Section 1 Conditions of Subcontract

SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT
SUBCONTRACT NO: .....................
SECTION 1
GENERAL CONDITIONS OF SUBCONTRACT
FOR
LABOUR ONLY SUBCONTRACT WORK
Malaysia Marine And Heavy Engineering Sdn. Bhd.

SUBCONTRACT NO: .....................
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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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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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TABLE OF CONTENTS
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

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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.

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“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.

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“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.

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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.

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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.

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(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.

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(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.

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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.

SUBCONTRACT NO: .....................
PAGE 9 OF 45
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.

SUBCONTRACT NO: .....................
PAGE 10 OF 45
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

SUBCONTRACT NO: .....................
PAGE 11 OF 45
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

SUBCONTRACT NO: .....................
PAGE 12 OF 45
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

SUBCONTRACT NO: .....................
PAGE 13 OF 45
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

SUBCONTRACT NO: .....................
PAGE 14 OF 45
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.

SUBCONTRACT NO: .....................
PAGE 15 OF 45
(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.

SUBCONTRACT NO: .....................
PAGE 16 OF 45
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.

SUBCONTRACT NO: .....................
PAGE 17 OF 45
(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

SUBCONTRACT NO: .....................
PAGE 18 OF 45
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.

SUBCONTRACT NO: .....................
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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.

SUBCONTRACT NO: .....................
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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.

SUBCONTRACT NO: .....................
PAGE 21 OF 45
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;

SUBCONTRACT NO: .....................
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(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

SUBCONTRACT NO: .....................
PAGE 23 OF 45
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.

SUBCONTRACT NO: .....................
PAGE 24 OF 45
(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;

SUBCONTRACT NO: .....................
PAGE 25 OF 45
(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.

SUBCONTRACT NO: .....................
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(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

SUBCONTRACT NO: .....................
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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.

SUBCONTRACT NO: .....................
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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].

SUBCONTRACT NO: .....................
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(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.

SUBCONTRACT NO: .....................
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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.

SUBCONTRACT NO: .....................
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(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

SUBCONTRACT NO: .....................
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(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,

SUBCONTRACT NO: .....................
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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.

SUBCONTRACT NO: .....................
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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

SUBCONTRACT NO: .....................
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(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.

SUBCONTRACT NO: .....................
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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];

SUBCONTRACT NO: .....................
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(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.

SUBCONTRACT NO: .....................
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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

SUBCONTRACT NO: .....................
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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

SUBCONTRACT NO: .....................
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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;

SUBCONTRACT NO: .....................
PAGE 41 OF 45
(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.

SUBCONTRACT NO: .....................
PAGE 42 OF 45
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;

SUBCONTRACT NO: .....................
PAGE 43 OF 45
(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.

SUBCONTRACT NO: .....................
PAGE 44 OF 45
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.

SUBCONTRACT NO: .....................
PAGE 45 OF 45
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.

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


SUBCONTRACT NO: .....................
PAGE 1 OF 1
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
A bank guarantee equivalent to 10% of the
5. Performance Bond SUBCONTRACT PRICE shall be provided by
SUBCONTRACTOR as the Performance Bond.
6. Effective Date dd/mm/yy
7. Completion Date dd/mm/yy
0.16 % per calendar day up to a maximum of 10% of
8. Liquidated Damages
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.

SUBCONTRACT NO: .....................
SECTION 1

APPENDIX 2 - PERFORMANCE BOND FORM

SUBCONTRACT NO: .....................
PAGE 1 OF 3
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

SUBCONTRACT NO: .....................
PAGE 2 OF 3
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.

SUBCONTRACT NO: .....................
PAGE 3 OF 3
(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:

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

APPENDIX 3 - CERTIFICATE OF COMPLETION

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: ) ...............................................

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

APPENDIX 4 - SUBCONTRACT CLOSURE CERTIFICATE

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: ) ...............................................

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

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

SUBCONTRACT NO: .....................
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.

SUBCONTRACT NO: .....................
PAGE 2 OF 4
Disclosures can be made to ANY of the following reporting channels, in strict confidential
manner:
• Email to whistle@mhb.com.my.
• 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.

