NATO UNCLASSIFIED INDEX OF ARTICLES SPECIAL PROVISIONS

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1 Northrop Grumman ISS International, Inc. Additional Special and General Purchase Order Terms and Conditions NATO Alliance Ground Surveillance Risk Reduction Study (Prime Contract No. CO AGS) INDEX OF ARTICLES SPECIAL PROVISIONS Article 1: Firm Fixed Price 3 Article 2: Reserved 3 Article 3: Scope of Order 3 Article 4: Correspondence and Order Administration 3 Article 5: Comprehension of Order 4 Article 6: Applicable Regulations 4 Article 7: Security 4 Article 8: Payments 5 Article 9: Schedule and Performance 6 Article 10: Change Orders 6 Article 11: Intellectual Property Indemnity and Royalties 7 Article 12: Place and Terms of Delivery 7 Article 13: Liquidated Damages 8 Article 14: Authorisation to Perform 9 Article 15: Purchaser Use of Third Parties 9 Article 16: Intellectual Property Rights 9 Article 17: Supplemental Agreements 11 Article 18: Language of Work 11 Article 19: Reserved 12 Article 20 NATO Participating Countries 12 Article 21: Statements of Work Relationship/Dependency 12 Article 22 Order Price Finalization 13 Article 23 Proprietary Information 14 GENERAL PROVISIONS Article 1 Definitions 14 Article 2 Applicable Law 15 Article 3 Reserved 16 Article 4 Changes 16 Article 5 Use and Possession Prior to Acceptance 17 Article 6 Inspection, Rejection and Acceptance 17 Article 7 Title and Risk of Loss 20 Article 8 Buyer and Buyer s Customer Furnished Property 21 Addendum 329 (05-05) NATO UNCLASSIFIED Page 1 of 51

2 Article 9 Seller s Personnel Working at Buyer s or Buyer s Customer Facilities 22 Article 10 Indemnification 23 Article 11 Right of Access, Examination of Records 24 Article 12 Reserved 24 Article 13 Reserved 24 Article 14 Taxes and Duties 24 Article 15 Price Fixing 25 Article 16 Preferred Customer 29 Article 17 Reserved 29 Article 18 Authorisation to Perform 29 Article 19 Reserved 30 Article 20 Reserved 30 Article 21 Sub-contracts 30 Article 22 Seller Notice of Delay 31 Article 23 Default 31 Article 24 Stop Work Order 33 Article 25 Buyer Delay of Work 34 Article 26 Termination for Convenience of the Buy 35 Article 27 Disputes and Arbitration 40 Article 28 Claims 42 Article 29 Release of Claims 43 Article 30 Variation of Quantity 44 Article 31 Extras 44 Article 32 Notice of Shipment 44 Article 33 Reserved 44 Article 34 Release of Information 45 Article 35 Reserved 45 Article 36 Security 45 Article 37 Health, Safety and Accident Prevention 47 Article 38 Buyer s Pricing Principles 47 Addendum 329 (05-05) NATO UNCLASSIFIED Page 2 of 51

3 Additional Special and General Purchase Order Terms and Conditions NATO Alliance Ground Surveillance Risk Reduction Study (Prime Contract Number CO AGS) All of the Additional Special and General Purchase Order Terms and Conditions set forth below are incorporated in and made a part of this Order. Any conflict between any of the conditions contained in this document and those on Northrop Grumman ISS International, Inc., International Purchase Order, Purchase Order Terms and Conditions (Commercial) (Fixed Price Supply) for NATO Ground Surveillance Risk Reduction Study, shall be resolved in favor of the conditions in this form. SECTION 1 SPECIAL ORDER PROVISIONS ARTICLE 1 FIRM FIXED PRICE 1.1 This is a Firm Fixed Price Order. The Buyer assumes no liability for costs incurred by the Seller in excess of the stated Firm Fixed Price except as provided under other provisions of this Order. ARTICLE 2 RESERVED ARTICLE 3 SCOPE OF ORDER 3.1 The scope of this order covers the NATO AGS Risk Reduction Study as set forth in the Seller s Statement of Work (SSOW). ARTICLE 4 CORRESPONDENCE AND ORDER ADMINISTRATION 4.1. Any discussion or negotiation with Seller representatives shall be recorded in Minutes, which shall be signed by the authorised representatives of both Seller and Buyer. All minutes are considered to be a summary record of discussions and specific actions to be undertaken by the parties as a result of meetings. If the contents of these minutes fall within the scope of the Order or specifications, then no Change Order will be initiated by the Buyer. If, however, it is considered Addendum 329 (05-05) NATO UNCLASSIFIED Page 3 of 51

