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3. For each month or part thereof during which the Contractor shall have the

right to use the items designated as the Schedule 6 Facilities, regardless
of whether'or not such Facilities are actually used:
(i) Until the first day of the calendar month in which the Acquisition

Costs of the Schedule 6 Facilities shall be certified in accordance
with paragraph (d) of Article 8 hereof, a sum equal to one-sixth of
one percent (%%) of the cost, as determined by the Department,
of such of the Schedule 6 Facilities as the Department shall detemine
to have been available for use as of the first day of the month for

which a payment under this subparagraph 3 is to be computed; and (ii) Beginning with the calendar month in which the Acquisition Cost of

the Schedule 6 Facilities shall be certified as aforesaid, a sum equal to one-sixth of one percent (16%) of the Acquisition Cost of said

Schedule 6 Facilities: Provided, however, that should the Contractor, for any period of six (6) consecutive calendar months after the completion of the Facilities, have no substantial ship-repair work upon which it might reasonably employ the Facilities, the Contractor, at its election, may cease all use of the Schedule 6 Facilities and for so long thereafter as it shall not make any use thereof, no amounts under this pubparagraph 3 shall accrue until the Contractor shall again make any use of the Schedule 6 Facilities, whereupon the Contractor's obligations under this subparagraph 3 shall immedi

ately resume. (d) The Contractor shall accompany each payment so made with such information, records and verifications as the Department may require in order to determine the correctness of each such payment. ART. 11. MAINTENANCE, REPAIR AND INSURANCE

(a) From the date first above written to the date of termination of the Contractor's right to use the Facilities, the Contractor shall: (i) Protect, preserve and maintain the Facilities, including all parts thereof,

and any and all Government-owned supplies, materials and equipment at the site of the Facilities, so as to insure their full availability and usefulness at all times and as may be directed by the Department. Whenever any item of the Facilities shall from any cause become obsolete, worn out, lost, disabled, damaged or destroyed, the Contractor shall immediately give notice thereof to the Department, and shall, as authorized or directed by the Department, effect the repair, replacement or disposition of such item; if the Department shall not authorize or direct the repair or replacement of any such item, the Acquisition Costs of the Facilities shall be revised by the Navy Compensation

Board so as to reflect any resulting loss of use. (ii) Procure and maintain in respect of the Facilities such builder's risk,

workmen's compensation, employer's liability, public liability, property damage, fire and other insurance, and in such amounts, as is customarily maintained in connection with similar facilities in the locality, and such further insurance as the Department may at any time require. All insurance shall be with such insurers, made payable in such manner, and the evidences thereof delivered to and deposited with such person or persons, as the Department may from time to time require. The Department shall pay the Contractor so much of the proceeds of any such insurance, upon items of the Facilities which become lost, damaged or destroyed, as may be necessary to enable the Contractor to effect the repair and replacement thereof as authorized or directed by

the Department. (6) During any period in which the Contractor shall have the right to use the Facilities in accordance with the provisions of Article 10 hereof, the Contractor shall be reimbursed by the Government (i) for the cost of any war risk or sabotage insurance required by the Department, and (ii) for replacement costs of complete units of the Facilities which the Department shall have directed the Contractor to replace, and the necessity for replacing which is attributable to ordinary wear and tear or to any destruction, loss, or damage arising out of causes or risks not normally incident to operation of the Facilities (unless such destruction, loss, or damage shall be determined by the Department to have been occasioned by the fault or negligence of the Contractor). All other costs incurred by the Contractor during such period* in complying with paragraph (a) of this article shall be borne by the Contractor: Provided, however, that should the Contractor, for lack of work upon which it might employ the Facilities, make no substantial use of the Facilities for any period of six (6) consecutive calendar months after the completion thereof, the Contractor shall be reimbursed by the Government for the costs incurred by the Contractor in complying with paragraph (a) of this Article, excluding costs resulting from fault or negligence of the Contractor, for so long after such period as it shall not make any use thereof and until such time as the Contractor shall again make any use of the Facilities, whereupon its obligation to bear said costs shall immediately resume.

