AGREEMENT BETWEEN XXXXXX INDUSTRIES, 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 Xxxxxx. The sole purpose of this Agreement is
to evince that Xxxxxx is presently responsible to contract with the Federal
Government by ensuring that Xxxxxx has and will continue a program of acceptable
contracting practices and procedures, and by establishing and implementing a
program of compliance reviews, audits, and reports. For purpose of this
Agreement, Xxxxxx shall mean Xxxxxx as a body corporate, its predecessors,
successors, affiliates, subsidiaries, and/or divisions and all owners,
directors, officers, employees and/or consultants of any of the aforesaid
entities.
2. This Agreement affects only those causes for suspension that are stated in
the Navy's Notice of Suspension dated June 9, 2006, attached hereto as Annex A
(hereinafter "the Notice"). Except as provided in paragraph 16, or as otherwise
authorized in writing by the Suspending Official, or an appointee thereof
(hereinafter collectively "the Navy Suspension Authority"), this Agreement shall
not be used for any purpose with regard to any criminal, civil, or
administrative charge, claim, or action by or against Xxxxxx 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, Xxxxxx recognizes its corporate responsibility to ensure
that Xxxxxx 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 Xxxxxx'x 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
spirit of this Agreement.
4. To fulfill its corporate responsibilities, Xxxxxx has begun and shall, in
accordance with the schedule set forth in this Agreement, fully implement a
Compliance Program by which Xxxxxx can and will adhere to lawful and ethical
procedures and practices in all areas of and relating to its provision of goods
and services as a Government contractor and/or subcontractor. This Compliance
Program shall have the following components:
A. A WRITTEN CODE OF CONDUCT: Xxxxxx has established a written Corporate
Code of Business Ethics which provides notice to all employees that the
highest standard of business ethics is mandated. A copy of the Corporate
Code of Business Ethics is attached as Annex B. The signature of the Navy
Suspending Official on this Agreement shall signify acceptance of the
current Corporate Code of Business Ethics.
1. The Corporate Code of Business Ethics shall be maintained, reviewed
on an annual basis by Xxxxxx'x Vice President (VP) Administration and
Governance and duly appointed legal counsel, and updated as required
for compliance with statutory and/or regulatory changes.
2. All Xxxxxx directors, officers, employees, and consultants shall be
required to sign a certificate stating that they have read the
Corporate Code of Business Ethics and agree to abide by its provisions
on a yearly basis.
B. AN ETHICS AND COMPLIANCE OFFICER: Xxxxxx has established and shall, for
at least the duration of this Agreement, maintain a position of VP
Administration and Governance, designated as the Ethics and Compliance
Officer.
1. The Ethics and Compliance Officer reports to and is responsible to
the CEO and Board of Directors of Xxxxxx.
2. The identification and qualifications of the current Ethics and
Compliance Officer are set forth in Annex C. The signature of the Navy
Suspending Official on this Agreement shall signify acceptance of the
current Ethics and Compliance Officer.
3. Should the current or any subsequently appointed Ethics and
Compliance Officer leave the position, that fact shall be reported to
the Navy Suspension Authority, in writing, within 10 days of said
leaving. A replacement shall be selected by Xxxxxx and reported to the
Navy Suspension Authority within forty-five calendar days of said
leaving. Appointment of a replacement Ethics and Compliance Officer
shall be subject to approval by the Navy Suspension Authority, which
approval shall be solely within the discretion of the Navy Suspension
Authority. Denial by the Navy Suspension Authority of approval of any
replacement Ethics and Compliance Officer shall be a "Failure by
Xxxxxx" as the phrase is used in paragraph 12 of this Agreement.
4. The Ethics and Compliance Officer shall assist Xxxxxx and the
Governance and Ethics Committee of the Board of Directors in
identifying and reporting violations of its Corporate Code of Business
Ethics.
5. The Governance and Ethics Committee of the Board of Directors, in
conjunction with the Ethics and Compliance Officer, shall investigate
all instances of suspected misconduct and shall report in writing the
findings to the Board of Directors for management response. Said
management response shall be in writing and shall be provided to the
Ethics and Compliance Officer within thirty days of the receipt by
management of the Ethics and Compliance Officer's report. Both the
Governance and Ethics Committee of the Board of Directors and Ethics
and Compliance Officer's report and management's response shall be
provided to the Navy Suspension Authority in time to be received
within ten working days of when said response was created.
