SECTION 7 WARRANTY REQUIREMENTS

SECTION 7 WARRANTY REQUIREMENTS Initial Issue

SECTION 7: WARRANTY REQUIREMENTS... 1 WR 1. Warranty Provisions... 1 WR 1.1 Basic Provisions... 1 WR 1.1.1 Warranty Requirements...1 WR 1.1.1.1 Contractor Warranty... 1 WR 1.1.1.2 Complete Bus... 1 WR 1.1.1.3 Body and Chassis Structure... 1 WR 1.1.1.4 Propulsion System... 1 WR 1.1.1.5 Major Subsystems... 2 WR 1.1.1.5.1 Major Subsystems and Components... 2 WR 1.1.1.6 Extension of Warranty... 2 WR 1.1.2 Voiding of Warranty...2 WR 1.1.3 Exceptions and Additions to Warranty...3 WR 1.1.4 Detection of Defects...3 WR 1.1.5 Scope of Warranty Repairs...3 WR 1.1.6 Fleet Defects...3 WR 1.1.6.1 Occurrence and Remedy... 3 WR 1.1.6.2 Exceptions to Fleet Defect Provisions... 5 WR 1.2 Repair Procedures... 5 WR 1.2.1 Repair Performance...5 WR 1.2.2 Repairs By Contractor...5 WR 1.2.3 Repairs By SEPTA...6 WR 1.2.3.1 Parts Used... 6 WR 1.2.3.2 Contractor Supplied Parts... 6 WR 1.2.3.3 Defective Components Return... 6 WR 1.2.3.4 Failure Analysis... 6 WR 1.2.3.5 Reimbursement For Labor... 7 WR 1.2.3.6 Reimbursement For Parts... 7 WR 1.2.3.7 Reimbursement Requirements... 7 WR 1.2.4 Warranty After Replacement/Repairs...7 Initial Issue

SECTION 7: WARRANTY REQUIREMENTS WR 1. Warranty Provisions WR 1.1 Basic Provisions WR 1.1.1 Warranty Requirements WR 1.1.1.1 Contractor Warranty Warranties in this document are in addition to any statutory remedies or warranties imposed on the Contractor. The Contractor assumes full responsibility for the execution of the warranty for this order of transit buses. Consistent with this requirement, the Contractor warrants and guarantees to SEPTA each complete bus, and specific subsystems and components as follows. WR 1.1.1.2 Complete Bus The complete bus, propulsion system, components, major subsystems, and body and chassis structure, are warranted to be free from defects and related defects for one year or 50,000 miles except as noted in paragraphs WR 1.1.1.3, WR 1.1.1.4 and WR 1.1.1.5, whichever comes first, beginning on the date of acceptance of each bus under "Acceptance of Bus" (Section 3 Contract and General Conditions, GC 5.1.5). The warranty is based on regular operation of the bus under the operating conditions prevailing in the SEPTA locale. WR 1.1.1.3 Body and Chassis Structure Body, *body structure, and **structural elements of the suspension are warranted to be free from Defects, Related Defects, and to maintain structural integrity for three years or 150,000 miles, whichever comes first. *Body structure refers to the interior panels, sheet metal, all passenger seating, driver s seat, flooring, plumbing, window glazing, stanchions, etc. **Primary load carrying members of the bus structure, including structural elements of the suspension; are warranted against corrosion failure and/or fatigue failure sufficient to cause a Class 1 or Class 2 failure for a period of 12 (twelve) years or 500,000 miles, whichever comes first. WR 1.1.1.4 Propulsion System Propulsion system components, specifically the engine, and transmission, shall be warranted to be free from Defects and Related Defects for five years or 300,000 miles, whichever comes first. The powertrain system components, in addition to supplied items noted in previous paragraph of this section are the drive units and shafts, all electrical and electronic controls including wiring harnesses, system controllers, and software updates necessary for a complete system. Section 7 Initial Issue Page 1 of 9

