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Rev.01 1.1.14

Subcontractor Requirements

Signed subcontractor agreement (initial all pages)

Completed and signed DWC-83(use if you don’t

have any employees) or use DWC-85 Form (If you

do have employees.)

Insurance Certificate with SGC Homes as

Certificate holder

Completed and signed w9

__________________________________

Contractor Signature Date

Contractor Initials ______ Page 1

SUBCONTRACTOR AGREEMENT

This SUBCONTRACTOR AGREEMENT (this “Agreement”), dated ____________ ____, 20___, (the “Effective Date”) is entered into by and between _______________________________________, (“Subcontractor”) and SGC Homes, LLC (“General Contractor”). Subcontractor and General Contractor may be herein referred to, individually, as a “Party” and, jointly, as the “Parties”. For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Subcontractor and the General Contractor hereby agree as follows:

Article 1. Statement of Work From time to time, Subcontractor may provide services to General Contractor for an arranged fee (each such service assigned, a “Project”). Each such Project may be only a part of the work involved in the design, construction plan and/or schematics (jointly, the “Building Plan”) on the construction location (the “Site”). Additional subcontractors, unrelated to Subcontractor, may be assigned by the General Contractor to other preceding, concurrent or succeeding projects under separate Subcontractor Agreements. In addition to the terms and conditions negotiated by the Parties for a particular Project (“Project Workorder”), General Contractor and Subcontractor hereby agree that the terms and conditions of this Agreement shall apply whenever Subcontractor accepts a Project assigned by the General Contractor.

Article 2. Payments A. Prior to beginning work on any Project, Subcontractor shall provide a signed estimate for the total cost of all services to be included in the Project (the “Estimate”). B. The General Contractor shall pay Subcontractor for work done on the Project in arrears based on receipt of Invoices, as defined below, from Subcontractor, which itemize the costs for the percentage of work completed in the time since payment of the last Invoice. Such Invoices shall request payment based on the amount of the Estimate and any amounts in excess of the Estimate (an “Overage”) shall be fully explained by the Subcontractor in order for payment of such Overage to be considered for payment by General Contractor. All payment requests for work properly completed by Subcontractor during any one week period (each, an “Invoice”) shall be submitted to the General Contractor in an invoice format by Wednesday in order to receive such payment by Friday of the following week (the “Payment Date”). Any Invoice submitted to General Contractor after Wednesday shall not be paid until the following Friday pay period, two weeks after such late submission. Such Invoice shall include the Estimate amount, the current Project amount, the percentage of the Project completed to date, any previous invoiced billing amount(s), the gross billing amount, and the current net Invoice amount. C. No Invoice shall be paid until General Contractor has inspected and approved the Project services included in such Invoice. Deficiencies noted by General Contractor in work included on an Invoice shall be remedied by the Subcontractor prior to any payment for such Invoice. It shall be the Subcontractor’s responsibility to ensure that any deficiencies in Subcontractor’s workmanship, as noted by General Contractor, are remedied by Subcontractor and re-inspected by the General Contractor prior to the Wednesday immediately before the Friday on which payment may be made available to the Subcontractor. Failure to remedy any noted deficiency prior to the current Payment Date is a default of this Agreement which must be cured pursuant to Article 12 of this Agreement. D. Subcontractor shall be charged for any and all costs and expenses incurred in connection with re-inspections necessitated by unacceptable materials or workmanship. E. Each Invoice shall be accompanied by proof of payment for any materials and labor included on such Invoice.


F. Any payment made by General Contractor hereunder shall not be construed as evidence of acceptance of any part of the work or materials furnished by Subcontractor. No payment shall constitute a waiver by General Contractor of any right to require fulfillment of all terms of this Agreement in strict accordance with this Agreement and any Project Workorder. All sums received by Subcontractor under this Agreement, in conjunction with any Project, are received in trust for the express use and purpose of paying in full all labor and materials furnished to Subcontractor in the performance of this Agreement. No title to any payment, or any part of it, shall vest in Subcontractor or be used for any other purpose, until Subcontractor has first paid in full all labor and materials furnished to Subcontractor by all persons who may have supplied labor and/or materials used in the work on that particular Project. G. General Contractor may withhold or, on account of subsequently discovered evidence, nullify the whole or part of any payment to the extent necessary to protect General Contractor from loss, including costs and actual attorneys’ fees, on account of (1) defective work not remedied; (2) claims filed or reasonable evidence indicating probable filing of claim; (3) failure of Subcontractor to make payments properly to Subcontractor’s employees or for material, labor or fringe benefits; (4) a reasonable doubt that this Agreement can be completed for the balance then unpaid; (5) damage to any Project or to another subcontractor; (6) penalties assessed against General Contractor or Subcontractor for failure of Subcontractor to comply with state, federal or local laws and regulations; or (7) any other ground for withholding payment allowed by state or federal law, or as otherwise provided in this Agreement. When the above matters are rectified, such amounts as then due and owing shall be paid or credited to Subcontractor. Such withholdings may be made by General Contractor whether or not said sums are in any way related to this Agreement or a Project or a Project Workorder. General Contractor may apply such deducted funds to any account, related or unrelated to this Agreement or a Project or a Project Workorder, wherein the obligations of the Subcontractor have not been discharged as determined by the General Contractor, and wherein the General Contractor’s interest are directly or indirectly involved. In the event Subcontractor is in default of, or breaches or fails to comply with any provision, covenant or requirement of this Agreement; or in the event that any person or entity asserts, or indicates that he will assert, any lien, claim, demand, or charge against the Project or land or improvements or funds related to the Project, or the Site, the General Contractor or any surety, arising from Subcontractor’s performance of this Agreement, the General Contractor may withhold out of any payments due or to become due to the Subcontractor such amounts as the General Contractor, in General Contractor’s discretion, may deem sufficient to completely protect and indemnify the General Contractor from any and all loss, damage and/or expense therefrom, including attorney’s fees and litigation costs, until the condition requiring such measures has been remedied by Subcontractor to the satisfaction of General Contractor. If the offending condition is not remedied by Subcontractor within a reasonable period of time, General Contractor may, at its option, proceed to make application of the withheld funds in whatever manner General Contractor may, in General Contractor’s discretion, determine as being in General Contractor’s best interests.

