Exhibit 10.1

 

Confidential Treatment Requested

 

3/21/2005

 

LONG TERM SUPPLY AGREEMENT

 

BETWEEN

 

ACTIVE POWER, INC.

 

AND

 

GE ZENITH CONTROLS, INC.

 

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LONG TERM SUPPLY AGREEMENT

 

This Long Term Supply Agreement (“Agreement”), made and entered into this day of
March 16, 2005, between Active Power, Inc, a Delaware corporation, with offices
at 2128 West Braker, Austin, Texas 78758, hereinafter referred to as “Active
Power” and GE Zenith Controls, Inc., a Delaware corporation, (and a wholly owned
subsidiary of General Electric Company a/k/a GE) with offices at 830 West 40th
Street, Chicago, IL 60609, hereinafter referred to as “GE Zenith”.

 

WITNESSETH:

 

Whereas, Active Power is a user/reseller of, Uninterruptible Power Supplies and
related accessories, hereinafter “Products” and desires to purchase Products
from GE Zenith and Whereas, GE Zenith is a producer of said Products that Active
Power desires and is willing to produce and sell the same to Active Power upon
the terms and conditions hereinafter stated.

 

NOW, THEREFORE, the parties agree as follows:

 

Section 1. Term

 

1.1 Initial Term & Renewal: The initial term of this Agreement shall be four
years from March 16, 2005, the “Effective Date” and to December 31, 2009. Price
will be re-negotiated every October beginning October 2006, effective Jan 1st of
the following year. The initial term shall be automatically renewed for one (1)
year terms unless either party shall give written notice to the contrary not
less than six (6) months prior to what would otherwise be the termination date
of this agreement.

 

Section 2. Quantities, Ordering, and Shipment

 

2.1 Quantities: There are no specific or minimum quantities of Products required
to be ordered by Active Power under this Agreement.

 

2.2 Ordering: The ordering of Products by Active Power from GE Zenith shall be
made through Active Power purchase orders. Expected lead times as shown in
Exhibit C – Delivery Lead Times.

 

2.3 Shipment: GE Factory Prepaid and Add. GE Zenith shall notify the designated
Active Power contact if any product will not be shipped on the date required by
Active Power and anticipated reason for late shipments or failure to ship. Such
notification shall be made via e-mail at least 10 working days prior to the
originally expected ship date, as practical.

 

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2.4 Cancellation: Active Power may cancel any Purchase Order that is scheduled
for delivery in twenty (20) days or greater, by giving GE Zenith at least ten
(10) business days written notice. In the event of cancellation, Active Power’s
liability shall be limited to cancellation charges based on costs for material
and labor already added to product that is unique to Active Power
configurations. For units 300 kVA and above, 15% cancellation charges apply.

 

2.5 Reschedules: Active Power may reschedule the delivery of any Purchase Order
in fifteen (15) days or greater of delivery dates by giving GE Zenith at least
five (5) business days written notice. Reschedules may not extend original
delivery dates more than ninety (90) days.

 

Section 3. Pricing and Payment

 

3.1 Prices for Uninterruptible Power Supplies and Accessories are in Exhibit A.
Price List.

 

3.2 Prices are firm for the initial two-year term through December 31, 2006 as
contained in the attached price lists, which hereafter is called the reference
base period. During the first two-year period, prices may be adjusted with
90-day notice, if the value of a special index, which is described in Attachment
#3, increases by more than 10% from the effective date of this contract.

 

3.3 “Invoice Price” will be the annual contractually agreed upon price in effect
for the item at time of order placement.

 

3.4 Payment terms will be net 45 days from date of Shipment with Shipment made
FOB GE Factory, Bonham, TX. Standard GE terms and conditions of sale apply and
attached in Attachment #2.

 

Section 4. Warranty and Product Safety Approvals

 

4.1 GE Zenith will supply Active Power with an 18 – month Parts and Labor
warranty from shipment, or 12 month from startup; whichever occurs first. GE
Zenith’s standard warranty and responsibility, as defined in GE Zenith’s Order
Acknowledgement, shall apply to Active Power’s customers and users of said
product.

 

4.2 See Attachment #2.

 

4.3 The UPS is designed, manufactured and tested in accordance with the
applicable portions of standards listed in Exhibit B – Product Safety Approvals

 

4.4 Warranty Service shall be provided by an Active Power Certified technical
Support Engineer or one of Active Power’s Qualified Service & Support Vendors
for GE Zenith Products

 

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sold by Active Power. GE Zenith shall reimburse Active Power for the agreed upon
expenses for labor, travel and other costs associated with a warranty repair. GE
Zenith will provide a reimbursement schedule for warranty items. Only one
warranty repair allowed per unit unless authorized by GE Zenith. GE Zenith shall
reimburse Active Power for any part consumed on a warranty related repair.
Active Power may contact GE Zenith to supply any warranty repair or service
under the standard GE Zenith product warranty. Active Power or any one of Active
Power’s Qualified Service & Support Vendors will only perform service on GE
Zenith Units sold by Active Power unless otherwise authorized by GE. This same
condition applies to GE Zenith if Active Power hires GE to service Active Power
units.

