LEASEAGREEMENTNO.
LEASEAGREEMENTbetweenUT-BATTELLE,LLC(“Company”),and ______,(“Lessor”).
The Company acting under its Prime ContractNo.DE-AC05-00OR22725with the United States
DepartmentofEnergy(DOE)issuesthisAgreement.
Anyinconsistenciesshallberesolvedinaccordancewiththefollowingdescendingorderofprecedence:
1. LeaseAgreementNo.
2. Exhibit9– TechnicalData(June2011)
3. GeneralTermsandConditions–CommercialItems(October 12, 2017)
4. Attachment1,Statement of Work
ARTICLEI.DEFINITIONS
Thefollowingtermsshallhavethemeaningsbelow:
“Acceptance”and“Accepted” means Producthassuccessfullycompletedthefunctionalandperformance systemtestthatLessoralongwithCompanyshallconductinaccordance withtheAcceptance TestPlan.
“Install,” “Installation,”and“Installed”meansthathardware,software,oraSystemhasbeenset-upin accordancewithLessor’spublishedinstallationspecificationsandisreadyforuseby Company.
“Maintenance”and“HardwareandSoftware”meansLessorsupportservicesprovidedunderthis
AgreementpursuanttoAttachmentA,SOW.
“CORAL-2System”,“System”,meanstheproductsspecifiedinAttachment1,SOW. “PaymentStartDate”meanstheAcceptancedateoftheSystem.
“PaymentTerm”meansperiodoftimeduringwhichthe Companymakesleasepaymentstothe Lessoror itsassignee.
“Statement of Work” (SOW) means the requirements established in the CORAL-2 Build Statement of Work
“SystemAnalyst”meansLessorsupportservicesprovidedunderthisAgreementpursuanttoAttachment
A,SOW.
“TBD”meanstheissue/itemhasyetto-be-determined.
Note:Thissectionwillbeupdatedasrequiredduringnegotiations.
ARTICLEII.SCHEDULE
A. AgreementType
ThisisaLease-to-OwnPurchase[“LTOP”]. Item 1 shall be leased. Throughout the term of the Agreement, Company may identify other items as being leased items. Items 2, 3, and 4 are not leased.
B. Description
TheLessorshallprovideallnecessarymaterials,labor,equipment,andfacilities(exceptasspecified hereintobefurnishedbytheCompany)necessaryforthesatisfactoryandtimelyperformanceofthe followingAgreementlineitems.
Item1
Item 1 will provide for a System in accordance with the CORAL-2 Build Statement of Work (SOW) in Attachment 1.
The principal price for Item 1 is $ (TBD). The lease cost including interest of Item 1 is $ _ (TBD).
The payment schedule including interest for the full term of the lease is described in Attachment 4. The payment term for Item 1 is (TBD) months. The payment term is based on the principal amount of
$ (TBD) amortized over a month period at an annual interest rate of (TBD) percent at the date of Final Acceptance for Item 1.
Item2
Item2will providefor hardwaremaintenancefor Item1inaccordancewiththe SOW. Theperiodofperformancewillbeginat Final Acceptance of Item 1 and continue for 5 years.
Monthly Price $ (TBD)
Total Price $______(TBD)
Item3
Item3will providefor softwaremaintenancefor Item1inaccordancewiththe SOW. Theperiodofperformancewillbeginat Final Acceptance of Item 1 and continue for 5 years.
Monthly Price $ (TBD)
Total Price $______(TBD)
Item4
Item4willprovideforsystemanalystsupportforItem1inaccordance withtheSOW. Theperiodofperformancewillbeginat Final Acceptance of Item 1 and continue for 5 years.
