Standard Subcontract Form 126i4v

SUBCONTRACT AGREEMENT (Contract No.____________________)

This SUBCONTRACT AGREEMENT (hereinafter referred as “Subcontract”) is made and entered into this ____th day of _______________2007 By and between ___________________________________________________. hereinafter called the “Contractor”, a corporation organized and existing under and by virtue of the laws of the Republic of Korea, duly licensed to do business in the Philippines with principal office address at 1128 North Bonifacio, Global City, Taguig, herein represented by ____________________________________ , who is duly authorized as the __________________ and is licensed to do business in the Philippines for the purpose of implementation of the __________________________________________________ (“Project”). and ________________________________________ , hereinafter called the “Subcontractor” a corporation duly organized and existing under and by virtue of the laws of the Philippines, with principal office address at _________________________________________________, herein represented by its ______________________, ______________________, duly licensed to do business; WHEREAS, the Contractor has entered into a contract (hereinafter called the “Main Contract”) with the ______________________________________ (hereinafter called the “Client”) for the _________________________________________ (hereinafter called the Project) to be located along ___________________________; WHEREAS, the Contractor desires to subcontract certain parts of the works for the Project, which works are listed in Article 2 (hereinafter called the “Subcontract Works”); WHEREAS, the Subcontractor is a ed and duly accredited Contractor by the Philippine Contractors Accreditation Board (PCAB) to conduct and operate construction business in the Philippines as evidenced by Contractor’s License no. 1411, issued by PCAB, a copy of which is herewith attached as an integral part of this agreement (Attachment “A”); WHEREAS, the Subcontractor desires, and has offered to undertake the Subcontract Works to the satisfaction of the Contractor in accordance with the Subcontract, the Subcontractor has been afforded the opportunity to read and fully understand the requirements of the Main Contract documents for the implementation of the Subcontract Works; WHEREAS, relying on the Subcontractor’s representations, warranties and undertakings shown in this Subcontract, the Contractor has accepted the Subcontractor’s offer for the latter to undertake the Subcontract Works for the Project; 1

NOW THEREFORE, for and in consideration of the foregoing premises which form an integral part of this subcontract and the mutual covenants and stipulations herewith set forth, the parties hereby agree as follows: ARTICLE 1. SUBCONTRACT DOCUMENTS 1.1

The following documents shall be deemed to form and be read and be construed as an integral part of this Subcontract in the same order of precedence as below: (a) (b) (c) (d) (e)

1.2

Subcontract Agreement with Special Conditions and General Requirements Drawings (Submitted by the Subcontractor and Approved for Construction by the Contractor) Technical Specifications of the Main Contract relevant to the Subcontract Works Construction Schedule (Working Schedule by the Subcontractor, approved by the Contractor Waiver of Subcontract as provided in the Special Conditions of Subcontract

The Subcontractor hereby represents and warrants that it has examined and fully understood the aforesaid Subcontract Documents.

ARTICLE 2. SCOPE OF WORKS 2.1

The Subcontractor agrees to perform or accomplish the Subcontract Works to the satisfaction of the Contractor, which performance shall satisfy the requirements and technical specifications listed in this Subcontract, and also agrees to provide at its sole cost and expense its laborers, tools, equipment and etc. whatsoever necessary to perform or accomplish the Subcontract Works in strict conformity with the requirements of the Technical Specifications of the Main Contract relevant to the Subcontract Works.

2.2

In accordance with the duly accepted Financial Proposal of the Subcontractor the Counterproposal of the Contractor, and the Technical Specifications of the Main Contract, the Subcontractor shall perform and accomplish the following Subcontract Works: 2.2.1

2.2.2

Supply its own resources, labor, materials, tools, equipment, supervision and other services, miscellaneous materials, other incidentals necessary to perform, execute and complete parts of the works for the Project described below with scope and amount as provided in the priced Bill of Quantities (Attachment “B”): Manage and supervise its staff for the implementation of the Subcontract Works.

2.2.3

Daily documentation of the accomplished Subcontract Works.

2.2.4

Provide technical matters including methodologies, quantity calculations and construction/shop drawings that will be necessary during the progress of the Subcontract Works for the approval of the Contractor.

2.2.5

Provide at its own cost temporary site facilities like, site office, office furnishings, fence, its own security, utilities and etc.

2.2.6

Take responsibility in carrying out adequate inspection, supervision, testing and other activities etc. for the satisfactory performance of the Subcontract Works. 2

2.2.7

Accept responsibility for any damages attributable to Force Majeure or accidents that are not within the responsibility of the Contractor.

2.2.8

Accept responsibility for and fully implement any variation of the Subcontract Works.

2.2.9

Accept responsibility for and fully implement any reworks or repairing works of the Subcontract Works.

2.2.10

Construct and maintain any temporary access for construction purposes.

2.2.11

Accept responsibility for any unjustified stoppage of the Subcontract Works by the Subcontractor and payment of liquidated damage as provided herein for any delay in the completion of the Subcontractor Works as result thereby.

2.2.12

Subcontractor shall comply with the Technical Specifications.

2.2.13

Be obligated to comply with any conditions & specifications set forth in the Subcontract.

2.3

Items not specifically described or listed in this Article and the priced Bill of Quantities of this Subcontract (Attachment “B”) and Technical Specifications of the Main Contract, but forming an integral and essential portion of the Subcontract Works, shall be deemed as included in the Subcontract Works and shall be paid by a Subcontract Price.

