10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number                                              000-24293

LMI AEROSPACE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Missouri	43-1309065
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)
411 Fountain Lakes Blvd.,
St. Charles, Missouri	63301
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code    (636) 946-6525

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Common stock, $0.02 par value per share	NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes                    þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

o Yes                    þ No

Note —Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes                   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

þ Yes                   o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer þ
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

o Yes                   þ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter ended June 30, 2012, was $164,395,786.

There were 12,758,400 shares of common stock outstanding as of March 5, 2013.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates by reference portions of the Proxy Statement for the Registrant’s 2013 Annual Meeting.

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TABLE OF CONTENTS

Item No.		Page
PART I
1	Business	5
1A	Risk Factors	15
1B	Unresolved Staff Comments	22
2	Properties	22
3	Legal Proceedings	23
4	Mine Safety Disclosures	23
PART II
5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
6	Selected Financial Data	26
7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
7A	Quantitative and Qualitative Disclosures About Market Risk	37
8	Financial Statements and Supplementary Data	39
9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	62
9A	Controls and Procedures	62
9B	Other Information	62
PART III
10	Directors, Executive Officers, and Corporate Governance	63
11	Executive Compensation	64
12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	64
13	Certain Relationships and Related Transactions, and Director Independence	64
14	Principal Accountant Fees and Services	64
PART IV
15	Exhibits and Financial Statement Schedules	65
Signatures		66
Exhibit Index		67

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Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements.  LMI Aerospace, Inc. (“LMI Aerospace”, “we” or the “Company”) makes forward-looking statements in this Annual Report on Form 10-K (“Report”) and in the public documents that are incorporated herein by reference, which represent the Company’s expectations or beliefs about future events and financial performance.  These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events or results.  Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to under “Item 1A.  Risk Factors” in this Report and otherwise described in the Company’s periodic filings and current reports filed with the Securities and Exchange Commission (the “SEC”).

All predictions as to future results contain a measure of uncertainty and, accordingly, actual results could differ.  Among the factors that could cause actual results to differ from those contemplated, projected or implied by the forward-looking statements (the order of which does not necessarily reflect their relative significance) are:

● difficulties with the implementation of the Company’s growth strategy, such as integration problems with respect to Valent Aerostructures, LLC (“Valent”), the Company’s newly-acquired subsidiary, and other future acquisition targets, and unanticipated costs relating to the Company’s manufacture of new parts for its current customers and new customers;

● the Company’s ability to comply with its new debt covenants and the increased leverage the Company incurred in connection with its acquisition of Valent;

● performing effectively in the face of record high production rates, including integrating new people, equipment, and processes;

● the Company’s ability to accurately estimate its costs under fixed-price contracts including contracts for design-build programs;

● competitive pressures, such as pricing, relating to low-cost foreign labor, industry participation commitments made by the Company’s customers to foreign governments, and customers requiring discounts to achieve program extensions;

● changes in the quality, costs and availability of the Company’s raw materials, principally aluminum;

● the Company’s ability to stay current with technological changes, such as the development of alternative aerospace materials and new engineering software;

● governmental funding for certain military programs that utilize the Company’s products;

● the effect of terrorism and other factors that adversely affect the commercial travel industry;

● a reduction in the number of suppliers and increases in competition resulting from consolidation within the aerospace industry;

● supply chain performance and support;

● inability to deliver new products timely and within quality specifications;

● asserted and unasserted claims, and in particular, the Company’s ability to successfully negotiate claims relating to cost over-runs of work performed on certain customer contracts;

● general economic conditions, particularly with respect to the availability of, terms of and access to credit and debt instruments;

● access to and retention of qualified workers and management;

● environmental matters;

● changes in accounting principles or new accounting standards;

● compliance with laws and regulations; and

● the political environment in Mexico, where the Company has manufacturing operations.

In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.  Accordingly, investors are cautioned not to place undue reliance on the forward-looking statements.  Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Investors should, however, review additional disclosures made by the Company from time to time in its periodic filings with the SEC.

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This Report and the documents incorporated herein by reference should be read completely and with the understanding that the Company’s actual future results may be materially different from what the Company expects.  All forward-looking statements made by the Company in this Report and in the Company’s other filings with the SEC are qualified by these cautionary statements.

PART I

ITEM 1. BUSINESS

General Overview

LMI Aerospace is a leading supplier of structural assemblies, kits and components, and design engineering services to the aerospace and defense markets.  The Company is comprised of talented and dedicated people committed to providing outstanding service to our customers.  We provide a broad array of manufacturing capabilities, as well as engineering and value-added services to the large commercial, corporate and regional, and military aircraft markets.  We also provide prototyping, testing and design capabilities to customers in support of new product development and in-service aircraft.  LMI Aerospace is a preferred supplier to aircraft original equipment manufacturers (“OEMs”) and Tier 1 aerospace suppliers.  In addition to aerospace products, we produce components and assemblies for laser equipment used by semiconductor equipment manufacturers, ProWall™ engineered reusable containers for commercial, industrial and military applications, and electronic and electrical wire harnesses, cable assemblies, and mechanical sub-assemblies for the air and rail traffic control, medical equipment, telecommunications, and heavy equipment industries.

Founded in 1948 as a manufacturer of components for the large commercial aircraft market of the aerospace industry, LMI Aerospace became a publicly-held company in 1998.  Historically, our business was primarily dependent on the large commercial aircraft market, specifically with one principal customer.  In order to diversify our product and customer base, we implemented an acquisition and marketing strategy in the late 1990’s that has broadened the number of industries to which we sell our products and services and, within the aerospace industry, diversified our customer base to reduce our dependence on any one principal customer.

In July 2007, we acquired San Diego, California-based D3 Technologies, Inc. (“D3”), a premier design and engineering services firm.  D3 performs structural design and analysis work for manufacturers of commercial, corporate and regional, and military aircraft and provides the engineering expertise required to support design-build programs internal to LMI Aerospace.  D3’s engineers have worked on a range of design and analysis projects, including airframe, electro/mechanical and hydraulic/pneumatic systems, and have expertise in mechanical, structural and system design; stress and finite element analysis; tool design and engineering; computer numerical control (“CNC”) programming; logistics and program support; and avionics software and hardware development.

In January 2009, we acquired Everett, Washington-based Integrated Technologies, Inc. (“Intec”), a provider of advanced materials testing, manufacturing and design services to the aerospace, defense and transportation industries.  Intec’s primary business is designed to support composite testing, manufacturing and research by analyzing new and existing materials, including organic matrix composites, ceramics, metal matrix composites and metal.  The acquisition of Intec, together with other initiatives, has provided composite assembly and component production capabilities, allowing LMI Aerospace to broaden its customer offerings and to transition to the production of non-metallic products.

In August 2012, we acquired Kirkland, Washington-based TASS Inc. (“TASS”), a premier after-market engineering and support services firm. TASS delivers high-end engineering solutions to aircraft manufacturers, airlines, Maintenance, Repair and Overhaul (“MRO”) services companies and leasing companies worldwide.  We believe the acquisition of TASS, whose expertise lies in engineering for aircraft repairs and modifications and providing airline fleet management services, will provide us with a global presence in the rapidly growing after-market engineering arena and build on our long and successful history with Boeing products.  TASS also provides the Company with the ability to internally source product support for parts manufactured by the Company to the global airline fleet.  See Note 2 of the Notes to Consolidated Financial Statements in Item 8 below.

In December 2012, we acquired Kansas City, Missouri-based Valent, a provider of complex, structural components, major sub-assemblies and machined parts for OEMs and Tier 1 airframe manufacturers in the aerospace and defense industries.  Valent provides significant content for several major commercial, business jet and military platforms including the Boeing 737, 747-8, 777, 787, V-22, F-15, F-18 and Gulfstream G650.  We believe the acquisition will position LMI Aerospace as an industry leading aerostructure supplier with significant scale.  The resulting increased scale, complementary product offerings and enhanced project management capabilities of Valent are expected to drive further growth from existing platforms by offering our customers more diversified product and service offerings, deeper customer relationships and greater leverage of our extensive manufacturing and supply chain network.  In addition, we believe Valent’s assembly and complex precision machining capabilities will allow the Company to compete for larger and more complex assemblies and design-build projects.  See Note 2 of the Notes to Consolidated Financial Statements in Item 8 below.

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Our Strategy

Our current strategy focuses on organic growth of all of our businesses coupled with the integration of our new capabilities and processes from our recent acquisitions.  We expect the additional high speed and hard metal machining expertise, deepened program management skills and after market support services from TASS and Valent will further expand our product offerings and will allow us to pursue additional complex assembly and design-build opportunities to capitalize on our strengths.

We believe that OEMs and Tier 1 aerospace suppliers will continue to outsource the design and manufacturing of components, assemblies and sub-systems to fewer preferred suppliers who are capable of meeting increasing market demands for on-time delivery and quality in a cost effective manner.  Accordingly, we continue to focus on remaining well positioned to benefit from these trends by:

● Building critical mass and enhanced capabilities to win larger and more complex assembly and design-build projects as a trusted and aligned supplier to our customers.

● Making project management the cornerstone of our competitive advantage.

● Providing unique integrated solutions to our aerospace customers through creative and value driven design and build processes throughout the product lifecycle.

● Achieving organic growth by executing our long-term business development strategy so that the engineering and fabrication segments continue to grow their expertise and sales while supporting a growing design-build operation.

● Investing in additional capacity to accommodate customer growth.

● Striving for more balance within our various markets, customers and platforms.

● Placing the highest priority on serving our external and internal customers with consistent emphasis on quality, delivery performance, integrity, ethical behavior and responsibility to our communities.

● Developing global low cost sources of supply through ownership or use of our supply chain to complement the engineering and build capabilities provided by our U.S. offices and factories, thus enabling us to better market to global customers.

● Enhancing those business processes necessary to effectively execute design-build projects.

● Preparing for a future enterprise resource planning system installation.

● Improving information and facility security, with emphasis on export control requirements.

● Investing in developing our work force by providing formal education support, skill training to provide flexibility and capability, and leadership training to enable us to reach our revenue growth targets and provide added management depth.

● Continuing to unify our divisions’ approaches in our dealings with our customers, suppliers and internal partners.

We believe these strategic actions will enhance our ability to successfully compete in the future.  Additionally, we continue to utilize defined strategic initiatives in our Aerostructures and Engineering Services segments with detailed action plans to further solidify the competitive position of each segment.

Financial Information About Our Business Segments

Financial information with respect to our business segments, including revenues and operating earnings is contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 below, and in Note 17 of the Notes to Consolidated Financial Statements in Item 8 below.

Description of Business by Segment

We operate in two business segments consisting of our Aerostructures segment and our Engineering Services segment.  Our Aerostructures segment fabricates, machines, finishes, integrates, assembles and kits machined and formed close tolerance aluminum, specialty alloy and composite components and higher level assemblies for use by the aerospace and defense industries.  We also offer our customers value-added services related to the design, production, assembly and distribution of aerospace components and deliver kits of products directly to customer points of use.  We believe these value-added services strengthen our position as a preferred supplier by improving overall production efficiencies and value for our customers.  With the acquisition of Valent, the Aerostructures segment broadens its capabilities in high speed machining, complex assemblies, processing and major program management.

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Our Engineering Services segment provides a complete range of design, engineering and program management services, supporting aircraft product lifecycles from conceptual design, analysis and certification through production support, fleet support, and service life extensions via a complete turnkey engineering solution to leading OEMs and Tier 1 aerospace suppliers.  Our team of engineers has extensive experience across multiple disciplines, enabling us to creatively address the needs of our customers throughout the life-cycle of our customers’ programs.  We have the ability to work with OEM customers to launch new programs by assisting with preliminary and conceptual design, certification planning support, risk mitigation and producibility trade studies, and the development of high level program schedules and resource planning.  Working with our customers in the early stages better positions us to provide tooling design support in the fabrication stage as well as modifications and upgrades throughout the platform’s life-cycle.

Our Aerostructures and Engineering Services segments have combined their experience and expertise to form an integrated team that can provide customers with fully integrated, seamless, innovative and strategic design-build solutions.  Design-build projects require close collaboration from conception through production.  Our consolidated team is committed to a high level of customer service and works together to ensure each project progresses smoothly through the design-to-production process.

Additional Information

We are a Missouri corporation.  Our principal executive offices are located at 411 Fountain Lakes Blvd., St. Charles, Missouri  63301.  Our Internet address is www.lmiaerospace.com.  Interested readers can access our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  These documents may be accessed free of charge on our corporate website at the following address: http://ir.lmiaerospace.com/sec.cfm.  These documents are also available after filing with the SEC and may be found, through the SEC website at www.sec.gov.  Such reports are generally available on the day they are filed.  Additionally, we will furnish interested readers a paper copy of such reports, upon request, free of charge.  Information contained on or accessible through our corporate website or the SEC’s website is not part of this Report.

Interested readers can access our Code of Business Conduct and Ethics, our Corporate Governance Principles and the charters of the following committees of our Board of Directors: the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee, free of charge on our corporate website at the following address: http://ir.lmiaerospace.com/governance.cfm.

Customers and Products & Services

Customers

Our principal customers are primarily leading OEMs and Tier 1 suppliers in the large commercial, corporate and regional, and military aircraft markets of the aerospace industry.  For the year ended December 31, 2012, direct sales to our six largest customers in terms of revenue (The Boeing Company, Gulfstream Aerospace Corporation, Spirit AeroSystems (“Spirit”), Bombardier, Triumph Group, and Sikorsky Aircraft Corporation) accounted for a total of approximately 77% of our sales.  Spirit is Valent’s largest customer so concentrations to this customer are expected to increase in 2013. The loss of, or substantial reduction of orders from, any of these customers could materially affect our sales and profitability.  See “Item 1A.  Risk Factors – Risks Related to Our Company – Sales to a limited number of customers represent a significant portion of our revenues and our long-term agreements with these customers are generally terminable upon written notice ” and Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Year ended December 31, 2012 compared to year ended December 31, 2011– Aerostructures Segment in Item 7 below and Note 16 of the Notes to Consolidated Financial Statements in Item 8 below.

We have entered into long-term agreements with many of our customers whereby the customer generally commits to purchase all of its requirements of a particular component from us, subject to termination rights.  When operating under these agreements, our customers issue purchase orders or provide a shipment signal to schedule delivery of products at a previously negotiated price.  Our products sold outside of long-term agreements are based upon previously negotiated pricing and specific terms and conditions on purchase orders.

Products & Services

Our Aerostructures segment manufactures more than 40,000 products for integration into a variety of aircraft platforms manufactured by leading OEMs and Tier 1 aerospace suppliers.  We are the sole-source provider, under long-term agreements, of many of the products that we manufacture.  Substantially all of our components and assemblies are based on designs and specifications prepared and furnished by our customers.  The primary aerospace products we manufacture and the platforms into which they are integrated, include:

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Product & Services	Models
Aerostructures Segment
Leading edge assemblies, wing slats and flap skins/components, ailerons	Gulfstream Aerospace Corporation: G-280, G-450, G-550, G-650 The Boeing Company: 737, 777, 787 Bombardier, Inc.: Learjet 45 & 60, Challenger 604/605, Dash 8, CRJ200/700/900/1000, Global Express Spirit AeroSystems: Gulfstream G-280, G-650 Embraer: KC-390
Winglet leading edges and modification kits	Aviation Partners Boeing: 737, 757, 767 FACC AG: Boeing 737, 757
Fuselage and wing skin	Gulfstream Aerospace Corporation: G-450, G-550, G-650 The Boeing Company: 737, 747, 767, 777, 787 Bombardier, Inc.: Learjet 45 & 60, Dash-8, CRJ200/700/900
Helicopter cabin and aft section components and assemblies	Sikorsky Aircraft: UH-60 Black Hawk, MH-60 Seahawk Triumph Group: UH-60 Black Hawk, MH-60 Seahawk
Wing panels	The Boeing Company: 747 Bombardier, Inc.: CRJ 200/700/900
Tail cone assemblies	Mitsubishi Aircraft Corporation (“MITAC”): Mitsubishi Regional Jet (“MRJ”)
Thrust reversers and engine nacelles/cowlings	Gulfstream Aerospace Corporation: G-450, G-650 Boeing Commercial: 737, 747, 777 Boeing Defense: B-52 Buffalo
Door components, assemblies and floor beams	Gulfstream Aerospace Corporation: G-450 The Boeing Company: 737, 747 Bombardier, Inc.: Challenger 604
Cockpit window frames and landing light lens assemblies	Gulfstream Aerospace Corporation: G-650 The Boeing Company: 737, 747, 767, 777, MD-80, KC-10 Bombardier, Inc.: Learjet 45 & 60, Challenger 300
Cockpit crew floor and bulkhead structure assemblies	Spirit Aerosystems: Boeing 737
Wheel well assemblies	The Boeing Company: 737 Spirit Aerosystems: Boeing 737
Detail interior components	Gulfstream Aerospace Corporation: G-450, G-550 The Boeing Company: 737, 747, 767, 777
Structural sheet metal, machined, milled and extruded components	Gulfstream Aerospace Corporation: G-450, G-550, G-650 Triumph Aerostructures – Vought Aircraft Division: Boeing 737, 747, 767, 777,  Gulfstream G-450, G-550 Boeing Commercial: 737, 747, 767, 777 Boeing Defense: F-15 Eagle, F/A-18 Hornet, C-17 Globemaster Bombardier, Inc.: CRJ 200/700/900 Spirit AeroSystems: Boeing 737, 777, 787

Housings and assemblies for gun turrets	The Boeing Company: AH-64 Apache Alliant Techsystems, Inc .:  AH-64 Apache
Auxiliary power unit components	Gulfstream Aerospace Corporation: G-550 The Boeing Company: V-22 Osprey
Electronic rack assembly	Spirit Aerosystems:Boeing 787

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Fans, heat exchangers and various assemblies	Cymer, Inc.: ELS 7000, ELS 6010, XLA 100
ProWall™ engineered containers	California Industrial Facilities, Inc., Atlas Van Lines, United Van Lines
Assemblies and components for rail yard switching equipment	General Electric

Our Engineering Services segment provides a complete range of engineering design, analysis, repair, certification and program management services for the aerospace industry.  The following table describes some of the engineering services we provide as well as the platforms into which they are integrated:

Engineering Services Segment	Models
Structural design and analysis
Wing/wingbox, fixed and moveable leading edges/trailing edges, fuselage, empennage, tail cone design	Boeing Commercial : 777, 747-8, 787-8/-9 Spirit AeroSystems: Boeing 747-8, 787-8, Gulfstream G-280, G-650, Airbus A-350 Triumph Aerostructures - Vought Aircraft Division: Boeing 787-8 Lockheed Martin Aeronautics Company: JSF F-35 Bombardier, Inc.: Learjet L-85 MITAC: MRJ
Winglet/wing mod design	Aviation Partners Boeing: 757, 767 Spirit AeroSystems: Gulfstream G-280, G-650
Nacelle, engine cowl, thrust reverser design	NORDAM: PD427 Fan Cowl (Hawker 400)
Weight improvement engineering	Boeing Commercial: 747-8, 787-8 Spirit AeroSystems: Boeing 787-8, Gulfstream G-280, G-650 Triumph Aerostructures - Vought Aircraft Division:  Boeing 787-8
Helicopter fuselage, cockpit, cabin frames, skins, longerons, beams	Spirit AeroSystems: Sikorsky CH53K
Aircraft modification engineering	Boeing Commercial: 747-LCF, 777-F Boeing Defense: F/A-18A/B/C/D Hornet, F/A-18E/F Super Hornet, EA-18G Growler
Systems design and integration	Boeing Commercial: 747-8, 787
Tool design and fabrication	Boeing Commercial: 777, 747-8, 787 Boeing Defense: MMA Spirit AeroSystems: Boeing 747-8 Triumph Aerostructures - Vought Aircraft Division: Boeing 787, 747-8, C-17, Northrop Grumman Global Hawk AMRO Fabrication Corporation: Boeing 787-9
Manufacturing engineering	DCR/Lockheed:  JSF
After-market engineering and support services	Boeing Commercial and other airlines
Aviation training system	Northrop Grumman: C-2A Greyhound, E-2C Hawkeye, E-2D Advanced Hawkeye

Aviation maintenance engineering USS Nimitz (CVN-68), USS Abraham Lincoln (CVN-72),  USS George Washington (CVN-73), USS John C Stennis (CVN-74), USS Carl Vinson (CVN-70) Naval Air Station: Lemoore, CA, Oceana, VA, Atsugi, Japan, Coronado, CA, Norfolk, VA, Jacksonville, FL Marine Corps Air Station: Cherry Point, NC, Beaufort, SC, Iwakuni, Japan, Miramar, CA

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Aviation system software engineering Northrop Grumman: Fire Scout, Sea Scout Sikorsky Aircraft: SH-60 Sea Hawk, HH-60 Jay Hawk,  MH-60 Black Hawk Space and Naval Warfare Systems Center (Pacific) Naval Air Station: Key West, FL, Jacksonville, FL

Manufacturing Process

Fabrication

We deliver a broad range of fabrication capabilities ranging from a single-piece component to complex, multiple-quantity orders.  Our abilities include coordinate measuring machine inspection, laser scribe, tooling and engineering.  We can bend, stretch, draw, stamp, punch and cut a myriad of materials, including aluminum alloys, stainless steel, titanium and other metals and non-metallic materials.  We organize our manufacturing facilities by value streams for a particular manufacturing process.  Depending on the component, we utilize either a forming process or a machining process.  Each value stream is staffed by a team of operators who are supported by a supervisor, lead operators and quality inspectors.  Throughout each stage of the manufacturing and finishing processes, we collect, maintain and evaluate data, including customer design inputs, process scheduling, material inventory, labor, inspection results and completion and delivery dates.  Our information systems employ this data to provide accurate pricing and scheduling information to our customers as well as to establish production standards used to measure internal performance.

We use several different processes in manufacturing components, including:

● fluid cell press;

● sheet metal and extrusion stretch;

● skin stretch;

● stretch draw;

● hot joggle;

● machining and turning;

● CNC brake forming and turret punch; and

● roll forming.

These processes shape or form aluminum, stainless steel or titanium sheet metal or other metals and non-metals and extrusion, known as a work piece, into components by applying pressure through impact, cutting, stretching or pressing, which causes the work piece to conform to a die.  The shapes may be simple with a single angle, bend or curve or may be complex with compound contours having multiple bends and angles.  Some processes incorporate heat to soften the metal prior to or during forming.

Machining

Our machining capabilities include high speed mills, routers, lathes and water jets.  We operate over 100 CNC machines with RPM’s up to 33,000 and component sizes up to 235 inches.  The machining centers employ over 30 CNC programmers with proficiency in Catia, Unigraphics, Mastercam and Vericut.  We produce components using close-tolerance machining methods.  These methods involve the machining of various metals, such as stainless steel, aluminum, monel, inconnel, Kevlar, titanium and numerous varieties of steel.  We have the capability of machining aluminum and steel in both heat-treated and non-heat-treated conditions.

We machine parts through conventional and CNC machining methods from raw material and forgings.  In addition, complex machining of parts is accomplished through the use of engineered tools or programs to produce intricate and close tolerances with very restrictive finish requirements.  Each machining facility is also set up to complete turnkey research and development projects to better support customers’ engineering changes.

Value-Added Services

In addition to products, we offer various value-added services that are intended to result in both cost and time savings.  These services include:

● finishing;

● assembly;

● kitting;

● distribution;

● composite testing services;

● integrated testing services;

● engineered tool design, fabrication and repair; and

● prototyping and manufacturing producibility design.

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Finishing

Our finishing plants are located in Tulsa, Oklahoma, Cuba, Missouri, and Mexicali, Mexico and offer chemical milling, processing, painting and polishing of components.  We deliver finished products that meet or exceed standards of our commercial, corporate and regional, and military aircraft customers.  We have received quality approvals from most major aircraft manufacturers in the United States and Canada.

Assembly

We are an industry leader in the assembly of detail components into large sub-assemblies or finished-assemblies.  We apply this critical manufacturing step to a range of products in the commercial and corporate and regional aircraft markets, as well as military aircraft, for both fixed-wing and rotor craft.  The parts for assembly come from supply chain and LMI Aerospace’s fabrication and machining facilities.  The assembled product goes direct to the customer. Customers who receive our assemblies include: The Boeing Company, Spirit AeroSystems, Sikorsky Aircraft Corporation, Gulfstream Aerospace Corporation, and Triumph Group.

Kitting

In support of our customers’ lean and best practice initiatives, we offer kitting services to help streamline the flow of components to their assembly lines.  Our facility in Savannah, Georgia is designed to kit manufactured components and deliver to customer points of use in a just-in-time manner.  The location also serves as a warehousing and detail storage facility where finished goods may be stored and kitted to customer specifications upon demand.

Distribution

We deliver value-added services to our customers through our distribution center located in Tulsa, Oklahoma.  This facility is designed with high-density storage systems that support storage and direct shipping of products to our customers’ points of use as well as cut to size programs of raw material for our internal plants.  This warehousing and just-in-time delivery supports and conforms to our customers’ lean manufacturing processes.  Additionally, we own a fleet of paneled trucks that are utilized for transporting product from our machining/fabrication facilities to our processing facilities, to our assembly facilities and then to our customers.

Composite Testing

Our composites testing organization provides material characterization and certification services for both basic materials as well as structural elements.  We utilize an industry leading technical staff to support customers like The Boeing Company, Lockheed Martin Aeronautics Company, Alliant Techsystems Inc., Cytec Industries Inc. and others with U.S. Federal Aviation Administration (“FAA”) certification programs, dynamic testing for full-scale fighter wings, development of material allowables, completion of Quality Assurance testing and other testing services utilizing state-of-the-art National Aerospace and Defense Contractors Accreditation Program (“NADCAP”) accredited (SAE 7101, ISO 17052) facilities.

Integrated Testing Services

Our Composites Technical Center of Excellence integrates engineering expertise in composites development, design, and certification with our composites testing organization to provide turn-key support for testing requirements.  This coordination allows our customers to define their testing needs and have the engineering and testing of the required components provided as one integrated service.

Engineering Tool Design, Fabrication, and Repair

Our tooling organization provides tooling design, fabrication and repair services for a wide range of projects from components, small assembly and drill jigs to determinant assembly tooling and planning.  We maintain an Approved Supplier List for our tooling projects.  These suppliers have been audited and approved by our Quality Department and meet quality standards for delivery.

Prototyping and Manufacturing Producibility Design

We provide prototyping and manufacturing producibility services to commercial, corporate and regional, and military aircraft customers.  These services include manufacturing and inspection planning as well as producibility assessments and prototype support.

Backlog

As a service provider, our Engineering Services segment does not typically utilize backlog to monitor its operations, other than the fixed price backlog for the MITAC and Embraer design-build projects.  Our Aerostructures segment’s backlog, together with our Engineering Services segment’s fixed price backlog for the MITAC and Embraer design-build projects is displayed in the following table:

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	As of December 31, ($ in millions)
	2012		2011
Total	$	371.4	$	220.8
Portion deliverable within 12 months	$	270.9	$	159.2

We have included our best estimate of backlog for Valent at December 31, 2012 in our amounts above, based upon open orders as reported by Valent.  There are certain inconsistencies in the systems and policies of the combined entities relating to entering orders received from customers, which is our main measuring tool for backlog.  As we gain more knowledge about these inconsistencies and implement changes to synchronize them, it may result in an adjustment to backlog in future periods.

Our customers often modify purchase orders to accelerate or delay delivery dates.  The level of unfilled orders at any given time during the year will be materially affected by our customers’ purchasing policies, the timing of our receipt of orders and the speed with which those orders are filled.  Moreover, sales during any period may include sales that are not part of the backlog at the end of the prior period.  See “Item 1A.  Risk Factors – Risks Related to Our Company – We may not realize all of the sales expected from our existing backlog.”

Raw Materials and Procurement Practices

We manufacture the majority of our components from aerospace quality aluminum sheet metal, forgings and extrusion.  We also use steel, titanium, inconel, monel and other metals to support the balance of our components.  We purchase the majority of these materials and hardware through a contract we have negotiated with producers of aluminum products as well as some right to buy contracts with certain customers.  These contracts are designed to provide an adequate supply of material at predictable pricing levels.  If supply is not available through these agreements, we use a variety of mills and distributors to support our needs.  We believe that currently there are adequate alternative sources of supply.  For the year ended December 31, 2012, we purchased approximately 66% of the raw materials used in production from four suppliers.

In line with our customers’ demands for more sophisticated and complex products, we have expanded the amount of assembled products we provide.  As a result, we have experienced a greater need to subcontract with capable third party suppliers for strategic components.  To meet this challenge, we established a management procurement process designed to develop strategic relationships with key suppliers and to manage the supply chain to ensure the timely delivery of quality components.  For the year ended December 31, 2012, we purchased approximately 49% of the procured parts used in assembled products from three suppliers.

Quality Assurance and Control

Our Aerospace Quality Systems, which apply to both of our segments, are consistently reviewed and updated to comply with the current requirements of ISO9001, AS9100 and NADCAP special processes quality requirements.  The ongoing review and updating of our processes have allowed our fabrication facilities with third party ISO9001/AS9100 registrations to maintain those certifications for 2013 and beyond.

Our quality systems include the quality review of work order masters and outside purchase orders to ensure that the flow-down of our customer’s requirements is being addressed both internally and externally.  The quality review of the work order master also ensures that the necessary inspection operations are properly located within the work order to verify and control the outcome of the fabrication processes.  We use an ongoing employee training program and lean manufacturing techniques to assist employees in becoming familiar with any changes in our procedures or special customer requirements.  We use an internal auditing program for each of the facilities to ensure that the training is effective and to ensure ongoing compliance with industry and customer required standards.  The internal auditing is provided by a combination of quality engineer/auditors located in some of our facilities and corporate quality engineer/auditors traveling to our individual facilities from our headquarters to perform internal audits.  In addition, we utilize a first part buy-off at each operation during the fabrication and machining processes as well as final inspection of parts to verify their compliance with the customers’ configuration requirements.

As part of our quality systems, we also use the AS9102 Rev A standard and associated forms to perform First Article Inspections.  Our Corporate Quality Group maintains our Approved Supplier List (“ASL”) for all facilities.  This process includes reviewing surveys, performing on-site audits, and constantly monitoring customer ASLs to verify that suppliers are maintaining their customers’ direct approvals.

The deployment of our quality systems and the sharing of best practices is accomplished through a Quality Council composed of management from the Quality Departments across the enterprise.  The process ensures efficient implementation of customer and industry requirements, as well as increased visibility for changes to the quality system, both from internal and external influences.

In addition, our Engineering Services segment conducts monthly management review meetings with the segment’s executive level team, analyzing internal processes and performance to ensure that we meet customer expectations with positive measurable results.  Suppliers of our Engineering Services segment are approved through our supplier rating system and are maintained in our ASL database.  Fabrication suppliers of our Engineering Services segment are reviewed on a continual basis with documented quality performance reviews and quality deliverable reviews.  Certification documentation is reviewed through preliminary design reviews and critical design reviews by our engineering department and is routed through our internal quality design verification group for verification and validation of data.  Engineering Services sites are required to go through a quality assurance internal audit program every year to ensure the effectiveness of our quality management system structure.  Final audit reports are reviewed by the segment’s executive level team, site director, and internal audit team to assess required process improvements.

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This attention to quality systems and business processes, as well as our certifications, have allowed us to remain an approved supplier for many of the leading OEMs and Tier 1 suppliers such as Gulfstream Aerospace Corporation, The Boeing Company, Bombardier, Inc., Sikorsky Aircraft Corporation, Spirit AeroSystems, Lockheed Martin Aeronautics Company, Cessna Aircraft Company, Raytheon Company, Goodrich Corporation and others.

Sales and Marketing

Our Marketing and Business Development ("M&BD") team targets three market sectors: corporate and regional aircraft, large commercial aircraft, and military aircraft.  At each of our facilities, customer service representatives establish and maintain a business relationship between customers and our plants with a focus on customer satisfaction.

Awards of new work for the Aerostructures segment are generally processed by a Request for Quotation (“RFQ”).  Upon receipt, the RFQ is reviewed by a team consisting of M&BD, operations, Advanced Programs, estimating, supply chain, engineering, facility management and other personnel, as required.  A bid decision is made if the team determines that the project fits our strategic goals and is within our manufacturing and supply chain management capabilities, and a Proposal Response is developed.  The majority of new programs are awarded on a competitive bid basis.  If engineering is evolving and the effort spans multiple facilities, a Project Manager and a support team are assigned.  The project team will coordinate customer requirements, schedules and manufacturing approach across the organization.  On selected projects, the Aerostructures Program Management Office (“PMO”) provides performance data and metrics to the Project Manager.  PMO also coordinates with the project team on a regular basis for changes to be communicated with the customer.  There are multiple levels of communication with our customers that include the Executive Management, Program Manager (primarily for on-going efforts), the Project Manager, PMO (for development efforts) and corporate/plant engineering for clarification of requirements and resolution of issues.

Awards of new work for the Engineering Services segment and for design-build programs generally begin with a customer inquiry in the form of a Request for Proposal or similar vehicle.  Upon receipt, the opportunity is logged, and a cross-functional bid/no-bid decision is facilitated by the M&BD team to assure alignment with Company strategy, capability and capacity.  In the event of a bid decision, the proposal response is developed and managed within the M&BD team with assistance from a proposal team consisting of representatives from operations, Program Management, quality engineering, tooling, estimating and other disciplines as required.  The M&BD team also facilitates the cross-functional execution of our business strategy as it pertains to marketing and business development.

The M&BD team also serves as the main focal point for sales and marketing activities relating to the Aerostructures, Engineering Services and design-build programs, working in conjunction with the Program Managers, the Director of Advanced Programs, and other Company personnel to ensure seamless customer service and integrated responses to customer inquiries.  This team’s main areas of responsibility include establishing and maintaining ongoing business relationships with our customer base, identifying new customer opportunities and managing responses to all proposal activity.

The Aerostructures General Managers, Directors of Engineering Operations, members of the PMO and the organizations they oversee directly engage with existing customers and programs.  All internal organizations work together to maintain and expand new and existing customer relationships.

Competition

Our competitors in the aerospace industry consist of a large, fragmented group of companies, including certain business units or affiliates of our customers.  However, we are unaware of any single company in the aerospace industry that competes in all of our business lines.  We believe competition within the aerospace industry will increase substantially as a result of industry consolidation, trends favoring greater outsourcing of assemblies, components and design engineering, the reduction of the number of preferred suppliers and increased capabilities of foreign sources.  In all of our industries, some of our competitors, including business units affiliated with our customers, have financial, production and other resources that are substantially greater than ours.

We believe participants in the aerospace industry compete primarily with respect to delivery, price and quality.  We also believe that foreign aerospace manufacturers and engineering service providers are becoming an increasing source of competition, due largely to foreign manufacturers’  and engineering service providers access to low-cost labor.  Within the aerospace industry, the prevalence of industry participation commitments, pursuant to which domestic OEMs agree to award production work to foreign manufacturers in order to obtain orders for aircraft from airlines in that country, is also driving this trend.  See “Item 1A.  Risk Factors – Risks Related to Our Industry – We may not be able to maintain or improve our competitive position because of the intense competition in the markets we serve .”

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Governmental Regulations and Environmental Compliance

Our operations are subject to extensive and frequently changing federal, state and local laws and substantial regulation by government agencies, including the U.S. Environmental Protection Agency (“EPA”), the U.S. Occupational Safety and Health Administration (“OSHA”), the FAA and the U.S. Department of Defense.  Among other matters, these agencies impose requirements that:

● regulate the handling, transportation and disposal of hazardous materials generated or used by us during the normal course of our operations;

● govern the health and safety of our employees; and

● require that we meet standards and licensing requirements for aerospace components.

In addition, we may become liable for the costs of removal or remediation of hazardous substances released on or in our facilities without regard to whether we knew of, or caused, the release of such substances.  This extensive regulatory framework imposes significant compliance burdens and risks and, as a result, may substantially affect our operational costs.

Furthermore, we are subject to U.S. Export Regulations, including but not limited to the Arms Export Control Act (“AECA”) and the associated International Traffic in Arms Regulations (“ITAR”), as well as other federal regulations promulgated by various departments within the U.S. government, including the Foreign Corrupt Practices Act (FCPA).  See “Item 1A - Risk Factors – Risks Related to Our Industry – Compliance with and changes in environmental, health and safety laws and other laws that regulate the operation of our business and industry standards could increase the cost of production and expose us to regulatory claims.”

We believe that we are currently in material compliance with applicable laws and regulations, and we are not aware of any material environmental violations at any of our current or former facilities.  There can be no assurance, however, that our prior activities did not create a material environmental situation for which we could be responsible or that future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations or an increase in the amount of hazardous substances generated or used by our operations) will not result in any material environmental liability to us or result in a material adverse effect to our financial condition or results of operations.

Employees

As of December 31, 2012, we had approximately 2,420 full-time employees, of whom approximately 20 served in executive positions, 460 were engineers and engineering-related personnel, 240 served in administrative positions and 1,700 were engaged in manufacturing operations.  None of our employees are subject to a collective bargaining agreement, and we have not experienced any material business interruption as a result of labor disputes since our inception.  We believe that we have an excellent relationship with our employees.

We strive to continuously train and educate our employees, which enhances the skill and flexibility of our work force. Through the use of internally developed programs and our tuition reimbursement programs, we seek to attract, develop and retain the personnel necessary to achieve our growth and profitability objectives.  Our internally developed programs include formal classroom, on-the-job, hands-on training, and lean manufacturing training developed jointly with external resources.

Seasonality

We do not generally experience any seasonality in the demand for our products.

Foreign Operations

The Company has a manufacturing facility in Mexico and small engineering offices in England and Australia.  The Company did not have any sales to a foreign country greater than 10% of its total sales in 2012, 2011 or 2010.  The amounts of profitability and identifiable assets attributable to foreign sales activity were not material when compared with revenue, profitability and identifiable assets attributed to United States domestic operations during 2012, 2011 or 2010.  The Company is not subject to any significant foreign currency risks since significantly all sales are made in United States dollars.  See “Item 1A - Risk Factors – Risks Related to Our Company – Risks associated with foreign operations could adversely impact the Company.”

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ITEM 1A. RISK FACTORS

You should carefully consider the following risks and other information contained in or incorporated by reference in this Report when evaluating our business and financial condition.  These risks may adversely affect our business, financial condition and operating results.

Risks Related to Our Company

Our future success will depend, to a significant extent, on our ability to engineer and produce new and more sophisticated products to meet the needs of our customers.

We believe that the commercial aircraft, military and other markets in which we operate are changing toward more sophisticated manufacturing and system-integration techniques and capabilities using composite as well as metallic materials.  Accordingly, our future success depends to a significant extent on our ability to acquire and/or develop and execute such sophisticated techniques and capabilities to meet the needs of our customers and to bring those products to market quickly and at cost-effective prices.  If we are unable to acquire and/or develop and execute such techniques and capabilities, we may experience an adverse effect to our business, financial condition or results of operation.

Our long-term success and growth strategy depend on our senior management and our ability to attract and retain qualified personnel.

We have written employment agreements with certain of our senior management that expire on January 1, 2014 thru January 1, 2016.  We also maintain key man life insurance policies on the lives of certain members of senior management.  The loss of service of one or more of our senior management personnel, however, could result in a loss of leadership and an inability to successfully pursue our long-term growth strategy.

Because of the highly specialized and complex nature of our business, our success and future growth also depends on management’s ability to attract, hire, train, integrate and retain skilled personnel in all areas of our business.  Competition for such personnel is intense, and our inability to adequately staff our operations with skilled personnel could render us less efficient and decrease our rate of production.  For example, our Engineering Services segment competes in a highly competitive market to attract and retain highly qualified and well-trained engineers.  Such a competitive market could put upward pressure on labor costs for engineering talent.  Although we have historically been able to pass through increases in engineering labor costs to our customers, there can be no assurance that we will be able to do so in the future.

In addition, rising costs associated with certain employee benefits, in particular employee health coverage, could limit our ability to provide certain employee benefits in the future.  If we are unable to provide a competitive employee benefits package, recruiting and retaining qualified personnel may become more difficult.

Sales to a limited number of customers represent a significant portion of our revenues, and our long-term agreements with these customers are generally terminable upon written notice.

For the year ended December 31, 2012, 77% of our aggregate sales were dependent upon relationships with six major customers: The Boeing Company, Gulfstream Aerospace Corporation, Spirit AeroSystems, Bombardier, Inc., Triumph Group and Sikorsky Aircraft Corporation. Spirit is Valent’s largest customer and is expected to contribute approximately 30% of Valent’s 2013 revenues. Although a majority of our sales, including sales to these customers, are made pursuant to long-term agreements, these agreements are generally terminable upon written notice by the customer and typically do not require the customer to purchase any specific quantity of products.  As a result, our sales under these agreements may not continue for the full term of the agreements or be consistent with historical sales levels.  Additionally, the loss of any one of these customers, or a significant reduction in the amount of orders received from any one of these customers, could cause a significant decrease in our net sales and profitability.  We anticipate that a small number of large customers will continue to represent a significant portion of our sales for the foreseeable future.  See “Item 1. Business – Customers and Products & Services – Customers.”

Recent failures by OEMs to successfully outsource non-core capabilities and services on new platforms may cause our customers to reevaluate outsourcing strategies resulting in fewer design projects, design-build projects, machined and fabricated components and assemblies being outsourced.

The credit agreement governing our new senior secured credit facilities contains financial covenants that require us to maintain certain financial metrics and ratios and restrictive covenants that limit our flexibility. A breach of those covenants may cause us to be in default under the facility, and our lenders could foreclose on our assets.

The credit agreement for our revolving credit facility and term loan requires us to maintain a certain leverage ratio and interest coverage on a quarterly basis.  A failure to maintain current revenue levels or an inability to control costs could negatively impact our ability to meet these financial covenants and, if we breach such covenants or any of the restrictive covenants described below, the lenders could either refuse to lend funds to us or accelerate the repayment of any outstanding borrowings under the credit facilities.  We might not have sufficient assets to repay such indebtedness upon a default.  If we are unable to repay the indebtedness, the lenders could initiate a bankruptcy proceeding against us or collection proceedings with respect to our assets, all of which secure our indebtedness under the credit facilities.

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The credit agreement also contains certain restrictive covenants that limit and in some circumstances prohibit, our ability to, among other things, incur additional debt, sell, lease or transfer our assets, pay dividends, make investments, guarantee debt or obligations, create liens, enter into transactions with our affiliates and enter into certain merger, consolidation or other reorganization transactions.  These agreements also require mandatory prepayments of excess cash at certain leverage levels.  These restrictions could limit our ability to obtain future financing, make acquisitions or needed capital expenditures, withstand the current or future downturns in our business or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise, any of which could place us at a competitive disadvantage relative to our competitors that have less debt and are not subject to such restrictions.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.  We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness.  We may not be able to affect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet our scheduled debt service obligations.  The credit agreement governing our senior secured credit facilities restricts our ability to dispose of assets and use the proceeds from any such dispositions.  We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

A downgrade, suspension or withdrawal, if any, of the rating assigned by a rating agency to our company or our new senior secured credit facilities could adversely affect the price of our common stock.

Our new senior secured credit facilities have been rated by nationally recognized statistical rating agencies and may in the future be rated by additional rating agencies.  We also have corporate ratings assigned by rating agencies.  We cannot assure you that any rating assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agency's judgment, circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant.  Any downgrade, suspension or withdrawal of a rating by a rating agency could adversely affect the price of our common stock.

Risks associated with acquisitions, including our completed TASS and Valent acquisitions, could result in increased costs and production inefficiencies.

Following our completed TASS and Valent acquisitions during 2012, a key element of our growth strategy continues to be expansion of our business through the acquisition of complementary businesses involved in the aerospace industry and strategic acquisitions that will provide us with access to new industries, product lines and technology.  Our ability to successfully expand by acquisition is dependent upon, and may be limited by, the availability of suitable acquisition candidates, our capital resources and the availability of credit. We face additional risks with the acquisitions we have consummated, such as TASS and Valent, which risks include:

● difficulties in assimilating the operations and personnel of TASS, Valent and other companies we may acquire;

● unanticipated performance issues, such as loss of key customers;

● difficulties associated with implementing and integrating new product lines and meeting new tolerance requirements;

● difficulties in accurately pricing new products;

● failure to realize potential cost savings or other financial and strategic benefits;

● incurrence of substantial unanticipated integration and other costs;

● potential loss of key employees of TASS, Valent and other companies we may acquire;

● incurrence of substantial, additional indebtedness in funding such acquisitions and cost of such indebtedness;

● significant strain on our managerial, financial and other resources; and

● potential goodwill and intangible asset impairment.

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Furthermore, although we investigate the business operations and assets of entities that we acquire, there may be liabilities that we fail or are unable to discover and for which we, as a successor owner or operator, may be liable.  Also, the necessity of integrating our internal controls over financial reporting with businesses acquired by us in order to meet the requirements of Section 404 of the Sarbanes - Oxley Act of 2002 may add additional cost and expense to acquisitions and expose us to the risk that we may not be successful in integrating our internal controls over financial reporting with that of the acquired business or company on a timely basis.  Management is currently in the process of assessing the internal controls of Valent.

Our long-term growth strategy depends on our ability to maintain a robust and effective supply-chain management system.

As we pursue our long-term growth strategy, we will be providing to our customers increasingly sophisticated components, assemblies and value-added services and design-build programs.  In addition, many OEMs are moving toward developing strategic partnerships with their larger suppliers, which are providing design, purchasing, warehousing and assembly services.  The increased complexity of our products, the expected increased outsourcing of non-core activities and the value-added services we are providing to our customers require us to maintain and manage an effective supply chain to assure timely delivery to us of quality components needed to meet our delivery schedules, which may become more difficult if our customers’ production increases.  Failure to continue to develop this capability and to procure from our suppliers quality components on a timely basis could decrease customer satisfaction, significant costs related to product recalls or charges for rework and thus our competitiveness, and could also result in lost revenue due to contractual penalties or lost sales.

We may experience cost over-runs related to orders for new products and changes to existing products, and we may be unable to recoup the resulting increased costs.

We generally sell our design-build projects, components, kits and assemblies under multi-year firm agreements on a fixed-price basis, regardless of our production costs.  As a result, factors such as engineering changes inaccurate pricing, manufacturing inefficiencies, start-up costs and increases in the cost of labor, materials or overhead may result in cost over-runs and losses on those agreements.  We may not succeed in obtaining the agreement of a customer to re-price a particular product, and we may not be able to recoup previous losses resulting from such issues as incomplete or inaccurate engineering data or out-of-tolerance tooling.

Our Engineering Services segment has historically provided the majority of its services under time and material arrangements.  However, recent changes in the industry and our strategic initiative to provide design-build capabilities have resulted in an increasing number of fixed-price arrangements.  Fixed-price development work inherently has more uncertainty than work pursuant to production or time and material contracts and, therefore, more variability in the estimates of the cost to complete such work.  Development programs have very complex designs, and as technical or quality issues arise, we may experience schedule delays and higher costs to complete.  Management uses its reasonable judgment to estimate the cost to perform the work and the price that we will eventually be paid.  While we believe the cost and price estimates incorporated in the financial statements are appropriate, future events could result in either upward or downward adjustments to those estimates. If we underestimate the cost of a project and are unable to adjust the price accordingly, our profit margin will be less than expected, or we could incur a loss on the project.

The Company’s failure to meet quality or delivery expectations of customers could adversely affect our business and financial results.

The Company’s customers have increased, and are expected to increase in the future, their expectations with respect to the on-time delivery and quality of the Company’s products.  Further, announced delivery rate increases over the next few years could put additional strain on the Company’s quality and delivery performance which would require additional expenditures.  In some cases, the Company does not presently satisfy these customer expectations.  If the Company fails to meet the quality or delivery expectations of its customers, this failure could result in significant penalties, liquidated damages, recalls and costs to repair products not meeting our customer requirements.  The loss of one or more significant customers of the Company could be damaging considering 77% of our aggregate sales for the most recently-ended fiscal year are dependent upon relationships with six major customers.

Demand for our defense-related products depends upon government spending.

A material portion of our sales (26% in the year ended December 31, 2012) is derived from the military market.  The military market is largely dependent upon government budgets, particularly the U.S. defense budget.  The funding of government programs is subject to Congressional appropriation and the possibility of sequestration.  Although multi-year contracts may be authorized in connection with major procurements, the U.S. Congress generally appropriates funds on a fiscal year basis even though a program may be expected to continue for several years.  Consequently, programs, including those that require our components, may be only partially funded or may never enter full-scale production as expected.  As a result, future U.S. defense spending may not be allocated to programs that would benefit our business or at levels that we had anticipated.  A decrease in levels of defense spending or the government’s termination of, or failure to fully fund, one or more of the contracts for the programs in which we participate would adversely impact our revenues and cash flow.

Most U.S. government contracts for which we subcontract can be terminated by the U.S. government either for its convenience or if the prime contractor defaults by failing to perform under the contract. In addition, the prime contractor typically has the right to terminate our subcontract for its convenience or if we default by failing to perform under the subcontract.  Termination for convenience provisions generally permit us to recover only our costs incurred or committed, plus settlement expenses and a reasonable profit, which may be different from what we bid or our historical profit rates, on the work completed prior to termination. Termination for default provisions generally provide for the subcontractor to be liable for excess costs incurred by the prime contractor in procuring undelivered items from another source.

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We may not realize all of the sales expected from our existing backlog.

As of December 31, 2012, we had approximately $371.4 million of order backlog, of which $365.8 million was related to our Aerostructures segment.  As a service provider, our Engineering Services segment does not typically utilize backlog to monitor its operations, other than the fixed price backlog for the MITAC and Embraer design-build projects.  We consider backlog to be firm customer orders for future delivery.  From time to time, our OEM customers provide projections of components and assemblies that they anticipate purchasing in the future under new and existing programs.  These projections are not included in our backlog unless we have received a firm purchase order or order commitment from our customers.  Our customers may have the right, under certain circumstances and with certain penalties or consequences, to terminate, reduce or defer firm orders that we have in backlog.  If our customers terminate, reduce or defer firm orders, we may be protected from certain costs and losses, but our sales will nevertheless be adversely affected.

Given the nature of our industry and customers, there is always a risk that orders may be cancelled or rescheduled due to fluctuations in our customers’ business needs, purchasing budgets or inventory management practices.  Moreover, our realization of sales from new and existing programs is inherently subject to a number of important risks and uncertainties, including the possibility that our customers will not launch programs on time, or at all, and the number of units that our customers will actually produce may change or the timing of production may be altered.  Also, until firm orders are committed, our customers generally have the right to discontinue a program, duel source or replace us with another supplier at any time without penalty.  Our failure to realize sales from new and existing programs would adversely impact our net sales, results of operations and cash flow.

We may be required to risk our capital to continue existing partnerships or develop new strategic partnerships with OEMs.

Many OEMs are moving toward developing strategic, and sometimes risk-sharing, partnerships with their larger suppliers.  Each strategic partner provides an array of integrated services, including purchasing, warehousing and assembly for OEM customers.  We have been designated as a strategic partner by some OEMs and are striving to become a strategic partner of other OEMs.  In order to maintain our current strategic partnerships and establish new ones, we will likely need to expand our existing capacities or capabilities.  We may not, however, have the financial ability or technical expertise to do so.

We use sophisticated equipment that is not easily repaired or replaced, and therefore equipment failures could cause us to be unable to meet quality or delivery expectations of our customers.

Many of our manufacturing processes are dependent on sophisticated equipment used to meet the strict tolerance requirements of our customers.  Because sophisticated equipment generally is not easily repaired or replaced, unexpected failures of this equipment could result in production delays or the manufacturing of defective products. We currently lack redundancy with certain sophisticated equipment which could impact our ability to meet the expectations of our customers with respect to on-time delivery of quality products.  More recently, commercial aerospace rate increases have caused a significant increase in demand for new equipment resulting in longer reorder lead times.  Our failure to acquire new capacity and meet the quality or delivery expectations of our customers could lead to the loss of one or more of our significant customers.

The use by end-users of the product platforms into which our components are integrated could expose us to product liability claims.

We may be exposed to possible claims of personal injury, death, grounding costs, property damage or other liabilities that result from the failure or malfunction of a component or assembly fabricated or designed by us.  We currently have in place policies for products liability and premises insurance, which we believe provide adequate coverage in amounts and on terms that are generally consistent with industry practice.  Nevertheless, to the extent a claim is made against us that is not covered in whole or in part by our current insurance, we may be subject to a material loss.  Moreover, any claims that are covered by our policies would likely cause our premiums to increase, and we might not be able to maintain adequate insurance coverage levels in the future.  Additionally, since we do not carry product recall insurance we could be subject to recall expenses associated with any product failures determined to be our fault.

Risks associated with foreign operations could adversely impact the Company.

The Company operates facilities in Mexico, England, and Australia.  Doing business in foreign countries is subject to various risks, including political instability, local economic conditions, foreign government regulatory requirements, trade tariffs and the potentially limited availability of skilled labor in proximity to the Company’s facilities.  In addition, the Company has been operating its Mexican facility through a shelter arrangement under a contractual agreement with a Mexican company.  If the Company is unable to renew this agreement in future years on terms satisfactory to it, the Company may incur increased labor costs and/or experience a disruption in its operations in Mexico.

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Our facilities are located in regions that are affected by natural disasters.

Several of our facilities are located in regions that have a higher than average risk of earthquake and tornado activity and one of our facilities has experienced damage due to floods.  Although we maintain earthquake and flood loss insurance where necessary, an earthquake, flood or other natural disaster could disrupt our business, result in significant recovery costs and cause our productivity and profits to decrease.

We may be required to record material impairment charges for goodwill and other intangible assets, which would reduce our net income and earnings per share.

Current accounting standards require a periodic review of goodwill and other intangible assets for impairment in value if circumstances indicate that the carrying amount will not be recoverable.  In assessing the recoverability of our goodwill and other intangible assets, management is required to make certain critical estimates and assumptions, particularly as to manufacturing efficiency, the achievement of reductions in operating costs, and increased sales and backlog.  If any of these or other estimates and assumptions are not realized in the future, we may be required to record impairment charges for goodwill and other intangible assets, which charges would reduce net income and earnings per share.

Certain newer aircraft platforms include fewer metal products and could, over time, limit our ability to grow.

Newer military aircraft, such as the Lockheed Martin F-35 Series, and newer aircraft designs for large commercial aircraft, such as the Boeing 787 and Airbus 350, include more composite and other non-metal components than previous models.  Additionally, redesigns of existing platforms could include greater amounts of non-metal components.  Although we are in the process of continuing to expand our development of non-metallic production capabilities and seeking acquisitions, we currently do not have significant capacity to produce large quantities of non-metal components.  If we are unsuccessful in developing or acquiring such production expertise, the trend toward the use of non-metal components could limit our opportunities for new work, cause the loss of certain existing work and increase the competitive environment with other suppliers of metal components.

Anti-takeover statutes and anti-takeover provisions in our organizational documents may discourage our acquisition by a third party, which could limit your opportunity to sell your shares at a premium.

Our restated articles of incorporation and amended and restated bylaws contain certain provisions that reduce the probability of a change of control or acquisition of our company.  These provisions include, among other things:

● the ability of our Board of Directors to issue preferred stock in one or more series with such rights, obligations and preferences as the Board of Directors may determine, without any further vote or action by our shareholders;

● advanced notice procedures for shareholders to nominate candidates for election of directors and for shareholders to submit proposals for consideration at shareholders’ meetings;

● the staggered election of our directors; and

● restrictions on the ability of shareholders to call special meetings of shareholders.

In addition, we are subject to Section 459 of the General and Business Corporation Law of Missouri, which, under certain circumstances, may prohibit a business combination with any shareholder holding 20% or more of our outstanding voting power.  This provision may have the effect of delaying, deterring or preventing certain potential acquisitions or a change of control of the Company.

If our directors and executive officers choose to act together, they will exercise significant influence over matters requiring approval by our shareholders.

As of December 31, 2012, our directors and executive officers collectively owned approximately 20% of our common stock.  In addition, in connection with our acquisition of Valent, Charles M. Newell and Henry H. Newell became executive officers effective January 1, 2013.  As a result, these shareholders, acting together, would be able to exert significant influence on all matters requiring approval by our shareholders, including the election of our directors and any merger, sale of assets or other change of control transaction.

We may sell more shares of common stock which could result in dilution and cause the stock price of our common stock to decline.

Our business plan anticipates the need for new capital to support the continued development of our design-build program and other more sophisticated product offerings, either through internal investment or acquisition.  We may raise new capital through debt (including debt securities and/or bank borrowings), the issuance of additional shares of our common stock or the issuance of securities convertible into or exchangeable for shares of our common stock.  Additionally, we may decide to raise capital to pay down some of the new indebtedness we have incurred in connection with our acquisition of Valent.  Should we choose to raise capital by issuing or selling shares of our common stock (or securities convertible into or exchangeable for shares of common stock) for any reason, such issuance will likely have a dilutive effect on the holders of our common stock and/or could have a material negative impact on the market price of our common stock.

19

If we are unable to protect our information technology infrastructure against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.

We rely on information technology networks and systems to manage and support a variety of business activities, including procurement and supply chain, engineering support and manufacturing.  Our information technology systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components of our technology.  These systems may also be subject to failures due to: power outages, hardware failures, computer viruses, computer hackers, telecommunication failures, user errors, or even catastrophic events.  In addition, security breaches could result in unauthorized disclosure of confidential information.  If our information technology systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, our manufacturing process could be disrupted, resulting in late deliveries.

OEMs in the aerospace industry have significant pricing leverage over suppliers such as us, and may be able to achieve price reductions over time, which could adversely impact our profitability.

There is substantial and continuing pressure from OEMs in the aerospace industry on suppliers such as us to reduce prices for products and services. Such pricing pressure has continued due to excess capacity in the industry and the availability of competitive pricing from businesses in low-cost labor areas. If we are required to provide price reductions to our customers and are unable to offset these effects through operating cost reductions and other methods, our gross margins, profitability and cash flows could be reduced.

Access to funding through the capital markets and debt financing are essential to the execution of our business plan and, if we are unable to obtain such access, we could experience a material adverse effect on our business and financial results.

Our ability to invest in our businesses, fund our operations and contractual commitments and make strategic acquisitions requires access to the capital markets, access to term debt and/or sufficient bank credit lines to support short-term borrowings.  If we are unable to continue to access the capital markets and debt financing on terms acceptable to the Company as a result of, for example, disruption or declines in the capital markets and/or a decline in our financial performance, outlook, credit ratings or failure to meet bank covenants could cause us to experience difficulties in successfully executing our long-term growth strategy and/or a material adverse effect on our business and financial results.

Risks Related to Our Industry

We are subject to the cyclical nature of the aerospace industry, and any future downturn in the aerospace industry or general economic conditions could cause our sales and operating income to decrease.

For the year ended December 31, 2012, we derived approximately 97% of our revenue from the sale of services and components for the aerospace industry.  Consequently, our business is directly affected by certain characteristics of and trends in the aerospace industry or general economic conditions that affect our customers, such as:

● fluctuations in the aerospace industry’s business cycle;

● new programs in commercial, military, and general aviation have historically experienced significant delays and engineering changes which adversely impact our net sales, results of operations and cash flow;

● varying fuel and labor costs;

● intense price competition and regulatory scrutiny;

● certain trends, including a possible decrease in aviation activity, a decrease in outsourcing by aircraft manufacturers or the failure of projected market growth to materialize or continue;

● changes in military budgeting, sequestration and procurement for certain military aircraft;

● sequestration may result in excess capacity potentially putting additional pressure on prices; and

● military trend toward utilizing more Unmanned Aerial Vehicles, reducing the demand for more traditional military aircraft (e.g. Boeing F-18, General Dynamics F-16 and Lockheed Martin F-35).

In the event that these characteristics and trends adversely affect customers in the aerospace industry, they will reduce the overall demand for our products and services, thereby decreasing our sales and operating income.

20

Terrorist attacks could reduce demand for our large commercial, corporate and regional products and services.

Acts of sabotage or terrorism or adverse results to the United States or its military conflicts, such as the current conflict in Afghanistan, would likely have an adverse impact on the large commercial and corporate and regional aircraft industries, which could lead to reduced demand for our products and services.  Prior industry downturns caused by such acts or results have negatively affected our Aerostructures segment’s sales, gross margin, net income and cash flow.

We may not be able to maintain or improve our competitive position because of the intense competition in the markets we serve.

Our competitors in the aerospace industry consist of a large fragmented group of companies, including certain business units or affiliates of our customers.  We believe that competition within the aerospace industry will increase substantially as a result of industry consolidation, trends favoring greater outsourcing of components and a decrease in the number of preferred suppliers.  We also believe foreign aerospace manufacturers and engineering service providers and foreign divisions of domestic aerospace businesses will become an increasing source of competition, due largely to these businesses’ access to low-cost labor and the increased prevalence of industry participation commitments, pursuant to which domestic OEMs agree to award production work to manufacturers from a foreign country in order to obtain orders from that country.  Some of our competitors have substantially greater financial, production and other resources than we have.  These competitors may have:

● the ability to adapt more quickly to changes in customer requirements and industry conditions or trends;

● greater access to capital;

● stronger relationships with customers and suppliers;

● greater name recognition; and

● purchased critical suppliers and make them captive causing delays and potential price increases.

Future commitments to increase production rates depend on our ability to expand production at our manufacturing facilities.

Certain large commercial and corporate aircraft manufacturers have announced planned production rate increases for several of their major programs.  In some cases, in order to meet these increases in production rates, we are making significant capital expenditures to expand our capacity and improve performance.  Many of our suppliers and customers are investing significant amounts of capital in new facilities and equipment as well.  If difficulty is experienced with effectively managing these expansion efforts to meet the planned increases in production rates, it could cause disruptions in our manufacturing lines or the manufacturing lines of our customers and suppliers, which could have a material adverse impact on our ability to meet commitments to our customers and on our future financial results.

Decreases in the availability or increases in the cost of our raw materials would increase our operating costs.

Most of our components are manufactured from aluminum products.  From time to time, we, and the aerospace components industry as a whole, have experienced shortages in the availability of aerospace quality aluminum. In addition, we utilize certain materials in the manufacture of our non-aerospace products that, in some cases, may be provided by a limited number of suppliers.  Raw material shortages could limit our ability to meet our production needs and adversely affect our ability to deliver products to our customers on a timely basis.  Also, raw material shortages and capacity constraints at our raw material producers are outside of our control and can cause the price of aluminum to increase.  Any significant shortage or price escalation of raw materials such as aluminum could increase our operating costs, which would likely have an adverse impact on our financial results.  Composite products have a higher percentage of raw material content and thus, are more susceptible to gross margin impacts.  As rate increase on commercial aerospace platforms rise so do the lead times for certain raw material which makes reorder points a critical step in our manufacturing and planning process.  One part missed in the process could result in a delivery being delayed and our ability to meet commitments to our customers and our future financial results.

Compliance with and changes in environmental, health and safety laws and other laws that regulate the operation of our business and industry standards could increase the cost of production and expose us to regulatory claims.

Our operations are subject to extensive and frequently changing federal, state and local laws and substantial regulation by government agencies, including the EPA, OSHA, the FAA and the U.S. Department of Defense.  Among other matters, these agencies impose requirements that:

● regulate the operation, handling, transportation and disposal of hazardous materials generated or used by us during the normal course of our operations;

● govern the health and safety of our employees; and

● require that we meet standards and licensing requirements for aerospace components.

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In particular, we use and generate hazardous waste in our operations.  Consequently, we monitor hazardous waste management and applicable environmental permitting and reporting for compliance with applicable laws at our locations in the ordinary course of our business.  We may be subject to potential material liabilities relating to any investigation and cleanup of any contamination at our locations or properties where we deliver hazardous waste for handling or disposal and to claims alleging personal injury.  In addition, we have incurred, and expect to continue to incur, costs to comply with environmental laws and regulations.  The adoption of new laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new cleanup requirements could require us to incur costs and become subject to new or increased liabilities that could increase our operating costs and adversely affect the manner in which we conduct our business.

We are also subject to U.S. Export Regulations, including the AECA, associated ITAR and Export Administration Regulations and FCPA.  Failure to comply with such regulations could result in substantial fines, significant time and costs related to training personnel for cause and corrective action, penalties and limit our ability to export certain products.

While we require FAA certifications only to a limited extent, we typically are required to maintain third-party registrations with respect to industry specification standards, such as AS9100 and NADCAP, for our quality systems and processes.  In fact, many individual OEMs and Tier 1 suppliers require certifications or approvals of our work based on third-party registrations in order to engineer and serve the systems and components used in specific aircraft models.  If material OEM certifications or approvals were to be revoked or suspended, OEMs might cease purchasing our products.

Moreover, if in the future new or more stringent governmental regulations are adopted, or industry oversight heightened, such action could result in our incurrence of significant additional costs and have an adverse effect on our financial condition or results of operation.

 Significant consolidation in the aerospace industry could adversely affect our business and financial results.

The aerospace industry is experiencing significant consolidation, including the Company’s customers, competitors and suppliers.  Consolidation among the Company’s customers may result in delays in the award of new contracts and losses of customer relationships which could impact our ability to win new projects.  Consolidation among our competitors may result in competitors with greater resources and market share, which could adversely affect the Company’s ability to compete successfully.  Consolidation among the Company’s suppliers may result in fewer sources of supply and increased cost to the Company.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

We operate manufacturing plants and other facilities (including office, distribution, engineering and other service facilities) in the United States and Mexico.  We lease 24 of our manufacturing plants and other facilities and own four.  We consider our major operating properties to be in good operating condition and suitable for their current use.  We believe that the productive capacity of our plants and other facilities is generally adequate for current operations; however, we are pursuing several expansion projects of existing facilities in Georgia, California, Oklahoma and Missouri.

Fabrication operates out of seven facilities in the following locations:

Location	Number of Facilities
St. Charles, Missouri	2
Vista, California	1
Wichita, Kansas	1
Auburn, Washington	1
Mexicali, Mexico	1
Everett, Washington	1

Machining operates out of seven facilities in the following locations:

Location	Number of Facilities
Sun Valley, California	1
Irving, Texas	1
Wichita, Kansas	1
Tulsa, Oklahoma	1
Washington, Missouri	1
Fredonia, Kansas	1
St. Louis, Missouri	1

22

Assembly operates out of three facilities in the following location:

Location	Number of Facilities
St. Charles, Missouri	1
Cottonwood Falls, Kansas	1
Lenexa, Kansas	1

Kitting and Distribution operates out of two facilities in the following locations:

Location	Number of Facilities
Tulsa, Oklahoma	1
Savannah, Georgia	1

Finishing operates out of two facilities in the following locations:

Location	Number of Facilities
Tulsa, Oklahoma	1
Cuba, Missouri	1

Engineering Services operates out of seven facilities in the following locations:

Location	Number of Facilities
San Diego, California	1
Greenville, South Carolina	1
Dallas/Fort Worth, Texas	1
Everett, Washington	1
Kirkland, Washington	1
Stansted, Essex, England	1
Melbourne, Australia	1

ITEM 3. LEGAL PROCEEDINGS.

We are not a party to any legal proceedings, other than routine claims and lawsuits arising in the ordinary course of our business.  We do not believe such claims and lawsuits, individually or in the aggregate, will have a material adverse effect on our business.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

The Company’s common stock is traded on the NASDAQ Global Market under the symbol “LMIA.”  The following table sets forth the range of high and low closing sales prices for the Company’s common stock for the periods indicated during the Company’s past two fiscal years:

Period	High		Low
Fiscal Year 2012
1st quarter	$	21.26	$	17.26
2nd quarter		19.14		15.10
3rd quarter		20.91		17.14
4th quarter		20.87		17.61
Fiscal Year 2011
1st quarter		20.21		16.06
2nd quarter		24.52		19.15
3rd quarter		24.41		16.88
4th quarter		21.19		15.49

Holders

As of March 5, 2013, there were approximately 128 holders of record of the Company’s common stock.

Dividends

We have not historically declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.  Our credit facilities prohibit us from declaring a dividend with respect to our common stock.  We currently intend to retain our earnings, if any, and reinvest them in the development of our business.

Securities Authorized for Issuance under Equity Compensation Plans

On July 7, 2005, our shareholders approved the LMI Aerospace, Inc. 2005 Long-term Incentive Plan (the “Plan”).  The Plan provides for the grant of non-qualified stock options, incentive stock options, shares of restricted stock, restricted stock units, stock appreciation rights, performance awards, and other stock-based awards and cash bonus awards to employees or directors.  Up to 1,200,000 shares of common stock are authorized for issuance under the Plan.  The following table summarizes information about our equity compensation plan as of December 31, 2012.  All outstanding awards relate to the Company’s common stock.

Equity Compensation Plan Information

Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights		Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a))
	(a)(1)		(b)		(c)(2)
Equity compensation  plans approved by security holders:
2005 Long-Term Incentive Plan		-		-		378,971
Equity compensation plans not approved by security holders		-		-		-
Total		-		-		378,971

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(1) This column excludes 189,828 shares of unvested restricted stock outstanding with an $18.76 per share weighted-average grant date fair market value.

(2) This column includes securities remaining for issuance as restricted stock.

Issuer Purchases of Equity Securities

The Company made no purchases of its common stock during the year ended December 31, 2012, and the Company does not maintain an active repurchase program.

Performance Graph

Set forth below is a line graph presentation comparing the yearly percentage change in cumulative total shareholder returns since December 31, 2007 on an indexed basis with the Standard & Poors (“S&P”) 500 Index and the S&P Small Cap Aerospace/Defense Index, which is a nationally recognized industry standard index.

The following graph assumes the investment of $100 in LMI Aerospace common stock, the S&P 500 Index and the S&P Small Cap Aerospace/Defense Index as well as the reinvestment of all dividends.  There can be no assurance that the performance of the Company’s common stock will continue into the future with a trend that is the same or similar to the trend depicted in the graph below.

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ITEM 6. SELECTED FINANCIAL DATA .

The selected financial data set forth below for the year ended December 31, 2012, and each of the four preceding fiscal years, should be read in conjunction with “Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the consolidated financial statements, related notes and other financial information included herein.

(Dollar amounts in thousands, except share and per share data)

	2012(1)			2011			2010			2009			2008
Statement of Operations Data:
Net sales	$	278,629		$	254,040		$	223,356		$	241,196		$	239,462
Cost of sales		210,321			194,390			171,856			188,245			178,347
Gross profit		68,308			59,650			51,500			52,951			61,115
Selling, general & administrative expenses		36,891			34,726			32,435			31,678			33,128
Impairment of goodwill (2)		-			-			-			3,350			2,303
Acquisition  expense (3)		5,362			-			-			-			-
Severance and restructuring costs		-			-			-			312			-
Income from operations		26,055			24,924			19,065			17,611			25,684
Other income (expense)
Interest expense		(1,771	)		(669	)		(696	)		(1,623	)		(1,815	)
Other income (expense), net		356			(730	)		58			10			10
Total other expense		(1,415	)		(1,399	)		(638	)		(1,613	)		(1,805	)
Income before income taxes		24,640			23,525			18,427			15,998			23,879
Provision for income taxes		8,153			7,136			5,496			5,843			8,611
Net income	$	16,487		$	16,389		$	12,931		$	10,155		$	15,268
Amounts per common share:
Net income - per common share	$	1.41		$	1.42		$	1.13		$	0.90		$	1.36
Net income - assuming dilution	$	1.39		$	1.40		$	1.11		$	0.90		$	1.35
Weighted average common shares outstanding		11,701,607			11,559,895			11,420,524			11,305,231			11,198,610
Weighted average dilutive common shares outstanding		11,839,182			11,741,513			11,636,385			11,341,312			11,301,382
Other Financial Data:
Capital expenditures (4)	$	19,529		$	10,267		$	7,151		$	3,938		$	8,055
Cash provided by operating activities		8,799			16,175			26,845			22,417			8,993
Cash used by investing activities		(235,000	)		(9,997	)		(7,145	)		(13,853	)		(5,867	)
Cash provided (used) by financing activities		222,680			(257	)		(17,784	)		(8,562	)		(3,179	)
Gross profit margin		24.5	%		23.5	%		23.1	%		22.0	%		25.5	%
Balance Sheet Data:
Cash and cash equivalents	$	4,347		$	7,868		$	1,947		$	31		$	29
Working capital		113,233			83,988			68,118			71,425			72,299
Total assets		527,964			204,606			179,849			180,217			180,718
Total long-term debt, excluding current portion		255,067			-			28			17,210			25,536
Shareholders' equity		200,954			167,785			149,763			134,493			122,800

(1) Includes the operating results of TASS subsequent to the acquisition date, August 7, 2012, and the results of Valent subsequent to the acquisition date, December 28, 2012.

(2) In the fourth quarter of 2009 and 2008, the Company recorded a non-cash charge of $3,350 and $2,303, respectively, within the Aerostructures segment (relating to Tempco Engineering, Inc.) for the impairment of goodwill.  The tests as of the fourth quarter of 2009 and 2008 indicated that the book value of Tempco Engineering, Inc. exceeded the fair value of the business.

(3) Includes investment banking, accounting, legal, tax and valuation expenses primarily as a direct result of the TASS and Valent acquisitions.

(4) Includes $746 for a capital lease for equipment in 2012.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

We are a leading supplier of structural assemblies, kits and components and design engineering services to the aerospace and defense markets.  We primarily sell our products and services to the large commercial, corporate and regional, and military aircraft markets.    We believe that OEMs and Tier 1 aerospace companies will continue the trend of selecting their suppliers based upon the breadth of more complex and sophisticated design and manufacturing capabilities and value-added services and the ability of their suppliers to manage large production programs.

We are organized into two reportable segments: the Aerostructures segment and the Engineering Services segment.  Our Aerostructures segment fabricates, machines, finishes, integrates, assembles and kits machined and formed close tolerance aluminum, specialty alloy, composite components and higher level assemblies for use by the aerospace and defense industries.  Our Engineering Services segment provides a complete range of design, engineering and program management services, supporting aircraft product lifecycles from conceptual design, analysis and certification through production support, fleet support, and service life extensions via a complete turnkey engineering solution.

On August 7, 2012, we acquired Kirkland, Washington-based TASS, a premier after-market engineering and support services firm.  TASS is included in the Engineering Services segment and delivers high-end engineering solutions to aircraft manufacturers, airlines, MRO services companies and leasing companies worldwide.  We believe the acquisition of TASS, whose expertise lies in engineering for aircraft repairs and modifications and providing airline fleet management services, will provide us with a global presence in the rapidly growing after-market engineering arena and build on our long and successful history with Boeing products.  TASS also provides the Company with the ability to internally source product support for parts manufactured by the Company to the global airline fleet.

On December 28, 2012, we acquired Kansas City, Missouri-based Valent, a provider of complex, structural components, major sub-assemblies and machined parts for OEMs and Tier 1 airframe manufacturers in the aerospace and defense industries.  Valent is included in the Aerostructures segment and provides significant content for several major commercial, business jet and military platforms including the Boeing 737, 747-8, 777, 787, V-22, F-15, F-18 and Gulfstream G650.  We believe the acquisition will position the Company as an industry leading aerostructure supplier with significant scale.  The resulting increased scale, complementary product offerings and enhanced project management capabilities of the acquisition are expected to drive further growth from existing platforms by offering our customers more diversified product and service offerings, deepened customer relationships and greater leverage of our extensive manufacturing and supply chain network.  In addition, we believe Valent’s assembly and high-end precision machining capabilities will allow the Company to compete for larger and more complex design-build projects.

Results of Operations

The results below include the results of operations of Valent in the Aerostructures segment and TASS in the Engineering Services segment since their acquisition dates.

The following table illustrates our sales percentages to our primary industries and markets over the last three years.

Market	2012			2011			2010
Large commercial aircraft		36.7	%		38.4	%		39.7	%
Corporate and regional aircraft		32.0	%		30.8	%		29.7	%
Military		26.0	%		22.0	%		23.8	%
Other (1)		5.3	%		8.8	%		6.8	%
Total		100.0	%		100.0	%		100.0	%

(1) Includes technology, testing, commercial consulting services and various other products.

Year ended December 31, 2012 compared to year ended December 31, 2011

The following table provides the comparative data for 2012 and 2011:

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	2012
	($ in millions)
	Aerostructures		Engineering Services		Elimination			Total
Net sales	$	175.0	$	105.6	$	(2.0	)	$	278.6
Cost of sales		127.1		85.3		(2.1	)		210.3
Gross profit		47.9		20.3		0.1			68.3
S, G, & A and other charges		32.4		9.8		-			42.2
Income from operations	$	15.5	$	10.5	$	0.1		$	26.1

	2011
	($ in millions)
	Aerostructures		Engineering Services		Elimination			Total
Net sales	$	168.1	$	87.5	$	(1.6	)	$	254.0
Cost of sales		123.2		72.9		(1.7	)		194.4
Gross profit		44.9		14.6		0.1			59.6
S, G, & A and other charges		26.6		8.1		-			34.7
Income from operations	$	18.3	$	6.5	$	0.1		$	24.9

Aerostructures Segment

Net Sales.   Net sales were $175.0 million in 2012, an increase of 4.1% from $168.1 million in 2011.  The following table summarizes the segment’s total sales and the percentage of the segment’s total sales represented by the market served for each of the years ended December 31, 2012 and December 31, 2011, respectively:

Category	2012		% of Total			2011		% of Total
	($ in millions)
Large commercial aircraft	$	72.6		41.5	%	$	65.9		39.2	%
Corporate and regional aircraft		57.6		32.9	%		53.4		31.8	%
Military		35.7		20.4	%		36.3		21.6	%
Other		9.1		5.2	%		12.5		7.4	%
Total	$	175.0		100.0	%	$	168.1		100.0	%

Large commercial aircraft generated net sales of $72.6 million in 2012 compared to $65.9 million in 2011, an increase of 10.2%.  Sales related to the 747 platform increased $4.7 million to $17.8 million in 2012 from $13.1 million in 2011 as new work statement and production rates increased for this aircraft.  Wing modification kits related to the 737 platform increased $3.7 million to $7.5 million in 2012 from $3.8 million in 2011.  Sales related to the 787 platform increased $1.3 million to $2.8 million in 2012 from $1.5 million in 2011.  The 777 program increased $1.6 million with sales in 2012 of $9.8 million compared to $8.2 million in 2011, due to increases in production rates and additions to the Company’s work statement.  Sales related to the 737, excluding wing modification programs, were the same for both years at $23.0 million.  The increases have been partially offset by a $6.3 million decline to $6.2 million in 2012 from $12.5 million in 2011 in the wing modification kits related to the 757 and 767 platforms as demand slowed for these aftermarket products.

Net sales of components for corporate and regional aircraft were $57.6 million during 2012 compared to $53.4 million in 2011, an increase of 7.9%.  This increase was primarily driven by increases in the production levels of and our work statement with respect to the G650 aircraft at Gulfstream, resulting in net sales reaching $13.3 million in 2012 compared to $8.0 million in 2011, a $5.3 million increase in sales.  The increase was also driven by higher net sales for the G280 Gulfstream aircraft which increased $1.9 million to $3.3 million in 2012 from $1.4 million in 2011.  These increases were partially offset by a decrease in net sales related to tooling for the Mitsubishi Regional Jet program, which generated $0.8 million in 2012 compared to $4.0 million in 2011, a $3.2 million decrease as program delays continue.  The large cabin G450 and G550 aircraft at Gulfstream continued to perform strongly with net sales of $37.4 million in 2012 compared to $37.5 million in 2011.

Military products generated net sales of $35.7 million in 2012 compared to $36.3 million in 2011, a decrease of 1.7%.  This decrease was primarily due to volume decreases in the Blackhawk helicopter program, which generated $28.4 million in 2012 compared to $30.4 million in 2011, a decrease of $2.0 million and a $1.9 million decline in other military projects.  These decreases were offset by the new Embraer KC-390 program which had $1.9 million in revenue in 2012 and an increase in the Apache helicopter program of $1.5 million from $0.8 million in 2011 to $2.3 million in 2012.

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Other products generated net sales of $9.1 million in 2012 compared to $12.5 million in 2011, a decrease of 27.2%.  This decrease was primarily due to the Company discontinuing sales related to one program at the Company’s Mexicali plant during 2012 which generated $2.9 million in 2011, but did not continue into 2012.

Cost of Goods Sold.  Cost of goods sold for 2012 was $127.1 million (72.6% of net sales) compared to $123.2 million (73.3% of net sales) for 2011.  The $3.9 million increase in cost of sales was primarily driven by higher sales in 2012 compared to 2011.  Production efficiencies helped to offset higher costs.

Gross Profit.  Gross profit for 2012 was $47.9 million (27.4% of net sales) compared to $44.9 million (26.7% of net sales) for 2011.  The improvement in gross profit resulted from the increased sales mentioned above and increased production levels to support higher sales levels and future production rate increases.  The increase in production caused fixed costs to be allocated to a larger amount of production, thus decreasing product costs and increasing gross profit percentage.

Selling, General and Administrative Expenses and Other Charges.  Selling, general and administrative expenses were $32.4 million (18.5% of net sales) in 2012 compared to $26.6 million (15.8% of net sales) in 2011.  The increase was mainly due to $5.4 million of costs incurred related to acquisitions in 2012, with Valent specifically accounting for $4.9 million of those costs.  The increase in costs from the acquisitions exceeded the increase in sales, increasing the total selling general and administrative expenses expressed as a percentage of sales.

Engineering Services Segment

Net Sales.  Net sales were $105.6 million in 2012, an increase of 20.7% from $87.5 million in 2011. The following table summarizes the segment’s total sales and the percentage of the segment’s total sales represented by the market served for each of the years ended December 31, 2012 and December 31, 2011, respectively:

Category	2012		% of Total			2011		% of Total
	($ in millions)
Large commercial aircraft	$	29.7		28.1	%	$	31.1		35.5	%
Corporate and regional aircraft		31.5		29.8	%		25.0		28.6	%
Military		37.0		35.1	%		20.3		23.2	%
Other		7.4		7.0	%		11.1		12.7	%
Total	$	105.6		100.0	%	$	87.5		100.0	%

Net sales of services for large commercial aircraft were approximately $29.7 million in 2012 compared to $31.1 million in 2011, a decrease of 4.5%.  The decrease was largely due to the winding down of several programs: the Boeing 747-8 program decreased $3.7 million, the Airbus A350 program decreased $1.4 million, the 787 programs decreased $2.5 million and the Boeing Integrated Test program decreased $1.2 million.  These declines were offset by the inclusion of $6.1 million of sales from the TASS subsidiary since the acquisition on August 7, 2012, and increased revenues from the nacelle systems development program of $1.4 million.  TASS revenues were primarily from sales to Boeing.

Net sales of services supporting corporate and regional aircraft were approximately $31.5 million during 2012 compared to $25.0 million in 2011, an increase of 26.0%.  The increase in sales was primarily related to support of the Bombardier Learjet L-85 of $10.8 million, $2.4 million for sales related to space travel and $1.3 million for sales to Triumph.  This increase was offset by a $3.0 million reduction in support requirements on the Mitsubishi Regional Jet program and a $3.4 million reduction on another program due to design maturation.

Military programs had net sales in 2012 of approximately $37.0 million compared to $20.3 million in 2011, an increase of 82.3%.  The increase from 2011 resulted primarily from increased services in support of the Boeing Tanker program of $13.0 million and the Embraer KC 390 program of $4.7 million, partially offset by the absence of $2.9 million in revenues from the Joint Strike Fighter program which was completed in 2011.

Sales related to the design and delivery of tooling on various programs supporting commercial aircraft were $7.4 million in 2012 compared to $11.1 million in 2011, a decrease of 33.3%.  This decrease was primarily due to a $2.5 million decrease in revenue in 2012 on 787 shipping fixtures and a decline of $0.9 million in revenues for other Boeing tooling projects.

Cost of Goods Sold.  Cost of goods sold for 2012 was $85.3 million (80.8% of net sales) compared to $72.9 million (83.3% of net sales) for 2011.  Our increased sales demand led us to hire additional project engineers, which resulted in an increase of $8.1 million in salary and fringe costs.  Also, the acquisition of TASS resulted in an additional $3.6 million in salary and fringe costs.

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Gross Profit. Gross profit for this segment was $20.3 million (19.2% of net sales) for 2012 compared to $14.6 million (16.7% of net sales) for 2011.  The increase in gross profit percentage was primarily driven by an increase in revenue, which reduced fixed costs as a percentage of sales.  Additionally, there were reductions in direct sub-contract services in 2012 compared to 2011.  These improvements were slightly offset by direct labor costs that were a higher percentage of sales in 2012 compared to 2011.

Selling, General and Administrative Expenses and Other Charges. Selling, general and administrative expenses were $9.8 million (9.3% of net sales) in 2012 compared to $8.1 million (9.3% of net sales) for 2011, an increase of $1.7 million.  The increase was primarily due to the inclusion of TASS’s selling, general, and administrative expenses.

Non-segment Expenses

Interest Expense.   Interest expense was $1.8 million for 2012 compared to $0.7 million for 2011.  The increase was primarily due to the refinancing of our credit facility on December 28, 2012 which resulted in a $0.6 million charge to expense related to deferred financing costs for the closed credit facility, and also from interest incurred of $0.2 million on the borrowings to acquire Valent.

Other Income (Expense), Net .  Other income was $0.4 million for 2012 compared to other expense of $0.7 million for 2011.  This change was primarily due to the absence of $0.8 million of non-recurring costs related to abandoned financing transactions that were present in 2011.  The increase in income was also driven by realized net foreign currency transaction gains in 2012 of $0.2 million compared to $0.2 million of expense in 2011.

Income Tax Expense .  Income tax expense for 2012 was $8.2 million compared to $7.1 million for 2011.  During 2012 our effective income tax rate was 33.1% compared to 30.3% in 2011 with the increase primarily due to research and development tax credits that were not extended for 2012 prior to December 31, 2012.  The income tax rate for 2013 will include the tax benefit for research and development tax credits for 2012 and 2013 and as such, we expect our rate to be between 33% and 34%.

Year ended December 31, 2011 compared to year ended December 31, 2010

The following table provides the comparative data for 2011 and 2010:

	2011
	($ in millions)
	Aerostructures		Engineering Services		Elimination			Total
Net sales	$	168.1	$	87.5	$	(1.6	)	$	254.0
Cost of sales		123.2		72.9		(1.7	)		194.4
Gross profit		44.9		14.6		0.1			59.6
S, G, & A and other charges		26.6		8.1		-			34.7
Income from operations	$	18.3	$	6.5	$	0.1		$	24.9

	2010
	($ in millions)
	Aerostructures		Engineering Services		Elimination			Total
Net sales	$	149.3	$	74.6	$	(0.5	)	$	223.4
Cost of sales		110.6		61.8		(0.5	)		171.9
Gross profit		38.7		12.8		-			51.5
S, G, & A and other charges		25.0		7.4		-			32.4
Income from operations	$	13.7	$	5.4	$	-		$	19.1

Aerostructures Segment

Net Sales.  Net sales were $168.1 million in 2011, an increase of 12.6% from $149.3 million in 2010.  The following table summarizes the segment’s total sales and the percentage of the segment’s total sales represented by the market served for each of the years ended December 31, 2011 and December 31, 2010, respectively:

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Category	2011		% of Total			2010		% of Total
	($ in millions)
Large commercial aircraft	$	65.9		39.2	%	$	59.5		39.9	%
Corporate and regional aircraft		53.4		31.8	%		45.3		30.3	%
Military		36.3		21.6	%		34.7		23.2	%
Other		12.5		7.4	%		9.8		6.6	%
Total	$	168.1		100.0	%	$	149.3		100.0	%

Large commercial aircraft generated net sales of $65.9 million in 2011 compared to $59.5 million in 2010, an increase of 10.8%.  Sales related to the 747 platform increased $1.3 million to $13.1 million in 2011 from $11.8 million in 2010.  Sales related to the 767 platform, excluding wing modification products, increased $1.3 million from $2.2 million in 2010 to $3.5 million in 2011, and increases were noted in the 777 program of $1.4 million with sales in 2011 of $8.2 million compared to $6.8 million in 2010, due to increases in production rates and additions to the Company’s work statement.  Wing modification programs increased by $1.1 million to $16.3 million in 2011 from $15.2 million in 2010, primarily due to additions to the Company’s work statement received in 2011.  Sales related to the 737, excluding wing modification programs, increased $0.9 million to $23.0 million in 2011 from $22.1 million in 2010 due to production rate increases.

Net sales of components for corporate and regional aircraft were $53.4 million during 2011 compared to $45.3 million in 2010, an increase of 17.9%.  This increase was primarily driven by the new G650 aircraft at Gulfstream with net sales reaching $8.0 million in 2011 compared to $2.4 million in 2010, a $5.6 million increase in sales.  This increase was also driven by work performed for the Mitsubishi Regional Jet program, which generated net sales of $4.0 million in 2011 compared to $1.4 million in 2010, a $2.6 million increase.  The large cabin G450 and G550 aircraft at Gulfstream continued to perform strongly with net sales of $37.5 million in 2011 compared to $37.1 million in 2010, an increase of $0.4 million.  These increases were offset by a $0.9 million decrease to, $2.4 million in 2011 from $3.3 million in 2010, in sales to various divisions of Bombardier.  This decrease was due to our decision to cease producing drop hammer components.

Military products generated net sales of $36.3 million in 2011 compared to $34.7 million in 2010, an increase of 4.6%.  This increase was primarily due to volume increases in the Blackhawk helicopter program, which generated net sales of $30.4 million in 2011 compared to $29.4 million in 2010, an increase of $1.0 million.

Other products generated net sales of $12.5 million in 2011 compared to $9.8 million in 2010, an increase of 27.6%.  This increase was primarily due to $2.9 million in sales related to one program at the Company’s Mexicali plant during 2011 compared to $0.8 million in 2010, an increase of $2.1 million. The Company discontinued this program in 2012. The increase in other products was also the result of an increase of $1.3 million in sales by Intec, to $6.9 million in 2011 from $5.6 million in 2010.  These increases were offset by a $0.8 million decrease in technology product sales, to $2.5 million in 2011 from $3.3 million in 2010.

Cost of Goods Sold.  Cost of goods sold for 2011 was $123.2 million (73.3% of net sales) compared to $110.6 million (74.1% of net sales) for 2010.  The $12.6 million increase in cost of sales was primarily driven by higher sales in 2011 compared to 2010.  Production efficiencies helped to offset these higher costs.

Gross Profit.  Gross profit for 2011 was $44.9 million (26.7% of net sales) compared to $38.7 million (25.9% of net sales) for 2010.  The improvement in gross profit resulted from the increased sales mentioned above and increased production levels to support higher sales levels and future production rate increases.  The increase in production caused fixed costs to be allocated to a larger amount of production, thus decreasing product costs and improving gross profit percentage. Offsetting these gross improvements was the impact of $1.1 million in loss on a 777 frame program and $0.8 million on a Mexicali program for non-aerospace product.

Selling, General and Administrative Expenses and Other Charges.  Selling, general and administrative expenses were $26.6 million (15.8% of net sales) in 2011 compared to $25.0 million (16.7% of net sales) in 2010.  Personnel costs increased to $15.3 million in 2011 from $13.9 million in 2010, primarily due to a continued increase in head count to support growth.  The increase in revenues caused these fixed costs to be allocated to a larger amount of sales, thus improving the expense percentage.  Amortization expense increased by $1.2 million related to the impairment of an intangible, but this increase was offset by a $1.2 million decrease in other miscellaneous expenses that resulted from a reversal of the liability related to the contingent consideration liability to the former shareholders of Intec.

Engineering Services Segment

Net Sales.  Net sales were $87.5 million in 2011, an increase of 17.3% from $74.6 million in 2010. The following table summarizes the segment’s total sales and the percentage of the segment’s total sales represented by the market served for each of the years ended December 31, 2011 and December 31, 2010, respectively:

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Category	2011		% of Total			2010		% of Total
	($ in millions)
Large commercial aircraft	$	31.1		35.5	%	$	29.2		39.1	%
Corporate and regional aircraft		25.0		28.6	%		21.1		28.3	%
Military		20.3		23.2	%		18.7		25.1	%
Other		11.1		12.7	%		5.6		7.5	%
Total	$	87.5		100.0	%	$	74.6		100.0	%

Net sales of services for large commercial aircraft were approximately $31.1 million in 2011 compared to $29.2 million in 2010, an increase of 6.5%.  The increase primarily resulted from two programs: a nacelle systems development program that generated $2.5 million more revenue in 2011 and the Boeing Integrated Test program which generated $2.3 million more revenue in 2011.  These increases were offset by decreased support provided on the Boeing 747-8 program to $7.7 million in 2011 from $10.1 million in 2010, a $2.4 million decline as the program matured.

Net sales of services supporting corporate and regional aircraft, the majority of which related to the development of new and re-designed aircraft, were approximately $25.0 million during 2011 compared to $21.1 million in 2010, an increase of 18.5%.  The increase in sales in this sector was primarily related to an increase in support requirements on the Bombardier Learjet L-85 of $9.1 million.  This increase was offset by a $4.1 million reduction in support requirements on the Mitsubishi Regional Jet program and a $3.2 million reduction on the G650 program due to design maturation.  A portion of the Mitsubishi Regional Jet decrease is also attributable to a $0.5 million cumulative catch-up adjustment made to revenue due to cost growth on the overall program during the second quarter of 2011.

Military programs had net sales in 2011 of approximately $20.3 million compared to $18.7 million in 2010, an increase of 8.6%.  The increase from 2010 resulted primarily from services in support of the new Boeing Tanker program of $7.9 million, which was offset by the completion of requirements on the CH-53 program, which generated $4.7 million in revenues in 2010, and the completion of our current participation on the Joint Strike Fighter, which generated $1.7 million less revenue in 2011 than in 2010.

Sales related to the design and delivery of tooling on various programs supporting commercial aircraft were $11.1 million in 2011 compared to $5.6 million in 2010, an increase of 98.2%.  This increase was primarily due to a $4.9 million increase in revenue in 2011 on 787 shipping fixtures and $1.7 million in additional revenues for Boeing tooling projects.  These increases were offset by a decline of $1.0 million in Triumph tooling revenues.

Cost of Goods Sold.  Cost of goods sold for 2011 was $72.9 million (83.3% of net sales) compared to $61.8 million (82.8% of net sales) for 2010.  Our increased sales demand led us to hire additional project engineers, which resulted in an increase of $7.7 million in salary and fringe costs.  The remainder of the increase was driven by an aggregate increase of $3.4 million in other direct and indirect project costs.

Gross Profit. Gross profit for this segment was $14.6 million (16.7% of net sales) for 2011 compared to $12.8 million (17.2% of net sales) for 2010.  The decrease in gross profit percentage was due to the Mitsubishi Regional Jet program, which required a $0.5 million cumulative catch-up adjustment during the second quarter of 2011 due to estimated higher costs to complete and other fixed price contracts.  The decrease was also attributed to an unfavorable revenue adjustment in the fourth quarter of 2011 for a fixed price program used to produce 787 shipping fixtures that is ramping down.  This decrease was partially offset by an increase in revenue, which reduced fixed costs as a percentage of sales, thus improving the gross profit percentage.

Selling, General and Administrative Expenses and Other Charges. Selling, general and administrative expenses were $8.1 million (9.3% of net sales) in 2011 compared to $7.4 million (9.9% of net sales) for 2010.  The increase was primarily due to an increase in administrative personnel to support growth.

Non-segment Expenses

Interest Expense.   Interest expense was $0.7 million for 2011 and 2010.

Other Income (Expense), Net.  Other expense was $0.7 million for 2011 compared to other income of $0.1 million for 2010.  This increase in expenses included $0.8 million of non-recurring costs incurred related to potential financing transactions we have decided not to pursue.

Income Tax Expense.  Income tax expense for 2011 was $7.1 million compared to $5.5 million for 2010.  During 2011 our effective income tax rate was 30.3% compared to 29.8% in 2010, with the increase primarily due to increased income that could not be offset at the same rate as available federal and state tax deductions and credits.

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Non-GAAP Financial Measures

When viewed with our financial results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and accompanying reconciliations, we believe earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA provide additional useful information to clarify and enhance the understanding of the factors and trends affecting our past performance and future prospects. We define these measures, explain how they are calculated and provide reconciliations of these measures to the most comparable GAAP measure in the tables below. EBITDA, Adjusted EBITDA and the related financial ratios, as presented in this Form 10-K, are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP.  They are not a measurement of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP, or as an alternative to net cash provided by operating activities as measures of our liquidity.  The presentation of these measures should not be interpreted to mean that our future results will be unaffected by unusual or nonrecurring items.

We use EBITDA and Adjusted EBITDA non-GAAP operating performance measures internally as complementary financial measures to evaluate the performance and trends of our businesses.  We present EBITDA, Adjusted EBITDA and the related financial ratios, as applicable, because we believe that measures such as these provide useful information with respect to our ability to meet our future debt service, capital expenditures, working capital requirements and overall operating performance.

EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.  Some of these limitations are:

● They do not reflect our cash expenditures, future expenditures for capital expenditures or contractual commitments;

● They do not reflect changes in, or cash requirements for, our working capital needs;

● They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

● They are not adjusted for all non-cash income or expense items that are reflected in our statement of cash flows;

● They do not reflect the impact on earnings of charges resulting from matters unrelated to our ongoing operations; and

● Other companies in our industry may calculate EBITDA and Adjusted EBITDA differently from us, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA, Adjusted EBITDA and the related financial ratios should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations.  You should compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally.  See our consolidated financial statements contained in this Report.

However, in spite of the above limitations, we believe that EBITDA and Adjusted EBITDA are useful to an investor in evaluating our results of operations because these measures:

● Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such terms, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;

● Help investors to evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating performance; and

● Are used by our management team for various other purposes in presentations to our Board of Directors as a basis for strategic planning and forecasting.

We have expanded our operations significantly through the Valent Acquisition. As a result, our operating income included significant charges for acquisition-related expenses in 2012.  EBITDA and Adjusted EBITDA exclude these charges, as applicable, and provide meaningful information about the operating performance of our businesses apart from the acquisition-related expenses, as well as interest and tax expenses.

The following financial items have been added back to our net income when calculating EBITDA:

● Depreciation;

● Amortization expense;

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● Interest expense; and

● Income tax expense.

The following financial items have been added back to our net income when calculating Adjusted EBITDA:

● Stock-based compensation;

● Acquisition–related expenses;

● Intangible asset impairment;

● Contingent consideration write-off; and

● Other (net).

Reconciliations of net income to EBITDA and Adjusted EBITDA and the presentation of Adjusted EBITDA as a percentage of net sales were as follows:

	(In Thousands)
	Years Ended December 31,
	2012			2011			2010
Net income	$	16,487		$	16,389		$	12,931
Depreciation and amortization ₁		7,994			7,241			7,289
Interest expense ₂		1,771			669			696
Income tax expense		8,153			7,136			5,496
EBITDA		34,405			31,435			26,412
Stock-based compensation		1,494			1,254			1,794
Acquisition expenses ₃		5,362			-			-
Intangible asset impairment ₄		-			1,163			-
Contingent consideration write-off ₅		-			(1,235	)		-
Other (net)		(356	)		730			(58	)
		6,500			1,912			1,736
Adjusted EBITDA	$	40,905		$	33,347		$	28,148

(1) Includes amortization of intangibles and depreciation expense.

(2) Includes deferred financing costs in connection with closed credit facility in 2012.

(3) Includes investment banking, accounting, legal, tax and valuation expenses for acquisitions.

(4) During the first quarter of 2011, a triggering event occurred with regard to a certain proprietary technology intangible asset as a result of a failure to conclude a possible sale of a product line.

(5) Included in accrued liabilities as of December 31, 2010 was $1,235 of contingent consideration, representing the fair value of the amount payable to former Intec shareholders if certain sales targets were achieved by Intec or if proceeds from the sale of certain portions of Intec exceeded a pre-established threshold by March 31, 2011.

Adjusted EBITDA increased in 2012 over 2011 primarily due to higher net income, higher depreciation and amortization expenses related to the TASS acquisition and capacity expansion, higher interest expense from the write-off of deferred financing expenses and acquisition expenses incurred.

Liquidity and Capital Resources

We generated cash from operations of $8.8 million in 2012 compared to $16.2 million in 2011 and $26.8 million in 2010.  Net cash provided by operating activities for 2012 was unfavorably impacted by increases in trade accounts receivables, related to program investment and inventories needed to support future production rate increases in Aerostructures’ large commercial aircraft and corporate and regional aircraft sectors.

Net cash used in investing activities for the year ended December 31, 2012 was $235.0 million compared to $10.0 million and $7.1 million for the years ended December 31, 2011 and 2010, respectively.  We used $206.5 million, net of cash acquired, in the 2012 acquisition of Valent which was funded from our new credit facility.  We paid $9.8 million, net of cash acquired, in the 2012 acquisition of TASS funded with available cash.  We spent $18.8 million in 2012 on capital expenditures, compared to $10.3 million and $7.2 million during 2011 and 2010, respectively, consistent with the Company’s plan to increase capital spending to support anticipated growth.

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Cash provided by financing activities was $222.7 million in 2012 compared to cash used of $0.3 million and $17.8 million in 2011 and 2010, respectively.  Funds provided by financing activities of $225.0 million in borrowings on a new term loan were primarily used for the acquisition of Valent. We also incurred $3.0 million in new loans for equipment, and $6.2 million in borrowings against our revolving credit facility.  We paid $12.7 million in financing costs for our new loan agreement. During the course of 2010, the Company paid down all of its outstanding revolving line of credit, and there was no significant activity in 2011.

During the fourth quarter of 2012, the Company entered into a credit agreement to provide new senior secured credit facilities to finance the Valent acquisition, refinance existing debt, and fund working capital requirements.  As of December 31, 2012 these new credit facilities include a term loan facility of $225.0 million and a revolving credit facility in the original amount of up to $75.0 million.  The maturity dates of the revolving credit facility and term loan are December 28, 2017 and December 28, 2018, respectively.  The credit agreement for our revolving credit facility and term loan requires us to maintain a certain leverage ratio and interest coverage on a quarterly basis as well as compliance with various restrictive covenants that limit and in some circumstances prohibit, our ability to, among other things, incur additional debt, sell, lease or transfer our assets, pay dividends, make investments, guarantee debt or obligations, create liens, enter into transactions with our affiliates and enter into certain merger, consolidation or other reorganization transactions.  These agreements also require mandatory prepayments of excess cash at certain leverage levels.  As of December 31, 2012, the Company was, and expects to continue to be, in compliance with all of its financial and non-financial covenants under the new senior secured credit facilities.  See Note 19 of the Notes to Consolidated Financial Statements in Item 8 below regarding changes subsequent to December 31, 2012 to our new senior secured credit facilities.

We expect to meet our ongoing working capital, acquisition, debt service, and capital expenditure needs presently and for the next twelve months from a combination of our cash on hand, cash flow from operating activities and cash available under our revolving credit facility.  Our capital budget for 2013 expects that capital expenditures will be between $24.0 million and $27.0 million.  The Company continues to market for design-build programs, which may require additional capital investments.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements consist primarily of operating leases as reflected under “Contractual Obligations and Commitments” below.

Contractual Obligations and Commitments

We had the following contractual obligations and commitments for debt and non-cancelable operating lease payments:

													More
				Less Than									than
		Total (3)		1 year			1-3 years			3 - 5 years			5 years
	($ in thousands)
Debt (1)		$	262,899		$	5,693		$	10,119		$	17,460		$	229,627
Interest on Long-term debt (2)			71,497			12,361			23,716			23,396			12,024
Operating Leases (3)			53,049			7,031			11,857			9,373			24,788
Total		$	387,445		$	25,085		$	45,692		$	50,229		$	266,439

(1) Balances include obligations under capital leases

(2) Interest expense assumes the balances of long-term debt at the end of the period and current effective interest rate.

(3) We have not committed to any significant current or long-term purchase obligations for our operations and have no other significant long-term liabilities reflected on our balance sheet under generally accepted accounting principles.

The purchase price for Valent includes the estimated acquisition-date fair value of contingent consideration.  The estimated acquisition-date fair value of contingent consideration relates to an earn-out at the date of acquisition contingent upon the achievement of certain earnings levels during the one year earn-out period.  The maximum amounts payable is $40.0 million of which no more than $25.0 million payable in 2014 with any remainder payable in 2015.  The estimated fair value of the earn-out at the date of acquisition is $8.0.  The fair value was based on significant inputs not observed in the market and thus represented a Level 3 instrument. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect our own assumptions in measuring fair value.

35

Critical Accounting Estimates

Certain accounting issues require management estimates and judgments for the preparation of financial statements.  We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements.  Therefore, we consider these to be our critical accounting estimates.  Our management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed our disclosure relating to these estimates.  However, these methods, assumptions and estimates could create materially different results under different conditions or using different assumptions.

Inventory.  Except for inventories related to long-term contracts accounted for under contract accounting as discussed below, we value our product inventories at the lower of cost or market using actual cost for raw materials and average cost for work in process, manufactured and purchased components and finished goods.  In assessing the ultimate realization of inventories, we make judgments as to future demand requirements based upon customer orders in backlog, historical customer orders, customer and industry analyst estimates of aircraft production rates, and other market data available to us.  Additionally, in the aviation industry, these future demand requirements depend on estimates of aircraft lives and the need for spare parts over the course of the aircraft life.  We have recorded charges in recent periods due to discontinuances of product lines, losses of customer contracts, lack of order activity, or changes in expectations of future requirements.

We sell many of our products under fixed-price arrangements.  Occasionally, costs of production may exceed the market values of certain products and product families, which require us to adjust our inventory value.  In these circumstances, management is required to make estimates of costs not yet incurred to determine the ultimate cost of these products that are in work in process.  Changes in the assumptions and estimates of such factors as expected scrap, costs of material, labor and outside services and the amount of labor required to complete the products may result in changes in inventory value.

At times, we accept new orders for products from our customers where actual production costs may differ from our expectations when we quoted the product.  Additionally, customers may request engineering changes or quality acceptance changes in products that may alter the cost of products produced by us.  In the latter circumstances, we notify the customer of these issues and seek reimbursement for costs incurred over and above the selling price of the products, as well as a re-pricing of the product on future deliveries.  For certain fixed price contracts requiring development or delivery of multiple units of complex product over more than one year, we incur and defer, as part of the inventory, certain costs that are specific to a particular contract and which we expect to recoup as part of the unit cost charged to the customer under the contract.  Such costs are charged to cost of product sales ratably as the manufactured units are shipped or costs are incurred pursuant to the contract.  Changes in the estimated number of units expected to be delivered under the contract result in prospective adjustments of the ratable charge-off of deferred inventoriable costs per unit shipped.  Should the remaining inventoriable costs plus estimated costs of production of units yet to be shipped under the contract exceed estimated future contract revenues, the resulting full loss is recognized in the period it becomes probable and estimable.  See Note 1 of the Notes to Consolidated Financial Statements in Item 8 below.

Contract Accounting.  Contract accounting involves a process of estimating the total revenues and costs for each contract, which results in the development of estimated gross margin percentages.  For contracts in which progress is measured using the units of delivery method, the amount reported as revenue represents the invoice price of delivered products, and cost of sales is determined by applying the estimated gross margin percentage to the amount of revenue recognized.  For contracts in which progress is measured using the cost-to-cost method, the amount reported as cost of sales represents actual costs incurred, and revenue is determined by applying the estimated gross margin percentage to actual costs incurred.  Based on the size, length of time and nature of the contract, the estimation of total revenues and costs through completion is complicated and subject to many variables.  Total contract revenue estimates are based on negotiated contract prices, customer change orders, claims when a legal basis exists and estimated cost to produce the product or service plus profit.  Total contract cost estimates are largely based on our cost of production, purchase order terms negotiated or estimated by our supply chain, historical and expected performance trends, customer change orders and other economic projections.

The development of a gross margin percentage involves utilization of detailed procedures by a team of operational and financial personnel that provides information on the status of the contracts.  Estimates of each significant contract’s revenues and costs are reviewed and approved by the team on a quarterly basis.  Any approved changes in these estimates are analyzed to determine if they result in recognition of cumulative adjustments to the contract profit in the period in which changes are made.  Due to the significance of the judgment in the estimation process described above, it is possible that materially different margins could be recorded if we used different assumptions or if the underlying circumstances were to change.  Changes in underlying assumptions/estimates or circumstances may adversely or positively affect financial performance in future periods.  Consistent with our business strategy of growing design-build and complex assembly capabilities, we expect significant increases in programs calling for long-term contracts in the future.

Goodwill and Intangible Assets.  The Company exercises its judgment in evaluating its goodwill and intangible assets for possible impairment.  We perform a goodwill and indefinite-lived intangible asset impairment test annually or when circumstances arise that indicate there may be an impairment.  We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.  If it is, the quantitative tests require comparing recorded values to estimated fair values for the assets under review.  If it is not, no additional analysis is required.

36

The Company has recorded its goodwill and conducted testing for potential goodwill impairment at a reporting unit level.  Our reporting units represent a business for which discrete financial information is available, and segment management regularly reviews the operating results.  There are three reporting units within the Company with 72% of the goodwill reported within the Aerostructures operating segment.

We performed our annual test of goodwill and indefinite-lived intangible assets in the fourth quarter of 2012, except for those amounts relating to our TASS and Valent acquisitions, by performing the qualitative assessment option and we concluded it was more likely than not that the fair value of our reporting units exceeded carrying value, and thus, no impairment charge was recorded.  A significant amount of judgment is involved in determining if an indicator of impairment has occurred.  Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others.  The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill.  The fair values of goodwill and intangibles relating to our 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

If it would be necessary to perform the quantitative tests, fair values for goodwill testing are estimated using a discounted cash flow approach and market approach unless circumstances indicate that a better estimate of fair value is available.  In using the discounted cash flow approach, we estimate cash flow forecasts of our reporting units, the discount rate, the terminal business value and the projected income tax rate.  The cash flow forecasts of the reporting units are based upon management’s long-term view of our markets.  The discount rate utilized is management’s estimate of what the market’s weighted average cost of capital is, considering what the optimal capital structure would be for a market participant purchaser of the reporting unit.  The terminal business value is determined by applying a business growth factor to the latest year for which a forecast exists.  The projected income tax rates utilized are the cash tax rates that a prospective buyer would most likely factor into a fair value calculation for each reporting unit.

Customer-related intangible assets resulting from the acquisitions of Versaform Corporation, D3, Intec, TASS and Valent have an original estimated useful life of five to 22 years.  The trademark that resulted from the D3 acquisition was determined to have an indefinite life.  Other intangible assets resulting from the acquisition of Intec, TASS and Valent have an original estimated useful life of two to seven years.  We test the indefinite lived intangible asset for impairment, at least annually, by comparing its carrying value over the amount of discounted cash flows attributable to the intangible asset.  We test the finite lived intangible assets for impairment by assessing the current period cash flows of each asset group.  If events or changes in circumstances indicate that the carrying amount of any of these intangible assets may not be recoverable, an undiscounted cash flow test will be performed and, if necessary, an impairment charge will be recognized for the amount by which the carrying amount of these assets exceeds its fair value.

As of December 31, 2012, and in further support of our analysis, our net book value (i.e., shareholders’ equity) was approximately $201.0 million, and our market capitalization was approximately $246.7 million.

Income Taxes.  The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets based on the future tax consequences of events that have been recognized in our financial statements or tax returns.  Deferred tax assets are also required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

We record an income tax expense or benefit based on the net income earned or net loss incurred in each tax jurisdiction and the tax rate applicable to that income or loss.  In the ordinary course of business, there are transactions for which the ultimate tax outcome is uncertain.  The final tax outcome for these matters may be different from management’s original estimates made in determining the income tax provision.  A change to these estimates could impact the effective tax rate and net income or loss in subsequent periods.

Recent Accounting Pronouncements

For information related to recently issued accounting standards, see Note 1 of the Notes to Consolidated Financial Statements in Item 8 below.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .

We are exposed to market risks, including interest rates, inflation, and foreign currency exchange rates.

Interest Rate Sensitivity

We are exposed to market risk primarily due to fluctuations in interest rates.  We do not utilize any particular strategy or instruments to manage our interest rate risk.  We estimate that a 1% change in the interest rates of our floating-rate debt outstanding as of December 31, 2012 would change interest expense on an annual basis by approximately $2.3 million.  This amount is determined by calculating the effect of a hypothetical interest rate change on our floating-rate debt.  As of December 31, 2012, we had $28.5 million in carrying value of fixed-rate debt, primarily consisting of notes payable and Industrial Revenue Bonds, with a fair value of approximately the same.

37

Inflation Risk

The Company experiences risk related to commodity prices as some of the raw materials and operating supplies are subject to price and supply fluctuations caused by the market.  We strive to mitigate the impact of commodity price risk and participate in Boeing’s collective raw material sourcing contracts, which allow us to obtain raw materials at pre-negotiated rates.  This mitigates the exposure to market volatility of certain raw materials used in the aerospace industry.  Our supply agreements with The Boeing Company allow us to pass on certain unusual increases in raw material costs to The Boeing Company; however, in limited scenarios, we may not be fully compensated for the increased costs.  We have long-term supply agreements with several of our primary suppliers.  We do not enter into forward contracts or other financial instruments to hedge commodity price risk; however, we do focus on strategic risk management of all raw material commodities.

Foreign Currency Exchange Risk

Certain of our operations outside of the United States use the related local currency as their functional currency.  We translate revenue and expense at average rates of exchange during the period.  We translate assets and liabilities at the rates of exchange as of the consolidated balance sheet dates and include foreign currency translation gains and losses as a component of accumulated other comprehensive income.  Due to the nature of our operations and our corporate structure, we also have subsidiaries that have transactions in foreign currencies other than their functional currency.  We record transaction gains and losses in our consolidated statements of operations related to the recurring remeasurement and settlement of such transactions.  A 10% change in foreign currency exchange rates would not have a material impact to our consolidated financial position or results of operations.

38

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following financial statements are included in Item 8 of this report:

Financial Statements	Page
Report of Independent Registered Public Accounting Firm	40
Consolidated Balance Sheets as of December 31, 2012 and 2011	41
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2012, 2011 and 2010	42
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2012,  2011 and 2010	43
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010	44
Notes to Consolidated Financial Statements	45
Schedule II – Valuation and Qualifying Accounts	61

39

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of LMI Aerospace, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive income, of shareholders' equity and of cash flows present fairly, in all material respects, the financial position of LMI Aerospace, Inc. and its subsidiaries (the "Company") at December 31, 2012 and December 31, 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of Management Regarding Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in the Report of Management Regarding Internal Control Over Financial Reporting, management has excluded TASS Inc. (“TASS”) and Valent Aerostructures, LLC (“Valent”) from its assessment of internal control over financial reporting as of December 31, 2012 because both entities were acquired by the Company in purchase business combinations during 2012. We have also excluded TASS and Valent from our audit of internal control over financial reporting. TASS and Valent are wholly-owned subsidiaries whose total assets and net sales represent 53.8% and 2.3%, respectively of the related consolidated financial statement amounts as of and for the year ended December 31, 2012.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

St. Louis, Missouri

March 15 , 2013

40

LMI AEROSPACE, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

	December 31,
		2012			2011
Assets
Current assets:
Cash and cash equivalents		$	4,347		$	7,868
Trade accounts receivable, net			69,159			42,720
Inventories			90,039			51,081
Prepaid expenses and other current assets			5,655			2,595
Deferred income taxes			3,839			4,085
Total current assets			173,039			108,349
Property, plant and equipment, net			96,218			27,340
Goodwill			179,314			49,102
Intangible assets, net			64,334			17,642
Other assets			15,059			2,173
Total assets		$	527,964		$	204,606
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable		$	30,471		$	13,224
Accrued expenses			23,703			11,108
Current installments of long-term debt and capital lease obligations			5,632			29
Total current liabilities			59,806			24,361
Long-term debt and capital lease obligations, less current installments			255,067			-
Other long-term liabilities			3,405			3,541
Deferred income taxes			8,732			8,919
Total long-term liabilities			267,204			12,460
Shareholders’ equity:
Common stock, $0.02 par value per share; authorized 28,000,000 shares; issued 12,860,023 and 12,123,992 shares at December 31, 2012 and December 31, 2011, respectively			257			242
Preferred stock, $0.02 par value per share; authorized 2,000,000 shares; none issued at either date			-			-
Additional paid-in capital			90,839			74,823
Accumulated other comprehensive loss			(49	)		-
Treasury stock, at cost, 101,622 shares at December 31, 2012 and 249,082 shares at December 31, 2011			(482	)		(1,182	)
Retained earnings			110,389			93,902
Total shareholders’ equity			200,954			167,785
Total liabilities and shareholders’ equity		$	527,964		$	204,606

See accompanying notes to consolidated financial statements.

41

LMI AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands, except share and per share data)

	Year Ended December 31,
		2012			2011			2010
Sales and service revenue
Product sales		$	168,943		$	161,435		$	143,919
Service revenues			109,686			92,605			79,437
Net sales			278,629			254,040			223,356
Cost of sales and service revenue
Cost of product sales			121,247			117,368			106,891
Cost of service revenues			89,074			77,022			64,965
Cost of sales			210,321			194,390			171,856
Gross profit			68,308			59,650			51,500
Selling, general and administrative expenses			36,891			34,726			32,435
Acquisitions expense			5,362			-			-
Income from operations			26,055			24,924			19,065
Other income (expense):
Interest expense			(1,771	)		(669	)		(696	)
Other, net			356			(730	)		58
Total other expense			(1,415	)		(1,399	)		(638	)
Income before income taxes			24,640			23,525			18,427
Provision for income taxes			8,153			7,136			5,496
Net income			16,487			16,389			12,931
Other comprehensive income (expense):
Change in foreign currency translation adjustment			(49	)		-			-
Total comprehensive income		$	16,438		$	16,389		$	12,931
Amounts per common share:
Net income per common share		$	1.41		$	1.42		$	1.13
Net income per common share assuming dilution		$	1.39		$	1.40		$	1.11
Weighted average common shares outstanding			11,701,607			11,559,895			11,420,524
Weighted average dilutive common shares outstanding			11,839,182			11,741,513			11,636,385

See accompanying notes to consolidated financial statements.

42

LMI AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands, except share data)

												Accumulated			Total
				Additional								Other			Share-
	Common			Paid-In			Treasury			Retained		Comprehensive			holders'
	Stock			Capital			Stock			Earnings		Income (Loss)			Equity
Balance at December 31, 2009	$	240		$	71,375		$	(1,704	)	$	64,582	$	-		$	134,493
Net income		-			-			-			12,931		-			12,931
Other comprehensive income (loss)		-			-			-			-		-			-
Issuance of stock
20,360 shares in connection with exercise of options		-			33			30			-		-			63
79,823 shares of restricted stock		2			(2	)		-			-		-			-
401k plan contribution		-			414			242			-		-			656
Restricted stock compensation		-			1,794			-			-		-			1,794
Other		-			(174	)		-			-		-			(174	)
Balance at December 31, 2010		242			73,440			(1,432	)		77,513		-			149,763
Net income		-			-			-			16,389		-			16,389
Other comprehensive income (loss)		-			-			-			-		-			-
Issuance of stock
7,850 shares in connection with exercise of options		-			57			4			-		-			61
76,458 shares of restricted stock		-			(25	)		24			-		-			(1	)
401k plan contribution		-			589			222			-		-			811
Restricted stock compensation		-			1,254			-			-		-			1,254
Other		-			(492	)		-			-		-			(492	)
Balance at December 31, 2011		242			74,823			(1,182	)		93,902		-			167,785
Net income		-			-			-			16,487		-			16,487
Other comprehensive income (loss)		-			-			-			-		(49	)		(49	)
Issuance of stock
108,646 shares of restricted stock		-			(515	)		515			-		-			-
401k plan contribution		-			582			211			-		-			793
783,798 shares for Valent acquisition		16			14,984			-			-		-			15,000
Restricted stock compensation		-			1,494			-			-		-			1,494
Other		(1	)		(529	)		(26	)		-		-			(556	)
Balance at December 31, 2012	$	257		$	90,839		$	(482	)	$	110,389		(49	)	$	200,954

See accompanying notes to consolidated financial statements.

43

LMI AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	Year Ended December 31,
	2012			2011			2010
Operating activities:
Net income	$	16,487		$	16,389		$	12,931
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7,994			7,241			7,289
Intangible asset impairment		-			1,163			-
Contingent consideration write-off		-			(1,235	)		-
Restricted stock compensation		1,494			1,254			1,794
Deferred taxes		(1,062	)		341			(558	)
Other noncash items		(317	)		(227	)		(240	)
Changes in operating assets and liabilities, net of acquired businesses:
Trade accounts receivable		(8,093	)		(8,871	)		1,440
Inventories		(10,980	)		(5,933	)		555
Prepaid expenses and other assets		1,186			(1,080	)		800
Current income taxes		(1,168	)		1,731			(343	)
Accounts payable		3,062			4,354			639
Accrued expenses		196			1,048			2,538
Net cash provided by operating activities		8,799			16,175			26,845
Investing activities:
Additions to property, plant and equipment		(18,783	)		(10,267	)		(7,151	)
Acquisitions, net of cash acquired		(216,398	)		-			-
Other, net		181			270			6
Net cash used by investing activities		(235,000	)		(9,997	)		(7,145	)
Financing activities:
Proceeds from issuance of debt		229,124			-			-
Principal payments on long-term debt and notes payable		(118	)		(180	)		(327	)
Advances on revolving line of credit		40,278			-			13,520
Payments on revolving line of credit		(34,042	)		-			(30,520	)
Prepaid financing costs		(12,736	)		-			-
Other, net		174			(77	)		(457	)
Net cash provided/(used) by financing activities		222,680			(257	)		(17,784	)
Net (decrease)/increase in cash and cash equivalents		(3,521	)		5,921			1,916
Cash and cash equivalents, beginning of year		7,868			1,947			31
Cash and cash equivalents, end of year	$	4,347		$	7,868		$	1,947
Cash payments for:
Interest paid	$	585		$	490		$	531
Income taxes paid, net of refunds received	$	10,261		$	5,032		$	6,360
Supplemental disclosure of noncash transactions:
Fair value of common stock issued to acquire Valent	$	15,000		$	-		$	-
Contingent consideration	$	7,950		$	-		$	-
Equipment acquired under capital lease	$	746		$	-		$	-

See accompanying notes to consolidated financial statements.

44

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

1.       ACCOUNTING POLICIES

Principles of Consolidation

The Consolidated Financial Statements included in this report have been prepared by management of LMI Aerospace, Inc.  All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions.  These estimates and assumptions affect the reported amounts in the financial statements and accompanying notes.  Actual results could differ from these estimates.

Revenue Recognition

Except as described below, the Company recognizes revenue for sales of products and related services when products are delivered and services are rendered, the price is fixed or determinable, and collection is reasonably assured.

The majority of the Aerostructures segment’s revenues are recognized when products are shipped, delivery has occurred or services have been rendered.  For long-term contracts requiring development and delivery of multiple units of product over more than one year, the Company incurs and defers, as part of inventory, certain costs which are specific to the contract and will be recouped as part of the unit cost charged to the customer under the contract.  Such costs are charged to cost of product sales ratably as the manufactured units are shipped pursuant to the contract.  Changes in the estimated number of units expected to be delivered under such contracts result in prospective adjustments of the ratable charge-off of deferred inventoriable costs per unit shipped.  Should the remaining inventoriable costs plus estimated costs of production of units yet to be shipped under the contract exceed estimated future contract revenues, the resulting full loss is recognized in the period it becomes probable and estimable.  No such loss was recognized in 2012, 2011, or 2010.

The majority of the Engineering Services segment’s revenues are generated under cost-plus reimbursement contracts.  Revenue for cost-plus reimbursement contracts is recognized as labor hours and direct costs are incurred.  Such revenues include the value of labor hours at pre-negotiated rates, estimated overhead and general and administrative costs allocable to the contract based on applicable rates for each quarter, actual direct incidental costs, and a pre-negotiated fee markup or margin.

For certain long-term fixed price design and development contracts, the Company applies the percentage of completion method of contract accounting.  The cost-to-cost method is used to measure progress toward completion.  Under the cost-to-cost method of accounting, the Company recognizes sales based on the ratio of costs incurred to the estimate of total costs at completion.    No such loss was recognized in 2012, 2011, or 2010.  For certain other contracts, progress is measured using the units of delivery method.  The amount reported as revenue represents the invoice price of delivered products, and cost of sales is determined by applying the estimated gross margin percentage to the amount of revenue recognized.  Should estimated total costs at completion exceed the estimated total revenue, the anticipated full loss is recognized in the period in which it is estimated.

In the ordinary course of business, the Company may receive requests from its customers to perform tasks not specified in its contracts.  When this occurs on a long-term contract using the cost-to-cost method of percentage of completion accounting, the Company may record revenue for claims or unpriced change orders to be negotiated with customers.  As of December 31, 2012, approximately 0.5% of revenue represented amounts associated with claims and unpriced change orders.

Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts

In certain circumstances, the Company capitalizes costs incurred prior to the execution of a contract with the customer.  These circumstances are limited to instances in which the Company has substantially negotiated the terms and conditions of the anticipated contract with its customers and concluded that their recoverability from the anticipated contract is probable.  As these costs are directly associated with a specific anticipated contract and they are concluded to be recoverable under that anticipated contract, the Company has capitalized these amounts.

The Company may incur design and development costs prior to the production phase of contracts that are outside the scope of the contract accounting method.  These pre-production costs are generally related to costs the Company incurs to design and build tooling that is owned by the customer and design and engineering services.  The Company receives the non-cancellable right to use these tools to build the parts as specified in a contractual agreement and therefore has capitalized these costs.  In certain instances, the Company enters into agreements with its customers that provide it a contractual guarantee for reimbursement of design and engineering services incurred prior to the production phase of a contract.  Due to the contractual guarantee, the Company capitalizes the costs of these services.  The pre-production costs are amortized to cost of sales over the shorter of the life of the contractual agreement or the related tooling.

45

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits in transit and all highly liquid investment instruments with an initial maturity of three months or less.

Inventories

The Company’s inventories are stated at the lower of cost or market and utilize actual costs for raw materials and an average cost for work in process, manufactured and purchased components and finished goods.  The Company evaluates the inventory carrying value and reduces the carrying costs based on customer activity, estimated future demand, price deterioration, and other relevant information. The Company’s customer demand is unpredictable and may fluctuate due to factors beyond the Company’s control.  In addition, inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, a portion of which is not expected to be realized within one year.  See further discussion regarding deferred long-term contract costs under “Revenue Recognition” and “Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts.”

Allowance for Doubtful Accounts

The allowance for doubtful accounts receivable reflects the Company’s best estimate of probable losses inherent in its accounts receivable.  The basis used to determine this value is derived from historical experience, specific allowances for known troubled customers and other currently available information.

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets.  Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets.  Estimated useful lives for buildings, machinery and equipment, and purchased software are 20 to 35 years, 4 to 10 years and 3 to 4 years, respectively.  Amortization incurred under capital leases is reported with depreciation expense.

Long Lived Assets

Long lived assets held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Goodwill and Intangible Assets

The Company’s acquisitions involve the purchase of tangible and intangible assets and the assumption of certain liabilities.   As part of the purchase price allocation, the Company allocates the purchase price to the tangible assets acquired and liabilities assumed based on estimated fair market values, and the remainder of the purchase price is allocated to intangibles and goodwill.  Goodwill and intangible assets with indefinite lives are not amortized but are subject to an impairment assessment at least annually in relation to their fair value.  As part of this process, the Company first assesses qualitatively whether it is necessary to perform the quantitative test.  The qualitative assessment involves evaluating relevant events or circumstances to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.  If it is not, the Company can bypass the quantitative assessment of goodwill.  If it is, or if the Company has elected to bypass the qualitative assessment process, the quantitative assessment of goodwill utilizes a two-step process, where the carrying value of the reporting unit is compared to its fair value.  If the carrying value is less than the fair value, no impairment exists, and the second step is not performed.  However, if the carrying value is greater than the fair value, the second step is performed.  An impairment charge would be recognized for the amount that the carrying value of the goodwill exceeds its fair value.

Deferred Gain on Sale of Real Estate

On December 28, 2006, the Company entered into an agreement with a third party to sell and lease back certain of its real estate properties for $10,250.  The amount of the sale price in excess of book value for these properties of $4,242 was deferred and is being amortized over the 18 year term of the leases on a straight-line basis.

46

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

Share-Based Compensation

The Company recognizes compensation expense for share-based payment transactions in the financial statements at their fair value.  The expense is measured at the grant date, based on the calculated fair value of the share-based award, and is recognized over the requisite service period (generally the vesting period of the equity award).

Income Taxes

Provisions for federal and state income taxes are calculated on reported net income before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities.  Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes.  Significant judgment is required in determining income tax provisions and evaluating tax positions.

The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.  The Company records a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on our tax return.  To the extent that management’s assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

The Company’s unrecognized tax benefits as of December 31, 2012 and 2011 are immaterial.  The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2012.  The Company has no material interest or penalties relating to income taxes recognized on the balance sheets as of December 31, 2012, and 2011.  As of December 31, 2012, returns for calendar years 2009 through 2011 remain subject to examination by the Internal Revenue Service and/or various state tax jurisdictions.

Financial Instruments

Fair values of the Company’s long-term obligations approximate their carrying values as the applicable interest rates approximate the current market rates or have variable rate characteristics.  The Company’s other financial instruments have fair values that approximate their respective carrying values due to their short maturities.

Reclassifications

Certain reclassifications have been made to prior period financial statements in order to conform to current period presentation.

Recent Accounting Pronouncements

In October 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2012-04, "Technical Corrections and Improvements," (“ASU 2012-04”).  ASU 2012-04 amends current guidance by clarifying the FASB Accounting Standards Codification (“Codification”), correcting unintended application of guidance, or making minor improvements to the Codification. These amendments are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Additionally, the amendments included in ASU 2012-04 intend to make the Codification easier to understand and the fair value measurement guidance easier to apply by eliminating inconsistencies and providing needed clarifications. The amendments in ASU 2012-04 that will not have transition guidance will be effective upon issuance.  For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012.  The adoption of this standard is not expected to have a material effect on our consolidated financial statements.

In January 2013, the FASB issued ASU No. 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” to clarify the scope of the disclosure requirements described in the FASB’s ASU No. 2011-11“Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”).  ASU No. 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position.  This update clarifies that the scope is limited to include derivatives or securities borrowing and lending transactions that are offset or subject to an enforceable master netting arrangement or similar agreement.  These updates are effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013 applied retrospectively for comparative periods presented.  The adoption of this standard is not expected to have a material effect on our consolidated financial statements.

47

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

In February 2013, the FASB issued ASU No.  2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income."  The standard requires companies to present, either in a single note or parenthetically on the face of the financial statements; the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification.  This ASU is effective prospectively for reporting periods beginning after December 15, 2012 which corresponds to the Company’s first fiscal quarter beginning January 1, 2013. The adoption of this is not expected to have a material effect on our consolidated financial statements.

2.       ACQUISITIONS

On December 28, 2012, the Company acquired all of the outstanding equity of Valent Aerostructures, LLC, (“Valent”), a provider of complex sub-assemblies and machined parts to airframe manufacturers in the commercial aerospace, business and regional, and military industries, is headquartered in Kansas City, Missouri, and was accounted for under the acquisition method of accounting.  Concurrent with the acquisition, the Company entered into a new credit agreement to fund the majority of the purchase price as described in Note 9 below.  The Company also issued $15,000 in common stock.  Operating results of Valent, which are not material to the Company's operations, have been included in the Company’s Aerostructures segment from the date of acquisition, and acquisition related costs of $4,860 were included in acquisitions expense.  The following table presents unaudited pro forma consolidated operating results for the Company for the years ended December 31, 2012 and 2011, as if Valent had been acquired as of the beginning of the periods presented:

	December 31,
	2012		2011
Net sales	$	386,402	$	340,551
Net income		12,899		10,152

Management believes the integration of Valent with its business will provide synergistic benefits, including increased scale, complementary product offerings, the ability to compete for larger and more complex design-build projects and enhanced project management capabilities, allowing the Company to drive further growth from existing platforms.

The following table summarizes the preliminary purchase price allocation for Valent at the date of acquisition:

Cash	$	44
Accounts receivable		16,507
Inventory		27,978
Prepaid expenses and other current assets		640
Fixed assets		55,593
Intangible assets		46,546
Other long-term assets		1,575
Goodwill		123,584
Current liabilities assumed		(19,820	)
Long-term liabilities assumed		(23,118	)
Cost of acquisition	$	229,529

Of the $46,546 acquired intangible assets, $45,600 was assigned to customer relationships with a weighted average useful life of 20.3 years; and the remaining $946 consists of trade names, trademarks and other intangibles and have a weighted average useful life of 5.5 years.  The fair value of the customer relationships was determined using the multi-period excess earnings method.  The fair value of trade names and trademarks was determined using the cost method.

The purchase price for Valent includes the estimated acquisition-date fair value of contingent consideration.  The estimated acquisition-date fair value of contingent consideration relates to an earn-out at the date of acquisition contingent upon the achievement of certain earnings levels during the one year earn-out period.  The maximum amounts payable is $40,000 of which no more than $25,000 is payable in 2014 with any remainder payable in 2015.  The estimated fair value of the earn-out at the date of acquisition is $7,950, and is included in accrued expenses.

The final determination of the fair value of certain assets acquired and liabilities assumed will be completed within the one year measurement period.  The size and timing of the Valent acquisition will necessitate the use of this measurement period to adequately analyze and assess a number of the factors used in establishing the asset and liability fair values as of the acquisition date.  Any potential adjustments made could be material in relation to the preliminary values presented above.

48

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

On August 7, 2012, the Company acquired all of the shares of capital stock of TASS Inc. (“TASS”), an after-market engineering and support services firm.  Headquartered in Kirkland, Washington, TASS delivers engineering solutions to aircraft manufacturers, airlines, Maintenance, Repair and Overhaul companies and leasing companies worldwide.  The acquisition was funded by internal cash and by entering into a $1,000 note payable and was accounted for under the acquisition method of accounting.  Operating results of TASS, including revenues of $6,147 and loss from operation of $79, have been included in the Company’s Engineering Services segment from the date of acquisition, and acquisition related costs of $343 were included in selling, general and administrative expense.  The pro-forma operating results, as if the Company had completed the acquisition at the beginning of the periods presented, are not material to the Company’s operations and are not presented.

Management believes the acquisition of TASS, together with other initiatives, will augment the Company’s long and successful history with Boeing products and provide the Company with a global presence in the aftermarket engineering arena.  TASS also provides the Company the ability to internally source product support for parts manufactured by the Company in the global airline fleet.

The Company performed a valuation analysis to determine amounts allocated to the acquired assets and assumed liabilities, including various intangible assets.  The following table summarizes the purchase price allocation for TASS at the date of acquisition:

Cash	$	617
Accounts receivable		1,979
Other assets		175
Fixed assets		196
Intangible assets		2,247
Goodwill		6,628
Current liabilities assumed		(1,362	)
Cost of acquisition	$	10,480

Of the $2,247 acquired intangible assets, $1,876 was assigned to customer relationships with a weighted average useful life of 11.9 years; and the remaining $371 consists of trademarks and other intangibles and have a weighted average useful life of 2.9 years.  The fair value of the customer relationships was determined using the discounted cash flow method.  The fair value of the trademarks was determined using the relief from royalty method.

3.       ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  A fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).  The three levels of the fair value hierarchy are described below:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.  There have been no changes in the methodologies used at December 31, 2012.  There were no transfers between levels during 2012 and 2011.

49

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

	Assets at Fair Value as of December 31, 2012
	Total		(Level 1)		(Level 2)		(Level 3)
Recurring Fair Value Measurement:
Contingent consideration (1)	$	7,950	$	-	$	-	$	7,950
Non-recurring Fair Value Measurements:
Intangible assets, net (2)		48,793		-		-		48,793

												2011
												Total
	Assets at Fair Value as of December 31, 2011											Gains
	Total		(Level 1)			(Level 2)			(Level 3)			(Losses)
Recurring Fair Value Measurement:
Money market fund (3)	$	7,503		$	7,503		$	-		$	-			-
Non-recurring Fair Value Measurements:
Intangible assets, net (4)		17,642			-			-			17,642		$	(1,163	)
Contingent consideration (5)		-			-			-			-			1,235
														72

(1) The Monte Carlo simulation was used with a normal probability distribution of the best estimate of EBITDA for 2013 to approximate fair value.

(2) The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values

(3) Institutional Money Market: Valued at the closing price reported on the active markets on which the individual securities are traded (Level 1); included in cash and cash equivalents at December 31, 2011.  The money market fund was fully liquidated at its carrying value during the third quarter of 2012 to fund the TASS acquisition.

(4) During the first quarter of 2011, a triggering event occurred with regard to a certain proprietary technology intangible asset as a result of a failure to conclude a possible sale of a product line.  The Company did not have plans to utilize this technology in the near term and believed the current market for the product line to be limited; thus, utilizing the income approach with a level 3 valuation, the Company expected zero cash flows.  As such, a full impairment loss of $1,163 was recognized as of March 31, 2011.  The impairment loss was recognized in the Aerostructures segment in the selling, general and administrative expenses line of the Consolidated Statements of Income.

(5) Included in accrued liabilities as of December 31, 2010 was $1,235 of contingent consideration, representing the fair value of the amount payable to former Intec shareholders if certain sales targets were achieved by Intec or if proceeds from the sale of certain portions of Intec exceeded a pre-established threshold by March 31, 2011.  This amount was calculated utilizing an income approach with a level 3 valuation in which the Company analyzed expected future cash flows of likely scenarios as of December 31, 2010.  Neither the sales targets nor the sale of certain portions of Intec occurred by March 31, 2011.  As such, the $1,235 of contingent consideration was deemed not to be owed, and a benefit was recorded in the selling, general and administrative expenses line of the Consolidated Statements of Income.

50

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

4.       ACCOUNTS RECEIVABLE NET

Accounts receivable, net consists of the following:

	December 31,
	2012			2011
Trade receivables	$	50,876		$	35,482
Unbilled revenue		12,372			6,347
Other receivables		6,198			1,250
		69,446			43,079
Less: Allowance for doubtful accounts		(287	)		(359	)
Accounts receivable, net	$	69,159		$	42,720

Under long-term contract accounting unbilled revenue on long-term contracts arise when the sales or revenues based on performance attainment, though appropriately recognized, cannot be billed yet under terms of the contract as of the balance sheet date.  Accounts receivable expected to be collected after one year are not material.

5.       INVENTORIES

Inventories consist of the following:

	December 31,
	2012		2011
Raw materials	$	20,451	$	9,437
Work in progress		20,012		9,387
Manufactured and purchased components		13,393		15,051
Finished goods		30,792		14,744
Product inventory		84,648		48,619
Capitalized contract costs		5,391		2,462
Total inventories	$	90,039	$	51,081

Inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which is not expected to be realized within one year.  The Company believes these amounts will be fully recovered.

6.       PROPERTY, PLANT AND EQUIPMENT

Depreciation expense (including amortization expense on software) recorded by the Company totaled $5,894, $5,219 and $5,152 for 2012, 2011 and 2010, respectively.

	December 31,
	2012			2011
Land	$	1,455		$	67
Buildings and improvements		18,676			199
Machinery and equipment		108,391			62,751
Leasehold improvements		10,559			7,462
Software and other		10,629			9,557
Construction in progress		7,168			2,427
Total gross property, plant and equipment		156,878			82,463
Less accumulated depreciation		(60,660	)		(55,123	)
Total net property, plant and equipment	$	96,218		$	27,340

See discussion in Note 9 regarding property, plant and equipment recorded as a result of capital leases.

51

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

7.       GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the net carrying amount of goodwill by segment at December 31, 2012 and 2011, respectively:

							Engineering
	Aerostructures						Services				Total
	2012			2011			2012		2011		2012			2011
Balance at December 31,
Gross Goodwill	$	135,431		$	11,847		$	49,536	$	42,908	$	184,967		$	54,755
Accumulated impairment loss		(5,653	)		(5,653	)		-		-		(5,653	)		(5,653	)
Net Goodwill	$	129,778		$	6,194		$	49,536	$	42,908	$	179,314		$	49,102

The net goodwill balance at December 31, 2012 consisted of $42,908 from the acquisition of D3 Technologies, Inc. (“D3”) in July 2007, $6,194 from the acquisition of Intec in January 2009, $6,628 from the acquisition of TASS in August 2012, and $123,584 from the acquisition of Valent in December 2012, and at December 31, 2011 only the D3 and Intec amounts.  Goodwill recorded as a result of the D3 and Intec acquisitions is not deductible for tax purposes.  Goodwill recorded as a result of the Valent and TASS acquisitions is deductible for tax purposes. The fair values of goodwill for Valent and TASS were determined by third parties in connection with the purchase and recorded at those values. The Company performed the goodwill impairment analyses for both reporting units in the fourth quarter of fiscal years 2012, excluding Valent and TASS, using a qualitative assessment, and in 2011, using the expected present value of future cash flows for D3 and the qualitative assessment for Intec.  This is considered to be level 3 in the fair value hierarchy.  No adjustment to goodwill was required based on the fourth quarter 2012 and 2011 analyses.

Intangible Assets

Intangible assets primarily consist of trademarks and customer intangibles resulting from the acquisitions of Versaform Corporation, D3, Intec, TASS, and Valent.  The trademark of $4,222 that resulted from acquisition of D3 was determined to have an indefinite life.  The remaining trademarks resulted from the acquisitions of Intec, TASS, and Valent and have a weighted average useful life of 4.5 years.  Customer intangibles have a weighted average useful life of 18.5 years.  Other intangible assets have a weighted average useful life of 5.3 years.  The carrying values were as follows:

	December 31,
	2012			2011
Trademarks	$	5,000		$	4,582
Customer intangible assets		68,991			21,515
Other		1,481			582
Accumulated amortization		(11,138	)		(9,037	)
Intangible assets, net	$	64,334		$	17,642

Intangibles amortization expense for 2012, 2011 and 2010 was $2,100, $3,185 and $2,137, respectively.  Amortization expense for 2011 includes $1,163 for the impairment loss as discussed in Note 3. Estimated annual amortization expense for these intangibles is as follows:

52

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

Year ending December 31,
2013	$	4,647
2014		4,524
2015		4,359
2016		4,134
2017		3,915
Thereafter		38,533
Nonamortizeable		4,222
	$	64,334

8.       ACCRUED EXPENSES

Accrued expenses consist of the following:

	December 31,
	2012		2011
Accrued payroll	$	3,362	$	1,366
Accrued bonus		1,493		1,173
Accrued vacation & holiday		3,257		2,465
Accrued employee benefits		1,815		1,463
Accrued operating lease obligations		1,706		1,440
Contingent consideration		7,950		-
Accrued professional fees		754		896
Other		3,366		2,305
Total accrued expenses	$	23,703	$	11,108

9.       LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long-term debt and capital lease obligations consist of the following:

	December 31,
	2012		2011
Revolver under credit agreement, variable	$	6,236	$	-
Term loan under credit agreement, variable		225,000		-
Missouri IRBs at fixed rate of 2.80% at December 31, 2012		8,113		-
Capital leases, at fixed rates ranging from 3.00% to 7.73% at December 31, 2012		15,316		-
Notes payable, principal and interest payable monthly, at fixed rates, up to 3.25% at December 31, 2012 and 6.48% to 6.70% at December 31, 2011		6,034		29
Total debt		260,699		29
Less current installments		5,632		29
Total long-term debt and capital lease obligations	$	255,067	$	-

On December 28, 2012, the Company entered into a credit agreement to provide new senior secured credit facilities to finance the Valent acquisition, refinance existing debt, and fund working capital requirements.  These new credit facilities include a revolving credit facility of up to $75,000 and a term loan facility of $225,000.  Borrowings under the facilities are secured by substantially all of the Company’s assets and bear interest at either the LIBOR rate plus a margin of up to 4.75% with a LIBOR floor of 1.25% or the alternate base rate (“ABR”) which is the highest of the following plus a margin of up to 3.75% with the applicable margin for the revolving credit facility being subject to a step-down grid based on the total leverage ratio of the company effective with the start of the second quarter of 2013:

53

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

· Prime rate,

· Federal funds rate plus 0.5%

· The adjusted Eurodollar rate for an interest period of one month plus 1% or

· The 2.25% ABR rate floor

The Company is required to pay a commitment fee of between 0.250% and 0.625% on the unused portion of the revolving credit facility.

The maturity dates are subject to acceleration upon breach of the financial covenants (consisting of a maximum total leverage ratio and senior leverage ratio and a minimum fixed charge coverage ratio) and other customary non-financial covenants contained in the credit agreement.  As of December 31, 2012, the Company was in compliance with all of its financial and non-financial covenants.  As part of the new credit facilities, we are required to enter into a hedging instrument to fix not less than 50% of the outstanding amount of the Term Loan for a three year period, at a minimum.  The revolving credit and term loan facilities mature on the fifth and sixth year anniversary dates of December 28, 2017 and 2018, respectively.

As part of the acquisition of Valent, the Company assumed debt and capital leases for buildings and equipment that were underwritten to service underlying Industrial Revenue Bonds (“IRBs”) with the City of Washington, Missouri and Fredonia, Kansas.  Monthly payments are scheduled in an amount sufficient to service the total principal and interest of the underlying bonds.  Interest ranges from 2.80% to 7.73% and mature between September 2020 and June 2032.  In addition, the Company assumed a note payable to a prior minority shareholder for $2,000 payable in monthly installments over 36 months.

The Company entered into various notes payable and a capital lease agreement for the purchase of certain equipment in 2012.  The notes are secured by certain equipment and payable in monthly installments including interest ranging from 2.45% - 2.56% through November 2019.  In connection with its acquisition of TASS on August 7, 2012, as discussed in Note 2 above, the company entered into a $1,000 note payable which is payable in full in August 2013 plus interest at 3.25%.

The gross amount of assets recorded under capital leases totaled $15,316 as of December 31, 2012 and is included in the related property, plant and equipment categories.  No material amortization expense nor accumulated amortization has been reported in the financial statements as all but one of the capital leases are due to the recent acquisition of Valent and were recorded at fair value and the aforementioned capital lease for certain equipment was not placed into service until December 31, 2012.  The Company has appropriately split the deferred financing fees between the revolving credit facility and term loan facility and will amortize the fees over their respective terms.  The long-term debt and capital lease payment obligations including the current portion thereof required in each of the next five years and thereafter are as follows:

	Long-Term
	Debt		Capital
Year ending December 31,	(Principal only)		Leases
2013	$	4,691	$	1,484
2014		3,766		1,626
2015		3,789		1,857
2016		3,145		1,856
2017		9,405		1,872
Thereafter		220,587		10,010
Total		245,383		18,705
Less:  imputed interest		-		(3,389	)
Total	$	245,383	$	15,316

10.      TREASURY STOCK TRANSACTIONS

The Company issued 102,986, net of forfeitures, 5,860 and 6,300 shares from treasury stock in 2012, 2011 and 2010, respectively, in conjunction with the exercise of certain employees’ options and grants of restrictive stock, but did not purchase any shares during those years.  The Company also utilized approximately 44,474 and 46,830 shares from treasury stock to match employee contributions in the Company’s 401(k) Plan in 2012 and 2011, respectively.

54

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

11.     EARNINGS PER COMMON SHARE

Basic net income per common share is based upon the weighted average number of common shares outstanding.  Diluted net income per common share is based upon the weighted average number of common shares outstanding, including the dilutive effect of restricted stock, using the if-converted methods.

The following table shows a reconciliation of the numerators and denominators used in calculating basic and diluted earnings per share.

	Year ended December 31,
	2012		2011		2010
Numerators
Net income	$	16,487	$	16,389	$	12,931
Denominators
Weighted average common shares - basic		11,701,607		11,559,895		11,420,524
Dilutive effect of restricted stock		137,575		181,618		209,743
Dilutive effect of employee stock options		-		-		6,118
Weighted average common shares - diluted	$	11,839,182	$	11,741,513	$	11,636,385
Basic earnings per share	$	1.41	$	1.42	$	1.13
Diluted earnings per share	$	1.39	$	1.40	$	1.11

12.   COMMITMENTS AND CONTINGENCIES

The Company leases certain facilities and equipment under various non-cancelable operating lease agreements that expire at various dates through 2025.  At December 31, 2012, the future minimum lease payments under operating leases with initial non-cancelable terms in excess of one year are as follows:

2013	$	7,031
2014		6,193
2015		5,664
2016		5,066
2017		4,307
Thereafter		24,788
	$	53,049

Rent expense totaled $6,789, $6,546 and $6,714 in 2012, 2011 and 2010, respectively.

In December 2012, the Company entered into a commitment to finance a warehouse in Tulsa, Oklahoma through a $2,200 promissory note.  The note carries a 2.95% fixed rate payable in monthly payments of principal and interest with a balloon payment at maturity on December 28, 2017.  The note is secured by the property and guaranteed by the Company.

The Company has been named as a defendant in certain lawsuits in the normal course of business.  It is the policy of management to disclose the amount or range of reasonably possible losses.  In the opinion of management, after consulting with legal counsel, the liabilities, if any, resulting from these matters should not have a material effect on the Company’s financial position or results of operations.

The Company has entered into employment agreements with certain members of senior management, the terms of which expire on January 1, 2014 through January 1, 2016.  The terms of these agreements are up to three years, include non-compete and non-disclosure provisions, and provide for defined severance payments in the event of termination.

55

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

13.      DEFINED CONTRIBUTION PLANS

The Company sponsored four defined contribution plans in 2012:  the LMI Profit Sharing and Savings Plan (the “LMI Plan”), the Valent 401(k) and Simple IRA plans (the “Valent Plans”) and the TASS Inc. 401(k) Plan, the (“TASS Plan”).  The LMI Plan covers virtually all of the employees of the Company, except the employees of Valent and TASS, and is a profit sharing plan that allows discretionary profit sharing contributions by the Company.  The LMI Plan also includes a 401(k) component that allows employee deferrals and a discretionary matching contribution component, under which the Company may make contributions based upon a percentage of employee contributions up to a maximum of $1 annually per employee.  Employee deferrals and matching contributions to the LMI Plan are fully vested to the employee immediately upon contribution.  Profit sharing contributions by the Company to the LMI Plan become vested over time and are fully vested after six years.  No profit sharing contributions have been made to the LMI Plan for 2012, 2011, or 2010.  The Company recognized costs for matching contributions to the LMI Plan totaling $882, $806, and $798 in 2012, 2011, and 2010, respectively.  The Company’s matching contributions to the LMI Plan are determined and approved by the Board of Directors, which can be settled in cash or shares of LMI common stock.  For the years ended December 31, 2012, 2011, and 2010, the Company made matching contributions of 50% for each one dollar contributed by each participant up to a maximum employer matching contribution of $1.  In 2012, 2011, and 2010 the contribution was made in shares of the Company’s common stock.  The amount of the expense is calculated based on the formula described above and is not impacted by the value of the common stock, as the shares given are based on the dollar amount of the matching contribution.

The Valent Plans cover essentially all full-time employees of Valent.  Under these plans, participants may elect to have a portion of their salary contributed to the respective plans within certain limits.  Under the plans, the Company may contribute a discretionary matching contribution to the applicable plan.  The exact percentage, if any, will be determined each year and shall not exceed 3% of a participant’s compensation for the year.

The TASS Plan covers all of the employees of TASS effective on the first day of full-time employment.  Under this plan, participants may elect to have a portion of their salary contributed to the plan within certain limits. Under the plan, the Company may contribute a discretionary profit sharing and / or matching contribution to the plan.  The exact percentage, if any, will be determined each year and is not limited by the plan. Contributions by the Company to the plan become vested over time and are fully vested after five years.  The Company has not made any profit sharing contribution or matching contribution to the plan during the period in 2012 subsequent to the acquisition of TASS on August 7, 2012.

14.      STOCK-BASED COMPENSATION

On July 7, 2005, the Company’s shareholders approved the LMI Aerospace, Inc. 2005 Long-term Incentive Plan (the “Plan”).  The Plan provides for the grant of non-qualified stock options, incentive stock options, shares of restricted stock, restricted stock units, stock appreciation rights, performance awards and other share-based grants and cash bonus awards to employees and directors.  All share-based grants or awards are subject to a time-based vesting schedule.  The company has only issued restricted stock in the periods presented.

All outstanding stock options were exercisable at December 31, 2010 and were exercised on or before January 19, 2011 at an exercise price of $2.00 per share.  The aggregate intrinsic value of options exercised during the years ended December 31, 2011 and 2010, based upon the market price on exercise date, were $126 and $239, respectively.

A summary of the activity for non-vested restricted stock awards under the Company’s share-based compensation plans is presented below:

	2012
Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1		278,410		$	16.42
Granted		108,646			19.19
Vested		(185,307	)		15.43
Forfeited		(11,921	)		19.83
Outstanding at December 31		189,828		$	18.76

Common stock compensation expense related to restricted stock awards granted under the Plan was $1,494, $1,254 and $1,794 for the years ended December 31, 2012, 2011 and 2010, respectively. Total unrecognized compensation costs related to non-vested share-based awards granted or awarded under the Plan were $2,071 and $1,716 as of December 31, 2012 and 2011, respectively.  These costs are expected to be recognized over a weighted average period of 1.6 and 0.8 years as of December 31, 2012 and 2011, respectively. The fair value of restricted stock awards that vested during the years ended December 31, 2012, 2011 and 2010, based on the market price on the vesting date, was $3,199, $2,149 and $835, respectively.

56

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

15.     INCOME TAXES

The temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to the deferred income tax assets and liabilities are as follows:

	December 31,
	2012			2011
Current deferred tax assets (liabilites):
Accrued vacation	$	705		$	663
Inventories		1,888			1,803
Stock award		522			962
Obligation under operating leases		587			437
Foreign NOL Carryforwards		261			-
Other		137			220
Total current deferred tax assets		4,100			4,085
Less: valuation allowance		(261	)		-
Net deferred tax asset		3,839			4,085
Long-term deferred tax assets (liabilities):
Depreciation		(6,151	)		(5,755	)
Amortization of intangibles		(3,646	)		(4,180	)
Gain on sale of real estate		1,022			1,106
Long-term contract costs		(1,941	)		(886	)
Professional fees		1,946			86
Other		38			710
Total long-term deferred tax liabilities		(8,732	)		(8,919	)
Net deferred tax liabilities	$	(4,893	)	$	(4,834	)

The Company’s income tax provision attributable to income before income taxes consisted of the following for the years ended December 31, 2012, 2011 and 2010:

	2012			2011		2010
Federal:
Current	$	7,926		$	5,658	$	5,306
Deferred		(109	)		1,149		(151	)
		7,817			6,807		5,155
State
Current		346			225		355
Deferred		(10	)		104		(14	)
		336			329		341
Provision for income taxes	$	8,153		$	7,136	$	5,496

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense is as follows:

	2012			2011			2010
Federal taxes	$	8,627		$	8,235		$	6,449
State and local taxes, net of federal benefit		336			329			341
Production deduction		(530	)		(508	)		(399	)
Research and experimental and other tax credits		(300	)		(665	)		(470	)
Other		20			(255	)		(425	)
Provision for income taxes	$	8,153		$	7,136		$	5,496

57

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

16.     CUSTOMER AND SUPPLIER CONCENTRATION

Direct sales to our top four customers, The Boeing Company, Gulfstream Aerospace Corporation, Spirit AeroSystems and Bombardier, accounted for 20.8%, 16.1%, 13.0%, and 10.1% of our total revenues in 2012, respectively.  These revenues are reported by both the Aerostructures and Engineering Services segments.  Accounts receivable balances related to these customers were 11.3%, 5.6%, 27.9%, and 6.4% of the accounts receivable balance at December 31, 2012, respectively.

Direct sales to our top three customers, The Boeing Company, Gulfstream Aerospace Corporation and Spirit AeroSystems, accounted for 18.3%, 16.5%, and 13.7% of our total revenues in 2011, respectively.  These revenues are reported by both the Aerostructures and Engineering Services segments, except Gulfstream Aerospace Corporation, with respect to which revenues are reported by the Aerostructures segment only.  Accounts receivable balances related to these customers were 15.6%, 5.4%, and 16.5% of the accounts receivable balance at December 31, 2011, respectively.

Direct sales to our top four customers, Spirit AeroSystems, Gulfstream Aerospace Corporation, The Boeing Company, and Triumph Group, accounted for 18.6%, 16.9%, 13.3%, and 10.9% of our total revenues in 2010, respectively.  These revenues are reported by both the Aerostructures and Engineering Services segments, except Gulfstream Aerospace Corporation, with respect to which revenues are reported by the Aerostructures segment only.

The Company did not have any sales to a foreign country greater than 10% of its total sales in 2012, 2011 and 2010, respectively.  The amounts of profitability and identifiable assets attributable to foreign sales activity are not material when compared with revenue, profitability, and identifiable assets attributed to United States domestic operations during 2012, 2011 and 2010.

The Company purchased approximately 51% of the raw materials used in production from two suppliers in 2012 and, 59% and 64% of the raw materials used in production from three suppliers in 2011 and 2010, respectively.  The Company has increased its capability to integrate components into higher level aerospace assemblies and to provide point of use kitting.  As a result, there was an increase in the use of third party suppliers for the purchase of strategic components.  During 2012 we purchased approximately 49% of the procured parts used in assembled products from three suppliers.  During 2011 and 2010 we purchased approximately 61% and 63% of the procured parts used in assembled products from four suppliers, respectively.

17.     BUSINESS SEGMENT INFORMATION

The Company is organized into two reportable segments: the Aerostructures segment and the Engineering Services segment.  The Aerostructures segment, which includes the recently acquired Valent, fabricates, machines, finishes, integrates, assembles and kits formed and machined close tolerance aluminum, specialty alloy and composite components for use by the aerospace and defense industries.  The Engineering Services segment, which includes the recently acquired TASS, provides a complete range of design, engineering and program management services supporting aircraft lifecycles from conceptual design, analysis and certification through production support, fleet support and service life extensions via a complete turnkey engineering solution.

Corporate assets, liabilities and expenses related to the Company’s corporate offices, except for interest expense and income taxes, primarily support the Aerostructures segment.  The table below presents information about reported segments on the basis used internally to evaluate segment performance:

58

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

	December 31,
	2012			2011			2010
Net sales:
Aerostructures	$	174,983		$	168,145		$	149,259
Engineering Services		105,607			87,527			74,574
Eliminations		(1,961	)		(1,632	)		(477	)
	$	278,629		$	254,040		$	223,356
Gross profit
Aerostructures	$	47,947		$	44,966		$	38,637
Engineering Services		20,270			14,615			12,788
Eliminations		91			69			75
	$	68,308		$	59,650		$	51,500
Income from operations:
Aerostructures	$	15,484		$	18,334		$	13,631
Engineering Services		10,480			6,522			5,359
Eliminations		91			68			75
	$	26,055		$	24,924		$	19,065
Depreciation, amortization and other charges:
Aerostructures (1)	$	5,532		$	6,013		$	4,843
Engineering Services		2,462			2,391			2,446
	$	7,994		$	8,404		$	7,289

(1) Includes a $1,163 charge for impairment of intangible in 2011.

Interest expense:
Aerostructures	$	(23	)	$	(5	)	$	(18	)
Engineering Services		(25	)		(12	)		(14	)
Corporate (2)		(1,723	)		(652	)		(664	)
	$	(1,771	)	$	(669	)	$	(696	)

(2) Includes a $580 charge for deferred financing costs for the closed credit facility in 2012.

Capital expenditures:
Aerostructures (3)	$	18,649	$	8,716	$	6,230
Engineering Services		880		1,551		921
	$	19,529	$	10,267	$	7,151
Total assets:
Aerostructures	$	446,902	$	132,032
Engineering		81,062		72,574
	$	527,964	$	204,606

(3) Includes $746 for a capital lease for equipment in 2012.

59

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except share and per share data)

December 31, 2012

18.     QUARTERLY FINANCIAL DATA (UNAUDITED)

The results of any single quarter are not necessarily indicative of the Company’s results for the full year.  Earnings per share data is computed independently for each of the periods presented.  As a result, the sum of the earnings per share amounts for the quarter may not equal the total for the year.

2012	First			Second			Third			Fourth
Net sales		$	66,749		$	69,327		$	70,636		$	71,917
Gross profit		$	16,518		$	16,967		$	18,584		$	16,239
Net income (1)		$	4,792		$	5,105		$	5,639		$	951
Amounts per common share:
Net income		$	0.41		$	0.44		$	0.48		$	0.08
Net income - assuming dilution		$	0.41		$	0.43		$	0.48		$	0.08
2011	First			Second			Third			Fourth
Net sales		$	60,899		$	63,348		$	64,767		$	65,026
Gross profit		$	14,558		$	15,245		$	15,332		$	14,515
Net income		$	4,269		$	3,966		$	4,078		$	4,076
Amounts per common share:
Net income		$	0.37		$	0.34		$	0.35		$	0.35
Net income - assuming dilution		$	0.37		$	0.34		$	0.35		$	0.35

(1) The fourth quarter of 2012 includes $4,860 in acquisition fees related to Valent.

19.     SUBSEQUENT EVENT

On February 5, 2013, the Company completed the $350,000 syndication of borrowings incurred in connection with the acquisition of Valent and entered into the first amendment to the original creditagreement and to other loan documents. The amended credit agreement reflects the increase, in connection withthe syndication, of the revolving credit facility to $125,000 from the initially-announced figure of $75,000.  Also, under the amended credit agreement, the term loanfacility’s margin adjustment for the LIBOR rate option has decreased from a top level of 4.75% to 3.50%and the ABR rate option has decreased from 3.75% to 2.50% with a new provision that should the total leverage ratio decrease to less than 3.00:1:00, these margins will decrease 0.25% further to 3.25% and 2.25%, respectively.  The revolving credit facility’s margin adjustment rates which are subject to a step-down grid based on the Company’s total leverage ratio were also reduced from the initial rate of 4.75% to 4.00% for the LIBOR rate option and 3.75% to 3.00% for the ABR rate option.  Also, the commitment fee rate for a total leverage ratio of less than 1.50:1.00 of 0.250% was changed to 2.00:1.00 of 0.375%.  The LIBOR and ABR rate floors continue to be 1.25% and 2.25% for both facilities.  The maturity dates continue to be December 28, 2017 for the revolving credit facility and December 28, 2018 for the term loan facility, and the borrowings continue to be secured by substantially all of the Company’s assets.

60

LMI AEROSPACE, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(Dollar amounts in thousands)

December 31, 2012

	Beginning Balance		Charge to Cost/ Expense			Other Charge to Cost/ Expense		Write-offs net of Recoveries			Ending Balance
Reserve for Accounts Receivable
Year ended December 31, 2010	$	279	$	(23	)	$	-	$	(3	)	$	253
Year ended December 31, 2011	$	253	$	157		$	-	$	(51	)	$	359
Year ended December 31, 2012	$	359	$	(140	)	$	86	$	(18	)	$	287

61

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined by Rules 13a-15(e) and 15d-15(c) promulgated under the Exchange Act, as of December 31, 2012.  Based upon and as of the date of this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act (a) is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms and (b) is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Report of Management Regarding Internal Control Over Financial Reporting

The management of LMI Aerospace is responsible for the preparation, integrity, and fair presentation of the consolidated financial statements included in this Report.  The consolidated financial statements and notes included in this Report have been prepared in conformity with accounting principles generally accepted in the United States of America and necessarily include some amounts that are based on management’s best estimates and judgments.

In order to produce reliable financial statements, management, under the supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the Exchange Act.  Management evaluates the effectiveness of internal control over financial reporting and tests for reliability of recorded financial information through a program of ongoing internal audits.  Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected.  Also, because of changes in conditions, internal control effectiveness may vary over time.  Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.  The scope of management’s assessment of the effectiveness of internal control over financial reporting includes all of the Company’s consolidated operations except for TASS and Valent, which were acquired by the Company on August 7, 2012 and December 28, 2012, respectively.  The Company’s consolidated net sales for the fiscal year ended December 31, 2012 were $278.6 million, of which the acquired TASS and Valent operations represented $6.3 million or 2.3%.  The consolidated total assets as of December 31, 2012 were $528.0 million, of which assets associated with the acquired TASS and Valent operations represented approximately $284.3 million, or 53.8%.

Management, under the supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, assessed the Company’s internal control over financial reporting as of December 31, 2012, as required by Section 404 of the Sarbanes-Oxley Act of 2002, based on the criteria for effective internal control over financial reporting described in the “Internal Control-Integrated Framework,” adopted by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of December 31, 2012, the Company’s internal control over financial reporting is effective.

PricewaterhouseCoopers LLP, our independent registered public accounting firm, has issued an audit report on our internal control over financial reporting which is included in Item 8.

Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting occurred during the three month period ending December 31, 2012, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

62

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information regarding our directors required by Item 401 of Regulation S-K and the information regarding compliance with Section 16(a) of the Exchange Act required by Item 405 of Regulation S-K will be included in the Company’s definitive proxy statement to be filed pursuant to Regulation 14A for the Company’s 2013 Annual Meeting of Shareholders and is incorporated herein by reference.

The following is a list of our current executive officers, their ages, their positions with us and their principal occupations for at least the past five years.

Name	Age	Position
Ronald S. Saks	69	Chief Executive Officer and Director
Charles M. Newell	57	Co-President – Aerostructures Segment
Henry H. Newell	48	Co-President – Aerostructures Segment
Richard Johnson	62	President of D3, a wholly-owned subsidiary of the Company
Lawrence E. Dickinson	53	Vice President, Chief Financial Officer and Secretary
Robert T. Grah	58	Chief Operating Officer – Aerostructures Segment
Michael J. Biffignani	57	Chief Information Officer
Cynthia G. Maness	62	Vice President of Human Resources and Organizational Development

Set forth below are biographies of each of our executive officers.

Ronald S. Saks.  Mr. Saks has served as our Chief Executive Officer and as a director since 1984.  Prior to his employment with the Company, Mr. Saks was an Executive Vice President with Associated Transports, Inc. for eight years and was a Tax Manager with Peat Marwick Mitchell & Co., now known as KPMG LLP, for the eight years prior thereto.

Charles M. Newell.  Mr. Newell was appointed Co-President – Aerostructures Segment at the time of the acquisition of Valent Aerostructures, LLC, in December 2012.  Prior to the acquisition, Mr. Newell co-managed and founded Tech Investments (2000), a private equity firm, which acquired 21 manufacturing companies and was the majority owner of Valent Aerostructures, where he served as the Chief Executive Officer.  Mr. Newell also served as President of Triumph Structural Components, President of Nu-Tech Industries (acquired by Triumph Group, Inc), served as president of several energy companies owned by Tech Investments’ principal partner and was an auditor for Touche Ross and Company.

Henry H. Newell.  Mr. Newell was appointed Co-President – Aerostructures Segment at the time of the acquisition of Valent, Aerostructures, LLC, in December 2012.  Prior to the acquisition, Mr. Newell co-managed and founded Tech Investments (2000) a private equity firm which acquired 21 manufacturing companies and was the majority owner of Valent Aerostructures, where he served as the Chief Executive Officer of Business Development.  Mr. Newell also served as President of Triumph Structural Components, President of Nu-Tech Industries (acquired by Triumph Group, Inc), served as president of several energy companies owned by Tech Investments’ principal partner and was an auditor for Ernst & Young.

Richard Johnson.  Mr. Johnson joined D3 as President in 2010.  Prior to his employment with the Company, Mr. Johnson was Vice President of Engineering with Gulfstream Aerospace where he was employed for 30 years.  Prior to Gulfstream, he was employed at Lockheed-Georgia as a structural engineering specialist.

Lawrence E. Dickinson.  Mr. Dickinson has been our Chief Financial Officer since 1993.  He served as a Financial Analyst and Controller for LaBarge, Inc. from 1984 to 1993 and as a Cost Accountant with Monsanto from 1981 to 1984.

Robert T. Grah.  Mr. Grah was appointed Chief Operating Officer – Aerostructures segment in 2010 and served as Vice President - Central Region from December 2002 until January 2010.  Mr. Grah joined the Company in 1984 as Production Control Manager.  Mr. Grah has held various management positions with us, including Purchasing and Contracts Manager, Maintenance Manager, Facilities Manager and General Manager of LMI Finishing, Inc. until December 2002.  Prior to joining us, Mr. Grah was a supervisor for Associated Transports, Inc. and a manager for Beneficial Finance.

63

Michael J. Biffignani.   Mr. Biffignani has served as our Chief Information Officer since 1999 and currently is responsible for information technology and the program management office to support readiness of the design-build projects.  He has also served as the Director of Supplier Management and Procurement.  Prior to joining us, Mr. Biffignani held several positions at The Boeing Company in Information Technology and Business Management and prior thereto he served as an engineer and materials manager for the Sony Corporation from 1979 to 1983.

Cynthia G. Maness.  Ms. Maness has been our Vice President of Human Resources and Organizational Development since 2008.  Ms. Maness joined the Company in 1990 as Human Resources Manager for Leonard’s Metal, Inc. Prior to joining us, Ms. Maness served in human resources management roles for the law firm of Peper, Martin, Jensen, Maichel & Hetlage, the City of Ballwin, and Fontbonne College.

The Company has adopted a Code of Business Conduct and Ethics that applies to all of our executive officers and employees and our Board of Directors, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial and principal accounting officer).

The Board of Directors has established an Audit Committee within the meaning of Section 3(a)(58)(A) of the Exchange Act.  The Audit Committee currently consists of Mr. John M. Roeder (Chairman), Mr. John S. Eulich and Ms. Judith W. Northup, each an independent director in accordance with NASDAQ Rule 5605(a)(2).  In addition, the Board of Directors has determined that each member of the Audit Committee is independent under the standards of Rule 10A-3 promulgated under the Exchange Act and the requirements of NASDAQ Rule 5605(c)(2) and that Mr. Roeder qualifies as an audit committee financial expert under Item 407(d)(5) of Regulation S-K.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by Item 402 of Regulation S-K regarding the compensation of the Company’s directors and executive officers will be included in its definitive proxy statement to be filed pursuant to Regulation 14A for the Company’s 2013 Annual Meeting of Shareholders and is incorporated herein by reference.

The information required by Item 407(e)(4) and (e)(5) of Regulation S-K will be included in the Company’s definitive proxy statement to be filed pursuant to Regulation 14A for the Company’s 2013 Annual Meeting of Shareholders under the captions “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by Item 403 of Regulation S-K regarding the security ownership of our beneficial owners and our management and the information required by Item 201(d) of Regulation S-K regarding our equity compensation plans will be included in the Company’s definitive proxy statement to be filed pursuant to Regulation 14A for the Company’s 2013 Annual Meeting of Shareholders and is incorporated herein by this reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by Item 407(a) of Regulation S-K regarding director independence and Item 404 regarding transactions with related persons will be included in the Company’s definitive proxy statement to be filed pursuant to Regulation 14A for the Company’s 2013 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information contained under the caption “Fees Billed by Independent Registered Public Accounting Firm” in the Company’s definitive proxy statement to be filed pursuant to Regulation 14A for the Company’s 2013 Annual Meeting of Shareholders, which involves the election of directors, is incorporated herein by this reference.

64

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

1. For a list of the Consolidated Financial Statements of the Company included as part of this report, see the index at Item 8.

2. Other than Schedule II - Valuation and Qualifying Accounts, all schedules have been omitted as the required information is not present in sufficient amounts or the required information is included elsewhere in the Consolidated Financial Statement or notes thereto.

3. Exhibits:

See Exhibit Index (each management contract or compensatory plan or arrangement listed therein is identified).

(b) See Exhibit Index below.

(c) Other than Schedule II - Valuation and Qualifying Accounts, all schedules have been omitted as the required information is not present in sufficient amounts or the required information is included elsewhere in the Consolidated Financial Statement or notes thereto.

65

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in the County of St. Charles and State of Missouri on the 15th day of March, 2013.

LMI AEROSPACE, INC.
By:	/s/ Ronald S. Saks
	Ronald S. Saks
	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Ronald S. Saks
Ronald S. Saks	Chief Executive Officer and Director (Principal Executive Officer)	March 15, 2013
/s/ Lawrence E. Dickinson
Lawrence E. Dickinson	Vice President, Chief Financial Officer and Secretary (Principal Financial Officer and Principal Accounting Officer)	March 15, 2013
/s/ Joseph Burstein
Joseph Burstein	Chairman of the Board and Director	March 15, 2013
/s/ Sanford S. Neuman
Sanford S. Neuman	Assistant Secretary and Director	March 15, 2013
/s/ John M. Roeder
John M. Roeder	Director	March 15, 2013
/s/ John S. Eulich
John S. Eulich	Director	March 15, 2013
/s/ Judith W. Northup
Judith W. Northup	Director	March 15, 2013

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EXHIBIT INDEX

Exhibit Number	Description
3.1	Restated Articles of the Registrant previously filed as Exhibit 3.1 to the Registrant’s Form S-1 (File No. 333-51357) dated as of April 29, 1998 (the “Form S-1”) and incorporated herein by reference.
3.2	Amended and Restated By-Laws of the Registrant previously filed as Exhibit 3.2 to the Form S-1 and incorporated herein by reference.
3.3	Amendment to Restated Articles of Incorporation dated as of July 9, 2001 filed as Exhibit 3.3 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2001 and filed April 1, 2002 and incorporated herein by reference.
3.4	Amendment to the Registrant’s Amended and Restated Bylaws filed as Exhibit 3.1 to the Registrant’s Form 8-K filed June 26, 2009 and incorporated herein by reference.
4.1	Form of the Registrant’s Common Stock Certificate previously filed as Exhibit 4.1 to the Form S-1 and incorporated herein by reference.
10.1	Lease Agreement dated December 7, 2005 between Inmobiliaria LA Rumorosa S.A. de C.V.  and Ivemsa S.A. de C.V., including all amendments, for the premises located at A.V. Eucalipto, #2351, Col. Rivera, Modulo Cy D, C.P. 21259, Mexicali, Baja California, Mexico and filed as Exhibit 10.2 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.2	Lease Agreement dated May 19, 2008 between Precise Machine Company and Acquiport DFWIP, Inc. for the premises located at 14813 Trinity Blvd., Fort Worth, Texas and filed as Exhibit 10.3 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.3	Lease Agreement dated May 2, 2006 between LMI Finishing, Inc. and Port Partnership, LLP for the premises located at 5270 N. Skiatook, Catoosa, Oklahoma and filed as Exhibit 10.4 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.4	Lease Agreement dated September 4, 2003 between LMI Aerospace, Inc. and Kole Warehouses, including all amendments, for the premises located at 101 Coleman, Savannah, Georgia and filed as Exhibit 10.5 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference, as restated by that certain Restated Lease Agreement dated as of September 14, 2012 between Kole Warehouses, Inc. and LMI Kitting, LLC.
10.5	Lease Agreement dated March 24, 1997, including all amendments, between D3 Technologies, Inc. and H.G. Fenton Company for the premises located at 4838 Ronson Court, San Diego, California and filed as Exhibit 10.6 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.6	Lease Agreement dated June 23, 2005, including all amendments, between D3 Technologies, Inc. and Quadrant Park for the premises located at 8217-8223 44 th Avenue, Mukilteo, Washington and filed as Exhibit 10.7 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.7	Lease Agreement dated February 13, 2007 between LMI Finishing, Inc. and Angelo Gordon, successor in interest to CIT CRE LLC, for the premises located at 2104 N. 170 th St. East, Tulsa, Oklahoma and filed as Exhibit 10.8 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.8*	Master Agreement between the Registrant and Aviation Partners Boeing, LLC, dated October 25, 2007 filed as Exhibit 10.9 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.9*	Purchase Order Number 801538 as Master Agreement between the Registrant and Vought Aircraft Industries, Inc. filed as Exhibit 10.10 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.10+	Employment Agreements effective January 1, 2011 between LMI Aerospace, Inc. and each of Ronald S. Saks (as amended pursuant to that certain Amendment to Employment Agreement dated as of July 11, 2011 between LMI Aerospace, Inc. and Ronald S. Saks), Lawrence E. Dickinson, Michael J. Biffignani, and Cynthia G. Maness previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed February 28, 2011 and incorporated herein by reference.

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10.11	Lease Agreement dated May 6, 1997 between the Registrant and Victor Enterprises, LLC, including all amendments, for the premises located at 101 Western Avenue S., Auburn, Washington previously filed as Exhibit 10.10 to the Form S-1/A and incorporated herein by reference.
10.12	Lease Agreement dated February 1, 1995 between the Registrant and RFS Investments for the premises located at 2621 West Esthner Court, Wichita, Kansas previously filed as Exhibit 10.11 to the Form S-1/A and incorporated herein by reference.
10.13+	Profit Sharing and Savings Plan and Trust, restated effective January 1, 2009, including amendments previously filed as Exhibit 10.12 to the Form S-1/A and incorporated herein by reference.
10.14	Business Reformation Agreement between Leonard’s Metal, Inc. and Lockheed Martin Aeronautics Company dated September 21, 2001 previously filed as Exhibit 10.1 to the Registrant’s Form 10-Q filed November 14, 2001 and incorporated by reference..
10.15	Lease Agreement dated April 2, 2001 between Peter Holz and Anna L. Holz, Trustees of the Peter and Anna L. Holz Trust dated 2/8/89, including all amendments, as to an undivided one-half interest, and Ernest R. Star and Linda Ann Zoettl, Trustees under the Ernest L. Star and Elizabeth H. Star 1978 Trust dated August 25, 1978, as to an undivided one-half interest, and Metal Corporation (now Tempco Engineering, Inc.) for the premises located at 11011-11021 Olinda Street, Sun Valley, California previously filed as Exhibit 10.27 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2001 filed April 1, 2002 and incorporated herein by reference.
10.16	Lease Agreement dated April 2, 2001 between Tempco Engineering, Inc. and Metal Corporation for the premises located at 8866 Laurel Canyon Blvd., Sun Valley, California previously filed as Exhibit 10.28 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2001 filed April 1, 2002 and incorporated herein by reference.
10.17	Lease Agreement between Versaform Corp. and Nonar Enterprises, including all amendments, dated September 12, 2003 for the premises located at 1345 Specialty Drive Suites A-E, 1391 Specialty Drive Suite B, 1351 Specialty Drive and 1377 Specialty Drive, Suites A, B, and C, Vista, California previously filed as Exhibit 10.1 to the Registrant’s Form 10-Q filed November 14, 2003 and incorporated herein by reference.
10.18+	LMI Aerospace, Inc. 2005 Long-Term Incentive Plan, approved and adopted by shareholders of LMI Aerospace, Inc. on July 7, 2005, to enable LMI Aerospace, Inc. to provide long-term incentives to those directors, officers, employees and other individuals with significant responsibility for, or potential impact on, the success and growth of LMI Aerospace, Inc. and its subsidiaries, divisions and affiliated businesses, previously filed as Exhibit 10.1 in the Registrant’s Form 8-K filed July 13, 2005 and incorporated herein by reference.
10.19	General Terms Agreement between Spirit AeroSystems, Inc. (Tulsa Facility) and LMI Aerospace, Inc. dated October 14, 2005 previously filed as Exhibit 10.1 to the Registrant’s Form 10-Q filed May 18, 2006 and incorporated herein by reference.
10.20	Special Business Provisions between Spirit AeroSystems, Inc. and LMI Aerospace, Inc. dated April 19, 2006 previously filed as Exhibit 10.2 to the Registrant’s Form 10-Q filed May 18, 2006 and incorporated herein by reference.
10.21	Lease Agreement between Leonard’s Metal, Inc. and Welsh Fountain Lakes, L.L.C., including all amendments dated June 9, 2006, for the premises located at 401-411 Fountain Lakes Blvd., St. Charles, Missouri previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed June 15, 2006 and incorporated herein by reference.
10.22	Memorandum of Agreement effective as of December 22, 2010 between LMI Aerospace, Inc. and Gulfstream Aerospace Corporation
10.23	Lease Agreement between Leonard’s Metal, Inc. and Angelo Gordon, successor in interest to CIT CRE LLC, dated as of December 28, 2006, including all amendments, for the premises located at 2629-2635 Esthner Court, Wichita, Kansas, 3600 Mueller Road, St. Charles, Missouri, and 3030-3050 North Highway 94, St. Charles, Missouri previously filed as Exhibit 10.3 to the Registrant’s Form 8-K filed January 3, 2007 and incorporated herein by reference.
10.24	Credit Agreement dated as of December 28, 2012, among the Registrant, certain subsidiaries of the Registrant, the lenders party thereto, Royal Bank of Canada, as Administrative Agent, and Wells Fargo Bank, National Association, as Syndication Agent, previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed January 4, 2013 and incorporated herein by reference.
10.25	Amendment No. 1 dated as of February 5, 2013, to the Credit Agreement and Other Loan Documents dated as of December 28, 2012, among the Registrant, certain subsidiaries of the Registrant, the lenders party thereto, Royal Bank of Canada, as Administrative Agent, and Wells Fargo Bank, National Association, as Syndication Agent, previously filed as Exhibit 10.1 to the Registrant’s Form 8-K/A filed February 7, 2013 and incorporated herein by reference.

68

10.26+ Employment Agreement effective November 1, 2010 between D3 Technologies, Inc., a wholly owned subsidiary of the Registrant and Richard L. Johnson, previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed October 21, 2010 and incorporated herein by reference.

10.27+	First Amendment to Employment Agreement dated effective December 31, 2011 between the D3 Technologies, Inc., a wholly owned subsidiary of the Registrant and Richard L. Johnson, previously filed as Exhibit 10.4 to the Registrant’s Form 8-K filed February 28, 2011 and incorporated herein by reference.
10.28+	Second Amendment to Employment Agreement dated as of February 22, 2011 between D3 Technologies, Inc., a wholly owned subsidiary of Registrant, and Richard L. Johnson previously filed as Exhibit 10.5 to the Registrant’s Form 8-K filed February 28, 2011 and incorporated herein by reference.
10.29	Lease Agreement dated January 16, 2009 between Integrated Holdings, LLC and Integrated Technologies, Inc. for the premises located at 1910 Merrill Creek Parkway, Everett, WA 98203 and filed as Exhibit 10.2 of the Registrant’s Form 10-Q filed May 11, 2009 and incorporated herein by reference.
10.30+	Amendment to Employment Agreement dated as of July 11, 2011 between LMI Aerospace, Inc. and Ronald S. Saks.
10.31	Lease agreement dated August 19, 2011 between D3 Technologies Inc. and JLM & Associates, LLC for the premises located at 1045 Keys Drive, Greenville, South Carolina, 29615.
10.32+	Employment Agreement effective January 1, 2011 between the Registrant and Robert T. Grah, previously filed as Exhibit 10.2 to the Registrant’s Form 8-K filed February 28, 2011 and incorporated herein by reference.
10.33+	First Amendment dated as of October 15, 2012 to Employment Agreement dated effective January 1, 2011 between the Registrant and Lawrence E. Dickinson, previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed October 22, 2012 and incorporated herein by reference.
10.34	Membership Interest Purchase Agreement, dated as of December 5, 2012, among the Registrant, Valent Aerostructures, LLC, and the members of Valent Aerostructures, LLC, previously filed as Exhibit 2.1 to the Registrant’s Form 8-K filed December 6, 2012 and incorporated herein by reference.
10.35+	Employment Agreement effective January 1, 2013 between the Registrant and Charles M. Newell, previously filed as Exhibit 10.2 to the Registrant’s Form 8-K filed January 4, 2013 and incorporated herein by reference.
10.36+	Employment Agreement effective January 1, 2013 between the Registrant and Henry H. Newell, previously filed as Exhibit 10.3 to the Registrant’s Form 8-K filed January 4, 2013 and incorporated herein by reference.
10.37	Lease agreement dated July 15, 2012 between the City of Coweta and Accu-Tec Enterprises, Ltd., regarding the real property commonly referred to as 26730 East 111th Street South, Coweta, Oklahoma including the Estoppel Certificate, dated November 9, 2009, executed by the city of Coweta.
10.38	Lease agreement dated April 1, 2012 between City of Fredonia, KS and Valent Acrostructures, LLC
10.39	Lease, dated October 11, 2001, as amended by the First Amendment to Lease, dated July 17, 2003, the Second Amendment to Lease, dated November 15, 2003, the Third Amendment to Lease, dated December 31, 2008, the Fourth Amendment to Lease, dated March 1, 2010, and the Fifth Amendment to Lease, dated May 24, 2011, between College Crossing Associates, LLC (as successor to Welsh Lenexa II, LLC) and Valent Aerostructures-Lenexa, LLC (as successor to CT Systems, L.LC. as successor to Cable-Tech Industries, L.L.C.), regarding certain real property located at 11064 Strang Line Road, Lenexa, Kansas.
10.40	Sublease Agreement dated September 3, 2010 between Washington Civic Industrial Corp. and Valent Aerostructures, LLC, regarding certain real property located at 6325 Avantha Drive, Washington, Missouri 63090.
10.41	General contract provisions of Spirit Aerosystems, Inc and Master Order Agreements, Special Business Provisions, Customer Specific Supplemental Terms and other contracts that contain additional general terms between Spirit Aerosystems, Inc and Valent Aerostructures, LLC or a subsidiary thereof.
14	Code of Business Conduct and Ethics, filed as Exhibit 14.1 to the Registrant’s Form 10-K/A for the fiscal year ended December 31, 2003 filed May 6, 2004 and incorporated herein by reference.
21.1	List of Subsidiaries of the Registrant filed herewith.
23.1	Consent of PricewaterhouseCoopers LLP filed herewith.
31.1	Rule 13a-14(a) Certification of Ronald S. Saks, Chief Executive Officer filed herewith.
31.2	Rule 13a-14(a) Certification of Lawrence E. Dickinson, Chief Financial Officer filed herewith.
32.1	Certification of Ronald S. Saks, Chief Executive Officer, pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 filed herewith.
32.2	Certification of Lawrence E. Dickinson, Vice President, Chief Financial Officer and Secretary, pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002 filed herewith.

101.ins	Instance Document
101.sch	XBRL Taxonomy Extension Schema Document
101.cal	XBRL Taxonomy Extension Calculation Linkbase Document

69

101.def	XBRL Taxonomy Extension Definition Linkbase Document
101.lab	XBRL Taxonomy Extension Label Linkbase Document
101.pre	XBRL Taxonomy Extension Presentation Linkbase Document

+ Management contract or compensatory plan or arrangement required to be filed as exhibit to this report.

* The Company has received confidential treatment of the redacted portions of this exhibit pursuant to Rule  24b-2, under the Exchange Act and has separately filed a complete copy of this exhibit with the SEC.

70

EX-10.37

EXHIBIT 10.37

LEASE AGREEMENT

This Lease Agreement is made on this 15th day of July, 2002, between the City of Coweta, Lessor, and Accu-Tec Enterprises, Ltd., Lessee. The parties agree as follows:

Article 1

LEASED PREMISES

Lessor hereby leases the land described on exhibit A attached hereto, together with any and all buildings and improvements now or hereafter located on the Land (the “Improvements”), which Land and Improvements are herein collectively called the “Premises,”

Article 2

TERM

Lessee shall have and hold the Premises, together with all Improvements and appurtenances now or thereafter located therein and thereon, including all rights of Lessor to entrance and exit over all streets, alleyways, parking lots and areaways adjacent thereto, for and during the full term of twenty (20) years commencing as of the day rentals commence hereunder.

Article 3

RENTAL

Lessee shall pay to Lessor as rent for the Premises a monthly payment, by the 15th of each month, equal to the sum of the following:

1 An amount equal to the Lessor’s total monthly payment to BancFirst for financing associated with this project, based upon a twenty (20) year amortization scale (estimated to be 59 monthly payments of $2,243.07 and 1 payment of $210,555.18);

and

2 An amount equal to Lessor’s total monthly payment for its CDBG building loan in the amount, based upon a twenty (20) year amortization scale (estimated to be 239 monthly payments of $1,666.67 and 1 payment of $101,667.87).

The parties further agree that rentals shall be commence on the first occurrence of the first day of the month immediately following Accu-Tec’s occupancy of the premises or notice by the City that the building is ready for occupancy upon satisfactory completion of construction as reasonably determined by the City and the Project Manager.

In the event that, due the unique nature of the financing obtained by the Lessor, the lease payment made by the Lessee shall be in excess of the amount needed by the City of Coweta to satisfy the monthly debt payment attributable to the purchase/construction of the leasehold estate, then the Lessor agrees and covenants that all portion of the Lessee’s monthly rental payment which is in excess of the debt service for the of the premises by the Lessor shall be paid and applied against the principal balance of the “conventional” loan as each of Lessee’s monthly payments are received by the Lessor; for purposes of this agreement, such debt shall include only those debts entered into to allow the Lessor to purchase the real property and erect the initial improvements on said real property

Article 4

USE OF PREMISES

Lessee agrees that he will not create or permit a nuisance to be carried on at the Premises, and that he will conduct all activities in full compliance with all municipal, state and Federal laws and ordinances. Lessee’s use of the premises shall be limited to an industrial business use.

Article 5

ALTERATIONS AND CONSTRUCTION BY LESSEE

Lessee may, at his own expense, make such changes in the Premises as he desires, provided such changes shall not lessen the value of the Premises or weaken the same structurally. Lessee shall have the right at his own expense to install any equipment, appliances or fixtures, including but not limited to, outside or inside signs, fluorescent lights, shelves, counters, bins and partitions it desires or deems necessary, and all such equipment and fixtures so installed, as well as those not in the Premises belonging to Lessee, shall remain the property of Lessee, with the right and privilege, but not the obligation, to remove same on or before the expiration of the term thereof Notwithstanding the generality of the foregoing language, it is understood and agreed that Lessee may not remove any permanent fixtures, furnaces, boilers, or like equipment, whether or not it may have installed the same.

At all times during the term of this Lease, Lessee shall keep the Premises and all building and improvements now or hereafter located on the Premises free and clear of all claims of liens for labor, services, materials, supplies or equipment performed on or furnished to the premises. Should Lessee fail to pay and discharge or cause the Premises to be released from any such lien or claim of lien within twenty (20) days after any such lien attaches to the Premises, Lessor may pay, adjust, compromise or discharge any such lien or claim of lien on such terms and manner as Lessor may deem appropriate. In such event, Lessee shall, on or before the first day of the next calendar month following any such payment by Lessor, reimburse Lessor for the full amount paid by Lessor in paying, adjusting, compromising, and discharging such lien or claim of lien, including any attorney’s fees or other costs expended by Lessor.

Article 6

ENCUMBRANCE OF LEASEHOLD ESTATE

2

Subject to the limitations contained in this Article 6, Lessee may encumber to any person or entity, herein called “Lender,” by deed of trust or mortgage or other security instrument all of Lessee’s interest under this lease and the leasehold estate hereby created in Lessee for the purposes of interim or permanent financing of the construction, installation or alteration of buildings or other improvements upon the Premises. Provided, however, that contemporaneous with such encumbrance the Lender shall, in a writing duly acknowledged and delivered to Lessor, subordinate any such encumbrance to the rights and interests of the Lessor in the premises as created by this Lease, all in a form acceptable to Lessor.

The term of any such loan shall not exceed the remaining term of this lease, including any renewal option granted by Lessor.

Article 7

MAINTENANCE AND PAYMENT OF EXPENSES

Lessee shall, at Lessee’s sole cost, during the term of this lease or any extension thereof:

(a) Maintain and keep in good repair the improvements, including the exterior and interior of all buildings;

(b) Keep the premises in a neat and clean condition, free from danger of damage by fire, and refrain from permitting any nuisance or fire hazard thereon, shall permit no unlawful or immoral practice to be carried on within the Premises with his knowledge or consent, and comply in his occupancy and use with all applicable laws and regulations relating thereto. Lessee shall at Lessee’s cost provide for the regular removal of all trash, rubbish and garbage from the Premises.

(c) Lessee shall pay all personal property taxes assessed against the Premises or contents; the Lessor shall pay all taxes or assessments charged or levied against said real premises, including any ad valorem assessments or taxes.

(d) Pay all costs for all utilities used on the Premises, including, but without limitation, electricity, gas, water and sewer charges;

(e) Pay all other expenses of every kind required for the maintenance or operation of the Premises, with the exception that the Lessor shall be responsible for regular maintenance of the building facility for the first one year of the parties lease.

EXCEPT, commencing with the date of first occupancy by the Lessee, Lessor shall provide a one year warranty on the leasehold estate, including all mechanical, electrical, heat/air conditioning and plumbing systems, and shall at its own expense maintain and keep the leasehold estate in proper repair during the first year of occupancy.

Article 8

LIABILITY OF THE PARTIES

3

Lessee shall procure and pay the premium for liability insurance naming the Lessor as Additional Insured in the amounts of One Million Dollars ($1,000,000.00) in respect of injuries to any person, one Million Dollars ($1,000,000.00) in respect to any one accident, and Seven Hundred Fifty Thousand Dollars ($750,000,00) in respect to property damage, to protect Lessee and Lessor against liability for such injury to persons and such damage upon or about the Premises.

Lessee shall indemnify and save harmless Lessor from any and all liabilities, penalties, damages, expenses, judgments, attorneys’ fees and other losses by reason of injury, or claim of injury, to any person or property, of any nature, and howsoever caused, arising out of the use, occupancy or control of the Premises, or the streets, driveways, parking areas, sidewalks and alleys adjacent thereto, by Lessee at any time during the demised term, whether or not caused by negligence of the Lessee, its agents, servants, employees, invitees or customers, unless the same be caused by the fault or negligence of Lessor. Lessee shall indemnify and save Lessor harmless from the cost and expense of defending against the same or the settlement thereof, including attorneys’ fees. Lessee agrees to pay any judgment which may be obtained against Lessor in any such event, or on account thereof. Lessor shall promptly notify Lessee of any claim of Injury, to persons or property, and shall promptly deliver to Lessee the original or a true copy of any summons or other process, pleading, or notice issued in any suit or other proceeding to assert or enforce any such claim.

Lessor and Lessee each waive their respective right of recovery from the other of losses incurred as the result of negligence or omission of the other or their respective agents, servants or employees insofar as such losses are covered and paid by a policy of insurance; in the event any such loss is not so covered and paid, this waiver of subrogation rights shall not be a bar to any action to recover such loss. It is intended by this paragraph that each party hereby waives his or its insurance company’s right of subrogation contained in any policy of insurance that such party may carry to protect its property, whether real, personal or mixed, under which policy the insurance company pays the loss and thus to prevent such insurance company from bringing any action to recover any moneys paid pursuant to said policy.

Lessee shall procure and pay the premium for property insurance insuring the real property and improvements against loss by fire and hazards included within the term “extended coverage” while permitted by the Lessee’s insurance carrier or while Lessee shall be deemed to have an insurable interest in the real property and improvements.