4 by either party that certain discussions and decisions have taken place at meetings which fall outside the scope of these documents, then this fact should be recorded at the time and Change Orders will be necessary prior to any action proceeding. ARTICLE 5 COMPREHENSION OF ORDER 5.1 The Seller warrants that he has read, understood and agreed to each and all terms, articles specified in the Order (including the Supplier Statement of Work) and that his signature of the Order is an acceptance, without reservations, of the said Order terms within their normal and common meaning. ARTICLE 6 APPLICABLE REGULATIONS 6.1. It is the Seller's responsibility, without expense to the Buyer, to obtain necessary permits or licences to comply with national codes, laws and regulations or local rules and practices of the Territorial Nation with respect to the execution of the works carried out under this Order The Seller shall take all necessary measures to protect the life and health of persons working or visiting the work area occupied by him. These measures include compliance with all safety and environmental requirements. ARTICLE 7 SECURITY 7.1. The security classification of the Order is NATO UNCLASSIFIED The Seller and all sub-contractors shall handle and safeguard, receive and process NATO CLASSIFIED material in accordance with the instructions set forth in Article 36 SECURITY of the General Provisions section of this addendum Seller and/or sub-contractors personnel employed under this Order that will require access to locations, such as sites and headquarters, where classified material and information up to and including NATO SECRET are handled shall be required to have NATO security clearance up to this level. It shall be the Seller s responsibility to obtain the necessary clearances and to have such clearances confirmed to the Buyer by the relevant national security authority. Addendum 329 (05-05) NATO UNCLASSIFIED Page 4 of 51

5 7.4. In the performance of all works under this Order it shall be the Seller s responsibility to ascertain and comply with all applicable NATO security regulations as implemented by the Host Nation and by the local Headquarters. ARTICLE 8 PAYMENTS 8.1 Payment shall be made in the currency specified following Buyer acceptance, in writing, of the supplies and services to be furnished. The price to be charged is specified per item in the Order Line Items. Each priced item in Order Line Items and individual Change Orders may be invoiced separately after Buyer has provided acceptance in writing. The total firm fixed price is an overall price including all expenses. No payment shall be made with respect to undelivered supplies; works not performed, services not rendered and/or invoices submitted without copies of written Buyer acceptance attached thereto. See the Purchase Order for the payment Schedule which will apply to this order. MAEDC-Months after effective date of Contract/Order. The Seller shall only invoice for a maximum of 50% of the Not to Exceed price until the Final Firm Fixed prices are established. 8.2 Invoices shall be submitted no later than the middle of the month of in voicing to: Northrop Grumman ISS International, Inc. Attention: Accounts Payable 8710 Freeport Parkway, Suite 180 Irving, TX Reference Purchase Order Number: See face of Purchase Order. Reference Prime Contract: CO AGS Payment to the Seller will be made by wire transfer within 30 days after Buyer s receipt of payment from the Customer in the currency of the Seller. To allow for wire transfer, Seller is to provide the following information to the Buyer as applicable: FOREIGN BANK: Bank Name Bank Address IBAN Number or Swift Bank Code Addendum 329 (05-05) NATO UNCLASSIFIED Page 5 of 51

6 Beneficiary Account Name Beneficiary Account Number Or DOMESTIC BANK: Bank Name Bank Address Routing Number Beneficiary Account Name Beneficiary Account Number ARTICLE 9 SCHEDULE AND PERFORMANCE 9.1 All line items in the Order are to be delivered and the Seller s performance complete no later than six months after effective date of order. Change orders shall contain schedule dates specific to the subject change order. Any delays beyond that time shall be subject to the Liquidated Damages provision of this order. 9.2 Performance is deemed to have been effected only when the supplies and services under this Order have been accepted by the Buyer. Performance shall be subject to the inspection articles of this Order. ARTICLE 10 CHANGE ORDERS 10.1 Changes to Orders to the Seller will be issued by the Buyer in writing via Change Orders, also referred to as Task Orders, signed by the Buyer. Change Orders will be designated as one of two types, either Level of Effort or Completion. Level of Effort Change Orders will specify the type of labour to be provided over a specified period of time and the general duties to be performed by the personnel provided by the Seller, within the general scope of the order. Completion Change Orders will provide a detailed description of the item or services, within the general scope of the order, to be delivered by a specified date Each Change Order will contain the following information: (a) (b) (c) Change Order Number Effective Date and End Date of Effort Total Number of Man-Days authorised (for Level of Effort Change Orders only) Addendum 329 (05-05) NATO UNCLASSIFIED Page 6 of 51

7 (d) (e) (f) (g) (h) (i) Total Monetary value of the Change Order SOW Reference(s) Name of Seller s personnel to be employed under the Change Location of work Travels authorised (if any) Signature of Buyer 10.3 The Buyer sends Change Orders to the Seller in writing before the effective date of each Change Order. ARTICLE 11 INTELLECTUAL PROPERTY INDEMNITY AND ROYALTIES 11.1 The Seller shall assume all liability and indemnify NGISSI and its Customer, officers, agents and employees against liability, including costs for the infringement of any patents or copyright in force in any countries arising out of the manufacture, services performed or delivery of supplies, or out of the use or disposal by or for the account of the Buyer and its Customer of such supplies. The Seller shall be responsible for obtaining any patent or copyright licenses necessary for the performance of this Order and for making all other arrangements required to indemnify NGISSI and its Customer from any liability for patent or copyright infringement in said countries The Seller shall exclude from his prices any royalty pertaining to patents which in accordance with agreements reached between NATO countries may be utilised free of charge by member nations of NATO and by NATO organizations The Seller shall report in writing to the Buyer during the performance of this Order the following: (a) The royalties excluded from his price for patent utilised under the agreements mentioned in paragraph 11.2 above and (b) The amount of royalties paid or to be paid by the Seller directly to others in performance of this Order. ARTICLE 12 PLACE AND TERMS OF DELIVERY 12.1 Supplies under this Order shall be delivered CIF (Cost, Insurance Freight) to the destination(s) and at such times as set forth in the Order. The Seller shall note that the Buyer is exempt from customs duties and VAT. Documentation shall be delivered to the Buyer at the specified destination by best commercial practice. Addendum 329 (05-05) NATO UNCLASSIFIED Page 7 of 51

