-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LsLfY85204TKRVw41FpT4QRfjADZyUHGiZRc7tlxfcfqMKHvhQnDy7ZykJeepVAT GMLV+L8FUxmGVE4RjLrBWg== 0001011240-03-000088.txt : 20030912 0001011240-03-000088.hdr.sgml : 20030912 20030912162506 ACCESSION NUMBER: 0001011240-03-000088 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030908 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LMI AEROSPACE INC CENTRAL INDEX KEY: 0001059562 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 431309065 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24293 FILM NUMBER: 03894207 BUSINESS ADDRESS: STREET 1: 3600 MUELLER RD CITY: ST CHARLES STATE: MO ZIP: 63302 BUSINESS PHONE: 6369466525 MAIL ADDRESS: STREET 1: P O BOX 900 CITY: ST CHARLES STATE: MO ZIP: 63302 8-K 1 lmi8k091003.htm FORM 8-K DATED 09/08/03 Form 8-K dated September 8, 2003

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of earliest event reported: September 8, 2003

LMI AEROSPACE, INC.
(Exact Name of Registrant as Specified in Its Charter)

Missouri
(State or Other Jurisdiction of Incorporation)

0-24293
(Commission File Number)

43-1309065
(I.R.S. Employer Identification No.)

3600 Mueller Road, St. Charles, Missouri
(Address of Principal Executive Offices)

63301
(Zip Code)

(636) 946-6525
(Registrant's Telephone Number, Including Area Code)

Item 5. Other Events

On September 8, 2003, LMI Aerospace, Inc. (the “Company”), issued a press release announcing the award to the Company, through its subsidiary Leonard's Metal, Inc., of a multi-year contract from Gulfstream Aerospace, a copy of which is attached as Exhibit 10.1. A copy of this press release is attached hereto as Exhibit 99.1.

Attached hereto as Exhibit 10.2 is a copy of a Special Business Provisions Agreement between Leonard's Metal, Inc. and the Boeing Company, and as Exhibit 10.3 is a copy of a General Terms Agreement between Leonard's Metal, Inc. and the Boeing Company. Together, these two agreements represent a new contract awarded by the Boeing Company to Leonard's Metal, Inc. in March, 2003.

Item 7. Financial Statements and Exhibits

(a) Financial Statements of Business Acquired.

Not Applicable.

(b) Pro Forma Financial Information.

Not Applicable.

Exhibit Number

Description

10.1

Multi-year contract between Leonard's Metal, Inc. and Gulfstream Aerospace.

10.2

Special Business Provisions Agreement between Leonard's Metal, Inc. and the Boeing Company.

10.3

General Terms Agreement between Leonard's Metal, Inc. and the Boeing Company.

99.1

Text of Press Release, dated September 8, 2003, issued by LMI Aerospace, Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: September 10, 2003

LMI AEROSPACE, INC.

By:  /s/ Lawrence E. Dickinson
       Lawrence E. Dickinson
       Chief Financial Officer and Secretary

EXHIBIT INDEX

Exhibit Number

Description

10.1

Multi-year contract between Leonard's Metal, Inc. and Gulfstream Aerospace.

10.2

Special Business Provisions Agreement between Leonard's Metal, Inc. and the Boeing Company.

10.3

General Terms Agreement between Leonard's Metal, Inc. and the Boeing Company.

99.1

Text of Press Release, dated September 8, 2003, issued by LMI Aerospace, Inc.