2.4

The Subcontractor shall give Priority Employment to those who are bonafide residents of the locality provided he/she is proved to be qualified workers in performing the Subcontract Works. The Priority Employment herein provided shall not mean to preclude the Subcontractor to hire non-resident/s of the locality. The Subcontractor shall still exercise its prerogative to hire, dismiss, approve and disapprove its employees whether residents or nonresident/s of the locality.

ARTICLE 3. COMPLIANCE WITH LAWS, OTHER RULES & REGULATION 3.1

The Subcontractor shall, throughout the execution of the Subcontract Works, conform in all respects, including the giving of all notices and paying of all fees and permits in compliance of any national or local government statute, ordinance, or other law, or any regulation, or bylaw of any local or other duly constituted authority in relation to the execution and completion of the Subcontract Works and remedying of any defects therein,

3.2

The Subcontractor shall, at all times, stand liable and/or responsible for the enforcement and compliance of all laws, rules and regulations with respect to its execution of the Subcontract Works and bind itself to save and hold the Contractor harmless and free from any and all liabilities arising from its implementation.

3.3

The Subcontractor shall, in close coordination with the Contractor, secure at its own expense all the necessary work permit and/or gate es of its employees/workers including the application and/or renewal of work visa of its foreign staff/expatriates, if any, who will be purposely deployed in the Project for the execution of the Subcontract Works. 3

ARTICLE 4. PROSECUTION OF WORK 4.1

The Subcontractor shall start the Subcontract Works within seven (7) calendar days after the receipt of NTP (Notice to Proceed) from the Contractor. The NTP will be issued upon the approval of the Contractor of the Subcontract Work’s working schedule and methodology. However, should any problem occur which is deemed by the Contractor as beyond its responsibility, before or during the course of Subcontract Works, such as right of way problem, Force Majeure, problems in obtaining any governmental approval and other matters and may cause the stoppage or delay of Subcontract Works, the Subcontractor shall not claim any and all expenses incurred thereby against the Contractor since it is foreseeable that any of these circumstances may cause some delays to both the Contractor and the Subcontract Works.

4.2

The Subcontractor shall submit to the Contractor the work schedule and methodology, and master time schedule of the Subcontract Works for checking, review and approval within seven (7) calendar days after g this Subcontract The working or Subcontract period shall be within the approved time frame of the Contractor’s PERT/M Network and in a manner not causing any delay to the Contractor’s Works or related works of the other Parties contracted by the Contractor or the Project’s Client if any. The Subcontractor shall promptly update and/or revise the work schedule and methodology provided, however, that the revised and updated work schedule and methodology shall be with prior approval by the Contractor and the Consultant and if said revision is deemed necessary.

4.3

Before proceeding with the Subcontract Works, the Subcontractor shall check the condition of the working site (hereinafter referred to as the Site) and prepare a written report. The Contractor shall not be liable for any claim whatsoever from the Subcontractor arising from the Subcontractor’s failure to inform itself of any Site condition or otherwise and any loss resulting from stoppages or delays that were caused by the reasons stipulated on Article 3.1 shall not be claimable against the Contractor.

4.4

The Subcontractor shall furnish the Contractor daily progress report of the Subcontract Works, including information pertaining to works, materials, equipment, manpower, and etc.

4.5

Each of the parties shall appoint a person as its coordinator for the Subcontract Works, and other representatives who will be responsible for transmitting all communications, instructions, documents and drawings relating to the execution of the Subcontract Works.

4.6

The Subcontract Works that were carried out through Subcontractor’s mistake, fault or negligence in the interpretation or implementation of the drawings, specifications and any other Subcontract Documents, shall not be accepted, measured or paid for by the Contractor.

4.7

If the Subcontractor fails to supply any required materials, equipment, services or manpower on time for the Subcontract Works, the Contractor may, without prejudice to any other remedy under this Subcontract or under law, either suspend the Subcontract works in whole or in part, or will take over its required activities or items. The costs and expenses, including relevant indirect cost and expenses, incurred for any works or items taken over and carried out by the Contractor shall be deducted immediately from the Subcontractor’s billed amounts. However any such reworks made by the Contractor shall not exempt or relieve the Subcontractor from its obligation to perform Subcontract Works in accordance with the related documents or liability thereunder nor will it be allowed to delay progress of its works. 4

In any case the Contractor shall still have the right to claim relevant expenses including loss of profit against the Subcontractor. ARTICLE 5. MOBILIZATION The Subcontractor shall mobilize the Site with all necessary tools, equipment, manpower and other items necessary for the performance of the Subcontract Works at its own costs and start the Subcontract Works within seven (7) calendar days after its receipt of the NTP. ARTICLE 6. PRICES AND PAYMENT 6.1

The Subcontractor agrees to perform the Subcontract Works to the satisfaction of the Contractor in the amount of _________________________________________________(Php _________________) Pesos only.

6.2

The basis for interim payments of monthly accomplishment shall be the actual quantities of work carried out during the period, as measured by the Contractor and the Subcontractor and approved by the Client and valued at the stipulated unit prices.

