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Resolution No. 9435
1 2 3 4 67 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 r-;A RESOLUTION NO. 9435 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF AN EQUIPMENT LEASE AGREEMENT BY AND BETWEEN THE CITY OF VERNON AND SIEMENS DEMAG DELAVAL TURBOMACHINERY, INC. WHEREAS, the Light & Power Department desires to lease an emergency spare gas turbine (the "Equipment") for its Malburg Generating Station; and WHEREAS, Siemens Demag Delaval Turbomachinery, Inc. ("Siemens") has expressed an interest and desire to lease the Equipment to the City; and WHEREAS, the Equipment is necessary for the Light & Power Department's operation and will enhance the services provided to citizens, residents and businesses within the Vernon community; and WHEREAS, the City has purchased gas turbines from Siemens in the past and Siemens is familiar with the City's system and requirements; and WHEREAS, the City and Siemens desire to enter into an equipment lease setting forth the terms and conditions for the use of the Equipment for a total of Forty Thousand Dollars and No Cents ($40,000.00) per week; and WHEREAS, the City Council of the City of Vernon has determined that, pursuant to the provisions of subsection (a) of Section 2.27 of the Vernon City Code, it is in the public interest and necessity to enter into a contract with Siemens for the Equipment to enhance services provided to the Vernon community. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the recitals contained hereinabove are true and correct. SECTION 2: The City Council of the City of Vernon hereby approves the Equipment Lease Agreement with Siemens, in substantially the same form as the copy which is attached hereto as Exhibit A and incorporated by reference. SECTION 3: The City Council of the City of Vernon hereby, authorizes the Mayor or Mayor Pro-Tem to execute the Agreement with Siemens for, and on behalf of, the City of Vernon and the City Clerk is hereby authorized to attest thereto. SECTION 4: The City Council of the City of Vernon hereby authorizes the City Administrator, or his designee, to make whatever nonsubstantive, administrative and/or text changes, upon advice of counsel, to the Agreement. SECTION 5: The City Council of the City of Vernon hereby directs the City Clerk, or her designee, to send two executed Agreements to Siemens. SECTION 6: The City Council of the City of Vernon hereby approves and authorizes the City Administrator, or his designee, to perform such acts and deeds as may be necessary or convenient to effect the purposes of this Resolution and the transactions herein approved or authorized and to execute any and all documents consistent with the terms and conditions of the Agreement. - 2 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 7: The City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 2nd day of October, 2007. AT ST: r UELA GIR Ciity Clerk Name: Leonis C. Malbura Title: Mayor / - May@r� m - 3 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 9435, was duly adopted by the City Council of the City of Vernon at an adjourned regular meeting of the City Council duly held on Tuesday, October 2, 2007, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. MANUELA GI ON, ity Clerk (SEAL) - 4 - EQUIPMENT LEASE AGREEMENT BETWEEN CITY OF VERNON AND SIEMENS DEMAG DELAVAL TURBOMACHINERY INC. Contents Form of Lease Annexes A. Terms and Conditions B. Installation Rates C. Description of Equipment A FORM OF LEASE FORM OF LEASE THIS EQUIPMENT LEASE AGREEMENT (this "Agreement") is made on September 28, 2007 between City of Vernon with offices at 4305 Santa Fe Avenue, Vernon, CA 90058 (hereinafter known as the "Lessee"), . � if Siemens Demag Delaval Turbomachinery, Inc., with offices at 840 Nottingham Way Hamilton, New Jersey 08638 (hereinafter known as "Lessor"). WHEREAS: A. The Lessor owns certain equipment (hereinafter known as the "Equipment") as described in Annex C attached; and B. Lessee wishes to lease the Equipment from the Lessor. The parties hereby agree as follows: This Agreement consists of, and is governed by, this Form of Lease together with the attached Annexes A, B and C. In the event of a conflict between this Form of Lease and the Annexes, this Form of Lease shall prevail and the Annexes shall prevail one over the other in alphabetical order. 2 INSTALLATION / REMOVAL CHARGES, RENT AND STIPULATED VALUES In consideration of the Lessor leasing the Equipment the Lessee agrees to pay the charges set out below in the manner and at the times stated in Annex A attached. (a) Installation and Removal Charge: A copy of the current issue of the Lessor's Field Service rates "Appendix B Installation / Removal Rates" document is deemed to be in Lessee's possession. Additional copies of this document will be made available on request. If requested by Lessee, Lessor shall provide installation and removal of each item of Equipment at these rates. (b) Weekly Rental: The weekly rent for each item of Equipment is the amount set forth opposite the description of such Equipment in Annex C and shall be per week or part thereof. The minimum lease period is four (4) weeks. Equipment Lease Page 2 of 19 Siemens Confidential (c) Stipulated Value: The Stipulated Value for each item of Equipment is the amount set forth opposite the description of such Equipment in Annex C. 3 DELIVERY Delivery of each item of Equipment by the Lessor to the Lessee shall be exworks - Siemens Demag Delaval Turbomachinery Inc, Hamilton, New Jersey and redelivery of each item of Equipment by the Lessee to the Lessor shall be exworks - Siemens Demag Delaval Turbomachinery Inc., Hamilton, New Jersey or such place in the United States as Lessor may designate by written notice to Lessee. 4 TERM The lease term for each item of Equipment shall commence upon delivery of that item of Equipment to the Lessee and shall terminate upon re -delivery of that item of Equipment to the Lessor. Delivery term, therefore, is from the time of shipment exworks Siemens Demag Delaval Turbomachinery Inc, Hamilton, New Jersey to the time of return of Equipment, exworks Siemens Demag Delaval Turbomachinery Inc, Hamilton, New Jersey. 5 OWNERSHIP; STATUS The Equipment is, and shall at all times be and remain, the sole and exclusive property of Lessor; and the Lessee shall have no right, title or interest therein or thereto except as expressly set forth in this agreement. The Equipment is, and shall at all times be and remain, personal property notwithstanding that the Equipment or any part thereof may now be, or hereafter become, in any manner affixed or attached to, or imbedded in, or permanently resting upon, any ship, any real property or any structure thereon, or attached in any manner to what is permanent by means of cement, plaster, nails, bolts, screws or otherwise. IN WITNESS WHEREOF, this Agreement has been executed by the representatives of the parties thereunto duly authorized as of the date first written above. SIGNATURES APPEAR ON THE FOLLOWING PAGE Equipment Lease Page 3 of 19 Siemens Confidential For Lessor: Siemens Demag Delaval Turbom ' ery, I Signed: Name: Darren L. Caldwell Title: General Manager, Service USA and Canada Date% Sept. 28, 2007 For Lessee: ........................................... Signed: ................................................. Name: ................................................... Title: ..................................................... Date: .................................................... Equipment Lease Page 4 of 19 Siemens Confidential ANNEX A TERMS AND CONDITIONS LESSEE'S REPRESENTATIONS In order to induce the Lessor to enter into this Agreement to lease the Equipment to the Lessee and as a condition precedent of the Lessor's obligation to lease the Equipment to the Lessee, the Lessee hereby represents, warrants and covenants that it has power to enter into and perform this Agreement and that it has obtained or effected . all licenses, consents, registrations or approvals (governmental or otherwise) necessary or appropriate on its part for the performance, validity and enforceability of the Agreement, that the same are in full force and effect and shall be maintained in full force and effect for the lease term. 2 INSURANCE AND RISK 2.1 The Lessee shall, from the date of delivery of the Equipment to the Lessee, throughout the lease term and until re -delivery of the Equipment to the Lessor: (a) insure the Equipment against any and all loss or damage from any and every cause whatsoever on an all risks and agreed value basis, but not for less than the Stipulated Value; and (b) insure the Lessor and the Lessee against claims of all third parties who may suffer damage to or loss of property, death or injury to persons arising directly or indirectly out of the ownership, management, control, construction, use, possession, operation or maintenance of the Equipment or the leasing thereof for such amount as is prudent in all the circumstances. 2.2 All insurance referred to in Clause 2.1 above shall: (a) be with insurers and in a form approved by the Lessor; and (b) be effected in the joint names of the Lessor and the Lessee; and (c) provide that a breach of warranty term shall be included to the effect that no act or omission of the Lessor or any other insured shall prejudice or affect the cover afforded to the Lessor and that it may not be cancelled or materially modified without thirty (30) days' prior written notice to the Lessor; and (d) provide that the insurer shall not be relieved from any liability to the Lessor thereunder as a result of any failure to give notice of any event giving rise to a claim. 2.3 The Lessee shall pay the premiums for all insurance referred to in Clause 2.1 above and shall deliver to the Lessor the said policy or policies of insurance (or Equipment Lease IPage 5 of 19 Siemens Confidential certified copies thereof) as soon as they are issued and at such other times as the Lessor may reasonably require. The proceeds of any all risks insurance, at the option of Lessor, shall be applied: (a) toward the replacement, restoration or repair of the Equipment; or, (b) toward payment of the obligations of Lessee hereunder. Lessee hereby appoints Lessor as Lessee's attorney -in -fact to make claim for, receive payment of, and execute and endorse all documents, checks or drafts for, loss or damage under any insurance policy. 2.4 The Lessee shall be responsible for the risk of any and all loss or damage to the Equipment from any and every cause whatsoever from the time that the Lessor delivers the Equipment to the Lessee until the time that the Equipment is redelivered to the Lessor. In the event of any loss or damage to the Equipment for which the Lessee bears the risk in accordance with the immediately preceding sentence, the Lessee shall pay to the Lessor the replacement cost of any Equipment or parts of Equipment which are so lost or damaged; provided, however, in the event that the Lessor determines that such item of Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee shall pay Lessor in cash the Stipulated Value for such item of Equipment. Upon such payment the lease term shall terminate with respect to such item of Equipment so paid for and Lessee thereupon shall become entitled to such item of Equipment "AS IS — WHERE IS" without warranty, express or implied, with respect to any matter whatsoever. 3 COLLECTION AND RETURN 3.1 The Lessee shall be responsible for obtaining all official approvals necessary for importing, exporting, installing and operating the Equipment. The Lessor shall provide reasonable assistance to the Lessee. 3.2 Each item of Equipment shall be used at the location set forth opposite the description of such Equipment in Annex C. The Lessee may not, without prior written permission from the Lessor, remove the Equipment from such location. 3.3 Operation and use of the Equipment by Lessee shall as between the Lessor and the Lessee constitute a conclusive presumption that the Lessor has complied with all its obligations in respect of delivery of the Equipment to the Lessee and that the Equipment is/are in good order and condition and in every way satisfactory to the Lessee. 3.4 The Lessee agrees that, forthwith upon the expiration or earlier termination of the lease term for each item of Equipment, Lessee shall return such item of Equipment to Lessor: (a) in good repair, condition and working order, ordinary wear and tear resulting from proper use thereof alone excepted; and (b) at its own cost and expense as set forth in paragraph 3 of the Form of Lease. All costs of dismantling or removal of the Equipment and of such re -delivery shall be borne by the Lessee. Equipment Lease Page 6 of 19 Siemens Confidential 3.5 If the Lessee fails to re -deliver the Equipment to the Lessor immediately upon a proper request, the Lessor may, at any time, retake possession of the Equipment without responsibility for any loss caused thereby or in connection therewith (including any damage caused in its removal). 3.6 The Lessee shall indemnify the Lessor and keep the Lessor fully indemnified against all costs, expenses, liabilities, claims, actions, demands and damages of whatsoever nature in connection with or arising out of the Equipment including, but not limited to, the manufacture, selection, delivery, possession, use, operation or recovery of possession including, without limitation, all costs of removal of any fixtures and dismantling costs or which the Contractor would not have incurred but for such recovery. 4 OPERATION AND MAINTENANCE The Lessee agrees throughout the lease term: 4.1 to use the Equipment in a skilful and proper manner for the purpose for which they were designed and in accordance with any operating instructions from time to time issued therefor by the Lessor and in accordance with good engineering practice and not in such a manner as to invalidate or vitiate any of the insurance policies referred to in this Agreement and to ensure that the Equipment is/are operated and used by properly skilled and trained personnel; 4.2 to perform (a) daily and weekly routine maintenance as specified in the appropriate instruction manual and other documents; and (b) periodic compressor cleaning as required or as specified in the appropriate instruction manual and other documents; 4.3 to provide all necessary consumable items such as fuel, lubricating oil and grease, fuses, light bulbs, cleaning materials (including compressor cleaning agents), filters (including air/fuel/lubricating oil/hydraulic/ventilation), and fire extinguishant; 4.4 that the Lessor shall not be liable to supply goods or equipment in lieu if the Equipment is/are lost or damaged or rendered unfit for use or closed, dismantled, confiscated, seized, requisitioned, restrained or appropriated or otherwise taken out of the possession or control of the Lessee or if for any reason whatsoever the Equipment become(s) inoperable or unusable in whole or in part and if the Equipment is/are damaged for reasons not due to the Lessor or due to the Lessee operating outside the Lessor's specification or instruction then the Lessee shall promptly notify the Lessor and shall pay for the cost of all repairs at Equipment Lease Page 7 of 19 Siemens Confidential the Lessor's standard current rates and prices. Repairs shall only be carried out by the Lessor or under the supervision of the Lessor and all of the costs shall be paid by the Lessee; 4.5 to obtain effect and keep effective all permissions licenses and permits which may be required in connection with the business of the Lessee and the use of the Equipment therefor and to comply with all statutory and other obligations of all kinds in relation to the Equipment and the use thereof and of its own expense to add to or install with the Equipment any safety or other equipment for the use or operation of the Equipment; 4.6 not to alter or remove any existing component from the Equipment unless it is replaced immediately (or if removed in the ordinary course of repair and maintenance as soon as practicable) by the same component or by a component of the like make supplied by the Lessor and model to that removed or an improved or advanced version thereof; 4.7 to allow to the Lessor or its duly authorized agent or representative access, at any time, upon reasonable notice, to inspect, repair and maintain the Equipment; 4.8 to keep, or procure to be kept, accurate, complete and current records of all operation and use of the Equipment and to permit the Lessor or any authorized agent or representative of the Lessor to examine such records at any time upon reasonable notice and to advise the Lessor immediately of any operational abnormality; 4.9 to take all necessary steps to safeguard the Lessor's title to and rights in the Equipment and in particular: (a) on all occasions when the ownership of the Equipment is relevant to make clear to third parties that the same is the property of the Lessor and, if required by the Lessor: to execute and deliver such instruments, documents or agreements, to make such filings and otherwise cooperate to give the necessary or appropriate public notice of Lessor's ownership interest in the Equipment; and (b) to place in a prominent position on the Equipment a name plate or label provided by the Lessor stating that the same is the property of the Lessor and is leased to the Lessee, not to remove or cover up such plate or label and not to place or permit to be placed any name plates or labels in or on the Equipment prejudicial to the Lessor's interest in the Equipment or otherwise consistent with the Lessor's ownership of the Equipment; and (b) to keep the Equipment in its own possession (other than for overhaul repair modification or maintenance under the terms of this Agreement) and not to sell nor permit any person to assign mortgage pledge hypothecate underlet, lend or otherwise pledge with the Equipment or any Equipment Lease Page 8 of 19 Siemens Confidential interest therein or in this Agreement nor without the prior written consent of the Lessor to attach the Equipment to any ship, real property or structure thereon so as to cause them to become a permanent or immovable fixture (or appurtenant to such ship, real property or structure) or so that the separate identity of the Equipment as chattels or personal property is lost thereon. 5 TERMINATION 5.1 The occurrence of any event set out in 5.2 (a) to 0) inclusive below shall be a terminating event which in each case aforesaid shall entitle the Lessor to terminate the lease of the Equipment in accordance with Clause 5.4 below and to recover the amounts specified in Clause 6.4 below from the Lessee 5.2 (a) the Lessee defaults for twenty-one (21) days in any payment due under the terms of this Agreement; or (b) the Lessee commits any breach of this Agreement or suffers any breach to be committed and in the case of a breach capable of being remedied fails to remedy the breach within twenty-one (21) days or such longer period as the Lessor may stipulate after being required by the Lessor so to do; or (c) the Lessee shall commit any act of bankruptcy or have a receiving order made against it; or (d) the Lessee convenes any meeting of creditors or makes a deed of assignment or arrangement for the benefit of or compounds with its creditors or convenes a meeting to consider a resolution for winding up (except for the purposes of an amalgamation or reconstruction the terms of which shall first have been approved by the Lessor) presents or has a petition for winding up presented against it (except as aforesaid) presents or has a petition for an administration order presented against it or has an administrator appointed or has a receiver or administrative receiver appointed over the whole or any part of its undertaking or assets or revenues or sells or otherwise disposes of the whole or any substantial part of its undertaking; or (e) the Lessee stops or threatens to stop payment or ceases or threatens to cease to carry on its business in the ordinary course as presently conducted is unable or admits its inability to pay its debts; or (f) any consent or license required for the construction or operation of the Equipment ceases to be in force or is modified in such a manner as to prejudice the interests of the Lessor; or x Equipment Lease Page 9 of 19 Siemens Confidential (g) any representation or warranty made by the Lessee shall prove to have been incorrect or inaccurate when made; or (h) any execution distress or other process is levied on the chattels or personal property of or in the possession of the Lessee or if the Equipment confiscated seized impounded or the Lessee abandons the Equipment; (i) an event of force majeure in accordance with 7.4 below continues for 90 days or more; or (j) the Equipment is removed from the location identified in Annex C without the prior written consent of the Lessor. 5.3 Upon the occurrence of any default breach or event set out in 5.2 (a) — (i) above the Lessor may (without prejudice to any other right or remedy it may have) without demand or notice terminate the leasing of the Equipment with immediate effect whereupon the Lessor's consent to the Lessee's possession of the Equipment shall terminate forthwith but without prejudice to the other provisions of ' this Agreement which shall insofar as they are capable of performance or observance continue in full force and effect. The Lessor may then without notice or demand retake possession of the Equipment or any part thereof wheresoever it may be and for such purpose the Lessor or its agent shall have irrevocable power and authority to do all things or acts necessary or advisable in order to do so including the right to enter upon any land or premises and shall be entitled to retake possession of or to remove the Equipment without responsibility for any loss or damage caused thereby or in connection therewith (including any damage caused in the removal of any fixtures) 5.4 Upon the termination of the hiring of the Equipment under this Clause 5 the Lessee shall on demand pay to the Lessor as a debt together with interest thereon: (a) all arrears of rentals and all other sums payable under the terms of this Agreement due but unpaid at the date of termination together with interest thereon from the date on which such rental or other sums fell due for payment hereunder to the date of payment; and (b) damages for breach of this Agreement or the occurrence of a terminating event (except if the lease is terminated under Clause 5.2(i) above) (c) all costs and losses incurred by the Lessor in connection with recovering or having possession of the Equipment recovering rentals or other payments hereunder and exercising or enforcing any of the terms and conditions of the Agreements (except insofar as such costs and losses arise directly from a force majeure event as defined in Clause 7.4 below) Equipment Lease Page 10 of 19 Siemens Confidential 6 DEFECTS IN THE GOODS 6.1 SUBJECT TO CLAUSE 6.2 BELOW, LESSOR MAKES NO WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY, OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. 6.2 Lessor warrants that each item of Equipment (excluding software and consumables) including any part repaired or replaced by Lessor during the lease term for such item of Equipment, will be free of defects in design, workmanship and materials (the "Equipment warranty"). If during the lease term for an item of Equipment, Lessor is promptly notified in writing that an item of Equipment or any component thereof fails to conform to the Equipment Warranty, Lessor shall at its option and expense correct such nonconformity by repair or replacement. THE WARRANTY SET FORTH IN THIS CLAUSE ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES, WHETHER STATUTORY, EXPRESS, OR IMPLIED (INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE). Correction of nonconformities in the manner and for the period of time provided above constitute Lessor's sole and exclusive liability and Lessee's sole and exclusive remedy for defective or nonconforming Equipment whether claims of Lessee are based in contract, in tort (including negligence and strict liability), or any other theory of recovery. 