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SUBCONTRACT AGREEMENT

BETWEEN

PT. MURTHY

AND

PT. xxxx

FOR PIPE FABRICATION, INSTALLATION AND PRE COMMISSIONING

FOR

MURTHY
HULL xxxx

SUBCONTRACT AGREEMENT NO: MURTHY-Hxxxx-8xx

CC : Subcontractor (Original #1)

Commercial Dept. (Original #2)
Finance Dept. (Original #3)
Project Shipbuilding Dept.
(Copy) Production (Copy)

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This Agreement is made on dd/mm/yy, Pulau Batam, Indonesia

BY AND BETWEEN

PT. MURTHY, a company incorporated under the laws of Indonesia and having its registered
office at ADDRESS- Indonesia (hereinafter called the “Company”)

OF THE ONE PART;

and

PT. xxxx, a company incorporated under the laws of Indonesia and having its registered office
at xxxx, Indonesia (hereinafter referred to as “Subcontractor”)

OF THE OTHER PART

WHEREAS

Company is building a vessel type xxx, and desires to subcontract the Pipe
Fabrication/Installation/Pre Commissioning Works.

AND

Subcontractor fully understood the requirements and Scope of Works as described in the
Tender and has represented to the Company that it has the experience, expertise, knowledge,
qualification, capacity, judgment and is properly financed to carry out such Work as further
defined for the Subcontractor under Appendix A and is willing to do so on the terms and
conditions set out hereinafter.

IT IS HEREBY AGREED AND STIPULATED AS FOLLOWS:

ARTICLE I: SCOPE OF WORK AND SUPPLIES

1.1. Scope of Work

The Subcontractor agrees to fully and successfully perform and complete the scope of
work more fully described and specified under Appendix A and all other works related
to this Agreement (hereinafter known as “Works”).

Anything not specifically mentioned in the aforesaid documents, but is necessary and
required for the purpose of sound structure, reliable system and performance, safety of
operation and equipment and in accordance with the said documents shall be deemed
to be included in the Works.

The Subcontractor shall at all reasonable times give priority to the Works and provide
assistance in terms of labour and equipment in the conduct of any test related to the

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Works as required by the Company as detailed in the Appendix A.

1.2. Company’s Supplies

For the purpose of facilitating Subcontractor to perform the Works, it is hereby

understood and agreed that the Company shall provide at its own costs the supplies
related to the Works (hereinafter known as “Company Supplies”) as detailed in the
Appendix B.

1.3. Subcontractor’s Supplies

For the purpose of performing the work it is hereby understood and agreed upon that
the Subcontractor shall provide at its own costs the supplies as necessary in order to
execute the Works (hereinafter known as “Subcontractor Supplies”) as detailed in the
Appendix C.

ARTICLE II: CONTRACT PRICE AND PAYMENT

2.1. Subcontract Price

In consideration of the performance of the Works in accordance with the Subcontract

and of the fulfillment of all of Subcontractor’s other obligations under the Subcontract,
Company shall pay or caused to be paid to Subcontractor the all-inclusive, non-
escalating firm and fixed total of IDR xxxx (Indonesia Rupiah: xxxx Only) being the
Subcontract Price, at the terms and in the manner specified herein below.

2.2. Terms of Payment

Subcontractor shall be allowed to invoice the Company monthly for an amount equivalent to
the work done. Such invoices, together with a Certificate for Progressive Work Assessment
to be certified by Company, shall be paid within thirty (30) days upon receipt thereof and the
balance 10% to withhold for final settlement upon vessel delivery.

The Company shall pay for progressive claim in full but less the amount for the
consumables.

2.3. Deduction from Payment Due

The Company shall be entitled to withhold or deduct from any payment due to the
Subcontractor, monies due to the Company, be it reason of commercial and/ or any
default or breach of Subcontract by Subcontractor.

