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TABLE OF CONTENTS

PART A. GENERAL TERMS AND CONDITIONS

1. ASSIGNMENT
   Neither this Contract nor monies due hereunder may be assigned by Seller in whole or in part, voluntarily or by operation of law, without Buyer's prior written consent. Seller may, however, assign rights to be paid amounts due, or to become due, to a financing institution if Buyer is promptly furnished a signed copy of such assignment reasonably in advance of the due date for payment of any such amounts. Buyer may, without Seller's consent, assign this Contract in whole or in part to the Government or to any other contractor acting under the terms of the Prime Contract.
   

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2. BUYER OR GOVERNMENT FURNISHED PROPERTY
   
   1. Buyer may provide property owned by Buyer or the Government ("Furnished Property") to Seller for Seller's benefit. Seller shall hold the Furnished Property on a bailment basis. Title to the Furnished Property shall remain in Buyer or the Government, as appropriate. Seller shall not sell, lend, rent, encumber, pledge, lease, transfer or otherwise dispose of the Furnished Property.
   2. While the Furnished Property is in Seller's possession and until Seller completes performance of the Contract or delivers the Furnished Property in accordance with Buyer's instructions, Seller bears the risk of loss and damage to the Furnished Property. Seller is responsible for the cost of repairing or replacing the Furnished Property if it is damaged or destroyed. Seller shall insure the Furnished Property with all-risk coverage, naming Buyer as loss payee. Seller shall at all times: (i) regularly inspect, maintain and repair as necessary the Furnished Property at Seller's sole expense; (ii) use the Furnished Property only for the performance of this Contract and in compliance with Buyer's instructions and all federal, state and local laws and regulations; and (iii) clearly mark the Furnished Property and maintain such markings to show the ownership thereof. Buyer may enter Seller's premises at all reasonable times on a not-to-interfere basis to inspect the Furnished Property and Seller's records with respect thereto.
   3. Seller acknowledges and agrees that: (i) Buyer is bailing the Furnished Property to Seller for Seller's benefit, and (ii) Seller is satisfied that the Furnished Property is suitable and fit for its intended purposes. BUYER HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR REPRESENTATION WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS, CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE FURNISHED PROPERTY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. Buyer shall not be liable to Seller for any loss, damage, injury or expense of any kind or nature, caused directly or indirectly by the Furnished Property, including without limitation, any loss of anticipatory damages, profits, or any other indirect, special or consequential damages.
   4. At Buyer's request, and/or upon expiration, completion or termination of this Contract, Seller shall submit to Buyer in an acceptable form inventory lists of the Furnished Property and shall deliver or make such other disposition of the Furnished Property as Buyer shall direct. If Seller does not release and deliver any Furnished Property as directed by Buyer, Buyer may obtain a writ of possession without notice and without the posting of any bond, and may enter Seller's premises without legal process (if possible without a breach of the peace) and take immediate possession of the Furnished Property.
      

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3. CHANGES
   
   1. Buyer may at any time, by written order, make changes to the Contract Work. If any such change causes an increase or decrease in the cost of, or the time required for, performance of this Contract, Buyer shall make an equitable adjustment in the Contract Price, the performance or delivery schedule, or both, and shall so modify this Contract. If Buyer changes the Contract delivery date(s) such that Seller is required to work overtime, Buyer shall pay therefor an amount equal only to Seller's actual additional labor costs occasioned by such overtime.
   2. Buyer's or the Government's engineering and technical personnel may from time to time render assistance or give technical advice or discuss or exchange information with Seller's personnel concerning the Contract Work. Such actions, however, shall not be deemed to be a change under this Changes paragraph and shall not be the basis for any equitable adjustment.
   3. Within twenty (20) days from the date of receipt of any written change order, Seller shall submit to Buyer a detailed written estimate of the impact of the change on the Contract Price, the performance or delivery schedule, and the performance capabilities of any Contract Products. Upon receipt of this estimate, Buyer shall begin good faith negotiations with Seller to determine an equitable adjustment to the Contract.
   4. The failure of the parties to agree to any equitable adjustment shall be dispute under the Disputes paragraph of this Contract. However, nothing in this Changes paragraph shall excuse Seller from proceeding with diligent performance of this Contract as changed.
      

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4. COMPLIANCE WITH LAW
   Seller shall, in the performance of this Contract, fully comply with all applicable laws, rules, regulations, orders, conventions, ordinances and standards of the country(ies) of origin and destination or that relate to the manufacture, labeling, transportation, exportation, licensing, approval or certification of the Contract Work, including, but not limited to, those relating to environmental matters, wages, hours and conditions of employment, subcontractor selection, discrimination, occupational health and safety and motor vehicle safety and with all rules, regulations and requirements of the classification society(ies) selected by Buyer and the Government to review and approve the Vessel design and construction. Seller shall defend, indemnify and hold Buyer harmless from any and all claims and liabilities resulting from any failure to so comply.
   

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5. COMPUTATION OF TIME
   All periods of time shall be computed by including Saturdays, Sundays and U.S. holidays, except that if such period terminates on a Saturday, Sunday or U.S. holiday, it shall be deemed extended to the U.S. business day next succeeding.
   

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6. CONFIDENTIALITY
   Information furnished by Buyer and identified by Buyer as "NASSCO Proprietary/Trade Secret Information" or otherwise identified as subject to restricted access or dissemination shall, as between Seller and Buyer, be and remain property of Buyer, shall not be duplicated, used or disclosed except for the purpose and to the extent necessary for the performance of this Contract, and upon completion of this Contract, shall be delivered to Buyer or destroyed by Seller as Buyer specifies (including all copies). Seller shall take all reasonable precautions to maintain in confidence all such information, including the imposition upon any person, firm, or corporation to whom disclosure of such information is made in the course of performance under this Contract of conditions relating to the confidential treatment thereof to the same effect as those imposed upon Seller herein; provided, the obligations imposed upon Seller herein shall not apply to such information that is already known to Seller, is lawfully obtained or obtainable by Seller from another source, is or comes into the public domain otherwise than as a result of breach of this Confidentiality paragraph.
   

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7. CONTRACT ACCEPTANCE, INTEGRATION AND AMENDMENT
   
   1. Seller shall strictly perform this Contract. Acceptance of this Contract is expressly limited to the terms and conditions hereof and shall be made by executing the "acknowledgment copy" of the purchase order and returning the same to Buyer. If for any reason Seller should fail to accept this Contract in writing, any performance by Seller of any portion of this Contract shall constitute complete acceptance of this Contract. Any terms proposed in the acceptance of this Contract, which add to, vary from, or conflict with the terms and conditions of this Contract are hereby objected to and shall be void.
   2. This Contract constitutes the entire agreement between the parties and supersedes all previous communications, representations or agreements, whether oral or written, between the parties. No terms other than those set forth herein or in the purchase order shall apply. Seller represents that, in entering this Contract, it does not rely on any previous oral or implied representation, inducement, or understanding of any kind.
   3. This Contract may be amended or modified only by a written instrument executed by authorized representatives of both Buyer and Seller.
      

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8. DEFAULT
   1. Buyer may, by written notice to Seller, terminate all or any part of this Contract (i) if Seller fails to perform the Contract Work or deliver the Contract Products within the time specified by this Contract or any written extension; (ii) if Seller fails to perform any other provision of this Contract; (iii) fails to make progress so as to endanger performance of this Contract; or (iv) in the event of Seller's suspension of business, insolvency, appointment of a receiver for Seller's property or business, or any assignment, reorganization or arrangement by Seller for the benefit of creditors. In either of circumstance (ii) or (iii), Seller shall have the right to cure the failure within ten (10) days after receipt of notice from Buyer specifying the failure or such longer period as Buyer may authorize in writing.
   2. In the event Buyer terminates this Contract in whole or in part as provided in subparagraph (a) above, Buyer may procure, upon such terms and in such manner as Buyer may reasonably determine, goods or services similar to the Contract Work specified herein, and Seller shall be liable to Buyer for any excess costs for such similar procurement. If this Contract is terminated only in part, Seller shall continue the performance of this Contract to the extent not terminated.
   3. If Buyer terminates all or any part of this Contract:
      1. Buyer may require Seller to transfer title and deliver to Buyer, as directed by Buyer, any (1) completed Contract Products, (2) partially completed Contract Products, and (3) materials, parts, tools, dies, fixtures, plans, drawings, information, and contract rights that Seller has specifically produced or acquired for the terminated portion of this Contract (collectively "Manufacturing Materials"). Upon direction of Buyer, Seller shall also protect and preserve property in possession of Seller in which Buyer has an interest.
      2. Buyer shall pay the price specified in this Contract for completed Contract Products. Buyer shall pay a proportionate share of the Contract price for partially completed Contract Products. Payment for Manufacturing Materials accepted by Buyer and for the protection and preservation of property shall be at Seller's direct costs. Buyer may withhold from any amount due under this Contract any sum Buyer determines to be necessary to protect Buyer or the Government against loss because of outstanding liens or claims of former lien holders.
         
   4. The rights and remedies of Buyer under this Default paragraph are in addition to any other rights and remedies provided by law or under this Contract.
      