EX-10 3 lmi8kmoa090903.txt 10.1 - MEMO OF AGREEMENT - GULFSTREAM MEMORANDUM OF AGREEMENT BETWEEN GULFSTREAM AEROSPACE CORPORATION AND Leonard's Metal Inc. PREAMBLE This Memorandum of Agreement (" MOA") is executed on September 03, 2003, between Gulfstream Aerospace Corporation ("GULFSTREAM") and Leonard's Metal Inc. ("LMI") for the design, tool build, manufacture, delivery and product support of G500/550 and GIV-X kitted skins package as described in this MOA. TABLE OF CONTENTS A. SCOPE OF MOA B. PRICING, OPTIONS, AND PAYMENT C. PERIOD OF PERFORMANCE D. DELIVERIES E. INSPECTION AND ACCEPTANCE F. PACKAGING AND SHIPPING G. WARRANTY H. TITLE AND RISK OF LOSS I. DESIGN CHANGES J. DERIVATIVES K. TERMINATION L. INTELLECTUAL PROPERTY RIGHTS, TOOLING AND DATA OWNERSHIP M. EXCUSABLE DELAYS N. PATENT INDEMNITY O. INDEMNITY BY LMI ENTERING GULFSTREAM PREMISES P. GENERAL A. SCOPE OF MOA 1. Product Description / Specification a. General Description of System Kitted Skins for G550 and G500 and GIV-X b. Shipset Description See "Pricing, Options, and Payment" section c. Quantity See "Pricing, Options, and Payment" section 2. Certification a. LMI agrees to deliver products and parts hereunder that will meet applicable FAA requirements as defined in the current FAR, Part 21, and the JAA requirements as defined in the JAR for LMI supplied products. Gulfstream shall be responsible for maintaining FAA Certification and JAA certifications as applicable, on the aircraft. b. LMI will support Gulfstream in its efforts to obtain Foreign Type Certificates as mutually agreed. Gulfstream will provide reasonable advance notice to LMI of the Foreign certifications that it intends to pursue and of the requirements to be met. LMI agrees as long as any increase in costs for obtaining foreign type certifications can be negotiated between GAC and LMI Corp. 3. Integrated Logistics Support Requirements a. LMI agrees to perform all work and provide all deliverables as identified in the attached Gulfstream Document #GER-2011 entitled "Integrated Logistics Support Requirements" dated September 4, 2001 at no cost to Gulfstream. These requirements include Technical Publications, Manuals, Technical and Product Support, Technical Training, Reliability, Maintainability, Material Services/Ground Support Equipment MSG3 and Warranty Administration and other data requirements. 4. Supplier Performance a. Performance Level This MOA is predicated upon LMI maintaining a high level of performance in all tasks required for commitment to the program and timely satisfaction of all requirements including without limitation performance in the areas of Quality, Reliability, Product Support and on time deliveries. If, during the life of this MOA, should performance become unacceptable to Gulfstream, the pricing, terms and conditions herein may be subject to further negotiations. b. Quality Assurance 1. Consistent with industry practice, Gulfstream has developed Supplier Quality Assurance Requirements SQAR-0003 dated 04/02 incorporated herein by reference which address such things as Quality programs, onsite evaluation inspection and testing of equipment and supplies and failure analysis. 2. LMI to adhere to the requirements of SQAR-0003 dated 04/02 as may be amended from time to time. Gulfstream will provide LMI with revisions to SQAR- 0003. 3. In addition, as a minimum the following special terms and conditions as cited in Gulfstream Form GA270 (latest revision) may apply. Form GA270 may be amended from time to time as required. 129, 131, 259, 304, 315, 334, 456, 463, 469A, 470A, 480, 481, and 921 c. FRACAS AND FAILURE ANALYSIS REPORTS 1. The performance, calculation, tracking and administration of the warranty shall be performed by LMI at no cost to Gulfstream consistent with Gulfstream's reliability document (GER608) incorporated herein by reference, which may be amended from time to time, which shall include a Failure Reporting Analysis and Corrective Action System (FRACAS) report submitted on a quarterly basis when requested by Gulfstream during the term of the MOA. This report is due to Gulfstream no later than ten (10) days following the end of each quarter. 2. In addition, LMI will provide failure analysis and tear-down reports on defective units to Gulfstream no later than 45 calendar days from receipt of the defective unit at their Repair & Overhaul Facility. d. Production Line Support LMI will maintain a minimum of two (2) extra shipset of hardware/assemblies in its production plan and on their shelf to support abnormal production shortages. This hardware and assemblies must be shipped within four hours of Gulfstream's request from LMI Savannah Distribution Center. e. Aircraft on Ground (AOG) Support 1. LMI will provide 24 hours, 7 days a week, 365 days AOG coverage, at no cost to Gulfstream. LMI will provide Gulfstream a listing of individual AOG contacts with E-Mail addresses, phone and fax numbers. The listing will be maintained by LMI with any revisions being provided Gulfstream prior to or at the time the revision is implemented. 2. The standard AOG response time is as follows: AOG Response 4 Hours Critical Expedite Request 24 Hours Expedite 7 Days 3. LMI will maintain an adequate AOG inventory of new and used components, inclusive of Parts of Assemblies (POA's), consumables and maintenance replacement units as mutually agreed to offset any like assets Gulfstream is required to provide its customers in support of warranties for said components. * * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. 4. Defective components will be expeditiously returned to LMI for verification of the failure. Upon verification that the failure is covered under the warranty LMI at its cost agrees to replace the failed unit within thirty (30) days after receipt of the failed unit or Gulfstream may invoice LMI for the actual purchase price of the unit plus a * (* %) percent handling fee. In the event that the component is not verified as a warranty failure, Gulfstream shall compensate LMI within thirty (30) days, as mutually agreed, based on the following options: a. Return same component(s) and compensate LMI for airworthiness test and recertification costs. b. Return like airworthy components to LMI. c. Exchange the failed core and compensate LMI for repair and airworthiness test costs. d. Procure unit at a mutually agreed to price based upon unit flight hours. * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. f. Parts Obsolescence LMI agrees to continue all manufacturing capabilities and/or provide alternate support for the form, fit and functional requirements for the original configurations on any/all of the "out-of-production" configurations, modifications or enhancements, so long as the model aircraft for which it was designed remains in service. LMI further agrees to provide Gulfstream 90 days notification for "last-time-buy" options for any obsolete end items and parts of assemblies at the pricing set forth in this MOA where applicable. g. Local Distribution Center 0 LMI agrees to position it's Gulfstream Distribution Center within a fifty (50) mile radius from Gulfstream's Savannah facility. 0 LMI agrees to obtain a facility that will be sufficient in size and functionality to support all roles pertaining to this MOA such as but not limited to: o Warehousing minimum agreed upon shipsets of LMI and Versaform parts. o Capacity and reliable capability to perform required processes in order to supply Gulfstream with the highest possible quality kitted products defined within this MOA. o A facility adequately secure from natural elements and outside influences. h. Consigned Components Upon award to LMI those part numbers incorporated in the G500/550 and GIV-X Kitted Assemblies currently in finished goods at Gulfstream will be consigned to LMI for inclusion into the assemblies. The following guidelines apply to the management and control of these components in the fulfillment of this agreement. 0 That LMI will begin receiving from Gulfstream the finished goods inventory for all components of the G500/550 and GIV-X Kitted Assembly by 1 October 2003. 0 That LMI will be in position to deliver the first kitted assembly by 1 November 2003. 0 That LMI will maintain at its Gulfstream Distribution Center a finished good inventory of all consigned components and its usage to support the kitting program. 0 Invoicing procedures for consigned Gulfstream inventory will be outlined by LMI and Gulfstream jointly by October 01,2003 and become an addendum to this agreement at a later date. 0 That there is an understanding that LMI is receiving a consigned inventory that meets or exceeds Gulfstream's latest engineering requirements. LMI is not responsible for the inspection of these consigned components, but is responsible for maintaining the components in same condition as received. 0 LMI will ensure Gulfstream that the following minimum insurance requirements are met in regards to the consigned components: o No acceptance and or approval of any insurance by GULFSTREAM shall be construed as relieving or excusing LMI or its agents or subcontractors of any liability or obligation imposed upon any of them by the provisions of the contract documents. o All insurance policies required by this section, or elsewhere in the contract documents, shall be so endorsed as to provide that the insurance carrier shall be responsible for giving sixty (60) days prior notice to GULFSTREAM in the event of cancellation or modification of the insurance policy o LMI's carrier shall list GULFSTREAM as additional insured and loss payee under the Commercial Liability policy. B. PRICING, OPTIONS AND PAYMENT ** 1. Supplies to be furnished GIV-X Part number Description Price Qty ----------- ----------- ----- --- 1159B47128-82-9 Skin Assembly $ * 1 1159B43131-29 Skin Assembly $ * 1 1159B47226-800-63 Skin Assembly $ * 1 1159B47226-800-9 Skin Assembly $ * 1 1159B47227-800-3 Skin Assembly $ * 1 1159B21201-800-7 Skin Assembly $ * 1 1159B21201-800-8 Skin Assembly $ * 1 1159B43132-7 Skin Assembly $ * 1 1159B21314-800-119 Skin Assembly $ * 1 1159B47318-800-3 Skin Assembly $ * 1 1159B41311-800-55 Skin Assembly $ * 1 1159B41311-800-56 Skin Assembly $ * 1 1159B31315-800-117 Skin Assembly $ * 1 115931316-800-101 Skin Assembly $ * 1 1159B47319-800-5 Skin Assembly $ * 1 1159B47320-800-3 Skin Assembly $ * 1 1159B41317-800-121 Skin Assembly $ * 1 1159B31321-803-89 Skin Assembly $ * 1 1159B47510-800-5 Skin Assembly $ * 1 1159B47513-800-7 Skin Assembly $ * 1 1159B47501-802-3 Skin Assembly $ * 1 1159B57111-800-33 Skin Assembly $ * 1 1159B57111-800-27 Skin Assembly $ * 1 1159B57110-800-21 Skin Assembly $ * 1 1159B57110-800-23 Skin Assembly $ * 1 1159B57827-800-75 Skin Assembly $ * 1 1159B57222-800-7 Skin Assembly $ * 1 1159B57223-800-5 Skin Assembly $ * 1 1159B57225-802-7 Skin Assembly $ * 1 Total shipset price GIV-X $ * * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. G500/550 Part number Description Price Qty ----------- ----------- ----- --- 1159B51510-47 Skin Assembly $ * 1 1159B51513-800-95 Skin Assembly $ * 1 1159B53132-31 Skin Assembly $ * 1 1159B51314-800-57 Skin Assembly $ * 1 1159B51318-57 Skin Assembly $ * 1 1159B51311-801-49 Skin Assembly $ * 1 1159B51315-800-107 Skin Assembly $ * 1 1159B51993-801-35 Skin Assembly $ * 1 1159B51316-800-53 Skin Assembly $ * 1 1159B51320-800-57 Skin Assembly $ * 1 1159B51912-800-73 Skin Assembly $ * 1 1159B51321-800-91 Skin Assembly $ * 1 1159B52242-800-55 Skin Assembly $ * 1 1159B52242-800-53 Skin Assembly $ * 1 1159B57111-800-23 Skin Assembly $ * 1 1159B57111-800-31 Skin Assembly $ * 1 1159B57110-800-19 Skin Assembly $ * 1 1159B57110-800-17 Skin Assembly $ * 1 1159B57827-800-75 Skin Assembly $ * 1 1159B57222-800-7 Skin Assembly $ * 1 1159B57223-800-5 Skin Assembly $ * 1 1159B57225-802-7 Skin Assembly $ * 1 1159B57828-802-47 Skin Assembly $ * 1 1159B57226-800-53 Skin Assembly $ * 1 1159B57226-800-9 Skin Assembly $ * 1 1159B57227-801-43 Skin Assembly $ * 1 1159B53135-49 Skin Assembly $ * 1 1159B52212-800-10 Skin Assembly $ * 1 1159B52212-800-9 Skin Assembly $ * 1 Total shipset price G500/550 $ * * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. ** Part number revisions will be maintained at the purchase order level. Quantities per year for Production. Please note that the spare requirements could be as high as the production requirements or as few as zero. The quantities listed below are estimates only, actually quantities will be given via purchase order. GIV-X G500/550 ----- -------- 2003 TBD TBD 2004 6 27 2005 23 27 2006 23 27 2007 23 27 2008 TBD TBD "Gulfstream is not obligated to procure any minimum number of supplies, products or services to obtain the shipset pricing set forth in this MOA. 2. Options Program Review: Purpose of this program review is to assess the progress of the implementation of the Gulfstream Distribution Center, and to evaluate the cost structure of this program. Schedule: There will be a scheduled program review every 6 months for the first 24 months of this contract. There will be two primary focuses of this review: 1) Determine the effectiveness of the distribution center in the deliveries of kitted assemblies to Gulfstream seeking avenues of improvement and enhancement. 2) Evaluate the profitability and cost of the program with regards to the GV/GIV Kitting Assembly package. Evaluation of Cost and Profitability review: The following milestone objectives will be measured and evaluated during the program review. 0 At the 6-month review a study will be conducted between Gulfstream and LMI to determine the profit margins for this contract. LMI's 040 report generated from its MRP system will constitute the primary source document for the evaluation, as it captures cost and labor associated with this program. Once the net profit is determined the following rules will apply: o Any net profit that exceeds the *% will be shared equally between Gulfstream and LMI. o If, the net profit is less than the *% LMI will not seek escalation of prices during the terms of this contract. * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. 3. All invoices, except as noted, shall be sent separately to: Gulfstream Aerospace Corporation Attn: Accounts Payable, M/S B-10 P.O.Box 2206 Savannah, GA 31402-2206 4. Payment: net 30 LMI will allow a discount of 1% net 10 days on payments of invoices. 5. Spares a. Spares pricing Agreement: ************************* * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. b. Sole Distribution Rights/Parts Manufacturing Authority 1. LMI acknowledges that all rights to the distribution of any components designated for use on any Gulfstream aircraft, belongs solely to Gulfstream and shall not solicit the PMA from the FAA. 2. LMI shall provide all components to Gulfstream only, for resale to Gulfstream customers through the Gulfstream distribution network. c. Spares LMI and Gulfstream will be jointly responsible for providing a Comprehensive Spares Requirement Forecast, based on past spare usage to Gulfstream prior to the first Production Aircraft delivery. LMI will provide a revised spares list, if required based on Gulfstream's then estimated spares usage, after the delivery of 5 production shipsets to Gulfstream. d. Spares Inventory To the extent LMI has provided spares inventory, LMI shall at its expense maintain the spares inventory to the latest production configuration (1 shipset only). LMI agrees to maintain spares inventory to latest production configuration as long as LMI is compensated for any GAC engineering changes that requires the existing spares inventory to be pulled out of stock and re-worked to the latest production configuration. (Gulfstream will only be responsible for the 1 shipset.) 6. Taxes a. With the exception of import and export duties (if any), LMI agrees that the prices contained herein include any and all taxed levies on LMI by the United States, and any state or political subdivision thereof, in effect on the date of this MOA, including, but not limited to: 1. State and Local Gross Receipts, Sales or Use Taxes on property used or procured by LMI, irrespective of the ownership of the property. 2. Ad Valorem Property Taxes on property; in the control, custody, or possession of LMI, irrespective of the ownership of the property. 3. Sales or Use Taxes on the sale of any item by LMI to Gulfstream under this MOA; and 4. Manufacturer's and Retailer's Excise Taxes. b. This section shall not be applicable to Social Security Taxes, Income and Franchise taxes. C. PERIOD OF PERFORMANCE The period of performance for this MOA will be from August 1, 2003 through August 1, 2008. The pricing (and relevant provision of this MOA) provided for shipsets will apply for orders placed by Gulfstream prior to the end of the period of performance even if the delivery and acceptance by Gulfstream occurs after the period of performance. Time is of the essence in the performance of obligations set out in this MOA. D. DELIVERIES 1. Delivery Schedules The delivery schedules in this MOA are estimated delivery schedules. Gulfstream will issue purchase orders for the supplies acquired under this MOA. Individual items ordered will be identified on the purchase orders with Gulfstream's part number. The required delivery schedule for supplies will be established on purchase orders. 2. Just in time (JIT) deliveries The JIT delivery schedule herein permits receipts no earlier than one (1) hour prior to requested delivery time on the Due-On-Dock date and not later than the Due-On-Dock date. 3. Delivery requirements change to the actual Delivery Schedule Gulfstream will provide a minimum of 30 days notice to LMI in the event of production schedule decelerations and/or production schedule accelerations. Gulfstream will be allowed to increase or decrease the delivery rate by up to 1 shipset per month (total of 12 shipsets per year) at no additional cost. Gulfstream and LMI will work together on a best effort basis to provide as much advance notice as possible for schedule changes. 3. Late Delivery Penalties In the advent that the supplier is late to deliver on the scheduled due on dock date a penalty will be assessed according to the amount of time finished product is late to the established delivery date provided adequate lead time for procurement of raw material and delivery is not affected by Gulfstream design changes (i.e. tools) and a minimum six month forecast is provided on all kits. The penalty scale is as follows: * % of Unit Price 1 (24 hours) to 3 Calendar days * % of Unit Price 4 to 7 Calendar days * % of Unit Price 8 to 14 Calendar days * % of Unit Price 15 to 21 Calendar days * % of Unit Price 22 to 28 Calendar days * % of Unit Price 29 to 36 Calendar days * % of Unit Price 37 and beyond Calendar days Penalty cost can not exceed cost of finished product and will only be assessed if purchase order is placed on or before the agreed upon lead-time of 12 weeks. Penalty is assessed to each individual finished product starting on the day that individual finished product is due. This penalty is assessed even if prior parts are still past due. * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. E. INSPECTION, ACCEPTANCE AND REMEDIES FOR NON-CONFORMING Kitted skins package 1. Inspection and Acceptance of Supplies a. Gulfstream has the right to perform an incoming inspection on each kitted skins upon delivery prior to acceptance. Acceptance of material ordered under this MOA will occur at the designated Gulfstream facility as soon as possible following delivery of material and all required material documentation (i.e. 8130 forms, etc.), but no more than sixty (60) days after delivery to Gulfstream's facility. b. Notwithstanding any prior inspection or test, payment, or receiving documents, the leading edges are subject to final inspection, test, and acceptance at destination stated herein or at the Gulfstream Facility which orders part(s). 2. Remedies for Non-Conforming Supplies a. Gulfstream may, if the supplies are non-conforming, do any or all of the following: 1. Reject or return such supplies upon failure to pass inspection or meet warranty, respectively. As to returned supplies (and as to rejected supplies but only if Gulfstream so directs), LMI shall promptly at its expense, and at Gulfstream's election, repair or replace such supplies. Upon rejection or failure to promptly repair or replace, Gulfstream may cancel and/or effect cover by purchase or otherwise. If notice of rejection or return is given, incidental expenses and the risk of loss or damage shall be borne by LMI until acceptance by Gulfstream at destination. 2. Accept or retain non-conforming supplies and, at its election, equitably reduce the price or repair such supplies at LMI expense and recoup as in 3 below. Not to exceed original part price. 3. Require repayment or effect a setoff against any amounts owed to LMI of any expenses incidental to rejection or return and of any amount paid for such supplies pending a conforming redelivery. 2. Acceptance of supplies previously rejected or returned, or of used supplies, or of former government property may be revoked if delivery is conforming but is not accompanied by written notice that the supplies were previously rejected, returned, used or government property. 3. Quality Assurance Inspections of Systems a. LMI and LMI subcontractors, at their expense, will maintain reasonable quality control and inspection systems consistent with SQAR 0003 and will provide the Supplier's Quality Organization a failure analysis and corrective action program for all design, tooling, test equipment, manufacturing and test operations supplied to Gulfstream. Each type of non-conformance shall be documented, investigated, and the appropriate corrective action implemented by LMI and its subcontractors. The supplier will have a method for positive identification, recall, and replacement of priority parts in the event of a nonconformance. b. At all reasonable times, including the period of manufacture, Gulfstream may inspect and test the end products and inspect the involved plants of LMI and LMI subcontractors. LMI and its subcontractors LMI will at their expense provide Gulfstream with reasonable assistance to effectively and efficiently conduct the inspections and LMI and LMI will at their expense promptly comply with written directions by Gulfstream reasonably necessary to correct deficiencies in such systems. F. PACKAGING AND SHIPPING 1. Packing tickets LMI will submit a packing ticket with each shipment. Packing tickets shall include the following: a. All packing tickets shall include purchase order number(s), MRA/MRP release numbers, item number(s), quantity, serial number(s) (as applicable), and nomenclature exactly as it appears on the purchase order. b. All parts shall be identified per the Engineering Drawing and Purchase Order Quality requirements utilizing GAMPS 1105 and GAMPS 1106 as required. c. All components, which are serialized must have the serial numbers stated on the packing ticket. d. The serial number on the packing ticket and the serial number on the component must be identical. Copies of functional test results must be included. e. If for any reason, a kitted skin part ends up on the problem file, LMI has one (1) week, from date of notification to comply with the request from Gulfstream to clear the problem file. If after a week, the request has not been complied with, Gulfstream will return said part back to LMI at LMI's expense to LMI Savannah Distribution Center. 2. Shipping, Marking and Packing Instructions Unless otherwise stated herein, all Shipping, Marking and Packing instructions will be in accordance with Gulfstream Document Number GA 75, 6/01 as amended from time to time. In addition, LMI agrees to furnish reusable container and/or rack to transport kitted skins to location of point of use. After use is complete the container and/or rack along with clecos will be returned to LMI. 3. Certification of country of manufacture U.S. Customs has increased requirements for the identification of foreign made items entering the United States of America. Therefore, proof of Country of Manufacture is required for all end items. 4. FOB Point of origin is *. * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. G. WARRANTY 1. General Subject to the limitations and conditions hereinafter set forth, LMI warrants that the leading edge and its components supplied hereunder shall: a. at the Date of Delivery, be free from: i. defects in material or workmanship ii. defects arising from the selection of material or process of manufacture other than as specified by Gulfstream or contained in Gulfstream's provided design under the Product Description; or Gulfstream approved design. iii.defects inherent in the design thereof, in view of the state of the art at the time of design thereof, except for those portions which have been retained from the prior GIV design or which are based upon Gulfstream directed or furnished engineering criteria but, only to the extent such criteria is defective or incorrect. b. at the Date of Delivery, and throughout the duration of the warranty, be free from defects arising from the failure to conform to the Type Design specifications and drawings, as certified by the FAA or other airworthiness authorities, developed by LMI pursuant to the Product Description or the Engineering Statement of Work. 2. Duration The extent of LMI liability under this Section as to defects in the kitted skin is limited to the repair of all such defects in the kitted skin which are discovered within a period of seventy eight (78) months from the date of shipment, or seventy two (72) months from the date of delivery to the GIV-SP and GIV-X aircraft to the operator and while LMI retains the tooling and data necessary to effect such repairs. Warranty duration calculations are based upon the exclusion of any repair time spent at LMI facilities. 3. Remedies a. LMI obligation for a breach of a warranty provided under this Section during the periods described in this Section. shall be to promptly repair, replace or correct (to include all costs associated with removal and reinstallation) at LMI sole election and cost, the defective part or condition with reasonable care and dispatch. LMI will reimburse Gulfstream for the cost of labor associated with the removal of defective units, installation of the replacement unit and required operational checks provided the work is performed by Gulfstream, an Authorized Warranty Repair Facility or by a facility as directed by Gulfstream. Reimbursement will be based on standard hours applicable to the removal and replacement of each unit. 4. Removal and Reinstallation of LMI Components a. Gulfstream reserves the right to debit LMI account for all direct and related tasks at any Gulfstream facility or any Gulfstream authorized facility to effect the removal and reinstallation of LMI components or parts of assemblies inclusive of consumables and maintenance replacement units. Gulfstream will debit LMI's account only after Gulfstream has given LMI adequate time to investigate and respond to the rejection that has taken place. b. Gulfstream will forward a periodic listing of items to be debited to LMI and will include the following data: 1. The date component was identified and removed. 2. Part number description and serial number 3. Reason for removal 4. Aircraft serial number 5. Then actual labor hours if known or standard published labor hours and any related labor hours incurred 6. Labor rate at then published rates 7. Debit amount c. LMI will have 30 days from the date of notification to take exception to any item(s) submitted. Gulfstream will only debit said account after LMI and Gulfstream have worked in good faith to determine who the responsible party is. 5. Guaranteed Mean Time Between Failure (MTBF) a. The MTBF requirements for the component(s) herein are as follows: Description Guaranteed MTBF Design Goal ----------- --------------- ----------- b. LMI shall guarantee that the component(s) will achieve the guaranteed MTBF noted above, with the calculation as follows: MTBF equals Flight Hours divided by confirmed failures. Where the flight hours are the total number of (INSERT AIRCRAFT MODEL) flight hours accumulated by the aircraft on which the component(s) are installed. If at the end of the agreed to warranty period, the guaranteed MTBF has not been achieved, LMI agrees to extend the warranty period until such time as the guaranteed MTBF is achieved. c. The performance, calculation, tracking and administration of this warranty and associated MTBF guarantees will be carried out in accordance with Gulfstream's Reliability Document (GER 608 Rev A). The labor and material required to incorporate the corrective actions as defined in said document will be provided at no cost to Gulfstream or its customers. 6. Bad Actor Program LMI will provide, at no cost to Gulfstream, a new replacement component if it is verified that the rejected part is the responsibility of LMI. 7. Disclaimer THE WARRANTIES SET FORTH IN THIS MOA ARE EXCLUSIVE AND NO OTHER WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM THE COURSE OF DEALING OR USAGE OF TRADE, SHALL APPLY. THE REMEDIES SET FORTH IN THIS MOA ARE THE SOLE AND EXCLUSIVE REMEDIES OF GULFSTREAM FOR ANY CLAIMS, EXPENSES, OR DAMAGE ARISING OUT OF OR RELATED TO PRODUCTS DELIVERED UNDER THIS MOA. IN NO EVENT SHALL LMI BE LIABLE IN TORT OR IN CONTRACT FOR ANY INCIDENTAL, SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES. THIS SECTION SHALL NOT BE INTERPRETED TO AFFECT IN ANY WAY [INSERT SUPPLIER NAME) OBLIGATIONS WITH RESPECT TO THIRD PARTY CLAIMS FOR PROPERTY DAMAGE, PERSONAL INJURY OR WRONGFUL DEATH. H. TITLE AND RISK OF LOSS 1. Title and Shipping Point * All risks of loss or damage to property to be delivered by LMI hereunder shall be upon LMI until title of such property passes to Gulfstream. * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. 2. Risk of Loss Notwithstanding the foregoing, LMI shall bear risk of loss or damage to property subsequently rejected by Gulfstream and placed on transport for return to LMI until such property is redelivered to Gulfstream, except for the loss, destruction of, or damage to such rejected property resulting from the negligence of officers, agents or employees of Gulfstream acting within the scope of their employment. a. If property is furnished by Gulfstream for performance of this MOA all risks of loss or damage to such property shall be upon LMI until the said property has been redelivered to Gulfstream. LMI shall properly segregate, identify and protect all such property. b. Processing of claims relating to loss of or damage to property to be furnished hereunder shall be accomplished by the party responsible for risk of loss or damage to such property at the time the claim arises. I. DESIGN CHANGES 1. Design Changes a. Gulfstream may at any time make changes in drawings, designs, specifications, materials, packaging, time and place of delivery, method of transportation or other terms of this MOA, which changes Gulfstream shall document in writing and which LMI shall immediately implement. If such changes cause an increase or decrease in the cost of performance of this MOA or in time required for performance, an equitable adjustment shall be made, as applicable, to the price and/or the delivery schedule of the affected performance and this MOA shall be amended in writing accordingly. Any claim by the LMI for an equitable adjustment under this clause must be asserted within thirty (30) days from the date of written order effecting the changes or Gulfstream shall not be obligated to consider LMI's claim for an equitable adjustment. In no event shall Gulfstream be liable for any claim for an increase in price after payment for the supplies. If property is made obsolete as a result of a change, Gulfstream shall have the right to prescribe the manner of disposition of such property. Changes directed by Gulfstream which are issued in order to improve fit and/or ease use by Gulfstream production operations will be accepted at no cost to Gulfstream and promptly acted upon as mutually agreed. There will be no increase in price if the changes incorporated do not impact the costs of manufacturing the final component as agreed upon during the onset of this program. 2. Class 1 & 2 Design Changes - Supplier Requested Changes a. Class 1 changes are those that affect fit, form, function, interchangeability, safety, strength, performance, flight characteristics, weight, balance, product qualifications, service life or installation of the next assembly. These changes are required to be submitted to and approved by Gulfstream Engineering prior to incorporation. b. Class 2 changes (those that do not affect fit, form, function, interchangeability, safety, strength, performance, flight characteristics, weight, balance, product qualification, service life or installation of the next assembly) must also be submitted for Gulfstream Engineering's review and concurrence with respect to classification prior to incorporation. Gulfstream will respond with said concurrence or any exceptions taken within 2 weeks after receipt of supplier notification. c. All Class 1 and Class 2 Design changes shall be submitted in writing via a "Seller Engineering Memo" (SEM) to Gulfstream Engineering with copies to Gulfstream Purchasing and Quality Assurance. 