WR 1.1.1.5 Major Subsystems WR 1.1.1.5.1 Major Subsystems and Components Major subsystems shall be warranted to be free from Defects and Related Defects, for three years or 150,000 miles, whichever comes first. Major Bus Subsystems include: Air compressor and dryer Alternator/Battery Equalizer AMDT/ASAS/On-Board Diagnostics Auxiliary Heater Brake system; incl. Foundation brake Destination Sign System/OCU Doors systems Pneumatic System LED Lighting Engine Fuel & Injection System Drive and Non-Drive Axles Windshield Wipers/Washers PA & Radio Communication Systems Fire Suppression Systems (AFSS) Driver Defroster Heater Turbo Charger Hydraulic Pump Hydraulic Steering Unit HVAC system Radiator Starter Automatic Passenger Counter Propulsion Thermal Management /Cooling System(s) Fuel Tank(s)/DEF Systems Wheelchair ramp system(s) Interior/Exterior Displays Vehicle Multiplex Systems AVL/AVM/Video Surveillance Brake Lining shall be warranted per the table below: Diesel Front Disc Pad Life 55,000/70,000 Miles Diesel Front Disc Rotor life Diesel Rear Axle Disc Pad Life 145,000 Miles 25,000/32,000 Miles Diesel Rear Axle Disc Rotor Life 55,000 Miles WR 1.1.1.6 Extension of Warranty If, during the warranty period, repairs or modifications on any bus, made necessary by defective design, materials or workmanship are not completed due to lack of material or inability to provide the proper repair for 30 (thirty) calendar days, the applicable warranty period shall be extended by the number of days equal to the delay period. The warranty period extension described above shall not apply if said defect does not prevent the vehicle from use in revenue service. WR 1.1.2 Voiding of Warranty The warranties shall not apply to the failure of any part or component of the bus that directly results from misuse, negligence, accident, or repairs not conducted in accordance with the Contractor provided; maintenance manuals, training programs, instruction, models, mock-ups, diagrams, parts catalogs, etc. and with workmanship performed by adequately trained personnel in accordance with recognized standards of the industry. The warranty shall also be void if SEPTA fails to conduct normal inspections Section 7 Initial Issue Page 2 of 9

and scheduled preventive maintenance procedures as recommended in the Contractor's approved maintenance manuals and that omission caused the part or component failure. WR 1.1.3 Exceptions and Additions to Warranty The warranties shall not apply to the following items; scheduled maintenance items, normal wear-out items (excluding brake lining), and items furnished by SEPTA such as fare collection, and other auxiliary equipment except if such equipment may be damaged by the failure of a part or component for which the Contractor is responsible. The Contractor shall notify and pass on to SEPTA any warranty, offered by a component supplier, that is superior to that required herein upon expiration of the complete bus warranty coverage or one (1) year. WR 1.1.4 Detection of Defects SEPTA detects a Defect within the warranty periods defined in "Warranty Requirements" (WR 1.1.1), it shall within 60 (sixty) days, notify the Contractor's representative. Within five (5) working days after receipt of notification, the Contractor's representative shall either agree that the Defect is in fact covered by warranty, or reserve judgment until the subsystem or component is inspected by the Contractor's representative or is removed and examined at SEPTA s property or at the Contractor's plant. The Contractor will be responsible for warranty resolution including related towing or other transportation costs. Warranty coverage on the subsystem or component shall be mutually resolved solely between SEPTA and the Contractor. Work shall commence to correct the Defect within 10 (ten) working days after receipt of notification and shall be conducted in accordance with "Repairs by Contractor" (WR 1.2.2). WR 1.1.5 Scope of Warranty Repairs When warranty repairs are required, SEPTA and the Contractor's representative shall agree within five (5) calendar days after notification on the most appropriate course for the repairs and the exact scope of the repairs to be performed under the warranty. If no agreement is obtained within the five-day period, SEPTA or it s designated representative reserves the right to commence the repairs in accordance with "Repairs by SEPTA " (WR 1.2.3). WR 1.1.6 Fleet Defects WR 1.1.6.1 Occurrence and Remedy A fleet defect is defined as cumulative failure, retrofit, recall, modification, or campaign of any kind in the same components in the same or similar application where such items covered by the warranty and such failure, retrofit, recall, modification, or campaign, which affects twenty (20) percent of the buses delivered under this contract. SEPTA will declare a Fleet Defect if any of the following occur: a) failures of the same component, (LRU) in the same application exceeds a failure rate of twenty (20) percent, during the component warranty period, and or b) all buses delivered or under warranty do not maintain an average aggregate Mean Distance Between Failures of at least 6000 miles. The Mean Distance Between failure is derived from SEPTA s Vehicle Maintenance Information System Vehicle Mileage and Road Service Call Failures reason F. The code F represents an in-service bus system malfunction or failure of any type. For example, a LRU, (A Line Replaceable Unit is the lowest replacement unit to maintain the bus serviceable for revenue operations) is furnished on the bus or purchased, installed and warranted as a unit. Section 7 Initial Issue Page 3 of 9