8 ARTICLE 13 LIQUIDATED DAMAGES 13.1 If the Seller fails to deliver the supplies or perform the services within the time specified in this Order, the Seller shall pay to the Buyer liquidated damages of $500 per day only for the undelivered items Such damages shall become due on the calendar day immediately following the relevant line item delivery due date as stipulated in the Order schedule. They shall accrue at the rate specified in paragraph 13.1 above to a maximum of five percent (5%) of the total prime contract value Alternatively, the Buyer may terminate this Order in whole or in part as provided in paragraph (a), Article 23 of the General Provisions section of this addendum. In that event the Seller shall be liable to pay the excess cost provided in paragraph (b) of said Article The Seller shall not be charged with liquidated damages when the delay arises out of causes beyond the control and without the fault or negligence of the Buyer, as defined in paragraph c., Article 23 Default of the General Provisions section of this addendum. In such event, subject to the Disputes Article, the Buyer shall ascertain the facts and extent of the delay and shall extend the time for performance of the order when in his judgement the findings of fact justify an extension The amount of Liquidated Damages due by the Seller shall be recovered by the Buyer in the following order of priority: a. By deducting such damages from the amounts due to the Seller against the Seller s invoices. b. By reclaiming such damages through appropriate legal remedies The payment of Liquidated Damages shall not relieve the Seller from the obligation to deliver the supplies or perform the services under this Order Notwithstanding any other Article of this Order, Liquidated Damages will be invoked only if invoked by the Buyer s Customer against the Prime Contract. ARTICLE 14 AUTHORISATION TO PERFORM Addendum 329 (05-05) NATO UNCLASSIFIED Page 8 of 51

9 14.1 The Seller warrants that he and his sub-contractors are duly authorized to operate and do business in the country or countries in which this Order is to be performed; that he and his sub-contractors have obtained or will obtain all necessary licenses and permits required in connection with the Order; that he is responsible for ascertaining and complying with all the national and local laws, decrees, labor standards and regulations of such country or countries, including any NATO regulations, during the performance of this Order; and that no claim for additional moneys with respect to any authorizations to perform will be made upon the Buyer. ARTICLE 15 BUYER S CUSTOMER USE OF THIRD PARTIES 15.1 The Buyer s Customer shall have the right to use third parties, including commercial entities, to assist it in the management of this Order and the evaluation of the Seller s performance The Seller shall permit such third parties full and free access to its premises, and all data (including software), deliverable and non-deliverable, generated and/or used under this Order, as and when required for the purposes of monitoring this Order and shall ensure the same right of access to the premises of its subcontractors, by the inclusion of any such subcontracts of a provision substantially as set forth in this article Definitions ARTICLE 16 INTELLECTUAL PROPERTY RIGHTS AGS Programme Purposes means the use by NATO and NATO Nations of the Information acquired under this Order, which cannot be released outside of Government control Background Information means information which is necessary to, or useful in, achieving the objectives of the Order but which was generated prior to or outside the scope of this Order Defence Purposes means the use by or for the armed forces of NATO and the NATO Nations participating in the Order, in any part of the world and includes but is not limited to study, evaluation, assessment, research, design, development, manufacture, improvement, modification, maintenance, Addendum 329 (05-05) NATO UNCLASSIFIED Page 9 of 51

10 repair, and other post design services, and product development. This does not include sales or transfers to not-participating Nations Foreground Information means information which is generated in the course of this Order by the Seller including the results of this study Information means any information used under this Order, regardless of form or type Intellectual Property, whether background or foreground, can be defined as including computer software, technical data, designs, technical knowhow, manufacturing information, and know-how, industrial techniques, technical data packages, manufacturing data packages and trade secrets All rights in the results of work undertaken by or on behalf of the NATO and NATO nations for the purposes of this Order, including any technical data specifications, report, drawings, computer software data, computer programmes, computer databases, computer software, documentation including software documentation, design data, specifications, instructions, test procedures, training material produced or acquired in the course of such work and, in particular, all rights, including copyright therein, shall be provided to NATO and NATO Nations with Defense Purposes rights Seller Background Information may be used by NATO and NATO Nations without charge for AGS Programme Purposes only and may be subject to further restrictions by holders of proprietary rights, however, the Seller or the holder of proprietary rights will retain all its rights with respect to such Background Information Any disclosure or transfer of Seller Background Information to NATO and NATO Nations will be made provided that: (a) such Background Information is necessary in order to comply with the terms and conditions of this Order; (b) such Background Information may be made available without incurring liability to holders of proprietary rights; and (c) such disclosure is consistent with national disclosure policies and regulations, including the export control policies and regulations of the Seller and of its sub-contractors The Buyer shall distribute the deliverables under this Order to NATO and NATO Nations. NATO and NATO nations shall have the right to use Government and Seller (including its subcontractors) Foreground Information Addendum 329 (05-05) NATO UNCLASSIFIED Page 10 of 51

