SPECIAL BUSINESS PROVISIONS
Between
THE BOEING COMPANY
and
Leonard's Metals, Inc.
POP-65344-0667
TABLE OF CONTENTS
TITLE PAGE
TABLE OF CONTENTS
AMENDMENT PAGE
RECITAL PAGE
1.0 DEFINITIONS..........................................................8
2.0 CONTRACT FORMATION...................................................8
2.1 Order......................................................8
2.2 Entire Agreement...........................................9
2.3 Incorporated by Reference..................................9
2.4 Order of Precedence........................................9
2.5 Survival...................................................10
3.0 PERIOD OF PERFORMANCE AND PRICES.....................................11
3.1 Performance................................................11
3.1.1 Period of Performance..........................11
3.1.2 Option to Extend...............................11
3.2 Pricing....................................................11
3.2.1 Product Pricing................................11
3.2.2 Manufacturing Configuration....................11
3.2.3 Packaging......................................11
3.2.4 Local Transportation Devices...................12
3.3 Subject Matter of Sale.....................................12
4.0 GOVERNING QUALITY ASSURANCE REQUIREMENTS.............................12
5.0 APPLICABLE LAW.......................................................12
6.0 PRODUCT SUPPORT AND ASSURANCE........................................12
6.1 Warranty...................................................12
7.0 PAYMENT..............................................................13
7.1 Recurring Price............................................13
7.2 Nonrecurring Price/Special Charges.........................13
7.3 Payment Method.............................................13
8.0 SCHEDULE ACCELERATION/DECELERATION...................................13
9.0 NOTICES..............................................................13
9.1 Addresses..................................................13
10.0 OBLIGATION TO PURCHASE AND SELL......................................14
11.0 COST AND PERFORMANCE VISIBILITY......................................15
12.0 CHANGE PROVISIONS....................................................15
12.1 Reserved...................................................15
12.2 Computation of Equitable Adjustment........................15
12.3 Obsolescence...............................................15
12.4 Change Absorption (Nonrecurring/Recurring).................15
12.4.1 Prior to 100% Engineering Release
(Drawing Revision Level New).....................
12.4.2 Subsequent to 100% Engineering Release.........
12.5 Planning Schedule..........................................17
12.6 Total Cost Management System...............................17
12.6.1 Continuous Cost Improvement Process..............17
12.6.2 Continuous Improvement Initiatives...............18
12.6.2.1 Submission of Cost Reduction Proposal............18
12.6.2.2 Acceptance and Cost Sharing......................19
12.6.3 Boeing Generated Technical and
Cost Improvements................................19
12.6.4 Value Engineering................................19
12.6.5 Lean Manufacturing...............................20
12.7 Reduction in Quantity to be Delivered......................21
12.8 Critical Manufacturing Reorder Lead-Time...................21
12.9 Derivative Aircraft........................................21
13.0 SPARES AND OTHER PRICING.............................................22
13.1 Spares.....................................................22
13.1.1 Spares Support...................................23
13.1.2 Reclassification or Re-exercises.................23
13.1.3 Spare Pricing....................................23
13.1.3.1 Aircraft On Ground (AOG), Critical Spares
and POA Requirement..............................23
13.1.3.2 Expedite Spare (Class 1).........................24
13.1.4 Spares Special Handling..........................24
13.2 Expedite of Production Requirements........................24
13.3 Tooling....................................................24
13.3.1 Responsible Party................................24
13.3.2 Boeing Furnished Tooling.........................25
13.4 Pricing of Boeing's Supporting Requirements................26
13.5 Pricing of Requirements for Modification or Retrofit.......26
13.5.1 Boeing Responsibility or Regulatory
Requirement......................................26
13.5.2 Contract Aftermarket Modification or Retrofit
Work Performed by Boeing.........................26
13.6 Pricing of Similar Products................................26
14.0 STATUS REPORTS/REVIEWS...............................................26
14.1 General Reports / Reviews..................................26
14.2 Diversity Reporting Format.................................27
14.3 Program Manager............................................27
14.4 Certified Tool List........................................27
14.5 Problem Reports............................................27
14.6 Order Readiness Matrix (ORM)...............................28
15.0 INTERNATIONAL COOPERATION............................................28
15.1 Market Access and Sales Support............................28
15.2 Offset Assistance..........................................28
15.3 Credit Against Aircraft Sales..............................29
16.0 BOEING FURNISHED MATERIAL/SUPPLIER BANKED MATERIAL...................29
17.0 PARTICIPATION........................................................29
17.1 Other Boeing Entities......................................29
17.2 Boeing Subcontractors/Suppliers............................30
17.3 Notification of Contract...................................30
17.4 Notification of Price Reductions...........................30
18.0 INVENTORY AT CONTRACT COMPLETION.....................................30
19.0 OWNERSHIP OF INTELLECTUAL PROPERTY...................................31
19.1 Technical Work Product.....................................31
19.2 Inventions and Patents.....................................31
19.3 Works of Authorship and Copyrights.........................31
19.4 Pre-Existing Inventions and Works of Authorship............31
19.5 Inapplicability............................................31
20.0 ADMINISTRATIVE AGREEMENTS............................................31
21.0 GUARANTEED WEIGHT REQUIREMENTS.......................................31
22.0 SELLER DATA REQUIREMENTS.............................................31
23.0 DEFERRED PAYMENT.....................................................31
24.0 SOFTWARE PROPRIETARY INFORMATION RIGHTS..............................32
25.0 CONFIGURATION CONTROL................................................32
26.0 INFRINGEMENT.........................................................32
27.0 RAW MATERIAL PROGRAM.................................................32
27.1 Boeing Raw Material Strategy...............................32
27.2 Casting and Forging Strategy...............................33
28.0 DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS................33
29.0 INSURANCE FOR ON-SITE SUPPORT........................................33
29.1 Indemnification Negligence of Seller or subcontractor......33
29.2 Commercial General Liability...............................33
29.3 Automobile Liability.......................................33
29.4 Workers' Compensation......................................33
29.5 Certificates of Insurance..................................33
29.6 Self-Assumption............................................33
29.7 Protection of Property.....................................33
30.0 BOEING TECHNICAL / MANUFACTURING ASSISTANCE REGARDING
SELLER'S NONPERFORMANCE..............................................33
31.0 U. S. CUSTOMS INVOICE REQUIREMENTS...................................34
31.1 U.S. Customs Requirements..................................34
31.2 The Boeing Company Requirements............................34
32.0 STRATEGIC ALIGNMENT AND WORK MOVEMENT................................34
Signature Page
Attachment 1 Work Statement and Pricing
Attachment 1A Continuous Cost Improvement Goals
Attachment 2 Non-U.S. Procurement Report
Attachment 3 Rates and Factors
Attachment 4 Boeing AOG Coverage
Attachment 5 Boeing AOG/Critical Shipping Notification
Attachment 6 Seller Data Requirements
Attachment 7 Supplier Data Requirements List Engineering/Customers
Attachment 8 Commodity Listing and Terms of Sale
Attachment 9 Cost and Performance Reviews
Attachment 10 Quality Assurance Requirements
Attachment 11 Second Tier Support
Attachment 12 Value Engineering Methodology
Attachment 13 SBP Exceptions
AMENDMENTS
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Amend Description Date Approval
Number
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SPECIAL BUSINESS PROVISIONS
THESE SPECIAL BUSINESS PROVISIONS (SBP) are entered into as of March 20th, 2003
by and between Leonard's Metals, Inc., a Missouri corporation with its principal
office in St. Charles, Missouri ("Seller"), and The Boeing Company, a Delaware
corporation acting by and through its Boeing Commercial Airplanes, a Delaware
corporation. Hereinafter, the Seller and Boeing may be referred to jointly as
"Parties" hereto.
