the accident liability, personal injury
and engineering damage caused thereby. The Employer shall, within 12 hours after issuing the verbal instruction, send the verbal
instruction to the Contractor’s project manager in writing.

 

(6) Other obligations and tasks of the
Employer during the post-completion test shall be agreed in the special terms and conditions.

 

10.1.2 Responsibilities and obligations
of the Contractor

 

(1) Under the unified arrangement of the
joint coordinating and leading organization for post-completion test established by the Employer, the Contractor will send personnel
with corresponding qualifications and experience to guide the post-completion test. The driving manager or supervisor dispatched
by the Contractor shall obtain the prior approval of the Employer before entering the site during the post-completion test period.

 

(2) The Contractor shall, in accordance
with the contract and the characteristics of the post-completion test, assist the Employer in preparing the post-completion test
plan and finishing the preparation before starting the completion test. The post-completion test plan shall include: operation
test procedures, resource conditions, test conditions, operating procedures, safety procedures, accident handling procedures, and
programs of the project, single project and related parts. The post-completion test plan shall be implemented after reviewed and
approved by the Employer. The copies and time of the post-completion test plan shall be stipulated in the special terms and conditions.

 

(3) The Employer shall be responsible for
any accidents, personal injuries and engineering damages caused by the Contractor’s failure to implement the Employer’s
arrangements, instructions and notices.

 

(4) The Contractor shall be obliged to
make recommendations on the organizational arrangements, instructions and notices of the Employer and explain the reasons.

 

(5) In case of emergency, the Contractor
shall immediately carry out the operation, work and assignment instructed by the Employer orally to the Contractor. The Contractor
shall keep a record of this instruction and its implementation. The Employer shall send the said oral instructions to the Contractor
in writing within 12 hours.

 

If the Employer fails to deliver the oral
instruction to the Contractor in writing within 12 hours, the Contractor and its project manager shall have the right to deliver
the oral instruction in writing within 24 hours after receiving the oral instruction. The Employer shall sign the return receipt
for confirmation and sign the date and time of receipt. If the Employer fails to sign the return receipt for confirmation within
24 hours, it is deemed to have been confirmed by the Employer.

 

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The Employer shall bear the liability for
accidents, personal injuries, engineering damages and additional costs caused by the Contractor’s execution of the Employer’s
verbal instructions. However, the Contractor shall be responsible for accidents, personal injuries, engineering damages and additional
costs arising from the Contractor’s wrongful execution of the said verbal instructions.

 

(6) Liability for defects in the operation
and maintenance manual. The Contractor shall be liable for accident liability, personal injury and engineering damage caused by
defects in the operation and maintenance manual compiled by the Contractor; if defects in the operation manual provided by the
Employer (including its licenser) lead to defects in the Contractor’s operation manual, which cause the accident liability,
personal injury, engineering damage and additional costs of the Contractor, the Employer shall be held responsible.

 

(7) Other obligations and work of the Contractor
according to the contract and/or industry regulations during the post-completion test shall be stipulated in the special terms
and conditions.

 

10.2 Post-completion Test Procedures

 

10.2.1 The Employer shall, in accordance
with the post-completion test plan approved by the joint coordinating and leading organization, provide the electricity, water,
fuel, power, raw materials, auxiliary materials, consumable materials and other test conditions, and organize and arrange its management
personnel, operation and maintenance personnel and other preparations.

 

10.2.2 The Contractor shall, in accordance
with the post-completion test plan approved, provide other temporary auxiliary equipment, facilities, tools and appliances required
for the post-completion test and other preparations that shall be completed by the Contractor.

 

10.2.3 The Employer shall, in accordance
with the post-completion test plan approved, organize the post-completion tests according to the post-completion test procedures
and test conditions for any part of a single project, a single project, between single projects, and/or the project.

 

10.2.4 The joint coordinating and leading
organization shall organize a comprehensive inspection, implement the resource conditions, test conditions, safety facility conditions,
fire fighting facility conditions, emergency treatment facility conditions, and/or related measures necessary for the post-completion
test of the project, single project, any part of the project, and ensure the completeness and quantity of recording instruments
and special recording forms.

 

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10.2.5 Notice of the post-completion test
date. The Employer shall, within 15 days after the date of receiving the single project and/or the date of receiving the project,
notify the Contractor of the date of starting the post-completion test, except as otherwise agreed in the special terms and conditions.

 

If the post-completion test cannot be performed
within 20 days after receiving the single project and/or project, or in the date agreed in the special terms and conditions due
to the Employer’s reasons, the Employer shall bear the related work delay fees incurred thereby to the Contractor starting
from the 21st day or from the day after the start date agreed in the special terms and conditions, including labor costs, temporary
auxiliary equipment/facility idle costs, management fees and reasonable profits.

 

10.3 Post-completion Test and Commissioning
Assessment 

 

10.3.1 The test shall be performed in accordance
with the test procedures, test conditions and operating procedures of the approved post-completion test plan, to achieve the production
and/or use functions of the project and/or single project as agreed in the contract.

 

10.3.2 The operator of the Contractor and
the instructor of the Contractor shall truthfully fill in the data, conditions, cases, time, name and other contents agreed on
the test condition records, test records and forms in the same post during the post-completion test.

 

10.3.3 Commissioning Assessment

 

(1) According to the provisions of Article
5.1.1, if the Contractor provides the production technology and/or architectural design plan, the Contractor shall ensure that
the project meets the assessment guarantee value and/or use functions specified in the special terms and conditions of Article
5.1.1 within the period of trial run assessment.

 

(2) According to the provisions of Article
5.1.2, if the Employer provides the production technology and/or architectural design plan, the Contractor shall ensure that the
project meets the assessment guarantee value and/or use functions of the relevant part of the project to be undertaken by the Contractor
as specified in the special terms and conditions of Article 5.1.2 within the period of commissioning assessment.

 

(3) The time period of the commissioning
assessment shall be agreed by both parties hereto in the special terms and conditions in accordance with the relevant industry
regulations on the commissioning assessment cycle.

 

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(4) After passing the commissioning assessment
or use functions, both parties hereto shall jointly sort out the results of the post-completion test and the commissioning assessment,
and prepare an evaluation report. The report shall be made in duplicate and each party shall hold one copy after being signed or
sealed as an integral part of the contract. The Employer shall issue assessment and acceptance certificate in accordance with the
provisions of Article 10.7.

 

10.3.4 Ownership of product and/or service
proceeds. Any product income and/or service income during the post-completion test and commissioning assessment of the single project
and/or the project shall be owned by the Employer.

 

10.4 Delay in Post-completion Tests

 

10.4.1 According to the provisions about
the notice of post-completion test date in Article 10.2.5, if the Employer fails to start the post-completion test within 90 days
after the post-completion test notice is issued, not because of the Contractor, the project and/or single project shall be deemed
to have passed the post-completion test and commissioning assessment, unless otherwise specified in the special terms and conditions.

 

10.4.2
If the post-completion test is delayed due to the Contractor’s reason, the Contractor shall take measures to organize as
soon as possible and cooperate with the Employer to start and pass the post-completion test. If the delay causes the Employer’s
additional expenses, the Employer shall have the right to claim compensation from the Contractor in accordance with the provisions
of Article 16.2.1.

 

10.4.3 According to the provisions about
the time period of the commissioning assessment in Paragraph (3) of Article 10.3.3, during the commissioning assessment, if the
assessment is interrupted or suspended due to the Employer’s reason, and the cumulative number of days of interruption or
suspension exceeds the commissioning assessment period stipulated in the special terms and conditions in Item (3) of Article 10.3.3,
the commissioning assessment shall be restarted within 60 days after interruption or suspension, beyond which the single project
and/or project shall be deemed to have passed the commissioning assessment.

 

10.5 Carrying out the Post-completion
Test Again

 

10.5.1 According to the provisions in Article
5.1.1 or 5.1.2 and its special terms and conditions, if the project, single project or any part of the project fails to pass the
post-completion test due to the Contractor’s reason, the Contractor shall repair the defects at his own expense, and the
Employer shall reorganize this test in accordance with the test procedures and test conditions as agreed in Article 10.2.3.

 

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10.5.2 If the Contractor retests according
to Article 10.5.1, and fails to pass the test, the Contractor shall continue to repair the defects at his own expense, and reorganize
this test in accordance with the test procedures and test conditions as agreed in Article 10.2.3 under the leadership of the Employer.

 

10.5.3 If the completion test is carried
out again due to the Contractor’s reason and additional expenses are incurred to the Employer, the Employer shall have the
right to claim against the Contractor according to the provisions of Article 16.2.1.

 

10.6 Failure to Pass the Assessment

 

If the project and/or single project fail
to pass the assessment due to the Contractor, but still have the production and use function, it shall be handled as follows:

 

(1) Compensation for failing to pass the
trial run assessment

 

1) The production process technology or
architectural design plan provided by the Contractor fails to pass the commissioning assessment.

 

If the production process technology and/or
architectural design plan provided by the Contractor fail to pass the trial run assessment, the Contractor shall, after paying
the corresponding compensation amount to the Employer according to the specification of the guarantee value and/or use function
guarantee for the commissioning assessment of the project and/or single project as agreed in the special terms and conditions of
Article 5.1.1, and according to the compensation amount for failure to pass the commissioning assessment as agreed in the special
terms and conditions or the amount calculated by the compensation formula, be deemed to have passed the trial run assessment.

 

2) The production process technology or
architectural design plan provided by the Employer fails to pass the commissioning assessment.

 

If the production process technology and/or
architectural design plan provided by the Employer fails to pass the commissioning assessment, the Contractor shall, after paying
the corresponding compensation amount to the Employer according to the relevant liabilities to be borne by the Contractor in the
commissioning assessment of the project and/or single project as agreed in the special terms and conditions of Article 5.1.2, and
according to the compensation amount agreed for relevant liabilities in the special terms and conditions, or the amount calculated
by the compensation formula, be deemed to have passed the commissioning assessment.

 

(2) If the Contractor proposes investigation,
adjustment and amendment at his own expense for the project and/or single project that fail to pass the commissioning assessment,
which is accepted by the Employer, both parties hereto shall agree on the corresponding investigation, amendment and test period,
and the Employer shall provide convenience for this purpose. Prior to passing the assessment, the Employer may temporarily withhold
the compensation in accordance with Item (1) of Article 10.6.

 

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(3) If the Employer accepts the provisions
of the said Item (2), but fails to provide convenience to the Contractor within the agreed time limit, which prevents the Contractor
from conducting investigation, adjustment and amendment within the agreed time limit, the Contractor shall be deemed to have passed
the commissioning assessment.

 

10.7 Post-completion Test and Assessment
and Acceptance Certificate

 

10.7.1 It is stipulated in the special
terms and conditions that the post-completion test and assessment and acceptance certificate shall be issued according to the project
and/or single project.

 

10.7.2 The Employer shall issue the post-completion
test and assessment and acceptance certificate in accordance with Article 10.7.1 for those that have passed or are deemed to have
passed the post-completion test and/or commissioning assessment as agreed in Articles 10.3, 10.4, 10.5.1, 10.5.2 and 10.6. The
date and time specified in the certificate for passing the commissioning assessment shall be the date and time on which the assessment
is actually completed or it is deemed to have passed the commissioning assessment.

 

10.8 Loss of Production Value and Use
Value

 

If the project and/or single project fail
to pass the post-completion test due to the Contractor’s reason, resulting in that the entire project loses its production
value or use value, the Employer shall have the right to claim for non-performance and deduct the performance bond submitted. However,
the Employer shall not include any joint and several contract losses other than the contract in the claim for non-performance.

 

Joint and several contract losses refer
to losses on market sales contracts, expected market profits, interest on production working capital loans, losses on raw materials,
auxiliary materials, electricity, water, fuel and other supply contracts signed other than the post-completion test and the commissioning
assessment cycle, as well as losses on transportation contracts, unless otherwise provided for by applicable laws.

 

Article 11 Warranty Liability 

 

11.1 Warranty Liability Letter 

 

11.1.1 Warranty liability letter.

 

The signing of the warranty liability letter
in accordance with the relevant legal provisions is one of the conditions of completion acceptance. Both parties shall sign the
warranty liability letter in accordance with the warranty content, scope, term and liability stipulated in laws as an annex hereto.
The date of receipt of the single project and (or) the project specified in the receipt certificate in Article 9.2.1 or the date
on which the single project and (or) the project is deemed to be received is the date on which the Contractor’s warranty
liability begins as well as the start date of the defect liability period.

 

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11.1.2 Failure to submit the warranty liability
letter

 

In the event that the Contractor fails
to submit the warranty liability letter and does not sign the warranty liability letter with the Employer without justified reasons,
the Employer may not go through completion settlement with the Contractor and not bear the corresponding interest of the completion
settlement funds not paid even if it has been stipulated in the contract that interest is paid overdue.

 

If the Contractor has submitted the warranty
liability letter and requires signing the liability letter with the Employer and it has been stipulated in the contract that interest
is paid overdue, but the warranty liability letter fails to be signed timely due to the Employer’s reasons, the Employer
shall bear the interest of the completion settlement funds paid overdue from the 11th day of receiving this liability
letter.

 

11.2 Defect Liability Warranty Premium

 

11.2.1 Amount of defect liability warranty
premium

 

The amount of defect liability warranty
premium is stipulated in the special terms and conditions.

 

11.2.2 Temporary deduction of defect liability
warranty premium

 

The method of temporary deduction of defect
liability warranty premium is stipulated in the special terms and conditions.

 

11.2.3 Payment of defect liability warranty
premium.

 

The Employer shall pay the defect liability
warranty premium temporarily deducted on the basis of the agreement on defect liability warranty premium in Article 14.5.2.

 

Article 12 Project Completion Acceptance

 

12.1 Completion Acceptance Report and
Complete Completion Data 

 

12.1.1 The project conforms to the relevant
agreements on project receipt in Article 9.1, and (or) the Employer has issued the test and examination acceptance certificate
after completion according to Article 10.7; the Contractor has completed the finishing works and defect repairs set forth in Article
9.2.2; after the Employer or supervisor accepts, the Contractor shall submit the completion acceptance report and complete project
completion data to the Employer in accordance with the inspection and acceptance of completion test in items (1), (2) and (3) of
Article 8.1.1 and Article 8.2, post-completion test and its trial operation examination result in item (4) of Article 10.3.3 and
other data. The format, content and number of copies of the completion acceptance report and complete completion data are specified
in the special terms and conditions.

 

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12.1.2 The Employer shall, within 25 days
after receiving the completion acceptance report and complete completion data, put forward modification opinions or confirm. The
Contractor shall modify the completion acceptance report and completion data according to the Employer’s opinions. If the
Employer has not put forward modification opinions within 25 days, it is deemed that completion data and completion acceptance
report have been confirmed.

 

12.1.3 Projects developed, put into use
or used by phases are handled according to the agreements in Articles 12.1.1 and 12.1.2.