11 data delivered under this Order without charge for Defence Purposes and Background Information delivered under this Order without charge for AGS Programme Purposes only The Seller shall grant NATO and NATO nations, a non-exclusive, irrevocable, royalty-free license to practice or have practice, by or on behalf of NATO and NATO Nations, throughout the world for Defence Purposes, any invention under this Order. ARTICLE 17 SUPPLEMENTAL AGREEMENTS 17.1 The Seller and their sub-contractors shall perform the required effort in accordance with the terms of the Order without the necessity of any supplemental agreements related to this Order. If supplemental agreements, such as End User Certificates, Technical Assistance Agreements, or other export requirements, are required by national regulations, these must be submitted to the Buyer for agreement of the Buyer and/or Buyer s Customer It is the Seller s responsibility to clearly identify in the supplemental agreement(s) which deliverables are subject to national export regulations In the event that a nation fails to approve the export licenses agreed between the Seller and Buyer and/or Buyer s Customer, the Buyer and/or Buyer s Customer and the Seller will negotiate or the Seller shall support the Buyer and Buyer s Customer resolution with the nation. In case of failure to reach an agreement, the Buyer and Buyer s Customer will bring the issue to the AGS Steering Committee for final resolution. If the AGS Steering Committee decision or lack of decision results in a situation where the Buyer or the Seller due to failure to approve export license(s) cannot meet the existing terms and conditions of the Order, then the Buyer upon written request of the Seller will request the Buyer s Customer to request approval of the Steering Committee to terminate the Order for convenience, in whole or part All Seller deliverables will be delivered and marked and segregated to the extent possible specifying the country/seller of origin. Seller must affix on each page the country/seller of origin. ARTICLE 18 LANGUAGE OF WORK 18.1 The working language under this Order is English and the associated technical documents are printed in English. Accordingly, all Contract Personnel shall be competent to converse and write in English. Reference Northrop Addendum 329 (05-05) NATO UNCLASSIFIED Page 11 of 51

12 Grumman ISS International, Inc., International Purchase Order, Purchase Order Terms and Conditions (Commercial) (Fixed Priced-Supply), for NATO Alliance Ground Surveillance Risk Reduction Study, Article 17, Applicable Language, is incorporated herein. ARTICLE 19 RESERVED ARTICLE 20 NATO PARTICIPATING COUNTRIES 20.1 The following NATO countries have funded this effort: BELGIUM, BULGARIA CANADA, CZECH REPUBLIC, DENMARK, ESTONIA, FRANCE, GERMANY, GREECE, ITALY, LATVIA, LITHUANIA, LUXEMBOURG, THE NETHERLANDS, NORWAY, POLAND, PORTUGAL,ROMANIA, SLOVAKIA,SLOVENIA, SPAIN, TURKEY, and UNITED STATES The Seller may issue subcontracts to firms and purchase from qualified vendors in any NATO participating country None of the work, including project design, labour and services, shall be performed other than by firms from and within participating countries No materials or items of equipment down to and including identifiable subassemblies shall be manufactured or assembled by a firm other than from and with participating countries The intellectual property rights to all design documentation and related system operating software shall reside in NATO member countries, and no license fees, royalty charges shall be paid by the Seller to firms, individuals or governments other than with the NATO member community. ARTICLE 21 STATEMENTS OF WORK RELATIONSHIP/DEPENDENCY 21.1 Subject order contains a firm Risk Reduction Statement of Work, and may contain future statements of work issued under change order/task orders. There are also separate deliverables associated with the separate statements of work. The Seller shall monitor the results of all activities required under order specified in separate statements of work. The Seller shall ensure all contractual deliveries reflect the results of all the work required under subject order. Addendum 329 (05-05) NATO UNCLASSIFIED Page 12 of 51

13 ARTICLE 22 ORDER PRICE FINALIZATION 22.1 A firm fixed price order shall be executed for the Seller s Risk Reduction Study. The order shall be initially awarded on a Not to Exceed Ceiling Price value subject only to downward price adjustment. The Seller shall promptly negotiate with Buyer the final firm fixed prices to be established under order. The Seller shall submit a firm fixed price proposal and cost or pricing data supporting its Risk Reduction Study Price Proposal in accordance with pricing instructions specified by Buyer. The schedule for finalization of the price of this Order is as follows. Event Seller submission of Price Proposal Buyer evaluates Price Proposal Buyer/Seller negotiates Price Proposal Buyer establish Fixed Price PO Date See Purchase Order See Purchase Order See Purchase Order See Purchase Order EDC is the Effective Date of Contract/Order 22.2 The Seller cost and pricing details in its proposal shall be in accordance with national pricing rules and regulations of the host nations of the respective Seller or subcontractor. The Buyer s Customer shall have the right to access the price proposal pricing details with the national audit authorities in accordance with Article 11 Right of Access, Examination of Records of the General Provisions section of this addendum. The Buyer and Buyer s Customer will ensure that information provided to national defense audit offices are considered privileged and confidential. (For the US- Freedom of Information Act 5 U.S.C). This information will not be considered Foreground Information under Special Provision 16 Intellectual Property Rights If agreement on definitive fixed price Order to supersede the not to exceed ceiling price is not reached by the target date in paragraph above, or within any extension granted by the Buyer s Customer on the prime contract and in such event the Buyer s Customer determines a reasonable price. Then in such event the Buyer s Customer determines a final price the Buyer will in turn determine a price subject to Seller s dispute in accordance with the Article 28 Claims of the General Provisions section of this addendum. A price dispute shall not be the basis for the Seller stop work or not meeting the existing requirements of the Order. ARTICLE 23 PROPRIETARY INFORMATION Addendum 329 (05-05) NATO UNCLASSIFIED Page 13 of 51

