general conditions of subcontract - labour only...

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: .....................

Malaysia Marine And Heavy Engineering Sdn. Bhd.

SECTION 1

GENERAL CONDITIONS OF SUBCONTRACT

FOR

LABOUR ONLY SUBCONTRACT WORK

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... PAGE | i

TABLE OF CONTENTS


1. GENERAL PROVISIONS ....................................................................................... 1

1.1 Definitions ................................................................................................................ 1

1.2 Interpretation ............................................................................................................ 3

1.3 Communications ...................................................................................................... 3

1.4 Language of the SUBCONTRACT .......................................................................... 3

2. ASSIGNMENT ........................................................................................................ 4

2.1 Assignment by SUBCONTRACTOR ....................................................................... 4

2.2 Assignment by MMHE ............................................................................................. 4

3. CONFIDENTIALITY ................................................................................................ 4

3.1 Confidential Information ........................................................................................... 4

4. LICENCES, PERMITS, LAWS AND REGULATION ............................................... 5

4.1 Obtaining of Permits, Licenses and Authorisations ................................................. 5

4.2 Compliance with Law ............................................................................................... 5

4.3 Bribery and Corruption under the Malaysian Anti-Corruption Commission Act 2009 (Act 694) .................................................................................................................. 6

4.4 Site Rules and Regulation, and Access to the Site ................................................. 6

4.5 Tax ........................................................................................................................... 7

4.6 MHB Code of Conduct and Business Ethics (CoBE) .............................................. 8

5. MMHE’S ADMINISTRATION .................................................................................. 8

5.1 MMHE’s Representative .......................................................................................... 8

5.2 MMHE’s Site Representative ................................................................................... 9

5.3 Delegated Person .................................................................................................... 9

5.4 Instructions ............................................................................................................... 9

6. SUBCONTRACTOR'S ADMINISTRATION .......................................................... 10

6.1 SUBCONTRACTOR’s General Obligation ............................................................ 10

6.2 Representations and Warranties of the SUBCONTRACTOR ............................... 10

6.3 SUBCONTRACTOR’s Site Representative ........................................................... 10

6.4 SUBCONTRACTOR to Satisfy Himself ................................................................. 11

6.5 Coordination and Co-operation .............................................................................. 12

6.6 Setting Out and Markings ...................................................................................... 12

6.7 Unforeseeable Difficulties ...................................................................................... 12

6.8 Sufficiency of SUBCONTRACT PRICE ................................................................. 12

6.9 MMHE's Supplied Constructional Plant and Free-Issue Material .......................... 13

6.10 SUBCONTRACTOR's Supplied Constructional Plant, Temporary Works and Services ................................................................................................................. 14

6.11 Quality Assurance .................................................................................................. 14

7. PERFORMANCE BOND ....................................................................................... 14

7.1 Submission of Performance Bond ......................................................................... 14

7.2 Validity of Performance Bond ................................................................................ 14

7.3 Default in Providing Performance Bond ................................................................ 15

7.4 Release of the Performance Bond by MMHE ........................................................ 15

7.5 Unfulfilled Obligations ............................................................................................ 15

8. HEALTH, SAFETY AND ENVIRONMENT (HSE) ................................................. 16

8.1 Compliance with HSE Requirements..................................................................... 16

8.2 HSE Measures ....................................................................................................... 16

8.3 HSE Recognition.................................................................................................... 17

8.4 Safety Official and Personnel ................................................................................ 17

8.5 Environmental Matters ........................................................................................... 17

8.6 Default of SUBCONTRACTOR .............................................................................. 17

8.7 Right to Stop Work on HSE Ground ...................................................................... 17

8.8 Right to Withhold Payment on HSE Ground .......................................................... 18

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TABLE OF CONTENTS


8.9 Consequence Management for HSE Non-Compliance ......................................... 18

9. QUALITY, INSPECTION AND TESTING .............................................................. 19

9.1 Quality Assurance and Quality Control .................................................................. 19

9.2 Right to Witness, Inspect and Test ........................................................................ 19

9.3 Right to Require SUBCONTRACTOR to Inspect and Test ................................... 19

9.4 Cover up of WORK ................................................................................................ 19

9.5 Stop Works for Investigation .................................................................................. 19

9.6 Consequences and Cost of Investigation .............................................................. 20

9.7 MMHE's right to reject WORK ............................................................................... 20

9.8 SUBCONTRACTOR Responsible for Cost of Uncovering, Testing, Inspection, Repair, etc. ............................................................................................................. 20

9.9 Continuing obligation ............................................................................................. 20

9.10 SUBCONTRACTOR to Rectify Damage ............................................................... 21

10. STAFF AND LABOUR .......................................................................................... 21

10.1 Engagement of Labour .......................................................................................... 21

10.2 Poaching of Workers ............................................................................................. 21

10.3 Employment Matters Relating to SUBCONTRACTOR's Personnel ...................... 21

10.4 Workmen and Labour Behaviour, Medical and Health .......................................... 22

10.5 Security .................................................................................................................. 22

10.6 SUBCONTRACTOR’s Superintendence ............................................................... 22

10.7 Removal of Workmen and Other Personnel .......................................................... 22

11. COMMENCEMENT OF WORKS AND DATE FOR COMPLETION ...................... 23

11.1 Date of Commencement ........................................................................................ 23

11.2 Completion Date and Certificate of Completion .................................................... 23

11.3 Completion of Outstanding WORK and Punchlist Items ....................................... 23

12. DELAYS AND DELAY DAMAGES ....................................................................... 24

12.1 Liquidated Damages for Delay in Completion ....................................................... 24

12.2 Duty to Mitigate the Delay ...................................................................................... 24

12.3 Extension of Time for Completion.......................................................................... 25

13. CHANGE IN THE WORKS ................................................................................... 25

13.1 Variations and Adjustments ................................................................................... 25

13.2 Submission of Claims ............................................................................................ 26

14. WORKS PROGRAMME AND METHOD OF WORKING ...................................... 26

14.1 Works Programme to be Furnished by SUBCONTRACTOR ................................ 26

14.2 Modification or Revision to Works Programme ..................................................... 27

14.3 Methods of Working ............................................................................................... 27

14.4 Modification or Revision to Method of Working ..................................................... 28

14.5 Expediting Progress of WORK .............................................................................. 28

14.6 Tests on Completion .............................................................................................. 29

15. GUARANTEE AND DEFECTS LIABILITY ........................................................... 30

15.1 General .................................................................................................................. 30

15.2 Guarantee Period................................................................................................... 30

15.3 Notification Upon Defect ........................................................................................ 30

15.4 Additional Inspection .............................................................................................. 30

15.5 Rectification ........................................................................................................... 31

15.6 Consequence of Non-Compliance ......................................................................... 31

15.7 MMHE's Right to Repair or Rectify ........................................................................ 31

15.8 Effect of Rectification or Repair by MMHE ............................................................ 31

15.9 Guarantee Bond..................................................................................................... 32

16. PAYMENTS .......................................................................................................... 32

16.1 Timing and Method of Payment ............................................................................. 32

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16.2 Invoicing ................................................................................................................. 32

16.3 Direct Payment to Suppliers or Employees ........................................................... 33

17. SUSPENSION ...................................................................................................... 33

17.1 MMHE's Right to Suspend ..................................................................................... 33

17.2 Suspension for Default .......................................................................................... 34

17.3 Suspension for Non-Default ................................................................................... 34

17.4 Continuing Obligations and Rights ........................................................................ 35

17.5 Resumption ............................................................................................................ 35

17.6 Suspension Over 90 Days ..................................................................................... 35

18. DEFAULT OF THE SUBCONTRACTOR .............................................................. 35

19. DISCONTINUANCE AND TERMINATION ............................................................ 36

19.1 Termination ............................................................................................................ 36

19.2 Discontinuance ...................................................................................................... 36

19.3 Consequences of Notice ........................................................................................ 36

19.4 Payments in the Event of Discontinuance or Termination for Default ................... 37

19.5 Payments in the Event of Discontinuance or Termination for Non-Default ........... 37

19.6 SUBCONTRACTOR's Continuing Obligations ...................................................... 37

20. RISK AND RESPONSIBILITY .............................................................................. 38

20.1 Liability for MMHE Property and Personnel ........................................................... 38

20.2 Liability of SUBCONTRACTOR Property and Personnel ...................................... 38

20.3 Consequential Damages ....................................................................................... 38

20.4 Intellectual and Industrial Property Rights ............................................................. 38

20.5 Computer Software ................................................................................................ 39

21. INSURANCE ......................................................................................................... 39

21.1 SUBCONTRACTOR's Duty to Insure .................................................................... 39

21.2 SUBCONTRACTOR Responsibility for Deductibles, etc ....................................... 40

21.3 Non-Compliance with Insurance Terms................................................................. 40

21.4 Co-insured, Waiver of Subrogation and Cross Liability ......................................... 40

21.5 Claims Handling ..................................................................................................... 40

21.6 Certificate of Insurance .......................................................................................... 40

21.7 Failure to Insure ..................................................................................................... 41

21.8 Construction All Risks (C.A.R.) Insurance arranged by the Client ........................ 41

21.9 General Liability Insurance .................................................................................... 41

21.10 Workmen's Compensation and/or Employer's Liability Insurance ......................... 42

22. FORCE MAJEURE ............................................................................................... 42

22.1 Non-Liability, Payment and Price ........................................................................... 42

22.2 Definition of Force Majeure .................................................................................... 42

22.3 Procedure on Force Majeure ................................................................................. 43

23. GOVERNING LAW AND DISPUTE RESOLUTION .............................................. 43

23.1 Governing Law ....................................................................................................... 43

23.2 Arbitration ............................................................................................................... 43

24. AUDIT ................................................................................................................... 44

24.1 Scope of Audit ........................................................................................................ 44

24.2 Retention of Records ............................................................................................. 44

24.3 Inspection and Reproduction of Records .............................................................. 44

24.4 Claims for Omissions, Corrections or Errors ......................................................... 44

25. MISCELLANEOUS PROVISIONS ........................................................................ 45

25.1 Entire Contract ....................................................................................................... 45

25.2 Waiver .................................................................................................................... 45

25.3 Severability ............................................................................................................ 45

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APPENDIX 1 – SUMMARY OF SUBCONTRACT ................................................................ 1

APPENDIX 2 - PERFORMANCE BOND FORM ................................................................... 1

APPENDIX 3 - CERTIFICATE OF COMPLETION ................................................................ 1

APPENDIX 4 - SUBCONTRACT CLOSURE CERTIFICATE ................................................ 1

APPENDIX 5 – MHB CODE OF CONDUCT AND BUSINESS ETHICS (COBE) .................. 1

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... PAGE 1 OF 45


1. GENERAL PROVISIONS

1.1 Definitions

In this SUBCONTRACT (as hereinafter defined) the following words and expressions shall have the meaning hereby assigned to them except where the context otherwise requires:

� "Affiliates" or “Affiliated Company” means

(a) a company which is:

(i) the holding company of another corporation,

(ii) a subsidiary of another corporation, or

(iii) a subsidiary of the holding company of another corporation.

(b) For the purposes of (ii) and (iii) in Sub-Clause (a), a company shall be

deemed to be a subsidiary of another company, if that other company:

(i) controls the composition of the board of directors of the first

mentioned company,

(ii) controls more than half of the voting power of the first mentioned

company, or

(iii) holds more than half of the issued share capital of the first

mentioned company (excluding any part thereof which consists of

preference shares); or

(iv) the first mentioned company is a subsidiary of any company which

is that other company’s subsidiary.

� “Certificate of Completion” means a certificate issued by MMHE pursuant to Sub-Clause 11.2:[Completion Date and Certificate of Completion]. A blank copy of the approved form is included as Appendix 3:[Certificate of Completion] herein.

� “Client” means the organization named in Appendix 1:[Summary of SUBCONTRACT], to whom MMHE shall deliver the completed WORK.

� “Client Group” means the Client and its affiliates, its co-venturers and its and their respective directors, officers and employees (including agency personnel).

� “Constructional Plant” shall mean all equipment, tools, appliances or things of whatsoever nature required in or about the execution, completion or maintenance of the WORK or Temporary Works but does not include Materials or other things intended to form or forming part of the WORK. Constructional Plant may mean MMHE’s Constructional Plant or SUBCONTRACTOR’s Constructional Plant, as the context requires.

� “SUBCONTRACTOR” means the company stated in the Form of Agreement and includes its successors and permitted assignees.

� “SUBCONTRACTOR’s Site Representative” means the person named by the SUBCONTRACTOR in the SUBCONTRACT or appointed from time to time by the SUBCONTRACTOR under Sub-Clause 6.3[SUBCONTRACTOR’s Site Representative], who acts on behalf of the SUBCONTRACTOR.



� “Subcontract Closure Certificate” means a document signed between MMHE and SUBCONTRACTOR confirming that SUBCONTRACTOR shall not be entitled to make further claims under the provisions of this SUBCONTRACT. A blank copy of the approved form is included as Appendix 4:[Subcontract Closure Certificate] herein.

� “SUBCONTRACT PRICE” means the sum specified in the SUBCONTRACT, as may be adjusted pursuant to the provisions of the SUBCONTRACT, to be paid to the SUBCONTRACTOR by MMHE in accordance with the provisions of the SUBCONTRACT for the performance of the WORK by the SUBCONTRACTOR. Legal stamping fees are included as part of SUBCONTRACT PRICE.

� “SUBCONTRACT” means the documents specified in the Form of Agreement as forming part of the SUBCONTRACT.

� “Effective Date” means the date so stated in the Appendix 1:[Summary of SUBCONTRACT].

� “Force Majeure” means an event beyond the control of either party and as more particularly described in Clause 22:[Force Majeure].

� “Guarantee Period” means the period stated in Appendix 1:[Summary of SUBCONTRACT].

� “Inspection Authority” means the representative of any organization appointed by MMHE or the Client for the purpose of inspecting the WORK.

� “Main Contract” means the contract between MMHE and the Client.

� “Materials” means equipment, materials, machinery, goods, plant, tools, supplies, articles, software, documents, drawings and other things intended to form or forming part of the Permanent Works.

� “MMHE” means the company stated in the Form of Agreement and includes its successors and permitted assignees.

� “MMHE’s Site Representative” means a person appointed from time to time by MMHE and notified in writing to SUBCONTRACTOR and who shall have the authority to perform the duties set forth in Sub-Clause 5.2:[MMHE’s Site Representative] hereof on behalf of MMHE.

� “Permanent Works” means the permanent works to be constructed and executed by the SUBCONTRACTOR under this SUBCONTRACT.

� "Parent Company" means the ultimate holding company as defined in section 5A of the Companies Act 1965.

� “Petronas” means Petroliam Nasional Berhad.

� “Site” means MMHE’s fabrication yard in Pasir Gudang, Johor, Malaysia and the lands and any other places to, under, in or through which the WORK are to be executed or carried out or to which materials are to be delivered by SUBCONTRACTOR and any other land or places provided by MMHE for the purposes of the SUBCONTRACT together with such other places as may be specifically designated in the SUBCONTRACT or in writing from time to time by MMHE’s Site Representative as forming part of the Site.



� “Scope of Work” means the document entitled scope of work included to this SUBCONTRACT, and any additions and modifications to such document in accordance with the SUBCONTRACT. Such document specifies the purpose, scope, specifications and/or design and/or other technical criteria, for the WORK.

� “Temporary Works” means all temporary works of every kind required in or about the execution, completion or maintenance of the WORK.

� “Tests on Completion” means such tests to be made by SUBCONTRACTOR before the WORK are taken over by MMHE as are provided for in the SUBCONTRACT and such other tests as may be agreed between MMHE and SUBCONTRACTOR.

� "Variation Order" means an instruction issued by MMHE to the SUBCONTRACTOR to proceed with a change in the WORK and to record the adjustments to the SUBCONTRACT PRICE and/or Completion Date.

� “WORK” means all the works and services to be executed by SUBCONTRACTOR including the provision of materials and equipment in accordance with the SUBCONTRACT. WORK may mean Temporary or Permanent Works as appropriate.

1.2 Interpretation

(a) Words importing the singular only also include the plural and vice versa where the context requires.

(b) The headings and marginal notes in these General Conditions of Subcontract shall not be deemed to be part thereof or be taken into consideration in the interpretation of these General Conditions of Subcontract.

1.3 Communications

(a) All official correspondence between MMHE and SUBCONTRACTOR shall be by letter or telefax. Only properly directed correspondence as set forth in Section 5 – Administration Procedures shall be considered to have contractual validity.

(b) MMHE and SUBCONTRACTOR may change their correspondence address by notice in writing to the other party.

(c) All notices under this SUBCONTRACT shall be in writing by one of the following means:

(i) Delivered by hand, and which will be deemed to be given at the time of signed acknowledgement of receipt.

(ii) Sent by registered post, and which will be deemed to be given at the time of receipt of the recorded delivery.

