by either party upon notice in writing given prior to May 1 of any calendar year, termination to be effective on December 31 of such year. In the event of termination in this manner, the Government shall not be obligated to deliver any sealskins to the Contractor subsequent to the notice of intent to terminate, and upon termination the Contractor shall return to Government custody all Government-owned sealskins in its custody, except as may be agreed otherwise by the parties; and a final accounting shall be made within 30 days from the date of termination.

(b) The Secretary of the Interior reserves the right to terminate this Agreement at any time for the following causes :

(1) Failure of the Contractor, in the judgment of the Secretary of the Interior, to maintain the recognized standards of quality of materials and workmanship contemplated by Section 6 of this Agreement.

(2) Breach of, or default under, this Agreement in any respect. Termination for cause shall be effective ten days subsequent to receipt by the Contractor of written notification thereof. If, within the ten-day period, the Contractor shall, to the satisfaction of the Secretary, cure the cause for the termination, the notice of termination shall be withdrawn and be without effect. In the event of termination for cause the Contractor shall return to Government custody all Government-owned sealskins in its custody, except as may be agreed otherwise by the parties: Provided, That if the termination takes effect more than eighteen days after an auction held pursuant hereto, the Contractor shall be allowed to process and sell at auction sealskins in its custody in a quantity not to exceed the number of sealskins sold at the last auction prior to the date of termination. A final accounting shall be made within thirty days from the date of such auction.

The rights and remedies of the Government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this Agreement.

(c) In the event that this Agreement is terminated by the Government for any reason other than failure of the Contractor to proceed hereunder, the Contractor, within ninety (90) days of receipt of notice of termination, may elect the following course of action, and advise the Government in writing accordingly :

(1) The Contractor shall sell and transfer to the Government all depreciable capital assets which it has acquired in connection with its performance of this Agreement, and the Government shall pay to the Contractor for said assets an amount of money equal to the original cost thereof, less accrued depreciation up to the date of termination; and

(2) The Contractor shall assign to the Government any leasehold interest which it has acquired in any real property in connection with its performance of this Agreement, and the Government will assume all rights and obligations under such lease; and

(3) The Government will allow to the Contractor an amount for any deferred costs related to Government-owned sealskins not charged to current expenses, and for all expenses direct and indirect spent by the Contractor for the storing, insuring, processing and producing of any Government-owned sealskins in the custody of the Contractor at the time of termination of this Agreement; and

(4) The Government shall permit the Contractor to continue to use any of the above-mentioned assets and facilities to such extent as may be necessary to complete any work, on accounts other than the Government account, which has been delivered to the Contractor and for which the Contractor is contractually committed. The Contractor will pay the Government for such use a reasonable compensation, determined by the Director to be sufficient to reimburse the Government for all costs attributable to such use. Funds to pay the compensation provided for in Section 19 (c) (1) and 19(c) (3) shall be withheld by the Contractor from receipts due the Government as an addition to the Contractor's share in the proceeds of the sale of sealskins: Provided, That in the event the Contractor does not have in its custody funds sufficient for this purpose, payment to the Contractor by the Government shall be subject to the availability of appropriated funds. Non-availability of funds shall not be a bar to termination hereof. Payment of any monies due from the Government under Section 19 (c) (2) shall be charged as an expense against income derived from the future sale of sealskins: Provided, That if such income is unavailable or inadequate, payment shall be subject to the availability of appropriated funds.

This subparagraph (c) shall not effect in any way the rights and remedies of the Government in the event of breach or default.

20. Disputes

(a) Except as otherwise provided in this Agreement, any dispute concerning a question of fact arising under this Agreement which is not disposed of by agreement shall be decided by the Director, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Director shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the Director a written appeal addressed to the Secretary. The decision of the Secretary or his duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the Agreement and in accordance with the Director's decision.

(b) This "Disputes" clause does not preclude consideration of law questions in connection with decisions provided for in subsection (a) above: Provided, That nothing in this Agreement shall be construed as making final the decision of any administrative official, representative, or board on a question of law.

21. Auctions

No

The sale of all sealskins processed in accordance with the provisions of this Agreement shall be at public auction conducted by the Contractor. The Director, however, reserves the right to postpone the date of the auction or withdraw from sale any or all sealskins at any time before the same shall be actually sold. bid shall be effective unless the bidder pays at least 50 percent of the purchase price of such sealskins on the date of sale and the balance within 20 days, and no sealskins shall be delivered to any bidder until full payment thereof has been made to the Contractor. No discounts for cash payments will be allowed, but, at the discretion of the Contractor, a cash penalty for delayed payments may be charged, and added to the amount of the sale.

In the event that full payment is not made within 20 days, the amount deposited shall be forfeited and paid in full to the Government. The amount bid for the sealskins involved shall not be included in the gross amount of the sales of that auction, and such sealskins will be sold at the next auction.

No charge shall be made to buyers for brokerage fees, lot money, or similar charges, except packing charges.

