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SUBCONTRACT AGREEMENT

BETWEEN

MEHTA ELECTRICALS LIMITED


(MEL)

AND

AZICON KENYA LTD


(AKL)

FOR

THE AGL SYSTEM, STRUCTURE CABLING,PABX AND FIDS


SYSTEM WORKS OF NORTH CORRIDOR TRANSPORT
IMPROVEMENT PROJECT FOR UPGRADING OF
FACILITIES AT KISUMU AIRPORT – RUNWAY, TAXIWAY,
APRON, NEW TERMINAL AND OTHER BUILDINGS AND
ASSOCIATED WORKS CONTRACT No.
KAA/ES/KSM/516/C&B.

JULY 2008
THE SUBCONTRACT AGREEMENT BETWEEN MEHTA
ELECTRICALS LIMITED (MEL) AND AZICON KENYA LIMITED
(AKL)

FOR THE

THE AGL SYSTEM, STRUCTURE CABLING,PABX AND FIDS


SYSTEM WORKS OF NORTH CORRIDOR TRANSPORT
IMPROVEMENT PROJECT FOR UPGRADING OF
FACILITIES AT KISUMU AIRPORT – RUNWAY, TAXIWAY,
APRON, NEW TERMINAL AND OTHER BUILDINGS AND
ASSOCIATED WORKS CONTRACT No.
KAA/ES/KSM/516/C&B.

THE SUBCONTRACT SCOPE OF WORKS COMPRISES OF BUT NOT


LIMITED TO

1. AGL SYSTEM- INSTALLATION ONLY


2. SCADA SYSTEM-SUPPLY AND
INSTALLATION
3. STRUCTURE CABLING WORKS-SUPPLY
AND INSTALLATION
4. PABX-SUPPLY AND INSTALLATION
5. FIDS SYSTEM- INSTALLATION ONLY
ORDER OF SIGNING OF
SUBCONTRACT
THE AGREEMENT BETWEEN MEHTA ELECTRICALS LIMITED LTD
(MEL) AND AZICON KENYA LTD (AKL)

JOINTLY AGREED BY BOTH


PARTIES
MAIN CONTRACTOR- MEHTA ELECTRICALS LIMITED
(MEL)
DESIGNATION………………………………….
NAME……………………………………………

SIGNATURE……………………………………..
DATE……………………………………………..

SUBCONTRACTOR – AZICON KENYA LIMITED (AKL)

DESIGNATION………………………………….
NAME……………………………………………

SIGNATURE……………………………………..
DATE……………………………………………..

IN THE PRESCENCE OF THE FOLLOWING


CONTRACTORS WITNESS

DESIGNATION………………………………….
NAME……………………………………………

SIGNATURE……………………………………..
DATE……………………………………………..
SUB CONTRACTORS WITNESS

DESIGNATION………………………………….
NAME……………………………………………

SIGNATURE……………………………………..
DATE……………………………………………..

SUBCONTRACT AGREEMENT

This Subcontract Agreement entered into on the day of August 2008


Between
M/s. MEHTA ELECTRICALS LTD of P.O. Box 39977-00623 Nairobi (hereinafter
called the “Contractor”) of the one part and M/s. AZICON KENYA LTD of P.O. Box
75740-00200 NAIROBI (hereinafter called the “Subcontractor”) of the other part.

Whereas the Contractor has entered into a contract with the CHINA OVERSEAS
ENGINEERING GROUP CO.LTD for the NORTH CORRIDOR TRANSPORT
IMPROVEMENT PROJECT (NCTIP) – UPGRADING OF FACILITIES AT
KISUMU AIRPORT-RUNWAY, TAXIWAY, APRON, NEW TERMINAL AND
OTHER BUILDINGS AND ASSOCIATED WORKS: CONTRACT NO.
KAA/ES/KSM/516/C&B.

And whereas the Subcontractor, having been afforded the opportunity to read and note
the provisions of the Main Contract, has offered to execute the Subcontract Works at the
rates and prices indicated in the enclosed Subcontract Bill of Quantities:
And whereas the Contractor has accepted the Subcontractor’s offer for the execution and
completion of such Subcontract scope of Works which is mainly the airfield light fittings,
electrical works, fire protection and special system works and associated works as
described herein and the remedying of any defects therein

Now this Subcontract Agreement witnesseth as follows:

1. In this Subcontract Agreement words and expressions shall have the same meanings
as are respectively assigned to them in the Conditions of Subcontract hereinafter
referred to.

