EXHIBIT 99.2
AGREEMENT BETWEEN UDT SENSORS, INC.
AND THE DEPARTMENT OF THE NAVY
1. This Agreement is entered into between the Department of the Navy, on
behalf of the Department of Defense, and UDT SENSORS, INC. ("UDT" or "Company").
The sole purpose of this agreement is to evince that UDT is presently
responsible to contract with the Federal Government by insuring that UDT has and
will continue a program of acceptable contracting practices and procedures, and
by establishing and implementing a program of compliance review, audits, and
reports. For purpose of this agreement, UDT shall mean UDT as a body corporate,
its predecessors, successors, affiliates, subsidiaries, and/or divisions and all
directors, officers, employees and/or consultants of any of the aforesaid
entities.
2. This agreement is based upon the resolution by UDT and the Department
of Justice of the criminal investigation pursuant to the criminal and civil
settlements reached by UDT with the United States Attorney's Office, Central
District of California on or about October 24, 1994, as reflected in the
Information and Plea Agreement and Stipulation for Consent Judgement and Consent
Judgement, attached as Annex I. This agreement shall not be used for any purpose
related to UDT's defense against or in mitigation or appeal of any criminal,
civil or administrative charge, claim, or action related to or arising out of
any criminal or civil investigation conducted by any component of the Department
of Justice or the Department of Defense.
3. By this agreement, UDT recognizes its corporate responsibility to
ensure that UDT fully complies with all Federal procurement laws and regulations
when contracting, directly or indirectly, with the United States Government. In
this regard, all aspects of UDT's corporate and business operations shall be
conducted according to the highest code of corporate ethics, generally
prevailing lawful and honest behavior, and the guidelines set by the letter and
the spirit of this agreement.
4. To fulfill its corporate responsibilities, UDT has implemented a
program which establishes compliant contracting procedures and practices for UDT
and by which UDT will monitor adherence to these procedures and practices. This
program includes four major components:
A. CODE OF ETHICS: UDT has established a written Code of Ethics
which provides notice to all employees that the highest standard of business
ethics is mandated.
(1) The written Code of Ethics is maintained, reviewed on an
annual basis by its duly appointed legal counsel,
and updated as required for compliance with statutory and/or regulatory changes.
B. All UDT directors, officers, employees, and consultants are
required to sign a certificate stating that they have read the Code of Ethics
and understand its provisions.
(1) An Ethics Committee and its Chairman, the Director of
Quality Assurance, reports and is responsible directly to the directors of UDT,
and has been appointed to assist UDT employees in recognizing and reporting
violations of the Code of Ethics or Standards of Conduct.
(i) The Chairman of the Ethics Committee and the Ethics
Committee members shall investigate all instances of suspected misconduct and
shall report the findings to the Board of Directors, which shall thereafter
provide for management response.
(ii) For the term of this agreement, the Ethics Committee
and its Chairman, the Director of Quality Assurance, shall, within 10 working
days after the end of each fiscal quarter, prepare and deliver to Counsel,
Procurement Integrity Office, Department of the Navy a synopsis of each instance
of suspected and/or confirmed misconduct which became known to the Ethics
Committee during the fiscal quarter. This synopsis shall be made without regard
to the degree to which the Ethics Committee has been able, as of the due date of
the report, to investigate the misconduct. This synopsis shall include
disclosure of any remedial action taken to date.
(2) A telephone "hot line" to the Ethics Committee has been
established at UDT to facilitate employee reports of suspected misconduct.
C. WRITTEN CONTRACTING PROCEDURES: A manual containing the
regulatory standards and acceptable practices for doing business with the
Government and/or Government prime contractors has been developed for UDT. These
practices and procedures shall be applied to all business dealings involving
Government contracts or subcontracts.
D. AUDIT AND COMPLIANCE REVIEW: The Chairman of the UDT Ethics
Committee shall have the responsibility of directing and monitoring all audit
and compliance review to ensure that all ethical standards are being met and
that UDT's compliance program is being implemented. The duties in this regard of
the Chairman of the Ethics Committee shall include the following:
(1) Have final decision making authority with respect to matters
over which the Committee does not achieve a consensus, subject to the review of
the Board of Directors.
(2) Review and approve all policies relating to quality, testing
and inspection as well as meet with supervisory
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personnel who work in quality assurance, inspection and testing, to determine
that they are fully trained in these areas.
(3) Have final decision making authority with respect to
quality, inspection and testing, subject to the review of the Board of
Directors.
(4) Review, with UDT's President, no less than four times
yearly, testing and inspection audits which shall be conducted by the Quality
Assurance Manager, including the compliance program audits which will be
conducted two times per year.
(5) Conduct with UDT's President no less than two testing and
inspection audits per year.
(6) Report both testing and inspection audit results to the
Ethics Committee and recommend any corrective action which the Ethics Committee
Chairman deems appropriate, with a full report directed to the Board of
Directors.