 

4.5 Product Service Training: GE Zenith shall provide at its cost the first
service training class on products sold by Active Power. The class shall be
limited to 8 service and training personnel from Active Power’s corporate head
quarters. Class shall include all manuals and software and special tools to
commission, maintain and service GE Zenith Products sold by Active Power. Travel
and lodging expenses for the trainees shall be at the expense of Active Power.
Any additional training classes provided by GE Zenith shall be billable at the
prevailing or normal class rate. GE Zenith is responsible for ensuring that the
course content achieves the goals of training Active Power’s personnel in the
ability to properly inspect the installation of, perform the commissioning of,
perform the routine maintenance of and supply emergency diagnostic and repair of
GE Zenith products sold by Active Power.

 

Section 5. Confidentiality/Non-Disclosure Agreement

 

5.1 See Attachment #1.

 

Section 6. Termination

 

6.1 A party shall have the right to terminate this Agreement with immediate
effect by notice in writing to the other party without any further liability: If
the other party shall at any time (a) Be adjudged bankrupt or insolvent; (b)
Make any assignment for the benefit of its creditors; or, (c) Voluntarily
liquidate; if a receiver or other equivalent officer is appointed by any court
or governmental authority or any third party to administer or liquidate the
other party; or in the event of dissolution proceedings by or against the other
party.

 

6.2 After the first twelve (12) months, a party shall have the right to
terminate this Agreement with twelve (12) months notice in writing to the other
party without further liability: (a) If the other party defaults in the
performance of any provision of this Agreement (except payment)

 

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and continues in default thereof for thirty (30) days after notice to such other
party of the default; or, (b) If, with respect to payment, Active Power fails to
make payment to GE Zenith within the time provided herein and the failure
continues for sixty (60) days after receipt of written demand for payment.

 

Section 7. Non-Performance

 

7.1 Neither party hereto shall be liable to the other for failure to perform its
obligations under this Agreement, in whole or in part, when performance is
prevented by flood, drought, fire or any other casualty, war, riot,
insurrection, acts of God, restrictions or interferences by any government or
governmental agency, strike, work stoppage or slowdown, or other similar causes
beyond the control of the party so failing to perform.

 

Section 8. Assignment

 

8.1 Neither party hereto shall have the right to assign any of its rights and
obligations under this Agreement to any other person, firm or corporation
without written consent of the other party, such written consent shall not be
unreasonably withheld.

 

Section 9. Notices

 

9.1 Any notice that either party desires or is required under this Agreement to
give to the other shall be in writing, either delivered personally or sent by
registered air mail or email, addressed, as appropriate to the UPS General
Manager or GM Sales -GE Zenith or to the respective addresses set forth on the
first page hereof, or at any other address that either party designates by the
means herein prescribed for giving notice.

 

Section 10. Invalid Provision

 

10.1 The decision of any court of law or other governmental authority
invalidating any portion of this Agreement shall not affect the validity of any
remaining portion. The remaining portion shall remain in full force and effect
as if the invalid portion were not a part of this Agreement when it was
executed. In the event that the severance of any portion of this Agreement
affects a material right or obligation of a party, the party may, by notice in
writing, terminate this Agreement upon twelve-months notice.

 

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Section 11. Waiver

 

11.1 The failure of either party to enforce at any time any of the provisions,
rights or elections provided in this Agreement, irrespective of any previous
action or proceeding taken by it, shall in no way be considered a waiver for
those or any other provisions, rights, or elections.

 

Section 12. Attachments Part of the Agreement

 

12.1 Exhibit A, B, C, C1, C2, C3 Attachment 1 - 3 hereto shall form an integral
part of this Agreement as though set forth in their entirety in the Agreement.
In the event of a conflict between the numbered sections of this Agreement and
the attachments, the provisions of the sections shall prevail.

 

Section 13. Amendments

 

13.1 This Agreement may only be amended by the execution of a written instrument
executed by duly authorized representatives of both parties.

 

Section 14. Headings

 

14.1 The headings of this Agreement are inserted solely for the purpose of
convenience of reference and are in no manner to be construed as part of this
Agreement.

 

Section 15. Applicable Law

 

15.1 This Agreement has been entered into the State of Illinois and shall be
governed and construed in accordance with the laws of the State of Illinois,
USA.

 

Section 16. Relationship of the Parties

 

16.1 Nothing contained in the Agreement shall be deemed: (a) To constitute
either party, or any employee, agent or representative of either party, as an
employee, agent or representative of the other party; (b) To create any
partnership, joint venture, association or syndicate between the parties; or,
(c) To confer with any express or implied right, power or authority to enter
into any Agreement or commitment, express or implied, or to incur any obligation
or liability on behalf of the other party.

 

Section 17. Entire Agreement

 

17.1

This Agreement constitutes the entire Agreement and understanding between the
parties as to the subject matter of this Agreement. No representations,
warranties, or promises have been

 

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made that are not fully set forth herein. As of the Effective Date, this
Agreement replaces any and all previous Agreements between GE Zenith Controls,
Inc. and Active Power. It is the intention of both parties that we continue to
grow and develop our relationship to optimize the use of the capabilities of
both parties and minimize the inefficiencies in all aspects of our business
relationship.

 

Section 18. Signatures

 

In witness whereof, the parties have executed this Agreement by their duly
authorized officers as of day and year set forth on the first page.