14 23.1 Any Seller or Subcontractor proprietary information disclosed to the Buyer pursuit to this Order shall remain the property of the party generating such work be it the Seller or a Subcontractor at any tier. The Seller shall ensure that the provisions of Article 16 Intellectual Property Rights of the Special Provisions section of this addendum are properly flowed down to the subcontractor(s) Seller or Subcontractor proprietary information will be protected by the Buyer s Customer and the participating nations in accordance with NATO Agreement on the Communication of Technical Information for Defence Purposes dated 19 October SECTION 2 GENERAL TERMS AND CONDITIONS ARTICLE 1 DEFINITIONS 1.1 As used throughout the Order, the following terms shall have the meaning set forth below: a. NATO The North Atlantic Treaty Organization. b. Reserved c. Reserved d. Buyer s Customer For the purposes of this Order the term Buyer s Customer shall mean NC3A. e. Reserved f. Sub-contractor "Sub-contractor" shall mean any person or firms directly or indirectly under sub-contract. g. Sub-contract Addendum 329 (05-05) NATO UNCLASSIFIED Page 14 of 51

15 "Sub-contract" shall mean any agreement, contract, sub-contract or purchase order made by the Seller with any other party in order to fulfil any part of this Order. h. Country of Origin The home country of a Seller or Sub-Contractor. i. Work Any tangible thing furnished or any service performed by the Seller under the terms of this Order. j. EDC Effective Date of Contract: The date upon which this Order is deemed to start. Unless otherwise specified an Order enters into force on the date of the last signature of the Order by the parties. k. Part The lowest component of an item replaceable through a maintenance action. This could include but not necessarily be limited to an assembly, sub-assembly, module, printed circuit board or any single component such as a switch, plug, terminal, strip, fuse, fuse holder, IC, capacitor, resistor extender board, hardware item (i.e. nuts, panels, bolts, printed circuit board), etc installed on or in an assembly, subassembly, module, or such other item which is or comprises an integral part of the equipment to be supplied under this Order. l. Supplies "Supplies" shall include, without limitation, raw materials, components, intermediate assemblies, end products and data including software and firmware. m. Reserved ARTICLE 2 APPLICABLE LAW 2.1 Except as otherwise provided in this Order, this Order shall be governed, interpreted and construed in accordance with the private contract law of the Kingdom of Belgium. Addendum 329 (05-05) NATO UNCLASSIFIED Page 15 of 51

16 ARTICLE 3 RESERVED ARTICLE 4 CHANGES a. The Buyer may at any time, by written order designated or indicated to be a change order, and without notice to the sureties, if any, make changes within the general scope of this order, in any one or more of the following: (1) Specifications (including drawings and designs); (2) Method and manner of performance of the work; (3) Marking, method of shipment and packing; (4) Time and place of delivery; (5) Buyer or Buyer s Customer Furnished Property and Facilities (including equipment, materials, services or sites); b. Any other written or oral order (which, as used in this paragraph b., includes direction, instruction, interpretation, or determination) from the Buyer that causes a change shall be treated as a change order under this article, provided, that the Seller gives the Buyer written notice within twenty (20) days after receipt of such change order stating (i) the date, circumstances, and source of the order and (ii) that the Seller regards the order as a change order, and that the order is accepted in writing by the Buyer as a change order. The timely written notice requirement, as detailed above, remains in force in all cases, even where, for example, the Buyer has positive knowledge of the relevant facts. c. Except as provided in this article, no order, statement, or conduct of the Buyer shall be treated as a change order under this article or entitle the Seller to an equitable adjustment. d. If any such change order causes an increase or decrease in the Seller's cost of, or the time required for the performance of any part of the work under this order, whether or not changed by any such order, the Buyer shall make an equitable adjustment and modify the order in writing accordingly. However, except for a "proposal for adjustment" (hereafter referred to as "proposal") based on defective specifications, no proposal for any change under b. above shall be allowed for any costs incurred more than thirty (30) days before the Seller gives written notice as required. In the case of defective specifications for which the Buyer is responsible, the equitable adjustment shall include any increased Addendum 329 (05-05) NATO UNCLASSIFIED Page 16 of 51