6.3

The unit price and amount shall include all construction plant, labor, materials, equipment installation, insurances, bonds, supervision, maintenance, all general risks, for construction drawings, as-built drawings, material testing, profit, taxes and duties, fees, levies and other charges imposed by the laws and regulations enforced in the Philippines, overhead costs , and other costs for the performance of the Subcontract Works together with all contingencies, liabilities and obligations set out and implied in the Subcontract.

6.4

The Subcontract Price shall not be affected by any escalation made by local price index variation or of any fluctuation in the cost of materials and/or labor from time to time and it shall not be influenced by any fluctuation of the foreign exchange rates as it is based on the fixed conversion rate and fixed price in Peso from the effective date of Subcontract.

6.5

The Subcontract price shall not be increased even though actual work and the contract quantity may change except however where a Variation Order is issued and approved by the Consultants and the implementing agency.

ARTICLE 7. PAYMENT 7.1

The Contractor will, upon a written request from the Subcontractor, make an advance payment to the Subcontractor in an amount equivalent to Fifteen Percent (15%) of the Subcontract Price as described in Article 6, the advance payment shall be payable upon satisfaction of the following conditions: a.

Seven and one-half percent (7.5%) of the Subcontract Price forming part of the advance payment which will be due after (i.) g of this Subcontract Agreement by the parties hereto; (ii.) securing by the Subcontractor of a Performance Bond, callable on demand, 5

issued by the contractor’s accredited insurance company to guarantee the satisfactory and faithful performance by the Subcontractor of its obligations under and in accordance with this Subcontract including the payment of the liquidated damages herein, covering ten percent (10 %) of the Subcontract Price, valid until the completion of the Subcontract Works; and (iii.) securing by the Subcontractor of a Surety Bond as Advance Payment Bond, callable on demand, issued by the contractor’s accredited insurance company to guarantee the refund by the Subcontractor of the advance payment in the event this is not recovered as contemplated under this Subcontract , covering Fifteen percent (15%) of the Subcontract Price, in an amount equal to the advance payment. The Advance Payment Bond shall remain effective until the advance payment has been repaid pursuant to the paragraph below. b.

The remaining seven and one-half percent (7.5%) will be paid after the Contractor confirms in writing the Subcontractor’s starting of the Subcontractor Works and after the completion of mobilization of required manpower and equipment for the Subcontract Works.

Provided further that bonds or bank guarantee to be submitted by the Subcontractor pursuant to this Article and to the other provision of this Subcontract shall be (i) issued by a first class commercial bank in the Philippines or a surety company duly licensed by the Insurance Commission and acceptable to the Contractor, (ii) shall include a clause that the bond is “callable on demand”. The recoupment of advance payment shall start on the first progress billing of the Subcontract Works by way of deducting Fifteen Percent (15%) from each monthly progress billing until the amount representing the advance payment is fully recovered. Monthly progress billing shall be calculated on the basis of actual works measured which is subject to the approval of the Contractor. Progress billing amount of a certain work shall be paid in local currency. 7.2

Payment of monthly progress billing to the Subcontractor will be carried out within forty five (45) working days, after issuance of the Invoice to the Contractor, after approval of the monthly progress billing submitted by the Subcontractor and after deductions of any amount due as stated in this Subcontract. The Contractor is entitled to deduct any of the amounts specified herein below from the monthly progress payments due to Subcontractor for any of the following purpose or reason, namely; 7.3

a.All charges for materials, equipment and services furnished by the Contractor for the

performance of the Subcontract Works; Unpaid amount of labor, materials and other bills which are legally and rightfully claimed by third parties against the Subcontractor; and c.Withholding tax and other taxes, if any, in accordance with the laws and regulations of the Republic of the Philippines b.

Notwithstanding Article 7.3, the Contractor is entitled to deduct any other amounts from the monthly progress payment that may have become due and payable by the Subcontractor to the Contractor. 7.4

The Subcontractor shall prepare his billing every month and submit it to the Contractor for checking, review and adjustments. 7.5

6

The Contractor shall not pay the billing amounts unless Surety Bond or Bank Guarantee for performance and Advance payment has been submitted or renewed. 7.6

No amount from the Subcontract works shall be certified or paid arising from the Subcontractor’s mistake, fault or negligence in interpretation or implementation of the drawings, specification and any other contract documents. 7.7

The Contractor, in any progress billing may make any correction or modification that should properly be made to any billing. 7.8

ARTICLE 8. RETENTION Ten percent (10%) of every progress billing of the Subcontract Works shall be deducted there from as Retention money with accumulative amount not exceeding to 10% of the Subcontract Price, in order to guarantee the remedy of any defects on the Subcontract Works until the expiry of the Defects and Liability Period. 8.1

Notwithstanding the foregoing, five percent (5%) retention money shall be released to the Subcontractor upon the Contractor’s issuance of the “Taking Over Certificate” to the Subcontractor as per submission of a Warranty Bond callable on demand, issued by the Contractor’s accredited insurance companies, the value of which is equivalent to the released retention money and valid until the duration of Defects and Liability Period, provided that the Subcontract Works is on schedule and is satisfactorily undertaken. 8.2

The remaining five percent (5%) “retention money” of the Subcontract Works shall be released after the Contractor issues the Final Acceptance Certificate”, and upon submission of a Warranty Bond as specified on Article 8.2 except to the value which should be equivalent to the remaining retention money being released. 8.3

