EXHIBIT 10.1

SALE OF GOVERNMENT PROPERTY
AMENDMENT OF INVITATION FOR BIDS/MODIFICATION OF CONTRACT

 

1. AMENDMENT TO INVITATION FOR BIDS NO.:

 

 

2. EFFECTIVE DATE

 

PAGE 1 OF 10 PAGES

 

SUPPLEMENTAL AGREEMENT NO.: 11

 

09/12/06

 

 

 

3. ISSUED BY

 

 

NAME AND ADDRESS WHERE BIDS ARE RECEIVED

 

DEFENSE REUTILIZATION AND MARKETING SERVICE

INTERNATIONAL SALES OFFICE, ATTN:DRMS-BBS

74 N WASHINGTON STREET

BATTLE CREEK MI 49017-3092

 

DEFENSE REUTILIZATION AND MARKETING SERVICE

INTERNATIONAL SALES OFFICE, ATTN:DRMS-BBS

74 N WASHINGTON STREET

BATTLE CREEK MI 49017-3092

 

o AMENDMENT OF INVITATION FOR BIDS NO.
(See Item 6)

 

DATED

 

x MODIFICATION OF CONTRACT NO.
     (See Item 8)
99-0001-0002

 

DATE

06/13/01

 

6. THIS BLOCK APPLIES ONLY TO AMENDMENTS OF INVITATIONS FOR BIDS

 

The above numbered invitation for bids is amended as set forth in Item 9.
Bidders must acknowledge receipt of this amendment unlessindicated otherwise in
Item 11 prior to the hour and date specified in the invitation for bids, or as
amended, by one of the following methods:

 

(a)   By signing and returning                 copies of this amendment;

 

(b)   By acknowledging receipt of this amendment on each copy of the bid
submitted; or

 

(c)   By separate letter or telegram which includes a reference to the
invitation for bids and amendment number.

 

FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE ISSUING OFFICE PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR BID. If by virtue of
this amendment you desire to change a bid already submitted, such change may be
made by telegram or letter, provided such telegram or letter makes reference to
the invitation for bids and this amendment, and is received prior to the opening
hour and date specified.

 

7. ACCOUNTING AND APPROPRIATION DATA (If required)

 

8. THIS APPLIES ONLY TO MODIFICATION OF CONTRACTS

This Supplemental Agreement is entered into pursuant to authority of Mutual
Agreement

 

 

9. DESCRIPTION OF AMENDMENT/MODIFICATION (Except as provided below all terms and
conditions of the document referenced in Item 5 remain in full force and effect)

 

 

 

Whereas Contract 99-0001-0002 was entered into on June 13, 2001 by and between
the United States of America, hereinafter referred to as the Government, and
SURPLUS ACQUISITION VENTURE (SAV), LLC, hereinafter referred to as the
Contractor, and GOVERNMENT LIQUIDATION (GL), LLC, formed by the contractor to
serve as the entity that processes DRMS assets, hereinafter referred to as the
Purchaser, and whereas the contract involved the following in Invitation For Bid
99-0001:

 

 

 

0001: All Federal Stock Classes (FSCs) listed in Table IV-1 of solicitation on
the DRMS accountable record that are demilitarization code A, B, or Q, located
at various U.S. (to include Alaska and Hawaii), Puerto Rico and Guam military
installations.  Contract performance is 7 years.

 

 

 

THE HOUR AND DATE FOR RECEIPT OF BIDS o IS NOT EXTENDED, o  IS EXTENDED UNTIL
          O’CLOCK
(LOCAL TIME)                 DATE                        

 

10. BIDDER/PURCHASER NAME AND ADDRESS
(Include ZIP Code)
SURPLUS ACQUISITION VENTURE, LLC
2131 K Street NW, 4th Floor
Washington, DC 20037

 

11. o BIDDER IS NOT REQUIRED TO SIGN THIS    

           DOCUMENT

     x PURCHASE IS REQUIRED TO SIGN THIS

           DOCUMENT AND RETURN ORIGINAL AND      

           0 COPIES TO THEISSUING OFFICE

 