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9. DEFINITIONS
   The following terms shall have the meanings set forth below throughout this Contract:
   1. "Buyer" means National Steel and Shipbuilding Company.
   2. "Contract" means the purchase order between Buyer and Seller, including these Terms and Conditions, the Specifications, and any other documents incorporated by reference.
   3. "Contract Price" means the total amount to be paid by Buyer to Seller in consideration of Seller's full performance of this Contract, as set forth on the face of the purchase order.
   4. "Contract Products" means the products, material, apparatus, equipment, supplies, articles, or other goods to be furnished by Seller under this Contract.
   5. "Contract Work" means the services and/or goods which are the subject of this Contract. Unless otherwise specifically defined, "Contract Work" includes any Contract Products called for by this Contract.
   6. "FAR" means Federal Acquisition Regulation as contained in Title 48, Code of Federal Regulations, and unless otherwise indicated shall be deemed to include the Department of Defense FAR Supplement ("DFARS") as similarly contained in Title 48, Code of Federal Regulations. In the event of a conflict between the FAR and the DFARS, the DFARS shall prevail.
   7. "Government" means the Unites States of America, through its authorized representative, the Department of the Navy.
   8. "Prime Contract" means the contract between Buyer and the Government for the dry docking, maintenance, repair, overhaul, alteration and/or conversion of the Vessel.
   9. "Seller" means the individual, association, partnership, corporation or other entity identified on the face of the purchase order of this Contract who is to perform the Contract Work or supply the Contract Products.
   10. "Specifications" means all specifications, plans, data, drawings, diagrams, work schedules, and any other documents, which describe the Contract Work and/or the Contract Products.
   11. "Vessel(s)" means any one or more of the vessels to be dry docked, maintained, repaired, overhauled, altered, and/or converted under the terms of the Prime Contract.
       

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10. DELIVERIES
    Deliveries are to be made both in quantities and at the times specified in this Contract. Buyer accepts no liability for payment for Contract Products delivered which are in excess of the quantity specified unless such excess is agreed upon in advance by Buyer in writing. Except as otherwise provided in this Contract, no payment for extra quantities shall be made unless such extra quantities and the price therefor have been authorized in writing by Buyer. No delivery shall be made in advance of the Contract delivery date without authorization in writing by Buyer.
    

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11. DISPUTES
    
    1. Any dispute between Buyer and Seller in connection with or arising out of this Contract shall be resolved by means of the following procedures:
       1. The dispute initially shall be referred to Buyer's Vice President, Operations Support, and to Seller's senior executive with responsibility for this Contract, who shall negotiate in good faith to reach a resolution of the dispute.
       2. In the absence of a resolution being achieved within fifteen (15) days after either Buyer or Seller offers to conduct the negotiations in subparagraph (a)(i), either party may take appropriate action pursuant to subparagraph (b) or (c) hereof.
    2. Any dispute solely in connection with or arising out of this Contract not resolved in accordance with subparagraph (a), above, may be resolved by any lawful means, including litigation, which shall be initiated by either party in a court of competent jurisdiction in San Diego County, California, and both parties consent to such exclusive jurisdiction and venue.
    3. Any dispute solely in connection with or arising out of the Prime Contract or in connection with or arising out of both the Prime Contract and this Contract not resolved in accordance with subparagraph (a), above, shall be resolved by means of the following procedure:
       1. Seller may submit to Buyer a claim or request for equitable adjustment in accordance with the dispute resolution provisions of the prime Contract, copies of which will be provided upon request. Buyer may, upon Seller's request and in Buyer's sole discretion, submit such claim or request for equitable adjustment to the Government (Contracting Officer) for resolution, including a Contracting Officer's final decision in the case of a claim. Such submission, if not rejected for lack of jurisdiction, shall constitute Seller's sole remedy and shall be a bar to Seller's proceeding directly against Buyer in any forum. Seller's compliance with the dispute resolution provisions of the Prime Contract is a condition precedent to Buyer's submission of Seller's claim or request for equitable adjustment to the Government.
       2. The resolution of any claim or request for equitable adjustment by the Government (Contracting Officer) shall be conclusive and binding on Seller to the extent conclusive and binding on Buyer, subject to Seller's rights of appeal as set forth below.
       3. If Seller is dissatisfied with the final decision of the Contracting Officer with respect to any claim, Seller may appeal such final decision in accordance with the dispute resolution provisions of the Prime Contract, using Buyer's name, if such appeal does not affect Buyer's rights independent of Seller's claim. If the final decision affects Buyer's independent rights, Seller may appeal in Buyer's name only with Buyer's written consent.
       4. Requests for equitable adjustment or claims that are not submitted to the Government or which are dismissed by the Government for lack of jurisdiction may be resolved in accordance with subparagraph (b), above.
       5. Nothing said, written or done by Buyer in the course of prosecuting any submission to the Government on behalf of Seller shall be construed as an admission or declaration against Buyer's interest in any other proceedings.
    4. In resolving any dispute under this Contract, each party shall bear its own attorney's fees and costs.
    5. Until final resolution of any dispute hereunder, Seller shall diligently proceed with the performance of this Contract as directed by Buyer.
       

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12. EXPORT CONTROL COMPLIANCE
    
    1. If Seller is organized to do business in the United States, Seller shall comply with the Arms Export Control Act (22 U.S.C. 2778), the International Traffic In Arms Regulations (ITAR) (22 CFR Parts 120 to 130), the regulations issued by the Office of Foreign Assets Control (OFAC) (31 CFR Chapter V), and all other applicable laws, regulations and orders which control the imports and exports of defense articles, defense services, and technical data.
       1. The Vessel and the Contract Products are deemed to be "defense articles" under the ITAR. This Contract may require Seller to furnish "defense services" and/or export "technical data" as defined in the ITAR.
       2. Seller represents and warrants that, if it manufactures or exports defense articles or furnishes defense services, it is registered with the Office of Defense Trade Controls (DTC), Bureau of Political-Military Affairs, Department of State.
       3. Technical data and defense services furnished by Buyer to Seller are authorized for use only by Seller and may not be exported or re-exported without a license or other approval from DTC.
       4. If Seller desires to authorize Buyer to export technical data directly to, or furnish defense services to, a sub-tier supplier that is a foreign person, Seller shall include Buyer as a third party signatory on any export license or other approval prior to Buyer's exporting technical data to, or furnishing a defense service to, any such foreign person sub-tier supplier.
       5. Seller shall provide to Buyer, upon request, all licenses or other approvals obtained by Seller in compliance with the above requirements, redacted if Seller desires to prevent the disclosure of any proprietary data.
    2. If Seller is not organized to do business in the United States, Seller nevertheless shall perform this Contract in compliance with the laws, regulations and terms set forth in subparagraph (a) hereof, specifically including, but not limited to, those provision regarding the re-export of defense articles, defense services and technical data. Seller shall execute any documents required by Buyer in order for Buyer to lawfully export defense articles, defense services or technical data, or furnish defense services, to Seller in the performance of this Contract.

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13. FORCE MAJEURE
    1. Any delay or failure of performance by Seller shall not constitute default under this Contract or give rise to any claim for damages if, and to the extent, that such delay or failure is caused by the occurrence of Force Majeure. The term "Force Majeure" shall mean any event or occurrence beyond the reasonable control and without the fault or negligence of Seller, which by exercise of due diligence, Seller shall not have been able to avoid or overcome. Such events and occurrences may include, by way of example and not limitation, natural disasters, floods, windstorms, severe weather and other acts of God, fires, explosions, riots, wars, sabotage, Seller's labor problems (including strikes and slowdowns but excluding lockouts), power failures, and acts of government.
    2. Seller shall provide notice to Buyer of the occurrence of Force Majeure no later than fifteen (15) days after Seller knows or has reason to know of the existence of the Force Majeure event, and such notice shall include Seller's estimated impact on the performance or delivery schedule. No extension of the delivery or performance schedule shall be granted unless such timely notice had been given to Buyer. Seller shall provide notice to Buyer of the cessation of any reported Force Majeure event within five (5) days after such event has ceased to exist, and such notice shall include a statement of the amount of delay in the performance or delivery schedule caused by such event.
       

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14. GRATUITIES AND KICKBACKS
    No gratuities (in the form of entertainment, gifts or otherwise) or kickbacks shall be offered or given by Seller to any employee of Buyer with a view toward securing favorable treatment as a supplier or subcontractor.
    

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15. GUARANTEE
    1. Seller guarantees to Buyer, the Government, and their successors and assigns, that the Contract Work will conform to this Contract and will be free from defects in material, workmanship and design for a period of ninety (90) days after redelivery of the Vessel to the Government (the "Guarantee Period").
    2. If at any time during the Guarantee Period, any failure of the Contract Work to comply with this Contract or any weakness, deficiency, failure, breaking down, or deterioration in material or workmanship not caused by Buyer or The Government or by ordinary wear and tear ("Guarantee Defect") in the Contract Work shall appear or be discovered, Seller shall repair or replace all material and equipment necessary to correct such Guarantee Defect at Seller's expense and shall be liable for any incidental travel and/or transportation costs which may be incurred. Seller guarantees such material and equipment repairs or replacements for a further period of ninety (90) days from the date of completion of such repairs or replacements or to the end of the Guarantee Period, whichever is later.
       

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16. INDEMNITY
    Seller shall defend, indemnify and save Buyer, its affiliated companies, and each of their directors, officers, agents and employees, free and harmless from and against all claims, demands, actions, damages and liabilities of any nature, and all costs and expenses incurred in connection therewith (including, but not limited to, attorneys fees) for death or injury to any person or persons (including, but not limited to, agents and employees of Seller and its suppliers) and for damage or loss of any property (including, but not limited to, loss of use) arising directly or indirectly out of or in connection with the performance of this Contract, including, without limitation, claims, demands, actions, damages and liabilities based in whole or in part on the negligence or other theory of liability of Seller or Sellers' suppliers, and excluding only claims and liabilities based on Buyer's sole negligence or willful misconduct.
    

