that month. If the fees and costs actually incurred, as shown by such statement and invoice, are greater than the estimated amount for said month paid by NAVY pursuant to this paragraph, then NAVY shall promptly pay to OPERATOR the difference in the amount specified in such statement and the amount paid pursuant to said estimate. If the fees and costs actually incurred as shown by such statement and invoice are less than the amount for said month paid by NAVY, such difference shall be deducted from the amount due OPERATOR from NAVY according to the estimate for the following month. Estimates of costs, invoices, and statements shall be in such form and reasonable detail as NAVY may require. The invoices with statements of costs shall be certified by two officers of OPERATOR or other responsible officials of OPERATOR acceptable to the OFFICER IN CHARGE one of whom shall be a person supervising accounting with respect to this contract. At any time or times either before or after final payment on account of actual costs and fees, NAVY shall be permitted to make such audit of invoices and statement of cost as it may deem proper. Each provisional payment shall be subject to reduction to the extent of the amounts included in the related invoices and statements of costs which are found not to constitute NAVY's actual cost and shall also be subject to any reduction for overpayments or to any increase for underpayments on preceding invoices.

B. In the event of any disallowance of costs in an audit of the monthly invoices and statements, and of the books and records of the services performed hereunder, the DIRECTOR shall determine the allowability of any and all such items of cost. If the OPERATOR does not agree with such a determination, it may take appropriate action under the disputes clause hereof.

ARTICLE XXII

CHANGES

A. The DIRECTOR or his representative may at any time, by written order, and without notice to the sureties, if any, make changes withi the general scope of this contract, in the plans and specifications o instructions incorporated herein.

B. If any such change causes an increase or decrease in the estimate cost of, or the time required for, the performance of any part of the work under this contract, whether changed or not changed by any such order, or otherwise affects any provision of this contract, an equitab adjustment shall be made:

1. In the estimated cost or completion time, or both;

2.

In the amount of any fixed fee to be paid to the OPERATOR; an

3.

In such other provisions of the contract as may be so

affected, and the contract shall be modified in writing

accordingly.

Any claim by the OPERATOR for adjustment under this clause must be asserted within thirty (30) days from the date of receipt by the OPERAT of the notification of change; provided, however, that the DIRECTOR or his representative, if he decides that the facts justify such action, may receive and act upon any such claim asserted at any time prior to final payment under this contract. Failure to agree to any adjustment shall be a dispute concerning question of fact within the meaning of

the clause of this contract entitled "Disputes". However, except as provided in paragraph (c) below, nothing in this clause shall excuse the OPERATOR from proceeding with the contract as changed.

C. Notwithstanding the provisions of paragraphs (a) and (b) above, the estimated cost of this contract, shall not be increased or deemed to be increased except by specific written modification of the contract indica the new contract estimated cost. Until such modification is made, the

OPERATOR shall not be obligated to continue performance or incur costs
beyond the point established in the clause of this contract entitled
"Limitation of Cost".

ARTICLE XXIII

LIMITATION OF COST

A. It is estimated that the total cost to the Government for the performance of this contract, exclusive of any fee, will not exceed the estimated cost set forth in the contract, and the OPERATOR agrees to use his best efforts to perform the work specified in the contract and all obligations under this contract within such estimated cost. If, at any time, the OPERATOR has reason to believe that the costs which he expects to incur in the performance of this contract in the next succeeding sixty (60) days, when added to all costs previously incurred, will exceed seventy five percent (75%) of the estimated cost then set forth in the contract, or if, at any time, the OPERATOR has reason to believe that the total cost to the Government for the performance of this contract, exclusive of any fee, will be greater or substantially less than the then estimated cost hereof, the OPERATOR shall notify the DIRECTOR or his representative in writing to that effect, giving his revised estimate of such total cost for the performance of this contract.

B. Except as required by other provisions of this contract specifically ' citing and stated to be an exception from this clause, the Government shall not be obligated to reimburse the OPERATOR for costs incurred in excess of the estimated cost set forth in the contract, and the OPERATOR shall not be obligated to continue performance under the contract (including actions under the Termination clause) or otherwise to incur costs in excess of the estimated cost set forth in the contract, unless and until the DIRECTOR or his representative shall have notified the OPERATOR in

writing that such estimated cost has been increased and shall have specified in such notice a revised estimated cost which shall thereupo constitute the estimated cost of performance of this contract. No noti communciation or representation in any other form or from any person other than the DIRECTOR or his representative shall affect the estimat cost of this contract. In the absence of the specified notice, the Government shall not be obligated to reimburse the OPERATOR for any costs in excess of the estimated cost set forth in the contract,. whether those excess costs were incurred during the course of the cont or as a result of termination. When and to the extent that the estimat cost set forth in the contract has been increased, any costs incurred b the OPERATOR in excess of the estimated cost prior to such increase shall be allowable to the same extent as if such costs had been incurre after the increase; unless the DIRECTOR or his representative issues a termination or other notice and directs that the increase is solely for the purpose, of covering termination or other specified expenses. C. Change orders issued pursuant to the Changes Section of this contra shall not be considered an authorization to the OPERATOR to exceed the estimated cost set forth in the contract in the absence of a statement in the change order, or other contract modification, increasing the estimated cost.

D.

In the event this contract is terminated or the estimated cost not increased, the Government and the OPERATOR shall negotiate an equitable distribution of all property produced or purchased under the contract based upon the share of costs incurred by each.

ARTICLE XXIV

OPERATORS DUTY TO PAY

OBLIGATIONS

OPERATOR shall, each month and upon termination of this contract by

either NAVY or OPERATOR, liquidate all obligations incurred by OPERATOR

hereunder promptly, including payment of all salaries and wages due workmen and employees, and shall settle all accounts payable by OPERATOR including, but not limited to, those for all services and purchases of

equipment, materials and supplies used or to be used in operations hereunder.

ARTICLE XXV

PROHIBITION AGAINST OWNING OR

ACQUIRING INTEREST IN OPERATIONS

ON ADJACENT LANDS

A. OPERATOR covenants and agrees that it does not own and will not acquire any interest whatsoever in lands within five miles of the boundary of Naval Petroleum Reserve No. 4, more particularly described at 37 Fed. Reg. 10088 (1972).

B. OPERATOR covenants and agrees that it will not engage in any activity, either on or off the RESERVE, which could in any manner be construed to conflict with NAVY's responsibilities, obligations or interests.

C. For breach of the covenants contained in this article NAVY shall

have the absolute and uncontestable right to:

D.

1. Terminate this contract immediately without incurring

any liability to OPERATOR,

2. Expropriate all of any part of the penal sum of

OPERATOR's performance bond hereunder,

3. Institute legal action against OPERATOR for damages

4.

or other appropriate legal relief, and

Institute equitable action against OPERATOR for in

junctive or other appropriate equitable relief.

In the event action under this article is commenced, OPERATOR covenants and agrees that it will pay all litigation fees and costs incurred by or on behalf of NAVY.