12. SIGNATURE FOR BIDDER/PURCHASER

 

15. UNITED STATES OF AMERICA

 

 

 

 

 

BY                      /s/ William Angrick
(SIGNATURE OF PERSON AUTHORIZED TO SIGN)

 

BY            /s/ Neil A. Watters
(SIGNATURE OF CONTRACTING OFFICER)

 

13.NAME & TITLE OF SIGNER (Type or print)

 

14. DATE SIGNED

 

16. NAME OF CONTRACTING OFFICER(Type or print)

 

17. DATE SIGNED

 

 

 

 

 

 

 

WILLIAM ANGRICK
CEO

 

9/12/2006

 

NEIL A. WATTERS

 

9/12/2006

 

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CONTRACT NUMBER 99-0001-0002

Supplemental Agreement 11
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WHEREAS, DRMS has identified a need to strengthen procedures related to the
proper identification and control of property to ensure that restricted property
is not released to the public under Sales Contract Number 99-0001-0002; and

WHEREAS, the rules defining “Controlled Property” are dynamic due to frequent
DEMIL code changes, evolving counter-terrorism policies and other business
rules; and

WHEREAS, DRMS seeks to implement a comprehensive solution to mitigate the
identified risks; and

WHEREAS, Surplus Acquisition Venture, LLC (“Contractor”) and its parent company
Liquidity Services, Inc. (“LSI”) can leverage technology and surplus property
domain expertise to develop and implement new inventory inspection and tracking
procedures with respect to the property for resale that DRMS provides; and

WHEREAS, the Contractor shall undertake new inventory inspection and assurance
procedures resulting in opportunity costs, and program management requirements
not contemplated in the net proceeds sharing ratios under Sales Contract Number
99-0001-0002; and

NOW, THEREFORE, it is mutually agreed between the parties hereto to this
modification that Contract Number 99-0001-0002 shall be amended as follows:

1.             ARTICLE THREE, SECTION 1(A), Titled, R/T/D Review:

Add the following:

1.               Effective December 1, 2006, Controlled Property shipped from a
Hub Site to a Controlled Property Center (“CPC”) (see Art. Three, Section 3)
will receive an additional level of Reutilization, Transfer and Donation
(“R/T/D”) screening via a private web site developed by the Purchaser or via a
data feed to GSA’s R/T/D web site for a period of 2 business days (48 hours)
prior to being released for sale.  Transfer and Donation screening will not
occur until the Property has been cleared for sale as defined in Section 3A of
Article Three.

2.               Property that is requisitioned for Reutilization, Transfer or
Donation by an authorized R/T/D customer will be returned to the DRMS, and will
not migrate from the private R/T/D web site (or from the GSA R/T/D web site) to
the Purchaser’s public sales web site.  The title to such property shall revert
to DRMS and DRMS shall credit the Purchaser the amount of the Contractor’s
purchase price for any item of property returned hereunder.

3.               The Purchaser will pull the item from inventory and deliver it
to the DRMS representative at the CPC who will arrange for the release of the
item to the R/T/D customer.

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4.               It is anticipated that the volume of property that will be
returned to the DRMS as a result of the additional R/T/D screening period will
be approximately 12,000 line items per year.  The Purchaser will receive
compensation for R/T/D up to the estimated amount by increasing the net proceeds
share by one percent (1%).

5.               If the actual volume of R/T/D exceeds 24,000 line items
annually, DRMS and the Purchaser shall renegotiate an increase in the net
proceeds sharing split between the parties.

6.               Effective upon the signing of this modification, Purchaser
agrees to return property that has not been awarded to a resale customer that
DRMS has identified as a mission essential reutilization requirement.   DRMS
will support all reutilization requirements with a mission impact statement
advising that property is needed to satisfy an authorized requirement.   Prior
to notifying Purchaser of the reutilization requirement, DRMS will have ensured
that current DRMS inventory is not available to satisfy the reutilization
request.  The title to such property shall revert to DRMS and DRMS shall credit
the Purchaser the amount of the Contractor’s purchase price for any item of
property returned hereunder.