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17. INDEPENDENT CONTRACTOR
    In performing this Contract, Seller and its employees and agents shall operate as and have the status of an "independent contractor" and shall not act as, or be, an employee of Buyer. Seller assumes full and sole responsibility for the payment of all compensation, expenses, and benefits (including, but not limited to, workers' compensation and medical benefits) of its employees and for all state and United States income tax, unemployment insurance, social security, disability insurance, and other applicable withholdings.
    

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18. INSPECTION AND ACCEPTANCE
    
    1. The Contract Work (which term throughout this Inspection and Acceptance paragraph includes, without limitation, raw materials, components, intermediate assemblies, data, manufacturing processes and quality systems) shall be subject to inspection and testing by Buyer, the Government, and governmental authorities, classification societies or other regulatory bodies having jurisdiction over the Vessels or the Contract Work at all places and reasonable times, including, but not limited to, Seller's subcontractors' and vendors' facilities. Seller shall provide Buyer with timely advance notification of all visits and requests for visits by any such governmental authorities, classification societies or other regulatory bodies.
    2. Acceptance of delivery of the Contract Products does not alone constitute acceptance of performance under this Contract. The inspection or testing of any portion of the Contract Work does not relieve Seller from its responsibility to correct defects or non-conformities which may be discovered in Contract Work not inspected or tested or which are discovered during the Guarantee Period. If the Contract Work is not ready at the time specified by Seller for inspection or testing, Buyer may deduct from the Contract Price the additional costs to Buyer of inspection or testing. Buyer may further deduct from the Contract Price any reasonable costs to Buyer of inspection or testing when prior rejection makes re-inspection or re-test necessary.
    3. If any inspection or testing is performed on the premises of Seller or its vendors or subcontractors, Seller, without additional charge, shall provide reasonable facilities and assistance for the safety and convenience of inspectors in the performance of their duties. All inspections and tests shall be performed in such a manner as not to unduly delay the Contract Work. Buyer assumes no obligation to perform any inspection or testing for the benefit of Seller unless specifically set forth elsewhere in this Contract. The failure to inspect and accept or reject the Contract Work shall neither relieve the Seller from responsibility for performing the Contract Work in accordance with this Contract nor impose liability on Buyer. Seller shall be solely responsible for any reduction in value of samples used in any inspection or test.
    4. The Contract Work shall be accepted when, upon final inspection and testing, it is found to conform to this Contract. If any time prior to such acceptance, the Contract Work is found to be defective in material or workmanship, or otherwise does not conform to this Contract, Seller shall correct or replace such defective Contract Work at Seller's expense. Notwithstanding the foregoing, this right specifically extends to any period after acceptance of the Contract Work and prior to commencement of the Guarantee Period. Any and all such defects shall be corrected and made good promptly after notice thereof by Buyer to Seller. Buyer may reject nonconforming Contract Work with or without disposition instructions. Seller shall have a reasonable opportunity to examine the Contract Work before it is rejected. Contract Work, which has been rejected, shall not thereafter be re-tendered for acceptance until the defect or nonconformity is corrected and the corrective action taken disclosed to Buyer.
    5. If Seller fails to promptly replace or correct rejected Contract Work, Buyer may either (i) correct such Contract Work to the account of Seller, or (ii) terminate this Contract for default as provided in the Default paragraph. Seller authorized Buyer, its affiliates, agents and subcontractors, and The Government and The Government's subcontractors, to repair, reconstruct or rebuild the Contract Products using Seller's applicable intellectual property without payment of any royalty or other compensation to Seller. If Seller fails to correct or replace such Contract Work within the Contract performance or delivery schedule, Buyer may nevertheless accept performance of the re-tendered Contract Work and equitably reduce the Contract Price.
    6. Seller shall comply with the Check Point Procedures attached hereto as Attachment A and incorporated herein by this reference.
       

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19. INTERPRETATION
    1. This Contract shall be governed by and interpreted under the laws of the State of California, excluding California's conflict or choice of law rules. The rights and remedies reserved to Buyer in this Contract are cumulative with, and in addition to, all other or further rights and remedies provided in law or equity. If any one or more of the provisions of this Contract is found to be invalid, the remaining provisions shall not be affected, and this Contract shall be interpreted as if not containing such provisions. This Contract shall not be varied, supplemented, qualified or interpreted by any prior course of dealing, usage of trade or course of performance between the parties and shall be interpreted without regard to which party is deemed to have drafted this Contract. Paragraph headings are for administrative convenience only and shall not be used to interpret this Contract.
    2. In the event of any conflict or inconsistency between any provisions of this Contract, wherever appearing, such conflict or inconsistency shall be resolved by giving precedence to the following documents in the order below:
       1. the provisions on the face of the purchase order;
       2. the Terms and Conditions;
       3. the Specifications, and within the Specifications, specifications shall prevail over drawings; and
       4. other documents incorporated by reference into this Contract.
          

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20. INVOICES
    1. Seller shall submit to Buyer for the Contract Work performed an invoice conforming to the following:
       1. The Contract Work performed by Seller must be detailed for each date/item worked, and the price of such Contract Work.
       2. Seller's invoice number and Buyer's purchase order number, and line item number.
       3. If the invoice reflects any progress or milestone payments, the invoice must comply with the Buyer's "Special Provisions for Progress Payments" or "Provisions for Milestone Payments."
    2. For Contract Products, an original and two (2) copies of the invoice should be mailed no earlier than the day of shipment. The invoice shall contain itemized prices, discounts, order number, transportation description and name of carrier. The invoice shall separately list all United States, state and local taxes, duties, tariffs and similar fees imposed by any government that have been paid by Seller. The cash discount period, notwithstanding anything to the contrary on any packing list or invoice, will commence on the date Buyer receives the Contract Products in conformance with the packing list and a complete and correct invoice.
    3. Invoices incorrectly or incompletely executed will be returned for correction or completion.
       

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21. LIENS
    1. The term "Lien" means any lien, security interest, encumbrance or other right in personam or in rem against the Vessel or Contract Products enforceable in a court of competent jurisdiction.
    2. Seller waives any and all rights to any Lien, and Seller shall not permit or cause any Lien by Seller of by any of Seller's suppliers to lie or attach against the Vessel, Contract Products, or Furnished Property.
    3. Anything herein to the contrary notwithstanding, Buyer shall have the right to withhold any payment until Seller shall furnish, as requested, current written releases and waivers of all rights to claim or file Liens, properly executed by Seller and its suppliers. It is further understood and agreed that acceptance by Seller of the final payment hereunder shall constitute satisfaction in full and release of all claims or demands by Seller against Buyer arising out of or in any way connected with this Contract. If Seller fails or neglects to pay any admitted claims for labor or material, Buyer may pay same and deduct from funds due hereunder, or, if such claims are disputed, Buyer may withhold sufficient funds to pay same until such claims are adjusted. Seller shall immediately discharge or cause to be discharged any Lien which at any time is filed against property of Buyer or the Government with respect to or arising from the Contract Work. If any such Lien is not immediately discharged, Buyer may discharge or cause to be discharged same at the expense of Seller.
       

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22. NO ADVERTISING
    Seller shall not, in any manner, advertise or publish the fact that Seller has contracted to furnish the Contract Work covered by this Contract or use any trademarks or trade names of Buyer in Seller's advertising or promotional materials without Buyer's express written consent.
    

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23. NOTICES
    Notices required by this Contract to be given by Seller or Buyer to the other shall be in writing and shall be deemed effective when served personally; delivered by courier service (with proof of delivery); successfully transmitted by fax (with confirmation of receipt); or deposited in the U.S. Mail, first class postage prepaid, addressed as follows:
    
    

    To Seller:
    As indicated on face of the purchase order
    
    To Buyer:
    National Steel and Shipbuilding Company
    28th Street and Harbor Drive
    P.O. Box 85278
    San Diego, CA 92186-5278
    Attn: Manager Repair Materials
    Facsimile Number: (619) 544-8786
    
    
    or addressed to either party at such other address(es) as such party may later specify in writing.
    

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24. PACKING AND SHIPMENT
    Deliveries shall be made as specified, without additional charge for boxing, crating, carting, or storage, unless otherwise specified. Contract Products shall be suitably packaged to secure the lowest transportation costs and in accordance with the requirements of common carriers and be packaged to ensure against damage from weather or transportation. Buyer's purchase order number and symbols must be plainly marked on all packages, bills of lading and shipping orders. Packing lists shall accompany each shipment showing materials. Buyer's count or weight shall be final and conclusive on shipments not accompanied by packing lists.
    

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25. PAYMENT, TAXES AND DUTIES
    
    1. Unless otherwise provided in this Contract, payment shall be net thirty (30) days from the latest of the following: (i) Buyer's receipt of a proper invoice; (ii) scheduled delivery of the Contract Work; or (iii) actual delivery of the Contract Work. Buyer shall have a right of set-off against payments due for amounts claimed under this Contract or any other contract between the parties. Payment shall be deemed to have been made as of the date of mailing payment or electronic funds transfer.
    2. Unless otherwise specified, prices include all applicable United States, state and local taxes, duties, tariffs, and similar fees imposed by any government. Credits resulting or arising from this Contract, including, but not limited to, trade credits, export credits, or the refund of duties, taxes or fees, belong to Buyer. Seller shall provide all information necessary to permit Buyer to receive these credits.
       