(d) If the time of receipt is not during customary hours of business, the notice will be deemed to have been given at 10:00 a.m. on the first business day thereafter.

1.4 Language of the SUBCONTRACT

All verbal and written communication between SUBCONTRACTOR and MMHE shall be in the English Language.



2. ASSIGNMENT

2.1 Assignment by SUBCONTRACTOR

(a) The SUBCONTRACTOR shall not assign the whole or any part of the SUBCONTRACT nor any benefit or interest under it without the prior written approval of MMHE.

(b) Any purported assignment without the written approval of MMHE shall be absolutely void against MMHE. In such event, MMHE shall have no obligation whatsoever to the purported assignee. Any such purported assignment shall not release or relieve the SUBCONTRACTOR of any of its obligations under the SUBCONTRACT.

2.2 Assignment by MMHE

(a) MMHE shall be entitled to assign the whole or any part of the SUBCONTRACT or any benefit or interest under it at any time without the approval of the SUBCONTRACTOR provided that MMHE notifies the SUBCONTRACTOR of such an assignment.

(b) In the event of discontinuance of part or all of the works or termination of the Main Contract, the SUBCONTRACTOR shall, at MMHE's option, assign any such SUBCONTRACT to Client. Unless such an assignment takes place, the SUBCONTRACTOR shall be responsible only to MMHE who shall in turn be responsible to Client.

3. CONFIDENTIALITY

3.1 Confidential Information

(a) The SUBCONTRACTOR shall keep in confidence and shall not disclose, in whole or in part, to any third party any and all technical and commercial information, including, but not limited to, designs, specifications, or know-how, which is disclosed directly or indirectly to the SUBCONTRACTOR by MMHE or the Client. The SUBCONTRACTOR shall not use such information in any way except for the performance of the WORK under the SUBCONTRACT and shall limit access to such information to those of its employees reasonably requiring the same for such purpose.

(b) The provisions of clause shall not apply to any information that:

(i) now or hereafter becomes a part of the public domain through no fault of the SUBCONTRACTOR;

(ii) was already in the possession of the SUBCONTRACTOR at the time of disclosure; or

(iii) otherwise lawfully becomes available to the SUBCONTRACTOR from a third party under no obligation of confidentiality.

(c) The SUBCONTRACTOR agrees to obtain MMHE’s written consent prior to making publicity releases or announcements with respect to the SUBCONTRACT and/or the WORK.

(d) The SUBCONTRACTOR shall promptly return to MMHE or dispose of or destroy all documents and copies thereof in whatever form furnished by MMHE on completion of the performance of the WORK under the SUBCONTRACT or on termination of the SUBCONTRACT.



4. LICENCES, PERMITS, LAWS AND REGULATION

4.1 Obtaining of Permits, Licenses and Authorisations

(a) In the performance of this SUBCONTRACT, the SUBCONTRACTOR shall obtain and maintain, all necessary permits, licenses and authorisations in the country or countries where any part of the SUBCONTRACT is being performed including, without limitation:

(i) all necessary or appropriate import and export licenses and customs clearances for WORK and/or Constructional Plant for the SUBCONTRACT and providing all documentation in support of such licenses and clearances;

(ii) all necessary immigration and/or work permits for personnel engaged in the performance of the SUBCONTRACT;

(b) MMHE shall not be responsible for any costs of obtaining or maintaining any of the foregoing permits, licenses and authorisations.

(c) The SUBCONTRACTOR shall provide written evidence of compliance with all permits, laws and regulations or exemptions or waivers therefrom within seven (7) days of being so requested by MMHE.

(d) The SUBCONTRACTOR shall maintain a valid license and/or registration with Petronas throughout the duration of this SUBCONTRACT.

4.2 Compliance with Law

(a) The SUBCONTRACTOR shall abide by and comply with all applicable laws, rules and regulations of any governmental or regulatory body having jurisdiction over the SUBCONTRACT.

(b) If the SUBCONTRACTOR performs any part of the SUBCONTRACT contrary to the law, the SUBCONTRACTOR shall bear any additional costs of the SUBCONTRACT and any other consequences resulting from said violation and correction thereof.

(c) For the purpose of this clause, "law" includes any law, act, ordinance, regulation, rule, by-law, order, directive, policy and guideline of the government (whether federal, state, local, municipal or other) of any country in which any part of the SUBCONTRACT is performed or of any such governmental or regulatory body, authority or agency.

(d) The SUBCONTRACTOR shall defend, indemnify and hold MMHE and Client Group harmless (such indemnity shall also include the full amount of all costs and expenses associated therewith) from all forms of:

(i) penalty which may be imposed on MMHE and Client Group by reason of any actual or alleged violation of law by the SUBCONTRACTOR.

(ii) claims, suits or proceedings that may be brought against MMHE or Client Group in any way related to, arising under, growing out of, or by reason of the SUBCONTRACT with respect to such alleged violation of law whether brought by employee of the SUBCONTRACTOR or by third parties or by any relevant authority.



(iii) loss or damage suffered by MMHE and Client Group in the event that the SUBCONTRACTOR shall in relation to the SUBCONTRACT, have committed any act, whether before, on or after the date of the SUBCONTRACT, which is an offence under the Laws of Malaysia (or any other similar law or enactment in force at the place for the performance of any part of the SUBCONTRACT outside Malaysia) or would have constituted such an offence.

(e) The SUBCONTRACT PRICE shall be adjusted to take account of any increase or decrease in the SUBCONTRACT PRICE resulting from a change in the Laws of Malaysia (including orders, regulations, decrees) which becomes effective after the Effective Date of the SUBCONTRACT and which materially affects the SUBCONTRACTOR’s Scope of Work. If the SUBCONTRACTOR incurs additional costs solely as a result of such change in law, the SUBCONTRACTOR shall give reasonable notice to MMHE and the SUBCONTRACTOR may claim for such additional cost to the extent which directly is attributable to such change in law.

4.3 Bribery and Corruption under the Malaysian Anti-Corruption Commission Act 2009 (Act 694)

(a) Any form of gratification in connection with this SUBCONTRACT is strictly prohibited. SUBCONTRACTOR including all of its employees and agents (of any tier) shall not directly or indirectly solicit, accept or obtain or agreeing to accept or attempting to obtain, from any party for themselves or for any other party or offer, promise or give to any party any bribe or gratification as an inducement or a reward. For purposes herein, a bribe or gratification is any gift, payment, benefit or other advantage, pecuniary or otherwise, offered, given or received in order to secure an undue or improper result, award, decision, benefit or advantage of any kind.

(b) Without prejudice to any other rights that MMHE may have under the SUBCONTRACT or at law, MMHE may terminate the SUBCONTRACT or any work immediately upon notice in writing should the SUBCONTRACTOR including any of its employees, and agents violate the provisions of this sub-clause.

4.4 Site Rules and Regulation, and Access to the Site

(a) The SUBCONTRACTOR shall acquaint all its personnel, employees and agents, with current Site rules and regulations, including safety regulations enforced by the MMHE. MMHE has the right to impose any form of penalties or summons on the SUBCONTRACTOR due to non- compliance or violation of any regulation or laws or bye laws by its or personnel, employees and/or agents that caused pecuniary losses or any form of damages and civil liabilities and costs incurred by MMHE due to the non-compliance or violation.

(b) Subject to Sub-Clause 4.4(a) above, MMHE shall give the SUBCONTRACTOR right of access to, and possession of so much of the Site as may be required to enable the SUBCONTRACTOR to commence and proceed with the construction of the WORK. The right and possession may not be exclusive to the SUBCONTRACTOR.



(c) If no such time is stated in the SUBCONTRACT, MMHE shall give the SUBCONTRACTOR right of access to, and possession of, the Site within such times as required to enable the SUBCONTRACTOR to proceed without disruption in accordance with the programme submitted under Sub-Clause 14.1[Works Programme to be Furnished by SUBCONTRACTOR].

(d) If the SUBCONTRACTOR suffers delay as a result of a failure by MMHE to give any such right or possession within such time which causes a delay in the commencement of the WORK or any part(s) of the WORK, the SUBCONTRACTOR shall give notice to MMHE’s Site Representative and subject to MMHE’s approval, SUBCONTRACTOR shall be entitled to claim an extension of time for completion for WORK or any part of the WORK but the SUBCONTRACTOR shall not be entitled to claim for any loss or damage caused by such delay of possession.

(e) However, if and to the extent that MMHE’s failure was caused by any error or delay by the SUBCONTRACTOR, including an error in, or delay in the submission of, any of the SUBCONTRACTOR’s documents required for entering the Site, the SUBCONTRACTOR shall not be entitled to such extension of time.

4.5 Tax

(a) The SUBCONTRACTOR shall be responsible for his employees tax liabilities and shall comply with the requirements of the Malaysian Government in this respect. Tax or taxes shall include:

(i) Taxes due on income, profits, excess profits of SUBCONTRACTOR as a result of SUBCONTRACTOR operating within Malaysia.

(ii) Taxes due and payable by SUBCONTRACTOR in countries outside of Malaysia.

(iii) Taxes and duties due on any offices or property whether owned, occupied or operated by SUBCONTRACTOR including vehicles, plants, franchise, licenses, permits, registration fees.

All employment taxes and contributions imposed by law, or trade union contracts, or regulations with respect to or measured by the compensation (wages, salaries, bonuses and benefits) paid to employees of SUBCONTRACTOR including, without limitation, taxes and contributions for unemployment and compensation insurance, old age benefits, welfare funds, pensions and annuities and disability insurance and similar items. Where required by the relevant authority, MMHE shall deduct whatever sum so required from any payment due to the SUBCONTRACTOR and pay over such deductions to the said authority from time to time. Such deductions paid over to the relevant authority shall constitute as payment to the SUBCONTRACTOR.

(b) MMHE shall have the right to withhold and remit taxes from payment due to the SUBCONTRACTOR under this SUBCONTRACT, to the extent that such withholding may be required by the Government of Malaysia or any relevant authorities thereof, or by the government of any other country, and payment by MMHE to the respective governmental office of the amount of money so withheld will relieve MMHE from any further obligation to the SUBCONTRACTOR with respect to the amount so withheld. Where the SUBCONTRACTOR is of opinion that it is not subject to withholding tax, it is the sole responsibility of the SUBCONTRACTOR to secure the written direction of the relevant authorities and submit the original copy to MMHE.



Upon receipt of such written direction, MMHE may make the said payments without deduction of such taxes.

(a) The SUBCONTRACTOR and its SUBCONTRACTOR shall indemnify and hold MMHE and its Affiliates safe and harmless from any and all demands, claims, actions, awards, judgments, costs, liabilities, fines, penalties, loss or damage, including any and all expenses, disbursements, costs, legal fees, interests, sums and amounts which MMHE suffers, incurs or is put to, resulting from, or in any way connected with:

(i) any assessment or imposition of tax based on any actual or alleged failure by the SUBCONTRACTOR to make timely payment of any taxes for which they are liable; or

(ii) any actual or alleged failure by the SUBCONTRACTOR to comply with applicable reporting, return or other procedural requirements with respect to such taxes.

(b) The SUBCONTRACTOR shall give prompt notice to MMHE on all matters relating to any demand, claim or action pertaining to taxes which may affect the performance of the SUBCONTRACTOR's obligation under this SUBCONTRACT.

(a) In the event MMHE has paid or incurred any liability for any tax on behalf of the SUBCONTRACTOR, which is subsequently determined to be not payable, the SUBCONTRACTOR shall promptly account for and refund to MMHE all such tax paid.

4.6 MHB Code of Conduct and Business Ethics (CoBE)

(a) SUBCONTRACTOR acknowledges that MMHE’s professional activities are governed by a set of commitments, values and charters describe on MHB Code of Conduct and Business Ethics or acronym CoBE. The CoBE provided in Appendix 5 of these Conditions will form part of the SUBCONTRACT.

(b) SUBCONTRACTOR hereby declares that it is informed about MHB Code of Conduct and Business Ethics and that it is familiar with and understands the provisions of the CoBE. SUBCONTRACTOR declares that it has not engaged and will not engage in any conduct that violates the CoBE provisions and shall abide by such provision while performing the SUBCONTRACT.

(c) Without prejudice to any other rights that MMHE may have under the SUBCONTRACT or at law, MMHE may terminate the SUBCONTRACT or any work immediately upon notice in writing should SUBCONTRACTOR including any of its employees, and agents violate the CoBE.

5. MMHE’S ADMINISTRATION

5.1 MMHE’s Representative

(a) MMHE shall appoint a representative (hereafter referred to as “MMHE Representative”) whom shall represent MMHE and act on MMHE behalf under the SUBCONTRACT whose contact details are set out in the Section 5 – Administration Procedures.

(b) MMHE may change MMHE Representative at any time and shall give written notification to the SUBCONTRACTOR of the replacement’s name, address, duties, authority, and of the date of appointment.



5.2 MMHE’s Site Representative

(a) MMHE's Representative shall appoint a Site representative (hereafter referred to as “MMHE’s Site Representative”) who shall have the obligation to monitor, direct, and supervise day to day operation and execution of the WORK including issuance of the Variation Orders. However such authority shall be subject to the limits of authority as notified to SUBCONTRACTOR from time to time by MMHE.

(b) Any written instruction or approval given by MMHE’s Site Representative to SUBCONTRACTOR within the terms of such delegation or as expressly stated under the SUBCONTRACT shall bind SUBCONTRACTOR and MMHE as though it had been given by MMHE. Provided always as follows:

(i) any failure to disapprove any WORK shall not constitute approval, and shall therefore not prejudice the right of MMHE to reject the WORK at any time;

(ii) it shall not relieve the SUBCONTRACTOR from any responsibility it has under the SUBCONTRACT, including responsibility for errors, omissions, discrepancies and non-compliances;

(iii) under (i) and (ii) above, all costs shall be borne by SUBCONTRACTOR and there shall no adjustment to the Completion Date.

(c) MMHE’s Site Representative shall have no authority to amend, adjust or terminate the SUBCONTRACT.

(d) MMHE may at any time revoke such delegation in writing. Any such delegation or revocation shall be in writing and shall not take effect until a copy of such delegation or revocation has been delivered to the SUBCONTRACTOR.

5.3 Delegated Person

(a) MMHE’s Site Representative may from time to time delegate to his assistant any of the duties vested to him. Notwithstanding any such delegation of duties, the delegated person shall have no power to amend, adjust or terminate the SUBCONTRACT. MMHE’s Site Representative or MMHE’s Representative may at any time revoke such delegation.

(b) Any such delegation or revocation shall be in writing and shall not take effect until a copy of such delegation or revocation has been delivered to the SUBCONTRACTOR.

5.4 Instructions

(a) MMHE’s Site Representative may issue instructions and directions to the SUBCONTRACTOR on matters relating to the WORK.

(b) SUBCONTRACTOR shall comply with instructions and directions issued by MMHE’s Site Representative within the ambit of his authority in Sub-Clause 5.2:[MMHE’s Site Representative] above in a timely manner.



6. SUBCONTRACTOR'S ADMINISTRATION

6.1 SUBCONTRACTOR’s General Obligation

(a) The SUBCONTRACTOR shall execute and complete the WORK in accordance with the SUBCONTRACT and with MMHE’s Site Representative’s instructions, and shall remedy any defects in the WORK.

(b) SUBCONTRACTOR shall with due diligence and in a good and workmanlike manner carry out and complete the WORK in accordance with the SUBCONTRACT and shall in all respects meet the quality, standards and warranty requirements of the SUBCONTRACT.

(c) SUBCONTRACTOR shall execute, carry out and complete the WORK and SUBCONTRACTOR shall not do any act or omission in relation thereto which shall cause or contribute to any breach by MMHE of any of its obligations under the Main Contract.

(d) The SUBCONTRACTOR shall supply sufficient and suitable labour to execute the WORK, and provide the Construction Plant and SUBCONTRACTOR’s documents specified in the SUBCONTRACT, and all SUBCONTRACTOR’s personnel, goods, consumables and other things and services, whether of a temporary or permanent nature, required in and for execution, completion and remedying of defects.

(e) The SUBCONTRACTOR shall be responsible for the adequacy, stability and safety of all Site operations and of all methods of construction including Temporary Works.

6.2 Representations and Warranties of the SUBCONTRACTOR

(a) SUBCONTRACTOR hereby acknowledges and agrees that MMHE is relying solely on SUBCONTRACTOR’s knowledge, expertise and experience in the performance of the WORK.

(b) SUBCONTRACTOR warrants that its personnel shall be appropriately qualified, licensed, skilled and experienced in their respective trades or occupations and that it has the required numbers of such personnel; further it has competent supervisory and management staff to diligently and expeditiously perform the WORK.

(c) The SUBCONTRACTOR shall not subcontract any part of the WORK to another contractor and any purported subcontracting shall be considered a default by SUBCONTRACTOR.