(7) Meet no less than twelve times per year with quality control
supervisors and other employees who work in the areas of quality, testing and
inspection to discuss and evaluate conformance with the procedures which have
been approved and adopted pursuant to this Agreement. Such meetings shall be
documented in writing.
(8) Convene special meetings of the Ethics Committee if it is
determined that one or more matters pertaining to any aspect of this Agreement
require the immediate attention of the Committee.
(9) Cause a report to be issued immediately to the Navy should
the Ethics Committee Chairman become unable to carry out the foregoing
responsibilities or if he is or will be replaced. This report should contain
the UDT's proposal for another qualified officer to carry out the
foregoing duties.
E. TRAINING: A comprehensive, recurring-type training program has
been established for UDT directors, officers, employees, and consultants
regarding the Code of Ethics and acceptable contracting practices.
The schedule for completed and planned compliance actions for this program
will be as previously submitted and approved by the Navy.
5. UDT further agrees to:
A. Complete any planned compliance actions as scheduled and
coordinated and approved by the Navy.
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B. Within ten (10) working days after the end of each fiscal
quarter, prepare and provide a report to the Navy Debarring and Suspending
Official, or his designee, describing UDT's implementation of this agreement.
C. Within ten (10) working days after the end of each fiscal
quarter, UDT shall report the status of: (1) All instances of disciplinary
action for violations of the Standards of Conduct; (2) all known, ongoing
criminal investigations; (3) all known qui tam suits; (4) all known or suspected
defective pricing cases; (5) all hotline calls received by the Ethics Advisor
(including a description of the complaint and any remedial action taken or
planned); and (6) any other matter which might affect UDT's present
responsibility status, including but not limited to actual or potential
suspension and/or debarment actions by other Government and quasi-governmental
agencies.
D. Allow designated representatives of the Department of Defense to
interview UDT personnel and to examine UDT's financial books, records, and other
company documents for the purpose of evaluating UDT's compliance with the terms
of this agreement; such materials described above shall be made available by UDT
after reasonable notice for inspection, audit and/or reproduction, provided,
however, the Department of Defense shall not be entitled to examine documents
properly subject to the attorney-client or attorney work product privileges, not
to copy: (1) Documents containing technical data or computer software, except in
accordance with government contract data rights provisions, or (2) Documents
containing trade secrets.
E. Disclose to the Department of Defense and to the prime Government
customer if such customer is not a DOD component, all instances in which there
are reasonable grounds to believe that UDT, its directors, officers, employees,
consultants, suppliers and/or Government personnel have violated Federal laws or
regulations relating to U.S. Government procurements. Further, UDT shall take
immediate corrective measures to remedy the matter disclosed, and to notify the
Department of Defense, and the prime Government customer, if the matter relates
to a non-DOD contract, of the corrective action taken and UDT's opinion
regarding any impact the matter may have on the Government.
F. Cooperate fully with any investigation by the Department of
Justice or the Department of Defense of which UDT knows or learns in the future.
G. Upon conviction of UDT for violation of any Federal criminal
statute, take appropriate disciplinary action against all responsible
individuals.
H. Upon indictment of, or the entering a guilty plea or plea of nolo
contendere by any director, officer, employee or consultant of UDT for violation
of an Federal criminal statue, which violation occurred in connection with the
individual's
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performance of duties for or on behalf of UDT, immediately remove the director,
officers, employee or consultant from active status with the Company relating to
any dealings with the U.S. Government.
I. Upon unappealed conviction of, or after an unsuccessful appeal by
any director, officer, employee or consultant of UDT for violation of any
Federal criminal statute, which violation occurred in connection with the
individual's performance of duties for or on behalf of UDT, take prompt action
to terminate the employment of such officer, employee or consultant, or as
appropriate to remove such director from the UDT Board of Directors in
recognition of Title 10, U.S.C. (S) D2408.
J. Treat all costs associated with the termination, severance and/or
removal of any director, officer, employee or consultant of UDT under paragraph
I, above, as unallowable for Federal Government Contract purposes.
K. Continue for a period of three years following full and complete
implementation, the actions and procedures described in Annex I and elsewhere in
the body of this agreement.
6. During the term of this agreement, UDT shall not knowingly employ,
engage or accept the services of an individual who is listed by a Federal Agency
as debarred, suspended, or otherwise ineligible for Federal contracting.
Reasonable inquiry shall be made into the suspension/debarment status of any
potential employee or consultant prior to the offer of employment or engagement
of services. Further, UDT shall promptly terminate the employment of or contract
for services with any individual who was suspended or debarred as of the
effective date of their association with UDT. Moreover, UDT shall immediately
remove such individuals from responsibility for or involvement with Government
contract matters until the resolution of any question there might be regarding
their suspension or debarment status as of the time of their association with
UDT.