2. The documents forming part of the Subcontract are to be taken as mutually


explanatory of one another. For the purpose of interpretation, the priority of the
documents shall be in accordance with the following sequence:
a) The Subcontract Agreement:
b) Pretender memorandum of understanding
c) The conditions of Subcontract( Part II Particular Conditions)
d) The Conditions of Subcontract( Part I General Conditions)
e) The Main Contract documents (letter of bid and appendix to Bid, general
conditions, particular conditions, technical specifications, drawings, blank bill
of quantities and addenda No.1 and No.2)
f) The Subcontract Works priced Bills of Quantities

3. The Subcontract Agreement is back- to- back with the Main Contract and
consequently, all valid contractual claims and variations that cause delay or
disruption and consequent additional cost are recoverable under the terms and
conditions of the respective Main Contract and Subcontract Agreement.

4. Scope of Subcontract works:


Subcontract scope of Works which is all the Electrical works, Fire protection system
works, Special system works and associated works assigned to the Contractor by the
Employer through the main Contract. The scope of works covers all consideration of
the memorandum of Understanding.

5. Construction period of Subcontract:


The construction period of the subcontract works is 22 months with a 12 months
Defects liability period. The Subcontractor shall commence the subcontract works
within 14 days after the Subcontractor is issued with an order to commence by the
Contractor on condition that the Subcontractor has received an Advance Payment.

6. Quality Standards:
The Subcontractor hereby covenants/promises to ensure to execute and complete the
Subcontract works strictly in pursuant to the Main Contract drawings and the
technical specifications and to ensure the quality of the Subcontract works herein
meets the requirements of the Main Contract, and to ensure the Subcontract works
are to be inspected, tested and approved by the Contractor and the Engineer. In case
the Subcontract works is not carried out to the satisfaction and requirements
mentioned above causing any delays to the Main contract resulting to any damages
and losses whatsoever to the contractor, the Subcontractor shall be responsible for
the same and shall remedy the defects at its own cost to the requirements of the
Contract and no extension of subcontract period is allowed unless the Engineer
extends the period of construction of the Subcontract works.

7. Price of the Subcontract

The Subcontract Price is exclusive of 16% VAT and inclusive of


provision sums.

The Subcontract Price shall be adjusted to take account of any increase or decrease in
cost resulting from a change in Legislation of the Country referring to conditions of
Main Contract.
The Subcontract Price shall be adjusted for rises or falls in the cost of labour, Goods
and other inputs to the Works, by the addition or deduction of the amounts
determined by the formulae prescribed in the conditions of Main Contract.

Except as otherwise agreed in accordance with Clause 21 and set out in part II of the
Conditions of Subcontract Particular Applications (COPA), Subcontract price covers
the payment to execute and complete Subcontract Works and remedy any defects
therein in conformity with the Conditions of Subcontract, the main contract
conditions and specifications, the contract Drawings, the Subcontract Bill of
Quantities and Addenda.

The Subcontract price includes among others: cost of labor, cost of materials, cost of
plant or equipment, overhead/duties/insurances/taxes, profit excluding VAT. The
price covers all items of the works as listed in the Bill of Quantities of the
Subcontract.

8. The Subcontractor shall provide all superintendence, labor, materials, Plant,


Subcontractor’s Equipment among others, whether of a temporary or permanent
nature be recognized, required in and for such design, execution, completion and
remedying of any defects, so far as the necessity for providing the same is specified in
or is reasonably inferred from the Subcontract Agreement.

9. In consideration of the payment to be made by the Contractor to the Subcontractor as


hereinafter mentioned the Subcontractor hereby covenants with the Contractor to
execute and complete the Subcontract Works and remedy any defects therein in
conformity in all respects with the provisions of the Subcontract.

10. The Contractor hereby covenants to pay the Subcontractor in consideration of the
execution and completion of the Subcontract Works and the remedying of any defects
therein the Subcontract Price or such other sum as may become payable under the
provisions of the Subcontract at the times and in the manner prescribed by the
Subcontract conditions of particular applications( COPA).

11. The subcontract agreement has been prepared in due consideration of the earlier
(INITIAL) Memorandum of understanding by the Main Contractor and
Subcontractor; signed and stamped by AKL on 28-11-2007. The Contractor and
Subcontractor herein covenant to comply with the same unless negotiated and agreed
otherwise by the two parties.