MonthlyPrice$ (TBD)
Total$ (TBD)
C. Funding
This Agreement shall be incrementally funded. Funding is subject to annually appropriated funds. The total estimated cost to the Company for performance of this Agreement is $______(TBD). The amount current allotted to this agreement for payment is $ (TBD)
D. Payment
1. TheLessorshallnotsubmitaninvoiceforpaymentuntiltheSystem,includingdataandmaterials certification,ifrequiredbytheAgreement,hasbeeninspectedandacceptedby theCompanyin accordancewiththeprovisionsofthisAgreement.TheCompanywillnotifytheLessorinwritingimmediatelyuponacceptance.TheCompanywilladvisetheLessorthattheyareto invoicetheCompanyforthepurchasepriceorinaccordancewiththe payment table, Attachment4.
Time,withrespecttotermsofpayment,shallbeginuponthereceiptby theCompanyofa properinvoice.
EarlyPayment:Companyshallhavetheoptionto makeadvancedleasepaymentsatanytime duringtheLeaseTermandshallreceiveacredittowardstheLeasePaymentsdueattheendofthe LeaseTerm.Thecreditshallbedeterminedby LessorandprovidedtoCompany.Uponagreementofthecreditamountby LessorandCompany,theadvancedLeasePaymentmaybe made.Thiswillalsoapplyto monthlyhardwareandsoftwaremaintenanceasdescribedin ArticleVI,Options.
2.Taxes
(a)PersonalPropertyTaxes
LessorshallpayforPersonalPropertyTaxes. CompanyshallreimburseLessorforsuch taxeswithin 30daysofthesubmissionofthetaxassessmentsprovidedtoLessor byRoane CountyandtheCityofOakRidge. PersonalPropertyTaxes shallnotbeapartofthelease payments.
Lessoragreesthatwhilethelegalincidence ofthepersonalpropertytaxapplicable tothe leasedpropertyisontheCompany,Lessorshallpaysuchtaxestotheappropriate taxing authorityinaccordance withtherulesandstatutesforpropertytaxreporting ofleased personalpropertyadministeredbytheStateofTennessee.
(b)SalesandOtherTaxes
Allothertaxesexcept income taxesandotherGovernmentalchargesbasedonormeasured bythechargessetforthinthisAgreement, orbasedonthesaleorleaseoftheSystem,its use,oranyServices provided herein,noworhereafter imposed byanyGovernment authority,includingbutnotlimitedtoSales, Use, andGross Receiptstaxes, willbepaidby Company.Companyrepresentsthatitholds aTennesseedirect paypermitforUseTaxand willprovidetheLessorwithacopy.
E. Invoicing
TheLessormustsubmitseparateinvoicesforpaymentsassociatedwiththelease,maintenance,and systemanalyst.PaymenttermsareNet30days.
AgreementNo. shallbereferencedonallinvoices.
Invoicesshallbesubmittedintriplicateto:
UT-Battelle,LLC
Attention:AccountsPayable
PostOfficeBox2308
OakRidge,Tennessee37831-6436 (865)576-6343Fax ,Emailaddress
ElectronicFundsTransfer(EFT).ElectronicFundsTransfer(EFT)expeditespaymentsto subcontractorsandisourpreferredmethodofpayment.ForinformationaboutEFT,visit
VendorAccountStatusSystem.Fordetailedpaymentinformationorinquiriesconcerninginvoices andpayments,visittheUT-Battelle,LLCAccountsPayableVendorAccountStatusSystem(VASS) at
F. DeliverySchedule
DeliveryoftheItem1shallbeginby (TBD) andbecompletedonorbefore (TBD).Acceptanceshalloccur by (TBD).
G. TransportationTerms
TheFOBpointshallbe“Destination”.TheLessorisresponsibleforallshippingcharges.
H. TransferofTitle
Lessor shallretaintitletotheSystemuntilCompanyhasmadeallpaymentsrequiredundertheterms ofthisAgreement.Uponissuanceofthefinalleasepayment,titleshallimmediatelytransfertoDOE. IfthisAgreement isterminated duringthePaymentTerm,thentitletotheSystemshallremainwith LessorunlessCompanyexercisesitsrightstopurchasetheSystem.