Now, therefore, in consideration of the mutual covenants set forth herein, the
Parties agree as follows:
SPECIAL BUSINESS PROVISIONS
1.0 DEFINITIONS
The definitions used herein are the same as those used in the GTA. In addition,
the following terms are defined as follows:
A. "Drawing" means an automated or manual depiction of graphics or
technical information representing a Product or any part thereof and
which includes the parts list and specifications relating thereto.
B. "End Item Assembly" means any Product which is described by a single
part number and which is comprised of more than one component part.
C. "Shipset" means the total set of Production Articles provided by
Seller hereunder necessary for production of one Program Airplane or
Derivative.
D. "Spare Parts" or "Spares" means Production Articles or components
thereof, and materials, assemblies and items of equipment relating
thereto, which are intended for Boeing's use or sale as spare parts or
production replacements. The term "Spare Parts" includes, but is not
limited to, Boeing Proprietary Spare Parts. 2.0 CONTRACT FORMATION
2.1 Order
Any Order to which these SBP shall apply shall incorporate this SBP by reference
in one or more of the following ways:
A. Include a statement substantially as follows:
This Order is subject to and incorporates by this reference SBP
POP-65344-0667 between The Boeing Company and Leonard's Metals, Inc.
dated March 20th, 2003.
B. List a number assigned to represent the SBP in the "REFERENCE P.O.
NO." block of the Order, or in a block with a similar title. Due to
computer programming limitations, different divisions may assign
different numbers to represent the same SBP.
C. Utilize the number assigned to represent the SBP as the first portion
of the Order number, followed by a dash, followed by a unique
identifier for the Order. For example, if contract MDC5002D was
assigned to represent a SBP, Orders issued under that SBP would have a
number of 5002D-XXXXX.
Each Order incorporating this SBP by any method listed above will be governed by
and be deemed to include the provisions of this SBP.
2.2 Entire Agreement
The Order sets forth the entire agreement, and supersedes any and all other
prior agreements understandings and communications between Boeing and Seller
related to the subject matter of an Order. The rights and remedies afforded to
Boeing or Customers pursuant to any provisions of an Order are in addition to
any other rights and remedies afforded by any other provisions of this Order, by
law or otherwise.
2.3 Incorporated by Reference
General Terms Agreement ("GTA") BCA-65344-0596 dated March 20th, 2003 (the
"Agreement") is incorporated in and made a part of this SBP by this reference.
In addition to any other documents incorporated elsewhere in this SBP or GTA by
reference, the following documents are incorporated in and made a part of this
SBP by reference with full force and effect, as if set out in full text.
PUGET SOUND / WICHITA
Boeing Document D33200-1 "Boeing Suppliers' Tooling Document"
Boeing Document D953W001, "General Operations Requirements Document For
Suppliers - External/internal Suppliers/Program Partners"
Boeing Document D37520-1, -1A, -1B, Supplier's Part Protection Guides
Boeing Document D6-81628, "Shipping Label, Barcoded Preparation and
Placement"
Additional TULSA
Form 49-5704, Flysheet 5704 -- INSTRUCTIONS FOR SHIPPING, PACKAGING, &
MARKING, revised September 15, 1999.
Form 49-5716, IDENTIFICATION, BOEING DETAIL PARTS OR ASSEMBLIES, revised
September 15, 1999.
2.4 Order of Precedence
In the event of a conflict or inconsistency between any of the terms of the
following documents, the following order of precedence shall control:
A. These Special Business Provisions ("SBP") including attachments
(excluding all documents listed below), then
B. General Terms Agreement ("GTA") (excluding all documents listed
elsewhere on this listing), then
C. Purchase Contract, if any, then
D. Order (excluding all documents listed elsewhere on this listing), then
E. The Design Change Transmittal, or the Flysheet 9, if any, then
F. The Subcontracted Parts - Revision, Authorization, and Transmittal
("SPRAT"), if any, then
G. Engineering Drawing by Part Number and, if applicable, related Outside
Production, Specification Plan (OPSP), Specification Plan Detail
(SPCD) or Supplier Specification Plan (SSP) then
H. All documents incorporated by reference in SBP Section 6.0, Product
Support and Assurance, of this SBP, then
I. Administrative Agreement, if any, then
J. Any other Boeing generated exhibits, attachments, forms, flysheets,
codes or documents that the Parties agree shall be part of this SBP,
then lastly
K. Any Seller generated documents that the Parties agree shall be part of
this SBP.