6. The Ethics and Compliance Officer shall, within 10 working days
after the end of each fiscal quarter (July, October, January and
April), prepare and deliver to the Navy Suspension Authority a
Quarterly Report, which shall include a synopsis of each instance of
suspected and/or confirmed misconduct which became known to the Ethics
and Compliance Officer or the Governance and Ethics Committee of the
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Board of Directors during the fiscal quarter. This synopsis shall be
made without regard to the degree to which the Ethics and Compliance
Officer 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.
7. The Quarterly Report shall also include: (1) All instances of
disciplinary action for violations of the Corporate Code of Business
Ethics, Government Contracts Overview, or Truth In Negotiations Act
Policy; (2) all known, ongoing criminal investigations; (3) all known
qui tam suits; (4) all known or suspected defective pricing cases; (5)
all hotline reports received by the Ethics and Compliance Officer
including a description of the complaint and any remedial action taken
or planned; (6) a summary of audit findings as required by paragraph
4.E.5.c.; (7) reports of new employee training as required by
paragraph 4.F.4; and (8) any other matter which might affect Xxxxxx'x
present responsibility status, including but not limited to actual or
potential suspension and/or debarment actions by other Government and
quasi-governmental agencies.
C. A HOT LINE: Xxxxxx has established and shall, for at least the duration
of this Agreement, maintain a "hot line" to facilitate the reporting of
misconduct by or within Xxxxxx. The policies and procedures of this
component are fully presented in Annex D. Execution of this Agreement by
the Navy Suspending Official shall evidence approval of this component by
the Navy Suspension Authority.
D. WRITTEN CONTRACTING POLICIES AND PROCEDURES: Xxxxxx has established
written contracting policies and procedures through its Government
Contracts Overview and Truth In Negotiations Act Policy. These policies and
procedures contain the regulatory standards and acceptable practices for
doing business with the Government and/or Government prime contractors, and
shall be applied to all of Xxxxxx'x business dealings involving Government
contracts or subcontracts. Copies of the Government Contracts Overview and
Truth In Negotiations Act Policy are attached as Annexes E and F
respectively. The signature of the Navy Suspending Official on this
Agreement shall signify acceptance of the current Government Contracts
Overview and Truth In Negotiations Act Policy.
1. The Navy Suspension Authority may, at its sole discretion, approve
or disapprove of any subsequent revisions to the Government Contracts
Overview and Truth In Negotiations Act Policy.
2. The Navy Suspension Authority approval shall be deemed given if
written notice of denial has not been mailed, by USPS Return Receipt
Requested service, to Xxxxxx by close of business on the fortieth
calendar day following receipt by the Navy Suspension Authority of
Xxxxxx'x Audit and Governance Compliance Review Procedures. Failure to
gain Navy Suspension Authority approval of the Audit and Governance
Compliance Review Procedures Procedure within the time stated in this
paragraph shall be a "Failure by Xxxxxx" as the phrase is used in
paragraph 12.
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E. WRITTEN AUDIT AND COMPLIANCE REVIEW PROCEDURES. Xxxxxx shall establish
and, for at least the duration of this Agreement, maintain Audit and
Compliance Review Procedures.
1. An outline of Xxxxxx'x Audit and Compliance Review Procedures is
set forth in the attached Annex G.
2. The full version of Xxxxxx'x revised Audit and Compliance Review
Procedures shall be submitted in time to reach the Navy Debarring
Authority not later than December 31, 2006, and shall, if approved,
replace the outline as Annex G.
3. The Navy Suspension Authority may, at its sole discretion, approve
or disapprove of Xxxxxx'x Audit and Compliance Review Procedures.
4. The Navy Suspension Authority approval shall be deemed given if
written notice of denial has not been mailed, by USPS Return Receipt
Requested service, to Xxxxxx by close of business on the fortieth
calendar day following receipt by the Navy Suspension Authority of
Xxxxxx'x Audit and Compliance Review Procedures. Failure to gain Navy
Suspension Authority approval of the Audit and Compliance Review
Procedures within the time stated in this paragraph shall be a
"Failure by Xxxxxx" as the phrase is used in paragraph 12 of this
Agreement.
