Exhibit 10.1

 

LOGO [g41014img003.jpg]    PURCHASE ORDER       THIS NUMBER MUST APPEAR ON      
   INVOICES, SHIPPING PAPERS, BOXES,          CRATES AND ALL CORRESPONDENCE.   
      PURCHASE ORDER NO. 51525-Pipe-003-00    Cheniere Creole Trail Pipeline,
L.P.         

717 Texas Avenue, Suite 3100

Houston, TX 77002

     

INTERNAL PO#: 99100776 OP

 

M.R. #:                         Field MR#

            DATE ORDERED:  7/31/2006            

REVISION ORDER NO.

51525-Pipe-003-00

   Date: Minor, J.B.    918-481-4168    918-481-4538       PAGE 1 OF 9     BUYER
   PHONE    FAX      

DATE DELIVERY REQUIRED AT “SHIP TO”

6/30/2007

 

SELLER:

ILVA S.p.A.

Viale Certosa, 249

Milano 20151

 

SHIP TO:

Bayou Companies, LLC

New Iberia, LA

 

                         
  COST ACCT. DISTRIBUTION:
99525500 CONTACT/PHONE NO:    SHIPPING TERMS:    SHIPPING METHOD:   
PAYMENT TERMS:    FINAL SHIPPING POINT:       PROMISE SHIP DATE: April Schatte
(713) 961-5858    See Below    Ocean Frt.    Installment Terms         
6/30/2007 LINE    QTY    U/M   

PART #

  

DESCRIPTION

  

TAG#

  

REFERENCE

   AREA/LOC.    UNIT PRICE    EXTENSION 1.000    16,000    FT                $
251.07    $ 4,017,120.00         

.

Pipeline, 42” OD x 0.888”WT X-70, 14 - 16 Mil FBE Outer 1.5 mils internal flow
coating, per the specifications referenced in notes, nominal joint length 40’

                       

.

The following is a breakout of unit cost per foot.

.

                        Bare Pipe: $205.09                         FBE Coating:
$12.40                         ID Flow Efficiency: $6.17                        

FRT. New Iberia: $27.41

.

                        Segment 1 - Marsh Construction (Item 2)               
         Class III               GRAND TOTAL:      CONTINUED LOGO
[g41014image004.jpg]       SIGNATURE: /s/                                       
                Date: 07/08/06   

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LOGO [g41014img003.jpg]

 LOGO 

   PURCHASE ORDER    PURCHASE ORDER NO. 51525-Pipe-003-00    Cheniere Creole
Trail Pipeline, L.P.    INTERNAL PO#: 99100776 OP    717 Texas Avenue, Suite
3100    M.R. #:    Field MR#    Houston, TX 77002                   DATE
ORDERED: 7/31/2006         

REVISION ORDER NO.

51525-Pipe-003-00

   Date:          PAGE 2 OF 9

 

LINE    QTY    U/M   

PART #

  

DESCRIPTION

   TAG#    REFERENCE    AREA/LOC.    UNIT PRICE    EXTENSION 2.000    2,000   
FT    .             244.71    $ 489,420.00          Pipe, Line, 42” OD x
0.864”WT X-70, 14 - 16 mil FBE Outer 1.5 mils internal flow coating, per the
specifications referenced in notes, nominal joint length 40’                  
      .                         The following is a breakout of unit cost per
foot.                         .                         Bare Pipe: $199.65      
                  FBE Coating: $12.20                         ID Flow
Efficiency: $6.17                         FRT. New Iberia: $26.69               
         .                         Segment 2 - Lake/Marsh Construction (Item 3)
                        Class III                3.000    729,700    FT    .   
         176.56      $128,835,832.00          Pipe, Line, 42” OD x 0.600”WT
X-70, 14 - 16 mil FBE Outer 1.5 mils internal flow coating, per the
specifications referenced in notes, nominal joint length 40’                  
      .                         The following is a breakout of unit cost per
foot.                         .                         Bare Pipe: $139.54      
                  FBE Coating: $12.20                         ID Flow
Efficiency: $6.17                         FRT. New Iberia: $18.65               
         .                         Segment 3 - Land Construction (Item 1)      
                              GRAND TOTAL:      CONTINUED

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

LOGO [g41014img003.jpg]    PURCHASE ORDER   
PURCHASE ORDER NO. 51525-Pipe-003-00    Cheniere Creole Trail Pipeline, L.P.   
INTERNAL PO#: 99100776 OP   

717 Texas Avenue, Suite 3100

Houston, TX 77002

  

 

M.R. #:

   Field MR#       DATE ORDERED: 7/31/2006         

REVISION ORDER NO.

51525-Pipe-003-00

   Date:          PAGE 3 OF 9

 

LINE

   QTY    U/M   

PART #

  

DESCRIPTION

   TAG#    REFERENCE    AREA/LOC.    UNIT PRICE    EXTENSION         

Class I

.

              

4.000

   11,700    FT                   176.56    $ 2,065,752.00         

.

Pipe, Line, 42” OD x 0.600” WT X-70, 14 - 16 mil FBE Outer 1.5 mils internal
flow coating, per the specifications referenced in notes, nominal joint length
40’.

.

                       

The following is a breakout of unit cost per foot.

.

                        Bare Pipe: $139.54                         FBE Coating:
$12.20                         ID Flow Efficiency: $6.17                        

FRT. New Iberia: $18.65

.

                        Segment 3 - Land Construction (Item 2)                  
      Class I                         .               

5.000

   177,400    FT                207.65      $36,837,110.00         

.

Pipe, Line, 42” OD x 0.720”WT

                       

X-70, 14 - 16 mil FBE Outer 1.5 mils internal flow coating, per the
specifications referenced in notes, nominal joint length 40’

.

                       

The following is a breakout of unit cost per foot.

.

            GRAND TOTAL:      CONTINUED          Bare Pipe: $166.96            
            FBE Coating: $12.20                         ID Flow Efficiency:
$6.17                        

FRT. New Iberia: $22.32

.

                        Segment 3 - Land Construction (Item 3)                  
     

Class II

.

              

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

LOGO [g41014img003.jpg]    PURCHASE ORDER   
PURCHASE ORDER NO. 51525-Pipe-003-00    Cheniere Creole Trail Pipeline, L.P.   
INTERNAL PO#: 99100776 OP   

717 Texas Avenue, Suite 3100

Houston, TX 77002

   M.R. #:    Field MR#       DATE ORDERED: 7/31/2006         

REVISION ORDER NO.

51525-Pipe-003-00

   Date:          PAGE 4 OF 9

 

LINE

   QTY    U/M   

PART #

  

DESCRIPTION

   TAG#    REFERENCE    AREA/LOC.    UNIT PRICE    EXTENSION

6.000

   11,700    FT    .             207.65    $ 2,429,505.00          Pipe, Line,
42” OD x 0.720”WT X-70, 14 - 16 mil FBE Outer 1.5 mils internal flow coating,
per the specifications referenced in notes, nominal joint length 40’            
            .                         The following is a breakout of unit cost
per foot.                         .                         Bare Pipe: $166.96
                        FBE Coating: $12.20                         ID Flow
Efficiency: $6.17                         FRT. New Iberia: $22.32               
         .                         Segment 3 - Land Construction (Item 4)      
                  Class II                         .               

7.000

   4,200    FT    .             244.71    $ 1,027,782.00         

Pipe, Line, 42” OD x 0.864”WT X-70, 14 - 16 mil FBE Outer 1.5 mils internal flow
coating, per the specifications referenced in notes, nominal joint length 40’

.

                                    GRAND TOTAL:      CONTINUED

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

LOGO [g41014img003.jpg]    PURCHASE ORDER   
PURCHASE ORDER NO. 51525-Pipe-003-00    Cheniere Creole Trail Pipeline, L.P.   
INTERNAL PO#: 99100776 OP   

717 Texas Avenue, Suite 3100

Houston, TX 77002

   M.R. #:    Field MR#       DATE ORDERED: 7/31/2006         

REVISION ORDER NO.

51525-Pipe-003-00

   Date:          PAGE 5 OF 9

 

LINE

   QTY    U/M   

PART #

  

DESCRIPTION

   TAG#    REFERENCE    AREA/LOC.    UNIT PRICE    EXTENSION          .         
              

The following is a breakout of unit cost

per foot.

                        .                         Bare Pipe: $199.65            
            FBE Coating: $12.20                         ID Flow Efficiency:
$6.17                         FRT. New Iberia: $26.69                         .
                        Segment 3 - Land Construction (Item 5)                  
      Class III                         .                         .            
            Notes to Seller:                        

1.        Pipe shall be manufactured in accordance and shall comply with the
following Buyer specifications which are incorporated into this Purchase Order
by reference:

                       

.       

                       

(a)       API 5L X70 and Specification 51520-P-003, Submerged Arc Welded Line
Pipe Longitudinal Seam, Rev. 0 dated 02/24/06,

                       

.       

                       

(b)       Specification 51520-P-020, Yard Applied Pipe Coating, Rev. 0 dated
02/27/06,

                       

.       

                       

(c)       Specification 51520-P-021, Internal Coating of Line Pipe, Rev. 0 dated
02/27/06,

                       

.       