Article 9

ACCESS BY LESSOR

Lessor City of Coweta, by and through the City Manager as a representative of the City, shall have the right to enter the Premises at all reasonable times to examine the condition thereof, but such rights shall not be exercised in a manner to interfere unreasonably with the business of the Lessee. At any time within six (6) months prior to the expiration of this lease or any extension, Lessor, after first having notified Lessee in writing, may show the premises to prospective purchasers or tenants, but Lessor may not attach to the building or erect on the Premises a notice advertising said property for sale or lease.

4

Article 10

DEFAULT BY LESSEE

Lessor shall not declare a default hereunder because of failure to pay any rentals when due, or to comply with any other terms of this Lease Agreement, without first giving Lessee fifteen (15) days written notice of its intention to do so with respect to the payment of rentals or other monies due hereunder or thirty (30) days written notice with respect to any other default. If during said fifteen (15) or thirty (30) day period as the case may be, Lessee shall pay said rental or remedy the default in the terms of the Lease in regard to which default has been made, then the right of the Lessor to declare a default under this lease shall cease and this Lease shall continue as though no default has been made, EXCEPT, if Lessor has give notice of default for non-payment on three separate occasions, during any twelve month period, Lessor shall have the following options in addition to any other legal options available to Lessor:

(a) If Lessee shall have abandoned the Leased Premises, at Lessor’ option, without terminating this Lease, to change the locks on the doors to the Leased Premises and exclude Tenant therefrom, for the purposes of securing the premises;

(b) At its option, by notice to Lessee, to terminate this Lease. No re-entry or taking of possession of the Leased premises by Lessor, as provided in clauses (a) and (c) of this article, shall be construed as an election on its part to terminate this Lease unless a notice of such intention is given to Lessee. Upon the service of such notice of termination, the term of this Lease shall automatically terminate. Notwithstanding any reletting without termination, Lessor may at any time thereafter elect to terminate this Lease for such previous breach in the manner provided in this section.

(c) At its option, to require Lessee to surrender possession without termination of this Lease, whereupon Lessee shall immediately surrender possession of the Premises to Lessor and immediately vacate the same, and remove all effects therefrom, except such as may not be removed under other provisions of this Lease. If Lessee fails to surrender possession and vacate as aforesaid, Lessor may apply to a court of appropriate jurisdiction for an order for possession of the property without thereby waiving Lessor’s rights to rent or any other rights given to Lessor under this lease or at law or in equity. If Lessee shall not remove all effects from the Premises in a commercially reasonable time, Lessor may, at its option, remove any or all effects in any manner it shall choose and store the same without liability for loss, and Lessee shall pay Lessor, on demand, any and all expenses incurred in such removal and storage of said effects for any length of time during which the same shall be in Lessor’s possession or storage.

(d) At its option, to make such alterations and repairs as Lessor shall determine may be reasonably necessary to relet the Premises, and to relet the same or any part thereof for such term or terms (which may be for a term extending beyond the term of this lease) and upon such terms and conditions as Lessor in its sole discretion may deem advisable. In no event shall Lessee be entitled to receive any surplus funds generated by any re-letting of the premises.

5

(e) At its option, to collect from Lessee any other loss or damage which Lessor may sustain by reason of any breach and any diminished value of the Premises resulting from said breach.

(f) At its option, in the event of a breach or threatened breach by Lessee, to enjoin any such breach or threatened breach.

(g) No receipt of moneys by Lessor from or for the account of Lessee or from anyone in possession or occupancy of the Premises after the termination in any of this Lease or after the giving of any notice of termination, shall reinstate, continue or extend the term of this Lease or affect any notice given to Lessee prior to the receipt of such money, it being agreed that after the service of notice or the commencement of a suit, or after final judgment for possession of the Premises, Lessor may receive and collect any rent or other amounts due Lessor, and such payment shall not waive or affect said notice, suit or judgment.

It is further understood that notice of default from the Lessor shall be a valid notice of default if issued by the City Manager, City Clerk, or City Attorney, regardless of formal action or approval by the governing body of the City of Coweta, and that the lack of formal approval by the governing body shall not constitute grounds for legal challenge to the sufficiency of any notice of default

Article 11

BANKRUPTCY OF TENANT

(a) If at any time prior to or after the commencement of the term of this Lease there shall be filed by Lessee, in any court pursuant to any statute either of the United States or of any State, a petition in bankruptcy (including, without limitation, a petition for liquidation, reorganization, or for adjustment of debts of an individual with regular income), or if such petition is filed against Lessee and such party fails to secure a dismissal thereof within thirty (30) days of the filing thereof, or if Lessee becomes insolvent or is unable or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors or petitions for or enters into an arrangement with its creditors or a custodian is appointed or takes possession of Lessee’s property, then this Lease shall, at the Lessor’s option, be terminated, in which event Lessee, nor any person claiming through Lessee or by virtue of any statute or any order of any court, shall be entitled to possession of the Premises, and Lessor, in addition to the other rights and remedies given by this Lease, or by virtue of any statute or rule of law, may retain as liquidated damages any rent, Security Deposit or moneys received by Lessor from Lessee or others in behalf of Lessee.

6

(b) In the event an act of bankruptcy shall occur and this Lease is not terminated pursuant to the provisions of paragraph (a) above, the parties agree:

(1)           That if there shall be a default in the payment of rent, or a default in the observance or performance of any other provision of this Lease binding on Lessee, Lessor shall be entitled to immediately discontinue furnishing any utilities and other services it has been providing to the Premises, until such time as such defaults have been fully cured, it being agreed that the foregoing action by Lessor shall in no way cause or result in any abatement or rent or any other charge owed by Lessee.

(2)           That if this Lease is assumed by a trustee in bankruptcy, this Lease may not be assigned by the trustee to a third party without prior written consent of Lessor.

Article 12

ASSIGNMENT AND SUBLETTING

(a) Lessee shall not, voluntarily, involuntarily or by operation of law assign or encumber this Lease, nor sublet all or any part of the Premises, without the prior written consent of the Lessor. Notwithstanding, unless written agreement otherwise, upon approved assignment or subletting, Lessee shall remain liable for any and all of his obligations owed pursuant to this Lease.

(b) Lessor may not transfer its ownership interest in the Premises to any party other than the Lessee or Lessee’s assigns without first obtaining a written assumption by the proposed transferee of all of Lessor’s obligations and duties under all written agreements between the Lessor and Lessee. Upon the valid transfer of its interest, the Lessor shall be entirely released and relieved of all obligations and responsibilities concerning this Lease.

Article 13

DESTRUCTION OF LEASED PREMISES

If the leased premises is damaged or destroyed by fire or other casualty so as to become partially or totally untenantable, the same shall be repaired and restored by Lessor and Lessee with due diligence.

(a) If the damage or destruction is such that the cost of repairs or replacement to the premises is greater than 50% of the initial cost of construction of the premises, rent shall abate by 50% during the time period in which the premises is not capable of being used by Lessee, said abatement period not to exceed 6 months. Abatement of rentals shall not occur if Lessee continues and occupy the premises and continues to conduct business in the premises, regardless of the extent of damage. Lessor shall have the option of deciding not to rebuild or repair only if it is determined insurance proceeds are not available to fund the total cost of rebuild or repair, in which case the Lessor may terminate this Lease.

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(b) If the damage or destruction is such that the cost of repairs or replacement to the premises is less than 50% of the initial cost of construction of the premises, rent shall not abate during the period of replacement or repair, regardless of the impact upon Lessee’s business.

Article 14

LEGAL EXPENSES; REMEDIES CUMULATIVE

(a) In case suit is brought because of the breach of any agreement or obligation contained in this Lease on the part of Lessee or Lessor to be kept or performed, and a breach shall be established, the prevailing party shall be entitled to recover all expenses incurred therefor, including reasonable attorneys’ fees.

(b) Lessor’s and Lessee’s rights and remedies shall be cumulative and may be exercised and enforced concurrently. Any right or remedy conferred upon Lessor or Lessee under this Lease shall not be deemed to be exclusive of any other right or remedy it may have.

Article 15

MISCELLANEOUS

(a) The waiver by Lessor or Lessee of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition herein contained. No waiver of any rights shall occur unless such waiver is in writing and signed by the party charged therewith.

(b) No payment by Lessee or receipt by Lessor of a lesser amount than the monthly rent or any other charges shall he deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement on any check be deemed an accord and satisfaction.

(c) No subsequent alteration, amendment, change or addition to this Lease, nor any surrender of the term, shall be binding upon Lessor or Lessee unless reduced to writing and signed by the parties hereto.

(d) Lessor does not in any way or for any purpose become a partner of Lessee in the conduct of his business or otherwise, nor a joint venturer or a member of a joint enterprise with Lessee.

(e) This written agreement constitutes the total, sole and complete Lease agreement of the parties, and no representations, promises, understandings, offers or other communications of any type concerning the agreement of the parties shall be binding unless included herein, EXCEPT, the parties anticipate execution herewith an “Option to Purchase” and said separate agreement, if approved by the parties, shall be binding thereon as a separate agreement, and not as a modification, interpretation, or limitation an this Lease.

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(f) Any notices required by the parties Lease shall be provided in writing, by certified mail, to the last known address of that party.

(g) The parties agree that any action concerning breach or enforcement of the terms of this lease shall be brought in the District Court for Wagoner County, Oklahoma, and that jurisdiction shall not be proper in any other court, regardless of the residence of the Lessee or where this Lease may be executed.

(h) The laws of the State of Oklahoma shall govern the performance, validity and enforcement of this Lease.

Dated this 15th day of July, 2002.

	CITY OF COWETA, LESSOR
	By:	/s/ W.W. Osburn
		W.W. Osburn, Mayor
		City of Coweta
/s/ Joyce Terry
Joyce Terry, City Clerk
	/s/ David Steeber
	DAVID STEEBER, President

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EXHIBIT A

A TRACT OF LAND LOCATED IN THE NE 1/4 OF SECTION 35, TOWNSHIP 18 NORTH, RANGE 15 EAST OF THE INDIAN BASE AND MERIDIAN, WAGONER COUNTY, STATE OF OKLAHOMA, MORE PARTICULARLY DESCRIBED AS: BEGINNING AT A POINT ON THE NORTH LINE OF THE SECTION, 495.00 FEET WEST OF THE NORTHEAST CORNER OF SAID NE 1/4; THENCE WEST ALONG SAID NORTH LINE A DISTANCE OF 295.00 FEET; THENCE SOUTH 00 04’20” EAST A DISTANCE OF 495 FEET; THENCE IN AN EASTERLY DIRECTION ON A LINE PARALLEL WITH THE NORTH SECTION LINE FOR A DISTANCE OF 295.00 FEET; THENCE NORTH 00 04’20” WEST A DISTANCE OF 495.00 FEET TO THE POINT OF BEGINNING.

THE PHYSICAL ADDRESS OF THE PROPERTY IS 26730 EAST 111’ STREET SOUTH, COWETA, OKLAHOMA.

OPTION AGREEMENT

In consideration of Accu-Tec Enterprises, Ltd. (“Optionee”) meeting all obligations as stated herein, the City of Coweta, Oklahoma (“Optionor”) hereby grants the Optionee an option to purchase under the following terms:

1 Commencing on the date of the first payment by the Optionee to the Optionor for lease or rental of improved real property as described on the attached Exhibit “A” (the “Property”), and ending on the end of the twentieth (20th) year after the date of such first payment, the Optionee shall have an option to purchase the Property owned by Optionor.

2 The Option Price shall be the then outstanding balance of all promissory notes or other debt instruments secured by the Property, but shall include only those debts entered into to allow the Optionee to purchase the Property and erect the initial improvements on said real property, together with the amount of any sums paid the Optionor on said promissory notes prior to the occupancy of the Property by the Optionee for which Optionor has not been reimbursed by the Optionee.

3 Optionee has paid the sum of $100.00 as non-refundable option consideration which will be applied toward the purchase price of the property if, and only if, Optionee exercises this Option to purchase. In the event Optionee fails to exercise the Option or defaults under any terms of the attached lease, this Option will be void and all monies will be retained by Optionor as liquidated damages and not as a penalty.

4 The recording of this Option or any memorandum thereof will result in the automatic revocation of this Option, and all monies will be retained by Optionor as liquidated damages and not as a penalty. In addition, Optionee will be liable to Optionor for all incidental and consequential damages for slander of title, including, but not limited to, attorneys fees and court costs for correcting title.

5 This Option, or any interest therein, is not transferable or assignable and can only be exercised by the individuals signing this Option acting in unison for Optionee’s principal residence.

6 Notice must be delivered to the Optionor in writing of Optionee’s intention to exercise this Option at least fifteen (15) days prior to exercise.

7 This purchase option is NOT contingent upon Optionee’s ability to obtain financing from a lender or any other reason. Optionee understands that TIME IS OF THE ESSENCE for this agreement, and that Optionee’s failure to purchase the property before the expiration of the Option for any reason (or if Optionee defaults under any of the terms of a lease agreement for the above stated property), all monies paid by Optionee will be retained by Optionor. Optionor and Optionee further agree that this agreement is not an installment land contract, contract-for-deed or equitable mortgage, but merely a statement of Optionee’s right to purchase the above-referenced property under the terms stated above, and that Optionee is under no legal responsibility to purchase the property.

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Dated this 5th day of August, 2002.

	“OPTIONOR”
	CITY OF COWETA, OKLAHOMA
	By:	/s/ W.W. Osburn
		W.W. Osburn, Mayor
Attest:
/s/ Joyce Terry
Joyce Terry, City Clerk
	“OPTIONEE”
	/s/ David Steeber
	David Steeber, President

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EXHIBIT A

A TRACT OF LAND LOCATED IN THE NE 1/4 OF SECTION 35, TOWNSHIP 18 NORTH, RANGE 15 EAST OF THE INDIAN BASE AND MERIDIAN, WAGONER COUNTY, STATE OF OKLAHOMA, MORE PARTICULARLY DESCRIBED AS: BEGINNING AT A POINT ON THE NORTH LINE OF THE SECTION, 495.00 FEET WEST OF THE NORTHEAST CORNER OF SAID NE 1/4; THENCE WEST ALONG SAID NORTH LINE A DISTANCE OF 295.00 FEET; THENCE SOUTH 00 04’20” EAST A DISTANCE OF 495 FEET; THENCE IN AN EASTERLY DIRECTION ON A LINE PARALLEL WITH THE NORTH SECTION LINE FOR A DISTANCE OF 295.00 FEET; THENCE NORTH 00 04’20” WEST A DISTANCE OF 495.00 FEET TO THE POINT OF BEGINNING.

THE PHYSICAL ADDRESS OF THE PROPERTY IS 26730 EAST 111TH STREET SOUTH, COWETA, OKLAHOMA.

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ESTOPPEL CERTIFICATE

Dated:  November 9, 2009

Tech Aerospace Group, LLC

911 Main, Suite 2100

Kansas City, MO  64105

Re: Lease Agreement dated July 15, 2002 (the “Lease”), by and between the City of Coweta (“Landlord”) and Auuc-Tec, LLC (“Tenant”) relating to property located at 26730 East 111th Street South, Coweta, Oklahoma (“Premises”)

Gentlemen:

The undersigned hereby acknowledges that Tech Aerospace Group, LLC, a Delaware limited liability company (“TAG”) may agree or has agreed to purchase all of the capital equity of Tenant.  In connection therewith, the undersigned hereby certifies, acknowledges and agrees as follows:

Article 16THE UNDERSIGNED IS THE OWNER OF THE FEE SIMPLE TITLE OF THE PREMISES AND THE OWNER AND HOLDER OF THE INTEREST OF LANDLORD UNDER THE LEASE.

Article 17THE TERM OF THE LEASE COMMENCED ON JULY 15, 2002 AND WILL EXPIRE ON 20 YEARS AS OF DAY RENTALS COMMENCE (SUBJECT TO THE TENANT’S RIGHT OF EXTENSION, IF ANY, CONTAINED IN THE LEASE).  THE LEASE IS VALID AND IN FULL FORCE AND EFFECT.

Article 18ATTACHED HERETO IS A TRUE, ACCURATE, AND COMPLETE COPY OF THE LEASE, TOGETHER WITH ALL AMENDMENTS AND MODIFICATIONS THERETO.  THE LEASE CONTAINS THE ENTIRE AGREEMENT BETWEEN THE UNDERSIGNED AND TENANT WITH RESPECT TO THE PREMISES.

Article 19THE LAST MONTHLY PAYMENT OF RENT WAS MADE ON OR ABOUT OCTOBER 19, 2009.  ALL RENTAL NOW OR HERETOFORE DUE HAS BEEN PAID IN FULL, THROUGH AND INCLUDING THE PAYMENT OF RENT DUE ON OR ABOUT OCTOBER 15, 2009.  THE MONTHLY RENTAL UNDER THE LEASE FOR THE REMAINING TERM OF THE LEASE IS $3,909.74.

Article 20EXCEPT FOR A SECURITY DEPOSIT IN THE AMOUNT OF $0, NO SECURITY DEPOSIT OR RENT IN ADVANCE OF ITS DUE DATE HAS BEEN PAID.

Article 21TO THE KNOWLEDGE OF THE UNDERSIGNED, NO DEFAULT AND NO EVENT HAS OCCURRED AND NO CONDITION EXISTS WHICH, IF NOT CURED FOLLOWING THE GIVING OF NOTICE AND/OR THE PASSAGE OF TIME, WOULD CONSTITUTE A DEFAULT UNDER THE LEASE.  NO NOTICE OF DEFAULT HAS BEEN GIVEN WITH RESPECT TO ANY DEFAULT WHICH REMAINS UNCURED.

Article 22ALL CONSTRUCTION OBLIGATIONS OF TENANT AND LANDLORD UNDER THE LEASE HAVE BEEN COMPLETED.

Article 23NO CONTROVERSY PRESENTLY EXISTS BETWEEN TENANT AND LANDLORD, INCLUDING ANY LITIGATION OR ARBITRATION, OVER THE LEASE OR THE PERFORMANCE OF THE TERMS THEREOF.  THERE IS NO DEFENSE, OFFSET, CLAIM, OR COUNTERCLAIM BY OR IN FAVOR OF LANDLORD AGAINST TENANT UNDER THE LEASE.

Article 24THE PERSON SIGNING THIS ESTOPPEL CERTIFICATE IS DULY AUTHORIZED AND HAS THE POWER TO EXECUTE IT ON BEHALF OF LANDLORD AND TO BIND LANDLORD.

LANDLORD:
City of Coweta
By:	/s/ Steven C. Whitock
Name:	Steven C. Whitock
Title:	City Manager

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EX-10.38

Exhibit 10.38

CITY OF FREDONIA, KANSAS

AS ISSUER

AND

VALENT AEROSTRUCTURES, LLC

AS TENANT

LEASE

DATED AS OF APRIL 1, 2012

$2,184,726

INDUSTRIAL REVENUE BONDS

SERIES 2012A

(VALENT AEROSTRUCTURES PROJECT)

LEASE

TABLE OF CONTENTS

			Page
ARTICLE I			1
	Section 1.1	Definitions	1
	Section 1.2	Representations and Covenants by the Tenant	1
	Section 1.3	Representations and Covenants by the Issuer	5
ARTICLE II			6
	Section 2.1	Granting of Leasehold	6
ARTICLE III			6
	Section 3.1	Basic Rent	6
	Section 3.2	Additional Rent	6
	Section 3.3	Rent Payable Without Abatement or Setoff	6
	Section 3.4	Prepayment of Basic Rent	7
	Section 3.5	Deposit of Rent by the Trustee	7
	Section 3.6	Acquisition of Bonds	7
ARTICLE IV			7
	Section 4.1	Disposition of Original Proceeds; Project Fund	7
ARTICLE V			7
	Section 5.1	Acquisition of Land and Improvements	7
	Section 5.2	Project Contracts	8
	Section 5.3	Payment of Project Costs for Buildings and Improvements	8
	Section 5.4	Payment of Project Costs for Machinery and Equipment	9
	Section 5.5	Completion of Project	9
	Section 5.6	Deficiency of Project Fund	9
	Section 5.7	Right of Entry by the Issuer and the Trustee	9
	Section 5.8	Machinery and Equipment Purchased by the Tenant	9
	Section 5.9	Project Property of the Issuer	9
	Section 5.10	Kansas Retailers’ Sales Tax	10

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ARTICLE VI			10
	Section 6.1	Insurance as a Condition to Disbursement	10
	Section 6.2	Insurance After Completion	11
	Section 6.3	General Insurance Provisions	11
	Section 6.4	Evidence of Title	12
ARTICLE VII			12
	Section 7.1	Impositions	12
	Section 7.2	Receipted Statements	12
	Section 7.3	Contest of Impositions	12
	Section 7.4	Ad Valorem Taxes	12
ARTICLE VIII			13
	Section 8.1	Use of Project	13
	Section 8.2	Environmental Provisions	13
ARTICLE IX			15
	Section 9.1	Sublease by the Tenant	15
	Section 9.2	Assignment by the Tenant	16
	Section 9.3	Release of the Tenant	16
	Section 9.4	Mergers and Consolidations	16
	Section 9.5	Covenant Against Other Assignments	16
ARTICLE X			17
	Section 10.1	Repairs and Maintenance	17
	Section 10.2	Removal, Disposition and Substitution of	17
ARTICLE XI			17
	Section 11.1	Alteration of Project	17
ARTICLE XII			17
	Section 12.1	Additional Improvements	17

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ARTICLE XIII			18
	Section 13.1	Securing of Permits and Authorizations	18
	Section 13.2	Mechanic’s Liens	18
	Section 13.3	Contest of Liens	18
	Section 13.4	Utilities	18
ARTICLE XIV			19
	Section 14.1	Indemnity	19
ARTICLE XV			19
	Section 15.1	Access to Project	19
ARTICLE XVI			20
	Section 16.1	Option to Extend Basic Term	20
ARTICLE XVII			20
	Section 17.1	Option to Purchase Project	20
	Section 17.2	Quality of Title and Purchase Price	20
	Section 17.3	Closing of Purchase	21
	Section 17.4	Effect of Failure to Complete Purchase	21
	Section 17.5	Application of Condemnation Awards if the Tenant	21
	Section 17.6	Option to Purchase Unimproved Portions of Land	21
	Section 17.7	Quality of Title - Purchase Price	22
	Section 17.8	Closing of Purchase	22
	Section 17.9	Effect of Purchase on Lease	23
	Section 17.10	Effect of Failure to Complete Purchase	23
ARTICLE XVIII			23
	Section 18.1	Damage and Destruction	23
	Section 18.2	Condemnation	24
	Section 18.3	Effect of Tenant’s Defaults	24
ARTICLE XIX			25
	Section 19.1	Change of Circumstances; Determination of Taxability	25

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ARTICLE XX			25
	Section 20.1	Remedies on Default	25
	Section 20.2	Survival of Obligations	27
	Section 20.3	No Remedy Exclusive	27
ARTICLE XXI			27
	Section 21.1	Performance of the Tenant’s Obligations by the Issuer	27
ARTICLE XXII			27
	Section 22.1	Surrender of Possession	27
ARTICLE XXIII			28
	Section 23.1	Notices	28
ARTICLE XXIV			28
	Section 24.1	Triple-Net Lease	28
	Section 24.2	Funds Held by the Trustee After Payment of Bonds	28
ARTICLE XXV			28
	Section 25.1	Rights and Remedies	28
	Section 25.2	Waiver of Breach	29
	Section 25.3	The Issuer Shall Not Unreasonably Withhold Consents	29
ARTICLE XXVI			29
	Section 26.1	The Issuer May Not Sell	29
	Section 26.2	Quiet Enjoyment and Possession	29
	Section 26.3	Financial Report; Furnishing of Financial Information	29
	Section 26.4	Issuer’s Obligations Limited	29
ARTICLE XXVII			30
	Section 27.1	Investment Tax Credit; Depreciation	30

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ARTICLE XXVIII			30
	Section 28.1	Amendments	30
	Section 28.2	Granting of Easements	31
	Section 28.3	Security Interests	31
	Section 28.5	Construction and Enforcement	32
	Section 28.6	Invalidity of Provisions of Lease	32
	Section 28.7	Covenants Binding on Successors and Assigns	32
	Section 28.8	Section Headings	32
	Section 28.9	Execution of Counterparts	32

Signatures and Acknowledgments	33
Appendix A, Form of Requisition for Payment of Project Costs	A-1
Appendix B, Form of Certificate of Completion	B-1
Appendix C, Glossary of Words and Terms	C-1
Schedule I, Description of Property	S-1

v

LEASE

THIS LEASE, made and entered into as of April 1, 2012 between the City of Fredonia, Kansas (the “Issuer”), and Valent Aerostructures, LLC (the “Tenant”).

WITNESSETH:

WHEREAS, the Issuer is a municipal corporation incorporated as a city of the second class, duly organized and existing under the laws of the State, with full lawful power and authority to enter into this Lease by and through its governing body; and

WHEREAS, the Issuer, in furtherance of the purposes and pursuant to the provisions of the laws of the State, particularly K.S.A. 12-1740 et seq., as amended (the “Act”), and in order to provide for the economic development and welfare of the City of Fredonia, Kansas and its environs and to provide employment opportunities for its citizens and to promote the economic stability of the State, has proposed and does hereby propose that it shall:

(a)           Acquire the Project (as defined in the Indenture);

(b)           Lease the Project to the Tenant for the rentals and upon the terms and conditions hereinafter set forth; and

(c)           Issue, for the purpose of paying Project Costs (as defined in the Indenture), the Series 2012A Bonds under and pursuant to and subject to the provisions of the Act and the Indenture (herein defined), said Indenture being incorporated herein by reference and authorized by an ordinance of the governing body of the Issuer, and

WHEREAS, the Tenant, pursuant to the foregoing proposals of the Issuer, desires to lease the Project from the Issuer for the rentals and upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein set forth, Issuer and the Tenant do hereby covenant and agree as follows:

ARTICLE I

Section 1.1       Definitions.  Capitalized terms not otherwise defined in this Lease shall have the meanings set forth in Appendix B to the Indenture.  In addition to the words, terms and phrases defined in Appendix B to the Indenture and elsewhere in this Lease, the capitalized words, terms and phrases as used herein shall have the meanings set forth in the Glossary of Words and Terms attached as Appendix C, unless the context or use indicates another or different meaning or intent.

Section 1.2        Representations and Covenants by the Tenant.  The Tenant makes the following covenants and representations as the basis for the undertakings on its part herein contained:

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(a)           Representations and Covenants Relating to the Code.

(i)             The Tenant will not use or cause or allow any portion of the Original Proceeds to be used or applied to provide any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility, racetrack, airplane, skybox or other private luxury box, any health club facility, any facility primarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.

(ii)           At least 95% of the Original Proceeds will be expended for Project Costs paid not more than 60 days prior to the Official Action Date (unless otherwise permitted under Treas.  Reg. § 1.150-2).

(iii)           The Tenant will not make or cause or permit to be made, whether by the Trustee or otherwise, any use of the proceeds (as defined in the Code) of the Series 2012A Bonds which would cause the Series 2012A Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code.  The Tenant further covenants and agrees that it will comply with, and will take all action reasonably required to insure that the Trustee complies with, all applicable requirements of said Section 148 and Treasury Regulations promulgated thereunder until all of the Bonds, including interest thereon and any applicable redemption premium, have been paid.

(iv)          The weighted average maturity of the Series 2012A Bonds (determined in accordance with Section 147(b) of the Code), does not exceed 120 percent of the average reasonably expected economic life of the Improvements (as determined in accordance with Section 147(b) of the Code) purchased with Original Proceeds.

(v)           The Tenant has reviewed the Issuer’s Form 8038 prepared for filing in connection with the issuance of the Series 2012A Bonds, and represents that the information set forth therein is true and d accurate.

(vi)          The Tenant will file or cause to be filed such periodic supplemental statements or notices with the Internal Revenue Service or such other designated governmental agency as may now or hereafter be required by applicable statutes or regulations in order to comply with Section 144(a)(4) of the Code.  The Tenant further covenants and agrees that it will not take any action or permit any action to be taken that would adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Series 2012A Bonds.

(vii)         The Project, and each portion thereof, constitutes either land or property of a character subject to the allowance for depreciation as required by Section 144(a) of the Code.  Not more than 25% of the Original Proceeds will be used to acquire land in accordance with Section 147(c) of the Code.  All expenditures for and costs of the Project have been or will be items of Project Costs as defined herein.

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(viii)         As of the date of issuance of the Series 2012A Bonds, there will not be outstanding any obligations (other than the Series 2012A Bonds) the interest on which is exempt from Federal income tax by virtue of the provisions of Section 144(a) of the Code and the proceeds of which were to be used with respect to the Project or with respect to other facilities located within the boundaries of Issuer, or facilities contiguous to, or integrated with, the Project or any such facilities, and the principal user (as defined in the Code) of which is or will be the Tenant or any other Principal User.

(ix)           The Tenant will comply with the Arbitrage Instructions (defined in the Indenture) and will pay to the United States or the Trustee all arbitrage rebate payments required under Section 148(f) of the Code, to the extent such amounts are not available to the Trustee in the Rebate Fund held under the Indenture.

(x)            The Tenant will not authorize or permit more than 2% of the Original Proceeds to be expended for Costs of Issuance, in compliance with Section 147(g) of the Code.

(xi)           The Tenant will not authorize or permit any portion of the Original Proceeds to be used to acquire any property (or any interest therein) unless the first use of such property is pursuant to such acquisition, or unless appropriate Rehabilitation Expenditures are made to such property in accordance with Section 147(d) of the Code.

(xii)          The Tenant did not place any property included in the Improvements in service more than eighteen months before the date of issuance of the Series 2012A Bonds.

(xiii)         The Project, when completed, will constitute a “manufacturing facility” within the definition of Section 144(a)(12) of the Code, and the Tenant has no present intention of making any substantial use of the Project other than as such “manufacturing facility.”

(xiv)         As of the date of issuance of the Series 2012A Bonds, the aggregate principal amount of the Series 2012A Bonds and all “Section 103(b)(6)(D) capital expenditures” as defined in Treas. Reg. §1.103-10(b) paid or incurred during the three-year period which begins three years before the date of issuance of the Series 2012A Bonds is less than $20 million.

The Issuer and the Tenant agree to amend the covenants contained in this subsection in such manner as shall be set forth in an opinion of Bond Counsel as being necessary to maintain the excludability from gross income for federal income tax purposes of the interest on the Bonds, and, for the purpose of implementing such amendments, the special covenants contained in this Section may be amended at any time, with the consent of the Trustee, by a written agreement executed by the Issuer and the Tenant pursuant to this subsection without notice to or the consent of any Owner(s) of Bonds.

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(b)           General Representation and Covenants.

(i)             The Tenant is a Delaware limited liability company, duly organized and existing under the laws of said state, and is duly authorized and qualified to do business in the State, with lawful power and authority to enter into this Lease, acting by and through its members.

(ii)            Except as otherwise permitted herein, the Tenant shall (1) maintain and preserve its existence and organization as a limited liability company and its authority to do business in the State and to operate the Project; and (2) not initiate any proceedings of any kind whatsoever to dissolve or liquidate without (A) securing the prior written consent thereto of the Issuer and (B) making provision for the payment in full of the principal of and interest and redemption premium, if any, on the Bonds.  If, at any time during the term of this Lease or the Indenture, the Tenant changes its state of organization, changes its form of organization, changes its name, or takes any other action which could affect the proper location for filing Uniform Commercial Code financing statements or continuation statements or which could render existing filings seriously misleading or invalid, the Tenant shall immediately provide written notice of such change to the Trustee, and thereafter promptly deliver to the Trustee such amendments and/or replacement financing statements, together with an Opinion of Counsel to the effect that such amendments and/or replacement financing statements have been properly filed so as to create a perfected security interest in the collateral securing the Indenture, and such additional information or documentation regarding such change as the Trustee may reasonably request.

(iii)           Neither the execution and/or delivery of this Lease, the consummation of the transactions contemplated hereby or by the Indenture, nor the fulfillment of or compliance with the terms and conditions of this Lease contravenes in any material respect any provisions of its articles of organization or operating agreement, or conflicts in any material respect with or results in a material breach of the terms, conditions or provisions of any mortgage, debt, agreement, indenture or instrument to which the Tenant is a party or by which it is bound, or to which it or any of its properties is subject, or would constitute a material default (without regard to any required notice or the passage of any period of time) under any of the foregoing, or would result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Tenant under the terms of any mortgage, debt, agreement, indenture or instrument, or violates in any material respect any existing law, administrative regulation or court order or consent decree to which the Tenant is subject.

(iv)           This Lease constitutes a legal, valid and binding obligation of the Tenant enforceable against the Tenant in accordance with its terms.

(v)            The Tenant agrees to operate and will operate the Project, or cause the Project to be operated as a “facility,” as that term is contemplated in the Act, from the date of the Issuer’s acquisition of the Project to the end of the Term.

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(vi)           The Tenant has obtained or will obtain any and all permits, authorizations, licenses and franchises necessary to construct the Improvements to enable it to operate and utilize the Project for the purposes for which it was leased by the Tenant under this Lease.

(vii)          The estimated total cost of the Improvements to be financed by the proceeds of the Series 2012A Bonds, plus interest on the Series 2012A Bonds during acquisition, construction and installation of the Improvements, and Costs of Issuance of the Series 2012A Bonds, will not be less than the original aggregate principal amount of the Series 2012A Bonds.

(viii)         After reasonable inquiry and investigation, the Tenant is not aware of (A) any Hazardous Substances generated from or located on the Project; (B) any prior use of the Land which might reasonably involve Hazardous Substances; or (C) any investigations, complaints or inquiries of any kind, from any source, concerning Hazardous Substances with respect to the Project or properties adjoining the Project.

(ix)           The Tenant will not use or permit the Project to be used by any other person or entity in any manner which would involve the generation, storage, disposal or transportation of Hazardous Substances, except in strict compliance with applicable Environmental Laws.

Section 1.3             Representations and Covenants by the Issuer.  The Issuer makes the following representations and covenants as the basis for the undertakings on its part herein contained:

(a)           It is a municipal corporation duly incorporated and existing as a city of the second class under the constitution and laws of the State.  Under the provisions of the Act and the Ordinance, the Issuer has the power to enter into and perform the transactions contemplated by this Lease and the Indenture and to carry out its obligations hereunder and thereunder.

(b)           It will submit to the Internal Revenue Service in accordance with Section 149 of the Code a completed Internal Revenue Service Form 8038 or other similar form provided by the Internal Revenue Service with respect to the Series 2012A Bonds.

(c)           It has not, in whole or in part, assigned, leased, hypothecated or otherwise created any other interest in, or disposed of, or caused or permitted any lien, claim or encumbrance to be placed against, the Project, except for this Lease, the assignment of this Lease to the Trustee, any Permitted Encumbrances, any Impositions, and the pledge of the Project pursuant to the Indenture.

(d)           Except as otherwise provided herein or in the Indenture, it will not during the Term, in whole or in part, assign, lease, hypothecate or otherwise create any other interest in, or dispose of, or cause or permit any lien, claim or encumbrance to be placed against, the Project, except Permitted Encumbrances, this Lease, any Impositions and the pledge of the Project pursuant to the Indenture.

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(e)           It has pledged the Project and the net rentals therefrom generated under the Lease to payment of the Bonds in the manner prescribed by the Act, and has duly authorized the execution and delivery of this Lease and the Indenture and the issuance, sale and delivery of the Series 2012A Bonds.

(f)            It has notified or obtained the consent to and/or approval of the issuance of the Series 2012A Bonds by each municipal corporation and political subdivision the notification, consent or approval of which is required by the provisions of the Act and the Code.

ARTICLE II

Section 2.1             Granting of Leasehold.  The Issuer by these presents hereby rents, leases and lets the Project unto the Tenant and the Tenant hereby rents, leases and hires the Project for the Basic Term from the Issuer, for the rentals and upon and subject to the terms and conditions hereinafter set forth.

ARTICLE III

Section 3.1             Basic Rent.  The Issuer reserves and the Tenant covenants and agrees to pay Basic Rent to the Trustee, as assignee of the Issuer, for the account of the Issuer, for deposit in the Debt Service Fund, on each Basic Rent Payment Date.  Basic Rent shall be payable at the principal office of the Trustee on each Basic Rent Payment Date.

Section 3.2             Additional Rent.  Within 30 days after receipt of written notice thereof, the Tenant shall pay any Additional Rent required to be paid pursuant to this Lease not already paid.

Section 3.3             Rent Payable Without Abatement or Setoff.  The Tenant covenants and agrees with and for the express benefit of the Issuer and the Owner(s) of Bonds that all payments of Basic Rent and Additional Rent shall be made by the Tenant as the same become due, and that the Tenant shall perform all of its obligations, covenants and agreements hereunder without notice or demand and without abatement, deduction, setoff, counterclaim, recoupment or defense or any right of termination or cancellation arising from any circumstance whatsoever, whether now existing or hereafter arising, and irrespective of whether the Improvements shall have been acquired, started or completed, or whether the Issuer’s title to the Project or any part thereof is defective or non-existent, and notwithstanding any failure of consideration or commercial frustration of purpose, the eviction or constructive eviction of the Tenant or any subtenant, any Change of Circumstances, any change in the tax or other laws of the United States of America, the State, or any municipal corporation of either, any change in the Issuer’s legal organization or status, or any default of the Issuer hereunder, and regardless of the invalidity of any action of the Issuer or any other event or condition whatsoever, and regardless of the invalidity of any portion of this Lease, and the Tenant hereby waives the provisions of any statute or other law now or hereafter in effect contrary to any of its obligations, covenants or agreements under this Lease or which releases or purports to release the Tenant therefrom.  Nothing in this Lease shall be construed as a waiver by the Tenant of any rights or claims the Tenant may have against the Issuer under this Lease or otherwise, but any recovery upon such rights and claims shall be had from the Issuer separately, it being the intent of this Lease that the Tenant shall be unconditionally and absolutely obligated to perform fully all of its obligations, agreements and covenants under this Lease (including the obligation to pay Basic Rent and Additional Rent) for the benefit of the Owner(s) of Bonds.

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Section 3.4             Prepayment of Basic Rent.  The Tenant may at any time prepay all or any part of the Basic Rent.  Prepayments of Basic Rent will be applied to redemption of Bonds (other than mandatory sinking fund redemption), without payment of redemption premium, as directed in writing by the Tenant, to the extent that Bonds are subject to optional redemption at the time of prepayment.  Otherwise, prepayments of Basic Rent will be deposited in the Debt Service Fund to be applied to purchase of Bonds as provided in the Indenture, or to optional redemption of Bonds (including redemption premium and interest) at the earliest date on which Bonds are subject to optional redemption.

Section 3.5             Deposit of Rent by the Trustee.  As assignee of the Issuer’s rights hereunder, the Trustee shall deposit, use and apply all payments of Basic Rent and Additional Rent in accordance with the provisions of this Lease and the Indenture.

Section 3.6             Acquisition of Bonds.  If the Tenant acquires any Outstanding Bonds, it may present the certificate(s) representing such part of the Bonds to the Trustee for cancellation, and upon such cancellation, the Tenant’s obligation to pay Basic Rent shall be reduced in the same manner as provided for prepayments by the Tenant of Basic Rent.  In no event, however, shall the Tenant’s obligation to pay Basic Rent be reduced in such a manner that the Trustee shall not have on deposit in the Debt Service Fund, on the next succeeding Payment Date, funds sufficient to pay the maturing principal of, redemption premium, if any, and interest on Outstanding Bonds as and when the same shall become due and according to the terms of the Bonds.

ARTICLE IV

Section 4.1             Disposition of Original Proceeds; Project Fund.  The Original Proceeds shall be paid over to the Trustee for the account of the Issuer as the Bonds are issued.  The Trustee shall pay from such Original Proceeds into the Debt Service Fund the full amount of any accrued interest received upon such sale.  The remainder of such proceeds shall be deposited by the Trustee in the Project Fund to be used and applied as provided in this Lease and the Indenture.

ARTICLE V

Section 5.1             Acquisition of Land and Improvements.  The Tenant shall prior to or concurrently with the issuance of the Bonds, assign or cause to be conveyed to the Issuer by warranty deed, subject to Permitted Encumbrances, the Land as described in Schedule I, and by bill of sale such of the Improvements as are then completed, installed or in progress.  The Tenant shall also concurrently with such conveyance make provisions for the discharge or subordination to the interests acquired by the Issuer of any liens or encumbrances incurred by it in connection with the construction, installation or development of the Improvements other than Permitted Encumbrances.

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Section 5.2             Project Contracts.  Prior to the delivery of this Lease, the Tenant may have entered into a contract or contracts with respect to the acquisition and/or construction of the Improvements.  Those contracts, and any such contracts entered into by the Tenant or the Issuer after delivery of this Lease, are hereinafter referred to as the “Project Contracts.” Prior to the delivery hereof, certain work has been or may have been performed on the Improvements pursuant to said Project Contracts or otherwise.  The Tenant hereby covenants with the Issuer to perform the Project Contracts for the benefit of the Issuer as holder of title to the Project as well as its own benefit as tenant under this Lease, and the Issuer hereby designates the Tenant as the Issuer’s agent for the purpose of executing and performing the Project Contracts.  After the execution hereof, the Tenant shall cause the Project Contracts to be fully performed by the contractor(s), subcontractor(s) and supplier(s) thereunder in accordance with the terms thereof, and the Tenant covenants to cause the Improvements to be acquired, constructed, installed and/or completed in accordance with the Project Contracts.  The Tenant warrants that the construction and/or acquisition of the Improvements in accordance with said Project Contracts will result in the Project being suitable for use by the Tenant as a “manufacturing” facility.  Any and all amounts received by the Issuer, the Trustee or the Tenant from any of the contractors or other suppliers by way of breach of contract, refunds or adjustments shall become a part of and be deposited in the Project Fund.

Section 5.3             Payment of Project Costs for Buildings and Improvements.  The Issuer hereby agrees to pay for the acquisition or construction of the Improvements or any repairs or replacements to be made pursuant to Article XVIII of this Lease, but solely from Original Proceeds of the Bonds (or Net Proceeds, as applicable) as deposited in the Project Fund, and hereby authorizes and directs the Trustee to pay for the same, but solely from the Project Fund, from time to time, after issuance of the Bonds while the Tenant is in compliance with the requirements of Section 6.1 hereof, upon receipt by the Trustee of a requisition certificate signed by the Authorized Tenant Representative in the form set forth as Appendix A hereto which is incorporated herein by reference.  With regard to materials and/or labor furnished to the Project at the order of the Tenant without formal contract, or by subcontract with the Tenant acting as general contractor, which could form the basis of a statutory mechanic’s or subcontractor’s lien, the Trustee may disburse payment therefor only upon receipt of releases or waivers of statutory mechanic’s or subcontractor’s liens by all vendors or subcontractors receiving payment or furnishing labor or materials as a subcontractor of the vendor or subcontractor receiving payment.

The sole obligation of the Issuer under this paragraph shall be to cause the Trustee to make such disbursements upon receipt of such certificates and releases or waivers.  The Trustee may rely fully on any such certificates and shall not be required to make any investigation in connection therewith, except that the Trustee shall investigate requests for reimbursements directly to the Tenant and shall require such supporting evidence as would be required by a reasonable and prudent fiduciary.

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Section 5.4             Payment of Project Costs for Machinery and Equipment [Intentionally Omitted].

Section 5.5             Completion of Project.  The Tenant warrants that the Project, when completed, will be occupied and used by the Tenant for its lawful business purposes.  The Tenant covenants and agrees to proceed diligently to complete or acquire the Improvements on or before the Completion Date.  Upon completion of the Improvements, the Tenant shall cause the Authorized Tenant Representative to deliver a Certificate of Completion, in the form substantially as attached hereto as Appendix B, to the Trustee.  In the event funds remain on hand in the Project Fund on the date the Certificate of Completion is furnished to the Trustee or on the Completion Date, whichever shall first occur, such remaining funds shall be transferred by the Trustee to the Debt Service Fund on the earlier of receipt of the Certificate of Completion or the Completion Date and shall be applied in accordance with the provisions of the Indenture.

Upon completion, the Tenant shall obtain an appraisal of the Project in a form and substance satisfactory to the Trustee which satisfies all of the applicable regulations adopted by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.  The appraisal shall be subject to the internal review by the Trustee of the data, assumptions and conclusions found in the appraisal.

Section 5.6             Deficiency of Project Fund.  If Bond Proceeds in the Project Fund are insufficient to pay fully all Project Costs (including reimbursements to the Tenant for Project Costs advanced by the Tenant prior to issuance of the Bonds) and to fully complete the Improvements, lien free (except for Permitted encumbrances), the Tenant covenants to pay the full amount of any such deficiency by making payments directly to the contractors and to the suppliers of materials, machinery, equipment, property and services as the same become due, and the Tenant shall save the Issuer and the Trustee whole and harmless from any obligation to pay such deficiency.

Section 5.7             Right of Entry by the Issuer and the Trustee.  The duly authorized agents of the Issuer and/or the Trustee shall have the right (but shall not be required) at any reasonable time and upon reasonable notice to the Tenant prior to the completion of the Improvements to have access to the Project or any part thereof for the purpose of inspecting the acquisition, installation or construction thereof.

Section 5.8             Machinery and Equipment Purchased by the Tenant [Intentionally Omitted].

Section 5.9             Project Property of the Issuer.  All Improvements, all work and materials on Improvements as such work progresses, any Project Additions, anything under this Lease which becomes, is deemed to be, or constitutes a part of the Project, and the Project as fully completed, repaired, rebuilt, rearranged, restored or replaced by the Tenant under the provisions of this Lease, except as otherwise specifically provided herein, shall immediately when erected or installed become the absolute property of the Issuer.  Any Improvements which become a part of the real estate as fixtures shall remain separate from the Tenant’s property unless and until purchased by the Tenant from the Issuer as provided in this Lease.

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Section 5.10           Kansas Retailers’ Sales Tax.

The parties have entered into this Lease in contemplation that, under the existing provisions of K.S.A. 79-3606, subsections (b) and (d) and other applicable laws, sales of tangible personal property or services purchased in connection with construction of the Improvements are entitled to exemption from the tax imposed by the Kansas Retailers’ Sales Tax Act.  The parties agree that the Issuer shall, upon the request of and with the Tenant’s assistance, promptly obtain from the State and furnish to the contractors and suppliers a project exemption certificate for the construction of the Improvements.  The Tenant covenants that said exemption certificate shall be used only in connection with the purchase of tangible personal property or services becoming a part of the Project.  The Issuer shall not be responsible for any failure on the part of the State to issue such project exemption certificate.

ARTICLE VI

Section 6.1             Insurance as a Condition to Disbursement.  As a condition precedent to payment of Costs of Issuance or disbursement of other Project Costs (other than Costs of Issuance) from the Project Fund pursuant to Article V hereunder, the following policies of insurance shall be in full force and effect:

(a)           General accident and public liability insurance covering the Tenant’s operations in or upon the Project (including coverage for losses arising from the ownership, maintenance, use or operation of any automobile, truck or other vehicle in or upon the Project) under which the Tenant shall be insured and the Issuer and the Trustee shall be additional insureds or mortgagees, as their interests in the Project appear, in an amount not less than the then maximum liability of a governmental entity for claims arising out of a single occurrence as provided by the Kansas tort claims act or other similar future law (currently $500,000 per occurrence); which policy shall provide that such insurance may not be canceled by the issuer thereof without at least 30 days’ advance written notice to the Issuer, the Tenant and the Trustee, such insurance to be maintained throughout the Term of this Lease;

(b)           Statutory workers’ compensation insurance;

(c)           With regard to new buildings and improvements constituting a part of the Improvements, insurance insuring the Improvements while under construction against fire, lightning and all other risks covered by the broadest form extended coverage endorsement then and from time to time thereafter in use in the State to the Full Insurable Value of such Improvements.  Such insurance coverage shall name the Tenant as insured and the Issuer and the Trustee as additional insureds or mortgagees and loss payees, as their respective interests appear, and all Net Proceeds received under such policy or policies by the Issuer or the Tenant shall be paid over to the Trustee and be applied as set forth in Article XVIII hereof, and

(d)           Original Proceeds shall be disbursed to pay Project Costs upon receipt by the Trustee of waivers of statutory mechanic’s and materialmen’s liens signed by the contractor and all vendors and subcontractors being paid from such disbursement, in the manner and to the extent required by Section 5.4 of this Lease for disbursements made for materials or labor furnished to the Project site by direct contract with the Tenant.

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Section 6.2             Insurance After Completion.  The Tenant shall and covenants and agrees that it will, prior to or simultaneously with the expiration of the insurance provided for in the preceding section and throughout the Term at its sole cost and expense, keep the Improvements continuously insured against loss or damage by fire, lightning and all other risks covered by the broadest form extended coverage insurance endorsement then in use in the State in an amount equal to the Full Insurable Value thereof in such insurance company or companies as it may select and shall at all times maintain general accident and public liability insurance required pursuant to Section 6.1(a), all of which policies shall name the Tenant, the Issuer, and the Trustee as insureds or mortgagees, as their interests appear.

Section 6.3             General Insurance Provisions.

(a)           Within 30 days of renewal dates of expiring policies, certificates of the insurance provided for in this Article shall be delivered by the Tenant to the Trustee.  All policies of such insurance and all renewals thereof shall name the Tenant as insured and the Issuer and the Trustee as insureds or mortgagees and loss payees as their respective interests may appear, shall contain a provision that such insurance may not be canceled or amended by the issuer thereof without at least 30 days’ written notice to the Issuer, the Tenant and the Trustee and shall be payable to the Issuer, the Tenant and the Trustee as their respective interests appear.  The Issuer and the Tenant each hereby agree to do anything necessary, be it the endorsement of checks or otherwise, to cause any payment of insurance proceeds to be made to the Trustee, as long as such payment is required by this Lease to be made to the Trustee.  Any charges made by the Trustee for its services in connection with insurance payments shall be paid by the Tenant.

(b)           Each policy of insurance hereinabove referred to shall be issued by a nationally recognized responsible insurance company authorized under the laws of the State to assume the risks covered therein, except that the Tenant may be self-insured as to any required insurance coverages under a program of self-insurance approved by the State Commissioner of Insurance or other applicable State regulatory authority.

(c)           Certificates of insurance evidencing the insurance coverages herein required shall be filed with the Trustee continuously during the term of this Lease.

(d)           Each policy of insurance hereinabove referred to may be subject to a reasonable deductible or self-insured retention.

(e)           Each policy of insurance required herein may be provided through blanket policies maintained by the Tenant.

(f)           Anything in this Lease to the contrary notwithstanding, the Tenant shall be liable to the Issuer and the Trustee pursuant to the provisions of this Lease or otherwise, as to any loss or damage which may have been occasioned by the negligence of the Tenant, its agents, licensees, contractors, invitees or employees.

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Section 6.4             Evidence of Title.  The Tenant shall furnish evidence of title in the form of a policy of owner’s title insurance, insuring the Issuer’s fee simple title to the Land, as of the date and time immediately prior to conveyance to the Issuer, subject to Permitted Encumbrances, in an amount equal to $2,400,000.  Such title insurance policy shall contain no exceptions, other than the title insurance company’s standard printed exceptions, Permitted Encumbrances, and the encumbrance created by this Lease.  The Issuer and the Tenant agree that any and all proceeds therefrom during the Basic Term (a) if received before the completion of the building Improvements shall be paid into and become a part of the Project Fund, (b) if received thereafter but before the Bonds and interest thereon have been paid in full, shall be paid into and become a part of the Debt Service Fund, and (c) if received after the Bonds, redemption premium, if any, and interest thereon have been paid in full, shall belong and be paid to the Tenant.

ARTICLE VII

Section 7.1             Impositions.  The Tenant shall, during the Term of this Lease, bear, pay and discharge, before the delinquency thereof, any and all Impositions.  In the event any Impositions may be lawfully paid in installments, the Tenant shall be required to pay only such installments thereof as become due and payable during the term of this Lease as and when the same become due and payable.

Section 7.2             Receipted Statements.  Unless the Tenant exercises its right to contest any Impositions in accordance with Section 7.3 hereof, the Tenant shall, within 30 days after the last day for payment without penalty or interest of an Imposition which the Tenant is required to bear, pay and discharge pursuant to the terms hereof, deliver to the Trustee a copy of the statement issued therefor duly receipted to show the payment thereof.

Section 7.3             Contest of Impositions.  The Tenant shall have the right, in its own or the Issuer’s name or both, to contest the validity or amount of any Imposition by appropriate legal proceedings instituted before the Imposition complained of becomes delinquent if, and provided, the Tenant (i) before instituting any such contest, shall give the Issuer and the Trustee written notice of its intention to do so and, if requested in writing by the Issuer or the Trustee, shall deposit with the Trustee a surety bond of a surety company acceptable to the Issuer as surety, in favor of the Issuer and the Trustee, as their interests may appear, or cash, in a sum of at least the amount of the Imposition so contested, assuring the payment of such contested Impositions together with all interest and penalties to accrue thereon and court costs, (ii) diligently prosecutes any such contest and at all times effectively stays or prevents any official or judicial sale therefor, under execution or otherwise, and (iii) promptly pays any final judgment enforcing the Imposition so contested and thereafter promptly procures record release or satisfaction thereof.  The Tenant shall indemnify and hold the Issuer whole and harmless from any costs and expenses the Issuer may incur related to any such contest.

Section 7.4             Ad Valorem Taxes.  The parties acknowledge that under the existing provisions of K.S.A. 79-201; as amended, the property acquired, constructed or purchased with the proceeds of the Bonds (except such property used for certain retail uses) is eligible to receive exemption from ad valorem taxation for a period up to 10 calendar years after the calendar year in which the Bonds are issued, provided the Issuer has complied with certain notice, hearing and procedural requirements established by law, and proper application has been made.  The Issuer represents that such notice, hearing and procedural requirements will have been complied with at the Issue Date.  The Issuer will, at the Tenant’s request, with information furnished by Tenant and the Trustee, make all necessary filings regarding the application for 100% ad valorem tax exemption for the full 10-year period in the calendar year following the calendar year in which the Bonds were issued, and will renew said application from time to time and take any other action as may be necessary to maintain such ad valorem tax exemption in full force and effect, in accordance with K.S.A. 79-201a, 79-210 et seq. and the requirements of the State Court of Tax Appeals.  If it becomes necessary to litigate the issue of availability or applicability of the ad valorem tax exemption, the Issuer will cooperate fully with Tenant in pursuing such litigation, but all litigation costs and reasonable attorney fees must be paid by Tenant, either directly or as Additional Rent.

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ARTICLE VIII

Section 8.1             Use of Project.  Subject to the provisions of this Lease, the Tenant shall have the right to use the Project for any and all purposes allowed by law and contemplated by the constitution of the State and the Act, as long as they are consistent with Code limitations on use of property purchased with Original Proceeds.  The Tenant shall comply in all material respects with all statutes, laws, ordinances, orders, judgments, decrees, regulations, directions and requirements of all federal, state, local and other governments or governmental authorities, now or hereafter applicable to the Project or to any adjoining public ways, as to the manner of use or the condition of the Project or of adjoining public ways.  The Tenant shall comply with the mandatory requirements, rules and regulations of all insurers under the policies required to be carried under the provisions of this Lease.  The Tenant shall pay all costs, expenses, claims, fines, penalties and damages that may in any manner arise out of, or be imposed as a result of, the failure of the Tenant to comply with the provisions of this Article.

Section 8.2             Environmental Provisions.

(a)           The Tenant hereby covenants that it will not cause or permit any Hazardous Substances (as defined herein) to be placed, held, located or disposed of, on, under or at the Land or the Project, other than in the ordinary course of business and in compliance with all applicable Environmental Laws.

(b)           In furtherance and not in limitation of any indemnity elsewhere provided to the Issuer hereunder and in the Indenture, the Tenant hereby agrees to indemnify and hold harmless the Issuer, the Trustee and the Owner(s) of Bond(s) from time to time from and against any and all losses, liabilities, including strict liability, damages, injuries, expenses, including reasonable attorneys’ fees, costs of any settlement or judgment, costs of investigation, consultants, testing, sampling, cleanup, or defense, and claims of any and every kind paid, incurred or suffered, with respect to, or as a direct or indirect result of, the actual or alleged presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or release from the Land or the Project of any Hazardous Substance (including, without limitation, any losses, liabilities, reasonable attorneys’ fees, costs of any settlement or judgment or claims asserted or arising under any federal, state or local Environmental Law or so-called “Superfund” or “Super lien” law, or any other applicable Environmental Law, rule, regulation, order or decree regulating, relating to or imposing liability, including strict liability, or standard of conduct concerning, any Hazardous Substance) regardless of whether or not caused by or within the control of the Tenant.

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(c)           If the Tenant receives any notice of (1) the happening of any event involving the use, other than in the ordinary course of business and in compliance with all applicable Environmental Laws, spill, release, leak, seepage, discharge or cleanup of any Hazardous Substance on the Land or the Project or in connection with the Tenant’s operations thereon or (2) any complaint, order, citation or notice with regard to air emissions, water discharges or any other environmental, health or safety matter affecting the Tenant (an “Environmental Complaint”) from any person (including, without limitation, the United States Environmental Protection Agency (the “EPA”), and the Kansas Department of Health and Environment (“KDHE”) then the Tenant shall immediately notify the Issuer and the Trustee in writing.  With respect to any such notice that relates to a condition or conditions on the Project site, the Tenant shall promptly initiate action to remediate the conditions cited in the notice, and shall diligently pursue such remediation at its expense to the satisfaction of the city authority.

(d)           If the Tenant fails to initiate action to remediate as required in subsection (c) of this section, or otherwise fails to discharge its obligations under this Section 8.2, the Issuer shall have the right, but not the obligation, and without limitation of the Issuer’s other rights under this Lease, to enter the Project or to take such actions as it may deem necessary or advisable to inspect, clean up, remove, resolve or minimize the impact of, or to otherwise deal with, any Hazardous Substance or Environmental Complaint following receipt of any notice asserting the existence on the Project of any Hazardous Substance or an Environmental Complaint pertaining to the Project or any part thereof which?  if true, could result in an order, suit or other action against the Tenant and/or which, in the reasonable judgment of the Issuer, could jeopardize its interests under this Lease.  All reasonable costs and expenses incurred by the Issuer in the exercise of any such rights shall be payable by the Tenant as Additional Rent on demand, and if not so paid, shall bear interest until paid at the average rate of interest on the Bonds plus 200 basis points.

(e)           If an Event of Default shall have occurred, at the request of the Issuer or the Trustee, the Tenant shall periodically perform (at the Tenant’s expense) an environmental audit and, if reasonably deemed necessary by the Issuer or the Trustee, an Environmental Assessment, (each of which must be reasonably satisfactory to the Issuer and the Trustee) of the Project, or the hazardous waste management practices and/or hazardous waste disposal sites used by the Tenant with respect to the Project.  Said audit and/or Environmental Assessment shall be conducted by an environmental consultant satisfactory to the Issuer and the Trustee.  Should the Tenant fail to perform any environmental audit or risk assessment within 30 days of the written request of the Issuer or the Trustee, either shall have the right, but not the obligation, to retain an environmental consultant to perform any such environmental audit or risk assessment.  All costs and expenses incurred by the Issuer or the Trustee in the exercise of such rights shall be payable by the Tenant as Additional Rent on demand, and if not so paid, shall bear interest until paid at the average rate of interest on the Bonds plus 200 basis points.

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(f)           The Tenant shall not install nor permit to be installed in the Project friable asbestos or any substance containing asbestos and deemed hazardous by Environmental Law applicable to the Project and respecting such material, and with respect to any such material currently present in the Project, shall promptly either (1) remove any material which such applicable regulations deem hazardous and require to be removed or (2) otherwise comply with such applicable Environmental Law, at the Tenant’s expense.  If the Tenant shall fail to so remove or otherwise comply, the Issuer may declare an Event of Default and/or do whatever is necessary to eliminate said substances from the Project or otherwise comply with the applicable Environmental Law or order, and the costs thereof shall be payable by the Tenant on demand, and if not so paid, shall bear interest until paid at the average rate of interest on the Bonds plus 200 basis points.  The Tenant shall defend, indemnify, and save the Issuer, the Trustee and the Owner(s) of Bond(s) harmless from all costs and expenses (including consequential damages) asserted or proven against the Tenant, or incurred to comply with such regulations.

(g)           The provisions of this Section 8.2 shall survive the termination of this Lease or exercise of the Tenant’s option to purchase the Project, except with respect to obligations which arise solely and exclusively as a result of the use, spill, release, leak, seepage or discharge of Hazardous Substances on the Land or the Project after the Project is no longer occupied by the Tenant.

ARTICLE IX

Section 9.1            Sublease by the Tenant.  The Tenant may sublease the Project to a single party or entity, with the prior written consent of the Issuer and upon receipt of a written opinion of Bond Counsel addressed to the Issuer and the Tenant that the proposed sublease will not render interest payable on the Bonds taxable for federal income tax purposes.  In the event of any such subleasing, the Tenant shall remain fully liable for the performance of its duties and obligations hereunder, and no such subleasing and no dealings or transactions between the Issuer or the Trustee and any such subtenant shall relieve the Tenant of any of its duties and obligations hereunder.

Any such subleases shall include the following provisions:

(1)           No subtenant shall be permitted to use the Project or any part thereof, without the prior written consent of the Tenant and the Trustee and an approving opinion of Bond Counsel, for retail food and beverage service, automobile sales or service, or the provision of recreation or entertainment;

(2)           No subtenant shall be permitted to use any portion of the Project for any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility, racetrack, airplane, skybox or other private luxury box, any health club facility, any facility primarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises; and

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(3)           Any subtenant shall use the Project only as a “manufacturing facility” within the definition of Section 144(a)(12) of the Code, unless the written opinion of Bond Counsel is obtained to the effect that the proposed use of the Project will not render interest payable on the Bonds taxable for federal income tax purposes, or constitute an Event of Taxability.

Any such sublease shall be subject and subordinate in all respects to the provisions of this Lease.

Section 9.2            Assignment by the Tenant.  The Tenant may assign, mortgage, sell, or otherwise transfer its interest in this Lease only with the prior written consent of the Issuer.  In the event of any such assignment, the Tenant shall remain fully liable for the performance of its duties and obligations hereunder, except to the extent hereinafter provided, and no such assignment and no dealings or transactions between the Issuer or the Trustee and any such assignee shall relieve the Tenant of any of its duties and obligations hereunder, except as may be otherwise provided in the following Section.

Section 9.3             Release of the Tenant.  If, in connection with an assignment by the Tenant of its interest in this Lease, (a) the Issuer and the Owners of at least seventy-five percent (75%) in aggregate principal amount of the Outstanding Bonds (including any Additional Bonds) shall file with the Trustee and the Original Purchaser their prior written consent to such assignment, and (b) the proposed assignee shall expressly assume and agree to perform all of the obligations of the Tenant under this Lease; then the Tenant shall be fully released from all obligations accruing hereunder after the date of such assignment.

Section 9.4             Mergers and Consolidations.  Notwithstanding the provisions of Sections 9.2 and 9.3 above, if the Tenant shall assign or transfer, by operation of law or otherwise, its interests in this Lease in connection with a transaction involving the merger or consolidation of the Tenant with or into, or a sale, lease or other disposition of all or substantially all of the property of the Tenant as an entirety to another person, association, corporation or other entity, and (a) the Issuer shall file with the Trustee its prior written consent to such assignment, transfer or merger, (b) the proposed assignee, transferee or surviving corporation shall expressly assume and agree to perform all of the obligations of the Tenant under this Lease and the Guaranty Agreement with regard to the Bonds, and (c) the Tenant shall furnish the Trustee and the Issuer with evidence in the form of financial statements accompanied by a proforma balance sheet prepared by an independent certified public accountant of recognized standing showing that the net worth of such proposed assignee, transferee or surviving entity immediately following such assignment, transfer or merger will be at least equal to the net worth of the Tenant as shown by the most recent financial statements of the Tenant furnished to the Trustee pursuant to this Lease; then and in such event the Tenant shall be fully released from all obligations accruing hereunder after the date of such assignment, transfer or merger.

Section 9.5             Covenant Against Other Assignments.  The Tenant will not assign or in any manner transfer its interests under this Lease, nor will it suffer or permit any assignment thereof by operation of law, except in accordance with the limitations, conditions and requirements herein set forth.

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ARTICLE X

Section 10.1           Repairs and Maintenance.  The Tenant covenants and agrees that it will, during the Term of this Lease, at its own expense, keep and maintain the Project and all parts thereof in good condition and repair.

Section 10.2           Removal, Disposition and Substitution of Machinery or Equipment [Intentionally Omitted].

ARTICLE XI

Section 11.1          Alteration of Project.  The Tenant shall have and is hereby given the right, at its sole cost and expense, to make such additions, changes and alterations in and to any part of the Project as the Tenant from time to time may deem necessary or advisable, provided however, the Tenant shall not make any major addition, change or alteration which will adversely affect the intended use or structural strength or value of any part of the Improvements.  All additions, changes and alterations made by the Tenant pursuant to the authority of this Article shall (a) be made in a workmanlike manner and in strict compliance with all laws and ordinances applicable thereto, (b) when commenced, be prosecuted to completion with due diligence, and (c) when completed, shall be deemed a part of the Project; provided, however, that additions of machinery, equipment and/or personal property of the Tenant, not purchased or acquired from proceeds of the Bonds and not constituting a part of the Project shall remain the separate property of the Tenant and may be removed by the Tenant prior to or as provided in Section 22.1 hereof.

ARTICLE XII

Section 12.1           Additional Improvements.  The Tenant shall have and is hereby given the right, at its sole cost and expense, to construct on the Land or within areas occupied by the Improvements, or in airspace above the Project, such additional buildings and improvements as the Tenant from time to time may deem necessary or advisable.  All additional buildings and improvements constructed by the Tenant pursuant to the authority of this Article shall, during the Term, remain the property of the Tenant and may be added to, altered or razed and removed by the Tenant at any time during the Term hereof.  The Tenant covenants and agrees (a) to make all repairs and restorations, if any, required to be made to the Project because of the construction of, addition to, alteration or removal of, said additional buildings or improvements, (b) to keep and maintain said additional buildings and improvements in good condition and repair, ordinary wear and tear excepted, (c) to promptly and with due diligence either raze and remove from the Land, in a good, workmanlike manner, or repair, replace or restore such of said additional buildings or improvements as may from time to time be damaged by fire or other casualty, and (d) that all additional buildings and improvements constructed by the Tenant pursuant to this Article which remain in place after the termination of this Lease for any cause other than the purchase of the Project pursuant to Article XIII hereof shall, upon and in the event of such termination, become the separate and absolute property of the Issuer.

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ARTICLE XIII

Section 13.1           Securing of Permits and Authorizations.  The Tenant shall not do or permit others under its control to do any work in or in connection with the Project or related to any repair, rebuilding, restoration, replacement, alteration of or addition to the Project, or any part thereof; unless all requisite municipal and other governmental permits and authorizations shall have first been procured and paid for.  All such work shall be done in a good and workmanlike manner and in compliance with all applicable building, zoning and other laws, ordinances, governmental regulations and requirements and in accordance with the requirements, rules and regulations of all insurers under the policies required to be carried under the provisions of this Lease.

Section 13.2          Mechanic’s Liens.  The Tenant shall not do or suffer anything to be done whereby the Project, or any part thereof, is encumbered by any mechanic’s or other similar lien.  Should any mechanic’s or other similar lien ever be filed against the Project, or any part thereof; the Tenant shall discharge the same of record within 30 days after the date of filing.  Notice is hereby given that the Issuer does not authorize or consent to and shall not be liable for any labor or materials furnished to the Tenant or anyone claiming by, through or under the Tenant upon credit, and that no mechanic’s or similar liens for any such labor, services or materials shall attach to or affect the reversionary or other estate of the Issuer in and to the Project, or any part thereof.

Section 13.3           Contest of Liens.  The Tenant, notwithstanding the above, shall have the right to contest any such mechanic’s or other similar lien if within said 30-day period stated above it (a) notifies the Issuer and the Trustee in writing of its intention so to do, and if requested by the Trustee or the Issuer, deposits with the Trustee a surety bond issued by a surety company acceptable to the Issuer as surety, in favor of the Issuer, or cash, in the amount of the lien claim so contested, indemnifying and protecting the Issuer from and against any liability, loss, damage, cost and expense of whatever kind or nature growing out of or in any way connected with said asserted lien and the contest thereof, (b) diligently prosecutes such contest, at all times effectively staying or preventing any official or judicial sale of the Project or any part thereof or interest therein, under execution or otherwise, and (c) promptly pays or otherwise satisfies any final judgment adjudging or enforcing such contested lien claim and thereafter promptly procures record release or satisfaction thereof.

Section 13.4           Utilities.  All utilities and utility services used by the Tenant in, on or about the Project shall be contracted for by the Tenant in the Tenant’s own name and the Tenant shall, at its sole cost and expense, procure any and all permits, licenses or authorizations necessary in connection therewith.

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ARTICLE XIV

Section 14.1          Indemnity.  The Tenant agrees, whether or not the transactions contemplated by this Lease, the Bonds or the Indenture are consummated, to indemnify and hold harmless the Issuer and its officers, directors, officials, employees and agents, including the Trustee as assignee of the Issuer’s rights under this Lease, and the Original Purchaser and each of its officers, directors, employees and agents (any or all of the foregoing referred to hereafter as “Indemnified Persons”), from and against all claims, actions, suits, proceedings, expenses, judgments, damages, penalties, fines, assessments, liabilities, charges or other costs (including, without limitation, all attorneys’ fees and expenses incurred in connection with enforcing this Lease or collecting any sums due hereunder and any claim or proceeding or any investigations undertaken hereunder) relating to, resulting from, or in connection with (a) any cause in connection with the Project, including, without limitation, the acquisition, design, construction, installation, equipping, operating, maintenance or use thereof; (b) any act or omission of the Tenant or any of its agents contractors, servants, employees or licenses in connection with the use or operation of the Project; (c) any cause in connection with the issuance and sale of the Bonds, (d) a misrepresentation or breach of warranty by the Tenant hereunder or under any of the documents executed by the Tenant in connection with this Lease, or (e) any violation by the Tenant of any of its covenants hereunder or under any of the other documents executed by the Tenant in connection with the Bonds or this Lease.  This indemnity is effective only with respect to any loss incurred by any Indemnified Person not due to willful misconduct, gross negligence, or bad faith on part of such Indemnified Person.  In case any action or proceeding shall be brought against one or more Indemnified Person and with respect to which such Indemnified Person may seek indemnity as provided herein, such Indemnified Person shall promptly notify the Tenant in writing and the Tenant shall promptly assume the defense thereof, including the employment of counsel reasonable satisfactory to such Indemnified Person or Indemnified Persons, the payment of all expenses and the right to negotiate and consent to settlement; but the failure to notify the Tenant as provided shall not relieve Tenant from any liability of duty under this Section, so long as Tenant is given reasonable opportunity to defend such claim.

ARTICLE XV

Section 15.1           Access to Project.  The Issuer, for itself and its duly authorized representatives and agents, including the Trustee, reserves the right to enter the Project at all reasonable times during usual business hours throughout the Term, upon reasonable notice, for the purpose of (a) examining and inspecting the same, (b) performing such work made necessary by reason of the Tenant’s default under any of the provisions of this Lease, and (c) after an Event of Default, for the purpose of exhibiting the Project to prospective purchasers, lessees or mortgagees.  The Issuer may, during the progress of said work mentioned in (b) above, keep and store on the Project all necessary materials, supplies and equipment and shall not be liable for inconvenience, annoyances, disturbances, loss of business or other damage suffered by reason of the performance of any such work or the storage of such materials, supplies and equipment.

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ARTICLE XVI

Section 16.1          Option to Extend Basic Term.  The Tenant shall have and is hereby given the right and option to extend the Basic Term of this Lease for the Additional Term provided that (a) the Tenant shall give the Issuer written notice of its intention to exercise the option at least 30 days prior to the expiration of the Basic Term and (b) the Tenant is not in Default hereunder at the time it gives the Issuer such notice or at the time the Additional Term commences.  In the event the Tenant exercises such option, the terms, covenants, conditions and provisions set forth in this Lease shall be in full force and effect and binding upon the Issuer and the Tenant during the Additional Term except that the Basic Rent during any extended term herein provided for shall be the sum of $100.00 per year, payable in advance on the first Business Day of such Additional Term.

ARTICLE XVII

Section 17.1           Option to Purchase Project.  Subject to the provisions of this Article, the Tenant shall have the right and option to purchase the Project at any time during the Term hereof and for 120 days thereafter.  The Tenant shall exercise its option by giving the Issuer written notice of the Tenant’s election to exercise its option and specifying the date, time and place of closing, which date (the “Purchase Date”) shall neither be earlier than 30 days nor later than 180 days after the notice is given.  The Tenant may not, however, exercise such option if the Tenant is in Default hereunder on the Purchase Date unless all Defaults are cured upon payment of the purchase price specified in Section 17.2.

Section 17.2           Quality of Title and Purchase Price.  If said notice of election to purchase is given, the Issuer shall sell and convey all of its interests in the Project to the Tenant on the Purchase Date free and clear of all liens and encumbrances except (a) Permitted Encumbrances, (b) those to which title was subject on the date of conveyance to the Issuer of the Land, or to which title became subject with the Tenant’s written consent, or which resulted from any failure of the Tenant to perform any of its covenants or obligations under this Lease, (c) taxes and assessments, general and special, if any, and (d) the rights of any party having condemned or who is attempting to condemn title to, or the use for a limited period of, all or any part of the Project, for a price determined as follows (which the Tenant agrees to pay in cash at the time of delivery of the Issuer’s deed or other instrument or instruments of transfer of the Project to the Tenant as hereinafter provided):

(1)           The full amount which is required to provide the Issuer and the Trustee with funds sufficient, in accordance with the provisions of the Indenture, to pay at maturity or to redeem and pay in full (A) the principal of all of the Outstanding Bonds, (B) all interest due thereon to date of maturity or redemption, whichever first occurs, and (C) all costs, expenses and premiums incident to the redemption and payment of said Bonds in full, plus

(2)           $100.00.

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Nothing in this Article shall release or discharge the Tenant from its duty or obligation under this Lease to make any payment of Basic Rent or Additional Rent which, in accordance with the terms of this Lease, becomes due and payable prior to the Purchase Date, or its duty and obligation to fully perform and observe all covenants and conditions herein stated to be performed and observed by the Tenant prior to the Purchase Date.

Section 17.3           Closing of Purchase.  On the Purchase Date the Issuer shall deliver to the Tenant its special warranty deed and/or other appropriate instrument or instruments of conveyance or assignment, properly executed and conveying the Project to the Tenant free and clear of all liens and encumbrances except as set forth in the preceding section above, or convoying such other title to the Project as may be acceptable to the Tenant, and the Tenant shall pay the full purchase price for the Project as follows: (a) the amount specified in clause (1) of Section 17.2 shall be paid to the Trustee for deposit in the Debt Service Fund to be used to pay or redeem Bonds and the interest thereon as provided in the Indenture, and (b) the amount specified in clause (2) of said Section 17.2 shall be paid to the Issuer; provided, however, nothing herein shall require the Issuer to deliver its appropriate instrument or instruments of assignment or conveyance to the Tenant until after all duties and obligations of the Tenant under this Lease to the date of such delivery have been fully performed and satisfied or adequate provision made for such performance and satisfaction.  Upon the delivery to the Tenant of the Issuer’s appropriate instrument or instruments of assignment or conveyance, payment of the purchase price by the Tenant and legal defeasance of the Bonds, this Lease shall ipso facto terminate, subject to the provisions of Section 20.2 hereof.

Section 17.4           Effect of Failure to Complete Purchase.  If, for any reason, the purchase of the Project by the Tenant pursuant to valid notice of election to purchase is not effected on the Purchase Date, this Lease shall be and remain in full force and effect according to its terms the same as though no notice of election to purchase had been given, except that if such purchase is not effected on the Purchase Date because the Issuer does not have or is unable to convey to the Tenant such title to the Project as the Tenant is required to accept, the Issuer shall use its best efforts to cure any such defect in its title to the Project.  In the event the Issuer is unable to cure such defect in its title to the Project, or if the Issuer’s failure to close would be a breach of its obligations hereunder, the Tenant shall have the right to cancel this Lease forthwith if, but only if, the principal of and interest on the Bonds and all costs incident to the redemption and payment of the Bonds have been paid in full.  The Tenant shall also have the right to exercise any legal or equitable remedies, in its own name or in the name of the Issuer, to obtain acceptable title to the Project.

Section 17.5           Application of Condemnation Awards if the Tenant Purchases Project.  The right of the Tenant to exercise its option to purchase the Project under the provisions of this Article shall remain unimpaired notwithstanding any condemnation of title to, or the use for a limited period of, all or any part of the Project.  If the Tenant shall exercise its said option and pay the purchase price as provided in this Article, all of the condemnation awards received by the Issuer after the payment of said purchase price, less all attorneys’ fees and other expenses and costs incurred by the Issuer as the owner of the Project in connection with such condemnation, shall belong and be paid to the Tenant.

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Section 17.6           Option to Purchase Unimproved Portions of Land.  The Tenant shall have the option to purchase at any time and from time to time during the Term any vacant part or vacant parts of the unimproved Land constituting a part of the Project; provided, however, the Tenant shall furnish the Issuer and the Trustee with a certificate of an Authorized Tenant Representative, dated not more than thirty (30) days prior to the date of the purchase and stating that, in the opinion of the Authorized Tenant Representative, (a) the portion of said Land with respect to which the option is exercised is not needed for the operation of the Project for the purposes herein stated, (b) the purchase will not impair the usefulness or operating efficiency or materially impair the value of the Project and will not destroy or materially impair the means of ingress thereto and egress therefrom, and (c) the purchase will not materially adversely affect compliance of the remaining Land and any Improvements with applicable zoning laws or regulations.  The Tenant shall exercise this option by giving the Issuer and the Trustee written notice of the Tenant’s election to exercise its option and specifying (i) the legal description, (ii) the date, time and place of closing, which date shall neither be earlier than 45 days nor later than 60 days after the notice is given, (iii) the appraised current fair market value of the portions of the Land with respect to which the Tenant’s option is exercised as determined by an independent, qualified appraiser whose report shall be furnished to the Trustee together with the Tenant’s notice of election to purchase, and (iv) a certificate signed by the chief executive or chief financial officer of the Tenant stating that no event has occurred and is continuing which, with notice or lapse of time or both, would constitute an Event of Default; provided, however, that the Tenant may not exercise this option if there has occurred and is continuing any event which, with notice or lapse of time or both, would constitute an Event of Default at the time said notice is given and may not purchase said real property on the specified closing date if any such event has occurred and is continuing on said date unless all defaults are cured.  The option hereby given shall include the right to purchase a perpetual easement for right-of-way to and from the public roadway and the right to purchase such land as is necessary to assure that there will always be access between the real property purchased pursuant to these Sections 17.6 through 17.10 and the public roadway.

Section 17.7           Quality of Title - Purchase Price.  If said notice of election to purchase is given as provided in Section 17.6 the Issuer shall convey the real property described in the Tenant’s notice to the Tenant on the specified date free and clear of all liens and encumbrances except (a) Permitted Encumbrances, (b) those to which the title was subject on the date of conveyance to the Issuer of the Land, or to which title became subject with the Tenant’s written consent, or which resulted from any failure of the Tenant to perform any of its covenants or obligations under this Lease, (c) taxes and assessments, general and special, if any, and (d) the interests of any party having condemned or who is attempting to condemn title to, or the use for a limited period of, all or any part of the real property described in the Tenant’s notice.  The purchase price shall be an amount equal to the then current fair market value thereof, as determined with reference to the independent appraiser’s report furnished to the Trustee or the original cost to the Tenant, whichever is less.

Section 17.8           Closing of Purchase.  If the Issuer has title to such vacant real property free and clear of all liens and encumbrances except as stated above or has such other title to the such real property as may be acceptable to the Tenant, then on the specified date, the Issuer shall deliver to the Tenant its special warranty deed, properly executed and conveying such real property to the Tenant free and clear of all liens and encumbrances except as stated above, and the Tenant shall pay the purchase price for such real property, said purchase price to be paid to the Trustee for the account of the Issuer and deposited by the Trustee in the Debt Service Fund and shall be used to redeem Bonds on any date the Bonds are subject to optional redemption as provided in the Indenture.  Nothing herein shall require the Issuer to deliver its special warranty deed to the Tenant until after all duties and obligations of the Tenant under this Lease to the date of such delivery have been fully performed and satisfied.

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Section 17.9           Effect of Purchase on Lease.  The exercise by the Tenant of the option granted under these Sections 17.6 to 17.10 and the purchase and sale and conveyance of a portion or portions of the Land constituting a part of the Project pursuant hereto shall in no way whatsoever affect this Lease, and all the terms and provisions hereof shall remain in full force and effect the same as though no notice of election to purchase had been given, and specifically, but not in limitation of the generality of the foregoing, exercise of such option shall not affect, alter, diminish, reduce or abate the Tenant’s obligations to pay all Basic Rent and Additional Rent required hereunder.

Section 17.10         Effect of Failure to Complete Purchase.  It for any reason whatsoever, the purchase by the Tenant of the real property described in said notice is not effected on the specified date, this Lease shall be and remain in full force and effect according to its terms the same as though no notice of election to purchase had been given.

ARTICLE XVIII

Section 18.1           Damage and Destruction.

(a)           If, during the Term, any Improvements are damaged or destroyed, in whole or in part, by fire or other casualty, the Tenant shall promptly notify the Issuer and the Trustee in writing as to the nature and extent of such damage or loss and whether it is practicable and desirable to rebuild, repair, restore or replace such damage or loss.

(b)           If the Tenant shall determine that such rebuilding, repairing, restoring or replacing is practicable and desirable, the Tenant shall forthwith proceed with and complete with reasonable dispatch such rebuilding, repairing, restoring or replacing.  In such case, any Net Proceeds of property and/or casualty insurance required by this Lease and received with respect to any such damage or loss to the Improvements shall be paid to the Trustee and shall be deposited in the Project Fund and shall be used and applied for the purpose of paying the cost of such rebuilding, repairing, restoring or replacing such damage or loss.  Any amount remaining in the Project Fund after such rebuilding, repairing, restoring or replacing shall be paid to the Tenant.

(c)           If the Tenant shall reasonably determine that rebuilding, repairing, restoring or replacing the Improvements is not practicable and desirable, any Net Proceeds of property and/or casualty insurance required by this Lease and received with respect to any such damage or loss to the Project shall be paid into the Debt Service Fund.  Such moneys shall be used to redeem Bonds at their earliest optional redemption date.  The Tenant agrees that it shall be reasonable in exercising its judgment pursuant to this subsection (c).

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(d)           The Tenant shall not, by reason of its inability to use all or any part of the Improvements during any period in which the Improvements are damaged or destroyed, or are being repaired, rebuilt, restored or replaced nor by reason of the payment of the costs of such rebuilding, repairing, restoring or replacing, be entitled to any reimbursement or any abatement or diminution of the Basic Rent or Additional Rent payable by the Tenant under this Lease nor of any other obligations of the Tenant under this Lease except as expressly provided in this Section.

Section 18.2           Condemnation.

(a)           If, during the Term title to, or the temporary use of, all or any part of the Project shall be condemned by any authority exercising the power of eminent domain (other than the Issuer), the Tenant shall, within 30 days after the date of entry of a final order in any eminent domain proceedings granting condemnation, notify the Issuer and the Trustee in writing as to the nature and extent of such condemnation and whether it is practicable and desirable to acquire substitute land or construct substitute Improvements.

(b)           If the Tenant shall determine that such substitution is practicable and desirable, the Tenant shall forthwith proceed with and complete with reasonable dispatch the acquisition or construction of such substitute Land or Improvements.  In such case, any Net Proceeds received from any award or awards with respect to the Project or any part thereof made in such condemnation or eminent domain proceedings shall be paid to the Trustee for the account of the Tenant and shall be deposited in the Project Fund and shall be used and applied for the purpose of paying the cost of such substitution.  Any amount remaining in the Project Fund after such acquisition or construction shall be paid to Tenant.

(c)           If the Tenant shall reasonably determine that it is not practicable and desirable to acquire or construct substitute Improvements, any Net Proceeds of condemnation awards received by the Tenant shall be paid into the Debt Service Fund.  Such moneys shall be used to redeem Bonds at their earliest optional redemption date.  The Tenant agrees that it shall be reasonable in exercising its judgment pursuant to this subsection.

(d)           The Tenant shall not, by reason of its inability to use all or any part of the Improvements during any such period of restoration or acquisition nor by reason of the payment of the costs of such restoration or acquisition, be entitled to any reimbursement or any abatement or diminution of the Basic Rent or Additional Rent nor of any other obligations hereunder payable by the Tenant under this Lease.

(e)           The Issuer shall cooperate fully with the Tenant in the handling and conduct of any prospective or pending condemnation proceedings with respect to the Project or any part thereof so long as the Issuer is not the condemning authority.  In no event will the Issuer voluntarily settle or consent to the settlement of any prospective or pending condemnation proceedings with respect to the Project or any part thereof without the written consent of the Tenant and the Trustee.

Section 18.3           Effect of Tenant’s Defaults.  Anything in this Article to the contrary notwithstanding, the Issuer and the Trustee shall have the right at any time and from time to time to withhold payment of all or any part of the Net Proceeds from the Project Fund attributable to damage, destruction or condemnation of the Project to the Tenant or any third party if an Event of Default has occurred and is continuing, or the Issuer or the Trustee has given notice to the Tenant of any Default which, with the passage of time, will become an Event of Default.  In the event the Tenant shall cure any Defaults specified herein, the Trustee shall make payments from the Net Proceeds to the Tenant in accordance with the provisions of this Article.  However, if this Lease is terminated or the Issuer or the Trustee otherwise re-enters and takes possession of the Project without terminating this Lease, the Trustee shall pay all the Net Proceeds held by it into the Debt Service Fund and all rights of the Tenant in and to such Net Proceeds shall cease.

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ARTICLE XIX

Section 19.1           Change of Circumstances; Determination of Taxability.  If at any time during the Basic Term, a Change of Circumstances occurs or the Bonds are called for redemption and payment upon the occurrence of a Determination of Taxability, then the Tenant shall have the option to purchase the Project pursuant to Article XVII or the option to terminate this Lease by giving the Issuer notice of such termination within 90 days after the Tenant has actual knowledge of the event giving rise to such option.  Such termination shall become effective when all of the Bonds Outstanding are paid or payment is provided for pursuant to the Indenture.

ARTICLE XX

Section 20.1           Remedies on Default.  Whenever any Event of Default shall have happened and be continuing, the Trustee (acting on behalf of the Issuer, as assignee of the Issuer’s rights hereunder) may take any legal action, including but not limited to, one or more of the following remedial actions:

(a)           By written notice to the Tenant upon acceleration of maturity of the Bonds as provided in the Indenture, the Trustee acting on behalf of the Issuer may declare the aggregate amount of all unpaid Basic Rent or Additional Rent then or thereafter required to be paid under this Lease by the Tenant to be immediately due and payable as liquidated damages from the Tenant, whereupon the same shall become immediately due and payable by the Tenant.

(b)           The Trustee acting on behalf of the Issuer may give the Tenant written notice of intention to terminate this Lease on a date specified therein, which date shall not be earlier than 30 days after such notice is given and, if all Defaults have not then been cured on the date so specified, the Tenant’s rights to possession of the Project shall cease, and this Lease shall thereupon terminate.  The Trustee acting on behalf of the Issuer may thereafter re-enter and take possession of the Project and pursue all its available remedies, including sale of the Project and judgment against the Tenant for possession of the Project and/or all Basic Rent and Additional Rent then owing, including costs and attorney fees.

(c)           Without terminating the Term hereof, or this Lease, the Trustee acting on behalf of the Issuer may conduct inspections or an Environmental Assessment of the Project, and re-enter the Project or take possession thereof pursuant to legal proceedings or any notice provided.  for by law and this Lease.  The Issuer or the Trustee acting on behalf of the Issuer may refuse to re-enter or take possession of the Project if it has reasonable cause for such refusal.  “Reasonable cause” shall include the presence on the Project of conditions which are in violation of any Environmental Law or the existence or threat of a remedial action against the Tenant under any Environmental Law resulting from conditions on the Project.

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(d)           Having elected to re-enter or take possession of the Project pursuant to subsection 20.1(c), the Trustee acting on behalf of the Issuer may relet the Project, or parts thereof, for such term or terms and at such rental and upon such other terms and conditions as are deemed advisable, with the right to make alterations and repairs to the Project, and no such re-entry or taking of possession of the Project shall be construed as an election to terminate this Lease, and no such re-entry or taking of possession shall relieve the Tenant of its obligation to pay Basic Rent or Additional Rent (at the time or times provided herein), or of any of its other obligations under this Lease, all of which shall survive such re-entry or taking of possession.  The Tenant shall continue to pay the Basic Rent and Additional Rent provided for in this Lease until the end of the Term, whether or not the Project shall have been relet, less the net proceeds, if any, of reletting the Project.

(e)           Having elected to reenter or take possession of the Project pursuant to subsection 20.1(c), the Trustee acting on behalf of the Issuer may (subject, however, to any restrictions against termination of this Lease in the Trust Indenture), by notice to the Tenant given at any time thereafter while the Tenant is in Default in the payment of Basic Rent or Additional Rent or in the performance of any other obligation under this Lease, elect to terminate this Lease in accordance with subsection 20.1(b) and thereafter proceed to exercise any remedies lawfully available.

(f)           If, in accordance with any of the foregoing provisions of this Article, the Issuer shall have the right to elect to re-enter and take possession of the Project, the Issuer or the Trustee acting on behalf of the Issuer, may enter and expel the Tenant and those claiming through or under the Tenant and remove the property and effects of both or either by all lawful means without being guilty of any manner of trespass and without prejudice to any remedies for arrears of Basic Rent or Additional Rent or preceding breach of contract by the Tenant.

(g)           Net proceeds of any reletting or sale of the Project shall be deposited in the Debt Service Fund for application to pay the Bonds and interest thereon.  “Net proceeds” shall mean the receipts obtained from reletting or sale after deducting all expenses incurred in connection with such reletting or sale, including without limitation, all repossession costs, brokerage commissions, legal fees and expenses, expenses of employees, alteration costs and expenses of preparation of the Project for reletting or sale.

(h)           The Issuer or the Trustee acting on behalf of the Issuer may recover from the Tenant any attorney fees or other expense incurred in exercising any of its remedies under this Lease.

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Section 20.2           Survival of Obligations.  The Tenant covenants and agrees with the Issuer and the Owner(s) of Bonds that until all Bonds and the interest thereon and redemption premium, if any, are paid in full or provision is made for the payment thereof in accordance with the Indenture, its obligations under this Lease shall survive the cancellation and termination of this Lease for any cause and/or sale of the Project, and that the Tenant shall be obligated to pay Basic Rent and Additional Rent (reduced by any net income the Issuer or the Trustee may receive from the Project after such termination) and perform all other obligations provided for in this Lease, all at the time or times provided in this Lease.  Notwithstanding any provision of this Lease or the Indenture, the Tenant’s obligations under Sections 8.2 and 14.1 hereof shall survive any termination, release or assignment of this Lease, the Indenture or Guaranty Agreement and payment or provision for payment of the Bonds.

Section 20.3           No Remedy Exclusive.  No remedy herein conferred upon or reserved to the Issuer is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity or by statute, subject to the provisions of the Indenture.  No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power, or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient.  In order to entitle the Issuer to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than notice required herein.

ARTICLE XXI

Section 21.1           Performance of the Tenant’s Obligations by the Issuer.  If the Tenant shall fail to keep or perform any of its obligations as provided in this Lease, then the Issuer may (but shall not be obligated to do so) upon the continuance of such failure on the Tenant’s part for 90 days after notice of such failure is given the Tenant by the Issuer or the Trustee and without waiving or releasing the Tenant from any obligation hereunder, as an additional but not exclusive remedy, make any such payment or perform any such obligation, and the Tenant shall reimburse the Issuer for all sums so paid by the Issuer and all necessary or incidental costs and expenses incurred by the Issuer in performing such obligations through payment of Additional Rent.  If such Additional Rent is not so paid by the Tenant within 10 days of demand, the Issuer shall have the same rights and remedies provided for in Article XX in the case of Default by the Tenant in the payment of Basic Rent.

ARTICLE XXII

Section 22.1           Surrender of Possession.  Upon accrual of the Issuer’s right of reentry as the result of the Tenant’s Default hereunder or upon the cancellation or termination of this Lease by lapse of time or otherwise (other than as a result of the Tenant’s purchase of the Project), the Tenant shall peacefully surrender possession of the Project to the Trustee, as assignee of the Issuer in good condition and repair, ordinary wear and tear excepted; provided, however, the Tenant shall have the right, prior to or within 30 business days after the termination of this Lease, to remove from on or about the Project the buildings, improvements, machinery, equipment, personal property, furniture and trade fixtures which the Tenant owns under the provisions of this Lease and are not a part of the Project.  All repairs to and restorations of the Project required to be made because of such removal shall be made by and at the sole cost and expense of the Tenant.  All buildings, improvements, machinery, equipment, personal property, furniture and trade fixtures owned by the Tenant and which are not so removed from on or about the Project prior to or within 30 business days after such termination of this Lease shall become the separate and absolute property of the Issuer.

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ARTICLE XXIII

Section 23.1          Notices.  All notices required or desired to be given hereunder shall be in writing and shall be delivered in person to the Notice Representative or mailed by restricted mail to the Notice Address.  All notices given by restricted mail as aforesaid shall be deemed duly given as of the date three days after they are so mailed.  When mailed notices are given, the party giving notice will use reasonable diligence to contact the party being notified by telephone, electronic mail or facsimile on or before the date such notice is mailed.

ARTICLE XXIV

Section 24.1          Triple-Net Lease.  The parties hereto agree (a) that this Lease is intended to be a triple-net lease, (b) that the payments of Basic Rent and Additional Rent are designed to provide the Issuer and the Trustee with funds adequate in amount to pay all principal of and interest on all Bonds as the same become due and payable and to pay and discharge all of the other duties and requirements set forth herein, and (a) that to the extent that the payments of Basic Rent and Additional Rent are not adequate to provide the Issuer and the Trustee with funds sufficient for the purposes aforesaid, the Tenant shall be obligated to pay, and it does hereby covenant and agree to pay, upon demand therefor, as Additional Rent, such further sums of money as may from time to time be required for such purposes.

Section 24.2          Funds Held by the Trustee After Payment of Bonds.  If, after the principal of and interest on all Bonds and all costs incident to the payment of Bonds have been paid in full, the Trustee holds unexpended funds received in accordance with the terms hereof, such unexpended funds shall, except as otherwise provided in this Lease and the Indenture and after payment therefrom to the Issuer of any sums of money then due and owing by the Tenant under the terms of this Lease, be the absolute property of and be paid over forthwith to the Tenant.

ARTICLE XXV

Section 25.1           Rights and Remedies.  The rights and remedies reserved by the Issuer and the Tenant hereunder and those provided by law shall be construed as cumulative and continuing rights.  No one of them shall be exhausted by the exercise thereof on one or more occasions.  The Issuer and the Tenant shall each be entitled to specific performance and injunctive or other equitable relief for any breach or threatened breach of any of the provisions of this Lease, notwithstanding the availability of an adequate remedy at law, and each party hereby waives the right to raise such defense in any proceeding in equity.

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Section 25.2           Waiver of Breach.  No waiver of any breach of any covenant or agreement herein contained shall operate as a waiver of any subsequent breach of the same covenant or agreement or as a waiver of any breach of any other covenant or agreement, and in case of a breach by either party of any covenant, agreement or undertaking, the nondefaulting party may nevertheless accept from the other any payment or payments or performance hereunder without in any way waiving its right to exercise any of its rights and remedies provided for herein or otherwise with respect to any such Default or Defaults which were in existence at the time such payment or payments or performance were accepted by it.

Section 25.3           The Issuer Shall Not Unreasonably Withhold Consents and Approvals.  Wherever in this Lease it is provided that the Issuer shall, may or must give its approval or consent, or execute supplemental agreements, exhibits or schedules, the Issuer shall not unreasonably or arbitrarily withhold or refuse to give such approvals or consents or refuse to execute such supplemental agreements, exhibits or schedules.

ARTICLE XXVI

Section 26.1          The Issuer May Not Sell.  The Issuer covenants that unless an Event of Default under this Lease has occurred and is continuing, and the remaining Term of this Lease has been terminated, it will not, without the Tenant’s written consent, unless required by law, sell or otherwise part with or encumber its fee title interest in the Project at any time during the Term of this Lease.

Section 26.2          Quiet Enjoyment and Possession.  The Tenant shall enjoy peaceable and quiet possession of the Project as long as no Event of Default has occurred and is continuing.

Section 26.3          Financial Report; Furnishing of Financial Information.  So long as any Bonds are Outstanding and unpaid and subject to the terms of the Indenture, the Tenant shall furnish or cause to be furnished to the Trustee the financial statements and other financial information required by Article V of the Guaranty Agreement.

Section 26.4           Issuer’s Obligations Limited.  Except as otherwise expressly provided in this Lease, no recourse upon any obligation or agreement contained in this Lease or in any Bond or under any judgment obtained against the Issuer, or by the enforcement of any assessment or by any legal or equitable proceeding by virtue of any constitution or statute or otherwise under any circumstances, under or independent of the Bond Agreement, shall be had against the Issuer and its officers, employees and agents.

Notwithstanding anything in this Lease to the contrary, it is expressly understood and agreed by the parties hereto that (a) the Issuer may rely conclusively on the truth and accuracy of any certificate, opinion, notice or other instrument furnished to the Issuer by the Tenant, a Owner(s) of Bonds or the Trustee as to the existence of any fact or state of affairs required to be noticed by the Issuer hereunder; (b) the Issuer shall not be under any obligation to perform any record-keeping or to provide any legal services, it being understood that such services shall be performed or provided either by the Tenant, the Trustee or the Owner(s) of Bonds; and (c) that none of the provisions of this Lease shall require the Issuer to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder, unless it shall have first been adequately indemnified to its satisfaction against the costs, expenses and liability which may be incurred by such action.

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Notwithstanding anything in this Lease to the contrary, any obligation the Issuer may incur under this Lease or under any instrument or document executed by the Issuer in connection with this Lease that entails the expenditure of any money by the Issuer shall be only a limited obligation of the Issuer payable solely from the revenues derived by the Issuer under the Lease and shall not be, under any circumstances, a general obligation of the Issuer.

ARTICLE XXVII

Section 27.1           Investment Tax Credit; Depreciation»

.  The Tenant shall be entitled to claim the full benefit of (1) any investment credit against federal or state income tax allowable with respect to expenditures of the character contemplated hereby under any federal or state income tax laws now or from time to time hereafter in effect, and (2) any deduction for depreciation with respect to the Project from federal or state income taxes.  The Issuer agrees that it will upon the Tenant’s request execute all such elections, returns or other documents which may be reasonably necessary or required to more fully assure the availability of such benefits to the Tenant.

ARTICLE XXVIII

Section 28.1           Amendments.  This Lease may be amended, changed or modified in writing in the following manner:

(a)           With respect to an amendment, change or modification which reduces the Basic Rent or Additional Rent, or any amendment which reduces the percentage of Owner(s) of Bonds whose consent is required for any such amendment, change or modification, by an agreement in writing executed by the Issuer and the Tenant and consented to in writing by the Trustee and by Owner(s) of Bonds owning at least 90% of the aggregate principal amount of the Bonds then Outstanding;

(b)           With respect to any other amendment, change or modification which will materially adversely affect the security or rights of the Owner(s) of Bonds, by an agreement in writing executed by the Issuer and the Tenant and consented to in writing by the Trustee and by Owner(s) of Bonds owning at least 66-2/3% of the aggregate principal amount of the Bonds then Outstanding; and

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(c)           With respect to all other amendments, changes, or modifications, by an agreement in writing executed by the Issuer and the Tenant.

At least 30 days prior to the execution of any agreement pursuant to (c) above, the Issuer and the Tenant shall furnish the Trustee and the Original Purchaser of the Bonds with a copy of the amendment, change or modification proposed to be made.

Section 28.2          Granting of Easements.  If no Event of Default under this Lease shall have happened and be continuing, the Tenant may, at any time or times, (a) grant easements, licenses and other rights or privileges in the nature of easements with respect to any property included in the Project, free from any rights of the Issuer or the Owner(s) of Bonds, or (b) release existing easements, licenses, rights-of-way and other rights or privileges, all with or without consideration and upon such terms and conditions as the Tenant shall determine, and the Issuer agrees, to the extent that it may legally do so, that it will execute and deliver any instrument necessary or appropriate to confirm and grant or release any such easement, license, right-of-way or other right or privilege or any such agreement or other arrangement, upon receipt by the Issuer of: (1) a copy of the instrument of grant or release or of the agreement or other arrangement, (2) a written application signed by the Authorized Tenant Representative requesting such instrument, and (3) a certificate executed by the Tenant stating (A) that such grant or release is not detrimental to the proper conduct of the business of the Tenant, and (B) that such grant or release will not impair the effective use or interfere with the efficient and economical operation of the Project and will not materially adversely affect the security of the Owner(s) of Bonds.  Any consideration received by the Tenant for the grant or release must be paid to the Trustee to be deposited in the Debt Service Fund and used to redeem Bonds at the earliest practicable date, at their principal amount, plus accrued interest, without premium.  If the instrument of grant shall so provide, any such easement or right and the rights of such other parties thereunder shall be superior to the rights of the Issuer and the Owner(s) of Bonds and shall not be affected by any termination of this Lease or default on the part of the Tenant hereunder.  If no Event of Default shall have happened and be continuing, any payments or other consideration received by the Tenant for any such grant or with respect to or under any such agreement or other arrangement shall be and remain the property of the Tenant, but, in the event of the termination of this Lease because of an Event of Default, all rights then existing of the Tenant with respect to or under such grant shall inure to the benefit of and be exercisable by the Issuer.

Section 28.3          Security Interests.  i) The Issuer and the Tenant agree to execute and deliver all instruments (including financing statements and statements of continuation thereof) necessary for perfection of and continuance of the security interest of the Issuer in and to the Project.  The Tenant hereby authorizes the Issuer to file or cause to be filed all such instruments required to be so filed and the Trustee to continue or cause to be continued the filings or liens of such instruments for so long as the Bonds shall be Outstanding.

(a)           Under the Indenture, the Issuer will, as additional security for the Bonds assign, transfer, pledge and grant a security interest in its rights under this Lease to the Trustee.  The Issuer hereby authorizes the Trustee to file financing statements or any other instruments necessary to perfect its security interest.  The Trustee is hereby given the right to enforce, either jointly with the Issuer or separately, the performance of the obligations of the Tenant, and the Tenant hereby consents to the same and agrees that the Trustee may enforce such rights as provided in the Indenture and the Tenant will make payments required hereunder directly to the Trustee.

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Section 28.5          Construction and Enforcement.  This Lease shall be construed and enforced in accordance with the laws of the.  State.  The provisions of this Lease shall be applied and interpreted in accordance with the rules of interpretation set forth in the Indenture.  Wherever in this Lease it is provided that either party shall or will make any payment or perform or refrain from performing any act or obligation, each such provision shall, even though not so expressed, be construed as an express covenant to make such payment or to perform, or not to perform, as the case may be, such act or obligation.

Section 28.6           Invalidity of Provisions of Lease.  If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby.

Section 28.7           Covenants Binding on Successors and Assigns.  The covenants, agreements and conditions herein contained shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

Section 28.8          Section Headings.  The section headings hereof are for the convenience of reference only and shall not be treated as a part of this Lease or as affecting the true meaning of the provisions hereof.  The reference to section numbers herein or in the Indenture shall be deemed to refer to the numbers preceding each section.

Section 28.9           Execution of Counterparts.  This Lease may be executed simultaneously in multiple counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one instrument.

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IN WITNESS WHEREOF, the Issuer has caused this Lease to be signed by an authorized official, such signature to be attested by an authorized officer, and its official seal to be applied, as of the date first above written.

		CITY OF FREDONIA, KANSAS
[SEAL]
		By:	/s/ Dennis Mollnow
			Mayor
ATTEST:
By:	/s/ Steven Hutfles
	City Clerk
			“ISSUER”

ACKNOWLEDGMENT

STATE OF KANSAS	)
	)SS:
COUNTY OF WILSON	)

This instrument was acknowledged before me on the 19 day of April, 2012, by Dennis D. Mollnow, Mayor, and Steven Hutfles, City Clerk, of the City of Fredonia, Kansas, a municipal corporation.

[SEAL]
	/s/ Carolyn Anderson
	Notary Public
My Appointment Expires:
May 7, 2014

33

IN WITNESS WHEREOF, the Tenant has caused this Lease to be signed by an authorized officer, as of the date first above written.

VALENT AEROSTRUCTURES, LLC
By:	/s/ Charles M. Newell
Title:	President
	“TENANT”

ACKNOWLEDGMENT

STATE OF MISSOURI	)
	)SS:
COUNTY OF JACKSON	)

This instrument was acknowledged before me on the 17th day of April, 2012, by Charles M. Newell, CEO of Valent Aerostructures, LLC, a Delaware corporation.

[SEAL]
	/s/ Deborah A. Guse
	Notary Public
My Appointment Expires:
July 19, 2015

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APPENDIX A

FORM OF REQUISITION FOR PAYMENT OF PROJECT COSTS

CITY OF FREDONIA, KANSAS

Project Fund

(Valent Aerostructures Project)

Payment Order No. __________

Community National Bank & Trust

Fredonia, Kansas

Attn:  Corporate Trust Department

You are hereby authorized and directed by the undersigned, the Authorized Tenant Representative, acting on behalf of Valent Aerostructures, LLC (the “Tenant”) to disburse funds held by you as Trustee in the above mentioned Project Fund for the purposes and in the amounts set forth in the Payment Schedules attached hereto and incorporated herein by reference (the “Payment Schedules”).

I hereby certify that the amounts requested in the attached Payment Schedules have either been advanced by the Tenant or are justly due to contractors, subcontractors, suppliers, vendors, materialmen, engineers, architects or other persons named in the Payment Schedules who have performed necessary and appropriate work in connection with any installation of machinery, equipment or personal property, or have furnished necessary and appropriate materials in the construction or acquisition of land, buildings and improvements constituting a part of the Project.  I further certify that the fair value of such work or materials, machinery and equipment, is not exceeded by the amount requested, and such cost is one which may be capitalized for federal income tax purposes.

I further certify that, except for the amounts set forth in the Payment Schedules, there are no outstanding debts now due and payable for labor, wages, materials, supplies or services in connection with the construction of said buildings and improvements or the purchase and/or installation of machinery, equipment and personal property which, if unpaid, might become the basis of a vendor’s, mechanic’s, laborer’s or materialmen’s statutory or other similar lien upon the Land, the Project or any part thereof.

I further certify that no part of the amounts set forth in the Payment Schedules have been the basis for any previous withdrawal of any moneys from the said Project Fund.

I further certify that each of the representations and covenants on the part of the Tenant contained in the Lease dated as of April 1, 2012 by and between the City of Fredonia, Kansas, as the Issuer, and the Tenant are now true and correct in all material respects and are now being materially complied with.

I further certify that the amounts set forth in the Payment Schedules constitute Project Costs, as said term is defined in the Lease, and that all insurance policies which are required to be in force as a condition precedent to disbursement of funds from the Project Fund pursuant to the provisions of Section 6.1 of the Lease are in full force and effect.

DATED ______________________________, 20_______.

Authorized Tenant Representative

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EXHIBIT A - Payment Order No. ___________

PAYMENT SCHEDULE

FOR BUILDINGS, IMPROVEMENTS AND

MISCELLANEOUS PROJECT COSTS

I hereby request payment of the amounts specified below to the payees whose names and addresses are stated below, and I certify that the description of the purchase or nature of each payment is reasonable, accurate and complete:

PAYMENT SCHEDULE

Payee Name Payee Address Purpose or Nature of Payment Amount

______

Initials

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APPENDIX B

FORM OF CERTIFICATE OF COMPLETION

CERTIFICATE OF COMPLETION

The undersigned, being the Authorized Tenant Representative for Valent Aerostructures, LLC (the “Tenant”), as tenant under a certain Lease dated as of April 1, 2012 (the “Lease”) between the City of Fredonia, Kansas, (the “Issuer”) and the Tenant, and as beneficiary of the Issuer’s Industrial Revenue Bonds, Series 2012A (Valent Aerostructures Project) issued pursuant to a certain Trust Indenture dated as of April 1, 2012 (the “Indenture”), hereby certifies:

1.           The Improvements purchased with Original Proceeds (as defined in the Indenture) have been substantially completed in accordance with the plans and specifications prepared at the Tenant’s direction.

2.           Such Improvements have been substantially completed in a good and workmanlike manner.

3.           There are no mechanic’s, materialmen’s liens or other statutory liens on file encumbering title to the Land (as defined in the Indenture); all bills for labor and materials furnished for the Improvements which could form the basis of a mechanic’s, materialmen’s or other statutory lien against the Land have been paid in full, and within the past four months no such labor or materials have been furnished which have not been paid for.

4.           All Improvements are located or installed upon the Land.

5.           All material provisions of applicable building codes have been complied with and, if applicable, a certificate of occupancy has been issued with respect to the Project.

6.           All moneys remaining in the Project Fund being held by the Trustee under the Indenture should be transferred to the Debt Service Fund being held by the Trustee under the Indenture as required by Section 504 of the Indenture, to be applied as provided therein.

IN WITNESS WHEREOF, the undersigned Authorized Tenant Representative has signed this Certificate, and states, under penalty of perjury, that the statements of fact made in this Certificate are true and correct.

STATE OF KANSAS	)
	)SS:
COUNTY OF WILSON	)

Subscribed and sworn to or affirmed before me, a notary public, this _____ day of ____________________, 20_____.

[SEAL]

Notary Public

My Appointment Expires:  ________________________

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APPENDIX C

GLOSSARY OF WORDS AND TERMS

“Additional Rent” means all fees, charges, costs and expenses of the Trustee or the Issuer (including reasonable attorney’s fees) payable under the Indenture, all Impositions, all amounts required to be rebated to the United States pursuant to the Tax Compliance Agreement, all Default Administration Costs (as defined in the Indenture), all other payments of whatever nature payable or to become payable pursuant to the Indenture or which the Tenant has agreed to pay or assume under the provisions of this Lease and any and all expenses (including reasonable attorney’s fees) incurred by the Issuer or the Trustee in connection with the issuance of the Bonds or the administration or enforcement of any rights under this Lease or the Indenture.  The fees, charges, costs and expenses of the Trustee shall include all costs incurred in connection with the issuance, transfer, exchange, registration, redemption or payment of the Bonds and the administration or enforcement of any rights or obligations under this Lease, the Indenture or the Guaranty Agreement except (a) the reasonable fees and expenses in connection with the replacement of a Bond or Bonds mutilated, stolen, lost or destroyed or (b) any tax or other government charge imposed on the Trustee in relation to the transfer, exchange, registration, redemption or payment of the Bonds.  The fees, charges, costs and expenses of the Issuer shall include, but not be limited to, any and all costs incurred by the Issuer in connection with the administration or enforcement of any rights, duties, or obligations under this Lease, the exercise or pursuit of any remedy upon an Event of Default, the amendment of this Lease, the granting of consents, easements or similar actions or any other action required of or available to the Issuer under the terms of this Lease.

“Additional Term” shall mean that term commencing on the last day of the Basic Term and terminating 5 years thereafter.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“Basic Rent” means the monthly pro rata amount which, when added to Basic Rent Credits, will be sufficient to pay, 30 days prior to each Payment Date, all principal of, redemption premium, if any, and interest on all Outstanding Bonds (as defined in the Indenture) which is due and payable on such Payment Date.  If for any reason on any Payment Date the Trustee does not have on deposit in the Debt Service Fund sufficient moneys to pay all principal and interest due on the Bonds on such Payment Date, then the Tenant shall pay, as Basic Rent, on such Payment Date, the amount of such deficiency.

“Basic Rent Credits” means all funds on deposit in the Debt Service Fund and available for the payment of principal of, redemption premium, if any, and interest on the Bonds on any Basic Rent Payment Date.

“Basic Rent Payment Date” means May 1, 2012 and the first day of each month thereafter until the principal of, redemption premium, if any, and interest on all Outstanding Bonds have been fully paid or provision made for their payment in accordance with the provisions of the Indenture.

C-1

“Basic Term” means that term commencing as of the delivery of this Lease and ending on April 1, 2032, subject to prior termination as specified in this Lease, but ending, in any event, when all of the principal of, redemption premium, if any, and interest on all Outstanding Bonds shall have been paid in full or provision made for their payment in accordance with the provisions of the Indenture.

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601, et seq.

“Certificate of Completion” means a written certificate signed by the Authorized Tenant Representative stating that (1) the Improvements have been substantially completed in accordance with the plans and specifications prepared or approved by the Issuer or the Tenant, as the case may be; (2) the Improvements have been substantially completed in a good and workmanlike manner; (3) no mechanic’s or materialmen’s liens have been filed, nor is there any basis for the filing of such liens, with respect to the Project; (4) all Improvements constituting a part of the Project are located or installed upon the Land; and (5) if required by ordinances duly adopted by the Issuer or by applicable building codes, that an appropriate certificate of occupancy has been issued with respect to the Improvements.  A form of Certificate of Completion is attached as Appendix B.

“Completion Date” means the date on which the Improvements are certified as substantially completed in accordance with Section 5.4 of this Lease, or the third anniversary of the issue date of the Bonds, whichever comes first.

“Default” means any event or condition the occurrence of which, with the lapse of time or the giving of notice or both, may constitute an Event of Default.

“Environmental Assessment” means an environmental assessment with respect to the Project conducted by an independent consultant satisfactory to the Issuer and the Trustee which reflects the results of such inspections, records reviews, soil tests, groundwater tests and other tests requested, which assessment and results shall be satisfactory in scope, form and substance to the Issuer and the Trustee.

“Environmental Law” means CERCLA, SARA, and any other federal, state or local environmental statute, regulation or ordinance presently in effect or coming into effect during the Term of this Lease.

“Event of Bankruptcy” means an event whereby the Tenant shall: (i) admit in writing its inability to pay its debts as they become due; or (ii) file a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Bankruptcy Code as now or in the future amended, or file a pleading asking for such relief; or (iii) make an assignment for the benefit of creditors; or (iv) consent to the appointment of a trustee or receiver for all or a major portion of its property; or (v) be finally adjudicated as bankrupt or insolvent under any federal or state law; or (vi) suffer the entry of a final and nonappealable court other under any federal or state law appointing a receiver or trustee for all or a major part of its property or ordering the winding-up or liquidation of its affairs, or approving a petition filed against it under the Bankruptcy Code, which order, if the Tenant has not consented thereto, shall not be vacated, denied, set aside or stayed within 60 days after the day of entry; or (vii) suffer a writ or warrant of attachment or any similar process to be issued by any court against all or any substantial portion of its property, and such writ or warrant of attachment or any similar process is not contested, stayed, or is not released within 60 days after the final entry, or levy or after any contest is finally adjudicated or any stay is vacated or set aside.

C-2

“Event of Default” means any one of the following events:

(a)           Failure of the Tenant to make any payment of Basic Rent within five business days of written notice from the Issuer or the Bank of the late payment; or

(b)           Failure of the Tenant to make any payment of Additional Rent at the times and in the amounts required hereunder, or failure to observe or perform any other covenant, agreement, obligation or provision of this Lease on the Tenant’s part to be observed or performed, and the same is not remedied within thirty (30) days after the Issuer or the Trustee has given the Tenant written notice specifying such failure (or such longer period as shall be reasonably required to correct such default; provided that (i) the Tenant has commenced such correction within said 30-day period, and (ii) the Tenant diligently prosecutes such correction to completion); or

(c)           An Event of Bankruptcy;

(d)           Abandonment of the Project by the Tenant; or

(e)           Tenant ceases to own and control, directly or indirectly, all of the equity interests of each of Valent-Lenexa, Valent-St.  Louis, Valent-Wichita, Valent-Tulsa and Valent-Washington; or Tech Investments II, LLC ceases to own and control at least a majority of the voting equity interests of Valent.

“Full Insurable Value” means full actual replacement cost less physical depreciation.

“Hazardous Substances” shall mean “hazardous substances” as defined in CERCLA.

“Impositions” means all taxes and assessments, general and special, which may be lawfully taxed, charged, levied, assessed or imposed upon or against or payable for or in respect of the Project or any part thereof, or any improvements at any time thereon or the Tenant’s interest therein, including any new lawful taxes and assessments not of the kind enumerated above to the extent that the same are lawfully made, levied or assessed in lieu of or in addition to taxes or assessments now customarily levied against real or personal property, and further including all water and sewer charges, assessments and other governmental charges and impositions whatsoever, foreseen or unforeseen, which, if not paid when due, would encumber the Issuer’s title to the Project.

“Improvements” shall have the meaning defined in the Indenture.

C-3

“Indenture” means the Trust Indenture delivered concurrently with this Lease, as from time to time amended and supplemented by Supplemental Indentures in accordance with the provisions of Article XI of the Indenture.

“Land” means the real property (or interests therein) described in Schedule I.

“Lease” means this Lease between the Issuer and the Tenant, as from time to time supplemented and amended in accordance with the provisions hereof and of the Indenture.

“Net Proceeds” means the gross proceeds from the insurance (including without limitation title insurance) or condemnation award with respect to which that term is used remaining after the payment of all expenses (including without limitation attorneys’ fees and any expenses of the Issuer, the Tenant, the Bank or any other owner of the Bonds) incurred in the collection of such gross proceeds.

The term “Notice Address” shall mean:

(1)           With respect to the Tenant:

Valent Aerostructures, LLC

1200 Main Street, Suite 400

Kansas City, MO  64105

Attn:  Chief Financial Officer

(2)           With respect to the Issuer:

City of Fredonia, Kansas

100 N. 15th

Fredonia, KS  66736

Attn:  City Clerk

(3)           With respect to the Trustee:

Community National Bank & Trust

733 Madison

Fredonia, KS  66736

Attn:  President

“Official Action Date” means October 3, 2011, the date on which the governing body of the Issuer adopted a resolution or approved a letter indicating an intent to issue the Series 2012A Bonds.

“Principal User” means any principal user of the Project within the meaning of the Code.

“Project Contracts” means a contract or contracts with respect to the acquisition and/or construction of the Improvements entered into by the Tenant or the Issuer.

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“Related Person” means a related person as defined in Section 147(a) and 144(a)(3) of the Code.

“SARA” means the Superfund Amendments and Reauthorization Act of 1986, as now in effect and as hereafter amended.

“State” means the State of Kansas.

“Term” means, collectively, the Basic Term and any Additional Term of the Lease.

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SCHEDULE I

DESCRIPTION OF PROPERTY

The following property acquired by the City of Fredonia, Kansas (the “Issuer”) in connection with the issuance by the City of its Industrial Revenue Bonds, Series 2012A (Valent Aerostructures Project) (the “Series 2012A Bonds”):

(a)           The following described real estate in Wilson County, Kansas:

Lots 14, 15, 16 and 17, Fredonia Industrial Park Sub-Division in the City of Fredonia, Kansas, according to the recorded plat thereof.

said real property constituting the “Land” as defined in the Lease entered into by the Issuer concurrently with the issuance of the Series 2012A Bonds (the “Lease”), subject to the following (“Permitted Encumbrances”):

All easements, liens and rights-of-way of record.

(b)           All buildings, building additions, improvements, machinery and equipment constructed, located or installed on the Land, all or any portion of the costs of which were paid from the proceeds of the Series 2012A Bonds, and which constitute Improvements as referred to in the Lease, together with any substitutions or replacements therefor, the property described in paragraphs (a) and (b) of this Schedule I together constituting the “Project” as referred to in the Lease.

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EX-10.39

Exhibit 10.39

LEASE

THIS INDENTURE of lease, entered into this 1lth day of October, 2001 between Welsh Lenexa II, LLC (“Landlord”) and Cable-Tech Industries, L.L.C., a Kansas limited liability (the “Tenant”).

DEFINITIONS

“Property” - That certain real property located in the City of Lenexa, County of Johnson, State of Kansas, and legally described on Exhibit A attached hereto and made a part hereof, including all buildings and site improvements located thereon.

“Building” - That certain office/warehouse building containing approximately 152,400 square feet located upon the Property and commonly described as 11032-11068 Strang Line Road, Lenexa, Kansas 66219.

“Demised Premises” - That certain portion of the Building located at 11060 Strang Line Road and designated as Bays 9 through 12, consisting of approximately 25,766 square feet (4,563 square feet office and 21,203 square feet of warehouse space), as measured from the outside walls of the Demised Premises to the center of the demising wall, as shown on the floor plan attached hereto as Exhibit B and made a part hereof.  The Demised Premises include the non-exclusive right of access to common areas, as hereinafter defined, and all licenses and easements appurtenant to the Demised Premises.

“Common Areas” - The term “common area” means the entire areas available for the non-exclusive use by Tenant and other Tenants in the Building, including, but not limited to, driveways, truck docks, parking lots, and landscaped areas.  Subject to reasonable rules and regulations promulgated by Landlord, the common areas are hereby made available to Tenant and its employees, agents, customers, and invitees for reasonable use in common with other Tenants, their employees, agents, customers and invitees.

TERM

ARTICLE I.FOR AND IN CONSIDERATION OF THE RENTS, ADDITIONAL RENTS, TERMS, PROVISIONS AND COVENANTS HEREIN CONTAINED, LANDLORD HEREBY LETS, LEASES AND DEMISES TO TENANT THE DEMISED PREMISES FOR A TERM COMMENCING ON THE EARLIER OF (I) THE DATE ON WHICH TENANT OPENS THE DEMISED PREMISES FOR BUSINESS, OR (II) FIFTEEN (15) DAYS FOLLOWING THE DELIVERY OF POSSESSION OF THE DEMISED PREMISES TO TENANT COMPLETED ACCORDING TO THE PLANS AND SPECIFICATIONS SET FORTH HEREIN (THE “COMMENCEMENT DATE”), AND EXPIRING ON THE SEVEN YEAR AND SIX MONTH ANNIVERSARY OF THE COMMENCEMENT DATE (THE “EXPIRATION DATE”), UNLESS SOONER TERMINATED AS HEREINAFTER PROVIDED.

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BASE RENT

ARTICLE II.TENANT SHALL TO PAY TO LANDLORD BASE RENT FOR THE DEMISED PREMISES (“BASE RENT”), EXCLUSIVE OF ANY OTHER CHARGE PROVIDED FOR IN THIS LEASE TO BE PAID BY TENANT, AS SET FORTH BELOW.  BASE RENT SHALL BE PAYABLE IN EQUAL MONTHLY

installments, in advance, commencing on the first full month of the term of this Lease, and continuing on the first day of each subsequent month during the term hereof.  In the event the term hereof commences on a day other than the first day of a month, Base Rent payable during such first month shall be adjusted on a pro rata basis and shall be paid contemporaneously with the execution of this lease.  Except as set forth in this Lease to the contrary, Base Rent shall be paid without setoff, deduction, demand or counterclaim of any nature whatsoever, in advance on the first day of each and every calendar month during the term hereof.

	Monthly		Annual
Dates	Base Rent		Base Rent
Commencement Date to 6- month anniversary of the Commencement Date.	$	7,128.59		N/A
6 month anniversary to forty-two month anniversary		14,278.66		171,343.90
Forty-two month anniversary to ninetieth month anniversary		15,352.24		184,226.90

All Rent and other sums payable hereunder by Tenant which are not paid when due shall bear interest from the date due to the date paid at a rate of three and one half percent (3.5%) per annum in excess of the “Prime Rate” published in the Wall Street Journal, as the same changes from time to time (the “Default Rate”).

ADDITIONAL RENT

ARTICLE III.IN ADDITION TO BASE RENT AND ALL OTHER AMOUNTS TO BE PAID BY TENANT HEREUNDER, TENANT SHALL PAY TO LANDLORD THROUGHOUT THE TERM OF THIS LEASE THE FOLLOWING (COLLECTIVELY, “ADDITIONAL RENT”):

Section 3.1         A sum equal to sixteen point nine percent (16.9%) (which represents the ratio of the Demised Premises to the area of the Building) of the Real Estate Taxes payable during the term of this Lease.  The term “Real Estate Taxes” shall mean all real estate taxes, all assessments (provided assessments that may be paid in installments as opposed to a lump sum shall be paid in installments) and any taxes in lieu thereof which may be levied upon or assessed against the Property or any part thereof less the amount of any tax refund received by Landlord attributable to such year.  “Real Estate Taxes” shall not include any federal or state inheritance, general income, or gift or estate taxes.

In the event the taxing authorities include in such Real Estate Taxes the value of any improvements made by Tenant, or of machinery, equipment, fixtures, inventory or other personal property or assets of Tenant, then Tenant shall pay all the taxes attributable to such items in addition to its proportionate share of said Real Estate Taxes.  A photostatic copy of the tax statement submitted by Landlord to Tenant, if requested by Tenant, shall be sufficient evidence of the amount of taxes and assessments assessed or levied against the Property or any part thereof.

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Section 3.2           Except as set forth below, a sum equal to sixteen point nine percent (16.9%) (which represents the ratio of the Demised Premises to the area of the Building) of the annual aggregate Operating Expenses incurred by Landlord in the operation, maintenance and repair of the Property.  The term “Operating Expenses” shall include but not be limited to Landlord’s actual reasonable and competitive costs of maintenance, repair, replacement and care of all common area lighting, common area plumbing and roofs, parking and landscaped areas, signs, snow removal, non-structural repair and maintenance of the exterior of the Building, insurance premiums, management fees (not to exceed 5% of the amount of the gross revenues generated from the Building), wages and fringe benefits of personnel employed for such work at the Building, costs of equipment purchased and used for such purposes, and the cost or portion thereof properly allocable to the Property (amortized over such reasonable period as Landlord shall determine (not to be less than seven years) together with the interest at the rate of nine percent (9%) per annum on the unamortized balance) of any capital improvements made to the Building by Landlord after the year in which the term of this Lease commences which are made for the purpose of reducing Operating Expenses or made to the Building by Landlord after the date of this Lease that are required under any governmental law or regulation that was not applicable to the Building as of the date hereof; provided such capital items would not otherwise be excluded by applying GAAP.

The following items may not be included in Operating Expenses:

A.      The cost of any items for which the Landlord is actually reimbursed by condemnation proceeds or insurance carried;

B.      Legal and other professional fees incurred by the Landlord in connection with the execution of leases and the expenses of enforcing any such leases;

C.      Leasehold improvements made in tenant spaces for other tenants or occupants of the Building or made in tenant spaces in order to prepare space for occupancy by a new tenant or other occupant;

D.      Interest on, and amortization of, mortgages and any recording or mortgage tax or expense in connection therewith;

E.      Advertising and promotional expenses;

F.      The cost of any repair made to the common areas by the Landlord to correct any violation of law existing as of the date of this Lease;

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G.      The cost of any items for which the Landlord is reimbursed by other tenants or occupants of the Building (except pursuant to provisions for the payment of a share of common areas costs and expenses) or by warranty or for which the Landlord is otherwise compensated;

H.      Depreciation of the original cost of constructing or expanding the

common areas and the balance of the Building;

I.      Any costs stated in common area costs and expenses representing an amount paid to a Landlord-related corporation or entity which is in excess of the amount which would be paid in the absence of such relationship;

J.      Any amounts held in reserve to be utilized in future years; and

K.     Except as set forth above, capital items chargeable according to generally accepted accounting principals (“GAAP”).

Notwithstanding the foregoing, Tenant’s proportionate share of Operating Expenses shall not exceed $1.50 per square foot per annum during the first year of the Lease and no more than a five percent (5%) increase in any one year thereafter during the second, third and fourth lease year.

Section 3.3          The payment of the sums set forth in this Article 3 shall be in addition to the Base Rent payable pursuant to Article 2 of this Lease.  In the event the lease term shall begin or expire at any time during any calendar year, the Tenant shall be responsible for its pro rata share of Additional Rent under subdivisions a. and b. during the Lease term.

Section 3.4         Prior to commencement of this Lease and prior to the commencement of each calendar year during the term of this Lease or any renewal or extension thereof, Landlord may estimate for each calendar year (i) the total amount of Real Estate Taxes; (ii) the total amount of Operating Expenses; (iii) Tenant’s share of Real Estate Taxes for such calendar year; (iv) Tenant’s share of Operating Expenses for such calendar year; and (v) the computation of the annual and monthly rental payable during such calendar year as a result of the Base Rent plus Tenant’s estimated share of Real Estate Taxes and Operating Expenses

Section 3.5          The amount of Tenant’s share of Real Estate Taxes and Operating Expenses for each calendar year, as so estimated, shall be payable as Additional Rent, in equal monthly installments, in advance, on the first day of each month during such calendar year.  In the event that such estimate is delivered to Tenant before the first day of January of such calendar year, the estimated amount shall be payable as Additional Rent in equal monthly installments, in advance on the first day of each month during such calendar year.  In the event that such estimate is delivered to Tenant after the first day of January of such calendar year, the estimated amount shall be payable as Additional Rent in equal monthly installments, in advance, on the first day of each month over the balance of such calendar year, with the number of installments being equal to the number of full calendar months remaining in such calendar year.

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Upon completion of each calendar year during the term of this Lease or any renewal or extension thereof, Landlord shall determine the actual amount of the Real Estate Taxes and Operating Expenses payable in such calendar year and Tenant’s share thereof and deliver a written statement of the amounts thereof to Tenant together with written

certification setting forth the computation of the amount due from Tenant.  If Tenant has underpaid its share of Real Estate Taxes or Operating Expenses for such calendar year, Tenant shall pay the balance of its share thereof within ten (10) days after the receipt of such statement.  If Tenant has overpaid its share of Real Estate Taxes or Operating Expenses for such calendar year, Landlord shall either (i) refund such excess, or (ii) credit such excess against the most current monthly installment or installments due Landlord for Base Rent or its estimate of Tenant’s share of Real Estate Taxes and Operating Expenses for the next following calendar year.  A pro rata adjustment shall be made for any fractional calendar year occurring during the term of this Lease or any renewal or extension thereof based upon the number of days of the term of the Lease during said calendar year and all additional sums payable by Tenant or credits due Tenant as a result of the provisions of this Article 3 shall be adjusted accordingly..

Section 3.6          Tenant or its authorized agent shall have the right, upon 5 days prior written notice to Landlord, to inspect, at Landlord’s main accounting offices, Landlord’s books, and records regarding any Operating Expenses paid by Tenant.  Landlord agrees to maintain such books and records at its main accounting office for a minimum of 2 years following the expiration of each accounting year to which such books and records pertain.  If Tenant’s audit discloses that Landlord has overstated Tenant’s required contribution toward any expenses by 4% of more during any one accounting year, then Landlord shall pay for the reasonable cost of such audit.  Any refund due Tenant shall be payable to Tenant within 30 days after Tenant’s request.

COVENANT TO PAY RENT

ARTICLE IV.EXCEPT AS SET FORTH HEREIN, THE COVENANTS OF TENANT TO PAY THE BASE RENT AND THE ADDITIONAL RENT ARE EACH INDEPENDENT OF ANY OTHER COVENANT, CONDITION, PROVISION, OR AGREEMENT CONTAINED IN THIS LEASE.  ALL RENTS ARE PAYABLE TO LANDLORD AT:

Welsh Lenexa II, LLC

c/o Grubb & Ellis / The Winbury Group

4520 Main Street, Suite 1000

Kansas City, MO  64111

(or such other address indicated in writing by Landlord).

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UTILITIES

ARTICLE V.LANDLORD SHALL SUPPLY WATER, GAS, ELECTRICITY, SANITARY SEWAGE, TELEPHONE, FIBER OPTIC COMMUNICATION SERVICE, DSL, AND CABLE MODEM CONNECTION TO THE PROPERTY AS PROVIDED IN THE PLANS AND SPECIFICATIONS APPROVED BY TENANT.  TENANT SHALL PAY, WHEN DUE, ALL CHARGES FOR SEWER USAGE OR RENTAL, GARBAGE, DISPOSAL, REFUSE REMOVAL, WATER, ELECTRICITY, GAS, FUEL OIL, L.P. GAS, TELEPHONE AND ANY OTHER UTILITY SERVICES OR ENERGY SOURCE FURNISHED TO THE DEMISED PREMISES DURING THE TERM OF THIS LEASE, AND ANY RENEWAL OR EXTENSION THEREOF.  IF LANDLORD ELECTS TO FURNISH ANY OF THE FOREGOING UTILITY SERVICES OR OTHER SERVICES

furnished or caused to be furnished to Tenant, then the rate charged by Landlord shall not exceed the rate Tenant would be required to pay to a utility company or service company furnishing any of the foregoing utilities or services (under similar circumstances).  All amounts payable by Tenant to Landlord hereunder shall be deemed Additional Rent in accordance with Article 3.

CARE AND REPAIR OF DEMISED PREMISES

ARTICLE VI.TENANT SHALL, AT ALL TIMES THROUGHOUT THE TERM OF THIS LEASE, INCLUDING RENEWALS AND EXTENSIONS, AND AT ITS SOLE EXPENSE, KEEP AND MAINTAIN THE DEMISED PREMISES IN A CLEAN, SAFE, SANITARY AND FIRST CLASS CONDITION AND IN COMPLIANCE WITH ALL APPLICABLE LAWS, CODES, ORDINANCES, RULES AND REGULATIONS; PROVIDED LANDLORD DELIVERS THE DEMISED PREMISES TO TENANT IN COMPLIANCE WITH SUCH LAWS, CODES, ORDINANCES, RULES AND REGULATIONS.  TENANT’S OBLIGATIONS HEREUNDER SHALL INCLUDE BUT NOT BE LIMITED TO THE MAINTENANCE, REPAIR AND REPLACEMENT, IF NECESSARY, OF HEATING AND AIR CONDITIONING FIXTURES, EQUIPMENT, AND SYSTEMS (THE “HVAC EQUIPMENT”), ALL LIGHTING AND PLUMBING AND FIXTURES AND EQUIPMENT, FIXTURES, MOTORS AND MACHINERY, ALL INTERIOR WALLS (EXCEPT THOSE THAT ARE LOAD BEARING), PARTITIONS, DOORS AND WINDOWS, INCLUDING THE REGULAR PAINTING THEREOF (NOT TO BE MORE FREQUENT THAN EVERY TWO YEARS), ALL EXTERIOR ENTRANCES TO THE DEMISED PREMISES, WINDOWS, DOORS AND LOADING DOCKS AND DOCK EQUIPMENT AND THE REPLACEMENT OF ALL BROKEN GLASS.  WHEN USED IN THIS PROVISION, THE TERM “REPAIRS” SHALL INCLUDE REPLACEMENTS OR RENEWALS WHEN NECESSARY, AND ALL SUCH REPAIRS MADE BY THE TENANT SHALL BE EQUAL IN QUALITY AND CLASS TO THE ORIGINAL WORK.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, TENANT SHALL OBTAIN AND MAINTAIN AT ALL TIMES DURING THE TERM OF THIS LEASE A MAINTENANCE CONTRACT WITH A RESPONSIBLE, LICENSED HVAC CONTRACTOR, ON TERMS REASONABLY ACCEPTABLE TO LANDLORD, FOR THE REGULAR MAINTENANCE OF ALL HVAC EQUIPMENT (NOT TO BE MORE THAN ONCE PER YEAR) WITHIN OR EXCLUSIVELY SERVING THE DEMISED PREMISES, AND SHALL BE RESPONSIBLE FOR THE PERFORMANCE OF ALL MAINTENANCE TO BE PERFORMED THEREUNDER.  TENANT SHALL KEEP ACCURATE AND COMPLETE RECORDS OF THE PERFORMANCE OF ALL SCHEDULED MAINTENANCE UNDER SUCH CONTRACT AND SHALL PROVIDE COPIES THEREOF TO LANDLORD FROM TIME TO TIME UPON REQUEST BY LANDLORD.  THE TENANT SHALL KEEP AND MAINTAIN ALL PORTIONS OF THE DEMISED PREMISES IN A CLEAN AND ORDERLY CONDITION.

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If Tenant fails, refuses or neglects to maintain or repair the Demised Premises as required in this Lease, after 10 days prior written notice shall have been given Tenant in accordance with Article 33 of this Lease, Landlord may make such repairs for any loss or damage that may accrue to Tenant’s merchandise, fixtures or other property or to Tenant’s business by reason thereof, and upon completion thereof, Tenant shall pay to Landlord all costs plus 5% for overhead incurred by Landlord in making such repairs upon presentation to Tenant of bill therefor; provided, however, that no notice shall be required in the event of any hazardous or emergency condition.

Landlord shall repair, at its expense (subject to inclusion in “Operating Expenses” pursuant to Section 3), the structural portions of the Building, including, without limitation, the roof, exterior walls, foundation, and load bearing walls.

Landlord shall be responsible for all outside maintenance of the Demised Premises, including grounds and parking areas, sidewalks, and areas adjoining the Demised Premises, all in a clean and orderly condition, free of accumulation of dirt, rubbish, snow and ice.  All such maintenance which is the responsibility of the Landlord shall be provided as reasonably necessary to the comfortable use and occupancy of Demised Premises during business hours, except Saturdays, Sundays and holidays, upon the condition that the Landlord shall not be liable for damages for failure to do so due to causes beyond its control

SIGNS

ARTICLE VII.ANY SIGN, LETTERING, PICTURE, NOTICE, OR ADVERTISEMENT INSTALLED ON OR IN ANY PART OF THE PROPERTY AND VISIBLE FROM THE EXTERIOR OF THE BUILDING, OR VISIBLE FROM THE EXTERIOR OF THE DEMISED PREMISES, SHALL BE SUBJECT TO LANDLORD’S PRIOR REASONABLE APPROVAL AND SHALL BE INSTALLED AT TENANT’S EXPENSE.  IN THE EVENT OF A VIOLATION OF THE FOREGOING BY TENANT, LANDLORD MAY REMOVE THE SAME WITHOUT ANY LIABILITY AND MAY CHARGE THE EXPENSE INCURRED BY SUCH REMOVAL TO TENANT.

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ALTERATIONS, INSTALLATION, FIXTURES

ARTICLE VIII.EXCEPT AS HEREINAFTER PROVIDED, TENANT SHALL NOT MAKE ANY ALTERATION, ADDITIONS, OR IMPROVEMENTS IN OR TO THE DEMISED PREMISES OR ADD, DISTURB OR IN ANY WAY CHANGE ANY PLUMBING OR WIRING THEREIN WITHOUT THE PRIOR WRITTEN CONSENT OF THE LANDLORD.  IN THE EVENT ALTERATIONS ARE REQUIRED BY ANY GOVERNMENTAL AGENCY BY REASON OF THE USE AND OCCUPANCY OF THE DEMISED PREMISES BY TENANT, TENANT SHALL MAKE SUCH ALTERATIONS AT ITS OWN COST AND EXPENSE AFTER FIRST OBTAINING LANDLORD’S APPROVAL OF PLANS AND SPECIFICATIONS THEREFOR AND FURNISHING SUCH INDEMNIFICATION AS LANDLORD MAY REASONABLY REQUIRE AGAINST LIENS, COSTS, DAMAGES AND EXPENSES ARISING OUT OF SUCH ALTERATIONS.  ALTERATIONS OR ADDITIONS BY TENANT MUST BE MADE IN COMPLIANCE WITH ALL LAWS, ORDINANCES AND GOVERNMENTAL REGULATIONS AFFECTING THE PROPERTY AND TENANT SHALL WARRANT TO LANDLORD THAT ALL SUCH ALTERATIONS, ADDITIONS, OR IMPROVEMENTS SHALL BE IN STRICT COMPLIANCE WITH ALL RELEVANT LAWS, ORDINANCES, GOVERNMENTAL REGULATIONS, PERMITS AND INSURANCE REQUIREMENTS.  CONSTRUCTION OF SUCH ALTERATIONS OR ADDITIONS SHALL COMMENCE ONLY UPON TENANT OBTAINING AND EXHIBITING TO LANDLORD THE REQUISITE APPROVALS, LICENSES AND PERMITS AND INDEMNIFICATION AGAINST LIENS.  ALL ALTERATIONS, INSTALLATIONS, PHYSICAL ADDITIONS OR IMPROVEMENTS TO THE DEMISED PREMISES MADE BY TENANT SHALL AT ONCE BECOME THE PROPERTY OF LANDLORD AND SHALL BE SURRENDERED TO LANDLORD UPON THE TERMINATION OF THIS LEASE; PROVIDED, HOWEVER, THIS CLAUSE SHALL NOT APPLY TO TRADE FIXTURES, MOVABLE EQUIPMENT OR FURNITURE OWNED BY TENANT, WHICH MAY BE REMOVED BY TENANT AT THE END OF THE TERM OF THIS LEASE.  TENANT SHALL BE RESPONSIBLE FOR ALL COSTS RELATED TO IMPROVEMENTS OR MODIFICATIONS TO THE DEMISED PREMISES REQUIRED OR NECESSARY TO COMPLY WITH THE AMERICANS WITH DISABILITIES ACT OF 1990 (ADA), OR SIMILAR STATUTES OR LAW; PROVIDED THE DEMISED PREMISES WERE DELIVERED TO TENANT IN COMPLIANCE WITH ADA.

Notwithstanding the foregoing, Tenant may make non-structural alterations and minor plumbing and wiring changes to the Demised Premises deemed necessary in Tenant’s sole discretion without obtaining Landlord’s consent.

POSSESSION

ARTICLE IX.EXCEPT AS HEREINAFTER PROVIDED, LANDLORD SHALL DELIVER POSSESSION OF THE DEMISED PREMISES TO TENANT IN THE CONDITION REQUIRED BY THIS LEASE ON OR BEFORE DECEMBER 1, 2001.  LANDLORD SHALL DELIVER THE LEASED PREMISES TO TENANT IN COMPLIANCE WITH ALL APPLICABLE LAWS, CODES, ORDINANCES, RULES AND REGULATIONS, INCLUDING WITHOUT LIMITATION THE ADA AND ALL ENVIRONMENTAL LAWS (AS DEFINED BELOW).  LANDLORD SHALL NOT BE LIABLE IN ANY RESPECT FOR ANY FAILURE TO DELIVER POSSESSION OF THE DEMISED PREMISES TO TENANT ON OR BEFORE DECEMBER 1, 2001.  IF LANDLORD FAILS TO DELIVER POSSESSION OF THE DEMISED PREMISES TO TENANT COMPLETED ACCORDING TO THE PLANS AND SPECIFICATIONS SET FORTH HEREIN ON OR BEFORE SEVENTY-FIVE (75) DAYS AFTER THE DATE OF THIS LEASE (“LATE DELIVERY DATE”), THEN, SUBJECT TO FORCE MAJEURE, FOR EVERY DAY THE LANDLORD DELIVERS THE DEMISED PREMISES AFTER THE LATE DELIVERY DATE TENANT SHALL RECEIVE TWO DAYS FREE RENT, EXCEPT THAT IF THE DEMISED PREMISES ARE NOT DELIVERED TO TENANT BY FEBRUARY 1, 2002, THEN TENANT MAY TERMINATE THIS LEASE.  THE RENTALS HEREIN RESERVED SHALL COMMENCE ON THE COMMENCEMENT DATE.  ANY OCCUPANCY BY TENANT PRIOR TO THE BEGINNING OF THE TERM SHALL IN ALL RESPECTS BE THE SAME AS THAT OF A TENANT UNDER THIS LEASE.

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SECURITY AND DAMAGE DEPOSIT

ARTICLE X.TENANT CONTEMPORANEOUSLY WITH THE EXECUTION OF THIS LEASE, HAS DEPOSITED WITH LANDLORD THE SUM OF FOURTEEN THOUSAND TWO HUNDRED SEVENTY-EIGHT AND 66/100 DOLLARS ($14,278.66), RECEIPT OF WHICH IS ACKNOWLEDGED HEREBY BY LANDLORD, WHICH DEPOSIT IS TO BE HELD BY LANDLORD, WITHOUT LIABILITY FOR INTEREST, AS A SECURITY AND DAMAGE DEPOSIT FOR THE FAITHFUL PAYMENT AND PERFORMANCE BY TENANT OF ALL OF ITS OBLIGATIONS HEREUNDER, DURING THE TERM HEREOF AND ANY EXTENSION HEREOF.  LANDLORD MAY CO-MINGLE SUCH DEPOSIT WITH LANDLORD’S OWN FUNDS AND TO USE SUCH SECURITY DEPOSIT FOR SUCH PURPOSE AS LANDLORD MAY DETERMINE.  IN THE EVENT OF THE FAILURE OF TENANT TO KEEP AND PERFORM ANY OF THE TERMS, COVENANTS AND CONDITIONS OF THIS LEASE TO BE KEPT AND PERFORMED BY TENANT DURING THE TERM HEREOF AND ANY EXTENSION HEREOF, AND WITHOUT LIMITING ANY OTHER REMEDY AVAILABLE TO LANDLORD, THEN LANDLORD EITHER WITH OR WITHOUT TERMINATING THIS LEASE, MAY (BUT SHALL NOT BE REQUIRED TO) APPLY SUCH PORTION OF SAID DEPOSIT AS MAY BE NECESSARY TO COMPENSATE OR REPAY LANDLORD FOR ALL LOSSES OR DAMAGES SUSTAINED OR TO BE SUSTAINED BY LANDLORD DUE TO SUCH BREACH ON THE PART OF TENANT, INCLUDING, BUT NOT LIMITED TO OVERDUE AND UNPAID RENT, ANY OTHER SUM PAYABLE BY TENANT TO LANDLORD PURSUANT TO THE PROVISIONS OF THIS LEASE, DAMAGES OR DEFICIENCIES IN ANY RELETTING OF THE DEMISED PREMISES, AND REASONABLE ATTORNEY’S FEES INCURRED BY LANDLORD.  SHOULD THE ENTIRE DEPOSIT OR ANY PORTION THEREOF, BE APPROPRIATED AND APPLIED BY LANDLORD, IN ACCORDANCE WITH THE PROVISIONS OF THIS PARAGRAPH, TENANT UPON WRITTEN DEMAND BY LANDLORD, SHALL REMIT FORTHWITH TO LANDLORD A SUFFICIENT AMOUNT OF CASH TO RESTORE SAID SECURITY DEPOSIT TO THE ORIGINAL SUM DEPOSITED, AND TENANT’S FAILURE TO DO SO WITHIN FIVE (15) DAYS AFTER RECEIPT OF SUCH DEMAND SHALL CONSTITUTE A BREACH OF THIS LEASE.  SAID SECURITY DEPOSIT SHALL BE RETURNED TO TENANT, LESS ANY AMOUNTS RETAINED BY LANDLORD PURSUANT TO THE PROVISIONS OF THIS PARAGRAPH, AT THE END OF THE TERM OF THIS LEASE OR ANY RENEWAL THEREOF, OR UPON THE EARLIER TERMINATION OF THIS LEASE.  TENANT SHALL HAVE NO RIGHT TO ANTICIPATE RETURN OF SAID DEPOSIT BY WITHHOLDING ANY AMOUNT REQUIRED TO BE PAID PURSUANT TO THE PROVISIONS OF THIS LEASE OR OTHERWISE.

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In the event Landlord shall sell the Property, or shall otherwise dispose of its interest in this Lease, Landlord shall assign said security deposit or any balance thereof to Landlord’s assignee, whereupon Landlord shall be released from all liability for the return or repayment of such security deposit, and Tenant shall look solely to the said assignee for the return and repayment of said security deposit.  Said security deposit shall not be assigned or encumbered by Tenant without the written consent of Landlord, and any assignment or encumbrance without such consent shall not bind Landlord.  In the event of any rightful and permitted assignment of this Lease by Tenant, said security deposit shall be deemed to be held by Landlord as a deposit made by the assignee, and Landlord shall have no further liability with respect to the return of said security deposit to the Tenant

USE

ARTICLE XI.LANDLORD ACKNOWLEDGES THE BUILDING IS ZONED BP2 AND THAT TENANT’S USE AS DESCRIBED HEREIN IS IN COMPLIANCE WITH THIS ZONING DESIGNATION.  THE DEMISED PREMISES SHALL BE USED AND OCCUPIED BY TENANT SOLELY FOR THE PURPOSES OF CONTRACT MANUFACTURING UTILIZING HEAVY EQUIPMENT INCLUDING BUT NOT LIMITED TO MILLS, LATHES, CAM AND SWISS SCREW MACHINES AND SECONDARILY, OPERATIONS SUCH AS HEAT TREATING, CRIMPING, STAMPING AND ASSEMBLY, SO LONG AS SUCH USE IS IN COMPLIANCE WITH ALL APPLICABLE LAWS, ORDINANCES AND GOVERNMENTAL REGULATIONS AFFECTING THE BUILDING AND DEMISED PREMISES.  LANDLORD ACKNOWLEDGES THAT SO LONG AS TENANT IS USING THE DEMISED PREMISES AS PROVIDED HEREIN: (I) LANDLORD SHALL NOT BE REQUIRED TO MAKE ANY SPECIAL ALTERATIONS NOT CONTEMPLATED HEREIN OR IN THE PLANS AND SPECIFICATIONS, (II) INSURANCE PREMIUMS WILL NOT BE INCREASED, (III) NO STOCK OR GOODS OR ACT OF TENANT WILL IN ANY WAY IMPAIR OR INVALIDATE THE OBLIGATION OF THE LANDLORD’S INSURER UNDER ANY POLICY OF INSURANCE REQUIRED BY THIS LEASE, AND (IV) TENANT’S USE WILL NOT CREATE WASTE OR A NUISANCE, OR UNREASONABLY DISTURB OTHER TENANTS IN THE BUILDING.  THE DEMISED PREMISES SHALL NOT BE USED IN SUCH MANNER THAT, IN ACCORDANCE WITH ANY REQUIREMENT OF LAW OR OF ANY PUBLIC AUTHORITY, LANDLORD SHALL BE OBLIGATED, AS A RESULT OF THE PURPOSE OR MANNER OF SAID USE, TO MAKE ANY ADDITION OR ALTERATION TO OR IN THE BUILDING.  THE DEMISED PREMISES SHALL NOT BE USED IN ANY MANNER WHICH WILL INCREASE THE RATES REQUIRED TO BE PAID FOR PUBLIC LIABILITY OR FOR FIRE AND EXTENDED COVERAGE INSURANCE COVERING THE DEMISED PREMISES TENANT SHALL OCCUPY THE DEMISED PREMISES, CONDUCT ITS BUSINESS AND CONTROL ITS AGENTS, EMPLOYEES, INVITEES AND VISITORS IN SUCH A WAY AS IS LAWFUL AND REPUTABLE, AND WILL NOT PERMIT OR CREATE ANY NUISANCE, NOISE, ODOR, OR OTHERWISE INTERFERE WITH, ANNOY OR DISTURB ANY OTHER TENANT IN THE BUILDING IN ITS NORMAL BUSINESS OPERATIONS OR LANDLORD IN ITS MANAGEMENT OF THE BUILDING.  TENANT’S USE OF THE DEMISED PREMISES SHALL CONFORM TO ALL THE LANDLORD’S RULES AND REGULATIONS RELATING TO THE USE OF THE DEMISED PREMISES.  OUTSIDE STORAGE ON THE DEMISED PREMISES OF ANY TYPE OF EQUIPMENT, PROPERTY OR MATERIALS OWNED OR USED BY TENANT OR ITS CUSTOMERS OR SUPPLIERS SHALL NOT BE PERMITTED.

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ACCESS TO DEMISED PREMISES

ARTICLE XII.THE TENANT AGREES TO PERMIT THE LANDLORD AND THE AUTHORIZED REPRESENTATIVES OF THE LANDLORD TO ENTER THE DEMISED PREMISES UPON 24 HOURS PRIOR NOTICE (EXCEPT

in the case of an emergency) at all times during usual business hours for the purpose of inspecting the same and making any necessary repairs to the Demised Premises and performing any work therein that may be necessary to comply with any laws, ordinances, rules, regulations or requirements of any public authority or of the Board of Fire Underwriters or any similar body or that the Landlord may deem necessary to prevent waste or deterioration in connection with the Demised Premises.  Nothing herein shall imply any duty upon the part of the Landlord to do any such work which, under any provision of this Lease, the Tenant may be required to perform and the performance thereof by the Landlord shall not constitute a waiver of the Tenant’s default in failing to perform the same.  The Landlord may, during the progress of any work in the Demised Premises, keep and store upon the Demised Premises all necessary materials, tools and equipment.  The Landlord shall use its best efforts to not disturb Tenant’s business.  The Landlord shall not in any event be liable for inconvenience, annoyance, or disturbance by reason of making repairs or the performance of any work in the Demised Premises, or on account of bringing materials, supplies and equipment into or through the Demised Premises during the course thereof and the obligations of the Tenant under this Lease shall not thereby be affected in any manner whatsoever.

Landlord reserves the right to enter upon the Demised Premises at any time in the event of an emergency and at reasonable hours to exhibit the Demised Premises to prospective purchasers or others during the last 180 days of the term of this Lease, all without hindrance or molestation by Tenant.

EMINENT DOMAIN

ARTICLE XIII.IN THE EVENT OF ANY EMINENT DOMAIN OR CONDEMNATION PROCEEDING OR PRIVATE SALE IN LIEU THEREOF IN RESPECT TO THE BUILDING DURING THE TERM HEREOF, THE FOLLOWING PROVISIONS SHALL APPLY:

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Section 13.1         If the whole of the Building shall be acquired or condemned by eminent domain for any public or quasi-public use or purpose, then the term of this Lease shall cease and terminate as of the date possession shall be taken in such proceeding and all rentals shall be paid up to that date.

Section 13.2         If any part constituting less than the whole of the Building shall be acquired or condemned as aforesaid, and in the event that such partial taking or condemnation shall materially affect the Demised Premises so as to render the Demised Premises unsuitable for the business of the Tenant, then, the term of this Lease shall cease and terminate as of the date possession shall be taken by the condemning authority and rent shall be paid to the date of such termination.

In the event of a partial taking or condemnation of the Building which shall not materially affect the Demised Premises so as to render the Demised Premises unsuitable for the business of the Tenant, this Lease shall continue in full force and effect but with a proportionate reduction of the Base Rent and Additional Rent based on the portion of the Building taken.  Landlord reserves the right, at its option, to restore the Building and the Demised Premises to substantially the same condition as they were prior to such condemnation.  In such event, Landlord shall give written notice to Tenant, within thirty (30) days following the date

possession shall be taken by the condemning authority, of Landlord’s intention to restore.  Upon Landlord’s notice of election to restore, Landlord shall commence restoration and shall restore the Building and the Demised Premises with reasonable promptness, subject to delays beyond Landlord’s control and delays in the receipt of condemnation or sale proceeds by Landlord; and Tenant shall have no right to terminate this Lease except as herein provided.  Upon completion of such restoration, the rent shall be re-adjusted based upon the portion, if any, of the Building restored.

Section 13.3         In the event of any condemnation or taking as aforesaid, whether whole or partial, the Tenant shall not be entitled to any part of the award paid for such condemnation and Landlord is to receive the full amount of such award, the Tenant hereby expressly waiving any right to claim to any part thereof.

Section 13.4        Although all damages in the event of any condemnation shall belong to the Landlord whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the Demised Premises, Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant’s own right on account of any and all damage to Tenant’s business by reason of the condemnation and for or on account of any cost or loss to which Tenant might be put in removing Tenant’s merchandise, furniture, fixtures, leasehold improvements and equipment.  However, Tenant shall have no claim against Landlord and shall make no claim with the condemning authority for the loss of its leasehold estate, any unexpired term or loss of any possible renewal or extension of said lease or loss of any possible value of said Lease.

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Section 13.5         Notwithstanding the foregoing, if a partial taking or condemnation of the Building materially affects the Demised Premises and such taking or condemnation occurs in the last two years of this Lease, then Tenant may terminate the Lease effective as of the taking or condemnation.

DAMAGE OR DESTRUCTION

ARTICLE XIV.IN THE EVENT OF ANY DAMAGE OR DESTRUCTION TO THE DEMISED PREMISES BY FIRE OR OTHER CAUSE DURING THE TERM HEREOF, THE FOLLOWING PROVISIONS SHALL APPLY:

Section 14.1         If the Building is damaged by fire or any other cause to such extent that the cost of restoration, as reasonably estimated by Landlord, will equal or exceed thirty percent (30%) of the replacement value of the Building (exclusive of foundations) just prior to the occurrence of the damage, then Landlord may, no later than the sixtieth (60th) day following the damage, give Tenant written notice of Landlord’s election to terminate this Lease; provided the leases of other similarly situated tenants are also terminated.

Section 14.2         If the cost of restoration as estimated by Landlord will equal or exceed thirty percent (30%) of said replacement value of the Building and if the Demised Premises are not suitable as a result of said damage for the

purposes for which they are demised hereunder, in the reasonable opinion of Landlord and Tenant, then Tenant may, no later than the sixtieth (60th) day following the damage, give Landlord a written notice of election to terminate this Lease.

Section 14.3         If the cost of restoration as estimated by Landlord shall amount to less than thirty percent (30%) of said replacement value of the Building, or if, despite the cost, Landlord (or Tenant, if applicable) does not elect to terminate this Lease, Landlord shall restore the Building and the Demised Premises with reasonable promptness (not to exceed 240 days), subject to delays beyond Landlord’s control and delays in the receipt of insurance proceeds by Landlord.

Section 14.2         In the event either of the elections to terminate is properly exercised, this Lease shall be deemed to terminate on the date of the receipt of the notice of election and all rents shall be paid up to that date.  Tenant shall have no claim against Landlord for the value of any unexpired term of this Lease.

Section 14.5         In any case where damage to the Building shall materially affect the Demised Premises so as to render them unsuitable in whole or in part for the purposes for which they are demised hereunder, then, a portion of the rent based upon the extent to which the Demised Premises are rendered unsuitable shall be abated until repaired or restored.

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CASUALTY INSURANCE

ARTICLE XV.Section 15.1   LANDLORD SHALL AT ALL TIMES DURING THE TERM OF THIS LEASE, AT ITS EXPENSE (EXCEPT THAT SUCH EXPENSE SHALL BE INCLUDED IN THE CALCULATION OF ADDITIONAL RENT UNDER SECTION 3 HEREOF), MAINTAIN A POLICY OR POLICIES OF INSURANCE ISSUED BY AN INSURANCE COMPANY LICENSED TO DO BUSINESS IN THE STATE OF KANSAS INSURING THE BUILDING FOR THE FULL REPLACEMENT VALUE, PROVIDED THAT LANDLORD SHALL NOT BE OBLIGATED TO INSURE ANY FURNITURE, EQUIPMENT, MACHINERY, GOODS OR SUPPLIES WHICH TENANT MAY BRING UPON THE DEMISED PREMISES.  LANDLORD MAY AT ITS OPTION ALSO ELECT TO CARRY RENT LOSS INSURANCE OR OTHER TYPES OF INSURANCE COMMONLY CARRIED BY OWNERS OF SIMILAR PROPERTIES IN THE KANSAS CITY METROPOLITAN AREA, AND THE TENANT’S PRO RATA SHARE OF THE COST THEREOF SHALL CONSTITUTE ADDITIONAL RENT.

Section 15.2         Tenant shall not carry any stock of goods or do anything in or about the Demised Premises which will in any way impair or invalidate the obligation of the insurer under any policy of insurance required by this Lease.

Section 15.3         Landlord hereby waives and releases all claims, liability and causes of action against Tenant and its agents, servants and employees for loss or damage to, or destruction of, the Demised Premises or any portion thereof, including the buildings and other improvements situated thereon, resulting from fire, explosion and other perils, to the extent such loss or damage is covered by standard extended coverage insurance, whether caused by the negligence of any of said persons or otherwise.  Likewise, Tenant hereby waives and releases all claims, liabilities and causes of action against Landlord and its agents, servants, and employees for loss or damage to, or destruction of, any of the improvements, fixtures, equipment, supplies, merchandise and other property, whether that of Tenant or of others in, upon or about the Demised Premises resulting from fire, explosion or the other perils included in standard extended coverage insurance, whether caused by the negligence of any of said persons or otherwise.  The waivers by Tenant and Landlord contained in this Section 15.c shall remain in force whether or not the Tenant’s or Landlord’s insurer shall consent thereto.

Section 15.4         In the event that the use of the Demised Premises by Tenant increases the premium rate for insurance carried by Landlord on the improvements of which the Demised Premises are a part, Tenant shall pay Landlord, upon demand, the amount of such premium increase.  If Tenant installs any electrical equipment that overloads the power lines to the Building or its wiring, Tenant shall, at its own expense, make whatever changes are necessary to comply with the requirements of the insurance underwriter, insurance rating bureau and governmental authorities having jurisdiction.

Section 15.5         Tenant shall during the term of this Lease, obtain and maintain in full force and effect at its sole cost and expense a policy or policies of insurance insuring all of its personal property located within the Demised Premises from time to time, as well as all tenant improvements made thereto, against loss or damage by fire, explosion or other such hazards and contingencies for the full replacement value thereof.  Such policy or policies shall provide that thirty (30) days written notice must be given to Landlord prior to cancellation or modification thereof.  Tenant shall furnish evidence satisfactory to Landlord at the time this Lease is executed and thereafter from time to time upon request by Landlord that such coverage is in full force and effect..

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PUBLIC LIABILITY INSURANCE

ARTICLE XVI.TENANT SHALL DURING THE TERM HEREOF, KEEP IN FULL FORCE AND EFFECT AT ITS EXPENSE A POLICY OR POLICIES OF PUBLIC LIABILITY INSURANCE WITH RESPECT TO THE DEMISED PREMISES AND THE BUSINESS OF TENANT IN AMOUNTS NOTE LESS THAN $1,000,000 PER OCCURRENCE, $2,000,000 AGGREGATE USING CURRENT ISO GENERAL LIABILITY FORMS OR EQUIVALENT NAMING THE LANDLORD AS AN ADDITIONAL INSURED.  SUCH POLICY OR POLICIES SHALL PROVIDE THAT THIRTY (30) DAYS WRITTEN NOTICE MUST BE GIVEN TO LANDLORD PRIOR TO CANCELLATION OR MODIFICATION THEREOF.  TENANT SHALL FURNISH EVIDENCE SATISFACTORY TO LANDLORD AT THE TIME THIS LEASE IS EXECUTED AND THEREAFTER UPON REQUEST BY LANDLORD THAT SUCH COVERAGE IS IN FULL FORCE AND EFFECT.

DEFAULT OF TENANT

ARTICLE XVII.Section 17.1   IN THE EVENT OF ANY FAILURE OF TENANT TO PAY ANY BASE RENT, ADDITIONAL RENT OR OTHER AMOUNTS DUE HEREUNDER WITHIN TEN (10) DAYS AFTER LANDLORD HAS PROVIDED WRITTEN NOTICE TO TENANT OF SUCH FAILURE (EXCEPT THAT IF TENANT IS IN MONETARY DEFAULT ACCORDING TO THE TERMS OF THIS LEASE WITHIN THE LAST 12 MONTHS, THEN LANDLORD SHALL NOT BE REQUIRED TO

provide notice to Tenant for a monetary default), or any failure to perform any other of the terms, conditions or covenants of this Lease to be observed or performed by Tenant with all reasonable diligence, but in any event for more than thirty (30) after written notice of such failure shall have been given to Tenant, or if Tenant or an agent of Tenant shall falsify any report required to be furnished to Landlord pursuant to the terms of this Lease, or if Tenant or any guarantor of this Lease shall become bankrupt or insolvent, or file any debtor proceedings, or any person shall file against Tenant or any guarantor of this Lease in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenant’s or any such guarantor’s property, or if Tenant or any such guarantor makes an assignment for the benefit of creditors, or petitions for or enters into any similar arrangement, or if any guarantor of this Lease shall be in default in the performance of any covenant, duty or obligation under any guaranty or other agreement entered into with or in favor of Landlord and such default shall remain uncured for a period of thirty (30) days or more after notice of such default (except in the case of a filing of an involuntary petition against Tenant in bankruptcy, in which case the notice shall be sixty (60) days), or suffer this Lease to be taken under any writ of execution (any one or more of the foregoing shall constitute an “Event of Default”), then in any such event Tenant shall be in default hereunder, and Landlord, in addition to any other rights and remedies it may have, shall have with prior notice the immediate right of re-entry and may remove all persons and property from the Demised Premises and such property may be removed and stored in a public warehouse or elsewhere at the sole cost of, and for the account of Tenant, all without service of notice or resort to legal process and without being guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby.

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Section 17.2         Upon the occurrence of an Event of Default, Landlord shall have the right (in addition to any other rights or remedies) to either terminate this Lease or, from time to time, without terminating this Lease, to terminate Tenant’s right of possession of the Demised Premises.  If Landlord terminates Tenant’s right of possession only, Landlord may, but shall in no event be obligated to, make such alterations and repairs as may be necessary in order to relet the Demised Premises, and relet the Demised Premises or any part thereof upon such term or terms (which may be for a term extending beyond the term of this lease) and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable.  Upon any such reletting all rentals received by the Landlord from such reletting shall be applied first to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such reletting, including brokerage fees and attorney’s fees and costs of such alterations and repairs; third, to the payment of the rent due and unpaid payment of the present value of future rent as the same may become due and payable hereunder.  If such rentals received from any such reletting during any month are less than that to be paid during that month by Tenant hereunder, Tenant, upon demand, shall pay any such deficiency to Landlord.  No such re-entry or taking possession of

the Demised Premises by Landlord shall be construed as an election on its part to terminate this Lease unless a written notice of such intention is given to Tenant.  Notwithstanding any such reletting without termination, Landlord may at any time after such re-entry and reletting elect to terminate this Lease, and in addition to any other remedies it may have, it may recover from any Tenant all damages it may incur by reason of such breach, including the cost of recovering the Demised Premises, reasonable attorney’s fees, and including the worth at the time of such termination of the excess, if any, of the amount of rent and charges equivalent to rent reserved in this Lease for the remainder of the stated term over the then reasonable rental value of the Demised Premises for the remainder of the stated term, all of which amounts shall be immediately due and payable from Tenant to Landlord

Section 17.3         Landlord may, at its option, upon twenty (20) days prior written notice to Tenant, in addition to any other rights or remedies available to it in this Lease or otherwise by law, statute or equity, spend such money as is necessary to cure any default of Tenant herein and the amount so spent, and costs incurred, including reasonable attorney’s fees in curing such default, shall be paid by Tenant, as additional rent, upon demand.

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Section 17.4         In the event suit shall be brought for recovery of possession of the Demised Premises, for the recovery of rent or any other amount due under the provisions of this Lease, or in connection with any Event of Default, and an Event of Default shall be established, Tenant shall pay to Landlord all expenses incurred in connection therewith, including reasonable attorney’s fees, together with interest on all such expenses at the Default Rate from the date of such breach.

Section 17.5         Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Landlord obtaining possession of the Demised Premises, by reason of any Event of Default hereunder, or otherwise.  Tenant also waives any demand for possession of the Demised Premises, and any demand for payment of rent and any notice of intent to re-enter the Demised Premises, or of intent to terminate this Lease, other than the notices above provided in this Article, and waives any and every other notice or demand prescribed by any applicable statutes or laws.

Section 17.6         No remedy herein or elsewhere in this Lease or otherwise by law, statute or equity, conferred upon or reserved to Landlord shall be exclusive of any other remedy, but shall be cumulative, and may be exercised from time to time and as often as the occasion may arise

HOLD HARMLESS

ARTICLE XVIII.TENANT SHALL HOLD HARMLESS LANDLORD, ITS SHAREHOLDERS, DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES, FROM ANY LIABILITY FOR DAMAGES TO ANY THIRD PERSON OR PROPERTY IN OR UPON THE DEMISED PREMISES AND THE DEMISED PREMISES, AND ALL PERSONS IN THE BUILDING AT ITS OR THEIR INVITATION OR SUFFERANCE, AND FROM ALL DAMAGES RESULTING FROM TENANT’S FAILURE TO PERFORM THE COVENANTS OR OTHER PROVISIONS OF THIS LEASE.  LANDLORD SHALL HOLD HARMLESS TENANT, ITS

shareholders, directors, officers, agents and employees, from any liability for damages to any third person or property in or upon the Demised Premises, the Demised Premises and the Building, and all persons in the Building at its or their invitation or sufferance, and from all damages resulting from Landlord’s failure to perform the covenants or other provisions of this Lease.  Landlord and Tenant each waive and release the other from all claims for damage to person or property sustained by the other or by the others employees, agents, or servants resulting from said Building or any part of it, or any equipment or appurtenance becoming out of repair, or resulting from any accident in or about the Demised Premises or the Building, or resulting directly or indirectly from any act or neglect of any other tenant or occupant of the Building, or of any other person; provided, Tenant and Landlord agree to first make an insurance claim to the extent coverage is available.  All property kept, maintained or stored on the Demised Premises shall be so kept, maintained or stored at the sole risk of Tenant, Tenant agrees to pay all sums of money in respect of any labor, service, materials, supplies or equipment furnished or alleged to have been furnished to Tenant in or about the Demised Premises, and not furnished on order of Landlord, which may be secured by any mechanic’s materialmen’s or other lien provided that Tenant may contest such lien, upon providing Landlord adequate security against such lien.  If any such lien is reduced to final judgment and if such judgment or process thereon is not stayed, or if stayed and said stay expires, then Tenant shall immediately pay and discharge said judgment.

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NON-LIABILITY

ARTICLE XIX.EXCEPT AS PROVIDED ABOVE IN SECTION 18, LANDLORD SHALL NOT BE LIABLE FOR DAMAGE TO ANY PROPERTY OF TENANT OR OF OTHERS LOCATED ON THE DEMISED PREMISES, NOR FOR THE LOSS OF OR DAMAGE TO ANY PROPERTY OF TENANT OR OF OTHERS BY THEFT OR OTHERWISE.  ALSO, EXCEPT AS PROVIDED IN SECTION 18, WITHOUT LIMITING THE FOREGOING, LANDLORD SHALL NOT BE LIABLE FOR ANY INJURY OR DAMAGE TO PERSONS OR PROPERTY RESULTING FROM FIRE, EXPLOSION, ANY INJURY OR DAMAGE TO PERSONS OR PROPERTY RESULTING FROM FIRE, EXPLOSION, FALLING PLASTER, STEAM, GAS, ELECTRICITY, WATER, RAIN OR SNOW OR LEAKS FROM ANY PART OF THE DEMISED PREMISES OR FROM THE PIPES, APPLIANCES, OR PLUMBING WORKS OR FROM THE ROOF, STREET OR SUBSURFACE OR FROM ANY OTHER PLACE OR BY DAMPNESS OR BY ANY SUCH DAMAGE CAUSED BY OTHER TENANTS OR PERSONS IN THE DEMISED PREMISES, OCCUPANTS OF ADJACENT PROPERTY, OF THE BUILDINGS, OR THE PUBLIC OR CAUSED BY OPERATIONS IN CONSTRUCTION OF ANY PRIVATE, PUBLIC OR QUASI-PUBLIC WORK.  ALL PROPERTY OF TENANT KEPT OR STORED ON THE DEMISED PREMISES SHALL BE SO KEPT OR STORED AT THE RISK OF TENANT ONLY.

SUBORDINATION

ARTICLE XX.Section 20.1    THIS LEASE SHALL BE SUBORDINATED TO ANY MORTGAGES THAT MAY NOW EXIST OR THAT MAY HEREAFTER BE PLACED UPON THE DEMISED PREMISES AND TO ANY AND ALL ADVANCES MADE THEREUNDER, AND TO ALL INTEREST AND OTHER CHARGES RELATING TO THE INDEBTEDNESS EVIDENCED BY SUCH MORTGAGES, AND TO ALL RENEWALS, REPLACEMENTS, AND EXTENSIONS THEREOF.  IN THE EVENT OF EXECUTION BY LANDLORD AFTER THE DATE OF THIS LEASE OF ANY SUCH MORTGAGE, RENEWAL, REPLACEMENT OR EXTENSION, TENANT AGREES TO EXECUTE A SUBORDINATION AGREEMENT AND/OR ANY OTHER DOCUMENTS RELATING TO THIS

Section 20 with the holder thereof, which agreement shall provide among other things, that:

Section 20.2         Such holder shall not disturb the possession and other rights of Tenant under this Lease so long as Tenant is not in default hereunder,

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Section 20.3         In the event of acquisition of title to the Demised Premises by such holder, such holder shall accept the Tenant as Tenant of the Demised Premises under the terms and conditions of this Lease and shall perform all the obligations of Landlord hereunder, and

Section 20.4         The Tenant shall recognize such holder as Landlord hereunder.

Section 20.5         Tenant shall, upon receipt of a request from Landlord therefor, execute and deliver to Landlord or to any proposed holder of a mortgage or trust deed or to any proposed purchaser of the Demised Premises, a certificate, in recordable form, certifying that this Lease is in full force and effect, and that there are no offsets against rent nor defenses to Tenant’s performance under this Lease, or setting forth any such offsets or defenses claimed by Tenant as the case may be.  Tenant shall execute and deliver any such subordination agreement or other such documents within ten (10) days of written request therefore.  The failure of Tenant to do so within such time frame shall constitute an immediate default hereunder without the need for Landlord to provide any notice and/or opportunity to cure as set forth in Section 17.a. hereof.  Tenant hereby irrevocably appoints Landlord its attorney in fact to execute any such subordination agreement or other such document in the name of Tenant upon the failure of Tenant to perform its obligations under this Section 20 as required hereunder.

ASSIGNMENT OR SUBLETTING

ARTICLE XXI.TENANT AGREES TO USE AND OCCUPY THE DEMISED PREMISES THROUGHOUT THE ENTIRE TERM HEREOF FOR THE PURPOSE OR PURPOSES HEREIN SPECIFIED AND FOR NO OTHER PURPOSES, IN THE MANNER AND TO SUBSTANTIALLY THE EXTENT NOW INTENDED, AND NOT TO TRANSFER OR ASSIGN THIS LEASE OR SUBLET SAID DEMISED PREMISES, OR ANY PART THEREOF, WHETHER BY VOLUNTARY ACT, OPERATION OF LAW, OR OTHERWISE, WITHOUT OBTAINING THE PRIOR WRITTEN CONSENT OF LANDLORD IN EACH INSTANCE, SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD OR DELAYED.  TENANT SHALL SEEK SUCH CONSENT OF LANDLORD BY A WRITTEN REQUEST THEREFOR, SETTING FORTH SUCH INFORMATION AS LANDLORD MAY DEEM NECESSARY.  CONSENT BY LANDLORD TO ANY ASSIGNMENT OF THIS LEASE OR TO ANY SUBLETTING OF THE DEMISED PREMISES SHALL BE AT LANDLORD’S SOLE DISCRETION AND SHALL NOT BE A WAIVER OF LANDLORD’S RIGHTS UNDER THIS ARTICLE AS TO ANY SUBSEQUENT ASSIGNMENT OR SUBLETTING.  LANDLORD’S RIGHTS TO ASSIGN THIS LEASE ARE AND SHALL REMAIN UNQUALIFIED.  EXCEPT AS SET FORTH BELOW, NO SUCH ASSIGNMENT OR SUBLEASING SHALL RELIEVE THE TENANT FROM ANY OF TENANT’S OBLIGATIONS IN THIS LEASE CONTAINED, NOR SHALL ANY ASSIGNMENT OR SUBLEASE OR OTHER TRANSFER OF THIS LEASE BE EFFECTIVE UNLESS THE ASSIGNEE, SUBTENANT OR TRANSFEREE SHALL AT THE TIME OF SUCH ASSIGNMENT, SUBLEASE OR TRANSFER, ASSUME IN WRITING FOR THE BENEFIT OF LANDLORD, ITS SUCCESSORS AND ASSIGNS, ALL OF THE TERMS, COVENANTS AND CONDITIONS OF THIS LEASE THEREAFTER TO BE PERFORMED BY TENANT AND SHALL AGREE IN WRITING TO BE BOUND THEREBY.

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Notwithstanding anything contained in this Lease to the contrary, Tenant may without the consent of Landlord, at any time, assign, sublet or otherwise transfer this Lease to any parent, subsidiary or affiliate corporation or entity or any corporation or entity resulting from the consolidation or merger of Tenant into or with any other entity, or to any person, firm, entity or corporation acquiring substantially all of Tenant’s assets.  (Landlord’s consent shall not be required for any merger or consolidation that does not involve an assignment or sublet).  As used herein, the expression “affiliate corporation or entity” means a person or business entity, corporate or otherwise, that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with Tenant.  The word “control” means the right and power, direct or indirect, to direct or cause the direction of the management and policies of a person or business entity, corporate or otherwise, through the ownership of voting securities, by contract or otherwise

Notwithstanding the foregoing, to the extent Tenant assigns the Lease to a entity or person that is not an affiliate of Tenant, and Landlord consents to such assignment, Tenant shall be released from Tenant’s obligations under this Lease effective as of the assignment consented to by Landlord, provided the assignee has a net worth or credit position equal to or better than Tenant.

ATTORNMENT

ARTICLE XXII.IN THE EVENT OF A SALE OR ASSIGNMENT OF LANDLORD’S INTEREST IN THE DEMISED PREMISES OR IN THE BUILDING IN WHICH THE DEMISED PREMISES ARE LOCATED, OR THIS LEASE, OR IF THE DEMISED PREMISES COME INTO CUSTODY OR POSSESSION OF A MORTGAGEE OR ANY OTHER PARTY WHETHER BECAUSE OF A MORTGAGE FORECLOSURE, OR OTHERWISE, TENANT SHALL ATTORN TO SUCH ASSIGNEE OR OTHER PARTY AND RECOGNIZE SUCH PARTY AS LANDLORD HEREUNDER; PROVIDED, HOWEVER, TENANT’S PEACEABLE POSSESSION WILL NOT BE DISTURBED SO LONG AS TENANT FAITHFULLY PERFORMS ITS OBLIGATIONS UNDER THIS LEASE.  TENANT SHALL EXECUTE, ON DEMAND, ANY ATTORNMENT AGREEMENT REQUIRED BY ANY SUCH PARTY TO BE EXECUTED, CONTAINING SUCH PROVISIONS AS SUCH PARTY MAY REQUIRE.

NOVATION IN THE EVENT OF SALE

ARTICLE XXIII.Section 23.1   IN THE EVENT OF THE SALE OF THE BUILDING, LANDLORD SHALL BE AND HEREBY IS RELIEVED OF ALL OF THE COVENANTS AND OBLIGATIONS CREATED HEREBY ACCRUING FROM AND AFTER THE DATE OF SALE, AND SUCH SALE SHALL RESULT AUTOMATICALLY IN THE PURCHASER ASSUMING AND AGREEING TO CARRY OUT ALL THE COVENANTS AND OBLIGATIONS OF LANDLORD HEREIN..

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Section 23.2        The Tenant agrees at any time and from time to time upon not less than ten (10) days prior written request by the Landlord to execute, acknowledge and deliver to the Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect (as modified and stating the modifications, if any) and the dates to which the base rent and other charges have been paid in advance, if any, it being intended that any such statement delivered pursuant to this paragraph may be relied upon by any prospective purchaser of the fee or mortgagee or assignee of any mortgage upon the fee of the Demised Premises.

SUCCESSORS AND ASSIGNS

ARTICLE XXIV.THE TERMS, COVENANTS, AND CONDITIONS HEREOF SHALL BE BINDING UPON AND INURE TO THE SUCCESSORS AND PERMITTED ASSIGNS OF THE PARTIES HERETO.

REMOVAL OF FIXTURES

ARTICLE XXV.NOTWITHSTANDING ANYTHING CONTAINED IN ARTICLE 8, 29 OR ELSEWHERE IN THIS LEASE, IF LANDLORD REQUESTS THEN TENANT WILL PROMPTLY REMOVE AT THE SOLE COST AND EXPENSE OF TENANT ALL TRADE FIXTURES, EQUIPMENT AND FURNITURE OF TENANT, AT THE TIME TENANT VACATES THE DEMISED PREMISES.,

QUIET ENJOYMENT

ARTICLE XXVI.LANDLORD WARRANTS THAT IT HAS FULL RIGHT TO EXECUTE AND TO PERFORM THIS LEASE AND TO GRANT THE ESTATE DEMISED, AND THAT TENANT, UPON PAYMENT OF THE RENTS AND OTHER AMOUNTS DUE AND THE PERFORMANCE OF ALL THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS ON TENANT’S PART TO BE OBSERVED AND PERFORMED UNDER THIS LEASE, MAY PEACEABLY, AND QUIETLY ENJOY THE DEMISED PREMISES FOR THE BUSINESS USES PERMITTED HEREUNDER, SUBJECT, NEVERTHELESS, TO THE TERMS AND CONDITIONS OF THIS LEASE.

RECORDING

ARTICLE XXVII.TENANT SHALL NOT RECORD THIS LEASE OR ANY MEMORANDUM HEREOF WITHOUT THE WRITTEN CONSENT OF LANDLORD.  HOWEVER, UPON THE REQUEST OF EITHER PARTY HERETO, THE OTHER PARTY SHALL JOIN IN THE EXECUTION OF A MEMORANDUM LEASE FOR THE PURPOSES OF RECORDATION.  SAID MEMORANDUM LEASE SHALL DESCRIBE THE PARTIES, THE DEMISED PREMISES, AND THE TERM OF THE LEASE AND SHALL INCORPORATE THIS LEASE BY REFERENCE, BUT SHALL NOT SET FORTH THE AMOUNT OF THE BASE RENT, ADDITIONAL RENT OR OTHER AMOUNTS DUE HEREUNDER.  THIS ARTICLE 27 SHALL NOT BE CONSTRUED TO LIMIT LANDLORD’S RIGHT TO FILE THIS LEASE UNDER ARTICLE 22 OF THIS LEASE.

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OVERDUE PAYMENTS

ARTICLE XXVIII.ALL MONIES DUE UNDER THIS LEASE FROM TENANT TO LANDLORD SHALL BE DUE ON DEMAND, UNLESS OTHERWISE SPECIFIED AND IF NOT PAID WHEN DUE, SHALL RESULT IN THE IMPOSITION OF A SERVICE CHARGE FOR SUCH LATE PAYMENT IN THE AMOUNT OF TWO PERCENT (2%) OF THE AMOUNT DUE.

SURRENDER

ARTICLE XXIX.ON THE EXPIRATION DATE OR UPON THE TERMINATION HEREOF ON A DAY OTHER THAN THE EXPIRATION DATE, TENANT SHALL PEACEABLY SURRENDER THE DEMISED PREMISES BROOM-CLEAN IN GOOD ORDER, CONDITION AND REPAIR, REASONABLE WEAR AND TEAR AND DAMAGE DUE TO CASUALTY EXCEPTED.  ON OR BEFORE THE EXPIRATION DATE OR UPON

termination of this Lease on a day other than the Expiration Date, Tenant shall, at its expense, remove all trade fixtures, personal property, equipment and signs, together with any fixtures, alterations or improvements Tenant desires to remove, from the Demised Premises and any property not removed shall be deemed to have been abandoned.  Any damage caused in the removal of such items shall be repaired by Tenant and at its expense.  All alterations, additions, improvements and fixtures (other than trade fixtures) which shall have been made or installed by Landlord or Tenant upon the Demised Premises and all floor covering so installed, at Tenant’s option, shall remain upon and be surrendered with the Demised Premises as a part thereof, without disturbance, molestation or injury, and without charge, at the expiration of termination of this Lease, except any such items identified under Section 25 hereof.  If the Demised Premises are not surrendered on the Expiration Date or the date of termination, Tenant shall indemnify Landlord against loss or liability arising out of or relating to any claims resulting from such failure, including without limitation, any claims made by any succeeding Tenant founded on such delay.  Tenant shall promptly surrender all keys for the Demised Premises to Landlord at the place then fixed for payment of rent and shall inform Landlord of combinations of any locks and safes on the Demised Premises.

HOLDING OVER

ARTICLE XXX.IN THE EVENT OF A HOLDING OVER BY TENANT AFTER EXPIRATION OR TERMINATION OF THIS LEASE WITHOUT THE CONSENT IN WRITING OF LANDLORD, TENANT SHALL BE DEEMED A TENANT AT SUFFERANCE AND SHALL PAY RENT FOR SUCH OCCUPANCY AT THE RATE OF ONE AND ONE-HALF THE LAST-CURRENT AGGREGATE BASE RENT AND ADDITIONAL RENT, PRORATED FOR THE ENTIRE HOLDOVER PERIOD, PLUS ALL ATTORNEY’S FEES AND EXPENSES INCURRED BY LANDLORD IN ENFORCING ITS RIGHTS HEREUNDER, PLUS ANY OTHER DAMAGES OCCASIONED BY SUCH HOLDING OVER.

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INTENTIONALLY DELETED

ARTICLE XXXI.INTENTIONALLY DELETED.

CONSENTS BY LANDLORD

ARTICLE XXXII.WHENEVER PROVISION IS MADE UNDER THIS LEASE FOR TENANT SECURING THE CONSENT OR APPROVAL BY LANDLORD, SUCH CONSENT OR APPROVAL SHALL ONLY BE VALID IF IT IS MADE IN WRITING.

NOTICES

ARTICLE XXXIII.ANY NOTICE REQUIRED OR PERMITTED UNDER THIS LEASE SHALL BE DEEMED SUFFICIENTLY GIVEN OR SECURED IF SENT BY REGISTERED OR CERTIFIED RETURN RECEIPT MAIL TO TENANT AT 800 W. 47TH STREET, #421, KANSAS CITY, MO 64112 AND TO LANDLORD AT THE ADDRESS THEN FIXED FOR THE PAYMENT OF RENT AS PROVIDED IN ARTICLE 4 OF THIS LEASE, AND EITHER PARTY MAY BY LIKE WRITTEN NOTICE AT ANY TIME DESIGNATE A DIFFERENT ADDRESS TO WHICH NOTICES SHALL SUBSEQUENTLY BE SENT.

RULES AND REGULATIONS

ARTICLE XXXIV.TENANT SHALL OBSERVE AND COMPLY WITH SUCH RULES AND REGULATIONS AS LANDLORD MAY FROM TIME TO TIME PRESCRIBE, ON WRITTEN NOTICE TO TENANT, FOR THE SAFETY, CARE, CLEANLINESS AND OPERATION OF THE BUILDING PROVIDED SUCH RULES AND REGULATIONS ARE UNIFORMLY AND NON-DISCRIMINATORILY APPLIED.

INTENT OF PARTIES

ARTICLE XXXV.EXCEPT AS OTHERWISE PROVIDED HEREIN, THE TENANT COVENANTS AND AGREES THAT IF IT SHALL AT ANY TIME FAIL TO PAY ANY COST OR EXPENSE REQUIRED TO BE PAID BY TENANT HEREUNDER, OR FAIL TO TAKE OUT, PAY FOR, MAINTAIN OR DELIVER ANY OF THE INSURANCE POLICIES ABOVE REQUIRED, OR FAIL TO MAKE ANY OTHER PAYMENT OR PERFORM ANY OTHER ACT ON ITS PART TO BE MADE OR PERFORMED AS IN THIS LEASE PROVIDED, THEN THE LANDLORD MAY, BUT SHALL NOT BE OBLIGATED SO TO DO, AND WITHOUT NOTICE TO OR DEMAND UPON THE TENANT AND WITHOUT WAIVING OR RELEASING THE TENANT FROM ANY OBLIGATIONS OF THE TENANT IN THIS LEASE CONTAINED, PAY ANY SUCH COST OR EXPENSE, EFFECT ANY SUCH INSURANCE COVERAGE AND PAY PREMIUMS THEREFOR, AND MAY MAKE ANY OTHER PAYMENT OR PERFORM ANY OTHER ACT ON THE PART OF THE TENANT TO BE MADE AND PERFORMED AS IN THIS LEASE PROVIDED, IN SUCH MANNER AND TO SUCH EXTENT AS THE LANDLORD MAY DEEM DESIRABLE, AND IN EXERCISING ANY SUCH RIGHT, TO ALSO PAY ALL NECESSARY AND INCIDENTAL COSTS AND EXPENSES, EMPLOY COUNSEL AND INCUR AND PAY REASONABLE ATTORNEYS’ FEES.  ALL SUMS SO PAID BY LANDLORD AND ALL NECESSARY AND INCIDENTAL COSTS AND EXPENSES IN CONNECTION WITH THE PERFORMANCE OF ANY SUCH ACT BY THE LANDLORD, TOGETHER WITH INTEREST THEREON AT THE RATE OF TEN PERCENT (10%) PER ANNUM FROM THE DATE OF MAKING OF SUCH EXPENDITURE, BY LANDLORD, SHALL BE DEEMED ADDITIONAL RENT HEREUNDER, AND SHALL BE PAYABLE TO LANDLORD ON DEMAND.  TENANT COVENANTS TO PAY ANY SUCH SUM OR SUMS WITH INTEREST AS AFORESAID AND THE LANDLORD SHALL HAVE THE SAME RIGHTS AND REMEDIES IN THE EVENT OF THE NONPAYMENT THEREOF BY TENANT AS IN THE CASE OF DEFAULT BY TENANT IN THE PAYMENT OF THE BASE RENT PAYABLE UNDER THIS LEASE.

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LANDLORD DEFAULT

ARTICLE XXX VI.Section 36.1   ANY OF THE FOLLOWING OCCURRENCE, CONDITIONS OR ACTS BY LANDLORD SHALL CONSTITUTE A “LANDLORD DEFAULT”:  (A) LANDLORD’S FAILURE TO MAKE ANY PAYMENTS OF MONEY DUE TENANT HEREUNDER WITHIN TEN (10) DAYS AFTER THE RECEIPT OF WRITTEN NOTICE FROM TENANT THAT SAME IS OVERDUE; OR (B) LANDLORD’S FAILURE TO PERFORM ANY NONMONETARY OBLIGATION OF LANDLORD HEREUNDER WITHIN THIRTY (30) DAYS AFTER RECEIPT OF WRITTEN NOTICE FROM TENANT TO LANDLORD SPECIFYING SUCH DEFAULT AND DEMANDING THAT THE SAME BE CURED; PROVIDED THAT, IF SUCH DEFAULT CANNOT WITH DUE DILIGENCE BE WHOLLY CURED WITHIN SUCH THIRTY (30) DAYS, LANDLORD SHALL HAVE SUCH LONGER PERIOD AS MAY BE REASONABLY NECESSARY TO CURE THE DEFAULT, SO LONG AS LANDLORD PROCEEDS PROMPTLY TO COMMENCE THE CURE OF SAME WITHIN SUCH THIRTY (30) DAY PERIOD AND DILIGENTLY PROSECUTES THE CURE TO COMPLETE.

Section 36.2         Upon the occurrence of a Landlord Default, at Tenant’s option, in addition to any other remedies which it may have, and without its actions being deemed a cure of Landlord’s default, Tenant may (i) pay or perform such obligations and offset Tenant’s reasonable and actual cost of performance, plus interest at the Default Rate, against the Base Rent

unless, by written notice to Tenant, Landlord contests whether a Landlord Default has occurred or is continuing, in which case such right of offset shall only be effective if final, non-appealable judgment against Landlord shall have been entered by a court of competent jurisdiction; or (ii) sue for damages.

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GENERAL

ARTICLE XXXVII.Section 37.1     THE LEASE DOES NOT CREATE THE RELATIONSHIP OF PRINCIPAL AGENT OR OF PARTNERSHIP OR OF JOINT VENTURE OR OF ANY ASSOCIATION BETWEEN LANDLORD AND TENANT, THE SOLE RELATIONSHIP BETWEEN THE PARTIES HERETO BEING THAT OF LANDLORD AND TENANT.

Section 37.2         No waiver of any default of Tenant hereunder shall be implied from any omission by Landlord to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated.  One or more waivers by Landlord shall not then be construed as a waiver of a subsequent breach of the same covenant, term or condition.  The consent to or approval by Landlord of any act by Tenant requiring Landlord’s consent or approval shall not waive or render unnecessary Landlord’s consent to or approval of any subsequent similar act by Tenant shall be construed to be both a covenant and a condition.  No action required or permitted to be taken by or on behalf of Landlord under the terms or provisions of this Lease shall be deemed to constitute an eviction or disturbance of Tenant’s possession of the Demised Premises.  All preliminary negotiations are merged into and incorporated in this Lease.  The laws of the State of Kansas shall govern the validity, performance and enforcement of this Lease.

Section 37.3        This Lease and the exhibits, if any, attached hereto and forming a part hereof, constitute the entire agreement between Landlord and Tenant affecting the Demised Premises and there are no other agreements, subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and executed in the same form and manner in which this Lease is executed.

Section 37.4         If any agreement, covenant or condition of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such agreement, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each agreement, covenant or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law..

Section 37.5         The submission of this Lease for examination does not constitute a reservation of or option for the Demised Premises and this Agreement of Lease shall become effective as a Lease only upon execution and delivery thereof by Landlord and Tenant.

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HAZARDOUS MATERIAL

ARTICLE XXXVIII.Section 38.1    THE DEMISED PREMISES HEREBY LEASED SHALL BE USED BY AND/OR AT THE SUFFERANCE OF TENANT ONLY FOR THE PURPOSE SET FORTH IN ARTICLE 11 ABOVE AND FOR NO OTHER PURPOSES.  TENANT SHALL NOT USE OR PERMIT THE USE OF THE DEMISED PREMISES IN ANY MANNER THAT WILL TEND TO CREATE WASTE OR A NUISANCE, OR WILL TEND TO UNREASONABLY DISTURB OTHER TENANTS IN THE BUILDING OR THE DEMISED PREMISES.  TENANT, ITS EMPLOYEES AND ALL PERSON VISITING OR DOING BUSINESS WITH TENANT IN THE DEMISED PREMISES SHALL BE BOUND BY AND SHALL OBSERVE THE REASONABLE RULES AND REGULATIONS MADE BY LANDLORD RELATING TO THE DEMISED PREMISES, THE BUILDING OR THE DEMISED PREMISES OF WHICH NOTICE IN WRITING SHALL BE GIVEN TO THE TENANT, AND ALL SUCH RULES AND REGULATIONS SHALL BE DEEMED TO BE INCORPORATED INTO AND FORM A PART OF THIS LEASE.

Section 38.2        Tenant covenants through the Lease Term, at Tenants sole cost and expense, promptly to comply with all laws and ordinances and the orders, rules and regulations and requirements of all federal, state and municipal governments and appropriate departments, commission, boards, and officers thereof, and the orders, rules and regulations of the Board of Fire Underwriters where the Demised Premises are situated, or any other body now or hereafter as well as extraordinary, and whether or not the same require structural repairs or alterations, which may be applicable to the Demised Premises, or the use or manner of use of the Demised Premises.  Tenant will likewise observe and comply with the requirements of all policies of public liability, fire and all other policies of insurance at any time in force with respect to the building and improvements on the Demised Premises and the equipment thereof provided the Demised Premises are delivered to Tenant in compliance with Environmental Laws.