In resolving any such conflicts, these documents shall be read as a whole and in
a manner most likely to accomplish their purposes.
Seller shall promptly report to Boeing in writing any inconsistencies in these
documents, even if the inconsistency is resolvable using the above rules.
2.5 Survival
Without limiting any other survival provision contained herein and
notwithstanding any other provision of this SBP or the GTA to the contrary, the
representations, covenants, agreements and obligations of the Parties set forth
in GTA Section 12.3 "Termination Claim", GTA Section 16.0 "Termination or
Wrongful Cancellation", GTA Section 18.0 "Responsibility for Property", GTA
Section 20.0 ` Proprietary Information and Items", GTA Section 24.0 "Boeing's
Rights in Seller's Patents, Copyrights, Trade Secrets and Tooling", GTA Section
27.0 "Property Insurance", GTA Section 29.0 "Non-Waiver/Partial Invalidity",
this SBP Section 2.5 "Survival", SBP Section 5.0 "Applicable Law", SBP Section
29.0 "Insurance"(if applicable), and SBP Section 41.0 "Supplements and
Modifications"(if applicable), shall survive any cancellation, termination or
expiration of this SBP, any assignment of this SBP or any payment and
performance of any or all of the other obligations of the Parties hereunder.
Termination or cancellation of any part of this SBP shall not alter or affect
any part of this SBP, which has not been terminated or cancelled.
3.0 PERIOD OF PERFORMANCE AND PRICES
3.1 Performance
3.1.1 Period of Performance
Except as otherwise provided below, the period of performance for this SBP shall
be for delivery of Products beginning on January 1, 2004 and ending on December
31, 2006.
Except as otherwise stated in any applicable Administrative Agreement, for Tulsa
and Long Beach requirements, period of performance set out above shall be
defined as order placement with potential delivery beyond December 31, 2006.
3.1.2 Option to Extend
"SECTION DELELTED"
3.2 Pricing
3.2.1 Product Pricing
The prices of Products ordered under this SBP are set forth in SBP Attachment 1.
Prices are in United States Dollars. F.O.B. point is as follows: Seller's Plant,
for Puget Sound and Wichita. Destination, for Tulsa, OK. (Melbourne, Ark.,
McAlester, Texas).
3.2.2 Manufacturing Configuration
Unit pricing for each Product or part number shown in SBP Attachment 1 is based
on the latest revisions of the engineering drawings or specifications at the
time of the signing of this SBP and any amendments thereof.
3.2.3 Packaging
The prices shown in SBP Attachment 1 include all packaging costs. Seller shall
package Product in accordance with the applicable requirements set forth in the
documents referred to in SBP Section 2.3 for the location issuing the Order. In
the case of Products to be shipped directly to Customers, A.T.A. Specification
300 "Specification for Packaging of Airline Supplies" shall apply unless
otherwise directed by Boeing. Upon Boeing's request, Seller will provide
discreet packaging costs.
3.2.4 Local Transportation Devices
Not Applicable
3.3 Subject Matter of Sale
Subject to the provisions of this SBP, Seller shall sell to Boeing and Boeing
shall purchase from Seller certain Products as set forth in SBP Attachment 1.
4.0 GOVERNING QUALITY ASSURANCE REQUIREMENTS
In addition to those general quality assurance requirements set forth in the
GTA, the work performed under this SBP shall be in accordance with the
requirements set forth in SBP Attachment 10.
5.0 APPLICABLE LAW
This contract shall be governed by the laws of the State of Washington. No
consideration shall be given to Washington's conflict of law rules. This
contract excludes the application of the 1980 United Nations Convention on
Contracts for the International Sale of Goods. Seller hereby irrevocably
consents to and submits itself exclusively to the jurisdiction of the applicable
courts of King County Washington and the federal courts of Washington State for
the purpose of any suit, action or other judicial proceeding arising out of or
connected with any Order or the performance or subject matter thereof. Seller
hereby waives and agrees not to assert by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that (a) Seller is
not personally subject to the jurisdiction of the above-named courts, (b) the
suit, action or proceeding is brought in an inconvenient forum or (c) the venue
of the suit, action or proceeding is improper.
6.0 PRODUCT SUPPORT AND ASSURANCE
6.1 Warranty
Seller acknowledges that Boeing and Customers must be able to rely on each
Product performing as specified and that Seller will provide all required
support. Accordingly, the following provisions, including documents, if any, set
forth below are incorporated herein and made a part hereof:
"Boeing Designed, Sub-Contracted Products Manufacturers Warranty" Boeing
Document M6-1124-3,
Boeing may choose initially not to extend the Seller's full warranty of Product
to Customers. This action shall in no way relieve Seller of any obligation set
forth in the warranty documents listed above. Boeing, at its sole discretion,
may extend Seller's full warranty of Product to its Customers at any time.
Furthermore, Seller agrees to support the Product as long as any aircraft using
or supported by the Product remains in service.
7.0 PAYMENT
7.1 Recurring Price
Unless otherwise provided under the applicable Order or written agreement
between the Parties, payment shall be (net) thirty (30) calendar days.
Except as otherwise provided on applicable Order identifying Pay-From Receipt,
payment due dates, including discount periods, shall be computed from (a) the
date of receipt of the Product, (b) the date of receipt of a correct (proper)
invoice or (c) the scheduled delivery date of such Product, whichever is last.
Unless freight and other charges are itemized, any discount shall be taken on
the full amount of the invoice. All payments are subject to adjustment for
shortages, credits and rejections.
7.2 Nonrecurring Price/Special Charges
Unless otherwise provided in the applicable Order, any Nonrecurring price
payable by Boeing under SBP Attachment 1 will be paid within the term discount
period or thirty (30) calendar days (whichever is later) after receipt by Boeing
of both acceptable Products and a correct invoice and where required, a
completed certified tool list (CTL).