                       

(d)       Specification 51520-P-050, Handling, Storage and Shipping of Pipe,
Rev. 0 dated 03/01/06, and

                       

.       

                       

(e)       Technical Evaluation for Pipe and Coating, Document 51520-TE-001 Rev.
5 dated June 14, 2006.

                                       GRAND TOTAL:    CONTINUED

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

LOGO [g41014img003.jpg]    PURCHASE ORDER   
PURCHASE ORDER NO. 51525-Pipe-003-00    Cheniere Creole Trail Pipeline, L.P.   
INTERNAL PO#: 99100776 OP   

717 Texas Avenue, Suite 3100

Houston, TX 77002

   M.R. #:    Field MR#       DATE ORDERED: 7/31/2006         

REVISION ORDER NO.

51525-Pipe-003-00

   Date:          PAGE 6 OF 9

 

LINE

   QTY    U/M   

PART #

  

DESCRIPTION

   TAG#    REFERENCE    AREA/LOC.    UNIT PRICE    EXTENSION         

.       

2.        Pipe shall be produced in Seller’s pipe mill located in Taranto,
Italy, and coated by its subcontractor, Bayou Companies, at their facility in
New Iberia, Louisiana. Pre-production meetings are tentatively scheduled for
late September 2006 in Taranto and New Iberia.

.       

                       

3.        Pipe shall be produced in lots in accordance with the following
production and delivery schedule:

.       

                       

Lot 1:       Shall consist of Line Item #2, and shall be produced March 1, 2007,
through April 15, 2007, and delivered by June 30, 2007.

.          

                       

Lot 2:        Shall consist of Line Item #1, and shall be produced April 15,
2007, through April 30, 2007, and delivered by July 15, 2007.

.          

                       

Lots 3 to 6:          Shall consist of Line Items #3 through #7, and shall be
produced in lots of approximately 20,000 tons per month during May 1, 2007,
through November 30, 2007, excluding Seller’s scheduled annual maintenance
during August. Delivery of such lots shall commence in June 30, 2007, and all
pipe shall be delivered by January 31, 2008.

.                     

                       

4.        In the event Buyer terminates this Purchase Order for convenience in
accordance with Section 15 of Buyer’s Standard Terms and Conditions, Buyer shall
pay Seller the following cancellation charges, which charges shall apply on a
per lot basis unless otherwise noted:

.       

                       

(a)       After the parties’ execution of this Purchase Order but

            GRAND TOTAL:    CONTINUED

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LOGO [g41014img003.jpg]    PURCHASE ORDER   
PURCHASE ORDER NO. 51525-Pipe-003-00    Cheniere Creole Trail Pipeline, L.P.   
INTERNAL PO#: 99100776 OP   

717 Texas Avenue, Suite 3100

Houston, TX 77002

   M.R. #:    Field MR#       DATE ORDERED: 7/31/2006         

REVISION ORDER NO.

51525-Pipe-003-00

   Date:          PAGE 7 OF 9

 

LINE

  QTY   U/M  

PART #

 

DESCRIPTION

  TAG#   REFERENCE   AREA/LOC.   UNIT PRICE   EXTENSION      

before steel pouring of Lot 1:

.

  $500,000 flat fee*                

(b)      After steel pouring but before plate rolling:

.

  40% of FOB (Taranto, Italy) bare pipe value                

(c)      After plate rolling but before pipe forming:

.

  70% of FOB (Taranto, Italy) bare pipe value                

(d)      After pipe forming but before pipe shipment:

.

  100% of FOB (Taranto, Italy) bare pipe value                

(e)    After shipment of the lot:

.

  Cancellation not accepted                

                       

*  Such charges shall only apply on a one time basis.

.   

               

5.        Seller shall invoice Buyer based on the following payment methods
which payments shall apply on a per lot basis:

.       

               

Payment 1: Milestone payment of 100% of DDP bare pipe value New Iberia,
Louisiana upon tendering of such pipe for shipment and issuance of a bill of
lading therefore.

.

               

Payment 2: Earned value progress payments on a monthly basis for coating
services completed the previous month and upon submission to Buyer of the tally
list of footage completed, provided that prior to final payment being due
hereunder for such lot, Seller shall provide copies of mill test records to
Buyer.

.

               

Buyer shall make payments of all undisputed amounts via wire transfer within
thirty (30) days from receipt of an invoice submitted in accordance with this
Purchase Order, including all documentation supporting provision of the goods
and services.

                          GRAND TOTAL:   CONTINUED

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LOGO [g41014img003.jpg]    PURCHASE ORDER   
PURCHASE ORDER NO. 51525-Pipe-003-00    Cheniere Creole Trail Pipeline, L.P.   
INTERNAL PO#: 99100776 OP   

717 Texas Avenue, Suite 3100

Houston, TX 77002

   M.R. #:    Field MR#       DATE ORDERED: 7/31/2006         

REVISION ORDER NO.

51525-Pipe-003-00

   Date:          PAGE 8 OF 9

 

LINE

   QTY    U/M   

PART #

  

DESCRIPTION

   TAG#    REFERENCE    AREA/LOC.    UNIT PRICE    EXTENSION         

.       

6.     Within ten (10) days following execution of this Purchase Order, Buyer
shall deliver to Seller a standby letter of credit issued from HSBC Bank USA, NA
in the form of Attachment B, naming Seller as beneficiary, in the amount of
fifty percent (50%) of the grand total Purchase Order price. Seller shall have
the right to draw down on or collect against such letter of credit upon Seller’s
demand in the event of the following: (a) Buyer’s failure to pay undisputed
amounts due hereunder, (b) Buyer has received at least five (5) days written
notice from Seller stating Seller’s intent to draw against the letter of credit
and the amount to be drawn, and (c) Buyer has failed to cure such failure to pay
within such five (5) day period. The amount drawn on the Letter of Credit shall
not be greater than the amount that Seller, at the time of the drawing,
reasonably estimates is owed under the Purchase Order for undisputed payments.
Once the value of the goods and services paid by Buyer hereunder exceeds the
value of the letter of credit, Seller shall, as a material obligation under this
Purchase Order and immediately upon receipt of such payment, submit a notice of
reduction to the issuing bank to reduce the amount of the letter of credit by
one hundred percent (100%) of any subsequent payment by Buyer hereunder. Seller
shall attach a copy of an electronic funds transfer transmittal to the notice of
reduction, evidencing the amount of the subsequent payment and the corresponding
applicable reduction. In the event Seller fails to submit a notice of reduction
to the issuing bank in accordance with this paragraph: (i) no further

                                    GRAND TOTAL:    CONTINUED

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LOGO [g41014img003.jpg]    PURCHASE ORDER   
PURCHASE ORDER NO. 51525-Pipe-003-00    Cheniere Creole Trail Pipeline, L.P.   
INTERNAL PO#: 99100776 OP    717 Texas Avenue, Suite 3100    M.R. #:   
Field MR#    Houston, TX 77002    DATE ORDERED: 7/31/2006         

REVISION ORDER NO.

51525-Pipe-003-00

   Date:          PAGE 9 OF 9

 

LINE

   QTY    U/M   

PART #

  

DESCRIPTION

   TAG#    REFERENCE    AREA/LOC.    UNIT PRICE    EXTENSION         

Order until such non-compliance is cured and (ii) Buyer may seek and obtain
specific performance or interlocutory mandatory injunctive relief therefore in
an appropriate court of jurisdiction without the posting of a bond; it being
agreed by Seller that such relief may be necessary to avoid irreparable harm to
Buyer.

                        .                        

7.        All prices are in U.S. dollars.

                        .                        

8.        Delivery Terms are DDP New Iberia, Louisiana, loaded on Buyer’s trucks
at Bayou Companies (after coating has been applied to pipe).

                        .                        

9.        Seller data, invoices and notices should reference the Purchase Order
Number and be sent to the following address:

                        .                        

Cheniere Creole Trail Pipeline Company, L.P.

Attn: Keith Teague (713) 265-0228

717 Texas Avenue, Suite 3100

Houston, TX 77002

                        .                        

10.      Buyer’s Standard Terms and Conditions are attached and shall apply to
this Purchase Order and are incorporated herein by reference.

                        .                        

11.      This is a confirming Purchase Order by Keith Teague to April Schatte.

                                       ORDER TOTAL:    175,702,521.00 USD      
                  TAX:    .00 USD                         GRAND TOTAL:   
175,702,521.00 USD

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

Execution Copy

THIS PURCHASE ORDER IS GOVERNED BY THE FOLLOWING

TERMS AND CONDITIONS

1. OFFER - This Purchase Order and its attachments, if any, constitute Buyer’s
offer to purchase from Seller the goods and services described herein. Buyer’s
offer is conditioned upon Seller’s acceptance of each of the terms and
conditions of this Purchase Order. Any modification of any term and condition by
Seller or any additional or different term and condition proposed by Seller
shall constitute a counter offer and shall not be binding on Buyer until
specifically accepted by Buyer in writing.