SUBCONTRACT NO: .....................
PAGE 3 OF 4
Annex 1
[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 Relationship Position in Name of

MHB Group Companies Vendor/Subcontractor Vendor’s/Subcontractor’s
(including name of Key Management
Department)
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 Name of the Form of Interest Details on the

Companies’ Employees' Family/ Interest
Employees Household Members or

SUBCONTRACT NO: .....................
PAGE 4 OF 4
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 : [Vendor’s/ Witness by,

behalf Subcontractor’s Name]
Signature : Signature :
Name : [Vendor’s/ Name :

Subcontractor’s
authorized person]
Designation : Designation :
Company : Company :
Stamp Stamp

Section 1 Conditions of Subcontract

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Section 1 Conditions of Subcontract

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SECTION 1 – GENERAL CONDITIONS OF SUBCONTRACT

SUBCONTRACT NO: .....................

GENERAL CONDITIONS OF SUBCONTRACT

LABOUR ONLY SUBCONTRACT WORK

Malaysia Marine And Heavy Engineering Sdn. Bhd.

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

Malaysia Marine And Heavy Engineering Sdn. Bhd.

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

Malaysia Marine And Heavy Engineering Sdn. Bhd.

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

Malaysia Marine And Heavy Engineering Sdn. Bhd.

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

Malaysia Marine And Heavy Engineering Sdn. Bhd.

Malaysia Marine And Heavy Engineering Sdn. Bhd.

“Subcontract Closure Certificate” means a document signed between

Malaysia Marine And Heavy Engineering Sdn. Bhd.

“Scope of Work” means the document entitled scope of work included to

Malaysia Marine And Heavy Engineering Sdn. Bhd.

Malaysia Marine And Heavy Engineering Sdn. Bhd.

4. LICENCES, PERMITS, LAWS AND REGULATION

Malaysia Marine And Heavy Engineering Sdn. Bhd.

Malaysia Marine And Heavy Engineering Sdn. Bhd.

Malaysia Marine And Heavy Engineering Sdn. Bhd.

Malaysia Marine And Heavy Engineering Sdn. Bhd.

5.2 MMHE’s Site Representative

Malaysia Marine And Heavy Engineering Sdn. Bhd.

Malaysia Marine And Heavy Engineering Sdn. Bhd.

SUBCONTRACTOR’s Site Representative. If consent is withheld or

Malaysia Marine And Heavy Engineering Sdn. Bhd.

information was given to SUBCONTRACTOR before tendering or before

Malaysia Marine And Heavy Engineering Sdn. Bhd.

Section 2 – Schedule of Compensation; and that such SUBCONTRACT

Malaysia Marine And Heavy Engineering Sdn. Bhd.

Malaysia Marine And Heavy Engineering Sdn. Bhd.

Malaysia Marine And Heavy Engineering Sdn. Bhd.

8. HEALTH, SAFETY AND ENVIRONMENT (HSE)

Malaysia Marine And Heavy Engineering Sdn. Bhd.

(b) Without limiting SUBCONTRACTOR liability under the SUBCONTRACT,

Malaysia Marine And Heavy Engineering Sdn. Bhd.

HSE rules and/or requirements stipulated in Section 4 - Health, Safety and

Malaysia Marine And Heavy Engineering Sdn. Bhd.

9. QUALITY, INSPECTION AND TESTING

Malaysia Marine And Heavy Engineering Sdn. Bhd.

9.6 Consequences and Cost of Investigation

Malaysia Marine And Heavy Engineering Sdn. Bhd.

9.10 SUBCONTRACTOR to Rectify Damage

10. STAFF AND LABOUR

Malaysia Marine And Heavy Engineering Sdn. Bhd.

(d) medical welfare, examination, treatment, hospitalisation, health insurance,

Malaysia Marine And Heavy Engineering Sdn. Bhd.

negligent, and SUBCONTRACTOR shall remove as aforesaid and shall

11. COMMENCEMENT OF WORKS AND DATE FOR COMPLETION

Malaysia Marine And Heavy Engineering Sdn. Bhd.

(b) Should SUBCONTRACTOR fail to complete any outstanding work or

12. DELAYS AND DELAY DAMAGES

Malaysia Marine And Heavy Engineering Sdn. Bhd.

13. CHANGE IN THE WORKS

Malaysia Marine And Heavy Engineering Sdn. Bhd.

14. WORKS PROGRAMME AND METHOD OF WORKING

Malaysia Marine And Heavy Engineering Sdn. Bhd.

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

Malaysia Marine And Heavy Engineering Sdn. Bhd.

14.4 Modification or Revision to Method of Working

Malaysia Marine And Heavy Engineering Sdn. Bhd.