Section 38.3        In the event any Hazardous Material (hereinafter defined) is brought or caused to be brought into or onto the Demised Premises, the Building, or the Demised Premises by Tenant, its agents, employees, contractors, or invitees, Tenant shall handle any such material in compliance with all applicable federal, state and/or local regulations.  For purposes of this Article, “Hazardous Material” means and includes any hazardous, toxic or dangerous waste, substance or material defined as such in (or for purposes of) the Comprehensive Environmental Response, Compensation, and Liability Act, any so-called “Superfund” or “Superlien” law, or any federal, state or local statute, law, ordinance, code, rule, regulation, order decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or materials, as now or at any time hereafter in effect (collectively, “Environmental Laws”).  Tenant shall submit to Landlord on an annual basis copies of its approved hazardous materials communication plan, OSHA monitoring plan, and permits required by the Resource, Recovery and Conservation Act of 1976, if Tenant is required to prepare, file or obtain any such plans or permits.  Tenant will indemnify and hold harmless Landlord from any losses, liabilities, damages, costs or expenses (including reasonable attorney’s fees) which Landlord may suffer or incur as a result of Tenant’s breach of this Section 37 or its introduction into or onto the Demised Premises, Building or Demised Premises of any Hazardous Material.  This Article shall survive the expiration or sooner termination of this Lease.

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Section 38.4        Landlord represents and warrants to Tenant that, except as otherwise disclosed in any environmental assessment or report delivered by Landlord to Tenant, there are no Hazardous Materials located within the Demised Premises or otherwise on or about the Property which require removal or remediation under applicable Environmental Laws.  Landlord agrees to indemnify and hold Tenant harmless from and against any and all claims or damages resulting from any violation or falsity of the representation set forth above or as a result of any leak, spill, discharge, emission or other release of Hazardous Materials on or about the Property caused by Landlord, its agents or employees from and after the date hereof.

FORCE MAJEURE

ARTICLEXXXIX.EITHER PARTY’S FAILURE TO PERFORM THE TERMS AND CONDITIONS OF THIS LEASE, IN WHOLE OR IN PART, OTHER THAN ANY TERM REQUIRING THE PAYMENT OF MONEY, SHALL NOT BE DEEMED A BREACH OR A DEFAULT HEREUNDER OR GIVE RISE TO ANY LIABILITY OF SUCH PARTY TO THE OTHER IF SUCH FAILURE IS ATTRIBUTABLE TO ANY UNFORESEEABLE EVENT BEYOND SUCH PARTY’S REASONABLE CONTROL AND NOT CAUSED BY THE NEGLIGENT ACTS OR OMISSIONS OR THE WILLFUL MISCONDUCT OF SUCH PARTY, INCLUDING, WITHOUT LIMITATION, FLOOD, DROUGHT, EARTHQUAKE, STORM, PESTILENCE, LIGHTNING, AND OTHER NATURAL CATASTROPHES AND ACTS OF GOD; EPIDEMIC, WAR, RIOT, CIVIC DISTURBANCE OR DISOBEDIENCE, AND ACT OF THE PUBLIC ENEMY; FIRE, ACCIDENT, WRECK, WASHOUT, AND EXPLOSION; STRIKE, LOCKOUT, LABOR DISPUTE, AND FAILURE, THREAT OF FAILURE, OR SABOTAGE OF SUCH PARTY’S FACILITIES; DELAY IN TRANSPORTATION OR CAR SHORTAGES, OR INABILITY TO OBTAIN NECESSARY LABOR, MATERIALS, COMPONENTS, EQUIPMENT, SERVICES, ENERGY, OR UTILITIES THROUGH SUCH PARTY’S USUAL AND REGULAR SOURCES AT USUAL AND REGULAR PRICES; AND ANY LAW, REGULATION, ORDER OR INJUNCTION OF A COURT OR GOVERNMENTAL AUTHORITY, WHETHER VALID OR INVALID AND INCLUDING, WITHOUT LIMITATION, EMBARGOES, PRIORITIES, REQUISITIONS, AND ALLOCATIONS OR RESTRICTIONS OF FACILITIES, EQUIPMENT OR OPERATIONS.  IN THE EVENT OF THE OCCURRENCE OF SUCH A FORCE MAJEURE EVENT, THE PARTY UNABLE TO PERFORM PROMPTLY SHALL NOTIFY THE OTHER PARTY

TENANT IMPROVEMENTS

ARTICLE XL.ALL IMPROVEMENTS TO THE DEMISED PREMISES PROPOSED TO BE CONSTRUCTED BY EITHER LANDLORD OR TENANT PRIOR TO THE COMMENCEMENT DATE SHALL BE CONSTRUCTED IN ACCORDANCE WITH THE TERMS AND PROVISIONS SET FORTH ON THE PLANS AND SPECIFICATIONS ATTACHED HERETO AND INCORPORATED HEREIN AS EXHIBIT C.  IT IS THE INTENT OF THE PARTIES THAT LANDLORD SHALL DELIVER THE DEMISED PREMISES TO TENANT IN A TURN-KEY CONDITION PURSUANT TO THE PLANS AND SPECIFICATIONS.  LANDLORD ACKNOWLEDGES THAT THE BUILD OUT OF THE TENANT IMPROVEMENTS ACCORDING TO THE PLANS AND SPECIFICATIONS IS NOT EXPECTED TO EXCEED $500,000.00.  IF THE BUILD OUT OF THE TENANT IMPROVEMENTS ACCORDING TO THE PLANS AND SPECIFICATIONS EXCEEDS $500,000.00, THEN LANDLORD SHALL BEAR THE COST INCREASE ABOVE $500,000.00.  IF TENANT REQUESTS A CHANGE TO THE PLANS AND SPECIFICATIONS THAT INCREASES THE COST OF THE TENANT IMPROVEMENTS AND IS APPROVED BY LANDLORD (SUCH APPROVAL NOT TO BE UNREASONABLY WITHHELD), THEN TENANT SHALL BEAR THE COST OF THE INCREASE TO THE EXTENT THE COST OF THE TENANT IMPROVEMENTS EXCEEDS $500,000.00.  ANY ADDITIONAL AMOUNTS TO BE PAID BY TENANT SHALL BE PAID BY TENANT ON THE COMMENCEMENT DATE.

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CAPTIONS

ARTICLE XLI.THE CAPTIONS ARE INSERTED ONLY AS A MATTER OF CONVENIENCE AND FOR REFERENCE, AND IN NO WAY DEFINE, LIMIT OR DESCRIBE THE SCOPE OF THIS LEASE NOR THE INTENT OR ANY PROVISION THEREOF.

ATTACHMENTS

ARTICLE XLII.SEE EXHIBITS A THROUGH E, INCLUSIVE, WHICH EXHIBITS ARE ATTACHED HERETO AND MADE A PART HEREOF.

EXHIBIT	DESCRIPTION
Exhibit A	Legal Description
Exhibit B	Demised Premises
Exhibit C	Improvements
Exhibit D	Building Rules and Regulations
Exhibit E	Sign Criteria

SUBMISSION

ARTICLE XLIII.SUBMISSION OF THIS INSTRUMENT TO TENANT OR PROPOSED TENANT OR ITS AGENTS OR ATTORNEYS FOR EXAMINATION, REVIEW, CONSIDERATION OR SIGNATURE DOES NOT CONSTITUTE OR IMPLY AN OFFER TO LEASE, RESERVATION OF SPACE, OR OPTION TO LEASE, AND THIS INSTRUMENT SHALL HAVE NO BINDING LEGAL EFFECT UNTIL EXECUTION HEREOF BY BOTH LANDLORD/OWNER AND TENANT OR ITS AGENTS.

COMMISSIONS

ARTICLE XLIV.IT IS AGREED AND UNDERSTOOD THAT GRUBB & ELLIS / THE WINBURY GROUP, AGENT OR BROKER WITH WELSH LENEXA II, LLC IS REPRESENTING WELSH LENEXA LLC, LANDLORD, AND PAT MCGANNON WITH J.P. FOGEL, IS REPRESENTING CABLE-TECH INDUSTRIES, L.L.C., TENANT.  TENANT INDEMNIFIES LANDLORD FOR ANY CLAIM MADE BY OR COMMISSION PAYABLE TO ANY OTHER BROKER OR AGENT IN CONNECTION WITH TENANT’S LEASING THE DEMISED PREMISES.

RIGHT OF FIRST REFUSAL

ARTICLE XLV.LANDLORD GRANTS TO TENANT A RIGHT OF FIRST REFUSAL TO LEASE ALL OR A PART OF THE AVAILABLE SPACE IN THE BUILDING.  THROUGHOUT THE TERM OF THIS LEASE, UPON RECEIPT OF A WRITTEN LETTER OF INTENT REFLECTING A BONA-FIDE OFFER TO LEASE SPACE IN THE BUILDING WITH INFORMATION IDENTIFYING THE PROPOSED TENANT (“OFFER”), LANDLORD SHALL OFFER THE SPACE SUBJECT TO THE OFFER TO TENANT UPON THE SAME TERMS AND CONDITIONS CONTAINED IN THE OFFER.  TENANT SHALL HAVE FIVE (5) BUSINESS DAYS WITHIN WHICH TO ACCEPT OR REJECT THE OFFER.  THIS RIGHT OF FIRST REFUSAL SHALL BE ONGOING WHEREBY A FAILURE TO EXERCISE THE RIGHT TO ACCEPT AN OFFER AT ONE OPPORTUNITY DOES NOT TERMINATE THIS RIGHT OF FIRST REFUSAL FOR ANY OTHER OFFER.

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LEASE TERMINATION

ARTICLE XLVI.PROVIDED TENANT IS IN COMPLETE POSSESSION OF DEMISED PREMISES AND NOT IN DEFAULT, TENANT SHALL HAVE THE RIGHT TO CANCEL THIS LEASE EFFECTIVE ON THE SIXTY - SIX MONTH ANNIVERSARY OF THE COMMENCEMENT DATE.  IN ORDER TO TERMINATE THE LEASE, TENANT WILL PROVIDE SIX (6) MONTH ADVANCE WRITTEN NOTICE BY CERTIFIED MAIL TO LANDLORD AND MAKE A CASH PAYMENT IN THE AMOUNT OF TWO HUNDRED TWENTY- FIVE THOUSAND AND NO/100 DOLLARS ($225,000.00) ON THE EFFECTIVE DATE OF THE TERMINATION.

OPTION TO RENEW

ARTICLE XLVII.LANDLORD GRANTS TO TENANT THE RIGHT TO EXTEND THE TERM OF THIS LEASE AN ADDITIONAL TERM OF FIVE (5) YEARS ON THE SAME TERMS AND CONDITIONS CONTAINED IN THIS LEASE, EXCEPT THAT RENT SHALL BE AT THEN EXISTING MARKET RATES OF COMPARABLE BUILDINGS IN THE AREA (“OPTION”).  TENANT MUST EXERCISE THE OPTION BY PROVIDING WRITTEN NOTICE TO LANDLORD AT LEAST SIX (6) MONTHS PRIOR TO THE EXPIRATION DATE.

IN WITNESS WHEREOF, the Landlord and the Tenant have caused these presents to be executed in form and manner sufficient to bind them at law, as of the day and year first above written.

TENANT:		LANDLORD:
Cable-Tech Industries, L L.C.		Welsh Lenexa II, LLC
By:	/s/ Henry H. Newell	By:	/s/ Vice President
Its:	Member	Its:	Vice President

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Exhibit A

LEGAL DESCRIPTION

Lot 4, College Crossover West — Second Plat, a subdivision in the City of Lenexa, Johnson County, Kansas according to the recorded plat thereof.  Together with a non-exclusive common driveway as established by the Agreement recorded under File No. 1974637 in Volume 3238, Page 712, re-recorded under File No. 1986960 in Volume 3267, Page 82.

1

Exhibit B

DEMISED PREMISES

1

Exhibit B

DEMISED PREMISES

2

Exhibit B

DEMISED PREMISES

3

Exhibit C

IMPROVEMENTS

4

Exhibit C

Cabletech

October 9, 2001

COST BREAKDOWN & SCOPE OF WORK

PERMITS		4,612.00
ARCHITECTURAL FEES		5,850.00
MASONRY		6,240.00
CHAIN LINK FENCE & GATES		3,075.00
CONCRETE FLATWORK		625.00
CONCRETE WALL SAWING		1,275.00
CLEAN UP		5,832.00
PARTITIONS		97,210.00
DOORS, FRAMES & HARDWARE		10,216.00
TOILET PARTITIONS & ACCESSORIES		4,165.00
GLASS & GLAZING		885.00
CASEWORK		17,245.00
:ACOUSTICAL CEILING W/R-11		11,227.00
FLOORING & BASE		15,898.00
PAINTING & VWC		13,650.00
FIRE SPRINKLER		7,323.00
PLUMBING		38,065.00
H.V.A.C.  — 62 TONS		144,540.00
ROOF PATCH		8,200.00
ELECTRICAL — 400 amp		74,844,00
OVERHEAD & PROFIT		28,259.00
TOTAL	$	499,236.00
ALTERNATES:

1.   Construct one trash enclosure	ADD	$	5,970.00
2.   Furnish & install one edge of dock level	ADD	$	1,160.00
3.   Furnish & install one 5,000 lb. scissor life	ADD	$	9,250.00
4.   Delete 2 vanities/add one ½ Bradley	ADD	$	1,325.00

NOTE:  HVAC includes integral screens.

EXCLUSIONS:

Fire Extinguishers, Window Treatments, TIP fees,

Telephone and related voice/data work, Signage,

Any additional work or fees required by any governing body having jurisdiction over this project.

1

Exhibit 10.39

2

Exhibit 10.39

Exhibit D

RULES AND REGULATIONS

1. No Lessee shall do or permit anything to be done in said premises or bring or keep anything therein which will in any way increase the rate of fire insurance on said Building, or on property kept therein, or obstruct or interfere with the rights of other Lessees, or in any way injure or annoy them, or conflict with the laws relating to fire, or with any regulations of the fire department, or with any insurance policy upon said buildings or any part thereof, or conflict with any rules or ordinances of the local Board of Health or any governing bodies.

2. No awning or other projection shall be attached to the outside walls of the Building.  No curtains, blinds, shades, or screens visible from the exterior of the Premises shall be attached to or hung in, or used in connection with any window or door of the Premises without the prior written consent of Lessor.  Such curtains, blinds, shades, screens or other fixtures must be of quality, type, design, and color attached in the manner approved in advance by Lessor.

3. Lessee, its servants, employees, customers, invitees and guests shall not obstruct sidewalks, entrances, passages, corridors, vestibules, or halls, in and about the Building which are used in common with other tenants and their servants, employees, customers, guests and invitees, and which are not a part of the Demised Premises of Lessee.

4. Lessee assumes full responsibility for protecting its space from theft, robbery, and pilferage; which includes keeping doors locked and other means of entry to the Demised Premises closed and secured after normal business hours.

5. The water and wash closets, drinking fountains and other plumbing fixtures shall not be used for any purpose other than those for which they were constructed, and no sweepings, rubbish, rags, coffee grounds, or other substances shall be thrown therein.  All damages resulting from any misuse of the fixtures shall be borne by the Lessee who; or who servants, employees, agents, visitors, or licensees; shall have caused the same.  No person shall waste water by interfering or tampering with the faucets or otherwise.

6. Lessee shall keep Premises at a temperature sufficiently high to prevent freezing of water pipes and fixtures.

7. The outside areas immediately adjoining the Demised Premises, including sidewalks, docks, dock, and loading and delivery areas, shall be kept clean by Lessee and Lessee shall not place or permit any obstructions, trash, or merchandise in such areas.

8. The use of parking shall be subject to reasonable regulations as Lessor may promulgate from time to time uniformly to all Tenants.  Lessee agrees that it will not use more than its prescribed number of stalls or dock or loading or delivery areas at any one time, and will not use or permit the use by its employees of the parking area for the overnight storage of automobiles, or other vehicles or equipment except as provided in the Lease.  However, one truck or fully connected truck with trailer may be parked overnight at each dock.  There will not be any assigned exclusive parking spaces available to any Lessee of the building except with prior, written consent of the Lessor.  Lessee agrees that upon written notice from the Lessor, it will furnish to Lessor, within five (5) days from receipt of such notice, the state automobiles license numbers assigned to the automobiles of the Lessee and its employees.  Owners and Lessor shall not be liable for any vehicle of the Lessee or its employees that the Lessor shall have towed from the premises when illegally parked.  Owner and Lessor will not be liable for damage to vehicles in the parking areas or for theft of vehicles, personal property from vehicles or equipment from vehicles.

3

Exhibit 10.39

9. Lessee will refer all contractors, contractors’ representatives, and installation technicians rendering any service on or to the Premises for Lessee to Lessor for Lessor’s approval and supervision before performance of any contractual service.  This provision shall apply to all work performed in the Building, including but not limited to the installation of telephone and telegraph equipment, electrical devices and attachments and installations of any nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment or any other physical portion of the Building.  Such approval, if given, shall in no way make Lessor or Owner a party to any contract between Lessee and any such contractor, and Lessor and Owner shall have no liability therefore.

10. Employees of the Building will at all times keep a pass key, and agents of the Lessor shall at all times be allowed reasonable admittance to said Lessee Demised Premises.

11. No additional external locks shall be placed upon any doors without written consent of the Lessor.  All keys to the Demised Premises shall be furnished by the Lessor in a reasonable number commensurate with the square footage leased.  Additional keys shall be furnished at Lessee’s cost.  Upon termination of this Lease, all keys shall be surrendered, and the Lessee shall then give the Lessor or his agents explanation of the combination of all locks upon any doors or vaults.

12. Ninety (90) days prior to the expiration of the Lease, Lessor or its agents may show the Demised Premises and may place on the windows or doors thereof, or upon a bulletin board, a notice “For Rent.”

13. No electric heaters are allowed on the Demised Premises without the prior written consent of Lessor.

14. No sign, advertisement, or notice shall be inscribed, painted, or affixed on any part of the inside or outside of said Building.  Landlord will supply building standard signage for Tenant’s suite entrance, at Tenant’s cost.  Any additions, deletions, or changes to the door signage after the original signage is installed shall also be at Tenant’s cost.

15. No person shall disturb the occupants of the Building by the use of any musical instruments, the making of unseemly noises, or any unreasonable noise.  No animals or pets of any kind will be allowed in the building.

16. No portion of the Building shall be used for the purpose of lodging rooms for any immoral or unlawful purposes.

17. All glass, locks and trimmings in or about the doors and windows and all electrical fixtures belonging to the Building shall be kept whole, and whenever broken by anyone shall be immediately replaced or repaired and put in order at Tenant’s cost under the direction and to the satisfaction of Landlord, and on removal shall be left whole and in good repair.

18. Lessee and its servants, employees, agents and visitors and licensees shall observe faithfully and comply strictly with the foregoing rules and regulations and such other and further appropriate rules and regulations as Lessor or its agent may from time to time adopt Lessor shall give written notice of any additional rules and regulations.

19. Lessor reserves the right at any time and from time to time as reasonably necessary to rescind, alter, or waive, in whole or in part, any of these Rules and Regulations when it is deemed necessary, desirable, or proper, in Lessor’s judgment, for its best interest or for the best interest of the Lessees of the Building.

4

Exhibit 10.39

5

Exhibit 10.39

FIRST AMENDMENT TO LEASE

THIS Lease Amendment made and entered into the _____ day of June 2003, amends that certain Lease dated the 11th of October, 2001, by and between Welsh Lenexa II, LLC (“Landlord”) and Cable-Tech Industries, L.  L C., a Kansas limited liability (“Tenant”), for the property located at 11000-11068 Strang Line Road, Lenexa, Kansas 66219.

The Lease Agreement shall be modified as follows:

1. Page 1, The second paragraph under DEFINITIONS shall be amended to read as follows:

“Buildings” — Those certain office/warehouse buildings containing approximately 154,070 square feet located upon the Property and commonly described as 11000 - 11068 Strang Line Road, Lenexa, Kansas 66215-2113 “

2. Page 1, The third paragraph under DEFINITIONS shall be amended to read as follows:

“Demised Premises” - That certain portion of the Building located at 11064 Strang Line Road and designated as Bays 9 through 12, consisting of approximately 25,862 square feet (4,563 square feet of office and 21, 299 square feet of warehouse space) as measured from the outside walls of the Demised Premises to the center of the demising wall, as shown on the floor plan attached hereto as Exhibit B and made a part hereof.  The Demised Premises include the non-exclusive right of access to common areas, as hereinafter defined, and all licenses and easements appurtenant to the Demised Premises.”

3 Page 20, Paragraph 33 under NOTICES shall be amended to read as follows:

“Any notice required or permitted under this Lease shall be deemed sufficiently given or secured if sent by registered or certified return receipt mail to Tenant at 11064 Strang Line Road, Lenexa, Kansas 66215-2113 and to Landlord at the address then.  fixed for the payment of rent as provided in Article 4 of this Lease, and either party may by like written notice at any time designate a different address to which notices shall subsequently be sent “

3 Page 2, The first line in section 3 (a) shall be amended to read as follows:

“A sum equal to sixteen point seventy-nine percent (16.79%) (which represents the ratio of the Demised Premises to the area of the Building) of the Real Estate Taxes payable during the term of this Lease”

1

Exhibit 10.39

4. Page 3, The first line in section 3 (b) shall be amended to read as follows:

“Except as set forth below, a sum equal to sixteen point seventy-nine percent (16,79%) (which represents the ratio of the Demised Premises to the area of the building) of the annual aggregate Operating expenses incurred by Landlord in the operation, maintenance and repair of the Property.”

All of the terms and conditions of the original Lease Agreement shall remain in full force and effect, with the exception of the items noted herein

Both parties have executed this document in triplicate as noted below

Sincerely,

WELSH LENEXA II, LLC		CABLE-TECH INDUSTRIES,
		L.L.C., a Kansas limited liability
By:	/s/ Vice President	By:	/s/ Henry H. Newell
Date:	July 17, 2003	Date:	July 16, 2003

2

SECOND AMENDMENT TO LEASE

THIS Lease Amendment made and entered into the 15 of November, 2003, amends that certain Lease dated the 11th of Célèbre, 2001, and the First Amendment To Lease, dated July 17th, 2003, by and between Welsh Lenexa TI, LLC (“Landlord”) and Cable-Tech Industries, L.L.C., a Kansas limited liability (“Tenant”), for the property located at 11000-11068 Strang Line Road, Lenexa, Kansas 66210,

The Lease Agreement and the First Amendment To Lease shall be modified as follows:

1. In addition to the “Demised Premises” as defined in the Lease, Landlord agrees to lease the adjacent two (2) Bays 7 & 8), containing 12,884 square feet on a temporary month to month basis beginning December 1, 2003.  Tenant shall pay to Landlord $4.00 per square foot, or 54,294.67 per month, as base rent to lease this space.  Tenant shall not be obligated to pay “Additional Rent” (Taxes, Insurance, and Common Area Maintenance charges) on this temporary space.

2. This Second Amendment To Lease may be terminated at any time by either party providing 14 days advance written notice.

3. Upon Landlord request, Tenant, at Tenant’s sole cost, shall close the ‘opening and repair all damage (to Landlord’s satisfaction) to the demising waft that separates the original “Demised Premises” and this temporary adjacent space.

All of the terms and conditions of the original Lease Agreement and the First Amendment To Lease shall remain in full force and effect, with the exception of the Items noted herein.

Both parties have executed this document in triplicate as noted below.

Sincerely,

WELSH LENEXA II, LLC		CABLE-TECH INDUSTRIES,
		L.L.C., a Kansas limited liability
By:	/s/ Vice President	By:	/s/ Henry H. Newell
Date:	January 8, 2004	Date:	December 15, 2003

THIRD AMENDMENT TO LEASE

THE STATE OF KANSAS	)
	)	KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF JOHNSON	)

THIS is the THIRD AMENDMENT TO LEASE (this “Third Amendment to Lease”) by COLLEGE CROSSING ASSOCIATES, LLC, Successor to Welsh Lenexa Ii, LLC (“Lessor”) and CT Systems, LLC , a Kansas Limited Liability Company (“Lessee’) for the property located at 11064 Strang Line Road, Lenexa, Kansas.

RECITALS:

CT Systems, L.L C , successor in interest to Cable Tech, entered into that certain Lease dated October 11, 2001, and amended by the First Amendment to Lease dated July 17, 2003, and amended by the Second Amendment to Lease dated November 16, 2003, pursuant to which Lessee leased from Lessor approximately 25,862 rentable square feet of floor area (the “Premises”) in those certain improvements located at 11064 Strang Line Road, Lenexa, Kansas and more particularly described in the Lease (the “Premises”)

Lessor and Lessee desire to execute this Third Amendment to Lease in order to (I) provide an extension of the lease term and (ii) to evidence their agreement to amend the Lease, all as more particularly set forth in this Third Amendment to Lease

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which Is hereby acknowledged, Lessor and Lessee agree as follows:

Article I

CERTAIN AMENDMENTS

Section 1 entitled “TERM”: The Term of this Lease is extended from July 1, 2009 thru June 30, 2010

Section 47, entitled “OPTION TO RENEW In the event that this Lease shall be in full force and effect and Lessee shall be in full and complete possession of the Premises, and shall not be in default, then in this event only, Lessee is hereby granted the sole and exclusive right to extend this Lease for one (1) additional term of five (5) years commencing on July 1, 2010 and ending on June 30, 2015, at the annual rental calculated at fair market value which is defined as the market rent for like-kind space in Johnson County, Kansas.  Notice of Lessee’s intent to so renew this Lease as is provided herein shall be furnished to Lessor in writing on or before December 31, 2009

Except as expressly provided herein, the Lease is unamended, except for this Third Amendment to Lease, as noted in the Recitals, the parties hereby ratify the Lease, First Amendment to Lease, Second Amendment to Lease and this Third Amendment to Lease as herein modified In the event of conflict or ambiguity of the terms of the lease and the provisions of this Third Amendment, the provisions of this Third Amendment shall govern and control

This Agreement:

Constitutes the entire agreement among the parties hereto with respect to the subject matter hereof;

shall be construed and governed by the laws of the State of Kansas;

shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns

1

Exhibit 10.39

may not be amended, except by written agreement of the parties hereto; and,

may be executed in multiple counter-parts whether of the entire Agreement or of the signature page or both, all of which counter-parts taken together shall constitute the complete Agreement

IN WITNESS WHEREOF, this Third Amendment to Lease is executed as of the date(s) below

LESSOR		LESSEE
COLLEGE CROSSING ASSOCIATES, LLC		CT Systems, L.L.C.
A Missouri Limited Liability Company		a Kansas Limited Liability Company
BY:	BK PROPERTIES, LLC, Managing Member	BY:	/s/ Bruce R. Breckenridge
			Bruce R. Breckenridge, Member
BY:	/s/ Kenneth G. Block
	Kenneth G. Block, Trustee
	Of the Kenneth G. Block Trust
	Dated January 11, 1991, as
	Amended,
	Managing Member

DATE: December 31, 2008 DATE: December 31, 2008

SIGNATURE PAGE FOR THAT CERTAIN

THIRD AMENDMENT TO LEASE

BY AND BETWEEN

COLLEGE CROSSING ASSOCIATES, LLC, LESSOR

AND

CT Systems, LLC, A Kansas Limited Liability Company, LESSEE

FOR THE PROPERTY LOCATED AT

11064 STRANG LINE ROAD

LENEXA, KANSAS

2

FOURTH AMENDMENT TO LEASE

THE STATE OF KANSAS	)
	)	KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF JOHNSON	)

THIS Is the FOURTH AMENDMENT TO LEASE (this “Fourth Amendment to Lease”) by COLLEGE CROSSING ASSOCIATES, LLC, Successor to Welsh Lenexa 11, LLC (“Lessor”) and CT Systems, L L.C., a Kansas Limited Liability Company (lessee”) for the property located at 11064 Strang Line Road, Lenexa, Kansas.

RECITALS:

CT Systems, L.L.C., successor in Interest to Cable Tech, entered into that certain Lease dated October 11, 2001, and amended by the First Amendment to Lease dated July 17, 2003, and amended by the Second Amendment to Lease dated November 15, 2003 and amended by the Third Amendment to Lease dated December 31, 2008, pursuant to which Lessee leased from Lessor approximately 25,862 rentable square feet of floor area (the “Premises”) in those certain improvements located at 11064 Strang Line Road, Lenexa, Kansas and more particularly described In the Lease (the “Premises”).

Lessor and Lessee desire to execute this Fourth Amendment to Lease in order to (i) provide an extension of the lease term and (ii) to evidence their agreement to amend the Lease, all as more particularly set forth in this Fourth Amendment to Lease.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which Is hereby acknowledged, Lessor and Lessee agree as follows:

Article I

CERTAIN AMENDMENTS

Section 1 entitled “TERM”: The Term of this Lease is extended from July 1, 2010 thru June 30, 2011.

Section 45 entitled “RIGHT OF FIRST REFUSAL”: The phrase reading “Landlord shall offer the space subject to the Offer to Tenant upon the same terms and conditions contained in the Offer” shall be deleted in its entirety and replaced with the following:

“Landlord shall offer the space subject to the Offer to Tenant in writing upon the same terms and conditions contained in the Offer”

Except as expressly provided herein, the Lease is unamended, except for this Fourth Amendment to Lease, and as noted in the Recitals and the parties hereby ratify the Lease, First Amendment to Lease, Second Amendment to Lease, Third Amendment to Lease, and this Fourth Amendment to Lease as herein modified.  in the event of conflict or ambiguity of the terms of the Lease or any of the Amendments thereto, as noted herein, and the provisions of this Fourth Amendment to Lease, the provisions of this Fourth Amendment to Lease, shall govern and control.

This Agreement:

Constitutes the entire agreement among the parties hereto with respect to the subject matter hereof;

shall be construed and governed by the laws of the State of Kansas;

shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

Exhibit 10.39

may not be amended, except by written agreement of the parties hereto; and,

may be executed in multiple counter-parts whether of the entire Agreement or of the signature page or both, all of which counter-parts taken together shall constitute the complete Agreement.

Page 1 of 2

IN WITNESS WHEREOF, this Fourth Amendment to Lease is executed as of the date(s) below.

LESSOR		LESSEE
COLLEGE CROSSING ASSOCIATES, LLC		CT Systems, L.L.C.
A Missouri Limited Liability Company		a Kansas Limited Liability Company
BY:	BK PROPERTIES, LLC, Managing Member	BY:	/s/ Bruce R. Breckenridge
			Bruce R. Breckenridge, Member
BY:	/s/ Kenneth G. Block
	Kenneth G. Block, Trustee
	Of the Kenneth G. Block Trust
	Dated January 11, 1991, as
	Amended,
	Managing Member

DATE: March 1, 2010 DATE: March 1, 2010

SIGNATURE PAGE FOR THAT CERTAIN

FOURTH AMENDMENT TO LEASE

BY AND BETWEEN

COLLEGE CROSSING ASSOCIATES, LLC, LESSOR

AND

CT SYSTEMS, LLC, LESSEE

FOR THE PROPERTY LOCATED AT

11064 STRANG LINE ROAD

LENEXA, KANSAS

FIFTH AMENDMENT TO LEASE

THE STATE OF KANSAS	)
	)	KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF JOHNSON	)

THIS is the FIFTH AMENDMENT TO LEASE (this “Fifth Amendment to Lease”) by COLLEGE CROSSING ASSOCIATES, LLC, and Successor to Welsh Lenexa II, LLC (“Lessor”) and VALENT AEROSTRUCTURES - LENEXA, LLC, a Kansas Limited Liability Company and Successor to CT Systems, LLC (lessee”) for the property located at 11064 Strang Line Road, Lenexa, Kansas

RECITALS:

VALENT AEROSTRUCTURES - LENEXA, LLC, successor in interest to CT Systems, L.L.C., successor in interest to CABLE-TECH INDUSTRIES, L L.C., entered into that certain Lease dated October 11, 2001, and amended by the First Amendment to Lease dated July 17, 2003, and amended by the Second Amendment to Lease dated November 15, 2003 and amended by the Third Amendment to Lease dated December 31, 2008, and amended by the Fourth Amendment to Lease dated March 1, 2010, pursuant to which Lessee leased from Lessor approximately 25,862 rentable square feet of floor area (the “Premises”) in those certain improvements located at 11064 Strang Line Road, Lenexa, Kansas and more particularly described in the Lease (the “Premises”).

Lessor and Lessee desire to execute this Fifth Amendment to Lease in order to (i) provide an extension of the lease term and (ii) to evidence their agreement to amend the Lease, all as more particularly set forth in this Fifth Amendment to Lease.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor and Lessee agree as follows:

Article I

CERTAIN AMENDMENTS

Section 1 entitled “TERM”: The Term of this Lease is hereby extended from July 1, 2011 thru June 30, 2014.

Section 2 entitled “BASE RENT”: The Base Rent is hereby changed as follows:

July 1, 2011 – June 30, 2012	$11,314.63 per month
July 1, 2012 – June 30, 2013	$11,530.14 per month
July 1, 2013 – June 30, 2014	$11,853.42 per month

Section 27 entitled “EARLY RIGHT TO TERMINATE”: This is a new Section of the Lease and under this Section, Lessee and Lessor hereby acknowledge that Lessee shall have the sole and exclusive one-time right to terminate this Lease on December 31, 2012, by delivering written notice to Lessor of its intention to so terminate the Lease, on or before June 30, 2012, In the event Lessee does elect to exercise its right to early termination, pursuant to this Section 27, both Lessee and Lessor shall continue to be obligated for all of their obligations under the Lease through December 31, 2012.  Lessee and Lessor further acknowledge that there will be no penalty for such early termination, should it occur, if such is in accordance with the terms of this Section 27.

Except as expressly provided herein, the Lease is unamended, except for this Fifth Amendment to Lease, and as noted in the Recitals and the parties hereby ratify the Lease, First Amendment to Lease, Second Amendment to Lease, Third Amendment to Lease, Fourth Amendment to Lease, and this Fifth Amendment to Lease as herein modified.  In the event of conflict or ambiguity of the terms of the Lease or any

of the Amendments thereto, as noted herein, and the provisions of this Fifth Amendment to Lease, the provisions of this Fifth Amendment to Lease, shall govern and control

This Agreement:

Constitutes the entire agreement among the parties hereto with respect to the subject matter hereof; shall be construed and governed by the laws of the State of Kansas;

shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

may not be amended, except by written agreement of the parties hereto; and,

may be executed in multiple counter-parts whether of the entire Agreement or of the signature page or

both, all of which counter-parts taken together shall constitute the complete Agreement.

IN WITNESS WHEREOF, this Fifth Amendment to Lease is executed as of the date(s) below.

LESSOR		LESSEE
COLLEGE CROSSING ASSOCIATES, LLC		VALENT AEROSTRUCTURES – LENEXA, LLC
A Missouri Limited Liability Company		a Kansas Limited Liability Company
BY:	BK PROPERTIES, LLC, Managing Member	BY:	/s/ Bruce R. Breckenridge
			Bruce R. Breckenridge, Member
BY:	/s/ Kenneth G. Block
	Kenneth G. Block, Trustee
	Of the Kenneth G. Block Trust
	Dated January 11, 1991, as
	Amended,
	Managing Member

DATE: May 24, 2011 DATE: May 23, 2011

SIGNATURE PAGE FOR THAT CERTAIN

FIFTH AMENDMENT TO LEASE

BY AND BETWEEN

COLLEGE CROSSING ASSOCIATES, LLC, LESSOR

AND

VALENT AEROSTRUCTURES – LENEXA, LLC, LESSEE

FOR THE PROPERTY LOCATED AT

11064 STRANG LINE ROAD

LENEXA, KANSAS

2

EX-10.40

Exhibit 10.40

WASHINGTON CIVIC INDUSTRIAL CORP.,

as Sublessor,

AND

VALENT AEROSTRUCTURES, LLC,

as Sublessee

SUBLEASE AGREEMENT

Dated September 3, 2010

SUBLEASE AGREEMENT

TABLE OF CONTENTS

		Page
	Parties	1
	Recitals
ARTICLE I
DEFINITIONS
Section 1.1.	Definitions of Words and Terms	2
Section 1.2.	Rules of Interpretation	2
ARTICLE II
REPRESENTATIONS
Section 2.1.	Representations by the City	3
Section 2.2.	Representations by the Redevelopment Corporation	4
Section 2.3	Representations by WCIC	5
Section 2.4.	Representations by Valent	5
ARTICLE III
GRANTING PROVISIONS
Section 3.1.	Granting of Leasehold Estate	6
Section 3.2.	Sublease Term	6
Section 3.3.	Possession and Use of the Project	6
ARTICLE IV
RENT PROVISIONS
Section 4.1.	Basic Rent	7
Section 4.2.	Additional Rent	8
Section 4.3.	Obligations of Valent Absolute and Unconditional.	8
Section 4.4.	Prepayment of Basic Rent	9
ARTICLE V
MAINTENANCE, TAXES AND UTILITIES
Section 5.1.	Maintenance and Repairs	10
Section 5.2.	Taxes, Assessments and Other Governmental Charges	10
Section 5.3.	Utilities	11
Section 5.4.	Property Tax Exemption	11

(i)

ARTICLE VI
INSURANCE
Section 6.1.	Title Commitment or Report; Due Diligence Materials	11
Section 6.2.	Insurance	11
Section 6.3.	Blanket Insurance Policies; Self Insurance	12
Section 6.4.	Worker’s Compensation	13
Section 6.5.	Failure to Insure	13
ARTICLE VII
ALTERATION OF THE PROJECT
Section 7.1.	Additions, Modifications and Improvements to the Project	13
Section 7.2.	Additional Improvements on the Project Site	14
Section 7.3.	Permits and Authorizations	14
Section 7.4.	Mechanics’ Liens	14
ARTICLE VIII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 8.1.	Damage or Destruction	15
Section 8.2.	Bondowner Approval	17
ARTICLE IX
SPECIAL COVENANTS
Section 9.1.	Surrender of Possession	17
Section 9.2.	Right of Access to the Project	17
Section 9.3.	Granting of Easements; Leasehold Mortgages and Financing Arrangements	18
Section 9.4.	Indemnification of City and Trustee	20
Section 9.5.	Depreciation, Investment Tax Credit and Other Tax Benefits	21
Section 9.6.	Valent to Maintain its Existence	21
Section 9.7.	Security Interests	21
Section 9.8.	Environmental Matters, Warranties, Covenants and Indemnities Regarding Environmental Matters	22
Section 9.9.	Tax Covenants	23

(ii)

ARTICLE X
OPTION TO PURCHASE THE PROJECT
Section 10.1.	Option to Purchase the Project	24
Section 10.2.	Conveyance of the Project	25
Section 10.3.	Relative Position of Option and Indenture	25
ARTICLE XI
DEFAULTS AND REMEDIES
Section 11.1.	Events of Default	25
Section 11.2.	Remedies on Default	26
Section 11.3.	Performance of Valent’s Obligations by WCIC	27
Section 11.4.	Rights and Remedies Cumulative	27
Section 11.5.	Waiver of Breach	27
Section 11.6.	Default by WCIC Under the Lease	28
ARTICLE XII
ASSIGNMENT AND SUBLEASE
Section 12.1.	Assignment; Sublease	28
Section 12.2.	Prohibition Against Fee Mortgage of Project	29
Section 12.3.	Restrictions on Sale or Encumbrance of Project by City	29
ARTICLE XIII
AMENDMENTS, CHANGES AND MODIFICATIONS
Section 13.1.	Amendments, Changes and Modifications	29
ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.1.	Notices	29
Section 14.2.	WCIC Shall Not Unreasonably Withhold Consents and Approvals	30
Section 14.3.	Net Lease	30
Section 14.4.	Governing Law	31
Section 14.5.	Binding Effect	31
Section 14.6.	Severability	31
Section 14.7.	Execution in Counterparts	31
Section 14.8.	Electronic Storage	31
	Signatures and Seals	S-1

(iii)

Exhibit A – Project Site

Exhibit B – Project Improvements

(iv)

SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT, dated September 3, 2010 (this “Sublease”), is entered into by and between WASHINGTON CIVIC INDUSTRIAL CORP., a Missouri corporation  (“WCIC”), and VALENT AEROSTRUCTURES, LLC, a Delaware limited liability company (“Valent”). The City of Washington, Missouri, a third-class city organized and existing under the laws of the State of Missouri (the “City”) and the Washington, Missouri Redevelopment Corporation, a redevelopment corporation organized and existing under the laws of the State of Missouri (the “Redevelopment Corporation”) each execute and join in this Sublease only for the purposes of those specific sections applicable to each such party herein;

RECITALS:

1.           The City is authorized and empowered pursuant to the provisions of Article VI, Section 27(b) of the Missouri Constitution and Sections 100.010 through 100.200, inclusive, of the Revised Statutes of Missouri, as amended (collectively, the “Act”), to purchase, construct, extend and improve certain projects (as defined in the Act) and to issue industrial development revenue bonds for the purpose of providing funds to pay the costs of such projects and to lease or otherwise dispose of such projects to private persons or corporations for manufacturing, commercial, warehousing and industrial development purposes upon such terms and conditions as the City shall deem advisable.

2.           Pursuant to the Act, the governing body of the City passed an ordinance (the “Ordinance”) on August 16, 2010, authorizing the City to issue (i) its Recovery Zone Facility Revenue Bonds (Valent Aerostructures Project), Series 2010A, in installments in the maximum aggregate principal amount of $[series a principal amount] (the “Series 2010A Bonds”), and (ii) its Industrial Development Revenue Bonds (Valent Aerostructures Project), Series 2010B, in installments in the maximum aggregate principal amount of $[series b principal amount] (the “Series 2010B Bonds,” together with the Series 2010A Bonds, the “Bonds”), for the purpose of (a) acquiring certain real property located at 6325 Avantha Drive in Washington, Missouri (the “Project Site,” as more fully described on Exhibit A hereto), (b) leasing the Project Site to WCIC for the purpose of construction of an approximately 85,000 square foot manufacturing facility thereon, including the purchase and installation of equipment and fixtures related thereto (the “Project Improvements,” as more fully described on Exhibit B hereto), and (c) paying a portion of the costs of issuing the Bonds.

3.           Pursuant to the Ordinance, the City is authorized to enter into a Trust Indenture of even date herewith (the “Indenture”) with UMB Bank, N.A., St. Louis, Missouri, as Trustee (the “Trustee”), for the purpose of issuing and securing the Bonds, as therein provided, and to enter into that certain Lease Agreement, dated as of August 1, 2010, with WCIC (the “Lease”), under which the City will acquire the Project Site, lease the Project Site to WCIC for the purpose of construction of the Project Improvements, and consent to a WCIC sublease of the Project Site and a lease of the Project Improvements (collectively, the “Project”), in consideration of rental payments by WCIC that will be sufficient to pay the principal of and interest on the Bonds.  WCIC will sublease the Project Site and lease the Project Improvements to Valent pursuant to this Sublease.

4.           The City, WCIC, and Valent entered into that certain Performance Agreement, dated as of August 1, 2010, pursuant to which the City, WCIC, and Valent made certain agreements in connection with the use of the Project by Valent (the “Performance Agreement”).

5.           Pursuant to the foregoing, WCIC desires to sublease the Project Site and lease the Project Improvements to Valent and Valent desires to sublease the Project Site and lease the Project Improvements from WCIC, for the rentals and upon the terms and conditions hereinafter set forth

NOW, THEREFORE, in consideration of the premises and the mutual representations, covenants and agreements herein contained, WCIC and Valent do hereby represent, covenant and agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1.          Definitions of Words and Terms.  In addition to any words and terms defined elsewhere in this Sublease, capitalized words and terms herein have the meanings given to such words and terms in the Lease, the Indenture, and the Performance Agreement (which definitions are hereby incorporated by reference).

Section 1.2.           Rules of Interpretation.

(a)           Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders.

(b)           Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa, and words importing persons shall include firms, associations and corporations, including governmental entities, as well as natural persons.

(c)           Wherever in this Sublease it is provided that either party shall or will make any payment or perform or refrain from performing any act or obligation, each such provision shall, even though not so expressed, be construed as an express covenant to make such payment or to perform, or not to perform, as the case may be, such act or obligation.

(d)           All references in this instrument to designated “Articles,” “Sections” and other subdivisions are, unless otherwise specified, to the designated Articles, Sections and subdivisions of this instrument as originally executed.  The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Sublease as a whole and not to any particular Article, Section or other subdivision.

(e)           The Table of Contents and the Article and Section headings of this Sublease shall not be treated as a part of this Sublease or as affecting the true meaning of the provisions hereof.

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(f)            Whenever an item or items are listed after the word “including,” such listing is not intended to be a listing that excludes items not listed.

ARTICLE II

REPRESENTATIONS

Section 2.1.           Representations by the City. The City makes the following representations as the basis for the undertakings on its part herein contained:

(a)           The City is a third class city duly organized and validly existing under the laws of the State of Missouri.  Under the provisions of the Act, the City has lawful power and authority to enter into the transactions contemplated by the Lease and to carry out its obligations thereunder.  By proper action of its governing body, the City has been duly authorized to execute and deliver the Lease, acting by and through its duly authorized officers.

(b)           As of the date of delivery hereof, the City agrees to acquire the Project Site, subject to Permitted Encumbrances (as defined in the Indenture).  The City agrees to lease the Project Site to WCIC and sell the Project Site to WCIC if WCIC exercises its option to purchase the Project Site or upon termination of this Lease (as such option right has been assigned to Valent pursuant to the terms of this Sublease), all for the purpose of furthering the public purposes of the Act.

(c)           To finance the costs of the Project, the City proposes to issue the Bonds which will be scheduled to mature as set forth in Article II of the Indenture, and will be subject to redemption prior to maturity in accordance with the provisions of Article III of the Indenture.

(d)           The Bonds are to be issued under and secured by the Indenture, pursuant to which the Project and the net earnings therefrom, consisting of all rents, revenues and receipts to be derived by the City from the leasing or sale of the Project, will be pledged and assigned to the Trustee as security for payment of the principal of and interest on the Bonds.

(e)           The purchase, construction, extension and improvement of the Project and the leasing of the Project Site by the City to WCIC will further the public purposes of the Act.

(f)            No member of the governing body of the City or any other officer of the City has any significant or conflicting interest, financial, employment or otherwise, in WCIC or in the transactions contemplated hereby.

(g)           The City is the fee simple owner of the Project Site.

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(h)           The City makes no representation or warranty concerning the suitability of the Project for the purpose for which it is being undertaken by Valent.  The City has not made any independent investigation as to the feasibility or creditworthiness of Valent.  Any bond purchaser, assignee of this Sublease or any other party with any interest in this transaction, shall make its own independent investigation as to the creditworthiness and feasibility of the Project, independent of any representation or warranties of the City.

Section 2.2.           Representations by the Redevelopment Corporation.The Redevelopment Corporation makes the following representations:

(a)           The Redevelopment Corporation is a redevelopment corporation duly organized, validly existing and in good standing under the laws of the State of Missouri.

(b)           The Redevelopment Corporation’s execution of this Sublease, in connection with the consideration received under the Redevelopment Corporation’s sale of the Project Site to the City, constitutes the valid and binding obligation of the Redevelopment Corporation, and the representations and warranties made herein by the Redevelopment Corporation shall be enforceable against it.

(c)           There are no recorded or unrecorded leases (other than the Lease and this Sublease), contracts, or options for purposes of farming, grazing or otherwise pertaining to or affecting the Project Site or any part thereof, and there is no party other than the City, WCIC, and Valent in possession or with a claim of possession of the Project Site or any part thereof.

(d)           To the best of the knowledge of the Redevelopment Corporation:  (i) the premises has never been utilized for the treatment, storage, or disposal of pollutants, contaminants or other harmful or hazardous substances, (ii) there are no pollutants, contaminants or other harmful or hazardous substances (including, but not limited to, asbestos containing materials and/or underground storage tanks) located on the premises, and (iii) there have been no underground leaks or releases of hazardous substances, petroleum, fuel oil or other pollutants from any underground storage tank or otherwise on any property adjacent to the premises.  Notwithstanding the foregoing, the parties acknowledge that prior to the purchase by the Redevelopment Corporation of the premises from Brinker Farms, the premises was used as a farm and as confinement hog feeding operation.  The parties further acknowledge that Redevelopment Corporation has delivered to Valent the environmental report on the premises prepared by Sitex Environmental, Inc., dated as of the 14th day of July, 1998, Project No. 109074 (Phase I Exam).

(e)           The Project Site, as configured, complies with all Federal, state and local laws, regulations or orders and common and case law pertaining to planning and zoning;

(f)            There are no burial grounds, cemeteries, unremediated archeology sites, landfills, or underground storage tanks on the Project Site.

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Section 2.3            Representations by WCIC.   WCIC makes the following representations as the basis for the undertakings on its part herein contained:

(a)           WCIC is a corporation duly organized, validly existing and in good standing under the laws of the State of Missouri.

(b)           This Sublease has been duly executed and delivered by WCIC, and constitutes the valid and binding obligation of WCIC, enforceable against it in accordance with the terms hereof;

(c)           There are no recorded or unrecorded leases (other than the Lease and this Sublease), contracts, or options for purposes of farming, grazing or otherwise pertaining to or affecting the Project Site or any part thereof, and there is no party other than the City, WCIC, and Valent in possession or with a claim of possession of the Project Site or any part thereof.

(d)           The Project Site, as configured, complies with all Federal, state and local laws, regulations or orders and common and case law pertaining to zoning, planning, health, safety, sanitation or environmental protection (including, without limitation, the surface water, ground water, drinking water supply, land, surface and subsurface strata and ambient air);

(e)           There are no burial grounds, cemeteries, archeology sites, landfills, or underground storage tanks on the Project Site.

(f)           The Project Site, as of the execution of this Sublease, is in Pad-Ready Condition.

(g)           The estimated costs of the purchase, construction, extension and improvement of the Project are in accordance with sound engineering and accounting principles.

(h)           The proceeds from the sale of the Bonds will be used only for payment of Project Costs and related Costs of Issuance of the Bonds authorized and permitted by both the Internal Revenue Code and the Act.

Section 2.4.           Representations by Valent.  Valent makes the following representations as the basis for the undertakings on its part herein contained:

(a)           Valent is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b)           Valent has lawful power and authority to enter into this Sublease and to carry out its obligations hereunder and Valent has been duly authorized to execute and deliver this Sublease, acting by and through its duly authorized officers and representatives.

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(c)           The execution and delivery of this Sublease, the consummation of the transactions contemplated hereby, and the performance of or compliance with the terms and conditions of this Sublease by Valent do not and will not, to the best of Valent’s knowledge, conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, any mortgage, deed of trust, lease or any other restrictions or any agreement or instrument to which Valent is a party or by which it or any of its property is bound, Valent’s organizational documents,or any order, rule or regulation applicable to Valent or any of its property of any court or governmental body, or constitute a default under any of the foregoing, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of Valent under the terms of any instrument or agreement to which Valent is a party.

ARTICLE III

GRANTING PROVISIONS

Section 3.1.           Granting of Leasehold Estate.  WCIC hereby exclusivelyrents, leases and lets the Project to Valent, and Valent hereby rents, leases and hires the Project from WCIC, subject to Permitted Encumbrances existing as of the date of the execution and delivery hereof, for the rentals and upon and subject to the terms and conditions herein contained.

Section 3.2.           Sublease Term.  This Sublease shall become effective upon its execution and delivery.  Subject to earlier termination pursuant to the provisions of this Sublease, the sublease of the Project Site and the lease of the Project Improvements shall terminate on September 1, 2020 (the “Sublease Term”).

Section 3.3.           Possession and Use of the Project.

(a)           WCIC covenants and agrees that as long as WCIC has not exercised any of the remedies set forth in Section 11.2 of this Sublease following the occurrence and continuance of an Event of Default, as defined in Section 11.1of this Sublease, Valent shall have sole and exclusive possession of the Project (subject to Permitted Encumbrances and subject to the City’s and the Trustee’s right of access pursuant to Section 10.3of the Lease) and shall and may peaceably and quietly have, hold and enjoy the Project during the Sublease Term.  WCIC covenants and agrees that it will not take any action to prevent Valent from having quiet and peaceable possession and enjoyment of the Project during the Sublease Term and will, at the request and expense of Valent, cooperate with Valent in order that Valent may have quiet and peaceable possession and enjoyment of the Project and will defend Valent’s enjoyment and possession thereof against all parties.

(b)           Subject to the provisions of this Section, Valent shall have the exclusive right to use the Project for any lawful purpose contemplated by the Act and consistent with the terms of the Performance Agreement.  Valent shall use its best efforts to comply in all material respects with all statutes, laws, ordinances, orders, judgments, decrees, regulations, directions and requirements of all federal, state, local and other governments or governmental authorities, now or hereafter applicable to the Project, as to the manner of use or the condition of the Project.  Valent shall also comply with the mandatory requirements, rules and regulations of all insurers under the policies carried under the provisions of Article VI below.  Valent shall promptly pay all costs, expenses, claims, fines, penalties and damages that may in any manner arise out of, or be imposed as a result of, the failure of Valent to comply with the provisions of this Section.  Notwithstanding any provision contained in this Section, however, Valent shall have the right, at its own cost and expense, to contest or review by legal or other appropriate procedures the validity or legality of any such governmental statute, law, ordinance, order, judgment, decree, regulation, direction or requirement, or any such requirement, rule or regulation of an insurer, and during such contest or review Valent may, to the extent permitted by law, refrain from complying therewith.

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ARTICLE IV

RENT PROVISIONS

Section 4.1.           Basic Rent.

(a)           Valent covenants and agrees to pay to WCIC in same day funds for the account of WCIC during this Sublease Term, on or before 11:00 a.m. CST, on the first calendar day of each month, beginning October 1, 2010 (“Payment Date”), as Basic Rent for the Project, an amount which, when added to any collected funds then on deposit in the Bond Fund and available for the payment of principal of the Bonds and the interest thereon on such Payment Date, shall be equal to the amount payable on such payment date as principal of the Bonds and the interest thereon as provided in the Indenture.  All payments of Basic Rent provided for in this Section shall be paid directly to WCIC and shall be used and applied by WCIC to pay to the Trustee in the manner and for the purposes set forth in the Lease and the Indenture.  At its option, on the final Payment Date, Valent may deliver to WCIC, for delivery to the Trustee, for cancellation Bonds not previously paid and Valent shall receive a credit against the Basic Rent payable by Valent in an amount equal to the principal amount of the Bonds so tendered for cancellation plus accrued interest thereon.

(b)           Notwithstanding any provision contained in this Sublease, the Lease, or in the Indenture to the contrary, in addition to any credits on the Basic Rent resulting from the payment or prepayment of Basic Rent from other sources:

(i)             moneys deposited with WCIC for deposit in the Bond Fund as interest (including moneys received as accrued interest from the sale of Bonds and any initial deposit made from the proceeds of the sale of any Bonds) shall be credited against the obligation of Valent to pay Basic Rent as the same becomes due;

(ii)            moneys deposited with WCIC for deposit in the Bond Fund as principal shall be credited against the obligation of Valent to pay Basic Rent as the same becomes due in the order of maturity thereof, except that prepayments to WCIC for purposes of making an optional deposit into the Bond Fund for the redemption of Bonds shall be applied to the principal corresponding to the Bonds to be redeemed or purchased, delivered and cancelled from the proceeds of such optional deposit; and

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(iii)          the investment income accruing to the Bond Fund and the amount of any moneys transferred by the Trustee from any other fund held under the Indenture and deposited in the Bond Fund as interest or principal shall be credited against the obligation of Valent to pay Basic Rent, as the same become due.

Section 4.2.           Additional Rent.  Valent shall pay to WCIC as Additional Rent, within thirty (30) days after receiving an itemized invoice from WCIC therefor, in the following amounts:

(a)           all reasonable fees, charges, costs and expenses, including reasonable agent and counsel fees, costs and expenses, of the City, the Trustee, the Paying Agent and rebate analysts incurred under or arising from the Indenture, the Lease, the Performance Agreement or the Tax Compliance Agreement (as defined in the Indenture), including but not limited to claims by contractors or subcontractors, as and when the same become due;

(b)           all reasonable costs incident to the issuance of the Bonds and the payment of the principal of and interest on the Bonds as the same become due and payable, including all costs and expenses in connection with the call, redemption and payment of all outstanding Bonds;

(c)           all reasonable fees, charges, costs and expenses incurred in connection with the enforcement of any rights under the Lease, the Indenture or the Performance Agreement by the City, the Trustee or the Bondowners, including counsel fees, costs and expenses;

(d)           an amount sufficient to reimburse WCIC for extraordinary expenses reasonably incurred by WCIC under the Lease in connection with the performance of its obligations under the Lease, the Performance Agreement, the Tax Compliance Agreement or the Indenture;

(e)           all rebate payments required under Section 148(f) of the Internal Revenue Code, to the extent such amounts are not available to the Trustee in the Rebate Fund held under the Indenture; and

(f)           all other reasonable payments of whatever nature which Valent has agreed in writing to pay or assume under the provisions of this Sublease or the Performance Agreement.

Additionally, any costs paid by Valent at the Bond closing shall not be included as Additional Rent under the provisions of this Subease.

Section 4.3.           Obligations of Valent Absolute and Unconditional.

(a)           The obligations of Valent under this Sublease to make payments of Basic Rent and Additional Rent on or before the date the same become due, and to perform all of its other obligations, covenants and agreements hereunder shall be absolute and unconditional, without notice or demand, and without abatement, deduction, set-off, counterclaim, recoupment or defense or any right of termination or cancellation arising from any circumstance whatsoever, whether now existing or hereafter arising, and irrespective of whether the Project has been started or completed, and notwithstanding any damage to, loss, theft or destruction of, the Project or any part thereof, any failure of consideration or frustration of commercial purpose, the taking by eminent domain of title to or of the right of temporary use of all or any part of the Project, legal curtailment of Valent’s use thereof, the eviction or constructive eviction of Valent, any change in the tax or other laws of the United States of America, the State of Missouri or any political subdivision thereof, any change in WCIC’s legal organization or status, or any default of WCIC hereunder, and regardless of the invalidity of any action of WCIC.

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(b)           Nothing in this Sublease shall be construed to release WCIC from the performance of any agreement on its part herein contained or as a waiver by Valent of any rights or claims Valent may have against WCIC under this Sublease or otherwise, but any recovery upon such rights and claims shall be had from WCIC separately, it being the intent of this Sublease that Valent shall be unconditionally and absolutely obligated to perform fully all of its obligations, agreements and covenants under this Sublease (including the obligation to pay Basic Rent and Additional Rent) for the benefit of WCIC.  Valent may, however, at its own cost and expense and in its own name or in the name of WCIC, prosecute or defend any action or proceeding or take any other action involving third Persons which Valent deems reasonably necessary in order to secure or protect its right of possession, occupancy and use hereunder, and in such event WCIC hereby agrees to cooperate fully with Valent and to take all action necessary to effect the substitution of Valent for WCIC in any such action or proceeding if Valent shall so request.

(c)           WCIC shall construct and equip the Project as set forth in Section 4.2 of the Lease. Notwithstanding any provision contained in this Sublease to the contrary, during the construction of the Project Improvements (the “Construction Period”), Valent shall not be obligated to pay more than eighty-five percent (85%) of Building Costs (defined below) until such time as WCIC has complied with its obligation to construct and equip the Project.  This percentage calculation is defined as (i) the numerator being equal to the present value sum (discounted at the same rate used by Valent for purposes of lease accounting classification for financial reporting under US generally accepted accounting principles) of all payments due by Valent under this Sublease, including but not limited to Basic Rent and Additional Rent paid and scheduled to be paid through the end of the Construction Period and (ii) the denominator being equal to the Building Costs.  Building Costs are defined as all costs, through the date of the calculation, associated with acquiring, developing and installing Project Improvements on the Project Site for purposes of the Lease and this Sublease, including "soft costs" paid by WCIC or on behalf of WCIC but excluding the payment of $540,000 for the acquisition of land.   Furthermore, Valent shall not be obligated to make any payments of Basic Rent or Additional Rent, above and beyond such payments made during the Construction Period which are subject to the above mentioned eighty-five percent 85% limitation, until after the Completion Date (as defined in the Lease).

Section 4.4.           Prepayment of Basic Rent.  Valent may at any time and from time to time prepay all or any part of the Basic Rent provided for hereunder.  During such times as the amount paid to WCIC shall be sufficient to pay, at the time required, the principal of and interest on all the Bonds then remaining unpaid, Valent shall not be obligated to make payments of Basic Rent under the provisions of this Sublease.

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ARTICLE V

MAINTENANCE, TAXES AND UTILITIES

Section 5.1.           Maintenance and Repairs.  Throughout the Sublease Term, Valent shall, at its own expense, keep the Project in reasonably safe operating condition and keep the Project in good repair, reasonable wear, tear, depreciation and obsolescence excepted, making from time to time all repairs thereto and renewals and replacements thereof it determines to be necessary.  Without limiting the generality of the foregoing, Valent shall at all times remain in compliance with all provisions of the City’s code relating to maintenance and appearance.

Section 5.2.           Taxes, Assessments and Other Governmental Charges.

(a)           Subject to subsection (b) of this Section, Valent shall promptly pay and discharge, as the same become due, all taxes and assessments, general and special, and other governmental charges of any kind whatsoever that may be lawfully taxed, charged, levied, assessed or imposed upon or against or be payable for or in respect of the Project, or any part thereof or interest therein (including the leasehold estate of Valent therein) or any buildings, improvements, machinery and equipment at any time installed thereon by Valent, or the income therefrom, including any new taxes and assessments not of the kind enumerated above to the extent that the same are lawfully made, levied or assessed in lieu of or in addition to taxes or assessments now customarily levied against real or personal property, and further including all utility charges, assessments and other general governmental charges and impositions whatsoever, foreseen or unforeseen, which if not paid when due would impair the security of the Bonds or encumber the City’s title or WCIC’s leasehold interest to the Project; provided that with respect to any special assessments or other governmental charges that are lawfully levied and assessed which may be paid in installments, Valent shall be obligated to pay only such installments thereof as become due and payable during the Sublease Term.

(b)           Valent shall have the right, in its own name or in WCIC’s name (as tenant under the Lease), to contest the validity or amount of any tax, assessment or other governmental charge which Valent is required to bear, pay and discharge pursuant to the terms of this Article by appropriate legal proceedings instituted at least 10 days before the tax, assessment or other governmental charge complained of becomes delinquent if and provided (1) Valent, before instituting any such contest, gives WCIC written notice of its intention to do so, (2) Valent diligently prosecutes any such contest, at all times effectively stays or prevents any official or judicial sale therefor, under execution or otherwise, and (3) Valent promptly pays any final judgment enforcing the tax, assessment or other governmental charge so contested and thereafter promptly procures record release or satisfaction thereof.  WCIC agrees to cooperate fully with Valent in connection with any and all administrative or judicial proceedings related to any tax, assessment or other governmental charge.  Valent shall save and hold harmless WCIC from any costs and expenses WCIC may incur related to any of the above.

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(c)           Nothing in this Sublease shall be construed to require Valent to make duplicate tax payments.

Section 5.3.           Utilities.  All utilities and utility services used by Valent in, on or about the Project shall be paid by Valent and shall be contracted by Valent in Valent’s own name, and Valent shall, at its sole cost and expense, procure any and all permits, licenses or authorizations necessary in connection therewith.

Section 5.4.           Property Tax Exemption.  WCIC and Valent expect that while the Project is owned by the City and is subject to the Lease and this Sublease, the Project will be exempt from all ad valorem property taxes by reason of such ownership, and the City and WCIC agrees that they will (at the expense of Valent) cooperate with Valent to defend such exemption against all parties.WCIC and Valent further acknowledge and agree that WCIC’s obligations hereunder are contingent upon Valent making the payments and otherwise complying with the terms of the Performance Agreement during the term of this Sublease.  The terms and conditions of the Performance Agreement are incorporated herein as if fully set forth herein.

ARTICLE VI

INSURANCE

Section 6.1.           Title Commitment or Report; Due Diligence Materials.  Prior to the execution of this Sublease, Valent will purchase, from a title insurance company reasonably acceptable to WCIC, a commitment for title insurance or provide such other report in a form reasonably acceptable to WCIC showing the ownership of and encumbrances on the Project Site. Copies of such report shall be provided to WCIC.  Within 60 days after the issuance of the Bonds, Valent will, at Valent’s expense, deliver to WCIC a title insurance policy, dated the date of issuance of the Bonds, showing the ownership of and encumbrances on the Project Site. Additionally, the parties acknowledge that, prior to the execution of this Sublease, the City and WCIC have granted to Valent, and Valent has exercised, the rights to review title in connection with, and perform physical inspection of, the Project Site.

Section 6.2.           Insurance.  Valent shall maintain insurance coverage with respect to the Project and Valent’s operations with respect to the Project, as follows. To the extent that Valent provides insurance coverage as required by this Sublease, the City agrees that WCIC shall be relieved of its obligations under the Lease to provide the same insurance coverage.

(a)           Casualty Insurance.

(i)            Valent shall at its sole cost and expense obtain and shall maintain throughout the Sublease Term, a policy or policies of insurance to keep the Project constantly insured against loss or damage by fire, lightning and all other risks covered by the extended coverage insurance endorsement then in use in the State of Missouri in an amount equal to the Full Insurable Value thereof (subject to reasonable loss deductible provisions).  The insurance required pursuant to this Section shall be maintained with a generally recognized responsible insurance company or companies authorized to do business in the State of Missouri or generally recognized international insurers or reinsurers with an A.M. Best rating of “A-” or the equivalent thereof as may be selected by Valent.  Valent shall deliver certificates of insurance for such policies to WCIC on the date of execution of this Sublease and not less than 30 days before the expiration date of each insurance policy.  All such policies of insurance pursuant to this Section, and all renewals thereof, shall name the City, WCIC and Valent as insureds, as their respective interests may appear, shall name the Trustee as loss payee and shall contain a provision that such insurance may not be cancelled by the issuer thereof without at least 10 days’ advance written notice to the City, WCIC, Valent and the Trustee.

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(ii)           In the event of loss or damage to the Project, the Net Proceeds of casualty insurance carried pursuant to this Section shall be (1) paid over to the Trustee and shall be applied as provided in Article VIII of this Sublease, or (2) applied as directed by, or on behalf of, the Owners of 100% in principal amount of the Bonds outstanding.

(b)           Public Liability Insurance.

(1)           Valent shall at its sole cost and expense maintain or cause to be maintained at all times during the Sublease Term commercial general liability and automobile liability insurance, under which the City, the Trustee, and WCIC shall be named as additional insureds, properly protecting and indemnifying the City, the Trustee and WCIC, in an amount not less than the limits of liability set by Section 537.610 of the Revised Statutes of Missouri, as amended (subject to reasonable loss deductible clauses not to exceed the amounts normally or generally carried by Valent).  The policies of said insurance shall contain a provision that such insurance may not be canceled by the issuer thereof without at least 10 days’ advance written notice to the City, WCIC, and the Trustee.  Certificates of such policies shall be furnished to the City, the Trustee and WCIC on the date of execution of this Sublease and not less than 30 days before the expiration date of each insurance policy.

(2)           In the event of a general or automobile liability occurrence, the Net Proceeds of liability insurance carried pursuant to this Section shall be applied toward the extinguishment or satisfaction of the liability with respect to which such proceeds have been paid.

Section 6.3.           Blanket Insurance Policies; Self Insurance.  Valent may satisfy any of the insurance requirements set forth in this Article by using blanket policies of insurance, provided each and all of the requirements and specifications of this Article respecting insurance are complied with. Valent may satisfy any of the insurance requirements set forth in this Article using self-insurance or insurance through a subsidiary or affiliate; so long as (a) the insurance is underwritten by a subsidiary or other affiliate of Valent with a separate net worth of at least $150,000,000, or (b) Valent funds such self insurance by appropriate reserves in the amounts recommended by independent actuarial reports obtained not less than every three (3) years for the term of this Sublease.  Valent shall provide to WCIC copies of financial statements or similar evidence of net worth of such affiliate on the date hereof and every three (3) years, or, in the case of actuarial reports, on the date of delivery of this Sublease and, thereafter, not less than 30 days after receipt of such reports.

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Section 6.4.          Worker’s Compensation.  Valent agrees throughout the Sublease Term to maintain or cause to be maintained the Worker’s Compensation coverage required by the laws of the State of Missouri.

Section 6.5.           Failure to Insure.  Unless Valent provides evidence of the insurance coverage required under this Article VI, WCIC may (but shall not be obligated to) purchase insurance at Valent’s expense to protect the interests of the City, the Trustee, WCIC and the Owners in the Project. This insurance may, but need not, protect Valent’s interests.  The coverage that WCIC purchases may not pay any claim that Valent makes or any claim that is made against Valent in connection with the Project.  Valent may later cancel any insurance purchased by WCIC, but only after providing evidence to WCIC that Valent has obtained insurance as required in this Article VI.  If WCIC purchases insurance for the Project, Valent will be responsible for the costs of that insurance together with interest equal to the lesser of (a) 10% per annum or (b) the highest rate permitted by law.  The costs of the insurance that WCIC obtains may be more than the cost of insurance Valent may be able to obtain on its own.

ARTICLE VII

ALTERATION OF THE PROJECT

Section 7.1.           Additions, Modifications and Improvements to the Project.

(a)           Valent may, at its sole cost and expense, make such additions, modifications and improvements in and to any part of the Project as Valent from time to time may deem necessary or desirable for its business purposes.  All additions, modifications and improvements made by Valent pursuant to this Section shall (1) be made in a good and workmanlike manner and in strict compliance with all laws and ordinances applicable thereto, (2) when commenced, be prosecuted to completion with due diligence, and (3) when completed, be deemed a part of the Project; provided, however, that additions of machinery and equipment installed in the Project by Valent not purchased or acquired from the proceeds of the Bonds or subsequent issuances of bonds and deposited with the Trustee hereunder shall remain the property of Valent and may be removed by Valent, and are not part of the Project; provided that Valent shall pay all the costs and expenses of any such removal and shall promptly repair at its expense all damage to the Project caused thereby.  Prior to Valent making improvements which are to become part of the Project, the City, WCIC and Valent shall agree upon whether any grant payments are to be paid with respect thereto and other matters related to the improvements to the Project and amend the Performance Agreement, if necessary, regardless of the improvements being made pursuant to this Section 7.1 or pursuant to Section 7.3.

(b)           Notwithstanding anything herein to the contrary, any repairs and maintenance pursuant to the provisions of Article VIII shall be deemed to be part of the Project regardless of whether the same is paid for from the proceeds of the Bonds or subsequent issuances of bonds deposited with the Trustee.

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Section 7.2.           Additional Improvements on the Project Site.  Valent may, at its sole cost and expense, construct on portions of the Project Site not theretofore occupied by buildings or improvements such additional buildings and improvements as Valent from time to time may deem necessary or desirable for its business purposes.  All additional buildings and improvements constructed on the Project Site by Valent and not paid from proceeds of the Bonds or proceeds from subsequent issuance of bonds, pursuant to the authority of this Section shall not be included as Project Improvements and, during the life of this Sublease, shall remain the property of Valent and may be added to, altered or razed and removed by Valent at any time.  All additional buildings and improvements shall be made in a good and workmanlike manner and in strict compliance with all material laws and ordinances applicable thereto and when commenced shall be prosecuted to completion with due diligence.  Valent covenants and agrees (a) to make any repairs and restorations required to be made to the Project because of the construction of, addition to, alteration or removal of said additional buildings or improvements, and (b) to promptly and with due diligence either raze and remove or repair, replace or restore any of said additional buildings and improvements as may from time to time be damaged by fire or other casualty.  Valent shall pay all ad valorem taxes and assessments payable with respect to such additional buildings and improvements which remain the property of Valent. If for any reason the County Assessor determines that such additional buildings and improvements are not subject to ad valorem taxes, Valent shall make payments in lieu of taxes in an amount equal to the taxes that would otherwise be due under this Section.

Section 7.3.           Permits and Authorizations.  Valent shall not do or permit others under its control to do any work on the Project related to any repair, rebuilding, restoration, replacement, modification or addition to the Project, or any part thereof, unless all requisite municipal and other governmental permits and authorizations shall have been first procured.  The City agrees to act promptly on all requests for such municipal permits and authorizations. All such work shall be done in a good and workmanlike manner and in strict compliance with all applicable material building and zoning laws and governmental regulations and requirements, and in accordance with the requirements, rules and regulations of all insurers under the policies required to be carried under the provisions of Article VI.

Section 7.4.           Mechanics’ Liens.

(a)           Valent will not directly or indirectly create, incur, assume or suffer to exist any lien on or with respect to the Project, except Permitted Encumbrances, and Valent shall promptly notify City and WCIC of the imposition of such lien of which Valent is aware and shall promptly, at its own expense, take such action as may be necessary to fully discharge or release any such lien.  Whenever and as often as any mechanics’ or other similar lien is filed against the Project, or any part thereof, purporting to be for or on account of any labor done or materials or services furnished in connection with any work in or about the Project, Valent shall discharge the same of record.  Notice is hereby given that City or WCIC shall not be liable for any labor or materials furnished Valent or anyone claiming by, through or under Valent upon credit, and that no mechanics’ or other similar lien for any such labor, services or materials shall attach to or affect the reversionary or other estate of the City in and to the Project or any part thereof.

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(b)           Notwithstanding paragraph (a) above, Valent may contest any such mechanics’ or other similar lien if Valent (1) within 60 days after Valent becomes aware of any such lien notifies City and WCIC in writing of its intention to do so, (2) diligently prosecutes such contest, (3) at all times effectively stays or prevents any official or judicial sale of the Project, or any part thereof or interest therein, under execution or otherwise, (4) promptly pays or otherwise satisfies any final judgment adjudging or enforcing such contested lien claim and (5) thereafter promptly procures record release or satisfaction thereof.  Valent may permit the lien so contested to remain unpaid during the period of such contest and any appeal therefrom unless Valent is notified by the City or WCIC that, in the opinion of counsel, by nonpayment of any such items, the interest of the City in the Project will be subject to loss or forfeiture.  In that event, Valent shall promptly, at its own expense, take such action as may be reasonably necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim if the same shall arise at any time.  Valent shall save and hold harmless the City and WCIC from any loss, costs or expenses the City or WCIC may incur related to any such contest.  Valent shall reimburse the City and/or WCIC for any expenses incurred by them in connection with the imposition of any such lien or in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim.The City and WCIC shall cooperate fully with Valent in any such contest

ARTICLE VIII

DAMAGE, DESTRUCTION AND CONDEMNATION

Section 8.1.           Damage or Destruction.

(a)           Notwithstanding the provisions of Section 7.1, if any portion of the Project is damaged or destroyed by fire or any other casualty, whether or not covered by insurance, Valent, as promptly as practicable, shall either (1) make the determination described in subsection (f) below, or (2) repair, restore or replace the same so that upon completion of such repairs, restoration or replacement such portion of the Project is of a value not less than the value thereof immediately prior to the occurrence of such damage or destruction.

If Valent elects to repair, restore or replace the Project, any reference to the words “Project” shall be deemed to include any such new machinery, equipment and fixtures.

Unless Valent makes the determination described in subsection (f) below, the Net Proceeds of casualty insurance required by Article VI hereof received with respect to such damage or loss to the Project shall be used to pay the cost of repairing, restoring or replacing the Project or any part thereof.  Insurance monies in an amount less than $1,000,000 may be paid to or retained by Valent to be held in trust and used as provided herein.  Insurance monies in any amount of $1,000,000 or more shall be (1) paid to WCIC, which will in turn pay such funds to the Trustee for deposit in the Project Fund, or (2) applied as directed by, or on behalf of, the Owners of 100% in principal amount of the Bonds outstanding.  If Valent makes the determination described in subsection (f) below, the Net Proceeds shall be paid to WCIC and deposited with the Trustee and used to redeem Bonds as provided in subsection (f).

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(b)           If any of the insurance monies paid by the insurance company as hereinabove provided remain after the completion of such repairs, restoration or replacement, and this Sublease has not been terminated, the excess shall be paid to WCIC and deposited in the Bond Fund, subject to the rights of the secured party under the Leasehold Mortgage and any other Financing Party.  Completion of such repairs, restoration or replacement shall be evidenced to WCIC by a certificate signed by the Authorized Company Representative stating (1) that the purchase and installation of the Project has been completed and the date thereof, and (2) that all costs and expenses of the purchasing and installing the Project have been incurred.  If the Net Proceeds are insufficient to pay the entire cost of such repairs, restoration or replacement, Valent shall pay the deficiency, unless Valent makes the determination described in subsection (f) below.

(c)           Except as otherwise provided in this Sublease, in the event of any such damage by fire or any other casualty, the provisions of this Sublease shall be unaffected and Valent shall remain and continue liable for the payment of all Basic Rent and Additional Rent and all other charges required hereunder to be paid by Valent, as though no damage by fire or any other casualty has occurred.

(d)           WCIC and Valent agree that they will cooperate with each other, to such extent as such other party may reasonably require, in connection with the prosecution or defense of any action or proceeding arising out of, or for the collection of any insurance monies that may be due in the event of, any loss or damage, and that they will execute and deliver to such other parties such instruments as may be required to facilitate the recovery of any insurance monies.

(e)           Valent agrees to give prompt written notice to WCIC with respect to all fires and any other casualties occurring in, on, at or about the Project Site.

(f)            If Valent determines that repairing, replacing or restoring the Project is not practicable or desirable, any Net Proceeds of casualty insurance required by Article VI hereof received with respect to such damage or loss shall, after payment of all Additional Rent then due and payable, be paid to WCIC, which will pay such funds into the Bond Fund and the same shall be used to redeem Bonds on the earliest practicable redemption date or to pay the principal of any Bonds as the same become due, all subject to rights of the secured party under the Leasehold Mortgage and any other Financing Party under any Financing Documents (if any).  Valent agrees to be reasonable in exercising its judgment pursuant to this subsection (f).

(g)           Valent shall not, by reason of its inability to use all or any part of the Project during any period in which the Project is damaged or destroyed or is being repaired, replaced or restored, nor by reason of the payment of the costs of such repairing, restoring or replacing, be entitled to any reimbursement from the City, the Trustee or the Owners or to any abatement or diminution of the rentals payable by Valent under this Sublease or of any other obligations of Valent under this Sublease except as expressly provided in this Section.

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Section 8.2.           Bondowner Approval.  Notwithstanding anything to the contrary contained in this Article VIII, the proceeds of any insurance received subsequent to a casualty may prior to the application thereof by the City, the Trustee or WCIC be applied as directed in writing by the Owners of 100% of the principal amount of Bonds outstanding, subject and subordinate to (a) the rights of the City, the Trustee and WCIC to be paid all their expenses (including attorneys’ fees, trustee’s fees and any extraordinary expenses of the City and the Trustee) incurred in the collection of such gross proceeds and (b) the rights of the City to any amounts then due and payable under the Performance Agreement.

ARTICLE IX

SPECIAL COVENANTS

Section 9.1.           Surrender of Possession.  Upon accrual of WCIC’s right of re-entry to the extent provided in Section 11.2(b), Valent shall peacefully surrender possession of the Project to WCIC in good condition and repair; provided, however, Valent shall have the right within 90 days (or such later date as WCIC may agree to) after the termination of this Sublease to remove from the Project Site any buildings, improvements, furniture, trade fixtures, machinery and equipment owned by Valent and not constituting part of the Project.  All repairs to and restorations of the Project required to be made because of such removal shall be made by and at the sole cost and expense of Valent, and during said 90-day (or extended) period Valent shall bear the sole responsibility for and bear the sole risk of loss for said buildings, improvements, furniture, trade fixtures, machinery and equipment owned by Valent and not constituting part of the Project.  All buildings, improvements, furniture, trade fixtures, machinery and equipment owned by Valent and which are not so removed from the Project before the expiration of said period shall be the separate and absolute property of WCIC.

Section 9.2.           Right of Access to the Project.  The City and WCIC may conduct such periodic inspections of the Project as may be generally provided in the City’s municipal code.  In addition, Valent agrees that WCIC and its duly authorized agents may, at reasonable times during normal business hours and, except in the event of emergencies, upon not less than ten Business Day’s prior written notice and subject to Valent’s usual business propriety, safety and security requirements, enter upon the Project Site (a) to examine and inspect the Project without interference or prejudice to Valent’s operations, (b) to monitor the acquisition, construction and installation provided for in Section 4.2 of the Lease, as may be reasonably necessary, (c) to examine all files, records, books and other materials in Valent’s possession pertaining to the acquisition, installation or maintenance of the Project, and (d) upon either (A) the occurrence and continuance of an Event of Default or (B) Valent’s failure to purchase the Project at the end of the Sublease Term, to exhibit the Project to prospective purchasers, lessees or trustees.

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Section 9.3.           Granting of Easements; Leasehold Mortgages and Financing Arrangements.

(a)           Subject to Sections 9.3(c) and (d), if no Event of Default under this Sublease has happened and is continuing, Valent may at any time or times, but only with the prior written consent of the City and WCIC, (1) grant subleases (as permitted in Section 12.1(b)), easements, licenses, rights-of-way (including the dedication of public highways) and other rights or privileges in the nature of easements that are for the direct use of the Project, or part thereof, by the grantee, (2) release or terminate existing subleases, easements, licenses, rights-of-way and other rights or privileges, all with or without consideration and upon such terms and conditions as Valent shall determine, or (3) incur Permitted Encumbrances.  Valent may take such actions and may execute any applicable documents in Valent’s own name. No separate signature of or authorization shall be required for the execution and delivery of any such document, although the City agrees to execute and deliver such confirming documents as are described below, under the procedures described below, if Valent chooses to make such a request.  All third parties entering into agreements with Valent or receiving delivery of or the benefit of such agreements or documents shall be entitled to rely upon the same as having been executed and delivered by the City, unless such third party has actual or constructive notice, expressly in writing, that the agency herein granted to Valent has been terminated by the City and WCIC because of an uncured Event of Default hereunder.  The City agrees that it will execute and deliver and will cause and direct the Trustee to execute and deliver any instrument necessary or appropriate to confirm and grant, release or terminate any such sublease, easement, license, right-of-way or other right or privilege or any such agreement or other arrangement, upon receipt by the City and the Trustee of:  (1) a copy of the instrument of grant, release or termination or of the agreement or other arrangement, (2) a written application signed by an Authorized Company Representative requesting such instrument, and (3) a certificate executed by an Authorized Company Representative stating that such grant or release is not detrimental to the proper conduct of the business of Valent, will not impair the effective use or interfere with the efficient and economical operation of the Project, will not materially adversely affect the security intended to be given by or under the Indenture and will be a Permitted Encumbrance.  If no Event of Default has happened and is continuing beyond any applicable grace period, any payments or other consideration received by Valent for any such grant or with respect to or under any such agreement or other arrangement shall be and remain the property of Valent; but, subject to Sections 9.3(c) and (d), upon (1) termination of this Sublease for any reason other than the redemption of the Bonds and/or the purchase of the Project by Valent or (2) the occurrence and continuance of an Event of Default by Valent, all rights then existing of Valent with respect to or under such grant shall inure to the benefit of and be exercisable by the City and the Trustee.

(b)           Valent may mortgage the leasehold estate created by this Sublease, with prior notice to but without the consent of the City and WCIC, provided and upon condition that a duplicate original or certified copy or photostatic of each such mortgage, and the note or other obligation secured thereby, is delivered to the City and WCIC within thirty (30) days after the execution thereof.

(c)           WCIC acknowledges and agrees that Valent may finance and refinance its rights and interests in the Project, this Sublease and the leasehold estate created hereby and, in connection therewith, Valent may execute Financing Documents with one or more Financing Parties.  Notwithstanding anything contained to the contrary in this Sublease, Valent may, at any time and from time to time, with prior notice to but without the consent of the City and WCIC (1) execute one or more Financing Documents upon the terms contained in this Section 9.3and (2) sublease or assign this Sublease, the leasehold estate, any sublease and rights in connection therewith, and/or grant liens or security interests therein, to any Financing Party.  Any further sublease or assignment by any Financing Party shall be subject to the provisions of Section 12.1(c).

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(d)           Upon notice by Valent to the City and WCIC in writing that it has executed one or more Financing Documents under which it has granted rights in this Sublease to a Financing Party, which includes the name and address of such Financing Party, then the following provisions shall apply in respect of each such Financing Party:

(1)           there shall be no merger of this Sublease or of the leasehold estate created hereby with the fee title to the Project, notwithstanding that this Sublease or said leasehold estate and said fee title shall be owned by the same Person or Persons, without the prior written consent of such Financing Party;

(2)           the Trustee, on behalf of the City and WCIC, shall serve upon each such Financing Party (at the address, if any, provided to the City and WCIC) a copy of each notice of the occurrence of an Event of Default and each notice of termination given to Valent under this Sublease, at the same time as such notice is served upon Valent.  No such notice to Valent shall be effective unless a copy thereof is thus served upon each Financing Party;

(3)           each Financing Party shall have the same period of time which Valent has, after the service of any required notice upon it, within which to remedy or cause to be remedied any payment default under this Sublease which is the basis of the notice plus thirty (30) days, and the City and WCIC shall accept performance by such Financing Party as timely performance by Valent;

(4)           the City and WCIC may exercise any of their rights or remedies with respect to any other Event of Default by Valent, subject to the rights of the Financing Parties under this Section 9.3(d) as to such other events of default;

(5)           upon the occurrence and continuance of an Event of Default by Valent under this Sublease, other than a default in the payment of money, WCIC shall take no action to effect a termination of this Sublease by service of a notice or otherwise, without first giving notice thereof to each such Financing Party and permitting such Financing Party (or its designee, nominee, assignee or transferee) a reasonable time within which to remedy such default in the case of an Event of Default which is susceptible of being cured (provided that the period to remedy such event of default shall continue beyond any period set forth in the Sublease to effect said cure so long as the Financing Party (or its designee, nominee, assignee or transferee) is diligently prosecuting such cure); provided that the Financing Party (or its designee, nominee, assignee or transferee) shall pay or cause to be paid to the City, the Trustee and WCIC all expenses, including reasonable counsel fees, court costs and disbursements incurred by the City, the Trustee and WCIC in connection with any such default; and

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(6)           the Financing Parties (and their designees, nominees, assignees or transferees) shall have the right to enter, possess and use the Project at such reasonable times and manner as are necessary or desirable to effectuate the remedies and enforce their respective rights under the Financing Documents.

(e)           In connection with the execution of one or more Financing Documents, upon the request of Valent, the City and WCIC agree to execute such documents as shall be reasonably requested by a Financing Party and which are usual and customary in connection with the closing of the financing or refinancing pursuant to the Financing Documents.  Valent agrees to reimburse the City and WCIC for any and all costs and expenses incurred by the City and WCIC pursuant to this Section, including reasonable attorneys’ fees, costs and expenses, in complying with such request.

(f)            Valent’s obligations under any mortgage or Financing Document relating to the Project shall be subordinate to Valent’s obligations under this Sublease.

Section 9.4.           Indemnification of City and Trustee.  Valent shall indemnify and save and hold harmless the City, the Trustee and their governing body members, officers, agents, attorneys, servants and employees from and against all claims, demands, costs, liabilities, damages or expenses, including attorneys’ fees, costs and expenses, by or on behalf of any Person arising from any work or thing done in or on the Project during the Sublease Term, and against and from all claims, demands, costs, liabilities, damages or expenses, including attorneys’ fees, costs and expenses, arising during the Sublease Term from (1) any condition of the Project caused by Valent, (2) any breach or default on the part of Valent in the performance of any of its obligations under this Sublease, the Performance Agreement or any related document, (3) any contract entered into in connection with the acquisition, purchase, construction, extension or improvement of the Project, (4) any act of negligence of Valent or of any of its agents, contractors, servants, employees or licensees, (5) unless Valent has been released from liability pursuant to Section 12.1(c), any act of negligence of any assignee or sublessee of Valent, or of any agents, contractors, servants, employees or licensees of any assignee or sublessee of Valent, (6) obtaining any applicable state and local sales and use tax exemptions for materials or goods that become part of the Project, and (7) any violation of Section 107.170 of the Revised Statutes of Missouri, as amended; provided, however, the indemnification contained in this Section 9.4 shall not extend to the City or Trustee to the extent that such claims, demands, costs, liabilities, damages or expenses, including attorneys’ fees, costs and expenses, are (A) the result of work being performed at the Project by employees of the City, or (B) the result of gross negligence or willful misconduct by the City or the Trustee.  Upon written notice from the City or the Trustee of any such claim or demand, Valent shall defend them or either of them in any such action or proceeding; provided, that the City shall cooperate with Valent and provide reasonable assistance in such defense.  All costs related to such defense of the City or the Trustee shall be paid by Valent.  This Section 9.4 shall survive any termination of this Sublease, the Performance Agreement, the satisfaction and discharge of the Indenture or the resignation or removal of the Trustee.

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Section 9.5.           Depreciation, Investment Tax Credit and Other Tax Benefits.  The City and WCIC agree that any depreciation, investment tax credit or any other tax benefits with respect to the Project or any part thereof shall be made available to Valent, and the City and WCIC will fully cooperate with Valent in any effort by Valent to avail itself of any such depreciation, investment tax credit or other tax benefits.

Section 9.6.           Valent to Maintain its Existence. Valent agrees that until the Bonds are paid or payment is provided for in accordance with the terms of the Indenture, it will maintain its existence, and will not dissolve or otherwise dispose of all or substantially all of its assets; provided, however, that Valent may, without violating the agreement contained in this Section, consolidate with or merge into another Person or permit one or more other Persons to consolidate with or merge into it, or may sell or otherwise transfer to another Person all or substantially all of its assets as an entirety and thereafter dissolve, provided, the surviving, resulting or transferee Person (a) expressly assumes in writing all the obligations of Valent contained in this Sublease, and (b) the long-term-debt rating of such Person or the long term debt rating of an entity controlled by, under common control with or controlling such Person, is in any of the top three long-term-debt rating categories by any nationally recognized rating service.

Section 9.7.           Security Interests.

(a)           Valent hereby authorizes the Trustee to file all appropriate continuation statements pursuant to Section 701 of the Indenture as may be required under the Uniform Commercial Code in order to fully preserve and protect the security of the Owners of the Bonds and the rights of the Trustee under the Indenture.  At the written request of the Owners of 100% of the Bonds then Outstanding, the City, WCIC and Valent agree to enter into any other instruments necessary for perfection of and continuance of the perfection of the security interests of the City and the Trustee in the Project.  Upon the written instructions of the Owners of 100% of the Bonds then Outstanding, together with sufficient indemnity to cover the costs thereof, the Trustee shall file all instruments the Owners of the Bonds deem necessary to be filed and shall continue or cause to be continued such instruments for so long as the Bonds are Outstanding.  The City, WCIC and Valent shall cooperate with the Trustee in this regard by providing such information as the Trustee may require to file or to renew such statements.

(b)           If, at any time during the Sublease Term, Valent changes its name or takes any other action that could affect the proper location for filing of Uniform Commercial Code financing statements or continuation statements or which could render existing filings misleading or invalid, Valent shall immediately provide written notice of such change to the City, the Trustee and WCIC, and thereafter promptly deliver to the City, the Trustee or WCIC such additional information or documentation regarding such change as the City, the Trustee or WCIC may reasonably request for the purpose of amendment and/or refiling, at the expense of Valent, as may be reasonably determined to be necessary by the City, the Trustee or WCIC, and their respective attorneys.

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Section 9.8.           Environmental Matters, Warranties, Covenants and Indemnities Regarding Environmental Matters.

(a)           As used in this Section, the following terms have the following meanings:

“Environmental Laws” means any now-existing or hereafter enacted or promulgated federal, state, local, or other law, statute, ordinance, rule, regulation or court order pertaining to (1) environmental protection, regulation, contamination or clean-up, (2) toxic waste, (3) underground storage tanks, (4) asbestos or asbestos-containing materials, or (5) the handling, treatment, storage, use or disposal of Hazardous Substances, including without limitation the Comprehensive Environmental Response, Compensation and Liability Act and the Resource Conservation and Recovery Act, all as amended from time to time.

“Hazardous Substances” means all (1) “hazardous substances” (as defined in 42 U.S.C. §9601(14)), (2) “chemicals” subject to regulation under Title III of the Superfund Amendments and Reauthorization Act of 1986, as amended from time to time (3) natural gas liquids, liquefied natural gas or synthetic gas, (4) any petroleum, petroleum-based products or crude oil, or (5) any other hazardous or toxic substances, wastes or materials, pollutants, contaminants or any other substances or materials which are included under or regulated by any Environmental Law.

(b)           The Redevelopment Corporation, and WCIC each warrants and represents to Valent that to the actual knowledge of such parties, (i) there are no conditions on the Project Site which materially violate any applicable Environmental Laws, (ii) there are no Hazardous Substances located on the Project Site, and (iii) no claims or demands have been asserted or made in writing by any third parties arising out of, relating to or in connection with any Environmental Laws or Hazardous Substances on, or allegedly on, the Project Site for any injuries suffered or incurred, or allegedly suffered or incurred, by reason of the foregoing.

(c)           The Redevelopment Corporation, WCIC and Valent will promptly provide each other party with copies of any notifications of releases of Hazardous Substances or of any environmental hazards or potential hazards in material violation of Environmental Lawswhich are given by or on behalf of such party to any Federal, state or local or other agencies or authorities or which are received by such party from any Federal, state or local or other agencies or authorities with respect to the Project Site.  Such copies shall be sent to the other parties concurrently with their being mailed or delivered to the governmental agencies or authorities or within ten days after they are received by the receiving party.  Valent will provide to the City, WCIC and the Redevelopment Corporation for review only, any environmental assessment (“Assessments”) and reports regarding the correction or remediation of material environmental issues required to by Environmental Laws to be addressed in the Assessment (“Reports”) concerning the Project Site and the Project Improvements; upon the completion of the City’s and WCIC’s review of the Assessments and the Reports, the City and WCIC shall immediately return to Valent all originals and copies of the Assessments and Reports. The City and WCIC acknowledge that the prior to the execution of this Sublease, the City and WCIC each permitted Valent to enter upon the Project Site for purposes of performing an Assessment.

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(d)           Valent will use its best efforts to comply with and operate and at all times use, keep and maintain the Project and every part thereof (whether or not such property constitutes a facility, as defined in 42 U.S.C. § 9601 et. seq.) in material conformance with all applicable Environmental Laws.  Without limiting the generality of the foregoing, Valent will not use, generate, treat, store, dispose of or otherwise introduce any Hazardous Substance into or on the Project or any part thereof nor cause, suffer, allow or permit anyone else to do so except in the ordinary course of the operation of Valent’s business and in material compliance with all applicable Environmental Laws.

(e)           Valent agrees to indemnify, protect and hold harmless WCIC and its directors, officers, shareholders, officials or employees from and against any and all claims, demands, costs, liabilities, damages or expenses, including reasonable attorneys’ fees, arising from (1) any release or alleged release (as defined in 42 U.S.C. § 9601 (22)) of any Hazardous Substances, upon the Project or respecting any products or materials located upon the Project during the Sublease Term, regardless of whether such release or alleged release occurs as a result of any act, omission, negligence or misconduct of Valent or any third party or otherwise (except to the extent such release occurs as a result of any act or omission of the City or WCIC), (2) (A) any violation arising during the Sublease Term (actual or alleged) of, or any other liability under or in connection with, any applicable Environmental Laws relating to or affecting the Project during the Sublease Term, or (B) any violation arising during the Sublease Term, or any other liability, under or in connection with, any applicable Environmental Laws relating to any products or materials located upon the Project during the Sublease Term, regardless of whether such violation or alleged violation or other liability occurs or arises, as the result of any act, omission, negligence or misconduct of Valent or any third party or otherwise (except to the extent such release occurs as a result of any act or omission of the City or WCIC), (3) any assertion by any third party of any claims or demands for any loss or injury arising out of, relating to or in connection with any Hazardous Substances on or allegedly on the Project Site during the Sublease Term, or (4) any material breach, falsity or failure of any of the representations, warranties, covenants and agreements contained in this Section; provided, however, that Valent’s obligations under this Section 9.8(e) shall not apply to the extent such claims, demands, costs, liabilities, damages or expenses, including attorneys’ fees and expenses, are the result of (A) work being performed at the Project by employees of the City or WCIC, (B) gross negligence or willful misconduct by the City, the Trustee or WCIC, or (C) breach of this Sublease, the Performance Agreement, or the Bond Purchase Agreement by the City or WCIC.  The City and WCIC shall cooperate with Valent in the defense of any matters included within the foregoing indemnity without any obligation to expend money. This subsection (e) shall survive any termination of this Sublease, the Performance Agreement, the satisfaction and discharge of the Indenture or the resignation or removal of the Trustee.

Section 9.9.           Tax Covenants.  Valent represents, warrants and agrees that each Tax Compliance Agreement executed and delivered by Valent concurrently with the issuance and delivery of the Bonds is true, accurate and complete in all material respects as of the date on which executed and delivered.  Valent shall comply with each Tax Compliance Agreement and Valent covenants and agrees that it will not take any action or permit any action to be taken that would adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds and will take whatever action, or refrain from whatever action, necessary to comply with the requirements of the Internal Revenue Code to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds, and Valent will pay or provide for payment to the United States Government, all rebate payments required under Section 148(f) of the Internal Revenue Code and each Tax Compliance Agreement.  This covenant shall survive payment in full or defeasance of the Bonds.

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ARTICLE X

OPTION TO PURCHASE THE PROJECT

Section 10.1.         Option to Purchase the Project.  It is acknowledged that WCIC, pursuant to the Lease, has an option to purchase the Project at any time. By execution of this Sublease, WCIC hereby assigns such right (and the City consents to such assignment by its execution hereof) to Valent.

Valent shall have, and is hereby granted, the option to purchase all or any portion of the Project at any time, upon payment in full or redemption of the outstanding Bonds to be redeemed or provision for their payment or redemption having been made pursuant to Article X of the Indenture.  To exercise such option, Valent shall give written notice to the City, the Trustee and WCIC, and shall specify therein the date of closing of such purchase, which date shall be not less than 15 nor more than 90 days from the date such notice is mailed, and, in case of a redemption of the Bonds in accordance with the provisions of the Indenture, Valent shall make arrangements satisfactory to the Trustee for the giving of the required notice of redemption.  Notwithstanding the foregoing, if WCIC provides notice of its intent to exercise its remedies hereunder upon an Event of Default (a “Remedies Notice”), Valent shall be deemed to have exercised its repurchase option under this Section on the 29th day following the issuance of the Remedies Notice without any further action by Valent; provided said Remedies Notice has not been rescinded by such date (such option to take place on the 29th day following the issuance of the Remedies Notice).  Valent may rescind such exercise by providing written notice to WCIC on or before the 29th day and by taking such action as may be required to cure the default that led to the giving of the Remedies Notice.  The purchase price payable by Valent in the event of its exercise of the option granted in this Section shall be the sum of the following:

(a)           an amount of money which, when added to the amount then on deposit in the Bond Fund, will be sufficient to redeem all or a portion of the then outstanding Bonds on the earliest redemption date next succeeding the closing date, including, without limitation, principal and interest to accrue to said redemption date and redemption expense; plus

(b)           an amount of money equal to the Trustee’s and the Paying Agent’s agreed to and reasonable fees, charges, costs and expenses under the Indenture accrued and to accrue until such redemption of the Bonds; plus

(c)           an amount of money equal to all payments due and payable pursuant to this Sublease, the Performance Agreement and the Indenture through the end of the calendar year in which the date of purchase occurs, including all fees pursuant to Section 6.4 and Section 7.2 of the Performance Agreement; plus

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(d)           the sum of $10.00.

At its option, to be exercised at least 5 days before the date of closing such purchase, Valent may deliver to WCIC, for delivery to the Trustee, for cancellation Bonds not previously paid, and Valent shall receive a credit against the purchase price payable by Valent in an amount equal to 100% of the principal amount of the Bonds so delivered for cancellation, plus the accrued interest thereon.

Section 10.2.         Conveyance of the Project.  At the closing of the purchase of the Project pursuant to this Article, the City will upon receipt of the purchase price deliver to Valent the following:

(a)            a release from the Trustee of the Project from the lien and/or security interest of the Indenture, the Lease and this Sublease, and appropriate termination of financing statements as required under the Uniform Commercial Code; and

(b)           documents, including without limitation a special warranty deed, conveying to Valent legal title to the Project, as it then exists, in recordable form, subject to the following:   (1) those liens and encumbrances, if any, to which title to the Project was subject when conveyed to the City; (2) those liens and encumbrances created by WCIC or Valent, or to the creation or suffering of which WCIC or Valent consented; (3) those liens and encumbrances resulting from the failure of WCIC or Valent to perform or observe any of the agreements on its part contained in the Lease or this Sublease; (4) Permitted Encumbrances other than the Indenture, the Lease and this Sublease; and (5) if the Project or any part thereof is being condemned, the rights and title of any condemning authority.

Section 10.3.         Relative Position of Option and Indenture.  The option to purchase the Project granted to Valent in this Article shall be and remain prior and superior to the Indenture and may be exercised whether or not Valent is in default under this Sublease, provided that such default will not result in nonfulfillment of any condition to the exercise of any such option and further provided that all options herein granted shall terminate upon the termination of this Sublease.

ARTICLE XI

DEFAULTS AND REMEDIES

Section 11.1.         Events of Default.  If any one or more of the following events occurs and is continuing, it is hereby defined as and declared to be and to constitute an “Event of Default” under this Sublease:

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(a)            default in the due and punctual payment of Basic Rent; or

(b)            default in the due and punctual payment of Additional Rent pursuant to Section 4.2within 10 days after written notice thereof from WCIC to Valent; or

(c)            default in the due observance or performance of any other covenant, agreement, obligation or provision of this Sublease on Valent’s part to be observed or performed, and such default continues for 60 days after WCIC has given Valent written notice specifying such default (or such longer period as is reasonably required to cure such default; provided that (1) Valent has commenced such cure within said 60-day period, and (2) Valent diligently prosecutes such cure to completion); or

(d)           Valent (1) admits in writing its inability to pay its debts as they become due; (2) files a petition in bankruptcy or for reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Bankruptcy Code, as now in the future amended or any other similar present or future federal or state statute or regulation, or files a pleading asking for such relief; (3) makes an assignment for the benefit of creditors; (4) consents to the appointment of a trustee, receiver or liquidator for all or a major portion of its property or fails to have the appointment of any trustee, receiver or liquidator made without Valent’s consent or acquiescence, vacated or set aside; (5) is finally adjudicated as bankrupt or insolvent under any federal or state law; (6) is subject to any proceeding, or suffers the entry of a final and non-appealable court order, under any federal or state law appointing a trustee, receiver or liquidator for all or a major part of its property or ordering the winding-up or liquidation of its affairs, or approving a petition filed against it under the Bankruptcy Code, as now or in the future amended, which order or proceeding, if not consented to by it, is not dismissed, vacated, denied, set aside or stayed within 90 days after the day of entry or commencement; or (7) suffers a writ or warrant of attachment or any similar process to be issued by any court against all or any substantial portion of its property, and such writ or warrant of attachment or any similar process is not contested, stayed, or is not released within 60 days after the final entry, or levy or after any contest is finally adjudicated or any stay is vacated or set aside; or

(e)           Valent vacates, abandons, ceases operations, fails to occupy or is ejected from the Project or any material portion thereof, and the same remains uncared for or abandoned for a period of 90 days; or

(f)             an Event of Default under the Performance Agreement.

Section 11.2.         Remedies on Default.  If any Event of Default referred to in Section 11.1 has occurred and continues beyond the period provided to cure, then WCIC may at WCIC’s election (subject, however, to any restrictions against acceleration of the maturity of the Bonds in the Indenture), then or at any time thereafter, and while such default continues, take any one or more of the following actions:

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(a)            cause all payments of Basic Rent payable for the remainder of the term of this Sublease to become due and payable; or

(b)           give Valent written notice of intention to terminate this Sublease on a date specified therein, which date shall not be earlier than 60 days after such notice is given, and if all defaults have not then been cured, on the date so specified, the Owners shall tender or be deemed to have tendered the outstanding principal amount of the Bonds for cancellation with instruction that such tender is in lieu of payment in accordance with Section 10.1, Valent’s rights to possession of the Project shall cease and this Sublease shall thereupon be terminated, and WCIC may re-enter and take possession of the Project; provided, however, if Valent has paid all obligations due and owing under this Sublease, Valent shall have the right to elect to purchase the Project pursuant to the option set forth in Article X above.

Section 11.3.        Performance of Valent’s Obligations by WCIC.  Upon an Event of Default, WCIC may (but shall not be obligated so to do) upon the continuance of such failure on Valent’s part for 60 days after written notice of such failure is given Valent by WCIC, and without waiving or releasing Valent from any obligation hereunder, as an additional but not exclusive remedy, make any such payment or perform any such obligation, and all reasonable sums so paid by WCIC and all necessary incidental reasonable costs and expenses incurred by WCIC (including, without limitation, attorney’s fees and expenses) in performing such obligations shall be deemed Additional Rent and shall be paid to WCIC on demand, and if not so paid by Valent, WCIC shall have the same rights and remedies provided for in Section 11.2 in the case of default by Valent in the payment of Basic Rent.

Section 11.4.         Rights and Remedies Cumulative.  The rights and remedies reserved by  WCIC and Valent hereunder are in addition to those otherwise provided by law and shall be construed as cumulative and continuing rights.  No one of them shall be exhausted by the exercise thereof on one or more occasions.  WCIC and Valent shall each be entitled to specific performance and injunctive or other equitable relief for any breach or threatened breach of any of the provisions of this Sublease, notwithstanding the availability of an adequate remedy at law, and each party hereby waives the right to raise such defense in any proceeding in equity.  Notwithstanding anything in this Section 11.5 or elsewhere in this Sublease to the contrary, however, Valent’s option to purchase the property as provided in Article X above shall not be terminated upon an Event of Default unless and until this Sublease is terminated to the extent permitted pursuant to Section 11.2(b) above.

Section 11.5.         Waiver of Breach.  No waiver of any breach of any covenant or agreement herein contained shall operate as a waiver of any subsequent breach of the same covenant or agreement or as a waiver of any breach of any other covenant or agreement, and in case of a breach by Valent of any covenant, agreement or undertaking by Valent, WCIC may nevertheless accept from Valent any payment or payments hereunder without in any way waiving WCIC’s right to exercise any of its rights and remedies provided for herein with respect to any such default or defaults of Valent which were in existence at the time such payment or payments were accepted by WCIC.

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Section 11.6.         Default by WCIC Under the Lease.  Notwithstanding anything in the Lease or this Sublease to the contrary, and so long as Valent is not in default under any provisions of this Sublease, WCIC and the City agree that, in the event that WCIC commits any Event of Default under the terms of the Lease, and WCIC does not timely cure such Event of Default as may be allowed pursuant to the Lease, the City shall not have the right to enforce any remedies set forth in Section 12.2 of the Lease until the City has provided Valent at least sixty (60) days to cure such Event of Default (or such longer period as is reasonably required to cure such default; provided that Valent has commenced such cure within said 60-day period and Valent diligently prosecutes such cure to completion). Additionally, in the case of such uncured Event of Default by WCIC under the provisions of the Lease (including without limitation in the event of a bankruptcy or similar filing by WCIC pursuant to Section 12.1(d) of the Lease), each of the City and WCIC agree and acknowledge that, so long as Valent is not in default under the terms of this Sublease, Valent shall have the right (but not the obligation) to assume the Lease, and all of WCIC’s rights and obligations thereunder, in which case WCIC and the City will consent to any assignment required as a result of Valent’s election to assume the Lease.

ARTICLE XII

ASSIGNMENT AND SUBLEASE

Section 12.1.         Assignment; Sublease.

(a)           Valent, with the written consent of WCIC and the City, may assign, transfer, encumber or dispose of this Sublease or any interest herein or part hereof for any lawful purpose under the Act.  Valent must obtain the City’s and WCIC’s prior written consent to any such disposition, unless such disposition is to an entity controlled by Valent, under common control with or controlling Valent, or such entity is a successor entity to Valent that is controlled by the current owners of Valent.

(b)           With respect to any assignment, Valent shall comply with the following conditions:

(i)            Valent shall notify the City, the Trustee and WCIC in writing of the assignment;

(ii)           Such assignment shall be in writing, duly executed and acknowledged by the assignor and in proper form for recording;

(iii)           Such assignment shall include the entire then unexpired term of this Sublease; and

(iv)          A duplicate original of such assignment shall be delivered to the City, the Trustee and WCIC within 10 days after the execution thereof, together with an assumption agreement, duly executed and acknowledged by the assignee and in proper form for recording, by which the assignee shall assume all of the terms, covenants and conditions of this Sublease on the part of Valent to be performed and observed.

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(c)           Any assignee of all the rights of Valent shall agree to be bound by the terms of this Sublease, the Performance Agreement and any other documents related to the issuance of the Bonds.  Upon such assignment of all the rights of Valent and agreement by the assignee to be bound by the terms of this Sublease, the Performance Agreement and any other documents related to the Bonds, Valent shall be released from and have no further obligations under this Sublease, the Performance Agreement or any agreement related to the issuance of the Bonds.

Section 12.2.         Prohibition Against Mortgage of Project.  The City shall not mortgage its fee interest in the Project, but may assign its interest in and pledge any moneys receivable under the Lease to the Trustee pursuant to the Indenture as security for payment of the principal of and interest on the Bonds.  Additionally, except for the Leasehold Deed of Trust, WCIC may not mortgage its leasehold interest in the Project, except that it may assign its interest in and pledge any moneys receivable under the Sublease as security for payment of the principal and interest on the Bonds.

Section 12.3.         Restrictions on Sale or Encumbrance of Project by City.  During the Sublease Term, the City agrees that, except to secure the Bonds to be issued pursuant to the Indenture and except to enforce its rights under Section 11.2(b), it will not sell, assign, encumber, mortgage, transfer or convey the Project or any interest therein.

ARTICLE XIII

AMENDMENTS, CHANGES AND MODIFICATIONS

Section 13.1.         Amendments, Changes and Modifications.  Except as otherwise provided in this Sublease or in the Indenture, subsequent to the issuance of Bonds and before the payment in full of the Bonds (or provision for the payment thereof having been made in accordance with the provisions of the Indenture), this Sublease may not be effectively amended, changed, modified, altered or terminated without the prior written consent of the City, the Trustee and WCIC, given in accordance with the provisions of the Indenture, which consent, however, shall not be unreasonably withheld.

ARTICLE XIV

MISCELLANEOUS PROVISIONS

Section 14.1.         Notices.  All notices, certificates or other communications required or desired to be given hereunder shall be in writing and shall be deemed duly given when (i) mailed by registered or certified mail, postage prepaid, or (ii) sent by overnight delivery or other delivery service which requires written acknowledgment of receipt by the addressee, addressed as provided in Section 1003 of the Indenture.

All notices given by certified or registered mail as aforesaid shall be deemed fully given as of the date they are so mailed; provided, however, that notice to the Trustee shall be effective only upon receipt.  A duplicate copy of each notice, certificate or other communication given hereunder by either WCIC or Valent to the other shall also be given to the Trustee and the City.  The City, WCIC, Valent and the Trustee may from time to time designate, by notice given hereunder to the others of such parties, such other address to which subsequent notices, certificates or other communications shall be sent.

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The Trustee will accept and act upon instructions or directions of WCIC or Valent pursuant to this Sublease sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods; provided, however, that WCIC and Valent, respectively, shall provide to the Trustee an incumbency certificate listing the respective Authorized WCIC Representatives and Authorized Company Representatives with the authority to provide such instructions, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing.  If WCIC or Valent, as the case may be, elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling.  The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction.  WCIC and Valent, as applicable, agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties.

The City, by its execution hereof, agrees that any and all notices to be delivered to WCIC under the terms of the Lease, including any notices of default required or given thereunder, shall be copied to Valent concurrently with the delivery of such notices to WCIC thereunder and in conformity with any notices to be given under the terms of this Sublease.

Section 14.2.         The City and WCIC Shall Not Unreasonably Withhold Consents and Approvals.  Wherever in this Sublease it is provided that the City and WCIC shall, may or must give its approval or consent, or execute supplemental agreements or schedules, the City and WCIC shall not unreasonably, arbitrarily or unnecessarily withhold or refuse to give such approvals or consents or refuse to execute such supplemental agreements or schedules; provided, however, that nothing in this Sublease shall be interpreted to affect the City’s and WCIC’s rights to approve or deny any additional project or matter unrelated to the Project subject to zoning, building permit or other regulatory approvals by WCIC.

Section 14.3.         Net Lease.  The parties hereto agree (a) that this Sublease shall be deemed and construed to be a net lease, (b) that the payments of Basic Rent are designed to provide WCIC funds adequate in amount to pay all principal of and interest accruing on the Bonds as the same become due and payable, (c) that to the extent that the payments of Basic Rent are not sufficient to provide WCIC with funds sufficient for the purposes aforesaid, Valent shall be obligated to pay, and it does hereby covenant and agree to pay, upon demand therefor, as Additional Rent, such further sums of money, in cash, as may from time to time be required for such purposes, and (d) that if after the principal of and interest on the Bonds and all costs incident to the payment of the Bonds (including the fees and expenses of the City and the Trustee) have been paid in full, the Trustee, the City or WCIC holds unexpended funds received in accordance with the terms hereof, such unexpended funds shall, after payment therefrom of all sums then due and owing by Valent under the terms of this Sublease, and except as otherwise provided in this Sublease and the Indenture, become the absolute property of and be paid over forthwith to Valent.

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Section 14.4.         Governing Law.  This Sublease shall be construed in accordance with and governed by the laws of Missouri without regard to conflicts of law principles.

Section 14.5.         Binding Effect.  This Sublease shall be binding upon and shall inure to the benefit of WCIC and Valent, and their respective successors and assigns.

Section 14.6.         Severability.  If for any reason any provision of this Sublease shall be determined to be invalid or unenforceable, the validity and enforceability of the other provisions hereof shall not be affected thereby.

Section 14.7.         Execution in Counterparts.  This Sublease may be executed in several counterparts, each of which shall be deemed to be an original and all of which shall constitute but one and the same instrument.

Section 14.8.         Electronic Storage.  The parties agree that the transaction described herein may be conducted and related documents may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law.

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IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be executed in their respective names by their duly authorized signatories, all as of the date first above written.

WASHINGTON CIVIC INDUSTRIAL CORP.,
a Missouri corporation
By:	/s/ Gerald J. Michels
Name:	Gerald J. Michels
Title:	Vice President

S-1

VALENT AEROSTRUCTURES, LLC,
a Delaware limited liability company
By:	/s/ Charles M. Newell
Name:	Charles M. Newell
Title:	Vice President
By:	/s/ Henry H. Newell
Name:	Henry H. Newell
Title:	Vice President

S-2

The City and the Redevelopment Corporation hereby execute this Sublease for the limited purposes set forth herein.

S-3

S-4

EXHIBIT A

PROJECT SITE

Lot 20 of Heidmann Industrial Park Plat 9, being part of Amended Lot 18 now Lot 20 of Heidmann Industrial Park Plat 7, part of the Northeast 1/4 of Section 18, Township 44 North, Range 1 West of the 5th P.M., per plat filed as Reference No. 1013009, City of Washington, Franklin County, Missouri.

A-1

EXHIBIT B

PROJECT IMPROVEMENTS

The Project Improvements consist of all improvements made to the Project Site, including equipment and fixtures relating thereto, and paid for with Bond proceeds.

B-1

(The above space is reserved for Recorder’s Certification.)

TITLE OF DOCUMENT:	MEMORANDUM OF SUBLEASE AGREEMENT
DATE OF DOCUMENT:	September 3, 2010
GRANTOR:	WASHINGTON CIVIC INDUSTRIAL CORP.
GRANTOR’S MAILING ADDRESS:	c/o Politte & Thayer 315 W. Main Street Washington, Missouri 63090
GRANTEE:	VALENT AEROSTRUCTURES LLC
GRANTEE’S MAILING ADDRESS:	911 Main Street, Suite 2100 Kansas City, Missouri  64105
RETURN DOCUMENTS TO:	Jim Caldwell, Esq. Gilmore & Bell, P.C. 2405 Grand Boulevard, Suite 1100 Kansas City, Missouri  64108
LEGAL DESCRIPTION:	See Exhibit A

MEMORANDUM OF SUBLEASE AGREEMENT

THIS MEMORANDUM OF SUBLEASE AGREEMENT, gives notice of, ratifies and confirms the Sublease Agreement dated September 3, 2010 (the “Sublease”), between the WASHINGTON CIVIC INDUSTRIAL CORP., a Missouri corporation (“WCIC”), as lessor and grantor, and VALENT AEROSTRUCTURES, a Delaware limited liability company (“Company”), as lessee;

RECITALS:

1.             The City of Washington, Missouri (the “City”) is authorized and empowered pursuant to the provisions of Article VI, Section 27(b) of the Missouri Constitution and Sections 100.010 through 100.200, inclusive, of the Revised Statutes of Missouri, as amended (collectively, the “Act”), to purchase, construct, extend and improve certain projects (as defined in the Act) and to issue industrial development revenue bonds for the purpose of providing funds to pay the costs of such projects and to lease or otherwise dispose of such projects to private persons or corporations for manufacturing, commercial, warehousing and industrial development purposes upon such terms and conditions as the City shall deem advisable.

2.             Pursuant to the Act, the governing body of the City passed an ordinance (the “Ordinance”) on August 16, 2010, authorizing the City to issue (i) its Recovery Zone Facility Revenue Bonds (Valent Aerostructures Project), Series 2010A, in installments in the maximum aggregate principal amount of $[series a principal amount] (the “Series 2010A Bonds”), and (ii) its Industrial Development Revenue Bonds (Valent Aerostructures Project), Series 2010B, in installments in the maximum aggregate principal amount of $[series b principal amount] (the “Series 2010B Bonds,” together with the Series 2010A Bonds, the “Bonds”), for the purpose of (a) acquiring certain real property located at 6325 Avantha Drive in Washington, Missouri (the “Project Site,” as more fully described on Exhibit A hereto), (b) improving the Project Site and constructing facilities thereon to be used for manufacturing purposes, including equipment and fixtures relating thereto (the “Project Improvements,” as more fully described on Exhibit B hereto), and (c) paying a portion of the costs of issuing the Bonds.

3.             Pursuant to the Ordinance, the City is authorized to enter into a Trust Indenture of even date herewith (the “Indenture”) with UMB Bank, N.A., St. Louis, Missouri, as Trustee (the “Trustee”), for the purpose of issuing and securing the Bonds, as therein provided, and to enter into a lease dated as of August 1, 2010 (the “Lease”) with the WCIC under which the City will acquire the Project Site and purchase and construct the Project Improvements, and will lease the Project Site and the Project Improvements and all additions, modifications, improvements, replacements and substitutions made thereto pursuant to the Lease as they may at any time exist (collectively, the “Project”), to WCIC in consideration of rental payments by WCIC that will be sufficient to pay the principal of and interest on the Bonds.  WCIC will sublease the Project to the Company pursuant to the Sublease.

4.             In consideration of the terms and conditions of the Lease, the Sublease, the Ordinance, issuance of the Bonds and certain other agreements, the City, the Company and WCIC have concurrently herewith entered into a Performance Agreement of even date herewith (the “Performance Agreement”), pursuant to which the Company has agreed to make certain payments in lieu of taxes.

1

5.             Pursuant to the foregoing, the WCIC desires to sublease the Project to the Company and Company desires to sublease the Project from the WCIC, for the rentals and upon the terms and conditions set forth in the Sublease.

NOW, THEREFORE, in consideration of the premises and the mutual representations, covenants and agreements contained in the Sublease, the WCIC and the Company do represent, covenant and agree as follows:

1.             Granting of Leasehold Estate.  The WCIC hereby exclusivelyrents, subleases and sublets the Project to the Company, and the Company hereby rents, subleases and hires the Project from the WCIC, subject to Permitted Encumbrances existing as of the date of the execution and delivery of the Sublease, for the rentals and upon and subject to the terms and conditions therein contained.

2.             Sublease Term.  The Sublease shall become effective upon its execution and delivery. Subject to earlier termination pursuant to the provisions of the Sublease, the sublease of the Project shall terminate on September 1, 2020.

3.             Basic Rent.  The Company covenants and agrees to pay to the WCIC in same day funds for the account of WCIC during this Sublease Term, on or before 11:00 a.m., CST, on the first calendar day of each month, beginning October 1, 2010 (“Payment Date”), as Basic Rent for the Project, an amount which, when added to any collected funds then on deposit in the Bond Fund and available for the payment of principal of the Bonds and the interest thereon on such Payment Date, shall be equal to the amount payable on such payment date as principal of the Bonds and the interest thereon as provided in the Indenture.

4.             Definition of Terms.  Capitalized terms not defined herein shall have the meanings ascribed thereto in the Indenture and the Sublease.

[Remainder of Page Intentionally Left Blank.]

2

IN WITNESS WHEREOF, the parties hereto have caused this Memorandum of Sublease Agreement to be executed in their respective corporate names to be attested by their duly authorized officers, all as of the date first above written.

VALENT AEROSTRUCTURES, LLC,
By:	/s/ Charles M. Newell
Name:	Charles M. Newell
Title:	Vice President
By:	/s/ Henry H. Newell
Name:	Henry H. Newell
Title:	Vice President

ACKNOWLEDGMENT

STATE OF MISSOURI	)
	)  SS.
COUNTY OF JACKSON	)

On this ____ day of September, 2010, before me appeared Charles M. Newell and Henry H. Newell, to me personally known, who, being by me duly sworn, did say that each is a Vice President of VALENT AEROSTRUCTURES LLC, a Delaware limited liability company, and that said instrument was signed in behalf of said limited liability company by authority of its Members; and said individuals acknowledged said instrument to be the free act and deed of said corporation.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.

[Memorandum of Sublease Agreement]

S-1

WASHINGTON CIVIC INDUSTRIAL CORP.,
By:	/s/ Gerald J. Michels
Name:	Gerald J. Michels
Title:	Vice President

ACKNOWLEDGMENT

STATE OF MISSOURI	)
	)  SS.
COUNTY OF FRANKLIN	)

On this ____ day of August, 2010, before me appeared Gerald J. Michels, to me personally known, who, being by me duly sworn, did say that he is the Vice President of WASHINGTON CIVIC INDUSTRIAL CORP., a Missouri corporation, and that said instrument was signed in behalf of said corporation by authority of its Board of Directors; and said individual acknowledged said instrument to be the free act and deed of said corporation.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.

[Memorandum of Sublease Agreement]

2

EXHIBIT A

PROJECT SITE

Lot 20 of Heidmann Industrial Park Plat 9, being part of Amended Lot 18 now Lot 20 of Heidmann Industrial Park Plat 7, part of the Northeast 1/4 of Section 18, Township 44 North, Range 1 West of the 5th P.M., per plat filed as Reference No. 1013009, City of Washington, Franklin County, Missouri.

A-1

EXHIBIT B

PROJECT IMPROVEMENTS

The Project Improvements consist of all improvements made to the Project Site, including equipment and fixtures relating thereto, and paid for with Bond proceeds.

EX-10.41

Exhibit 10.41

General Provisions

SPIRIT AEROSYSTEMS, INC.

Fixed Price Contract

Table of Contents

1.	FORMATION OF CONTRACT	3
2.	REFERENCED DOCUMENTS	3
3.	SUPPLY CHAIN PROCUREMENT AGENT (SCPA)	3
4.	ISSUANCE AND ACCEPTANCE OF PURCHASE DOCUMENTS	3
5.	SCHEDULE	3
6.	PRODUCT PRICING	3
7.	CRITICAL MANUFACTURING REORDER LEAD-TIME	4
8.	PACKING AND SHIPPING	4
9.	INSPECTION REQUIREMENTS	6
10.	ADVANCE SHIP NOTICES	6
11.	ACCEPTANCE AND REJECTION	6
12.	SUPPLIER’S NOTICE OF DISCREPANCIES	6
13.	WARRANTY	7
14.	QUALITY CONTROL	8
15.	REGULATORY APPROVALS	10
16.	TAXES	10
17.	INVOICES AND PAYMENT	10
18.	CHANGES	11
19.	SUSPENSION OF WORK	11
20.	TERMINATION FOR CONVENIENCE	11
21.	CANCELLATION FOR DEFAULT	13
22.	DISPUTES	15
23.	ASSURANCE OF PERFORMANCE	15
24.	EXCUSABLE DELAY	16
25.	LIMITATION OF SUPPLIER’S RIGHTS TO ENCUMBER ASSETS	16
26.	SUPPLIERS RESPONSIBILITY FOR PAYMENT	16
27.	NOTICE OF LABOR NEGOTIATIONS	16
28.	ASSIGNMENT, DELEGATION AND SUBCONTRACTING	16
29.	PUBLICITY	17
30.	BUYER’S PROPERTY	17
31.	PATENT, TRADEMARK AND COPYRIGHT INDEMNITY	17
32.	BUYER’S RIGHTS IN SUPPLIER’S PATENTS, COPYRIGHTS, TRADE SECRETS AND TOOLING	17
33.	PROPRIETARY INFORMATION AND ITEMS	18
34.	RECORDS AND AUDIT	19
35.	FINANCIAL DATA	19

Page 1 of 26

36.	RIGHTS OF BUYER’S CUSTOMERS AND REGULATORS TO PERFORM INSPECTION, SURVEILLANCE AND TESTING	19
37.	GRATUITIES	20
38.	INTERNATIONAL COOPERATION	20
39.	GENERAL & INTERNATIONAL REQUIREMENTS	21
40.	UTILIZATION OF SMALL BUSINESS CONCERNS	23
41.	COMPLIANCE WITH LAWS	23
42.	GOVERNING LAW	23
43.	GOVERNMENT CLAUSES	23
44.	ACCESS TO PLANTS AND PROPERTIES	23
45.	PARTICIPATION	23
46.	STRATEGIC ALIGNMENT	24
47.	TECHNICAL / MANUFACTURING ASSISTANCE REGARDING SUPPLIER’S NONPERFORMANCE	24
48.	PROPERTY INSURANCE	24
49.	DIVERSITY REPORTING	25
50.	OWNERSHIP OF INTELLECTUAL PROPERTY	25
51.	ENTIRE AGREEMENT	26

Page 2 of 26

General Provisions

1. FORMATION OF CONTRACT

This proposed contract is Spirit AeroSystems Inc’s (Buyer) offer to purchase the products and services described in this offer. Acceptance is strictly limited to the terms and conditions in this offer. Unless specifically agreed to in writing by Buyer's Authorized Supply Chain Procurement Agent (SCPA), Buyer objects to, and is not bound by, any term or condition that differs from or adds to this offer. Supplier’s commencement of performance or acceptance of this offer in any manner shall conclusively evidence acceptance of this offer as written.

2. REFERENCED DOCUMENTS

All specifications, exhibits, drawings, or other documents, which are referenced in Procurement Documents (Purchase Contract and/or Purchase Order), whether or not attached, are incorporated herein by reference.

If Supplier is not presently on distribution for Buyer document(s) necessary to comply with any Purchase Document, copies may be obtained by contacting the SCPA whose name appears on the face of the procurement document.

3. SUPPLY CHAIN PROCUREMENT AGENT (SCPA)

The SCPA shown on the face of the Procurement Document is the only representative authorized by Buyer to change or modify any requirements contained therein.

4. ISSUANCE AND ACCEPTANCE OF PURCHASE DOCUMENTS

Buyer may issue Purchase Contracts/Purchase Orders (Purchase Documents) to Supplier from time to time. Each Purchase Document 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.

Any rejection by Supplier of a Purchase Document shall specify the reasons for rejection and any changes or additions that would make the Purchase Document acceptable to Supplier; provided, however, that Supplier may not reject any Purchase Document for reasons inconsistent with the provisions of the Purchase Document.

5. SCHEDULE

a. Supplier shall strictly adhere to the shipment or delivery schedules specified in this Purchase Document. In the event of any anticipated or actual delay, including but not limited to delays attributed to labor disputes, Supplier shall:

(i) promptly notify Buyer in writing of the reasons for the delay and the actions being taken to overcome or minimize the delay;

(ii) provide Buyer with a written recovery schedule; and

(iii) if requested by Buyer, ship via air or other expedited routing to avoid or minimize delay to the maximum extent possible, unless Supplier is excused from prompt performance as provided in the "Excusable Delays" article of this Purchase Document. The added premium transportation costs are to be borne by Supplier.

b. Supplier shall not deliver products prior to the scheduled delivery dates unless authorized by Buyer.

6. PRODUCT PRICING

The prices of products ordered under the Purchase Documents are set forth within said document. Prices are in United States Dollars. Pricing shall include all cost with respect to such products of preparation, packaging, crating, shipping fixtures and containers, container marking, furnishing of packing sheets and test reports and loading on the carrier's equipment

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General Provisions

Pricing of Similar Products. New products ordered by Buyer that are similar to or within Product families of products currently being manufactured by Supplier shall be priced using the same methodology or basis as that used to price the existing Product(s).

Manufacturing Configuration. Unit pricing for each Product or part number shown within the Purchase Document is based on the latest revisions of the engineering drawings or specifications.

7. CRITICAL MANUFACTURING REORDER LEAD-TIME

Critical Manufacturing Reorder Lead-time (CMROLT) shall be identified by part number for the items listed on the Purchase Documents. As defined in this Purchase Document, CMROLT shall include administrative and manufacturing (including queue, setup, run and move) lead times. CMROLT is the minimum number of manufacturing days (M days) prior to delivery date that Buyer can issue a release for a delivery quantity against a Purchase Document

The CMROLT defined herein shall be fixed and guaranteed by the Supplier. Supplier shall not manufacture or fabricate items in advance of the CMROLT required to comply with the delivery schedule of any subsequent Purchase Document(s). Notwithstanding any other provision of this Purchase Document, Supplier is not entitled to any equitable adjustment or other modification of any Purchase Document(s) for any manufacture, fabrication or procurement of products not in conformity with the requirement of this Purchase Document without first obtaining written consent of Buyer’s SCPA.

Nothing in this Clause shall be construed as relieving Supplier of any of its obligations under this Purchase Document or any subsequent Purchase Document(s).

8. PACKING AND SHIPPING

a. Supplier 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. Supplier shall comply with carrier tariffs. Unless the Purchase Document specifies otherwise, the price includes shipping charges for products to the F.O.B. destination – freight collect (international orders will ship using 2010 Incoterms FCA – Suppliers Facility unless otherwise directed by the Purchase Documents). For products shipped domestically, Supplier 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, Supplier shall release or declare such value at the maximum value within the lowest rating. Buyer may charge Supplier for damage to or deterioration of any products resulting from improper packing or packaging. Supplier shall comply with any special instructions stated in the applicable Purchase Document. Upon Buyer’s request, Supplier will identify packaging charges showing material and labor costs for container fabrication.

b. Unless this Purchase Document specifies otherwise, Supplier will ship the products in accordance with the following instructions:

(i)  Shipments by Supplier or its subcontractors must include packing sheets. Each packing sheet must include at a minimum the following: a) Supplier's name, address, phone number; and supplier code number b) Purchase Document 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 Buyer; i) warranty data and certification, as applicable; j) NCR/rejection tag number, if applicable; k) copy of any completed Buyer corrective action request follow-up documentation for article(s) being shipped, l) Supplier's certification that products comply with Purchase Document requirements; and, m) identification of optional material used, if applicable, n) evidence of Supplier’s product acceptance, o) evidence of Buyer’s product acceptance, when Buyer source acceptance is required, p) Serialized Parts List identifying parts with an assigned serial numbers q) when Supplier is a distributor, all items furnished must include the legal name of the product manufacturer immediately following the part number. The list shall contain the part numbers, part nomenclature and part serial numbers. This list shall also include part change letters when applicable, r) control identity of the end item deliverable of raw material or purchased articles, as applicable. The control identification is traceable to the product processed in a single run (same manufacturing date, lot, batch, heat, job or shop traveler number). When multiple lots are included in one shipment, Supplier shall clearly separate the control identity of the respective lots. 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 air bill, unless Buyer’s Authorized SCPA 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.

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 (ii) Supplier will not insure any FOB origin shipment unless authorized by Buyer.

(iii) Supplier will label each shipping container with the Purchase Document number and the number that each container represents of the total number being shipped (e.g., box 1 of 2, box 2 of 2).

(iv) Buyer will select the carrier and mode of transportation for all shipments where freight costs will be charged to Buyer.

(v) Supplier will include copies of documentation supporting prepaid freight charges (e.g., carrier invoices or UPS shipping log/manifest), if any, with its invoices.

(vi) If Supplier is unable to comply with the shipping instructions in the Purchase Document, Supplier will contact Buyer's Traffic Management Department referenced elsewhere in this Purchase Document or Buyer's Authorized SCPA.

c. For Purchase Documents from Buyer locations that have approved Supplier to utilize barcode labeling for shipping and packaging, Supplier shall mark and package such shipments in accordance with the applicable barcode requirements for that location. Where approved and pursuant to applicable specifications, Supplier will utilize bar-coding technology for part marking products.

d. All items furnished under the Purchase Document, unless excepted by law, must be legibly marked with the English name of the country of origin per U.S. Customs Regulation 19 CFR Part 134 Country of Origin Marking. Markings are to be legible, indelible, and as permanent as the nature of the article or container will allow.

e. Supplier must place final inspection stamp and date on all parts. If part surface area, available for marking, is less than 1" x 2” then part should be marked in accordance with the engineering drawing marking requirement.

f. Test Reports – The Supplier shall include with each shipment two copies of the results of the lot, batch or item acceptance tests when required by the applicable specification. Test reports shall include control identity (e.g., heat, lot, batch, serial number) of material/item tested, actual values when applicable, and shall be signed by the Supplier’s authorized agent. The report shall establish the quantity of material/items associated with each traceability number shipped. Place one copy with the shipping documentation and one copy on the inside of the shipping container.

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General Provisions

9. INSPECTION REQUIREMENTS

a. At no additional cost to Buyer, products shall be subject to inspection, surveillance and test at reasonable times and places, including Supplier's subcontractors' locations. Buyer shall perform inspections, surveillance and tests so as not to unduly delay the work.

b. Supplier shall maintain an inspection system acceptable to Buyer for the products purchased under this Purchase Document.

c. If Buyer performs an inspection or test on the premises of Supplier or its subcontractors, Supplier shall furnish, and require its subcontractors to furnish, without additional charge, reasonable facilities and assistance for the safe and convenient performance of these duties.

10. ADVANCE SHIP NOTICES

Advance Ship Notices (ASNs) are required on all shipments to Spirit AeroSystems, Inc., unless specifically excepted. Labels must be generated per MAA7-70121-1(ERP) or MAA7-70121-2 (SAP) document if supplier-generated, or per manual web tool provided to supplier. Electronic file must be generated per Buyer ICD documents on file at http://www.esisinc.com/support/spirit/ or per manual web tool provided to supplier.

11. ACCEPTANCE AND REJECTION

a. Buyer shall accept the products or give Supplier 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 Supplier of any obligations under this Purchase Document or impair any rights or remedies of Buyer.

b. If Supplier delivers non-conforming products, Buyer may at its option and at Supplier's expense

(i) return the products for credit or refund;

(ii) require Supplier to promptly correct or replace the products;

(iii) correct the products; or

(iv) obtain replacement products from another source.

c. Supplier shall not redeliver corrected or rejected products without disclosing the former rejection or requirement for correction. Supplier 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 Buyer's Authorized SCPA may reasonably direct.

d. 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 Supplier by equitable price reduction or credit against any amounts that may be owed to Supplier under this Purchase Document or otherwise.

12. SUPPLIER’S NOTICE OF DISCREPANCIES

Supplier shall provide written notification to Buyer within one business day after Supplier becomes aware that a nonconformance (i) is determined to exist, or (ii) is reasonably believed to exist, on Product already delivered to Buyer under any Purchase Document. The following must be included.

Ÿ Affected process or Product number and name

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Ÿ Description of the problem (i.e. what it is and what it should be);

Ÿ Quantity and dates delivered;

Ÿ Suspect/affected serial number(s) or date codes, when applicable.

The Supplier shall notify the Buyer SCPA and the Buyer Procurement Quality Assurance Field Representative for the Buyer location where the Product was delivered.

If the nonconforming condition has been previously identified by Buyer, using a Nonconformance Record or equivalent means and requesting a corrective action response, the Supplier shall notify the Buyer investigator identified on the corrective action request that additional Product is affected.

a. If a discrepant shipment is received as a result of Supplier error, which does not permit inspection and receipt of the shipment, the Supplier will be charged one percent of the value of the shipment or a minimum of $100 per discrepant shipment.

b. If the Supplier’s material is rejected at Buyer’s Facility, the Supplier will be charged one percent of the value of the shipment or a minimum of $250 per rejection tag, exclusive of the material disposition.

c. Material shipped above the allowable Purchase Document tolerance on discreet orders or shipments which result in inventory over the maximum levels of a Min/Max order without prior approval from Buyer, will at Buyer’s option be returned at Supplier’s expense or Supplier will be assessed $150 handling charge.

13. WARRANTY

a. Supplier warrants that for a period of forty-eight (48) months after acceptance of product by Buyer all products furnished under this Purchase Document shall conform to all specifications and requirements of the Purchase Document and shall be free from defects in materials and workmanship. To the extent products are not manufactured pursuant to detailed designs and specifications furnished by Buyer, the products shall be free from design and specification defects. This warranty shall survive inspection, test and acceptance of, and payment for, the products. This warranty shall run to Buyer and its successors, assigns and customers. Such warranty shall begin after Buyer's final acceptance.

Buyer may, at its option, either (i) return for credit or refund, or (ii) require prompt correction or replacement of the defective or non-conforming products. Return to Supplier of defective or nonconforming products and redelivery to Buyer of corrected or replaced products shall be at Supplier's expense. Products required to be corrected or replaced shall be subject to this article and the "Inspection" article of this Purchase Document in the same manner and to the same extent as products originally delivered under this Purchase Document, but only as to the corrected or replaced part or parts thereof. Even if the parties disagree about the existence of a breach of this warranty, Supplier shall promptly comply with Buyer's direction to: (i) repair, rework or replace the products, or (ii) furnish any materials or parts and installation instructions required to successfully correct the defect or nonconformance. If the parties later determine that Supplier did not breach this warranty, the parties shall equitably adjust the Purchase Document price.

b.  Supplier warrants that any hardware, software and firmware products delivered under the Purchase Documents shall be able to accurately process date/time data (including, but not limited to, calculating, comparing and sequencing) leap year calculations to the extent that other information technology, used in combination with the information technology being acquired, properly exchanges date/time data with it. The duration of this warranty and the remedies available to Buyer for breach of this warranty shall be as defined in, and subject to, the other warranties contained in this Purchase Document, provided that notwithstanding anyprovision to the contrary in such warranties, the remedies available to Buyer under this warranty shall include repair or replacement of any non-compliant products discovered and made known to Supplier in writing. Nothing in this warranty shall be construed to limit any rights or remedies Buyer may otherwise have under this Purchase Document with respect to defects.

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14. QUALITY CONTROL

Supplier must certify that the material/finished parts/services and/or data shall be controlled and tested in accordance with, and will meet specified Purchase Document requirements and applicable specifications.

It is required that the Supplier flow down to sub-tier suppliers the applicable requirements in this purchasing document, including quality systems requirements and engineering requirements.

At least annually, the Supplier shall conduct an internal audit to ensure compliance to their quality system and the controlling quality assurance document.

The Supplier shall promptly notify Buyer of any of the following: changes in the management representative with assigned responsibility and authority for the quality system; change to company name (through sale or merger); change in location of manufacturing facility; intent to file bankruptcy.

When specifically requested by Buyer, Supplier shall make specified quality data and/or approved design data available in the English language. The Supplier shall maintain an English language translation of (1) its quality manual, (2) the operating instructions that implement the quality manual requirements, and (3) an index of all other Supplier procedures that contain quality requirements. Buyer may require additional documentation to be translated, including but not limited to: shop Orders, technical specifications, certificates, reports, and nonconformance documents.

The Supplier shall immediately notify Buyer in writing of any change to the manufacturing facility location of the part number or assembly covered by the Purchase Document.

Unless otherwise specified all Supplier notifications to Buyer shall be communicated in writing to the Buyer Procurement Agent and the Primary Buyer Procurement Quality Representative.

Supplier shall ensure right of entry and provide all reasonable facilities to Buyer, Buyer Customer, and Regulatory Agency personnel to inspect and evaluate Supplier’s facilities, systems, data, equipment, personnel and any articles that will be incorporated into a Buyer type-certificated product. While Buyer reserves the right to conduct inspection on a surveillance basis or to the extent of 100 percent inspection, no shipments are to be held for Buyer inspection unless Buyer Source Acceptance is invoked on the Purchase Document. This right will extend to all facilities involved in the order.

Supplier shall maintain, on file at the Supplier’s facility, Quality records traceable to the conformance of product/part numbers delivered to Buyer. Supplier shall make such records available to regulatory authorities and Buyer’s authorized representatives. Supplier shall retain such records for a period of not less than (7) seven years from the date of shipment under each applicable Purchase Document for all product/part numbers unless otherwise specified on the Purchase Documents. Supplier shall maintain all records related to the current first article inspection (FAI) for (7) seven years past final delivery of the last Product covered by the FAI.

At the expiration of such period, Buyer reserves the right to request delivery of such records. In the event Buyer chooses to exercise this right, Supplier shall promptly deliver such records to Buyer at no additional cost on media agreed to by both parties.

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Supplier shall strictly control all inventory of Buyer proprietary product that is in excess of contracted quantity to prevent product from being sold or provided to any third party without prior written authorization from Buyer.

Non-conforming Parts and Corrective Action

Supplier shall provide written notification to Buyer within one (1) business day when a nonconformance is determined to exist, or is suspected to exist, on product already delivered to Buyer under this Purchase Document when any of the following is known:

a. Affected process or product number and nomenclature;

b. Description of the problem (i.e., what it is and what it should be);

c. Suspect/affected serial number(s) or date codes, when applicable;

Notification shall include the above information as a minimum. The Supplier shall notify the Buyer’s SCPA who manages the Purchase Document, and as applicable the Buyer Procurement Quality Assurance Field Representative, the Buyer Procurement Quality Assurance organization where product was procured and the supporting Buyer Procurement Quality Assurance organization where the product was delivered

When Buyer notifies Supplier of a detected nonconformance, Supplier shall immediately take action to eliminate the nonconformance on all products in Supplier’s control. Supplier shall also maintain on file verification that root cause corrective action has occurred and has resolved the subject condition. At the specific request of Buyer, this verification shall occur for the next five (5) shipments after implementation of the corrective action to ensure detected nonconformance has been eliminated. Buyer reserves the right to review the verification data at Supplier’s facility or have the data submitted to Buyer.

Where Supplier is requested to submit a corrective action report, Supplier will submit its response within ten (10) days of receipt of such request unless an extension is otherwise provided by Buyer. Any corrective action report submitted to Buyer shall be in the format specified by Buyer. If after submittal to Buyer, Supplier determines need for revision, Supplier shall immediately notify Buyer of such revision. In the event Supplier is unable to respond within the allotted ten day time frame, Supplier shall submit a request for extension which shall include the reason for the extension request and the time need to complete the corrective action report.

In the event Supplier receives approval from Buyer’s SCPA, prior to submitting non-conforming material and/or hardware, the Supplier shall document and process said items in accordance with Buyer MAA1-10034-1 Supplier Non-conformance.

Supplier shall not use dispositions of use-as-is or repair on Buyer-designed product unless current revision of Supplier’s Material Review Board (MRB) plan complies with MAA7-70001-1, Requirements for Obtaining MRB Authority by Buyer Suppliers, and has been approved by Buyer.

The disposition “regrade” shall not be used on products of Buyer proprietary design.

Supplier must achieve and maintain a 98% site quality acceptance rate, which is a prerequisite for delegated inspection authority awarded at Spirit Aero Systems’ discretion. Should the acceptance rating fall below 98% the Supplier shall be responsible for one or more of the following as directed by Buyer:

a. Obtaining source inspection from a Buyer-qualified contractor at Supplier’s own expense;

b. Reimbursing Buyer for reasonable Buyer costs incurred at the point of manufacture (i.e. Supplier’s site) to verify product conformance;

c. Reimburse Buyer for reasonable Buyer costs incurred at the point of receipt to verify product conformance.

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PF-550

General Provisions

The site quality acceptance rate is a calculation of the ratio of acceptable units delivered to the total units delivered, or an alternate criteria quality acceptance rating, equivalent to 98% as defined by the contracting Buyer site(s).

Supplier shall perform First Article Inspections (FAIs) in accordance with AS9102 – Aerospace – First Article Inspection Requirement. When documenting the FAI, the Supplier may use the forms contained within AS9102, or equivalent forms so long as they contain the minimum information required by AS9102.

Tooling - Supplier shall inspect all tools to the Engineering immediately on receipt of the tools and shall perform a first part inspection to the Engineering. If tools require rework, Buyer is to be notified immediately.

Supplier Surveillance – Work under this Purchase Document is subject to Buyer surveillance at supplier’s facility. Buyer quality control representative may elect to conduct inspection either on a random basis or to the extent of 100 percent inspection. Supplier will be notified if Buyer inspection is to be conducted on specific shipments. No shipments are to be held for Buyer inspection unless notification is received prior to, or at time of, product being ready for shipment.

Digital Data – When a Supplier uses Buyer digital data as authority for design and/or inspection, then the Supplier must be approved for Digital Product Definition and comply with the requirements of MAA1-10009-1, Quality Assurance Standard for Digital Product Definition at Buyer Suppliers, or contractual requirements. Supplier recognizes that prior to the receipt of digital data a proprietary information agreement must be on file with Buyer.

15. REGULATORY APPROVALS

For aircraft regulated by the FAA or non-U.S. equivalent agency, regulatory approval may be required for Supplier to make direct sales (does not include “direct ship” sale through Buyer) of modification or replacement parts to owners/operators of type-certificated aircraft. Regulatory approval, such as Parts Manufacturer Approval (PMA), is granted by the FAA or appropriate non­U.S. equivalent regulatory agency. Supplier 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. For Supplier proprietary parts, Supplier agrees to notify Buyer 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, Buyer may list Supplier in the Illustrated Parts Catalog as Supplier of that part.

16. TAXES

Unless this Purchase Document specifies otherwise, the price of this Purchase Document includes, and Supplier is liable for and shall pay, all taxes, impositions, charges and exactions imposed on or measured by this Purchase Document except for applicable sales and use taxes that are separately stated on Supplier's invoice. Prices shall not include any taxes, impositions, charges or exactions for which Buyer has furnished a valid exemption certificate or other evidence of exemption.

17. INVOICES AND PAYMENT

Unless otherwise authorized by Buyer's Authorized SCPA, Supplier shall issue a separate original invoice for each delivery that shall include Buyer's Purchase Document number and line item number. Supplier shall forward its invoice to the address specified elsewhere in this Purchase Document. Unless freight or other charges are itemized, Buyer may take any offered discount on the full amount of the invoice. Payment due date, including discount periods, shall be computed from the later of the scheduled delivery date, the actual delivery date or the date of receipt of a correct invoice. Payment shall be deemed made on the date Buyer's check is mailed or payment is otherwise tendered. Supplier shall promptly repay Buyer any amounts paid in excess of amounts due Supplier. Payment Terms are Net 60 days.

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18. CHANGES

a. Buyer's Authorized SCPA may, without notice to sureties and in writing, direct changes within the general scope of this Purchase Document 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 Buyer-furnished property; and, if this Purchase Document includes services, (vi) description of services to be performed; (vii) time of performance (e.g., hours of the day, days of the week); (viii) place of performance, and (ix) terms and conditions of this Purchase Document required to meet Buyer’s obligations under Government prime contracts or subcontracts. Supplier shall comply immediately with such direction.

b. If such change increases or decreases the cost or time required to perform this Purchase Document, Buyer and Supplier shall negotiate an equitable adjustment in the price or schedule, or both, to reflect the increase or decrease. Buyer shall modify this Purchase Document in writing accordingly. Unless otherwise agreed in writing, Supplier must assert any claim for adjustment to Buyer's Authorized SCPA in writing within thirty (30) days and deliver a fully supported proposal to Buyer's Authorized SCPA within sixty (60) days after Supplier's receipt of such direction. Buyer may, at its sole discretion, consider any claim regardless of when asserted. If Supplier's proposal includes the cost of property made obsolete or excess by the change, Buyer may direct the disposition of the property. Buyer may examine Supplier's pertinent books and records to verify the amount of Supplier's claim. Failure of the parties to agree upon any adjustment shall not excuse Supplier from performing in accordance with Buyer's direction.

c. If Supplier considers that Buyer's conduct constitutes a change, Supplier shall notify Buyer's Authorized SCPA immediately in writing as to the nature of such conduct and its effect upon Supplier's performance. Pending direction from Buyer's Authorized SCPA, Supplier shall take no action to implement any such change.

19. SUSPENSION OF WORK

a. Buyer's Authorized SCPA may, by written Order, suspend all or part of the work to be performed under this Purchase Document for a period not to exceed one hundred (150) days. Within such period of any suspension of work, Buyer shall (i) cancel the suspension of work Order; (ii) terminate this Purchase Document in accordance with the "Termination for Convenience" article of this Purchase Document; (iii) cancel this Purchase Document in accordance with the "Cancellation for Default" article of this Purchase Document; or (iv) extend the stop work period.

b. Supplier shall resume work whenever a suspension is canceled. Buyer and Supplier shall negotiate an equitable adjustment in the price or schedule or both if (i) this Purchase Document is not canceled or terminated; (ii) the suspension results in a change in Supplier's cost of performance or ability to meet the Purchase Document delivery schedule; and (iii) Supplier submits a claim for adjustment within thirty (30) days after the suspension is canceled.

20. TERMINATION FOR CONVENIENCE

Basis for Termination; Notice

Buyer may, from time to time terminate all or part of any Purchase Document by written notice to Supplier. Any such written notice of termination shall specify the effective date and the extent of any such termination.

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Termination Instructions

On receipt of a written notice of termination, unless otherwise directed by Buyer, Supplier shall:

a. Immediately stop work as specified in the notice;

b. Immediately terminate its subcontracts and Purchase Documents relating to work terminated;

c. Use commercially reasonable efforts to settle any termination claims made by its subcontractors or suppliers. It is advisable that Supplier review such claims with Buyer prior to settlement, however Supplier shall not be required to obtain pre-approval from Buyer, provided, that with respect to any payments made by Supplier without Buyer’s prior approval, Buyer shall be obligated to pay Supplier only that portion of such termination claims as are compensable under the Supplier’s Claim portion of the Clause.

d. Preserve and protect all terminated inventory and products;

e. At Buyer's request, transfer title (to the extent not previously transferred) and deliver to Buyer or Buyer's designee all supplies and materials, work-in-process, Tooling and manufacturing drawings and data produced or acquired by Supplier for the performance of this Agreement and any Purchase Document, all in accordance with the terms of such request;

f. Be compensated for such items to the extent provided below;

g. Take all reasonable steps required to return, or at Buyer's option and with prior written approval to destroy, all Buyer Proprietary Information and Items in the possession, custody or control of Supplier or any of its subcontractors or suppliers;

h. Take such other action as, in Buyer's reasonable opinion, may be necessary, and as Buyer shall direct in writing, to facilitate termination of the Purchase Document; and

i. Complete performance of the work not terminated.

Supplier's Claim

If Buyer terminates a Purchase Document in whole or in part Supplier shall have the right to submit a written termination claim to Buyer. Such termination claim shall be asserted to Buyer within forty-five (45) calendar days and all documentation supporting said claim must be asserted not later than six (6) months after Supplier's receipt of the termination notice and shall be in the form prescribed by Buyer using Spirit AeroSystems form F08-04597. 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. In no event shall claims for non-recurring engineering be considered or paid by Buyer to Supplier. Supplier shall be entitled to compensation in accordance with and to the extent allowed under the terms of FAR 52-249-2 (May 2004) paragraphs (e)-(i), ( which may be accessed via the World Wide Web address www.acquisition.gov/far); without Alternates, unless alternate clause date is called out on the Purchase Documents which is incorporated herein by reference except "Government" and "Contracting Officer" shall mean Buyer, "Contractor" shall mean Supplier and "Contract" shall mean Purchase Documents and “1 year” shall be “6 months”. Supplier shall indemnify Buyer and hold Buyer harmless from and against (i) any and all claims, suits and proceedings against Buyer by any subcontractor or supplier of Supplier in respect of any such termination and (ii) any and all costs, expenses, losses and damages incurred by Buyer in connection with any such claim, suit or proceeding.

Failure to Submit a Claim

Notwithstanding any other provision of this General Provisions, if Supplier fails to submit a termination claim within the time period set forth above, Supplier shall be barred from submittinga claim and Buyer shall have no obligation for payment to Supplier except for those products previously delivered and accepted by Buyer.

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Partial Termination

Any partial termination of a Purchase Document shall not alter or affect the terms and conditions of the Purchase Documents or any order(s) with respect to products not terminated.

Product Price

Termination shall not result in any change to unit prices for products not terminated. Exclusions or Deductions

The following items shall be excluded or deducted from any claim submitted by Supplier:

a. All unliquidated advances or other payments made by Buyer to Supplier pursuant to a terminated Purchase Document;

b. Any claim which Buyer has against Supplier;

c. The agreed price for scrap allowance;

d. Except for normal spoilage and any risk of loss assumed by Buyer, the agreed fair value of property that is lost, destroyed, stolen or damaged.

Partial Payment/Payment Payment, if any, shall be made thirty (30) days after settlement between the parties or as otherwise agreed to between the parties. Buyer may make partial payments and payments against costs incurred by Supplier for the terminated portion of the Purchase Document. If the total payments exceed the final amount determined to be due, Supplier shall repay the excess to Buyer upon demand.

Supplier's Accounting Practices Buyer and Supplier agree that Supplier'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 General Provisions, Supplier's "normal accounting practices" refers to Supplier's method of charging costs as a direct charge, overhead expense, general administrative expense, etc.

Records Unless otherwise provided in this Agreement or by law, Supplier shall maintain all financial records and documents relating to the terminated portion of the Purchase Document for three (3) years after final settlement of Supplier's termination claim.

21. CANCELLATION FOR DEFAULT

Events of Default

The occurrence of any one or more of the following events shall constitute an "Event of Default".

a. Any failure by Supplier to deliver, when and as required by the order(s), any Product, or

b. Any failure by Supplier to provide an acceptable Assurance of Performance or,

c. Supplier 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

d. Buyer revokes Supplier’s Quality Assurance System approval, if applicable; or,

e. Any failure by Supplier to perform or comply with any obligation set forth in this Agreement and such failure shall continue unremedied for a period of ten (10) days or more following receipt by Supplier of notice from Buyer specifying such failure; or

f.  (1) the suspension, dissolution or winding-up of Supplier's business, (2) Supplier's insolvency, or its inability to pay debts, or its nonpayment of debts, as they become due, (3)the institution of reorganization, liquidation or other such proceedings by or against Supplier or the appointment of a custodian, trustee, receiver or similar Person for Supplier's properties or business, (4) an assignment by Supplier for the benefit of its creditors, or (5) any action of Supplier for the purpose of effecting or facilitating any of the foregoing.

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General Provisions

Remedies

If any Event of Default shall occur:

a. Cancellation

Buyer may, by giving written notice to Supplier, immediately cancel any Purchase Document, in whole or in part, and Buyer shall not be required after such notice to accept the tender by Supplier of any products subject to the cancellation.

Supplier shall continue work not canceled. If Buyer cancels all or part of the Purchase Document, Supplier shall be liable for Buyer’s excess re-procurement costs.

b. Cover

Buyer 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 Supplier. In addition to any other remedies or damages available to Buyer hereunder or at law or in equity, Buyer may recover from Supplier 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 Buyer to manufacture, produce or provide, or engage other persons to manufacture, produce or provide, each such Product.

c. Buyer may require Supplier to transfer title and deliver to Buyer, as directed by Buyer, any (i) completed Goods, and (ii) any partially completed Goods and materials, parts, tools, dies, jigs, fixtures, plans, drawings, information and contract rights (collectively, "Manufacturing Materials") that Supplier has specifically produced or acquired for the canceled portion of this Purchase Document. Upon direction from Buyer, Supplier shall also protect and preserve property in its possession in which Buyer or its Customer has an interest.

d. Rework or Repair

Where allowed by the applicable regulatory authority, Buyer or its designee may rework or repair any Product;

e. Setoff

Buyer 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 Buyer hereunder or under any Purchase Document, all deposits, amounts or balances held by Buyer for the account of Supplier and any amounts owed by Buyer to Supplier, regardless of whether any such deposit, amount, balance or other amount or payment is then due and owing.

f. Tooling and other Materials

As partial compensation for the additional costs which Buyer will incur as a result of the transfer of production capabilities from Supplier to Buyer or Buyer's designee, Supplier shall upon the request of Buyer, transfer and deliver to Buyer or Buyer's designee title to any or all (i) tooling, (ii) Buyer-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 Supplier or any of its subcontractors or suppliers (iv) Proprietary Information and Materials of Buyer 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 Supplier or any of its subcontractors or suppliers, in each case free and clear of all liens, claims or other rights of any person.

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Supplier shall be entitled to receive from Buyer reasonable compensation for any item accepted by Buyer which has been transferred to Buyer pursuant Section (except for any item the price of which has been paid to Supplier prior to such transfer); provided, however, that such compensation shall not be paid directly to Supplier, but shall be accounted for as a setoff against any damages payable by Supplier to Buyer as a result of any Event of Default.

Remedies Generally

No failure on the part of Buyer 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 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 Supplier's obligations hereunder shall constitute a waiver of any Event of Default or a waiver or release of payment or performance in full by Supplier of any such obligation. All rights and remedies of Buyer 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.

If after cancellation, it is determined that Supplier is not at fault, the rights and remedies of the parties shall be as if the Purchase Document had been terminated according to the Termination for Convenience article of this Purchase Document.

22. DISPUTES

Any dispute that arises under or is related to this Purchase Document that cannot be settled by mutual agreement of the parties may be decided by a court of competent jurisdiction. Pending final resolution of any dispute, Supplier shall proceed with performance of this Purchase Document according to Buyer's instructions so long as Buyer continues to pay amounts not in dispute.

23. ASSURANCE OF PERFORMANCE

If Buyer determines, at any time or from time to time, that it is not sufficiently assured of Supplier's full, timely and continuing performance hereunder, or if for any other reason Buyer has reasonable grounds for insecurity, Buyer may request, by notice to Supplier, written assurance (hereafter an "Assurance of Performance") with respect to any specific matters affecting Supplier's performance hereunder, that Supplier is able to perform all of its respective obligations under any Purchase Document when and as specified herein. Each Assurance of Performance shall be delivered by Supplier to Buyer as promptly as possible, but in any event no later than ten (10) calendar days following Buyer's request therefore and each Assurance of Performance shall be accompanied by any information, reports or other materials, prepared by Supplier, as Buyer may reasonably request. Except as to payment for accepted products, Buyer may suspend all or any part of Buyer's performance hereunder until Buyer receives an Assurance of Performance from Supplier satisfactory in form and substance to Buyer.

Meetings and Information

Buyer may request one or more meetings with senior management or other employees of Supplier for the purpose of discussing any request by Buyer for Assurance of Performance or any Assurance of Performance provided by Supplier. Supplier shall make such persons available to meet with representatives of Buyer as soon as may be practicable following a request for any such meeting by Buyer and Supplier shall make available to Buyer any additional information, reports or other materials in connection therewith as Buyer may reasonably request.

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24. EXCUSABLE DELAY

If delivery of any Product is delayed by unforeseeable circumstances beyond the control and without the fault or negligence of Supplier 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 Buyer after an assessment by Buyer 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 Supplier's noncompliance with any rule, regulation or order promulgated by any governmental agency for or with respect to environmental protection. However, the above notwithstanding, Buyer expects Supplier to continue production, recover lost time and support all schedules as established under the Purchase Documents. 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 Supplier'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 Supplier to meet the applicable delivery schedules. If delivery of any Product is delayed by any Excusable Delay for more than three (3) months, Buyer may, without any additional extension, cancel all or part of any Purchase Document with respect to the delayed Products, and exercise any of its remedies in accordance with General Provisions Clause 21, provided however, that Buyer shall not be entitled to monetary damages or specific performance to the extent Supplier's breach is the result of an Excusable Delay.

25. LIMITATION OF SUPPLIER’S RIGHTS TO ENCUMBER ASSETS

Supplier warrants to Buyer that it has good title to all inventory, work-in-process, tooling and materials to be supplied by Supplier in the performance of its obligations under any Purchase Document. Pursuant to the provisions of such Purchase Document, Supplier will transfer to Buyer title to such inventory, work-in-process, tooling and materials whether transferred separately or as part of any Product delivered under the Purchase Document, free of any liens, charges, encumbrances or rights of others.

26. SUPPLIERS RESPONSIBILITY FOR PAYMENT

Supplier will be responsible for the prompt payment of all persons who perform labor upon or furnish services, materials, equipment, supplies, or other items used or to be used in the performance of the work called for by this Purchase Document, and Supplier shall defend protect and save harmless Buyer, Inc. from and against all liens, claims, suits and actions for such labor, services, materials, equipment, supplies or other items whether brought by Supplier's subcontractors or any lower tier subcontractors.

27. NOTICE OF LABOR NEGOTIATIONS

When requested by Buyer, Supplier will provide status on labor contracts and pending negotiations, including that of Supplier’s subcontractors or suppliers, except as may be prohibited by law.

28. ASSIGNMENT, DELEGATION AND SUBCONTRACTING

Supplier shall not assign any of its rights or interest in this Purchase Document or subcontract all or substantially all of its performance of this Purchase Document, without Buyer's prior written consent. Supplier shall not delegate any of its duties or obligations under this Purchase Document. Supplier may assign its right to monies due or to become due. No assignment, delegation or subcontracting by Supplier, with or without Buyer's consent, shall relieve Supplier of any of its obligations under this Purchase Document or prejudice any of Buyer's rights against Supplier whether arising before or after the date of any assignment. This article does not limit Supplier's ability to purchase standard commercial supplies or raw materials.

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29. PUBLICITY

Without Buyer's prior written approval, Supplier shall not, and shall require that its subcontractors at any tier shall not, release any publicity, advertisement, news release or denial or confirmation of same regarding this Purchase Document or the products or program to which it pertains. Supplier shall be liable to Buyer for any breach of such obligation by any subcontractor.

30. BUYER’S PROPERTY

Supplier shall clearly mark, maintain an inventory of, and keep segregated or identifiable all of Buyer's property and all property to which Buyer acquires an interest by virtue of this Purchase Document. Supplier assumes all risk of loss, destruction or damage of such property while in Supplier's possession, custody or control, including any transfer to Supplier’s subcontractors. Upon request, Supplier shall provide Buyer with adequate proof of insurance against such risk of loss. Supplier shall not use such property other than in performance of this Purchase Document without Buyer's prior written consent. Supplier shall notify Buyer's Authorized SCPA if Buyer's property is lost, damaged or destroyed. As directed by Buyer, upon completion, termination or cancellation of this Purchase Document, Supplier shall deliver such property, to the extent not incorporated in delivered products, to Buyer in good condition subject to ordinary wear and tear and normal manufacturing losses. Nothing in this article limits Supplier's use, in its direct contracts with the Government, of property in which the Government has an interest.

31. PATENT, TRADEMARK AND COPYRIGHT INDEMNITY

Supplier will indemnify, defend and hold harmless Buyer and its customer 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 Buyer or its customer. Buyer and/or its customer will duly notify Supplier of any such claim, suit or action; and Supplier will, at its own expense, fully defend such claim, suit or action on behalf of indemnitees.

Supplier will have no obligation under this article with regard to any infringement arising from

a. Supplier's compliance with formal specifications issued by Buyer where infringement could not be avoided in complying with such specifications or

b. 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 Supplier.

For purposes of this article only, the term Buyer will include Buyer, Inc. and all Buyer, Inc., subsidiaries and all officers, agents and employees of Buyer, Inc., or any Buyer, Inc., subsidiary.

32. BUYER’S RIGHTS IN SUPPLIER’S PATENTS, COPYRIGHTS, TRADE SECRETS AND TOOLING

Supplier hereby grants to Buyer an irrevocable, nonexclusive, paid-up worldwide license to practice and/or use, and license others to practice and/or use on Buyer's behalf, all of Supplier'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. Buyer hereafter retains all of the aforementioned license rights in Licensed Property, but Buyer 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 Product cannot, in Buyer’s sole determination, be reasonablyobtained in the required time frame at a reasonable price from commercially available sources (including Buyer) without the use of Supplier’s Licensed Property and if one or more of the following situations occur:

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a. Supplier discontinues or suspends business operations or the production of any or all of the products;

b. Supplier is acquired by or transfers any or all of its rights to manufacture any Product to any third party, whether or not related, without Buyer’s prior written concurrence;

c. Buyer cancels this Agreement or any Purchase Document for cause;

d. In Buyer's judgment it becomes necessary, in order for Supplier to comply with the terms of the Purchase Document(s), for Buyer to provide support to Supplier (in the form of design, manufacturing, or on-site personnel assistance) substantially in excess of that which Buyer normally provides to its suppliers;

e. Supplier's trustee in bankruptcy (or Supplier as debtor in possession) fails to assume the Purchase Document(s) 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 Supplier, or Buyer elects to retain its rights to Licensed Property under the bankruptcy laws;

f. Supplier 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. Supplier voluntarily becomes a debtor in any case under bankruptcy law or, in the event an involuntary bankruptcy petition is filed against Supplier, such petition is not dismissed within thirty (30) days.

As a part of the license granted under this Section, Supplier shall, at the written request of Buyer and at no additional cost to Buyer, promptly deliver to Buyer any and all Licensed Property considered by Buyer to be necessary to satisfy Buyer's requirements for products and their substitutes.

33. PROPRIETARY INFORMATION AND ITEMS

Buyer and Supplier shall each keep confidential and protect from disclosure all (a) confidential, proprietary, and/or trade secret information; including editorial revisions, annotations, elaborations, or any other forms in which such confidential, proprietary, and/or trade secret information may be modified, recast, transformed, translated, condensed, or otherwise adapted; (b) tangible items and software containing, conveying, or embodying such information; and (c) tooling obtained from and/or belonging to the other in connection with the Purchase Document (collectively referred to as "Proprietary Information and Materials"). Buyer and Supplier shall each use Proprietary Information and Materials of the other only in the performance of and for the purpose of the Purchase Document. Provided, however, that despite any other obligations or restrictions imposed by this General Provisions Clause 33, Buyer shall have the right to use, disclose and copy Supplier's Proprietary Information and Materials for the purposes of testing, certification, use, sale, or support of any item delivered under the Purchase Document or any airplane including such an item; and any such disclosure by Buyer shall, whenever appropriate, include a restrictive legend suitable to the particular circumstances. Each party shall maintain restrictive legends placed by the other party on Proprietary Information and Materials of the other party on all copies made of the other party’s Proprietary Information and Materials. The restrictions on disclosure or use of Proprietary Information and Materials by Supplier shall apply to all materials derived by Supplier or others from Buyer's Proprietary Information and Materials.

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Upon Buyer's request at any time, and in any event upon the completion, termination or cancellation of the Purchase Document, Supplier shall return all of Buyer's Proprietary Information and Materials, and all materials derived from Buyer's Proprietary Information and Materials to Buyer unless specifically directed otherwise in writing by Buyer. Supplier shall not, without the prior written authorization of Buyer, 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 Buyer. Prior to disposing of such parts or materials as scrap, Supplier shall render them unusable. Buyer shall have the right to audit Supplier's compliance with this General Provisions Clause 33. Supplier may disclose Proprietary Information and Materials of Buyer 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 Supplier under this General Provisions Clause 33 relating to Proprietary Information and Materials; and Supplier shall be liable to Buyer for any breach of such obligation by such subcontractor. The provisions of this General Provisions Clause 33 are effective in lieu of, and will apply notwithstanding the absence of, any restrictive legends or notices applied to Proprietary Information and Materials; and the provisions of this General Provisions Clause 33 shall survive the performance, completion, termination or cancellation of the Purchase Document. This General Provisions Clause 33 supersedes and replaces any and all other prior agreements or understandings between the parties to the extent that such agreements or understandings relate to Buyer's obligations relative to confidential, proprietary, and/or trade secret information, or tangible items containing, conveying, or embodying such information, obtained from Supplier and related to any Product, regardless of whether disclosed to the receiving party before or after the effective date of the Purchase Document.

34. RECORDS AND AUDIT

Supplier shall maintain complete and accurate records. Such records shall support all services performed, allowances claimed and costs incurred by Supplier in the performance of each Purchase Document, 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 Buyer and be available to Buyer at Supplier's facility for Buyer's examination, reproduction, and audit at all reasonable times from the date of the applicable Purchase Document until three (3) years after final payment under such Purchase Document. Supplier shall provide assistance to interpret such data if requested by Buyer. Such examination shall provide Buyer with complete information regarding Supplier's performance for use in price negotiations with Supplier relating to existing or future Purchase Documents for products, including but not limited to negotiation of equitable adjustments for changes and termination/obsolescence claims pursuant to Section 11 of this document. Buyer shall treat all information disclosed under this Purchase Document section as confidential, unless required by U.S. Government contracting regulation(s).

35. FINANCIAL DATA

If requested, Supplier shall provide financial data, on a quarterly basis, or as requested to the Buyer Credit Management 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 seventy-two (72) hours of any written request by the Buyer Credit Management Office. Buyer shall treat all such information as confidential.

36. RIGHTS OF BUYER’S CUSTOMERS AND REGULATORS TO PERFORM INSPECTION, SURVEILLANCE AND TESTING

Buyer'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 Buyer that are departments, agencies or instrumentalities of the United States Government and to the United States Government Federal Aviation Administration and any successor agency or instrumentality of the United States Government. Buyer may also, at Buyer's option, by prior written notice from Buyer's Authorized SCPA, extend such rights to other customers of Buyer and to agencies or instrumentalities of foreign governments equivalent in purpose to the Federal Aviation Administration. Supplier shall cooperate with any such United States Government-directed or Buyer-directed inspection, surveillance, test or review without additional charge to Buyer. Nothing in this Purchase Document shall be interpreted to limit United States Government access to Supplier's facilities pursuant to law or regulation.

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37. GRATUITIES

Supplier warrants that neither it nor any of its employees, agents, or representatives have offered or given, or will offer or give, any gratuities to Buyer's employees, agents or representatives for the purpose of securing this Purchase Document or securing favorable treatment under this Purchase Document.

38. INTERNATIONAL COOPERATION

Market Access and Sales Support

Supplier agrees to work with Buyer to develop a lean global supply stream through application of shared strategies and tactics which support market access, and international business strategy. Buyer and Supplier agree to work together to identify countries where Supplier may subcontract and manage associated supply chain in support of Buyer's market access and international business strategy. With respect to work covered by the Purchase Documents, and if directed by Buyer, Supplier shall use commercially reasonable efforts to procure from subcontractors and manage associated supply chain, in countries selected by Buyer, goods and services having a value of not more than twenty-five-percent (25%) of the total Shipset Price of all undelivered Shipsets as of the date of such notice. Such direction shall be at Buyer's sole option and may occur at any time during the performance of the Purchase Document; provided that Supplier shall not be required to breach any then existing subcontract. Supplier may satisfy such requirement through purchases either related or not related to the Purchase Document. If Supplier is directed by Buyer to subcontract any part of its Work Packages and Supplier anticipates an increase to the Price of the Purchase Document as a result of such direction, Supplier shall notify Buyer in writing within thirty (30) days of such direction. If there is a cost or schedule impact, Buyer shall respond within thirty (30) days on whether Supplier is to proceed. In such cases if Buyer directs Supplier to proceed and there is a resulting increase to the Price of the Purchase Document, then the Parties will mutually agree to an equitable adjustment in Price.

Offset Assistance

Supplier shall use commercially reasonable efforts to cooperate with Buyer in the fulfillment of any non-United States offset program obligation that Buyer may have accepted as a condition of the sale of a Buyer product. In the event that Supplier is either directed by Buyer 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 the Purchase Document from any source outside of the United States, Buyer 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. Supplier shall take any commercially reasonable actions that may be required on its part to assure that Buyer receives such credits. If Supplier is directed by Buyer to subcontract any part of its Product(s) to a country in which Buyer has an offset obligation, and Supplier anticipates an increase to the Price of the Product(s) as a result of such direction, Supplier shall notify Buyer in writing within thirty (30) days of such direction. If there is a cost or schedule impact, Buyer shall respond within thirty (30) days on whether Supplier is to proceed. In such cases if Buyer directs Supplier toproceed and there is a resulting increase to the Price of the Product(s), then the Parties will mutually agree to an equitable adjustment in Price.

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Credit Against Sales

It is understood that Buyer may wish to claim part or all of the value of this Purchase Document as credit against a current or future Buyer offset obligation in country where Supplier is located. The full value of this Purchase Document shall be held in account by the Government of the country where Supplier is located and may be applied, at Buyer's sole determination, to satisfy any future offset obligations Buyer may accept as a condition of the sale of any Buyer product in the country where Supplier is located. Supplier will use its best efforts to assist Buyer in working with the appropriate government officials to obtain the offset credit being sought.

39. GENERAL & INTERNATIONAL REQUIREMENTS

Language

The Parties hereto have agreed that this Agreement be drafted in American English only. Where Supplier 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. Buyer shall determine whether measurements will be in the English or Metric system or a combination of the two systems. Supplier shall not convert measurements, which Buyer has stated in an English measurement system into the Metric system in documents furnished to Buyer

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.

Import/Export

a. Supplier shall comply with applicable import and export laws and regulations of Supplier’s country and of the United States and with all applicable export licenses and their provisos. This Purchase Document 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 Supplier 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 Supplier to perform this Purchase Document. Such Controlled Items are authorized for export only to Supplier’s country for use by Supplier 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 Purchase Document shall not be imported, exported, or re-exported. Resale or other transfer of items delivered or exchanged pursuant to this Purchase Document shall be in accordance with this clause.

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c. U.S. Government import/export authorization is based upon the following ITAR requirements and upon all applicable export licenses with which Supplier agrees to comply:

1. Supplier shall use Controlled Items furnished by Buyer only in the manufacture of products in accordance with this Purchase Document.

2. Supplier shall not disclose or provide Controlled Items furnished by Buyer to any Foreign Person either in the United States or abroad before obtaining written authorization from Buyer or from the U.S. Department of State Office of Defense Trade Controls, except that if Supplier is itself a Foreign Person, it may disclose or provide Controlled Items furnished by Buyer to Supplier’s employees who are nationals of Supplier’s country of site.

3. Supplier acquires no rights in Controlled Items furnished by Buyer except to use them to perform this Purchase Document. Supplier shall not purport to convey to any subcontractor or person any greater rights in the data than Supplier has. Supplier may convey to subcontractors the right to use the Controlled Items only as required to perform their subcontracts.

4. Supplier shall deliver the articles manufactured in accordance with this Purchase Document only to Buyer in the United States or, with Buyer’s authorization, to the U.S. Government.

5. Upon completion or termination of this Purchase Document, Buyer may require Supplier to: i) return to Buyer all technical data furnished by Buyer pursuant to this Purchase Document; or ii) destroy such technical data and to certify in writing to such destruction.

6. Supplier shall impose these requirements, 1 through 6 inclusive, suitably revised to properly identify the parties, on all subcontractors to whom Supplier intends to furnish Controlled Items provided by Buyer for use by the subcontractors in performance of subcontracts.

d. Supplier 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 Purchase Document: 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.

Mutual Assistance in Obtaining Import/Export Authorizations Under ITAR or EAR

a. Upon request of Buyer’s Authorized Procurement Agent, Supplier shall, promptly and without additional cost, furnish Buyer with any documentation, including import certificates or end- user statements from Supplier or Supplier’s government, which is reasonably necessary to support Buyer’s application for U.S. import or export authorizations. Buyer shall not be responsible for delays in U.S. import or export of Controlled Items supplied hereunder by Buyer due to a lack of necessary documentation from Supplier or Supplier’s country.

b. Supplier shall be responsible for obtaining required import or export approvals, including licenses to import or export equipment or authorizations for Buyer to locate personnel and furnish in-country technical assistance.

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c. Upon Supplier’s request, Buyer shall promptly furnish Supplier with any documentation, including import certificates or end -user statements from Buyer or the U.S. Government, which is reasonably necessary to support Supplier’s application for import or export authorizations issued by Supplier’s government. Supplier shall not be responsible for delays in import or export of Controlled Items supplied hereunder by Supplier into or out of Supplier’s country due to a lack of necessary documentation from Buyer or Buyer’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 Purchase Document, that party shall immediately notify the other party and neither party shall be responsible for performance or payment under this Purchase Document for directly affected activities.

40. UTILIZATION OF SMALL BUSINESS CONCERNS

Supplier 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 Supplier awards to the fullest extent consistent with the efficient performance of this Purchase Document.

41. COMPLIANCE WITH LAWS

Supplier shall comply with all applicable local, State and Federal statutes and government rules, regulations and Orders, including those pertaining to United States Export Controls.

42. GOVERNING LAW

This Purchase Document shall be governed by and construed in accordance with the laws of the state of Kansas. No consideration shall be given to Kansas’s conflict of laws rules. This Purchase Document excludes the application of the United Nations Convention on Contracts for the International Sale of Goods.

43. GOVERNMENT CLAUSES

Government clauses applicable to this Purchase Document are incorporated herein either by attachment to this document or by some other means of reference.

44. ACCESS TO PLANTS AND PROPERTIES

Supplier shall comply with all the rules and regulations established by Buyer for access to and activities in and around premises controlled by Buyer or Buyer’s customer.

45. PARTICIPATION

a. Other Buyer, Inc., Entities - Supplier agrees that any Buyer, Inc., division or Buyer, Inc., subsidiary ("Buyer Entity") not specifically included in this agreement may, by issuing a Purchase Document, work order, or other release document, place Purchase Documents under this agreement during the term hereof or any written extension thereof, under the terms, conditions and pricing specified by this agreement. Supplier agrees that the prices set forth in this agreement may be disclosed by Buyer on a confidential basis to Buyer entities wishing to invoke this agreement clause. Supplier shall notify Buyer’s SCPA named elsewhere in this agreement of Buyer Entities not specifically referenced herein who frequently use this agreement.

b. Buyer Subcontractors/Suppliers - Supplier agrees that any subcontractor or supplier (hereinafter referred to as “Buyer Subcontractor”) performing work for a Buyer Entity, including but not limited to inventory management, may issue a Purchase Document with Supplier independent of this agreement. Supplier agrees to sell products or support aschedule and or a quantity change to such Buyer Subcontractor for its use in its Purchase Documents with Buyer at the prices set forth herein or at a price that reflects the pricing methodology used under this agreement. Buyer assumes no obligation, including payment obligation, with respect to such independent Purchase Document. Supplier agrees that the prices set forth herein may be disclosed by Buyer on a confidential basis to any Buyer Subcontractor wishing to invoke this agreement clause. Supplier may request written verification from the Buyer Subcontractor that the products ordered pursuant to the authority of this agreement support Buyer requirements. Supplier shall periodically inform Buyer’s SCPA of each such request invoking this participation right.

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c. Notification of Purchase Document - In the event a purchaser known by Supplier to be a Buyer Entity or Buyer Subcontractor places a Purchase Document for supplies or services covered by this agreement but fails to reference this agreement or otherwise seek the prices established by this agreement, Supplier shall notify such purchaser of the existence of this agreement and the prices established hereunder and shall offer such prices to such purchaser.

d. Notification of Price Reductions - If Supplier is awarded an additional Purchase Document by another Buyer Entity that results in any price less than that established under this agreement, Supplier agrees to notify the Buyer SCPA immediately of said price reductions and shall extend all such price reductions to this agreement.

46. STRATEGIC ALIGNMENT

Buyer may assign any Purchase Document, in whole or in part, to a third party who is under an obligation to supply Buyer with components, kits, assemblies or systems that require the Supplier's product. At the time of such assignment, Supplier releases Buyer from any and all claims, demands and rights, which Supplier has or may thereafter have against Buyer in connection with such assigned Purchase Document. Buyer will require that its assignee expressly assume all obligations and perform all duties owed to Supplier under the assigned Purchase Document. Promptly after the assignment, Buyer will notify Supplier of the assignment and its effective date.

47. TECHNICAL / MANUFACTURING ASSISTANCE REGARDING SUPPLIER’S NONPERFORMANCE

Supplier shall reimburse Buyer for all Buyer resources expended in providing Supplier and/or Supplier’s subcontractors or supplier’s technical or manufacturing assistance in resolving Supplier nonperformance issues at the established Buyer internal wage rate, which shall include fringe benefits, multiplied by the estimated hours recorded by Buyer, plus the estimated Material costs associated with providing such assistance. In addition, Supplier shall, at Buyer's request, pay for normal and customary expenses relating to salaries, living expenses, travel and any other reasonable expenses related to the provision of technical services. Such reimbursement may be offset against any pending Supplier invoice, regardless of product or program. Buyer’s rights under this clause are in addition to those available to Buyer for Supplier’s nonperformance issues.

48. PROPERTY INSURANCE

Insurance

Supplier shall obtain and maintain continuously in effect a property insurance policy covering loss or destruction of or damage to all property in which Buyer does or could have an insurable interest pursuant to this Agreement, including but not limited to Tooling, Buyer-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 Supplier or any agent, employee, affiliate, subcontractor or supplier of Supplier, 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 Buyer and shall (i) provide for payment of loss there under to Buyer, as loss payee, as its interests may appear and (ii) contain a waiver of any rights of subrogation against Buyer, its subsidiaries, and their respective directors, officers, employees and agents

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Certificate of Insurance

Upon written request from Buyer, Supplier shall provide to Buyer's SCPA certificates of insurance reflecting full compliance with the requirements set forth above. 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 Buyer's SCPA in the event of cancellation, non-renewal or material change adversely affecting the interests of Buyer.

Notice of Damage or Loss

Supplier shall give prompt written notice to Buyer's SCPA 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 Supplier may, upon written notice to Buyer, 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. Supplier may settle, adjust or compromise any other claim by Supplier only after Buyer has given written approval, which approval shall not be unreasonably withheld.

49. DIVERSITY REPORTING

Supplier shall report to Buyer on a quarterly basis, starting from the date of Purchase Document 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 Purchase Document price paid to Supplier to date.

50. OWNERSHIP OF INTELLECTUAL PROPERTY

Technical Work Product

All technical work product, including to the extent protectible by ownership rights, but not limited to, ideas, information, data, documents, drawings, software, software documentation, software tools, designs, specifications, and processes produced by or for Supplier, either alone or with others, in the course of or as a result of any work performed by or for Supplier pursuant to the Purchase Document will be the exclusive property of Buyer and be delivered to Buyer promptly upon request.

Works of Authorship and Copyrights

All works of authorship (including, but not limited to, documents, drawings, software, software documentation, software tools, photographs, video tapes, sound recordings and images) created by or for Supplier, either alone or with others, in the course of or as a result of any work performed by or for Supplier pursuant to the Purchase Document, together with all copyrights subsisting therein, will be the sole property of Buyer. To the extent permitted under United States copyright law, all such works will be works made for hire, with the copyrights therein vesting in Buyer. The copyrights in all other such works, including all of the exclusive rights therein, will be promptly transferred and formally assigned free of charge to Buyer.

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Inventions and Pre-Existing Works of Authorship

Supplier grants to Buyer, with the right of Buyer to sublicense the same to Buyer's subcontractors, suppliers, and customers in connection with Products or work being performed for Buyer, an irrevocable, nonexclusive, paid-up, worldwide license under any patents, copyrights, industrial designs and mask works (whether domestic or foreign) owned or controlled by Supplier at any time and existing prior to or during the term of the Purchase Document, but only to the extent that such patents or copyrights would otherwise interfere with Buyer's or Buyer's subcontractors', suppliers', or customers' use or enjoyment of Products or the work product, inventions, or works of authorship belonging to Buyer under the Purchase Document.

51. ENTIRE AGREEMENT

This Purchase Document contains the entire agreement of the parties and supersedes any and all prior agreements, understandings and communications between Buyer and Supplier related to the subject matter of this Purchase Document. No amendment or modification of this Purchase Document shall bind either party unless it is in writing and is signed by Buyer's Authorized SCPA and an authorized representative of Supplier.

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SPIRIT AEROSYSTEMS, INC.

Fixed Price Contract

Table of Contents
1.	FORMATION OF CONTRACT	3
2.	REFERENCED DOCUMENTS	3
3.	SUPPLY CHAIN PROCUREMENT AGENT (SCPA)	3
4.	ISSUANCE AND ACCEPTANCE OF PURCHASE DOCUMENTS	3
5.	SCHEDULE	3
6.	PRODUCT PRICING	3
7.	CRITICAL MANUFACTURING REORDER LEAD-TIME	4
8.	PACKING AND SHIPPING	4
9.	INSPECTION REQUIREMENTS	5
10.	ADVANCE SHIP NOTICES	5
11.	ACCEPTANCE AND REJECTION	6
12.	SELLER’S NOTICE OF DISCREPANCIES	6
13.	WARRANTY	6
14.	QUALITY CONTROL	7
15.	REGULATORY APPROVALS	9
16.	TAXES	9
17.	INVOICES AND PAYMENT	10
18.	CHANGES	10
19.	SUSPENSION OF WORK	10
20.	TERMINATION FOR CONVENIENCE	11
21.	CANCELLATION FOR DEFAULT	12
22.	DISPUTES	14
23.	ASSURANCE OF PERFORMANCE	14
24.	EXCUSABLE DELAY	14
25.	LIMITATION OF SELLER’S RIGHTS TO ENCUMBER ASSETS	15
26.	SELLERS RESPONSIBILITY FOR PAYMENT	15
27.	NOTICE OF LABOR NEGOTIATIONS	15
28.	ASSIGNMENT, DELEGATION AND SUBCONTRACTING	15
29.	PUBLICITY	15
30.	BUYER’S PROPERTY	15
31.	PATENT, TRADEMARK AND COPYRIGHT INDEMNITY	16
32.	BUYER’S RIGHTS IN SELLER’S PATENTS, COPYRIGHTS, TRADE SECRETS AND TOOLING	16
33.	PROPRIETARY INFORMATION AND ITEMS	17
34.	RECORDS AND AUDIT	17
35.	FINANCIAL DATA	18
36.	RIGHTS OF BUYER’S CUSTOMERS AND REGULATORS TO PERFORM INSPECTION, SURVEILLANCE AND TESTING	18

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37.	GRATUITIES	18
38.	INTERNATIONAL COOPERATION	18
39.	GENERAL & INTERNATIONAL REQUIREMENTS	19
40.	UTILIZATION OF SMALL BUSINESS CONCERNS	21
41.	COMPLIANCE WITH LAWS	21
42.	GOVERNING LAW	21
43.	GOVERNMENT CLAUSES	21
44.	ACCESS TO PLANTS AND PROPERTIES	21
45.	PARTICIPATION	21
46.	STRATEGIC ALIGNMENT	22
47.	TECHNICAL / MANUFACTURING ASSISTANCE REGARDING SELLER’S NONPERFORMANCE	22
48.	PROPERTY INSURANCE	22
49.	DIVERSITY REPORTING	23
50.	OWNERSHIP OF INTELLECTUAL PROPERTY	23

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1. FORMATION OF CONTRACT

This proposed contract is Spirit AeroSystems Inc’s (Buyer) offer to purchase the products and services described in this offer. Acceptance is strictly limited to the terms and conditions in this offer. Unless specifically agreed to in writing by Buyer's Authorized Supply Chain Procurement Agent (SCPA), Buyer objects to, and is not bound by, any term or condition that differs from or adds to this offer. Seller’s commencement of performance or acceptance of this offer in any manner shall conclusively evidence acceptance of this offer as written.

2. REFERENCED DOCUMENTS

All specifications, exhibits, drawings, or other documents, which are referenced in Procurement Documents (Purchase Contract and/or Purchase Order), whether or not attached, are incorporated herein by reference.

If Seller is not presently on distribution for Buyer document(s) necessary to comply with any Purchase Document, copies may be obtained by contacting the SCPA whose name appears on the face of the procurement document.

3. SUPPLY CHAIN PROCUREMENT AGENT (SCPA)

The SCPA shown on the face of the Procurement Document is the only representative authorized by Buyer to change or modify any requirements contained therein.

4. ISSUANCE AND ACCEPTANCE OF PURCHASE DOCUMENTS

Buyer may issue Purchase Contracts/Purchase Orders (Purchase Documents) to Seller from time to time. Each Purchase Document 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.

Any rejection by Seller of a Purchase Document shall specify the reasons for rejection and any changes or additions that would make the Purchase Document acceptable to Seller; provided, however, that Seller may not reject any Purchase Document for reasons inconsistent with the provisions of the Purchase Document.

5. SCHEDULE

a. Seller shall strictly adhere to the shipment or delivery schedules specified in this Purchase Document. In the event of any anticipated or actual delay, including but not limited to delays attributed to labor disputes, Seller shall:

(i) promptly notify Buyer in writing of the reasons for the delay and the actions being taken to overcome or minimize the delay;

(ii) provide Buyer with a written recovery schedule; and

(iii) if requested by Buyer, ship via air or other expedited routing to avoid or minimize delay to the maximum extent possible, unless Seller is excused from prompt performance as provided in the "Excusable Delays" article of this Purchase Document. The added premium transportation costs are to be borne by Seller.

b. Seller shall not deliver products prior to the scheduled delivery dates unless authorized by Buyer.

6. PRODUCT PRICING

The prices of products ordered under the Purchase Documents are set forth within said document. Prices are in United States Dollars. Pricing shall include all cost with respect to such products of preparation, packaging, crating, shipping fixtures and containers, container marking, furnishing of packing sheets and test reports and loading on the carrier's equipment

Pricing of Similar Products. New products ordered by Buyer 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).

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Manufacturing Configuration. Unit pricing for each Product or part number shown within the Purchase Document is based on the latest revisions of the engineering drawings or specifications.

7. CRITICAL MANUFACTURING REORDER LEAD-TIME

Critical Manufacturing Reorder Lead-time (CMROLT) shall be identified by part number for the items listed on the Purchase Documents. As defined in this Purchase Document, CMROLT shall include administrative and manufacturing (including queue, setup, run and move) lead times. CMROLT is the minimum number of manufacturing days (M days) prior to delivery date that Buyer can issue a release for a delivery quantity against a Purchase Document

The CMROLT defined herein shall be fixed and guaranteed by the Seller. Seller shall not manufacture or fabricate items in advance of the CMROLT required to comply with the delivery schedule of any subsequent Purchase Document(s). Notwithstanding any other provision of this Purchase Document, Seller is not entitled to any equitable adjustment or other modification of any Purchase Document(s) for any manufacture, fabrication or procurement of products not in conformity with the requirement of this Purchase Document without first obtaining written consent of Buyer’s SCPA.

Nothing in this Clause shall be construed as relieving Seller of any of its obligations under this Purchase Document or any subsequent Purchase Document(s).

8. PACKING AND SHIPPING

a. 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 Purchase Document specifies otherwise, the price includes shipping charges for products to the F.O.B. destination – freight collect (international orders will ship using INCO terms of FCA unless otherwise directed by the Purchase Documents). 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. Buyer 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 Purchase Document.  Upon Buyer’s request, Seller will identify packaging charges showing material and labor costs for container fabrication.

b. Unless this Purchase Document specifies otherwise, Seller will ship the products in accordance with the following instructions:

(i) 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) Purchase Document 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 Buyer; i) warranty data and certification, as applicable; j) NCR/rejection tag number, if applicable; k) copy of any completed Buyer corrective action request follow-up documentation for article(s) being shipped, l) Seller's certification that products comply with Purchase Document requirements; and, m) identification of optional material used, if applicable, n) evidence of Seller’s product acceptance, o) evidence of Buyer’s product acceptance, when Buyer source acceptance is required, p) Serialized Parts List identifying parts with an assigned serial numbers q) when Seller is a distributor, all items furnished must include the legal name of the product manufacturer immediately following the part number. The list shall contain the part numbers, part nomenclature and part serial numbers. This list shall also include part change letters when applicable, r) control identity of the end item deliverable of raw material or purchased articles, as applicable. The control identification is traceable to the product processed in a single run (same manufacturing date, lot, batch, heat, job or shop traveler number). When multiple lots are included in one shipment, Seller shall clearly separate the control identity of the respective lots. A shipment containing hazardous and non­hazardous 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 air bill, unless Buyer’s Authorized SCPA 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.

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(ii) Seller will not insure any FOB origin shipment unless authorized by Buyer.

(iii) Seller will label each shipping container with the Purchase Document number and the number that each container represents of the total number being shipped (e.g., box 1 of 2, box 2 of 2).

(iv) Buyer will select the carrier and mode of transportation for all shipments where freight costs will be charged to Buyer.

(v) Seller will include copies of documentation supporting prepaid freight charges (e.g., carrier invoices or UPS shipping log/manifest), if any, with its invoices.

(vi) If Seller is unable to comply with the shipping instructions in the Purchase Document, Seller will contact Buyer's Traffic Management Department referenced elsewhere in this Purchase Document or Buyer's Authorized SCPA.

c. For Purchase Documents from Buyer locations that have approved Seller 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. Where approved and pursuant to applicable specifications, Seller will utilize bar-coding technology for part marking products.

d. All items furnished under the Purchase Document, unless excepted by law, must be legibly marked with the English name of the country of origin per U.S. Customs Regulation 19 CFR Part 134 Country of Origin Marking. Markings are to be legible, indelible, and as permanent as the nature of the article or container will allow.

e. Seller must place final inspection stamp and date on all parts. If part surface area, available for marking, is less than 1" x 2” then part should be marked in accordance with the engineering drawing marking requirement.

f. Test Reports – The Seller shall include with each shipment two copies of the results of the lot, batch or item acceptance tests when required by the applicable specification. Test reports shall include control identity (e.g., heat, lot, batch, serial number) of material/item tested, actual values when applicable, and shall be signed by the Seller’s authorized agent. The report shall establish the quantity of material/items associated with each traceability number shipped. Place one copy with the shipping documentation and one copy on the inside of the shipping container.

9. INSPECTION REQUIREMENTS

a. At no additional cost to Buyer, products shall be subject to inspection, surveillance and test at reasonable times and places, including Seller's subcontractors' locations. Buyer shall perform inspections, surveillance and tests so as not to unduly delay the work.

b. Seller shall maintain an inspection system acceptable to Buyer for the products purchased under this Purchase Document.

c.  If Buyer 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.