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26. QUALITY
    
    1. Seller shall comply with the General Quality Assurance Specification attached hereto as Attachment B and incorporated herein by this reference.
    2. Seller shall provide and maintain a commercially reasonable quality control system that complies with the quality control requirements of this Contract. Records of all quality control inspection work by Seller shall be kept complete and available to Buyer and the Government.

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27. SCOPE OF PERFORMANCE
    1. Seller shall perform for Buyer the Contract Work described by this Contract. Seller shall provide at the location where the Contract Work is to be performed all labor, materials, equipment, tools and supervision, and Seller shall bear all items of expense, necessary for the complete and satisfactory performance of the Contract Work, except such items that Buyer, in this Contract, specifically agrees to supply or furnish for the use of Seller. Any equipment, materials, or services not specifically described in this Contract as the responsibility of Buyer, but which may be necessary to complete the Contract Work, shall be deemed to be within the scope of the Contract Work and shall be provided by Seller. Seller shall perform the Contract Work to the standards of care, skill and diligence, professional or otherwise, normally provided by a competent person when supplying goods or performing services identical or substantially similar to the Contract Work hereunder.
    2. Seller shall provide all necessary material, equipment and labor to supply the Contract Products in strict conformity with the Specifications. Seller shall make no changes in the Specifications without Buyer's written consent and shall not substitute materials for those specified without Buyer's written approval. The Contract Products and their components shall be new and of suitable grade for their intended purpose. Upon Buyer's request, Seller shall furnish full information concerning the origin, quality and condition of the components of the Contract Products.
       

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28. SURVIVAL
    If this Contract expires, is completed, or is terminated, Seller shall not be relieved of those obligations contained in the following provisions:
    
    

    Buyer's Medical Treatment	Indemnity
    Compliance with Law	Independent Contractor
    Confidentiality	Insurance
    Disputes	Interpretation
    Environmental	Payment, Taxes and Duties
    Export Control Compliance	Third Party Intellectual Property Rights
    Guarantee

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29. TERMINATION FOR CONVENIENCE
    Buyer may terminate this Contract in whole or in part for Buyer's convenience in accordance with the provisions of the incorporated FAR clause applicable to termination for the convenience of the Government, except that Seller shall submit any final termination settlement proposal to Buyer within two (2) months from the effective date of termination.
    

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30. THIRD PARTY INTELLECTUAL PROPERTY RIGHTS
    Seller represents and warrants that it has read and understood the Specifications, and based on such reading and its past experience and superior knowledge with respect to Contract Products, Seller warrants to Buyer and its successors in interest that the manufacture, sale or use of the Contract Products, whether manufactured in accordance with the Specification or otherwise, does not and will not infringe or interfere with any intellectual property rights(s) of any third party, including, without limitation, patent, trademark, copyright, trade secret, industrial design or other proprietary rights. Seller shall defend, indemnify and hold Buyer and its employees, agents and successors in interest free and harmless from and against any and all claims, demands, costs and liabilities, including legal expenses, arising out of any such infringement, interference or claim of infringement or interference.
    

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31. TIME OF PERFORMANCE
    Seller shall perform the Contract Work and/or deliver the Contract Products in a diligent manner and in no event later than the time(s) specified on the face of the purchase order. Time of performance specified in this Contract is of the essence of this Contract. If at any time it reasonably appears to Buyer that Seller is failing to make progress, such that performance may not be completed in accordance with this Contract, Seller shall, within seven (7) days of a written request by Buyer, assure timely performance and represent to Buyer in writing Seller's best completion date. If the represented completion date is not within the original time for completion of performance of this Contract, Buyer may terminate this Contract for default in accordance with the Default paragraph. Buyer shall further have the right, but not the duty, and without waiver of any other rights and remedies which it may have, to extend the time for completion of performance. The new date for completion of performance shall be final, of the essence of this Contract, and subject to further change only in accordance with this Contract.
    

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32. TITLE AND RISK OF LOSS
    1. Title to the Contract Products shall pass to Buyer upon delivery of the Contract Products in accordance with this Contract, except as may be otherwise expressly provided for herein. A rejection or other refusal by Buyer to receive or retain the Contract Products, whether or not justified, or a justified revocation of acceptance, revests title to the Contract Products in Seller.
    2. Unless otherwise agreed by the parties, risk of loss, destruction or damage to the Contract Products ("Risk of Loss") shall be as determined by the shipping terms set forth on the face of the purchase order. To the extent not so determined by said shipping terms:
       1. Seller shall be responsible for Risk of Loss until the Contract products are delivered at the designated delivery point, regardless of the point of inspection;
       2. after delivery to Buyer at the designated delivery point, and prior to Buyer accepting or giving notice of rejection, Seller shall remain solely responsible for Risk of Loss until Buyer accepts or rejects the Contract Products, unless such loss, destruction or damage results from the gross negligence of Buyer; and
       3. after rejection, Seller shall remain solely liable for Risk of Loss, unless such loss, destruction or damage results from the gross negligence of Buyer.
          

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33. WAIVER
    The failure of Buyer to insist on strict performance of any provision of this Contract shall not be construed as a waiver of any such provision in any later circumstance, and such failure shall not affect the right to thereafter exercise any right or remedy under such provision or any other provision of this Contract or at law.
    

PART B. PERFORMANCE AT BUYER'S FACILITIES AND UPON VESSELS

In the event that Seller, its employees, agents or suppliers (including delivery persons), enters any facility owned, leased or operated by Buyer, including any Vessel, Seller shall comply with the following additional terms and conditions.

1. BUYER'S MEDICAL TREATMENT
   Buyer shall have no obligation to furnish medical treatment to Seller's employees while such employees may be working in Buyer's facilities. In the event Buyer's Medical Department furnishes medical treatment to any such employee, Seller shall defend, indemnify and hold harmless Buyer, its affiliated companies, and the directors, officers and employees of each of them, from and against any and all claims, demands or causes of action, by Seller's employees or their representatives, heirs or assigns for costs or damages (including without limitation punitive damages and reasonable attorney fees) arising out of or in connected with medical treatment furnished by Buyer, including claims based upon the negligence of Buyer, and excluding only claims based on Buyer's sole negligence or willful misconduct.
   

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2. CLEAN UP OF WORK SITE
   During the performance of this Contract, and upon completion of the Contract Work or earlier termination of the Contract Work, Seller shall remove all debris, garbage or other waste material, including excess materials, scrap and equipment used or generated in performance of this Contract from Buyer's facilities. Seller shall be liable for and shall pay to Buyer, upon demand, all costs of removal for materials or equipment not so removed.
   

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3. CONTROL OVER WEEKEND AND HOLIDAY PERFORMANCE
   Buyer reserves the right to declare by timely written notice periods of "no weekend work" or "no holiday work" at Buyer's facilities. Seller shall ensure that no Contract Work is performed in Buyer's facilities and that all of Seller's and Seller's supplier's employees are kept out of Buyer's facilities on all affected weekends and holidays during such declared periods of "no weekend work" and "no holiday work." Seller shall not be responsible for any performance delays or claims for damages caused by such declared periods of "no weekend work" and "no holiday work."

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4. ENVIRONMENTAL
   1. Seller shall comply with Buyer's environmental policies and procedures and with all United States, state and local laws and regulations regarding the use of any hazardous substances, and shall be responsible for all hazardous waste (both as defined by United States and California law) generated by Seller's employees and subcontractors during the performance of this Contract. Seller shall inform Buyer of all hazardous waste generated at Buyer's facilities and shall cooperate with Buyer in disposing of such waste as directed by Buyer. Seller shall bring to the immediate notice of Buyer any risk to the environment which Seller believes has not been adequately assessed and is not under adequate control, so that Buyer can take immediate appropriate action to prevent potential environmental harm or other losses. Any failure to perform these obligations shall be a default under this Contract. Seller shall be solely responsible for the consequences of its failure to perform the foregoing obligations and shall defend, indemnify and hold Buyer harmless from any and all losses, costs and expenses, including attorneys fees, arising from Seller's failure to perform its obligations hereunder, negligent or otherwise.
   2. Seller's environmental management system shall incorporate measures which reasonably demonstrate that its employees are competent to perform their tasks with due regard for the need to protect the environment and ensure that, in the performance of this Contract, hazards to the environment have been eliminated where possible or are being controlled through formal planning methods and procedures.
   3. If Seller causes, to any extent, and fails to report as required by Buyer's procedures, the actual or potential release, spill, discharge or other loss of control of a hazardous substance or hazardous waste (an "Incident"), and Buyer's On-Scene Emergency Coordinator responds to said Incident, Buyer will incur response costs which are extremely difficult and impractical to ascertain. Buyer and Seller agree that the sum set forth herein represent the minimum amount of cost and expenses incurred by Buyer to respond to each such Incident. Accordingly, Seller agrees to pay to Buyer for Buyer's response to each such Incident, liquidated damages in the amount of one thousand dollars ($1,000.00). Such payment shall not relieve Seller of the responsibility to pay Buyer the actual costs of remediation resulting from the Incident, and shall not impair or waive Buyer's indemnification rights as set forth elsewhere in this Contract. Buyer shall have the right to reduce any payments to Seller by the amount of any sums assessed hereunder.
      