7.3 Payment Method
All payments hereunder shall be made by check payable to the order of Seller
deposited in the U.S. postal system via first-class mail to an address
designated in writing by Seller.
8.0 SCHEDULE ACCELERATION/DECELERATION
Notwithstanding GTA Section 10.0, Boeing may revise the delivery schedule and/or
firing order without additional cost or change to the unit price stated in the
applicable Order if (a) the delivery date of the Product under such Order is on
or before the last date of contract, if applicable, and (b) Boeing provides
Seller with written notice of such changes.
9.0 NOTICES
9.1 Addresses
For all matters requiring the approval or consent of either party, such approval
or consent shall be requested in writing and is not effective until given in
writing. With respect to Boeing, authority to grant approval or consent is
limited to Boeing's Procurement Representative. Notices and other communications
shall be given in writing by personal delivery, United States mail, express
delivery, facsimile, or electronic transmission addressed to the respective
party as follows:
To Boeing: Attention: Peggy McDonald Mail Code: 5X-65
BOEING COMMERCIAL AIRPLANES
SUPPLY MANAGEMENT AND PROCUREMENT DIVISION
P.O. Box 3707
Seattle, Washington 98124-2207
To Seller: Attention: Rick Darrow
Leonard's Metals, Inc.
3600 Mueller Road
St. Charles, MO 63301
10.0 OBLIGATION TO PURCHASE AND SELL
Boeing and Seller agree that in consideration of the prices set forth under SBP
Attachment 1, Boeing shall issue Orders for Products from time to time to Seller
for all of Boeing's requirements. Such Products shall be shipped at any
scheduled rate of delivery, as determined by Boeing, and Seller shall sell to
Boeing Boeing's requirements of such Products, provided that, without limitation
on Boeing's right to determine its requirements, Boeing shall not be obligated
to issue any Orders for any given Product if:
A. Any of Boeing's customers specifies an alternate product;
B. Such Product is, in Boeing's reasonable judgment, not technologically
competitive at any time, for reasons including but not limited to the
availability of significant changes in technology, design, materials,
specifications, or manufacturing processes which result in a reduced price
or weight or improved appearance, functionality, maintainability or
reliability;
C. Boeing gives reasonable notice to Seller of a change in any of Boeing's
aircraft which will result in Boeing no longer requiring such Product for
such aircraft;
D. Seller has materially defaulted in any of its obligations under any Order,
whether or not Boeing has issued a notice of default to Seller pursuant to
GTA Section 13.0; or,
E. Boeing reasonably determines that Seller cannot support Boeing's
requirements for Products in the amounts and within the delivery schedules
Boeing requires.
F. Boeing gives at least six (6) months notice to Seller that the Product is
used in the manufacturing of an airplane component, assembly or other
product previously manufactured in-house by Boeing and which component,
assembly or other product Boeing has resourced to a third party supplier.
For purposes of this SBP Section 10.0, Boeing is defined as those organizations,
divisions, groups or entities set forth specifically in SBP Attachment 1.
Seller represents and warrants to Boeing that discounts offered fairly reflect
manufacturing, selling, or delivery cost savings resulting from this quantity
sale and that such discounts are reasonably available to all other purchasers.
11.0 COST AND PERFORMANCE VISIBILITY
When requested by Boeing, Seller shall provide all necessary cost support data,
source documents for direct and indirect costs, and assistance at the Seller's
facility in support of cost and performance reviews performed by the Parties
pursuant to cost reduction initiatives as set forth in SBP Section 12.6.
The Cost and Performance Review (CPR) process is the preferred tool, which the
Parties will use to measure Seller's performance to the goals and objectives of
Boeing as set forth in SBP Section 12.6. Boeing and Seller shall implement a
structured process called CPR to review and identify areas, processes and
strategies to improve, reduce or eliminate which will result in the desired
effect of reducing costs and/or improving cycle times for the Product(s) set
forth in this SBP. The CPR process will address those activities, which are a
direct result of both parties involvement. Seller will provide the resources and
data sufficient to support the CPR process in accordance with the structure set
forth in SBP Attachment 9.
12.0 CHANGE PROVISIONS
12.1 Reserved
12.2 Computation of Equitable Adjustment
The Rates and Factors set forth in SBP Attachment 3, which by this reference is
incorporated herein, shall be used to determine the equitable adjustment, if
any, (including equitable adjustments, if any, in the prices of Products to be
incorporated in Derivative Aircraft), to be paid by Boeing pursuant GTA Section
10.0 for each individual change.
12.3 Obsolescence
Seller may not submit a claim for obsolete material or Product resulting from an
individual change order that has a total claim value of One Thousand Dollars
$2500.00 or less.
12.4 Change Absorption (Nonrecurring/Recurring)
12.4.1 Prior to 100% Engineering Release (Drawing Revision Level New)
Notwithstanding the provisions of GTA Section 10.0, no equitable adjustment in
the prices or schedules of any Order shall be made for any change initiated by
Boeing made prior to the date on which all engineering drawings that change the
technical requirements, descriptions, specifications, statement of work, drawing
or designs ("Technical Change(s)") have been released by Boeing ("100%
Engineering Release") provided, however, that an equitable adjustment shall be
made for:
A. Any Technical Change which is a change between raw material classifications
such as a change from aluminum to steel or titanium to plastic. Not
included as a Technical Change for purposes of this SBP Section are changes
within a raw material classification such as a change from 7050 Aluminum to
7075 Aluminum;
B. Any Technical Change, which adds or deletes a process specification
including but not limited to chem milling, chrome plating, anodizing,
painting, priming and heat-treating.
Claims for equitable adjustment for Technical Changes shall be submitted in
writing within thirty (30) days after 100% Engineering Release.