5. In addition to any other provision that the Audit and Compliance
Review Procedures may have, the Audit and Compliance Review Procedures
shall provide for yearly audits of each procedure that is a component
of this Compliance Program.
a) The audits shall be conducted by the Ethics and Compliance
Officer in conjunction with the appropriate Xxxxxx management
personnel.
b) The audits shall begin no earlier than December 1, and shall
be completed no later than December 31 of each calendar year
during the term of this Agreement. The 2006 audit shall be
completed by December 31, 2006, or within 30 days of approval of
Xxxxxx'x Audit and Compliance Review Procedures if such
procedures are submitted on or after December 2, 2006.
c) A report, which describes and discusses the findings made
during the audits, shall be part of the Ethics and Compliance
Officer's Quarterly Report for the quarter during which the
audits are conducted.
F. IMPLEMENT RECURRING, CLASSROOM STYLE TRAINING: Xxxxxx shall create and
implement a curriculum of classroom style training designed to familiarize
each of its directors, officers, employees, and consultants with the
concepts and precepts of each component of this Compliance Program. This
training shall begin immediately and shall be ongoing, pursuant to the
published training schedule.
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1. The outline of the curriculum to be used for training with regard
to each of the components of the Compliance Program is attached hereto
as Annex H. The full version of the curriculum shall be submitted in
time to reach the Navy Suspension Authority not later than December
31, 2006, and shall if approved, replace the outline as Annex H of
this Agreement.
2. The Navy Suspension Authority may approve or disapprove of the
curriculum, in whole or in part, at its sole discretion.
3. The Navy Suspension Authority approval shall be deemed given if
written notice of denial has not been mailed, by USPS Return Receipt
Requested service, to Xxxxxx by close of business on the fortieth
calendar day following receipt by the Navy Suspension Authority of
Xxxxxx'x Audit and Compliance Review Procedures. Failure to gain Navy
Suspension Authority approval of the training curriculum within the
time stated in this paragraph shall be a "Failure by Xxxxxx" as the
phrase is used in paragraph 12 of this Agreement.
4. In addition to any other training they may receive, each director,
officer, employee, and/or consultant who misses the training given on
the dates indicated on the Schedule, and any director, officer,
employee, and/or consultant who joins, is hired by, or contracts with
Xxxxxx after said training is completed shall be required, within
thirty days of their association with Xxxxxx, to read the course
syllabus and pass a written test on its salient contents. Each person
who completes the reading required by this paragraph shall sign a
certification that the reading has been completed. Each such
certification and the completed test taken by each such person shall
be maintained in a clearly identified file by the Ethics and
Compliance Officer. In addition, the Ethics and Compliance Officer
shall, as part of each Quarterly Report, identify each such person,
state the date when the person joined Xxxxxx, and state whether the
person has successfully met the training requirements stated in this
paragraph.
5. In addition to any other training, each Xxxxxx director, officer,
employee, and consultant shall be informed of any change to any
component of this Compliance Program, which took place since the next
previous training session.
6. Xxxxxx has contracted with Xxxxxxxxx Xxxxx Xxxx to review the
Ethics and Training Programs and make a report of his Conclusions and
Recommendations. This Report will be submitted directly to the Navy
Suspension Authority with a copy to the VP Administration and
Governance not later than December 31, 2006. Xxxxxx will incorporate
any suggested changes or improvements made by Xxxxxxxxx Xxxx into its
Programs.
5. Xxxxxx further agrees to:
A. Complete all compliance actions identified by this Agreement on or
before the date stated in this Agreement.
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B. Act in good faith and adhere to the policies and procedures described in
paragraph 4 of this Agreement in all of its dealings with the Government.
C. Hire an outside entity to survey/interview Xxxxxx'x employees about the
organizational culture related to ethics, specifically the atmosphere on
reporting misconduct within Xxxxxx on or before December 31, 2006. Xxxxxx
will provide a report of the survey/interview results to the Navy
Suspension Authority on or before January 31, 2007.
D. Include an ethics and compliance component in the performance evaluation
criteria of management level employees. Xxxxxx'x Executive Performance
Appraisal - Ethics, is attached as Annex I.
E. Xxxxxx'x management shall, within ten (10) working days after the end of
each fiscal quarter prepare and provide a report to the Navy Suspending
Official, or his designee, describing Xxxxxx'x implementation of this
Agreement.