 

Attest:           Active Power, Inc.        GE Zenith Controls, Inc. By:  

/s/ Sriram Sivaram

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/s/ Tom Duffy

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    Sriram Sivaram        Tom Duffy     Vice President, Sales & Marketing       
GM Sales     Active Power, Inc.        GE Zenith Controls, Inc.             
General Electric Company

 

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ATTACHMENT #1 - CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT

 

In consideration of the disclosure of proprietary information by Active Power,
Inc., (hereinafter “Active Power”), 2128 West Braker, Austin, TX 78758, and GE
Zenith Controls, Inc. (hereinafter “GE Zenith”), 830 West 40th Street, Chicago,
IL 60609 to each other, which information relates to present and prospective
business relations between Active Power and GE Zenith. Such information includes
data relating to disclosing party’s products, product development, manufacturing
processes, product designs, materials and technology and/or other information
not generally available to the public which is disclosed to or acquired by the
non-disclosing party, from the disclosing party (hereinafter collectively
“Proprietary Information”), the parties agree as follows:

 

1. Proprietary Information disclosed by either party to the other hereunder may
be in written form or it may be electronically, orally or visually presented. If
in written form, it shall be identified as Proprietary Information by an
appropriate legend indicating its proprietary or confidential nature. If
disclosed electronically, orally or visually, it shall be identified by the
disclosing party as proprietary Information at the time of disclosure and shall
be confirmed as such by written summary mailed to the receiving party within
thirty (30) days of the original disclosure.

 

2. Proprietary Information disclosed by either party to the other hereunder
shall be used by the receiving party solely in connection with the Long Term
Supply Agreement by and between Active Power and GE Zenith for Uninterruptible
Power Supplies, and related Supply Accessories (hereinafter “Products”). The
parties agree for a period of four (4) years equal to the LTSA agreement:

 

  (A) Not to disclose any Proprietary Information to any third party, exercising
the same degree of care with regard to the protection of Proprietary Information
as it uses in protecting and preserving its own confidential and proprietary
information; and

 

  (B) To restrict the dissemination of Proprietary Information to only those
employees and affiliates who have a need to know such information in the
performance of their duties related to the purpose of this Agreement.

 

3. The obligations of each party as set forth in this Agreement shall not apply
to any information which:

 

  (A) Has become generally available in the public domain without breach of this
Agreement;

 

  (B) The receiving party can establish by written documentation was in its
possession prior to disclosure pursuant to this Agreement;

 

  (C) The receiving party can establish by written documentation was
independently developed;

 

  (D) The disclosing party has disclosed to a third party without restriction;

 

  (E) The receiving party has received from a third party who is properly in
possession thereof and who has not received the same through an agreement with
the other party to maintain such information in confidence; or

 

  (F) The receiving party is compelled to release by law or in the course of
litigation by a third party, provided that the receiving party provides the
disclosing party with notice of such compulsion sufficiently in advance of
disclosure so as to provide the disclosing party a reasonable time period to
seek a protective order.

 

4. No rights are granted hereby except as expressly stated nor are any licenses
under any patents or copyrights granted or to be implied by this Agreement.
Neither party’s Proprietary Information may be copied except by express written
permission of said party.

 

5. There are no warranties expressed or implied by this Agreement. Without
limiting the foregoing, neither party nor their licensors make any
representations nor extend any warranties, express or implied, as to the
adequacy or accuracy of Proprietary Information or any other information or data
related thereto, or with respect to the use thereof by the other party.

 

6. In no event, whether as a result of breach of contract, breach of warranty,
tort (including negligence) or otherwise, shall either party or their licensors
be liable for any loss or damage arising out of the other party’s use of
Proprietary Information or any part thereof, and each party agrees to indemnify
the other against any such liability.

 

7. This Agreement shall be construed in accordance with the laws of the
Illinois.

 

8. This Agreement is effective when duly signed by both parties and shall
terminate upon cancellation of the LTSA. The obligations of Paragraph 2 above
shall survive termination. This Agreement contains the entire agreement between
the parties pertaining to the subject matter hereof. No change, modification,
alteration or addition to any provision of this Agreement shall be binding
unless in writing and signed by duly authorized representatives of both parties.

 

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed
by its duly authorized representative.

 

Active Power, Inc.   GE Zenith Controls, Inc. a Wholly Owned Subsidiary of GE
Signature:  

/s/ Sriram Sivaram

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  Signature:  

/s/ Thomas P. Duffy

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Name & Title:   VP of Sales and Marketing   Name & Title:   General Manager of
Sales Date:   3/17/2005   Date:   3/16/2005

 

 

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ATTACHMENT #2

  PROJECT TERMS AND CONDITIONS

 

The sale of any service and products, and the integration thereof, ordered by
the Customer is expressly conditioned upon the terms and conditions contained or
referenced herein. Terms and conditions included in the GE Industrial Systems
(herein called GE) proposal, where not in conflict with the terms included
herein, shall be incorporated by reference. Any additional or different terms
and conditions set forth in the Customer’s purchase order or similar
communication are expressly objected to and will not be binding upon GE unless
specifically agreed to in writing by an authorized GE employee.

 

1. DEFINITIONS

 

PROJECT shall be defined as the sale of products and services, and may
incorporate any one or more of the following:

 

A. INSTALLATION/ MAINTENANCE/ CONSTRUCTION: Any combination of planning,
management, labor, tools and incidental goods to move, install, assemble,
modify, repair, modernize, start-up and/or maintain products.