12.4.2 Subsequent to 100% Engineering Release
Notwithstanding the provisions of GTA Section 10.0, no equitable adjustment
shall be made to the recurring or Nonrecurring prices after the date of 100%
Engineering Release for any change initiated by Boeing unless the value of such
change (debit or credit) is greater than or equal to two percent (2%) of the
then current unit price for the Product (recurring) or is greater than or equal
to two percent (2%) of the total then current nonrecurring price as set forth in
SBP Attachment 1. For purposes of this SBP Section 12.4, the then current unit
price or total nonrecurring price shall be the price identified in SBP
Attachment 1 plus any and all price adjustments agreed to previously by the
Parties.
Claims shall be made individually for each Product and for each change. Each
claim shall be considered separately for application of the two percent (2%)
threshold. Changes may not be combined for the purposes of exceeding the two
percent (2%) threshold set forth herein.
12.5 Planning Schedule
Any planning schedule, forecast, or any such quantity estimate provided by
Boeing shall be used solely for production planning. Boeing may purchase
Products in different quantities and specify different delivery dates as
necessary to meet Boeing's requirements. Unless otherwise set forth in the
Administrative Agreement as applicable, any such estimate shall be subject to
adjustment from time to time, and such adjustment shall not constitute a change
under GTA Section 10.0 nor a termination under GTA Section 12.0.
12.6 Total Cost Management System
The Total Cost Management System (TCMS) is Boeing's overarching cost management
strategy and visibility tool incorporating internal and external supply base
cost management activities such as CCIP, Lean manufacturing, Value Engineering
Innovation and Raw Material Strategies. Seller will prepare a TCMS support plan
addressing all applicable strategies. The plan will include strategy specific
method of support, internal implementation, flow down to sub-tier suppliers, if
applicable, and a yearly update schedule. Seller shall submit a TCMS support
plan to the appropriate Boeing Procurement Representative within six (6) weeks
of new or follow-on contract award.
12.6.1 Continuous Cost Improvement Process
The timely implementation of the Continuous Cost Improvement Process (CCIP) is a
material duty of the Seller. The CCIP is an ongoing, year-after-year plan to
achieve cost reductions. The goal is to work together to reduce costs in order
to reduce Product unit prices in the manner set forth in SBP Section 12.6.2,
while maintaining or improving margins, profits, and quality levels, and meeting
schedule and other contractual requirements. The implementation of the CCIP
requires establishing cost improvement targets, developing and agreeing on a
cost improvement plan, implementation of the plan by the Seller, regular review
and status reporting with the Procurement Representative, appropriate support
from the Procurement Representative, and corrective action as necessary to meet
the cost improvement targets.
Boeing may assist Seller in areas such as Lean Manufacturing, Advanced Quality
System, Accelerated Improvement Workshop (AIW), Value Engineering, packaging
cost reduction activities, and other initiatives. Seller is not limited to the
Boeing initiatives and may implement any improvement consistent with the
requirements of this SBP.
Boeing and Seller agree to establish CCIP target cost reductions in order to
reduce Product unit prices in the manner set forth in SBP Section 12.6.2, and
delivery and quality performance goals, on or before January 1 of each year for
the period of performance of this SBP. Said target price reductions; delivery
and quality performance goals shall be set out in SBP Attachment 1A, "Continuous
Cost Improvement Goals".
12.6.2 Continuous Improvement Initiatives
Boeing and Seller agree to work together to identify continuous improvement
initiatives which:
A. Decrease Seller's costs by affecting the manufacturing and assembly process
at Seller's facilities and Seller's subcontractor facilities;
B. Reduce Boeing's product weight without impairing any essential functions or
characteristics of the product;
C. Produce a net reduction in the cost to Boeing of installation, operation,
maintenance or production of the Product; and/or improve producibility,
reliability, expected life, or maintainability of the Product.
Proposed changes shall not impair any essential functions or characteristics of
the Products or Tooling.
12.6.2.1 Submission of Cost Reduction Proposal
Proposals shall be submitted to Boeing's Procurement Representative. Boeing
shall not be liable for any delay in acting upon a proposal. Boeing's decision
to accept, postpone, or reject any proposal shall be final. If there is a delay
and the net result in savings no longer justifies the investment, Boeing and
Seller will not be obligated to proceed with the initiative. Seller has the
right to withdraw, in whole or in part, any proposal not accepted by Boeing
within the time period specified in Seller's proposal. Seller shall submit, as a
minimum, the following information with the proposal:
A. Description of the difference between the existing requirement and the
proposed change and the comparative advantage and disadvantages of each;
B. The specific requirements which must be changed if the proposal is adopted;
C. The cost savings and Seller's implementation costs;
D. An implementation schedule, including need dates for any Boeing actions and
the time by which a proposal must be approved so as to obtain the maximum
cost reduction.
Seller shall include with each proposal verifiable cost records and other data
as required by Boeing for proposal review and analysis. Each party shall be
responsible for its own implementation costs.
12.6.2.2 Acceptance and Cost Sharing
Boeing may accept, in whole or in part, any continuous improvement initiative
proposal by issuing a change order. Until such change has been issued, Boeing
and Seller shall remain obligated to perform in accordance with the terms and
requirements of the Order. Where Boeing and Seller identify areas of
improvement, beyond those previously anticipated, identified and documented in
the contract price, the Parties will determine the amount of savings, which will
result from the improvements and share the savings. Where a saving is identified
and documented, the Parties agree to reduce the Product unit price. Seller
suggestions disapproved by Boeing may be given due consideration in achievement
of cost reduction goals.
12.6.3 Boeing Generated Technical and Cost Improvements
At any time during the Seller's performance under this SBP, Boeing may offer
specific recommendations to Seller for the incorporation of new technologies and
process improvements intended to reduce Seller's costs or improve product
performance. These recommendations may include, but are not limited to, Boeing
proprietary information and Boeing owned patents. Upon receipt of any such
recommendation, Seller shall provide a price reduction proposal to Boeing. Upon
Boeing's agreement with the price proposal, Seller shall implement the change.
Boeing shall be entitled to * % of the price reduction and Seller shall be
entitled to * % and the Shipset price shall be adjusted accordingly for those
shipsets affected by the change.
* The text noted by asterisks has been redacted in connection with a request
to the Securities and Exchange Commission for confidential treatment of
such text. A copy of this Agreement including the redacted information has
been submitted to the Securities and Exchange Commission as part of such
request.