17 cost reasonably incurred by the Seller in attempting to comply with the defective specifications. Where the cost of property made obsolete or excess as a result of a change is included in the Seller's claim for adjustment, the Buyer shall have the right to prescribe the manner of disposition of such property. Failure to agree to any adjustment shall be a dispute within the meaning of the article of this order entitled "Disputes". However, nothing in this article shall excuse the Seller from proceeding with the order as changed. e. The Seller must submit any proposal under this article within twenty (20) days after (i) receipt of a written change order under a. above or (ii) the furnishing of a written notice under b., by submitting to the Buyer a written statement describing the general nature and amount of the proposal, unless this period is extended by the Buyer. The statement of proposal for adjustment may be included in the notice under b. above. f. No proposal by the Seller for an equitable adjustment shall be allowed if asserted after final payment and acceptance under this order. ARTICLE 5 USE AND POSSESSION PRIOR TO ACCEPTANCE a. The Buyer shall have the right to take possession of or use any completed or partially completed work under the Order but such possession or use shall not constitute acceptance as defined in the Order, by the Buyer. b. While the Buyer has such use or is in such possession, the Seller shall be relieved of the responsibility for loss or damage to the work other than that resulting from the Seller's fault or negligence. c. If such prior possession or use by the Buyer delays the progress of the work or causes additional expense to the Seller, an equitable adjustment in the order price or the time of delivery will be made, and the Order shall be modified in writing accordingly. ARTICLE 6 INSPECTION, REJECTION AND ACCEPTANCE a. Unless otherwise specifically provided for in the Order, all equipment, materials and supplies incorporated in the work Addendum 329 (05-05) NATO UNCLASSIFIED Page 17 of 51

18 covered by this Order are to be new and of the most suitable grade of their respective kinds for the purpose, notwithstanding the requirements for testing, inspection and performance as required under this Order. All workmanship shall be as required under the Order or, if specified, best commercial (National and International) standard. b. All supplies (which term throughout this article includes without limitation raw materials, components, intermediate assemblies, end products, data including software and firmware) and services may be subject to inspection and test by the Buyer s Customer, or his authorised representative to the extent practicable at all times and places prior to acceptance, including the period of manufacture, or after delivery, or as otherwise specified in the Order. For the purposes of inspection and testing the Buyer s Customer may delegate as his representative the authorised National Quality Assurance Representative (NQAR) in accordance with STANAG c. No representative or NQAR appointed by the Buyer s Customer for the purpose of determining the Seller's compliance with the technical requirements of the Order shall have the authority to change any of the specifications. Such changes may only be made by the Buyer in writing in accordance with the article of this Order entitled "Changes" of the General Provisions section of this addendum. d. The presence or absence of a NQAR or other Buyer s Customer representative shall not relieve the Seller from any of the requirements of this Order. e. In the event that any supplies, or lots thereof, or services are defective in design, material, workmanship or manufacturing quality, or as a result of undue wear and tear or otherwise not in conformity with the requirements of this Order, including any characteristic or condition which is or becomes at variance to the performance specifications and to the intended function of the supplies, the Buyer shall have the right either to reject them (with or without instructions as to their disposition) or to require their correction or replacement. Supplies, or lots thereof or services which have been rejected or required to be corrected or replaced shall, at the expense of the Seller, be removed, or, if permitted or required by the Buyer, corrected in place by the Seller promptly after notice, and shall not thereafter be tendered for acceptance by the Seller unless the former rejection or requirement of correction or replacement is disclosed. If the Seller fails promptly Addendum 329 (05-05) NATO UNCLASSIFIED Page 18 of 51

19 to remove, replace or correct such supplies or lots thereof, or services, the Buyer either: (1) may by order or otherwise return, replace or correct such supplies or services and charge to the Seller the cost incurred by the Buyer or (2) may terminate this Order for default as provided in Article 23, Default" of the General Provisions section of this addendum. f. Unless the Seller corrects or replaces such supplies or services within the delivery schedule, the Buyer may require the delivery of such supplies or services at a reduction in price which is equitable under the circumstances. Failure to agree to such reduction of price shall be a dispute within the meaning of the article of this Order entitled "Disputes". g. If any inspection or test is made by the Buyer's Customer representatives on the premises of the Seller or sub-contractor, the Seller, without additional charge, shall provide all reasonable facilities and assistance for the safety and convenience of the Buyer's Customer representatives in the performance of their duties. The NQAR or other Buyer s Customer representatives shall have the right of access to any area of the Seller's or his sub-contractor's premises where any part of the contractual work is being performed. If Buyer s Customer inspection or test is made at a point other than the premises of the Seller or subcontractor, it shall be at the expense of the Buyer s Customer except as otherwise provided in this Order; provided, that in case of rejection the Buyer s Customer shall not be liable for any reduction in value of samples used in connection with such inspection or test. All inspections and tests by the Buyer s Customer shall be performed in such a manner as not to unduly delay the work. The Buyer reserves the right to charge to the Seller any additional cost of Buyer s Customer inspection and test when supplies or services are not ready at the time such inspection and test is requested by the Seller or when reinspection or retest is necessitated by prior rejection. Acceptance or rejection of the supplies or services shall be made as promptly as practicable after delivery, except as otherwise provided in this Order, but failure to inspect and accept or reject supplies or services shall neither relieve the Seller from responsibility for such supplies or services as are not in accordance with the Order requirements nor impose liability on the Buyer thereof. Addendum 329 (05-05) NATO UNCLASSIFIED Page 19 of 51