12 The Subcontractor shall communicate and negotiate with the Engineer on claims,
variations and other issues associated with Subcontract Work jointly with the
Contractor.

13 The Subcontract Agreement has two copies, with each party holding one copy. The
Subcontract Agreement shall take effect upon signature and stamp. It will expire after
the full execution and completion of the Subcontract works, the remedying of any
defects therein, full implementation of the Subcontract Agreement and expiry of the
Defects Liability Period and subcontract price is paid in full.
This agreement is unconditional, non-transferable, non-reassign able and non-divisible
and shall be effective upon the commencement for the said SUBCONTRACT and shall
remain in full force and effect for the full term of the said Subcontract Agreement and
shall apply to all renewals, extensions, rollovers, or additions pertaining thereto.

This document binds all parties, the Contractor, Subcontractor, and their Associates,
Agents, Transfers, Assigns and / or Designees. The subcontract agreement is Non-
Circumvention / Non Disclosure and Confidentiality Agreement signed amongst all
parties.

In Witness Whereof the parties hereto have caused this Subcontract Agreement to take
effect upon signature and stamp.

Being signature of Contractor:

Witness of Contractor:

Being signature of Subcontractor:

Witness of Subcontractor:
CONDITIONS OF SUBCONTRACT

PART I

CONDITIONS OF GENERAL APPLICATION

The Conditions of Subcontract, Part I: General Conditions shall be those forming Part I
of the “Conditions of Subcontract for Works of Civil Engineering Construction 1994”
first edition 1994, prepared by the Fédération Internationale des Ingénieurs-Conseils
(FIDIC). These Conditions are subject to the variations and additions set out in Part II
hereof entitled “particular conditions”.
CONDITIONS OF SUBCONTRACT

PART II

CONDITIONS OF PARTICULAR APPLICATION

Clause 1 Definitions and Interpretation

1.1 Definitions

(a) (i) The Employer is the KENYA AIRPORTS AUTHORITY


(b) (ii) The MainContractor CHINA OVERSEAS ENGINEERING GROUP
CO.LTD
(c) (iii) The Contractor is MEHTA ELECTRICALS LTD
(d) (iv) The Sub Contrctor is AZICON KENYA LTD
(d) (iv) The Engineer is NETHERLANDS AIRPORTS CONSULTANTS B.V.
(e) (v) The Main Contract between the Employer and the Contractor is composed of
the following contract documents.

a. The Contract Agreement


b. The Letter of Acceptance
c. The Tender
d. The Particular Conditions – Part A
e. The Particular Conditions – Part B
f. The General Conditions
g. The Specification
h. The Drawings, and
i. The Schedules and any other documents forming part of the Contract.

The Contractor shall forward to the Subcontractor the following copies of


documents and the Subcontractor shall take note:

a) Addendum No.1 dated ……………………..


b) Addendum No.2 dated ……………………..;
c) Clarification on the contract documents dated ………………………..;
d) Letter from client to contractor dated ……… to correct errors in the Bid
e) Letter from Contractor accepting the correction of errors
f) Particular Conditions A and B
g) General Conditions
h) Specifications and drawings.

The documents in writing of negotiations, variations, notices and faxes,


Memorandum of Understanding in relation to the Main Contract Works between
the Employer and Contractor form the parts of the Contract.
(f) Scope of Subcontract Works are:

1. AGL SYSTEM- INSTALLATION ONLY


2. SCADA SYSTEM-SUPPLY AND
INSTALLATION
3. STRUCTURE CABLING WORKS-
SUPPLY AND INSTALLATION
4. PABX-SUPPLY AND INSTALLATION
5. FIDS SYSTEM- INSTALLATION ONLY

Clause 2 General Obligations

2.2 Performance Security

Replace the text of Sub-Clause 2.2 with the following:


Within fourteen (14) working days after the signing of the Subcontract, the Subcontractor
shall furnish the Contractor with a performance bond from a reputable insurance
company that shall be 10% of Subcontract Price. The form of the performance security
provided in the Main Contract may be used or some other form acceptable to the
Contractor. The institution providing such security shall be subject to the approval of the
Contractor. The cost of complying with the requirements of this clause shall be borne by
the Subcontractor.