7 LIMITATION OF LIABILITY AND FORCE MAJEURE 7.1 NOTWITHSTANDING ANY OTHER PROVISION OF THE AGREEMENT, LESSEE EXPRESSLY AGREES THAT NEITHER LESSOR NOR ITS SUPPLIERS OR SUBCONTRACTORS WILL UNDER ANY CIRCUMSTANCES BE LIABLE UNDER ANY THEORY OF RECOVERY, WHETHER BASED IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), UNDER WARRANTY, OR OTHERWISE, FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE WHATSOEVER; DAMAGE TO OR LOSS OF ANY PROPERTY OR EQUIPMENT; LOSS OF PROFITS OR REVENUE OR LOSS OF USE THEREOF; LOSS OF USE OF LESSEE'S MATERIAL, EQUIPMENT OR POWER SYSTEM; COST OF CAPITAL: COST OF FUEL; COST OF PURCHASED OR REPLACEMENT POWER; INCREASED COSTS OF ANY KIND; OR ANY CLAIMS OF CUSTOMERS OF LESSEE. LESSEE EXPRESSLY AGREES THAT THE REMEDIES PROVIDED IT IN THIS AGREEMENT ARE EXCLUSIVE, AND THAT NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, UNDER NO CIRCUMSTANCES Equipment tease Page 11 of 19 Siemens Confidential SHALL THE TOTAL AGGREGATE LIABILITY OF LESSOR UNDER ANY THEORY OF RECOVERY, WHETHER BASED IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), UNDER WARRANTY, OR OTHERWISE, EXCEED, WITH RESPECT TO THE ITEM OF EQUIPMENT OUT OF WHICH SUCH LIABILITY ARISES, AN AMOUNT EQUAL TO FOUR (4) WEEKS RENT TO BE PAID TO LESSOR UNDER THIS AGREEMENT. WITH RESPECT TO EACH ITEM OF EQUIPMENT, ALL LIABILITY OF LESSOR AND ITS SUPPLIERS AND SUBCONTRACTORS UNDER THIS AGREEMENT SHALL TERMINATE NO LATER THAN SIX (6) MONTHS AFTER THE EXPIRATION OF THE LEASE TERM OF SUCH ITEM OF EQUIPMENT. THE PROVISIONS OF THIS CLAUSE 7.1 SHALL PREVAIL OVER ANY CONFLICTING OR INCONSISTENT PROVISIONS SET FORTH ELSEWHERE IN THE AGREEMENT. 7.2 For the purpose of this Clause and Clauses 6.3 and 7.1 above, all persons, firms or companies who are or may from time to time become suppliers or subcontractors, or their officers, directors or employees shall be third party beneficiaries of this Agreement. 7.3 NOT USED 7.4 If performance of any obligation under the Agreement (other than an obligation of the Lessee to make payment) is prevented, restricted or delayed by any act of God, act or omission of government, war, hostilities, industrial dispute at either party's premises or elsewhere, failure or delay in source of supply of materials or equipment, fire, explosion, accident or breakdown of essential machinery or equipment or by any cause (whether similar or not to any of the above events) beyond the reasonable control of the party whose performance is affected, then that party shall be excused from and shall not be liable for failure in performance to the extent of that prevention, restriction or delay. 8 SERVICES AND EQUIPMENT 8.1 The Lessor shall provide sufficient man -days of staff to supervise the installation, commissioning, decommissioning and removal of the Equipment at the charge rates incorporated in Clause 2(a) of the Form of Agreement. 8.2 Lifting equipment and tools shall be provided by the Lessee. Equipment Lease Page 12 of 19 Siemens Confidential 9 PAYMENT; INTEREST 9.1 Payment shall be made by wire transfer into the Lessor's bank account in accordance with remittance instructions outlined below: Domestic USD Bank Name: Mellon Bank Address: Pittsburgh, PA Account Name: Siemens Demag Delaval Turbomachinery Inc. Routing # 043000261 Account # 022-1735 9.2 Ten (10) days prior to the commencement of the lease term of an item of Equipment, advance rent shall be paid by the Lessee to the Lessor and thereafter the rent shall be paid monthly in advance. Advance rent of four (4) weeks lease shall be paid if the lease term is less than three (3) months and of three (3) months shall be paid if the lease term exceeds three (3) months. 9.3 Other charges shall be paid within twenty-one (21) days from the date of the Lessor's invoice. 9.4 Any past due payments shall, without prejudice to the right of Lessor to payment when due, bear interest at a floating rate equivalent to one -twelfth (1/12) of the per annum prime rate charged by Chase Manhattan Bank, New York, New York, U.S.A., as such prime rate is published on the first banking day following the date payment is due, plus an additional one-half of one percent (0.5%), payable each month or portion thereof that payment is delayed. 10 TAXATION The rent paid or to be paid to Lessor under this Agreement does not include any federal, state (other than Untied States federal and state income taxes imposed on Lessor), or local property, license, privilege, sales, use, excise, value added, gross receipts, or similar taxes now or hereafter applicable to, measured by, or imposed upon or with respect to the transaction and the Equipment its or their rental, sale, value or use, or any services performed in connection therewith. Lessor agrees to pay or reimburse Lessee for any such taxes which Lessee or its suppliers or subcontractors are required to pay. 11 DISPUTE RESOLUTION If at any time any question, dispute or difference shall arise between the Lessor and the Lessee under or in connection with this Agreement (including any Equipment Lease Page 13 of 19 Siemens Confidential dispute as to its validity, meaning, effect or termination) the parties shall attempt to come to a reasonable settlement of the matter, but should such question dispute or difference not be settled within six weeks of the original written notification of such matter the dispute may be submitted by either party to litigation pursuant to this Clause. The Lessor and Lessee hereby submit to the exclusive jurisdiction of the federal and state courts located in the Southern District of New York for the purpose of all disputes not resolved pursuant to the first sentence of this Clause. Each of the Lessor and the Lessee waives, to the fullest extend permitted by law, any objection which either may now or hereafter have to the laying of the venue of any such proceeding brought in such courts or any claim that any such proceeding has been brought in an inconvenient forum. EACH OF THE LESSOR AND LESSEE HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 12 INTELLECTUAL PROPERTY RIGHTS 12.1 All design rights (whether registered or not) trade marks and patents registered in the Lessor's name and copyrights (where information, drawings, manuals and other literature is annotated as copyrighted) in any of the Lessor's drawings, documents, specifications, the Equipment, other hardware included in the supply and software shall remain the exclusive property of the Lessor. The Lessee shall not nor shall he/she enable others to reproduce any software or hardware using any designs, drawings or specifications provided by the Lessor nor by copying from any part or parts of the Equipment supplied. 12.2 Lessor will, at its own expense, defend or at its option settle any suit or proceeding brought against Lessee so far as based on an allegation that any Equipment (including parts thereof), or use thereof for their intended purpose, constitutes an infringement of any United States patent or copyright or misappropriation of a trade secret, if Lessor is notified promptly in writing and given authority, information, and assistance in a timely manner for the defense of said suit or proceeding. Lessor will pay the damages and costs awarded in any suit or proceeding so defended. Lessor will not be responsible for any settlement of such suit or proceeding made without its prior written consent. In case the Equipment, or any part thereof, as a result of any suit or proceeding so defended is held to constitute infringement of any such United States patent, copyright or trade secret, Lessor will, at its option and its own expense, either: (a) procure for Lessee the right to continue using said Equipment; (b) replace it with substantially equivalent non -infringing equipment; or (c) modify it so it becomes non -infringing. Lessor will have no duty or obligation to Lessee under this Clause to the extent that the Equipment is (a) supplied according to Lessee's design or instructions Equipment Lease Page 14 of 19 Siemens Confidential wherein compliance therewith has caused Lessor to deviate from its normal course of performance, (b) modified by Lessee or its contractors after delivery, or (c) combined by Lessee or its contractors with items not furnished hereunder and by reason of said design, instruction, modification, or combination a suit is brought against Lessee. In addition, if by reason of such design, instruction, modification or combination, a suit or proceeding is brought against Lessor, Lessee shall protect Lessor in the same manner and to the same extent that Lessor has agreed to protect Lessee under the provisions of first paragraph of this Clause 12.2. THIS CLAUSE IS AN EXCLUSIVE STATEMENT OF ALL THE DUTIES OF THE PARTIES RELATING TO PATENTS, COPYRIGHTS OR TRADE SECRETS AND DIRECT OR CONTRIBUTORY INFRINGEMENT THEREOF AND OF ALL THE REMEDIES OF LESSEE RELATING TO ANY CLAIMS, SUITS, OR PROCEEDINGS INVOLVING PATENTS, COPYRIGHTS OR TRADE SECRETS. Compliance with this Clause as provided herein shall constitute fulfillment of.all liabilities of the parties under the Agreement with respect to patents, copyrights or trade secrets. 13 CONFIDENTIALITY All information and know how including all manuals and operating instructions, all drawings and other technical information and specifications which are the property of or are provided by the Lessor in connection with the Agreement and all information which becomes known to the Lessee as a result of this Agreement shall be kept confidential by the Lessee and not copied or disclosed to any third party with the prior written consent of the Lessor. 14 WAIVER The failure or delay on the part of the Lessor to exercise any power or right hereunder shall not operate as a waiver thereof, nor affect the validity of this Agreement or the right of Lessor to enforce each and every provision. 15 ENTIRE AGREEMENT This Agreement contains the entire agreement between the parties and supersedes all previous or contemporaneous agreements, representations, understandings and commitments whatsoever oral or in writing. 16 LAW This Agreement shall in all respects be construed and interpreted in accordance with the laws of the State of New Jersey without application of its choice of law or conflicts of laws rules. Titles of the Clauses shall not affect their legal construction. Equipment Lease Page 15 of 19 Siemens Confidential 17 MODIFICATION No waiver, modification, or amendment of any of the provisions of the Agreement shall be binding unless it is in writing and signed by duly authorized representatives of both parties. 18 NOTICES 18.1 Any notice or other communication which either party is required or permitted or wishes to give or make to the other party pursuant to this Agreement shall be in writing in the English language and shall be effected by: - (a) delivering in person to any authorized representative of such other party, or (b) sending it by overnight courier service to such other party, or (c) transmitting it to such other party by facsimile or other electronic means of data transmission. 18.2 Service of such notice or other communication shall be made on the parties at their respective addresses as follows: Lessor: Lessee: Siemens Demag Delaval............................................................... Turbomachinery, Inc................................................................ ............................................................... Trenton, New Jersey USA.................................... I.......................... Attention: Attention: ......................................... Andy Kemsley Tel: Tel: +1 (609) 890-5131 Fax: .......................................................... Fax:, +1-(609) 587-7790 18.3 A party may change the address, fax number to which notices are to be addressed by serving a notice on the other party in accordance with this Clause. 18.4 Notices sent by overnight courier shall be deemed to be delivered on the day following dispatch as determined by the date of the courier's waybill, and notices sent by facsimile or other electronic means of data transmission shall be deemed to be delivered on the date of transmission; provided, however, if the date a Equipment Lease Page 16 of 19 Siemens Confidential notice is deemed delivered is not a Business Day, then the notice shall be deemed delivered on the next Business Day following. 21 ASSIGNMENT Without the prior written consent of Lessor, Lessee shall not: (a) assign, transfer, pledge or hypothecate this lease, the Equipment or any part thereof, or any interest therein; or, (b) sublet or lend the Equipment or any part thereof, or permit the Equipment or any part thereof to be used by anyone other than Lessee or Lessee's employees. Consent to any of the foregoing prohibited acts, if given, applies only in the given instance, and shall not constitute a consent to any subsequent like act by Lessee or any other person. Subject always to the foregoing, this Agreement inures to the benefit of, and is binding upon, the heirs, legatees, personal representatives, successors and assigns of the parties hereto. Equipment Lease Page 17 of 19 Siemens Confidential ANNEX B INSTALLATION / REMOVAL RATES See attached Field Servcie Rate Sheet SERVICES for USA (onshore) , Rev 2 dated December, 2006. Equipment Lease Page 18 of 19 Siemens Confidential Siemens Power Generation - Industrial Applications Field Service Rates SERVICES for USA (onshore) PRODUCTS: Siemens Steam Turbines & Compressors, Alstom Steam & Gas Turbines WORKING RATES daily rate daily rate daily rate Hourly rate in I Hourly rate in Personnel Mon - Fri Sat based on a Sun & Local excess of excess of based on a 8 8 hour work day holiday I 8 hours worked 18 hours worked hour work days based on a 8 Mon- Sat Sun or Local hour work day holiday SPECIALIST ENGINEER $1760.00 US $2640.00 US $3520.00 US $330.00 US $440.00 US TECHNICAL FIELD ADVISOR $1440.000 US $2160.00 US $2880.00 US $270.00 US I ui E360.00 US FIELD SERVICE TECHNICIAN $1120.00 US $1360.00 Us 1 $1600.00 US $170.00 US 1 $200.00 US Round Trip Billing for One Way Travel Time of: Up to 3 hours Up to 8 hours Up to 12 hours USA/ Canada Up to 12 hours International* Up to 18 hours* Up to 24 hours* Up to 36 hours* $1550.00 $4400.00 $6300.00 $5700.00 $8100.00 $10,400.00 $14,300.00 *Excludes airfare. Airtare is billed at cost plus i 5 io administration tee. Daily Lump Sum Per Diem charge for Lodging, Transportation, Meals and Misc = $290.00 from arriving at location. Higher cost of living areas will be billed at cost plus 15% administration fee. The above rates are in US Dollars and include expenses as referenced in the attached Conditions. Validity : From 2007-01-01up to 2007-12-31 Conditions , General Conditions for Erection, Commissioning and other Services Charging appendix for field services issue 01-2006 Rev.2 Dec 2006 Siemens Demag Delaval Turbomachinery, Inc. Conditions for the Sale of A Siemens Company Field 8, Engineering 840 Nottingham Way, Hamilton, New Jersey, U.S.A. 08650 Services Field & Engineering Services For Service on All Siemens Acquired Steam Turbines, Gas Turbines, Compressors and Pumps in the U.S.A. Effective January 1, 2007 Prices are subject to change without notice I. Selling Policy All prices contained herein are subject to the terms and conditions of the Siemens Demag Delaval Turbomachinery, Inc. Selling Policy for the Sale of Equipment and Services ("Selling Policy') in effect on the date an order is received. It. Price Policy All rates and prices are subject to change without notice. Unless contracted otherwise, rates and prices for ongoing contracts will be those In effect at the time the work is performed. No personnel will be dispatched until a Purchase Order, Payment or written authorization acknowledging acceptance of Terms, Pricing and agreement to pay is received III. Services Definitions Siemens Demag Delaval Turbomachinery, Inc. ("Siemens") offers three types of field and engineering services as defined below, in accordance with the price list attached. A. Supervisory and Specialist Services An engineer, project manager, technical field advisor (TFA) providing Supervisory Services and directing Siemens personnel or Customer personnel performing to Siemens procedures and process specifications. C. Field Service Technician A Field Service Technician generally performs the work required to be completed at site. By definition, this would include the disassembly, Inspection, and replacement of parts, routine repair and reassembly of rotating equipment. it would also Include the complete removal and re- installation of the entire unit. IV. Rates Payable A standard day for on -shore work is classified as 8 hours working time. A standard day for off- shore work is classified as 12 hours working time. Minimum billing is the daily rate and will also apply to week day standby time. Weekend stand-by will be charged at % the daily rate, straight lime per day that the representative does not work but remains within the vicinity of the site. Holiday stand-by will be charged as if it was worked. It the representative is able to return home then the costs of time and travel for the representative to go home and return to site will be charged accordingly. The daily rate applies to all time worked or traveled during an 8 hour work day or fraction thereof; that is, any consecutive 8 hour period In a weekday (Monday through Friday, holidays excepted) with an allowance for lunch lime. A job specific readiness fee will apply to all The 01' day daily rates apply to all time worked or orders that are not firm priced, for supervisory traveled on Saturday (holidays excepted) with an services. This fee will cover pre -job efforts and allowance for lunch. Will be quoted separately. The 7"' day daily rates apply to all time worked or An engineer, manager or specialist providing Special Services also performs diagnostic and operational trouble -shooting and commissioning of rotating equipment. This work may be conducted onsite or by telecommunication. Special Services include diagnostic electrical testing, evaluation and set-up activities on control systems, voltage regulator systems and any on-line diagnostics. level III NDE and balancing is also included in this type of field engineering service. Engineers located at Siemens home facilities, including District Offices and the Technical Support Center, provide technical studies and information relating to the design and operating parameters of rotating equipment. B. Technical Field Advisor (TFA) An engineer providing TFA renders advice and makes recommendations based on Siemens procedures and drawings during standard maintenance of existing and installation of new Siemens supplied rotating equipment to customers direct employees. By definition, standard maintenance includes disassembly, inspection, and replacement of parts, routine repair and reassembly. traveled on a Sunday or a holiday, locally observed by Siemens, with an allowance for lunch. Overtime rates also apply for time worked in excess of 8 hours. This Is an hourly charge, based upon actual additional time worked in excess of 8 hour period. Two overtime rates apply; one for time worked in excess of 8 hours for the daily rate (Monday through Friday, holidays excepted) and the 6°i day daily rate (holidays excepted), and one for time worked in excess of 8 hours for the 7"' day daily rate. The daily rates are based on working days at site. Standby time not attributable to Siemens WIN be classed as working time. Time spent at the site shall be evidenced with timesheets signed by the Customer's authorized representative. The daily rates include the supply and use of basic PPE (Personal Protective Equipment) and the use of standard small hand tools, as required by Technicians. AN rates shall be valid for the determined period of validity only. V. Traveling and Other Expenses Siemens policy for traveling and other expenses are assessed as outlined here: A. Travel and Expenses The daily labor rates exclude the following costs, which shall be for Customer's account and will be charged separately: a) Mobilization/Demobilization fees shall be charged at a graded fixed fee dependent on the required travel time from base location to site. Mobilization fees include preparation time, visa costs, all travel expenses including flights where relevant to mobilize and travel time plus accommodation costs to get the field service personnel to and from the onshore work site, or point of embarkation for off shore sites. The transport from the point of embarkation to an offshore location and back will be provided by the Customer free of charge. b) MobilizationlOemobilization fees applicable for International travel in excess of 12 hours shall be charged at a graded fixed fee dependent on the required travel time from base location to site. Mobilization fees include preparation time, visa costs, all travel expenses excludi flights where relevant to mobilize and travel time plus accommodation costs to get the field service personnel to and from the onshore work site, or point of embarkation for off shore sites. The transport from the point of embarkation to an offshore location and back will be provided by the Customer free of charge. c) Accommodation where not provided by the Customer will be charged on a lump sum daily basis. d) Meals and allowances will be charged on a lump sum daily basis. e) The daily allowance charge for accommodation, meals, transportation and allowances will be assessed for each calendar day an individual is assigned to a project including nonworking weekend days for jobs extending over the week- end(s). f) Where the Customer provides accommodation and food it is to be to a standard which Is acceptable to Siemens. In the event that this is, in our opinion, unsuitable, we reserve the right to find an alternative which will be charged for as above. g) Should an expedited mobilization be required an additional charge for excessive airfare may be applicable. All separately invoiced Items over and above the daily rates will be charged with a fifteen percent (15 %) increase for handling and administration costs. Page No. 1 B. Departure Delay and Cancellation a) Departure delay — Standby in Home Base If the fixed date for the personnel delegation will be delayed due to reason by the Customer, Siemens Is prepared to keep the nominated personnel on stand-by up to 7 calendar days. In this case Siemens reserve the right to charge a delay fee of the full applicable dally rate per calendar day. b) Departure Delay — At Point of Embarkation Should departure of personnel be delayed at the point of embarkation for any reason beyond Siemens control, the full applicable day rate will be charged per day of delay. Accommodation and meals where provided by Siemens will also be charged according to the published rates. c) Cancellation Where cancellation by the Customer Is notified less than 7 days prior to planned mobilization, a cancellation fee of one single day at 100% of the applicable daily rate will be charged. Should any job be cancelled or postponed by the Customer after the representative has been dispatched then all costs incurred for time and expanses will be charged in accordance with the terms of this rate sheet. C. Home Leave a) For USA/ Canadian service personnel, when a project Is expected to exceed 5 continuous weeks of duration, following every three (3) weeks of continuous attendance at an onshore site, including any days spent traveling, the Customer will allow each member of Siemens personnel an extended weekend home leave journey at the Customer's expense. For International personnel, home leave Is permitted every two (2) months for 10 days b) If continuous attendance of Siemens personnel is required, then and on request. Siemens will delegate substitute personnel, mobilization rates would apply. c) Following every fourteen days of continuous attendance offshore, Siemens reserves the right to charge the Customer a further mobilization fee for each member of Siemens personnel. d) Days spent traveling with respect to home leave shall be charged at the applicable daily rate. Should any member of Siemens personnel cancel a home leave journey, the Customer shall be charged for the airfare (according to Siemens travel regulations) and/or other travel costs