Article 3. Subcontractor Guidelines

A. Time is of the essence in the completion of any Project accepted by Subcontractor. Upon Subcontractor’s acceptance of a Project, as indicated by Subcontractor’s, or Subcontractor’s representative’s execution of the Project Workorder, Subcontractor shall promptly commence work on said Project without undue delay. Except for normal, reasonable weather delays and/or other unpreventable force majeure delays, as enumerated in Article 14(D) of this Agreement, Subcontractor’s failure to promptly commence work within three (3) days of such Project’s agreed upon Project commencement date shall constitute an incurable breach of this Agreement and shall, on such third day, be deemed to represent Subcontractor’s intent to abandon the Project (a “Breach of Commencement”). Upon Subcontractor’s Breach of Commencement, Subcontractor shall have no further rights in the assigned Project and General Contractor may immediately reassign the Project for completion by another subcontractor. B. If Subcontractor should default in performance of the Project Workorder or should otherwise commit any act which causes delay to the Project, other subcontractor work on the Site or any part of the Building Plan, Subcontractor shall be liable for all losses, costs, expenses, liabilities and damages, including consequential damages and liquidated damages, sustained by General Contractor, or for which General Contractor may be liable to any other party because of Subcontractor’s default. Further, whether


or not liquidated damages and/or consequential damages are so assessed, Subcontractor agrees to pay to General Contractor such other additional damages as the General Contractor may sustain by reason of any such delay directly or indirectly attributable to or caused by Subcontractor, including, but not limited to, recovery of General Contractor’s overhead and expenses related to managing and supervising the Project during or equal to any period of time resulting from such delay of Subcontractor. Subcontractor further agrees that neither the payment of such damages nor any liability incurred for the payment of such damages shall release the Subcontractor from his obligation to otherwise fully perform this Agreement. C. Subcontractor shall be solely responsible for obtaining and paying for all necessary permits, licenses, and any other instruments required to perform the services associated with the Project. General Contractor will fully cooperate with Subcontractor in the obtaining of any permits and licenses, as necessary. D. Subcontractor shall furnish all necessary management, supervision, labor, equipment, power, supplies, materials, permits, machinery, tools, cartage, insurance, engineering, testing, services, facilities, and any other act or thing required to diligently and fully perform and complete the Project in strict compliance with any applicable plans and specifications as contained in the Project Workorder. E. Subcontractor shall be responsible for inspecting the Project Site, familiarizing himself with the conditions under which the work on the Project is to be performed, checking all figures, dimensions and measurements set forth in the Project Workorder related to Subcontractor’s work on the Project, and correlating his observations with the requirements of the Project, and shall immediately report any discrepancies or omissions to General Contractor. Subcontractor warrants and agrees that he shall investigate all such matters and familiarize himself therewith to the extent that Subcontractor, in his sole discretion, deems necessary. Failure to comply with this provision and any additional costs resulting from such non-compliance shall be the sole responsibility of and charged to Subcontractor. Subcontractor further agrees that General Contractor shall not be liable to Subcontractor on any claim for additional payment or additional time or any claim whatsoever if such claim directly or indirectly results from Subcontractor’s failure to investigate or familiarize himself sufficiently with the conditions under which a particular Project is to be performed, including the foregoing, or from any misunderstanding thereof on the part of the Subcontractor. F. Subcontractor shall maintain a competent superintendent acceptable to General Contractor on the Project Site at all times when Subcontractor's work is in progress to ensure that the work is completed in strict accordance with the Project Workorder, and the superintendent shall be authorized to represent Subcontractor as to all phases of the Project. Subcontractor shall notify General Contractor prior to the commencement of the work as to who Subcontractor's superintendent shall be and shall give prior notice to General Contractor before any changes of superintendent shall become effective. Subcontractor shall remove any employee from the job who is unacceptable to General Contractor. G. Subcontractor agrees to use due diligence in the completion of the Project and shall complete the Project strictly in accordance with any applicable plans and specifications as contained in the Project Workorder, in a workmanlike manner in accordance with the legally required and/or acceptable standards, customs and practices of workmanship within the Subcontractor’s trade or profession, meeting all local and state building codes, including the Uniform Building Code or other applicable local regulations, and in the most expeditious, sound and economical manner. H. Subcontractor shall effectively secure and protect the work done on the Project and assume full responsibility for the condition thereof until final acceptance by General Contractor. Subcontractor further agrees to provide such protection as is necessary to protect the work and the workers of General Contractor and other subcontractors from Subcontractor’s operations. Subcontractor shall repair or replace, at Subcontractor’s own expense, any property, surfaces, structures or conditions damaged as a result of, or arising out of Subcontractor’s work. Any unsafe conditions or working practices caused by or attributable to Subcontractor, or relating to Subcontractor’s scope of work, shall be immediately remedied by and at the sole expense of Subcontractor, and General Contractor shall not be liable to Subcontractor's employees or any other third party for unsafe conditions related to or caused by Subcontractor's performance of this Agreement. Subcontractor is specifically responsible and liable for all aspects of Subcontractor’s use of work space jointly used by different subcontractors, and General