It is mutually understood that auction sales normally will be held twice a year in the spring and fall. In the event that either of these auctions is postponed by the Government for more than 60 days beyond the date requested by the Contractor, the Government shall pay the storage and insurance charges accruing after the 60-day delay on such sealskins intended to be offered for sale at such auction or auctions, and upon request of the Contractor shall advance, as partial payment of the sum that would have been received by the Contractor had such sealskins been sold, such amount as may be determined to be proper by the Director, subject to the availability of such funds.

22. Financial Participation-Sealskins

Participation of the Government and the Contractor in the proceeds of the sale of sealskins processed in accordance with the provisions of this Agreement shall be as follows:

(a) The Contractor's participation per sealskin in the proceeds of the sale of sealskins shall be:

(1) For all sealskins processed and sold as dressed, dyed, machined and finished sealskins, 16 percent of the average selling price of such sealskins sold, plus $14 per sealskin, and

(2) For all female sealskins processed and sold as sheared, dressed and finished sealskins: (i) for prices up to and including the average selling price of $30.00, 60 percent of the average price of such sealskins sold; (ii) for prices over the average selling price of $30, $18 plus 16 percent of the difference between the selling price and $30.

(b) The annual net profit of the Contractor is defined as the amount realized by the Contractor from the formulae in subparagraph (a) of this Section, less the allowable expenses of the Contractor resulting from its operations under this Agreement, including any increase or decrease in the payments to National, Superior, and the Corporation made in accordance with Section 11(b) of this Agreement, and exclusive of those expenses directly attributable to the development, processing, and sale of by-products.

(c) The basic annual profit, which is deemed a fair and reasonable return, shall be $177,400 (based on annual sales of $4,440,000 which are estimated to produce income to the Contractor of $1,402,000 of which $1,225,000 are estimated allowable expenses) increased or decreased in each year wherein the gross annual sale of sealskins is at least $100,000 more or less than $4,440,000. The amount of increase or decrease to the basic annual net profit shall be $2,000 for each complete unit of $100,000 sales in excess of or less than $4,440,000. An increase in the basic annual profit shall not be recognized where the allowable expenses exceed 87.375% of the Contractor's income as determined under subparagraph (a) of this Section.

(d) In the event that the annual net profit exceeds the basic annual profit, the difference between the annual net profit and the basic annual profit will be refunded to the Government. In the event that the annual net profit is less than the basic annual profit, the Contractor shall retain the difference between the basic annual profit and the annual net profit from any sums due the Government.

(e) The Government's participation in the proceeds of the sale of sealskins shall be the difference between the gross annual sales, and the amount of the Contractor's participation determined in accordance with subparagraphs (a) to (d) of this Section.

23. By-Products

(a) The sale of any by-products of the processing of Government-owned sealskins shall be on the open market to the highest bidder.

(b) Net annual profit from the sale of such by-products shall be the difference between the gross amount of annual sales and the expenses of the Contractor directly attributable to the development, processing, and sale of such by-products, as distinguished from allowable expenses attributable to sealskins.

(c) The participation of the Government and the Contractor in the net annual

profit from the sale of such by-products shall each be 50 percent.

(d) The amount due to the Government under this Section shall be remitted by the Contractor on or before July 31 and January 31 of each year.

24. Accounting principles

In ascertaining profits and allowable expenses for purposes of Section 22 hereof, the following principles shall apply:

(a) Allowable expenses shall be limited to the following:

(1) Direct costs which can be identified specifically with the performance of this Agreement.

(2) The portion of indirect costs allocable to the performance of this Agreement, on an appropriate apportionment between the business done under this Agreement and the other business of the Contractor.

On any items of expense as to which the Director has a right of approval and has exercised that right, expenditures in excess of amounts approved shall not be allowable expenses.

(b) Books are to be kept in accordance with good accounting practices. (c) Capital assets are to be fully depreciated over the period from the commencement of operations to December 31, 1974.

(d) Payments made to National, Superior and the Corporation under the Employment Agreement shall be deemed a direct cost of this Agreement.

(e) Salaries paid to not more than two joint venturers in the Contractor shall be considered an indirect cost.

(f) Overhead expense shall be deemed an indirect cost.

(g) Sums spent in research shall be deemed a direct cost: Provided, That sums spent in research relating to the formulae for dyes shall not be an item of allowable expense.

(h) Entertainment expenses shall be deemed an indirect cost.

(i) Interest payment shall not be an item of allowable expense. (j) Income taxes shall not be an item of allowable expense.

(k) The first fiscal year of the Contractor will commence on July 1, 1964, and all allowable expenses accruing to the Contractor prior thereto shall be added to the allowable expenses of the first fiscal year.

(1) Promotion and advertising shall be deemed an indirect cost.

(m) Except as otherwise specified in this Agreement the principles stated in Subpart 1-15.2 of the Federal Procurement Regulations (41 CFR 1-15.2) in effect at the date of this Agreement shall apply.