(d) SUBCONTRACTOR shall fully indemnify and hold harmless MMHE in respect of any breaches of the terms set out hereinabove.

6.3 SUBCONTRACTOR’s Site Representative

(a) SUBCONTRACTOR shall appoint the SUBCONTRACTOR’s Site Representative and shall give him all authority necessary to act on the SUBCONTRACTOR’s behalf under the SUBCONTRACT. The SUBCONTRACTOR’s Site Representative shall have full authority concerning the supply of materials, personnel and services for the WORK and shall have full authority to discharge SUBCONTRACTOR’s responsibility in accordance with the SUBCONTRACT.

(b) Unless the SUBCONTRACTOR’s Site Representative is named in the SUBCONTRACT, SUBCONTRACTOR shall, within 14 days from Effective Date, submit to MMHE’s Site Representative for consent the name and particulars of the person the SUBCONTRACTOR proposes to appoint as



SUBCONTRACTOR’s Site Representative. If consent is withheld or subsequently revoked in terms of Sub-Clause 10.7:[Removal of Workmen and Other Personnel], or if the appointed person fails to act as SUBCONTRACTOR’s Site Representative, the SUBCONTRACTOR shall similarly submit the name and particulars of another suitable person for such appointment.

(c) SUBCONTRACTOR’s Site Representative responsibility among other things is to look after his workforce. The SUBCONTRACTOR’s Site Representative must be fully aware of and understand the safety rules and requirements of the WORK and shall enforce the same amongst SUBCONTRACTOR’s workforce. The SUBCONTRACTOR’s Site Representative should also possess adequate knowledge of the relevant requirements as set out by statutes, laws and by-laws.

(d) SUBCONTRACTOR shall not, without the prior consent of MMHE’s Site Representative, revoke the appointment of the SUBCONTRACTOR’s Site Representative or appoint a replacement.

(e) If the SUBCONTRACTOR’s Site Representative is to be temporarily absent from the Site during the execution of the WORK, a suitable replacement person shall be appointed, subject to MMHE’s Site Representative’s prior consent, and MMHE’s Site Representative shall be notified accordingly. SUBCONTRACTOR’s Site Representative shall, on behalf of the SUBCONTRACTOR, receive instructions under Sub-Clause 5.4:[Instructions].

(f) SUBCONTRACTOR’s Site Representative may delegate any powers, functions and authority to any competent person, and may at any time revoke the delegation. Any delegation or revocation shall not take effect until MMHE’s Site Representative has received prior notice signed by the SUBCONTRACTOR’s Site Representative, naming the person and specifying the powers, functions and authority being delegated or revoked.

6.4 SUBCONTRACTOR to Satisfy Himself

(a) SUBCONTRACTOR shall be deemed to have:

(i) inspected and examined the Site to determine all necessary services, labour, Constructional Plant, Temporary Works and Materials required for the performance of the WORK;

(ii) familiarised itself with the Site, any restrictions applicable to or associated with the Site whether imposed by any authority or third party, and all ingress and egress from it;

(iii) obtained for itself in advance a full understanding and knowledge of the nature and scope of the WORK and of the conditions under which the WORK will be carried out;

(iv) examined general and local conditions including climatic, water and weather conditions, and all other matters which could affect progress or performance of the WORK.

(b) As provided under Sub-Clause 6.7:[Unforeseeable Difficulties], no claim by SUBCONTRACTOR for payment additional to the SUBCONTRACT PRICE shall be allowed on the grounds of any misunderstanding or misapprehension or that there were unforeseeable difficulties in respect of any such matter or on the grounds of any allegation or fact that incorrect



information was given to SUBCONTRACTOR before tendering or before entering into the SUBCONTRACT.

6.5 Coordination and Co-operation

(a) SUBCONTRACTOR shall cooperate and coordinate its work with other contractors who may be engaged on the Site as required by MMHE’s Site Representative. If in the reasonable view of MMHE, SUBCONTRACTOR willfully obstructs or disrupts other work on the Site it shall be default of the SUBCONTRACTOR pursuant to Clause 18:[Default of the SUBCONTRACTOR] entitling MMHE to terminate the SUBCONTRACT pursuant to Clause 19:[Discontinuance and Termination]. All costs associated with SUBCONTRACTOR having to coordinate his activities or to change the sequence of the WORK to comply with this provision shall be deemed to be included in the SUBCONTRACT PRICE.

(b) SUBCONTRACTOR shall consult with MMHE’s Site Representative for any Site issues with MMHE, third parties and other contractors. When more than one subcontractor has to work at a particular location and there is limited working space, MMHE’s Site Representative shall have the prerogative to decide on priority.

6.6 Setting Out and Markings

(a) SUBCONTRACTOR shall be fully responsible to ensure that the positions, levels, dimensions and markings of the WORK are correct as specified in the SUBCONTRACT notwithstanding any approval by MMHE’s Site Representative in setting out the said positions, levels and dimensions.

(b) SUBCONTRACTOR shall give to MMHE’s Site Representative all necessary information and assistance to enable MMHE’s Site Representative to check the setting out of the WORK including interpreting any marks made by SUBCONTRACTOR for the purpose of setting out.

(c) If any errors or mistakes in the setting out and marking are made by SUBCONTRACTOR which result in the damage or loss of the Constructional Plant, Materials and services supplied by MMHE, the cost and expenses for making good, replacing or repairing the above said Constructional Plant, Materials and services shall be borne by SUBCONTRACTOR.

6.7 Unforeseeable Difficulties

Except as otherwise stated in the SUBCONTRACT:

(a) the SUBCONTRACTOR shall be deemed to have obtained all necessary information as to risks, contingencies and other circumstances which may influence or affect the WORK;

(b) by signing the SUBCONTRACT, the SUBCONTRACTOR accepts total responsibility for having foreseen all difficulties and costs of successfully completing the WORK; and

(c) the SUBCONTRACT PRICE shall not be adjusted to take account of any difficulties or costs that an experienced SUBCONTRACTOR performing such fabrication, installation and commissioning of the WORK should have foreseen.

6.8 Sufficiency of SUBCONTRACT PRICE

The SUBCONTRACTOR shall be deemed to have satisfied himself as to the correctness and sufficiency of the SUBCONTRACT PRICE and rates stated in



Section 2 – Schedule of Compensation; and that such SUBCONTRACT PRICE and rates covers all the SUBCONTRACTOR 's obligations under the SUBCONTRACT and all things necessary for the proper procurement, construction, commissioning and overall execution of the WORK including the remedying of any defects.

6.9 MMHE's Supplied Constructional Plant and Free-Issue Material

(a) MMHE shall make the Constructional Plant as indicated in Scope of Work available for the use of the SUBCONTRACTOR in the execution of the WORK in accordance with the details and arrangements stated in Scope of Work.

(b) SUBCONTRACTOR shall be solely responsible for care, custody and control of Constructional Plant supplied by MMHE to SUBCONTRACTOR upon receipt by SUBCONTRACTOR of such Constructional Plant. SUBCONTRACTOR shall be liable for any costs and expense for repairing or replacing lost or damaged Constructional Plant due to SUBCONTRACTOR's negligence or wilful act. MMHE’s Site Representative shall be notified immediately when Constructional Plant is damaged or lost.

(c) SUBCONTRACTOR shall notify MMHE’s Site Representative of any shortages or deficiencies of Constructional Plant received by SUBCONTRACTOR immediately after receipt of the same.

(d) The Constructional Plant shall be received and signed for by SUBCONTRACTOR when they are handed over to SUBCONTRACTOR. SUBCONTRACTOR shall maintain adequate records in a form approved by MMHE to show the use of all Constructional Plant s received by SUBCONTRACTOR.

(e) MMHE shall supply, free of charge, the materials (“Materials”) in accordance with the details stated in the Scope of Work. MMHE shall, at his cost, provide these Materials at the time and place specified in the SUBCONTRACT. The SUBCONTRACTOR shall then visually inspect them, and after this visual inspection, the Materials shall come under the care, custody and control of the SUBCONTRACTOR.

(f) SUBCONTRACTOR shall within three (3) working days of receipt or visual inspection give notice to MMHE’s Site Representative of any shortage, defect or default in these Materials. Unless otherwise agreed by both parties, MMHE shall immediately rectify the notified shortage, defect or default.

(g) MMHE’s obligations of inspection, care, custody and control shall not relieve SUBCONTRACTOR of liability for any shortage, defect or default not apparent from a visual inspection.

(h) The SUBCONTRACTOR shall maintain, in a form agreed by MMHE, adequate records for Materials and Construction Plant provided by MMHE and shall provide a monthly inventory to MMHE showing:

(i) the use of all Materials and Construction Plant received, and

(ii) the balance of Materials and Construction Plant unused at all times.

(i) The SUBCONTRACTOR shall notify MMHE of all unused or surplus Materials provided by MMHE. MMHE shall instruct the SUBCONTRACTOR to return such Materials to MMHE nominated storage area. The SUBCONTRACTOR shall be responsible for ensuring that all Materials which MMHE has instructed the SUBCONTRACTOR to return to the



nominated storage area of MMHE are returned in good condition with full supporting documentation.

6.10 SUBCONTRACTOR's Supplied Constructional Plant, Temporary Works and Services

(a) All Constructional Plant, materials, Temporary Works, services, personnel, transport and other things necessary for carrying out the WORK to completion shall be furnished by SUBCONTRACTOR at SUBCONTRACTOR's cost and expense.

(b) When brought on to the Site, Constructional Plant shall be deemed to be exclusively intended for the execution of the WORK. The SUBCONTRACTOR shall not remove from the Site any major items of Constructional Plant without the consent of MMHE’s Site Representative.

(c) SUBCONTRACTOR shall be responsible for the timely order and delivery and calling off of all Constructional Plant, materials, Temporary Works, services, personnel, transport and other things to be supplied by him to ensure that the performance of the WORK continues unimpeded.

6.11 Quality Assurance

(a) In the performance of the WORK, the SUBCONTRACTOR, its employees, representatives, agents shall meet MME and the Client requirements for Quality Assurance, In-line Quality Control Programme and other documented systems during entire performance of the WORK.

(b) SUBCONTRACTOR shall comply with MMHE’s Quality Management System and SUBCONTRACTOR, its employees, representatives, and/or agents shall avail themselves for quality audit that may be conducted from time to time to verify whether the quality activities and related results performed by SUBCONTRACTOR comply with planned arrangements and to determine the effectiveness of the Quality Management System.

7. PERFORMANCE BOND

7.1 Submission of Performance Bond

(a) SUBCONTRACTOR shall within one (1) month from the Effective Date and prior to commencing any work on Site, provide a Performance Bond in the form of a Bank Guarantee payable on demand in favour of MMHE in an amount as specified in Appendix 1:[Summary of SUBCONTRACT] from a bank operating in Malaysia acceptable to MMHE to guarantee the performance of SUBCONTRACTOR's obligation under this SUBCONTRACT. A blank copy of the approved form is included as Appendix 2:[Performance Bond Form] herein. If requested by MMHE, SUBCONTRACTOR shall revise the Bank Guarantee amount to correspond to any increase in the SUBCONTRACT PRICE.

(b) All expenses in issuing and maintaining the Performance Bond shall be borne by the SUBCONTRACTOR.

7.2 Validity of Performance Bond

(a) The Performance Bond scheduled shall be valid up to thirty (30) days after the Completion Date. SUBCONTRACTOR shall extend the Performance Bond as necessary to ensure that such bond is valid and effective until the issuance of the Certificate of Completion.



(b) Should the Certificate of Completion not be issued by the date thirty (30) days prior to the expiry date of the Performance Bond, SUBCONTRACTOR shall extend or renew the bond in a form similar to and in the same amount as that previously provided, the expiry date of which shall be thirty (30) days after the planned date for completion at that time, as approved by MMHE. The extension of the Performance Bond or the renewed Performance Bond shall be extended to MMHE not later than fifteen (15) days prior to the expiry of the first Performance Bond. SUBCONTRACTOR shall bear all expenses related to bearing, completing, executing and stamping and extension/renewal of such Bank Guarantee.

7.3 Default in Providing Performance Bond

(a) MMHE shall not be obliged to make any payments to SUBCONTRACTOR under the SUBCONTRACT before it receives the Performance Bond and has satisfied itself that the Performance Bond is in accordance with the requirements of the SUBCONTRACT. Failure to provide the Performance Bond within the stipulated duration, or such extended duration as may be allowed at the sole discretion of MMHE, shall be default of the SUBCONTRACTOR pursuant to Clause 18:[Default of the SUBCONTRACTOR] entitling MMHE to terminate the SUBCONTRACT pursuant to Clause 19:[Discontinuance and Termination].

(b) Should SUBCONTRACTOR fail to extend or renew the Performance Bond pursuant to Sub-Clause 7.2(b), MMHE may:

(i) make a demand on the Performance Bond for part or all of the amount of the bond; or

(ii) withhold payments due to the SUBCONTRACTOR up to the amount of the bond; or

(iii) treat the failure as default of the SUBCONTRACTOR pursuant to Clause 18:[Default of the SUBCONTRACTOR] entitling MMHE to terminate the SUBCONTRACT pursuant to Clause 19:[Discontinuance and Termination].

7.4 Release of the Performance Bond by MMHE

The Performance Bond (or any balance of the same remaining to the credit of the SUBCONTRACTOR) shall be released or refunded to the SUBCONTRACTOR on the completion of the whole of the WORK by the issuance of the Certificate of Completion by MMHE and settlement of all claims from SUBCONTRACTOR.

7.5 Unfulfilled Obligations

The above said Bank Guarantee shall be forfeited by and in favour of MMHE in the event SUBCONTRACTOR defaults, neglects, refuses or fails to perform the WORK all in accordance with the terms and conditions of this SUBCONTRACT, and/or SUBCONTRACTOR defaults, neglects, refuses or fails to extend the validity period of the Bank Guarantee as instructed by MMHE. MMHE shall also have the right to call on the said Bank Guarantee if the SUBCONTRACTOR fails to comply with the HSE requirements stipulated in the SUBCONTRACT such that an incident of the non-compliance results in fatality.



8. HEALTH, SAFETY AND ENVIRONMENT (HSE)

8.1 Compliance with HSE Requirements

(a) The SUBCONTRACTOR shall, at his own cost and expenses, comply with all applicable Health, Safety and Environment (“HSE”) laws and regulations pertaining to safety, health, environment protection and fire protection, which are applicable to the location where the WORK are being carried out. The SUBCONTRACTOR shall also comply at all times with the requirements as set forth by MMHE in its Health, Safety and Environment Management System (“HSEMS”), policies, operating standards, Site HSE requirements, MMHE 10 Safety Rules, and any special instructions and all requirements stipulated in this SUBCONTRACT. These requirements are intended to supplement any known or ought to be known laws and regulations applicable at the location where the WORK are being carried out. The SUBCONTRACTOR shall take all necessary HSE control and recovery measures related to or arising out of the performance of the SUBCONTRACT in order to protect the WORK, the personnel and property of MMHE, SUBCONTRACTOR, all third parties and public from the hazards and risks associated with the planning and execution of WORK.

Notwithstanding the above, the SUBCONTRACTOR shall perform all obligations related to the HSE requirements listed within Section 4 - Health, Safety and Environment.

(b) SUBCONTRACTOR must comply and shall ensure compliance by his personnel, workmen, agents, employees, representatives and his sub- subcontractors at all time during the execution of the WORK with all of the following:

(i) Factories and Machinery Act, 1967;

(ii) Occupational Safety and Health Act, 1994;

(iii) Environment Quality Act, 1974;

(iv) Client’s HSE requirements; and

(v) All other relevant safety at work requirements imposed by law including and subsequent amendments to or re-enactment of the said law;

(c) Within seven (7) days before commencing work on the Site, SUBCONTRACTOR shall obtain from MMHE all HSE requirements of MMHE and Client for the purposes of executing the WORK. SUBCONTRACTOR shall ensure that his agents, employees and representatives are notified of and observe and abide by said regulation and procedures.

8.2 HSE Measures

(a) SUBCONTRACTOR shall ensure that all Constructional Plant, Temporary Works and other items used for the WORK, whether purchased, rented or otherwise provided by SUBCONTRACTOR are in a safe and sound condition and capable of performing the functions for which they are intended. If any Constructional Plant, Temporary Works or other item is in the judgment of MMHE, unsafe or incapable of doing the work for which it is intended, SUBCONTRACTOR shall repair or replace the same with safe and capable Constructional Plant, Temporary Works or items at SUBCONTRACTOR's cost and expense.



(b) Without limiting SUBCONTRACTOR liability under the SUBCONTRACT, SUBCONTRACTOR shall provide at his own expense all workmen on Site with the necessary personal protective equipment including but not limited to safety boots, safety glass, safety helmets and protective clothing.

(c) SUBCONTRACTOR shall at all times throughout the performance of the SUBCONTRACT ensure proper and diligent housekeeping.

