Requirement. The purchaser understands that this system has been designated for Enhanced End Use Monitoring. This will include, but not be limited to, U.S. Government (U.S. Government) inventories of the SM-6 missiles by serial number, review of security controls and procedures, inventory and accountability documentation, distribution of assets (i.e., a plan for in-country movement), or plan for repair and return, transportation access controls, and storage of hardware and technical data. The SM-6 missile, referred to as an All Up Round (AUR), requires Category III protection as stated in Department of Defense (DoD) manual 5100.76-M, "Physical Security of Sensitive Conventional Arms, Ammunition, and Explosives," current version. Specific requirements for the protection of the SM-6 missiles listed on this offer must be documented and agreed upon during the site visit referenced in Paragraph 6 of this note and implemented prior to delivery of the missiles. The purchaser agrees to adhere to the security requirements and U.S. Government verification checks as outlined in the following paragraphs.

Storage. The AURs must be stored in facilities that are at least equivalent in strength to U.S. Government requirements. Specific requirements for storage must be agreed upon and met prior to delivery of the missiles. U.S. Government representatives must be allowed to verify security measures and procedures prior to and following the delivery of the missiles.

1. Inventory and Accountability Documentation. The purchaser must have procedures in place that provide a continuous accounting of SM-6 missile receipt, transfer, storage, shipment, and destruction or demilitarization. The purchaser agrees to inventory 100% of the missiles on this LOA, serial number to missile, on a quarterly basis. The U.S. Government must be permitted, upon request, to conduct an assessment of the physical security and accountability measures and inventory 100% of all missiles transferred under this LOA, to include photography of the AURs. Inventory and accountability documentation by the purchaser must be retained throughout the period of ownership and must be made available for review upon U.S. Government request. The purchaser must immediately notify the U.S. Government (through the Security Cooperation Organization (SCO) to DSCA) of any missile expenditures, compromises, or losses and provide necessary assistance if the U.S. Government desires to initiate recovery operations.

2. Storage of Hardware and Technical Data. Storage of missile hardware and technical data must meet U.S. Government standards for safeguarding the missile. The purchaser must maintain strict accountability records on all classified information provided by the U.S. Government related to the missiles including extracts and copies. These records must include documentary evidence of any missiles or components that are lost or destroyed. These records must be made available for review upon U.S. Government request. Such records will, to the extent possible, be centralized.

3. Doors, Locks, and Keys. Exterior doors will be class five steel vault doors secured by a key-operated high security padlock and hasp. Use of a master or multiple key system is prohibited.

4. Fencing. Fencing will be six-foot (minimum) steel chain link with a one-foot overhang mounted on steel or reinforced concrete posts over firm base. Clear zones will be established 30 feet inside and 12 feet outside the perimeter. A 45-degree outrigger or "Y" configuration with 3 strands of barbwire is required on the fencing. The bottom of the fence will extend 2 inches into the ground.

Reporting. The purchaser must report immediately to the SCO, or other appropriate U.S. Government representative, any allegations, confirmed or unconfirmed, of missile hardware technology or software released or compromised to unauthorized nationals, third country nationals, or a foreign government. The purchaser must also report any allegation, report, or evidence of unauthorized attempts to collect information on the missile program.

Organization (O-Level) and Intermediate (I-Level) Maintenance. Except under conditions that may be specified separately in this LOA, maintenance by the purchaser is prohibited. Upon approval by the U.S. Government, the purchaser's military, civilian, or industry personnel may receive the oral and visual information necessary to integrate the SM-6 missile on the purchaser's ship.

Depot Level Maintenance. Missiles that require depot level repair must be transported to designated depot level repair facilities in the U.S. under the proper security procedures.

Site Survey. Prior to the delivery of the missiles, the U.S. Government will conduct an in-country site survey of the physical security measures and logistic chain for all facilities of the purchaser designated for storage of the AURs.

1. The U.S. Government will provide to the purchaser a security checklist and serial numbers that should be referenced during the site survey and throughout the life of the SM-6 missiles. The checklist is used to indicate that the integrity of the security measures in place for the storage of AURs will ensure the equivalent level of security protection as the U.S. Government.

2. Deficiencies identified during the site survey must be corrected prior to delivery of any AURs.

3. The purchaser agrees to adhere to the security requirements associated with the life cycle of the SM-6 missiles. The purchaser agrees to allow U.S. Government verification of security arrangements for the protection of the SM-6 missiles on both a scheduled and unscheduled basis.

Transportation. Transportation of AURs must meet U.S. standards for safeguarding classified material in transit. Prior to delivery of missiles to the purchaser, the transportation plan must be coordinated and approved by the NAVSEA PEO W 4.0.

Disposition. The purchaser is responsible for disposition associated costs and will obtain U.S. Government disposition instructions that either direct transporting SM-6 missiles back to the U.S. Government or another designated staging area, or that provide comprehensive guidance on demilitarization or disposal management. The U.S. Government disposition instructions will indicate parties in the U.S. Government that must be contacted prior to any demilitarization or disposal effort.

Expenditure Reporting. The purchaser agrees to notify the U.S. Government (through the SCO) of any missile firings/expenditures.