that are incurred by Siemens. D. Tools a) Charges for equipment, tools, measuring Instruments and special assembly tools supplied with Siemens field service personnel for use by Siemens or Its subcontractors will be quoted by your local Siemens representative. Costs of transportation (including all applicable transportation charges, insurance, customs/duties, etc.) will also be charged at cost plus 15%. The rental time applies from the day of dispatch from base to return receipt. b) Siemens will catalogue the tools required to be returned to base. If for any event the catalogued tools are not returned within 30 days after leaving site, Siemens will charge the Customer the current replacement cost. c) Prices quoted will include normal replenishment and re -calibration. Excessive loss or damaged equipment, tools and Instruments beyond the control of Siemens will be billed as an additional charge to the Customer. E. Shift Work a) Shift work Is defined as those circumstances where, In a given day, more than one service crew is engaged to perform the service activity. In such instances Siemens reserves the right to charge a shift premium In addition to the published rate sheets. F. Technical Consultation a) During on -site service work it might be necessary to Involve specialists from Siemens headquarters for particularly complicated technical questions such as certain analysis, calculations or similar (asks. For such technical consultation Siemens will Invoice this charge on an hourly basis according to the Specialist Engineer rates as defined in the published rates sheet. b) Where Technical Consultation is required to be provided at site, charges will be in accordance with the published rate sheets for Specialists and Engineers. Before such work is commenced a separate agreement has to be established, unless It is already agreed upon in the order. VI. Working Conditions and Special Costs Costs for factory security officers, medical services, industrial safety and supporting activities at the Customer site will be for the account of the Customer. In case of accident or illness, the Customer undertakes to provide immediate medical assistance and if necessary, to transfer any injured or sick person to a hospital preferably conforming to North American standards. Should repatriation become necessary as a result of serious illness or death, the Customer shall attend to all formalities and pay all the costs Incurred thereby. Should replacement personnel be required, the costs for same shall be borne by the Customer. The Customer shall make available free of charge to Siemens personnel: office space, telephone, high speed internet connection and telex/fax (communication with home office shall be free of charge) and all such other facilities as are available to Customer's own personnel. Any social amenities available at the job site or Introduced there during the progress of site work, as well as any special benefits granted, shall be made available to Siemens personnel in the same manner and extent as accorded to any other foreign personnel at the job site. In the interests of avoiding language difficulties, the Customer shall, for own account, make available the services of interpreters, where work is being performed. Vil. Additional Notes a) In the event Siemens uses outside or subsidiary personnel to perform services that would normally be performed by Siemens personnel, Siemens will Invoice Purchaser for such personnel at the hourly rates published herein. b) Any non Siemens parts or materials supplied during the work- will be charged at cost plus 25%. c) Siemens will supply engineers and techrddans based on qualifications with priority given to qualified daily commuting personnel when available. d) For all other conditions, please refer to the attached selling policy. Page 2 ANNEX C DESCRIPTION OF EQUIPMENT DESCRIPTION OF THE EQUIPMENT WEEKLY RENTAL STIPULATED VALUE LOCATION OF THE EQUIPMENT SGT 800 Turbine $ 40,000.00 USD $ 6,200,000.00 USD Siemens Demag Module Delaval Turbomachinery Inc - Hamilton, NJ Equipment Lease Page 19 of 19 Siemens Confidential E 1 _.� Service Product Information Appendix 6.2 Document number Edition Vernon Date Page 2006-06-13 1 (2) Emergency Support Emergency Modules SGT-800 Standard document — may be changed without previous notice Emergency Modules Purpose High power plant availability is dependent not only on a high technical reliability of the equipment and an effective preventive maintenance program. Ample back-up resources are of near -equal importance. Operation support, accessibility of spare parts, spare modules and complete spare units are therefore prerequisites for maintaining the plant's availability at the desired, high level. Though the consequences of an extensive breakdown may be severe, few users keep a back-up unit on their own. So, Siemens offers cost efficient emergency back up in the form of spare modules and gas turbines for hire. To offer the possibility of individual optimising of cost and outage time in case of an emergency break down, our back up recourses do not only include complete gas turbines but also spare modules for hire. Depending on the situation it is sometimes, from total outage time perspective, beneficial to install a spare module instead of replacing the complete gas turbine. General description The emergency modules for SGT-800 / GTX100 cover the major part of the core engine (See definition at the end of this document). Following modules are available for hire for a weekly fee as shown: Weekly fee (USD) Combustion Chamber Module (Combustor Chamber and Fuel Injectors) 20 000 Turbine Module (including Turbine Stator Stage 1 and Turbine Casing) 40 000 Outlet Casing Module 10 000 Minimised transportation time to all turbine sites is secured by the strategic locations of the emergency modules. All users have access to these emergency modules on a first come first served basis. If there is a need, any available module can be sent within 24 hours from notification, at the return of a signed lease contract. The estimated time for installation and commissioning is normally 2-9 days, depending on type of module and local conditions such as means of transportation, lifting capacity, local assistance personnel, etc. The lease of modules is subject to the same terms and condition as described in Appendix 6.1. We reserve all rights in this document and in the information contained therein. Reproduction, use or disclosure to third parties without express authority is strictly forbidden. Issued by: ajul Checked by: Approved by: © Demag Delaval Industrial Turbomachinery AB Document numbon ' Service Product Information Appendix er Edit2 Date Page 2006-05-09 2 (2) Emergency Support Emergency Modules SGT-800 Casing Module I GTX100 Emergency Back-up Modules We reserve all rights in this document and in the information contained therein. Reproduction, use or disclosure to third parties without express authority is strictly forbidden. ® Demag Delaval Industrial Turbomachinery AB 3 m 2 x SGT-800 200606-13 Appendix 6.1 SIEMENS Vernon Edition 1 (Std no) / Page 1 (4) Additional Terms and Conditions for lease of Emergency Gas .Turbine or Gas Turbine modules Below additional Terms and Conditions shall prevail when the Purchaser is leasing the Supplier's Gas Turbine or its modules within the validity period of this agreement. 1. Emergency Gas Generator/Turbine The Supplier hereby agrees to lease to the Purchaser on the terms and conditions described herein one SGT-800 / GTX-100 Gas Turbine (see the end of this document for definition) or one of its modules described in Appendix 6.2, hereinafter referred to as the Lease Unit, during unscheduled repair of the Installation, provided such a Lease Unit is available at the time of the Purchaser's request. The term "available" means that the Lease Unit is not utilized or booked by another Purchaser or under maintenance. The following terms and conditions apply also to lease of SGT-800/GTX-100 modules as described in Appendix 6.2, which is the more likely than leasing a whole turbine. 2. Supplier's obligations 2.1 The Lease Unit will be delivered to the Purchaser at the site. The lease period commences on the date that the Lease Unit leaves the Supplier's workshop facilities and ends on the date when the Lease Unit is returned back to the Supplier hereinafter referred to as the Lease Period. 2.2 The Supplier will provide qualified technical direction for the installation and subsequent removal of the Lease Unit. 2.3 In the event that the Lease Unit becomes inoperative during the Lease Period due to faulty, workmanship or material, the Supplier shall remedy such defect at its own expense. 3. Purchaser's obligations 3.1 The Purchaser shall to the Supplier place an acceptable purchase order for repair of his own Gas Turbine. CADocuments and Settings\rtolmasoff\Local Settings\Temporary Internet Files\OLK6E\App 6 1 Lease of GTX turbine or modules (2).doc 2 x SGT-800 200606-13 Appendix 6.1 SIEMENS Vernon Edition 1 (Std no) / Page 2 (4) 3.2 The Purchaser agrees to pay a weekly use fee for each week or fraction thereof of use of the Lease Unit. Invoicing will be made after each 30 days of use. Payment is to be made against invoice payable within 30 days from the date of invoice. In case payment is delayed beyond the respective due date the Supplier shall be entitled to interest on the overdue amount at a rate of 10% p.a. from the due date until the actual date of payment. The weekly use fee is a fixed fee, subject to adjustment in accordance with a Price Adjustment clause and changes in exchange rate SEK/USD. 3.3 The Purchaser agrees to pay all cost for. manpower and for transport of the Lease Unit. The cost for manpower will be based on the Supplier's charges for manpower valid at the time of execution. 3.4 The Purchaser shall allow the Supplier to utilise parts and components from the Purchaser's gas turbine at no charge during the Lease Period. 3.5 The Purchaser shall ensure that the Lease Unit is operated and maintained by trained personnel in accordance with the Supplier's at the moment current specifications (manuals, mandatory bulletins and other written instructions), including the performance of inspections and sampling to assure conformance. The Lease Unit shall be operated in accordance with the specified conditions. Without limiting the generality of the foregoing, the Purchaser shall bear the costs of all necessary consumables needed during the Lease Period. The Purchaser is not entitled to 3 make any alterations or modifications to the Lease Unit. m 0 3.6 Except for the Supplier's obligations of paragraph 2.3 of this document, the Purchaser m hereby assumes and shall bear during the Lease Period the entire risk of loss or damage to a the Lease Unit. 3.7 o The Purchaser shall during the Lease Period keep the Lease Unit insured against risk of loss or damage by fire, theft or other customarily insured hazards in an amount not less than 100 times the weekly rate. The insurance shall be in a form and with a company satisfactory to (D �Y 4) CADocuments and Settings\rtolmasoft\Local Settings\Temporary Internet Files\OLME\App 6 1 Lease of GTX turbine or E modules (2).doc c Cn u- 2 x SGT-800 200606-13 Appendix 6.1 SIEMENS Vernon Edition 1 (Std no) Page 3 (4) the Supplier. The Purchaser shall at the Supplier's request deliver evidence satisfactory to the Supplier of insurance coverage as aforesaid. 3.8 The Supplier shall have the right to in advance notice enter the premises where the Lease Unit is located and shall be given necessary facilities for the purpose of inspection thereof. 3.9 The Purchaser shall supply all necessary assistance, helpers, tools and other equipment, required for carrying out installation and subsequent removal of the Lease Unit at no cost for the Supplier. 3.10 The Purchaser shall provide the Supplier with relevant operating and performance data as requested by the Supplier including, but not limited to, fired hours, equivalent operating hours, starts, full and partial cycles, trips, irregular operating and performance indications and results of sampling inspections. The Purchaser is obligated to shut down the Lease Unit upon the request of the Supplier when, in the reasonable opinion of the Supplier, continued operation would constitute a risk of substantial damage to the Lease Unit or associated equipment and/or personnel. If the Purchaser in spite of the Supplier's written request for a shut down, chooses to run without the Supplier's concurrence, the cost for remedying any resulting damages shall be borne by the Purchaser. 3.11 Title to and ownership of the Lease Unit shall at all times remain with the Supplier and the Purchaser shall undertake all measures necessary in order to preserve the Supplier's ownership to the Lease Unit during the Lease Period. The Purchaser may not pledge, transfer or sell the Lease Unit or part thereof. The Purchaser may not transfer this Agreement to a third party or lease the Lease Unit or part thereof to a third party except in connection with the sale of the Plant. CA Documents and Settings\rtolmasoff\Local Settings\Temporary Internet Files\OLK6E\App 6 1 Lease of GTX turbine or modules (2).doc c rn 0 .a N C_ u- m Q C C L U f6 E O .fl 7 F- N f0 C y 7 j- C N CO C E -0 a) k 2 x SGT-800 200606-13 Appendix 6.1 SIEMENS Vernon Edition 1 (Std no) / Page 4 (4) Emergency Spare gas turbine CADocuments and Settings\rtolmasoff\Local Settings\Temporary Internet Files\OLK6E\App 6 1 Lease of GTX turbine or modules (2).doc C SUPPORTING DOCUMENTS Romero, Debbie From: Romero, Debbie Sent: Wednesday, December 12, 2007 12:53 PM To: O'Callaghan, Donal Cc: Jaunzemis, Dolores; Nickens, Debby; Tolmasoff, Robin; Tolmasoff, Michelle; Tolmasoff, Tania Subject: Emailing: Res. FI-288 Siemens Demag Delaval 11-27-07 Attachments: Res. FI-288 Siemens Demag Delaval 11-27-07.PDF if Res. FI-288 emens Demag Dela, The message is ready to be sent with the following file or link attachments: Res. FI-288 Siemens Demag Delaval 11-27-07 Note: To protect against computer viruses, e-mail programs may prevent sending or receiving certain types of file attachments. Check your e-mail security settings to determine how attachments are handled. 1 CITY CLERK'S OFFICE INTEROFFICE MEMORANDUM DATE: December 11, 2007 TO: Donal O'Callaghan, Director of Light & Power FROM: Nelly Giron, City Clerk RE: Resolution No. FI-288- A Resolution of the Finance Committee of the City of Vernon Approving and Authorizing the Purchase of a Gas Turbine Module for the Malburg Generating Station and Authorizing the Issuance of Purchase Orders ad Payment to Siemens Demag Delaval Turbomachinery, Inc. For Said Equipment and Services Provided For the Removal and Installation of the 'equipment and Any Freight Charges Connected with the Removal and Installation of the Equipment Transmitted herewith is a copy of Resolution No. FI-288, referenced above, which was approved by City Council on November 27, 2007. Thank you. NG:dr c: Resolution No. FI-288 Agreement File No. 07-112 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. FI-288 A RESOLUTION OF THE FINANCE COMMITTEE OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE PURCHASE OF A GAS TURBINE MODULE FOR THE MALBURG GENERATING STATION AND AUTHORIZING THE ISSUANCE OF PURCHASE ORDERS AND PAYMENT TO SIEMENS DEMAG DELAVAL TURBOMACHINERY, INC. FOR SAID EQUIPMENT AND SERVICES PROVIDED FOR THE REMOVAL AND INSTALLATION OF THE EQUIPMENT AND ANY FREIGHT CHARGES CONNECTED WITH THE REMOVAL AND INSTALLATION OF THE EQUIPMENT WHEREAS, the City of Vernon (the "City") is a municipal corporation and a chartered city of the State of California organized and existing under its Charter and the Constitution of the State of California; and WHEREAS, on October 2, 2007, the City Council of the City of Vernon adopted Resolution No. 9435 approving an Equipment Lease Agreement with Siemens Demag Delaval Turbomachinery, Inc. ("Siemens") for the lease of an emergency spare gas turbine for the Malburg Generating Station; and WHEREAS, in order to facilitate the operation of the Malburg Generating Station, the Light & Power Department desires to purchase an SGT 800 Turbine Module (the "Equipment") from Siemens pursuant to the Terms and Conditions of Siemens Selling Policy 1200 dtd 05/01/05 and the Quotation dated November 16, 2007 (collectively, the "Proposal") for the sum of $6,819,750.00 (includes tax) plus freight in the sum of $13,700.00; and WHEREAS, in accordance with the Proposal, the City will receive a credit for lease payments made; and WHEREAS, the Finance Committee Section of the City Council of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the City of Vernon has determined that, pursuant to the provisions of subsection (a) of Section 2.27 of the Vernon City Code, it is in the Public interest and necessity to purchase the Equipment from Siemens to enhance services provided to the Vernon community. NOW, THEREFORE, BE IT RESOLVED BY THE FINANCE COMMITTEE OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The Finance Committee Section of the City Council of the City of Vernon hereby finds and determines that the recitals contained hereinabove are true and correct. SECTION 2: The Finance Committee Section of the City Council of the City of Vernon hereby approves the purchase of the Equipment in accordance with the Terms and Conditions of Siemens Selling Policy 1200 dtd 05/01/05 and the Quotation dated November 16, 2007, a copy of which is attached hereto as Exhibit A and incorporated 1by reference. SECTION 3: The Finance Committee Section of the City Council of the City of Vernon hereby authorizes the issuance of a Purchase Order to Siemens Demag Delaval Turbomachinery, Inc., 840 Nottingham Way, Hamilton, NJ 08638 for the Equipment and freight for transporting the leased Equipment to the jobsite and hereby approves the payment of 50% net 30 days after issuance of the Purchase Order and payment of the remaining 50% net 60 days after issuance of Purchase Order, subject to the appropriate credit for lease payments made as determined by the Director of Light & Power. SECTION 4: The Finance Committee Section of the City Council of the City of Vernon hereby authorizes payment for the cost of Field Service by Siemens in removing the old module and installing the new module to be billed pursuant to the rate schedule attached hereto - 2 - 1 2 3 4 5 6 7 8 9'' 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 as Exhibit B and incorporated by reference. SECTION 5: The Finance Committee Section of the City Council of the City of Vernon hereby authorizes the payment of the freight and duty fees for the old turbine module shipped to and from Sweden in the approximate amount of $50,000.00. SECTION 6: The City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 27th day of November, 2007. ATT�ST: VELA GIRO C ty Clerk Name: Leonis C. Malburg Title• Chairman - 3 - 1 2 3 4' 5 6 7 8 9 10. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (STATE OF CALIFORNIA ss COUNTY OF LOS ANGELES I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. FI-288, was duly adopted by the Finance Committee Section of the City Council of the City of Vernon at a regular meeting of the Finance Committee duly held on Tuesday, November 27, 2007, and thereafter was duly signed by the Chairman or Vice Chairman of the Finance Committee Section of the City Council of the City of Vernon. (SEAL) MANUELA GIRON, City Clerk - 4 - EXHIBTT A SIEMENS Siemens Demag Delaval Turbomachinery, Inc. 840 Nottingham Way Hamilton, New Jersey 08638 609-890-5000 Sold -to Address CITY OF VERNON - LIGHT AND POWER 4305 SANTA FE AVE VERNON CA 90058 USA Ship -to Address CITY OF VERNON - LIGHT AND POWER 4305 SANTA FE AVE VERNON CA 90058 USA Document No. / Date Customer Doc. No. / Date Your Reference Customer Account No Revision Validity period 40000128 / 10/18/2007 Donal O'Callaghan / 11 /16/2007 3235838811 301455 10/18/2007 - 11/30/2007 Siemens Demag Delaval Turbomachinery, Inc. is pleased to offer the following for your consideration: Item Part No. Serial No. Lead Time Qty UoM Unit Price Extended Price 0020 PARTS AGREEMENT 1 EA 6,300,000.00 6,300,000.00 SGT800 TURBINE MODULE - Rev 1 Proposal Customer Doc No. /Item Donal O'Callaghan / This offer is for the supply of a Siemens SGT800 Turbine Module and is valid through November 30, 2007. Title of the new Turbine Module (currently under Equipment Lease Agreement between the City of Vernon and Siemens) will pass to the City of Vernon upon the following: 1. Receipt of an acceptable purchase order referencing this quotation and our terms and conditions; 2. Receipt of 50% downpayment and 50% final payment bank wired to our account; Commercial Offer: The selling price for the SGT800 Turbine Module is $6,300,000.00 USD. Payment Terms are: 50% payment due net 30 days after issuance of Purchase Order 50% payment due net 60 days after issuance of Purchase Order Upon title transfer of the turbine module, Siemens will waive all turbine module lease payments received in our account. The City of Vernon may deduct all lease payments paid and received in our account from the final 50% invoice for the turbine module provided all lease payments and both payments for the new turbine module have been remitted on time. The City of Vernon will be responsible to pay the freight invoice for transporting the leased turbine module to the jobsite (ref: Siemens Invoice 90002549 $ 13,700.00 USD). The City of Vernon will be responsible for the Field Service provided by Siemens in removing the old Thank you for your continued Interest in Siemens products and services CITY OF VERNON - LIGHT AND POWER 4305 SANTA FE AVE VERNON CA 90058 USA Document No. l Date 40000128 / 10/18/2007 Item Part No. Serial No. Lead Time Qty UoM Unit Price Extended Price module and installing the new module. Field Service will be billed separately by Siemens. As part of this Offer, Siemens will waive the fee to perform the root cause analysis on the old turbine module referencing Siemens Quotation 40000125 dated 10/17/07. The City of Vernon will be responsible for paying the freight and duty of the old turbine module to and from Sweden to be billed separately by Siemens. Siemens reserves the right to negotiate in good faith with the City of Vernon for an agreement to repurchase the old module after the inspection is complete in Sweden. The warranty for the new turbine module will start effective the delivery date specified in existing lease agreement. Items Total State Tax 6, 300, 000.00 6.250 % 393,750.00 County Tax 1.000 % 63,000.00 Secondary County Tax 1.000 % 63 000.00 Total Amount 6.819.750.00 Currency USD Terms of Payment Progress Payments Terms of Delivery EXW TRENTON, NJ Terms and Conditions Siemens Demag Delaval Turbomachinery, Inc. Terms and Conditions 1200 (dated 5/01/2005) Thank you for your continued interest In Siemens products and services CITY OF VERNON - LIGHT AND POWER ,,00 4305 SANTA FE AVE Document No. / Date 40000128 / 10/18/2007 VERNON CA 90058 USA All purchase orders are to be made out in the name of: Siemens Demag Delaval Turbomachinery, Inc. 840 Nottingham Way Hamilton, NJ 08638 All purchase orders must state that terms and conditions are in accordance with Siemens Demag Delaval Turbomachinery Inc Selling Policy 1200 dtd 05/01105. If you have any questions, please feel free to contact me. Best Regards, r� i Debbie Vietzke Manager, Customer Service Siemens Demag Delaval Turbomachinery, Inc. Tel: 609-890-5221 Fax: 609-587-7790 Cell: 609-306-0889 E-Mail: debra.vietzke@siemens.com Thank you for your continued interest in Siemens products and services Siemens Demag Delaval Turbomachinery, Inc. Selling Policy 1200 A Siemens Company 840 Nottingham Way Trenton, New Jersey, U.S.A. 08650 (For Sales in United States, Except Louisiana) These Terms and Conditions Govern May 1, 2005 The Sale of Equipment and Services The terms and conditions set forth in the Siemens Demag Delaval Turbomachinery, Inc. ("Siemens") proposal and in this Selling Policy 1200 are the terms and conditions governing the Siemens proposal and any Agreement between the par- ties for the Equipment and/or Services covered by such proposal. Each proposal is valid for sixty (60) days from the date of the proposal unless extended or withdrawn in writing by Siemens. The issuance of a Purchaser purchase order or any other reasonable manner of acceptance by Purchaser communicated to Siemens during such validity period will form an Agreement based upon the terms and conditions of the Siemens proposal and this Selling Policy 1200. 