ARTICLEIII.AGREEMENTCONDITIONS
A. RiskofLoss
LessorassumesallriskoflossofordamagetotheProductsuntilAcceptance, exceptforlossofor damagetotheProductsresultingdirectlyfromCompany’snegligence. Companyassumesallriskof lossofordamagetotheProductsuponAcceptance. Companywillberesponsiblefordamagetothe Productscausedby itsnegligenceifsuchdamageoccursfollowinginstallation.
B. AvailabilityofFunds
LessorunderstandsthatfundingoftheAgreementissubjecttothefutureavailabilityofannually appropriated,apportioned,andallottedfundsunderContractDE-AC05-00OR22725orasuccessor primeoperatingcontractandthatthisAgreementmustbemadeandadministeredconsistentwith31
U.S.C.1341and41U.S.C.11. Accordingly,fundingofthisAgreementshallbeprovidedonafiscal yearbasis,subjecttoadetermination bytheCompanythatsufficientappropriatedandapportioned fundsareavailabletobeallottedandavailableforpaymentunderthisAgreement. Suchfundsshall beappliedtocontinuetheAgreement,subjecttotheavailabilityoffunds.Intheeventthatnofunds areappropriated,apportioned,andallottedoradetermination isnotmadebytheCompanythat sufficientfundsareavailabletocontinuethisAgreement andthentheCompanymaycancelthe Agreementwitha14-calendardaynoticetotheLessor. Thecancellationshallbeatnocostthe Company. IffundingpreviouslyavailableunderthisAgreementiswithdrawnduringthecurrent fiscalyearasaresultofbudgetaryactionbytheOfficeofManagement andBudgetorCongress,the CompanywillnotifytheLessorofthisoccurrenceandmaycanceltheAgreementupon a14-calendar daynoticetotheLessor. Thecancellation shallbewithoutpenaltytotheCompany. Upon cancellationoftheAgreementanduponwritten directionfromtheLessor, theCompanyshalldeliver theItem 1 (leased items)totheLessorwithintheContinentalUnitedStatesconsistentwith thetermsandconditions ofthisAgreement.
C. ReturnofSystem (Item 1)
IntheeventCompanyisrequired toreturntheSystem described in Item 1underthetermsofthislease,Companyshall, uponoraftertheexpirationoftheleaseremoveandreturnItem1at theCompany'sexpense. Item 1 shall be appropriately packageandshipped toalocationwithinthecontinentalUnitedStates designatedbyLessor. Item 1 shallbereturnedintheoriginalconditionasdelivered,withthe exceptionofordinarywearandtearfromtheproperuse. .
D. NoSetoff
Companyagreesthat,uponacceptance oftheSystem,itsobligation topaytheLeasePaymentsshall notbesubjecttoanyabatement, reduction,set-off,defense,counterclaimorrecoupment whatsoever, dueorallegedtobedueto,orbyreasonof,anypast,present, orfutureclaimswhichCompany may haveagainstLessor,themanufactureroftheSystem,any assigneeoftheLessororagainstany person foranyreasonwhatsoever.
E. AssignmentofPayments
LessormayassignitsrightstoanyandallmoniesdueortobecomedueundertheAgreement toa bank,trustcompanyorotherfinancinginstitution. Anysuchassignment shallbeeffectivewhenthe Assigneefileswrittennoticeoftheassignment, togetherwithatruecopyoftheinstrumentof assignment,withCompany. Companyagreestoacknowledge suchnoticetoevidencesuch assignment, andagreestomakepaymentofanyandallmoniesdueortobecomedueunderthe Agreementinaccordancewiththetermsofsuchassignment.
F. Attachments
Companymay make alterations or addattachments, featuresordevicestotheSystemfurnishedunderthis Agreement. Companyagreestoremoveany alterationsorattachmentsbeforetheSystemis returnedtoLessorand agreestopayLessorforanychargestorestoretheSystem toitsoriginalcondition (normalwearand tearexcluded.)