(d) SUBCONTRACTOR shall be responsible for the safety and safe working practices of its agents, employees, representatives and all Constructional Plant and Temporary Works, and shall be responsible for the training of its agents, employees and representatives on safety and safe working practices. SUBCONTRACTOR shall ensure that all personnel to be provided in the performance of the WORK are adequately trained in safety practices before they are involved in the WORK. SUBCONTRACTOR shall be responsible to maintain the Site in a safe and efficient manner and shall arrange for regular meetings and emergency drills to enhance HSE awareness.

(e) SUBCONTRACTOR shall report any incidents whether involving first aid or lost time to MMHE’s Site Representative immediately following the incident.

8.3 HSE Recognition

SUBCONTRACTOR shall work closely with MMHE to develop the most appropriate HSE recognition programme for this SUBCONTRACT. Such HSE recognition programme shall provide a structured means to periodically reward and recognise those personnel who have contribute in making the Site a safe work place. HSE incentives will be based on merits, active participation, and the achievement of HSE performance targets.

8.4 Safety Official and Personnel

SUBCONTRACTOR shall appoint a suitably qualified and experienced person as safety official who shall be responsible for compliance with safety requirements and all safety matters relating to the WORK. SUBCONTRACTOR shall, from time to time, provide such other personnel and resources as may be required to ensure the effective implementation of the safety programme on Site.

8.5 Environmental Matters

SUBCONTRACTOR shall comply with all relevant laws and regulations relating to the protection and preservation of the environment, in particular the Environmental Quality Act including any subsequent amendments to or re-enactments of the said Act. All measures taken by the SUBCONTRACTOR in compliance with this clause shall be deemed to be included in the SUBCONTRACT PRICE.

8.6 Default of SUBCONTRACTOR

The failure of SUBCONTRACTOR to comply with the MMHE’s applicable Health, Safety and Environment (HSE) requirements shall be deemed as a default by SUBCONTRACTOR and shall constitute a breach of the SUBCONTRACT.

8.7 Right to Stop Work on HSE Ground

MMHE shall have the right to prohibit commencement of the WORK or to stop any WORK in progress on HSE ground if (without limitation), Constructional Plant, SUBCONTRACTOR’s personnel (whether procured by SUBCONTRACTOR from third parties or supplied by SUBCONTRACTOR) or work conditions are considered to be unsafe or not in compliance with MMHE’s



HSE rules and/or requirements stipulated in Section 4 - Health, Safety and Environment. In such event, SUBCONTRACTOR shall without reservation remove the unsafe Constructional Plant, SUBCONTRACTOR’s personnel or work conditions prior to seeking MMHE’s permission to resume or commence the WORK. Any costs incurred by SUBCONTRACTOR or SUBCONTRACTOR’s Site Representatives as a result of any delays or actions taken or required which arise in any way in connection with this clause and/or the WORK stoppage, shall be at SUBCONTRACTOR’s sole expense and shall not entitle SUBCONTRACTOR to any compensation thereof.

8.8 Right to Withhold Payment on HSE Ground

(a) In the event the SUBCONTRACTOR or SUBCONTRACTOR’s Site Representatives fail to comply with any of the HSE requirements stipulated in Section 4 - Health, Safety and Environment, MMHE shall be entitled to withhold amounts from payments due to SUBCONTRACTOR under this SUBCONTRACT until SUBCONTRACTOR rectifies the noncompliance to the satisfaction of MMHE whereupon MMHE shall immediately release such sums withheld to SUBCONTRACTOR (without any interest imposed thereon).

(b) In the event the SUBCONTRACTOR fails to take appropriate remedial action or refuses to remedy or remove the causes for withholding such payments after delivery of written notice to the SUBCONTRACTOR by MMHE, MMHE shall be entitled to cause the same to be remedied or removed on its own and may deduct the costs including the expenses thereby incurred by MMHE from any amounts due or owing or which may become due or owing to SUBCONTRACTOR under the SUBCONTRACT provided always that this provision shall not affect any other rights or remedies to which MMHE may be entitled hereunder SUBCONTRACT or at law or otherwise for the recovery of such sums.

8.9 Consequence Management for HSE Non-Compliance

(a) In case of HSE non-compliance committed by SUBCONTRACTOR’s personnel which has been verified by MMHE, consequence management shall be applied to SUBCONTRACTOR’s personnel in accordance with the requirements of stipulated in Section 4 - Health, Safety and Environment.

(b) If HSE non-compliances of a major category as prescribed in Section 4 - Health, Safety and Environment were repeatedly committed by SUBCONTRACTOR’s personnel, MMHE shall have the right to terminate the SUBCONTRACT in accordance with the provisions of Clause 19:[Discontinuance and Termination] of this SUBCONTRACT and claim for any loss, damages suffered by the MMHE as a result thereof.

(c) If an incident of HSE non-compliance by the SUBCONTRACTOR occurs and results in fatality during execution of the WORK, MMHE shall have the right to terminate the SUBCONTRACT in accordance with the provisions of Clause 19:[Discontinuance and Termination] and MMHE shall also have the right to call on the performance bond pursuant to Clause 7:[Performance Bond] of this SUBCONTRACT to recover any loss, claims or damages suffered by the MMHE as a result thereof.

(d) The above are without prejudice to any other rights and remedies of MMHE arising hereunder or by law or otherwise.



9. QUALITY, INSPECTION AND TESTING

9.1 Quality Assurance and Quality Control

(a) The SUBCONTRACTOR shall have and operate a quality assurance system as specified in the SUBCONTRACT.

(b) MMHE shall have the right to reject any WORK not conforming to specified quality standards as contained in the SUBCONTRACT.

(c) Notwithstanding the above, such non-conformity shall be deemed a default under Clause 18:[Default of the SUBCONTRACTOR].

(d) At least seven (7) days before commencing work on the Site, SUBCONTRACTOR shall obtain from MMHE all Quality Assurance and Quality Control requirements of MMHE for the purposes of executing the WORK. SUBCONTRACTOR shall ensure that his employees are notified of and observe and abide by said procedures.

9.2 Right to Witness, Inspect and Test

MMHE shall have the right, but not the obligation, at all times to witness, inspect and test any part of the WORK or Materials, Construction Plant, facilities and services to be incorporated into or used for the WORK performed by the SUBCONTRACTOR.

9.3 Right to Require SUBCONTRACTOR to Inspect and Test

MMHE shall have the right to require the SUBCONTRACTOR to inspect, test or retest any part of the WORK or Materials, Construction Plant, facilities and services to be incorporated into or used for the WORK performed by the SUBCONTRACTOR.

(a) MMHE shall specify in the SUBCONTRACT the scope and details of the inspection required of the SUBCONTRACTOR.

(b) SUBCONTRACTOR shall give MMHE at least fourteen (14) days notice of any inspections or tests to be performed.

9.4 Cover up of WORK

No part of the WORK shall be covered up or put out of view without the approval of MMHE. If any part of the WORK is closed in or covered up before the required inspection or witnessing and without agreement by MMHE, then, if required by MMHE, the part of the WORK shall be opened or uncovered for inspection or witnessing of testing and re-closed or re-covered by the SUBCONTRACTOR at its own cost.

9.5 Stop Works for Investigation

(a) In the event MMHE becomes aware of any symptoms suggesting that any part of the WORK or Materials, Construction Plant, facilities and services to be incorporated into or used for the WORK may not comply with the SUBCONTRACT, MMHE may order WORK to stop in order to allow such symptoms to be investigated.

(b) MMHE may conduct such investigations by itself and/or by a third party and MMHE may instruct the SUBCONTRACTOR to carry out such investigations either concurrently or independently. The SUBCONTRACTOR shall cooperate with such investigations, which may include opening up of WORK, inspection, testing and re-closing of WORK.



9.6 Consequences and Cost of Investigation

(a) If as a result of the investigation, there is non-compliance with the SUBCONTRACT and the SUBCONTRACTOR is responsible for such non-compliance:

(i) MMHE may order further investigation and/or further opening up of WORK to determine the full extent of the problem;

(ii) the SUBCONTRACTOR shall be responsible for all costs related to such initial investigations and opening up and such further investigations and further opening up of the WORK.

(b) If as a result of the investigation, there is no non-compliance with the SUBCONTRACT, or the SUBCONTRACTOR is not responsible for such non-compliance:

(i) MMHE shall issue a Variation Order in respect of the stoppage of work and initial investigations.

9.7 MMHE's right to reject WORK

MMHE shall have the right to reject any part of the WORK, Construction Plant, facilities or services to be incorporated into or used for the WORK which does not conform with the SUBCONTRACT. The SUBCONTRACTOR shall promptly remove any item so rejected and shall immediately repair or replace the same and shall carry out such further inspections or tests on other parts of the WORK as MMHE may require to ensure that there are no similar parts of the WORK that fail to conform with the SUBCONTRACT.

9.8 SUBCONTRACTOR Responsible for Cost of Uncovering, Testing, Inspection, Repair, etc.

(a) Unless otherwise provided in this clause, the SUBCONTRACTOR shall be responsible for all costs of uncovering, testing, inspection, repair, replacement and reinstating the WORK, facilities or services to be incorporated into or used for the WORK.

(b) MMHE shall be responsible for the cost of such testing, inspection, uncovering and reinstating of WORK, facilities or services to be incorporated into or used for the WORK and shall issue a Variation Order for such costs if:

(i) MMHE requires any tests, inspections, uncovering or opening up of any part of the WORK, facilities or services to be incorporated into or used for the WORK for any inspection or testing that is additional to the requirements of the SUBCONTRACT; and

(ii) such tests, inspections, uncovering or opening up are not required as a result of a failure by the SUBCONTRACTOR to conform with the SUBCONTRACT on some other part of the WORK; and

(iii) the additional inspection or test shows that the part of the WORK concerned is in accordance with the SUBCONTRACT.

9.9 Continuing obligation

Neither failure on the part of MMHE to inspect the WORK or witness or test or to discover defects nor failure to reject WORK performed by the SUBCONTRACTOR which is not in accordance with the SUBCONTRACT shall relieve the SUBCONTRACTOR from any liability or obligation under the SUBCONTRACT.



9.10 SUBCONTRACTOR to Rectify Damage

(a) SUBCONTRACTOR shall be responsible for making good at his own expense to the satisfaction of MMHE’s Site Representative all loss of or damage to any parts of the WORK which have not been taken over by MMHE, howsoever caused.

(b) SUBCONTRACTOR shall exercise care in execution of the WORK to ensure no damage is caused to other works, including but not limited to equipment, pipework, structural, architectural, electrical and instrumentation items and the like. In the event of any loss or damage caused by SUBCONTRACTOR to such other works directly or indirectly and SUBCONTRACTOR fails to rectify the damage as required above, MMHE may at its sole option mobilise its own resources or cause a third party to rectify the loss or damage and all costs incurred by MMHE due to the same shall be borne by SUBCONTRACTOR at cost plus fifteen percent (15 %). Such amount may be deducted from any payment due to SUBCONTRACTOR or from the Retention Money or Performance Bond or may be recovered as a debt at MMHE’s option.

10. STAFF AND LABOUR

10.1 Engagement of Labour

(a) SUBCONTRACTOR shall make his own arrangement at no cost to MMHE for the engagement of adequate and competent labour.

(b) In employing labour, SUBCONTRACTOR shall give preference to local labour. Where foreign labour is engaged, SUBCONTRACTOR shall arrange and obtain the necessary work permits at no cost to MMHE.

(c) SUBCONTRACTOR shall also adhere to all health and safety rules pertaining to the WORK imposed by law, statutes, ordinances and acts of parliament. In addition, SUBCONTRACTOR must also observe MMHE’s rules, regulations, procedures and standards on safety and security. It is the duty of SUBCONTRACTOR to inform himself of all these rules, regulations, procedures and standards, to seek information from MMHE and other statutory bodies, and to inform his labour about these rules, regulations, procedures and standards.

(d) SUBCONTRACTOR shall make adequate provisions for his labour at no cost to MMHE with regard to transport and accommodation.

10.2 Poaching of Workers

SUBCONTRACTOR shall not directly or indirectly solicit, poach, interfere with or endeavour to entice away from MMHE or from other subcontractors, any labour of MMHE or the other subcontractors.

10.3 Employment Matters Relating to SUBCONTRACTOR's Personnel

Unless otherwise provided in the SUBCONTRACT, the SUBCONTRACTOR shall at its own cost, be responsible for all matters relating to the employment of its personnel, whether local or foreign, including without limitation:

(a) work permit, employment visa, immigration requirements;

(b) remuneration, EPF, SOCSO, taxes, levy, commission;

(c) lodging or accommodation, transportation, meal allowance;



(d) medical welfare, examination, treatment, hospitalisation, health insurance, including that of their immediate families; and

(e) all other statutory requirements.

10.4 Workmen and Labour Behaviour, Medical and Health

(a) SUBCONTRACTOR shall ensure that the labour employed by SUBCONTRACTOR shall comply with the HSE requirement and procedures in Clause 8:[Health, Safety and Environment (HSE)] of the SUBCONTRACT.

(b) In the event SUBCONTRACTOR is unable to comply with the obligations stated in this clause, it shall be default of the SUBCONTRACTOR pursuant to Clause 18:[Default of the SUBCONTRACTOR] entitling MMHE to terminate the SUBCONTRACT pursuant to Clause 19:[Discontinuance and Termination].

(c) SUBCONTRACTOR shall indemnify and keep MMHE indemnified from all loss, costs, claims and damages which MMHE may suffer as a result of any breach of SUBCONTRACTOR’s obligation under this clause.

10.5 Security

In the execution of the WORK, no person other than SUBCONTRACTOR and their employees shall be allowed on the Site except by the written permission of MMHE’s Site Representative.

10.6 SUBCONTRACTOR’s Superintendence

(a) SUBCONTRACTOR shall give or provide proper and adequate superintendence during the WORK and if required during the Guarantee Period as given in Clause 15:[Guarantee and Defects Liability] hereof as MMHE’s Site Representative may consider it necessary and shall ensure that the WORK will be properly carried out at a speed and in manner satisfactory to MMHE’s Site Representative.

(b) SUBCONTRACTOR shall, subject to the approval in writing by MMHE’s Site Representative, employ a competent and skilled superintendence to plan, arrange, direct, manage, inspect and test the WORK and SUBCONTRACTOR’s workforce on Site. Such superintendence shall be in constant attendance at the Site whilst the WORK is in progress and any instructions or directions given by MMHE’s Site Representative to such superintendence shall be deemed for all the purposes of the SUBCONTRACT to have been given to SUBCONTRACTOR.

10.7 Removal of Workmen and Other Personnel

(a) The SUBCONTRACTOR’s Site Representative and key personnel as set forth in the Scope of Work shall not be replaced except with prior agreement of MMHE’s Site Representative of its successor(s) (the “Key Personnel”). Any change to the SUBCONTRACTOR’s Site Representative and Key Personnel without MMHE approval will result in liquidated damages of RM 5,000.00 per change, the amount of which shall be deducted from SUBCONTRACTOR’s progress payments.

(b) MMHE’s Site Representative shall be at liberty by notice in writing to SUBCONTRACTOR to object to any representative or person employed by SUBCONTRACTOR in the execution of or otherwise about the WORK who shall in the opinion of MMHE’s Site Representative, misconducts himself, contravenes any safety or security requirements, or is incompetent or



negligent, and SUBCONTRACTOR shall remove as aforesaid and shall replace such person with another person of competent skill and qualification at SUBCONTRACTOR’s cost and expense to the satisfaction of MMHE’s Site Representative within a reasonable time so as to ensure that the completion of the WORK is not affected.

(c) In the event that the SUBCONTRACTOR’s Site Representative and Key Personnel is not in attendance on Site persistently for more than three (3) days within a period of one (1) month, MMHE reserves the right to instruct SUBCONTRACTOR to replace such representative immediately at SUBCONTRACTOR’s cost and expense.

11. COMMENCEMENT OF WORKS AND DATE FOR COMPLETION

11.1 Date of Commencement

(a) SUBCONTRACTOR shall commence the WORK on the Site on the Effective Date stated in Appendix 1:[Summary of SUBCONTRACT]. SUBCONTRACTOR shall proceed with the WORK with due expedition and without delay, except as may be expressly instructed in writing by MMHE.

(b) Time is of the essence in carrying out the SUBCONTRACT.

11.2 Completion Date and Certificate of Completion

(a) SUBCONTRACTOR shall complete the WORK on or before the Completion Date stated in Appendix 1:[Summary of SUBCONTRACT], or any extension thereto pursuant to the SUBCONTRACT.

(b) At least seven (7) days before the expected Date of Completion, SUBCONTRACTOR shall notify MMHE in writing of the date when it considers the WORK will achieve completion.