(c) Prior to the Contractor's use of any of the Facilities, and during any period when the Contractor shall not have the right to use the Facilities, in accordance with the provisions of Article 10 hereof, the Government shall reimburse the Contractor for the costs incurred by the Contractor in complying with paragraph (a) of this Article. ART. 12. PERIOD OF USE

(a) The rights and obligations of the parties hereto under Article 10 hereof shall become effective at the time therein provided, and shall continue for six (6) months after the Contractor shall have received notice from the Department of its determination that the Facilities are no longer required either for the national defense or for other public use, and upon the expiration of said six (6) months' period, said rights and obligations shall terminate unless the Department shall, not less than ninety (90) days prior to the expiration of said six (6) months' period, receive notice from the Contractor of its election to extend the period of said rights and obligations, together with all other rights and obligations of this contract, for a term of not less than one (1) year nor more than five (5) years from the date of expiration of such six (6) months' period, as the Contractor may specify in its said notice; in such event all such rights and obligations shall continue for the period so specified and shall terminate at the end of any such period, subject to the right of the Contractor to extend such rights and obligations for further terms of not less than one(1) year nor more than five (5) years each, by giving notice to the Department at least ninety (90) days before the termination of each successive period and specifying the period for which it elects to extend the same: Provided, however, that in any 90-day notice given by the Contractor, as above provided, to extend the period of the rights and obligations of the parties under Article 10 hereof for an additional term, the Contractor may notify the Government that it elects to relinquish the right to the use of the Schedule 6 Facilities during such additional term, and in the event it shall so elect the Contractor shall have no right during such additional term to use the Schedule 6 Facilities and shall pay no rent on account of such Schedule 6 Facilities.

(6) The rights and obligations of the parties hereto which are provided in Article 10 hereof and which may terminate as provided in paragraph (a) of this Article, may also be terminated: (1) As to all or any part of the Facilities, if the Secretary shall determine that

it is in the public interest to terminate the same and shall notify the

Contractor thereof, or (2) As to all but not part of the Facilities, if the Contractor shall give to

the Secretary sixty (60) days' notice of the Contractor's election to terminate the same, which notice, however, may only be given (i) after the expiration of the existing national emergency, or (ii) after the Government shall have failed for a period of ninety (90) days to make payment to the Contractor of any sum due to it hereunder from the Government and provided the Contractor shall have faithfully

performed all of the agreements to be performed by it hereunder. ART. 13. ADDITIONAL PERIOD OF MAINTENANCE

Upon and after the termination in accordance with Article 12 of the Contractor's right to use all of the Facilities, the Contractor shall continue to comply with all provisions of Article 11 hereof for a period of five (5) years (hereinafter called the Stand-by Period”), and for a period of two (2) years thereafter: Provided, however, that at any time, upon giving thirty (30) days' notice to the Contractor, the Department may terminate the Stand-by Period, or the said two-year period, or both.

The Contractor shall be reimbursed by the Government for all costs incurred by the Contractor in effecting such compliance. During the Stand-by Period the Department shall have the right (i) to use the Facilities or any part *So in original contract.

thereof, or (ii) to rent the Facilities or any part thereof to any third party or parties, provided the Department shall have first given the Contractor the right to rent the same upon terms which the Department shall deem to be equal to the terms upon which it proposes to rent to such third party or parties. ART. 14. OPTIONS OF CONTRACTOR AND GOVERNMENT

At any time, and from time to time, prior to the termination or expiration of the Stand-by Period, the Contractor, if it desires to purchase the Facilities, may request the Secretary to determine their then fair vaue. The Secretary, within ninety (90) days after the receipt of any such request, shall determine such fair value, and in making such determination shall give due regard to the original cost of the Facilities, the extent of their prior use, the amount of depreciation and obsolescence chargeable against the Facilities, the value of the Facilities to the Contractor, the replacement cost, and all other facts and circumstances which he may deem relevant. Upon the completion of any such determination, the Secretary shall notify the Contractor of the fair value so determined, and the Contractor for a period of thirty (30) days from the receipt of such notification, and for such additional period if any as may be allowed by the Secretary, shall have the right to purchase the Facilities for a sum equal to such fair value, by making a payment to the Government of an amount equal to such fair value, or by giving notice in writing to the Department of its election to purchase the same at such fair value and entering into a contract with the Government specifying the terms of such purchase: Provided, however, that prior to expiration of the existing national emergency, the Contractor may exercise such right to purchase only if it shall satisfy the Department that upon effecting a purchase it will insure, maintain and keep the Facilities available for national defense until expiration of said national emergency, and the Contractor's right to purchase the Facilities shall not include the right to purchase any floating dry dock. All right of the Contractor so to purchase shall terminate either, (i) upon the termination of any proceedings to purchase the Facilities in accordance with the provisions of this paragraph which are pending at the time of the termination or expiration of the Stand-by Period, or (ii) upon termination or expiration of the Stand-by Period if no such proceeding shall then be pending. ART. 15. MARKING