 

B. FIELD ENGINEERING: Engineering and technical guidance, advice and counsel
based upon GE’s current engineering, manufacturing, installation and operating
practices, as related to work performed by others.

 

C. JOB MANAGEMENT: Any combination of planning, scheduling, monitoring or
selection of crews, as specified in the contract documents.

 

D. ENGINEERING STUDY/ INSPECTION/ TEST: System design and analysis of equipment
or systems by competent, experienced personnel using special techniques,
instruments or devices with the objective of reporting opinions or
recommendations relating to the current condition and future serviceability of
the equipment or system.

 

2. WARRANTY

 

GE warrants to Customer that products and any services furnished hereunder will
be free from defects in material, workmanship and title and will be of the kind
and quality specified in the GE written quotation. The foregoing shall apply
only to failures to meet said warranties (excluding any defects in title) which
appear within one (1) year from installation or eighteen (18) months from the
date of shipment, whichever occurs first; provided, however, that if Customer,
in the course of its regular and usual business, transfers title to or leases
such products (including equipment incorporating such products) to a third
party, such period shall run until one (1) year from such transfer or lease or
eighteen (18) months from shipment by GE, whichever occurs first.

 

GE warrants that ENGINEERING STUDY/ INSPECTION/ TEST performed pursuant this
agreement shall be prepared in a professionally competent manner, however, GE
does not assume responsibility for specific operating results, nor for achieving
desired objectives. This warranty applies only to failures which appear within
one year from the date services are furnished, provided that Customer promptly
notifies GE in writing of such failure. GE shall reperform any such defective
portion of the services provided. If reperformance is not practicable, GE will
furnish, without charge, services in an amount essentially equal to those that,
in GE’s judgment, would have been required for reperformance of the defective
service.

 

In no case does this warranty apply to any failure or nonconformance with
specifications caused by or attributable to any associated or complementary
products not supplied under this contract, nor shall it in any case apply to the
quantity or quality of the product of Customer or the process of manufacture on
which the products are used. The warranty and remedies are conditioned upon (a)
proper storage, installation, use and maintenance, and conformance with any
applicable recommendations of GE, and (b) Customer promptly notifying GE of any
defects and, if required, promptly making the product available for correction.

 

If any product or service fails to meet the foregoing warranties (except title),
GE shall thereupon correct any such failure either, at its option, (i) by
repairing any defective or damaged part or parts of the products, and/or
reperforming any defective service, or (ii) by making available, F.O.B. the GE
plant or other mutually agreed upon point of shipment, any necessary repaired or
replacement parts. If reperformance is not practicable, GE will furnish without
charge services in an amount essentially equal to those that, in the sole
judgment of GE, would have been required for reperformance. Where a failure
cannot be corrected by GE’s reasonable efforts, the parties will negotiate an
equitable adjustment in price.

 

In providing products or renewal parts, GE reserves the right to use refurbished
circuit boards, which shall be warranted in accordance with this article. GE
does not warrant computer hardware, software or products and services obtained
from others but only the warranty of the manufacturer shall apply. GE’s
obligation under this warranty shall terminate immediately upon any modification
of products or software by Customer unless made with the approval of GE.

 

THE PRECEDING PARAGRAPHS SET FORTH THE EXCLUSIVE REMEDIES FOR CLAIMS (EXCEPT AS
TO TITLE) BASED ON DEFECT IN OR FAILURE OF PRODUCTS OR SERVICES, WHETHER THE
CLAIM IS IN CONTRACT, INDEMNITY, WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT
LIABILITY OR OTHERWISE. Upon the expiration of the warranty period, all such
liability shall terminate and Customer shall have a reasonable time, not to
exceed thirty (30) days after the warranty period, to give written notice of any
defects that appeared during the warranty period. EXCEPT AS SET FORTH IN ARTICLE
3, “PATENTS” AND ARTICLE 4, “SOFTWARE WARRANTY”, THE FOREGOING WARRANTIES ARE
EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, WHETHER WRITTEN, ORAL, IMPLIED OR
STATUTORY. NO IMPLIED STATUTORY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
PARTICULAR PURPOSE SHALL APPLY. GE does not warrant any products or services of
others designated by Customer.

 

3. PATENTS

 

Subject to the provisions of this Article, GE warrants that products, services,
or products and services in combination, furnished under this contract shall be
delivered free of any rightful claim of any third party for infringement of any
United States patent. If notified promptly in writing and given authority,
information and assistance, and contingent upon Customer not taking any position
adverse to GE in connection with such claim, GE shall defend, or may settle at
its expense, any suit or proceeding against Customer so far as based on a
claimed infringement which would result in a breach of this warranty and GE
shall pay all damages and costs awarded therein against Customer due to such
breach. In case any product, service or combination thereof is in such suit held
to constitute such an infringement and the use of said product or service is
enjoined, GE shall, at its expense and option, either procure for Customer the
right to continue using said product or service, or replace same with a
non-infringing product or service, or modify same so it becomes non-infringing,
or remove the product or halt the service and refund the purchase price (less
reasonable depreciation for any period of use) and any transportation costs
separately paid by Customer. The foregoing states the entire liability of GE for
patent infringement relating to products, services or any combination thereof.