ARTICLE 9. GUARANTEE AND DEFECTS LIABILITY PERIOD The Subcontractor shall guarantee the faithful performance and observe all the stipulations and conditions of this Subcontract, throughout the Subcontract period described in Article 4.1 and 4.2. To guarantee the foregoing, the Subcontractor shall, not later than twenty (20) calendar days after the date of g of this Subcontract, submit Performance Bond and Advance Payment Bond in surety form, covering respectively ten percent (10%) and Fifteen percent (15%) of the total Subcontract Price, both acceptable and callable on demand to the Contractor, and more specifically described Article 7. 9.1

It is agreed that the Contractor may utilize and make payments out of the Performance Bond and Advance Payment Bond in accordance with the of this Subcontract. The provision of this Article shall in no way affect the rights and remedies expressly reserved herein to the Contractor or for the Contractor to claim all expenses, loss and damages incurred or sustained by the Contractor in the event of any breach by the Subcontractor of the stipulations, and conditions of this Subcontract herein contained 9.2

Whenever there is an increase in the Subcontract Price, the value of the Performance Bond shall be increased by an equal percentage of the Subcontract Price increase and in case of time extension, the Subcontractor shall extend the validity of the Surety Bond, until the Subcontractor has executed and completed the Subcontract Works and remedied any defect. 9.3

7

Defects Liability Period shall be three hundred sixty five (365) calendar days from the date of issuance of the Taking Over Certificate. Within this period, the Subcontractor shall repair, remedy and make good all defects in the Subcontract Works at its own cost, to the full satisfaction of the Contractor. The Subcontractor shall assume full and sole responsibility for the removal, repair and replacement of any defective or non-conforming works as instructed to do so by the Contractor. Issuance of the Defects Liability Certificate for the Main Contract containing automatically means issuance of the Defects Liability Certificate for the Subcontract Works. 9.4

9.5 Notwithstanding the acceptance of the Subcontract Works by the Contractor, the Subcontractor shall continue to be fully responsible for the performance and integrity of the Subcontract Works up to the period as stipulated on Article 9.4 or as specified by pertinent laws of the Republic of the Philippines, the longer period of which shall always prevail. 9.6 If the Subcontractor has failed to remedy any defective or non-conforming works within a reasonable time, the Contractor shall have the right, to exercise at its sole option to remedy by itself or by others such defective or non-conforming works and claim the actual costs through the Warranty Bond, or deduct the same amount from any deposited or retention money under this Subcontract or cancel this Subcontract or claim reduction in the Subcontract Price or seek such other resolutions and remedies permitted by law. ARTICLE 10. VARIATION OF WORKS All extra or additional works shall be carried out only after instruction for the same by the Consultants/Engineers and shall be valued at the rates and prices stipulated in this Subcontract. In case of decrease of work volume attributable to the change or variation of the Subcontract Works, the Contractor shall not be liable to pay for any damages, losses (including anticipated profits) and/or additional expenses/costs incurred by the Subcontractor. 10.1

The Contractor may during the Subcontract period, give in writing any instruction for the change in the Subcontract Work. Upon receipt of such instructions, the Subcontractor shall, except as stated below, proceed immediately with the performance of the change in the Subcontract Works and complete the change in the work without delay. However, if any change in the work materially affects the Subcontract Price or the time for completion of the Subcontract Works, the Subcontractor shall within ten (10) working days of receipts of the instructions, submit written notice to the Contractor of such effect on the Subcontract Price and the time for completion. Within a further ten (10) working days, if so requested by the Contractor, the Subcontractor shall prepare and submit to the Contractor, a detailed estimate of the change in the work including the effect on the Subcontract Price and the time of completion. The estimate for the change in the work shall be prepared at the rates and prices set forth in the Subcontract. If the Subcontract does not contain any rates or prices applicable to the change in the Subcontract Work, then suitable rates and prices shall be mutually determined by the parties hereto. Should such estimate be acceptable to The Contractor, a change order will be issued and the Subcontractor shall proceed with such change in the work without delay. No change in the work shall be binding unless authorized in writing by the Contractor. 10.2

The Contractor may, within the period of this Subcontract, give in writing any instruction for The Variations. 10.3

Corrective work, additional services, supply of material, and/or field work necessary due to the Subcontractor’s non-conformity to this Subcontract and/or errors or omissions by the Subcontractor in its drawings, specifications, or workmanship shall not constitute the change in 10.4

8

the work and/or the variations in accordance with t his Article 9 and shall not affect the Subcontract Price or the time for Completion of the Subcontract Works. The Subcontract Price, unit rates and prices are deemed to include all materials and works required for the complete performance of the Subcontract Works. Should any work or material be required for proper performance of the work which has not been mentioned in the specification, drawing or any other Subcontract Documents but is reasonably implied or inferred from normal engineering practice, the Subcontractor shall finish such work or material without claiming adjustments of the Subcontract Price or on the time frame for completion. 10.5