10. ADVANCE SHIP NOTICES

Advance Ship Notices (ASNs) are required on all shipments to Spirit AeroSystems, Inc., unless specifically excepted. Labels must be generated per MAA7-70121-1(ERP) or MAA7-70121-2 (SAP) document if supplier-generated, or per manual web tool provided to supplier. Electronic file must be generated per Buyer ICD documents on file at http://www.esisinc.com/support/spirit/ or per manual web tool provided to supplier.

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11. ACCEPTANCE AND REJECTION

a. Buyer shall 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 Purchase Document or impair any rights or remedies of Buyer.

b. If Seller delivers non-conforming products, Buyer 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.

c. Seller shall not redeliver corrected or rejected products 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 Buyer's Authorized SCPA may reasonably direct.

d. 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 any amounts that may be owed to Seller under this Purchase Document or otherwise.

12. SELLER’S NOTICE OF DISCREPANCIES

Seller shall provide written notification to Buyer within one business day after Seller becomes aware that a nonconformance (i) is determined to exist, or (ii) is reasonably believed to exist, on Product already delivered to Buyer under any Purchase Document. The following must be included.

o Affected process or Product number and name

o Description of the problem (i.e. what it is and what it should be);

o Quantity and dates delivered;

o Suspect/affected serial number(s) or date codes, when applicable.

The Seller shall notify the Buyer SCPA and the Buyer Procurement Quality Assurance Field Representative for the Buyer location where the Product was delivered.

If the nonconforming condition has been previously identified by Buyer, using a Nonconformance Record or equivalent means and requesting a corrective action response, the Seller shall notify the Buyer investigator identified on the corrective action request that additional Product is affected.

a. If a discrepant shipment is received as a result of Seller error, which does not permit inspection and receipt of the shipment, the Seller will be charged one percent of the value of the shipment or a minimum of $100 per discrepant shipment.

b. If the Seller’s material is rejected at Buyer’s Facility, the Seller will be charged one percent of the value of the shipment or a minimum of $250 per rejection tag, exclusive of the material disposition.

c. Material shipped above the allowable Purchase Document tolerance on discreet orders or shipments which result in inventory over the maximum levels of a Min/Max order without prior approval from Buyer, will at Buyer’s option be returned at Seller’s expense or Seller will be assessed $150 handling charge.

13. WARRANTY

a. Seller warrants that for a period of forty-eight (48) months after acceptance of product by Buyer all products furnished under this Purchase Document shall conform to all specifications and requirements of the Purchase Document and shall be free from defects in materials and workmanship. To the extent products are not manufactured pursuant to detailed designs and specifications furnished by Buyer, the products shall be free from design and specification defects. This warranty shall survive inspection, test and acceptance of, and payment for, the products. This warranty shall run to Buyer and its successors, assigns and customers. Such warranty shall begin after Buyer's final acceptance.

Buyer may, at its option, either (i) return for credit or refund, or (ii) require prompt correction or replacement of the defective or non-conforming products. Return to Seller of defective or nonconforming products and redelivery to Buyer of corrected or replaced products shall be at Seller's expense. Products required to be corrected or replaced shall be subject to this article and the "Inspection" article of this Purchase Document in the same manner and to the same extent as products originally delivered under this Purchase Document, but only as to the corrected or replaced part or parts thereof. Even if the parties disagree about the existence of a breach of this warranty, Seller shall promptly comply with Buyer's direction to: (i) repair, rework or replace the products, or (ii) furnish any materials or parts and installation instructions required to successfully correct the defect or nonconformance. If the parties later determine that Seller did not breach this warranty, the parties shall equitably adjust the Purchase Document price.

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b. Seller warrants that any hardware, software and firmware products delivered under the Purchase Documents shall be able to accurately process date/time data (including, but not limited to, calculating, comparing and sequencing) leap year calculations to the extent that other information technology, used in combination with the information technology being acquired, properly exchanges date/time data with it. The duration of this warranty and the remedies available to Buyer for breach of this warranty shall be as defined in, and subject to, the other warranties contained in this Purchase Document, provided that notwithstanding any provision to the contrary in such warranties, the remedies available to Buyer under this warranty shall include repair or replacement of any non­compliant products discovered and made known to Seller in writing. Nothing in this warranty shall be construed to limit any rights or remedies Buyer may otherwise have under this Purchase Document with respect to defects.

14. QUALITY CONTROL

Seller must certify that the material/finished parts/services and/or data shall be controlled and tested in accordance with, and will meet specified Purchase Document requirements and applicable specifications.

It is required that the Seller flow down to sub-tier suppliers the applicable requirements in this purchasing document, including quality systems requirements and engineering requirements.

At least annually, the Seller shall conduct an internal audit to ensure compliance to their quality system and the controlling quality assurance document.

The Seller shall promptly notify Buyer of any of the following: changes in the management representative with assigned responsibility and authority for the quality system; change to company name (through sale or merger); change in location of manufacturing facility; intent to file bankruptcy.

When specifically requested by Buyer, Seller shall make specified quality data and/or approved design data available in the English language. The Seller shall maintain an English language translation of (1) its quality manual, (2) the operating instructions that implement the quality manual requirements, and (3) an index of all other Seller procedures that contain quality requirements. Buyer may require additional documentation to be translated, including but not limited to: shop Orders, technical specifications, certificates, reports, and nonconformance documents.

The Seller shall immediately notify Buyer in writing of any change to the manufacturing facility location of the part number or assembly covered by the Purchase Document.

Unless otherwise specified all Supplier notifications to Buyer shall be communicated in writing to the Buyer Procurement Agent and the Primary Buyer Procurement Quality Representative.

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Seller shall ensure right of entry and provide all reasonable facilities to Buyer, Buyer Customer, and Regulatory Agency personnel to inspect and evaluate Seller’s facilities, systems, data, equipment, personnel and any articles that will be incorporated into a Buyer type-certificated product. While Buyer reserves the right to conduct inspection on a surveillance basis or to the extent of 100 percent inspection, no shipments are to be held for Buyer inspection unless Buyer Source Acceptance is invoked on the Purchase Document. This right will extend to all facilities involved in the order.

Seller shall maintain, on file at the seller’s facility, Quality records traceable to the conformance of product/part numbers delivered to Buyer. Seller shall make such records available to regulatory authorities and Buyer’s authorized representatives. Seller shall retain such records for a period of not less than (7) seven years from the date of shipment under each applicable Purchase Document for all product/part numbers unless otherwise specified on the Purchase Documents. Seller shall maintain all records related to the current first article inspection (FAI) for (7) seven years past final delivery of the last Product covered by the FAI.

At the expiration of such period, Buyer reserves the right to request delivery of such records. In the event Buyer chooses to exercise this right, Seller shall promptly deliver such records to Buyer at no additional cost on media agreed to by both parties.

Seller shall strictly control all inventory of Buyer proprietary product that is in excess of contracted quantity to prevent product from being sold or provided to any third party without prior written authorization from Buyer.

Non-conforming Parts and Corrective Action

Seller shall provide written notification to Buyer within one (1) business day when a nonconformance is determined to exist, or is suspected to exist, on product already delivered to Buyer under this Purchase Document when any of the following is known:

a. Affected process or product number and nomenclature;

b. Description of the problem (i.e., what it is and what it should be);

c. Suspect/affected serial number(s) or date codes, when applicable;

Notification shall include the above information as a minimum. The Seller shall notify the Buyer’s SCPA who manages the Purchase Document, and as applicable the Buyer Procurement Quality Assurance Field Representative, the Buyer Procurement Quality Assurance organization where product was procured and the supporting Buyer Procurement Quality Assurance organization where the product was delivered

When Buyer notifies Seller of a detected nonconformance, Seller shall immediately take action to eliminate the nonconformance on all products in Seller’s control. Seller shall also maintain on file verification that root cause corrective action has occurred and has resolved the subject condition. At the specific request of Buyer, this verification shall occur for the next five (5) shipments after implementation of the corrective action to ensure detected nonconformance has been eliminated. Buyer reserves the right to review the verification data at Seller’s facility or have the data submitted to Buyer.

Where Seller is requested to submit a corrective action report, Seller will submit its response within ten (10) days of receipt of such request unless an extension is otherwise provided by Buyer. Any corrective action report submitted to Buyer shall be in the format specified by Buyer. If after submittal to Buyer, Seller determines need for revision, Seller shall immediately notify Buyer of such revision. In the event Seller is unable to respond within the allotted ten day time frame, Seller shall submit a request for extension which shall include the reason for the extension request and the time need to complete the corrective action report.

In the event seller receives approval from Buyer’s SCPA, prior to submitting non-conforming material and/or hardware, the seller shall document and process said items in accordance with Buyer MAA1- 10034-1 Supplier Non-conformance.

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Seller shall not use dispositions of use-as-is or repair on Buyer-designed product unless current revision of Seller’s Material Review Board (MRB) plan complies with MAA7-70001-1, Requirements for Obtaining MRB Authority by Buyer Suppliers, and has been approved by Buyer.

The disposition “regrade” shall not be used on products of Buyer proprietary design.

Seller must achieve and maintain a 98% site quality acceptance rate, which is a prerequisite for delegated inspection authority awarded at Spirit Aero Systems’ discretion. Should the acceptance rating fall below 98% the Seller shall be responsible for one or more of the following as directed by Buyer:

a. Obtaining source inspection from a Buyer-qualified contractor at Seller’s own expense;

b. Reimbursing Buyer for reasonable Buyer costs incurred at the point of manufacture (i.e. Seller’s site) to verify product conformance;

c. Reimburse Buyer for reasonable Buyer costs incurred at the point of receipt to verify product conformance.

The site quality acceptance rate is a calculation of the ratio of acceptable units delivered to the total units delivered, or an alternate criteria quality acceptance rating, equivalent to 98% as defined by the contracting Buyer site(s).

Seller shall perform First Article Inspections (FAIs) in accordance with AS9102 – Aerospace – First Article Inspection Requirement. When documenting the FAI, the Seller may use the forms contained within AS9102, or equivalent forms so long as they contain the minimum information required by AS9102. Tooling - Seller shall inspect all tools to the Engineering immediately on receipt of the tools and shall perform a first part inspection to the Engineering. If tools require rework, Buyer is to be notified immediately.

Supplier Surveillance – Work under this Purchase Document is subject to Buyer surveillance at supplier’s facility. Buyer quality control representative may elect to conduct inspection either on a random basis or to the extent of 100 percent inspection. Supplier will be notified if Buyer inspection is to be conducted on specific shipments. No shipments are to be held for Buyer inspection unless notification is received prior to, or at time of, product being ready for shipment.

Digital Data – When a Seller uses Buyer digital data as authority for design and/or inspection, then the Seller must be approved for Digital Product Definition and comply with the requirements of MMA1-10009- 1, Quality Assurance Standard for Digital Product Definition at Buyer Suppliers, or contractual requirements. Seller recognizes that prior to the receipt of digital data a proprietary information agreement must be on file with Buyer.

15. 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 Buyer) of modification or replacement parts to owners/operators of type-certificated aircraft. Regulatory approval, such as Parts Manufacturer Approval (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. For Seller proprietary parts, Seller agrees to notify Buyer 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, Buyer may list Seller in the Illustrated Parts Catalog as seller of that part.

16. TAXES

Unless this Purchase Document specifies otherwise, the price of this Purchase Document includes, and Seller is liable for and shall pay, all taxes, impositions, charges and exactions imposed on or measured by this Purchase Document except for applicable sales and use taxes that are separately stated on Seller's invoice. Prices shall not include any taxes, impositions, charges or exactions for which Buyer has furnished a valid exemption certificate or other evidence of exemption.

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17. INVOICES AND PAYMENT

Unless otherwise authorized by Buyer's Authorized SCPA, Seller shall issue a separate original invoice for each delivery that shall include Buyer's Purchase Document number and line item number. Seller shall forward its invoice to the address specified elsewhere in this Purchase Document. Unless freight or other charges are itemized, Buyer may take any offered discount on the full amount of the invoice. Payment due date, including discount periods, shall be computed from the later of the scheduled delivery date, the actual delivery date or the date of receipt of a correct invoice. Payment shall be deemed made on the date Buyer's check is mailed or payment is otherwise tendered. Seller shall promptly repay Buyer any amounts paid in excess of amounts due Seller. Payment Terms are Net 60 days.

18. CHANGES

a. Buyer's Authorized SCPA may, without notice to sureties and in writing, direct changes within the general scope of this Purchase Document 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 Buyer-furnished property; and, if this Purchase Document includes services, (vi) description of services to be performed; (vii) time of performance (e.g., hours of the day, days of the week); (viii) place of performance, and (ix) terms and conditions of this Purchase Document required to meet Buyer’s obligations under Government prime contracts or subcontracts. Seller shall comply immediately with such direction.

b. If such change increases or decreases the cost or time required to perform this Purchase Document, Buyer and Seller shall negotiate an equitable adjustment in the price or schedule, or both, to reflect the increase or decrease. Buyer shall modify this Purchase Document in writing accordingly. Unless otherwise agreed in writing, Seller must assert any claim for adjustment to Buyer's Authorized SCPA in writing within thirty (30) days and deliver a fully supported proposal to Buyer's Authorized SCPA within sixty (60) days after Seller's receipt of such direction. Buyer 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, Buyer may direct the disposition of the property. Buyer 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 Buyer's direction.

c. If Seller considers that Buyer's conduct constitutes a change, Seller shall notify Buyer's Authorized SCPA immediately in writing as to the nature of such conduct and its effect upon Seller's performance. Pending direction from Buyer's Authorized SCPA, Seller shall take no action to implement any such change.

19. SUSPENSION OF WORK

a. Buyer's Authorized SCPA may, by written Order, suspend all or part of the work to be performed under this Purchase Document for a period not to exceed one hundred (150) days. Within such period of any suspension of work, Buyer shall (i) cancel the suspension of work Order; (ii) terminate this Purchase Document in accordance with the "Termination for Convenience" article of this Purchase Document; (iii) cancel this Purchase Document in accordance with the "Cancellation for Default" article of this Purchase Document; or (iv) extend the stop work period.

b. Seller shall resume work whenever a suspension is canceled. Buyer and Seller shall negotiate an equitable adjustment in the price or schedule or both if (i) this Purchase Document is not canceled or terminated; (ii) the suspension results in a change in Seller's cost of performance or ability to meet the Purchase Document delivery schedule; and (iii) Seller submits a claim for adjustment within thirty (30) days after the suspension is canceled.

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20. TERMINATION FOR CONVENIENCE

Basis for Termination; Notice

Buyer may, from time to time terminate all or part of any Purchase Document by written notice to Seller. Any such written notice of termination shall specify the effective date and the extent of any such termination.

Termination Instructions

On receipt of a written notice of termination, unless otherwise directed by Buyer, Seller shall:

a. Immediately stop work as specified in the notice;

b. Immediately terminate its subcontracts and Purchase Documents relating to work terminated; c Use commercially reasonable efforts to settle any termination claims made by its subcontractors or suppliers. It is advisable that Seller review such claims with Buyer prior to settlement, however Seller shall not be required to obtain pre-approval from Buyer, provided, that with respect to any payments made by Seller without Buyer’s prior approval, Buyer shall be obligated to pay Seller only that portion of such termination claims as are compensable under the Seller’s Claim portion of the Clause.

d. Preserve and protect all terminated inventory and products;

e. At Buyer's request, transfer title (to the extent not previously transferred) and deliver to Buyer or Buyer'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 Purchase Document, all in accordance with the terms of such request;

f. Be compensated for such items to the extent provided below;

g. Take all reasonable steps required to return, or at Buyer's option and with prior written approval to destroy, all Buyer Proprietary Information and Items in the possession, custody or control of Seller or any of its subcontractors or suppliers;

h. Take such other action as, in Buyer's reasonable opinion, may be necessary, and as Buyer shall direct in writing, to facilitate termination of the Purchase Document; and

i. Complete performance of the work not terminated.

Seller's Claim

If Buyer terminates a Purchase Document in whole or in part Seller shall have the right to submit a written termination claim to Buyer. Such termination claim shall be asserted to Buyer within forty-five (45) calendar 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 Buyer using Spirit AeroSystems form F08-04597. 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. In no event shall claims for non­recurring engineering be considered or paid by Buyer to Seller. Seller shall be entitled to compensation in accordance with and to the extent allowed under the terms of FAR 52-249-2 (May 2004) paragraphs (e)-(i), ( which may be accessed via the World Wide Web address www.acquisition.gov/far); without Alternates, unless alternate clause date is called out on the Purchase Documents which is incorporated herein by reference except "Government" and "Contracting Officer" shall mean Buyer, "Contractor" shall mean Seller and "Contract" shall mean Purchase Documents and “1 year” shall be “6 months”. Seller shall indemnify Buyer and hold Buyer harmless from and against (i) any and all claims, suits and proceedings against Buyer 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 Buyer in connection with any such claim, suit or proceeding.

Failure to Submit a Claim

Notwithstanding any other provision of this General Provisions, if Seller fails to submit a termination claim within the time period set forth above, Seller shall be barred from submitting a claim and Buyer shall have no obligation for payment to Seller except for those products previously delivered and accepted by Buyer. Partial Termination

Any partial termination of a Purchase Document shall not alter or affect the terms and conditions of the Purchase Documents or any order(s) with respect to products not terminated.

Product Price

Termination shall not result in any change to unit prices for products not terminated.

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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 Buyer to Seller pursuant to a terminated Purchase Document;

b. Any claim which Buyer has against Seller;

c. The agreed price for scrap allowance;

d. Except for normal spoilage and any risk of loss assumed by Buyer, the agreed fair value of property that is lost, destroyed, stolen or damaged.

Partial Payment/Payment Payment, if any, shall be made thirty (30) days after settlement between the parties or as otherwise agreed to between the parties. Buyer may make partial payments and payments against costs incurred by Seller for the terminated portion of the Purchase Document. If the total payments exceed the final amount determined to be due, Seller shall repay the excess to Buyer upon demand.

Seller's Accounting Practices Buyer 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 General Provisions, Seller's "normal accounting practices" refers to Seller's method of charging costs as a direct charge, overhead expense, general administrative expense, etc.

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 Purchase Document for three (3) years after final settlement of Seller's termination claim.

21.  CANCELLATION FOR DEFAULT

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 the order(s), any Product, or

b. Any failure by Seller to provide an acceptable Assurance of Performance or,

c. 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

d. Buyer revokes Seller’s Quality Assurance System approval, if applicable; or,

e. Any failure by Seller to perform or comply with any obligation 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 Buyer specifying such failure; or

f. (1) the suspension, dissolution or winding-up of Seller's business, (2) Seller's insolvency, or its inability to pay debts, or its nonpayment of debts, as they become due, (3) 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, (4) an assignment by Seller for the benefit of its creditors, or (5) any action of Seller for the purpose of effecting or facilitating any of the foregoing.

Remedies

If any Event of Default shall occur:

a. Cancellation

Buyer may, by giving written notice to Seller, immediately cancel any Purchase Document, in whole or in part, and Buyer shall not be required after such notice to accept the tender by Seller of any products subject to the cancellation.

Seller shall continue work not canceled. If Buyer cancels all or part of the Purchase Document, Seller shall be liable for Buyer’s excess re-procurement costs.

b. Cover

Buyer 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. In addition to any other remedies or damages available to Buyer hereunder or at law or in equity, Buyer 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 Buyer to manufacture, produce or provide, or engage other persons to manufacture, produce or provide, each such Product.

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c. Buyer may require Seller to transfer title and deliver to Buyer, as directed by Buyer, any (i) completed Goods, and (ii) any partially completed Goods and materials, parts, tools, dies, jigs, fixtures, plans, drawings, information and contract rights (collectively, "Manufacturing Materials") that Seller has specifically produced or acquired for the canceled portion of this Purchase Document. Upon direction from Buyer, Seller shall also protect and preserve property in its possession in which Buyer or its Customer has an interest.

d. Rework or Repair

Where allowed by the applicable regulatory authority, Buyer or its designee may rework or repair any Product;

e. Setoff

Buyer 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 Buyer hereunder or under any Purchase Document, all deposits, amounts or balances held by Buyer for the account of Seller and any amounts owed by Buyer to Seller, regardless of whether any such deposit, amount, balance or other amount or payment is then due and owing.

f. Tooling and other Materials

As partial compensation for the additional costs which Buyer will incur as a result of the transfer of production capabilities from Seller to Buyer or Buyer's designee, Seller shall upon the request of Buyer, transfer and deliver to Buyer or Buyer's designee title to any or all (i) tooling, (ii) Buyer- 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 or suppliers (iv) Proprietary Information and Materials of Buyer 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 or suppliers, in each case free and clear of all liens, claims or other rights of any person.

Seller shall be entitled to receive from Buyer reasonable compensation for any item accepted by Buyer which has been transferred to Buyer pursuant Section (except for any item the price of which has 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 Buyer as a result of any Event of Default.

Remedies Generally

No failure on the part of Buyer 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 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 Buyer 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.

If after cancellation, it is determined that Seller is not at fault, the rights and remedies of the parties shall be as if the Purchase Document had been terminated according to the Termination for Convenience article of this Purchase Document.

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22. DISPUTES

Any dispute that arises under or is related to this Purchase Document that cannot be settled by mutual agreement of the parties may be decided by a court of competent jurisdiction. Pending final resolution of any dispute, Seller shall proceed with performance of this Purchase Document according to Buyer's instructions so long as Buyer continues to pay amounts not in dispute.

23. ASSURANCE OF PERFORMANCE

If Buyer 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 Buyer has reasonable grounds for insecurity, Buyer 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 any Purchase Document when and as specified herein. Each Assurance of Performance shall be delivered by Seller to Buyer as promptly as possible, but in any event no later than ten (10) calendar days following Buyer's request therefore and each Assurance of Performance shall be accompanied by any information, reports or other materials, prepared by Seller, as Buyer may reasonably request. Except as to payment for accepted products, Buyer may suspend all or any part of Buyer's performance hereunder until Buyer receives an Assurance of Performance from Seller satisfactory in form and substance to Buyer.

Meetings and Information

Buyer may request one or more meetings with senior management or other employees of Seller for the purpose of discussing any request by Buyer for Assurance of Performance or any Assurance of Performance provided by Seller. Seller shall make such persons available to meet with representatives of Buyer as soon as may be practicable following a request for any such meeting by Buyer and Seller shall make available to Buyer any additional information, reports or other materials in connection therewith as Buyer may reasonably request.

24. 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 Buyer after an assessment by Buyer 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, Buyer expects Seller to continue production, recover lost time and support all schedules as established under the Purchase Documents. 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, Buyer may, without any additional extension, cancel all or part of any Purchase Document with respect to the delayed Products, and exercise any of its remedies in accordance with General Provisions Clause 21, provided however, that Buyer shall not be entitled to monetary damages or specific performance to the extent Seller's breach is the result of an Excusable Delay.

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25. LIMITATION OF SELLER’S RIGHTS TO ENCUMBER ASSETS

Seller warrants to Buyer 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 Purchase Document. Pursuant to the provisions of such Purchase Document, Seller will transfer to Buyer title to such inventory, work-in- process, tooling and materials whether transferred separately or as part of any Product delivered under the Purchase Document, free of any liens, charges, encumbrances or rights of others.

26. SELLERS RESPONSIBILITY FOR PAYMENT

Seller will be responsible for the prompt payment of all persons who perform labor upon or furnish services, materials, equipment, supplies, or other items used or to be used in the performance of the work called for by this Purchase Document, and Seller shall defend protect and save harmless Buyer, Inc. from and against all liens, claims, suits and actions for such labor, services, materials, equipment, supplies or other items whether brought by Seller's subcontractors or any lower tier subcontractors.

27.  NOTICE OF LABOR NEGOTIATIONS

When requested by Buyer, Seller will provide status on labor contracts and pending negotiations, including that of Seller’s subcontractors or suppliers, except as may be prohibited by law.

28. ASSIGNMENT, DELEGATION AND SUBCONTRACTING

Seller shall not assign any of its rights or interest in this Purchase Document or subcontract all or substantially all of its performance of this Purchase Document, without Buyer's prior written consent. Seller shall not delegate any of its duties or obligations under this Purchase Document. Seller may assign its right to monies due or to become due. No assignment, delegation or subcontracting by Seller, with or without Buyer's consent, shall relieve Seller of any of its obligations under this Purchase Document or prejudice any of Buyer's rights 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 materials.

29. PUBLICITY

Without Buyer's prior written approval, Seller shall not, and shall require that its subcontractors at any tier shall not, release any publicity, advertisement, news release or denial or confirmation of same regarding this Purchase Document or the products or program to which it pertains. Seller shall be liable to Buyer for any breach of such obligation by any subcontractor.

30. BUYER’S PROPERTY

Seller shall clearly mark, maintain an inventory of, and keep segregated or identifiable all of Buyer's property and all property to which Buyer acquires an interest by virtue of this Purchase Document. 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 Buyer with adequate proof of insurance against such risk of loss. Seller shall not use such property other than in performance of this Purchase Document without Buyer's prior written consent. Seller shall notify Buyer's Authorized SCPA if Buyer's property is lost, damaged or destroyed. As directed by Buyer, upon completion, termination or cancellation of this Purchase Document, Seller shall deliver such property, to the extent not incorporated in delivered products, to Buyer in good condition subject to ordinary wear and tear and normal manufacturing losses. Nothing in this article limits Seller's use, in its direct contracts with the Government, of property in which the Government has an interest.

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31.  PATENT, TRADEMARK AND COPYRIGHT INDEMNITY

Seller will indemnify, defend and hold harmless Buyer and its customer 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 Buyer or its customer. Buyer and/or its customer 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 indemnitees.

Seller will have no obligation under this article with regard to any infringement arising from

a. Seller's compliance with formal specifications issued by Buyer where infringement could not be avoided in complying with such specifications or

b. 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 article only, the term Buyer will include Buyer, Inc. and all Buyer, Inc., subsidiaries and all officers, agents and employees of Buyer, Inc., or any Buyer, Inc., subsidiary.

32. BUYER’S RIGHTS IN SELLER’S PATENTS, COPYRIGHTS, TRADE SECRETS AND TOOLING

Seller hereby grants to Buyer an irrevocable, nonexclusive, paid-up worldwide license to practice and/or use, and license others to practice and/or use on Buyer'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. Buyer hereafter retains all of the aforementioned license rights in Licensed Property, but Buyer 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 Product cannot, in Buyer’s sole determination, be reasonably obtained in the required time frame at a reasonable price from commercially available sources (including Buyer) 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 Buyer’s prior written concurrence;

c. Buyer cancels this Agreement or any Purchase Document for cause;

d. In Buyer's judgment it becomes necessary, in order for Seller to comply with the terms of the Purchase Document(s), for Buyer to provide support to Seller (in the form of design, manufacturing, or on-site personnel assistance) substantially in excess of that which Buyer normally provides to its suppliers;

e. Seller's trustee in bankruptcy (or Seller as debtor in possession) fails to assume the Purchase Document(s) 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 Buyer 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 Section, Seller shall, at the written request of Buyer and at no additional cost to Buyer, promptly deliver to Buyer any and all Licensed Property considered by Buyer to be necessary to satisfy Buyer's requirements for products and their substitutes.

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33. PROPRIETARY INFORMATION AND ITEMS

Buyer and Seller shall each keep confidential and protect from disclosure all (a) confidential, proprietary, and/or trade secret information; including editorial revisions, annotations, elaborations, or any other forms in which such confidential, proprietary, and/or trade secret information may be modified, recast, transformed, translated, condensed, or otherwise adapted; (b) tangible items and software containing, conveying, or embodying such information; and (c) tooling obtained from and/or belonging to the other in connection with the Purchase Document (collectively referred to as "Proprietary Information and Materials"). Buyer and Seller shall each use Proprietary Information and Materials of the other only in the performance of and for the purpose of the Purchase Document. Provided, however, that despite any other obligations or restrictions imposed by this General Provisions Clause 33, Buyer 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 the Purchase Document or any airplane including such an item; and any such disclosure by Buyer shall, whenever appropriate, include a restrictive legend suitable to the particular circumstances. Each party shall maintain restrictive legends placed by the other party on Proprietary Information and Materials of the other party on all copies made of the other party’s Proprietary Information and Materials. The restrictions on disclosure or use of Proprietary Information and Materials by Seller shall apply to all materials derived by Seller or others from Buyer's Proprietary Information and Materials.

Upon Buyer's request at any time, and in any event upon the completion, termination or cancellation of the Purchase Document, Seller shall return all of Buyer's Proprietary Information and Materials, and all materials derived from Buyer's Proprietary Information and Materials to Buyer unless specifically directed otherwise in writing by Buyer. Seller shall not, without the prior written authorization of Buyer, 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 Buyer. Prior to disposing of such parts or materials as scrap, Seller shall render them unusable. Buyer shall have the right to audit Seller's compliance with this General Provisions Clause 33. Seller may disclose Proprietary Information and Materials of Buyer 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 General Provisions Clause 33 relating to Proprietary Information and Materials; and Seller shall be liable to Buyer for any breach of such obligation by such subcontractor. The provisions of this General Provisions Clause 33 are effective in lieu of, and will apply notwithstanding the absence of, any restrictive legends or notices applied to Proprietary Information and Materials; and the provisions of this General Provisions Clause 33 shall survive the performance, completion, termination or cancellation of the Purchase Document. This General Provisions Clause 33 supersedes and replaces any and all other prior agreements or understandings between the parties to the extent that such agreements or understandings relate to Buyer'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 the Purchase Document.

34. RECORDS AND AUDIT

Seller shall maintain complete and accurate records. Such records shall support all services performed, allowances claimed and costs incurred by Seller in the performance of each Purchase Document, 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 Buyer and be available to Buyer at Seller's facility for Buyer's examination, reproduction, and audit at all reasonable times from the date of the applicable Purchase Document until three (3) years after final payment under such Purchase Document. Seller shall provide assistance to interpret such data if requested by Buyer. Such examination shall provide Buyer with complete information regarding Seller's performance for use in price negotiations with Seller relating to existing or future Purchase Documents for products, including but not limited to negotiation of equitable adjustments for changes and termination/obsolescence claims pursuant to Section 11 of this document. Buyer shall treat all information disclosed under this Purchase Document section as confidential, unless required by U.S. Government contracting regulation(s).

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35. FINANCIAL DATA

If requested, Seller shall provide financial data, on a quarterly basis, or as requested to the Buyer Credit Management 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 seventy-two (72) hours of any written request by the Buyer Credit Management Office. Buyer shall treat all such information as confidential.

36. RIGHTS OF BUYER’S CUSTOMERS AND REGULATORS TO PERFORM INSPECTION, SURVEILLANCE AND TESTING

Buyer'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 Buyer that are departments, agencies or instrumentalities of the United States Government and to the United States Government Federal Aviation Administration and any successor agency or instrumentality of the United States Government. Buyer may also, at Buyer's option, by prior written notice from Buyer's Authorized SCPA, extend such rights to other customers of Buyer 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- directed or Buyer-directed inspection, surveillance, test or review without additional charge to Buyer. Nothing in this Purchase Document shall be interpreted to limit United States Government access to Seller's facilities pursuant to law or regulation.

37. GRATUITIES

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 Buyer's employees, agents or representatives for the purpose of securing this Purchase Document or securing favorable treatment under this Purchase Document.

38. INTERNATIONAL COOPERATION

Market Access and Sales Support

Seller agrees to work with Buyer to develop a lean global supply stream through application of shared strategies and tactics which support market access, and international business strategy. Buyer and Seller agree to work together to identify countries where Seller may subcontract and manage associated supply chain in support of Buyer's market access and international business strategy. With respect to work covered by the Purchase Documents, and if directed by Buyer, Seller shall use commercially reasonable efforts to procure from subcontractors and manage associated supply chain, in countries selected by Buyer, goods and services having a value of not more than twenty-five-percent (25%) of the total Shipset Price of all undelivered Shipsets as of the date of such notice. Such direction shall be at Buyer's sole option and may occur at any time during the performance of the Purchase Document; provided that Seller shall not be required to breach any then existing subcontract. Seller may satisfy such requirement through purchases either related or not related to the Purchase Document. If Seller is directed by Buyer to subcontract any part of its Work Packages and Seller anticipates an increase to the Price of the Purchase Document as a result of such direction, Seller shall notify Buyer in writing within thirty (30) days of such direction. If there is a cost or schedule impact, Buyer shall respond within thirty (30) days on whether Seller is to proceed. In such cases if Buyer directs Seller to proceed and there is a resulting increase to the Price of the Purchase Document, then the Parties will mutually agree to an equitable adjustment in Price.

Offset Assistance

Seller shall use commercially reasonable efforts to cooperate with Buyer in the fulfillment of any non- United States offset program obligation that Buyer may have accepted as a condition of the sale of a Buyer product. In the event that Seller is either directed by Buyer 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 the Purchase Document from any source outside of the United States, Buyer 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 commercially reasonable actions that may be required on its part to assure that Buyer receives such credits. If Seller is directed by Buyer to subcontract any part of its Product(s) to a country in which Buyer has an offset obligation, and Seller anticipates an increase to the Price of the Product(s) as a result of such direction, Seller shall notify Buyer in writing within thirty (30) days of such direction. If there is a cost or schedule impact, Buyer shall respond within thirty (30) days on whether Seller is to proceed. In such cases if Buyer directs Seller to proceed and there is a resulting increase to the Price of the Product(s), then the Parties will mutually agree to an equitable adjustment in Price.

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General Provisions

Credit Against Sales

It is understood that Buyer may wish to claim part or all of the value of this Purchase Document as credit against a current or future Buyer offset obligation in country where Seller is located. The full value of this Purchase Document shall be held in account by the Government of the country where Seller is located and may be applied, at Buyer's sole determination, to satisfy any future offset obligations Buyer may accept as a condition of the sale of any Buyer product in the country where Seller is located. Seller will use its best efforts to assist Buyer in working with the appropriate government officials to obtain the offset credit being sought.

39. GENERAL & INTERNATIONAL REQUIREMENTS

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. Buyer 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 Buyer has stated in an English measurement system into the Metric system in documents furnished to Buyer

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.

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 Purchase Document 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 Purchase Document. 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 Purchase Document shall not be imported, exported, or re-exported. Resale or other transfer of items delivered or exchanged pursuant to this Purchase Document shall be in accordance with this clause.

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General Provisions

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 Buyer only in the manufacture of products in accordance with this Purchase Document.

2. Seller shall not disclose or provide Controlled Items furnished by Buyer to any Foreign Person either in the United States or abroad before obtaining written authorization from Buyer 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 Buyer to Seller’s employees who are nationals of Seller’s country of site.

3. Seller acquires no rights in Controlled Items furnished by Buyer except to use them to perform this Purchase Document. 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 Purchase Document only to Buyer in the United States or, with Buyer’s authorization, to the U.S. Government.

5. Upon completion or termination of this Purchase Document, Buyer may require Seller to: i) return to Buyer all technical data furnished by Buyer pursuant to this Purchase Document; 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 Buyer 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 Purchase Document:

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.

Mutual Assistance in Obtaining Import/Export Authorizations Under ITAR or EAR

a. Upon request of Buyer’s Authorized Procurement Agent, Seller shall, promptly and without additional cost, furnish Buyer with any documentation, including import certificates or end-user statements from Seller or Seller’s government, which is reasonably necessary to support Buyer’s application for U.S. import or export authorizations. Buyer shall not be responsible for delays in U.S. import or export of Controlled Items supplied hereunder by Buyer 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 Buyer to locate personnel and furnish in-country technical assistance.

c. Upon Seller’s request, Buyer shall promptly furnish Seller with any documentation, including import certificates or end -user statements from Buyer 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 Buyer or Buyer’s country.

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General Provisions

d. If the government of either party denies, fails to grant, or revokes any import or export authorizations necessary for the performance of this Purchase Document, that party shall immediately notify the other party and neither party shall be responsible for performance or payment under this Purchase Document for directly affected activities.

40. 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 Purchase Document.

41. COMPLIANCE WITH LAWS

Seller shall comply with all applicable local, State and Federal statutes and government rules, regulations and Orders, including those pertaining to United States Export Controls.

42. GOVERNING LAW

This Purchase Document shall be governed by and construed in accordance with the laws of the state of Kansas. No consideration shall be given to Kansas’s conflict of laws rules. This Purchase Document excludes the application of the United Nations Convention on Contracts for the International Sale of Goods.

43. GOVERNMENT CLAUSES

Government clauses applicable to this Purchase Document are incorporated herein either by attachment to this document or by some other means of reference.

44. ACCESS TO PLANTS AND PROPERTIES

Seller shall comply with all the rules and regulations established by Buyer for access to and activities in and around premises controlled by Buyer or Buyer’s customer.

45. PARTICIPATION

a. Other Buyer, Inc., Entities - Seller agrees that any Buyer, Inc., division or Buyer, Inc., subsidiary ("Buyer Entity") not specifically included in this agreement may, by issuing a Purchase Document, work order, or other release document, place Purchase Documents under this agreement during the term hereof or any written extension thereof, under the terms, conditions and pricing specified by this agreement. Seller agrees that the prices set forth in this agreement may be disclosed by Buyer on a confidential basis to Buyer entities wishing to invoke this agreement clause. Seller shall notify Buyer’s SCPA named elsewhere in this agreement of Buyer Entities not specifically referenced herein who frequently use this agreement.

b. Buyer Subcontractors/Suppliers - Seller agrees that any subcontractor or supplier (hereinafter referred to as “Buyer Subcontractor”) performing work for a Buyer Entity, including but not limited to inventory management, may issue a Purchase Document with Seller independent of this agreement. Seller agrees to sell products or support a schedule and or a quantity change to such Buyer Subcontractor for its use in its Purchase Documents with Buyer at the prices set forth herein or at a price that reflects the pricing methodology used under this agreement. Buyer assumes no obligation, including payment obligation, with respect to such independent Purchase Document. Seller agrees that the prices set forth herein may be disclosed by Buyer on a confidential basis to any Buyer Subcontractor wishing to invoke this agreement clause. Seller may request written verification from the Buyer Subcontractor that the products ordered pursuant to the authority of this agreement support Buyer requirements. Seller shall periodically inform Buyer’s SCPA of each such request invoking this participation right.

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General Provisions

c. Notification of Purchase Document - In the event a purchaser known by Seller to be a Buyer Entity or Buyer Subcontractor places a Purchase Document for supplies or services covered by this agreement but fails to reference this agreement or otherwise seek the prices established by this agreement, Seller shall notify such purchaser of the existence of this agreement and the prices established hereunder and shall offer such prices to such purchaser.

d Notification of Price Reductions - If Seller is awarded an additional Purchase Document by another Buyer Entity that results in any price less than that established under this agreement, Seller agrees to notify the Buyer SCPA immediately of said price reductions and shall extend all such price reductions to this agreement.

46. STRATEGIC ALIGNMENT

Buyer may assign any Purchase Document, in whole or in part, to a third party who is under an obligation to supply Buyer with components, kits, assemblies or systems that require the Seller's product. At the time of such assignment, Seller releases Buyer from any and all claims, demands and rights, which Seller has or may thereafter have against Buyer in connection with such assigned Purchase Document. Buyer will require that its assignee expressly assume all obligations and perform all duties owed to Seller under the assigned Purchase Document. Promptly after the assignment, Buyer will notify Seller of the assignment and its effective date.

47.  TECHNICAL / MANUFACTURING ASSISTANCE REGARDING SELLER’S NONPERFORMANCE

Seller shall reimburse Buyer for all Buyer resources expended in providing Seller and/or Seller’s subcontractors or supplier’s technical or manufacturing assistance in resolving Seller nonperformance issues at the established Buyer internal wage rate, which shall include fringe benefits, multiplied by the estimated hours recorded by Buyer, plus the estimated Material costs associated with providing such assistance. In addition, Seller shall, at Buyer's request, pay for normal and customary expenses relating to salaries, living expenses, travel and any other reasonable expenses related to the provision of technical services. Such reimbursement may be offset against any pending Seller invoice, regardless of product or program. Buyer’s rights under this clause are in addition to those available to Buyer for Seller’s nonperformance issues.

48. PROPERTY INSURANCE

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 Buyer does or could have an insurable interest pursuant to this Agreement, including but not limited to Tooling, Buyer-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, subcontractor or supplier 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 Buyer and shall (i) provide for payment of loss there under to Buyer, as loss payee, as its interests may appear and (ii) contain a waiver of any rights of subrogation against Buyer, its subsidiaries, and their respective directors, officers, employees and agents

Certificate of Insurance

Upon written request from Buyer, Seller shall provide to Buyer's SCPA certificates of insurance reflecting full compliance with the requirements set forth above. 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 Buyer's SCPA in the event of cancellation, non-renewal or material change adversely affecting the interests of Buyer.

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General Provisions

Notice of Damage or Loss

Seller shall give prompt written notice to Buyer's SCPA 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 Buyer, 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 Buyer has given written approval, which approval shall not be unreasonably withheld.

49. DIVERSITY REPORTING

Seller shall report to Buyer on a quarterly basis, starting from the date of Purchase Document 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 Purchase Document price paid to Seller to date.

50. OWNERSHIP OF INTELLECTUAL PROPERTY

Technical Work Product

All technical work product, including to the extent protectible by ownership rights, 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 pursuant to the Purchase Document will be the exclusive property of Buyer and be delivered to Buyer promptly upon request.

Works of Authorship and Copyrights

All works of authorship (including, but not limited to, documents, drawings, software, software documentation, software tools, photographs, video tapes, sound recordings and images) created 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 pursuant to the Purchase Document, together with all copyrights subsisting therein, will be the sole property of Buyer. To the extent permitted under United States copyright law, all such works will be works made for hire, with the copyrights therein vesting in Buyer. The copyrights in all other such works, including all of the exclusive rights therein, will be promptly transferred and formally assigned free of charge to Buyer.

Inventions and Pre-Existing Works of Authorship

Seller grants to Buyer, with the right of Buyer to sublicense the same to Buyer's subcontractors, suppliers, and customers in connection with Products or work being performed for Buyer, an irrevocable, nonexclusive, paid-up, worldwide license under any patents, copyrights, industrial designs and mask works (whether domestic or foreign) owned or controlled by Seller at any time and existing prior to or during the term of the Purchase Document, but only to the extent that such patents or copyrights would otherwise interfere with Buyer's or Buyer's subcontractors', suppliers', or customers' use or enjoyment of Products or the work product, inventions, or works of authorship belonging to Buyer under the Purchase Document.

51. ENTIRE AGREEMENT

This Purchase Document contains the entire agreement of the parties and supersedes any and all prior agreements, understandings and communications between Buyer and Seller related to the subject matter of this Purchase Document. No amendment or modification of this Purchase Document shall bind either party unless it is in writing and is signed by Buyer's Authorized SCPA and an authorized representative of Seller.

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General Provisions

SPIRIT AEROSYSTEMS, INC.

Fixed Price Contract

Table of Contents

1.	FORMATION OF CONTRACT	3
2.	REFERENCED DOCUMENTS	3
3.	SUPPLY CHAIN PROCUREMENT AGENT (SCPA)	3
4.	ISSUANCE AND ACCEPTANCE OF PURCHASE DOCUMENTS	3
5.	SCHEDULE	3
6.	PRODUCT PRICING	3
7.	CRITICAL MANUFACTURING REORDER LEAD-TIME	4
8.	PACKING AND SHIPPING	4
9.	INSPECTION REQUIREMENTS	5
10.	ADVANCE SHIP NOTICES	5
11.	ACCEPTANCE AND REJECTION	6
12.	SELLER’S NOTICE OF DISCREPANCIES	6
13.	WARRANTY	6
14.	QUALITY CONTROL	7
15.	REGULATORY APPROVALS	9
16.	TAXES	10
17.	INVOICES AND PAYMENT	10
18.	CHANGES	10
19.	SUSPENSION OF WORK	10
20.	TERMINATION FOR CONVENIENCE	11
21.	CANCELLATION FOR DEFAULT	12
22.	DISPUTES	14
23.	ASSURANCE OF PERFORMANCE	14
24.	EXCUSABLE DELAY	15
25.	LIMITATION OF SELLER’S RIGHTS TO ENCUMBER ASSETS	15
26.	SELLERS RESPONSIBILITY FOR PAYMENT	15
27.	NOTICE OF LABOR NEGOTIATIONS	15
28.	ASSIGNMENT, DELEGATION AND SUBCONTRACTING	15
29.	PUBLICITY	16
30.	BUYER’S PROPERTY	16
31.	PATENT, TRADEMARK AND COPYRIGHT INDEMNITY	16
32.	BUYER’S RIGHTS IN SELLER’S PATENTS, COPYRIGHTS, TRADE SECRETS AND TOOLING	16
33.	PROPRIETARY INFORMATION AND ITEMS	17
34.	RECORDS AND AUDIT	18
35.	FINANCIAL DATA	18
36.	RIGHTS OF BUYER’S CUSTOMERS AND REGULATORS TO PERFORM INSPECTION, SURVEILLANCE AND TESTING	18

Page 1 of 24

37.	GRATUITIES	19
38.	INTERNATIONAL COOPERATION	19
39.	GENERAL & INTERNATIONAL REQUIREMENTS	20
40.	UTILIZATION OF SMALL BUSINESS CONCERNS	21
41.	COMPLIANCE WITH LAWS	22
42.	GOVERNING LAW	22
43.	GOVERNMENT CLAUSES	22
44.	ACCESS TO PLANTS AND PROPERTIES	22
45.	PARTICIPATION	22
46.	STRATEGIC ALIGNMENT	23
47.	TECHNICAL / MANUFACTURING ASSISTANCE REGARDING SELLER’S NONPERFORMANCE	23
48.	PROPERTY INSURANCE	23
49.	DIVERSITY REPORTING	24
50.	OWNERSHIP OF INTELLECTUAL PROPERTY	24
51.	ENTIRE AGREEMENT	24

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ARTICLE 1.0 FORMATION OF CONTRACT

This proposed contract is Spirit AeroSystems Inc’s (Buyer) offer to purchase the products and services described in this offer. Acceptance is strictly limited to the terms and conditions in this offer. Unless specifically agreed to in writing by Buyer’s Authorized Supply Chain Procurement Agent (SCPA), Buyer objects to, and is not bound by, any term or condition that differs from or adds to this offer. Seller’s commencement of performance or acceptance of this offer in any manner shall conclusively evidence acceptance of this offer as written.

ARTICLE 2.0 REFERENCED DOCUMENTS

All specifications, exhibits, drawings, or other documents, which are referenced in Procurement Documents (Purchase Contract and/or Purchase Order), whether or not attached, are incorporated herein by reference.

If Seller is not presently on distribution for Buyer document(s) necessary to comply with any Purchase Document, copies may be obtained by contacting the SCPA whose name appears on the face of the procurement document.

ARTICLE 3.0 SUPPLY CHAIN PROCUREMENT AGENT (SCPA)

The SCPA shown on the face of the Procurement Document is the only representative authorized by Buyer to change or modify any requirements contained therein.

ARTICLE 4.0 ISSUANCE AND ACCEPTANCE OF PURCHASE DOCUMENTS

Buyer may issue Purchase Contracts/Purchase Orders (Purchase Documents) to Seller from time to time. Each Purchase Document 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.

Any rejection by Seller of a Purchase Document shall specify the reasons for rejection and any changes or additions that would make the Purchase Document acceptable to Seller; provided, however, that Seller may not reject any Purchase Document for reasons inconsistent with the provisions of the Purchase Document.

ARTICLE 5.0 SCHEDULE

5.1 Seller shall strictly adhere to the shipment or delivery schedules specified in this Purchase Document. In the event of any anticipated or actual delay, including but not limited to delays attributed to labor disputes, Seller shall:

5.1.1 promptly notify Buyer in writing of the reasons for the delay and the actions being taken to overcome or minimize the delay;

5.1.2 provide Buyer with a written recovery schedule; and

5.1.3 if requested by Buyer, ship via air or other expedited routing to avoid or minimize delay to the maximum extent possible, unless Seller is excused from prompt performance as provided in the “Excusable Delays” article of this Purchase Document. The added premium transportation costs are to be borne by Seller.

5.2 Seller shall not deliver products prior to the scheduled delivery dates unless authorized by Buyer.

ARTICLE 6.0 PRODUCT PRICING

The prices of products ordered under the Purchase Documents are set forth within said document. Prices are in United States Dollars. Pricing shall include all cost with respect to such products of preparation, packaging, crating, shipping fixtures and containers, container marking, furnishing of packing sheets and test reports and loading on the carrier’s equipment

Pricing of Similar Products. New products ordered by Buyer 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).

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Manufacturing Configuration. Unit pricing for each Product or part number shown within the Purchase Document is based on the latest revisions of the engineering drawings or specifications.

ARTICLE 7.0 CRITICAL MANUFACTURING REORDER LEAD-TIME

Critical Manufacturing Reorder Lead-time (CMROLT) shall be identified by part number for the items listed on the Purchase Documents. As defined in this Purchase Document, CMROLT shall include administrative and manufacturing (including queue, setup, run and move) lead times. CMROLT is the minimum number of manufacturing days (M days) prior to delivery date that Buyer can issue a release for a delivery quantity against a Purchase Document

The CMROLT defined herein shall be fixed and guaranteed by the Seller. Seller shall not manufacture or fabricate items in advance of the CMROLT required to comply with the delivery schedule of any subsequent Purchase Document(s). Notwithstanding any other provision of this Purchase Document, Seller is not entitled to any equitable adjustment or other modification of any Purchase Document(s) for any manufacture, fabrication, or procurement of products not in conformity with the requirement of this Purchase Document without first obtaining written consent of Buyer’s SCPA.

Nothing in this Clause shall be construed as relieving Seller of any of its obligations under this Purchase Document or any subsequent Purchase Document(s).

ARTICLE 8.0 PACKING AND SHIPPING

8.1 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 Purchase Document specifies otherwise, the price includes shipping charges for products to the F.O.B. destination — freight collect (international orders will ship using INCO terms of FCA unless otherwise directed by the Purchase Documents). 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. Buyer 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 Purchase Document.  Upon Buyer’s request, Seller will identify packaging charges showing material and labor costs for container fabrication.

8.2 Unless this Purchase Document specifies otherwise, Seller will ship the products in accordance with the following instructions:

8.2.1 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) Purchase Document 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 Buyer; i) warranty data and certification, as applicable; j) NCR/rejection tag number, if applicable; k) copy of any completed Buyer corrective action request follow-up documentation for article(s) being shipped, I) Seller’s certification that products comply with Purchase Document requirements; and, m) identification of optional material used, if applicable, n) evidence of Seller’s product acceptance, o) evidence of Buyer’s product acceptance, when Buyer source acceptance is required, p) Serialized Parts List identifying parts with an assigned serial numbers q) when Seller is a distributor, all items furnished must include the legal name of the product manufacturer immediately following the part number. The list shall contain the part numbers, part nomenclature and part serial numbers. This list shall also include part change letters when applicable, r) control identity of the end item deliverable of raw material or purchased articles, as applicable. The control identification is traceable to the product processed in a single run (same manufacturing date, lot, batch, heat, job, or shop traveler number). When multiple lots are included in one shipment, Seller shall clearly separate the control identity of the respective lots. 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 air bill, unless Buyer’s Authorized SCPA 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.

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8.2.2 Seller will not insure any FOB origin shipment unless authorized by Buyer.

8.2.3 Seller will label each shipping container with the Purchase Document number and the number that each container represents of the total number being shipped (e.g., box 1 of 2, box 2 of 2).

8.2.4 Buyer will select the carrier and mode of transportation for all shipments where freight costs will be charged to Buyer.

8.2.5 Seller will include copies of documentation supporting prepaid freight charges (e.g., carrier invoices or UPS shipping log/manifest), if any, with its invoices.

8.2.6 If Seller is unable to comply with the shipping instructions in the Purchase Document, Seller will contact Buyer’s Traffic Management Department referenced elsewhere in this Purchase Document or Buyer’s Authorized SCPA.

8.3 For Purchase Documents from Buyer locations that have approved Seller 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. Where approved and pursuant to applicable specifications, Seller will utilize bar-coding technology for part marking products.

8.4 All items furnished under the Purchase Document, unless excepted by law, must be legibly marked with the English name of the country of origin per U.S. Customs Regulation 19 CFR Part 134 Country of Origin Marking. Markings are to be legible, indelible, and as permanent as the nature of the article or container will allow.

8.5 Seller must place final inspection stamp and date on all parts. If part surface area, available for marking, is less than 1” x 2” then part should be marked in accordance with the engineering drawing marking requirement.

8.6 Test Reports — The Seller shall include with each shipment two copies of the results of the lot, batch or item acceptance tests when required by the applicable specification. Test reports shall include control identity (e.g., heat, lot, batch, serial number) of material/item tested, actual values when applicable, and shall be signed by the Seller’s authorized agent. The report shall establish the quantity of material/items associated with each traceability number shipped. Place one copy with the shipping documentation and one copy on the inside of the shipping container.

ARTICLE 9.0 INSPECTION REQUIREMENTS

9.1 At no additional cost to Buyer, products shall be subject to inspection, surveillance and test at reasonable times and places, including Seller’s subcontractors’ locations. Buyer shall perform inspections, surveillance, and tests so as not to unduly delay the work.

9.2 Seller shall maintain an inspection system acceptable to Buyer for the products purchased under this Purchase Document.

9.3 If Buyer 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.

ARTICLE 10.0 ADVANCE SHIP NOTICES

Advance Ship Notices (ASNs) are required on all shipments to Spirit AeroSystems, Inc., unless specifically excepted. Labels must be generated per MAA7-70121-1(ERP) or MAA7-70121-2 (SAP) document if supplier-generated, or per manual web tool provided to supplier. Electronic file must be generated per Buyer ICD documents on file at http://www.esisinc.com/supportispirit/ or per manual web tool provided to supplier.

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ARTICLE 11.0 ACCEPTANCE AND REJECTION

11.1 Buyer shall 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 Purchase Document or impair any rights or remedies of Buyer.

11.2 If Seller delivers non-conforming products, Buyer may at its option and at Seller’s expense

11.2.1 return the products for credit or refund;

11.2.2 require Seller to promptly correct or replace the products;

11.2.3 correct the products; or

11.2.4 obtain replacement products from another source.

11.3 Seller shall not redeliver corrected or rejected products 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 Buyer’s Authorized SCPA may reasonably direct.

11.4 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 any amounts that may be owed to Seller under this Purchase Document or otherwise.

ARTICLE 12.0 SELLER’S NOTICE OF DISCREPANCIES

Seller shall provide written notification to Buyer within one business day after Seller becomes aware that a nonconformance (i) is determined to exist, or (ii) is reasonably believed to exist, on Product already delivered to Buyer under any Purchase Document. The following must be included.

o Affected process or Product number and name

o Description of the problem (i.e. what it is and what it should be);

o Quantity and dates delivered;

o Suspect/affected serial number(s) or date codes, when applicable.

The Seller shall notify the Buyer SCPA and the Buyer Procurement Quality Assurance Field Representative for the Buyer location where the Product was delivered.

If the nonconforming condition has been previously identified by Buyer, using a Nonconformance Record or equivalent means and requesting a corrective action response, the Seller shall notify the Buyer investigator identified on the corrective action request that additional Product is affected.

12.1 If a discrepant shipment is received as a result of Seller error, which does not permit inspection and receipt of the shipment, the Seller will be charged one percent of the value of the shipment or a minimum of $100 per discrepant shipment.

12.2 If the Seller’s material is rejected at Buyer’s Facility, the Seller will be charged one percent of the value of the shipment or a minimum of $250 per rejection tag, exclusive of the material disposition.

12.3 Material shipped above the allowable Purchase Document tolerance on discreet orders or shipments which result in inventory over the maximum levels of a Min/Max order without prior approval from Buyer, will at Buyer’s option be returned at Seller’s expense or Seller will be assessed $150 handling charge.

ARTICLE 13.0 WARRANTY

13.1 Seller warrants that for a period of forty-eight (48) months after acceptance of product by Buyer all products furnished under this Purchase Document shall conform to all specifications and requirements of the Purchase Document and shall be free from defects in materials and workmanship. To the extent products are not manufactured pursuant to detailed designs and specifications furnished by Buyer, the products shall be free from design and specification defects. This warranty shall survive inspection, test and acceptance of, and payment for, the products. This warranty shall run to Buyer and its successors, assigns and customers. Such warranty shall begin after Buyer’s final acceptance.

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Buyer may, at its option, either (i) return for credit or refund, or (ii) require prompt correction or replacement of the defective or non-conforming products. Return to Seller of defective or nonconforming products and redelivery to Buyer of corrected or replaced products shall be at Seller’s expense. Products required to be corrected or replaced shall be subject to this article and the “Inspection” article of this Purchase Document in the same manner and to the same extent as products originally delivered under this Purchase Document, but only as to the corrected or replaced part or parts thereof. Even if the parties disagree about the existence of a breach of this warranty, Seller shall promptly comply with Buyer’s direction to: (i) repair, rework or replace the products, or (ii) furnish any materials or parts and installation instructions required to successfully correct the defect or nonconformance. If the parties later determine that Seller did not breach this warranty, the parties shall equitably adjust the Purchase Document price.

13.2 Seller warrants that any hardware, software and firmware products delivered under the Purchase Documents shall be able to accurately process date/time data (including, but not limited to, calculating, comparing and sequencing) leap year calculations to the extent that other information technology, used in combination with the information technology being acquired, properly exchanges date/time data with it. The duration of this warranty and the remedies available to Buyer for breach of this warranty shall be as defined in, and subject to, the other warranties contained in this Purchase Document, provided that notwithstanding any provision to the contrary in such warranties, the remedies available to Buyer under this warranty shall include repair or replacement of any noncompliant products discovered and made known to Seller in writing. Nothing in this warranty shall be construed to limit any rights or remedies Buyer may otherwise have under this Purchase Document with respect to defects.

ARTICLE 14.0 QUALITY CONTROL

Seller must certify that the material/finished parts/services and/or data shall be controlled and tested in accordance with, and will meet specified Purchase Document requirements and applicable specifications.

It is required that the Seller flow down to sub-tier suppliers the applicable requirements in this purchasing document, including quality systems requirements and engineering requirements.

At least annually, the Seller shall conduct an internal audit to ensure compliance to their quality system and the controlling quality assurance document.

The Seller shall promptly notify Buyer of any of the following: changes in the management representative with assigned responsibility and authority for the quality system; change to company name (through sale or merger); change in location of manufacturing facility; intent to file bankruptcy.

When specifically requested by Buyer, Seller shall make specified quality data and/or approved design data available in the English language. The Seller shall maintain an English language translation of (1) its quality manual, (2) the operating instructions that implement the quality manual requirements, and (3) an index of all other Seller procedures that contain quality requirements. Buyer may require additional documentation to be translated, including but not limited to: shop Orders, technical specifications, certificates, reports, and nonconformance documents.

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The Seller shall immediately notify Buyer in writing of any change to the manufacturing facility location of the part number or assembly covered by the Purchase Document.

Unless otherwise specified all Supplier notifications to Buyer shall be communicated in writing to the Buyer Procurement Agent and the Primary Buyer Procurement Quality Representative.

Seller shall ensure right of entry and provide all reasonable facilities to Buyer, Buyer Customer, and Regulatory Agency personnel to inspect and evaluate Seller’s facilities, systems, data, equipment, personnel and any articles that will be incorporated into a Buyer type-certificated product. While Buyer reserves the right to conduct inspection on a surveillance basis or to the extent of 100 percent inspection, no shipments are to be held for Buyer inspection unless Buyer Source Acceptance is invoked on the Purchase Document. This right will extend to all facilities involved in the order.

Seller shall maintain, on file at the seller’s facility, Quality records traceable to the conformance of product/part numbers delivered to Buyer. Seller shall make such records available to regulatory authorities and Buyer’s authorized representatives. Seller shall retain such records for a period of not less than (7) seven years from the date of shipment under each applicable Purchase Document for all product/part numbers unless otherwise specified on the Purchase Documents. Seller shall maintain all records related to the current first article inspection (FAI) for (7) seven years past final delivery of the last Product covered by the FAI.

At the expiration of such period, Buyer reserves the right to request delivery of such records. In the event Buyer chooses to exercise this right, Seller shall promptly deliver such records to Buyer at no additional cost on media agreed to by both parties.

Seller shall strictly control all inventory of Buyer proprietary product that is in excess of contracted quantity to prevent product from being sold or provided to any third party without prior written authorization from Buyer.

Non-conforming Parts and Corrective Action

Seller shall provide written notification to Buyer within one (1) business day when a nonconformance is determined to exist, or is suspected to exist, on product already delivered to Buyer under this Purchase Document when any of the following is known:

14.1 Affected process or product number and nomenclature;

14.2 Description of the problem (i.e., what it is and what it should be);

14.3 Suspect/affected serial number(s) or date codes, when applicable;

Notification shall include the above information as a minimum. The Seller shall notify the Buyer’s SCPA who manages the Purchase Document, and as applicable the Buyer Procurement Quality Assurance Field Representative, the Buyer Procurement Quality Assurance organization where product was procured and the supporting Buyer Procurement Quality Assurance organization where the product was delivered

When Buyer notifies Seller of a detected nonconformance, Seller shall immediately take action to eliminate the nonconformance on all products in Seller’s control. Seller shall also maintain on file verification that root cause corrective action has occurred and has resolved the subject condition. At the specific request of Buyer, this verification shall occur for the next five (5) shipments after implementation of the corrective action to ensure detected nonconformance has been eliminated. Buyer reserves the right to review the verification data at Seller’s facility or have the data submitted to Buyer.

Where Seller is requested to submit a corrective action report, Seller will submit its response within ten (10) days of receipt of such request unless an extension is otherwise provided by Buyer. Any corrective action report submitted to Buyer shall be in the format specified by Buyer. If after submittal to Buyer, Seller determines need for revision, Seller shall immediately notify Buyer of such revision. In the event Seller is unable to respond within the allotted ten day time frame, Seller shall submit a request for extension which shall include the reason for the extension request and the time need to complete the corrective action report.

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In the event seller receives approval from Buyer’s SCPA, prior to submitting non-conforming material and/or hardware, the seller shall document and process said items in accordance with Buyer MAA1- 10034-1 Supplier Non-conformance.

Seller shall not use dispositions of use-as-is or repair on Buyer-designed product unless current revision of Seller’s Material Review Board (MRB) plan complies with MAA7-70001-1, Requirements for Obtaining MRB Authority by Buyer Suppliers, and has been approved by Buyer.

The disposition “regrade” shall not be used on products of Buyer proprietary design.

Seller must achieve and maintain a 98% site quality acceptance rate, which is a prerequisite for delegated inspection authority awarded at Spirit Aero Systems’ discretion. Should the acceptance rating fall below 98% the Seller shall be responsible for one or more of the following as directed by Buyer:

Obtaining source inspection from a Buyer-qualified contractor at Seller’s own expense;

14.4 Reimbursing Buyer for reasonable Buyer costs incurred at the point of manufacture (i.e. Seller’s site) to verify product conformance;

14.5 Reimburse Buyer for reasonable Buyer costs incurred at the point of receipt to verify product conformance.

The site quality acceptance rate is a calculation of the ratio of acceptable units delivered to the total units delivered, or an alternate criteria quality acceptance rating, equivalent to 98% as defined by the contracting Buyer site(s).

Seller shall perform First Article Inspections (FAIs) in accordance with AS9102 — Aerospace — First Article Inspection Requirement. When documenting the FAI, the Seller may use the forms contained within AS9102, or equivalent forms so long as they contain the minimum information required by AS9102.

Tooling - Seller shall inspect all tools to the Engineering immediately on receipt of the tools and shall perform a first part inspection to the Engineering. If tools require rework, Buyer is to be notified immediately.

Supplier Surveillance — Work under this Purchase Document is subject to Buyer surveillance at supplier’s facility. Buyer quality control representative may elect to conduct inspection either on a random basis or to the extent of 100 percent inspection. Supplier will be notified if Buyer inspection is to be conducted on specific shipments. No shipments are to be held for Buyer inspection unless notification is received prior to, or at time of, product being ready for shipment.

Digital Data — When a Seller uses Buyer digital data as authority for design and/or inspection, then the Seller must be approved for Digital Product Definition and comply with the requirements of MMA1-10009- 1, Quality Assurance Standard for Digital Product Definition at Buyer Suppliers, or contractual requirements. Seller recognizes that prior to the receipt of digital data a proprietary information agreement must be on file with Buyer.

ARTICLE 15.0 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 Buyer) of modification or replacement parts to owners/operators of type-certificated aircraft. Regulatory approval, such as Parts Manufacturer Approval (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. For Seller proprietary parts, Seller agrees to notify Buyer 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, Buyer may list Seller in the Illustrated Parts Catalog as seller of that part.

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ARTICLE 16.0 TAXES

Unless this Purchase Document specifies otherwise, the price of this Purchase Document includes, and Seller is liable for and shall pay, all taxes, impositions, charges and exactions imposed on or measured by this Purchase Document except for applicable sales and use taxes that are separately stated on Seller’s invoice. Prices shall not include any taxes, impositions, charges, or exactions for which Buyer has furnished a valid exemption certificate or other evidence of exemption.

ARTICLE 17.0 INVOICES AND PAYMENT

Unless otherwise authorized by Buyer’s Authorized SCPA, Seller shall issue a separate original invoice for each delivery that shall include Buyer’s Purchase Document number and line item number. Seller shall forward its invoice to the address specified elsewhere in this Purchase Document. Unless freight or other charges are itemized, Buyer may take any offered discount on the full amount of the invoice. Payment due date, including discount periods, shall be computed from the later of the scheduled delivery date, the actual delivery date or the date of receipt of a correct invoice. Payment shall be deemed made on the date Buyer’s check is mailed or payment is otherwise tendered. Seller shall promptly repay Buyer any amounts paid in excess of amounts due Seller. Payment Terms are Net 60 days.

ARTICLE 18.0 CHANGES

18.1 Buyer’s Authorized SCPA may, without notice to sureties and in writing, direct changes within the general scope of this Purchase Document 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 Buyer-furnished property; and, if this Purchase Document includes services, (vi) description of services to be performed; (vii) time of performance (e.g., hours of the day, days of the week); (viii) place of performance, and (ix) terms and conditions of this Purchase Document required to meet Buyer’s obligations under Government prime contracts or subcontracts. Seller shall comply immediately with such direction.

18.2 If such change increases or decreases the cost or time required to perform this Purchase Document, Buyer and Seller shall negotiate an equitable adjustment in the price or schedule, or both, to reflect the increase or decrease. Buyer shall modify this Purchase Document in writing accordingly. Unless otherwise agreed in writing, Seller must assert any claim for adjustment to Buyer’s Authorized SCPA in writing within thirty (30) days and deliver a fully supported proposal to Buyer’s Authorized SCPA within sixty (60) days after Seller’s receipt of such direction. Buyer 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, Buyer may direct the disposition of the property. Buyer 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 Buyer’s direction.

18.3 If Seller considers that Buyer’s conduct constitutes a change, Seller shall notify Buyer’s Authorized SCPA immediately in writing as to the nature of such conduct and its effect upon Seller’s performance. Pending direction from Buyer’s Authorized SCPA, Seller shall take no action to implement any such change.

ARTICLE 19.0 SUSPENSION OF WORK

19.1 Buyer’s Authorized SCPA may, by written Order, suspend all or part of the work to be performed under this Purchase Document for a period not to exceed one hundred (150) days. Within such period of any suspension of work, Buyer shall (i) cancel the suspension of work Order; (ii) terminate this Purchase Document in accordance with the “Termination for Convenience” article of this Purchase Document; (iii) cancel this Purchase Document in accordance with the “Cancellation for Default” article of this Purchase Document; or (iv) extend the stop work period.

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19.2 Seller shall resume work whenever a suspension is canceled. Buyer and Seller shall negotiate an equitable adjustment in the price or schedule or both if (i) this Purchase Document is not canceled or terminated; (ii) the suspension results in a change in Seller’s cost of performance or ability to meet the Purchase Document delivery schedule; and (iii) Seller submits a claim for adjustment within thirty (30) days after the suspension is canceled.

ARTICLE 20.0 TERMINATION FOR CONVENIENCE

Basis for Termination; Notice

Buyer may, from time to time terminate all or part of any Purchase Document by written notice to Seller. Any such written notice of termination shall specify the effective date and the extent of any such termination.

Termination Instructions

On receipt of a written notice of termination, unless otherwise directed by Buyer, Seller shall:

20.1 Immediately stop work as specified in the notice;

20.2 Immediately terminate its subcontracts and Purchase Documents relating to work terminated;

20.3 Use commercially reasonable efforts to settle any termination claims made by its subcontractors or suppliers. It is advisable that Seller review such claims with Buyer prior to settlement, however Seller shall not be required to obtain pre-approval from Buyer, provided, that with respect to any payments made by Seller without Buyer’s prior approval, Buyer shall be obligated to pay Seller only that portion of such termination claims as are compensable under the Seller’s Claim portion of the Clause.

20.4 Preserve and protect all terminated inventory and products;

20.5 At Buyer’s request, transfer title (to the extent not previously transferred) and deliver to Buyer or Buyer’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 Purchase Document, all in accordance with the terms of such request;

20.6 Be compensated for such items to the extent provided below;

20.7 Take all reasonable steps required to return, or at Buyer’s option and with prior written approval to destroy, all Buyer Proprietary Information and Items in the possession, custody or control of Seller or any of its subcontractors or suppliers;

20.8 Take such other action as, in Buyer’s reasonable opinion, may be necessary, and as Buyer shall direct in writing, to facilitate termination of the Purchase Document; and

20.9 Complete performance of the work not terminated.

Seller’s Claim

If Buyer terminates a Purchase Document in whole or in part Seller shall have the right to submit a written termination claim to Buyer. Such termination claim shall be asserted to Buyer within forty-five (45) calendar 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 Buyer using Spirit AeroSystems form F08-04597. 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. In no event shall claims for non-recurring engineering be considered or paid by Buyer to Seller. Seller shall be entitled to compensation in accordance with and to the extent allowed under the terms of FAR 52-249-2 (May 2004) paragraphs (e)-(i), ( which may be accessed via the World Wide Web address www.acquisition.gov/far); without Alternates, unless alternate clause date is called out on the Purchase Documents which is incorporated herein by reference except “Government” and “Contracting Officer” shall mean Buyer, “Contractor” shall mean Seller and “Contract” shall mean Purchase Documents and “1 year” shall be “6 months”. Seller shall indemnify Buyer and hold Buyer harmless from and against (i) any and all claims, suits and proceedings against Buyer 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 Buyer in connection with any such claim, suit or proceeding.

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Failure to Submit a Claim

Notwithstanding any other provision of this General Provisions, if Seller fails to submit a termination claim within the time period set forth above, Seller shall be barred from submitting a claim and Buyer shall have no obligation for payment to Seller except for those products previously delivered and accepted by Buyer.

Partial Termination

Any partial termination of a Purchase Document shall not alter or affect the terms and conditions of the Purchase Documents or any order(s) with respect to products not terminated.

Product Price

Termination shall not result in any change to unit prices for products not terminated.

Exclusions or Deductions

The following items shall be excluded or deducted from any claim submitted by Seller:

All unliquidated advances or other payments made by Buyer to Seller pursuant to a terminated Purchase Document;

20.10 Any claim which Buyer has against Seller;

20.11 The agreed price for scrap allowance;

20.12 Except for normal spoilage and any risk of loss assumed by Buyer, the agreed fair value of property that is lost destroyed, stolen, or damaged.

Partial Payment/Payment Payment, if any, shall be made thirty (30) days after settlement between the parties or as otherwise agreed to between the parties. Buyer may make partial payments and payments against costs incurred by Seller for the terminated portion of the Purchase Document. If the total payments exceed the final amount determined to be due, Seller shall repay the excess to Buyer upon demand.

Seller’s Accounting Practices Buyer 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 General Provisions, Seller’s “normal accounting practices” refers to Seller’s method of charging costs as a direct charge, overhead expense, general administrative expense, etc.

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 Purchase Document for three (3) years after final settlement of Seller’s termination claim.

ARTICLE 21.0 CANCELLATION FOR DEFAULT

Events of Default

The occurrence of any one or more of the following events shall constitute an “Event of Default”.

21.1 Any failure by Seller to deliver, when and as required by the order(s), any Product, or

21.2 Any failure by Seller to provide an acceptable Assurance of Performance or,

21.3 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

21.4 Buyer revokes Seller’s Quality Assurance System approval, if applicable; or,

21.5 Any failure by Seller to perform or comply with any obligation 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 Buyer specifying such failure; or

21.6 (1) the suspension, dissolution or winding-up of Seller’s business, (2) Seller’s insolvency, or its inability to pay debts, or its nonpayment of debts, as they become due, (3) 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, (4) an assignment by Seller for the benefit of its creditors, or (5) any action of Seller for the purpose of effecting or facilitating any of the foregoing.

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Remedies

If any Event of Default shall occur:

Cancellation

Buyer may, by giving written notice to Seller, immediately cancel any Purchase Document, in whole or in part, and Buyer shall not be required after such notice to accept the tender by Seller of any products subject to the cancellation.

Seller shall continue work not canceled. If Buyer cancels all or part of the Purchase Document, Seller shall be liable for Buyer’s excess re-procurement costs.

21.7 Cover

Buyer 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. In addition to any other remedies or damages available to Buyer hereunder or at law or in equity, Buyer 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 Buyer to manufacture, produce or provide, or engage other persons to manufacture, produce, or provide, each such Product.

21.8 Buyer may require Seller to transfer title and deliver to Buyer, as directed by Buyer, any (i) completed Goods, and (ii) any partially completed Goods and materials, parts, tools, dies, jigs, fixtures, plans, drawings, information and contract rights (collectively, “Manufacturing Materials”) that Seller has specifically produced or acquired for the canceled portion of this Purchase Document. Upon direction from Buyer, Seller shall also protect and preserve property in its possession in which Buyer or its Customer has an interest.

21.9 Rework or Repair

Where allowed by the applicable regulatory authority, Buyer or its designee may rework or repair any Product;

21.10 Setoff

Buyer 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 Buyer hereunder or under any Purchase Document, all deposits, amounts or balances held by Buyer for the account of Seller and any amounts owed by Buyer to Seller, regardless of whether any such deposit, amount, balance or other amount or payment is then due and owing.

21.11 Tooling and other Materials

As partial compensation for the additional costs which Buyer will incur as a result of the transfer of production capabilities from Seller to Buyer or Buyer’s designee, Seller shall upon the request of Buyer, transfer and deliver to Buyer or Buyer’s designee title to any or all (i) tooling (ii) Buyer - 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 or suppliers (iv) Proprietary Information and Materials of Buyer 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 or suppliers, in each case free and clear of all liens, claims or other rights of any person.

Seller shall be entitled to receive from Buyer reasonable compensation for any item accepted by Buyer which has been transferred to Buyer pursuant Section (except for any item the price of which has 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 Buyer as a result of any Event of Default.

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Remedies Generally

No failure on the part of Buyer 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 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 Buyer 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.

If after cancellation, it is determined that Seller is not at fault, the rights and remedies of the parties shall be as if the Purchase Document had been terminated according to the Termination for Convenience article of this Purchase Document.

ARTICLE 22.0 DISPUTES

Any dispute that arises under or is related to this Purchase Document that cannot be settled by mutual agreement of the parties may be decided by a court of competent jurisdiction. Pending final resolution of any dispute, Seller shall proceed with performance of this Purchase Document according to Buyer’s instructions so long as Buyer continues to pay amounts not in dispute.

ARTICLE 23.0 ASSURANCE OF PERFORMANCE

If Buyer 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 Buyer has reasonable grounds for insecurity, Buyer 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 any Purchase Document when and as specified herein. Each Assurance of Performance shall be delivered by Seller to Buyer as promptly as possible, but in any event no later than ten (10) calendar days following Buyer’s request therefore and each Assurance of Performance shall be accompanied by any information, reports or other materials, prepared by Seller, as Buyer may reasonably request. Except as to payment for accepted products, Buyer may suspend all or any part of Buyer’s performance hereunder until Buyer receives an Assurance of Performance from Seller satisfactory in form and substance to Buyer.

Meetings and Information

Buyer may request one or more meetings with senior management or other employees of Seller for the purpose of discussing any request by Buyer for Assurance of Performance or any Assurance of Performance provided by Seller. Seller shall make such persons available to meet with representatives of Buyer as soon as may be practicable following a request for any such meeting by Buyer and Seller shall make available to Buyer any additional information, reports or other materials in connection therewith as Buyer may reasonably request.

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ARTICLE 24.0 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 Buyer after an assessment by Buyer 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, Buyer expects Seller to continue production, recover lost time and support all schedules as established under the Purchase Documents. 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, Buyer may, without any additional extension, cancel all or part of any Purchase Document with respect to the delayed Products, and exercise any of its remedies in accordance with General Provisions Clause 21, provided however, that Buyer shall not be entitled to monetary damages or specific performance to the extent Seller’s breach is the result of an Excusable Delay.

ARTICLE 25.0 LIMITATION OF SELLER’S RIGHTS TO ENCUMBER ASSETS

Seller warrants to Buyer 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 Purchase Document. Pursuant to the provisions of such Purchase Document, Seller will transfer to Buyer title to such inventory, work-in- process, tooling and materials whether transferred separately or as part of any Product delivered under the Purchase Document, free of any liens, charges, encumbrances or rights of others.

ARTICLE 26.0 SELLERS RESPONSIBILITY FOR PAYMENT

Seller will be responsible for the prompt payment of all persons who perform labor upon or furnish services, materials, equipment, supplies, or other items used or to be used in the performance of the work called for by this Purchase Document, and Seller shall defend protect and save harmless Buyer, Inc. from and against all liens, claims, suits and actions for such labor, services, materials, equipment, supplies or other items whether brought by Seller’s subcontractors or any lower tier subcontractors.

ARTICLE 27.0 NOTICE OF LABOR NEGOTIATIONS

When requested by Buyer, Seller will provide status on labor contracts and pending negotiations, including that of Seller’s subcontractors or suppliers, except as may be prohibited by law.

ARTICLE 28.0 ASSIGNMENT, DELEGATION AND SUBCONTRACTING

Seller shall not assign any of its rights or interest in this Purchase Document or subcontract all or substantially all of its performance of this Purchase Document, without Buyer’s prior written consent. Seller shall not delegate any of its duties or obligations under this Purchase Document. Seller may assign its right to monies due or to become due. No assignment, delegation or subcontracting by Seller, with or without Buyer’s consent, shall relieve Seller of any of its obligations under this Purchase Document or prejudice any of Buyer’s rights 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 materials.

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ARTICLE 29.0 PUBLICITY

Without Buyer’s prior written approval, Seller shall not, and shall require that its subcontractors at any tier shall not, release any publicity, advertisement, news release or denial or confirmation of same regarding this Purchase Document or the products or program to which it pertains. Seller shall be liable to Buyer for any breach of such obligation by any subcontractor.

ARTICLE 30.0 BUYER’S PROPERTY

Seller shall clearly mark, maintain an inventory of, and keep segregated or identifiable all of Buyer’s property and all property to which Buyer acquires an interest by virtue of this Purchase Document. 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 Buyer with adequate proof of insurance against such risk of loss. Seller shall not use such property other than in performance of this Purchase Document without Buyer’s prior written consent. Seller shall notify Buyer’s Authorized SCPA if Buyer’s property is lost, damaged, or destroyed. As directed by Buyer, upon completion, termination, or cancellation of this Purchase Document, Seller shall deliver such property, to the extent not incorporated in delivered products, to Buyer in good condition subject to ordinary wear and tear and normal manufacturing losses. Nothing in this article limits Seller’s use, in its direct contracts with the Government, of property in which the Government has an interest.

ARTICLE 31.0 PATENT, TRADEMARK AND COPYRIGHT INDEMNITY

Seller will indemnify, defend and hold harmless Buyer and its customer 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 Buyer or its customer. Buyer and/or its customer 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 indemnitees. Seller will have no obligation under this article with regard to any infringement arising from

31.1 Seller’s compliance with formal specifications issued by Buyer where infringement could not be avoided in complying with such specifications or

31.2 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 article only, the term Buyer will include Buyer, Inc. and all Buyer, Inc., subsidiaries and all officers, agents and employees of Buyer, Inc., or any Buyer, Inc., subsidiary.

ARTICLE 32.0 BUYER’S RIGHTS IN SELLER’S PATENTS, COPYRIGHTS, TRADE SECRETS AND TOOLING

Seller hereby grants to Buyer an irrevocable, nonexclusive, paid-up worldwide license to practice and/or use, and license others to practice and/or use on Buyer’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. Buyer hereafter retains all of the aforementioned license rights in Licensed Property, but Buyer 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 Product cannot, in Buyer’s sole determination, be reasonably obtained in the required time frame at a reasonable price from commercially available sources (including Buyer) without the use of Seller’s Licensed Property and if one or more of the following situations occur:

32.1 Seller discontinues or suspends business operations or the production of any or all of the products;

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32.2 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 Buyer’s prior written concurrence;

32.3 Buyer cancels this Agreement or any Purchase Document for cause;

32.4 In Buyer’s judgment it becomes necessary, in order for Seller to comply with the terms of the Purchase Document(s), for Buyer to provide support to Seller (in the form of design, manufacturing, or on-site personnel assistance) substantially in excess of that which Buyer normally provides to its suppliers;

32.5 Seller’s trustee in bankruptcy (or Seller as debtor in possession) fails to assume the Purchase Document(s) 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 Buyer elects to retain its rights to Licensed Property under the bankruptcy laws;

32.6 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

32.7 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 Section, Seller shall, at the written request of Buyer and at no additional cost to Buyer, promptly deliver to Buyer any and all Licensed Property considered by Buyer to be necessary to satisfy Buyer’s requirements for products and their substitutes.

ARTICLE 33.0 PROPRIETARY INFORMATION AND ITEMS

Buyer and Seller shall each keep confidential and protect from disclosure all (a) confidential, proprietary, and/or trade secret information; including editorial revisions, annotations, elaborations, or any other forms in which such confidential, proprietary, and/or trade secret information may be modified, recast, transformed, translated, condensed, or otherwise adapted; (b) tangible items and software containing, conveying, or embodying such information; and (c) tooling obtained from and/or belonging to the other in connection with the Purchase Document (collectively referred to as “Proprietary Information and Materials”). Buyer and Seller shall each use Proprietary Information and Materials of the other only in the performance of and for the purpose of the Purchase Document. Provided, however, that despite any other obligations or restrictions imposed by this General Provisions Clause 33, Buyer 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 the Purchase Document or any airplane including such an item; and any such disclosure by Buyer shall, whenever appropriate, include a restrictive legend suitable to the particular circumstances. Each party shall maintain restrictive legends placed by the other party on Proprietary Information and Materials of the other party on all copies made of the other party’s Proprietary Information and Materials. The restrictions on disclosure or use of Proprietary Information and Materials by Seller shall apply to all materials derived by Seller or others from Buyer’s Proprietary Information and Materials.

Upon Buyer’s request at any time, and in any event upon the completion, termination or cancellation of the Purchase Document, Seller shall return all of Buyer’s Proprietary Information and Materials, and all materials derived from Buyer’s Proprietary Information and Materials to Buyer unless specifically directed otherwise in writing by Buyer. Seller shall not, without the prior written authorization of Buyer, 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 Buyer. Prior to disposing of such parts or materials as scrap, Seller shall render them unusable. Buyer shall have the right to audit Seller’s compliance with this General Provisions Clause 33. Seller may disclose Proprietary Information and Materials of Buyer 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 General Provisions Clause 33 relating to Proprietary Information and Materials; and Seller shall be liable to Buyer for any breach of such obligation by such subcontractor. The provisions of this General Provisions Clause 33 are effective in lieu of, and will apply notwithstanding the absence of, any restrictive legends or notices applied to Proprietary Information and Materials; and the provisions of this General Provisions Clause 33 shall survive the performance, completion, termination, or cancellation of the Purchase Document. This General Provisions Clause 33 supersedes and replaces any and all other prior agreements or understandings between the parties to the extent that such agreements or understandings relate to Buyer’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 the Purchase Document.

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ARTICLE 34.0 RECORDS AND AUDIT

Seller shall maintain complete and accurate records. Such records shall support all services performed, allowances claimed, and costs incurred by Seller in the performance of each Purchase Document, 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 Buyer and be available to Buyer at Seller’s facility for Buyer’s examination, reproduction, and audit at all reasonable times from the date of the applicable Purchase Document until three (3) years after final payment under such Purchase Document. Seller shall provide assistance to interpret such data if requested by Buyer. Such examination shall provide Buyer with complete information regarding Seller’s performance for use in price negotiations with Seller relating to existing or future Purchase Documents for products, including but not limited to negotiation of equitable adjustments for changes and termination/obsolescence claims pursuant to Section 11 of this document. Buyer shall treat all information disclosed under this Purchase Document section as confidential, unless required by U.S. Government contracting regulation(s).

ARTICLE 35.0 FINANCIAL DATA

If requested, Seller shall provide financial data, on a quarterly basis, or as requested to the Buyer Credit Management 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 seventy-two (72) hours of any written request by the Buyer Credit Management Office. Buyer shall treat all such information as confidential.

ARTICLE 36.0 RIGHTS OF BUYER’S CUSTOMERS AND REGULATORS TO PERFORM INSPECTION, SURVEILLANCE AND TESTING

Buyer’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 Buyer that are departments, agencies or instrumentalities of the United States Government and to the United States Government Federal Aviation Administration and any successor agency or instrumentality of the United States Government. Buyer may also, at Buyer’s option, by prior written notice from Buyer’s Authorized SCPA, extend such rights to other customers of Buyer 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- directed or Buyer-directed inspection, surveillance, test, or review without additional charge to Buyer. Nothing in this Purchase Document shall be interpreted to limit United States Government access to Seller’s facilities pursuant to law or regulation.

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ARTICLE 37.0 GRATUITIES

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 Buyer’s employees, agents or representatives for the purpose of securing this Purchase Document or securing favorable treatment under this Purchase Document.

ARTICLE 38.0 INTERNATIONAL COOPERATION

Market Access and Sales Support

Seller agrees to work with Buyer to develop a lean global supply stream through application of shared strategies and tactics which support market access, and international business strategy. Buyer and Seller agree to work together to identify countries where Seller may subcontract and manage associated supply chain in support of Buyer’s market access and international business strategy. With respect to work covered by the Purchase Documents, and if directed by Buyer, Seller shall use commercially reasonable efforts to procure from subcontractors and manage associated supply chain, in countries selected by Buyer, goods and services having a value of not more than twenty-five-percent (25%) of the total Shipset Price of all undelivered Shipsets as of the date of such notice. Such direction shall be at Buyer’s sole option and may occur at any time during the performance of the Purchase Document; provided that Seller shall not be required to breach any then existing subcontract Seller may satisfy such requirement through purchases either related or not related to the Purchase Document. If Seller is directed by Buyer to subcontract any part of its Work Packages and Seller anticipates an increase to the Price of the Purchase Document as a result of such direction, Seller shall notify Buyer in writing within thirty (30) days of such direction. If there is a cost or schedule impact, Buyer shall respond within thirty (30) days on whether Seller is to proceed. In such cases if Buyer directs Seller to proceed and there is a resulting increase to the Price of the Purchase Document, then the Parties will mutually agree to an equitable adjustment in Price.

Offset Assistance

Seller shall use commercially reasonable efforts to cooperate with Buyer in the fulfillment of any non- United States offset program obligation that Buyer may have accepted as a condition of the sale of a Buyer product. In the event that Seller is either directed by Buyer 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 the Purchase Document from any source outside of the United States, Buyer 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 commercially reasonable actions that may be required on its part to assure that Buyer receives such credits. If Seller is directed by Buyer to subcontract any part of its Product(s) to a country in which Buyer has an offset obligation, and Seller anticipates an increase to the Price of the Product(s) as a result of such direction, Seller shall notify Buyer in writing within thirty (30) days of such direction. If there is a cost or schedule impact, Buyer shall respond within thirty (30) days on whether Seller is to proceed. In such cases if Buyer directs Seller to proceed and there is a resulting increase to the Price of the Product(s), then the Parties will mutually agree to an equitable adjustment in Price.

Credit Against Sales

It is understood that Buyer may wish to claim part or all of the value of this Purchase Document as credit against a current or future Buyer offset obligation in country where Seller is located. The full value of this Purchase Document shall be held in account by the Government of the country where Seller is located and may be applied, at Buyer’s sole determination, to satisfy any future offset obligations Buyer may accept as a condition of the sale of any Buyer product in the country where Seller is located. Seller will use its best efforts to assist Buyer in working with the appropriate government officials to obtain the offset credit being sought.

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ARTICLE 39.0 GENERAL & INTERNATIONAL REQUIREMENTS

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. Buyer 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 Buyer has stated in an English measurement system into the Metric system in documents furnished to Buyer

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.

Import/Export

39.1 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 Purchase Document 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).

39.2 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 Purchase Document. 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 Purchase Document shall not be imported, exported, or re-exported. Resale or other transfer of items delivered or exchanged pursuant to this Purchase Document shall be in accordance with this clause.

39.3 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:

a. Seller shall use Controlled Items furnished by Buyer only in the manufacture of products in accordance with this Purchase Document.

b. Seller shall not disclose or provide Controlled Items furnished by Buyer to any Foreign Person either in the United States or abroad before obtaining written authorization from Buyer 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 Buyer to Seller’s employees who are nationals of Seller’s country of site.

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c. Seller acquires no rights in Controlled Items furnished by Buyer except to use them to perform this Purchase Document. 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.

d. Seller shall deliver the articles manufactured in accordance with this Purchase Document only to Buyer in the United States or, with Buyer’s authorization, to the U.S. Government.

e. Upon completion or termination of this Purchase Document, Buyer may require Seller to: i) return to Buyer all technical data furnished by Buyer pursuant to this Purchase Document; or ii) destroy such technical data and to certify in writing to such destruction.

f. 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 Buyer for use by the subcontractors in performance of subcontracts.

39.4 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 Purchase Document:

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.

Mutual Assistance in Obtaining Import/Export Authorizations Under ITAR or EAR

Upon request of Buyer’s Authorized Procurement Agent, Seller shall, promptly and without additional cost, furnish Buyer with any documentation, including import certificates or end-user statements from Seller or Seller’s government, which is reasonably necessary to support Buyer’s application for U.S. import or export authorizations. Buyer shall not be responsible for delays in U.S. import or export of Controlled Items supplied hereunder by Buyer due to a lack of necessary documentation from Seller or Seller’s country.

39.5 Seller shall be responsible for obtaining required import or export approvals, including licenses to import or export equipment or authorizations for Buyer to locate personnel and furnish in-country technical assistance.

39.6 Upon Seller’s request, Buyer shall promptly furnish Seller with any documentation, including import certificates or end -user statements from Buyer 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 Buyer or Buyer’s country.

39.7 If the government of either party denies, fails to grant, or revokes any import or export authorizations necessary for the performance of this Purchase Document, that party shall immediately notify the other party and neither party shall be responsible for performance or payment under this Purchase Document for directly affected activities.

ARTICLE 40.0 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 Purchase Document,

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ARTICLE 41.0 COMPLIANCE WITH LAWS

Seller shall comply with all applicable local, State and Federal statutes and government rules, regulations and Orders, including those pertaining to United States Export Controls.

ARTICLE 42.0 GOVERNING LAW

This Purchase Document shall be governed by and construed in accordance with the laws of the state of Kansas. No consideration shall be given to Kansas’s conflict of laws rules. This Purchase Document excludes the application of the United Nations Convention on Contracts for the International Sale of Goods.

ARTICLE 43.0 GOVERNMENT CLAUSES

Government clauses applicable to this Purchase Document are incorporated herein either by attachment to this document or by some other means of reference.

ARTICLE 44.0 ACCESS TO PLANTS AND PROPERTIES

Seller shall comply with all the rules and regulations established by Buyer for access to and activities in and around premises controlled by Buyer or Buyer’s customer.

ARTICLE 45.0 PARTICIPATION

45.1 Other Buyer, Inc., Entities - Seller agrees that any Buyer, Inc., division or Buyer, Inc., subsidiary (“Buyer Entity”) not specifically included in this agreement may, by issuing a Purchase Document, work order, or other release document, place Purchase Documents under this agreement during the term hereof or any written extension thereof, under the terms, conditions and pricing specified by this agreement. Seller agrees that the prices set forth in this agreement may be disclosed by Buyer on a confidential basis to Buyer entities wishing to invoke this agreement clause. Seller shall notify Buyer’s SCPA named elsewhere in this agreement of Buyer Entities not specifically referenced herein who frequently use this agreement.

45.2 Buyer Subcontractors/Suppliers - Seller agrees that any subcontractor or supplier (hereinafter referred to as “Buyer Subcontractor”) performing work for a Buyer Entity, including but not limited to inventory management, may issue a Purchase Document with Seller independent of this agreement. Seller agrees to sell products or support a schedule and or a quantity change to such Buyer Subcontractor for its use in its Purchase Documents with Buyer at the prices set forth herein or at a price that reflects the pricing methodology used under this agreement. Buyer assumes no obligation, including payment obligation, with respect to such independent Purchase Document. Seller agrees that the prices set forth herein may be disclosed by Buyer on a confidential basis to any Buyer Subcontractor wishing to invoke this agreement clause. Seller may request written verification from the Buyer Subcontractor that the products ordered pursuant to the authority of this agreement support Buyer requirements. Seller shall periodically inform Buyer’s SCPA of each such request invoking this participation right.

45.3 Notification of Purchase Document - In the event a purchaser known by Seller to be a Buyer Entity or Buyer Subcontractor places a Purchase Document for supplies or services covered by this agreement but fails to reference this agreement or otherwise seek the prices established by this agreement, Seller shall notify such purchaser of the existence of this agreement and the prices established hereunder and shall offer such prices to such purchaser.

45.4 Notification of Price Reductions - If Seller is awarded an additional Purchase Document by another Buyer Entity that results in any price less than that established under this agreement, Seller agrees to notify the Buyer SCPA immediately of said price reductions and shall extend all such price reductions to this agreement.

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ARTICLE 46.0 STRATEGIC ALIGNMENT

Buyer may assign any Purchase Document, in whole or in part, to a third party who is under an obligation to supply Buyer with components, kits, assemblies or systems that require the Seller’s product. At the time of such assignment, Seller releases Buyer from any and all claims, demands and rights, which Seller has or may thereafter have against Buyer in connection with such assigned Purchase Document. Buyer will require that its assignee expressly assume all obligations and perform all duties owed to Seller under the assigned Purchase Document. Promptly after the assignment, Buyer will notify Seller of the assignment and its effective date.

ARTICLE 47.0 TECHNICAL I MANUFACTURING ASSISTANCE REGARDING SELLER’S NONPERFORMANCE

Seller shall reimburse Buyer for all Buyer resources expended in providing Seller and/or Seller’s subcontractors or supplier’s technical or manufacturing assistance in resolving Seller nonperformance issues at the established Buyer internal wage rate, which shall include fringe benefits, multiplied by the estimated hours recorded by Buyer, plus the estimated Material costs associated with providing such assistance. In addition, Seller shall, at Buyer’s request, pay for normal and customary expenses relating to salaries, living expenses, travel and any other reasonable expenses related to the provision of technical services. Such reimbursement may be offset against any pending Seller invoice, regardless of product or program. Buyer’s rights under this clause are in addition to those available to Buyer for Seller’s nonperformance issues.

ARTICLE 48.0 PROPERTY INSURANCE

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 Buyer does or could have an insurable interest pursuant to this Agreement, including but not limited to Tooling, Buyer-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, subcontractor or supplier 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 Buyer and shall (i) provide for payment of loss there under to Buyer, as loss payee, as its interests may appear and (ii) contain a waiver of any rights of subrogation against Buyer, its subsidiaries, and their respective directors, officers, employees and agents

Certificate of Insurance

Upon written request from Buyer, Seller shall provide to Buyer’s SCPA certificates of insurance reflecting full compliance with the requirements set forth above. 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 Buyer’s SCPA in the event of cancellation, non-renewal or material change adversely affecting the interests of Buyer.

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Notice of Damage or Loss

Seller shall give prompt written notice to Buyer’s SCPA 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 Buyer, 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 Buyer has given written approval, which approval shall not be unreasonably withheld.

ARTICLE 49.0 DIVERSITY REPORTING

Seller shall report to Buyer on a quarterly basis, starting from the date of Purchase Document 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 Purchase Document price paid to Seller to date.

ARTICLE 50.0 OWNERSHIP OF INTELLECTUAL PROPERTY

Technical Work Product

All technical work product, including to the extent protectible by ownership rights, 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 pursuant to the Purchase Document will be the exclusive property of Buyer and be delivered to Buyer promptly upon request.

Works of Authorship and Copyrights

All works of authorship (including, but not limited to, documents, drawings, software, software documentation, software tools, photographs, video tapes, sound recordings and images) created 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 pursuant to the Purchase Document, together with all copyrights subsisting therein, will be the sole property of Buyer. To the extent permitted under United States copyright law, all such works will be works made for hire, with the copyrights therein vesting in Buyer. The copyrights in all other such works, including all of the exclusive rights therein, will be promptly transferred and formally assigned free of charge to Buyer.

Inventions and Pre-Existing Works of Authorship

Seller grants to Buyer, with the right of Buyer to sublicense the same to Buyer’s subcontractors, suppliers, and customers in connection with Products or work being performed for Buyer, an irrevocable, nonexclusive, paid-up, worldwide license under any patents, copyrights, industrial designs and mask works (whether domestic or foreign) owned or controlled by Seller at any time and existing prior to or during the term of the Purchase Document, but only to the extent that such patents or copyrights would otherwise interfere with Buyer’s or Buyer’s subcontractors’, suppliers’, or customers’ use or enjoyment of Products or the work product, inventions, or works of authorship belonging to Buyer under the Purchase Document.

ARTICLE 51.0 ENTIRE AGREEMENT

This Purchase Document contains the entire agreement of the parties and supersedes any and all prior agreements, understandings and communications between Buyer and Seller related to the subject matter of this Purchase Document. No amendment or modification of this Purchase Document shall bind either party unless it is in writing and is signed by Buyer’s Authorized SCPA and an authorized representative of Seller.

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SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 — Wichita, Kansas — 67278-0008

Customer Specific Supplemental Notes BOEING- SUSTAINING PROGRAMS

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	IXX	PRICING
2XX	RESERVED	3XX	RESERVED
4XX	DELIVERY/PACKAGING/IDENTIFICATIONONON	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

28A	In the event seller receives approval from Buyer’s Procurement Representative, prior to submitting non-conforming material and/or hardware, the seller shall document and process said items in accordance with Boeing Wichita Document D500-11959-1, “Supplier Initiated Withhold Tags” and/or Document D500-11959-2, “Supplier Initiated Tool Withhold Tags.”
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the “Commodity Listing” included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the “Commodity Listing” by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form WMFM 550, Section 18 (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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing’s standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller’s full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List will be submitted by the supplier, to the Buyer’s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T-.

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 — Wichita, Kansas — 67278-0008

Customer Specific Supplemental Notes BOEING- SUSTAINING PROGRAMS

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	IXX	PRICING
2XX	RESERVED	3XX	RESERVED
4XX	DELIVERY/PACKAGING/IDENTIFICATIONONON	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

155	A Tool Usage List will be submitted by the supplier, to the Buyer’s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from reworked tool(s).
208	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200,”Boeing Suppliers’ Tooling Document.”
	When Boeing Document D6-1276 is required by engineering drawing for parts covered by this order Boeing/Spirit
356A	The packing sheet, certificate of compliance or certified test reports accompanying shipments of castings on this order shall certify that the castings have been inspected in accordance with D-13169
412A	Parts are to be marked per BAC 5307. Parts shall have the date of final acceptance rubber-stamped adjacent to the part number.
413	Package per the D6-81628 Shipping Label Barcode preparation and Placement Document.
429	Source inspection not required, furnish two photographs - one showing the tool identification data and tool inspection stamps and the other showing the complete tool. Include these photographs with the certified tool list when returned to Buyer Additional photographs may be required by Buyer
	Quality Assurance or the buyer and will be provided upon request.
437	Stamp parts individually with heat number.
459	Contractual Requirements for Rubber Test Slabs a)           Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer’s Procurement Representative via purchase order to supplier. b)           Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot of Boeing BMS rubber specifications must be sent with each shipment to Buyer. Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 — Wichita, Kansas — 67278-0008

Customer Specific Supplemental Notes BOEING- SUSTAINING PROGRAMS

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	IXX	PRICING
2XX	RESERVED	3XX	RESERVED
4XX	DELIVERY/PACKAGING/IDENTIFICATIONONON	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200 and D33041, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200 and D33041, covered by this Purchase Order/Purchase Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Boeing.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200 and D33041, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Buyer.
511A	Accountability for tooling fabricated on this Purchase Order will be transferred to Blanket Accountable, Tooling Order T-by change order on receipt of a properly prepared Certified
	Tool List. The Certified Tool List is to be signed by an officer of the Seller’s Quality Control representative, by a Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List, acceptable parts produced from the tooling and a change order issued to authorize payment.
512	Parts on this order to be fabricated from tools ordered on P.O.                                                                                                           .
514A	When returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 — Wichita, Kansas — 67278-0008

Customer Specific Supplemental Notes BOEING- SUSTAINING PROGRAMS

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	IXX	PRICING
2XX	RESERVED	3XX	RESERVED
4XX	DELIVERY/PACKAGING/IDENTIFICATIONONON	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, Form P5426, listing each item reworked, by name and part number and the following notation: “This Tool Usage List is issued for record purposes only and is signed by an authorized official, certifying the work called for has been satisfactorily accomplished.” If Buyer Source Inspection is available, the TUL must also be stamped by the servicing Source Quality Control Representative. Accountable Blanket Tooling Order T-.
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200, “Boeing Supplier’s Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.           Test reports from each block of material B.           A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	The packing sheet, certificate of compliance or certified test reports accompanying shipments of castings on this order shall certify that the castings have been inspection in accordance with D­13169.
683	A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 — Wichita, Kansas — 67278-0008

Customer Specific Supplemental Notes BOEING- SUSTAINING PROGRAMS

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	IXX	PRICING
2XX	RESERVED	3XX	RESERVED
4XX	DELIVERY/PACKAGING/IDENTIFICATIONONON	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

684 Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool Usage List that has been approved by Buyer’s Procurement Quality Assurance.

Vendor Owned Inventory Supplemental Terms

TABLE OF CONTENTS

1.0 INTRODUCTION	2
1.1 General Introduction	2
1.2 Scope Overview	2
1.3 Documents	2
2.0 DEFINITIONS	2
3.0 SCOPE OF WORK	3
3.1 Products	3
3.1.1 Receipt of Product Requirements	3
3.1.2 Product Ordering	3
3.2 Inventory Management	4
3.2.1 General	4
3.2.2 Seller’s Representative	4
3.2.3 Acceptance of Goods	5
3.2.4 Inventory Ownership	5
3.2.5 Inventory Accountability and Audits	5
3.2.6 Inventory Levels	6
3.2.7 Metrics	6
4.0 PARTICIPATING SITE REQUIREMENTS	7
4.1. Cycle Time	7
5.0 TERMINATION LIABILITY	7
6.0 TRANSPORTATION	8
7.0 TAXES	8
8.0 PAYMENT	8
9.0 MODIFICATION OF PURCHASE CONTRACT	8

1

Vendor Owned Inventory Supplemental Terms

VENDOR OWNED INVENTORY (VOI)

1.0 INTRODUCTION

1.1 General Introduction

This document is intended to define the scope of service to be performed by Seller pursuant to Spirit AeroSystems’ vendor owned inventory initiative at its participating sites.  Seller acknowledges that Spirit may request Seller to expand this Statement of Work at any time, including other locations and affiliate companies.

1.2 Scope Overview

The scope of vendor owned inventory services specifically delineated in Section 3.0 of this document consists of the inventory ownership and management of the products set forth in the Purchase Contract.

1.3 Documents

This document and all referenced documents therein are incorporated into the Purchase Contract as though set out in full text.

2.0 DEFINITIONS

The following definitions apply to the following terms as they are used throughout this document.

Vendor Owned Inventory (VOI) - an arrangement requiring the Seller to stock products at Spirit’s location at either predetermined minimum/maximum inventory levels or in accordance with discrete order schedules.  The Seller shall retain ownership of inventory until such inventory is issued to Spirit’s point of use.

Products — Parts list as set forth in the Purchase Contract.

SPN — Spirit Partners Network, the web based supplier portal available through the Spirit AeroSystems, Inc. website containing supplier communications, worksheets, metrics, etc.

Standards — General term for aerospace fasteners and hardware.

2

Vendor Owned Inventory Supplemental Terms

3.0 SCOPE OF WORK

3.1 Products

Seller shall own and manage the inventory for the products set forth on the Purchase Contract.

The Purchase Contract may be revised at any time as agreed to by the parties.

3.1.1 Receipt of Product Requirements

Spirit shall update and supply Seller daily with inventory levels via an electronic method such as the SPN.  Seller shall, throughout the duration of the Purchase Contract, and including any extensions thereto, have the ability to receive updated VOI inventory data from any electronic system utilized by Spirit.  All costs for computing hardware, systems integration software and any other cost incurred in order to be able to receive electronic VOI data shall be at Seller’s expense.

Seller is responsible for reviewing the information set forth electronically as often as it deems necessary to support the participating site.  If there are any questions or concerns regarding any information provided electronically, Seller shall immediately contact the appropriate Spirit Procurement Agent.

A receiving notice will be issued upon delivery to receive the parts into the VOI stock.  Parts in VOI stock will remain the property of Seller until disbursed to Spirit’s point of use.  This disbursal shall be designated as the point of sale.

3.1.2 Product Ordering

3.1.2.1 Spirit’s Ordering Process

Spirit will utilize various methods for scheduling and ordering parts.  Spirit shall designate the ordering process applicable to the products delineated in the Purchase Contract and reserves the right to change the process for any given product in order to better support its manufacturing process.  Spirit shall provide Seller with sufficient notice of its intent to change the ordering process for goods.  The specific ordering process for any goods will be determined by the appropriate Procurement Agent.  A change in the ordering process shall not constitute grounds for an assertion under the Changes Clause of the Spirit AeroSystems, Inc. General Provisions.  Seller agrees to perform in accordance with the ordering process designated by Spirit pursuant to the provisions in Section 3.2.6.

3

Vendor Owned Inventory Supplemental Terms

3.1.2.2 Seller’s Ordering Process

For VOI simplified ordering, supplier will be provided a current inventory position as listed in 3.1.1. Current inventory will include both goods stocked and in Receiving/Inspection.

3.1.2.3 Forecasts

Shipments to Spirit for min/max orders are to be based on the forecast worksheets provided on the Spirit Partners Network.  Forecasts shall reflect Spirit’s estimated consumption on a monthly basis and will be updated on a weekly basis.  Actual consumption may vary.  Forecasts are for planning purposes only.

Shipments for discrete scheduling are to be based on meeting the quantity and delivery as directed by the purchase order.

3.2 Inventory Management

3.2.1 General

Seller shall be responsible for managing all products on the statement of work (the Purchase Contract).  In general, inventory management consists of planning inventory levels based on information provided by Spirit and storing Seller’s VOI product at Spirit’s facility.  Seller shall provide all personnel necessary to perform all activities, tasks and duties in order to fulfill the Seller’s obligation for inventory management as delineated in the Purchase Contract.

3.2.2 Seller’s Representative

Seller shall designate a primary contact as the single point of responsibility for the Seller under the Purchase Contract.  This individual shall be accessible in person or by voice communication at all times and shall have full authority over the Seller’s resources in order to ensure fulfillment of the Seller’s obligations under the Purchase Contract, or to otherwise respond to matters presented by Spirit’s Procurement Agent.

4

Vendor Owned Inventory Supplemental Terms

3.2.3 Acceptance of Goods

Spirit shall initially accept the products or give Seller a notice of rejection or revocation of acceptance (“rejection” herein), upon initial receipt of the product.  No test or inspection will constitute passage of title or initiate payment.  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 rights or remedies of Spirit.  For purposes of the Warranty clause of the General Provisions, Spirit’s final acceptance shall be deemed to occur thirty (30) days after the point of sale as delineated in Clause 3.1.1.

3.2.4 Inventory Ownership

Seller shall own and retain title to all product inventories that are stored at Spirit’s facility until the point of sale as delineated in Clause 3.1 .1 of this document.

3.2.5 Inventory Accountability and Audits

Spirit will be responsible for loss or damage to the VOI while it is in Spirit’s care, custody, and control, except for loss or damage resulting from Seller’s fault or negligence.  Spirit shall maintain inventory count records which shall be made available to the Seller on the SPN daily.  Such records shall be subject to verification through physical inventory count and stock analysis by Seller at Spirit’s facility.  Seller’s examination and or audit(s) shall occur during reasonable periods of time (e.g. Spirit’s normal business hours) and frequency shall be scheduled to limit disruption of Spirit’s operations, beginning at the implementation date stipulated by the applicable Purchase Contract and ending at the completion date of the Purchase Contract.

Spirit shall grant Seller access to its facility for the purpose of auditing existing VOI stock during the period of performance of the Purchase Contract, and upon the date final payment has been made under such Purchase Contract. Seller shall be granted access to Spirit’s facility only to the extent of the VOI storage location and only for the purpose of performing audits and count of parts in VOI stock. Seller shall provide 72 hour notice to the authorized Spirit representative of intent to access VOI storage location to perform physical inventory count.  Seller shall comply with all the rules and regulations established by Spirit for access to and activities in and around the premises controlled by Spirit, to include, but not be limited to, Spirit’s On-Site Activity Supplement.

5

Vendor Owned Inventory Supplemental Terms

3.2.6 Inventory Levels

Where minimum/maximum ordering is utilized, the Seller, whether by manufacturing or purchasing, will maintain inventory levels at or above the minimum levels while not exceeding corresponding maximum level established by the parties.  Seller shall determine shipment quantities and dates to accomplish this.  These levels will be reviewed on a regular basis and adjusted as determined by Spirit to support participating sites.  This includes, but is not limited to, production rate changes or improved efficiencies by one or both parties.

The Seller may be provided with:

Ÿ Visibility as set forth in Section 3.1 .1 above for the required item(s)

Ÿ Authorization to ship

Ÿ Delivery location(s)

Ÿ Minimum, Maximum and total inventory levels for the products

Ÿ An order for the purpose of receiving parts into Spirit’s system

Ÿ Communications regarding exceptions

Ÿ Applicable rate change data

Where discrete ordering is utilized, the Seller shall provide inventory to Spirit based on the quantity and delivery dates as specified on each order.

3.2.7 Metrics

Seller’s performance regarding Product delivery will be based upon maintaining inventory at Spirit’s facility in accordance with open orders.  Measurements will be taken on a daily basis.

6

Vendor Owned Inventory Supplemental Terms

Delivery performance for min/max orders will be determined by the minimum and maximum levels as included on the Inventory worksheet.

Delivery performance for discrete orders will be based on actual receipt date versus scheduled receipt date on the order.

3.2.7.1 Metric Effective Dates

A worksheet, located on the SPN, shall include a”Metric Effective Date” column, a date in that column indicates the mutually agreed to date that performance measurements shall be effective.

In the event that emergent requirements (i.e. spares, AOGs, excessive scrap) can be directly attributed to negative performance measurements, Seller may solicit Spirit to have specific measurements removed or revised accordingly.  Spirit and Seller may mutually agree to insert a new “Metric Effective Date” reflecting recovery from any such events.

4.0 PARTICIPATING SITE REQUIREMENTS

Seller shall maintain the management and control functions necessary to ensure that requirements of the participating sites are met.

4.1. Cycle Time

Seller understands and is committed to Spirit’s goal of reduced cycle time. Spirit and Seller shall work together to reduce cycle time to support Spirit’s requirements.

5.0 TERMINATION LIABILITY

Min/Max purchase orders are a means to facilitate receiving and payment.  Quantities stated on such orders are estimates, and may exceed actual demand.  Therefore, Spirit is not liable for the specific quantity stated on orders.

All orders are subject to the Termination section of the Spirit General Provisions.

7

Vendor Owned Inventory Supplemental Terms

In support of VOI’s simplified ordering techniques for the procurement of Standards items (e.g. fasteners and hardware), Seller is authorized to stock at Spirit’s facility a quantity not to exceed a three (3) month quantity of products plus an additional month of work in process, based on Average Monthly Usage. Spirit’s maximum liability, including any termination liability, shall not exceed this quantity.

6.0 TRANSPORTATION

Seller is required to coordinate shipping methods with Spirit’s Traffic Department.

7.0 TAXES

Seller shall pay all present and future property, sales, use, and other taxes arising out of, or resulting from, the Purchase Contract, including but not limited to any taxes levied as a result of the storage of stock by Seller, including income tax filing obligations if necessary, and Seller shall hold Spirit harmless from all such taxes.

8.0 PAYMENT

Spirit’s payment obligation to Seller is triggered at the point of sale identified in section 3.1.1.  The price paid will be the price that is in effect at point of sale.  Payment shall be made in accordance with the agreed- upon prices within the purchase document.

9.0 MODIFICATION OF PURCHASE CONTRACT

Items added to the Purchase Contract by mutual agreement shall be subject to these terms.

8

Consumption Based Ordering

Seller shall deliver to Buyer product as defined in reports (Inventory Worksheet and Packaging Worksheet) on the Spirit Partners Network (SPN).  Seller is required to maintain the minimum level at Buyer’s facility while not exceeding corresponding maximum level at Buyer’s facility.  Both Buyer and Seller shall mutually agree to minimum and maximum levels.  Levels will be determined on an individual project basis.  Buyer and Seller may mutually agree to revise levels as necessary.

Minimum and Maximum Levels

Min-Max

The initial minimum and maximum inventory levels at Buyer’s facility shall be negotiated between Buyer and Seller based upon, but not limited to: forecasted requirements, cost of part, manufacturing lead time, delivery time and frequency of delivery.  Minimum and maximum inventory levels are included in the Min/Max Worksheet.

Packaging

The initial minimum and maximum package levels at Buyer’s facility shall be negotiated between Buyer and Seller based upon, but not limited to: forecasted requirements, cost of part, manufacturing lead time, delivery time and frequency of delivery.  Minimum and maximum package levels are included in the Packaging Worksheet

Spirit Partners Network (SPN) Worksheets

Min-Max

Buyer shall make available to Seller, through the SPN, a Min/Max Inventory Worksheet.  This worksheet shall indicate the negotiated minimum and maximum inventory level as well as the current inventory level at Buyer’s facility.  The inventory level on this worksheet shall be updated daily by Buyer.  Seller shall base actual shipments upon the information included on this worksheet.

Packaging

Buyer shall make available to Seller, through the SPN, a Packaging Worksheet.  This worksheet shall indicate the negotiated minimum and maximum package levels as well as the current Package inventory level at Buyer’s facility.  What constitutes as “Current on-hand Pkg. Inventory” is the quantity of a complete Line Unit’s worth of parts in the sequence used by Buyer’s facility.  The current inventory level for a package on this worksheet shall be updated daily by Buyer.  Seller shall base actual shipments upon the information included on this worksheet.  Regardless of on hand inventory, Seller only has authority to ship up to max level if requirements are visible on the worksheet.

Forecasting

Min-Max AND Packaging

Forecasts shall be provided via the SPN. Forecasts shall reflect Buyer’s estimated consumption on a monthly basis and will be updated on a weekly basis. Actual consumption may vary.  Forecasts are for planning purposes only.  Actual shipments to Buyer are to be based on the worksheets provided on the Spirit Partners Network.

Items classified as “active” may, from time to time, fail to appear in a forecast or may show unexpected quantity changes.  This may reflect engineering or other activity on a particular part or family of parts.  Failure of an item to appear on the forecast does not mean it is inactive.  Seller shall revert to latest active forecast for planning purposes.  Seller shall notify Buyer of forecast anomalies for determination and disposition.

Open Purchase Orders

Min-Max

Buyer shall issue an “Open Purchase Order” to Seller for each active item covered by this Statement of Work.  Each of these orders shall cover the period of 12 to 24 months and shall include a maximum of one item or position.  If actual shipments exceed or are expected to exceed the open order quantity?  Buyer shall revise the quantity accordingly.  Seller shall reference the open purchase order number on each shipment.  The Min/Max Inventory Worksheet shall remain as Seller’s authority to ship.

Packaging

Buyer shall issue one “Open Purchase Order” to Seller, which covers all active items included in the Package Statement of Work.  Each purchase order shall cover the period of 12 months.  If actual shipments exceed or are expected to exceed the open order quantity, Buyer shall revise the quantity accordingly.  Seller shall reference the open purchase order number on each shipment.  The Packaging Worksheet shall remain as Seller’s authority to ship.

Seller Metrics

Min-Max

Seller’s performance will be based upon maintaining inventory at Buyer’s facility within the minimum and maximum levels as included on the Min/Max Worksheet.  Measurements will be taken on a daily basis.  The worksheet shall include a “Metric Effective Date” column indicating the mutually agreed to date that performance measurements shall be effective.

In the event that emergent requirements (i.e. spares, AOGs, excessive scrap) can be directly attributed to negative performance measurements, Seller may solicit Buyer to have specific measurements removed or revised accordingly.  Buyer and Seller may mutually agree to insert a new “Metric Effective Date” reflecting recovery from any such events.

Packaging

Seller’s performance will be based upon maintaining inventory at Buyer’s facility within the minimum and maximum Package levels as included on the Packaging Worksheet.  What constitutes as “Current on-hand Pkg. Inventory” is the quantity of a complete Line Unit’s worth of parts in the sequence used by the shop.  Measurements will be taken on a daily basis.  The worksheet shall include a “Metric Effective Date” column indicating the mutually agreed to date that performance measurements shall be effective.

In the event that emergent requirements (i.e. spares, AOGs, excessive scrap) can be directly attributed to negative performance measurements, Seller may solicit Buyer to have specific measurements removed or revised accordingly.  Buyer and Seller may mutually agree to insert a new “Metric Effective Date” reflecting recovery from any such events.

Vendor Owned Inventory

Supplemental Terms

TABLE OF CONTENTS

1.0	INTRODUCTION	1
1.1	General Introduction	1
1.2	Scope Overview	1
1.3	Documents	1
2.0	DEFINITIONS	1
3.0	SCOPE OF WORK	1
3.1	Products	1
3.1.1	Receipt of Product Requirements	2
3.1.2	Product Ordering	2
3.2	Inventory Management	3
3.2.1	General	3
3.2.2	Seller’s Representative	3
3.2.3	Acceptance of Goods	3
3.2.4	Inventory Ownership	4
3.2.5	Inventory Accountability and Audits	4
3.2.6	Inventory Levels	4
3.2.7	Metrics	5
4.0	PARTICIPATING SITE REQUIREMENTS	5
4.1.	Cycle Time	5
5.0	TERMINATION LIABILITY	6
6.0	TRANSPORTATION	6
7.0	TAXES	6
8.0	PAYMENT	6
9.0	MODIFICATION OF PURCHASE CONTRACT	6

Vendor Owned Inventory

Supplemental Terms

VENDOR OWNED INVENTORY (VOI)

1.0 INTRODUCTION

1.1 General Introduction

This document is intended to define the scope of service to be performed by Seller pursuant to Spirit AeroSystems’ vendor owned inventory initiative at its participating sites. Seller acknowledges that Spirit may request Seller to expand this Statement of Work at any time, including other locations and affiliate companies.

1.2 Scope Overview

The scope of vendor owned inventory services specifically delineated in Section 3.0 of this document consists of the inventory ownership and management of the products set forth in the Purchase Contract.

1.3 Documents

This document and all referenced documents therein are incorporated into the Purchase Contract as though set out in full text.

2.0 DEFINITIONS

The following definitions apply to the following terms as they are used throughout this document.

Vendor Owned Inventory (VOI) - an arrangement requiring the Seller to stock products at Spirit’s location at either predetermined minimum/maximum inventory levels or in accordance with discrete order schedules. The Seller shall retain ownership of inventory until such inventory is issued to Spirit’s point of use.

Products — Parts list as set forth in the Purchase Contract.

SPN — Spirit Partners Network, the web based supplier portal available through the Spirit AeroSystems, Inc. website containing supplier communications, worksheets, metrics, etc.

Standards — General term for aerospace fasteners and hardware.

3.0 SCOPE OF WORK

3.1 Products

Seller shall own and manage the inventory for the products set forth on the Purchase Contract.

The Purchase Contract may be revised at any time as agreed to by the parties.

1

Vendor Owned Inventory

Supplemental Terms

3.1.1 Receipt of Product Requirements

Spirit shall update and supply Seller daily with inventory levels via an electronic method such as the SPN. Seller shall, throughout the duration of the Purchase Contract, and including any extensions thereto, have the ability to receive updated VOI inventory data from any electronic system utilized by Spirit. All costs for computing hardware, systems integration software and any other cost incurred in order to be able to receive electronic VOI data shall be at Seller’s expense.

Seller is responsible for reviewing the information set forth electronically as often as it deems necessary to support the participating site. If there are any questions or concerns regarding any information provided electronically, Seller shall immediately contact the appropriate Spirit Procurement Agent.

A receiving notice will be issued upon delivery to receive the parts into the VOI stock. Parts in VOI stock will remain the property of Seller until disbursed to Spirit’s point of use. This disbursal shall be designated as the point of sale.

3.1.2 Product Ordering

3.1.2.1 Spirits’ Ordering Process

Spirit will utilize various methods for scheduling and ordering parts. Spirit shall designate the ordering process applicable to the products delineated in the Purchase Contract and reserves the right to change the process for any given product in order to better support its manufacturing process. Spirit shall provide Seller with sufficient notice of its intent to change the ordering process for goods. The specific ordering process for any goods will be determined by the appropriate Procurement Agent. A change in the ordering process shall not constitute grounds for an assertion under the Changes Clause of the Spirit AeroSystems, Inc. General Provisions. Seller agrees to perform in accordance with the ordering process designated by Spirit pursuant to the provisions in Section 3.2.6.

3.1.2.2 Seller’s Ordering Process

For VOI simplified ordering, supplier will be provided a current inventory position as listed in 3.1.1. Current inventory will include both goods stocked and in Receiving/Inspection.

2

Vendor Owned Inventory

Supplemental Terms

3.1.2.3 Forecasts

Shipments to Spirit for min/max orders are to be based on the forecast worksheets provided on the Spirit Partners Network. Forecasts shall reflect Spirit’s estimated consumption on a monthly basis and will be updated on a weekly basis. Actual consumption may vary. Forecasts are for planning purposes only.

Shipments for discrete scheduling are to be based on meeting the quantity and delivery as directed by the purchase order.

3.2 Inventory Management

3.2.1 General

Seller shall be responsible for managing all products on the statement of work (the Purchase Contract). In general, inventory management consists of planning inventory levels based on information provided by Spirit and storing Seller’s VOI product at Spirit’s facility. Seller shall provide all personnel necessary to perform all activities, tasks and duties in order to fulfill the Seller’s obligation for inventory management as delineated in the Purchase Contract.

3.2.2 Seller’s Representative

Seller shall designate a primary contact as the single point of responsibility for the Seller under the Purchase Contract. This individual shall be accessible in person or by voice communication at all times and shall have full authority over the Seller’s resources in order to ensure fulfillment of the Seller’s obligations under the Purchase Contract, or to otherwise respond to matters presented by Spirit’s Procurement Agent.

3.2.3 Acceptance of Goods

Spirit shall initially accept the products or give Seller a notice of rejection or revocation of acceptance (“rejection” herein), upon initial receipt of the product. No test or inspection will constitute passage of title or initiate payment. 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 rights or remedies of Spirit. For purposes of the Warranty clause of the General Provisions, Spirit’s final acceptance shall be deemed to occur thirty (30) days after the point of sale as delineated in Clause 3.1.1.

3

Vendor Owned Inventory

Supplemental Terms

3.2.4 Inventory Ownership

Seller shall own and retain title to all product inventories that are stored at Spirit’s facility until the point of sale as delineated in Clause 3.1 .1 of this document.

3.2.5 Inventory Accountability and Audits

Spirit will be responsible for loss or damage to the VOI while it is in Spirit’s care, custody, and control, except for loss or damage resulting from Seller’s fault or negligence. Spirit shall maintain inventory count records which shall be made available to the Seller on the SPN daily. Such records shall be subject to verification through physical inventory count and stock analysis by Seller at Spirit’s facility. Seller’s examination and or audit(s) shall occur during reasonable periods of time (e.g. Spirit’s normal business hours) and frequency shall be scheduled to limit disruption of Spirit’s operations, beginning at the implementation date stipulated by the applicable Purchase Contract and ending at the completion date of the Purchase Contract.

Spirit shall grant Seller access to its facility for the purpose of auditing existing VOI stock during the period of performance of the Purchase Contract, and upon the date final payment has been made under such Purchase Contract. Seller shall be granted access to Spirit’s facility only to the extent of the VOI storage location and only for the purpose of performing audits and count of parts in VOI stock. Seller shall provide 72 hour notice to the authorized Spirit representative of intent to access VOI storage location to perform physical inventory count. Seller shall comply with all the rules and regulations established by Spirit for access to and activities in and around the premises controlled by Spirit, to include, but not be limited to, Spirit’s On-Site Activity Supplement.

3.2.6 Inventory Levels

Where minimum/maximum ordering is utilized, the Seller, whether by manufacturing or purchasing, will maintain inventory levels at or above the minimum levels while not exceeding corresponding maximum level established by the parties. Seller shall determine shipment quantities and dates to accomplish this. These levels will be reviewed on a regular basis and adjusted as determined by Spirit to support participating sites. This includes, but is not limited to, production rate changes or improved efficiencies by one or both parties.

The Seller may be provided with:

· Visibility as set forth in Section 3.1.1 above for the required item(s)

· Authorization to ship

4

Vendor Owned Inventory

Supplemental Terms

· Delivery location(s)

· Minimum, Maximum and total inventory levels for the products

· An order for the purpose of receiving parts into Spirit’s system

· Communications regarding exceptions

· Applicable rate change data

Where discrete ordering is utilized, the Seller shall provide inventory to Spirit based on the quantity and delivery dates as specified on each order.

3.2.7 Metrics

Seller’s performance regarding Product delivery will be based upon maintaining inventory at Spirit’s facility in accordance with open orders. Measurements will be taken on a daily basis.

Delivery performance for min/max orders will be determined by the minimum and maximum levels as included on the Inventory worksheet.

Delivery performance for discrete orders will be based on actual receipt date versus scheduled receipt date on the order.

3.2.7.1 Metric Effective Dates

A worksheet, located on the SPN, shall include a”Metric Effective Date” column, a date in that column indicates the mutually agreed to date that performance measurements shall be effective.

In the event that emergent requirements (i.e. spares, AOGs, excessive scrap) can be directly attributed to negative performance measurements, Seller may solicit Spirit to have specific measurements removed or revised accordingly. Spirit and Seller may mutually agree to insert a new “Metric Effective Date” reflecting recovery from any such events.

4.0 PARTICIPATING SITE REQUIREMENTS

Seller shall maintain the management and control functions necessary to ensure that requirements of the participating sites are met.

4.1. Cycle Time

Seller understands and is committed to Spirit’s goal of reduced cycle time. Spirit and Seller shall work together to reduce cycle time to support Spirit’s requirements.

5

Vendor Owned Inventory

Supplemental Terms

5.0 TERMINATION LIABILITY

Min/Max purchase orders are a means to facilitate receiving and payment. Quantities stated on such orders are estimates, and may exceed actual demand. Therefore, Spirit is not liable for the specific quantity stated on orders.

All orders are subject to the Termination section of the Spirit General Provisions.

In support of VOI’s simplified ordering techniques for the procurement of Standards items (e.g. fasteners and hardware), Seller is authorized to stock at Spirit’s facility a quantity not to exceed a three (3) month quantity of products plus an additional month of work in process, based on Average Monthly Usage. Spirit’s maximum liability, including any termination liability, shall not exceed this quantity.

6.0 TRANSPORTATION

Seller is required to coordinate shipping methods with Spirit’s Traffic Department.

7.0 TAXES

Seller shall pay all present and future property, sales, use, and other taxes arising out of, or resulting from, the Purchase Contract, including but not limited to any taxes levied as a result of the storage of stock by Seller, including income tax filing obligations if necessary, and Seller shall hold Spirit harmless from all such taxes.

8.0 PAYMENT

Spirit’s payment obligation to Seller is triggered at the point of sale identified in section 3.1.1. The price paid will be the price that is in effect at point of sale. Payment shall be made in accordance with the agreed- upon prices within the purchase document.

9.0 MODIFICATION OF PURCHASE CONTRACT

Items added to the Purchase Contract by mutual agreement shall be subject to these terms.

6

Consumption Based Ordering

Seller shall deliver to Buyer product as defined in reports (Inventory Worksheet and Packaging Worksheet) on the Spirit Partners Network (SPN).  Seller is required to maintain the minimum level at Buyer’s facility while not exceeding corresponding maximum level at Buyer’s facility.  Both Buyer and Seller shall mutually agree to minimum and maximum levels.  Levels will be determined on an individual project basis.  Buyer and Seller may mutually agree to revise levels as necessary.

Minimum and Maximum Levels

Min-Max

The initial minimum and maximum inventory levels at Buyer’s facility shall be negotiated between Buyer and Seller based upon, but not limited to:  forecasted requirements, cost of part, manufacturing lead time, delivery time and frequency of delivery.  Minimum and maximum inventory levels are included in the Min/Max Worksheet.

Packaging

The initial minimum and maximum package levels at Buyer’s facility shall be negotiated between Buyer and Seller based upon, but not limited to: forecasted requirements, cost of part, manufacturing lead time, delivery time and frequency of delivery.  Minimum and maximum package levels are included in the Packaging Worksheet.

Spirit Partners Network (SPN) Worksheets

Min-Max

Buyer shall make available to Seller, through the SPN, a Min/Max Inventory Worksheet.  This worksheet shall indicate the negotiated minimum and maximum inventory level as well as the current inventory level at Buyer’s facility.  The inventory level on this worksheet shall be updated daily by Buyer. Seller shall base actual shipments upon the information included on this worksheet.

Packaging

Buyer shall make available to Seller, through the SPN, a Packaging Worksheet.  This worksheet shall indicate the negotiated minimum and maximum package levels as well as the current Package inventory level at Buyer’s facility.  What constitutes as “Current on-hand Pkg. Inventory” is the quantity of a complete Line Unit’s worth of parts in the sequence used by Buyer’s facility.  The current inventory level for a package on this worksheet shall be updated daily by Buyer.  Seller shall base actual shipments upon the information included on this worksheet.  Regardless of on hand inventory, Seller only has authority to ship up to max level if requirements are visible on the worksheet.  Regardless of on hand inventory, Seller only has authority to ship up to max level if requirements are visible on the worksheet.

Forecasting

Min-Max AND Packaging

Forecasts shall be provided via the SPN.  Forecasts shall reflect Buyer’s estimated consumption on a monthly basis and will be updated on a weekly basis.  Actual consumption may vary.  Forecasts are for planning purposes only.  Actual shipments to Buyer are to be based on the worksheets provided on the Spirit Partners Network.

Items classified as “active” may, from time to time, fail to appear in a forecast or may show unexpected quantity changes.  This may reflect engineering or other activity on a particular part or family of parts.  Failure of an item to appear on the forecast does not mean it is inactive.  Seller shall revert to latest active forecast for planning purposes.  Seller shall notify Buyer of forecast anomalies for determination and disposition.

Open Purchase Orders

Min-Max

Buyer shall issue an “Open Purchase Order” to Seller for each active item covered by this Statement of Work.  Each of these orders shall cover the period of 12 to 24 months and shall include a maximum of one item or position.  If actual shipments exceed or are expected to exceed the open order quantity, Buyer shall revise the quantity accordingly.  Seller shall reference the open purchase order number on each shipment.  The Min/Max Inventory Worksheet shall remain as Seller’s authority to ship.

Packaging

Buyer shall issue one “Open Purchase Order” to Seller, which covers all active items included in the Package Statement of Work.  Each purchase order shall cover the period of 12 months.  If actual shipments exceed or are expected to exceed the open order quantity, Buyer shall revise the quantity accordingly.  Seller shall reference the open purchase order number on each shipment.  The Packaging Worksheet shall remain as Seller’s authority to ship.

Seller Metrics

Min-Max

Seller’s performance will be based upon maintaining inventory at Buyer’s facility within the minimum and maximum levels as included on the Min/Max Worksheet.  Measurements will be taken on a daily basis.  The worksheet shall include a “Metric Effective Date” column indicating the mutually agreed to date that performance measurements shall be effective.

In the event that emergent requirements (i.e. spares, AOGs, excessive scrap) can be directly attributed to negative performance measurements, Seller may solicit Buyer to have specific measurements removed or revised accordingly.  Buyer and Seller may mutually agree to insert a new “Metric Effective Date” reflecting recovery from any such events.

Packaging

Seller’s performance will be based upon maintaining inventory at Buyer’s facility within the minimum and maximum Package levels as included on the Packaging Worksheet.  What constitutes as “Current on-hand Pkg. Inventory” is the quantity of a complete Line Unit’s worth of parts in the sequence used by the shop.  Measurements will be taken on a daily basis.  The worksheet shall include a “Metric Effective Date” column indicating the mutually agreed to date that performance measurements shall be effective.

In the event that emergent requirements (i.e. spares, AOGs, excessive scrap) can be directly attributed to negative performance measurements, Seller may solicit Buyer to have specific measurements removed or revised accordingly.  Buyer and Seller may mutually agree to insert a new “Metric Effective Date” reflecting recovery from any such events.

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	ADMINISTRATIVE
002	All specifications, exhibits, drawings, or other documents, which are referenced in this order, whether or not attached, are incorporated herein by reference.
005	Liquidated Damages
	In the event of a Non-Excusable Delay in delivery (any delay other than those excusable delays as defined in Spirit’s General Terms Agreement, Excusable Delay Section), Spirit may, at Spirits option, accept products that are not delivered on or before the required delivery date. Delay is further defined to include failure to maintain the Minimum level of the Min/Max inventory methodology as set out in PF­502 “Consumption Based Ordering Guidelines”. The parties acknowledge, however, that Supplier would be liable for all additional costs incurred by Spirit because of such delay(s), which may include, by way of illustration and not of limitation: ·            additional expense related to administrative costs,
	·            telecommunication costs,
	·            additional or premium transportation charges,
	·            special handling expenses, and
	·            various anticipated and unanticipated costs to install the products out of the normal manufacturing sequence.
	The Parties further acknowledge that the nature and actual amount of costs associated with delivery delay are uncertain and difficult to calculate.
	Therefore, Spirit may choose, in its sole discretion, to require Supplier to pay Spirit liquidated damages.
	The parties acknowledge that such payments are not intended as a penalty, but are, in lieu of the actual damages measured by such costs.
	If Spirit chooses to recover liquidated damages, they shall be equal to 1 % of the value of the delinquent items per day of delay or a minimum of $100 for each item per day of delay. The parties agree this calculation represents a reasonable estimate of the additional costs to be incurred by Spirit in connection with a delivery delay.
	Accumulation of liquidated damages will be subject to a grace period of five (5) days per item after which liquidated damages shall begin.
	Spirit’s choice to recover such liquidated damages for delayed delivery on any one or more occasions shall not, however, preclude Spirit from recovering the actual costs incurred because of delayed delivery on any other occasion.
	Spirits exercise of rights under this provision shall not preclude Spirit from exercising its option to terminate this Purchase Contract/Purchase Order for an Event of Default by Supplier as provided in
	Spirit General Terms Agreement, Cancellation for Default Section, even if Supplier has (a) paid such liquidated or actual damages to Spirit on prior occasions, or (b) if repeated incidents of late deliveries in the aggregate (or a single significant incident of delay) materially adversely affect Spirit’s ability to enjoy the bargained for benefits of this Purchase Contract/Purchase Order on an ongoing basis.

Page 1 of 10

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

033	The Procurement Agent/Material Management Analyst shown on the face of this Purchase Contract/Purchase Order is the only representative authorized by Spirit AeroSystems, Inc. to change or modify any requirements contained herein.
035	Seller will be responsible for the prompt payment of all persons who perform labor upon or furnish services, materials, equipment, supplies, or other items used or to be used in the performance of the work called for by this order, and Seller shall defend protect and save harmless Spirit AeroSystems, Inc. from and against all liens, claims, suits and actions for such labor, services, materials, equipment, supplies or other items whether brought by Seller's subcontractors or any lower tier subcontractors.
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the "Commodity Listing" included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the "Commodity Listing" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form PF-550, Changes Section, 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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller's full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
	PRICING
107	This Purchase Order/Purchase Contract is a firm fixed price contract.
128B	Discrepant Charges to Seller. A.        If a discrepant shipment is received as a result of Seller error, which does not permit inspection and receipt of the shipment, the Seller will be charged one percent of the value of the shipment or a minimum of $100 per discrepant shipment. B.        If the Seller’s material is rejected at Buyer’s Facility, the Seller will be charged one percent of the value of the shipment or a minimum of $250 per rejection tag, exclusive of the material disposition.

Page 2 of 10

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	C.Material shipped above the allowable purchase order tolerance, without prior approval from Buyer, will at Buyer’s option be returned at Seller’s expense or Seller will be assessed $150 handling charge.
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List (F08-04605) will, if required, be submitted by the supplier, to the Buyer’s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T-.
155	If required, a Tool Usage List (F08-04605) will be submitted by the supplier, to the Buyer’s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from reworked tool(s).
	SHIPPING
202	BUYER FIRST ARTICLE INSPECTION (BFAI) – If BFAI activity is required at the Seller’s facility prior to shipment then Seller shall notify Buyer to schedule a comparable inspection and coordinate the required inspection/verification activity. Subsequent engineering, inspection, manufacturing or tooling changes for specific characteristics will require the Seller to notify Buyer. At the minimum, Seller shall make the following available in support of the BFAI for the article being reviewed: 1.       The applicable purchase contract, material/process certifications, manufacturing and inspection records; 2.       The applicable design data; 3.       The applicable documented configuration baseline and configuration summary; 4.       The applicable Material Review Board (MRB) actions; 5.       The applicable acceptance and qualification test results; 6.       The record of Buyer approval for supplier drawing and test procedures; 7.       Completed Supplier First Article Inspection (SFAI) documentation. Seller shall maintain a copy of the completed Buyer First Article Inspection Report (BFAIR) along with the completed Seller First Article Inspection documentation in accordance with contractual quality record retention requirements.
206	SHIPPING DOCUMENTATION REQUIREMENTS The Seller’s shipping documentation shall contain the following: ·A Packing Sheet; ·A Certification of Compliance Statement (may be included as part of the packing sheet); ·Evidence of Seller’s Product Acceptance; ·A copy of any completed Buyer corrective action request follow-up documentation for article(s) being shipped; ·Evidence of Buyer’s product acceptance, when Buyer Source Acceptance is required; ·Serialized Number Control (SNC) data in accordance with D016Z006-01

Page 3 of 10

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	·A Serialized Parts List identifying parts with an assigned serial numbers. The list shall contain the part numbers, part nomenclature and part serial numbers. This list shall also include part change letters when applicable; ·The NCR/rejection tag number(s), as applicable; ·Control identity of the end item deliverable of raw material or purchased articles, as applicable. The control identification is traceable to the product processed in a single run (same manufacturing date, lot, batch, heat, job or shop traveler number). When multiple lots are included in one shipment, Seller shall clearly separate the control identity of the respective lots. In addition to the above, Seller’s shipping documentation shall also include the following: ·Certification listing all articles which must be procured from Boeing Qualified Manufacturer. Certifications must contain the following information: ·       The article specification, drawing or standard and revision; ·       Name and complete address of the Boeing Qualified Manufacturer; ·       Name of the Manufacturer’s Authorized Distributor for D590 standards when the purchase document is not placed with the manufacturer; ·All D1–4426 Certified Special Process (CSP) certifications are available for review, as applicable; ·The material certification(s) are available for review, as applicable. ·                  The CAR number(s).
	INSPECTION
311 B	Seller recognizes that prior to the receipt of Digital data, a proprietary information agreement must be on file. Additionally the Supplier must have Boeing DPD approval per D6-51991 and Spirit DPD approval per MAA1-10009-1.
333	Supplier must retain on file the results of the final inspection for all kitted parts or assemblies that will include a dimensional inspection, temper inspection per BAC 5946 for aluminum alloys, and hardness inspection per BAC5650/BSS7350 for steel and CRES alloys.
363A	If Seller is not presently on distribution for Buyer document(s) necessary to comply with this contract, copies may be obtained by contacting the SM&P representative’s name that appears on the face of this order.
	DELIVERY/PACKAGING/IDENTIFICATION
412A	Parts are to be marked per BAC 5307
413	If barcodes are used, package per the D6-81628 Shipping Label Barcode preparation and Placement

Page 4 of 10

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	Document.
437	If parts have heat numbers they are to be stamped individually with the heat number.
459	Contractual Requirements for Rubber Test Slabs a)          Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer’s Procurement Representative via purchase order to supplier. b)          Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot of Boeing BMS rubber specifications must be sent with each shipment to Buyer. Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.
460	Unless explicit direction is given to the contrary, no articles (or constituent parts thereof) ordered in support of Boeing programs shall contain any FAA-PMA markings. The articles shall not be certified under an FAA-PMA approval and the accompanying paperwork (e.g. packages, shippers, etc.) shall not contain any FAA-PMA markings.
	PROPERTY
501	BOEING COMMERCIAL TOOLING – SELLER’S QUALITY REQUIREMENTS If Seller uses Boeing tooling then Seller’s quality system shall maintain records to assure compliance with all the requirements of D33200-1 ‘Boeing Supplier Tooling’ document, all processes and flows will be in accordance with STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’. All quality checks, verifications, and records shall be presented with the Spirit AeroSystems, Inc. Certified Tool List. These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Spirit AeroSystems, Inc. Certified Tool List and/or Tool Usage List. A.            Record Requirements 1.Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Boeing’s applicable tooling manual and engineering drawing. Seller’s inspection stamp affixed to show compliance and acceptance of completed tool. B.            Manufacturing Records 1.Seller’s manufacturing plan shall provide traceability for verification of need, function, and usage for each tool listed on the Spirit AeroSystems, Inc. Certified Tool List. C. Design Records 1.Seller’s Quality Assurance shall verify the maintenance of the following tool engineering data per D33200-1 ‘Boeing Supplier Tooling’, Section 1.15 and STM­130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’, Section 10. a.one complete set of reproducible drawings submitted to Buyer

Page 5 of 10

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

b. one complete set of reproducible drawings retained with tool

D. Tool Designs

1.            In order to maintain tool design standards, it is mandatory that tool designs be

governed by the requirements of Boeing and Spirit AeroSystems, Inc. tooling manuals, engineering drawings or equivalent approved standards.

2.            Seller’s Quality Assurance shall verify that all tool designs be governed by

Boeing/Spirit AeroSystems, Inc tooling standards.

3.Seller’s Quality Assurance shall verify all Seller tool designs have been approved by

Spirit AeroSystems, Inc.’s Tool Design organization:

a.            for master tooling,

b.            for all major or final stage tools controlled by master tooling,

c.            for tools that control interchangeability or replaceability items,

d.            for all tools used as media for quality acceptance that have tool design

requirements,

e.for all tools used for periodic and configuration control.

E. Tool Fabrication

1.            Seller’s Quality Assurance requirements verify and inspect progressively any feature of

the tool that cannot be inspected after tool is complete.

2.            Maintain and retain all progressive inspection record as required (ref. E.1 above).

3.Inspect and verify all tool tryouts or tool proving.

F.Identification of Accountable Tools

Seller’s Quality Assurance shall verify all tools are identified per Boeing’s D33181-40 ‘Tooling Reference and Spirit AeroSystems, Inc. STM-1 30010-23 ‘Tool Identification’.

1.           No tool will be considered complete that is not properly identified and accepted by

Quality Control.

2.           Seller’s Quality Assurance shall verify acceptable parts or assemblies have been

produced by all tooling and affix steel quality acceptance stamp in tool tryout space.

Note: If tool tryout is not required, stamp “NR” beside inspection acceptance stamp.

3.Seller’s Quality Assurance shall verify the latest engineering drawing revision or tool

drawing revision.

G. Certified Tool List

1.            Seller’s Quality Assurance shall verify the completeness and accuracy of each tool on

the Spirit AeroSystems, Inc. Certified Tool List.

2.            Seller’s Quality Assurance manager shall sign and/or use their quality acceptance

stamp to validate compliance to all D33200-1 ‘Boeing Supplier Tooling’ requirements and STM-130030-1 as stated in upper right hand section of the Spirit AeroSystems, Inc. Certified Tool List. Signature of an Officer of the company is also required.

Page 6 of 10

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	3.Seller shall have a rework tool order to show specific rework instructions have been completed and Seller’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per D33181-40 ‘Boeing Tooling Reference’ and STM-130010-23 ‘Spirit AeroSystems, Inc. Tool Identification’. 4.Seller’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.
502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller if required in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200 and D33041, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200 and D33041, covered by this Purchase Order/Purchase Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Buyer.
504	Seller shall use any and all Tooling only for the purpose of performing its obligations under this purchase Order/Purchase Contract and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this order.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200 and D33041, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Buyer.
506	Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. 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 Buyer.
507	If required, Seller shall provide at no cost to Buyer on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Seller or its subcontractors in accordance with

Page 7 of 10

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	Document D33200, "Boeing Suppliers' Tooling Document' or, subject to Buyer review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	If required, Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200, "Boeing Suppliers' Tooling Document' or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Buyer.
509	If required, Seller shall prepare a list or lists ("Certified Tool List") in accordance with the D33200, "Boeing Suppliers' Tooling Document' or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	Seller shall inspect all tools to the Engineering immediately on receipt of the tools and shall perform a first part inspection to the Engineering. If tools require rework, Buyer is to be notified immediately.
511A	Accountability for tooling fabricated on this Purchase Order will be transferred to Blanket Accountable, Tooling Order T-_______ on receipt of a properly prepared Certified Tool List (F08-04605). The
	Certified Tool List is to be signed by an officer of the Seller's Quality Control representative, by a Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Buyer PQA and proof acceptable parts were produced from the tooling.
514A	When returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, F08-04605, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Buyer PQA and proof acceptable parts were produced from the reworked tooling.

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Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	If Buyer Source Inspection is available, the TUL must also be stamped by the servicing Source Quality Control Representative. Accountable Blanket Tooling Order T-_____.
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200,”Boeing Suppliers’ Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.            Test reports from each block of material B.            A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.
	QUALITY
615	As stated is D6-83721 All Program Partners and Internal / External Suppliers who supply hardware end items as "Supplier Custom Parts" are required to be in compliance with all requirements contained within this document. D6-83721 states that Internal / External Suppliers are required to provide configuration definition which will be included as a portion of the Purchased Article Configuration Traveler (PACT). The Purchased Article Configuration Traveler “PACT” must include the SCPPL/UPL version number, all Module Revisions/Change Levels and the line unit number. If there are no deviations only the top portion of the PACT must be completed and sent with shipping documents. To determine proper form number to convey this data contact your Supply Chain Procurement Agent.
627	Seller and their sub-contractor(s) shall utilize sources listed in Document D1-4426 “Boeing Approved Process Sources” whenever the manufacturing and/or inspection processes listed in D1– 4426 are performed on articles on this purchase document. The current version of D1–4426 is accessible via the Internet at the following web address http://www.boeing.com/companyoffices/doingbiz/d14426/index.html Seller shall maintain actual processor certifications for all D1–4426 special processes performed in accordance with the requirements of this purchase document. In addition to all certification requirements defined by the applicable processing specification(s), the certifications shall contain the following: ·                       The complete part number of the article(s) represented by the certification; ·                       The total quantity of the parts (for each part number) represented by the certification; ·                       The company name and address of the performing processor. The address shall include street address, city and state; ·                       The specification number(s) and revision letter of the D1–4426 process performed. Seller shall provide such certification upon Buyer request. Seller shall provide their sub-tier process sources with the prime site of Buyer (that is the design authority) as well as the aircraft model number or hardware that the part numbers represent.

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Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX SHIPPING 3XX INSPECTION 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	Seller’s use of approved processors does not relieve Seller from verifying that the processor and the product conforms to all applicable process specification requirements.
628	All parts painted with BMS10-11 Type I primer, Mil-PRF-23377 primer, and/or BMS10-11 Type II enamel in accordance with BAC 5736, Application of Chemical and Solvent Resistant Finishes, should be tested to the requirements defined within that BAC and BSS 7225, Tape Test Adhesion, as referenced.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	If castings are included on this order the packing sheet, certificate of compliance or certified test reports accompanying shipments shall certify that the castings have been inspected in accordance with D­13169
682	Where Boeing specifications and/or processes are listed within the detail design, specification control, or envelope drawing, incorporated by this purchase document, Seller shall adhere to the latest revision of the Boeing specification and/or process, unless otherwise specified in the purchase document.
683	A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein. To request Boeing acceptance sampling approval – contact your Procurement Agent. They will coordinate the request with the SPIRIT PQA Sampling SME.
684	Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool Usage List that has been approved by Buyer’s Procurement Quality Assurance.

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Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	ADMINISTRATIVE/GENERAL
001	ITAR Requirements
	This Purchase Contract/request for quote includes items or technologies that are covered by the Munitions List and are therefore subject to the International Traffic In Arms Regulations (ITAR), 22 CFR 120-130. Accordingly you are prohibited from exporting technical data to a foreign person without authorization from the U.S. State Department. It is the responsibility of the recipient of this Purchase Contract/request to ensure their compliance with all applicable U.S. export regulations. As part of Supplier's written solicitation response, Supplier shall confirm, in connection with the effort related to the Spirit prospective procurement, 1.It is not a representative of a foreign interest (RFI) and 2.It will not employ foreign persons on the effort related to this Spirit             procurement 3. It is a US firm incorporated under US law. Supplier agrees to comply with all applicable U.S. export control laws and regulations, specifically including, but not limited to, the requirements of the Arms Export Control Act, 22 U.S.C.2751-2794, including the International Traffic in Arms Regulation (ITAR), 22 C.F.R. 120 et seq.; and the Export Administration Act, 50 U.S.C. app. 2401-2420, including the Export Administration Regulations, 15 C.F.R. 730-774; including the requirement for obtaining any export license or agreement, if applicable. Without limiting the foregoing, Supplier agrees that it will not transfer any export controlled item, data, or services, to include transfer to foreign persons employed by or associated with, or under contract to Supplier or Supplier's lower-tier suppliers, without the authority of an export license, agreement, or applicable exemption or exception. Supplier must comply with ITAR, part 122.1 Registration requirements (a), Any person who engages in the United States in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register with the Office of Defense Trade Controls. For the purpose of this subchapter, engaging in the business of manufacturing or exporting defense articles or furnishing defense services requires only one occasion of manufacturing or exporting a defense article or furnishing a defense service. Manufacturers who do not engage in exporting must nonetheless register. Supplier shall immediately notify the Spirit Procurement Agent if Supplier's firm is, or becomes, listed in any Denied Parties List or if Supplier's export privileges are otherwise denied, suspended or revoked in whole or in part by any U.S.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	Government entity or agency.
003	Fab Service Procurement
	The invoice and Packing slip shall include the shipping document number, order number, Purchase Order number and Purchase Order item number. Any overtime or expedite charges must have prior approval by the Service Procurement Pa (PA). Supplier to return all Spirit -furnished containers. Each shipment must be processed as soon as possible and returned to Spirit Behind schedule items will be coordinated with Supplier by Spirit for expeditious handling. Please contact Spirit if circumstance arises that precludes prompt return of Parts.
005	Liquidated Damages
	In the event of a Non-Excusable Delay in delivery (any delay other than those excusable delays as defined in Spirit‟s General Provisions, Excusable Delay Section), Spirit may, at Spirits option, accept products that are not delivered on or before the required delivery date. Delay is further defined to include failure to maintain the Minimum level of the Min/Max inventory methodology as set out in PF-502, “Consumption Based Ordering Guidelines”. The parties acknowledge, however, that Supplier would be liable for all additional costs incurred by Spirit because of such delay(s), which may include, by way of illustration and not of limitation: ·additional expense related to administrative costs, telecommunication costs, ·additional or premium transportation charges, special handling expenses, and ·various anticipated and unanticipated costs to install the products out of the normal manufacturing sequence. The Parties further acknowledge that the nature and actual amount of costs associated with delivery delay are uncertain and difficult to calculate. Therefore, Spirit may choose, in its sole discretion, to require Supplier to pay Spirit liquidated damages. The parties acknowledge that such payments are not intended as a penalty, but are, in lieu of the actual damages measured by such costs. If Spirit chooses to recover liquidated damages, they shall be equal to 1 % of the value of the delinquent items per day of delay or a minimum of $100 for each item per day of delay. The parties agree this calculation represents a

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	reasonable estimate of the additional costs to be incurred by Spirit in connection with a delivery delay. Accumulation of liquidated damages will be subject to a grace period of five (5) days per item after which liquidated damages shall begin. Spirit‟s choice to recover such liquidated damages for delayed delivery on any one or more occasions shall not, however, preclude Spirit from recovering the actual costs incurred because of delayed delivery on any other occasion. Spirits exercise of rights under this provision shall not preclude Spirit from exercising its option to terminate this Purchase Contract/Purchase Order for an Event of Default by Supplier as provided in Spirit General Provisions form PF­550, Cancellation for Default Section,, even if Supplier has (a) paid such liquidated or actual damages to Spirit on prior occasions, or (b) if repeated incidents of late deliveries in the aggregate (or a single significant incident of delay) materially adversely affect Spirit‟s ability to enjoy the bargained for benefits of this Purchase Contract/Purchase Order on an ongoing basis.
007	Vendor Owned Inventory
	All items on the Purchase Contract/Request for Quote identified as Vendor Owned Inventory shall be administered in accordance with PF-200, Supplemental Terms for Vendor Owned Inventory. Payment terms for VOI items shall be ____.”
019	Indemnification And Insurance Requirements
	1.0 INDEMNIFICATION 1.1       Indemnification, Negligence of Supplier.Supplier shall defend, indemnify
	and hold harmless Spirit AeroSystems, Inc., its subsidiaries, and their directors, officers, employees and agents (hereinafter referred to as "Indemnities") from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards and damages, of any kind and nature whatsoever (hereinafter referred to as "Claims,” for property damage, personal injury or death (including without limitation claims brought by and liabilities to, including injury or death to employees of Supplier or any Subcontractor) and expenses, costs of litigation and reasonable attorney's fees related thereto, or incident to establishing the right to indemnification, to the extent such Claims arise from any negligent act or omission or willful misconduct of Supplier or any Subcontractor or their employees arising out of or in any way related to the presence on Spirit 's premises of Supplier, any Subcontractor or their employees, including without limitation the provision of services, personnel, facilities, equipment, support supervision or review. In no event shall Supplier's obligations hereunder be

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

be limited to the extent of any insurance available to or provided by the Supplier.

1.2 Waiver of Immunity, Industrial Insurance. Supplier will not assert as a defense to this indemnification obligation any immunity under workers' compensation statues, industrial insurance, or other source, and Supplier expressly waives any immunity to the extent of the indemnity set forth in Paragraph 1.1 "Indemnification, Negligence of Supplier.”

1.3 Indemnification, Subcontractors. Supplier shall require each Subcontractor to provide an Indemnity, enforceable by and for the benefit of the Indemnities, to the same extent required of Supplier stated under Paragraphs 1.1 "Indemnification, Negligence of Supplier" and 1.2 "Waiver of Immunity, Industrial Insurance."

2.0 INSURANCE REQUIREMENTS

2.1 Commercial General Liability. Throughout the period of performance of this contract and until final acceptance by Spirit, Supplier shall carry and maintain, and shall ensure that all Subcontractors carry and maintain Commercial General Liability Insurance with limits of not less than One Million Dollars ($1,000,000) per occurrence for bodily injury, including death and One Million Dollars ($1,000,000) per occurrence for property damage or alternatively, One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage combined. Such insurance shall be in a form and with insurers acceptable to Spirit, and shall contain coverage for all premises and operations, broad form damage, contractual liability (including, without limitation, that specifically assumed herein), and products and completed operations insurance. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.2 Automobile Liability. If licensed vehicles will be used in connection with the performance of this contract, Supplier shall carry and maintain, and shall ensure that any Subcontractor who uses a licensed vehicle in connection with the performance of this contract, carries and maintains, throughout the period of performance of this contract, Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed or otherwise, with limits of liability of not less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage. Such insurance shall be in a form and with insurers acceptable to Spirit. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.3 Workers' Compensation & Employer‟s Liability. Throughout the period of performance of this contract and until final acceptance by Spirit, Supplier shall

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

cover or maintain insurance, and shall ensure that all Subcontractors cover or maintain insurance, in accordance with the applicable laws relating to Workers' Compensation, with respect to all of their respective employees working on or about Spirit's premises, regardless of whether such coverage or insurance is mandatory or merely elective under the law.

Throughout the period when work is performed and until its final acceptance by Spirit, Supplier shall also carry and maintain, and ensure that all Subcontractors carry and maintain, Employer's Liability coverage with limits of not less than One Million Dollars ($1,000,000) each accident. To the extent permitted by law, any policy or policies which provide any of the insurance required by this Paragraph 2.3, "Workers' Compensation & Employer‟s Liability,” shall contain a Waiver of Rights of Subrogation against Spirit, its subsidiaries and their directors, officers and employees. If Spirit AeroSystems, Inc. is required by any applicable law to Pay Workers' Compensation premiums with respect to employees of Supplier or any Subcontractor, Supplier shall reimburse Spirit for such Payment. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.4 Certificates of Insurance

1. Prior to the commencement of the period of performance, Supplier shall provide for Spirit's review and approval Certificates of Insurance reflecting full compliance with the requirements set forth in Paragraphs 2.1 "Commercial General Liability," 2.2 "Automobile Liability," and 2.3 "Workers' Compensation." Such Certificates shall:

a)      be kept current and in compliance with throughout the period of performance and until final acceptance by Spirit (and for two [2] years thereafter for products and completed operations liability);

b)      provide for thirty (30) calendar days advance written notice to Spirit in the event of cancellation or material change adversely affecting the interests of Spirit; and

c) identify the cognizant SCM Representative and list Spirit as the certificate holder.

2. Any policy or policies providing the insurance under Paragraph 2.0, "Insurance Requirements,” may be inspected by Spirit upon request.

3. Where Supplier is subject to the requirements of a "monopolistic" state which does not permit insured workers' compensation, a written letter confirming participation in a state fund or, alternatively, confirming a state approved self-insurance program, will satisfy the certificate requirement. Such letter will identify the State account or

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	self-insured number.  For Employer's Liability coverage in such monopolistic states, evidence of "Stop Gap" endorsement to the General Liability policy is acceptable proof of compliance with the Employer's Liability insurance requirement. 4.               Self-Assumption.Any self-assured layer, deductibles and exclusions in coverage in the policies required under this Paragraph 2.0, "Insurance Requirements,” shall be assumed by for the account of and at the sole risk of Supplier or the Subcontractor which provide the insurance and to the extent applicable shall be paid by such Supplier or Subcontractor. In no event shall the liability of Supplier of Subcontractor be limited to the extent of any of the minimum limits of insurance required under Paragraph 2.0 "Insurance Requirements." General Liability policy is acceptable proof of compliance with the Employer's Liability insurance requirement.
020	Raw Material Order Confirmation
	Within thirty (30) days after receipt of Purchase Contract/Purchase Order, Supplier shall confirm to Spirit order placement for raw material. Confirmation shall include raw material identification, supplier, Purchase Order number and date, quantity ordered, and the supplier committed delivery schedule.
021	Operational Detail Report
	Withindays after receipt of purchase order, Supplier shall furnish to
	Spirit a copy of Supplier's planning showing detailed operations in sequence. Said planning shall include the estimated flow time for each detailed operation.
036	Obligation To Purchase And Sell
	Spirit and Supplier agree that in consideration of the prices set forth in this Purchase Contract, Spirit shall issue orders for products from time to time to Supplier for all of Spirit's requirements. Such products shall be shipped at any scheduled rate of delivery, as determined by Spirit, and Supplier shall sell to Spirit, Spirit 's requirements of such products, provided that, without limitation on Spirit 's right to determine its requirements, Spirit shall not be obligated to issue any orders for any given product if: 1. Any of Spirit 's customers specifies an alternate product; 2. Such productis, iin Spirit's reasonable judgment, nottechnologically competitive at any time, for reasons including but not limited to the availability of significantchangesintechnology,design,materials,specifications, or

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	manufacturing processes which result in a reduced price or weight or improved appearance, functionality, maintainability or reliability; 3.          Spirit gives reasonable notice to Supplier of a change in any of Spirit's manufactured product which will result in Spirit no longer requiring such product for such manufactured product, 4.          Supplier has materially defaulted in any of its obligations under any order, whether or not Spirit has issued a notice of default to Supplier pursuant to Spirit General Provisions, PF-550, „Cancellation for Default‟ Section 5.                Spirit                  reasonably                          determines                          that                      Suppliercannotsupport Spirit's requirements for products in the amounts and within the delivery schedules Spirit requires. 6.          Spirit gives at least six (6) months notice to Supplier that the product is used in the manufacturing of an airplane component, assembly or other product previously manufactured in-house by Spirit and which component, assembly or other product Spirit has resourced to a third party supplier. 7. Spirit gives at least ninety (90) days notice to Supplier of Spirit‟s decision to manufacture the products itself rather than purchase the products from Supplier. Supplier represents and warrants to Spirit 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. Any planning schedule, forecast, or any such quantity estimate provided by Spirit shall be used solely for production planning. Spirit may purchase products in different quantities and specify different delivery dates as necessary to meet Spirit's requirements. Any such estimate shall be subject to adjustment from time to time, and such adjustment shall not constitute a change under Spirit General Provisions, PF-550 „Changes‟ Section
037	Fab Service Procurement Damaged Shipments
	Shipments you receive F.O.B. destination, or F.O.B. your plant for our account, which are in noticeably bad condition when delivered to you by the carrier: 1.          Note condition of shipment on carrier‟s delivery receipt and on copy of freight bill retained by your Receiving Department. 2.          Immediately request carrier inspection on the shipment and retain a copy of the carrier‟s inspection report. 3. If carrier waives inspection, note your copy of the freight bill with the date, name of the carrier representative who waived inspection and a statement

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	that carrier waived inspection. Shipments received in apparent good condition but found to contain concealed damage: 1.          Stop unpacking immediately as soon as damage is found. 2.          Retain all container and packing material. 3. Request carrier inspection and retain a copy of carrier‟s inspection report. Contact Spirit‟s Traffic Coordinator for further instructions as soon as damage to any of the above type shipments is discovered.
043	Anti-Kickback Procedures
	Supplier agrees to abide by the Anti-Kickback Act of 1986 (41 U.S.C. 51 through 58) and FAR 52.303-7. "Anti-Kickback Procedures," except that subparagraph (c)(1) of FAR 52.203-7 shall not apply to Supplier, and further that in subparagraphs (c)(2), (c)(3), and (c)(5), the term "Contractor" shall mean Supplier, and in subparagraph (c)(4) the term "Prime Contractor" shall mean Spirit AeroSystems, Inc. and the term "Subcontractor" shall mean Supplier. In addition to reportingpossible violations of the Anti-Kickback Act to the Government pursuant to 41 U.S.C. 57, Supplier shall report such possible violations, if related to Spirit, to the Director of SCM and/or the Division Counsel of the Spirit, Division or subsidiary issuing this purchase order (PO). In addition to any other remedies that Spirit may have, Supplier shall defend Spirit against all claims and procedures based upon actual or alleged violations of the Anti-Kickback Act of 1986 and any amendment thereof; and Supplier shall indemnify and hold Spirit harmless from any losses, damages, liabilities, costs, and expenses including but not limited to, losses of profits, expenses of litigation, attorney‟s fees, penalties or fines, suspensions or reductions of progress payments, and all losses arising out of contract terminations, suspensions or debarments of Spirit, resulting from a violation of the Anti- Kickback Act of 1986 and any amendment thereof, by Supplier, any of its officers, partners, employees, agents, or any subcontractors at any tier below Supplier or such subcontractor‟s employees. If the Government, pursuant to FAR 52.203-7, directs the Spirit to withhold sums owed the Supplier, the Spirit shall be entitled to do so and the Spirit may, if ordered to do so, pay said money over to the Government and the Spirit shall not be responsible to pay the said money to the Supplier but Supplier shall remain responsible for performance of the contract.
044	Consumption Based Ordering
	This Purchase Contract/Purchase Order is subject to the requirements of Spirit, form PF-502, Consumption Based Ordering Guidelines, current revision, incorporated herein by reference.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

046	Program Manager
	Supplier will assign a full-time program manager whose exclusive responsibility will be to oversee and manage Supplier's performance hereunder. The assignment of such program manager will be subject to Spirit's approval.
049	Cost And Performance Visibility
	When requested by Spirit, Supplier shall provide all necessary cost support data, including source documents for direct and indirect costs, on Spirit Form PF-270, and assistance at the Supplier's facility in support of cost and performance analysis and reviews performed by the parties.
050	Computation Of Equitable Adjustment
	The Rates and Factors set forth below shall be used to determine the equitable adjustment, if any, to be paid by Spirit pursuant Spirit, General Provisions, Form PF-550, Changes Section. 1.Direct Labor Rate $ 2.Manufacturing Burden% 3.G&A (Gen. Admin. Expense) % 4.Profit % 5.         Total Rate $
051	Reporting Requirements
	Supplier shall furnish to Spirit, at _______ intervals, or until such time as
	Spirit considers the report no longer necessary, a complete status report of work accomplished in manufacture of product(s) covered by this contract. Reports will be mailed each showing progress through the preceding period.
	Status reports shall include, but are not limited to, the following topics: 1.        Delivery schedule updates, schedule impact issues and corrective action; 2.        Technical/manufacturing progress since the previous report period, including significant accomplishments, breakthroughs, problems and

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	solutions; 3. Identification of changes to key manpower or staffing levels; 4.Identification of the critical events/activities expected within the next month and a discussion of potential risk factors; 5. Progress on open Action Items, including closure dates; 6. Purchased components and raw material status; 7. Identification of Quality issues and resolutions; 8. Manufacturing and Quality inspection progress of First Article products; 9. Status on tool design and fabrication, as applicable, until completion; 10. Inventory status of castings and forgingsprocuredbySupplier (if applicable). In Addition to the above required Status Reports, within twenty-four (24) hours of known problem to Supplier, Supplier shall provide a detailed Problem Report, notifying Spirit of program problems/issues that could impact Supplier’s ability to deliver products on time and otherwise in conformance with the terms of this contract. Problem reports shall be submitted to the Spirit‟s Procurement Representative. Submittal of a Status Report or Problem Report in no way relieves Supplier of any obligations under the Purchase Contract/Purchase Order nor does it constitute a waiver of any rights and remedies Spirit may have with respect to any default.
063	Acknowledgment Of Change To Purchase Order
	No charge or claim is involved and therefore Supplier does hereby remise, release and discharge Spirit AeroSystems, Inc., its officers, agents and employees, of and from all liabilities, obligations, claims or demands whatsoever as a result of this Changed Purchase Order/Purchase Contract. Please sign and return one copy of this Changed Purchase Order/Purchase Contract Acknowledgement.
064	Acknowledgment Of Change To Purchase Order
	Supplier, by accepting this Changed Purchase Order, does hereby remise, release and discharge Spirit, its officers, agents, and employees, of and from all liabilities, obligations, claims, and demands whatsoever as a result of this Changed Purchase Order, unless Supplier files with Spirit, Spirit, a proper termination proposal (Spirit Form F08-04597) pursuant to and within the time

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	time limits allowed per Spirit General Provisions (PF-550) Termination for Convenience Section.
065	Milestone Reporting
	Within thirty (30) days after award of Purchase Contract/Purchase Order, Supplier must submit to Spirit, a milestone schedule reflecting all significant milestones, such as 1.        raw material ordering and receipt, 2.        planning, 3.        tool design and fabrication, 4.        each manufacturing operation, 5.        processing, 6.        inspection and shipment of finished Parts. All milestones are to be time-phased and a complete status report comparing actuals to targets must be submitted to Spirit on the first of each month.
066	Limitations On Disclosure Of Technical Data
	Supplier agrees that subject to the other data provisions of this contract any technical data furnished to Spirit by Supplier may be furnished to associate contractors for and in connection with this program. Any technical data furnished to Spirit by Supplier shall only be furnished to associate contractors upon Supplier’s written approval and shall only be used for and in connection with this Purchase Order/Purchase Contract for coordination and interface control.
067	Option To Extend Term Of Purchase Contract/Purchase Order
	Supplier grants to Spirit an option to extend the period of performance of this Purchase Contract as set forth below. Spirit may exercise the option by written notice to the Supplier on or before (insert a date).
	This option may be exercised by Spirit any number of times so long as each option increases the period of performance of this contract by no less than (insert a number of months or years). However, in no event may Spirit
	unilaterally extend the contract beyond (insert a date) by exercise of this
	option. Notwithstanding the option set forth herein, Spirit reserves the right to commence new negotiations with Supplier concerning pricing and other terms

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	for additional quantities of Products.
097	Supplier Import Compliance
	When Spirit AeroSystems, Inc. is the Importer of Record, Supplier is required to submit a copy of a Commercial Invoice, prior to each shipment of product, and ensure that the Packing slip accompanying the product matches the Commercial Invoice. In the case of "American Goods Returned" or "Returned After Repair or Alteration", Supplier is to include the foreign shipper's declaration,shipper's repairdeclaration,manufacturer'sdeclarations as applicable. Product that is subject to United States Department of State International Traffic In Arms Regulations (ITAR) should not be combined with non ITAR product. Supplier is to provide a separate Commercial Invoice and make shipment on a separate house or master air bill. Supplier represents and warrants that the copy provided to Spirit will be a true copy of the Commercial Invoice that will accompany shipment. The true copy of the Commercial Invoice must be emailed or faxed to: Spirit AeroSystems, Inc. Email Address: grpimportcompliance@spiritaero.com Fax Number: 1-316-529-7956 Attn: Import Administration NOTE: Failure to comply with these requirements shall be a material breach of contract and grounds for default pursuant to the Cancellation for Default clause of this contract. 1.Commercial Invoice Requirements a. Must be in English b. Must be legible c. Purchase Order Number Provide the current Purchase Order or Purchase Contract number (P.O. XXXXXX), if applicable. d. Location and Names of Supplier/and or Shipper, Spirit and Date i.Date when the merchandise is sold or agreed to be sold. When goods being imported are not sold or agreed to be sold to Spirit, the shipping/Customs invoice should be noted, accordingly, complete with an explanation.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

ii.Merchandise Shipment Date (month, day, year) Provide the date that the merchandise shipped from the Suppliers factory or facility.

iii.Name and address of the Supplier (Company name and address) and/or name and address of the Shipper, if the Supplier is not the Shipper.

iv.Name and Contact information for an employee, employed by the Supplier and/or Shipper, who has detailed knowledge of the sales transaction.

v.Name of Consignee if not the Spirit (Company receiving non-purchased transactions or drop ship destination).

e.Record the United States Port of Entry where merchandise is to be cleared by CBP.

f.Quantities, weights and measures

i.Record the quantity of each Part number in the Shipment.

ii.If not separately noted on Packing sheet(s) include on  invoice:

·Total quantity of Parts being shipped

·Provide net weight of each Part number and gross weight of entire shipment

·Specify unit of measure being used

·Specify the total number of boxes included per packing sheet.

·Textiles must specify the net gross weights and the length, width and total square meters of material.

g.Provide a detailed description of each item being shipped to ensure proper product classification per the Harmonized Tariff Schedule (HTS) and must include at a minimum:

i.The full name by which each item is known

ii.Part Number as appears on Purchase Order/Contract.

If the item is a raw material, provide the material grade, class and dimensions.

·Generic descriptions, abbreviations, acronyms, and Stock Keeping Unit (SKU) numbers are not acceptable.

·Spirit may request additional description information for items that do not have a Part number and/or design or when the appropriate HTS number cannot be determined from the provided description.

·Supplier will provide material class, grade, dimensions and assembly components if Part is manufactured by Supplier’s own manufacturing drawings.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

h.Country of Origin: indicate the country of manufacture of each item.

i.Terms of Sale: Specify the International Commercial Terms of Sale (Incoterms) as agreed to per the Spirit Contract on the invoice or Spirit Work Authorization.

j.Specify “Related Party to the Spirit” status (Yes or No) on the invoice.

k.       Commercial Invoice Number (Supplier’s Option)

l.Page numbers are required for each invoice (example: ____ of ____ Pages).

m.Bolt Seals: All shipping documents must reflect the bolt seal number being used for ocean shipments loaded into dedicated containers. All bolt seals used must be those issued to the supplier by Spirit Aerosystems in order to comply with C-TPAT requirements.

2. Commercial Invoice Valuation Requirements

a.Must be complete and accurate, including the unit cost of each Part and the total value of the entire shipment.

b.Currency on all invoices must reflect the actual currency of the purchase contract and the transaction of money between the Spirit and the Supplier.

c. List separately any Assists and/or Additional costs used for manufacturing each Part. For example:

·Assists:  Anny components, materials, dies molds and tools that are supplied by the Spirit free of charge or at a reduced cost to the Supplier, and used in the production of imported goods.  This includes any Spirit Paid transportation costs associated with the assist.  These transportation costs will be provided by the procurement focal responsible for this merchandise.

·Costs for tooling, etc., built or supplied, directly or indirectly, and used in the production or manufacture, by the manufacturer of the goods being imported into the United States, and not included in the purchase order unit price.

·Engineering and Design work – Work that is performed outside the U.S. by Non-U.S. employees, and is not included in the unit price of the merchandise being imported.

·Packing Costs – Costs for Packing that are incurred by the Spirit and have not been included in the unit cost.

·Non-recurring charges – One time charges, incurred by the Spirit, for such items as, expedite fees and transportation costs, which have not been included in the unit cost.

·Selling Commissions – Commissions incurred by Spirit that have not been included in the unit cost.

·Royalties – Fees the Spirit is required to pay as a condition of sale.

d.List all discounts that have been agreed to, or may be allowed, that apply to the purchase price or value, but have not been included in the unit price (Terms of Payment).

e.Repaired or modified Parts – separately enter the value of the item and the value of the repair on the invoice.  For “no charge” repair, show the value of the repair on invoice.

f.If Supplier receives any rebates, drawbacks or bounties, as a result of exportation, please itemize and provide description.

3.Packing Sheet/slip (if used by supplier)

a.Include Packing sheet/slip number(s) on invoice

4.U.S. Government Programs Only (Regardless of Business Units)

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

a.If a government contract applies, the prime contract number must be noted on the commercial invoice. Additionally, the following government contract statement needs to be shown as follows for Military Programs.

“United States Dept. of Defense Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Sub-chapter VIII, item 9808.00.3000 of the Harmonized Tariff Schedules to The United States. Upon arrival of shipment at the port of entry, District Director of Customs, please release shipment under Section 19 CFR Part 142 and notify Commander, Defense Contract Management Area Operations (DCMAO) New York, for execution of customs forms and any required duty free entry certificates.”

b.Commercial Invoice must show that the shipment is consigned to a U.S. Government Agency (i.e.: U.S. Department of Defense) in “care of Spirit”, if shipment has a prime contract number.

c.If items were exported on a license or exemption upon importation, that license or exemption information should be notated as follows:

Example: “Originally exported under DSP-XX license number XXXXXX” or “Imported under 22 CFR XXXXX”

ADDITIONAL IMPORT NOTES: Part Marking

All items furnished under this contract/order, unless excepted by law, must be legibly marked with the English name of the country of origin per U.S. Customs Regulation 19 CFR 134 Country of Origin Marking. Markings are to be legible, indelible, and as permanent as the nature of the article or container will allow.

Chemical Content

Additionally, the import of any shipment that actually contains or consists of a chemical substance must be coordinated with Spirit in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants, protectorants, paint, packaging materials)

Supplier will provide MSDS (Material Safety Data Sheet, Ref – 29CFR1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination.

Note: Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies.

NAFTA

If the Products under this Order qualify for preferential duty treatment under the North American Free Trade Agreement (NAFTA), the Supplier must provide Spirit‟s Import Compliance group with a valid NAFTA Certificate of Origin (C/O), in order for the Product to be eligible for preferential duty treatment at the time of Customs entry.

Supplier acknowledges that the C/O will be used by Spirit as proof of eligibility for preferential duty treatment, and agrees to provide full cooperation to Spirit for any U.S. or foreign Customs inquiries into preferential duty claims that arise out of any Article furnished under this Order.

Should Spirit be fined and/or penalized by the aforementioned Customs entities, for invalid data on the NAFTA C/O provided by Supplier, Supplier agrees to reimburse Spirit upon request for the fines and/or penalties as well as Spirit‟s expenses in connection therewith.

Unless Spirit requests individual C/O for each shipment, Supplier may provide annual blanket C/O to cover multiple shipments during the calendar year.

Supplier shall immediately notify Spirit in writing of any changes in the eligibility of the Products for preferential duty treatment.

Part number additions to the NAFTA C/O will be requested periodically by Spirit. Supplier will fully review all applicable part numbers to ensure they qualify for NAFTA preferential duty treatment, before sending Spirit a copy of the updated NAFTA C/O.

Importer Security Filing (ISF 10+2) Ocean Shipments

When import cargo is arriving in the United States by ocean vessel, Supplier must submit data elements necessary for Spirit to comply with U.S. Customs and Border Protection (CBP) ISF requirements.

In the event CBP shall issue fines, penalties, and or liquidated damages for violations attributable to Spirit for the submission of inaccurate, incomplete, or untimely filing, then Supplier shall be liable for such costs and will indemnify and hold Spirit harmless from and against such claims, losses, liabilities, damages, penalties, costs and expenses arising out of or in connection with Supplier's failure to provide Spirit timely, accurate, or complete data. Penalties may consist of $5,000.00 per violation and may result in shipments being held at Customs.

Data will be submitted:

a.No later than 4 business days prior to loading cargo onto the ocean vessel at the foreign port of export.

b.On a spreadsheet containing the following data elements:

1.Manufacture Name and address

2.Ship-To Party (Consignee) Name and address

3.Part number, description, and manufacturer’s Country of Origin of each part

4.Supplier Name and Address

5.Supplier Name and Address (if different from Supplier

6.Buyer Name and Address

7.Container Stuffing Location

8.Consolidator Name and Address

9.Estimated Sailing Date

10.Freight Forwarder bill of lading number

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

c.Via e-mail to  Spirit’s Import and Traffic Organizations, and Spirit’s Broker

·grpimportcompliance@spiritaero.com

·grpspirittraffic@spiritaero.com

·shellya.stone@spiritaero.com

For Shipment cleared by DHL Global Forwarding

·rifcae@dhl.com

·Charlene.gleaton@dhl.com

·Julie.moore@dhl.com

Subject line of the e-mail to  DHL GF:

Spirit Wichita:  MCI, ISF, Ocean, Spirit, HBL#___, ETS (Date of the estimated vessel sailing)

Spirit Tulsa:  DFW, ISF, Ocean, Spirit, HBL#____, ETS (Date of the estimated vessel sailing)

For Shipments cleared by F.H. Kaysing Company

·spirit@fhkaysing.com

·jmetzen@fhkaysing.com

·abooth@fhkaysing.com

·msapien@fhkaysing.com

Customs – Trade Partnership Against Terrorism (C-TPAT)

C-TPAT is an initiative between business and government to protect global commerce from terrorism and increases the efficiencies of global transportation.  The program calls for importers, carriers and brokers to establish policies to enhance their own security practices and those of their business partners involved in their supply chain.  Such practices may include but are not limited to the following:

1.Procedural Security – Procedures in place to protect against unmanifested material being introduced into the supply chain;

2.Physical Security – Buildings constructed to resist intrusion, perimeter fences, locking devices and adequate lighting;

3.Access Controls – Positive identification of all employees, visitors and suppliers;

4.Personnel Security – Employment screening, background checks and application verifications;

5.Education and Training Awareness – Security awareness training, incentives for participation in security controls.

Carrier or international Freight Forwarder must be C-TPAT certified in order to transport Spirit shipments across U.S. borders, and must maintain C-TPAT certification.  Carrier or international freight forwarder’s loss of C-TPAT certification willl be grounds for termination.  International Freight Forwarder also agrees to use C-TPAT certified carriers, local cartage companies and others involved with the transport and  handling of Spirit shipments.  In the absence of C-TPAT certified transport and handling providers, carrier or international freight forwarder may use companies that have agreed in writing to follow the C-TPAT Supply Chain Security Guidelines.  If no C-TPAT certified carriers or carriers that have agreed to follow the C-TPAT Supply Chain Security Guidelines are available to move Spirit’s shipment, carrier or international freight forwarder will notify Spirit immediately.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	PRICING
115	Estimated Price
	The unit price(s) shown in this Purchase Order/Purchase Contract is only an estimated price. Advise the Spirit of the firm price as soon as possible.
118	Precious Metal
	The precious metal (gold, silver, platinum) surcharge will be an upward or downward adjustment computation based on material content factor of _____ times the difference between the base price of _____ and the current value of the precious metal. The current value will be the value listed in the Wall Street Journal dated _____ and this value will be computed on the _____.
119	Rework Cost
	Supplier may disassemble the herein described article(s) and shall immediately quote price of rework or repair and the current replacement price. Supplier shall not proceed with rework until receipt of a change order authorizing the rework cost. Price will be finalized within 60 days of the date of this Purchase Order.
121	Expedite Cost
	The expedite charge will be paid if acceptable parts in the quantity stated are produced and shipped to Spirit, or Spirit‟s designated location, on or before: _________________.
122	Maximum Liability For Equitable Adjustment
	Spirit's maximum liability for an equitable adjustment resulting from a decrease in quantity or termination of Product(s) shall be limited to costs directly attributable to 1.          _____ days raw material and 2.          _____ days finished Products worth of scheduled deliveries of the Products. For purposes of this Note, scheduled deliveries shall be determined by the applicable schedule in effect at the time Supplier commenced work on the Product(s) that are the subject of the termination or decrease.
129	Change To Cost Or Pricing Data
	Supplier shall submit cost or pricing data as required by Form PF-270 “Cost

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	Breakdown Form” for each change when the total amount of the proposed additions and/or deletions to the price combined is $100,000 or more.
131	Die Service Charges
	Die service charges are considered a fee, not a purchase price. Considerations acceptable to Spirit in Payment of such fees being (A)         That title, ownership, possession and control of all equipment produced hereunder shall vest in Supplier, (B)         That Supplier shall store, maintain and where necessary because of wear, loss or damage, replace such equipment, without further cost to Spirit, until final disposition of such equipment has been agreed to between Spirit and Supplier, (C) that Supplier shall not dispose of such equipment until three (3) consecutive years of inactivity has Passed, and not then without first giving at least thirty (30) days written notice of intention and receiving Spirit's written approval to do so.
132	License Agreement
	This Purchase Contract/Purchase Order is subject to the terms and conditions () of License Agreement effective date ( ).
133	Set-Up Charges
	The item price(s) on this Purchase Order is/are based on Spirit Paying one setup charge for one lot run with the entire quantity to be shipped per Spirit shipping schedule. In the event of a shortage situation, the requested quantity of material is to be shipped within 3 days of notification. Spirit, under the terms of this Purchase Contract/Purchase Order, may not change the quantity of any item, on the Purchase Order. Spirit further agrees to accept the outstanding balance of any item within one calendar year from the date of the first shipment of that item. Spirit may at no cost, revise both the quantity per ship schedule and the scheduled ship dates, with a minimum of one-week notice.
136	Price Increase Petitions
	All petitions for price increase must: 1.Be in writing; 2.Provideatleastthirty(30)daysadvancewritten notification.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	Notification shall commence on the postmarked date of a correctly addressed letter to Spirit‟s designated representative; 3.Be accompanied by detailed cost data substantiating the petitioned increase; 4. Any price revision(s) shall be passed through as a percentage price change equal to the percentage changeinSupplier’sdelivered commodity/service cost. No additionalmarkup for profit on the incremental price increase will be accepted by Spirit; 5. Spirit‟s procurement agent shall have the right to negotiate all proposed price increases and may delete specific line items or terminate the contract upon failure to mutually agree to a proposed price revision; 6.In the event a price increase is incorporated into a contract, all billing shall be at the price in effect at the time of purchase order/requirements placement, not at the time of shipment/performance; 7.Spirit‟s acceptance of a price revision (increase/decrease) shall be confirmed only through a fully executed revision to the contract.
138	Obsolete Material
	Supplier may not submit a claim for obsolete material or product resulting from an individual change order that has a total claim value of Two Thousand Five Hundred Dollars ($2,500.00) or less.
139	Claims Prior To Engineering Release (Drawing Revision Level New)
	Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, (PF-550), Changes Section, no equitable adjustment in the prices or schedules of any order shall be made for any change initiated by Spirit 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 Spirit ("100% Engineering Release") provided, that an equitable adjustment shall be made for: 1.       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 Section are changes within a raw material classification such as a change from 7050 Aluminum to 7075 Aluminum; 2.       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

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	writing within thirty (30) days after the receipt of 100% Engineering Release by the Supplier. Claims Subsequent to Engineering Release
	Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, (PF-550), Changes Section no equitable adjustment shall be made to the recurring or non-recurring prices after the date of 100% Engineering Release for any change initiated by Spirit 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 this contract. For purposes of this section, the then current unit price or total nonrecurring price shall be the price identified elsewhere in this contract 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.
	DELIVERY/PACKAGING
401	Skid Identification
	Maximum weight of each skid shall not to exceed 4,000 pounds gross. Skids must be identified by heat lot number with only one heat lot per skid.
402	Distributor Requirements
	For products provided by a distributor, each product furnished must include the legal name of the product manufacturer on each Packing sheet immediately following the part number.
406	Multiple Shipments
	The material on this order shall be identified and separated by the lot number appearing on the Package and Packing slips. For shipments with more than one lot number to a carton, the Supplier is required to segregate materials according to their specific lot numbers
410	Hazardous Material Requirements
	Material Data Specification Sheet
	Supplier will comply  with the hazard communication standard,

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

29CFR1910-1200, if applicable. Supplier will include a Material Safety Data Sheet (MSDS) with the initial shipment of a hazardous material each calendar year and route an additional copy of the MSDS to;

Spirit AeroSystems, Inc.

P.O. Box 780008 M/C K06-94

Wichita, KS 67278-0008

ATTN: EH&S Hazardous Materials Gatekeeper

The revision number and date must be displayed prominently on the MSDS. Supplier is also required to provide an MSDS to the address above in the event of a change in brand, a change in chemical composition, or a new / substitute chemical shipment; any change information shall be communicated to the Spirit immediately.

Routing, Packaging, Labeling, and Marking

Routing, packaging, labeling, and marking of hazardous material for shipment via common carrier, authorized to handle the material, shall be in accordance with title 49 of the Code of Federal Regulations (CFR), Parts 100 to 199; the International Civil Aviation Organization (ICAO) "technical instructions for the safe transport of dangerous goods by air"; the International Air Transportation Association (IATA) "dangerous goods regulations"; the International Maritime Dangerous Goods (IMDG) code; and all other applicable international, federal, state, and local regulations.

Clean Air Act Warnings/Notices

Warning statements for products containing or manufactured with ozone depleting chemicals as required by the Clean Air Act Amendments of 1990, Section 611, 40 CFR Part 82, should not be applied directly on the Parts or items. Warning statements are to be included in a separate document, such as the bill of lading, shipment papers or other proper notification that complies with the referenced regulation and accompanies the shipment.

Montreal Protocol Agreement

Any Part or item procured under this Purchase Contract which contains or was manufactured with an ozone depleting chemical as defined in the Montreal Protocol Agreement must include the following warning statement on the airbill/bill of lading, and the applicable invoice(s)/Packing list(s) for U.S. Customs entry purposes (for a shipment containing multiple Parts or invoices/Packing lists, the above documents must indicate to which Parts the warning statement applies):

"WARNING: This shipment no.______ containsor was manufactured

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	with, a substance which harms public and the environment by
	destroying the ozone in the upper atmosphere."
	Toxic Substance Control Act (TSCA)
	The import of any shipment that actually contains or consists of a chemical substance must be coordinated with Spirit in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic
	Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants, protectorants, paint, packaging materials)
	Supplier will provide MSDS (Material Safety DataSheet,Ref –
	29CFR1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination.
	Note: Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies.
	Superfund Amendments and Reauthorization Act Of 1986 (SARA)
	Compliance with Title III of SARA you are required to furnish to Spirit the following additional information above and beyond that which is required by
	29CFR 1910.1200 in the form of Material Safety Data Sheets (MSDS). The following additional information must be provided with the initial shipment of each product to Spirit , Hazardous Materials Management M/C K06-94, P.O.
	BOX 780008; Wichita, Kansas 67278-0008 each calendar year.
	1)          A statement that the chemical material is or is not subject to reporting under Section 313 of the SARA Title III and 40 CFR
	372.45.
	2)          The name of each chemical component of the product and the associated chemical abstracts service registry number.
	3)Percent by weight of each chemical component of the product shipped."
411	Environmental Protection
	Supplier must comply with all laws, statutes, decrees,treaties, regulations, orders, directives or norms of the United States, Canada or the European Union with respect to environmental protection or quality

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	as they relate to the work performed under this Purchase Contract.
416	Returnable Containers
	Returnable containers are to be returned to                                                                                          via.
	Returnable containers shall be plainly marked or stenciled with Spirit‟s Purchase Order number, Supplier’s name, address and amount of deposit on outside of each returnable container.
419	Spool Labels
	Each spool must be marked or labeled with the following information: Spirit Purchase Order Number, manufacturer's name, and address, lot number, date of manufacture, wire gauge, length in feet, military or other material specification number and revision, Spirit material code, and vendor or Spirit Part number.
431	Tubing Labels
	Tubing 1/2-inch or smaller in diameter, or with wall thickness less than .029 inch shall have a tag on each end, bearing the required identification as outlined in SAE-AMS-STD-184, except each piece must be identified.
458	Bar Stock Labels
	All bars, rods, shapes, tubes, and forgings shallbemarkedwith the specification, heat lot number, size, and mill name or original manufacturer.
460	Packaged Assembly Labels
	Supplier will include all components of an assembly in a single Package, putting in that Package only those components in correct quantities, which make up that assembly whenever that assembly does not ship as a single unit.
461	Divert Shipments
	This is a divert shipment. Supplier must reference Spirit, Purchase Order number and Part number as shown below on Packing list: Purchase Contract/Purchase Order No.                                                                                  , Item. Packing list and freight bill (proof of shipment) must be sent to the Spirit Procurement Agent at the time of shipment.
462	Identification Marking Of Aluminum, Magnesium, And Titanium

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

Material may be marked per SAE-AMS-STD-184 or a minimum of one complete set of identification markings may appear on the top side ends of the material.

463	Skid Dimensions
	Minimum skid length to be 9 ft., including runners.Maximum skid width including packing material used to cushion cargo to be 50". Material larger than 4ft. x 9ft. to be on appropriate size skid to protect material.
464	Shipment Of Electronic Products
	Electrical/electronic Products shall be Packaged in the original manufacturer's container or if repackaged shall be in a container equivalent to the original manufacturers. Equivalent Package as a minimum shall prevent damage to the Products including, but not limited to, bending of leads or contamination by dust or moisture. The shipping containers shall be labeled with a highly visible label on at least one side. This label shall identify the container as containing electrical/electronic items.
465	Test And Evaluation
	Apply in red block letters "Released for test only" adjacent to or directly underneath engineering Part mark.
466	Packing Slips/ASNs
	All Packing Slips and any paperwork (which has not been submitted electronically) associated with parts and materials must be placed on the OUTSIDE of the shipping container and marked as PACKING SLIP. All ASNs must be placed on the OUTSIDE of the shipping containers.
	PROPERTY
501	Commercial Tooling ± Supplier¶Vq1aliUyVRe\15eTenUs
	Supplier’s quality system shall maintain records to assure compliance with all the requirements, processes and flows in accordance with STM-130030-1 „Spirit Tooling Requirements‟. All quality checks, verifications, and records shall be presented with the Spirit Certified Tool List. These quality records shall support the validations of the Quality Manager and Officer of the Company‟s signature for compliance statement on the Spirit Certified Tool List and/or Tool Usage List.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

A.            Record Requirements

1.Each tool shall have a tool fabrication order indicating specific

tool fabrication instructions per Spirit‟s applicable tooling manual and engineering drawing. Supplier’s inspection stamp affixed to show compliance and acceptance of completed tool.

B.            Manufacturing Records

1.Supplier’s manufacturing plan shall provide traceability for

verification of need, function, and usage for each tool listed on the Spirit Certified Tool List.

C. Design Records

1.Supplier’s Quality Assurance shall verify the maintenance of the

following tool engineering data per Spirit‟s STM-130030-1, Tooling Requirements, Section 10.

a.         one complete set of reproducible drawings submitted to

Buyer

b.         one complete set of reproducible drawings retained with

tool

D. Tool Designs

1.             In order to maintain tool design standards, it is mandatory that

tool designs be governed by the requirements of Spirit tooling manuals, engineering drawings or equivalent approved standards.

2.             Supplier’s Quality Assurance shall verify that all tool designs be

governed by Spirit AeroSystems, Inc tooling standards.

3.Supplier’s Quality Assurance shall verify all Supplier tool

designs have been approved by Spirit‟s Tool Design organization:

a.            for master tooling,

b.            for all major or final stage tools controlled by master

tooling,

c.            for tools that control interchangeability or replaceability

items,

d.            for all tools used as media for quality acceptance that

have tool design requirements,

e.for all tools used for periodic and configuration control.

E.Tool Fabrication

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

1.Supplier’s Quality Assurance shall verify and inspect progressively any feature of the tool that cannot be inspected after tool is complete. 2.           Maintain and retain all progressive inspection record as required (ref. E.1 above). 3.Inspect and verify all tool tryouts or tool proving. F.Identification of Accountable Tools Supplier’s Quality Assurance shall verify all tools are identified per Spirit‟s STM-130010-23, Tool Identification. 1.        No tool will be considered complete that is not properly identified and accepted by Quality Control. 2.        Supplier’s Quality Assurance shall verify acceptable parts or assemblies have been produced by all tooling and affix steel quality acceptance stamp in tool tryout space. Note:If tool tryout is not required, stamp “NR” beside inspection acceptance stamp. 3.Supplier’s Quality Assurance shall verify the latest engineering drawing revision or tool drawing revision. G.Certified Tool List 1.           Supplier’s Quality Assurance shall verify the completeness and accuracy of each tool on the Spirit Certified Tool List. 2.           Supplier’s Quality Assurance manager shall sign and/or use their quality acceptance stamp to validate compliance to all Spirit‟s STM-130030-1, Tooling Requirements, as stated in upper right hand section of the Spirit Certified Tool List. Signature of an Officer of the company is also required. 3.           Supplier shall have a rework tool order to show specific rework instructions have been completed and Supplier’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per Spirit‟s STM-130010-23, Tool Identification. 4.           Supplier’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer‟s Quality Assurance for validation.