 

The preceding paragraph shall not apply to any product or service specified by
Customer or manufactured to Customer’s design, or to the use of any product in
combination with products not provided by GE.

 

4. SOFTWARE DEVELOPMENT WARRANTY

 

GE warrants that any software developed by GE under this contract shall conform
to the GE-provided specification pertaining thereto at the time of its shipment.
For a period of ninety (90) days following shipment of software, GE will provide
amendments or alterations to the software that may be required to correct
significant errors present at the time of shipment. GE’s obligation shall be
limited, however, to assembling such amendments and/or alterations into a
package, which includes code on the appropriate medium to enable Customer, at
its expense, to implement said corrections. This warranty is contingent upon
Customer advising GE, in writing, of such errors within such period.

 

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GE does not warrant that operation of the software shall be uninterrupted or
error-free or that it shall meet Customer’s needs. GE shall not be responsible
for any portions of the software that have been modified by Customer, unless
such changes are approved in writing by GE. Customer assumes the responsibility
to take adequate precautions against damages to its operations that could be
caused by defects, interruptions or malfunctions in the services performed by
GE. Any work performed by GE due to difficulties or defects traceable to
Customer errors or software changes shall be billed to Customer at GE’s
then-prevailing standard rates for such services.

 

5. SOFTWARE

 

Unless subject to a separate license or agreement, any software furnished
hereunder whether separate or incorporated with supplied hardware, including any
subsequent updates, is furnished under the following terms and conditions:

 

(a) The software, and any part thereof, is designed for use only on the type
unit on which the software is first installed.

 

(b) No exclusivity of use of the software is transferred to Customer.

 

(c) Software and documentation copyrighted by GE shall not be copied in whole or
in part, but additional copies of software and documentation in printed form may
be obtained from GE or its representatives at GE’s then-standard charges,
subject to applicable import and export laws and regulations. Customer agrees
that any copyright, proprietary, trade secret or similar notices appearing on
and in software will be reproduced and included on and in any modifications and
copies, in whole or in part, of software.

 

(d) The source code for software is not included unless specifically listed as
an item in the GE specification.

 

(e) On occasion, third party licensed software is provided. It will be
identified as such and Customer will be required to complete any sublicense
specified by the software licensor and provided by GE.

 

(f) If a separate software license agreement is required by GE, Customer shall
execute the software license agreement on or before installation, and the
provisions of the separate software license agreement shall supersede the
foregoing subparagraphs to the extent they are inconsistent with such license.

 

6. DELIVERY, TITLE AND RISK OF LOSS

 

Delivery dates are approximate and are based upon prompt receipt of all
necessary information from Customer. Unless otherwise specified by GE, title
shall pass to the Customer when products are placed in the hands of a carrier at
the point of shipment, or on a pro rata basis as services are performed. Risk of
loss or damage shall be retained by GE until the products are delivered to the
Customer’s site, unless otherwise agreed upon by Customer and GE.

 

If any part of the products cannot be shipped when ready due to any cause
referred to in Article 7 “Excusable Delays”, herein, GE may place such products
in storage (which may be at the place of manufacture). In such event, (i) GE
shall notify Customer of the placement of any products in storage, (ii) GE’s
delivery obligations shall be deemed fulfilled and title and all risk of loss or
damage shall thereupon pass to Customer, (iii) any amounts otherwise payable to
GE upon delivery shall be payable upon presentation of GE’s invoices therefore
and its certification as to such cause, (iv) promptly upon submission of GE’s
invoices, Customer shall reimburse GE for all expenses incurred by GE, such as
preparation for and placement into storage, handling, storage, inspection,
preservation and insurance, and (v) when conditions permit and upon payment of
all amounts due hereunder, GE shall assist and cooperate with Customer in any
reasonable manner with respect to the removal of any products placed in storage.

 

7. EXCUSABLE DELAYS

 

GE shall not be liable for delays in delivery or performance, or for failure to
manufacture, deliver or perform, due to (i) a cause beyond its reasonable
control, or (ii) an act of God, act of Customer, prerequisite work by others,
act of civil or military authority, Governmental priority, strike or other labor
disturbance, flood, epidemic, war, riot, transportation delay or shortage, or
(iii) inability on account of a cause beyond the reasonable control of GE to
obtain necessary materials, components, services or facilities. GE will notify
Customer promptly of any material delay excused by this Article and will specify
the revised delivery date as soon as practicable. In the event of any such
delay, there will be no termination and the date of delivery or of performance
shall be extended for a period equal to the time lost by reason of the delay. In
the event GE is delayed by acts of the Customer or by prerequisite work by other
contractors or suppliers of the Customer, GE shall be entitled to an equitable
price adjustment in addition to an extension of the time of performance.

 

8. PAYMENTS AND FINANCIAL CONDITIONS

 

Except as otherwise specified by GE in its quotation, pro rata payments shall
become due as shipments are made. If GE agrees to delay shipments after
completion of any product, payment shall become due on the date when GE is
prepared to make shipment. In the event of any such delay, title shall pass and
products shall be held at Customer’s risk and expense. All payments shall be
made without set-off for claims arising out of other sales by GE. Unless
otherwise agreed, payments shall be made by wire transfer upon receipt of
invoice.

