<p>MACHINERY BREAKDOWN</p>

<p>&nbsp;THE INSURERS HEREBY AGREE with the Insured (subject always to the terms, provisions and conditions contained herein or endorsed hereon), that if at any time during the period of insurance stated in the Schedule, there shall occur to the machinery insured (or any part thereof) specified in the said Schedule, whilst on the premises mentioned therein, any unforeseen and sudden physical loss or damage necessitating its repair or replacement due to the causes such as defects in casting and material, faulty design, faults at workshop or in erection, bad workmanship, lack of skill, carelessness, shortage of water in boilers, physical explosion, tearing apart on account of centrifugal force, short circuit or any other cause not specifically excluded hereinafter.</p>

<p>THE INSURERS WILL INDEMNIFY the Insured in respect of such loss or damage by payment in cash, replacement or repair (at their own option) as hereinafter provided, up to an amount not exceeding in any one year of insurance in respect of each of the machines specified in the Schedule the sum set opposite thereto and not exceeding the whole the total sum insured thereby.<br />
This insurance applies whether the insured machines are at work or at rest, or being dismantled for the purpose of cleaning, overhauling or of being shifted within the said premises, or in the course of the aforesaid operations themselves, or in the course of subsequent re-erection, but in any case only after successful commissioning.</p>

<p>THE INSURERS SHALL NOT BE LIABLE FOR:<br />
a. The deductible stated in the Schedule to be borne by the Insured in any one occurrence; if more than one machine is lost or damaged in one occurrence, the Insured shall not, however, be called upon to bear more than the highest single deductible applicable to such machines;<br />
b. Loss or damage to belts, ropes, wires, chains, rubber tires, dies or exchangeable tools, engraved cylinders, objects made of glass, porcelain, ceramics, felts, sieves or fabrics, all operating media (e.g. lubricating oil, fuel, catalysts);<br />
c. Loss or damage arising directly from lightning, directly or indirectly from fire, the extinguishment of a fire, or clearance of debris and dismantling necessitated thereby, chemical explosion (except flue gas explosion in boilers), smoke, soot, aggressive substances, theft, subsidence, landslide, rock slide, cyclone, storm, typhoon, flood, inundation, earthquake, volcanic eruption, tsunami, impact of land-borne, waterborne or airborne craft;<br />
d. Loss or damage directly or indirectly caused by or arising out of war, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, mutiny, riot, strike, lock-out, civil commotion, military or usurped power, a group of malicious persons or persons acting on behalf of or in connection with any political organization, conspiracy, confiscation, commandeering, requisition or destruction of or damage by order of any government de jure or de facto or by any public authority, nuclear reaction, nuclear radiation or radioactive contamination;<br />
e. Loss or damage caused by any faults or defects existing at the time of commencement of the present insurance within the knowledge of the Insured, or his representatives, whether such faults or defects were known to the Insurers or not;<br />
f. Loss or damage arising out of the willful act or gross negligence of the Insured or of his representatives;<br />
g. Loss or damage for which the supplier or manufacturer is responsible either by law or under contract;<br />
h. Loss or damage as a direct consequence of the continual influence of operation (e.g. wear and tear, cavitation, erosion, corrosion, rust, boiler scale);<br />
i. Consequential loss or liability of any kind or description, any payments over and above the indemnity for material damage as provided herein.&nbsp;<br />
In any action, suit or other proceeding where the Insurers allege that by reason of the provisions of Exclusions (d) - (g) above any loss, destruction, damage or liability is not covered by this insurance the burden of proving that such loss, destruction, damage or liability is covered shall be upon the Insured.</p>

<p>PROVISIONS<br />
SUM INSURED:<br />
It is a requirement of this insurance that the sum insured shall be equal to the cost of replacement of the insured machinery by new machinery of the same kind and same capacity, which shall mean its replacement costs including, e.g. freight, dues and customs duties, if any, and erection costs.<br />
If the sum insured is less than the amount required to be insured, the Insurers will pay only in such proportion as the sum insured bears to the amount required to be insured. Every item if more than one shall be subject to this condition separately.</p>