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5. EXPORT CONTROL COOPERATION
   Seller shall inform Buyer in writing of the name and country of citizenship (or countries, in the case of dual citizenship) of each foreign person employee of Seller and Seller's suppliers at all tiers that Seller desires to participate in the performance of this Contract at Buyer's facilities. Seller shall cooperate fully with Buyer with respect to any application made by Buyer for a license or other approval under the ITAR and shall execute any documentation that may be required by Buyer with respect to any such application. Seller's and Seller's suppliers' foreign person employees shall not participate in the performance of this Contract at Buyer's facilities without Buyer's consent.
   

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6. INSURANCE
   Without prejudice to Buyer's rights and Seller's obligations under the Indemnity paragraph of this Contract, Seller shall keep and maintain in effect, at its sole cost and expense, the following policies of insurance:
   1. Commercial general liability insurance with coverage to include premises operations, products liability, completed operations hazard, contractual liability (specifically including the risks assumed hereunder) and independent contractors. Combined bodily injury and property damage coverage shall have minimum limits of liability of $2,000,000 per occurrence and $2,000,000 in the aggregate.
   2. Comprehensive automobile liability insurance with coverage to include owned, hired and non-owned vehicles. Combined bodily injury and property damage coverage shall have a minimum liability limitation of $2,000,000 per occurrence.
   3. Workers' Compensation and Longshore and Harbor Workers' Compensation Act insurance with limits conforming to the statutory requirements of the State of California and the United States of America, respectively. If Seller's employees are assigned aboard the Vessel for any reason, Jones Act coverage with minimum limits of liability of $2,000,000 per occurrence and $2,000,000 in the aggregate.
      
      Each such policy shall be underwritten by an insurance company satisfactory to Buyer; shall provide that it is primary insurance to and noncontributing with any other insurance carried by Buyer; and, shall obligate the insurer to give Buyer not less than thirty (30) days prior written notice in the event of policy cancellation or any material change therein. Certificates evidencing such policies, in a form satisfactory to Buyer, shall be delivered to NASSCO upon issuance of the purchase order and renewals thereof sent to Buyer at least ten (10) days prior to the expiration of the respective policy terms. The policies referred to in subparagraphs (a) and (b) shall be endorsed to name Buyer as an "additional insured," and the certificates provided to Buyer shall reflect such endorsement. All policies shall contain a waiver of subrogation against Buyer.
      
      Notices regarding insurance policies shall be provided in writing and shall be deemed delivered five (5) days after deposit in the U.S. Mail, postage prepaid, certified mail and return receipt requested, when addressed to National Steel and Shipbuilding Company, Attention: Risk Manager (M/S 20-E), P.O. Box 85278, San Diego CA 92186-5278.
      
      The insurance coverage limits stated above are minimum insurance coverage requirements, not limits of Seller's liability. Notwithstanding the above-required insurance policies, Seller shall be obligated for the full and total amount of any damage, injury, expense or loss.
      

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7. SAFETY
   1. The safe conduct of all persons employed by Seller or its subcontractors or vendors shall be the sole responsibility of Seller. Seller shall take all reasonable precautions in the performance of the Contract Work to protect the health and safety of such employees and others and to minimize danger from all hazards to life and property. Seller shall comply with all applicable United States, state, and local health, safety and fire protection laws and regulations, including, but not limited to, the applicable portions of the Occupational Safety and Health Standards 29 CFR 1910, Occupational Safety and Health Standards for Shipyard Employment 29 CFR 1915, and Cal OSHA Title 8 Cal Code Regulations. Seller shall also comply with Buyer's safety policies and procedures. Seller is solely responsible for informing itself of said laws, regulations, policies and procedures. Buyer's Safety Manual and other materials are available at Buyer's Safety Department. In any event where the aforesaid laws, regulations, policies and procedures are in conflict, Seller shall comply with the item providing the greatest safety protection. Any failure by Seller or any of its suppliers to comply with any such safety policies, procedures, laws or regulations shall constitute a default. Under no circumstance shall compliance with Buyer's safety policies and procedures alone be considered complete satisfaction of the requirements of this subparagraph.
   2. Seller's occupational health and safety management system shall incorporate measures which reasonably demonstrate that its employees are competent to perform their tasks safely and ensure that, in the performance of this Contract, hazards to health and safety have been eliminated where possible or are being controlled through formal planning methods and procedures.
   3. Seller shall complete the following prior to commencement of performance of the Contract Work:
      1. Provide to Buyer's Safety Department the name, telephone number and title or position of the person who has the authority to correct any safety violations by Seller during the performance of the Contract Work ("Seller's Safety Representative").
      2. Seller's Safety Representative, together with equivalent representatives of Seller's suppliers who are expected to perform at Buyer's facilities, shall meet with Buyer's Safety Manager or designee to review applicable safety policies and procedures.
      3. Provide to Buyer's Safety Department a copy of Seller's written safety policies and procedures.
      4. Provide to Buyer's Safety Department a copy of all Material Safety Data Sheets ("MSDS") for all chemical compounds that Seller anticipates using in performing Contract Work at Buyer's facilities.
      5. Cause each of Seller's employees who will be in Buyer's facilities to complete a "Personal Protective Equipment" statement acknowledging their safety responsibilities.
   4. Seller represents and warrants that all equipment used by Seller to perform any Contract Work at Buyer's facilities conforms to all federal and state safety standards.
   5. Seller represents and warrants that Seller's employees and suppliers' employees performing Contract Work at Buyer's facilities are property trained in all Federal, State, and local health, safety and fire protection laws and regulations and Buyer's safety policies and procedures, applicable to the Contract Work.
   6. Seller shall report all recordable occupational injuries or illnesses (as defined in 29 CFR 1904.12(c)) occurring at Buyer's facilities during performance of the Contract Work in accordance with the following procedures:
      1. Seller shall make an initial report to Buyer's Safety Department within four hours of the incident. This report shall consist of the name of the injured person, place of occurrence, nature of the injury, and a brief description of the incident. This report can be made orally by telephone call to (619) 544-8444 or by personal visit to Buyer's Safety Department.
      2. Seller shall submit a written final report in the form of a formal accident investigation report, within three (3) working days of the incident, using NASSCO Form for Supervisor's Injury Analysis available at Buyer's Safety Department or any other form which includes all necessary information. This report shall be delivered to Buyer's Safety Department in person or by mail at NASSCO Mail Stop 27, P.O. Box 85278, San Diego, CA 92186-5278.
   7. Seller shall immediately notify Buyer's Safety Department, in writing, upon receiving notice of any inspection from either United States OSHA or California OSHA representatives, of their work area at Buyer's facilities. In the event of such an inspection, Seller shall permit Buyer's personnel to be present at any opening conference, the inspection and any closing conference, and Seller shall provide Buyer with copies of all correspondence, including citations, received from OSHA or Cal OSHA.
   8. If, in Buyer's sole opinion, Seller fails to comply with this Safety paragraph, Buyer, may without prejudice to any other legal or contractual rights of Buyer, issue an order stopping all or part of the Contract Work. Seller shall have no claim for extension of time or for compensation or damages by reason of or in connection with such work stoppage.
   9. Seller shall remove from Buyer's facilities any of Seller's or Seller's suppliers' employees immediately upon Buyer's request based upon (in Buyer's sole opinion) violation of Buyer's safety policies or procedures, or violation of applicable United States, state or local safety laws or regulations.
      

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8. SECURITY
   Seller shall comply with Buyer's security policies and procedures regarding personnel administration, vehicle operations, and general security practices. Seller shall comply with the Access Control Procedures attached hereto as Attachment C and incorporated herein by this reference. Willful or repeated negligent noncompliance by Seller or any of its subcontractors or vendors with any such security policies or procedures shall constitute a default.
   

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9. SUBSTANCE ABUSE PREVENTION
   1. Sellers who are subcontractors providing only services or services in conjunction with Contract Products shall require, in writing, that each employee assigned to work at Buyer's facilities be drug tested prior to that employee's starting work at said facilities and be retested when the employee has not worked at Buyer's facilities for a period of ninety (90) days or longer. Drug tests shall conform to at least the same standards as provided by the current version of Buyer's Human Resources Policy Manual, Section IV, Industrial Health/Safety, Subsection IV-1, NASSCO Substance Abuse Program and Work Rule, Attachment 1, Poison Lab Drug Screen, a copy of which will be provided to Seller upon request.
   2. Upon Buyer's request, Seller shall provide the documents needed to verify Seller's compliance with subparagraph (a), above, to include a copy of Seller's written employee drug testing requirement and a listing of the employees assigned to work at Buyer's facilities who have been properly tested under these provisions.
      

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10. USE OF BUYER'S EQUIPMENT
    Seller shall not use, or permit any third party to use, any or Buyer's equipment, tools, devices, apparatus or property ("Buyer's Equipment") without Buyer's express written consent. If Buyer so consents, Seller shall ensure that only qualified, properly trained persons use Buyer's Equipment and that such persons obey Buyer's applicable use procedures and requirements and applicable United States, state and local laws and regulations. If Buyer so consents, Buyer's Equipment is provided "as-is," with no warranty, express or implied, as to its merchantability, fitness for any particular purpose, current condition, or prior maintenance history. Seller is responsible for all risk of loss or damage to Buyer's Equipment used by Seller.
    