G. AuthorizedMovement
UponwrittennotificationtoLessor,Productsmay betransferredfromone CompanyorDOElocation toanotheratanytimeduringthe LeaseTerm. Authorizedmovementsshallnotaffectleasepayments orwarrantyprovisions.
H. TechnicalDirection
Theclause,TechnicalDirection(Jan2006),isincorporatedby referenceandamendedasfollows: "PerformanceunderthisAgreementissubjecttothetechnicaldirectionoftheCompany'sTechnical ProjectOfficer(TPO):"
TPOName: JamesH.Rogers
TPOTelephone#: 865-576-2978
TPOEmailAddress:
I.EnvironmentalSafetyandHealth
Thefollowingshallapplyforallworkperformedon-siteatOakRidgeNationalLaboratory: SiteAccessRequirements
Lessoremployees and Lessor’s subcontractorshavingunescortedCompanysite accessshall completethe Company's"ORNLSite AccessTraining." Otherwise,escortbyanindividualwhohascompletedthetrainingprogramis required.
All electrical equipment, assemblies, or items shall be field evaluatedand labeled by an OSHA Recognized NRTL ( at the Lessor’s expense. The NRTL'sevaluation label mthe NRTL's evaluation report with the equipment.
The Lessor shall perform service and maintenance activities employingwork practices required forelectrical safety by the Occupational Safetyand Health Administration (OSHA) in 29 CFR 1910Subpart S and NFPA 70E,Standard for Electrical Safety in the Workplace 2012 Edition.
Maintenance, testing, startup, and repair activities involving thepotential for contact with exposedenergized electrical circuits orparts shall be performed with the equipment de energized unless this isinfeasible because of diagnostic or operational limitations. To controlpotential electrical hazards,system components shall be disconnectedfrom their electric energy source(s), with the disconnectingmeans(power cord and plug, safety switch, etc.) under the control of theservice Lessor. All stored electrical energy which might endangerpersonnel through contact (high amperage batteries, capacitorsand highcapacitance elements, high energy electromagnets, etc.) shall bedischarged or safely isolated from the circuit. See Lockout/Tagoutsection.
Prior to the commencement of any on-site work, methods to identify andprevent work-related musculoskeletal disorders shall be developed andimplemented by the Lessor. Lessor shall provide documentation to theORNL site safety contact upon request.
The Lessor shall comply with the requirements of 29 CFR 1910 Subpart P"Hand and Portable Powered Tools and Hand-Held Equipment". Less than 50 pounds net weight of powder actuated tool cartridges may bekept in a storage cabinet (non-magazine) or container that is lockable,properly marked, and dedicated for those materials or devices. Otherrequirements for Explosives/Blasting apply.
The Lessor shall comply with all manufacturers' requirements andrecommendations.
Any personal protective equipment (PPE) required for use of thechemicals shall be supplied by theLessor. Lessor personnel shall betrained for the required PPE in accordance with 29 CFR 1910.132,Personal Protective Equipment. Lessor personnel shall wear safetyglasses with side shields at alltimes during work activities withpotential for eye injury unless a higher level of eye protection isrequired for specific hazards. Lessor employees shall wear clothingsuitable for the environmental andwork conditions. The minimum shall beshort sleeve shirts, long trousers, and leather or otherprotective workshoes or boots with protective toes when there is potential for foot injury.
Prior to working on or near any energized parts, Lessor shall meet therequirements in the Terms andConditions to obtain, through theTechnical Project Officer (TPO), or if there is none, the Procurement Officer, the advance approval of the responsible Company Level IIManager, of Lessor’s plansand proposed activities. The TPO hasresponsibility for providing theSubcontractor with approvalprior to working on or near any energizedpart. The TPO responsibility includes ensuring a pre-jobdialogue onjob hazards and controls between the service subcontractor and TPOand/or Companyelectrical SME.