<p>BASIS OF INDEMNITY:<br />
a. In cases where damage to an insured item can be repaired - the Insurers will pay expenses necessarily incurred to restore the damaged machine to its former state of serviceability plus the cost of dismantling and re-erection incurred for the purpose of effecting the repairs as well as ordinary freight to and from a repair shop, customs duties and dues, if any, to the extent such expenses have been included in the sum insured. If the repairs are executed at the workshop owned by the Insured, the Insurers will pay the cost of the materials and wages incurred for the purpose of the repairs plus a reasonable percentage to cover overhead charges.<br />
No deduction shall be made for depreciation in respect of parts replaced, but the value of any salvage will be taken into account.<br />
If the cost of repairs as detailed hereinabove equals or exceeds the actual value of the machinery insured immediately before the occurrence of the damage, the settlement shall be made on the basis provided for in (b) below.<br />
b. In cases where an insured item is destroyed - the Insurers will pay the actual value of the item immediately before the occurrence of the loss, including costs for ordinary freight, erection and customs duties, if any, provided such expenses have been included in the sum insured, such actual value to be calculated by deducting proper depreciation from the replacement value of the items. The Insurers will also pay any normal charges for the dismounting of the machinery destroyed, but the salvage will be taken into account.</p>

<p>Any extra charges incurred for overtime, night-work, work on public holidays, express freight, are covered by this insurance only if especially agreed in writing.<br />
The cost of any alterations, additions, improvements or overhauls shall not be recoverable under this policy.<br />
The costs of any provisional repairs will be borne by the Insurers if such repairs constitute part of the final repairs, and do not increase the total repair expenses.<br />
The Insurers will make payments only after being satisfied by production of the necessary bills and documents that the repairs have been effected or replacement has taken place, as the case may be.</p>

<p>INSPECTION OF TURBINES, TURBO GENERATORS AND BOILERS:<br />
All mechanical and electrical parts of any steam-turbine, gas turbine or turbo generator set, up to 30,000 KW shall be inspected and overhauled thoroughly in a completely opened up state at least every two years; for turbines or turbo generators exceeding 30,000 KW such inspection and overhaul shall take place after 20,000 hours of operation or at least every three years. All boilers shall be inspected annually. The Insured shall arrange for these regular inspections in such a way as to enable the Insurers&#39; representatives to be present at the inspection at their own expense. The Insurers shall be notified at least seven days in advance of the commencement of any overhauling necessary according to expert opinion.<br />
If the Insured fails to comply with the requirements of this condition, the Insurers shall be free from all liability for loss or damage caused by any circumstances which could have been detected had an inspection taken place in the presence of the Insurers&#39; representatives.<br />
The Insured may apply for an extension of the period between any two regular inspections, and such extension shall be granted if in the opinion of the Insurers the risk is not aggravated hereby.</p>

<p>CONDITIONS<br />
1. The due observance and fulfillment of the terms of this policy in so far as they relate to anything to be done or complied with by the Insured shall be<br />
a condition precedent to any liability of the Insurers.<br />
2. The Insured shall at his own expense take all reasonable precautions to prevent loss, damage or liability and to comply with statutory and manufacturer&#39;s recommendations.<br />
3. a) Representatives of the Insurers shall at all reasonable times have the right to inspect and examine the plant and the Insured shall provide the representatives of the Insurers with all details and information necessary for the assessment of the risk.<br />
b) The Insured shall immediately notify the Insurers in writing of any material change in the risk and cause such additional precautions to be taken as circumstances may require to ensure safe operation of the insured machinery, and the scope of cover shall if necessary be adjusted accordingly.</p>

<p>No material alteration shall be made or admitted by the Insured whereby the risk of damage is increased, unless the continuance of the Insurance be confirmed by memorandum signed by or on behalf of the Insurers.</p>

<p>4. In the event of any occurrence which might give rise to a claim under this Policy the Insured shall:<br />
a) immediately notify the Insurers by telephone or telegram as well as in writing, giving an indication as to the nature and extent of loss or damage;<br />
b) take all reasonable steps within his power to minimize the extent of the loss or damage;<br />
c) preserve the damaged or defective parts and make them available for inspection by an official or surveyor of the Insurers;<br />
d) furnish all such information and documentary evidence as the Insurers may require.</p>