 

12.2 Completion Acceptance 

 

12.2.1 Organizing completion acceptance

 

The Employer shall organize completion
acceptance within 30 days after receiving the completion acceptance report and complete completion data and confirming according
to Article 12.1.2.

 

12.2.2 Completion acceptance organized
overdue

 

When the Employer fails to organize completion
acceptance within 30 days according to Article 12.2.1, completion settlement funds shall be paid off according to Articles 14.12.1-14.12.3.

 

When the Employer conducts completion acceptance
after the time stipulated in Article 12.2.1, the Contractor has the obligation to participate in. Within 25 days after acceptance,
in terms of the further modification opinions proposed by the Employer to the Contractor’s completion acceptance report or
completion data, the Contractor shall rectify according to the Employer’s opinions at its own expense.

 

12.2.3 Phased completion acceptance

 

Completion acceptance of the contract project
developed, put into use or used by phases is organized by phases according to clauses 12.1.3 and 12.2.1.

 

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Article
13 Change and Contract Price Adjustment

 

13.1 Change Right 

 

13.1.1 Change right

 

The Employer has the jurisdiction of approving
changes. Within any time after the contract takes effect to project completion acceptance, the Employer has the right to release
change instructions according to the supervisor’s suggestions, Contractor’s suggestions and the scope of change stipulated
in Article 13.2. Change instructions are sent in writing.

 

13.1.2 Change

 

Written change instructions approve and
sent by the Employer are changes, including change instructions directly released by the Employer, or change instructions approved
by the Employer and released by the supervisor.

 

The Contractor shall amend, adjust and
improve defects in its own design, procurement, construction, completion test and post-completion test at its own expense, which
are not changes.

 

13.1.3 Change suggestion right

 

The Contractor has the obligation to submit
the written change suggestion to the Employer at any time, including shortening duration, reducing Employer’s project, construction,
maintenance and operation expenses, improving efficiency or value of completion project and bringing long-term interests and other
interests. After receiving such suggestions, the Employer shall send a written notice of non-adoption, adoption or addition of
further information.

 

13.2 Scope of Change 

 

13.2.1 Scope of design change

 

(1) Adjustment of production process, but
the production route and scale initially designed and approved are not enlarged or zoomed out, or the production route and scale
stipulated in the contract is not enlarged or zoomed out;

 

(2) Adjustment of plane layout, vertical
layout and partial use functions, but the building scale initially designed and approved is not enlarged; the use functions initially
designed and approved are not changed; or the building scale agreed in the contract is not enlarged; the use functions stipulated
in the contract are not changed;

 

(3) Adjustment of process and use functions
of the supporting project system;

 

(4) Adjustment of benchmark control point,
benchmark elevation and datum line in the area;

 

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(5) Adjustment of the performance, specification
and quantity of equipment, materials and components;

 

(6) Changes incurred by execution of laws,
standards and specifications issued after the benchmark date;

 

(7) Other design matters beyond the contract
agreement;

 

(8) Additional work required for the aforesaid
changes.

 

13.2.2 Procurement change scope

 

(1) The Contractor signs the procurement
contract with the relevant supplier according to the name list approved by the Employer or has started processing manufacturing,
supply, transportation, etc.; the Employer informs the Contractor to choose another supplier in this name list;

 

(2) Changes incurred by execution of laws,
standards and specifications issued after the benchmark date;

 

(3) The Employer requires changing the
place of examination, inspection, detection and test and increased additional tests;

 

(4) The Employer requires increasing or
decreasing the purchase quantity of spare parts, special tools and materials for post-completion test stipulated in the contract;

 

(5) Additional work required for the aforesaid
changes.

 

13.2.3 Scope of construction changes

 

(1) Changes in construction methods, increase
or decrease of equipment, materials, parts, labor and quantities according to the design change in Article 13.2.1;

 

(2) Additional tests required by the Employer,
change of test place;

 

(3) New construction obstacle treatment
except items (1) and (2) of Article 5.2.1;

 

(4) The Employer informs to conduct the
completion test on the completion tested items that have been accepted or are deemed to pass the acceptance again;

 

(5) Changes incurred by execution of laws,
standards and specifications issued after the benchmark date.

 

(6) Other visas on site;

 

(7) Additional work required by the aforesaid
changes.

 

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13.2.4 Employer’s work instructions.
When the Contractor has accepted the Employer’s written instructions and speeds up design, construction or the progress of
any other parts in such manner as the Employer deems necessary, the Contractor needs to adjust the project program in order to
implement the work instructions and estimate the increased measures and resources. After approval by the Employer, it is treated
as changes. If the Employer does not approve such changes, the Contractor has the right to execute according to the program of
relevant stages stipulated in the contract.

 

When the actual progress is obviously behind
the project program approved above due to the Contractor’s reasons, the Contractor shall catch up with according to Article
4.1.2 at its own expense; when the date for completion is delayed, the liability for compensation for delay is assumed as agreed
in Article 4.5.

 

13.2.5 Reduction of a part of the project.
In the event that the Employer’s suspension exceeds 45 days and the work cannot be resumed when the Contractor requests resumption
or cannot continue construction due to continuity of force majeure, both parties may reduce the part of the project affected by
suspension in form of change as agreed in the contract.

 

13.2.6 Other changes are agreed in the
special terms and conditions according to the specific characteristics of the project.

 

13.3 Change Procedures 

 

13.3.1 Change notice. The Employer’s
change shall be notified to the Contractor in writing in advance.

 

13.3.2 Suggestion report of change notice.
After the Contractor receives the Employer’s change notice, it has the obligation to submit the written suggestion report
to the Employer within 10 days.

 

(1) If the Contractor accepts the changes
in the Employer’s change notice, the suggestion report shall contain: reasons for supporting the changes, work content, equipment,
materials, manpower, machinery, turnover of materials, consumption of materials and other resources consumption for implementation
of such changes and estimate of relevant management costs and reasonable profits. The percentage of relevant management costs and
reasonable profits shall be agreed in the special terms and conditions. When the date for completion incurred by such changes is
extended, the reasons shall be explained in the report; and the program related to such changes shall be submitted.

 

The Contractor’s failure to submit
the estimate of the increased fees and extension of date for completion is deemed that the changes do not involve in contract price
adjustment and completion date extension. The Employer will no longer assume any costs for such changes and liability for extension
of date for completion.

 

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(2) If the Contractor does not accept the
changes in the Employer’s change notice, the suggestion report shall contain the reasons for not supporting such changes,
including:

 

1) Such changes do not conform to laws,
regulations and other relevant provisions;

 

2) It is difficult for the Contractor to
obtain the special equipment, materials and parts required for changes;

 

3) It is difficult for the Contractor to
obtain the processes and technologies required for changes;

 

4) Changes will reduce the safety, stability
and adaptability of the project;

 

5) Have a bad influence on the achievement
of production performance guarantee value and use function guarantee.

 

13.3.3 Employer’s examination and
approval. The Employer shall examine the suggestions within 10 days after receiving the written suggestion report submitted by
the Contractor according to Article 13.3.2 and send a written notice of approval, revocation, change or further requirements. Within
the time of waiting for the Employer’s reply, the Contractor cannot stop or delay any work.

 

(1) After receiving the suggestion report
submitted by the Contractor according to item (1), Article 13.3.2 and approving its reasons, estimate and (or) date for completion
through examination, the Employer shall release change instructions in writing.

 

In the event that the Employer fails to
confirm the estimate and (or) extension of date for completion raised by the Contractor for such changes nor does it raise any
objections in the change instructions released, from the 11th day after the Employer receives such written suggestion
report, it is considered that the estimate of changes and (or) extension of date for completion submitted by the Contractor have
(has) been approved by the Employer.

 

(2) After examining the Contractor’s
reasons for not accepting such changes submitted according to item (2), Article 13.3.2, the Employer sends a written notice of
continuing execution, changing and further supplementing materials, and the Contractor shall implement.

 

13.3.4 In the event that the Contractor
submits the change proposal according to Article 13.1.3, its change procedure is subject to according to the agreement of this
change procedure.

 

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13.4 Emergency Change Procedure

 

13.4.1 The Employer has the right to send
an emergency change instruction in written or oral form, to order the Contractor to immediately execute such change. After the
Contractor receives this instruction, it shall immediately execute. In the event that the Employer sends an emergency change instruction
orally, it shall confirm this change in writing within 48 hours and hand over to the Contractor’s Project Manager.

 

13.4.2 The Contractor shall submit the
work content, resource consumption and estimate of this change within 10 days after completion of the emergency change instruction.
When the key path of the project is delayed due to execution of this change, the requirement on extending the date for completion
may be put forward but reasons shall be stated, and the program related to this change shall be submitted.

 

If the Contractor fails to submit the written
data of estimate of actual consumption, and (or) extension of date for completion within 10 days after completion of this change,
it is deemed that this change does not involve contract price adjustment and completion date extension. The Employer will no longer
assume any liability for this change.

 

13.4.3 The Employer shall, within 10 days
after receiving the written data submitted by the Contractor according to Article 13.4.2, inform the Contractor of the approved
reasonable estimate in writing, and (or) provide reasonable extension of the date for completion.

 

In the event that the Employer fails to
approve the Contractor’s estimate and (or) completion date extension nor does it explain reasons within 10 days after receiving
the Contractor’s written report, the estimate, and (or) completion date extension submitted by the Contractor are deemed
to have been approved by the Employer after the 11th day of receiving the report.

 

When the Contractor has a dispute about
the change expense and completion date extension approved by the Employer, both parties shall settle through friendly negotiation.
If negotiation fails, it shall be settled according to the disputes and awards procedures of Article 16.3.

 

13.5 Change Price Determination 

 

The change price is determined according
to the following methods:

 

13.5.1 If the corresponding unit price
(including the collection fee) of labor, machinery, and project quantity is already included in the contract, the change price
shall be determined according to the corresponding unit price (including the collection fee) of labor, machinery, project quantity,
etc. already in the contract;

 

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13.5.2 If there is no corresponding unit
price (including the collection fee) of labor, machinery, and project quantity, the change price shall be determined according
to the price similar to change project.

 

13.5.3 If there is no corresponding unit
price (including the collection fee) of labor, machinery, and project quantity, or the price similar to change project, the change
price shall be determined by both parties through negotiation.

 

13 .5.4 Other methods agreed in the special
terms and conditions.

 

13.6 Benefit Sharing of Proposed Changes

 

Where the Employer’s approval of
the adoption of the change proposal proposed by the Contractor in accordance with Article 13.1.3 reduces the investment in the
project, shortens the construction period, and makes that the Employer obtains long-term operating benefits or other benefits,
both parties may share benefits in accordance with the special terms and conditions. When necessary, both parties can sign a supplementary
benefit sharing agreement as an annex hereto.

 

13.7 Contract Price Adjustment 

 

Within 30 days after the following circumstances
occur, both parties hereto have the right to inform each other or the supervisor in writing of the reasons for contract price adjustment
and adjustment amount. The reasonable amount confirmed by the Employer serves as the adjustment amount of the contract price, and
the adjusted amount shall be paid or deducted upon payment of the project progress fund for the current period. Where one party
does not confirm nor does it put forward modification opinions within 15 days after receiving the other party’s notice, it
is deemed to have agreed to the adjustment of this price. The contract price adjustment excludes the following circumstances:

 

(1) After the contract is signed, the contract
price increase or decrease is affected by changes in laws, national policies and industrial provisions that need to be abided by;

 

(2) During the execution of contract, the
price adjustment published by the project cost management department involves increase or decrease of the Contractor’s investment
cost;

 

(3) Water outages, power outages, gas outages,
and road interruptions caused by non-Contractor’s reasons within a week cause the project site to stop working for more than
8 hours (the Contractor must submit a report and provide verifiable evidence and estimates);

 

(4) The increase or decrease of the change
estimates approved by the Employer in accordance with the change procedures approved in clauses 13.3 to 13.5;

 

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(5) Other funds increase or decrease as
agreed herein.

 

For increased or decreased funds not specified
in the contract, the Employer does not assume the liability for adjusting the contract price unless otherwise provided in laws.
The adjustment of contract price excludes contract changes.

 

13.8 Disputes about Contract Price Adjustment

 

If both parties fail to reach a consensus
on the fee for project changes, adjustment of contract price or extension of completion date, it shall be settled according to
the agreements on disputes and awards in Article 16.3.

 

Article 14 Total Contract Price and
Payment

 

14.1 Total Contract Price and Payment

 

14.1.1 Total contract price

 

This contract is a total price contract.
The contract price will not be adjusted except for the adjustment according to the changes and contract price of Article 13 and
other agreements on increase or decrease of amount herein.

 

14.1.2 Payment

 

(1) The currency of the contract price
is RMB, paid by the Employer to the Contractor within the territory of China.

 

(2) The Employer shall pay the Contractor
the contract price according to the category of payables and payment schedule agreed in the contract. The bank account appointed
by the Contractor is agreed in the special terms and conditions.

 

14.2 Guarantee 

 

14.2.1 Performance bond

 

When it is stipulated in the contract that
the Contractor shall submit the performance bond to the Employer, the format, content and time of submission of the performance
bond are agreed in the special terms and conditions.

 

14.2.2 Payment bond

 

When it is stipulated in the contract that
the Contractor shall submit the performance bond to the Employer, the Employer shall submit the payment bond to the Contractor.
The format, content and time of submission of the payment bond are agreed in the special terms and conditions.

 

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14.2.3 Prepayment bond

 

When it is stipulated in the contract that
the Contractor shall submit the prepayment bond to the Employer, the format, amount and time of submission of the prepayment bond
are agreed in the special terms and conditions.

 

14.3 Prepayment 

 

14.3.1 Amount of prepayment

 

The Employer agrees to regard a certain
proportion of the contract price as the amount of prepayment. The specific amount is agreed in the special terms and conditions.

 

14.3.2 Prepayment paying

 

When the prepayment bond is stipulated
in the contract, within 10 days after the contract comes into effect, the Employer shall pay the Contractor the lump sum of the
advance payment amount agreed in Article 14.3.1 within 10 days after receiving the prepayment guarantee submitted by the Contractor;
when no prepayment bond is stipulated, the Employer shall pay the Contractor the lump sum of the advance payment amount agreed
in Article 14.3.1 within 10 days after the contract becomes effective.

 

14.3.3 Deduction of prepayment

 

(1) Deduction method, deduction proportion
and deduction schedule of prepayment are agreed in the special terms and conditions.

 

(2) When the Employer issues the project
receipt certificate or the contract is dissolved, if the prepayment has not been fully deducted, the Employer has the right to
require the Contractor to pay the prepayment not fully deducted yet. If the Contractor is unable to pay, the Employer has the right
to deduct the balance of the prepayment according to the following procedure:

 

1) Deduct from the funds payable to the
Contractor or belonging to the Contractor once or multiple times;

 

2) When the funds payable to the Contractor
or belonging to the Contractor are insufficient to deduct, the Employer has the right to deduct the prepayment not fully deducted
from the prepayment bond (if it shall be submitted as agreed);

 

3) When the funds payable to the Contractor
or belonging to the Contractor are insufficient to deduct and it is not agreed in the contract that the Contractor shall submit
the prepayment bond, the Contractor shall sign the prepayment payment schedule agreement of the prepayment not fully deducted with
the Employer;

 

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4) If the Contractor fails to execute according
to the aforesaid agreement, the Employer has the right to deduct the prepayment not fully deducted from the performance bond (if
any).