ARTICLE 11. NOTICES AND CLAIMS The Contractor shall have no liability to the Subcontractor with respect to any condition, obstruction or circumstance that may affect the execution of the Subcontract Works and the Subcontractor shall be deemed to have satisfied itself as to the correctness and sufficiency of the Subcontract Price to cover its provision and its execution of all things necessary for the performance of its obligations under the Subcontract. The payable amount by the Contractor to the Subcontractor shall not exceed the agreed Subcontract Price, nor will it exceed the unit price of the Priced Bill of Quantities. ARTICLE 12. TIME SCHEDULE The Subcontract Works under this Subcontract shall be carried out according to the time schedule submitted by the Subcontractor and approved by the Contractor as stipulated in Article 4.1 and 4.2, provided that the time schedule should always be within the time frame of approved PERT/M Network submitted by the Contractor for the Main Works. The Contractor must be informed in advance of the extent of and the reason for any delay. Any revision thereof is subject to the Contractor’s prior written consent. 12.1

The Subcontractor, if delayed in performing any of its obligations under the Subcontract by any of the reasons set forth below and the Subcontractor intends to claim an extension of the time for completion, shall forthwith give written notice thereof to the Contractor. a.Any binding change order issued by the Contractor; b. Any suspension order issued by the Contractor , except when issued by reason of the act or omission of by the Subcontractor or by reason of the Subcontractor’s breach of this Subcontract. 12.2

If the Contractor finds such claim, as notified by the Subcontractor, justified in accordance with the conditions of this Subcontract, the Contractor shall so inform to the Subcontractor and the time for completion of the Subcontract Works will be extended to the extent deemed fair and reasonable by the Contractor. 12.3

Should the Subcontractor fail to notify the Contractor in full details the circumstances giving rise to the delay within twenty-one (21) working days after the date of the occurrence that gave rise to the claim has first shown itself, the Subcontractor shall not be entitled to any extension of the time for completion of the Subcontract Works. 12.4

9

The Subcontractor shall accept the Contractor’s decision and instruction to allow another subcontractor to carry out a certain portion of the Subcontract Works provided that there is an unjustifiable progress delay compared to the agreed time schedule by more than ten percent (10%). 12.5

ARTICLE 13. INSURANCES The Subcontractor’s workmen’s compensation insurance and all the other insurances that are deemed necessary for the Subcontractor to operate within the Republic of the Philippines including insurance for Subcontractor’s equipment, plant, tools and consumables and those that will cover the risk arising from the performance of the Subcontract Works, shall be its own responsibility and for its own . The Subcontractor shall procure and maintain said insurances during the period of this Subcontract from a reputable insurer, and under and conditions, acceptable to the Contractor, and shall promptly provide copy of the insurances to the Contractor upon the latter’s demand. 13.1

The Contractor shall not be under any liability to the Subcontractor for any damages or accident suffered by the Subcontractor that may be caused by it or its employees, labors, agents and whatsoever. All damages in relation to the Subcontract Works shall be borne by the Subcontractor and if the Contractor is held liable for the damage, which damage is due to the fault of the Subcontractor, the Contractor is entitled to receive compensation from the Subcontractor for the same. 13.2

The Subcontractor shall, at its own cost, obtain additional insurance for wider coverage, which is necessary to cover any other risks arising from the performance of the Subcontract Works. 13.3

The Subcontractor shall indemnify and save harmless the Contractor from all and any claims, damages, losses and liabilities which may arise directly or indirectly from the Subcontract Works. If for any reason whatsoever, the Contractor is held liable for any damages or liabilities, which arose due to the fault, mistake, or negligence, or lack of foresight of the Subcontractor, then the Contractor shall have the right to demand reimbursement from the Subcontractor for the same. 13.4

ARTICLE 14. LIABILITY OF THE SUBCONTRACTOR Any approval by the Contractor does not relieve the Subcontractor of its obligations and liabilities to perform this Subcontract Works in accordance with this Subcontract. 14.1

The Subcontractor shall be responsible for keeping the Site clean and free from any hazardous and dangerous materials/items. 14.2

The Subcontractor shall maintain the safety of its tools, equipment, and safety of his personnel at its own costs, and be responsible for storage and safekeeping of all its tools, equipment, and materials. 14.3

The Subcontractor shall assign fully qualified personnel to be available at the Site during the Subcontract Works until the issuance of the Taking Over Certificate to supervise the Subcontract Works and to represent the Subcontractor. The Subcontractor shall promptly 14.4

10

replace any of its personnel with another if the Contractor, for valid reason, requests such replacement. The Subcontractor shall be fully responsible for the proper behavior of all its workers, employees and agents at the jobsite and it shall take all necessary precautions to prevent any strikes or concerted action of any sort by any such personnel. 14.5

The Subcontractor shall not subcontract a part or the whole of the Subcontract Works to another firm, person or entity without obtaining prior written consent from the Contractor. 14.6

The Subcontractor shall be responsible for any personal injuries, damages, or death sustained to or caused by its employees, agents, devices and equipment, whatsoever, whether or not occurring during the performance of their duties, and shall indemnify the Contractor from and against any damages, liabilities or claims arising from its implementation of the Subcontractor Works, including third party liability. 14.7

The Subcontractor shall strictly comply with the construction safety requirements mandated by the Contractor and the Client and shall secure enough workmen’s area in the elevated work area and take due measures to prevent harm or damage to any persons and/or any properties from the materials/tools/equipment which may fall from the elevated work area. 14.8

The Subcontractor shall, during the execution of the Subcontract Works on the Site, observe and comply with the same working hours as the Contractor and shall comply with all reasonable rules and regulations of the Contractor governing the execution of the Subcontract Works. 14.9