3. Supplier Escapes LMI will immediately notify Gulfstream, in writing, of any material/component escapes. Escapes are any material/ component issue that may result in performance, airworthiness, FAR non-compliance, or non-conformance as defined below: a. Material or component issues that might affect the item's ability to perform to original specifications. b. Airworthiness of the component or end use product in question. c. FAR non-compliance has been identified with components. d. Non-conformance to original specification (component or material does not conform to Engineering specification, drawing or document). Written notification must include: 1. Nature of the Issue "What, why, how and when" information. Reference SQAR-0003, Paragraph 19. 2. Inspections/Action State if it is satisfactory to simply inspect for this condition and what inspection methods are required. If the item needs to be replaced, state NDT standards, tools, and inspection resources available. Identify specific series (by serial number, by date of manufacture, by location of manufacture, etc.) if possible. 3. Compliance Time State the urgency of the issue and recommended compliance time. 4. Spares State if replacement or return to supplier for repair is required, whether or not adequate spares exist to either replace outright, or to develop a rotable pool to keep in service aircraft flying. 5. Remedy If appropriate, recommend actions to preclude this event from happening again, both short term and long term. 6. Suppliers identification of the issue State if Airworthiness issue, Quality issue, FAR non-compliance (or all of the above). 7. Service Bulletin The above information is the basis of a Service Bulletin. The LMI should provide a draft Service Bulletin at this time if possible. However, in those cases where LMI has the Material Review Board (MRB) authority and the escape disposition meets type design, then a separate submission, other than MRB with the component, is not necessary. J. DERIVATIVES 1. Derivative Aircraft At any time during the term of this MOA, Gulfstream may elect to build a derivative of the aircraft on which the products purchased under this MOA are used. A derivative aircraft is defined as an already type certified aircraft that will undergo sufficient modification as to require re-certification and issuance of a new type certificate. 2. Alternate Sources If the products purchased under this MOA will not meet the market requirements or technical specifications of the derivative aircraft, Gulfstream may elect to develop alternate sources for like products to be used on the derivative aircraft in lieu of the products purchased under this MOA. If an alternate source supplied product is selected for use on the derivative aircraft, Gulfstream may terminate this MOA in accordance with the terms delineated herein. K. TERMINATION 1. For default a. Gulfstream may terminate this MOA or any part thereof, by giving notice of default to LMI under any of the following circumstances. 1. If LMI refuses or fails to make deliveries or perform the services within the time specified in this MOA. 2. If LMI fails to comply with any of the other provisions of this MOA, or so fails to make progress as to endanger performance of this MOA in accordance with its terms, and does not cure any such failure within a period of ten (10) days (or such longer period as Gulfstream may authorize in writing) after receipt of notice from Gulfstream specifying such failure. 3. If LMI becomes insolvent or is subject to proceedings under any law relating to bankruptcy, insolvency or the relief of debtors. b. In the event of such termination, Gulfstream may purchase or manufacture similar product and/or require LMI to transfer title and deliver to Gulfstream any or all property produced or procured by LMI under this MOA, and LMI shall be liable to Gulfstream for any excess cost to Gulfstream; provided, however, LMI shall not be liable to Gulfstream for such excess cost when the default of LMI is due to causes beyond the control and without the fault or negligence of LMI; provided further, and LMI has exercised due diligence to remove delay, LMI shall not be excused from liability unless LMI has notified Gulfstream in writing of the existence of such cause within ten (10) days from the beginning thereof. c. Gulfstream's liability in the event of a default termination shall be limited to the agreed price of items delivered and accepted, subject to downward equitable adjustment if such product(s) are nonconforming, and to the reasonable value of any property, inclusive of tooling, design data, survival of warranties and obligations thereunder that Gulfstream may require to be delivered pursuant to b. above. 2. For Convenience Gulfstream may terminate this MOA, or any part thereof, by giving written notice thereof to LMI. In the event of such termination, Gulfstream shall pay to LMI costs incurred by LMI, for supplies that have been ordered by Gulfstream, determined in accordance with sound accounting practices plus a reasonable allowance for profit earned thereon; provided that LMI shall not be entitled to any profits with respect to work and/or services not performed prior to effective date of such termination, nor shall the total termination sum payable to the LMI exceed the total agreed to price for supplies that have been ordered by Gulfstream as reduced by the amount of payments otherwise made, and as further reduced by the agreed to price of work not terminated; further provided, however, that if it appears that LMI would have sustained a loss of the entire MOA had it been completed, no profit shall be payable hereunder and an appropriate adjustment shall be made reducing the amount otherwise payable hereunder to reflect the indicated rate of loss. L. INTELLECTUAL PROPERTY RIGHTS, TOOLING AND DATA OWNERSHIP 1. Ownership of Design Drawings/Data a. Title and rights to all design and design data (drawings) created by LMI under this MOA are owned by Gulfstream upon full payment for supplies. b. In the supplies have been either originated or designed by Gulfstream in accordance with specifications or other data furnished by Gulfstream, all rights to supplies or other data and the reproduction, use or sale thereof are owned solely by Gulfstream. 2. Ownership of Tooling, Design and Data a. All tooling whether designed by LMI, by Gulfstream or by a third party, shall become, upon acquisition or manufacture, the property of Gulfstream. LMI shall deliver such tooling to Gulfstream or Gulfstream's designees after performance is completed hereunder or upon termination, unless such tooling is needed to fill further orders from Gulfstream and retention by LMI of such tooling has been consented to in writing by Gulfstream. b. The term "tooling" shall include, but not be limited to, all tools, dies, jigs, fixtures, molds, patterns, special taps, special gauges, special test equipment, other special equipment and manufacturing aids, and replacement thereof, acquired or manufactured by LMI for the performance of this MOA, which are of such a specialized nature that without substantial modification or alteration, their use is limited to the production of supplies or parts hereof, or the performance of such services as are to be supplied to Gulfstream hereunder. LMI agrees to comply with the provisions of the Gulfstream Tooling Manual for Subcontractors. 3. Disposition of Tools a. LMI is wholly responsible for all Gulfstream tooling located in its facility/facilities. When tooling is deemed no longer necessary, LMI will receive, in writing, from Gulfstream guidance on disposition for said tools. b. Upon completion of payments, all tooling shall be properly marked to indicate its ownership by Gulfstream in accordance with the mutually agreed to tooling philosophy by Gulfstream and LMI. Gulfstream may file, with the cooperation of LMI, a UCC Financing statement confirming Gulfstream's ownership interest. M. EXCUSABLE DELAYS 1. Neither party hereto shall be responsible for, nor deemed to be in default, on account of delays in performance of the MOA due to causes beyond its control and not occasioned by its fault or negligence. Such causes include, but are not limited to: acts of God, force majeure, action by the Governments, delays in transportation, labor disputes or strikes; provided, however, that the existence of such causes shall not excuse the delaying party from the resulting delay unless such party shall have given the other party written notice on any excusable delays referred to above, within 5 days (or such additional time as may be approved by the other party) after the delaying party has actual knowledge that such occurrences will result in a delay in delivery and the delaying party. 3. In the event the delivery of any product from LMI is delayed for any cause deemed excusable hereunder, so that the extent of such delay in delivery of any product will exceed 1 month from the date of scheduled delivery, the MOA, for the undelivered delayed products, may be terminated by Gulfstream upon written notice to LMI. Any termination under this paragraph shall be treated as a termination for default as described elsewhere in these terms and conditions. 3. In the event of a significant force majeure event, terrorist act or other act or declaration of war that materially impacts Gulfstream's aircraft backlog or sales activities, Gulfstream may in addition to the other rights set forth in this MOA reschedule or cancel deliveries effected by such an event, as required (in Gulfstream's sole determination). In the event Gulfstream determines a requirement to either reschedule or cancel deliveries, Gulfstream will notify the supplier in writing of the deliveries impacted by Gulfstream's determination. The MOA will be modified accordingly and all other deliveries, rights and obligations under the MOA will remain unchanged and there shall be no penalty, additional costs or liability assessed to Gulfstream as a result of its cancellation or rescheduling of deliveries under this section. N. PATENT INDEMNITY 1. Unless the leading edge are made to the detailed design of Gulfstream, LMI shall at its expense defend and indemnify Gulfstream against any claim of patent infringement provided timely notice of such claim be given LMI. 2. Gulfstream agrees to pay LMI all costs and expenses in its defense and to pay LMI the amount of any judgement against LMI in any suit proceeding against LMI, based upon a claim of infringement resulting solely from Gulfstream connecting any equipment purchased herein with any article or device not manufactured or supplied by LMI, or from the sale or use of any such combination by Gulfstream. O. INDEMNITY BY LMI ENTERING GULFSTREAM PREMISES LMI assumes the risk of all damage, loss, costs and expense, and agrees to indemnify and hold harmless Gulfstream, its officers, agents and employees from and against any and all liability, damage, loss, cost and expense, including attorney's fees, which may accrue to or be sustained by Gulfstream, its officers, agents or employees on account of any claim, suit or action made or brought against Gulfstream, its officers, agents or employees, (including claims, suits or actions brought against Gulfstream because of Gulfstream's own negligence) for the death of or injury to employees, agents or subcontractors of LMI or destruction of property of LMI, sustained in connection with LMI performance of any activity under this MOA performed at a Gulfstream facility, arising from any cause whatsoever (including, without limitation, falls from scaffolding, ladders, catwalks, beams or other high places; mishaps involving cranes, booms, elevators, trucks or other equipment; injuries resulting from electrical shock; and failure of or defect in any equipment, instrument or device supplied by Gulfstream or its employees to LMI, its employees, agents or representatives at the request of LMI, its employees, agents or representatives), except for the willful misconduct of Gulfstream or its employees acting within the scope of their employment. P. GENERAL 1. Disputes Any controversy or claim between the parties arising out of or relating to this MOA, or breach thereof, shall be governed by the laws of the State of Georgia and shall be settled by arbitration in Savannah, Georgia under the Commercial Arbitration Rules of the American Arbitration Association ("AAA") and administered by the AAA. Pending settlement by agreement or a final judgement, LMI shall proceed diligently with the performance hereof according to Gulfstream's decision and instructions. 2. Substance Abuse Policy LMI, its subcontractors, agent and employees acknowledges and understands that: a. The possession, sale, transfer, purchase and/or presence in one's system of a controlled substance(s) or alcohol by any person on Gulfstream property is prohibited; b. Entry onto Gulfstream property constitutes consent to an inspection of any individual and their personal effects when entering, on, or leaving Gulfstream property; c. Any individual found in violation of (1) above or who refuses to permit an inspection may be removed and barred from Gulfstream property at the discretion of Gulfstream. d. LMI agrees to abide by and to advise its subcontractors, agents and its employees of the provisions herein. e. Gulfstream Aerospace Corporation's Substance Abuse Policy (GA 3059) is enclosed and incorporated by reference and will apply while LMI and/or any of its subcontractors are on Gulfstream's premises. 3. TSO The GIV-SP and GIV-X leading edge will be covered by TSO, if applicable. 4. Press Releases LMI shall not issue any press release, press conference or similar announcements to the industry or the media (to include securities analysts) without the prior written consent of Gulfstream. 5. Marketing/Advertising Assistance LMI agrees, at its expense, and upon the direction of Gulfstream to provide reasonable and normal assistance in support of the following: a. Green Aircraft Sales b. Customer/Options/Retrofits c. Air Shows/Trade Shows d. Gulfstream's Customer Workshops e. Other Gulfstream sponsored activities 6. Assignment Except as to the sale of the business to which this MOA relates, the rights of the parties under this MOA may not be assigned or transferred, in whole or in part, to any person, firm, corporation, or subcontractors without the express prior consent of the other party. 7. Entire Agreement This MOA constitutes the entire understanding between the parties and supersedes all previous understandings, agreements, communications and representations, whether written or oral, concerning the subject matter of the agreement. 8. MOA Acceptance Agreement by LMI to furnish materials or services hereby ordered or partial performance hereunder or shipment of any leading edge ordered hereby constitutes acceptance of the terms and conditions of this MOA. The terms and conditions set forth shall be the only applicable terms and conditions for this purchase, unless changes or substitutions are agreed to, in writing, by an authorized agent or representative for Gulfstream and LMI. 9. Offset Credits Any order placed by LMI with a sub-contractor outside the United States may be used to satisfy Gulfstream's (including its parent company, General Dynamics Corporation, and all other affiliated entities) contractual obligations, current and future to procure goods and/or services from firms in said country to offset, in part, their sales of goods and services into that country and their impact on that country's balance-of-trade accounts. If Gulfstream requests these offset credits, Gulfstream shall reimburse for any LMI cost associated in implementing / obtaining these offset credits. 10. Most Favored Customers LMI shall warrant that prices, terms and warranties under this MOA are at least as favorable as those being offered to any other purchaser of similar products under the same or similar circumstances. 11. Order of Precedence In the event of conflict in terms, conditions or other Gulfstream documents, the following order of precedence will apply: A. Memorandum of Agreement B. Purchase Order Issues per MOA C. Statement of Work D. Design Specification E. GV-GER-608, Rev. A, July 15, 1993 F. SQAR-0003 dated 04/02 Quality G. GA 270 3/01 Additional Conditions H. GA75 7/97 SHIPPING, MARKING AND PACKING INSTRUCTIONS GULFSTREAM AEROSPACE CORPORATION LMI /s/ Jim McQueeny /s/ Robert Grah - ------------------------------------ -------------------------------------- Jim McQueeny Robert Grah Director of Initial Phase Purchasing Vice President, LMI /s/ Brian McCarthy /s/ Ed Campbell - ------------------------------------ -------------------------------------- Brian McCarthy Ed Campbell Purchasing Manager Director of Marketing /s/ Todd Smiley /s/ Ron Llopis - ------------------------------------ -------------------------------------- Todd Smiley Ron Llopis Senior Buyer Manager Customer Relationship EX-10 4 lmi8ksbp03.txt 10.2 - SPECIAL BUSINESS PROVISIONS - BOEING SPECIAL BUSINESS PROVISIONS Between THE BOEING COMPANY and Leonard's Metals, Inc. POP-65344-0667 TABLE OF CONTENTS TITLE PAGE TABLE OF CONTENTS AMENDMENT PAGE RECITAL PAGE 1.0 DEFINITIONS..........................................................8 2.0 CONTRACT FORMATION...................................................8 2.1 Order......................................................8 2.2 Entire Agreement...........................................9 2.3 Incorporated by Reference..................................9 2.4 Order of Precedence........................................9 2.5 Survival...................................................10 3.0 PERIOD OF PERFORMANCE AND PRICES.....................................11 3.1 Performance................................................11 3.1.1 Period of Performance..........................11 3.1.2 Option to Extend...............................11 3.2 Pricing....................................................11 3.2.1 Product Pricing................................11 3.2.2 Manufacturing Configuration....................11 3.2.3 Packaging......................................11 3.2.4 Local Transportation Devices...................12 3.3 Subject Matter of Sale.....................................12 4.0 GOVERNING QUALITY ASSURANCE REQUIREMENTS.............................12 5.0 APPLICABLE LAW.......................................................12 6.0 PRODUCT SUPPORT AND ASSURANCE........................................12 6.1 Warranty...................................................12 7.0 PAYMENT..............................................................13 7.1 Recurring Price............................................13 7.2 Nonrecurring Price/Special Charges.........................13 7.3 Payment Method.............................................13 8.0 SCHEDULE ACCELERATION/DECELERATION...................................13 9.0 NOTICES..............................................................13 9.1 Addresses..................................................13 10.0 OBLIGATION TO PURCHASE AND SELL......................................14 11.0 COST AND PERFORMANCE VISIBILITY......................................15 12.0 CHANGE PROVISIONS....................................................15 12.1 Reserved...................................................15 12.2 Computation of Equitable Adjustment........................15 12.3 Obsolescence...............................................15 12.4 Change Absorption (Nonrecurring/Recurring).................15 12.4.1 Prior to 100% Engineering Release (Drawing Revision Level New)..................... 12.4.2 Subsequent to 100% Engineering Release......... 12.5 Planning Schedule..........................................17 12.6 Total Cost Management System...............................17 12.6.1 Continuous Cost Improvement Process..............17 12.6.2 Continuous Improvement Initiatives...............18 12.6.2.1 Submission of Cost Reduction Proposal............18 12.6.2.2 Acceptance and Cost Sharing......................19 12.6.3 Boeing Generated Technical and Cost Improvements................................19 12.6.4 Value Engineering................................19 12.6.5 Lean Manufacturing...............................20 12.7 Reduction in Quantity to be Delivered......................21 12.8 Critical Manufacturing Reorder Lead-Time...................21 12.9 Derivative Aircraft........................................21 13.0 SPARES AND OTHER PRICING.............................................22 13.1 Spares.....................................................22 13.1.1 Spares Support...................................23 13.1.2 Reclassification or Re-exercises.................23 13.1.3 Spare Pricing....................................23 13.1.3.1 Aircraft On Ground (AOG), Critical Spares and POA Requirement..............................23 13.1.3.2 Expedite Spare (Class 1).........................24 13.1.4 Spares Special Handling..........................24 13.2 Expedite of Production Requirements........................24 13.3 Tooling....................................................24 13.3.1 Responsible Party................................24 13.3.2 Boeing Furnished Tooling.........................25 13.4 Pricing of Boeing's Supporting Requirements................26 13.5 Pricing of Requirements for Modification or Retrofit.......26 13.5.1 Boeing Responsibility or Regulatory Requirement......................................26 13.5.2 Contract Aftermarket Modification or Retrofit Work Performed by Boeing.........................26 13.6 Pricing of Similar Products................................26 14.0 STATUS REPORTS/REVIEWS...............................................26 14.1 General Reports / Reviews..................................26 14.2 Diversity Reporting Format.................................27 14.3 Program Manager............................................27 14.4 Certified Tool List........................................27 14.5 Problem Reports............................................27 14.6 Order Readiness Matrix (ORM)...............................28 15.0 INTERNATIONAL COOPERATION............................................28 15.1 Market Access and Sales Support............................28 15.2 Offset Assistance..........................................28 15.3 Credit Against Aircraft Sales..............................29 16.0 BOEING FURNISHED MATERIAL/SUPPLIER BANKED MATERIAL...................29 17.0 PARTICIPATION........................................................29 17.1 Other Boeing Entities......................................29 17.2 Boeing Subcontractors/Suppliers............................30 17.3 Notification of Contract...................................30 17.4 Notification of Price Reductions...........................30 18.0 INVENTORY AT CONTRACT COMPLETION.....................................30 19.0 OWNERSHIP OF INTELLECTUAL PROPERTY...................................31 19.1 Technical Work Product.....................................31 19.2 Inventions and Patents.....................................31 19.3 Works of Authorship and Copyrights.........................31 19.4 Pre-Existing Inventions and Works of Authorship............31 19.5 Inapplicability............................................31 20.0 ADMINISTRATIVE AGREEMENTS............................................31 21.0 GUARANTEED WEIGHT REQUIREMENTS.......................................31 22.0 SELLER DATA REQUIREMENTS.............................................31 23.0 DEFERRED PAYMENT.....................................................31 24.0 SOFTWARE PROPRIETARY INFORMATION RIGHTS..............................32 25.0 CONFIGURATION CONTROL................................................32 26.0 INFRINGEMENT.........................................................32 27.0 RAW MATERIAL PROGRAM.................................................32 27.1 Boeing Raw Material Strategy...............................32 27.2 Casting and Forging Strategy...............................33 28.0 DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS................33 29.0 INSURANCE FOR ON-SITE SUPPORT........................................33 29.1 Indemnification Negligence of Seller or subcontractor......33 29.2 Commercial General Liability...............................33 29.3 Automobile Liability.......................................33 29.4 Workers' Compensation......................................33 29.5 Certificates of Insurance..................................33 29.6 Self-Assumption............................................33 29.7 Protection of Property.....................................33 30.0 BOEING TECHNICAL / MANUFACTURING ASSISTANCE REGARDING SELLER'S NONPERFORMANCE..............................................33 31.0 U. S. CUSTOMS INVOICE REQUIREMENTS...................................34 31.1 U.S. Customs Requirements..................................34 31.2 The Boeing Company Requirements............................34 32.0 STRATEGIC ALIGNMENT AND WORK MOVEMENT................................34 Signature Page Attachment 1 Work Statement and Pricing Attachment 1A Continuous Cost Improvement Goals Attachment 2 Non-U.S. Procurement Report Attachment 3 Rates and Factors Attachment 4 Boeing AOG Coverage Attachment 5 Boeing AOG/Critical Shipping Notification Attachment 6 Seller Data Requirements Attachment 7 Supplier Data Requirements List Engineering/Customers Attachment 8 Commodity Listing and Terms of Sale Attachment 9 Cost and Performance Reviews Attachment 10 Quality Assurance Requirements Attachment 11 Second Tier Support Attachment 12 Value Engineering Methodology Attachment 13 SBP Exceptions AMENDMENTS - ------------------------------------------------------------------------------ Amend Description Date Approval Number - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ SPECIAL BUSINESS PROVISIONS THESE SPECIAL BUSINESS PROVISIONS (SBP) are entered into as of March 20th, 2003 by and between Leonard's Metals, Inc., a Missouri corporation with its principal office in St. Charles, Missouri ("Seller"), and The Boeing Company, a Delaware corporation acting by and through its Boeing Commercial Airplanes, a Delaware corporation. Hereinafter, the Seller and Boeing may be referred to jointly as "Parties" hereto. Now, therefore, in consideration of the mutual covenants set forth herein, the Parties agree as follows: SPECIAL BUSINESS PROVISIONS 1.0 DEFINITIONS The definitions used herein are the same as those used in the GTA. In addition, the following terms are defined as follows: A. "Drawing" means an automated or manual depiction of graphics or technical information representing a Product or any part thereof and which includes the parts list and specifications relating thereto. B. "End Item Assembly" means any Product which is described by a single part number and which is comprised of more than one component part. C. "Shipset" means the total set of Production Articles provided by Seller hereunder necessary for production of one Program Airplane or Derivative. D. "Spare Parts" or "Spares" means Production Articles or components thereof, and materials, assemblies and items of equipment relating thereto, which are intended for Boeing's use or sale as spare parts or production replacements. The term "Spare Parts" includes, but is not limited to, Boeing Proprietary Spare Parts. 2.0 CONTRACT FORMATION 2.1 Order Any Order to which these SBP shall apply shall incorporate this SBP by reference in one or more of the following ways: A. Include a statement substantially as follows: This Order is subject to and incorporates by this reference SBP POP-65344-0667 between The Boeing Company and Leonard's Metals, Inc. dated March 20th, 2003. B. List a number assigned to represent the SBP in the "REFERENCE P.O. NO." block of the Order, or in a block with a similar title. Due to computer programming limitations, different divisions may assign different numbers to represent the same SBP. C. Utilize the number assigned to represent the SBP as the first portion of the Order number, followed by a dash, followed by a unique identifier for the Order. For example, if contract MDC5002D was assigned to represent a SBP, Orders issued under that SBP would have a number of 5002D-XXXXX. Each Order incorporating this SBP by any method listed above will be governed by and be deemed to include the provisions of this SBP. 2.2 Entire Agreement The Order sets forth the entire agreement, and supersedes any and all other prior agreements understandings and communications between Boeing and Seller related to the subject matter of an Order. The rights and remedies afforded to Boeing or Customers pursuant to any provisions of an Order are in addition to any other rights and remedies afforded by any other provisions of this Order, by law or otherwise. 2.3 Incorporated by Reference General Terms Agreement ("GTA") BCA-65344-0596 dated March 20th, 2003 (the "Agreement") is incorporated in and made a part of this SBP by this reference. In addition to any other documents incorporated elsewhere in this SBP or GTA by reference, the following documents are incorporated in and made a part of this SBP by reference with full force and effect, as if set out in full text. PUGET SOUND / WICHITA Boeing Document D33200-1 "Boeing Suppliers' Tooling Document" Boeing Document D953W001, "General Operations Requirements Document For Suppliers - External/internal Suppliers/Program Partners" Boeing Document D37520-1, -1A, -1B, Supplier's Part Protection Guides Boeing Document D6-81628, "Shipping Label, Barcoded Preparation and Placement" Additional TULSA Form 49-5704, Flysheet 5704 -- INSTRUCTIONS FOR SHIPPING, PACKAGING, & MARKING, revised September 15, 1999. Form 49-5716, IDENTIFICATION, BOEING DETAIL PARTS OR ASSEMBLIES, revised September 15, 1999. 2.4 Order of Precedence In the event of a conflict or inconsistency between any of the terms of the following documents, the following order of precedence shall control: A. These Special Business Provisions ("SBP") including attachments (excluding all documents listed below), then B. General Terms Agreement ("GTA") (excluding all documents listed elsewhere on this listing), then C. Purchase Contract, if any, then D. Order (excluding all documents listed elsewhere on this listing), then E. The Design Change Transmittal, or the Flysheet 9, if any, then F. The Subcontracted Parts - Revision, Authorization, and Transmittal ("SPRAT"), if any, then G. Engineering Drawing by Part Number and, if applicable, related Outside Production, Specification Plan (OPSP), Specification Plan Detail (SPCD) or Supplier Specification Plan (SSP) then H. All documents incorporated by reference in SBP Section 6.0, Product Support and Assurance, of this SBP, then I. Administrative Agreement, if any, then J. Any other Boeing generated exhibits, attachments, forms, flysheets, codes or documents that the Parties agree shall be part of this SBP, then lastly K. Any Seller generated documents that the Parties agree shall be part of this SBP. In resolving any such conflicts, these documents shall be read as a whole and in a manner most likely to accomplish their purposes. Seller shall promptly report to Boeing in writing any inconsistencies in these documents, even if the inconsistency is resolvable using the above rules. 2.5 Survival Without limiting any other survival provision contained herein and notwithstanding any other provision of this SBP or the GTA to the contrary, the representations, covenants, agreements and obligations of the Parties set forth in GTA Section 12.3 "Termination Claim", GTA Section 16.0 "Termination or Wrongful Cancellation", GTA Section 18.0 "Responsibility for Property", GTA Section 20.0 ` Proprietary Information and Items", GTA Section 24.0 "Boeing's Rights in Seller's Patents, Copyrights, Trade Secrets and Tooling", GTA Section 27.0 "Property Insurance", GTA Section 29.0 "Non-Waiver/Partial Invalidity", this SBP Section 2.5 "Survival", SBP Section 5.0 "Applicable Law", SBP Section 29.0 "Insurance"(if applicable), and SBP Section 41.0 "Supplements and Modifications"(if applicable), shall survive any cancellation, termination or expiration of this SBP, any assignment of this SBP or any payment and performance of any or all of the other obligations of the Parties hereunder. Termination or cancellation of any part of this SBP shall not alter or affect any part of this SBP, which has not been terminated or cancelled. 3.0 PERIOD OF PERFORMANCE AND PRICES 3.1 Performance 3.1.1 Period of Performance Except as otherwise provided below, the period of performance for this SBP shall be for delivery of Products beginning on January 1, 2004 and ending on December 31, 2006. Except as otherwise stated in any applicable Administrative Agreement, for Tulsa and Long Beach requirements, period of performance set out above shall be defined as order placement with potential delivery beyond December 31, 2006. 