F. Allow designated representatives of the Navy Suspension Authority to
interview Xxxxxx personnel and to examine Xxxxxx'x financial books,
records, and other company documents for the purpose of evaluating Xxxxxx'x
compliance with the terms of this Agreement. Such materials described above
shall be made available by Xxxxxx after reasonable notice for inspection,
audit and/or reproduction, provided, however, the Navy Suspension Authority
shall not be entitled to examine documents properly subject to the
attorney-client or attorney work product privileges, nor 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, or (3) Financial records.
G. In addition to the reports made pursuant to paragraphs 4.B. and 5.E.,
disclose, within 30 calendar days of its alleged occurrence, 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 suspect that Xxxxxx, its directors, officers, employees, consultants,
suppliers and/or Government personnel have violated Federal laws or
regulations relating to U.S. Government procurements. Further, Xxxxxx 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
Xxxxxx'x opinion regarding any impact the matter may have on the
Government.
H. Cooperate fully with any investigation by the Department of Justice or
the Department of Defense in connection with any matter not subject of the
Indictment of which Xxxxxx knows or learns in the future.
I. Upon a conviction or civil judgment of Xxxxxx for violation of any
Federal criminal statute, take appropriate disciplinary action against all
responsible individuals.
J. Upon an indictment of, or the entering of a guilty plea or plea of nolo
contendere by any director, officer, employee or consultant of Xxxxxx for
violation of any criminal statute, which violation occurred in connection
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with the individual's performance of duties for or on behalf of Xxxxxx,
immediately remove the director, officer, employee or consultant from
active status with the Company relating to any dealings with the U.S.
Government.
K. Upon an unappealed conviction of, or after an unsuccessful appeal by any
director, officer, employee or consultant of Xxxxxx for violation of any
criminal statute, which violation occurred in connection with the
individual's performance of duties for or on behalf of Xxxxxx, take prompt
action to terminate the employment of such officer, employee or consultant,
or as appropriate to remove such director from the Xxxxxx Board of
Directors in recognition of Title 10, U.S.C. ss. 2408.
L. Treat all costs associated with the termination, severance and/or
removal of any director, officer, employee or consultant of Xxxxxx under
paragraph K, above, as unallowable for Federal Government Contract
purposes.
6. During the term of this Agreement, Xxxxxx 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, Xxxxxx 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 Xxxxxx. Moreover, Xxxxxx shall
immediately remove such individual 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 Xxxxxx.
7. During the term of this Agreement, Xxxxxx 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") without prior approval by the Navy Suspension Authority.
X. Xxxxxx shall make reasonable inquiry into the listed contractor status
of each prospective business associate.
B. Whenever the inquiry required by the preceding paragraph 7.A reveals
that the prospective business associate is a listed contractor, Xxxxxx
shall submit a notice to the Navy Suspension Authority in form and content
as specified in FAR 9.405-2(b).
X. Xxxxxx shall also give written notice of the prohibition effected by
paragraph 7 to each prospective business associate.
8. Xxxxxx expressly agrees and represents that Xxx X. Xxxxx is not a director,
officer, employee or consultant of Xxxxxx and that Xxxxxx will not conduct any
business with Xx. Xxxxx during the term of this Agreement except as may be
required to defend itself against the Indictment, to fulfill the terms of its
Indemnification Agreement with Xx. Xxxxx dated May 21, 2003, or to fulfill the
terms of its Agreement with Xx. Xxxxx dated September 27, 2006. Further, Xxxxxx
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expressly agrees and represents that Xx. Xxxxx will not beneficially own,
directly or indirectly, any Xxxxxx stock during the term of this Agreement,
unless such shares are placed in a voting trust approved in advance by the Navy
Suspension Authority. Failure by Xxxxxx to implement and enforce the provisions
of this paragraph throughout the term of this Agreement to the sole satisfaction
of the Navy Suspension Authority shall be a "Failure by Xxxxxx" as the phrase is
used in paragraph 12 of this Agreement
9. In addition to those costs stated in paragraphs 5.L and 10, Xxxxxx 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 this Agreement
accomplished by Xxxxxx subsequent to its learning of the investigation that
resulted in the suspension.
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.
C. The Navy agrees that if its policy with respect to cost allowability is
changed in the future, the Navy Suspension Authority will consider amending
this Agreement to incorporate the revised policy.