12.6.4 Value Engineering
From time to time Seller may submit to Boeing proposals for Value Engineering
changes. Boeing and Seller will define and agree to (i) the Project work
statement, (ii) the value of Recurring savings per Shipset to be shared, (iii)
the negotiated division of the savings between Boeing and Seller, and (iv) the
first affected unit. Each party will bear their own Nonrecurring investments.
All implemented price reductions carry from the first affected unit to the end
of the SBP.
Boeing reserves the right to not incorporate any Value Engineering concept that
is not in Boeing's or Customers' best interests. This includes, but is not
limited to, any proposed change that adversely affects Boeing's internal
assembly processes, marketing capabilities, certification processes, and
interface capabilities with other supplier's hardware.
12.6.5 Lean Manufacturing
Upon Statement of Work (SOW) issuance and prior to commencement of production
planning, Seller's executive management will;
A. Host a Boeing Lean Supplier Development Specialist (SDS) visit and
participate in a facility-wide Lean Diagnostic if not previously conducted
by Boeing and host follow-on visits as specified by the Subject Matter
Expert (SME).
B. Use their best efforts to implement the SDS's recommendations, particularly
those tied directly to or in support of 7X7-X production
C. Provide a Lean Manufacturing Implementation Plan or modification to an
existing plan that is inclusive of all Boeing work and contains a section
specific to 7X7-X. The 7X7-X section must demonstrate incorporation of Lean
Manufacturing concepts within the following part/assembly development and
implementation phases;
1. Part/Assembly design (if Seller has Design Delegation Level 4 or 5
responsibility)
2. Tooling design
3. Production process setup (door to door) The non-program specific
(company-wide) portion of the plan must address Lean deployment to;
a. Recurring training
b. Sub tier interface
c. Delivery to Boeing
d. Manufacturing support organizations (Enterprise Lean)
The Seller Lean Implementation plan must be reviewed and determined acceptable
by the SDS and Boeing Procurement Team within a jointly agreed schedule. Within
one year of commencement of production, Boeing and Seller agree to use the
following metrics to establish an enterprise level baseline followed by monthly
measurements to evaluate Lean driven cost improvement: (i) Inventory Turns,
defined as Annual Costs of Goods Sold/Inventory Value; (ii) Productivity,
defined as Annual Sales/Average Employee Count; and, (iii) Asset Turnover,
defined as Annual Sales/Total Assets. Additional metrics may be added and
evaluated as agreed to by the parties. Where Boeing and Seller can identify
areas of improvement, beyond those previously anticipated, identified and
documented in the SBP price, the parties will determine the amount of savings,
which will result from the improvements and share the savings. Where a savings
is identified and documented, the parties agree to reduce the recurring price by
that amount determined by the Parties.
12.7 Reduction in Quantity to be Delivered
"NOT APPLICABLE"
12.8 Critical Manufacturing Reorder Lead-Time
Critical Manufacturing Reorder Lead-time (CMROLT) shall be identified in SBP
Attachment 1 by part number for the items listed herein. As defined in this SBP,
Critical Manufacturing Reorder Lead-time shall include administrative and
manufacturing (including queue, setup, run and move) lead times. CMROLT is the
minimum number of manufacturing days prior to delivery date that Boeing can
issue a purchase order release for a line delivery quantity against a Purchase
Contract.
The CMROLT defined herein shall be fixed and guaranteed by the Seller, and may
only be revised upon written notice to the Boeing Procurement Representative.
Seller shall not manufacture or fabricate items in advance of the CMROLT
required to comply with the delivery schedule of any subsequent Purchase
Order(s). Notwithstanding any other provision of this SBP, Seller is not
entitled to any equitable adjustment or other modification of any Purchase
Order(s) for any manufacture, fabrication or procurement of products not in
conformity with the requirement of this SBP without first obtaining written
consent of the Boeing Procurement Representative. Nothing in this Clause shall
be construed as relieving Seller of any of its obligations under this SBP or any
subsequent Purchase Contract(s) and/or Order(s).
12.9 Derivative Aircraft
Boeing may, but is not obligated to direct Seller within the scope of the
applicable Order and in accordance with the provisions of GTA Section 10.0 to
supply Boeing's requirements for Products for Derivative aircraft which
correspond to those Products being produced under the applicable Order. For
purposes of this SBP Section, Derivative Aircraft means any model airplane
designated by Boeing as a derivative of an existing model airplane and which:
(1) has the same number of engines as the existing model airplane; (2) utilizes
essentially the same aerodynamic and propulsion design, major assembly
components, and systems as the existing model airplane; (3) achieves other
payload/range combinations by changes in body length, engine thrust, or
variations in certified gross weight; (4) has the same body cross-section as the
subject model aircraft; and (5) is designated as a Derivative to the FAA by
Boeing. A Derivative does not include any subject model aircraft, which has been
or was currently in production as of the date of execution of the applicable
SBP. Furthermore, Boeing reserves the right to extend application of the above
Products and prices to other aircraft models as required.
13.0 SPARES AND OTHER PRICING
13.1 Spares
For purposes of this SBP Section, the following requirements and definitions
shall apply:
A. AIRCRAFT ON GROUND (AOG) - means the highest Spares priority. Seller will
expend best efforts to provide the earliest possible shipment of any Spare
designated AOG by Boeing. Such effort includes but is not limited to
working twenty-four (24) hours a day, seven days a week and use of premium
transportation. Seller shall specify the delivery date of any such AOG
Spare within two (2) hours of receipt of an AOG Spare request.
B. CRITICAL - means an imminent AOG work stoppage. Seller will expend best
efforts to provide the earliest possible shipment of any Spare designated
Critical by Boeing. Such effort includes but is not limited to working two
(2) shifts a day, five (5) days a week and use of premium transportation.
Seller shall specify the delivery date of any such Critical Spare within
the same working day of receipt of a Critical Spare request.
