The work done under the subcontract resulting from this proposal (called the subcontract) shall be turned over by subcontractor to contractor in good condition, free and clear from all claims, encumbrances, patent royalties and liens growing out of the performance of the subcontract. In the event of the failure of subcontractor, during the progress of such work or at any time thereafter, to pay for all materials and labor used in the prosecution of the work, contractor may, at its option and without prior notice to subcontractor, pay for the materials and labor and charge the amount paid to subcontractor. In case any suit to establish a lien is brought by any person, firm or corporation allegedly employed by, or furnishing material or services to, subcontractor in connection with the subcontract, subcontractor shall at his [her] own cost and expense (including attorneys' fees) defend the suit and pay any such claim or lien as is established in court and in every other way make contractor whole and free from any costs or losses sustained as a result of such claim or liens. Subcontractor shall, as often as requested in writing by owner or by contractor, make out and give to owner or contractor, or both, a sworn statement of persons furnishing labor or materials to subcontractor, giving their names and stating how much, if any, is due or will be due each.

Monies received by subcontractor for the performance of the subcontract will be used primarily for labor and material entering into the work under the subcontract and shall not be diverted to satisfy the obligations of subcontractor on other contracts.