 

14.4 Project Progress Payment 

 

14.4.1 Project progress payment. The payment
method, payment conditions and payment time of the project progress payment are agreed in the special terms and conditions.

 

14.4.2 Other progress payment payable according
to the specific condition of the project is agreed in the special terms and conditions.

 

14.5 Temporary Deduction and Payment
of Defect Liability Warranty Premium

 

14.5.1 Temporary deduction of defect liability
warranty premium. The Employer may temporarily deduct the defect liability warranty premium according to the amount of the defect
liability warranty premium specified in Article 11.2.1 and the agreement on temporary deduction of the defect liability warranty
premium in Article 11.2.2.

 

14.5.2 Payment of defect liability warranty
premium

 

(1) The Employer shall pay the Contractor
half of the total defect liability warranty premium temporarily deducted under 14.5.1 when handling project completion acceptance
and completion settlement unless otherwise provided in the special terms and conditions. Thereafter, if the Contractor fails to
repair a defect that occurs during the defect repair liability period as notified by the Contractor or entrusts the Contractor
to repair the defect, the cost of repairing the defect shall be deducted from the remaining amount of the defect liability warranty
premium. The Employer shall, within 15 days after the expiry of the defect liability period, pay the Contractor the remaining balance
of the defect liability warranty premium.

 

(2) If the special terms and conditions
stipulate that the Contractor may submit the bond of defect liability warranty premium, and the Contractor requires providing the
bond to replace the remaining defect liability warranty premium when handling project completion acceptance and completion settlement,
the Employer shall pay the remaining amount of the warranty premium after receiving the defect liability warranty premium bond
submitted by the Contractor according to the contract agreement. Thereafter, if the Contractor fails to repair the defects arising
during the defect liability period at its own expense or entrusts the Employer to repair the defects, the cost for repairing the
defects shall be deducted from this bond. The Employer shall, within 15 days after the expiry of the defect liability period, return
the bond. The format, amount and time of submission of the bond are agreed in the special terms and conditions.

 

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14.6 Applying for Payment According
to the Monthly Project Progress 

 

14.6.1 Apply for payment by month. If payment
is applied by month, the Contractor shall, on the basis of the contract price agreed in the contract agreement, submit the payment
application to the Employer or the supervisor according to the contract amount of the project quantity (including design, procurement,
construction, completion test and post-completion test, etc.) actually finished every month. The format, content, number of copies
and time of the payment application report submitted by the Contractor are agreed in the special terms and conditions.

 

The funds in the monthly payment application
report include:

 

(1) The type of funds agreed upon in clause14.4
project progress payment;

 

(2) Increased or decreased funds according
to the contract price adjustment of Article 13.7;

 

(3) Funds paid and deducted according to
the prepayment stipulated in Article 14.3;

 

(4) Funds temporarily deducted and paid
according to Article 14.5 defect liability warranty premium;

 

(5) Increased or decreased funds according
to the claim result of Article 16.2;

 

(6) Increased or decreased funds according
to the supplementary agreement of this contract signed separately.

 

14.6.2 If both parties have agreed on the
method of payment applied according to the monthly project progress under Article 14.6.1, they may not agree on the method of payment
applied according to the payment schedule under Article 14.7.

 

14.7 Applying for Payment According
to the Payment Schedule 

 

14.7.1 Apply for payment according to the
payment schedule

 

If applying for payment according to the
payment schedule, the Contractor shall submit the payment application report of the current period to the Employer or the supervisor
on the basis of the contract price specified in the contract agreement according to the number of payment periods, the main image
progress achieved in each plan, and / or the main planned project quantity (including design, procurement, construction, completion
test and post-completion test, etc.) and each period’s payment amount, and according to the format, content, number of copies
and time of submission specified in the special terms and conditions.

 

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The funds in each period’s payment
application report include:

 

(1) The amount of payment to be applied
in the current period as agreed in the special terms and conditions;

 

(2) The increased and decreased funds according
to the provisions of Article 13.7 on contract price adjustment;

 

(3) Payments made and deducted in accordance
with the provisions of Article 14.3 on prepayment;

 

(4) Funds temporarily deducted and paid
according to the provisions of Article 14.5 on defect liability warranty premium;

 

(5) Funds increased or decreased according
to Article 16.2 claim results;

 

(6) Funds increased or decreased according
to the supplementary agreement of this contract signed separately.

 

14.7.2 When the Employer pays according
to the payment schedule, the Contractor’s actual work and / or actual progress is 30 days or more behind the target task of the
key path stipulated in the payment schedule, the Employer has the right to negotiate with the Contractor to reduce the current
payment amount and the right to adjust the payment schedule with the Contractor. The Employer’s future payment applications and
the Employer’s payment for each period are based on the adjusted payment schedule.

 

14.7.3 When both parties agree that payment
shall be applied according to the payment schedule in Article 14.7, they cannot agree on the method of payment application according
to the monthly project progress in Article 14.6.

 

14.8 Payment Conditions and Time Arrangement

 

14.8.1 Payment conditions

 

When both parties agree that the Contractor
shall submit the performance bond, the submission of the performance bond shall be the prerequisite for the Employer’s payment
of each fund; when no performance bond is stipulated, the Employer pays the funds as agreed.

 

14.8.2 Prepayment paying

 

The project prepayment is paid according
to the agreement on prepayment paying in Article 14.3.2. After full deduction of prepayment, the Employer shall promptly return
the payment bond to the Contractor.

 

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14.8.3 Project progress payment

 

(1) Apply and pay according to monthly
project progress. When applying for payment and paying according to monthly project progress under Article 14.6.1, the Employer
shall review and pay within 25 days from the date of receiving the monthly payment application report submitted by the Contractor
in accordance with Article 14.6.1.

 

(2) Apply and pay according to the payment
schedule. When applying for payment and paying according to the payment schedule under Article 14.7.1, the Employer shall review
and pay within 25 days from the date of receiving each payment application report submitted by the Contractor according to Article
14.7.1.

 

14.9 Payment Time Delay 

 

14.9.1 In the event that the Employer fails
to pay the Contractor the project progress payment according to the time stipulated in 14.8.3, it shall pay the Contractor’s interest
on the deferred payment at the interest rate of the same loans promulgated by the People’s Bank of China for the same period from
the 26th day after receiving the payment application report, as the default amount of the deferred payment.

 

14.9.2 Where the Employer delays payment
for more than 15 days, the Contractor has the right to send a notice of requesting payment to the Contractor. After the Employer
receives the notification and still cannot pay, the Contractor may suspend some work, which is deemed a suspension caused by the
Employer, and follow the provisions of Article 4.6.1 on the Employer’s suspension.

 

Where both parties negotiate and sign a
deferred payment agreement, the Employer shall pay according to the period, time, amount and interest stipulated in the deferred
payment agreement; when both parties fail to reach a deferred payment agreement, causing that the project cannot be implemented,
the Contractor may stop part or all of the project, and the Employer shall bear the liability for breach of contract; when it causes
the project’s critical path to be delayed, the completion date is postponed.

 

14.9.3 If the Employer delays payment for
more than 60 days and affects the implementation of the entire project, the Contractor has the right to issue a notice of dissolution
to the Employer in accordance with Article 18.2, and has the right to make a claim against the Employer for the related expenses
increased.

 

14.10 Taxes and Tariff 

 

14.10.1 The Employer and the Contractor
shall perform their respective tax obligations in accordance with the relevant national tax regulations, including various tax
obligations related to imported project materials.

 

14.10.2 When one party hereto enjoys the
import value-added tax and tariff reduction and exemption of imported engineering equipment, materials, equipment accessories,
etc. under this contract, the other party is obliged to assist and cooperate in going through the tax reduction and exemption procedures.

 

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14.11 Payment of Claims

 

14.11.2 For the claim amount that shall
be obtained by the Employer determined through negotiation or mediation, or determined by arbitration, or judged by the court,
The Employer may deduct the claim amount from the project progress payment for the current month or the payment in the current
payment schedule payable to the Contractor. When the project progress payment paid to the Contractor in each period is insufficient
to offset the Employer’s claim amount, the Contractor shall pay separately. If the Contractor fails to pay, the payment agreement
can be negotiated. If the payment is still not made, the Employer can deduct it from the performance bond (if any). If the performance
bond is not sufficient for deduction, the Contractor must pay the claim amount separately, or within the time limit of the payment
agreement agreed upon by both parties.

 

14.11.2 For the claim amount that shall
be obtained by the Contractor determined through negotiation or mediation, or determined by arbitration, or judged by the court,
the Contractor may separately list the claim amount in the payment application for the current month’s progress payment or current
payment schedule, The Employer shall pay the claim amount in the current payment. When the Employer fails to pay the claim amount,
the Contractor has the right to deduct from the payment bond (if any) submitted by the Employer. If no payment bond is stipulated,
the Employer shall pay the claim separately.

 

14.12 Completion Settlement

 

14.12.1 Submit completion settlement data

 

The Contractor shall submit a completion
settlement report and complete completion settlement data to the Employer within 30 days after the completion acceptance report
and complete completion data submitted according to the provisions of Article 12.1 are determined by the Employer. The format,
content and number of completion settlement data are specified in the special terms and conditions.

 

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14.12.2 Final completion settlement data

 

The Employer shall review and propose modification
opinions within 30 days after receiving the completion settlement report and complete completion settlement data submitted by the
Contractor. After the parties have reached a consensus on the modification of the completion settlement report and the complete
completion settlement data, the Contractor shall amend at its own expense and submit the final completion settlement report and
final settlement information.

 

14.12.3 Settle the funds for completion
settlement

 

The Employer shall settle the funds for
completion settlement within 30 days after receiving the final completion settlement data submitted by the Contractor in accordance
with Article 14.12.2. Within 5 days after the completion funds are settled, the Employer shall return the performance bond submitted
by the Contractor in accordance with Article 14.2.1 to the Contractor; the Contractor shall return the payment bond submitted by
the Employer to the Employer in accordance with Article 14.2.2.

 

14.12.4 Failure to respond to the completion
settlement report

 

If the Employer fails to submit modification
opinions or reply within 30 days of receiving the completion settlement report and the complete completion settlement data submitted
by the Contractor in accordance with Article 14.12.1, it shall be deemed that the Employer has approved the completion settlement
data as the final completion settlement data. The Employer shall settle the funds for completion settlement in accordance with
the provisions of Article 14.12.3.

 

14.12.5 The Employer’s failure to
settle the funds for completion settlement

 

(1) If the Employer fails to settle the
balance of the funds for completion settlement payable to the Contractor in accordance with Article 14.12.3, the Contractor shall
have the right to deduct the balance of the funds from the payment bond submitted by the Employer in accordance with Article 14.2.2.

 

When the contract does not stipulate that
when the Employer submits the payment bond in accordance with Article 14.2.2 or the payment bond is not enough to compensate the
completion settlement funds payable to the Contractor, the Employer shall pay the balance of the funds for completion settlement
from the 31st day after the Contractor submits the final settlement data and pay corresponding interest in accordance
with the interest rate of similar loans of the People’s Bank of China for the same period.

 

(2) Under the provisions of Article 14.12.4,
if the Employer fails to raise modification opinions and respond to the completion settlement data within the agreed 30 days, or
fails to pay the Contractor the balance of the funds for completion settlement, it shall pay the balance of the funds for completion
settlement in arrears from the 31st day after the Contractor submits the final settlement data and pay corresponding
interest in accordance with the interest rate of similar loans of the People’s Bank of China for the same period.

 

If the Employer has not settled the funds
for completion settlement within 90 days after the Contractor submits the final completion settlement data, the Contractor may
settle it according to the provisions of Article 16.3 on disputes and awards.

 

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14.12.6 Failure to submit the completion
settlement report and complete settlement data on time

 

If, within 30 days after the project completion
acceptance report is approved by the Employer, the Contractor fails to submit the project completion report and complete settlement
data to the Employer, causing the project completion settlement to fail to proceed normally or the project completion settlement
fail to be settled on time, when the Employer requires the Contractor to deliver the project, the Contractor shall make the delivery;
when the Employer does not require the project to be delivered, the Contractor shall bear the costs and responsibilities of storage,
maintenance and preservation, excluding a single project that has been used and received by the Employer in accordance with the
provisions of Article 9 on the receipt of the project and any part of the project.

 

14.12.7 The Contractor’s failure
to pay the funds for completion settlement

 

(1) When the Contractor fails to settle
the balance of the funds for completion settlement payable to the Contractor in accordance with Article 14.12.3, the Employer has
the right to deduct it from the performance bond submitted by the Contractor in accordance with Article 14.2.1.

 

When the amount of the performance bond
is insufficient to offset, the Contractor shall pay the outstanding balance of the funds for completion settlement from the 31st
day after the submission of the final completion settlement data, and pay the corresponding interest at the same loan rate of the
People’s Bank of China for the same period. If the Contractor fails to pay within 90 days of the submission of the final completion
settlement data, the Employer shall have the right to settle in accordance with the provisions of Article 16.3 on disputes and
awards.

 

(2) When no performance bond is stipulated
in the contract, the Contractor shall pay the outstanding balance of the funds for completion settlement from the 31st
day after the submission of the final completion settlement data, and pay the corresponding interest at the same loan rate of the
People’s Bank of China for the same period. If the Contractor fails to pay within 90 days of the submission of the final completion
settlement data, the Employer shall have the right to settle in accordance with the provisions of Article 16.3 on disputes and
awards.

 

14.12.8 Disputes over completion settlement

 

If both parties have disputes over the
price of project completion settlement within 30 days after the Employer receives the completion settlement report and complete
settlement data submitted by the Contractor, they shall jointly entrust a construction cost consulting unit at the corresponding
qualification level to conduct the completion settlement audit and settle the funds for completion settlement according to the
results of the audit. The audit period shall be agreed upon between both parties hereto and the project cost audit unit. If there
are still disputes over the results of the audit, they shall be resolved in accordance with the provisions of Article 16.3 on disputes
and awards.

 

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Article 15 Insurance 

 

15.1 Insurance Insured by the Contractor

 

15.1.1 According to the types of insurance
agreed by the applicable laws and special terms and conditions, the insurance costs of the types of insurance covered by the Contractor
are included in the contract price. The types of insurance to be insured by the Contractor, insurance coverage, amount of insurance,
term of insurance, and duration of validity are agreed in the special terms and conditions.