J.KeyPersonnel
(a)Thefollowingpersonnelareconsideredtobeessentialtotheworkbeingperformedhereunder:
, ProjectManager
(b)TheLessormustnotifytheCompanybeforedivertinganylistedperson(s)toanotherprogram, providingjustification(includingproposedsubstitutions)insufficientdetailtopermitevaluationof theimpactontheprogram.Nodiversionshallbe madewithouttheconsentoftheCompany; provided,thattheCompanymayratifyadiversioninwritingandtheratificationshallconstitute consent.Thelistofkeypersonnelmayberevisedbymutualagreementduringtheperiodofthis Agreement.
K. KeySubcontractor
ForpurposesofthisclauseaKeySubcontractorisaSubcontractorperformingasignificantportionof theworkunderthisAgreement,relativetocostortechnicalfunction.TheKeySubcontractor's performanceiscriticaltothesuccessfulcompletionoftheLessor'sworkrequirements.Asa Key SubcontractortheCompanymaybeinterestedinperformingon-siteQualitysurveysinordertoassessthecapabilityandprogressoftheirportionofthework.TheKeySubcontractor(s)specified below:
List here:
areconsideredtobeessentialtotheworkbeingperformedhereunder.TheAgreementawardtothe LessorisbasedonuseoftheKeySubcontractor(s)fortheworkspecifiedabove.Priortodiverting anyofthespecifiedworktoanotherSubcontractor,theLessorshallnotifytheCompanyreasonably inadvanceandshallsubmitjustification(includingproposedsubstitutions)insufficientdetailto permitevaluationoftheimpactontheprogram.Nodiversionshallbe made.
L.AgreementAdministration
TheCompany'sProcurement Officer forthisAgreementisWilliamR.Besancenez.The Company'sProcurement Officeristheonlypersonauthorizedto makechangesinthe requirementsofthisAgreementor makemodificationstothisAgreement,includingchangesor modificationstotheAgreement.TheLessorshalldirectallnoticesandrequestsforapprovalrequired by thisAgreementtotheCompany'sProcurement Officerattheaddresslistedbelow:
Procurement Officer: WilliamR.Besancenez
865-576-1538
Anynoticesandapprovalsrequiredby thisAgreementfromtheCompanytotheLessorshallbe issuedby theCompany'sProcurement Officer.
M. CompanyRighttoAudit
TheCompanyshallhavetherighttoexaminetherecordsoftheLessorasnecessarytoassurethatthe pricesfortheitemsunderthisAgreementdonotexceedthosechargedby theLessortoanyother customerpurchasingthesameitemsin likeorcomparablequantities.
ARTICLE IV, GO / NO-GO
NOTE: The following GO/NO-GO Decision clause. Portions of the clause are provided as an EXAMPLE. The final versionof the clause will be adapted as needed and included in the final Agreement.
A. GO/NO-GO Decision
1. The System referenced in Item 1, is described in the SOW.
2. Upon completion of Section _____ of the SOW, the Lessor andCompany shall consider the ______(the number is yet to be determined) major decisionpoints.
a. The results of the Lessor's work on research and development Agreement______awarded by the Company, will form the basisfor a GO/NO-GO decision to build Item 1.
b. A GO decision will require the Company and Lessor to revise the SOW by written modification of this Agreement. See Paragraphs B, C, and D, below andSection ______(TBD) of the SOW.
c. A commitment by Company and the Lessor to acquire parts for Item 1 afterreview and approval by the Company.
If all three decisions are affirmative, Company will amend this Agreement to reflect theterms and conditions agreed upon in connection with the decision to build Item 1.
3. The following is an EXAMPLE only. The purchase of parts is an example of whatmay be included in this section.
EXAMPLE: Company may authorize the Lessor, in writing, to acquire the partsnecessary to build Item 1, provided the GO/NO-GO decision above is GO and after the Lessorhas notified Company it is ready to acquire the Item 1 parts. ______System partsinclude, but are not limited to, individual______(TBD) (Examples may include:processor and interconnect ASICs, memory chips or DIMMs, PCBs, optical component cables,empty racks, cooling equipment, power supplies, fans, and fully or partially integrated built racksof parts, etc.).