3.1.2 Option to Extend "SECTION DELELTED" 3.2 Pricing 3.2.1 Product Pricing The prices of Products ordered under this SBP are set forth in SBP Attachment 1. Prices are in United States Dollars. F.O.B. point is as follows: Seller's Plant, for Puget Sound and Wichita. Destination, for Tulsa, OK. (Melbourne, Ark., McAlester, Texas). 3.2.2 Manufacturing Configuration Unit pricing for each Product or part number shown in SBP Attachment 1 is based on the latest revisions of the engineering drawings or specifications at the time of the signing of this SBP and any amendments thereof. 3.2.3 Packaging The prices shown in SBP Attachment 1 include all packaging costs. Seller shall package Product in accordance with the applicable requirements set forth in the documents referred to in SBP Section 2.3 for the location issuing the Order. In the case of Products to be shipped directly to Customers, A.T.A. Specification 300 "Specification for Packaging of Airline Supplies" shall apply unless otherwise directed by Boeing. Upon Boeing's request, Seller will provide discreet packaging costs. 3.2.4 Local Transportation Devices Not Applicable 3.3 Subject Matter of Sale Subject to the provisions of this SBP, Seller shall sell to Boeing and Boeing shall purchase from Seller certain Products as set forth in SBP Attachment 1. 4.0 GOVERNING QUALITY ASSURANCE REQUIREMENTS In addition to those general quality assurance requirements set forth in the GTA, the work performed under this SBP shall be in accordance with the requirements set forth in SBP Attachment 10. 5.0 APPLICABLE LAW This contract shall be governed by the laws of the State of Washington. No consideration shall be given to Washington's conflict of law rules. This contract excludes the application of the 1980 United Nations Convention on Contracts for the International Sale of Goods. Seller hereby irrevocably consents to and submits itself exclusively to the jurisdiction of the applicable courts of King County Washington and the federal courts of Washington State for the purpose of any suit, action or other judicial proceeding arising out of or connected with any Order or the performance or subject matter thereof. Seller hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that (a) Seller is not personally subject to the jurisdiction of the above-named courts, (b) the suit, action or proceeding is brought in an inconvenient forum or (c) the venue of the suit, action or proceeding is improper. 6.0 PRODUCT SUPPORT AND ASSURANCE 6.1 Warranty Seller acknowledges that Boeing and Customers must be able to rely on each Product performing as specified and that Seller will provide all required support. Accordingly, the following provisions, including documents, if any, set forth below are incorporated herein and made a part hereof: "Boeing Designed, Sub-Contracted Products Manufacturers Warranty" Boeing Document M6-1124-3, Boeing may choose initially not to extend the Seller's full warranty of Product to Customers. This action shall in no way relieve Seller of any obligation set forth in the warranty documents listed above. Boeing, at its sole discretion, may extend Seller's full warranty of Product to its Customers at any time. Furthermore, Seller agrees to support the Product as long as any aircraft using or supported by the Product remains in service. 7.0 PAYMENT 7.1 Recurring Price Unless otherwise provided under the applicable Order or written agreement between the Parties, payment shall be (net) thirty (30) calendar days. Except as otherwise provided on applicable Order identifying Pay-From Receipt, payment due dates, including discount periods, shall be computed from (a) the date of receipt of the Product, (b) the date of receipt of a correct (proper) invoice or (c) the scheduled delivery date of such Product, whichever is last. Unless freight and other charges are itemized, any discount shall be taken on the full amount of the invoice. All payments are subject to adjustment for shortages, credits and rejections. 7.2 Nonrecurring Price/Special Charges Unless otherwise provided in the applicable Order, any Nonrecurring price payable by Boeing under SBP Attachment 1 will be paid within the term discount period or thirty (30) calendar days (whichever is later) after receipt by Boeing of both acceptable Products and a correct invoice and where required, a completed certified tool list (CTL). 7.3 Payment Method All payments hereunder shall be made by check payable to the order of Seller deposited in the U.S. postal system via first-class mail to an address designated in writing by Seller. 8.0 SCHEDULE ACCELERATION/DECELERATION Notwithstanding GTA Section 10.0, Boeing may revise the delivery schedule and/or firing order without additional cost or change to the unit price stated in the applicable Order if (a) the delivery date of the Product under such Order is on or before the last date of contract, if applicable, and (b) Boeing provides Seller with written notice of such changes. 9.0 NOTICES 9.1 Addresses For all matters requiring the approval or consent of either party, such approval or consent shall be requested in writing and is not effective until given in writing. With respect to Boeing, authority to grant approval or consent is limited to Boeing's Procurement Representative. Notices and other communications shall be given in writing by personal delivery, United States mail, express delivery, facsimile, or electronic transmission addressed to the respective party as follows: To Boeing: Attention: Peggy McDonald Mail Code: 5X-65 BOEING COMMERCIAL AIRPLANES SUPPLY MANAGEMENT AND PROCUREMENT DIVISION P.O. Box 3707 Seattle, Washington 98124-2207 To Seller: Attention: Rick Darrow Leonard's Metals, Inc. 3600 Mueller Road St. Charles, MO 63301 10.0 OBLIGATION TO PURCHASE AND SELL Boeing and Seller agree that in consideration of the prices set forth under SBP Attachment 1, Boeing shall issue Orders for Products from time to time to Seller for all of Boeing's requirements. Such Products shall be shipped at any scheduled rate of delivery, as determined by Boeing, and Seller shall sell to Boeing Boeing's requirements of such Products, provided that, without limitation on Boeing's right to determine its requirements, Boeing shall not be obligated to issue any Orders for any given Product if: A. Any of Boeing's customers specifies an alternate product; B. Such Product is, in Boeing's reasonable judgment, not technologically competitive at any time, for reasons including but not limited to the availability of significant changes in technology, design, materials, specifications, or manufacturing processes which result in a reduced price or weight or improved appearance, functionality, maintainability or reliability; C. Boeing gives reasonable notice to Seller of a change in any of Boeing's aircraft which will result in Boeing no longer requiring such Product for such aircraft; D. Seller has materially defaulted in any of its obligations under any Order, whether or not Boeing has issued a notice of default to Seller pursuant to GTA Section 13.0; or, E. Boeing reasonably determines that Seller cannot support Boeing's requirements for Products in the amounts and within the delivery schedules Boeing requires. F. Boeing gives at least six (6) months notice to Seller that the Product is used in the manufacturing of an airplane component, assembly or other product previously manufactured in-house by Boeing and which component, assembly or other product Boeing has resourced to a third party supplier. For purposes of this SBP Section 10.0, Boeing is defined as those organizations, divisions, groups or entities set forth specifically in SBP Attachment 1. Seller represents and warrants to Boeing that discounts offered fairly reflect manufacturing, selling, or delivery cost savings resulting from this quantity sale and that such discounts are reasonably available to all other purchasers. 11.0 COST AND PERFORMANCE VISIBILITY When requested by Boeing, Seller shall provide all necessary cost support data, source documents for direct and indirect costs, and assistance at the Seller's facility in support of cost and performance reviews performed by the Parties pursuant to cost reduction initiatives as set forth in SBP Section 12.6. The Cost and Performance Review (CPR) process is the preferred tool, which the Parties will use to measure Seller's performance to the goals and objectives of Boeing as set forth in SBP Section 12.6. Boeing and Seller shall implement a structured process called CPR to review and identify areas, processes and strategies to improve, reduce or eliminate which will result in the desired effect of reducing costs and/or improving cycle times for the Product(s) set forth in this SBP. The CPR process will address those activities, which are a direct result of both parties involvement. Seller will provide the resources and data sufficient to support the CPR process in accordance with the structure set forth in SBP Attachment 9. 12.0 CHANGE PROVISIONS 12.1 Reserved 12.2 Computation of Equitable Adjustment The Rates and Factors set forth in SBP Attachment 3, which by this reference is incorporated herein, shall be used to determine the equitable adjustment, if any, (including equitable adjustments, if any, in the prices of Products to be incorporated in Derivative Aircraft), to be paid by Boeing pursuant GTA Section 10.0 for each individual change. 12.3 Obsolescence Seller may not submit a claim for obsolete material or Product resulting from an individual change order that has a total claim value of One Thousand Dollars $2500.00 or less. 12.4 Change Absorption (Nonrecurring/Recurring) 12.4.1 Prior to 100% Engineering Release (Drawing Revision Level New) Notwithstanding the provisions of GTA Section 10.0, no equitable adjustment in the prices or schedules of any Order shall be made for any change initiated by Boeing made prior to the date on which all engineering drawings that change the technical requirements, descriptions, specifications, statement of work, drawing or designs ("Technical Change(s)") have been released by Boeing ("100% Engineering Release") provided, however, that an equitable adjustment shall be made for: A. Any Technical Change which is a change between raw material classifications such as a change from aluminum to steel or titanium to plastic. Not included as a Technical Change for purposes of this SBP Section are changes within a raw material classification such as a change from 7050 Aluminum to 7075 Aluminum; B. Any Technical Change, which adds or deletes a process specification including but not limited to chem milling, chrome plating, anodizing, painting, priming and heat-treating. Claims for equitable adjustment for Technical Changes shall be submitted in writing within thirty (30) days after 100% Engineering Release. 12.4.2 Subsequent to 100% Engineering Release Notwithstanding the provisions of GTA Section 10.0, no equitable adjustment shall be made to the recurring or Nonrecurring prices after the date of 100% Engineering Release for any change initiated by Boeing unless the value of such change (debit or credit) is greater than or equal to two percent (2%) of the then current unit price for the Product (recurring) or is greater than or equal to two percent (2%) of the total then current nonrecurring price as set forth in SBP Attachment 1. For purposes of this SBP Section 12.4, the then current unit price or total nonrecurring price shall be the price identified in SBP Attachment 1 plus any and all price adjustments agreed to previously by the Parties. Claims shall be made individually for each Product and for each change. Each claim shall be considered separately for application of the two percent (2%) threshold. Changes may not be combined for the purposes of exceeding the two percent (2%) threshold set forth herein. 12.5 Planning Schedule Any planning schedule, forecast, or any such quantity estimate provided by Boeing shall be used solely for production planning. Boeing may purchase Products in different quantities and specify different delivery dates as necessary to meet Boeing's requirements. Unless otherwise set forth in the Administrative Agreement as applicable, any such estimate shall be subject to adjustment from time to time, and such adjustment shall not constitute a change under GTA Section 10.0 nor a termination under GTA Section 12.0. 12.6 Total Cost Management System The Total Cost Management System (TCMS) is Boeing's overarching cost management strategy and visibility tool incorporating internal and external supply base cost management activities such as CCIP, Lean manufacturing, Value Engineering Innovation and Raw Material Strategies. Seller will prepare a TCMS support plan addressing all applicable strategies. The plan will include strategy specific method of support, internal implementation, flow down to sub-tier suppliers, if applicable, and a yearly update schedule. Seller shall submit a TCMS support plan to the appropriate Boeing Procurement Representative within six (6) weeks of new or follow-on contract award. 12.6.1 Continuous Cost Improvement Process The timely implementation of the Continuous Cost Improvement Process (CCIP) is a material duty of the Seller. The CCIP is an ongoing, year-after-year plan to achieve cost reductions. The goal is to work together to reduce costs in order to reduce Product unit prices in the manner set forth in SBP Section 12.6.2, while maintaining or improving margins, profits, and quality levels, and meeting schedule and other contractual requirements. The implementation of the CCIP requires establishing cost improvement targets, developing and agreeing on a cost improvement plan, implementation of the plan by the Seller, regular review and status reporting with the Procurement Representative, appropriate support from the Procurement Representative, and corrective action as necessary to meet the cost improvement targets. Boeing may assist Seller in areas such as Lean Manufacturing, Advanced Quality System, Accelerated Improvement Workshop (AIW), Value Engineering, packaging cost reduction activities, and other initiatives. Seller is not limited to the Boeing initiatives and may implement any improvement consistent with the requirements of this SBP. Boeing and Seller agree to establish CCIP target cost reductions in order to reduce Product unit prices in the manner set forth in SBP Section 12.6.2, and delivery and quality performance goals, on or before January 1 of each year for the period of performance of this SBP. Said target price reductions; delivery and quality performance goals shall be set out in SBP Attachment 1A, "Continuous Cost Improvement Goals". 12.6.2 Continuous Improvement Initiatives Boeing and Seller agree to work together to identify continuous improvement initiatives which: A. Decrease Seller's costs by affecting the manufacturing and assembly process at Seller's facilities and Seller's subcontractor facilities; B. Reduce Boeing's product weight without impairing any essential functions or characteristics of the product; C. Produce a net reduction in the cost to Boeing of installation, operation, maintenance or production of the Product; and/or improve producibility, reliability, expected life, or maintainability of the Product. Proposed changes shall not impair any essential functions or characteristics of the Products or Tooling. 12.6.2.1 Submission of Cost Reduction Proposal Proposals shall be submitted to Boeing's Procurement Representative. Boeing shall not be liable for any delay in acting upon a proposal. Boeing's decision to accept, postpone, or reject any proposal shall be final. If there is a delay and the net result in savings no longer justifies the investment, Boeing and Seller will not be obligated to proceed with the initiative. Seller has the right to withdraw, in whole or in part, any proposal not accepted by Boeing within the time period specified in Seller's proposal. Seller shall submit, as a minimum, the following information with the proposal: A. Description of the difference between the existing requirement and the proposed change and the comparative advantage and disadvantages of each; B. The specific requirements which must be changed if the proposal is adopted; C. The cost savings and Seller's implementation costs; D. An implementation schedule, including need dates for any Boeing actions and the time by which a proposal must be approved so as to obtain the maximum cost reduction. Seller shall include with each proposal verifiable cost records and other data as required by Boeing for proposal review and analysis. Each party shall be responsible for its own implementation costs. 12.6.2.2 Acceptance and Cost Sharing Boeing may accept, in whole or in part, any continuous improvement initiative proposal by issuing a change order. Until such change has been issued, Boeing and Seller shall remain obligated to perform in accordance with the terms and requirements of the Order. Where Boeing and Seller identify areas of improvement, beyond those previously anticipated, identified and documented in the contract price, the Parties will determine the amount of savings, which will result from the improvements and share the savings. Where a saving is identified and documented, the Parties agree to reduce the Product unit price. Seller suggestions disapproved by Boeing may be given due consideration in achievement of cost reduction goals. 12.6.3 Boeing Generated Technical and Cost Improvements At any time during the Seller's performance under this SBP, Boeing may offer specific recommendations to Seller for the incorporation of new technologies and process improvements intended to reduce Seller's costs or improve product performance. These recommendations may include, but are not limited to, Boeing proprietary information and Boeing owned patents. Upon receipt of any such recommendation, Seller shall provide a price reduction proposal to Boeing. Upon Boeing's agreement with the price proposal, Seller shall implement the change. Boeing shall be entitled to * % of the price reduction and Seller shall be entitled to * % and the Shipset price shall be adjusted accordingly for those shipsets affected by the change. * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. 12.6.4 Value Engineering From time to time Seller may submit to Boeing proposals for Value Engineering changes. Boeing and Seller will define and agree to (i) the Project work statement, (ii) the value of Recurring savings per Shipset to be shared, (iii) the negotiated division of the savings between Boeing and Seller, and (iv) the first affected unit. Each party will bear their own Nonrecurring investments. All implemented price reductions carry from the first affected unit to the end of the SBP. Boeing reserves the right to not incorporate any Value Engineering concept that is not in Boeing's or Customers' best interests. This includes, but is not limited to, any proposed change that adversely affects Boeing's internal assembly processes, marketing capabilities, certification processes, and interface capabilities with other supplier's hardware. 12.6.5 Lean Manufacturing Upon Statement of Work (SOW) issuance and prior to commencement of production planning, Seller's executive management will; A. Host a Boeing Lean Supplier Development Specialist (SDS) visit and participate in a facility-wide Lean Diagnostic if not previously conducted by Boeing and host follow-on visits as specified by the Subject Matter Expert (SME). B. Use their best efforts to implement the SDS's recommendations, particularly those tied directly to or in support of 7X7-X production C. Provide a Lean Manufacturing Implementation Plan or modification to an existing plan that is inclusive of all Boeing work and contains a section specific to 7X7-X. The 7X7-X section must demonstrate incorporation of Lean Manufacturing concepts within the following part/assembly development and implementation phases; 1. Part/Assembly design (if Seller has Design Delegation Level 4 or 5 responsibility) 2. Tooling design 3. Production process setup (door to door) The non-program specific (company-wide) portion of the plan must address Lean deployment to; a. Recurring training b. Sub tier interface c. Delivery to Boeing d. Manufacturing support organizations (Enterprise Lean) The Seller Lean Implementation plan must be reviewed and determined acceptable by the SDS and Boeing Procurement Team within a jointly agreed schedule. Within one year of commencement of production, Boeing and Seller agree to use the following metrics to establish an enterprise level baseline followed by monthly measurements to evaluate Lean driven cost improvement: (i) Inventory Turns, defined as Annual Costs of Goods Sold/Inventory Value; (ii) Productivity, defined as Annual Sales/Average Employee Count; and, (iii) Asset Turnover, defined as Annual Sales/Total Assets. Additional metrics may be added and evaluated as agreed to by the parties. Where Boeing and Seller can identify areas of improvement, beyond those previously anticipated, identified and documented in the SBP price, the parties will determine the amount of savings, which will result from the improvements and share the savings. Where a savings is identified and documented, the parties agree to reduce the recurring price by that amount determined by the Parties. 12.7 Reduction in Quantity to be Delivered "NOT APPLICABLE" 12.8 Critical Manufacturing Reorder Lead-Time Critical Manufacturing Reorder Lead-time (CMROLT) shall be identified in SBP Attachment 1 by part number for the items listed herein. As defined in this SBP, Critical Manufacturing Reorder Lead-time shall include administrative and manufacturing (including queue, setup, run and move) lead times. CMROLT is the minimum number of manufacturing days prior to delivery date that Boeing can issue a purchase order release for a line delivery quantity against a Purchase Contract. The CMROLT defined herein shall be fixed and guaranteed by the Seller, and may only be revised upon written notice to the Boeing Procurement Representative. Seller shall not manufacture or fabricate items in advance of the CMROLT required to comply with the delivery schedule of any subsequent Purchase Order(s). Notwithstanding any other provision of this SBP, Seller is not entitled to any equitable adjustment or other modification of any Purchase Order(s) for any manufacture, fabrication or procurement of products not in conformity with the requirement of this SBP without first obtaining written consent of the Boeing Procurement Representative. Nothing in this Clause shall be construed as relieving Seller of any of its obligations under this SBP or any subsequent Purchase Contract(s) and/or Order(s). 12.9 Derivative Aircraft Boeing may, but is not obligated to direct Seller within the scope of the applicable Order and in accordance with the provisions of GTA Section 10.0 to supply Boeing's requirements for Products for Derivative aircraft which correspond to those Products being produced under the applicable Order. For purposes of this SBP Section, Derivative Aircraft means any model airplane designated by Boeing as a derivative of an existing model airplane and which: (1) has the same number of engines as the existing model airplane; (2) utilizes essentially the same aerodynamic and propulsion design, major assembly components, and systems as the existing model airplane; (3) achieves other payload/range combinations by changes in body length, engine thrust, or variations in certified gross weight; (4) has the same body cross-section as the subject model aircraft; and (5) is designated as a Derivative to the FAA by Boeing. A Derivative does not include any subject model aircraft, which has been or was currently in production as of the date of execution of the applicable SBP. Furthermore, Boeing reserves the right to extend application of the above Products and prices to other aircraft models as required. 13.0 SPARES AND OTHER PRICING 13.1 Spares For purposes of this SBP Section, the following requirements and definitions shall apply: A. AIRCRAFT ON GROUND (AOG) - means the highest Spares priority. Seller will expend best efforts to provide the earliest possible shipment of any Spare designated AOG by Boeing. Such effort includes but is not limited to working twenty-four (24) hours a day, seven days a week and use of premium transportation. Seller shall specify the delivery date of any such AOG Spare within two (2) hours of receipt of an AOG Spare request. B. CRITICAL - means an imminent AOG work stoppage. Seller will expend best efforts to provide the earliest possible shipment of any Spare designated Critical by Boeing. Such effort includes but is not limited to working two (2) shifts a day, five (5) days a week and use of premium transportation. Seller shall specify the delivery date of any such Critical Spare within the same working day of receipt of a Critical Spare request. C. EXPEDITE (CLASS I) - means a Spare required in less than Seller's normal lead-time. Seller will expend best efforts to meet the requested shipment date. Such effort includes but is not limited to working overtime and use of premium transportation. D. ROUTINE (CLASS III) - means a Spare required in Seller's normal lead-time. E. POA REQUIREMENT (POA) - means any detail component needed to replace a component on an End Item Assembly currently in Boeing's assembly line process. Seller shall expend best efforts to provide the earliest possible delivery of any Spare designated as POA by Boeing. Such effort includes but is not limited to working twenty-four (24) hours a day, seven days a week and use of premium transportation. Seller shall specify the delivery date of any such POA within two (2) hours of a POA request. F. IN-PRODUCTION - means any Spare with a designation of AOG, Critical, Expedite, Routine, POA or End Item Assembly which is in the current engineering configuration for the Product and is used on a model aircraft currently being manufactured by Boeing at the time of the Order. G. NON-PRODUCTION REQUIREMENTS - means any Spare with a designation of AOG, Critical, Expedite and Routine requirements which is used on model aircraft no longer being manufactured by Boeing (Post Production) or is in a non-current engineering configuration for the Product (Out of Production). H. BOEING PROPRIETARY SPARE - means any Spare, which is manufactured (i) by Boeing, or (ii) to Boeing's detailed designs with Boeing's authorization or (iii) in whole or in part using Boeing's Proprietary Materials. 13.1.1 Spares Support Seller shall provide Boeing with a written Spares support plan describing Seller's process for supporting AOG and Critical commitments and manufacturing support. The plan must provide Boeing with the name and number of a twenty-four (24) hour contact for coordination of AOG, Critical requirements. Such contact shall be equivalent to the coverage provided by Boeing to its Customers as outlined in SBP Attachment 4 "Boeing AOG Coverage". Seller shall notify Boeing as soon as possible via fax, telecon, or as otherwise agreed to by the Parties of each AOG and Critical requirement shipment using the form identified in SBP Attachment 5 "Boeing AOG and Critical Shipping Notification". Such notification shall include time and date shipped, quantity shipped, Order, pack slip, method of transportation and air bill if applicable. Seller shall also notify Boeing immediately upon the discovery of any delays in shipment of any requirement and identify the earliest revised shipment possible. 13.1.2 Reclassification or Re-exercises Boeing may instruct Seller to re-prioritize or reclassify an existing requirement in order to improve or otherwise change the established shipping schedule. Seller shall expend the effort required to meet the revised requirement as set forth above in the definitions of the requirements. Seller's commitment of a delivery schedule shall be given in accordance with that set forth above for the applicable classification but in no case shall it exceed twenty-four (24) hours from notification by Boeing. 13.1.3 Spare Pricing * * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. 13.1.3.1 Aircraft On Ground (AOG), Critical Spares and POA Requirement The price for AOG and Critical Spares and POA requirements shall be the price for such Products listed on SBP Attachment 1 in effect when such Spares are ordered multiplied by a factor not to exceed *. * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. 13.1.3.2 Expedite Spare (Class 1) The price for Expedite Spares shall be the price for such Products listed on SBP Attachment 1 in effect when such Spares are ordered multiplied by a factor not to exceed *. * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. 13.1.4 Spares Special Handling The price for all effort associated with the handling and delivery of Spare(s) is deemed to be included in the price for such Spare(s). If Boeing directs delivery of Spares to a place other than the F.O.B. point as designated in SBP Section 3.2.1, Boeing shall reimburse Seller for shipping charges, including insurance, paid by Seller from the plant to the designated place of delivery which exceed the cost of shipping to the F.O.B. point. Such charges shall be shown separately on all invoices. 13.2 Expedite of Production Requirements Any expedite charges to be paid for short flow production requirements shall be pre-approved by the Procurement Representative. Seller shall provide data to verify expedite charges. If Seller fails to meet their committed delivery, Boeing shall not be obligated to pay the agreed upon amount. 13.3 Tooling 13.3.1 Responsible Party Seller shall absorb the first $ * of cost for Puget Sound and $ * of cost for Tulsa/Wichita for each individual occurrence associated with all Boeing furnished tooling, supplier manufactured tooling, and non-acountable tooling required for the manufacture and delivery of products including but not limited to rework, repair, replacement and maintenance of the tooling (after initial review and repair of Boeing furnished tools to bring them to acceptable levels). Programming when required will be reviewed on an individual case by case basis. Repair of tooling damaged by seller through misuse or poor workmanship will be the responsibility of the Seller. If the tool assertions are greater than $ * for Puget Sound or $ * for Tulsa/Wichita, seller can submit a detailed assertion to procurement agent for consideration. Engineering changes that cause any tool rework will be handled with detailed assertion to the procurement agent for their approval. Seller shall not use tools, which contain, convey, embody, or were made in accordance with or by reference to any Proprietary Information and Materials of Boeing, to manufacture parts for anyone other than Boeing without the prior written authorization of Boeing. Puget Sound Example: Tool rework cost is $ *. Cost will be at seller's expense. Tool rework cost is $ *. Cost will be at buyer's expense total $ *. Tulsa/Wichita Example: Tool rework cost is $ *. Cost will be at seller's expense. Tool rework cost is $ *. Cost will be at buyer's expense total $ *. * The text noted by asterisks has been redacted in connection with a request to the Securities and Exchange Commission for confidential treatment of such text. A copy of this Agreement including the redacted information has been submitted to the Securities and Exchange Commission as part of such request. When Boeing agrees to pay for Tooling to support the manufacture and delivery of applicable Product(s) identified herein, the amount shall be set forth in SBP Attachment 1. The costs of necessary repair and maintenance to the Tooling is included in such amount. In addition to the requirements set forth in SBP Section 7.2, the Seller shall comply with the applicable Terms and Conditions as set forth in SBP Section 2.3 for the Boeing location issuing the Order. Invoices received with incorrect, improperly prepared or incomplete certified tool lists will be returned for correction prior to payment. Invoices shall be dated concurrent with, or subsequent to, shipment of the Products. No repair, replacement, maintenance or rework of such Tooling shall be performed without Boeing's prior written consent. Boeing shall notify Seller of any action required for discrepant Tooling. 13.3.2 Boeing Furnished Tooling In the event Boeing furnishes Tooling to Seller, Seller shall comply with the applicable Terms and Conditions as set forth in SBP Section 2.3 for the Boeing location furnishing the Tooling. No repair, replacement, maintenance or rework of such Tooling shall be performed without Boeing's prior written consent. Boeing shall notify Seller of any action required for discrepant Tooling. 