 

(1) Where the contract is responsible for
insurance subject to applicable laws and special terms and conditions, the Contractor shall apply for insurance on schedule according
to the needs of the project implementation stage;

 

(2) During the execution of the contract,
for the compulsory insurance covered by the Contractor as stipulated in the newly promulgated laws, the contract price is adjusted
in accordance with the provisions of Article 13 on changes and contract price adjustment.

 

15.1.2 When an insurance policy provides
insurance to joint insured persons, insurance compensation is applied separately to each joint insured person. The Contractor shall,
on behalf of its own insured person, guarantee that its insured person complies with the conditions stipulated in the insurance
policy and its compensation amount.

 

15.1.3 The claims received by the Contractor
from the insurer shall be used for the repair, purchase, reconstruction and compensation of losses, damages and injuries agreed
in the insurance policy.

 

15.1.4 The Contractor shall provide the
Employer with a copy of the insurance policy, a copy of the premium payment document and a certificate of the validity of the insurance
policy within the period of the insured project and its insurance period.

 

If the Contractor fails to submit the above-mentioned
certification documents, it shall be deemed that the insurance has not been covered in accordance with the contract, and the Employer
may cover the corresponding insurance in its own name. The resulting costs and claims losses shall be borne by the Contractor.

 

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15.2 All Risks Insurance and Third Party
Liability Insurance

 

Regarding all risks insurance of construction
engineering, all risks insurance of installation engineering and third party liability insurance, no matter whichever party is
the insuring party, it shall list the other party concerned hereto, subcontractors, suppliers and service providers hereunder as
the insured persons under the insurance contract upon covering the insurance. The specific insuring party is agreed in the special
terms and conditions.

 

15.3 Other Provisions of Insurance

 

15.3.1 The Contractor covers the transportation
insurance of the equipment, materials and parts that the Contractor is responsible for purchasing and transporting. The insurance
premium has been included in the contract price unless otherwise provided in the special terms and conditions.

 

15.3.2 When an accident in an insurance
event occurs, all parties present are responsible for taking the necessary measures to prevent the expansion of losses and damages.

 

15.3.3 Insurance types other than those
stipulated in this contract shall be covered according to their own needs, and the insurance costs shall be borne by them.

 

Article 16 Breach of Contract, Claims
and Disputes

 

16.1 Liability for Breach of Contract

 

16.1.1 Employer’s liability for breach
of contract

 

When the following happens:

 

(1) The Employer fails to perform the provisions
of Article 5.1.2 and items (1) and (2) of Article 5.2.1, fails to provide the true, accurate and complete process technology and
/ or architectural design plan, project basic data and on-site obstacle data;

 

(2) The Employer fails to adjust the contract
price according to Article 13 and fails to pay the corresponding amount according to the types, amounts, and accounts and times
designated by the Contractor in accordance with Article 14 on prepayments, project progress payment, and completion settlement
agreements;

 

(3) The Employer fails to perform other
responsibilities and obligations stipulated in the contract.

 

The Employer shall take remedial measures
and compensate the Contractor for the losses caused by the aforesaid breach of contract. When the critical path of the project
is delayed due to its breach of contract, the completion date is postponed. The Contractor’s burden of liability for breach of
contract cannot reduce or relieve other obligations and obligations that the Contractor continues to perform in the contract.

 

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16.1.2 Contractor’s liability for breach
of contract

 

When the following happens:

 

(1) The Contractor fails to perform the
provisions of Article 6.2 on the inspection of the engineering materials provided by it, the provisions of Article 7.5 on the construction
quality and inspection, and fails to repair the defects;

 

(2) The Contractor fails to pass the completion
test three times, or fails to pass the post-completion test three times, causing any major part of the project or the entire project
to lose its use value, production value, and use benefit;

 

(3) When the Contractor is not allowed
to subcontract without the consent of the Contractor, or without the necessary permission, or applicable law, it subcontracts the
project to others;

 

(4) The Contractor fails to perform other
responsibilities and obligations stipulated in the contract.

 

The Contractor shall take remedial measures
and compensate the Contractor for the losses caused by the aforesaid breach of contract. The Contractor’s burden of liability for
breach of contract cannot reduce or relieve other obligations and obligations that the Contractor continues to perform in the contract.

 

16.2 Claims

 

16.2.1 Employer’s claim

 

The Employer believes that if the Contractor
fails to perform the duties, responsibilities, and obligations stipulated in the contract, and the Contractor shall bear the liability
for losses and damages according to the relevant conditions and matters agreed in this contract and documents and materials related
to this contract, but the Contractor fails to fulfill its liability in accordance with the contract, the Employer has the right
to claim compensation from the Contractor. Claims shall be made in accordance with laws and contracts and shall follow the following
procedures:

 

(1) The Employer shall send a notice of
claim to the Contractor within 30 days of the occurrence of the claim event. In case of failure to send a notice of claim within
30 days of the claim event, the Contractor will no longer bear any liability, except as otherwise provided by law;

 

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(2) The Employer shall provide the Contractor
in written form with relevant information explaining the justification of the claim, the basis of the clauses, valid and verifiable
evidence, claim estimates and other relevant data within 30 days after the notice of claim is issued;

 

(3) The Contractor shall negotiate with
the Employer to settle or provide a reply within 30 days after receiving the claim materials sent by the Employer, or request the
Employer to provide additional reasons and evidence for the claim;

 

(4) If the Contractor does not negotiate
with the Employer, does not reply, or makes no further request to the Employer within 30 days after receiving the claim materials
sent by the Employer, the claim is deemed to have been accepted by the Contractor.

 

(5) When the claim event proposed by the
Employer continues to affect, the Employer shall send the continuous impact of the claim event to the Contractor every week. Within
30 days after the continuous impact of the claim event stops, the Employer shall send the final claim report and final claim estimate
to the Contractor. The procedure for claiming is the same as the provisions of items (1) to (4) of this clause.

 

16.2.2 Contractor’s claim

 

The Contractor believes if the Employer
fails to perform the duties, responsibilities, and obligations stipulated in the contract, and the Employer shall bear the liability
for losses and damages and extend the date for completion according to the relevant conditions and matters agreed in this contract
and documents and materials related to this contract, but the Employer fails to fulfill its liability for compensation or extends
the date for completion in accordance with the contract, the Contractor has the right to claim compensation from the Employer.
Claims shall be subject to laws and contracts and shall follow the following procedures:

 

(1) The Contractor shall send a notice
of claim to the Employer within 30 days of the occurrence of the claim event. In case of failure to send a notice of claim within
30 days of the claim event, the Employer will no longer bear any liability, except as otherwise provided by law;

 

(2) The Contractor shall provide the Employer
in written form with relevant information explaining the justification of the claim, the basis of the clauses, valid and verifiable
evidence, claim estimates and other relevant data within 30 days after the notice of claim is issued;

 

(3) The Employer shall negotiate with the
Contractor to settle or provide a reply within 30 days after receiving the claim materials sent by the Contractor, or request the
Contractor to provide additional reasons and evidence for the claim;

 

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(4) If the Employer does not negotiate
with the Contractor, does not reply, or makes no further request to the Contractor within 30 days after receiving the report and
supplementary materials sent by the Contractor according to item (3) of this clause, the claim is deemed to have been accepted
by the Employer.

 

(5) When the claim event proposed by the
Contractor continues to affect, the Contractor shall send the continuous impact of the claim event to the Employer every week.
Within 30 days after the continuous impact of the claim event stops, the Contractor shall send the final claim report and final
claim estimate to the Employer. The procedure for claiming is the same as the provisions of items (1) to (4) of this clause.

 

16.3 Disputes and Awards

 

16.3.1 Dispute settlement procedure

 

In the event of any claim dispute arising
out of this contract or matters concerning this contract, both parties hereto shall first resolve it through friendly negotiation.
One party to the dispute shall notify the other party in writing, stating the content, details and cause of the dispute. Within
30 days from the date of the above written notice, if there is still a dispute after friendly negotiation, both parties hereto
may request the relevant unit or authority in the project location agreed by both parties to mediate this dispute; if both parties
still have disputes within 30 days, or if either party hereto does not agree with the mediation, the dispute shall be resolved
through arbitration or litigation in accordance with the provisions of the special terms and conditions.

 

16.3.2 Disputes shall not influence performance

 

After a dispute occurs, the contractual
responsibilities and obligations shall continue to be performed, and the project implementation shall be continued. Unless the
following circumstances occur, no party shall stop the implementation of the project or part of the project,

 

(1) The contract is indeed unable to be
performed due to a breach of contract by one of the parties hereto, and the implementation of the contract is stopped after the
agreement between both parties;

 

(2) The arbitration agency or the court
orders the stoppage of implementation.

 

16.3.3 Discontinued engineering protection

 

According to the provisions of Article
16.3.2, for the project or part of the project to be stopped, the parties shall protect the various documents, materials, drawings,
completed projects and unused project materials related to the contract project in accordance with the duties, responsibilities
and obligations agreed in the contract.

 

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Article 17 Force Majeure

 

17.1 Obligations in the event of Force
Majeure

 

17.1.1 Notification obligation

 

The party that is aware of or discovers
a force majeure event is obligated to notify the other party at once. According to this contract, the responsible party which cares
for the project site shall, upon the occurrence of the event of force majeure, take prompt measures to minimize the loss; the other
party shall fully assist and take measures. Construction or work that needs to be suspended shall be stopped immediately.

 

17.1.2 Notification obligation

 

When force majeure occurs at the project
site, within 48 hours after the end of the force majeure event, the Contractor (if it is the caretaker of the project site) must
notify the Contractor of the damage and loss. When force majeure events continue to occur, the Contractor shall report the damage
to the Employer and the engineering director every week unless otherwise agreed on the reporting cycle.

 

17.2 Consequences of Force Majeure

 

The losses, damages and injuries caused
by force majeure events and the delayed completion date shall be treated as follows:

 

(1) The Employer shall bear the loss and
damage of permanent engineering and engineering materials;

 

(2) Injuries of employees are handled in
accordance with their respective employment contract relationships;

 

(3) The loss of or damage to machinery,
equipment, property and temporary works of the Contractor shall be borne by the Contractor;

 

(4) The Contractor’s downtime losses shall
be borne by the Contractor;

 

(5) After the occurrence of force majeure,
for continuous losses and damages caused by one party’s delay in the performance of the contracted protection obligations,
the party which delays in performing the obligations shall bear the corresponding liability and its losses;

 

(6) When the Employer informs the restoration
of construction, the Contractor shall submit the data and report on the plan for cleaning and restoration and its estimate, as
well as the program, within 20 days after receiving the notice, or within the time agreed by both parties according to the specific
circumstances. After confirmed by the Employer, the required cleaning and repair costs shall be borne by the Employer. The completion
date of the restoration construction will be postponed accordingly.

 

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Article 18 Termination of Contract

 

18.1 The Employer Terminating the Contract

 

18.1.1 Notice of correction

 

If the Contractor fails to perform its
duties, responsibilities and obligations in accordance with the contract, the Employer may notify the Contractor to correct and
remedy its breach of contract within a reasonable time.

 

18.1.2 The Employer terminating the contract

 

The Employer has the right to notify the
dissolution of the contract or part of the work herein in writing based on the following reasons. The Employer shall notify the
Contractor 15 days before the notice of dissolution of contract is sent. The termination of the contract by the Employer does not
affect any other rights it enjoys under the contract.

 

(1) The Contractor fails to comply with
the provisions of Article 14.2.1 on the performance bond;

 

(2) The Contractor fails to implement the
provisions of Article 18.1.1 on notice of correction;

 

(3) The Contractor fails to comply with
the provisions of clauses 3.8.1 to 3.8.4 on subcontracting and transfer of contracting;

 

(4) When the actual progress of the Contractor
is clearly behind the program and the Employer instructs it to take measures and amend the program, the Contractor does nothing;

 

(5) There are serious defects in the quality
of the project, and the Contractor has delayed the start date of the repair for more than 30 days without justified reasons;

 

(6) The Contractor has clearly stated or
clearly indicated in its actions that it would not perform the contract, or failed to perform the contract in accordance with the
contract after the Employer notified it to perform the contract in writing, or performed the contract in an obviously inappropriate
manner;

 

(7) According to item (4) of Article 8.6.2
(or) and Article 10.8, failure to pass the completion test and failure to pass the post-completion test cause any part of the project
and / or the entire project to lose the main use functions and production functions;

 

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(8) The Contractor goes into bankruptcy,
liquidation or liquidation proceedings, or the circumstances indicate that the Contractor will go into bankruptcy and / or liquidation
proceedings.

 

The Employer cannot dissolve the contract
or part of the work of the contract for arranging other Contractors to implement the project. When the Employer violates this agreement,
the Contractor has the right to bring arbitration or litigation in accordance with this provision.

 

18.1.3 Work stopped and carried out after
notice of dissolution of contract

 

The Contractor’s work after receiving
the notice of dissolution of contract. The Contractor shall finish the following tasks within 30 days of dissolution of the contract
or within the time agreed by the parties:

 

(1) Except for the protection of life,
property or engineering, cleaning and necessary work, stop executing all work that is notified to be dissolved;

 

(2) Hand over all the information provided
by the Employer and the design documents, technical data and other documents prepared by the Contractor for the project to the
Employer. In the information files retained by the Contractor, destroy the data and backup of the data related to all the information
provided by the Employer;

 

(3) Hand over the completed permanent project
and the permanent project materials that have been transported to the site. Before the handover, properly complete the custody,
maintenance and preservation of the completed project and permanent project materials that have been transported to the site;

 

(4) Hand over the design documents, drawings,
materials, operation and maintenance manuals, construction organization design, quality inspection data, completion data, etc.
that have been paid, completed and are to be completed for the corresponding implementation stage;

 

(5) Submit all subcontracting agreements
and the implementation statement to the Employer, including: project materials provided by the Contractor (including those kept
at the site, ordered, being processed, in transit, and transported to the site but not handed over). The Employer shall be responsible
for such funds occurring before the date of notice of dissolution and stipulated in the contract. The Contractor is obliged to
assist in and cooperate with the treatment of the relationship with the subcontractor with which it has a contractual relationship;

 

(6) With the approval of the Employer,
the Contractor shall transfer the relevant responsibilities and obligations related to the contract being cancelled or part of
the work in the contract being cancelled and the subcontracting agreement being performed to the name of the Employer and (or)
the designated party by the Employer, including the permanent project and project materials, and related work;

 

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(7) The Contractor shall continue to perform
its work in the part of the contract that has not been cancelled in accordance with the contract;

 

(8) The Contractor shall not evacuate and
/ or dismantle its machinery, equipment, facilities, working materials, measure materials until the settlement of the dissolution
of the contract has been completed, unless the Employer has agreed.

 

18.1.4 Settlement on the date of dissolution

 

According to the provisions of Article
18.1.2, after the Contractor receives the notice of dissolution of the contract or part of the contractual work, the Employer shall
immediately agree with the Contractor on the contract funds that have occurred, including the prepayment of Article 14.3 and the
project progress payment of Article 14.4, the fund of the contract price adjustment of Article 13.7, the fund of the temporary
deduction for the defect liability warranty of Article 14.5, the claim of Article 16.2, the amount of the supplementary agreement
of this contract, and any fund that shall be increased or decreased as stipulated in the contract. The contract funds agreed upon
by both parties shall be used as the settlement data on the date of dissolution.