20 h. The inspection and test by the Buyer s Customer of any supplies or lots thereof, or services, does not relieve the Seller from any responsibility regarding defects or other failures to meet the order requirements which may be discovered prior to acceptance. Except as otherwise provided in this Order, acceptance shall be conclusive except as regards latent defects, fraud, or such gross mistakes as amount to fraud. i. Acceptance of supplies or services shall take place when the Buyer confirms acceptance of the supplies or services in accordance with the procedure specified in the Order, or if none is so specified then the Buyer shall be deemed to have accepted the supplies or services without prejudice to any other remedies, when and as soon as any of the following events have occurred: (1) The Buyer has taken the supplies or services into use; (2) The Buyer has not exercised its right of rejection of the supplies or services within any period specified for that purpose in the Order; (3) There being no period for exercising the right of rejection specified in the Order, a reasonable time, all the circumstances having been taken into account, has elapsed since delivery of the supplies or services was effected in accordance with the Order. j. Unless otherwise specified in this Order, the Seller shall have or establish, implement and maintain an effective and economical quality control system, planned and developed in conjunction with other Seller functions necessary to satisfy the order requirement. The system shall be acceptable to the Buyer and its authorised representatives. The system shall provide for the early and prompt detection of deficiencies, trends and conditions which could result in unsatisfactory quality, and for timely and effective corrective action. Objective evidence that the system is effective shall be readily available to the Buyer and its authorised representatives. Records of all inspection and testing work by the Seller shall be kept complete and available to the Buyer's representatives during the performance of this order and for such longer periods as may be specified elsewhere in this Order. ARTICLE 7 TITLE AND RISK OF LOSS a. Unless this Order specifically provides for earlier passage of title, title to supplies covered by this Order shall pass to the Buyer Addendum 329 (05-05) NATO UNCLASSIFIED Page 20 of 51

21 upon acceptance as specified in the Order, regardless of when or where the Buyer takes physical possession. b. Unless the Order specifically provides otherwise, risk of loss or damage to supplies covered by this Order shall remain with the Seller until, and shall pass to the Buyer upon: (1) delivery of supplies as specified in accordance with the Order; or (2) acceptance by the Buyer or receipt of the supplies by the Buyer at the destination specified in the Order, whichever is the later. c. Notwithstanding b. above, the risk of loss or damage to supplies which fail to conform to the requirements of the Order shall remain with the Seller until cure or acceptance, at which time b. above shall apply. d. Notwithstanding b. above the Seller shall not be liable for the loss of or damage to supplies caused by the negligence of officers, agents or employees of the Buyer acting within the scope of their employment under the terms and conditions of this Order. ARTICLE 8 BUYER OR BUYER S CUSTOMER FURNISHED PROPERTY a. The term "Buyer or Buyer s Customer Furnished Property" as used in this article refers to items of equipment, material or property furnished by the Buyer or Buyer s Customer to the Seller which shall be subject to overhaul, repair, modification, test, embodiment or other work as specified in the Order to be performed by the Seller. b. The Buyer or Buyer s Customer shall deliver to the Seller, for use only in connection with this Order, the property described in the schedule or specifications (hereinafter referred to as "Buyer or Buyer s Customer Furnished Property"), at the times and locations stated therein. In the event that Buyer or Buyer s Customer Furnished Property is not delivered by such time or times stated in the Schedule, or if not so stated, in sufficient time to enable the Seller to meet such delivery or performance dates the Buyer shall, upon timely written request made by the Seller, and if the facts warrant such action, equitably adjust any affected provision of this Order pursuant to the procedures of the "Changes" article hereof. c. In the event that Buyer or Buyer s Customer Furnished Property is received by the Seller in a condition not suitable for its Addendum 329 (05-05) NATO UNCLASSIFIED Page 21 of 51

22 intended use, the Seller shall immediately notify the Buyer. The Buyer shall within a reasonable time of receipt of such notice replace, re-issue, authorise repair or otherwise issue instructions for the disposal of Buyer or Buyer s Customer Furnished Property agreed to be unsuitable. The Buyer shall, upon timely written request of the Seller, equitably adjust any affected provision of this Order pursuant to the procedures of the "Changes" article hereof. d. Title to Buyer or Buyer s Customer Furnished Property shall remain in the Buyer or Buyer s Customer. The Seller shall maintain adequate property control records of Buyer or Buyer s Customer Furnished Property in accordance with sound industrial practice. e. Unless otherwise provided in this Order, the Seller, upon delivery to him of any Buyer or Buyer s Customer Furnished Property, assumes the risk of, and shall be responsible for, any loss thereof or damage thereof except for reasonable wear and tear, and except to the extent that such property is consumed in the performance of this Order. f. Upon completion of this Order, or at such earlier dates as may be specified by the Buyer, the Seller shall submit, in a form acceptable to the Buyer, inventory schedules covering all items of Buyer or Buyer s Customer Furnished Property not consumed in the performance of this Order or not theretofore returned to the. The Seller shall prepare for shipment, deliver FOB origin, or otherwise dispose of Buyer or Buyer s Customer Furnished Property as may be directed or authorised by the Buyer. The net proceeds of any such disposal shall be credited to the Order price or paid in such other manner as the Buyer may direct. g. The Seller shall not modify any Buyer or Buyer s Customer Furnished Property unless specifically authorised by the Buyer or directed by the terms of the Order. ARTICLE 9 SELLER'S PERSONNEL WORKING AT BUYER'S OR BUYER S CUSTOMER FACILITIES a. The term "Buyer or Buyer s Customer Facilities" as used in this article shall be deemed to include sites, property, utilities, ships or vessels and the term "Facility Representative" shall be deemed to refer to the authority designated by the Buyer or Addendum 329 (05-05) NATO UNCLASSIFIED Page 22 of 51