In the performance of this Subcontract, the Subcontractor shall operate as an independent contractor and not as an agent of the Contractor. No personnel furnished by the Subcontractor shall be deemed under any circumstances an agent, employee, or servant of the Contractor and/or the Client. 14.10

ARTICLE 15. LIQUIDATED DAMAGES 15.1 In case the Subcontractor refuses or fails (except in cases of Force Majeure) to satisfactorily complete the Subcontract Works within the Agreed Time Schedule (plus reasonable and written extension of the time granted) and that it is responsible for such delay or such delay was due to its act or omission, the Subcontractor shall pay the Contractor liquidated damages of 10/1000 (1%) of the remaining portion of work per week and shall not exceed 20 % of the Subcontract Price, until the Subcontract Works are completed and accepted by the Contractor and the Client. The payment or deduction of such damages shall not relieve the Subcontractor from its obligation to complete the Subcontract Works, or from any of its obligations and liabilities under this Subcontract. 15.2 Amounts due to the Contractor hereunder may, at the option of the Contractor, be chargeable against the Performance Bond. The Contractor’s right under this Article shall not be in lieu or in limitation of any of the Contractor’s other rights provided in this Subcontract or by applicable law without limitation. ARTICLE 16. LAWS, TAXES, CHARGES, WAGES, PERMITS AND FEES

11

16.1 The Subcontractor shall be responsible for all payments of wages, taxes, contributions and or s payable to its employees or relating to its operations under Philippine Law and the Subcontractor shall save and keep the Contractor free and harmless from all liabilities, losses and expenses resulting from the Subcontractor’s failure to comply with such requirements. 16.2 The Subcontractor’s taxes, licenses, permits and fees which may be due to the local and/or national government on the of the performance and completion of the Subcontract Works stipulated herein, fees for the testing of materials and samples, except for the materials supplied by the Contractor, and fees for testing and inspection of the installation by all agencies with jurisdiction, and all necessary and incidental expenses relative thereto including preparation of documents and notarial fees, shall be borne by the Subcontractor on its own . 16.3 The Subcontractor shall, at all times, stand solely liable and/or responsible for the enforcement and compliance with all existing laws, rules and regulations of the Philippines, and binds itself to save and hold the Contractor free and harmless from any and all liabilities in respect thereof and/or arising there from and/or reason of this Subcontract and its implementation. 16.4 During the Subcontract period, the Subcontractor shall pay labor’s wage not less than the minimum wage implied by the Department of Labor and Employment and all other benefit of its employees and any other parties, and otherwise comply with all labor and social legislation laws. Upon the request by the Contractor, the Subcontractor shall promptly provide the Contractor with proof of compliance with these laws, including giving the Contractor certified true copy of the Subcontractor’s payroll for the relevant period. 16.5 The Subcontractor shall maintain up-to-date records in connection with the Subcontract Works. If the Contractor requests, (a) the Subcontractor shall promptly provide copies of such records to the Contractor and (b) the Subcontractor shall give access to such records to the Contractor and allow the latter to inspect the same. ARTICLE 17. REPRESENTATIONS AND WARRANTIES 17.1

The Subcontractor hereby represents, warrants and undertakes to the Contractor that:

a

it is a corporation duly organized and existing and in good standing under the laws of the Republic of the Philippines, and is not in liquidation, provisional liquidation, or receivership, or under istration;

b

it has full legal capacity and is fully authorized to enter into, exercise its rights, and perform its obligations under this Subcontract;

c

all conditions and things required by applicable law to be fulfilled or done (including the obtaining of any necessary accreditations from the implementing agency and all other governmental approvals) in order to enable it lawfully to enter into, and exercise its rights and perform its obligations under, this Subcontract, and to make this Subcontract issible in evidence in any dispute resolution forum specified in this Subcontract, have been fulfilled or done;

d

this Subcontract constitutes its valid and legally binding obligation, enforceable against it in accordance with its ; 12

e

neither its execution of, nor the exercise of rights or performance of obligations under, this Subcontract does or will (i) contravene any applicable law to which it or any of its employees and agents are subject, any order of any government agency binding on it or any of its employees and agents, or any undertaking or instrument binding on it or any of its employees and agents, or (ii) contravene any provision of its articles of incorporation or association, by-laws, or other constitutive documents or any of its governmental licenses and approvals;

f

it and its employees and agents hold, or on a timely basis will obtain and maintain, all governmental licenses and approvals required for it to conduct its business and to perform its obligations under this Subcontract, including those governmental approvals which maybe required by the implementing agency;

g

it and its employees and agents have the expertise, experience and capability and the resources necessary for the performance or accomplishment of the Subcontract Works for the Project;

h

it and its employees and agents shall comply with the specifications, technical standards, building, construction, and environmental laws and regulations and other laws and regulations in the Philippines applicable to the performance or accomplishment of the Subcontract Works and the standards specified in this Subcontract, as each of the same are in effect from time to time or, if more stringent, to the specifications and standards with which the Contractor must comply under the Main Contract.

i

all materials, equipment, services and laborers furnished by it under this Subcontract shall meet the standards under the relevant laws and regulations, those specified in this Subcontract and, if more stringent, those in the Main Contract.

17.2

To this effect, the Subcontractor shall promptly and at its own expense re-perform any defective or deficient works at any time prior to the expiration of the relevant Defects and Liability Period.