(c) When in the opinion of MMHE’s Site Representative, substantial completion of the WORK has been achieved with the exception of a minor defects or outstanding works which do not affect the use of the WORK by MMHE or Client (referred to herein as “punchlist” items), he shall forthwith issue a certificate (hereinafter referred to as Certificate of Completion) to that effect to SUBCONTRACTOR. The Certificate of Completion shall be subject to SUBCONTRACTOR’s obligations under Clause 15:[Guarantee and Defects Liability]. Completion of the WORK shall be deemed to have taken place on the day named in such certificate (hereinafter referred to as “Date of Completion”).

(d) For the avoidance of doubt, the issuance of this Certificate of Completion shall not release in any way SUBCONTRACTOR from his obligations under the provisions of this SUBCONTRACT to complete any outstanding work, make good any defects, and to proceed with completing such outstanding work and rectifying such defects immediately. SUBCONTRACTOR shall not be entitled to claim any additional payment for such outstanding work or rectification of defects.

11.3 Completion of Outstanding WORK and Punchlist Items

(a) SUBCONTRACTOR shall complete with due expedition and within such time as may be specified by MMHE any punchlist items remaining at the Date of Completion. All works referred to in this Clause shall be executed by SUBCONTRACTOR at SUBCONTRACTOR’s own cost.



(b) Should SUBCONTRACTOR fail to complete any outstanding work or punchlist items, MMHE shall have the right to deduct the cost to complete such work plus fifteen (15) percent from any payment due to SUBCONTRACTOR, or to otherwise recover such amount from SUBCONTRACTOR.

(c) On the completion of the WORK, SUBCONTRACTOR shall clear away and remove from the Site all Constructional Plant, surplus materials, rubbish and Temporary Works of every kind and leave the whole of the Site and WORK clean and in a workman-like condition to the satisfaction of MMHE’s Site Representative. In the event that SUBCONTRACTOR fails to carry out the aforesaid obligation to the satisfaction of MMHE’s Site Representative, MMHE reserves the right to withhold all further payments due to SUBCONTRACTOR under this SUBCONTRACT until all such obligations are satisfactorily completed.

12. DELAYS AND DELAY DAMAGES

12.1 Liquidated Damages for Delay in Completion

(a) If SUBCONTRACTOR shall fail to complete the WORK by the Completion Date or any extension thereof then SUBCONTRACTOR shall pay MMHE the sum at the rate stated in Appendix 1:[Summary of SUBCONTRACT] as Liquidated Damages for such breach and not as penalty for every day which shall elapse between the Completion Date so prescribed in Appendix 1:[Summary of SUBCONTRACT] (or any extension thereof as the case may be) and the Date of Completion of the WORK as certified in the Certificate of Completion. MMHE may without prejudice to any other methods of recovery deduct the amount of such damages from any money due or which may become due to SUBCONTRACTOR and/or deduct the same from the Retention Money and/or the Performance Bond and such liquidated damages shall be MMHE’s sole remedy for SUBCONTRACTOR’s delay in completing the WORK.

(b) The payment or deduction of such damages shall not relieve SUBCONTRACTOR from his obligations to complete the WORK or from any other of his obligations or liabilities under the SUBCONTRACT. MMHE shall have the right to invoke the provisions under Clause 18:[Default of the SUBCONTRACTOR], entitling MMHE to terminate the SUBCONTRACT pursuant to Clause 19:[Discontinuance and Termination] once the maximum liquidated damages specified in Appendix 1:[Summary of SUBCONTRACT] is reached.

12.2 Duty to Mitigate the Delay

If the SUBCONTRACTOR considers himself to be entitled to an extension of the time for Completion Date, the SUBCONTRACTOR shall give notice to MMHE’s Site Representative in accordance with Clause 13 [Change in the WORK]. The SUBCONTRACTOR shall take steps to mitigate the delay to the Completion Date by proposing to MMHE’s Site Representative in writing, at the same time as the notice set out in Clause 13 [Change in the WORK], an alternative WORK Programme to minimise the delay and/or cost, and include changes including:

(a) Altering the order of the execution of the WORK so that SUBCONTRACTOR’s workers and Constructional Plant will be utilized fully in order to maximise progress towards completion of the WORK;



(b) Re-assigning workers from one part of the WORK to another to minimize standby time.

12.3 Extension of Time for Completion

Subject to Clause 13:[Change in the Works], if the amount of extra or additional work of any kind or other special circumstances of any kind whatsoever which may occur and fairly entitle the SUBCONTRACTOR to an extension of time for the completion of the WORK, MMHE’s Site Representative shall determine the period of such extension, subject to written approval by MMHE. MMHE is not bound to take into account any extra or additional work or other special circumstances unless the SUBCONTRACTOR has, within seven (7) days after such work has commenced or such circumstances have arisen, delivered to MMHE’s Site Representative full and detailed particulars of any claim to extension of time to which he may consider himself entitled in order that such claim may be investigated at the time.

13. CHANGE IN THE WORKS

13.1 Variations and Adjustments

(a) MMHE shall have the right at any time within the duration of the SUBCONTRACT to make any changes in the WORK and/or SUBCONTRACT period by additions, deletions, substitutions, modifications or revisions thereto. MMHE shall advise the SUBCONTRACTOR of such changes by issuing written instructions in accordance with Section 5 – Administration Procedures section.

(b) The SUBCONTRACTOR shall then submit to MMHE, within the time stipulated, a quotation for the change and stating the change to the Completion Date(s) arising from the change. Pricing shall be in accordance with the pricing structure of the SUBCONTRACT and shall clearly define increase, decrease or no change in compensation under the SUBCONTRACT.

(c) In the event MMHE and the SUBCONTRACTOR are not in agreement on the cost and/or schedule impact arising from any such change, MMHE shall instruct the SUBCONTRACTOR to perform the change, subject to financial restrictions, by issuing a Variation Order. Alternatively, MMHE shall issue a written instruction pursuant to this sub-clause ordering the SUBCONTRACTOR to proceed with the change. Upon receiving such Variation Order or instruction, the SUBCONTRACTOR shall diligently perform the change in strict accordance with and subject to all provisions of the SUBCONTRACT.

(d) Any adjustment to the Completion Date and/or the SUBCONTRACT PRICE as agreed by a Variation Order are not subject to renegotiations and shall be deemed to include any cumulative effect of the Variation Order and the determined effect on any other previously authorised Variation Orders on the Completion Date and the SUBCONTRACT PRICE.

(e) The SUBCONTRACT PRICE and/or the Completion Date shall be subject to adjustment only as a result of a Variation Order or the operation of any escalation clause that may be contained in Section 2 – Schedule of Compensation. However, for administrative purposes, any additional cost or adjustment to the Completion Date shall be formalised through a Variation Order.



(f) A Variation Order shall in no way affect the rights or obligations of the parties except as expressly provided for in that Variation Order. A Variation Order shall be governed by all the provisions of the SUBCONTRACT.

(g) Any work to be performed by SUBCONTRACTOR resulting from comments given by MMHE on such documents and drawings which are to be prepared by SUBCONTRACTOR and which are subject to comments by MMHE as provided therein, shall not be considered as change in the WORK and shall be carried out at SUBCONTRACTOR's own expense, to the extent such comments are consistent with the requirements of the SUBCONTRACT, and/or based on considerations of safety or good engineering practice.

13.2 Submission of Claims

(a) SUBCONTRACTOR shall notify MMHE in writing when SUBCONTRACTOR is of the opinion that any work to be performed by SUBCONTRACTOR with respect to the SUBCONTRACT should qualify as a Variation Order. SUBCONTRACTOR shall notify be commenced, but not later than seven (7) days after the factor causing the change in the WORK has first shown itself, together with SUBCONTRACTOR 's initial advice as to the effect such work has on any of the requirements of the SUBCONTRACT. SUBCONTRACTOR shall then submit within seven (7) days thereafter its estimated cost and schedule impact for MMHE's review and approval.

(b) On approval in writing by MMHE of SUBCONTRACTOR's proposal as aforesaid, the change in the WORK in question shall be deemed to be incorporated in the WORK.

(c) If after review of SUBCONTRACTOR's notice, MMHE does not agree that it is a change in the WORK, MMHE shall have the right to instruct and SUBCONTRACTOR shall have the obligation to carry out the work. However, if the SUBCONTRACTOR wishes to pursue the claim, the SUBCONTRACTOR shall (and MMHE may order to, if so required) make such contemporaneous records as may be necessary to support its claims for additional cost and/or time in the event the claim is admitted. The SUBCONTRACTOR shall submit these records timely to MMHE so that MMHE is able to verify these records and MMHE may sign such records without admitting the validity of the claim.

(d) If MMHE, after review of SUBCONTRACTOR's notice and cost and schedule impact, does not agree with the cost and schedule impact, MMHE shall have the right reasonably to instruct and SUBCONTRACTOR shall have the obligation to carry out the work under Sub-Clause 13.1(c) herein.

14. WORKS PROGRAMME AND METHOD OF WORKING

14.1 Works Programme to be Furnished by SUBCONTRACTOR

(a) Within 14 days after the Effective Date, SUBCONTRACTOR shall submit to MMHE’s Site Representative for his approval:

(i) a WORK programme showing a breakdown of the WORK to be done by SUBCONTRACTOR and when they are planned to be done (the “Works Programme”);

(ii) a procedure or method statement setting out how he proposes to carry out the WORK, and shall whenever required by the Project Manger furnish for his information further particulars in writing of



SUBCONTRACTOR's arrangements for the carrying out of the WORK; and

(iii) details of all Constructional Plant and Temporary Works which SUBCONTRACTOR intends to supply, use, or construct as the case may be.

(b) MMHE shall have at least 21 days to review such documentation. The submission to and approval by MMHE’s Site Representative of such Works Programme or the furnishing of such particulars shall not relieve SUBCONTRACTOR of any of his duties or responsibilities under the SUBCONTRACT.

14.2 Modification or Revision to Works Programme

(a) MMHE may from time to time during the progress of the WORK make modification or revision to the Works Programme to take into account any changed circumstances or events affecting the progress and/or the execution of the Main Contract works.

(b) SUBCONTRACTOR shall update, make modification or revision to the Works Programme to reflect such modification or revision and submit to MMHE within seven (7) days.

(c) Should:

(i) the actual progress of the WORK not follow the Works Programme; or

(ii) the Completion Date be extended pursuant to the SUBCONTRACT; or

(iii) MMHE’s Site Representative otherwise reasonably consider that the Works Programme needs to be revised,

then MMHE’s Site Representative may request in writing that SUBCONTRACTOR revise the Works Programme. SUBCONTRACTOR shall provide such revised programme within seven (7) days of such request. The revised Works Programme shall show completion by the Completion Date or any extension thereto pursuant to Clause 12:[Delays and Delay Damages] of the SUBCONTRACT.

(d) No aforementioned modification or revision to the Works Programme and/or the execution of the WORK shall entitle the SUBCONTRACTOR to additional compensation unless it arises from a change pursuant to Clause 13:[Change in the WORK] herein. Nor shall it entitle the SUBCONTRACTOR to adjustment of the Completion Date unless it arises from a change pursuant to Clause 13:[Change in the WORK] herein or from an extension of the Completion Date pursuant to the SUBCONTRACT. For clarity, SUBCONTRACTOR shall be entitled to an extension of time/costs in accordance with the SUBCONTRACT if the revised Works Program implemented is attributable to MMHE.

14.3 Methods of Working

(a) SUBCONTRACTOR shall adopt methods of working, Constructional Plant and Temporary Works which will be safe and proper during construction, and which will ensure properly constructed WORK.

(b) In programming the WORK, SUBCONTRACTOR shall comply with the provision of this sub-clause.



14.4 Modification or Revision to Method of Working

MMHE has the right to vary at no cost to MMHE, SUBCONTRACTOR's methods of working and Temporary Works to comply with the provisions of this SUBCONTRACT.

14.5 Expediting Progress of WORK

14.5.1 Notification to Expedite

SUBCONTRACTOR shall immediately notify MMHE in writing if the progress of the WORK or any section of the WORK is not in accordance with the Works Programme, or it becomes evident that the progress has been too slow to ensure completion of the WORK by the Completion Date or any extension thereto pursuant to the SUBCONTRACT. SUBCONTRACTOR’s notice must:

(a) be in writing;

(b) dated;

(c) clearly identify the steps to be taken; and

(d) clearly identify the date to complete the steps.

If SUBCONTRACTOR fails to issue the notice, MMHE reserves the right to recover all costs due to SUBCONTRACTOR default.

14.5.2 Work to Expedite the Progress

(a) MMHE may instruct the SUBCONTRACTOR to submit, under Sub-Clause 14.2:[Modification or Revision to Works Programme], a revised programme and supporting report describing the revised methods which the SUBCONTRACTOR proposes to adopt in order to expedite progress and complete within the WORK by the Completion Date. Unless MMHE notifies otherwise, the SUBCONTRACTOR shall adopt these revised methods, which may require working overtime, additional shifts, night shifts, weekend working, and providing additional workmen and Constructional Plant, all at SUBCONTRACTOR’s costs. SUBCONTRACTOR shall upon the receipt of such instruction take immediate steps to expedite the progress of the WORK in order to complete the WORK by the Completion Date as stipulated in Appendix 1:[Summary of SUBCONTRACT], or any or any extension thereto pursuant to the SUBCONTRACT.

(b) If SUBCONTRACTOR fails to take the required steps to recover from the delay within such time as stipulated by MMHE, MMHE reserves the right to mobilise its own resources or those of a third-party, or from any other resources to expedite and complete the WORK or any part thereof, the cost of which shall be deducted from any payment due to SUBCONTRACTOR or backcharged to SUBCONTRACTOR at cost plus fifteen percent (15%). In addition, MMHE may suspend payment to the SUBCONTRACTOR in respect of amounts due and owing to the SUBCONTRACTOR. Notwithstanding the aforesaid, MMHE retains the right to treat the failure as default of the SUBCONTRACTOR pursuant to Clause 18:[Default of the SUBCONTRACTOR] entitling MMHE to terminate the SUBCONTRACT pursuant to Clause 19:[Discontinuance and Termination].



(c) Notwithstanding the foregoing, MMHE’s Site Representative may also issue orders in writing for overtime or additional overtime to be worked (with or without Sunday work or night work) by SUBCONTRACTOR to complete the WORK or any part thereof earlier than the Completion Date or any extension thereto pursuant to the SUBCONTRACT, but in such an event such additional cost directly arising therefrom as may be certified by MMHE’s Site Representative shall be added to the SUBCONTRACT PRICE.

(d) SUBCONTRACTOR shall in all instances advise MMHE’s Site Representative of his intention to work overtime which shall be subject to MMHE’s Site Representative's written approval.

14.6 Tests on Completion

14.6.1 SUBCONTRACTOR’s Obligations

SUBCONTRACTOR shall carry out such Tests on Completion of the WORK as provided in the Scope of Work Such Tests on Completion shall be instructed in writing by MMHE’s Site Representative and shall be deemed to be included in the SUBCONTRACT PRICE.

14.6.2 Notice of Tests and Test Report

(a) SUBCONTRACTOR shall give MMHE’s Site Representative reasonable notice in writing of the date after which he will be ready to carry out such tests. Unless otherwise agreed, such tests shall take place within three (3) days after the date of MMHE’s Site Representative’s instruction, and shall be carried out on such day or days as MMHE’s Site Representative shall in writing notify SUBCONTRACTOR.

(b) Not more than 3 months before the Completion Date the SUBCONTRACTOR shall submit in writing to MMHE for his approval full details of the test methods and procedures and methods of evaluation it proposes for the tests ("Test Procedures"). Following submission of such Test Procedures, MMHE shall notify the SUBCONTRACTOR in writing whether or not the same are approved and, if not, shall give particulars of the modifications he requires. Within 10 days after any such notification of disapproval, the SUBCONTRACTOR shall revise the disapproved Test Procedures to incorporate the modifications required by MMHE and submit the revised Test Procedures to MMHE for approval. The test methods and procedures and methods of evaluation for the tests shall be those contained in the Test Procedures approved by MMHE.

(c) The SUBCONTRACTOR shall provide all apparatus, assistance, documents and other information, equipment, consumables, instruments, labour, materials, and suitably qualified and experienced staff, as are necessary to carry out the specified tests efficiently. The SUBCONTRACTOR shall agree, with MMHE, the time and place for the specified testing of any Materials and other parts of the WORK in accordance with the Test Procedures.

(d) SUBCONTRACTOR shall promptly forward to MMHE duly certified reports of the tests. When the specified tests have been passed, MMHE shall endorse the SUBCONTRACTOR’s test certificate.



15. GUARANTEE AND DEFECTS LIABILITY

15.1 General

(a) The SUBCONTRACTOR guarantees that the WORK, Temporary Work, Constructional Plant, facilities and services to be incorporated into or used for the WORK:

(i) are fit for their intended purpose, of good quality and workmanship;

(ii) meet accepted and specified safety standards and are in accordance with the SUBCONTRACT;

(iii) are free from errors, defects, shrinkages and failures for the relevant guarantee period.