Each item of the Facilities shall be marked by the Contractor to such extent in such manner, and with such indicia of Government ownership as the Department shall require. Such marking shall be effected by the Contractor as promptly as possible after title to each item shall vest in the Government. ART. 16. INVENTORY

The Contractor shall keep such running or other inventory of the Facilities as the Department may from time to time require. ART. 17. PATENT INFRINGEMENT

(a) The Government shall indemnify and save harmless the Contractor against any loss, damage or expense resulting from or occasioned by any infringement or alleged infringement of any letters patent or the United States when such infringement or alleged infringement is the direct and necessary result of compliance with directions of the Government as to the manufacturing processes to be employed or as to the material, patented or otherwise, to be incorporated in the Facilities and when the use or incorporation of noninfringing processes or material would not have. complied with the directions of the Government. The Contractor shall promptly notify the Government in writing of any and all claims of infringement arising out of this contract that may from time to time be brought to the Contractor's attention.

(6) The Contractor shall indemnify and save harmless the Government against any loss, damage or expense resulting from or occasioned by infringement or alleged infringement of any letters patent of the United States other than any loss, damage or expense covered by the preceding paragraph of this Article. ART. 18. DOMESTIC PREFERENCE

In the performance of the work covered by this contract the Contractor, subcontractors, materialmen, or suppliers shall use only such unmanufactured articles, materials, and supplies as have been mined or produced in the United States, and only such manufactured articles, materials, and supplies as have been manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured, as the case may be, in the United States. The foregoing provision shall not apply either to such'articles, materials,

or supplies, or articles, materials, or supplies from which they are manufactured, as are not mined, produced, or manufactured, as the case may be, in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality, or to such articles, materials, or supplies as may be excepted by the Secretary under the proviso of Title III, Section 3, of the Act of March 3, 1933 (41 U. S. Č. § 10b). ART. 19. RECORDATION OF CONTRACT.

The Contractor will for purposes of recordation duly execute, acknowledge, and record either a copy of this contract, or a summary thereof, in such form and manner as the Department may require, with the Schedules and Exhibits thereto either in the form attached to this contract or in such summarized form and with such description of the property therein referred to as the Department may require. ART. 20. FAILURE OF GOVERNMENT TO Insist on COMPLIANCE

The failure of the Government to insist, in any one or more instances, upon performance of any of the terms, covenants, or conditions of this contract shall not be construed as a waiver or relinquishment of the Government's right to the future performance of any such term, covenant, or condition, and the Contractor's obligation in respect of such future performance shall continue in full force and effect. ART. 21. RECORDS.

(a) The Contractor shall keep adequate records and books of account showing the actual cost of all items of labor, material, equipment, supplies, services, and other expenditures of whatever nature in connection with performance of this contract. The method of accounting employed by the Contractor shall be subject to the approval of the Department, but no material changes will be made therein if the same conforms to good accounting practice and is sufficient for the purposes of this contract.

(6) The Department shall at all times be afforded proper facilities for inspecting the Facilities, both during and after their completion, and the premises and all work, materials, records and books of account pertaining to this contract, and shall at all reasonable times have access thereto for such purposes. All information obtained from said records and books of account shall be treated as confidential.

(c) The Contractor shall preserve all records and books of account pertaining to this contract: Provided, however, that if the Contractor, at any time after six (6) years next following the date upon which the final payment under the contract becomes due, desires to dispose of said records and books of account, he shall so notify the Department, which shall in writing either authorize their destruction or notify the Contractor to turn over the same to the Government for such disposal as it may desire to make thereof; the Contractor shall promptly comply with such notice.

(d) Should the Contractor enter into any subcontract on a cost-plus-a-fixed-fee basis which is incidental to the performance of this contract, the foregoing provisions of this Article shall be applicable to, and included in, such subcontract. ART. 22. TRANSFER OF CONTRACT AND ASSIGNMENT OF CONTRACTOR'S CLAIMS

(a) Except with the prior written approval of the Secretary, or except as otherwise provided in this Article, neither this contract, nor any interest herein, shall be assigned or transferred by the Contractor.