1. Definitions Whenever used in this document with initial capitalization, the following definitions shall be applicable: A. "Agreement" or "Contract" means the Siemens proposal, this Selling Policy 1200, Purchaser's purchase order, as ac- cepted by Siemens, (excluding any preprinted terms and conditions on said purchase order and in any attachments to or Purchaser documents referenced in said purchase order) and any other document set forth in the Siemens proposal; or an integrated agreement signed by Siemens and Purchaser; for the Equipment, and/or Services. B. "Field Installation Services" means the installation by Siemens of Purchaser's Material at the Site. C. "Field Repair and Modernization Services" means the repair, modification or modernization work, or some or all of them, performed by Siemens on Purchaser's Material at the Site and for certain activities at a repair facility selected by Sie- mens. D. "Equipment" means equipment, components, parts, materials and Software provided by Siemens pursuant to the Agreement. E. "Maintenance Services" means the disassembly, inspection and reassembly of Purchaser's Material at the Site. F. "Party" means individually either Siemens or Purchaser. G. "Parties" means collectively both Siemens and Purchaser. H. "Purchaser" means the entity purchasing Equipment, or Services or both, as well as any other owners of the facility where the Equipment or Purchaser's Material is or will be installed. I. "Purchaser's Material" means the equipment, materials, components and items of any kind owned by Purchaser or any other owner of the Site for which Services are to be provided or are provided under the Agreement. J. "Services" means Shop Repair and Modernization Services, Field Installation Services, Field Repair and Modernization Services, Maintenance Services, and Technical Services; or some or all of them provided by Siemens pursuant to the Agreement. K. "Services on Third Party Parts" means Services in connection with the installation of Third Party Parts. L. "Shop Repair and Modernization Services" means work performed by Siemens on Purchaser's Material at a Siemens manufacturing plant, a Siemens repair facility or another suitable facility selected by Siemens. M. "Siemens" means Siemens and its affiliated companies and their subsidiaries, successors and assigns. N. "Site" means the Purchaser's facility where the Equipment or Purchaser's Material is or will be installed. O. "Special Services" means the performance by a Siemens field service representative of diagnostic and operational troubleshooting on Purchaser's Material, both on line and off line. This work may be conducted on Site or by telecom- munication. Confidential Selling Policy 1200 P. "Software" means instructions in machine readable form, other than source code, and associated documentation deliv- ered by Siemens to Purchaser in chip, disk and/or tape format. Q. "Supplier" means any subcontractor or supplier of any tier who supplies goods and services to Siemens in connection with the obligations of Siemens under the Agreement. R. "Technical Field Assistance" means the advice and consultation given to Purchaser's personnel by a field service repre- sentative of Siemens with respect to: (1) installation, inspection, repair and/or maintenance activities performed by others at the Site, and (2) any Siemens recommended quality assurance procedures for activities performed at the Site. Technical Field Assistance does not include management, supervision or regulation of Purchaser's personnel, agents or contractors. S. "Technical Services" means (i) Technical Field Assistance; (ii) Special Services; (Ili) inspection of equipment which has been disassembled by Purchaser or others; (iv) technical evaluation of inspections performed by Siemens, Purchaser or others; (v) technical information provided by Siemens, including data interpretation and reports; (vi) inspections, technical evaluation of inspections, technical analysis of materials and technical recommendations related to Shop Re- pair and Modernization Services; (vii) advice and consultation given to Purchaser's personnel at the Site or at a Sie- mens facility by a Siemens engineer or technician; and/or (viii) advice and guidance given to Purchaser by Siemens field engineer(s) regarding methods and procedures for installation, maintenance and/or calibration of the Equipment or Purchaser's Material. T. "Third Party Parts" means parts, components, equipment or materials provided by Purchaser under the Agreement which were not manufactured or supplied by Siemens or the predecessors of Siemens or which were originally sup- plied by Siemens or the predecessors of Siemens and subsequently repaired, serviced or otherwise modified or altered by any party not affiliated with Siemens or with a predecessor of Siemens. 2. Scope Siemens will furnish to Purchaser Equipment, and/or Services as specified in and pursuant to the Agreement. 3. Price Policy For an Agreement for Equipment supply only, unless otherwise stated in the Siemens proposal, the price does not include disassembly and reassembly of Equipment at the Site. Prices are firm for (i) Equipment with a scheduled shipment date of 60 weeks or less from the date of the Agreement and (ii) Services which are scheduled to be performed within 60 weeks or less from the date of the Agreement. For (i) Equipment with a scheduled shipment date in excess of 60 weeks and (ii) Services scheduled to be completed be- yond 60 weeks from the date of the Agreement, the prices are subject to adjustment upward or downward for changes in the specified labor and material indexes in accordance with the provisions of the applicable Siemens Price Adjustment Pol- icy. 4. Terms of Payment A. Unless otherwise specified, Siemens shall issue invoices in accordance with the schedule set forth in the Siemens pro- posal. If an invoice schedule is not set forth in the Siemens proposal, Siemens shall issue invoices as the work is com- pleted, but no more often than monthly. In any event, all invoices shall be paid within thirty (30) days after the date of the invoice. B. In any instance where Purchaser is unable to return components to Siemens for fitting or for coordination with other as- semblies by the specific date agreed to in the Agreement, Siemens reserves the right to invoice Purchaser for work per- formed to date and either ship the components to Purchaser in their existing state or hold the components in storage at Purchaser's risk and expense. That portion of the work which is to be performed by Siemens at a later date will be per- formed as a Purchaser requested change under Article 18, Changes. C. If shipments are delayed by Purchaser, affected payments shall become due based on the date Siemens is prepared to make shipment. D. Any past due payments shall, without prejudice to the right of Siemens to payment when due, bear interest at a floating rate equivalent to one -twelfth (1/12) of the per annum prime rate charged by Chase Manhattan Bank, New York, New York, U.S.A., as such prime rate is published on the first banking day following the date payment is due, plus an addi- tional one-half of one percent (0.5%), payable each month or portion thereof that payment is delayed. If payments are not made when due Siemens, upon fifteen (15) days written notice, may, at its option, (i) terminate this Agreement Confidential 2 Selling Policy 1200 (which termination shall be treated as a termination pursuant to Article 11, Termination) or (ii) suspend all further work hereunder. Resumption of work thereafter is contingent upon correction of the payments deficiency by Purchaser. The schedule for the resumed work will be established by Siemens based on its then current work load and the availability of other resources. All Siemens expenses associated with any such suspension shall be for the account of Purchaser. E. If there exists a good faith dispute over the amounts to be paid, Purchaser shall pay the undisputed amount. The dis- puted portion may be held in abeyance until resolution of the dispute with that portion, together with the interest charge specified in Paragraph D above, due thirty (30) days after said resolution. F. Unless otherwise set forth in the Siemens proposal, if shipment (from the manufacturing plant or repair facility where the work is performed) and/or Delivery of an item of the Equipment or completion of the Services is delayed for causes which are within the reasonable control of Siemens, issuance of the invoice covering the final 5% payment for the work will be deferred for twice the number of months by which shipment/Delivery of such item of the Equipment or completion of such Services is delayed; provided, however, that such deferral of the final invoice shall only be applicable if the delay in shipment and/or Delivery of the Equipment or the delay in completion of the Services has actually delayed the Pur- chaser's project for which the Equipment and/or Services were purchased. G. THE REMEDIES OF PURCHASER SET FORTH ABOVE AND/OR IN THE SIEMENS PROPOSAL FOR DELAY IN SHIPMENT/DELIVERY OR COMPLETION OF SERVICES CAUSED BY SIEMENS ARE PURCHASER'S SOLE AND EXCLUSIVE REMEDIES AND NO OTHER REMEDIES OF ANY KIND WHATSOEVER SHALL APPLY. Deferral of the issuance of the final 5% invoice as set forth above and/or provision of the remedy set forth in the Siemens proposal shall constitute complete fulfillment of all liabilities of Siemens to Purchaser for delay in shipment/Delivery of Equipment or completion of Services whether based in contract, in tort (including negligence and strict liability), or any other theory of recovery. 5. Delivery, Title and Risk of Loss or Damage A. Unless otherwise stated in the Siemens proposal, Delivery of each component of Equipment shall be made Ex Works at the manufacturing plant. Subject to the provisions of Paragraph B below, legal and equitable title and risk of loss or damage to each such component of the Equipment shall pass from Siemens to Purchaser upon Delivery. B. Title to and right of possession of any Software licensed hereunder, without legal process, shall remain with Siemens or its licensor, except that Purchaser shall have the right of possession and use of the Software provided hereunder for the terms of the corresponding license provided herein, so long as no breach of this Agreement has been made by Pur- chaser and all payments due Siemens have been paid. Nothing in this Agreement shall be construed as giving Pur- chaser any right to sell, assign, lease or in any other manner transfer or encumber Siemens' or its licensor's ownership of the Software, or as limiting Siemens or its licensor from using and licensing the Software to any third party. C. Purchaser's Material sent to Siemens for Shop Repair and Modernization Services or Purchaser's Material or Equipment being returned pursuant to the provisions of the Warranty or Patents Articles of the Agreement will be delivered by Pur- chaser at its expense to the repair or manufacturing plant designated by Siemens where the work is to be performed. Ti- tle to such Equipment or Purchaser's Material will remain at all times with Purchaser. Risk of loss or damage to such Equipment or Purchaser's Material will transfer to Siemens upon its arrival on board the carrier at the repair or manufac- turing plant and will transfer back to Purchaser upon its delivery to the carrier at the repair or manufacturing plant for re- turn to Purchaser after the work is performed. Delivery of Purchaser's Material shall be made when the item is placed on board carrier at the repair or manufacturing plant after the work is performed. When repair work is performed by Sie- mens at the Site, title and risk of loss or damage to the Equipment, to Purchaser's Material and to other property shall remain at all times with Purchaser. Title to any defective or nonconforming components of the Equipment that are re- placed by Siemens, as part of its warranty obligations shall, at Siemens' option, revert back to Siemens upon completion of the replacement, with a deemed value of zero. D. Risk of loss of or damage to Purchaser's Material or other property located at the Site shall remain with Purchaser at all times during the performance of work hereunder. If Purchaser procures or has procured property damage insurance applicable to occurrences at the Site, Purchaser shall obtain a waiver by the insurers of all subrogation rights against Siemens and its Suppliers. 6. Transportation A. Transportation and Storage When items of Equipment are ready for shipment or Shop Repair and Modernization Services are completed on Pur- chaser's Material, Siemens will notify Purchaser to arrange for shipment. If Siemens has agreed in the Siemens pro- posal to transport Equipment, when items of Equipment are ready for shipment or Shop Repair and Modernization Ser- vices are completed on Purchaser's Material, Siemens will (i) in the absence of shipping instructions inform Purchaser of pending shipment and Purchaser will thereafter promptly give shipping instructions to Siemens (ii) determine the method Confidential 3 Selling Policy 1200 of transportation and the routing of the shipment and (iii) ship the Equipment or Purchaser's Material freight prepaid and included in the price by Normal Carriage: (1)to Purchaser's designated destination when shipped by highway transport, or (2)to the nearest suitable rail siding to Purchaser's designated destination when shipped by rail transport. In the event that Purchaser fails to provide Siemens with timely shipping instructions, Siemens will ship the Equipment or Purchaser's Material by Normal Carriage to Purchaser or to a suitable storage location selected by Siemens. If the Equipment and/or Purchaser's Material is to be placed into storage in accordance with the above, delivery of the Equipment or Purchaser's Material shall be deemed to have occurred for all purposes under the Agreement, including any payment due upon Delivery, at the time the Equipment or Purchaser's Material is placed on board carrier for ship- ment to the storage location. If the Equipment and/or Purchaser's Material is to be stored in the facility where manufac- tured, or where Shop Repair and Modernization Services are performed, delivery shall be deemed to have occurred when the Equipment and/or Purchaser's Material is placed into the storage location at such facility. In the event of storage pursuant to the preceding Paragraph, all expenses thereby incurred by Siemens, such as prepa- ration for and placement into storage, handling, freight, storage, inspection, preservation, taxes and insurance, shall be payable by Purchaser upon receipt of an invoice(s) from Siemens When conditions permit and upon payment to Sie- mens of any additional amounts due hereunder, Purchaser shall arrange, at its expense, for removing the Equipment and/or Purchaser's Material from storage. B. Normal Carriage When Siemens is providing the transportation of the Equipment and/or Purchaser's Material, Siemens shall make every reasonable effort to ship by highway transport unless rail transport is required. Normal Carriage means carriage either by highway transport (provided this does not necessitate use of specialized riggers trailers) or by rail transport, on nor- mal routing from the repair facility or manufacturing plant to (i) Purchaser's designated destination when shipped by highway transport or (ii) the nearest accessible suitable rail siding to Purchaser's designated destination when shipped by rail transport or (iii) the port of export selected by Siemens if shipped by water transport outside of the United States. C. Special Transportation and Services Purchaser agrees to pay or to reimburse any transportation charges in excess of regular charges for Normal Carriage, including, but not limited to, excess charges for special routing, special trains, specialized riggers trailers, lighterage, barging and air transport. Purchaser also agrees to pay or to reimburse any cost incurred or charge resulting from special services performed in connection with the transportation of the Equipment or Purchaser's Material, including, but not limited to, the construc- tion and repair of transportation and handling facilities, bridges and roadways, of whatever kind and wherever located. 7. Warranty A. Equipment Warranty and Exclusive Remedy (excluding Software) Siemens warrants that each component of the Equipment (excluding Software and consumables) furnished to Pur- chaser, including any part repaired or replaced by Siemens during the Equipment Warranty Period, will be free of de- fects in design, workmanship and materials until the earlier of eighteen (18) months after the Delivery of such compo- nent of the Equipment or one (1) year from the date of first use of the item of Equipment (the "Equipment Warranty Pe- riod"). If during the Equipment Warranty Period Siemens is promptly notified in writing that the Equipment or any component thereof fails to conform to the Equipment Warranty, Siemens will at its option and expense correct such nonconformity by repair or replacement. B. Software Warranty and Exclusive Remedy If Equipment includes Software, Siemens also warrants that the Software will be free of errors which materially affect its utility until the earlier of eighteen (18) months after the Delivery of such Software or one (1) year from the date of first use of the Software (the "Software Warranty Period"). If during the Software Warranty Period, Siemens is promptly noti- fied in writing that the Software fails to conform to its warranty, Siemens will at its option and expense correct the non- conformity by correction in the medium originally supplied or by providing a procedure to Purchaser for correction of the nonconformity. Third party Software shall be warranted on a pass through basis in the same manner and for the same period and extent provided to Siemens by the entity which supplied said third party software. C. Field Installation Services, Field Repair and Modernization Services, Maintenance Services, and/or Shop Repair and Modernization Services Warranty and Exclusive Remedy Confidential Selling Policy 1200 Siemens warrants that the work performed by Siemens on Purchaser's Material, including any materials (excluding con- sumables) supplied by Siemens in connection therewith (hereinafter in this Paragraph C referred to as the "Work"), will be free of defects in design, workmanship and materials until the earlier of eighteen (18) months after the completion of such services or one (1) year from the date of first use of Purchaser's Material (the "Field and Shop Repair and Mod- ernization Services Warranty Period"). If during the Field and Shop Repair and Modernization Services Warranty Period, Siemens is promptly notified in writing that the Work or any part thereof fails to conform to the Field Installation Services, Field Repair and Modernization Ser- vices, Maintenance Services, and/or Shop Repair and Modernization Services Warranty, Siemens will at its option and expense correct such nonconformity by repair, replacement or reperformance of the defective portion of the Work. If re- pair, replacement or reperformance is impracticable, Siemens will refund the amount of the compensation paid to Sie- mens for such nonconforming portion of the Work. D. Technical Services Warranty and Exclusive Remedy Siemens warrants for each item of Technical Services that (i) the advice, recommendations and performance of its per- sonnel will reflect competent professional knowledge and judgment and (ii) the technical information, reports and analy- ses transmitted by Siemens in connection therewith will reflect competent professional knowledge and judgment, begin- ning with the start of the item of Technical Services and ending one (1) year after completion of said item of Technical Services by Siemens (the "Technical Services Warranty Period"). If during the Technical Services Warranty Period, Siemens is promptly notified in writing that any portion of the Technical Services fails to conform to the Technical Services Warranty, Siemens will promptly reperform such nonconforming por- tion of the Technical Services. If reperformance is impracticable Siemens will refund the amount of the compensation paid to Siemens for such nonconforming portion of the Technical Services. E. Title Siemens warrants that the Equipment, upon Delivery, shall not be subject to any encumbrances, liens, security inter- ests, or other defects in title. In the event of any failure to conform to this warranty, Siemens, upon prompt written notice of such failure, shall defend the title to the Equipment. F. Performance Guarantee(s) and Exclusive Remedy There are no performance guarantees of the Equipment and/or Services unless specifically set forth in the Siemens proposal. In the event any performance guarantees are provided in the Siemens proposal, Purchaser's sole and exclu- sive remedy and Siemens' sole and exclusive liability for any failure of the Equipment and/or Services to comply with such performance guarantees under any theory of recovery shall be the liquidated damages specified in such Siemens proposal up to the limit specified therein, which liquidated damages shall only be paid on a "no harm, no foul" basis. The Parties agree that such liquidated are a reasonable determination of the damages that Purchaser would incur as a result of the failure of the Equipment and/or Services to meet the Performance Guarantees and do not constitute a penalty. G. Warranty Conditions The warranties and remedies set forth in this Article are conditioned upon: (1)Purchaser's receipt, handling, storage, installation, testing, operation and maintenance, including tasks incident thereto, of the Equipment and/or Purchaser's Material in accordance with the recommendations of Siemens to the ex- tent applicable or, in the absence of such recommendations or to the extent not applicable, in accordance with the generally accepted practices of the industry. In addition, such Equipment and Purchaser's Material shall not have been operated in excess of limitations specified in writing by Siemens and not have been subjected to accident, al- teration, abuse or misuse; and (2) For all warranty work, where disassembly, removal, replacement and reinstallation of Equipment, materials, struc- tures or Purchaser's Material was not part of the Siemens scope of work under the Agreement; Purchaser providing, without cost to Siemens, access to the nonconformity by disassembling, removing, replacing and reinstalling any Equipment, materials, structures or Purchaser's Material to the extent necessary to permit Siemens to perform its warranty obligations. (3)AII warranty work being performed on a single -shift straight -time basis, Monday through Friday. In the event Pur- chaser requests correction of warranty items on an overtime or multiple shift schedule, the premium portion of such overtime or multiple shift shall be to Purchaser's account. (4)Purchaser, without cost to Siemens, making its Site facilities and personnel (to the extent consistent with personnel job classifications) available to assist Siemens in the performance of its warranty obligations. (5)the Purchaser, with respect to Paragraph 4 above, reimbursing Siemens for all costs incurred in the transportation of personnel and defective, repaired or replacement parts to and from the Site. Confidential Selling Policy 1200 H. Additional Conditions Applicable to the Sale of Monitoring Devices Monitoring devices supplied by Siemens pursuant to the Agreement, such as but not limited to, monitors for generator condition and for steam chemistry, are intended to enhance the availability and reliability of the equipment. These moni- tors normally represent state-of-the-art technology which enables users.to better diagnose and control conditions within a turbine generator. While such monitors follow conditions and trends within the equipment and thereby permit earlier detection of harmful conditions, Siemens does not warrant or represent that the use of such monitors will prevent failure or detect all harmful conditions in a turbine generator and Purchaser acknowledges the same. Additional Conditions Applicable to Diagnostic and Non -Destructive Examination and Testing Diagnostic and non-destructive examination and testing techniques employed by Siemens represent the current Sie- mens techniques for detecting defects in (including indications of cracking) and evaluation of the condition of Pur- chaser's Material. However even these current techniques, when performed according to the standards detailed above in this Article, may not detect all of the defects in Purchaser's Material (including indications of cracking) and such failure shall not constitute a breach by Siemens of its warranty obligations. Purchaser acknowledges that Siemens will not be responsible for the consequences of undetected defects including undetected cracks.. J. Additional Conditions Applicable to Technical Field Assistance Where Siemens furnishes Technical Field Assistance under the Agreement, Purchaser is responsible for (i) the supervi- sion, management, regulation, arbitration and determination of the number of its personnel, agents, or contractors and their work and (ii) the planning, scheduling, management and progress of the work. Unless expressly agreed to in writ- ing by Siemens, under no circumstances shall Siemens provide or be obligated to provide Technical Field Assistance di- rectly or indirectly to any competitor of Siemens or their employees, representatives, or consultants. K. Purchaser Supplied Third Party Parts and Materials Purchaser assumes the entire liability and risk arising out of or resulting from Third Party Parts and Services on Third Party Parts. The warranties and remedies set forth herein do not apply to any Third Party Parts or Services on Third Party Parts, and SIEMENS DISCLAIMS ANY AND ALL WARRANTIES AND REMEDIES, WHETHER STATUTORY, EXPRESS OR IMPLIED, FOR OR WITH RESPECT TO THIRD PARTY PARTS OR SERVICES ON THIRD PARTY PARTS. Exclusivity of Warranties, Performance Guarantees and Remedies. THE WARRANTIES AND PERFORMANCE GUARANTEES SET FORTH IN THIS ARTICLE ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES AND PERFORMANCE GUARANTEES, WHETHER STATUTORY, EX- PRESS, OR IMPLIED (INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE). Correction of nonconformities in the manner and for the period of time provided above constitute Siemens' sole and exclusive liability and Purchaser's sole and exclusive remedy for defective or nonconforming Equipment and/or Services whether claims of the Purchaser are based in contract, in tort (including negligence and strict liability), or any other theory of recovery. 