(b) The SUBCONTRACTOR shall advise MMHE if, in SUBCONTRACTOR's opinion, based on the information given by MMHE, the WORK and Materials, Constructional Plant, facilities and services to be incorporated into or used for the WORK are inadequate for the intended purpose of the WORK.

(c) The SUBCONTRACTOR shall not be liable for any breach of this clause to the extent that the breach is due to a defect or failure in Materials supplied by MMHE which could not reasonably have been discovered by the SUBCONTRACTOR complying with its obligations under Sub-Clause 6.9:[MMHE's Supplied Constructional Plant and Free-Issue Material].

15.2 Guarantee Period

(a) The guarantee provided under this clause shall apply to the WORK and Guarantee Period for all materials, workmanship and services incorporated into or used for the WORK shall be 12 months from Date of Completion, as provided in Sub-Clause 11.2 [Completion Date and Certificate of Completion], which the date the WORK are completed and duly certified as completed.

(b) The Guarantee Period of the WORK and all materials and workmanship shall be extended by the same amount of time of such parts of the WORK have been out of operation or their putting into operation has been delayed as a result of a defect to which this guarantee applies.

15.3 Notification Upon Defect

MMHE shall notify the SUBCONTRACTOR of any defects that have appeared in the WORK or Materials, Constructional Plant, facilities and services to be incorporated into or used for the WORK, and shall give the SUBCONTRACTOR the opportunity of inspecting and/or remedying the defects in so far as it is reasonable and practical to do so.

15.4 Additional Inspection

In the event of a defect in the WORK or Materials, Constructional Plant, facilities and services which have been or are to be incorporated into or used for the WORK arising before the expiry of the Guarantee Period, MMHE may after consultation with the SUBCONTRACTOR and in accordance with accepted industry practices, carry out itself, or have a third party carry out on its behalf, or require that the SUBCONTRACTOR carries out additional appropriate inspection(s) of the WORK or Materials, Constructional Plant, facilities and services.



(a) The above-mentioned consultation shall include the methods, procedures, criteria and extent of the tests to be carried out.

(b) The test criteria shall be specified in the SUBCONTRACT.

15.5 Rectification

Subject to any inspection as set out above, the SUBCONTRACTOR shall at its own expense, upon being notified by MMHE that WORK, Materials, Constructional Plant, facilities and services which have been or are to be incorporated into or used for the WORK are defective or do not meet specifications:-

(a) collect the defective item from MMHE's designated collection area and deliver replacement item to the same point; and

(b) rectify the performance under the SUBCONTRACT, if any.

15.6 Consequence of Non-Compliance

Any reasonable costs incurred by MMHE as a consequence of the SUBCONTRACTOR's non-compliance with Sub-Clause 15.5:[Rectification] hereof shall be for the SUBCONTRACTOR's account. These shall include:

(a) the cost of detection of the defect, removal, transportation, repair, replacement, reinstallation, inspection, re-testing of the WORK, Materials, Constructional Plant, facilities and services in question;

(b) cost of MMHE's own personnel together with the proven cost of delay to work of other contractors caused, subject to a maximum of ten (10) %, of the SUBCONTRACT value;

(c) Other resulting loss or damage incurred by MMHE that is not excluded under Sub-Clause 20.3:[Consequential Damages] or stipulated as the responsibility or liability of MMHE or the SUBCONTRACTOR under the SUBCONTRACT.

15.7 MMHE's Right to Repair or Rectify

(a) Notwithstanding the foregoing, subject to MMHE having given prior notice to the effect, repairs or rectification may be carried out or replacements may be made either by MMHE, or by a third party on its behalf, in the event that:

(i) it would be unreasonable or impractical to give the SUBCONTRACTOR an opportunity of inspection and/or remedying defects; or

(ii) there is a threat of further damage or loss, including those as a consequence of delay in installation work or operations.

(b) The cost for the above repairs or rectification shall be for the SUBCONTRACTOR's account.

15.8 Effect of Rectification or Repair by MMHE

Any repairs or replacements carried out as described above shall be deemed to be effected and made by the SUBCONTRACTOR, and the guarantee concerned shall remain in effect provided that:

(a) The same does not result in any detriment to the WORK, Materials, Constructional Plant, facilities and services in question; and



(b) The WORK, Materials, Constructional Plant, facilities and services in question shall be held available for inspection by or on behalf of the SUBCONTRACTOR for 45 days thereafter.

15.9 Guarantee Bond

(a) The SUBCONTRACTOR shall provide to MMHE on or prior to the commencement of the Guarantee Period, a security for performance of the SUBCONTRACTOR’s obligations during the Guarantee Period (“Guarantee Bond”) in an amount equal to five percent (5%) of the total SUBCONTRACT PRICE to guarantee the SUBCONTRACTOR's obligations during the Guarantee Period. All expenses in issuing and maintaining the Guarantee Bond shall be borne by the SUBCONTRACTOR.

(b) The Guarantee Bond shall be in the form of an irrevocable and unconditional bank guarantee payable on demand in favour of MMHE from a bank operating in Malaysia acceptable to MMHE. The Guarantee Bond shall be valid and be in full effect throughout the Guarantee Period.

(c) Upon expiry of the Guarantee Period, MMHE shall return the Guarantee Bond to the SUBCONTRACTOR.

(d) Failure by the SUBCONTRACTOR to provide the Guarantee Bond in accordance with this clause shall be treated as breach of a fundamental term of the SUBCONTRACT.

(e) In the event that SUBCONTRACTOR intent to provide cash deposit in lieu of the Guarantee Bond as required under this sub-clause, SUBCONTRACTOR shall request MMHE in writing at least six (6) months prior to commencement of Guarantee Period. In lieu of the Guarantee Bond, a five percent (5%) of the total SUBCONTRACT PRICE shall be deducted from the progress claim by SUBCONTRACTOR or from any subsequent claims until the amount of the Guarantee Bond is reached.

16. PAYMENTS

16.1 Timing and Method of Payment

Subject to other provisions in this SUBCONTRACT, MMHE shall make progress payments by Telegraphic Transfer remittance (unless otherwise stated) within the time stated in Appendix 1: [Summary of SUBCONTRACT] after the receipt of an undisputed invoice by MMHE’s finance department in a sum equal to the net value certified by MMHE’s Site Representative.

16.2 Invoicing

(a) The SUBCONTRACTOR shall be entitled to progress payments for the WORK carried out under this SUBCONTRACT as identified and set out in Section 2 – Schedule of Compensation based on:

(i) Monthly assessment of the progress of the WORK properly executed and certified by MMHE; and/or

(ii) Completion of defined stages and upon achieving pre-defined and agreed Milestones for the performance of the WORK as certified by MMHE.

(b) Where the progress payment is to be based on monthly assessment of the progress, the amount to be paid shall be calculated based on the percentage of the WORK or part thereof carried out and certified by MMHE as being complete under this SUBCONTRACT. At MMHE’s sole discretion,



MMHE may use the WORK progress plan to calculate the percentage of the WORK carried out and completed or part thereof.

(c) Where payment is to be based on pre-defined and agreed milestones, then the amount to be paid shall be calculated in accordance to achievement of the relevant milestone as certified by MMHE as being completed.

(d) Invoices shall clearly include at least the following information. MMHE reserves the right to disregard invoices submitted with insufficient information.

(i) Service Order number

(ii) Project name

(iii) Name of SUBCONTRACTOR’s bank

(iv) Bank’s branch name

(v) Bank's full address

(vi) Account number

(e) MMHE reserves the right to reject any further invoice submitted by the SUBCONTRACTOR three (3) months after the completion of the WORK.

16.3 Direct Payment to Suppliers or Employees

SUBCONTRACTOR hereby covenants that progress payments received from MMHE under this SUBCONTRACT shall be promptly used to pay its suppliers or employees (“Payees”) who have performed work or supplied materials that form part of the WORK. In the event that SUBCONTRACTOR’s Payees complain to MMHE about non-payment for work properly performed or materials delivered, MMHE may at any time request SUBCONTRACTOR to furnish reasonable proof within 7 days that payments due to its Payees have been properly discharged and to co-operate with MMHE and/or its own suppliers or employees to resolve the matter so that regular progress of the WORK under the SUBCONTRACT is not affected. If SUBCONTRACTOR has any reasons for withholding payments to its Payees it shall write to MMHE detailing the reasons. Correspondingly, SUBCONTRACTOR consents to MMHE making enquiry or requesting further information from SUBCONTRACTOR’s Payees to ascertain whether SUBCONTRACTOR's non-payment is justified. In the event SUBCONTRACTOR failed to furnish proof of payment requested or is ascertained by MMHE to be in non-compliance with regard to its payment obligations under this provision, SUBCONTRACTOR consents to MMHE making direct payments to its Payees to resolve the non-compliance and deduct the same from any payments due to SUBCONTRACTOR.

17. SUSPENSION

17.1 MMHE's Right to Suspend

MMHE shall have the right at any time to suspend without cause all or any part of the SUBCONTRACT by giving the SUBCONTRACTOR a written notice specifying the part of the SUBCONTRACT to be suspended.



17.2 Suspension for Default

(a) In the event MMHE issues a suspension notice for reason of default pursuant to Clause 18:[Default of the SUBCONTRACTOR], the suspension notice shall include reasons for such issuance and shall also outline the steps to be taken by the SUBCONTRACTOR to rectify the situation within a specified period.

(b) The SUBCONTRACTOR shall be considered in default of its obligations until the situation has been remedied to the satisfaction of MMHE and MMHE may, in addition to and without any prejudice to any other rights it may have, exercise its rights under Clause 19:[Discontinuance and Termination].

(c) Upon receipt of such suspension notice as referenced in Sub-Clause 17.1:[ MMHE's Right to Suspend] hereof, the SUBCONTRACTOR shall, unless the notice otherwise requires:

(i) immediately discontinue performance of the SUBCONTRACT on the date and to the extent specified in the notice;

(ii) In such event, the SUBCONTRACTOR shall be liable for all costs and expenses incurred by MMHE as a result of the suspension.

(iii) place no orders and make no further subcontracts with respect to the suspended portion of the SUBCONTRACT other than to the extent required in the notice;

(iv) promptly make every reasonable effort to obtain suspension upon terms satisfactory to MMHE of all outstanding orders and subcontracts to the extent they relate to the execution of the portion of the SUBCONTRACT suspended;

(v) continue to maintain such portion of the SUBCONTRACT that has been carried out;

(vi) use its best efforts to minimise the costs associated with the suspension.

(vii) continue to perform all unsuspended parts of the SUBCONTRACT.

(d) No payment shall be made to the SUBCONTRACTOR in the event that MMHE suspends the performance of the SUBCONTRACT pursuant to Clause 18:[Default of the SUBCONTRACTOR].

17.3 Suspension for Non-Default

In the event that MMHE suspends the performance of the SUBCONTRACT for reasons other than under Clause 18:[Default of the SUBCONTRACTOR], or Clause 22:[Force Majeure], MMHE shall authorise a Variation Order to cover the following:

(a) the cost of keeping all facilities, Constructional Plant and personnel dedicated to the part of the SUBCONTRACT suspended to the extent that the SUBCONTRACTOR is unable to redeploy such resources during the period of suspension;

(b) standby fees, where applicable, for all facilities, Constructional Plant and personnel of the SUBCONTRACTOR authorised in advance by MMHE to be on standby;

(c) other items directly related to the suspended part of the SUBCONTRACT, if authorised in advance by MMHE; and



(d) any changes to the Completion Date.

17.4 Continuing Obligations and Rights

In the event of suspension of the whole or part of the WORK, the SUBCONTRACTOR shall not be relieved of any continuing obligations or liabilities under the provisions of the SUBCONTRACT, nor does it affect any statutory or other legal rights of MMHE or the SUBCONTRACTOR.

17.5 Resumption

(a) MMHE may at any time, by giving written notice to the SUBCONTRACTOR specifying the part of the WORK to be resumed and the effective date of such resumption, authorise the SUBCONTRACTOR to resume all or any part of the WORK suspended.

(b) The SUBCONTRACTOR shall resume the performance of the WORK on the date fixed in such written notice from MMHE to the extent required in the notice.

(c) Provided that if the suspension period exceeds thirty (30) consecutive days, MMHE shall give notice of not less than twenty five (25%) per-centum of the suspension period prior to the effective date of resumption.

17.6 Suspension Over 90 Days

If any period of suspension exceeds ninety (90) consecutive days, the SUBCONTRACTOR may require MMHE to:

(a) terminate the SUBCONTRACT, or

(b) discontinue the suspended part of the WORK, or

(c) notify the SUBCONTRACTOR of the date the suspension shall be lifted.

18. DEFAULT OF THE SUBCONTRACTOR

The SUBCONTRACTOR shall be in default of the SUBCONTRACT upon the occurrence of any of the following events:

(a) non-delivery of WORK.

(b) the refusal or the inability or other failure of the SUBCONTRACTOR to:

(i) where applicable, perform any part of the SUBCONTRACT in a safe, efficient, workmanlike, skilful and careful manner or with the required promptness or diligence, or

(ii) comply with any one of the requirements of the SUBCONTRACT.

(c) The SUBCONTRACTOR or the provider of any guarantee pursuant to this SUBCONTRACT becoming bankrupt or making a composition arrangement with its creditors or having a winding-up order made or (except for the purposes of amalgamation or reconstruction) a resolution for voluntary winding-up passed or having a provisional Liquidator, Special Administrator, Receiver or Manager of its business or undertaking appointed, or having possession taken by or on behalf of the holders of any debenture, whether secured by a Floating Charge or otherwise.



19. DISCONTINUANCE AND TERMINATION

19.1 Termination

(a) MMHE shall, subject to SUBCONTRACTOR's right to payments described below, have the right at any time and at its absolute discretion to summarily terminate the SUBCONTRACT by giving the SUBCONTRACTOR written notice to such effect.

(b) Without prejudice to the right of summary termination described above, MMHE may, in the event of any default under Clause 18:[Default of the SUBCONTRACTOR], if it is of the reasonable opinion that the default is capable of being remedied, give written notice stating the details of such default and require the SUBCONTRACTOR to remedy the default within seven (7) days.

(c) If the SUBCONTRACTOR does not within the seven (7) days commence, and having commenced, continuously proceed with action satisfactory to MMHE to remedy such default, MMHE may, at its option and regardless of the stage of completion of the WORK, notify the SUBCONTRACTOR of any claim which MMHE may have hereunder, and MMHE shall have the right to issue a notice of discontinuance of part of the WORK, or terminate the SUBCONTRACT, or issue a notice of suspension, at the sole discretion of MMHE.

(d) If the Main Contract is terminated, this SUBCONTRACT shall be terminated automatically. MMHE shall immediately confirm the termination of SUBCONTRACTOR under this SUBCONTRACT in writing.

19.2 Discontinuance

Notwithstanding the foregoing, MMHE shall have the right at any time and at its absolute discretion to discontinue part or the whole of the WORK by giving the SUBCONTRACTOR prior written notice to the effect.

19.3 Consequences of Notice

Any written notice of discontinuance or termination described above shall become effective immediately upon delivery of the notice to the SUBCONTRACTOR, or on such later date as may be specified in the notice, whereupon the SUBCONTRACTOR at such date shall immediately:

(a) discontinue the WORK or part of the WORK as specified in the notice;

(b) allow MMHE or its nominee full right of access to the worksite so as to remove and/or take over the performance of the WORK as may be applicable or the relevant part of the WORK so far completed and to remove and/or take over possession of all WORK in connection with all or part of the SUBCONTRACT and to allow MMHE to obtain completion by another SUBCONTRACTOR;

(c) assign to MMHE or its nominee, to the extent desired by MMHE, all or any rights, titles and commitments relating to the SUBCONTRACT which the SUBCONTRACTOR has acquired vis-a-vis third parties;

(d) remove all WORK of the SUBCONTRACTOR (where ownership has not passed to MMHE) unless otherwise required by MMHE;

(e) deliver to MMHE within thirty (30) days of said notice all plans, mark-up, schedules, drawings and all other data prepared by the SUBCONTRACTOR in connection with the SUBCONTRACT subject to Clause 4:[Licences, Permits, Laws and Regulation];



(f) take all such further steps as are necessary to enable MMHE or its nominee to take over the SUBCONTRACTOR's position in the performance of the SUBCONTRACT with the least possible disruption, all in accordance with MMHE’s Site Representative instructions.