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11. WAGES AND BENEFITS
    1. Sellers who are subcontractors providing only services or services in conjunction with Contract Products shall pay all employees, who participate in the performance of this Contract at Buyer's facilities, and who perform work that Buyer's bargaining unit employees previously regularly have performed, wages and fringe benefits, the combined cost of which shall be at least equal to the combined costs of Buyer's current wages and fringe benefits for the applicable trade classification. Further, Seller shall provide Buyer with current and certified payroll data reflecting wage rates and fringe benefits actually paid by such Sellers to such employees for the first full pay period of work performed pursuant to this Contract and periodically thereafter as requested by Buyer.
    2. Sellers who are subcontractors providing only services or services in conjunction with Contract Products shall be liable, and shall defend and indemnify Buyer, for any amounts recovered from Buyer by any labor union representing Buyer's bargaining unit employees as a result of any such Sellers' breach of this Wages and Benefits paragraph.
       

PART C: PRIME CONTRACT CLAUSES

The following clauses are flowed down pursuant to the requirements of the Prime Contract.

1. ACCESS TO PROPRIETARY DATA OR COMPUTER SOFTWARE (NAVSEA) (JUN 1994)
   
   1. Performance under this Contract may require that Seller have access to technical data, computer software, or other sensitive data of another party who asserts that such data or software is proprietary. If access to such data or software is required or to be provided, Seller shall enter into a written agreement with such party prior to gaining access to such data or software. The agreement shall address, at a minimum, (i) access to, and use of, the proprietary data or software exclusively for the purposes of performance of the work required by this Contract, and (ii) safeguards to protect such data or software from unauthorized use or disclosure for so long as the data or software remains proprietary. In addition, the agreement shall not impose any limitation upon the Government or Buyer or their employees with respect to such data or software. A copy of the executed agreement shall be provided to the Government Contracting Officer via Buyer. Buyer may unilaterally modify this Contract to list those third parties with which Seller has agreement(s).
   2. Seller agrees to: (i) indoctrinate its personnel who will have access to the data or software as to the restrictions under which access is granted; (ii) not disclose the data or software to another party or other Seller personnel except as authorized by the Government Contracting Officer; (iii) not engage in any other action, venture, or employment wherein this information will be used, other than under this Contract, in any manner inconsistent with the spirit and intent of this requirement; (iv) not disclose the data or software to any other party, including, but not limited to, joint venturer, affiliate, successor, or assign of Seller; and (v) reproduce the restrictive stamp, marking, or legend on each use of the data or software whether in whole or in part.
   3. The restrictions on use and disclosure of the data and software described above also apply to such information received from the Government or Buyer through any means to which Seller has access in the performance of this Contract that contains proprietary or other restrictive markings.
   4. Seller agrees that it will promptly notify the Government Contracting Officer via Buyer of any attempt by an individual, company, or Government or Buyer representative not directly involved in the effort to be performed under this Contract to gain access to such proprietary information. Such notification shall include the name and organization of the individual, company, or Government or Buyer representative seeking access to such information.
   5. Seller shall include this requirement in subcontracts of any tier that involve access to information covered by subparagraph (a).
   6. Compliance with this requirement is a material requirement of this Contract.

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2. COMPUTER SOFTWARE AND/OR COMPUTER DATE BASE(S) DELIVERED TO AND/OR RECEIVED FROM THE GOVERNMENT OR BUYER (NAVSEA) (APR 2004)
   
   1. Seller agrees to test for viruses all computer software and/or computer databases, as defined in DFARS 252.227-7014, Rights In Noncommercial Computer Software and Noncommercial Computer Software Documentation, in Part D2 below, before delivery of that computer software or computer database in whatever media and on whatever system the software is delivered. Seller warrants that any such computer software and/or computer database will be free of viruses when delivered.
   2. Seller agrees to test any computer software and/or computer database(s) received from the Government or Buyer for viruses prior to use under this Contract.
   3. Unless otherwise agreed in writing, any license agreement governing the use of any computer software to be delivered as a result of this Contract must be paid-up and perpetual, or so nearly perpetual as to allow the use of the computer software or computer data base with the equipment for which it is obtained, or any replacement equipment, for so long as such equipment is used. Otherwise, the computer software or computer database does not meet the minimum functional requirements of this Contract. In the event that there is any routine to disable the computer software or computer database after the software is developed for or delivered to the Government or Buyer, that routine shall not disable the computer software or computer database until at least twenty-five (25) calendar years after the delivery date of the affected computer software or computer database to the Government or Buyer.
   4. No copy protection devices or systems shall be used in any computer software or computer database delivered under this Contract to restrict or limit the Government or Buyer from making copies. This does not prohibit license agreements from specifying the maximum amount of copies that can be made.
   5. Delivery by Seller to the Government or Buyer of certain technical data and other data is now frequently required in digital form rather than as hard copy. Such delivery may cause confusion between data rights and computer software rights. It is agreed that, to the extent that any such data is computer software by virtue of its delivery in digital form, the Government and Buyer will be licensed to use that digital-form with exactly the same rights and limitations as if the data had been delivered as hard copy.
   6. Any limited rights legends or other allowed legends placed by Seller on technical data or other data delivered in digital form shall be digitally included on the same media as the digital-form data and must be associated with the corresponding digital-form technical data to which the legends apply to the extent possible. Such legends shall also be placed in human readable form on a visible surface of the media carrying the digital-form data as delivered, to the extent possible.

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3. CONDITION FOUND REPORT
   
   1. Seller shall identify needed repairs and recommend corrective action during Contract performance for those deficiencies discovered which are not covered by the Specifications. Needed repairs and corrective action reported will be submitted to Buyer in the form of a Condition Found Report ("CFR").
   2. CFR's, cost estimates, and supporting data shall be submitted via electronic means, in an electronic format compatible with standard desk top software programs, within three (3) working days of identification of the requirement. As a minimum, the CFR will include the following:
      1. Identify contract number, ship and hull number
      2. Serialized by CFR number
      3. Identification of the applicable Work Item number
      4. Date requirement was discovered
      5. Description of the work requirement
      6. Specific location of the work
      7. Recommendation for corrective action
      8. Recommendation for the appropriate/best time to accomplish the work (i.e. during current availability with or without schedule change, future CNO or Continuous Maintenance Availability. Provide supporting rational for the recommendation, such as cost efficiencies, availability of work force, availability of material, premium expenditures, etc.
      9. Cost and time estimates, and the time frame for which it is valid, including:
         1. Class "C" cost estimate. If the work requirement cannot be estimated within three (3) working days, provide a class "F" estimate (+ - 40%) identifying any potential impact which may affect the current schedule. The class "F" estimate will also contain the date on which a class ³C² estimates will be provided.
         2. Estimated Premium/Acceleration Costs, including premium costs for; material, subcontractors, man-hours, rework and any additional costs to on going work resulting from inclusion of the CFR work requirement.
      10. Identification of related changes, if any, to the internal milestones and production and contract completion dates. If none, so state.

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4. EXCLUSION OF MERCURY (NAVSEA) (MAY 1998)
   Mercury or mercury-containing compounds shall not intentionally be added to or come in direct contact with hardware or supplies furnished under this Contract.
   

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5. GOVERNMENT-INDUSTRY DATA EXCHANGE PROGRAM (NAVSEA 5252.227-9113) (AUG 1997)
   If the Contract Price exceeds $500,000, Seller shall participate in the appropriate interchange of the Government-Industry Data Exchange Program (GIDEP) in accordance with NAVSEA S0300-BU-GYD-010 dated November 1994. Data entered is retained by the program and provided to qualified participants. Compliance with this requirement shall not relieve Seller from complying with any other requirement of this Contract. GIDEP materials, software and information are available without charge from:

   GIDEP Operations Center
   P.O. Box 8000
   Corona CA 91718-8000
   Phone: 909) 273-4677
   FAX: (909) 273-5200
   Internet: http://www.gidep.corona.navy.mil.

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6. NON SMOKING POLICY (JAN 2005)
   In light of the Navy's policy regarding smoke-free facilities, the entire vessel, topside and below decks, is to be considered a "No Smoking Area" unless otherwise indicated by shipboard policy.
   