2. ACCEPTANCE - Acceptance by Seller of this offer to purchase shall occur at
the time (a) Buyer receives a written acknowledgment of Seller’s acceptance,
which may include issuance of an invoice in accordance with Section 15,
(b) Buyer is deemed to have accepted this offer as set forth below, or (c) when
Seller ships the first lot of the goods or commences performance of the services
ordered hereunder, whichever occurs first. In the event Seller fails to provide
Buyer with a written acknowledgment of acceptance (including issuance of an
invoice in accordance with Section 15) or notice of rejection within fifteen
(15) days from receipt of Buyer’s offer, and unless Seller requests modification
of or additional or different terms or conditions than those expressed herein
within that same fifteen (15) day period, Buyer and Seller hereby agree that
Seller shall be deemed to accept this offer, and the terms and conditions of
this Purchase Order shall apply in their entirety as written.

3. MODIFICATIONS - Modifications to this Purchase Order shall become part of the
Purchase Order when confirmed in writing by Buyer and accepted by Seller.

4. PRICE - The prices included on the face of this Purchase Order are firm and
fixed unless otherwise agreed in writing by Buyer. Buyer shall receive the
benefit of any general reductions in Seller’s prices prior to delivery.

5. QUANTITY- Buyer shall be obligated to purchase and shall accept only the
quantity of goods described herein and any goods received in excess thereof or
substituted by Seller may be returned to Seller at Seller’s risk and expense.
Acceptable tolerances for the quantities of goods and services ordered by Buyer
in this Purchase Order are – 0, + 0.5.

6. EXPEDITING AND INSPECTION - Seller shall provide to Buyer and its agents and
representatives with any information pertinent to this Purchase Order and shall
allow Buyer and its agents and representatives to have access to any production
facility in order to witness the progress of the work and inspect the materials
being used. Buyer and its agents and representatives shall have the right to
inspect each item when completed whether paid for or not by Buyer. Such
inspections shall be at Buyer’s cost and shall not unduly interfere with the
normal operations of Seller. Neither Buyer’s inspection nor failure to inspect
shall relieve Seller of its obligations hereunder. Goods and services may be
rejected by Buyer if they fail to meet the terms of this Purchase Order, and any
such goods shall be returned to Seller at Seller’s cost.

7. GENERAL WARRANTY - In addition to the implied warranties under the Uniform
Commercial Code, Seller expressly represents and warrants to Buyer that all
goods and services furnished under this Purchase Order shall (a) conform to the
specifications and other requirements furnished by Buyer, (b) be new and of
merchantable quality, (c) be of good material and workmanship, (d) be free from
any defects in materials, workmanship and design, (e) meet standard industry
practices and procedures, (f) are manufactured, produced and/or performed in
compliance with all Applicable Law, and (g) be free and clear of any security
interests, liens or other encumbrances, and Seller has merchantable title
thereto. The representations and warranties in this Section 7 and in Section 8
shall survive the termination or expiration of this Purchase Order for whatever
reason.

8. DEFECTS - If any goods or services furnished hereunder do not conform to the
warranties set forth in Section 7, Seller shall promptly repair or replace all
such goods and services upon notification by Buyer within the later of eighteen
(18) months from the date of shipment or twelve (12) months from the date of
hydrostatic testing, free of cost to Buyer. At Buyer’s option, defective goods
may be repaired or replaced by Seller at Buyer’s facility or wherever the goods
are located, or may be returned to Seller’s facility or to an authorized repair
center, all at Seller’s expense. In the event of Seller’s failure to correct or
replace goods and services or diligently initiate the correction and replacement
thereof within five (5) business days of Buyer’s notice to Seller, Buyer may
correct or replace such goods and services and charge Seller all costs thereof
or collect on the letter of credit subject to Section 31. Notwithstanding the
foregoing, if any non-conformity with a warranty materially affects the
operation or use of any of the goods or the project or presents an imminent
threat to the safety or health of any person or entity and Buyer knows of such
non-conformity, Buyer may, at its option, correct or replace such goods or
services without giving Seller notice of such non-conformity, and Seller shall
be responsible and liable to Buyer for all costs incurred by Buyer subject to
Section 31. Such correction of work obligation, together with all other service
warranties of Seller, shall extend to Buyer, its successors and assigns.

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

9. INDEMNITY - SELLER SHALL ASSUME THE RISK OF AND RELEASE, DEFEND, INDEMNIFY
AND HOLD HARMLESS BUYER, ITS REPRESENTATIVES, OFFICERS, AGENTS, EMPLOYEES,
AFFILIATES, ASSIGNS, SHAREHOLDERS, CLIENTS, AND CUSTOMERS (“BUYER INDEMNITEES”)
FROM AND AGAINST ALL LOSS, DAMAGE, LIABILITY, COST AND EXPENSE (INCLUDING
REASONABLE ATTORNEYS’ FEES) ARISING OUT OF OR RELATING TO ANY INJURY (INCLUDING
DEATH) TO ANY PERSON OR DAMAGE TO ANY PROPERTY RESULTING FROM OR IN ANY WAY
CONNECTED WITH THE PERFORMANCE OR NON-PERFORMANCE OF THIS PURCHASE ORDER OR THE
GOODS OR SERVICES FURNISHED HEREUNDER BUT ONLY TO THE EXTENT OF THE NEGLIGENCE
OR WILLFUL MISCONDUCT OF SELLER OR ANY SUBCONTRACTOR OR ANYONE DIRECTLY OR
INDIRECTLY EMPLOYED BY ANY OF THEM OR ANYONE FOR WHOSE ACTS THEY MAY BE LIABLE.
THE RELEASE, INDEMNITY, DEFENSE AND HOLD HARMLESS OBLIGATIONS IN THIS SECTION 9
SHALL APPLY REGARDLESS OF WHETHER ANY OF THE BUYER INDEMNITEES WERE CONCURRENTLY
NEGLIGENT, IT BEING AGREED THAT IN THIS EVENT THE PARTIES’ RESPECTIVE LIABILITY
OR RESPONSIBILITY FOR LOSSES, DAMAGES, LIABILITY, COSTS AND EXPENSES SHALL BE
DETERMINED IN ACCORDANCE WITH THE PRINCIPLES OF COMPARATIVE NEGLIGENCE. Seller
agrees, upon receipt of notification from Buyer, to promptly assume full
responsibility for the defense of any such suit or proceeding; provided,
however, that Buyer may be represented by and actively participate through its
own counsel in any such suit or proceeding. This indemnification shall survive
the termination or expiration of this Purchase Order for whatever reason.

10. DELIVERY - Seller shall prepare the goods sold hereunder for delivery to the
destination specified within the time period specified on the face of the
Purchase Order. If Seller does not prepare the goods within the applicable time
period, Buyer may require Seller to deliver the goods by the most expeditious
means available and Seller shall pay for that portion of the transportation
charge which exceeds the cost of the method which would have otherwise been
used.

11. PACKING - Seller shall properly package the goods in order to insure
adequate protection against damage during shipment. Partial shipments are
permitted as set forth herein. Such partial shipments shall be accompanied by
identifying documents but shall not be interpreted to make the obligations of
Seller severable. Itemized packing lists must accompany each shipment. Buyer’s
count shall be accepted as final and conclusive on shipments not accompanied by
Seller’s itemized packing list. Each shipment shall be properly labeled as
indicated in the Purchase Order. No fees for packaging, packing, crating,
freight or other costs will be paid by Buyer unless expressly stated in this
Purchase Order. Seller shall be solely liable for damaged goods resulting from
improper packing or marking.

12. HAZARDOUS MATERIAL – Seller warrants and represents that none of the goods
furnished hereunder are subject to Applicable Law relating to hazardous or toxic
substances; or when disposed of, to Applicable Law governing hazardous wastes,
or to any other applicable environmental or safety and health regulations.
Seller shall furnish, without limitation, all appropriate and required shipping,
handling and use certifications, instructions, labeling, lists and
representations for shipping, safety, handling, exposure and disposal.

13. INVOICING - Seller shall invoice Buyer for all goods and services sold
hereunder. Each invoice shall specify Buyer’s Purchase Order number and date,
and the specific goods and services being invoiced. Invoices shall be delivered
to Buyer, along with supporting documentation required by this Purchase Order
and appropriate lien and claim waivers in such forms to be provided by Buyer, in
accordance with the project milestones set forth on the face of the Purchase
Order. All invoices must be mailed within one year after the relevant goods are
shipped. Any legal action regarding payment of an invoice must be commenced by
Seller within one year after the date the invoice was mailed or Seller’s right
to payment shall be deemed conclusively waived. Payment terms specifically
applicable to this Purchase Order are set forth on the face of this Purchase
Order.

14. TAXES – Seller shall pay, and the grand total Purchase Order price includes,
all customs and import duties or charges arising from or related to the
performance of this Purchase Order except for any increase in importation duties
or charges following the date of this Purchase Order which are a necessary
consequence of import and are incurred as a result of import regulations imposed
by Applicable Law. In addition, Seller shall obtain and pay, and the grand total
Purchase Order price includes, the cost of all permits, licenses, fees and
certificates of inspection necessary for the prosecution and completion of this
Purchase Order. All federal, state and local sales and use taxes shall be the
responsibility of Buyer.