19.4 Payments in the Event of Discontinuance or Termination for Default

In the event of MMHE giving the SUBCONTRACTOR notice of discontinuance or termination pursuant to Clause 18:[Default of the SUBCONTRACTOR], MMHE shall pay to the SUBCONTRACTOR only the amount calculated in accordance with Section 2 – Schedule of Compensation for the part of the WORK satisfactorily completed and accepted at the date of the discontinuance or termination, which payment shall be reduced by:

(a) any additional costs incurred by MMHE as a result of the default of the SUBCONTRACTOR,

(b) any costs incurred by MMHE in having the SUBCONTRACT completed by another SUBCONTRACTOR in excess of the amount provided in the SUBCONTRACT.

19.5 Payments in the Event of Discontinuance or Termination for Non-Default

In the event that MMHE discontinues part of, or terminates, the SUBCONTRACT for reasons other than default of the SUBCONTRACTOR, MMHE shall pay to the SUBCONTRACTOR only the following:

(a) the amount calculated in accordance with Section 2 – Schedule of Compensation, for the part of the WORK completed to the satisfaction of MMHE up to the time of discontinuance or termination;

(b) the cost of cancellation of any commitments necessarily entered into in the execution of the SUBCONTRACT and for which MMHE has given its approval and which cannot be used or employed on any other task or assigned to MMHE in the manner set out above;

(c) the actual cost necessarily incurred by the SUBCONTRACTOR to hand over any work in progress and completed parts of the WORK in accordance with MMHE's instructions;

(d) the amount MMHE would have had to pay, pursuant to the SUBCONTRACT if any, for the services of each individual assigned to the SUBCONTRACT or part thereof as applicable, for up to four (4) calendar weeks following the effective date of discontinuance of part of the SUBCONTRACT or of termination of the SUBCONTRACT. This sum shall only be payable if, or to the extent that, such personnel cannot be allocated to other work by the SUBCONTRACTOR.

(e) the demobilisation fee, if any, on termination of the SUBCONTRACT, or a pro-rated portion relating to the discontinued part on discontinuance of part of the SUBCONTRACT, all in accordance with Section 2 – Schedule of Compensation.

19.6 SUBCONTRACTOR's Continuing Obligations

In the event of discontinuance of part of, or termination of, the SUBCONTRACT the SUBCONTRACTOR shall not be relieved of any continuing obligations or liabilities under the provisions of the SUBCONTRACT, nor does it affect any statutory or other legal rights of MMHE or the SUBCONTRACTOR.



20. RISK AND RESPONSIBILITY

20.1 Liability for MMHE Property and Personnel

(a) SUBCONTRACTOR shall be liable for, and shall at all times fully and effectively indemnify and keep indemnified MMHE against all loss or damage to property of MMHE, Client Group or third parties and against all costs, claims, actions, proceedings or demands arising out of any such loss or damage occasioned by any act, neglect, omission or default of SUBCONTRACTOR, his employees, agents or vendors in or about or in any way arising out of and incidental to the execution of the SUBCONTRACT whether or not MMHE contributed to or was in anyway partly attributable for the loss or damage.

(b) SUBCONTRACTOR shall be liable for the due payment of any losses damages or compensation legally payable in respect of or in consequence of death, injury or disease to any person employed by SUBCONTRACTOR or his vendors and shall indemnify and keep indemnified MMHE and Client Group against all claims, demands, proceedings, costs, charges and expenses in connection therewith whether or not MMHE contributed to or was in anyway partly attributable for the death, injury or disease.

20.2 Liability of SUBCONTRACTOR Property and Personnel

(a) MMHE shall be liable for, and shall at all times fully and effectively indemnify and keep indemnified SUBCONTRACTOR against all loss or damage property of SUBCONTRACTOR and against all costs, claims, actions, proceedings or demands arising out of any such loss or damage occasioned by any act, neglect, omission or default of MMHE, his employees, agents or his subcontractors in or about or in any way arising out of and incidental to the execution of the SUBCONTRACT whether or not SUBCONTRACTOR contributed to or was in anyway partly attributable for the loss or damage.

(b) MMHE shall be liable for the due payment of any losses damages or compensation legally payable in respect of or in consequence of death, injury or disease to any person employed by MMHE or his CONTRACTORs and shall indemnify and keep indemnified SUBCONTRACTOR against all claims, demands, proceedings, costs, charges and expenses in connection therewith whether or not SUBCONTRACTOR contributed to or was in anyway partly attributable for the death, injury or disease.

20.3 Consequential Damages

Neither MMHE nor SUBCONTRACTOR shall be liable to the other by way of indemnity or by reason of any breach of the contract or of statute, tort (including but not limited to negligence) for any loss of profit, loss of use, loss of production, loss of contracts, loss of revenues or of anticipated savings, any increase in operating costs, or for any financial or economic loss or for any indirect or consequential damage whatsoever that may be suffered by the other.

20.4 Intellectual and Industrial Property Rights

(a) "Intellectual Property” means all intellectual and industrial property including, without limiting the generality of the foregoing, any patent, patent application, trade mark, trade mark application, registered design, registered design application, trade name, trade secret, business name, discovery, invention, process, formula, know-how, rights of confidence, improvement, technique, copyright including rights in computer software, unregistered design right, technical information or drawing, and database



and topography rights, and rights in the nature of unfair competition and rights to sue in passing off.

(b) Each Party shall indemnify and keep indemnified the other Party and or Client and its affiliates against all claims, liabilities, proceedings, costs, damages, losses and expenses (including legal expenses) incurred or suffered by the indemnified Party and or Client in relation to the infringement or alleged infringement of any third party's Intellectual Property under this SUBCONTRACT.

(c) Each of the Parties warrant that, each of the Party's respective existing background intellectual property information disclosed to each other does not infringe any third party patent, registered design, trademark or name, copyright or other third party protected right. The Party being in breach of such warranty indemnifies and holds harmless the other Party for any loss or damage the other Party may suffer as a result of such breach.

20.5 Computer Software

(a) SUBCONTRACTOR shall comply with the Malaysian Copyright Act 1987 including any subsequent amendments to or re-enactments of the said Act. The

SUBCONTRACTOR shall ensure that any software provided and installed by the SUBCONTRACTOR used in connection with the WORK, either used on MMHE’s IT equipment or SUBCONTRACTOR’s IT equipment, must have a valid license for such software prior to the installation and use.

(b) SUBCONTRACTOR shall maintain accurate and up-to-date records of all software provided, downloaded or installed by the SUBCONTRACTOR on SUBCONTRACTOR's IT equipment. SUBCONTRACTOR, while working at Site, shall adhere to the software licensing requirement and update their software(s) inventory and licenses on a regular basis in compliance to rules.

(c) The SUBCONTRACTOR shall save, indemnify, defend and hold harmless MMHE from all claims, losses, damages, costs (including legal costs on a solicitor and client basis), expenses, and liabilities of every kind and nature for, or arising out of, any alleged or actual infringement of unlicensed software, arising out of or in connection with the performance of the obligations of the SUBCONTRACTOR under the SUBCONTRACT.

21. INSURANCE

21.1 SUBCONTRACTOR's Duty to Insure

(a) Without prejudice to the SUBCONTRACTOR liabilities under the SUBCONTRACT, the SUBCONTRACTOR shall, at its own cost, obtain and maintain or cause to be obtained and maintained policies of insurance satisfactory and acceptable to MMHE the following insurance, with limits not less than, and coverage not inferior to, those specified below in connection with the performance of the WORK:

(i) Workmen's Compensation and/or Employer's Liability Insurance covering adequately the employees, servants and agents of the SUBCONTRACTOR shall be provided by SUBCONTRACTOR as set forth in Sub-Clause 21.10.

(ii) Insurance against all risks of physical loss or damage covering all property of the SUBCONTRACTOR, including Constructional Plant, marine vessels, hull and machinery, where applicable, whether owned, hired or leased in the amount of the full replacement value



thereof including but not limited to the risks of riots, strikes and civil commotions.

(iii) Any other Insurance(s) which may be relevant and/or necessary and/or as may be required by any law(s) to which the SUBCONTRACTOR are subject.

(b) Such insurance shall be obtained and maintained in full force and effect throughout the term of this SUBCONTRACT and any extensions and changes thereof.

(c) MMHE shall not be obliged to make any payments to SUBCONTRACTOR under the SUBCONTRACT before it receives the insurance as required under the SUBCONTRACT and has satisfied itself that insurance is in accordance with the requirements of the SUBCONTRACT.

21.2 SUBCONTRACTOR Responsibility for Deductibles, etc

All deductibles, exceptions and exclusions applicable to any insurance arranged by the SUBCONTRACTOR shall be for the account of, and be paid by the SUBCONTRACTOR.

21.3 Non-Compliance with Insurance Terms

In the event of breach or non-compliance by the SUBCONTRACTOR with any term, condition or warranty contained in any insurance arranged by MMHE previously advised to the SUBCONTRACTOR, in consequence of which the insurers do not indemnify for loss, damage or liability, then the SUBCONTRACTOR shall be responsible for the unindemnified loss, damage or liability.

21.4 Co-insured, Waiver of Subrogation and Cross Liability

The SUBCONTRACTOR shall cause MMHE and Client to be co-insured and to benefit from the foregoing insurance to the extent of this SUBCONTRACT and shall cause the insurers thereof to waive any and all liens and rights of subrogation against MMHE and Client. The SUBCONTRACTOR shall further cause the insurers to include a cross-liability provision in the foregoing insurance.

21.5 Claims Handling

Notice, followed by full details, of any incident or occurrence whether or not giving rise to a valid claim under the insurance above shall be given by the SUBCONTRACTOR to MMHE in accordance with the HSE Incident Procedure of the Client. Thereafter, the SUBCONTRACTOR shall handle the claim directly with the insurers and shall always act in the best interests of MMHE and Client.

21.6 Certificate of Insurance

(a) Prior to commencement of WORK and at any other time upon request, the SUBCONTRACTOR shall furnish to MMHE original Certificates of Insurance evidencing:

(i) types, coverage, effective and expiration dates of insurance policy;

(ii) territorial limits include all locations where WORK is to be carried out;

(iii) compliance with Co-insured, Waiver of Subrogation and Cross Liability;

(iv) full payment of premium;



(v) that the Insurer shall give a thirty (30) day prior written notice to MMHE before any material amendment to, or cancellation of, the insurance policy.

(b) The furnishing of Certificate of Insurance or other documents of insurance shall not be interpreted as implying that MMHE assumes responsibility for the correctness of such policies or documents or that the SUBCONTRACTOR has complied with its other obligations contained in this SUBCONTRACT or relieve the SUBCONTRACTOR of any obligation or liability under the SUBCONTRACT.

21.7 Failure to Insure

Refusal to take out or failure to maintain the necessary insurance by the SUBCONTRACTOR shall be deemed a default of the SUBCONTRACTOR.

(a) Under such circumstances, without prejudice to the rights and remedies of MMHE under this SUBCONTRACT, MMHE shall have the right, but not any obligation, to procure such insurance policies as set out above.

(b) MMHE shall be entitled to recover from the SUBCONTRACTOR all costs incurred plus an additional 2.5% as handling charges.

21.8 Construction All Risks (C.A.R.) Insurance arranged by the Client

(a) Without limiting or waiving the SUBCONTRACTOR’s responsibility under the SUBCONTRACT, the Client will at its own costs obtain and maintain in full force and effect from the Effective Date throughout the term of this SUBCONTRACT, and any extensions or changes thereof, a C.A.R. Insurance.

(i) The SUBCONTRACTOR shall not include a cost for C.A.R. Insurance in the SUBCONTRACT PRICE.

(ii) The C.A.R. Insurance shall be arranged in the name of the Client and shall include as "other assureds" MMHE and any CONTRACTORs and others who have entered into agreements for the performance of this SUBCONTRACT.

(iii) The C.A.R. Insurance shall apply in excess of any other insurance required of the SUBCONTRACTOR under this clause.

(iv) All deductibles, exceptions and exclusions applicable to the C.A.R Insurance policy arranged by Client resulting from any claims made against such policy shall be for the account of, and be paid by the SUBCONTRACTOR.

(b) All communication in respect of the C.A.R. Insurance shall be addressed to MMHE in the first instance.

(c) The arrangement of the C.A.R. Insurance by the Client shall not be construed as limiting the SUBCONTRACTOR's liabilities in the SUBCONTRACT or guaranteeing payment of claims by the C.A.R. insurers.

21.9 General Liability Insurance

Public Liability Insurance providing an indemnity of a minimum sum of RM1,000,000.00 for any or all persons injured or killed and for loss of or damage to any properties including those belonging to third parties.



21.10 Workmen's Compensation and/or Employer's Liability Insurance

Workmen’s Compensation Insurance or similar statutory social insurance in accordance with the law which may be applicable to the said employees including the SUBCONTRACTOR’s liability under Common Laws. Such insurance policy shall provide an adequate indemnity as required by law and shall take effect immediately.

22. FORCE MAJEURE

22.1 Non-Liability, Payment and Price

(a) Neither MMHE nor the SUBCONTRACTOR shall be liable one to the other for any delay or failure to perform its obligations under the SUBCONTRACT where and to the extent such delay or failure is caused by Force Majeure.

(b) Force Majeure occurrences shall not be just cause for non-payment of monies due under the SUBCONTRACT for work performed and/or completed in accordance with the SUBCONTRACT, not affected by the Force Majeure occurrence.

(c) Under no circumstances shall the SUBCONTRACT PRICE be increased to include for the financial impact on either Party of any Force Majeure occurrence.

22.2 Definition of Force Majeure

(a) Force Majeure events shall be events beyond the control of the Parties or either of them and shall include, but not be limited to:

(i) Acts of God or force of nature,

(ii) landslide, lightning, earthquake, flood,

(iii) fire, explosion,

(iv) unusually severe weather during the period in question,

(v) act of war (declared or undeclared) of public enemy,

(vi) strikes, boycotts, lockouts or other labour disturbance (excluding those solely amongst employees of the SUBCONTRACTOR),

(vii) act or omission of sovereign or those purporting to represent sovereign states,

(viii) blockade, embargo, quarantine, public disorder, sabotage and acts of terrorists.

(b) However, Force Majeure shall not include the following:

(i) Late delivery of Materials caused by congestion at a supplier's plant or elsewhere, or oversold condition of the market, inefficiencies, or similar occurrences;

(ii) Late performance by SUBCONTRACTOR caused by a shortage of supervisors or labour, inefficiencies, or similar occurrences; unless caused by circumstances that are themselves Force Majeure events which are beyond both the SUBCONTRACTOR control;

(iii) Mechanical breakdown of any item of the SUBCONTRACTOR's, SUBCONTRACTOR's equipment, plant or machinery;



(iv) Contractual commitment made by the SUBCONTRACTOR to third parties which limits the SUBCONTRACTOR's ability to provide materials or Constructional Plant;

(v) Financial distress of the SUBCONTRACTOR;

(vi) Cumulative effect of recurring weather over time, including but not limited to excessive cumulative rainfall and/or period of high relative humidity.

22.3 Procedure on Force Majeure

(a) On the occurrence of an event of Force Majeure the party claiming to be affected thereby shall:

(i) immediately notify the other party, giving full particulars thereof;

(ii) use its best endeavours to remedy such failure of fulfilment with all reasonable dispatch;

(iii) mitigate its losses arising from the effects of such Force Majeure;

(iv) keep the other party fully advised of the progress being made in such efforts;

(v) upon the cessation of such Force Majeure, to give notice as soon as it is practicable to do so; and

(vi) upon the cessation of such Force Majeure, to resume its obligations under the SUBCONTRACT.

(b) Unless otherwise agreed by the Parties, the Party affected by Force Majeure shall give notice of a period not less than 7 days before requiring the other Party to resume its obligation under the SUBCONTRACT.

(c) Unless otherwise agreed by the parties, if an event of Force Majeure continues for a continuous period of more than 2 years, this SUBCONTRACT shall be deemed to have been mutually terminated and the provisions relating to payment under Sub-Clause 19.5:[Payments in the event of Discontinuance or Termination for non-Default] shall apply.

23. GOVERNING LAW AND DISPUTE RESOLUTION

23.1 Governing Law

This SUBCONTRACT shall be governed by and construed in accordance with the laws of Malaysia.

23.2 Arbitration

(a) All disputes, controversies or claims arising out of or in connection with this SUBCONTRACT or the breach, termination or invalidity thereof shall be finally settled by arbitration in accordance with the rules of the Regional Centre for Arbitration, Kuala Lumpur before a panel of three (3) arbitrators. The place of arbitration shall be Kuala Lumpur and the language of arbitration shall be English.

(b) Pending the resolution of any disputes, controversies or claims arising out or relating to this SUBCONTRACT, the SUBCONTRACTOR shall perform and/or continue performing all its obligations specified in the SUBCONTRACT.



24. AUDIT

24.1 Scope of Audit

Without prejudice to any other audit rights provided for elsewhere in this SUBCONTRACT, MMHE shall have the right to audit the following matters:

(a) Payments made to the SUBCONTRACTOR

(b) WORK delivered by the SUBCONTRACTOR

(c) Performance of the SUBCONTRACT by the SUBCONTRACTOR

(d) Health, Safety and Environment requirements

(e) Information security and confidentiality

(f) Business ethics

(g) Conflict of interest

(h) Permits, laws and regulations

(i) Quality assurance system

(j) Technical capabilities of all parties supplying WORK and/or performing the SUBCONTRACT.