13.3.3 Additional Tooling Requirement Upon expiration, termination or cancellation of this SBP or any Product included herein and for up to one year thereafter, Seller shall at no cost to Boeing, prepare and package for shipment any and all Tooling in the possession or under the effective control of Seller or any of its Subcontractors associated with this SBP or the applicable Product within 30 days of receipt of written notice from Boeing. Included as part of this preparation would be the transfer of title, where applicable, of such Tooling free and clear of all liens, claims or other rights of Seller or any third party. Where the parties determine that the hours associated with the transfer of tools are excessive, the parties will negotiate a fee to be paid for the preparation and packaging costs. Seller hereby authorizes Boeing or its representatives to enter upon its, or any of Seller's Subcontractors, premises at any time during regular business hours upon one (1) day's advance written notice, for the limited purpose of taking physical possession of any or all of the aforesaid items. At the request of Boeing, Seller shall promptly provide to Boeing a detailed list of such items, including the location thereof, and shall catalog, crate, package, mark and ship such items expeditiously and in an orderly manner and otherwise in the manner requested by Boeing, which request may specify incremental or priority shipping of certain items. Seller shall, if instructed by Boeing, store or dispose of any or all of the aforesaid items in any reasonable manner requested by Boeing. 13.4 Pricing of Boeing's Supporting Requirements Any Products required to assist Boeing's supporting requirements, including but not limited to requirements for color and appearance samples, Boeing-owned simulators, test requirements, factory support, flight test spares will be provided for not more than the applicable price as set forth in SBP Attachment 1. 13.5 Pricing of Requirements for Modification or Retrofit 13.5.1 Boeing Responsibility or Regulatory Requirement Any Products required by Boeing to support a modification or retrofit program which results from a regulatory requirement or which Boeing may be liable for the cost associated with such program shall be provided to Boeing at a price not more than the applicable price as set forth in SBP Attachment 1. 13.5.2 Contract Aftermarket Modification or Retrofit Work Performed by Boeing Any Products required by Boeing to support modification or retrofit programs, which Boeing performs under contract, shall be provided for not more than the applicable price as set forth in SBP Attachment 1. 13.6 Pricing of Similar Products New Products ordered by Boeing that are similar to or within Product families of Products currently being manufactured by Seller shall be priced using the same methodology or basis as that used to price the existing Product(s). 14.0 STATUS REPORTS/REVIEWS 14.1 General Reports / Reviews When requested by Boeing, Seller shall update and submit, as a minimum, monthly status reports or data requested by Boeing using a method mutually agreed upon by Boeing and Seller. Boeing has the right to impose more frequent reporting on Seller to achieve program objectives. When requested by Boeing, Seller shall provide to Boeing a manufacturing milestone chart identifying the major purchasing, planning and manufacturing operations for the applicable Product(s). Program reviews will be held at Seller's facility or Boeing's facilities as requested by Boeing. The topics of these reviews may include raw material and component part status, manufacturing status, production status, Seller's current and future capacity assessments, Boeing supplied components, inventory, Boeing's requirements, changes, forecasts and other issues pertinent to Seller's performance under this SBP. Reviews will allow formal presentations and discussion of status reports as set forth above. Formal management reviews shall be held periodically by Boeing and Seller to evaluate total cost performance (including overhead, man-hours (production and support)). During these reviews, Seller shall present and provide actual cost performance data with respect to this SBP. 14.2 Diversity Reporting Format Seller shall report to Boeing on a quarterly basis, starting from the date of this SBP award, all payments to small businesses, small disadvantaged business/minority business enterprises, women-owned small business and historically black colleges and universities and minority institutions in dollars and as a percentage of the contract price paid to Seller to date, proving the information shown on the Second Tier Report located in SBP Attachment 11. 14.3 Program Manager "NOT APPLICABLE" 14.4 Certified Tool List If applicable, Seller shall provide a Certified Tool List for all accountable tools thirty (30) days after delievery of the first production unit to Boeing, in accordance with SBP Section 2.3. Subsequent to submittal of the initial Certified Tool List, Seller shall provide Certified Tool Lists for any new, reworked or re-identified tools, thirty (30) days after completion of the first affected production part. All tooling manufactured and acquired by Seller for use in performance of the Program shall be in accordance with all tooling requirements specified in SBP Section 2.3. 14.5 Problem Reports Seller shall provide a detailed report, notifying Boeing of program problems/issues that could impact Seller's ability to deliver Products on time and otherwise in conformance with the terms of the GTA and SBP. The report shall contain a detailed description of the problem, impact on the program or affected tasks, and corrective/remedial action, with a recovery schedule. Submittal of a report in no way relieves Seller of any obligations under the GTA and SBP nor does it constitute a waiver of any rights and remedies Boeing may have with respect to any default. Problem reports shall be submitted to the Boeing Procurement Representative within twenty-four (24) hours of known problem to Seller. Where problems arise prior to a normal status reporting date, Seller shall report said events immediately or within 24 hours. Status reports shall include, but are not limited to, the following topics: A. Delivery schedule updates, schedule impact issues and corrective action; B. Technical/manufacturing progress since the previous report period, including significant accomplishments, breakthroughs, problems and solutions; C. Identification of changes to key manpower or staffing levels; D. Identification of the critical events/activities expected within the next month and a discussion of potential risk factors; E. Progress on open Action Items, including closure dates; F. Purchased components and raw material status; G. Identification of Quality issues and resolutions; H. Manufacturing and Quality inspection progress of First Article products; I. Status on tool design and fabrication, as applicable, until completion; J. Inventory status of castings and forgings procured by Seller (if applicable). 14.5 Order Readiness Matrix (ORM) NOT APPLICABLE 15.0 INTERNATIONAL COOPERATION 15.1 Market Access and Sales Support Seller agrees to work with Boeing to develop a contracting strategy, which supports Boeing's market access, and international business strategy. Boeing and Seller agree to work together to identify countries where Seller may subcontract in support of Boeing's market access and international business strategy. With respect to work covered by this SBP, and if directed by Boeing, Seller agrees to procure from subcontractors, in countries selected by Boeing, goods and services with a value to be determined by Boeing after coordination with Seller. Such direction may occur at any time during the performance of this SBP. Although not required to do so, Seller may satisfy such obligation through purchases not related to this SBP. If Seller is directed by Boeing to subcontract any part of its Product(s) and Seller anticipates an increase or decrease to the price for such Product(s) as a result of such direction, Seller shall immediately notify Boeing in writing. Boeing shall respond within thirty (30) days on whether Seller is to proceed. 15.2 Offset Assistance Seller shall use its best reasonable efforts to cooperate with Boeing in the fulfillment of any non-United States offset program obligation that Boeing may have accepted as a condition of the sale of a Boeing product. In the event that Seller is either directed by Boeing, or on its own solicits bids and/or proposals for, or procures or offers to procure any goods or services relating to the work covered by this SBP from any source outside of the United States, Boeing shall be entitled, to the exclusion of all others, to all industrial benefits and other "offset" credits which may result from such solicitations, procurements or offers to procure. Seller shall take any actions that may be required on its part to assure that Boeing receives such credits. . Seller shall document on SBP Attachment 2 all offers to contract and executed contracts with such subcontractors including the dollars contracted. Seller shall provide to Boeing with an updated copy of SBP Attachment 2 for the six-month periods ending June 30 and December 31 of each year. The reports shall be submitted on the 1st of August and the 1st of February respectively. If Seller is directed by Boeing to subcontract any part of its Product(s) to a country in which Boeing has an offset obligation, an equitable price adjustment, increase or decrease, for Seller's costs and expenses will be considered by Boeing. 15.3 Credit Against Aircraft Sales NOT APPLICABLE 16.0 BOEING FURNISHED MATERIAL/SUPPLIER BANKED MATERIAL NOT APPLICABLE 17.0 PARTICIPATION 17.1 Other Boeing Entities Seller agrees that any Boeing division or Boeing subsidiary ("Boeing Entity") not specifically included in this SBP may, by issuing a purchase order, work order, or other release document, place orders under this SBP during the term hereof or any written extension thereof, under the terms, conditions and pricing specified by this SBP. Seller agrees that the prices set forth herein may be disclosed by Boeing on a confidential basis to Boeing entities wishing to invoke this SBP Section 17.1. Seller shall notify the Boeing Procurement Representative named in SBP Section 9.0 of Boeing Entities not specifically referenced herein who frequently use this SBP. 17.2 Boeing Subcontractors/Suppliers Seller agrees that any subcontractor or supplier (hereinafter referred to as "Boeing Subcontractor") performing work for a Boeing Entity, including but not limited to inventory management, may issue an order or contract with Seller independent of this SBP. Seller agrees to sell Products or support a schedule and or a quantity change to such Boeing Subcontractor for its use in its contracts with Boeing at the prices set forth herein or at a price that reflects the pricing methodology used under this SBP. Boeing assumes no obligation, including payment obligation, with respect to such independent contract. Seller agrees that the prices set forth herein may be disclosed by Boeing on a confidential basis to any Boeing Subcontractor wishing to invoke this SBP Section 17.2. Seller may request written verification from the Boeing Subcontractor that the Products ordered pursuant to the authority of this SBP support Boeing requirements. Seller shall periodically inform the Boeing Procurement Representative of each such request invoking this participation right. 17.3 Notification of Contract In the event a purchaser known by Seller to be a Boeing Entity or Boeing Subcontractor places an order for supplies or services covered by this SBP but fails to reference this SBP or otherwise seek the prices established by this SBP, Seller shall notify such purchaser of the existence of this SBP and the prices established hereunder and shall offer such prices to such purchaser. 17.4 Notification of Price Reductions If Seller is awarded an additional order or contract by another Boeing Entity that results in any price less than that established under this SBP, Seller agrees to notify the Boeing Procurement Representative immediately of said price reductions and shall extend all such price reductions to this SBP. 18.0 INVENTORY AT CONTRACT COMPLETION Subsequent to Seller's last delivery of Product(s), Products which contain, convey, embody or were manufactured in accordance with or by reference to Boeing's Proprietary Materials including but not limited to finished goods, work-in-process and detail components (hereafter "Inventory") which are in excess of Order quantity shall be made available to Boeing for purchase. In the event Boeing, in its sole discretion, elects not to purchase the Inventory, Seller may scrap the Inventory. Prior to scrapping the Inventory, Seller shall mutilate or render it unusable. Seller shall maintain, pursuant to their quality assurance system, records certifying destruction of the applicable Inventory. Said certification shall state the method and date of mutilation and destruction of the subject Inventory. Boeing or applicable regulatory agencies shall have the right to review and inspect these records at any time it deems necessary. In the event Seller elects to maintain the Inventory, Seller shall maintain accountability for the inventory and Seller shall not sell or provide the Inventory to any third party without prior specific written authorization from Boeing. Failure to comply with these requirements shall be a material breach and grounds for default pursuant to GTA Section 13.0. Nothing in this SBP Section 18.0 prohibits Seller from making legal sales directly to the United States of America Government. 19.0 OWNERSHIP OF INTELLECTUAL PROPERTY 19.1 Technical Work Product All technical work product, including, but not limited to, ideas, information, data, documents, drawings, software, software documentation, software tools, designs, specifications, and processes produced by or for Seller, either alone or with others, in the course of or as a result of any work performed by or for Seller which is covered by this SBP will be the exclusive property of Boeing and be delivered to Boeing promptly upon request. 19.2 Inventions and Patents NOT APPLICABLE 19.3 Works of Authorship and Copyrights NOT APPLICABLE 19.3 Pre-Existing Inventions and Works of Authorship NOT APPLICABLE 19.4 Inapplicability NOT APPLCABLE 20.0 ADMINISTRATIVE AGREEMENTS Administrative Agreements are used for administrative matters not specifically addressed elsewhere and set forth-certain obligations of the Parties relating to the administration of each Order. The Administrative Agreements, if any, are identified and incorporated in SBP Section 2.3. 21.0 GUARANTEED WEIGHT REQUIREMENTS NOT APPLICALBE 22.0 SELLER DATA REQUIREMENTS NOT APPLICABLE 23.0 DEFERRED PAYMENT NOT APPLICABLE 24.0 SOFTWARE PROPRIETARY INFORMATION RIGHTS NOT APPLICABLE 25.0 CONFIGURATION CONTROL NOT APPLICABLE 26.0 INFRINGEMENT Seller will indemnify, defend, and hold harmless Boeing and its Customers from all claims, suits, actions, awards (including, but not limited to, awards based on intentional infringement of patents known at the time of such infringement, exceeding actual damages, and/or including attorneys' fees and/or costs), liabilities, damages, costs and attorneys' fees related to the actual or alleged infringement of any United States or foreign intellectual property right (including, but not limited to, any right in a patent, copyright, industrial design or semiconductor mask work, or based on misappropriation or wrongful use of information or documents) and arising out of the manufacture, sale or use of Products by either Boeing or its Customers. Boeing and/or its Customers will duly notify Seller of any such claim, suit or action; and Seller will, at its own expense, fully defend such claim, suit or action on behalf of Boeing and/or its Customers. Seller shall have no obligation under this SBP Section 26.0 with regard to any infringement arising from: (i) Seller's compliance with formal specifications issued by Boeing where infringement could not be avoided in complying with such specifications or (ii) use or sale of Products in combination with other items when such infringement would not have occurred from the use or sale of those Products solely for the purpose for which they were designed or sold by Seller. For purposes of this SBP Section 26.0 only, the term Customer shall not include the United States Government; and the term Boeing shall include The Boeing Company and all Boeing subsidiaries and all officers, agents, and employees of Boeing or any Boeing subsidiary. 27.0 RAW MATERIAL PROGRAM 27.1 Boeing Raw Material Strategy During the term of this SBP, Seller shall procure from Boeing (or its designated service provider who will act on behalf of Boeing) all raw material of the commodity type specified on the SBP Attachment entitled "Commodity Listing and Terms of Sale" (SBP Attachment 8) necessary to support any Order issued pursuant to this Agreement. From time to time, Boeing may amend the SBP Attachment entitled "Commodity Listing and Terms of Sale" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under GTA Section 10.1 (Changes), provided that Seller shall take no action to terminate its existing supply agreements when such termination would result in an assertion for an adjustment until the Seller has received approval from Boeing. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard terms of sale, the text of which is included in the SBP Attachment entitled "Commodity Listing and Terms of Sale". Boeing shall advise Seller of any designated service provider to be used at the time the Order is issued. Upon request by Boeing, Seller must provide to Boeing documentation (e.g., packing slips, invoices) showing Seller's full compliance with the obligations under this SBP Section. 27.2 Casting and Forging Strategy NOT APPLICABLE 28.0 DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS Seller grants, to Boeing a license under Seller's copyrights for the purpose of converting Seller's Proprietary Informations and Materials to a digital format ("Digital Materials") and make such Digital Materials available to its employees for company internal use through a computer data base system. Except as otherwise specifically agreed to in writing by the parties, said license set forth hereunder shall survive termination or cancellation of this SBP relative to Digital Materials included in Boeing's computer data base system prior to receipt of such notice of termination or cancellation. 29.0 INSURANCE FOR ON-SITE SUPPORT NOT APPLICABLE 29.1 Indemnification Negligence of Seller or subcontractor 29.2 Commercial General Liability 29.3 Automobile Liability 29.4 Workers' Compensation 29.5 Certificates of Insurance 29.6 Self-Assumption 29.7 Protection of Property 30.0 BOEING TECHNICAL / MANUFACTURING ASSISTANCE REGARDING SELLER'S NONPERFORMANCE Seller shall reimburse Boeing for all reasonable Boeing resources expended in providing Seller and/or Seller's subcontractors technical or manufacturing assistance in resolving Seller nonperformance issues at the established Boeing internal wage rate, which shall include fringe benefits, multiplied by the estimated hours recorded by Boeing, plus the estimated Material costs associated with providing such assistance. In addition, Seller shall, at Boeing's request, pay for normal and customary expenses relating to living expenses, travel and any other reasonable expenses related to the provision of technical services reasonably deemed necessary by Boeing to help resolve Seller's nonperformance situation. For purposes of determining the necessary resources, Boeing will coordinate with Seller prior to identifying those resources including but not limited to the applicable numbers, estimated time frames, etc. Where Seller disagrees with Boeing's proposed resources, Seller will provide to Boeing an alternate resource recommendation including actions to be performed by Seller for Boeing's review and approval. The Parties will work to agree on the resource plan to be implemented. Such reimbursement may be offset against any pending Seller invoice, regardless of Boeing model or program. Boeing's rights under this clause are in addition to those available to Boeing for Seller's nonperformance issues, including those where a demand for an Adequate Assurance of Performance may be made under GTA Section 17.0. Seller's responsibility under this Section 30.0 is limited to those situations which are clearly attributable to Seller or Seller's subcontractors or supplier's failure or potential failure to perform. 31.0 U. S. CUSTOMS INVOICE REQUIREMENTS NOT APPLICABLE 31.1 U.S. Customs Requirements NOT APPLICABLE 31.2 The Boeing Company Requirements NOT APPLICABLE 32.0 STRATEGIC ALIGNMENT AND WORK MOVEMENT 32.1 Novation Subject to the conditions set forth below, Boeing may novate this Agreement or any Order, in whole or in part, to a third party who is under an obligation to supply Boeing with components, kits, assemblies or systems that require the Seller's Product. At the time of such novation, Seller releases Boeing from any and all claims, demands and rights, which Seller has or may thereafter have against Boeing in connection with such novated Agreement or Order. Boeing will require that its novatee expressly assume all obligations and perform all duties owed to Seller under the novated Agreement or Order. Promptly after the novation, Boeing will notify Seller of the novation and its effective date. Seller agrees to continue production of novated Products under the terms of this Agreement through the applicable period of performance. In the event either party (Seller and the third party) seek to alter the terms of this agreement after novation, Seller commits to provide Products for a period not less than six months nor more than sufficient leadtime to establish a new source unless otherwise agreed to by the parties (Seller and the third party). EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties. BOEING SELLER THE BOEING COMPANY Leonard's Metal, Inc. By and Through its Divisions Boeing Commercial Airplanes /s/ Peggy McDonald /s/ Rick Darrow - ------------------------------- ------------------------------- Name: Peggy McDonald Name: Rick Darrow Title: Procurement Agent Title: Program Manager Date: Date: EX-10 5 lmi8kgta03.txt 10.3 - GENERAL TERMS AGREEMENT - BOEING GENERAL TERMS AGREEMENT between THE BOEING COMPANY and Leonard's Metals BCA-65344-0596 TABLE OF CONTENTS TITLE PAGE TABLE OF CONTENTS AMENDMENT PAGE RECITAL PAGE 1.0 DEFINITIONS..........................................................6 2.0 ORDERING.............................................................7 2.1 Issuance of Orders..........................................7 2.2 Acceptance of Orders........................................7 2.3 Written Authorization to Proceed............................8 3.0 TITLE AND RISK OF LOSS...............................................8 4.0 DELIVERY.............................................................8 4.1 Schedule....................................................8 4.2 Reserved....................................................9 4.3 Notice of Labor Negotiations................................9 5.0 ON-SITE REVIEW AND RESIDENT REPRESENTATIVES..........................9 5.1 Review .....................................................9 5.2 Resident Representatives....................................9 6.0 CREDIT OFFICE VISIBILITY.............................................10 7.0 PACKING AND SHIPPING.................................................10 7.1 General.................................................... 10 7.1.1 Shipping Documentation...........................10 7.1.2 Insurance........................................11 7.1.3 Shipping Container Labels........................11 7.1.4 Carrier Selection................................11 7.1.5 Invoices.........................................11 7.1.6 Noncompliance....................................11 7.1.7 Reserved.........................................11 7.2 Barcode Marking and Shipping................................11 8.0 QUALITY ASSURANCE, INSPECTION, REJECTION, & ACCEPTANCE...........................................................12 8.1 Controlling Document........................................12 8.2 Seller's Inspection.........................................12 8.2.1 Seller's Disclosure..............................12 8.2.2 Seller's Acceptance..............................12 8.3 Boeing's Inspection and Rejection...........................12 8.4 Rights of Boeing's Customers and Regulators to Perform Inspections, Surveillance, and Testing ....................................................13 8.5 Retention of Records........................................14 8.6 Inspection..................................................14 8.7 Reserved....................................................14 8.8 Regulatory Approvals........................................14 9.0 EXAMINATION OF RECORDS...............................................15 10.0 CHANGES..............................................................15 10.1 Changes Clause..............................................15 11.0 GENERAL & INTERNATIONAL REQUIREMENTS.................................16 11.1 Language....................................................16 11.2 Currency....................................................16 11.3 Import/Export...............................................16 11.4 Mutual Assistance in Obtaining Import/Export Authorizations Under ITAR or EAR............................18 12.0 TERMINATION FOR CONVENIENCE..........................................19 12.1 Basis for Termination; Notice...............................19 12.2 Termination Instructions....................................19 12.3 Seller's Claim..............................................20 12.4 Failure to Submit a Claim...................................20 12.5 Partial Termination.........................................20 12.6 Product Price...............................................20 12.7 Exclusions or Deductions....................................21 12.8 Partial Payment/Payment.....................................21 12.9 Seller's Accounting Practices...............................21 12.10 Records.................................................... 21 13.0 CANCELLATION FORDEFAULT..............................................22 13.1 Events of Default...........................................22 13.2 Remedies....................................................23 14.0 EXCUSABLE DELAY......................................................25 15.0 SUSPENSION OF WORK...................................................25 16.0 TERMINATION OR WRONGFUL CANCELLATION.................................26 17.0 ASSURANCE OF PERFORMANCE.............................................26 18.0 RESPONSIBILITY FOR PROPERTY..........................................27 19.0 LIMITATION OF SELLER'S RIGHT TO ENCUMBER ASSETS......................27 20.0 PROPRIETARY INFORMATION AND ITEMS....................................27 21.0 COMPLIANCE WITH LAWS.................................................28 21.1 Seller's Obligation.........................................28 21.2 Government Requirements.....................................29 22.0 INTEGRITY IN PROCUREMENT.............................................29 23.0 UTILIZATION OF SMALL BUSINESS CONCERNS...............................29 24.0 BOEING'S RIGHTS IN SELLER'S PATENTS, COPYRIGHTS, TRADE SECRETS, AND TOOLING..........................................................30 25.0 TERMINATION OF AIRPLANE PROGRAM......................................31 25.1 Program Termination.........................................31 25.2 Termination Liability.......................................31 26.0 PUBLICITY............................................................31 27.0 PROPERTY INSURANCE...................................................32 27.1 Insurance...................................................32 27.2 Certificate of Insurance....................................32 27.3 Notice of Damage or Loss....................................32 28.0 RESPONSIBILITY FOR PERFORMANCE.......................................33 28.1 Subcontracting..............................................33 28.2 Reliance....................................................34 28.3 Assignment..................................................34 29.0 NON-WAIVER/PARTIAL INVALIDITY........................................34 30.0 HEADINGS.............................................................34 31.0 RESERVED.............................................................35 32.0 RESERVED.............................................................35 33.0 DISPUTES.............................................................35 34.0 RESERVED.............................................................35 35.0 TAXES................................................................35 35.1 Inclusion of Taxes in Price.................................35 35.2 Litigation..................................................36 35.3 Rebates.....................................................36 36.0 OFFSET CREDITS.......................................................36 AMENDMENTS - -------------------------------------------------------------------------------- Amend Description Date Approval Number - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GENERAL TERMS AGREEMENT RELATING TO BOEING PRODUCTS THIS GENERAL TERMS AGREEMENT ("GTA") ("the Agreement") is entered into as of March 20, 2003 by and between Leonard's Metal Inc., a Missouri corporation, with its principal office in St. Charles, Missouri ("Seller"), and The Boeing Company, a Delaware corporation acting by and through the Boeing Commercial Airplanes, McDonnell Douglas Corporation, a Maryland corporation, and Boeing-Oakridge Company, (collectively and individually "Boeing"). Hereinafter, the Seller and Boeing may be referred to jointly as "Parties" hereto. AGREEMENTS 1.0 DEFINITIONS The definitions set forth below shall apply to this Agreement, any Order, and any related Special Business Provisions ("SBP"). Words importing the singular shall also include the plural and vice versa. A. "Customer" means any owner, lessee or operator of an aircraft or commodity, or designee of such owner, lessee or operator. B. "FAA" means the United States Federal Aviation Administration or any successor agency thereto. C. "FAR" means the Federal Acquisition Regulations in effect on the date of this Agreement. D. "Procurement Representative" means the individual designated by Boeing as being primarily responsible for interacting with Seller regarding this Agreement or any Order. E. "Order" means each purchase contract and purchase order issued by Boeing and either accepted by Seller under the terms of this Agreement or issued within Boeing's authority under this Agreement. F. "Product" means goods, including components and parts thereof, services, documents, data, software, software documentation and other information or items furnished or to be furnished to Boeing under any Order, including Tooling, except for Rotating Use Tooling. G. "Tooling" means all tooling, used in production or inspection of Products, either provided to Seller or supplied by Seller whereby Boeing agrees to pay Seller for the manufacture of the tooling. 2.0 ORDERING 2.1 Issuance of Orders Boeing may issue Orders to Seller under this Agreement from time to time. Each Order shall contain a description of the Products ordered, a reference to the applicable specifications, Drawings or supplier part number, the quantities and prices, the delivery schedule, the terms and place of delivery and any special conditions. Each Order, which incorporates a Special Business Provisions (SBP), which incorporates this Agreement, shall be governed by and be deemed to include the provisions of this Agreement. Purchase Order Terms and Conditions, Form D1-4100-4045, 49-5700, GP1, DAC Form 26-915, DAC Form 26-916 or Form P252T does not apply. Any other Order terms and conditions, which directly conflict with this Agreement, do not apply unless specifically agreed to in writing by the Parties. 2.2 Acceptance of Orders Each Order is Boeing's offer to Seller and acceptance is strictly limited to its terms. Unless specifically agreed to in writing by the Authorized Procurement Representative of Boeing, Boeing objects to, and is not bound by, any terms or condition that differs from or adds to the Order. Seller's commencement of performance or acceptance of the Order in any manner shall conclusively evidence Seller's acceptance of the Order as written. Any rejection by Seller of an Order shall specify the reasons for rejection and any changes or additions that would make the Order acceptable to Seller; provided, however, that Seller may not reject any Order for reasons inconsistent with the provisions of this Agreement or the applicable SBP. 2.3 Written Authorization to Proceed Boeing's Procurement Representative may give written or electronic authorization to Seller to commence performance before Boeing issues an Order. If Boeing's authorization specifies that an Order will be issued, Boeing and Seller shall proceed as if an Order had been issued. This Agreement, the applicable SBP and the terms stated in the authorization shall be deemed to be a part of Boeing's offer and the Parties shall promptly and in good faith agree on any open Order terms. If Boeing does not specify in its authorization that an Order shall be issued, Boeing's obligation is strictly limited to the terms of the authorization. If Seller commences performance before an Order is issued or without receiving Boeing's prior authorization to proceed, such performance shall be at Seller's risk and expense. 