2.4. Price Adjustment

2.4.1. The Subcontractor shall not be allowed to make any additional claims for minor
modifications and reworks and the Subcontractor is also aware that the Contract
Price is as per Item 2.1, is not tied to the delivery of any equipment or materials.
Minor changes shown on flysheets or revised drawings are deemed to be
included in the work scope of the Subcontractor.

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2.4.2. Any other additional claims for the reasons other than those mentioned above
shall not be entertained unless and until the Subcontractor shows valid
documentation substantiating its claims or such claims have been agreed upon
in writing between both parties.

ARTICLE III: WORK / PRODUCTION SCHEDULE

The Subcontractor shall comply with the Work Schedule as per Appendix D, which the
Company reserves right to make minor adjustments from time to time.

3.1. Completion Schedule

Subcontractor shall comply with the attached Appendix D, i.e. start and finish each task
as planned in the schedule within the Subcontract Duration and monitor the progress of
overall construction of the vessel.

Subcontract Duration for Hull xxxx – mm/yy to mm/yy

3.2. Minimization of Delay

At any time during the performance of the Works, if in the good judgment of the Company,
the Works is likely to be delayed, the Company shall have the right, upon three
(3) days notice, use its own resources or other means to reduce and minimize the delay
and all costs incurred thereby (whether direct or indirect) shall be deducted from any
monies due to the Subcontractor or shall be recoverable as damages.

3.3. Liquidated Damages

In the event the Subcontractor fails to complete the Works within the completion date
specified in Appendix D above or any other such date as may be agreed to or extended
under the provisions of the Subcontract, the Subcontractor shall pay the Company a
sum total of (from 0.5% of total contract amount IDR xxxx (Indonesia Rupiah: xxxx
Only) per day of delay, to be pro-rated, subject to a maximum 10% of Subcontract Price
as liquidated damages for such default and not as penalty for every day or part of a
week which shall elapse between the time so prescribed and the date of completion of
the Works.

3.4. Suspension of Works

Should Subcontractor during the course of the Subocntract carry out the Works in a
manner not in conformance with the Subcontract requirements or be in breach of the
Subcontract, Company shall the right to notify Subcontractor of such fault or deficiency
and request Subcontractor to take remedial steps within specified time limits.

Subcontractor hereby undertakes to immediately take, or to have taken, at no extra cost

to Company, all steps necessary to correct such fault or deficiency and/ or re peform
such Works and shall inform Company of the steps undertaken or to be undertaken and
their related schedule.

If Company considers such steps inadequate or insufficient, it shall have the right to
instruct Subcontractor to take specific remedial steps at no extra cost to Company (such

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as working overtime or increasing the number of personnel at any level, the number of
shifts or workdays per week, the quantity or capacity of construction equipment and the
like) but without detracting from the safety requirements of the Subcontract or departing
from the relevant regulations relating to employment of the work force, and specifiying
appropriate time limits for so doing.

If Subcontractor persists in failing to comply with Subcontract obligations after receipt of

Company’s notice concerning default or deficiency of Subcontractor, Company shall
have the right at any time and at its sole option, after the expiry of the time limits
specified in such notice, to order Subcontractor to suspend the Works, until such time
Subcontractor has remedied the fault or deficiency or until all measures he intends to
implement have been approved and Subcontractor shall immediately suspend Works
and/ or store all or parts of the Works as instructed by Company.

Subcontractor shall promptly resume performance of suspended Works upon receipt of

notice to continue from Company and to the extent required therein.

Subcontractor shall not be entitled to any additional compensation, including in respect

of storage costs, or time extensions, regardless of costs, expenses and delays incurred
by Subcontractor in remedying such fault or deficiency and/ or due to suspension of
Works and/ or storage of all or part of the Works. Such suspension shall not relieve
Subcontractor from any of his obligations under the Subcontract.