15. TERMINATION FOR CONVENIENCE – At any time, Buyer may terminate for its
convenience all or any separable part of this Purchase Order by giving written
notice to Seller. On the date that notice of such termination is received by
Seller, Seller shall: (a) discontinue all work relating to the goods so
terminated, (b) place no additional orders, (c) preserve and protect materials
on hand purchased for or committed to this Purchase Order, work for goods and
services in progress, and completed goods and services both in Seller’s and in
its subcontractors plants pending Buyer’s written instructions, and (d) dispose
of same in accordance with Buyer’s written instructions. Buyer’s sole and
exclusive liability to Seller upon termination under this Section shall be
pursuant to the cancellation schedule set forth on the face of the Purchase
Order.

 

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16. TERMINATION FOR DEFAULT - Each of the following events shall constitute a
material default by Seller for purpose of this Purchase Order (each of which
shall entitle Buyer to terminate for default in accordance with this Section):
(a) any bankruptcy proceeding by or against Seller or the appointment of a
trustee for the benefit of creditors; (b) a refusal or failure of Seller to
deliver the goods, or to perform the services, in accordance with any of the
agreed scheduled delivery date(s) and the maximum amount for liquidated damages
permitted under Section 36 has been exceeded, provided that such maximum amount
need not be exceeded to entitle Buyer to terminate pursuant to this
Section 16(b) (i) if Seller fails to pay any portion of the liquidated damages
when due hereunder, provided that Buyer has notified Seller of its failure to
pay and Seller has not cured such failure within ten (10) days of such notice,
or (ii) if, based upon the current progress of the goods and services and
information provided by Seller, Seller is projected to deliver any portion of
the goods or perform any portion of the services one hundred seventy-four
(174) days or more beyond the applicable scheduled delivery date(s) for such
goods or services; (c) assignment of all or any part of this Purchase Order
without Buyer’s consent; or (d) failure to perform any other material provision
of this Purchase Order. In the event Seller does not cure any such default
within a period of seven (7) days after notice thereof, or such longer period as
Buyer may authorize in writing, then Buyer may give written notice to Seller to
terminate this Purchase Order or any part thereof. In the event of termination
for default, Buyer shall not be liable to Seller for payment of any amount
beyond the value of any goods and services shipped or received and accepted by
Buyer, less damages suffered by Buyer. In such case, Seller shall be liable to
Buyer for any and all damages incurred by Buyer arising out of or resulting from
such default, including any and all liquidated damages which shall be based on
the date(s) that a reasonable substitute supplier, exercising proper due
diligence, achieved such respective scheduled deliveries; subject to the
limitation of Seller’s liability under Sections 31 and 36. Buyer agrees to act
reasonably to mitigate any costs it might incur in connection with any
termination by Buyer under this Section. Upon request by Buyer, Seller will
deliver or assign to Buyer any goods and services in progress at the time of
termination.

17. CONFIDENTIALITY - All information furnished by Buyer hereunder, and any
information furnished by Seller in connection with goods specifically designed
or manufactured for Buyer, shall be the proprietary information of Buyer. Seller
shall disclose Buyer’s proprietary information to a third party only with the
prior written consent of Buyer or if required to do so under a valid court
order. Upon request, Seller shall return all such information to Buyer.

18. RESERVATION OF RIGHTS - Any action by Buyer with respect to inspection of or
payment for the goods and/or related services covered by this Purchase Order
shall not prejudice Buyer’s right to reject nonconforming or defective goods or
services, nor be deemed to constitute acceptance by Buyer of the goods or
services, or affect in any way Seller’s obligations under this Purchase Order
notwithstanding Buyer’s opportunity to inspect the goods and/or related
services, Buyer’s knowledge of the nonconformity or defect, the importance or
critical nature of, or the ease of discovery of the nonconformity or defect, nor
Buyer’s earlier failure to reject the goods or services.

19. INSTALLATION - Buyer shall be responsible for installation of the goods
purchased hereunder at its own expense unless otherwise specified herein. If
necessary, Seller shall make available to Buyer, either without charge or at a
rate mutually agreed upon, one or more persons as reasonably required to assist
in the installation. Such person(s) shall not be deemed an agent or employee of
Buyer, and Seller shall be solely responsible for their acts or omissions.

20. FORCE MAJEURE - Time is of the utmost importance in the performance of this
Purchase Order. The conduct of Buyer’s business is based upon timely obtaining
the goods and services described herein. Neither Buyer nor Seller shall be
liable to the other for failure to perform in accordance with the provisions of
this Purchase Order if such failure is due to catastrophic acts of God (such as
hurricane, named tropical storm in the Gulf of Mexico, earthquake, tornado,
tsunami or lightning); war; riot; civil commotion; strike by labor other from
that employed by Buyer or Seller; insurrection; government orders, rules,
regulations, suspensions or requisitions of any kind; or fire; provided that
such act or event (a) renders impossible the affected party’s performance of its
obligations under this Purchase Order, (b) is beyond the control of the affected
party and not due to its fault or negligence, and (c) could not have been
prevented or avoided by the affected party through the exercise of due
diligence, including the expenditure of any reasonable sum taking into account
the grand total Purchase Order price. An event satisfying all of the
requirements of this Section 20 shall be referred to as a “Force Majeure Event.”
If Seller is entitled to relief under this Section 20 for a Force Majeure Event,
Seller must notify Buyer in writing within five (5) days of the occurrence of
the Force Majeure Event or forfeit its exclusion from liability under this
Section. The notice must contain reasons for the delay and an estimate of the
delay in shipment of the goods or performance of the services. After receipt of
such notice, Buyer shall have the right, at its sole option, either to accept
Seller’s delay in ability to perform or require Seller to initiate corrective
actions to overcome the delay or terminate this Purchase Order in accordance
with Section 15.

 

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21. GOVERNING LAW - This Purchase Order shall be governed by, and construed in
accordance with, the laws of the state of Texas (without giving effect to the
principles thereof relating to conflicts of law). The United Nations Convention
on Contracts for the International Sale of Goods shall not apply to this
Purchase Order.

22. COMPLIANCE WITH LAWS – Seller agrees that all goods and services furnished
under this Purchase Order will comply with all applicable laws, orders, codes
and regulations, including those governing labor, wages, and improper or illegal
payments, gifts or gratuities, those promulgated by any federal, state and local
authorities, and those codes and regulations set forth in this Purchase Order
(“Applicable Law”). Seller shall comply with Italian law in the manufacture and
production of the goods. Seller is exclusively liable for the payment of any
state, municipal or federal payroll taxes, and for workmen’s compensation,
employer’s liability and general public liability and property damage
insurances. To the extent applicable to this Purchase Order, Seller agrees to
comply with all provisions of the Federal Equal Employment Opportunity
Regulations, the Federal Acquisition Regulations, and the orders, regulations
and laws relating thereto, and such are incorporated herein by reference with
the same force and effect as if set forth herein in full, including without
limitation, the provisions of (i) Section 202 of Executive Order 11246 of
September 24, 1965 at C.F.R.§§ 60-1.4 (1993), (ii) 29 U.S.C. §§701 (1993) and 41
C.F.R.§§ 60-741.4 (1993), (iii) C.F.R.§§ 60-250.4 (1993), (iv) those clauses of
the Federal Acquisition Regulations and Department of Defense Federal
Acquisition Regulations Supplement, which are delivered to Seller herewith,
(v) requirements for filing of EEO-1 forms and preparation of Affirmative Action
Plans, (vi) Section 17 of Alaska Natural Gas Transportation Act of 1976
(“ANGTA”), 14 U.S.C.§§ 719 (1993), President’s Decision and Report to Congress
on the Alaska Natural Gas Transportation System, September 1977, pursuant to
section 7(a) of the ANGTA (“President’s Decision”), approved and adopted by S.J.
Res. 82, 91 Stat. 1268 (1977), (vii) Regulations implementing condition 11 of
the President’s Decision and Section 17 of the ANGTA at 43 C.F.R. Part 34
(1993), (viii) Affirmative Action Plans for Equal Employment Opportunity and
Minority and Female Owned Business, and (ix) Americans with Disabilities Act of
1990, 42 U.S.C. 6 §§ 12101-12117 (1993). SELLER SHALL INDEMNIFY, DEFEND, RELEASE
AND HOLD HARMLESS BUYER INDEMNITEES AGAINST ALL LOSS, PENALTIES OR DAMAGES
ARISING OUT OF OR RESULTING FROM SELLER’S OR ITS SUBCONTRACTORS’ FAILURE TO
COMPLY WITH THIS SECTION 22 AND SECTION 35.

23. PATENTS - SELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE BUYER
INDEMNITEES FROM ALL LOSS, PENALTIES OR DAMAGES ARISING OUT OF OR RESULTING FROM
ANY CLAIMS OR SUITS FOR INFRINGEMENT OF UNITED STATES OR FOREIGN PATENTS,
COPYRIGHTS, TRADEMARKS, OR OTHER INTELLECTUAL PROPERTY RIGHTS OR CLAIMS OF
UNFAIR COMPETITION ARISING OUT OF OR RESULTING FROM BUYER’S USE, POSSESSION,
PURCHASE OR SALE OF ALL GOODS AND SERVICES FURNISHED UNDER THIS PURCHASE ORDER.
Seller shall defend all such suits and shall pay all related costs. In addition,
if the use of any portion of such goods or services are enjoined, Seller shall,
at its sole expense, and subject to Buyer’s sole discretion, procure the right
to continue use of such goods or services, modify such goods or services to
render them noninfringing, replace such goods or services with noninfringing
goods or services, or remove that portion of the goods or services completely
and refund the purchase price for such goods or services plus all related
transportation, installation and dismantling costs related to such goods or
services.