Contractor specifically does not retain supervisory control of such joint use areas for purposes of liability for unsafe conditions. I. All work covered by this Agreement done at the Site or in preparing or delivering materials or equipment, or any or all of them, to the Site shall be at the risk of Subcontractor exclusively until the completed work is finally accepted by General Contractor. J. In the event Subcontractor shall use General Contractor’s equipment, materials, labor, supplies or facilities, Subcontractor shall reimburse General Contractor at a predetermined rate, except as otherwise stated herein. Further, Subcontractor assumes all responsibility for physical damage to such equipment, materials, labor, supplies, or facilities used by Subcontractor or Subcontractor’s agents, employees, or permittees. In the event that General Contractor’s employees are used by Subcontractor, Subcontractor shall have full responsibility for all acts or omissions of General Contractor’s employees with regard to Subcontractor’s use or employment of them. Subcontractor accepts any and all of General Contractor’s equipment, materials, labor, supplies or facilities as furnished. If, at the request of Subcontractor, General Contractor permits Subcontractor’s personnel to use General Contractor’s equipment, owned or rented, such as hoisting equipment, safety planks, ladders and scaffolds, Subcontractor will indemnify General Contractor and hold General Contractor harmless from any and all liability, claims, actions, demands, damages, and expenses, including without limitation, attorneys’ fees arising out of injury to persons or property in any connection with such use of General Contractor’s services, facilities, or equipment. Subcontractor agrees to indemnify General Contractor and hold General Contractor harmless from any and all liability, claims, actions, demands, damages, and expenses, including without limitation, attorneys’ fees arising out of injury to persons or property in any connection with such use of any equipment, tools or devices within the control of Subcontractor, whether owned, rented, leased or borrowed by Subcontractor. K. Except as otherwise specified within this Agreement, General Contractor shall have complete control of the Site on which the Project is to be performed and shall have the right to decide the time and order in which various portions of the Project shall be installed and the relative priority of the work of Subcontractor and other subcontractors, and, in general, all other matters pertaining to the timely and orderly conduct of the work of Subcontractor on the Site. L. Subcontractor shall report to General Contractor all accidents to or by Subcontractor’s personnel or equipment which occur at the Project Site. Copies of accident reports shall be given to General Contractor within 24 hours of the occurrence. M. Subcontractor shall not accept any changes to the Project Workorder from any person or entity, other than the General Contractor. N. If General Contractor requests or requires any change either expanding or limiting the work to be performed under the Project Workorder (a “Change Order”), Subcontractor shall accept such Change Order from General Contractor. General Contractor agrees to provide Subcontractor with written notice of any such Change Order as soon as practical after General Contractor receives such notice. Any resulting increase or decrease in the Project price caused by a Change Order, pursuant to this Article 3(N), must be in writing, mutually agreed to, and signed by both parties. If the parties are unable to reach an agreement regarding any price adjustment for a Change Order, Subcontractor will proceed with the work, as per the Change Order, and the matter shall be submitted to arbitration under the laws of Texas within 30 days from the issuance of the Change Order. Such arbitration shall set the Change Order price allowing General Contractor a reasonable profit, after considering direct costs and reasonable overhead expenses. Such arbitration costs for determination of price shall be equally split between Subcontractor and General Contractor, regardless of the decision made by the arbitrator. Both Parties shall abide by the decision of the arbitrator. O. Subcontractor shall perform the services required for a particular Project in a professional manner that does not harm the reputation of General Contractor. Subcontractor and Subcontractor’s employees are required to wear appropriate clothing at all times while on the Project. No articles of clothing that displays lewd or vulgar illustrations or language shall be permitted.


P. Subcontractor shall not discuss any pricing issues with a customer of the General Contractor, a competitor of the General Contractor, or any third party. Subcontractor shall refer any customer questions directly to the General Contractor. Q. Subcontractor shall keep the Project Site clean of debris at all times and shall be responsible for cleaning the work area and properly disposing of any debris related to Project services prior to payment of any Invoice. R. Unless Subcontractor receives the express, written consent of the General Contractor, Subcontractor shall not hire or engage the services of any agent or subcontractor, who is not a W-4 employee of Subcontractor, to perform any service or portion of the work required to complete the Project. S. Subcontractor must leave Site free of any and all liens and claims of lien, suits, encumbrances and/or stop notices chargeable to the Subcontractor. Subcontractor shall have sole responsibility for paying any supplier, Subcontractor’s employee, or other person for supplies, services performed, and/or work done on any Project assigned by General Contractor to Subcontractor. Subcontractor shall ensure that no supplier, Subcontractor employee or subcontractor will place a lien on any property that is the subject of a Project or that is owned or controlled by the General Contractor or its affiliates. Subcontractor agrees within ten (10) days after written demand to cause the effect of any such lien, claim, suit, encumbrance and/or stop notice to be removed, and in the event Subcontractor shall fail so to do, General Contractor is authorized to use whatever means in its discretion General Contractor may deem appropriate to defend, dismiss, resolve, remove or dismiss same, and the cost thereof, together with actual attorneys’ fees, shall be immediately due and payable to General Contractor by Subcontractor. In case suit is brought on any claim, lien, encumbrance or stop notice labor performed or materials used on or furnished to the project, Subcontractor shall pay and satisfy any such amount or judgment as may be established by the decision of the arbitrator and/or court in said suit, or through settlement. Subcontractor may litigate any such lien or suit provided it causes the effect thereof to be removed, promptly in advance, from the Site and/or Project, and shall do such further things as may be necessary to prevent damage, monetary or otherwise, to General Contractor by reason of such liens, suits, encumbrances or stop notices. Subcontractor hereby gives to General Contractor the authorization and right to setoff any payments due to Subcontractor in order to pay any legitimate and proven claim made by a supplier, Subcontractor employee, or subcontractor whose claim arises from the Project assigned to Subcontractor. T. Subcontractor shall not at any time, during a Project or after completion of a Project, place a lien on any property that is the subject of such Project or that is owned or controlled by General Contractor or its affiliates. Any unresolved differences between Subcontractor and General Contractor shall be resolved by arbitration. U. Subcontractor shall provide unconditional final lien waivers and releases from Subcontractor, material and equipment suppliers and any subcontractor, whether approved or not, upon final payment of all sums due to Subcontractor for the Project Workorder. V. Subcontractor agrees that he shall not directly or indirectly solicit, hire, or otherwise retain or engage, whether as an employee, independent contractor or otherwise, any employee, personnel or subcontractor of the General Contractor or its affiliates for the duration of this Agreement and for the sooner of one (1) year after the termination of this Agreement or such person’s termination by the General Contractor.