 

Any order for products by Customer shall constitute a representation that
Customer is solvent. In addition, upon GE’s request, Customer will furnish a
written representation concerning its solvency at any time prior to shipment. If
Customer’s financial condition at any time does not, in the judgment of GE,
justify continuance of the work to be performed by GE hereunder on the agreed
terms of payment, GE may require full or partial payment in advance or shall be
entitled to terminate the contract and receive termination charges. In the event
of Customer’s bankruptcy or insolvency or in the event any proceeding is brought
against Customer, voluntarily or involuntarily, under bankruptcy or insolvency
laws, GE shall be entitled to cancel any order then outstanding at any time
during the period allowed for filing claims against the estate and shall receive
reimbursement for its cancellation charges. GE’s rights under this Article are
in addition to all rights available at law or in equity.

 

If Customer fails to fulfill any condition of its payment obligations, GE may
(i) withhold deliveries and suspend performance, or (ii) continue performance if
GE deems it reasonable, or (iii) place products in storage pursuant to the
provisions of Article 6 above. In any event, the costs incurred by GE as a
result of Customer’s non-fulfillment shall be payable by Customer upon
submission of GE’s invoices. GE shall be entitled to an extension of time for
performance of its obligations equaling the period of Customer’s non-fulfillment
whether or not GE elects to suspend performance. If Customer does not rectify
such non-fulfillment promptly upon notice, GE may cancel the agreement and
Customer shall pay GE cancellation charges upon submission of GE’s invoices
therefor.

 

9. DISCLOSURE OF INFORMATION

 

Any information, suggestions or ideas transmitted by Customer to GE in
connection with performance hereunder are not to be regarded as secret or
submitted in confidence except as may be otherwise provided in a writing signed
by a duly authorized GE employee.

 

10. TAXES

 

In addition to any price specified herein, Customer shall pay, or reimburse GE
for, the gross amount of any present or future sales, use, excise, value-added,
or other similar tax applicable to the price, sale or delivery of any products
or services furnished hereunder or to their use by GE or Customer, or Customer
shall furnish GE with evidence of exemption acceptable to the taxing
authorities.

 

11. INDEMNITIES

 

Subject to the provisions of Article 12, “Limitations of Liability”, GE agrees
to indemnify and save harmless Customer from and against any loss, expense or
claim asserted by third parties for damage to third party tangible property, or
for bodily injury, or both, arising out of the performance of this agreement, to
the extent such damage or injury is attributable to the negligence of GE;
provided that Customer gives GE prompt notice of any such

 

10

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claim and all necessary information and assistance so that GE, at its option,
may defend or settle such claim and Customer does not take any adverse position
in connection with such claim. In the event that any such damage or injury is
caused by the joint or concurrent negligence of GE and Customer, the loss,
expense or claim shall be borne by GE and Customer in proportion to their
negligence.

 

12. LIMITATIONS OF LIABILITY

 

(a) Except as provided in Article 3, “Patents”, in no event, whether as a result
of breach of contract, indemnity, warranty, tort (including negligence), strict
liability or otherwise, shall GE’s liability to Customer or its insurers for any
loss or damage arising out of, or resulting from this agreement, or from the
performance or breach thereof, or from the products or services furnished
hereunder, exceed the price of the specific product or service which gives rise
to the claim, and except as to title, any such liability shall terminate upon
the expiration of the warranty period specified in Article 2, “Warranty”. Any
such claim of liability must be timely commenced in a court of competent
jurisdiction in accordance with the applicable statute of limitations, but in no
event later than one year from the termination of the warranty period.

 

(b) In no event, whether as a result of breach of contract, indemnity, warranty,
tort (including negligence), strict liability or otherwise, shall GE be liable
for any special, consequential, incidental or exemplary damages including, but
not limited to, loss of profit or revenues, loss of data, loss of use of the
products or any associated equipment, damage to associated equipment, cost of
capital, cost of substitute products, facilities, services or replacement power,
downtime cost, or claims of customers of the Customer for such damages. If the
products or services being provided by GE will be furnished by the Customer to a
third party by contract or otherwise or relate to a contract between the
Customer and a third party, the Customer shall obtain from such third party a
provision affording GE the protection of this Article.

 

(c) In no event shall GE be liable for any loss or damage whatsoever arising
from its failure to discover or repair latent defects or defects inherent in the
design of products serviced (unless such discovery or repair is normally
discoverable by tests expressly specified in the scope of work under this
contract) or caused by the use of products by the Customer against the advice of
GE. If GE furnishes Customer with advice or other assistance which concerns any
product supplied hereunder or any system or equipment in which any such product
may be installed and which is not required pursuant to this agreement, the
furnishing of such advice or assistance will not subject GE to any liability,
whether in contract, indemnity, warranty, tort (including negligence), strict
liability or otherwise. For the purposes of this Article, the term GE includes
GE subcontractors and suppliers.

 

13. CHANGES, DELETIONS AND EXTRA SERVICES

 

Customer may, by written Change Order, request changes within the general scope
of any services provided. If any such change will result in an increase or
decrease in the cost or time required for the performance of any part of the
project under this Agreement, there shall be an equitable adjustment to the
contract price or in the time for performance, or both. GE shall not be
obligated to proceed with the changed or extra services until: (1) the value of
such changes or extra services and the effect on the schedule of completion of
the services have been agreed upon and (2) the Change Order has been signed by
GE and Customer.