24. TITLE – Title to the goods and related services, or any part thereof, shall
pass to Buyer upon the earlier of: (i) issuance of a bill of lading for such
goods or (ii) Buyer’s payment for such goods and services to the extent of the
payment so made. Seller shall clearly identify the goods (including raw
materials and components) as property of Buyer by visible marking or tagging,
and Buyer shall have the right, at Buyer’s option, to inspect and verify that
said goods have been identified as Buyer’s property. Care, custody, and control
of such goods and risk of loss with respect to such goods remains with Seller in
accordance with the applicable Incoterm (latest edition) identified on the face
of the Purchase Order.

25. REMEDIES - Any waiver by Buyer of any breach of any term or condition of
this Purchase Order shall not constitute a waiver of any such subsequent breach
of the same or any other term or condition hereof. The rights and remedies of
Buyer set forth herein are not exclusive, but are in addition to all other
rights and remedies of Buyer at law and in equity. Seller agrees that any right,
or remedy of Buyer under this Purchase Order shall extend to Buyer’s parent
company, as well as any affiliate, assignee, customer or client of Buyer, and
any party(ies) on whose behalf this Purchase Order was issued.

26. ASSIGNMENT AND SETOFF - This Purchase Order, including amounts to be paid
hereunder, shall not be assigned or transferred in whole or in part by Seller
without Buyer’s prior written consent and any assignment or transfer without
such consent shall be void. Buyer may freely assign this Purchase Order in whole
or in part to any affiliate or successor entity at any time without Seller’s
consent, provided that any assignment by Buyer pursuant to this Section 26 shall
not relieve Buyer of any of its

 

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obligations or liabilities under this Purchase Order. All claims for monies due,
or to become due, from Buyer shall be subject to Buyer’s collection on the
letter of credit or deduction of any amount due or to become due from Seller
arising out of this or any other transaction with Seller. This Purchase Order
shall be binding upon Seller and Buyer and their respective successors and
permitted assigns.

27. RECORDS AND AUDIT - Seller shall, and shall ensure that its subcontractors
shall, for a period of three (3) years after the date of delivery of the goods
or performance of the services sold hereunder, retain a true and correct set of
all documents which relate to the goods and services required under this
Purchase Order, and shall make those documents available to Buyer and its
representatives for audit. Seller shall cooperate fully with Buyer during the
audits performed hereunder, including furnishing Buyer with copies of all
requested documents.

28. ENTIRE AGREEMENT - This Purchase Order, including the face of this Purchase
Order, Buyer’s specifications and expressly incorporated attachments,
constitutes the entire agreement between Buyer and Seller regarding the subject
matter of this Purchase Order, and supersedes all prior bids, awards,
discussions, negotiations and agreements regarding the subject matter. Any
amendment to this Purchase Order, including an oral modification supported by
new consideration, must be in writing and must be signed by Buyer and Seller
before it shall be effective. In the event any provision, or any part or portion
of any provision of this Purchase Order shall be held to be invalid, void or
otherwise unenforceable, such holding shall not affect the remaining part or
portions of that provision, or any other provision hereof. In the event of any
ambiguities, express conflicts, or discrepancies between the face of this
Purchase Order, these Terms and Conditions or Buyer’s specifications, such
ambiguity, conflict or discrepancy shall be resolved in the foregoing order with
the face of this Purchase Order having the highest priority.

29. SUBCONTRACTORS - Seller shall be responsible for the acts or omissions of
any subcontractor as fully as if they were the acts or omissions of Seller.
Without relieving Seller of any of its warranty obligations under this Purchase
Order, Seller shall assign in full, and without cost to Buyer, all warranties
from Seller’s subcontractors that are applicable to the goods or services
provided hereunder, and deliver such assigned warranties to Buyer prior to final
payment. All subcontracts shall be subject to the provisions of this Purchase
Order, and Seller shall insert into Seller’s subcontracts all provisions
required by this Purchase Order or necessary to enable Seller to comply with the
terms of this Purchase Order.

30. DISPUTE RESOLUTION - Any claim, dispute, controversy, difference,
disagreement, or grievance (of any kind or type, whether based on contract,
tort, statute, regulation or otherwise) arising out of, connected with or
relating in any way to this Purchase Order (including the construction,
validity, interpretation, termination, enforceability or breach of this Purchase
Order, or any dispute over arbitrability or jurisdiction) (“Dispute”) not
resolved through negotiation shall be decided by final, binding arbitration.
Arbitration of any Dispute shall be held in Houston, Texas, unless otherwise
agreed by the parties, shall be administered by the American Arbitration
Association (“AAA”) and shall, except as otherwise modified by this Section 30,
be governed by the AAA Rules then in effect. The arbitration shall be conducted
by three (3) arbitrators, unless otherwise agreed by the parties in writing. The
arbitrators shall determine the rights and obligations of the parties according
to the substantive law required by Section 21; provided, however, the law
applicable to the validity of the arbitration clause, the conduct of the
arbitration, including resort to a court for provisional remedies, the
enforcement of any award and any other question of arbitration law or procedure
shall be the Federal Arbitration Act, 9 U.S.C § 1, et seq. Issues concerning the
arbitrability of a matter in dispute shall be decided by a court with proper
jurisdiction. The arbitration shall be conducted in the English language and all
submissions shall be made in the English language or with an English
translation; provided that witnesses may provide testimony in a language other
than English if a simultaneous English translation is provided. The parties
shall be entitled to engage in reasonable discovery, including the right to
production of relevant and material documents by the opposing party and the
right to take depositions reasonably limited in number, time and place; provided
that in no event shall any party be entitled to refuse to produce relevant and
non-privileged documents or copies thereof requested by the other party within
the time limit set and to the extent required by order of the arbitrators. This
agreement to arbitrate is binding upon the parties and the successors and
permitted assigns of any of them. At Buyer’s sole option, any other person or
entity may be joined as an additional party to any arbitration conducted under
this Section 30, provided that the party to be joined is or may be liable to
either Seller or Buyer in connection with all or any part of any Dispute between
Seller or Buyer. The arbitration award shall be final and binding, in writing,
signed by all arbitrators, and shall state the reasons upon which the award
thereof is based. The parties agree that judgment on the arbitration award may
be entered by any court having jurisdiction thereof.

31. LIMITATION OF LIABILITY - Seller shall not be liable to Buyer under this
Purchase Order or under any cause of action related to the subject matter of
this Purchase Order, whether in contract, warranty, tort (including negligence),
strict liability, products liability, professional liability or any other cause
of action, for amounts in excess of one hundred percent (100%) of the grand
total

 

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Purchase Order price; provided that, notwithstanding the foregoing, the
limitation of liability set forth in this Section 31 shall not (i) apply in the
event of Seller’s willful misconduct (including the willful refusal to perform
the services or supply the goods, willful delay in performing the services or
supplying the goods, or abandonment of the services or supply of the goods) or
gross negligence; (ii) apply to Seller’s indemnification obligations under this
Purchase Order; or (iii) include the payment of proceeds under any insurance
policy provided by Seller. In no event shall the limitation of liability set
forth in this Section 31 be in any way deemed to limit Seller’s obligation to
complete all services and supply all goods as required under this Purchase
Order. The costs incurred by Seller in performing the services and supplying the
goods under this Purchase Order shall not be counted against the aggregate
limitation of liability set forth in this Section 31.

32. INDEPENDENT CONTRACTOR - The relationship of Seller to Buyer shall be that
of an independent contractor and not an agent of Buyer, and as such, Seller
shall have full power of management and direction in all matters relating to the
provision of the goods and the services. Neither Seller, any subcontractor of
Seller nor the employees of either shall be deemed to be employees or agents of
Buyer for any purpose whatsoever.

33. LIENS - Should Seller or any subcontractor or any other person or entity
acting through or under any of them file a lien or other encumbrance against all
or any portion of the goods, services, or the project, Seller shall, at its sole
cost and expense, remove and discharge, by payment, bond or otherwise, such lien
or encumbrance within twenty-five (25) days of the filing of such lien or
encumbrance. If Seller fails to remove and discharge any such lien or
encumbrance within such twenty-five (25) day period, then Buyer may, in its sole
discretion and in addition to any other rights that it has under this Purchase
Order, at law or equity, remove and discharge such lien and encumbrance using
whatever means that Buyer, in its sole discretion, deems appropriate. In such
circumstance, Seller shall be liable to Buyer for all damages, costs, losses and
expenses (including all attorneys’ fees, consultant fees and litigation
expenses, and settlement payments) incurred by Buyer arising out of or relating
to such removal and discharge. All such damages, costs, losses and expenses
shall be paid by Seller no later than thirty (30) days after receipt of each
invoice from Buyer, and, at Buyer’s option, Buyer may withhold payment for
amounts otherwise due Seller.