17.3

The warranties under this Article shall apply at all times from the execution of this Subcontract and shall continue until the expiration of the relevant Defects and Liability Period, without prejudice to any longer warranty/liability period provided under the law.

ARTICLE 18. NON-ASSIGNMENT AND NO SUBCONTRACT 18.1 The Subcontractor shall not, without any prior written approval from the Contractor, assign, transfer, pledge, and subcontract or make any disposition of its interest in this Subcontract. Any unapproved assignment, transfer, pledge, subcontract or any disposition, shall be sufficient ground for the Contractor to terminate or cancel this Subcontract without need of judicial action. The Subcontractor shall ensure that the and conditions of any such subcontract approved by the Contractor shall comply and conform to the and conditions of this Subcontract. 18.2 Any such approval shall not relieve the Subcontractor from any liability or obligation under the Subcontract and it shall remain responsible for the acts, defaults, and neglects of its subcontractor, the agents, servants or workmen as fully as if they were the acts, defaults, and neglects of the Subcontractor, its agents, servants or workmen. 13

18.3 This Subcontract shall be binding upon the parties hereto and upon their permitted successors or assigns. ARTICLE 19. TERMINATION OF CONTRACT 19.1

19.2

The Contractor shall have the right to terminate this Subcontract in whole or in part, upon giving twenty (20) calendar days notice to the Subcontractor on any of the grounds enumerated below. In the event of termination, the Contractor may itself complete the Subcontract Works or may employ any other subcontractor to complete the Subcontract Works and, if the termination is due or attributable to an act, omissions or condition of the Subcontractor, the Contractor may recover its reasonable costs of so doing from the Subcontractor, or deduct such costs from amounts otherwise due or becoming due to the Subcontractor. a.

In case of termination of the Main Contract by the Client for any reason;

b.

If the Subcontractor is not allowed to enter into this Subcontract or disqualified by the Client.

c.

If the Subcontractor is deemed by law to be unable to pay its debts as they fall due, or enters into voluntary or involuntary bankruptcy, liquidation, or dissolution;

d.

If the Subcontractor becomes insolvent, or makes an arrangement with or assignment in favor of its creditor;

e.

If the Subcontractor’s progress of the Subcontract Works is more than ten (10%) behind the work schedule due to subcontractor’s reason, as described in Article 4.1 and 4.2;

f.

If the Subcontractor refuses or neglects to remove or remedy defective materials;

g.

If the Subcontractor’s fails to perform its obligations in accordance with this Subcontract.

h.

If the Subcontractor’s fails to perform any of its obligations under this Subcontract or any of its representations or warranties herein proved to be false or misleading.

The Contractor shall notify the Subcontractor through the latter’s designated authorized representative, of any of the foregoing circumstances. The Subcontractor, after receipt of such notice, shall immediately take corrective measures within the 20-day notice period mentioned in Article 19.1, if the event giving rise to termination is capable of being corrected. In cases where the Subcontractor fails to take appropriate corrective actions after receipt of written notice of the fault, where capable of being corrected, the Contractor shall have the right to immediately terminate the Subcontract at the end of the 20-day notice period. All other notices between the Contractor and Subcontractor shall be sufficient in all respects if delivered in person or sent either by ed airmail or by courier addressed to the recipient at its address above stated. This, notwithstanding, any notice when delivered by the Contractor or its authorized representative at the Site or at the address of the Subcontractor shall be considered sufficient notice. The Contractor or Subcontractor may change its address for the receipt of notices by written notice fully given to the other party. 14

19.3

The Subcontractor shall have the right to remove any plant or equipment from the Site within thirty (30) days after its receipt of the termination notice. After said period, The Contractor has the right to remove any plant or equipment left behind by the Subcontractor to any designated place with no need of consent from the Subcontractor. The Contractor shall not be liable for any loss or damage of any plant or equipment of the Subcontractor not yet removed from the Site after issuance of the termination notice. If any amount is still due from the Subcontract, the Contractor may take possession of all materials, constructional plant and other things whatsoever brought on to the Site by the Subcontractor and use them for the purpose of executing, completing and maintaining the Subcontract Works and may sell all or any of them and apply the proceeds thereof toward the satisfaction of amounts otherwise due to its from the Subcontractor.

19.4

If the Subcontractor fails to comply with this Subcontract, the Contractor will have a right to terminate this Subcontract and enter in to contract with and any other Subcontractor(s), as well as claim against the Subcontractor for all damages or losses including business losses incurred by the Contractor.

19.5

In case of termination under Articles 19.1, 19.2, 19.4 or 19.7, the quantities accomplished by the Subcontractor and approved by the Contractor shall be the basis for any payment. Remaining quantities, on which work is ongoing or partially completed, shall be considered for payment only upon approval by the Contractor.

19.6

This Subcontract shall expire automatically when the Subcontract Works under this Subcontract are accomplished and accepted, the Defects Liability/Guarantee period has lapsed and all payments have been made, and all outstanding matters on this Subcontract have been resolved.

19.7

In case of deferment, rejection or change of plan from the Contractor, this Subcontract shall be cancelled automatically and the Subcontractor waives the right to claim for any additional cost from the Contractor.