10. Within thirty days of the effective date of this Agreement, Xxxxxx will
remit the sum of $5,000, made payable to the Treasury of the United States, as
and for final payment of those investigative and administrative costs incurred,
or to be incurred, by the Government because of the costs of investigating the
charges made in the Indictment to the extent necessary to determine the
administrative remedies necessary for the protection of the Government under FAR
9.4, and of monitoring, reviewing, enforcing, and administering this Agreement.
11. Except as provided in paragraph 16, 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 the Notice, or
for any other conduct that would give rise to such remedies.
12. Failure by Xxxxxx to meet any of its obligations under the terms or spirit
of this Agreement, not cured to the reasonable satisfaction of the Navy
Suspension Authority within 20 working days, or as otherwise permitted by the
Navy Suspension Authority after receipt by Xxxxxx of written notice of such
failure, shall constitute a cause for debarment subject to the procedures
established by the Federal Acquisition Regulation and any other applicable
statute or regulation.
13. By execution of this Agreement, Xxxxxx releases the United States, its
employees, agents, and instrumentalities, in both official and person
capacities, of any and all liability arising out of or otherwise related to this
Agreement. Further, Xxxxxx agrees not to file any claim against the United
States, its employees, agents, and instrumentalities, in both official and
personal capacities, in any forum or jurisdiction, with regard to any matter
arising out of or otherwise related to this Agreement.
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14. By execution of this Agreement, Xxxxxx xxxxx that any adverse action taken
or to be taken against any Xxxxxx director, officer, employee, consultant, or
agent, with regard to any matter arising out of or related to the facts and
circumstances set forth in the Notice, are the result solely of Xxxxxx'x
initiatives and decisions, and are not the result of any action by or on behalf
of the United States, its employees, agents or instrumentalities.
15. Xxxxxx 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.
16. In recognition of the actions by and covenants of Xxxxxx set forth herein,
the Navy, on behalf of the Department of Defense, will terminate Xxxxxx'x
suspension and will not xxxxx Xxxxxx based upon the facts and for those causes
set forth in the Notice; provided, however, the Navy retains the right to take
appropriate administrative action, if necessary, 1) upon learning additional
facts relating to the Indictment that have not been released by the U.S.
Attorney as of the date of this Agreement or are currently subject to Rule 6(e)
of the Federal Rules of Criminal Procedure, or 2) in the event of any
conviction, guilty plea, or plea of nolo contendere resulting from the pending
Indictment.
17. 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 in accordance with the requirements of the Privacy Act and the Freedom
of Information Act.
18. Modification to this Agreement may be made but shall have no effect until
the terms of the Modification 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.
19. For purposes of interpretation of this Agreement or any part hereof by any
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.
20. This Agreement shall become effective on the date of the last signature
hereto and shall continue hereafter for a period of three (3) years or until
settlement or adjudication of the Indictment, whichever is later, unless
shortened or extended by written Agreement of the parties. In addition, should
Xxxxxx for any reason cease to be in full compliance with the letter and spirit
of this Agreement, this Agreement shall be extended for a period of three years
following reestablishment of full compliance as determined by the Navy
Suspension Authority.
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21. This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This Agreement shall inure to the benefit
of, and be binding upon, the parties and their respective successors and
assigns.
October 11, 2006 /s/ Xxxxx Xxxx
------------------- -----------------------------------------------------
Date Xxxxx Xxxx
Chairman and Chief Executive Officer
Xxxxxx Industries, Inc.
October 11, 1006 /s/ Xxxx X. Xxxxxx
------------------- -----------------------------------------------------
Date Xxxx X. Xxxxxx
President
Xxxxxx Industries, Inc.
October 11, 2006 /s/ X. X. Xxxxxxx
------------------- -----------------------------------------------------
Date Xxxxx X. Xxxxxxx, CPA
Vice President, Chief Financial Officer
Xxxxxx Industries, Inc.
October 11, 2006 /s/ Xxxxxxx X. Xxxxxxxx, Xx.
------------------- ------------------------------------------------------
Date Xxxxxxx X. Xxxxxxxx, Xx.
Vice President Administration and Governance
Xxxxxx Industries, Inc.
October 12, 2006 /s/ Xxxx X. Xxxxxxx
------------------- ------------------------------------------------------
Date Xxxx X. Xxxxxxx
Suspending and Debarring Official
Department of the Navy