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7. ORGANIZATIONAL CONFLICT OF INTEREST (NAVSEA) (JUL 2000)
   
   1. "Organizational Conflict of Interest" means that because of other activities or relationships with other persons, a person is unable or potentially unable to render impartial assistance or advice to the Government, or the person's objectivity in performing the Contract Work is or might be otherwise impaired, or a person has an unfair competitive advantage. "Person" as used herein includes corporations, partnerships, joint ventures, and other business enterprises.
   2. Seller warrants that, to the best of its knowledge and belief, and except as otherwise set forth in this Contract, Seller does not have any organizational conflict of interest(s) as defined in paragraph (a).
   3. It is recognized that the Contract Work may create a potential organizational conflict of interest on the instant Contract or on a future acquisition. In order to avoid this potential conflict of interest, and at the same time to avoid prejudicing the best interest of the Government, the right of Seller to participate in future procurement of equipment and/or services that are the subject of any work under this Contract shall be limited as described below in accordance with the requirements of FAR 9.5.
   4. 1. Seller agrees that it shall not release, disclose, or use in any way that would permit or result in disclosure to any party outside the Government any information provided to Seller by the Government during or as a result of performance of this Contract. Such information includes, but is not limited to, information submitted to the Government on a confidential basis by other persons. Further, the prohibition against release of Government provided information extends to cover such information whether or not in its original form, e.g., where the information has been included in Seller generated work or where it is discernible from materials incorporating or based upon such information. This prohibition shall not expire after a given period of time.
      2. Seller agrees that it shall not release, disclose, or use in any way that would permit or result in disclosure to any party outside the Government any information generated or derived during or as a result of performance of this Contract. This prohibition shall expire after a period of three (3) years after completion of performance of this Contract.
      3. The prohibitions contained in subparagraphs (d)(i) and (d)(ii) shall apply with equal force to any affiliate of Seller, any subcontractor, consultant, or employee of Seller, any joint venture involving Seller, any entity into or with which it may merge or affiliate, or any successor or assign of Seller. The terms of paragraph (f) of this Special Contract Requirement relating to notification shall apply to any release of information in contravention of this paragraph (d).
   5. Seller further agrees that, during the performance of this Contract and for a period of three (3) years after completion of performance of this contract, Seller, any affiliate of Seller, any subcontractor, consultant, or employee of Seller, any joint venture involving Seller, any entity into or with which it may subsequently merge or affiliate, or any other successor or assign of Seller, shall not furnish to the Government, either as a subcontractor or a consultant to a prime contractor or subcontractor, any system, component or services which is the subject of the work to be performed under this Contract. This exclusion does not apply to any recompetition for those systems, components or services furnished pursuant to this Contract. As provided in FAR 9.505-2, if the Government procures the system, component, or services on the basis of work statements growing out of the effort performed under this Contract, from a source other than Seller, subcontractor, affiliate, or assign of either, during the course of performance of this Contract or before the three-year period following completion of this Contract has lapsed, Seller may, with the authorization of the cognizant Government Contracting Officer, participate in a subsequent procurement for the same system, component, or service. In other words, Seller may be authorized to compete for procurement(s) for systems, components or services subsequent to an intervening procurement.
   6. Seller agrees that, if after award, it discovers an actual or potential organizational conflict of interest, it shall make immediate and full disclosure in writing to the Government Contracting Officer via Buyer. The notification shall include a description of the actual or potential organizational conflict of interest, a description of the action which Seller has taken or proposes to take to avoid, mitigate, or neutralize the conflict, and any other relevant information that would assist the Government Contracting Officer in making a determination on this matter. Notwithstanding this notification, the Government and Buyer may terminate this Contract for the convenience of the Government if determined to be in the best interest of the Government.
   7. Notwithstanding subparagraph (f) above, if Seller was aware, or should have been aware, of an organizational conflict of interest prior to the award of this Contract or becomes, or should become, aware of an organizational conflict of interest after award of this Contract and does not make an immediate and full disclosure in writing to the Government Contracting Officer via Buyer, the Government and Buyer may terminate this Contract for default.
   8. If Seller takes any action prohibited by this requirement or fails to take action required by this requirement, the Government and Buyer may terminate this Contract for default.
   9. The Government Contracting Officer's decision as to the existence or nonexistence of an actual or potential organizational conflict of interest shall be final.
   10. Nothing in this requirement is intended to prohibit or preclude Seller from marketing or selling to the Government its product lines in existence on the effective date of this Contract; nor, shall this requirement preclude Seller from participating in any research and development or delivering any design development model or prototype of any such equipment. Additionally, sale of catalog or standard commercial items are exempt from this requirement.
   11. Seller shall promptly notify the Government Contracting Officer via Buyer, in writing, if it has been tasked to evaluate or advise the Government concerning its own products or activities or those of a competitor in order to ensure proper safeguards exist to guarantee objectivity and to protect the Government's interest.
   12. Seller shall include this requirement in subcontracts of any tier which involve access to information or situations/conditions covered by the preceding paragraphs.
   13. The rights and remedies described herein shall not be exclusive and are in addition to other rights and remedies provided by law or elsewhere included in this Contract.
   14. Compliance with this requirement is a material requirement of this Contract.

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8. PROTECTION OF THE VESSEL (NAVSEA) (SEP 1990)
   Seller shall exercise reasonable care, as agreed upon with Buyer, to protect the Vessel from fire and shall maintain a system of inspection over the activities of its welders, burners, riveters, painters, pipe fitters, and similar workers, and of its suppliers, particularly where such activities are undertaken in the vicinity of the Vessel's magazines, fuel oil tanks, or storage rooms containing inflammable materials. All ammunition, fuel oil, motor fuels, and cleaning fluids shall have been off-loaded and the tanks cleaned, except as may be mutually agreed between Buyer and Seller prior to performance of any Contract Work by Seller. All tanks under alteration or repair shall be cleaned, washed, and steamed out or otherwise made safe to the extent necessary, and Seller shall furnish Buyer with a "Gas Chemists' Certificate" before any hot work is performed.
   

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9. QUALIFICATIONS OF CONTRACTOR NONDESTRUCTIVE TESTING (NDT) PERSONNEL (NAVSEA) (APR 2004)
   1. Seller and any Nondestructive Testing (NDT) subcontractor shall utilize for the performance of required NDT, only Level I, II and III personnel currently certified inn accordance with NAVSEA Technical Publication T9074-AS-GIB-010/271, ACN Notice 1 of 16 February 1999. Documentation pertaining to the qualification and certification of NDT personnel shall be made available to Buyer for review upon request.
   2. These requirements do not apply with respect to nuclear propulsion plant systems and other matters under the technical cognizance of NAVSEA (SEA 08). Because of health and safety considerations, such matters will continue to be handled by NAVSES (SEA 08).
      

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10. SMALL BUSINESS SUBCONTRACTING BY LARGE BUSINESS SELLLERS
    
    1. The Prime Contract requires that Buyer subcontract to small businesses, either directly or indirectly, a percentage of direct costs related to Prime Contract production work. This requirement may be met at any subcontracting tier.
    2. To facilitate Buyer's meeting the requirement of subparagraph (a), above, large business Sellers shall identify to Buyer the number of dollars that Seller pays to small businesses for services or supplies, and in each case, Seller shall identify any special category of the small business, i.e., veteran-owned, service-disabled veteran-owned, disadvantaged, women-owned, or HUBZone small business.
    3. Buyer cannot "tier" profit or fee on any major subcontract (purchase order). "Tiering" is the adding of profit or fee to Seller's profit or fee. A "major subcontract" is a subcontract (purchase order) held by a large business Seller. There is one exception to this tiering prohibition, and that is when a large business Seller is awarded a fixed-price subcontract (purchase order) via competition. Therefore, large business Sellers shall identify the amount of profit or fee that is included in their proposals to Buyer if the subcontract (purchase order) was not competitively bid.

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11. TRAVEL COSTS (NAVSEA) (MAR 2001)
    1. Seller shall not charge, and Buyer shall not pay, as an allowable cost under this Contract, any man-hour costs (whether straight-time or overtime) for Seller personnel or Seller’s subcontractor personnel traveling to or from work sites, including travel to work sites other than Seller’s facility for performance of this Contract.
    2. Workers being paid under this Contract, as Seller personnel or Seller’s subcontractor personnel, shall complete a full shift at the worksite, and no compensation will be paid for travel time before or after the shift.
    3. This requirement pertains only to payments for travel time before and after these workers’ regular shifts and does not apply to legitimate travel costs incurred during normal working hours, provided that those costs are otherwise reasonable, allocable and allowable. This requirement does not apply to manufacturer’s representatives of Original Equipment Manufacturer (OEM) representatives when specifically required by Buyer or Government work specifications.
    4.  
       1. Additionally, Seller shall not charge, and Buyer shall not pay, any transportation costs under this Contract associated with transporting Seller or Seller’s subcontractor personnel between Seller’s facility (or Seller’s subcontractor’s facility) and any other work site to perform scheduled ship availability or inter-availability work. Transportation costs include, but are not limited to, bus fare, carfare, train fare, or boat fare, paid by the work force or paid by Seller on behalf of the work force.
       2. Paragraph (d)(i) does not preclude payments to Seller for allowable transportation costs incurred, such as those for bus and driver, to transport workers to a Government facility or other directed Government work site for performance of scheduled ship availability or inter-availability work. Transportation costs incurred in the replacement of personnel when such replacement is accomplished for Seller’s or employee’s convenience shall not be reimbursed by Buyer.
          

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12. USE OF BLACK OXIDE COATED THREADED FASTENERS (BOCTFs) (JAN 2005)
    Due to safety concerns, use of BOCTFs is not authorized when installing or replacing threaded fasteners in the accomplishment of any work required by any work item in this Contract.

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13. USE OF POWER GRINDERS AND SAWS (NAVSEA) (SEP 1990)
    1. All portable pneumatic grinders or reciprocating saws that are to be used on reactor plant material or equipment or used within the reactor compartment shall be equipped with safety lock off devices. In addition, Seller agrees that all portable pneumatic grinders or reciprocating saws that it purchases or acquires subsequent to the date of this Contract, for use in performance of this Contract in Naval workplace areas shall be equipped with safety lock off devices.
    2. A "safety lock off device" is any operating control which requires positive action by the operator before the tool can be turned on. The lock off device shall automatically and positively lock the throttle in the off position when the throttle is released. Two consecutive operations by the same hand shall be required first to disengage the lock off device and then to turn on the throttle. The lock off device shall be integral with the tool, shall not adversely affect the safety or operating characteristics of the tool, and shall not be easily removable.
    3. Devices, such as a "dead man control" or "quick disconnect", which do not automatically and positively lock the throttle in the off position when the throttle is released, are not safety lock off devices.