2.             ARTICLE THREE, SECTION 3, Titled, R/T/D of the Property; Property
Storage; Delivery of Property to Purchasers and Passage of Title.

(D)               Inventory Assurance Procedures for Batch Box Items.

(1)           Inventory Assurance.  Contractor and Purchaser have agreed to set
up and implement an inventory assurance procedure for Batch Box Items and Local
Stock Number (LSN) items, except for LSN items identified, low-risk FSCs, a list
of which will be provided by and updated as needed by DRMS.

(2)           Batch Boxes and LSN items (not identified at the Hub Site as
“low-risk” FSC) (“Controlled Property”) to Controlled Property Center.  DRMS
shall ship all Controlled Property to a CPC where batch boxes will be broken
down, inspected, and the item identification verified by Purchaser’s personnel
(with Government oversight) as set forth herein.

(3)           Scanning Process.   Purchaser’s personnel, using Contractor’s
proprietary barcode technology and any enhancements made thereto, will scan the
National Stock Number (NSN) from the DD Form 1348-1A.  The technology will allow
Purchaser to check the data against a DRMS created and maintained “Controlled
Property Restricted List” Database that DRMS will update and provide to
Purchaser at an agreed upon frequency (the “Controlled Property Restricted
List”).  If the scan reveals that the Batch Box Item or LSN is on the Controlled
Property Restricted List or item identification cannot be determined (refer to
Section 3A(C) for further LSN guidance), then the item will be returned to DRMS
and Purchaser shall receive a credit for the contractor’s purchase price for
those items.   The title to such property shall revert to DRMS.  DRMS shall, at
its sole expense, remove all items identified as not eligible for sale from the
CPC, or provide at its sole expense, warehousing space for such items separate
from any warehousing space used for the property.  For NSN items, DRMS
acknowledges for the purposes of this screening process that the

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Purchaser is relying on the accuracy of the information contained on the DD Form
1348-1A accompanying each property item it receives and visual inspection of the
Controlled Property. All items determined to be eligible for sale shall proceed
through the sales pipeline after Government physical verification and approval,
such verification and approval to be completed in a good faith timely manner.

(4)           Inadequate Documentation.  If Batch Box Items contain illegible or
inadequate documentation necessary to determine whether the item falls within
the Controlled Property Restricted List, then Purchaser shall set the item aside
and conduct a further investigation with DRMS to confirm whether the item is
deemed to be a Controlled Property Restricted item. DRMS and Purchaser agree to
work together in good faith to establish business rules regarding the required
level of detail for specific FSCs and commodity types for adequate risk
management. If DRMS determines an item is not eligible for sale, then DRMS shall
dispose of such items as it would other items falling within the Controlled
Property Restricted List and Purchaser shall receive a credit for the
Contractor’s Purchase Price for those items.  The title to such property shall
revert to DRMS.

(5)           Warehouses for Inventory Assurance.  Notwithstanding any other
provision of this Contract to the contrary, DRMS, at its sole expense, agrees to
provide Purchaser additional warehouses with approximately 140,000 square feet
of space at each location when available to serve as a CPC for the scanning
procedures described in this Section 3(D), based on a good faith effort by DRMS
to acquire such space.  The CPCs will be established in locations that are
mutually agreed upon between the Purchaser and DRMS, and may be altered as
needed to facilitate performance requirements.  The Purchaser will provide the
DRMS with proof of receipt of property at all CPCs by line item.   Any
discrepancies in quantities will be mutually researched and resolved by DRMS and
the Purchaser.   Purchaser will retain item visibility of all items until
released for sale to the public.

(6)           Continuing Review of Items Lotted For Sale. Periodically, at an
agreed upon frequency (no less frequently than weekly and no more frequently
than daily), the DRMS agrees to provide data to the Purchaser and the Purchaser
agrees to conduct a scan of Property items received against the Controlled
Property Restricted List.  If the scan reveals that any item received is on the
Controlled Property Restricted List, then the item shall be removed from the
Purchaser’s sales pipeline and returned to DRMS or another disposition as
agreed, at the sole expense of DRMS.  The title to such property shall revert to
DRMS.  Purchaser shall receive a credit for the Contractor’s Purchase Price for
those items.

