Document:

Exhibit
10.3

 

N00421-01-E-0372

 

TABLE
OF CONTENTS

 

This facilities use
contract consists of the Table of Contents on page 1, the
Schedule (Sections B through H), and Contract Clauses (Section I), as
follows:

 

	
  Section

  	
   

  	
  Title

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B

  	
   

  	
  Supplies
  or Services

  	
   

  	
  2

  
	
  B-1

  	
   

  	
  Rental Computation—“Use
  and Charges” Clause

  	
   

  	
  2

  
	
  C

  	
   

  	
  Description
  or Specifications or Work Statement

  	
   

  	
  3

  
	
  D

  	
   

  	
  Packaging
  and Marking

  	
   

  	
  3

  
	
  E

  	
   

  	
  Inspection and Acceptance

  	
   

  	
  3

  
	
  F

  	
   

  	
  Deliveries or Performance

  	
   

  	
  4

  
	
  G

  	
   

  	
  Contract Administration
  Data

  	
   

  	
  4

  
	
  H

  	
   

  	
  Special Contract
  Requirements

  	
   

  	
  5

  
	
  I

  	
   

  	
  Contract Clauses

  	
   

  	
  10

  

 

1

 

SCHEDULE

 

SECTION B
- SUPPLIES OR SERVICES

 

B-1                            RENTAL COMPUTATION—“USE AND CHARGES” CLAUSE

 

(A)           Rental Rates

 

The monthly rental rates
shall be calculated in accordance with FAR 52.245-9, “USE AND CHARGES” (APR
1984) (DEVIATION), under paragraph [c](3), “Alternate Methodology”, as
specified below:

 

Alternate Methodology:  For purposes of calculation of monthly
rental rates only, the original “Use and Charges” clause at FAR 52.245-9 shall
apply. The following monthly rental rates shall be applied to the acquisition
cost of each of the types of property listed below in carrying out the rental
computation under FAR 52.245-9, “USE AND CHARGES”:

 

	
   

  	
   

  	
  Type of Property

  	
   

  	
  Monthly
  Rates

  	
   

  
	
  (1)

  	
   

  	
  Industrial Plant
  Equipment of the types covered by the Federal Supply Clause specified in
  paragraph (ii) of Table I of the “Use and Charges” clause (FAR 52.245-9)

  	
   

  	
  Those prescribed at
  paragraph (ii) of “Use and Charges” clause Table

  	
   

  
	
  (2)(a)

  	
   

  	
  Electronic Test
  Equipment

  	
   

  	
  2.0

  	
  %

  
	
   

  	
  (b)

  	
   

  	
  Automotive Equipment

  	
   

  	
  2.0

  	
  %

  
	
   

  	
  (c)

  	
   

  	
  Special Tooling

  	
   

  	
  1.0

  	
  %

  
	
   

  	
  (d)

  	
   

  	
  Special Test Equipment
  Other than Electronic

  	
   

  	
  1.0

  	
  %

  
	
   

  	
  (e)

  	
   

  	
  Other Personal Property

  	
   

  	
  1.0

  	
  %

  

 

The measurement unit
referred to in paragraph (c)(4) of the “Use and Charges” clause (FAR 52.245-9)
is defined in Section H-1 of this contract.

 

(B)             Rental Period

 

In accordance with
paragraph (a) of FAR 52.245-9, “USE AND CHARGES” (APR 1984) (DEVIATION) and
with Section H-1 of this contract, “rental period” means the calendar
period during which government property is made available for commercial
purposes (i.e. on a rent-payable basis). For purposes of this contract, a
“rental period” shall be of three months (one calendar quarter) duration.

 

(C)             When used in FAR
52.245-9, “USE AND CHARGES” (APR 1984) (DEVIATION), the term “Contracting
Officer” shall mean the Administrative Contracting Officer (ACO) of this contract.

 

2

 

SCHEDULE

 

SECTION C
- DESCRIPTION OR SPECIFICATIONS OR
WORK STATEMENT

 

Facilities To Be Provided
Under This Contract

 

(a)               This contract
covers Industrial Plant Equipment (IPE) and Other Plant Equipment (OPE) only,
as described in Attachment (1) of this contract. The real property (land and
buildings) associated with use under this contract is covered under Lease No.
N00019-98-L-0162. The term “facilities” as used herein refers only to the
IPE/OPE listed in Attachment (1) of this contract.

 

(b)              The facilities
previously provided to the Contractor under Contract N00019-99-E-1423, except
for land and buildings, shall become accountable under this contract upon its
effective date, as provided in subparagraph (1) under paragraph (m)
(“Supersedure”) of the FAR 52.245-11, “Government Property (Facilities Use)”
clause of this contract.

 

(c)               Facilities being
provided to the Contractor before the effective date of this contract, but
which have not been received by the Contractor and made accountable under
Contract N00019-99-E-1423, and facilities subsequently provided to the
Contractor under any contract shall be accountable under this contract in
accordance with paragraph (m)(2) of the FAR 52.245-11, “Government Property
(Facilities Use)” clause of this contract.

 

(d)              The Contractor may
use the facilities at the following location(s):

 

Location of Facilities

 

The Government-owned
facilities provided hereunder are located at the Naval Weapons Industrial
Reserve Plant (NWIRP), Dallas, Texas, and other plants of the Contractor in
Dallas County and Tarrant County, Texas.

 

The Contractor may also
use the facilities at any location other than the location(s) specified above,
if approved in writing by the Administrative Contracting Officer (ACO) in
accordance with paragraph (d) (Location of the Facilities) of the FAR
52.245-11, “Government Property (Facilities Use)” clause of this contract.

 

SECTION D
- PACKAGING AND MARKING

 

Not Applicable.

 

SECTION E
- INSPECTION AND ACCEPTANCE

 

Inspection and acceptance
will be made at the location of the facilities specified in Section C,
“Facilities to be Provided under this Contract.”

 

FAR 52.246-10        INSPECTION OF FACILITIES (APR 1984)

 

3

 

SCHEDULE

 

SECTION F
- DELIVERIES OR PERFORMANCE

 

Notwithstanding the
period of “five years” set forth in paragraph (b) of the clause of this
contract entitled “Government Property (Facilities Use)” (FAR 52.245-11), the
use of the facilities authorized under this contract shall be effective from 1
August 2001 and terminate on 31 July 2005.

 

SECTION G - CONTRACT
ADMINISTRATION DATA

 

Contract Administration
Office:

 

The contract
administration functions set forth in FAR 42.302(a)(30)(i), (ii), (iv) and (v)
are assigned to:

 

DCMA Dallas-Arlington

P.O. Box 655907. M/S
49-15

Dallas, TX 75265-5907

Attn: John Branch,
Administrative Contracting Officer

Phone:             (972) 946-3912/2784

Fax:                           (972)
946-8485

E-mail:             jrbranch@dcmdw.dcma.mil

 

The following additional contract
administration functions are also assigned to DCMA Dallas-Arlington:

 

(1)               Determine the total
cost to the Government of each item of facilities in accordance with FAR
52.245-9, “USE AND CHARGES” (APR 1984) (DEVIATION).

 

(2)               Approve locations
other than the specified plant(s) in accordance with the “Location of the
Facilities” in paragraph (d) of the “Government Property (Facilities Use)”
clause (FAR 52.245-11). The period of each such authorized relocation of
facilities shall not exceed twelve (12) months.

 

(3)               Approve the
installation, arrangement or rearrangement on premises furnished by the
Government of items belonging to the Contractor in accordance with the “Title
in the Facilities” paragraph (c)(3) of the “Government Property (Facilities
Use)” clause (FAR 52.245-11).

 

(4)               Determine in
accordance with the “Title in the Facilities” paragraph (c)(3) of the
“Government Property (Facilities Use)” clause (FAR 52.245-11), the permanency
of attachment of Contractor-owned items affixed to realty owned by the
Government.

 

(5)               Perform functions
required of the Contracting Officer cognizant of the property in accordance
with FAR 45.402 and 45.201 in effect on the date of this contract; provided
that this delegation shall extend only to use of facilities already in the
Contractor’s possession at an authorized location under this contract.

 

Payment:   All payments by the Government under this
contract shall be made by electronic funds transfer (EFT), in accordance with
FAR 52.232-33, “Payment by Electronic Funds Transfer—Central Contractor
Registration” (May 1999).

 

4

 

SCHEDULE

 

SECTION H - SPECIAL
CONTRACT REQUIREMENTS

 

H-1                         Measurement
Unit

 

(1)                  The
measurement unit referred to in paragraph (c)(4) of the “Use and Charges”
clause (FAR 52.245-9), for the types of facilities described in
Section B-1 of this contract, shall be “direct labor hours”, which shall
be defined as all direct labor hours worked at the facilities known as the
Naval Weapons Industrial Reserve Plant (NWIRP), Dallas, TX, by the Contractor’s
employees that are directly charged to any contract or subcontract for goods
produced or services provided and in the performance of which contract or
subcontract any such facilities are used. The facilities will be considered to
have been used regardless of whether actually used in the performance of work
authorized to be on a rent-free basis or whether actually used in the
performance of work authorized to be on a rent-payable basis. Such direct labor
hours shall include, but not be limited to, those expended in design,
fabrication, assembly, and test work.

 

(2)                  Direct labor
hours records will be maintained by the Contractor to show:

(a)          The total of such direct
labor hours expended during each rental period (Total Direct Labor Hours);

(b)         The portion of (a),
expressed in total hours, expended in performing contracts and subcontracts
with respect to which facilities use rent is payable (Total Rent-Payable Direct
Labor Hours); and

(c)          The portion of (a),
expressed in total hours, expended in performing contracts and subcontracts
with respect to which facilities use rent is not payable (Total Rent-Free
Direct Labor Hours).

 

(3)                  These
totals will be the means used to establish the credit authorized under
paragraph (e) of the “Use and Charges” clause (FAR 52.245-9) and to calculate
the rental for use authorized under Special Contract Requirement H-8 below.

 

(4)                  In
calculating the rent for use authorized under Section B-1 of this
contract, the Total Acquisition Cost of each type of facilities described in
Section B-1 of this contract shall be determined in accordance with
Special Contract Requirement H-2 of this contract. However, in calculating the
rent authorized under Special Contract Requirement H-2, the Acquisition Cost of
those portions of the facilities that are in standby or layaway status during
the entire rental period shall not be taken into consideration. Except for any
unauthorized use of the facilities to which paragraph (j) of the “Use and
Charges” clause (FAR 52.245-9) is applicable, no rental calculations need be
made for those portions of the facilities that are in standby or layaway status
during the entire rental period.