8. Taxes The price paid or to be paid to Siemens under the Agreement does not include any federal (other than federal and state income taxes imposed on Siemens), state, or local property, license, privilege, sales, use, excise, value added, gross re- ceipts, or similar taxes now or hereafter applicable to, measured by, or imposed upon or with respect to the transaction, the Equipment and Purchaser's Material, its or their sale, their value or their use, or any Services performed in connection therewith. Purchaser agrees to pay or reimburse Siemens for any such taxes which Siemens or its Suppliers are required to pay. 9. Additional Conditions Applicable to Nuclear Installations In the event the Services or the Equipment provided under the Agreement are to be performed or utilized at or in any man- ner in connection with a nuclear installation, the following conditions shall apply: A. Purchaser Insurance (1) If Purchaser procures property damage insurance applicable to occurrences at the Site and third party non-nuclear liability insurance, or either of such types of insurance, such insurance will name Siemens and its Suppliers as addi- tional insureds. (2) Purchaser shall have at its own cost, prior to the arrival of nuclear fuel at the Site, secured and shall thereafter main- tain in force protection against liability arising out of or resulting from a nuclear incident (as defined in the Atomic En- ergy Act of 1954, as amended) as required by the Nuclear Regulatory Commission; provided, however, that if the nu- clear liability protection system in effect on the date of the Agreement expires or is repealed, changed, or modified, Purchaser will, without cost to Siemens, maintain liability protection through government indemnity, limitation of liabil- ity, and/or liability insurance which will not result in a material impairment of the protection afforded Siemens and its Confidential Selling Policy 1200 Suppliers by such nuclear liability protection system which is in effect as of the date of the Agreement, taking into ac- count the availability of insurance, customary practice in the industry for plants of similar size and character, and other relevant factors in light of then existing conditions. In any event, the protection provided pursuant to this Article shall remain in effect until the decommissioning of the nuclear plant. B. Waivers by Purchaser Neither Siemens nor its Suppliers shall be liable for any loss of, damage to, or loss of use of property or equipment wherever located, arising out of or resulting from a "Nuclear Incident." Purchaser waives and will require its insurers to waive all rights of recovery against Siemens and its Suppliers on account of any such loss, damage, or loss of use. All such waivers shall be in a form acceptable to Siemens. In the event Purchaser recovers damages from a third party based on losses at the Site resulting from the hazardous properties of source, special nuclear or byproduct material (as defined in the Atomic Energy Act of 1954, as amended), Purchaser shall indemnify Siemens and its Suppliers against claims by such third party which are based on Purchaser's recovery of such damages. In addition, Purchaser waives and will require its insurers to waive all rights of recovery against Siemens and its Suppliers, for any and all costs or expenses arising out of or in connection with the investigation and settlement of claims or the defense of suits for damage resulting from the nuclear energy hazard. C. Third Party Property Protection Purchaser will indemnify Siemens and its Suppliers for any liability arising out of loss of or damage to property at the Site which arises out of a "nuclear incident". In addition, Purchaser shall obtain for the benefit of Siemens and its Suppli- ers, protection against liability for, arising out of, or resulting from damage to any property or equipment located at the Site which is used or intended for use by Purchaser in connection with the operation of the nuclear power plant (includ- ing but not limited to fuel) and which is owned by parties other than Purchaser. D. Decontamination Purchaser shall, without cost to Siemens, perform any required decontamination and health physics to the extent nec- essary for Siemens to perform its contractual obligations. This includes decontamination of any Siemens equipment or tools used in the performance thereof. Purchaser shall provide documentation demonstrating that components or parts being returned to Siemens meet the requirements designated for unrestricted release as set forth in 10CFR20. 10. Force Majeure A. Siemens will not be liable for failure to perform or delay in performance of any obligation resulting from or contributed to by any cause beyond the reasonable control of Siemens or its Suppliers or from any act of God; act of civil or military authority; act of war whether declared or undeclared; act (including delay, failure to act or priority) of any governmental authority or Purchaser; act of terrorism; civil disturbance, rebellion, insurrection, riot or sabotage; fire, inclement weather conditions, earthquake, flood or natural disaster; strike, work stoppage or other labor difficulty; embargo, epidemic or quarantine; railroad car, fuel or energy shortage; major equipment breakdown; delay or accident in shipping or transpor- tation; or failure or delay beyond its reasonable control in obtaining necessary manufacturing facilities, labor, or materi- als from usual sources. B. In the event of a delay in performance excusable under this Article, the date of Delivery or time for performance of the work will be extended by a period of time reasonably necessary to overcome the effect of such delay, and Purchaser will reimburse Siemens for its additional costs and expenses resulting from the delay. 11. Termination A. Purchaser may terminate the Agreement for convenience upon thirty (30) days prior written notice to Siemens and pay- ment of reasonable and proper termination charges. Should the work be delayed for a period in excess of six (6) months for any reason attributable to Purchaser and/or force majeure, or should any payment from Purchaser be thirty (30) days or more past due, at the option of Siemens, the Agreement may be deemed to have been terminated by Purchaser. Termination charges in either event will be the applicable Termination Fee from the Termination Fee Schedule set forth in the Siemens proposal. The Parties agree that such Termination Fees are a reasonable determination of the damages that Siemens would incur as a result of such termination and do not constitute a penalty. In the absence of a Termina- tion Fee Schedule, the termination charges shall be calculated based upon the portion of the purchase price for the work performed, man hours expended and materials acquired at as the date of termination plus the expenses associ- ated with the termination, including, but not limited to, any additional expense incurred by reason of termination or can- cellation of agreements between Siemens and its Suppliers, and any applicable cost allocated in contemplation of per- formance. Siemens will make every reasonable effort to minimize such termination charges. All termination charges shall be due and payable thirty (30) days from the date of the Siemens invoice. B. Purchaser may terminate the Agreement for cause in the event of (i) an act of insolvency or bankruptcy by Siemens or (ii) a material breach of the Agreement by Siemens which Siemens fails to commence to cure within thirty (30) days af- Confidential Selling Policy 1200 ter notice thereof from Purchaser and fails to diligently pursue thereafter. In such event, Siemens will reimburse Pur- chaser for its reasonable and verifiable costs to complete the Services or obtain replacement Equipment up to twenty percent (20%) of the total price paid to Siemens under the Agreement. C. In the event of any breach of the Agreement by Purchaser, Siemens shall be entitled to an extension of time to the extent necessitated by the breach and to reimbursement for all costs and expenses incurred by Siemens as a result of such breach. Siemens may terminate the Agreement for cause in the event of (i) an act of insolvency or bankruptcy by Purchaser or (ii) a material breach of the Agreement by Purchaser which Purchaser fails to commence to cure within thirty (30) days after notice thereof from Siemens and fails to diligently pursue thereafter. In such event, Purchaser shall pay Siemens the applicable Termination Fee set forth in the Termination Fee Schedule plus all costs and expenses in- curred as a result such breach and termination. In the absence of a Termination Fee Schedule, the termination charges shall be calculated based upon the portion of the purchase price for the work performed, man hours expended and ma- terials acquired at as the date of termination plus the expenses associated with the breach and termination, including, but not limited to, any additional expense incurred by reason of termination or cancellation of agreements between Sie- mens and its Suppliers, and any applicable cost allocated in contemplation of performance. 12. Intellectual Property Infringement A. Siemens will, at its own expense, defend or at its option settle any suit or proceeding brought against Purchaser so far as based on an allegation that any Services on Purchaser's Material or the Equipment (including parts thereof), or use thereof for their intended purpose, constitutes an infringement of any United States patent or copyright or misappropria- tion of a trade secret, if Siemens is notified promptly in writing and given authority, information, and assistance in a timely manner for the defense of said suit or proceeding. Siemens will pay the damages and costs awarded in any suit or proceeding so defended. Siemens will not be responsible for any settlement of such suit or proceeding made without its prior written consent. In case the Services on Purchaser's Material or the Equipment, or any part thereof, as a result of any suit or proceeding so defended is held to constitute infringement of any such United States patent, copyright or trade secret, or its use by Purchaser is enjoined, Siemens will, at its option and its own expense, either: (a) procure for Purchaser the right to continue using said Equipment and/or Purchaser's Material; (b) replace it with substantially equivalent non -infringing equipment; or (c) modify it so it becomes non -infringing. B. Siemens will have no duty or obligation to Purchaser under this Article to the extent that the Services on Purchaser's Material or Equipment is (a) supplied according to Purchaser's design or instructions wherein compliance therewith has caused Siemens to deviate from its normal course of performance, (b) modified by Purchaser or its contractors after de- livery, or (c) combined by Purchaser or its contractors with items not furnished hereunder and by reason of said design, instruction, modification, or combination a suit is brought against Purchaser. In addition, if by reason of such design, in- struction, modification or combination, a suit or proceeding is brought against Siemens, Purchaser shall protect Siemens in the same manner and to the same extent that Siemens has agreed to protect Purchaser under the provisions of Para- graph A above. C. THIS ARTICLE IS AN EXCLUSIVE STATEMENT OF ALL THE DUTIES OF THE PARTIES RELATING TO PATENTS, COPYRIGHTS OR TRADE SECRETS AND DIRECT OR CONTRIBUTORY INFRINGEMENT THEREOF AND OF ALL THE REMEDIES OF PURCHASER RELATING TO ANY CLAIMS, SUITS, OR PROCEEDINGS INVOLVING PATENTS, COPYRIGHTS OR TRADE SECRETS. Compliance with this Article as provided herein shall constitute fulfillment of all liabilities of the parties under the Agreement with respect to patents, copyrights or trade secrets. 13. Confidential Information A. Siemens may have a proprietary interest in information that may be furnished pursuant to the Agreement. Purchaser will keep in confidence and will not disclose any such information which is specifically designated as being confidential to Siemens or use any such information for other than the purpose for which it is supplied without the prior written permis- sion of Siemens. The provisions of this Paragraph shall not apply to information, notwithstanding any confidential des- ignation thereof, which is known to Purchaser without any restriction as to disclosure or use at the time it is furnished, which is or becomes generally available to the public without breach of any confidentiality obligation of Purchaser, or which is received from a third party without limitation or restriction on said third party or Purchaser at the time of disclo- sure. B. Siemens also has a confidential interest in its proposal and the Agreement. Accordingly, neither document will be dis- closed in whole or in part to third parties without the prior written permission of Siemens. C. When required by appropriate governmental authority, including governmental regulations, applicable law or regulation, by order of a court of competent jurisdiction or lawful subpoena (hereinafter collectively referred to as "Governmental Authority'), Purchaser may disclose such confidential information to such Governmental Authority; provided, however, that prior to making any such disclosure, Purchaser will: (a) provide Siemens with timely advance written notice of the confidential information requested by such Governmental Authority and Purchaser's intent to so disclose; (b) minimize Confidential Selling Policy 1200 the amount of confidential information to be provided consonant with the interests of Siemens and its Suppliers and the requirements of the Governmental Authority involved; and (c) make every reasonable effort (which shall include partici- pation by Siemens in discussions with the Governmental Authority involved) to secure confidential treatment and mini- mization of the proprietary information to be provided. In the event that efforts to secure confidential treatment are un- successful, Siemens shall have the prior right to revise such information to minimize the disclosure of such information in a manner consonant with its interests and the requirements of the Governmental Authority involved. 14. Limitation of Liability A. NOTWITHSTANDING ANY OTHER PROVISION OF THE AGREEMENT, PURCHASER EXPRESSLY AGREES THAT NEITHER SIEMENS NOR ITS SUPPLIERS WILL UNDER ANY CIRCUMSTANCES BE LIABLE UNDER ANY THEORY OF RECOVERY, WHETHER BASED IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), UNDER WARRANTY, OR OTHERWISE, FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE WHATSOEVER; DAMAGE TO OR LOSS OF ANY PROPERTY OR EQUIPMENT; LOSS OF PROFITS OR REVENUE OR LOSS OF USE THEREOF; LOSS OF USE OF PURCHASER'S MATERIAL, EQUIPMENT OR POWER SYSTEM; COST OF CAPITAL: COST OF FUEL; COST OF PURCHASED OR REPLACEMENT POWER; IN- CREASED COSTS OF ANY KIND; OR ANY CLAIMS OF CUSTOMERS OF PURCHASER. B. PURCHASER EXPRESSLY AGREES THAT THE REMEDIES PROVIDED IT IN THE AGREEMENT ARE EXCLUSIVE, AND THAT NOTWITHSTANDING ANY OTHER PROVISION OF THE AGREEMENT, UNDER NO CIRCUMSTANCES SHALL THE TOTAL AGGREGATE LIABILITY OF SIEMENS UNDER ANY THEORY OF RECOVERY, WHETHER BASED IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), UNDER WARRANTY, OR OTHERWISE, EXCEED THE TOTAL PRICE PAID TO SIEMENS UNDER THE AGREEMENT. C. ALL LIABILITY OF SIEMENS AND ITS SUPPLIERS UNDER THIS AGREEMENT SHALL TERMINATE NO LATER THAN TWELVE (12) MONTHS AFTER THE EXPIRATION OF THE WARRANTY PERIOD. D. THE PROVISIONS OF THIS ARTICLE SHALL PREVAIL OVER ANY CONFLICTING OR INCONSISTENT PROVI- SIONS SET FORTH ELSEWHERE IN THE AGREEMENT. 15. Transfer and Export Compliance A. Prior to the transfer to another party of any Equipment or Purchaser's Material or the transfer of any interest in said Equipment or Purchaser's Material or Purchaser's facility in which said Equipment or Purchaser's Material is installed, Purchaser shall obtain for Siemens written assurances from the transferee of limitation of and protection against liability following the proposed transfer at least equivalent to that afforded Siemens and its Suppliers under the Agreement. Transfer contrary to the provisions of this Article shall make Purchaser the indemnitor of Siemens and its Suppliers against any liabilities incurred by Siemens and its Suppliers in excess of those that would have been incurred had no such transfer taken place. B. Purchaser acknowledges that Siemens is required to comply with all applicable export laws and regulations relating to the sale, exportation, transfer, assignment, use and/or disposal of the Equipment supplied and Purchaser's Material Serviced under the Agreement, including without limitation all export license requirements. Purchaser agrees that the Equipment provided and Purchaser's Materials Serviced under the Agreement shall not at any time, directly or indirectly, be sold, exported, transferred, assigned, used or otherwise disposed of in any manner which shall or may result in any non-compliance with such export laws and regulations. It is a condition to the continuing performance by Siemens of its obligations under the Agreement that compliance with such export laws and regulations be maintained at all times. 16. Software License Siemens grants to Purchaser a nonexclusive, nontransferable license to utilize the Siemens Software furnished hereunder. Such license is limited to Purchaser's internal use at or for the Equipment with which such Software is incorporated. All title and ownership of the Siemens Software, including, without limitation, the copyright to such Software, shall remain exclu- sively with Siemens. Purchaser may make a reasonable number of backup copies of the Software for evaluation, installa- tion, and maintenance of the Siemens Equipment. Purchaser shall not itself, or with the assistance of others, reverse com- pile, reverse engineer, or in any other manner attempt to decipher in whole or in part the logic or coherence of any Software licensed hereunder. Third party Software provided by Siemens may be subject to a separate license agreement and /or registration requirements and limitations on copying and use. 17. Compliance with Laws The price for the work is based on compliance by Siemens with the applicable laws, regulations and technical codes and standards as they are in effect on the date of the Siemens proposal (or the effective date of the Agreement if no proposal was provided). Confidential 9 Selling Policy 1200 18. Changes A. Purchaser may request changes within the scope of the Agreement and, if accepted by Siemens, the price, perform- ance, schedule and other pertinent provisions of the Agreement will be adjusted by mutual agreement of the parties prior to implementation of the change. B. Expenses incurred by Siemens due to (i) delays, other than delays which are deemed to be within the reasonable control of Siemens, and (ii) changes in applicable laws, regulations and technical codes and standards or the imposition of new laws, regulations and/or technical codes and standards after the applicable date set forth in Article 17 will be treated as changes to the scope of work and the Agreement will be adjusted as set forth in the previous Paragraph. C. Siemens may make a change(s) in the Equipment, Services on Purchaser's Material or the other Services without addi- tional compensation from Purchaser if such change(s) does not adversely affect the warranties, the interface with Pur- chaser's equipment, materials and plant, the technical soundness of the work, the operability of the facility where the Equipment or Purchaser's Material is installed or for which Siemens is providing Services under the Agreement, or the schedule. 19. Inspection by Purchaser Purchaser shall have reasonable access to the areas of the Siemens plants where work under the Agreement is being per- formed to enable Purchaser to observe tests on the work. Siemens, if requested, will inform the Purchaser of those tests and procedures which can be witnessed. Should Purchaser elect to witness specific tests, Purchaser must so specify such requirement in ample time to permit Siemens to include said witness tests in the schedule. Siemens, if requested, will ad- vise Purchaser of the schedule of such tests. However, no rescheduling of tests or delays in manufacturing or shipment will be made to accommodate such inspection. Siemens will exercise reasonable efforts to secure similar rights with respect to the inspection of Purchaser's work at Supplier's premises. 20. Returning Equipment or Purchaser's Material Prior to the return of any Equipment or Purchaser's Material to Siemens, the Purchaser must obtain authorization and ship- ping instructions from Siemens and remove all asbestos material. The Equipment or Purchaser's Material must be returned with complete identification in accordance with instructions fur- nished by Siemens. In no event will Siemens be responsible for Equipment or Purchaser's Material returned without proper authorization and identification. 21. Purchaser's Third Party Parts Warranty Purchaser warrants that any and all Third Party Parts which may be the subject of any Services shall (a) be fully compatible with the corresponding part, component, equipment or material of the Original Equipment Manufacturer ("OEM") in terms of form, fit, and function; (b) shall be timely provided to Siemens hereunder; and (c) shall be capable of installation in the same manner and within the same time as the corresponding OEM part, component, equipment, or material. 