<p>The Insurers shall not be liable for any loss or damage of which no notice has been received by the Insurers within 30 days of its occurrence. Upon notification of a claim being given to the Insurers, the Insured may proceed with the repair of any minor damage provided that the carrying out of such repair is without prejudice to any question of liability of the Insurers and that any damaged part requiring replacement is kept for inspection by the Insurers, but in all other cases a representative of the Insurers shall have the opportunity of inspecting the damage before any alterations, repairs or replacements are effected. If an inspection by a representative of the Insurers does not take place within a period of 14 days from the date of the notification of the claim, the Insured shall be entitled to proceed with the repairs or replacement. Nothing contained herein shall prevent the Insured from taking such<br />
steps as are absolutely necessary to maintain the operation of the plant.<br />
The liability of the Insurers under this Policy in respect of any item of property that sustained damage, for which indemnity is provided, shall cease if the said item is kept in operation without being repaired to the satisfaction of the Insurers.<br />
The amount of any loss or damage for which an Insurer maybe liable, under this Policy, shall be paid within 30 days after proof of loss is received by the Insurer and ascertainment of the loss or damage is made either by agreement between the Insured and Insurer or by arbitration, but if such ascertainment is not had or made within 60 days after such receipt by the Insurer of the proof of loss, then the loss or damage shall be paid within 90 days after such receipt. Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board, unless such failure or refusal to pay is based on the ground that the claim is fraudulent.</p>

<p>5. If the proposal or declaration of the Insured is not true in any material respect, or if a claim is in any respect fraudulent, or if any false declaration is made or used in support thereof, or if any fraudulent means or devices are used by the Insured or anyone acting on his behalf to obtain any benefit under this Policy, or if a claim be made and rejected and an action or suit be not commenced either in the Insurance Commission or any court of competent jurisdiction within twelve (12) months from receipt of notice of such &nbsp;rejection, or in case of arbitration taking place as provided herein, within twelve (12) months after due notice of the award made by the arbitrator or arbitrators or umpire, then the claim shall for all purpose be deemed to have been abandoned and shall not thereafter be recoverable hereunder.</p>

<p>6. The Insured shall at the expense of the Insurers do and concur and in doing and permit to be done, all such acts and things as may be necessary or required by the Insurers in the interest of any right of remedies, or of obtaining relief or indemnity from parties (other than those insured under this Policy) to which the Insurers shall be or would become entitled or subrogated upon their paying for or making good of any loss or damage under this Policy, whether such acts and things shall be or become necessary or required before or after the Insured&#39;s indemnification by the Insurers.</p>

<p>7. No admission, offer, promise, payment or indemnity shall be made or given by or on behalf of the Insured without the written consent of the Insurers who shall be entitled if they so desire to take over and conduct in the name of the Insured the defense or settlement of any claim for indemnity or damage or otherwise and shall have full discretion in the conduct of any proceedings or in the settlement of any claim and the Insured shall give all such information and assistance as the Insurers may require.</p>

<p>8. This insurance may be terminated at the request of the Insured at any time. This insurance may equally be terminated at the option of the Insurers by seven days&#39; notice to that effect being given to the Insured.<br />
However, no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following:<br />
a. conviction of a crime arising out of acts increasing the hazard insured against;<br />
b. discovery of fraud or material misrepresentation;<br />
c. discovery of willful or reckless acts or omissions increasing the hazard insured against;<br />
d. physical changes in the property insured which result in the property becoming uninsurable; or<br />
e. a determination by the Commissioner that the continuation of the policy would violate or would place the Insurer in violation of this Code.</p>

<p>All notices of cancellation shall be in writing, mailed or delivered to the named Insured at the address shown in the policy, and shall state (a) which of the grounds set forth above is relied upon and (b) that, upon written request of the named Insured the Insurer will furnish the facts on which the cancellation is based.</p>

<p>Unless the Insurer at least forty-five (45) days in advance of the end of the policy period mails or delivers to the named Insured at the address shown in the policy notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or elimination of coverage, the named Insured shall be entitled to renew the policy upon payment of the premium due on the effective date of the renewal. Any policy written for a term of less than one year shall be considered as if written for a term of one year. Any policy written for a term longer than one year or any policy with no fixed expiration date shall be considered as if written for successive policy periods or terms of one year.</p>

<p>9. All differences as to the amount of any loss or damage covered by this Policy shall be referred to the decision of an arbitrator to be appointed by the parties in difference or if they cannot agree upon a single arbitrator to the decision of two arbitrators one to be appointed in writing by each of the parties within thirty (30) days after having been required in writing so to do by either of the parties or in case of disagreement between the arbitrators to the decision of an umpire to be appointed in writing by the arbitrators before entering on the reference and an award by the arbitrator or arbitrators or umpire shall be a condition precedent to any right of action against the company.<br />
10. If at the time any claim arises under this Policy there be any other insurance covering the same loss or damage the Insurers shall not be liable to pay or contribute more than their ratable proportion on any claim for such loss or damage. If such other insurance is subject to any condition of advantage to the Insurers this Policy shall be subject to such conditions in a like manner.</p>
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