ARTICLE 20. BINDING EFFECT The Subcontractor’s Price, including unit price and any pertinent costs as stated on Article 6, shall not be changed, unless it is specified otherwise in this Subcontract or approved in writing by the Contractor. Any technical descriptions not specified herein shall be duly referred to relevant Technical Specifications of the Main Contract forming this Subcontract. ARTICLE 21. FORCE MAJEURE 21.1

“Force Majeure” means an event that a. is beyond the reasonable control of the party seeking relief by reason of its occurrence; b. despite the exercise of reasonable diligence, could not be prevented, avoided, or removed by such party; c. in the case of an event affecting the Subcontractor, would not be reasonably foreseeable by a competent and experienced contractor, but e.g. labor strike of the Subcontractor shall not be deemed as a reasonably foreseeable event; and

15

d.

assuming all of the preconditions to claiming a Force Majeure event under the Main Contract have been satisfied, would constitute an event of Force Majeure under the Subcontract.

21.2

The failure of a party to fulfill any of its obligations shall not be considered to be a breach of, or default, under this Subcontract insofar as such failure arises from an event of Force Majeure so long as the party affected by such an event has taken all reasonable precautions, due care and reasonable alternative measures, all with the objective of carrying out the and conditions of this Subcontract.

21.3

A party affected by an event of Force Majeure shall take all reasonable measures to remove such party’s inability to fulfill its obligations in this Subcontract with reasonable dispatch and with minimum delay.

ARTICLE 22. AMENDMENT Any amendment, alteration or modification of this Subcontract shall not be valid and binding unless made in writing and signed by the parties hereto. ARTICLE 23. SEVERABILITY In the event that any part or provisions of this Subcontract is found to be void or unenforceable, the remaining provisions of this Subcontract shall nevertheless be binding with the same effect as though the void parts were deleted. ARTICLE 24. ACCEPTANCE . The Subcontractor shall notify the Contractor in writing when it deems that the Completion of Work has been attained. Within fifteen (15) working days after receipt of the Subcontractor’s notification, the Contractor shall either (a) accept the Subcontract Work by issuing the Letter of Acceptance of the Subcontract Works (b) advice the Subcontractor or any defects that are discovered. If the Subcontractor is notified of any defects, the Subcontractor shall promptly take corrective measures to remove those defects, and again notify the Contractor that the Subcontract Work is deemed completed. The Contractor will then have an additional seven (7) working days to accept the Subcontract Works or to advise the Subcontractor of any additional defects. ARTICLE 25. EFFECTIVITY 25.1

This Subcontract shall be governed by the laws of the Republic of the Philippines. This Subcontract shall be binding and effective upon g by the parties hereto. This Subcontract shall be deemed to have expired when all obligations of the Parties under this Subcontract shall have been performed to the full satisfaction of the Contractor.

25.2

Other matters not covered herein shall be made through supplemental amendments to the Subcontract, which shall be in writing and signed by the Parties. 16

25.3 The parties shall treat as confidential all information supplied or obtained under or pursuant to this Subcontract, except for information to be supplied to the Contractor for testing, operation and maintenance of the system specified in this Subcontract. ARTICLE 26. PATENTS The Subcontractor shall indemnify and hold the Contractor harmless against any claim, damage or liability incurred by the Contractor, including any claim, damage or liability the Contractor may sustain arising from the unauthorized use or infringement of patent rights, trade marks or protected rights to which the goods under this Subcontract may be subject. All royalties and expenses arising from the use of such patent rights, trade marks, copyright or protected or other intellectual property rights shall be payable by the Subcontractor, provided that the Contractor shall promptly notify the Subcontractor of any claim and give the Subcontractor the opportunity to defend and settle any responsibility of the Subcontractor arising out of any law suit in this respect. ARTICLE 27. SETTLEMENT OF DISPUTES 27.1

Any and all disputes between the parties arising from this Subcontract shall be settled amicably by negotiation within twenty (20) working days from the notice of the occurrence of the dispute.

27.2

However, in the event that there is failure in the negotiation, both parties agree that any and all causes of action that may arise out of this Subcontract shall be referred to and finally resolved by arbitration under the Rules of Procedures governing Construction Arbitration promulgated pursuant to Executive Order No. 1008 (Construction Industry Law) by one arbitrator or a of three (3) arbitrators appointed in accordance with such rules.

27.3

The place of Arbitration shall be in Makati City, Philippines. Any and all fees and expenses relative to said arbitration shall be equally borne by the parties.

IN WITNESS WHEREOF, the parties have hereunto affixed their respective signatures on this _____th of __________, 2007 in Makati City, Philippines.

(Contractor) BY

___________________ Project Manager

(Subcontractor) BY

____________________ Manager

____________________ Subcontract Manager 17

WITNESSES

__________________

_____________________

ACKNOWLEDGMENT BEFORE ME, a Notary Public for and in the above jurisdiction this ___th day of ____________ 2010 personally appeared the following: Name

CTC/ No.

Date

Place

__________________

______________

________

_________

__________________

______________

________

_________

__________________

______________

________

_________

Known to me and to me known to be the same persons who executed the foregoing Subcontract Agreement and who acknowledged that the same is their free and voluntary act and deed and of the entity which they represents. WITNESS MY HAND AND SEAL, on the date and place first above written. Doc. No.____ Page No.____ Book No.____ Series of______

18