22. Indemnity Until the expiration of the applicable Warranty Period, Siemens shall indemnify, hold harmless and defend Purchaser its officers, directors and employees from and against any claims, demands, suits, liabilities, judgments, losses, damages, costs or expenses (including reasonable legal fees, costs and charges) for personnel injury or death or loss of or damage to third party property (except property of customers of Purchaser or property incorporated in or intended to be incorporated in the project), to the extent caused by or arising out of any negligent act or omission or willful misconduct of Siemens, or any of its officers, directors, agents, employees or Suppliers in connection with performance of work under the Agreement. 23. Siemens Insurance In connection with the Agreement, Siemens shall maintain insurance (or self insurance) as specified below: A. Worker's Compensation: Siemens shall comply with workers compensation laws (or equivalent) in each jurisdiction where work is performed, and shall maintain a Workers Compensation and Employers Liability insurance policy. If any work is to be performed on or near navigable waters, the policy shall include coverage for United States Longshore- man's and Harbor Worker's Act, Death on the High Seas Act, Jones Act, or their equivalent as required by the applica- ble law in the jurisdiction where such work is performed. The limits of such insurance shall be as follows: Worker's Compensation — Statutory Employer's Liability — $1,000,000 each accident and in the aggregate $1,000,000 disease each employee. B. Commercial General Liability: Siemens shall maintain commercial general liability insurance on an occurrence basis to provide coverage for: Bodily Injury; Personal Injury and Death, Property Damage, Explosion, Collapse and Underground Confidential 10 Selling Policy 1200 hazards; Contractual Liability (particularly applicable to the provisions of the Indemnity Article of this Agreement); and Products and Completed Operations with limits as follows: $1,000,000 each occurrence and in the aggregate. C. Business Automobile Liability: Siemens shall maintain business automobile liability insurance which shall include coverage for all owned, non -owned and hired vehicles with the follow- ing limit: $1,000,000 Combined Single Limit Bodily Injury and Property Damage D. Umbrella Liability: Siemens shall maintain umbrella liability insurance with a limit of $2,000,000 each occurrence and in the aggregate. The policy shall be excess over the Commercial General Liability, Business Automobile Liability, and Employer's Liability coverages. 24. Purchaser's Insurance In connection with the Agreement, Purchaser shall purchase and maintain insurance as specified below: A. All Risk Builders Risk: Purchaser shall purchase and maintain throughout construction of the project, "All Risk" Builders Risk insurance for the Site. Such insurance shall be purchased and in effect at least ten (10) calendar days before the start of any Services at the Site or the arrival of the first item of Equipment at the Site, whichever first occurs. Siemens and its Suppliers shall be named as an additional insured, with a waiver of subrogation, for physical loss or damage to the property at the Site (including the Equipment once at the Site and the Purchaser's Material) on such All Risk Build- ers Risk policy. B. Property Insurance: Upon completion of the project, Purchaser shall purchase and maintain property damage insurance for the facilities at the Site until the expiration of the last of the applicable Warranty Periods. Such insurance will name Siemens and its Suppliers as an additional insured, with a waiver of subrogation, for physical loss or damage to the property at the Site (including the Equipment and Purchaser's Material). 25. Miscellaneous Provisions A. Shipment Dates Shipment dates are the dates the Equipment or Purchaser's Material will be ready for shipment from the manufacturing plant, Siemens repair facility or other facility where the Services are performed and are predicated on the prompt receipt by Siemens from Purchaser of all information necessary to commence and complete the work without delay or interrup- tion. B. Waivers The failure of either Party to enforce at any time any of the provisions of the Agreement or to require at any time per- formance by the other Party of any of such provisions, shall in no way be construed to be a waiver of such provision, nor in any way to affect the validity of the Agreement or any parts thereof, or the right of either Party thereafter to enforce each and every provision. C. Modification No waiver, modification, or amendment of any of the provisions of the Agreement shall be binding unless it is in writing and signed by duly authorized representatives of both parties. D. Headings The headings used in the Agreement are not to be construed as modifying, limiting or expanding in any way the scope or extent of the provisions in the Agreement. E. Assignment Except for assignment by Siemens to an affiliate of Siemens, the Agreement will not be assigned by either Party without the prior written consent of the other Party, which consent will not be unreasonably withheld. Any purported assignment without such prior written consent shall be null and void. F. Governing Law The Agreement will be construed and interpreted in accordance with the laws of the State of New Jersey without appli- cation of its choice of law or conflict of law rules. G. Personnel Siemens reserves the right to change any of its personnel performing Services under the Agreement. In such event, Siemens will provide replacement personnel of equivalent capabilities and bear any additional travel and living expense associated with providing such replacement personnel. Confidential 11 Selling Policy 1200 H. Environmental Compliance Purchaser recognizes that the performance of Services at the Site may involve the generation of hazardous waste as such term is defined by the laws of the United States, the laws of the state in which the Site is located and the rules or regulations issued thereunder as are now in effect or hereafter amended from time to time (such generated hazardous waste being herein referred to as "Hazardous Waste"). Purchaser shall at its expense furnish Siemens with containers for Hazardous Waste and shall designate a waste stor- age facility at the Site where such containers are to be placed by Siemens. Purchaser shall handle, store and dispose of Hazardous Waste in accordance with all applicable federal, state and local laws, rules, regulations and ordinances. Pur- chaser shall reimburse Siemens for additional costs, if any, incurred in complying with any such laws, regulations, rules and/or ordinances. Siemens shall have no responsibility or liability with regard to any Hazardous Waste which it does not know or have reason to know will be generated in the performance of the Services, and Purchaser shall be responsible for all pollution and environmental impairment arising from the Purchaser's property, the Equipment and the Services. I. Asbestos and Thermal Insulation The terms "Asbestos" and "Presumed Asbestos Containing Material" shall have the meanings set forth in United States Code of Federal Regulations Chapter 29 Section CFR 1926.1101 et seq. (1)The Purchaser, by allowing access to the Site, thereby warrants, represents, and certifies that any areas there asso- ciated with the Siemens scope of work, including, without limitation, areas of ingress and egress thereto (the "Work Areas") either (a) are free of asbestos or asbestos containing materials (collectively "ACM"), or (b) any ACM there present is lawfully abated and conspicuously and specifically marked as asbestos or ACM. (2) Prior to Siemens' commencement of Services at the Site: (a)The Purchaser shall, at Purchaser's expense remove all thermal insulation, sprayed -on surfacing material, and/or Presumed Asbestos Containing Material ("PACM") the disturbance of which could occur in or removal of which is required for the performance of the Services; and, (b)The Purchaser shall ensure that any areas where any activities involving the abatement or removal of thermal in- sulation or ACM shall be conspicuously identified, posted and isolated, all as required by applicable law. PURCHASER EXPRESSLY ACKNOWLEDGES AND AGREES THAT SIEMENS IN PERFORMING THE SER- VICES AND PERMITTING EMPLOYEES TO ENTER THE WORK AREAS IS RELYING UPON THE COVE- NANTS, AGREEMENTS, WARRANTIES, CERTIFICATIONS AND REPRESENTATIONS MADE BY PUR- CHASER ABOVE. Without limiting its other rights and remedies Siemens shall not be obligated to commence or may stop any work in any Work Areas unless fully satisfied that the Purchaser is in compliance with Paragraph 25.1.(1) above and this Paragraph 25.1.(2), and shall be entitled to an equitable adjustment in the schedule, price and other provisions of the Agreement affected thereby or otherwise affected by Purchaser's non-compliance. (3)In no event shall Siemens be obligated to install, disturb, handle, or remove any thermal insulation, sprayed -on sur- facing material, or PACM except as specifically agreed in writing by Siemens and only after Siemens has been pro- vided acceptable chemical analyses verifying that the same are not ACM. (4)Siemens does not represent that it is licensed to abate ACM. Where the Services include activities such as handling, modification, removal, or reinstallation of generator wedges, packing, or high temperature gaskets (such materials herein "GPW"), then, and unless Siemens is provided satisfactory written evidence that such GPW is not ACM, Sie- mens shall be obligated only to the extent (a) such activities do not require a permit, license, or authorization, (b) such activities are not likely to generate airborne asbestos fibers, and (c) all such GPW is non -friable. In all other cases, such activities shall be Purchaser's responsibility and Siemens shall be entitled to an equitable adjustment in the schedule, price and other pertinent affected provisions of the Purchase Order should the same not be performed in a timely manner. The disposal of any GPW or scrap or waste material resulting from its disturbance or removal shall in all cases be the Purchaser's responsibility. (5) Purchaser shall defend, indemnify and hold Siemens harmless against any and all claims, demands, damages, losses, liabilities, fines, penalties, costs or expenses, including without limitation any clean up or remedial measures arising out of, connected with, or resulting from the Purchaser's failure to comply with the provisions of this Article 25.1. J. Integration Confidential 12 Selling Policy 1200 The Agreement contains the entire agreement and understanding between the parties as to the subject matter of the Agreement, and merges and supersedes all prior or contemporaneous agreements, commitments, representations, writ- ings, and discussions between them. Neither of the parties will be bound by any prior or contemporaneous obligations, conditions, warranties, or representations with respect to the subject matter of the Agreement. K. Survival The provisions entitled "Intellectual Property," "Additional Conditions Applicable to Nuclear Installations," "Confidential Information," "Limitation of Liability," "Transfer and Export Compliance," "Software License" and the second Paragraph of "Delivery, Title and Risk of Loss or Damage" shall survive termination, expiration or cancellation of the Agreement. Confidential 13 EXHIBIT B Siemens Power Generation - Industrial Applications Field Service Rates SERVICES for USA (onshore) PRODUCTS: Siemens Steam Turbines Alstom Steam and Gas Turbines WORKING RATES daily rate daily rate ! daily rate Hourly rate in ? Hourly rate in Personnel Mon - Fri ' Sat based on a Sun 8 Local excess of j excess of based on a 8 18 hour work day holiday 8 hours worked ; 8 hours worked hour work days 1 based on a 8 Mon- Sat I Sun or Local I hour work day holiday SPECIALIST ENGINEER ! $1760.00 US $2640.00 US $3520.00 US I $330.00 US $440.00 US TECHNICAL FIELD ADVISOR $1440.00 US $2160.00 US $2880.00 US $270.00 US $360.00 US FIELD SERVICE i TECHNICIAN $1120.00 US $1360.00 Us $1600.00 US $170.00 US $200.00 US Round Trip Billing for One Way Travel Time of: Up to 3 hours Up to 8 hours Up to 12 hours USA/ Canada Up to 12 hours International* Up to 18 hours* Up to 24 hours* Up to 36 hours* $1550.00 $4400.00 $6300.00 $5700.00 $8100.00 $10,400.00 $14,300.00 *Excludes airfare. Airfare is billed at cost plus 15% administration fee. Daily Lump Sum Per Diem charge for Lodging, Transportation, Meals and Misc = $290.00 from arriving at location. Higher cost of living areas will be billed at cost plus 15% administration fee. The above rates are in US Dollars and include expenses as referenced in the attached Conditions. Validity : From 2007-01-01 up to 2007-12-31 Conditions : General Conditions for Erection, Commissioning and other Services Charging appendix for field services issue 01-2006 Rev.2 Dec 2006 cj'� Transmittal Number: L&P-0201 Page 1 of 1 City of Vernon Light & Power Department 4305 Santa Fe Avenue, Vernon, CA 90058 Tel.: 323-583-8811, Ext. 561 Fax: 323-826-1425 FROM: Light & Power Department ATTN: Andy Kemsley Siemens Demag Delaval Turbomachinery, Inc. TO: 840 Nottingham Way Trenton, NJ 08638 cc: TRANSMITTAL LETTER DATE: 10/02/07 We Transmit For Your The Following Herewith ❑ Under Separate Cover Transmitted Via ❑ Approval ❑ Specifications ❑ Review and Comment ❑ Submittals ❑ Fax Number: ❑ Distribution as Indicated ❑ Drawings ❑ Overnight Service: ❑ Information Only ❑ Close -Out Documents ® US Mail: 863057139877 ® Use/File ❑ Computer Files ❑ Per Your Instructions ❑ Action: ❑ Documents ❑ Hand Delivered ❑ Contract Documents ❑ Other: ❑ Other: Copies 1 Date 10/02/07 Description Lease Agreement between City of Vernon and Siemens Demag Delaval Turbomachiner , Inc. COMMENTS Transmitted From: Michelle Mermis 4305 Santa Fe Avenue, Vernon, CA 90058 Tel.: 323-583-8811, Ext Fax: 323-826-1425 Copies To: File: Chron — UP Please Sign, Date and Return EQUIPMENT LEASE AGREEMENT BETWEEN CITY OF VERNON AND SIEMENS DEMAG DELAVAL TURBOMACHINERY INC. Contents Form of Lease Annexes A. Terms and Conditions B. Installation Rates C. Description of Equipment r FORM OF LEASE FORM OF LEASE THIS EQUIPMENT LEASE AGREEMENT (this "Agreement") is made on September 28, 2007 between City of Vernon with offices at 4305 Santa Fe Avenue, Vernon, CA 90058 (hereinafter known as the "Lessee"), AND Siemens Demag Delaval Turbomachinery, Inc., with offices at 840 Nottingham Way Hamilton, New Jersey 08638 (hereinafter known as "Lessor"). WHEREAS: A. The Lessor owns certain equipment (hereinafter known as the "Equipment") as described in Annex C attached; and B. Lessee wishes to lease the Equipment from the Lessor. The parties hereby agree as follows: This Agreement consists of, and is governed by, this Form of Lease together with the attached Annexes A, B and C. In the event of a conflict between this Form of Lease and the Annexes, this Form of Lease shall prevail and the Annexes shall prevail one over the other in alphabetical order. 2 INSTALLATION / REMOVAL CHARGES, RENT AND STIPULATED VALUES In consideration of the Lessor leasing the Equipment the Lessee agrees to pay the charges set out below in the manner and at the times stated in Annex A attached. (a) Installation and Removal Charge: A copy of the current issue of the Lessor's Field Service rates "Appendix B Installation / Removal Rates" document is deemed to be in Lessee's possession. Additional copies of this document will be made available on request. If requested by Lessee, Lessor shall provide installation and removal of each item of Equipment at these rates. (b) Weekly Rental: The weekly rent for each item of Equipment is the amount set forth opposite the description of such Equipment in Annex C and shall be per week or part thereof. The minimum lease period is four (4) weeks. Equipment Lease Page 2 of 19 Siemens Confidential (c) Stipulated Value: The Stipulated Value for each item of Equipment- is the amount set forth opposite the description of such Equipment in Annex C. 3 DELIVERY Delivery of each item of Equipment by the Lessor to the Lessee shall be exworks - Siemens Demag Delaval Turbomachinery Inc, Hamilton, New Jersey and redelivery of each item of Equipment by the Lessee to the Lessor shall be exworks - Siemens Demag Delaval Turbomachinery Inc., Hamilton, New Jersey or such place in the United States as Lessor may designate by written notice to Lessee. 4 TERM The lease term for each item of Equipment shall commence upon delivery of that item of Equipment to the Lessee and shall terminate upon re -delivery of that item of Equipment to the Lessor. Delivery term, therefore, is from the time of shipment exworks Siemens Demag Delaval Turbomachinery Inc, Hamilton, New Jersey to the time of return of Equipment, exworks Siemens Demag Delaval Turbomachinery Inc, Hamilton, New Jersey. 5 OWNERSHIP; STATUS The Equipment is, and shall at all times be and remain, the sole and exclusive property of Lessor; and the Lessee shall have no right, title or interest therein or thereto except as expressly set forth in this agreement. The Equipment is, and shall at all times be and remain, personal property notwithstanding that the Equipment or any part thereof may now be, or hereafter become, in any manner affixed or attached to, or imbedded in, or permanently resting upon, any ship, any real property or any structure thereon, or attached in any manner to what is permanent by means of cement, plaster, nails, bolts, screws or otherwise. IN WITNESS WHEREOF, this Agreement has been executed by the representatives of the parties thereunto duly authorized as of the date first written above. SIGNATURES APPEAR ON THE FOLLOWING PAGE tqurpment tease Page 3 of 19 Siemens Confidential For Lessor: Siemens Demag Delaval Turbom ery, Ir Signed: Name: Darren L. Caldwell Title: General Manager, Service USA and Canada Date% Sept. 28, 2007 For Lessee: ........................................... Signed....... ''z�....... Name:................................................ ta? —� Title: ..................!�/p r .......................... Date: .................................................... ATTEST: i 1 By: Manuela Giron, Citerk APPROVED TO FORM: '�'k P" J A. rrison, City Attorney Equipment Lease Page 4 of 19 Siemens Confidential ANNEX A TERMS AND CONDITIONS LESSEE'S REPRESENTATIONS In order to induce the Lessor to enter into this Agreement to lease the Equipment to the Lessee and as a condition precedent of the Lessor's obligation to lease the Equipment to the Lessee, the Lessee hereby represents, warrants and covenants that it has power to enter into and perform this Agreement and that it has obtained or effected . all licenses, consents, registrations or approvals (governmental or otherwise) necessary or appropriate on its part for the performance, validity and enforceability of the Agreement, that the same are in full force and effect and shall be maintained in full force and effect for the lease term. 2 INSURANCE AND RISK 2.1 The Lessee shall, from the date of delivery of the Equipment to the Lessee, throughout the lease term and until re -delivery of the Equipment to the Lessor: (a) insure the Equipment against any and all loss or damage from any and every cause whatsoever on an all risks and agreed value basis, but not for less than the Stipulated Value; and (b) insure the Lessor and the Lessee against claims of all third parties who may suffer damage to or loss of property, death or injury to persons arising directly or indirectly out of the ownership, management, control, construction, use, possession, operation or maintenance of the Equipment or the leasing thereof for such amount as is prudent in all the circumstances. 2.2 All insurance referred to in Clause 2.1 above shall: (a) be with insurers and in a form approved by the Lessor; and (b) be effected in the joint names of the Lessor and the Lessee; and (c) provide that'a breach of warranty term shall be included to the effect that no act or omission of the Lessor or any other insured shall prejudice or affect the cover afforded to the Lessor and that it may not be cancelled or materially modified without thirty (30) days' prior written notice to the Lessor; and (d) provide that the insurer shall not be relieved from any liability to the Lessor thereunder as a result of any failure to give notice of any event giving rise to a claim. 2.3 The Lessee shall pay the premiums for all insurance referred to in Clause 2.1 above and shall deliver to the Lessor the said policy or policies of insurance (or Equipment Lease I Page 5 of 19 Siemens Confidential certified copies thereof) as soon as they are issued and at such other times as the Lessor may reasonably require. The proceeds of any all risks insurancQ, at the option of Lessor, shall be applied: (a) toward the replacement, restoration or repair of the Equipment; or, (b) toward payment of the obligations of Lessee hereunder. Lessee hereby appoints Lessor as Lessee's attorney -in -fact to make claim for, receive payment of, and execute and endorse all documents, checks or drafts for, loss or damage under any insurance policy. 2.4 The Lessee shall be responsible for the risk of any and all loss or damage to the Equipment from any and every cause whatsoever from the time that the Lessor delivers the Equipment to the Lessee until the time that the Equipment is redelivered to the Lessor. In the event of any loss or damage to the Equipment for which the Lessee bears the risk in accordance with the immediately preceding sentence, the Lessee shall pay to the Lessor the replacement cost of any Equipment or parts of Equipment which are so lost or damaged; provided, however, in the event that the Lessor determines that such item of Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee shall pay Lessor in cash the Stipulated Value for such item of Equipment. Upon such payment the lease term shall terminate with respect to such item of Equipment so paid for and Lessee thereupon shall become entitled to such item of Equipment "AS IS — WHERE IS" without warranty, express or implied, with respect to any matter whatsoever. 3 COLLECTION AND RETURN 3.1 The Lessee shall be responsible for obtaining all official approvals necessary for importing, exporting, installing and operating the Equipment. The Lessor shall provide reasonable assistance to the Lessee. 3.2 Each item of Equipment shall be used at the location set forth opposite the description of such Equipment in Annex C. The Lessee may not, without prior written permission from the Lessor, remove the Equipment from such location. 3.3 Operation and use of the Equipment by Lessee shall as between the Lessor and the Lessee constitute a conclusive presumption that the Lessor has complied with all its obligations in respect of delivery of the Equipment to the Lessee and that the Equipment is/are in good order and condition and in every way satisfactory to the Lessee. 3.4 The Lessee agrees that, forthwith upon the expiration or earlier termination of the lease term for each item of Equipment, Lessee shall return such item of Equipment to Lessor: (a) in good repair, condition and working order, ordinary wear and tear resulting from proper use thereof alone excepted; and (b) at its own cost and expense as set forth in paragraph 3 of the Form of Lease. All costs of dismantling or removal of the Equipment and of such re -delivery shall be borne by the Lessee. Equipment Lease Page 6 of 19 Siemens Confidential 3.5 If the Lessee fails to re -deliver the Equipment to the Lessor immediately upon a proper request, the Lessor may, at any time, retake possession of the Equipment without responsibility for any loss caused thereby or in connection therewith (including any damage caused in its removal). 3.6 The Lessee shall indemnify the Lessor and keep the Lessor fully indemnified against all costs, expenses, liabilities, claims, actions, demands and damages of whatsoever nature in connection with or arising out of the Equipment including, but not limited to, the manufacture, selection, delivery, possession, use, operation or recovery of possession including, without limitation, all costs of removal of any fixtures and dismantling costs or which the Contractor would not have incurred but for such recovery. 