C. EXPEDITE (CLASS I) - means a Spare required in less than Seller's normal
lead-time. Seller will expend best efforts to meet the requested shipment
date. Such effort includes but is not limited to working overtime and use
of premium transportation.
D. ROUTINE (CLASS III) - means a Spare required in Seller's normal lead-time.
E. POA REQUIREMENT (POA) - means any detail component needed to replace a
component on an End Item Assembly currently in Boeing's assembly line
process. Seller shall expend best efforts to provide the earliest possible
delivery of any Spare designated as POA by Boeing. Such effort includes but
is not limited to working twenty-four (24) hours a day, seven days a week
and use of premium transportation. Seller shall specify the delivery date
of any such POA within two (2) hours of a POA request.
F. IN-PRODUCTION - means any Spare with a designation of AOG, Critical,
Expedite, Routine, POA or End Item Assembly which is in the current
engineering configuration for the Product and is used on a model aircraft
currently being manufactured by Boeing at the time of the Order.
G. NON-PRODUCTION REQUIREMENTS - means any Spare with a designation of AOG,
Critical, Expedite and Routine requirements which is used on model aircraft
no longer being manufactured by Boeing (Post Production) or is in a
non-current engineering configuration for the Product (Out of Production).
H. BOEING PROPRIETARY SPARE - means any Spare, which is manufactured (i) by
Boeing, or (ii) to Boeing's detailed designs with Boeing's authorization or
(iii) in whole or in part using Boeing's Proprietary Materials.
13.1.1 Spares Support
Seller shall provide Boeing with a written Spares support plan describing
Seller's process for supporting AOG and Critical commitments and manufacturing
support. The plan must provide Boeing with the name and number of a twenty-four
(24) hour contact for coordination of AOG, Critical requirements. Such contact
shall be equivalent to the coverage provided by Boeing to its Customers as
outlined in SBP Attachment 4 "Boeing AOG Coverage".
Seller shall notify Boeing as soon as possible via fax, telecon, or as otherwise
agreed to by the Parties of each AOG and Critical requirement shipment using the
form identified in SBP Attachment 5 "Boeing AOG and Critical Shipping
Notification". Such notification shall include time and date shipped, quantity
shipped, Order, pack slip, method of transportation and air bill if applicable.
Seller shall also notify Boeing immediately upon the discovery of any delays in
shipment of any requirement and identify the earliest revised shipment possible.
13.1.2 Reclassification or Re-exercises
Boeing may instruct Seller to re-prioritize or reclassify an existing
requirement in order to improve or otherwise change the established shipping
schedule. Seller shall expend the effort required to meet the revised
requirement as set forth above in the definitions of the requirements. Seller's
commitment of a delivery schedule shall be given in accordance with that set
forth above for the applicable classification but in no case shall it exceed
twenty-four (24) hours from notification by Boeing.
13.1.3 Spare Pricing
*
* The text noted by asterisks has been redacted in connection with a request
to the Securities and Exchange Commission for confidential treatment of
such text. A copy of this Agreement including the redacted information has
been submitted to the Securities and Exchange Commission as part of such
request.
13.1.3.1 Aircraft On Ground (AOG), Critical Spares and POA Requirement
The price for AOG and Critical Spares and POA requirements shall be the price
for such Products listed on SBP Attachment 1 in effect when such Spares are
ordered multiplied by a factor not to exceed *.
* The text noted by asterisks has been redacted in connection with a request
to the Securities and Exchange Commission for confidential treatment of
such text. A copy of this Agreement including the redacted information has
been submitted to the Securities and Exchange Commission as part of such
request.
13.1.3.2 Expedite Spare (Class 1)
The price for Expedite Spares shall be the price for such Products listed on SBP
Attachment 1 in effect when such Spares are ordered multiplied by a factor not
to exceed *.
* The text noted by asterisks has been redacted in connection with a request
to the Securities and Exchange Commission for confidential treatment of
such text. A copy of this Agreement including the redacted information has
been submitted to the Securities and Exchange Commission as part of such
request.
13.1.4 Spares Special Handling
The price for all effort associated with the handling and delivery of Spare(s)
is deemed to be included in the price for such Spare(s). If Boeing directs
delivery of Spares to a place other than the F.O.B. point as designated in SBP
Section 3.2.1, Boeing shall reimburse Seller for shipping charges, including
insurance, paid by Seller from the plant to the designated place of delivery
which exceed the cost of shipping to the F.O.B. point. Such charges shall be
shown separately on all invoices.
13.2 Expedite of Production Requirements
Any expedite charges to be paid for short flow production requirements shall be
pre-approved by the Procurement Representative. Seller shall provide data to
verify expedite charges. If Seller fails to meet their committed delivery,
Boeing shall not be obligated to pay the agreed upon amount.
13.3 Tooling
13.3.1 Responsible Party
Seller shall absorb the first $ * of cost for Puget Sound and $ * of cost for
Tulsa/Wichita for each individual occurrence associated with all Boeing
furnished tooling, supplier manufactured tooling, and non-acountable tooling
required for the manufacture and delivery of products including but not limited
to rework, repair, replacement and maintenance of the tooling (after initial
review and repair of Boeing furnished tools to bring them to acceptable levels).
Programming when required will be reviewed on an individual case by case basis.
Repair of tooling damaged by seller through misuse or poor workmanship will be
the responsibility of the Seller. If the tool assertions are greater than $ *
for Puget Sound or $ * for Tulsa/Wichita, seller can submit a detailed assertion
to procurement agent for consideration. Engineering changes that cause any tool
rework will be handled with detailed assertion to the procurement agent for
their approval. Seller shall not use tools, which contain, convey, embody, or
were made in accordance with or by reference to any Proprietary Information and
Materials of Boeing, to manufacture parts for anyone other than Boeing without
the prior written authorization of Boeing.
Puget Sound Example:
Tool rework cost is $ *. Cost will be at seller's expense.
Tool rework cost is $ *. Cost will be at buyer's expense total $ *.
Tulsa/Wichita Example:
Tool rework cost is $ *. Cost will be at seller's expense.