3.5. Termination of Agreement

3.5.1. Without prejudice to Company’s right to suspend the Works persuant to Article 3.4,
Company reserves its right to terminate the Subcontract at any time at its own
convenience by prior notice to Subcontractor. Subcontractor shall then
immediately deliver to Company upon termination of the Subcontract the Works
performed to date. Company shall pay Subcontractor the unpaid balance of the
Subcontract Price corresponding to the percentage of Works completed by
Subcontractor prior to the date of termination as agreed by the Parties based on
approved Progress Reports and other means of evaluating the Works under the
Subcontract. Such payments shall constitute the full and final amounts payable by
Company under the Subcontract, to the exclusion of any other indemnity; and
Company shall not be liable to Subcontractor for loss of future income, or loss of
profit, or for any economic or consequential loss whatsoever.

3.5.2. In the event of non-performance, or if the Subcontractor neglects to perform the

Subcontract with due diligence and expedition, or refuses or neglects to comply
with any reasonable orders given to the Subcontractor, or is unable in the
Company’s opinion to follow the work schedule and/ or is unable to achieve the
required quality standard of work, then Company shall have the right to terminate
the Subcontract forthwith by notice in writing to the Subcontractor.

3.5.3. In the event of such termination, Company shall have the right to complete the work by
alternative arrangements, and any additional costs so incurred, which shall include any
economic or consequential loss whatsoever and damages for late re-delivery and loss
of use of vessel, shall be paid by Subcontractor by means of deduction from the
monies due to the Subcontractor. In the event that money due to the Subcontractor is
less than costs incurred by Company, Subcontractor shall

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immediately pay the difference to Company.

ARTICLE IV: ADDITIONAL TERMS AND CONDITIONS AGREEMENT

The additional terms and conditions as given in the Works Order shall form an integral
part of this Agreement in addition to the ARTICLE V and subject to the following
understanding by the Subcontractor:

1) This Agreement does not allow the Subcontractor to pledge the mentioned
Agreement as loan collateral to any financial institutions, banks or others.

2) This Agreement does not permit the Subcontractor to re-assign or re-transfer the
mentioned Agreement to another Subcontractor, with the exception that prior
approval shall be granted unconditionally in writing by Vice President / Deputy GM /
PJM.

3) This Agreement does prohibit the Subcontractor to transfer the Subcontractor’s

mentioned Agreement to any other financial investor, or any other Third party
without the final approval by Company management.

ARTICLE V: COMPANY IN-HOUSE RULES AND REGULATIONS

The Subcontractor shall comply with the Company In–House Rules and Regulations
that cover the latest issues on:

5.1. Safety Requirements

5.2. Company’s Standard for Workmanship and Practices

5.3. Security and Discipline

5.4. Yard Working Hour

ARTICLE VI: INDEMNITY & INSURANCE

6.1 The Subcontractor and his assistant(s) shall at all times be deemed to be the
employees of the Subcontractor and not of the Company. The Company shall be under
no liability whatsoever to the Subcontractor, their representative or assistant(s) for
personal injuries, including death or suffered during the time when he or they are on
the Vessel, or within the premises of either the Subcontractor or its assistant, or are
otherwise engaged in and about the construction of the vessel, unless however, such
personal injuries including death, were caused by gross negligence of the Company.

6.2 The Company’s representative and his assistant(s) shall at all times be deemed to be the
employees of the Company and not of the Subcontractor. The Subcontractor shall be under
no liability whatsoever to the Company, their representative or his assistant(s) for personal
injuries, including death or suffered during the time when he or they are on the Vessel, or
within the premises of either the Company or its assistant, or are otherwise engaged in and
about the construction of the vessel, unless however, such personal

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injuries including death, were caused by gross negligence of the Subcontractor.

6.3 The Subcontractor shall at its own cost and expenses procure insurance policies for its
employees or agents in respect of Workman’s Compensation and Common Law
Employer Liabilities as well as Third Party Liabilities.

ARTICLE VII: ENTIRE AGREEMENT

The Governing law of this Agreement shall be under the substantive Law of Batam
Court, Indonesia.