34. WAIVER OF CONSEQUENTIAL DAMAGES - NOTWITHSTANDING ANY OTHER PROVISIONS OF
THIS PURCHASE ORDER TO THE CONTRARY, NEITHER SELLER NOR BUYER SHALL BE LIABLE
UNDER THIS PURCHASE ORDER OR UNDER ANY CAUSE OF ACTION RELATED TO THE SUBJECT
MATTER OF THIS PURCHASE ORDER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE),
STRICT LIABILITY, PRODUCTS LIABILITY OR ANY OTHER CAUSE OF ACTION FOR SPECIAL,
INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL LOSSES OR DAMAGES, INCLUDING
LOSS OF PROFITS, USE, OPPORTUNITY, REVENUES, FINANCING, BONDING CAPACITY, OR
BUSINESS INTERRUPTIONS; PROVIDED THAT THE LIMITATION OF LIABILITY SET FORTH IN
THIS SECTION 34 SHALL NOT APPLY TO AMOUNTS ENCOMPASSED WITHIN LIQUIDATED
DAMAGES.

35. CONFLICTS OF INTEREST - Seller shall not, and shall ensure that each of its
subcontractors and the agents and employees of each of them shall not (a) pay
any commissions or fees, or grant any rebates, to any employee or officer of
Buyer or its affiliates, (b) favor employees or officers of same with gifts or
entertainment of a significant cost or value, or (c) enter into any business
arrangements with employees or officers of same. With respect to the supply and
performance of goods and services under this Purchase Order, Seller shall, and
shall cause each of its subcontractors and the agents and employees of each of
them to comply with (i) all applicable provisions of the Foreign Corrupt
Practices Act of the United States (15 U.S.C. § 78dd-1 and 2), and (ii) the
Organization for Economic Cooperation and Development Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions as
implemented in the domestic law of any state to which Seller and its
subcontractors and the agents and employees of each of them is subject and not
to take any action that could result in Buyer or any of its affiliates becoming
subject to any action, penalty or loss of benefits thereunder.

36. LIQUIDATED DAMAGES. If Seller fails to deliver the goods in the final lot
after the scheduled delivery date for such lot as set forth in the face of this
Purchase Order, Seller will be liable to Buyer in the following amounts: (a) one
(1) through thirty (30) days after the scheduled delivery date at Zero U.S.
Dollars (US$0) per day; (b) thirty-one (31) days through sixty (60) days
inclusive after the scheduled delivery date at Five Thousand U.S. Dollars
(US$5,000) per day; (c) sixty-one (61) days through ninety (90) days inclusive
after the scheduled delivery date at Seven Thousand U.S. Dollars (US$7,000) per
day; and (d) ninety-one (91) days and thereafter until delivery of the final lot
is achieved at Ten Thousand U.S. Dollars (US$10,000) per day. In no event shall
such liquidated damages exceed the total sum of One Million Two Hundred Thousand
U.S. Dollars (US$1,200,000), provided that such limitation of liability shall
not be construed to limit Seller’s other obligations or liabilities under this
Purchase Order (including its obligations to complete the services and deliver
the goods for the compensation provided under this Purchase Order and its
warranty obligations), nor shall such limitation of liability apply in the event
of Seller’s willful misconduct (including the willful

 

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refusal to perform the services or deliver the goods, willful delay in
performing the services or delivering the goods or abandonment of the services
or the goods) or gross negligence. With respect to any liquidated damages that
accrue, Buyer, at its sole discretion, may do one or more of the following:
(1) invoice Seller for such owed liquidated damages, and within thirty
(30) calendar days of Seller’s receipt of such invoice, Seller shall pay Buyer
such liquidated damages, (2) withhold from Seller amounts that are otherwise due
and payable to Seller in the amount of such liquidated damages, or (3) collect
on the Letter of Credit in the amount of such liquidated damages. It is
expressly agreed that liquidated damages payable under this Purchase Order do
not constitute a penalty and that the parties, having negotiated in good faith
for such specific liquidated damages and having agreed that the amount of such
liquidated damages is reasonable in light of the anticipated harm caused by the
breach related thereto and the difficulties of proof of loss and inconvenience
or nonfeasibility of obtaining any adequate remedy, are estopped from contesting
the validity or enforceability of such liquidated damages. The liquidated
damages set forth herein shall be Buyer’s sole damages for delay in delivery and
performance hereunder.

37. LETTER OF CREDIT - Upon execution of this Purchase Order and as a condition
precedent to Seller’s right to receive any payments under this Purchase Order,
Seller shall deliver to Buyer an irrevocable standby letter of credit, naming
Buyer as beneficiary, in the amount of ten percent (10%) of the grand total
Purchase Order price and in the form of Attachment A, which is incorporated
herein by reference, and issued by Banca Intesa (“Letter of Credit”). If at any
time the rating of Banca Intesa falls below Investment Grade, Seller shall
replace the Letter of Credit within thirty (30) calendar days with an equivalent
instrument issued or confirmed by a commercial bank in Italy meeting such rating
requirements. As used herein, “Investment Grade” means a rating of at least A by
Standard & Poor’s and at least A by Moody’s Investors Service. The Letter of
Credit shall be advised through HSBC Bank USA, N.A., New York, New York. In
addition to any other rights under this Purchase Order, Buyer shall have the
right to collect against such Letter of Credit, upon Buyer’s demand, in the
event Seller owes Buyer any liquidated damages under this Purchase Order or any
other liabilities, damages, losses, costs or expenses arising out of or relating
to a breach of any obligation under this Purchase Order by Seller or otherwise.
The amount drawn on the Letter of Credit shall not be greater than the amount
that Buyer, at the time of the drawing, reasonably estimates is owed it under
the Purchase Order for liquidated damages, liabilities, damages, losses, costs
or expenses or is necessary to remedy the breach of the Purchase Order. The
Letter of Credit shall expire on December 31, 2009, provided that in the event
Seller’s obligations under this Purchase Order (including Seller’s warranty
obligations) are not fully completed by such date in accordance with this
Purchase Order, Seller shall extend the Letter of Credit within thirty
(30) calendar days prior to the foregoing expiration date so that such Letter of
Credit shall remain in effect through completion of all of Seller’s obligations
hereunder (including Seller’s warranty obligations). In the event Seller fails
to extend the Letter of Credit during such thirty (30) day period, Buyer may
draw down on the Letter of Credit for the full stated amount.

38. LENDER REQUIREMENTS - Seller acknowledges that Buyer may obtain financing
associated with the provision of the goods and services hereunder, and Seller
agrees to cooperate with Buyer and its lenders in connection with such
financing, including entering into direct agreements with such lenders covering
matters that are customary in financings of this type such as lender assignment
or security rights with respect to this Purchase Order, consent agreements,
opinions of counsel, direct notices to lender and lender’s independent engineer,
step-in/step-out rights, access by lender’s representative, including lender’s
independent engineer, and other matters applicable to such financing. Seller
shall cooperate with any independent engineer retained by Buyer’s lender(s) in
the conduct of such independent engineers’ duties in relation to the project.

39. MISCELLANEOUS - The headings contained in this Purchase Order are for
convenience and reference only and in no way define, describe, extend or limit
the scope of intent of this Purchase Order or the intent of any provision
contained herein. This Purchase Order may be signed in any number of
counterparts and each counterpart (when combined with all other counterparts)
shall represent a fully executed original as if one copy had been signed by all
of the parties. Facsimile signatures shall be deemed as effective as original
signatures. Preparation of this Purchase Order has been a joint effort of Seller
and Buyer and the resulting document shall not be construed more severely
against one of the parties than against the other. References to “days” or a
“day” shall mean a calendar day, unless otherwise stated. All notices,
communications and submittals between the parties pursuant to this Purchase
Order shall be in the English language, unless otherwise directed in writing by
Buyer. Sections 7, 8, 9, 12, 15, 16, 17, 18, 21, 22, 23, 25, 27, 30, 31, 33, 34,
36 and 37 shall survive termination or expiration of this Purchase Order, in
addition to any other provisions which by their nature should, or by their
express terms do, survive or extend beyond the termination or expiration of this
Purchase Order.

 

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ATTACHMENT A

FORM OF IRREVOCABLE STANDBY LETTER OF CREDIT

[to be issued on letterhead of Issuing Bank]

IRREVOCABLE STANDBY LETTER OF CREDIT NO.                     

DATE:                     , 200    

AMOUNT OF: U.S.$                    

ADVISING BANK: HSBC BANK USA, N.A. - NEW YORK BRANCH

 

BENEFICIARY:

   APPLICANT AND ACCOUNT PARTY:

CHENIERE CREOLE TRAIL PIPELINE COMPANY

  

ILVA, S.p.A.

717 TEXAS AVENUE, SUITE 3100

  

 

HOUSTON, TEXAS 77002

  

 

FACSIMILE: (    )      - _____________________________

  

FACSIMILE: (    )      - _____________________________

ATTN: ___________________________________________

  

ATTN: ___________________________________________

WE HEREBY ISSUE OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO.             (THIS
“LETTER OF CREDIT”) IN FAVOR OF CHENIERE CREOLE TRAIL PIPELINE COMPANY, AS
BENEFICIARY, FOR AN AMOUNT OF                      DOLLARS
(U.S.$                     ) (THE “STATED AMOUNT”) AT THE REQUEST AND FOR THE
ACCOUNT OF ILVA, S.p.A., AS APPLICANT.