PART D: INCORPORATED FAR AND DFARS CLAUSES

The following clauses are flowed down pursuant to the requirements of the Prime Contract.

The following clauses of the FAR and DFARS are hereby incorporated into this Contract by reference as if given in full text, subject to the following definitions. The full text of FAR and DFARS clauses may be accessed electronically at the following internet websites:

FAR http://www.arnet.gov/far

DFARS http://www.acq.osd.mil/dpap/dars/dfars/index.htm

1. DEFINITIONS
   The following terms will have the meanings indicated in each of the following FAR and DFARS clauses, unless the context indicates otherwise:
   1. "Contract" means this Contract
   2. "Contractor" means Seller
   3. "Contracting Officer" means Buyer
   4. "Government" means Buyer
   5. "Subcontractor" means Seller's subcontractors
      
      

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2. DFARS CLAUSES

   252.203-7001 Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies (DEC 2004)
   
   252.204-7000 Disclosure of Information (DEC 1991)
   
   252.209-7000 Acquisition from Subcontractors Subject to On-Site Inspection Under the Intermediate-Range Nuclear Forces (INF) Treaty (NOV 1995)
   
   252.209-7004 Subcontracting With Firms that Are Owned or Controlled by the Government of a Terrorist Country (MAR 1998)
   
   252.211-7000 Acquisition Streamlining (DEC 1991)
   
   252.211-7003 Item Identification and Valuation (JAN 2004)
   
   252.215-7000Pricing Adjustments (Dec 1991)
   
   252.219-7003 Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan (DoD Contracts) (APR 1996)
   
   252.223-7006 Prohibition on Storage and Disposal of Toxic and Hazardous Materials (APR 1993)
   
   252.225-7001 Buy American Act and Balance of Payments Program (APR 2003)
   
   252.225-7002 Qualifying Country Sources as Subcontractors (APR 2003)
   
   252.225-7012 Preference for Certain Domestic Commodities (JUN 2004)
   
   252.225-7014 Preference for Domestic Specialty Metals (APR 2003) and Alternate I (APR 2003)
   
   252.225-7015 Preference for Domestic Hand or Measuring Tools (APR 2003)
   
   252.225-7016 Restriction on Acquisition of Ball and Roller Bearings (MAY 2004)
   
   252.225-7019 Restriction on Acquisition of Foreign Anchor and Mooring Chain (APR 2003)
   
   252.225-7022 Restrictions on Acquisition of Polyacrylonitile (PAN) Based Carbon Fiber (APR 2003)
   
   252.225-7025 Restriction on Acquisition of Forgings (APR 2003)
   
   252.225-7030 Restriction on Acquisition of Carbon, Alloy, and Armor Steel Plate (APR 2003)
   
   252.226-7001 Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns (SEP 2004)
   
   252.227-7013Rights in Technical Data - Noncommercial Items (NOV 1995)
   
   252.227-7014Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation (JUN 1995)
   
   252.227-7016 Rights in Bid or Proposal Information (JUN 1995)
   
   252.227-7019Validation of Asserted Restrictions - Computer Software (JUN 1995)
   
   252.227-7027 Deferred Ordering of Technical Data or Computer Software (APR 1988)
   
   252.227-7030Technical Data--Withholding of Payment (MAR 2000)
   
   252.227-7034 Patents - Subcontracts (APR 1984)
   
   252.227-7037 Validation of Restrictive Markings on Technical Data (SEP 1999)
   
   252.227-7039 Patents - Reporting of Subject Inventions (APR 1990)
   
   252.231-7000 Supplemental Cost Principles (DEC 1991)
   
   252.243-7002 Requests for Equitable Adjustment (MAR 1998)
   
   252.244-7000 Subcontracts for Commercial Items and Commercial Components (DoD Contracts) (MAR 2000)
   
   252.246-7001 Warranty of Data (DEC 1991)
   
   252.247-7023 Transportation of Supplies by Sea (MAY 2002)
   
   252.249-7002 Notification of Anticipated Termination or Reduction (DEC 1996)
   
   252.251-7000 Ordering from Government Supply Sources (NOV 2004)

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3. FAR CLAUSES

   52.202-1 Definitions (JUL 2004)
   
   52.203-3 Gratuities (APR 1984)
   
   52.203-5 Covenant against Contingent Fees (APR 1984)
   
   52.203-6 Restrictions on Subcontractor Sales to the Government (JUL 1995)
   
   52.203-7 Anti-Kickback Procedures (JUL 1995)
   
   52.203-8 Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity (JAN 1997)
   
   52.203-10 Price or Fee Adjustment for Illegal or Improper Activity (JAN 1997)
   
   52.203-12 Limitation on Payments to Influence Certain Federal Transactions (JUN 2003)
   
   52.204-2 Security Requirements (AUG 1996)
   
   52.209-6 Protecting the Government's Interest When Subcontracting with Contractors Debarred, Suspended or Proposed for Debarment (JAN 2005)
   
   52.211-5 Material Requirements (AUG 2000)
   
   52.211-15 Defense Priority and Allocation Requirements (SEP 1990)
   
   52.215-2 Audit and Records - Negotiation (JUN 1999)
   
   52.215-8 Order of Precedence - Uniform Contract Format (OCT 1997)
   
   52.215-10 Price Reduction for Defective Cost or Pricing Data (OCT 1997)
   
   52.215-12 Subcontractor Cost or Pricing Data (OCT 1997)
   
   52.215-15 Pension Adjustments and Asset Reversions (OCT 2004)
   
   52.215-18 Reversion or Adjustment of Plans for Postretirement Benefits (PRB) Other Than Pensions (OCT 1997)
   
   52.219-8 Utilization of Small Business Concerns (MAY 2004)
   
   52.219-9 Small Business Subcontracting Plan (JAN 2002) and Alternate I (OCT 2001)
   
   52.219-16 Liquidated Damages - Subcontracting Plan (JAN 1999)
   
   52.222-1 Notice to the Government of Labor Disputes (FEB 1997)
   
   52.222-3 Convict Labor (JUN 2003)
   
   52.222-4 Contract Work Hours and Safety Standards Act - Overtime Compensation (SEP 2000)
   
   52.222-19 Child Labor - Cooperation with Authorities and Remedies (JUN 2004)
   
   52.222-21 Prohibition of Segregated Facilities (FEB 1999)
   
   52.222-26 Equal Opportunity (APR 2002)
   
   52.222-35 Equal Opportunity for Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (DEC 2001)
   
   52.222-36 Affirmative Action for Workers with Disabilities (JUN 1998)
   
   52.222-37 Employment Reports on Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (DEC 2001)
   
   52.223-3 Hazardous Material Identification and Material Safety Data (JAN 1997)
   
   52.223-5 Pollution Prevention and Right-to-Know Information (AUG 2003)
   
   52.223-6 Drug-Free Workplace (MAY 2001)
   
   52.223-7 Notice of Radioactive Materials (JAN 1997)
   
   52.223-11 Ozone-Depleting Substances (MAY 2001)
   
   52.223-12 Refrigeration Equipment and Air Conditioners (MAY 1995)
   
   52.223-14 Toxic Chemical Release Reporting (AUG 2003)
   
   52.225-8 Duty-Free Entry (FEB 2000)
   
   52.225-13 Restrictions on Certain Foreign Purchases (DEC 2003)
   
   52.227-1 Authorization and Consent (JUL 1995)
   
   52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement (AUG 1996)
   
   52.227-10 Filing Patent Applications - Classified Subject matter (APR 1984)
   
   52.227-11 Patent Rights - Retention by the Contractor (Short Form) (JUN 1997)
   
   52.227-12 Patent Rights - Retention by the Contractor (Long Form) JAN 1997)
   
   52.227-13 Patent Rights - Acquisition by the Government (JAN 1997)
   
   52.230-2 Cost Accounting Standards (APR 1998)
   
   52.230-3 Disclosure and Consistency of Cost Accounting Practices (APR 1998)
   
   52.230-6 Administration of Cost Accounting Standards (NOV 1999)
   
   52.232-9 Limitations on Withholding of Payments (APR 1984)
   
   52.232-17 Interest (JUN 1996)
   
   52.232-23 Assignment of Claims (JAN 1986) and Alternate I (APR 1984)
   
   52.234-1 Industrial Resources Developed Under Defense Production Act, Title III (DEC 1994)
   
   52.237-2 Protection of Government Buildings, Equipment and Vegetation (APR 1984)
   
   52.242-3 Penalties for Unallowable Costs (MAY 2001)
   
   52.242-15 Stop-Work Order (AUG 1989) and Alternate I (APR 1984)
   
   52.243-6 Change Order Accounting (APR 1984)
   
   52.244-5 Competition in Subcontracting (DEC 1996)
   
   52.244-6 Subcontracts for Commercial Items (DEC 2004)
   
   52.248-1 Value Engineering (FEB 2000)
   
   52.249-6 Termination (Cost-Reimbursement) (MAY 2004)
   
   52.251-1 Government Supply Sources (APR 1984)
   
   

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PART E: ATTACHMENTS

The following attachments are incorporated into this Contract by this reference as if given in full text:

Attachment A: Check Point Procedures
Attachment B: General Quality Assurance Specification
Attachment C: Access Control Procedures

NASSCO FORM TCR-MIL-LHA/LHD
Rev 1 January 2010