 

H-2                           Computation
of Amounts

 

(1)                    The “Total
Acquisition Cost” of each type of facilities described in Section B-1 of
this contract shall be in accordance with paragraph (a) of FAR 52.245-9, “USE
AND CHARGES” (APR 1984) (DEVIATION), but shall exclude facilities in standby or
layaway status.

 

5

 

SCHEDULE

 

H-3                            Applicability
of “Use and Charges (Deviation)” Clause

 

The terms and conditions
of Contract No. N00019-99-E-1423, as amended, are superseded in their entirety
by this contract as of the effective date hereof. Commencing on the effective
date of this contract, the terms and conditions of the clause of this contract
entitled FAR 52.245-9, “USE AND CHARGES” (APR 1984) (DEVIATION), except for the
exceptions noted below, as well as this Section shall apply to all duly
authorized use by the Contractor or his subcontractors of the facilities
accountable under this contract, except for use in the performance of contracts
or subcontracts awarded in response to bids, proposals or quotations made prior
to the effective date of this contract (which will be subject to the terms and
conditions of the document under which such facilities were accountable prior
to said effective date).

 

Exceptions to
applicability of “Use and Charges (Deviation)” Clause: As
authorized by paragraph [c](3) “Alternate methodology” of FAR 52.245-9, “USE
AND CHARGES” (APR 1984) (DEVIATION), an alternate methodology for computing the
rental charge (i.e. “sales dollars” as described in Section H-1 of this
contract) is made applicable to this contract. Therefore, the following portions
of the “Use and Charges (Deviation)” clause referring to “appraisal method” and
“rental time” shall not apply to this contract;

 

1)                   In paragraph
(a), the last paragraph which states:

 

Rental
time means the number of hours, to the nearest whole hour, rented property is
actually used for commercial purposes. It includes time to set up the property
for such purposes, perform required maintenance, and restore the property to
its condition prior to rental (less normal wear and tear)

 

2)                   In
paragraph (b)(1), the phrase:  “...by using the Contractor’s best estimate of rental
time in the formulae described in paragraph [c] of this clause.”

 

3)                   Paragraphs
[c](1) and [c](2) in their entirety.

 

H-4         Rental Payment Due Dates

 

Notwithstanding
paragraphs (d)(1) and (d)(2) of the “Use and Charges (Deviation)” clause,
rental payments are due 60-90 days following completion of the rental period.
Interest will be charged if payment is not made by the specified payment date
or, in the absence of a specified date, by the ninety-first (91st) day
following completion of the rental period.

 

H-5                            Informing
the Administrative Contracting Officer (ACO) of Rental Payments

 

In the event that checks
for rental payment are mailed to the Defense Finance and Accounting Service
(DFAS), Columbus, OH, the Contractor shall, at the discretion of Contracting
Officer, either transmit such checks via the ACO or notify the ACO of each
check transmitted directly to DFAS.

 

6

 

SCHEDULE

 

H-6                            Proscribed
Allowances and Charges

 

The Contractor agrees
that it will not include, directly or indirectly, in the cost, fee or price for
any goods produced or services performed under Government prime contracts or
subcontracts, any provision, allowance or claim:

 

(1)                      for the cost
of acquisition of the facilities;

(2)                      for the
amortization or depreciation of the facilities, except to the extent, if any,
that such amortization or depreciation is permitted by specific written
authorization of the Contracting Officer cognizant of this contract; or

(3)                      arising out
of charges or assessments for the authority to use the facilities in
performance of work other than for the Federal Government.

 

H-7                           Limitation
of Effect of Acceptance of Rent

 

The acceptance of rent by
the Government hereunder shall not be construed as (1) a waiver or
relinquishment of any rights it may have against the Contractor by reason of
any breach of contract or default by the Contractor in the performance of any
provision of this contract, or (2) an invalidation of any termination or notice
of termination hereunder unless the Contracting Officer so agrees in writing.

 

H-8                           Rent-Payable
Facilities Use Authorization

 

(1)                    Except for
such facilities as may be in standby or layaway status, the Government hereby authorizes
all of the facilities to be used for rent-payable work during the period of
this contract, provided that the use of any such plant equipment in the
performance of contracts other than Government contracts and subcontracts shall
not exceed twenty-five percent (25%) without obtaining the approval of the
Contracting Officer. The Contractor may from time to time request authorization
to use, on a rent-payable basis, all or any part of the plant equipment for
non-Government contracts and subcontracts in excess of the twenty-five percent
(25%) limitation. Such requests shall be considered in accordance with FAR
45.407 (“Non-Government use of plant equipment”).

(2)                    Lists of
property in standby or layaway status, including revisions and additions to
outstanding listings already submitted, may be submitted by the Contractor at
any time during the period of this contract. Such listings and revisions
thereto shall be submitted to the Contracting Officer and the standby or
layaway status shall be effective at the beginning of the next rental period
after the Contracting Officer receives such listing or revision, provided he
receives it at least twenty (20) days prior to the beginning of the next
period, unless a later effective date is specified in the listing or the
revision. Removal from or additions to listings of property in standby or
layaway status submitted during any given rental period shall not expire at the
end of the rental period unless requested by the Contractor and approved by the
Contracting Officer.

 

7

 

SCHEDULE

 

H-9                            Use of Facilities on
Independent Research & Development Programs

 

The Contractor is
authorized to use the facilities, on a non-interference work basis with the
Government, in the performance of independent research and development
(IR&D) work. The contractor shall deduct a rental charge for the portion of
the contractor’s IR&D program whose costs are allocated to commercial work
from any agreed upon Government share of the contractor’s IR&D costs. The
cognizant Corporate Administrative Contracting Officer must approve the rental
charge, its method of calculation and the procedure by which it will be applied
in reduction of the Government’s share of the Contractor’s R&D contract
proposals as a condition precedent to such authorization becoming effective.
The Contractor agrees that he will not include, directly or indirectly, in the
cost, fee or price for any goods produced or services performed under
Government prime contracts or subcontracts, any provision, allowance, or claim
for such authority to use or to recover any deduction for rental made pursuant
to execution of this Section H-9.

 

H-10                   Proscription of Rent-Free
Use for Foreign Work

 

(a)               Notwithstanding any
provision to the contrary in any contract with the United States Government and
in order to ensure compliance with 22 U.S.C. 2761(e), rent-free use of any or
all of the facilities in the performance of work to satisfy an obligation of
the Contractor that implements a sale of goods or services, or both, by the
Government to a foreign government or international organization is expressly
prohibited. Further, this contract shall in no event be construed to authorize
rent-free use of any or all of the facilities in the performance of direct
commercial sales of goods or services, or both, by the Contractor to a foreign
government or international organization, unless specifically authorized by the
Contracting Officer in writing.

(b)             Requests for waivers or reduction of charges
on direct commercial sales for the use of Government facilities on work for
foreign governments or international organizations shall be submitted to the
contracting officer who shall refer the matter through contracting
channels.  In response to these
requests, approvals may be granted only by the Director, Defense Security
Assistance Agency, for particular sales which are consistent with DFARS
245.405(1)(iii).

(c)              Rental charges for use of U.S. production and
research property on commercial sales transactions to the Government of Canada
are waived for all commercial contracts based on an understanding wherein the
Government of Canada has agreed to waive its rental charges.

 

H-11                   Notices

 

No notice, order,
direction, determination, consent or approval issued by either Party under this
contract shall be of any effect unless in writing. All such actions under this
contract shall be forwarded by mail, postage prepaid. Each such action to the
Government shall be directed to the Issuing Office, Attention: Contracting Officer,
at the address indicated on Standard Form (SF) 26 entitled “Award/Contract”
(SF-26) of this contract, or such other such address as the Government may
hereafter from time to time specify in writing for such purpose. Each such
action to the Contractor shall be directed to the address appearing on SF-26 of
this contract or to such other address as the Contractor may hereafter from
time to time specify in writing for such purpose.

 

8

 

SCHEDULE

 

H-12                    Additional Information
Relating to the Property Control Paragraph of the “Government Property
(Facilities Use)” Clause of this Contract

 

Pursuant to paragraph (f) of the clause at FAR
52.245-11, “Government Property (Facilities Use)”, and paragraph (a) of FAR
45.505-5, “Records of Plant Equipment”:

 

(1)                     The Contractor shall maintain individual item
records for each item of plant equipment with a unit cost of $5,000,00 or more;

(2)                    Individual item records shall not be required
for plant equipment costing less than $5,000.00. The elimination of this
requirement does not relieve the Contractor of accountability and liability;

(3)                    Industrial Plant Equipment (IPE) and items of
accessory tooling associated therewith being stored for reasons of relocation,
repair or disposition may be so stored in areas best suited to the requirements
and may be commingled with items of IPE owned by the Contractor;

(4)                    In the event an item of IPE accountable under
this contract shall be declared excess to the Contractor’s requirements, and the
accessory tooling accountable under the property record number assigned to the
basic IPE item (DD Form 1342) is still required by the Contractor, then such
accessory tooling may be transferred to another item of IPE by modifying the DD
Form 1342 applicable to the IPE declared excess and to the IPE to which such
accessory tooling is transferred, respectively; and

(5)                    For purpose of this contract, the list of
Government property includes, but is not limited to, the Government property
contained in Attachment (1) to this contract.

 

H-13                   Taxes, Assessments or
Similar Charges Imposed Against the Contractor

 

A.                                   Notice of Taxes

The
Contractor shall promptly notify the Contracting Officer of any taxes,
assessments, or similar charges which may be imposed by any state or local
taxing authority upon the Contractor with respect to the use or possession of
the facilities or any part thereof.

 

B.                                     Contesting Taxes

The
Contractor shall, if so directed in writing by the Contracting Officer, take
appropriate action at Government expense to contest the validity of all or any
portion of such taxes, assessments, or similar charges, or if they have been
paid, to secure a refund thereof.

 

C.                                     Payment of Taxes

The
Contractor shall pay to the proper authority all such taxes, assessments, or
similar charges when they become due and payable. If the Contracting Officer
does not direct the Contractor to contest the validity of any such taxes,
assessments, or similar charges, the Contractor may, if it questions the
validity or amount thereof, pay the same when due in such manner as to preserve
its right to claim a refund. Thereafter, the Contractor may take such legal
actions as it deems advisable under the circumstances, and shall notify the
Contracting Officer thereof in writing. If the validity of any such taxes,
assessments, or similar charges (other than on the Contractor’s interest in the
facilities) results from any future act of Congress subjecting Government-owned
property to taxation or if the validity is contested, whether or not at the
direction of the Contracting Officer, and is upheld by the highest court of
resort of competent jurisdiction, this contract shall be renegotiated so as to
accomplish an equitable reduction in the rental herein provided, which
reduction shall not be greater than the amount of such taxes, assessments, or
similar charges plus any expenses incurred by the Contractor in contesting the
validity thereof, if directed to do so by the Contracting Officer.