 

Upon submittal of a written request by the Customer to GE to perform extra
services or to alter, add to, or deduct from the services provided, GE shall
submit to the Customer a written estimate of any adjustment to the scope of
services, the construction schedule, the contract price, or any adjustments to
the warranty or guarantee obligations or any other impacts which would result
from the change. If the Customer elects to proceed with the changed services,
Customer shall issue a Change Order to GE authorizing such adjustments as agreed
to by the Customer and GE. The price of any extra or change shall be determined
in one or more of the following ways: (1) by mutually agreed firm lump sum
price, or (2) by unit prices specified in the contract or agreed upon, or (3) by
cost and negotiated percentage of cost or fixed fee.

 

At any time and with prior consent of Customer in case of material changes, GE
reserves the right to make changes in design, construction, arrangement or
products; provided such changes do not result in any increase in the contract
price or time for performance or alter the performance guarantees or warranty
obligations set forth herein. Customer shall not unreasonably withhold its
consent in case of material changes.

 

14. CONDITIONS AFFECTING THE SERVICES

 

Customer shall advise GE of the location and nature of any known unusual
conditions which would affect the services, including but not limited to,
underground obstructions, unstable soil conditions and the suspected presence of
hazardous materials that could not otherwise be discerned by GE during a visual
inspection of the site.

 

GE shall be entitled to assume that any Site data furnished by Customer is
accurate and complete. GE shall promptly notify Customer of (1) any conditions
at the Site which materially differ from those indicated in the information
furnished by Customer, (2) any previously unknown physical conditions at the
Site of an unusual nature, not revealed by previous investigations and differing
from those ordinarily encountered in the type of services provided for in this
Agreement, (3) the suspected presence of any toxic substances, hazardous
substances, or hazardous wastes (as such terms may be defined in any federal,
state or local statute, ordinance or regulations) which require special handling
and/or disposal, or (4) the presence of archaeological remains. If such
conditions cause an increase in GE’s cost or time for performance of any part of
this agreement, GE shall be entitled to an equitable adjustment in the contract
price and an extension in the time for performance.

 

If suspected toxic substances, hazardous substances, or hazardous wastes are
present at the Site, GE shall not be obligated to commence or continue services
until Customer causes such substances to be removed or remediated. GE shall be
entitled to an appropriate equitable adjustment to the contract price and/or
extension of the time for performance to the extent GE’s performance is
adversely impacted by the presence of such substances.

 

15. INSURANCE

 

Subject to Article 11, “Indemnities” and Article 12, “Limitations of Liability”,
GE shall maintain for its protection such insurance in coverage and limits set
forth below for claims which may arise out of or result from GE’s performance
under the contract. Upon Customer request, GE will furnish a valid certificate
of insurance.

 

Coverage

--------------------------------------------------------------------------------

  

Limits of Liability

--------------------------------------------------------------------------------

Worker’s Compensation

   Statutory

Employer’s Liability

   $2,500,000

Comprehensive General Liability

   $2,500,000 Combined Single Limit per Occurrence

Comprehensive Automobile Liability

   $2,500,000 Combined Single Limit per Occurrence

 

16. RELEASE OF LIENS

 

Upon completion of the services and receipt of final payment for the services,
including extras and changes, GE shall execute a release of liens applicable to
any and all work performed pursuant to this Contract, provided that Customer has
paid all amounts due and owing to GE under the contract.

 

17. DIAGNOSTIC SERVICES

 

Under these terms and conditions GE may, at its discretion, connect remotely to
Customer’s equipment in order to facilitate start-up, warranty services, and
existing service contracts for equipment GE provided to Customer under a
separate agreement.

 

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GE and Customer agree that the existing business relationship between GE and
Customer is adequate consideration for the obligations of GE and Customer under
this Agreement. During the Term of this Agreement, GE may use remote monitoring
and diagnostic services through an internet or phone connection to Customer’s
system allowing direct access to the covered equipment. The intent is to provide
the GE a view of signals, data and parameters that may be used to evaluate and
assess equipment conditions so that appropriate actions can be recommended and
implemented. To ensure system security, Customer will control the level of
connection access.

 

18. GENERAL

 

Any products delivered by GE hereunder will be produced in compliance with the
Fair Labor Standards Act of 1938, as amended and applicable. GE will comply with
applicable federal, state and local laws and regulations as of the date of this
agreement which relate to (i) nonsegregated facilities and equal employment
opportunity (including the seven paragraphs appearing in Section 202 of
Executive Order 11246, as amended), (ii) the Occupational Safety and Health Act
of 1970 (OSHA), as amended, (iii) workers’ compensation, and (iii) the
production in GE’s manufacturing facilities of products furnished hereunder.
Price, including delivery, will be equitably adjusted to compensate GE for the
cost of compliance with any other laws or regulations.

 

Customer will not directly or indirectly solicit for employment nor offer
employment to, nor accept from others services by, an employee of GE during the
performance of any services by said employee and for a period of one (1) year
thereafter.

