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225 ITRON, INC. SERVICE AGREEMENT CONTRACT NO. This Service Agreement ("Agreement") is made between Itron, Inc., a Washington corporatlontltron'?, and Ci t Y 0 f S an Marco s, Texas C'Customer"). This Agreement sets forth the terms and conditions under which Itron will provide services for the equipment and/or software listed on Schedule A("Products"), which is appended to and incorporated into this Agreement. Itron requires Customer to execute this Agreement before Itron will perform any services on the Products. SECTION 1. ELIGIBIlITY AND TERM OF AGREEMENT Customer represents that it is the owner or licensee of the Products serviced under this Agreement. or, if not the owner or licensee, has authority from the owner or licensee to include the Products under this Agreement. The term of this Agreement shall commence on the date of execution by Customer and shall remain in force for one (1) year after the latest warranty expiration date on the Products listed on Schedule A at the time this Agreement is executed by Customer (the "Initial Term"). Either party may, at any time after the Initial Term, withdraw Product models from this Agreement upon ninety (90) days prior written notice. When a Product is withdrawn from this Agreement, Customer will receive credit for any charges already paid for service beyond the date of withdrawal. Following the expiration of the Initial Term, this Agreement shall remain effective unWlerminated by either party upon ninety (90) days prior written notice, provided that either party may terminate-this agreement at any earlier time pursuant to Section 5. SECTION 2. SERVICE Itron shall provide services to keep the Products listed on Schedule A in good working order in accordance with the then current applicable Itron Service Program ("Services"). A copy of such Program for the first year of Service is attached hereto as Exhibit A. Service shall include labor, parts, tools, and test equipment necessary for the service and support of the Products. New or equivalent to new standard parts shall be used in effecting repairs. Parts shall be provided on an exchange basis and replaced parts shall become the property of Itron. Itron shall have reasonable access to the Products to provide Service thereon. SECTION 3. QUARTERLY CHARGES Service charges specified in Schedule A for each Product and any Product purchased or licensed subsequent to the effective date of this Agreement shall commence upon the expiration of the warranty period for said Product. The quarterly charges shall be prorated based upon actual warranty expiration dates. Quarterly charges shall be invoiced thirty (30) days prior to the first day of each calendar quarter for which Services are to be provided. All invoices for quarterly charges shaIJ be paid by Customer in U.S. dollars thirty (30) days from date of receipt of invoice. Itron may change the quarterly charge upon ninety (90) days prior written notice, provided that no such changes hall be effective prior to expiration of the Initial Term In no event shall the rates be modified more than once during any twelve month period. Changes requested by Customer to Product specifications, functionality, attachments, or features that are beyond the scope of Services may result in an adjustment of the specified basic quarterly charge. SECTION 4. TAXES In addition to the charges due under this Agreement, Customer agrees to pay amounts equal to any taxes and duties resulting from this Agreement, or any activities hereunder, exclusive of taxes based upon Itron's net income. 3/29/99 In the event Customer is a tax exempt entity, Customer shall provide Itron with a copy of its tax exemption certificate upon execution of this Agreement. SECTION 5. EARLY TERMINATION Either party may terminate this Agreement upon the occurrence of any of the following: (a) If a party becomes insolvent, executes an assignment for the benefit of creditors, or becomes subject to bankruptcy or receivership proceedings. Upon the occurrence of such default, the other party may, at its option and without notice to or demand on the party in default, declare this Agreement terminated. (b) If a party breaches a material provision of this Agreement, the other party may give written notice of the breach. If the breaching party fails to make progress to cure the breach 10 an extent satisfactory to the nonbreaching party within thirty (30) days, the nonbreaching party may terminate this Agreement upon written notice. In the event of termination, Customer shall receive a credit for any charges already paid for Services beyond the date of termination, however, in the event of nonpayment, all accrued charges shall become immediately due and payable. SECTION 6. GENERAL (a) Assignment. Customer shall not assign this Agreement, direct\:! or indirectly, without the prior written consent of Itron; provided, however, that Customer may assign this Agreement to its successor in a merger or to the purchaser of all or substantially all of Customer's assets if such successor or purchaser agrees in writing to comply with the terms and condilions of this Agreement (b) Governing Law. This Agreement and performance hereunder shall be governed by and construed in accordance with the laws of the State of Washington, U.S.A., without reference to choice of law principles that would result in application of laws other than the laws of the State of Washington. (c) Enforceability. If any provision in this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shaff in no way be affected or impaired thereby. (d) Notices and Reauests. Notices hereunder shall be in writing and shall be given by either party to the other by delivery or by mailing the same by prepaid registered mail addressed as specified below or to such other address as may be substituted by written notice by either party to the other: Customer: Notices to Customer at address provided below. Itron: ITRON, INC. 2818 N. Sutrivan Road Spokane, WA99216 Attn: Contract Administrator