The express written approval of the Company's Procurement Officer is required before theLessor is permitted to acquire the Item 1 parts. (End of EXAMPLE)
4. The following is an EXAMPLE only. Memory pricing is just one example of what
may be included in this section. This example can be adapted to include other technologies or commodities such as disk drives.
EXAMPLE: Company and the Lessor agree to share the memory price risk for the Item 1. Inexchange for this memory price risk sharing, the Lessor agrees to disclose actual memory costinformation (i.e., the sum of the actual cost the Lessor will pay its supplier for memory and theLessor's overhead recovery charges) to Company prior to purchasing Item 1 memory parts. Thefixed price of this Agreement is based on a total of TBD TebiBytes (TiB) of memory (e.g., HBM2, HBM3, DDR4, DDR5, 3D-XPOINT, PCM, ReRAM, or STT-MRAM) forthe System at the total estimated price of $______(TBD), or $TBD per GibiByte (GiB). Similarly, the fixed price of this Agreement is based on a total of TBD TebiBytes (TiB) ofmemory for System at the total estimated price of $______TBD, or$______TBD per GibiByte (GiB). If theactual memory price is more than ___% above or below this estimate when the memory (e.g., HBM2, HBM3, DDR4, DDR5, 3D-XPOINT, PCM, ReRAM, or STT-MRAM) need to be purchased to build Item 1, the parties agree to negotiate a mutuallyacceptable memory price estimate and either change the total fixed price of this Agreementaccordingly or change the System deliverables accordingly. If Company obtainssubstantive information indicating the Lessor's memory pricing may not represent a fair andreasonable market price, Company will share this information with the Lessor. If Company andthe Lessor cannot agree on an equitable change to the Agreement, Company may elect, bywritten notice to the Lessor within 14 days, to purchase the SDRAM and/or NVRAM itself andfurnish it to the Lessor. (End of EXAMPLE)
B. SOW Target Requirements
Company and Lessor recognize that the production and performance of Item 1 will betied directly to the results of the Lessor's work on research and development Subcontract ______(subcontract number) awarded by Company. Since research results are not predictable, and since theactualperformance of future products cannot be defined in the present, the SOW defines the requirements for the Lessor's performance in terms of targets. Thesetargets are not the usual mandatory (minimum or maximum) requirements that are typically used in a SOW. Targets are those performance achievements that Company and theLessor reasonably believe the Lessor could approach, achieve, or exceed, depending upon theresults of the research.
C. SOW Performance Assessment
Company and Lessor agree that the Lessor's performance under the SOW will be measured by an aggregate assessment of the level of achievement of thesystem as a whole rather than an assessment of performance of each target requirementindividually. Company will assess the Lessor's performance on the system as a whole after theLessor completes work on the critical subsystems and provides performance results to Company. At its discretion, Company may use a numeric or subjective assessment method depending uponthe nature of the target requirement being assessed. Credits and debits will be reasonablyassigned by Company in proportion to the level of achievement relative to the target requirement. Company will give assessment credits if the performance results exceed the target requirement,will give a neutral assessment if the target is merely met, or will give assessment debits if theperformance results do not meet the target. Company will then aggregate the individualassessments into an overall assessment, balancing the credits and debits in a reasonable manner. These critical subsystem and overall system assessments, along with the individual assessments,will be promptly and continually shared with the Lessor. Since Company has agreed to use a SOW with target requirementsrather than traditional performance requirements, Company is accepting some of the risknormally assumed by Lessor under a fixed price agreement. As consideration for accepting thisincreased level of risk, the Lessor agrees that Company shall have the sole discretion to assess theLessor's performance relative to each target requirement, the critical subsystems identified in the SOW, and the system as a whole. This does not, however, infringe upon the Lessor's rights under the clause in the GENERAL TERMS and CONDITIONS entitledRESOLUTION OF DISPUTES.