 

18.1.5 Settlement after the date of dissolution

 

(1) Both parties shall settle the balance
of the receivables and payables of both parties in accordance with the settlement data on the date of dissolution of the contract
in accordance with Article 18.1.4. Thereafter, the Employer shall return the performance bond submitted by the Contractor in accordance
with Article 14.2.1 to the Contractor, and the Contractor shall return the payment bond submitted by the Employer to the Employer
in accordance with Article 14.2.2.

 

(2) If there is still a prepayment that
has not been deducted when the contract is dissolved, the Employer shall deduct it in accordance with the provisions of Article
14.3.3 on prepayment deduction and thereafter return the prepayment bond to be submitted as agreed to the Contractor.

 

(3) If the Employer has other receivable
balances that have not been deducted, it shall have the right to deduct from the performance bond submitted by the Contractor as
agreed in Article 14.2.1, and thereafter return the performance bond to the Contractor.

 

(4) When the Employer still fails to recover
some funds after the deduction according to the above provision; or when the contract fails to stipulate the submission of the
performance bond and the prepayment bond, and the balance of the receivable fails to be reduced, the equipment, equipment, facilities,
working materials, etc. of the Contractor equivalent to the value of the receivable may be detained as compensation.

 

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18.1.6 Evacuation of the Contractor

 

(1) Evacuation of the dissolution of the
entire contract. The Contractor has the right to evacuate the machinery, equipment, facilities, etc. that have not been detained
for compensation in accordance with the provisions of item (4) of Article 18.1.5, and bear the cost of evacuation and demolition
of temporary facilities. The Employer provides the necessary conditions for this.

 

(2) Evacuation of the dissolution of partial
contract. After receiving the notice from the Employer to evacuate from the site, the Contractor shall evacuate its excess machinery,
equipment, facilities, etc. at its own expense from the site at its own expense (excluding the machinery and equipment that are
compensated in accordance with item (4), Article 18.1.5). The Employer provides the necessary conditions for this.

 

18.1.7 The right to continue the implementation
of the project after dissolution of the contract. The Employer may continue to complete the project or entrust other Contractors
to continue to complete the project. The Employer has the right to use with other Contractors the materials of the permanent project
that have been transferred, and the design documents, implementation documents and materials prepared by the Contractor for the
project, and to use the facilities, machinery and equipment detained for compensation in accordance with item (4), Article 18.1.5.

 

18.2 The Contractor Terminating the
Contract 

 

18.2.1 The Contractor dissolves the contract.
For the following reasons, the Contractor has the right to notify the Employer in writing to dissolve the contract, but notify
the Employer 15 days before the notice of dissolution is issued:

 

(1) The Contractor delays payment for over
60 days, or the Contractor requests resumption of work in accordance with Article 4.6.4, but the Employer has not notified resumption
of work within 180 days;

 

(2) The Employer’s essential failure to
perform its obligations in accordance with the contract affects the suspension of the Contractor’s implementation of work for more
than 30 days;

 

(3) The Employer fails to submit a payment
bond as stipulated in Article 14.2.2;

 

(4) The occurrence of force majeure events
stipulated in Article 17 makes it impossible or unnecessary to continue to perform the main obligations of the contract;

 

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(5) The Employer is bankrupted, closed
for liquidation or goes into liquidation proceedings, or the circumstances indicate that the Employer will go into bankruptcy and
/ or liquidation proceedings, or the Employer is unable to pay the contract funds.

 

After the Employer receives the Contractor’s
notice of dissolution of the contract in accordance with items (1), (2), and (3) of this clause, the Employer subsequently makes
payment, agrees to resume work, or continues to perform its obligations, or provides the payment bond, the Contractor shall arrange
and resume normal work as soon as possible. When the critical route is delayed, the completion date is postponed; the Contractor’s
additional expenses are borne by the Employer.

 

18.2.2 The Contractor has the right to
stop and must perform the following work after sending the notice of dissolution of contract:

 

(1) Stop all further work except for the
protection of life, property, project safety, cleanup and work that must be executed;

 

(2) Hand over the completed permanent project
and the project materials provided by the Contractor (including those kept on-site, already ordered, being processed and manufactured,
in transit, and not yet handed over on site). Before the handover, the Contractor is obligated to properly keep, maintain and preserve
the completed project and purchased project materials;

 

(3) Hand over design documents, drawings,
materials, operation and maintenance manuals, construction organization design, quality inspection data, completion data, etc.
that have been paid, completed and yet to be completed. At the request of the Employer, after paying the relevant design documents,
drawings and materials that have been completed but not yet paid at the agreed price, the Contractor shall submit them to the Employer
at the agreed time.

 

(4) Submit all subcontracting agreements
and the implementation statement to the Employer, and the Employer shall bear the expenses.

 

(5) At the request of the Employer, the
Contractor transfers the subcontracting agreements to the name of the Employer and (or) the party designated by the Employer, including
the permanent project and its materials, and related work;

 

(6) In the documents retained by the Contractor,
destroy all the information provided by the Employer and the related data and materials.

 

18.2.3 Settlement data on the date of dissolution

 

According to the provisions of Article
18.2.1, after the Employer receives the notice of dissolution of contract, it shall immediately agree with the Contractor on the
project funds that have occurred, including: the prepayment of Article 14.3 and the project progress payment of Article 14.4, the
fund of the contract price adjustment of Article 13.7, the fund of the temporary deduction for the defect liability warranty of
Article 14.5, the claim of Article 16.2, the fund of the supplementary agreement of this contract, and any fund that shall be increased
or decreased as stipulated in the contract, and the cost of the Contractor’s removal of temporary facilities, machinery, equipment,
etc. to the location of the Contractor’s enterprise (in the case of force majeure in item (4), Article 18.2.1, the cost of the
evacuation shall be borne by the Contractor). The contract funds agreed upon by both parties shall be used as the settlement basis
on the date of dissolution.

 

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18.2.4 Settlement after dissolution of
contract

 

(1) Both parties shall settle the balance
of the receivables and payables of both parties upon dissolution of the contract in accordance with the settlement data on the
date of dissolution of the contract in Article 18.2.3. Thereafter, the Contractor shall return the payment bond submitted by the
Employer in accordance with Article 14.2.2 to the Employer, and the Employer shall return the performance bond submitted by the
Contractor in accordance with Article 14.2.1 to the Contractor.

 

(2) If the Contractor still has a prepayment
that has not been deducted upon dissolution of the contract, the Employer can deduct according to the provisions of Article 14.3.3
on prepayment deduction. Thereafter, the prepayment bond shall be returned to the Contractor.

 

(3) If the Contractor has other balances
of receivables that fail to be collected upon dissolution of the contract, the Contractor may deduct from the payment bond submitted
by the Employer agreed in Article 14.2.2 and shall thereafter return the payment bond to the Employer.

 

(4) If the Contractor has other balances
of receivables that fail to be collected upon dissolution of the contract, and the contract does not stipulate that when the Employer
submits the payment bond in accordance with Article 14.2.2, the Employer shall, in accordance with the provisions of Article 18.2.3,
pay outstanding balances and interest at the interest rate of similar loans of the People’s Bank of China for the same period from
the first day after the settlement data of the agreed contract dissolution date. If the Employer has not paid within 60 days thereafter,
the Contractor has the right to settle in accordance with the provisions of Article 16.3 on disputes and awards.

 

(5) If the Contractor still fails to pay
the balance of the payment to the Employer when the contract is dissolved, the Employer is entitled to settle according to items
(2) to (4) in the settlement of contract dissolution under Article 18.1.5.

 

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18.2.5 Evacuation of the Contractor. After
the contract is dissolved, the Contractor shall evacuate all other materials, machinery, equipment and facilities except for safety
needs from the site.

 

18.3 Matters after Dissolution of Contract

 

18.3.1 The payment provisions are still
valid

 

After the contract is dissolved, the settlement
of the dissolution of the contract by the Employer or the Contractor and the post-settlement payment provisions shall remain valid
until the settlement of contract dissolution is completed.

 

18.3.2 Disputes over dissolution of contract

 

If both parties hereto have a dispute over
the dissolution of the contract or the settlement on the date of dissolution, they shall settle through friendly negotiation. If
the dispute still exists after friendly negotiation, or if one party does not accept the friendly negotiation, it shall be settled
in accordance with the provisions of Article 16.3 on disputes and awards.

 

Article 19 Effectiveness and Termination
of Contract

 

19.1 Effectiveness of Contract.

 

Become effective on the date on which the
contract effective conditions stipulated in the contract agreement are met.

 

19.2 Number of Contract Copies

 

The number of contract originals and duplicates,
and the number of copies to be held by both parties hereto shall be stipulated in the special terms and conditions.

 

19.3 Post-contractual Obligations

 

After the contract is terminated, both
parties hereto shall abide by the principle of honesty and good faith and perform their obligations of notification, assistance
and confidentiality.

 

Article 20 Supplementary Provisions

 

The specific provisions, supplement or
modification of the contents of these general terms are stipulated by both parties in the special terms and conditions.

 

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Part III Special Terms and Conditions

 

Article 1 General Provisions 

 

1.1 Definition and Interpretation 

 

1.1.1 Other circumstances that both parties
hereto agreed to treat as force majeure are as follows: war, riot, earthquake, rainstorm, blizzard, national policy adjustment,
etc.

 

1.1.2 Other additional supplementary definitions
agreed by the two parties according to the features of the contract project: None.

 

1.2 Language 

 

The contract uses None other language
except Chinese.

 

1.3 Applicable Laws 

 

The laws, administrative regulations and
local regulations that both parties hereto shall express: both parties hereto shall abide by relevant laws, administrative regulations,
departmental rules and regulations, as well as local laws and regulations of Shaanxi Province.

 

1.4 Standards and Codes

 

1.4.1 Applicable standard and specification
(name): current national and local standard and specification, after desalination of mine water, its various salt indexes shall
meet the class III standard of Surface Water Environmental Quality Standard, and
the recovered salt shall attain the corresponding national standards. 

 

1.4.2 Name, number of copies and time for
the Employer to provide foreign standards and codes: The imported equipment and materials used must meet the international standards
of the corresponding industry.

 

1.4.3 Agreement for non-written codes and
standard regulations: Refer to relevant national and international standards, norms or standards applicable to the manufacturer
of the supplied product.

 

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1.5 Documents Submission Time 

 

The Employer’s technical requirements
and submission time: shall implement the technical agreement signed by both parties.

 

Contractor’s implementation method
submission time: shall be submitted within 7 days after receiving the technical requirements specified by the Employer.

 

1.6 Confidentiality 

 

Commercial confidentiality agreement signed
by both parties (name): None. As an appendix to this contract.

 

Commercial
confidentiality agreement signed by both parties (name): The General Contract for Advanced Treatment Project BT (Build and
Transfer) of Mine Water of Yuandatan Coal Mine will be an appendix to this contract.

 

Article 2 the Employer 

 

2.1 the Employer’s Representative

 

Name of Employer’s Representative:
__________;

 

Position of Employer’s Representative:
__________;

 

Responsibility of Employer’s Representative:
__________;

 

2.2 Supervisor 

 

2.2.1 Name of Supervising Unit: __________;

 

Name of project chief supervisor: __________;

 

Supervising scope: __________;

 

Supervising content: __________;

 

Supervising authority: __________;

 

2.3 Security Liabilities

 

2.3.1 Site security responsibilities agreed
by both parties: The Contractor shall take charge of the security management.

 

2.3.2 The responsibility division of security
area and relevant security system, responsibility system and reporting system agreed by both parties: The Contractor shall take
charge of all security and management in the construction site and formulate corresponding system and precautionary measure. 

 

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Article 3 the Contractor 

 

3.1 General Obligations and Rights of
Contractor 

 

3.1.1 The
types, names, requirements, reporting period, time and copies of the statements to be submitted by the Contractor as agreed by
the parties hereto shall be: in six copies.

 

3.1.
Contractor on behalf of the members of consortium shall shoulder the responsibility and accept the order, instruction and notice
from Employer, and be responsible for all matters (including payment of the project price) during the whole contract implementation.

 

3.2 Project Manager 

 

3.2.1 Name of Project Manager: Fu Sanliang

 

Responsibilities of the project manager:
all correspondences sent by the Contractor for the purpose of performing the contract shall be stamped with the seal of the
construction site management organization authorized by the Contractor and signed by the project manager of the Contractor.

 

3.2.2 Authority of Project Manager: perform
the contract on behalf the Contractor.

 

3.2.3 Stipulations for breach due to unauthorized
replacement of project manager or project manager with other part-time projects:

 

The
written notice shall be given the Employer and the supervisor 14 days in advance and the written consent shall be obtained from
the Employer. The notice shall specify the registered qualifications and management experience of the succeeding project manager,
and the succeeding project manager shall continue to perform the responsibilities prescribed in item 3.2.1. The Contractor shall
not change the project manager without the written consent of the Employer. Provided that the Contractor replaces the project manager
without proper reasons or reject the Employer’s request to replace the project manager. It shall be paid liquidated damages
of 200,000 yuan. 

 

3.2.4
The project manager or technical person in charge of the project shall often be at the construction site and shall be at the
construction site for not less than 22 days per month. A penalty of RMB 10,000.00 shall be paid to the employer for each less day.

 

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3.3 Subcontracting 

 

3.3.1 Subcontracting Stipulations

 

Subcontracting matters agreed: The Contractor
shall not subcontract the whole works to any third party; the subcontractor’s qualification and capacity shall be adapted to the
standard and scale of the subcontract work.

 

Article 4 Program, Delay and Suspension

 

4.1 Project Grogram

 

4.1.1 The
determining principle of critical path and critical path change in project schedule: not affect the construction period and
agreed in writing by the Employer. On the condition that the Employer fails to complete the approval within 3 working days and
to raise any objection after receiving the document, it is deemed that the Employer have accepted the critical path and the critical
path change in the project program.

 

4.1.2 Copies
and time of project program submitted by the Contractor: before the 5th day of each month, six copies of the monthly project
schedule (including two copies for the supervisor and four copies for the employer) shall be submitted.

 

4.2 Procurement Program 

 

4.2.1 Submission copy and time of procurement
program: for common material purchase, three copies of procurement program shall be submitted to the Employer for approval one
month before purchase. 

 

4.2.2 The tendering procurement for
the important equipment, facilities and main material of the project shall be participated in and supervised by the representative
of the Employer. Equipment and material into the site must be reported to the Employer for inspection. 

 

4.2.3 Start date of purchase: It is
determined by the Contractor in accordance with the progress of works and shall satisfy the Item 4.2.1.

 

4.3 Construction Program 

 

4.3.1 Construction program (presentation
by form or by words)

 

Submitting the name, copies and time of
key single project construction program in six copies (including two copies for supervisor, and four copies for the Employer)
5 days before single project construction.