This Agreement together with the Appendices hereto embodies all the terms and
conditions agreed upon between the Parties and supersede and cancel out in all
respects all previous Agreements or undertakings, if any, between the Parties hereto
with respect to the transaction contemplated herein. In the event of any discrepancy
between the Appendices attached hereto and the terms of this Agreement, the terms
and conditions of this Agreement shall prevail.

IN WITNESS WHEREOF, the parties hereto have signed this Subcontract the day
and the year first above written.

FIRST PARTY SECOND PARTY

Signed for and on behalf of Signed for and on behalf of
PT. MURTHY PT. xxxx

MURTHY xxxx
________________________ ________________________
Vice President Director

________________________ ________________________

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APPENDIX A
Scope of Work

The Subcontractor shall:

1. Undertake the fabrication, installation and pre commissioning of piping system for one
(1) unit of Vessel according to the attached Appendix D unless otherwise stated.
Fabrication and install processes included in the Scope of Work for the vessel e.g.
pump, bracket, penetration pieces, sight glass, valve, flanges, bellow, silencer, plus
connection fitting and function test. (Exclude modification and Insulation work.)

2. Agree and carry out the Work according to the related production drawings as provided
by the Company from time to time to the Subcontractor.

3. Progressively fulfill the intended requirements and design criteria as stipulated in the
technical specifications approved by the Owner, Biro Klasifikasi Indonesia (BKI),
regulatory bodies and the Company.

4. Provide experienced work / trade supervisors, front line Quality Control (hereinafter called
“QC”) inspectors, skilled worker and other related workmen as required to executing the
work including inspections and co-ordination with the Company personnel.

5. Employ welders for the implementation of this Contract are to be fully certified by the
respective classification and duly verified by the Company’s Quality Assurance / Quality
Control Dep’t (hereinafter called “QA/QC Dep’t”).

6. Provide qualified welders as certified by the respective Classification to executing the

work. (Remark: the expenses for the first test for the Company’s account. The expenses
for the subsequent tests for the Subcontractor’s account. The Subcontractor shall pay
the amount incurred to the Company, e.g. deduct direct from the invoice).

7. Adopt Effective and proper Welding procedure(s) in accordance with requirements of

the Biro Klasifikasi Indonesia (BKI) and the Company.

8. Assist the Company to keep one full set of record for the pipe(s) with heat number(s)
and other relevant identification number(s) to be duly verified and recorded by the
Company’s QA/QC Dep’t.

9. Progressively complete the work and pass the Company’s QA/QC inspection according
to the attached Appendix D and finally pass through the inspection to be conducted by
the Owner, Biro Klasifikasi Indonesia (BKI) and the Company’s QA/QC Dep’t, unless
otherwise specified.

10. Submit all applications for test and inspection to the Company’s QA/QC Dep’t on the
preceding day.

11. Progressively carry out in house testing and inspection together with the Company’s
QA/QC Dep’t prior to arrangement for Owner and Biro Klasifikasi Indonesia (BKI)
Surveyor to witness the tests and inspections.

12. Immediately rectify and rework any defective weld and re-test at the Subcontractor’s
expense upon the radiographic and other forms of testing on weld performed by the
Company according to the rule of Biro Klasifikasi Indonesia (BKI). Any cost incurred for
additional tests shall be borne by the Subcontractor.

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13. Immediately remove all temporary strong back, support, lifting eyes, securing lugs and
any other such items completely after each completed task.

14. Immediately rectify or rework any deep cuts, scars, rough edges, burrs and welding
splatter according to the requirement of the Owner, Biro Klasifikasi Indonesia (BKI) and
the Company.

15. Use automatic cutting method for all beveling and cutting of pipe(s) unless otherwise
specified.

16. Conduct proper alignment and level recording as required for the pipe unit during the
construction period as witnessed by the Company as and when required with the record
duly verified by the Company’s QA/QC Dep’t.

17. Be responsible for laying, arranging, shifting and returning all pipe system, planks, balance
of pipe(s) and profiles, and any other items provided by the Company. (Remark: the
arrangement of the pipe whether concrete or wood is to suit the transverse and longitudinal
framing of the vessel and should avoid the weld seam as far as possible.)