4 OPERATION AND MAINTENANCE The Lessee agrees throughout the lease term: 4.1 to use the Equipment in a skilful and proper manner for the purpose for which they were designed and in accordance with any operating instructions from time to time issued therefor by the Lessor and in accordance with good engineering practice and not in such a manner as to invalidate or vitiate any of the insurance policies referred to in this Agreement and to ensure that the Equipment is/are operated and used by properly skilled and trained personnel; 4.2 to perform (a) daily and weekly routine maintenance as specified in the appropriate instruction manual and other documents; and (b) periodic compressor cleaning as required or as specified in the appropriate instruction manual and other documents; 4.3 to provide all necessary consumable items such as fuel, lubricating oil and grease, fuses, light bulbs, cleaning materials (including compressor cleaning agents), filters (including air/fuel/lubricating oil/hydraulic/ventilation), and fire extinguishant; 4.4 that the Lessor shall not be liable to supply goods or equipment in lieu if the Equipment is/are lost or damaged or rendered unfit for use or closed, dismantled, confiscated, seized, requisitioned, restrained or appropriated or otherwise taken out of the possession or control of the Lessee or if for any reason whatsoever the Equipment become(s) inoperable or unusable in whole or in part and if the Equipment is/are damaged for reasons not due to the Lessor or due to the Lessee operating outside the Lessor's specification or instruction then the Lessee shall promptly notify the Lessor and shall pay for the cost of all repairs at Equipment Lease Page 7 of 19 Siemens Confidential the Lessor's standard current rates and prices. Repairs shall only be carried out by the Lessor or under the supervision of the Lessor and all of the costs shall be paid by the Lessee; 4.5 to obtain effect and keep effective all permissions licenses and permits which may be required in connection with the business of the Lessee and the use of the Equipment therefor and to comply with all statutory and other obligations of all kinds in relation to the Equipment and the use thereof and of its own expense to add to or install with the Equipment any safety or other equipment for the use or operation of the Equipment; 4.6 not to alter or remove any existing component from the Equipment unless it is replaced immediately (or if removed in the ordinary course of repair and maintenance as soon as practicable) by the same component or by a component of the like make supplied by the Lessor and model to that removed or an improved or advanced version thereof; 4.7 to allow to the Lessor or its duly authorized agent or representative access, at any time, upon reasonable notice, to inspect, repair and maintain the Equipment; 4.8 to keep, or procure to be kept, accurate, complete and current records of all operation and use of the Equipment and to permit the Lessor or any authorized agent or representative of the Lessor to examine such records at any time upon reasonable notice and to advise the Lessor immediately of any operational abnormality; 4.9 to take all necessary steps to safeguard the Lessor's title to and rights in the Equipment and in particular: (a) on all occasions when the ownership of the Equipment is relevant to make clear to third parties that the same is the property of the Lessor and, if required by the Lessor: to execute and deliver such instruments, documents or agreements, to make such filings and otherwise cooperate to give the necessary or appropriate public notice of Lessor's ownership interest in the Equipment; and (b) to place in a prominent position on the Equipment a name plate or label provided by the Lessor stating that the same is the property of the Lessor and Is leased to the Lessee, not to remove or cover up such plate or label and not to place or permit to be placed any name plates or labels in or on the Equipment prejudicial to the Lessor's interest in the Equipment or otherwise consistent with the Lessor's ownership of the Equipment; and (b) to keep the Equipment in its own possession (other than for overhaul repair modification or maintenance under the terms of this Agreement) and not to sell nor permit any person to assign mortgage pledge hypothecate underlet, lend or otherwise pledge with the Equipment or any Equipment Lease Page 8 of 19 Siemens Confidential interest therein or in this Agreement nor without the prior written consent of the Lessor to attach the Equipment to any ship, real property, or structure thereon so as to cause them to become a permanent or immovable fixture (or appurtenant to such ship, real property or structure) or so that the separate identity of the Equipment as chattels or personal property is lost thereon. 5 TERMINATION 5.1 The occurrence of any event set out in 5.2 (a) to 0) inclusive below shall be a terminating event which in each case aforesaid shall entitle the Lessor to terminate the lease of the Equipment in accordance with Clause 5.4 below and to recover the amounts specified in Clause 5.4 below from the Lessee 5.2 (a) the Lessee defaults for twenty-one (21) days in any payment due under the terms of this Agreement; or (b) the Lessee commits any breach of this Agreement or suffers any breach to be committed and in the case of a breach capable of being remedied fails to remedy the breach within twenty-one (21) days or such longer period as the Lessor may stipulate after being required by the Lessor so to do; or (c) the Lessee shall commit any act of bankruptcy or have a receiving order made against it; or (d) the Lessee convenes any meeting of creditors or makes a deed of assignment or arrangement for the benefit of or compounds with its creditors or convenes a meeting to consider a resolution for winding up (except for the purposes of an amalgamation or reconstruction the terms of which shall first have been approved by the Lessor) presents or has a petition for winding up presented against it (except as aforesaid) presents or has a petition for an administration order presented against it or has an administrator appointed or has a receiver or administrative receiver appointed over the whole or any part of its undertaking or assets or revenues or sells or otherwise disposes of the whole or any substantial part of its undertaking; or (e) the Lessee stops or threatens to stop payment or ceases or threatens to cease to carry on its business in the ordinary course as presently conducted is unable or admits its inability to pay its debts; or (f) any consent or license required for the construction or operation of the Equipment ceases to be in force or is modified in such a manner as to prejudice the interests of the Lessor; or Equipment tease Page 9 of 19 Siemens Confidential (g) any representation or warranty made by the Lessee shall prove to have been incorrect or inaccurate when made; or (h) any execution distress or other process is levied on the chattels or personal property of or in the possession of the Lessee or if the Equipment confiscated seized impounded or the Lessee abandons the Equipment; (i) an event of force majeure in accordance with 7.4 below continues for 90 days or more; or Q) the Equipment is removed from the location identified in Annex C without the prior written consent of the Lessor. 5.3 Upon the occurrence of any default breach or event set out in 5.2 (a) — (i) above the Lessor may (without prejudice to any other right or remedy it may have) without demand or notice terminate the leasing of the Equipment with immediate effect whereupon the Lessor's consent to the Lessee's possession of the Equipment shall terminate forthwith but without prejudice to the other provisions of this Agreement which shall insofar as they are capable of performance or observance continue in full force and effect. The Lessor may then without notice or demand retake possession of the Equipment or any part thereof wheresoever it may be and for such purpose the Lessor or its agent shall have irrevocable power and authority to do all things or acts necessary or advisable in order to do so including the right to enter upon any land or premises and shall be entitled to retake possession of or to remove the Equipment without responsibility for any loss or damage caused thereby or in connection therewith (including any damage caused in the removal of any fixtures) 5.4 Upon the termination of the hiring of the Equipment under this Clause 5 the Lessee shall on demand pay to the Lessor as a debt together with interest thereon: (a) all arrears of rentals and all other sums payable under the terms of this Agreement due but unpaid at the date of termination together with interest thereon from the date on which such rental or other sums fell due for payment hereunder to the date of payment; and (b) damages for breach of this Agreement or the occurrence of a terminating event (except if the lease is terminated under Clause 5.2(i) above) (c) all costs and losses incurred by the Lessor in connection with recovering or having possession of the Equipment recovering rentals or other payments hereunder and exercising or enforcing any of the terms and conditions of the Agreements (except insofar as such costs and losses arise directly from a force majeure event as defined in Clause 7.4 below) Equipment Lease Page 10 of 19 Siemens Confidential 6 DEFECTS IN THE GOODS 6.1 SUBJECT TO CLAUSE 6.2 BELOW, LESSOR MAKES NO WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY, OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. 6.2 Lessor warrants that each item of Equipment (excluding software and consumables) including any part repaired or replaced by Lessor during the lease term for such item of Equipment, will be free of defects in design, workmanship and materials (the "Equipment warranty"). If during the lease term for an item of Equipment, Lessor is promptly notified in writing that an item of Equipment or any component thereof fails to conform to the Equipment Warranty, Lessor shall at its option and expense correct such nonconformity by repair or replacement. THE WARRANTY SET FORTH IN THIS CLAUSE ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES, WHETHER STATUTORY, EXPRESS, OR IMPLIED (INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE). Correction of nonconformitles in the manner and for the period of time provided above constitute Lessor's sole and exclusive liability and Lessee's sole and exclusive remedy for defective or nonconforming Equipment whether claims of Lessee are based in contract, in tort (including negligence and strict liability), or any other theory of recovery. 7 LIMITATION OF LIABILITY AND FORCE MAJEURE 7.1 NOTWITHSTANDING ANY OTHER PROVISION OF THE AGREEMENT, LESSEE EXPRESSLY AGREES THAT NEITHER LESSOR NOR ITS SUPPLIERS OR SUBCONTRACTORS WILL UNDER ANY CIRCUMSTANCES BE LIABLE UNDER ANY THEORY OF RECOVERY, WHETHER BASED IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), UNDER WARRANTY, OR OTHERWISE, FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE WHATSOEVER; DAMAGE TO OR LOSS OF ANY PROPERTY OR EQUIPMENT; LOSS OF PROFITS OR REVENUE OR LOSS OF USE THEREOF; LOSS OF USE OF LESSEE'S MATERIAL, EQUIPMENT OR POWER SYSTEM; COST OF CAPITAL: COST OF FUEL; COST OF PURCHASED OR REPLACEMENT POWER; INCREASED COSTS OF ANY KIND; OR ANY CLAIMS OF CUSTOMERS OF LESSEE. LESSEE EXPRESSLY AGREES THAT THE REMEDIES PROVIDED IT IN THIS AGREEMENT ARE EXCLUSIVE, AND THAT NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, UNDER NO CIRCUMSTANCES Equipment Lease Page 11 of 19 Siemens Confidential SHALL THE TOTAL AGGREGATE LIABILITY OF LESSOR UNDER ANY THEORY OF RECOVERY, WHETHER BASED IN CONTRACT, IN T©RT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), UNDER WARRANTY, OR OTHERWISE, EXCEED, WITH RESPECT TO THE ITEM OF EQUIPMENT OUT OF WHICH SUCH LIABILITY ARISES, AN AMOUNT EQUAL TO FOUR (4) WEEKS RENT TO BE PAID TO LESSOR UNDER THIS AGREEMENT. WITH RESPECT TO EACH ITEM OF EQUIPMENT, ALL LIABILITY OF LESSOR AND ITS SUPPLIERS AND SUBCONTRACTORS UNDER THIS AGREEMENT SHALL TERMINATE NO LATER THAN SIX (6) MONTHS AFTER THE EXPIRATION OF THE LEASE TERM OF SUCH ITEM OF EQUIPMENT. THE PROVISIONS OF THIS CLAUSE 7.1 SHALL PREVAIL OVER ANY CONFLICTING OR INCONSISTENT PROVISIONS SET FORTH ELSEWHERE IN THE AGREEMENT. 7.2 For the purpose of this Clause and Clauses 6.3 and 7.1 above, all persons, firms or companies who are or may from time to time become suppliers or subcontractors, or their officers, directors or employees shall be third party beneficiaries of this Agreement. 7.3 NOT USED 7.4 If performance of any obligation under the Agreement (other than an obligation of the Lessee to make payment) is prevented, restricted or delayed by any act of God, act or omission of government, war, hostilities, industrial dispute at either party's premises or elsewhere, failure or delay in source of supply of materials or equipment, fire, explosion, accident or breakdown of essential machinery or equipment or by any cause (whether similar or not to any of the above events) beyond the reasonable control of the party whose performance is affected, then that party shall be excused from and shall not be liable for failure in performance to the extent of that prevention, restriction or delay. 8 SERVICES AND EQUIPMENT 8.1 The Lessor shall provide sufficient man -days of staff to supervise the installation, commissioning, decommissioning and removal of the Equipment at the charge rates incorporated in Clause 2(a) of the Form of Agreement. 8.2 Lifting equipment and tools shall be provided by the Lessee. Equipment Lease Page 12 of 19 Siemens Confidential 9 PAYMENT; INTEREST 9.1 Payment shall be made by wire transfer into the Lessor's bank account in accordance with remittance instructions outlined below: Domestic USD Bank Name: Mellon Bank Address: Pittsburgh, PA Account Name: Siemens Demag Delaval Turbomachinery Inc. Routing # 043000261 Account # 022-1735 9.2 Ten (10) days prior to the commencement of the lease term of an item of Equipment, advance rent shall be paid by the Lessee to the Lessor and thereafter the rent shall be paid monthly in advance. Advance rent of four (4) weeks lease shall be paid if the lease term is less than three (3) months and of three (3) months shall be paid if the lease term exceeds three (3) months. 9.3 Other charges shall be paid within twenty-one (21) days from the date of the Lessor's invoice. 9.4 Any past due payments shall, without prejudice to the right of Lessor to payment when due, bear interest at a floating rate equivalent to one -twelfth (1/12) of the per annum prime rate charged by Chase Manhattan Bank, New York, New York, U.S.A., as such prime rate is published on the first banking day following the date payment is due, plus an additional one-half of one percent (0.5%), payable each month or portion thereof that payment is delayed. 10 TAXATION The rent paid or to be paid to Lessor under this Agreement does not include any federal, state (other than Untied States federal and state income taxes imposed on Lessor), or local property, license, privilege, sales, use, excise, value added, gross receipts, or similar taxes now or hereafter applicable to, measured by, or imposed upon or with respect to the transaction and the Equipment its or their rental, sale, value or use, or any services performed in connection therewith. Lessor agrees to pay or reimburse Lessee for any such taxes which Lessee or its suppliers or subcontractors are required to pay. 11 DISPUTE RESOLUTION If at any time any question, dispute or difference shall arise between the Lessor and the Lessee under or in connection with this Agreement (including any Equipment Lease Page 13 of 19 Siemens Confidential dispute as to its validity, meaning, effect or termination) the parties shall attempt to come to a reasonable settlement of the matter, but should such question dispute or difference not be settled within six weeks of the original written notification of such matter the dispute may be submitted by either party to litigation pursuant to this Clause. The Lessor and Lessee hereby submit to the exclusive jurisdiction of the federal and state courts located in the Southern District of New York for the purpose of all disputes not resolved pursuant to the first sentence of this Clause. Each of the Lessor and the Lessee waives, to the fullest extend permitted by law, any objection which either may now or hereafter have to the laying of the venue of any such proceeding brought in such courts or any claim that any such proceeding has been brought in an inconvenient forum. EACH OF THE LESSOR AND LESSEE HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 12 INTELLECTUAL PROPERTY RIGHTS 12.1 All design rights (whether registered or not) trade marks and patents registered in the Lessor's name and copyrights (where information, drawings, manuals and other literature is annotated as copyrighted) in any of the Lessor's drawings, documents, specifications, the Equipment, other hardware included in the supply and software shall remain the exclusive property of the Lessor. The Lessee shall not nor shall he/she enable others to reproduce any software or hardware using any designs, drawings or specifications provided by the Lessor nor by copying from any part or parts of the Equipment supplied. 12.2 Lessor will, at its own expense, defend or at its option settle any suit or proceeding brought against Lessee so far as based on an allegation that any Equipment (including parts thereof), or use thereof for their intended purpose, constitutes an infringement of any United States patent or copyright or misappropriation of a trade secret, if Lessor is notified promptly in writing and given authority, information, and assistance in a timely manner for the defense of said suit or proceeding. Lessor will pay the damages and costs awarded in any suit or proceeding so defended. Lessor will not be responsible for any settlement of such suit or proceeding made without its prior written consent. In case the Equipment, or any part thereof, as a result of any suit or proceeding so defended is held to constitute infringement of any such United States patent, copyright or trade secret, Lessor will, at its option and its own expense, either: (a) procure for Lessee the right to continue using said Equipment; (b) replace it with substantially equivalent non -infringing equipment; or (c) modify it so it becomes non -infringing. Lessor will have no duty or obligation to Lessee under this Clause to the extent that the Equipment is (a) supplied according to Lessee's design or instructions Equipment Lease Page 14 of 19 Siemens Confidential wherein compliance therewith has caused Lessor to deviate from its normal course of performance, (b) modified by Lessee or its contractors after delivery, or (c) combined by Lessee or its contractors with items not furnished hereunder and by reason of said design, instruction, modification, or combination a suit is brought against Lessee. In addition, if by reason of such design, instruction, modification or combination, a suit or proceeding is brought against Lessor, Lessee shall protect Lessor in the same manner and to the same extent that Lessor has agreed to protect Lessee under the provisions of first paragraph of this Clause 12.2. THIS CLAUSE IS AN EXCLUSIVE STATEMENT OF ALL THE DUTIES OF THE PARTIES RELATING TO PATENTS, COPYRIGHTS OR TRADE SECRETS AND DIRECT OR CONTRIBUTORY INFRINGEMENT THEREOF AND OF ALL THE REMEDIES OF LESSEE RELATING TO ANY CLAIMS, SUITS, OR PROCEEDINGS INVOLVING PATENTS, COPYRIGHTS OR TRADE SECRETS. Compliance with this Clause as provided herein shall constitute fulfillment of.all liabilities of the parties under the Agreement with respect to patents, copyrights or trade secrets. 13 CONFIDENTIALITY All information and know how including all manuals and operating instructions, all drawings and other technical information and specifications which are the property of or are provided by the Lessor in connection with the Agreement and all information which becomes known to the Lessee as a result of this Agreement shall be kept confidential by the Lessee and not copied or disclosed to any third party with the prior written consent of the Lessor. 14 WAIVER The failure or delay on the part of the Lessor to exercise any power or right hereunder shall not operate as a waiver thereof, nor affect the validity of this Agreement or the right of Lessor to enforce each and every provision. 15 ENTIRE AGREEMENT This Agreement contains the entire agreement between the parties and supersedes all previous or contemporaneous agreements, representations, understandings and commitments whatsoever oral or in writing. 16 LAW This Agreement shall in all respects be construed and interpreted in accordance with the laws of the State of New Jersey without application of its choice of law or conflicts of laws rules. Titles of the Clauses shall not affect their legal construction. Equipment Lease Page 15 of 19 Siemens Confidential 17 MODIFICATION No waiver, modification, or amendment of any of the provisions of the Agreement shall be binding unless it is in writing and signed by duly authorized representatives of both parties. 18 NOTICES 18.1 Any notice or other communication which either party is required or permitted or wishes to give or make to the other party pursuant to this Agreement shall be in writing in the English language and shall be effected by: - (a) delivering in person to any authorized representative of such other party, or (b) sending it by overnight courier service to such other party, or (c) transmitting it to such other party by facsimile or other electronic means of data transmission. 18.2 Service of such notice or other communication shall be made on the parties at their respective addresses as follows: Lessor: Siemens Demag Delaval Turbomachinery, Inc. Trenton, New Jersey USA Attention: Andy Kemsley Tel: +1 (609) 890-5131 Fax: +1-(609) 587-7790 Lessee: Attention: ................................................... Tel: Fax: .......................................................... 18.3 A party may change the address, fax number to which notices are to be addressed by serving a notice on the other party in accordance with this Clause. 18.4 Notices sent by overnight courier shall be deemed to be delivered on the day following dispatch as determined by the date of the courier's waybill, and notices sent by facsimile or other electronic means of data transmission shall be deemed to be delivered on the date of transmission; provided, however, if the date a Equipment Lease Page 16 of 19 Siemens Confidential notice is deemed delivered is not a Business Day, then the notice shall be deemed delivered on the next Business Day following. 