502

Mylars Spirit will furnish all necessary mylars or photo templates of Engineering

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	Layouts and/or tooling master layouts required by the Supplier in accomplishing the work called for by this Purchase Contract/Purchase Order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Supplier shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Spirit documents STM-130030-1 and STM130020-1, and upon acquisition or manufacturer by Supplier and before the same is used, becomes the property of/or controlled by Spirit
503	Spirit Property
	All special tooling as defined in STM-130030-1 and STM130020-1 covered by this Purchase Contract/Purchase Order shall, upon acquisition or manufacture by Supplier and before the same is used, become the property of/or controlled by Spirit. Any use of this tooling for other than Spirit work, or before scrapping, must have written consent from Spirit.
504	Use of Spirit Tooling
	Supplier shall use any and all Tooling only for the purpose of performing its obligations under this Purchase Contract/Purchase Order and shall not sell, lease or otherwise dispose of any Tooling. Supplier shall, on behalf of Spirit as the owner thereof obtain and maintain in effect insurance in respect of all Supplier-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Spirit,). Supplier shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Spirit, in respect of any Tooling, under this order.
505	Customer Tooling
	Design,              fabrication,                                handling,                                   storage,accountability,maintenance, and disposition of Customer owned tooling, furnished by Spirit in support of this order or fabricated by Supplier as directed in this order, shall be in strict accordance with Spirit Documents STM-130030-1 and STM130020-1, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Spirit.
506	Tooling Costs
	Supplier shall absorb all costs associatedwithnon-accountable tooling manufactured and/or purchased by Supplier necessary for the manufacture and

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. Supplier shall not use tools, which contain, convey, embody, or were made in accordance with or by reference to any Proprietary Information and Materials of Spirit, to manufacture parts for anyone other than Spirit without the prior written authorization of Spirit.
507	Contractor-Use Tooling and Common-Use Tooling
	Supplier shall provide at no cost to Spirit on Spirit‟s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Supplier or its subcontractors in accordance with Spirit Document STM130030- 1, or, subject to Spirit review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Spirit as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	Control and Accountability for Tooling
	Supplier shall control and account for all Tooling in accordance with the provisions of Spirit Document STM130030-1 or, subject to Spirit review and approval(not to be unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Spirit-Use Tooling until delivery thereof to Spirit and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Spirit or delivery to Spirit or Spirit's designee. All Existing Tooling shall remain identified with its identification tag containing the Spirit Lifetime Serial Number of such Tooling. Supplier shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Spirit Lifetime Serial Number of each such Tool. Spirit Lifetime Serial Numbers will be provided to Supplier by Spirit.
509	Certified Tool List
	Supplier shall prepare a list or lists ("Certified Tool List") in accordance with Spirit Document STM130030-1 or, subject to Spirit review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Spirit shall request. Supplier shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Supplier shall promptly submit each initial Certified Tool List to Spirit. Supplier shall subsequently submit from time to time

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	as specified by Spirit new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	Discrepant Tooling
	With respect to Existing Tooling and New Tooling, and in the event Spirit furnishes Tooling to Supplier, Supplier shall conform to the standards and requirements of Spirit Document STM130030-1. Spirit shall notify Supplier of any action required for discrepant Tooling.
511	Accountable Tooling
	Accountability for tooling fabricated on this Purchase Order will be transferred to Blanket Accountable,Tooling Order T-on receipt of a properly
	prepared Certified Tool List (F08-04605). The Certified Tool List is to be signed by an officer of the Supplier's Quality Control representative, by a Spirit resident inspector, if available and a Government Source Inspector, if required and returned to Spirit as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Spirit PQA and proof acceptable parts were produced from the tooling.
514	Returned Tooling
	When returning Spirit -furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Tooling Rework
	Payment for rework of tooling as specified under this order is to be as follows: Supplier shall, upon completion of the rework specified hereunder, forward to Spirit, an original and one copy of a Tool Usage List, F08-04605, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Spirit PQA and proof acceptable parts were produced from the reworked tooling.
518	Pattern Of Die Equipment
	Supplier shall not use pattern of die equipment purchased on this order for manufacture of product for anyone other than Spirit without prior approval of Spirit.
519	Rework Or Replacement Of Dies

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	Spirit must be notified of any rework or replacement of dies subsequent to the original qualification of this forging.
525	Supplier Banked Material
	A. Supplier Banked Material (SBM) applies to all Positions and Part Numbers. B. Material, includingbut not limited to raw material,standards, detail components and assemblies, furnished to Supplier by Spirit shall be administered in accordance with Supplier Banked Material Agreement (SBMA) # xxxxxxxxxx DATED xx/xx/xxxx C. Material and or processing furnished by the Spirit is not included in the purchase price of items on this. D. The allowablescrap rate for theSBM items onthis Purchase Contract/Purchase Order is XX percent.Any scrap in excess of this amount will be the responsibility of the Supplier. E.Supplier shall provide Spirit with required on-dock dates for all material. Supplier's notice shall provide Spirit with sufficient time to competitively acquire the material if, in its sole and absolute discretion, it desires to do so.
	QUALITY
	System Requirements
601	AS9100
	Supplier is required to maintain a Quality System in compliance with AS9100 – Quality Management Systems – Aerospace – Requirements as outlined in section titled “Certification / Registration Body” (Note 610)
602	AS9003
	Supplier is required to maintain a Quality System in compliance with AS9003 – Inspection and Test Quality System.
603	Limited Approval/Adequate Quality System
	Supplier must maintain an adequate quality system to provide the supplies and services that meet the requirements of this purchase document and all applicable specifications and/or engineering drawings. All work performed under this Purchase Contract/Purchase Order shall be in

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	accordance with said quality system which shall be adequate to control the product(s) and assure that it conforms to the type design and is safe for operation.
605	AS9120 Supplier is required to maintain a Quality System in compliance with AS9120 – Quality Management Systems – Aerospace – Requirements for Stockist Distributors.
606	AS9006 Supplier is required to maintain a Quality System in compliance with AS9006 – Quality Management Systems – Aerospace – Requirements for Software.
610	Certification / Registration Body / NADCAP
	Spirit recognition of Supplier’s AQMS certification/registration does not affect the right of Spirit to conduct audits and issue findings at the Supplier’s facility. Spirit reserves the right to provide Spirit-identified quality system findings, associated quality system data, and quality performance data to the Supplier’sCertification /Registration Body (CRB). Supplier shall ensure the following relative to AQMS certification: 1. The certification/registration body (CRB) is accreditedtoperform aerospace quality management system (AQMS) assessments. 2.The CRB must use approved auditors and operate in accordance with the corresponding International Aerospace Quality Group (IAQG) certification/registration scheme. NOTE: IAQG sanctioned certification/registration schemes include but are not limited to AIR 5359, SJAC 9010, TS157, etc. Reference IAQG website for listing of accredited CRBs: http://www.iaqg.sae.org/servlets/index?PORTAL_CODE=IAQG 3.The Supplier maintains objective evidence of CRB certification/registration on file at Supplier’s facility. Objective evidence shall include: a. The accredited AQMS certificate(s) of registration; b. The audit report(s), including all information pertaining to the audit results in accordance with the applicable certification/registration scheme;

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

c. Copies of all CRB finding(s), objective evidence of acceptance of corrective action(s), and closure of the finding(s).

NOTE: Certification records shall be maintained in accordance with Spirit specified contractual quality record retention requirements.

4.The CRB services agreement provides for “right of access” to all CRB records by Spirit applicable accreditation body, applicable Registrar Management Committee (RMC) and other regulatory or government bodies for the purpose of verifying CRB certification/registration criteria and methods are in accordance with the applicable IAQG certification/registration scheme.

5.The CRB has Supplier’s written permission to provide audit results/data to IAQG membership as required by the applicable IAQG certification/registration scheme.

6.Spirit will be immediately notified in writing should the Supplier’scertification/registration be suspended or withdrawn, or accreditation status of Supplier’s CRB is withdrawn.

7.Spirit-identified findings and Supplier’s quality performance data will be provided to the CRB during certification/registration and surveillance activity.

8.CRB shall be provided access to applicable proprietary data (including Spirit proprietary data) to the extent necessary to assess Supplier’scompliance to AQMS requirements.

9.CRB shall agree to keep confidential and protect Spirit proprietary information under terms no less stringent than Supplier’s contractual agreement with Spirit. Supplier will assure that such information is conspicuously marked “SPIRIT AEROSYSTEMS PROPRIETARY”.

10. Supplier will comply with all CRB requirements imposed to issue and maintain certification/registration.

NADCAP:

Special Process Suppliers will be required to secure NADCAP accreditation. The special processes to which NADCAP applies are as follows;

Heat Treatment

Welding / Brazing

Materials Test Laboratories

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	·Non-Conventional Machining ·Coatings ·Non-Destructive Test Composites ·Chemical Processing Surface Enhancement
	Inspection Requirements
619	First Article Inspection
	As applicable, FAI‟s shall be performed by the Supplier. The FAI will be conducted in accordance AS9102, Aerospace First Article Inspection Requirements and (when required) customer approved FAI plans. Any changes to the FAI plans by the Supplier will require Spirit and/or customer approval prior to conducting the FAI. Spirit utilizes a web based quality module known as Net-Inspect (www.netinspect.com) for the purpose of performing and recording FAI‟s in
	accordance with AS9102 and (when required) customer approved FAI plans. This system shall also be used by the Supplier to submit FAI reports to Spirit electronically. The use of this system will require Supplier to have computer access, a web connection, (preferably high speed), and a document scanner at no additional cost to Spirit. The web-based quality module will be provided at no additional cost to Supplier when used on Spirit‟s Product. Supplier’s use of this system shall be at no additional cost to Spirit. Supporting documents shall be provided within FAI reports (attached PDF Files). Supporting documents shall consist of but are not limited to, material certifications, process certifications, bubble drawings, acceptance data reports, acceptance test results, production planning and or any other documentation related to the FAI product being inspected. Delta FAI‟s shall have applicable supporting documentation as necessary. A copy of the AS9102 standard can be obtained through the Society of Automotive Engineers (SAE) at the following website address: http://www.sae.org
621	Buyer (Spirit) First Article Inspection
	Buyer (Spirit) First Article Inspection (BFAI) – BFAI activity is required at the Supplier’s facility prior to shipment.Supplier shall notify Spirit to schedule a comparable inspection and coordinate therequired inspection/verification

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	activity.Subsequent engineering, inspection, manufacturing or tooling changes for specific characteristics will require the Supplier to notify Spirit. At the minimum, Supplier shall make the following available in support of the BFAI for the article being reviewed: 1. The applicable Purchase Contract,material/process certifications, manufacturing and inspection records; 2. The applicable design data; 3. The applicable documented configuration baseline and configuration summary; 4. The applicable Material Review Board (MRB) actions; 5. The applicable acceptance and qualification test results; 6. The record of Spirit approval for supplier drawing and test procedures; 7.Completed Supplier First Article Inspection (SFAI) documentation. Spirit utilizes a web based quality module known as Net-Inspect (www.netinspect.com) for the purpose of performing and recording FAI‟s
	in accordance with AS9102 and (when required) customer approved FAI plans. This system shall also be used by the Supplier to submit FAI reports to Spirit electronically. The use of this system will require Supplier to have computer access, a web connection, (preferably high speed), and a document scanner at no additional cost to Spirit. The web-based quality module will be provided at no additional cost to Supplier when used on Spirit‟s Product. Supplier’s use of this system shall be at no additional cost to Spirit. Supporting documents shall be provided within FAI reports (attached PDF Files). Supporting documents shall consist of but are not limited to, material certifications, process certifications, bubble drawings, acceptance data reports, acceptance test results, production planning and or any other documentation related to the FAI product being inspected. Delta FAI‟s shall have applicable supporting documentation as necessary. A copy of the AS9102 standard can be obtained through the Society of Automotive Engineers (SAE) at the following website address: http://www.sae.org
622	Buyer (Spirit) Source Acceptance
	Buyer (Spirit) Source Acceptance (BSI) - BSI is required for items procured on this purchase document prior to shipment from the Supplier’s facility. Acceptance may include in-process activities such as processing, fabrication,

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	witnessing of testing and/or final inspection.Supplier shall provide the Spirit Quality representative with a copy of this purchase order, applicable drawings, specifications and changes thereto, and such other information as may be required. Supplier shall provide the necessary use of the Supplier’s facility and equipment to perform the inspection. Unless Buyer (Spirit) Source Acceptance has been delegated, in writing, by the procuring site, Supplier shall contact the Spirit Quality Representative who services the facility.
623	FAA Conformity Inspection And Certification
	FAA and/or Foreign Civil Airworthiness Authority (FCAA) conformity inspection and certification is required for items procured on this Purchase Document. Supplier shall contact the local FAA/FCAA representative for inspection and certification. Unless otherwiseindicated, in writing,the conformity inspectionshall be performed at the Supplier or Subcontractor point of manufacture as deemed necessary to verify product conformance to the type design. Supplier shall include the original FAA Form 8130-9 and FAA Form 8130-3 with the shipment. Foreign government equivalents to FAA Form 8130-3 are acceptable for imported product. For a Supplier locatedin a country without aUnitedStates bilateral airworthiness agreement, the FAA may elect to conduct the inspection in accordance with paragraph 2 above, or upon arrival of the product in the U.S. Supplier shall contact their procurement quality assurance focal for FAA Conformity coordination.
624	Delegated Authority
	Delegation Authority – The Supplier is authorized to inspect product(s) identified for this Purchase Document line item on behalf of the contracting Spirit site‟s Quality assurance organization. Spirit Quality Assurance reserves the right to conduct product integrity audits, quality system assessments, verify Supplier’sconformance to contracting Spirit site‟s delegation program requirements and to revoke delegation authorization(s).
625	Acceptance of Detail Parts
	Final Product Acceptance for all detail parts and/or assemblies must include 100% inspection of temper (Conductivity and Rockwell Hardness) for aluminum

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	alloys, and 100% Rockwell Hardness inspection for steel and CRES alloys. Inspection of temper must be accomplished after the final machining operation on fully tempered material and/or the final heat treatment operation, where applicable. The required range must be listed along with the range of measured values at the appropriate place on each work order and, where applicable, be transferred from process certifications. For clad materials, the type of instrument used to verify compliance must also be listed. Sampling of hardness inspections may be allowed for certain alloys or tensile ranges if permitted by the governing customer documents or the corresponding heat treatment specification.
626	Functional Test
	Functional Test – Identify the parts that have successfully passed function test requirements by stamping “FT” and the date the test was accomplished. These markings will be applied in a color contrasting to the part and of a size consistent with the part configurations. If Spirit witness of test(s) is required, supplier shall notify Spirit a minimum of five (5) days in advance of such test(s).
628	Certificates of Conformance
	If certifications are required they shall be submitted electronically to Spiritgoods@spiritaero.com OR in paper format with product and packing slip.
	Materialsshall be certified to theirapplicablespecifications. Quality requirements within those material specificationsmust be met regarding submission of inspection / test report requirements.Any process that requires customer approval shall list the approved processor.Any approved process whichrequires documentation as definedbytheprocessor support specification shall be included. (Examples: ultrasonic inspection, penetrant inspection, etc.) 1) Suppliers utilizing the electronic documentation system will be exempt from providing a paper copy of those documents with shipment. 2)Original copies of all quality data and certifications must be kept on file at the Supplier’s location. 3)Suppliers are still required to include a copy of the packing slip with the shipment. When providing certifications through the Aerospac process – notate on the front of the packing slip „Documentation on file in AEROSPAC‟.”
	Documentation / Shipping

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

631	X-Rays And Photos
	Radiographic film and grain flow photos, when required by engineering drawing or reference specifications, shall be sent to Spirit AeroSystems, Inc., for review and acceptance. Send X-rays and photos directly to: SPIRIT AEROSYSTEMS, INC., RECEIVING INSPECTION 4555 E. MACARTHUR, GATE 14E WICHITA, KS 67210 Please reference production Purchase Order number on the shipping package.
632	After Market / Spares
	After Market / Spares — Supplier is required to provide copy of completed First Article Inspection Report, manufacturing planning, and material and processing certs with first shipment of parts.
633	Design Proposal Approval
	Withhold shipment until higher than Design Proposal Approval has been granted by Spirit, except those submitted for First Article Inspection.
635	Limitation On Re-Used Equipment And Materials
	Unless this order specifies otherwise, Supplier represents that, all equipment, material and articles to be furnished under this Purchase Contract/Purchase Order are new (not used or reconditioned) and are not of such age or so deteriorated as to impair their usefulness or safety.
	Repair Station
640	AS9110 Supplier is required to maintain a Quality System in compliance with AS9110 – Quality Maintenance Systems — Aerospace — Requirements for Maintenance Organizations.
641	Rework/Repair
	When the certificate involves rework/repair performed under FAR Part 145, the Serviceable Parts Tag shall identify the FAA Repair Station number and shall be signed by an authorized inspector. The Supplier shall provide a description of

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	the work accomplished when the part is returned to a Spirit Repair Station."
642	Airworthiness Certification
	This article requires an airworthiness certificate executed by the Supplier’scountry airworthiness authority or their authorized designee. Supplier shall contact the airworthiness authority representative that normally services the Supplier’s facility to arrange for the application of the airworthiness certificate. It is the Supplier’s responsibility to meet any special import requirements of the country to which the part is shipped. Supplier may contact Spirit‟s Procurement Agent for further assistance as required.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

ADMINISTRATIVE/GENERAL

001

ITAR Requirements This Purchase Contract/request for quote includes items or technologies that are covered by the Munitions List and are therefore subject to the International Traffic In Arms Regulations (ITAR), 22 CFR 120-130.  Accordingly you are prohibited from exporting technical data to a foreign person without authorization from the U.S. State Department.  It is the responsibility of the recipient of this Purchase Contract/request to ensure their compliance with all applicable U.S. export regulations. As part of Supplier’s written solicitation response, Supplier shall confirm, in connection with the effort related to the Spirit prospective procurement, 1.     It is not a representative of a foreign interest (RFI) and 2.     It will not employ foreign persons on the effort related to this Spirit procurement 3.     It is a US firm incorporated under US law. Supplier agrees to comply with all applicable U.S. export control laws and regulations, specifically including, but not limited to, the requirements of the Arms Export Control Act, 22 U.S.C.2751-2794, including the International Traffic in Arms Regulation (ITAR), 22 C.F.R. 120 et seq.; and the Export Administration Act, 50 U.S.C. app. 2401-2420, including the Export Administration Regulations, 15 C.F.R. 730-774; including the requirement for obtaining any export license or agreement, if applicable. Without limiting the foregoing, Supplier agrees that it will not transfer any export controlled item, data, or services, to include transfer to foreign persons employed by or associated with, or under contract to Supplier or Supplier’s lower-tier suppliers, without the authority of an export license, agreement, or applicable exemption or exception. Supplier must comply with ITAR, part 122.1 Registration requirements (a), Any person who engages in the United States in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register with the Office of Defense Trade Controls. For the purpose of this subchapter, engaging in the business of manufacturing or exporting defense articles or furnishing defense services requires only one occasion of manufacturing or exporting a defense article or furnishing a defense service. Manufacturers who do not engage in exporting must nonetheless register. Supplier shall immediately notify the Spirit Procurement Agent if Supplier’s firm is, or becomes, listed in any Denied Parties List or if Supplier’s export privileges are otherwise denied, suspended or revoked in whole or in part by any U.S. Government entity or agency.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

003

Fab Service Procurement The invoice and Packing slip shall include the shipping document number, order number, Purchase Order number and Purchase Order item number. Any overtime or expedite charges must have prior approval by the Service Procurement Pa (PA). Supplier to return all Spirit -furnished containers.  Each shipment must be processed as soon as possible and returned to Spirit Behind schedule items will be coordinated with Supplier by Spirit for expeditious handling.  Please contact Spirit if circumstance arises that precludes prompt return of Parts.

005

Liquidated Damages In the event of a Non-Excusable Delay in delivery (any delay other than those excusable delays as defined in Spirit’s General Provisions, Excusable Delay Section), Spirit may, at Spirits option, accept products that are not delivered on or before the required delivery date. Delay is further defined to include failure to maintain the Minimum level of the Min/Max inventory methodology as set out in PF-502, “Consumption Based Ordering Guidelines”. The parties acknowledge, however, that Supplier would be liable for all additional costs incurred by Spirit because of such delay(s), which may include, by way of illustration and not of limitation: Ÿadditional expense related to administrative costs, Ÿtelecommunication costs, Ÿadditional or premium transportation charges, Ÿspecial handling expenses, and Ÿvarious anticipated and unanticipated costs to install the products out of the normal manufacturing sequence. The Parties further acknowledge that the nature and actual amount of costs associated with delivery delay are uncertain and difficult to calculate. Therefore, Spirit may choose, in its sole discretion, to require Supplier to pay Spirit liquidated damages.  The parties acknowledge that such payments are not intended as a penalty, but are, in lieu of the actual damages measured by such costs. If Spirit chooses to recover liquidated damages, they shall be equal to 1 % of the value of the delinquent items per day of delay or a minimum of $100 for each item per day of delay.  The parties agree this calculation represents a reasonable estimate of the additional costs to be incurred by Spirit in connection with a delivery delay. Accumulation of liquidated damages will be subject to a grace period of five (5) days per item after which liquidated damages shall begin. Spirit’s choice to recover such liquidated damages for delayed delivery on any one or more occasions shall not, however, preclude Spirit from recovering the actual costs incurred because of delayed delivery on any other occasion. Spirits exercise of rights under this provision shall not preclude Spirit from exercising its option to terminate this Purchase Contract/Purchase Order for an Event of Default by Supplier as provided in Spirit General Provisions form PF-550, Cancellation for Default Section, even if Supplier has (a) paid such liquidated or actual damages to Spirit on prior occasions, or (b) if repeated incidents of late deliveries in the aggregate (or a single significant incident of delay) materially adversely affect Spirit’s ability to enjoy the bargained for benefits of this Purchase Contract/Purchase Order on an ongoing basis.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

007

Vendor Owned Inventory All items on the Purchase Contract/Request for Quote identified as Vendor Owned Inventory shall be administered in accordance with PF-200, Supplemental Terms for Vendor Owned Inventory.  Payment terms for VOI items shall be ___________.”

019

Indemnification 1.0INDEMNIFICATION 1.1Indemnification, Negligence of Supplier.  Supplier shall defend, indemnify and hold harmless Spirit AeroSystems, Inc., its subsidiaries, and their directors, officers, employees and agents (hereinafter referred to as “Indemnities”) from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards and damages, of any kind and nature whatsoever (hereinafter referred to as “Claims,” for property damage, personal injury or death (including without limitation claims brought by and liabilities to, including injury or death to employees of Supplier or any Subcontractor) and expenses, costs of litigation and reasonable attorney’s fees related thereto, or incident to establishing the right to indemnification, to the extent such Claims arise from any negligent act or omission or willful misconduct of Supplier or any Subcontractor or their employees arising out of or in any way related to the presence on Spirit ‘s premises of Supplier, any Subcontractor or their employees, including without limitation the provision of services, personnel, facilities, equipment, support supervision or review. In no event shall Supplier’s obligations hereunder be limited to the extent of any insurance available to or provided by the Supplier. 1.2Waiver of Immunity, Industrial Insurance.  Supplier will not assert as a defense to this indemnification obligation any immunity under workers’ compensation statues, industrial insurance, or other source, and Supplier expressly waives any immunity to the extent of the indemnity set forth in Paragraph 1.1 “Indemnification, Negligence of Supplier.” 1.3Indemnification, Subcontractors.  Supplier shall require each Subcontractor to provide an Indemnity, enforceable by and for the benefit of the Indemnities, to the same extent required of Supplier stated under Paragraphs 1.1 “Indemnification, Negligence of Supplier” and 1.2 “Waiver of Immunity, Industrial Insurance.” 2.0INSURANCE REQUIREMENTS 2.1Commercial General Liability.  Throughout the period of performance of this contract and until final acceptance by Spirit, Supplier shall carry and maintain, and shall ensure that all Subcontractors carry and maintain Commercial General Liability Insurance with limits of not less than One Million Dollars ($1,000,000) per occurrence for bodily injury, including death and One Million Dollars ($1,000,000) per occurrence for property damage or alternatively, One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage combined. Such insurance shall be in a form and with insurers acceptable to Spirit, and shall contain coverage for all premises and operations, broad form damage, contractual liability (including, without limitation, that specifically assumed herein), and products and completed operations insurance. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier. 2.2Automobile Liability.  If licensed vehicles will be used in connection with the performance of this contract, Supplier shall carry and maintain, and shall ensure that any Subcontractor who uses a licensed vehicle in connection with the performance of this contract, carries and maintains, throughout the period of performance of this contract, Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed or otherwise, with limits of liability of not less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage. Such insurance shall be in a form and with insurers acceptable to Spirit. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier. 2.3Workers’ Compensation & Employer’s Liability.  Throughout the period of performance of this contract and until final acceptance by Spirit, Supplier shall cover or maintain insurance, and shall ensure that all Subcontractors cover or maintain insurance, in accordance with the applicable laws relating to Workers’ Compensation, with respect to all of their respective employees working on or about Spirit’s premises, regardless of whether such coverage or insurance is mandatory or merely elective under the law. Throughout the period when work is performed and until its final acceptance by Spirit, Supplier shall also carry and maintain, and ensure that all Subcontractors carry and maintain, Employer’s Liability coverage with limits of not less than One Million Dollars ($1,000,000) each accident.  To the extent permitted by law, any policy or policies which provide any of the insurance required by this Paragraph 2.3, “Workers’ Compensation & Employer’s Liability,” shall contain a Waiver of Rights of Subrogation against Spirit, its subsidiaries and their directors, officers and employees.  If Spirit AeroSystems, Inc. is required by any applicable law to Pay Workers’ Compensation premiums with respect to employees of Supplier or any Subcontractor, Supplier shall reimburse Spirit for such Payment.  Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier. 2.4Certificates of Insurance 1.Prior to the commencement of the period of performance, Supplier shall provide for Spirit’s review and approval Certificates of Insurance reflecting full compliance with the requirements set forth in Paragraphs 2.1 “Commercial General Liability,” 2.2 “Automobile Liability,” and 2.3 “Workers’ Compensation.” Such Certificates shall: a)be kept current and in compliance with throughout the period of performance and until final acceptance by Spirit (and for two [2] years thereafter for products and completed operations liability); b)provide for thirty (30) calendar days advance written notice to Spirit in the event of cancellation or material change adversely affecting the interests of Spirit; and c)identify the cognizant SCM Representative and list Spirit as the certificate holder. 2.Any policy or policies providing the insurance under Paragraph 2.0, “Insurance Requirements,” may be inspected by Spirit upon request. 3.Where Supplier is subject to the requirements of a “monopolistic” state which does not permit insured workers’ compensation, a written letter confirming participation in a state fund or, alternatively, confirming a state approved self-insurance program, will satisfy the certificate requirement.  Such letter will identify the State account or self-insured number.  For Employer’s Liability coverage in such monopolistic states, evidence of “Stop Gap” endorsement to the General Liability policy is acceptable proof of compliance with the Employer’s Liability insurance requirement. 4.Self-Assumption.  Any self-assured layer, deductibles and exclusions in coverage in the policies required under this Paragraph 2.0, “Insurance Requirements,” shall be assumed by for the account of and at the sole risk of Supplier or the Subcontractor which provide the insurance and to the extent applicable shall be paid by such Supplier or Subcontractor.  In no event shall the liability of Supplier of Subcontractor be limited to the extent of any of the minimum limits of insurance required under Paragraph 2.0 “Insurance Requirements.” General Liability policy is acceptable proof of compliance with the Employer’s Liability insurance requirement.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

020	Raw Material Order Confirmation Within thirty (30) days after receipt of Purchase Contract/Purchase Order, Supplier shall confirm to Spirit order placement for raw material. Confirmation shall include raw material identification, supplier, Purchase Order number and date, quantity ordered, and the supplier committed delivery schedule.
021	Operational Detail Report Within                      days after receipt of purchase order, Supplier shall furnish to Spirit a copy of Supplier’s planning showing detailed operations in sequence. Said planning shall include the estimated flow time for each detailed operation.
036	Obligation to Purchase and Sell Spirit and Supplier agree that in consideration of the prices set forth in this Purchase Contract, Spirit shall issue orders for products from time to time to Supplier for all of Spirit’s requirements.  Such products shall be shipped at any scheduled rate of delivery, as determined by Spirit, and Supplier shall sell to Spirit, Spirit’s requirements of such products, provided that, without limitation on Spirit ‘s right to determine its requirements, Spirit shall not be obligated to issue any orders for any given product if: 1.           Any of Spirit ‘s customers specifies an alternate product; 2.           Such product is, in Spirit’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; 3.           Spirit gives reasonable notice to Supplier of a change in any of Spirit’s manufactured product which will result in Spirit no longer requiring such product for such manufactured product, 4.           Supplier has materially defaulted in any of its obligations under any order, whether or not Spirit has issued a notice of default to Supplier pursuant to Spirit General Provisions, PF-550, ‘Cancellation for Default’ Section 5.           Spirit reasonably determines that Supplier cannot support Spirit’s requirements for products in the amounts and within the delivery schedules Spirit requires. 6.           Spirit gives at least six (6) months notice to Supplier that the product is used in the manufacturing of an airplane component, assembly or other product previously manufactured in-house by Spirit and which component, assembly or other product Spirit has resourced to a third party supplier. 7.           Spirit gives at least ninety (90) days notice to Supplier of Spirit’s decision to manufacture the products itself rather than purchase the products from Supplier. Supplier represents and warrants to Spirit 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. Any planning schedule, forecast, or any such quantity estimate provided by Spirit shall be used solely for production planning.  Spirit may purchase products in different quantities and specify different delivery dates as necessary to meet Spirit’s requirements.  Any such estimate shall be subject to adjustment from time to time, and such adjustment shall not constitute a change under Spirit General Provisions, PF-550 ‘Changes’ Section
037	Fab Service Procurement Damaged Shipments Shipments you receive F.O.B. destination, or F.O.B. your plant for our account, which are in noticeably bad condition when delivered to you by the carrier: 1.           Note condition of shipment on carrier’s delivery receipt and on copy of freight bill retained by your Receiving Department. 2.           Immediately request carrier inspection on the shipment and retain a copy of the carrier’s inspection report. 3.           If carrier waives inspection, note your copy of the freight bill with the date, name of the carrier representative who waived inspection and a statement that carrier waived inspection. Shipments received in apparent good condition but found to contain concealed damage: 1.           Stop unpacking immediately as soon as damage is found. 2.           Retain all container and packing material. 3.           Request carrier inspection and retain a copy of carrier’s inspection report. Contact Spirit’s Traffic Coordinator for further instructions as soon as damage to any of the above type shipments is discovered.
043	Anti-Kickback Procedures Supplier agrees to abide by the Anti-Kickback Act of 1986 (41 U.S.C. 51 through 58) and FAR 52.303-7.  “Anti-Kickback Procedures,” except that subparagraph (c)(1) of FAR 52.203-7 shall not apply to Supplier, and further that in subparagraphs (c)(2), (c)(3), and (c)(5), the term “Contractor” shall mean Supplier, and in subparagraph (c)(4) the term “Prime Contractor” shall mean Spirit AeroSystems, Inc. and the term “Subcontractor” shall mean Supplier.  In addition to reporting possible violations of the Anti-Kickback Act to the Government pursuant to 41 U.S.C. 57, Supplier shall report such possible violations, if related to Spirit, to the Director of SCM and/or the Division Counsel of the Spirit, Division or subsidiary issuing this purchase order (PO). In addition to any other remedies that Spirit may have, Supplier shall defend Spirit against all claims and procedures based upon actual or alleged violations of the Anti-Kickback Act of 1986 and any amendment thereof; and Supplier shall indemnify and hold Spirit harmless from any losses, damages, liabilities, costs, and expenses including but not limited to, losses of profits, expenses of litigation, attorney’s fees, penalties or fines, suspensions or reductions of progress payments, and all losses arising out of contract terminations, suspensions or debarments of Spirit, resulting from a violation of the Anti- Kickback Act of 1986 and any amendment thereof, by Supplier, any of its officers, partners, employees, agents, or any subcontractors at any tier below Supplier or such subcontractor’s employees. If the Government, pursuant to FAR 52.203-7, directs the Spirit to withhold sums owed the Supplier, the Spirit shall be entitled to do so and the Spirit may, if ordered to do so, pay said money over to the Government and the Spirit shall not be responsible to pay the said money to the Supplier but Supplier shall remain responsible for performance of the contract.
044	Consumption Based Ordering This Purchase Contract/Purchase Order is subject to the requirements of Spirit, form PF-502, Consumption Based Ordering Guidelines, current revision, incorporated herein by reference.
046	Program Manager Supplier will assign a full-time program manager whose exclusive responsibility will be to oversee and manage Supplier’s performance hereunder.  The assignment of such program manager will be subject to Spirit’s approval.
049	Cost and Performance Visibility When requested by Spirit, Supplier shall provide all necessary cost support data, including source documents for direct and indirect costs, on Spirit Form PF-270, and assistance at the Supplier’s facility in support of cost and performance analysis and reviews performed by the parties.
050	Computation of Equitable Adjustment The Rates and Factors set forth below shall be used to determine the equitable adjustment, if any, to be paid by Spirit pursuant Spirit, General Provisions, Form PF-550, Changes Section. 1.        Direct Labor Rate                                            $ 2.        Manufacturing Burden                                           % 3.        G&A (Gen. Admin. Expense)% 4.       Profit                                           % 5.        Total Rate                                           $
051	Reporting Requirements Supplier shall furnish to Spirit, at intervals, or until such time as Spirit considers the report no longer necessary, a complete status report of work accomplished in manufacture of product(s) covered by this contract.  Reports will be mailed each showing progress through the preceding period.  Status reports shall include, but are not limited to, the following topics: 1.Delivery schedule updates, schedule impact issues and corrective action; 2.Technical/manufacturing progress since the previous report period, including significant accomplishments, breakthroughs, problems and solutions; 3.Identification of changes to key manpower or staffing levels; 4.Identification of the critical events/activities expected within the next month and a discussion of potential risk factors; 5.Progress on open Action Items, including closure dates; 6.Purchased components and raw material status; 7.Identification of Quality issues and resolutions; 8.Manufacturing and Quality inspection progress of First Article products; 9.Status on tool design and fabrication, as applicable, until completion; 10.Inventory status of castings and forgings procured by Supplier (if applicable). In Addition to the above required Status Reports, within twenty-four (24) hours of known problem to Supplier, Supplier shall provide a detailed Problem Report, notifying Spirit of program problems/issues that could impact Supplier’s ability to deliver products on time and otherwise in conformance with the terms of this contract.  Problem reports shall be submitted to the Spirit’s Procurement Representative. Submittal of a Status Report or Problem Report in no way relieves Supplier of any obligations under the Purchase Contract/Purchase Order nor does it constitute a waiver of any rights and remedies Spirit may have with respect to any default.
063	Acknowledgment of Change to Purchase Order No charge or claim is involved and therefore Supplier does hereby remise, release and discharge Spirit AeroSystems, Inc., its officers, agents and employees, of and from all liabilities, obligations, claims or demands whatsoever as a result of this Changed Purchase Order/Purchase Contract.  Please sign and return one copy of this Changed Purchase Order/Purchase Contract Acknowledgement.
064	Acknowledgement of Change to Purchase Order Supplier, by accepting this Changed Purchase Order, does hereby remise, release and discharge Spirit, its officers, agents, and employees, of and from all liabilities, obligations, claims, and demands whatsoever as a result of this Changed Purchase Order, unless Supplier files with Spirit, Spirit, a proper termination proposal (Spirit Form F08-04597) pursuant to and within the time limits allowed per Spirit General Provisions (PF-550) Termination for Convenience Section.
065	Milestone Reporting Within thirty (30) days after award of Purchase Contract/Purchase Order, Supplier must submit to Spirit, a milestone schedule reflecting all significant milestones, such as 1.        raw material ordering and receipt, 2.        planning, 3.        tool design and fabrication, 4.        each manufacturing operation, 5.        processing, 6.        inspection and shipment of finished Parts. All milestones are to be time-phased and a complete status report comparing actuals to targets must be submitted to Spirit on the first of each month.
066	Limitations on Disclosure of Technical Data Supplier agrees that subject to the other data provisions of this contract any technical data furnished to Spirit by Supplier may be furnished to associate contractors for and in connection with this program.  Any technical data furnished to Spirit by Supplier shall only be furnished to associate contractors upon Supplier’s written approval and shall only be used for and in connection with this Purchase Order/Purchase Contract for coordination and interface control.
067	Option to Extend Term of Purchase Contract/Purchase Order Supplier grants to Spirit an option to extend the period of performance of this Purchase Contract as set forth below.  Spirit may exercise the option by written notice to the Supplier on or before (insert a date). This option may be exercised by Spirit any number of times so long as each option increases the period of performance of this contract by no less than (insert a number of months or years).  However, in no event may Spirit unilaterally extend the contract beyond (insert a date) by exercise of this option. Notwithstanding the option set forth herein, Spirit reserves the right to commence new negotiations with Supplier concerning pricing and other terms for additional quantities of Products.
097	Supplier Import Compliance When Spirit AeroSystems, Inc. is the Importer of Record, Supplier is required to submit a copy of a Commercial Invoice, prior to each shipment of product, and ensure that the Packing slip accompanying the product matches the Commercial Invoice. In the case of “American Goods Returned” or “Returned After Repair or Alteration”, Supplier is to include the foreign shipper’s declaration, shipper’s repair declaration, manufacturer’s declarations as applicable. Product that is subject to United States Department of State International Traffic In Arms Regulations (ITAR) should not be combined with non ITAR product. Supplier is to provide a separate Commercial Invoice and make shipment on a separate house or master air bill. Supplier represents and warrants that the copy provided to Spirit will be a true copy of the Commercial Invoice that will accompany shipment. The true copy of the Commercial Invoice must be emailed or faxed to: Spirit AeroSystems, Inc. Email Address: grpimportcompliance@spiritaero.com Fax Number: 1-316-529-7956 Attn: Import Administration NOTE: Failure to comply with these requirements shall be a material breach of contract and grounds for default pursuant to the Cancellation for Default clause of this contract. 1.Commercial Invoice Requirements a.Must be in English b.Must be legible c.Purchase Order Number Provide the current Purchase Order or Purchase Contract number (P.O. XXXXXX), if applicable. d.Location and Names of Supplier/and or Shipper, Spirit and Date i.Date when the merchandise is sold or agreed to be sold. When goods being imported are not sold or agreed to be sold to Spirit, the shipping/Customs invoice should be noted, accordingly, complete with an explanation. ii.Merchandise Shipment Date (month, day, year) Provide the date that the merchandise shipped from the Suppliers factory or facility. iii.Name and address of the Supplier (Company name and address) and/or name and address of the Shipper, if the Supplier is not the Shipper. iv.Name and Contact information for an employee, employed by the Supplier and/or Shipper, who has detailed knowledge of the sales transaCtI911. v.Name and address of the Spirit location, and name and phone number of prime point of contact at the Spirit site (i.e.: Pa, etc.) vi.Name of Consignee if not the Spirit (Company receiving non-purchased transactions or drop ship destination). e.Record the United States Port of Entry where merchandise is to be cleared by CBP f.Quantities, weights and measures i.Record the quantity of each Part number in the shipment ii.If not separately noted on Packing sheet(s) include on invoice: •Total quantity of Parts being shipped •Provide net weight of each Part number and gross weight of entire shipment •Specify unit of measure being used •Specify the total number of boxes included per packing sheet. •Textiles must specify the net gross weights and the length, width and total square meters of material. g.Provide a detailed description of each item being shipped to ensure proper product classification per the Harmonized Tariff Schedule (HTS) and must include at a minimum: i.The full name by which each item is known ii.Part Number as appears on Purchase Order/Contract. If the item is a raw material, provide the material grade, class and dimensions. Notes: •Generic descriptions, abbreviations, acronyms, and Stock Keeping Unit (SKU) numbers are not acceptable. •Spirit may request additional description information for items that do not have a Part number and/or design or when the appropriate HTS number cannot be determined from the provided description. •Supplier will provide material class, grade, dimensions and assembly components if Part is manufactured by Supplier’s own manufacturing drawings. h.Country of Origin: indicate the country of manufacture of each item. i.Terms of Sale: Specify the International Commercial Terms of Sale (Incoterms) as agreed to per the Spirit Contract on the invoice or Spirit Work Authorization. j.Specify “Related Party to the Spirit” status (Yes or No) on the invoice. k.Commercial Invoice Number (Supplier’s Option) l.Page numbers are required for each invoice (example: of Pages). m.Bolt Seals: All shipping documents must reflect the bolt seal number being used for ocean shipments loaded into dedicated containers. All bolt seals used must be those issued to the supplier by Spirit Aerosystems in order to comply with C-TPAT requirements. 2.Commercial Invoice Valuation Requirements a.Must be complete and accurate, including the unit cost of each Part and the total value of the entire shipment. b.Currency on all invoices must reflect the actual currency of the purchase contract and the transaction of money between the Spirit and the Supplier. c.List separately any Assists and/or Additional costs used for manufacturing each Part. For example: ŸAssists: Any components, materials, dies molds and tools that are supplied by the Spirit free of charge or at a reduced cost to the Supplier, and used in the production of imported goods.  This includes any Spirit Paid transportation costs associated with the assist. These transportation costs will be provided by the procurement focal responsible for this merchandise. ŸCosts for tooling, etc., built or supplied, directly or indirectly, and used in the production or manufacture, by the manufacturer of the goods being imported into the United States, and not included in the purchase order unit price. ŸEngineering and Design work — Work that is performed outside the U.S. by Non-U.S. employees, and is not included in the unit price of the merchandise being imported. ŸPacking Costs — Costs for Packing that are incurred by the Spirit and have not been included in the unit cost. ŸNon-recurring charges — One time charges, incurred by the Spirit, for such items as, expedite fees and transportation costs, which have not been included in the unit cost. ŸSelling Commissions — Commissions incurred by Spirit that have not been included in the unit cost. ŸRoyalties — Fees the Spirit is required to pay as a condition of sale. d.List all discounts that have been agreed to, or may be allowed, that apply to the purchase price or value, but have not been included in the unit price (Terms of Payment). e.Repaired or modified Parts — separately enter the value of the item and the value of the repair on the invoice. For “no charge” repair, show the value of the repair on invoice. f.If Supplier receives any rebates, drawbacks or bounties, as a result of exportation, please itemize and provide description. 3.           Packing Sheet\slip (if used by supplier) a.Include Packing sheet\slip number(s) on invoice 4.U.S. Government Programs Only (Regardless of Business Units) a.If a government contract applies, the prime contract number must be noted on the commercial invoice. Additionally, the following government contract statement needs to be shown as follows for Military Programs. “United States Dept. of Defense Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Sub-chapter VIII, item 9808.00.3000 of the Harmonized Tariff Schedules to The United States.  Upon arrival of shipment at the port of entry, District Director of Customs, please release shipment under Section 19 CFR Part 142 and notify Commander, Defense Contract Management Area Operations (DCMAO) New York, for execution of customs forms and any required duty free entry certificates.” b.Commercial Invoice must show that the shipment is consigned to a U.S. Government Agency (i.e.: U.S. Department of Defense) in “care of Spirit”, if shipment has a prime contract number. c.If items were exported on a license or exemption upon importation, that license or exemption information should be notated as follows: Example: “Originally exported under DSP-XX license number XXXXXX” or “Imported under 22 CFR XXXXX” ADDITIONAL IMPORT NOTES: Part Marking All items furnished under this contract/order, unless excepted by law, must be legibly marked with the English name of the country of origin per U.S. Customs Regulation 19 CFR 134 Country of Origin Marking.  Markings are to be legible, indelible, and as permanent as the nature of the article or container will allow. Chemical Content Additionally, the import of any shipment that actually contains or consists of a chemical substance must be coordinated with Spirit in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants, protectorants, paint, packaging materials) Supplier will provide MSDS (Material Safety Data Sheet, Ref – 29CFR1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination. Note:  Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies. NAFTA If the Products under this Order qualify for preferential duty treatment under the North American Free Trade Agreement (NAFTA), the Supplier must provide Spirit’s Import Compliance group with a valid NAFTA Certificate of Origin (C/O), in order for the Product to be eligible for preferential duty treatment at the time of Customs entry. If the Products under this Order qualify for preferential duty treatment under the North American Free Trade Agreement (NAFTA), the Supplier must provide Spirit’s Import Compliance group with a valid NAFTA Certificate of Origin (C/O), in order for the Product to be eligible for preferential duty treatment at the time of Customs entry. Supplier acknowledges that the C/O will be used by Spirit as proof of eligibility for preferential duty treatment, and agrees to provide full cooperation to Spirit for any U.S. or foreign Customs inquiries into preferential duty claims that arise out of any Article furnished under this Order. Should Spirit be fined and/or penalized by the aforementioned Customs entities, for invalid data on the NAFTA C/O provided by Supplier, Supplier agrees to reimburse Spirit upon request for the fines and/or penalties as well as Spirit’s expenses in connection therewith. Unless Spirit requests individual C/O for each shipment, Supplier may provide annual blanket C/O to cover multiple shipments during the calendar year. Supplier shall immediately notify Spirit in writing of any changes in the eligibility of the Products for preferential duty treatment. Part number additions to the NAFTA C/O will be requested periodically by Spirit. Supplier will fully review all applicable part numbers to ensure they qualify for NAFTA preferential duty treatment, before sending Spirit a copy of the updated NAFTA C/O. Importer Security Filing (ISF 10+2) Ocean Shipments When import cargo is arriving in the United States by ocean vessel, Supplier must submit data elements necessary for Spirit to comply with U.S. Customs and Border Protection (CBP) ISF requirements. In the event CBP shall issue fines, penalties, and or liquidated damages for violations attributable to Spirit for the submission of inaccurate, incomplete, or untimely filing, then Supplier shall be liable for such costs and will indemnify and hold Spirit harmless from and against such claims, losses, liabilities, damages, penalties, costs and expenses arising out of or in connection with Supplier’s failure to provide Spirit timely, accurate, or complete data. Penalties may consist of $5,000.00 per violation and may result in shipments being held at Customs. Data will be submitted: a.           No later than 4 business days prior to loading cargo onto the ocean vessel at the foreign port of export. b.           On a spreadsheet containing the following data elements: 1.           Manufacturer Name and address 2.           Ship-to-Party (Consignee) Name and address 3.           Part number, description, and manufacturer’s Country of Origin of each part 4.           Supplier Name and Address 5.           Supplier Name and Address (if different from Supplier) 6.           Buyer Name and Address 7.           Container Stuffing Location 8.           Consolidator Name and Address 9.           Estimated Sailing Date 10.           Freight Forwarder bill of lading number c.           Via e-mail to Spirit’s Import Department and Spirit’s Broker, DHL Ÿgrpimportcompliance@spiritaero.com Ÿtim.cottam@dhl.com Ÿlori.rinard@dhl.com Ÿvictoria.watson@dhl.com Ÿjane.johnson@dhl.com Sublect line of the e-mail will contain the date the spreadsheet is sent (MM DD) Customs – Trade Partnership Against Terrorism (C-TPAT) C-TPAT is an initiative between business and government to protect global commerce from terrorism and increases the efficiencies of global transportation.  The program calls for importers, carriers and brokers to establish policies to enhance their own security practices and those of their business partners involved in their supply chain.  Such practices may include but are not limited to the following: 1.Procedural Security – Procedures in place to protect against unmanifested material being introduced into the supply chain. 2.Physical Security – Buildings constructed to resist intrusion, perimeter fences, locking devices and adequate lighting; 3.Access Controls – Positive identification of all employees, visitors and suppliers; 4.Personnel Security – Employment screening, background checks and application verifications; 5.Education and Training Awareness – Security awareness training, incentives for participation in security controls. Carrier or International Freight Forwarder must be C-TPAT certified in order to transport Spirit shipments across U.S. borders, and must maintain C-TPAT certification. Carrier or international freight forwarder‟s loss of C-TPAT certification will be grounds for termination. International Freight Forwarder also agrees to use C-TPAT certified carriers, local cartage companies and others involved with the transport and handling of Spirit shipments. In the absence of C-TPAT certified transport and handling providers, carrier or international freight forwarder may use companies that have agreed in writing to follow the C-TPAT Supply Chain Security Guidelines. If no C-TPAT certified carriers or carriers that have agreed to follow the C-TPAT Supply Chain Security Guidelines are available to move Spirit’s shipment, carrier or international freight forwarder will notify Spirit immediately.
	PRICING
115	Estimated Price The unit price(s) shown in this Purchase Order/Purchase Contract is only an estimated price. Advise the Spirit of the firm price as soon as possible.
118	Precious Metal The precious metal (gold, silver, platinum) surcharge will be an upward or downward adjustment computation based on material content factor of _____ times the difference between the base price of _____ and the current value of the precious metal. The current value will be the value listed in the Wall Street Journal dated _____ and this value will be computed on the _____.
119	Rework Cost Supplier may disassemble the herein described article(s) and shall immediately quote price of rework or repair and the current replacement price.  Supplier shall not proceed with rework until receipt of a change order authorizing the rework cost.  Price will be finalized within 60 days of the date of this Purchase Order.
121	Expedite Cost The expedite charge will be paid if acceptable parts in the quantity stated are produced and shipped to Spirit, or Spirit’s designated location, on or before.
122	Maximum Liability for Equitable Adjustment Spirit’s maximum liability for an equitable adjustment resulting from a decrease in quantity or termination of Product(s) shall be limited to costs directly attributable to 1.           _____ days raw material and 2.           _____ days finished Products worth of scheduled deliveries of the Products. For purposes of this Note, scheduled deliveries shall be determined by the applicable schedule in effect at the time Supplier commenced work on the Product(s) that are the subject of the termination or decrease.
129	Change to Cost or Pricing Data Supplier shall submit cost or pricing data as required by Form PF-270 “Cost Breakdown Form” for each change when the total amount of the proposed additions and/or deletions to the price combined is $100,000 or more.
131	Die Service Charges Die service charges are considered a fee, not a purchase price. Considerations acceptable to Spirit in Payment of such fees being (A)           That title, ownership, possession and control of all equipment produced hereunder shall vest in Supplier, (B)           That Supplier shall store, maintain and where necessary because of wear, loss or damage, replace such equipment, without further cost to Spirit, until final disposition of such equipment has been agreed to between Spirit and Supplier, (C)           hat Supplier shall not dispose of such equipment until three (3) consecutive years of inactivity has Passed, and not then without first giving at least thirty (30) days written notice of intention and receiving Spirit’s written approval to do so.
132	License Agreement This Purchase Contract/Purchase Order is subject to the terms and conditions (__________) of License Agreement effective date (__________).
133	Set-Up Charges The item price(s) on this Purchase Order is/are based on Spirit Paying one setup charge for one lot run with the entire quantity to be shipped per Spirit shipping schedule.  In the event of a shortage situation, the requested quantity of material is to be shipped within 3 days of notification. Spirit, under the terms of this Purchase Contract/Purchase Order, may not change the quantity of any item, on the Purchase Order. Spirit further agrees to accept the outstanding balance of any item within one calendar year from the date of the first shipment of that item. Spirit may at no cost, revise both the quantity per ship schedule and the scheduled ship dates, with a minimum of one-week notice.
136	Price Increase Petitions All petitions for price increase must: 1.Be in writing; 2.Provide at least thirty (30) days advance written notification.  Notification shall commence on the postmarked date of a correctly addressed letter to Spirit’s designated representative; 3.Be accompanied by detailed cost data substantiating the petitioned increase; 4.Any price revision(s) shall be passed through as a percentage price change equal to the percentage change in Supplier’s delivered commodity/service cost.  No additional markup for profit on the incremental price increase will be accepted by Spirit; 5.Spirit’s procurement agent shall have the right to negotiate all proposed price increases and may delete specific line items or terminate the contract upon failure to mutually agree to a proposed price revision; 6.In the event a price increase is incorporated into a contract, all billing shall be at the price in effect at the time of purchase order/requirements placement, not at the time of shipment/performance; 7.Spirit’s acceptance of a price revision (increase/decrease) shall be confirmed only through a fully executed revision to the contract.
138	Obsolete Material Supplier may not submit a claim for obsolete material or product resulting from an individual change order that has a total claim value of Two Thousand Five Hundred Dollars ($2,500.00) or less.
139	Claims Prior to Engineering Release (Drawing Revision Level New) Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, (PF-550), Changes Section, no equitable adjustment in the prices or schedules of any order shall be made for any change initiated by Spirit 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 Spirit (“100% Engineering Release”) provided, that an equitable adjustment shall be made for: 1.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 Section are changes within a raw material classification such as a change from 7050 Aluminum to 7075 Aluminum; 2.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 the receipt of 100% Engineering Release by the Supplier. Claims Subsequent to Engineering Release Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, (PF-550), Changes Section no equitable adjustment shall be made to the recurring or non-recurring prices after the date of 100% Engineering Release for any change initiated by Spirit 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 this contract. For purposes of this section, the then current unit price or total nonrecurring price shall be the price identified elsewhere in this contract 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.
	DELIVERY/PACKAGING
401	Skid Identification Maximum weight of each skid shall not to exceed 4,000 pounds gross.  Skids must be identified by heat lot number with only one heat lot per skid.
402	Distributor Requirements For products provided by a distributor, each product furnished must include the legal name of the product manufacturer on each Packing sheet immediately following the part number.
406	Multiple Shipments The material on this order shall be identified and separated by the lot number appearing on the Package and Packing slips. For shipments with more than one lot number to a carton, the Supplier is required to segregate materials according to their specific lot numbers.
410	Hazardous Material Requirements Material Data Specification Sheet Supplier will comply with the hazard communication standard, 29CFR1910-1200, if applicable. Supplier will include a Material Safety Data Sheet (MSDS) with the initial shipment of a hazardous material each calendar year and route an additional copy of the MSDS to; Spirit AeroSystems, Inc. P.O. Box 780008 M/C K06-94 Wichita, KS 67278-0008 ATTN: EH&S Hazardous Materials Gatekeeper The revision number and date must be displayed prominently on the MSDS. Supplier is also required to provide an MSDS to the address above in the event of a change in brand, a change in chemical composition, or a new / substitute chemical shipment; any change information shall be communicated to the Spirit immediately. Routing, Packaging, Labeling, and Marking Routing, packaging, labeling, and marking of hazardous material for shipment via common carrier, authorized to handle the material, shall be in accordance with title 49 of the Code of Federal Regulations (CFR), Parts 100 to 199; the International Civil Aviation Organization (ICAO) “technical instructions for the safe transport of dangerous goods by air”; the International Air Transportation Association (IATA) “dangerous goods regulations”; the International Maritime Dangerous Goods (IMDG) code; and all other applicable international, federal, state, and local regulations. Clean Air Act Warnings/Notices Warning statements for products containing or manufactured with ozone depleting chemicals as required by the Clean Air Act Amendments of 1990, Section 611, 40 CFR Part 82, should not be applied directly on the Parts or items.  Warning statements are to be included in a separate document, such as the bill of lading, shipment papers or other proper notification that complies with the referenced regulation and accompanies the shipment. Montreal Protocol Agreement Any Part or item procured under this Purchase Contract which contains or was manufactured with an ozone depleting chemical as defined in the Montreal Protocol Agreement must include the following warning statement on the airbill/bill of lading, and the applicable invoice(s)/Packing list(s) for U.S. Customs entry purposes (for a shipment containing multiple Parts or invoices/Packing lists, the above documents must indicate to which Parts the warning statement applies): “WARNING: This shipment no.______ contains _________ or was manufactured with ____________, a substance which harms public and the environment by destroying the ozone in the upper atmosphere.” Toxic Substance Control Act (TSCA) The import of any shipment that actually contains or consists of a chemical substance must be coordinated with Spirit in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants, protectorants, paint, packaging materials) Supplier will provide MSDS (Material Safety Data Sheet, Ref – 29 CFR 1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination. Note: Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies. Superfund Amendments and Reauthorization Act Of 1986 (SARA) Compliance with Title III of SARA you are required to furnish to Spirit the following additional information above and beyond that which is required by 29CFR 1910.1200 in the form of Material Safety Data Sheets (MSDS).  The following additional information must be provided with the initial shipment of each product to Spirit, Hazardous Materials Management M/C K06-94, P.O. BOX 780008; Wichita, Kansas 67278-0008 each calendar year. 1)A statement that the chemical material is or is not subject to reporting under Section 313 of the SARA Title III and 40 CFR 372.45. 2)The name of each chemical component of the product and the associated chemical abstracts service registry number. 3)Percent by weight of each chemical component of the product shipped.”
411	Environmental Protection Supplier must comply with all laws, statutes, decrees, treaties, regulations, orders, directives or norms of the United States, Canada or the European Union with respect to environmental protection or quality as they relate to the work performed under this Purchase Contract.
416	Returnable Containers Returnable containers are to be returned to _______ via _______. Returnable containers shall be plainly marked or stenciled with Spirit’s Purchase Order number, supplier’s name, address and amount of deposit on outside of each returnable container.
419	Spool Labels Each spool must be marked or labeled with the following information: Spirit Purchase Order Number, manufacturer’s name, and address, lot number, date of manufacture, wire gauge, length in feet, military or other material specification number and revision, Spirit material code, and vendor or Spirit Part number.
431	Tubing Labels Tubing 1/2-inch or smaller in diameter, or with wall thickness less than .029 inch shall have a tag on each end, bearing the required identification as outlined in SAE-AMS-STD-184, except each piece must be identified.
458	Bar Stock Labels All bars, rods, shapes, tubes, and forgings shall be marked with the specification, heat lot number, size, and mill name or original manufacturer.
460	Packaged Assembly Labels Supplier will include all components of an assembly in a single Package, putting in that Package only those components in correct quantities, which make up that assembly whenever that assembly does not ship as a single unit.
461	Divert Shipments This is a divert shipment.  Supplier must reference Spirit, Purchase Order number and Part number as shown below on Packing list: Purchase Contract/Purchase Order No. _____, Item _____. Packing list and freight bill (proof of shipment) must be sent to the Spirit Procurement Agent at the time of shipment.
462	Identification Marking of Aluminum, Magnesium, and Titanium Material may be marked per SAE-AMS-STD-184 or a minimum of one complete set of identification markings may appear on the top side ends of the material.
463	Skid Dimensions Minimum skid length to be 9 ft., including runners.  Maximum skid width including packing material used to cushion cargo to be 50”.  Material larger than 4ft. x 9ft. to be on appropriate size skid to protect material.
464	Shipment of Electronic Products Electrical/electronic Products shall be Packaged in the original manufacturer’s container or if repackaged shall be in a container equivalent to the original manufacturers. Equivalent Package as a minimum shall prevent damage to the Products including, but not limited to, bending of leads or contamination by dust or moisture.  The shipping containers shall be labeled with a highly visible label on at least one side.  This label shall identify the container as containing electrical/electronic items.
465	Test and Evaluation Apply in red block letters “Released for test only” adjacent to or directly underneath engineering Part mark.
466	Packing Slips/ASNs All Packing Slips and any paperwork (which has not been submitted electronically) associated with parts and materials must be placed on the OUTSIDE of the shipping container and marked as PACKING SLIP.  All ASNs must be placed on the OUTSIDE of the shipping containers.
	PROPERTY
501	Commercial Tooling – Supplier’s Quality Requirements Supplier’s quality system shall maintain records to assure compliance with all the requirements, processes and flows in accordance with STM-130030-1 “Spirit Tooling Requirements”.  All quality checks, verifications, and records shall be presented with the Spirit Certified Tool List.  These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Spirit Certified Tool List and/or Tool Usage List. A.Record Requirements 1.Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Spirit’s applicable tooling manual and engineering drawing. Supplier’s inspection stamp affixed to show compliance and acceptance of completed tool. B.        Manufacturing Records 1.Supplier’s manufacturing plan shall provide traceability for verification of need, function, and usage for each tool listed on the Spirit Certified Tool List. C.        Design Records 1.Supplier’s Quality Assurance shall verify the maintenance of the following tool engineering data per Spirit’s STM-130030-1, Tooling Requirements, Section 10. a.one complete set of reproducible drawings submitted to Buyer b.one complete set of reproducible drawings retained with tool D.           Tool Designs 1.In order to maintain tool design standards, it is mandatory that tool designs be governed by the requirements of Spirit tooling manuals, engineering drawings or equivalent approved standards. 2.Supplier’s Quality Assurance shall verify that all tool designs be governed by Spirit AeroSystems, Inc tooling standards. 3.Supplier’s Quality Assurance shall verify all Supplier tool designs have been approved by Spirit’s Tool Design organization: a.for master tooling, b.for all major or final stage tools controlled by master tooling, c.for tools that control interchangeability or replaceability items, d.for all tools used as media for quality acceptance that have tool design requirements, e.for all tools used for periodic and configuration control. E.           Tool Fabrication 1.Supplier’s Quality Assurance shall verify and inspect progressively any feature of the tool that cannot be inspected after tool is complete. 2.Maintain and retain all progressive inspection record as required (ref. E.1 above). 3.Inspect and verify all tool tryouts or tool proving. F.           Identification of Accountable Tools Supplier’s Quality Assurance shall verify all tools are identified per Spirit’s STM-130010-23, Tool Identification. 1.No tool will be considered complete that is not properly identified and accepted by Quality Control. 2.Supplier’s Quality Assurance shall verify acceptable parts or assemblies have been produced by all tooling and affix steel quality acceptance stamp in tool tryout space. Note: If tool tryout is not required, stamp “NR” beside inspection acceptance stamp. 3.Supplier’s Quality Assurance shall verify the latest engineering drawing revision or tool drawing revision. G.           Certified Tool List 1.Supplier’s Quality Assurance shall verify the completeness and accuracy of each tool on the Spirit Certified Tool List. 2.Supplier’s Quality Assurance manager shall sign and/or use their quality acceptance stamp to validate compliance to all Spirit’s STM-130030-1, Tooling Requirements, as stated in upper right hand section of the Spirit Certified Tool List.  Signature of an Officer of the company is also required. 3.Supplier shall have a rework tool order to show specific rework instructions have been completed and Supplier’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per Spirit’s STM-130010-23, Tool Identification. 4.Supplier’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.
502	Mylars Spirit will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Supplier in accomplishing the work called for by this Purchase Contract/Purchase Order.  It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work.  Supplier shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Spirit documents STM-130030-1 and STM130020-1, and upon acquisition or manufacturer by Supplier and before the same is used, becomes the property of/or controlled by Spirit
503	Spirit Property All special tooling as defined in STM-130030-1 and STM130020-1 covered by this Purchase Contract/Purchase Order shall, upon acquisition or manufacture by Supplier and before the same is used, become the property of/or controlled by Spirit.  Any use of this tooling for other than Spirit work, or before scrapping, must have written consent from Spirit.
504	Use of Spirit Tooling Supplier shall use any and all Tooling only for the purpose of performing its obligations under this Purchase Contract/Purchase Order and shall not sell, lease or otherwise dispose of any Tooling.  Supplier shall, on behalf of Spirit as the owner thereof obtain and maintain in effect insurance in respect of all Supplier-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Spirit,).  Supplier shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Spirit, in respect of any Tooling, under this order.
505	Customer Tooling Design, fabrication, handling, storage, accountability, maintenance, and disposition of Customer owned tooling, furnished by Spirit in support of this order or fabricated by Supplier as directed in this order, shall be in strict accordance with Spirit Documents STM-130030-1 and STM130020-1, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein.  The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Spirit.
506	Tooling Costs Supplier shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Supplier necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling.  Supplier shall not use tools, which contain, convey, embody, or were made in accordance with or by reference to any Proprietary Information and Materials of Spirit, to manufacture parts for anyone other than Spirit without the prior written authorization of Spirit.
507	Contractor-Use Tooling and Common-Use Tooling Supplier shall provide at no cost to Spirit on Spirit’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Supplier or its subcontractors in accordance with Spirit Document STM130030- 1, or, subject to Spirit review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Spirit as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	Control and Accountability for Tooling Supplier shall control and account for all Tooling in accordance with the provisions of Spirit Document STM130030-1 or, subject to Spirit review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement.  This requirement shall apply to Spirit-Use Tooling until delivery thereof to Spirit and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Spirit or delivery to Spirit or Spirit’s designee.  All Existing Tooling shall remain identified with its identification tag containing the Spirit Lifetime Serial Number of such Tooling.  Supplier shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Spirit Lifetime Serial Number of each such Tool.  Spirit Lifetime Serial Numbers will be provided to Supplier by Spirit.
509	Certified Tool List Supplier shall prepare a list or lists (“Certified Tool List”) in accordance with Spirit Document STM130030-1 or, subject to Spirit review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Spirit shall request. Supplier shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Supplier shall promptly submit each initial Certified Tool List to Spirit. Supplier shall subsequently submit from time to time as specified by Spirit new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	Discrepant Tooling With respect to Existing Tooling and New Tooling, and in the event Spirit furnishes Tooling to Supplier, Supplier shall conform to the standards and requirements of Spirit Document STM130030-1.  Spirit shall notify Supplier of any action required for discrepant Tooling.
511	Accountable Tooling Accountability for tooling fabricated on this Purchase Order will be transferred to Blanket Accountable, Tooling Order T-_______ on receipt of a properly prepared Certified Tool List (F08-04605).  The Certified Tool List is to be signed by an officer of the Supplier’s Quality Control representative, by a Spirit resident inspector, if available and a Government Source Inspector, if required and returned to Spirit as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Spirit PQA and proof acceptable parts were produced from the tooling.
514	Returned Tooling When returning Spirit-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Tooling Rework Payment for rework of tooling as specified under this order is to be as follows: Supplier shall, upon completion of the rework specified hereunder, forward to Spirit, an original and one copy of a Tool Usage List, F08-04605, listing each reworked tool.  Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Spirit PQA and proof acceptable parts were produced from the reworked tooling.
518	Pattern of Die Equipment Supplier shall not use pattern of die equipment purchased on this order for manufacture of product for anyone other than Spirit without prior approval of Spirit.
519	Rework or Replacement of Dies Spirit must be notified of any rework or replacement of dies subsequent to the original qualification of this forging.
525	Supplier Banked Material A.Supplier Banked Material (SBM) applies to all Positions and Part Numbers. B.Material, including but not limited to raw material, standards, detail components and assemblies, furnished to Supplier by Spirit shall be administered in accordance with Supplier Banked Material Agreement (SBMA) # xxxxxxxxxx DATED xx/xx/xxxx C.Material and or processing furnished by the Spirit is not included in the purchase price of items on this. D.The allowable scrap rate for the SBM items on this Purchase Contract/Purchase Order is XX percent.  Any scrap in excess of this amount will be the responsibility of the Supplier. E.Supplier shall provide Spirit with required on-dock dates for all material.  Supplier’s notice shall provide Spirit with sufficient time to competitively acquire the material if, in its sole and absolute discretion, it desires to do so.
	QUALITY
	System Requirements
601	AS9100 Supplier is required to maintain a Quality System in compliance with AS9100 – Quality Management Systems – Aerospace – Requirements as outlined in section titled “Certification / Registration Body” (Note 610)
602	AS9003 Supplier is required to maintain a Quality System in compliance with AS9003 – Inspection and Test Quality System.
603	Limited Approval/Adequate Quality System Supplier must maintain an adequate quality system to provide the supplies and services that meet the requirements of this purchase document and all applicable specifications and/or engineering drawings. All work performed under this Purchase Contract/Purchase Order shall be in accordance with said quality system which shall be adequate to control the product(s) and assure that it conforms to the type design and is safe for operation.
605	AS9120 Supplier is required to maintain a Quality System in compliance with AS9120 – Quality Management Systems – Aerospace – Requirements for Stockist Distributors.
606	AS9006 Supplier is required to maintain a Quality System in compliance with AS9006 – Quality Management Systems – Aerospace – Requirements for Software.
610	Certification / Registration Body Spirit recognition of Supplier’s AQMS certification/registration does not affect the right of Spirit to conduct audits and issue findings at the Supplier’s facility. Spirit reserves the right to provide Spirit-identified quality system findings, associated quality system data, and quality performance data to the Supplier’s Certification /Registration Body (CRB). Supplier shall ensure the following relative to AQMS certification: 1.The certification/registration body (CRB) is accredited to perform aerospace quality management system (AQMS) assessments. 2.The CRB must use approved auditors and operate in accordance with the corresponding International Aerospace Quality Group (IAQG) certification/registration scheme. NOTE: IAQG sanctioned certification/registration schemes include but are not limited to AIR 5359, SJAC 9010, TS157, etc. Reference IAQG website for listing of accredited CRBs: http://www.iaqg.sae.org/servlets/index?PORTAL_CODE=IAQG 3.The Supplier maintains objective evidence of CRB certification/registration on file at Supplier’s facility.  Objective evidence shall include: a.The accredited AQMS certificate(s) of registration; b.The audit report(s), including all information pertaining to the audit results in accordance with the applicable certification/registration scheme; c.Copies of all CRB finding(s), objective evidence of acceptance of corrective action(s), and closure of the finding(s). NOTE:  Certification records shall be maintained in accordance with Spirit specified contractual quality record retention requirements. 4.The CRB services agreement provides for “right of access” to all CRB records by Spirit applicable accreditation body, applicable Registrar Management Committee (RMC) and other regulatory or government bodies for the purpose of verifying CRB certification/registration criteria and methods are in accordance with the applicable IAQG certification/registration scheme. 5.The CRB has Supplier’s written permission to provide audit results/data to IAQG membership as required by the applicable IAQG certification/registration scheme. 6.Spirit will be immediately notified in writing should the Supplier’s certification/registration be suspended or withdrawn, or accreditation status of Supplier’s CRB is withdrawn. 7.Spirit-identified findings and Supplier’s quality performance data will be provided to the CRB during certification/registration and surveillance activity. 8.CRB shall be provided access to applicable proprietary data (including Spirit proprietary data) to the extent necessary to assess Supplier’s compliance to AQMS requirements. 9.CRB shall agree to keep confidential and protect Spirit proprietary information under terms no less stringent than Supplier’s contractual agreement with Spirit.  Supplier will assure that such information is conspicuously marked “SPIRIT AEROSYSTEMS PROPRIETARY”. 10.Supplier will comply with all CRB requirements imposed to issue and maintain certification/registration.
	Inspection Requirements
619	First Article Inspection As applicable, FAI’s shall be performed by the Supplier.  The FAI will be conducted in accordance AS9102, Aerospace First Article Inspection Requirements and (when required) customer approved FAI plans.  Any changes to the FAI plans by the Supplier will require Spirit and/or customer approval prior to conducting the FAI. Spirit utilizes a web based quality module known as Net-Inspect (www.netinspect.com) for the purpose of performing and recording FAI’s in accordance with AS9102 and (when required) customer approved FAI plans.  This system shall also be used by the Supplier to submit FAI reports to Spirit electronically.  The use of this system will require Supplier to have computer access, a web connection, (preferably high speed), and a document scanner at no additional cost to Spirit.  The web-based quality module will be provided at no additional cost to Supplier when used on Spirit’s Product.  Supplier’s use of this system shall be at no additional cost to Spirit. Supporting documents shall be provided within FAI reports (attached PDF Files).  Supporting documents shall consist of but are not limited to, material certifications, process certifications, bubble drawings, acceptance data reports, acceptance test results, production planning and or any other documentation related to the FAI product being inspected.  Delta FAI’s shall have applicable supporting documentation as necessary. A copy of the AS9102 standard can be obtained through the Society of Automotive Engineers (SAE) at the following website address: http://www.sae.org
621	Buyer (Spirit) First Article Inspection Buyer (Spirit) First Article Inspection (BFAI) – BFAI activity is required at the Supplier’s facility prior to shipment.  Supplier shall notify Spirit to schedule a comparable inspection and coordinate the required inspection/verification activity.  Subsequent engineering, inspection, manufacturing or tooling changes for specific characteristics will require the Supplier to notify Spirit. At the minimum, Supplier shall make the following available in support of the BFAI for the article being reviewed: 1.The applicable Purchase Contract, material/process certifications, manufacturing and inspection records; 2.The applicable design data; 3.The applicable documented configuration baseline and configuration summary; 4.The applicable Material Review Board (MRB) actions; 5.The applicable acceptance and qualification test results; 6.The record of Spirit approval for supplier drawing and test procedures; 7.Completed Supplier First Article Inspection (SFAI) documentation. Spirit utilizes a web based quality module known as Net-Inspect (www.netinspect.com) for the purpose of performing and recording FAI’s in accordance with AS9102 and (when required) customer approved FAI plans.  This system shall also be used by the Supplier to submit FAI reports to Spirit electronically.  The use of this system will require Supplier to have computer access, a web connection, (preferably high speed), and a document scanner at no additional cost to Spirit.  The web-based quality module will be provided at no additional cost to Supplier when used on Spirit’s Product. Supplier’s use of this system shall be at no additional cost to Spirit. Supporting documents shall be provided within FAI reports (attached PDF Files). Supporting documents shall consist of but are not limited to, material certifications, process certifications, bubble drawings, acceptance data reports, acceptance test results, production planning and or any other documentation related to the FAI product being inspected.  Delta FAI’s shall have applicable supporting documentation as necessary. A copy of the AS9102 standard can be obtained through the Society of Automotive Engineers (SAE) at the following website address: http://www.sae.org
622	Buyer (Spirit) Source Acceptance Buyer (Spirit) Source Acceptance (BSI) - BSI is required for items procured on this purchase document prior to shipment from the Supplier’s facility.  Acceptance may include in-process activities such as processing, fabrication, witnessing of testing and/or final inspection. Supplier shall provide the Spirit Quality representative with a copy of this purchase order, applicable drawings, specifications and changes thereto, and such other information as may be required.  Supplier shall provide the necessary use of the Supplier’s facility and equipment to perform the inspection. Unless Buyer (Spirit) Source Acceptance has been delegated, in writing, by the procuring site, Supplier shall contact the Spirit Quality Representative who services the facility.
623	FAA Conformity Inspection And Certification FAA and/or Foreign Civil Airworthiness Authority (FCAA) conformity inspection and certification is required for items procured on this Purchase Document.  Supplier shall contact the local FAA/FCAA representative for inspection and certification. Unless otherwise indicated, in writing, the conformity inspection shall be performed at the Supplier or Subcontractor point of manufacture as deemed necessary to verify product conformance to the type design. Supplier shall include the original FAA Form 8130-9 and FAA Form 8130-3 with the shipment. Foreign government equivalents to FAA Form 8130-3 are acceptable for imported product. For a Supplier located in a country without a United States bilateral airworthiness agreement, the FAA may elect to conduct the inspection in accordance with paragraph 2 above, or upon arrival of the product in the U.S. Supplier shall contact their procurement quality assurance focal for FAA Conformity coordination.
624	Delegated Authority Delegation Authority – The Supplier is authorized to inspect product(s) identified for this Purchase Document line item on behalf of the contracting Spirit site’s Quality assurance organization. Spirit Quality Assurance reserves the right to conduct product integrity audits, quality system assessments, verify Supplier’s conformance to contracting Spirit site’s delegation program requirements and to revoke delegation authorization(s).
625	Acceptance of Detail Parts Final Product Acceptance for all detail parts and/or assemblies must include 100% inspection of temper (Conductivity and Rockwell Hardness) for aluminum alloys, and 100% Rockwell Hardness inspection for steel and CRES alloys. Inspection of temper must be accomplished after the final machining operation on fully tempered material and/or the final heat treatment operation, where applicable.  The required range must be listed along with the range of measured values at the appropriate place on each work order and, where applicable, be transferred from process certifications.  For clad materials, the type of instrument used to verify compliance must also be listed.  Sampling of hardness inspections may be allowed for certain alloys or tensile ranges if permitted by the governing customer documents or the corresponding heat treatment specification.
626	Functional Test Functional Test – Identify the parts that have successfully passed function test requirements by stamping “FT” and the date the test was accomplished.  These markings will be applied in a color contrasting to the part and of a size consistent with the part configurations.  If Spirit witness of test(s) is required, supplier shall notify Spirit a minimum of five (5) days in advance of such test(s).
628	Certificates of Conformance If certifications are required they shall be submitted to Aerospac. http://www.aerospac.com/aerospac.htm Materials shall be certified to their applicable specifications.  Quality requirements within those material specifications must be met regarding submission of inspection / test report requirements.  Any process that requires customer approval shall list the approved processor.  Any approved process which requires documentation as defined by the processor support specification shall be included.  (Examples:  ultrasonic inspection, penetrant inspection, etc.) 1)Suppliers utilizing the electronic documentation system will be exempt from providing a paper copy of those documents with shipment. 2)Original copies of all quality data and certifications must be kept on file at the supplier’s location. 3)Suppliers are still required to include a copy of the packing slip with the shipment. When providing certifications through the Aerospac process – notate on the front of the packing slip ‘Documentation on file in AEROSPAC’.”
	Documentation / Shipping
631	X-Rays and Photos Radiographic film and grain flow photos, when required by engineering drawing or reference specifications, shall be sent to Spirit AeroSystems, Inc., for review and acceptance.  Send X-rays and photos directly to: SPIRIT AEROSYSTEMS, INC., RECEIVING INSPECTION 4555 E. MACARTHUR, GATE 14E WICHITA, KS 67210 Please reference production Purchase Order number on the shipping package.
632	After Market / Spares After Market / Spares – Supplier is required to provide copy of completed First Article Inspection Report, manufacturing planning, and material and processing certs with first shipment of parts.
633	Design Proposal Approval Withhold shipment until higher than Design Proposal Approval has been granted by Spirit, except those submitted for First Article Inspection.
635	Limitation on Re-Used Equipment and Materials Unless this order specifies otherwise, Supplier represents that, all equipment, material and articles to be furnished under this Purchase Contract/Purchase Order are new (not used or reconditioned) and are not of such age or so deteriorated as to impair their usefulness or safety.
640	AS9110 Supplier is required to maintain a Quality System in compliance with AS9110 – Quality Maintenance Systems – Aerospace – Requirements for Maintenance Organizations.
641	Rework/Repair When the certificate involves rework/repair performed under FAR Part 145, the Serviceable Parts Tag shall identify the FAA Repair Station number and shall be signed by an authorized inspector.  The Supplier shall provide a description of the work accomplished when the part is returned to a Spirit Repair Station.”
642	Airworthiness Certification This article requires an airworthiness certificate executed by the Supplier’s country airworthiness authority or their authorized designee. Supplier shall contact the airworthiness authority representative that normally services the Supplier’s facility to arrange for the application of the airworthiness certificate. It is the Supplier’s responsibility to meet any special import requirements of the country to which the part is shipped. Supplier may contact Spirit’s Procurement Agent for further assistance as required.

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	ADMINISTRATIVE/GENERAL
001	ITAR Requirements
	This Purchase Contract/request for quote includes items or technologies that are covered by the Munitions List and are therefore subject to the International Traffic In Arms Regulations (ITAR), 22 CFR 120-130. Accordingly you are prohibited from exporting technical data to a foreign person without authorization from the U.S. State Department. It is the responsibility of the recipient of this Purchase Contract/request to ensure their compliance with all applicable U.S. export regulations. As part of Supplier's written solicitation response, Supplier shall confirm, in connection with the effort related to the Spirit prospective procurement, 1.          It is not a representative of a foreign interest (RFI) and 2.           It will not employ foreign persons on the effort related to this Spirit procurement 3.            It is a US firm incorporated under US law. Supplier agrees to comply with all applicable U.S. export control laws and regulations, specifically including, but not limited to, the requirements of the Arms Export Control Act, 22 U.S.C.2751-2794, including the International Traffic in Arms Regulation (ITAR), 22 C.F.R. 120 et seq.; and the Export Administration Act, 50 U.S.C. app. 2401-2420, including the Export Administration Regulations, 15 C.F.R. 730-774; including the requirement for obtaining any export license or agreement, if applicable. Without limiting the foregoing, Supplier agrees that it will not transfer any export controlled item, data, or services, to include transfer to foreign persons employed by or associated with, or under contract to Supplier or Supplier's lower-tier suppliers, without the authority of an export license, agreement, or applicable exemption or exception. Supplier must comply with ITAR, part 122.1 Registration requirements (a), Any person who engages in the United States in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register with the Office of Defense Trade Controls. For the purpose of this subchapter, engaging in the business of manufacturing or exporting defense articles or furnishing defense services requires only one occasion of manufacturing or exporting a defense article or furnishing a defense service. Manufacturers who do not engage in exporting must nonetheless register. Supplier shall immediately notify the Spirit Procurement Agent if Supplier's firm is, or becomes, listed in any Denied Parties List or if Supplier's export privileges are otherwise denied, suspended or revoked in whole or in part by any U.S.

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC.

NOTES CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL 1XX PRICING 2XX RESERVED 3XX RESERVED 4XX DELIVERY/PACKAGING/IDENTIFICATION 5XX PROPERTY 6XX QUALITY 7XX MISCELLANEOUS

	Government entity or agency.
003	Fab Service Procurement
	The invoice and Packing slip shall include the shipping document number, order number, Purchase Order number and Purchase Order item number. Any overtime or expedite charges must have prior approval by the Service Procurement Pa (PA). Supplier to return all Spirit -furnished containers. Each shipment must be processed as soon as possible and returned to Spirit Behind schedule items will be coordinated with Supplier by Spirit for expeditious handling. Please contact Spirit if circumstance arises that precludes prompt return of Parts.
005	Liquidated Damages
	In the event of a Non-Excusable Delay in delivery (any delay other than those excusable delays as defined in Spirit’s General Provisions, Excusable Delay Section), Spirit may, at Spirits option, accept products that are not delivered on or before the required delivery date. Delay is further defined to include failure to maintain the Minimum level of the Min/Max inventory methodology as set out in PF-502, “Consumption Based Ordering Guidelines”. The parties acknowledge, however, that Supplier would be liable for all additional costs incurred by Spirit because of such delay(s), which may include, by way of illustration and not of limitation: ·            additional expense related to administrative costs, ·            telecommunication costs, ·            additional or premium transportation charges, ·            special handling expenses, and ·            various                             anticipated                                  andunanticipatedcoststoinstall the products out of the normal manufacturing sequence. The Parties further acknowledge that the nature and actual amount of costs associated with delivery delay are uncertain and difficult to calculate. Therefore, Spirit may choose, in its sole discretion, to require Supplier to pay Spirit liquidated damages. The parties acknowledge that such payments are not intended as a penalty, but are, in lieu of the actual damages measured by such costs. If Spirit chooses to recover liquidated damages, they shall be equal to 1 % of the value of the delinquent items per day of delay or a minimum of $100 for each item per day of delay. The parties agree this calculation represents a

	reasonable estimate of the additional costs to be incurred by Spirit in connection with a delivery delay. Accumulation of liquidated damages will be subject to a grace period of five (5) days per item after which liquidated damages shall begin. Spirit’s choice to recover such liquidated damages for delayed delivery on any one or more occasions shall not, however, preclude Spirit from recovering the actual costs incurred because of delayed delivery on any other occasion. Spirits exercise of rights under this provision shall not preclude Spirit from exercising its option to terminate this Purchase Contract/Purchase Order for an Event of Default by Supplier as provided in Spirit General Provisions form PF­550, Cancellation for Default Section,, even if Supplier has (a) paid such liquidated or actual damages to Spirit on prior occasions, or (b) if repeated incidents of late deliveries in the aggregate (or a single significant incident of delay) materially adversely affect Spirit’s ability to enjoy the bargained for benefits of this Purchase Contract/Purchase Order on an ongoing basis.
007	Vendor Owned Inventory
	All items on the Purchase Contract/Request for Quote identified as Vendor Owned Inventory shall be administered in accordance with PF-200, Supplemental Terms for Vendor Owned Inventory. Payment terms for VOI items shall be .”
019	Indemnification And Insurance Requirements
	1.0 INDEMNIFICATION 1.1 Indemnification, Negligence of Supplier.Supplier shall defend, indemnify
	and hold harmless Spirit AeroSystems, Inc., its subsidiaries, and their directors, officers, employees and agents (hereinafter referred to as "Indemnities") from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards and damages, of any kind and nature whatsoever (hereinafter referred to as "Claims,” for property damage, personal injury or death (including without limitation claims brought by and liabilities to, including injury or death to employees of Supplier or any Subcontractor) and expenses, costs of litigation and reasonable attorney's fees related thereto, or incident to establishing the right to indemnification, to the extent such Claims arise from any negligent act or omission or willful misconduct of Supplier or any Subcontractor or their employees arising out of or in any way related to the presence on Spirit 's premises of Supplier, any Subcontractor or their employees, including without limitation the provision of services, personnel, facilities, equipment, support supervision or review. In no event shall Supplier's obligations hereunder be

limited to the extent of any insurance available to or provided by the Supplier.

1.2 Waiver of Immunity, Industrial Insurance. Supplier will not assert as a defense to this indemnification obligation any immunity under workers' compensation statues, industrial insurance, or other source, and Supplier expressly waives any immunity to the extent of the indemnity set forth in Paragraph 1.1 "Indemnification, Negligence of Supplier.”

1.3 Indemnification, Subcontractors. Supplier shall require each Subcontractor to provide an Indemnity, enforceable by and for the benefit of the Indemnities, to the same extent required of Supplier stated under Paragraphs 1.1 "Indemnification, Negligence of Supplier" and 1.2 "Waiver of Immunity, Industrial Insurance."

2.0 INSURANCE REQUIREMENTS

2.1 Commercial General Liability. Throughout the period of performance of this contract and until final acceptance by Spirit, Supplier shall carry and maintain, and shall ensure that all Subcontractors carry and maintain Commercial General Liability Insurance with limits of not less than One Million Dollars ($1,000,000) per occurrence for bodily injury, including death and One Million Dollars ($1,000,000) per occurrence for property damage or alternatively, One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage combined. Such insurance shall be in a form and with insurers acceptable to Spirit, and shall contain coverage for all premises and operations, broad form damage, contractual liability (including, without limitation, that specifically assumed herein), and products and completed operations insurance. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.2 Automobile Liability. If licensed vehicles will be used in connection with the performance of this contract, Supplier shall carry and maintain, and shall ensure that any Subcontractor who uses a licensed vehicle in connection with the performance of this contract, carries and maintains, throughout the period of performance of this contract, Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed or otherwise, with limits of liability of not less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage. Such insurance shall be in a form and with insurers acceptable to Spirit. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.3 Workers' Compensation & Employer’s Liability. Throughout the period of performance of this contract and until final acceptance by Spirit, Supplier shall

cover or maintain insurance, and shall ensure that all Subcontractors cover or maintain insurance, in accordance with the applicable laws relating to Workers' Compensation, with respect to all of their respective employees working on or about Spirit's premises, regardless of whether such coverage or insurance is mandatory or merely elective under the law.

Throughout the period when work is performed and until its final acceptance by Spirit, Supplier shall also carry and maintain, and ensure that all Subcontractors carry and maintain, Employer's Liability coverage with limits of not less than One Million Dollars ($1,000,000) each accident. To the extent permitted by law, any policy or policies which provide any of the insurance required by this Paragraph 2.3, "Workers' Compensation & Employer’s Liability,” shall contain a Waiver of Rights of Subrogation against Spirit, its subsidiaries and their directors, officers and employees. If Spirit AeroSystems, Inc. is required by any applicable law to Pay Workers' Compensation premiums with respect to employees of Supplier or any Subcontractor, Supplier shall reimburse Spirit for such Payment. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.4 Certificates of Insurance

1. Prior to the commencement of the period of performance, Supplier shall provide for Spirit's review and approval Certificates of Insurance reflecting full compliance with the requirements set forth in Paragraphs 2.1 "Commercial General Liability," 2.2 "Automobile Liability," and 2.3 "Workers' Compensation." Such Certificates shall:

a)      be kept current and in compliance with throughout the period of performance and until final acceptance by Spirit (and for two [2] years thereafter for products and completed operations liability);

b)      provide for thirty (30) calendar days advance written notice to Spirit in the event of cancellation or material change adversely affecting the interests of Spirit; and

c) identify the cognizant SCM Representative and list Spirit as the certificate holder.

2. Any policy or policies providing the insurance under Paragraph 2.0, "Insurance Requirements,” may be inspected by Spirit upon request.

3. Where Supplier is subject to the requirements of a "monopolistic" state which does not permit insured workers' compensation, a written letter confirming participation in a state fund or, alternatively, confirming a state approved self-insurance program, will satisfy the certificate requirement. Such letter will identify the State account or

	self-insured number.For Employer's Liability coverage in such monopolistic states, evidence of "Stop Gap" endorsement to the General Liability policy is acceptable proof of compliance with the Employer's Liability insurance requirement. 4.               Self-Assumption.Any self-assured layer, deductibles and exclusions in coverage in the policies required under this Paragraph 2.0, "Insurance Requirements,” shall be assumed by for the account of and at the sole risk of Supplier or the Subcontractor which provide the insurance and to the extent applicable shall be paid by such Supplier or Subcontractor. In no event shall the liability of Supplier of Subcontractor be limited to the extent of any of the minimum limits of insurance required under Paragraph 2.0 "Insurance Requirements." General Liability policy is acceptable proof of compliance with the Employer's Liability insurance requirement.
020	Raw Material Order Confirmation
	Within thirty (30) days after receipt of Purchase Contract/Purchase Order, Supplier shall confirm to Spirit order placement for raw material. Confirmation shall include raw material identification, supplier, Purchase Order number and date, quantity ordered, and the supplier committed delivery schedule.
021	Operational Detail Report
	Withindays after receipt of purchase order, Supplier shall furnish to
	Spirit a copy of Supplier's planning showing detailed operations in sequence. Said planning shall include the estimated flow time for each detailed operation.
036	Obligation To Purchase And Sell
	Spirit and Supplier agree that in consideration of the prices set forth in this Purchase Contract, Spirit shall issue orders for products from time to time to Supplier for all of Spirit's requirements. Such products shall be shipped at any scheduled rate of delivery, as determined by Spirit, and Supplier shall sell to Spirit, Spirit 's requirements of such products, provided that, without limitation on Spirit 's right to determine its requirements, Spirit shall not be obligated to issue any orders for any given product if: 1.          Any of Spirit 's customers specifies an alternate product; 2.          Such product s, in    Spirit'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; 3.          Spirit gives reasonable notice to Supplier of a change in any of Spirit's manufactured product which will result in Spirit no longer requiring such product for such manufactured product, 4.          Supplier has materially defaulted in any of its obligations under any order, whether or not Spirit has issued a notice of default to Supplier pursuant to Spirit General Provisions, PF-550, ‘Cancellation for Default’ Section 5.                Spirit                  reasonably                          determines                          that                      Suppliercannotsupport Spirit's requirements for products in the amounts and within the delivery schedules Spirit requires. 6.          Spirit gives at least six (6) months notice to Supplier that the product is used in the manufacturing of an airplane component, assembly or other product previously manufactured in-house by Spirit and which component, assembly or other product Spirit has resourced to a third party supplier. 7. Spirit gives at least ninety (90) days notice to Supplier of Spirit’s decision to manufacture the products itself rather than purchase the products from Supplier. Supplier represents and warrants to Spirit 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. Any planning schedule, forecast, or any such quantity estimate provided by Spirit shall be used solely for production planning. Spirit may purchase products in different quantities and specify different delivery dates as necessary to meet Spirit's requirements. Any such estimate shall be subject to adjustment from time to time, and such adjustment shall not constitute a change under Spirit General Provisions, PF-550 ‘Changes’ Section
037	Fab Service Procurement Damaged Shipments
	Shipments you receive F.O.B. destination, or F.O.B. your plant for our account, which are in noticeably bad condition when delivered to you by the carrier: 1.          Note condition of shipment on carrier’s delivery receipt and on copy of freight bill retained by your Receiving Department. 2.          Immediately request carrier inspection on the shipment and retain a copy of the carrier’s inspection report. 3. If carrier waives inspection, note your copy of the freight bill with the date, name of the carrier representative who waived inspection and a statement that

	carrier waived inspection. Shipments received in apparent good condition but found to contain concealed damage: 1.          Stop unpacking immediately as soon as damage is found. 2.          Retain all container and packing material. 3. Request carrier inspection and retain a copy of carrier’s inspection report. Contact Spirit’s Traffic Coordinator for further instructions as soon as damage to any of the above type shipments is discovered.
043	Anti-Kickback Procedures
	Supplier agrees to abide by the Anti-Kickback Act of 1986 (41 U.S.C. 51 through 58) and FAR 52.303-7. "Anti-Kickback Procedures," except that subparagraph (c)(1) of FAR 52.203-7 shall not apply to Supplier, and further that in subparagraphs (c)(2), (c)(3), and (c)(5), the term "Contractor" shall mean Supplier, and in subparagraph (c)(4) the term "Prime Contractor" shall mean Spirit AeroSystems, Inc. and the term "Subcontractor" shall mean Supplier. In addition to reporting possible violations of the Anti- Kickback Act to the Government pursuant to 41 U.S.C. 57, Supplier shall report such possible violations, if related to Spirit, to the Director of SCM and/or the Division Counsel of the Spirit, Division or subsidiary issuing this purchase order (PO). In addition to any other remedies that Spirit may have, Supplier shall defend Spirit against all claims and procedures based upon actual or alleged violations of the Anti-Kickback Act of 1986 and any amendment thereof; and Supplier shall indemnify and hold Spirit harmless from any losses, damages, liabilities, costs, and expenses including but not limited to, losses of profits, expenses of litigation, attorney’s fees, penalties or fines, suspensions or reductions of progress payments, and all losses arising out of contract terminations, suspensions or debarments of Spirit, resulting from a violation of the Anti- Kickback Act of 1986 and any amendment thereof, by Supplier, any of its officers, partners, employees, agents, or any subcontractors at any tier below Supplier or such subcontractor’s employees. If the Government, pursuant to FAR 52.203-7, directs the Spirit to withhold sums owed the Supplier, the Spirit shall be entitled to do so and the Spirit may, if ordered to do so, pay said money over to the Government and the Spirit shall not be responsible to pay the said money to the Supplier but Supplier shall remain responsible for performance of the contract.

044	Consumption Based Ordering
	This Purchase Contract/Purchase Order is subject to the requirements of Spirit, form PF-502, Consumption Based Ordering Guidelines, current revision, incorporated herein by reference.
046	Program Manager
	Supplier will assign a full-time program manager whose exclusive responsibility will be to oversee and manage Supplier's performance hereunder. The assignment of such program manager will be subject to Spirit's approval.
049	Cost And Performance Visibility
	When requested by Spirit, Supplier shall provide all necessary cost support data, including source documents for direct and indirect costs, on Spirit Form PF-270, and assistance at the Supplier's facility in support of cost and performance analysis and reviews performed by the parties.
050	Computation Of Equitable Adjustment
	The Rates and Factors set forth below shall be used to determine the equitable adjustment, if any, to be paid by Spirit pursuant Spirit, General Provisions, Form PF-550, Changes Section. 1.         Direct Labor Rate $ 2.         Manufacturing Burden                                                % 3.         G&A (Gen. Admin. Expense) % 4.         Profit % 5.         Total Rate $
051	Reporting Requirements
	Supplier shall furnish to Spirit, atintervals, or until such time as
	Spirit considers the report no longer necessary, a complete status report of work accomplished in manufacture of product(s) covered by this contract. Reports will be mailed each showing progress through the preceding period.
	Status reports shall include, but are not limited to, the following topics: 1.        Delivery schedule updates, schedule impact issues and corrective action; 2.        Technical/manufacturing progress since the previous report period, including significant accomplishments, breakthroughs, problems and

	solutions; 3. Identification of changes to key manpower or staffing levels; 4. Identification of the critical events/activities expected within the next month and a discussion of potential risk factors; 5. Progress on open Action Items, including closure dates; 6. Purchased components and raw material status; 7. Identification of Quality issues and resolutions; 8. Manufacturing and Quality inspection progress of First Article products; 9. Status on tool design and fabrication, as applicable, until completion; 10. Inventory status of castings and forgingsprocuredbySupplier (if applicable). In Addition to the above required Status Reports, within twenty-four (24) hours of known problem to Supplier, Supplier shall provide a detailed Problem Report, notifying Spirit of program problems/issues that could impact Supplier’s ability to deliver products on time and otherwise in conformance with the terms of this contract. Problem reports shall be submitted to the Spirit’s Procurement Representative. Submittal of a Status Report or Problem Report in no way relieves Supplier of any obligations under the Purchase Contract/Purchase Order nor does it constitute a waiver of any rights and remedies Spirit may have with respect to any default.
063	Acknowledgment Of Change To Purchase Order
	No charge or claim is involved and therefore Supplier does hereby remise, release and discharge Spirit AeroSystems, Inc., its officers, agents and employees, of and from all liabilities, obligations, claims or demands whatsoever as a result of this Changed Purchase Order/Purchase Contract. Please sign and return one copy of this Changed Purchase Order/Purchase Contract Acknowledgement.
064	Acknowledgment Of Change To Purchase Order
	Supplier, by accepting this Changed Purchase Order, does hereby remise, release and discharge Spirit, its officers, agents, and employees, of and from all liabilities, obligations, claims, and demands whatsoever as a result of this Changed Purchase Order, unless Supplier files with Spirit, Spirit, a proper termination proposal (Spirit Form F08-04597) pursuant to and within the time

	limits allowed per Spirit General Provisions (PF-550) Termination for Convenience Section.
065	Milestone Reporting
	Within thirty (30) days after award of Purchase Contract/Purchase Order, Supplier must submit to Spirit, a milestone schedule reflecting all significant milestones, such as 1.        raw material ordering and receipt, 2.        planning, 3.        tool design and fabrication, 4.        each manufacturing operation, 5.        processing, 6.        inspection and shipment of finished Parts. All milestones are to be time-phased and a complete status report comparing actuals to targets must be submitted to Spirit on the first of each month.
066	Limitations On Disclosure Of Technical Data
	Supplier agrees that subject to the other data provisions of this contract any technical data furnished to Spirit by Supplier may be furnished to associate contractors for and in connection with this program. Any technical data furnished to Spirit by Supplier shall only be furnished to associate contractors upon Supplier’s written approval and shall only be used for and in connection with this Purchase Order/Purchase Contract for coordination and interface control.
067	Option To Extend Term Of Purchase Contract/Purchase Order
	Supplier grants to Spirit an option to extend the period of performance of this Purchase Contract as set forth below. Spirit may exercise the option by written notice to the Supplier on or before (insert a date).
	This option may be exercised by Spirit any number of times so long as each option increases the period of performance of this contract by no less than (insert a number of months or years). However, in no event may Spirit
	unilaterally extend the contract beyond (insert a date) by exercise of this
	option. Notwithstanding                               the           option               set forth                     herein,              Spiritreservesthe right to commence new negotiations with Supplier concerning pricing and other terms

	for additional quantities of Products.
097	Supplier Import Compliance
	When Spirit AeroSystems, Inc. is the Importer of Record, Supplier is required to submit a copy of a Commercial Invoice, prior to each shipment of product, and ensure that the Packing slip accompanying the product matches the Commercial Invoice. In the case of "American Goods Returned" or "Returned After Repair or Alteration", Supplier is to include the foreign shipper's declaration,                                  shipper'srepair                             declaration,manufacturer'sdeclarations as applicable. Product that is subject to United States Department of State International Traffic In Arms Regulations (ITAR) should not be combined with non ITAR product. Supplier is to provide a separate Commercial Invoice and make shipment on a separate house or master air bill. Supplier represents and warrants that the copy provided to Spirit will be a true copy of the Commercial Invoice that will accompany shipment. The true copy of the Commercial Invoice must be emailed or faxed to: FH Kaysing Co. Email address:sDiritAfhkaysing.com.
	Fax Number: 1-316-721-8986 Attn: Entry processing NOTE: Failure to comply with these requirements shall be a material breach of contract and grounds for default pursuant to the Cancellation for Default clause of this contract. 1.Commercial Invoice Requirements a.       Must be in English b.       Must be legible c.       Purchase Order Number Provide the current Purchase Order or Purchase Contract number (P.O. XXXXXX), if applicable. d.       Location and Names of Supplier/and or Shipper, Spirit and Date i.                                                                                                           Date when the merchandise is sold or agreed to be sold. When goods being imported are not sold or agreed to be sold to Spirit, the shipping/Customs invoice should

be noted, accordingly, complete with an explanation.

ii.Merchandise Shipment Date (month, day, year) Provide the date that the merchandise shipped from the Suppliers factory or facility.

iii.Name and address of the Supplier (Company name and address) and/or name and address of the Shipper, if the Supplier is not the Shipper.

iv.Name and Contact information for an employee, employed by the Supplier and/or Shipper, who has detailed knowledge of the sales transaction.

v.Name and address of the Spirit location, and name and phone number of prime point of contact at the Spirit site (i.e.: Pa, etc.)

vi. Name of Consignee if not the Spirit (Company receiving non-purchased transactions or drop ship destination).

e.Record the United States Port of Entry where merchandise is to be cleared by CBP

f.Quantities, weights and measures

i.Record the quantity of each Part number in the shipment

ii.If not separately noted on Packing sheet(s) include on invoice:

·          Total quantity of Parts being shipped

·          Provide net weight of each Part number and gross weight of entire shipment

·          Specify unit of measure being used

·          Specify the total number of boxes included per packing sheet.

·          Textiles must specify the net gross weights and the length, width and total square meters of material.

g. Provide a detailed description of each item being shipped to ensure proper product classification per the Harmonized Tariff Schedule (HTS) and must include at a minimum:

i.The full name by which each item is known

ii.Part Number as appears on Purchase Order/Contract. If the item is a raw material, provide the material grade, class and dimensions.

Notes:

·Generic descriptions, abbreviations, acronyms, and Stock Keeping Unit (SKU) numbers are not acceptable.

·Spirit may request additional description information for

items that do not have a Part number and/or design or when the appropriate HTS number cannot be determined from the provided description.

·             Supplier will provide material class, grade, dimensions

and assembly components if Part is manufactured by Supplier’s own manufacturing drawings.

h.Country of Origin: indicate the country of manufacture of each item.

i.Terms of Sale: Specify the International Commercial Terms of Sale (Incoterms) as agreed to per the Spirit Contract on the invoice or Spirit Work Authorization.

j.Specify “Related Party to the Spirit” status (Yes or No) on the invoice.

k.Commercial Invoice Number (Supplier’s Option)

l.Page numbers are required for each invoice (example: ____ of ____ Pages).

m.Bolt Seals: All shipping documents must reflect the bolt seal number being used for ocean shipments loaded into dedicated containers. All bolt seals used must be those issued to the supplier by Spirit Aerosystems in order to comply with C-TPAT requirements.

2. Commercial Invoice Valuation Requirements

a.Must be complete and accurate, including the unit cost of each Part and the total value of the entire shipment.

b.Currency on all invoices must reflect the actual currency of the purchase contract and the transaction of money between the Spirit and the Supplier.

c. List separately any Assists and/or Additional costs used for manufacturing each Part. For example:

·Assists: Any components, materials, dies molds and tools that are supplied by the Spirit free of charge or at a reduced cost to the Supplier, and used in the production of imported goods. This includes any Spirit Paid transportation costs associated with the assist. These transportation costs will be provided by the procurement focal responsible for this merchandise.

·Costs for tooling, etc., built or supplied, directly or

indirectly, and used in the production or manufacture, by the manufacturer of the goods being imported into the United States, and not included in the purchase order unit price.

·      Engineering and Design work – Work that is performed

outside the U.S. by Non-U.S. employees, and is not included in the unit price of the merchandise being imported.

·      Packing Costs – Costs for Packing that are incurred by

the Spirit and have not been included in the unit cost.

·      Non-recurring charges – One time charges, incurred by

the Spirit, for such items as, expedite fees and transportation costs, which have not been included in the unit cost.

·      Selling Commissions – Commissions incurred by Spirit

that have not been included in the unit cost.

·      Royalties – Fees the Spirit is required to pay as a

condition of sale.

d. List all discounts that have been agreed to, or may be allowed, that apply to the purchase price or value, but have not been included in the unit price (Terms of Payment).

e.Repaired or modified Parts – separately enter the value of the item and the value of the repair on the invoice. For “no charge” repair, show the value of the repair on invoice.

f.If Supplier receives any rebates, drawbacks or bounties, as a result of exportation, please itemize and provide description.

3. Packing Sheet\slip (if used by supplier)

a. Include Packing sheet\slip number(s) on invoice

4. U.S. Government Programs Only (Regardless of Business Units)

a.If a government contract applies, the prime contract number must be noted on the commercial invoice. Additionally, the following government contract statement needs to be shown as follows for Military Programs.

“United States Dept. of Defense Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Sub-chapter VIII, item 9808.00.3000 of the Harmonized Tariff Schedules to The United States. Upon arrival of shipment at the port of entry, District Director of Customs, please release shipment under Section 19 CFR Part 142 and notify Commander, Defense Contract Management Area Operations (DCMAO) New York, for execution of customs forms and any required duty free entry certificates.'

b.Commercial Invoice must show that the shipment is consigned to a U.S. Government Agency (i.e.: U.S. Department of Defense) in “care of Spirit', if shipment has a prime contract number.

c. If items were exported on a license or exemption upon importation, that license or exemption information should be notated as follows:

Example: “Originally exported under DSP-XX license number XXXXXX' or “Imported under 22 CFR XXXXX'

ADDITIONAL IMPORT NOTES: Part Marking

All items furnished under this contract/order, unless excepted by law, must be legibly marked with the English name of the country of origin per U.S. Customs Regulation 19 CFR 134 Country of Origin Marking. Markings are to be legible, indelible, and as permanent as the nature of the article or container will allow.

Chemical Content

Additionally, the import of any shipment that actually contains or consists of a chemical substance must be coordinated with Spirit in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants,

protectorants, paint, packaging materials)

Supplier will provide MSDS (Material Safety Data Sheet, Ref – 29CFR1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination.

Note: Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies.

NAFTA

If the Products under this Order qualify for preferential duty treatment under the North American Free Trade Agreement (NAFTA), the Supplier must provide Spirit’s Import Compliance group with a valid NAFTA Certificate of Origin (C/O), in order for the Product to be eligible for preferential duty treatment at the time of Customs entry.

Supplier acknowledges that the C/O will be used by Spirit as proof of eligibility for preferential duty treatment, and agrees to provide full cooperation to Spirit for any U.S. or foreign Customs inquiries into preferential duty claims that arise out of any Article furnished under this Order.

Should Spirit be fined and/or penalized by the aforementioned Customs entities, for invalid data on the NAFTA C/O provided by Supplier, Supplier agrees to reimburse Spirit upon request for the fines and/or penalties as well as Spirit’s expenses in connection therewith.

Unless Spirit requests individual C/O for each shipment, Supplier may provide annual blanket C/O to cover multiple shipments during the calendar year.

Supplier shall immediately notify Spirit in writing of any changes in the eligibility of the Products for preferential duty treatment.

Part number additions to the NAFTA C/O will be requested periodically by Spirit. Supplier will fully review all applicable part numbers to ensure they qualify for NAFTA preferential duty treatment, before sending Spirit a copy of the updated NAFTA C/O.

Importer Security Filing (ISF 10+2) Ocean Shipments

When import cargo is arriving in the United States by ocean vessel, Supplier must submit data elements necessary for Spirit to comply with U.S. Customs and Border Protection (CBP) ISF requirements.

In the event CBP shall issue fines, penalties, and or liquidated damages for violations attributable to Spirit for the submission of inaccurate, incomplete, or

untimely filing, then Supplier shall be liable for such costs and will indemnify and hold Spirit harmless from and against such claims, losses, liabilities, damages, penalties, costs and expenses arising out of or in connection with Supplier's failure to provide Spirit timely, accurate, or complete data. Penalties may consist of $5,000.00 per violation and may result in shipments being held at Customs.

Data will be submitted:

a.No later than 4 business days prior to loading cargo onto the ocean vessel at the foreign port of export.

b.On a spreadsheet containing the following data elements:

1.Manufacturer Name and address

2.          Ship-To Party (Consignee) Name and address

3.Part number, description, and manufacturer’s Country of Origin of each part

4.Supplier Name and Address

5.Supplier Name and Address (if different from Supplier)

6.Buyer Name and Address

7.Container Stuffing Location

8.Consolidator Name and Address

9.Estimated Sailing Date

10.          Freight Forwarder bill of lading number c. Via e-mail to Spirit’s Traffic Organizations, and Spirit’s Broker

·           grpspirittraffic@spiritaero.com

·           Tami.s.harville@spiritaero.com

·           henry.e.kendall@spiritaero.com

·           spirit@fhkaysing.com

·           jmetzen@fhkaysing.com

•abooth@fhkaysing.com

·           msapien@fhkaysing.com

·           bpace@fhkaysing.com

	Customs – Trade Partnership Against Terrorism (C-TPAT) C-TPAT is an initiative between business and government to protect global commerce from terrorism and increases the efficiencies of global transportation. The program calls for importers, carriers and brokers to establish policies to enhance their own security practices and those of their business partners involved in their supply chain. Such practices may include but are not limited to the following: 1.         Procedural Security – Procedures in place to protect against un­manifested material being introduced into the supply chain; 2.         Physical Security – Buildings constructed to resist intrusion, perimeter fences, locking devices and adequate lighting; 3.Access Controls – Positive identification of all employees, visitors and suppliers; 4.         Personnel Security – Employment screening, background checks and application verifications; 5. Education and Training Awareness – Security awareness training, incentives for participation in security controls. Carrier or International Freight Forwarder must be C-TPAT certified in order to transport Spirit shipments across U.S. borders, and must maintain C-TPAT certification. Carrier or international freight forwarder’s loss of C-TPAT certification will be grounds for termination. International Freight Forwarder also agrees to use C-TPAT certified carriers, local cartage companies and others involved with the transport and handling of Spirit shipments. In the absence of C-TPAT certified transport and handling providers, carrier or international freight forwarder may use companies that have agreed in writing to follow the C-TPAT Supply Chain Security Guidelines. If no C-TPAT certified carriers or carriers that have agreed to follow the C-TPAT Supply Chain Security Guidelines are available to move Spirit’s shipment, carrier or international freight forwarder will notify Spirit immediately.
	PRICING
115	Estimated Price
	The unit price(s) shown in this Purchase Order/Purchase Contract is only an estimated price. Advise the Spirit of the firm price as soon as possible.

118	Precious Metal
	The precious metal (gold, silver, platinum) surcharge will be an upward or downward adjustment computation based on material content factor of _____ times the difference between the base price of _____ and the current value of the precious metal. The current value will be the value listed in the Wall Street Journal dated _____ and this value will be computed on the _____.
119	Rework Cost
	Supplier may disassemble the herein described article(s) and shall immediately quote price of rework or repair and the current replacement price. Supplier shall not proceed with rework until receipt of a change order authorizing the rework cost. Price will be finalized within 60 days of the date of this Purchase Order.
121	Expedite Cost
	The expedite charge will be paid if acceptable parts in the quantity stated are produced and shipped to Spirit, or Spirit’s designated location, on or before .
122	Maximum Liability For Equitable Adjustment
	Spirit's maximum liability for an equitable adjustment resulting from a decrease in quantity or termination of Product(s) shall be limited to costs directly attributable to 1.          _____ days raw material and 2.          _____ days finished Products worth of scheduled deliveries of the Products. For purposes of this Note, scheduled deliveries shall be determined by the applicable schedule in effect at the time Supplier commenced work on the Product(s) that are the subject of the termination or decrease.
129	Change To Cost Or Pricing Data
	Supplier shall submit cost or pricing data as required by Form PF-270 “Cost Breakdown Form” for each change when the total amount of the proposed additions and/or deletions to the price combined is $100,000 or more.
131	Die Service Charges
	Die service charges are considered a fee, not a purchase price. Considerations acceptable to Spirit in Payment of such fees being

	(A)         That title, ownership, possession and control of all equipment produced hereunder shall vest in Supplier, (B)         That Supplier shall store, maintain and where necessary because of wear, loss or damage, replace such equipment, without further cost to Spirit, until final disposition of such equipment has been agreed to between Spirit and Supplier, (C) that Supplier shall not dispose of such equipment until three (3) consecutive years of inactivity has Passed, and not then without first giving at least thirty (30) days written notice of intention and receiving Spirit's written approval to do so.
132	License Agreement
	This Purchase Contract/Purchase Order is subject to the terms and conditions () of License Agreement effective date ( ).
133	Set-Up Charges
	The item price(s) on this Purchase Order is/are based on Spirit Paying one setup charge for one lot run with the entire quantity to be shipped per Spirit shipping schedule. In the event of a shortage situation, the requested quantity of material is to be shipped within 3 days of notification. Spirit, under the terms of this Purchase Contract/Purchase Order, may not change the quantity of any item, on the Purchase Order. Spirit further agrees to accept the outstanding balance of any item within one calendar year from the date of the first shipment of that item. Spirit may at no cost, revise both the quantity per ship schedule and the scheduled ship dates, with a minimum of one-week notice.
136	Price Increase Petitions
	All petitions for price increase must: 1.        Be in writing; 2.        Provide at least thirty (30) days advance written notification. Notification shall commence on the postmarked date of a correctly addressed letter to Spirit’s designated representative; 3.        Be accompanied by detailed cost data substantiating the petitioned increase; 4.        Any price revision(s) shall be passed through as a percentage price change equal to the percentage change in Supplier’s delivered commodity/service cost. No additional markup for profit on the

	incremental price increase will be accepted by Spirit; 5.       Spirit’s procurement agent shall have the right to negotiate all proposed price increases and may delete specific line items or terminate the contract upon failure to mutually agree to a proposed price revision; 6.In the event a price increase is incorporated into a contract, all billing shall be at the price in effect at the time of purchase order/requirements placement, not at the time of shipment/performance; 7.Spirit’s acceptance of a price revision (increase/decrease) shall be confirmed only through a fully executed revision to the contract.
138	Obsolete Material
	Supplier may not submit a claim for obsolete material or product resulting from an individual change order that has a total claim value of Two Thousand Five Hundred Dollars ($2,500.00) or less.
139	Claims Prior To Engineering Release (Drawing Revision Level New)
	Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, (PF-550), Changes Section, no equitable adjustment in the prices or schedules of any order shall be made for any change initiated by Spirit 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 Spirit ("100% Engineering Release") provided, that an equitable adjustment shall be made for: 1.       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 Section are changes within a raw material classification such as a change from 7050 Aluminum to 7075 Aluminum; 2.       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 the receipt of 100% Engineering Release by the Supplier. Claims Subsequent to Engineering Release
	Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, (PF-550), Changes Section no equitable adjustment shall be made to the recurring or non-recurring prices after the date of 100% Engineering Release for

	any change initiated by Spirit 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 this contract. For purposes of this section, the then current unit price or total nonrecurring price shall be the price identified elsewhere in this contract 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.
	DELIVERY/PACKAGING
401	Skid Identification
	Maximum weight of each skid shall not to exceed 4,000 pounds gross. Skids must be identified by heat lot number with only one heat lot per skid.
402	Distributor Requirements
	For products provided by a distributor, each product furnished must include the legal name of the product manufacturer on each Packing sheet immediately following the part number.
406	Multiple Shipments
	The material on this order shall be identified and separated by the lot number appearing on the Package and Packing slips. For shipments with more than one lot number to a carton, the Supplier is required to segregate materials according to their specific lot numbers
410	Hazardous Material Requirements
	Material Data Specification Sheet
	Supplier                 will         comply              with          the         hazard              communicationstandard, 29CFR1910-1200, if applicable. Supplier will include a Material Safety Data Sheet (MSDS) with the initial shipment of a hazardous material each calendar year and route an additional copy of the MSDS to; Spirit AeroSystems, Inc. P.O. Box 780008 M/C K06-94 Wichita, KS 67278-0008

ATTN: EH&S Hazardous Materials Gatekeeper

The revision number and date must be displayed prominently on the MSDS. Supplier is also required to provide an MSDS to the address above in the event of a change in brand, a change in chemical composition, or a new / substitute chemical shipment; any change information shall be communicated to the Spirit immediately.

Routing, Packaging, Labeling, and Marking

Routing, packaging, labeling, and marking of hazardous material for shipment via common carrier, authorized to handle the material, shall be in accordance with title 49 of the Code of Federal Regulations (CFR), Parts 100 to 199; the International Civil Aviation Organization (ICAO) "technical instructions for the safe transport of dangerous goods by air"; the International Air Transportation Association (IATA) "dangerous goods regulations"; the International Maritime Dangerous Goods (IMDG) code; and all other applicable international, federal, state, and local regulations.

Clean Air Act Warnings/Notices

Warning statements for products containing or manufactured with ozone depleting chemicals as required by the Clean Air Act Amendments of 1990, Section 611, 40 CFR Part 82, should not be applied directly on the Parts or items. Warning statements are to be included in a separate document, such as the bill of lading, shipment papers or other proper notification that complies with the referenced regulation and accompanies the shipment.

Montreal Protocol Agreement

Any Part or item procured under this Purchase Contract which contains or was manufactured with an ozone depleting chemical as defined in the Montreal Protocol Agreement must include the following warning statement on the airbill/bill of lading, and the applicable invoice(s)/Packing list(s) for U.S. Customs entry purposes (for a shipment containing multiple Parts or invoices/Packing lists, the above documents must indicate to which Parts the warning statement applies):

"WARNING: This shipment no.______ contains or was manufactured

with  , a substance which harms public and the environment by

destroying the ozone in the upper atmosphere."

Toxic Substance Control Act (TSCA)

The import of any shipment that actually contains or consists of a chemical substance must be coordinated with Spirit in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic

	Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants, protectorants, paint, packaging materials) Supplier                will        provide              MSDS             (Material                           SafetyDataSheet,Ref – 29CFR1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination. Note: Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies. Superfund Amendments and Reauthorization Act Of 1986 (SARA) Compliance with Title III of SARA you are required to furnish to Spirit the following additional information above and beyond that which is required by 29CFR 1910.1200 in the form of Material Safety Data Sheets (MSDS). The following additional information must be provided with the initial shipment of each product to Spirit , Hazardous Materials Management M/C K06-94, P.O. BOX 780008; Wichita, Kansas 67278-0008 each calendar year. 1)A statement that the chemical material is or is not subject to reporting under Section 313 of the SARA Title III and 40 CFR 372.45. 2)The name of each chemical component of the product and the associated chemical abstracts service registry number. 3)Percent by weight of each chemical component of the product shipped."
411	Environmental Protection
	Supplier                 must          comply              with         all       laws,           statutes,                decrees,treaties, regulations, orders, directives or norms of the United States, Canada or the European Union with respect to environmental protection or quality as they relate to the work performed under this Purchase Contract.
416	Returnable Containers
	Returnable containers are to be returned to                                                                                          via.
	Returnable containers shall be plainly marked or stenciled with Spirit’s Purchase Order number, supplier’s name, address and amount of deposit on outside of

	each returnable container.
419	Spool Labels
	Each spool must be marked or labeled with the following information: Spirit Purchase Order Number, manufacturer's name, and address, lot number, date of manufacture, wire gauge, length in feet, military or other material specification number and revision, Spirit material code, and vendor or Spirit Part number.
431	Tubing Labels
	Tubing 1/2-inch or smaller in diameter, or with wall thickness less than .029 inch shall have a tag on each end, bearing the required identification as outlined in SAE-AMS-STD-184, except each piece must be identified.
458	Bar Stock Labels
	All       bars,          rods,          shapes,                        tubes,                     and         forgings                  shallbemarkedwith the specification, heat lot number, size, and mill name or original manufacturer.
460	Packaged Assembly Labels
	Supplier will include all components of an assembly in a single Package, putting in that Package only those components in correct quantities, which make up that assembly whenever that assembly does not ship as a single unit.
461	Divert Shipments
	This is a divert shipment. Supplier must reference Spirit, Purchase Order number and Part number as shown below on Packing list: Purchase Contract/Purchase Order No.                                                                                  , Item. Packing list and freight bill (proof of shipment) must be sent to the Spirit Procurement Agent at the time of shipment.
462	Identification Marking Of Aluminum, Magnesium, And Titanium
	Material may be marked per SAE-AMS-STD-184 or a minimum of one complete set of identification markings may appear on the top side ends of the material.
463	Skid Dimensions
	Minimum skid length to be 9 ft., including runners.Maximum skid width including packing material used to cushion cargo to be 50". Material larger than

	4ft. x 9ft. to be on appropriate size skid to protect material.
464	Shipment Of Electronic Products
	Electrical/electronic Products shall be Packaged in the original manufacturer's container or if repackaged shall be in a container equivalent to the original manufacturers. Equivalent Package as a minimum shall prevent damage to the Products including, but not limited to, bending of leads or contamination by dust or moisture. The shipping containers shall be labeled with a highly visible label on at least one side. This label shall identify the container as containing electrical/electronic items.
465	Test And Evaluation
	Apply in red block letters "Released for test only" adjacent to or directly underneath engineering Part mark.
466	Packing Slips/ASNs
	All Packing Slips and any paperwork (which has not been submitted electronically) associated with parts and materials must be placed on the OUTSIDE of the shipping container and marked as PACKING SLIP. All ASNs must be placed on the OUTSIDE of the shipping containers.
	PROPERTY
501	Commercial Tooling – Supplier’s Quality Requirements
	Supplier’s quality system shall maintain records to assure compliance with all the requirements, processes and flows in accordance with STM-130030-1 ‘Spirit Tooling Requirements’. All quality checks, verifications, and records shall be presented with the Spirit Certified Tool List. These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Spirit Certified Tool List and/or Tool Usage List. A.Record Requirements 1.Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Spirit’s applicable tooling manual and engineering drawing. Supplier’s inspection stamp affixed to show compliance and acceptance of completed tool. B.            Manufacturing Records

1.Supplier’s manufacturing plan shall provide traceability for

verification of need, function, and usage for each tool listed on the Spirit Certified Tool List.

C. Design Records

1.Supplier’s Quality Assurance shall verify the maintenance of the

following tool engineering data per Spirit’s STM-130030-1, Tooling Requirements, Section 10.

a.         one complete set of reproducible drawings submitted to

Buyer

b.         one complete set of reproducible drawings retained with

tool

D. Tool Designs

1.            In order to maintain tool design standards, it is mandatory that

tool designs be governed by the requirements of Spirit tooling manuals, engineering drawings or equivalent approved standards.

2.            Supplier’s Quality Assurance shall verify that all tool designs be

governed by Spirit AeroSystems, Inc tooling standards.

3.Supplier’s Quality Assurance shall verify all Supplier tool

designs have been approved by Spirit’s Tool Design organization:

a.            for master tooling,

b.            for all major or final stage tools controlled by master

tooling,

c.            for tools that control interchangeability or replaceability

items,

d.            for all tools used as media for quality acceptance that

have tool design requirements,

e.for all tools used for periodic and configuration control.

E.Tool Fabrication

1.            Supplier’s Quality Assurance shall verify and inspect

progressively any feature of the tool that cannot be inspected after tool is complete.

2.            Maintain and retain all progressive inspection record as

required (ref. E.1 above).

3.Inspect and verify all tool tryouts or tool proving.

F.Identification of Accountable Tools Supplier’s Quality Assurance shall verify all tools are identified per Spirit’s STM-130010-23, Tool Identification. 1.        No tool will be considered complete that is not properly identified and accepted by Quality Control. 2.        Supplier’s Quality Assurance shall verify acceptable parts or assemblies have been produced by all tooling and affix steel quality acceptance stamp in tool tryout space. Note:If tool tryout is not required, stamp “NR” beside inspection acceptance stamp. 3.Supplier’s Quality Assurance shall verify the latest engineering drawing revision or tool drawing revision. G.Certified Tool List 1.           Supplier’s Quality Assurance shall verify the completeness and accuracy of each tool on the Spirit Certified Tool List. 2.           Supplier’s Quality Assurance manager shall sign and/or use their quality acceptance stamp to validate compliance to all Spirit’s STM-130030-1, Tooling Requirements, as stated in upper right hand section of the Spirit Certified Tool List. Signature of an Officer of the company is also required. 3.           Supplier shall have a rework tool order to show specific rework instructions have been completed and Supplier’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per Spirit’s STM-130010-23, Tool Identification. 4.           Supplier’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.

502

Mylars Spirit will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Supplier in accomplishing the work called for by this Purchase Contract/Purchase Order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Supplier shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Spirit documents STM-130030-1 and STM130020-1, and upon acquisition or manufacturer by Supplier and before the same is used, becomes

	the property of/or controlled by Spirit
503	Spirit Property
	All special tooling as defined in STM-130030-1 and STM130020-1 covered by this Purchase Contract/Purchase Order shall, upon acquisition or manufacture by Supplier and before the same is used, become the property of/or controlled by Spirit. Any use of this tooling for other than Spirit work, or before scrapping, must have written consent from Spirit.
504	Use of Spirit Tooling
	Supplier shall use any and all Tooling only for the purpose of performing its obligations under this Purchase Contract/Purchase Order and shall not sell, lease or otherwise dispose of any Tooling. Supplier shall, on behalf of Spirit as the owner thereof obtain and maintain in effect insurance in respect of all Supplier-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Spirit,). Supplier shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Spirit, in respect of any Tooling, under this order.
505	Customer Tooling
	Design,              fabrication,                                 handling,                                   storage,accountability,maintenance, and disposition of Customer owned tooling, furnished by Spirit in support of this order or fabricated by Supplier as directed in this order, shall be in strict accordance with Spirit Documents STM-130030-1 and STM130020-1, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Spirit.
506	Tooling Costs
	Supplier shall                                   absorb               all                 costs                                         associatedwithnon-accountable tooling manufactured and/or purchased by Supplier necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. Supplier shall not use tools, which contain, convey, embody, or were made in accordance with or by reference to any Proprietary Information and Materials of Spirit, to manufacture parts for anyone other than Spirit without the prior written authorization of Spirit.

507	Contractor-Use Tooling and Common-Use Tooling
	Supplier shall provide at no cost to Spirit on Spirit’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Supplier or its subcontractors in accordance with Spirit Document STM130030- 1, or, subject to Spirit review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Spirit as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	Control and Accountability for Tooling
	Supplier shall control and account for all Tooling in accordance with the provisions of Spirit Document STM130030-1 or, subject to Spirit review and approval (not to be unreasonably withheld or delayed),its equivalent or replacement. This requirement shall apply to Spirit-Use Tooling until delivery thereof to Spirit and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Spirit or delivery to Spirit or Spirit's designee. All Existing Tooling shall remain identified with its identification tag containing the Spirit Lifetime Serial Number of such Tooling. Supplier shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Spirit Lifetime Serial Number of each such Tool. Spirit Lifetime Serial Numbers will be provided to Supplier by Spirit.
509	Certified Tool List
	Supplier shall prepare a list or lists ("Certified Tool List") in accordance with Spirit Document STM130030-1 or, subject to Spirit review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Spirit shall request. Supplier shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Supplier shall promptly submit each initial Certified Tool List to Spirit. Supplier shall subsequently submit from time to time as specified by Spirit new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	Discrepant Tooling
	With respect to Existing Tooling and New Tooling, and in the event Spirit

	furnishes Tooling to Supplier, Supplier shall conform to the standards and requirements of Spirit Document STM130030-1. Spirit shall notify Supplier of any action required for discrepant Tooling.
511	Accountable Tooling
	Accountability for tooling fabricated on this Purchase Order will be transferred to Blanket Accountable, Tooling Order T-on receipt of a properly
	prepared Certified Tool List (F08-04605). The Certified Tool List is to be signed by an officer of the Supplier's Quality Control representative, by a Spirit resident inspector, if available and a Government Source Inspector, if required and returned to Spirit as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Spirit PQA and proof acceptable parts were produced from the tooling.
514	Returned Tooling
	When returning Spirit -furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Tooling Rework
	Payment for rework of tooling as specified under this order is to be as follows: Supplier shall, upon completion of the rework specified hereunder, forward to Spirit, an original and one copy of a Tool Usage List, F08-04605, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Spirit PQA and proof acceptable parts were produced from the reworked tooling.
518	Pattern Of Die Equipment
	Supplier shall not use pattern of die equipment purchased on this order for manufacture of product for anyone other than Spirit without prior approval of Spirit.
519	Rework Or Replacement Of Dies
	Spirit must be notified of any rework or replacement of dies subsequent to the original qualification of this forging.
525	Supplier Banked Material
	A.Supplier Banked Material (SBM) applies to all Positions and Part Numbers.

	B.      Material,                                 includingbut       not           limited             to              raw                        material,standards, detail components and assemblies, furnished to Supplier by Spirit shall be administered in accordance with Supplier Banked Material Agreement (SBMA) # xxxxxxxxxx DATED xx/xx/xxxx C.      Material and or processing furnished by the Spirit is not included in the purchase price of items on this. D.      The          allowablescrap                                rate         for             theSBM            items                          onthis Purchase Contract/Purchase Order is XX percent.Any scrap in excess of this amount will be the responsibility of the Supplier. E.      Supplier shall provide Spirit with required on-dock dates for all material. Supplier's notice shall provide Spirit with sufficient time to competitively acquire the material if, in its sole and absolute discretion, it desires to do so.
	QUALITY
	System Requirements
601	AS9100
	Supplier is required to maintain a Quality System in compliance with AS9100 – Quality Management Systems – Aerospace – Requirements as outlined in section titled “Certification / Registration Body” (Note 610)
602	AS9003
	Supplier is required to maintain a Quality System in compliance with AS9003 – Inspection and Test Quality System.
603	Limited Approval/Adequate Quality System
	Supplier must maintain an adequate quality system to provide the supplies and services that meet the requirements of this purchase document and all applicable specifications and/or engineering drawings. All work performed under this Purchase Contract/Purchase Order shall be in accordance with said quality system which shall be adequate to control the product(s) and assure that it conforms to the type design and is safe for operation.
605	AS9120

	Supplier is required to maintain a Quality System in compliance with AS9120 – Quality Management Systems – Aerospace – Requirements for Stockist Distributors.
606	AS9006
	Supplier is required to maintain a Quality System in compliance with AS9006 – Quality Management Systems – Aerospace – Requirements for Software.
610	Certification / Registration Body / NADCAP
	Spirit recognition of Supplier’s AQMS certification/registration does not affect the right of Spirit to conduct audits and issue findings at the Supplier’s facility. Spirit reserves the right to provide Spirit-identified quality system findings, associated quality system data, and quality performance data to the Supplier’s Certification /Registration Body (CRB). Supplier shall ensure the following relative to AQMS certification: 1.      The                certification/registration                                                    body (CRB)is accredited toperform aerospace quality management system (AQMS) assessments. 2.The CRB must use approved auditors and operate in accordance with the corresponding International Aerospace Quality Group (IAQG) certification/registration scheme. NOTE: IAQG sanctioned certification/registration schemes include but are not limited to AIR 5359, SJAC 9010, TS157, etc. Reference IAQG website for listing of accredited CRBs: http://www.iaqg.sae.org/servlets/index?PORTAL_CODE=IAQG 3.The Supplier maintains objective evidence of CRB certification/registration on file at Supplier’s facility. Objective evidence shall include: a.       The accredited AQMS certificate(s) of registration; b.       The audit report(s), including all information pertaining to the audit results in accordance with the applicable certification/registration scheme; c.Copies of all CRB finding(s), objective evidence of acceptance of corrective action(s), and closure of the finding(s). NOTE: Certification records shall be maintained in accordance with Spirit specified contractual quality record retention requirements. 4.The CRB services agreement provides for “right of access” to all CRB

records by Spirit applicable accreditation body, applicable Registrar Management Committee (RMC) and other regulatory or government bodies for the purpose of verifying CRB certification/registration criteria and methods are in accordance with the applicable IAQG certification/registration scheme.

5.The CRB has Supplier’s written permission to provide audit results/data to IAQG membership as required by the applicable IAQG certification/registration scheme.

6.Spirit will be immediately notified in writing should the Supplier’s certification/registration be suspended or withdrawn, or accreditation status of Supplier’s CRB is withdrawn.

7.Spirit-identified findings and Supplier’s quality performance data will be provided to the CRB during certification/registration and surveillance activity.

8.CRB shall be provided access to applicable proprietary data (including Spirit proprietary data) to the extent necessary to assess Supplier’s compliance to AQMS requirements.

9.CRB shall agree to keep confidential and protect Spirit proprietary information under terms no less stringent than Supplier’s contractual agreement with Spirit. Supplier will assure that such information is conspicuously marked “SPIRIT AEROSYSTEMS PROPRIETARY”.

10.Supplier will comply with all CRB requirements imposed to issue and maintain certification/registration.

NADCAP:

Special Process Suppliers will be required to secure NADCAP accreditation. The special processes to which NADCAP applies are as follows;

·            Heat Treatment

·            Welding / Brazing

·            Materials Test Laboratories

·            Non-Conventional Machining

·            Coatings

·            Non-Destructive Test

·            Composites

·            Chemical Processing

	•                                                  Surface Enhancement
	Inspection Requirements
619	First Article Inspection
	As applicable, FAI’s shall be performed by the Supplier. The FAI will be conducted in accordance AS9102, Aerospace First Article Inspection Requirements and (when required) customer approved FAI plans. Any changes to the FAI plans by the Supplier will require Spirit and/or customer approval prior to conducting the FAI. Spirit utilizes a web based quality module known as Net-Inspect (www.netinspect.com) for the purpose of performing and recording FAI’s in
	accordance with AS9102 and (when required) customer approved FAI plans. This system shall also be used by the Supplier to submit FAI reports to Spirit electronically. The use of this system will require Supplier to have computer access, a web connection, (preferably high speed), and a document scanner at no additional cost to Spirit. The web-based quality module will be provided at no additional cost to Supplier when used on Spirit’s Product. Supplier’s use of this system shall be at no additional cost to Spirit. Supporting documents shall be provided within FAI reports (attached PDF Files). Supporting documents shall consist of but are not limited to, material certifications, process certifications, bubble drawings, acceptance data reports, acceptance test results, production planning and or any other documentation related to the FAI product being inspected. Delta FAI’s shall have applicable supporting documentation as necessary. A copy of the AS9102 standard can be obtained through the Society of Automotive Engineers (SAE) at the following website address: http://www.sae.org
621	Buyer (Spirit) First Article Inspection
	Buyer (Spirit) First Article Inspection (BFAI) – BFAI activity is required at the Supplier’s facility prior to shipment. Supplier shall notify Spirit to schedule a comparable inspection and coordinate the required inspection/verification activity. Subsequent engineering, inspection, manufacturing or tooling changes for specific characteristics will require the Supplier to notify Spirit. At the minimum, Supplier shall make the following available in support of the BFAI for the article being reviewed: 1.             The        applicable                                           PurchaseContract,material/processcertifications,

	manufacturing and inspection records; 2.       The applicable design data; 3.       The applicable documented configuration baseline and configuration summary; 4.       The applicable Material Review Board (MRB) actions; 5.       The applicable acceptance and qualification test results; 6.       The record of Spirit approval for supplier drawing and test procedures; 7.       Completed Supplier First Article Inspection (SFAI) documentation. Spirit utilizes a web based quality module known as Net-Inspect (www.netinspect.com) for the purpose of performing and recording FAI’s
	in accordance with AS9102 and (when required) customer approved FAI plans. This system shall also be used by the Supplier to submit FAI reports to Spirit electronically. The use of this system will require Supplier to have computer access, a web connection, (preferably high speed), and a document scanner at no additional cost to Spirit. The web-based quality module will be provided at no additional cost to Supplier when used on Spirit’s Product. Supplier’s use of this system shall be at no additional cost to Spirit. Supporting documents shall be provided within FAI reports (attached PDF Files). Supporting documents shall consist of but are not limited to, material certifications, process certifications, bubble drawings, acceptance data reports, acceptance test results, production planning and or any other documentation related to the FAI product being inspected. Delta FAI’s shall have applicable supporting documentation as necessary. A copy of the AS9102 standard can be obtained through the Society of Automotive Engineers (SAE) at the following website address: http://www.sae.org
622	Buyer (Spirit) Source Acceptance
	Buyer (Spirit) Source Acceptance (BSI) - BSI is required for items procured on this purchase document prior to shipment from the Supplier’s facility. Acceptance may include in-process activities such as processing, fabrication, witnessing of testing and/or final inspection. Supplier shall provide the Spirit Quality representative with a copy of this purchase order, applicable drawings, specifications and changes thereto, and such other information as may be required. Supplier shall provide the necessary use of the Supplier’s facility and equipment to perform the inspection.

	Unless Buyer (Spirit) Source Acceptance has been delegated, in writing, by the procuring site, Supplier shall contact the Spirit Quality Representative who services the facility.
623	FAA Conformity Inspection And Certification
	FAA and/or Foreign Civil Airworthiness Authority (FCAA) conformity inspection and certification is required for items procured on this Purchase Document. Supplier shall contact the local FAA/FCAA representative for inspection and certification. Unless otherwise indicated,in writing, the conformity inspection shall be performed at the Supplier or Subcontractor point of manufacture as deemed necessary to verify product conformance to the type design. Supplier shall include the original FAA Form 8130-9 and FAA Form 8130-3 with the shipment. Foreign government equivalents to FAA Form 8130-3 are acceptable for imported product. For         a     Supplier                          located                                 in     a            country withoutaUnitedStates bilateral airworthiness agreement, the FAA may elect to conduct the inspection in accordance with paragraph 2 above, or upon arrival of the product in the U.S. Supplier shall contact their procurement quality assurance focal for FAA Conformity coordination.
624	Delegated Authority
	Delegation Authority – The Supplier is authorized to inspect product(s) identified for this Purchase Document line item on behalf of the contracting Spirit site’s Quality assurance organization. Spirit Quality Assurance reserves the right to conduct product integrity audits, quality system assessments, verify Supplier’s conformance to contracting Spirit site’s delegation program requirements and to revoke delegation authorization(s).
625	Acceptance of Detail Parts
	Final Product Acceptance for all detail parts and/or assemblies must include 100% inspection of temper (Conductivity and Rockwell Hardness) for aluminum alloys, and 100% Rockwell Hardness inspection for steel and CRES alloys. Inspection of temper must be accomplished after the final machining operation on fully tempered material and/or the final heat treatment operation, where applicable. The required range must be listed along with the range of measured values at the appropriate place on each work order and, where applicable, be transferred from process certifications. For clad materials, the type of

	instrument used to verify compliance must also be listed. Sampling of hardness inspections may be allowed for certain alloys or tensile ranges if permitted by the governing customer documents or the corresponding heat treatment specification.
626	Functional Test
	Functional Test – Identify the parts that have successfully passed function test requirements by stamping “FT” and the date the test was accomplished. These markings will be applied in a color contrasting to the part and of a size consistent with the part configurations. If Spirit witness of test(s) is required, supplier shall notify Spirit a minimum of five (5) days in advance of such test(s).
628	Certificates of Conformance
	If certifications are required they shall be submitted electronically to Spiritgoods@spiritaero.com OR in paper format with product and packing slip.
	Materialsshall                         be       certified                   to         their                 applicablespecifications. Quality requirements within those material specifications must be met regarding submission of inspection / test report requirements. Any process that requires customer approval shall list the approved processor. Any approved process whichrequires                         documentation                             as             defined                           by               theprocessor support specification shall be included.                                                                                                          (Examples: ultrasonic inspection, penetrant inspection, etc.) 1)       Suppliers utilizing the electronic documentation system will be exempt from providing a paper copy of those documents with shipment. 2)Original copies of all quality data and certifications must be kept on file at the supplier’s location. 3)Suppliers are still required to include a copy of the packing slip with the shipment. When providing certifications through the electronic process – notate on the front of the packing slip ‘Documentation on file at Spiritgoods@spiritaero.”
	Documentation / Shipping
631	X-Rays And Photos
	Radiographic film and grain flow photos, when required by engineering drawing or reference specifications, shall be sent to Spirit AeroSystems, Inc., for review and acceptance. Send X-rays and photos directly to: SPIRIT AEROSYSTEMS, INC.,

	RECEIVING INSPECTION 4555 E. MACARTHUR, GATE 14E WICHITA, KS 67210 Please reference production Purchase Order number on the shipping package.
632	After Market / Spares
	After Market / Spares – Supplier is required to provide copy of completed First Article Inspection Report, manufacturing planning, and material and processing certs with first shipment of parts.
633	Design Proposal Approval
	Withhold shipment until higher than Design Proposal Approval has been granted by Spirit, except those submitted for First Article Inspection.
635	Limitation On Re-Used Equipment And Materials
	Unless this order specifies otherwise, Supplier represents that, all equipment, material and articles to be furnished under this Purchase Contract/Purchase Order are new (not used or reconditioned) and are not of such age or so deteriorated as to impair their usefulness or safety.
	Repair Station
640	AS9110
	Supplier is required to maintain a Quality System in compliance with AS9110 – Quality Maintenance Systems – Aerospace – Requirements for Maintenance Organizations.
641	Rework/Repair
	When the certificate involves rework/repair performed under FAR Part 145, the Serviceable Parts Tag shall identify the FAA Repair Station number and shall be signed by an authorized inspector. The Supplier shall provide a description of the work accomplished when the part is returned to a Spirit Repair Station."
642	Airworthiness Certification
	This article requires an airworthiness certificate executed by the Supplier’s country airworthiness authority or their authorized designee.

Supplier shall contact the airworthiness authority representative that normally services the Supplier’s facility to arrange for the application of the airworthiness certificate.

It is the Supplier’s responsibility to meet any special import requirements of the country to which the part is shipped. Supplier may contact Spirit’s Procurement Agent for further assistance as required.

12-12-11

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

UDC PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7XX MISCELLANEOUS

	Order Of Precedence
001	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.          WMFM 515 A350XWB Supplemental Procurement Notes for Airbus A350XWB
	Program
	B.          WMFM 515 Supplemental Procurement Notes for Spirit AeroSystems, Inc.
	C.          Spirit AeroSystems, Inc. General Provisions Fixed Price Contract (WMFM 550)
	D.          Airbus Procurement GRAMS ( General Requirements for Aerostructure and Material
	Suppliers AP2190) Issue C
	E.          All documents incorporated by reference in GP Section 2, Referenced Documents
	F.          Engineering Model by Part Number and Specification Plan (ZSP)
	In resolving any such conflicts, these documents shall be read as a whole and in a manner most likely to accomplish their purpose.
	Supplier shall promptly report to Buyer in writing any inconsistencies in these documents, even if the inconsistency is resolvable using the above rules.
002	Definitions
	Aviation Authority means the official authority having the jurisdiction to approve the design, manufacture and airworthiness of the Aircraft and/or Item, including but not limited to:
	In France, the Direction Generale de ('Aviation Civile, (DGAC);
	In the United Kingdom, the Civil Aviation Authority (CAA);
	In Germany, the Luftfahrtbundesamt (LBA);
	In Spain, the DirecciOn General de AviaciOn Civil (DGAC);
	In Europe, the European Aviation Safety Agency (EASA);
	In the United States of America, the Federal Aviation Administration (FAA);
	Any other relevant aviation authority; or
	Any successor of the above-mentioned authorities.
	Aircraft Type mean the aircraft specific design definition for certification purposes (eg:
	A350XWB).
	Customer means the following Airbus Companies: AIRBUS S.A.S., AIRBUS Deutschland
	GmbH, AIRBUS France S.A.S., AIRBUS Espana S.L., AIRBUS UK Ltd and any Affiliates of
	Airbus, its or their designated proxy, and its or their direct or subsequent successors;
	Deliverable means any result achieved, including but not limited to any goods, plan, model, software, updated and accurate documentation, test or calculation results, arising from the performance of a Service by Supplier pursuant to this Order.
	Item means any assembly, subassembly, component, and/or any part thereof (including Spare
	Parts, software, Tooling as hereinafter defined, any sort of data, or any other goods and associated services), which shall be designed, developed, manufactured, supplied, performed and/or supported by Supplier pursuant to this Order;
	Service means any work and/or service performed in accordance with the Order including any
	Deliverable and the delivery thereof;
	Support means all the activities and obligations of the Supplier described in "GRAMS" to this order, in relation to the after-sales activities and maintenance of the Aircraft;

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

1)0( PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7XX MISCELLANEOUS

003	Airbus GRAMS document is incorporated by reference.                                                                                                                   Supplier must contact theirprocurement agent to request a copy of the GRAMS document.
004	Obligations of the Supplier
	1)Supplier shall ensure that its activities shall fully comply with the requirements, including but not limited to: 2)          Supplier shall be responsible for obtaining all resources to perform the work. 3)Supplier shall promptly inform Buyer of any known or potential issue relating to the Item that may affect the airworthiness of the Aircraft to which the Item relates. 4)Buyer's requirements (as specified in the order or otherwise) may not always define in a detailed manner the work required by Supplier to perform its obligations. In any case: (a)        where Supplier is required or instructed by Buyer to comply with any overall design requirements; and/or, (b)        where any cooperation, instruction or advice is provided by Buyer; and/or (c)where any information is provided to Buyer, with respect to the performance by Supplier of its responsibilities as described herein; Supplier shall remain fully liable for the performance of its obligations.
010	Information Technology
	Supplier shall use computer hardware, software and exchange devices or network connections to be fully compatible with tools used by Buyer through the duration of the order.  If Supplier has to use Buyer's or its Customer's information technology system or software owned by Buyer or Customer, or for which Buyer holds the right to grant sub-licenses, Supplier shall be granted a license on Buyer's standard terms for suppliers to use the said information technology system or software.
015	Support
	Supplier shall provide Support for the Item, in accordance with GRAMS and the requirements of the Order.
016	Post Delivery Support
	Supplier shall, promptly at Buyer's request and at no charge to Buyer, provide Buyer with such installation support in relation to the Item as Buyer may reasonably specify, including: (a)         analysis of repeated or recurring issues in relation to the Item; (b)         development and timely implementation of corrective action plans; (c)         provision of after hours and weekend support, including support for designproduction and logistics in order to meet Programme requirements and objectives; (d)         24 hour reactivity before Aircraft hand-over and 6 hour reactivity after Aircraft hand-over; (e)         completion of any work identified in relevant folios, "cahiers de retouche" and "squawk books"; completion of any work requested by Customers in order to fulfil Supplier's obligations under the Order; and Without limiting Supplier's obligations under the Order, Supplier shall perform its obligations under this Note using appropriately qualified, skilled and experienced personnel and in accordance with the procedures of the Quality Plan as set forth in the Order.
017	Payment Terms

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

UDC PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7XX MISCELLANEOUS

	Payment terms are net 90 days.
019	Changes
	a.       Buyer's Authorized SCPA may, without notice to sureties and in writing, direct changes within the general scope of this Purchase Document 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 Buyer- furnished property; and, if this Purchase Document includes services, (vi) description of services to be performed; (vii) time of performance (e.g., hours of the day, days of the week); (viii) place of performance, and (ix) terms and conditions of this Purchase Document required to meet Buyer's obligations under contracts or subcontracts. Seller shall comply immediately with such direction. b.       Seller shall be responsible for absorbing the cost of changes (recurring and non-recurring) to the general scope of this Purchase Document as outlined above, prior to delivery of requirements for the 20th (twentieth) aircraft. c.       Beginning with requirements for the 21st (twenty-first) aircraft, if such change increases or decreases the cost or time required to perform this Purchase Document, Buyer and Seller shall negotiate an equitable adjustment in the price or schedule, or both, to reflect the increase or decrease. Buyer shall modify this Purchase Document in writing accordingly. Unless otherwise agreed in writing, Seller must assert any claim for adjustment to Buyer's Authorized SCPA in writing within thirty (30) days and deliver a fully supported proposal to Buyer's Authorized SCPA within sixty (60) days after Seller's receipt of such direction. Buyer 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, Buyer may direct the disposition of the property. Buyer 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 Buyer's direction. If Seller considers that Buyer's conduct constitutes a change, Seller shall notify Buyer's Authorized SCPA immediately in writing as to the nature of such conduct and its effect upon Seller's performance. Pending direction from Buyer's Authorized SCPA, Seller shall take no action to implement any such change.
021	Compliance With Law
	Supplier shall comply with all environmental laws and regulations applicable to its Items and activities. Supplier shall put in place all necessary means and actions to ensure compliance of the Items designed, manufactured and delivered to Buyer with any regulations on authorization or registration of substances contained in such Items, in particular and as applicable the REACH regulation ("Registration, Evaluation, Authorization and Restriction of Chemicals"). REACH information may be accessed at the following website. http://reach.jrc.it/index_en.htm Supplier shall also comply with Buyer environmental requirements in GRAMS.
022	Title and Risk
	1)_ Title to the Item shall transfer to Buyer upon delivery of the Item to the point of delivery

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

UDC PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7XX MISCELLANEOUS

	designated by Buyer and risk shall pass to Buyer in accordance with the Incoterm specified in the Order. 2)       Acceptance of the Item shall be deemed to have occurred upon transfer of title to the Aircraft to the Customer, or upon expiration of 120 days after delivery of the Item to Buyer, whichever first occurs. 3)      Acceptance of the Item shall not be conclusive of the absence of latent defect and shall be without prejudice to the rights of Buyer, under the order or at law.
023	Severability
	Any provision of the order prohibited by or unlawful or unenforceable under any applicable law actually applied by any court of competent jurisdiction shall, to the extent required by such law, be severed from the order and rendered ineffective in so far as is possible without modifying the remaining provisions. However, where the provisions of any new applicable law may be waived, they are hereby waived by the Parties hereto to the fullest extent permitted by such law, with the result that the provisions of the order shall be valid and binding and enforceable in accordance with its terms. The Parties hereto agree to replace, as far as is practicable, any provision which is prohibited, unlawful or unenforceable with another provision having substantially the same effect in its legal and commercial content as the severed provision, but which is not prohibited, unlawful or unenforceable. The invalidity in whole or in part of any provisions of the order shall not void or affect the validity of any other provision herein.
024	Strategic Alignment
	Buyer may assign any Purchase Document, in whole or in part, to its Customer or a third party who is under an obligation to supply Buyer with components, kits, assemblies or systems that require the Seller's product. At the time of such assignment, Seller releases Buyer from any and all claims, demands and rights, which Seller has or may thereafter have against Buyer in connection with such assigned Purchase Document. Buyer will require that its assignee expressly assume all obligations and perform all duties owed to Seller under the assigned Purchase Document. Promptly after the assignment, Buyer will notify Seller of the assignment and its effective date
025	Enabled Material
	1 Buyer and certain of its/their suppliers of material (Enabling Suppliers) have entered or may enter into agreements, pursuant to which Buyer procures specific materials (Enabled Material) which may include the permission of third parties nominated by Buyer to order material at the same or similar terms as Buyer (those third parties referred to as Enabled Suppliers, the relevant agreement between Buyer and certain of its/their suppliers of material Enabled Material Contracts). 2 Either Party may propose that Supplier becomes an Enabled Supplier for Enabled Material, in which case Supplier shall provide the information required by Buyer to support its negotiation with the Enabled Material Supplier, which shall include inter alia volume, leadtime, current price, logistics conditions, for Enabled Material. Upon mutual agreement, Buyer shall

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

UDC PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7)0( MISCELLANEOUS

nominate Supplier as an Enabled Supplier under applicable Enabled Material Contracts.

3 Supplier undertakes to become an Enabled Supplier to those Enabled Material Contracts required for performance of the Order, by entering in any agreement with Buyer and/or the Enabling Supplier necessary for accessing the Enabled Material Contracts and by taking all further action necessary for such accession and as indicated by Buyer, including, but not limited, by committing itself to any terms and conditions of the Enabled Material Contracts as applicable to Enabled Suppliers. The list and applicable terms and conditions of such Enabled Material Contracts for which Buyer has nominated Supplier as an Enabled Supplier (to be amended from time to time in Buyer's free discretion) and the list of the Enabled Material applicable to the relevant Item will be provided by the Procurement Agent.

4 Subject to prior agreement in writing from Buyer, the Enabled Supplier is granted the possibility to offer to its relevant sub-contractors under this Order to procure Enabled Material subject to and under the same conditions described in this Note "Enabled Material". In such circumstances, Supplier shall be solely liable for the performance of its sub-contractors and their adherence and compliance to the terms detailed in this Order, as if no such sub-contract had been entered into.

5 Supplier undertakes to order its entire requirements (or, if and to the extent so indicated by Buyer, a portion thereof) for the material covered by the relevant Enabled Material Contracts under those Enabled Material Contracts where it has become an Enabled Supplier. Where Buyer has agreed to certain volumes to be purchased under an Enabled Material Contract, Supplier undertakes to purchase a certain sub-volume to be agreed between Buyer and Supplier.

6 Buyer may define and/or agree with the Enabling Supplier on and/or amend from time to time certain ordering and call-off processes to co-ordinate the orders to be placed by itself and by its Enabled Suppliers under the Enabled Material Contracts. These processes defined by Buyer may entail certain obligations of the Enabled Supplier, in particular in relation to ordering volumes, ordering forecasts, ordering market share, lead time, safety stocks, exchange of information etc. Supplier undertakes to fully comply with such ordering and call- off processes and in no event shall the Enabled Supplier procure or attempt to procure volumes in excess of the volumes, or of the market share as applicable, agreed by Buyer. The Enabled Supplier shall inform Buyer in a timely manner of its specific requirements for Enabled Material and on the quantity it reasonably requires for the subsequent years and shall comply with such requirements by ordering the corresponding quantities from the relevant Enabling Supplier(s).

7 The Enabled Supplier shall be responsible for placing all relevant orders with the relevant Enabling Suppliers to call off Enabled Material (within the processes defined and shall be solely responsible for all payments as well as for any dispute or performance issue with the Enabling Supplier. The Enabled Supplier shall indemnify Buyer from any recourse claims the Enabling Supplier may have against Buyer, in particular recourse claims for quantity and/or market share ordering defaults and/or payment defaults by the Enabled Supplier. The

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

1)0( PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7)0( MISCELLANEOUS

Enabled Supplier shall forthwith notify Buyer of any dispute and shall continuously provide full details of such dispute to Buyer. Where Buyer, in its reasonable and justifiable discretion, recommends to Supplier to make payments to the Enabled Material supplier despite a dispute, Supplier shall comply with such recommendation.

8 The recurring element of the price for the Item under the Order may require an adjustment to reflect changes in the price of Enabled Material procured by the Enabled Supplier. If applicable, the terms and conditions for any such Item price change shall be defined in the Order and any resulting price change shall be confirmed thru an amendment to such Order.

9 Where Supplier fails to comply with its obligations towards the Enabling Supplier or to Buyer in connection with the Enabled Material Contract (e.g. where the Enabled Supplier fails to make due payments to the Enabling Supplier or payments recommended by Buyer), Buyer shall be entitled to unilaterally suspend Supplier's status as an Enabled Supplier. In this event, (i) Supplier shall cease any call-offs and orders under the Enabled Material Contract, (ii) the price adaptation mechanism in item 8 shall end and (iii) the Item prices applicable before the suspension of the Enabled Supplier status shall continue to apply. The foregoing shall not limit Buyer's other rights and remedies under the Order, in particular the right to terminate or to claim damages. It is understood that it also constitutes a material default under the Order if the Enabled Supplier materially fails to comply with its obligations towards the Enabling Supplier in connection with the Enabled Material Contracts, in particular if the Enabled Supplier is in payment default under an Enabled Material Contract.

10 Where the Enabled Supplier has diligently ordered Enabled Material in accordance with this Article and has complied with all of its obligations vis-a-vis the Enabling Supplier and Buyer in connection with the Enabled Material Contracts and is nevertheless unable to receive the required material, the Enabled Supplier shall use its best efforts to resolve the issue with the Enabling Supplier, keeping Buyer copied as deemed necessary. If in spite of such actions substantiated to Buyer the required material is still unavailable, and to the extent the appropriate remedy terms and conditions of the Enabled Material Contract could not be disclosed by Buyer to the Enabled Supplier, the Enabled Supplier shall notify Buyer, who will contact the Enabling Supplier to seek a solution as required. In such case and where it is necessary for the Enabled Supplier to meet its obligations under the Order, the Enabled Supplier may request permission to purchase required material from sources other than the Enabled Material Contracts (Spot Purchasing). Buyer may, at its option, authorise the Enabled Supplier to Spot Purchasing in writing and on a case-by-case basis. Buyer shall ensure that its personnel in charge of the Enabled Supplier's requests for Spot Purchasing closely co-operate with the Enabled Supplier's personnel in charge of the ordering and call-off processes according to item 6 above.

11 The obligations and liabilities of the Parties under this Order shall in no way be affected by the purchasing of Enabled Materials by the Enabled Supplier except where Buyer has refused a legitimate request for Spot Purchasing by the Enabled Supplier. Buyer shall in no event be liable for performance of the Enabling Supplier vis-a-vis the Enabled Supplier.

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

UDC PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7XX MISCELLANEOUS

	12 Dependent upon the specific Enabled Material, the benefit of the Enabled Material Contract may require the Enabled Supplier to build and maintain safety stocks. Any such requirements shall be agreed between Buyer and the Enabled Supplier. No Additional Charge Issue Parts If applicable, Spirit shall make the "No Additional Charge Issue Parts" available to Supplier in accordance with provisions to be provided by the Procurement Agent
031	Patent, Trademark And Copyright Indemnity Seller will indemnify, defend and hold harmless Buyer and its customer 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 made in accordance with Seller's Background Intellectual Property or the Foreground Intellectual Property by either Buyer or its customer. Buyer and/or its customer 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 indemnitees. Seller will have no obligation under this article with regard to any infringement arising from a.          Seller's compliance with formal specifications issued by Buyer where infringement could not be avoided in complying with such specifications or b.          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 article only, the term Buyer will include Buyer, Inc. and all buyer, Inc., subsidiaries and all officers, agents and employees of buyer, Inc., or any buyer, Inc., subsidiary
050	Ownership Of Intellectual Property Foreground Intellectual Property
	All intellectual property and technical work product, including to the extent protectable by ownership rights, but not limited to, ideas, inventions, know-how, 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 pursuant to the Purchase Document ("Foreground Intellectual Property") will be the exclusive property of Buyer and be delivered to Buyer

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

UDC PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7XX MISCELLANEOUS

	promptly upon request. Works of Authorship and Copyrights All works of authorship (including, but not limited to, documents, drawings, software, software documentation, software tools, photographs, video tapes, sound recordings and images) created 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 pursuant to the Purchase Document, together with all copyrights subsisting therein, will be the sole property of Buyer. To the extent permitted under United States copyright law, all such works will be works made for hire, with the copyrights therein vesting in Buyer. The copyrights in all other such works, including all of the exclusive rights therein, will be promptly transferred and formally assigned free of charge to Buyer. Seller's Background Intellectual Property
	All ideas, inventions, know-how, information, data, documents, drawings, software, software
	documentation, software tools, designs, specifications, and processes owned or controlled by
	Seller prior to the effective date of the Purchase Document or generated or acquired by Seller
	independently from Seller's performance of the Purchase Document ("Seller's Background
	Intellectual Property") shall remain the exclusive property of Seller.
	Seller shall disclose to Buyer of any of Seller's Background Intellectual Property related to the products or any work performed by Seller under any Purchase Document. The disclosure shall include a description of Seller's Background Intellectual Property and, if applicable, a reference to the patent number, patent application number, or other identifying information. If Seller fails to disclose to Buyer of any of Seller's Background Intellectual Property, Seller shall not enforce any of its undisclosed Background Intellectual Property, nor institute a legal action regarding the same, against Buyer, Buyer's subcontractors, Buyer's suppliers, or Buyer's customers.
101	Continuous Improvement
	Supplier undertakes that it shall, throughout the duration of the order: (a)            maximise the quality and efficiency of each Item; and (b)            minimize the acquisition, development, manufacturing, operating and other costs, which arise in connection with it. Supplier undertakes to improve, at its own cost and expense, the competitiveness level of the Item to ensure that Buyer has, at all times the most competitive Item in the marketplace. This includes Supplier undertaking to perform design to cost analysis on the Item. Supplier shall develop and maintain in its organization, a design to cost process. Any cost reduction initiative considered for implementation will be based upon a business case substantiating the undertaking of such initiative. Design to cost activities consist in Supplier and Buyer jointly developing a process contributing to convergence to the target recurring price, as follows: -Identification of Buyer's requirements influencing recurring and non-recurring cost -           Identification of opportunities: Supplier's proposed alternative design or process solutions and/or relaxation of Buyers' requirements

SPIRIT AEROSYSTEMS Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

UDC PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7)0( MISCELLANEOUS

-Analysis of such opportunities to quantify associated cost, performance, planning to enable Buyer's decision-making

-Updating of such repercussions in the Order as applicable subsequent to Buyer's decision.

-       Including Buyer support for optimization of pricing with respect to Enabled Materials To develop such process, Supplier shall appoint a contact person in its organization and shall provide Buyer with:

-       Detailed recurring price breakdown including non-recurring price amortization

-       List of potential trade-offs identified with associated repercussion

-       List of Buyer's requirements to be challenged and potential associated benefits. Supplier shall update and further refine the above input at least every three (3) months depending on the various stages of the Development Schedule. Buyer shall select, from the above list of opportunities, those to be further analyzed in order to maximize the benefits at Aircraft level. Upon Buyer's decision to implement changes (alternative solution, requirement relaxation), the Order shall be updated to reflect the agreed Item price and/or performance impacts. For the avoidance of doubt, the cost of non-recurring work and investment associated with each cost reduction initiative shall be recovered before sharing any savings resulting from such cost reduction initiative.

Supplier's improvement shall be measured periodically by Buyer in accordance with the following target criteria agreed upon by the Parties, which shall be subject to an annual review:

(a)industrial performance including the quality of the Item and associated services, reliability of deliveries, reduction of industrial cycles, tight physical flows, productivity;

(b)technical competitiveness including the contribution to the improvement of the item via the use of technologies and processes offering optimal cost/performance ratios;

(c)support competitiveness including the continuous improvement of Support services to meet the Customers existing and future needs in all areas of support (such as price, reliability repairs);

(d)price competitiveness including the continuous price competitiveness in line with

market trends, evolution of design and manufacturing techniques, and optimisation of purchases; and

(e)any other target criteria agreed upon by the Parties which are likely to generate cost

reductions, to improve reliability and maintainability, and/or to reduce the weight of the Item.

Supplier shall as requested by Buyer deliver reports on the competitiveness of the Item having regard to (i) the criteria set out above and of the Order and (ii) all products and services available on the market and competing with the Item.

In the event that Supplier's performance is found deficient with regard to the criteria under this Note, Supplier shall promptly provide Buyer with an assessment of the issues causing the deficiency and a draft corrective action plan, including target criteria for improvement. This information shall be reviewed and agreed upon by the Parties. Upon acceptance of the assessment and corrective action plan by Buyer, Supplier shall comply with such plan. In order to assist in the review of the actual performance against the target criteria, Supplier undertakes to provide to the Buyer detailed information reasonably requested by Buyer, including but not limited to costs related to the Item.

In the event no acceptable assessment and corrective action plan is proposed by Supplier, pursuant to this Note, or if the objectives of the accepted corrective action plan are not met

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

UDC PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7XX MISCELLANEOUS

	within a reasonable time scale, the Supplier shall be considered to be in material breach of its obligations under the order.
215	Certification Support
	Supplier agrees to support Buyer in all activities associated with the Item and the Aircraft certification by the Aviation Authorities (including rig testing and Aircraft ground and flight testing) by providing inter alia in accordance with the Order, Spare Parts, Tooling and test equipment, support data, on site field engineers and support personnel, data and documentation in respect of the Item, for the purpose of ensuring that the Item integrated on the Aircraft fulfils all requirements of the Aviation Authority or any Customer's certifying authority. If an issue is identified which might cause the Certificate of Airworthiness to be revoked because of an alleged defect in the Item, Supplier shall undertake all necessary actions to remedy the situation. Such actions may include, but are not limited to, the development of modifications, inspections and repair solutions, including the provision of Spare Parts, for new and in-service Aircraft. If a possible unsafe condition is identified by or comes to the attention of Supplier, then Supplier shall notify the Buyer no later than 72 hours after the identification of the unsafe condition by Supplier. Supplier shall perform all actions and/or support Buyer in performing all actions as provided by the Order to gain, maintain and/or regain certification.
216	Weight
	The Seller recognizes that Spirit or Spirit's Customer shall design the Item for production at the optimum weight. Accordingly, the Seller shall proactively support this aim by seeking and proposing to Spirit any suggestions and improvements relevant to the design and manufacturing of the Item for the purpose of achieving weight reductions Notwithstanding the above, the Seller shall deliver the Item in compliance with the Specification stated in this agreement except to the extent authorized by Spirit's SCPA. Should the Item delivered not comply with the Specification or the actual weight of the Item be above the weight agreed upon at First Article Inspection or upon completion of any other sampling period at any other sampling interval agreed upon between the Parties, the Seller shall promptly advise Spirit and shall put in place a corrective action plan to comply with the Specification or the weight requirements, as required by this agreement. Seller is required to weigh the first three (3) production parts for all new part numbers in accordance with GRAMS requirements throughout the entire contract period and report that data to Spirit prior to shipment. Seller is to use only equipment that is certified to industry standards for accuracy and precision. When Seller is providing an item determined by Spirit to be a "Major Assembly" and the item weight is equal to or greater than 101.5% of the nominal weight as defined by Spirit's or Spirit's

SPIRIT AEROSYSTEMS ,.. Supplemental Notes Airbus A350 XWB Program

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0)0( ADMINISTRATIVE GENERAL4)0( DELIVERY/PACKAGING/IDENTIFICATION

UDC PRICING 5)0( PROPERTY

2)0( DEVELOPMENTAL 6)0( QUALITY

3)0( INSPECTION 7XX MISCELLANEOUS

Customer's engineering: a.Seller shall submit an action plan to decrease the overall weight of the assembly to Spirit within 20 manufacturing days of the original weight determination. b.     Action plan must be approved by Spirit. c.Seller must work to immediately implement this action plan upon approval.

685

Supplier shall fulfil the requirements of certification and approval by Purchaser as defined in General Requirements for Aerostructure & Material Suppliers (GRAMS) Compliance Analysis Matrix (CAM) to be provided by Buyer. All costs associated with Suppliers quality management system and/or special process certifications, certification maintenance and any other subsequent certification or approval, shall be borne by Supplier. Supplier shall be responsible for its sub-contractors compliance with the provisions of this sub-contract.

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	ADMINISTRATIVE
002	All specifications, exhibits, drawings, or other documents, which are referenced in this order, whether or not attached, are incorporated herein by reference.
005	Liquidated Damages
	In the event of a Non-Excusable Delay in delivery (any delay other than those excusable delays as defined in Spirit‟s General Terms Agreement, Excusable Delay Section), Spirit may, at Spirits option, accept products that are not delivered on or before the required delivery date. Delay is further defined to include failure to maintain the Minimum level of the Min/Max inventory methodology as set out in PF­502 “Consumption Based Ordering Guidelines”. The parties acknowledge, however, that Supplier would be liable for all additional costs incurred by Spirit because of such delay(s), which may include, by way of illustration and not of limitation: additional expense related to administrative costs, telecommunication costs, additional or premium transportation charges, special handling expenses, and various anticipated and unanticipated costs to install the products out of the normal manufacturing sequence. The Parties further acknowledge that the nature and actual amount of costs associated with delivery delay are uncertain and difficult to calculate. Therefore, Spirit may choose, in its sole discretion, to require Supplier to pay Spirit liquidated damages. The parties acknowledge that such payments are not intended as a penalty, but are, in lieu of the actual damages measured by such costs. If Spirit chooses to recover liquidated damages, they shall be equal to 1 % of the value of the delinquent items per day of delay or a minimum of $100 for each item per day of delay. The parties agree this calculation represents a reasonable estimate of the additional costs to be incurred by Spirit in connection with a delivery delay. Accumulation of liquidated damages will be subject to a grace period of five (5) days per item after which liquidated damages shall begin. Spirit‟s choice to recover such liquidated damages for delayed delivery on any one or more occasions shall not, however, preclude Spirit from recovering the actual costs incurred because of delayed delivery on any other occasion. Spirits exercise of rights under this provision shall not preclude Spirit from exercising its option to terminate this Purchase Contract/Purchase Order for an Event of Default by Supplier as provided in Spirit General Terms Agreement, Cancellation for Default Section, even if Supplier has (a) paid such liquidated or actual damages to Spirit on prior occasions, or (b) if repeated incidents of late deliveries in the aggregate (or a single significant incident of delay) materially adversely affect Spirit‟s ability to enjoy the bargained for benefits of this Purchase Contract/Purchase Order on an ongoing basis.

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

033	The Procurement Agent/Material Management Analyst shown on the face of this Purchase Contract/Purchase Order is the only representative authorized by Spirit AeroSystems, Inc. to change or modify any requirements contained herein.
035	Seller will be responsible for the prompt payment of all persons who perform labor upon or furnish services, materials, equipment, supplies, or other items used or to be used in the performance of the work called for by this order, and Seller shall defend protect and save harmless Spirit AeroSystems, Inc. from and against all liens, claims, suits and actions for such labor, services, materials, equipment, supplies or other items whether brought by Seller's subcontractors or any lower tier subcontractors.
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the "Commodity Listing" included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the "Commodity Listing" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form PF-550, Changes Section, 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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller's full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
	PRICING
107	This Purchase Order/Purchase Contract is a firm fixed price contract.
128B	Discrepant Charges to Seller. A.        If a discrepant shipment is received as a result of Seller error, which does not permit inspection and receipt of the shipment, the Seller will be charged one percent of the value of the shipment or a minimum of $100 per discrepant shipment. If the Seller‟s material is rejected at Buyer‟s Facility, the Seller will be charged one percent of the value of the shipment or a minimum of $250 per rejection tag, exclusive of the material disposition.

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	C.Material shipped above the allowable purchase order tolerance, without prior approval from Buyer, will at Buyer‟s option be returned at Seller‟s expense or Seller will be assessed $150 handling charge.
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List (F08-04605) will, if required, be submitted by the supplier, to the Buyer‟s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T-.
155	If required, a Tool Usage List (F08-04605) will be submitted by the supplier, to the Buyer‟s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from reworked tool(s).
	SHIPPING
202	BUYER FIRST ARTICLE INSPECTION (BFAI) – If BFAI activity is required at the Seller‟s facility prior to shipment then Seller shall notify Buyer to schedule a comparable inspection and coordinate the required inspection/verification activity. Subsequent engineering, inspection, manufacturing or tooling changes for specific characteristics will require the Seller to notify Buyer. At the minimum, Seller shall make the following available in support of the BFAI for the article being reviewed: 1.       The applicable purchase contract, material/process certifications, manufacturing and inspection records; 2.       The applicable design data; 3.       The applicable documented configuration baseline and configuration summary; 4.       The applicable Material Review Board (MRB) actions; 5.       The applicable acceptance and qualification test results; 6.       The record of Buyer approval for supplier drawing and test procedures; 7. Completed Supplier First Article Inspection (SFAI) documentation. Seller shall maintain a copy of the completed Buyer First Article Inspection Report (BFAIR) along with the completed Seller First Article Inspection documentation in accordance with contractual quality record retention requirements.
206	SHIPPING DOCUMENTATION REQUIREMENTS The Seller‟s shipping documentation shall contain the following: A Packing Sheet; A Certification of Compliance Statement (may be included as part of the packing sheet); Evidence of Seller‟s Product Acceptance; A copy of any completed Buyer corrective action request follow-up documentation for article(s) being shipped; Evidence of Buyer‟s product acceptance, when Buyer Source Acceptance is required; Serialized Number Control (SNC) data in accordance with D016Z006-01

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	A Serialized Parts List identifying parts with an assigned serial numbers. The list shall contain the part numbers, part nomenclature and part serial numbers. This list shall also include part change letters when applicable; The NCR/rejection tag number(s), as applicable; Control identity of the end item deliverable of raw material or purchased articles, as applicable. The control identification is traceable to the product processed in a single run (same manufacturing date, lot, batch, heat, job or shop traveler number). When multiple lots are included in one shipment, Seller shall clearly separate the control identity of the respective lots. In addition to the above, Seller‟s shipping documentation shall also include the following: Certification listing all articles which must be procured from Boeing Qualified Manufacturer. Certifications must contain the following information: The article specification, drawing or standard and revision; Name and complete address of the Boeing Qualified Manufacturer; Name of the Manufacturer‟s Authorized Distributor for D590 standards when the purchase document is not placed with the manufacturer; All D1–4426 Certified Special Process (CSP) certifications are available for review, as applicable; The material certification(s) are available for review, as applicable. The CAR number(s).
	INSPECTION
311 B	Seller recognizes that prior to the receipt of Digital data, a proprietary information agreement must be on file. Additionally the Supplier must have Boeing DPD approval per D6-51991 and Spirit DPD approval per MAA1-10009-1.
333	Supplier must retain on file the results of the final inspection for all kitted parts or assemblies that will include a dimensional inspection, temper inspection per BAC 5946 for aluminum alloys, and hardness inspection per BAC5650/BSS7350 for steel and CRES alloys.
363A	If Seller is not presently on distribution for Buyer document(s) necessary to comply with this contract, copies may be obtained by contacting the SM&P representative‟s name that appears on the face of this order.
	DELIVERY/PACKAGING/IDENTIFICATION
412A	Parts are to be marked per BAC 5307
413	If barcodes are used, package per the D6-81628 Shipping Label Barcode preparation and Placement

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	Document.
437	If parts have heat numbers they are to be stamped individually with the heat number.
459	Contractual Requirements for Rubber Test Slabs a)          Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer‟s Procurement Representative via purchase order to supplier. b)          Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot of Boeing BMS rubber specifications must be sent with each shipment to Buyer. Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.
460	Unless explicit direction is given to the contrary, no articles (or constituent parts thereof) ordered in support of Boeing programs shall contain any FAA-PMA markings. The articles shall not be certified under an FAA-PMA approval and the accompanying paperwork (e.g. packages, shippers, etc.) shall not contain any FAA-PMA markings.
	PROPERTY
501	BOEING COMMERCIAL TOOLING – SELLER‟S QUALITY REQUIREMENTS If Seller uses Boeing tooling then Seller‟s quality system shall maintain records to assure compliance with all the requirements of D33200-1 „Boeing Supplier Tooling‟ document, all processes and flows will be in accordance with STM-130030-1 „Spirit AeroSystems, Inc. Tooling Requirements‟. All quality checks, verifications, and records shall be presented with the Spirit AeroSystems, Inc. Certified Tool List. These quality records shall support the validations of the Quality Manager and Officer of the Company‟s signature for compliance statement on the Spirit AeroSystems, Inc. Certified Tool List and/or Tool Usage List. A.            Record Requirements 1.Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Boeing‟s applicable tooling manual and engineering drawing. Seller‟s inspection stamp affixed to show compliance and acceptance of completed tool. B.            Manufacturing Records 1.Seller‟s manufacturing plan shall provide traceability for verification of need, function, and usage for each tool listed on the Spirit AeroSystems, Inc. Certified Tool List. C.Design Records 1.Seller‟s Quality Assurance shall verify the maintenance of the following tool engineering data per D33200-1 „Boeing Supplier Tooling‟, Section 1.15 and STM­130030-1 „Spirit AeroSystems, Inc. Tooling Requirements‟, Section 10. a.           one complete set of reproducible drawings submitted to Buyer

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

b. one complete set of reproducible drawings retained with tool

D. Tool Designs

1.            In order to maintain tool design standards, it is mandatory that tool designs be

governed by the requirements of Boeing and Spirit AeroSystems, Inc. tooling manuals, engineering drawings or equivalent approved standards.

2.            Seller‟s Quality Assurance shall verify that all tool designs be governed by

Boeing/Spirit AeroSystems, Inc tooling standards.

3.Seller‟s Quality Assurance shall verify all Seller tool designs have been approved by

Spirit AeroSystems, Inc.‟s Tool Design organization:

a.            for master tooling,

b.            for all major or final stage tools controlled by master tooling,

c.            for tools that control interchangeability or replaceability items,

d.            for all tools used as media for quality acceptance that have tool design

requirements,

e.for all tools used for periodic and configuration control.

E. Tool Fabrication

1.            Seller‟s Quality Assurance requirements verify and inspect progressively any feature of

the tool that cannot be inspected after tool is complete.

2.            Maintain and retain all progressive inspection record as required (ref. E.1 above).

3.Inspect and verify all tool tryouts or tool proving.

F.Identification of Accountable Tools

Seller‟s Quality Assurance shall verify all tools are identified per Boeing‟s D33181-40 „Tooling Reference and Spirit AeroSystems, Inc. STM-130010-23 „Tool Identification‟.

1.           No tool will be considered complete that is not properly identified and accepted by

Quality Control.

2.           Seller‟s Quality Assurance shall verify acceptable parts or assemblies have been

produced by all tooling and affix steel quality acceptance stamp in tool tryout space.

Note: If tool tryout is not required, stamp “NR” beside inspection acceptance stamp.

3.Seller‟s Quality Assurance shall verify the latest engineering drawing revision or tool

drawing revision.

G. Certified Tool List

1.            Seller‟s Quality Assurance shall verify the completeness and accuracy of each tool on

the Spirit AeroSystems, Inc. Certified Tool List.

2.            Seller‟s Quality Assurance manager shall sign and/or use their quality acceptance

stamp to validate compliance to all D33200-1 „Boeing Supplier Tooling‟ requirements and STM-130030-1 as stated in upper right hand section of the Spirit AeroSystems, Inc. Certified Tool List. Signature of an Officer of the company is also required.

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	3.            Seller shall have a rework tool order to show specific rework instructions have been completed and Seller‟s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per D33181-40 „Boeing Tooling Reference‟ and STM-1 30010-23 „Spirit AeroSystems, Inc. Tool Identification‟. Seller‟s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer‟s Quality Assurance for validation.
502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller if required in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200 and D33041, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200 and D33041, covered by this Purchase Order/Purchase Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Buyer.
504	Seller shall use any and all Tooling only for the purpose of performing its obligations under this purchase Order/Purchase Contract and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this order.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200 and D33041, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Buyer.
506	Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. 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 Buyer.
507	If required, Seller shall provide at no cost to Buyer on Boeing‟s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Seller or its subcontractors in accordance with

Supplemental Procurement Notes Boeing 787 Program

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	Document D33200, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	If required, Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Buyer.
509	If required, Seller shall prepare a list or lists ("Certified Tool List") in accordance with the D33200, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	Seller shall inspect all tools to the Engineering immediately on receipt of the tools and shall perform a first part inspection to the Engineering. If tools require rework, Buyer is to be notified immediately.
511 A	Accountability for tooling fabricated on this Purchase Order will be transferred to Blanket Accountable, Tooling Order T-______ on receipt of a properly prepared Certified Tool List (F08-04605). The
	Certified Tool List is to be signed by an officer of the Seller's Quality Control representative, by a Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Buyer PQA and proof acceptable parts were produced from the tooling.
514A	When returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, F08-04605, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Buyer PQA and proof acceptable parts were produced from the reworked tooling.

Supplemental Procurement Notes Boeing 787 Program

PF-515 B787 Rev 07/15/10

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	If Buyer Source Inspection is available, the TUL must also be stamped by the servicing Source Quality Control Representative. Accountable Blanket Tooling Order T- .
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200,”Boeing Suppliers‟ Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.            Test reports from each block of material B.            A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.
	QUALITY
615	As stated is D6-83721 All Program Partners and Internal / External Suppliers who supply hardware end items as "Supplier Custom Parts" are required to be in compliance with all requirements contained within this document. D6-83721 states that Internal / External Suppliers are required to provide configuration definition which will be included as a portion of the Purchased Article Configuration Traveler (PACT). The Purchased Article Configuration Traveler “PACT” must include the SCPPL/UPL version number, all Module Revisions/Change Levels and the line unit number. If there are no deviations only the top portion of the PACT must be completed and sent with shipping documents. To determine proper form number to convey this data contact your Supply Chain Procurement Agent.
627	Seller and their sub-contractor(s) shall utilize sources listed in Document D1-4426 “Boeing Approved Process Sources” whenever the manufacturing and/or inspection processes listed in D1– 4426 are performed on articles on this purchase document. The current version of D1–4426 is accessible via the Internet at the following web address http://www.boeing.com/companyoffices/doingbiz/d14426/index.html Seller shall maintain actual processor certifications for all D1–4426 special processes performed in accordance with the requirements of this purchase document. In addition to all certification requirements defined by the applicable processing specification(s), the certifications shall contain the following: ·    The complete part number of the article(s) represented by the certification; ·    The total quantity of the parts (for each part number) represented by the certification; ·    The company name and address of the performing processor. The address shall include street address, city and state; ·    The specification number(s) and revision letter of the D1–4426 process performed. Seller shall provide such certification upon Buyer request. Seller shall provide their sub-tier process sources with the prime site of Buyer (that is the design authority) as well as the aircraft model number or hardware that the part numbers represent.

Supplemental Procurement Notes Boeing 787 Program

PF-515 B787 Rev 07/15/10

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX SHIPPING 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	Seller‟s use of approved processors does not relieve Seller from verifying that the processor and the product conforms to all applicable process specification requirements.
628	All parts painted with BMS10-11 Type I primer, Mil-PRF-23377 primer, and/or BMS10-11 Type II enamel in accordance with BAC 5736, Application of Chemical and Solvent Resistant Finishes, should be tested to the requirements defined within that BAC and BSS 7225, Tape Test Adhesion, as referenced.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	If castings are included on this order the packing sheet, certificate of compliance or certified test reports accompanying shipments shall certify that the castings have been inspected in accordance with D­13169
682	Where Boeing specifications and/or processes are listed within the detail design, specification control, or envelope drawing, incorporated by this purchase document, Seller shall adhere to the latest revision of the Boeing specification and/or process, unless otherwise specified in the purchase document.
683	A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller‟s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.
684	Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool Usage List that has been approved by Buyer‟s Procurement Quality Assurance.

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

	ADMINISTRATIVE/GENERAL
001	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.       Spirit Supplemental Procurement Notes (PF-515 B C-series) for Bombardier C Series Program B.       Spirit Supplemental Procurement Notes (PF-515) C.       Spirit General Provisions, Fixed Price Contract (PF-550) D.       Bombardier documents referenced within the Purchase Documents F.Engineering specifications In resolving any such conflicts, these documents shall be read as a whole and in a manner most likely to accomplish their purpose. Seller shall promptly report to Spirit in writing any inconsistencies in these documents, even if the inconsistency is resolvable using the above rules.
002	Force Majeure
	Buyer shall not be in default under this Agreement, if the cause of such default is caused by an unforeseeable and irresistible event affecting Buyer or Buyer’s Customer ("Force Majeure"). Such events may include, depending on the circumstances, events such as, but not limited to, acts of God, acts of the Government, fires, floods, epidemics, quarantine restrictions, labor strikes and freight embargoes.
003	Program Management
	Seller shall assume and provide to Spirit, at no additional cost, all program management and resources related to this Agreement including, but not limited to, program managers, engineers, procurement personnel, support personnel and test equipment and spares to comply with all of Seller's contractual obligations. Seller's program management and other resources shall be available at Seller's site and Spirit's site
004	Program Reviews
	Seller agrees to send representatives to Spirit's designated facilities at no charge to Spirit, to provide a status on the progress of the work and related subjects. Any attendance at any plant, or any participation in a meeting, or any action by either Party, pursuant to this Agreement or any Purchase Order, or otherwise, shall not relieve either Party of any obligations or transfer any obligations of either Party to the other Party.

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

005	Performance
	Seller shall promptly advise Spirit of circumstances or incidents which will have a material influence on Seller's performance under this Agreement. These circumstances or incidents may, without limitation, consist of the following: corporate financial instability, likelihood of insolvency or reorganization, upcoming collective bargaining negotiations, departure of key personnel, potential or actual law suits, potential strikes at Seller's or its
	Sellers' facilities, shortage of materials, pending freight embargoes, pending export limitation legislation and recently confirmed contract awards. Concurrently, Seller shall provide its risk management plan to prevent or minimize any impact on the performance of Seller's contractual obligations.
006	Work Management
	If Seller fails to carry out any of its material obligations under this Agreement, or if
	Seller notifies Spirit that it expects to do so and does not initiate a corrective action plan within five (5) Days of the receipt of Spirit's written notice, and then Spirit shall have the right to intervene in the management of the work. Spirit's right may be exercised, at any time, during any of the development phases, production phases or in service.
007	Product Numbers
	The Product numbers are provided primarily for reference purposes. If, during the term of this
	Agreement, Products' part numbers are changed or added, this Agreement shall continue to apply to the corresponding Products.
008	Sub-contractors
	Throughout the duration of this Agreement, Seller shall notify Spirit of any sub-contractors to be used by Seller or any proposed change to its sub-contractors. Spirit may require qualification and approval.
009	Termination Liability
	Spirit shall incur no termination liability for any Purchase Order cancelled or terminated within ten (10) days of issuance.
010	ITAR Free Aircraft
	Seller acknowledges the importance for Bombardier of commercializing an ITAR-free aircraft and agrees to maintain Export Control processes minimizing the risk of ITAR contamination of the Product throughout the life of the program. To the best of its knowledge and as of the
	Effective Date of the Agreement, neither the Product, nor any of its components or parts, are controlled or otherwise restricted from use or export under the International Traffic in Arms
	Regulations (hereinafter referred to as "ITAR Component").
011	Canadian Content

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

	Seller shall make its best efforts to obtain ten percent (10%) of Canadian content for each Product delivered.
012	Software
	Throughout the duration of the Agreement, Seller agrees to communicate and transfer data electronically with Spirit when and as required by Spirit. In this respect, Seller shall maintain software, software formats and versions, system operations, security procedures, signature procedures, transmission regulations and any other required procedures which are compatible with Spirit's systems, formats and procedures.
013	Use of Trademarks
	Seller shall not, without the prior written consent of Bombardier use any trademark or trade name of Bombardier.
	DEVELOPMENTAL
101	Source Control Drawing
	Suppliers providing products manufactured using Source Control Drawings shall adhere to the following: A.       Seller shall be fully responsible to design the Product in order that it meets all the requirements of this Agreement/Order. Without limiting the foregoing, Seller shall be responsible to perform all tests and reviews required to ensure that the Product meets the requirements of Spirit’s and Bombardier’s Requirements Documents, and performs its intended function when installed on the Aircraft. B.In the event that any other Seller must implement a material change to its Product as a result of an act or omission of Seller, Seller shall reimburse Spirit, Bombardier and other suppliers any costs and expenses incurred by Spirit, Bombardier or other suppliers in implementing said material change, to the extent caused by Seller's acts or omissions. C.Seller shall immediately implement the following, at no charge to Spirit, Bombardier or the Operator: a.       changes made to maintain Aircraft Certification; b.       changes made to remedy any safety issue; and c.changes made to comply with any mandatory airworthiness authorities' requirements. D.Seller Product will be able to support Item Guarantees as provided by MAA1-10098-1, Bombardier C Series Reliability Requirements Affected items will be noted in the Contract header text. E.In order to ensure proper interface and interaction of all Products incorporated on the Aircraft with other structures, systems, items or components of the Aircraft, Seller shall participate in and support the actions of other suppliers that require information, to adequately perform their respective work throughout the life of the Agreement.

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

	F.It is Seller's sole responsibility to ensure that Qualification or Certification based on either analysis or similarity can be substantiated to Spirit's satisfaction. Seller understands and accepts that if any Product fails to meet Spirit’s or Bombardier's Qualification or Certification requirements, whether by analysis or similarity, Seller shall conduct any and all testing required to meet the requirements of this Agreement. Seller shall bear all testing related costs. Seller shall meet its detailed plan and schedule for Qualification or Certification of the Products for use on the Aircraft, in accordance with Spirit’s requirements. Seller shall assume any costs incurred by Spirit (including, without limitation, flight testing costs) in relation to Seller's failure to perform its obligations. In the event that Spirit submits a proposal to Seller requesting a change in the Product for a reason other than those set out above, and the change is not the result of an act or an omission by Seller, the Parties shall promptly agree on the most appropriate technical and commercial solution to implement the proposed change and execute an appropriate Agreement amendment.
102	Airworthiness/Certification
	Suppliers providing products manufactured using Source Control Drawings shall adhere to the following: Until an Aircraft model has achieved Entry-Into-Service, Seller shall be responsible for, and shall make all changes to its Products and to its Products' interface points as required by Spirit, Bombardier or the airworthiness authorities at no cost to Spirit or Bombardier, as may be necessary to obtain or maintain Certification.
103	Non-Source Controlled Drawing Procured Equipment
	Suppliers providing products manufactured using supplier’s part numbers, industry standard part numbers or supplier part numbers built to an industry standard, will be able to support Item Guarantees as provided by MAA1-10098-1, Bombardier C Series Reliability Requirements. Affected items will be noted in the Contract header text.
	PRICING
201	Value Improvement
	Seller shall engage in a process of Value Improvement (VI). Seller shall identify cost reduction opportunities and work together with Spirit for implementation. Spirit may offer specific recommendations regarding, but not limited to, the incorporation of new technologies and process improvements intended to reduce Seller's costs or improve Product performance. Seller may offer specific recommendations regarding, but not limited to, Design for Manufacture (DFM), material used, or packaging and shipping improvements. All Value Improvement opportunities shall be reviewed by Spirit. Implementation will be determined by Spirit based on the cost to implement, and the final cost improvement opportunity. Cost reductions derived from the VI process will be negotiated.