Any failure, retrofit, recall, modifications or campaign on that unit under warranty necessitating removal regardless of the cause is handled by the same method; i.e., the entire unit is removed and repaired or replaced by another unit. Furthermore, failures of a speed sensor or a turbo-compressor are considered LRUs of the propulsion system motor or the engine meet the 20 per cent removal rate of this Section, SEPTA will declare a fleet defect of the speed sensor or turbo-compressor regardless of failure type; i.e., the unit (component), broken component wiring, connector or software problem that can only be solved with the changing of the unit type currently utilized. This interpretation applies to all other equipment items specified in the warranty. For components listed below, fleet defect provisions will be applied based on the number of times the component has failed to function normally from a warrantable cause within the period: Air compressor and dryer Alternator/Battery Equalizer AMDT/ASAS/On-Board Diagnostics Auxiliary Heater Brake system; incl. Foundation brake Destination Sign System/OCU Doors systems Pneumatic System LED Lighting Engine Fuel & Injection System Drive and Non-Drive Axles Windshield Wipers/Washers PA & Radio Communication Systems Fire Suppression Systems (AFSS) Driver Defroster Heater Turbo Charger Hydraulic Pump Hydraulic Steering Unit HVAC system Radiator Starter Automatic Passenger Counter Propulsion Thermal Management /Cooling System(s) Fuel Tank(s)/DEF Systems Wheelchair ramp system(s) Interior/Exterior Displays Vehicle Multiplex Systems AVL/AVM/Video Surveillance The Contractor is responsible to correct a fleet defect under the warranty provisions defined in "Repair Procedures" (WR 1.2). The Contractor will proceed with the remedies as explained in the following paragraph. After correcting the Defect, SEPTA and the Contractor shall mutually agree to and the Contractor shall promptly undertake and complete a work program designed to prevent the occurrence of the same Defect in all other buses, spare parts, and training demonstration units purchased under this contract. Where the specific Defect can be solely attributed to particular identifiable part(s), the work program shall include redesign and/or replacement of only the defectively designed and/or manufactured part(s). In all other cases, the work program shall include inspection and/or correction of all of the buses in the fleet via a mutually agreed to arrangement. The Contractor shall demonstrate the performance efficacy of the fleet defect correction work program(s). The Contractor shall develop and provide SEPTA the engineering analysis, test data, reliability improvement forecast and on-site system or component testing data to validate the Contractor's work program recommendation. Recommendation Data must be presented to SEPTA for concurrence and milestone submittals. The Contractor shall provide SEPTA with documentation listing the bus number or each retrofit, campaign and modification work showing start and finish date for each bus and a project completion date. Section 7 Initial Issue Page 4 of 9