21 ASSIGNMENT Without the prior written consent of Lessor, Lessee shall not: (a) assign, transfer, pledge or hypothecate this lease, the Equipment or any part thereof, or any interest therein; or, (b) sublet or lend the Equipment or any part thereof, or permit the Equipment or any part thereof to be used by anyone other than Lessee or Lessee's employees. Consent to any of the foregoing prohibited acts, if given, applies only in the given instance, and shall not constitute a consent to any subsequent like act by Lessee or any other person. Subject always to the foregoing, this Agreement inures to the benefit of, and is binding upon, the heirs, legatees, personal representatives, successors and assigns of the parties hereto. Equipment Lease Page 17 of 19 Siemens Confidential ANNEX B INSTALLATION / REMOVAL RATES See attached Field Servcie Rate Sheet SERVICES for USA (onshore) , Rev 2 dated December, 2006. Equipment Lease Page 18 of 19 Siemens Confidential Siemens Power Generation - Industrial Applications Field Service Rates SERVICES for USA (onshore) PRODUCTS: Siemens Steam Turbines & Compressors Alstom Steam $ Gas Turbines WORKING RATES daily rate daily rate daily rate Hourly rate in Hourly rate In Personnel Mon - Fri Sat based on a Sun & Local excess of excess of based on a 8 8 hour work day holiday 8 hours worked 8 hours worked hour work days based on a 8 Mon- Sat Sun or Local hour work day holiday SPECIALIST ENGINEER $1760.00 US $2640.00 US $3520.00 US $330.00 US $440.00 US TECHNICAL FIELD — ---- ADVISOR $1440.00 US $2160.00 US $2880.00 US $270.00 US $360.00 US FIELD SERVICE TECHNICIAN $1120.00 US $1360.00 Us 1 $1600.00 US 1 $170.00 US $200.00 US Round Trip Billing for One Way Travel Time of: Up to 3 hours Up to 8 hours Up to 12 hours USA/ Canada Up to 12 hours Intemational* Up to 18 hours* Up to 24 hours* Up to 36 hours* $1550.00 $4400.00 $6300.00 $5700.00 $8100.00 $10,400.00 $14,300.00 `Excludes airfare. Airfare is billed at cost plus 15% administration fee. Daily Lump Sum Per Diem charge for Lodging, Transportation, Meals and Misc = $290.00 from arriving at location. Higher cost of living areas will be billed at cost plus 15% administration fee. The above rates are in US Dollars and include expenses as referenced in the attached Conditions. Validity : From 2007-01-01 up to 2007-12-31 Conditions : General Conditions for Erection, Commissioning and other Services Charging appendix for field services issue 01-2006 Rev.2 Dec 2006 Siemens Demag Delaval Turbomachinery, Inc. Conditions for the Sale of A Siemens Company Field & Engineering 840 Nottingham Way, Hamilton, New Jersey, U.S.A. 08650 Services Field & Engineering Services a For Service on All Siemens Acquired Steam Turbines, Gas Turbines, Compressors and Pumps in the U.S.A. Effective January 1, 2007 Prices are subject to change without notice I. Selling Policy AU prices contained herein are subject to the terms and conditions of the Siemens Demag Delaval Turbomachlnery, Inc. Selling Policy for the Sale of Equipment and Services ("Selling Policy") in effect on the dale an order is received. 11. Price Policy AN rates and prices are subject to change without notice. Unless contracted otherwise, rates and prices for ongoing contracts will be those in effect at the time the work Is performed. No personnel will be dispatched until a Purchase Order, Payment or written authorization acknowledging acceptance of Terms, Pricing and agreement to pay is received III. Services Definitions Siemens Demag Delaval Turbomachinery, Inc. ("Siemens") offers three types of field and engineering services as defined below, in accordance with the price fist attached. A. Supervisory and Specialist Services An engineer, project manager, technical field advisor (TFA) providing Supervisory Services and directing Siemens personnel or Customer personnel performing to Siemens procedures and process specifications. A job specific readiness fee will apply to all orders that are not firm priced, for supervisory services. This fee will cover prejob efforts and will be quoted- separately. An engineer, manager or specialist providing Special Services also performs diagnostic and operational trouble -shooting and commissioning of rotating equipment. This work may be conducted onsite or by telecommunication. Special Services include diagnostic electrical testing, evaluation and set-up activities on control systems, voltage regulator systems and any on -fine diagnostics. Level III NDE and balancing is also included in this type of field engineering service. Engineers located at Siemens home facilities, including District Offices and the Technical Support Center, provide technical studies and information relating to the design and operating parameters of rotating equipment. B. Technical Field Advisor (TFA) An engineer providing TFA renders advice and makes recommendations based on Siemens procedures and drawings during standard maintenance of existing and installation of new Siemens supplied rotating equipment to customers direct employees. By definition, standard maintenance includes disassembly, inspection, and replacement of parts, routine repair and reassembly. C. Field Service Technician A Field Service Technician generally performs the work required to be completed at site. By definition, this would include the disassembly, Inspection, and replacement of parts, routine repair and reassembly of rotating equipment. It would also include the complete removal and re- installation of the entire unit. IV. Rates Payable A standard day for on -shore work is classified as 8 hours working time. A standard day for off- shore work is classified as 12 hours working time. Minimum biting is the daily rate and will also apply to week day standby time. Weekend stand-by will be charged at h the daily rate, straight time per day that the representative does not work but remains within the vicinity of the site. Holiday stand-by will be charged as if it was worked. If the representative is able to return home then the costs of time and travel for the representative to go home and return to site will be charged accordingly. The daily rate applies to all time worked or traveled during an 8 hour work day or fraction thereof; that is, any consecutive 8 hour period In a weekday (Monday through Friday, holidays excepted) with an allowance for lunch time. The & day daily rates apply to all time worked or traveled on Saturday (holidays excepted) with an allowance for lunch. The 71" day daily rates apply to au time worked or traveled on a Sunday or a holiday, locally observed by Siemens, with an allowance for lunch. Overtime rates also apply for Ume worked in excess of 8 hours. This Is an hourly charge, based upon actual additional time worked in excess of 8 hour period. Two overtime rates apply; one for Ume worked in excess of 8 hours for the daily rate (Monday through Friday, holidays excepted) and the a day daily rate (holidays excepted), and one for time worked in excess of 8 hours for the 71" day daily rate. The daily rates are based on working days at site. Standby time not attributable to Siemens will be classed as working time. Time spent at the site shall be evidenced with timesheets signed by the Customer's authorized representative. The daily rates include the supply and use of g) basic PPE (Personal Protective Equipment) and the use of standard small hand tools, as required by Technicians. Ai rates shall be valid for the determined period of validity only. V. Traveling and Other Expenses Siemens policy for traveling and other expenses are assessed as outlined here: A. Travel and Expenses The daily labor rates exclude the following costs, which shall be for Customer's account and will be charged separately: a) Mobilization/Demobilization fees shall be charged at a graded fixed fee dependent on the required travel time from base location to site. Mobilization fees include preparation time, visa costs, all travel expenses including flights where relevant to mobilize and travel time plus accommodation costs to get the field service personnel to and from the onshore work site, or point of embarkation for off shore sites. The transport from the point of embarkation to an offshore location and back will be provided by the Customer free of charge. b) Mobilization/Demobilization fees applicable for International travel in excess of 12 hours shall be charged at a graded fixed fee dependent on the required travel time from base location to site. Mobilization fees Include preparation time, visa costs, all travel expenses excludin flights where relevant to mobilize and travel time plus accommodation costs to get the field service personnel to and from the onshore work site, or point of embarkation for off shore sites. The transport from the point of embarkation to an offshore location and back will be provided by the Customer free of charge. c) Accommodation where not provided by the Customer will be charged on a lump sum daily basis. d) Meals and allowances will be charged on a lump son daily basis. e) The daily allowance charge for accommodation, meals, transportation and allowances will be assessed for each calendar day an individual is assigned to a project including non -working weekend days for jobs extending over the week- end(s). f) Where the Customer provides accommodation and food it is to be to a standard which is acceptable to Siemens. In the event that this is, in our opinion, unsuitable, we reserve the right to find an alternative which will be charged for as above. Should an expedited mobilization be required an additional charge for excessive airfare may be applicable. All separately invoiced items over and above the daily rates will be charged with a fifteen percent (15 %) increase for handling and administration costs. Page No. 1 B. Departure Delay and Cancellation D. a) Departure delay — Standby in Home Base a) If the fixed date for the personnel delegation will be delayed due to reason by the Customer, Siemens Is prepared to keep the nominated personnel on stand-by up to 7 calendar days. In this case Siemens reserve the right to charge a delay fee of the full applicable daily rate per calendar day. b) Departure Delay —At Point of Embarkation Should departure of personnel be delayed at the point of embarkation for any reason beyond b} Siemens control, the full applicable day rate will be charged per day of delay. Accommodation and meals where provided by Siemens will also be charged according to the published rates. c) Cancellation Where cancellation by the Customer is notifted less than 7 days prior to planned mobilization, a cancellation fee of one single day at 100% of the applicable daily rate will be charged. Should any job be cancelled or postponed by the Customer after the representative has been dispatched then all costs incurred for time and expenses will be charged in accordance with the terms of this rate sheet. C. Home Leave a) For USAI Canadian service personnel, when a project is expected to exceed 5 continuous weeks of duration, following every three (3) weeks of continuous attendance at an onshore site, including any days spent traveling, the Customer will allow each member of Siemens personnel an extended weekend home leave journey at the Customer's expense. For International personnel, home leave Is permitted every two (2) months for 10 days b) If continuous attendance of Siemens personnel Is required, then and on request. Siemens will delegate substitute personnel, mobilization rates would apply. c) Following every fourteen days of continuous attendance offshore, Siemens reserves the right to charge the Customer a further mobilization fee for each member of Siemens personnel. d) Days spent traveling with respect to home leave shall be charged at the applicable daily rate. Should any member of Siemens personnel cancel a home leave journey, the Customer shall be charged for the akfare (according to Siemens travel regulations) and/or other travel costs that are Incurred by Siemens. c) Tools Charges for equipment, tools, measuring instruments and special assembly tools supplied with Siemens field service personnel for use by Siemens or Its subcontractors will be quoted by your local Siemens representative. Costs of transportation (including all applicable transportation charges, insurance, customs/duties, etc.) will also be charged at cost plus 15%. The rental time applies from the day of dispatch from base to return receipt. Siemens will catalogue the tools required to be returned to base. If for any event the catalogued tools are not returned within 30 days after leaving site, Siemens will charge the Customer the current replacement cost. Prices quoted will include normal replenishment and re -calibration. Excessive loss or damaged equipment, tools and instruments beyond the control of Siemens will be billed as an additional charge to the Customer. E. Shift Work a) Shift work is defined as those circumstances where, in a given day, more than one service crew Is engaged to perform the service activity. In such instances Siemens reserves the right to charge a shift premium In addition to the published rate sheets. Technical Consultation During on -site service work it might be necessary to Involve specialists from Siemens headquarters for particularly complicated technical questions such as certain analysis, calculations or similar tasks. For such technical consultation Siemens will invoice this charge on an hourly basis according to the Specialist Engineer rates as defined in the published rates sheet. Where Technical Consultation is required to be provided at site, charges will be in accordance with the published rate sheets for Specialists and Engineers. Before such work is commenced a separate agreement has to be established, unless it is already agreed upon in the order. VI. Working Conditions and Special Costs Costs for factory security officers, medical services, industrial safety and supporting activities at the Customer site will be for the account of the Customer. In case of accident or illness, the Customer undertakes to provide immediate medical assistance and if necessary, to transfer any injured or sick person to a hospital preferably conforming to North American standards. Should repatriation become necessary as a result of serious Illness or death, the Customer shah attend to all formalities and pay all the costs incurred thereby. Should replacement personnel be required, the costs for same shall be borne by the Customer. The Customer shall make available free of charge to Siemens personnel: office space, telephone, high speed Internet connection and telexlfax (communication with home office shall be free of charge) and all such other facilities as are available to Customer's own personnel. Any social amenities available at the job site or introduced there during the progress of site work, as well as any special benefits granted, shall be made available to Siemens personnel In the same manner and extent as accorded to any other foreign personnel at the job site. in the interests of avoiding language difficulties, the Customer shah, for own account, make available the services of interpreters, where work is being performed. VII. Additional Notes a) In the event Siemens uses outside or subsidiary personnel to perform services that would normally be performed by Siemens personnel, Siemens will Invoice Purchaser for such personnel at the hourly rates published herein. b) Any non Siemens parts or materials supplied during the work- will be charged at cost plus 25%. c) Siemens will supply engineers and techniclans based on qualifications with priority given to qualified daily commuting personnel when available. d) For all other conditions, please refer to the attached selling policy. Page 2 ANNEX C DESCRIPTION OF EQUIPMENT DESCRIPTION OF THE EQUIPMENT WEEKLY RENTAL STIPULATED VALUE LOCATION OF THE EQUIPMENT SGT 800 Turbine $ 40,000.00 USD $ 6,200,000.00 USD Siemens Demag Module Delaval Turbomachinery Inc - Hamilton, NJ Equipment Lease Page 19 of 19 Siemens Confidential a; � Document number Edition Y 1 a- N Service Product Information Appendix 6.2 2 Vernon Date Page 2006-06-13 1 (2) Emergency Support Emergency Modules SGT-800 Standard document — may be changed without previous notice Emergency Modules Purpose High power plant availability is dependent not only on a high technical reliability of the equipment 4nd an effective preventive maintenance program. Ample back-up resources are of near -equal importance. Operation support, accessibility of spare parts, spare modules and complete spare units are therefore prerequisites for maintaining the plant's availability at the desired, high level. Though the consequences of an extensive breakdown may be severe, few users keep a back-up unit on their own. So, Siemens offers cost efficient emergency back up in the form of spare modules and gas turbines for hire. To offer the possibility of individual optimising of cost and outage time in case of an emergency break down, our back up recourses do not only include complete gas turbines but also spare modules for hire. Depending on the situation it is sometimes, from total outage time perspective, beneficial to install a spare module instead of replacing the complete gas turbine. General description The emergency modules for SGT-800 / GTX100 cover the major part of the core engine (See definition at the end of this document). Following modules are available for hire for a weekly fee as shown: Weekly fee (USD) Combustion Chamber Module (Combustor Chamber and Fuel Injectors) 20 000 Turbine Module (including Turbine Stator Stage 1 and Turbine Casing) 40 000 Outlet Casing Module 10 000 Minimised transportation time to all turbine sites is secured by the strategic locations of the emergency modules. All users have access to these emergency modules on a first come first served basis. If there is a need, any available module can be sent within 24 hours from notification, at the return of a signed lease contract. The estimated time for installation and commissioning is normally 2-9 days, depending on type of module and local conditions such as means of transportation, lifting capacity, local assistance personnel, etc. The lease of modules is subject to the same terms and condition as described in Appendix 6.1. We reserve all rights in this document and in the information contained therein. Reproduction, use or disclosure to third parties without express authority is strictly forbidden. © Demag Delaval Industrial Turbomachinery AB Issued by: ajul Checked by: Approved by: Document Service Product Information Appennu 6.2 Edition Date Page 2006-05-09 2 (2) Emergency Support Emergency Modules SGT-800 Casing Module I GTX100 Emergency Back-up Modules We reserve all rights in this document and in the information contained therein. Reproduction, use or disclosure to third parties without express authority is strictly forbidden. 0 Demag Delaval Industrial Turbomachinery AB 2 x SGT-800 200606-13 Appendix 6.1 SIEMENS Vernon Edition 1 (Std no) / Page 1 (4) Additional Terms and Conditions for lease of Emergency Gas ,Turbine or Gas Turbine modules Below additional Terms and Conditions shall prevail when the Purchaser is leasing . the Supplier's Gas Turbine or its modules within the validity period of this agreement. 1. Emergency Gas Generator/Turbine The Supplier hereby agrees to lease to the Purchaser on the terms and conditions described herein one SGT-800 / GTX-100 Gas Turbine (see the end of this document for definition) or one of its modules described in Appendix 6.2, hereinafter referred to as the Lease Unit, during unscheduled repair of the Installation, provided such a Lease Unit is available at the time of the Purchaser's request. The term "available" means that the Lease Unit is not utilized or booked by another Purchaser or under maintenance. The following terms and conditions apply also to lease of SGT-800/GTX-100 modules as described in Appendix 6.2, which is the more likely than leasing a whole turbine. 2. Supplier's obligations 2.1 The Lease Unit will be delivered to the Purchaser at the site. The lease period commences on the date that the Lease Unit leaves the Supplier's workshop facilities and ends on the date when the Lease Unit is returned back to the Supplier hereinafter referred to as the Lease Period. 2.2 The Supplier will provide qualified technical direction for the installation and subsequent removal of the Lease Unit. W 3 2.3 In the event that the Lease Unit becomes inoperative during the Lease Period due to faulty, workmanship or material, the Supplier shall remedy such defect at its own expense. m a 3. Purchaser's obligations s M 3.1 0 The Purchaser shall to the Supplier place an acceptable purchase order for repair of his own Gas Turbine. �a (p N CADocuments and Settings\rtolmasoff\Local Settings\Temporary Internet Files\OLKK App 6 1 Lease of GTX turbine or E modules (2).doc c to 2 x SGT-800 200606-13 Appendix 6.1 SIEMENS Vernon Edition 1 (Std no) / Page 2 (4) 3.2 The Purchaser agrees to pay a weekly use fee for each week or fraction thereof of use of the Lease Unit. Invoicing will be made after each 30 days of use. Payment is to be made against invoice payable within 30 days from the date of invoice. In case payment is delayed beyond the respective due date the Supplier shall be entitled to interest on the overdue amount at a rate of 10% p.a. from the due date until the actual date of payment. The weekly use fee is a fixed fee, subject to adjustment in accordance with a Price Adjustment clause and changes in exchange rate SEK/USD. 3.3 The Purchaser agrees to pay all cost for. manpower and for transport of the Lease Unit. The cost for manpower will be based on the Supplier's charges for manpower valid at the time of execution. 3.4 The Purchaser shall allow the Supplier to utilise parts and components from the Purchaser's gas turbine at no charge during the Lease Period. 3.5 The Purchaser shall ensure that the Lease Unit is operated and maintained by trained personnel in accordance with the Supplier's at the moment current specifications (manuals, mandatory bulletins and other written instructions), including the performance of inspections and sampling to assure conformance. The Lease Unit shall be operated in accordance with the specified conditions. Without limiting the generality of the foregoing, the Purchaser shall bear the costs of all a) necessary consumables needed during the Lease Period. The Purchaser is not entitled to 3 make any alterations or modifications to the Lease Unit. U) a 0 3.6 CL Except for the Supplier's obligations of paragraph 2.3 of this document, the Purchaser m hereby assumes and shall bear during the Lease Period the entire risk of loss or damage to a the Lease Unit. z a� 3.7 o The Purchaser shall during the Lease Period keep the Lease Unit insured against risk of loss or damage by fire, theft or other customarily insured hazards in an amount not less than 100 ~ �CO times the weekly rate. The insurance shall be in a form and with a company satisfactory to C- N 7 C �- C f6 N aa) CADocuments and Settings\rtolmasoft\Local Settings\Temporary Internet Files\OLMRApp 6 1 Lease of GTX turbine or m modules (2).doc c 2 x SGT-800 200606-13 Appendix 6.1 SIEMENS Vernon Edition 1 (Stdno) / Page 3 (4) a the Supplier. The Purchaser shall at the Supplier's request deliver evidence satisfactory to the Supplier of insurance coverage as aforesaid. 3.8 The Supplier shall have the right to in advance notice enter the premises where the Lease Unit is located and shall be given necessary facilities for the purpose of inspection thereof. 3.9 The Purchaser shall supply all necessary assistance, helpers, tools and other equipment, required for carrying out installation and subsequent removal of the Lease Unit at no cost for the Supplier. 3.10 The Purchaser shall provide the Supplier with relevant operating and performance data as requested by the Supplier including, but not limited to, fired hours, equivalent operating hours, starts, full and partial cycles, trips, irregular operating and performance indications and results of sampling inspections. The Purchaser is obligated to shut down the Lease Unit upon the request of the Supplier when, in the reasonable opinion of the Supplier, continued operation would constitute a risk of substantial damage to the Lease Unit or associated equipment and/or personnel. If the Purchaser in spite of the Supplier's written request for a shut down, chooses to run without the Supplier's concurrence, the cost for remedying any resulting damages shall be borne by the Purchaser. 3.11 Title to and ownership of the Lease Unit shall at all times remain with the Supplier and the Purchaser shall undertake all measures necessary in order to preserve the Supplier's ownership to the Lease Unit during the Lease Period. The Purchaser may not pledge, transfer or sell the Lease Unit or part thereof. The Purchaser may not transfer this Agreement to a third party or lease the Lease Unit or part thereof to a third party except in connection with the sale of the Plant. 3 Cn c 0 n M C u. m Q @ C L U E O 7 H y CO C � 7 7 U � C @ @ y CADocuments and Settings\rtolmasoff\Local Settings\Temporary Internet Files\OLK6E\App 6 1 Lease of GTX turbine or modules (2).doc c 2 x SGT-800 200606-13 Appendix 6.1 N d C 7 F- M .0 y 7 c M nO EM ENS Vernon Edition 1 (Std no) / Page 4 (4) Emergency Spare gas turbine CADocuments and SettingsVtolmasoff\Local Settings\Temporary Internet Files\OLK6E\App 6 1 Lease of GTX turbine or modules (2).doc