Without limitation to the provisions of the preceding paragraph, whenever the Contractor
determines an addition to the Subcontract Price as a result of a change in cost and/or
legislation or as a result of a variation amounting to more than 25 percent of the portion
of the Subcontract Price payable in a specific currency, the Subcontractor, at the
Contractor’s written request, shall promptly increase the value of the performance
security in that currency by an equal percentage.

The performance bond shall be valid until the Subcontractor has executed and completed
the Subcontract Works and remedied any defects therein in accordance with the
Subcontract. No claim shall be made against such bond after the issue of the Defects
Liability Certificate in respect of the Main Works and such security or bond shall be
returned to the Subcontractor within twenty-eight (28) days after the issue of the said
Defects Liability Certificate. Prior to making a claim under the performance bond the
Contractor shall, in every case, notify the Subcontractor stating the nature of the default
in respect of which the claim is to be made.

If within the fourteen (14) working days after the signing of the Subcontract, the
Subcontractor shall not have submitted the required performance bond, the Contractor
shall withhold an equivalent amount accumulatively not exceeding 10% of the
subcontract Price from the Subcontractor’s monthly payments due until such a bond is
submitted.

2.3 Programme to Submitted by Subcontractor


Delete the first paragraph of sub-clause 2.3 and substitute:

Fourteen (14) days after receipt of master programme from the Contractor, three (3)
copies of a scheme/schedule and a programme shall be submitted by the Subcontractor to
the Contractor for his consent, in such form and detail as the Contractor shall reasonably
prescribe, for the execution of the Subcontract Works. The Subcontractor shall, whenever
required by the Contractor, also provide in writing for his information a general
description of the arrangements and methods which the Subcontractor proposes to adopt
for the execution of the Subcontract Works.

In principle the programme shall contain the following


a) The orders in which the Subcontractor proposes to carry the works
b) The time limits within which submission and approval of drawings are required
c) The general description of method (critical path method), which the
Subcontractor proposes to adopt for carrying out the works.
d) A graphical programme of works is essential for coloration purposes between
the programmed and actual progress.
e) Such other details and information as the contractor may reasonably require

The approval of the programme by the contractor shall not relieve the Subcontractor from
any of his obligations under the contract.

In particular the detailed programme shall be based upon the programme submitted by
the Subcontractor as part of his tender and shall in no manner deviate from the said
programme.

The programme shall be coordinated with climatic, ground water, rain and other
conditions to provide for the completion of the works in the order and time by the
specified. The monthly programme shall be revised as when necessary and shall show
quantities and percentage of works completed and shall also include a chart of the
principal quantities of work forecast for execution on a monthly basis. Subsequent event
may necessitate revision to this programme. The contractor acceptance of Subcontractor
proposed revision shall be obtained prior to captioning the changes. If for any reason, the
rate of progress of works at any section thereof is at any time in the opinion of the
contractor, that the work is too slow. The contractor shall notify the Subcontractor in
writing and the Subcontractor shall there upon take such steps as necessary so that to
expedite the progress so as to complete the works or such section by the prescribed time
and the Subcontractor is not entitled to any additional payment for taking such steps.
Unless the delay is not the responsibility of the Subcontractor in which case, costs to
recover earlier delays are a recoverable cost.
The Subcontractor shall submit to the contractor the general descriptions of his proposed
arrangements and method of execution of the works including working shift
arrangements, supply of materials, labor strength, skilled and unskilled, material
utilization programme and supervision arrangements. During the execution of works the
Subcontractor shall also submit to the contractor full and detailed particulars of any
proposed amendments to the arrangements and method in accordance with the foregoing
and all quality control records.
The Subcontractor will ensure quality progress of works as per the specification in line
with his programme within the subcontract agreement and subcontract conditions of
particular applications to avoid any impediment to completion of the subcontract works
which are all in the critical path. Where the subcontract works are delayed by the
Subcontractor, the Subcontractor will expedite the subcontract works by increasing his
resources/equipment and working time at no additional cost

Clause 3 Subcontract Documents

3.1 Language

The language of the Subcontract is English

3.2 Govering Law

The law is that in force in the Republic of Kenya..

3.3 Priority of Subcontract Documents

Refer to term No.2 of Subcontract Agreement.