(b) Claims for monies due or to become due to the Contractor from the Government arising or to arise out of this contract may be assigned to any bank, trust company or other financial institution, including any Federal lending agency. Any such assignment may cover all or any part of any claim or claims arising or to arise out of this contract, shall not be subject to further assignment, and may be made to any one or more such institutions or to any one party as agent or trustee for two or more such institutions participating in the financing of this contract. In the event of any such assignment, the assignee thereof shall file written notice of the assignment together with a true copy of the instrument of assignment, with (i) the General Accounting Office of the Government, (ii) the Department, (iii) the surety or sureties upon the bond or bonds, if any, in connection with this contract, and (iv) the Disbursing Officer of the Navy Department at Washington, D. C., who is hereby designated to make all payments under this contract.

(c) Payments to an assignee of any claims arising under this contract shall not be subject to reduction or set-off for any indebtedness of the Contractor to the Government arising independently of this contract.

(d) In no event shall copies of any plans, specifications or other similar documents marked “Secret,” “Confidential,”' or 'Restricted,” and annexed or attached to this contract be furnished to any assignee of any claim arising under this contract or to any other party not otherwise entitled to receive the same. ART. 23. COVENANT AGAINST CONTINGENT FEES

The Contractor warrants that it has not employed any person to solicit or secure this contract upon any agreement for a commission, percentage, brokerage or contingent fee. Breach of this warranty shall give the Government the right to annul the contract, or, in its discretion, to deduct from the payments due and payable hereunder the amount of such commission, percentage, brokerage or contingent fee. This warranty shall not apply to commissions payable by the Contractor upon contracts or sales secured or made through bona fide established commercial or selling agencies maintained by the Contractor for the purpose of securing business. ART. 24. OFFICIALS NOT TO BENEFIT

No member of or Delegate to Congress, or Resident Commissioner, shall be admitted to any share or part of this contract or to any benefit that may arise therefrom, but this provision shall not be construed to extend to this contract if made with a corporation for its general benefit. ART. 25. DISPUTES

Except as otherwise specifically provided this contract, all disputes concerning questions of fact arising under this contract shall be decided by the Secretary, whose decision shall be final and conclusive upon the parties hereto. Pending the settlement of any dispute, the Contractor shall diligently proceed with the work as provided herein. Art. 26. DEFINITION OF "DEPARTMENT

Department” as used in this contract shall mean the Secretary, the Chief of the Bureau of Ships, the Commandant Third Naval District (District Material Officer), and such other duly authorized representative or representatives as the Secretary or the Chief of the Bureau of Ships may designate from time to time. ART. 27. LETTER OF INTENT TERMINATED

All authority of the Contractor to act under the aforementioned Letter of Intent, as amended, is hereby terminated as of the date hereof. Work commenced and contracts entered into with the approval of the Department, under the authority of the said Letter of Intent, as amended, shall be deemed to have been authorized hereunder and shall be carried out under the terms and conditions hereof, and all rights and obligations of the parties hereto under the said Letter of Intent, as amended, are hereby superseded by the provisions of this contract. Notwithstanding any provisions to the contrary in this contract, the wage rates specified in Schedule 9 shall be effective only from and after the date of the execution of this contract, and shall not be retroactive. ART. 28. OVERTIME COMPENSATION OF LABORERS AND MECHANICS

The Contractor shall compensate laborers and mechanics for all hours worked by them in connection with acquisition, construction, installation, completion, maintenance and repair of the Facilities, and in excess of eight (8) hours in any one calendar day at a rate not less than one and one-half (112) times the basic rate of pay of such laborers and mechanics, and shall include a stipulation in each subcontract that laborers and mechanics employed in connection therewith shall be paid at a rate not less than one and one-half (112) times their basic rate of pay for all hours worked by them in excess of eight (8) hours in any one calendar day. ART. 29. CONVICT LABOR

The Contractor shall not employ, in the performance of any work under this contract, any person undergoing sentence of imprisonment at hard labor. ART. 30. LABOR STATISTICS

The Contractor shall report monthly, and will, by agreement, require its subcontractors to report in like manner, within five (5) days after the close of

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