all present and future rights with respect to payments due or to become due from the Debtor to the undersigned Creditor to the rights of the Government under or arising out of the contract. As of the date of execution of this agreement recited at the end thereof, (Insert the Amount) is owing or is due and owing from the Debtor to the Creditor.

In consideration of the award of the contract to the Debtor the undersigned agrees as follows:

1. Payments and Debts. Any and all present and future rights of the undersigned Creditor with respect to payments due or to become due by reason of the above cited indebtedness and including any additional future indebtedness incurred as advances by the Creditor for working capital purposes and/or acquisition of capital assets owed by the Debtor to the Creditor, are fully subordinated to the rights of the Government under or arising out of the contract. The undersigned Creditor will make no demand for payment from the Debtor and will forbear to sue on said indebtedness, or to attempt to collect the same by legal process until the contract is fully performed. (Purchases of raw materials, fabricated subassemblies, component parts and/or subcontractor services supplied by the Creditor to the Debtor under usual trade terms in the normal course of the Creditor's business will not be construed as being advances for working capital purposes.)

2. Property of the Debtor. Any and all present and future rights of the undersigned Creditor against the Debtor or any property of the Debtor are fully subordinated to the prior performance of the contract and the liquidation of all obligations of the Debtor under or arising out of the contract.

3. Collateral. So long as the rights of the Government under or arising out of the contract remain unsatisfied, any and all sums obtained by the Creditor from the Debtor or from any property of the Debtor received by the Creditor whether or not incident to any assignment, mortgate, pledge or other hypothecation of property of the Debtor shall be held for the use and benefit of the Government, and no such sums or property shall belong to or be retained by the Creditor.

4. Assignment of Contract. If any person, firm, corporation or entity other than the Debtor becomes obligated to perform the contract or any part thereof, whether by operation by law or otherwise, any and all present and future rights of the Creditor shall remain fully subordinated to the rights of the Government.

5. Default. In the event of failure, insolvency, default, bankruptcy, arrangement, appointment of receiver for the Debtor or other liquidation of the Debtor, any claim

due from the Debtor. its successors and assigns, to the undersigned Creditor shall be subordinated to any claim of the Government against the Debtor under or arising out of the contract; and in such event the undersigned Creditor hereby assigns to the Government (and this agreement shall constitute the assignment to it) all claims of any kind or sort the Creditor may now or hereafter have against the Debtor and all dividends and other distributions which the Creditor may receive or to which it may be entitled by reason of any claim filed, claimed or asserted against the Debtor. The undersigned Creditor consents to and waives notice of all extensions or renewals of said indebtedness, release of security and any arrangements that may be made in the event control of the business of the Debtor is assumed by a court or by creditors. The undersigned Creditor irrevocably authorizes and empowers the Government to demand, sue for, collect and receive every such dividend or distribution and give acquittance and to file claims and take such other proceedings in the Government's own name or in the name of the undersigned Creditor or otherwise, as the Government may deem necessary or advisable for the enforcement of this agreement and the undersigned Creditor agrees to execute and deliver to the Government such powers of attorney, assignments or other instruments as may be requested by the Government in order to enable the Government to enforce any and all claims upon or with respect to any or all indebtedness of the Debtor to the undersigned Creditor, and to collect and receive any and all dividends or distributions which may be payable or deliverable at any time upon or with respect to any such indebtedness of the Debtor to the undersigned Creditor.

6. Modification. This Subordination Agreement shall not be affected by any action extending the time of performance of the contract or by the making of any amendment or modification authorized by the terms of the contract.

7. Certification. The Creditor hereby certifies that he has not given or executed any prior Subordination Agreement with respect to its claims against the Debtor except as follows: (Insert to

Whom, or if None, so state).

8. Records. The Creditor hereby agrees to direct the Debtor(s) to mark its records in accordance with this Subordination Agreement and (b) to confirm receipt of notice by signing in the place indicated below. The Creditor also agrees to permit audits by the Government and to furnish reports to the Government at its request, to aid it in determining the Creditor's conformity with this agreement.