(7)           Report of Restricted Items.  Purchaser agrees to supply DRMS on an
agreed upon frequency a report in a machine readable format that lists the items
that the Purchaser determined fell within the scope of the Controlled Property
Restricted List  through the procedures described in Section 3(D)(3). 
Additionally, the Purchaser shall make available to the DRMS verifier for
inspection all potentially Controlled items identified by the Purchaser as “safe
to sell.”  DRMS will provide to the Purchaser current batch lotting procedures. 
Purchaser will identify discrepant items discovered by DTID number of the batch
lot for tracking and reporting purposes.  On

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site DRMS personnel will determine the proper method of disposal for discrepant
property at the sole expense of DRMS.  Title to such property shall revert to
DRMS.  Purchaser shall receive a credit for the Contractor’s Purchase Price fo
those items.

(8)           Duty to Cooperate.  DRMS and Purchaser shall cooperate as is
reasonably required to implement the inventory assurance procedures set forth in
this Section 3(D).

(9)           Start Date.  As the CPCs become operational, but not later than
December 1, 2006, all batch box and LSN property, including aged property
already referred to the Purchaser, will be processed through the CPCs, unless
otherwise approved by DRMS.

3.             ARTICLE SIX, SHALL BE AMENDED TO ADD THE FOLLOWING AS SECTION 3A:

Section 3A.  Controlled Property Restricted List

(A)          Not later than December 1, 2006, Purchaser, on a weekly basis,
shall compare their National Stock Number (NSN) records of property received
against the DRMS Controlled Property Restricted List as described in Article 3,
Section 3(D).  Purchaser agrees to remove all property found on the Controlled
Property Restricted List from the sale lot and return such property to DRMS or
another disposition as agreed upon by the parties, and at the sole risk and
expense of DRMS.  The title to such Property shall revert to DRMS upon
Purchaser’s disposition of the Property as instructed by DRMS.

(B)           Not later than December 1, 2006, Purchaser shall match all
incoming delivery orders for their respective property flows against the DRMS
Controlled Property Restricted List as described in Article 3, Section 3(D). 
Purchaser agrees that any property found on the Controlled Property Restricted
List will be returned to DRMS or another disposition as agreed upon by the
parties, at DRMS’s sole risk and expense.  The title to such property shall
revert to DRMS upon return to DRMS control.

(C)           The parties understand that Local Stock Numbers (“LSNs”) cannot be
checked systemically as they do not typically contain identifiable National Item
Identification Numbers (NIINs).  Purchaser agrees, at the time of lotting for
sale, to visually inspect and scrutinize each LSN item.  All LSN items
determined to be eligible for sale shall proceed through the sales pipeline
after Government physical inspection and approval, such verification and
approval to be completed in a good faith timely manner.  If the LSN item upon
inspection is unidentifiable or of suspect use, the Purchaser shall contact the
Government Controlled Property Center, Controlled Property Verifier for further
instruction.  If the Government representative determines the item is not
eligible for sale, the Purchaser agrees that the item will be considered a
Controlled Property Restricted List item and the Purchaser agrees the property
will not be identified for sale.  The title to any such Property shall revert to
DRMS upon return to DRMS control.  Additionally, the Purchaser shall make
reasonably available to the Government Verifier for inspection all items
identified by the Purchaser as “safe to sell” for verification.  Purchaser will
perform research to identify the LSN to an NSN if possible.  Items that are not
authorized for sale by the Government Verifier will be returned to the DRMS for
proper disposal.  The title to any such property shall revert to DRMS.

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CONTRACT NUMBER 99-0001-0002
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(D)          Purchaser agrees to provide DRMS a regular reporting at a mutually
agreed upon frequency identifying all items that Purchaser returned from their
property flows in accordance with Section 3A(A), 3A(B), or 3A(C) above.