 

Any GE product or service provided hereunder shall be considered a “commercial
item” as defined in FAR PART 2, 2.101 Definitions and in accordance with FAR
52.244-6. If the reasonableness of the price cannot be established through the
presence of adequate price competition or price elaboration, if cost or pricing
data should be required for any other reason, or if the service cannot be
considered a “commercial item”, GE reserves the right to withdraw this proposal
without penalty

 

Unless otherwise specified by GE, any quotation of GE shall expire thirty (30)
days from the date of issuance and may be modified or withdrawn at any time
prior to the date of Customer’s order.

 

Customer may terminate an order only upon paying GE its termination charges
determined in accordance with GE’s standard accounting practices upon submission
of GE’s invoices therefor. The termination charge will be equal to twenty-five
percent (25%) of the net selling price, plus engineering and project management
time expended at the published rate in effect, plus labor and materials at GE’s
cost incurred. Termination of an order shall not relieve either party of any
obligation arising out of work performed prior to termination.

 

GE reserves the right to subcontract any of the work to one or more
subcontractors. The delegation or assignment by either party of any or all of
its duties or rights hereunder without the other party’s prior written consent
shall be void, except that GE may, without prior written consent of the
Customer, assign this agreement to a successor in interest by merger, by
operation of law, by purchase, or otherwise, or to any entity at least 50% of
whose stock or other equity interest is beneficially owned, directly or
indirectly, by GE or any affiliate of GE.

 

Any representation, warranty, course of dealing or trade usage not contained or
referenced herein will not be binding on GE. These Project Terms and Conditions
contain the entire and only agreement between the Customer and GE with respect
to terms and conditions and supersede and cancel all previous negotiations,
agreements, commitments, representations and writings in respect thereto. The
Project Terms and Conditions may not be amended, supplemented, changed or
modified in any manner, orally or otherwise, except by an instrument in writing
of concurrent or subsequent date, signed by a duly authorized representative of
each party.

 

The validity, performance and all matters relating to the interpretation and
effect of this agreement and any amendment hereto shall be governed by the law
of the State of New York, excluding its conflict of law rules. The invalidity,
in whole or part, of any of the articles or paragraphs in these Project Terms
and Conditions will not affect the remainder of such article or paragraph or any
other article or paragraph.

 

The provisions of this agreement are for the benefit of the parties hereto and
not for any other person except as specifically provided herein.

 

19. SITE ACCESS

 

Neither party shall require (i) waivers or releases of any personal rights or
(ii) execution of documents which conflict with the terms of this agreement,
from employees, representatives or customers of the other in connection with
visits to its premises and both parties agree that no such releases, waivers or
documents shall be pleaded by them or third persons in any action or proceeding.

 

20. RIDER FOR NUCLEAR APPLICATIONS

 

Products and services sold hereunder are not to be used in connection with any
nuclear facility or activity. For Nuclear Applications, the provisions of
GETC2003-Nuclear entitled “Rider for Nuclear Applications” shall apply.

 

21. RIDER FOR EXPORT SALES

 

For export sales, the provisions of GETC2003-Export entitled “Rider for Export
Sales” shall apply.

 

22. RIDER FOR PCB SERVICES

 

For PCB Services, the provisions of GETC2003-PCB entitled “Supplemental
Conditions for PCB Services” shall apply.

 

12

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ATTACHMENT #3 – PRICE ESCALATION

 

[****]

 

--------------------------------------------------------------------------------

** Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**

 

13

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Exhibit A – Price List

 

[****]

 

--------------------------------------------------------------------------------

** Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**

 

14

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Exhibit B – Product Safety Approvals

 

The UPS shall be designed, manufactured and tested in accordance with the
applicable portions of the following standards:

 

  A. UL 1778 - UPS Standard.

 

  B. NFPA 70 - National Electrical Code.

 

  C. IEEE 446 - Recommended Practice for Standby Power Systems.

 

  D. IEEE C62.41 - Recommended Practice for Surge Withstandability.

 

  E. NEMA PE 1 - Uninterruptible Power Systems.

 

  F. OSHA – Occupational Safety and Health Association

 

  G. FCC Class A (optional)

 

15

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Exhibit C – Delivery Lead Times

 

[****]

 

--------------------------------------------------------------------------------

** Confidential treatment has been requested for the portions of this agreement
marked by asterisks. Omitted material for which confidential treatment has been
requested has been filed separately with the Securities and Exchange
Commission.**

 

16

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Exhibit C1 – GE Factory and Service Locations

 

For the purposes of this agreement, the GE Ex-Works location for shipping UPS
products will be the following GE facility:

 

GE Consumer & Industrial

2501 Pecan Street

Bonham, Texas 75418

 

For purposes of this agreement, the GE headquarter location for UPS service will
be the following GE facility:

 

GE Consumer & Industrial

2500 Discovery Blvd.

Rockwall, Texas 75032

 

17

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Exhibit C2 – Service and Warranty Support Process

 

All service and warranty support calls should be made to our 7x24 call center
number.

 

18

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Exhibit C3 – GE Contact and Escalation Process

 

The following are the key GE Contacts:

 

Commercial/Sales

 

Sales Manager (West)

Sales Manager (North)

Sales Manager (South)

General Manager of Sales

 

Product/Operations Support

 

Fulfillment Leader

Commercial Leader

Product Manager

 

Emergency and Warranty Service

 

19