23 Buyer s Customer responsible for the site, property, utility, ship or vessel. b. The Facility Representative shall provide such available administrative and technical facilities for Seller's personnel working at Buyer's or Buyer s Customer Facilities for the purpose of the Order as in the opinion of the Facility Representative may be necessary for the effective and economical discharge of work under the Order. These facilities may be provided free at the discretion of the Facility Representative. The Seller shall be responsible for ascertaining what necessary facilities will be available and whether they will be provided free of charge, or determining what charges are payable. The Seller shall have no claim against the Buyer for any such additional cost or delay or any additional cost or delay occasioned by the closure for holidays, or other reasons, where this is generally published or made known to the Seller by the Buyer or Buyer s Customer authorised representatives. c. Notwithstanding the provisions of the "Buyer or Buyer s Customer Furnished Property" and "Title and Risk of Loss" articles above, where those conditions form part of the Order, the Seller shall, except as otherwise provided for in the Order, make good or, at the option of the Buyer, pay compensation for all damage occurring to any Buyer's or Buyer s Customer Facilities occasioned by the Seller, or by his servants, agents or subcontractors, arising from his or their presence, on Buyer or Buyer s Customer Facilities in connection with the Order; provided that this Condition shall not apply to the extent that the Seller is able to show that any such damage was not caused or contributed to, by his neglect, or default or the neglect or default of his servants, agents or sub-contractors, or by any circumstances within his or their control. d. All property of the Seller while at a Buyer s or Buyer s Customer Facility shall be at the risk of the Seller, and the Buyer or Buyer s Customer shall accept no liability for any loss or damage, except to the extent that any loss or damage is the result of a wilful act or gross negligence on the part of the Buyer's or Buyer s Customer employees or agents. ARTICLE 10 INDEMNIFICATION 10.1 The Seller shall indemnify and hold the Buyer and Buyer s Customer harmless against claims for injury to persons or damages to property Addendum 329 (05-05) NATO UNCLASSIFIED Page 23 of 51

24 of the Seller or others arising from the Seller's possession or use of Buyer or Buyer s Customer Furnished Property or Facilities. ARTICLE 11 RIGHT OF ACCESS, EXAMINATION OF RECORDS a. The Seller shall give to the Buyer s Customer and/or his representative full and free access to his premises as and when required for the purpose of this Order and shall ensure the same right of access to the premises of his sub-contractors, by the inclusion in any such sub-contracts of a provision substantially as set forth in this article. b. The Seller agrees that the Buyer s Customer, or any of his duly authorised representatives shall, until the expiration of three (3) years after final payment under this Order, have unrestricted access to and the right to examine any books, documents, papers and records of the Seller or sub-sellers as the Buyer deems to be pertinent to this Order. c. The period of access and examination described in b. above for records which relate to either appeals under the "Disputes" article of this Order or litigation, or the settlement of claims arising out of the performance of this Order, shall continue until such appeals, litigation or claims have been disposed of. ARTICLE 12 RESERVED ARTICLE 13 RESERVED ARTICLE 14 TAXES AND DUTIES a. The Buyer s Customer by virtue of his status is exempt from all direct taxes and all customs duties on merchandise imported or exported. The Seller, therefore, certifies that the prices stipulated in this Order do not include amounts to cover such direct taxes or customs duties. b. The Seller shall be responsible for ensuring that his respective sub-sellers are aware that the Buyer is exempt from taxes and Addendum 329 (05-05) NATO UNCLASSIFIED Page 24 of 51

25 customs duties. In cases where taxes and duties are levied by nations, the Seller and his sub-contractors should obtain reimbursement directly from the authorities concerned in compliance with national legislative and administrative procedures. c. (1) Notwithstanding b. above, in the event that reimbursement is not made by the national authorities concerned and providing that the Seller and/or his sub-contractor have complied with the national legislative and administrative procedures, the Buyer shall reimburse the full amount of the payments upon receipt of the Seller's invoice indicating such tax or duty as a separate item of cost and fully identified by reference to any governmental law, regulation and/or instruction pursuant to which such tax or duty is enforced. (2) Following payment by the Buyer of the taxes and/or duties pursuant to paragraph c.(1) above, should the Seller receive a rebate of any amount paid by the Buyer, the Seller shall immediately notify the Buyer and the amount of such rebate shall be credited or reimbursed to the Buyer, as directed. The Seller shall be responsible for taking any and all action that could reasonably be required in order to obtain such rebate. (3) In the event of the Seller and/or sub-contractor not complying with national legislative or administrative procedures, taxes and duties paid by the Seller and/or sub-contractors shall not be reimbursed by the Buyer. d. The Seller shall be liable for all other taxes, assessments, fees, licences, administrative charges or other Government assessments or charges which are applicable to the performance of this Order. It is the Seller's responsibility to inform himself of his liability in each country where such liability may arise. ARTICLE 15 PRICE FIXING a. Offers for sole source procurement, changes, modifications, and claims shall be priced in accordance with this provision and the Buyer's Pricing Principles as set out in Article 38 of the General Provisions section of this addendum,,or the National Government Pricing Rules and Regulations for the Seller's own country where in force. The Seller shall provide cost information accompanied by appropriate substantiation. Addendum 329 (05-05) NATO UNCLASSIFIED Page 25 of 51