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

202	Pricing of Derivatives
	Recurring base prices set forth in this Agreement shall apply to Products, or derivatives thereof, purchased under the Purchase Documents, which are supplied for any other aircraft manufactured by Bombardier and its subsidiaries or affiliates.
	DELIVERY/SCHEDULE
301	Schedule Changes
	Spirit may accelerate delivery up to one hundred and forty (140) days prior to delivery date and may decelerate delivery up to one hundred twenty (120) days prior to delivery date at Spirit’s discretion and at no charge. Any changes other than within the parameters set out above shall require the Seller’s approval.
302	Production Rate Capability
	Subject to a seventy (70) week notice or any other notice as mutually agreed by the Parties, Seller shall have the capabilities and capacity to support a final assembly line rate increase up to one (1) Structure per working day, excluding Replacement Products for the production line and Spare Products.
303	Stop Work
	In the event of lack of sales of the Customer’s Aircraft, Spirit may issue, at no charge to Spirit, a written Stop Work order to Seller in order to suspend the Work for twelve (12) consecutive months or less. During the suspension of Work, Spirit may issue written notice to restart the Work and Seller shall initiate a plan to restart the Work within ten (10) Days after receipt of such notice. A ramp- up plan shall be mutually agreed between the Parties. If suspension of the Work extends beyond twelve (12) months: Spirit may extend the suspension of the Work beyond twelve (12) months, subject to the Parties agreeing on the compensation owed by Spirit to Seller for Seller's Work in-progress and inventory; or Spirit may terminate all or part of this Agreement or any Purchase Order. Such termination shall be treated as a Termination for Convenience in accordance with the terms and conditions of PF-550, Spirit General Provisions, Termination clause. Seller hereby agrees to hold harmless Spirit from and against any and all claims, demands, suits, judgments, liabilities, losses, costs and expenses which result from suspension or termination of this Contract pursuant to this provision.
304	Divert Shipments
	Supplier shipments which are sent directly to Sprit’s customer or another Spirit sub-contractor must be accompanied by two (2) copies of the following documents,

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

	(one (1) inside the container and one (1) outside the container) 1)          Packing slips and certificate of compliance, or both; 2)          bill of lading, 3)          express courier receipt or waybill with the mention of the Purchase Order number and the part numbers; 4)          two (2) copies of the commercial invoice and/or Canadian and/or USA Customs invoice, as applicable, with the mention of a)             the Purchase Order number b)             the part numbers c)             the exact description of the Products, d)harmonized system code for purposes of clearing customs, e)             country of origin of the merchandise, f)             bill of lading or waybill numbers and declared value(s). The declared value(s) must include any non-recurring costs which Spirit has paid, or will pay, in addition to the recurring costs of the Products. For Repairs, Seller shall indicate the value of the Products, when new, and the value of the Repair.
	QUALITY
401	Quality Records
	Seller shall maintain, on file at the Seller’s facility, Quality records traceable to the conformance of product/part numbers delivered to Spirit. Seller shall make such records available to regulatory authorities and Spirit’s authorized representatives. Seller shall retain such records for a period of not less than (7) seven years from the date of shipment under each applicable Purchase Document for all product/part numbers unless otherwise specified on the Purchase Documents. Seller shall maintain all records related to the current first article inspection (FAI) for (7) seven years past final delivery of the last Product covered by the FAI. At the expiration of such period, Seller shall notify Spirit of their intent to destroy such records. Spirit shall either approve of the destruction or request delivery of such records. In the event Spirit chooses delivery of the records, Seller shall promptly deliver such records to Spirit at no additional cost, on media agreed to by both parties.
402	Part Criticality Classification Number (PCCN) - Class 1 Requirements
	For each PCCN Class 1 part (including sub-tier Seller parts) Seller shall provide the following information to Spirit Procurement Agent, prior to release, for review and concurrence: ·       Manufacturing process sheet, including any technique sheets; ·       List of special processes applicable;

Rev 12/7/10

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

	·       List of sub-tier sub-contractor used for special processes (if applicable); ·       List of sub-tier sub-contractor used to manufacture the part (if applicable); ·       List of inspection techniques to be used to ensure the specific ·       manufacturing, test, process, inspection requirements and/or failure criteria identified on the drawing have been complied with; ·       List of material, tooling, and any special equipment; ·       Seller shall ensure that the work instructions (including sub-tier sub-contractor work instructions) are identified as "PCCN Class 1 Part" once Bombardier has concurred with the above information. ·       Seller shall ensure that the work instructions (including sub-tier sub-contractor work instructions) for PCCN Class 1 parts are identified as "FROZEN NO CHANGE PERMITTED". ·       Seller shall submit any proposed changes (including sub-tier Seller proposed changes) to PCCN Class 1 Part manufacturing process sheets to Spirit for concurrence prior to incorporation of the change.
403	Part Criticality Classification Number (PCCN) - Class 2 Requirements
	For each PCCN Class 2 part Seller shall submit a list in electronic format, by part number, of all released manufacturing process sheets (including sub-tier sub-contractors) to Spirit Procurement Agent for review and concurrence. Seller shall submit a revised PCCN Class 2 parts listing Spirit Procurement Agent for review and concurrence when changes are made to any of the applicable manufacturing process sheets (including sub-tier sub-contractors).
404	Nonconforming Product
	In the event that Seller's Product does not conform to a requirement, Spirit shall notify Seller of such non-conformance. Such non conforming Product shall be either (i)       Repaired within one (1) working day of Spirit's notification to Seller or (ii)       returned to Seller and replaced by another Product within one (1) working day of Spirit's notification to Seller, at Seller's expense. In the event that Spirit elects to return the Product to Seller, title of ownership of such Product (if title has already been transferred) shall immediately vest in Seller. In the event that Seller is unable to comply with the one (1) working day requirement, Seller shall promptly advise Spirit and define a delivery date that is acceptable to Spirit.
405	Configuration Management
	For parts engineered by the Seller Bombardier Configuration Management (CM) practices as documented in the engineering manual BM6010 must be followed. All Sellers are required to comply with the material contained within this document. These practices define Bombardier requirements in areas such as, but not limited to: a)              Type Design (see BM 6010.03.01.11) b)              Type Approval (see BM6010.03.01.03)

Rev 12/7/10

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

	c)              Configuration (or End) Items (see BM6010.03.01.07) d)              Part Criticality Classification Numbering (see BM4010.02.03.03) e)              Interchangeability Codes (see BM4010.02.03.06) f)    Airworthiness Classification of Design Changes (see BM6032.01.08.19) g) Rules for Part re-identification (see BM4010.04.02.02) In order to comply with the CM practices, all Sellers and their sub-tier sub-contractors, as part of their engineering manual or procedures, shall establish a configuration management system to ensure: a)Technical and administrative functions identify, document, control, report and validate the physical and functional characteristics of a product. b)Engineering definition of products and their change history are known at any point in time and can be provided to Spirit upon request in a timely manner. c)Verification that all aspects of the change have been assessed for completeness, accuracy, and interface (including but not limited to performance, design, definition, justification, production, inspection, testing, logistic support). d)Whenever computer software or changeable digital processor instructions are integral to Products supplied to Spirit by a Seller, a software control policy (approved by Bombardier) shall be a documented part of the configuration management system. All questions with respect to CM should be addressed to Spirit for resolution and to ensure clear understanding. Sellers shall establish procedures to identify, document, review, approve and control all changes and modifications at their facilities prior to release as per section 4.4.6. A Seller’s part number shall change when the new part configuration meets any of the criteria established in Bombardier Practice BM4010.04.02.02 (Rules For Part Re-Identification). Seller product definition is part of the Type Design Data and as such a copy of the Seller Drawing that defines the Seller part (preferably in digital format e.g.: tif, cgm, pdf, etc.) must be provided to Spirit and Bombardier for type approval. Any changes to the Seller’s drawing must also be supplied to Spirit and Bombardier for Type Design Approval and to ensure acceptance when parts go through receiving inspection. Changes to engineering data affecting aircraft products shall be executed in compliance with the NOC practice per section 4.4.6 and controlled with regard to release and effectivity. In any event designs approved by Bombardier shall not be changed without the expressed written consent of Spirit and Bombardier approval authority.
406	Determining Acceptable Sources of Supply
	To determine which sub-tier sources of supply are acceptable to use in support of the various Bombardier programs and contracts, the Seller shall follow these steps: Identify the program to which the Bombardier bid request or contract applies. (1) Use the appropriate table (ref Tables T4.6.-1, -2, -3 and -4 of QD4.6-40). In the first column, find the type of product to be procured from the sub-tier. The second column contains acceptable sources of supply. The Bombardier list of approved Sellers can be found on the Internet at

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

	http://www.bombardier.com/en/aerospace/suppliers
407	Quality Process Control
	The Seller shall plan production, installation and processes that affect Product quality, and ensure they are carried out under controlled conditions. These conditions include: suitable production and installation equipment, documented work instructions, as well as suitable working environments. There shall be a clear definition of workmanship criteria or standards. Process equipment and personnel shall be qualified and approved as per the applicable requirements. Cleanliness and organization shall be appropriate to the work being performed. Records of process parameters, equipment and personnel qualifications/approvals shall be maintained. No changes to Seller process will be authorized without prior written consent of Spirit and Bombardier. Status of Sellers or sub-tier sub-contractors violating this condition will be reevaluated and reassessed by Spirit. Sellers using controlled processes, including sub-tier sub-contractors, shall be approved by Spirit and Bombardier and qualified for each controlled process they perform. National Aerospace and                                      Defense                                      Contractors AccreditationProgram(NADCAP) certification is mandatory for special processes listed in QD4.6-40 section 3. (Seller Classifications). The Bombardier controlled specifications is listed in BAEPM-001 available on the Internet. The Bombardier list of controlled processes approved Sellers is available on the Internet at: http://www.bombardier.com/en/aerospace/suppliers
	Variation from specified Bombardier process operating parameters is not permitted. "Request for Deviation to Materials and Process Specification - Form BT0213-01" shall be raised by Seller and submitted to Spirit for approval. Refer to QD4.6-40 section 5.3.
408	CONTROL OF QUALITY AND ENGINEERING RECORDS/DATA
	Quality                    and                   Engineering                            records/data                                       shall                     includeVitalrecords/dataandNon Vital records/data. Vital Records/data are document or data to be preserved to provide objective evidence that Products comply with approved design data and its safe operation. Non Vital Records/data are document or data generated to support and demonstrate that the quality system complies with stated policies. Records shall be in the form of hard copy, microfilm or electronic media. Electronic records shall be password-protected against inadvertent loss, destruction or tampering and be write-protected. Procedures shall define the methods used to identify, collect, index, file, store, maintain and establish the disposition of records. Quality and Engineering records/data shall be archived in accordance with established procedures or as defined by customers or regulatory authorities. Seller shall provide an adequate storage facility to protect all stored records/data from reasonably foreseeable damage (water, humidity, fire, insects and rodents, electrostatic interference, etc.). Vital records/data shall be retained for the life of the product. Non Vital records shall be retained for (3) years. At the expiry of the retention period, the records shall be offered to Bombardier with prior notice of at least six (6) months for further retention or disposal according to Bombardier’s written instructions. Quality and Engineering records/data shall be available to Spirit, Bombardier and regulatory authorities upon request. For this reason Quality and Engineering records/data shall be

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

	maintained in the English language or an accurate translation made from the original records created in the Seller’s native language.
409	SOURCE SUBSTANTIATED COMPONENTS
	The Seller of each production detail part identified as a Source Substantiated Component (specified on engineering drawing) shall, in addition to preparing a formal FAIR as per QD4.6- 40 section "4.10.6 First Article Inspection Report (FAIR)", submit the following with the report: a)Raw material traceability through a Certificate of Conformance from the manufacturer of the material. b)Fully approved Technical Sheets when required by the relevant Process Specifications. c) Fully approved Process Control Document when agreed between the Bombardier Seller and Spirit. The formal FAIR and associated documentation is accepted by Spirit only if the Product meets the contractual and technical requirements. Once accepted, the Seller can make no changes to the following without prior approval of Spirit: a)     The method of manufacture b)     Process Control Document (if applicable) c)     Technical Sheets d)     Utilization of sub-tier processors. Note: All raw materials shall be procured from Bombardier approved manufacturers.
	CUSTOMER SUPPORT
501	New Aircraft Warranty
	The warranty period for primary structural Products shall be for a period of forty-eight (48) months following delivery of the Aircraft to the Operator. This warranty shall apply, without reduction, whether or not the Product was replaced, or Repaired, whether once or more than once, prior to or after delivery of the Aircraft to the Operator. If the Products fail to comply Seller shall promptly Repair, Overhaul, if requested by Spirit, or replace the Products and shall bear all costs and expenses incurred by Bombardier or the Operators in relation to the Repair, Twelve (12) months prior to Entry-Into-Service, Seller shall agree with Spirit to a standard number of hours for the removal, installation and Aircraft return to service testing per LRU. Such hours shall be the standard number of hours that Seller shall reimburse to Spirit for a failed Product within the warranty period. In the event that Spirit and Seller do not agree on a standard number of removal and reinstallation hours, Seller shall accept the number of hours claimed for the work done by the applicable service centre.
502	Warranty Improvement
	Upon request by Spirit, Seller shall improve its warranties to meet the Aircraft competition's warranty improvements or market demands. Such improvements to Seller's warranties shall not be unreasonably withheld. If applicable, the Parties will mutually agree on commercial terms.

Supplemental Procurement Notes Bombardier CSeries Program

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

503	Repair or Replacement
	Seller shall Repair or replace failed, damaged or defective Products as required during production. When requested, Seller shall provide a replacement no later than one (1) working day after receipt of Spirit requirements, in order to support the production schedule. In the event that Seller is unable to comply with the one (1) working day requirement, Seller shall promptly advise Spirit and define a delivery date that is acceptable to Spirit.
504	Damaged Products
	Seller shall notify Spirit of any Products that are considered to have been damaged due to improper operation, improper maintenance, mishandling, customer induced failure, Foreign Object Damage ("FOD") or accident. Seller shall provide to Spirit documentation to support the claim for chargeable Repairs covered under the warranty or a cost-by-hour plan. Such documentation shall include, as a minimum, the root cause, pictures of the foreign object and damage when available, as well as specifications which support why the Repair is chargeable. Seller shall provide to Spirit all pertinent findings. Spirit may visit Seller's facilities or any other location to inspect and verify Seller's conclusion that such Product has been found to meet the aforementioned criteria. Spirit shall notify Seller of the disposition of such Product. If Seller elects to Repair or replace such Product without Spirit's prior written consent, Seller's rights to be paid are immediately extinguished.
505	Service Bulletins
	Seller shall bear all costs, including labor costs at the then-current Bombardier rate, to implement corrective actions required by all Alert Service Bulletins related to defects that have been agreed to by both Parties as Seller's defect. Service bulletins shall be incorporated as mandated by regulatory authorities during shop visits or campaigned in the field, whichever is the most expedient. Subject to the Warranty period, for all Recommended Service Bulletins addressing defects that have been agreed to by the Parties as a defect of Seller's Product, Seller shall bear all costs for the implementation of corrective actions required by such Recommended Service Bulletins during maintenance of the Items or other components. Such costs shall be limited to the man hours as identified on the Recommended Service Bulletins.
506	Service Life Policy
	If Seller’s products are covered by the Service Life Policy then the following shall apply: The Service Life Policy ("SLP") provides a non-warranty cost sharing assurance that applies to Bombardier-specified SLP Components that fail within shall apply for a period of fifteen (15) years, or forty-five thousand (45,000) flight hours or forty-thousand (40,000) flight cycles following delivery of the Aircraft to the Operator, whichever occurs first. For clarification, the Structural Products comprehensive warranty coincides with the first forty-eight (48) months of the SLP. The SLP described shall apply to Components listed (SCPA must add)

Supplemental Procurement Notes Bombardier CSeries Program

Bombardier CSeries                                                              Page 12 of 12 515 B CSeries

Rev 12/7/10

SPIRIT AEROSYSTEMS, INC. Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE/GENERAL	1XX	DEVELOPMENTAL
2XX	PRICING	3XX	DELIVERY/SCHEDULE
4XX	QUALITY	5XX	CUSTOMER SUPPORT

	d)failure resulting from impact with an external object. Conditions for SLP Claims Seller's obligations under this policy are conditioned upon the following: a)         Spirit must notify Seller in writing within sixty (60) Days after the failure becomes apparent. b)         Spirit must provide reasonable evidence that the claimed failure is covered by the SLP and, if requested by Seller, that such failure was not the result of (i) a failure in a component not covered by this Policy, (ii) impact with an external object, (iii) a wrongful act or wrongful omission of Operator, or (iv) operation or maintenance contrary to applicable governmental regulations or Seller's instructions. c)If return of a failed SLP Component is practicable and requested by Seller, Spirit will return such SLP Component at Seller's expense.
507	Environmental Protection
	Seller must comply with all laws, statutes, decrees, treaties, regulations, orders, directives or norms of the United States, Canada or the European Union with respect to environmental protection or quality as they relate to the work performed under this Agreement.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	ADMINISTRATIVE
028A	In the event seller receives approval from Buyer’s Procurement Representative, prior to submitting non­conforming material and/or hardware, the seller shall document and process said items in accordance with Spirit Document MAA1-10034-1, "Supplier Non-conformance".
030	No 787 Related Work Notwithstanding anything to the contrary in the Purchase Document, Seller shall not, either alone or with others, perform pursuant to the Purchase Document any work that may be applicable to, developed for, incorporated in or to be incorporated in the 787. All work related to the 787 must be performed pursuant to separate agreement(s).
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the "Commodity Listing" included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the "Commodity Listing" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form PF- 550, Changes Section, 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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller's full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
	PRICING
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List (F08- 04605), if required, will be submitted by the supplier, to the Buyer’s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T­.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

155	If required, a Tool Usage List (F08-04605) will be submitted by the supplier, to the Buyer’s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from reworked tool(s).
	DELIVERY/PACKAGING/IDENTIFICATION
412A	Parts are to be marked per BAC 5307.
413	If barcodes are used, package per the D6-81628 Shipping Label Barcode preparation and Placement Document.
437	If parts have heat numbers they are to be stamped individually with the heat number.
459	Contractual Requirements for Rubber Test Slabs a)          Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer’s Procurement Representative via purchase order to supplier. b)          Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot of Boeing BMS rubber specifications must be sent with each shipment to Buyer. Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.
460	Unless explicit direction is given to the contrary, no articles (or constituent parts thereof) ordered in support of Boeing programs shall contain any FAA-PMA markings. The articles shall not be certified under an FAA-PMA approval and the accompanying paperwork (e.g. packages, shippers, etc.) shall not contain any FAA-PMA markings.
	PROPERTY
501	BOEING COMMERCIAL TOOLING – SELLER’S QUALITY REQUIREMENTS If Seller uses Boeing tooling then Seller’s quality system shall maintain records to assure compliance with all the requirements of D33200-1 ‘Boeing Supplier Tooling’ document, all processes and flows will be in accordance with STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’. All quality checks, verifications, and records shall be presented with the Spirit AeroSystems, Inc. Certified Tool List. These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Spirit AeroSystems, Inc. Certified Tool List and/or Tool Usage List.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX ADMINISTRATIVE GENERAL 1XX PRICING

2XX RESERVED 3XX INSPECTION

4XX DELIVERY/PACKAGING/IDENTIFICATION5XX PROPERTY

6XX QUALITY 7XX MISCELLANEOUS

A.            Record Requirements

1.Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Boeing’s applicable tooling manual and engineering drawing. Seller’s inspection stamp affixed to show compliance and acceptance of completed tool.

B.            Manufacturing Records

1.Seller’s manufacturing plan shall provide traceability for verification of need, function, and

usage for each tool listed on the Spirit AeroSystems, Inc. Certified Tool List.

C. Design Records

1.Seller’s Quality Assurance shall verify the maintenance of the following tool engineering

data per D33200-1 ‘Boeing Supplier Tooling’, Section 1.15 and STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’, Section 10.

a.       one complete set of reproducible drawings submitted to Buyer

b.       one complete set of reproducible drawings retained with tool

D. Tool Designs

1.          In order to maintain tool design standards, it is mandatory that tool designs be governed by the requirements of Boeing and Spirit AeroSystems, Inc. tooling manuals, engineering drawings or equivalent approved standards.

2.            Seller’s Quality Assurance shall verify that all tool designs be governed by Boeing/Sprit AeroSystems, Inc tooling standards.

3.Seller’s Quality Assurance shall verify all Seller tool designs have been approved by

Spirit AeroSystems, Inc.’s Tool Design organization:

a.            for master tooling,

b.            for all major or final stage tools controlled by master tooling,

c.            for tools that control interchangeability or replaceability items,

d.            for all tools used as media for quality acceptance that have tool design requirements,

e.for all tools used for periodic and configuration control.

E. Tool Fabrication

1.            Seller’s Quality Assurance requirements verify and inspect progressively any feature of the tool that cannot be inspected after tool is complete.

2.            Maintain and retain all progressive inspection record as required (ref. E.1 above).

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	3.Inspect and verify all tool tryouts or tool proving.
	F.Identification of Accountable Tools
	Seller’s Quality Assurance shall verify all tools are identified per Boeing’s D33181-40 ‘Tooling
	Reference and Spirit AeroSystems, Inc. STM-130010-23 ‘Tool Identification’.
	1.           No tool will be considered complete that is not properly identified and accepted by Quality
	Control.
	2.           Seller’s Quality Assurance shall verify acceptable parts or assemblies have been produced by all tooling and affix steel quality acceptance stamp in tool tryout space.
	Note:If tool tryout is not required, stamp “NR” beside inspection acceptance stamp.
	3.Seller’s Quality Assurance shall verify the latest engineering drawing revision or tool drawing revision.
	G.Certified Tool List
	1.            Seller’s Quality Assurance shall verify the completeness and accuracy of each tool on the Spirit AeroSystems, Inc. Certified Tool List.
	2.            Seller’s Quality Assurance manager shall sign and/or use their quality acceptance stamp to validate compliance to all D33200-1 ‘Boeing Supplier Tooling’ requirements and STM-
	130030-1 as stated in upper right hand section of the Spirit AeroSystems, Inc. Certified
	Tool List. Signature of an Officer of the company is also required.
	3.            Seller shall have a rework tool order to show specific rework instructions have been completed and Seller’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per D33181-40 ‘Boeing Tooling Reference’ and STM-
	130010-23 ‘Spirit AeroSystems, Inc. Tool Identification’.
	4.            Seller’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.
502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200-1 and D33041-1, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200-1 and D33041-1, covered by this Purchase Order/Purchase
	Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Buyer.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

504	Seller shall use any and all Tooling only for the purpose of performing its obligations under this purchase Order/Purchase Contract and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this order.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200-1 and D33041-1, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Buyer.
506	Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. 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 Buyer.
507	If tooling is a part of this Agreement, Seller shall provide at no cost to Buyer on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Seller or its subcontractors in accordance with Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	If tooling is a part of this Agreement, Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Buyer.
509	If tooling is a part of this Agreement, Seller shall prepare a list or lists ("Certified Tool List") in accordance

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	with the D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	With respect to Existing Tooling and New Tooling, and in the event Buyer furnishes Tooling to Seller, Seller shall conform to the standards and requirements of Document D33200-1-1. Buyer shall notify Seller of any action required for discrepant Tooling.
511A	Accountability for tooling fabricated in support of this Agreement will be transferred to Blanket Accountable, Tooling Order T- on receipt of a properly prepared Certified Tool List (WMFM 508).
	The Certified Tool List is to be signed by an officer of the Seller's Quality Control representative, by a Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Buyer PQA and proof acceptable parts were produced from the tooling.
514A	If returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, WMFM 508, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Buyer PQA and proof acceptable parts were produced from the reworked tooling.
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200-1,”Boeing Suppliers’ Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.            Test reports from each block of material B.            A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	QUALITY
615	As stated is D6-83721 All Program Partners and Internal / External Suppliers who supply hardware end items as "Supplier Custom Parts" are required to be in compliance with all requirements contained within this document. D6-83721 states that Internal / External Suppliers are required to provide configuration definition which will be included as a portion of the Purchased Article Configuration Traveler (PACT). The Purchased Article Configuration Traveler “PACT” must include the SCML revision number or all the SMPL Revisions and Change Levels, the line number and the A/P effectivity the end item was built to. A copy of the Purchased Article Configuration Traveler form is included in the D6-83721 document and as stated in this document a completed copy must accompany each end item delivered. Reference D953W001, “General Operations Requirements Document for Suppliers - External/Internal Suppliers/Program Partners”
627	Seller and their sub-contractor(s) shall utilize sources listed in Document D1-4426 “Boeing Approved Process Sources” whenever the manufacturing and/or inspection processes listed in D1– 4426 are performed on articles on this purchase document. The current version of D1–4426 is accessible via the Internet at the following web address http://www.boeing.com/companyoffices/doingbiz/d14426/index.html Seller shall maintain actual processor certifications for all D1–4426 special processes performed in accordance with the requirements of this purchase document. In addition to all certification requirements defined by the applicable processing specification(s), the certifications shall contain the following: ·    The complete part number of the article(s) represented by the certification; ·    The total quantity of the parts (for each part number) represented by the certification; ·    The company name and address of the performing processor. The address shall include street address, city and state; ·    The specification number(s) and revision letter of the D1–4426 process performed. Seller shall provide such certification upon Buyer request. Seller shall provide their sub-tier process sources with the prime site of Buyer (that is the design authority) as well as the aircraft model number or hardware that the part numbers represent. Seller’s use of approved processors does not relieve Seller from verifying that the processor and the product conforms to all applicable process specification requirements.
628	All parts painted with BMS10-11 Type I primer, Mil-PRF-23377 primer, and/or BMS10-11 Type II enamel

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	in accordance with BAC 5736, Application of Chemical and Solvent Resistant Finishes, should be tested to the requirements defined within that BAC and BSS 7225, Tape Test Adhesion, as referenced.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	If castings are included on this order the packing sheet, certificate of compliance or certified test reports accompanying shipments shall certify that the castings have been inspected in accordance with D-13169
682	Where Boeing specifications and/or processes are listed within the detail design, specification control, or envelope drawing, incorporated by this purchase document, Seller shall adhere to the latest revision of the Boeing specification and/or process, unless otherwise specified in the purchase document.
683	A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.
684	Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool Usage List that has been approved by Buyer’s Procurement Quality Assurance.
	MISCELLEANOUS
705	Registration, Evaluation and Authorization of Chemicals (REACH) compliance: If raw materials, parts or assemblies contain substances of very high concern (SVHCs) as prescribed by EU directive EC No. 1907/2006, Registration, Evaluation and Authorization of Chemicals, identification shall be included with the shipment. This identification should list the SVHC-designated chemicals present in the purchased article and the conditions under which handling precautions should be taken.

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	ADMINISTRATIVE
028A	In the event seller receives approval from Buyer’s Procurement Representative, prior to submitting non­conforming material and/or hardware, the seller shall document and process said items in accordance with Spirit Document MAA1-10034-1, "Supplier Non-conformance".
030	No 787 Related Work Notwithstanding anything to the contrary in the Purchase Document, Seller shall not, either alone or with others, perform pursuant to the Purchase Document any work that may be applicable to, developed for, incorporated in or to be incorporated in the 787. All work related to the 787 must be performed pursuant to separate agreement(s).
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the "Commodity Listing" included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the "Commodity Listing" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form PF- 550, Changes Section, 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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller's full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
	PRICING
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List (F08- 04605), if required, will be submitted by the supplier, to the Buyer’s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T-.
155	If required, a Tool Usage List (F08-04605) will be submitted by the supplier, to the Buyer’s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	reworked tool(s).
	DELIVERY/PACKAGING/IDENTIFICATION
412A	Parts are to be marked per BAC 5307.
413	If barcodes are used, package per the D6-81628 Shipping Label Barcode preparation and Placement Document.
437	If parts have heat numbers they are to be stamped individually with the heat number.
459	Contractual Requirements for Rubber Test Slabs a)          Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer’s Procurement Representative via purchase order to supplier. b)          Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot of Boeing BMS rubber specifications must be sent with each shipment to Buyer. Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.
460	Unless explicit direction is given to the contrary, no articles (or constituent parts thereof) ordered in support of Boeing programs shall contain any FAA-PMA markings. The articles shall not be certified under an FAA-PMA approval and the accompanying paperwork (e.g. packages, shippers, etc.) shall not contain any FAA-PMA markings.
	PROPERTY
501	BOEING COMMERCIAL TOOLING – SELLER’S QUALITY REQUIREMENTS If Seller uses Boeing tooling then Seller’s quality system shall maintain records to assure compliance with all the requirements of D33200-1 ‘Boeing Supplier Tooling’ document, all processes and flows will be in accordance with STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’. All quality checks, verifications, and records shall be presented with the Spirit AeroSystems, Inc. Certified Tool List. These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Spirit AeroSystems, Inc. Certified Tool List and/or Tool Usage List. A.            Record Requirements 1.Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Boeing’s applicable tooling manual and engineering drawing. Seller’s inspection stamp affixed to show compliance and acceptance of completed tool. B.            Manufacturing Records

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

1.Seller’s manufacturing plan shall provide traceability for verification of need, function, and

usage for each tool listed on the Spirit AeroSystems, Inc. Certified Tool List.

C. Design Records

1.Seller’s Quality Assurance shall verify the maintenance of the following tool engineering

data per D33200-1 ‘Boeing Supplier Tooling’, Section 1.15 and STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’, Section 10.

a.       one complete set of reproducible drawings submitted to Buyer

b.       one complete set of reproducible drawings retained with tool

D. Tool Designs

1.            In order to maintain tool design standards, it is mandatory that tool designs be governed

by the requirements of Boeing and Spirit AeroSystems, Inc. tooling manuals, engineering drawings or equivalent approved standards.

2.            Seller’s Quality Assurance shall verify that all tool designs be governed by Boeing/Spirit

AeroSystems, Inc tooling standards.

3.Seller’s Quality Assurance shall verify all Seller tool designs have been approved by

Spirit AeroSystems, Inc.’s Tool Design organization:

a.            for master tooling,

b.            for all major or final stage tools controlled by master tooling,

c.            for tools that control interchangeability or replaceability items,

d.            for all tools used as media for quality acceptance that have tool design

requirements,

e.for all tools used for periodic and configuration control.

E. Tool Fabrication

1.            Seller’s Quality Assurance requirements verify and inspect progressively any feature of

the tool that cannot be inspected after tool is complete.

2.            Maintain and retain all progressive inspection record as required (ref. E.1 above).

3.Inspect and verify all tool tryouts or tool proving.

F.Identification of Accountable Tools

Seller’s Quality Assurance shall verify all tools are identified per Boeing’s D33181-40 ‘Tooling Reference and Spirit AeroSystems, Inc. STM-1 30010-23 ‘Tool Identification’.

1.           No tool will be considered complete that is not properly identified and accepted by Quality

Control.

2.           Seller’s Quality Assurance shall verify acceptable parts or assemblies have been

produced by all tooling and affix steel quality acceptance stamp in tool tryout space.

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	Note:If tool tryout is not required, stamp “NR” beside inspection acceptance stamp. 3.Seller’s Quality Assurance shall verify the latest engineering drawing revision or tool drawing revision. G.Certified Tool List 1.            Seller’s Quality Assurance shall verify the completeness and accuracy of each tool on the Spirit AeroSystems, Inc. Certified Tool List. 2.            Seller’s Quality Assurance manager shall sign and/or use their quality acceptance stamp to validate compliance to all D33200-1 ‘Boeing Supplier Tooling’ requirements and STM­130030-1 as stated in upper right hand section of the Spirit AeroSystems, Inc. Certified Tool List. Signature of an Officer of the company is also required. 3.            Seller shall have a rework tool order to show specific rework instructions have been completed and Seller’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per D33181-40 ‘Boeing Tooling Reference’ and STM­130010-23 ‘Spirit AeroSystems, Inc. Tool Identification’. 4.            Seller’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.
502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200-1 and D33041-1, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200-1 and D33041-1, covered by this Purchase Order/Purchase Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Buyer.
504	Seller shall use any and all Tooling only for the purpose of performing its obligations under this purchase Order/Purchase Contract and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this order.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200-1 and D33041-1, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	Buyer.
506	Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. 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 Buyer.
507	If tooling is a part of this Agreement, Seller shall provide at no cost to Buyer on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Seller or its subcontractors in accordance with Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	If tooling is a part of this Agreement, Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Buyer.
509	If tooling is a part of this Agreement, Seller shall prepare a list or lists ("Certified Tool List") in accordance with the D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	With respect to Existing Tooling and New Tooling, and in the event Buyer furnishes Tooling to Seller, Seller shall conform to the standards and requirements of Document D33200-1-1. Buyer shall notify Seller of any action required for discrepant Tooling.
511A	Accountability for tooling fabricated in support of this Agreement will be transferred to Blanket Accountable, Tooling Order T- on receipt of a properly prepared Certified Tool List (WMFM 508).
	The Certified Tool List is to be signed by an officer of the Seller's Quality Control representative, by a

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Buyer PQA and proof acceptable parts were produced from the tooling.
514A	If returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, WMFM 508, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Buyer PQA and proof acceptable parts were produced from the reworked tooling.
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200-1,”Boeing Suppliers’ Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.            Test reports from each block of material B.            A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.
	QUALITY
615	As stated is D6-83721 All Program Partners and Internal / External Suppliers who supply hardware end items as "Supplier Custom Parts" are required to be in compliance with all requirements contained within this document. D6-83721 states that Internal / External Suppliers are required to provide configuration definition which will be included as a portion of the Purchased Article Configuration Traveler (PACT). The Purchased Article Configuration Traveler “PACT” must include the SCPPL/UPL version number, all Module Revisions/Change Levels and the line unit number. If there are no deviations only the top portion of the PACT must be completed and sent with shipping documents. To determine proper form number to convey this data contact your Supply Chain Procurement Agent.
627	Seller and their sub-contractor(s) shall utilize sources listed in Document D1-4426 “Boeing Approved Process Sources” whenever the manufacturing and/or inspection processes listed in D1– 4426 are performed on articles on this purchase document.

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	The current version of D1–4426 is accessible via the Internet at the following web address http://www.boeing.com/companyoffices/doingbiz/d14426/index.html Seller shall maintain actual processor certifications for all D1–4426 special processes performed in accordance with the requirements of this purchase document. In addition to all certification requirements defined by the applicable processing specification(s), the certifications shall contain the following: ·    The complete part number of the article(s) represented by the certification; ·    The total quantity of the parts (for each part number) represented by the certification; ·    The company name and address of the performing processor. The address shall include street address, city and state; ·    The specification number(s) and revision letter of the D1–4426 process performed. Seller shall provide such certification upon Buyer request. Seller shall provide their sub-tier process sources with the prime site of Buyer (that is the design authority) as well as the aircraft model number or hardware that the part numbers represent. Seller’s use of approved processors does not relieve Seller from verifying that the processor and the product conforms to all applicable process specification requirements.
628	All parts painted with BMS10-11 Type I primer, Mil-PRF-23377 primer, and/or BMS10-11 Type II enamel in accordance with BAC 5736, Application of Chemical and Solvent Resistant Finishes, should be tested to the requirements defined within that BAC and BSS 7225, Tape Test Adhesion, as referenced.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	If castings are included on this order the packing sheet, certificate of compliance or certified test reports accompanying shipments shall certify that the castings have been inspected in accordance with D-13169
682	Where Boeing specifications and/or processes are listed within the detail design, specification control, or envelope drawing, incorporated by this purchase document, Seller shall adhere to the latest revision of the Boeing specification and/or process, unless otherwise specified in the purchase document.
683	A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	over the inspection requirements defined herein. To request Boeing acceptance sampling approval – contact your Procurement Agent. They will coordinate the request with the SPIRIT PQA Sampling SME.
684	Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool Usage List that has been approved by Buyer’s Procurement Quality Assurance.
	MISCELLEANOUS
705	Registration, Evaluation and Authorization of Chemicals (REACH) compliance: If raw materials, parts or assemblies contain substances of very high concern (SVHCs) as prescribed by EU directive EC No. 1907/2006, Registration, Evaluation and Authorization of Chemicals, identification shall be included with the shipment. This identification should list the SVHC-designated chemicals present in the purchased article and the conditions under which handling precautions should be taken.

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

028A	In the event seller receives approval from Buyer’s Procurement Representative, prior to submitting non­conforming material and/or hardware, the seller shall document and process said items in accordance with Spirit Document MAA1-10034-1, "Supplier Non-conformance".
030	No 787 Related Work Notwithstanding anything to the contrary in the Purchase Document, Seller shall not, either alone or with others, perform pursuant to the Purchase Document any work that may be applicable to, developed for, incorporated in or to be incorporated in the 787. All work related to the 787 must be performed pursuant to separate agreement(s).
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the "Commodity Listing" included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the "Commodity Listing" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form PF-550, Section 18 (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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller's full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List (Spirit Form F08-04605) will be submitted by the supplier, to the Buyer’s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T-_____.
155	A Tool Usage List will be submitted by the supplier, to the Buyer’s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from reworked tool(s).
356A	The packing sheet, certificate of compliance or certified test reports accompanying shipments of castings on this order shall certify that the castings have been inspected in accordance with D-13169
412A	Parts are to be marked per BAC 5307. Parts shall have the date of final acceptance rubber-stamped adjacent to the part number.
413	Package per the D6-81628 Shipping Label Barcode preparation and Placement Document.

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

429	Source inspection not required, furnish two photographs - one showing the tool identification data and tool inspection stamps and the other showing the complete tool. Include these photographs with the certified tool list when returned to Buyer. Additional photographs may be required by Buyer Quality
	Assurance or the buyer and will be provided upon request.
437	Stamp parts individually with heat number.
459	Contractual Requirements for Rubber Test Slabs a)         Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer’s Procurement Representative via purchase order to supplier. b)          Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot
	of Boeing BMS rubber specifications must be sent with each shipment to Buyer.
	Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.
501	BOEING COMMERCIAL TOOLING – SELLER’S QUALITY REQUIREMENTS
	Seller’s quality system shall maintain records to assure compliance with all the requirements of D33200 document. All quality checks, verifications, and records shall be presented with the Certified Tool List.
	These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Certified Tool List and/or Tool Usage List.
	A.        Record Requirements
	1.Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Boeing’s applicable tooling manual and engineering drawing.
	Seller’s inspection stamp affixed to show compliance and acceptance of completed tool.
	B.        Manufacturing Records
	1.Seller’s manufacturing plan shall provide traceability for verification of need, function, and usage for each tool listed on the Certified Tool List.
	C.Design Records
	1.Seller’s Quality Assurance shall verify the maintenance of the following tool engineering data per D33200, Section 1.15. a.       one complete set of reproducible drawings submitted to Buyer b.       one complete set of reproducible drawings retained with tool
	D.Tool Designs
	1.             In order to maintain tool design standards, it is mandatory that tool designs be governed by the requirements of Boeing tooling manuals, engineering drawings or equivalent approved standards.
	2.          Seller’s Quality Assurance shall verify that all tool designs be governed by
	Boeing tooling standards.

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

3.Seller’s Quality Assurance shall verify all Seller tool designs have been

approved by Buyers PQA organization:

a.            for master tooling,

b.            for all major or final stage tools controlled by master tooling,

c.            for tools that control interchangeability or replaceability items,

d.            for all tools used as media for quality acceptance that have tool design

requirements,

e.for all tools used for periodic and configuration control.

E.Tool Fabrication

1.            Seller’s Quality Assurance requirements verify and inspect progressively any

feature of the tool that cannot be inspected after tool is complete.

2.            Maintain and retain all progressive inspection record as required (ref. E.1

above).

3.Inspect and verify all tool tryouts or tool proving.

F.Identification of Accountable Tools

Seller’s Quality Assurance shall verify all tools are identified per Boeing’s tooling manual D33181-40.

1.             No tool will be considered complete that is not properly identified and accepted

by Quality Control.

2.             It is Seller’s responsibility to assure that the tooling has produced acceptable

parts or assemblies.

3.             Seller’s Quality Assurance shall verify acceptable parts or assemblies have

been produced by all tooling and affix steel quality acceptance stamp in tool tryout space.

Note: If tool tryout is not required, stamp “NR” beside inspection acceptance stamp.

4.             Seller’s Quality Assurance shall verify the latest engineering drawing revision

or tool drawing revision.

G.Certified Tool List

1.            Seller’s Quality Assurance shall verify the completeness and accuracy of each

tool on the Certified Tool List.

2.            Seller’s Quality Assurance manager shall sign and/or use their quality

acceptance stamp to validate compliance to all D33200 requirements as stated in upper right hand section of the Certified Tool List. Signature of an Officer of the company is also required.

3.Seller shall have a rework tool order to show specific rework instructions have

been completed and Seller’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per Boeing’s tooling manual D33181-40.

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	4.Seller’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.
502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200 and D33041, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200 and D33041, covered by this Purchase Order/Purchase Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Buyer.
504	Seller shall use any and all Tooling only for the purpose of performing its obligations under this purchase Order/Purchase Contract and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this order.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200 and D33041, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Buyer.
506	Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. 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 Buyer.
507	Seller shall provide at no cost to Buyer on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common- Use Tooling in the possession of Seller or its subcontractors in accordance with Document D33200, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

	unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Buyer.
509	Seller shall prepare a list or lists ("Certified Tool List") in accordance with the D33200, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	With respect to Existing Tooling and New Tooling, and in the event Buyer furnishes Tooling to Seller, Seller shall conform to the standards and requirements of Document D33200-1. Buyer shall notify Seller of any action required for discrepant Tooling.
511A	Accountability for tooling fabricated on this Purchase Order will be transferred to Blanket Accountable, Tooling Order T- on receipt of a properly prepared Certified Tool List (Spirit Form F08-04605).
	The Certified Tool List is to be signed by an officer of the Seller's Quality Control representative, by a Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Buyer PQA and proof acceptable parts were produced from the tooling.
514A	When returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, F08-04605, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Buyer PQA and proof acceptable parts were produced from the reworked tooling. If Buyer Source Inspection is available, the TUL must also be stamped by the servicing Source Quality Control Representative. Accountable Blanket Tooling Order T- .
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200,”Boeing Suppliers’ Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.           Test reports from each block of material B.           A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

615	As stated is D6-83721 All Program Partners and Internal / External Suppliers who supply hardware end items as "Supplier Custom Parts" are required to be in compliance with all requirements contained within this document. D6-83721 states that Internal / External Suppliers are required to provide configuration definition which will be included as a portion of the Purchased Article Configuration Traveler (PACT). The Purchased Article Configuration Traveler “PACT” must include the SCML revision number or all the SMPL Revisions and Change Levels, the line number and the A/P effectivity the end item was built to. A copy of the Purchased Article Configuration Traveler form is included in the D6-83721 document and as stated in this document a completed copy must accompany each end item delivered. Reference D953W001, “General Operations Requirements Document for Suppliers - External/Internal Suppliers/Program Partners”
627	Seller and their sub-contractor(s) shall utilize sources listed in Document D1-4426 “Boeing Approved Process Sources” whenever the manufacturing and/or inspection processes listed in D1– 4426 are performed on articles on this purchase document. The current version of D1–4426 is accessible via the Internet at the following web address http://www.boeing.com/companyoffices/doingbiz/d14426/index.html Seller shall maintain actual processor certifications for all D1–4426 special processes performed in accordance with the requirements of this purchase document. In addition to all certification requirements defined by the applicable processing specification(s), the certifications shall contain the following: ·    The complete part number of the article(s) represented by the certification; ·    The total quantity of the parts (for each part number) represented by the certification; ·    The company name and address of the performing processor. The address shall include street address, city and state; ·   The specification number(s) and revision letter of the D1–4426 process performed. Seller shall provide such certification upon Buyer request. Seller shall provide their sub-tier process sources with the prime site of Buyer (that is the design authority) as well as the aircraft model number or hardware that the part numbers represent. Seller’s use of approved processors does not relieve Seller from verifying that the processor and the product conforms to all applicable process specification requirements.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	The packing sheet, certificate of compliance or certified test reports accompanying shipments of castings on this order shall certify that the castings have been inspection in accordance with D-13169.
682	Where Boeing specifications and/or processes are listed within the detail design, specification control, or envelope drawing, incorporated by this purchase document, Seller shall adhere to the latest revision of the Boeing specification and/or process, unless otherwise specified in the purchase document.

Supplemental Notes Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL4XX DELIVERY/PACKAGING/IDENTIFICATION

1XX PRICING 5XX PROPERTY

2XX RESERVED 6XX QUALITY

3XX INSPECTION 7XX MISCELLANEOUS

683

A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.

684

Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool  Usage List that has been approved by Buyer’s Procurement Quality Assurance.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	ADMINISTRATIVE
028A	In the event seller receives approval from Buyer’s Procurement Representative, prior to submitting non­conforming material and/or hardware, the seller shall document and process said items in accordance with Spirit Document MAA1-10034-1, "Supplier Non-conformance".
030	No 787 Related Work Notwithstanding anything to the contrary in the Purchase Document, Seller shall not, either alone or with others, perform pursuant to the Purchase Document any work that may be applicable to, developed for, incorporated in or to be incorporated in the 787. All work related to the 787 must be performed pursuant to separate agreement(s).
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the "Commodity Listing" included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the "Commodity Listing" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form PF- 550, Changes Section, 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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller's full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
	PRICING
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List (F08- 04605), if required, will be submitted by the supplier, to the Buyer’s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T­.

Page 1 of 8

PF-515 Boeing Sustaining -6/1/10

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

 NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

155	If required, a Tool Usage List (F08-04605) will be submitted by the supplier, to the Buyer’s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from reworked tool(s).
	DELIVERY/PACKAGING/IDENTIFICATION
412A	Parts are to be marked per BAC 5307.
413	If barcodes are used, package per the D6-81628 Shipping Label Barcode preparation and Placement Document.
437	If parts have heat numbers they are to be stamped individually with the heat number.
459	Contractual Requirements for Rubber Test Slabs a)          Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer’s Procurement Representative via purchase order to supplier. b)          Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot of Boeing BMS rubber specifications must be sent with each shipment to Buyer. Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.
460	Unless explicit direction is given to the contrary, no articles (or constituent parts thereof) ordered in support of Boeing programs shall contain any FAA-PMA markings. The articles shall not be certified under an FAA-PMA approval and the accompanying paperwork (e.g. packages, shippers, etc.) shall not contain any FAA-PMA markings.
	PROPERTY
501	BOEING COMMERCIAL TOOLING – SELLER’S QUALITY REQUIREMENTS If Seller uses Boeing tooling then Seller’s quality system shall maintain records to assure compliance with all the requirements of D33200-1 ‘Boeing Supplier Tooling’ document, all processes and flows will be in accordance with STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’. All quality checks, verifications, and records shall be presented with the Spirit AeroSystems, Inc. Certified Tool List. These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Spirit AeroSystems, Inc. Certified Tool List and/or Tool Usage List.

Page 2 of 8

PF-515 Boeing Sustaining -6/1/10

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

A.          Record Requirements

1.         Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Boeing’s applicable tooling manual and engineering drawing. Seller’s inspection stamp affixed to show compliance and acceptance of completed tool.

B.          Manufacturing Records

1.          Seller’s manufacturing plan shall provide traceability for verification of need, function, and usage for each tool listed on the Spirit AeroSystems, Inc. Certified Tool List.

C.           Design Records

1.          Seller’s Quality Assurance shall verify the maintenance of the following tool engineering data per D33200-1 ‘Boeing Supplier Tooling’, Section 1.15 and STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’, Section 10.

a.       one complete set of reproducible drawings submitted to Buyer

b.       one complete set of reproducible drawings retained with tool

D.           Tool Designs

1.          In order to maintain tool design standards, it is mandatory that tool designs be governed by the requirements of Boeing and Spirit AeroSystems, Inc. tooling manuals, engineering drawings or equivalent approved standards.

2.          Seller’s Quality Assurance shall verify that all tool designs be governed by Boeing/Sprit AeroSystems, Inc tooling standards.

3.          Seller’s Quality Assurance shall verify all Seller tool designs have been approved by Spirit AeroSystems, Inc.’s Tool Design organization:

a.          for master tooling,

b.          for all major or final stage tools controlled by master tooling,

c.          for tools that control interchangeability or replaceability items,

d.          for all tools used as media for quality acceptance that have tool design requirements,

e.          for all tools used for periodic and configuration control.

E.           Tool Fabrication

1.          Seller’s Quality Assurance requirements verify and inspect progressively any feature of the tool that cannot be inspected after tool is complete.

2.          Maintain and retain all progressive inspection record as required (ref. E.1 above).

Page 3 of 8

PF-515 Boeing Sustaining -6/1/10

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	3.          Inspect and verify all tool tryouts or tool proving.
	F.          Identification of Accountable Tools
	Seller’s Quality Assurance shall verify all tools are identified per Boeing’s D33181-40 ‘Tooling Reference and Spirit AeroSystems, Inc. STM-130010-23 ‘Tool Identification’.
	1.          No tool will be considered complete that is not properly identified and accepted by Quality Control.
	2.          Seller’s Quality Assurance shall verify acceptable parts or assemblies have been produced by all tooling and affix steel quality acceptance stamp in tool tryout space.
	Note:          If tool tryout is not required, stamp “NR” beside inspection acceptance stamp.
	3.          Seller’s Quality Assurance shall verify the latest engineering drawing revision or tool drawing revision.
	G.          Certified Tool List
	1.          Seller’s Quality Assurance shall verify the completeness and accuracy of each tool on the Spirit AeroSystems, Inc. Certified Tool List.
	2.          Seller’s Quality Assurance manager shall sign and/or use their quality acceptance stamp to validate compliance to all D33200-1 ‘Boeing Supplier Tooling’ requirements and STM-
	130030-1 as stated in upper right hand section of the Spirit AeroSystems, Inc. Certified Tool List. Signature of an Officer of the company is also required.
	3.          Seller shall have a rework tool order to show specific rework instructions have been completed and Seller’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per D33181-40 ‘Boeing Tooling Reference’ and STM-130010-23 ‘Spirit AeroSystems, Inc. Tool Identification’.
	4.          Seller’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.
502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200-1 and D33041-1, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200-1 and D33041-1, covered by this Purchase Order/Purchase Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Buyer.

Page 4 of 8

PF-515 Boeing Sustaining -6/1/10

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

504	Seller shall use any and all Tooling only for the purpose of performing its obligations under this purchase Order/Purchase Contract and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this order.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200-1 and D33041-1, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Buyer.
506	Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. 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 Buyer.
507	If tooling is a part of this Agreement, Seller shall provide at no cost to Buyer on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Seller or its subcontractors in accordance with Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	If tooling is a part of this Agreement, Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Buyer.
509	If tooling is a part of this Agreement, Seller shall prepare a list or lists ("Certified Tool List") in accordance with the D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.

Page 5 of 8

PF-515 Boeing Sustaining -6/1/10

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

510	With respect to Existing Tooling and New Tooling, and in the event Buyer furnishes Tooling to Seller, Seller shall conform to the standards and requirements of Document D33200-1-1. Buyer shall notify Seller of any action required for discrepant Tooling.
511A	Accountability for tooling fabricated in support of this Agreement will be transferred to Blanket Accountable, Tooling Order T-on receipt of a properly prepared Certified Tool List (WMFM 508). The Certified Tool List is to be signed by an officer of the Seller's Quality Control representative, by a Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Buyer PQA and proof acceptable parts were produced from the tooling.
514A	If returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, WMFM 508, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Buyer PQA and proof acceptable parts were produced from the reworked tooling.
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200-1,”Boeing Suppliers’ Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.          Test reports from each block of material B.          A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.

Page 6 of 8

PF-515 Boeing Sustaining -6/1/10

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

 NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	QUALITY
615	As stated is D6-83721 All Program Partners and Internal / External Suppliers who supply hardware end items as "Supplier Custom Parts" are required to be in compliance with all requirements contained within this document. D6-83721 states that Internal / External Suppliers are required to provide configuration definition which will be included as a portion of the Purchased Article Configuration Traveler (PACT). The Purchased Article Configuration Traveler “PACT” must include the SCML revision number or all the SMPL Revisions and Change Levels, the line number and the A/P effectivity the end item was built to. A copy of the Purchased Article Configuration Traveler form is included in the D6-83721 document and as stated in this document a completed copy must accompany each end item delivered. Reference D953W001, “General Operations Requirements Document for Suppliers - External/Internal Suppliers/Program Partners”
627	Seller and their sub-contractor(s) shall utilize sources listed in Document D1-4426 “Boeing Approved Process Sources” whenever the manufacturing and/or inspection processes listed in D1– 4426 are performed on articles on this purchase document. The current version of D1–4426 is accessible via the Internet at the following web address http://www.boeing.com/companyoffices/doingbiz/d14426/index.html Seller shall maintain actual processor certifications for all D1–4426 special processes performed in accordance with the requirements of this purchase document. In addition to all certification requirements defined by the applicable processing specification(s), the certifications shall contain the following: ·          The complete part number of the article(s) represented by the certification; ·          The total quantity of the parts (for each part number) represented by the certification; ·          The company name and address of the performing processor. The address shall include street address, city and state; ·          The specification number(s) and revision letter of the D1–4426 process performed. Seller shall provide such certification upon Buyer request. Seller shall provide their sub-tier process sources with the prime site of Buyer (that is the design authority) as well as the aircraft model number or hardware that the part numbers represent. Seller’s use of approved processors does not relieve Seller from verifying that the processor and the product conforms to all applicable process specification requirements.
628	All parts painted with BMS10-11 Type I primer, Mil-PRF-23377 primer, and/or BMS10-11 Type II enamel

Page 7 of 8

PF-515 Boeing Sustaining -6/1/10

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

 NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	in accordance with BAC 5736, Application of Chemical and Solvent Resistant Finishes, should be tested to the requirements defined within that BAC and BSS 7225, Tape Test Adhesion, as referenced.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	If castings are included on this order the packing sheet, certificate of compliance or certified test reports accompanying shipments shall certify that the castings have been inspected in accordance with D-13169
682	Where Boeing specifications and/or processes are listed within the detail design, specification control, or envelope drawing, incorporated by this purchase document, Seller shall adhere to the latest revision of the Boeing specification and/or process, unless otherwise specified in the purchase document.
683	A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.
684	Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool Usage List that has been approved by Buyer’s Procurement Quality Assurance.
	MISCELLEANOUS
705	Registration, Evaluation and Authorization of Chemicals (REACH) compliance: If raw materials, parts or assemblies contain substances of very high concern (SVHCs) as prescribed by EU directive EC No. 1907/2006, Registration, Evaluation and Authorization of Chemicals, identification shall be included with the shipment. This identification should list the SVHC-designated chemicals present in the purchased article and the conditions under which handling precautions should be taken.

Page 8 of 8

PF-515 Boeing Sustaining -6/1/10

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

	ADMINISTRATIVE
028A	In the event seller receives approval from Buyer’s Procurement Representative, prior to submitting non­conforming material and/or hardware, the seller shall document and process said items in accordance with Spirit Document MAA1-10034-1, "Supplier Non-conformance".
030	No 787 Related Work Notwithstanding anything to the contrary in the Purchase Document, Seller shall not, either alone or with others, perform pursuant to the Purchase Document any work that may be applicable to, developed for, incorporated in or to be incorporated in the 787. All work related to the 787 must be performed pursuant to separate agreement(s).
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the "Commodity Listing" included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the "Commodity Listing" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form PF- 550, Changes Section, 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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller's full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
	PRICING
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List (F08- 04605), if required, will be submitted by the supplier, to the Buyer’s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T-.
155	If required, a Tool Usage List (F08-04605) will be submitted by the supplier, to the Buyer’s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from reworked tool(s).

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

	DELIVERY/PACKAGING/IDENTIFICATION
412A	Parts are to be marked per BAC 5307.
413	If barcodes are used, package per the D6-81628 Shipping Label Barcode preparation and Placement Document.
437	If parts have heat numbers they are to be stamped individually with the heat number.
459	Contractual Requirements for Rubber Test Slabs a)          Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer’s Procurement Representative via purchase order to supplier. b)          Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot of Boeing BMS rubber specifications must be sent with each shipment to Buyer. Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.
460	Unless explicit direction is given to the contrary, no articles (or constituent parts thereof) ordered in support of Boeing programs shall contain any FAA-PMA markings. The articles shall not be certified under an FAA-PMA approval and the accompanying paperwork (e.g. packages, shippers, etc.) shall not contain any FAA-PMA markings.
	PROPERTY
501	BOEING COMMERCIAL TOOLING – SELLER’S QUALITY REQUIREMENTS If Seller uses Boeing tooling then Seller’s quality system shall maintain records to assure compliance with all the requirements of D33200-1 ‘Boeing Supplier Tooling’ document, all processes and flows will be in accordance with STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’. All quality checks, verifications, and records shall be presented with the Spirit AeroSystems, Inc. Certified Tool List. These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Spirit AeroSystems, Inc. Certified Tool List and/or Tool Usage List. A.          Record Requirements 1.           Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Boeing’s applicable tooling manual and engineering drawing. Seller’s inspection stamp affixed to show compliance and acceptance of completed tool. B.          Manufacturing Records

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

1.          Seller’s manufacturing plan shall provide traceability for verification of need, function, and usage for each tool listed on the Spirit AeroSystems, Inc. Certified Tool List.

C.           Design Records

1.          Seller’s Quality Assurance shall verify the maintenance of the following tool engineering data per D33200-1 ‘Boeing Supplier Tooling’, Section 1.15 and STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’, Section 10.

a.       one complete set of reproducible drawings submitted to Buyer

b.       one complete set of reproducible drawings retained with tool

D.           Tool Designs

1.          In order to maintain tool design standards, it is mandatory that tool designs be governed by the requirements of Boeing and Spirit AeroSystems, Inc. tooling manuals, engineering drawings or equivalent approved standards.

2.          Seller’s Quality Assurance shall verify that all tool designs be governed by Boeing/Spirit AeroSystems, Inc tooling standards.

3.          Seller’s Quality Assurance shall verify all Seller tool designs have been approved by Spirit AeroSystems, Inc.’s Tool Design organization:

a.          for master tooling,

b.          for all major or final stage tools controlled by master tooling,

c.          for tools that control interchangeability or replaceability items,

d.          for all tools used as media for quality acceptance that have tool design requirements,

e.          for all tools used for periodic and configuration control.

E.           Tool Fabrication

1.          Seller’s Quality Assurance requirements verify and inspect progressively any feature of the tool that cannot be inspected after tool is complete.

2.          Maintain and retain all progressive inspection record as required (ref. E.1 above).

3.          Inspect and verify all tool tryouts or tool proving.

F.           Identification of Accountable Tools

Seller’s Quality Assurance shall verify all tools are identified per Boeing’s D33181-40 ‘Tooling Reference and Spirit AeroSystems, Inc. STM-1 30010-23 ‘Tool Identification’.

1.          No tool will be considered complete that is not properly identified and accepted by Quality Control.

2.          Seller’s Quality Assurance shall verify acceptable parts or assemblies have been produced by all tooling and affix steel quality acceptance stamp in tool tryout space.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

	Note:                     If tool tryout is not required, stamp “NR” beside inspection acceptance stamp. 3.          Seller’s Quality Assurance shall verify the latest engineering drawing revision or tool drawing revision. G.          Certified Tool List 1.          Seller’s Quality Assurance shall verify the completeness and accuracy of each tool on the Spirit AeroSystems, Inc. Certified Tool List. 2.          Seller’s Quality Assurance manager shall sign and/or use their quality acceptance stamp to validate compliance to all D33200-1 ‘Boeing Supplier Tooling’ requirements and STM­130030-1 as stated in upper right hand section of the Spirit AeroSystems, Inc. Certified Tool List. Signature of an Officer of the company is also required. 3.          Seller shall have a rework tool order to show specific rework instructions have been completed and Seller’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per D33181-40 ‘Boeing Tooling Reference’ and STM­130010-23 ‘Spirit AeroSystems, Inc. Tool Identification’. 4.          Seller’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.
502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200-1 and D33041-1, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200-1 and D33041-1, covered by this Purchase Order/Purchase Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Buyer.
504	Seller shall use any and all Tooling only for the purpose of performing its obligations under this purchase Order/Purchase Contract and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this order.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200-1 and D33041-1, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Buyer.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

506	Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. 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 Buyer.
507	If tooling is a part of this Agreement, Seller shall provide at no cost to Buyer on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Seller or its subcontractors in accordance with Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	If tooling is a part of this Agreement, Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Buyer.
509	If tooling is a part of this Agreement, Seller shall prepare a list or lists ("Certified Tool List") in accordance with the D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	With respect to Existing Tooling and New Tooling, and in the event Buyer furnishes Tooling to Seller, Seller shall conform to the standards and requirements of Document D33200-1-1. Buyer shall notify Seller of any action required for discrepant Tooling.
511A	Accountability for tooling fabricated in support of this Agreement will be transferred to Blanket Accountable, Tooling Order T-on receipt of a properly prepared Certified Tool List (WMFM 508).
	The Certified Tool List is to be signed by an officer of the Seller's Quality Control representative, by a

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

	Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Buyer PQA and proof acceptable parts were produced from the tooling.
514A	If returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, WMFM 508, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Buyer PQA and proof acceptable parts were produced from the reworked tooling.
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200-1,”Boeing Suppliers’ Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.          Test reports from each block of material B.          A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.
	QUALITY
615	As stated is D6-83721 All Program Partners and Internal / External Suppliers who supply hardware end items as "Supplier Custom Parts" are required to be in compliance with all requirements contained within this document. D6-83721 states that Internal / External Suppliers are required to provide configuration definition which will be included as a portion of the Purchased Article Configuration Traveler (PACT). The Purchased Article Configuration Traveler “PACT” must include the SCPPL/UPL version number, all Module Revisions/Change Levels and the line unit number. If there are no deviations only the top portion of the PACT must be completed and sent with shipping documents. To determine proper form number to convey this data contact your Supply Chain Procurement Agent.
627	Seller and their sub-contractor(s) shall utilize sources listed in Document D1-4426 “Boeing Approved Process Sources” whenever the manufacturing and/or inspection processes listed in D1– 4426 are performed on articles on this purchase document.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

	The current version of D1–4426 is accessible via the Internet at the following web address http://www.boeing.com/companyoffices/doingbiz/d14426/index.html Seller shall maintain actual processor certifications for all D1–4426 special processes performed in accordance with the requirements of this purchase document. In addition to all certification requirements defined by the applicable processing specification(s), the certifications shall contain the following: ·          The complete part number of the article(s) represented by the certification; ·          The total quantity of the parts (for each part number) represented by the certification; ·          The company name and address of the performing processor. The address shall include street address, city and state; ·          The specification number(s) and revision letter of the D1–4426 process performed. Seller shall provide such certification upon Buyer request. Seller shall provide their sub-tier process sources with the prime site of Buyer (that is the design authority) as well as the aircraft model number or hardware that the part numbers represent. Seller’s use of approved processors does not relieve Seller from verifying that the processor and the product conforms to all applicable process specification requirements.
628	All parts painted with BMS10-11 Type I primer, Mil-PRF-23377 primer, and/or BMS10-11 Type II enamel in accordance with BAC 5736, Application of Chemical and Solvent Resistant Finishes, should be tested to the requirements defined within that BAC and BSS 7225, Tape Test Adhesion, as referenced.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	If castings are included on this order the packing sheet, certificate of compliance or certified test reports accompanying shipments shall certify that the castings have been inspected in accordance with D-13169
682	Where Boeing specifications and/or processes are listed within the detail design, specification control, or envelope drawing, incorporated by this purchase document, Seller shall adhere to the latest revision of the Boeing specification and/or process, unless otherwise specified in the purchase document.
683	A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

	To request Boeing acceptance sampling approval – contact your Procurement Agent. They will coordinate the request with the SPIRIT PQA Sampling SME.
684	Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool Usage List that has been approved by Buyer’s Procurement Quality Assurance.
	MISCELLEANOUS
705	Registration, Evaluation and Authorization of Chemicals (REACH) compliance: If raw materials, parts or assemblies contain substances of very high concern (SVHCs) as prescribed by EU directive EC No. 1907/2006, Registration, Evaluation and Authorization of Chemicals, identification shall be included with the shipment. This identification should list the SVHC-designated chemicals present in the purchased article and the conditions under which handling precautions should be taken.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

028A	In the event seller receives approval from Buyer’s Procurement Representative, prior to submitting non­conforming material and/or hardware, the seller shall document and process said items in accordance with Spirit Document MAA1-10034-1, "Supplier Non-conformance".
030	No 787 Related Work Notwithstanding anything to the contrary in the Purchase Document, Seller shall not, either alone or with others, perform pursuant to the Purchase Document any work that may be applicable to, developed for, incorporated in or to be incorporated in the 787. All work related to the 787 must be performed pursuant to separate agreement(s).
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the "Commodity Listing" included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the "Commodity Listing" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form PF-550, Section 18 (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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller's full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List (Spirit Form F08-04605) will be submitted by the supplier, to the Buyer’s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T-_____.
155	A Tool Usage List will be submitted by the supplier, to the Buyer’s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from reworked tool(s).
356A	The packing sheet, certificate of compliance or certified test reports accompanying shipments of castings on this order shall certify that the castings have been inspected in accordance with D-13169
412A	Parts are to be marked per BAC 5307. Parts shall have the date of final acceptance rubber-stamped adjacent to the part number.
413	Package per the D6-81628 Shipping Label Barcode preparation and Placement Document.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

429	Source inspection not required, furnish two photographs - one showing the tool identification data and tool inspection stamps and the other showing the complete tool. Include these photographs with the certified tool list when returned to Buyer. Additional photographs may be required by Buyer Quality
	Assurance or the buyer and will be provided upon request.
437	Stamp parts individually with heat number.
459	Contractual Requirements for Rubber Test Slabs a)         Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer’s Procurement Representative via purchase order to supplier. b)          Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot
	of Boeing BMS rubber specifications must be sent with each shipment to Buyer.
	Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.
501	BOEING COMMERCIAL TOOLING – SELLER’S QUALITY REQUIREMENTS
	Seller’s quality system shall maintain records to assure compliance with all the requirements of D33200 document. All quality checks, verifications, and records shall be presented with the Certified Tool List.
	These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Certified Tool List and/or Tool Usage List.
	A.          Record Requirements
	1.          Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Boeing’s applicable tooling manual and engineering drawing.
	Seller’s inspection stamp affixed to show compliance and acceptance of completed tool.
	B.          Manufacturing Records
	1.          Seller’s manufacturing plan shall provide traceability for verification of need, function, and usage for each tool listed on the Certified Tool List.
	C.          Design Records
	1.          Seller’s Quality Assurance shall verify the maintenance of the following tool engineering data per D33200, Section 1.15. a.       one complete set of reproducible drawings submitted to Buyer b.       one complete set of reproducible drawings retained with tool
	D.          Tool Designs
	1.          In order to maintain tool design standards, it is mandatory that tool designs be governed by the requirements of Boeing tooling manuals, engineering drawings or equivalent approved standards.
	2.          Seller’s Quality Assurance shall verify that all tool designs be governed by Boeing tooling standards.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

3.          Seller’s Quality Assurance shall verify all Seller tool designs have been

approved by Buyers PQA organization:

a.          for master tooling,

b.          for all major or final stage tools controlled by master tooling,

c.          for tools that control interchangeability or replaceability items,

d.          for all tools used as media for quality acceptance that have tool design

requirements,

e.          for all tools used for periodic and configuration control.

E.         Tool Fabrication

1.          Seller’s Quality Assurance requirements verify and inspect progressively any

feature of the tool that cannot be inspected after tool is complete.

2.          Maintain and retain all progressive inspection record as required (ref. E.1

above).

3.          Inspect and verify all tool tryouts or tool proving.

F.         Identification of Accountable Tools

Seller’s Quality Assurance shall verify all tools are identified per Boeing’s tooling manual D33181-40.

1.          No tool will be considered complete that is not properly identified and accepted

by Quality Control.

2.          It is Seller’s responsibility to assure that the tooling has produced acceptable

parts or assemblies.

3.          Seller’s Quality Assurance shall verify acceptable parts or assemblies have

been produced by all tooling and affix steel quality acceptance stamp in tool tryout space.

Note: If tool tryout is not required, stamp “NR” beside inspection acceptance stamp.

4.          Seller’s Quality Assurance shall verify the latest engineering drawing revision

or tool drawing revision.

G.         Certified Tool List

1.          Seller’s Quality Assurance shall verify the completeness and accuracy of each

tool on the Certified Tool List.

2.          Seller’s Quality Assurance manager shall sign and/or use their quality

acceptance stamp to validate compliance to all D33200 requirements as stated in upper right hand section of the Certified Tool List. Signature of an Officer of the company is also required.

3.          Seller shall have a rework tool order to show specific rework instructions have

been completed and Seller’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per Boeing’s tooling manual D33181-40.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

	4.           Seller’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.
502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200 and D33041, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200 and D33041, covered by this Purchase Order/Purchase Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Buyer.
504	Seller shall use any and all Tooling only for the purpose of performing its obligations under this purchase Order/Purchase Contract and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this order.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200 and D33041, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Buyer.
506	Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. 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 Buyer.
507	Seller shall provide at no cost to Buyer on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common- Use Tooling in the possession of Seller or its subcontractors in accordance with Document D33200, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

	unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Buyer.
509	Seller shall prepare a list or lists ("Certified Tool List") in accordance with the D33200, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	With respect to Existing Tooling and New Tooling, and in the event Buyer furnishes Tooling to Seller, Seller shall conform to the standards and requirements of Document D33200-1. Buyer shall notify Seller of any action required for discrepant Tooling.
511A	Accountability for tooling fabricated on this Purchase Order will be transferred to Blanket Accountable, Tooling Order T-on receipt of a properly prepared Certified Tool List (Spirit Form F08-04605). The Certified Tool List is to be signed by an officer of the Seller's Quality Control representative, by a Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Buyer PQA and proof acceptable parts were produced from the tooling.
514A	When returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, F08-04605, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Buyer PQA and proof acceptable parts were produced from the reworked tooling. If Buyer Source Inspection is available, the TUL must also be stamped by the servicing Source Quality Control Representative. Accountable Blanket Tooling Order T-.
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200,”Boeing Suppliers’ Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.          Test reports from each block of material B.          A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.

Supplemental Notes – Boeing Sustaining Programs

 SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

615	As stated is D6-83721 All Program Partners and Internal / External Suppliers who supply hardware end items as "Supplier Custom Parts" are required to be in compliance with all requirements contained within this document. D6-83721 states that Internal / External Suppliers are required to provide configuration definition which will be included as a portion of the Purchased Article Configuration Traveler (PACT). The Purchased Article Configuration Traveler “PACT” must include the SCML revision number or all the SMPL Revisions and Change Levels, the line number and the A/P effectivity the end item was built to. A copy of the Purchased Article Configuration Traveler form is included in the D6-83721 document and as stated in this document a completed copy must accompany each end item delivered. Reference D953W001, “General Operations Requirements Document for Suppliers - External/Internal Suppliers/Program Partners”
627	Seller and their sub-contractor(s) shall utilize sources listed in Document D1-4426 “Boeing Approved Process Sources” whenever the manufacturing and/or inspection processes listed in D1– 4426 are performed on articles on this purchase document. The current version of D1–4426 is accessible via the Internet at the following web address http://www.boeing.com/companyoffices/doingbiz/d14426/index.html Seller shall maintain actual processor certifications for all D1–4426 special processes performed in accordance with the requirements of this purchase document. In addition to all certification requirements defined by the applicable processing specification(s), the certifications shall contain the following: ·          The complete part number of the article(s) represented by the certification; ·          The total quantity of the parts (for each part number) represented by the certification; ·          The company name and address of the performing processor. The address shall include street address, city and state; ·          The specification number(s) and revision letter of the D1–4426 process performed. Seller shall provide such certification upon Buyer request. Seller shall provide their sub-tier process sources with the prime site of Buyer (that is the design authority) as well as the aircraft model number or hardware that the part numbers represent. Seller’s use of approved processors does not relieve Seller from verifying that the processor and the product conforms to all applicable process specification requirements.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	The packing sheet, certificate of compliance or certified test reports accompanying shipments of castings on this order shall certify that the castings have been inspection in accordance with D-13169.
682	Where Boeing specifications and/or processes are listed within the detail design, specification control, or envelope drawing, incorporated by this purchase document, Seller shall adhere to the latest revision of the Boeing specification and/or process, unless otherwise specified in the purchase document.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	INSPECTION	7XX	MISCELLANEOUS

683

A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.

684

Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool Usage List that has been approved by Buyer’s Procurement Quality Assurance.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	ADMINISTRATIVE
028A	In the event seller receives approval from Buyer’s Procurement Representative, prior to submitting non­conforming material and/or hardware, the seller shall document and process said items in accordance with Spirit Document MAA1-10034-1, "Supplier Non-conformance".
030	No 787 Related Work Notwithstanding anything to the contrary in the Purchase Document, Seller shall not, either alone or with others, perform pursuant to the Purchase Document any work that may be applicable to, developed for, incorporated in or to be incorporated in the 787. All work related to the 787 must be performed pursuant to separate agreement(s).
047	BOEING RAW MATERIAL STRATEGY During the term of this contract, 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 in the "Commodity Listing" included below necessary to support any order issued pursuant to this contract. From time to time, Buyer may amend the "Commodity Listing" by adding or deleting commodity types. Any such amendment, or revisions to the raw material pricing, shall be subject to adjustment under Spirit AeroSystems, Inc., General Provisions, Form PF- 550, Changes Section, 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 Buyer. The provision of any raw material by Boeing to Seller shall be according to Boeing's standard 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 Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller's full compliance with these obligations. If requested by Boeing or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity. COMMODITY LISTING Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys. Aluminum extrusions, all press size or circle size. Titanium includes all wrought and un-wrought titanium mill products.
	PRICING
135	When acceptable parts have been received on a production Purchase Order, a Certified Tool List (F08- 04605), if required, will be submitted by the supplier, to the Buyer’s Procurement Representative, to transfer accountability to Blanket Accountable Tool Order T­.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

155	If required, a Tool Usage List (F08-04605) will be submitted by the supplier, to the Buyer’s Procurement Representative certifying satisfactory completion of rework and production of acceptable parts from reworked tool(s).
	DELIVERY/PACKAGING/IDENTIFICATION
412A	Parts are to be marked per BAC 5307.
413	If barcodes are used, package per the D6-81628 Shipping Label Barcode preparation and Placement Document.
437	If parts have heat numbers they are to be stamped individually with the heat number.
459	Contractual Requirements for Rubber Test Slabs a)          Supplier shall retain test slabs up to the date of expiration for each batch and/or lot, for Buyer use in support of quality surveillance testing as requested from Buyer’s Procurement Representative via purchase order to supplier. b)          Boeing BMS specifications that require the supplier to provide test slabs of each batch and/or lot of Boeing BMS rubber specifications must be sent with each shipment to Buyer. Each shipment of rubber will require a certified test report that shall indicate the batch number, lot number, and the actual calendar date on which the test specimen was cured.
460	Unless explicit direction is given to the contrary, no articles (or constituent parts thereof) ordered in support of Boeing programs shall contain any FAA-PMA markings. The articles shall not be certified under an FAA-PMA approval and the accompanying paperwork (e.g. packages, shippers, etc.) shall not contain any FAA-PMA markings.
	PROPERTY
501	BOEING COMMERCIAL TOOLING – SELLER’S QUALITY REQUIREMENTS If Seller uses Boeing tooling then Seller’s quality system shall maintain records to assure compliance with all the requirements of D33200-1 ‘Boeing Supplier Tooling’ document, all processes and flows will be in accordance with STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’. All quality checks, verifications, and records shall be presented with the Spirit AeroSystems, Inc. Certified Tool List. These quality records shall support the validations of the Quality Manager and Officer of the Company’s signature for compliance statement on the Spirit AeroSystems, Inc. Certified Tool List and/or Tool Usage List.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

A.          Record Requirements

1.          Each tool shall have a tool fabrication order indicating specific tool fabrication instructions per Boeing’s applicable tooling manual and engineering drawing. Seller’s inspection stamp affixed to show compliance and acceptance of completed tool.

B.          Manufacturing Records

1.          Seller’s manufacturing plan shall provide traceability for verification of need, function, and usage for each tool listed on the Spirit AeroSystems, Inc. Certified Tool List.

C.           Design Records

1.          Seller’s Quality Assurance shall verify the maintenance of the following tool engineering data per D33200-1 ‘Boeing Supplier Tooling’, Section 1.15 and STM-130030-1 ‘Spirit AeroSystems, Inc. Tooling Requirements’, Section 10.

a.       one complete set of reproducible drawings submitted to Buyer

b.       one complete set of reproducible drawings retained with tool

D.           Tool Designs

1.          In order to maintain tool design standards, it is mandatory that tool designs be governed

by the requirements of Boeing and Spirit AeroSystems, Inc. tooling manuals, engineering drawings or equivalent approved standards.

2.          Seller’s Quality Assurance shall verify that all tool designs be governed by Boeing/Spirit

AeroSystems, Inc tooling standards.

3.          Seller’s Quality Assurance shall verify all Seller tool designs have been approved by Spirit AeroSystems, Inc.’s Tool Design organization:

a.          for master tooling,

b.          for all major or final stage tools controlled by master tooling,

c.          for tools that control interchangeability or replaceability items,

d.          for all tools used as media for quality acceptance that have tool design requirements,

e.          for all tools used for periodic and configuration control.

E.           Tool Fabrication

1.          Seller’s Quality Assurance requirements verify and inspect progressively any feature of the tool that cannot be inspected after tool is complete.

2.          Maintain and retain all progressive inspection record as required (ref. E.1 above).

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	3.          Inspect and verify all tool tryouts or tool proving.
	F.          Identification of Accountable Tools
	Seller’s Quality Assurance shall verify all tools are identified per Boeing’s D33181-40 ‘Tooling
	Reference and Spirit AeroSystems, Inc. STM-130010-23 ‘Tool Identification’.
	1.          No tool will be considered complete that is not properly identified and accepted by Quality Control.
	2.          Seller’s Quality Assurance shall verify acceptable parts or assemblies have been produced by all tooling and affix steel quality acceptance stamp in tool tryout space.
	Note:          If tool tryout is not required, stamp “NR” beside inspection acceptance stamp.
	3.          Seller’s Quality Assurance shall verify the latest engineering drawing revision or tool drawing revision.
	G.          Certified Tool List
	1.          Seller’s Quality Assurance shall verify the completeness and accuracy of each tool on the Spirit AeroSystems, Inc. Certified Tool List.
	2.          Seller’s Quality Assurance manager shall sign and/or use their quality acceptance stamp to validate compliance to all D33200-1 ‘Boeing Supplier Tooling’ requirements and STM-
	130030-1 as stated in upper right hand section of the Spirit AeroSystems, Inc. Certified
	Tool List. Signature of an Officer of the company is also required.
	3.          Seller shall have a rework tool order to show specific rework instructions have been completed and Seller’s quality acceptance stamp affixed to Rework Tool Order and rework identification stamp on tool per D33181-40 ‘Boeing Tooling Reference’ and STM-130010-23 ‘Spirit AeroSystems, Inc. Tool Identification’.
	4.          Seller’s Quality Assurance shall verify the accuracy and completeness of tool usage list prior to presenting to Buyer’s Quality Assurance for validation.
502	Buyer will furnish all necessary mylars or photo templates of Engineering Layouts and/or tooling master layouts required by the Seller in accomplishing the work called for by this order. It is agreed that the prices established reflect an allowance for scrap value of such photo templates and upon completion of the work. Seller shall take title. Any template specifically designed as a tool and serial numbered is accountable property per Boeing document D33200-1 and D33041-1, and upon acquisition or manufacturer by Seller and before the same is used, becomes the property of/or controlled by Boeing.
503	All special tooling as defined in D33200-1 and D33041-1, covered by this Purchase Order/Purchase
	Contract shall, upon acquisition or manufacture by Seller and before the same is used, become the property of/or controlled by Boeing. Any use of this tooling for other than Boeing work, or before scrapping, must have written consent from Buyer.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

504	Seller shall use any and all Tooling only for the purpose of performing its obligations under this purchase Order/Purchase Contract and shall not sell, lease or otherwise dispose of any Tooling. Seller shall, on behalf of Boeing as the owner thereof obtain and maintain in effect insurance in respect of all Seller-Use Tooling and Common-Use Tooling (other than such Tooling, which is in the actual possession of Boeing,). Seller shall not create or be responsible for the creation by others, any lien, claim or right of any person or entity other than the rights of Boeing, in respect of any Tooling, under this order.
505B	Tooling: Design, fabrication, handling, storage, accountability, maintenance, and disposition of Boeing owned tooling, furnished by Buyer in support of this order or fabricated by Seller as directed in this order, shall be in strict accordance with Boeing Document D33200-1 and D33041-1, as revised, which is hereby incorporated by reference and all applicable tooling manuals referenced herein. The Supplier shall store, maintain, and where necessary because of loss or damage, replace such tooling without further cost to Buyer.
506	Seller shall absorb all costs associated with non-accountable tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the tooling. 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 Buyer.
507	If tooling is a part of this Agreement, Seller shall provide at no cost to Buyer on Boeing’s behalf as the owner thereof, control, accountability, care, storage, maintenance, insurance and replacements of all Contractor-Use Tooling and Common-Use Tooling in the possession of Seller or its subcontractors in accordance with Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval, not to be unreasonably withheld or delayed, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products; it being understood, however, that Boeing as the owner thereof bears the economic burden of depreciation and obsolescence of all Tooling.
508	If tooling is a part of this Agreement, Seller shall control and account for all Tooling in accordance with the provisions of Boeing Document D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement. This requirement shall apply to Boeing-Use Tooling until delivery thereof to Boeing and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Boeing or delivery to Boeing or Boeing's designee. All Existing Tooling shall remain identified with its identification tag containing the Boeing Lifetime Serial Number of such Tooling.Seller shall identify all New Tooling and any reworked or re-identified Tooling with an identification tag containing the Boeing Lifetime Serial Number of each such Tool. Boeing Lifetime Serial Numbers may be provided to Seller by Buyer.
509	If tooling is a part of this Agreement, Seller shall prepare a list or lists ("Certified Tool List") in accordance

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	with the D33200-1, "Boeing Suppliers' Tooling Document” or, subject to Buyer review and approval (not to be unreasonably withheld or delayed), its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for (i) Contractor-Use Tools, (ii) Common-Use Tools, (iii) Casting/Extrusion Tools, (iv) each county in Kansas in which any such Tool is located, (v) each state in which any such Tool is located and (vi) each state in which any such Tool is first utilized. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.
510	With respect to Existing Tooling and New Tooling, and in the event Buyer furnishes Tooling to Seller, Seller shall conform to the standards and requirements of Document D33200-1-1. Buyer shall notify Seller of any action required for discrepant Tooling.
511A	Accountability for tooling fabricated in support of this Agreement will be transferred to Blanket Accountable, Tooling Order T-on receipt of a properly prepared Certified Tool List (WMFM 508).
	The Certified Tool List is to be signed by an officer of the Seller's Quality Control representative, by a Buyer resident inspector, if available and a Government Source Inspector, if required and returned to Buyer as soon as possible. Tooling Invoices will not be honored prior to receipt of the Certified Tool List signed and stamped by Buyer PQA and proof acceptable parts were produced from the tooling.
514A	If returning Buyer-furnished tooling, Supplier is required to list the Blanket Accountable Tool Order No., tool number and serial number on the packing slip.
515	Payment for rework of tooling as specified under this order is to be as follows: Seller shall, upon completion of the rework specified hereunder, forward to Buyer, an original and one copy of a Tool Usage List, WMFM 508, listing each reworked tool. Tooling invoices will not be honored prior to receipt of the Tool Usage List signed and stamped by Buyer PQA and proof acceptable parts were produced from the reworked tooling.
516	When a Seller receives or fabricates Boeing or Boeing customer-owned accountable tools, then the Seller must comply with the requirements of D33200-1,”Boeing Suppliers’ Tooling Document.”
535	BMS 8-124 Honeycomb core shipments must be accompanied by: A.          Test reports from each block of material B.          A .500 T X 18L X 24W test slab cut from each block of material. These test reports and slabs are required for lab use.

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	QUALITY
615	As stated is D6-83721 All Program Partners and Internal / External Suppliers who supply hardware end items as "Supplier Custom Parts" are required to be in compliance with all requirements contained within this document. D6-83721 states that Internal / External Suppliers are required to provide configuration definition which will be included as a portion of the Purchased Article Configuration Traveler (PACT). The Purchased Article Configuration Traveler “PACT” must include the SCML revision number or all the SMPL Revisions and Change Levels, the line number and the A/P effectivity the end item was built to. A copy of the Purchased Article Configuration Traveler form is included in the D6-83721 document and as stated in this document a completed copy must accompany each end item delivered. Reference D953W001, “General Operations Requirements Document for Suppliers - External/Internal Suppliers/Program Partners”
627	Seller and their sub-contractor(s) shall utilize sources listed in Document D1-4426 “Boeing Approved Process Sources” whenever the manufacturing and/or inspection processes listed in D1– 4426 are performed on articles on this purchase document. The current version of D1–4426 is accessible via the Internet at the following web address http://www.boeing.com/companyoffices/doingbiz/d14426/index.html Seller shall maintain actual processor certifications for all D1–4426 special processes performed in accordance with the requirements of this purchase document. In addition to all certification requirements defined by the applicable processing specification(s), the certifications shall contain the following: ·          The complete part number of the article(s) represented by the certification; ·          The total quantity of the parts (for each part number) represented by the certification; ·          The company name and address of the performing processor. The address shall include street address, city and state; ·          The specification number(s) and revision letter of the D1–4426 process performed. Seller shall provide such certification upon Buyer request. Seller shall provide their sub-tier process sources with the prime site of Buyer (that is the design authority) as well as the aircraft model number or hardware that the part numbers represent. Seller’s use of approved processors does not relieve Seller from verifying that the processor and the product conforms to all applicable process specification requirements.
628	All parts painted with BMS10-11 Type I primer, Mil-PRF-23377 primer, and/or BMS10-11 Type II enamel

Supplemental Notes – Boeing Sustaining Programs

SPIRIT AEROSYSTEMS, INC.

WICHITA DIVISION

P.O. BOX 780008 – Wichita, Kansas – 67278-0008

Customer Specific Supplemental Notes

NOTES ARE CATEGORIZED AS FOLLOWS:

0XX	ADMINISTRATIVE GENERAL	1XX	PRICING
2XX	RESERVED	3XX	INSPECTION
4XX	DELIVERY/PACKAGING/IDENTIFICATION	5XX	PROPERTY
6XX	QUALITY	7XX	MISCELLANEOUS

	in accordance with BAC 5736, Application of Chemical and Solvent Resistant Finishes, should be tested to the requirements defined within that BAC and BSS 7225, Tape Test Adhesion, as referenced.
680	When Boeing document D6-1276 is required by engineering drawing for this part Boeing/Spirit approval of your manufacturing planning is required through the Supply Chain Procurement Agent prior to shipment of completed parts.
681	If castings are included on this order the packing sheet, certificate of compliance or certified test reports accompanying shipments shall certify that the castings have been inspected in accordance with D-13169
682	Where Boeing specifications and/or processes are listed within the detail design, specification control, or envelope drawing, incorporated by this purchase document, Seller shall adhere to the latest revision of the Boeing specification and/or process, unless otherwise specified in the purchase document.
683	A Seller that performs acceptance sampling shall meet the requirements of document D1-8007. Boeing approval of Seller’s acceptance sampling plan is required prior to performing acceptance sampling when it is used for in-process or final inspection, and employs continuous sampling or repetitive lot sampling. Subsequent revisions to approved sampling plans require Boeing approval prior to implementation. Prior Boeing approval of a sampling plan is not required if it is used exclusively for receiving inspection, or employs only isolated lot sampling during in-process or final inspection. When statistical process control is used as an option for either in-process or final inspection, Seller shall satisfy the requirements of document AS/EN/SJAC 9103, Variation Management of Key Characteristics. In all cases, inspection requirements identified by engineering drawing or specification take precedence over the inspection requirements defined herein.
684	Tooling invoices will not be honored prior to certification by the Buyer of a Certified Tool List or Tool Usage List that has been approved by Buyer’s Procurement Quality Assurance.
	MISCELLEANOUS
705	Registration, Evaluation and Authorization of Chemicals (REACH) compliance: If raw materials, parts or assemblies contain substances of very high concern (SVHCs) as prescribed by EU directive EC No. 1907/2006, Registration, Evaluation and Authorization of Chemicals, identification shall be included with the shipment. This identification should list the SVHC-designated chemicals present in the purchased article and the conditions under which handling precautions should be taken.

Supplemental Procurement Notes BR 725 Program

SPIRIT AEROSYSTEMS, INC.

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	ADMINISTRATIVE/GENERAL
001	In order to meet the requirements of the customer, Spirit AeroSystems, Inc. may be required to accept and agree, in it’s contract with such customer, sale terms which are not reasonably reflected by the terms of this agreement. In such event, the Supplier shall negotiate with Spirit with the object of accepting an amendment to the terms of the agreement in respect of orders for Goods or Work related to such customer.
002	Supplier will comply with the Fair Labor Standards Act of June 30, 1938 (LISC201-209) as amended.
003	If there is a conflict of terms the order of precedence shall be: Purchase Contract Purchase Order Spirit AeroSystems, Inc. General Provisions (PF-550, Rev 09/08) Spirit AeroSystems, Inc. Supplemental Notes (PF-515, Rev 06/01/10) BR725 Supplemental Notes (PF-515 BR725, Rev 09/21/10)
004	The provisions of Spirit AeroSystems, Inc. General Provisions (PF-550, Rev 09/08) Clauses 21, 28, 29, 31, 33, 42 and 50 shall survive after termination or expiry of this Agreement
005	In order to meet the requirement of a potential new customer for the same engine application, Spirit may be required to accept and agree, in its contract with such customer to purchase components from different source other than the Seller. In such event Spirit shall be entitled to contract with such other vendor to supply the component for the new customer demands only, without incurring any liability. This arrangement shall not impact the supply of the component from Seller for this Program.
006	If any of Spirit customers requires that special components or parts of the Set of Materials have to be supplied from another Spirit vendor by the Seller then the Seller agrees to purchase such components/parts from that specific source.
007	Rolls Royce SABRe 9000 document is incorporated by reference. Supplier

BR 725 Supplemental Notes

PF-515 BR725 Rev. 01/10/11

Page 1 of 4

Supplemental Procurement Notes BR 725 Program

SPIRIT AEROSYSTEMS, INC.

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	may access this document at the following link: http://www.suppliermanager-online.com/sabre/default.html Contact your procurement agent for specific questions.
008	Some engineering definitions may include a Surface Point (SP _RD001xxxxx) document identified on the parts list. The SP document is derived from the referenced CATIA model and is the authoritative data.The Spirit provided CATIA model may be used to facilitate production and inspection.
	PRICING
100	The Seller and Spirit agree to jointly pursue cost reduction opportunities for the duration of this Agreement and will reflect the achievements of such opportunities in price reductions to Spirit.
	DELIVERY/PACKAGING/IDENTIFICATION
400	The Parties agree that timely performance under an Order shall be a primary obligation of the Seller, hence the Seller will only be excused delay in delivery or performance if it can show to Spirit's reasonable satisfaction that such delay has been caused by circumstances outside its reasonable control and it has notified Spirit in writing within five (5) calendar days of becoming aware of such circumstances. No Order will terminate as a result of such delay except that Spirit may, at its discretion, terminate an Order in whole or in part where the Seller is so excused without incurring liability if such delay becomes substantial. The Seller will make all reasonable endeavors to mitigate the effects of such delay. For the avoidance of doubt, strikes, lockouts or other industrial action or disputes that last longer than 90 days duration specific to the Seller and/or its subcontractors or agents shall not constitute an excusable delay. If delivery of the Goods is delayed in respect of the delivery date specified in the procurement document, other than for reasons listed above, the Seller shall pay Spirit a penalty at the rate of 1.5% (one and one-half percent) of the value of the Order under which the Goods were to be supplied for each complete week of delay up to a maximum of 6% (six percent) of such Order. Application of any such penalty shall begin after a Grace Period of 5 days. Spirits right to reserve penalties for such delays will be limited to a period of

BR 725 Supplemental Notes

PF-515 BR725 Rev. 01/10/11

Page 2 of 4

Supplemental Procurement Notes BR 725 Program

SPIRIT AEROSYSTEMS, INC.

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	90 days after delivery of such delayed Goods.
401	For orders received from Spirit AeroSystems, Inc., if delivery of the Goods or Work is delayed in respect of the delivery date specified in the procurement document, other than for reasons set out in PF-515 BR725 Rev 09/21/10, Note 400, the Supplier shall pay to Spirit AeroSystems, Inc. a penalty at a rate of 2.5% (two and one-half percent) of the value of the order under which the Goods or Work were to be supplied for each complete week of delay up to a maximum of 10% (ten percent) of such order. Spirit AeroSystems, Inc.’s right to reserve penalties for such delays will be limited to a period of 90 days after delivery of such Goods or Work.
	PROPERTY
501	If any tooling is fully funded by Spirit title to such tooling will remain with the Seller until such time as determined by Spirit. Spirit will have the option to purchase this tooling, for an agreed price of US $1.00. Spirit can take up this option at any time. For tooling fully funded by Spirit and tooling jointly funded by the Parties ("Total Tooling") the Seller will have full rights of use and will be responsible for the maintenance and replacement of the Total Tooling notwithstanding that such Total Tooling may be held and/or used by a sub­contractor to the Seller. The Seller will produce and maintain an auditable register of such Total Tooling,which will include but not be limited to details of serial numbers and ownership. The Seller is responsible for the acquisition of all tooling required by the Seller tofulfill it's obligations under the Agreement and the Appendices thereto. The NRC includes the cost of tooling sufficient to achieve a delivery rate of 12 Engine Sets of Material per month. If additional tooling is required to achieve a delivery rate greater than 12 Engine Sets of Material per month the Seller shall advise Spirit who in turn will instruct the Seller to purchase such tooling. The cost of such additional tooling to achieve a delivery rate of 15 Engine Sets of Material per month shall be negotiated when instructed. The Seller is responsible for the costs of tooling to produce a delivery rate of 12 Engine Sets of Material per month. The Seller is responsible for the acquisition of additional tooling if necessary to achieve a delivery rate greater than 12 Engine Sets of Material per month.

BR 725 Supplemental Notes

PF-515 BR725 Rev. 01/10/11

Page 3 of 4

Supplemental Procurement Notes BR 725 Program

SPIRIT AEROSYSTEMS, INC.

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

QUALITY

621

Buyer First Article Inspection (BFAI) – If BFAI activity is required at the Seller’s facility prior to shipment the Seller shall notify Buyer to schedule a comparable inspection and coordinate the required inspection/verification activity. Subsequent engineering, inspection, manufacturing or tooling changes for specific characteristics will require the Seller to notify Buyer. As a minimum, the Seller shall complete the Spirit AeroSystems F09-01159 ’First Article Inspection Report Content / Check Sheet’, and forward their completed check sheet and AS9102 form one through three with all supporting documentation electronically (E-Mail) to their buyer for review and retention at Spirit AeroSystems.

BR 725 Supplemental Notes

PF-515 BR725 Rev. 01/10/11

Page 4 of 4

Supplemental Procurement Notes BR 725 Program

SPIRIT AEROSYSTEMS, INC.

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	ADMINISTRATIVE/GENERAL
001	In order to meet the requirements of the customer, Spirit AeroSystems, Inc. may be required to accept and agree, in it’s contract with such customer, sale terms which are not reasonably reflected by the terms of this agreement. In such event, the Supplier shall negotiate with Spirit with the object of accepting an amendment to the terms of the agreement in respect of orders for Goods or Work related to such customer.
002	Supplier will comply with the Fair Labor Standards Act of June 30, 1938 (LISC201-209) as amended.
003	If there is a conflict of terms the order of precedence shall be: Purchase Contract Purchase Order Spirit AeroSystems, Inc. General Provisions (PF-550, Rev 09/08) Spirit AeroSystems, Inc. Supplemental Notes (PF-515, Rev 06/01/10) BR725 Supplemental Notes (PF-515 BR725, Rev 09/21/10)
004	The provisions of Spirit AeroSystems, Inc. General Provisions (PF-550, Rev 09/08) Clauses 21, 28, 29, 31, 33, 42 and 50 shall survive after termination or expiry of this Agreement
005	In order to meet the requirement of a potential new customer for the same engine application, Spirit may be required to accept and agree, in its contract with such customer to purchase components from different source other than the Seller. In such event Spirit shall be entitled to contract with such other vendor to supply the component for the new customer demands only, without incurring any liability. This arrangement shall not impact the supply of the component from Seller for this Program.
006	If any of Spirit customers requires that special components or parts of the Set of Materials have to be supplied from another Spirit vendor by the Seller then the Seller agrees to purchase such components/parts from that specific source.
007	Rolls Royce SABRe 9000 document is incorporated by reference. Supplier

BR 725 Supplemental Notes

PF-515 BR725 Rev. 01/10/11

Page 1 of 4

Supplemental Procurement Notes BR 725 Program

SPIRIT AEROSYSTEMS, INC.

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	may access this document at the following link: http://www.suppliermanager-online.com/sabre/default.html Contact your procurement agent for specific questions.
008	Some engineering definitions may include a Surface Point (SP _RD001xxxxx) document identified on the parts list. The SP document is derived from the referenced CATIA model and is the authoritative data.The Spirit provided CATIA model may be used to facilitate production and inspection.
	PRICING
100	The Seller and Spirit agree to jointly pursue cost reduction opportunities for the duration of this Agreement and will reflect the achievements of such opportunities in price reductions to Spirit.
	DELIVERY/PACKAGING/IDENTIFICATION
400	The Parties agree that timely performance under an Order shall be a primary obligation of the Seller, hence the Seller will only be excused delay in delivery or performance if it can show to Spirit's reasonable satisfaction that such delay has been caused by circumstances outside its reasonable control and it has notified Spirit in writing within five (5) calendar days of becoming aware of such circumstances. No Order will terminate as a result of such delay except that Spirit may, at its discretion, terminate an Order in whole or in part where the Seller is so excused without incurring liability if such delay becomes substantial. The Seller will make all reasonable endeavors to mitigate the effects of such delay. For the avoidance of doubt, strikes, lockouts or other industrial action or disputes that last longer than 90 days duration specific to the Seller and/or its subcontractors or agents shall not constitute an excusable delay. If delivery of the Goods is delayed in respect of the delivery date specified in the procurement document, other than for reasons listed above, the Seller shall pay Spirit a penalty at the rate of 1.5% (one and one-half percent) of the value of the Order under which the Goods were to be supplied for each complete week of delay up to a maximum of 6% (six percent) of such Order. Application of any such penalty shall begin after a Grace Period of 5 days. Spirits right to reserve penalties for such delays will be limited to a period of

BR 725 Supplemental Notes

PF-515 BR725 Rev. 01/10/11

Page 2 of 4

Supplemental Procurement Notes BR 725 Program

SPIRIT AEROSYSTEMS, INC.

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	90 days after delivery of such delayed Goods.
401	For orders received from Spirit AeroSystems, Inc., if delivery of the Goods or Work is delayed in respect of the delivery date specified in the procurement document, other than for reasons set out in PF-515 BR725 Rev 09/21/10, Note 400, the Supplier shall pay to Spirit AeroSystems, Inc. a penalty at a rate of 2.5% (two and one-half percent) of the value of the order under which the Goods or Work were to be supplied for each complete week of delay up to a maximum of 10% (ten percent) of such order. Spirit AeroSystems, Inc.’s right to reserve penalties for such delays will be limited to a period of 90 days after delivery of such Goods or Work.
	PROPERTY
501	If any tooling is fully funded by Spirit title to such tooling will remain with the Seller until such time as determined by Spirit. Spirit will have the option to purchase this tooling, for an agreed price of US $1.00. Spirit can take up this option at any time. For tooling fully funded by Spirit and tooling jointly funded by the Parties ("Total Tooling") the Seller will have full rights of use and will be responsible for the maintenance and replacement of the Total Tooling notwithstanding that such Total Tooling may be held and/or used by a sub­contractor to the Seller. The Seller will produce and maintain an auditable register of such Total Tooling,which will include but not be limited to details of serial numbers and ownership. The Seller is responsible for the acquisition of all tooling required by the Seller tofulfill it's obligations under the Agreement and the Appendices thereto. The NRC includes the cost of tooling sufficient to achieve a delivery rate of 12 Engine Sets of Material per month. If additional tooling is required to achieve a delivery rate greater than 12 Engine Sets of Material per month the Seller shall advise Spirit who in turn will instruct the Seller to purchase such tooling. The cost of such additional tooling to achieve a delivery rate of 15 Engine Sets of Material per month shall be negotiated when instructed. The Seller is responsible for the costs of tooling to produce a delivery rate of 12 Engine Sets of Material per month. The Seller is responsible for the acquisition of additional tooling if necessary to achieve a delivery rate greater than 12 Engine Sets of Material per month.

BR 725 Supplemental Notes

PF-515 BR725 Rev. 01/10/11

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Supplemental Procurement Notes BR 725 Program

SPIRIT AEROSYSTEMS, INC.

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

QUALITY

621

Buyer First Article Inspection (BFAI) – If BFAI activity is required at the Seller’s facility prior to shipment the Seller shall notify Buyer to schedule a comparable inspection and coordinate the required inspection/verification activity. Subsequent engineering, inspection, manufacturing or tooling changes for specific characteristics will require the Seller to notify Buyer. As a minimum, the Seller shall complete the Spirit AeroSystems F09-01159 ’First Article Inspection Report Content / Check Sheet’, and forward their completed check sheet and AS9102 form one through three with all supporting documentation electronically (E-Mail) to their buyer for review and retention at Spirit AeroSystems.

BR 725 Supplemental Notes

PF-515 BR725 Rev. 01/10/11

Page 4 of 4

Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	ADMINISTRATIVE
001	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.          Spirit Supplemental Procurement Notes (PF-515 MRJ) for Mitsubishi Regional Jet Program B.          Spirit Supplemental Procurement Notes (PF-515) C.          Spirit General Provisions, Fixed Price Contract (PF-550) D.          Mitsubishi documents referenced within the Purchase Documents F. Engineering specifications In resolving any such conflicts, these documents shall be read as a whole and in a manner most likely to accomplish their purpose. Supplier shall promptly report to Spirit in writing any inconsistencies in these documents, even if the inconsistency is resolvable using the above rules.
002	Force Majeure Neither Spirit nor Supplier shall be in default for failure to perform under this Agreement if the failure shall be excusable upon the following circumstance: a cause beyond the control and without the fault of the party. Such causes shall include, for example: acts of God, war (declared or undeclared), acts of governmental authorities, civil disturbances, strikes/labor disputes, terrorist acts, or a similar act affecting Spirit’s customers. Failure of a subcontractor for such cause shall be excusable unless the affected items are available from alternate sources. None of the following shall be considered excusable events: manufacturing problems, labor shortages, non-performance by subcontractors, inclement weather (unless it closes a pertinent manufacturing facility for at least five (5) consecutive days), or transportation problems. The affected party shall give the other party written notice within seven (7) days after becoming aware of an event constituting excusable delay. The notice shall include reasonable evidence for the excusable delay, and the expected period of delay. Within fourteen (14) days after such notice, the party shall further provide a detailed work-around plan, alternative sources, and other means of preventing further delays. In the event of an excusable delay, the parties shall consult and agree to a plan for the delayed delivery of the product, provided that the delay in delivery shall not exceed the period deemed excusable. Neither party may claim any compensation under the Agreement for excusable delays. Delay or non-performance deemed excusable which exceeds sixty (60) days shall entitle Spirit to terminate the affected purchase order or Agreement without further liability; provided, however, that Spirit shall be responsible for all reasonable amounts due to Supplier for (i) unrecovered non-recurring expense;

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Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	(ii) the cost of tooling; and (iii) any reasonable and proportionate amount for any Products and materials then in production which Spirit agrees to accept in writing and are delivered to Spirit in accordance with the terms and conditions of this Contract. In the event of termination, Supplier shall grant to Spirit, as Spirit may request, a non-exclusive license with reasonable terms and conditions sufficient to allow continued availability of Products to Spirit.
004	Program Reviews Supplier agrees to send representatives to Spirit's designated facilities at no charge to Spirit, to provide a status on the progress of the work and related subjects. Any attendance at any plant, or any participation in a meeting, or any action by either Party, pursuant to this Agreement or any Purchase Order, or otherwise, shall not relieve either Party of any obligations or transfer any obligations of either Party to the other Party.
012	Software Throughout the duration of the Agreement, Supplier agrees to communicate and transfer data electronically with Spirit when and as required by Spirit. In this respect, Supplier shall maintain software, software formats and versions, system operations, security procedures, signature procedures, transmission regulations and any other required procedures which are compatible with Spirit's systems, formats and procedures.
015	Termination In the event of the termination of any Purchase Orders, Supplier shall not be entitled to be reimbursed for any costs which, when taken together with any amounts paid or owing to Supplier under the applicable Purchase Order, shall exceed the amount payable under the Purchase Order. Spirit shall incur no termination liability for any Purchase Order cancelled or terminated within ten (10) days of issuance.
016	Changes The parties acknowledge and agree that the non-recurring and recurring prices set forth in this Contract are based on the TRDs as of the effective date of Spirit’s contract with its customer. Spirit shall have the right at any time, and only in accordance with an adjusted delivery schedule to be agreed upon by the parties, to direct in writing changes to: (a) the Specifications, the TRDs and the designs and drawings for the Products, (b)          the methods of packing and shipment of the Products, and (c)          the places of delivery and performance relating to the Products. Supplier shall promptly comply with each such Change in accordance with the following Articles, unless

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Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	Supplier demonstrates that doing so would reduce the safety or suitability of the applicable Products, or is technically not feasible. Notwithstanding any other provision of this Agreement, fourteen (14) days in advance of the date upon which items are ready for shipment at Supplier’s facility, such Products shall not be subject to any Change by Spirit. Supplier Changes.
	Supplier shall not make any change to any of the requirements of this Contract, the Specifications, the TRDs or any Purchase Order, including, without limitation, with respect to methods of packing or shipment and places of delivery or performance, without Spirit’s prior written consent; provided that if Supplier’s proposed change would not affect the form, fit, function, weight, maintainability or safety of, or the product support for, the Products, then Spirit shall not unreasonably withhold or delay its consent for such change. Design Evolution.
	Supplier further agrees that Changes prior to type certification of the Aircraft that do not fall within any of the applicable categories set forth below shall be Supplier’s responsibility and shall not be subject to any equitable compensation by Spirit under this Contract. Safety-Related Changes
	Any and all safety-related changes to the Products required by any Airworthiness Authority, including in response to any mandatory airworthiness directive (AD), service bulletin (SB), special condition or issue paper issued or authorized by such Airworthiness Authority (as the case may be) (collectively, “Safety Changes”) prior to the type certification for the Aircraft, shall be the sole responsibility of Supplier, and Supplier shall implement such changes at its sole cost. After such Type Certification, any and all Safety Changes due to Supplier manufacturing or design defect at any time during the applicable aircraft Design Service Objective (DSO) shall be the sole responsibility of Supplier, and Supplier shall implement such changes at its sole cost. After such Type Certification, if it is determined that the Safety Changes are not attributable solely to Supplier manufacturing or design defects, Supplier shall bear only that portion of the cost that is directly associated with Supplier manufacturing or design defects; provided, that Supplier shall not charge Spirit for any Safety Changes to the extent that such Safety Changes are developed for or implemented on other products provided by Supplier to third parties.
021	Product Liability Insurance In addition to the insurance requirements of Spirit Supplemental Procurement Notes (PF-515), in Note 019, Supplier is to carry and maintain aviation products liability insurance throughout the period of performance of this contract in an amount that is commensurate with the products supplied by Seller and limits typically carried in the aircraft industry. All other requirements of Note 019 of the PF-515 shall apply to this insurance coverage as applicable.

PF-515MRJ 01/30/12

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Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	PRICING
101	Pricing of Derivatives
	Recurring base prices set forth in this Agreement shall apply to Products, or derivatives thereof, purchased under the Purchase Documents, which are supplied for any other aircraft manufactured by Mitsubishi and its subsidiaries or affiliates. Any changes necessary to enable Supplier to supply products for Derivative Aircraft, such as the MRJ70, shall be subject to equitable compensation by Spirit, subject to Supplier’s obligations to minimize design and development costs and expenses.
	QUALITY
250	Records Retention
	Supplier shall retain the receiving inspection record and production records for ten (10) years from the date of shipment, at a minimum. First Article Inspection and Nonconformity records shall be retained for the life of the product. Supplier shall not dispose of these records without Spirit’s agreement. Supplier shall not contaminate or falsify such records. If required Supplier shall make records available to Spirit, Spirit’s customer or any regulatory authority. Supplier shall avoid breakage, failure, contamination, falsification and all that. In addition, Supplier shall ensures to submit and/or show if required by Spirit, Spirit’s customer or regulatory authority. If Supplier retains quality records by electronic data, Supplier shall define the procedure. the content shall describe at least the following: 1)     media 2)     Back-up method and frequency 3)     Security method
251	Flight Critical Parts Program (FCPP)
	If Supplier’s product(s) is identified as a Flight Critical Part subject to the MJET Flight Critical Part Program, the Supplier’s manufacturing and control plans are subject to approval by Spirit prior to production.
252	Disposition Support
	Even after delivery of the product(s), if any non-conformances are found on Supplier’s product(s) regardless of Supplier’s responsibility, Supplier shall provide technical support to Spirit in order to make

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Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	disposition.
253	Inspection/Audit by Spirit
	If Spirit conducts inspection and/or audit, Suppleir shall receive them and provide equipments, measurements as needed. Those audits may be performed at facilities of Supplier’s sub-tiers.
254	Inspection/Audit by Spirit’s Customer ro Regulatory Authority
	If Spirit’s customer or regulatory authority conducts inspection and/or audit, Supplier shall receive them and provide equipments, measurements as needed. If any non-conformance is noted, Supplier shall take necessary action(s) as soon as possible. If Supplier is required some reports such as an action plan, a result, etc. by Spirit’s customer or regulatory authority, Supplier shall be concurred with them by Spirit. Supplier is not allowed to report them to Spirit’s customer or regulatory authority directly from Supplier.
255	Re-Certification Responsibility
	In addition to Supplier’s warranty obligations, if, at any time within twelve (12) years after entry into service of an Aircraft, the certificate of airworthiness for such Aircraft is or becomes invalidated by a defect in any of the Products, Supplier shall, at its sole expense, immediately remedy such defect to rectify such invalidation, and shall bear the cost of re-Certification, including the costs of dismantling, repairing, replacing and re-installing such Products; provided, however, that in the event that such defect was caused solely or jointly by Spirit, Mitsubishi and/or any Operator, or is due to damage in shipping, such costs shall be shared by the parties to the extent of their respective fault. Supplier shall not be responsible for re-Certification if the invalidation is due solely to industry-wide enhancements in safety requirements by Airworthiness Authorities applicable to all other aircraft similar to the Aircraft.
256	Testing Supplier shall perform required testing as set forth in this Agreement at its or its applicable subcontractor’s facilities. If Supplier is unable to perform any required tests at its or the applicable subcontractor’s facility (such as in the case of a “ship short” Item), such tests shall be performed at Spirit’s facility at Supplier’s expense. Without limiting the generality of the foregoing, Supplier shall provide, at its expense, any test equipment necessary to perform such tests at Spirit’s facility. Further, for the avoidance of doubt, any tests performed at Spirit’s facility by Spirit under this Article shall have no effect on the obligations of Supplier, including, without limitation, Supplier’s warranty obligations, with respect to the Products so tested.
257	Sub-tier Supplier Approval
	Supplier and their sub-tier shall obtain approval by Quality Assurance Department of Mitsubishi Heavy Industry (MHI QA) via Spirit if the following conditions are applicable.

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Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	1.          When specified by MHI drawing and Quality Qualification is required. 2.          When industrial specifications are specified by MHI drawings for the following processes: a.             Heat Treatment b.             Surface Treatment (excluding commonly-used paint) c.             Plating/Coating d.             NDI/Nital Etch Inspection e.             Welding f.             Brazing g.             Structural Bond h.             Composit Processing i.             Superplastic Forming j.             Shot/Glass Peening Exclusions apply for: ·             Internal test articles ·             If Spirit’s process specifications (including industrial specifications which are managed in Spirit’s engineering specification system) are specified by MHI drawing, special process approval will be managed by Spirit’s special process approval system. Therefore MHI QA approval is not required. ·             Materials which are purchased to industrial material specification as required by the drawing and Spirit Material Specifications do not require MHI QA approval. If the process specification requires personnel qualification, Supplier’s personnel shall be qualified by Supplier’s internal process. Spirit QA approval is not required. In addition structural partner and its sub-tiers shall obtain NADCAP accreditation.. For SCD suppliers the following requirements apply in addition to those described above: Special process approval shall be performed in accordance with the SCD supplier’s internal procedures For MHI process specifications are included in the SCD drawing the SCD suppliers must submit their procedure for special process approval to Spirit for review and coordination with MHI. If Supplier needs special process approval by Spirit QA, Supplier shall contact the Spirit Procurement Agent for instructions.
258	Spirit Quality Representative
	Spirit shall be entitled to place and maintain a resident quality representative at Supplier’s facilities and/or

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Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	at Suppliers’ sub-tier supplier’s facilities during the term of this Agreement, at Spirit’s expense, to review Supplier’s manufacture of the Products, to witness or perform source inspection of the Products, provided that such representative shall not unreasonably interfere with Supplier’s manufacturing of the Products.
	CUSTOMER SUPPORT
301	Program Manager
	Supplier shall provide to Spirit, as a part of Supplier’s obligations under this Contract, all program management and engineering functions and human and material resources necessary for Supplier to perform its obligations under this Agreement, including, but not limited to, the assignment of program managers, engineers, and support personnel reasonably sufficient in quantity, experience, duration and otherwise. Such program management and engineering functions and other resources shall be available in Nagoya, Japan and/or at such other location(s) mutually agreed upon by the parties.
302	Testing Requirements
	Supplier shall provide to Spirit, in accordance with the provisions of this Agreement and as consideration for the non-recurring expenses to be paid by Spirit hereunder, the Products and other materials, documentation, data and services set forth in this Agreement. Supplier shall also provide to Spirit the following items: 1.     all Products required for testing and timely qualification of the Products and timely certification of the Aircraft 2.     all documents related to the Products required for timely qualification of the Products and Certification of the Aircraft; 3.     all equipment, documentation and procedures required to perform functional tests on the Aircraft 4.     competent on-site technical and/or engineering support as agreed by the parties to support flight test Aircraft through type certification of the Aircraft at a location designated by Spirit, such technical support to include the provision of a reasonable amount of testing equipment, and reasonable engineering support of the modification work during the flight test activity, if and as needed.
303	Warranty
	Supplier warrants that the Products furnished under this Agreement, shall (a) conform in all respects to the requirements of this Agreement and the Specifications, (b) be free from defects in design, materials, and workmanship, and (c) be new and unused at the time of delivery, in each case for a period of forty-eight (48) months from the date of Mitsubishi’s delivery of such Products to the applicable Operator. In the event of a discovery of any such non-conformance or defect, Supplier, at its option and expense, shall promptly repair, replace, or otherwise make good, and if applicable, dismantle and re-install, such non­conforming or defective Products (or such part thereof), at its sole cost and expense. Payment for, or

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Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	receipt, inspection or acceptance of, the Products shall not release Supplier from any of its warranty obligations set forth in this clause. In the event Spirit, Mitsubishi or Operator repairs, replaces, or dismantles or re-installs the non-conforming Products by or on behalf of itself or pursuant to the instructions of the Supplier, Supplier shall reimburse Spirit, Mitsubishi or Operator, as the case may be, reasonable costs and expenses incurred in connection with such repair, replacement, dismantling or re-installation, including, without limitation, any costs related to direct labor, material, and freight; provided, however, that (a) Supplier has been given an opportunity to confirm the non-conforming Products, (b) the entity performing such repair, replacement, or dismantling or re-installation is certified by the appropriate Airworthiness Authorities, and (c) all corrections are performed in accordance with applicable service manuals, bulletins or other written instructions, using parts and materials furnished or approved by Supplier, Spirit or Mitsubishi. After the expiry of the warranty period, the warranty on Products repaired will be twelve (12) months after installation of such repaired Products on the applicable Aircraft.
304	Recurring Failure
	For purposes of this Agreement, “Recurring Failure” shall mean material failures of any Products to conform with any of the warranties set forth within eight (8) years following acceptance by Mitsubishi of such Products, which (a) have the same cause, (b) occur more than three (3) times during any consecutive rolling eighteen (18) month period and (c) are not solely attributable to any act or omission of Mitsubishi or any Operator. Upon the occurrence of a Recurring Failure, the remedies set forth below shall apply to the entire population of Products affected by the Recurring Failure Upon the occurrence of a Recurring Failure, the parties shall (a) exchange information and work together in good faith to determine the root cause of the Recurring Failure, (b) draft a corrective action plan for the identification of and the repair and/or replacement of the affected Products, and (c) implement such corrective action plan to provide a prompt, aggressive and complete remedy of the Recurring Failure to Mitsubishi and the affected Operators with minimal disruption and loss to Mitsubishi and such affected Operators. Without limiting the foregoing, such corrective action plan shall include, at Supplier’s sole cost, repair and/or replacement of the affected Products and reimbursement to Mitsubishi for all direct and reasonable costs and expenses incurred by Mitsubishi to remedy such Recurring Failure. Mitsubishi shall use commercially reasonable efforts to minimize the foregoing costs and expenses in connection with any Recurring Failure. Further, to the extent that any Recurring Failure requires a Change, Supplier shall be responsible for absorbing the costs (including the direct costs incurred by Mitsubishi) of such Changes. At Supplier’s expense, Supplier shall incorporate any such Change into all future Products delivered under this Agreement, if applicable; provided, however, that if the reason for any such Change is not solely attributable to Supplier, Supplier shall only be responsible for absorbing the costs of such Change to the extent of its fault. In the event of a Recurring Failure, notwithstanding anything else to the contrary in this Agreement, until such time as the Recurring Failure is corrected and the remedies provided herein are completed, Spirit

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Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	shall have the right to cancel any Purchase Orders affected by such Recurring Failure without liability. When a solution is achieved for a Recurring Failure, Supplier shall incorporate such solution immediately into all future Products delivered under this Agreement.
305	Prohibition Against Direct Sales
	Unless otherwise expressly authorized by Spirit in writing in each instance, Supplier shall not sell any Products for replacement, maintenance or otherwise to any Operators or any other third party, either directly or indirectly.
306	Prohibited Materials
	Supplier hereby represents and warrants that the Products do not contain any asbestos, radioactive material, mercury, polychlorinated biphenyls or cadmium.
307	Value Improvement
	If requested by Spirit, Supplier shall engage in a process of Value Improvement (VI). Supplier shall identify cost reduction opportunities and work together with Spirit for implementation. Spirit may offer specific recommendations regarding, but not limited to, the incorporation of new technologies and process improvements intended to reduce Supplier's costs or improve Product performance. Supplier may offer specific recommendations regarding, but not limited to, Design for Manufacture (DFM), material used, or packaging and shipping improvements. All Value Improvement opportunities shall be reviewed by Spirit. Implementation will be determined by Spirit based on the cost to implement, and the final cost improvement opportunity. Cost reductions derived from the VI process will be negotiated.
308	Supplier Interface
	Supplier shall be responsible for, and shall make all changes to its Products and to its Products' interface points as required by Spirit, Mitsubishi or the airworthiness authorities at no cost to Spirit or Mitsubishi, as may be necessary to obtain or maintain Certification. In order to ensure proper interface and interaction of all Products incorporated on the Aircraft with other structures, systems, items or components of the Aircraft, Supplier shall participate in and support the actions of other suppliers that require information, to adequately perform their respective work throughout the life of the Agreement.
309	Production Rate Capability
	Subject to a seventy (70) week notice or any other notice as mutually agreed by the Parties, Supplier shall have the capabilities and capacity to support a final assembly line rate increase up to one 6 per month,

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Supplemental Procurement Notes Mitsubishi Regional Jet Program 

SPIRIT AEROSYSTEMS, INC.

CUSTOMER SPECIFIC SUPPLEMENTAL NOTES

CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	2XX	QUALITY
1XX	PRICING	3XX	CUSTOMER SUPPORT
		4XX	DELIVERY/SCHEDULE

	excluding Replacement Products for the production line and Spare Products. The parties acknowledge and agree that any Spirit-funded tools, equipment, hardware, software and/or NC tapes necessary for the supply of Products in excess of the six (6) complete sets of Products per month described above shall be considered Rate Tooling, and the cost of such Rate Tooling shall be borne by Spirit.
	DELIVERY/SCHEDULE
401	Schedule Changes
	Spirit may make rescheduling adjustments to the delivery schedule of Products as specified in the applicable Purchase Order as follows: Spirit may decelerate the delivery schedule of Products when Spirit gives written electronic notice of such at least four (4) months from the date of delivery as originally scheduled in the applicable Purchase Order. Spirit may accelerate Products scheduled for delivery in excess of the Lead Time. Such acceleration shall be at no charge. Any acceleration hereunder shall be permitted until the point of penetration into the Lead Time. Supplier will use commercially reasonable efforts to meet any Spirit request for acceleration within the Lead Time, subject to agreement of the parties as to the new delivery date and remuneration for any additional costs incurred, if applicable; provided that Supplier shall attempt to minimize the costs associated with any such acceleration.
402	Forecast
	Spirit shall provide to Supplier in March of each year a rolling forecast that projects the number of units per month. The forecast shall provide a look-ahead three (3) years in duration. All such rolling forecasts shall be non-binding on Spirit, and will serve as a projection only.

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Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	ADMINISTRATIVE/GENERAL
001	ITAR REQUIREMENTS
	This Contract/request for quote includes items or technologies that is covered by the
	Munitions List and are therefore subject to the International Traffic In Arms Regulations
	(ITAR), 22 CFR 120-130. Accordingly you are prohibited from exporting technical data to a foreign person without authorization from the U.S. State Department. It is the responsibility of the recipient of this purchase contract to ensure their compliance with all applicable U.S. export regulations.
	As part of Seller's written solicitation response, seller shall confirm, in connection with the effort related to the Spirit prospective procurement, 1.          It is not a foreign corporation
	2.          It is not a representative of a foreign interest (RFI) and
	3.          It will not employ foreign persons on the effort related to this Spirit procurement
	4.          It is a US firm incorporated under US law.
	Seller agrees to comply with all applicable U.S. export control laws and regulations, specifically including, but not limited to, the requirements of the Arms Export Control Act, 22 U.S.C.2751-2794, including the International Traffic in Arms Regulation (ITAR), 22
	C.F.R. 120 et seq.; and the Export Administration Act, 50 U.S.C. app. 2401-2420, including the Export Administration Regulations, 15 C.F.R. 730-774; including the requirement for obtaining any export license or agreement, if applicable. Without limiting the foregoing, Seller agrees that it w ill not transfer any export controlled item, data, or services, to include transfer to foreign persons employed by or associated with, or under contract to Seller or Seller's lower-tier suppliers, without the authority of an export license, agreement, or applicable exemption or exception.
	Seller must comply with ITAR, part 122.1 Registration requirements (a), Any person who engages in the United States in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register with the Office of Defense
	Trade Controls.  Manufacturers who do not engage in exporting must nonetheless register.
	Seller shall immediately notify the SPIRIT AEROSYSTEMS,INC.Procurement
	Representative if Seller's firm is, or becomes, listed in any Denied Parties List or if
	Seller's export privileges are otherwise denied, suspended or revoked in whole or in part by any U.S. Government entity or agency.
003	The invoice and Packing slip shall include the shipping document number, TKR number, Purchase Order number and Purchase Order item number. Any overtime or expedite charges must have prior approval by the Service Procurement Pa (PA). Supplier to return all Spirit AeroSystems, Inc.-furnished containers. Each shipment must be processed as soon as possible and returned to Spirit AeroSystems, Inc. Behind schedule items will be

9/08 PF-515

Page 1 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	coordinated with Seller by Buyer for expeditious handling. Please contact Buyer if circumstance arises that precludes prompt return of Parts.
004	CAUTION: Handle with care. Parts require (limited/no) machining. Avoid damage to the (cast/forged) surfaces.
005	LIQUIDATED DAMAGES: In the event of a Non-Excusable Delay in delivery (as defined in PF-550, “GP: Fixed Price Contract”, Section 24), Buyer may, at Buyers option, accept products that are not delivered on or before the required delivery date. Delay is further defined to include failure to maintain the Minimum level of the Min/Max inventory methodology as set out in PF­502, “Consumption Based Ordering Guidelines”. The parties acknowledge, however, that Seller would be liable for all additional costs incurred by Buyer because of such delay(s), which may include, by way of illustration and not of limitation: ·     additional expense related to administrative costs, ·     telecommunication costs, ·     additional or premium transportation charges, ·     special handling expenses, and ·     various anticipated and unanticipated costs to install the products out of the normal manufacturing sequence. The Parties further acknowledge that the nature and actual amount of costs associated with delivery delay are uncertain and difficult to calculate. Therefore, Buyer may choose, in its sole discretion, to require Seller to pay Buyer liquidated damages. The parties acknowledge that such payments are not intended as a penalty, but are, in lieu of the actual damages measured by such costs. If Buyer chooses to recover liquidated damages, they shall be equal to 1 % of the value of the delinquent items per day of delay or a minimum of $100 for each item per day of delay. The parties agree this calculation represents a reasonable estimate of the additional costs to be incurred by Buyer in connection with a delivery delay. Accumulation of liquidated damages will be subject to a grace period of five (5) days per item after which liquidated damages shall begin. Buyer’s choice to recover such liquidated damages for delayed delivery on any one or more occasions shall not, however, preclude Buyer from recovering the actual costs incurred because of delayed delivery on any other occasion. Buyers exercise of rights under this provision shall not preclude Buyer from exercising its option to terminate this Agreement for an Event of Default by Seller as provided in Spirit General Provisions (PF-550) Section 21, even if Seller has (a) paid such liquidated or actual damages to Buyer on prior occasions, or (b) if repeated incidents of late deliveries in the aggregate (or a single significant incident of delay) materially adversely affect

9/08 PF-515

Page 2 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	Buyer’s ability to enjoy the bargained for benefits of this Agreement on an ongoing basis.
006	The above material to be supplied to on a no-charge (trial) (loan) basis for a period of ____, beginning on the date of receipt.
008	Seller agrees to assume full responsibility as to any loss or damage of the material, as covered by the Contract, for the duration of the (trial) (loan) period provided said loss or damage is not directly due to Buyer's negligence, and the Seller further agrees to accept the return of said material, in a used condition, without any costs to the Buyer.
019	INDEMNIFICATION AND INSURANCE REQUIREMENTS 1.0 INDEMNIFICATION 1.1 Indemnification, Negligence of Supplier. Supplier shall defend, indemnify and hold Harmless Spirit AeroSystems, Inc., its subsidiaries, andtheirdirectors,officers, employees and agents (hereinafter referred to as "Indemnities") from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards and damages, of any kind and nature whatsoever (hereinafter referred to as "Claims,” for property damage, personal injury or death (including without limitation claims brought by and liabilities to, including injury or death to employees of Supplier or any Subcontractor) and expenses, costs of litigation and reasonable attorney's fees related thereto, or incident to establishing the right to indemnification, to the extent such Claims arise from any negligent act or omission or willful misconduct of Supplier or any Subcontractor or their employees arising out of or in any way related to the presence on Spirit AeroSystems, Inc.'s premises of Supplier, any Subcontractor or their employees, including without limitation the provision of services, personnel, facilities, equipment, support supervision or review. In no event shall Supplier's obligations hereunder be limited to the extent of any insurance available to or provided by the Supplier.
	1.2 Waiver of Immunity, Industrial Insurance. Supplier will not assert as a defense to this
	indemnification obligation any immunity under workers' compensation statues, industrial insurance, or other source, and Supplier expressly waives any immunity to the extent of the indemnity set forth in Paragraph 1.1 "Indemnification, Negligence of Supplier. " 1.3 Indemnification, Subcontractors. Supplier shall require each Subcontractor to provide
	an Indemnity, enforceable by and for the benefit of the Indemnities, to the same extent required of Supplier stated under Paragraphs 1.1 "Indemnification, Negligence of Supplier" and 1.2 "Waiver of Immunity, Industrial Insurance." 2.0 INSURANCE REQUIREMENTS 2.1 Commercial General Liability. Throughout the period of performance of this contract
	and until final acceptance by Spirit AeroSystems, Inc., Supplier shall carry and maintain, and shall ensure that all Subcontractors carry and maintain Commercial General Liability Insurance with limits of not less than One Million Dollars ($1,000,000) per occurrence for bodily injury, including death and One Million Dollars ($1,000,000) per occurrence for

9/08 PF-515

Page 3 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

property damage or alternatively, One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage combined. Such insurance shall be in a form and with insurers acceptable to Spirit AeroSystems, Inc., and shall contain coverage for all premises and operations, broad form damage, contractual liability (including, without limitation, that specifically assumed herein), and products and completed operations insurance. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.2 Automobile Liability. If licensed vehicles will be used in connection with the performance of this contract, Supplier shall carry and maintain, and shall ensure that any Subcontractor who uses a licensed vehicle in connection with the performance of this contract, carries and maintains, throughout the period of performance of this contract, Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed or otherwise, with limits of liability of not less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage. Such insurance shall be in a form and with insurers acceptable to Spirit AeroSystems, Inc. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.3 Workers' Compensation & Employer’s Liability.  Throughout the period of performance of this contract and until final acceptance by Spirit AeroSystems, Inc., Supplier shall cover or maintain insurance, and shall ensure that all Subcontractors cover or maintain insurance, in accordance with the applicable laws relating to Workers' Compensation, with respect to all of their respective employees working on or about Spirit AeroSystems, Inc.'s premises, regardless of whether such coverage or insurance is mandatory or merely elective under the law.

Throughout the period when work is performed and until its final acceptance by Spirit AeroSystems, Inc., Supplier shall also carry and maintain, and ensure that all Subcontractors carry and maintain, Employer's Liability coverage with limits of not less than One Million Dollars ($1,000,000) each accident. To the extent permitted by law, any policy or policies which provide any of the insurance required by this Paragraph 2.3, "Workers' Compensation & Employer’s Liability,” shall contain a Waiver of Rights of Subrogation against Spirit AeroSystems, Inc., its subsidiaries and their directors, officers and employees. If Spirit AeroSystems, Inc. is required by any applicable law to Pay Workers' Compensation premiums with respect to employees of Supplier or any Subcontractor, Supplier shall reimburse Spirit AeroSystems, Inc. for such Payment. Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.4 Certificates of Insurance

1. Prior to the commencement of the period of performance, Supplier shall

9/08 PF-515

Page 4 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	provide for Spirit AeroSystems, Inc.'s review and approval Certificates of Insurance reflecting full compliance with the requirements set forth in Paragraphs 2.1 "Commercial General Liability," 2.2 "Automobile Liability," and 2.3 "Workers' Compensation." Such Certificates shall: a)           be kept current and in compliance with throughout the period of performance and until final acceptance by Spirit AeroSystems, Inc. (and for two [2] years thereafter for products and completed operations liability); b)           provide for thirty (30) calendar days advance written notice to Spirit AeroSystems,Inc.in the event of cancellatio nor material change adversely affecting the interests of Spirit AeroSystems, Inc.; and c)           identify the cognizant SCM Representative and list Spirit AeroSystems, Inc. as the certificate holder. 2.           Any policy or policies providing the insurance under Paragraph 2.0, "Insurance Requirements,” may be inspected by Spirit AeroSystems, Inc. upon request. 3.           Where Supplier is subject to the requirements of a "monopolistic" state which does not permit insured workers' compensation, a written letter confirming participation in a state fund or, alternatively, confirming a state approved self-insurance program, will satisfy the certificate requirement. Such letter will identify the State account or self-insured number.  For Employer's Liability coverage in such monopolistic states, evidence of "Stop Gap" endorsement to the General Liability policy is acceptable proof of compliance with the Employer's Liability insurance requirement. 4.           Self-Assumption. Any self-assured  layer, deductibles and exclusions in coverage in the policies required under this Paragraph 2.0, "Insurance Requirements,” shall be assumed by for the account of and at the sole risk of Supplier or the Subcontractor which provide the insurance and to the extent applicable shall be paid by such Supplier or Subcontractor. In no event shall the liability of Supplier of Subcontractor be limited to the extent of any of the minimum limits of insurance required under Paragraph 2.0 "Insurance Requirements."                General Liability policy is acceptable proof of compliance with the Employer's Liability insurance requirement.
020	Within thirty (30) days after receipt of Purchase Contract/Purchase Order, Seller shall confirm to Buyer order placement for raw material. Confirmation shall include raw material identification, supplier, Purchase Order number and date, quantity ordered, and the supplier committed delivery schedule.
021	Within                      days after receipt of purchase order, Seller shall furnish to Buyer a copy

9/08 PF-515

Page 5 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	of Seller's planning showing detailed operations in sequence. Said planning shall include the estimated flow time for each detailed operation.
022	Seller shall furnish to Buyer, at ____ intervals, a complete progress status report of work accomplished in manufacture of article covered by this Purchase Order or until such time as Buyer considers the report no longer necessary.  Reports will be mailed each ______ showing progress through the preceding period.
036	OBLIGATION TO PURCHASE AND SELL Buyer and Seller agree that in consideration of the prices set forth in this Purchase Contract, Buyer shall issue orders for products from time to time to Seller for all of Buyer's requirements. Such products shall be shipped at any scheduled rate of delivery, as determined by Buyer, and Seller shall sell to Buyer, Buyer 's requirements of such products, provided that, without limitation on Buyer 's right to determine its requirements, Buyer shall not be obligated to issue any orders for any given product if: 1.          Any of Buyer 's customers specifies an alternate product; 2.         Such product is, in Buyer'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; 3.         Buyer gives reasonable notice to Seller of a change in any of Buyer's manufactured product which will result in Buyer no longer requiring such product for such manufactured product, 4.         Seller has materially defaulted in any of its obligations under any order, whether or not Buyer has issued a notice of default to Seller pursuant to Spirit AeroSystems, Inc.; General Provisions, Form PF-550, Section 21 (Cancellation For Default) or, 5.         Buyer reasonably determines that Seller cannot support Buyer's requirements for products in the amounts and within the delivery schedules Buyer requires. 6.         Buyer gives at least six (6) months notice to Seller that the product is used in the manufacturingof anairplanecomponent,assembly or other productpreviously manufactured in-house by Buyer and which component, assembly or other product Buyer has resourced to a third party supplier. 7.          Buyer gives at least ninety (90) days notice to Seller of Buyer’s decision to manufacture the products itself rather than purchase the products from Seller. Seller represents and warrants to Buyer 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. Any planning schedule, forecast, or any such quantity estimate provided by Buyer shall be used solely for production planning.Buyer may purchase products in different

9/08 PF-515

Page 6 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	quantities and specify different delivery dates as necessarytomeetBuyer's requirements. Any such estimate shall be subject to adjustment from time to time, and such adjustment shall not constitute a change under Spirit AeroSystems, Inc., General Provisions, Form PF-550, Section 18 (Changes) or Section 20 (Termination for Convenience).
037	Shipments you receive F.O.B. destination, or F.O.B. your plant for our account, which are in noticeably bad condition when delivered to you by the carrier: 1.          Note condition of shipment on carrier’s delivery receipt and on copy of freight bill retained by your Receiving Department. 2.          Immediately request carrier inspection on the shipment and retain a copy of the carrier’s inspection report. 3.          If carrier waives inspection, note your copy of the freight bill with the date, name of the carrier representative who waived inspection and a statement that carrier waived inspection. Shipments received in apparent good condition but found to contain concealed damage: 1.          Stop unpacking immediately as soon as damage is found. 2.          Retain all container and packing material. 3. Request carrier inspection and retain a copy of carrier’s inspection report. Contact Buyer’s Traffic Coordinator for further instructions as soon as damage to any of the above type shipments is discovered.
043	ANTI-KICKBACK PROCEDURES Seller agrees to abide by the Anti-Kickback Act of 1986 (41 U.S.C. 51 through 58) and FAR 52.303-7. "Anti-Kickback Procedures," except that subparagraph (c)(1) of FAR 52.203-7 shall not apply to Seller, and further that in subparagraphs (c)(2), (c)(3), and (c)(5), the term "Contractor" shall mean Seller, and in subparagraph (c)(4) the term "Prime Contractor" shall mean Buyer and the term "Subcontractor" shall mean Seller. In addition to reporting possible violations of the Anti- Kickback Act to the Government pursuant to 41 U.S.C. 57, Seller shall report such possible violations, if related to Buyer, to the Director of SCM and/or the Division Counsel of the Spirit AeroSystems, Inc., Division or subsidiary issuing this purchase order (PO). In addition to any other remedies that Buyer may have, Seller shall defend Buyer against all claims and procedures based upon actual or alleged violations of the Anti-Kickback Act of 1986 and any amendment thereof; and Seller shall indemnify and hold Buyer harmless from any losses, damages, liabilities, costs, and expenses including but not limited to, losses of profits, expenses of litigation, attorney’s fees, penalties or fines, suspensions or reductions of progress payments, and all losses arising out of contract terminations, suspensions or debarments of Buyer, resulting from a violation of the Anti-

9/08 PF-515

Page 7 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	Kickback Act of 1986 and any amendment thereof, by Seller, any of its officers, partners, employees, agents, or any subcontractors at any tier below Seller or such subcontractor’s employees. If the Government, pursuant to FAR 52.203-7, directs the Buyer to withhold sums owed the seller, the Buyer shall be entitled to do so and the Buyer may, if ordered to do so, pay said money over to the Government and the Buyer shall not be responsible to pay the said money to the seller but seller shall remain responsible for performance of the contract.
044	This contract is subject to the requirements of Spirit AeroSystems, Inc., form PF-502, Consumption Based Ordering Guidelines, current revision, incorporated herein by reference.
046	Seller will assign a full-time program manager whose exclusive responsibility will be to oversee and manage Seller's performance hereunder. The assignment of such program manager will be subject to Buyer's prior approval of such Person's resume.
049	COST AND PERFORMANCE VISIBILITY When requested by Buyer, 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.
050	COMPUTATION OF EQUITABLE ADJUSTMENT The Rates and Factors set forth below shall be used to determine the equitable adjustment, if any, to be paid by Buyer pursuant Spirit AeroSystems, Inc., General Provisions, Form PF-550, Section 18 (Changes). 1.          Direct Labor Rate                                      $ 2.          Manufacturing Burden                            % 3.          G&A (Gen. Admin. Expense)                   % 4.          Profit                                                            % 5.          Total Rate                                                   $
051	Reporting Requirements
	Seller shall furnish to Buyer, at intervals, or until such time as Buyer
	considers the report no longer necessary, a complete status report of work accomplished in manufacture of product(s) covered by this contract.  Reports will be mailed each showing progress through the preceding period. Status reports shall include,
	but are not limited to, the following topics: 1.          Delivery schedule updates, schedule impact issues and corrective action; 2.          Technical/manufacturing progresss incethepreviousreportperiod,including significant accomplishments, breakthroughs, problems and solutions;

9/08 PF-515

Page 8 of 26

9/08

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	3.          Identification of changes to key manpower or staffing levels; 4.          Identification of the critical events/activities expected within the next month and a discussion of potential risk factors; 5.          Progress on open Action Items, including closure dates; 6.          Purchased components and raw material status; 7.          Identification of Quality issues and resolutions; 8.          Manufacturing and Quality inspection progress of First Article products; 9.          Status on tool design and fabrication, as applicable, until completion; 10.          Inventory status of castings and forgings procured by Seller (if applicable). In Addition to the above required Status Reports, within twenty-four (24) hours of known problem to Seller, Seller shall provide a detailed Problem Report, notifying Buyer of program problems/issues that could impact Seller’s ability to deliver products on time and otherwise in conformance with the terms of this contract. Problem reports shall be submitted to the Buyer’s Procurement Representative. Submittal of a Status Report or Problem Report in no way relieves Seller of any obligations under the contract nor does it constitute a waiver of any rights and remedies Buyer may have with respect to any default.
061	Spirit AeroSystems, Inc., hereby certifies that: This purchase of tangible personal  property is exempt from Kansas sales and compensating use tax as provided by Kansas Code Section 79-3606(n) Consumed in Production. It is engaged in the business of designing, developing, manufacturing, and selling airplanes, missiles, space vehicles, and related articles, and spare Parts and components of such items. Understands and agrees that if the tangible personal property is used for any purpose that is not exempt from sales or compensating tax, Spirit AeroSystems, Inc., becomes liable for the tax.
062	Spirit AeroSystems, Inc. hereby certifies that this purchase of this service is exempt from Kansas sales and compensating use tax because it is not a listed taxable service per Kansas Code Section 79-3603.
063	No charge or claim is involved and therefore seller does hereby remise, release and discharge Spirit AeroSystems, Inc., its officers, agents and employees, of and from all liabilities, obligations, claims or demands whatsoever as a result of this Changed Purchase Order/Purchase Contract. Please sign and return one copy of this Changed Purchase Order/Purchase Contract Acknowledgement.
064	Seller, by accepting this Changed Purchase Order, does hereby remise, release and discharge Spirit AeroSystems, Inc., its officers, agents, and employees, of and from all liabilities, obligations, claims, and demands whatsoever as a result of this Changed Purchase Order, unless seller files with Spirit AeroSystems, Inc., buyer, a proper

9/08 PF-515

Page 9 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

	termination proposal (Spirit Form F08-04597) pursuant to and within the time limits allowed in the termination clause of the Purchase Order terms and conditions.
065	Within thirty (30) days after award of Purchase Contract/Purchase Order, Seller must submit to Buyer, a milestone schedule reflecting all significant milestones, such as (1) raw material ordering and receipt, (2) planning, (3) tool design and fabrication, (4) each manufacturing operation, (5) processing, (6) inspection and shipment of finished Parts. All milestones are to be time-phased and a complete status report comparing actuals to targets must be submitted to Buyer on the first of each month.
066	Seller agrees that subject to the other data provisions of this contract any technical data furnished to Buyer by Seller may be furnished to associate contractors for and in connection with this program. Any technical data furnished to Buyer by Seller shall only be furnished to associate contractors upon Seller’s written approval and shall only be used for and in connection with this Purchase Order/Purchase Contract for coordination and interface control.
067	Seller grants to Buyer an option to extend the period of performance of this contract as set forth below. Buyer may exercise the option by written notice to the Seller on or before (insert a date). This option may be exercised by Buyer any number of times so long as
	each option increases the period of performance of this contract by no less than (insert a
	number of months or years). However, in no event may Buyer unilaterally extend the
	contract beyond (insert a date) by exercise of this option.
	Notwithstanding the option set forth herein, Buyer reserves the right to commence new negotiations with Seller concerning pricing and other terms for additional quantities of Products.
068	Supplier shall record and retain measurement data (diameter, position, and Part temperature), for all hole locations that are assigned any of the following requirements: A) statistical tolerances, B) positional tolerances less than or equal to twenty-eight thousandths (.028) diametric, or C) coordinate (linear) tolerances having a total band width less than or equal to twenty thousandths (.020 or +/- .010). Records must be retained for a minimum of three (3) years after final delivery unless otherwise specified by contract.
097	When Spirit AeroSystems, Inc. is the Importer of Record, Seller is required to submit a copy of a Commercial Invoice, prior to each shipment of product, and ensure that the Packing slip accompanying the product matches the Commercial Invoice. In the case of "American Goods Returned" or "Returned After Repair or Alteration", Seller is to include the foreign shipper's declaration, shipper's repair declaration, manufacturer's declarations as applicable. Product that is subject to United States Department of State International Traffic In Arms Regulations (ITAR), should not be combined with non ITAR product. Seller is to provide a separate Commercial Invoice and make shipment on a separate house or master airbill.

9/08 PF-515

Page 10 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

Seller represents and warrants that the copy provided to Spirit AeroSystems, Inc. will be a true copy of the Commercial Invoice that will accompany shipment.

The true copy of the Commercial Invoice must be emailed or faxed to:

Spirit AeroSystems, Inc.

Email Address: grpimportcompliance@spiritaero.com

Fax Number: 1-316-529-7956

Attn: Import Administration

NOTE: Failure to comply with these requirements shall be a material breach of contract and grounds for default pursuant to the Cancellation for Default clause of this contract.

1. Commercial Invoice Requirements

a.      Must be in English

b.      Must be legible

c.      Purchase Order Number

Provide the current Purchase Order or Purchase Contract number (P.O. XXXXXX), if applicable.

d.      Location and Names of Seller/and or Shipper, Buyer and Date

i.    Date when the merchandise is sold or agreed to be sold.

1. When goods being imported are not sold or agreed to be sold to Spirit, the shipping/Customs invoice should be noted, accordingly, complete with an explanation.

ii.    Merchandise Shipment Date (month, day, year)

Provide the date that the merchandise shipped from the Sellers factory or facility.

iii.Name and address of the Seller (Company name and address) and/or name and address of the Shipper, if the Seller is not the Shipper.

iv.Name and Contact information for an employee, employed by the Seller and/or Shipper, who has detailed knowledge of the sales transaction.

v.Name and address of the Buyer (Spirit AeroSystems, Inc. – 3801 S. Oliver, Wichita, Ks. 67210), and name and phone number of prime point of contact at the Buyer’s site (i.e.: Pa, etc.)

vi.Name of Consignee if not the Buyer (Company receiving non- purchased transactions or drop ship destination).

e.Record the United States Port of Entry where merchandise is to be cleared by CBP

f.Quantities, weights and measures

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Page 11 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

i.    Record the quantity of each Part number in the shipment

ii.    If not separately noted on Packing sheet(s) include on invoice :

·          Total quantity of Parts being shipped

·          Provide net weight of each Part number and gross weight of

entire shipment

·          Specify unit of measure being used

·          Specify the total number of boxes included per packing

sheet.

·          Textiles must specify the net gross weights and the length,

width and total square meters of material.

g. Provide a detailed description of each item being shipped to ensure proper product classification per the Harmonized Tariff Schedule (HTS) and must include at a minimum:

i.The full name by which each item is known

ii.Part Number as appears on Purchase Order/Contract. If the item is a raw material, provide the material grade, class and dimensions.

Notes:

·     Generic descriptions, abbreviations, acronyms, and Stock

Keeping Unit (SKU) numbers are not acceptable.

·     Spirit AeroSystems, Inc. may request additional description

information for items that do not have a Part number and/or design or when the appropriate HTS number cannot be determined from the provided description.

·     Seller will provide material class, grade, dimensions and

assembly components if Part is manufactured by Seller’s own manufacturing drawings.

h. Country of Origin: indicate the country of manufacture of each item.

i.Terms of Sale: Specify the International Commercial Terms of Sale (Incoterms) as agreed to per the Spirit AeroSystems, Inc. Contract on the invoice or Spirit AeroSystems, Inc. Work Authorization.

j.Specify “Related Party to the Spirit AeroSystems, Inc.” status (Yes or No) on the invoice.

k.Commercial Invoice Number (Seller’s Option)

l.Page numbers are required for each invoice (example:of

9/08 PF-515

Page 12 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

Pages).

m. Bolt Seals: All shipping documents must reflect the bolt seal number being used for ocean shipments loaded into dedicated containers. All bolt seals used must be those issued to the supplier by Spirit Aerosystems in order to comply with C-TPAT requirements.

2. Commercial Invoice Valuation Requirements

a.Must be complete and accurate, including the unit cost of each Part and the total value of the entire shipment.

b.Currency on all invoices must reflect the actual currency of the purchase contract and the transaction of money between the buyer and the seller.

c. List separately any Assists and/or Additional costs used for manufacturing each Part. For example:

·      Assists: Any components, materials, dies molds and tools that are supplied by the Buyer free of charge or at a reduced cost to the Seller, and used in the production of imported goods. This includes any buyer Paid transportation costs associated with the assist. These transportation costs will be provided by the procurement focal responsible for this merchandise.

·      Costs for tooling, etc., built or supplied, directly or indirectly, and

used in the production or manufacture, by the manufacturer of the goods being imported into the United States, and not included in the purchase order unit price.

·      Engineering and Design work – Work that is performed outside

the U.S. by Non-U.S. employees, and is not included in the unit price of the merchandise being imported.

·      Packing Costs – Costs for Packing that are incurred by the Buyer and have not been included in the unit cost.

·      Non-recurring charges – One time charges, incurred by the Buyer,

for such items as, expedite fees and transportation costs, which have not been included in the unit cost.

·      Selling Commissions – Commissions incurred by Buyer that have

not been included in the unit cost.

·      Royalties – Fees the Buyer is required to pay as a condition of

sale.

d. List all discounts that have been agreed to, or may be allowed, that apply to the purchase price or value, but have not been included in the unit price (Terms of Payment).

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Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

e.Repaired or modified Parts – separately enter the value of the item and the value of the repair on the invoice. For “no charge” repair, show the value of the repair on invoice.

f.If Seller receives any rebates, drawbacks or bounties, as a result of exportation, please itemize and provide description.

3.     Packing Sheet\slip (if used by supplier)

a. Include Packing sheet\slip number(s) on invoice

4.     U.S. Government Programs Only (Regardless of Business Units)

a.If a government contract applies, the prime contract number must be

noted on the commercial invoice. Additionally, the following government

contract statement needs to be shown as follows for Military Programs. “United States Dept. of Defense Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Sub-chapter VIII, item 9808.00.3000 of the Harmonized Tariff Schedules to The United States. Upon arrival of shipment at the port of entry, District Director of

Customs, please release shipment under Section 19 CFR Part 142 and notify Commander, Defense Contract Management Area Operations (DCMAO) New York, for execution of customs forms and any required duty free entry certificates.”

b.Commercial Invoice must show that the shipment is consigned to a U.S. Government Agency (i.e.: U.S. Department of Defense) in “care of Spirit AeroSystems, Inc.”, if shipment has a prime contract number.

c. If items were exported on a license or exemption upon importation, that license or exemption information should be notated as follows:

Example: “Originally exported under DSP-XX license number XXXXXX” or “Imported under 22 CFR XXXXX”

ADDITIONAL IMPORT NOTES:

Part Marking

All items furnished under this contract/order, unless excepted by law, must be legibly marked with the English name of the country of origin per U.S. Customs Regulation 19 CFR 134 Country of Origin Marking. Markings are to be legible, indelible, and as permanent as the nature of the article or container will allow.

Chemical Content

Additionally, the import of any shipment that actually contains or consists of a chemical substance must be coordinated with Buyer in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants, protectorants, paint, packaging materials)

9/08 PF-515

Page 14 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

	Seller will provide MSDS (Material Safety Data Sheet, Ref – 29CFR1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination. Note: Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies. NAFTA If the Products under this Order qualify for preferential duty treatment under the North American Free Trade Agreement (NAFTA), the Seller must provide Buyer’s Import Compliance group with a valid NAFTA Certificate of Origin (C/O), in order for the Product to be eligible for preferential duty treatment at the time of Customs entry. Seller acknowledges that the C/O will be used by Buyer as proof of eligibility for preferential duty treatment, and agrees to provide full cooperation to Buyer for any U.S. or foreign Customs inquiries into preferential duty claims that arise out of any Article furnished under this Order. Should Buyer be fined and/or penalized by the aforementioned Customs entities, for invalid data on the NAFTA C/O provided by Seller, Seller agrees to reimburse Buyer upon request for the fines and/or penalties as well as Buyer’s expenses in connection therewith. Unless Buyer requests individual C/O for each shipment, Seller may provide annual blanket C/O to cover multiple shipments during the calendar year. Seller shall immediately notify Buyer in writing of any changes in the eligibility of the Products for preferential duty treatment. Part number additions to the NAFTA C/O will be requested periodically by Buyer. Seller will fully review all applicable part numbers to ensure they qualify for NAFTA preferential duty treatment, before sending Buyer a copy of the updated NAFTA C/O.
	PRICING
100	This order is subject to Kansas State Tax on raw material only.   Seller will pay Kansas state sales tax on the amount of material called out in the face of this order, and invoice Spirit AeroSystems, Inc., for reimbursement of the sales tax paid as a separate entry on the invoice.

9/08 PF-515

Page 15 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

101 Multi-State Tax Compact Resale Exemption Certificate We are registered with the below listed states within which your firm would deliver purchases made by us. We warrant that any such purchases are for resale in the normal course of our business of manufacturing aircraft and aerospace products.  

STATE	STATE REGISTRATION, SELLER'S PERMIT OR ID NUMBER OF PURCHASER	STATE	STATE REGISTRATION, SELLER'S PERMIT OR ID NUMBER OF PURCHASER
KS	004-2021305285-01	OK	831731
We further certify that if any property or service purchased tax-free under this exemption certificate is used or consumed in such a way to make it subject to a sales or use tax, we will Pay the tax due directly to the proper taxing authority.

102	Exempt from Federal Excise Tax. Exemption form attached.
103	Federal Excise tax of is included in the unit price.
104	State Sales Tax applicable; (Note: Other than Kansas) Buyer to reflect a two-digit state code, i.e., TX for Texas
105	This Purchase Order/Purchase Contract is exempt from state sales or use taxes, Kansas Registration Certificate.
106	This Purchase Order/Purchase Contract is subject to Kansas state sales tax.
115	The unit price(s) shown in this Purchase Order/Purchase Contract is only an estimated price. Advise the Buyer of the firm price as soon as possible.
118	The precious metal (gold, silver, platinum) surcharge will be an upward or downward adjustment computation based on material content factor of _____ times the difference between the base price of  and the current value of the precious metal. The current value will be the value listed in the Wall Street Journal dated _____ and this value will be computed on the _____.
119	Seller may disassemble the herein described article(s) and shall immediately quote price of rework or repair and the current replacement price.   Seller shall not proceed with rework until receipt of a change order authorizing the rework cost. Price will be finalized within 60 days of the date of this Purchase Order.
121	The expedite charge will be paid if acceptable parts in the quantity stated are produced and shipped to Buyer, or Buyer’s designated location, on or before.
122	Buyer's maximum liability for an equitable adjustment resulting from a decrease in

9/08 PF-515

Page 16 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

	quantity or termination of Product(s) shall be limited to costs directly attributable to 1.          _____ days raw material and 2.          _____ days finished Products worth of scheduled deliveries of the Products. For purposes of this Note, scheduled deliveries shall be determined by the applicable schedule in effect at the time Seller commenced work on the Product(s) that are the subject of the termination or decrease.
129	Seller shall submit cost or pricing data as required by Form PF-270 “Cost Breakdown Form” for each change when the total amount of the proposed additions and/or deletions to the price combined is $100,000 or more.
131	Die service charges are considered a fee, not a purchase price. Considerations acceptable to Buyer in Payment of such fees being (A) That title, ownership, possession and control of all equipment produced hereunder shall vest in Seller, (B) That Seller shall store, maintain and where necessary because of wear, loss or damage, replace such equipment, without further cost to Buyer, until final disposition of such equipment has been agreed to between Buyer and Seller, (C) that Seller shall not dispose of such equipment until three (3) consecutive years of inactivity has Passed, and not then without first giving at least thirty (30) days written notice of intention and receiving Buyer's written approval to do so.
132	This   Purchase      Order/Purchase       Contract     subject         to        thetermsandconditions (          ) of License Agreement effective date (                                                                           ).
133	The item price(s) on this Purchase Order is/are based on Buyer Paying one setup charge for one lot run with the entire quantity to be shipped per Buyer shipping schedule. In the event of a shortage situation, the requested quantity of material is to be shipped within 3 days of notification. Buyer, under the terms of this agreement, may not change the quantity, of any item, on the Purchase Order. Buyer further agrees to accept the outstanding balance of any item within one calendar year from the date of the first shipment of that item. Buyer may at no cost, revise both the quantity per ship schedule and the scheduled ship dates, with a minimum of one-week notice.
136	All petitions for price increase must: 1.    Be in writing; 2.    Provide at least thirty (30) days advance written notification.  Notification shall commence on the postmarked date of a correctly addressed letter to Buyer’s designated representative; 3.    Be accompanied by detailed cost data substantiating the petitioned increase; Any price revision(s) shall be passed through as a percentage price change equal to the percentage change in Seller’s delivered commodity/service cost. No additional markup for profit on the incremental price increase will be accepted by Buyer;

9/08 PF-515

Page 17 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

	5.           Buyer shall have the right to negotiate all proposed price increases and may delete specific line items or terminate the contract upon failure to mutually agree to a proposed price revision; 6.           In the event a price increase is incorporated into a contract, all billing shall be at the price in effect at the time of purchase order/requirements placement, not at the time of shipment/performance; 7.           Buyer’s acceptance of a price revision (increase/decrease) shall be confirmed only through a fully executed revision to the contract.
138	Seller may not submit a claim for obsolete material or product resulting from an individual change order that has a total claim value of Two Thousand Five Hundred Dollars ($2,500.00) or less.
139	Prior to 100% Engineering Release (Drawing Revision Level New) Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, Form PF­550, Section 18 (Changes), no equitable adjustment in the prices or schedules of any order shall be made for any change initiated by Buyer 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 Buyer ("100% Engineering Release") provided, that an equitable adjustment shall be made for: 1.          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 Section are changes within a raw material classification such as a change from 7050 Aluminum to 7075 Aluminum; 2.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 the receipt of 100% Engineering Release by the Seller. Subsequent to 100% Engineering Release Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, Form PF­550, Section 18 (Changes), no equitable adjustment shall be made to the recurring or non-recurring prices after the date of 100% Engineering Release for any change initiated by Buyer 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 this contract. For purposes of this section, the then current unit price or total nonrecurring price shall be the price identified elsewhere in this contract 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

9/08 PF-515

Page 18 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

	purposes of exceeding the two percent (2%) threshold set forth herein.
	DELIVERY/PACKAGING
401	Maximum weight of each skid not to exceed 4,000 pounds gross. Skids must be identified by heat lot number with only one heat lot per skid.
402	When Seller is a distributor, all items furnished must include the legal name of the product manufacturer on each Packing sheet immediately following the part number.
406	Material on this order shall be identified by the lot number appearing on the Package and Packing slips. Should more than one number be represented within one Package, Seller will provide sufficient separation to identify material by lot number.
414	Seller will  comply with the hazard communication standard, 29CFR1910-1200, if applicable. Seller will include a Materiel Safety Data Sheet (MSDS) with the initial shipment of a hazardous material each calendar year and route an additional copy of the MSDS to; Spirit AeroSystems, Inc. P.O. Box 780008 M/C K06-94 Wichita, KS 67278-0008 ATTN: EH&S Hazardous Materials Gatekeeper The revision number and date must be displayed prominently on the MSDS.Seller is also required to provide an MSDS to the address above in the event of a change in brand, a change in chemical composition, or a new / substitute chemical shipment; any change information will be communicated to the buyer.
415	Routing, Packaging, labeling, and marking of hazardous material for shipment via common carrier, authorized to handle the material, shall be in accordance with title 49 of the Code of Federal Regulations (CFR), Parts 100 to 199; the International Civil Aviation Organization (ICAO) "technical instructions for the safe transport of dangerous goods by air"; the International Air Transportation Association (IATA) "dangerous goods regulations"; the International Maritime Dangerous Goods (IMDG) code; and all other applicable international, federal, state, and local regulations.
416	Returnable containers are to be returned to          via           .
	Returnable containers shall be plainly marked or stenciled with Buyer’s Purchase Order number, supplier’s name, address and amount of deposit on outside of each returnable container.
419	Each spool must be marked or labeled with the following information: Buyer Purchase Order Number, manufacturer's name, and address, lot number, date of manufacture, wire gauge, length in feet, military or other material specification number and revision, Buyer material code, and vendor or Buyer Part number.

9/08 PF-515

Page 19 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

431	Tubing 1/2-inch or smaller in diameter, or with wall thickness less than .029 inch shall have a tag on each end, bearing the required identification as outlined in SAE-AMS-STD­184, except each piece must be identified.
458	All bars, rods, shapes, tubes, and forgings shall be marked with the specification, heat lot number, size, and mill name or original manufacturer.
460	Seller will include all components of an assembly in a single Package, putting in that Package only those components in correct quantities, which make up that assembly whenever that assembly does not ship as a single unit.
461	This is a drop shipment. Seller must reference Spirit AeroSystems, Inc., Purchase Order number and Part number as shown below on Packing list: Purchase Contract/Purchase Order No.     , Item           .
462	Material may be marked per SAE-AMS-STD-184 or a minimum of one complete set of identification markings may appear on the top side ends of the material.
463	Minimum skid length to be 9 ft., including runners.  Maximum skid width including dunnage to be 50". Material larger than 4ft. x 9ft. to be on appropriate size skid to protect material.
464	Preservation, Packaging and Packing.  Electrical/electronic Parts shall be Packaged in the original manufacturer's container or if repackaged shall be in a container equivalent to the original manufacturers. Equivalent Package as a minimum shall prevent damage to the Parts including, but not limited to, bending of leads or contamination by dust or moisture. The shipping containers shall be labeled with a highly visible label on at least one side. This label shall identify the container as containing electrical/electronic items.
465	Apply in red block letters "Released for test only" adjacent to or directly underneath engineering Part mark.
	PROPERTY
518	Seller shall not use Pattern of die equipment purchased on this order for production of Parts for anyone other than Buyer without prior approval of Buyer.
519	Buyer must be notified of any rework or replacement of dies subsequent to the original qualification of this forging.
525	SUPPLIER BANKED MATERIAL A.          Supplier Banked Material (SBM) applies to all Positions and Part Numbers. B.          Material, including but not limited to raw material, standards, detail components and assemblies, furnished to Seller by Buyer shall be administered in accordance with

9/08 PF-515

Page 20 of 26

Supplemental Procurement Notes

 SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

	Supplier Banked Material Agreement (SBMA) # xxxxxxxxxx DATED xx/xx/xxxx C.          Material and or processing furnished by the Buyer is not included in the purchase price of items on this contract/order. D.          The allowable scrap rate for the SBM items on this Contract/order is XX percent. Any scrap in excess of this amount will be the responsibility of the Seller. E. Seller shall provide Buyer with required on-dock dates for all material.Seller's notice shall provide Buyer with sufficient time to competitively acquire the material if, in its sole and absolute discretion, it desires to do so
	QUALITY
	System Requirements
601	Supplier is required to maintain a Quality System in compliance with AS9100 – Quality Management Systems – Aerospace – Requirements as outlined in section titled “Certification / Registration Body” (Note 610)
602	Supplier is required to maintain a Quality System in compliance with AS9003 – Inspection and Test Quality System.
603	All work performed under this contract shall be in accordance with a limited approval of a quality system adequate to control the product(s) and assure that it conforms to the type design and is safe for operation.
604	Seller must maintain an adequate quality system to provide the supplies and services that meet the requirements of this purchase document and all applicable specifications and/or engineering drawings.
605	Supplier is required to maintain a Quality System in compliance with AS9120 – Quality Management Systems – Aerospace – Requirements for Stockist Distributors.
606	Supplier is required to maintain a Quality System in compliance with AS9006 – Quality Management Systems – Aerospace – Requirements for Software.
	Certification / Registration Body
610	Spirit AeroSystems recognition of Seller’s AQMS certification/registration does not affect the right of Spirit AeroSystems to conduct audits and issue findings at the Seller’s facility. Spirit AeroSystems reserves the right to provide Spirit AeroSystems-identified quality system findings, associated quality system data, and quality performance data to the Seller’s Certification /Registration Body (CRB). Seller shall ensure the following relative to AQMS certification: 1.           The certification/registration body (CRB) is accredited to perform aerospace quality management system (AQMS) assessments.

9/08 PF-515

Page 21 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

2.              The CRB must use approved auditors and operate in accordance with the

corresponding International Aerospace Quality Group (IAQG) certification/registration scheme.

NOTE: IAQG sanctioned certification/registration schemes include but are not limited to

AIR 5359, SJAC 9010, TS157, etc. Reference IAQG website for listing of accredited

CRBs: http://www.iaqg.sae.org/servlets/index?PORTAL_CODE=IAQG

3.              The seller maintains objective evidence of CRB certification/registration on file at

Seller’s facility. Objective evidence shall include:

a.        The accredited AQMS certificate(s) of registration;

b.        The audit report(s), including all information pertaining to the audit results in accordance with the applicable certification/registration scheme;

     c.       Copies of all CRB finding(s), objective evidence of acceptance of corrective action(s), and closure of the finding(s).

NOTE: Certification records shall be maintained in accordance with Spirit AeroSystems specified contractual quality record retention requirements.

4.              The CRB services agreement provides for “right of access” to all CRB records by

Spirit AeroSystems, applicable accreditation body, applicable Registrar

Management Committee (RMC) and other regulatory or government bodies for the purpose of verifying CRB certification/registration criteria and methods are in accordance with the applicable IAQG certification/registration scheme.

   5.The CRB has Seller’s written permission to provide audit results/data to IAQG membership as required by the applicable IAQG certification/registration scheme.

6.              Spirit AeroSystems will be immediately notified in writing should the Seller’s

certification/registration be suspended or withdrawn, or accreditation status of

Seller’s CRB is withdrawn.

7.              Spirit AeroSystems-identified findings and Seller’s quality performance data will

be provided to the CRB during certification/registration and surveillance activity.

8.              CRB shall be provided access to applicable proprietary data (including Spirit

AeroSystems proprietary data) to the extent necessary to assess Seller’s compliance to AQMS requirements.

9.              CRB shall agree to keep confidential and protect Spirit AeroSystems proprietary

information under terms no less stringent than Seller’s contractual agreement with Spirit AeroSystems. Seller will assure that such information is conspicuously marked “SPIRIT AEROSYSTEMS PROPRIETARY”.

10.Seller will comply with all CRB requirements imposed to issue and maintain certification/registration.

9/08 PF-515

Page 22 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

	Inspection Requirements
621	Buyer First Article Inspection (BFAI) – BFAI activity is required at the Seller’s facility prior to shipment. Seller shall notify Buyer to schedule a comparable inspection and coordinate the required inspection/verification activity. Subsequent engineering, inspection, manufacturing or tooling changes for specific characteristics will require the Seller to notify Buyer. At the minimum, Seller shall make the following available in support of the BFAI for the article being reviewed:
	1.          The applicable purchase contract, material/process certifications, manufacturing and inspection records;
	2.          The applicable design data;
	3.          The applicable documented configuration baseline and configuration summary;
	4.          The applicable Material Review Board (MRB) actions;
	5.          The applicable acceptance and qualification test results;
	6.          The record of Buyer approval for supplier drawing and test procedures;
	7.          Completed Supplier First Article Inspection (SFAI) documentation.
622	Buyer Source Acceptance (BSI) - BSI is required for items procured on this purchase document prior to shipment from the Seller’s facility. Acceptance may include in-process activities such as processing, fabrication, witnessing of testing and/or final inspection.
	Seller shall provide the Spirit Quality representative with a copy of this purchase order, applicable drawings, specifications and changes thereto, and such other information as may be required. Seller shall provide the necessary use of the Seller’s facility and equipment to perform the inspection.
	Unless Buyer Source Acceptance has been delegated, in writing, by the procuring site, Seller shall contact the Buyer Quality Representative who services the facility.
623	FAA and/or Foreign Civil Airworthiness Authority (FCAA) conformity inspection and certification is required for items procured on this Purchase Document. Seller shall contact the local FAA/FCAA representative for inspection and certification.
	Unless otherwise indicated, in writing, the conformity inspection shall be performed at the
	Seller or Subcontractor; point of manufacture as deemed necessary to verify product conformance to the type design.
	Seller shall include the original FAA Form 8130-9 and FAA Form 8130-3 with the shipment. Foreign government equivalents to FAA Form 8130-3 are acceptable for imported product.
	For a Seller located in a country without a United States bilateral airworthiness agreement, the FAA may elect to conduct the inspection in accordance with paragraph 2 above, or upon arrival of the product in the U.S.
	Seller shall contact their procurement quality assurance focal for FAA Conformity coordination.

9/08 PF-515

Page 23 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

624	Delegation Authority – The Seller is authorized to inspect product(s) identified for this Purchase Document line item on behalf of the contracting Buyer site’s Quality assurance organization. Buyer Quality Assurance reserves the right to conduct product integrity audits, quality system assessments, verify Seller’s conformance to contracting Buyer site’s delegation program requirements and to revoke delegation authorization(s).
625	Supplier must retain on file the results of the final inspection for all kitted parts or assemblies that will include a dimensional inspection, hardness/conductivity inspection for aluminum alloys, and hardness inspection for steel and CRES alloys per engineering drawing requirements.
626	Functional Test – Identify the parts that have successfully passed function test requirements by stamping “FT” and the date the test was accomplished. These markings will be applied in a color contrasting to the part and of a size consistent with the part configurations. If Spirit witness of test(s) is required, supplier shall notify Spirit a minimum of five (5) days in advance of such test(s).
	Documentation / Shipping
631	Radiographic film and grain flow photos, when required by engineering drawing or reference specifications, shall be sent to Spirit AeroSystems, Inc., for review and acceptance. Send X-rays and photos directly to: SPIRIT AEROSYSTEMS, INC., RECEIVING INSPECTION 4555 E. MACARTHUR, GATE 14E WICHITA, KS 67210 Please reference production Purchase Order number on the shipping package.
632	After Market / Spares – Supplier is required to provide copy of completed First Article Inspection Report, manufacturing planning, and material and processing certs with first shipment of parts.
633	Withhold shipment until higher than Design Proposal Approval has been granted by Buyer, except those submitted for First Article Inspection.
	Repair Station
640	Supplier is required to maintain a Quality System in compliance with AS9110 – Quality Maintenance Systems – Aerospace – Requirements for Maintenance Organizations.
641	When the certificate involves rework/repair performed under FAR Part 145,the Serviceable Parts Tag shall identify the FAA Repair Station number and shall be signed by an authorized inspector. The Seller shall provide a description of the work accomplished when the part is returned to a Buyer Repair Station."
642	Airworthiness Certification - This article requires an airworthiness certificate executed by

9/08 PF-515

Page 24 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

	the Seller’s country airworthiness authority or their authorized designee. Seller shall contact the airworthiness authority representative that normally services the Seller’s facility to arrange for the application of the airworthiness certificate. It is the Seller’s responsibility to meet any special import requirements of the country to which the part is shipped. Seller may contact Buyer’s Procurement Agent for further assistance as required.
	MISCELLANEOUS
701	Warning statements for products containing or manufactured with ozone depleting chemicals as required by the Clean Air Act Amendments of 1990, Section 611, 40 CFR Part 82, should not be applied directly to the Parts or items. All such statements are to be included in a separate writing, such as the bill of lading, shipment Papers or other proper notification that complies with the referenced regulation and accompanies the shipment.
702	Parts shipped to Seller from Buyer’s facility for processing and return to Buyer under this Purchase Order are not subject to the Clean Air Act Amendments of 1990 Section 611, 40 CFR Part 82, requirement for ODC warning labels.
703	Any Part or item procured under this purchase contract which contains or was manufactured with an ozone depleting chemical as defined in the Montreal Protocol Agreement must include the following warning statement on the airbill/bill of lading, and the applicable invoice(s)/Packing list(s) for U.S. Customs entry purposes (for a shipment containing multiple Parts or invoices/Packing lists, the above documents must indicate to which Parts the warning statement applies): "WARNING: This shipment no.contains ___ or was manufactured with ________,
	a substance which harms public and the environment by destroying the ozone in the upper atmosphere."
	Additionally, the import of any shipment that actually contains or consists of a chemical substance must be coordinated with Buyer in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants, protectorants, paint, packaging materials) Seller will provide MSDS (Material Safety Data Sheet, Ref – 29CFR1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination. Note: Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies.
704	Information concerning chemical acquisition and emission.

9/08 PF-515

Page 25 of 26

Supplemental Procurement Notes

SPIRIT AEROSYSTEMS, INC. WICHITA, KANSAS P.O. BOX 780008, 67278-0008

NOTES ARE CATEGORIZED AS FOLLOWS

0XX ADMINISTRATIVE GENERAL	4XX DELIVERY/PACKAGING/IDENTIFICATION
1XX PRICING	5XX PROPERTY
2XX RESERVED	6XX QUALITY
3XX RESERVED	7XX MISCELLANEOUS

"To obtain accurate information concerning the purchase of chemical materials which may be subject to the requirements of Title III of the Superfund Amendments and Reauthorization Act Of 1986 (SARA), you are required to furnish to Buyer the following additional information above and beyond that which is required by 29CFR 1910.1200 in the form of Material Safety Data Sheets (MSDS). This additional information must be provided with the initial shipment of each product to Spirit AeroSystems, Inc., Hazardous Materials Management M/C K11-65, P.O. BOX 780008; Wichita, Kansas 67278-0008 each calendar year.

A statement that the chemical material is or is not subject to reporting under Section 313 of the SARA Title III and 40 CFR 372.45.

The name of each chemical component of the product and the associated chemical abstracts service registry number.

Percent by weight of each chemical component of the product shipped."

9/08 PF-515

Page 26 of 26

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

	ADMINISTRATIVE/GENERAL
003	The invoice and Packing slip shall include the shipping document number, TKR number, Purchase Order number and Purchase Order item number.  Any overtime or expedite charges must have prior approval by the Service Procurement Pa (PA).  Supplier to return all Spirit AeroSystems, Inc.-furnished containers.  Each shipment must be processed as soon as possible and returned to Spirit AeroSystems, Inc.  Behind schedule items will be coordinated with Seller by Buyer for expeditious handling.  Please contact Buyer if circumstance arises that precludes prompt return of Parts.
004	CAUTION:  Handle with care.  Parts require (limited/no) machining.  Avoid damage to the (cast/forged) surfaces.
006	The above material to be supplied to on a no-charge (trial) (loan) basis for a period of ____, beginning on the date of receipt.
008	Seller agrees to assume full responsibility as to any loss or damage of the material, as covered by the Contract, for the duration of the (trial) (loan) period provided said loss or damage is not directly due to Buyer’s negligence, and the Seller further agrees to accept the return of said material, in a used condition, without any costs to the Buyer.
019	INDEMNIFICATION AND INSURANCE REQUIREMENTS 1.0 INDEMNIFICATION 1.1 Indemnification, Negligence of Supplier.  Supplier shall defend, indemnify and hold harmless Spirit AeroSystems, Inc., its subsidiaries, and their directors, officers, employees and agents (hereinafter referred to as “Indemnities”) from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards and damages, of any kind and nature whatsoever (hereinafter referred to as “Claims,” for property damage, personal injury or death (including without limitation claims brought by and liabilities to, including injury or death to employees of Supplier or any Subcontractor) and expenses, costs of litigation and reasonable attorney’s fees related thereto, or incident to establishing the right to indemnification, to the extent such Claims arise from any negligent act or omission or willful misconduct of Supplier or any Subcontractor or their employees arising out of or in any way related to the presence on Spirit AeroSystems, Inc.’s premises of Supplier, any Subcontractor or their employees, including without limitation the provision of services, personnel, facilities, equipment, support supervision or review.  In no event shall Supplier’s obligations hereunder be limited to the extent of any insurance available to or provided by the Supplier.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

1.2 Waiver of Immunity, Industrial Insurance.  Supplier will not assert as a defense to this indemnification obligation any immunity under workers’ compensation statues, industrial insurance, or other source, and Supplier expressly waives any immunity to the extent of the indemnity set forth in Paragraph 1.1 “Indemnification, Negligence of Supplier.”

1.3 Indemnification, Subcontractors.  Supplier shall require each Subcontractor to provide an Indemnity, enforceable by and for the benefit of the Indemnities, to the same extent required of Supplier stated under Paragraphs 1.1 “Indemnification, Negligence of Supplier” and 1.2 “Waiver of Immunity, Industrial Insurance.”

2.0 INSURANCE REQUIREMENTS

2.1 Commercial General Liability.  Throughout the period of performance of this contract and until final acceptance by Spirit AeroSystems, Inc., Supplier shall carry and maintain, and shall ensure that all Subcontractors carry and maintain Commercial General Liability Insurance with limits of not less than One Million Dollars ($1,000,000) per occurrence for bodily injury, including death and One Million Dollars ($1,000,000) per occurrence for property damage or alternatively, One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage combined.  Such insurance shall be in a form and with insurers acceptable to Spirit AeroSystems, Inc., and shall contain coverage for all premises and operations, broad form damage, contractual liability (including, without limitation, that specifically assumed herein), and products and completed operations insurance.  Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.2 Automobile Liability.  If licensed vehicles will be used in connection with the performance of this contract, Supplier shall carry and maintain, and shall ensure that any Subcontractor who uses a licensed vehicle in connection with the performance of this contract, carries and maintains, throughout the period of performance of this contract, Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed or otherwise, with limits of liability of not less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage.  Such insurance shall be in a form and with insurers acceptable to Spirit AeroSystems, Inc.  Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

2.3 Workers’ Compensation & Employer’s Liability.  Throughout the period of performance of this contract and until final acceptance by Spirit AeroSystems, Inc., Supplier shall cover or maintain insurance, and shall ensure that all Subcontractors cover or maintain insurance, in accordance with the applicable laws relating to Workers’ Compensation, with respect to all of their respective employees working on or about Spirit AeroSystems, Inc.’s premises, regardless of whether such coverage or insurance is mandatory or merely elective under the law.

Throughout the period when work is performed and until its final acceptance by Spirit AeroSystems, Inc., Supplier shall also carry and maintain, and ensure that all Subcontractors carry and maintain, Employer’s Liability coverage with limits of not less than One Million Dollars ($1,000,000) each accident.  To the extent permitted by law, any policy or policies which provide any of the insurance required by this Paragraph 2.3, “Workers’ Compensation & Employer’s Liability,” shall contain a Waiver of Rights of Subrogation against Spirit AeroSystems, Inc., its subsidiaries and their directors, officers and employees.  If Spirit AeroSystems, Inc. is required by any applicable law to Pay Workers’ Compensation premiums with respect to employees of Supplier or any Subcontractor, Supplier shall reimburse Spirit AeroSystems, Inc. for such Payment.  Deductibles, premiums, and any losses arising out of failure of Subcontractors to carry the same insurance, shall be the responsibility of the Supplier.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

2.4 Certificates of Insurance

1.Prior to the commencement of the period of performance, Supplier shall provide for Spirit AeroSystems, Inc.’s review and approval Certificates of Insurance reflecting full compliance with the requirements set forth in Paragraphs 2.1 “Commercial General Liability,” 2.2 “Automobile Liability,” and 2.3 “Workers’ Compensation.”  Such Certificates shall:

a) be kept current and in compliance with throughout the period of performance and until final acceptance by Spirit AeroSystems, Inc. (and for two [2] years thereafter for products and completed operations liability);

b) provide for thirty (30) calendar days advance written notice to Spirit AeroSystems, Inc. in the event of cancellation or material change adversely affecting the interests of Spirit AeroSystems, Inc.; and

c) identify the cognizant SCM Representative and list Spirit AeroSystems, Inc. as the certificate holder.

2.Any policy or policies providing the insurance under Paragraph 2.0, “Insurance Requirements,” may be inspected by Spirit AeroSystems, Inc. upon request.

3.Where Supplier is subject to the requirements of a “monopolistic” state which does not permit insured workers’ compensation, a written letter confirming participation in a state fund or, alternatively, confirming a state approved self-insurance program, will satisfy the certificate requirement.  Such letter will identify the State account or self-insured number.  For Employer’s Liability coverage in such monopolistic states, evidence of “Stop Gap” endorsement to the General Liability policy is acceptable proof of compliance with the Employer’s Liability insurance requirement.

4.Self-Assumption.  Any self-assured layer, deductibles and exclusions in coverage in the policies required under this Paragraph 2.0, “Insurance Requirements,” shall be assumed by for the account of and at the sole risk of Supplier or the Subcontractor which provide the insurance and to the extent applicable shall be paid by such Supplier or Subcontractor.  In no event shall the liability of Supplier of Subcontractor be limited to the extent of any of the minimum limits of insurance required under Paragraph 2.0 “Insurance Requirements.”

General Liability policy is acceptable proof of compliance with the Employer’s Liability insurance requirement.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

020	Within thirty (30) days after receipt of Purchase Contract/Purchase Order, Seller shall confirm to Buyer order placement for raw material.  Confirmation shall include raw material identification, supplier, Purchase Order number and date, quantity ordered, and the supplier committed delivery schedule.
021	Within _______ days after receipt of purchase order, Seller shall furnish to Buyer a copy of Seller’s planning showing detailed operations in sequence.  Said planning shall include the estimated flow time for each detailed operation.
022	Seller shall furnish to Buyer, at __________ intervals, a complete progress status report of work accomplished in manufacture of article covered by this Purchase Order or until such time as Buyer considers the report no longer necessary.  Reports will be mailed each _______________ showing progress through the preceding period.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

036

OBLIGATION TO PURCHASE AND SELL Buyer and Seller agree that in consideration of the prices set forth in this Purchase Contract, Buyer shall issue orders for products from time to time to Seller for all of Buyer’s requirements.  Such products shall be shipped at any scheduled rate of delivery, as determined by Buyer, and Seller shall sell to Buyer, Buyer ‘s requirements of such products, provided that, without limitation on Buyer’s right to determine its requirements, Buyer shall not be obligated to issue any orders for any given product if: 1.  Any of Buyer ‘s customers specifies an alternate product; 2.  Such product is, in Buyer’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; 3.  Buyer gives reasonable notice to Seller of a change in any of Buyer’s manufactured product which will result in Buyer no longer requiring such product for such manufactured product, 4.  Seller has materially defaulted in any of its obligations under any order, whether or not Buyer has issued a notice of default to Seller pursuant to Spirit AeroSystems, Inc.; General Provisions, Form WMFM 550, Section 21 (Cancellation For Default) or, 5.  Buyer reasonably determines that Seller cannot support Buyer’s requirements for products in the amounts and within the delivery schedules Buyer requires. 6.  Buyer 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 Buyer and which component, assembly or other product Buyer has resourced to a third party supplier. Seller represents and warrants to Buyer 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. Any planning schedule, forecast, or any such quantity estimate provided by Buyer shall be used solely for production planning.  Buyer may purchase products in different quantities and specify different delivery dates as necessary to meet Buyer’s requirements.  Any such estimate shall be subject to adjustment from time to time, and such adjustment shall not constitute a change under Spirit AeroSystems, Inc., General Provisions, Form WMFM 550, Section 18 (Changes) or Section 20 (Termination for Convenience).

037

Shipments you receive F.O.B. destination, or F.O.B. your plant for our account, which are in noticeably bad condition when delivered to you by the carrier: 1.  Note condition of shipment on carrier’s delivery receipt and on copy of freight bill retained by your Receiving Department. 2.  Immediately request carrier inspection on the shipment and retain a copy of the carrier’s inspection report. 3.  If carrier waives inspection, note your copy of the freight bill with the date, name of the carrier representative who waived inspection, and a statement that carrier waived inspection. Shipments received in apparent good condition but found to contain concealed damage: 1.  Stop unpacking immediately as soon as damage is found. 2.  Retain all container and packing material. 3.  Request carrier inspection and retain a copy of carrier’s inspection report. Contact Buyer’s Traffic Coordinator for further instructions as soon as damage to any of the above type shipments is discovered.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

043

ANTI-KICKBACK PROCEDURES Seller agrees to abide by the Anti-Kickback Act of 1986 (41 U.S.C. 51 through 58) and FAR 52.203-7. “Anti-Kickback Procedures,” except that subparagraph (c)(1) of FAR 52.203-7 shall not apply to Seller, and further that in subparagraphs (c)(2), (c)(3), and (c)(5), the term “Contractor” shall mean Seller, and in subparagraph (c)(4) the term “Prime Contractor” shall mean Buyer and the term “Subcontractor” shall mean Seller.  In addition to reporting possible violations of the Anti- Kickback Act to the Government pursuant to 41 U.S.C. 57, Seller shall report such possible violations, if related to Buyer, to the Director of SCM and/or the Division Counsel of the Spirit AeroSystems, Inc., Division or subsidiary issuing this purchase order (PO). In addition to any other remedies that Buyer may have, Seller shall defend Buyer against all claims and procedures based upon actual or alleged violations of the Anti-Kickback Act of 1986 and any amendment thereof; and Seller shall indemnify and hold Buyer harmless from any losses, damages, liabilities, costs, and expenses including but not limited to, losses of profits, expenses of litigation, attorney’s fees, penalties or fines, suspensions or reductions of progress payments, and all losses arising out of contract terminations, suspensions or debarments of Buyer, resulting from a violation of the Anti-Kickback Act of 1986 and any amendment thereof, by Seller, any of its officers, partners, employees, agents, or any subcontractors at any tier below Seller or such subcontractor’s employees. If the Government, pursuant to FAR 52.203-7, directs the Buyer to withhold sums owed the seller, the Buyer shall be entitled to do so and the Buyer may, if ordered to do so, pay said money over to the Government and the Buyer shall not be responsible to pay the said money to the seller but seller shall remain responsible for performance of the contract.

044

This contract is subject to the requirements of Spirit AeroSystems, Inc., form WMFM 502, Consumption Based Ordering Guidelines, current revision, incorporated herein by reference.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

046	Seller will assign a full-time program manager whose exclusive responsibility will be to oversee and manage Seller’s performance hereunder.  The assignment of such program manager will be subject to Buyer’s prior approval of such Person’s resume.
049	COST AND PERFORMANCE VISIBILITY When requested by Buyer, 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.
050	COMPUTATION OF EQUITABLE ADJUSTMENT The Rates and Factors set forth below shall be used to determine the equitable adjustment, if any, to be paid by Buyer pursuant Spirit AeroSystems, Inc., General Provisions, Form WMFM 550, Section 18 (Changes). 1.  Direct Labor Rate                        $ 2.  Manufacturing Burden              % 3.  G&A (Gen. Admin. Expense)    % 4.  Profit                                             % 5.  Total Rate                                     $

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

051

Reporting Requirements Seller shall furnish to Buyer, at __________ intervals, or until such time as Buyer considers the report no longer necessary, a complete status report of work accomplished in manufacture of product(s) covered by this contract.  Reports will be mailed each __________ showing progress through the preceding period.  Status reports shall include, but are not limited to, the following topics: 1.Delivery schedule updates, schedule impact issues and corrective action; 2.Technical/manufacturing progress since the previous report period, including significant accomplishments, breakthroughs, problems and solutions; 3.Identification of changes to key manpower or staffing levels; 4.Identification of the critical events/activities expected within the next month and a discussion of potential risk factors; 5.Progress on open Action Items, including closure dates; 6.Purchased components and raw material status; 7.Identification of Quality issues and resolutions; 8.Manufacturing and Quality inspection progress of First Article products; 9.Status on tool design and fabrication, as applicable, until completion; 10.Inventory status of castings and forgings procured by Seller (if applicable). In Addition to the above required Status Reports, within twenty-four (24) hours of known problem to Seller, Seller shall provide a detailed Problem Report, notifying Buyer of program problems/issues that could impact Seller’s ability to deliver products on time and otherwise in conformance with the terms of this contract.  Problem reports shall be submitted to the Buyer’s Procurement Representative. Submittal of a Status Report or Problem Report in no way relieves Seller of any obligations under the contract nor does it constitute a waiver of any rights and remedies Buyer may have with respect to any default.

061

Spirit AeroSystems, Inc., hereby certifies that: This purchase of tangible personal property is exempt from Kansas sales and compensating use tax as provided by Kansas Code Section 79-3606(n) Consumed in Production. It is engaged in the business of designing, developing, manufacturing, and selling airplanes, missiles, space vehicles, and related articles, and spare Parts and components of such items. Understands and agrees that if the tangible personal property is used for any purpose that is not exempt from sales or compensating tax, Spirit AeroSystems, Inc., becomes liable for the tax.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

062	Spirit AeroSystems, Inc. hereby certifies that this purchase of this service is exempt from Kansas sales and compensating use tax because it is not a listed taxable service per Kansas Code Section 79-3603.
063	No charge or claim is involved and therefore seller does hereby remise, release and discharge Spirit AeroSystems, Inc., its officers, agents and employees, of and from all liabilities, obligations, claims or demands whatsoever as a result of this Changed Purchase Order/Purchase Contract.  Please sign and return one copy of this Changed Purchase Order/Purchase Contract Acknowledgement.
064	Seller, by accepting this Changed Purchase Order, does hereby remise, release and discharge Spirit AeroSystems, Inc., its officers, agents, and employees, of and from all liabilities, obligations, claims, and demands whatsoever as a result of this Changed Purchase Order, unless seller files with Spirit AeroSystems, Inc., buyer, a proper termination proposal (WMFM 460C) pursuant to and within the time limits allowed in the termination clause of the Purchase Order terms and conditions.
065	Within thirty (30) days after award of Purchase Contract/Purchase Order, Seller must submit to Buyer, a milestone schedule reflecting all significant milestones, such as (1) raw material ordering and receipt, (2) planning, (3) tool design and fabrication, (4) each manufacturing operation, (5) processing, (6) inspection and shipment of finished Parts.  All milestones are to be time-phased and a complete status report comparing actuals to targets must be submitted to Buyer on the first of each month.
066	Seller agrees that subject to the other data provisions of this contract any technical data furnished to Buyer by Seller may be furnished to associate contractors for and in connection with this program.  Any technical data furnished to Buyer by Seller shall only be furnished to associate contractors upon Seller’s written approval and shall only be used for and in connection with this Purchase Order/Purchase Contract for coordination and interface control.
067	Seller grants to Buyer an option to extend the period of performance of this contract as set forth below.  Buyer may exercise the option by written notice to the Seller on or before (insert a date).  This option may be exercised by Buyer any number of times so long as each option increases the period of performance of this contract by no less than (insert a number of months or years).  However, in no event may Buyer unilaterally extend the contract beyond (insert a date) by exercise of this option. Notwithstanding the option set forth herein, Buyer reserves the right to commence new negotiations with Seller concerning pricing and other terms for additional quantities of Products.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

068

Supplier shall record and retain measurement data (diameter, position, and Part temperature), for all hole locations that are assigned any of the following requirements:  A) statistical tolerances, B) positional tolerances less than or equal to twenty-eight thousandths (.028) diametric, or C) coordinate (linear) tolerances having a total band width less than or equal to twenty thousandths (.020 or +/- .010).  Records must be retained for a minimum of three (3) years after final delivery unless otherwise specified by contract.

097

When Spirit AeroSystems, Inc. is the Importer of Record, Seller is required to submit a copy of a Commercial Invoice, prior to each shipment of product, and ensure that the Packing slip accompanying the product matches the Commercial Invoice.  In the case of “American Goods Returned” or “Returned After Repair or Alteration”, Seller is to include the foreign shipper’s declaration, shipper’s repair declaration, manufacturer’s declarations as applicable.  Seller represents and warrants that the copy provided to Spirit AeroSystems, Inc. will be a true copy of the Commercial Invoice that will accompany shipment. The true copy of the Commercial Invoice must be emailed or faxed to: Spirit AeroSystems, Inc. Email Address:  grpimportcompliance@spiritaero.com Fax Number:  1-316-529-7956 Attn:  Import Administration NOTE:  Failure to comply with these requirements shall be a material breach of contract and grounds for default pursuant to the Cancellation for Default clause of this contract. 1.Commercial Invoice Requirements a.Must be in English b.Must be legible c.Purchase Order Number Provide the current Purchase Order or Purchase Contract number (P.O. XXXXXX), if applicable. d.Location and Names of Seller/and or Shipper, Buyer and Date i.Date when the merchandise is sold or agreed to be sold. 1.When goods being imported are not sold or agreed to be sold to Spirit, the shipping/Customs invoice should be noted, accordingly, complete with an explanation. ii.Merchandise Shipment Date (month, day, year) Provide the date that the merchandise shipped from the Sellers factory or facility.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

iii.Name and address of the Seller (Company name and address) and/or name and address of the Shipper, if the Seller is not the Shipper.

iv.Name and Contact information for an employee, employed by the Seller and/or Shipper, who has detailed knowledge of the sales transaction.

v.Name and address of the Buyer (Spirit AeroSystems, Inc. – 3801 S. Oliver, Wichita, Ks. 67210), and name and phone number of prime point of contact at the Buyer’s site (i.e.:  Pa, etc.)

vi.Name of Consignee if not the Buyer (Company receiving non-purchased transactions or drop ship destination).

e.Record the United States Port of Entry where merchandise is to be cleared by CBP

f.Quantities, weights and measures

i.Record the quantity of each Part number in the shipment

ii.If not separately noted on Packing sheet(s) include on invoice:

•Total quantity of Parts being shipped

•Provide net weight of each Part number and gross weight of entire shipment

•Specify unit of measure being used

•Specify the total number of boxes included per packing sheet.

•Textiles must specify the net gross weights and the length, width and total square meters of material.

g.Provide a detailed description of each item being shipped to ensure proper product classification per the Harmonized Tariff Schedule (HTS) and must include at a minimum:

i.The full name by which each item is known

ii.Part Number as appears on Purchase Order/Contract.  If the item is a raw material, provide the material grade, class and dimensions.

Notes:

•Generic descriptions, abbreviations, acronyms, and Stock Keeping Unit (SKU) numbers are not acceptable.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

Spirit AeroSystems, Inc. may request additional description information for items that do not have a Part number and/or design or when the appropriate HTS number cannot be determined from the provided description.

•Seller will provide material class, grade, dimensions and assembly components if Part is manufactured by Seller’s own manufacturing drawings.

h.Country of Origin:  indicate the country of manufacture of each item.

i.Terms of Sale:  Specify the International Commercial Terms of Sale (Incoterms) as agreed to per the Spirit AeroSystems, Inc. Contract on the invoice or Spirit AeroSystems, Inc. Work Authorization.

j.Specify “Related Party to the Spirit AeroSystems, Inc.” status (Yes or No) on the invoice.

k.Commercial Invoice Number (Seller’s Option)

l.Page numbers are required for each invoice (example:  ____ of ____ Pages).

m.Bolt Seals:  All shipping documents must reflect the bolt seal number being used for ocean shipments loaded into dedicated containers.  All bolt seals used must be those issued to the supplier by Spirit Aerosystems in order to comply with C-TPAT requirements.

2.Commercial Invoice Valuation Requirements

a.Must be complete and accurate, including the unit cost of each Part and the total value of the entire shipment.

b.Currency on all invoices must reflect the actual currency of the purchase contract and the transaction of money between the buyer and the seller.

c.List separately any Assists and/or Additional costs used for manufacturing each Part.  For example:

•Assists:  Any components, materials, dies molds and tools that are supplied by the Buyer free of charge or at a reduced cost to the Seller, and used in the production of imported goods.  This includes any buyer Paid transportation costs associated with the assist.  These transportation costs will be provided by the procurement focal responsible for this merchandise.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

•Costs for tooling, etc., built or supplied, directly or indirectly, and used in the production or manufacture, by the manufacturer of the goods being imported into the United States, and not included in the purchase order unit price.

•Engineering and Design work – Work that is performed outside the U.S. by Non-U.S. employees, and is not included in the unit price of the merchandise being imported.

•Packing Costs – Costs for Packing that are incurred by the Buyer and have not been included in the unit cost.

•Non-recurring charges – One time charges, incurred by the Buyer, for such items as, expedite fees and transportation costs, which have not been included in the unit cost.

•Selling Commissions – Commissions incurred by Buyer that have not been included in the unit cost.

•Royalties – Fees the Buyer is required to pay as a condition of sale.

d.List all discounts that have been agreed to, or may be allowed, that apply to the purchase price or value, but have not been included in the unit price (Terms of Payment).

e.Repaired or modified Parts – separately enter the value of the item and the value of the repair on the invoice.  For “no charge” repair, show the value of the repair on invoice.

f.If Seller receives any rebates, drawbacks or bounties, as a result of exportation, please itemize and provide description.

3.Packing Sheet\slip (if used by supplier)

a.Include Packing sheet\slip number(s) on invoice

4.U.S. Government Programs Only (Regardless of Business Units)

a.If a government contract applies, the prime contract number must be noted on the commercial invoice.  Additionally, the following government contract statement needs to be shown as follows for Military Programs.

“United States Dept. of Defense Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Sub-chapter VIII, item 9808.00.3000 of the Harmonized Tariff Schedules to The United States.  Upon arrival of shipment at the port of entry, District Director of Customs, please release shipment under Section 19 CFR Part 142 and notify Commander, Defense Contract Management Area Operations (DCMAO) New York, for execution of customs forms and any required duty free entry certificates.”

b.Commercial Invoice must show that the shipment is consigned to a U.S. Government Agency (i.e.:  U.S. Department of Defense) in “care of Spirit AeroSystems, Inc.”, if shipment has a prime contract number.

c.If items were exported on a license or exemption upon importation, that license or exemption information should be notated as follows:

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

	Example:  “Originally exported under DSP-XX license number XXXXXX” or “Imported under 22 CFR XXXXX” ADDITIONAL IMPORT NOTES: Part Marking All items furnished under this contract/order, unless excepted by law, must be legibly marked with the English name of the country of origin per U.S. Customs Regulation 19 CFR 134 Country of Origin Marking.  Markings are to be legible, indelible, and as permanent as the nature of the article or container will allow. Chemical Content Additionally, the import of any shipment that actually contains or consists of a chemical substance must be coordinated with Buyer in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants, protectorants, paint, packaging materials) Seller will provide MSDS (Material Safety Data Sheet, Ref – 29CFR1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination. Note:  Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies.
	PRICING
100	This order is subject to Kansas State Tax on raw material only.  Seller will pay Kansas state sales tax on the amount of material called out in the face of this order, and invoice Spirit AeroSystems, Inc., for reimbursement of the sales tax paid as a separate entry on the invoice.
101	Multi-State Tax Compact Resale Exemption Certificate We are registered with the below listed states within which your firm would deliver purchases made by us.  We warrant that any such purchases are for resale in the normal course of our business of manufacturing aircraft and aerospace products.