Clause 5 Temporary Works; Contractor’s Equipment and /or Other Facilities

Replace Clause 5 with the following paragraph:

The Subcontractor shall provide all superintendence, labors, materials, Plant, Equipments
and others facilities required for the Subcontract works, whether of a temporary or
permanent nature. However as per Memorandum of Understanding the Contractor will
provide the sub contractor with continuous supply of portable water, electricity and
sanitation facilities inclusive of all temporary supply as it is required from time to time.

The Subcontractor shall submit to the contractor the drawings of temporally works which
he intend to use such as scaffolding, shuttering, survey pegs and cofferdams or any other
item. Therefore the Subcontractor shall carry out at his expense all the temporally works
to enable the works to be carried efficiently.

In the case that the Subcontractor uses any equipment, tool and scaffolding belonging to
or provided by the Contractor while it remains so erected upon the site, the Subcontractor
shall comply with operating and maintenance manual, Contractor’s management
regulations and shall abide by the rules and decisions by the Contractor. The use by the
Subcontractor of any other equipment, facilities or services provided by the Contractor
for the works shall be subject to separate arrangements between the parties hereto.
Payments of usage arising from aforesaid shall be deducted from interim and final
payments and otherwise due to the Subcontractor. Before use by the Subcontractor, such
costs and rates of charge shall be reasonable and will be first agreed between the parties
hereto. If equipment and/or other facilities are destroyed or damaged, the Subcontractor
shall repair and/or indemnify the Contractor against any damages.

With respect to materials and Plant brought by the Subcontractor to the Site for
incorporation into the Permanent Works, the Subcontractor shall bear the cost of
inspection and testing and survey works as prescribed in the bid document.

Clause 6 Site Working and Access

6.1 Working Hours on Site; Subcontractor’s Compliance with Rules and


Regulations

Replace sub-clause 6.1 with the following:


The Subcontractor shall observe the working hours and regulations as ordered by the
Contractor and the specifications in the Main Contract and shall comply with all
specifications governing the execution of the works and management regulations laid
down by the Employer and the Contractor.

No work shall be carried out on the site on locally recognized days of rest or outside the
normal working hours unless the work is unavoidable, or necessary for the protection of
life or property of for the safety of the Works, in which case the Contractor shall
immediately advise the Subcontractor.

The Subcontractor shall submit a work register determined by the contractor after sub
contractors’ submission of performance of programme. The work register shall be kept
on site and contain plant on site, labor on site and a list of categories of staff and plant
and equipment returns.

6.2 Availability of Site to Subcontractor and Access to Site

Add the following to the end of the first paragraph of sub-clause 6.2:
Provided that the Employer or his representative grant permission of the extent of such
portions of the Site and/or the access to such portions.

Clause 7 Commencement and Completion

7.4 Liquidated Damages for Delay

Add the Sub-Clause 7.4 as following:

If the Subcontractor fails to comply with the Time for Completion in accordance with
Sub-Clause 7.1, for Subcontract Works and any Section within the relevant time
prescribed by Sub-Clause 7.1, then the Subcontractor shall accordingly bear the
Liquidated Damages of 0.033% of the initial Subcontract Price per day for such default
and not as a penalty (which sum shall be the only monies due from the Subcontractor for
such default) for every calendar day that shall elapse between the date stated in a Taking-
Over Certificate of the whole of the Works and the originally planned completion date or
the relevant Section is delayed or not completed on time, subject to the applicable limit of
10% of the initial Subcontract Price.

The Contractor may, without prejudice to any method of recovery, deduct such damages
from monies and otherwise due to or becoming due to the Subcontractor. The payment or
deduction of such damages shall not relieve the Subcontractor of his obligation to
complete the Subcontract Works, or of any other of his obligations under the Subcontract.

Clause 12 Subcontractor’s Equipment, Temporary Works and Materials

Delete Sub-Clause12.1 and add the following Sub-Clause:

12.1 Equipment, temporary works or materials whether of a temporary or permanent


nature brought to the Site by the Subcontractor shall be in the name of the
Contractor or the client. All costs arising from the aforesaid shall be borne by the
Subcontractor.

12.2 The Subcontractor must provide and mobilize enough, considerable, reliable and
effective productive equipments and qualified experienced personnel as per
Subcontractor’s schedule during tender and as attached, related to any
tasks/activities for all the subcontract scope of works.

12.3 Equipment, temporary works or materials shall not be moved out of the site as stated
in the Main Contract except for the consent of the Contractor.

12.4 The Contractor will use his best endeavours in helping the Subcontractor, where
required for the Subcontract Works, with the arrival at and the departure from the
Site of materials and Subcontractor’s equipment and the storage of materials and
other things required for the Works at no cost to the Sub Contractor

12.5 The Subcontractor shall also provide at his own cost any additional facilities outside
the Site required by him for the purposes of the Subcontract Works.

Clause 15 Insurances

15.1 Subcontractor's Obligation to Insure

Replace the Sub-Clause 15.1 with the following:

Prior to the commence of the Subcontract Works the Subcontractor shall effect insurance
against such risks as are specified hereafter and in such sums for the benefit of the
Contractor. The Subcontractor shall keep in force such insurance from the time that so
much of the Site and such access is made available to him as may be required to enable
him to commence and proceed with the execution of the Subcontract Works in
accordance with the Subcontract until he has finally performed his obligations under the
Subcontract.

a) Equipments required for execution of Subcontract Works shall be insured at


Subcontractor own cost for not less than the full replacement value, including
delivery to Site. For each item of Subcontractor’s Equipment, the insurance shall
be effective while it is being transported to the Site and until it is no longer
required as Subcontractor’s Equipment.

b) Insurance against all losses and claims in respect of death of or injury to any person
employed by him.

c) Insurance against all losses and claims in respect of the Sub-Clause 13.1 which the
Subcontractor shall indemnify the Contractor against, i.e insurance of Automobile
Liability and Workmen’s compensation according to the laws and regulations of
Kenya.

15.2 Contractor’s Obligation to Insure Subcontract Works at Subcontractor’s


Risk

Replace the Sub-Clause 15.2 with the following:

The Contractor shall effect and keep in force the insurance for Subcontract Works. In the
event of the Subcontract Works being destroyed or damaged during such period in such
circumstances that a claim is established in respect thereof under the said policy, then the
Subcontractor shall be paid the amount of such claim, or the amount of his loss
whichever is the less, and shall apply such in replacing or repairing that which was
destroyed or damaged.

The Contractor shall effect and keep in force the insurance for Third Party Insurance
against liabilities for death of or injury to any person(irrespective of the Contract Works)
or loss of or damage to any property (other than the Works) arising during the
performance of the Subcontract.

The Subcontractor shall not be relieved of the obligations for any loss or damage
stipulated in this Sub-Clause as a result of adding the aforesaid paragraph.

15.3 Evidence of Insurance; Remedy on Failure to Insure

Replace the Sub-Clause 15.3 with the following:

Where by virtue of this Clause the Subcontractor is required to effect and keep in force
the insurance in pursuance of sub-clause 15.2, he shall if so required provide evidence
which could be in the form of appropriate from the insurers and the receipt for the
payment of the current premium and copies of the polices for the insurances effected.

If the Subcontractor fails to effect and keep in force any of the insurances required under
the Subcontract, or fails to provide evidence of insurance when required, then in any such
case the Contractor may effect and keep in force any such insurance and pay any
premium as may be necessary for that purpose and shall from time to time deduct the
amount so paid from any monies due or to become due to the Subcontractor, or recover
the same as a debt due from the Subcontractor.

Clause 16 Payment

16.1a Advance Payment

Add-Clause 16.1a as following:

The Contractor, within 14 days after receipt of advance payment from the Employer,
shall make an advance payment, as an interest-free loan for mobilization and cash flow
support for the execution of subcontract works only. When the Subcontractor submits the
Guarantee in accordance with this Sub-clause, the total advancement is 10% percentage
of the Subcontract Price payable in the currencies as agreed exclusive of Provisional
Sums and VAT.

Unless and until the Contractor receives the advance payment, this Sub-clause shall not
apply. In which instant, mobilization and procurement is delayed and damages apply.

The Contractor shall deliver to the Subcontractor an Interim Payment Certificate for the
advance payment after receiving a Statement (under Sub-clause 16.1) and after the
Contractor receives (i) the Performance Bond in accordance with Sub-clause
2.2[Performance Security] and (ii) a guarantee in amounts and currencies equal to the
advance payment. This guarantee shall be issued by a reputable bank, and shall be in the
form annexed to Particular Conditions of the Main Contract.

The Subcontractor shall ensure that Advance Payment Guarantee is valid and enforceable
until the advance payment has been repaid, but its amount shall be progressively reduced
by the amount repaid by the Subcontractor as indicated in the Payment Certificates. If the
terms of the guarantee specify its expiry date, and the advance payment has not been
repaid by the date 28 days prior to the expiry date, the Subcontractor shall extend the
validity of the guarantee until the advance payment has been repaid.

The advance payment shall be repaid through percentage deductions determined by the
Contractor from the interim payments as follows:
(a) deductions shall commence in the next interim Payment Certificate following that in
which the total of all certified interim payments ( excluding the advance payment and
deductions and repayments of retention)exceeds 30 percent (30%) of the Subcontract
Price less Provisional Sums.

(b) deductions shall be made at the amortization rate of 20% of the amount of each
Interim Payment Certificate (excluding the advance payment and deductions for its
repayments as well as deductions for retention money) until such time as the advance
payment has been repaid; provided that the advance payment shall be completely repaid
prior to the time when 90 percent of the Subcontract Price less Provisional Sums has been
certified for payment.

If the advance payment has not been repaid prior to the issue of the Taking-Over
Certificate for the Subcontract Works or prior to termination under Sub-clause 18.1
[ Termination of Subcontract], the whole of the balance then outstanding shall
immediately become due and payable by the Subcontractor to the Contractor.

16.1 Subcontractor’s Monthly Statements

Replace the Sub-Clause 16.1 with following:

The Subcontractor shall submit seven copies of a statement five (5) days before the end
of each month (the Specified Day), in a tabulated form approved by the Engineer,
showing the amounts to which the Subcontractor considers himself to be entitled. The
statement shall include the following items, as applicable, which shall be taken into
account in the sequence listed:

(a) The estimated Subcontract value of the Temporary and Permanent Works executed at
the unit rates and prices included in the Subcontract, in local currency;

(b) The actual value certified for payment for the Temporary and Permanent Works
executed up to the end of the previous month, at the unit rates and prices included in
the Subcontract, in local currency;

(c) The estimated Subcontract value at the unit rates and prices included in the
Subcontract of the temporary and permanent works for the month in question, in local
currency, obtained by deducting (b) from (a);

(d) The value of any variations executed up to the end of the month in question, less the
amount certified in the previous Interim Payment Certificate, in local currency;

(e) The value of any day work executed up to the end of the month in question, less the
amount certified in the previous Interim Payment Certificate, in local currency;

(f) Any credit or debit for the month in question in respect of materials and Plant for the
Permanent Works, in the relevant amounts, in local currencies, and under the
conditions set forth in Sub-Clause 16.7 in the Subcontract;
(g) Any amount to be withheld under the retention provisions of Sub-Clause 16.4 of the
Subcontract;

(h) Amount of insurance premium, to be withheld expressed in local currency, to which


the Contractor may be entitled under the Subcontract or otherwise;

(i) Any amounts to be deducted as repayment of the advance under the provisions of the
Subcontract, and

(j) Any other sum in local currency, to which the Subcontractor may be entitled under the
Subcontract or otherwise.

The Subcontractor must at the end of every month to carry out joint measurement works
with Contractor. The measurement for subcontract works will be carried out jointly.
Payment certificate will be based on signed measurement sheets for the subcontract
works. The value of work done shall be calculated in accordance with the rates and prices
specified in the Subcontract, but if there are no such rates and prices, or if they are
inappropriate or inapplicable, and subject to the Engineer’s confirmation/approval, then
such value shall be such as is fair and reasonable. The Subcontractor shall be paid for as
per quantities agreed by both parties by applying unit rates to the quantities executed for
the respective items in accordance to the subcontract agreement and subcontract
conditions of particular applications.

16.2 Contractor’s Monthly Statements

Add the following paragraph as the first paragraph of Sub-Clause 16.2: 

The said statement in Sub-Clause16.1 shall be amended and checked by the Contractor in
such a way that, in his opinion, it reflects the amounts due to the Subcontractor in
accordance with the Subcontract. In cases where there is a difference of opinion as to the
value of any item, the Engineer’s view shall prevail. Within seven (7) days of receipt of
the monthly statement referred to in Sub-Clause16.1, the Contractor shall
determine/examine the amounts due to the Subcontractor.

16.3 Payment Due, Payment Withheld or Deferred, Interest

Replace the first paragraph of Sub-Clause 16.3 with the following:

Within fourteen (14) days after the Contractor receives payment from the Employer, the
amounts included in a Statement shall be due and payable to the Subcontractor, subject to
deduction of previous payments and of retention monies until such time as the limit of
retention money (if any) therein specified has been reached.

16.4 Payment of Retention Money

Replace the Sub-Clause 16.4 with the following:


The percentage of Retention Money is five (5) percent of Interim Payment Certificates
through the Subcontract. Retention Money shall be deducted from the first Certificate.
After the issue by the Engineer of the Taking-Over Certificate with respect to the whole
of the Main Works, within seven(7) working days after the Contractor’s receipt of one
half of Retention Money from the Employer, the Contractor shall pay to the
Subcontractor one half of the retention monies under the Subcontract.
Within seven(7) working days after the Contractor’s receipt of any payment under the
Main Contract which is by way of release of the other half of the retention monies, the
Contractor shall pay the Subcontractor the other half, or the remaining proportion, of the
retention monies under the Subcontract.

16.6 Cessation of Contractor’s Liability

Replace Sub-Clause 16.6 with the following:

The Contractor shall not be liable to the Subcontractor for any matter or thing arising out
of or in connection with the Subcontract or execution of Subcontract Works, unless the
Subcontractor has given a notice of a claim in respect thereof to Contractor in his
Statement at Completion before the issue of the Defect liability Certificate in respect of
the whole of the Works according to Sub-Clause 16.9.

16.7 Minimum Amount of Interim Payment Certificates

Add sub-Clause 16.7 as following

Minimum Amount of Interim Payment Certificates shall be 5 % of the Subcontract Price


with no more than one submission per month. The payments for the Subcontractor shall be
based on the payments from the Employer to which they relate.

Clause 19 Settlement of Disputes


19.1. Amicable Settlement Adjudication and Arbitration

Add the following at end of last paragraph of sub-clause 19.1

The place of arbitration shall be Nairobi, Kenya and the arbitration shall be conducted in
the English language.

Clause 22 Currency and Rates of Exchange

22.1 Currency Restrictions

Add the following paragraph of Sub-clause 22.1

Payment of the Subcontract Price shall be in currencies as agreed between the Contractor
and Subcontractor.
22.2 Rates of Exchange

Delete and replace Sub-Clause 22.2 with the following:

The rates of exchange refer to the Schedule of Payment Currencies in the Main Contract
Documents.

Clause 23 Safeties, Security, Protection of the Environment and General


Obligations

Sub-Clause 23.1

After effecting of the Subcontract, the Subcontractor shall be deemed to have full
knowledge of the provisions of Construction Code and Specifications of the Main
Contract limited to documentation provided at commencement and during the contract
period and assume and perform hereunder all the obligations and liabilities of the
Contractor under the Main Contract in relation to the Subcontract works and bear the cost
arising from complying with this clause.

Sub- Clause 23.2

The Subcontractor shall take all essentials steps on his own responsibility and at his own
expense to ensure that existing structures and installation are protected, preserved and
maintained. The Subcontractors shall be responsible for taking the necessary steps
prevent any loss or accident which may result from carrying out the works. During the
performance of contract, the Subcontractor should put urgent measures that are necessary
to obviate any risk of accident or damage in place. On his own responsibility and at his
expense, the Subcontractor shall take all precautions required by good construction
practice and by the prevailing circumstance to safeguard adjacent properties and avoid
causing any abnormal disturbance therein. The Subcontractor shall ensure that the works
and installation do not cause damage to or obstruction or communication links and shall
take account of selecting routes and vehicles.

Sub-Clause 23.3 Existing Services

Where in the course of carrying out the works, the Subcontractor shall mark the course of
underground cables, conduits and should execution of work necessitated their temporary
removal- such require authorization from the contractor. The Subcontractor shall be
responsible for the preservation, removal or replacement as the case may be but limited to
as per priced Bills of Quantities Where the presence of cables and conduits and is not
specified in the subcontract. The Subcontractor under general duty of care and similar
obligation and must be notified to the contractor. Where any work of site is likely to
cause disturbance or damages to utility service, the Subcontractor shall immediately
inform the contractor in writing and giving a reasonable period of notice so that suitable
measures can be taken in time.
The above mentioned existing services shall be shown on drawings issued for
construction. If not, any delay or cost arising is recoverable.

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