3.0 TITLE AND RISK OF LOSS Title to and risk of any loss of or damage to the Products shall pass at the F.O.B. point as specified in the applicable Order, except for loss or damage thereto resulting from Seller's fault or negligence. 4.0 DELIVERY 4.1 Schedule Seller shall strictly adhere to the shipment, delivery or completion schedules specified in the Order. In the event of any anticipated or actual delay, including but not limited to delays attributed to labor disputes, Seller shall: (i) promptly notify Boeing in writing of the reasons for the delay and the actions being taken to overcome or minimize the delay; and (ii) provide Boeing with a written recovery schedule. If Boeing requests, Seller shall, at Seller's expense, ship via air or other expedited routing to avoid the delay or minimize it as much as possible. Seller shall not deliver Products prior to the scheduled delivery dates unless authorized by Boeing, Boeing shall, at no additional cost, retain goods furnished in excess of the specified quantity or in excess of any allowable overage unless, within 45 days of shipment, Seller requests return of such excess. In the event of such request, Seller shall reimburse Boeing for reasonable costs associated with storage and return of excess. If Products are manufactured with reference to Boeing Proprietary Information or Materials, Seller agrees that pursuant to the Proprietary Information and Items article of this Agreement, it will not sell or offer such Products for sale to anyone other than Boeing without Boeing prior written consent. 4.2 Reserved 4.3 Notice of Labor Negotiations When requested by Boeing, Seller will provide status on labor contracts and pending negotiations, including that of Seller's subcontractors, except as may be prohibited by law. 5.0 ON-SITE REVIEW AND RESIDENT REPRESENTATIVES 5.1 Review Seller hereby grants, and shall cause any of its subcontractors to grant, to Boeing the right to visit the facility of Seller or any of its subcontractors during operating hours to review progress and performance with respect to production, schedule, cost, quality and protection of Boeing's proprietary rights under this GTA. Any Boeing representative shall be allowed access to all areas used for the performance of this GTA. Such access shall be subject to the regulations of any governmental agency regarding admissibility and movement of personnel on the premises of Seller or any of its subcontractors. Boeing shall notify Seller prior to any visit. Such notice shall contain the names, citizenship and positions of the visiting personnel and the duration and purpose of such visit. 5.2 Resident Representatives Boeing may, in its sole discretion, and for such period, as it deems necessary, locate resident personnel ("Resident Team") at Seller's facility. The Resident Team shall function under the direction of a resident Boeing manager, if appropriate, or a manager located at Boeing who will supervise Resident Team activities. The Resident Team shall be allowed access to or to review, as the case may be, all work areas, program status reports and management reviews used for or relating to Seller's performance of this GTA. Seller shall supply the Resident Team with office space, desks, facsimile machines, telephones, stationery supplies, filing cabinets, communication facilities, secretarial and stenographic services and any other items reasonably requested by Boeing. A reasonable portion of the Resident Team's working area shall be dedicated to space for private telephone calls, meetings and similar Boeing activities. All costs and expenses for such facilities and services, if required, shall be paid by Seller. Notwithstanding such assistance, Seller remains solely responsible for performing in accordance with each Order. 6.0 CREDIT OFFICE VISIBILITY If requested, Seller shall provide financial data, on a quarterly basis, or as requested to the Boeing Corporate Credit Office for credit and financial condition reviews. Said data shall include but not be limited to balance sheets, schedule of accounts payable and receivable, major lines of credit, creditors, income statements (profit and loss), cash flow statements, firm backlog, and headcount. Copies of such data are to be made available within 72 hours of any written request by Boeing's Corporate Credit Office. Boeing shall treat all such information as confidential. 7.0 PACKING AND SHIPPING 7.1 General Seller shall pack the Products to prevent damage and deterioration taking into account method of shipment, location of shipment and destination of receipt, as well as time associated with shipment. Seller shall comply with carrier tariffs. Unless the Order specifies otherwise, the price includes shipping charges for Products to the F.O.B. destination. Unless otherwise specified in the Order, Products sold F.O.B. place of shipment shall be forwarded collect. For Products shipped domestically, Seller shall make no declaration concerning the value of the Products shipped, except on the Products where the tariff rating is dependent upon released or declared value. In such event, Seller shall release or declare such value at the maximum value within the lowest rating. Boeing may charge Seller for damage to or deterioration of any Products resulting from improper packing or packaging. Seller shall comply with any special instructions stated in the applicable Order. Upon Boeing's request, Seller will identify packaging charges showing material and labor costs for container fabrication. 7.1.1 Shipping Documentation Shipments by Seller or its subcontractors must include packing sheets. Each packing sheet must include at a minimum the following: a) Seller's name, address, phone number; and supplier code number b) Order and item number; c) ship date for the Products; d) total quantity shipped and quantity in each container, if applicable; e) legible pack slip number; f) nomenclature; g) unit of measure; h) ship to information if other than Boeing; i) warranty data and certification, as applicable; j) rejection tag, if applicable; k) Seller's certification that Products comply with Order requirements; and, l) identification of optional material used, if applicable. A shipment containing hazardous and non-hazardous materials must have separate packing sheets for the hazardous and non-hazardous materials. Items shipped on the same day will be consolidated on one bill of lading or airbill, unless Boeing's Authorized Procurement Representative authorizes otherwise. The shipping documents will describe the material according to the applicable classification or tariff rating. The total number of shipping containers will be referenced on all shipping documents. Originals of all government bills of lading will be surrendered to the origin carrier at the time of shipment. 7.1.2 Insurance Seller will not insure any FOB Origin shipment unless authorized by Boeing. 7.1.3 Shipping Container Labels Seller will label each shipping container with the Order number and the number that each container represents of the total number being shipped (e.g., Box 1 of 2, Box 2 of 2). 7.1.4 Carrier Selection Boeing will select the carrier and mode of transportation for all shipments where freight costs will be charged to Boeing. 7.1.5 Invoices Seller will include copies of documentation supporting prepaid freight charges (e.g., carrier invoices or UPS shipping log/manifest), if any, with its invoices. 7.1.6 Noncompliance If Seller is unable to comply with the shipping instructions in this Agreement or an Order, Seller will contact Boeing's Traffic Management Department or Boeing's Authorized Procurement Representative. 7.1.7 Reserved 7.2 Barcode Marking and Shipping For those shipments which support Orders from Boeing locations where Seller has been approved to utilize barcode labeling for shipping and packaging, Seller shall mark and package such shipments in accordance with the applicable barcode requirements for that location. 8.0 QUALITY ASSURANCE, INSPECTION, REJECTION, & ACCEPTANCE 8.1 Controlling Document The controlling quality assurance document for Orders shall be as set forth elsewhere in the contract. 8.2 Seller's Inspection Seller shall inspect or otherwise verify that all Products, including those components procured from or furnished by subcontractors or Boeing, comply with the requirements of the Order prior to shipment to Boeing or Customer. Seller shall be responsible for all tests and inspections of the Product during receiving, manufacture and Seller's final inspection. Seller agrees to furnish copies of test and/or control data upon request from Boeing's Procurement Representative. 8.2.1 Seller's Disclosure Seller will immediately notify Boeing in writing when discrepancies in Seller's processes or Product are discovered or suspected for Products Seller has delivered or will deliver under this Agreement. 8.2.2 Seller's Acceptance Seller shall provide with all shipments the following evidence of acceptance by its Quality Assurance department: (a) certified physical and metallurgical or mechanical test reports where required by controlling specifications, or (b) a signed, dated statement on the packing sheet certifying that its Quality Assurance department has inspected the Products and they adhere to all applicable Drawings and/or specifications. 8.3 Boeing's Inspection and Rejection Boeing will accept the Products or give Seller notice of rejection or revocation of acceptance ("rejection" herein), notwithstanding any payment, prior test or inspection, or passage of title. No inspection, test delay or failure to inspect or test or failure to discover any defect or other nonconformance shall relieve Seller of any obligations under this Agreement or impair any right or remedy of Boeing. If Seller delivers non-conforming Products, Boeing may at its option and at Seller's expense (i) return the Products for credit or refund; (ii) require Seller to promptly correct or replace the Products; (iii) correct the Products; or, (iv) obtain replacement Products from another source. Seller shall not redeliver corrected or rejected goods without disclosing the former rejection or requirement for correction. Seller shall disclose any corrective action taken. Repair, replacement and other correction and redelivery shall be completed within the original delivery schedule or such later time as Authorized Procurement Representatives of Boeing may reasonably direct. All costs and expenses and loss of value incurred as a result of or in connection with nonconformance and repair, replacement or other correction may be recovered from Seller by equitable price reduction or credit against amounts that may be owed to Seller under this Agreement or otherwise. Acceptance of any Product by Boeing following any repair or rework pursuant to this Section 8.3 shall not alter or affect the obligations of Seller or the rights of Boeing under SBP Section 6.1. 8.4 Rights of Boeing's Customers and Regulators to Perform Inspections, Surveillance, and Testing Boeing's rights to perform inspections, surveillance and tests and to review procedures, practices, processes and related documents related to quality assurance, quality control, flight safety, and configuration control shall extend to the Customers of Boeing that are departments, agencies or instrumentalities of the United States Government and to the United States Government FAA and any successor agency or instrumentality of the United States Government. Boeing may also, at Boeing's option, by prior written notice from Boeing's Authorized Procurement Representative, extend such rights to other Customers of Boeing and to agencies or instrumentalities of foreign governments equivalent in purpose to the Federal Aviation Administration. Seller shall cooperate with any such United States Government or Boeing directed inspection, surveillance, test or review without additional charge to Boeing. Nothing in this contract shall be interpreted to limit United States Government access to Seller's facilities pursuant to law or regulation. Where Seller is located in or subcontracts with a supplier or subcontractor located in a country which does not have a Bi-lateral Airworthiness Agreement with the United States, Seller will obtain and maintain on file and require its affected supplier(s) or subcontractor(s) to obtain and maintain on file, subject to review by Boeing, a letter from the applicable government where the Product or subcontracted element is to be manufactured stating that Boeing and the FAA will be granted access to perform inspections, surveillance and tests and to review procedures, practices, processes and related documents related to quality assurance, quality control, flight safety, and configuration control. 8.5 Retention of Records For purchases supporting BCA, Quality Assurance records shall be maintained on file at Seller's facility and available to FAA (or equivalent governmental agency in Seller's country that has been granted jurisdiction by the FAA) and Boeing's authorized representatives. Seller shall retain such records for a period of not less than seven (7) years from the date of final payment under the applicable Order for all Products unless otherwise specified on the Order. 8.6 Inspection At no additional cost to Boeing, Products may be subject to inspection, surveillance and test at reasonable times and places, including Seller's subcontractors' locations. Boeing will perform inspections; surveillance and tests so as not to unduly delay the work. Seller shall maintain an inspection system acceptable to Boeing for the Products purchased under this Agreement. If Boeing performs an inspection or test on the premises of Seller or its subcontractors, Seller shall furnish and require its subcontractors to furnish, without additional charge, reasonable facilities and assistance for the safe and convenient performance of these duties. Seller's documentation accompanying the shipment must reflect evidence of this inspection. 8.7 Reserved 8.8 Regulatory Approvals For aircraft regulated by the FAA or non-U.S. equivalent agency, regulatory approval may be required for Seller to make direct sales (does not include "direct ship" sale through Boeing) of modification or replacement parts to owners/operators of type-certificated aircraft. Regulatory approval, such as Parts Manufacturing Authority (PMA), is granted by the FAA or appropriate non-U.S. equivalent regulatory agency. Seller agrees not to engage in any such direct sales of Products under this Agreement without regulatory approval. Any breach of this provision will be deemed a material breach of this Agreement. On Seller proprietary parts, Seller agrees to notify Boeing of application for PMA or other applicable regulatory approval and subsequent approval or denial of same. Upon receipt of proof of PMA or other applicable regulatory approval, Boeing may list Seller in the Illustrated Parts Catalog as seller of that part. 9.0 EXAMINATION OF RECORDS Seller shall maintain complete and accurate records showing the sales volume of all Products. Such records shall support all services performed, allowances claimed and costs incurred by Seller in the performance of each Order, including but not limited to those factors which comprise or affect direct labor hours, direct labor rates, material costs, burden rates and subcontracts. Such records and other data shall be capable of verification through audit and analysis by Boeing and be available to Boeing at Seller's facility for Boeing's examination, reproduction, and audit at all reasonable times from the date of the applicable Order until three (3) years after final payment under such Order. Seller shall provide assistance to interpret such data if requested by Boeing. Such examination shall provide Boeing with complete information regarding Seller's performance for use in price negotiations with Seller relating to existing or future orders for Products, including but not limited to negotiation of equitable adjustments for changes and termination/obsolescence claims pursuant to GTA Section 10.0. Boeing shall treat all information disclosed under this GTA Section as confidential, unless required by US Government contracting regulation(s). 10.0 CHANGES 10.1 Changes Clause Boeing's Procurement Representative may, without notice to sureties, in writing direct changes within the general scope of this Agreement or an Order in any of the following: (i) technical requirements and descriptions, specifications, statement of work, drawings or designs; (ii) shipment or packing methods; (iii) place of delivery, inspection or acceptance; (iv) reasonable adjustments in quantities or delivery schedules or both; (v) amount of Boeing-furnished property; and, if this contract includes services, (vi) description of services to be performed; (vii) time of performance (i.e., hours of the day, days of the week, etc.); and (viii) place of performance. Seller shall comply immediately with such direction. If such change increases or decreases the cost or time required to perform this contract, Boeing and Seller shall negotiate an equitable adjustment in the price or schedule, or both, to reflect the increase or decrease. Boeing shall modify the Order in writing accordingly. Unless otherwise agreed in writing, Seller must assert any claim for adjustment to Boeing's Procurement Representative in writing within 25 days and deliver a fully supported proposal to Boeing's Procurement Representative within 60 days after Seller's receipt of such direction. Boeing may, at its sole discretion, consider any claim regardless of when asserted. If Seller's proposal includes the cost of property made obsolete or excess by the change, Boeing may direct the disposition of the property. Boeing may examine Seller's pertinent books and records to verify the amount of Seller's claim. Failure of the Parties to agree upon any adjustment shall not excuse Seller from performing in accordance with Boeing's direction. If Seller considers that Boeing's conduct constitutes a change, Seller shall notify Boeing's Procurement Representative immediately in writing as to the nature of such conduct and its effect upon Seller's performance. Pending direction from Boeing's Procurement Representative, Seller shall take no action to implement any such change. 11.0 GENERAL & INTERNATIONAL REQUIREMENTS 11.1 Language The Parties hereto have agreed that this Agreement be drafted in American English only. Where Seller resides in Quebec, Canada, les parties aux presentes tes ont convenu de rediger ce contrat en Anglais seulement. All contractual documents and all correspondence, invoices, notices and other documents shall be submitted in American English. Any necessary conversations shall be held in English. Boeing shall determine whether measurements will be in the English or Metric system or a combination of the two systems. Seller shall not convert measurements, which Boeing has stated in an English measurement system into the Metric system in documents furnished to Boeing 11.2 Currency Unless specified elsewhere herein, all prices shall be stated in and all payments shall be made in the currency of the United States of America (U.S. Dollars). No adjustments to any prices shall be made for changes to or fluctuations in currency exchange rates. 11.3 Import/Export A. Seller shall comply with applicable import and export laws and regulations of Seller's country and of the United States and with all applicable export licenses and their provisos. This contract may involve information or items which are subject to the International Traffic in Arms Regulations (ITAR) or Export Administration Regulations (EAR) and which may not be released to "Foreign Persons" inside or outside the United States without the proper export authority. The ITAR defines a Foreign Person as any person who is not a U.S. citizen, a lawful permanent resident as defined by 8 USC 1101(a)(20), or a protected individual as defined by 8 USC 1324b(a)(3). Foreign Person also means a corporation, business association, partnership, or any other entity that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments, and any agency or subdivision of foreign governments (e.g. diplomatic missions). B. The importer/exporter of record has obtained or will obtain and properly utilize, U.S. Government import/export authorization to furnish to Seller any defense articles, technical data, defense services, software, and/or other controlled items (together referred to herein as "Controlled Items") requiring such authorization, which are necessary for Seller to perform this contract. Such Controlled Items are authorized for export only to Seller's country for use by Seller and may not, without the prior written approval of the U.S. Government, be transferred, transshipped on a non-continuous voyage, or otherwise disposed of in any other country, either in their original form or after being incorporated into other end items. If so requested by the importer/exporter of record, the other party shall assist in obtaining such authorization. If U.S. Government import/export authorization is not available, cannot be obtained, or is obtained and subsequently revoked, Controlled Items to be delivered or exchanged pursuant to this contract shall not be imported, exported, or re-exported. Resale or other transfer of items delivered or exchanged pursuant to this contract shall be in accordance with this clause. C. U.S. Government import/export authorization is based upon the following ITAR requirements and upon all applicable export licenses with which Seller agrees to comply: 1. Seller shall use Controlled Items furnished by Boeing only in the manufacture of Products in accordance with this contract. 2. Seller shall not disclose or provide Controlled Items furnished by Boeing to any Foreign Person either in the United States or abroad before obtaining written authorization from Boeing or from the U.S. Department of State Office of Defense Trade Controls, except that if Seller is itself a Foreign Person, it may disclose or provide Controlled Items furnished by Boeing to Seller's employees who are nationals of Seller's country of site. 3. Seller acquires no rights in Controlled Items furnished by Boeing except to use them to perform this contract. Seller shall not purport to convey to any subcontractor or person any greater rights in the data than Seller has. Seller may convey to subcontractors the right to use the Controlled Items only as required to perform their subcontracts. 4. Seller shall deliver the articles manufactured in accordance with this contract only to Boeing in the United States or, with Boeing's authorization, to the U.S. Government. 5. Upon completion or termination of this contract, Boeing may require Seller to: i) return to Boeing all technical data furnished by Boeing pursuant to this contract; or ii) destroy such technical data and to certify in writing to such destruction. 6. Seller shall impose these requirements, 1 through 6 inclusive, suitably revised to properly identify the parties, on all subcontractors to whom Seller intends to furnish Controlled Items provided by Boeing for use by the subcontractors in performance of subcontracts. D. Seller agrees, in addition to the above procedures established by the ITAR, to place the following legend on all technical data obtained, used, generated, or delivered in performance of this contract: WARNING--Information Subject to Export Control Laws This document may contain information subject to the International Traffic in Arms Regulation (ITAR) or the Export Administration Regulation (EAR) of 1979. This information may not be exported, released, or disclosed to Foreign Nationals outside the United States without first complying with the export. 11.4 Mutual Assistance in Obtaining Import/Export Authorizations Under ITAR or EAR A. Upon request of Boeing's Authorized Procurement Agent, Seller shall, promptly and without additional cost, furnish Boeing with any documentation, including import certificates or end-user statements from Seller or Seller's government, which is reasonably necessary to support Boeing's application for U.S. import or export authorizations. Boeing shall not be responsible for delays in U.S. import or export of Controlled Items supplied hereunder by Boeing due to a lack of necessary documentation from Seller or Seller's country. B. Seller shall be responsible for obtaining required import or export approvals, including licenses to import or export equipment or authorizations for Boeing to locate personnel and furnish in-country technical assistance. C. Upon Seller's request, Boeing shall promptly furnish Seller with any documentation, including import certificates or end -user statements from Boeing or the U.S. Government, which is reasonably necessary to support Seller's application for import or export authorizations issued by Seller's government. Seller shall not be responsible for delays in import or export of Controlled Items supplied hereunder by Seller into or out of Seller's country due to a lack of necessary documentation from Boeing or Boeing's country. D. If the government of either party denies, fails to grant, or revokes any import or export authorizations necessary for the performance of this contract, that party shall immediately notify the other party, and neither party shall be responsible for performance or payment under this contract for directly affected activities. 12.0 TERMINATION FOR CONVENIENCE 12.1 Basis for Termination; Notice Boeing may, from time to time terminate all or part of any Order issued hereunder, by written notice to Seller. Any such written notice of termination shall specify the effective date and the extent of any such termination. 12.2 Termination Instructions On receipt of a written notice of termination pursuant to GTA Section 12.1, unless otherwise directed by Boeing, Seller shall: A. Immediately stop work as specified in the notice; B. Immediately terminate its subcontracts and purchase orders relating to work terminated; C. Settle any termination claims made by its subcontractors or suppliers; provided, that Boeing shall have approved the amount of such termination claims prior to such settlement; D. Preserve and protect all terminated inventory and Products; E. At Boeing's request, transfer title (to the extent not previously transferred) and deliver to Boeing or Boeing's designee all supplies and materials, work-in-process, Tooling and manufacturing drawings and data produced or acquired by Seller for the performance of this Agreement and any Order, all in accordance with the terms of such request; F. Be compensated for such items to the extent provided in GTA Section 12.3 below; G. Take all reasonable steps required to return, or at Boeing's option and with prior written approval to destroy, all Boeing Proprietary Information and Items, as set forth in GTA Section 20.0, in the possession, custody or control of Seller; H. Take such other action as, in Boeing's reasonable opinion, may be necessary, and as Boeing shall direct in writing, to facilitate termination of the Order; and I. Complete performance of the work not terminated. 12.3 Seller's Claim If Boeing terminates an Order in whole or in part pursuant to GTA Section 12.1 above, Seller shall have the right to submit a written termination claim to Boeing in accordance with the terms of this GTA Section 12.3. Such termination claim shall be asserted to Boeing within forty-five (45) days and all documentation supporting said claim must be asserted not later than six (6) months after Seller's receipt of the termination notice and shall be in the form prescribed by Boeing. Such claim must contain sufficient detail to explain the amount claimed, including detailed inventory schedules and a detailed breakdown of all costs claimed separated into categories (e.g., materials, purchased parts, finished components, labor, burden, general and administrative), and to explain the basis for allocation of all other costs. With regard to the amount compensatable to Seller under a termination pursuant to GTA Section 12.1 above, Seller shall be entitled to compensation in accordance with and to the extent allowed under the terms of FAR 52-249-2 paragraphs (e)-(i), (Sept 96) (as published in 48 CFR ss. 52.249-2 approval 1996; without Alternates, unless alternate clause date is called out on the Order) which is incorporated herein by reference except "Government" and "Contracting Officer" shall mean Boeing, "Contractor" shall mean Seller and "Contract" shall mean Order. Seller shall indemnify Boeing and hold Boeing harmless from and against (i) any and all claims, suits and proceedings against Boeing by any subcontractor or supplier of Seller in respect of any such termination and (ii) any and all costs, expenses, losses and damages incurred by Boeing in connection with any such claim, suit or proceeding. 12.4 Failure to Submit a Claim Notwithstanding any other provision of this GTA Section 12.0, if Seller fails to submit a termination claim within the time period set forth above, Seller shall be barred from submitting a claim and Boeing shall have no obligation for payment to Seller under this GTA Section 12.0 except for those Products previously delivered and accepted by Boeing. 12.5 Partial Termination Any partial termination of an Order shall not alter or affect the terms and conditions of the Order or any Order with respect to Products not terminated. 12.6 Product Price Termination under any of the above paragraphs shall not result in any change to unit prices for Products not terminated. 12.7 Exclusions or Deductions The following items shall be excluded or deducted from any claim submitted by Seller: A. All unliquidated advances or other payments made by Boeing to Seller pursuant to a terminated Order; B. Any claim which Boeing has against Seller; C. The agreed price for scrap allowance; D. Except for normal spoilage and any risk of loss assumed by Boeing, the agreed fair value of property that is lost, destroyed, stolen or damaged. 12.8 Partial Payment/Payment Payment, if any, to be paid under this GTA Section 12.0 shall be made thirty (30) days after settlement between the parties or as otherwise agreed to between the parties. Boeing may make partial payments and payments against costs incurred by Seller for the terminated portion of the Order. If the total payments exceed the final amount determined to be due, Seller shall repay the excess to Boeing upon demand. 12.9 Seller's Accounting Practices Boeing and Seller agree that Seller's "normal accounting practices" used in developing the price of the Product(s) shall also be used in determining the allocable costs at termination. For purposes of this GTA Section 12.9, Seller's "normal accounting practices" refers to Seller's method of charging costs as either a direct charge, overhead expense, general administrative expense, etc. 12.10 Records Unless otherwise provided in this Agreement or by law, Seller shall maintain all financial records and documents relating to the terminated portion of the Order for three (3) years after final settlement of Seller's termination claim. 13.0 CANCELLATION FOR DEFAULT 13.1 Events of Default The occurrence of any one or more of the following events shall constitute an "Event of Default". A. Any failure by Seller to deliver, when and as required by this Agreement or any Order, any Product, except as provided in GTA Section 14.0; or B. Any failure by Seller to provide an acceptable Assurance of Performance within the time specified in GTA Section 17.0, or otherwise in accordance with applicable law; or, C. Any failure by Seller to perform or comply with any obligation set forth in GTA Section 20.0;or, D. Seller is or has participated in the sale, purchase or manufacture of airplane parts without the required approval of the FAA or appropriate non-U.S. equivalent regulatory agency; or E. Boeing revokes Seller's Quality Assurance System approval, if applicable; or, F. Any failure by Seller to perform or comply with any obligation (other than as described in the foregoing GTA Sections (13.1.A, 13.1.B, 13.1.C, 13.1.D and 13.1.E) set forth in this Agreement and such failure shall continue unremedied for a period of ten (10) days or more following receipt by Seller of notice from Boeing specifying such failure; or G. (a) the suspension, dissolution or winding-up of Seller's business, (b) Seller's insolvency, or its inability to pay debts, or its nonpayment of debts, as they become due, (c) the institution of reorganization, liquidation or other such proceedings by or against Seller or the appointment of a custodian, trustee, receiver or similar Person for Seller's properties or business, (d) an assignment by Seller for the benefit of its creditors, or (e) any action of Seller for the purpose of effecting or facilitating any of the foregoing. 