STATE	STATE REGISTRATION, SELLER’S PERMIT OR ID NUMBER OF PURCHASER	STATE	STATE REGISTRATION, SELLER’S PERMIT OR ID NUMBER OF PURCHASER
KS	004-2021305285-01	OK	831731
We further certify that if any property or service purchased tax-free under this exemption certificate is used or consumed in such a way to make it subject to a sales or use tax, we will Pay the tax due directly to the proper taxing authority.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

102	Exempt from Federal Excise Tax.  Exemption form attached.
103	Federal Excise tax of __________ is included in the unit price.
104	__________ State Sales Tax applicable; (Note:  Other than Kansas) Buyer to reflect a two-digit state code, i.e., TX for Texas.
105	This Purchase Order/Purchase Contract is exempt from state sales or use taxes, Kansas Registration Certificate __________.
106	This Purchase Order/Purchase Contract is subject to Kansas state sales tax.
115	The unit price(s) shown in this Purchase Order/Purchase Contract is only an estimated price.  Advise the Buyer of the firm price as soon as possible.
118	The precious metal (gold, silver, platinum) surcharge will be an upward or downward adjustment computation based on material content factor of _____ times the difference between the base price of _____ and the current value of the precious metal.  The current value will be the value listed in the Wall Street Journal dated _____ and this value will be computed on the _____.
119	Seller may disassemble the herein described article(s) and shall immediately quote price of rework or repair and the current replacement price.  Seller shall not proceed with rework until receipt of a change order authorizing the rework cost.  Price will be finalized within 60 days of the date of this Purchase Order.
121	The expedite charge will be paid if acceptable parts in the quantity stated are produced and shipped to Buyer, or Buyer’s designated location, on or before ____________________.
122	Buyer’s maximum liability for an equitable adjustment resulting from a decrease in quantity or termination of Product(s) shall be limited to costs directly attributable to 1.  _____ days raw material and 2.  _____ days finished Products worth of scheduled deliveries of the Products.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

129	Seller shall submit cost or pricing data as required by Form WMFM 270 for each change when the total amount of the proposed additions and/or deletions to the price combined is $100,000 or more.
131	Die service charges are considered a fee, not a purchase price.  Considerations acceptable to Buyer in Payment of such fees being (A) That title, ownership, possession and control of all equipment produced hereunder shall vest in Seller, (B) That Seller shall store, maintain and where necessary because of wear, loss or damage, replace such equipment, without further cost to Buyer, until final disposition of such equipment has been agreed to between Buyer and Seller, (C) that Seller shall not dispose of such equipment until three (3) consecutive years of inactivity has Passed, and not then without first giving at least thirty (30) days written notice of intention and receiving Buyer’s written approval to do so.
132	This Purchase Order/Purchase Contract subject to the terms and conditions (____________________) of License Agreement effective date (____________________).
133	The item price(s) on this Purchase Order is/are based on Buyer Paying one setup charge for one lot run with the entire quantity to be shipped per Buyer shipping schedule.  In the event of a shortage situation, the requested quantity of material is to be shipped within 3 days of notification. Buyer, under the terms of this agreement, may not change the quantity, of any item, on the Purchase Order.  Buyer further agrees to accept the outstanding balance of any item within one calendar year from the date of the first shipment of that item. Buyer may at no cost, revise both the quantity per ship schedule and the scheduled ship dates, with a minimum of one-week notice.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

136	All petitions for price increase must: 1.Be in writing; 2.Provide at least thirty (30) days advance written notification.  Notification shall commence on the postmarked date of a correctly addressed letter to Buyer’s designated representative; 3.Be accompanied by detailed cost data substantiating the petitioned increase; 4.Any price revision(s) shall be passed through as a percentage price change equal to the percentage change in Seller’s delivered commodity/service cost.  No additional markup for profit on the incremental price increase will be accepted by Buyer; 5.Buyer shall have the right to negotiate all proposed price increases and may delete specific line items or terminate the contract upon failure to mutually agree to a proposed price revision; 6.In the event a price increase is incorporated into a contract, all billing shall be at the price in effect at the time of purchase order/requirements placement, not at the time of shipment/performance; 7.Buyer’s acceptance of a price revision (increase/decrease) shall be confirmed only through a fully executed revision to the contract.
138	Seller may not submit a claim for obsolete material or product resulting from an individual change order that has a total claim value of Two Thousand Five Hundred Dollars ($2,500.00) or less.
139	Prior to 100% Engineering Release (Drawing Revision Level New) Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, Form WMFM 550, Section 18 (Changes), no equitable adjustment in the prices or schedules of any order shall be made for any change initiated by Buyer 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 Buyer (“100% Engineering Release”) provided, that an equitable adjustment shall be made for: 1.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 Section are changes within a raw material classification such as a change from 7050 Aluminum to 7075 Aluminum; 2.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 the receipt of 100% Engineering Release by the Seller. Subsequent to 100% Engineering Release Notwithstanding the provisions of Spirit AeroSystems, Inc., General Provisions, Form WMFM 550, Section 18 (Changes), no equitable adjustment shall be made to the recurring or non-recurring prices after the date of 100% Engineering Release for any change initiated by Buyer 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 this contract.  For purposes of this section, the then current unit price or total nonrecurring price shall be the price identified elsewhere in this contract 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.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

	DELIVERY/PACKAGING
401	Maximum weight of each skid not to exceed 4,000 pounds gross.  Skids must be identified by heat lot number with only one heat lot per skid.
406	Material on this order shall be identified by the lot number appearing on the Package and Packing slips.  Should more than one number be represented within one Package, Seller will provide sufficient separation to identify material by lot number.
414	Seller will comply with the hazard communication standard, 29CFR1910-1200, if applicable.  Seller will include a Materiel Safety Data Sheet (MSDS) with the initial shipment of a hazardous material each calendar year and route an additional copy of the MSDS to; Spirit AeroSystems, Inc. P.O. Box 780008 M/C K06-94 Wichita, KS 67278-0008 ATTN:  EH&S Hazardous Materials Gatekeeper The revision number and date must be displayed prominently on the MSDS.  Seller is also required to provide an MSDS to the address above in the event of a change in brand, a change in chemical composition, or a new / substitute chemical shipment; any change information will be communicated to the buyer.
415	Routing, Packaging, labeling, and marking of hazardous material for shipment via common carrier, authorized to handle the material, shall be in accordance with title 49 of the Code of Federal Regulations (CFR), Parts 100 to 199; the International Civil Aviation Organization (ICAO) “technical instructions for the safe transport of dangerous goods by air”; the International Air Transportation Association (IATA) “dangerous goods regulations”; the International Maritime Dangerous Goods (IMDG) code; and all other applicable international, federal, state, and local regulations.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

416	Returnable containers are to be returned to __________ via __________. Returnable containers shall be plainly marked or stenciled with Buyer’s Purchase Order number, supplier’s name, address and amount of deposit on outside of each returnable container.
419	Each spool must be marked or labeled with the following information:  Buyer Purchase Order Number, manufacturer’s name, and address, lot number, date of manufacture, wire gauge, length in feet, military or other material specification number and revision, Buyer material code, and vendor or Buyer Part number.
431	Tubing 1/2-inch or smaller in diameter, or with wall thickness less than .029 inch shall have a tag on each end, bearing the required identification as outlined in SAE-AMS-STD-184, except each piece must be identified.
458	All bars, rods, shapes, tubes, and forgings shall be marked with the specification, heat lot number, size, and mill name or original manufacturer.
460	Seller will include all components of an assembly in a single Package, putting in that Package only those components in correct quantities, which make up that assembly whenever that assembly doe not ship as a single unit.
461	This is a drop shipment.  Seller must reference Spirit AeroSystems, Inc., Purchase Order number and Part number as shown below on Packing list: Purchase Contract/Purchase Order No.           , Item           .
462	Material may be marked per SAE-AMS-STD-184 or a minimum of one complete set of identification markings may appear on the top side ends of the material.
463	Minimum skid length to be 9 ft., including runners.  Maximum skid width including dunnage to be 50”.  Material larger than 4ft. x 9ft. to be on appropriate size skid to protect material.
464	Preservation, Packaging and Packing.  Electrical/electronic Parts shall be Packaged in the original manufacturer’s container or if repackaged shall be in a container equivalent to the original manufacturers. Equivalent Package as a minimum shall prevent damage to the Parts including, but not limited to, bending of leads or contamination by dust or moisture.  The shipping containers shall be labeled with a highly visible label on at least one side.  This label shall identify the container as containing electrical/electronic items.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

465	Apply in red block letters “Released for test only” adjacent to or directly underneath engineering Pa mark.
	PROPERTY
518	Seller shall not use Pattern of die equipment purchased on this order for production of Parts for anyone other than Buyer without prior approval of Buyer.
519	Buyer must be notified of any rework or replacement of dies subsequent to the original qualification of this forging.
521	1.Supplier Banked Material.  The allowable scrap rate on this Purchase Order is _____ percent.  Any scrap in excess of this amount will be the responsibility of the Seller. 2.The purchase price of all items on this Purchase Order does not include material.  Material is being furnished by Buyer. 3.Seller agrees not to sell, assign, loan, lease, mortgage, pledge or otherwise create a lien or equitable interest in a third Party with respect to the material described in this Purchase Order, or permit such material to be subject to any legal process.  Seller warrants that such material shall be used solely as directed by Buyer and Seller will not permit any other use thereof. 4.Seller will be responsible to maintain accountability of Buyer furnished material as specified on Supplier Banked Material (SBM) Purchase Order __________.
524	Requirements For Supplier Banked Material 1.Supplier agrees not to sell, assign, loan, lease, mortgage, pledge or otherwise create a lien or equitable interest in a third Party with respect to the material described in this Purchase Order, or permit such material to be subject to any legal process.  Seller warrants that such material shall be used solely as directed by Buyer, and Seller will not permit any other use thereof. 2.Supplier agrees to store the material in such a manner that it will not be damaged or in any way rendered unusable for its intended purpose. 3.Supplier will be sent a warehouse inventory report quarterly to report status of Buyer-Owned, Supplier Store Material.  Supplier is to complete and return to Buyer by the response due date shown on the form.  Buyer may request status more often under special circumstances. 4.Supplier must keep copies of all warehouse inventory reports on file with copies of all other pertinent Paperwork, ESD, memos, etc., that apply to Buyer-Furnished Material.  This file must be kept current and available for review by Buyer upon request.  This file must be kept for three (3) years after all material associated with this purchase order has been removed from seller’s facility. 5.Seller shall immediately notify Buyer when any material is scrapped and against what applicable Purchase Order and Part number. 6.Seller shall allow Buyer personnel access at all reasonable times for the purpose of reviewing the inventory of Buyer-Furnished Material and the records maintained by Seller with respect to accountability of Buyer-Furnished Material. 7.Upon receipt of Buyer-Furnished Material, Seller will be responsible to accomplish the following with regard to accountability of material. a.Inspect for damage in transit.  Immediately notify Buyer if any damage is discovered. b.When material is received, it must be inspected 100 percent to determine if material meets all applicable specifications. c.Seller is to immediately notify Buyer in writing the amount of material received and against which applicable Purchase and Part number. 8.Any remaining material at the conclusion of the Purchase Order will be dispositioned in accordance with instructions to be furnished by Buyer. 9.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

525	BUYER FURNISHED MATERIAL/SUPPLIER BANKED MATERIAL Material, including but not limited to raw material, standards, detail components and assemblies, furnished to Seller by Buyer shall be administered in accordance with a Supplier Banked Material Agreement between Buyer and Seller. Seller shall provide Buyer with required on-dock dates for all material.  Seller’s notice shall provide Buyer with sufficient time to competitively acquire the material if, in its sole and absolute discretion, it desires to do so.
	QUALITY System Requirements
601	Supplier is required to maintain a Quality System in compliance with AS9100 – Quality Management Systems – Aerospace – Requirements as outlined in section titled “Certification / Registration Body”
602	Supplier is required to maintain a Quality System in compliance with AS9003 – Inspection and Test Quality System.
603	All work performed under this contract shall be in accordance with a limited approval of a quality system adequate to control the product(s) and assure that it conforms to the type design and is safe for operation.
604	Seller must maintain an adequate quality system to provide the supplies and services that meet the requirements of this purchase document and all applicable specifications and/or engineering drawings.
605	Supplier is required to maintain a Quality System in compliance with AS9120 – Quality Management Systems – Aerospace – Requirements for Stockist Distributors.
606	Supplier is required to maintain a Quality System in compliance with AS9006 – Quality Management Systems – Aerospace – Requirements for Software.
	Certification / Registration Body

 SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

610 Spirit AeroSystems recognition of Seller’s AQMS certification/registration does not affect the right of Spirit AeroSystems to conduct audits and issue findings at the Seller’s facility.  Spirit AeroSystems reserves the right to provide Spirit AeroSystems-identified quality system findings, associated quality system data, and quality performance data to the Seller’s Certification /Registration Body (CRB).   Seller shall ensure the following relative to AQMS certification: 1.The certification/registration body (CRB) is accredited to perform aerospace quality management system (AQMS) assessments. 2.The CRB must use approved auditors and operate in accordance with the corresponding International Aerospace Quality Group (IAQG) certification/registration scheme.   NOTE:  IAQG sanctioned certification/registration schemes include but are not limited to AIR 5359, SJAC 9010, TS157, etc.  Reference IAQG website for listing of accredited CRBs:  http://www.iaqg.sae.org/servlets/index?PORTAL_CODE=IAQG   3.The seller maintains objective evidence of CRB certification/registration on file at Seller’s facility.  Objective evidence shall include: a.The accredited AQMS certificate(s) of registration; b.The audit report(s), including all information pertaining to the audit results in accordance with the applicable certification/registration scheme; c.Copies of all CRB finding(s), objective evidence of acceptance of corrective action(s), and closure of the finding(s).   NOTE:Certification records shall be maintained in accordance with Spirit AeroSystems specified contractual quality record retention requirements.   4.The CRB services agreement provides for “right of access” to all CRB records by Spirit AeroSystems, applicable accreditation body, applicable Registrar Management Committee (RMC) and other regulatory or government bodies for the purpose of verifying CRB certification/registration criteria and methods are in accordance with the applicable IAQG certification/registration scheme. 5.The CRB has Seller’s written permission to provide audit results/data to IAQG membership as required by the applicable IAQG certification/registration scheme. 6.Spirit AeroSystems will be immediately notified in writing should the Seller’s certification/registration be suspended or withdrawn, or accreditation status of Seller’s CRB is withdrawn. 7.Spirit AeroSystems-identified findings and Seller’s quality performance data will be provided to the CRB during certification/registration and surveillance activity. 8.CRB shall be provided access to applicable proprietary data (including Spirit AeroSystems proprietary data) to the extent necessary to assess Seller’s compliance to AQMS requirements. 9.CRB shall agree to keep confidential and protect Spirit AeroSystems proprietary information under terms no less stringent than Seller’s contractual agreement with Spirit AeroSystems.  Seller will assure that such information is conspicuously marked “SPIRIT AEROSYSTEMS PROPRIETARY”. 10.Seller will comply with all CRB requirements imposed to issue and maintain certification/registration.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

	Inspection Requirements
621	Buyer First Article Inspection (BFAI) – BFAI activity is required at the Seller’s facility prior to shipment.  Seller shall notify Buyer to schedule a comparable inspection and coordinate the required inspection/verification activity.  Subsequent engineering, inspection, manufacturing or tooling changes for specific characteristics will require the Seller to notify Buyer. At the minimum, Seller shall make the following available in support of the BFAI for the article being reviewed: 1.The applicable purchase contract, material/process certifications, manufacturing and inspection records; 2.The applicable design data; 3.The applicable documented configuration baseline and configuration summary; 4.The applicable Material Review Board (MRB) actions; 5.The applicable acceptance and qualification test results; 6.The record of Buyer approval for supplier drawing and test procedures; 7.Completed Supplier First Article Inspection (SFAI) documentation.
622	Buyer Source Acceptance (BSI) – BSI is required for items procured on this purchase document prior to shipment from the Seller’s facility.  Acceptance may include in-process activities such as processing, fabrication, witnessing of testing and/or final inspection.  Seller shall provide the Spirit Quality representative with a copy of this purchase order, applicable drawings, specifications and changes thereto, and such other information as may be required.  Seller shall provide the necessary use of the Seller’s facility and equipment to perform the inspection. Unless Buyer Source Acceptance has been delegated, in writing, by the procuring site, Seller shall contact the Buyer Quality Representative who services the facility.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

623	FAA and/or Foreign Civil Airworthiness Authority (FCAA) conformity inspection and certification is required for items procured on this Purchase Document.  Seller shall contact the local FAA/FCAA representative for inspection and certification. Unless otherwise indicated, in writing, the conformity inspection shall be performed at the Seller or Subcontractor; point of manufacture as deemed necessary to verify product conformance to the type design. Seller shall include the original FAA Form 8130-9 and FAA Form 8130-3 with the shipment.  Foreign government equivalents to FAA Form 8130-3 are acceptable for imported product. For a Seller located in a country without a United States bilateral airworthiness agreement, the FAA may elect to conduct the inspection in accordance with paragraph 2 above, or upon arrival of the product in the U.S. Seller shall contact their procurement quality assurance focal for FAA Conformity coordination.
624	Delegation Authority – The Seller is authorized to inspect product(s) identified for this Purchase Document line item on behalf of the contracting Buyer site’s Quality assurance organization.  Buyer Quality Assurance reserves the right to conduct product integrity audits, quality system assessments, verify Seller’s conformance to contracting Buyer site’s delegation program requirements and to revoke delegation authorization(s).
625	Supplier must retain on file the results of the final inspection for all kitted parts or assemblies that will include a dimensional inspection, temper inspection per for aluminum alloys, and hardness inspection per for steel and CRES alloys.
626	Functional Test – Identify the parts that have successfully passed function test requirements by stamping “FT” and the date the test was accomplished.  These markings will be applied in a color contrasting to the part and of a size consistent with the part configurations.  If Spirit witness of test(s) is required, supplier shall notify Spirit a minimum of five (5) days in advance of such test(s).
	Documentation / Shipping
631	Radiographic film and grain flow photos, when required by engineering drawing or reference specifications, shall be sent to Spirit AeroSystems, Inc., for review and acceptance.  Send X-rays and photos directly to: SPIRIT AEROSYSTEMS, INC., RECEIVING INSPECTION 4555 E. MACARTHUR, GATE 14E WICHITA, KS 67210 Please reference production Purchase Order number on the shipping package.
632	After Market / Spares – Supplier is required to provide copy of completed First Article Inspection Report, manufacturing planning, and material and processing certs with first shipment of parts.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED

633	Withhold shipment until higher than Design Proposal Approval has been granted by Buyer, except those submitted for First Article Inspection.
635	Unless this order specifies otherwise, Seller represents that, all equipment, material and articles to be furnished under this contract are new (not used or reconditioned) and are not of such age or so deteriorated as to impair their usefulness or safety.
	Repair Station
640	Supplier is required to maintain a Quality System in compliance with AS9110 – Quality Maintenance Systems – Aerospace – Requirements for Maintenance Organizations.
641	When the certificate involves rework/repair performed under FAR Part 145, the Serviceable Parts Tag shall identify the FAA Repair Station number and shall be signed by an authorized inspector.  The Seller shall provide a description of the work accomplished when the part is returned to a Buyer Repair Station.”
642	Airworthiness Certification – This article requires an airworthiness certificate executed by the Seller’s country airworthiness authority or their authorized designee. Seller shall contact the airworthiness authority representative that normally services the Seller’s facility to arrange for the application of the airworthiness certificate. It is the Seller’s responsibility to meet any special import requirements of the country to which the part is shipped.  Seller may contact Buyer’s Procurement Agent for further assistance as required.
	MISCELLANEOUS
701	Warning statements for products containing or manufactured with ozone depleting chemicals as required by the Clean Air Act Amendments of 1990, Section 611, 40 CFR Part 82, should not be applied directly to the Parts or items.  All such statements are to be included in a separate writing, such as the bill of lading, shipment Papers or other proper notification that complies with the referenced regulation and accompanies the shipment.
702	Parts shipped to Seller from Buyer’s facility for processing and return to Buyer under this Purchase Order are not subject to the Clean Air Act Amendments of 1990 Section 611, 40 CFR Part 82, requirement for ODC warning labels.

SPIRIT AEROSYSTEMS, INC.

P.O. BOX 780008 -WICHITA, KANSAS -  67278-0008

SUPPLEMENTAL PROCUREMENT NOTES

NOTES ARE CATEGORIZED AS FOLLOWS

0XX	ADMINISTRATIVE GENERAL	4XX	DELIVERY/PACKAGING/IDENTIFICATION
1XX	PRICING	5XX	PROPERTY
2XX	RESERVED	6XX	QUALITY
3XX	RESERVED	7XX	MISCELLANEOUS

703

Any Part or item procured under this purchase contract which contains or was manufactured with an ozone depleting chemical as defined in the Montreal Protocol Agreement must include the following warning statement on the airbill/bill of lading, and the applicable invoice(s)/Packing list(s) for U.S. Customs entry purposes (for a shipment containing multiple Parts or invoices/Packing lists, the above documents must indicate to which Parts the warning statement applies): “WARNING:  This shipment no. _____ contains __________ or was manufactured with _____, a substance which harms public and the environment by destroying the ozone in the upper atmosphere.” Additionally, the import of any shipment that actually contains or consists of a chemical substance must be coordinated with Buyer in sufficient time prior to the importation, to allow for proper notification and coordination with the Spirit Toxic Substance Control Act (TSCA) Coordinator to allow for proper certification of the chemical substance being imported (this includes any chemical used in the product or shipping of the product (including, but not limited to, lubricants, protectorants, paint, packaging materials) Seller will provide MSDS (Material Safety Data Sheet, Ref – 29CFR1910.1200(f)), or equivalent, which must include adequate chemical information to make proper TSCA determination. Note:  Any hazardous Material that is not on the TSCA Inventory, or certified as not required to be on the inventory list, cannot be imported without prior approval and/or coordination with the Spirit TSCA Coordinator and the appropriate regulatory agencies.

704

Information concerning chemical acquisition and emission. “To obtain accurate information concerning the purchase of chemical materials which may be subject to the requirements of Title III of the Superfund Amendments and Reauthorization Act Of 1986 (SARA), you are required to furnish to Buyer the following additional information above and beyond that which is required by 29CFR 1910.1200 in the form of Material Safety Data Sheets (MSDS).  This additional information must be provided with the initial shipment of each product to Spirit AeroSystems, Inc., Hazardous Materials Management M/C K11-65, P.O. BOX 780008; Wichita, Kansas 67278-0008 each calendar year. A statement that the chemical material is or is not subject to reporting under Section 313 of the SARA Title III and 40 CFR 372.45. The name of each chemical component of the product and the associated chemical abstracts service registry number. Percent by weight of each chemical component of the product shipped.”

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SPECIAL BUSINESS PROVISIONS

FOR

Metal Details

FOR

787 AIRCRAFT

between

Spirit AeroSystems, Inc. (Buyer)

A Delaware Corporation

and

Valent Aerostructures – Washington, LLC (Seller)

A Missouri Corporation

ICT-787-S B P-2011-1002

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

TABLE OF CONTENTS
Title Page		1
AMENDMENTS		9
1.0	DEFINITIONS	10
2.0	CONTRACT FORMATION	14
2.1.	Order	14
2.2.	Entire Agreement	14
2.3.	Incorporated by Reference	14
3.0	SUBJECT MATTER OF SALE	14
3.1.	Subject Matter of Sale	14
3.2.	Period of Performance	15
3.3.	Nonrecurring Work	15
3.3.1.	Reserved	15
3.3.2.	Product Development and Test	15
3.3.4.	Tooling	15
3.3.5.	Life Cycle Product Teams	17
3.3.6.	Weight Management and Reporting	17
3.4.	Recurring Work	17
3.4.1.	Production Articles	17
3.4.2.	Delivery Point and Schedule	17
3.4.3.	Transportation Routing Instructions	17
3.4.4.	Manufacturing Configuration	17
3.4.5.	Reserved	17
3.4.6.	Tooling Maintenance	17
3.4.7.	Maintenance of Production Planning	18
3.4.8.	Certification Support	18
3.4.9.	Systems Integration	18
3.5.	Product Support and Miscellaneous Work	18
3.5.1.	Product Support and Assurance	19
3.5.2.	Spare Parts Ordering and Delivery	19
3.5.3.	Spares Support	21
3.5.4.	Reclassification or Re-exercises	21
3.5.5.	Sale of Buyer Proprietary Spare Parts	21
3.5.6.	Initial Provisioning	21
3.5.7.	Miscellaneous Work and Buyer-Use Tooling	22
3.5.8.	Delivery Schedule of Other Products and Performance of Services	22
3.5.9.	RESERVED	22
4.0	PRICING	22
4.1.	Product Price	22
4.1.1.	Nonrecurring Work	23
4.1.2.	RESERVED (	23
4.2.	Spare Parts	23
4.2.1.	Pricing for In-Production Spare Parts	23
4.2.2.	Pricing for Out-of-Production Spare Parts	23

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

4.2.3.	Pricing for Special Configuration Spare Parts	23
4.3.	Prices for Other Spares and Miscellaneous Work	24
4.4.	Aircraft On Ground (AOG) and POA Requirement	24
4.5.	Less Than Seller Lead Time Spares Pricing	24
4.6.	Full Seller Lead Time Spares Pricing	24
4.7.	Pricing of Buyer's Supporting Requirements	24
4.8.	Pricing of Requirements for Modification or Retrofit	24
4.8.1.	Buyer Responsibility or Regulatory Requirement	24
4.8.2.	Contract In-Service Modification or Retrofit Work Performed by Buyer	24
5.0	PAYMENT	25
5.1.	Invoicing	25
5.1.1.	Invoicing Requirements	25
5.1.2.	Invoicing Shipset Identification	25
5.1.3.	Spares and Miscellaneous Work Invoicing	25
5.1.4.	Summary Invoices	25
5.1.5.	Mailing Instructions	25
5.2.	Payment Due Date	26
5.3.	Payment Term - Production	26
5.4.	Payment Term – Spares and Miscellaneous Work	26
5.5.	Payment Method	26
5.6.	Payment Errors	26
6.0	CHANGES	26
6.1.	Change Direction	26
6.2.	Change Compliance	27
6.3.	Change Pricing	27
7.0	CHANGE PROVISIONS	28
7.1.	General Change Provisions	28
7.2.	Work Statement Changes Subject to Price Adjustment	28
7.2.1.	Requirement Changes	28
7.2.2.	Requirement Change Evaluation	29
7.2.3.	Requirement Change Price Threshold	29
7.3.	Changes Generated by Seller Affecting Buyer or a Third Party	30
7.4.	Derivatives	31
7.5.	Schedule Acceleration/Deceleration	31
7.5.1.	Production Rates	31
7.6.	Total Cost Management	32
7.6.1.	Buyer Generated Technical and Cost Improvement	32
7.7.	Obsolescence	32
7.8.	Planning Schedule	32

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

7.9.	Contract Change Notification	32
8.0	GOVERNING QUALITY ASSURANCE REQUIREMENTS	33
9.0	STATUS REPORTS/REVIEWS	33
9.1.	Notification of Shipment	33
9.2.	General Reports / Reviews	33
9.3.	Cost Performance Visibility	34
9.4.	Problem Reports	34
9.5.	Notice of Delay - Premium Effort	35
9.6.	Diversity Reporting Format	35
10.0	BUYER ASSISTANCE	35
10.1.	Buyer Technical / Manufacturing Assistance Regarding Seller’s Nonperformance	35
10.2.	Other Buyer Assistance	36
11.0	REPAIR AUTHORIZATION	36
11.1.	Buyer-Performed Work	36
11.2.	Reimbursement for Repairs	36
12.0	OTHER REQUIREMENTS	37
12.1.	Supporting Documentation	37
12.1.1.	Supporting Documentation and Priority	37
12.1.2.	Revision of Documents	37
12.1.3.	Compliance	37
12.1.4.	List of Supporting Documents	37
12.2.	Guaranteed Weight Requirements	39
12.3.	Accountability for Tooling	39
12.4.	Certified Tool Lists	39
12.5.	Buyer Furnished Tooling	39
12.6.	Packaging and Shipping	39
12.6.1.	Packaging	39
12.6.2.	Product Packaging	40
12.6.3.	Packaging - Spares	40
12.6.4.	Consolidated Shipments and Markings	40
12.6.5.	Transportation Devices	41
12.6.6.	Disposable Shipping Fixtures	41
12.6.7.	Packing Sheet and Test Reports	41
12.6.8.	Additional Copies	41
12.6.9.	Price Inclusive	41
12.7.	Cycle Time Requirements	42
12.8.	Compatibility with Engineering, Business and Production Systems	42
12.9.	Electronic Access, Communications and Data Exchange via Telecommunications	42
12.10.	Program Manager	42

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.11.	Subcontracting	42
12.12.	International Cooperation	43
12.12.1.	Market Access and Sales Support	43
12.12.3.	RESERVED	44
12.13.	Supply Chain Integration	44
12.13.1.	Buyer Furnished Material/Seller Banked Material	44
12.13.2.	Procurement From Buyer or Its Service Providers	44
12.13.3.	Third Party Pricing	45
12.13.4.	Agency	45
12.13.5.	Acceptance of Assignment, Novation, or Agency for Products within Seller's Work Statement	45
12.13.6.	Participation	45
12.14.	Surplus Products	46
12.14.1.	Return of Surplus Products	46
12.14.2.	Use of Surplus Products	46
12.15.	Life Cycle Product Team	47
12.15.1.	Purpose	47
12.15.2.	Work Schedule	47
12.15.3.	Equipment and Supplies	47
12.15.4.	Employment Status	47
12.15.5.	Team Leader	47
12.15.6.	Discipline	48
12.15.7.	Removal of Personnel	48
12.15.8.	Qualifications	48
13.0	ORDER OF PRECEDENCE	48
14.0	787 PROGRAM AUTHORIZATION AND CONTRACT AWARD	49
15.0	APPLICABLE LAW	49
16.0	PRODUCT SUPPORT AND ASSURANCE	49
16.1.	Warranty	49
16.2.	Term of Support	49
17.0	ADMINISTRATIVE MATTERS	49
17.1.	Administrative Authority	50
18.0	OBLIGATION TO PURCHASE AND SELL	50
19.0	STRATEGIC ALIGNMENT	50
20.0	OWNERSHIP OF INTELLECTUAL PROPERTY	51
20.1.	787 Product Proprietary Information	51
20.2.	Background 787 Proprietary Information and Inventions	51
20.3.	Joint 787 Activity Proprietary Information and Inventions	52
20.4.	Seller 787 Activities Proprietary Information and Inventions	52
20.5.	Spirit 787 Activities Proprietary Information and Inventions	53
20.6.	Third Party Proprietary Information and Inventions	54

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

20.7.	Derivative Technology	54
20.8.	Works of Authorship and Copyrights	54
20.9.	Pre-Existing Inventions and Works of Authorship	54
20.10.	Hardware, Materials, and Services General Terms Agreement (HMSGTA) and Supplemental License Agreement (SLA) Requirement	54
21.0	SOFTWARE PROPRIETARY INFORMATION RIGHTS	55
22.0	INFRINGEMENT	55
23.0	DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS	56
24.0	RESERVED	56
25.0	PERFORMANCE GUARANTEES	56
26.0	INSURANCE FOR ON-SITE SUPPORT	56
26.1.	Indemnification Negligence of Seller or subcontractor	56
26.2.	Commercial General Liability	57
26.3.	Automobile Liability	57
26.4.	Workers’ Compensation and Employer’s Liability	57
26.5.	Certificates of Insurance	57
26.6.	Self-Assumption	58
26.7.	Protection of Property	58
27.0	U. S. CUSTOMS INVOICE REQUIREMENTS	58
27.1.	U.S. Customs Requirements	58
27.2.	The Buyer Company Requirements	60
28.0	DELIVERY - TITLE AND RISK OF LOSS	61
28.1.	Title and Risk of Loss	61
29.0	EXAMINATION OF RECORDS	61
29.1.	Reports	61
30.0	CUSTOMER CONTACT	61
31.0	EVENTS OF DEFAULT AND REMEDIES	61
31.1.	Additional Event of Default	61
31.2.	Interest on Overdue Amounts	61
32.0	SURVIVAL	62
33.0	INVENTORY AT CONTRACT COMPLETION	62
34.0	SELLER ASSISTANCE	62

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

35.0	NONRECURRING WORK TRANSFER	63
36.0	DISPOSITION OF TOOLING	63
37.0	RESTRICTIONS ON LOBBYING	64
37.1.	Applicability	64
37.2.	Certification	64
37.3.	Flow Down	64
38.0	SIGNATURES	64
Work Statement and Pricing		66
SBP ATTACHMENT 1: Work Statement and Pricing		6
Production Article Definition and Contract Change Notices		67
SBP ATTACHMENT 2: Production Article Definition and Contract Change Notices		67
Recurring Price Status and Summary Tables		68
SBP ATTACHMENT 3: Recurring Price Status and Summary Tables		68
RESERVED		69
SBP ATTACHMENT 4: RESERVED		69
SBP ATTACHMENT 5: Buyer AOG Coverage		70
SBP ATTACHMENT 6: Buyer AOG/CRITICAL Shipping Notification		71
SBP ATTACHMENT 7: Indentured Priced Parts List and Spares Pricing		72
A. INDENTURED and SPARES PRICED PARTS LIST		72
SBP ATTACHMENT 8: Seller Data Submittals		73
RESERVED		74
SBP ATTACHMENT 9: RESERVED		74
Quality Assurance Requirements		75
SBP ATTACHMENT 10: Quality Assurance Requirements		75
SBP ATTACHMENT 11: Buyer Commercial Airplanes Second Tier Report		79
Non-U.S. Procurement Report Form		80
SBP ATTACHMENT 12: Non-U.S. Procurement Report Form		80
SBP ATTACHMENT 13: Product Definition Schedules		81
Production Article Delivery Schedule		82
SBP ATTACHMENT 14: Production Article Delivery Schedule		82

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 15: SCHEDULE CHANGE EXAMPLES	83
SBP ATTACHMENT 16: Commodity Listing and Terms of Sale	84
Terms of Sale	85
SBP ATTACHMENT 16: Terms of Sale	85
SBP ATTACHMENT 19: Requirement Changes Evaluation	89
SBP ATTACHMENT 20: Administrative Agreement	91
SBP ATTACHMENT 21: Storage Requirements for Boeing Furnished Material (PMI)	93
A21.3  RISK OF LOSS	94
A21.4  INSURANCE	94
A21.4.1  Coverage	94
A21.4.2  Self-Insurance	94
A21.4.3  Certificates of Insurance	94
SBP ATTACHMENT 22: Boeing Furnished Material and Inventory Reporting Forms	97

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

AMENDMENTS

Amend Number Description Date Approval

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SPECIAL BUSINESS PROVISIONS

THESE SPECIAL BUSINESS PROVISIONS (SBP) are entered into as of July 1, 2011 by and between Valent Aerostructures – Washington, LLC, a Missouri corporation with its principal office in Dutzow, Missouri (“Seller”), and Spirit AeroSystems Inc. (“Buyer”), a Delaware corporation with its principal office in Wichita Kansas. Hereinafter, the Seller and Buyer 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. “Aircraft” means a completed Program Airplane ready for delivery or delivered to a Customer.

B. “Spirit Proprietary Spare Parts” means all Spare Parts, which are manufactured (i) by Spirit, or (ii) to Spirit’s detailed design with Spirit’s authorization, or (iii) in whole or in part using Spirit Proprietary Information.

C. “Spirit -Use Tooling” means certain gauge and interface Tooling (not including Spirit master gauges) manufactured by Seller in accordance with designs provided by Spirit, to be used exclusively by Spirit.

D. “Certification” or “Type Certification” per CFR (Code of Federal Regulations) Part 21, means design approval which is approval of the type design and spells out limitations.

E. “Common-Use Tooling” means all Contractor-Use Tooling that enters into a Spirit facility or Spirit designated destination and that is required for use by Spirit and Seller, and, if applicable, a third party.

F. “Contract Change Notice” or “CCN” means any written notice sent by Spirit to Seller describing any change to the general scope of this SBP pursuant to SBP Changes Clauses and authorizing Seller to proceed with the performance of work hereunder in accordance with such change description.

G. “Contractor-Use Tooling” (also known as “Seller-Use Tooling”) means all Tooling needed to manufacture and deliver Products (including but not limited to, Seller-Use Tools, Common-Use Tools, Mechanical Handling Equipment, Rotating Tools, Shipping Equipment, Interface Control Tools and Interface Production Tools as defined in Document D33200).

H. “Cycle Time” means the period of time that elapses between the dates the Program executes a Customer implementation directive for a Program Airplane and delivery of such Program Airplane to such Customer.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

I. “Dataset” means any compilation of data or information (including, without limitation, numerical data, geometric definitions, program instructions or coded information) which may be used directly in, integrated with or applied to, a computer program for further processing. A Dataset may be a composite of two or more other Datasets or an extract of a larger Dataset.

J. “Derivative” 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.

K. “Drawing” means a computer-based 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.

L. “End Item Assembly” means any Product which is described by a single part number and which is comprised of more than one component part.

M. “Engineering Release” means engineering Drawings, Datasets or other Documents, that define the design requirements of any Product.

N. “Entry Into Service” or “EIS” means the date the first Program airplane enters into service which is the first Customer revenue flight of the first Program airplane.

O. “Initial Provisioning” means the process of determining provisioning of a spare part necessary to support forecasted maintenance commitments for Customer’s introduction of an Aircraft or type into service.

P. “Life Cycle Product Team” or “LCPT”, “Integrated Product Team” or “IPT” or “Design Build Team” or “DBT” means a team composed of representatives from engineering, operations, procurement, finance, design-to-cost and other disciplines as Buyer and Seller shall specify whose objective is to optimize designs for cost, weight, performance and producibility.

Q. “Miscellaneous Work” is Seller performed work or services that includes, but is not limited to provision of additional test articles, Spirit-Use Tooling, test support, field support and Spirit- used Seller facilities.

R. “Nonrecurring Work” is Seller performed work other than Recurring Work or Spares and Miscellaneous Work, which may include, but is not limited to Product Definition, product development, Tooling, static and fatigue test articles, Transportation Devices and planning.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

S. “Obsolescence” means the discontinuation of the requirement for any Product as a result of engineering or manufacturing change, which has rendered such Product no longer usable in the production of the Program Airplane or any Derivative.

T. “Person” means any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity.

U. “Price” means the amount to be paid by Spirit to Seller for any Product in accordance with the terms of this SBP.

V. “Products”, in addition to the definition in the GTA, has the meaning of Product Definition.

W. “Product Definition” means the engineering design deliverables (layouts, interface drawings, stress notes, etc.) required to design, build, test, certify, deliver and support Orders.

X. “Product Support” and “Product Assurance” shall have the meaning set forth in Product Support and Assurance Document D6-83069, “Product Support and Assurance Agreement”, and Document M6-1124-3, “Buyer Designed Sub Contracted Products Manufacturer’s Warranty”.

Y. “Production Articles” means those completed assemblies defined and configured, including SCD Products, as set forth in SBP Attachment 2 “Production Article Definition and Contract Change Notices” for the Program Airplane and any Derivative.

Z. “Program” means the design, development, marketing, manufacture, sales and customer support of Program Airplanes, Derivatives and Products.

AA. “Program Airplane” means a commercial transport aircraft incorporating advanced technology and having a model designation of 787 for which Seller shall provide Product Definition and Production Articles pursuant to this SBP.

BB. “Recurring Shipset Price” means the Price for the Recurring Work associated with each Shipset.

CC. “Recurring Work” means work Seller performs in producing Product Definition (if applicable) and Production Articles. The cost of Recurring Work can include, but is not limited to labor, material and packaging.

DD. “SCD Products” means all goods, including components and parts thereof, designed to a Spirit Specification Control Drawing by Seller or its subcontractors or suppliers, and provided or manufactured under this SBP.

EE. “SCD Spare Parts” means Spare Parts that are also SCD Products.

FF. “Shipset” means the total set of Production Articles provided by Seller hereunder necessary for production of one Program Airplane or Derivative.

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

GG. “Spare Parts” or “Spares” means Production Articles or components thereof, and materials, assemblies and items of equipment relating thereto, which are intended for Spirit’s use or sale as spare parts or production replacements. The term “Spare Parts” includes, but is not limited to, Spirit Proprietary Spare Parts.

HH. “Statement of Work” (SOW) means Products, Production Articles or deliverables provided by Seller under this SBP.

II. “Tooling” Notwithstanding the definition in the GTA, “Tooling” means all tooling, used in production, inspection or delivery of Products, either provided to Seller or supplied by Seller including Contractor-Use Tooling, Common-Use Tooling and Spirit-Use Tooling

JJ. “787 Activities” means Seller’s activities (a) related to the 787 Program or (b) performed using data, information, or other materials provided to Seller by Boeing or Spirit in connection with this Agreement.

KK. “Activities” means Seller’s activities (a) related to the 787 Program or (b) performed using data, information, or other materials provided to Seller by Boeing or Spirit in connection with this agreement.

LL. “Aircraft” means the Boeing 787 model aircraft and any derivatives of the Boeing model 787 aircraft designated as 787 derivative by Boeing and/or the FAA.

MM. “Product Proprietary Information” related to the configuration or certification of the 787 Aircraft that is developed or reduced to writing or electronic format (including, but not limited to, all technical data, calculations and manufacturing data sets that disclose explicit 787 Aircraft configuration (expressly excluded from this definition are technical data calculations, and manufacturing data sets where explicit 787 configuration), engineering design data including assembly requirements models, engineering intent objects, detail part model based definition, digital mock up solids, and bill of material data analytical data and Boeing developed analytical tools, common architecture documentation, developmental test data, configuration memos and documentation, and coordination memos for preliminary and final designs, analyses in support thereof and trade studies for configuration and certification.

NN. “787 Program” means the design, development, marketing, manufacture, sales and customer support of the 787 Aircraft and products for, or related to, the 787 Aircraft.

OO. “787 Proprietary Information” means all proprietary, confidential and/or trade secrets information relating to the subject matter of the 787 Aircraft and disclosed by one Party to the other, or developed, during the 787 Activities.

PP. “Background Invention(s)” means any Invention(s) conceived by a Party prior to or outside of the 787 Activities. For the purposes of this Agreement, Spirit’s Background Inventions include Inventions conceived by Boeing.

QQ. “Background 787 Proprietary Information” means any 787 Proprietary Information belonging to a party which was developed prior to or outside of the 787 Activities. For the purposes of this Agreement, Spirit’s Background 787 Proprietary Information includes 787 Proprietary Information provided by Boeing.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

RR. “Boeing” means The Boeing Company.

SS. “Derivative Technology” means – Any 787 Proprietary Information or Invention that is developed and brought to the point of practical application solely by either Party during or after the 787 Activities and is derived, in substantial part , (i) from any Background 787 Proprietary Information solely developed by the other Party during the 787 Activities, or from any Joint 787 Activities Proprietary Information, and/or (ii) from any Background invention(s) of the other Party or any Invention(s) solely conceived by the other Party during the 787 Activities, or from any Joint 787 Activities Invention(s).

TT. “Seller 787 Activities Invention(s)” means – Any Invention(s) solely conceived by Seller or conceived through the use or application of funds provided solely by Seller during the 787 Activities.

UU. “Seller 787 Activities Proprietary Information” means any 787 Proprietary

Information developed during the 787 Activities, other than Joint 787 Activities Proprietary Information and Seller 787 Activities Proprietary Information

2.0           CONTRACT FORMATION

2.1.         Order

Any Order to which this SBP applies shall include a statement incorporating this SBP by reference. Each such Order shall 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 Buyer and Seller related to the subject matter of an Order. The rights and remedies afforded to Buyer or Customers pursuant to any provisions of an Order are in addition to any other rights and remedies afforded by any other provisions of the Order, the General Terms Agreement (GTA), or the SBP, by law or otherwise.

2.3.         Incorporated by Reference

General Terms Agreement (“GTA”) ICT-787-GTA-2011-1002 dated July 1, 2011 (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 Documents set forth in SBP Section 12.1 “Supporting Documentation” are incorporated in and made a part of this SBP by reference with full force and effect, as if set out in full text, and any references in such documents to “7E7” or “Sonic Cruiser” shall be deemed to refer instead to the 787 Program.

3.0           SUBJECT MATTER OF SALE

3.1.         Subject Matter of Sale

Subject to the provisions of this SBP, including Attachment 1, Seller shall sell to Buyer and Buyer shall purchase from Seller certain Products as described in this SBP including, certain Production Articles and other recurring Products as described in SBP Section 3.4 “Recurring Work”, and certain Spare Parts and other Miscellaneous Work as described in SBP Section 3.5 “Product Support and Miscellaneous Work”. In addition, Seller shall be responsible for providing other Nonrecurring Work as described in SBP Section 3.3 “Nonrecurring Work”

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

3.2.         Period of Performance

The period of performance for this SBP shall include initial manufacturing activities required to support delivery of Products beginning on July 1, 2011 and ending on December 31,2017.

3.3.         Nonrecurring Work

3.3.1.         Reserved

3.3.2.         Product Development and Test

3.3.2.1.         Product Development and Test Activities

Seller is responsible for all product development and test activities required to build, test, deliver, support certification, and support Products as set forth in SBP Attachment 1 “Work Statement and Pricing”. Seller shall also prepare, and Buyer shall have the right to review, initial product development and test planning documentation as necessary to produce Production Articles in accordance with SBP Attachment 2 “Production Article Definition and Contract Change Notices” and Spare Parts in accordance with SBP Attachment 7.

3.3.2.2.         Static and Fatigue Test Articles

Seller shall provide Buyer with Products and associated hardware as set forth in SBP Attachment 2 “Production Article Definition and Contract Change Notices” for static and fatigue tests, and as scheduled in SBP Attachment 14.

3.3.3.         Certification Support

Seller is responsible for all certification support activities as set forth in SBP 3.3.2.1 “Product Development and Test Activities”. No payment shall be made by Buyer for any certification support performed hereunder.

3.3.4.         Tooling

3.3.4.1.         Tooling - General

Seller is responsible for all Contractor-Use Tooling needed to manufacture and deliver Products as required in the performance of this SBP. Seller shall plan, design, manufacture or procure, and test all Contractor-Use Tooling. Contractor-Use Tooling shall be in the configuration, quantity and quality required to produce (i) Production Articles in

accordance with SBP Attachment 14 and (ii) other Buyer requirements for Products (including, without limitation, Spare Parts).

All Contractor-Use Tooling produced in performance of this SBP must conform to the provisions of the Document D33200, “Suppliers’ Tooling Document” or, subject to Buyer’s review and approval, its equivalent or replacement document.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

3.3.4.2.         Title to Tooling

Except as provided in GTA Section 12.2, “Termination Instructions” and GTA Section 13.0, “Cancellation for Default”, Seller shall retain, and shall cause each of its subcontractors or suppliers to retain, legal title to all Contractor-Use Tooling, Common-Use Tooling and Buyer-Use Tooling manufactured or procured by Seller or any of its subcontractors or suppliers.

3.3.4.3.         Responsible Party

Unless otherwise agreed in writing, Buyer shall not be liable for any costs associated with Tooling manufactured and/or purchased by Seller necessary for the manufacture and delivery of the Products including but not limited to rework, repair, replacement and maintenance of the Tooling. 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 Buyer, to manufacture parts for anyone other than Buyer without the prior written authorization of Buyer.

3.3.4.4.         Common - Use Tooling

Seller shall design, manufacture or procure, and test all Common-Use Tooling including, without limitation, strongback handling fixtures, rotable shipping fixtures and handling fittings. The requirements for such items shall be defined and identified by Buyer.

3.3.4.5.         Use of Casting, Forging and Extrusion Tooling

Buyer or its designees shall retain the right to use all Tooling for the production of castings, forgings and extrusions produced at Seller’s direction for use under this SBP and such Tooling shall be used only in the performance of this SBP or any other SBP that Buyer may designate in writing. Such Tooling shall be retained for use in production of castings, forgings and extrusions for Buyer or as Buyer directs until Buyer gives written notice to Seller that a requirement for the use of such Tooling no longer exists. Buyer agrees to grant to Seller the right to use any Tooling for the production of castings, forgings or extrusions that shall become part of any Product, in which Buyer has a right of use, ownership or other proprietary interest.

3.3.4.6.         Initial Planning

Seller shall perform initial Tooling and production planning activities. Seller shall also prepare, and Buyer shall have the right to review, initial Tooling and production planning documentation as necessary to evaluate Seller’s ability to produce Production Articles in accordance with SBP Section 12.1.4 “List of Supporting Documents”; SBP Attachment 2 “Production Article Definition and Contract Change Notices”; and Spare Parts pursuant to SBP Attachment 7.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

3.3.5.         Life Cycle Product Teams

Seller shall, in accordance with SBP Section 12.15, locate at Buyer’s facilities key personnel for Life Cycle Product Teams (LCPT’s).

3.3.6.         Weight Management and Reporting

Seller shall report weight information in accordance with Document D024Z001-01 “787 Weight Engineering Requirements”.

3.4.           Recurring Work

3.4.1.         Production Articles

Seller shall provide the Production Articles specified in SBP Attachment 2 “Production Article Definition and Contract Change Notices” in accordance with the delivery schedules set forth in SBP Attachment 14 “Production Article Delivery Schedule”. All Production Articles shall be manufactured, delivered, and supported in accordance with the specifications and schedules set forth in this SBP.

3.4.2.         Delivery Point and Schedule

Notwithstanding the provisions of GTA Section 4.1, “Schedule”, deliveries of Products shall be strictly in accordance with the quantities, the schedule and other requirements specified by Buyer. All Products shall be delivered for United States domestic deliveries F.O.B. at Seller’s plant; for non-United States deliveries as specified by Buyer.

3.4.3.         Transportation Routing Instructions

Unless otherwise specified by Buyer, Buyer shall be responsible for transportation of Products, including agents, carriers and routing. Buyer shall have the right to review and approve Sellers transportation agents, carriers and routing.

3.4.4.         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 thereto.

3.4.5.         Reserved

3.4.6.         Tooling Maintenance

Seller shall provide control, accountability, care, storage, maintenance and replacements of all Contractor-Use Tooling and Common-Use Tooling in accordance with Document D33200, “Suppler Tooling Document” or, subject to Buyer review and approval, its equivalent or replacement, as required to support the manufacture, certification, support and delivery of Products.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

3.4.7.         Maintenance of Production Planning

Seller shall revise and maintain the production planning as required to support the production and certification of Production Articles and Spare Parts. Buyer shall have the right to review production planning on request.

3.4.8.         Certification Support

Seller is responsible for all certification support activities as set forth in SBP 3.3.2.1 “Product Development and Test Activities”. No payment shall be made by Buyer for any certification support performed hereunder.

3.4.9.         Systems Integration

All activities required to incorporate systems into Products, including but not limited to Product Definition, ordering, scheduling, integration, and test, are included in Recurring Work.

3.5.         Product Support and Miscellaneous Work

For purposes of this SBP Section, the following requirements and definitions shall apply:

A. Aircraft on Ground (“AOG”) - means the highest Spares priority. Seller shall expend best efforts to provide the earliest possible shipment of any Spare designated AOG by Buyer. Such effort includes but is not limited to working twenty-four (24) hours a day, seven (7) 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. DEMAND DATE – means a date provided to Seller by Buyer when Buyer wants the Product(s) on-dock. Seller shall provide a commitment to Buyer no later than three (3) days from notification of demand date.

C. SELLER’S FULL LEADTIME SPARE - means a Spare in which the Demand Date is equal to or greater than Seller’s normal or the Demand Date is less than Seller’s normal but Seller’s best effort commitment is Seller’s normal.

D. SELLER’S LESS THAN FULL LEADTIME SPARE - means a Spare in which the Demand Date is less than Seller’s normal and Seller’s best effort commitment to meet the Demand Date is less than Seller’s normal

E. PURCHASED ON ASSEMBLY REQUIREMENT (POA) - means any detail component needed to replace a component on an End Item Assembly currently in Buyer’s assembly line process. Seller shall expend best efforts to provide the earliest possible delivery of any Spare designated as POA by Buyer. 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.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

F. IN-PRODUCTION SPARE - means any Spare which is in the current engineering configuration for the Product and is used on a model aircraft currently being manufactured by Buyer at the time of the Order.

G. NON-PRODUCTION SPARE - means any Spare which is used on model aircraft no longer being manufactured by Buyer (Post Production) or is in a non-current engineering configuration for the Product (Out of Production).

H. BUYER PROPRIETARY SPARE - means any Spare, which is manufactured (i) by Buyer, or (ii) to Buyer’s detailed designs with Buyer’s authorization or (iii) in whole or in part using Buyer’s Proprietary Materials.

3.5.1.         Product Support and Assurance

Seller shall provide Product Support and Product Assurance in accordance with the applicable documents referred to in SBP Section 12.1 “Supporting Documentation” and Section 16.0. Unless otherwise specified in the applicable Order, no payment shall be made by Buyer for any Product Support and Product Assurance performed hereunder.

3.5.2.         Spare Parts Ordering and Delivery

In accordance with the “Administrative Agreement”, as identified in SBP Section 17.0, Seller shall manufacture and sell such Spare Parts as Buyer may order from time to time. Seller shall accept any Order for Spare Parts during the term of the SBP. Except as provided in SBP Section 3.5.2.3, the delivery point for Spares Parts is as follows: Origin, Seller’s Plant or (INCOTERM) for international shipments. The delivery schedule for Spare Parts shall be as specified in the Order.

3.5.2.1.         Spare Part Stock and Lead Times

Seller shall maintain an adequate Spare Part stock of Products to support all lead times specified in this SBP and shall ship such Products within lead times as follows:

a. Shelf Stock Spare Parts shall ship in not more than five (5) calendar days from receipt of an Order or prior to Demand Date whichever is sooner.

b. Other Spare Parts in Seller’s continuous production at the time of receipt of an Order shall ship in not more than fifteen (15) calendar days from receipt of an Order, including parts that are unique to a single Customer (e.g., interior color coded parts) unless mutually agreed upon by Customer, Customer’s Designee and Seller.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

c. For Spare Parts not in Seller’s continuous production at the time of receipt of an Order, Seller shall expend best efforts to meet Buyer’s, Customer’s or Customer’s Designee’s delivery requirements.

3.5.2.2.         Spare Part Delivery Commitment

Seller guarantees that a Spare Part shall be available for shipment to Customer or Buyer within the lead times specified in SBP Section 3.5.2.1. If, after three months following Entry in Service of the Program Airplane, Seller is unable to comply with the requirements of Section 3.5.2.1 , Seller shall perform, at no charge, one or more of the following actions, as necessary to meet Customer’s, Customer’s Designee’s, or Buyer’s requirements:

a)      Expend premium time;

b)      Remove such Spare Part from a higher assembly in Seller’s inventory;

c)      Provide a loan Spare Part until the Spare Part can be delivered; or,

d)      Provide reimbursement of Buyer’s reasonable lease charges for a replacement Product.

If Seller’s actions above still fail to meet Buyer requirements, Seller shall provide a credit to Buyer in an amount of one half of one percent (0.5%), or other mutually acceptable percentage, of the Seller’s Spare Parts Price Catalog (SPPC) price of the Spare Part for each calendar day the Delivery of the Spare Part is delayed, not to exceed the then current SPPC price of a new Product. Seller agrees that such credit reflects Buyer’s liquidated damages and is not a penalty.

Unless otherwise agreed between the Seller and Buyer, the Delivery date for computation of credit shall be the Delivery dates listed the Order within the lead-times described in this SBP section. Buyer shall provide Seller a request for such credit within 90 days after Delivery of the Spare Part.

3.5.2.3.         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 Buyer directs delivery of Spares to a place other than the INCOTERM designated in SBP Section 3.4.2, Buyer 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 INCOTERM. Such charges shall be shown separately on all invoices.

3.5.2.4.         Integrated Materials Management Program

If requested by Buyer, Seller shall participate in and support Buyer’s Integrated Materials Management (IMM) Program pursuant to terms and conditions mutually determined by the parties, that shall achieve an efficient and low cost supply chain infrastructure pursuant to the goals and strategies of the IMM Program as set forth below:

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

a. Provide a Buyer integrated solution for customers’ material management operations;

b. Provide guaranteed service levels to customers’ maintenance operations by Seller holding and forward deploying inventory as deemed appropriate;

c. Reduce inventory and process costs with better service levels to customers;

d. Enable supply chain and customers to reduce costs and share benefits.

IMM on-site functions may be located at customers’ facilities and may include, demand planning, inventory management, repair and overhaul services and replenishment management. IMM global functions may include, planning and collaboration, global operations, systems integration, network supplier management, global logistics management, quality assurance, human resources, parts/services engineering, finance and accounting, communications, product development.

3.5.3.         Spares Support

The Demand Date initiative is Buyer’s means of providing Seller greater visibility of Customer requirements and expectations for Spares. Seller agrees to work with Buyer during the term of this SBP to identify and address those elements in the manufacturing or support process which are critical to supporting the Demand Date initiative. Where possible, the parties shall work to improve those critical elements.

Seller shall provide Buyer with a written Spares support plan describing Seller’s process for supporting AOG commitments and manufacturing support. The plan must provide Buyer with the name and number of a twenty-four (24) hour contact for coordination of AOG requirements. Such contact shall be equivalent to the coverage provided by Buyer to its Customers as outlined in SBP Attachment 5 “Buyer AOG Coverage”.

3.5.4.         Reclassification or Re-exercises

Buyer 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 Buyer.

3.5.5.         Sale of Buyer Proprietary Spare Parts

Seller shall sell Buyer Proprietary Spare Parts to Buyer, or to third parties only with Buyer’s prior written approval or at Buyer’s direction. Seller shall respond to any inquiry from a third party concerning Buyer Proprietary Spare Parts in accordance with SBP Section 30.0 “Customer Contact”.

3.5.6.         Initial Provisioning

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

3.5.6.1.         Initial Provisioning Spare Part Stocking

Seller shall maintain adequate Product in stock to support Initial Provisioning requirements and delivery times as determined by Buyer.

3.5.6.2.         Lead Times for Initial Provisioning Spare Part

Lead times for Initial Provisioning Spare Part shall not exceed one hundred twenty (120) calendar days.

3.5.6.3.         Delivery of Initial Provisioning Spare Parts

Seller shall have Initial Provisioning Spare Parts available for delivery one hundred twenty (120) calendar days prior to delivery of the first Aircraft of a particular model to a Customer and shall, based on receipt of an Order, complete delivery of Initial Provisioning Spare Parts to Buyer no later than forty five (45) calendar days prior to delivery of such first Aircraft of a particular model, unless otherwise agreed to by Buyer.

3.5.7.         Miscellaneous Work and Buyer-Use Tooling

Seller shall provide Miscellaneous Work, including, without limitation Buyer-Use Tooling, field support or other related program support items, as may be ordered by Buyer from time to time.

3.5.8.         Delivery Schedule of Other Products and Performance of Services

All deliveries of other Products and performance of services shall be as set forth in any applicable Order unless specifically agreed to in writing by the Buyer Procurement Representative.

3.5.8.1.         ROLT Maintenance

Seller is required to maintain records of current Class III ROLTs for all details and assemblies required for fabrication and assembly of Production Article(s) provided to Boeing under the subject Purchase Orders. Seller is required to submit a current ROLT listing quarterly via BPN. This data will be used in establishing Class III spare requirement delivery commitments to Boeing customers.

Seller may submit revised ROLT commitments to Boeing at any time. However, ROLT revisions submitted in confirmation of a firm Purchase Order will apply to future orders and will not affect existing requirements.

3.5.9.         RESERVED

4.0           PRICING

4.1.         Product Price

The Prices of Products Shipset Price are set forth in SBP Attachment 1. Prices are in United States Dollars.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

4.1.1.         Nonrecurring Work

The Price is exclusive of any Seller Nonrecurring Work during the term of this SBP. No payment shall be made by Buyer for any Nonrecurring Work performed hereunder. In addition, Seller waives and agrees not to assert to recover or recoup any costs associated with Nonrecurring Work in the event of Default, failure to launch the Program, Program cancellation or end of this SBP either upon expiration or mutual agreement of the Parties.

4.1.2.         RESERVED

4.2.         Spare Parts

Spare Parts shall be categorized and priced as follows:

4.2.1.         Pricing for In-Production Spare Parts

Buyer and Seller shall develop a firm fixed average Price for each Spare Part, in which the Price shall be based in part upon the “indentured” priced parts list SBP Attachment 7 for the first Shipset of Production Articles submitted by Seller, and agreed to by Buyer, at the time of first Production Article inspection. The line item prices contained in such “indentured” priced parts list shall be adjusted by Seller each time an adjustment of prices for Products is made pursuant to SBP Section 7.0, with the effect that the sum of such line item prices shall equal the then-current Recurring Shipset Price. Each Spare Part Price developed in accordance with this SBP Section 4.2.1 shall be listed in SBP Attachment 7. SBP Attachment 7 shall be completed by Seller and submitted to Buyer concurrent with the delivery of the first Shipset under this SBP. For SBP Amendments, Seller shall update SBP Attachment 7 to reflect then current pricing not later than one hundred twenty (120) calendar days after completion of any amendment of the SBP as provided in SBP Section 7.0. Payment for any Spare Part shall not take place until after agreement by Seller and Buyer on pricing included in SBP Attachment 7, and shall be subject to SBP Section 5.0. SBP Attachment 7 shall be updated from time to time in accordance with the “Administrative Agreement” as identified in SBP Section 17.0.

4.2.2.         Pricing for Out-of-Production Spare Parts

Firm fixed prices for Out-of-Production Spare Parts not previously priced in SBP Attachment 7 shall be developed using the same methodology as used in developing the prices for In- Production Spare Parts as set forth above.

4.2.3.         Pricing for Special Configuration Spare Parts

Firm fixed prices for Special Configuration Spare Parts shall be developed by Seller, subject to Buyer’s approval. In-Production Prices shall be applied to in-production components and Out-of-Production Prices shall be applied to Out-of-Production components. Prices for any component not priced at the time any Special Configuration Spare Part (in which such component shall be installed) is ordered shall be priced as if it were an in-production component.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

4.3.         Prices for Other Spares and Miscellaneous Work

Firm fixed prices for work other than Spare Parts shall be developed using the performance indicators for the two (2) calendar quarters immediately preceding the quarter in which such work is delivered to Buyer, such performance indicators to be derived from data provided by Seller concerning Seller’s current rates and factors, all in accordance with the “Administrative Agreement” as identified in SBP Section 17.0. At Buyer’s request, Seller shall provide estimated hours and actual material costs, the latter to be substantiated with Seller’s current purchase orders.

4.4.         Aircraft On Ground (AOG) and POA Requirement

The price for AOG Spares and POA requirements shall be the price for such Products listed on SBP Attachment 7 in effect when such Spares are ordered multiplied by a factor not to exceed 1.07.

4.5.         Less Than Seller Lead Time Spares Pricing

The price for Less Than Seller Lead Time Spares shall be production price for such Products listed on SBP Attachment 7, Indentured Priced Parts List, in effect when such Spares are ordered multiplied by a factor not to exceed 1.05.

4.6.         Full Seller Lead Time Spares Pricing

The price for Full Seller Lead Time Spares shall be production price for such Products listed on SBP Attachment 7, Indentured Priced Parts List, in effect when such Spares are ordered.

4.7.         Pricing of Buyer’s Supporting Requirements

Any Products required to assist Buyer’s supporting requirements and Miscellaneous Work, including but not limited to color and appearance samples, design studies, Product qualification, Buyer or Customer-owned simulators, test requirements, factory support, flight test spares shall be provided to Buyer at no cost.

4.8.         Pricing of Requirements for Modification or Retrofit

4.8.1. Buyer Responsibility or Regulatory Requirement

Any Products required by Buyer to support a modification or retrofit program, which results from a regulatory requirement or which Buyer may be liable for the cost associated, with such program shall be provided to Buyer for not more than the applicable price as set forth in SBP Attachment 1.

4.8.2.                 Contract In-Service Modification or Retrofit Work Performed by Buyer

Any Products required by Buyer to support modification or retrofit programs, which Buyer performs under contract, shall be provided for not more than the applicable price as set forth in SBP Attachment 1.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

5.0           PAYMENT

5.1.         Invoicing

5.1.1.                 Invoicing Requirements

Seller shall submit separate invoices for payment of each Product and each invoice for payment shall be submitted in triplicate. Payment of any such invoice by Buyer shall be subject to the satisfaction of all of the following conditions:

A. Buyer shall have received the Certified Tool List in form and substance satisfactory to Buyer, or otherwise in compliance with Document D33200, “Supplier Tooling Manual,” for the tools required to produce each Production Article in a Shipset, and, as changes to Production Articles shall occur, updated Certified Tool Lists listing additional Tools required to accomplish any such change, and

B. The Shipset of Production Articles for which payment is to be made shall have been delivered to Buyer. Any Shipset shall be deemed to be delivered when all Production Articles constituting such Shipset shall have been delivered to Buyer.

5.1.2.                 Invoicing Shipset Identification

Seller shall indicate on each Shipset invoice the line number of each Shipset included therein.

5.1.3.                 Spares and Miscellaneous Work Invoicing

Seller shall prepare and submit an invoice for each Product classified as Spares and Miscellaneous Work.

5.1.4.                 Summary Invoices

Seller shall supply a summary invoice for those shipments that contain multiple-invoiced items; each item in turn having its own invoice. The summary invoice shall be attached along with the paperwork for the shipment and provide total value for the invoices that accompany it as well as specify what invoices are covered.

An acceptable alternative is the use of a single invoice for multiple items, part numbers and purchase order numbers.

5.1.5.                 Mailing Instructions

All invoices shall be mailed to:

Spirit AeroSystems Inc.

Attn: Accounts Payable Mail Code K11-10

PO Box 780008

Wichita, KS 67278-0008

Email: accountspayable@spiritaero.com

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

5.2.         Payment Due Date

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; (c) the scheduled delivery date of such Product, or (d) the date of consumption by Buyer, (e) delivery of the aircraft to the airline customer, 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.

5.3.         Payment Term - Production

Unless otherwise provided under the applicable Order or written agreement between the Parties, payment shall be Vendor Owned Inventory, (net) sixty (60) calendar days. Seller acknowledges that 23 shipsets or more may be delivered before payments begin.

5.4.         Payment Term – Spares and Miscellaneous Work

The Price for any Spare Part shall be paid sixty (60) calendar days after the Price for such Spare Part shall have been developed in accordance with the terms of SBP Section 4.2 and (i) Buyer’s verification of delivery of any Spare Part shipped directly to any Customer on Buyer’s behalf or (ii) acceptance by Buyer of any Spare Part. The Price for any Miscellaneous Work (except for any Spare Part) shall be paid sixty (60) calendar days after (a) development of the Price for such work in accordance with the terms of SBP Section 4.3, (b) delivery or provision, as the case may be, of the Product constituting or containing such Miscellaneous Work to Buyer or Buyer’s designee, and (c) Buyer’s receipt of a valid and correct invoice pursuant to SBP Section 5.1.

5.5.         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.

5.6.         Payment Errors

If an error in payment (over payment or under payment) is discovered by Buyer or Seller, a written notification will be submitted to the other Party and resolution of the error will occur in a timely manner after discovery of such error.

6.0           CHANGES

6.1.         Change Direction

At any time, Buyer may, by written direction to Seller, make changes within the general scope of this SBP in: (i) requirements for Product Definition, Drawings, designs, specifications, Datasets or

any other Document; (ii) Buyer-Use Tooling and Common Use Tooling (including, without limitation, the quantities thereof), services or Spare Parts to be provided by Seller under this SBP; (iii) the method of shipping or packing; (iv) the place of delivery, inspection or acceptance for all Products; (v) Program schedules, delivery rates and schedules for performance of services; (vi) Products, the Program Airplane and Derivative models and Customer variables; (vii) Buyer Furnished Material; (viii) the allocation of responsibility as between Seller and Buyer for production of any component of any Product or the provision of any service; (ix) the allocation of responsibility among Seller and Third Parties; (x) certification requirements; and (xi) description of services to be performed; provided, however, that (a) such changes are made for the purpose of supporting Program requirements as determined by Buyer in good faith and in accordance with SBP Section 3.1. “Subject Matter of Sale” and (b) the provisions of this SBP Section 6.1 are subject to SBP Section 2.0 “Contract Formation” and other provisions of SBP Section 6.0.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

6.2.         Change Compliance

Seller shall immediately comply with any written direction from Buyer in accordance with SBP Section 6.1 “Change Direction” upon receipt, irrespective of any failure by the Parties to agree that such change shall be subject to Price adjustment in accordance with SBP Section 7.0 “Change Provisions” and SBP Section 4.2 “Spare Parts”.

If at any time Seller has any concerns regarding its ability to implement any such change, the Parties shall consult in good faith regarding such concerns. Seller shall be deemed to be in full compliance with this SBP so long as it immediately commences substantial efforts to implement each such change and thereafter proceeds diligently and in good faith to implement such change within a reasonable period of time specified by Buyer after consultations with Seller and taking into account the efforts required by Seller in connection with such implementation. Notwithstanding anything in the foregoing to the contrary, any change directed by Buyer that impacts Seller’s ability to meet the delivery schedule will be subject to the mutual agreement of the Parties with respect to any necessary schedule changes. Seller agrees to use its best commercially reasonable efforts to incorporate such change in accordance with the Buyer desired delivery schedule.

6.3.         Change Pricing

Seller shall be responsible for absorbing the cost of changes to meet requirements and specifications of its Work Package, except as otherwise provided in SBP Section 7.0 “Change Provisions”. If Seller reasonably expects that any change made within the general scope of this SBP is outside the scope of requirements and specifications of its Work Package and shall significantly affect Seller’s cost or schedule performance of any work hereunder, Seller shall, without affecting its obligation to comply with SBP Section 6.2 “Change Compliance” with any such change, so notify Buyer in writing within thirty (30) days of Seller’s receipt.

If Seller considers that Buyer’s conduct, other than as provided above, constitutes a change, Seller shall notify Buyer’s Procurement Representative in a timely manner in writing as to the nature of such conduct and its effect (or its anticipated effect) upon Seller’s performance. In the absence of such notification, Seller shall not be entitled to an equitable Price adjustment.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

Unless otherwise agreed in writing, Seller must assert any claim for adjustment to Buyer’s Procurement Representative in writing within thirty (30) days and deliver a fully supported proposal to Buyer’s Procurement Representative within ninety (90) days after Seller’s receipt of written direction from Buyer with respect to any change. Buyer may, at its sole discretion, consider any claim regardless of when asserted. Upon receipt of a proposal with respect to an adjustment claim from Seller, Buyer shall review and consider such proposal promptly and in good faith and shall provide its written response to Seller in a timely manner. Failure of the Parties to agree upon any adjustment shall not excuse Seller from performing in accordance with Buyer’s written direction.

If a change is made pursuant to this SBP Section 6.0, and such change meets the applicable criteria for Price adjustment set forth in SBP Section 7.0 “Change Provisions”, then a Price adjustment shall be made in accordance with the provisions set forth in SBP Section 7.0.

With respect to any change made pursuant to SBP Section 6.0 “Changes”, all time periods for the giving of notice, the filing of claims and the submission of proposals by Seller shall be measured from the date that is the earlier of the date that Buyer gives notice of the posting of such change or the date of Buyer’s delivery of a Document giving notice of such change to Seller.

Notwithstanding anything to the contrary in this SBP Section 6.3, the time periods set forth in this SBP Section 6.3 with respect to notice of, and the assertion of claims for, any changes shall not apply to any changes that occur prior to firm configuration of the Program Airplane.

7.0           CHANGE PROVISIONS

7.1.         General Change Provisions

As provided in SBP Paragraph 6.0 “Changes”, Seller shall be responsible for absorbing the cost of changes to meet requirements and specifications of its Work Package, except as otherwise provided in this SBP Section 7.0. Therefore, except as the Parties may otherwise mutually agree, no adjustment will be made to the Price of any Product for any change orders as provided in SBP Section 6.0 issued through the period of performance of this SBP except as provided in this SBP Section 7.0.

7.2.         Work Statement Changes Subject to Price Adjustment

7.2.1. Requirement Changes

The Price is subject to an equitable adjustment if there is a change to the requirements contained in any other Document that is referred to in such Documents (collectively, the “Work Statement Documents”) that impacts Seller’s cost and/or schedule (“Requirement Change”).

The evaluation of any change to determine if it meets the criteria of a Requirement Change shall be made in accordance with the guidelines set forth in SBP Attachment 19 “Requirement Changes Evaluation”. The calculation methodology for Price adjustments made in connection with Requirement Changes shall be made using an agreed upon methodology acceptable to Buyer and Seller. The Shipset Price adjustment at firm configuration of the Program Airplane will be negotiated based upon a proposal by Seller that will include rates and factors, which shall be considered in good faith by Buyer. Within six (6) months from the execution of this SBP, and within each six (6) month anniversary thereafter, the Parties will attempt in good faith to agree on a rates and factors methodology for the calculation of Price adjustments made in connection with Requirement Changes. The Parties will mutually agree on a rates and factors methodology (which shall include the values for all rates and factors) at the earliest practicable date, and the Parties shall in any case mutually agree on a rates and factors methodology within two (2) years from the execution of this SBP. The agreed methodology will give due consideration to Seller’s proposed rates and factors.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

Following firm configuration of the Program Airplane, only those Requirement Changes authorized in writing by Buyer shall be subject to a Price adjustment pursuant to this SBP Section 7.0. In the event Seller considers any change not authorized in writing to be a Requirement Change, Seller shall request authorization from Buyer.

When requested by Buyer, Seller shall participate in and support the evaluation of any Requirement Change prior to its authorization. This may include, but not be limited to, Seller cost analysis in a manner that supports timely program decision making, and other processes to be jointly developed by Buyer and Seller to maintain change visibility by means of tracking and approval processes.

7.2.2.         Requirement Change Evaluation

7.2.2.1.         Pre-Firm Configuration Changes

At firm configuration of the Program Airplane, the Parties shall mutually agree to the work statement definition (the “Firm Configuration Statement of Work”). Following establishment of the Firm Configuration Statement of Work, the Parties shall conduct a joint review and assessment of the cumulative impact (increase or decrease) to Seller’s anticipated costs resulting from the comparison of the Firm Configuration Statement of Work to the scope of work represented by the Work Statement Documents as of the time of execution of this SBP. Either Party may submit any other Document, data and/or information to clarify and substantiate its assessment. The Parties agree to evaluate and negotiate in good faith any Price adjustment resulting from such assessment.

7.2.2.2.         Post-Firm Configuration Changes

Upon mutual agreement of the Firm Configuration, Statement of Work, shall be amended and incorporated into the definition of Work Statement Documents. In the event a Party believes any change meets the criteria of a Requirement Change, and therefore should be subject to a Price adjustment, the Parties agree to evaluate and negotiate in good faith the merits of such proposed Price adjustment and shall mutually determine any Price adjustments.

7.2.3.         Requirement Change Price Threshold

7.2.3.1.         Requirement Changes Subject to Threshold

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

A change threshold (the “Change Threshold”) of two and one-half percent (2.5%) of the Shipset Price (the “Threshold Amount”) will be implemented for all Requirement Changes after Type Certification. No adjustment to the Shipset Price shall be made for any Requirement Change not exceeding the Change Threshold except as provided in SBP Sections 7.2.3.2 “Requirement Changes Not Subject to Threshold” and 7.2.3.3 “Change Cap”. Subject to SBP Sections 7.2.3.2 and 7.2.3.3, the Threshold Amount shall be applied to each change and shall be calculated as shown in SBP Attachment 17 “Pricing Methodologies”.

If the amount of the Price adjustment with respect to any change exceeds the Threshold Amount, the Shipset Price for each Shipset affected by such change shall be adjusted by the full amount of such Price adjustment without regard to the Threshold Amount.

An example of a Price adjustment is provided in SBP Attachment 17 “Pricing Methodologies”.

7.2.3.2.         Requirement Changes Not Subject to Threshold

All Requirement Changes prior to Type Certification are not subject to the Change Threshold. After Type Certification, the following Requirement Changes are not subject to the Change Threshold: (i) any change to the allocation of responsibility as between Seller and Buyer for production of any component of any Product or the provision of any service; (ii) any change to the allocation of responsibility among Seller and Third Parties; (iii) Buyer directed weight savings initiatives for weight reductions below agreed work package weight commitment level; (iv) Requirements Changes resulting from TCM; (v) changes relating to the design and implementation of Derivatives; (vi) airplane-level certification changes; and (vii) TBS 2B & 3 changes (as defined in SBP Attachment 17 “Pricing Methodologies”).

7.2.3.3.         Cap on Changes Subject to Threshold

The Parties shall periodically assess the volume of changes which may occur and at such time that the volume of changes reasonably require, shall mutually determine a fair and equitable Change Cap, but in no event shall such determination be made later than two (2) years from the date of execution of this SBP. For purposes of this SBP, “Change Cap” means a dollar or percentage value that shall cause the Change Threshold to be of no further force or effect for an agreed period of time, which may include the life of the Program, or after an agreed number of Shipsets, once the aggregate amount of Requirement Changes subject to the Change Threshold shall equal or exceed such dollar or percentage value. The Parties shall mutually agree on language and a Change Cap value to be incorporated into this SBP Section 7.2.3.3.1 in order to effect the Change Cap.

7.3.         Changes Generated by Seller Affecting Buyer or a Third Party

Seller may propose changes that have an effect on Buyer or a Third Party. Any such proposal shall include Seller’s business case proposal for such change, including any compensation or payment Seller may (but shall not be obligated to) offer to Buyer or any Third Party. Any such proposal shall be considered in good faith by Buyer. Buyer shall

coordinate with any affected

Third Party regarding any change proposed by Seller and shall have the sole right, after consultation with Seller, to approve or disapprove any such change. Seller may not implement any such change without Buyer’s prior written approval.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

7.4.         Derivatives

For Derivative(s) Buyer reserves the right to contract with any Seller Buyer determines is appropriate for the supply of the Products addressed in this SBP. In determining the appropriate Seller for Derivative(s), market driven target prices, based on Buyer’s expected revenue generated from sales of Derivative(s), shall be a key consideration in the selection process, and in the establishment of Nonrecurring and Recurring Shipset Prices for Derivative(s). If Buyer selects Seller as the supplier for these Products, change pricing shall be subject to the criteria set forth in SBP Section 6.0 “Changes”.

7.5.         Schedule Acceleration/Deceleration

Buyer may revise the delivery schedule and/or firing order without additional cost or change to the Shipset Price stated in the applicable Order if Buyer provides Seller with written notice of such revision; provided, however, that Seller shall be entitled to payment for schedule accelerations made with less than six (6) months notice for acceleration and less than four (4) months notice for deceleration. In case of shorter notification for acceleration, the Shipset Price for those Shipsets inside the notification period (less than 6 months notification) shall be equitably adjusted as agreed by the Parties subject to schedule feasibility. In case of shorter notification for deceleration, the Shipset Price will be adjusted by four-tenths of one percent (.4%) per month for those Shipsets inside the notification period (less than 4 months notification). Attachment 15 “Schedule Change Examples” provides examples of the above. Except as provided in this SBP Section 7.4 and SBP Section 7.5.1 “Production Rates”, there shall be no other Price adjustment for schedule rate or firing order changes. The resulting payment amount shall be paid in accordance with SBP Section 5.0 “Payment”.

Seller shall inform Buyer as Seller deems appropriate of critical lead times and constraints in its production system and Buyer shall reasonably consider such information in making a determination to accelerate production rates.

Buyer agrees to provide Seller with written notice of any deceleration as soon as reasonably possible. Reasons for decelerations shall include, but not be limited to, rate changes, possible strikes at Buyer or any of its suppliers or subcontractors on the Program or performance issues at Buyer or any of its suppliers or subcontractors on the Program.

7.5.1.                 Production Rates

Seller shall support the initial program production rates of fifteen (15) shipsets per month. Seller shall support higher production rates with lead time notification from the Buyer. Higher production rates are defined as higher peak production volumes than previously built by the Program and would apply to either the initial airplane production rate of fifteen (15) shipsets per month or increases higher than previous peak production rates if the previous peak production rate was greater than fifteen (15) shipsets per month. Seller shall support higher production rates with twelve (12) months lead time notification from Buyer, or a shorter lead time if agreed to by both Buyer and Seller.

This SBP contains no minimum or maximum airplane production rates. Seller payment prices shall not be adjusted for the effects of different production rates.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

7.6.         Total Cost Management

Buyer and Seller shall engage in a process herein known as Total Cost Management (“TCM”). Buyer and Seller shall each identify cost reduction opportunities and work together for implementation. Buyer and Seller shall review TCM on a periodic basis, which shall include the establishment of targets and implementation plans. Seller shall submit its TCM Plan in accordance with SBP Attachment 8 “Seller Data Submittals”. Notwithstanding any other provision(s) elsewhere in this SBP, where a savings is identified as part of TCM, any cost reduction resulting from incorporation of TCM will result in a reduction in the Shipset Price in a mutually agreed manner that equitably preserves, or enhances if market conditions allow, the anticipated economics of the Program for both Buyer and Seller. For the avoidance of doubt, once the cost of Nonrecurring Work and investment associated with each cost reduction initiative is recovered, the resulting benefit of the cost reduction will be shared by Seller, Buyer and Buyer Customers. Seller suggestions disapproved by Buyer shall be given consideration in achievement of TCM targets.

7.6.1.         Buyer Generated Technical and Cost Improvement

At any time during the Seller’s performance under this SBP, Buyer may offer specific recommendations to Seller for the incorporation of any new technologies and process improvements intended to reduce Seller’s costs or improve product performance. These recommendations may include, but are not limited to, Buyer proprietary information and Buyer owned patents. Notwithstanding any other provision(s) elsewhere in this SBP, where a savings is identified and documented, the Parties agree to reduce the Price accordingly.

7.7.         Obsolescence

Obsolescence Seller shall be responsible for any costs associated with obsolescence. Buyer shall not be liable for any cost associated with any changes required to address obsolescence

7.8.         Planning Schedule

Any planning schedule, forecast, or any such quantity estimate provided by Buyer shall be used solely for production planning. Buyer may purchase Products in different quantities and specify different delivery dates as necessary to meet Buyer’s requirements. Any such estimate shall be subject to adjustment from time to time, and such adjustment shall not constitute a change under SBP Section 6.0 nor a termination under GTA Section 12.0, “Termination for Convenience”.

7.9.         Contract Change Notification

Certain engineering requirements changes and other modifications, revisions, additions, deletions, and/or stop work orders, to the Special Business Provisions pursuant to SBP Section 6.0, “Changes” thereof shall be directed by a Contract Change Notice (CCN) which shall be Seller’s authority to proceed. The Procurement Agent identified in Attachment 20 Section 1.1 will issue the CCN. Seller will proceed as directed. When claims against CCNs have been settled between Buyer and the Seller, Buyer will issue a Contract Amendment incorporating the CCNs into the SBP.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

8.0           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.

9.0           STATUS REPORTS/REVIEWS

9.1.         Notification of Shipment

Seller shall notify the Buyer personnel identified in the “Administrative Agreement”, as identified in SBP Section 17.0, by electronic transmission or facsimile when any shipment has been made. Such notification shall include (i) a list of the items and quantities of items shipped, (ii) the Shipset number with respect to any item shipped, (iii) the number and weight of containers shipped, (iv) the shipper or packing sheet number with respect to such shipment, and (v) the date of such shipment. Seller shall airmail or facsimile copies of shipping manifests for Common-Use Tools to Buyer. Such manifests shall identify Common-Use Tool codes and part numbers, unit numbers of Common-Use Tools and the airplane effectivity of the Production Article contained in such Common-Use Tools.

Seller shall notify Buyer as soon as possible via fax, electronic transmission, or as otherwise agreed to by the Parties of each AOG requirement shipment using the form identified in SBP Attachment 6 “Buyer AOG 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 Buyer immediately upon the discovery of any delays in shipment of any requirement and identify the earliest revised shipment possible.

9.2.         General Reports / Reviews

When requested by Buyer, Seller shall update and submit, as a minimum, monthly status reports or data requested by Buyer using a method mutually agreed upon by Buyer and Seller. Buyer has the right to impose more frequent reporting on Seller to achieve program objectives.

When requested by Buyer, Seller shall provide to Buyer a Product Definition and manufacturing milestone chart identifying the major engineering, purchasing, planning, tooling and manufacturing operations for the applicable Product(s).

Program reviews shall be held at Seller’s facility or Buyer’s facilities or Customer facilities as requested by Buyer. The topics of these reviews may include Product Definition status, raw material and component part status, manufacturing status, production status, Seller’s current and

future capacity assessments, Buyer supplied components, inventory, Buyer’s requirements, changes, forecasts and other issues pertinent to Seller’s performance under this SBP. Reviews shall allow formal presentations and discussion of status reports as set forth above.

Formal management reviews shall be held periodically by Buyer and Seller to evaluate total cost performance (including overhead, labor-hours (production and support)). During these reviews, Seller shall present and provide actual cost performance data with respect to this SBP.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

9.3.         Cost Performance Visibility

When requested by Buyer, 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 7.6.

The Cost and Performance Review (CPR) process is the tool, which the Parties shall use to measure Seller’s performance to the goals and objectives of Buyer as set forth in SBP Section 7.6. Buyer and Seller shall implement a structured process called CPR to review and identify areas, processes and strategies to improve, reduce or eliminate which shall result in the desired effect of reducing costs and/or improving cycle times for the Product(s). The CPR process shall address those activities, which are a direct result of both Parties involvement. Seller shall provide the resources and data sufficient to support the CPR process.

9.4.         Problem Reports

Seller shall provide a detailed report, notifying Buyer of program problems and/or issues including but not limited to delays attributed to labor disputes, that could impact Seller’s ability to deliver Product Definition, if applicable, or Products on time and otherwise in conformance with the terms of the Order. 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. Seller also shall require each of its subcontractors or suppliers supporting the Order to provide such notification to Seller concerning any such problems/issues of any subcontracted good or service to Seller. Submittal of a report in no way relieves Seller of any obligations under the Order nor does it constitute a waiver of any rights and remedies Buyer may have with respect to any default.

Problem reports shall be submitted to the Buyer 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 twenty-four (24) hours. Status reports shall include, but are not limited to, the following topics:

A. Delivery schedule updates, written recovery schedules, 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;

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

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 Tooling design and fabrication, as applicable, until completion;

J. Inventory status of castings and forgings procured by Seller (if applicable).

K. Product Definition maturity, schedule and performance updates.

9.5.         Notice of Delay - Premium Effort

Seller shall notify Buyer, pursuant to SBP Section 9.4 and as set forth in the “Administrative Agreement”, as identified in SBP Section 17.0, by electronic transmission or facsimile immediately of any circumstances, including, but not limited to, labor disputes, that may cause a delay in delivery by Seller or any of its subcontractors or suppliers. Such notification shall state the estimated period of such delay and the actions being taken by Seller to prevent or recover from such delay. Seller also shall require each of its subcontractors or suppliers under this Contract to provide such notification to Seller concerning any such delay in the delivery of any subcontracted goods or services to Seller. At Buyer’s direction, Seller shall use additional effort, including premium effort, and shall ship via air or other expedited routing in order to avoid or minimize delay to the maximum extent possible. All additional costs resulting from such premium effort and/or premium transportation and such delay shall be paid by Seller. Additional costs include, but are not limited to all costs and expenses incurred by Buyer as a result of production line disruption attributable to Seller’s delayed delivery. Buyer’s rights under this SBP Section 9.5 are not exclusive, and any other rights provided in this Contract or by law are reserved. Disruption costs and expenses shall be an amount equal to the portion of resultant planned installation time allocated for out-of-sequence work multiplied by Buyer’s then-current rate for labor. These provisions shall also apply to incomplete work shipped to Buyer for completion (traveled work).

9.6.         Diversity Reporting Format

Seller shall report to Buyer 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.

10.0           BUYER ASSISTANCE

10.1.         Buyer Technical / Manufacturing Assistance Regarding Seller’s Nonperformance

Seller shall reimburse Buyer for all Buyer resources expended in providing Seller and/or Seller’s subcontractors or suppliers technical or manufacturing assistance in resolving Seller nonperformance issues at the established Buyer internal wage rate, which shall include fringe benefits, multiplied by the estimated hours recorded by Buyer, plus the estimated material costs associated with providing such assistance. In addition, Seller shall, at Buyer’s request, pay for normal and customary expenses relating to salaries, living expenses, travel and any other reasonable expenses related to the provision of technical services. Such reimbursement may be offset against any pending Seller invoice, regardless of Buyer model or program. Buyer’s rights under this clause are in addition to those available to Buyer for Seller’s nonperformance issues, including those where a demand for an Assurance of Performance may be made under GTA Section 17.0, “Assurance of Performance”.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

10.2.         Other Buyer Assistance

In the event either Party believes that Seller requires Buyer technical (including engineering), manufacturing or training assistance for any activity within Seller’s area of responsibility under this SBP, Seller and Buyer shall negotiate the scope and price for such Buyer assistance.

11.0           REPAIR AUTHORIZATION

11.1.         Buyer-Performed Work

In the event that any Product is rejected by Buyer pursuant to GTA Section 8.3, “Buyer’s Inspection and Rejection”, Seller hereby grants to Buyer the right, without prior authorization from Seller, to repair or rework such Product, or to have such Product repaired or reworked by a third party. Such repair or rework by Buyer or such third party shall be deemed not to be inconsistent with Seller’s ownership of such Product.

All costs and expenses of Buyer relating to such repair or rework shall be paid by Seller. Such costs and expenses shall be an amount equal to Buyer’s estimated rework hours multiplied by Buyer’s then-current rate for labor and materials or the amount charged Buyer by any third party for performing such repair or rework. Disruption costs and expenses shall be an amount equal to the portion of resultant planned installation time allocated for out-of-sequence work multiplied by Buyer’s then-current rate for labor. These provisions shall also apply to incomplete work shipped to Buyer for completion (traveled work).

11.2.         Reimbursement for Repairs

Pursuant to this SBP Section 11.2, Buyer shall notify Seller, through Buyer’s automated systems, of costs and expenses incurred for each individual repair. Seller shall notify Buyer within thirty (30) days after receipt of such advice of any significant errors detected by Seller in Buyer’s estimate of costs and expenses. Buyer and Seller shall promptly resolve such errors. Seller’s failure to so notify Buyer shall be deemed to be an acceptance of Buyer’s estimate of costs and expenses. Buyer shall be entitled to either (a) set off the amount of such costs and expenses against any amounts payable to Seller hereunder or (b) invoice Seller for the amount of such costs and expenses, and Seller shall pay the invoiced amount promptly upon receipt of such invoice.

12.0           OTHER REQUIREMENTS

12.1.         Supporting Documentation

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.1.1.    Supporting Documentation and Priority

All Documents (as hereinafter defined) are by this reference incorporated herein and made a part of this SBP and any references in such documents to “7E7” or “Sonic Cruiser” shall be deemed to refer instead to the 787 Program. For purposes of this SBP, “Document” means all specifications, Drawings, Datasets, documents, publications and other similar materials, whether in a tangible or intangible form, as the same shall be revised from time to time, which relate to the design, manufacture, test, certification, delivery, support and sale of Products or the provision of services to Buyer pursuant to this SBP, including, but not limited to, the documents listed below, and any other documents specifically referred to in this SBP or in such other documents. Reference in any Document to “Contractor” or “Seller” or “Supplier” shall mean Seller for the purposes of this SBP. In the event of any inconsistency between the terms and conditions of this SBP (not including any Documents) and the terms and conditions of any Document, the terms and conditions of the SBP shall control. In the event any provisions of any Document or Documents conflict among themselves, Buyer shall, on its own initiative or at the request of Seller, resolve such conflict, revise such Document or Documents accordingly, and so notify Seller. In resolving any such conflicts, this SBP shall be read as a whole and in a manner most likely to accomplish its purposes.

12.1.2.    Revision of Documents

Subject to the terms of this SBP Section 12.1, Buyer may at any time revise any Document prepared by Buyer and Buyer shall provide Seller with revisions to Documents prepared by Buyer; provided, however, the “Administrative Agreement” as identified in SBP Section 17.0, may be modified only by mutual agreement, except that stated addresses and designees for each Party contained therein may be modified unilaterally by such Party, and any modification of the Administrative Agreement shall be reflected promptly therein by amendment thereto.

12.1.3.    Compliance

Seller shall promptly comply with the provisions of all Documents referenced in this SBP Section 12.1.4, the GTA and any Order, including any replacements or revisions Buyer may make thereto.

12.1.4.    List of Supporting Documents

Item	No.	Title
A	AS/EN/JISQ 9100	“Quality Systems – Aerospace – Model for Quality Assurance in Design, Development, Production, Installation and Servicing”
B	AS/EN/SJAC 9102	“Aerospace First Article Inspection (FAI) Requirement”
C	AS/EN/SJAC 9103	“Variation Management of Key Characteristics”
Item	No.	Title

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

D	AS9006	“Deliverable Aerospace Software Supplement for AS9100A Quality Management Systems - Aerospace - Requirements for Software”
E	ATA 300	“Specification for Packaging of Airline Supplies”
		http://www.airlines.org/home/default.aspxF
F	D1-8007	“Approval Guide for Supplier Statistical Sampling Plans”
G	D1-4426	“Boeing Approved Process Sources”
		http://www.boeing.com/companyoffices/doingbiz/d14426/index.html
H	D6-51991	“Quality Assurance Standard for Digital Product Definition (DPD)”
I	D6-83137	“787 Control Stations”
J	TBD	Supplier Change Management - Major Outside Production
K	D33200- (0, 1, & 2)	“Suppliers’ Tooling Document”
L	D-13709- (1, 2 & 4)	Document Cancelled
M	D6-10867	“Protective Finish Requirements for the Model 737 Airplane”
N	D6-17554	“Model 737 airplane installation system functional test requirements, foreword”
O	D37520-(1, 1A, 1B, 1 C, 2, 3, & 4)	“Suppliers’ Part Protection Guide”
P	D024Z001-01	“787 Weight Engineering Requirements”
Q	D6-55351	“Design for Corrosion Prevention”
R	D6-17781	“Material and Performance Evaluation of Designated Critical Parts”
S	D6-1276	“Control of materials and processes for designated parts and components of Boeing products”
T	D3-2061	“BTWT 398, transonic test on FR-W235, a 0.035 scale model of the Wichita research model number 726”
U	Place EAA number here	“Electronic Access Agreement”
V	Place SBMA number here	“Supplier Banked Material Agreement”
W	D6-56199	“Hardware and Software Compatibility Requirements for Suppliers’ Use of BCAG CATIA Native Datasets as Sole Authority for Design, Manufacturing and Inspection”
X	D6-81628	‘Shipping Label, Barcoded Preparation and Placement”
Y	D6-81852	“Structures Product Support and Assurance Agreement (SPSAA)” (applicable to SCDs)
Z	D6-83069 - Spirit	Product Support and Assurance Document
AA	D6-81491	“Authority and Usage of CATIA Native, CATIA IGES and PDM STEP Datasets.”
AB	787N4-1981	787 Define Products Distributed to Partners and Suppliers (was D034Z002-01)
AC	PF 502	Consumption Based Ordering
AD	PF 455	Contract Standards Support Sales Agreement
AE	PF 515	B787 Supplemental Notes - Boeing 787 document in its entirety
Item	No.	Title

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

AF	P F 200	VOI Supplemental Terms
AG	PF 515	Note 44 Consumption Based Ordering

12.2.    Guaranteed Weight Requirements

Seller acknowledges the importance to Buyer of guaranteed weight requirements. Each Product shall strictly conform to the guaranteed weight requirement set forth in the applicable Statement of Work (SOW) and required Documents. If a Product fails to conform to such guaranteed weight requirement, Buyer may reject delivery of any such Product and take any other action as set forth in GTA Section 8.3, “Buyer’s Inspection and Rejection”, or any other remedy available to Buyer under this Agreement, any Order and applicable law.

12.3.    Accountability for Tooling

Seller shall control and account for all tooling in accordance with the provisions of Buyer Document D33200, Tooling Document” or, subject to Buyer review and approval, its equivalent or replacement. This requirement shall apply to Buyer-Use Tooling until delivery thereof to Buyer, and to Contractor-Use Tooling and Common-Use Tooling at all times prior to the removal thereof by Buyer or delivery to Buyer or Buyer’s designee pursuant to GTA Section 12.0, “Termination for Convenience”, GTA Section 13.0, “Cancellation for Default”, or SBP Section 33.0, “Inventory at Contract Completion”. Upon request Seller shall identify all new, reworked and re-identified tooling.

12.4.    Certified Tool Lists

Seller shall prepare a list or lists (“Certified Tool List”) in accordance with the D33200, “Supplier Tooling Document” or, subject to Buyer review and approval, its equivalent or replacement, and such other information as Buyer shall request. Seller shall prepare a separate Certified Tool List for Tooling produced, procured, or reworked by authority of a Buyer tool purchase order. Seller shall promptly submit each initial Certified Tool List to Buyer. Seller shall subsequently submit from time to time as specified by Buyer new Certified Tool Lists to supplement the information contained in the initial Certified Tool Lists.

12.5.    Buyer Furnished Tooling

In the event Buyer furnishes Tooling to Seller, Seller shall conform to the standards and requirements of the applicable documents referred to in SBP Section 12.1 “Supporting Documentation”. No repair, replacement, maintenance or rework of such Tooling shall be performed without Buyer’s prior written consent. Buyer shall notify Seller of any action required for discrepant Tooling.

12.6.    Packaging and Shipping

Notwithstanding the provisions of GTA Section 7.0, “Packing and Shipping”, the following SBP Sections shall address all packaging and shipping matters.

12.6.1.    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 Order.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.6.2.    Product Packaging

Except as expressly provided otherwise herein, all Products shall be prepared (cleaned, preserved, etc.) and packed for shipment in a manner acceptable to Buyer pursuant to Document D37520-1, -1 A, & -1 B, “Supplier’s Part Protection Guide,” to (i) comply with carrier regulations and (ii) prevent damage or deterioration during handling, shipment and outdoor storage at destination for up to ninety (90) days. Packaging design shall be suitable for, and consistent with, the requirements and limitations of the transportation mode specified by Buyer. Buyer specifically reserves the right, at Buyer’s discretion; to direct air shipment from the delivery point specified in SBP Section 3.4.2 and Seller shall maintain a capability (where reasonably practicable) for meeting this requirement. Seller shall submit two (2) copies of its proposed preparation procedure and packaging design to Buyer for approval prior to the first Product delivery, and shall prepare and package each Product in accordance with the procedure and design approved by Buyer. Notwithstanding any Buyer approval of Seller’s packaging design, Seller shall be solely liable for the manufacture of such packaging. Any package (or unitized group of packages) weighing in excess of forty (40) pounds or otherwise not suited to manual handling shall be provided with skids to permit use of mechanical handling equipment.

Product packaging shall be in accordance with document D6-81628, “Shipping Label, Barcoded Preparation and Placement”, which is incorporated herein by reference.

12.6.3.    Packaging - Spares

The prices shown in SBP Attachment 7 include all packaging costs. Seller shall package Product in accordance with the applicable requirements set forth in 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 Buyer. Upon Buyer’s request, Seller shall provide discrete packaging costs.

Seller shall package Products in accordance with ATA 300. In addition, all repairable (SPC 2) parts shipped as spares must utilize ATA 300 Category 2 or better containers. When requested, Seller shall make available for sale specially designed shipping containers for major components, as directed by Buyer. Buyer reserves the right to approve the Seller’s container design prior to spares shipments.

12.6.4.    Consolidated Shipments and Markings

All shipments of Products (excluding POA, AOG and other Spare Parts), which are forwarded on one day via one routing, shall be consolidated in accordance with Buyer’s instructions. POA, AOG and other Spare Parts shall be packaged separately. Each container shall be consecutively numbered and marked with the relevant Order number and the part number of each enclosed Product. Container and Order numbers shall be indicated on the appropriate bill of lading. Each unit container (individual part box or other innermost package), each

intermediate container and each shipping container (shipping box, crate or other outermost package) in each shipment shall be marked in English in accordance with Buyer’s written instructions. For deliveries originating outside the United States, Seller shall identify any Buyer-supplied items and any items purchased from the United States on the packing sheets enclosed in, or attached to, any container.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.6.5.    Transportation Devices

All shipping or handling fixtures necessary for the handling, transportation and loading of Products prior to installation of the Product at Buyer including but not limited to those shipping or handling fixtures for transportation via air or surface carrier, off loading from the air or surface carrier or handling, and shipping or handling fixtures for use at Buyer’s facility (“Transportation Devices”) shall be provided by Seller at no cost or expense to Buyer. Seller shall plan, design, manufacture or procure, and test any Transportation Devices subject to Buyer approval in accordance with the provisions of Document D33200,”Supplier Tooling Document.”

12.6.6.    Disposable Shipping Fixtures

Seller shall design, manufacture or procure, and test disposable shipping fixtures, as requested by Buyer, to support Orders. The requirements for such items shall be defined and identified by Buyer. The design of any disposable shipping fixture shall be approved by Buyer and conform to the standards and requirements of the applicable documents referred to in SBP Section 2.3.

12.6.7.    Packing Sheet and Test Reports

The No. 1 shipping container in each shipment shall contain one (1) copy in English of (i) a packing sheet listing the contents of the entire shipment in accordance with Buyer’s written instructions and (ii) any test reports required by the specifications applicable to the Products being shipped.

For Non-United States shipments, prior to exportation of any Product, one (1) copy of the required customs invoice shall be enclosed in a waterproof envelope or wrapper, clearly marked “Customs Invoice,” securely attached to the outside of the No. 1 shipping container of each shipment. Each customs invoice shall contain all of the information specified in SBP Section 27.1.

12.6.8.    Additional Copies

Additional copies of packing sheets, test reports and, if non-United States shipments, customs invoices shall be furnished to Buyer in accordance with Buyer’s written instructions.

12.6.9.    Price Inclusive

Unless otherwise specified in this SBP, the Prices for Products stated in this SBP include the cost with respect to such Products of preparation, packaging, crating, shipping fixtures and containers, container marking, furnishing of packing sheets and test reports and delivery, in accordance with applicable documents referred to in SBP Section 2.3.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.7.                 Cycle Time Requirements

Buyer and Seller acknowledge that Buyer is committed to reduce Cycle Time. Seller agrees to support Buyer in its commitment and to take all necessary actions to support Cycle Time requirements as specified by Buyer to support the Program Airplane. Upon Buyer’s request Seller shall submit to Buyer a written plan describing how Seller shall comply with the Cycle Time schedules, as specified by Buyer.

12.8.                 Compatibility with Engineering, Business and Production Systems

Seller shall implement and maintain systems as required to ensure: i) compatibility with Buyer systems; and ii) Seller’s performance under this SBP, including, but not limited to, business, manufacturing and engineering systems as defined in accordance with applicable documents referred to in SBP Section 2.3 and SBP Section 12.1.4

12.9.                 Electronic Access, Communications and Data Exchange via Telecommunications

Any electronic communications and data exchange via telecommunications between the parties shall be pursuant to an electronic exchange agreement between the Parties. Provided, that any amendments to the Order, change authorizations and any other matter requiring written authorization shall be communicated in writing and not solely by electronic communication.

Any electronic access to Buyer by Seller shall be pursuant to an electronic access or similar agreement.

12.10.                 Program Manager

Seller shall assign a full-time program manager whose exclusive responsibility shall be to oversee and manage Seller’s performance hereunder. The assignment of such program manager shall be subject to Buyer’s prior approval of such person’s resume.

12.11.                 Subcontracting

During the term of this SBP, Seller agrees to work with Buyer to identify and implement opportunities to introduce into Seller’s subcontract base substantial changes in manufacturing procedures, manufacturing technology, process specifications, and alternate sourcing to lower cost subcontractors or suppliers. Seller and Buyer shall periodically review the implementation of these opportunities and evaluate the sharing of cost savings in accordance with SBP Section 7.6.

In addition to the provisions of GTA Section 28.1, “Subcontracting”, Buyer may at any time during the performance of this SBP, review and approve Seller’s make-or-buy plan and source selection for Products, items and Tooling considered critical by Buyer because of process requirements, manufacturing complexity provided that any subcontract by Seller for the procurement of goods or services in excess of $10 million U.S. Dollars from any source shall be subject to Buyer’s priorwritten approval. Buyer’s approval shall not be unreasonably withheld. Seller shall in a timely manner submit to Buyer its proposed make-or-buy plan and proposed source selection before awarding any subcontract or purchase order with respect to any Products, items or Tooling. Buyer shall have the right to determine whether the proposed subcontractors or suppliers are qualified to manufacture Products and Tooling in accordance with Buyer processes; provided, however, that Seller may accompany Buyer when Buyer is investigating the qualifications of proposed subcontractors or suppliers. Approval or disapproval by Buyer of Seller’s make-or-buy plan or source selection and any action taken by Buyer in connection with the qualification of subcontractors or suppliers shall not be construed as relieving Seller of any of its obligations under this SBP.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.12.    International Cooperation

12.12.1.    Market Access and Sales Support

Seller agrees to work with Buyer to develop a lean global supply stream through application of shared strategies and tactics which support market access, and international business strategy. Buyer and Seller agree to work together to identify countries where Seller may subcontract in support of Buyer’s market access and international business strategy. With respect to work covered by this SBP, and if directed by Buyer, Seller shall procure from subcontractors or suppliers, in countries selected by Buyer, goods and services having a value of not more than twenty five percent (25%) of the total Shipset Price of all undelivered Shipsets as of the date of such notice. Such direction shall be at Buyer’s sole option and may occur at any time during the performance of this SBP. Although not required to do so, Seller may satisfy such requirement through purchases not related to this SBP. Seller shall document on SBP Attachment 12 all offers to contract and executed contracts with such subcontractors or suppliers including the dollars contracted. Seller shall provide to Buyer with an updated copy of SBP Attachment 12 for the six-month periods ending June 30 and December 31 of each year. If Seller is directed by Buyer to subcontract any part of its Statement of Works and Seller anticipates an increase to the Price of the Order as a result of such direction, Seller shall immediately notify Buyer in writing. If there is a cost impact, Buyer shall respond within thirty (30) days on whether Seller is to proceed.

12.12.2.    Offset Assistance

Seller shall use its best reasonable efforts to cooperate with Buyer in the fulfillment of any non- United States offset program obligation that Buyer may have accepted as a condition of the sale of a Buyer product. In the event that Seller is either directed by Buyer, 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, Buyer 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 Buyer receives such credits. Seller shall document on SBP Attachment 12 all offers to contract and executed contracts with such subcontractors or suppliers including the dollars contracted. Seller shall provide to Buyer with an updated copy of SBP Attachment 12 for the six-month periods ending June 30 and December 31 of each year. The reports shall be submitted on the next 1st of August and the 1st of February respectively. If Seller is directed by Buyer to subcontract any part of its Product(s) to a country in which Buyer has an offset obligation, an equitable price adjustment, increase or decrease, for Seller’s costs and expenses shall be considered by Buyer.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.12.3.    RESERVED

12.13.    Supply Chain Integration

12.13.1.    Buyer Furnished Material/Seller Banked Material

Material, including but not limited to raw material, standards, detail components and assemblies, furnished to Seller by Buyer (“Buyer Furnished Material” or “Seller Banked Material”) shall be administered in accordance with a Supplier Banked Material Agreement (SBMA) as listed in SBP Section 12.1 “Supporting Documentation”.

Seller shall provide Buyer with required on-dock dates for all such material. Seller’s notice shall provide Buyer with sufficient time to acquire the material.

12.13.2.    Procurement From Buyer or Its Service Providers

Buyer may at any time identify products, to be incorporated into Seller’s Products, that Seller shall procure from Buyer (or its designated service provider who shall act on behalf of Buyer). Seller shall procure such products when directed by Buyer. If Seller is directed by Buyer to procure such products and Seller anticipates an increase to the Price of the Order as a result of such direction, Seller shall immediately notify Buyer in writing. If there is a cost impact, Buyer shall respond within thirty (30) days on whether Seller is to proceed.

12.13.2.1.    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 16) necessary to support any Order issued pursuant to this SBP. From time to time, Buyer 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 Buyer. 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”. Buyer shall advise Seller of any designated service provider to be used at the time the Order is issued. Upon request by Buyer, Seller must provide to Buyer documentation (e.g., packing slips, invoices) showing Seller’s full compliance with the obligations under this SBP Section. If requested by Buyer or its designated service provider, Seller will provide an annual forecast of demand for the applicable commodity

12.13.3.    Third Party Pricing

Buyer may at any time identify products within Seller’s Products, for which Buyer or Boeing has established a contract that Seller may purchase directly from Buyer or Boeing’s subcontractor under the terms of a “Third Party Price Contract”. Pricing for products under a Third Party Price Contract is only available for 787 usage. Seller is free to negotiate and enter into contracts at lower prices, with this subcontractor or another company.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.13.4.    Agency

From time to time, Buyer may require Seller to act as Buyer or Boeing’s agent with respect to certain contracts Buyer or Boeing has with other subcontractors or suppliers. Details of this agency agreement are to be defined and documented.

Buyer shall make no additional payment to Seller for acting as Buyer or Boeing’s agent.

12.13.5.    Acceptance of Assignment, Novation, or Agency for Products within Seller’s Work Statement

Buyer may at any time identify raw materials and finished parts, used in the manufacture of Seller’s Products, for which Buyer has subcontracted with other subcontractors or suppliers. Buyer may at any time, assign or novate to Seller all or part of Buyer’s sub-contracts with such subcontractors or suppliers or designate Seller as Buyer’s agent. Seller shall accept any such assignment, novation or agency when requested by Buyer. Buyer shall make no additional payment to Seller for such assignment, novation or acting as Buyer’s agent. Unless otherwise specified, Seller is responsible for all Nonrecurring and Recurring Work required as described in the Order. This SBP Section shall also apply in the event Buyer transfers work statement from Buyer to Seller.

12.13.6.    Participation

12.13.6.1.    Other Buyer Entities

Seller agrees that any Buyer division or Buyer subsidiary 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 Buyer on a confidential basis to Buyer entities wishing to invoke this SBP Section 12.13.6.1. Seller shall notify the Buyer Procurement Representative named in the Administrative Agreement of Buyer Entities not specifically referenced herein who frequently use this SBP.

12.13.6.2.    Buyer Subcontractors/Suppliers

Seller agrees that any subcontractor or supplier (hereinafter referred to as “Buyer Subcontractor”) performing work for a Buyer 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 Buyer Subcontractor for its use in its contracts with Buyer at the prices set forth herein or at a price that reflects the pricing methodology used under this SBP provided such Buyer subcontractor commits to key contract elements established by this SBP. For purposes of this Section 12.13.6.2, key contract elements may include payment terms, commitment to buy and demand forecast. Buyer assumes no obligation, including payment obligation, with respect to such independent contract. Seller agrees that the prices set forth herein may be disclosed by Buyer on a confidential basis to any Buyer Subcontractor wishing to invoke this SBP Section 12.13.6.2. Seller may request written verification from the Buyer Subcontractor that the Products ordered pursuant to the authority of this SBP support Buyer requirements. Seller shall periodically inform the Buyer Procurement Representative of each such request invoking this participation right.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.13.6.3.    Notification of Contract

In the event a purchaser known by Seller to be a Buyer Entity or Buyer 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.

12.13.6.4.    Notification of Price Reductions

If Seller is awarded an additional order or contract by another Buyer Entity that results in any price less than that established under this SBP, Seller agrees to notify the Buyer Procurement Representative immediately of said price reductions and shall extend all such price reductions to this SBP.

12.14.    Surplus Products

12.14.1.    Return of Surplus Products

Buyer shall be entitled to return to Seller, at Buyer’s expense, any Product that has been delivered to Buyer in accordance with this SBP and that is surplus to Buyer’s then-current requirements (including, without limitation, any Products returned to Buyer by any Customer), provided that such Product is in a current production configuration or can be, in Buyer’s determination, economically changed to such a configuration. On receipt of any such Product, Seller shall credit Buyer’s account with eighty percent (80%) of the most recent catalog Price for such Product as set forth in SBP Attachment 7. If instructed by Buyer, Seller shall rework any returned Product to put such Product in a current configuration. Such rework shall be considered Miscellaneous Work and shall be priced as mutually agreed between the Parties.

12.14.2.    Use of Surplus Products

In its sole discretion, Buyer may, upon providing notice to Seller within 4 months to the scheduled delivery date for any Production Article, elect to use any Product in inventory or any Product returned to Buyer by any Customer in the place of such Production Article. Buyer’s

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

notice shall include the cumulative line number of the Program Airplane or Derivative on which Buyer intends to incorporate such Product returned by such Customer. Seller shall not deliver such Production Article to Buyer and shall not invoice Buyer for the Price of such undelivered Production Article.

12.15.    Life Cycle Product Team

12.15.1.    Purpose

It is the objective of Buyer to utilize Integrated Product Teams. LCPT personnel located at Buyer’s facilities in accordance with this SBP shall conduct their respective activities concurrently in a team environment to assist Buyer in improving producibility, reliability and maintainability of the Program Airplane. Notwithstanding Seller’s participation in the Integrated Product Team, Buyer shall have the right to make any and all determinations with respect to the design of the Section 41 of the 787 Airplane and any Derivative.

12.15.2.    Work Schedule

Except for sickness and other unavoidable absence, all personnel assigned to the LCPT by Seller pursuant to this SBP Section 12.15, shall be available during the customary work shift at the place designated by Buyer eight (8) working hours per day, Monday through Friday (except for identified Buyer holidays and such vacation periods as Buyer may reasonably permit) and shall work all overtime hours as Buyer may reasonably request.

12.15.3.    Equipment and Supplies

At Buyer’s option it shall furnish certain office equipment (e.g. desks, electronic transmissions, network access) and office supplies to Seller’s LCPT personnel. Buyer shall not provide personal property (such as computing equipment, software or drafting equipment and calculators) necessary for the performance by Seller’s LCPT personnel. Seller shall provide all computing equipment and software required to support its LCPT personnel while located at Buyer facilities.

Buyer shall not be responsible for loss or damage to such personal property.

12.15.4.    Employment Status

Seller’s LCPT personnel shall at all times remain employees of Seller and not employees of Buyer. Seller shall be responsible for all wages, salaries and other amounts due Seller’s LCPT personnel and shall be responsible for all reports, requirements and obligations respecting them under local, state or federal laws of the United States, or the laws of any foreign country, including but not limited to social security, income tax, unemployment compensation, workers’ compensation and any other local, state or federal taxes of the United States or the taxes of any foreign country.

12.15.5.    Team Leader

Seller shall designate one of its LCPT personnel “Team Leader.” Administrative matters between Buyer and Seller arising during the performance of this SBP shall be managed by the Team Leader.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

12.15.6.    Discipline

Discipline of Seller’s LCPT personnel shall be Seller’s responsibility. While on Buyer premises, Seller’s LCPT personnel shall obey all Buyer rules.

12.15.7.    Removal of Personnel

Upon receipt of a written request from Buyer for the replacement of any person assigned to the LCPT by Seller pursuant to this SBP Section 12.15, Seller shall remove such person from the LCPT. As soon thereafter as reasonably possible, Seller shall promptly furnish a satisfactory replacement or alternate arrangement.

12.15.8.    Qualifications

Buyer shall have the right to review the qualifications of all personnel proposed by Seller for assignment to the LCPT. Seller shall forward professional resumes of such personnel to Buyer for review and approval by Buyer prior to assignment of such personnel.

13.0           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 referenced documents), then

B. General Terms Agreement (“GTA”) (excluding all documents listed elsewhere in this listing), then

C. Purchase contract, if any, then

D. Order (excluding all documents listed elsewhere on this listing), then

E. All documents incorporated by reference in SBP Section 12.1 “Supporting Documentation”, and 16.0 “Product Support and Assurance”, of this SBP, then

F. Any other Buyer generated exhibits, attachments, forms, flysheets, codes or documents that the Parties agree shall be part of this SBP, then

G. Engineering Drawing by Part Number and Supplier Specification Plan (SSP), and, if applicable Supplier Module Part List (SMPL) and Supplier Custom Module List (SCML), then

H. Any Seller generated documents that the Parties agree shall be part of this SBP.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

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 Buyer in writing any inconsistencies in these documents, even if the inconsistency is resolvable using the above rules.

14.0           787 PROGRAM AUTHORIZATION AND CONTRACT AWARD

The Seller shall perform all contract requirements, including protection of the 787 Program schedule, and be responsible for funding and all Seller costs and expenditures throughout the period of this SBP for the 787 Program Airplane.

15.0           APPLICABLE LAW

This contract shall be governed by the laws of the State of Kansas. No consideration shall be given to Kansas 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 the 18th Judicial District, Sedgwick County, Kansas, and the federal courts of the State of Kansas 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.

16.0           PRODUCT SUPPORT AND ASSURANCE

16.1.         Warranty

Seller acknowledges that Buyer and Customers must be able to rely on each Product performing as specified and that Seller shall provide all required support. Accordingly, the following provisions, including documents, if any, set forth below are incorporated herein and made a part hereof:

Product Support and Assurance Document D6-83069-Spirit,

Buyer 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. Buyer, 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.

16.2.         Term of Support

Seller agrees to support the Product as long as any aircraft using or supported by the Product remains in service.

17.0           ADMINISTRATIVE MATTERS

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

17.1.         Administrative Authority

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 Buyer, authority to grant approval or consent is limited to Buyer’s Procurement Representative as provided in the Administrative Agreement Attachment 20.

18.0           OBLIGATION TO PURCHASE AND SELL

Buyer and Seller agree that in consideration of the prices set forth under SBP Attachment 1, Buyer shall issue Orders for Products from time to time to Seller for all of Buyer’s requirements. Such Products shall be shipped at any scheduled rate of delivery, as determined by Buyer, and Seller shall sell to Buyer Buyer’s requirements of such Products, provided that, without limitation on Buyer’s right to determine its requirements, Buyer shall not be obligated to issue any Orders for any given Product if:

A. Any of Buyer’s customers specifies an alternate product;

B. Such Product is, in Buyer’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. Buyer gives reasonable notice to Seller of a change in any of Buyer’s aircraft which shall result in Buyer no longer requiring such Product for such aircraft;

D. Seller has materially defaulted in any of its obligations under any Order, whether or not Buyer has issued a notice of default to Seller pursuant to GTA Section 13.0; “Cancellation for Default”,

E. Buyer reasonably determines that Seller cannot support Buyer’s requirements for Products in the amounts and within the delivery schedules Buyer requires; or

F. Buyer 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 Buyer and which component, assembly or other product Buyer has resourced to a third party Seller; or,

G. For the Products specifically designated as applicable to this clause in SBP Attachment 1, Buyer gives at least ninety (90) days notice to Seller of Buyer’s decision to manufacture the Products itself rather than purchase the Products from Seller.

For purposes of this SBP Section 18.0, Buyer is defined as those organizations, divisions, groups or entities set forth specifically in SBP Attachment 1.

Seller represents and warrants to Buyer 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.

19.0           STRATEGIC ALIGNMENT

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

Buyer may assign this SBP or any Order, in whole or in part, to a third party who is under an obligation to supply Buyer with components, kits, assemblies or systems that require the Seller’s Product. At the time of such assignment, Seller releases Buyer from any and all claims, demands and rights, which Seller has or may thereafter have against Buyer in connection with such assigned Agreement or Order. Buyer shall require that its assignee expressly assume all obligations and perform all duties owed to Seller under the assigned Agreement or Order. Promptly after the assignment, Buyer shall notify Seller of the assignment and its effective date.

20.0           OWNERSHIP OF INTELLECTUAL PROPERTY

20.1.         787 Product Proprietary Information

Notwithstanding any other provision in this Agreement to the contrary, 787 Product Proprietary Information shall be deemed to be Background 787 Proprietary Information or Background Inventions of Spirit and/or Boeing and be delivered to Spirit or Boeing promptly upon request; provided, however, that all Background 787 Proprietary Information and Background Inventions of Seller, Joint 787 Activities Proprietary Information, Joint 787 Activities Inventions, Seller 787 Activities Proprietary Information and Seller 787 Activities Inventions that are contained in any 787 Product Proprietary Information, or from which any portion of any 787 Product Proprietary Information is derived, shall continue to be treated as Background 787 Proprietary Information and Background Inventions of Seller, Joint 787 Activities Proprietary Information, Joint 787 Activities Inventions, Seller 787 Activities Proprietary Information or Seller 787 Activities Inventions, respectively, and Seller shall retain all of its right, title and interest in and to such 787 Proprietary Information and Inventions under this Agreement, separate and apart from 787 Product Proprietary Information.

20.2.         Background 787 Proprietary Information and Inventions

Each Party shall retain all rights in its own Background 787 Proprietary Information and Background Inventions, which shall be subject to the following:

a. Each Party shall not disclose the other Party’s Background 787 Proprietary Information to any third party without the prior written consent of the other Party, which shall not be unreasonably withheld if such disclosure is in connection with the 787 Program and otherwise may be withheld in the other Party’s sole and absolute discretion. Any disclosure by either Party to any third party of the other Party’s Background 787 Proprietary Information also shall be subject to the previous execution by such third party of a written agreement (which shall be reasonably satisfactory to, and enforceable by, such other Party) to protect such Background 787 Proprietary Information under terms no less restrictive than those set forth herein.

b. Spirit agrees to grant and hereby grants Sellers a royalty free license to use Spirit Background 787 Proprietary Information and/or Spirit Background Inventions for work under the 787 Program.

c. Seller agrees to grant and hereby grants a royalty free license to Spirit and Boeing and a royalty free license on reasonable terms and conditions to any third party to use Seller Background 787 Proprietary Information or Seller Background Inventions for work under the 787 Program, subject in each case to government approval, if required.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

20.3.         Joint 787 Activity Proprietary Information and Inventions

All Joint 787 Activities Proprietary Information and Joint 787 Activities Inventions shall be jointly owned by the Parties and Boeing and shall be subject to the following:

a. Each Party may disclose any Joint 787 Activities Proprietary Information to any third party for work under the 787 Program; provided that the third party shall have entered into a written agreement (which shall be reasonably satisfactory to, and enforceable by, each of Boeing, Spirit and Seller) to protect such Joint 787 Activities Proprietary Information under terms no less restrictive than those set forth herein. Any other disclosure by either Party to any third party shall require the prior written consent of the other Party, which shall not be unreasonably withheld.

b. Each Party shall be free to use Joint 787 Activities Proprietary Information and Joint 787 Activities Inventions for work under (i) the 787 Program, (ii) any other aerospace programs of Spirit or Boeing (“Other Programs”). Any other use by either Party of Joint 787 Activities Proprietary Information or Joint 787 Activities Inventions shall require the prior written consent of the other Party, which may include a reasonable royalty, which license shall not be unreasonably withheld.

c. Spirit and Seller agree to grant any third party a royalty free license on reasonable terms and conditions to use Joint 787 Activities Proprietary Information and Joint 787 Activities Inventions for work under the 787 Program.

d. Any disclosure to or use by a third party of any Joint 787 Activities Proprietary Information or Joint 787 Activities Inventions for any Other Programs shall require a license from both Parties, which may include a reasonable royalty payable to Spirit and/or Seller. Approval by the Parties of any such license shall not be unreasonably withheld.

e. The Parties shall decide on a case-by-case basis which Party will take the lead role in the preparation, filing, prosecution and maintenance (including with respect to fee payments) of Joint 787 Activities Inventions. The costs associated with the preparation, filing, prosecution and maintenance of Joint 787 Activities Inventions shall be shared equally by the Parties. If either Party declines to share the costs associated with the preparation, filing, prosecution or maintenance of any Joint 787 Activities Invention in any country, the declining Party shall retain the right to use such Joint 787 Activities Invention in such country, but shall thereafter have no right to grant or approve licenses of such Joint 787 Activities Invention to third parties in such country.

20.4.         Seller 787 Activities Proprietary Information and Inventions

Seller 787 Activities Proprietary Information and Seller 787 Activities Inventions shall be owned by Seller and shall be subject to the following:

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

a. Sprit and/or Boeing may disclose any Seller 787 Activities Proprietary Information and Seller 787 Activities Inventions to any third party for work under the 787 Program; provided that the third party shall have entered into a written agreement (which shall be reasonably satisfactory to, and enforceable by, Seller) to protect such Seller 787 Activities Proprietary Information and Seller 787 Activities Inventions under terms no less restrictive than those set forth herein. Any other disclosure by Spirit Boeing to any third party shall require the prior written consent of Seller, which shall not be unreasonably withheld if such disclosure is in connection with any Other Program and otherwise may be withheld at Seller sole and absolute discretion.

b. Seller agrees to grant and hereby grants Spirit and Boeing a royalty free license to use Seller 787 Activities Proprietary Information and Seller 787 Activities Inventions for work under the 787 Program, subject to government approval, if required.

c. Any use by Spirit or Boeing of any Seller 787 Activities Proprietary Information or Seller 787 Activities Inventions for any Other Program shall be subject to a license from Seller (which shall be on reasonable terms and conditions and may include a reasonable royalty), and subject to government approval, if required. Approval by Seller of any such license shall not be unreasonably withheld.

d. Any other use by Spirit or Boeing of Seller 787 Activities Proprietary Information and Seller 787 Activities Inventions shall be subject to a license (which may include a reasonable royalty) from Seller which shall be at Seller’s sole and absolute discretion.

e. Seller agrees to grant any third party a royalty free license on reasonable terms and conditions to use any Seller 787 Activities Proprietary Information or Seller 787 Activities Inventions for work under the 787 Program, subject to government approval, if required.

f. Any use by a third party of any Seller 787 Activities Proprietary Information or Seller 787 Activities Inventions for any Other Program shall be subject to a license from Seller (which shall be on reasonable terms and conditions and may include a reasonable royalty), and subject to government approval, if required. Approval by Seller of any such license shall not be unreasonably withheld.

20.5.         Spirit 787 Activities Proprietary Information and Inventions

Spirit 787 Activities Proprietary Information and Spirit 787 Activities Inventions shall be owned by Spirit and/or Boeing and shall be subject to the following:

a. Seller may disclose any Spirit 787 Activities Proprietary Information and Spirit 787 Activities Inventions to any third party for work under the 787 Program; provided that the third party shall have entered into a written agreement (which shall be reasonably satisfactory to, and enforceable by, Spirit and/or Boeing) to protect such Spirit 787 Activities Proprietary Information and Spirit 787 Activities Inventions under terms no less restrictive than those set forth herein. Any other disclosure by Seller to any third party shall require the prior written consent of Spirit and/or Boeing, which shall not be unreasonably withheld if such disclosure is in connection with any Other Program, and otherwise may be withheld at Spirit and/or Boeing’s sole and absolute discretion.

b. Spirit agrees to grant and hereby grants Seller a royalty free license to use Spirit 787 Activities Proprietary Information and Spirit 787 Activities Inventions for work under the 787 Program.

c. Any other use by Seller of Spirit 787 Activities Proprietary Information and Spirit 787 Activities Inventions shall be subject to a license (which may include a reasonable royalty) from Spirit and/or Boeing, which shall be at Spirit’s and/or Boeing’s sole and absolute discretion.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

20.6.         Third Party Proprietary Information and Inventions

In case either Party discloses any proprietary information or invention of a third party to the other Party during the 787 Activities, such proprietary information or invention shall be treated as though it were the Background 787 Proprietary Information or Background Invention, as the case may be, of the disclosing Party and also shall be subject to all restrictions imposed by such third party of which the receiving Party has received written notice from the disclosing Party.

20.7.         Derivative Technology

Notwithstanding any other provision of this Agreement, all Derivative Technology (other than 787 Product Proprietary Information) shall be considered to be Joint 787 Activities Proprietary Information or Joint 787 Activities Inventions, as the case may be.

20.8.         Works of Authorship and Copyrights

Except as otherwise provided in the provision above entitled 787 Product Proprietary Information, all works of authorship (including, but not limited to, documents, drawings, software, software documentation, software tools, photographs, video tapes, sound recordings and images) created by or for Seller either alone or with others, constituting 787 Product Proprietary Information, together with all copyrights subsisting therein, will be the sole property of Boeing. To the extent permitted under United States copyright law, all such works will be works made for hire, with the copyrights therein vesting in Boeing. The copyrights in all other such works, including all of the exclusive rights therein, will be promptly transferred and formally assigned free of charge to Boeing.

20.9.         Pre-Existing Inventions and Works of Authorship

Seller grants to Boeing, Spirit, and to Boeing’s and Spirit’s subcontractors, Suppliers, and customers in connection with 787 products or work being performed for Boeing and/or Spirit, an irrevocable, nonexclusive, paid-up, worldwide license under any patents, copyrights, industrial designs and mask works (whether domestic or foreign) owned or controlled by SELLER at any time and existing prior to or during the term of this Agreement, but only to the extent that such patents or copyrights would otherwise interfere with Boeing’s, Spirit’s or their subcontractors’, Suppliers’, or customers’ use or enjoyment of Products or the work product, inventions, or works of authorship belonging to Boeing and/or Spirit under this Agreement.

20.10.      Hardware, Materials, and Services General Terms Agreement (HMSGTA) and Supplemental License Agreement (SLA) Requirement

In recognition of the Buyer Proprietary Information and Materials and other intellectual property (Buyer Intellectual Property) being utilized for this Program, and in consideration of the business roles contemplated for the Parties, Buyer and Seller agree that any sales directly to Buyer of Product manufactured by Seller shall not require execution of a Supplemental License Agreement (SLA) between Buyer and Seller. However, Seller agrees that prior to any manufacture for, use by, offer of sale or sale to any entity other than Buyer of Product or other product, equipment, or service which utilizes Buyer Intellectual Property, Seller shall be required to execute a Hardware Material Services General Terms Agreement (HMSGTA) and SLA between Buyer and Seller.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

21.0           SOFTWARE PROPRIETARY INFORMATION RIGHTS

Seller hereby grants to Buyer a perpetual, nonexclusive, paid-up, worldwide license to reproduce, distribute copies of, perform publicly, display publicly, and make Seller intended derivative works from software included in or provided with or for Products (Software) and related information and materials (Software Documentation) as reasonably required by Buyer in connection with (1) the testing, certification, use, sale, or support of a Product, or the manufacture, testing, certification, use, sale, or support of any aircraft including and/or utilizing a Product, or (2) the design or acquisition of hardware or software intended to interface with Software. The license granted to Buyer under this SBP Section 21 .0, also includes the right to grant sublicenses to Customers as reasonably required in connection with Customers’ operation, maintenance, overhaul, and modification of any aircraft including and/or utilizing Software. All copies and Seller intended derivative works made pursuant to the foregoing license or any sublicense to a Customer shall automatically become the property of Buyer or Customer, and Buyer agrees to preserve Seller’s copyright notice thereon to the extent that such a notice was included with the original Software and/or Software Documentation. Seller acknowledges that Buyer is the owner of all copies of Software and Software Documentation provided to or made by Buyer or Customers pursuant to this SBP, and Seller hereby authorizes Buyer and Customers to dispose of, and to authorize the disposal of, the possession of any and all such copies by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending.

Seller may propose the use in Product of third party software which includes unique requirements requiring one or more exceptions to the General Terms Agreement, this SBP or related documents. One such example is commercial off-the-shelf (“COTS”) software requiring transfer of end user license agreements (“EULA’s”). Buyer shall grant Seller the right to incorporate such third party software into Product on a case-by-case basis by prior, written agreement. Under no event shall Buyer or Customers be required to execute EULA’s or to engage in any direct dealings with third party software owners or licensors.

Buyer shall not use the license granted in this SBP Section 21 for the purpose of competing with Seller in aftermarket business opportunities.

22.0           INFRINGEMENT

Seller shall indemnify, defend, and hold harmless Buyer 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 Buyer or its Customers. Buyer and/or its Customers shall duly notify Seller of any such claim, suit or action; and Seller shall, at its own expense, fully defend such claim, suit or action on behalf of Buyer and/or its Customers. Seller shall have no obligation under this SBP Section 22.0 with regard to any infringement arising from: (i) Seller’s compliance with formal specifications issued by Buyer 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 22.0 only, the term Customer shall not include the United States government; and the term Buyer shall include The Buyer Company and all Buyer subsidiaries and all officers, agents, and employees of Buyer or any Buyer subsidiary.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

23.0           DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS

Seller grants to Buyer a license under Seller’s copyrights for the purpose of converting Seller’s Proprietary Information 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 Buyer’s computer data base system prior to receipt of such notice of termination or cancellation.

24.0           RESERVED

25.0           PERFORMANCE GUARANTEES

Seller acknowledges the importance to Buyer of meeting guaranteed performance requirements to Customers. Seller’s performance to requirements as set forth in this SBP is crucial to Buyer’s meeting its guarantees. Therefore, each Product shall strictly conform to the applicable performance requirements. If a Product fails to conform to such requirement, Buyer may reject delivery of any such Product and take any other action as set forth in GTA Section 8.3, “Buyer’s Inspection and Rejection”, or any other remedy available to Buyer under this agreement, any Order and applicable law. Notwithstanding the above, should Buyer be required to or elect to make a concession to a Customer related to the non-performance of Seller’s Products, Seller shall compensate Buyer for its proportionate share of the concession.

26.0           INSURANCE FOR ON-SITE SUPPORT

26.1.         Indemnification Negligence of Seller or subcontractor

Seller shall indemnify and hold harmless The Buyer’s Company, its subsidiaries, and their directors, officers, employees, and agents from and against all actions, causes of action, liabilities, claims, suits, judgments, liens, awards, and damages, of any kind and nature whatsoever for property damage, personal injury, or death (including without limitation injury to or death of employees of Seller or any subcontractor thereof) and expenses, costs of litigation and counsel fees related thereto or incident to establishing the right to indemnification, arising out of or in any way related to the contract, the performance thereof by Seller or any subcontractor thereof or other third parties, including without limitation the provision of services, personnel, facilities, equipment, support, supervision, or review. The foregoing indemnity shall apply only to the extent of the negligence of Seller, any subcontractor thereof, or their respective employees. In no event shall Seller’s obligations hereunder be limited to the extent of any insurance available to or provided by the Seller or any subcontractor thereof. Seller expressly waives any immunity under industrial insurance, whether arising out of statute or source, to the extent of the indemnity set forth in this paragraph.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

26.2.         Commercial General Liability

If Seller or any subcontractor thereof shall be performing work on Buyer premises, Seller shall carry and maintain, and ensure that all subcontractors or Sellers thereof carry and maintain, throughout the period when work is performed and until final acceptance by Buyer, Commercial General Liability insurance with available limits of not less than One Million Dollars ($1,000,000) per occurrence for bodily injury and property damage combined. Such insurance shall contain coverage for all premises and operations, broad form property damage, contractual liability (including, without limitation,that specifically assumed under SBP Section 26.1) and products and completed operations insurance.

26.3.         Automobile Liability

If licensed vehicles shall be used in connection with the performance of the work, Seller shall carry and maintain, and ensure that any subcontractor thereof who uses a licensed vehicle in connection with the performance of the work carries and maintains, throughout the period when work is performed and until final acceptance by Buyer, Business Automobile Liability insurance covering all vehicles, whether owned, hired, rented, borrowed, or otherwise, with available limits of not less than One Million Dollars ($1,000,000) per occurrence combined single limit for bodily injury and property damage.

26.4.         Workers’ Compensation and Employer’s Liability

Throughout the period when work is performed and until final acceptance by Buyer, Seller shall, and ensure that any subcontractor thereof shall, cover or maintain insurance in accordance with the applicable laws relating to Workers’ Compensation with respect to all of their respective employees working on or about Buyer premises. If Buyer is required by any applicable law to pay any Workers’ Compensation premiums with respect to an employee of Seller or any subcontractor, Seller shall reimburse Buyer for such payment. In addition, Seller shall, and ensure that any subcontractor thereof shall, carry and maintain Employer’s Liability Insurance with limits of not less than One Million Dollars ($1,000,000) for bodily injury by accident or disease.

26.5.          Certificates of Insurance

Prior to commencement of the work Seller shall provide for Buyer’s review and approval Certificates of Insurance reflecting full compliance with the requirements set forth in SBP Section 26.2 “Commercial General Liability”, SBP Section 26.3 “Automobile Liability” and, SBP Section 26.4 “Workers’ Compensation and Employer’s Liability”“. Such certificates shall be kept current and in compliance throughout the period when work is being performed and until final acceptance by Buyer, and shall provide for thirty (30) days advance written notice to Buyer in the event of cancellation. Failure of Seller or any subcontractor thereof to furnish Certificates of Insurance, or to procure and maintain the insurance required herein or failure of Buyer to request such certificates, endorsements or other proof of coverage shall not constitute a waiver of the respective Seller’s or subcontractor’s obligations hereunder.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

26.6.         Self-Assumption

Any self-insured retention, deductibles, and exclusions in coverage in the policies required under this SBP Section 26.0 shall be assumed by, for the account of, and at the sole risk of Seller or the subcontractor, which provides the insurance, and to the extent applicable shall be paid by such Seller or subcontractor. In no event shall the liability of Seller or any subcontractor thereof be limited to the extent of any of the minimum limits of insurance required herein.

26.7.         Protection of Property

Seller assumes, and shall ensure that all subcontractors or suppliers thereof and their respective employees assume, the risk of loss or destruction of or damage to any property of such parties whether owned, hired, rented, borrowed, or otherwise. Seller waives, and shall ensure that any subcontractor thereof and their respective employees waive, all rights of recovery against Buyer, its subsidiaries, and their respective directors, officers, employees, and agents for any such loss or destruction of or damage to any property of Seller, any subcontractor, or their respective employees.

At all times Seller shall, and ensure that any subcontractor thereof shall, use suitable precautions to prevent damage to Buyer property. If any such property is damaged by the fault or negligence of Seller or any subcontractor thereof, Seller shall, at no cost to Buyer, promptly and equitably reimburse Buyer for such damage, or repair or otherwise make good such property to Buyer’s satisfaction. If Seller fails to do so, Buyer may do so and recover from Seller the cost thereof.

27.0           U. S. CUSTOMS INVOICE REQUIREMENTS

27.1.         U.S. Customs Requirements

The U.S. Customs Service requires that shipments incoming to the United States have commercial invoices that are accurate and contain complete information which enables both Customs and Buyer to examine, release, appraise and classify imported merchandise. (U.S. Customs Directive 3590-01, issued May 1, 1990)

Customs Regulations (Title 19, Code of Federal Regulations, U.S. Customs Regulations) require a commercial invoice accompany the shipment with a detailed description of the imported merchandise that is sufficient to allow classification of the item(s) in accordance with the Harmonized Tariff Schedule of the United States.

Seller’s commercial invoices must include, but are not limited to, the following information:

A. Port of United States Entry where merchandise is destined

B. Name and address of Seller

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

C. Name and address of Shipper (if not the Seller)

D. Name and address of Buyer

E. Name and address of Ultimate Consignee (if not the Buyer)

F. Related Party (to Buyer)? Yes or No

G. Detailed description of the merchandise being shipped (Generic descriptions and/or stock keeping unit (sku) numbers are not sufficient to classify goods; do not use abbreviations or generic nouns):

1. Buyer part number(s) (can use invoice continuation sheets to list all part numbers)

2. Quantities in metric weights and measures

3. Show pieces, net and gross weights

4. Show quantities of the packages in which merchandise is packed

5. Textiles must be specified using net and gross weights in addition to length, width and total square meters, fabric content, type of construction (hand hooked, woven, knotted, tufted, or of the same construction by power driven loom)

6. For the import of bearings, the Seller shall provide the exact type of bearing (ball, roller, spherical, thrust, etc.), inside and outside diameters, and the manufacturer’s full name and address. (Anti-dumping duties may be applicable)

7. When classification determination requires a unit of measure such as bottle size, plate size, grade, quality, etc., this information must appear on the invoice

H. Buyer’s purchase order number(s) and purchase order line item number(s) when applicable

I. Price actually paid or payable plus the following statutory additions

J. Statutory additions to value (when not included in purchase price) are:

1. Commissions (selling commissions incurred by buyer)

2. Royalties (fee buyer required to pay as condition of sale)

3. Assists (when supplied directly or indirectly by buyer free of charge or at reduced cost, when used in production of imported goods, plus transportation cost to send materials to supplier)

4. Assists types are components, parts, materials; engineering and design work (when done outside the U. S.); dies, molds, tools

5. Packing (packing costs incurred by buyer)

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

6. Proceeds of Sale (additional payments which accrue to seller)

7. Nonrecurring charges such as expedite fees, and transportation costs (depending on INCOTERM)

8. All merchandise being imported ‘free of charge’ must have an accurate value for U. S. Customs clearance

K. For repaired or modified items, the invoice must include the cost of repair or modification, and the value of the item after being repaired or modified, in U. S. Dollars. Note: Where export license requirements mandate that the currency of the exporting country be stated on the invoice, it must be stated “for (export country) customs purposes, value in (local currency)”

L. Kind of currency (such as U. S. Dollars, Japanese Yen, etc.)

M. Country of Origin (means the country of manufacture for each item) Complete name and address of the manufacturer (may differ from seller or buyer)

N. Discounts - Set forth in detail per item, all discounts from list or other base price, which has been or may be allowed in fixing each purchase price or value

O. All invoices must be in English

27.2.         The Buyer Company Requirements

In addition to the US Customs Requirements called out in Section 27.1, the following are Buyer requirements for commercial invoices:

A. Terms of Sale (INCOTERMS) are not required, but strongly advised

B. Harmonized Tariff Schedule Number(s) up to first six (6) digits of classification

C. U.S. Import or Export License number, if applicable

D. Serial numbers and/or Unit numbers of the merchandise being imported into the United States

E. Invoice number and ship date

F. Rebates, drawbacks and bounties allowed upon export from non-U.S. location

G. The material component(s) of the imported merchandise (A majority of items shall be classified under their specific Harmonized Tariff Schedule number according to their use, but other items are classified by the materials from which they are manufactured.)

28.0           DELIVERY - TITLE AND RISK OF LOSS

28.1.         Title and Risk of Loss

Title to and risk of any loss of, or damage to, all Products (except for Common-Use Tooling) shall pass from Seller to Buyer upon delivery as set forth in SBP Section 3.4.2 (Delivery Point and Schedule), except for loss or damage resulting from Seller’s fault or negligence or failure to comply with the terms of this SBP. Passing of title on delivery shall not constitute final acceptance of such Products by Buyer.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

29.0           EXAMINATION OF RECORDS

29.1.         Reports

Periodically, upon Buyer’s written request, Seller shall prepare and submit to Buyer reports on the information contained in the records maintained by Seller and subject to Buyer audit pursuant to GTA Section 9.0, “Examination of Records”. Such reports shall set forth in detail costs and expenses by account category, month, work order and quantity. Seller shall provide any explanations of any such report as reasonably requested by Buyer.

30.0           CUSTOMER CONTACT

Buyer is responsible for all contact with Customers regarding the Program, Program Airplanes and Derivatives and any other Boeing model aircraft programs. Seller shall not make any contact with actual or potential Customers on the subject of the Program, Program Airplanes or Derivatives without Buyer’s prior written consent; and Seller shall respond to any inquiry from actual or potential Customers regarding the Program, Program Airplanes or Derivatives by requesting that the inquiry be directed to Buyer. Seller shall, concurrently with such response, advise Buyer of such inquiry.

31.0           EVENTS OF DEFAULT AND REMEDIES

31.1.         Additional Event of Default

In addition to those events of Default specified in GTA Section 13.1, “Events of Default”, the occurrence of the following event shall also constitute an Event of Default for purposes of GTA Section 13.1:

Any Designated Event (as hereinafter defined) with respect to Seller. A Designated Event shall be deemed to have occurred at such time as a “person” or “group” (within the meaning of SBP Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “Beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of more than fifty percent (50%) of the then outstanding stock entitled to vote for the election of directors of Seller (“Voting Stock”).

31.2.         Interest on Overdue Amounts

If Seller shall fail to pay when and as due any amount payable hereunder, such amount shall bear interest, payable on demand, at the per annum rate announced by Citibank, New York, New York,

as its prime rate on the last working day of the month in which such amount becomes due. This payment is in addition to and not a substitute for any other rights Buyer has under law or equity, including but not limited to defaulting Seller.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

32.0           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 “Seller’s 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 “Buyer’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”, SBP Sections 3.5 “Product Support and Miscellaneous Work”,, SBP Section 15.0 “Applicable Law”, SBP Section 16.0 “Product Support and Assurance”, SBP Section 20.0 “Intellectual Property”, SBP Section 22.0 “Infringement”, SBP Section 26.0 “Insurance for On-Site Support” (if applicable), this SBP Section 32.0 “Survival”, and 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.

33.0           INVENTORY AT CONTRACT COMPLETION

Subsequent to Seller’s last delivery of Product(s), which contain, convey, embody or were manufactured in accordance with or by reference to Buyer’s Proprietary Information or 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 Buyer for purchase. In the event Buyer, 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. Buyer 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 Buyer. Failure to comply with these requirements shall be a material breach and grounds for default pursuant to GTA Section 13.0, “Cancellation for Default”. Nothing in this SBP Section 33.0 prohibits Seller from making legal sales directly to the United States of America government.

34.0           SELLER ASSISTANCE

In accordance with GTA Section 12.2, “Termination Instruction”, and GTA Section 13.2, “Remedies”, Buyer may, by written notice to Seller, require Seller to transfer to Buyer or to Buyer’s designee title (to the extent not previously transferred) to any or all (i) Contractor-Use Tooling, Common-Use Tooling and other Tooling, (ii) Transportation Devices, (iii) Buyer Furnished Material, (iv) 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 or suppliers, and (v) Proprietary Information of Buyer, including, without limitation, planning data, Product Definition, Drawings and other Proprietary Information relating to the design, production, maintenance, repair and use of all Products and Contractor-Use Tooling and Common-Use Tooling, in the possession or under the effective control of Seller or any of its subcontractors or suppliers, in each case free and clear of all liens, claims or other rights of any Person. Seller shall immediately transfer and deliver, and cause each of its subcontractors or suppliers to transfer and deliver, any or all of the aforesaid items in accordance with any written notice or notices given hereunder by Buyer to Seller, notwithstanding any event or circumstance whatsoever, including, without limitation, any claim or dispute Seller may assert in connection with a termination of this SBP or any payment for any such items. If Buyer shall require Seller to transfer and deliver to Buyer or Buyer’s designee any of the aforesaid items, Seller shall cooperate with and shall assist Buyer in developing and implementing plans to transfer the production of Products and provision of services to Buyer, or to any other Person designated by Buyer, in an expeditious and orderly manner and shall take such other steps to assist Buyer as Buyer may request in good faith, all for the purpose of maintaining, or attempting to maintain as nearly as may be possible, production of Program Airplanes and Derivatives in accordance with Buyer’s schedule of delivery of Program Airplanes and Derivatives to Customers.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

Buyer and Seller acknowledge that the Program, and Buyer’s ability to sell and deliver Program Airplanes and Derivatives to Customers, shall be substantially impaired if Seller delays, for any reason, its performance under this SBP Section 34.0. Buyer and Seller also acknowledge that Seller’s assistance hereunder in the event of a cancellation, in whole or in part, of this SBP shall be of fundamental significance to reduce incidental, consequential or other damages to Buyer. Consequently, Seller shall transfer and deliver to Buyer any or all of the aforesaid items notwithstanding any dispute or claim that Seller may have against Buyer. Seller shall not delay its performance under this SBP Section 34.0 by any action, including, without limitation, any judicial or other proceeding, or by any failure to act. Seller hereby authorizes Buyer or its representatives to enter upon its, or any of Seller’s subcontractors or suppliers (Seller shall obtain from its subcontractors or suppliers Buyer’s right to so enter and act), 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 Buyer, Seller shall promptly provide to Buyer 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 Buyer, which request may specify incremental or priority shipping of certain items. Seller shall, if instructed by Buyer, store or dispose of any or all of the aforesaid items in any reasonable manner requested by Buyer.

35.0           NONRECURRING WORK TRANSFER

In the event of default, program cancellation, expiration of this SBP or the termination of this SBP by mutual agreement of the Parties, Seller agrees to transfer to Buyer at no cost all Nonrecurring Work set forth in SBP Section 3.3 “Nonrecurring Work”.

36.0           DISPOSITION OF TOOLING

In the event Buyer exercises its rights under GTA Section 12.0, “Termination for Convenience”, GTA Section 13.0, “Cancellation for Default”, or SBP Section 34.0, “Seller Assistance”, Seller shall transfer to Buyer any and all Tooling free and clear of any and all liens, claims or rights of any third party.

37.0           RESTRICTIONS ON LOBBYING

37.1.         Applicability

SBP Section 37.0 applies to all Sellers, domestic and foreign if:

Seller’s Product incorporated into Spirit’s products are sold by Spirit’s customer, individually or incorporated into another product such as an Aircraft, to it’s customer who finances the purchase of the Product or product with a direct loan from the Export-Import Bank of the United States (“Direct Loan”), and the shipset price of the Product exceeds $100,000 U.S.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

37.2.         Certification

Spirit will notify Seller in writing if it believes the conditions of 37.1 are met and the below described certificate and disclosure form are required. If applicable, Spirit will also identify the Aircraft being financed.

Upon receipt of such notice, Seller will execute an “Anti-Lobbying Certificate” substantially in the form of Attachment 23 to this SBP and, if applicable, Standard Form-LLL, “Disclosure Form to Report Lobbying.” (a copy of the form can be found at http://www.ahrq.gov/downloads/pub/rfp010003/lobbying.pdf)

Seller will provide the executed certificate to the Spirit Procurement Agent. Also, Seller will forward to the Spirit Procurement Agent any originals of the Standard Form-LLL received by Seller from its subcontractors of any tier promptly upon Seller’s receipt.

37.3.         Flow Down

With respect to any Direct Loan, the substance of this SBP Section 37.0 shall apply to all of Seller’s suppliers of any tier who supply items with a shipset price exceeding $100,000 U.S. Seller agrees to incorporate the substance of Section 37.0 in all applicable subcontracts.

38.0           SIGNATURES

EXECUTED in duplicate as of the date and year first set forth above by the duly authorized representatives of the Parties.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

Spirit                      SELLER

Spirit AeroSystems, Inc.               Valent Aerostructures – Washington, LLC

By and Through its Divisions

VanLeer	Kaylie
14:19:08	2012.02.21
_____                ______	-06’00’

Name: April R. Shults                  Name: Kaylie VanLeer

Title: Procurement Agent          Title: Contracts

Date:   Date: 2-21-12

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 1 TO

SPECIAL BUSINESS PROVISIONS

Work Statement and Pricing

(SBP ATTACHMENT 2 TO

SPECIAL BUSINESS PROVISIONS

Production Article Definition and Contract Change Notices

(Reference SBP Section 1.0, 3.3.2.1, 3.3.2.2, 3.3.4.6, 3.4.1)

A.           Configuration [TBD]

The configuration of each Production Article shall be as described in the Preliminary Configuration Document (PCD) and/or Integrated Control Station Plan * (ICS) revision identified below, and in the Contract Change Notices listed in Paragraph B below as such Contract Change Notices relate to the configuration of any Production Article:

			Qty
	Test	Production	Per
Part No.	Article	Article	S/S	ICS # Rev.	Date
	Static
	Fatigue
	Other

* Note: If applicable, substitute alternate specification plan.

B.           Contract Change Notices

The following Contract Change Notices are hereby incorporated into this SBP.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 3 TO

SPECIAL BUSINESS PROVISIONS

Recurring Price Status and Summary Tables

(Reference SBP Section 7.0 Change Provisions)

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 4 TO

SPECIAL BUSINESS PROVISIONS

RESERVED

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 5 TO

SPECIAL BUSINESS PROVISIONS

Buyer AOG Coverage

(Reference SBP Section 3.5.3)

 NORMAL HOURS BUYER’S PROCUREMENT REPRESENTATIVE

Approximately 5:30 a.m. - 6:00 p.m.

þ Performs all functions of procurement process.

þ Manages formal communication with Seller.

Á SECOND SHIFT - AOG PROCUREMENT SUPPORT

3:00 p.m. - 11:00 p.m.

þ May place order and assist with commitment and shipping information, working with several subcontractors or suppliers on a priority basis.

þ Provides a communication link between Seller and Buyer.

( 24 HOUR AOG SERVICE - AOG CUSTOMER REPRESENTATIVE (CUSTOMER SERVICE DIVISION) (206) 662-7200

þ Support commitment information particularly with urgent orders.

þ Customer Service Representative needs (if available):

1. Part Number

2. Buyer Purchase Order

3. Airline Customer & customer purchase order number

4. Buyer S.I.S. #

If Seller is unable to contact any of the above, please provide AOG/Critical shipping information notification via FAX using Buyer AOG/Critical shipping notification form (SBP Attachment 5).

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 6 TO

SPECIAL BUSINESS PROVISIONS

Buyer

AOG/CRITICAL

Shipping Notification

(Reference SBP Section 9.1)

To: FAX:	(206) 662-7145	Phone:	(206) 662-7200
Procurement Agent Name:		Phone:
From:		Today’s Date:
Part Number:		Customer P.O.:
Customer:		Ship Date:
Qty Shipped:		*SIS Number:
Buyer P.O.:		Pack Sheet:
*Airway Bill:		or Invoice:
Carrier:		*Flight #:
Freight Forwarder:

*If Applicable

SHIPPED TO:

þ           (check one)

¨           Buyer

¨           Direct Ship to Customer

¨           Direct Ship to Seller

Remarks:

If unable to contact Procurement Agent, Please use this form to fax shipping information.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 7 TO

SPECIAL BUSINESS PROVISIONS

SBP ATTACHMENT 8TO

SPECIAL BUSINESS PROVISIONS

Seller Data Submittals

(Reference SBP 9.0, 3.5.3)

EXAMPLES

1. Program Status Reports (as requested by Buyer)

Seller’s program progress reports, highlighting significant accomplishments and critical program issues, etc.

2. Product Definition Milestone Schedule (as requested by Buyer)

Seller’s Product Definition schedule depicting key milestone events to support program requirements.

3. Manufacturing Milestone Schedule (as requested by Buyer)

Seller’s manufacturing schedule depicting key milestone events to support program requirements.

4. Certified Tool List

Seller’s Certified Tool Lists for identifying all accountable tools, including any subsequent new, reworked or re-identified tools affecting the first production spares Product. .

5. Problem Reports (as required)

Seller’s written notification to Buyer of program problems, potential program impact and corrective action. .

6. AOG and Critical Spares Support Plan

Seller ‘s written plan describing Seller’s procedure for supporting AOG and Critical spares delivery requirements. Refer to SBP Section 3.5.3 for details.

7. Order Readiness Matrix

Seller’s plan (matrix) identifying pre-manufacturing activities, such as, material procurement, tooling, planning and manufacturing readiness, that must be prioritized and completed prior to manufacture of a spares Product.

8. Total Cost Management System Plan

Within six weeks of contract award Seller shall submit a plan in TCMS plan as required under SBP Section 7.6

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 9 TO

SPECIAL BUSINESS PROVISIONS

RESERVED

(Reference SBP Section)

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 10 TO

SPECIAL BUSINESS PROVISIONS

Quality Assurance Requirements

A10.1    Documents Incorporated by Reference

In addition to any other documents incorporated elsewhere in this SBP or GTA by reference, Seller is required to maintain compliance with the following documents as may be revised from time to time and incorporated herein and made a part of this SBP by reference with full force and effect, as if set out in full text:

A10.1.1       Document AS/EN/JISQ 9100, “Quality Systems – Aerospace – Model for Quality

Assurance in Design, Development, Production, Installation and Servicing”

A10.1.2     Document AS/EN/SJAC 9102, “Aerospace First Article Inspection (FAI) Requirement”

Seller shall perform First Article Inspections (FAIs) in accordance with AS/EN/SJAC 9102. First article inspections for certain non-critical detail components may be waived, as agreed by Seller and Buyer.”

A10.1.3   Buyer Document D1-4426, “Approved Process Sources”

This document defines the approved sources for special processing, composite raw materials, composite products, aircraft bearings, designated fasteners, and metallic raw materials.

A10.2  AS/EN/JISQ 9100 Certification/Registration

Seller shall maintain an accredited aerospace industry certification/registration to AS/EN/JISQ 9100. Buyer reserves the right to make final determination regarding Seller compliance to quality management system requirements.

Buyer recognition of Seller’s Aerospace Quality Management System certification/registration does not affect the right of Buyer to conduct audits and issue findings at the Seller’s facility. Buyer reserves the right to provide Buyer-identified quality system findings, associated quality system data, and quality performance data to the Seller’s CRB.

Seller shall ensure the following relative to AQMS certification:

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 10 TO

SPECIAL BUSINESS PROVISIONS

A10.2.1 Accreditation of Certification/Registration Body

The certification/registration body (CRB) is accredited to perform aerospace quality management system (AQMS) assessments. The CRB must use approved auditors and operate in accordance with the corresponding International Aerospace Quality Group (IAQG) certification/registration scheme.

NOTE:  IAQG sanctioned certification/registration schemes include but are not limited to AIR 5359, SJAC 9010, TS157, etc. Reference IAQG website for listing of accredited CRBs: http://www.iaqg.sae.org/iaqg/audit_information/registrars.htm.

A10.2.2   Records of Certification/Registration

The seller maintains objective evidence of CRB certification/registration on file at Seller’s facility. Objective evidence shall include:

a.           The accredited AQMS certificate(s) of registration;

b.           The audit report(s), including all information pertaining to the audit results in accordance with the applicable certification/registration scheme;

c.           Copies of all CRB finding(s), objective evidence of acceptance of corrective action(s), and closure of the finding(s).

NOTE:     Certification records shall be maintained in accordance with Buyer specified contractual quality record retention requirements.

A10.2.3 Right of Access to CRB

The CRB services agreement provides for “right of access” to all CRB records by Buyer, applicable accreditation body, applicable Registrar Management Committee (RMC) and other regulatory or government bodies for the purpose of verifying CRB certification/registration criteria and methods are in accordance with the applicable IAQG certification/registration scheme.

A10.2.4  Audit Results/Data Reporting to IAQG

The CRB has Seller’s written permission to provide audit results/data to IAQG membership as required by the applicable IAQG certification/registration scheme.

A10.2.5  Notification to Buyer of Change in Status

Buyer is immediately notified in writing should the Seller’s certification/registration be suspended or withdrawn, or accreditation status of Seller’s CRB be withdrawn. Send email notification to grpcrboversightrep@boeing.com .

SBP ATTACHMENT 10 TO

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SPECIAL BUSINESS PROVISIONS

A10.2.6  Provision of Buyer Quality Data to CRB

Buyer-identified findings and Seller’s quality performance data is provided to the CRB during certification/registration and surveillance activity.

A10.2.7 CRB Access to Proprietary Data

CRB shall be provided access to applicable proprietary data (including Buyer proprietary data) to the extent necessary to assess Seller compliance to AQMS requirements. CRB shall agree to keep confidential and protect Buyer proprietary information under terms no less stringent than Seller’s contractual agreement with Buyer. Seller shall assure that such information is conspicuously marked “BUYER PROPRIETARY.”

A10.2.8 Seller Compliance with CRB Requirements

Seller complies with all CRB requirements imposed to issue and maintain certification/registration.

A10.3    Relocation/Subcontract Notification

The Seller shall not relocate or subcontract any Category I or II work without written Buyer acceptance. Notification to Buyer shall be made to the Procurement Agent who manages the Seller’s contract and shall contain the subcontractor name, address, telephone number, QA manager name, applicable part numbers, and part descriptions being relocated. Category I and II work is defined in FAA Order 8120.2, Appendix 4.

A10.4    English Language

When specifically requested by Buyer, Seller shall make requested quality data or approved design data available in the English language.

A1 0.5     Guidance Documents

Refer to the following documents for guidance relative to AS/EN/JISQ 9100 requirements:

A10.5.1   Document AS/EN/SJAC 9103, “Variation Management of Key Characteristics”

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 10 TO

SPECIAL BUSINESS PROVISIONS

A10.5.2      Document AS9006, “Deliverable Aerospace Software Supplement for AS9100A Quality Management Systems - Aerospace - Requirements for Software (based on AS9100A)”

A1 0.5.3    Document D1-8007, “Approval Guide for Supplier Statistical Sampling Plans”

A10.5.4     Document D6-51991, “Quality Assurance Standard for Digital Product Definition at Buyer Subcontractors or Suppliers”

A10.6   Seller Non-Conformance Records Documentation/Processing

In the event Seller receives approval from the Buyer, prior to submitting non-conforming material and/or hardware, the Seller shall document and process said items in accordance with Document MAA1-10034-1, Supplier Non-Conformance. The Seller will be charged a minimum of $250 per non-conformance record, Seller or Buyer generated, exclusive of the material disposition.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 11 TO

SPECIAL BUSINESS PROVISIONS

Buyer Commercial Airplanes Second Tier Report

(Reference SBP Section 9.6)

Seller name:					Seller contact:				Date:
Seller phone number:					Procurement Agent Name:
		o Jan - Mar                   o    Apr - Jun                    o   July - Sept                    o   Oct - Dec						Year:
Purchase contract number:			Type of report:                                Regular                      Final           Revised
Definitions
Small business			The term “small business” shall mean a small business as defined pursuant to section 3 of the Small Business Act (15 U.S.C.A. 632) and relevant regulations issued pursuant thereto. Generally, this means a small business organized for profit, it is independently owned and operated, is not dominant in the field of operations in which it is bidding, and meets the size standards as prescribed in Government regulations.
Small disadvantaged business/minority business enterprise			A business certified by the SBA as a socially and economically small disadvantaged business for consideration of Government set-a-side contracting opportunities and business development.
Women-owned small business			A business concern that is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock is owned by one or more women; and whose management and daily business operations are controlled by one or more women.
Historically black colleges and universities and minority institutions			Historically black colleges and universities (HBCU’s) are institutions that were established before 1964 and have a principal mission that was, and is, the education of Black Americans and that meet the requirements set forth in the Code of Federal Regulations (CFR), Title 34, Part 608.2. Minority institutions (MI’s) are institutions that substantially increase the higher education opportunities for minority and/or low income students who are educationally disadvantaged or underrepresented in post-secondary education and meet the requirements set forth in Title 34 or the CFR, Part 607.2.
Value of Subcontract Awards (report in whole dollars)
Subcontract Awards						Current Quarter
						Dollars	%
A.	Small business
B.	Small disadvantaged business/minority business enterprise
C.	Women-owned small business
D.	Historically black colleges and universities and minority institutions
Name of Liaison Officer:				Signature:			Date:

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 12 TO

SPECIAL BUSINESS PROVISIONS

Non-U.S. Procurement Report Form

(Seller to Submit)

(Reference SBP Section 12.12)

Seller Name Country Commodity/ Nomenclature Bid Dollars Contracted Dollars

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 13 TO

SPECIAL BUSINESS PROVISIONS

Product Definition Schedules

(Reference SBP Section 3.3.1.1, 3.4.5, 25.0)

Item	Nomenclature	First Delivery
414Z5235-27	CAB SPLICE FITTING, PT B, INNER	6/30/2011
414Z5235-28	CAB SPLICE FITTING PT A	6/30/2011
414Z5235-29	CAB SPLICE FITTING PT C, LH	6/30/2011
414Z5235-30	CAB SPLICE FITTING PT C, RH	6/30/2011
414Z5235-31	CAB SPLICE FITTING PT D, LH	6/30/2011
414Z5235-32	CAB SPLICE FITTING PT D, RH	6/30/2011
414Z5321-60	CAB SPLICE PLT, PT A, INNER	6/30/2011
414Z5321-61	CAB SPLICE PLT, PT A, OUTER	6/30/2011
414Z5321-62	CAB SPLICE PLT, PT B, OUTER	6/30/2011
414Z5321-63	CAB SPLICE PLT, PT C, OUTER LH	6/30/2011
414Z5321-64	CAB SPLICE PLT, PT C, OUTER RH	6/30/2011
414Z5321-65	CAB SPLICE PLT, PT C INNER LH	6/30/2011
414Z5321-66	CAB SPLICE PLT, PT C, INNER RH	6/30/2011
414Z5321-67	CAB SPLICE PLT, PT D, OUTER LH	6/30/2011
414Z5321-68	CAB SPLICE PLT, PT D, OUTER RH	6/30/2011
414Z5321-69	CAB SPLICE PLT, PT D, INNER LH	6/30/2011
414Z5321-70	CAB SPLICE PLT, PT D, INNER RH	6/30/2011
414Z5321-71	CAB SPLICE PLT, PT E, OUTER LH	6/30/2011
414Z5321-72	CAB SPLICE PLT, PT E, OUTER RH	6/30/2011
414Z5321-73	CAB SPLICE PLT, PT E, INNER LH	6/30/2011
414Z5321-74	CAB SPLICE PLT, PT E, INNER RH	6/30/2011
414Z5330-37	CAB SILL EXTENSION, U-R, LH	6/30/2011
414Z5330-38	CAB SILL EXTENSION, U-R, RH	6/30/2011
414Z5220-24	CAB UPPER A-B POST	6/30/2011
414Z8330-14	REINFORCE STRAP FLAT	6/30/2011

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 14 TO

SPECIAL BUSINESS PROVISIONS

Production Article Delivery Schedule

(Reference SBP Section 3.3.2, 3.3.4, 3.4.1)

Production Article Delivery Schedule

MASTER SCHEDULE

Airplane                      Manufacturing                     Deliv.            Airplane                      Manufacturing                                Deliv.

Line No.                      Cycle                                      Date              Line No.                      Cycle                                 Date

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 15 TO

SPECIAL BUSINESS PROVISIONS

SCHEDULE CHANGE EXAMPLES

(Reference SBP Section 7.5)

EXAMPLE

Current Shipset Billing Price = $300,000

Schedule No. 1

Month 1                      2           3           4           5           6           7           8           9           10

S/S Per Month                        7           7           10         10         10         10         10          10           14           14

ACCELERATION - Notice of acceleration of Schedule No. 2 is given at Month 7 resulting in the following schedule:

Schedule No. 3

S/S Per Month                                           7           7           10           10           7           7           *7           10           10           10

Shipsets Accelerated                                                                                       0           3             3

A total of six Shipsets are accelerated resulting in a $7,200 payment:

6 Shipsets x $300,000 x .004 = $7,200

DECELERATION - Notice of deceleration of Schedule No. 2 is given at Month 1 resulting in the following schedule:

Schedule No. 3

S/S Per Month                                           *7           7           10           10           7           7           *7           10           10           10

Shipsets Accelerated                                               8           8              5

A total of four Shipsets are declerated resulting in a $7,200 payment:

4 Shipsets x $300,000 x .004 = $4,800

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 16 TO

SPECIAL BUSINESS PROVISIONS

Commodity Listing and Terms of Sale

(Reference SBP Section 12.13.2.1)

COMMODITY LISTING

Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing plate, and body skins, excluding “soft” aluminum alloys.

Aluminum extrusions, all press size or circle size.

Titanium includes all wrought and un-wrought titanium mill products.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 16 TO

SPECIAL BUSINESS PROVISIONS

Terms of Sale

Parties

The Seller is The Buyer Company, acting through its agent, TMX. The Customer is a Buyer subcontractor, at any tier, who is manufacturing a product in support of a Buyer requirement.

Sales

All materials to be furnished by Seller are to be within the limits and the sizes published by Seller and subject to Seller’s standard tolerances for variations. Seller will warrant that all materials to be supplied will conform to the descriptions contained herein and on the face of the purchase order and that Seller will convey good title to any such materials free from any security interest, or other lien or encumbrance held by any other party and unknown to the customer. THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS AND SELLER WILL MAKE NO OTHER EXPRESS OR IMPLIED WARRANTIES EXCEPT AS STATED HEREIN. Seller will not be liable for any incidental or consequential damages for any breach of warranty, express or implied. Seller’s liability and the Customer’s sole and exclusive remedy will be limited at Seller’s option either to (a) return of the materials and repayment of the purchase price, or (b) replacement of nonconforming materials upon return thereof to Seller. The Customer shall be required to notify Seller in writing of any claim of breach of warranty and no materials shall be returned to Seller by the Customer without Seller’s consent.

Payment Terms

The following payment processes will be followed for material sold to Customer by Seller. All payments shall be in United States Dollars.

DEBIT PROCESS

The debit process will be used in all circumstances where the Customer has an account with the Seller. The amount due is the quantity shipped multiplied by the unit price, plus the price for any value added services. The amount due will be collected by the Seller’s applying a debit to the Customer’s account. Payment is due on the (net) thirtieth (30th) day from the scheduled delivery date. The debit will be applied to the Seller’s account on the payment due date. If the debit amount exceeds the amount outstanding on the Customer’s account, the Customer will remit to The Buyer Company the amount due beyond the debit payment due date. The foregoing debit process does not apply to Sellers who are only performing under orders issued by the Tulsa Division of the Buyer.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 16 TO

SPECIAL BUSINESS PROVISIONS

INVOICE PROCESS

The invoice process will be used for Customers not currently making direct sales to Buyer; foreign countries governed by MITI laws and regulations (currently Australia, Brazil, China, India, Japan, and Korea), and orders issued by the Tulsa Division. The amount due is the quantity shipped multiplied by the unit price, plus the price for any value added services. Payment is due on the (net) thirtieth (30th) day after the date of Seller’s invoice, which shall be issued on the day following the date of shipment.

LATE PAYMENT CHARGES

Payments due Seller representing undisputed charges for material and services that are not paid within forty-five (45) days after the date of Seller’s invoice or within fifteen days after any remittance due to Seller under the debit process will be subject to a late payment charge. Such charge will be computed monthly using an annual rate of interest publicly announced by Citibank N.A. New York, New York, as its prime rate in effect on the fifteenth (15th) day of the month, as adjusted month to month, plus two percent (2%). Such rate will be applied on the basis of a 365-day year against the undisputed past due amount, commencing on the forty-sixth (46th) day (or 16th day in the debit process) after the invoice date and continuing until payment is received by Buyer.

DEBIT/INVOICE DISPUTE PROCEDURE

Customer may dispute payment amounts due provided that (1) Customer contacts Seller within 25 days of the date of the debit/ invoice, (2) Customer provides a complete reason as to the dispute. If the action is Seller’s to resolve, late payment charges will not be assessed on amounts that are under dispute. Once a dispute has been resolved, payment terms will be (net) thirty (30) days from the date of resolution.

FAILURE TO PAY

In the event Customer fails to make payments when due, Seller reserves the right to assert whatever remedies it may have under law, including setoffs against amounts due from Seller to Customer on other contracts. In such an event, Seller may, with respect to future orders, require full payment in advance or otherwise alter the terms of payment specified earlier.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 17 TO

SPECIAL BUSINESS PROVISIONS

Reserved

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT               18               TO

SPECIAL BUSINESS PROVISIONS

Reserved

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 19 TO

SPECIAL BUSINESS PROVISIONS

Requirement Changes Evaluation

(Reference SBP Section 7.2.1)

As provided in SBP Section 7.2.1 “Requirement Changes”, descriptions of certain changes that are and are not Requirement Changes are listed in this SBP Attachment 19. These are certain examples that could be described at the time of the execution of this SBP and are not intended to be comprehensive or exhaustive. Therefore, the descriptions of changes listed below shall be interpreted as representing the intent of the Parties and may be used as a guideline for any changes not listed below.

A.    Requirement Changes include:

o Changes to Seller’s requirements set forth or referred to in the Work Statement Documents

o Derivatives

o TBS 2B & 3 changes (as defined in SBP Attachment 16 “Pricing Methodologies”)

o Work Package & detail level product definition change, as a result of Program & Airplane level configuration, architecture and platform changes

o Work Package & detail level product definition change, as a result of change of FAA or other regulatory agency requirements

o Boeing directed changes relating to weight saving initiatives for weight reductions below agreed guaranteed weights

o TCM

o Changes due to full scale Static and Fatigue test results that result from Seller’s use or application of innovative technologies selected or directed by Buyer for the design and build of Production Articles*

o Changes resulting from having incorporated preliminary loads into the detail design.*

o Prior to agreement on Seller’s work package weight commitment level, changes relating to weight saving initiatives to meet target weights that impact technology process, material or complexity*

o Changes to Boeing manuals (stress analysis, design, durability and damage tolerance)*

o Changes to Boeing material specifications*

o Changes to Boeing process specifications*

o Changes by Boeing to Interface Control Model (ICM) and Interface Control Documents (ICD)*

* The Parties acknowledge and agree that, following review and consideration of all relevant Documents, data and/or other information, the changes marked with an asterisk above may or may not be determined by the Parties to be

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 19 TO

SPECIAL BUSINESS PROVISIONS

Requirement Changes in all instances. These categories of changes (including any specific examples within these categories that are raised by either Party for consideration and resolution in a timely manner) will be evaluated and considered during the joint review, by both Parties, of Requirement Changes commencing immediately following establishment of the Firm Configuration Statement of Work as provided in SBP Section 7.2.2.1 “Pre-Firm Configuration Changes” and at any time thereafter.

B. Requirement Changes do not include:

o Seller’s errors

o Initial production rate build-up

o Delivery rates

o Change in regulations or laws

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 20 TO

SPECIAL BUSINESS PROVISIONS

Administrative Agreement

(Reference SBP Section 7.9, 17.1)

COMMITMENT AUTHORIZATION

Buyer Designees

The individuals identified by Buyer in the following positions are authorized to make contractual commitments, provide Program direction and discuss cost and performance issues directly with Seller on behalf of Buyer, including any and all discussions which affect price, delivery schedule or other contractual terms and conditions:

Name & Title	Roles/Limits
Procurement Agent: April Shults	Contractual Commitments/None
Procurement Manager: Amanda Bally	Contractual Commitments/None
Procurement Senior Manager: Dorine Brittain	Contractual Commitments/None

The individuals identified by Buyer in the following positions are authorized to communicate directly with Seller concerning engineering, quality control, production, schedule and delivery status, and per

Name & Title	Roles/Limits
LCPT Leader(s):  TBD	Communication Only
Procurement Quality Assurance:  TBD	Communication Only
SM&P PCS:  TBD	Communication Only
Materials Management Analyst:  TBD	Communication Only

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 20 TO

SPECIAL BUSINESS PROVISIONS

Seller Designees

For the specific Product(s) identified in the attachment(s) the individuals in the following positions are authorized to make contractual commitments, discuss Program and cost issues directly with Buyer on behalf of the Seller:

Title	Roles/Limits
Contract Administrator	Contractual Commitments/None
Manager Contracts:	Contractual Commitments/None

The individuals identified by the Seller in the following positions are authorized to communicate directly with Buyer concerning engineering, quality control, production, schedule and delivery status, and performance problems on behalf of Seller.

Title Roles/Limits

COMMUNICATION AND CORRESPONDENCE

Seller to Buyer

Materials Management Correspondence

All correspondence to Buyer pertaining to the matters set forth in AA Section 2.1.B above shall be forwarded to the appropriate individual identified in the applicable order.

Other Correspondence

All other correspondence pertaining to contractual matters or falling outside the purview of the individual(s) set forth in 3.1.1 above shall be forwarded to the Procurement Representative as identified in the applicable GTA/SBP.

Buyer to Seller

All correspondence to Seller concerning the Products identified in the SBP Attachment 1 shall be addressed to the Seller representative identified in the applicable GTA/SBP.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 21 TO

SPECIAL BUSINESS PROVISIONS

Storage Requirements for Boeing Furnished Material (PMI)

A21           Storage Agreement for Spirit Tier Two Supplier

This agreement to control Boeing Furnished Material (PMI) hereby defines the requirements for the Spirit Supplier (supplier name); hereinto referred to as Spirit Tier Two Supplier.

A21.1           Boeing Furnished Material

Boeing will provide Boeing Furnished Material (PMI) to Spirit Tier Two Supplier for the purpose of enabling Spirit Tier Two Supplier to perform its obligations under this SBP. During the term of this SBP, Spirit Tier Two Supplier shall store and use the Boeing Furnished Material.

A21.2           Storage and Handling

At no charge to Boeing or Spirit AeroSystems, Inc., Spirit Tier Two Supplier will store Boeing Furnished Material at Spirit Tier Two Supplier premises located in (enter address where Boeing Furnished Materials will be physically located, city and state), supplier code (enter supplier code). Such Boeing Furnished Material at all times must be easily distinguishable from all other materials stored on Spirit Tier Two Supplier premises. Such distinction shall be maintained by placing a sign on the Boeing Furnished Material clearly stating that the Boeing Furnished Material is owned by Boeing, and by segregating the Boeing Furnished Material within a fenced or other storage area (the “Storage Area”). The Storage Area shall contain a sign which shall indicate that there is located therein “Boeing Materials - Property of The Boeing Company.” The quantity and amount of such Boeing Furnished Material to be stored at Spirit Tier Two Supplier facility should be coordinated from time to time between Spirit AeroSystems, Inc. and Spirit Tier Two Supplier after taking into account the available capacity of Spirit Tier Two Supplier warehouse provided that Spirit Tier Two Supplier facilities are adequate to perform their obligations under any Order, this SBP and the GTA.

Boeing maintains the right to mark all Boeing Furnished Material, and upon request from Boeing or Spirit AeroSystems, Inc., Spirit Tier Two Supplier shall so mark any items as requested. The Boeing Furnished Material shall only be removed from the Storage Area pursuant to SBP Attachment 21, Section A21.3. The Boeing Furnished Material shall at all times be stored and maintained by Spirit Tier Two Supplier, or a delegated Spirit AeroSystems Inc. representative employed by the Spirit Tier Two Supplier, with the same degree of care used by Spirit Tier Two Supplier under like circumstances for the storage and maintenance of Spirit Tier Two Supplier own similar materials, provided that such standard shall in no event be less than that of reasonable care designed to prevent damage, loss or abnormal deterioration, and in accordance with good commercial practice.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

A21.3           RISK OF LOSS

Spirit Tier Two Supplier shall bear the entire risk of any loss or destruction of, or damage to any Boeing Furnished Materials in each case to the extent in the possession, or under the effective control of Spirit Tier Two Supplier until such time as such Boeing Furnished Materials are permanently delivered to Spirit or otherwise permanently removed from Spirit Tier Two Supplier ‘s possession, care, custody and control at Spirit’s direction in accordance with the provisions of any contract between Spirit Tier Two Supplier and Spirit.

A21.4           INSURANCE

A21.4.1                   Coverage

Spirit Tier Two Supplier shall, at Spirit Tier Two Supplier expense, carry and maintain at all times and for as long as any Boeing Furnished Materials are in the possession, or under the care, custody and control, of Spirit Tier Two Supplier, a policy or policies covering loss or destruction of, or damage to, any Boeing Furnished Materials in the amount of the full replacement value thereof providing protection against all perils normally covered in an “all risk” Loss Special Form property insurance policy (including without limitation, fire, windstorm, explosion, riot, civil commotion, aircraft, earthquake, flood or other acts of nature). Such insurance shall provide for payment of loss there under to Spirit or its subsidiaries as their respective interests may appear. Spirit Tier Two Supplier shall cause its property insurers to waive all rights of subrogation against Spirit, its subsidiaries and their respective directors, officers and employees for any loss or destruction of or damage to any Boeing Furnished Materials (including items or equipment incorporated therein or materials and supplies therefore) which are covered by insurance pursuant to this Section. Any deductibles and exclusions in coverage of such policies shall be assumed by and at the sole risk of Spirit Tier Two Supplier and to the extent applicable shall be paid by Spirit Tier Two Supplier. The policies providing such insurance may be reviewed by Spirit upon request.

A21.4.2                   Self-Insurance

Spirit Tier Two Supplier may, upon written approval from Spirit’s Procurement Representative, self- assume or self-insure all or a portion of Spirit Tier Two Supplier’s obligation set forth in Section 21.4. Spirit Tier Two Supplier’s request for approval of self-assumption or self-insurance shall include sufficient particulars to demonstrate Spirit Tier Two Supplier’s financial capability to cover Spirit’s interest in the Boeing Furnished Materials.

A21.4.3                   Certificates of Insurance

Except as provided in Section 21.4.2 above, prior to Spirit Tier Two Supplier’s taking possession of any Boeing Furnished Materials, Spirit Tier Two Supplier shall provide to Spirit’s Procurement Representative for Spirit’s review and approval, certificates of insurance reflecting full compliance with the requirements set forth in Section 21.4. Such certificates shall be kept current and in compliance throughout the period of Spirit Tier Two Supplier ‘s possession, care, custody and control of any Boeing Furnished Materials, and shall provide for thirty (30) days’ advance written notice to Spirit’s Procurement Representative in the event of cancellation or material change adversely affecting the interests of Spirit or its subsidiaries.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

A21.5           Withdrawal of Materials

Spirit Tier Two Supplier shall remove Boeing Furnished Material from the Storage Area for use in the production of Products pursuant to any Order, this SBP and the GTA, or upon Boeing or Spirit AeroSystems, Inc.’s direction, ship them at Boeing’s expense in accordance with Boeing’s instructions; provided that Spirit Tier Two Supplier shall not be responsible for any delay in the delivery of any Products that is caused by the removal of any Boeing Furnished Material upon Boeing’s direction. In no event shall the Boeing Furnished Material be transferred by Spirit Tier Two Supplier to any other party without Spirit AeroSystems, Inc. prior written approval.

A21.6           Title to Materials

Title to the Boeing Furnished Material shall at all times remain in Boeing. Spirit Tier Two Supplier hereby warrants to Boeing and Spirit AeroSystems, Inc. that Spirit Tier Two Supplier will not take any action that would result in the imposition by Spirit AeroSystems, Inc. or by third parties of any liens, charges or encumbrances on the Boeing Furnished Material. Spirit Tier Two Supplier shall not sell, assign, lease, or grant a security interest in the Boeing Furnished Material, allow the Boeing Furnished Material to be attached or seized on execution or otherwise, or in any other way dispose of or encumber the Boeing Furnished Material or any part thereof except as provided herein.

[The following paragraph is for use with U.S. Partners only – with respect to work performed inside the United States]

Without in any way limiting Spirit Tier Two Supplier obligations as set forth in this Section, Spirit Tier Two Supplier, on request from Boeing or Spirit AeroSystems, Inc., shall file a financing statement in the appropriate jurisdiction where the property is located, for notice purposes only, Form UCC-1, and on request from Boeing or Spirit AeroSystems, Inc., file any other documents or notices necessary to preserve and protect the interest of Boeing in the Boeing Furnished Material.

A21.7           Records

A21.7.1      Access

Spirit Tier Two Supplier shall maintain and preserve adequate records relating to the Boeing Furnished Material as provided herein, including records of all Boeing Furnished Material transactions. Boeing or Spirit AeroSystems, Inc. may inspect the Storage Area at the Spirit Tier Two Supplier, Boeing Furnished Material and records relating thereto at any reasonable time. Copies of such records shall be provided to Spirit AeroSystems, Inc upon request.

A21.7.2      Quarterly Certified Boeing Furnished Material

Within thirty (30) days after the end of each calendar quarter, Spirit Tier Two Supplier shall prepare and furnish to Spirit AeroSystems, Inc. a report in the form provided in SBP Attachment 22 (the “Inventory Reporting Form”), identifying the content of the certified Boeing Furnished Material as of the end of each such quarter, which report shall be verified as correct by an officer of Spirit Tier Two Supplier. In addition to the Inventory Reporting Form, Spirit Tier Two Supplier will be able, for each quarterly inventory, to demonstrate the traceability of the Boeing Furnished Material used to the specific Spirit AeroSystems, Inc. purchase orders for the end items produced. Boeing and Spirit AeroSystems, Inc. personnel shall, if desired by Boeing or Spirit AeroSystems, Inc., participate in the preparation of such report.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

A21.7.3        Aircraft Readiness Log (ARL) Parts

Any part that is deemed to be serialized and is marked as ARL within the Boeing ENOVIA system must be traceable. This is flowed down to the Spirit Tier Two Supplier via Parts List through Cfolders Before each shipment of assemblies the Spirit Tier Two Supplier must flow the part number, serial number, Line Unit part is installed on and the instance ID to Spirit AeroSystems, Inc. This can be done via email to Spirit AeroSystems, Inc. Procurement Representative or, if access is granted, by the use of the DRIM system.

A21.8           Shortage or Loss of Materials

In the event of a shortage or loss for which Spirit Tier Two Supplier is responsible, at Boeing’s or Spirit AeroSystems, Inc’s option, Spirit Tier Two Supplier shall (i) contact Spirit AeroSystems, Inc. Procurement Representative make prompt replacement of such Boeing Furnished Material at Spirit Tier Two Supplier expense, or (ii) be deemed to have purchased all missing items of Boeing Furnished Material and shall promptly pay to Spirit AeroSystems, Inc. an amount equal to the replacement value of such missing items. If the damage occurs at the aforementioned Spirit Tier Two Supplier as named in section A21.2, Spirit Aero Systems, Inc. will invoice said supplier for reimbursement of any expense associated with the Boeing Furnished Material. Spirit AeroSystems, Inc. shall have the right to set off against, or appropriate and apply to the payment or performance of any obligation, sum or amount owing at any time to Spirit AeroSystems, Inc. hereunder all deposits, amounts or balances held by Spirit AeroSystems, Inc. for the account of Spirit Tier Two Supplier and any amounts owed by Spirit AeroSystems, Inc. to Spirit Tier Two Supplier, regardless of whether any such deposit, amount, balance or other amount or payment is then due and owing.

A21.9           Nonconforming Materials

Boeing Furnished Materials received by Spirit Tier Two Supplier shall be inspected for any physical damage and have part number and serial number, if applicable, verified on packing slip by Spirit Tier Two Supplier upon receipt. In the event such Boeing Furnished Material are received at Spirit Tier Two Supplier facility and found at any time thereafter to be nonconforming,

A. Spirit Tier Two Supplier shall promptly identify and control nonconforming Boeing Furnished Material in accordance with Spirit documented procedures and contact Spirit’s Procurement Representative;

B. For dispositions requiring rework or repair, Sub Tier Two Supplier submits Supplier Nonconformance Notification (SNN) to Spirit Procurement Representative. Spirit Procurement Representative will contact Sub Tier Two Supplier with Nonconformance instructions;

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

C. Supporting supplier of such Boeing Furnished Material shall perform the work. All costs and expenses associated with such rework or repair shall be the responsibility of Boeing Spirit Tier Two Supplier shall be responsible for costs and expenses for non- conformances caused by it.

D. Spirit Tier Two Supplier shall maintain accurate records relating to receipt and disposition of nonconforming Boeing Furnished Material in accordance with 787 Program data requirements and copies of such records shall be furnished to Spirit AeroSystems, Inc upon request.

A21.10                      Taxes

Spirit Tier Two Supplier shall pay, on Spirit AeroSystems, Inc. behalf, all present and future property, sales, use, and other taxes levied as a result of the storage of Boeing Furnished Material by Spirit Tier Two Supplier, and Spirit AeroSystems, Inc. shall hold Spirit Tier Two Supplier harmless from all such taxes. Notwithstanding the above, Spirit AeroSystems, Inc. shall declare directly to the appropriate taxing authority, all property, the title to which is in Spirit AeroSystems, Inc. and shall notify Spirit Tier Two Supplier of any taxes levied on such property, and Spirit AeroSystems, Inc. shall reimburse Spirit Tier Two Supplier for all such taxes immediately upon the receipt of Spirit Tier Two Supplier invoice. Upon request, Spirit Tier Two Supplier shall, in a timely manner, furnish Spirit AeroSystems, Inc. with Boeing Furnished Material information necessary to assist Spirit AeroSystems, Inc. for tax computation and tax reporting purposes.

SBP ATTACHMENT 22 TO

SPECIAL BUSINESS PROVISIONS

Boeing Furnished Material and Inventory Reporting Forms

(Reference SBP Attachment 21)

Boeing Furnished Material Listing:

MATERIALS/SBM ITEM UNIT OF MEASURE QTY PER END ITEM INITIAL QUANTITY

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

Boeing Furnished

Material Listing

Inventory Reporting Form:

[Partner] SBM INVENTORY REPORTING

SUPPLIER CODE Wrhs No SBM MCC SBM Item                     U/M E/I Buyer Starting Bal Received Scrapped Shipped Ending Bal As of Date Comments

999999                    X99 99999999 9999999999999999999 XX XX99                     99999 9999999999 9999999999 mm/dd/yyyy xxxx

0

0

0

0

Inventory Reporting

Form

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

SBP ATTACHMENT 23 TO

SPECIAL BUSINESS PROVISIONS

ANTI-LOBBYING CERTIFICATE

(Reference SBP Section 37)

__________________, 20___

Month           Day           Year

Export-Import Bank of the United States 811

Vermont Avenue, N.W.

Washington, D.C. 20571

Attention: Operations & Data Quality Division

Subject:     Ex-Im Bank Credit No.      - [Name of Country]

   [Name of Borrower] (“Borrower”)

   Anti-Lobbying Certificate

Ladies and Gentlemen:

The undersigned certifies, to the best of his or her knowledge and belief, that:

(1)           No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement and the extension, continuation, renewal, amendment or modification of any Federal contract, grant, loan or cooperative agreement.

(2)           If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress or an employee of a Member of Congress in connection with this Federal contract, grant, loan or cooperative agreement, the undersigned shall complete and submit Standard Form LLL, “Disclosure Form to Report Lobbying” in accordance with its instructions. (http://www.ahrq.gov/downloads/pub/rfp01 0003/lobbying.pdf)

(3)           The undersigned shall require that the language of this certification be included in the award documents for all sub-awards at all tiers (including subcontracts, sub-grants, and contracts under grants, loans and cooperative agreements) and that all sub-recipients shall certify and disclose accordingly.

This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

_________	Spirit AeroSystems, Inc.	NM
Buyer Initial		Seller Inital

1 [NAME OF SELLER]
2 By:
(Signature of Authorized Representative) Name:
Name:	Nicholas Mueller
	(Print)
Title:	Planning/Contracts
	(Print)
3 Address:	PO Box 10
	Dutzow, MO 63342

1 Include Dun & Bradstreet Number.

2 This Certificate must be signed by the President, Chief Executive Officer (if different) and/or Chief Financial Officer, and/or by any other authorized officer(s) of the undersigned. Execution of this certificate constitutes a representation that the signer(s) are fully authorized to do so on behalf of the undersigned. Any person who makes a false representation to Ex-Im Bank may be subject to fine and/or imprisonment pursuant to 18 U.S.C. §1001. The undersigned agrees that, upon request, it will provide Ex-Im Bank with evidence of authority with respect to the person(s) signing this certificate.

3 Include Zip Code of company facility that produced the Item.

Special Business Provision (SBP)	Sellers Name
Pro-Forma dated September 16, 2011	SBP #ICT-787-SBP-2011-1002

Administrative Agreement Vendor Owned Inventory

ADMINISTRATIVE AGREEMENT

BY AND BETWEEN

SPIRIT AEROSYSTEMS, INC.

AND

Daca Machine & Tool, LLC.

VENDOR OWNED INVENTORY # 3-1441-0809-01098

Exhibit H

Administrative Agreement Vendor Owned Inventory

3.1.2.3 Forecasts

Forecasts shall be provided via the SPN.  Forecasts shall reflect Spirit’s estimated consumption on a monthly basis and will be updated on a weekly basis.  Actual consumption may vary.  Forecasts are for planning purposes only.

Shipments to Spirit for min/max orders are to be basedon the worksheets provided on the Spirit Partners Network.

Shipments for discrete scheduling are to be based on meeting the quantity and delivery as directed by the purchase order.

3.2          Inventory Management

3.2.1       General

Seller shall be responsible for managing all products on the statement of work (accompanying Attachments).  In general, inventory management consists of planning inventory levels based on information provided by Spirit and storing Seller’s VOI product at Spirit’s facility.  Seller shall provide all personnel necessary to perform all activities, tasks and duties In order to fulfill the Seller’s obligation for inventory management as delineated in this AA.

3.2.2       Seller’s Representative

Seller shall designate a primary contact as the single point of responsibility for the Seller under this AA.  This individual shall be accessible in person or by voice communication at all limes and shall have full authority over the Seller’s resources In order to ensure fulfillment of the Seller’s obligations under this AA, or to otherwise respond to matters presented by Spirit’s Procurement Agent.

3.2.3       Acceptance of Goods

Spirit shall initially acceptthe products or give Seller a notice of rejection or revocation of acceptance (“rejection” herein), upon initial receipt of the product.  No test or inspection will constitute passage of title or initiate payment.  No inspection, test, delay or failure to inspector test or failure to discover any defect or other nonconformance shall relieve Seller of any obligations under this Agreement or impair any rights or remedies of Spirit.  For purposes of the Warranty clause of the General Provisions, Spirit’s final acceptance shall be deemed to occur thirty (30) days after the point of sale as delineated in Clause 3.1.1.

Administrative Agreement Vendor Owned Inventory

3.2.4       Inventory Ownership

Seller shall own and retain title to all product inventories that are stored at Spirit’s facility until the point of sale as delineated in Clause 3.1.1 of this A.A.

3.2.5       Inventory Accountability and Audits

Spirit will be responsible for loss or damage to the VOI while it is in Spirit’s care, custody, and control, except for loss or damage resulting from Seller’s fault or negligence.  Spirit shall maintain inventory count records which shall be made available to the Seller on the SPN daily.  Such records shall be subject to verification through physical inventory count and stock analysis by Seller at Spirit’s facility.  Seller’s examination and or audit(s) shall occur during reasonable periods of time (e.g. Spirit’s normal business hours), beginning at the implementation date stipulated by the applicable Agreement and ending at the completion date of the Agreement.

Spirit shall grant Seller access to its facility for the purpose of auditing existing VOI stock during the period of performance of the Agreement, and upon the date final payment has been made under such Agreement.  Seller shall be granted access to Spirit’s facility only to the extent of the VOI storage location and only for the purpose of performing audits and count of parts in VOI stock.

Seller shall provide 72 hour notice to the authorized Spirit representative of intent to access VOI storage location to perform physical inventory count.  Seller shall comply with all the rules and regulations’ established, by Spirit for access to and activities in and around the premises controlled by Spirit, to include, but not be limited to, Spirit’s On-Site Activity Supplement.

3.2.6       Inventory Levels

Where minimum/maximum ordering is utilized, the Seller, whether by manufacturing or purchasing, will maintain inventory levels at or above the minimum levels while not exceeding corresponding maximum level established by the parties.  Seller shall determine shipment quantities and dates to accomplish this.  These levels will be reviewed on a regular basis and adjusted as determined by Spirit to support participating sites.  This includes, but is not limited to, production rate changes or improved efficiencies by one or both parties.

Administrative Agreement Vendor Owned Inventory

The Seller may be provided with:

· Visibility as set forth in Section 3.1.1 above for the required item(s)

· Authorization to ship

· Delivery location(s)

· Minimum, Maximum and total Inventory levels for the products

· An order for the purpose of receiving parts into Spirit’s system

· Communications regarding exceptions

· Applicable rate change data

Where discrete ordering is utilized, the Seller shall provide inventory to Spirit based on the quantity and delivery dates as specified on each order.

3.2.7           Metrics

Sellers performance regarding Product delivery will be based upon maintaining inventory at Spirit’s facility in accordance with open orders.  Measurements will be taken on a daily basis.

Delivery performance for min/max orders will be determined by the minimum and maximum levels as included on the Inventory worksheet.

Delivery performance for discrete orders will be based on actual receipt date versus scheduled receipt date on the order.

3.2.7.1 Metric Effective Dates

A worksheet, located on the SPN, shall include a “Metric Effective Date” column, a date in that column indicates the mutually agreed to date that performance measurements shall be effective.

In the event that emergent requirements (i.e. spares, AOGs, excessive scrap) can be directly attributed to negative performance measurements, Seller may solicit Spirit to have specific measurements removed or revised accordingly.  Spirit and Seller may mutually agree to insert a new “Metric Effective Date” reflecting recovery from any such events.

Administrative Agreement Vendor Owned Inventory

4.0           PARTICIPATING SITE REQUIREMENTS

Seller shall maintain the management and control functions necessary to ensure that requirements of the participating sites are met.

4.1.         Cycle Time

Seller understands and is committed to Spirit’s goal of reduced cycle time.  Spirit and Seller shall work together to reduce cycle time to support Spirit’s requirements.

5.0           TERMINATION LIABILITY

Min/Max purchase orders are a means to facilitate receiving and payment.  Quantities stated on such orders are estimates, and may exceed actual demand.  Therefore, Spirit is not liable for the specific quantity stated on orders.

MRP/discrete orders are subject to the Termination section of the Spirit General Provisions.

6.0           TRANSPORTATION

Seller is required to use the latest shipping methods as directed by Spirit’s Traffic Department.

7.0           TAXES

Seller shall pay all present and future property, sales, use, and other taxes arising out of, or resulting from, this Administrative Agreement, including but not limited to any taxes levied as a result of the storage of stock by Seller, and Seller shall hold Spirit harmless from all such taxes.