 

4.3.2 Submitting the name, copies and time
of key sub-item project construction schedule: in six copies (including two copies for supervisor, and four copies for the Employer)
5 days before sub-item project construction. 

 

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4.4 Indemnity for Delay 

 

4.4.1 Provided that the
completion date is delayed caused due to the reason of the Contractor, the liquidated damages shall be paid to the Employer basing
the standard that compensation amount for one day delay is 0.5‰ of the contract price (the maximum amount shall not exceed
10% of the total contract amount);

 

4.4.2
In case the completion date is delayed caused due to the reason of the Employer, the liquidated damages shall be paid to the Contractor
basing the standard that compensation amount for one day delay is 0.5‰ of the contract price (the maximum amount shall not
exceed 10% of the total contract amount), meanwhile, the completion date shall be postponed.

 

Article 5 Technology and Design 

 

5.1 Production Process Technology and Architectural Art Modeling

 

5.1.1 The Contractor provides the production
process technology and (or) construction design plan.

 

The guaranteed value of project commissioning
assessment and (or) use function of the project and (or) single project undertaken by the Contractor is as follows: or detail,
please see the technical agreement.

 

Technical achievements that the Contractor
shall undertake in the project: the Contractor must create 5 technical innovation program during the implementation of the project,
and cooperate with the Employer to apply for the awards above Shaanxi Northern Mining Company, including 1 award of Shaanxi Coal
Group and 1 national award.

 

5.1.2 The Employer provides the production
process technology and (or) construction design plan.

 

The guarantee value of project commissioning
assessment and (or) use function of the project and (or) single project undertaken by the Employer is as follows: None.

 

5.2 Design 

 

5.2.1 The Employer’s Obligations

 

(1) Provide the basic project information.
The project basic files that shall be provided by the Employer includes types, contents, copies and time: basic files shall be
submitted within 7 days after signing the contract;

 

(2) Provide the on-site obstruction information. The site obstruction
information that shall be provided by the Employer includes the types, contents, number of copies and time: provided by the Employer;

 

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(3) As agreed by both parties, for the
following parts of the basic project information and the on-site obstruction information provided by the Employer, the Employer
may be requested to provide more information according to the following time limit agreed in this clause: None.

 

5.2.2 Contractor’s Obligations

 

The Contractor shall be responsible for the design
of whole project (the design work completed by a consortium member is equivalent to full performance of this obligation by the
contractor)

 

5.2.3 Operation and Maintenance Manual

 

Number of copies and deadline of submission of operation guideline
and analysis manual by the Contractor: None.

 

The copies of the operation and maintenance
manual submitted by the contractor and the deadline for submission: the copies submitted by the Contractor: 6 copies, which
shall be provided before the handover and acceptance of the project.

 

5.2.4 Number of Copies and Submission Time of Design Documents

 

Copies and submission time of planning and design document,
information and drawings in planning and design stage: in six copies 

 

Copies and submission time of document, files and drawings in
preliminary design stage: in six copies 

 

Copies and submission time of document, materials and drawings
in technical design stage: in six copies 

 

Copies and submission time of design document, materials and
drawings in construction drawing design stage: in six copies 

 

5.3 Reviews at Design Stage

 

5.3.1 Review at Design Stage

 

The design stage of this project (Name): Advanced Treatment
Project of Mine Water of Yuandatan Coal Mine

 

5.3.2 Time of Design Review Meeting

 

Time arrangement of design review meeting:
The Employer shall organize a review meeting for the design drawings, and the contractor shall be fully responsible for the
design documents and bear all costs.

 

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Article 6 Project Materials

 

6.1 Supply of Project Materials 

 

6.1.1 Project materials to be provided
by the Employer

 

(1) Category and estimated quantity of
project materials: pipes, valves and cables outside the coordinate range of the project boundary

 

6.1.2 Project materials to be provided
by the Contractor

 

(1) Category and estimated quantity of
project materials: for details, please see the Technical Agreement.

 

(2) Supply and technical requirement of
project material: purchase in accordance with Technical Agreement and bear the relevant costs. 

 

(3) Category or (and) list of productive
material for post-completion test : see Technical Agreement for details. 

 

6.2 Inspection 

 

6.2.1 Project Inspection and Report

 

Journal, content and number of copies of
submission of report: Submit project quality inspection report and water quality monitoring report in sextuplicate each after successful
commissioning and operation.

 

6.3 Procurement of Imported Project
Material 

 

Purchase responsibility and method: The
Contractor shall purchase and assume the corresponding responsibilities, including customs declaration, transportation, formalities
and all other matters, and the Employer shall supervise bidding and purchasing.

 

6.4 Safekeeping and Surplus of Project
Materials 

 

Category and estimated quantity entrusted
to the Contractor for safekeeping: None 

 

The time that the Contractor submits safekeeping
and maintenance scheme: None

 

Warehouse, storage yard, facilities and
equipment supplied by the Employer: None 

 

    112

     

    

 

Article 7 Construction 

 

7.1 Obligations of the Employer 

 

7.1.3 Approach Conditions and Approach
Date

 

Approach conditions for the Contractor:
The Employer shall provide the construction site with water, electricity, access and level land.

 

Approach time for the Contractor: Within
7 days upon the Contractor receives the commencement order in writing from the Employer when the Employer obtains the Construction
Permit after signing of the contract. 

 

7.1.4 Temporary Water and Electricity Supply
and Node Laying

 

Category and unit price of temporary water
and electricity to be provided by the Employer: The Employer is only responsible for providing water and electricity access
points within the coordinate of the project boundary, water, electricity, communication and equipment shall be solved by the Contractor
and the costs arising therefrom shall be borne by the Contractor. The temporary water rate is 3 yuan/ton and the temporary electricity
rate is 0.6 yuan/kWh.

 

7.1.5 Other obligations performed by
the Employer: If the construction progress is delayed for the Employer’s reason, the losses shall be borne by the Employer
and the construction period shall be postponed.

 

7.2 Oblations of the Contractor 

 

7.2.1 Construction organization design

 

Number of copies and time for submission
of overall planning and programming of project construction: To submit it in six copies, two copies for the supervisor and four
copies for the Employer upon signing of the contract. 

 

Name, number of copies and time for submission
of the construction organization design of main single project and main sub-project: 7 days prior to the implementation of the
construction organization of main single project and main sub- project.

 

    113

     

    

 

7.2.3 Submission of Temporary Land Occupation
Document

 

Time for submission of temporary land occupation
document: To submit it within 7 days upon receiving the Notice of Winning Bid.

 

7.2.4 Submission of Documents of Temporary
Water, Electricity etc.

 

The quality, normal usage, peak usage and
usage time of the water and electricity etc. needed by the Contractor: To be arranged by the Contractor.

 

Category and quantity of temporary water
and electricity etc. for construction that are available from the Employer: To be arranged by the Contractor. The Employer only
provide the access points. 

 

Time for submission of documents for node
point location of water and electricity etc.: To be arranged by the Contractor according to the location documents from the
Employer. 

 

7.2.4 Cost of cleaning the site: To
be arranged by the Contractor. 

 

7.2.5 Other obligations performed by the
Contractor: None.

 

7.3 Human Resources and Machinery Resources

 

7.3.1 Format, content, number of copies
and submission time of human resources planning checklist: in six copies, within 28 days upon signing of the contract.

 

Format, number of copies and reporting
period of the report of human resources actual approach: in six copies, 5 days prior to the approach.

 

7.3.2 Format, content, number of copies
and submission time of main machinery resources planning checklist: in six copies, within 28 days upon signing of the contract.

 

Format, number of copies and reporting
period of the report of main machinery resources actual approach: in six copies, 5 days prior to the approach.

 

7.5 Quality and Inspection 

 

7.5.2 Inspection Part and Inspection Parties

 

Part, standard and form of inspection attended
by three parties: the civil construction and installation project shall comply with the relevant national and local standards
and the requirements of the Employer and the supervisor. The project quality test report must be issued by the third party (the
third party shall provide complete video), and the Employer, the Contractor and supervisor must be at inspection site and sign
the relevant documentary evidence.

 

Part, standard and form of inspection attended
by both parties: according to the relevant norms and the requirement of supervisor. 

 

Part, standard and form of inspection attended
by the third party attends: according to the national and local relevant norms;

 

Part, standard and form of the Contractor’s
self-inspection: according to the national and local relevant norms;

 

7.5 Concealed Works and Intermediate
Acceptance 

 

The classification, location, quality inspection
content, standards, forms of concealed works requiring quality inspection and intermediate acceptance part, as well as the agreement
of the inspecting parties: to carry out the provisions and requirements of the current national code for acceptance of construction
quality.

 

    114

     

    

 

7.6 Occupational Health, Safety and
Environmental Protection

 

Copies and time for submission of occupational
health, safety and environmental management plan: in six copies, within 7 days after contract signing.

 

Article 8 Completion Test

 

8.1 Obligation in Completion Test 

 

Number of copies and time for submission
of completion test plan: The Contractor shall submit it to the Employer in six copies 7 days prior to the completion test. 

 

8.2 Completion Acceptance 

 

8.2.1 According to industry standards, the relevant acceptance
shall be conducted by the government’s environmental protection authority.

 

8.2.2 The acceptance shall be organized by the parent unit
of the Employer.

 

8.2.3 The acceptance shall be organized by the Employer.

 

The three acceptances need to be carried out step by step. Do
not conduct the following acceptance until the project passes the current acceptance.

 

Article 9 Project Taking-over 

 

9.1 Project Taking-over

 

9.1.1 Taking-over by single project or (and) by project

 

Choose one of the two options as agreement on project taking-over
between the two parties.

 

☐ If the
Contractor is responsible for guiding the Employer to conduct the test after completion for single project or (and) the
project and assumes the liability for the assessment of trial operation, the sequence and time arrangement for taking over
single project or the time arrangement for taking the project are listed as follows: ______________________;

 

þ
If the Employer is responsible for the test after completion for single
project or (and) the project and assumes the liability for the assessment of trial operation, the sequence and time arrangement
for taking over single project or the time arrangement for taking over the project are listed as follows: From the date on which
the project passes the Employer’s preliminary acceptance, the Contractor shall guarantee normal operation for 3 months. If
the system runs well and passes the after-completion acceptance, the hand-over of relevant project shall be conducted. 

 

    115

     

    

 

9.1.2 Documents for Project Hand-over

 

The type, content, number of copy and time
for submission of documents for completion test: In accordance with the General Composition of Scientific and Technical Archives
(GB/T11822-2008), submit completed completion document that meet the national archives acceptance requirements in sextuplicate
to the Employer, the Supervision Unit and the Quality Supervision Station within three months upon the project passes the test
after completion.

 

Article 10. Post-completion Tests 

 

The contract contains the Contractor’s
guidance for post-completion tests.

 

10.1 Rights and Obligations 

 

10.1.1 Rights and Obligations of the Employer

 

To organize tests after completion.

 

10.1.2 Rights and Obligations of the Contractor

 

(1) Number of copies and completion time
of the plan for tests after completion: 7 days prior to the tests after completion, in six copies. 

 

(2) Other obligations
and tasks: To take charge of passing the inspection and acceptance of relevant departments by making the project satisfy the acceptance
and commissioning work; after the tests after completion are finished, the qualified third part jointly entrusted by both parties
shall inspect the water output index and construction quality etc. and provide a test report; to be responsible for all test items
of the project and acquiring corresponding certification documents (the labor costs, electric charge, pharmaceutical fee and costs
of consumables etc. during tests after completion shall be borne by the Employer.)

 

10.2 Post-completion Test Procedures

 

Agreement on start date of post-completion
test for single project or and the project: None.

 

    116

     

    

 

10.3 Tests after completion and Commissioning
Assessment 

 

10.3.1 Commissioning Assessment

 

Commissioning Assessment Circle: 72
hours (days, weeks, months or years) after the system enter stable operation (the labor costs, electric charge, pharmaceutical
fee and costs of consumables etc. during the trial operation shall be borne by the Employer.).

 

10.4 Failure to Pass the Assessment

 

(1) Compensation for Failure to Pass Commissioning
Assessment

 

The compensation for failure to pass commissioning
assessment due to the process technology or the architectural design program to be provided by the Contractor: Systematical corrective
and improvement actions shall be made unconditionally on the ground of the conditions of the project till the project meets the
assessment indicators. In case the process technology has critical defect, choose one of the following options as assessment compensation
agreement for the two parties:

 

☐ The
compensation amounts (or formulas) of each single project are respectively listed as: __________________;

 

þ
The project compensation amount (or formula): 150% of the total amount
of the single project that has defect processing procedure.

 

10.5 Assessment Acceptance Certificate

 

10.5.1 Choose one of the following options
as agreement for issuing test after completion assessment and acceptance certificate.

 

þ
To issue test after completion assessment and acceptance certificate according
to the project. 

 

☐ To issue
assessment and acceptance certificate according to single project and the project.

 

Article 11 Quality Warranty Liabilities

 

11.1 Defect Liability Warranty Premium

 

The amount of defect liability warranty
premium shall take None (proportion) of the total contract price agreed in the contract agreement:

 

Article 12 Project Completion Acceptance

 

12.1 Completion Documents and Completion
Acceptance Report 

 

Format, number of copies and submission
time of project acceptance report: in six copies, 30 days after the tests after completion are finished.

 

Format, number of copies and submission
time of complete completion documents: To submit completion documents that meet the file acceptance requirements in six copies
within three months upon the project has passed the completion acceptance.

 

    117

     

    

 

12.2 Project Taking-over 

 

After the project construction is completed,
the Contractor shall propose the Employer in writing to organize the project completion acceptance. The Employer shall complete
the preliminary acceptance within 10 days and complete the project completion acceptance within 30 days. If the Employer fails
to organize acceptance 45 days after the written application for completion acceptance of the Contractor, it shall be deemed that
the project has passed the acceptance. The Contractor shall ensure 3 months normal operation after the project passes the preliminary
acceptance of the Employer; if the system operates normally and passes completion acceptance, the Contractor shall handle relevant
project take-over procedures (the labor costs, electric charge, pharmaceutical fee and costs of consumables etc. during the
guaranteed operation shall be borne by the Employer.).

 

Article 13 Changes and Contract Price
Adjustment

 

13.2 Scope of Change 

 

The two parties have agreed on the scope
of other changes based on the features of the project: The Employer shall give written change instructions.

 

13.5 Confirmation of Price Change

 

Other methods agreed for price change:
The Employer shall review the price according to the market quotations and third- party cost companies. 

 

13.3 Benefit Sharing of Proposed Change

 

Proposed change in benefit sharing agreement:
None.

 

Article 14 Total Contract Price and
Payment 

 

14.1 Total Contract Price and Payment

 

14.1.1 Payment Method and Account Number

 

The Employer shall make payment to the
Contractor’s specified account by telegraphic transfer. The opening bank and bank account designated by the Contractor: Details
see Annex I Subject Succession Agreement. 