 

9

 

SCHEDULE

 

 

SECTION I
- CONTRACT CLAUSES

 

CLAUSES
INCORPORATED BY REFERENCE (JUN 1988) (FAR 52.252-2)

 

This contract
incorporates one or more clauses by reference with the same force and effect as
if they were given in full text. Upon request, the Contracting Officer will
make their full text available. Also, the full text of a clause may be accessed
electronically at this address:

 

http://farsite.hill.af.mil

 

CLAUSES
INCORPORATED IN FULL TEXT

 

This contract also
incorporates those clauses designated with an asterisk (**) in the following
list of clauses and attached hereto in full text.

 

REQUEST
FOR FULL TEXT OF CLAUSES INCORPORATED HEREIN BY REFERENCE

 

Checked clauses marked
with asterisks (**) are attached in full text. The full text of any clause
incorporated by reference, but not so attached, may be obtained by submitting a
request to the Department of the Navy, Naval Air Systems Command, Code
AIR-2.5.1.4, Bldg. 588, Suite 2, 47253 Whalen Road, Unit 9, Patuxent River, MD
20670-1463.

 

ONLY THE CLAUSES SPECIFIED
BY THE GOVERNMENT BELOW APPLY TO THIS CONTRACT. THE CONTRACTOR SHALL NOT ADD
ANY CLAUSE TO THE FOLLOWING LIST OF CLAUSES.

 

SECTION I
- CONTRACT CLAUSES

 

	
  Clause No.

  	
   

  	
  Title and
  Date

  
	
   

  	
   

  	
   

  
	
  FAR 52.202-1

  	
   

  	
  DEFINITIONS (MAY 2001)

  
	
  FAR 52.203-3

  	
   

  	
  GRATUITIES (APR 1984)

  
	
  FAR 52.203-5

  	
   

  	
  COVENANT AGAINST
  CONTINGENT FEES (APR 1984)

  
	
  FAR 52.203-7

  	
   

  	
  ANTI-KICKBACK
  PROCEDURES (JUL 1995)

  
	
  FAR 52.203-8

  	
   

  	
  CANCELLATION,
  RESCISSION, AND RECOVERY OF FUNDS FOR ILLEGAL OR IMPROPER ACTIVITY (JAN 1997)

  
	
  FAR 52.203-10

  	
   

  	
  PRICE OR FEE ADJUSTMENT
  FOR ILLEGAL OR IMPROPER ACTIVITY (JAN 1997)

  
	
  FAR 52.203-12

  	
   

  	
  LIMITATION ON PAYMENTS
  TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS (JUN 1997)

  
	
  DFARS 252.203-7002

  	
   

  	
  DISPLAY OF DOD HOTLINE
  POSTER (DEC 1991)

  
	
  FAR 52.204-4

  	
   

  	
  PRINTED OR COPIED
  DOUBLE SIDED ON RECYCLED PAPER (AUG 2000)

  
	
  DFARS 252.204-7000

  	
   

  	
  DISCLOSURE OF
  INFORMATION (MAY 1995)

  
	
  DFARS 252.204-7003

  	
   

  	
  CONTROL OF GOVERNMENT
  PERSONNEL WORK PRODUCT (APR 1992)

  

 

10

 

SECTION I
- CONTRACT CLAUSES

 

	
  Clause No.

  	
   

  	
  Title and
  Date

  
	
   

  	
   

  	
   

  
	
  DFARS 252.205-7000

  	
   

  	
  PROVISION OF
  INFORMATION TO COOPERATIVE AGREEMENT HOLDERS (DEC 1991)

  
	
  FAR 52.209-6

  	
   

  	
  PROTECTING THE
  GOVERNMENT’S INTEREST WHEN SUBCONTRACTING WITH CONTRACTORS DEBARRED,
  SUSPENDED OR PROPOSED FOR DEBARMENT (JUL 1995)

  
	
  DFARS 252-209-7000

  	
   

  	
  ACQUISITION FROM
  SUBCONTRACTORS SUBJECT TO ON-SITE INSPECTION UNDER THE INTERMEDIATE-RANGE
  NUCLEAR FORCES (INF) TREATY (NOV 1995)

  
	
  FAR 52.215-2

  	
   

  	
  AUDIT AND
  RECORDS—NEGOTIATION (JUN 1999)

  
	
  FAR 52.216-14

  	
   

  	
  ALLOWABLE COST AND
  PAYMENT—FACILITIES USE (APR 1984)

  
	
  FAR 52.219-8

  	
   

  	
  UTILIZATION OF SMALL
  BUSINESS CONCERNS (OCT 2000)

  
	
  FAR 52.222-3

  	
   

  	
  CONVICT LABOR (AUG
  1996)

  
	
  FAR 52.222-26

  	
   

  	
  EQUAL OPPORTUNITY (FEB
  1999)

  
	
  FAR 52.222-35

  	
   

  	
  AFFIRMATIVE ACTION FOR
  DISABLED VETERANS AND VETERANS OF THE VIETNAM ERA (APR 1998)

  
	
  FAR 52.222-36

  	
   

  	
  AFFIRMATIVE ACTION FOR
  WORKERS WITH DISABILITIES (JUN 1998)

  
	
  FAR 52.222-37

  	
   

  	
  EMPLOYMENT REPORTS ON
  DISABLED VETERANS AND VETERANS OF THE VIETNAM ERA (JAN 1999)

  
	
  FAR 52.223-5

  	
   

  	
  POLLUTION PREVENTION
  AND RIGHT-TO-KNOW INFORMATION (APR 1998)

  
	
  FAR 52.223-6

  	
   

  	
  DRUG-FREE WORKPLACE
  (MAY 2001)

  
	
  FAR 52.223-10

  	
   

  	
  WASTE REDUCTION PROGRAM
  (AUG 2000)

  
	
  DFARS 252.223-7004

  	
   

  	
  DRUG FREE WORK FORCE
  (SEP 1988)

  
	
  DFARS 252.223-7006

  	
   

  	
  PROHIBITION ON STORAGE
  AND DISPOSAL OF TOXIC AND HAZARDOUS MATERIALS (APR 1993)

  
	
  FAR 52.225-13

  	
   

  	
  RESTRICTIONS ON CERTAIN
  FOREIGN PURCHASES (JUL 2000)

  
	
  DFARS 252.225-7031

  	
   

  	
  SECONDARY ARAB BOYCOTT
  OF ISRAEL (JUN 1992)

  
	
  FAR 52.227-1

  	
   

  	
  AUTHORIZATION AND
  CONSENT (JUL 1995)

  
	
  FAR 52.228-5

  	
   

  	
  INSURANCE—WORK ON A
  GOVERNMENT INSTALLATION (JAN 1997)

  
	
  DFARS 252.231-7000

  	
   

  	
  SUPPLEMENTAL COST
  PRINCIPLES (DEC 1991)

  
	
  FAR 52.232-17

  	
   

  	
  INTEREST (JUN 1996)

  
	
  FAR 52.232-21

  	
   

  	
  LIMITATION OF COST
  (FACILITIES) (APR 1984)

  
	
  FAR 52.232-23

  	
   

  	
  ASSIGNMENT OF CLAIMS
  (JAN 1986)

  
	
  FAR 52.232-33

  	
   

  	
  PAYMENT BY ELECTRONIC
  FUNDS TRANSFER—CENTRAL CONTRACTOR REGISTRATION (MAY 1999)

  
	
  FAR 52.233-1

  	
   

  	
  DISPUTES (DEC 1998)

  
	
  FAR 52.233-3

  	
   

  	
  PROTEST AFTER AWARD
  (AUG 1996)

  
	
  FAR 52.242-13

  	
   

  	
  BANKRUPTCY (JUL 1995)

  
	
  FAR 52.245-1

  	
   

  	
  PROPERTY RECORDS (APR
  1984)

  
					

 

11

 

SECTION I
- CONTRACT CLAUSES

 

	
  Clause No.

  	
   

  	
  Title and
  Date

  
	
   

  	
   

  	
   

  
	
  FAR 52.245-8**

  	
   

  	
  LIABILITY FOR THE
  FACILITIES (JAN 1997) (DEVIATION)

  
	
   

  	
   

  	
  (Reference to the
  “Property administration paragraph” should read “Property Control paragraph”
  in (c)(5)(i) and (ii) of the FAR 52.245-8 clause. The words “The Insurance
  Examiner Office of the Assistant Secretary of the Navy (Research,
  Development, and Acquisition), Washington, D.C.” are substituted for
  “Contracting Officer”, wherever it appears in paragraph (f) of the FAR
  52.245-8 clause, except the last sentence. The Agency Name in the last
  sentence of paragraph (f) shall read “Department of the Navy”. In the loss
  payable clause appearing at the end of paragraph (f), the words “paid to DFAS
  Columbus, Columbus, Ohio” are substituted for the words “paid to the office
  designated by the Contracting Officer”.)

  
	
  FAR 52.245-9**

  	
   

  	
  USE AND CHARGES (APR
  1984) (DEVIATION)

  
	
  FAR 52.245-11

  	
   

  	
  GOVERNMENT PROPERTY
  (FACILITIES USE) (APR 1984)

  
	
   

  	
   

  	
  (As used in paragraphs
  (c) (Title in Facilities), (d) (Location of Facilities) and (g)
  (Maintenance)) of the FAR 52.245-11 clause, the term “Contracting Officer”
  means the Administrative Contracting Officer” (ACO)).

  
	
  DFARS 252.245-7001

  	
   

  	
  REPORTS OF GOVERNMENT
  PROPERTY (MAY 1994)

  
	
  FAR 52.249-11

  	
   

  	
  TERMINATION OF WORK
  (CONSOLIDATED FACILITIES OR FACILITIES ACQUISITION) (SEP 1996)

  
	
  FAR 52.249-13

  	
   

  	
  FAILURE TO PERFORM (APR
  1984)

  
	
  FAR 52.252-6**

  	
   

  	
  AUTHORIZED DEVIATIONS
  IN CLAUSES (APR 1984)

  
	
  FAR 52.253-1

  	
   

  	
  COMPUTER GENERATED
  FORMS (JAN 1991)

  
					

 

12

 

SECTION I
- CONTRACT CLAUSES

 

CLAUSES
INCORPORATED IN FULL TEXT

 

AUTHORIZED
DEVIATIONS IN CLAUSES (APR 1984)

(FAR 52.252-6)

 

(a)          The use in this solicitation or contract of any Federal Acquisition
Regulation (48 CFR Chapter 1) clause with an authorized deviation is indicated
by the addition of “(DEVIATION)” after the date of the clause.

(b)         The use in this
solicitation or contract of any DOD FAR Supplement (DFARS) (48 CFR Chapter 2)
clause with an authorized deviation is indicated by the addition of
“(DEVIATION)” after the name of the regulation.

 

[DoD—
Deviation, per DAR Tracking Number 99-00008, 13 July 99, until FAR is
revised]

 

FAR
52.245-8 — LIABILITY FOR THE FACILITIES (JAN 1997) (DEVIATION)

 

(a)          The term “Contractor’s managerial personnel,” as used in this clause,
means any of the Contractor’s directors, officers, managers, superintendents,
or equivalent representatives who have supervision or direction of—

(1)       All or substantially all of the Contractor’s business;

(2)       All or
substantially all of the Contractor’s operations at any one plant or separate
location in which the facilities are installed or located; or

(3)       A
separate and complete major industrial operation in connection with which the
facilities are used.

 

(b)       The Contractor shall not be liable for any
loss or destruction of, or damage to, the facilities, or for expenses
incidental to such loss, destruction, or damage, except as provided in this
clause.

 

(c)        The Contractor shall be liable for loss or destruction
of, or damage to, the facilities, and for expenses incidental to such loss,
destruction, or damage—

(1)         That
results from a risk expressly required to be insured under this contract, but
only to the extent of the insurance required to be purchased and maintained, or
to the extent of insurance actually purchased and maintained, whichever is
greater;

(2)         That
results from a risk that is in fact covered by insurance or for which the
Contractor is otherwise reimbursed, but only to the extent of such insurance or
reimbursement;

(3)         For which the Contractor is otherwise responsible under the express
terms of this contract;

(4)         That
results from willful misconduct or lack of good faith on the part of the
Contractor’s managerial personnel; or

(5)         That
results from a failure, due to willful misconduct or lack of good faith on the
part of the Contractor’s managerial personnel—

(i) To establish, maintain, and administer a system
for control of the facilities in accordance with the “Property administration”
paragraph of the Government Property clause; or

(ii)
To maintain and administer a program for maintenance, repair, protection, and
preservation of the facilities, in accordance with the “Property
administration” paragraph of the Government Property clause, or to take
reasonable steps to comply with any appropriate written direction that the
Contracting Officer may prescribe as reasonably necessary for the protection of
the facilities. If the Government Property clause does not include the
“Property administration”

 

13

 

SECTION I
- CONTRACT CLAUSES

 

(CONT'D)
FAR 52.245-8 — LIABILITY FOR THE FACILITIES (JAN 1997) (DEVIATION)

 

paragraph, then the
Contractor shall exercise sound industrial practice in complying with the
requirements of this subdivision (c)(5)(ii).

 

(d)         (1) If the Contractor
fails to act as provided by subparagraph (c)(5) above, after being notified (by
certified mail addressed to one of the Contractor’s managerial personnel) of
the Government’s disapproval, withdrawal of approval, or nonacceptance of the
system or program, it shall be conclusively presumed that such failure was due
to willful misconduct or lack of good faith on the part of the Contractor’s
managerial personnel.

(2) Furthermore,
any loss or destruction of, or damage to, the Government property shall be
presumed to have resulted from such failure unless the Contractor can establish
by clear and convincing evidence that such loss, destruction, or damage—

(i) Did not result from
the Contractor’s failure to maintain an approved program or system; or

(ii) Occurred while an
approved program or system was maintained by the Contractor.

 

(e)  If the Contractor transfers facilities to
the possession and control of a subcontractor, the transfer shall not affect
the liability of the Contractor for loss or destruction of, or damage to, the
facilities. However, the Contractor shall require the subcontractor to assume
the risk of, and be responsible for, any loss or destruction of, or damage to,
the facilities while in the subcontractor’s possession or control, except to
the extent that the subcontract, with the advance approval of the Contracting
Officer, relieves the subcontractor from such liability. In the absence of such
approval, the subcontract shall contain appropriate provisions requiring the
return of all the facilities in as good condition as when received, except for
reasonable wear and tear or for their utilization in accordance with the
provisions of the prime contract.

 

(f)  Unless expressly directed in writing by the
Contracting Officer, the Contractor shall not include in the price or cost
under any contract with the Government the cost of insurance (including self-
insurance) against any form of loss, destruction, or damage to the facilities.
Any insurance required under this clause shall be in such form, in such
amounts, for such periods of time, and with such insurers (including the
Contractor as self-insurer in appropriate circumstances) as the Contracting
Officer shall require or approve. Such insurance shall provide for 30 days
advance notice to the Contracting Officer, in the event of cancellation or
material change in the policy coverage on the part of the insurer.
Documentation of insurance or an authenticated copy of such insurance shall be
deposited promptly with the Contracting Officer. The Contractor shall, not less
than 30 days before the expiration of such insurance, deliver to the
Contracting Officer documentation of insurance or an authenticated copy of each
renewal policy. The insurance shall be in the name of the United States of
America (Agency Name), the Contractor, and such other interested parties as the
Contracting Officer shall approve, and shall contain a loss payable clause
reading substantially as follows:

“Any loss under this
policy shall be adjusted with (Contractor) and the proceeds, at the direction
of the Government, shall be paid to (Contractor), Proceeds not paid to
(Contractor) shall be paid to the office designated by the Contracting
Officer.”

 

14

 

SECTION I
- CONTRACT CLAUSES

 

(CONT'D)
FAR 52.245-8 — LIABILITY FOR THE FACILITIES (JAN 1997) (DEVIATION)

 

(g) When there is any
loss or destruction of, or damage to, the facilities, [with the exception of low value property for which
the loss, damage, or destruction is required to be reported at contract
termination, completion, or when needed for continued contract performance]—

(1)         The Contractor shall
promptly notify the Contracting Officer and, with the assistance of the
Contracting Officer, shall take all reasonable steps to protect the facilities
from further damage, separate the damaged and undamaged facilities, put all the
facilities in the best possible order, and promptly furnish to the Contracting
Officer (and in any event within 30 days) a statement of—

(i) The facilities lost
or damaged;

(ii) The time and origin
of the loss or damage;

(iii) All known interests
in commingled property of which the facilities are a part; and

(iv) Any insurance
covering any part of or interest in such commingled property;

(2)         The Contractor shall make
such repairs, replacements, and renovations of the lost, destroyed, or damaged
facilities, or take such other action as the Contracting Officer may direct in
writing; and

(3)         The Contractor shall
perform its obligations under this paragraph (g) at Government expense, except
to the extent that the Contractor is liable for such damage, destruction, or
loss under the terms of this clause, and except as any damage, destruction, or
loss is compensated by insurance.

 

(h) The Government is not
obliged to replace or repair the facilities that have been lost, destroyed, or
damaged. If the Government does not replace or repair the facilities, the right
of the parties to an equitable adjustment in delivery or performance dates,
price, or both, and in any other contractual condition of the related contracts
affected shall be governed by the terms and conditions of those contracts.

 

(i) Except to the extent
of any loss or destruction of, or damage to, the facilities for which the
Contractor is relieved of liability, the facilities shall be returned to the
Government or otherwise disposed of under the terms of this contract (1) in as
good condition as when received by the Contractor, (2) improved, or (3) as
required under the terms of this contract, less ordinary wear and tear.

 

(j) If the Contractor is
in any way compensated (excepting proceeds from use and occupancy insurance,
the cost of which is not borne directly or indirectly by the Government) for
any loss or destruction of, or damage to, the facilities, the Contractor, as
directed by the Contracting Officer, shall—

(1)         Use the proceeds to
repair, renovate, or replace the facilities involved; or

(2)         Pay such proceeds to the
Government.

 

(k) The Contractor shall
do nothing to prejudice the Government’s right to recover against third parties
for any loss or destruction of, or damage to, the facilities. Upon the request
of the Contracting Officer, the Contractor shall furnish to the Government, at Government
expense, all reasonable assistance and cooperation (including the prosecution
of suit and the execution of instruments of assignment in favor of the
Government) in obtaining recovery.

 

(END
OF CLAUSE)

 

15

 

SECTION I
- CONTRACT CLAUSES

 

[Deviation
DAR Tracking Number: 99-O00I1 August 30, 1999 effective until the FAR is
revised]

 

FAR
52.245-9 — USE AND CHARGES (APR 1984) (DEVIATION)

 

(a)  Definitions.

 

As used in this clause—

 

Acquisition cost means the
acquisition cost recorded in the Contractor’s property control system or, in
the absence of such record, the value attributed by the Government to a
government property item for purposes of determining a reasonable rental
charge.

 

Government property means
property owned or leased by the Government.

 

Real property means land
and rights in land, ground improvements, utility distribution systems, and
buildings and other structures. It does not include foundations and other work
necessary for installing special tooling, special test equipment, or equipment.

 

Rental period means the
calendar period during which government property is made available for
commercial purposes.

 

Rental time means the
number of hours, to the nearest whole hour, rented property is actually used
for commercial purposes. It includes time to set up the property for such
purposes, perform required maintenance, and restore the property to its
condition prior to rental (less normal wear and tear)

 

(b) General.

 

(1)          Rental requests must be submitted
to the administrative Contracting Officer, identify the property for which
rental is requested, propose a rental period, and calculate an estimated rental
charge by using the Contractor’s best estimate of rental time in the formulae
described in paragraph (c) of this clause.

 

(2)          The Contractor shall not
use government property for commercial purposes, including Independent Research
and Development, until a rental charge for real property, or estimated rental
charge for other property, is agreed upon, Rented property shall be used only
on a non-interference basis.

 

(c)  Rental charge.

 

(1)     Real property and
associated fixtures.

 

(i)                  The Contractor
shall obtain, at its expense, a property appraisal from an independent
licensed, accredited, or certified appraiser that computes a monthly, daily, or
hourly rental rate for comparable commercial property. The appraisal may be
used to compute rentals under this clause throughout its effective period or,
if an effective period is not stated in the appraisal, for one year following
the date the appraisal was performed. The Contractor shall submit the appraisal
to the administrative Contracting Officer at least 30 days prior

 

16

 

(CONT'D)
FAR 52.245-9 — USE AND CHARGES (APR 1984) (DEVIATION)

 

the date the property is
needed for commercial use. Except as provided in paragraph (c) (1) (iii) of
this clause, the administrative Contracting Officer shall use the appraisal
rental rate to determine a reasonable rental charge.

 

(ii)               Rental charges
shall be determined by multiplying the rental time by the appraisal rental rate
expressed as a rate per hour. Monthly or daily appraisal rental rates shall be
divided by 720 or 24, respectively, to determine an hourly rental rate.

 

(iii)            When the
administrative Contracting Officer has reason to believe the appraisal rental
rate is not reasonable, he or she shall promptly notify the Contractor and
provide his or her rationale. The parties may agree on an alternate means for
computing a reasonable rental charge.

 

(2)     Other government property.
The Contractor may elect to calculate the final rental charge using the
appraisal method described in paragraph (c) (1 ) of this clause subject to the
constraints therein or the following formula in which rental time shall be
expressed in increments of not less than one hour with portions of hours
rounded to the next higher hour—

 

Rental charge = (Rental
Time in hours) (.02 per month) (Acquisition Cost)

720
hours per month

 

(3)     Alternate methodology.
The Contractor may request consideration of an alternate basis for computing
the rental charge if it considers the monthly rental rate or a time-based
rental unreasonable or impractical.

 

(d) Rental payments.

 

(1)     Rent is due at the time and
place specified by the Contracting Officer. If a time is not specified, the
rental is due 60 days following completion of the rental period. The Contractor
shall calculate the rental due, and furnish records or other supporting data in
sufficient detail to permit the administrative Contracting Officer to verify
the rental time and computation. Unless otherwise permitted by law, payment
shall be made by check payable to the Treasurer of the United States and sent
to the contract administration office identified in this contract or by
electronic funds transfer to that office.

 

(2)     Interest will be charged if
payment is not made by the specified payment date or, in the absence of a
specified date, by the sixty-first day following completion of the rental
period. Interest will accrue at the “Renegotiation Board Interest Rate”
(published in the Federal Register semiannually on or about January 1st
and July 1st) for the period in which the rent is due.

 

(3)     The Government’s acceptance
of any rental payment under this clause, in whole or in part, shall not be
construed as a waiver or relinquishment of any rights it may have against the
Contractor stemming from the Contractor’s unauthorized use of government
property or any other failure to perform this contract according to its terms.

 

17

 

(CONT'D)
FAR 52.245-9 — USE AND CHARGES (APR 1984) (DEVIATION)

 

(e)     Use revocation. At any
time during the rental period, the Government may revoke commercial use
authorization and require the Contractor, at the Contractor’s expense, to
return the property to the Government, restore the property to its pre-rental
condition (less normal wear and tear), or both.

 

(f)       Unauthorized use.
The unauthorized use of government property can subject a person to fines,
imprisonment, or both, under 18 U.S.C. 641.

 

 

(END
OF CLAUSE)

 

18

 

PART
III—LIST OF DOCUMENTS, EXHIBITS, AND OTHER ATTACHMENTS

 

SECTION J
- LIST OF ATTACHMENTS

 

Documents, Exhibits, and
Other Attachments

 

Attachment
(1)                Vought
Aircraft Industries, Inc., Dallas, TX List of Industrial Plant Equipment (IPE)
and Other Plant Equipment (OPE) dated 1 August 2001

 

19Exhibit 10.4

 

THIS MASTER
SERVICE AGREEMENT (this “Agreement”) is made and entered into this 17th day of
December, 2002 by and between Vought Aircraft Industries, Incorporated ,
(hereinafter referred to as “Buyer”), a Corporation having an address for purposes
of this Agreement at 9314 West Jefferson Boulevard, Dallas, Texas 75211 and
Northrop Grumman Commercial Information Services, Inc., (hereinafter referred
to as “Seller”), having its place of business at 13825 Sunrise Valley Drive,
Suite 120, Hemdon, Virginia 20171.

 

WITNESSETH:

 

WHEREAS,
Seller is currently providing Information Technology (IT) Services to Buyer
pursuant to the terms of an Agreement titled Information Technology Services
Agreement, dated February 16, 2001, which agreement terminates effective
December 31, 2002; and

 

WHEREAS,
Seller has offered to provide and Buyer desires to purchase from Seller
substantially the same services bundled and in addition to new services and
products, provided under a long term arrangement with certain options to
extend; and

 

WHEREAS, in
the interests of implementing such an arrangement, Seller, and Buyer have
agreed to terminate the original agreement early and to replace it with this
Agreement, the terms of which are effective January 1, 2003;

 

NOW,
THEREFORE, in consideration of the above recitations and of
the mutual promises contained herein, Seller and Buyer agree as follows:

 

DEFINITIONS

 

A.                                   “Parties”
means Buyer and Seller either individually or collectively

B.                                     “Products”
means those goods, supplies, reports, computer software, data, materials,
articles, items, parts, components or assemblies, and any related services
described in Attachment 1 and Schedule C.

C.                                     “Proprietary
Information” means all data or materials that are identified in writing at the time
of disclosure as proprietary and marked with an appropriate legend, marking or
stamp identifying the data as proprietary to the party disclosing the
information.

D.                                    “Services”
means the Seller’s time and effort, incidental to the performance of the services
described in Attachment 1 and Schedules A, B and C and includes any goods,
supplies, materials, articles, items, parts, components or assemblies
incidental to the performance of the Service.

 

Section 1

 

GENERAL

 

1.1                               Mutual
Commitment and Cooperation

Subject to the terms and
conditions of this Agreement, Seller shall provide services and products as
defined in the Statement of Work, Attachment 1 to this Agreement at Buyer’s
facilities and Buyer shall accept and pay for such IT Services and products. Seller
shall commit the reasonable effort of its organization and personnel to cause
such IT Services and products to meet the priorities, timetables, and
objectives mutually established by Seller and Buyer, as set forth in this
Agreement. Buyer shall cooperate with Seller in every reasonable way to enable
Seller to provide IT Services and products in such manner.

 

1.2                               Program
Managers

All responsibilities of
the Parties under this Agreement shall be supervised and coordinated by
Seller’s and Buyer’s respective Program Managers or by such other person or
persons as the foregoing representatives may designate from time to time.

 

1

 

 

1.3                               Purpose

The purposes of this
agreement are as follows:

 

1.3.1                        To specify
the procedures, terms and conditions by which Buyer purchases IT Services and
products from Seller;

 

1.3.2                        To ensure
the uninterrupted continuance of substantially the same IT Services the Buyer
currently receives.

 

1.4                               Rates

As the sole consideration
for the services specified in the Statement of Work (Attachment 1), Buyer
agrees to pay Seller for the work performed by Seller on either a fixed price
or time and materials rate basis, as specified for each section identified
within the Statement of Work. If Buyer agrees to pay for Seller’s services on a
time and materials basis, then Seller shall charge Buyer for the services of
its individual employees at the rates specified in Schedule A attached hereto.
If Buyer agrees to pay for Seller’s services and products on a fixed price
basis, then Seller shall charge Buyer for the fixed priced services at the
prices specified in Schedule C attached hereto. The amounts to be paid to
Seller for procurement items shall be the actual cost paid by Seller plus a
material handling charge as listed in Schedule B.

 

1.5                               Contract
Term

The period of performance
of this Agreement shall be for a base term of thirty-six (36) months beginning
1 January 2003 and continuing through 31 December 2005, with two (2) one (1)
year Options exercisable by Buyer in accordance with the provisions of Section
10.1.2, Discontinuance and Extension.

 

Section 2

 

SERVICES AND PRODUCT

 

2.1                               Statement
of Work

Seller agrees to provide
to Buyer, the IT Services and products described in the Statement of Work (Attachment
1). The Statement of Work sets forth the specific areas of IT Services and
products to be provided to Buyer. For each area of the IT Services and product,
the Statement of Work provides a Product Summary, a detailed description of the
services to be provided, the metrics/service level objectives (SLO), the
anticipated resources required to provide the stated service for the initial
thirty-six (36) month base term of the Agreement, and the assumptions upon
which the estimate of the anticipated resources is based. The anticipated
resources required represent Buyer business requirements. These resource
requirements will be reviewed annually as part of the Buyer’s annual operating
planning cycle and adjusted as agreed to by the Parties.

 

2.2                               Contract
Value

The total estimated
amount of this effort for the initial thirty-six (36) month base term of the
Agreement is $120.2 million. The estimate for FY2003 is $39.6 million; the
estimate for FY2004 is $40.8 million and the estimate for 2005 is $39.7 million.
A summary of the estimated units of measure and dollars and the applicable
rates upon which this value is based is set forth in Schedules A, B and C.

 

2.3                               Level
of Services

Unless otherwise agreed
by the Parties, Seller shall perform the Services for Buyer in a manner that is
substantially the same as the manner as is currently provided and Buyer shall
use such Services for

 

2

 

substantially
the same purposes and in substantially the same manner as it currently
receives. The level of Services described in the Statement of Work (Attachment
1) is an estimate of the level of Services required by Buyer for the initial
thirty-six (36) month term of the Agreement.

 

2.3.1                     If Buyer’s rate of use for Services’ is significantly
lower in any category than estimated in Schedule A, Seller reserves the right
to renegotiate Time and Material rates based on the impact of lost synergies.

 

2.3.2                     If Buyer’s rate of use for Services is
significantly higher in any category than outlined in Schedule A, the Parties
agree to mutually renegotiate Time and Material rates and Fixed price items in
order to reflect improved economies of scale.

 

2.4                               Services or products not described in
Statement of Work (Attachment 1) may be procured from Seller by issuance of a
Change Order pursuant to the Changes provision of this Agreement. The time and
material rate or fixed price for each change order issued shall be mutually
negotiated by the parties.

 

2.5                               Seller shall have the right to shut down temporarily for maintenance
purposes the operation of the facilities providing any Service whenever in its
judgment, reasonably exercised, such action is necessary. In the event
maintenance is non-scheduled, Buyer shall be notified that maintenance is required.
Seller shall give Buyer as much advance notice of any such shutdown as is
practicable.  Where feasible, this
notice shall be given in writing.  
Where written notice is not feasible, oral notice shall be given and
promptly confirmed in writing. Seller shall be relieved of its obligations to
provide Services during the period that its facilities are so shut down but
shall use reasonable efforts to minimize each period of shutdown for such
purpose and to schedule such shutdown so as not to inconvenience or disrupt the
conduct of the business by Buyer.

 

2.6                               Seller will issue to Buyer a credit for its use of the phone switch and
the voice operator system for the year 2003 at an agreed upon annual total of
$437,844.00. This amount shall be prorated on a monthly basis in year 2003 and
credited against monthly invoices in accordance with Section 3.2 of this
Agreement. Prior to October 1, 2003, the parties will determine as to the
continuation of the credit for the use of this phone switch and voice operator
system for 2004 and subsequent years.  
As Seller is providing a fixed price managed desktop service offering,
ownership of “covered” devices, which are currently Buyer owned, will transfer
to Seller.   In exchange, Seller will
credit buyer, the sum of $300,000. This credit will be applied equally to the
first twelve invoices of this Agreement. 
The meaning of “covered” items extends only to the following items:   CPU’s which will be refreshed during the
plan period, display monitors that accompany the refreshed device, laptop
computers which are covered by the refresh plan.

 

2.7                               As part of the Services provided by Seller to Buyer under this
Agreement, Seller will adhere to Buyer’s published holiday and work schedules
in the performance of services.

 

Section 3

 

INVOICING AND PAYMENT

 

3.1                               For each area of IT Services to be performed
under this Agreement, the estimated effort (units of measure and dollars) to be
expended in performance of this Agreement is as set forth in Schedule B – Time
and Material Rates, for services to be performed on a time and material basis,
and Schedule C – Fixed Price Services/Products, for services to be performed on
a fixed price basis.

 

Seller
shall submit an invoice, in duplicate, to Buyer’s Program Manager on the last
day of Seller’s accounting

 

3

 

month, for Services
provided that month, to the location set forth below:

 

VOUGHT AIRCRAFT
INDUSTRIES, INC.

Post Office Box 655907

Dallas, TX 75265-5907

Attn: ACCOUNTS PAYABLE
M/S 49-55

Each monthly invoice
shall be for an amount calculated by application of the Time and Material
(T&M) rates set forth in schedule B - Time & Material Rates to the
actual monthly consumption of resource units of measure, added to the Fixed
Prices in Schedule C. [NOTE: No Per diem or travel costs associated with any
work performed under this Agreement will be charged and invoiced under this
Agreement unless specifically authorized by Buyer.] The total amount derived
from the above calculation will be reduced by; 1) the applicable credit for
phone switches and voice operator systems of $36,487 per month for all FY 2003
invoices, and 2) the applicable credit for desktops devices of $25,000 per
month for all FY 2003 invoices. Credits for subsequent invoices for phone switches
and voice operator systems, if any, will be determined in accordance with
Section 2.6.

 

 

3.3                               Buyer
shall pay Seller for Services on a monthly schedule. Payment is due on a Net 30
basis from Buyer’s receipt of Seller’s invoice. For invoices for the months of
February, May, and August, Seller hereby offers Buyer a 1% discount for payment
made within twenty (20) days of receipt of that month’s invoice; with such
payment being collected in person on the 20th day or earlier by
Seller personnel. For the invoice for the month of December, Seller hereby
offers Buyer a 1.5% discount if that payment is made within ten (10) days of
receipt of invoice and the payment is collected, in person, on the 10th day or
earlier by Seller personnel.

 

Section 4

 

CHANGES

 

4.1                               Review
of Proposed Changes

Either party, Seller
through the Seller Program Manager and Buyer through Buyer’s Program Manager,
may propose changes to the scope of the Services. Change requests will be
submitted to the other Party in writing for consideration as to feasibility and
the effect, if any, on contract price and schedule. No change request nor any
other change contemplated by this Section 4 shall be effective unless it is
evidenced in writing and signed by the Seller Program Manager and Buyer’s Program
Manager or other authorized persons.

 

4.1.1                    The
Parties agree to consider and negotiate in good faith any proposed change
requests, including appropriate equitable adjustments to the Monthly Charges or
Annual Base Charges as a result of proposed changes to the contract.  A proposed change will be effected through a
written change request signed by both Parties, which will constitute an
amendment to this Agreement.

 

Section 5

 

FACILITIES

 

5.1                               Obligations
of Buyer

Buyer shall provide, at
no charge to Seller, access to the sites and general facilities as necessary
for Seller to render the IT Services. Buyer shall provide, without charge, to
Seller employees, or its subcontractors, at Buyer sites performing the
Services, reasonable office space, furniture, facilities services (cafeteria,
emergency

 

4

 

medical, cleaning
services, parking transportation, shipping and receiving, storage and staging
areas, telephone service), access to Buyer’s network and services (e-mail,
intranet and internet.) and other similar support consistent with that provided
to Buyer employees.

 

5.1.1                     In-Home
Maintenance Service

Seller staff will not be
required to enter any residential unit, dwelling unit, domicile, or any other
location, inclusive of, but not limited to hotels, homes, businesses or remote
locations (all hereinafter referred to as “sites”) in order to provide services
under this agreement unless a responsible adult [defined as a competent adult,
identified in advance by the Buyer to Seller, with the authority to consent to
entry by the Seller representative] is present. The responsible adult must
remain with the Seller representative(s) while such services are being
provided. In addition, any and all dangerous conditions must be removed from
the sites prior to and throughout the period that Seller representative(s)
provide covered services. Seller representatives may refrain from entering or
continuing to provide services at any site if, in the representative(s)
reasonable judgment, the site poses a risk of physical harm or danger.

 

5.2                               Obligations
of Seller

Seller shall provide to
Seller employees or its subcontractors required INTEL desktop computing
devices, pagers, cell phones and other personal computing devices.

 

Section 6

 

OWNERSHIP
AND RIGHTS

 

6.1                               Ownership
of Equipment

All equipment procured or
obtained for Buyer in performance of the IT Services set forth herein shall be
the property of Buyer, consistent with the normal terms of sale of each vendor
or financing terms of any third party leasing entity.

 

6.2                               Ownership
of Third-Party Programming All software procured or obtained for Buyer in
performance of the IT Services set forth herein shall be the property of Buyer,
consistent with the normal terms of sale of each vendor.

 

6.3                               Ownership
of New Work and Modifications

 

6.3.1                     Definitions.

In the context of the
following terms, the words “defined by” mean that an idea or invention
originates with a party who then also develops the product specifications
necessary to its development or production. “Intellectual property” rights in
the context of the following terms mean rights to ideas or inventions whether
or not patented, and to trade secrets.

 

6.3.2                     Buyer will
own the product of and intellectual property rights to new software development
defined by and paid for by Buyer. Seller may request a non-exclusive license on
reasonable terms to such work. Buyer will negotiate such a license unless it is
determined that the works are deemed a competitive advantage to Buyer,

 

6.3.3                     Buyer will
own the product of and intellectual property rights to new software development
jointly

 

5

 

defined by Buyer and
Seller and paid for by Buyer, and Buyer agrees to grant Seller a non-exclusive,
perpetual, paid-up and royalty free license to use such works in its business.
If it is determined that the intellectual properties so developed provide a
competitive advantage to Buyer, the license granted may restrict use..

 

6.3.4                     Seller will
own the product of and intellectual property rights to new software development
efforts defined and developed by Seller in the course of providing services
identified in Attachment 1 and paid for by Buyer. Seller agrees to grant and
hereby grants to Buyer a non-exclusive, perpetual, paid-up, and royalty free
license to use such works.

 

6.3.5                     New
software development efforts defined and paid for by Seller in the course of
providing services identified in Attachment 1 to this Agreement shall be owned
by Seller. Buyer may request a nonexclusive license on reasonable terms to such
work. Seller will negotiate such a license unless it is determined that the
works are deemed a competitive advantage to Seller.

 

6.4                               Protection
of Seller Property

Buyer agrees to provide
reasonable protection of all Seller equipment, which is necessarily left under
Buyer’s control at Buyer facilities being maintained to carry out this
Agreement and to take appropriate measures to meet this obligation.

 

6.4                               Indemnity
for Infringement

 

6.4.1                     Notwithstanding
any other provision of this Agreement, Seller shall, at its expense, defend,
indemnify, and hold harmless Buyer from and against any claim, liability, or
damage based on the alleged or actual infringement of any U.S. patent or
copyright by the items classified as “Hardware Parts or Products supplied by
Seller,” “Existing Programming Products supplied by Seller,” or “Special
Programming to be prepared by Seller” pursuant to Attachment 1 hereto (this
applies only to non-Buyer hardware, software and systems), provided that such
obligation shall be contingent on the following:

 

(i)                                     Buyer
providing prompt notice to Seller writing of such claim when it becomes known
to Buyer;

 

(ii)                                  Buyer’s
cooperation with Seller the defense thereof, at Seller’s expense; and

 

(iii)                               Seller
obtaining Buyer’s prior written approval of any settlement by Seller of such
matters (which approval shall not be unreasonably withheld). Seller shall have
no indemnity obligation for claims or infringement resulting or alleged to
result from any combination, operation, or use of any of such items by Buyer
with any other components or any other equipment or programming not part of
this IT Services Agreement or insofar as the such combination, operation, or
use was not consistent with the IT Services Agreement and/or SOW.

 

In addition, as to the
items classified as “Special Programming to be prepared by Seller” pursuant to
Attachment 1 hereto, if Seller determines, during the design process, that it
cannot comply with the specifications and avoid infringement of a patent or
copyright, then Seller shall promptly inform Buyer and the Parties will develop
an alternate approach (which may include obtaining the right for a
non-infringing use or locating a substitute product) or otherwise modify the
Specification.

 

6

 

Seller’s sole obligation
with respect to this clause shall be to obtain at Buyer’s expense either the
right for a non-infringing use or to acquire on behalf of Buyer a substitute
product.

 

6.4.2                     Buyer
shall at its expense defend, indemnify and hold harmless Seller from and
against any claim, liability, or damage based on the alleged or actual
infringement of any US patent or copyright arising out of or related to
Seller’s compliance with Buyer direction to perform the subject IT services in
a specific manner and/or by utilizing Buyer specified software, hardware,
products, programs, specifications or other resources in a particular
configuration or structure. The foregoing obligation is contingent upon:

 

(i)                                     Seller
providing Buyer prompt notice in writing of such claim when it becomes known to
Seller;

 

(ii)                                  Seller’s
cooperation with Buyer in the defense of such matter, at Buyer’s expense; and

 

(iii)                               Buyer
obtaining Seller’s prior written approval of any settlement by Buyer of such
matters (which approval shall not be unreasonably withheld).

 

Buyer shall (1) direct
Seller to cease the activity that has resulted in the alleged infringement, (2)
obtain for Seller the right to proceed on a non-infringing basis or (3) direct
a different approach or the use of different resources that will not result in
any alleged infringement.

 

6.5                               Appointment
of Licensing Agent

Subject to the terms and
conditions hereof, Buyer hereby designates and appoints “Seller” as its Agent
for the term of this Agreement, and as its exclusive representative for the
solicitation of license agreements and service agreements relating to the
Products from end-users as defined herein, and Agent hereby accepts such
designation and appointment.

 

Section 7

 

FREEDOM
OF ACTION; CONFIDENTIALITY

 

7.1                               Dealings
With Other Customers

Seller is engaged in the
business of providing systems analysis, integration services, and contract
programming to a variety of customers, and nothing in this Agreement shall
prevent Seller from using its and its personnel’s general skills in pursuing
such business with any other customer on any other terms, whether or not
similar to those provided under this Agreement. Seller shall be free to use and
disclose in such business pursuits any data-processing or
information-processing techniques, concepts, or ideas employed in the delivery
of services or otherwise developed or learned by Seller in the course of
rendering the IT Services, provided, Buyer did not provide these techniques,
concepts or ideas to Seller and identify and designate them in writing to
Seller as Buyer’s Proprietary Information or as the Proprietary Information of
a third party with whom Seller is working.

 

7.2                             Safeguarding
Of Information

 

7.2.1                     Seller and
Buyer agree to keep in confidence all information in accordance with the
Non-Disclosure Agreement attached hereto as Attachment 2, and incorporated
herein by reference.

 

7.2.2                     To the extent
that either party requires access to any information or data which carries a
U.S. Government military security classification, the recipient party shall
additionally safeguard such

 

7

 

classified information in
accordance with the appropriate provisions of the United States Department of
Defense Industrial Security Manual for Safeguarding Classified Information.
Technical information or data, whether classified or otherwise, must not be
disclosed to any foreign person in violation of the Export Administration Regulations
of the United States, the International Traffic in Arms Regulations of the
United States Department of State, or any other applicable laws or regulations
of the United States.

 

Section 8

 

LIMITED WARRANTY

 

8.1                               IT Services

Seller warrants that it will
render the IT Services in a professional and workmanlike manner.

 

8.2                               Warranty

UNLESS EXPRESSLY SET
FORTH ELSEWHERE IN THIS AGREEMENT, SELLER, ITS PARENT, SUBSIDIARIES AND THEIR
AFFILIATES, SUBCONTRACTORS AND SUPPLIERS MAKE NO WARRANTIES, EXPRESSED OR IMPLIED,
AND SPECIFICALLY DISCLAIM ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR THE FITNESS OR SUITABILITY OF THE EQUIPMENT ON WHICH THE
SERVICES ARE PERFORMED, OR ANY MODIFICATIONS THEREOF, FOR ANY SPECIFIC
APPLICATION, PERFORMANCE, RESULT OR USE. NO WARRANTY OR REPRESENTATION SHALL BE
BINDING ON SELLER UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE
OF SELLER.

 

8.3                               No Effect on Other Agreements

Nothing in this Agreement
shall abridge or negate any other warranties contained in any other agreements
concerning the procurement of components or services by Buyer. Seller shall
provide its reasonable cooperation to enable Buyer to realize the benefits of
any such other warranties.

 

Section 9

 

LIMITATION OF LIABILITY

 

9.1                               Indemnification

Both Parties shall
indemnify and hold harmless the other Party, officers, agents, representatives,
and employees, from and against any and all claims or losses for physical
damage to real and/or tangible personal property or bodily injury to persons
resulting from and directly caused by the negligence or willful misconduct on
the part of the other Party, its agents, employees, representatives, or
subcontractors in connection with their performance of obligations under this
Agreement.

 

9.2                               Seller’s Liability

Except as provided in
Section 6.4.1 of this Agreement, the limit of Seller liability (whether in
contract, tort, negligence, strict liability in tort or by statute or
otherwise) to Buyer concerning performance or non-performance by Seller, or in
any manner related to this Agreement, for any claim or aggregation of claims
relating to the same factual nexus, shall not exceed the total contract value
for each annual contract period. Buyer’s exclusive remedy for any claim arising
out of these arrangements shall be for Seller, upon receipt of written notice,
to use commercially reasonable efforts to cure the breach at its

 

8

 

expense, and, failing
that, the return of fees paid to Seller for the work related to the breach. In
no event shall either Party be liable for consequential, incidental or punitive
losses, damages or expenses including lost profits or savings) even if it has
been advised of their possible existence.

 

Section 10

 

TERMINATION 

 

10.1
Termination

 

10.1.1              Cancellation

This Agreement may not be
cancelled in its entirety by either Party for the first thirty-six (36) months
of the Agreement except as provided in 10.1.3 and 10.2.

 

10.1.2              Discontinuance and
Extension

The base period of performance
of this Agreement is thirty-six (36) months. For performance beyond the initial
thirty-six (36) month term of the Agreement, Buyer may extend the contract in
one-year increments for years 2006 and 2007. The Parties will mutually agree on
resource requirements and any changes to the statement of Work required for
Option Years 2006 and 2007. Each one (1) year Option for Years 2006 and 2007
will be based on the labor rates identified in Schedule B and the fixed prices
identified in schedule C. Buyer shall provide to Seller, in writing, a minimum
of six (6) months notice prior to; 1) the expiration of the base thirty-six
month (36) term of this Agreement, and/or 2) the expiration of any Option
period exercised hereunder, of its intent to discontinue or extend the
Services. In the absence of notice of intent to discontinue or extend the
contract beyond the base thirty-six (36) month period or the first Option Year
(2006), the contract shall automatically be extended for the subsequent one (1)
year Option period.

 

As an alternative to the
exercise of the Option for Year 2006, should Buyer decide to enter into a new
agreement with Seller, Buyer must have entered into a follow-on agreement or
given Seller advanced written notice of its intent to enter into a new
agreement prior to the start of month thirty (30) of this Agreement.

 

10.1.2.1                    If Buyer provides written notice of
intent to discontinue this Agreement, Seller will provide termination
assistance as agreed by the parties, on a Time and Material basis, not to
exceed twelve months. Within 90 days from date of receipt of Buyer’s written
notice to discontinue services, Seller shall provide to Buyer for review and
negotiation a Proposal for Termination Statement of Work and a schedule of
proposed termination charges.

 

10.1.3              Termination for
Cause

In the event that either
party materially or repeatedly defaults in the performance of any of its duties
or obligations set forth in this Agreement, and such default is not
substantially cured within thirty (30) days after written notice is given to
the defaulting party specifying the default, then the party not in default may
terminate this Agreement by giving written notice thereof to the defaulting
party specifying the effective date of the termination. This Section is subject
to the provisions of Section 10.3 “Actions upon Discontinuance of Services or
Termination for Cause.”

 

9

 

10.2                        Partial
Termination

 

10.2.1              Buyer may terminate performance of specific
areas of Services under this Agreement set forth in Attachment 1 in whole if
Buyer determines that a termination is in its interest. Buyer shall terminate
by delivering to Seller a notice of termination specifying the extent of
termination and the effective date. A notice of termination is required a
minimum of sixty (60) days prior to the effective date of termination.

 

10.2.2              After receipt of a Notice of Termination, and
except as directed by Buyer, Seller shall immediately, as to the terminated
portion of this Agreement, proceed with all actions necessary to effect the
elimination of the terminated Services by the effective date of the termination
and protect property in Seller’s possession in which Buyer has or may acquire
an interest.

 

10.2.3              In the event of termination, the Agreement
shall be amended and Seller paid:

 

(i)             The actual costs incurred up to and including
the date of termination which, using recognized accounting practices, are
properly allocable to, or apportionable under the terminated portion of the Agreement;
this will include costs to subcontractors which are so allocable.

 

(ii)          Reasonable cost impact associated with a
service category.

 

10.3                        Actions
upon Discontinuance of Services or Termination for Cause

In
the event Buyer discontinues Services or Terminates for Cause, in accordance
with Section 10.1.2 or Section 10.1.3 of this Agreement, Buyer recognizes that
certain charges relating to the cessation of services (whether in accordance
with a discontinuance of Services or a Termination for Cause) (“Charges”) will
be applicable. These Charges include fees or other payments due for third party
leases, licensing arrangements and amounts payable to employees for retention.
An estimate of these Charges is thirty percent of the annual contract value in
2003, twenty-five percent in 2004, and twenty percent in 2005. These estimates
shall constitute the not-to- exceed (NTE) liability of Buyer with regard to any
cessation of Services. At any time during the performance of this Agreement,
upon identification of any additional commitments required to be included in
the Charges, and upon mutual agreement of the Parties, such additional
commitments will then be incorporated into the total Charges by a written
amendment to this agreement Upon Buyer’s notification to Seller of its intent
to discontinue Services or notification of Termination for Cause, the Parties
agree to work together to mutually agree on any future commitments not
previously identified and incorporated in the Charges, and the development of
any employee retention plan so as to minimize the total amount of cessation
charges. The parties agree that once Buyer has given notice of intent to
discontinue Services or to Terminate for Cause, Seller will use reasonably
prudent efforts to maintain an adequate level of performance through the
effective date of cessation of Services. It is further agreed that on the
effective date of the cessation of Services, any and all contracted
liabilities, including, but not limited to, computer equipment leasing arrangements
and facilities, that are contracted for by Seller in the performance of
Services under this Agreement, will be assigned to Buyer, and Seller will have
no further obligations to any third party. Within thirty (30) days following
the date that Services cease under this Agreement, Seller shall submit to Buyer
an itemized invoice for any aforementioned fees or expenses incurred under this
Agreement with regard to the cessation of Services.

 

10

 

Section 11

 

INSPECTION AND ACCEPTANCE

 

11.1                        Products
and Services delivered under, and that conform to this Agreement, will be
accepted by Buyer. Products and Services that do not so conform may be rejected
in whole or in part at Buyer’s option. If the Products or Services or their
tender of delivery fail in any respect to conform to this Contract, Buyer may
accept or reject the whole or any unit thereof.  Buyer may reject goods or services within a reasonable time (not
less than thirty business days or the time required to complete stated
acceptance tests, whichever is greater) after delivery or tender. Acceptance
occurs after Buyer signifies to Seller in writing that it has accepted the
goods or services. Payment shall not, in and of itself, signify acceptance, nor
does acceptance itself impair any other legal or equitable remedy for
non-conformity.

 

11.2                        Acceptance
may be revoked at any time if it were made with the reasonable assumption that
any non-conformity would be cured, the non-conformity was difficult to discover
before acceptance, or such revocation is otherwise permitted by law or equity.

 

11.3                        Upon
rejection, Buyer may, at its option and at no increase in agreement cost,
perform any or all of the following actions: return the rejected goods for a
complete credit; return the rejected goods for repair, in which case repair
shall be made and the goods delivered to Buyer within ten business days after
the date rejected; return the rejected goods for a replacement of the returned
goods, such replacement to be delivered to Buyer within ten business days after
the date rejected; return the rejected goods for Seller’s determination as to
whether to repair or replace the goods, such determination to be communicated
in writing to Buyer within ten business days after Seller’s receipt of the
goods, with the repaired or replaced goods delivered to Buyer within twenty
business days after Seller’s receipt of the goods; demand and receive a
complete credit for the rejected services; request Seller provide compliant
services of the same type as those rejected, in which case such services shall
be rendered to Buyer within ten business days after the date rejected; or
negotiate other methods of cure with Seller. 
The options above apply regardless of determination of fault as between
carrier and Seller (in the case of goods) and are not an exhaustive statement
of Buyer’s recourse.   Seller shall bear
all costs of shipping rejected goods, including but not limited to freight,
insurance, and other costs associated with sending rejected goods to Seller and
back to Buyer. Seller shall also assume risk of loss from the date of rejection
until final acceptance by Buyer of the repaired or replaced goods.

 

11.4                        Any and
all computing hardware provided by Seller to Buyer via Seller’s lease program
is to be returned to Seller, at end of refresh period, in good operating
condition, excluding normal wear and tear. Failure by Buyer to meet this
obligation constitutes a breach of this agreement and will require Buyer to pay
reasonable costs Seller incurs as a result of Seller’s inability to satisfy
third party leasing obligations on such computing hardware.

 

Section 12

 

MISCELLANEOUS

 

12.1                        Independent
Contractor

Seller, in rendering the
IT Services from time to time, is acting solely as an independent contractor.
Seller’s employees, agents or representatives (hereinafter “Employees”)
performing Services under this Agreement shall at all times be under Seller’s
direction and control. Seller shall pay all wages, salaries, and other amounts

 

11

 

due its Employees in
connection with this Agreement and shall be responsible for all reports and
obligations for its Employees, including, but not limited to, social security
and income tax withholdings, unemployment compensation, worker’s compensation,
and equal employment opportunity reporting.

 

12.2                        Multiple
Counterparts

This Agreement may be
executed in several counterparts, all of which taken together shall constitute
one single Agreement between the parties.

 

12.3                        Section
Headings; Exhibits

The section and
subsection headings used herein are for reference and convenience only and
shall not enter into the interpretation hereof. The attachments referred to
herein and attached hereto are incorporated herein to the same extent as if set
forth in full herein.

 

12.4                        Required
Approvals

Where agreement,
approval, acceptance, or consent by either party is required by any provision
of this Agreement, such action shall not be unreasonably delayed or withheld.

 

12.5                        No Waiver

No delay or omission by
either party hereto to exercise any right or power occurring upon any
noncompliance or default by the other party with respect to any of the terms of
this Agreement shall impair any such right or power or be construed to be a
waiver thereof. A waiver by either of the parties hereto of any of the
covenants, conditions, or agreements to be performed by the other shall not be
construed to be a waiver of any succeeding breach thereof or of any covenant,
condition, or agreement herein contained. Unless stated otherwise, all remedies
provided for in this Agreement shall be cumulative and in addition to and not
in lieu of any other remedies available to either party at law, in equity, or
otherwise.

 

12.6                        Governing
Law

This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas,
exclusive of its choice of law provisions. The Parties waive any right to a
jury trial.

 

12.7                        Entire
Agreement

This Agreement and the
attachments hereto constitute the entire agreement between the parties. It
supercedes all other understandings or representations, oral or written
including any proposals, which have not been specifically incorporated herein.
No change, waiver, or discharge hereof shall be valid unless it is in writing
and is executed by the party against whom such change, waiver, or discharge is
sought to be enforced.

 

12.8                        Notices

All notices, demands, or
consents required or permitted under this Agreement shall be in writing and may
be delivered personally or may be transmitted by fax or e-mail. Each party
shall provide the name, address and telephone number of their designated
contact, in writing, within 30 days from the effective date of the contract.

 

12.9                        Personnel;
Subcontracting

Seller shall have sole
responsibility for the assignment of its personnel to the IT Services. Such
personnel shall not be restricted or prevented from performing services for
others that are similar to the IT Services. Seller shall be free to change its
personnel, engage subcontractors in rendering IT Services hereunder, provided
that such subcontractors are subject to written agreements that give effect to
the rights and obligations of Seller under this Agreement, and provided further
that Seller shall retain responsibility and liability for all acts of such
subcontractors. Seller shall provide Buyer thirty days (30 days) notice of any
change in key personnel regarding this Agreement.

 

12

 

12.10                 Transfer of
Ownership

In the event Buyer should
sell, divest, consolidate, merge, or otherwise take action to affect the
ownership of the Buyer business, this contract will remain in effect through
the then effective period and all terms, conditions, services and prices shall
be honored.

 

12.11                 Binding Nature
and Assignment

The Agreement will be
binding on the Parties and their respective successors and assigns. Subject to
12.10 above, neither Party may, or will have the power to, assign the Agreement
without the prior written consent of the other, except that Seller may assign
its rights and obligations under the Agreement without Buyer’s approval to an
entity which acquires all or substantially all of Seller’s assets or to any
subsidiary or Affiliate or to any successor in a merger or acquisition of
Seller; provided, however, that in no event will such assignment relieve Seller
of its obligations under the Agreement.

 

12.12                 Order of
Precedence

In the event of any
inconsistency between any parts of this Agreement, the inconsistency shall be
resolved by giving precedence in the following order:

 

A.      The Agreement.

B.        Statement of Work.

C.        Schedules A-C.

D.       Third party leasing
documents.

E.         Specification/Drawing.

F.         Supplier Data
Requirements List (SDRL)/Data Item Description (DID).

G.        Other Referenced Documents.

 

12.13                 Disputes Between
the Parties

The Parties shall
exercise their best efforts to settle all disputes arising hereunder or
relating to the Agreement, including disputes as to the interpretation or
enforceability of any term of this Agreement, by agreement of the Parties. If
at any time the Parties reach an impasse on an issue with respect to the
Parties rights or obligations, and such impasse is not resolved in thirty (30)
workdays thereafter, the issue shall be referred immediately to the President
of each Party for decision. In the event the dispute is not resolved through
amicable discussion between the Presidents within a reasonable time then the
Parties shall submit the dispute for final and exclusive resolution by binding
arbitration pursuant to the then existing commercial arbitration rules of the
American Arbitration Association under AAA rules. Each Party shall select one
arbitrator and those two shall select a third. All the arbitrators must be
familiar with and experienced in the outsourcing and providing of IT Services.
The arbitrators shall issue their opinion in writing stating the facts upon
which they based their decision. The arbitrators shall have no authority to
award exemplary, punitive or similar type damages. To the extent an issue
involves proprietary information or technology, then in such case the Parties
may resort to legal action in a court of competent jurisdiction in the State of
Texas in order to seek injunctive relief.

 

12.14                 Force Majeure

The term “Force Majeure”
shall be defined to include fires or other casualties or accidents, acts of
God, severe weather conditions, strikes or labor disputes, war or other
violence, or any law, order, proclamation, regulation, ordinance, demand, or
requirement of any governmental agency.

 

12.14.1.    A party whose performance is
prevented, restricted, or interfered with by reason of a Force Majeure
condition shall be excused from such performance to the extent of such Force
Majeure condition so long as such party provides the other party with prompt
written notice describing the Force Majeure

 

13

 

condition and takes all
reasonable steps to avoid or remove such causes of nonperformance and
immediately continues performance whenever and to the extent such causes are
removed.

 

12.14.2       If, due to a Force
Majeure condition, the scheduled time of delivery or performance is or will be
delayed for more than thirty (30) days after the scheduled date, the party not
relying upon the Force Majeure condition may terminate, without liability to
the other party, the Purchase Order or any portion thereof covering the delayed
Products or Services.

 

12.15                 Non-Hiring of
Employees

During the term of this
Agreement and any exercised option years, each party agrees not to offer or
solicit employment to any person employed by the other and performing work in
support of this Agreement, unless approved in writing by such other party. Such
approval shall not be unreasonably denied or delayed.

 

12.15.1       For a period of twelve
(12) months from separation date, Employees of either Party who have
voluntarily separated (resigned, retired, transferred) from one Party will be
prohibited from accepting employment (as an employee or as contract labor) from
the other Party to this Agreement without the written permission of the
originally employing Party.

 

12.16                 Publicity

No news release including
advertisements, public announcements, denial or confirmation of same relating
to this Agreement shall be made by either party without first obtaining express
written consent from the other party. Approval of such requests shall not be
unreasonably withheld.

 

12.17                 Taxes Buyer

Agrees to pay all taxes,
however designated (excluding taxes on Seller’s net income), imposed on or
based upon the provision, sale or use of the work, labor or services and
products of any nature and in the quantities stated herein or itemized in
schedules attached hereto. Buyer shall pay or reimburse Seller any sale tax,
use tax or VAT assessed on the services provided to Buyer under this Agreement
unless Buyer signs a sales tax waiver that runs concurrently with this
agreement allowing Seller not to bill Buyer for sales tax, use tax or VAT.

 

12.18                 Audit

Seller shall support the
Buyer, as necessary, on all audits performed by any governmental agency for any
work performed under this Agreement. Seller shall keep books and records of
performance and costs incurred in support of this Agreement for a period of not
less than three (3) years after final payment under this Agreement. Buyer may,
at its discretion, perform audits of services delivered as it relates to this
agreement and statement of work (attachment 1) and as required to satisfy
security and controls reviews. Seller will implement management corrective
actions as mutually agreed to and provide evidence of implementation. Buyer and
Seller will work together to mitigate costs associated with annual audit
requirements.

 

12.19                 Compliance with
Laws

Seller warrants that it
shall comply with all applicable federal, state, and local laws, rulings, and
regulations in performance of this Agreement.

 

12.20                 Export and Import
Compliance

All exports of data from
the United States and any subsequent re-export from a non-U.S. country shall
comply with the laws and regulations of the United States relating to exports
and foreign transactions, including, but not limited to, the International
Traffic in Arms regulations (ITAR) and the Export

 

14

 

Administration
Regulations (EAR). Except as specifically authorized in writing by the U.S.
Government, Seller shall not transfer data to a person in a third country or to
a national of a third country.

 

IN WITNESS
WHEREOF, Seller and Buyer have caused this Agreement to be signed and delivered
by their duly authorized officers, all as of the date first herein above
written.

 

 

	
  Northrop Grumman Commercial
  Information Services, Inc.

  
	
   

  
	
  By:

  	
  /s/  Douglas R. Hoffman

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Douglas R. Hoffman

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Senior Director, Contracts
  and Pricing

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  12/17/02

  	
   

  
	
   

  	
   

  
	
  Vought Aircraft Industries,
  Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/  Judith W. Northup

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Judith W. Northup

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Vice President, Human
  Resources, Administration & Information Services

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  12/17/02

  	
   

  
								

 

15

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