Upon completion of a project, process instructions, Bill of Material(s) and functional checkout procedures will be submitted to the Project Manager within seven working days after the last bus is completed. For a period not less than one (1) year after completion of a work program, or longer as outlined in Contractor Warranty WR 1.1.1.1, the Contractor shall monitor the effectiveness of the work program designed to prevent a re-occurrence of the same defect in the fleet. This period will be used to evaluate the performance of the repair. The status of the defect will remain open during this period until the Contractor has demonstrated the effectiveness of the repair to SEPTA. The warranty on items determined to be fleet defects shall be extended for the duration from the notification by SEPTA of a fleet defect until the work program is completed or as agreed to by SEPTA. This extended warranty shall restart on the date of completion of the repair / replacement work program as agreed to by SEPTA. SEPTA will not perform fleet defect repairs under the provisions of this warranty. The Contractor or his representative must perform all repairs to fleet defects. WR 1.1.6.2 Exceptions to Fleet Defect Provisions The fleet defect warranty provisions shall not apply to SEPTA supplied items such as fareboxes, fare collection equipment, and tires. Fleet defect warranty provisions shall not apply to defects caused by noncompliance with the Contractor s normal maintenance practices and procedures as long as they are not in conflict with this specification. The Contractor shall pass on to SEPTA any warranty, offered by a component supplier, that is superior to that required herein. The Contractor's maintenance practices and procedures shall be approved by SEPTA. Maintenance manuals shall be approved by SEPTA. WR 1.2 Repair Procedures WR 1.2.1 Repair Performance The Contractor is responsible for all warranty-covered repair work. The Contractor shall be responsible for the performance of all required warranty work at its sole cost and expense during the warranty period. The Contractor will perform, or have performed, all required warranty work as promptly as possible so as to preclude or minimize any interruptions to, or disruptions of, the operation of normal route service of the buses resulting from delays in the performance of warranty work under this Contract. Bus(es) required to be out-of-service 21 calendar days or more will trigger a retainage notification process that may increase the retainage two (2) percent on the next set of bus invoice(s) per Section 3 - Paragraph GC 8 - Payments; Additional retainage on the remaining buses to be delivered. At its discretion, SEPTA or it s designated representative may perform such work if it determines it needs to do so based on transit service or other requirements. Such work shall be reimbursed by the Contractor. WR 1.2.2 Repairs By Contractor The Contractor or its designated representative must establish provisions at SEPTA for on-site customer service support and repair staff for the duration of the base warranty, and begin work on warranty-covered repairs within five (5) working days after receiving notification of a Defect from SEPTA. The Contractor shall perform such work in a timely manner to make the bus available for transit service or other requirements. Section 7 Initial Issue Page 5 of 9

The Contractor shall provide at its own expense all parts, tools, and space required to complete repairs. At its sole discretion, SEPTA may provide shop space to complete repairs, subject to availability. At SEPTA s option, the Contractor may be required to remove the bus from SEPTA s property while repairs are being effected. If the bus is removed from SEPTA s property, the Contractor s representative must diligently pursue repair procedures. SEPTA will allow a 21 calendar day grace out-of-service period per bus for the respective bus system malfunction attributable to a warranty restoration and or only a total of five (5) percent of the bus fleet out-of-service allowance of the total bus fleet delivered attributable to all warranty reasons. If the number of buses out-of-service exceeds five (5) percent, each respective bus number warranty duration will be extended on the buses involved for the their entire out-of-service period each time the same bus number is in a five (5) percent out of service event. WR 1.2.3 Repairs By SEPTA WR 1.2.3.1 Parts Used If SEPTA performs the warranty-covered repairs, it shall correct or repair the Defect and any Related Defects utilizing parts supplied by the Contractor specifically for this repair. At its discretion, SEPTA may use Contractor-specified parts available from its own stock if deemed in its best interest. Monthly, or at a period to be mutually agreed upon, reports of all repairs covered by this warranty shall be submitted by SEPTA to the Contractor for reimbursement or replacement of parts. The Contractor shall use SEPTA's or mutually agreed to forms for these reports. WR 1.2.3.2 Contractor Supplied Parts SEPTA may require that the Contractor supply new parts for warranty-covered repairs being performed by SEPTA. These parts shall be ordered by the Contractor and shipped prepaid to SEPTA from any source selected within three (3) working days of receipt of the request for said parts. Parts supplied by the Contractor shall be Original Equipment Supplier (OEM) equivalent or superior to that used in the bus original manufacture. The Contractor shall maintain sufficient stock of spare parts on SEPTA s property to ensure that no more than ten (10%) percent of the fleet is out-of-service for repair of any reason at any given time during the warranty period. WR 1.2.3.3 Defective Components Return The Contractor may request that failed part covered by the warranty be returned to the manufacturing plant. SEPTA will hold failed parts as requested in writing by the Contractor on an individual basis for pickup and return to the manufacturer for fifteen (15) calendar days from date of replacement of the part. All other failed parts will be inspected and scrapped locally by the Contractor and/or his designated representative. Returns of failed parts are the responsibility of the Contractor. Warranty claim status and/or duration of warranty coverage shall not be adversely affected for any repair made by SEPTA or it s designated representative to a vehicle for which the Contractor did not obtain the failed part for examination. WR 1.2.3.4 Failure Analysis The Contractor shall, upon specific request of SEPTA, provide a failure analysis of fleet defect- or safetyrelated parts, or major components, removed from buses under the terms of the warranty, that could affect fleet operation. Such reports shall be delivered within 60 (sixty) days of the receipt of the request. Section 7 Initial Issue Page 6 of 9

