1. Description of Amendment/Modification:
  1. The following Clause H.33 - CAP ON LIABILITY is hereby substituted for the H.33 - CAP ON LIABILITY Clause previously incorporated into this agreement under Modification No. 300.

"CLAUSE H.33 - CAP ON LIABILITY

(a) The Parties have agreed that the Contractor’s liability for certain obligations it has assumed under this contract shall be limited as set forth in paragraph (b) below. These limitations or caps shall only apply to the obligations the Contractor has assumed pursuant to Clause I.91 (h) with respect to failure to exercise prudent business judgment only, Clause I.91 (j)(2) with respect to unallowable punitive damages (except those resulting from the willful misconduct, or lack of good faith of the Contractor's Managerial personnel as defined in Clause H.1), Clause H.12 and Clause I.84 (f)(1)(i)(C), and shall apply on a cumulative per calendar year basis. In addition, the determination of which cap will apply will be based on a determination by the Contracting Officer of the year in which the Contractor’s act or failure to act was the proximate cause of the liability assumed by the Contractor pursuant to the provisions of the Clauses enumerated above. Provided, further that in the event the Contractor’s act or failure to act overlaps more than one year, then the applicable cap will be the cap for the last year in which the Contractor’s act or failure to act occurred. It is further provided that if the last act or failure to act occurs after December 31, 2004 (if this contract is further extended) then the cap for calendar year 2004 shall apply.

(b) The liability cap for each year of this contract extension will be as stated in paragraph (c) below. Except as otherwise provided in paragraph (a) above, and notwithstanding any other provision of this contract to the contrary, if the liability cap is reached for any year, as set forth in paragraph (c) below, the Contractor shall have no further responsibility for the costs of the liabilities it has assumed pursuant to Clause I.91 (h) with respect to failure to exercise prudent business judgment only, Clause I.91 (j)(2) with respect to unallowable punitive damages, Clause H.12, and Clause I.84 (f)(1)(i)(C), and all costs in excess of the cap for the applicable period for said liabilities shall be borne by the Government.

(c) For each calendar year of this contract, the Contractor will be responsible for the first $100,000. The next $300,000 will be shared by the Contractor and the Government on a fifty-fifty per dollar basis. Accordingly, the total cap shall be $400,000."