(k) Supply of goods and services on a reimbursable basis: the entire process from tender to award to contract close-out, including details of all payments to vendors.

24.2 Retention of Records

The SUBCONTRACTOR shall maintain and shall cause its agents, suppliers and consultants to maintain accurate and correct records of all charges and accounts including gifts and entertainment expenses in connection with the SUBCONTRACT and all transactions related thereto and shall retain all such records and accounts for a period of not less than thirty-six (36) months after the final payment under the SUBCONTRACT or expiry or termination of the SUBCONTRACT whichever is later.

24.3 Inspection and Reproduction of Records

(a) From the Effective Date of the SUBCONTRACT until the time period specified above, MMHE shall have the right and access at all reasonable times, to inspect and audit the records, and interview any staff of the SUBCONTRACTOR, agents, suppliers and consultants which are deemed by MMHE to be directly pertinent to the correctness of any documents relating to the audit rights described above, and to verify compliance to the SUBCONTRACT terms and conditions.

(b) MMHE shall have the right to reproduce and retain any such records.

24.4 Claims for Omissions, Corrections or Errors

A written response to MMHE's claims for omissions, corrections or errors in charges and credits for MMHE's account shall be made by the SUBCONTRACTOR as soon as practicable, and in no event, later than thirty (30) days from the date of such claims, failing which MMHE's claim shall be deemed to be correct and final.



25. MISCELLANEOUS PROVISIONS

25.1 Entire Contract

Without prejudice and subject to the provision of the Main Contract, this SUBCONTRACT constitutes the entire agreement between MMHE and SUBCONTRACTOR and supersedes all prior negotiations, representations or agreements related to this SUBCONTRACT either written or oral except to the extent they are expressly incorporated.

25.2 Waiver

Any failure on the part of MMHE or SUBCONTRACTOR at any time or from time to time to enforce or require the strict adherence and performance of any of the terms or conditions of this SUBCONTRACT shall not constitute a waiver of such terms or conditions in any way or the right of MMHE or SUBCONTRACTOR at any time to avail itself of such remedies as it may have for any breach or breaches of such terms or conditions.

25.3 Severability

If any one or more of the provisions contained in this SUBCONTRACT or any document executed in connection herewith shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired.

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... APPENDIX 1 – SUMMARY OF SUBCONTRACT


SECTION 1

GENERAL CONDITIONS OF SUBCONTRACT APPENDIX 1 – SUMMARY OF SUBCONTRACT

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... APPENDIX 1 – SUMMARY OF SUBCONTRACT PAGE 1 OF 1


APPENDIX 1 – SUMMARY OF SUBCONTRACT

SUMMARY OF SUBCONTRACT

The descriptions stated in the table below are not comprehensive and reference shall be made to all the provisions of this SUBCONTRACT.

1. Subcontract Reference No. ●

2. Overall Project

3. Title of Works

4. Name of Client

5. Performance Bond A bank guarantee equivalent to 10% of the SUBCONTRACT PRICE shall be provided by SUBCONTRACTOR as the Performance Bond.

6. Effective Date dd/mm/yy

7. Completion Date dd/mm/yy

8. Liquidated Damages 0.16 % per calendar day up to a maximum of 10% of SUBCONTRACT PRICE.

9. Terms Of Payment 30 days from date MMHE receives the proper invoice.

10. Progress Payment Progress payments invoicing shall be based on:

1. Monthly Progress:

Comprising Ninety percent (90%) of the SUBCONTRACT PRICE.

2. Milestones:

Balance Ten percent (10%) of the SUBCONTRACT PRICE by milestones for QA and HSE as provided in the Subcontract under Section 5 – Administration Procedures.

11. Guarantee Period As provided in Sub-Clause 15.2.

12. Guarantee Bond As provided in Sub-Clause 15.9.

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: .....................


SECTION 1

GENERAL CONDITIONS OF SUBCONTRACT APPENDIX 2 - PERFORMANCE BOND FORM

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... APPENDIX 2 - PERFORMANCE BOND FORM PAGE 1 OF 3


APPENDIX 2 - PERFORMANCE BOND FORM

To :

Malaysia Marine And Heavy Engineering Sdn Bhd (hereinafter referred to as “MMHE”), a

company incorporated under the laws of Malaysia and having its registered office at Level 31

Menara Dayabumi, Jalan Sultan Hishamuddin, 50050 Kuala Lumpur, Malaysia.

WHEREAS:

a) This Guarantee is supplemental to Contract No. …………………. for ………… dated

…….. (hereinafter called the “SUBCONTRACT”) made between ……… (hereinafter

referred to as “the SUBCONTRACTOR”) of the one part and MMHE of the other part;

b) One of the expressed conditions of the SUBCONTRACT is the receipt by MMHE of this

Guarantee duly executed by ……………………… (hereinafter referred to as “ the

Guarantor” ) whose registered address is at …………………………..;

c) The Guarantor agrees to guarantee the due performance of the SUBCONTRACT by the

SUBCONTRACTOR in the manner hereinafter appearing.

NOW THEREFORE the Guarantor hereby irrevocably and unconditionally guarantees and

undertakes to MMHE as follows:

(1) If the SUBCONTRACTOR shall in any respect fail to execute the SUBCONTRACT or

shall commit any breach of his obligations in accordance with the requirement of the

SUBCONTRACT, the Guarantor shall indemnify MMHE against all losses, damages,

costs and expenses which may be incurred by MMHE by reason of any default on the

part of the SUBCONTRACTOR in performing and observing the SUBCONTRACT and

provisions on his part contained in the SUBCONTRACT PROVIDED ALWAYS that the

liability of the Guarantor to indemnify MMHE as aforesaid shall not exceed the sum of

………… (hereinafter referred to as “the Guaranteed Sum” ).

(2) The Guarantor further covenants and agrees that the Guarantor shall pay to MMHE

upon receipt of its first written demand without proof or condition, such sums as MMHE

may certify being indemnification against any loss, damage, cost or expenses incurred

by MMHE by reason of any default or breach on the part of SUBCONTRACTOR of its

obligations under the SUBCONTRACT, within fourteen (14) days after receipt of the



said demand notwithstanding any contestation or protest by the SUBCONTRACTOR or

other third party.

(3) This Guarantee is a continuing security and accordingly shall remain in force and

effective from ……. until …….. All claims if any, in respect of this Guarantee must be

received by the Guarantor in writing on or before .............. (hereinafter referred to as

the “Expiry Date”) i.e. within 3 months after the expiry of the Guarantee, failing which

all the Guarantor’s liabilities and obligations hereunder shall be absolved and this

Guarantee shall be automatically be terminated and shall be null and void and of no

further effect whatsoever irrespective of whether or not this Guarantee is returned to the

Guarantor for cancellation.

(4) The Guarantor shall not be discharged or released from this Guarantee by any

arrangement between the SUBCONTRACTOR and MMHE with or without the consent

of Guarantor or by any alteration in the obligations undertaken by the

SUBCONTRACTOR or by any forbearance whether as to payment, time, performance

or otherwise, or by any change in name of constitution of MMHE or the

SUBCONTRACTOR.

(5) The Guarantor agrees that the Guarantee is given regardless of whether or not the sum

outstanding occasioned by the loss, damages, costs, expenses or otherwise incurred by

MMHE is recoverable by legal action or arbitration.

(6) This Guarantee cannot be assigned or transferred or dealt with without the prior written

consent of the Guarantor.



(7) This Guarantee shall be governed by and construed in accordance with the laws of

Malaysia and all parties agree to submit to the exclusive jurisdiction of the courts of

Malaysia.

IN WITNESS whereof this Guarantee has been duly executed by the Guarantor the

…………. day of …………, 2012…. for and on behalf of ………………….

Signed by:

……………………………………………..

Name :

Title:

Date:

Witnessed by :

………………………………………………

Name:

Title:

Date:

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... APPENDIX 3 – CERTIFICATE OF COMPLETION


SECTION 1

GENERAL CONDITIONS OF SUBCONTRACT APPENDIX 3 - CERTIFICATE OF COMPLETION

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... APPENDIX 3 – CERTIFICATE OF COMPLETION PAGE 1 OF 1


APPENDIX 3 - CERTIFICATE OF COMPLETION

SUBCONTRACTOR : _________________________________

SUBCONTRACT Reference : _________________________________

SUBCONTRACT Description : _________________________________

Pursuant to SUBCONTRACT, Clause 11 of the Conditions of Subcontract, MMHE hereby issues this Certificate of Completion. In this respect, MMHE accepts on [dd/mm/yy], (SUBCONTRACT designation) was substantially completed, and as of this date the outstanding punchlist items have also been substantially completed, except for items as per the attachment to this Certificate. The issue of this Certificate of Completion shall not be construed as MMHE’s concurrence that the work or any positions thereof, fully conform to the SUBCONTRACT requirements. For and On behalf of MMHE Signed: ) ............................................... Name: ) ............................................... Position: ) ............................................... Date: ) ............................................... For and On behalf of SUBCONTRACTOR Signed: ) ............................................... Name: ) ............................................... Position: ) ............................................... Date: ) ...............................................

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... APPENDIX 4 – CONTRACT CLOSURE LETTER


SECTION 1

GENERAL CONDITIONS OF SUBCONTRACT APPENDIX 4 - SUBCONTRACT CLOSURE CERTIFICATE

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... APPENDIX 4 - CONTRACT CLOSURE CERTIFICATE PAGE 1 OF 1


APPENDIX 4 - SUBCONTRACT CLOSURE CERTIFICATE

With reference to SUBCONTRACT No :……………………. dated ……………………………between …………………………………………………………….(hereinafter called "SUBCONTRACTOR") and MALAYSIA MARINE AND HEAVY ENGINEERING SDN BHD (hereinafter called "MMHE") for _____________________________________________ (title of SUBCONTRACT) …………………………………………………………………………………………….

In consideration that the MMHE has approved the final SUBCONTRACT PRICE of (Ringgit Malaysia : ………………………………………………………………………………………….) as stated in the attached Final Official Variation Order No. : ……………………….. dated ……………….., the SUBCONTRACTOR hereby unconditionally releases and forever discharges MMHE and MMHE's premises and property from all claims, liens and obligations of every nature arising out of or in connection with the performance of the SUBCONTRACT and all amendments thereto.

As additional consideration for the final payment, the SUBCONTRACTOR agrees to indemnify and hold MMHE harmless from and against all costs, losses, damages, claims, causes of action, judgments and expenses, including legal cost arising out or in connection with claims against MMHE which claims arise out of the performance of the WORK under the SUBCONTRACT and which may be asserted by the SUBCONTRACTOR or any of its subcontractors of any tier or any of their representatives, officers, agents or employees.

The foregoing shall not relieve the SUBCONTRACTOR of his obligations under the provisions of the SUBCONTRACT, which by their nature survive completion of the WORK including, without limitation, warranties, guarantees and indemnities.

Executed this ……………. Day of …………………., …………… (year)

For and On behalf of MMHE Signed: ) ............................................... Name: ) ............................................... Position: ) ............................................... Date: ) ............................................... For and On behalf of SUBCONTRACTOR Signed: ) ............................................... Name: ) ............................................... Position: ) ............................................... Date: ) ...............................................

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... APPENDIX 5 - MHB CODE OF CONDUCT AND BUSINESS ETHICS (COBE)


SECTION 1

GENERAL CONDITIONS OF SUBCONTRACT APPENDIX 5 - MHB CODE OF CONDUCT AND BUSINESS

ETHICS (COBE)

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT SUBCONTRACT NO: ..................... APPENDIX 5 - MHB CODE OF CONDUCT AND BUSINESS ETHICS (COBE) PAGE 1 OF 4


APPENDIX 5 – MHB CODE OF CONDUCT AND BUSINESS ETHICS (COBE)

The MHB Code of Conduct and Business Ethics (CoBE) policy are applicable to all MHB’s contractors, sub-contractors, consultants, agents, representatives and other performing work and services for or on behalf of MHB Group of companies. In this regard, MHB expects that such persons and entity will comply with the CoBE in the relevant parts when performing such work and services. In view of the above, please take note that CoBE prohibits any MHB Group employee to have interest in the following forms in any of MHB Group companies’ registered vendor or subcontractor: a) Directorship;

b) Key management position (key management shall include those who are involved in the

tender bidding process and project management);

c) Direct or indirect equity holding. In the event that the contractor is a public listed company, the equity holding shall be greater than 1% with respect to which such employee has the authority to make decision in the course of his/her work at MHB Group.

All registered vendors are required to make a declaration to MHB on the interest of any MHB Group employee in their company in the forms and substances provided in Annex 1 hereto. In conjunction with the adoption of CoBE, 2 new policies has been introduced namely No Gift Policy and Whistleblowing Policy. No Gift Policy is introduced to avoid conflict of interest or the appearance of conflict of interest between employee and external party in the ongoing or potential business dealing. MHB’s No Gift Policy PROHIBITS its employees (including their family/household members and their agents) to provide gifts or to receive gifts from external party. Therefore, we would appreciate that you could refrain from providing gifts to MHB’s employees going forward. Whistleblowing Policy is introduced to provide an avenue for employees and members of the public (including vendors and subcontractors) to report any improper conduct (misconduct or criminal offence) committed or about to be committed within MHB. A Whistleblower will be accorded with protection under the Policy (such as confidentiality of identity) provided that the disclosure is made in good faith.The protection to the Whistleblower can be revoked under the following circumstances, among others:

• the Whistleblower participated in the improper conduct; • the Whistleblower wilfully discloses a false statement; • the disclosure is made with malicious intent; and/or • the disclosure is frivolous or vexatious.



Disclosures can be made to ANY of the following reporting channels, in strict confidential manner:

• Email to [email protected]. • Online submission through website ://www.mhb.com.my/EN/page/governance/ • In writing to MHB Whistleblowing Focal Point, Malaysia Marine and Heavy

Engineering Holdings (MHB), P.O. Box No. 10780,, Pejabat Pos Besar, 50724 Kuala Lumpur

• Hotline at +60 3 2070 0466 from Monday to Friday during office hours (9 am to 5 pm)

The company is also strictly observing the adherence to the MHB 10 Safety Rules of vendors and subcontractors, whereas, any non compliance will be dealt accordingly based on the consequence management guidelines of the company.



[Vendor/Subcontractor letterhead]

To: Malaysia Marine and Heavy Engineering Holdings Berhad (“MHB”) Level 31, Menara Dayabumi

Jalan Sultan Hishamuddin 50050 Kuala Lumpur, Malaysia,

(Attn: [ ]) As part of [Name of Vendor/ Subcontractor (“ “)] compliance with MHB Group’s Code of Ethics and Business Conduct (“CoBE”) and to ensure integrity in all our transactions with MHB Group Companies as required under CoBE, we hereby declare the following information: 1) There are/are no* relatives (up to second degree affiliation) of our key management

working in MHB Group Companies. Details of the above information are as below*:

Name of relatives in

MHB Group Companies

(including name of

Department)

Relationship Position in

Vendor/Subcontractor

Name of

Vendor’s/Subcontractor’s

Key Management

2) There are/ are no* employee(s) of MHB Group Companies (including their

family/household members and agent) who has/have* interest in any of the following

form in our organization:

i) Directorship;

ii) Key management position;

iii) Direct/indirect equity holding (In the event that the vendor/subcontractor is a

public listed company, the equity holding shall be greater than 1% with respect to

which such employee has the authority to make decision in the course of his/her

work at MHB Group Companies).

Details of the above information are as follows*:

Name of MHB Group Companies’ Employees

Name of the Employees' Family/ Household Members or

Form of Interest Details on the Interest

Annex 1



Agent (* delete whichever is not applicable) We confirm that the information declared above are true and accurate and if all or any part of them are found to be untrue, MHB Group shall have the right to deregister our company and thereafter we will not be allowed to participate in any of MHB Group Companies projects, current or proposed. We also understand and accept that MHB Group have the absolute right to reclassify our company in accordance with MHB Group’s classification index. We also undertake to indemnify and hold harmless MHB Group Companies against any and all claims, suits, losses, causes of action, damages, liabilities and expenses of any kind whatsoever arising out of our misrepresentation, inaccuracy and falseness of any information and/or declaration provided herein. We shall inform MHB Group of any future changes on the information declared above failing which MHB Group shall have the right to take action as provided herein.

For and on

behalf

: [Vendor’s/

Subcontractor’s Name]

Witness by,

Signature :

Signature :

Name : [Vendor’s/

Subcontractor’s

authorized person]

Name :

Designation :

Designation :

Company

Stamp

:

Company

Stamp

:

general conditions of subcontract - labour only...

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