 

    118

     

    

 

14.2 Guarantee

 

14.2.1 Performance Guarantee

 

Choose one of the following options as
agreement of performance guarantee between the two parties.

 

☐ The Contractor does
not need to submit performance guarantee.

 

þ
The format, amount and time for the Contractor to submit performance guarantee:
None.

 

14.2.2 Payment Guarantee

 

Choose one of the following options as
agreement of payment guarantee between the two parties.

 

☐ The Employer does
not need to submit payment guarantee.

 

þ
The format, amount and time for the Employer to submit payment guarantee:
None.

 

14.2.3 Prepayment Guarantee

 

Choose one of the following options as
agreement of advance payment guarantee between the two parties.

 

☐ The Contractor does
not need to submit payment guarantee.

 

þ
The format, amount and time for the Contractor to submit payment guarantee:
None.

 

14.3 Prepayment 

 

14.3.1 Prepayment Amount

 

The advance payment amount is: None.

 

14.3.3 Advance Payment Deduction

 

Deduction method, proportion and schedule
of advance payment: None.

 

14.4 Project Progress Payment 

 

14.4.1 Progress Payment of 1st
Phase of Project

 

The Employer shall repurchase the assets
of the 1st phase of project by installment payment. The total repurchase amount shall be calculated on the ground of
the total price of the project and an annualized capital occupation fee of 5%. The payment conditions and payment time are:

 

1 When the
Contractor has completed all the contents within the coordinate range of the 1st phase of the project, within 12
months following the completion acceptance the Employer shall pay the Contractor 40% of the total price of the 1st
phase of the project and shall pay the interests (of 5% annual interest rate) of the funds occupied since the effective date
of the contract. While the Contractor shall issue a corresponding VAT special invoice to the Employer. 

 

    119

     

    

 

The interest
of the occupied funds is calculated as follows: the total price of the 1st phase of the project *5%* the days (from
the contract effective date to the first payment date)/365.

 

2 Within 24 months
following the completion acceptance the Employer shall pay the Contractor another 30% of the total price of the first phase of
the project and shall pay the interests (of 5% annual interest rate) of the funds occupied. While the Contractor shall issue a
corresponding VAT special invoice to the Employer. 

 

The interest
of the occupied funds is calculated as follows: the total price of the 1st phase of the project *60%*5%* the days (from the first
payment date to the second payment date)/365.

 

3 With 36 months
following the completion acceptance the Employer shall pay the Contractor 30% of the total price of the first phase of the
project and shall pay the interests (of 5% annual interest rate) of the funds occupied. While the Contractor shall issue a
corresponding VAT special invoice to the Employer. 

 

The interest
of the occupied funds is calculated as follows: the total price of the 1st phase of the project *30%*5%* the days (from the second
payment date to the third payment date)/365.

 

14.4.2 Progress Payment of 2nd
Phase of Project

 

The Contractor shall execute the 2nd
phase of the project after receiving the written notice to commence from the Employer. The Employer shall repurchase the assets
of the 2nd phase of the project. The payment conditions and payment time of the repurchase funds shall be implemented
with reference to Article 14.41.

 

14.4.3 Other Progress Payment

 

Other progress payments include: None.

 

14.5 Suspension and Payment of Defect
Liability Warranty Premium 

 

14.5.1 Payment of Defect Liability Warranty

 

(1) Payment of defect liability warranty:
None.

 

(2) The format, amount and time of defect
liability warranty guarantee letter: None.

 

    120

     

    

 

14.6 Applying for Payment According
to the Monthly Project Progress

 

The format, content, number of copies and
submit time of the application report of monthly project progress payment: None.

 

14.7 Applying for Payment According
to the Payment Schedule 

 

The number of payment periods, the payment
amount of each period, the major planned image progress and major planned project progress to be reached in each period shall be:
None.

 

The format, content, number of copies and
submission time of the payment application report: The payment application shall be submitted 3 months prior to each payment.

 

14.8 Completion Settlement 

 

The format, content and number of copies
of completion settlement documents: in six copies.

 

14.9 Warranty Period 

 

From the date of project completion acceptance,
the warranty periods are as follows:

 

14.9.1 The warranty period of roof waterproofing
project is 5 years and the warranty period of other civil works is 1 year; 

 

14.9.2 In accordance with the warranty
terms of the reverse osmosis membrane manufacturer, the limited warranty for reverse osmosis membranes is 3 years; 

 

14.9.3 The warranty period for heating
facilities is 2 heating seasons, and the warranty period for other equipment and installation projects is 1 year. 

 

Article 15 Insurance 

 

15.1 Insurance Insured by the Contractor

 

The two parties to the contract agree that
the Contractor shall be responsible for the type of insurance, insurance coverage, amount of insurance, duration of insurance and
duration of validity, which are: To be arranged by the Contractor himself and to be supervised by the Employer.

 

15.2 All Risks and Third Party Liability

 

The Insuring Party of all risks in civil
works and relevant requirements for insurance: To be arranged by the Contractor himself and to be supervised by the Employer.

 

    121

     

    

 

The Insuring Party of all risks in installation
work and tests after completion and relevant requirements for insurance: To be arranged by the Contractor himself and to be
supervised by the Employer. 

 

The Insuring Party of the third party liability
insurance and relevant requirements for insurance: To be arranged by the Contractor himself and to be supervised by the Employer.

 

Article 16 Breach of Contract, Claims
and Awards 

 

16.1 Disputes and Awards 

 

16.1.1 Dispute Resolution Procedure

 

Within 30 days from the date the dispute
is submitted for mediation, if the two parties still have a dispute, or if either party to the contract does not agree with the
mediation, choose one of the following

 

☐ Submit ______to the
Arbitration Commission. When applying for arbitration, the dispute shall be arbitrated in accordance with effective
arbitration rules. The arbitral award is final and binding on both parties.

 

þ
File a lawsuit with the People’s Court where the project is located.

 

Article 17 Force Majeure 

 

To be executed in accordance with Article
17 of Party II General Provisions in the contract.

 

Article 18 Termination
of Contract 

 

To be executed in accordance with Article
18 of Party II General Provisions in the contract.

 

Article 19 Effectiveness and Termination
of the Contract 

 

19.1 Number of Contract Copies

 

The original contract is in two
copies, the copy contract is in twelve copies. Each of the two parties to the contract shall hold one copy of the
original contract and six copies of the copy contract.

 

    122

     

    

 

Article 20 Supplementary Provision

 

20.1 The Contractor shall be responsible
for all the content within the coordinate range of the project, including the project management and detailed design required for
the successful construction of this unit (responsible for all processes, buildings, structure, water supply and drainage, heating
and ventilation, instrumentation and automatic control, electrical, fire protection, general plans and the docking project 1-meter
outside the boundary area etc.), equipment procurement, material procurement, construction, single machine commission, intermediate
handover, cooperation with joint commission and performance assessment till the project is completed and accepted; as well as including
personnel training and providing guidance and supporting service to the Employer within the warranty period. 

 

20.2 The Employer shall be responsible
for obtaining the approval of technical plan, the approval of fund use model, the approval of initial establishment, the approval
of maximum price limit and the approval of tender passing from the parent unit and the group company. 

 

20.3 The Employer shall be responsible
for providing land survey data within the project boundary, obtaining construction permit procedures, connecting 10 KV power supplies
that satisfy the electrical load of the project to the Contractor’s 10 KV incoming cabinet, the laying of water supply and
production pipelines outside the project boundary, the supply of firefighting water, the export of produced water and the disposal
of solid materials such as slime, sludge, calcium sulfate and crystalline salt. 

 

20.4 The Contractor shall be responsible
for the fund-raising of the project. The normal progress of the project shall not be affected by the funding plan of the funder.
The Contractor shall ensure the construction of the project through self-funding.

 

20.5 Since the date of the hand-over
of the project, all the artificial losses, damages, defects and other liabilities caused to all the assets and equipment of the
project by the Employer shall be borne by the Employer; all losses, damages, defects and other labilities caused to all the assets
and equipment of the project due to quality and technical problems shall be borne by the Contractor. 

 

20.6 There is no reason for the Employer
to refuse any amount payable. If any amount payable by the Employer is overdue, in addition to the overdue payment, the Employer
shall also pay the Contractor late payment fee of the deferred amount (late payment fee=deferred amount *deferred days *0.5‰),
which is up to 10% of the amount payable. 

 

20.7 Before the Employer pays all the
repurchase funds, the ownership of any and all assets formed by the investment in the project shall belong to the Contractor, including
but not limited to houses, buildings/ structures, installations and intangible assets etc. The ownership of these assets shall
belong to the Employer from the date on which the Employer pays the entire repurchase funds. If the Employer delays payment for
12 months, the Contractor shall have the right to terminate the contract and dispose various assets. Meanwhile, the Employer shall
compensate the Contractor for various losses. 

 

20.8 After the contract is signed the
Contractor will register and establish a project company (“Contractor’s Project Company”) and the “Contractor’s
Project Company” will be responsible for the obligations under the contract. After the “Contractor’s Project
Company” obtains a business license, the two parties will sign a Subject Succession Agreement. After that the “Contractor’s
Project Company” will carry on the subject of the contract for the Contractor and the contract will automatically begin to
have legal effect on the “Contractor’s Project Company” and the Contractor will no longer be the subject of the
contract. 

 

20.9 If there is any difference between
the General Provisions in Part II of the contract and the General Provisions in Part II of the Model Text (Trial) of General
Contract for Construction Projects (No. GF-2011-2016) jointly developed by the Ministry of Housing and Urban-Rural Development
and the State Administration for Industry and Commerce, the later shall prevail. 

 

 

123Exhibit

AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 31, 2019 (the “Amendment”), between Air T, Inc., a Delaware corporation (the “Borrower”), and Minnesota Bank & Trust, a Minnesota state banking corporation (the “Lender”).

RECITALS:

A.    The Borrower and the Lender are parties to that certain Amended and Restated Credit Agreement dated as of March 28, 2019, as amended by that certain Amendment No. 1 to Amended and Restated Credit Agreement dated as of September 24, 2019 (the “Original Agreement”).

B.    The Borrower has requested that the Lender amend the Original Agreement to, among other things, provide a separate revolving line of credit in the maximum amount of up to $10,000,000, to be secured by, inter alia, the pledge of depository accounts with an aggregate cash balance of $10,000,000, for the purposes of providing liquidity to Borrower’s wholly-owned Subsidiaries, OZ1, OZ2 and OZ3 (as hereinafter defined).
C.    Subject to the terms and conditions of this Amendment, the Lender will agree to the foregoing request of the Borrower.

NOW, THEREFORE, the parties agree as follows:

1.Defined Terms.  All capitalized terms used in this Amendment shall, except where the context otherwise requires, have the meanings set forth in the Original Agreement as amended hereby.
2.    Amendments.  The Original Agreement is hereby amended as follows:
(a)    The definitions of the terms “Commitment”, “Loan”, “Loan Documents”, “Maturity Date” appearing in Section 1.01 of the Original Agreement are hereby amended in their respective entireties to read as follows:
“    ‘Commitment(s)’ means the Supplemental Revolving Credit Commitment and the Revolving Credit Commitment.

‘Loan’ means any Revolving Credit Loan, any Supplemental Revolving Credit Loan or any Term Loan, as the context may require, and “Loans” means either Revolving Credit Loans, Supplemental Revolving Credit Loans or Term Loans, as the context may require.

5421946_5.docx    

‘Loan Documents’ means, collectively, this Agreement, the Security Agreement, the Guaranty, the Collateral Account Agreements, the Supplemental Revolving Credit Note, the Revolving Credit Note, the Supplemental Revolving Credit Note, the Term Notes, the North Carolina Assignment, the North Carolina Deed of Trust, each Hedge Agreement and all other agreements, documents, certificates and instruments executed and delivered to the Lender by any Loan Party or by any Pledgor Party in connection therewith

‘Maturity Date’ means, the earlier of:  (a) the date on which the Loans become due and payable under Section 8.02 upon the occurrence of an Event of Default; or (b) (i) the Revolving Credit Termination Date for the Revolving Credit Loans; (ii) the Supplemental Revolving Credit Termination Date for the Supplemental Revolving Credit Loans; or (iii) January 1, 2028 for Term Loan A, Term Loan B and Term Loan D.

(b)    Section 1.01 of the Original Agreement is hereby further amended by inserting the following new definitions of the terms “Collateral Account”, “OZ1”, “OZ2”, “OZ3”, “Pledged Funds”, “Pledgor Party(ies)”, “Second Amendment”, “Second Amendment Effective Date”, “Supplemental Revolving Credit Commitment”, “Supplemental Revolving Credit Commitment Fee”, “Supplemental Revolving Credit Commitment Period”, “Supplemental Revolving Credit Loans”, “Supplemental Revolving Credit Note”, “Supplemental Revolving Credit Termination Date” in the appropriate alphabetical order:
“    ‘Collateral Account(s)’ means non-interest bearing depository collateral accounts maintained with, held in the name of, and subject to the exclusive dominion and control of, Lender for the purpose of holding assets as security for, and for application by Lender (to the extent available) to the payment of the unpaid balance of the Obligations.
‘OZ1’ means Air T OZ 1, LLC, a Minnesota limited liability company.
‘OZ2’ means Air T OZ 2, LLC, a Minnesota limited liability company.
‘OZ3’ means Air T OZ 3, LLC, a Minnesota limited liability company.
‘Pledged Funds’ means, at any date of determination, the aggregate amount of cash on deposit in the Collateral Accounts.
‘Pledgor Party(ies)’ means, individually or collectively, as the case may be, OZ1, OZ2 and OZ3.
‘Second Amendment’ means that certain Amendment No. 2 to Amended and Restated Credit Agreement dated as of December 31, 2019.”
‘Second Amendment Effective Date’ means the ‘Effective Date’ as such term is defined in the Second Amendment.

2

‘Supplemental Revolving Credit Commitment’ means the obligation of the Lender to make Supplemental Revolving Credit Loans in an aggregate principal amount not to exceed $10,000,000, as the same may be changed from time to time pursuant to the terms hereof.
‘Supplemental Revolving Credit Commitment Fee’ has the meaning set forth in Section 2.11A.
‘Supplemental Revolving Credit Commitment Period’  means the period from and including the Second Amendment Effective Date to the Supplemental Revolving Credit Termination Date.
‘Supplemental Revolving Credit Loans’ means any Supplemental Revolving Credit loan made by the Lender under Section 2.04A.
‘Supplemental Revolving Credit Note’ means the promissory note of the Borrower described in Section 2.06(e), as such promissory note may be amended, modified or supplemented from time to time, and such term shall include any substitutions for, or renewals of, such promissory note.
‘Supplemental Revolving Credit Termination Date’ means the earliest to occur of (a) June 30, 2020, (b) the date the Supplemental Revolving Credit Commitment is reduced to zero pursuant to Section 2.05A, and (c) the termination of the Supplemental Revolving Credit Commitment pursuant to Section 8.02.
(c)    The Original Agreement is hereby amended by inserting a new Section 2.03A, immediately after Section 2.03, to read as follows:
“    2.03A    Supplemental Revolving Credit Commitment.