WE ARE INFORMED THAT THIS LETTER OF CREDIT IS ISSUED ON BEHALF OF THE APPLICANT
TO SUPPORT APPLICANT’S OBLIGATIONS UNDER THAT CERTAIN PURCHASE ORDER, DATED AS
OF                     , 2006, BY AND BETWEEN APPLICANT AND BENEFICIARY.

FUNDS UNDER THIS LETTER OF CREDIT ARE AVAILABLE BY PAYMENT AGAINST THE
PRESENTATION OF YOUR DRAFT(S) DRAWN AT SIGHT ON [INSERT ISSUING BANK’S NAME AND
ADDRESS] (THE “ISSUING BANK”) IN SUBSTANTIALLY THE FORM OF ANNEX I ATTACHED
HERETO APPROPRIATELY COMPLETED.

PARTIAL DRAWINGS ARE PERMITTED. ALL ITALIAN BANKING CHARGES UNDER THIS LETTER OF
CREDIT ARE FOR ACCOUNT OF THE APPLICANT. THE STATED AMOUNT SHALL BE
AUTOMATICALLY AND PERMANENTLY REDUCED BY THE AMOUNT OF ANY DRAWING RECEIVED BY
BENEFICIARY PURSUANT TO THIS LETTER OF CREDIT NO.                     .

ALL DEMANDS FOR PAYMENT MUST BE PRESENTED TO THE ISSUING BANK LOCATED AT [INSERT
ISSUING BANK’S NAME AND ADDRESS], NOT LATER THAN 5:00 P.M., [CENTRAL STANDARD
TIME (“C.S.T.”)].

THIS LETTER OF CREDIT SHALL EXPIRE ON DECEMBER 31, 2009.

IF WE RECEIVE YOUR DRAFT IN FULL COMPLIANCE WITH THE TERMS AND CONDITIONS OF
THIS LETTER OF CREDIT AT OR BEFORE 11:00 A.M., C.S.T., ON A BUSINESS DAY, WE
WILL HONOR YOUR DEMAND FOR PAYMENT NO LATER THAN THE CLOSE OF BUSINESS ON SUCH
BUSINESS DAY. IF WE RECEIVE YOUR DRAFT IN FULL COMPLIANCE WITH THE TERMS AND
CONDITIONS OF THIS LETTER OF CREDIT AFTER 11:00 A.M., C.S.T., ON A BUSINESS DAY,
WE WILL HONOR YOUR DEMAND FOR PAYMENT NO LATER THAN THE CLOSE OF BUSINESS ON THE
FOLLOWING BUSINESS DAY. “BUSINESS DAY” MEANS ANY DAY OTHER THAN A SATURDAY, A
SUNDAY OR ANY OTHER DAY COMMERCIAL BANKS IN THE UNITED STATES OF AMERICA ARE
AUTHORIZED OR REQUIRED TO BE CLOSED, AND A DAY ON WHICH PAYMENTS CAN BE EFFECTED
ON THE FEDWIRE SYSTEM.

 

A-1

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EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS ISSUED
SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993
REVISION) INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500 (“U.C.P.”), AND
AS TO ANY MATTERS NOT SPECIFICALLY COVERED THEREBY, THIS LETTER OF CREDIT SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING AND SUCH
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED OR AMPLIFIED BY REFERENCE TO ANY
DOCUMENT, INSTRUMENT, OR AGREEMENT REFERRED TO HEREIN OTHER THAN THE U.C.P. OR
OTHER THAN BY AGREEMENT IN WRITING BETWEEN BENEFICIARY AND APPLICANT AND
CONSENTED TO BY US.

 

[NAME OF ISSUING BANK]

BY:

 

 

NAME:

 

 

TITLE:

 

 

BY:

 

 

NAME:

 

 

TITLE:

 

 

 

A-2

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ANNEX I

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER             

DRAFT

                    , 20    

PAY AT SIGHT TO ORDER OF OURSELVES                      U.S. DOLLARS
(U.S.$            ). THIS DRAFT IS PRESENTED UNDER IRREVOCABLE STANDBY LETTER OF
CREDIT NO.              DATED                     , ISSUED FOR THE ACCOUNT OF
ILVA S.p.A. FOR THE FOLLOWING REASONS:                      .

 

TO:   [ISSUING BANK NAME]   [ISSUING BANK ADDRESS]

 

CHENIERE CREOLE TRAIL PIPELINE COMPANY

BY:

 

 

NAME:

 

 

TITLE:

 

 

 

A-3

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ATTACHMENT B

STANDBY LETTER OF CREDIT

WE HEREBY ISSUE THIS IRREVOCABLE STANDBY LETTER OF CREDIT (“LETTER OF CREDIT”)
NO.                     

- ADVISING BANK: BANCA INTESA - SARONNO BRANCH, ITALY

 

- APPLICANT :   CHENIERE CREOLE TRAIL PIPELINE COMPANY, L.P.   717 TEXAS AVENUE,
SUITE 3100   HOUSTON, TEXAS 77002   UNITED STATES   ATTN:                       
FACSIMILE:              - BENEFICIARY:   ILVA S.P.A.   VIALE CERTOSA, 249  
20151 MILANO - ITALY   ATTN:                        FACSIMILE:             

FOR AN INITIAL AMOUNT OF                      U.S. DOLLARS
(U.S.$                     ) (THE “STATED AMOUNT”). THIS LETTER OF CREDIT IS
ISSUED ON BEHALF OF THE APPLICANT TO SUPPORT APPLICANT’S PAYMENT OBLIGATIONS
UNDER THAT CERTAIN PURCHASE ORDER, DATED AS OF                    , 2006.

EXPIRY DATE: THIS LETTER OF CREDIT SHALL EXPIRE AND BECOME AUTOMATICALLY NULL
AND VOID ON THE EARLIER OF 31/01/2008 IN ITALY OR WHEN THE STATED AMOUNT HAS
BEEN REDUCED TO ZERO U.S. DOLLARS (U.S.$0), WHETHER OR NOT THIS LETTER OF CREDIT
IS RETURNED TO US.

FUNDS UNDER THIS LETTER OF CREDIT ARE AVAILABLE WITH BANCA INTESA - SARONNO
BRANCH, ITALY BY PAYMENT AGAINST THE PRESENTATION OF: (A) YOUR DRAFT(S) DRAWN ON
[                    ] (THE “ISSUING BANK”) AT SIGHT IN THE FORM OF ANNEX I
ATTACHED HERETO APPROPRIATELY COMPLETED, (B) A DRAWING CERTIFICATE DULY SIGNED
IN THE FORM OF ANNEX II ATTACHED HERETO APPROPRIATELY COMPLETED, (C) A COPY OF
NOTICE TO APPLICANT DULY SIGNED IN THE FORM OF ANNEX III ATTACHED HERETO AND
APPROPRIATELY COMPLETED, AND (D) PRESENTATION AT COUNTERS OF BANCA INTESA -
SARONNO BRANCH, ITALY OF THE FOLLOWING DOCUMENTS:

 

1) ONE COPY OF THE APPLICABLE INVOICE FOR THE GOODS FOR WHICH PAYMENT HAS NOT
BEEN MADE, SUCH INVOICE BEING ATTACHED TO THE DRAWING CERTIFICATE, AND

 

2) ONE COPY/PHOTOCOPY OF THE APPLICABLE BILL OF LADING ISSUED EVIDENCING
SHIPMENT OF SUCH GOODS OR THE APPLICABLE TALLY LIST EVIDENCING COATING SERVICES
PERFORMED FOR SUCH GOODS, SUCH COPY/PHOTOCOPY BEING ATTACHED TO THE DRAWING
CERTIFICATE.

SPECIAL CONDITIONS:

- PARTIAL DRAWING: ALLOWED

 

- PRESENTATION OF A BILL OF LADING IS FOR THE EVIDENCE OF SHIPMENT PURPOSES ONLY
AND SUCH DOCUMENTS WILL NOT BE EXAMINED IN ACCORDANCE WITH THE U.C.P.

 

- IT IS A CONDITION OF THIS LETTER OF CREDIT THAT ONCE THE CUMULATIVE INVOICES
PAID BY THE APPLICANT TO BENEFICIARY UNDER THE PURCHASE ORDER EXCEED THE

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

STATED AMOUNT, THE STATED AMOUNT SHALL BE REDUCED BY THE EQUIVALENT AMOUNT OF
ANY SUBSEQUENT PAYMENT BY APPLICANT UNDER THE PURCHASE ORDER UPON THE ISSUING
BANK’S RECEIPT FROM BENEFICIARY OF A COPY OF A NOTICE OF REDUCTION DULY SIGNED
BY BENEFICIARY IN THE FORM OF ANNEX IV ATTACHED HERETO AND APPROPRIATELY
COMPLETED.

 

- THE STATED AMOUNT SHALL BE AUTOMATICALLY AND PERMANENTLY REDUCED BY THE AMOUNT
OF ANY DRAWING RECEIVED BY BENEFICIARY PURSUANT TO THIS LETTER OF CREDIT.