25. Price Redetermination

Within 60 days subsequent to the conclusion of the fourth auction held pursuant to this Agreement and at five-year intervals thereafter, and at any other time at the request of either party, the arrangements for participation of the Contractor and the Government in the proceeds of the sale of sealskins and the by-products of the processing thereof and for determining profits and allowable expenses shall be reviewed by the parties and adjustments made which shall be effective for subsequent transactions. Such adjustments shall reflect experience with actual costs of operation and current proceeds of sales, and they shall be calculated to achieve a fair and reasonable, but not excessive, profit to the Contractor for the services rendered to the Government in the performance of its duties under the terms of this Agreement. Any failure to reach an agreement on such adjustments shall be deemed to be a dispute concerning a question of fact within the meaning of Section 20 hereof.

26. Inspection

(a) Authorized representatives of the Government shall have access to the Contractor's plant and facilities and the right to inspect operations and examine any directly pertinent books, documents, papers, and records of the Contractor involving operations and transactions related to this Agreement. Any such information obtained by representatives of the Government and the financial and cost statements and reports submitted in accordance with this provision shall be treated and protected as information obtained in confidence by a Federal agency.

(b) The Contractor agrees that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment under this Agreement, have access to and the right to examine any directly pertinent books, documents, papers, and records of the Contractor involving transactions related to this Agreement.

(c) The Contractor further agrees to include in all his subcontracts hereunder a provision to the effect that the subcontractor agrees that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment under the subcontract, have access to and the right to examine any directly pertinent books, documents, papers, and records of such subcontractor, involving transactions related to the subcontract. The term "subcontract" as used in this clause excludes (i) purchase orders not exceeding $2,500 and (ii) subcontracts or purchase orders for public utility services at rates established for uniform applicability to the general public.

27. Excusable Delays

In respect to those obligations of the Contractor which are to be performed within a stipulated period of time, the Contractor shall not be charged with noncompliance with any of such provisions due to unforeseeable causes beyond the control and without the fault or negligence of the Contractor including, but not restricted to, act of God or of the public enemy, acts of the Government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather, and delays of another Contractor due to such causes, if the Contractor shall, within ten days from the beginning of any such delay, notify the Director in writing of the causes of delay, who shall ascertain the facts of the extent of the delay and extend the time for compliance with the particular obligation affected by such cause of delay.

28. Work Hours Act of 1962—Overtime Compensation

This Agreement, to the extent that it is of a character specified in the Work Hours Act of 1962 (Public Law 87-581, 76 Stat. 357-360) and is not covered by the Walsh-Healey Public Contracts Act (41 U.S.C. 35-45), is subject to the following provisions and to all other provisions and exceptions of said Work Hours Act of 1962.

(a) No Contractor or subcontractor contracting for any part of the contract work shall require or permit any laborer or mechanic to be employed on such work in excess of eight hours in any calendar day or in excess of forty hours in any workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times his basic rate of pay for all hours worked in excess of eight hours in any calendar day or in excess of forty hours in such workweek, whichever is the greater number of overtime hours.

(b) In the event of any violation of the provisions of subparagraph (a), the Contractor and any subcontractor responsible for such violation shall be liable to any affected employee for his unpaid wages. In addition, such Contractor or subcontractor shall be liable to the United States for liquidated damages. Such liquidated damages shall be computed, with respect to each individual laborer or mechanic employed in violation of the provisions of subparagraph (a), in the sum of $10 for each calendar day on which such employee was required or permitted to work in excess of eight hours or in excess of forty hours in a workweek without payment of the required overtime wages.

(c) The Director may withhold, or cause to be withheld, from any moneys payable on account of work performed by the Contractor or subcontractor, the full amount of wages required by this Agreement and such sums as may administratively be determined to be necessary to satisfy any liabilities of such Contractor or subcontractor for liquidated damages as provided in subparagraph (b). 29. Convict Labor

In connection with the performance of work under this Agreement, the Contractor agrees not to employ any person undergoing sentence of imprisonment at hard labor.

30. Nondiscrimination in Employment

In connection with the performance of work under this Agreement, the Contractor agrees as follows:

(a) The Contractor will not discriminate against any employee or applicant for employment because of race, creed, color, or national origin. The Contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, creed, color, or national origin. Such action shall include, but not be limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Government setting forth the provisions of this Nondiscrimination clause.

(b) The Contractor will, in all solicitations or advertisements for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive consideration for employment without regard to race, creed, color, or national origin.

(c) The Contractor will send to each labor union or representative of workers with which he has a collective-bargaining agreement or other contract or understanding, a notice to be provided by the Director, advising the said labor union or workers' representative of the Contractor's commitments under his Nondiscrimination clause, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

(d) The Contractor will comply with all provisions of Executive Order No. 10925 of March 6, 1961, and of the rules, regulations, and relevant orders of the President's Committee on Equal Employment Opportunity created thereby. (e) The Contractor will furnish all information and reports required by Executive Order No. 10925 of March 6, 1961, and by the rules, regulations, and orders of the said Committee, or pursuant thereto, and will permit access to his books, records, and accounts by the Government and the Committee for purposes of investigation to ascertain compliance with such rules, regulations, and orders.

(f) In the event of the Contractor's noncompliance with the Nondiscrimination clause of this Agreement or with any of the said rules, regulations, or orders, this Agreement may be canceled in whole or in part and the Contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order No. 10925 of March 6, 1961, and such other sanctions may be imposed and remedies invoked as provided in