(E)           DRMS shall credit the Purchaser the amount of the Contractor’s
Purchase Price for any item of Property returned as provided in Section 3A(A),
3A(B), and 3A(C) above.  The amount of any credit to which this section entitles
Purchaser shall be deducted from the amount of DRMS’ next invoice to the
Purchaser.  If there are no more Invoices forthcoming, the next Distributions
shall be adjusted for such credit.  If no more Distributions are forthcoming,
DRMS shall issue Contractor a check for the amount of the credit.

4.             ARTICLE NINE, SECTION 1(B) SHALL BE REVISED TO STATE:

(B)          Seller Indirect Costs.

“Seller Indirect Costs” are (i) subject to the provisions and limitations of
Section 4(F) of Article 3, all costs that are actually incurred by Purchaser for
the packing, loading and transport of Property referred for sale to Purchaser at
a DLA Depot, Restricted Access Facility, or Special Situation Location, that
does not allow on-site processing,  and either (1) paid to any Person that is
not an Affiliated Party or (2) paid to an Affiliated Party and constituting one
of the “Permitted Affiliate Transactions” identified at Schedule VI.7.3.(C),
(ii) the actual and minimum reasonable costs incurred by Purchaser to comply
with administrative or other requirements by DRMS as agreed to by Purchaser, or
(iii) as otherwise provided herein.  All costs incurred by Purchaser and
Contractor in implementing, developing, or enhancing the Inventory Assurance
Procedures specified in Article 3, Section 3(D), or those procedures to set
aside Restricted Items specified in Article Six, Section 3A shall be considered
Seller Indirect Costs.  First year start up Seller Indirect Costs associated
with this process will not exceed $5 million.

5.             ARTICLE SEVEN, SECTION 5 SHALL BE AMENDED TO ADD THE FOLLOWING
SUBSECTION (G):

Purchaser shall provide DEMIL Code A buyer information to DCIA upon the receipt
of a judicial or administrative subpoena, specifying the information being
requested.  Customer information will include all information provided to the
Purchaser by the customer during the course of bid receipt and contract award.  
If property sold as DEMIL Code A, however, is later found to have changed to any
DEMIL code other than A, Purchaser will assist DCIA in the course of an
investigation as if the property were in fact, sold as DEMIL Code B or Q and
will provide DRMS upon request, all information provided to Purchaser by the
customer during the course of bid receipt and contract award.  Purchaser shall
cooperate and provide an administrative point of contact for all DCIA requests
for assistance.

6.             ARTICLE SEVEN, SECTION 4 FIRST PARAGRAPH SHOULD BE AMENDED AS
FOLLOWS:

Any classified material, demilitarization required or hazardous property, or any
other property on the Controlled Property Restricted List, as defined in Article
23 of the CV contract,

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CONTRACT NUMBER 99-0001-0002
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not covered by this contract, found while in the possession of contractor,
Purchaser, or any subcontractor(s) or in or among the property must be
immediately returned to Government control as directed by the SCO at Government
expense.  Purchaser is not authorized to sell any of the property listed above.

ARTICLE SEVEN, SECTION 4 SHALL BE AMENDED TO ADD THE FOLLOWING LANGUAGE AFTER
THE FIRST PARAGRAPH:

The Purchaser shall make a good faith effort to retrieve property sold to the
public that should have carried a DEMIL required Code barring the sale, by
sending a letter via registered mail or trackable courier service (e.g., FedEx,
DHL, etc.) to the customer advising them of the requirement to return mistakenly
released property, and advising them of the possible consequences of
non-compliance with the terms and conditions of sale.   Purchaser will also make
a second effort to contact the customer via registered mail or trackable courier
services within 30 days of the first letter contract should resolution not been
attained.  After issuing the second communication with the customer requesting
the return of the property, the customer name, contact information, and item
released will be referred to DRMS for additional action and Purchaser will also
provide DRMS upon request, any further information provided to Purchaser by the
customer during the course of bid receipt and contract award.

In the event that any Ammunition, Explosive or Dangerous Articles (AEDA) are
discovered by the Purchaser, they will be reported immediately to the Government
on-site representatives.  Purchaser will provide DRMS a list of the buyers and
property involved under this section on a monthly basis.

7.             ARTICLE SEVENTEEN, SECTION 2, SHALL BE AMENDED TO ADD THE
FOLLOWING LANGUAGE:

(C)           DRMS shall provide oversight of the Purchaser’s Controlled
Property Verification Process, using Controlled Property Verifiers, who DRMS
will assign to the Controlled Property Centers.  DRMS Verifiers will have access
to the property throughout all stages of the property handling process at the
CPCs.

8.             ARTICLE 23 SHALL BE AMENDED TO ADD THE FOLLOWING DEFINITION:

Batch Box Items: One line item (DTID) consisting of multiple turn-in documents
and items.

Controlled Property: Any property which DRMS determines is potentially not
saleable due to its DEMIL Code, its end-use, or should not be sold to the
general public for any reason related to national security or other statutory
obligations of the Federal Government.  DRMS shall determine the Business Rules
governing how Controlled Property is determined, and those rules shall be
communicated to the Purchaser.

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Controlled Property Center (CPC):  A centralized processing facility that is
manned by DRMS and Purchaser personnel.    Controlled Property is sent both from
Hub Sites and received directly from generators.  CPC personnel review and DRMS
personnel certify that the Controlled Property is “saleable” or determine that
the property cannot be sold and must be returned.

Controlled Property Restricted List: A DRMS-maintained and provided list by
which property will be screened against to determine whether it can be sold or
transferred to a R/T/D customer.  The list is comprised of controlled items
based on demilitarization code or other factors relating to National security as
determined by DRMS.

Hub Site:  A location where DRMS receives, stores and issues property.

9.             PART II, A. “INTRODUCTION” SHOULD BE AMENDED AS FOLLOWS:

Change the lines 11 to 14 (after “property”) of the first paragraph to read as
follows,

“with DRMS a portion (ranging between 69.5% and 75% based on the Purchaser
meeting or failing to meet certain performance benchmarks) of the net proceeds
realized from the re-sale of the property after deducting all of the costs of
managing, transporting, protecting, improving and marketing the property.

10.           PART II, M. “DISTRIBUTIONS AND PAYMENTS” SHOULD BE AMENDED AS
FOLLOWS:

Eliminate paragraph three of this section and replace with the following
paragraph:

The Purchaser must pay to DRMS a variable share of the net proceeds ranging
between 69.5% and 75% (as further explained in Article Sixteen below) of all Net
Proceeds (less any required increase in the cash reserve).  The Purchaser must
pay to Contractor a variable share (dependent on the variable amount paid to
DRMS and intended to always equal 100%) of between 25% and 30.5% of all Net
Proceeds (less any such increase in the cash reserve).  (See Art. 16.)

11.           ARTICLE SIXTEEN, SECTION 3(A) SHOULD BE AMENDED AS FOLLOWS:

(A)          CALCULATE CONTRACTOR NET WORTH ALLOCATION.

Purchaser shall calculate the amount of the “Contractor Net Worth Allocation” as
Operating Net Worth multiplied by twenty-seven and one half percent (27.50%)
(twenty-eight and one half percent (28.50%) if R/T/D is accomplished).

12.           ARTICLE SIXTEEN, SECTION 3(B) SHOULD BE AMENDED AS FOLLOWS:

(B)           CALCULATE DRMS NET WORTH ALLOCATION.

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Purchaser shall calculate the amount of the “DRMS Net Worth Allocation” as
Operating Net Worth multiplied by seventy-two point five percent (72.5%) (71.5%
if R/T/D is accomplished).

13.           ARTICLE SIXTEEN, SECTION 3 SHOULD BE AMENDED BY ADDING SUB-SECTION
(D), “INCENTIVES”:

(D)          The operating revenue share of Purchaser effective immediately on
execution of this Supplemental Agreement is twenty seven point five percent
(27.5%) (twenty eight point five percent (28.5%) if R/T/D is accomplished) for
purposes of all distributions under the contract moving forward.  DRMS has
indicated that the United States Government Accountability Office (“GAO”)
intends to conduct audits of improper Controlled Property Restricted List
sales.  To provide Purchaser with an added financial incentive to minimize
screening failures with respect to property on the Controlled Property List,
DRMS and Purchaser have agreed to this incentive provision, based on the number
of “failures” identified in subsequent audits.  The incentive provision shall
commence December 1, 2006.  The net proceeds share of Purchaser for purposes of
all distribution payments made or accrued under the contract from the date this
modification is signed until December 1, 2006 shall be 27.5% (28.5% if R/T/D is
accomplished).

A “failure” for purposes of this provision is defined as the discovery of
individual sales item(s) from the Controlled Property Restricted List on
Purchaser’s website available to the public, or a subsequent sale to the public
or the GAO after December 1, 2006, as discovered by: (1) the GAO; (2) by any
other entity presenting its findings to a Congressional Committee or
Subcommittee; or (3) by any other independent review(s)  mutually agreed to by
DRMS and Purchaser by November 30, 2006.   Beginning December 1, 2006,
Purchaser’s net proceeds sharing percentage for the next calendar year shall be
retroactively adjusted for the audited calendar year only (with the then current
period continuing at the operating Purchaser net proceeds share of 27.5% (28.5%
if R/T/D is accomplished) according to the following matrix:

Number of Failures by Purchaser*

 

Change in Net Proceeds Baseline
without R/T/D Option

 

Change in Net Proceeds Sharing
with R/T/D Option

≤ 25

 

30.5%

 

30.5%

26 to 80

 

28.5%

 

28.5%

81 to 120

 

27.5%

 

28.5%

≥ 121

 

25%

 

26%

 

The number of failures in the above table reflect a 6-month review period and
shall be adjusted to reflect the sampling period (shorter or longer), used by
the GAO, any other entity presenting its findings to a Congressional Committee
or Subcommittee or by any other independent review(s) mutually agreed to by DRMS
and Purchaser, in order to reflect equitable performance measures.  September of
the Fiscal Year will be the cut-off to determine the performance ratios.  If
there has been no independent verification of the Purchaser’s performance, the
Purchaser shall receive the 30.5 percent split.  If there has been an
independent verification, then the ratio will be determined

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no later than September 30th of the previous Fiscal Year’s performance.  The
Purchaser’s split will revert back to the baseline and be in effect until the
next reporting timeframe.

If based on the number of “failures” as defined and computed above, it is
determined that Purchaser is due an additional amount for the period in
question, Purchaser shall identify the increased amount due on the next
Distribution Statement and account for and recover the incentive amount as a
Seller Indirect Cost.  If based on the audit report (and allowing 30 days from
receipt for Purchaser and DRMS to discuss the results), it is determined that
Purchaser owes DRMS as a result of the discovery of 121 or more failures in the
prior six months.  Purchaser shall identify the amount due to DRMS in writing
(to be concurred in by DRMS) and issue DRMS a check within 60 days of
Purchaser’s receipt of the audit report.

14.           ATTACHMENT VI.16.1, MONTHLY DISTRIBUTION STATEMENT SHOULD BE
AMENDED AS FOLLOWS:

Pages 118, No. 3, change the allocation from 20.0% to 27.5% (28.5% of R/T/D is
accomplished) and from 78.2% to 72.5% (71.5% if R/T/D is accomplished).

15.           ALL OTHER APPLICABLE TERMS AND CONDITIONS OF THE CONTRACT REMAIN
IN EFFECT, INCLUDING BUT NOT LIMITED TO PARTS I-VI, AND ARTICLES ONE (1) THROUGH
TWENTY THREE (23); AND

16.           THIS MODIFICATION WILL BECOME EFFECTIVE UPON THE DATE OF THE LAST
AFFIXED SIGNATURE TO THE MODIFICATION.

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