INSTRUCTIONS TO ADVISING BANK: YOU ARE AUTHORIZED TO CLAIM ON US VIA
AUTHENTICATED SWIFT CERTIFYING TO US THAT THE DRAFT AND ACCOMPANYING DOCUMENTS
ARE RECEIVED IN FULL COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT AND YOU
ARE FORWARDING THE DRAFT AND CORRESPONDING DOCUMENTS TO US VIA COURIER SERVICE
UNDER ONE COVER. WE UNDERTAKE TO HONOR YOUR DEMAND WITHIN THREE (3) BANKING DAYS
AFTER RECEIPT OF YOUR CLAIM.

ALL BANKING CHARGES OUTSIDE THE COUNTRY OF ISSUANCE OF THIS LETTER OF CREDIT
CHARGES ARE FOR THE ACCOUNT OF THE BENEFICIARY.

EXCEPT SO FAR AS OTHERWISE EXPRESSELY STATED, THIS LETTER OF CREDIT IS SUBJECT
TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500 (“U.C.P.”), AND AS TO ANY
MATTERS NOT SPECIFICALLY COVERED THEREBY, THIS LETTER OF CREDIT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING AND SUCH
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED OR AMPLIFIED BY REFERENCE TO ANY
DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN OTHER THAN THE U.C.P. OR
OTHER THAN BY AGREEMENT IN WRITING BETWEEN BENEFICIARY AND APPLICANT AND
CONSENTED TO BY US.

 

[NAME OF ISSUING BANK]

BY:

 

 

NAME:

 

 

TITLE:

 

 

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

ANNEX I

STANDBY LETTER OF CREDIT NUMBER             

DRAFT

DATE:                     

PAY AT SIGHT TO ORDER OF OURSELVES                      AND         /100 U.S.
DOLLARS (U.S.$            ). THIS DRAFT IS PRESENTED UNDER STANDBY LETTER OF
CREDIT NO.                      DATED                     , ISSUED FOR THE
ACCOUNT OF CHENIERE CREOLE TRAIL PIPELINE COMPANY, L.P.

 

TO:   [ISSUING BANK NAME]   [ISSUING BANK ADDRESS]

 

ILVA S.P.A.

BY:

 

 

NAME:

 

 

TITLE:

 

 

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

ANNEX II

STANDBY LETTER OF CREDIT NUMBER             

DRAWING CERTIFICATE

DATE:                     

 

TO:   [ISSUING BANK NAME]   [ISSUING BANK ADDRESS]

RE:

  STANDBY LETTER OF CREDIT NO.                     

GENTLEMEN:

REFERENCE IS MADE TO THAT CERTAIN STANDBY LETTER OF CREDIT NO.
                     (THE “LETTER OF CREDIT”) ISSUED BY YOU IN FAVOR OF ILVA
S.P.A. (“BENEFICIARY”).

IN ACCORDANCE WITH THAT CERTAIN PURCHASE ORDER, DATED AS OF
[                    , 2006], BY AND BETWEEN BENEFICIARY AND CHENIERE CREOLE
TRAIL PIPELINE COMPANY, L.P. (“APPLICANT”), THE UNDERSIGNED, AN OFFICER OF
BENEFICIARY, DOES HEREBY CERTIFY THAT:

1. APPLICANT HAS FAILED TO PAY AMOUNTS FOR GOODS AND SERVICES (A) OWED TO
BENEFICIARY WITHIN THE TIME ALLOWED UNDER THE PURCHASE ORDER, AND (B) FOR WHICH
BENEFICIARY HAS SUBMITTED TO APPLICANT AN INVOICE (ATTACHED HERETO) IN
ACCORDANCE WITH THE PURCHASE ORDER; AND

2. BENEFICIARY HAS SHIPPED SUCH GOODS, AS EVIDENCED BY THE ATTACHED BILL OF
LADING OR BENEFICIARY HAS COATED THE GOODS, AS EVIDENCED BY THE ATTACHED TALLY
LIST, WHICHEVER IS APPLICABLE; AND

3. BENEFICIARY HAS PROVIDED WRITTEN NOTICE TO APPLICANT IN THE FORM OF ANNEX III
TO THE LETTER OF CREDIT, DATED AT LEAST THIRTY (30) DAYS AFTER THE DATE OF THE
ATTACHED INVOICE AND AT LEAST FIVE (5) CALENDAR DAYS PRIOR TO THE DATE OF THIS
DRAWING CERTIFICATE, STATING BENEFICIARY’S INTENT TO DRAW AGAINST THE LETTER OF
CREDIT AND THE AMOUNT TO BE DRAWN. A COPY OF SUCH NOTICE IS ATTACHED HERETO; AND

4. APPLICANT HAS FAILED TO CURE SUCH FAILURE TO PAY PRIOR TO THE DATE OF THIS
CERTIFICATE; AND

5. BENEFICIARY IS ENTITLED TO PAYMENT OF                      U.S. DOLLARS
(U.S.$            ), WHICH REPRESENTS NO MORE THAN THE AMOUNTS OWED FOR THOSE
GOODS AND SERVICES FOR WHICH PAYMENT IS OWED UNDER THE PURCHASE ORDER BUT WHICH
HAVE NOT BEEN PAID.

YOU ARE REQUESTED TO REMIT PAYMENT OF THIS DRAWING IN IMMEDIATELY AVAILABLE
FUNDS BY WIRE TRANSFER TO THE FOLLOWING ACCOUNT:

[ACCOUNT INFORMATION]

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

IN WITNESS WHEREOF, THE UNDERSIGNED HAS EXECUTED AND DELIVERED THIS CERTIFICATE
AS OF THIS              DAY OF                     , 20    .

 

ILVA S.P.A.

BY:

 

 

NAME:

 

 

TITLE:

 

 

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

ANNEX III

STANDBY LETTER OF CREDIT NUMBER             

FORM OF NOTICE TO APPLICANT

DATE:                     

 

TO:  

CHENIERE CREOLE TRAIL PIPELINE COMPANY, L.P.

717 TEXAS AVENUE, SUITE 3100

HOUSTON, TEXAS 77002

UNITED STATES

ATTN: [                    ]

RE: Standby Letter of Credit No.                     ; Purchase Order, dated as
of [            ], 2006, by and between Beneficiary and Cheniere Creole Trail
Pipeline Company, L.P. (“Buyer”) (“Purchase Order”)

To Whom It May Concern:

ILVA S.p.A. (“Seller”) hereby gives Buyer notice that Buyer has failed to pay
amounts owed to Seller under the Purchase Order, generally specified as follows:

                                                                               
                                        
                                        
                                        
                                                            

                                                                               
                                        
                                        
                                        
                                                            

                                                                               
                                        
                                        
                                        
                                                            

                                                                               
                                        
                                        
                                        
                                                           .

If Buyer does not cure such failure to pay within five (5) calendar days of
Buyer’s receipt of this notice, Seller intends to draw down or collect against
the Letter of Credit in the amount of [                     U.S. Dollars
(U.S.$            ]).

 

ILVA S.p.A.

BY:

 

 

NAME:

 

 

TITLE:

 

 

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

ANNEX IV

STANDBY LETTER OF CREDIT NUMBER                     

NOTICE OF REDUCTION

DATE:                     

 

TO: [ISSUING BANK NAME]

[ISSUING BANK ADDRESS]

 

RE: STANDBY LETTER OF CREDIT NO.                     

GENTLEMEN:

REFERENCE IS MADE TO THAT CERTAIN STANDBY LETTER OF CREDIT NO.
                     (THE “LETTER OF CREDIT”) ISSUED BY YOU IN FAVOR OF ILVA
S.P.A. (“BENEFICIARY”).

IN ACCORDANCE WITH THAT CERTAIN PURCHASE ORDER, DATED AS OF [
                    , 2006], BY AND BETWEEN BENEFICIARY AND CHENIERE CREOLE
TRAIL PIPELINE COMPANY, L.P. (“APPLICANT”), THE UNDERSIGNED, AN OFFICER OF
BENEFICIARY, DOES HEREBY PROVIDE NOTICE THAT:

1. THE CUMULATIVE INVOICES PAID BY THE APPLICANT TO BENEFICIARY UNDER THE
PURCHASE ORDER EXCEED THE STATED AMOUNT OF THE LETTER OF CREDIT, AND THEREFORE
EACH SUBSEQUENT PAYMENT BY APPLICANT UNDER THE PURCHASE ORDER REDUCES THE STATED
AMOUNT BY THE EQUIVALENT AMOUNT OF THE SUBSEQUENT PAYMENT.

2. ATTACHED HERETO IS A COPY OF AN ELECTRONIC FUNDS TRANSFER TRANSMITTAL
EVIDENCING THE AMOUNT OF THE RELEVANT SUBSEQUENT PAYMENT.

3. THEREFORE, YOU ARE REQUESTED TO IMMEDIATELY REDUCE THE STATED AMOUNT OF THE
LETTER OF CREDIT BY [                     U.S. DOLLARS
(U.S.$                     )] SO THAT THE STATED AMOUNT WILL THEREAFTER BE
[                     U.S. DOLLARS (U.S.$                     )].

IN WITNESS WHEREOF, THE UNDERSIGNED HAS EXECUTED AND DELIVERED THIS NOTICE AS OF
THIS              DAY OF                     , 20    .

 

ILVA S.P.A. BY:  

 

NAME:  

 

TITLE: