Document:

AGREEMENT OF SUBCONTRACT

	 

	 	THIS AGREEMENT OF SUBCONTRACT (hereinafter referred to as this “Subcontract”), made as of
the       day of             2004, is by and between General Dynamics Government Systems Corporation, a Delaware
Corporation, having an office and place of business at Needham, Massachusetts (hereinafter called
“GD” or the “Contractor”) and ION Networks Inc., a Delaware Corporation, having
an office and place of business at 120 Corporate Blvd., South Plainfield, NJ 07080 (hereinafter called
“ION” or the “Subcontractor”).

	 
	
WITNESSETH, THAT:

WHEREAS IT IS UNDERSTOOD THAT:

	 

	                    (i)	The United States of America (hereinafter referred to as the “Government”) acting through
a duly authorized Contracting Officer of the Department of Defense has heretofore entered into a
contract identified as Prime Contract No. DAAB07-01-D-H101 (which contract is hereinafter referred
to as the “Prime Contract”) whereunder certain work was undertaken to be performed for
the Government; and
		 
	                    (ii)	The Contractor by such Prime Contract has undertaken the performance of all or a portion of such work;
and
		 
	                    (iii)	The Contractor desires to have the Subcontractor perform the work called for by this Agreement and
the Subcontractor desires to so perform upon the terms and conditions in this Agreement set forth.

	 
	
Now, therefore, in consideration of the foregoing and the undertaking hereinafter set forth, and subject
to the approval of the Government, the parties hereto do hereby agree as follows:

                    This
Subcontract is intended to establish and set forth any and all special or unusual conditions of the
Subcontract upon which the Subcontract Parties have mutually agreed to:

                    1.
All terms and conditions required by federal law and regulations in full text or by incorporation
by reference,

                    2.
All terms and conditions necessary for Subcontractor to fully satisfy all of its subcontract requirements
under LTLCS3 Prime Contract Number DAAB07-01-D-H101 by and between the U.S. Army, CECOM and Contractor.                   

	 

	 	ARTICLE 1:  Object and Scope of Subcontract
	 	 
	 	The object of this Subcontract is to set forth the parties respective rights and obligations with regard
to the design, fabrication, testing, delivery, maintenance and operation of 

	

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	 	the equipment, materials and services to be supplied hereunder when and as provided in the Price Schedule
and Statement of Work (SOW) included herein.

	 	 
	 	ARTICLE 2:  Documents Comprising Subcontract
	 	 
	 	The Subcontract is comprised of the following Subcontract Documents, each of which is an integral part
hereof:
	 	 
	 	2.1           Agreement of Subcontract

	 
	
                                               
Part I:             Special and General Provisions

                                               
Part II:            Statement of Work

                                               
Part III:           Attachments

	    
                   
                    
                     
         Attachment 1 - Price Schedule
	                                                                             Attachment
2 - Representations, Certifications and Instructions

	 
	
                   
ARTICLE 3:    Interpretation and Precedence

	 

	                    3.1	 In the event of a conflict with or inconsistencies between the provisions of this Subcontract, such conflicts
or inconsistencies shall be resolved by giving precedence to the various portions of the Subcontract
in the following order:

	 	 
	 	3.1.1        Articles            1 through 7

    3.1.2        Part I:               Special and General Provisions

    3.1.3        Part II:              Statement of Work
	 	 
	                    3.2	The title and captions of any parts, sections or paragraphs of this Subcontract are for convenience
or reference only and shall have no meaning in the construction or interpretation of this Subcontract.
		 
	                    3.3	This Subcontract incorporates one or more clauses by Reference with the same force and effect as if
it were given in full text.

	 
	
                    ARTICLE
4:  Controlling Law and Severability

	 

	                    4.1	Irrespective of the place of performance, this Subcontract shall be construed, interpreted and enforced
and the rights of the Parties hereto shall be determined in accordance with the United Stated federal
common law of government contracts as enunciated and applied by federal judicial bodies, boards of
contract appeals and other judicial and quasi-judicial agencies of the Federal Government of the
United States. To the extent that the federal common law of government contracts is not dispositive,
the laws, without regard to its laws concerning conflicts of law, of the Commonwealth of Massachusetts,
which is the State wherein this Subcontract was made, shall apply. Any dispute, controversy or claim,
arising out of or in connection with this Subcontract, that 

	

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	 	cannot be resolved in accordance with the Disputes Clause hereof, shall be submitted to and finally
resolved by a court of competent jurisdiction in the Commonwealth of Massachusetts. 
		 

	                    4.2	Over and above the governing laws listed above, the Subcontractor is obligated to subscribe to the laws and regulations of the foreign state in which they are performing pursuant to this subcontract, and in Agreements between the U.S. Government and these foreign countries for work performance pursuant to this subcontract.
	 	 
	                    4.3	Any provision hereof which is held invalid or unenforceable shall not affect the validity or enforceability
of any other provisions hereof. In the event that any provision of this Subcontract is held invalid
or unenforceable, the Parties shall make every effort to mutually agree to and incorporate into the
Subcontract by Modification, a new provision in regard to the same subject.

	 
	
                   
ARTICLE 5:    Communication and Authority

	 

	                    5.1	The Contractor’s duly authorized representative of the Contractor’s Contractual Relations
Department shall be the only Contractor individual authorized to issue Subcontract changes and stop-work
orders, altering the time or place of performance under the Subcontract, or otherwise varying the
terms of the Subcontract. No other Contractor or Government communications shall have any contractual
validity or be binding on the Contractor.
		 
	                    5.2	Except as otherwise specified herein, all correspondence, notices and approvals permitted or required hereunder shall be made to or by the duly authorized representative of parties as set forth below:

	 
	
                                    Contractor:                Margery
A. Cunningham

                                    Title:                           Subcontract
Manager

                                   
  Subcontractor:          Patrick E. Delaney

                                   
Title:                           CFO 

	 

	                                    5.2.1	The Parties shall promptly notify each other in writing of any changes made to their respective designated
representatives hereunder.

	 
	
                   
ARTICLE 6:    Integration and Merger

	 

	 	This Subcontract constitutes the final and entire expressed agreements of the Parties concerning the
subject matter hereof, and supersedes all prior negotiations, discussions, representations, correspondence,
promises or agreements, either written or oral, that 

	

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	 	may have been made in connection with the subject matter hereof. This Subcontract or any Contract Document
which is a part hereof may only be amended by written agreement of the Parties. The only person authorized
to modify this Subcontract on behalf of Contractor is the duly authorized representative of the Contractual
Relations Department as specified in Article 5.

	 	 
	 	ARTICLE 7:    Force and Effect
	 	 
	 	This Subcontract shall enter into full force and effect and shall be binding on the Parties upon signature
by the duly authorized representatives of the Parties. The Effective Date shall be the date specified
in the attestation below:
	 	 
	 	ATTESTATION
	 	 
	 	IN WITNESS WHEREOF, the Parties hereto have caused this Subcontract to be signed by their duly authorized representatives
as of the day and year first written.

	 
	
                 
GD GOVERNMENT SYSTEMS CORPORATION

                 
Network Systems

                 
(Contractor)

	 

	                  BY: _____________________________	WITNESS:  __________________________
	 	 
	                  NAME: __________________________	 DATE: _____________________________
	 	 
	                  TITLE: ___________________________	 
	 	 
	                  DATE: ___________________________	 

	 
	
                 

ION Networks Inc.

                 
(Subcontractor)

	 

	                  BY: ______________________________	WITNESS:  __________________________
	 	 
	                  NAME: Patrick E. Delaney ___________	 DATE: _____________________________
	 	 
	                  TITLE: CFO ______________________	 
	 	 
	                  DATE: ___________________________	 

	 

	                 
The Effective Date of this Subcontract is:                                                  

	

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	PART I 
	 
	SPECIAL AND GENERAL PROVISIONS
	 
	SPECIAL PROVISIONS
	 

	1.0  	SUBCONTRACT TYPE
	 	 
	 	It is understood that this is a Firm Fixed-Price, Indefinite Delivery Infinite Quantity (IDIQ) subcontract
for equipment, supplies and services in support of the LTLCS Prime Contract DAAB07-01-D-H101. As
required, Contractor may order any of the items specified in Attachment 1 from the Subcontractor
that are necessary to be purchased by the Contractor in order to fulfill its obligations under the
LTLCS Program. The minimum ordering guarantee hereunder is $__________ not to exceed a maximum of $445,299.
	 	 
	2.0 	TERM OF THE SUBCONTRACT
	 	 
	 	2.1 For the purpose of this subcontract the following option years are established: 
	 	 
	 	(a) Base Year 1 effective 21 August 2001 through 20 August 2002.
	 	 
	 	(b) Option Year 1 effective from 21 August 2002 through 20 August 2003.
	 	 
	 	(c) Option Year 2 effective from 21 August 2003 through 20 August 2004.
	 	 
	 	(d) Option Year 3 effective from 21 August 2004 through 20 August 2005.
	 	 
	 	(e) Option Year 4 effective from 21 August 2005 through 20 August 2006.

	                    

		2.2    	The Subcontract shall be applicable to all Purchase Orders dated and placed in the mail by the Contractor
up to the expiration date of the Subcontract.

	 	 
	3.0	PRICES, SCHEDULES, AND PERFORMANCE
	 	 
	 	All prices shall be as provided in Part III, Attachment 1. Travel prices will be based on the JTR per
diem rate in effect at the time of the proposal.
	 	 
	 	Specific requirements will be attached to each purchase order.

	

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	 	The prices in Part III, Attachment 1 are firm fixed prices granted by the Subcontractor which the Contractor
may exercise with the Subcontractor at any time during the Option period delineated in Paragraph
2.1 Term of the Subcontract.
		 
	                    	The four (4) Option Years may be exercised individually, at the sole discretion of Contractor. In the
event the Contractor decides not to exercise its option hereunder, the Contractor shall provide the
Subcontractor with written notification of its decision not later than thirty (30) days prior to
the expiration of the Subcontract. If said notice is not provided, the option to extend the term
of the contract shall be considered to have been exercised, and the Term of the Contract will be
extended without further action by the Parties.
		 
	 	Neither this Subcontract nor its Attachments shall be construed to expressly or implicitly commit Contractor
to exercise in whole or in part any of the options set out in this Subcontract. The options are independent
and if any option(s) are not exercised the Subcontractor will not be entitled to any reimbursement
or adjustment and all future options will remain in effect.

	 	 
	4.0	CONSIDERATION AND PAYMENT
	 	 
	 	4.1   Prices
	 	 
	 	In consideration for the equipment, services and other items ordered by Contractor and supplied by
Subcontractor when and as specified herein, Contractor shall pay to Subcontractor the Subcontract
firm fixed prices set forth in Attachment 1 hereto for any options exercised. 
	 	 
	 	4.2   Payment

		 	 
		4.2.1	Payment for Firm Fixed Price Items
		 	 
		 	Contractor shall pay the Subcontractor for firm fixed price items less any deductions permitted hereunder
or at law, net thirty (30) days upon:
			 

	                                                (1) 	Contractor’s acceptance of the item(s) invoiced; and 
	 	 
	                                                (2) 	Contractor’s receipt of Subcontractor’s invoice, specifying the Prime Contract Number, Subcontract
Number, Line Item Number(s), Quantity(s) and unit prices together with:
		 

		 	(i) Two (2) copies of the Contractor Approved Acceptance Test Results (if applicable); and,
			 
		 	(ii) A statement signed by a duly authorized representative of Subcontractor certifying that the items
covered under the invoice were manufactured or procured by Subcontractor and delivered to Contractor
in conformance with this Subcontract.

	

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		(1)	Subcontractor may submit invoices based upon the price schedule at Attachment 1.
		 	 

		 	4.3   Invoicing

    Invoices are to be submitted to:

    GD Government Systems Corporation

  77 “A” Street

  Needham, MA 02194-9123

  Attention: Margery Cunningham

  

  Payment is to be 

  remitted to:

    ION Networks Inc.

      120 Corporate Blvd

    South Plainfield, NJ 07080

		 	 
		4.4 	Offsets and Reductions
		 	 
		 	Contractor reserves the right to withhold and offset any amounts due to Subcontractor from Contractor
under the terms of this Subcontract from any payments due or which may become due to Subcontractor
pursuant to the provisions of the claims/disputes clauses herein.

		 	 
		 	4.5   Release of Claims
		 	 
		          	As condition precedent to any payments under this Agreement, Contractor may require the Subcontractor
to furnish his affidavits that no liens or rights in rem of any kind lie upon or have attached against the work, or materials, article or equipment therefor,
or any part thereof, either for or on account of any work done upon or about such work, or any materials,
articles or equipment furnished therefore or in connection therewith, or any other cause or thing,
or any claims or demands of any kind (except claims of the Government.)
		 	 

	5.0 	PURCHASE ORDER MECHANISM
	 	 
	 	5.1 For purposes of Subcontract procedure, the equipment, materials, services and other items
to be supplied hereunder shall be ordered and delivered in accordance with Purchase Orders to be
placed by Contractor. 
		 
	 	5.2 Notwithstanding any provisions on any form supplied by Contractor or Subcontractor to the
contrary, all Purchase Orders issued pursuant to this Subcontract shall be subject to and governed
by the terms of this Subcontract. Any terms and 

	

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	 	conditions that may appear on any form supplied by Contractor or Subcontractor which alters, revises,
conflicts with or supplements the terms of this Subcontract shall have no force or effect unless
such provisions are mutually agreed to in writing and expressly incorporated into this Subcontract
by duly authorized representatives of the Parties.
		 
	 	5.3  Each Purchase Order shall include a description of the equipment, materials or services
as well as delivery date and ship to address(es). As applicable, each Purchase Order shall contain
a reference to the Prime Contract Number in addition to a separate Order Number assigned to the Purchase
Order by Contractor.

	 	 
	6.0	DELIVERY/PERFORMANCE 
	 	 
	 	6.1   Delivery Schedule
	 	 
	 	The Subcontractor shall provide all supplies, services and data ordered in accordance with the delivery
dates specified in the accepted purchase order.
	 	 
	 	6.2   Time of Performance
	 	 

	 	All work shall be completed within the time period(s) specified. Subcontractor agrees to comply with
the schedule and completion dates as agreed upon herein.

	 	 
	 	6.3   Delays in Delivery
	 	 
	 	         6.3.1  In the event the Subcontractor anticipates
difficulty in complying with the Subcontract delivery schedule, the Subcontractor shall immediately
notify the Contractor’s Subcontract Administrator in writing, giving pertinent details, including
the date by which it expects to make delivery. This data shall be informational only and receipt
thereof shall not be construed as a waiver by the Contractor of any Subcontract delivery schedule,
or any rights or remedies provided by law under this Subcontract.
		 
	 	         6.3.2  If at any time it appears that the
Subcontractor has not or will not meet the Subcontract delivery schedule, or any extension thereof,
the Contractor shall have the right to require the Subcontractor to submit a revised delivery schedule
together with adequate information and documentation to support the reasonableness of the proposed
schedule. The proposed delivery schedule shall provide a date certain for each deliverable item or
service under the terms of the Subcontract. Such delivery schedules shall take into consideration
all contingencies based upon events or circumstances which are known to the Subcontractor or reasonably
foreseeable at the time of submission. The Subcontractor shall submit the revised delivery schedule
within twenty-five (25) days after receipt of notification by the Contractor. Such notification shall
not be deemed a waiver of the existing Subcontract delivery schedule. The Contractor shall have thirty-five
(35) days within which to approve or disapprove the Subcontractor’s proposed revision to the
delivery schedule. If approved by the Contractor, the proposed delivery schedule shall be incorporated
into the Subcontract by bilateral modification.

	

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	 	If Subcontractor fails to submit a revised delivery schedule within the time specified above, or any
extension thereof granted in writing by the Contractor, the Subcontractor shall be deemed to have
failed to make delivery within the meaning of the “Default” clauses of this Subcontract
and this Subcontract may be subject to termination.
		 

	 	6.3.3 Notwithstanding any other remedies available to the Contractor, in the event that Subcontractor
fails to deliver items or services to be supplied hereunder on or by the Delivery Dates specified,
Subcontractor shall, at its expense, ship such items in accordance with Contractor’s instructions
so as to ensure expeditious delivery.

	 	 
	7.0 	ACCEPTANCE OF SERVICES
	 	 
	 	Notwithstanding acceptance of any services provided herein, all such services remain subject to meeting
all the SOW requirements of this Subcontract and the remedies contained therein.

	 	 
	8.0 	WARRANTY OF SUPPLIES AND SERVICES 
	 	 
	 	8.1 Warranty shall be provided in accordance with Statement of Requirements. 
	 	 
	 	8.2 All defective parts which are removed and replaced during the warranty period shall become
the property of the Subcontractor.
		 
	 	8.3 The warranty shall not apply to maintenance and or repair required due to the fault or negligence
of the Contractor or Government or third persons (eg. vandal(s), saboteur(s), visitor(s), etc.) or
due to Acts of God.
		 
	 	8.4 The Subcontractor will not be responsible for providing a warranty on any Government Furnished
Equipment (i.e. excess switches in the Government inventory) provided under this Subcontract.
		 
		8.5  Replacement items that are provided in exchange for defective equipment during warranty shall be warranted for a period of 90 days, or for the remainder of the warranty period of
the original equipment, whichever is greater.

	 	 
	9.0  	SUBCONTRACTOR RESPONSIBILITY
	 	 
	 	The Subcontractor warrants that Subcontractor has reviewed all specifications, drawings and documents
that are applicable to this Subcontract and agrees that deliverable items will meet or exceed all
requirements of this Subcontract. 
	 	 
	10.0 	LIAISON WITH THE CONTRACTOR’S CUSTOMER 

	

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	 	Except in emergency situations or where authorized in the specification, the Subcontractor shall not
communicate with the Contractor’s customer regarding this Subcontract without the express permission
of the Contractor. The Subcontractor shall provide assistance to the Contractor, upon request, in
the preparation for and/or conducting of meetings with the Contractor’s customer.
		 
	 	The Subcontractor shall be responsible for immediately notifying the Contractor by telephone, facsimile
or telegram should the Contractor’s Customer or anyone other than the Subcontractor’s suppliers
communicate in any manner directly with him regarding this Subcontract. Communication(s) to the Government
from the Subcontractor and all other subcontractors regarding this Subcontract shall be conducted
through the Contractor.
		 
	 	The Subcontractor shall notify the Contractor, in writing, of any impending visit by Government personnel
relative to this Subcontract or its subcontractor’s facilities or on-site installation offices
immediately upon being advised thereof.
		 
		For the purpose of this clause, the Contractor’s customer(s) is U.S. Army CECOM.

	 	 
	11.0  	DEFENSE PRIORITY RATING 
	 	 
	 	Subcontractor acknowledges that Contractor has informed it that the Prime Contract has been assigned
a Defense Order Rating D0-A7 and agrees to extend this rating to this Subcontract and all lower tier
subcontractors and suppliers and to comply with the requirements of FAR 52.211-15.

	 	 
	12.0	DISCLOSURE OF INFORMATION
	 	 
	 	Subcontractor shall not in any manner, advertise or publish the fact that it has furnished or has contracted
to furnish the Contractor with any items ordered unless authorized in writing by the Contractor.
Such authorization shall not be unreasonably withheld.

	 	 
	13.0 	CERTIFICATIONS AND REPRESENTATIONS
	 	 
	 	All the Subcontractor Certifications and Representations, enclosed herewith as Attachment 2 - Representations,
Certification and Instructions, are incorporated into this Subcontract.
	 	 
	14.0	DISPUTES

		 	 
		A.	Disputes Related to the Government Prime Contract
			 
		 	Any dispute that arises under or is related to this Subcontract, and which also relates to Government
  action under the Prime Contract shall be resolved in accordance with the “Disputes” clause
  of the Prime Contract as follows:

	

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		 	(1)   Provided Subcontractor has afforded Contractor prior notice of the claim, Subcontractor
  will submit to Contractor a fully-supported written claim concerning any such dispute within one
  (1) year after the claim accrues, but in no event later than final payment under this Subcontract
  or delivery order issued thereunder. Subcontractor shall be barred from any remedy for such claim
  if Subcontractor fails to provide the required notice specified herein;

			 
		 	(2)   Subcontractor shall cooperate fully with Contractor in prosecuting any such dispute
  and shall be bound by the outcome unless: (a) without Subcontractor’s consent, Contractor settles
  the dispute; or (b) Contractor, having determined to discontinue its own prosecution of the dispute,
  does not afford Subcontractor an opportunity to continue to prosecute the dispute in Contractor’s
  name;

			 
		 	(3)   Each party shall bear its own costs of prosecuting any such dispute under this
  subparagraph;

			 
		 	(4)   Any final decision of the contracting officer if not appealed, and any decision or
  judgment upon appeal, shall be final and conclusive upon Contractor and Subcontractor insofar as
  it relates to this Subcontract;

			 
		 	(5)   If the dispute is solely between Subcontractor and Contractor and is not otherwise subject to a
  final decision of the contracting officer, the dispute will be decided in accordance with the procedures
  set forth in subparagraph B below;

			 
		 	(6)   Nothing in this Subcontract gives Subcontractor a direct right of action under the Disputes
  clause of the Prime Contract.

			 
		B.	Disputes Between Contractor and Subcontractor Only
			 
		 	(1)   For any dispute arising under this Subcontract which is not based on Government action under the
  Prime Contract and which relates solely to a dispute between the parties, the parties agree to seek
  an amicable resolution of such dispute through good faith negotiations. Any dispute which cannot
  be resolved through good faith negotiations shall be decided by the Contractor upon submission by
  the Subcontractor of a written claim. Contractor shall make reasonable efforts to decide such claim
  within sixty (60) days, or such longer period as may be practical given the size and complexity of
  the claim. In no event shall Subcontractor submit a claim under this subparagraph more than one (1)
  year after such claim accrues.

			 
		 	(2)   Within thirty (30) days after receipt of Contractor’s decision denying any such
  claim, Subcontractor shall notify Contractor in writing of its disagreement with the decision. In
  the absence of such notice, such decision shall be final. As appropriate, and consistent with this
  clause, either party may pursue resolution of any dispute under this subparagraph at law or in equity
  through litigation. Any 

	

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		 	such action shall be filed only in a court of competent jurisdiction in the Commonwealth of Massachusetts,
  subject to Subcontractor’s compliance with paragraph D below; provided, however, that the parties
  hereby expressly waive any rights to a trial by jury and agree that any legal proceeding hereunder
  shall be tried by a judge without a jury. The parties agree that the governing law applicable to
  any such action under this Subcontract shall be the federal law of government contracts, as interpreted
  by federal judicial bodies and administrative boards of contract appeals. To the extent federal government
  contract law is not dispositive, the parties agree that the law of the Commonwealth of Massachusetts
  shall govern. Any such action by the Subcontractor must be commenced within one (1) year from the
  date of Contractor’s final decision, if applicable. 

			 
		C.	As used in this clause, “claim” means a written demand or assertion seeking, as a matter
  of right, the payment of money in a sum certain, the adjustment or interpretation of subcontract
  terms or other relief arising under or relating to this Subcontract. Any claim submitted for decision
  hereunder shall: 

			 
		 	                 (a)     specify
  the facts, contract terms and conditions and authorities relied upon by the Subcontractor in support
  of the relief sought; and

			 
		 	                 (b)     if
  for an amount of $100,000 or more, be accompanied by a certification executed by a senior company
  official authorized to bind the Subcontractor who has knowledge of the basis of the claim, knowledge
  of the accuracy and completeness of the supporting data and knowledge of the claim stating that:

			 

	 	(i)    The claim is made in good faith;
	 	 
	 	(ii)    All data supporting the claim are accurate and

    complete to the best of the certifier’s 

    knowledge and belief;
	 	 
	 	(iii)    The amount requested accurately

    reflects the contract adjustment for which the 

    Subcontractor believes the Contractor is liable; and
	 	 
	 	(iv)     The certifier is duly authorized to

    certify the claim on behalf of the 

    Subcontractor.
	 	 

		  D.	Pending final resolution of any dispute hereunder, Subcontractor shall diligently proceed with performance
  of this Subcontract in accordance with the decision and instructions of Contractor.

	

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		  E.	The parties may, by mutual agreement, elect to submit the dispute to an Alternative Dispute Resolution
  (ADR) Process with a mutually acceptable neutral mediator or dispute resolution firm (“arbitrator”)
  and mutually acceptable procedures. The arbitrator selected shall have demonstrated experience in
  the area of telecommunications and federal government contracts, and shall not be related to, employed
  by, or have any substantial or ongoing business or ownership relationship with, any party, its affiliates
  or subcontractors. The arbitrator shall have no power or authority to make awards or issue orders
  of any kind except as permitted by this Subcontract or by written agreement of the parties, and in
  no event shall the arbitrator have the authority to make any award that provides for consequential,
  punitive or exemplary damages. The arbitrator shall follow the plain meaning of the relevant documents
  and render a decision that is consistent, to the extent applicable, with the federal law of government
  contracts as interpreted by federal judicial bodies and administrative boards of contract appeals.
  To the extent federal government contract law is not dispositive, the arbitrator shall apply the
  law of the Commonwealth of Massachusetts. The costs of the ADR process shall be shared equally by
  the parties. Each party shall bear the cost of preparing and presenting its own case. 

	 	 
	15.0 	TERMINATION FOR CONVENIENCE OF THE CONTRACTOR 
	 	 
	 	(a)  The Contractor may terminate performance of work under this subcontract in whole or, from
time to time, in part, if—
		 
	 	        (1)  The Contractor determines that a termination
is in the Contractor’s interest; or if the Contractor is ordered to terminate by the Government
in accordance with FAR 52.249; or
		 
	 	        (2)  The Subcontractor defaults in performing
this subcontract by failing to: (i) deliver the supplies or perform the services within the
time specified in the subcontract or any extension; (ii) make progress, so as to endanger performance
of this subcontract; or (iii) perform any other provisions of this subcontract. The Contractor’s
right to terminate this subcontract under (a)(2)(ii) or (a)(2)(iii) above may be exercised if the
Subcontractor does not cure such failure within ten (10) days (or more if authorized in writing by
the Contractor) after receipt of the notice from the Contractor specifying the failure. 
		 

		(b)	If the Contractor terminates this subcontract in whole or in part pursuant to (a)(2) above, it may
acquire, under the terms and in the manner the Contractor considers appropriate, supplies or services
similar to those terminated, and the Subcontractor will be liable to the Contractor for any excess
costs for such supplies or services. However, the Subcontractor shall be required to continue to
work on the portions of the subcontract not terminated.

	

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		(c)	The Contractor shall terminate by delivering to the Subcontractor a Notice of Termination specifying
whether termination is for default of the Subcontractor or for convenience of the Contractor or of
the Government, the extent of termination, and the effective date. If, after termination for default,
it is determined that the Subcontractor was not in default or that the Subcontractor’s failure
to perform or to make progress in performance is due to causes beyond the control and without
the fault or negligence of the Subcontractor as set forth in the Excusable Delays clause, the rights
and obligations of the parties will be the same as if the termination was for the convenience of
the Contractor or of the Government.
			 

	 	(d)   After receipt of a Notice of Termination and except as directed by the Contractor, the Subcontractor
shall immediately proceed with the following obligations, regardless of any delay in determining
or adjusting any amounts due under this clause:
	 	 

	 	         1.  Stop work as specified in the notice.
	 	 
	 	         2.  Place no further lower tier subcontracts or
orders (referred to as subcontracts in this clause) except as necessary to complete the continued
portion of the Subcontract.
		 
	 	         3.  Terminate all lower tier subcontracts to the
extent they relate to the work terminated.
		 
	 	         4.  Assign to the Contractor or the Government,
as directed by the Contractor, all right, title and interest of the Subcontractor under the subcontracts
terminated, in which case the Contractor or the Government shall have the right to settle or to pay
any termination settlement proposals arising out of those terminations.
		 
	 	         5.  With approval or ratification to the extent
required by the Contractor or the Government, settle all outstanding liabilities and termination
settlement proposals arising from the termination of subcontracts, the cost of which would be reimbursable
in whole or in part, under this contract; approval or ratification will be final for purposes of
this clause.
		 
	 	         6.  As directed by the Contractor, transfer title
and deliver to the Contractor or the Government (i) the fabricated or unfabricated parts, work in
process, completed work, supplies, and other material produced or acquired for the work terminated,
and (ii) the completed or partially completed plans, drawings, information and other property that,
if the Subcontract or Prime Contract had been completed, would be required to be furnished to the
Contractor or the Government and (iii) the jigs, dies, fixtures, and other special tools and tooling
acquired or manufactured for this subcontract, the cost of which, the Subcontractor has been or will
be reimbursed under this contract.

	 	 
	 	         7.  Complete performance of the work not terminated.
	 	 
	 	         8.  Take any action that may be necessary, or
that the Contractor may direct, for the protection and preservation of the property related to this
Subcontract that is in the 

	

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	 	possession of the Subcontractor and in which the Contractor or the Government has or may acquire an
interest.
		 
	 	         9.  Use its best efforts to sell, as directed
or authorized by the Contractor, any property of the types referred to in subparagraph (6) above;
provided, however, that the Subcontractor (i) is not required to extend credit to any purchaser and
(ii) may acquire the property under the conditions prescribed by, and at prices approved by, the
Contractor and the Government. The proceeds of any transfer or disposition will be applied to reduce
any payments to be made by the Contractor under this Subcontract, credited to the price or cost of
the work, or paid in any other manner directed by the Contractor.
		 
	 	(e)   After expiration of the plant clearance period as defined in Subpart 45.6 of the Federal Acquisition
Regulation, the Subcontractor may submit to the Contractor a list, certified as to quantity and quality,
of termination inventory not previously disposed of, excluding items authorized for disposition by
the Contractor. The Subcontractor may request the Contractor or the Government to remove those items
or enter into an agreement for their storage. Within 15 days, the Contractor or the Government will
accept title to those items and remove them or enter into a storage agreement. The Contractor may
verify the list upon removal of the items, or if stored, within 45 days from submission of the list,
and shall correct the list, as necessary, before final settlement.
		 
	 	(f)   After termination, the Subcontractor shall submit a final termination settlement proposal
to the Contractor in the form and with the certification prescribed by the Contractor. The Subcontractor
shall submit the proposal promptly, but no later than six (6) months from the effective date of termination,
unless extended in writing by the Contractor upon written request of the Contractor within this six
(6) month period. However, if the Contractor determines that the facts justify it, a termination
settlement proposal may be received and acted on after six months or any extension. If the Subcontractor
fails to submit the proposal within the time allowed, the Contractor may determine, on the basis
of information available, the amount, if any, due the Subcontractor because of the termination and
shall pay the amount determined.
		 
	 	(g)   Subject to paragraph (f) above, the Subcontractor and the Contractor may agree upon the whole
or any part of the amount to be paid (including an allowance for fee) because of the termination.
The contract shall be amended, and the Subcontractor paid the agreed amount.
		 
	 	(h)   If the Subcontractor and Contractor fail to agree in whole or in part on the amount of costs
and/or fee to be paid because of the termination of work, the Contractor shall determine, on the
basis of information available, the amount, if any, due the Subcontractor, and shall pay that amount,
which shall include the following:
		 
	 	         (1)  All costs reimbursable under this contract,
not previously paid, for the performance of this subcontract before the effective date of the termination,
and those 

	

15

	 	costs that may continue for a reasonable time with the approval of or as directed by the Contractor;
however, the Subcontractor shall discontinue these costs as rapidly as practicable.
		 
	 	         (2)  The cost of settling and paying termination
settlement proposals under terminated subcontracts that are properly chargeable to the terminated
portion of the subcontract if not included in subparagraph (1) above.
		 
	 	         (3)  The reasonable costs of settlement of
the work terminated, including-
		 
	 	                 (i)      Accounting,
legal, clerical, and other expenses reasonably necessary for the preparation of termination settlement
proposals and supporting data;
		 
	 	                 (ii)    The
termination and settlement of lower tier subcontracts (excluding the amounts of such settlements);
and
		 
	 	                 (iii)   Storage,
transportation, and other costs incurred, reasonably necessary for the preservation, protection,
or disposition of the termination inventory. If the termination is for default, no amounts for the
preparation of the Subcontractor’s termination settlement proposal may be included.
		 
	 	         (4)  A portion of the fee payable under the
subcontract, determined as follows:
		 
	 	                 (i)  If
the subcontract is terminated for the convenience of the Contractor or the Government, the settlement
shall include a percentage of the fee equal to the percentage of completion of work contemplated
under the subcontract, but excluding subcontract effort included in subcontractors’ termination
proposals, less previous payments for fee.
		 
	 	                 (ii)  If
the subcontract is terminated for default, the total fee payable shall be such proportionate part
of the fee as the total number of articles (or amount of services) delivered to and accepted by the
Contractor is to the total number of articles (or amount of services) of a like kind required
by the subcontract.
		 
	 	         (5)  If the settlement includes only fee,
it will be determined under subparagraph (h)(4) above.
		 
	 	(i)  The cost principles and procedures in Part 31 of the Federal Acquisition Regulation, in effect
on the date of this subcontract, shall govern all costs claimed, agreed to, or determined under this
clause.
		 
	 	(j)  The Subcontractor shall have the right of appeal, under the Disputes clause, from any determination
made by the Contractor under paragraph (f) or (h) above, or paragraph (k) below, except that if the
Subcontractor failed to submit the termination settlement proposal within the time provided in paragraph
(f) and failed to request a time extension, there is no right of appeal. If the Contractor has made
a determination 

	

16

	 	of the amount due under paragraph (f), (h), or (l), the Contractor shall pay the Subcontractor (1)
the amount determined by the Contractor if there is no right of appeal or if no timely appeal has
been taken, or (2) the amount finally determined on an appeal.
		 
	 	(k) In arriving at the amount due the Subcontractor under this clause, there shall be deducted—
		 
	 	        (1)   All unliquidated advance or other payments
to the Subcontractor, under the terminated portion of this subcontract;
		 
	 	        (2)   Any claim which the Contractor has against
the Subcontractor under this subcontract; and
		 
	 	        (3)   The agreed price for, or the proceeds
of sale of materials, supplies, or other things acquired by the Subcontractor or sold under this
clause and not recovered by or credited to the Contractor.
		 
	 	(l)  The Subcontractor and the Contractor must agree to any equitable adjustment in fee for the
continued portion of the contract when there is a partial termination. The Contractor shall amend
the contract to reflect the agreement.
		 
	 	        (1)  The Contractor may, under the terms and conditions
it prescribes, make partial payments and payments against costs incurred by the Subcontractor for
the terminated portion of the contract, if the Contractor believes the total of these payments will
not exceed the amount to which the Subcontractor will be entitled.
		 
	 	         (2)  If the total payments exceed the amount finally
determined to be due, the Subcontractor shall repay the excess to the Contractor upon demand, together
with interest computed at the rate established by the Treasury under 50 U.S.C. App. 1215(b)(2). Interest
shall be computed for the period from the date the excess payment is received by the Subcontractor
to the date the excess is repaid. Interest shall not be charged on any excess payment due to a reduction
in the Subcontractor termination settlement proposal because of retention or other disposition of
termination inventory until 10 days after the date of the retention or disposition, or a later date
determined by the Contractor because of the circumstances.
		 

		(m)	The provisions of this clause relating to fee are inapplicable if this contract does not include a
fee.
			 
		(n)	Unless otherwise provided in this subcontract or by statute, the Subcontractor shall maintain all records
and documents related to the terminated portion of this subcontract for three (3) years after final
settlement. This includes all books and other evidence related to the Subcontractor’s costs
and expenses under this subcontract. The Subcontractor shall make these records and documents available
to the Government (or Contractor, as appropriate) at a place designated by the 

	

17

	
	 

	 	Government or Contractor at all reasonable times, without any direct charge under this subcontract.
If approved by the Contractor, photographs, microphotographs or other authentic reproductions may
be maintained instead of original records and documents.

	 	 
	16.0  	DEFAULT FOR NONPERFORMANCE 
	 	 
	 	(a) (1) The Contractor may, subject to paragraphs (c) and (d) below, by written notice of default
to the Subcontractor, terminate this Subcontract in whole or in part if the Subcontractor fails to
—
		 
	 	                 (i)   Deliver
the supplies or to perform the services within the time specified in this Subcontract or any extension;
		 
	 	                 (ii)
 Make progress, so as to endanger performance of this Subcontract (but see subparagraph (a)(2) below);
or
		 
	 	                 (iii)  Perform
any of the other provisions of this Subcontract (but see paragraph (a)(2) below).
		 
	 	         (2)  The Contractor’s right to terminate
this Subcontract under subdivisions (1)(ii) and (1)(iii) above, may be exercised if the Subcontractor
does not cure such failure within ten (10) days (or more if authorized in writing by the Contractor)
after receipt of the notice from the Contractor specifying the failure.
		 
	 	(b)  If the Contractor terminates this Subcontract in whole or in part, the Contractor may acquire,
under the terms and in the manner the Contractor considers appropriate, supplies or services similar
to those terminated, and the Subcontractor will be liable to the Contractor for any excess costs
for those supplies or services. However, the Subcontractor shall continue the work not terminated.
		 
	 	(c)  Except for defaults of subcontractors at any tier or Force Majeure, the Subcontractor shall
not be liable for any excess costs if the failure to perform this Subcontract arises from cause beyond
the control and without the fault or negligence of the Subcontractor. Examples of such cause include
(1) acts of God, (2) acts of the government in either its sovereign or contractual capacity, (3)
fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes,
and (9) unusually severe weather. In each instance the failure to perform must go beyond the control
and without the fault or negligence of the Subcontractor.
		 
	 	(d)  If the failure to perform is caused by the default of a subcontractor at any tier, and if
the cause of the default is beyond the control of both the Subcontractor and lower tier subcontractor,
and without the fault or negligence of either, the Subcontractor shall not be liable for any excess
costs for failure to perform, unless the subcontracted supplies or 

	

18

	 	services were obtainable from other sources in sufficient time for the Subcontractor to meet the required
delivery schedule.
		 
	 	(e)  If this Subcontract is terminated for default, the Contractor may require the Subcontractor
to transfer title and deliver to the Contractor or the Government, as directed by the Contractor,
any (1) completed supplies, and (2) partially completed supplies and materials, parts, tools, dies,
jigs, fixtures, plans, drawings, information, and contract rights (collectively referred to as “manufacturing
materials” in this clause) that the Subcontractor has specifically produced or acquired for
the terminated portion of this Subcontract. Upon direction of the Contractor or the Government, the
Subcontractor shall also protect and preserve property in its possession in which the Contractor
has an interest.
		 
	 	(f)  The Contractor shall pay the Subcontract price for completed supplies delivered and accepted.
The Subcontractor and Contractor shall agree on the amount of payment for manufacturing materials
delivered and accepted and for the protection and preservation of the property. Failure to agree
will be a dispute under the applicable clause of this Subcontract. The Contractor may withhold from
these amounts any sum the Contractor determines to be necessary to protect the Contractor or the
Government against loss because of outstanding liens or claims of former lien holders.
		 
	 	(g)  If, after termination, it is determined that the Subcontractor was not in default, or that
the default was excusable, the rights and obligations of the Parties shall be the same as if the
termination had been issued for the convenience of the Contractor or the Government.
		 
	 	(h)  The rights and remedies of the Contractor or the Government in this clause are in addition
to any other rights and remedies provided by law or under this Subcontract.

	 	 
	17.0 	STOP-WORK ORDER
	 	 
	 	17.1   The Contractor may, at any time, by written order to the Subcontractor, require the Subcontractor
to stop all, or any part, of the work called for by this Subcontract for a period of 90 days after
the stop-work order is delivered to the Subcontractor, and for any further period to which the parties
may agree. The order shall be specifically identified as a stop-work order issued under this clause.
Upon receipt of the order, the Subcontractor shall immediately comply with its terms and take all
reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during
the period of work stoppage. Within a period of 90 days after a stop-work order is delivered to the
Subcontractor, or within any extension of that period to which the parties shall have agreed, the
Contractor shall either —

	 	 	 
	 	1.	Cancel the stop-work order; or
	 	 	 
	 	2.	 Terminate the work covered by the order as provided in the Default, or the Termination for Convenience clause of this Subcontract.

	

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	 	17.2    If a stop-work order issued under this clause is canceled or the period of the order or any extension
thereof expires, the Subcontractor shall resume work. The Contractor shall make an equitable adjustment
in the delivery schedule or subcontract price or both, and the Subcontract shall be modified, in
writing, accordingly, if —
		 

	 	1. The stop-work order results in an increase in the time required for, or in the Subcontractor’s
costs properly allocable to, the performance of any part of this Subcontract; and
		 
	 	2. The Subcontractor asserts a claim for the adjustment within 20 business days after the end of the
period of work stoppage; provided, that, if the Contractor decides the facts justify the action,
the Contractor may receive and act upon the claim asserted at any time before final payment under
this Subcontract.
		 

	 	17.3    If a stop-work order is not canceled and the work covered by the order is terminated in accordance
with the Termination for Convenience Clause, the Contractor shall allow reasonable costs resulting
from the stop-work order in arriving at the termination settlement.
		 
	 	17.4    If stop-work order is not canceled and the work covered by the order is
terminated for default, the Contractor shall allow, by equitable adjustment or otherwise, reasonable
costs resulting from the stop-work order.
	 	 
	18.0 	ASSIGNMENT AND SUBCONTRACTING
	 	 

		18.1	Subcontractor shall not assign any interest herein, in whole or in part, without the prior written
consent of the Contractor.
			 
		18.2	Neither all nor substantially all of the work to be performed under this Subcontract may be further
subcontracted by Subcontractor without the prior written consent of Contractor. 
		 	 
	19.0	TITLE AND RISK OF LOSS OR DAMAGE TO PURCHASED EQUIPMENT 
		 	 

	 	Title and risk of loss passes to the Contractor upon acceptance.
	 	 
	 	In the event loss or damage to Subcontractor equipment is caused by nuclear reaction, nuclear radiation
or radioactive contamination for which the U.S. Government is legally responsible or when loss or
damage is due to the negligence of the Government, Subcontractor shall be indemnified by Contractor
to the extent Contractor is indemnified by the U.S. Government therefor.
		 
	 	Risk of loss to equipment, accessories and devices rented under the Subcontract shall remain with the
Subcontractor.

	

20

	20.0	NOTICE OF LOSS OR DAMAGE
	 	 
	 	Each party shall be liable for any loss of or damage to the other parties property, including Government
Property which it proximately caused by negligence, theft, or willful misconduct of its agents, servants,
and employees. The responsible party shall submit a full written report to the other party within
sixteen (16) hours following the occurrence of such damage, loss or injury.

	 	 
	21.0  	SAFETY AND HEALTH
	 	 
	 	21.1   The Subcontractor will comply with all Department of Army (DA) Safety and Health regulations and
Department of Labor, Occupational Safety and Health Administration (OSHA) Standards.
		 
	 	21.2   The Subcontractor shall report on a monthly basis to the Contractor the number of employees performing
on the job site. All Subcontractor accidents occurring on Government property resulting in loss of
one full scheduled shift or $1,000.00 in damage to Government property must be submitted to the Contractor.

	 	 
	22.0  	SUBCONTRACTOR PERSONNEL
	 	 

	 	22.1   The Subcontractor is responsible for selecting personnel who are well qualified to perform under
this Subcontract, for supervising the techniques used in performance and for keeping them informed
of all improvements, changes, methods or operations.
		 
	 	22.2   The Subcontractor shall have the right to replace or transfer his personnel and to substitute
other personnel of equal or greater qualification in lieu thereof, provided that such transfers or
replacements will not cause a delay in performance.
		 
	 	22.3   The Contractor may direct, at its sole discretion, the Subcontractor to
remove, and the Subcontractor shall remove, any employee from assignment to this Subcontract for
reasons of security or misconduct. Replacement shall be at the Subcontractor’s expense and not
chargeable to the Contractor.
	 	 
	23.0	PERMITS, TAXES, LICENSES, ORDINANCES AND REGULATIONS
	 	 

	 	Subcontractor shall, at his own expense, obtain all necessary permits, give all notices, pay all license
fees and taxes, comply with all Federal, State, municipal, county and local Board of Health ordinances,
rules and regulations applicable to the business carried on under this Subcontract and be responsible
for all applicable State and Use Taxes. The Subcontractor warrants that he has been duly authorized
to operate and do business in the countries in which this contract is to be performed; that he has
obtained, at no cost to the U.S. Government, all necessary license and permits required with this
contract; and 

	

21

	 	that he will fully comply with all the laws, decrees, labor standards and regulations of such countries
during performance of this contract.

	 	 
	24.0 	NORMAL WORKING HOURS
	 	 
	 	The Subcontractor shall schedule his working hours to coincide with the normal work hours of each location.
In the event that hours are required beyond normal work hours, Subcontractor shall notify the cognizant
GD site project manager for written concurrence. E-mail authorization is acceptable.

	 	 
	25.0 	LOCAL, STATE AND FEDERAL REGULATIONS
	 	 
	 	The Subcontractor is responsible for knowledge and compliance with all local, state and federal regulations
which may have impact on the performance of this Subcontract. These include, but are not limited
to, laws and regulations pertaining to environmental laws such as hazardous material handling and
disposition, Occupational Safety and Health Administration (OSHA) regulations, zoning and construction
regulations and requirements imposed by historical commissions and landmark preservation committees.
	 	 
	26.0	SUBCONTRACTOR ACCESS TO INSTALLATIONS
	 	 

		 	Each installation will identify the appropriate procedures and policies regarding Subcontractor access
to the areas where services will be required. Clarification of Terms: “installation”,
“site”, “facility” and “Government” shall be deemed to mean “U.S.
Government”.

		 	 
	27.0	 	NON-WAIVER OF RIGHTS
		 	 
		 	The failure or delay of Contractor to insist upon strict performance of any of the terms and conditions
in the Subcontract or to exercise any rights or remedies, shall not be construed as a waiver of its
rights to assert any of the same or to rely on any such terms or conditions at any time thereafter.
The invalidity in whole or in part of any terms or conditions of this Subcontract shall not affect
the validity of other parts thereof.

	 	 
	28.0 	SUBCONTRACT FLOWDOWN REQUIREMENTS
	 	 
	 	Subcontractor agrees to flowdown any mandatory FAR and DFAR clauses of this Subcontract, and other
sections of this Subcontract to lower tier subcontractors. Subcontractor agrees to furnish all information
requested by Contractor respective to such subcontracts. If Subcontractor does not choose to pass
these clauses down, it does not relieve Subcontractor of its responsibilities and obligations.
	 	 
	29.0  	PASSPORTS AND VISAS

	

22

	 	All Subcontractor personnel who are required to travel OCONUS under this Subcontract, shall possess
all required passports and visas and will have obtained all required immunizations prior to such
employment. In addition, the Subcontractor shall obtain for those personnel departing from CONUS
all necessary security clearances and identification. Inability by the Subcontractor to obtain, or
delay in obtaining required passports, visas or other requirements in conjunction therewith, shall
not be construed as a cause for an excusable delay in performance of the Subcontract. Expense for
passports, visas and immunizations are solely those of the Subcontractor, and are not direct reimbursable
hereunder.
		 
	30.0	REQUEST OVERSEAS AREA CLEARANCES, TRAVEL AUTHORIZATION ORDERS, LOGISTICAL PRIVILEGES AND SECURITY CLEARANCES
		 
	 	The Subcontractor shall submit a request for Travel Authorization Orders, Logistical Privileges and
Security Clearances (if required) to the Contractor. Normally a security clearance will not be required.
The Subcontractor must allow thirty days for the Contractor to solicit and obtain Government approval
of overseas clearances for Subcontractor personnel. Failure, due to the fault or negligence of Subcontractor,
to obtain such clearances shall not excuse timely Subcontract performance. As a minimum, the request
shall include the following:

	 
	                            a.     Subject:  Invitational Travel Order
	   
	                            b.     Last, First, Middle Name of Visitor:
	   
	                            c.     Passport Information: Number and date of issue
	   
	                            d.     Position:
	   
	                            e.     Citizenship:
	   
	                            f.      Social Security Number:
	   
	                            g.     Date/Place of Birth:
	   
	                            h.     Security Clearance:  Date/Agency of Issue
	   
	                            i.      Date, Purpose of Duration of Visit:
	   
	                            j.      Subcontract Number:
	   
	                            k.     Prime Contract Number:

	 	 
	31.0 	SUPPORT IN HOST COUNTRY
	 	 
	 	31.1   The United States citizen Subcontractor employees who are authorized entry to the overseas command
will be authorized the following Logistical Support Services with the approval of the applicable
site commander, subject to availability, and in accordance with Army costing methods:

	 	 	 	 
	 	 31.1.1 	 	 Civilian Personnel Administrative Services (Reimbursable) 
	 	 	 	 
	 	 31.1.2 	 	 Legal Services (Reimbursable) 
	 	 	 	 
	 	 31.1.3 	 	 Mail Pickup and Delivery (Nonreimbursable) 

	

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	 	 31.1.4 	 	 Administrative Office Space (Reimbursable) 
	 	 	 	 
	 	 31.1.5 	 	 Custodial/Disposal Services (Reimbursable) 
	 	 	 	 
	 	 31.1.6 	 	 Fire Protection (Nonreimbursable) 
	 	 	 	 
	 	 31.1.7 	 	 Police Services (Nonreimbursable) 
	 	 	 	 
	 	 31.1.8 	 	 Housing/Lodging (Reimbursable) 
	 	 	 	 
	 	 31.1.9 	 	 Laundry and Dry Cleaning (Reimbursable) 
	 	 	 	 
	 	 31.1.10 	 	 Health Services (Reimbursable) 
	 	 	 	 
	 	 31.1.11 	 	 Utilities Services (Reimbursable) 
	 	 	 	 
	 	 31.1.12 	 	 Real Property Maintenance 
	 	 	 	 (Reimbursable/Nonreimbursable) 
	 	 	 	 
	 	 31.1.13 	 	 Chaplain/Religious Services (Nonreimbursable) 
	 	 	 	 
	 	 31.1.14 	 	 Social Actions (Nonreimbursable) 
	 	 	 	 
	 	 31.1.15 	 	 Expendable/General Supplies (Reimbursable) 
	 	 	 	 
	 	 31.1.16 	 	 Commissary and Base Exchange Privileges 
	 	 	 	 (Reimbursable 
	 	 	 	 
	 	 31.1.17 	 	 Use of Military Banking Facilities (Reimbursable) 
	 	 	 	 
	 	 31.1.18 	 	 Telephone/Message Services (Reimbursable) 
	 	 	 	 
	 	 31.1.19 	 	 Pet and Firearm Registration (Reimbursable) 
	 	 	 	 
	 	 31.1.20 	 	 Ground Transportation (Regularly Scheduled- 
	 	 	 	 Nonreimbursable); taxi, U–Drive and Rental 
	 	 	 	 Reimbursable) 
	 	 	 	 
	 	 31.1.21 	 	 Mortuary Services (Reimbursable) The 
	 	 	 	 support/facilities to be provided shall be further 
	 	 	 	 defined by the Contractor on a site-by-site basis. 
	 	 	 	 
	 	 31.1.22 	 	 Driver Licensing and Vehicle Registration 
	 	 	 	 
	 	 31.1.23 	 	 Use of Officer’s and NCO Clubs 

	

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	 	 31.1.24 	 	 Government Messing Facilities 
	 	 	 	 
	 	 31.1.25 	 	 Local and Government Recreational Facilities 
	 	 	 	 (Space Available) 
	 	 	 	 
	 	 31.1.26 	 	 Subcontractor personnel may travel by military 
	 	 	 	 aircraft in host country subject to availability. 
	 	 	 	 

	                    31.2	Subcontractor employee dependents who are authorized entry to the overseas command will also be authorized
the above logistical support with the approval of the applicable site commander, subject to availability,
and in accordance with Army costing methods.
		 
	                    31.3	Subcontractor employees requests for Logistic Support and Privileges while in Host Country will be
processed through the Contractor.

	 
	
32.0         LIABILITY AND INDEMNIFICATION

	 

	                32.1	GD or its employees shall not be liable for any injury to the person or property of Subcontractor,
except where such injury was directly caused by the fault or negligence of GD or such employees in
the course of their employment.
		 

		32.2	Subcontractor shall indemnify, defend and hold GD harmless from and against:
			 

		(i)	Subcontractor’s failure to deduct and pay taxes required by law on compensation Subcontractor
pays to its officers, employees or independent contractors.
			 
		(ii)	Personal injury or death occurring to any of its officers, employees and independent contractors engaged
in the performance of the work under this Subcontract.
			 
		(iii)	Damage or loss to property of Subcontractor, its officers, employees or independent contractors related to performance of the work of this Subcontract.
			 

	33.0	SUBCONTRACTOR OR TECHNICAL REPRESENTATIVES STATUS-REPUBLIC OF KOREA (ROK) (Applies to Korea sites only)
		 
	 	33.1   As obtained through the Contractor’s Prime Contract, Invited-Subcontractor or technical representatives
status under the US-ROK Status of Forces Agreement (SOFA) is subject to the written approval of HQ
USFK, Attn.: ACJ, APO SF 96301-0010.
		 
	 	33.2   The Contractor and the Government will coordinate with the HQ USFK in accordance with DFARS subpart
25.77 and USFK Reg. 700-19. The ACofs, 

	

25

	 	Acquisition Management, HQ USFK, will determine the appropriate Subcontractor status under the SOFA
and notify the Contractor and the Government of the determination.
		 
	 	33.3   Subject to the Government providing the above approval to Contractor based upon Subcontractor’s
timely submittal of required documentation, the Subcontractor, including their employees and lawful
dependents, may be accorded such privileges and exemptions as specified in the US-ROK SOFA and implemented
per USFK Reg. 700-19, subject to the conditions and limitations imposed by the SOFA and that regulation.
These privileges and exemptions may be furnished during the performance period of the Subcontract,
subject to their availability and provided the Invited Subcontractor or technical representatives
status is not withdrawn by USFK.
		 
	 	33.4   The Subcontractor officials and employees performing under this contract collectively and separately
warrant that they are not now performing nor will perform during the period of this Subcontract,
any subcontract, service or otherwise engage in business activities in the ROK other than those pertaining
to the U.S. Armed Forces.
		 
	 	33.5   During performance of work in the ROK required by this Subcontract, the Subcontract will be governed
by USFK regulations pertaining to the direct hiring and the personnel administration of Korean National
employees.
		 
	 	33.6   The authorities of the ROK will have the right to exercise jurisdiction over Invited-Subcontractors
and technical representatives including officials and employees, and their dependents, for offenses
committed in the ROK and punishable by the Laws of the ROK. In recognition of the role of such persons
in the defense of the ROK, they will be subject to the provisions of paragraph 5, 7(b), and 9 of
the US-ROK SOFA and the related agreed minutes of SOFA, Article XXII. In those cases in which the
authorities of the ROK decide not to exercise jurisdiction, they shall notify the US Military authorities
as soon as possible. On such notification, the military authorities will have the right to exercise
such jurisdiction over the person(s) referred to, as is conferred on them by the law of the United States.
		 
	 	33.7   Invited-Subcontractors and technical personnel agree to cooperate fully with the USFK sponsoring
agency and responsible officer on all matters pertaining to logistical support. In particular, Subcontractors
will provide prompt and accurate reporting of changes in employee status as required by this regulation
to the assigned sponsoring agency. All U.S. Subcontractors performing work on classified Subcontracts
will report to the nearest Security Police Information Security Section for the geographical area
where the Subcontract is to be performed.
		 
		33.8   Invited-Subcontractor and technical representatives status will be withdrawn by USFK upon:
		 
		          33.8.1 Completion of termination of the Subcontract.

	

26

	
	 

	 	                 33.8.2 Proof
that the Subcontractor or its employees are engaged in business activities other than those pertaining
to the US Armed Forces in the ROK or are violating USFK regulations.
		 
	 	                 33.8.3 Proof
that the Subcontractor or its employees are engaged in practices illegal in the ROK or are violating
USFK regulations.
		 
	 	33.9 It is agreed that the withdrawal of the Invited-Subcontractor or technical representative status
or any of the privileges associated therewith by the U.S. Government due to the fault or negligence
of the Subcontractor, will not constitute grounds for excusable delay by the Subcontractor in the
performance of the Subcontractor, nor will it justify or excuse the Subcontractor defaulting the
performance of this Subcontract; and such withdrawal will not serve as a basis for the filing of
any claims against the U.S. Government if withdrawal is made for the reasons stated above. Under
no circumstances will the withdrawal of such status privileges be considered or construed as a breach
of contract by the Contractor or the U.S. Government. The determination to withdraw SOFA status and
privileges by USFK shall be final and binding on the parties unless it is patently arbitrary, capricious
and lacking in good faith.

	 	 
	34.0	SUPPORT OFFERED IN SOUTHWEST ASIA (SAUDI ARABIA)
	 	 
	 	U.S. Subcontractor employees are not authorized in-host country Logistics Support Services and Privileges
in accordance with the Status of Forces Agreement (SOFA) with the Saudi Arabia Government. Only Military
personnel permanently assigned to U.S. Military Units in Saudi Arabia are authorized typical US Military
support such as indicated in 29.0 Support in Host Country. Further, Subcontractors doing business
in Saudi Arabia may be required to provide a yearly tax payment to the Saudi Arabian Government.
		 
	 	Subcontractor employee dependents who are authorized entry to the overseas command will also be authorized
logistical support as applicable in accordance with above.
		 
	 	Subcontractor employees requests for Logistic Support Services and Privileges while in Host Country
will be processed through the Overseas Contract Administration Office who will assist with procedures
required for obtaining individual support.
	 	 
	35.0	CONFORMITY TO JAPANESE LAWS AND REGULATIONS
	 	 
	                    	The subcontractor shall be responsible for assuring that employees assigned to this subcontract comply, while in Japan, with the applicable Laws and Regulations of the Government of Japan (GOJ) and political subdivisions thereof. In addition, the subcontractor’s employees must comply with the military rules and regulations when employed in areas under the jurisdiction of the Commander, U.S. Forces Japan. In the event that a subcontractor’s employee is barred from continuing to perform under the subcontract for failure to comply with the Laws, Rule and Regulations described in the 

	

27

	 	foregoing paragraph, any costs incurred by the subcontractor as the result of the removal of the employee
or the substitution of a replacement employee for the overseas assignment shall not be allowed. The
disallowed costs include relocation costs incurred by the subcontractor to furnish a substitute employee
for the overseas assignment. The subcontractor shall be responsible for obtaining the required authorization
and licenses from the Government of Japan (GOJ) necessary for the performance of this subcontract.
The subcontractor shall comply with the applicable articles of the Status of Forces Agreement (SOFA)
between the U.S. Government and the Government of Japan (GOJ).

	 	 
	36.0	CENTURY COMPLIANCE CLAUSE 
	 	 
	 	36.1 Century Compliance
	 	 
	 	When used in this Agreement with initial capital letters, the following terms have the respective
meanings given below:
		 
	 	“Procured System” means the computer software, computer firmware, computer hardware (whether
general or special purpose), documentation, data, and other similar or related items of the automated,
computerized, and/or software system(s) that are provided by or through Vendor pursuant to this Agreement,
or any component part thereof, and any services provided by or through Vendor in connection therewith.
		 
	 	“Calendar-Related” refers to date values based on the Gregorian calendar as defined in Encyclopedia
Britannica, 15th  edition, 1982, page 602, and to all uses in any manner of those date values, including without
limitation manipulations, calculations, conversions, comparisons, and presentations.
		 
	 	“Date Data” means any Calendar-Related data in the inclusive range January 1, 1900, through
December 31, 2050, which the Procured System uses in any manner.
		 
	 	“System Date” means any Calendar-Related data value in the inclusive range from January 1,
1985, through December 31, 2035, (including the natural transition between such values), which
the Procured System shall be able to use as its current date while operating.
		 
	 	“Century Compliant” means that the Procured System satisfies the requirements set forth in
sections 36.2, 36.3 and 36.4 below.
		 
	 	“Century Noncompliance” means any failure of the Procured System to be Century Compliant.

	

28

	 	36.2   Vendor represents that, in connection with Calendar-Related data and Calendar-Related
processing of the Date Data or of any System Date, the Procured System will not malfunction, will
not cease to function, will not generate incorrect data, and will not produce incorrect results.
		 
	 	36.3   Vendor further represents that, in connection with providing Calendar-Related data
to and accepting Calendar-Related data from other automated, computerized, and/or software systems
and users via user interfaces, electronic interfaces, and data storage, the Procured System represents
dates without ambiguity as to century.
		 
	 	36.4   Vendor further represents that Vendor has verified through testing that the Procured
System is Century Compliant and that testing included, without limitation, each of the following
specific dates and the transition to and from such date: December 31, 1998; January 1,
1999; September 9, 1999; September 10, 1999; December 31, 1999; January 1, 2000; February
28, 2000; February 29, 2000; March 1 2000; December 31, 2000; January 1, 2001; and
December 31, 2004; and January 1, 2005.
		 
	 	36.5   These representations survive the expiration or earlier termination of this Agreement.
		 
	 	36.6   Interfacing.  If the Procured System is a commercial-off-the-shelf (COTS) product,
it shall have the present capability, which can be readily utilized by GD, of providing Calendar-Related
data to and accepting Calendar-Related data from other automated, computerized, and/or software systems
and users in a four-digit CCYY format, where CC are the two digits expressing the century and YY
are the two digits expressing the year with that century (e.g., 1996, 2003, and 2007).
		 
	 	36.7   Century Noncompliance Remedy. In the event that the Procured System is Century
Noncompliant in any respect, Vendor shall, at no cost to GD, promptly under the circumstances, including
without limitation GD’s schedule commitments (prior to delivery under the subcontract) correct the Century Noncompliance and provide the corrected Century Compliant Procured System to GD.
		 
	 	36.8    Noncompliance Notice. In the event Vendor becomes aware of (i) a
possible or an actual Century Noncompliance in the Procured System or (ii) any international, governmental,
industrial, or other standard (proposed or adopted) regarding Calendar-Related data and/or processing,
or Vendor begins any significant effort to conform the Procured System to any such standard, Vendor
shall promptly inform GD of all relevant information (and timely provide GD updates to such information)
with respect to Vendor’s knowledge. Vendor shall respond promptly and fully to inquiries by
GD (and timely provide updates to any responses provided to GD) with respect to (i) any possible
Century Noncompliance in the Procured System or to (ii) any international, governmental, industrial,
or other standards. In the foregoing, the use of “timely” means promptly after the relevant
information becomes known to or is developed by or for Vendor.

	

29

	
37.0   YEAR 2000 (Y2K) WARRANTY (COMMERCIAL ITEMS)

	 

		(a)	The Subcontractor warrants that any Information Technology including, but not limited to, hardware,
  software, firmware and middleware delivered under this contract shall accurately process date/time
  data (including, but not limited to, calculating, comparing, and sequencing) from, into and between
  the twentieth and twenty-first centuries, and the years 1999 and 2000 and leap year calculations,
  to the extent that other information, used in combination with other information technology being
  acquired, properly exchanges date/time data with it.

			 
		(b)	Contractor’s obligation. The contractor’s warranties under this clause shall apply only to
  those defects discovered by either the Government or the Contractor on or before 31 December 2001.
  Should a warranted item fail to meet the requirements set out in the foregoing paragraph, the Contractor
  agrees to correct or replace the item at no cost to the Government. The parties agree that this correction
  or replacement shall not act as a limitation of remedies and that the Government may seek such additional
  remedies as may be available through this contract or at law or equity.

			 
		(c)	This clause takes precedence over any other warranty or disclaimer thereof in this contract. It is
  in addition to the rights and remedies set forth in any other warranty for this item.

	 	 
	38.0 	MINIMUM SUGGESTED INSURANCE REQUIREMENTS
	 	 
	 	Recommended minimum coverage limits are as follows:
		 

		Type of Insurance 	Minimum Limit
		
	

	  	  	  
		Commercial General Liability	$1,000,000 - Personal Injury & Property Damage - Combined single limit per occurrence
			 
		Automobile Liability	$1,000,000 - Bodily Injury
& Property Damage - Combined single limit per occurrence
			 
		Workers’ Compensation 	Statutory ----------
			 
		Employer’s Liability	$1,000,000 - per occurrence
		

		

	  	  	  
		1)	General Dynamics Corporation should be added as an Additional Insured regarding

  Commercial General Liability (CGL) and Automobile Liability (AL).
			 

		2)	As is regards Workers’ Compensation (WC), the insurance carrier must agree in

  writing to waive its right to subrogation.

	

30

		3)	General Dynamics Corporation should be provided thirty (30) days advanced written

  notice if any coverage is suspended, voided, cancelled or reduced in limits.
			 

		4)	The insurance shall be primary as respects General Dynamics Corporation,

  subsidiaries, and employees.

	 	 
	38.0 	GENERAL PROVISIONS
	 	 
	A.	In addition to the clauses specifically set forth herein, this Subcontract is subject to and the Subcontractor
will comply with the below listed provisions of the Federal Acquisition Regulations (FAR) and DoD
FAR Supplement (DFAR) modified to the extent indicated, and which are incorporated herein by reference
with the same force and effect as though set forth at length.
		 
	B.	The changes noted in this paragraph (B)(i) through (v) below are applicable to all clauses of the FAR
and DFAR referenced in this Part II as General Provisions of this subcontract unless otherwise specifically
noted at the clause as it appears:
		 

		(i)	The term “Contract” means this “Subcontract.”
			 
		(ii)	The term “Subcontract” means “Lower Tier Subcontract”.
			 
		(iii)	The term “Contractor” means “Subcontractor” or “Seller”
			 
		(iv)	The term “Contracting Officer” means the GD Government Systems duly authorized representative
unless otherwise indicated.
			 
		(v)	The term “Government” means “GD Government Systems Corporation,” or “Buyer”
unless otherwise indicated.
			 

	C.	The FAR and DFAR clauses incorporated herein are those in effect on the dates specified in this Part
III.
		 
	D.	It is the intention of the parties hereto that the above substitutions shall obligate the Subcontractor
directly to the Contractor, where applicable, in the same manner as if it were the Government referred
to herein.
		 
	E.	Pursuant to the General Provision clauses FAR 52.227-7013, “Rights in Technical Data and Computer
Software” the acquisition of the rights in technical data and computer software prescribed by
these clauses, is by the Government and not the Contractor.

	

31

	 	CLAUSE	 DESCRIPTION
	 	 	 	 
	 	 52.202-1 	 	 DEFINITIONS (OCT 95) 
	 	 	 	 
	 	 52.203-3 	 	 GRATUITIES (APR 84) 
	 	 	 	 
	 	 52.203-05 	 	 COVENANT AGAINST CONTINGENT FEES (APR 84) 
	 	 	 	 
	  	 52.203-6  	  	 RESTRICTIONS ON SUBCONTRACTOR SALES TO THE GOVERNMENT, WITH  ALTERNATE 1 (41 U.S.C. 253G AND 10 U.S.C. 2402) (JUL 95) 
	 	 	 	 
	 	 52.203-7 	 	 ANTI-KICKBACK PROCEDURES (JUL 95) 
	 	 	 	 
	 	 52.211-14 	 	 NOTICE OF PRIORITY RATING FOR NATIONAL DEFENSE USE (SEPT 1990) 
	 	 	 	 
	 	 52.211-15 	 	 DEFENSE PRIORITY AND ALLOCATIONS REQUIREMENTS (SEP 90) 
	 	 	 	 
	 	 52.211-16 	 	 VARIATION IN QUANTITY (APR 84) 
	 	 	 	 
	 	 52.212-1 	 	 INSTRUCTIONS TO OFFERORS - COMMERCIAL IEMS (OCT 2000) 
	 	 	 	 
	  	 52.212-3  	  	 OFFEROR REPRESENETATIONS AND CERTIFICATIONS - COMMERCIAL

    ITEMS (JUN 1999) AND ALTERNTES I AND III (JAN 99) (OCT 2000)    
	 	 	 	 
	 	 52.212-4 	 	 CONTRACT TERMS AND CONDITIONS - COMMERCIAL ITEMS (MAY 99) 
	 	 	 	 
	 	 55.212-5 	 	 CONRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT 

    STATUTES OR EXECUTIVE ORDERS - COMMERCIAL ITEMS (FEB 2000)    
	 	 	 	 
	 	 52.215-02 	 	 AUDIT AND RECORDS - NEGOTIATION (JUN 99) 
	 	 	 	 
	 	 52.215-05 	 	 CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT 

    STATUTES OR EXECUTIVE ORDERS - COMMERCIAL ITEMS (FEB 2000)    
	 	 	 	 
	 	 52.216-18 	 	 ORDERING (OCT 95) 
	 	 	 	 
	 	 52.216-22 	 	 INDEFINITE QUANTITY (OCT 1995) 
	 	 	 	 
	 	 52.219-04 	 	 NOTICE OF PRICE EVALUATION PREFERENCE FOR HUBZONE SMALL 

    BUSINESS CONCERNS (JAN 99) 
	 	 	 	 
	 	 52.219-8 	 	 UTILIZATION OF SMALL BUSINESS CONCERNS (OCT 2000) 
	 	 	 	 
	 	 52.219-9 	 	 SMALL BUSINESS SUBCONTRACTING PLAN (OCT 2000) 
	 	 	 	 
	 	 52.219-16 	 	 LIQUIDATED DAMAGES - SUBCONTRACTING PLAN (JAN 99) 
	 	 	 	 
	 	 52.222-03 	 	 CONVICT LABOR (AUG 96) 
	 	 	 	 
	 	 52.222-19 	 	 CHILD LABOR - COOPERATION WITH AUTHORITIES AND REMEDIES (FEB 2000) 

	

32

	 	 52.222-20 	 	 WALSH-HEALEY PUBLIC CONTRACTS ACT (DEC 96) 
	 	 	 	 
	 	 52.222-21 	 	 PROHIBITION OF SEGREGATED FACILITIES (FEB 99) 
	 	 	 	 
	 	 52.222-26 	 	 EQUAL OPPORTUNITY (FEB 99) 
	 	 	 	 
	  	 52.222-35  	  	 AFFIRMATIVE ACTION FOR DISABLED VETERANS AND VETERANS OF THE 

      VIETNAM ERA (38 U.S.C. 4212) (APRIL 98) 
	 	 	 	 
	  	 52.222-36  	  	 AFFIRMATIVE ACTION FOR WORKERS WITH DISABILITIES (29 U.S.C. 793) (JUN 98) 
	 	 	 	 
	 	 52.222-37 	 	 EMPLOYMENT REPORTS ON DISABLED VETERANS AND VETERANS OF

      THE VIETNAM ERA (38 U.S.C 4212) (JAN 99) 
	 	 	 	 
	 	 52.222-41 	 	 SERVICE CONTRACT ACT OF 1965 AS AMENDED (41 U.S.C. 351, ET SEQ.) (MAY 89)
      
	 	 	 	 
	 	 52.225-08 	 	 DUTY FREE ENTRY (FEB 2000) 
	 	 	 	 
	 	 52.225-13 	 	 RESTRICTIONS ON CERTAIN FOREIGN PURCHASES ( E.O. 12722, 12724, 

      13059, 13067, 13121 AND 13129) (FEB 2000) 
	 	 	 	  
	 	 52-225-16 	 	 SANCTIONED EUROPEAN UNION COUNTRY SERVICES (E.O. 12849) 

      (FEB 2000) 
	 	 	 	  
	 	 52.227-01 	 	 AUTHORIZATION AND CONSENT (JUL 95) 
	 	 	 	 
	 	 52.227-02 	 	 NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT 

      INFRINGEMENT (AUG 96) 
	 	 	 	 
	 	 52.227-03 	 	 PATENT INDEMNITY (APR 84) 
	 	 	 	 
	 	 52.227-9 	 	 REFUND OF ROYALTIES (APR 84) 
	 	 	 	 
	 	 52.227-10 	 	 FILING OF PATENT APPLICATION—CLASSIFIED SUBJECT MATTER 

      (APR 84) 
	 	 	 	  
	 	 52.228-05 	 	 INSURANCE - WORK ON A GOVERNMENT INSTALLATION (JAN 1977) 
	 	 	 	 
	 	 52.232.29 	 	 TERMS FOR FINANCING OF PURCHASES OF COMMERCIAL ITEMS (OCT 95) 
	 	 	 	 
	 	 52.237-02 	 	 PROTECTION OF GOVERNMENT BUILDINGS, EQUIPMENT, AND 

      VEGETATION (APR 84) 
	 	 	 	 
	 	 52.242-17 	 	 GOVERNMENT DELAY OF WORK (APR 84) 
	 	 	 	 
	 	 52.243-1 	 	 CHANGES —FIXED PRICE (AUG 87) 
	 	 	 	 
	 	 52.244-01 	 	 SUBCONTRACTS (FIXED-PRICE CONTRACTS) (FEB 95) 

	

33

	 	 52.244-03 	 	 SUBCONTRACTS (TIME-AND-MATERIALS AND LABOR-HOUR  CONTRACTS)
    
	 	 	 	 
	 	 52.244-05 	 	 COMPETITION IN SUBCONTRACTING (DEC 96) 
	 	 	 	 
	 	 52.244-06 	 	 SUBCONTRACTS FOR COMMERCIAL ITEMS AND COMMERCIAL COMPONENTS 
(OCT 98)
      
	 	 	 	 
	 	 52.245-2 	 	 GOVERNMENT PROPERTY (FIXED-PRICE CONTRACTS AND 

      ALTERNATE I (APR 84) 
	 	 	 	 
	 	 52.246-2 	 	 INSPECTION OF SUPPLIES - FIXED PRICE (AUG 96) 
	 	 	 	 
	 	 52.246-23 	 	 LIMITATION OF LIABILITY (FEB 97) 
	 	 	 	 
	 	 52.246-25 	 	 LIMITATION OF LIABILITY SERVICES (FEB 97) 
	 	 	 	 
	 	 52.247-34 	 	 F.O.B. DESTINATION (NOV 1991) 
	 	 	 	 
	 	 52.252-01 	 	 SOLICITATION PROVISIONS INCORPORATED BY REFERENCE (JUN 88)
	 	 	 	 
	 	 52.XXX 	 	 CONTINUED PERFORMANCE DURING CRISIS SITUATIONS (JULY 1988) 
	 	 	 	 
	 	 52.6081 	 	 REPORTING OF CONTRACTOR MANPOWER DATA ELEMENTS (JAN 2001) 
	 	 	 	 
	 	 52.6126 	 	 HAZARDOUS MATERIAL IDENTIFICATION AND MATERIAL SAFETY DATA 

      SHEET (MSDS) (APR 1992) 
	 	 	 	  
	 	 52.6130 	 	 SCHEDULE OF GOVERNMENT FURNISHED PROPERTY(EQUIP)(SEPT 2000) 
	 	 	 	 
	 	 52.6195 	 	 CONTRACTOR AND COTR IDENTIFICATION (OCT 1999) 
	 	 	 	 
	 	 52.7025 	 	 PLACE OF PERFORMANCE AND SHIPPING POINT (MAR 99) 
	 	 	 	 
	 	 52.7043 	 	 STANDARD PRACTICE FOR COMMERCIAL PACKAGING (APR99) 
	 	 	 	 
	 	 52.7410 	 	 DEPLOYMENT OF CONTRACTORS TO THE FAR EAST (FE) (SEP 99) 
	 	 	 	 
	 	 52.7625 	 	 Y2K WARRANTY (COMMERCIAL ITEMS) (FEB 99) 
	 	 	 	 
	 	 52.7650 	 	 YEAR 2000 (Y2K) WARRANTY 
	 	 	 	 
	 	 52.7910 	 	 INSURANCE (STATEMENT OF WORK (SEPT. 1992) 
	 	 	 	 
	 	 252.203-7002 	 	 DISPLAY OF DOD HOTLINE POSTER (DEC 1991) 
	 	 	 	 
	 	 252.204-7004 	 	 REQUIRED CENTRAL CONTRACTOR REGISTRATION (CCR) (MAR 2000) 
	 	 	 	 
	 	 252.205-7000 	 	 PROVISION OF INFORMATION TO COOPERATIVE AGREEMENT HOLDERS 

      (10 U.S.C. 2416) (DEC 91) 
	 	 	 	 
	 	 252.209-7001 	 	 DISCLOSURE OF OWNERSHIP OR CONTROL BY THE GOVERNMENT OF A 

      TERRORIST COUNTRY (SEPT 94) 

	

34

	 	 252.212-7001   	   	 CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT

      STATUTES  OR EXECUTIVE ORDERS APPLICABLE TO DEFENSE

      ACQUISITIONS OF  COMMERCIAL ITEMS (DEC 2000) 
	 	 	 	 
	   	 252.219-7003   	   	 SMALL, SMALL DISADVANTAGED BUSINESS AND WOMEN- OWNED  

      SMALL BUSINESS SUBCONTRACTING P LAN (DOD CONTRACTS  

      (15 U.S.C. 637) (APR 96) 
	 	 	 	 
	 	 252.225-7001 	 	 BUY AMERICAN ACT AND BALANCE OF PAYMENTS PROGRAM 

      (41 U.S.C.10A-10D, E. O. 10582) (MAR 98) 
	 	 	 	  
	 	 252.225-7008 	 	 SUPPLIES TO BE ACCORDED DUTY-FREE ENTRY SUPPLIES (MAR 98) 
	 	 	 	 
	 	 252.225-7009 	 	 DUTY-FREE ENTRY - QUALIFYING COUNTRY (END PRODUCTS AND 

      COMPONENTS) (AUG 2000) 
	 	 	 	 
	 	 252.225-7010 	 	 DUTY FREE ENTRY - ADDITIONAL PROVISIONS (AUG 2000) 
	 	 	 	 
	 	 252.225-7012 	 	 PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES (AUG 2000) 
	 	 	 	 
	 	 252-225-7014 	 	 PREFERENCE FOR DOMESTIC SPECIALTY METALS, ALTERNATE 1 

      (10 U.S.C. 2241 NOTE) (MAR 98) 
	 	 	 	  
	 	 252-225-7031 	 	 SECONDARY ARAB BOYCOTT OF ISRAEL (JUN 92) 
	 	 	 	 
	 	 252-225-7043 	 	 ANTITERRORISM/FORCE P ROTECTION POLICY FOR DEFENSE 

      CONTRACTORS OUTSIDE THE U.S. (JUN 98) 
	 	 	 	  
	 	 252.227-7015 	 	 TECHNICAL DATA—COMMERCIAL ITEMS (10 U.S.C. 2320) (NOV 95) 
	 	 	 	 
	 	 252.227-7016 	 	 RIGHTS IN BID OR PROPOSAL INFORMATION (JUN 95) 
	 	 	 	 
	 	 252.227-7019 	 	 VALIDATION OF ASSERTED RESTRICTIONS - COMPUTER SOFTWARE 

      (JUN 95) 
	 	 	 	  
	 	 252.227-7027 	 	 DEFERRED ORDERING OF TECHNICAL DATA OR COMPUTER SOFTWARE (APR 88) 
	 	 	 	 
	 	 252.227-7028 	 	 TECHNICAL DATA OR COMPUTER SOFTWARE PREVIOUSLY DELIVERED 

      TO THE GOVERNMENT (JUN 95) 
	 	 	 	  
	 	 252.227-7030 	 	 TECHNICAL DATA - WITHHOLDING OF PAYMENT (OCT 98) 
	 	 	 	 
	 	 252.227-7036 	 	 DECLARATION OF TECHNICAL DATA CONFORMITY (JAN 1997) 
	 	 	 	 
	 	 252.227-7037 	 	 VALIDATION OF RESTRICTIVE MARKINGS ON TECHNICAL DATA (10 U.S.C.2321) (SEP 97) 

	

35

	 	 252.243-7002 	 	 REQUESTS FOR EQUITABLE ADJUSTMENT (10 U.S.C. 2410) (MAR 98) 
	 	 	 	 
	 	 252.246-7000 	 	 MATERIAL INSPECTION AND RECEIVING REPORT (DEC 91) 
	 	 	 	 
	 	 252.247-7023 	 	 TRANSPORTATION OF SUPPLIES BY SEA (10 U.S.C. 2631) 

      (ALTERNATE I) (ALTERNATE II) (9 U.S.C. 2631) (MAR 2000) 
	 	 	 	  
	 	 252.247-7024 	 	 NOTIFICATION OF TRANSPORTATION OF SUPPLIES BY SEA (10 U.S.C. 

      2631) (MAR 2000) 

	

36ASSIGNMENT
                               OF
                 AGREEMENT OF PURCHASE AND SALE

     THIS ASSIGNMENT made and entered into this 3rd day of March,
2005,  by  and  between AEI FUND MANAGEMENT,  INC.,  a  Minnesota
corporation,  ("Assignor")  and AEI  Income  &  Growth  Fund  XXI
Limited Partnership, a Minnesota limited partnership, AEI  Income
&  Growth Fund 24 LLC, a Delaware limited liability company,  AEI
Income  &  Growth  Fund  25  LLC, a  Delaware  limited  liability
company,  and  AEI  Private  Net Lease  Millennium  Fund  Limited
Partnership,  a  Minnesota  limited partnership  (as  tenants  in
common, together collectively referred to as "Assignee");

     WITNESSETH, that:

      WHEREAS, on the 3rd day of February, 2005, Assignor entered
into  a  Agreement  of  Purchase and Sale  (referred  to  as  the
"Agreement")  for that certain property located at 1977  Thornton
Road,  Lithia  Springs,  Georgia  (the  "Property")  with  Silver
Capital  Net  Lease  Fund II, LLC, a Virginia  limited  liability
company, as Seller; and

      WHEREAS, Assignor desires to assign to AEI Income &  Growth
Fund XXI Limited Partnership, an undivided twenty percent (20.0%)
interest as a tenant in common, AEI Income & Growth Fund 24  LLC,
an  undivided fourteen percent (14.0%) interest as  a  tenant  in
common,  AEI Income & Growth Fund 25 LLC, an undivided forty-five
percent  (45.0%) interest as a tenant in common, AEI Private  Net
Lease  Millennium Fund Limited Partnership, an undivided  twenty-
one  percent  (21.0%) interest as a tenant  in  common,   of  its
rights,  title  and interest in, to and under  the  Agreement  as
hereinafter provided;

      NOW,  THEREFORE, for One Dollar ($1.00) and other good  and
valuable  consideration, receipt of which is hereby acknowledged,
it is hereby agreed between the parties as follows:

     1.    Assignor assigns all of its rights, title and interest
     in,  to and under the Agreement to Assignee, to have and  to
     hold the same unto the Assignee, its successors and assigns;

     2.     Assignee   hereby  assumes  all   rights,   promises,
     covenants, conditions and obligations under the Agreement to
     be  performed by the Assignor thereunder, and agrees  to  be
     bound  for  all  of  the obligations of Assignor  under  the
     Agreement.

All  other  terms  and conditions of the Agreement  shall  remain
unchanged and continue in full force and effect.

ASSIGNOR:

AEI FUND MANAGEMENT, INC.,
a Minnesota corporation

By: /s/ Robert P Johnson
        Robert P. Johnson, its President

ASSIGNEE:

AEI INCOME & GROWTH
FUND XXI LIMITED PARTNERSHIP,
a Minnesota limited partnership

By:  AEI Fund Management XXI, Inc.,
     a Minnesota corporation, its General Partner

By: /s/ Robert P Johnson
        Robert P. Johnson, its President

AEI INCOME & GROWTH FUND 24 LLC,
a Delaware limited liability company

By:  AEI Fund Management XXI, Inc.,
     a Minnesota corporation, its Managing Member

By: /s/ Robert P Johnson
        Robert P. Johnson, its President

AEI INCOME & GROWTH FUND 25 LLC,
a Delaware limited liability company

By:  AEI Fund Management XXI, Inc.,
     a Minnesota corporation, its Managing Member

By: /s/ Robert P Johnson
        Robert P. Johnson, its President

AEI PRIVATE NET LEASE MILLINIUM
FUND LIMITED PARTNERSHIP,
a Minnesota limited partnership

By:  AEI Fund Management XVIII, Inc.,
     a Minnesota corporation, its Managing Member

By: /s/ Robert P Johnson
        Robert P. Johnson, its President

                                                        Carmax/GA

                 AGREEMENT OF PURCHASE AND SALE

      THIS  AGREEMENT ("Agreement"), dated as of the 3rd  day  of
February, 2005, by and between SILVER CAPITAL NET LEASE FUND  II,
LLC, a Virginia limited liability company ("Seller") and AEI FUND
MANAGEMENT, INC., a Minnesota corporation ("Purchaser"),  recites
and provides:

RECITALS

      Seller  is  the  owner of a parcel of real  property,  with
improvements  thereon  known generally  as  1977  Thornton  Road,
Lithia Springs, Georgia 30122, currently leased to Car Max,  such
property  being  more  particularly  described  on  Exhibit   "A"
attached hereto (collectively, the "Property").

      Seller wishes to sell and Purchaser wishes to purchase  the
Property on the terms and conditions set forth herein.

AGREEMENT

      NOW,  THEREFORE, in consideration of their mutual  promises
hereinafter  set forth and other good and valuable consideration,
the   receipt  and  sufficiency  of  which  are  hereby  mutually
acknowledged, the parties hereto covenant and agree as follows:

      1.    RECITALS.  The recitals above are incorporated herein
by this reference as matters of contract, and not mere recital.

      2.    CONTRACT.  This Agreement shall constitute a  binding
contract for the purchase and sale of the Property, on the  terms
and conditions set forth herein.

     3.   PROPERTY.  The Property includes all of Seller's right,
title and interest in and to all buildings and other improvements
on   or  within  the  Property  and  all  appurtenances  thereto,
including  easements and covenants and Seller's right, title  and
interest in and to all leases of the Property (together with  all
rents,  charges  and other matters arising or otherwise  accruing
thereunder) (the "Leases").

      4.    DEPOSIT.   Upon  execution hereof,   Purchaser  shall
deposit the sum of $50,000 as a "Deposit", which will be held  by
LANDAMERICA  TITLE INSURANCE COMPANY, Richmond, Virginia  branch,
as  the  "Escrow Agent" in escrow pending "Settlement".  If  this
Agreement  is  timely terminated pursuant to any right  contained
herein,  the Deposit shall be returned to Purchaser.  The Deposit
shall be applied to the Purchase Price at Settlement or shall  be
paid to Purchaser or Seller in accordance with the provisions  of
Section  6  and/or 16 below.  If this Agreement is not terminated
prior  to  expiration of the Feasibility Period, Purchaser  shall
deposit  an additional $50,000 with Escrow Agent, increasing  the
Deposit to $100,000.

      5.    PURCHASE  PRICE.  The purchase price  (the  "Purchase
Price")  for  the  Property shall be Nine Million  Three  Hundred
Twenty  Thousand  Dollars ($9,320,000.00).   The  Purchase  Price
shall be payable all in cash at settlement by wire transfer.

     6.   FEASIBILITY.

           (a)   During  the  fifteen (15)  business  day  period
following  the latest of the dates on which Purchaser and  Seller
have  both  executed  this Agreement (the "Feasibility  Period"),
Purchaser, its agents, employees and contractors shall  have  the
right  to  enter  the  Property for  the  purpose  of  inspecting
improvements,   making  surveys,  updating  the   due   diligence
materials  previously  delivered to Purchaser  pursuant  to  6(b)
below,  and  performing other tests, studies and examinations  as
Purchaser,  in  its sole discretion, desires and to  confirm  the
availability of financing, on terms and conditions acceptable  to
Purchaser.    If  Purchaser  is  not  satisfied,  in   its   sole
discretion, with all aspects of the Property and the  results  of
all  tests  and  studies, and the availability of  the  specified
financing, Purchaser shall have the right, upon written notice to
Seller  given prior to expiration of the Feasibility  Period,  to
terminate  this  Agreement, in which event the Deposit  shall  be
returned to Purchaser.

           (b)   Purchaser acknowledges that Seller has delivered
to  Purchaser  the materials listed on Exhibit B,  and  that  all
matters  disclosed by such deliveries are acceptable to Purchaser
and  shall  not  be  the basis for any objection  hereunder.  The
matters  of  title and survey reflected in the materials  already
delivered   to   Purchaser  are  "Permitted  Exceptions"   deemed
acceptable  to  Purchaser.   Seller  shall  promptly  deliver  to
Purchaser   such  other  due  diligence  materials  in   Seller's
possession  as  Purchaser may specifically identify  in  writing,
excluding any materials of a proprietary nature, not relating  to
the  condition or performance of the Property or the Tenant.  All
due diligence updates shall be at Purchaser's sole expense.

           (c)   If  notice of termination is not given prior  to
expiration of the Feasibility Period, all such matters  shall  be
deemed  acceptable  and  all  such  conditions  satisfied  and/or
waived.

           (d)   Purchaser  agrees to repair  any  damage  caused
directly  by exercise of the right of access granted to Purchaser
in  this paragraph, and to indemnify and hold the Seller harmless
from  any and all losses actually incurred as a direct result  of
the  exercise of such right of access, other than as a result  of
the  Seller's  negligence  or willful  misconduct.   Seller  will
cooperate and assist Purchaser's access to the buildings.

      7.   CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER.  This
Agreement  and  all  of  Purchaser's  obligations  hereunder  are
further subject to satisfaction of the following conditions on or
before Settlement:

           (a)   SELLER'S  REPRESENTATIONS AND  DELIVERIES.   All
representations  and warranties of Seller made  herein  shall  be
true  and  correct in all material respects as  of  the  date  of
Settlement  and Seller shall have taken all action and  delivered
all documents and materials required by this Agreement.

           (b)  NO LITIGATION.  As of Settlement, there shall  be
no  litigation, proceeding or investigations pending, or  to  the
knowledge of Purchaser or Seller threatened, which might  prevent
or  adversely affect the use of the Property, or which  questions
the  validity  of  any  action taken or to  be  taken  by  Seller
hereunder.

           (c)  LEASE.  Purchaser shall have received an Estoppel
Certificate  from  the  tenant under  the  Lease,  such  Estoppel
Certificate to be in the form specified by the Lease,  confirming
that  the  Lease is in full force and effect, that there  are  no
modifications  or  amendments,  other  than  those  provided   to
Purchaser,  the  amount  of rent and any security  deposit,  that
amounts due under the Lease are current and not prepaid and  that
Seller  is  not  in  default  under the  Lease.   Purchaser  must
determine during the Feasibility Period if this form of  Estoppel
is satisfactory to Purchaser.

      In  the  event  any  of  the foregoing  conditions  is  not
satisfied on the date of Settlement, then Purchaser, at its  sole
option,  shall either:  (i) waive such condition in  writing  and
proceed   to  consummate  Settlement;  or  (ii)  terminate   this
Agreement  by  written  notice to Seller, whereupon  the  Deposit
shall  be  promptly repaid to Purchaser, subject  to  Purchaser's
right to exercise its remedies hereunder in the event of a Seller
default.  Failure to select one of the foregoing on the  date  of
Settlement shall constitute Purchaser's election not to terminate
this   Agreement  and  shall  constitute  waiver  of   all   such
conditions.

     8.   SETTLEMENT.

           (a)   TIME AND PLACE.  Unless this Agreement has  been
terminated  as  provided above, Seller and Purchaser  shall  make
settlement on the sale and purchase of the Property in accordance
with the terms hereof ("Settlement") on the date which is fifteen
(15) business days after the expiration of the Feasibility Period
(the  "Settlement Date"), time being of the essence.   Settlement
shall  take  place  at  the offices of the Escrow  Agent,  or  as
mutually agreed by the parties.

            (b)   PURCHASER'S  DELIVERIES.   At  Settlement,  the
Purchaser  shall  pay  the purchase price  to  Seller  and  shall
execute  and  deliver  an  instrument providing  for  Purchaser's
assumption of the Leases and Purchaser's indemnity of Seller with
respect  to all matters occurring under the Lease or with respect
to the Property from and after the date of Settlement.

           (c)   SELLER'S DELIVERIES.  Seller shall  deliver  the
following  to  Purchaser:  (i) the Deed (as defined in  paragraph
10);  (ii)  an  affidavit as to mechanics' liens and  parties  in
possession  in  customary form as reasonably  required  to  cause
owner's title policy to be issued without exception for Mechanics
Liens  or parties in possession (other than the Lease);  (iii)  a
Certificate of Non-Foreign Status as required by Section 1445  of
the  Internal  Revenue  Code of 1986 and any  other  certificates
required  by  any  governmental  authority  or  agency;  (iv)  an
assignment  of all of Seller's right, title and interest  in  the
Leases;  and  (v)  a  written notice from Seller  to  the  Tenant
stating  that  the  Property  has  been  sold  to  Purchaser  and
directing  Tenant  to regard Purchaser as its Landlord  and  make
rental payments payable to Purchaser at the address specified  by
Purchaser and set forth in such notice.

           (d)   COSTS.   The  Seller  shall  pay  the  costs  of
preparing  the  Deed,  the title insurance  company's  reasonable
escrow  settlement  charges and any transfer  taxes,  stamps  and
recording charges on the Deed.  The Purchaser shall pay  for  the
examination  of  title to the Property, premiums charged  by  the
title  insurance  company, and the cost of  any  updated  survey,
environmental report and other feasibility studies.   Each  party
shall  pay its own legal, accounting and other expenses  incurred
in connection with this Agreement or Settlement hereunder.  It is
the  intent of the parties that Seller shall be entitled  to  all
income for the period of time up to but not including the date of
Settlement,  and Purchaser shall be entitled to  all  income  and
shall  be  responsible for all expenses for the  period  of  time
from,   after  and  including  the  date  of  Settlement.    Such
adjustments shall be shown on the Settlement Statement (with such
supporting  documentation  as the parties  hereto  may  require).
Without  limiting the generality of the foregoing, the  items  of
income  and  expense allocated at Settlement shall include  rent,
maintenance charges, any other additional rent, real and personal
property  taxes,  amounts  due under contracts  assigned  to  and
assumed  by  Purchaser, if any, and utility charges,  except  for
costs  which  the  tenants under the Leases are responsible  for,
which  shall not be prorated.  In addition, any security  deposit
under the Leases shall be assigned and delivered to Purchaser  at
Settlement.  For purposes of this Section, Settlement  shall  not
be deemed to have occurred unless and until Seller's proceeds are
received  by  Seller  prior to 2:00 p.m.  E.S.T.  on  such  date.
Settlement  and  any  prorations shall  be  computed  as  of  the
following  day in the event Seller's proceeds cannot be delivered
by 2:00 p.m. EST on the date specified for Settlement.

           (e)   POSSESSION.  Subject only to the rights  of  the
tenant  under  the  Lease, possession of the  Property  shall  be
delivered   to   Purchaser  immediately  upon   consummation   of
Settlement.

           (f)   CLOSING DOCUMENTS.  All closing documents to  be
executed and delivered by the parties pursuant hereto shall be in
form, execution and substance as required herein.

     9.   TITLE AND SURVEY OBJECTIONS.  The Purchaser shall have until
expiration  of  the  Feasibility Period to report  to  Seller  in
writing any survey or title defects or other objections regarding
the  Property  that  are  disclosed by Purchaser's  examinations,
other  than  the Permitted Exceptions (as to which Purchaser  has
waived  any  objection), which, in Purchaser's  sole  discretion,
materially  adversely  affect use of the  Property  as  currently
operated  or make the title to the Property uninsurable or  which
impose  restrictions on future use of the Property which are  not
acceptable  to Purchaser.  Seller shall have the right,  but  not
the duty to cure any such title objections reported by Purchaser.
If  the  Seller is unable or unwilling to cure objections to  the
Purchaser's    satisfaction    prior    to    Settlement    then,
notwithstanding  anything herein to the contrary,  the  Purchaser
shall,  at  its  option, either (i) terminate this Agreement,  in
which  event  the Deposit shall be refunded; or (ii)  waive  such
defects  and  proceed  to Settlement, with no  reduction  in  the
Purchase  Price; provided, however, that all mortgages, deeds  of
trusts  and  other monetary liens may be paid at Settlement,  and
the  parties  hereby authorize application of the Purchase  Price
proceeds to effect the same.  If any additional matters of record
are   created  after  the  date  of  the  examination  of   title
contemplated  hereby,  and prior to Settlement,  Purchaser  shall
have  the right to further delay Settlement a reasonable time  to
permit Seller to complete curative action.  Any matters of  title
or  survey  not  timely  objected to by Purchaser  or  which  are
reported but not cured by Settlement shall be deemed waived.

      10.   THE DEED.  At the time specified in paragraph 8 above
for  Settlement the Seller shall deliver to Purchaser  a  Special
Warranty  Deed  (the "Deed") conveying fee simple  title  to  the
Property, described according to the applicable legal description
attached hereto as Exhibit A, subject to all liens, encumbrances,
conditions,  restrictions  and other matters  of  record,  unless
otherwise agreed in writing.

      11.   RISK  OF  LOSS.  The risk of loss or  damage  to  the
Property  by  fire or other casualty prior to Settlement  thereon
shall  be  on the Seller.  If such loss or damage is substantial,
materially and adversely affects the Purchaser's intended use and
enjoyment of the Property as of Settlement or gives rise  to  the
right  of the Tenant to terminate the Lease as a result  of  such
casualty,  the  Purchaser shall have the option to (i)  terminate
this Agreement and have the Deposit refunded, in which event  the
parties  hereto shall have no further obligations or  liabilities
to  one another hereunder; or (ii) proceed to Settlement with  an
assignment  of  any  right of Seller in and to  the  proceeds  of
insurance.

     12.  CONDEMNATION.  If all or any portion of the Property is
subject  to actual or threatened taking pursuant to the power  of
eminent  domain  prior  to Settlement,  the  Purchaser  shall  be
entitled to elect either to (a) terminate this Agreement and have
the  Deposit  refunded in which event the parties shall  have  no
further  obligations hereunder, or (b) proceed to Settlement,  in
which event, at Purchaser's Option all proceeds, awards and other
payments  arising from any such taking or sale shall be  assigned
and paid to the Purchaser.

     13.  COVENANTS.

           (a)   SELLER'S COVENANTS.  Seller covenants and agrees
with Purchaser that, prior to Settlement:

                (i)   Seller, as Landlord, shall not violate  the
provisions of the Lease and shall use reasonable efforts to cause
Tenant  to  fully  comply with the terms and  provisions  of  the
Lease.

                (ii)  Seller  shall continue to maintain  all  of
Seller's existing insurance policies relating to the Property, or
any  part  thereof, if any, in full force and  effect  until  the
Settlement  has occurred, and shall cause Tenant to maintain  all
of  Tenant's policies relating to the Property as required  under
the Lease.

                (iii)      Seller shall provide Purchaser with  a
copy  of any written notice hereafter received by Seller relating
to  any violations or alleged violations of any federal, state or
municipal  laws, ordinances, rules and regulations affecting  the
Property,  or  any pending or threatened actions, proceedings  or
claims affecting the Property.

                (iv) From and after the date hereof, Seller shall
not  (A)  make  or  authorize to be made any alterations  to  the
Property,  (B) enter into any agreements, leases or  undertakings
with  respect to the Property or any part thereof, (C) submit  or
file any applications with governmental authorities to change the
zoning  or  the  Property,  or  (D)  record  or  consent  to  the
recordation of any liens, mortgages, or encumbrances of any  kind
affecting  the  Property,  except  as  would  be  discharged   at
Settlement, without the prior written consent of Purchaser.

      14.   REPRESENTATIONS AND WARRANTIES OF  THE  SELLER.   The
Seller represents and warrants as of the date hereof that to  the
best of its actual knowledge without investigation:

           (a)   REPAIRS.  No governmental agency has served  any
written  notice on the Seller regarding any repairs,  alterations
or corrections of any existing condition on the Property.

           (b)   CONDEMNATION.  There is no pending or threatened
proceedings  for  condemnation or the exercise of  the  right  of
eminent domain as to any part of the Property or for the limiting
or denying of any right of access thereto.

           (c)  AUTHORIZATION AND EXECUTION.  This Agreement  has
been  duly authorized by all necessary action on the part of  the
Seller  and  has been duly executed and delivered by the  Seller.
Seller  shall  deliver  to Purchaser, prior  to  Settlement,  all
organizational  documents, resolutions,  certificates  and  other
materials  reasonably  required  by  Purchaser  to  confirm   the
foregoing.

           (d)  HAZARDOUS MATERIALS.  No hazardous materials,  as
hereinafter defined, are located on or about the Property nor has
Seller used the Property for the storage, manufacture or disposal
of  hazardous  materials.  For the purposes  of  this  Agreement,
"hazardous  materials"  shall  mean  any  "hazardous  substance",
"hazardous  waste" and "hazardous material", as  defined  in  the
Comprehensive  Environmental Response Compensation and  Liability
Act  of  1984,  42 U.S.C. Section 9601 et. seq., as amended,  the
Resource  Conservation and Recovery Act of 1976, as amended,  and
the  Hazardous and Solid Waste Amendment of 1984, as amended, the
regulations adopted pursuant thereto and any other federal, state
and   local   law,  statute  or  ordinance  or   any   court   or
administrative   decree  or  any  private  agreement   with   any
governmental   authority  pertaining  to   hazardous   or   toxic
materials,  substances,  pollutants,  contaminants  or  waste  to
Seller's knowledge.

           (e)  LEASES.  There are no leases, tenancies, licenses
or  other  rights  of  occupancy or use for any  portion  of  the
Property other than the Lease, the Permitted Exceptions and title
matters  of  record.  Neither Tenant nor Seller is in default  in
performing its obligations under the Lease.

           (f)   Seller  has  not  entered  into  any  agreements
affecting  the  Property other than the Lease and  other  matters
that  would be revealed by inquiry and proper search of the  land
records   and/or  zoning  and  planning  records  in  the   local
jurisdiction.

      Except  for the foregoing representations, Seller makes  no
representations  or warranties with respect to the  Property  and
Purchaser acknowledges and agrees that the Property is being sold
"AS  IS,  WHERE  IS"  and that Purchaser is relying  on  its  own
inspections,  consultants  and  inquiries  with  respect  to  the
Property,  the  Leases  and all related matters.   The  "best  of
Seller's  knowledge" as used herein shall be deemed to  mean  the
actual  knowledge, without investigation, of Marvin Bolinger  and
Dennis Weiss.

      15.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.   The
Purchaser represents and warrants as of the date hereof and shall
be deemed to represent and warrant as of Settlement that:

           (a)   ORGANIZATION   Purchaser is a  corporation  duly
organized  and in good standing under the laws of Minnesota,  and
has  qualified  (or  will be qualified) to  do  business  in  all
jurisdictions  in  which  such  qualification  is  necessary   to
consummate the transactions described herein.

           (b)   AUTHORIZATION  AND  EXECUTION.   The  execution,
delivery and performance of this Agreement by Purchaser has  been
duly  authorized by all necessary action, if any, as  applicable,
and  has been duly executed and delivered by the Purchaser.  This
Agreement is enforceable against Purchaser in accordance with its
terms  and  does  not  conflict  with  any  indenture,  operating
agreement,  bylaw, or any other agreement to which  Purchaser  is
bound.   The  individual  signing  on  behalf  of  Purchaser   is
authorized  to act for and on behalf of and to bind Purchaser  in
connection with this Agreement.

           (c)   AGREEMENTS.   There is  no  agreement  to  which
Purchaser is a party or, to Purchaser's knowledge, is binding  on
Purchaser, which adversely affects Purchaser's ability to perform
its obligations under this Agreement.

      16.   DEFAULT.   In  the event of a default  by  Purchaser,
Seller's  sole  and  exclusive  remedy,  in  lieu  of  all  other
remedies,  shall be to retain the Deposit as liquidated  damages,
and  Seller hereby specifically waives the right to seek specific
performance  of this Agreement by Purchaser.  If Seller  defaults
hereunder, Purchaser may terminate this Agreement, in which event
the  Deposit shall be promptly refunded to Purchaser or Purchaser
may  seek  specific  performance of this Agreement  as  its  sole
remedy at law or in equity.

      17.   AGENTS AND BROKERS.  Each party hereunder  represents
and  warrants that it did not consult or deal with any broker  or
agent, real estate or otherwise, with regard to this Agreement or
the  transactions  contemplated hereby,  other  than  Progressive
Properties who shall receive a commission, payable by  Seller  if
and  only  if  Closing occurs, equal to one percent (1%)  of  the
Purchase  Price. Each party hereto agrees to indemnify  and  hold
harmless the other party from all liability, expense, loss,  cost
or  damage, including reasonable attorneys' fees, that may  arise
by  reason  of any claim, demand or suit of any agent  or  broker
arising  out  of  facts constituting a breach  of  the  foregoing
representations and warranties.

      18.   NOTICES.  Any notice, request or demand  required  or
permitted  to  be given pursuant to this Agreement  shall  be  in
writing  and  shall be deemed sufficiently given if delivered  by
hand  by messenger at the address of the intended recipient, sent
prepaid  by Federal Express (or a comparable guaranteed overnight
delivery service), or deposited in the United States first  class
mail  (registered  or  certified, postage  prepaid,  with  return
receipt requested), addressed as follows:

     For the Purchaser:  c/o George Rerat
                         Managing Director of Acquisitions
                         1300 Wells Fargo Place
                         30th Seventh Street East
                         St. Paul, MN  55101
                         Fax No.:  (651) 227-7705
                         Phone No.:  (651) 227-7333
                         Copy to: Robert Johnson, President

     For the Seller:     Silver Capital LLC
                         Sabre Center II, Suite 600
                         6001 Broken Sound Parkway
                         Boca Raton, FL  33487
                         Attn:  Larry D. Silver
                         Fax No.:  (561) 997-1094
                         Phone No.:  (561) 981-5252

     with a  copy to:    Paul S. Elkin, Esquire
                         Sabre Center II, Suite 600
                         6001 Broken Sound Parkway
                         Boca Raton, FL  33487
                         Fax No.:  (561) 997-1094
                         Phone No.:  (561)-981-5252

     with a copy to:     John W. Steele, Esquire
                         Hirschler Fleischer
                         Post Office Box 500
                         Richmond, VA  23218
                         Fax No.:  (804) 644-0957
                         Phone No.:  (804) 771-9565

Notice  may  also  be  given by facsimile transmission,  provided
notice  is also sent subsequently by one of the methods specified
above.   Notice shall be deemed given on the date of the  receipt
if delivered by hand or mail, one day after posting with FedEx or
other comparable carrier or upon confirmed facsimile transmission
to the party named therein at the applicable fax number above.

      19.   APPLICABLE LAW.  This Agreement shall  be  construed,
performed  and enforced in accordance with the laws of the  State
of Georgia.

       20.    ENTIRE  AGREEMENT;  MODIFICATION.   This  Agreement
contains the entire agreement between the parties hereto relating
to  the  Property  and  supersedes all prior and  contemporaneous
negotiations,  understandings and agreements,  written  or  oral,
between  the parties hereto.  This Agreement shall not be amended
or  modified  and  no  waiver of any provision  hereof  shall  be
effective unless set forth in a written instrument executed  with
the same formality as this Agreement.

      21.  SURVIVAL.  The provisions of this Agreement shall  not
survive Settlement hereunder and shall be deemed merged into  the
deed at Settlement.

     22.  TIME OF THE ESSENCE.  The parties expressly acknowledge
and  agree that TIME IS OF THE ESSENCE with respect to  each  and
every provision of this Agreement; provided, however, that if the
final  date  of any period which is set out in any  provision  of
this Agreement falls on a Saturday, Sunday or legal holiday under
the  laws  of the United States, then such time period  shall  be
extended to the next day which is not a Saturday, Sunday or legal
holiday.

      23.   SEVERABILITY.  In the event any one or  more  of  the
provisions  contained in this Agreement are held to  be  invalid,
illegal,  or  unenforceable  in  any  respect,  such  invalidity,
illegality,  or  unenforceability  shall  not  affect  any  other
provision  hereof, and this Agreement shall be  construed  as  if
such  invalid, illegal, or unenforceable provision had  not  been
contained herein.

     24.  CAPTIONS.  Any paragraph headings or captions contained
in  this Agreement shall be for convenience of reference only and
shall  not  affect  the  construction or  interpretation  of  any
provision of this Agreement.

      25.   COUNTERPARTS.  Upon written notice  to  Seller,  this
Agreement may be executed in any number of counterparts, each  of
which  shall be deemed to be an original, but all of  which  when
taken together shall constitute one and the same instrument.

      26.   TAX-FREE  EXCHANGE.   The parties  acknowledges  that
Purchaser  and/or  Seller may wish to close this  transaction  as
part  of  a tax-free exchange.  The parties shall cooperate  with
the  other  and take any reasonable actions necessary,  including
the execution of appropriate documents, to assist the other so to
acquire  or sell the Property as part of a 1031 deferred exchange
provided that:  (a) neither party shall not be required to  incur
any  liability or expense in connection with the others exchange;
and (b) the exchange does not delay Settlement.

      27.  ASSIGNMENT.  This Agreement shall not be assignable by
Purchaser  without Seller's prior written consent.  No assignment
by Purchaser shall relieve him of his obligations and liabilities
hereunder.

                   [SIGNATURE PAGE TO FOLLOW.]

     IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed in its name pursuant to due
authority as of the dates set forth below.

     PURCHASER:               AEI FUND MANAGEMENT, INC.,
                              a Minnesota corporation

                              By: /s/ Robert P Johnson
                              Name:   Robert P Johnson
                              Title:  President
                              Date:   Feb 3, 2005

     SELLER:                  SILVER CAPITAL NET LEASE FUND II, LLC,
                              a Virginia limited liability
                              company

                              By:  SILVER CAPITAL MANAGER, LLC, a
                                   Virginia limited liability
                                   company, Its Manager

                                   By:/s/ Paul S Elkin
                                   Title: Member
                                   Date:  2-8-05

                            EXHIBIT A

          (1977 Thornton Road, Lithia Springs, Douglas
                County and Cobb County, Georgia)

Legal Description:

ALL  THAT TRACT or parcel of land lying and being in Land Lots
421 and 482 of the 18th District of Douglas and Cobb Counties,
Georgia, and being more particularly described as follows:

COMMENCING at the intersection of the northerly right  of  way
of  Thornton Road (290 foot right of way) and the west line of
Land  Lot  482; thence south 50 degrees 55 minutes 15  seconds
east for 41.76 feet, to a 1/2 inch rebar set, and the Point of
Beginning; thence departing the right of way of Thornton Road,
north  25  degrees  55 minutes 10 seconds east,  for  1,140.63
feet,  to a 1/2 rebar on the southerly bank of Carroll  Creek;
thence continuing along said line, north 25 degrees 55 minutes
10  seconds  east, a distance of 11.52 feet, to the centerline
of Carroll Creek; thence along the centerline of Carroll Creek
the  following  bearing and distances:  south  78  degrees  11
minutes  32  seconds  east, for 56.74 feet;  thence  north  83
degrees  11  minutes 55 seconds east, for 184.43 feet;  thence
south  47 degrees 35 minutes 48 seconds east, for 342.71 feet;
thence north 61 degrees 34 minutes 57 seconds east, for  46.11
feet; thence south 30 degrees 29 minutes 28 seconds east,  for
159.12  feet;  thence south 78 degrees 35 minutes  46  seconds
east,  for  229.72  feet, to the east line of  Land  Lot  421;
thence   departing  the  centerline  of  Carroll   Creek   and
continuing along the easterly line of Land Lots 421  and  482,
south  07 degrees 36 minutes 22 seconds west, for 22.76  feet,
to  a  1/2 inch rebar; thence south 07 degrees 36  minutes  22
seconds  west,  for  231.54 feet, to a  metal  fence  post  in
concrete  cut  off  at  ground  level;  thence  departing  the
easterly line of Land Lot 482, south 66 degrees 36 minutes  20
seconds west, for 1,286.85 feet, to a 1/2 inch  rebar  on  the
northerly  right of way of Thornton Road (290  foot  right  of
way);  thence continuing along the northerly right of  way  of
Thornton  Road the following bearings and distances: north  48
degrees  41  minutes 08 seconds west, for 46.51  feet;  thence
north  49 degrees 46 minutes 25 seconds west, for 103.93 feet;
thence north 50 degrees 55 minutes 15 seconds west, for  16.51
feet,  to  the  Point of Beginning, containing 806,639  square
feet,  or  18.518 acres, more or less, as shown  on  ALTA/ACSM
Land  Title Survey for Silver Capital Net Lease Fund II,  LLC,
South Trust Bank and Chicago Title Insurance Company, made  by
Greenhorne & O'Mara, Inc. bearing the seal of Julian D. Grace,
Ga. R.L.S. No. 2679, dated November 4, 2003.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}]]