WR 1.2.3.5 Reimbursement For Labor SEPTA shall be reimbursed by the Contractor for labor. The amount shall be determined by multiplying the number of man-hours actually required to correct the Defect by a per hour, first (1st) class mechanic, straight wage rate, as defined in "Technical Specifications" (Section 6), plus eighty-four (84) percent fringe benefits; plus the cost of towing in the bus if such action was necessary and if the bus was in the normal service area. NOTE: The prevailing fringe benefit rate in effect at the time of repair will be utilized. These wage and fringe benefit rates shall not exceed the rates in effect in the SEPTA s service garage at the time the Defect correction is made. Labor required to correct fleet defects shall be reimbursed by the Contractor at 134% the actual rate in effect at the time the campaign is made plus fringe benefits if SEPTA chooses to participate in a fleet defect campaign. WR 1.2.3.6 Reimbursement For Parts The Contractor has sole responsibility under this contract to maintain sufficient spare parts in his own stock on SEPTA s property to support the warranty period requirement. SEPTA is under no obligation to provide spare parts to the Contractor for warranty purposes. In the event the Contractor does not have needed spare parts on hand, SEPTA on an individual item basis and in kinds and amounts solely within its discretion, may permit its spare parts to be used by the Contractor in performance of warranty work. SEPTA shall be reimbursed by the Contractor for the use of such parts and for parts that must be replaced to correct the Defect. The reimbursement for parts shall be at the current price at the time of repair and shall include taxes where applicable and fifteen (15) percent handling costs on parts valued between 0.01 cents and 3,000 dollars. Part value over 3,000 dollars, the material handling cost will be ten (10) percent. Any investment type or regular spare part from SEPTA s stock that is used to correct a warranty covered defect shall be replaced within fifteen (15) calendar days by the Contractor with a new part of original quality. WR 1.2.3.7 Reimbursement Requirements The Contractor shall reimburse SEPTA for warranty covered expenditures within 60 (sixty) days of receipt of warranty claim. Any claim that remains as outstanding to SEPTA after this period will become due automatically at the end of the current fiscal quarter and may result in withholding of additional retainage on buses covered by this contract. When the number of diesel buses out-of-service exceeds 5% of the fleet on account of retrofits, awaiting fleet defect remediation, supplier troubleshooting, awaiting parts, or warranty running repair corrections outside the control of SEPTA, the Contractor will be charged $100.00 per day or fraction thereof. WR 1.2.4 Warranty After Replacement/Repairs If any component, unit, or subsystem is repaired, rebuilt or replaced by the Contractor, or by SEPTA with the concurrence of the Contractor, the component, unit, or subsystem shall have the unexpired warranty period of the original. Repairs shall not be warranted if Contractor-provided or authorized parts are not used for the repair; unless the Contractor has failed to respond within five days, in accordance with "Scope of Warranty Repairs" (WR 1.1.5). The warranty on items determined to be fleet defects as defined in WR 1.1.6.1 shall be extended for the time and/or miles of the original warranty remaining at the time the fleet defect was identified. This extended warranty shall begin on the repair/replacement date for corrected items on each bus. Section 7 Initial Issue Page 7 of 9