Article 4. Rules Concerning Drugs and Alcohol

A. General Contractor strictly prohibits the use, possession, sale, transfer, purchase or being under the influence of any drug or alcohol by subcontractors or their employees at any time on General Contractor’s Site or while conducting General Contractor’s business. B. Subcontractors or their employees shall not report for duty or be on General Contractor property or Projects while under the influence of an illegal drug or alcohol.


C. No prescribed drug shall be brought on General Contractor’s premises or Site by any person other than the one for whom it is prescribed. Such drugs can only be used in the manner, combination and quantity prescribed and only providing there are no safety concerns involved with such drug’s use. D. General Contractor shall not condone the off-duty use of any drug or alcohol that results in excessive absenteeism or tardiness or which may result in accidents or poor workmanship. E. Any Subcontractor found to be in violation of the General Contractor's Drug and Alcohol Policy shall be immediately terminated from all current or future contracts with General Contractor. F. Subcontractor shall immediately terminate any subcontractor employee found to be in violation of the General Contractor's Drug and Alcohol Policy from any further work on General Contractor's and its affiliates’ property or Projects. G. The following definitions refer to this Article 4 of the Agreement: i. Alcohol is any beverage that may be legally sold and consumed and has an alcohol content more than three percent (3%) by volume. ii. Drug means any substance that can alter a person's mood, perception, pain level or judgment. Drug also includes alcoholic beverages, inhalants and illegal drugs. iii. Prescribed Drug is any substance prescribed by a licensed medical practitioner. iv. Illegal Drug is any drug or controlled substance whose use, possession, sale, transfer or purchase is illegal under local, state or federal laws.

Article 5. Insurance A. The Subcontractor, at Subcontractor’s own expense, and, notwithstanding the requirement for Subcontractor to obtain the written acceptance of General Contractor for the use of a third party subcontractor, any subcontractor of Subcontractor, at such subcontractor’s own expense, shall obtain and maintain in full force and effect at all times, without interruption during the term of this Agreement and during Subcontractor’s performance of the Project at the Site under a Project Workorder, not less than the following coverage and limits of insurance which shall be maintained by Subcontractor and Subcontractor’s subcontractor under forms of policies and from companies satisfactory to General Contractor:

i. Workers’ Compensation Insurance – Regardless of any state or federal statutory requirement, such insurance shall be procured and maintained to cover the legal liability of the Subcontractor and its subcontractors (if such are expressly permitted by General Contractor) under the applicable workers’ compensation or occupational license laws relating to claims for the personal injuries and/or death of the Subcontractor and/or the Subcontractor’s employees. The limits of the required coverage shall be the higher of: (a) Statutory Statutory Limits (b) Employer’s Liability: $1,000,000.00 Each Accident $1,000,000.00 Disease – Policy Limit $1,000,000.00 Disease – Each Employee

ii. Commercial General Liability Insurance – Such insurance shall cover the legal liability (including liability assumed contractually, whether incidental or not) of the Subcontractor (and any of its subcontractors, if expressly permitted by the General Contractor), who may be engaged in a Project, for claims for personal injuries (including death) and any property damage resulting therefrom arising out of Project to be completed by the Subcontractor (or any of its subcontractors, if expressly permitted by the General Contractor), in an amount not less than $1,000,000.00 for any one occurrence, $2,000,000.00 general aggregate (subject to a per Site/location general aggregate provision), and with a $2,000,000.00


Products/Completed Operations aggregate limit. The Commercial General Liability insurance should be occurrence form and shall include contractual liability coverage, products/completed operations coverage, cross liability coverage, severability of interest and property damage coverage (A CG 00 01 Coverage Form or its equivalent is required). iii. Automobile Liability Insurance – Such insurance shall cover the legal liability (including liability assumed contractually, whether incidental or not) of the Subcontractor (or any of its subcontractors, if expressly permitted by the General Contractor), who may be engaged in the Project, for claims for personal injuries and death resulting therefrom and for property belonging to other than the Subcontractor caused by highway licensed vehicles of or used by the Subcontractor in an amount not less than $1,000,000.00, combined single limit. Automobile Liability insurance shall provide coverage for Subcontractor-owned, -hired or non-owned automobiles or other automotive equipment. iv. Umbrella Coverage – Such insurance shall be in excess of other required insurance and be maintained at a minimum of $1,000,000.00 umbrella covering any accepted Project. v. Crane Insurance – If the Subcontractor or, if permitted by the General Contractor, Subcontractor’s subcontractors use any owned, leased, chartered or hired crane of any type, Subcontractor shall maintain a General Liability insurance policy, with a Riggers Liability endorsement attached to the policy, in an amount not less than $5,000,000.00 per occurrence. vi. Completed Operations Coverage – Subcontractor, and any subcontractor of Subcontractor, shall maintain and evidence Completed Operations Coverage for a minimum of three (3) years subsequent to the completion of any Project per the limits shown above. B. Copies of all insurance policies shall be provided to General Contractor by Subcontractor within twenty-four (24) hours of General Contractor’s request for such policies, whether such request be made in person or in writing. C. The General Contractor, its subsidiaries, officers, members, directors, employees, and agent shall be named as an Additional Insured for ongoing Projects and completed Projects by having the insurance carrier issue an Additional Insured Endorsement(s) with the ISO CG2010 11/85 or its equivalent on all such policies. Copies of these endorsements should be attached to the Certificate of Insurance and shall be updated for any insurance renewals. Subcontractor hereby authorizes General Contractor to contact insurer, speak with agents and representatives of insurer. D. Certificates of insurance must also include a waiver of subrogation issued by the Subcontractor’s or its subcontractor’s insurance carrier in favor of the General Contractor, its subsidiaries, officers, members, directors, employees, and agents for General Liability, Auto Liability, and Workers Compensation. The Subcontractor hereby waives and relinquishes any right of subrogation against General Contractor and its subsidiaries, agents, representatives, employees, and affiliates which they might possess for any policy of insurance provided under this Article 5(C) or under any State or Federal Workers’ Compensation or Employer’s Liability Act. E. The Subcontractor’s general liability, automobile liability and excess insurance coverage shall be primary and non-contributory with respect to work on any Project for the General Contractor, its subsidiaries, officers, members, directors, employees, and agents. The Subcontractor, in its agreements with subcontractors (if expressly permitted by General Contractor), shall require each such permitted subcontractor to obtain insurance meeting the minimum limits and incorporating the contractual requirements that are prescribed within this Article 5. F. Subcontractor shall require its insurers to notify General Contractor in writing thirty (30) days prior to the effective date of any cancellation or material change in any of the required policies. To the extent that the Subcontractor utilizes deductibles in conjunction with the insurance required by this Agreement, all costs of such deductibles shall be assumed by the Subcontractor. Insurance shall be placed with insurers with an AM Best rating of not less than A- VIII.


G. Proof of all insurance required in Section 5(A) shall be submitted to General Contractor in the form required by this Section 5 fifteen (15) or more days prior to the commencement of any Project. General Contractor may contact Subcontractor’s insurers at any time to confirm that the required insurances and endorsements are in effect. H. General Contractor reserves the right to require Subcontractor to increase the limits of liability for any of the above-required insurances. I. No payment for any Project shall be made to Subcontractor unless and until all above-required proof of insurance has been submitted to General Contractor. General Contractor shall ensure that all required insurance is current and in effect prior to any payment to Subcontractor. J. Any cancellation of the required insurances shall result in cessation of the then current Project assigned to Subcontractor until the required insurance is demonstrated to be valid and in effect. Subcontractor shall not perform any portion of such Project until the required insurances are renewed and in effect. Subcontractor shall be liable for any costs for any delays resulting from a cessation of insurance. A cessation lasting longer than three (3) days may result in the Subcontractor’s replacement on the Project and any costs for such delay shall be assessed to the Subcontractor and may be deducted from funds due to Subcontractor for past services performed for General Contractor.

Article 6. Bonding of Subcontractor.

Concurrently with the execution of this Agreement, Subcontractor shall, if required by General Contractor, execute a labor and material bond and performance bond, in an amount equal to one hundred percent (100%) of the Project price. Said bonds shall be executed by a corporate surety acceptable to General Contractor and shall be in a form satisfactory to General Contractor. Subcontractor shall pay the premium on said bonds unless otherwise provided herein or in the Project Workorder.

Article 7. Warranty.

A. For a period of one (1) year after transfer of ownership to a home buyer (unless the Texas Property Code (the “Code”) specifies a greater minimum statutory warranty requirement, in which such case, the statutory period specified in the Code shall apply), Subcontractor warrants its work against all defects in materials or workmanship and warrants that all such work was completed in conformance with the Project Workorder and Building Plan. B. Subcontractor warrants to General Contractor and any subsequent purchaser of the final structures and property affiliated with a Project Site that all goods, materials, and equipment furnished as part of the work shall conform to the Project Workorder and/or other descriptions furnished by General Contractor and that the goods, materials and equipment shall be merchantable, free from defect, new, of good workmanship and quality, and fit for any particular purpose for which the goods, materials or equipment are required. C. Subcontractor further warrants that all materials shall be free of hazardous substances including, but not limited to, asbestos. D. All such warranties shall survive inspection, testing and acceptance of the goods and shall extend to future performance of the goods or materials. E. These warranties are in addition to the other remedies General Contractor has under this Agreement and Texas law. F. Upon receipt of notification from General Contractor, Subcontractor shall correct at Subcontractor's sole cost and expense any defects or deficiencies in the materials or workmanship which arise during the period of Subcontractor's warranty/guarantee. If Subcontractor shall fail to correct the defects and/or deficiencies within seventy-two (72) hours of receipt of notice from General Contractor, General Contractor may without further notice provide the labor and materials necessary to correct the defects and/or deficiencies and the cost thereof shall be charged to the Subcontractor. In the event there


are insufficient funds to satisfy such deduction, Subcontractor shall reimburse General Contractor for such costs immediately upon receipt of written demand from General Contractor.

Article 8. OSHA Compliance

A. Subcontractor shall fully comply with all workplace safety regulations promulgated by the Occupational Safety and Health Administration (“OSHA”). Subcontractor shall ensure that Subcontractor’s employees and any subcontractors, if permitted by the General Contractor, are in compliance with OSHA at all times while engaged in Projects under control of the General Contractor. It shall be the Subcontractor's responsibility to furnish and pay for special tools, equipment and personal protection equipment necessary to comply with OSHA standards or other agency regulations that pertain to the Project. B. Subcontractor shall comply fully with all laws, orders, citations, rules, regulations, standards and statutes affecting or relating to this Agreement and the Project or the performance thereof, including but not limited to those with respect to the handling and storage of hazardous materials, accident and illness prevention, safety equipment and practices, and compliance with all applicable environmental rules and regulations, including those relating to sediment and erosion control, storm water discharge, and air, ground and water quality. Subcontractor shall conduct inspections and monitoring to determine compliance with all of the foregoing and that safe working conditions and equipment exist. Subcontractor accepts sole responsibility for providing a safe work environment for its employees and for suppliers of material and equipment, and for any person or entity that may be affected by Subcontractor’s work, for adequacy of and required use of all safety protective measures and equipment, and for full compliance with the aforesaid laws, orders, citations, rules, regulations, standards and statutes.

Article 9. State and Federal Taxes & Employer Compliance

A. Subcontractor shall be solely responsible for payment of all employment, sales and income taxes due to the requisite state, if any, and to federal taxing authorities on any funds earned as payment for Projects. B. Subcontractor shall ensure that all of Subcontractor’s employees are documented and legally permitted to work in the United States. Subcontractor shall require every employee of Subcontractor to complete and execute a W-4 with Subcontractor. C. If, on any Project, the use of a subcontractor is expressly permitted by the General Contractor, Subcontractor shall require each and every of Subcontractor’s subcontractors to complete and execute a W-9 with Subcontractor. Subcontractor shall provide a copy of such complete and executed W-9 for each such subcontractor if requested by the General Contractor. If Subcontractor fails to submit such required copies, General Contractor may hold any payment to Subcontractor until such required copies are properly completed and provided to General Contractor. D. Subcontractor shall comply with and agrees to be bound by all applicable federal, state and local laws and regulations, including, but not limited to, all provisions of the Fair Labor Standards Act, the Americans With Disabilities Act, the federal Family and Medical Leave Act, the Texas Labor Code, all immigration and work authorization laws and regulations, and all other laws and regulations relating to the employment relationship, including compensation, benefits, workers compensation, and wage and hour requirements.

Article 10. Indemnification

The work performed by the Subcontractor shall be at the risk of the Subcontractor exclusively. Subcontractor hereby indemnifies and holds General Contractor, its subsidiaries, parent, affiliates and their respective officers, members, directors, employees and agents, harmless from and against any and all claims, actions, losses, settlements, judgments, or expenses, including reasonable attorneys’ fees, arising from or in any way connected with the work performed, materials furnished, or services provided to General Contractor in association with any Project Workorder during the term of this Agreement. Such


indemnity as provided by this Article 10 shall not be limited by the insurance requirements set forth in Article 5 of this Agreement.

Article 11. Arbitration and Waiver of Jury Trial A. At the request of either party, any controversy or claim arising out of or relating to this Agreement, or the default thereof, shall be submitted to binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association. Unless otherwise agreed to by both parties, the location for any arbitration proceedings concerning this Agreement shall be in Tarrant County, Texas. In the event that a party hereto initiates a lawsuit in court concerning an arbitrable claim, controversy or dispute, such party shall pay the other party for the costs, including attorneys’ fees that the other party incurs to obtain an order from the court to stay or dismiss the lawsuit or otherwise compel arbitration. Any arbitration shall be conducted by arbitrators approved by the American Arbitration Association (“AAA”) or the Judicial Arbitration and Mediation Services (“JAMS”) and mutually acceptable to the parties. All such disputes, controversies, or claims shall be conducted by a single arbitrator, unless the dispute involves more than $50,000 in the aggregate in which case the arbitration shall be conducted by a panel of three arbitrators. If the Parties are unable to agree on the arbitrator(s), then the selected arbitration organization shall select the arbitrator(s). In the event of any conflict between the rules of the selected arbitration organization and this Agreement, this Agreement shall control. Except as provided below, each party shall be responsible for its own attorneys’ fees incurred during the course of the arbitration, as well as the costs of any witnesses or other evidence such party produces or causes to be produced. The arbitrator shall be authorized to award such relief as is allowed by law. The arbitration award shall be in writing and shall include findings of fact, conclusions of law, and a statement of the reasons for the award. Except as required by law, such award shall be kept confidential, and shall be final, binding, non-appealable, and fully enforceable by a court of competent jurisdiction under the Federal Arbitration Act. Except as otherwise stated in this Agreement, the prevailing party in the resolution of any dispute (a “Dispute Resolution”), concerning this Agreement, any provision hereof or any actual or alleged breach, shall be entitled to its reasonable attorneys’ fees, including investigation and costs of discovery, and other costs connected with such Dispute Resolution, in addition to all other recovery or relief. The prevailing party shall be that party receiving substantially the relief sought or successfully defending substantially the position maintained in the Dispute Resolution, whether or not brought to final award or judgment. Except as otherwise stated in this Agreement, all costs of arbitration shall be the responsibility of the non-prevailing Party. The costs associated with an arbitration in which the arbitrator’s decision is split shall be paid by the Parties in a manner proportionate to such split decision. Notwithstanding the foregoing, the parties agree that in the event of any litigation hereunder, the exclusive venue and place of jurisdiction for such litigation shall be in the state courts or the federal district courts, situated in Dallas County, Texas, and each party hereto specifically consents and submits to the personal jurisdiction of such courts. B. EACH PARTY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANYWAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY ARBITRATION, AND IF BY COURT TRIAL, WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Article 12. Default and Termination

A. The occurrence of any of the following shall constitute a material default under this agreement:

i. The failure to make a required payment when due, except when such payment has been

refused due to deficiencies on the part of Subcontractor;

ii. The failure or refusal of Subcontractor to supply sufficient properly skilled workers or

sufficient materials of proper quality; or


iii. The failure of Subcontractor to deliver the services in the time and manner provided for in

the Agreement.

B. If Subcontractor fails to cure any default within three (3) days after General Contractor has provided written notice of such default, in accordance with Article 13 of this Agreement, General Contractor shall, at its option and without prejudice to any right or remedy it may have at law or in equity, have the right to any or all of the following remedies: i. General Contractor may supply such number of workers and quantity of materials, equipment and other facilities as General Contractor deems necessary for the completion of Subcontractor’s work, or any part thereof which Subcontractor has failed to complete or perform, and charge the cost thereof to Subcontractor, who shall be liable for the payment of same including reasonable overhead, profit, and actual attorneys’ fees incurred as a result of Subcontractor’s failure of performance; ii. General Contractor may contract with one or more additional subcontractors to perform such part of Subcontractor’s work as General Contractor shall determine will provide the most expeditious completion of the total work and charge the cost thereof to Subcontractor, who shall be liable for the payment of same including reasonable overhead, profit, and actual attorneys’ fees incurred as a result of Subcontractor’s failure of performance; or iii. General Contractor may withhold payment to Subcontractor pending corrective action to the extent required by and to the satisfaction of General Contractor. C. In the event of an emergency or conditions affecting the safety of persons or property, General Contractor may proceed, as per Parts i-iii of Article 12(B) above, and without notice. D. If either party defaults by failing to substantially perform any material provision, term or condition of this agreement, the other party may elect to terminate this agreement if the default is not cured within five (5) days after providing written notice, in accordance with Article 13of this Agreement, to the defaulting party. The notice shall describe with sufficient detail the nature of the default. i. In the event of a termination pursuant to this Article 12(D), resulting from the default of Subcontractor, Subcontractor’s failure to commence and satisfactorily continue correction of a default within twenty-four (24) hours after receipt by Subcontractor of the notice issued under Article 13 of this Agreement, shall permit General Contractor to terminate Subcontractor’s right to perform under this Agreement and use any materials, implements, equipment, appliances or tools furnished by or belonging to Subcontractor to complete Subcontractor’s work without any further compensation to Subcontractor for such use. General Contractor also may furnish those materials and equipment, and/or employ such workers or subcontractors as General Contractor deems necessary to maintain the orderly progress on the work. In such case, Subcontractor shall be entitled to no further payment until the balance of Subcontractor’s work has been completed. At that time, all of the costs and expenses incurred by General Contractor as a result of Subcontractor’s default, including the costs incurred in performing Subcontractor’s work, plus a markup of fifteen percent (15%) for overhead and profit on such expenses, plus actual attorneys’ fees as provided above, shall be deducted from any monies due or to become due to Subcontractor. Subcontractor shall be liable for the payment of any amount by which such expenses, and costs may exceed the unpaid balance of the Project Workorder price. E. Unresolved disputes arising from any default shall be decided by arbitration under the provisions of Article 11(A). F. General Contractor may at any time and for any reason terminate Subcontractor’s services and work at General Contractor’s convenience with seven (7) calendar days’ notice, in accordance with Article 13 of this Agreement. The effective date of termination shall be seven (7) calendar days after Subcontractor’s Receipt of written notice. Upon Receipt of such notice, Subcontractor shall, unless the notice directs otherwise, immediately discontinue the work and placing of orders for materials, facilities and supplies in connection with the performance of this Agreement, and shall, if requested, make every


reasonable effort to procure cancellation of all existing orders or contracts upon terms satisfactory to General Contractor or, at the option of General Contractor, give General Contractor the right to assume those obligations directly, including all benefits to be derived therefrom. Subcontractor shall thereafter do only such work as may be necessary to preserve and protect the work already in progress and to protect materials and equipment on the job site or in transit thereto. Upon termination under this Article 12(F), Subcontractor shall be entitled to payment in accordance with Article 2 only as follows: i. The actual cost of the work completed in conformity with this Agreement and/or the Project Workorder; plus ii Such other costs actually incurred by Subcontractor as are permitted by the Project Workorder and Building Plan; less iii. The amount of any payments made to Subcontractor prior to the date of the termination of this Agreement. In no event shall payment due under this Article 12(F) exceed the amount due for approved units of work or percentage of completion. Subcontractor shall not be entitled to any claim of lien against General Contractor for any additional compensation or damages in the event of such termination and payment.

Article 13. Notice All notices, requests, and approvals required or permitted by this Agreement shall be in writing and addressed/directed to the other party at the address/facsimile number below or at such other address of which the notifying party hereafter receives notice in conformity with this Article 13. All such notices, requests, and approvals shall be deemed given upon the earlier of facsimile transmission or actual receipt (both “Receipt”) thereof:

To General Contractor: SGC Homes, LLC 201 E. Abram Street, Suite 120 Arlington, Texas 76010 Fax: (817)462-1692 Attn: Isaiah Spates

To Subcontractor:

Fax:

Attn:

Article 14. Miscellaneous A. Commencing any work on a Project shall constitute Subcontractor’s acceptance of the terms and conditions of this Agreement of any Project Workorder, of the conditions that may affect the work, and of the surface over which the work is being performed. B. The parties hereto are independent contractors and nothing contained herein shall be interpreted to create, to intend to create, nor shall be deemed or construed to create, any joint venture, partnership, agency or other relationship between General Contractor and Subcontractor other than that of independent entities contracting with each other solely for the purpose of carrying out the provisions of this Agreement. Subcontractor is an independent subcontractor and is not an employee of the General Contractor. Neither of the Parties to this Agreement, nor any of their respective employees, agents, or other representatives, shall be construed to be the agent, employee or representative of the other party. Neither Party shall have the authority to bind the other Party nor shall a Party be responsible for the acts or omissions of the other Party, unless otherwise stated in this agreement. Similarly, Subcontractor


expressly acknowledges that Subcontractor is not an agent, employee, or representative of the buyer of the property Site which is the subject of any particular Project and covenants to represent itself accordingly. C. Upon any Termination of this Agreement, the following provisions shall survive such termination or expiration of this Agreement and shall remain in effect: Article 2 (Payments), Article 3 (Subcontractor Guidelines), Article 5 (Insurance), Article 7 (Warranty), Article 9 (State and Federal Taxes & Employer Compliance), Article 10 (Indemnification), Article 11 (Arbitration and Waiver of Jury Trial), Article 12 (Default and Termination), and Article 14 (Miscellaneous). D. Reasonable additional, unexpected costs directly related to an existing, concealed condition that may be revealed during construction, shall be the sole responsibility of General Contractor. Further, Subcontractor shall not be held responsible for reasonable delays caused by such conditions. This agreement is subject to force majeure, including without limitation, accidents, acts of God, fire, explosion, vandalism, storm, weather conditions, labor strikes, orders or acts of military or civil authority, national emergencies, insurrections, riots, wars, or other delays beyond the reasonable control of the parties. Subcontractor shall not be held responsible for reasonable delays caused by such events, but shall use reasonable efforts under the circumstances to avoid or remove such causes of non-performance. In the event of delays, which are not the fault of Subcontractor, General Contractor shall allow reasonable additional time equal to such delays for Subcontractor’s completion of the Project. No claims for additional compensation or damages for such delays, whether caused in whole or in part by any conduct on the part of the General Contractor, including, but not limited to, conduct amounting to a breach of this Agreement, or delays by other subcontractors, shall be recoverable from General Contractor. E. Neither Party hereto shall be deemed to have waived any of its rights, powers or remedies hereunder except in an express writing signed by an authorized agent or representative of the Party to be charged with such waiver. The failure of either Party to pursue a breach or default of any term or provision of this Agreement by the other Party shall not be construed as a waiver of a Party’s rights to pursue any subsequent breach or default of this Agreement. F. Except as otherwise stated in Article 5 of this Agreement, this Agreement may be modified or amended only if made in writing and signed by both Parties. G. This Agreement shall be in full force and effect from the Effective Date unless terminated in writing pursuant to Article 12 of this Agreement or with ninety (90) days’ written notice by Subcontractor. The termination of this Agreement shall not negate any term or condition of the insurance requirements in Article 5. H. All references in the Agreement to the singular shall include the plural, as context may require, and all references to gender shall, as appropriate, include other genders. I. This Agreement shall be construed and performed in accordance with the laws of the State of Texas, without reference to Texas choice of law or conflicts rules. J. The titles to the articles of this Agreement are solely for the convenience of the parties and shall not be used to explain, modify, simplify, or aid in the interpretation of the provisions of this Agreement. K. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. L. Neither Party may assign or transfer this Agreement without the express prior written consent of the other Party, which consent shall not be unreasonably withheld. Subject to the foregoing, this


agreement shall be binding upon, and inure to the benefit of, the Parties and their respective heirs, administrators, executors, representatives, successors and permitted assigns. Nothing herein, express or implied, is intended to confer upon any person, other than the Parties and their respective heirs, administrators, executors, representatives, successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. M. This Agreement, and any subsequent Project Workorders, shall constitute the entire agreement between the Parties and supersede all prior agreements, representations, warranties, statements, promises, information, arrangements and understandings, whether oral or written, express or implied, with respect to the subject matter hereof. The Parties further acknowledge and agree that, in entering into this Agreement, they have not in any way relied, and will not in any way rely upon any oral or written agreements, representations, warranties, statements, promises, information, arrangements or understandings, express or implied, not specifically set forth in this Agreement, any subsequent Project Workorders, or in such schedules, documents or instruments which may be hereto attached. N. This Agreement may be executed and delivered by the Parties hereto in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. In proving this Agreement in any judicial or arbitration proceedings, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought. Delivery of a signature hereto by facsimile transmission or by e-mail transmission of an Adobe portable digital file (PDF) shall be as effective as delivery of a manually executed counterpart hereof, and any such facsimile or PDF signature shall be treated as an original signature hereto. O. In the event of a conflict between this Agreement and any previous or subsequent agreements or any Project Workorder, the terms of this Agreement shall control.

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IN WITNESS WHEREOF, this Agreement is executed by the Parties’ authorized officers and representatives and shall be effective as of the Effective Date. SUBCONTRACTOR: Company: ____________________________ By:_______________________________ Title: _________________________________ Date:_____________________________ GENERAL CONTRACTOR: SGC Homes, LLC By:__________________________________ Title: ________________________________ Date: _____________________________

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