9. Enforcement. This agreement shall inure to the benefit of and may be enforced

by the United States. It is recognized and agreed by the Creditor that any breach or failure to perform or comply with the terms of this Agreement will be considered as a performance default in the contract awarded the Debtor and the Government may proceed as provided for in these cases in such contract. In the event that the Government terminates the contract with the Debtor for such default and awards the uncompleted portion of such contract to another source at a fair and reasonable price, the Creditor shall be liable for any excess costs incurred by the Government as a result of such re-procurement. In addition, the Creditor shall be liable for all costs and expenses incurred by the Government in enforcing this provision. The rights and remeIdies of the Government provided herein shall not be exclusive and are in addition to the other rights and remedies provided by law.

10. Construction. Nothing in this Agreement shall be construed to obligate the Government to award any contract to the Debtor.

Receipt of a copy of the above agreement is acknowledged. The Debtor agrees to comply with all terms and provisions of this agreement affecting it and to withhold payment or distribution to the subordinating Creditor and to the Debtor's stockholders, officers, and directors in conformity with this agreement. It is further agreed that its failure to carry out any of the terms of this agreement constitutes a default in performance of the contract awarded it and the Government may proceed in accordance with the terms of said contract making provisions for default.

By

(Title)

40-113 0-79--10

(c) Where the NSFPR supplements the FPR, the numbers 50 and up will be assigned to the parts, subparts, or sections involved.

(d) Where the subject matter contained in a part, subpart, section, or subsection of the FPR requires no implementation, the NSFPR will contain no corresponding part, subpart, section, or subsection number.

§ 25-1.108 Implementation and supple

mentation.

The NSF Procurement Regulations "implement" and "supplement" the FPR. The meaning of these terms includes the following:

(a) Implementation may have either of the following meanings:

(1) A part, subpart, section, etc., which treats a similarly numbered portion of the FPR in greater detail or indicates the manner of compliance, including any deviations.

(2) The absence of a corresponding part, subpart, section, etc., in the NSFPR indicates that the FPR is applicable as written. Policies and procedures in the FPR are not repeated in the NSFPR.

(b) Supplementation means NSFPR coverage of matters which have no counterpart in the FPR.

§ 25-1.109 Deviation.

§ 25-1.109-1 Description.

The term "deviation" includes any of the following actions:

(a) When a prescribed contract clause is set forth verbatim, use of a contract clause covering the same subject matter which varies from that set forth.

(b) When a standard or other form is prescribed, use of any other form for the same purpose.

(c) Alteration of a prescribed standard or other form, except as may be authorized in the regulations.

(d) The imposition of lesser or, where the regulation expressly prohibits, greater limitations than are imposed upon the use of a contract clause, form, procedure, type of contract, or upon any other procurement action, including but not limited to, the making or amendment of a contract, or actions taken in connection

with the solicitation of bids or proposals, award, administrative, or settlement of contracts.

(e) When a policy or procedure is prescribed, use of any inconsistent policy or procedure.

§ 25-1.109-2 Procedure.

In the interest of establishing and maintaining uniformity to the greatest extent feasible, deviations from the FPR and NSFPR shall be kept to a minimum and controlled as follows:

(a) In individual cases, deviations from the FPR and NSFPR may be authorized by the Deputy Director. This authority may not be redelegated.

(1) A supporting statement for each individual deviation, which indicates briefly the nature of the deviation and the reasons for such special action shall be included in the contract file.

(b) In classes of cases, requests for deviations from the FPR and NSFPR shall be forwarded to the Deputy Director and shall be accompanied by an appropriate supporting statement.

(c) If a requested deviation is considered appropriate, approval will be accomplished as follows:

(1) Where the deviation applies to an individual case, approval will be granted by memorandum addressed to the Contracting Officer. The contract file shall include a copy of the request and approval.

(2) Where the deviation applies to a class of cases, when necessary, approval of the General Services Administration will be obtained.

(d) When any deviation in a standard form provision is authorized, physical change may not be made in the printed form but shall be made by appropriate provision in the schedule specifications or continuation sheet.