18. Assist the Company to handle and preserve materials, e.g. unload and store the
material to be supplied by the Company with the aid of crane c/w operator.

19. Follow and monitor the material list and cutting plan to be provided by the Company
prior to commencement of work shall be deemed to be correct and sufficient for the
work. (Remark: any cost due to misuse or excessive wastage of material without proper
approval and verification by the Company’s QA/QC Dep’t shall be borne by the
Subcontractor.

20. Waive all “additional” claims or compensation requests, unless the Company has made
major changes or increase in the scope of design and specification and a confirmed
change order has been issued by the Company.

21. Maintain proper housekeeping and cleaning within the vicinity of the work, including the
constructed compartments and tanks onboard the vessel. During the progress and upon
completion of the work, all scrap, rubbish, unused material and/or equipment shall be
removed to the site allocated by the Company. If the Company feels that it has been
unsatisfactorily performed, the Company shall either impose a fine or utilize labour and
equipment to complete the job with all cost borne by the Company.

22. Comply with the Company’s regulations and safety requirement. In the event of non-
compliance by the Subcontractor, the Company shall have the right to enforce the
Subcontractor with a fine or other disciplinary action deemed fit by the Company.

23. Be responsible to submit the weekly manning list or time sheet for the workforce.

24. Collect and return the balance of materials (e.g. Off-cut steel, pipe, welding electrode,
cables, etc.) to the store immediately after the job completion.

25. The scope of work includes complete Piping system for one (1) unit of Vessel in
accordance with Schematic & Production drawing but not limited to as follow:

1. Bilge and Ballast System

2. Fire Fighting System
3. Fresh Water, Sea Water and Sanitary Supply System
4. Sounding, Filling and Air Vent System
5. Fuel Oil System

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6. Cooling System
7. Fresh Water Cooling Supply System
8. Exhaust Gas System
9. Hydraulic System
10. Water Sprinkle System
11. CO2 Sprinkle System
12. Lub Oil System
13. Cross Over Sea Chest System
14. Dirty Oil System
15. Sanitary Discharge System
16. Compressed System
17. Drainage System

APPENDIX B
Company’s Supplies

The Company shall provide at its own costs the following supplies including plating, profiles and
parts related to the Scope of Work:

1) All Material for the Project.

2) All Gases.

3) All Welding Machine.

4) Special Bending Materials.

5) Transportation in Yard Crane & Forklift.

6) Schematic & Approved Production Drawing.

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APPENDIX C
Subcontractor’s Supplies

The Subcontractor shall provide at its own costs the following supplies as necessary in order to
execute the work.

1) Skilled workers and supervisors as required to executing the work.

2) All general and personal tools including but not limited to, e.g. grinding machines,
cutting torch nozzles, welding electrode holders, welding shields.

3) All personal protective equipment including but not limited to, for the Subcontractor’s
employees, e.g. working gloves, safety helmets, safety glasses, safety shoes, protective
clothing, masks and ear-plugs.

4) All hand tools and hot works tools including but not limited to, e.g. welding cables,
cutting hoses, torches, welding holders, gouging holder.

5) All hand lamps & its electrical power supplies cables for 230V & 110V.

6) All expendable items, e.g. electrodes, masking tapes & rags.

7) All Kind of Electrode / TIG.

8) Salary and / or wage and / or incentives to be paid to the Subcontractor’s employees,

on weekly or monthly or annually basis, whichever applicable.

9) Effective and sufficient Workmen’s Compensation and Public Liability insurance during
the execution of this Contract (Subcontractor shall submit a copy of such insurance
policies to the Company).

10) The expenses incurred for subsequent Test due to any failure shot cause by poor
workmanship. The Subcontractor shall pay the amount incurred to the Company e.g.
deduct direct from invoice.

APPENDIX D
QUOTATION

~ Project Schedule of each systems

~ Quotation Ref. No: xxxx, dated dd/mm/yy (xx Pages)

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