8.0           PAYMENT

Spirit’s payment obligation to Seller is triggered at the point of sale identified in section 3.1.1.  The price paid will be the price that is in effect at point of sale.  Not withstanding the provisions of Spirit AeroSystems, Inc. General Provisions, payment terms for any products withdrawn by Spirit shall be Net 60

9.0           MODIFICATION OF PURCHASE CONTRACT

Except to the extent modified herein, the terms and conditions of the Agreement remain in full force and effect.

Administrative Agreement Vendor Owned Inventory

EXECUTED in duplicate originals as of the date and year set forth above by the duly authorized representatives of the parties.

SPIRIT AEROSYSTEMS, INC.		Daca Machine
Spirit Signature		Supplier Signature
Name:	Chris Carillo	Name:	Perry Pecaut
Title:	Procurement Agent	Title:	President/Owner
Date:	08/18/2009	Date:	08/19/2009

Administrative Agreement Vendor Owned Inventory

ATTACHMENT A—VOI Statement of Work for Contract# 4600001152

Period of Performance 06/20/2007 through 12/31/2012

Part Numbers/Items

Central (East MacArthur) Receiving

No parts deliver to Central Receiving

3PL (S. Oliver) Spirit Distribution Center

85807845-74

152N/1396.3

152W1396-2

152W 1396-1

141UI11188-32

141UI11188-31

141U1188-28

141U1188-27

141U1188-24

Administrative Agreement Vendor Owned Inventory

141U1188-23

141U1188-20

141U1188-19

141U1188-16

141U1188-15

141U0051-120

141U0051-119

Exhibit B

To:	John Daniel, Chris Cumerillo
From:	Charlie Newell, Bruce Breckenridge
RE:	Vendor Owned Inventory

As we discussed, it is the intention of the Tech Aerospace Companies to participate in the VOI subject to your confirmation of the following terms and your agreement to items proposed below.

Spirit confirms that:

1.   Access to inventory will not be limited

·   Agreed that access will not be limited, given proper notice (72 hours)

2.   Tech may invoice Spirit upon product being shipped from our facilities; Spirit agrees to pay xx days after pulled

·   Agreed that our invoices will include quantities shipped and language referencing payment terms per contract

3.   Items held greater than 30 days will be considered pulled, payment clock starts

·   Agreed that we would be contacting Buyer for items held over 30 days, as goal is to maintain 20 M days of inventory in VOI

4.   Spirit will provide an acceptable Certificate of Insurance with Tech named as the Loss Payee

·   Agreed that Spirit will provide an acceptable Certificate of Insurance with Tech named as the Loss Payee

5.   Spirit payments will be made weekly

·   Agreed that Spirit will continue to make payments weekly

6.   Spirit will assist with timely reconciliation of items shipped to items pulled

·   Agreed that new spreadsheets will be very helpful and that Spirit personnel will be made available to provide assistance as needed

7.   Min-Max levels will be quantified and returned to pre-strike levels (quantify)

·   Agreed that Spirit will produce new Min-Max levels (consistent with Pre- Strike levels) before first product are shipped into VOI

8.   No right-of-return exists for product Tech moves to Spirits warehouse other than for non-conforming quality issues

·   Agreed that product may be returned for quality issues and for obsolete or surplus product (in which case, Tech will have ability to make termination claim)

Master Order Agreement

Between

Spirit AeroSystems Inc.

AeroStructures Business Unit

and

Daca Machine

T7P2-IB002827

P-Programs

Machined and Sheet Metal Parts

PREAMBLE

This Master Order Agreement (“Agreement”) is executed on this [insert date of execution], between:

Spirit AeroSyslems Inc, through its AeroStructures Business Unit (hereinafter “Spirit”), a Delaware corporation having its principal place of business at 3330 N. Mingo, Tulsa, OK, 74115.

and

[Insert Seller’s name and company information (see Spirit’s company information above for example) (hereinafter “Seller”), Spirit and Seller may also be referenced to as a “Party” or the “Parties” as the context so requires.

RECITALS:

WHEREAS, Spirit intends to design, manufacture, and support aircraft wings (hereafter, ‘‘wings”) and desires to establish a business agreement with Seller for the acquisition of Product(s) (the term “Product(s)” throughout this Agreement includes without limitation, raw materials, components. intermediate assemblies and end Products as may be defined herein or as defined on Orders issued by Spirit (hereafter, “Order(s)”) issued by Spirit and acknowledged by Seller) for installation in wings, Product(s) support, design and data; and

WHEREAS, Seller is engaged in the business of designing, manufacturing and selling of Product(s)s and desires to establish a business agreement with Spirit to sell Product(s)s for Installation in wings; and

WHEREAS, the Parties desire that certain terms and conditions shall apply to all Orders covering the Product(s) and services sold to Spirit by Seller and the terms of this Agreement will apply to each model type covered under this Agreement, and to the extent that other Spirit facilities place Orders under this Agreement, the terms and conditions herein apply to those Orders.

NOW THEREFORE, in consideration of the mutual promises and covenants herein contained, and other Product(s) and valuable consideration, Spirit and Seller hereby agree as follows:

TABLE OF CONTENTS

ARTICLE DESCRIPTION PAGE NUMBER

ARTICLE 1.0	GENERAL PROGRAM DESCRIPTION	4
1.1	Certification	4
1.2	Milestones	5
1.3	Non-Recurring	5
1.4	Qualification Tests	5
1.5	Hardware: Development/Integrated Test Facility/Flight Test	6
1.6	Weight Guarantee	6
1.7	Weight Control Participation Plan	6
1.8	Design Changes During Development Phase	8
1.9	Engineering Drawings and Documentation	8
1.10	Termination During Development Phase	9
ARTICLE 2.0	SCOPE OF AGREEMENT	9
2.1	Product(s) Description/Specification	9
2.2	General Description of Product(s)	9
2.3	Shipset Description	9
2.4	Quantity	10
2.5	Period of Performance	10
2.6	Integrated Logistics Support Requirements	10
2.7	Seller Performance Level	10
2.8	Production Line Support	11
2.9	Aircraft on Ground (AOG) Support	11
2.10	Obsolescence	12
2.11	Weekly Report	12
ARTICLE 3.0	PRICING, OPTIONS AND PAYMENT	13
3.1	Pricing	13
3.2	Invoices	13
3.3	Payment	13
3.4	Taxes	14
3.5	Fleet Discount	15
3.6	Price Point Aircraft Discount	15
3.7	Offset Credits	15
ARTICLE 4.0	PACKAGING AND SHIPP1NG/FJ(PORT CONTROL	15
4.1	Shipping, Marking and Packing Instructions	15
ARTICLE 5.0	EXPORT/IMPORT COMPLIANCE	15
5.1	Compliance with Export Laws	15
5.2	Foreign Nationals	16
5.3	Delivery Schedules	16
5.4	Commercial Invoice Requirements	17
5.5	Customs-Trade Partnership Against Terrorism (C-TPAT)	20

ARTICLE 6.0	DELIVERIES	21
6.1	Title and Risk of Loss	21
6.2	Delivery Schedules	22
6.3	Just in Time (JIT) Deliveries	22
6.4	Delivery Requirements Change to the Actual Delivery Schedule	22
6.5	Delivery Performance Penalty	23
ARTICLE 7.0	PRODUCT SUPPORT	23
7.1	Aftermarket Scope of Work	23
7.2	Duration of Support	23
7.3	Repair Requirements	24
7.4	Quote Requirements	24
7.5	Repair Warranty	25
7.6	In-Service Support	25
7.7	Product Support inventory	26
7.8	Spares Pricing	26
7.9	Sole Distribution Rights/Parts Manufacturing Authority	26
7.10	Out-of-Production Components	26
7.11	Lean Manufacturing	27
ARTICLE 8.0	QUALITY ASSURANCE	27
8.1	Inspection and Acceptance of Supplies	27
8.2	Remedies for Non-Conforming Products	27
8.3	Quality Assurance	28
8.4	Quality Assurance Inspections of Systems	29
8.5	Bad Actor Program	30
8.6	Seller Escapes	30
ARTICLE 9.0	RELIABILITY	31
9.1	Fracas and Failure Analysis Reports	31
9.2	Guaranteed Mean Time Between Failure (MTBF)	31
ARTICLE 10.0	WARRANTY	32
10.1	General	32
10.2	Duration	33
10.3	Remedies	34
10.4	Removal and Reinstallation of Seller’s Product(s)	35
10.5	Disclaimer	36
10.6	Exclusion of Consequential Damages	36
10.7	Successor and Assigns	36
10.8	Warranty Competitiveness	36
10.9	Additional Guarantees	36
ARTICLE 11.0	CHANGES	37
11.1	Changes	37
11.2	Class 1 & 2 Design Changes — Seller Requested Changes	37

ARTICLE 12.0	DERIVATIVES	38
12.1	Derivative Aircraft	38
12.2	Alternate Sources	38
ARTICLE 13.0	INTELLECTUAL PROPERTY RIGHTS, TOOLING AND DATA OWNERSHIP	38
13.1	Ownership of Design Drawings/Data	38
13.2	Ownership of Tooling, Design and Data	39
13.3	Disposition of Tools	39
ARTICLE 14.0	INDEMNIFICATION	39
14.1	Patent Indemnity	39
14.2	Indemnity by Seller Entering Spirit Premises	40
14.3	Insurance	41
ARTICLE 15.0	TERMINATION	41
15.1	For Default	41
15.2	For Convenience	42
15.3	Partial Termination	42
15.4	Notice of Delays	43
15.5	Force Majeure	43
15.6	Stop Work Orders	44
ARTICLE 16.0	MISCELLANEOUS	44
16.1	Disputes	44
16.2	Substance Abuse Policy	45
16.3	Technical Standard Order	45
16.4	Marketing/Advertising Assistance/Press Releases	45
16.5	Assignment	45
16.6	Entire Agreement; Amendments	45
16.7	Agreement Acceptance	45
16.8	Most Favored Customer	46
16.9	Gratuities	46
16.10	Records Review	46
16.11	Federal Acquisition Regulations	47
16.12	Notices	47
ARTICLE 17.0	ORDER OF PRECEDENCE
17.1	Document Precedence	48
ARTICLE 18.0	ATTACHMENTS	48
ARTICLE 19.0	CONFIRMING AUTHORITY	49

AGREEMENTS:

The above and foregoing Recitals are adopted herein, by reference, as if set out in their entirety in the following Articles of Agreements.

ARTICLE 1.0 GENERAL PROGRAM DESCRIPTION

1.1 Certification

1.1.1 To the extent that Seller has Design authority, Seller agrees to deliver Product(s) hereunder that will meet applicable FAA requirements as defined in the current FAR, Part 21 and the JAA/EASA requirements as defined in the JAR for Seller supplied Product(s). Gulfstream shall be responsible for maintaining FAA Certification and JAA/EASA certifications as applicable, on the Aircraft.

1.1.2 Seller will support Spirit and Gulfstream in their efforts to obtain Foreign Type Certificates as mutually agreed. Spirit will provide reasonable advance notice to Seller of the Foreign Type Certifications that Gulfstream intends to pursue and of the requirements to be met.

1.1.3 Seller will be responsible for the analysis and other related services consistent with the Work Breakdown Structure as defined in the applicable Statement(s) of Work required to obtain FM & Foreign Type Certification of the Product(s) as installed on the Aircraft.

1.1.4 Seller is responsible for fulfilling any quality requirements necessary to gain and maintain certifications at Seller’s expense, including but not limited to First Article Inspection per SAE AS9102, FM conformity and conformity of TSO or PMA items.

1.1.5 Spirit’s Engineering, Manufacturing and/or Quality personnel may provide technical direction under this Agreement to Seller. Technical direction is the process by which the Seller receives guidance and approvals in its technical effort, as it relates to an element of work or task, solely within the existing requirements of this Agreement, as a result of technical review of the Seller’s work by Spirit’s Engineering, Manufacturing and/or Quality. Provision of technical direction by Spirit does not obviate, in any way, Seller’s obligations under the terms of this Agreement.

a. Spirit’s Engineering, Manufacturing and/or Quality personnel are notauthorized to direct Seller on matters that would materially alter the requirements of the Agreement. All changes, which affect the specification(s), and/or costs, must be delivered in writing, from an authorized representative of Spirit’s Procurement organization. Likewise, acceptance of all changes that affect the specification(s), and/or costs, must be delivered in writing from Seller’s authorized Program Manager/Procurement Representative.

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1.2 Milestones

1.2.1 Seller shall adhere to all program schedules (PDR, CDR, FAI, flight test equipment deliveries, etc.) in this Agreement or as shown in Orders or other appropriately delivered documents.

1.3 Non-Recurring

1.3.1 Seller’s non-recurring costs for the development and certification of Product(s) on the Aircraft, relating to Spirit’s or Spirit’s customers applicable specification(s), shall be borne by Seller in exchange for Spirit’s commitment to perform its obligations under this Agreement. Seller may not market or sell Product(s) developed under this Agreement to third parties without written authorization by Spirit.

1.4 Qualification Tests

1.4.1 Seller is responsible, at Seller’s expense, for performing any and all qualification tests necessary in accordance with procedures outlined in Spirit’s Quality Assurance Requirements to ensure the Product(s) will meet aircraft certification. Gulfstream’s aircraft will serve as the final test bed to determine acceptability. Any impact associated with this provision shall be in accordance with the Changes provision of this Agreement.

1.4.2 If Product(s) are ready for delivery prior to completion of the qualification tests required, Spirit may conditionally accept such Product(s) contingent upon:

a. Satisfactory completion of the acceptance tests for the Product(s) concerned.

b. Tender by Seller of the Product(s) completed and ready for shipment, and

c. Final inspection of the Product(s) by Spirit.

1.4.3 In the event that supplies are conditionally accepted and Seller has Design authority, Seller shall, as a condition of final acceptance, be obligated to successfully complete the qualification tests in a timely manner and to incorporate in all such Product(s) at no increase in price:

a. Any changes required to pass the qualification tests, and

b. Replacements for non-approved, non-standard Product(s) and

c. In the event Product(s) have passed earlier qualification tests but fail on the final test bed, Seller will redesign Product(s) at Seller’s expense in order to meet the requirements of the final test bed.

5

1.4.4 Nothing in this Section shall affect Seller’s obligation under other Sections of this Agreement.

1.5 Hardware: Development/Integrated Test Facility/Flight Test

1.5.1 Seller will provide up to five (5) complete FAA conformed shipsets in support of development, certification and post certification, inclusive of the flight test program and the Integration Test Facility (ITF), for a period up to twelve (12) months after Gulfstream receives Type Certification (TC). Following the twelve (12) month period following TC, the flight test program Product(s) may be returned to the Seller to be updated, refurbished or replaced by Seller, at its sole cost and expense, within one hundred and eighty (180) days with new Product(s) to the configuration certified and at no expense to Spirit. The ITF Product(s) will be kept indefinitely at Spirit or Gulfstream. These Product(s) will be delineated as flight test/ITF hardware on the face of the Order. For purposes of clarification, these five (5) shipsets, identified herein are included within the total number of shipsets ordered and paid for by Spirit from Seller.

1.6 Weight Guarantee

1.6.1 Target Weights for each Product(s) are provided in CATIA models. All parts fabricated to a CATIA model will be weighed prior to processing. Parts, assemblies, and other items manufactured by Seller shall be weighed using certified and calibrated scales. For items that weigh less than 1000 lb, the scale shall be readable to within 1/10 of a pound. For items weighing 1000 lb or more, the scale shall be readable to within 0.1 percent of the lifted load (part and tare). The first ten (10) shipsets of delivered hardware shall be weighed to establish the Actual System Weight, then every tenth (10th) shipset thereafter, or as otherwise directed by the Purchasing Agent, shall be weighed. The weights shall be reported to the Purchasing Agent.

1.6.2 After determining the Actual System Weight, with a tolerance of ± 2%, Spirit reserves the right, at its election, to reject shipsets, which weight exceeds the Actual System Weight. If Spirit does not exercise this right, it shall have the right to receive adequate price reductions to reflect the reduced value of such shipsets.

1.6.3 The Guaranteed Weight, with a tolerance of 2%, shall be adjusted to a new system weight guarantee in the event of a Spirit directed change that results in a weight change. The Guaranteed Weight shall also apply to any design changes approved and incorporated prior to Aircraft Certification.

1.7 Weight Control Participation Plan

1.7.1 Spirit and Seller shall mutually agree upon a Maximum Guaranteed Weight for the Product(s). Spirit and Seller shall work together to develop and submit a Weight Control Plan outlining the steps they will take to achieve the Target Weight for those Product(s) if it appears Product may exceed Design Weight.

6

1.7.2 The elements of the Weight Control Plan shall include:

a. Schedule sessions for weight reduction.

b. Require Maximum Guaranteed Weights and Target Weight for Seller’s direct subcontractors,

c. Each component drawing shall be reviewed by a Mass Properties Engineer and signed off by the Design Build Team (DBT) Leader to assure that all weight aspects of the design process have received proper emphasis.

d. The Parties shall provide calculation weight (to within 0.01 LB) for the components and their associated centers of gravity.

e. Identify items of potential weight Increase and decrease and track these items separately.

f. Develop monthly status reports to Spirit until the acceptance of the first Production Product(s). Each status shall report current and previously reported data. The Parties shall be responsible for advising each other of any unexpected changes in mass properties and propose appropriate corrective action. Target weight reporting will cease after successful first article inspection.

g. In addition to the monthly weight report, a detailed record of the Product(s) weight shall be created and maintained throughout the program. This detailed record may be in the form of a database or spreadsheet with electronic medium to be determined. An accounting for every detail shall be per the component drawing. Detail callout should, at a minimum, record part number, description, unit weight, quantity, total weight and center of gravity. Summation of weight and center of gravity shall likewise be by the engineering assemblies. A hard copy and electronic copy shall be submitted to Spirit on a quarterly basis. If after development and delivery of the Product(s), Seller makes engineering modifications, as authorized by Spirit, the detailed records shall be updated by the Parties.

h. The frequency of further weighing, which shall be based on the stability of actual weight data.

i. Nominal weights will be put on the models by Spirit for reference.

7

j. Provide weight quality breakdown of current status weight (Actual, Estimated and Calculated).

1.8 Design Changes During Development Phase

1.8.1 The Parties acknowledge that in the course of completing the design, testing and certification of the Aircraft, various modifications to the Aircraft specification and/or specifications and design of Product(s) may be required, and Seller agrees to incorporate such modifications at no additional cost to Spirit, providing such changes do not significantly alter the Seller’s basic design of Seller’s Product(s) (“significantly alter” shall mean in excess of five percent (5%) of the costs of the Product(s)), Unless Seller presents to Spirit, with respect to any significant change(s) to the basic design of Seller’s Product(s), an itemized statement of claim against Spirit within thirty (30) calendar days after receipt of notice of such change(s), Seller shall be conclusively deemed to have waived all such claims against Spirit. Seller shall provide cost breakdowns and supporting documentation to validate proposed cost/price impact.

1.8.2 There will be no modifications to the pricing in this Agreement for either NRE or Product(s) if Spirit requests changes to the content of the technical statement, specification or SOW, which do not impact the Seller’s program level of effort in the aggregate, required for Seller to perform its obligations under this Agreement. The Parties will promptly work together to determine if any such changes have impacted Seller’s program level of effort. If the Parties mutually agree there is an impact, these changes will be handled in accordance with Section 1.8.1.

1.8.3 To the extent that Seller is responsible for design, Product(s) furnished hereunder shall be totally compatible with the Aircraft system and/or structure into which they are incorporated or with which they interface, shall satisfactorily perform in the environment in which they are Installed, and shall meet all requirements for FAA/JAA certification and for satisfactory Aircraft usage.

1.9 Engineering Drawings and Documentation

1.9.1 If applicable, all Engineering Drawings and Documentation produced by Seller, in any state of completeness, shall be available for review by Spirit during the design process. Formal reviews of Engineering Drawings and Documentation will take place at a Preliminary Design Review (PDR) at which various trade study items will be presented for final selection and at a Critical Design Review (CDR) at which mature design incorporating trade study selections will be presented.

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1.9.2 If applicable, Seller will provide three-dimensional (3-D) data (part, assembly and/or installations) in a format compliant with Spirit’s CATIA V5 requirements as mutually agreed.

1.9.3 If applicable, Seller will provide Product Structure/Bill of Material (BOM) in a format compliant with Spirit’s ENOVIA LCA V5 requirements as mutually agreed.

1.9.4 When Seller is responsible for design, Gulfstream’s Engineering Manual, (GEM2800, Section 2801, Partner, Supplier and Subcontractor Procedures), and Gulfstream Data Exchange Process & Procedures for Digital Engineering Data between Gulfstream, Partners & Suppliers (GER-5710), are hereby incorporated by reference.

1.10 Termination During Development Phase

1.10.1 If during the development and certification effort of the Aircraft, Gulfstream determines the prevailing market conditions will not support the introduction of the Aircraft, Gulfstream may, at its option, terminate the Aircraft program, upon thirty (30) calendar days written notice to Spirit; whereupon Spirit will then notify Seller of such termination of the Aircraft program by Gulfstream. Such termination shall be without obligation or liability to either Party. Upon termination of the Aircraft program, all Product(s) provided to either Party  shall be returned to the supplying Party within thirty (30) calendar days following notice of termination by Spirit. Upon such Termination during Development Phase and subsequent return of Product(s), which includes Tooling, Spirit shall pay to Seller its pro rata NRC for such Product(s) and/or Tooling.

ARTICLE 2.0 SCOPE OF AGREEMENT

2.1 Product(s) Description/Specification

2.1.1 Structural Component(s)

2.1.2 Seller hereby represents that the Seller-Furnished Materials shall be new, not used or reconditioned (except to the extent that such supplies and components must be used or modified in the performance hereof) and that at time of delivery, none of such Seller- Furnished Materials shall be of such age or so deteriorated as to impair their usefulness or safety.

2.2 General Description of Product(s)

2.2.1 See Attached Statements of Work

2.3 Shipset Description

2.3.1 See Attachment TBD.

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2.4 Quantity

2.4.1 Spirit is not obligated to procure any minimum number of supplies, Product(s) or services to obtain the shipset pricing set forth in this Agreement. Actual Order quantity will be Indicated by Order schedules, to be released annually, or as otherwise mutually agreed, and the quantities outlined in this Agreement are for planning purposes only and do not obligate Spirit to purchase any Product(s) under this Agreement. Pricing set out in this Agreement will apply regardless of actual quantities ordered under this Agreement.

2.5 Period of Performance

2.5.1 The period of performance for this Agreement will be from 7 January 2008 to 31 December 2013.

2.5.2 The pricing (and relevant provision of this Agreement) provided for shipsets will apply for Orders placed by Spirit prior to the end of the period of performance even if the delivery and acceptance by Spirit occurs after the period of performance. Time is of the essence in the performance of obligations set out in this Agreement.

2.6 Integrated Logistics Support Requirements

2.6.1 Seller agrees to support Spirit’s efforts to provide all deliverables as identified in Gulfstream Document GER-2011 entitled “Integrated Logistics Support Requirements” dated September 4, 2001 at no additional cost to Spirit. These requirements include Technical Publications, Manuals, Technical and Product(s) Support, Technical Training, Reliability, Maintainability, Material Services/Ground Support Equipment and Warranty Administration and other data requirements.

2.7 Seller Performance Level

2.7.1 If Gulfstream maintains continuous Production of the Aircraft for the term of this Agreement, Spirit agrees to procure from Seller, Product(s), as described in this Agreement; subject to the following requirements;

a. Seller shall provide Product(s) technology equal to or better than the applicable specification(s), including, but not limited to, engineering specification(s), and applicable reliability and environmental specification(s);

b. Seller shall comply with Spirit’s Quality Flysheets TQPA 101, 124 and/or 126, then In effect, which are maintained by Spirit and made available to the Seller as a part of this Agreement;

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c. During the life of this Agreement, should performance become unacceptable to Spirit, as evidenced by an overall rating of “RED” on Spirit’s Supplier Rating System, the pricing, terms and conditions herein may be subject to further negotiations and Spirit may request to review Seller’s financial health, as outlined in Records Review. Pricing will be subject to downward adjustments only. Seller will provide all corrections necessary to attain a minimum of “GREEN” status at no additional cost to Spirit. Supplier Ratings are determined with the Supplier Measurement Criteria, which may be amended from time to time, and shall be provided to Seller. Costs of quality incurred by Spirit as a result of Seller’s nonconformance may be charged back to Seller;

d. Seller shall provide Product(s) support for Spirit’s factory and customer delivered Aircraft, as outlined In this Agreement and/or separate Product Support Agreement between Spirit and Seller;

e. Seller shall remain compliant with agreed to delivery schedules;

f. Seller shall remain cost competitive by maintaining the agreed to annual pricing for the Production and after-market spares; and

g. Seller shall remain compliant with all other requirements of this Agreement, for the years described in this Article, Subsection 2.5.1.

2.8 Production Line Support

2.8.1 Seller will maintain a minimum of two (2) extra shipsets of Product(s) in its Production plan and on Its shelf to support abnormal Production shortages at no additional cost to Spirit. This hardware and assemblies must be shipped within four (4) hours of Spirit’s request via Air Express. Cost of shipment will be borne by the Party responsible for shortage.

2.8.2 Seller will provide annually, or sooner if requested by Spirit, a Surge Capacity Plan that will enable Spirit to maintain a continuous supply of Product(s) necessary to support current and future Aircraft build schedules. Spirit will provide Seller with advanced notice of Production build schedules and/or projected increases/decreases to said schedules as Spirit is able. Seller shall identify constraints (if any) that would hinder Seller from achieving a ten percent (10%) increase to Spirit’s current Production build schedule. Seller shall provide its plan no later than September of each year unless Spirit requests an earlier submittal.

2.9 Aircraft on Ground (AOG) Support

2.9.1 Seller will provide twenty-four (24) hours, seven (7) days a week, three hundred and sixty- five (365) days a year AOG support, at no additional cost to Spirit. Seller will provide Spirit a listing of individual AOG support contacts with E-Mail addresses, phone and fax numbers. The listing wit be maintained by Seller with any revisions being provided to Spirit prior to or at the time the revision is implemented.

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2.9.2 The standard AOG response time is as follows:

a. AOG Response 4 Hours

Critical Expedite Request 18 Hours

Expedite  7 Days

b. Response is defined as a definition of ability or plan to support Spirit’s request for AOG support.

2.9.3 Seller will maintain an adequate AOG inventory of new and used Product(s) and components, inclusive of Parts of Assemblies (POA’s), consumables and maintenance replacement units as mutually agreed to offset any like assets Spirit is required to provide its customer in support of warranties for said components. Seller will, in good faith, replace those assets used by Spirit for warranty support on an AOG critical expedite turnaround, at no additional cost to Spirit.

2.9.4 Defective components will be expeditiously returned to Seller for verification of the failure, Upon verification that the failure is covered under the warranty Seller, at its own cost and expense, agrees to replace the failed unit within thirty (30) days after receipt of the failed unit or Spirit may invoice Seller for the actual purchase price of the unit plus a fifteen percent (15%) handling fee. in the event that the component is not verified as a warranty failure, Spirit shall compensate Seiler within thirty (30) days, as mutually agreed, and based on the following options:

a. Return same component(s) and compensate Seller for airworthiness test and recertification costs;

b. Return like airworthy components to Seller;

c. Exchange the failed core and compensate Seller for repair and airworthiness test costs; or

d. Procure unit at a mutually agreed to price based upon unit flight hours.

2.10 Obsolescence

2.10.1 Seller 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 there are five (5) model aircraft for which it was designed remaining in service.

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2.11 Weekly Report

2.11.1 In order for Spirit to monitor the performance of Seller’s obligations under this Agreement, Seller shall provide to Spirit a “Status Report” with respect to the status of the services performed/to be performed hereunder, in Spirit’s approved form (as reasonably revised by Spirit from time to time), to be provided on a weekly basis.

ARTICLE 3.0 PRICING, OPTIONS AND PAYMENT

3.1 Pricing

3.1.1 Spirit expects Seller to achieve increased Productivity through aggressive internal and supply chain improvements and the quoted prices will be held Firm Fixed for the period of performance.

3.1.2 Spirit reserves the right to perform audits and analysis of cost data and rationale presented by Seller in support of proposed pricing, where necessary.

3.2 Invoices

3.2.1 All invoices, except as noted, shall be sent separately to:

Spirit AeroSystems Inc.

Attn: Accounts Payable

P.O. Box 582808

Tulsa, OK 74158-2808

Note: Orders from other Spirit divisions may provide an address for shipment and invoicing different from above, invoices are to be addressed as requested on those Orders. No Order may be invoiced at a higher price than shown on the Order. No charge will be allowed for packing, crating, drayage, or storage for any Orders placed under this Agreement.

3.2.2 Individual invoices showing Order number and Order item number must be issued by Seller for each shipment applying against an Order. Two (2) copies of each invoice must be rendered with prices and extensions, Invoices shall be mailed within three (3) days after shipping date. Invoice date shall not precede shipment date. Rejections, delays in delivery or delivery in advance of required delivery date, and/or invoices and/or shipping documentation, errors and/or omission will be considered just cause for withholding payment without loss of cash discount privilege(s).

3.3 Payment

3.3.1 Net 60 payment terms apply. Payment of net invoice amount is due within sixty (60) days of receipt of product or invoice by Spirit, which ever Is later.

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3.4 Taxes

3.4.1 Except as otherwise provided under the Article, Subsection 3.4.2, Seller is responsible for, and indemnifies Spirit against, any and all taxes (including without limitation any related penalties, interest, fees, etc. associated therewith) arising out of or in connection with Seller’s sale of Product(s) or services to Spirit and services to be sold to Spirit under this Agreement. In no event will Seller attempt to bill or invoice Spirit for any taxes described in this Subsection 3.4.1.

3.4.2 Seller agrees that the prices contained herein include any and all Transfer Taxes (as defined in this Subsection 3.4.2). Seller accepts Spirit’s representation that the Product(s) and services purchased by Spirit hereunder are for resale purposes. Seller will cooperate with Spirit in obtaining any exemptions from Transfer Taxes where applicable. In the event Seller determines that It has a duty under applicable law to charge and collect from Spirit and remit to the applicable taxing authority any Transfer Tax upon the sale of Product(s) and services to Spirit under this Agreement, Spirit will be responsible for and will pay or reimburse Seller for such Transfer Taxes. Seller will separately state any Transfer Taxes charged to Spirit on any bill or invoice. For purposes of Section 3.4, “Transfer Taxes” means sales, use, value-added, goods and services or similar-type taxes (including without limitation any related penalties, interest, fees, etc. associated therewith).

3.4.3 If a claim is made against any Party for taxes with respect to which the other Party is liable for a payment or indemnity hereunder, the Party receiving such claim will promptly give the other Party notice In writing within fifteen (15) days of receipt of such claim; provided, however, that failure to give notice will not relieve any Party of its obligations hereunder. The Party liable for the tax under this Section 3.4 will be required to remit payment to the other Party or the tax authority, as appropriate, unless the Party liable for the tax under this Section 3.4 is permitted by applicable law to contest such claim and defer payment in accordance with the law. The Party upon whom the tax is being legally imposed will coordinate such contest. The expense of such contest will be borne by the Party liable for the tax under this Section 3.4. If either Party receives any refund on account of any suit or action for a tax for which the other Party has provided funds hereunder, such Party shall promptly, but in any event, within thirty (30) days of receipt of such refund, remit such refund to the other Party, together with any interest and penalties refunded on such amount.

3.4.4 The obligations provided under this Section 3.4 shall survive termination or expiration of this Agreement for ten (10) years.

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3.5 Fleet Discount

3.5.1 Seller will be expected to support Fleet Sates by way of matching pricing discounts for sales of three aircraft or more to a single Customer. Such discounts will be mutually agreed and documented on Orders,

3.6 Price Point Aircraft Discount

3.6.1 Seller will be expected to support Price Point aircraft (PPA) by way of matching discounts for sales of such aircraft. Such discounts will be mutually agreed and documented on Orders.

3.7 Offset Credits

3.7.1 Any Order placed by Seller with a sub-contractor outside the United States may be used to satisfy Spirit’s or 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 Spirit requests these offset credits, Seller agrees to assist Spirit in securing offset credit for Spirit or Gulfstream, as applicable, or their affiliated companies and Spirit will reimburse Seller’s direct costs associated with such assistance.

ARTICLE 4.0 PACKAGING AND SHIPP1NG/EXPORT CONTROL

4.1 Shipping, Marking and Packing Instructions

4.1.1 Unless otherwise stated herein, all Shipping, Marking and Packing instructions will be in accordance with Spirit Flysheet 856, as amended from time to time.

ARTICLE 5.0 EXPORT/IMPORT COMPLIANCE

5.1 Compliance with Export Laws

5.1.1 The Parties recognize there are various statutes and regulations that impose restrictions on import, export and transfer to third countries of certain categories of data and Product(s), and that licenses from the US Department of State and/or US Department of Commerce may be required before such Product(s) and data can be provided herein, and that such licenses may impose further restrictions on use of such Product(s) and data. Disclosure of such Product(s) and data to foreign persons is subject to these regulations regardless if the export occurs in the US or abroad. Supplier agrees to comply with all US Governmental regulations as they relate to the import, export and re-export of Product(s) and data. Both Parties shall indemnify and hold the other Party harmless to the full extent of any loss, damage, or expense, including lost profit, attorney’s fees and court costs, for any failure or alleged failure of either party to comply with the applicable laws and regulations. Seller further agrees to provide appropriate certification to Spirit that the Product(s) procured under this Agreement is not on the United States Munitions List (USML). Furthermore, as part of Sellers obligation under this Agreement, Seller shall, on the first shipment to Spirit, provide the Export Control Classification Number (ECCN) to the Export/Import Compliance Office.

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5.1.2 The Product(s)s and data provided under this Purchase Order may be subject to the following statutes and regulations; Export Administration Act of 1979 (50 USC 2401-2420) and the Export Administration Regulations (15 CFR 768-799) promulgated herein; The Arms Export Control Act of 1976 (22 USC 2751-2779) and the International Traffic in Arms Regulations (22 CFR 120-128 and 130) promulgated therein; US Customs and Border Protection (22 CFR Title 19 Part 1- 199) promulgated therein The Customs Regulations of the United Stated; and the Foreign Corrupt Practice Act.

5.1.3 Export Controls

a. With respect to transfers of technical data and materials by one Party to the other Party, then the transferring Party shall be responsible for exporting such data or materials in compliance with all applicable export laws, including without limitation, the US Department of State International Traffic in Arms Regulations (“ITAR”) and the US Department of Commerce Export Administration Regulations (“EAR”), and notifying the receiving Party of any export related restrictions on such transfer.

5.2 Foreign Nationals

5.2.1 Spirit is a company that performs military defense services and possesses technology related to military defense articles. Control of these functions resides under the jurisdiction of the US State Department. Whenever Foreign Nationals are hired or assigned to perform tasks, Spirit must determine if export licenses are required to export any data Foreign Nationals may possess or be in control of while employed or assigned to perform tasks. Therefore, Seller agrees that it will not transfer any export controlled item, data, or services, to include transfer to foreign persons employed by or associated with, or under contract to Seller or Seller’s lower-tier suppliers, without the authority of an export license, Agreement, or applicable exemption or exception.

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5.3 Delivery Schedules

5.3.1 Spirit will issue Purchase Orders for the acquisitions acquired under this Agreement. Individual items Purchase Ordered will be identified on the Purchase Order with Spirit’s or Seller part number as applicable. The required delivery schedule for Product(s) will be indicated on the Purchase Orders. All documentation shall reflect therespective Purchase Order’s part number to ensure receiving compliance.

a. Committed Delivery Schedule. if Seller encounters or anticipates difficulty in meeting the delivery schedule, Supplier shall immediately notify Spirit in writing, providing pertinent details; provided however, the receipt of such data shall be for informational purposes only and shall not be construed as a waiver by Spirit of any delivery schedule or date or of any rights or remedies provided by law or this Agreement.

5.4 Commercial Invoice Requirements

5.4.1 Any and all shipments into the United States shall be accompanied by a Commercial Invoice inclusive of all information identified herein. A copy shall be provided to the Spirit Procurement Agent via fax or e-mail, as mutually agreed when shipment is made.

5.4.2 Any and all Commercial Invoices shall contain the following information:

a. Commercial Invoice must be in English.

b. Record the United States Port of Entry where merchandise is to be cleared by US Customs.

c. Date, Location and Names of Seller and/or Shipper

i. Date when the merchandise is sold, or agreed to be sold (Current Order date).

ii. Name and address of the Seller and/or Shipper if Seller is not the Shipper (Company name and address).

iii. Name and contact information for an employee, who is employed by the Seller and/or shipper who has detailed knowledge of the sales transaction.

iv. Name and address of Spirit (Spirit company name and site address)

v. Name of Consignee if not Spirit (Company receiving non-purchased transactions or drop ship destination).

d. Order Number and Item Numbers

i. Provide the current Order and Item numbers.

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e. Commercial Invoice Number (Sellers option)

f. Packing Sheet Number

i. If a separate packing sheet(s) is used to provide any of the required commercial invoice information, the packing sheet number(s) must be recorded on the commercial invoice.

g. Merchandise Shipment Date (month, day and year)

i. Provide the date that the merchandise shipped from the Sellers factory or facility

h. Related Party to Spirit

i. If the Seller Is a Related Party to Spirit, or any of its subsidiaries, it must be stated on the invoice: “Related Party to Spirit”

i. A detailed description of the merchandise being shipped must be provided to ensure proper product classification per the US Customs Harmonized Tariff Schedule (HTS) and must include at a minimum:

i. The full name by which each item is known. (i.e. Spirit drawing part name)

ii. The part number on the Spirit Order; or if the item is a raw material, the material grade, class and dimensions.

iii. Notes:

A. Generic descriptions, abbreviations, acronyms and Stock Keeping Unit (SKU) numbers are not acceptable.

B. Spirit may request additional description information for items that do not have a Spirit part number and/or design.

j. Quantities, Weights and Measures

k. Record the quantity of each part number in the shipment If not separately noted on packing sheet

i. Record the total quantity of parts being shipped

ii. Provide the gross and net weight of the entire shipment

iii. Specify the unit of measure being used Specify the total number of boxes Included on each packing sheet

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iv. Textiles must specify the net and gross weights and the length, width, and total square meters of material.

l. Specify the value of items being shipped

m. In addition to recording the Unit cost of each part on the commercial invoice, list separately, all Assists and Additional costs as directed by the Spirit Procurement representative:

n. Assists

i. Assists are components, materials, dies, molds and tools that are supplied by Spirit, free of charge or at a reduced cost to the Seller, and used in the production of imported goods. This also would include Spirit paid transportation costs associated with the Assist. These transportation costs will be provided by the procurement focal responsible for this merchandise.

o. Additional Costs

i. Engineering and Design Work. Work that Is performed outside the US by non-US employees, and is not included in the unit price of the merchandise being imported.

ii. Packing Costs. Costs for packing that are incurred by Spirit, and have not been included in the unit cost.

iii. Non-recurring Charges. One time charges, incurred by Spirit, for such items as, expedite fees and transportation costs, which have not been included In the unit cost.

iv. Selling Commissions. Commissions incurred by Spirit that have not been included in the unit cost.

v. Royalties. Fees Spirit is required to pay as a condition of sate.

p. If the item being shipped is a Repaired or Modified part:

i. Include the value of the item being repaired or modified, and

ii. The cost of the repair or modification

q. Attach a copy of a “Shippers Declaration of Repair or Alteration” form.

r. The Total Value of the entire shipment must be shown on the commercial invoice.

i. Type of Currency. Currency on all invoices must be in US Dollars

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ii. Note: Where export license requirements mandate that the currency of the exporting country be stated on the invoice, include the following “for (export country) Customs purposes, value in (local currency).” This must be stated in addition to and not in lieu of the item value in US Dollars.

s. Country of Origin

i. Indicate the country of manufacture of each item being shipped.

t. Discounts

i. List all discounts that have been agreed to between Spirit and Seller, or may be allowed, that apply to the purchase price or value, but have not been included in the unit price.

u. Rebates, Drawback and Bounties

i. If Seller receives any of these items, as a result of export, please itemize and provide description.

v. Terms of Sale (INCOTERMS)

i. Specify the International Commercial Terms of Sale (INCOTERMS) on the commercial invoice as agreed to per the Spirit contract.

ii. Note: Commercial Invoices are required on all shipments whether or not an Order has been released or payment made. Non-Procurement examples include, free samples, returned tools and test parts.

5.5 Customs-Trade Partnership Against Terrorism (C-TPAT)

5.5.1 C-TPAT is an initiative between business and government to protect global commerce from terrorism and increase the efficiencies of global transportation. The program calls for importers, carriers and brokers to establish policies to enhance their own security practices and those of their business partners involved in their supply chain. Such practices may include but are not limited to the following:

a. Procedural Security—Procedures in place to protect against unmanifested material being introduced into the supply chain;

b. Physical Security—Buildings constructed to resist intrusion, perimeter fences, locking devices, and adequate lighting;

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c. Access Controls—Positive Identification of all employees, visitors and suppliers;

d. Personnel Security—Employment screening, background checks and application verifications;

e. Education and Training Awareness—Security awareness training, incentives for participation in security controls.

5.5.2 If so directed by Spirit and at no cost to Spirit, Supplier agrees to undertake activities necessary to become certified under the C-TPAT program. Supplier agrees to work with Spirit and appropriate industry and governmental agencies, as necessary, to develop and implement policies and procedures consistent with the C-TPAT initiative to ensure the safe and secure transport of Products under this Agreement.

ARTICLE 6.0 DELIVERIES

6.1 Title and Risk of Loss

6.1.1 Title and Shipping Point

a. Title to all Product(s) to be delivered hereunder shall remain In Seller until such Product(s) is delivered at Delivery Duty Unpaid (DDU) Tulsa (1NCOTERMS 2000). All risk of loss or damage to Product(s) to be delivered by Seller hereunder shall be upon Seller until title of such property passes to Spirit.

b. Seller agrees to prepare and properly box or crate Product(s) for shipment so as to prevent damage in transit and comply with Spirit’s shipping and handling instructions, to include choice of carrier and Customs Broker as applicable.

6.1.2 Risk of Loss

a. Seller shall bear risk of loss or damage to Product(s) subsequently rejected by Spirit and placed on transport for return to Seller until such Product(s) is redelivered to Spirit, except for the loss, destruction of, or damage to such rejected Product(s) resulting from the negligence of officers, agents or employees of Spirit acting within the scope of their employment. Spirit shall notify Seller prior to shipping the Product(s) back to Seller to ensure proper receipt and handling.

6.1.3 If Product(s) is furnished back to Seller by Spirit for performance of this Agreement, all risks of loss or damage to such Product(s) shall be upon Seller until the said Product(s) has been redelivered to Spirit. Seller shall properly segregate, identify and protect all such Product(s),

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6.1.4 Processing of claims relating to loss of or damage to Product(s) to be furnished hereunder shall be accomplished by the Party responsible for risk of loss or damage to such Product(s) at the time the claim arises.

6.2 Delivery Schedules

6.2.1 The delivery schedules in this Agreement are estimated delivery schedules. From time to time, Spirit will issue Orders for the supplies acquired under this Agreement. Individual items ordered will be Identified on the Order with Spirit’s part number. The required delivery schedule for Product(s) will be indicated on the Orders.

6.3 Just in Time (JIT) Deliveries

6.3.1 Unless otherwise noted on the Order, the J1T delivery schedule herein permits receipts no earlier than seven (7) days prior to the Due-On-Dock date and not later than the Due-On-Dock date. Components delivered eight (8) days or more in advance of the Due-On-Dock date will not be accepted until, and unless, appropriate Purchasing approval is provided. If such approval has not been provided in writing, the Product(s) will be returned collect, or without loss of discount privileges, Spirit can pay invoices covering Product(s) based on the schedule identified on the Order, even when Product(s) have been shipped in advance of the scheduled date.

6.3.2 If Seller fails to meet its scheduled delivery dates and Spirit elects to require expedited shipments, Seller will pay the cost of the actual expedited rate incurred. Spirit, at Its election, may accept Product(s) which are not delivered on or before the required delivery date, in which case, the Seller shall be liable for all reasonable additional costs including, but not limited to, telecommunication costs, additional or premium transportation charges, special handling expenses, and cost to the Spirit to install the materials out of normal manufacturing sequence in addition to other remedies available by law. If Seller encounters or anticipates difficulty in meeting the delivery schedule, Seller shall immediately notify Spirit In writing, providing pertinent details; provided however, the receipt of such data shall be for informational purposes only and shall not be construed as a waiver by Spirit of any delivery schedule or date or of any rights or remedies provided by law or this Agreement. If Seller fails to make delivery promptly and regularly, as required by an Order, Spirit may, in addition to other remedies available by law, terminate the Order, Agreement, or effect a partial termination, In accordance with the Sections of this Agreement entitled “Partial Termination.” Nothing contained in this Subsection shall prevent termination by Spirit under the provisions of the “Termination for Default” Sections of this Agreement.

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6.4 Delivery Requirements Change to the Actual Delivery Schedule

6.4.1 Spirit will provide a minimum of thirty (30) calendar days notice to Seller in the event of Production schedule decelerations and/or Production schedule accelerations to be applied to Orders. Spirit and Seller will work together on a best effort basis to provide as much advance notice as possible for schedule changes.

6.4.2 Spirit will be allowed to increase or decrease the delivery rate on Orders by up to one (1) shipset per month (total of twelve (12) shipsets per year) at no additional cost.

6.5 Delivery Performance Penalty

6.5.1 Upon failure of Seller to adhere to delivery schedules as outlined In Orders issued per this Agreement, Spirit will have the option of assessing a late delivery penalty of one percent (1%) of the unit price per day, commencing on the sixth (6th) working day after the Order due date, and continuing through the fifteenth (15th) working day.This liquidated damages penalty will be debited to Seller’s account. On the sixteenth (16th) working day, ay cure notice shall be deemed to be satisfied and the Seller shall be deemed to be in default for the undelivered Product(s),

ARTICLE 7.0 PRODUCT SUPPORT

7.1 Aftermarket Scope of Work

7.1.1 The Product support obligations under this Agreement shall survive a termination of this Agreement and continue as long as Gulfstream owns Type Certification for a model type and that at least five (5) model types are still in service and as long as Seller has possession of the Tooling, and include, but are not limited to, the following Services:

a. OEM Warranty Support for Gulfstream Production Warranty Activity provided by all Gulfstream service facilities;

b. Repairs/Overhauls/Modifications/Enhancements/Service Changes, Maintenance Operation Letters (MOL) and Customer Service Bulletin Activity provided by all Gulfstream service facilities; and

c. Acquisitions of Part of Assemblies (POA) & Line Replacement Units (LRU’s) by all Gulfstream service facilities.

7.2 Duration of Support

7.2.1 Seller agrees to continue all manufacturing & repair capabilities and/or provide alternate support for the form, fit and functional requirements of the original configuration for any/all “out-of-Production” configurations, modifications or enhancements, so long as at least five (5) of the aircraft for which It was designed, remains in service.

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7.3 Repair Requirements

7.3.1 Seller shall establish and maintain adequate repair facilities to effectively support Spirit, Gulfstream and Gulfstream’s Customers in accordance with AOG and component repair turn times defined herein.

7.3.2 In the event Seller’s repair facilities do not maintain adequate turn times, and to the extent Seller has Design authority, Seller agrees to establish Spirit and/or a third party as an approved repair facility and provide all appropriate technical data, revisions, customer bulletins and replacement parts for the repair and/or overhaul to support the fleet.

7.3.3 Also, as the manufacturer of Product(s), further agrees to provide applicable current technical data to support systems, assemblies and POA’s for approved repair stations, as required.

7.3.4 The Seller agrees to support, in a timely manner, all special program requirements for Product(s) and service(s) to be furnished in accordance with Article 7.0.

7.4 Quote Requirements

7.4.1 Repair, Overhaul and modifications shall be based upon Quotations prior to performance unless firm fixed pricing has been mutually established.

7.4.2 Seller quotations for all new or repair work requested by either facility are to be faxed to the designated facilities’ procurement representative, at the fax number provided on Request-for-Quote (RFQ) or Order or documentation accompanying failed unit.

7.4.3 All quotations must indicate warranty acceptance or exception and be provided within ten (10) working days after receipt of discrepant Product(s) at the repair facility. If a discrepant Product(s) is considered beyond economical repair (BER), Seller shall advise Gulfstream for immediate concurrence and disposition.

7.4.4 In the event, over five percent (5%) of the Product(s) in-service becomes identified as no cause for rejection (NCFR) or no fault found (NFF), the Parties mutually agree to expend the required effort to identify cause and implement corrective actions as appropriate. NCFR or NFF shall be at no charge to Spirit and communicated to Spirit for assistance in duplicating the failure, prior to the return of the failed unit.

7.4.5 Test & recertification for In warranty support components shall be at no charge to Spirit.

7.4.6 The quoted price shall be adjusted downward relative to future published Customer Bulletin Discounts or Special Published Pricing the Seller may offer during the term of this Agreement. In these events, Orders already placed, whether received or not, and/or not yet issued from inventory, the pricing shall be decreased with credit memo or account will be debited for such credit.

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7.5 Repair Warranty

7.5.1 All repair work, to include parts and labor, shall be warranted for design, material and workmanship for a period of one (1) year following the date of installation. This warranty applies only to the specific repair work performed on the Product(s), and does not cover the entire unit, unless original warranty applies and as delineated in 10.2.1.

7.6 In-Service Support

7.6.1 Seller agrees to provide annually, at a minimum, three (3) copies of their current pricing catalogs for Product(s) or subcomponents, within twenty (20) days of publication; preferably via electronic data transmission if possible. Seller, at its own cost and expense, shall also place Spirit on a permanent distribution list for all-future publications/revisions, etc.

7.6.2 Seller agrees to provide a recommended list of consumables and line item replacement units based on component maintenance requirements within three (3) months prior to the first Production Aircraft delivery or within component lead-time which ever is greater. Seller will also provide a complete bill of material for each Product(s).

7.6.3 In the event, a reliability or critical dispatch trend Is identified, such as Top 20 removal, Seller agrees to provide free of charge consignment units and/or stock an adequate number of rotable Product(s), In accordance to failure trends, to support all warranty exchanges and critical dispatch requirements.

7.6.4 Spirit reserves the right to request additional rotable assets to be added to Seller inventory due to increased Product(s) failures or long lead-time Product(s). Seller, at a minimum, shall increase the critical dispatch Product(s) to support the fleet coverage; with or without an association to a service bulletin.

7.6.5 Turn Around Times (TAT) shall be within the following given parameters;

a. AOG response to call 4 hours

b. Critical Expedite 12 hours

c. Shipment of AOG 8 hours

d. Functional Test/Rectification 3 days or less

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e. Warranty Repairs 7 days or less

f. Quotes 10 day maximum

g. Out-of-Warranty Repairs 15 days or less

h. Overhaul/Modifications 30 days or less

7.6.6 In the event any negotiations are in progress, under no circumstances shall the above support requirements or Product(s) be held pending the finalization of said negotiations.

7.6.7 Seller agrees to provide field service support for any and all warranty or non-warranty critical dispatch requirements regarding Maintenance Operation Letter’s (MOL’s) and Customer Service Bulletins (SB), as mutually agreed upon, on an as required basis.

7.6.8 Spirit, Gulfstream or Gulfstream’s customers shall not be subject to charges associated with either recommended or mandatory bulletins unless, the bulletin, test and field programs are predetermined and agreed to jointly by the Parties prior to issuance. Notwithstanding the above, bulletins that fix Product(s) deficiencies, address performance issues, comply with regulatory issues or to meet the intended use of the Product(s) as defined in the applicable Product(s) or Reliability Specification will be at no cost to Spirit.

7.7 Product Support inventory

7.7.1 To the extent Seller has agreed to maintain inventory, Seller shall, at its expense, maintain the Inventory to the latest Production configuration.

7.8 Spares Pricing

7.8.1 Attachment TBD

7.9 Sole Distribution Rights/Parts Manufacturing Authority

7.9.1 Seller acknowledges that all rights to the distribution of any components designated for use on all Gulfstream Aircraft belong solely to Gulfstream. Seller shall not solicit Parts Manufacturing Authority (PMA) from the FM without prior written authority from Gulfstream.

7.9.2 Seller shall provide all Product(s) to Spirit or Gulfstream only, for resale to Gulfstream’s customers through Gulfstream’s distribution network.

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7.10 Out-of-Production Components

7.10.1 In the event the Production contract is not renewed, or the Product(s) are no longer on the Aircraft, this Agreement, shall revert, in its entirety and as applicable, to the Product Support Administration i.e. Reliability, Quality & Warranty requirements. The then-current pricing shall remain in effect and all out-of-Production inventories will be assessed to ensure all fleet configuration support, so long as there are at least five (5) aircraft still in service.

7.11 Lean Manufacturing

7.11.1 Seller shall work with Spirit to Identify areas of Improvement, which affect the manufacturing processes at Seller’s facility(ies) (Lean Manufacturing). Manufacturing and assembly processes include, without limitation, reductions in recurring costs, inventory turn rates, lead time reductions beyond those set forth in the SOW, make-or-buy strategies, set up time reductions and lot size reductions.

7.11.2 Seller shall submit its plan(s) for the implementation of Lean Manufacturing processes immediately following the year of serial production. Such plan(s) shall be written in English and in a form and substance satisfactory to Spirit. Seiler shall take full responsibility for implementing the plan(s).

7.11.3 Spirit and Seller shall periodically conduct formal reviews of the implantation of these improvements and Seller shall provide such review information in form and substance satisfactory to Spirit.

ARTICLE 8.0 QUALITY ASSURANCE

8.1 Inspection and Acceptance of Supplies

8.1.1 Spirit has the right to perform an incoming inspection on each Product(s) upon delivery at the designated Spirit 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 Spirit’s facility.

8.1.2 Notwithstanding any prior inspection or test, payment, or receiving documents, Product(s) are subject to final inspection, and test at the destination stated herein or at the Spirit facility from which the Product(s) were ordered.

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8.2 Remedies for Non-Conforming Products

8.2.1 Spirit may, if the Product(s) are non-conforming, do any or all of the following:

a. Reject or return such Product(s) upon failure to pass Inspection or meet warranty, respectively. As to returned Product(s) (and as to rejected Product(s) but only if Spirit so directs), Seller shall promptly at its expense, and at Spirit’s election, repair or replace such supplies. Upon rejection or failure to promptly repair or replace, Spirit 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 Seller until acceptance by Spirit at destination.

b. Accept or retain non-conforming Product(s) and, at its election, equitably reduce the price or repair such supplies at Seller expense and recoup as in c. below.

c. Require repayment or effect a setoff against any amounts owed to Seller of the equitable adjustment in price in 8.2.1.b, any expenses incidental to rejection or return and of any amount paid for such Product(s) pending a conforming redelivery. Labor expended by Spirit will be reimbursed by Seller at Spirit’s then current standard labor rate.

8.2.2 Acceptance of Product(s) previously rejected or returned, or of used Product(s), or of former Government property, may be revoked if delivery is conforming but is not accompanied by written notification that the Product(s) were previously rejected, returned, used or Government property.

8.2.3 Rejected Units

Should Seller fail to return any Spirit owned rejected units for more than six (6) months after the Order origination date; Spirit reserves the right to permanently debit Seiler for the amount of the unit, close the Order short and consider the unit as Seller’s property.

8.3 Quality Assurance

8.3.1 Seiler must create and maintain a Quality Management System that is approved by Spirit Procurement Quality Assurance. The system must adhere to the requirements indicated in the Tulsa Quality Flysheets TQPA 101 and TQPA 124 and/or TQPA 126, as appropriate (revisions currently in effect as reflected and defined on releasing orders). Seller must also be able to meet the requirements of the engineering drawing, standard or specifications listed in the Attachments Section or called out on the Drawing or SPRAT and in doing so, recognize that any article provided will be in conformance with those requirements and suitable for its intended purpose.

8.3.2 Any “Special” processing requirements will be identified within the engineering drawing through Individual Finish and Process Codes Standard. When performing work on Gulfstream design-controlled Product(s), applicable Seller special processes must be approved prior to processing. This includes any special processes performed by “sub-tier” suppliers to Seller. Unless specifically directed otherwise in writing by Spirit, the use of Gulfstream Procurement Quality Approved Special Processors is required. A reference of Gulfstream Approved Process Sources is available upon request.

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8.4 Quality Assurance Inspections of Systems

8.4.1 Sellers Quality System and special process evaluations for approval may be conducted through onsite visits and/or audits of Seller at the discretion of Spirit Procurement Quality Assurance.

8.4.2 Seller shall provide Spirit with a listing of major subcontractors providing manufacturing or processing of all major components included in this Agreement. Spirit reserves the right to review and disapprove for use any subcontractor that has been found to be an unacceptable performer by Spirit.

8.4.3 Prior to Seiler transferring manufacturing or processing functions to new subcontractors, Seller shall submit transition plan and new subcontractor details to Spirit for concurrence.

8.4.4 In the event Seller intends to move manufacturing or processing functions to a foreign subcontractor, Spirit reserves the right to approve the transition.  If Spirit ascertains the movement to a foreign subcontractor will harm Seller’s ability to fulfill the terms and conditions of this Agreement, Spirit may terminate this Agreement in accordance with Section 15.1 of this Agreement. If the transition is approved, and the movement of these functions results in a lower cost of Production, Seller will share the benefit of that reduction in cost with Spirit. In no case, will pricing increase due to any increased freight expenses incurred by Seiler.

8.4.5 Seller and Seller’s subcontractors, at their expense, will maintain reasonable quality control and inspection systems consistent with noted flysheets and will provide the Seller’s Quality Organization a failure analysis and corrective action program for all design, tooling, test equipment, manufacturing and test operations supplied to Spirit or used to manufacture, test or support Product(s) provided under this Agreement. Each type of non-conformance shall be documented, investigated, and the appropriate corrective action implemented by Seller and Its subcontractors. The Seller will have a method for positive Identification, recall and replacement of priority parts in the event of a nonconformance.

8.4.6 At all reasonable times, including the period of manufacture, Spirit may inspect and test the Product(s) and inspect the involved plants of Seller and Seller’s subcontractors. Seller and its subcontractors will, at their expense, provide Spirit with reasonable assistance to effectively and efficiently conduct the inspections and Seller and its subcontractors will, at their expense, promptly comply with written directions by Spirit reasonably necessary to correct deficiencies In such systems.

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8.5 Bad Actor Program

8.5.1 Seller will provide, at its own cost and expense, a new replacement Product(s) when any such Product(s) fail three (3) times for the same reason or five (5) times for different reasons, and upon verification that the responsibility for said failure rests with Seller.

8.6 Seller Escapes

8.6.1 Seller will immediately notify Spirit, in writing, of any material/Product(s) Escapes.  Escapes are any material/Product(s) issue that may result in performance, airworthiness, FAR non-compliance or non-conformance as defined below:

a. Material or Product(s) Issues that might affect the item’s ability to perform to original specifications.

b. Airworthiness of the Product(s) in question.

c. FAR non-compliance has been identified with Product(s).

d. Non-conformance to original specification (Product(s) or material do not conform to Engineering specification, drawing or document).

8.6.2 Written notification must include:

a. Nature of the Issue

i. “What, why, how and when” Information

b. Inspections/Action

i. 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.

c. Compliance Time

i. State the urgency of the issue and recommended compliance time.

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d. Spares Availability

i. State if replacement or return to Seller 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.

e. Remedy

i. If appropriate, recommend actions to preclude this event from happening again, both short term and long term.

f. Sellers Identification of the issue

i. State if Airworthiness issue, Quality issue, FAR non-compliance (or all of the above).

g. Service Bulletin

i. If the above information is the basis of a Service Bulletin. The Seller should provide a draft Service Bulletin at this time if possible.

ii. However, in those cases where Seller 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.

ARTICLE 9.0 RELIABILITY

9.1 Fracas and Failure Analysis Reports

9.1.1 The performance, calculation, tracking and administration of the warranty shall be performed by Seller at its own cost and expense and consistent with Gulfstream’s reliability document GV-GER-608, rev. B, 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. This report is due to Spirit no later than ten (10) days following the end of each quarter.

9.1.2 In addition, Seller will provide failure analysis and tear-down reports on defective units to Spirit no later than forty-five (45) calendar days from receipt of the defective unit at their Repair & Overhaul Facility.

9.2 Guaranteed Mean Time Between Failure (MTBF)

9.2.1 The MTBF requirements for the component(s) herein are as follows:

Description	Guaranteed MTBF	Design Goal
TBD	TBD	TBD

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9.2.2 Seller shall guarantee that the Product(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 Aircraft flight hours accumulated by the Aircraft on which the Product(s) are installed. If at the end of the agreed to warranty period, the guaranteed MTBF has not been achieved, Seller agrees to extend the warranty period until such time as the guaranteed MTBF is achieved.

9.2.3 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 B. The labor and material required to Incorporate the corrective actions required to meet the MTBF as defined in said document will be provided at no additional cost to Spirit, Gulfstream or its customers. For those Product(s) with required overhauls, where the calculated MTBF is lower than the guaranteed MTBF and Product(s) are returned to Seller for repair, Seller will overhaul Product(s) to zero time at no additional cost to Spirit or Gulfstream.

9.2.4 Seller shall provide Spirit with a comprehensive in-service Product(s) repair/upgrade plan to address any in-service Product(s) reliability issues discovered In accordance with this Section. Said plan shall be at Sellers own cost and expense and will include the process for executing fleet upgrade/modification program, time frame for completing any required program, and comprehensive evaluation of the validity of corrective actions established.

9.2.5 For Spirit or Spirit’s customer designed components, if at the end of the agreed to warranty period, the guaranteed MTBF has not been achieved, and joint investigation concludes that the issue of quality or manufacturing workmanship or processes are the cause for in service failures, then Seller agrees to extend the warranty period until such time as the guaranteed MTBF is achieved. if the joint investigation concludes that Gulfstream’s design is the cause of the failures, then Gulfstream will take responsibility for any corrective action.

ARTICLE 10.0 WARRANTY

10.1 General

10.1.1 Subject to the limitations and conditions hereinafter set forth, Seller warrants that the Product(s) supplied hereunder shall:

a. at the Date of Delivery:

i. conform to the specifications and the Approved Design;

ii. to the extent Seller has Design authority, integrate fully with the Aircraft;

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iii. be fit for the purposes intended;

iv. be free from defects in material or workmanship;

v. be free from defects arising from the selection of material or process of manufacture other than as specified by Spirit or contained in Spirit provided design under the Product(s) Description; or Spirit approved design; and

vi. to the extent that Seller has design authority, be free from 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 Aircraft design or which are directly provided by Spirit but, only to the extent such criteria is defective or incorrect. To the extent Spirit has provided the design, Seller shall have no design warranty obligations under Section 10.1.1.a.

10.1.2 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 provided in this Agreement, as certified by the FAA or other airworthiness authorities, developed by Seller pursuant to the Product(s) Description or the Engineering Statement of Work.

10.1.3 Notwithstanding any provisions contained in this Article or elsewhere in this Agreement, in the event of proven repetitive defects, malfunctions or premature deterioration, Seller shall take the appropriate measures to eliminate such defects as quickly as possible, but no later than thirty (30) calendar days after notification by Spirit. Any such defective Product(s) that is not promptly corrected by Seller may be corrected by Spirit at Seller’s expense, which shall be mutually agreed to and such correction will not alter or affect Seller’s warranty as stated in this Article.

10.2 Duration

10.2.1 The extent of Seller liability under this Section as to non-compliance or defects in the Product(s) is limited to the repair of all such defects in the Product(s) which are discovered within a period of;

a. One hundred and twenty months (120) months from the date of shipment, or one hundred and twenty (120) months from the date of delivery of the Aircraft to the operator and while Seller retains the tooling and data necessary to effect such repairs. Warranty duration calculations are based upon the exclusion of any repair time spent at Sellers facilities, and/or.

b. Twenty (20) years for primary and secondary structure commencing after delivery and acceptance of an outfitted aircraft by Gulfstream’s customer.

i. For the purposes of this Agreement, “Primary and Secondary Structure” shall mean the aluminum, steel and/or graphite or fiberglass composite materials, including the fasteners attached thereto, which form the fuselage, wings, vertical and horizontal stabilizers, flight control surfaces, fairings, doors, engine mounts and nacelles, including attachment and support structures found within these areas.

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10.2.2 Seller will support demonstrator aircraft by refreshing all warranties upon sale of demonstrator to customer to original new warranty duration, or extending warranty to cover period of time aircraft is leased from customer.

10.2.3 The above warranties shall not apply to defects attributable to normal wear and tear, acts of omissions of Spirit or its customers and Spirit’s or Spirit’s distributor’s or the Aircraft operator’s failure to preserve., store, install, operate or maintain the item of Product(s) in accordance with the Seller’s written instructions furnished to Spirit (provided such instructions are consistent with the provisions of this Agreement.

10.2.4 The warranty period for any Item of Product(s) repaired or replaced shall begin on the date of delivery of the corrected Seller Product(s) and will be for the period specified below;

a. For corrected Seller Products, which have been corrected because of a defect in material, the applicable warranty period is the remainder of the initial warranty period for such corrected Seller Product For corrected Seller Products, which have been corrected because of a defect in workmanship, the applicable warranty period is the remainder of the initial warranty period or twelve (12) months following the date of delivery of the corrected Seller Product or kits, whichever is longer.

b. For corrected Seller Product(s), which have been corrected because of a defect in design, the applicable warranty period is eighteen (18) months or the remained of the initial warranty period, whichever is longer. if any item of Product(s) is returned three (3) times by Spirit to Seller, under the terms of this Warranty. then Seller shall replace the defective item of Product(s) with a new or like new item of Product(s).

10.3 Remedies

10.3.1 Seller’s obligation for a breach of a warranty provided under this Section during the periods described in Section 10.2 shall be to promptly repair, replace or correct (to include all costs associated with removal and reinstallation) at Seller’s sole election and cost, the defective part or condition with reasonable care and dispatch. Seller will reimburse Spirit for the cost of labor for all tasks associated with the removal of defective Product(s), to include gaining access and closure and troubleshooting, installation of the replacement unit and required operational checks that are needed to return the Aircraft to service, provided the work is performed by Spirit, an Authorized Warranty Repair Facility or by a facility as directed by Spirit. Reimbursement will be at Spirit’s then standard labor rate and will be based on standard hours applicable to the removal and replacement of each Product(s).

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10.3.2 Seller agrees to absorb all associated costs incurred against no fault found (NFF)/no cause for rejection (NCFR) including shipping expenses for equipment removed from Spirit’s Production line.

10.3.3 Seller agrees to absorb all associated costs incurred in providing temporary lift to customers. in those cases where Seller fails to meet terms of AOG support.

10.4 Removal and Reinstallation of Seller’s Product(s)

10.4.1 Spirit reserves the right to debit Seller’s account without prior notice for all direct and related tasks at any Spirit facility or any Spirit authorized facility to effect the removal and reinstallation of Sellers Product(s) or Parts of Assemblies (POA) inclusive of consumables and maintenance replacement units.

10.4.2 Spirit will forward a periodic listing of items to be debited to Seller and will include the following data:

a. The date Product(s) was identified and removed;

b. Part number description and serial number;

c. Reason for removal;

d. Aircraft serial number;

e. Then actual labor hours if known or standard published labor hours and any related labor hours Incurred;

f. Labor rate at then published rates; and

g. Debit amount

10.4.3 Seller will have thirty (30) calendar days from the date of notification to take exception to any item(s) submitted. If upon review, Spirit concurs with said exception, Spirit will adjust debit amount accordingly. Any claims not contested by Seller within the thirty (30) day period will be debited to Seller’s account.

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10.5 Disclaimer

10.5.1 THE WARRANTIES SET FORTH IN THIS AGREEMENT 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 AGREEMENT ARE THE SOLE AND EXCLUSIVE REMEDIES OF SPIRIT FOR ANY CLAIMS, EXPENSES OR DAMAGE ARISING OUT OF OR RELATED TO PRODUCT(S) DELIVERED UNDER THIS AGREEMENT.

10.6 Exclusion of Consequential Damages

10.6.1 INNO EVENT SHALL EITHER PARTY 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 SELLER’S OBLIGATIONS WITH RESPECT TO THIRD PARTY CLAIMS FOR PROPERTY DAMAGE, PERSONAL INJURY OR WRONGFUL DEATH.

10.7 Successor and Assigns

10.7.1 Thewarranties under this Article shall run to Spirit, its successors and assigns, as well as to Spirit’s distributors and customers and to any other end user(s) of the item of Product(s) or the Aircraft in which the same is Installed.

10.8 Warranty Competitiveness

10.8.1 Seller’s warranty shall remain competitive throughout the Aircraft program. Upon mutual agreement, Seller will adjust its warranty to meet the Aircraft competition’s warranty improvements or market demands, at no additional cost to Spirit, its customer or the operator of the Aircraft.

10.9 Additional Guarantees

10.9.1 Without limiting the foregoing, in the event any warranties or guarantees fall below the specified guarantee, Seller shall, at no additional cost to Spirit, implement the following actions:

a. institute a reliability improvement program for the improvement to the appropriate guaranteed levels;

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b. provide Spirit with adequate additional inventory so as to preclude guaranteed levels;

c. continue with Seller’s obligations under this Agreement until Improvements to the guaranteed levels and all Products containing the reliability deficiencies, which caused the guarantee to fall short have been purged from production and Spare Item of a Product inventories and in-serve Aircraft or modified by wither attrition or campaign to improve. Without limitation to any of Spirit’s rights and remedies, in the event that guarantees are not met, Seller shall reimburse Spirit for any reasonable cost incurred, including those imposed by Spirit’s customer and/or the operator of an Aircraft.

ARTICLE 11.0 CHANGES

11.1 Changes

11.1.1 Spirit shall have the right at any time to make changes in drawings, designs, specifications, materials, packaging, time and place of delivery, method of transportation or other terms of this Agreement. Subsequent to receiving Production Type Certification of the Aircraft, notice of changes hereunder shall be delivered to Seller in writing and Seller shall be bound by such changes upon receipt of such writing and Seller shall immediately implement said changes. If such changes cause an increase or decrease in the cost of performance of this Agreement 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 Agreement shall be amended In writing accordingly. Any claim by the Seller for an equitable adjustment under this clause must be asserted within thirty (30) days from the date of written Order effecting the changes or Spirit shall not be obligated to consider Seller’s claim for an equitable adjustment and Seller shall be conclusively deemed to have waived all claims against Spirit. Seller’s claim shall include cost breakdowns and supporting documentation to validate the proposed cost/price impact. In no event shall Spirit 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, Spirit shall have the right to prescribe the manner of disposition of such property. Changes directed by Spirit, which are issued in order to improve fit and/or ease of use by Spirit Production operations will be accepted by Seller without additional costs charged to Spirit and promptly acted upon as mutually agreed. Changes that do not materially affect work in the aggregate, materials and/or testing that would reasonably be expected will not be eligible for price adjustments.

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11.2 Class 1 & 2 Design Changes — Seller Requested Changes

11.2.1 Class 1 changes are those that affect fit, form, function, interchangeability, safety, strength, performance, flight characteristics, weight, balance, Product(s) qualifications, service life or installation of the next assembly. These changes are required to be submitted to and approved by Spirit Engineering pi& to incorporation.

11.2.2 Class 2 changes (those that do not affect fit, form, function, Interchangeability, safety, strength, performance, flight characteristics, weight, balance, Product(s) qualification, service life or installation of the next assembly) must also be submitted for Spirit Engineering’s review and concurrence with respect to classification prior to incorporation. Spirit will respond with said concurrence or any exceptions taken within two (2) weeks after receipt of Seller notification.

11.2.3 All Class 1 and Class 2 Design changes shall be submitted in writing via a ‘Seller Engineering Memo” (SEM) to Spirit Engineering with copies to Spirit Procurement and Procurement Quality Assurance.

ARTICLE 12.0 DERIVATIVES

12.1 Derivative Aircraft

12.1.1 At any time during the term of this Agreement, Gulfstream may elect to build a derivative of the Aircraft on which the Product(s) purchased under this Agreement 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,

12.2 Alternate Sources

12.2.1 If theProduct(s) purchased under this Agreement will not meet the market and commercial requirements or technology that is equal to or better than the applicable technical specifications (which include but are not limited to, reliability and environmental specifications) of the Derivative Aircraft, Spirit may elect to develop alternate sources for like Product(s) to be used on the Derivative Aircraft in lieu of the Product(s) purchased under this Agreement. if an alternate source supplied Product(s) is selected for use on the Derivative Aircraft, Spirit may terminate this Agreement in accordance with the terms delineated herein In the Termination for Default clause.

ARTICLE 13.0 INTELLECTUAL PROPERTY RIGHTS, TOOLING AND DATA OWNERSHIP

13.1 Ownership of Design Drawings/Data

13.1.1 Title and rights to all design and design data (drawings) created by Seller under this Agreement are owned by Spirit or Spirit’s customer upon full payment for Product(s).

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13.1.2 If the Product(s) have been either originated or designed by Seller in accordance with specifications or other data furnished by Gulfstream, all rights to Product(s) or other data and the reproduction, use or sale thereof are owned solely by Gulfstream at all times.

13.1.3 The design shall not be used by Seller in any program that competes with a Gulfstream program.

13.2 Ownership of Tooling, Design and Data

13.2.1 All tooling, the cost of which is included in the price of this Agreement and Is amortized over 150 shipsets, whether designed by Seller, by Gulfstream or by a third party, shall become, upon acquisition or manufacture, the property of Gulfstream. Seller 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 Seller of such tooling has been consented to in writing by Gulfstream.

13.2.2 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 Seller for the performance of this Agreement, which are of such a specialized nature that without substantial modification or alteration, their use is limited to the Production of Product(s) or parts hereof, or the performance of such services as are to be supplied to Gulfstream hereunder. Seller agrees to comply with the provisions of the Gulfstream Tooling Manual for Subcontractors.

13.3 Disposition of Tools

13.3.1 Seller is wholly responsible for all Gulfstream tooling located in its facility/facilities. When tooling is deemed no longer necessary, Seller will receive, in writing, from Spirit guidance on disposition for said tools.

13.3.2 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 Spirit, Gulfstream and Seller. Spirit may file, with the cooperation of Seller, a UCC Financing statement confirming Gulfstream’s ownership interest.

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ARTICLE 14.0 INDEMNIFICATION

14.1 Patent Indemnity

14.1.1 Unless the Product(s) are made to the detailed design of Spirit, Seller shall and agrees to indemnify and hold harmless Spirit and its customers, as well as the end users of the items of Product(s) and the Aircraft in which the same is installed, against all claims, demands, suits, losses and liabilities, including costs and fees, resulting from actual or alleged infringement or any patent, trademark, copyright or trade secret, by reason of the use, sale or disposal by Spirit and/or its customers and/or the end users of any item of Product(s) to be furnished under this Agreement. In the event of any such claims, demands or suits, Seller shall, at Seller’s expense, defend (at Spirit’s option) such claims, demands or suits and Spirit shall provide to Seller such reasonable assistance as shall be required by Seller to defend the same. Should Spirit or its customers and/or the end users be prevented, as a result of such claims, demands or suits regarding infringement, from utilizing the item of Product(s) in question, then Seller shall, at Seller’s sole option and expense, either substitute a non-infringing equivalent item of Product(s) or modify the item of Product(s) so that same no longer infringes but remains equivalent or obtain for Spirit or its customers or the end users the right to continue the use of item of Product(s).

14.1.2 Spirit shall and agrees to pay Seller all direct cost and expenses in its defense and to pay Seller the amount of any judgment against Seller in any suit proceeding against Seller, based upon a claim of infringement resulting solely from a Product(s) made to the detailed design of Spirit or from Spirit connecting any equipment purchased herein with any article or device not manufactured or supplied by Seller, or from the sale or use of any such combination by Spirit.

14.2 Indemnity by Seller Entering Spirit Premises

14.2.1 Seller assumes the risk of all damage, loss, costs and expense, and agrees to indemnify and hold harmless Spirit, 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 Spirit, its officers, agents or employees on account of any claim, suit or action made or brought against Spirit, its officers, agents or employees, (including claims, suits or actions brought against Spirit because of Spirit’s own negligence) for the death of or injury to employees, agents or subcontractors of Seller or destruction of property of Seller, sustained in connection with Seller’s performance of any activity under this Agreement performed at a Spirit 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 Spirit or its employees to Seller, its employees, agents or representatives at the request of Seller, its employees, agents or representatives), except for the willful misconduct of Spirit or its employees.

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14.3 Insurance

14.3.1 Seller agrees to be responsible for and to maintain the following:

a. Product liability insurance with no Individual person or seat insurance limit in the amount of ten (10) times Seller’s annual sales to Spirit in the last calendar year rounded to the nearest million dollars or one million dollars ($1,000,000), whichever is greater.

b. Insurance in the amount of the fair market value of any material and/or tools furnished by Spirit to Seller.

14.3.2 All such insurance shall be placed with reputable companies and Seller shall furnish Certificates of Insurance to Spirit. All such Insurance shall include a clause providing that insurance shall not be canceled or modified on less than thirty (30) days’ prior written notice to Spirit.

ARTICLE 15.0 TERMINATION

15.1 For Default

15.1.1 Spirit may terminate this Agreement or any part thereof, by giving written notice of default to Seller under any of the following circumstances:

a. If Seller refuses or fails to make deliveries of the Product(s) or perform the services required under this Agreement or by an Order Issued pursuant to this Agreement within the time specified.

b. If Seller fails to comply with any of the other material provisions of this Agreement, or so fails to make progress as to endanger performance of this Agreement in accordance with its terms, and does not cure any such failure within a period of ten (10) days (or such longer period as Spirit may authorize in writing) after receipt of notice from Spirit specifying such failure.

c. if Seller becomes insolvent or is subject to proceedings under any law relating to bankruptcy, insolvency or the relief of debtors.

15.1.2 In the event of such termination, Spirit may purchase or manufacture similar Product(s) and/or require Seller to transfer title and deliver to Spirit any or all property produced or procured by Seller under this Agreement and/or Order, to include all applicable tooling, data or designs, and Seller shall be liable to Spirit for any excess cost to Spirit; provided, however, Seller shall not be liable to Spirit for such excess cost when the default of Seller Is due to causes beyond the control and without the fault or negligence of Seller; provided further, and Setter has exercised due diligence to remove delay, Seller shall not be excused from liability unless Seller has notified Spirit in writing of the existence of such cause within ten (10) days from the beginning thereof.

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15.1.3 Spirit’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 Spirit may require to be delivered pursuant to 15.1.2 above. Any and all claims by Seller arising out of termination for default shall be accompanied by cost breakdowns and supporting documentation; further provided, at Spirit’s discretion, this information shall be subject to audit by Spirit

15.2 For Convenience

15.2.1 Spirit may terminate this Agreement, or any part thereof, by giving written notice thereof to Seller. In the event of such termination, Spirit shall pay to Seller costs incurred by Seller, to be mutually agreed upon, for supplies that have been ordered by Spirit, determined in accordance with sound accounting practices plus a reasonable allowance for profit earned thereon; provided that Seller shall not be entitled to any recovery of non-recurring engineering costs or profits with respect to work and/or services not performed prior to effective date of such termination, or for work performed on Product(s) outside of the lead time for that Product(s), nor shall the total termination sum payable to the Seller exceed the total agreed to price for Product(s) and/or supplies that are on Order by Spirit 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 Seller would have sustained a loss of the entire Agreement 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. Any and all claims by Seller arising out of termination for convenience shall be accompanied by cost breakdowns and supporting documentation; further provided, at Spirit’s discretion, this information shall be subject to audit by Spirit. Termination costs shall be calculated by utilizing the procedures set out in the Federal Acquisition Regulations Subparts 49.1 et seq. and 49.2 at seq.

15.3 Partial Termination

15.3.1 Spirit will have the right to exercise a partial termination, whether for default or convenience. A partial termination will allow removal of Product(s) by model type or by part number, allow Spirit to exercise all remedies included in this Agreement and allow Spirit to make Orders for remaining Product(s) without any price increases whatsoever.

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15.4 Notice of Delays

15.4.1 Seller shall immediately notify Spirit of any circumstance that may cause a delay in the performance and/or delivery hereunder, stating the estimated period and reasons for delay and, as reasonable, shall use additional effort, including premium effort, to avoid or minimize delay to the maximum extent possible, all at no change in the contract price and without prejudice to any of Spirit’s rights or remedies under this Agreement.

15.4.2 Seller shall, when delinquent to the committed Program Schedule, and at the written request of Spirit, provide at Spirit’s facility a review for Spirit’s management explaining the cause of the delinquency, corrective action taken or planned, recovery commitments and such other assurances, information and matters pertinent to the delinquent condition. Nothing herein shall be construed as a waiver of any of Spirit’s rights to proceed against the Seller because of such delinquency.

15.5 Force Majeure

15.5.1 Neither Party hereto shall be responsible for, nor deemed to be in default, on account of delays in performance of the Agreement 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, action by the Government(s) ineither its sovereign or contractual capacity, 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 five (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.

15.5.2 In the event the delivery of any Product(s) from Seller is delayed for any cause deemed excusable hereunder, so that the extent of such delay in delivery of any Product(s) will exceed thirty M calendar 60frdM the Cote of scheduled delivery, the Agreement, for Inc undelivered delayed Product(s), may be terminated by Spirit upon written notice to Seller. Any termination under this Subsection shall be treated as a “Termination for Convenience” as described elsewhere in these terms and conditions.

15.5.3 In the event of a significant Force Majeure event, terrorist act or other act or declaration of war that materially impacts Spirit’s Aircraft backlog or sales activities, Spirit may in addition to the other rights set forth in this Agreement reschedule or cancel deliveries effected by such an event, as required (in Spirit’s sole determination). In the event Spirit determines a requirement to either reschedule or cancel deliveries, Spirit will notify the Seller In writing of the deliveries impacted by Spirit’s determination. The Agreement will be modified accordingly and all other deliveries, rights and obligations under the Agreement will remain unchanged and there shall be no penalty, additional costs or liability assessed to Spirit as a result of its cancellation or rescheduling of deliveries under this Section.

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15.6 Stop Work Orders

15.6.1 Spirit may, at any time by written notice to Seller, require Seller to stop all, or any part, of the work called for by this Agreement or by an Order issued under this Agreement for a period of one hundred and eighty (180) days after the notice is delivered to Seller, and for any further period to which the Parties may agree. The Order shall be specifically identified as a Stop-Work Order issued under this Section. Upon receipt of such Stop- Work Order, Seller shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work stoppage. Within a period of one hundred and eighty (180) days after a Stop-Work Order is delivered to the Seller, or within any extension of that period, which the Parties shall have agreed, Spirit shall either:

a. cancel the Stop-Work Order; or

b. terminate the work covered by the Order in accordance with the applicable Termination for Convenience Clause of this Agreement.

15.6.2 If a Stop-Work Order issued under this Section Is cancelled or the period of the Order or any extension thereof expires, Seller shall resume work. Spirit shall make an equitable adjustment in the delivery schedule or contract price, or both, and this Agreement shall be modified, in writing accordingly, if:

a. the Stop-Work Order results in an increase in the time required for, or in Seller’s cost properly allocable to, the performance of any part of this Agreement or an Order so affected; and

b. Seller asserts a claim for the adjustment within thirty (30) days after the end of the period of work stoppage.

ARTICLE 16.0 MISCELLANEOUS

16.1 Disputes

16.1.1 Any controversy or claim between the Parties arising out of or relating to this Agreement, including disputes with respect to whether subject matter Is In the scope of the Agreement, or breach thereof, shall be governed by the laws of the State of Kansas, Pending settlement by agreement or a final judgment, Seller shall proceed diligently with the performance hereof according to Spirit’s decision and instructions.

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16.2 Substance Abuse Policy

16.2.1 Gulfstream Aerospace Corporation’s Substance Abuse Policy (GA 30591 is enclosed and incorporated by reference and will apply while Seller and/or any of its subcontractors are on Gulfstream’s premises.

16.3 Technical Standard Order

16.3.1 The Product(s) will be covered by TSO, if applicable.

16.4 Marketing/Advertising Assistance/Press Releases

16.4.1 Seller 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 Spirit.

16.4.2 Seller agrees, at its own cost and expense, and upon the direction of Spirit to provide reasonable and customary assistance in support of the following:

a. Customer/Options/Retrofits;

b. Air Shows/Trade Shows;

c. Gulfstream Customer Workshops; and

d. Other Spirit or Gulfstream sponsored activities

16.5 Assignment

Seller will not assign all or any part of its interest in this Agreement to any person, firm, corporation, or subcontractors without the express prior consent of Spirit.

16.6 Entire Agreement; Amendments

This Agreement and the Terms and Conditions stated herein or on the face of an Order or any attachments hereto and incorporated herein, constitute the entire understanding between the Parties with respect to the subject matter hereof and are binding on Spirit and Seller, their respective heirs, devisees, administrators, executors, trustees, receivers, successors and permitted assigns and supersedes all previous understandings, agreements, communications and representations, whether written or oral, concerning the subject matter of the Agreement. No change to this Agreement, the Terms and Conditions or any attachments hereto and incorporated herein, shall be valid and binding on either Party unless reduced to writing and signed by authorized representatives of both Parties.

16.7 Agreement Acceptance

Agreement by Seller to furnish materials or services hereby ordered or partial performance hereunder or shipment of any Product(s) ordered hereby constitutes acceptance of the terms and conditions of this Agreement. The terms and conditions set forth shall be the only applicable terms and conditions for this Agreement, unless changes or substitutions are agreed to, in writing, by an authorized agent or representative for Spirit and Seller.

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16.8 Most Favored Customer

Seller shall warrant that prices, terms and warranties under this Agreement are at least as favorable as those being offered to any other purchaser of similar Product(s) under the same or similar circumstances.

16.9 Gratuities

16.9.1 If it is found that gratuities (in the form of entertainment, gifts or otherwise) are offered by Seller, or any agent or representative of Seller, to any employee of Spirit with a view toward securing favorable treatment with respect to the awarding or performing of any Order, Spirit may, by written notice to Seller, terminate all Orders as upon a default In accordance with Article 15.0, Subsection 15.1 of this Agreement in addition to any other rights or remedies by law.

16.9.2 Seller, its employees, representatives and agents shall comply with all of Spirit’s rules, regulations, policies and procedures while on Spirit’s premises or in the company of Spirit’s employees, If Seller, its employees, representatives or agents violate Spirit’s rules, regulations, policies or procedures, Spirit may, by written notice to Seller, terminate all Orders as a Default in accordance with Article 15.0, Subsection 15.1 of this Agreement in addition to any other rights or remedies provided by law.

16.10 Records Review

16.10.1 At Spirit’s request, Seller shall provide to Spirit sufficient operations, marketing and financial data to evaluate any risk that could impact Seller’s ability to perform to terms and conditions of this Agreement. Disclosures should include complete actual and forecasted financial statements (audited if available). Upon agreement by Spirit, Seller may provide a financial review presentation or certified letter from its Chief Financial Officer to describe Seller’s financial health.

16.10.2 Spirit has the right to perform on-site inspections of Seller’s facilities.

16.10.3 Seller will disclose to Spirit any event(s) that could adversely impact Seller’s financial health. Such disclosure will be made to Spirit within two (2) business days of the occurrence. These events may include, but are not limited to: defaults, amendments, or waivers on the financial covenants with banks and/or lenders, files bankruptcy, becomes insolvent, begins restructuring, etc.

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16.10.4 Remedies for non-compliance with records review

Spirit reserves the right to immediately make contingency plans during resolution of said event(s) including dual sourcing to maintain Product(s) flow.

16.11 Federal Acquisition Regulations

16.11.1 The following Federal Acquisition Regulation Clauses contained In the Federal Acquisition Regulation (FAR) Part 52 are incorporated herein by reference:

a. 52.211-15 Defense Priority and Allocation Requirements;

b. 52.219-8 Utilization of Small Business and Small Disadvantaged Business Concerns;

c. 52.222-26 Equal Opportunity;

d. 52.222-35 Affirmative Action for Special and Disabled Vietnam Era Veterans; and

e. 52.222-36 Affirmative Action for Handicapped Workers.

16.11.2 The Seller shall comply with the Certification and Disclosure Regarding Payments to Influence Certain Federal Transactions—$100,000 or Greater (FAR 52.203-11) If applicable:

a. Seller certifies that if it is awarded a contract of $100,000 or more, to the best of its knowledge and belief, Federal appropriated funds have not been paid or will be paid to influence certain Government officials to award a Federal contract or to modify a Federal contract.

b. Seller agrees that if awarded a contract of $100,000 or more, and Seller has provided payments to influence Federal transactions, OMB Standard Form LLL, Disclosure of Lobbying Activities will be submitted to Gulfstream.

16.12 Notices

All notices required or permitted to be given hereunder shall be deemed to be properly given if delivered In writing personally, by facsimile or e-mail, or sent by United States certified or registered mail, or sent by private overnight delivery service and by United States first class mail, addressed to Seller, Spirit or Gulfstream, as the case may be, at the addresses set forth below, with postage thereon fully prepaid. Notice shall be effective upon receipt.

Spirit AeroSystems, Inc.	Daca machine & Tool Co. Inc.
3330 North Mingo Road	13869 South Highway 94
Tulsa, OK 741115	Dutzow, MO 63342
Attention: Danetta Steinmeyer	Attention:
Fax No. (918) 832-32163362	Fax No.

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ARTICLE 17.0 ORDER OF PRECEDENCE 17.1 DOCUMENT PRECEDENCE

17.1.1 In the event of conflict in terms, conditions or other Gulfstream documents, the following order of precedence will apply:

a. Master Order Agreement

b. Purchase Order

c. Referenced Spirit Flysheets

d. Statement of Work

e. Design Specification

f. GV-GER-608, Rev. B, dated 6/28/05 and as amended from time to time

g. GA 270, dated 8/06 Additional Conditions and as amended from time to time

ARTICLE 18.0 ATTACHMENTS

18.1 The following documents shall be attached hereto and made a part hereof.

18.1.1 Non-Disclosure Agreement

18.1.2 Milestone Schedule

18.1.3 Description of System

18.1.4 Weight Penalty Chart

18.1.5 Escalation Formula

18.1.6 Gulfstream Aerospace Corporation’s Substance Abuse Policy (GA 3059)

18.1.7 Gulfstream Tooling Manual for Subcontractors

18.2 All other documents referred to within this Agreement or referenced In the Attachments set out in Section 18.1 above and not otherwise attached hereto shall be deemed to be incorporated herein, by reference, and as may be amended from time to lime, as if fully set out herein.

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ARTICLE 19.0 CONFIRMING AUTHORITY

IN WITNESS WHEREOF, the Parties have signed this Agreement, by their duly authorized representatives.

Spirit AeroSystems Inc.		Seller
BY:	BY:
NAME:	NAME:
TITLE:	TITLE:

49

EX-21.1

Exhibit 21.1

Subsidiaries of Registrant

Subsidiary	Jurisdiction
LMI Finishing, Inc.	Missouri
LMI Kitting, LLC	Delaware
Leonard’s Metal, Inc.	Missouri
Integrated Technologies, Inc.	Washington
Precise Machine Company	Missouri
Tempco Engineering, Inc.	Missouri
Versform Corporation	California
D3 Technologies, Inc.	California
TASS Holdings, Inc.	Delaware
TASS, Inc.	Washington
TASS European Union Ltd.	United Kingdom
TASS Asia Pacific Pty. Ltd.	Australia
Valent Aerostructures, LLC	Delaware
Valent Aerostructures – Wichita, LLC	Delaware
Valent Aerostructures – Tulsa, LLC	Delaware
Valent Aerostructures – Washington, LLC	Delaware
Valent Aerostructures – Lenexa, LLC	Kansas
Valent Aerostructures – St. Louis, Inc.	Missouri
Ozark Mountain Technologies, LLC	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-126768) and Form S-3 (No. 333-170454) of LMI Aerospace, Inc. of our report dated March 15, 2013, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Saint Louis, Missouri

March 15, 2013

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Ronald S. Saks, certify that:

1.     I have reviewed this annual report on Form 10-K of LMI Aerospace, Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent certified public accountants and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 15, 2013	/s/ Ronald S. Saks
	Ronald S. Saks
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Lawrence E. Dickinson, certify that:

1.     I have reviewed this annual report on Form 10-K of LMI Aerospace, Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent certified public accountants and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 15, 2013	/s/ Lawrence E. Dickinson
	Lawrence E. Dickinson
	Chief Financial Officer and Secretary

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of LMI Aerospace, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 15, 2013	/s/ Ronald S. Saks
	Ronald S. Saks
	Chief Executive Officer
	(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to LMI Aerospace, Inc. and will be retained by LMI Aerospace, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of LMI Aerospace, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 15, 2013	/s/ Lawrence E. Dickinson
	Lawrence E. Dickinson
	Secretary and Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

A signed original of this written statement required by Section 906 has been provided to LMI Aerospace, Inc. and will be retained by LMI Aerospace, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

STOCK BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2012

STOCK BASED COMPENSATION [Abstract]

Summary of the activity for non-vested restricted stock awards

A summary of the activity for non-vested restricted stock awards under the Company's share-based compensation plans is presented below:

	2012
Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1		278,410		$	16.42
Granted		108,646			19.19
Vested		(185,307	)		15.43
Forfeited		(11,921	)		19.83
Outstanding at December 31		189,828		$	18.76

XML

EARNINGS PER COMMON SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012		Dec. 31, 2011	Dec. 31, 2010
Numerators [Abstract]
Net income	$ 951	[1]	$ 5,639	[1]	$ 5,105	[1]	$ 4,792	[1]	$ 4,076	$ 4,078	$ 3,966	$ 4,269	$ 16,487	[1]	$ 16,389	$ 12,931
Denominators [Abstract]
Weighted average common shares - basic (in shares)													11,701,607		11,559,895	11,420,524
Dilutive Securities Included in Computation of Earnings Per Share [Line Items]
Weighted average common shares - diluted (in shares)													11,839,182		11,741,513	11,636,385
Basic earnings per share (in dollars per share)	$ 0.08		$ 0.48		$ 0.44		$ 0.41		$ 0.35	$ 0.35	$ 0.34	$ 0.37	$ 1.41		$ 1.42	$ 1.13
Diluted earnings per share (in dollars per share)	$ 0.08		$ 0.48		$ 0.43		$ 0.41		$ 0.35	$ 0.35	$ 0.34	$ 0.37	$ 1.39		$ 1.40	$ 1.11
Restricted Stock[Member]
Dilutive Securities Included in Computation of Earnings Per Share [Line Items]
Dilutive effect of restricted stock and employee stock options (in shares)													137,575		181,618	209,743
Employee Stock Options [Member]
Dilutive Securities Included in Computation of Earnings Per Share [Line Items]
Dilutive effect of restricted stock and employee stock options (in shares)													0		0	6,118

[1] The fourth quarter of 2012 includes $4,860 in acquisition fees related to Valent.

XML

PROPERTY PLANT AND EQUIPMENT (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 5,894	$ 5,219	$ 5,152
Property, Plant and Equipment, Net [Abstract]
Total gross property, plant and equipment	156,878	82,463
Less accumulated depreciation	(60,660)	(55,123)
Total net property, plant and equipment	96,218	27,340
Land [Member]
Property, Plant and Equipment, Net [Abstract]
Total gross property, plant and equipment	1,455	67
Buildings and Improvements [Member]
Property, Plant and Equipment, Net [Abstract]
Total gross property, plant and equipment	18,676	199
Machinery and Equipment [Member]
Property, Plant and Equipment, Net [Abstract]
Total gross property, plant and equipment	108,391	62,751
Leasehold Improvements [Member]
Property, Plant and Equipment, Net [Abstract]
Total gross property, plant and equipment	10,559	7,462
Software and Other [Member]
Property, Plant and Equipment, Net [Abstract]
Total gross property, plant and equipment	10,629	9,557
Construction in Progress [Member]
Property, Plant and Equipment, Net [Abstract]
Total gross property, plant and equipment	$ 7,168	$ 2,427

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COMMITMENTS AND CONTINGENCIES (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Debt Instrument [Line Items]
Lease expiration date	Dec. 31, 2025
Future minimum lease payments under operating leases [Abstract]
2013	$ 7,031,000
2014	6,193,000
2015	5,664,000
2016	5,066,000
2017	4,307,000
Thereafter	24,788,000
Total	53,049,000
Operating lease rent expense	6,789,000	6,546,000	6,714,000
Maximum term of employment agreement	3 years
Warehouse Note [Member]
Future minimum lease payments under operating leases [Abstract]
Promissory note to finance warehouse	$ 2,200,000
Interest rate on note (in hundredths)	2.95%
Maturity date for note	Dec. 28, 2017

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ACCOUNTS RECEIVABLE NET (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Accounts Receivable, Net [Abstract]
Trade receivables	$ 50,876	$ 35,482
Unbilled revenue	12,372	6,347
Other receivables	6,198	1,250
Accounts receivable, gross	69,446	43,079
Less: Allowance for doubtful accounts	(287)	(359)
Accounts receivable, net	$ 69,159	$ 42,720

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PROPERTY PLANT AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2012

PROPERTY PLANT AND EQUIPMENT [Abstract]

Schedule of property, plant and equipment

Depreciation expense (including amortization expense on software) recorded by the Company totaled $5,894, $5,219 and $5,152 for 2012, 2011 and 2010, respectively.

	December 31,
	2012			2011
Land	$	1,455		$	67
Buildings and improvements		18,676			199
Machinery and equipment		108,391			62,751
Leasehold improvements		10,559			7,462
Software and other		10,629			9,557
Construction in progress		7,168			2,427
Total gross property, plant and equipment		156,878			82,463
Less accumulated depreciation		(60,660	)		(55,123	)
Total net property, plant and equipment	$	96,218		$	27,340

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STOCK BASED COMPENSATION (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Weighted Average Grant Date Fair Value
Compensation expense	$ 1,494	$ 1,254	$ 1,794
Restricted Stock Awards [Member]
Shares
Outstanding beginning balance (in shares)	278,410
Granted (in shares)	108,646
Vested (in shares)	(185,307)
Forfeited (in shares)	(11,921)
Outstanding ending balance (in shares)	189,828	278,410
Weighted Average Grant Date Fair Value
Outstanding beginning balance (in dollars per share)	$ 16.42
Granted (in dollars per share)	$ 19.19
Vested (in dollars per share)	$ 15.43
Forfeited (in dollars per share)	$ 19.83
Outstanding ending balance (in dollars per share)	$ 18.76	$ 16.42
Unrecognized compensation costs	2,071	1,716
Costs are expected to be recognized over a weighted average period	1 year 7 months 6 days	9 months 18 days
Fair value of restricted stock awards that vested	3,199	2,149	835
Compensation expense	1,494	1,254	1,794
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price per share (in dollars per share)	$ 2.00
Aggregate intrinsic value of options exercised		$ 126	$ 239

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QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2012

QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract]

QUARTERLY FINANCIAL DATA (UNAUDITED)

18.     QUARTERLY FINANCIAL DATA (UNAUDITED)

The results of any single quarter are not necessarily indicative of the Company's results for the full year. Earnings per share data is computed independently for each of the periods presented. As a result, the sum of the earnings per share amounts for the quarter may not equal the total for the year.

2012	First			Second			Third			Fourth
Net sales		$	66,749		$	69,327		$	70,636		$	71,917
Gross profit		$	16,518		$	16,967		$	18,584		$	16,239
Net income (1)		$	4,792		$	5,105		$	5,639		$	951
Amounts per common share:
Net income		$	0.41		$	0.44		$	0.48		$	0.08
Net income - assuming dilution		$	0.41		$	0.43		$	0.48		$	0.08
2011	First			Second			Third			Fourth
Net sales		$	60,899		$	63,348		$	64,767		$	65,026
Gross profit		$	14,558		$	15,245		$	15,332		$	14,515
Net income		$	4,269		$	3,966		$	4,078		$	4,076
Amounts per common share:
Net income		$	0.37		$	0.34		$	0.35		$	0.35
Net income - assuming dilution		$	0.37		$	0.34		$	0.35		$	0.35

(1) The fourth quarter of 2012 includes $4,860 in acquisition fees related to Valent.

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ACCRUED EXPENSES (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Accrued Liabilities [Abstract]
Accrued payroll	$ 3,362	$ 1,366
Accrued bonus	1,493	1,173
Accrued vacation & holiday	3,257	2,465
Accrued employee benefits	1,815	1,463
Accrued operating lease obligations	1,706	1,440
Contingent consideration	7,950	0
Accrued professional fees	754	896
Other	3,366	2,305
Total accrued expenses	$ 23,703	$ 11,108

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QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables)

12 Months Ended

Dec. 31, 2012

QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract]

Schedule of quarterly financial data

The results of any single quarter are not necessarily indicative of the Company's results for the full year. Earnings per share data is computed independently for each of the periods presented. As a result, the sum of the earnings per share amounts for the quarter may not equal the total for the year.

2012	First			Second			Third			Fourth
Net sales		$	66,749		$	69,327		$	70,636		$	71,917
Gross profit		$	16,518		$	16,967		$	18,584		$	16,239
Net income (1)		$	4,792		$	5,105		$	5,639		$	951
Amounts per common share:
Net income		$	0.41		$	0.44		$	0.48		$	0.08
Net income - assuming dilution		$	0.41		$	0.43		$	0.48		$	0.08
2011	First			Second			Third			Fourth
Net sales		$	60,899		$	63,348		$	64,767		$	65,026
Gross profit		$	14,558		$	15,245		$	15,332		$	14,515
Net income		$	4,269		$	3,966		$	4,078		$	4,076
Amounts per common share:
Net income		$	0.37		$	0.34		$	0.35		$	0.35
Net income - assuming dilution		$	0.37		$	0.34		$	0.35		$	0.35

(1) The fourth quarter of 2012 includes $4,860 in acquisition fees related to Valent.

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EARNINGS PER COMMON SHARE (Tables)

12 Months Ended

Dec. 31, 2012

EARNINGS PER COMMON SHARE [Abstract]

Calculation of basic and diluted earnings per share

The following table shows a reconciliation of the numerators and denominators used in calculating basic and diluted earnings per share.

	Year ended December 31,
	2012		2011		2010
Numerators
Net income	$	16,487	$	16,389	$	12,931
Denominators
Weighted average common shares - basic		11,701,607		11,559,895		11,420,524
Dilutive effect of restricted stock		137,575		181,618		209,743
Dilutive effect of employee stock options		-		-		6,118
Weighted average common shares - diluted	$	11,839,182	$	11,741,513	$	11,636,385
Basic earnings per share	$	1.41	$	1.42	$	1.13
Diluted earnings per share	$	1.39	$	1.40	$	1.11

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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, LINE OF CREDIT FACILTY (Details) (USD $)	12 Months Ended
	Dec. 31, 2012
Line of Credit Facility [Line Items]
Mandatory prepayments description	The maturity dates are subject to acceleration upon breach of the financial covenants (consisting of a maximum total leverage ratio and senior leverage ratio and a minimum fixed charge coverage ratio) and other customary non-financial covenants contained in the credit agreement
Long-term Debt, Fiscal Year Maturity [Abstract]
Year ending December 31, 2013	$ 4,691,000
Year ending December 31, 2014	3,766,000
Year ending December 31, 2015	3,789,000
Year ending December 31, 2016	3,145,000
Year ending December 31, 2017	9,405,000
Thereafter	220,587,000
Long-term debt, total	245,383,000
Less Imputed Interest - Debt	0
Long-term Debt, five year maturities	245,383,000
Capital Leases, Fiscal Year Maturity [Abstract]
Year ending December 31, 2013	1,484,000
Year ending December 31, 2014	1,626,000
Year ending December 31, 2015	1,857,000
Year ending December 31, 2016	1,856,000
Year ending December 31, 2017	1,872,000
Thereafter	10,010,000
Capital Leases, Total	18,705,000
Less: imputed interest	(3,389,000)
Total Capital leases, five year maturities	15,316,000
Line of Credit [Member]
Line of Credit Facility [Line Items]
Minimum outstanding debt required to be hedge to a fixed rate (in hundredths)	50.00%
Minimum outstanding debt hedging period	3 years
Credit Agreement [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Variable rate floor (in hundredths)	1.25%
Credit Agreement [Member] | Alternate base rate [Member]
Line of Credit Facility [Line Items]
Variable rate floor (in hundredths)	2.25%
Credit Agreement [Member] | Federal Funds Rate [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	0.50%
Credit Agreement [Member] | One Month Eurodollar [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	1.00%
Credit Agreement [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Commitment fee (in hundredths)	0.25%
Credit Agreement [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Commitment fee (in hundredths)	0.625%
Credit Agreement [Member] | Maximum [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	4.75%
Credit Agreement [Member] | Maximum [Member] | Alternate base rate [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	3.75%
Missouri IRBs [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Maturity dates	Sep. 30, 2020
Missouri IRBs [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Maturity dates	Jun. 30, 2032
Term Loan Under Credit Agreement, Variable [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	225,000,000
Maturity dates	Dec. 28, 2018
Revolver Under Credit Agreement, Variable [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 75,000,000
Maturity dates	Dec. 28, 2017

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QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended												12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012		Dec. 31, 2011	Dec. 31, 2010
Selected Quarterly Financial Information [Abstract]
Net sales	$ 71,917		$ 70,636		$ 69,327		$ 66,749		$ 65,026	$ 64,767	$ 63,348	$ 60,899	$ 278,629		$ 254,040	$ 223,356
Gross profit	16,239		18,584		16,967		16,518		14,515	15,332	15,245	14,558	68,308		59,650	51,500
Net income	951	[1]	5,639	[1]	5,105	[1]	4,792	[1]	4,076	4,078	3,966	4,269	16,487	[1]	16,389	12,931
Amounts per common share [Abstract]
Net income (in dollars per share)	$ 0.08		$ 0.48		$ 0.44		$ 0.41		$ 0.35	$ 0.35	$ 0.34	$ 0.37	$ 1.41		$ 1.42	$ 1.13
Net income - assuming dilution (in dollars per share)	$ 0.08		$ 0.48		$ 0.43		$ 0.41		$ 0.35	$ 0.35	$ 0.34	$ 0.37	$ 1.39		$ 1.40	$ 1.11
Acquisition fees	$ 4,860												$ 5,362		$ 0	$ 0

[1] The fourth quarter of 2012 includes $4,860 in acquisition fees related to Valent.

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INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Inventories [Abstract]
Raw materials	$ 20,451	$ 9,437
Work in progress	20,012	9,387
Manufactured and purchased components	13,393	15,051
Finished goods	30,792	14,744
Product inventory	84,648	48,619
Capitalized contract costs	5,391	2,462
Total inventories	$ 90,039	$ 51,081

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ACQUISITION

12 Months Ended

Dec. 31, 2012

ACQUISITION [Abstract]

ACQUISITION

2.     ACQUISITIONS

On December 28, 2012, the Company acquired all of the outstanding equity of Valent Aerostructures, LLC, ("Valent"), a provider of complex sub-assemblies and machined parts to airframe manufacturers in the commercial aerospace, business and regional, and military industries, is headquartered in Kansas City, Missouri, and was accounted for under the acquisition method of accounting. Concurrent with the acquisition, the Company entered into a new credit agreement to fund the majority of the purchase price as described in Note 9 below. The Company also issued $15,000 in common stock. Operating results of Valent, which are not material to the Company's operations, have been included in the Company's Aerostructures segment from the date of acquisition, and acquisition related costs of $4,860 were included in acquisitions expense. The following table presents unaudited pro forma consolidated operating results for the Company for the years ended December 31, 2012 and 2011, as if Valent had been acquired as of the beginning of the periods presented:

	December 31,
	2012		2011
Net sales	$	386,402	$	340,551
Net income		12,899		10,152

Management believes the integration of Valent with its business will provide synergistic benefits, including increased scale, complementary product offerings, the ability to compete for larger and more complex design-build projects and enhanced project management capabilities, allowing the Company to drive further growth from existing platforms.

The following table summarizes the preliminary purchase price allocation for Valent at the date of acquisition:

Cash	$	44
Accounts receivable		16,507
Inventory		27,978
Prepaid expenses and other current assets		640
Fixed assets		55,593
Intangible assets		46,546
Other long-term assets		1,575
Goodwill		123,584
Current liabilities assumed		(19,820	)
Long-term liabilities assumed		(23,118	)
Cost of acquisition	$	229,529

Of the $46,546 acquired intangible assets, $45,600 was assigned to customer relationships with a weighted average useful life of 20.3 years; and the remaining $946 consists of trade names, trademarks and other intangibles and have a weighted average useful life of 5.5 years. The fair value of the customer relationships was determined using the multi-period excess earnings method. The fair value of trade names and trademarks was determined using the cost method.

The purchase price for Valent includes the estimated acquisition-date fair value of contingent consideration. The estimated acquisition-date fair value of contingent consideration relates to an earn-out at the date of acquisition contingent upon the achievement of certain earnings levels during the one year earn-out period. The maximum amounts payable is $40,000 of which no more than $25,000 is payable in 2014 with any remainder payable in 2015. The estimated fair value of the earn-out at the date of acquisition is $7,950, and is included in accrued expenses.

The final determination of the fair value of certain assets acquired and liabilities assumed will be completed within the one year measurement period. The size and timing of the Valent acquisition will necessitate the use of this measurement period to adequately analyze and assess a number of the factors used in establishing the asset and liability fair values as of the acquisition date. Any potential adjustments made could be material in relation to the preliminary values presented above.

On August 7, 2012, the Company acquired all of the shares of capital stock of TASS Inc. ("TASS"), an after-market engineering and support services firm. Headquartered in Kirkland, Washington, TASS delivers engineering solutions to aircraft manufacturers, airlines, Maintenance, Repair and Overhaul companies and leasing companies worldwide. The acquisition was funded by internal cash and by entering into a $1,000 note payable and was accounted for under the acquisition method of accounting. Operating results of TASS, including revenues of $6,147 and loss from operation of $79, have been included in the Company's Engineering Services segment from the date of acquisition, and acquisition related costs of $343 were included in selling, general and administrative expense. The pro-forma operating results, as if the Company had completed the acquisition at the beginning of the periods presented, are not material to the Company's operations and are not presented.

Management believes the acquisition of TASS, together with other initiatives, will augment the Company's long and successful history with Boeing products and provide the Company with a global presence in the aftermarket engineering arena. TASS also provides the Company the ability to internally source product support for parts manufactured by the Company in the global airline fleet.

The Company performed a valuation analysis to determine amounts allocated to the acquired assets and assumed liabilities, including various intangible assets. The following table summarizes the purchase price allocation for TASS at the date of acquisition:

Cash	$	617
Accounts receivable		1,979
Other assets		175
Fixed assets		196
Intangible assets		2,247
Goodwill		6,628
Current liabilities assumed		(1,362	)
Cost of acquisition	$	10,480

Of the $2,247 acquired intangible assets, $1,876 was assigned to customer relationships with a weighted average useful life of 11.9 years; and the remaining $371 consists of trademarks and other intangibles and have a weighted average useful life of 2.9 years. The fair value of the customer relationships was determined using the discounted cash flow method. The fair value of the trademarks was determined using the relief from royalty method.

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SUBSEQUENT EVENT (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended
	Feb. 05, 2013
Subsequent Event [Line Items]
Subsequent Event, Date	Feb. 05, 2013
Debt instrument, face amount	$ 350,000
Term Loans [Member]
Subsequent Event [Line Items]
Total leverage ratio for determining margin adjustment decrease on term loan	3.00:1:00
Incremental decrease in rate	0.25%
Debt maturity date	Dec. 28, 2018
Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Debt instrument, face amount	125,000
Initial loan amount	$ 75,000
Initial Total leverage threshold for commitment fee	1.50:1.00
Total leverage threshold for increase in commitment fee	2.00:1.00
Initial commitment fees	0.25%
New commitment fees	0.375%
Debt maturity date	Dec. 28, 2017
LIBOR Rate [Member] | Term Loans [Member]
Subsequent Event [Line Items]
Description of Variable Rate Basis	LIBOR
Initial margin adjustment	4.75%
Amended margin adjustment	3.50%
New margin rate after decrease in rate	3.25%
Variable base rate floor	1.25%
LIBOR Rate [Member] | Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Description of Variable Rate Basis	LIBOR
Initial margin adjustment	4.75%
Amended margin adjustment	4.00%
Variable base rate floor	1.25%
ABR Rate Option [Member] | Term Loans [Member]
Subsequent Event [Line Items]
Description of Variable Rate Basis	ABR
Initial margin adjustment	3.75%
Amended margin adjustment	2.50%
New margin rate after decrease in rate	2.25%
Variable base rate floor	2.25%
ABR Rate Option [Member] | Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Description of Variable Rate Basis	ABR
Initial margin adjustment	3.75%
Amended margin adjustment	3.00%
Variable base rate floor	2.25%

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ACCOUNTING POLICIES (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2006	Dec. 28, 2006
ACCOUNTING POLICIES [Abstract]
Percentage of revenue included claims and unpriced change orders (in hundredths)	0.50%
Sell and lease back of real estate properties		$ 10,250
Amount of the sale price in excess of book value			$ 4,242
Lease term of property	18 years
Building [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	20 years
Building [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	35 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	4 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	10 years
Purchased Software [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Purchased Software [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	4 years

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ACQUISITION (Tables)

12 Months Ended

Dec. 31, 2012

ACQUISITION [Abstract]

Pro forma consolidated operating results

On December 28, 2012, the Company acquired all of the outstanding equity of Valent Aerostructures, LLC, ("Valent"), a provider of complex sub-assemblies and machined parts to airframe manufacturers in the commercial aerospace, business and regional, and military industries, is headquartered in Kansas City, Missouri, and was accounted for under the acquisition method of accounting. Concurrent with the acquisition, the Company entered into a new credit agreement to fund the majority of the purchase price as described in Note 9 below. The Company also issued $15,000 in common stock. Operating results of Valent, which are not material to the Company's operations, have been included in the Company's Aerostructures segment from the date of acquisition, and acquisition related costs of $4,860 were included in acquisitions expense. The following table presents unaudited pro forma consolidated operating results for the Company for the years ended December 31, 2012 and 2011, as if Valent had been acquired as of the beginning of the periods presented:

	December 31,
	2012		2011
Net sales	$	386,402	$	340,551
Net income		12,899		10,152

Summary of purchase price allocation

The following table summarizes the preliminary purchase price allocation for Valent at the date of acquisition:

Cash	$	44
Accounts receivable		16,507
Inventory		27,978
Prepaid expenses and other current assets		640
Fixed assets		55,593
Intangible assets		46,546
Other long-term assets		1,575
Goodwill		123,584
Current liabilities assumed		(19,820	)
Long-term liabilities assumed		(23,118	)
Cost of acquisition	$	229,529

The Company performed a valuation analysis to determine amounts allocated to the acquired assets and assumed liabilities, including various intangible assets. The following table summarizes the purchase price allocation for TASS at the date of acquisition:

Cash	$	617
Accounts receivable		1,979
Other assets		175
Fixed assets		196
Intangible assets		2,247
Goodwill		6,628
Current liabilities assumed		(1,362	)
Cost of acquisition	$	10,480

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ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2012

ACCOUNTING POLICIES [Abstract]

Principles of Consolidation

Principles of Consolidation

The Consolidated Financial Statements included in this report have been prepared by management of LMI Aerospace, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from these estimates.

Revenue Recognition

Revenue Recognition

Except as described below, the Company recognizes revenue for sales of products and related services when products are delivered and services are rendered, the price is fixed or determinable, and collection is reasonably assured.

The majority of the Aerostructures segment's revenues are recognized when products are shipped, delivery has occurred or services have been rendered. For long-term contracts requiring development and delivery of multiple units of product over more than one year, the Company incurs and defers, as part of inventory, certain costs which are specific to the contract and will be recouped as part of the unit cost charged to the customer under the contract. Such costs are charged to cost of product sales ratably as the manufactured units are shipped pursuant to the contract. Changes in the estimated number of units expected to be delivered under such contracts result in prospective adjustments of the ratable charge-off of deferred inventoriable costs per unit shipped. Should the remaining inventoriable costs plus estimated costs of production of units yet to be shipped under the contract exceed estimated future contract revenues, the resulting full loss is recognized in the period it becomes probable and estimable. No such loss was recognized in 2012, 2011, or 2010.

The majority of the Engineering Services segment's revenues are generated under cost-plus reimbursement contracts. Revenue for cost-plus reimbursement contracts is recognized as labor hours and direct costs are incurred. Such revenues include the value of labor hours at pre-negotiated rates, estimated overhead and general and administrative costs allocable to the contract based on applicable rates for each quarter, actual direct incidental costs, and a pre-negotiated fee markup or margin.

For certain long-term fixed price design and development contracts, the Company applies the percentage of completion method of contract accounting. The cost-to-cost method is used to measure progress toward completion. Under the cost-to-cost method of accounting, the Company recognizes sales based on the ratio of costs incurred to the estimate of total costs at completion. No such loss was recognized in 2012, 2011, or 2010. For certain other contracts, progress is measured using the units of delivery method. The amount reported as revenue represents the invoice price of delivered products, and cost of sales is determined by applying the estimated gross margin percentage to the amount of revenue recognized. Should estimated total costs at completion exceed the estimated total revenue, the anticipated full loss is recognized in the period in which it is estimated.

In the ordinary course of business, the Company may receive requests from its customers to perform tasks not specified in its contracts. When this occurs on a long-term contract using the cost-to-cost method of percentage of completion accounting, the Company may record revenue for claims or unpriced change orders to be negotiated with customers. As of December 31, 2012, approximately 0.5% of revenue represented amounts associated with claims and unpriced change orders.

Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts

Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts

In certain circumstances, the Company capitalizes costs incurred prior to the execution of a contract with the customer. These circumstances are limited to instances in which the Company has substantially negotiated the terms and conditions of the anticipated contract with its customers and concluded that their recoverability from the anticipated contract is probable. As these costs are directly associated with a specific anticipated contract and they are concluded to be recoverable under that anticipated contract, the Company has capitalized these amounts.

The Company may incur design and development costs prior to the production phase of contracts that are outside the scope of the contract accounting method. These pre-production costs are generally related to costs the Company incurs to design and build tooling that is owned by the customer and design and engineering services. The Company receives the non-cancellable right to use these tools to build the parts as specified in a contractual agreement and therefore has capitalized these costs. In certain instances, the Company enters into agreements with its customers that provide it a contractual guarantee for reimbursement of design and engineering services incurred prior to the production phase of a contract. Due to the contractual guarantee, the Company capitalizes the costs of these services. The pre-production costs are amortized to cost of sales over the shorter of the life of the contractual agreement or the related tooling.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits in transit and all highly liquid investment instruments with an initial maturity of three months or less.

Inventories

Inventories

The Company's inventories are stated at the lower of cost or market and utilize actual costs for raw materials and an average cost for work in process, manufactured and purchased components and finished goods. The Company evaluates the inventory carrying value and reduces the carrying costs based on customer activity, estimated future demand, price deterioration, and other relevant information. The Company's customer demand is unpredictable and may fluctuate due to factors beyond the Company's control. In addition, inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, a portion of which is not expected to be realized within one year. See further discussion regarding deferred long-term contract costs under "Revenue Recognition" and "Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts."

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The allowance for doubtful accounts receivable reflects the Company's best estimate of probable losses inherent in its accounts receivable. The basis used to determine this value is derived from historical experience, specific allowances for known troubled customers and other currently available information.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. Estimated useful lives for buildings, machinery and equipment, and purchased software are 20 to 35 years, 4 to 10 years and 3 to 4 years, respectively. Amortization incurred under capital leases is reported with depreciation expense.

Long-Lived Assets

Long Lived Assets

Long lived assets held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The Company's acquisitions involve the purchase of tangible and intangible assets and the assumption of certain liabilities. As part of the purchase price allocation, the Company allocates the purchase price to the tangible assets acquired and liabilities assumed based on estimated fair market values, and the remainder of the purchase price is allocated to intangibles and goodwill. Goodwill and intangible assets with indefinite lives are not amortized but are subject to an impairment assessment at least annually in relation to their fair value. As part of this process, the Company first assesses qualitatively whether it is necessary to perform the quantitative test. The qualitative assessment involves evaluating relevant events or circumstances to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If it is not, the Company can bypass the quantitative assessment of goodwill. If it is, or if the Company has elected to bypass the qualitative assessment process, the quantitative assessment of goodwill utilizes a two-step process, where the carrying value of the reporting unit is compared to its fair value. If the carrying value is less than the fair value, no impairment exists, and the second step is not performed. However, if the carrying value is greater than the fair value, the second step is performed. An impairment charge would be recognized for the amount that the carrying value of the goodwill exceeds its fair value.

Deferred Gain on Sale of Real Estate

Deferred Gain on Sale of Real Estate

On December 28, 2006, the Company entered into an agreement with a third party to sell and lease back certain of its real estate properties for $10,250. The amount of the sale price in excess of book value for these properties of $4,242 was deferred and is being amortized over the 18 year term of the leases on a straight-line basis.

Share-based Compensation

Share-Based Compensation

The Company recognizes compensation expense for share-based payment transactions in the financial statements at their fair value. The expense is measured at the grant date, based on the calculated fair value of the share-based award, and is recognized over the requisite service period (generally the vesting period of the equity award).

Income Taxes

Income Taxes

Provisions for federal and state income taxes are calculated on reported net income before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes. Significant judgment is required in determining income tax provisions and evaluating tax positions.

The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company records a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on our tax return. To the extent that management's assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

The Company's unrecognized tax benefits as of December 31, 2012 and 2011 are immaterial. The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2012. The Company has no material interest or penalties relating to income taxes recognized on the balance sheets as of December 31, 2012, and 2011. As of December 31, 2012, returns for calendar years 2009 through 2011 remain subject to examination by the Internal Revenue Service and/or various state tax jurisdictions.

Financial Instruments

Financial Instruments

Fair values of the Company's long-term obligations approximate their carrying values as the applicable interest rates approximate the current market rates or have variable rate characteristics. The Company's other financial instruments have fair values that approximate their respective carrying values due to their short maturities.

Reclassifications

Reclassifications

Certain reclassifications have been made to prior period financial statements in order to conform to current period presentation.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In October 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2012-04, "Technical Corrections and Improvements,"("ASU 2012-04"). ASU 2012-04 amends current guidance by clarifying the FASB Accounting Standards Codification ("Codification"), correcting unintended application of guidance, or making minor improvements to the Codification. These amendments are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Additionally, the amendments included in ASU 2012-04 intend to make the Codification easier to understand and the fair value measurement guidance easier to apply by eliminating inconsistencies and providing needed clarifications. The amendments in ASU 2012-04 that will not have transition guidance will be effective upon issuance. For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. The adoption of this standard is not expected to have a material effect on our consolidated financial statements.

In January 2013, the FASB issued ASU No. 2013-01, "Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities" to clarify the scope of the disclosure requirements described in the FASB's ASU No. 2011-11"Balance Sheet: Disclosures about Offsetting Assets and Liabilities" ("ASU 2011-11"). ASU No. 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. This update clarifies that the scope is limited to include derivatives or securities borrowing and lending transactions that are offset or subject to an enforceable master netting arrangement or similar agreement. These updates are effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013 applied retrospectively for comparative periods presented. The adoption of this standard is not expected to have a material effect on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." The standard requires companies to present, either in a single note or parenthetically on the face of the financial statements; the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. This ASU is effective prospectively for reporting periods beginning after December 15, 2012 which corresponds to the Company's first fiscal quarter beginning January 1, 2013. The adoption of this is not expected to have a material effect on our consolidated financial statements.

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DEFINED CONTRIBUTIONS PLANS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Number of company sponsored defined contribution plans	4
LMI Profit Sharing and Savings Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Maximum annual contribution per employee amount	$ 1
Defined contribution plan vesting period	6 years
Recognized cost for matching contributions	$ 882	$ 806	$ 798
Employer matching contribution percentage (in hundredths)	50.00%	50.00%	50.00%
Valent 401k and Simple IRA Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution threshold	3.00%
TASS Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan vesting period	5 years

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ACQUISITION (Details) (USD $)	3 Months Ended	12 Months Ended					12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 TASS Inc [Member]	Aug. 07, 2012 TASS Inc [Member]	Dec. 31, 2012 TASS Inc [Member] Customer Relationships [Member]	Aug. 07, 2012 TASS Inc [Member] Customer Relationships [Member]	Dec. 31, 2012 TASS Inc [Member] Trademarks other intangibles asset [Member]	Aug. 07, 2012 TASS Inc [Member] Trademarks other intangibles asset [Member]	Dec. 31, 2012 Valent Aerostructures, LLC [Member]	Dec. 31, 2012 Valent Aerostructures, LLC [Member] Contingent payment in year two [Member]	Dec. 31, 2012 Valent Aerostructures, LLC [Member] Customer Relationships [Member]	Dec. 31, 2012 Valent Aerostructures, LLC [Member] Trademarks other intangibles asset [Member]
Business Acquisition [Line Items]
Acquisition date					Aug. 07, 2012						Dec. 28, 2012
Notes payable						$ 1,000,000
Equity Interests Issued		15,000,000									15,000,000
Common shares issued (in shares)		783,798
Common stock, par value (in dollars per share)	$ 0.02	$ 0.02	$ 0.02
Contingent consideration--earn-out											40,000,000	25,000,000
Accrued contingent consideration											7,950,000
Revenue of acquiree since acquisition					6,147,000
Loss of acquiree since acquisition					(79,000)
Acquisition related costs	4,860,000	5,362,000	0	0	343,000						4,860,000
Business Acquisition, Pro Forma Information [Abstract]
Net Sales		386,402,000	340,551,000
Net Income		12,899,000	10,152,000
Summary of purchase price allocation [Abstract]
Cash acquired						617,000					44,000
Accounts receivable						1,979,000					16,507,000
Inventory											27,978,000
Prepaid expenses and other current assets											640,000
Other assets						175,000
Fixed assets						196,000					55,593,000
Intangible assets						2,247,000					46,546,000
Other long-term assets											1,575,000
Goodwill						6,628,000					123,584,000
Current liabilities assumed						(1,362,000)					(19,820,000)
Long-term liabilities assumed											(23,118,000)
Cost of acquisition						10,480,000					229,529,000
Acquired Finite-lived Intangible Asset, Amount						$ 2,247,000		$ 1,876,000		$ 371,000	$ 46,546,000		$ 45,600,000	$ 946,000
Weighted average estimated useful life							11 years 10 months 24 days		2 years 10 months 24 days				20 years 3 months 18 days	5 years 6 months

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ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2012

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Valuation methodologies used for assets measured at fair value

The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. There have been no changes in the methodologies used at December 31, 2012. There were no transfers between levels during 2012 and 2011.

	Assets at Fair Value as of December 31, 2012
	Total		(Level 1)		(Level 2)		(Level 3)
Recurring Fair Value Measurement:
Contingent consideration (1)	$	7,950	$	-	$	-	$	7,950
Non-recurring Fair Value Measurements:
Intangible assets, net (2)		48,793		-		-		48,793

												2011
												Total
	Assets at Fair Value as of December 31, 2011											Gains
	Total		(Level 1)			(Level 2)			(Level 3)			(Losses)
Recurring Fair Value Measurement:
Money market fund (3)	$	7,503		$	7,503		$	-		$	-			-
Non-recurring Fair Value Measurements:
Intangible assets, net (4)		17,642			-			-			17,642		$	(1,163	)
Contingent consideration (5)		-			-			-			-			1,235
														72

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ACCOUNTS RECEIVABLE NET (Tables)

12 Months Ended

Dec. 31, 2012

ACCOUNTS RECEIVABLE NET

Schedule of accounts receivable, net

Accounts receivable, net consists of the following:

	December 31,
	2012			2011
Trade receivables	$	50,876		$	35,482
Unbilled revenue		12,372			6,347
Other receivables		6,198			1,250
		69,446			43,079
Less: Allowance for doubtful accounts		(287	)		(359	)
Accounts receivable, net	$	69,159		$	42,720

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ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2012

ACCOUNTING POLICIES [Abstract]

ACCOUNTING POLICIES

1.       ACCOUNTING POLICIES

Principles of Consolidation

The Consolidated Financial Statements included in this report have been prepared by management of LMI Aerospace, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from these estimates.

Revenue Recognition

Except as described below, the Company recognizes revenue for sales of products and related services when products are delivered and services are rendered, the price is fixed or determinable, and collection is reasonably assured.

The majority of the Aerostructures segment's revenues are recognized when products are shipped, delivery has occurred or services have been rendered. For long-term contracts requiring development and delivery of multiple units of product over more than one year, the Company incurs and defers, as part of inventory, certain costs which are specific to the contract and will be recouped as part of the unit cost charged to the customer under the contract. Such costs are charged to cost of product sales ratably as the manufactured units are shipped pursuant to the contract. Changes in the estimated number of units expected to be delivered under such contracts result in prospective adjustments of the ratable charge-off of deferred inventoriable costs per unit shipped. Should the remaining inventoriable costs plus estimated costs of production of units yet to be shipped under the contract exceed estimated future contract revenues, the resulting full loss is recognized in the period it becomes probable and estimable. No such loss was recognized in 2012, 2011, or 2010.

The majority of the Engineering Services segment's revenues are generated under cost-plus reimbursement contracts. Revenue for cost-plus reimbursement contracts is recognized as labor hours and direct costs are incurred. Such revenues include the value of labor hours at pre-negotiated rates, estimated overhead and general and administrative costs allocable to the contract based on applicable rates for each quarter, actual direct incidental costs, and a pre-negotiated fee markup or margin.

For certain long-term fixed price design and development contracts, the Company applies the percentage of completion method of contract accounting. The cost-to-cost method is used to measure progress toward completion. Under the cost-to-cost method of accounting, the Company recognizes sales based on the ratio of costs incurred to the estimate of total costs at completion. No such loss was recognized in 2012, 2011, or 2010. For certain other contracts, progress is measured using the units of delivery method. The amount reported as revenue represents the invoice price of delivered products, and cost of sales is determined by applying the estimated gross margin percentage to the amount of revenue recognized. Should estimated total costs at completion exceed the estimated total revenue, the anticipated full loss is recognized in the period in which it is estimated.

In the ordinary course of business, the Company may receive requests from its customers to perform tasks not specified in its contracts. When this occurs on a long-term contract using the cost-to-cost method of percentage of completion accounting, the Company may record revenue for claims or unpriced change orders to be negotiated with customers. As of December 31, 2012, approximately 0.5% of revenue represented amounts associated with claims and unpriced change orders.

Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts

In certain circumstances, the Company capitalizes costs incurred prior to the execution of a contract with the customer. These circumstances are limited to instances in which the Company has substantially negotiated the terms and conditions of the anticipated contract with its customers and concluded that their recoverability from the anticipated contract is probable. As these costs are directly associated with a specific anticipated contract and they are concluded to be recoverable under that anticipated contract, the Company has capitalized these amounts.

The Company may incur design and development costs prior to the production phase of contracts that are outside the scope of the contract accounting method. These pre-production costs are generally related to costs the Company incurs to design and build tooling that is owned by the customer and design and engineering services. The Company receives the non-cancellable right to use these tools to build the parts as specified in a contractual agreement and therefore has capitalized these costs. In certain instances, the Company enters into agreements with its customers that provide it a contractual guarantee for reimbursement of design and engineering services incurred prior to the production phase of a contract. Due to the contractual guarantee, the Company capitalizes the costs of these services. The pre-production costs are amortized to cost of sales over the shorter of the life of the contractual agreement or the related tooling.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits in transit and all highly liquid investment instruments with an initial maturity of three months or less.

Inventories

The Company's inventories are stated at the lower of cost or market and utilize actual costs for raw materials and an average cost for work in process, manufactured and purchased components and finished goods. The Company evaluates the inventory carrying value and reduces the carrying costs based on customer activity, estimated future demand, price deterioration, and other relevant information. The Company's customer demand is unpredictable and may fluctuate due to factors beyond the Company's control. In addition, inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, a portion of which is not expected to be realized within one year. See further discussion regarding deferred long-term contract costs under "Revenue Recognition" and "Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts."

Allowance for Doubtful Accounts

The allowance for doubtful accounts receivable reflects the Company's best estimate of probable losses inherent in its accounts receivable. The basis used to determine this value is derived from historical experience, specific allowances for known troubled customers and other currently available information.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. Estimated useful lives for buildings, machinery and equipment, and purchased software are 20 to 35 years, 4 to 10 years and 3 to 4 years, respectively. Amortization incurred under capital leases is reported with depreciation expense.

Long Lived Assets

Long lived assets held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Goodwill and Intangible Assets

The Company's acquisitions involve the purchase of tangible and intangible assets and the assumption of certain liabilities. As part of the purchase price allocation, the Company allocates the purchase price to the tangible assets acquired and liabilities assumed based on estimated fair market values, and the remainder of the purchase price is allocated to intangibles and goodwill. Goodwill and intangible assets with indefinite lives are not amortized but are subject to an impairment assessment at least annually in relation to their fair value. As part of this process, the Company first assesses qualitatively whether it is necessary to perform the quantitative test. The qualitative assessment involves evaluating relevant events or circumstances to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If it is not, the Company can bypass the quantitative assessment of goodwill. If it is, or if the Company has elected to bypass the qualitative assessment process, the quantitative assessment of goodwill utilizes a two-step process, where the carrying value of the reporting unit is compared to its fair value. If the carrying value is less than the fair value, no impairment exists, and the second step is not performed. However, if the carrying value is greater than the fair value, the second step is performed. An impairment charge would be recognized for the amount that the carrying value of the goodwill exceeds its fair value.

Deferred Gain on Sale of Real Estate

On December 28, 2006, the Company entered into an agreement with a third party to sell and lease back certain of its real estate properties for $10,250. The amount of the sale price in excess of book value for these properties of $4,242 was deferred and is being amortized over the 18 year term of the leases on a straight-line basis.

Share-Based Compensation

The Company recognizes compensation expense for share-based payment transactions in the financial statements at their fair value. The expense is measured at the grant date, based on the calculated fair value of the share-based award, and is recognized over the requisite service period (generally the vesting period of the equity award).

Income Taxes

Provisions for federal and state income taxes are calculated on reported net income before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes. Significant judgment is required in determining income tax provisions and evaluating tax positions.

The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company records a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on our tax return. To the extent that management's assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

The Company's unrecognized tax benefits as of December 31, 2012 and 2011 are immaterial. The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2012. The Company has no material interest or penalties relating to income taxes recognized on the balance sheets as of December 31, 2012, and 2011. As of December 31, 2012, returns for calendar years 2009 through 2011 remain subject to examination by the Internal Revenue Service and/or various state tax jurisdictions.

Financial Instruments

Fair values of the Company's long-term obligations approximate their carrying values as the applicable interest rates approximate the current market rates or have variable rate characteristics. The Company's other financial instruments have fair values that approximate their respective carrying values due to their short maturities.

Reclassifications

Certain reclassifications have been made to prior period financial statements in order to conform to current period presentation.

Recent Accounting Pronouncements

In October 2012, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2012-04, "Technical Corrections and Improvements,"("ASU 2012-04"). ASU 2012-04 amends current guidance by clarifying the FASB Accounting Standards Codification ("Codification"), correcting unintended application of guidance, or making minor improvements to the Codification. These amendments are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Additionally, the amendments included in ASU 2012-04 intend to make the Codification easier to understand and the fair value measurement guidance easier to apply by eliminating inconsistencies and providing needed clarifications. The amendments in ASU 2012-04 that will not have transition guidance will be effective upon issuance. For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. The adoption of this standard is not expected to have a material effect on our consolidated financial statements.

In January 2013, the FASB issued ASU No. 2013-01, "Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities" to clarify the scope of the disclosure requirements described in the FASB's ASU No. 2011-11"Balance Sheet: Disclosures about Offsetting Assets and Liabilities" ("ASU 2011-11"). ASU No. 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. This update clarifies that the scope is limited to include derivatives or securities borrowing and lending transactions that are offset or subject to an enforceable master netting arrangement or similar agreement. These updates are effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013 applied retrospectively for comparative periods presented. The adoption of this standard is not expected to have a material effect on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." The standard requires companies to present, either in a single note or parenthetically on the face of the financial statements; the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. This ASU is effective prospectively for reporting periods beginning after December 15, 2012 which corresponds to the Company's first fiscal quarter beginning January 1, 2013. The adoption of this is not expected to have a material effect on our consolidated financial statements.

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INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2012

INVENTORIES [Abstract]

Inventories

Inventories consist of the following:

	December 31,
	2012		2011
Raw materials	$	20,451	$	9,437
Work in progress		20,012		9,387
Manufactured and purchased components		13,393		15,051
Finished goods		30,792		14,744
Product inventory		84,648		48,619
Capitalized contract costs		5,391		2,462
Total inventories	$	90,039	$	51,081

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

Schedule of deferred tax assets and liabilities

The temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to the deferred income tax assets and liabilities are as follows:

	December 31,
	2012			2011
Current deferred tax assets (liabilites):
Accrued vacation	$	705		$	663
Inventories		1,888			1,803
Stock award		522			962
Obligation under operating leases		587			437
Foreign NOL Carryforwards		261			-
Other		137			220
Total current deferred tax assets		4,100			4,085
Less: valuation allowance		(261	)		-
Net deferred tax asset		3,839			4,085
Long-term deferred tax assets (liabilities):
Depreciation		(6,151	)		(5,755	)
Amortization of intangibles		(3,646	)		(4,180	)
Gain on sale of real estate		1,022			1,106
Long-term contract costs		(1,941	)		(886	)
Professional fees		1,946			86
Other		38			710
Total long-term deferred tax liabilities		(8,732	)		(8,919	)
Net deferred tax liabilities	$	(4,893	)	$	(4,834	)

Schedule of income tax provision attributable to income before income taxes

The Company's income tax provision attributable to income before income taxes consisted of the following for the years ended December 31, 2012, 2011 and 2010:

	2012			2011		2010
Federal:
Current	$	7,926		$	5,658	$	5,306
Deferred		(109	)		1,149		(151	)
		7,817			6,807		5,155
State
Current		346			225		355
Deferred		(10	)		104		(14	)
		336			329		341
Provision for income taxes	$	8,153		$	7,136	$	5,496

Schedule of effective income tax rate reconciliation

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense is as follows:

	2012			2011			2010
Federal taxes	$	8,627		$	8,235		$	6,449
State and local taxes, net of federal benefit		336			329			341
Production deduction		(530	)		(508	)		(399	)
Research and experimental and other tax credits		(300	)		(665	)		(470	)
Other		20			(255	)		(425	)
Provision for income taxes	$	8,153		$	7,136		$	5,496

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TREASURY STOCK TRANSACTIONS (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
TREASURY STOCK TRANSACTIONS [Abstract]
Shares reissued from treasury (in shares)	102,986	5,860	6,300
Shares reissued from treasury for 401(k) plan (in shares)	44,474	46,830

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 4,347	$ 7,868
Trade accounts receivable, net	69,159	42,720
Inventories	90,039	51,081
Prepaid expenses and other current assets	5,655	2,595
Deferred income taxes	3,839	4,085
Total current assets	173,039	108,349
Property, plant and equipment, net	96,218	27,340
Goodwill	179,314	49,102
Intangible assets, net	64,334	17,642
Other assets	15,059	2,173
Total assets	527,964	204,606
Current liabilities:
Accounts payable	30,471	13,224
Accrued expenses	23,703	11,108
Current installments of long-term debt and capital lease obligations	5,632	29
Total current liabilities	59,806	24,361
Long-term debt and capital lease obligations, less current installments	255,067	0
Other long-term liabilities	3,405	3,541
Deferred income taxes	8,732	8,919
Total long-term liabilities	267,204	12,460
Shareholders' equity:
Common stock, $0.02 par value per share; authorized 28,000,000 shares; issued 12,860,023 and 12,123,992 shares at December 31, 2012 and December 31, 2011, respectively	257	242
Preferred stock, $0.02 par value per share; authorized 2,000,000 shares; none issued at either date	0	0
Additional paid-in capital	90,839	74,823
Accumulated other comprehensive loss	(49)	0
Treasury stock, at cost, 101,622 shares at December 31, 2012 and 249,082 shares at December 31, 2011	(482)	(1,182)
Retained earnings	110,389	93,902
Total shareholders' equity	200,954	167,785
Total liabilities and shareholders' equity	$ 527,964	$ 204,606

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ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2011		Dec. 31, 2011	Dec. 31, 2010 Level 3 [Member]		Dec. 31, 2012 Recurring Fair Value Measurement [Member]		Dec. 31, 2011 Recurring Fair Value Measurement [Member]		Dec. 31, 2012 Recurring Fair Value Measurement [Member] Level 1 [Member]		Dec. 31, 2011 Recurring Fair Value Measurement [Member] Level 1 [Member]		Dec. 31, 2012 Recurring Fair Value Measurement [Member] Level 2 [Member]		Dec. 31, 2011 Recurring Fair Value Measurement [Member] Level 2 [Member]		Dec. 31, 2012 Recurring Fair Value Measurement [Member] Level 3 [Member]		Dec. 31, 2011 Recurring Fair Value Measurement [Member] Level 3 [Member]		Dec. 31, 2012 Non-recurring Fair Value Measurement [Member]		Dec. 31, 2011 Non-recurring Fair Value Measurement [Member]		Dec. 31, 2012 Non-recurring Fair Value Measurement [Member] Level 1 [Member]		Dec. 31, 2011 Non-recurring Fair Value Measurement [Member] Level 1 [Member]		Dec. 31, 2012 Non-recurring Fair Value Measurement [Member] Level 2 [Member]		Dec. 31, 2011 Non-recurring Fair Value Measurement [Member] Level 2 [Member]		Dec. 31, 2012 Non-recurring Fair Value Measurement [Member] Level 3 [Member]		Dec. 31, 2011 Non-recurring Fair Value Measurement [Member] Level 3 [Member]
Assets at Fair Value [Abstract]
Money market fund								$ 7,503	[1]			$ 7,503	[1]			$ 0	[1]			$ 0	[1]
Intangible assets, net																						48,793	[2]	17,642	[3]	0	[2]	0	[3]	0	[2]	0	[3]	48,793	[2]	17,642	[3]
Liabilities at Fair Value [Abstract]
Contingent consideration						7,950	[4]			0	[4]			0	[4]			7,950	[4]					0	[5]			0	[5]			0	[5]			0	[5]
Impairment loss	(1,163)	[3]	(1,163)
Accrued liabilities				1,235	[5]
Fair value adjustment, liabilities			72
Change in amount of contingent consideration			$ 1,235

[1] Institutional Money Market: Valued at the closing price reported on the active markets on which the individual securities are traded (Level 1); included in cash and cash equivalents at December 31, 2011. The money market fund was fully liquidated at its carrying value during the third quarter of 2012 to fund the TASS acquisition.

[2] The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

[3] During the first quarter of 2011, a triggering event occurred with regard to a certain proprietary technology intangible asset as a result of a failure to conclude a possible sale of a product line. The Company did not have plans to utilize this technology in the near term and believed the current market for the product line to be limited; thus, utilizing the income approach with a level 3 valuation, the Company expected zero cash flows. As such, a full impairment loss of $1,163 was recognized as of March 31, 2011. The impairment loss was recognized in the Aerostructures segment in the selling, general and administrative expenses line of the Consolidated Statements of Income.

[4] The Monte Carlo simulation was used with a normal probability distribution of the best estimate of EBITDA for 2013 to approximate fair value.

[5] Included in accrued liabilities as of December 31, 2010 was $1,235 of contingent consideration, representing the fair value of the amount payable to former Intec shareholders if certain sales targets were achieved by Intec or if proceeds from the sale of certain portions of Intec exceeded a pre-established threshold by March 31, 2011. This amount was calculated utilizing an income approach with a level 3 valuation in which the Company analyzed expected future cash flows of likely scenarios as of December 31, 2010. Neither the sales targets nor the sale of certain portions of Intec occurred by March 31, 2011. As such, the $1,235 of contingent consideration was deemed not to be owed, and a benefit was recorded in the selling, general and administrative expenses line of the Consolidated Statements of Income.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Issuance of stock
Shares in connection with exercise of options (in shares)		7,850	20,360
Shares of restricted stock (in shares)	108,646	76,458	79,823
Shares in connection with Valent acquisition (in shares)	783,798

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CUSTOMER AND SUPPLIER CONCENTRATION (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Revenue and Accounts Receivable, Major Customer [Line Items]
Number of top customers	4	3	4
Supplier Concentration Risk [Member] | Raw Materials [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Number of suppliers	2	3	3
Percentage of materials attributable to supplier (in hundredths)	51.00%	59.00%	64.00%
Supplier Concentration Risk [Member] | Procured Parts [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Number of suppliers	3	4	4
Percentage of materials attributable to supplier (in hundredths)	49.00%	61.00%	63.00%
Boeing [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage of revenue attributable to customer (in hundredths)	20.80%	18.30%	13.30%
Percentage of accounts receivable attributable to customer (in hundredths)	11.30%	15.60%
Gulfstream [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage of revenue attributable to customer (in hundredths)	16.10%	16.50%	16.90%
Percentage of accounts receivable attributable to customer (in hundredths)	5.60%	5.40%
Spirit [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage of revenue attributable to customer (in hundredths)	13.00%	13.70%	18.60%
Percentage of accounts receivable attributable to customer (in hundredths)	27.90%	16.50%
Triumph Group [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage of revenue attributable to customer (in hundredths)			10.90%
Bombardier [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage of revenue attributable to customer (in hundredths)	10.10%
Percentage of accounts receivable attributable to customer (in hundredths)	6.40%

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ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2012

ACCRUED EXPENSES [Abstract]

Schedule of accrued expenses

Accrued expenses consist of the following:

	December 31,
	2012		2011
Accrued payroll	$	3,362	$	1,366
Accrued bonus		1,493		1,173
Accrued vacation & holiday		3,257		2,465
Accrued employee benefits		1,815		1,463
Accrued operating lease obligations		1,706		1,440
Contingent consideration		7,950		-
Accrued professional fees		754		896
Other		3,366		2,305
Total accrued expenses	$	23,703	$	11,108

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INCOME TAXES

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

INCOME TAXES

15.  INCOME TAXES

The temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to the deferred income tax assets and liabilities are as follows:

	December 31,
	2012			2011
Current deferred tax assets (liabilites):
Accrued vacation	$	705		$	663
Inventories		1,888			1,803
Stock award		522			962
Obligation under operating leases		587			437
Foreign NOL Carryforwards		261			-
Other		137			220
Total current deferred tax assets		4,100			4,085
Less: valuation allowance		(261	)		-
Net deferred tax asset		3,839			4,085
Long-term deferred tax assets (liabilities):
Depreciation		(6,151	)		(5,755	)
Amortization of intangibles		(3,646	)		(4,180	)
Gain on sale of real estate		1,022			1,106
Long-term contract costs		(1,941	)		(886	)
Professional fees		1,946			86
Other		38			710
Total long-term deferred tax liabilities		(8,732	)		(8,919	)
Net deferred tax liabilities	$	(4,893	)	$	(4,834	)

The Company's income tax provision attributable to income before income taxes consisted of the following for the years ended December 31, 2012, 2011 and 2010:

	2012			2011		2010
Federal:
Current	$	7,926		$	5,658	$	5,306
Deferred		(109	)		1,149		(151	)
		7,817			6,807		5,155
State
Current		346			225		355
Deferred		(10	)		104		(14	)
		336			329		341
Provision for income taxes	$	8,153		$	7,136	$	5,496

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense is as follows:

	2012			2011			2010
Federal taxes	$	8,627		$	8,235		$	6,449
State and local taxes, net of federal benefit		336			329			341
Production deduction		(530	)		(508	)		(399	)
Research and experimental and other tax credits		(300	)		(665	)		(470	)
Other		20			(255	)		(425	)
Provision for income taxes	$	8,153		$	7,136		$	5,496

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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Tables)

12 Months Ended

Dec. 31, 2012

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS [Abstract]

Long-term debt

Long-term debt and capital lease obligations consist of the following:

	December 31,
	2012		2011
Revolver under credit agreement, variable	$	6,236	$	-
Term loan under credit agreement, variable		225,000		-
Missouri IRBs at fixed rate of 2.80% at December 31, 2012		8,113		-
Capital leases, at fixed rates ranging from 3.00% to 7.73% at December 31, 2012		15,316		-
Notes payable, principal and interest payable monthly, at fixed rates, up to 3.25% at December 31, 2012 and 6.48% to 6.70% at December 31, 2011		6,034		29
Total debt		260,699		29
Less current installments		5,632		29
Total long-term debt and capital lease obligations	$	255,067	$	-

Five year maturities of long-term debt

The gross amount of assets recorded under capital leases totaled $15,316 as of December 31, 2012 and is included in the related property, plant and equipment categories. No material amortization expense nor accumulated amortization has been reported in the financial statements as all but one of the capital leases are due to the recent acquisition of Valent and were recorded at fair value and the aforementioned capital lease for certain equipment was not placed into service until December 31, 2012. The Company has appropriately split the deferred financing fees between the revolving credit facility and term loan facility and will amortize the fees over their respective terms. The long-term debt and capital lease payment obligations including the current portion thereof required in each of the next five years and thereafter are as follows:

	Long-Term
	Debt		Capital
Year ending December 31,	(Principal only)		Leases
2013	$	4,691	$	1,484
2014		3,766		1,626
2015		3,789		1,857
2016		3,145		1,856
2017		9,405		1,872
Thereafter		220,587		10,010
Total		245,383		18,705
Less: imputed interest		-		(3,389	)
Total	$	245,383	$	15,316

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BUSINESS SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2012

BUSINESS SEGMENT INFORMATION [Abstract]

BUSINESS SEGMENT INFORMATION

17.  BUSINESS SEGMENT INFORMATION

The Company is organized into two reportable segments: the Aerostructures segment and the Engineering Services segment. The Aerostructures segment, which includes the recently acquired Valent, fabricates, machines, finishes, integrates, assembles and kits formed and machined close tolerance aluminum, specialty alloy and composite components for use by the aerospace and defense industries. The Engineering Services segment, which includes the recently acquired TASS, provides a complete range of design, engineering and program management services supporting aircraft lifecycles from conceptual design, analysis and certification through production support, fleet support and service life extensions via a complete turnkey engineering solution.

Corporate assets, liabilities and expenses related to the Company's corporate offices, except for interest expense and income taxes, primarily support the Aerostructures segment. The table below presents information about reported segments on the basis used internally to evaluate segment performance:

	December 31,
	2012			2011			2010
Net sales:
Aerostructures	$	174,983		$	168,145		$	149,259
Engineering Services		105,607			87,527			74,574
Eliminations		(1,961	)		(1,632	)		(477	)
	$	278,629		$	254,040		$	223,356
Gross profit
Aerostructures	$	47,947		$	44,966		$	38,637
Engineering Services		20,270			14,615			12,788
Eliminations		91			69			75
	$	68,308		$	59,650		$	51,500
Income from operations:
Aerostructures	$	15,484		$	18,334		$	13,631
Engineering Services		10,480			6,522			5,359
Eliminations		91			68			75
	$	26,055		$	24,924		$	19,065
Depreciation, amortization and other charges:
Aerostructures (1)	$	5,532		$	6,013		$	4,843
Engineering Services		2,462			2,391			2,446
	$	7,994		$	8,404		$	7,289

(1) Includes a $1,163 charge for impairment of intangible in 2011.

Interest expense:
Aerostructures	$	(23	)	$	(5	)	$	(18	)
Engineering Services		(25	)		(12	)		(14	)
Corporate (2)		(1,723	)		(652	)		(664	)
	$	(1,771	)	$	(669	)	$	(696	)

(2) Includes a $580 charge for deferred financing costs for the closed credit facility in 2012.

Capital expenditures:
Aerostructures (3)	$	18,649	$	8,716	$	6,230
Engineering Services		880		1,551		921
	$	19,529	$	10,267	$	7,151
Total assets:
Aerostructures	$	446,902	$	132,032
Engineering		81,062		72,574
	$	527,964	$	204,606

(3) Includes $746 for a capital lease for equipment in 2012.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011	Dec. 31, 2010
Operating activities:
Net income	$ 16,487	[1]	$ 16,389	$ 12,931
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,994		7,241	7,289
Intangible asset impairment	0		1,163	0
Contingent consideration write-off	0		(1,235)	0
Restricted stock compensation	1,494		1,254	1,794
Deferred taxes	(1,062)		341	(558)
Other noncash items	(317)		(227)	(240)
Changes in operating assets and liabilities, net of acquired businesses:
Trade accounts receivable	(8,093)		(8,871)	1,440
Inventories	(10,980)		(5,933)	555
Prepaid expenses and other assets	1,186		(1,080)	800
Current income taxes	(1,168)		1,731	(343)
Accounts payable	3,062		4,354	639
Accrued expenses	196		1,048	2,538
Net cash provided by operating activities	8,799		16,175	26,845
Investing activities:
Additions to property, plant and equipment	(18,783)		(10,267)	(7,151)
Acquisitions, net of cash acquired	(216,398)		0	0
Other, net	181		270	6
Net cash used by investing activities	(235,000)		(9,997)	(7,145)
Financing activities:
Proceeds from issuance of debt	229,124		0	0
Principal payments on long-term debt and notes payable	(118)		(180)	(327)
Advances on revolving line of credit	40,278		0	13,520
Payments on revolving line of credit	(34,042)		0	(30,520)
Prepaid financing costs	(12,736)		0	0
Other, net	174		(77)	(457)
Net cash provided by (used by) financing activities	222,680		(257)	(17,784)
Net (decrease) increase in cash and cash equivalents	(3,521)		5,921	1,916
Cash and cash equivalents, beginning of year	7,868		1,947	31
Cash and cash equivalents, end of year	4,347		7,868	1,947
Cash payments for: [Abstract]
Interest paid	585		490	531
Income taxes paid, net of refunds received	10,261		5,032	6,360
Supplemental disclosure of noncash transactions:
Fair value of common stock issued to acquire Valent	15,000		0	0
Contingent consideration	7,950		0	0
Equipment acquired under capital lease	$ 746		$ 0	$ 0

[1] The fourth quarter of 2012 includes $4,860 in acquisition fees related to Valent.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0.02	$ 0.02
Common stock, authorized shares (in shares)	28,000,000	28,000,000
Common stock, shares issued (in shares)	12,860,023	12,123,992
Preferred stock, par value (in dollars per share)	$ 0.02	$ 0.02
Preferred stock, authorized shares (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Treasury stock, at cost (in shares)	101,622	249,082

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TREASURY STOCK TRANSACTIONS

12 Months Ended

Dec. 31, 2012

TREASURY STOCK TRANSACTIONS [Abstract]

TREASURY STOCK TRANSACTIONS

10.  TREASURY STOCK TRANSACTIONS

The Company issued 102,986, net of forfeitures, 5,860 and 6,300 shares from treasury stock in 2012, 2011 and 2010, respectively, in conjunction with the exercise of certain employees' options and grants of restrictive stock, but did not purchase any shares during those years. The Company also utilized approximately 44,474 and 46,830 shares from treasury stock to match employee contributions in the Company's 401(k) Plan in 2012 and 2011, respectively.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Mar. 05, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	LMI AEROSPACE INC
Entity Central Index Key	0001059562
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 164,395,786
Entity Common Stock, Shares Outstanding		12,758,400
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012

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EARNINGS PER COMMON SHARE

12 Months Ended

Dec. 31, 2012

EARNINGS PER COMMON SHARE [Abstract]

EARNINGS PER COMMON SHARE

11.  EARNINGS PER COMMON SHARE

Basic net income per common share is based upon the weighted average number of common shares outstanding. Diluted net income per common share is based upon the weighted average number of common shares outstanding, including the dilutive effect of restricted stock, using the if-converted methods.

The following table shows a reconciliation of the numerators and denominators used in calculating basic and diluted earnings per share.

	Year ended December 31,
	2012		2011		2010
Numerators
Net income	$	16,487	$	16,389	$	12,931
Denominators
Weighted average common shares - basic		11,701,607		11,559,895		11,420,524
Dilutive effect of restricted stock		137,575		181,618		209,743
Dilutive effect of employee stock options		-		-		6,118
Weighted average common shares - diluted	$	11,839,182	$	11,741,513	$	11,636,385
Basic earnings per share	$	1.41	$	1.42	$	1.13
Diluted earnings per share	$	1.39	$	1.40	$	1.11

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011	Dec. 31, 2010
Sales and service revenue
Product sales	$ 168,943		$ 161,435	$ 143,919
Service revenues	109,686		92,605	79,437
Net sales	278,629		254,040	223,356
Cost of sales and service revenue
Cost of product sales	121,247		117,368	106,891
Cost of service revenues	89,074		77,022	64,965
Cost of sales	210,321		194,390	171,856
Gross profit	68,308		59,650	51,500
Selling, general and administrative expenses	36,891		34,726	32,435
Acquisitions expense	5,362		0	0
Income from operations	26,055		24,924	19,065
Other income (expense):
Interest expense	(1,771)		(669)	(696)
Other, net	356		(730)	58
Total other expense	(1,415)		(1,399)	(638)
Income before income taxes	24,640		23,525	18,427
Provision for income taxes	8,153		7,136	5,496
Net income	16,487	[1]	16,389	12,931
Other comprehensive income (expense):
Change in foreign currency translation adjustment	(49)		0	0
Total comprehensive income	$ 16,438		$ 16,389	$ 12,931
Amounts per common share:
Net income per common share (in dollars per share)	$ 1.41		$ 1.42	$ 1.13
Net income per common share assuming dilution (in dollars per share)	$ 1.39		$ 1.40	$ 1.11
Weighted average common shares outstanding (in shares)	11,701,607		11,559,895	11,420,524
Weighted average dilutive common shares outstanding (in shares)	11,839,182		11,741,513	11,636,385

[1] The fourth quarter of 2012 includes $4,860 in acquisition fees related to Valent.

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INVENTORIES

12 Months Ended

Dec. 31, 2012

INVENTORIES [Abstract]

INVENTORIES

5.    INVENTORIES

Inventories consist of the following:

	December 31,
	2012		2011
Raw materials	$	20,451	$	9,437
Work in progress		20,012		9,387
Manufactured and purchased components		13,393		15,051
Finished goods		30,792		14,744
Product inventory		84,648		48,619
Capitalized contract costs		5,391		2,462
Total inventories	$	90,039	$	51,081

Inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which is not expected to be realized within one year. The Company believes these amounts will be fully recovered.

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ACCOUNTS RECEIVABLE NET

12 Months Ended

Dec. 31, 2012

ACCOUNTS RECEIVABLE NET

ACCOUNTS RECEIVABLE NET

4.    ACCOUNTS RECEIVABLE NET

Accounts receivable, net consists of the following:

	December 31,
	2012			2011
Trade receivables	$	50,876		$	35,482
Unbilled revenue		12,372			6,347
Other receivables		6,198			1,250
		69,446			43,079
Less: Allowance for doubtful accounts		(287	)		(359	)
Accounts receivable, net	$	69,159		$	42,720

Under long-term contract accounting unbilled revenue on long-term contracts arise when the sales or revenues based on performance attainment, though appropriately recognized, cannot be billed yet under terms of the contract as of the balance sheet date. Accounts receivable expected to be collected after one year are not material.

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CUSTOMER AND SUPPLIER CONCENTRATION

12 Months Ended

Dec. 31, 2012

CUSTOMER AND SUPPLIER CONCENTRATION [Abstract]

CUSTOMER AND SUPPLIER CONCENTRATION

16.  CUSTOMER AND SUPPLIER CONCENTRATION

Direct sales to our top four customers, The Boeing Company, Gulfstream Aerospace Corporation, Spirit AeroSystems and Bombardier, accounted for 20.8%, 16.1%, 13.0%, and 10.1% of our total revenues in 2012, respectively. These revenues are reported by both the Aerostructures and Engineering Services segments. Accounts receivable balances related to these customers were 11.3%, 5.6%, 27.9%, and 6.4% of the accounts receivable balance at December 31, 2012, respectively.

Direct sales to our top three customers, The Boeing Company, Gulfstream Aerospace Corporation and Spirit AeroSystems, accounted for 18.3%, 16.5%, and 13.7% of our total revenues in 2011, respectively. These revenues are reported by both the Aerostructures and Engineering Services segments, except Gulfstream Aerospace Corporation, with respect to which revenues are reported by the Aerostructures segment only. Accounts receivable balances related to these customers were 15.6%, 5.4%, and 16.5% of the accounts receivable balance at December 31, 2011, respectively.

Direct sales to our top four customers, Spirit AeroSystems, Gulfstream Aerospace Corporation, The Boeing Company, and Triumph Group, accounted for 18.6%, 16.9%, 13.3%, and 10.9% of our total revenues in 2010, respectively. These revenues are reported by both the Aerostructures and Engineering Services segments, except Gulfstream Aerospace Corporation, with respect to which revenues are reported by the Aerostructures segment only.

The Company did not have any sales to a foreign country greater than 10% of its total sales in 2012, 2011 and 2010, respectively. The amounts of profitability and identifiable assets attributable to foreign sales activity are not material when compared with revenue, profitability, and identifiable assets attributed to United States domestic operations during 2012, 2011 and 2010.

The Company purchased approximately 51% of the raw materials used in production from two suppliers in 2012 and, 59% and 64% of the raw materials used in production from three suppliers in 2011 and 2010, respectively. The Company has increased its capability to integrate components into higher level aerospace assemblies and to provide point of use kitting. As a result, there was an increase in the use of third party suppliers for the purchase of strategic components. During 2012 we purchased approximately 49% of the procured parts used in assembled products from three suppliers. During 2011 and 2010 we purchased approximately 61% and 63% of the procured parts used in assembled products from four suppliers, respectively.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2012

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

12.  COMMITMENTS AND CONTINGENCIES

The Company leases certain facilities and equipment under various non-cancelable operating lease agreements that expire at various dates through 2025. At December 31, 2012, the future minimum lease payments under operating leases with initial non-cancelable terms in excess of one year are as follows:

2013	$	7,031
2014		6,193
2015		5,664
2016		5,066
2017		4,307
Thereafter		24,788
	$	53,049

Rent expense totaled $6,789, $6,546 and $6,714 in 2012, 2011 and 2010, respectively.

In December 2012, the Company entered into a commitment to finance a warehouse in Tulsa, Oklahoma through a $2,200 promissory note. The note carries a 2.95% fixed rate payable in monthly payments of principal and interest with a balloon payment at maturity on December 28, 2017. The note is secured by the property and guaranteed by the Company.

The Company has been named as a defendant in certain lawsuits in the normal course of business. It is the policy of management to disclose the amount or range of reasonably possible losses. In the opinion of management, after consulting with legal counsel, the liabilities, if any, resulting from these matters should not have a material effect on the Company's financial position or results of operations.

The Company has entered into employment agreements with certain members of senior management, the terms of which expire on January 1, 2014 through January 1, 2016. The terms of these agreements are up to three years, include non-compete and non-disclosure provisions, and provide for defined severance payments in the event of termination.

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ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2012

ACCRUED EXPENSES [Abstract]

ACCRUED EXPENSES

8.    ACCRUED EXPENSES

Accrued expenses consist of the following:

	December 31,
	2012		2011
Accrued payroll	$	3,362	$	1,366
Accrued bonus		1,493		1,173
Accrued vacation & holiday		3,257		2,465
Accrued employee benefits		1,815		1,463
Accrued operating lease obligations		1,706		1,440
Contingent consideration		7,950		-
Accrued professional fees		754		896
Other		3,366		2,305
Total accrued expenses	$	23,703	$	11,108

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BUSINESS SEGMENT INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended									12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011		Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
BUSINESS SEGMENT INFORMATION [Abstract]
Number of reportable segments										2
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	$ 71,917	$ 70,636	$ 69,327	$ 66,749	$ 65,026	$ 64,767	$ 63,348	$ 60,899		$ 278,629		$ 254,040		$ 223,356
Gross profit	16,239	18,584	16,967	16,518	14,515	15,332	15,245	14,558		68,308		59,650		51,500
Income from operations										26,055		24,924		19,065
Depreciation, amortization and other charges										7,994		8,404		7,289
Interest expense										(1,771)		(669)		(696)
Capital expenditures										19,529		10,267		7,151
Total assets	527,964				204,606					527,964		204,606
Deferred financing costs										580
Impairment loss on intangible assets								1,163	[1]			1,163
Aerostructures [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales										174,983		168,145		149,259
Gross profit										47,947		44,966		38,637
Income from operations										15,484		18,334		13,631
Depreciation, amortization and other charges										5,532	[2]	6,013	[2]	4,843	[2]
Interest expense										(23)		(5)		(18)
Capital expenditures										18,649	[3]	8,716	[3]	6,230	[3]
Total assets	446,702				132,032					446,702		132,032
Engineering Services [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales										105,607		87,527		74,574
Gross profit										20,270		14,615		12,788
Income from operations										10,480		6,522		5,359
Depreciation, amortization and other charges										2,462		2,391		2,446
Interest expense										(25)		(12)		(14)
Capital expenditures										880		1,551		921
Total assets	81,062				72,574					81,062		72,574
Eliminations [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales										(1,961)		(1,632)		(477)
Gross profit										91		69		75
Income from operations										91		68		75
Corporate [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Interest expense										$ (1,723)	[4]	$ (652)	[4]	$ (664)	[4]

[1] During the first quarter of 2011, a triggering event occurred with regard to a certain proprietary technology intangible asset as a result of a failure to conclude a possible sale of a product line. The Company did not have plans to utilize this technology in the near term and believed the current market for the product line to be limited; thus, utilizing the income approach with a level 3 valuation, the Company expected zero cash flows. As such, a full impairment loss of $1,163 was recognized as of March 31, 2011. The impairment loss was recognized in the Aerostructures segment in the selling, general and administrative expenses line of the Consolidated Statements of Income.

[2] Includes a $1,163 charge for impairment of intangible in 2011.

[3] Includes $746 for a capital lease for equipment in 2012.

[4] Includes a $580 charge for deferred financing costs for the closed credit facility in 2012.

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PROPERTY PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2012

PROPERTY PLANT AND EQUIPMENT [Abstract]

PROPERTY PLANT AND EQUIPMENT

6.      PROPERTY, PLANT AND EQUIPMENT

Depreciation expense (including amortization expense on software) recorded by the Company totaled $5,894, $5,219 and $5,152 for 2012, 2011 and 2010, respectively.

	December 31,
	2012			2011
Land	$	1,455		$	67
Buildings and improvements		18,676			199
Machinery and equipment		108,391			62,751
Leasehold improvements		10,559			7,462
Software and other		10,629			9,557
Construction in progress		7,168			2,427
Total gross property, plant and equipment		156,878			82,463
Less accumulated depreciation		(60,660	)		(55,123	)
Total net property, plant and equipment	$	96,218		$	27,340

See discussion in Note 9 regarding property, plant and equipment recorded as a result of capital leases.

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GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2012

GOODWILL AND INTANGIBLE ASSETS [Abstract]

GOODWILL AND INTANGIBLE ASSETS

7.    GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table summarizes the net carrying amount of goodwill by segment at December 31, 2012 and 2011, respectively:

							Engineering
	Aerostructures						Services				Total
	2012			2011			2012		2011		2012			2011
Balance at December 31,
Gross Goodwill	$	135,431		$	11,847		$	49,536	$	42,908	$	184,967		$	54,755
Accumulated impairment loss		(5,653	)		(5,653	)		-		-		(5,653	)		(5,653	)
Net Goodwill	$	129,778		$	6,194		$	49,536	$	42,908	$	179,314		$	49,102

The net goodwill balance at December 31, 2012 consisted of $42,908 from the acquisition of D3 Technologies, Inc. ("D3") in July 2007, $6,194 from the acquisition of Intec in January 2009, $6,628 from the acquisition of TASS in August 2012, and $123,584 from the acquisition of Valent in December 2012, and at December 31, 2011 only the D3 and Intec amounts. Goodwill recorded as a result of the D3 and Intec acquisitions is not deductible for tax purposes. Goodwill recorded as a result of the Valent and TASS acquisitions is deductible for tax purposes. The fair values of goodwill for Valent and TASS were determined by third parties in connection with the purchase and recorded at those values. The Company performed the goodwill impairment analyses for both reporting units in the fourth quarter of fiscal years 2012, excluding Valent and TASS, using a qualitative assessment, and in 2011, using the expected present value of future cash flows for D3 and the qualitative assessment for Intec. This is considered to be level 3 in the fair value hierarchy. No adjustment to goodwill was required based on the fourth quarter 2012 and 2011 analyses.

Intangible Assets

Intangible assets primarily consist of trademarks and customer intangibles resulting from the acquisitions of Versaform Corporation, D3, Intec, TASS, and Valent. The trademark of $4,222 that resulted from acquisition of D3 was determined to have an indefinite life. The remaining trademarks resulted from the acquisitions of Intec, TASS, and Valent and have a weighted average useful life of 4.5 years. Customer intangibles have a weighted average useful life of 18.5 years. Other intangible assets have a weighted average useful life of 5.3 years. The carrying values were as follows:

	December 31,
	2012			2011
Trademarks	$	5,000		$	4,582
Customer intangible assets		68,991			21,515
Other		1,481			582
Accumulated amortization		(11,138	)		(9,037	)
Intangible assets, net	$	64,334		$	17,642

Intangibles amortization expense for 2012, 2011 and 2010 was $2,100, $3,185 and $2,137, respectively. Amortization expense for 2011 includes $1,163 for the impairment loss as discussed in Note 3. Estimated annual amortization expense for these intangibles is as follows:

Year ending December 31,
2013	$	4,647
2014		4,524
2015		4,359
2016		4,134
2017		3,915
Thereafter		38,533
Nonamortizeable		4,222
	$	64,334

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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

12 Months Ended

Dec. 31, 2012

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS [Abstract]

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

9.   LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long-term debt and capital lease obligations consist of the following:

	December 31,
	2012		2011
Revolver under credit agreement, variable	$	6,236	$	-
Term loan under credit agreement, variable		225,000		-
Missouri IRBs at fixed rate of 2.80% at December 31, 2012		8,113		-
Capital leases, at fixed rates ranging from 3.00% to 7.73% at December 31, 2012		15,316		-
Notes payable, principal and interest payable monthly, at fixed rates, up to 3.25% at December 31, 2012 and 6.48% to 6.70% at December 31, 2011		6,034		29
Total debt		260,699		29
Less current installments		5,632		29
Total long-term debt and capital lease obligations	$	255,067	$	-

On December 28, 2012, the Company entered into a credit agreement to provide new senior secured credit facilities to finance the Valent acquisition, refinance existing debt, and fund working capital requirements. These new credit facilities include a revolving credit facility of up to $75,000 and a term loan facility of $225,000. Borrowings under the facilities are secured by substantially all of the Company's assets and bear interest at either the LIBOR rate plus a margin of up to 4.75% with a LIBOR floor of 1.25% or the alternate base rate ("ABR") which is the highest of the following plus a margin of up to 3.75% with the applicable margin for the revolving credit facility being subject to a step-down grid based on the total leverage ratio of the company effective with the start of the second quarter of 2013:

· Prime rate,

· Federal funds rate plus 0.5%

· The adjusted Eurodollar rate for an interest period of one month plus 1% or

· The 2.25% ABR rate floor

The Company is required to pay a commitment fee of between 0.250% and 0.625% on the unused portion of the revolving credit facility.

The maturity dates are subject to acceleration upon breach of the financial covenants (consisting of a maximum total leverage ratio and senior leverage ratio and a minimum fixed charge coverage ratio) and other customary non-financial covenants contained in the credit agreement. As of December 31, 2012, the Company was in compliance with all of its financial and non-financial covenants. As part of the new credit facilities, we are required to enter into a hedging instrument to fix not less than 50% of the outstanding amount of the Term Loan for a three year period, at a minimum. The revolving credit and term loan facilities mature on the fifth and sixth year anniversary dates of December 28, 2017 and 2018, respectively.

As part of the acquisition of Valent, the Company assumed debt and capital leases for buildings and equipment that were underwritten to service underlying Industrial Revenue Bonds ("IRBs") with the City of Washington, Missouri and Fredonia, Kansas. Monthly payments are scheduled in an amount sufficient to service the total principal and interest of the underlying bonds. Interest ranges from 2.80% to 7.73% and mature between September 2020 and June 2032. In addition, the Company assumed a note payable to a prior minority shareholder for $2,000 payable in monthly installments over 36 months.

The Company entered into various notes payable and a capital lease agreement for the purchase of certain equipment in 2012. The notes are secured by certain equipment and payable in monthly installments including interest ranging from 2.45% - 2.56% through November 2019. In connection with its acquisition of TASS on August 7, 2012, as discussed in Note 2 above, the company entered into a $1,000 note payable which is payable in full in August 2013 plus interest at 3.25%.

The gross amount of assets recorded under capital leases totaled $15,316 as of December 31, 2012 and is included in the related property, plant and equipment categories. No material amortization expense nor accumulated amortization has been reported in the financial statements as all but one of the capital leases are due to the recent acquisition of Valent and were recorded at fair value and the aforementioned capital lease for certain equipment was not placed into service until December 31, 2012. The Company has appropriately split the deferred financing fees between the revolving credit facility and term loan facility and will amortize the fees over their respective terms. The long-term debt and capital lease payment obligations including the current portion thereof required in each of the next five years and thereafter are as follows:

	Long-Term
	Debt		Capital
Year ending December 31,	(Principal only)		Leases
2013	$	4,691	$	1,484
2014		3,766		1,626
2015		3,789		1,857
2016		3,145		1,856
2017		9,405		1,872
Thereafter		220,587		10,010
Total		245,383		18,705
Less: imputed interest		-		(3,389	)
Total	$	245,383	$	15,316

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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning Balance	$ 359	$ 253	$ 279
Charge to Cost/Expense	(140)	157	(23)
Other Charge to Cost/Expense	86	0	0
Write-offs net of Recoveries	(18)	(51)	(3)
Ending Balance	$ 287	$ 359	$ 253

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GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2012

GOODWILL AND INTANGIBLE ASSETS [Abstract]

Schedule of goodwill

The following table summarizes the net carrying amount of goodwill by segment at December 31, 2012 and 2011, respectively:

							Engineering
	Aerostructures						Services				Total
	2012			2011			2012		2011		2012			2011
Balance at December 31,
Gross Goodwill	$	135,431		$	11,847		$	49,536	$	42,908	$	184,967		$	54,755
Accumulated impairment loss		(5,653	)		(5,653	)		-		-		(5,653	)		(5,653	)
Net Goodwill	$	129,778		$	6,194		$	49,536	$	42,908	$	179,314		$	49,102

Finite and infinite lived intangible assets

Intangible assets primarily consist of trademarks and customer intangibles resulting from the acquisitions of Versaform Corporation, D3, Intec, TASS, and Valent. The trademark of $4,222 that resulted from acquisition of D3 was determined to have an indefinite life. The remaining trademarks resulted from the acquisitions of Intec, TASS, and Valent and have a weighted average useful life of 4.5 years. Customer intangibles have a weighted average useful life of 18.5 years. Other intangible assets have a weighted average useful life of 5.3 years. The carrying values were as follows:

	December 31,
	2012			2011
Trademarks	$	5,000		$	4,582
Customer intangible assets		68,991			21,515
Other		1,481			582
Accumulated amortization		(11,138	)		(9,037	)
Intangible assets, net	$	64,334		$	17,642

Estimated annual amortization expense

Intangibles amortization expense for 2012, 2011 and 2010 was $2,100, $3,185 and $2,137, respectively. Amortization expense for 2011 includes $1,163 for the impairment loss as discussed in Note 3. Estimated annual amortization expense for these intangibles is as follows:

Year ending December 31,
2013	$	4,647
2014		4,524
2015		4,359
2016		4,134
2017		3,915
Thereafter		38,533
Nonamortizeable		4,222
	$	64,334

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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Details) (USD $) In Thousands, unless otherwise specified				12 Months Ended				12 Months Ended			12 Months Ended		0 Months Ended	12 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Missouri IRBs [Member]	Dec. 31, 2012 Missouri IRBs [Member] Minimum [Member]	Dec. 31, 2012 Missouri IRBs [Member] Maximum [Member]	Dec. 31, 2012 Term Loan Under Credit Agreement, Variable [Member]	Dec. 31, 2011 Term Loan Under Credit Agreement, Variable [Member]	Dec. 31, 2012 Revolver Under Credit Agreement, Variable [Member]	Dec. 31, 2011 Revolver Under Credit Agreement, Variable [Member]	Dec. 31, 2012 Capital Leases [Member]	Dec. 31, 2012 Capital Leases [Member] Minimum [Member]	Dec. 31, 2012 Capital Leases [Member] Maximum [Member]	Aug. 07, 2012 Notes Payable [Member]	Dec. 31, 2012 Notes Payable [Member]	Dec. 31, 2011 Notes Payable [Member]	Dec. 31, 2012 Notes Payable [Member] Minimum [Member]	Dec. 31, 2011 Notes Payable [Member] Minimum [Member]	Dec. 31, 2012 Notes Payable [Member] Maximum [Member]	Dec. 31, 2011 Notes Payable [Member] Maximum [Member]	Dec. 31, 2012 Notes Payable to Prior Minority Shareholder [Member]
Debt Instrument [Line Items]
Long-term debt, gross			$ 8,113			$ 225,000	$ 0	$ 6,236	$ 0	$ 15,316			$ 1,000	$ 6,034	$ 29
Long-term debt, total	260,699	29
Less current installments	5,632	29
Total long-term debt and capital lease obligations	255,067	0
Fixed interest rate, minimum (in hundredths)				2.80%							3.00%					2.45%	6.48%
Fixed interest rate, maximum (in hundredths)					7.73%							7.73%		3.25%				2.56%	6.70%
Fixed interest rate (in hundredths)			2.80%										3.25%
Monthly installment payment																				$ 2,000
Maturity dates				Sep. 30, 2020	Jun. 30, 2032	Dec. 28, 2018		Dec. 28, 2017					Aug. 31, 2013
Number of monthly installments																				36

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STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2012

STOCK BASED COMPENSATION [Abstract]

STOCK BASED COMPENSATION

14.  STOCK-BASED COMPENSATION

On July 7, 2005, the Company's shareholders approved the LMI Aerospace, Inc. 2005 Long-term Incentive Plan (the "Plan"). The Plan provides for the grant of non-qualified stock options, incentive stock options, shares of restricted stock, restricted stock units, stock appreciation rights, performance awards and other share-based grants and cash bonus awards to employees and directors. All share-based grants or awards are subject to a time-based vesting schedule. The company has only issued restricted stock in the periods presented.

All outstanding stock options were exercisable at December 31, 2010 and were exercised on or before January 19, 2011 at an exercise price of $2.00 per share. The aggregate intrinsic value of options exercised during the years ended December 31, 2011 and 2010, based upon the market price on exercise date, were $126 and $239, respectively.

A summary of the activity for non-vested restricted stock awards under the Company's share-based compensation plans is presented below:

	2012
Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1		278,410		$	16.42
Granted		108,646			19.19
Vested		(185,307	)		15.43
Forfeited		(11,921	)		19.83
Outstanding at December 31		189,828		$	18.76

Common stock compensation expense related to restricted stock awards granted under the Plan was $1,494, $1,254 and $1,794 for the years ended December 31, 2012, 2011 and 2010, respectively. Total unrecognized compensation costs related to non-vested share-based awards granted or awarded under the Plan were $2,071 and $1,716 as of December 31, 2012 and 2011, respectively. These costs are expected to be recognized over a weighted average period of 1.6 and 0.8 years as of December 31, 2012 and 2011, respectively. The fair value of restricted stock awards that vested during the years ended December 31, 2012, 2011 and 2010, based on the market price on the vesting date, was $3,199, $2,149 and $835, respectively.

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SUBSEQUENT EVENT

12 Months Ended

Dec. 31, 2012

SUBSEQUENT EVENT [Abstract]

SUBSEQUENT EVENT

19.     SUBSEQUENT EVENT

On February 5, 2013, the Company completed the $350,000 syndication of borrowings incurred in connection with the acquisition of Valent and entered into the first amendment to the original creditagreement and to other loan documents. The amended credit agreement reflects the increase, in connection withthe syndication, of the revolving credit facility to $125,000 from the initially-announced figure of $75,000. Also, under the amended credit agreement, the term loanfacility's margin adjustment for the LIBOR rate option has decreased from a top level of 4.75% to 3.50%and the ABR rate option has decreased from 3.75% to 2.50% with a new provision that should the total leverage ratio decrease to less than 3.00:1:00, these margins will decrease 0.25% further to 3.25% and 2.25%, respectively. The revolving credit facility's margin adjustment rates which are subject to a step-down grid based on the Company's total leverage ratio were also reduced from the initial rate of 4.75% to 4.00% for the LIBOR rate option and 3.75% to 3.00% for the ABR rate option. Also, the commitment fee rate for a total leverage ratio of less than 1.50:1.00 of 0.250% was changed to 2.00:1.00 of 0.375%. The LIBOR and ABR rate floors continue to be 1.25% and 2.25% for both facilities. The maturity dates continue to be December 28, 2017 for the revolving credit facility and December 28, 2018 for the term loan facility, and the borrowings continue to be secured by substantially all of the Company's assets.

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GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended						1 Months Ended		1 Months Ended
	Mar. 31, 2011		Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Trademarks [Member]	Dec. 31, 2012 Customer Intangible Assets [Member]	Dec. 31, 2012 Other [Member]	Jul. 31, 2007 D3 Technologies, Inc. [Member]	Dec. 31, 2012 D3 Technologies, Inc. [Member] Trademarks [Member]	Jan. 31, 2009 Integrated Technologies, Inc. [Member]	Aug. 31, 2012 TASS, Inc. [Member]	Dec. 31, 2012 Valent Aerostructures, LLC [Member]	Dec. 31, 2012 Aerostructures [Member]	Dec. 31, 2011 Aerostructures [Member]	Dec. 31, 2012 Engineering Services [Member]	Dec. 31, 2011 Engineering Services [Member]
Goodwill [Abstract]
Gross Goodwill			$ 184,967	$ 54,755										$ 135,431	$ 11,847	$ 49,536	$ 42,908
Accumulated impairment loss			(5,653)	(5,653)										(5,653)	(5,653)	0	0
Net Goodwill			179,314	49,102										129,778	6,194	49,536	42,908
Goodwill acquired									42,908		6,194	6,628	123,584
Intangible Assets [Abstract]
Indefinite-Lived Trademarks										4,222
Weighted average estimated useful life						4 years 6 months	18 years 6 months	5 years 3 months 18 days
Trademarks			5,000	4,582
Customer intangible assets			68,991	21,515
Other			1,481	582
Accumulated amortization			(11,138)	(9,037)
Intangible assets, net			64,334	17,642
Amortization expense on intangible assets			2,100	3,185	2,137
Impairment loss on intangible assets	1,163	[1]		1,163
Estimated annual amortization expense for these intangibles [Abstract]
2013			4,647
2014			4,524
2015			4,359
2016			4,134
2017			3,915
Thereafter			38,533
Nonamortizeable			4,222
Intangible assets, net			$ 64,334	$ 17,642

[1] During the first quarter of 2011, a triggering event occurred with regard to a certain proprietary technology intangible asset as a result of a failure to conclude a possible sale of a product line. The Company did not have plans to utilize this technology in the near term and believed the current market for the product line to be limited; thus, utilizing the income approach with a level 3 valuation, the Company expected zero cash flows. As such, a full impairment loss of $1,163 was recognized as of March 31, 2011. The impairment loss was recognized in the Aerostructures segment in the selling, general and administrative expenses line of the Consolidated Statements of Income.

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BUSINESS SEGMENT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2012

BUSINESS SEGMENT INFORMATION [Abstract]

Information about reported segments on the basis used internally to evaluate segment performance

Corporate assets, liabilities and expenses related to the Company's corporate offices, except for interest expense and income taxes, primarily support the Aerostructures segment. The table below presents information about reported segments on the basis used internally to evaluate segment performance:

	December 31,
	2012			2011			2010
Net sales:
Aerostructures	$	174,983		$	168,145		$	149,259
Engineering Services		105,607			87,527			74,574
Eliminations		(1,961	)		(1,632	)		(477	)
	$	278,629		$	254,040		$	223,356
Gross profit
Aerostructures	$	47,947		$	44,966		$	38,637
Engineering Services		20,270			14,615			12,788
Eliminations		91			69			75
	$	68,308		$	59,650		$	51,500
Income from operations:
Aerostructures	$	15,484		$	18,334		$	13,631
Engineering Services		10,480			6,522			5,359
Eliminations		91			68			75
	$	26,055		$	24,924		$	19,065
Depreciation, amortization and other charges:
Aerostructures (1)	$	5,532		$	6,013		$	4,843
Engineering Services		2,462			2,391			2,446
	$	7,994		$	8,404		$	7,289

(1) Includes a $1,163 charge for impairment of intangible in 2011.

Interest expense:
Aerostructures	$	(23	)	$	(5	)	$	(18	)
Engineering Services		(25	)		(12	)		(14	)
Corporate (2)		(1,723	)		(652	)		(664	)
	$	(1,771	)	$	(669	)	$	(696	)

(2) Includes a $580 charge for deferred financing costs for the closed credit facility in 2012.

Capital expenditures:
Aerostructures (3)	$	18,649	$	8,716	$	6,230
Engineering Services		880		1,551		921
	$	19,529	$	10,267	$	7,151
Total assets:
Aerostructures	$	446,902	$	132,032
Engineering		81,062		72,574
	$	527,964	$	204,606

(3) Includes $746 for a capital lease for equipment in 2012.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Common Stock [Member]	Additional Paid-In Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2009	$ 240	$ 71,375	$ (1,704)	$ 64,582	$ 0	$ 134,493
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	12,931	0	12,931
Other comprehensive income (loss)	0	0	0	0	0	0
Issuance of stock
Shares in connection with exercise of options	0	33	30	0	0	63
Shares of restricted stock	2	(2)	0	0	0	0
401k plan contribution	0	414	242	0	0	656
Restricted stock compensation	0	1,794	0	0	0	1,794
Other	0	(174)	0	0	0	(174)
Balance at Dec. 31, 2010	242	73,440	(1,432)	77,513	0	149,763
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	16,389	0	16,389
Other comprehensive income (loss)	0	0	0	0	0	0
Issuance of stock
Shares in connection with exercise of options	0	57	4	0	0	61
Shares of restricted stock	0	(25)	24	0	0	(1)
401k plan contribution	0	589	222	0	0	811
Restricted stock compensation	0	1,254	0	0	0	1,254
Other	0	(492)	0	0	0	(492)
Balance at Dec. 31, 2011	242	74,823	(1,182)	93,902	0	167,785
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	16,487	0	16,487	[1]
Other comprehensive income (loss)	0	0	0	0	(49)	(49)
Issuance of stock
Shares of restricted stock	0	(515)	515	0	0	0
401k plan contribution	0	582	211	0	0	793
Shares in connection with Valent acquisition	16	14,984	0	0	0	15,000
Restricted stock compensation	0	1,494	0	0	0	1,494
Other	(1)	(529)	(26)	0	0	(556)
Balance at Dec. 31, 2012	$ 257	$ 90,839	$ (482)	$ 110,389	$ (49)	$ 200,954

[1] The fourth quarter of 2012 includes $4,860 in acquisition fees related to Valent.

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ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

12 Months Ended

Dec. 31, 2012

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

3.     ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. There have been no changes in the methodologies used at December 31, 2012. There were no transfers between levels during 2012 and 2011.

	Assets at Fair Value as of December 31, 2012
	Total		(Level 1)		(Level 2)		(Level 3)
Recurring Fair Value Measurement:
Contingent consideration (1)	$	7,950	$	-	$	-	$	7,950
Non-recurring Fair Value Measurements:
Intangible assets, net (2)		48,793		-		-		48,793

												2011
												Total
	Assets at Fair Value as of December 31, 2011											Gains
	Total		(Level 1)			(Level 2)			(Level 3)			(Losses)
Recurring Fair Value Measurement:
Money market fund (3)	$	7,503		$	7,503		$	-		$	-			-
Non-recurring Fair Value Measurements:
Intangible assets, net (4)		17,642			-			-			17,642		$	(1,163	)
Contingent consideration (5)		-			-			-			-			1,235
														72

(1) The Monte Carlo simulation was used with a normal probability distribution of the best estimate of EBITDA for 2013 to approximate fair value.

(2) The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values

(3) Institutional Money Market: Valued at the closing price reported on the active markets on which the individual securities are traded (Level 1); included in cash and cash equivalents at December 31, 2011. The money market fund was fully liquidated at its carrying value during the third quarter of 2012 to fund the TASS acquisition.

(4) During the first quarter of 2011, a triggering event occurred with regard to a certain proprietary technology intangible asset as a result of a failure to conclude a possible sale of a product line. The Company did not have plans to utilize this technology in the near term and believed the current market for the product line to be limited; thus, utilizing the income approach with a level 3 valuation, the Company expected zero cash flows. As such, a full impairment loss of $1,163 was recognized as of March 31, 2011. The impairment loss was recognized in the Aerostructures segment in the selling, general and administrative expenses line of the Consolidated Statements of Income.

(5) Included in accrued liabilities as of December 31, 2010 was $1,235 of contingent consideration, representing the fair value of the amount payable to former Intec shareholders if certain sales targets were achieved by Intec or if proceeds from the sale of certain portions of Intec exceeded a pre-established threshold by March 31, 2011. This amount was calculated utilizing an income approach with a level 3 valuation in which the Company analyzed expected future cash flows of likely scenarios as of December 31, 2010. Neither the sales targets nor the sale of certain portions of Intec occurred by March 31, 2011. As such, the $1,235 of contingent consideration was deemed not to be owed, and a benefit was recorded in the selling, general and administrative expenses line of the Consolidated Statements of Income.

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INCOME TAXES (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current deferred tax assets (liabilities):
Accrued vacation	$ 705	$ 663
Inventories	1,888	1,803
Stock award	522	962
Obligation under operating leases	587	437
Foreign NOL carryforwards	261	0
Other	137	220
Total current deferred tax assets	4,100	4,085
Less: valuation allowance	(261)	0
Deferred Tax Assets, Net of Valuation Allowance, Current, Total	3,839	4,085
Long-term deferred tax assets (liabilities):
Depreciation	(6,151)	(5,755)
Amortization of intangibles	(3,646)	(4,180)
Gain on sale of real estate	1,022	1,106
Long-term contract costs	(1,941)	(886)
Professional fees	1,946	86
Other	38	710
Total long-term deferred tax liabilities	(8,732)	(8,919)
Net deferred tax liabilities	(4,893)	(4,834)
Federal [Abstract]
Current	7,926	5,658	5,306
Deferred	(109)	1,149	(151)
Federal Income Tax Expense, Total	7,817	6,807	5,155
State [Abstract]
Current	346	225	355
Deferred	(10)	104	(14)
State Income Tax Expense, Total	336	329	341
Provision for income taxes	8,153	7,136	5,496
Income Tax Reconciliation [Abstract]
Federal taxes	8,627	8,235	6,449
State and local taxes, net of federal benefit	336	329	341
Production deduction	(530)	(508)	(399)
Research and experimental and other tax credits	(300)	(665)	(470)
Other	20	(255)	(425)
Provision for income taxes	$ 8,153	$ 7,136	$ 5,496

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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2012

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS [Abstract]

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

LMI AEROSPACE, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(Dollar amounts in thousands)

December 31, 2012

	Beginning Balance		Charge to Cost/ Expense			Other Charge to Cost/ Expense		Write-offs net of Recoveries			Ending Balance
Reserve for Accounts Receivable
Year ended December 31, 2010	$	279	$	(23	)	$	-	$	(3	)	$	253
Year ended December 31, 2011	$	253	$	157		$	-	$	(51	)	$	359
Year ended December 31, 2012	$	359	$	(140	)	$	86	$	(18	)	$	287

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2012

COMMITMENTS AND CONTINGENCIES [Abstract]

Schedule of future minimum lease payments under operating leases

The Company leases certain facilities and equipment under various non-cancelable operating lease agreements that expire at various dates through 2025. At December 31, 2012, the future minimum lease payments under operating leases with initial non-cancelable terms in excess of one year are as follows:

2013	$	7,031
2014		6,193
2015		5,664
2016		5,066
2017		4,307
Thereafter		24,788
	$	53,049

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DEFINED CONTRIBUTIONS PLANS

12 Months Ended

Dec. 31, 2012

DEFINED CONTRIBUTIONS PLANS [Abstract]

DEFINED CONTRIBUTIONS PLANS

13.  DEFINED CONTRIBUTION PLANS

The Company sponsored four defined contribution plans in 2012: the LMI Profit Sharing and Savings Plan (the "LMI Plan"), the Valent 401(k) and Simple IRA plans (the "Valent Plans") and the TASS Inc. 401(k) Plan, the ("TASS Plan"). The LMI Plan covers virtually all of the employees of the Company, except the employees of Valent and TASS, and is a profit sharing plan that allows discretionary profit sharing contributions by the Company. The LMI Plan also includes a 401(k) component that allows employee deferrals and a discretionary matching contribution component, under which the Company may make contributions based upon a percentage of employee contributions up to a maximum of $1 annually per employee. Employee deferrals and matching contributions to the LMI Plan are fully vested to the employee immediately upon contribution. Profit sharing contributions by the Company to the LMI Plan become vested over time and are fully vested after six years. No profit sharing contributions have been made to the LMI Plan for 2012, 2011, or 2010. The Company recognized costs for matching contributions to the LMI Plan totaling $882, $806, and $798 in 2012, 2011, and 2010, respectively. The Company's matching contributions to the LMI Plan are determined and approved by the Board of Directors, which can be settled in cash or shares of LMI common stock. For the years ended December 31, 2012, 2011, and 2010, the Company made matching contributions of 50% for each one dollar contributed by each participant up to a maximum employer matching contribution of $1. In 2012, 2011, and 2010 the contribution was made in shares of the Company's common stock. The amount of the expense is calculated based on the formula described above and is not impacted by the value of the common stock, as the shares given are based on the dollar amount of the matching contribution.

The Valent Plans cover essentially all full-time employees of Valent. Under these plans, participants may elect to have a portion of their salary contributed to the respective plans within certain limits. Under the plans, the Company may contribute a discretionary matching contribution to the applicable plan. The exact percentage, if any, will be determined each year and shall not exceed 3% of a participant's compensation for the year.

The TASS Plan covers all of the employees of TASS effective on the first day of full-time employment. Under this plan, participants may elect to have a portion of their salary contributed to the plan within certain limits. Under the plan, the Company may contribute a discretionary profit sharing and / or matching contribution to the plan. The exact percentage, if any, will be determined each year and is not limited by the plan. Contributions by the Company to the plan become vested over time and are fully vested after five years. The Company has not made any profit sharing contribution or matching contribution to the plan during the period in 2012 subsequent to the acquisition of TASS on August 7, 2012.