D. SOW Conversion from Target Requirements to TraditionalMandatory Requirements,
Company and the Lessor agree that certain target requirements in the SOW will be converted to traditional mandatory requirements after the results of researchand development Subcontract ______(subcontract number) awarded by Company. These conversions shall be definedby the mutual agreement of Company and the Lessor and implemented by a written modificationof this Agreement.
E. Source Code
The Lessor shall deliver source code for software delivered with the Item 1, which mayinclude the ability of Company to build software binaries that reproduce Lessor delivered binariesthat can be installed on Item 1, as mutually agreed upon by the parties. The source code shallallow Company to assist the Lessor in performing software maintenance of the Item 1.
F. Obligations of the Parties
Company and Lessor agree that this Agreement involves the development of cutting-edgetechnology under aggressive schedules. Company and the Lessor agree (i) that the Lessor shalluse reasonable efforts to deliver in accordance with the requirements and schedules set forth inthis Agreement, and (ii) to reasonably consider limitations that may occur in meetingobligationsunder this Agreement. If the Lessor is unable to meet its performance obligations, thenCompany and the Lessor hereby agree to negotiate the SOW and the Agreement price, if necessary, to reflect changes to the Lessor's performance obligations. Company and the Lessor agree to use this process to address performance issues before resortingto any rights or remedies available by way of the DISPUTES or the TERMINATION clauses ofthe GENERAL TERMS AND CONDITIONS.
G. Unwind
1. The technical checkpoints identified within SOW Paragraph ______(TBD) shall be used to review technical progress and schedules, which may be revised. Within 30 days after completion of a technical checkpoint, either party may decide to cancel itsparticipation in the Item 1 work by providing written notice of its decision to the other party. Ifno such written notice is received by either party, then the Lessor's obligation to proceedhereunder shall continue. Cancellation under this Paragraph shall not constitute a terminationfordefault or convenience but, rather, a voluntary cancellation of the obligations of the work. In theevent either party elects to invoke the cancellation right prescribed by this Paragraph, Companyshall have no obligation to pay for milestones it has not accepted, and the Lessor shall have noobligation either to perform work prescribed by any remaining milestones and their associated SOW sections, or to make any payments to Company.
2. If exercised, the foregoing cancellation right shall constitute the parties' exclusive remedyand shall be subject to the following limitation. In the event of cancellation by Company after theLessor has acquired the Item 1 parts, Company shall pay the Lessor for the Item 1 parts and theLessor shall provide Company with reasonable documentation supporting the cost of the Item 1parts and shall also deliver to Company any Item 1 parts not already delivered to Company underthe SOW. Company and the Lessor agree that Company's obligation to pay forthe Item 1 parts hereunder shall not exceed $ ______(TBD). In the event of cancellation bythe Lessor after the Lessor has acquired the Item 1 parts, Company's sole and exclusive obligationfor payment hereunder is expressly limited to milestones it has accepted. In this event, Companyand the Lessor shall mutually agree upon return of any deliverables not accepted by Company ordelivery of Item 1 parts to Company in proportion to the payments made by Company forcompleted milestones.
ARTICLEV.MAINTENANCE,SYSTEMANALYST,ANDASSOCIATEDOPTIONS
LessorshallprovideMaintenanceservicesinaccordancewithAttachment1,SOW. CompanyshallpurchaseandkeepineffectMaintenanceforItem1. Companymayexerciseoneormore successiveoneyearoptionsforMaintenanceandortheSystemAnalystunderArticleV.
Note:This section to be completed once negotiations are finalized.
ARTICLEVI. SUBSYSTEMS, AND OTHER OPTIONS
Lessor shall provide the following in accordance with Attachment 1.