(a)    Subject to the terms and conditions of this Agreement, the Lender agrees to make Supplemental Revolving Credit Loans to the Borrower from time to time during the Supplemental Revolving Credit Commitment Period in an aggregate principal amount at any one time outstanding not to exceed the lesser of (i) the Supplemental Revolving Credit Commitment, or (ii) the aggregate amount of Pledged Funds.  During the Supplemental Revolving Credit Commitment Period the Borrower may use the Supplemental Revolving Credit Commitment by borrowing, prepaying the Supplemental Revolving Credit Loans in whole or in part, and re-borrowing, all in accordance with the terms and conditions hereof.  

(b)    The Borrower shall repay all outstanding Supplemental Revolving Credit Loans on the Supplemental Revolving Credit Termination Date.

3

(d)    The Original Agreement is hereby amended by inserting a new Section 2.04A, immediately after Section 2.04, to read as follows:
“    Section 2.04A    Procedures for Supplemental Revolving Credit Borrowing.  The Borrower shall either (a) submit a draw request to the Lender in writing or telephonically; or (b) use the Lender’s electronic banking systems to request each proposed borrowing in accordance with the requirements of such systems as may be in effect from time to time.  Each such notice shall be effective upon receipt by the Lender, shall be irrevocable, and shall specify the date and amount of borrowing requested.  At the request of the Lender, a telephonic request must be confirmed in writing by the Borrower within three (3) Business Days after such request So long as (a) all conditions precedent set forth in Article IV with respect to such borrowing have been satisfied, and (b) the aggregate outstanding balance of Supplemental Revolving Credit Loans at such time does not exceed the lesser of (i) the Supplemental Revolving Credit Commitment, or (ii) the aggregate amount of Pledged Funds, after giving effect to such Supplemental Revolving Credit Loan, the Lender shall provide immediately available funds to the Borrower in the amount of such requested borrowing on the requested borrowing date by depositing such funds into depository account number 161010277, maintained by the Borrower with the Lender.  Each such borrowing shall be on a Business Day.”

(e)    The Original Agreement is hereby amended by inserting a new Section 2.05A, immediately after Section 2.05, to read as follows:
“    Section 2.05A    Termination or Reduction of Revolving Credit Commitment.

Upon not less than three Business Days’ notice to the Lender, the Borrower shall have the right to terminate the Supplemental Revolving Credit Commitment or, from time to time, to reduce the aggregate amount of the Supplemental Revolving Credit Commitment; provided, that no such termination or reduction of Supplemental Revolving Credit Commitment shall be permitted if, after giving effect thereto and to any prepayments of the Supplemental Revolving Credit Loans made on the effective date thereof, the outstanding principal balance of Supplemental Revolving Credit Loans would exceed the aggregate amount of Pledged Funds. Any such partial reduction shall be in an amount equal to $500,000, or a whole multiple thereof, and shall reduce permanently the Supplemental Revolving Credit Commitment then in effect.”

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(f)    Section 2.06 of the Original Agreement is hereby amended by redesignating existing Section 2.06(e) as Section 2.06(f), redesignating existing Section 2.06(f) as Section 2.06(g), and by inserting a new Section 2.06(e) to read as follows:
“    (e)    Supplemental Revolving Note.  The Supplemental Revolving Credit Loans made by the Lender shall be evidenced by an Supplemental Revolving Credit Note in the initial amount of the Supplemental Revolving Credit Commitment.  The Supplemental Revolving Credit Loans and the Supplemental Revolving Credit Note shall mature and be payable at Maturity of the Supplemental Revolving Credit Loans.  The Lender shall enter in its records the amount of each of its Supplemental Revolving Credit Loans, the rate of interest borne on such Supplemental Revolving Credit Loans, and the payments of the Supplemental Revolving Credit Loans received by the Lender, and such records shall be conclusive evidence of the subject matter thereof, absent manifest error.”

(g)    Section 2.07 of the Original Agreement is hereby amended by inserting a new Section 2.07(iii) to read as follows:
“    (iii)    Supplemental Revolving Credit Loans. The Borrower shall have the right, by giving written notice to the Lender by not later than 3:00 p.m. (Minneapolis time) on the Business Day of such payment, to voluntarily prepay the Supplemental Revolving Credit Loans in whole or in part at any time without premium or penalty.”

(h)    Section 2.08 of the Original Agreement is hereby amended by inserting a new Section 2.08(c) to read as follows:
“    (c)    Supplemental Revolving Credit Loans. If, at any time, the aggregate outstanding principal balance of Supplemental Revolving Credit Loans exceeds the lesser of (i) the Supplemental Revolving Credit Commitment or (ii) the aggregate amount of Pledged Funds, then the Borrower shall immediately prepay the Supplemental Revolving Credit Loans by the amount of such excess together with interest on the amount prepaid.”

(i)    Section 2.10 of the Original Agreement is hereby amended by inserting a new Section 2.10(c) to read as follows:
“    (b)    Supplemental Revolving Credit Loans.  The Borrower agrees to pay interest on the outstanding principal amount of the Supplemental Revolving Credit Loans at the rates and at the times specified in the Supplemental Revolving Credit Note.”

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(j)    The Original Agreement is hereby amended by inserting a new Section 2.11A, immediately after Section 2.11, to read as follows:
“    Section 2.11A    Supplemental Revolving Credit Commitment Fee.  The Borrower shall pay to the Lender a fee (the “Supplemental Revolving Credit Commitment Fee”) in an amount determined by applying a rate of eleven hundredths of one percent (0.11%) per annum to the average daily excess of the Supplemental Revolving Credit Commitment over the outstanding principal balance of the Supplemental Revolving Credit Loans. Such Supplemental Revolving Credit Commitment Fee shall be payable to the Lender in arrears on the last day of each calendar month, commencing January 31, 2020, and on the Supplemental Revolving Credit Termination Date.”

(k)    Section 3.02(b) of the Original Agreement is hereby amended by inserting the phrase “or any Supplemental Revolving Credit Commitment” immediately after the reference therein to “any Revolving Credit Commitment”.
(l)    Section 6.09 of the Original Agreement is hereby amended in its entirety to read as follows:
“    Section 6.09    Use of Proceeds. Use the proceeds of the Loans (a) to finance the acquisition of assets by the Borrower and the Domestic Subsidiaries in the ordinary course of business, including the purchase of inventory and equipment, (b) to finance Capital Expenditures of the Borrower and of its Domestic Subsidiaries, and (c) for general corporate purposes of the Borrower, in each case to the extent not prohibited under any Requirement of Law or the Loan Documents.  Notwithstanding the foregoing, proceeds of the Supplemental Revolving Credit Loans shall be used solely to provide liquidity to the Pledgor Parties.

(m)    The preambles to Articles VI and VII of the Original Agreement are hereby amended by inserting the phrase “or any Supplemental Revolving Credit Commitment” immediately after each reference therein to the Revolving Credit Commitment.
(n)    Articles VI, VII and VIII are generally amended to include references to the Pledgor Parties when referencing the Loan Parties (e.g, Section 8.01(h) is amended to read “any Loan Party or any Pledgor Party contests in any manner the validity or enforceability of any provision of any Loan Document”).
(o)    Section 8.01(h)(iii) of the Original Agreement is hereby amended by substituting “Supplemental Revolving Credit Commitment” for the occurrence therein of “Term Loan Commitment”.

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(p)    Section 8.01 of the Original Agreement is hereby amended by deleting the occurrence of “or” at the end of Section 8.01(j), redesignating existing Section 8.01(k) as Section 8.01(m) and by inserting new Sections 8.01(k) and 8.01(l) to read as follows:
“    (k)    any Collateral Account ceases for any reason to be valid, binding and in full force and effect or for any reason the Lender ceases to a first and only priority Lien in any Pledged Funds; 

(l)     any Pledgor Party contests in any manner the validity or enforceability of any provision of any Collateral Account Agreement; or”

(q)    Schedule 5.17 to the Original Agreement is hereby amended in its entirety to conform with the form of Schedule 5.17 (Amended 12/2019) attached to this Amendment.
3.    Conditions to Effectiveness.  This Amendment shall become effective on the date (the “Effective Date”) when, and only when, the Lender shall have received:
(a)    this Amendment, duly executed by a Responsible Officer of Borrower;
(b)    a promissory note (the “Supplemental Revolving Credit Note”), in the form attached as Exhibit A to this Amendment, duly executed by Borrower;
(c)    a certificate of the secretary of Borrower in the form provided by the Bank, appropriately completed and duly executed by Borrower’s secretary;
(d)    payment of a non-refundable amendment fee in the amount of $15,000, in immediately available funds; 
(e)    an Acknowledgment and Agreement, in the form provided by the Lender, duly executed by each Guarantor; 
(f)    a certification of formation, certified by the Secretary of State of the state of Minnesota, for each of (i) Air T OZ 1, LLC, a Minnesota limited liability company (“OZ 1), (ii) Air T OZ 2, LLC, a Minnesota limited liability company (“OZ 2”), and Air T OZ 3, LLC, a Minnesota limited liability company (“OZ 3”; and together with OZ 1 and OZ 2 being collectively referred to herein as the “Pledgor Parties” and individually as a “Pledgor Party”); 
(g)    a copy of the limited liability company agreement of each Pledgor Party; 
(h)    resolutions of the managers of each Pledgor Party authorizing the execution and delivery of each Loan Document to which such Pledgor Party is or is to be a party; 
(i)    a certification that the names and signatures of the officers of each Pledgor Party authorized to sign each Loan Document to which such Pledgor Party is or is to be a party are true and correct;

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(j)    separate Collateral Account Agreement documents, each in the form provided by Lender and duly executed by the respective Pledgor Parties;
(k)    results of a recent lien searches in each of the jurisdictions where each Pledgor Party is organized and its assets are located, and such searches reveal no Liens on any of the assets of the Pledgor Parties;
(l)    the Pledgor Parties shall have deposited not less than an aggregate amount of $10,000,000 in the Collateral Accounts; 
(m)    a letter agreement, in the form provided by Lender, duly executed by the Borrower and each Pledgor Party confirming the termination of that certain Credit Agreement dated December 31, 2019, by and among the Pledgor Parties as the “Borrowers”, the Borrower as “Parent” and the Lender; and
(n)    such other documents as the Lender may reasonably request.
4.    Representations and Warranties.  To induce the Lender to enter into this Amendment, the Borrower represents and warrants to the Lender as follows:
(a)    The execution, delivery and performance by the Borrower of this Amendment, the Supplemental Revolving Credit Note, and any other Loan Document to which the Borrower is a party have been duly authorized by all necessary corporate action, do not require any approval or consent of, or any registration, qualification or filing with, any government agency or authority or any approval or consent of any other person (including, without limitation, any shareholder), do not and will not conflict with, result in any violation of or constitute any default under, any provision of the Borrower’s articles of incorporation or bylaws, any agreement binding on or applicable to the Borrower or any of its property, or any law or governmental regulation or court decree or order, binding upon or applicable to the Borrower or of any of its property and will not result in the creation or imposition of any security interest or other lien or encumbrance in or on any of its property pursuant to the provisions of any agreement applicable to the Borrower or any of its property;
(b)    The representations and warranties contained in the Original Agreement are true and correct as of the date hereof as though made on that date except: (i) to the extent that such representations and warranties relate solely to an earlier date; and (ii) that the representations and warranties set forth in Section 5.04 of the Original Agreement to the audited annual financial statements and internally-prepared interim financial statements of the Borrower shall be deemed to be a reference to the audited financial statements and interim financial statements, as the case may be, of the Borrower most recently delivered to the Lender pursuant to Section 6.01(a) or 6.01(b) of the Original Agreement;
(c)    No events have taken place and no circumstances exist at the date hereof which would give the Borrower the right to assert a defense, offset or counterclaim to any claim by the Lender for payment of the Obligations;

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(d)    The Original Agreement, as amended by this Amendment, the Supplemental Revolving Credit Note, and each other Loan Document to which the Borrower is a party are the legal, valid and binding obligations of the Borrower and are enforceable in accordance with their respective terms, subject only to bankruptcy, insolvency, reorganization, moratorium or similar laws, rulings or decisions at the time in effect affecting the enforceability of rights of creditors generally and to general equitable principles which may limit the right to obtain equitable remedies; and
(e)    Before and after giving effect to this Amendment, there does not exist any Default or Event of Default.
5.    Release.  The Borrower hereby releases and forever discharges the Lender and its successors, assigns, directors, officers, agents, employees and participants from any and all actions, causes of action, suits, proceedings, debts, sums of money, covenants, contracts, controversies, claims and demands, at law or in equity, which the Borrower ever had or now has against the Lender or its successors, assigns, directors, officers, agents, employees or participants by virtue of the Lender’s relationship to the Borrower in connection with the Loan Documents and the transactions related thereto
6.    Reference to and Effect on the Loan Documents.
(a)    From and after the date of this Amendment, each reference in the Original Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Original Agreement, and each reference to the “Credit Agreement”, the “Credit Agreement”, “thereunder”, “thereof”, “therein” or words of like import referring to the Original Agreement in any other Loan Document shall mean and be a reference to the Original Agreement as amended hereby; and except as specifically set forth above, the Original Agreement remains in full force and effect and is hereby ratified and confirmed.
(b)    The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lender under the Agreement or any other Loan Document, nor constitute a waiver of any provision of the Agreement or any such other Loan Document.
7.    Costs, Expenses and Taxes.  The Borrower agrees to pay on demand all costs and expenses of the Lender in connection with the preparation, reproduction, execution and delivery of this Amendment and the other documents to be delivered hereunder or thereunder, including their reasonable attorneys’ fees and legal expenses.  In addition, the Borrower shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution and delivery, filing or recording of this Amendment and the other instruments and documents to be delivered hereunder and agrees to save the Lender harmless from and against any and all liabilities with respect to, or resulting from, any delay in the Borrower’s paying or omission to pay, such taxes or fees.
8.    Governing Law.  THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AMENDMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE 

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OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.
9.    Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
10.    Counterparts.  This Amendment may be executed in counterparts and by separate parties in separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same document.  Receipt by telecopy, pdf file or other electronic means of any executed signature page to this Amendment shall constitute effective delivery of such signature page.
11.    Recitals.  The Recitals hereto are incorporated herein by reference and constitute a part of this Amendment.
[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above.

AIR T, INC.

By:                        
Name:                        
Its:                        

MINNESOTA BANK & TRUST

By:_________________________________
Name:    Eric P. Gundersen
Title:     Senior Vice President

[signature page Amendment No. 2 to Amended and Restated Credit Agreement]

Exhibit A

Form of Supplemental Revolving Credit Note

[see attached\

Schedule 5.17
(Amended 12/2019)

Subsidiaries; Equity Interests

18509173v1

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