13.2 Remedies If any Event of Default shall occur: A. Cancellation Boeing may, by giving written notice to Seller, immediately cancel this Agreement, any SBP, any Administrative Agreement, or any Order, in whole or in part, and Boeing shall not be required after such notice to accept the tender by Seller of any Products with respect to which Boeing has elected to cancel this Agreement. B. Cover Boeing may manufacture, produce or provide, or may engage any other persons to manufacture, produce or provide, any Products in substitution for the Products to be delivered or provided by Seller hereunder with respect to which this Agreement or any Order has been canceled. In addition to any other remedies or damages available to Boeing hereunder or at law or in equity, Boeing may recover from Seller the difference between the price for each such Product and the aggregate expense, including, without limitation, administrative and other indirect costs, paid or incurred by Boeing to manufacture, produce or provide, or engage other persons to manufacture, produce or provide, each such Product. C. Rework or Repair Where allowed by the applicable regulatory authority, Boeing or its designee may rework or repair any Product in accordance with GTA Section 8.3; D. Setoff Boeing shall, at its option, have the right to set off against and apply to the payment or performance of any obligation, sum or amount owing at any time to Boeing hereunder or under any Order, all deposits, amounts or balances held by Boeing for the account of Seller and any amounts owed by Boeing to Seller, regardless of whether any such deposit, amount, balance or other amount or payment is then due and owing. E. Tooling and other Materials As partial compensation for the additional costs which Boeing will incur as a result of the actual physical transfer of production capabilities from Seller to Boeing or Boeing's designee, Seller shall upon the request of Boeing, transfer and deliver to Boeing or Boeing's designee title to any or all (i) Tooling, (ii) Boeing-furnished material, (iii) raw materials, parts, work-in-process, incomplete or completed assemblies, and all other Products or parts thereof in the possession or under the effective control of Seller or any of its subcontractors (iv) Proprietary Information and Materials of Boeing including without limitation planning data, drawings and other Proprietary Information and Materials relating to the design, production, maintenance, repair and use of Tooling, in the possession or under the effective control of Seller or any of its subcontractors, in each case free and clear of all liens, claims or other rights of any person. Seller shall be entitled to receive from Boeing reasonable compensation for any item accepted by Boeing which has been transferred to Boeing pursuant to this GTA Section 13.2.E (except for any item the price of which shall have been paid to Seller prior to such transfer); provided, however, that such compensation shall not be paid directly to Seller, but shall be accounted for as a setoff against any damages payable by Seller to Boeing as a result of any Event of Default. F. Remedies Generally No failure on the part of Boeing in exercising any right or remedy hereunder, or as provided by law or in equity, shall impair, prejudice or constitute a waiver of any such right or remedy, or shall be construed as a waiver of any Event of Default or as an acquiescence therein. No single or partial exercise of any such right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. No acceptance of partial payment or performance of any of Seller's obligations hereunder shall constitute a waiver of any Event of Default or a waiver or release of payment or performance in full by Seller of any such obligation. All rights and remedies of Boeing hereunder and at law and in equity shall be cumulative and not mutually exclusive and the exercise of one shall not be deemed a waiver of the right to exercise any other. Nothing contained in this Agreement shall be construed to limit any right or remedy of Boeing now or hereafter existing at law or in equity. 14.0 EXCUSABLE DELAY If delivery of any Product is delayed by unforeseeable circumstances beyond the control and without the fault or negligence of Seller or of its suppliers or subcontractors (any such delay being hereinafter referred to as "Excusable Delay"), the delivery of such Product shall be extended for a period to be determined by Boeing after an assessment by Boeing of alternative work methods. Excusable Delays may include, but are not limited to, acts of God, war, terrorist acts, riots, acts of government, fires, floods, epidemics, quarantine restrictions, freight embargoes, strikes or unusually severe weather, but shall exclude Seller's noncompliance with any rule, regulation or order promulgated by any governmental agency for or with respect to environmental protection. However, the above notwithstanding, Boeing expects Seller to continue production, recover lost time and support all schedules as established under this Agreement or any Order. Therefore, it is understood and agreed that (i) delays of less than two (2) days duration shall not be considered to be Excusable Delays unless such delays shall occur within thirty (30) days preceding the scheduled delivery date of any Product and (ii) if delay in delivery of any Product is caused by the default of any of Seller's subcontractors or suppliers, such delay shall not be considered an Excusable Delay unless the supplies or services to be provided by such subcontractor or supplier are not obtainable from other sources in sufficient time to permit Seller to meet the applicable delivery schedules. If delivery of any Product is delayed by any Excusable Delay for more than three (3) months, Boeing may, without any additional extension, cancel all or part of any Order with respect to the delayed Products, and exercise any of its remedies in accordance with GTA Section 13.2, provided however, that Boeing shall not be entitled to monetary damages or specific performance to the extent Seller's breach is the result of an Excusable Delay. 15.0 SUSPENSION OF WORK Boeing may at any time, by written order to Seller, require Seller to stop all or any part of the work called for by this Agreement for up to one hundred twenty (120) days hereafter referred to as a "Stop Work Order" issued pursuant to this GTA Section 15.0. On receipt of a Stop Work Order, Seller shall promptly comply with its terms and take all reasonable steps to minimize the occurrence of costs arising from the work covered by the Stop Work Order during the period of work stoppage. Within the period covered by the Stop Work Order (including any extension thereof) Boeing shall either (i) cancel the Stop Work Order or (ii) terminate or cancel the work covered by the Stop Work Order in accordance with the provisions of GTA Section 12.0 or 13.0. In the event the Stop Work Order is canceled by Boeing or the period of the Stop Work Order (including any extension thereof) expires, Seller shall promptly resume work in accordance with the terms of this Agreement or any applicable Order. 16.0 TERMINATION OR WRONGFUL CANCELLATION Boeing shall not be liable for any loss or damage resulting from any termination pursuant to GTA Section 12.1, except as expressly provided in GTA Section 12.3 or any cancellation under GTA Section 13.0 except to the extent that such cancellation shall have been determined to have been wrongful, in which case such wrongful cancellation shall be deemed a termination pursuant to GTA Section 12.1 and therefore, Boeing's liability shall be limited to the payment to Seller of the amount or amounts identified in GTA Section 12.3. 17.0 ASSURANCE OF PERFORMANCE A. Seller to Provide Assurance If Boeing determines, at any time or from time to time, that it is not sufficiently assured of Seller's full, timely and continuing performance hereunder, or if for any other reason Boeing has reasonable grounds for insecurity, Boeing may request, by notice to Seller, written assurance (hereafter an "Assurance of Performance") with respect to any specific matters affecting Seller's performance hereunder, that Seller is able to perform all of its respective obligations under this Agreement when and as specified herein. Each Assurance of Performance shall be delivered by Seller to Boeing as promptly as possible, but in any event no later than ten (10) calendar days following Boeing's request therefore and each Assurance of Performance shall be accompanied by any information, reports or other materials, prepared by Seller, as Boeing may reasonably request. Except as to payment for accepted goods, Boeing may suspend all or any part of Boeing's performance hereunder until Boeing receives an Assurance of Performance from Seller satisfactory in form and substance to Boeing. B. Meetings and Information Boeing may request one or more meetings with senior management or other employees of Seller for the purpose of discussing any request by Boeing for Assurance of Performance or any Assurance of Performance provided by Seller. Seller shall make such persons available to meet with representatives of Boeing as soon as may be practicable following a request for any such meeting by Boeing and Seller shall make available to Boeing any additional information, reports or other materials in connection therewith as Boeing may reasonably request. 18.0 RESPONSIBILITY FOR PROPERTY Seller shall clearly mark, maintain an inventory of, and keep segregated or identifiable all of Boeing's property and all property to which Boeing has acquired an interest. Seller assumes all risk of loss, destruction or damage of such property while in Seller's possession, custody or control, including any transfer to Seller's subcontractors. Upon request, Seller shall provide Boeing with adequate proof of insurance against such risk of loss. Seller shall not use such property other than in performance of an Order without prior written consent from Boeing. Seller shall notify Boeing's Authorized Procurement Representative if Boeing's property is lost, damaged or destroyed. As directed by Boeing, upon completion, termination or cancellation of the agreement or any Order, Seller shall deliver such property, to the extent not incorporated in delivered end products, to Boeing in good condition subject to ordinary wear and tear and normal manufacturing losses. Nothing in this GTA Section limits Seller's use, in its direct contracts with the Government, of property in which the Government has an interest. 19.0 LIMITATION OF SELLER'S RIGHT TO ENCUMBER ASSETS Seller warrants to Boeing that it has good title to all inventory, work-in-process, tooling and materials to be supplied by Seller in the performance of its obligations under any Order. Pursuant to the provisions of such Order, Seller will transfer to Boeing title to such inventory, work-in-process, tooling and materials whether transferred separately or as part of any Product delivered under the Order, free of any liens, charges, encumbrances or rights of others. 20.0 PROPRIETARY INFORMATION AND ITEMS Boeing and Seller shall each keep confidential and protect from disclosure all (a) confidential, proprietary, and/or trade secret information; (b) tangible items containing, conveying, or embodying such information; and (c) tooling obtained from and/or belonging to the other in connection with this Agreement or any Order (collectively referred to as "Proprietary Information and Materials"). Boeing and Seller shall each use Proprietary Information and Materials of the other only in the performance of and for the purpose of this Agreement and/or any Order. Provided, however, that despite any other obligations or restrictions imposed by this GTA Section 20.0, Boeing shall have the right to use, disclose and copy Seller's Proprietary Information and Materials for the purposes of testing, certification, use, sale, or support of any item delivered under this Agreement, an Order, or any airplane including such an item; and any such disclosure by Boeing shall, whenever appropriate, include a restrictive legend suitable to the particular circumstances. The restrictions on disclosure or use of Proprietary Information and Materials by Seller shall apply to all materials derived by Seller or others from Boeing's Proprietary Information and Materials. Upon Boeing's request at any time, and in any event upon the completion, termination or cancellation of this Agreement, Seller shall return all of Boeing's Proprietary Information and Materials, and all materials derived from Boeing's Proprietary Information and Materials to Boeing unless specifically directed otherwise in writing by Boeing. Seller shall not, without the prior written authorization of Boeing, sell or otherwise dispose of (as scrap or otherwise) any parts or other materials containing, conveying, embodying, or made in accordance with or by reference to any Proprietary Information and Materials of Boeing. Prior to disposing of such parts or materials as scrap, Seller shall render them unusable. Boeing shall have the right to audit Seller's compliance with this GTA Section 20.0. Seller may disclose Proprietary Information and Materials of Boeing to its subcontractors as required for the performance of an Order, provided that each such subcontractor first assumes, by written agreement, the same obligations imposed upon Seller under this GTA Section 20.0 relating to Proprietary Informations and Materials; and Seller shall be liable to Boeing for any breach of such obligation by such subcontractor. The provisions of this GTA Section 20.0 are effective in lieu of, and will apply notwithstanding the absence of, any restrictive legends or notices applied to Proprietary Informations and Materials; and the provisions of this GTA Section 20.0 shall survive the performance, completion, termination or cancellation of this Agreement or any Order. This GTA Section 20.0 supersedes and replaces any and all other prior agreements or understandings between the parties to the extent that such agreements or understandings relate to Boeing's obligations relative to confidential, proprietary, and/or trade secret information, or tangible items containing, conveying, or embodying such information, obtained from Seller and related to any Product, regardless of whether disclosed to the receiving party before or after the effective date of this Agreement. 21.0 COMPLIANCE WITH LAWS 21.1 Seller's Obligation Seller shall be responsible for complying with all laws, including, but not limited to, any statute, rule, regulation, judgment, decree, order, or permit applicable to its performance under this Agreement, including those pertaining to United States Export Controls. Seller shall notify Boeing at the earliest possible opportunity of any aspect of its performance, which becomes subject to additional regulation after the date of execution of this Agreement or which Seller reasonably believes will become subject to additional regulation during the term of this Agreement. Seller agrees to indemnify and to hold harmless Boeing from any failure by Seller to comply with any provision of any statute, rule, regulation, judgment, decree, order or permit applicable to its performance under this Agreement. 21.2 Government Requirements If any of the work to be performed under this Agreement is performed in the United States, Seller shall, via invoice or other form satisfactory to Boeing, certify that the Products covered by the Order were produced in compliance with GTA Sections 6, 7, and 12 of the Fair Labor Standards Act (29 U.S.C. 201-291), as amended, and the regulations and orders of the U.S. Department of Labor issued there under. In addition, the following Federal Acquisition Regulations are incorporated herein by this reference except "Contractor" shall mean "Seller": Other Government clauses, if any, are incorporated herein either by attachment to this document or by some other means of reference. FAR 52.222-26 "Equal Opportunity" FAR 52.222-35 "Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era " FAR 52.222-36 "Affirmative Action for Workers with Disabilities" FAR 52.247-64 "Preference for Privately Owned U.S.-Flagged Commercial Vessels" 22.0 INTEGRITY IN PROCUREMENT Seller warrants that neither it nor any of its employees, agents or representatives have offered or given, or will offer or give any gratuities to Boeing's employees, agents or representatives for the purpose of securing this contract or securing favorable treatment under this contract. 23.0 UTILIZATION OF SMALL BUSINESS CONCERNS Seller agrees to actively seek out and provide the maximum practicable opportunities for small businesses, small disadvantaged businesses, women-owned small businesses, minority business enterprises, historically black colleges and universities and minority institutions, historically underutilized business zone small business concerns and U.S. veteran and service-disabled veteran owned small business concerns to participate in the subcontracts Seller awards to the fullest extent consistent with the efficient performance of this contract. 24.0 BOEING'S RIGHTS IN SELLER'S PATENTS, COPYRIGHTS, TRADE SECRETS, AND TOOLING Seller hereby grants to Boeing an irrevocable, nonexclusive, paid-up worldwide license to practice and/or use, and license others to practice and/or use on Boeing's behalf, all of Seller's patents, copyrights, trade secrets (including, without limitation, designs, processes, drawings, technical data and tooling), industrial designs, semiconductor mask works, and tooling (collectively hereinafter referred to as "Licensed Property") related to the development, production, maintenance or repair of Products. Boeing hereafter retains all of the aforementioned license rights in Licensed Property, but Boeing hereby covenants not to exercise such rights except in connection with the making, having made, using and selling of Products or products of the same kind provided that such undelivered quantity of Product cannot, in Boeing's sole determination, be reasonably obtained in the required time frame at a reasonable price from commercially available sources (including Boeing) without the use of Seller's Licensed Property and if one or more of the following situations occur: A. Seller discontinues or suspends business operations or the production of any or all of the Products; B. Seller is acquired by or transfers any or all of its rights to manufacture any Product to any third party, whether or not related, without Boeing's prior written concurrence; C. Boeing cancels this Agreement or any Order for cause pursuant to GTA Section 13.0 herein; D. In Boeing's judgment it becomes necessary, in order for Seller to comply with the terms of this Agreement or any Order, for Boeing to provide support to Seller (in the form of design, manufacturing, or on-site personnel assistance) substantially in excess of that which Boeing normally provides to its suppliers; E. Seller's trustee in bankruptcy (or Seller as debtor in possession) fails to assume this Agreement and all Orders by formal entry of an order in the bankruptcy court within sixty (60) days after entry of an order for relief in a bankruptcy case of the Seller, or Boeing elects to retain its rights to Licensed Property under the bankruptcy laws; F. Seller is at any time insolvent (whether measured under a balance sheet test or by the failure to pay debts as they come due) or the subject of any insolvency or debt assignment proceeding under state or non-bankruptcy law; or G. Seller voluntarily becomes a debtor in any case under bankruptcy law or, in the event an involuntary bankruptcy petition is filed against Seller, such petition is not dismissed within thirty (30) days. As a part of the license granted under this GTA Section 24.0, Seller shall, at the written request of Boeing and at no additional cost to Boeing, promptly deliver to Boeing any and all Licensed Property considered by Boeing to be necessary to satisfy Boeing's requirements for Products and their substitutes. 25.0 TERMINATION OF AIRPLANE PROGRAM 25.1 Program Termination The parties acknowledge and agree that Boeing may, in its sole discretion, terminate all or part of this Agreement, including any Order issued hereunder, by written notice to Seller, if Boeing decides not to initiate or continue production of the program which the Product supports, by reason of Boeing's determination that there is insufficient business basis for proceeding with such program. In the event of such a termination, Boeing shall have no liability to Seller except as expressly provided in GTA Section 25.2 below. 25.2 Termination Liability In the event of a termination of the program as described in 25.1 above, Boeing shall have no liability whatsoever to Seller, except to the extent of (i) any guaranteed minimum purchase, if any, as set forth in SBP Section 10.0, and (ii) any Orders issued prior to the date of the written notice to Seller identified in 25.1 above. Termination of such Orders shall be governed by GTA Section 12.0 herein. 26.0 PUBLICITY Without Boeing's prior written approval, Seller shall not, and shall require that its subcontractors and suppliers of any tier shall not, release any publicity, advertisement, news release or denial or confirmation of the same, regarding any Order or Products, or the program to which they may pertain. Seller shall be liable to Buyer for any breach of such obligation by any subcontractor. 27.0 PROPERTY INSURANCE 27.1 Insurance Seller shall obtain and maintain continuously in effect a property insurance policy covering loss or destruction of or damage to all property in which Boeing does or could have an insurable interest pursuant to this Agreement, including but not limited to Tooling, Boeing-furnished property, raw materials, parts, work-in-process, incomplete or completed assemblies and all other products or parts thereof, and all drawings, specifications, data and other materials relating to any of the foregoing in each case to the extent in the possession or under the effective care, custody or control of Seller or any agent, employee, affiliate, or subcontractor of Seller, in the amount of full replacement value thereof providing protection against all perils normally covered in an "all risk" property insurance policy (including without limitation fire, windstorm, explosion, riot, civil commotion, aircraft, earthquake, flood or other acts of God). Any such policy shall be with insurers reasonably acceptable to Boeing and shall (i) provide for payment of loss there under to Boeing, as loss payee, as its interests may appear and (ii) contain a waiver of any rights of subrogation against Boeing, its subsidiaries, and their respective directors, officers, employees and agents 27.2 Certificate of Insurance Upon written request from Boeing, Seller shall provide to Boeing's Procurement Representative certificates of insurance reflecting full compliance with the requirements set forth in GTA Section 27.1. Such certificates shall be kept current and in compliance throughout the period of this Agreement and shall provide for thirty (30) days advanced written notice to Boeing's Procurement Representative in the event of cancellation, non-renewal or material change adversely affecting the interests of Boeing. 27.3 Notice of Damage or Loss Seller shall give prompt written notice to Boeing's Procurement Representative of the occurrence of any damage or loss to any property required to be insured herein. If any such property shall be damaged or destroyed, in whole or in part, by an insured peril or otherwise, and if no Event of Default shall have occurred and be continuing, then Seller may, upon written notice to Boeing, settle, adjust, or compromise any and all such loss or damage not in excess of Two Hundred Fifty Thousand Dollars ($250,000) in any one occurrence and Five Hundred Thousand Dollars ($500,000) in the aggregate. Seller may settle, adjust or compromise any other claim by Seller only after Boeing has given written approval, which approval shall not be unreasonably withheld. 28.0 RESPONSIBILITY FOR PERFORMANCE Seller shall be responsible for it's requirements under this Agreement and any Order referencing this Agreement. Seller shall bear all risks of providing adequate facilities and equipment to perform each Order in accordance with the terms thereof. If any use of any facilities or equipment contemplated by Seller will not be available for any reason, Seller shall be responsible for arranging for similar facilities and equipment at no cost to Boeing, and any failure to do so shall not relieve Seller from its obligations. Seller shall notify and obtain approval from Boeing prior to moving work to be performed under this Agreement between Seller's various facilities. Seller shall include as part of its subcontracts those elements of the Agreement that protect Boeing's rights including but not limited to right of entry provisions, proprietary information and rights provisions and quality control provisions. In addition, Seller shall provide to its subcontractor's sufficient information to document clearly that the work being performed by Seller's subcontractor is to facilitate performance under this Agreement or any Order. Sufficient information may include but is not limited to Order number, GTA number or the name of Boeing's Procurement Representative. 28.1 Subcontracting Seller shall maintain complete and accurate records regarding all subcontracted items and/or processes. Seller's use of subcontractors shall comply with Seller's quality assurance system approval for said subcontractors. Unless Boeing's prior written authorization or approval is obtained, Seller may not purchase completed or substantially completed Products. For purposes of this GTA Section and this GTA Section only, completed or substantially completed Products shall not include components of assemblies or subassemblies. No subcontracting by Seller shall relieve Seller of its obligation under the applicable Order. No non-domestic metallic raw materials, composite materials or products, aircraft bearings or designated fasteners, or special processing may be incorporated in a Product unless: (a) Seller uses an approved source identified in the applicable specification or set forth in Boeing Document D1-4426 which is incorporated herein and made a part hereof by this reference or (b) Boeing has surveyed and qualified Seller's receiving inspection personnel and laboratories to test the specified raw materials and/or material process. No waiver of survey and qualification requirements will be effective unless granted by Boeing's Engineering and Quality Assurance departments. Utilization of a Boeing-approved source does not constitute a waiver of Seller's responsibility to meet all specification requirements. 28.2 Reliance Entering into this Agreement is in part based upon Boeing's reliance on Seller's ability, expertise and awareness of the intended use of the Products. Seller agrees that Boeing and Boeing's Customers may rely on Seller as an expert, and Seller will not deny any responsibility or obligation hereunder to Boeing or Boeing's Customers on the grounds that Boeing or Boeing's Customers provided recommendations or assistance in any phase of the work involved in producing or supporting the Products, including but not limited to Boeing's acceptance of specifications, test data or the Products. 28.3 Assignment Seller shall not assign any of its rights or interest in this Agreement or any Order, or subcontract all or substantially all of its performance of this Agreement or any Order, without Boeing's prior written consent. Seller shall not delegate any of its duties or obligations under this contract. Seller may assign its right to monies due or to become due. No assignment, delegation or subcontracting by Seller, with or without Boeing's consent, shall relieve Seller of any of its obligations under this Agreement or prejudice any rights of Boeing against Seller whether arising before or after the date of any assignment. This article does not limit Seller's ability to purchase standard commercial supplies or raw material. The prohibition set forth in this GTA Section 28.3 includes, without limitation (and the following shall be deemed to be "assignments"): (i) a consolidation or merger of Seller; (ii) a change in the ownership or voting rights of more than fifty percent (50%) of the issued and outstanding stock of any corporate Seller; (iii) any assignment or transfer which would otherwise occur by operation of law, merger, consolidation, reorganization, transfer or other significant change in corporate or proprietary structure; (iv) the sale, assignment or transfer of all or substantially all of the assets of Seller; and (v) where Seller is a partnership, a change in control in such partnership. 29.0 NON-WAIVER/PARTIAL INVALIDITY Any failures, delays or forbearances of Boeing in insisting upon or enforcing any provisions of this contract, or in exercising any rights or remedies under this contract, shall not be construed as a waiver or relinquishment of any such provisions, rights or remedies; rather, the same shall remain in full force and effect. If any provision of this contract is or becomes void or unenforceable by law, the remainder shall be valid and enforceable. 30.0 HEADINGS GTA Section headings used in this Agreement are for convenient reference only and do not affect the interpretation of the Agreement. 31.0 RESERVED 32.0 RESERVED 33.0 DISPUTES Boeing and Seller shall use their best reasonable efforts to resolve any and all disputes, controversies, claims or differences between Boeing and Seller, arising out of or relating in any way to this GTA or its performance, including, but not limited to, any questions regarding the existence, validity or termination hereof ("Disputes"), through negotiation. If a Dispute cannot be resolved by the functional representatives of Boeing and Seller, it shall be referred up through management channels of the Parties or their respective designees, for further negotiation. Any dispute that arises under or is related to this Agreement that cannot be settled by mutual agreement of the parties shall be resolved only as provided in SBP Section 5. Pending final resolution of any dispute, Seller shall proceed with performance of this Agreement according to Boeing's instructions so long as Boeing continues to pay amounts not in dispute. 34.0 RESERVED 35.0 TAXES 35.1 Inclusion of Taxes in Price Unless this Agreement or a Special Business Provisions, or Order issued under this Agreement specifies otherwise, the price of this contract includes, and Seller is liable for and shall pay, all taxes, impositions, charges and exactions imposed on or measured by this Agreement and the Orders issued hereunder, except for sales or use taxes on sales to Boeing ("Sales Taxes") for which Boeing specifically agrees to pay and which are separately stated on Seller's invoice. Prices shall not include any taxes, impositions, charges or exactions for which Boeing has furnished a valid exemption certificate or other evidence of exemption. Additionally, Buyer shall reimburse Seller for all personal property taxes applicable to the tooling after receipt by Buyer of Seller's invoice for such taxes for the amount of tax imposed by the state or the local taxing authority. 35.2 Litigation In the event that any taxing authority has claimed or does claim payment for Sales Taxes, Seller shall promptly notify Boeing, and Seller shall take such action as Boeing may direct to pay or protest such taxes or to defend against such claim. The actual and direct expenses, without the addition of profit and overhead, of such defense and the amount of such taxes as ultimately determined as due and payable shall be paid directly by Boeing or reimbursed to Seller. If Seller or Boeing is successful in defending such claim, the amount of such taxes recovered by Seller, which had previously been paid by Seller and reimbursed by Boeing or paid directly by Boeing, shall be immediately refunded to Boeing. 35.3 Rebates If any taxes paid by Boeing are subject to rebate or reimbursement, Seller shall take the necessary actions to secure such rebates or reimbursement and shall promptly refund to Boeing any amount recovered 36.0 OFFSET CREDITS To the exclusion of all others, Boeing or its assignee shall be entitled to all industrial benefits or offset credits which might result from this Agreement or Order. Seller shall provide documentation or information, which Boeing or its assignee may reasonably request to substantiate claims for industrial benefits or offset credits. Seller agrees to use reasonable efforts to identify the foreign content of goods, which Seller either produces itself or procures from other companies for work directly related to this Agreement. Promptly after selection of a non-U.S. subcontractor for work under this Agreement, Seller shall notify Boeing of the name, address, subcontract point of contact (including telephone number) and dollar value of the subcontract. EXECUTED in duplicate as of the date and year first written above by the duly authorized representatives of the parties. BOEING SELLER THE BOEING COMPANY Leonard's Metal, Inc. By and Through its Divisions Boeing Commercial Airplanes /s/ Peggy McDonald /s/ Rick Darrow - ------------------------------ ------------------------------- Name: Peggy McDonald Name: Rick Darrow Title: Procurement Agent Title: Program Manager Date: Date: EX-99 6 lmi8kpress03.htm 99.1 - PRESS RELEASE DATED 09/10/03 Press Release dated September 10, 2003