7. During the term of this agreement, UDT shall not knowingly enter into
any subcontract or other business relationship relating to Federal Government
contracts with any individual or business entity listed as debarred, suspended,
or otherwise ineligible for contracting by a Federal Agency (hereinafter "listed
contractor") until it has prepared a notice in form and content as specified in
FAR 9.405-2(b), and has submitted a copy thereof to the Counsel, Procurement
Integrity Office. Further, UDT shall make reasonable inquiry into the listed
contractor status of each prospective business associate prior to the execution
of any subcontract or the commencement of any other type of business
relationship. In addition, UDT shall give written notice of the prohibition
effected by this paragraph to all parties to any potential transaction involving
a subcontract or other business relationship relating to Federal Government
contracting prior to
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the execution of such subcontract or the commencement of such business
relationship.
8. In addition to these costs stated in paragraphs 5.J and 9, UDT agrees
that the costs described below shall be unallowable for United States
Government contract purposes and shall not be charged directly or indirectly to
any such contract or subcontract.
A. All costs of performing the actions set forth in Annex I
accomplished by UDT subsequent to its learning of the investigation that
resulted in the Information and Plea Agreement and Stipulation for Consent
Judgment and Consent Judgment set forth in Annex II.
B. All costs of legal services (whether performed by in-house or
private counsel), administrative and clerical services, services of accountants
and consultants, salaries and wages of employees, officers, and directors,
travel, and any costs directly related to the aforesaid, incurred in the
implementation of and/or continued compliance with the terms of this agreement.
9. Within thirty days of the effective date of this agreement, UDT
Corporation will remit the sum of $10,000, made payable to the Treasury of the
United State, and for final payment of these administrative costs incurred, or
to be incurred, by the Government because of UDT's improper activity, which
include but are not limited to the costs of investigating the charges, and of
monitoring, reviewing, enforcing, and administering this Agreement.
10. Except as provided in paragraph 14, the execution of this agreement by
the Navy in no way waives any criminal, civil, contractual, or administrative
remedy or right that the Government may have for the acts described in Annex I
or for any other conduct that would give rise to such remedies. In addition,
this agreement does not alter or limit in any way the releases and waivers
previously provided for by the agreements with the U.S. Department of Justice,
set forth in Annex I.
11. Failure by UDT to meet any of its obligations under the terms and
spirit of this agreement, or to timely perform any of the actions identified in
Annex I, not cured to the reasonable satisfaction of the Navy Debarring
Authority within 20 working days, or as otherwise agreed, after receipt of
written notice of such failure, shall constitute a cause for institution of
suspension or debarment proceedings subject to the procedures established by the
Federal Acquisition Regulation and any other applicable statute or regulation.
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12. By execution of this agreement, UDT releases the United States, its
employees, agents, and instrumentalities, in both official and personal
capacities, of any and all liability arising out of or otherwise related to this
agreement. Further, UDT agrees not to file any claim against the United States,
its employees, agents, and instrumentalities, in both official and personal
capacities, in any form or jurisdiction, with regard to any matter arising out
of or otherwise related to this agreement.
13. By execution of this agreement, UDT avers that any adverse action
taken or to be taken against any UDT director, officer, employee, consultant, or
agent, with regard to any matter arising out of or related to the facts and
circumstances set forth in Annex II are the result solely of UDT's initiatives
and decisions, and are not the result of any action by or on behalf of the
United States, its employees, agents or instrumentalities.
14. UDT agrees to indemnify the Government against, and hold the
Government harmless from, any and all claims, liabilities, obligations, and
causes of action of whatsoever kind or nature for injury to, or death of, any
person, and for any injury or damage to or destruction of any property, arising
out of or as a result of the facts which form the basis for this agreement, even
if the Government's liability to any person arises out of the acts or omissions
of the Government, its employees, agents, invitees, or representatives of any
other description whatsoever.
15. In recognition of the actions by and covenants of UDT set forth
herein, the Navy, on behalf of the Department of Defense, will not suspend or
debar UDT based upon the facts set forth in Annex II.
16. This agreement is a public document and may be distributed by the Navy
throughout the Executive Branch of the Government and to other interested
parties.
17. Modifications to this agreement may be made but shall have no effect
until their terms are expressly incorporated in a writing which has been
executed by both parties. Neither party shall seek or accept the benefit of a
judicial or quasi-judicial order directing the other to execute a writing which
would, if executed, modify this agreement.
18. For purposes of interpretation of this agreement, or any part hereof,
by a court of competent jurisdiction (or any other judicial or quasi-judicial
body), this agreement shall be deemed to have been drafted equally by all
parties hereto.
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19. This agreement shall become effective on the date of the last
signature hereto and shall continue thereafter for a period of three years from
that date or, should UDT for any reason cease to be in full compliance with the
letter and spirit of this agreement, for a period of three years following
reestablishment for full compliance as determined by the Navy Debarring and
Suspending Official, whichever period is longest.
20. This agreement constitutes the entire agreement between the parties
and supersedes all prior agreements and understandings, oral or written, with
respect to the subject hereof. This agreement shall inure to the benefit of,
and be binding upon, the parties and their respective successors and assigns.
Date: 7/25/95 UDT SENSORS, INC.
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
President and CEO
Date: November 9, 1995 DEPARTMENT OF THE NAVY
By: /s/
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Department and Suspension Officer
Office of Procurement Integrity
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