FOR IMMEDIATE RELEASE

LMI AEROSPACE, INC. AWARDED MULTI YEAR CONTRACTS

FOR SKIN KITTING PROGRAM FOR GULFSTREAM AEROSPACE

Over 600 components to be kitted and delivered to point of use

ST. LOUIS, September 8, 2003 – LMI Aerospace, Inc. (NASDAQ/NMS:LMIA) a leading provider of assemblies, kits and detail sheet metal and machined components to the aerospace, defense and semiconductor industries, announced today it has been selected by Gulfstream Aerospace, a wholly owned subsidiary of General Dynamics (NYSE:GD), to provide kitted skins including bonded leading edges, for a five-year project. The estimated annual value of these contracts based on current production rates for the large-cabin, ultra-range G500 and the large-cabin, ultra-long-range G550 is $7 million dollars, approximately $3.5 million of which is from existing contracts.

LMI has agreed to begin warehousing and preparing kitted product for delivery this month from a newly opened facility near Gulfstream’s Savannah, Georgia, facility. In November, the Company plans to make deliveries to Gulfstream’s production floor on a just in time basis.

“We are very pleased to have this opportunity to expand our business relationship with Gulfstream, which is one of our largest customers,” said Ronald S. Saks, CEO of LMI. “We believe this project will serve as a model for improving the assembly process at Gulfstream, and significantly lower Gulfstream’s total product cost. It is also a strategic milestone for LMI as we integrate components currently produced by several LMI and outside suppliers in order to provide a more comprehensive acquisition solution for our customers.”

LMI’s Savannah distribution center will use a combination of two card pull, Kanban and min/max consumption based orders to simplify scheduling. “We believe this business model, together with aligning some of our plants into customer dedicated work centers, will enable us to add considerable value to our customers. From our Tulsa, Savannah and future distribution centers, we plan to manage both domestic and foreign suppliers and coordinate product deliveries by LMI owned plants, allowing us to deliver higher level product directly to the user. Over time, we believe this model will be used extensively by our customer base, thereby fueling LMI’s growth, despite the current market challenges facing the industries we serve,” said Saks.

LMI Aerospace, Inc. is a leading supplier of quality components to the aerospace and technology industries. The Company operates twelve manufacturing facilities that fabricate, machine, finish and integrate formed, close tolerance aluminum and specialty alloy components for commercial, corporate, regional and military aircraft, laser, equipment used in the semiconductor and medical industries, and for the commercial sheet metal industries.

This press release includes forward-looking statements related to LMI Aerospace’s outlook for 2003, which are based on current management expectations. Such forward-looking statements are subject to various risks and uncertainties, many of which are beyond the control of LMI Aerospace, Inc. Actual results could differ materially from the forward-looking statements as a result, among other things, of the factors detailed from time to time in LMI Aerospace’s filings with the Securities and Exchange Commission, including those factors contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934