Tool rework cost is $ *. Cost will be at buyer's expense total $ *.
* The text noted by asterisks has been redacted in connection with a request
to the Securities and Exchange Commission for confidential treatment of
such text. A copy of this Agreement including the redacted information has
been submitted to the Securities and Exchange Commission as part of such
request.
When Boeing agrees to pay for Tooling to support the manufacture and delivery of
applicable Product(s) identified herein, the amount shall be set forth in SBP
Attachment 1. The costs of necessary repair and maintenance to the Tooling is
included in such amount. In addition to the requirements set forth in SBP
Section 7.2, the Seller shall comply with the applicable Terms and Conditions as
set forth in SBP Section 2.3 for the Boeing location issuing the Order. Invoices
received with incorrect, improperly prepared or incomplete certified tool lists
will be returned for correction prior to payment. Invoices shall be dated
concurrent with, or subsequent to, shipment of the Products. No repair,
replacement, maintenance or rework of such Tooling shall be performed without
Boeing's prior written consent. Boeing shall notify Seller of any action
required for discrepant Tooling.
13.3.2 Boeing Furnished Tooling
In the event Boeing furnishes Tooling to Seller, Seller shall comply with the
applicable Terms and Conditions as set forth in SBP Section 2.3 for the Boeing
location furnishing the Tooling. No repair, replacement, maintenance or rework
of such Tooling shall be performed without Boeing's prior written consent.
Boeing shall notify Seller of any action required for discrepant Tooling.
13.3.3 Additional Tooling Requirement
Upon expiration, termination or cancellation of this SBP or any Product included
herein and for up to one year thereafter, Seller shall at no cost to Boeing,
prepare and package for shipment any and all Tooling in the possession or under
the effective control of Seller or any of its Subcontractors associated with
this SBP or the applicable Product within 30 days of receipt of written notice
from Boeing. Included as part of this preparation would be the transfer of
title, where applicable, of such Tooling free and clear of all liens, claims or
other rights of Seller or any third party. Where the parties determine that the
hours associated with the transfer of tools are excessive, the parties will
negotiate a fee to be paid for the preparation and packaging costs.
Seller hereby authorizes Boeing or its representatives to enter upon its, or any
of Seller's Subcontractors, premises at any time during regular business hours
upon one (1) day's advance written notice, for the limited purpose of taking
physical possession of any or all of the aforesaid items. At the request of
Boeing, Seller shall promptly provide to Boeing a detailed list of such items,
including the location thereof, and shall catalog, crate, package, mark and ship
such items expeditiously and in an orderly manner and otherwise in the manner
requested by Boeing, which request may specify incremental or priority shipping
of certain items. Seller shall, if instructed by Boeing, store or dispose of any
or all of the aforesaid items in any reasonable manner requested by Boeing.
13.4 Pricing of Boeing's Supporting Requirements
Any Products required to assist Boeing's supporting requirements, including but
not limited to requirements for color and appearance samples, Boeing-owned
simulators, test requirements, factory support, flight test spares will be
provided for not more than the applicable price as set forth in SBP Attachment
1.
13.5 Pricing of Requirements for Modification or Retrofit
13.5.1 Boeing Responsibility or Regulatory Requirement
Any Products required by Boeing to support a modification or retrofit program
which results from a regulatory requirement or which Boeing may be liable for
the cost associated with such program shall be provided to Boeing at a price not
more than the applicable price as set forth in SBP Attachment 1.
13.5.2 Contract Aftermarket Modification or Retrofit Work Performed by Boeing
Any Products required by Boeing to support modification or retrofit programs,
which Boeing performs under contract, shall be provided for not more than the
applicable price as set forth in SBP Attachment 1.
13.6 Pricing of Similar Products
New Products ordered by Boeing that are similar to or within Product families of
Products currently being manufactured by Seller shall be priced using the same
methodology or basis as that used to price the existing Product(s).
14.0 STATUS REPORTS/REVIEWS
14.1 General Reports / Reviews
When requested by Boeing, Seller shall update and submit, as a minimum, monthly
status reports or data requested by Boeing using a method mutually agreed upon
by Boeing and Seller. Boeing has the right to impose more frequent reporting on
Seller to achieve program objectives.
When requested by Boeing, Seller shall provide to Boeing a manufacturing
milestone chart identifying the major purchasing, planning and manufacturing
operations for the applicable Product(s).
Program reviews will be held at Seller's facility or Boeing's facilities as
requested by Boeing. The topics of these reviews may include raw material and
component part status, manufacturing status, production status, Seller's current
and future capacity assessments, Boeing supplied components, inventory, Boeing's
requirements, changes, forecasts and other issues pertinent to Seller's
performance under this SBP. Reviews will allow formal presentations and
discussion of status reports as set forth above.
Formal management reviews shall be held periodically by Boeing and Seller to
evaluate total cost performance (including overhead, man-hours (production and
support)). During these reviews, Seller shall present and provide actual cost
performance data with respect to this SBP.
14.2 Diversity Reporting Format
Seller shall report to Boeing on a quarterly basis, starting from the date of
this SBP award, all payments to small businesses, small disadvantaged
business/minority business enterprises, women-owned small business and
historically black colleges and universities and minority institutions in
dollars and as a percentage of the contract price paid to Seller to date,
proving the information shown on the Second Tier Report located in SBP
Attachment 11.
14.3 Program Manager
"NOT APPLICABLE"
14.4 Certified Tool List
If applicable, Seller shall provide a Certified Tool List for all accountable
tools thirty (30) days after delievery of the first production unit to Boeing,
in accordance with SBP Section 2.3. Subsequent to submittal of the initial
Certified Tool List, Seller shall provide Certified Tool Lists for any new,
reworked or re-identified tools, thirty (30) days after completion of the first
affected production part. All tooling manufactured and acquired by Seller for
use in performance of the Program shall be in accordance with all tooling
requirements specified in SBP Section 2.3.
14.5 Problem Reports
Seller shall provide a detailed report, notifying Boeing of program
problems/issues that could impact Seller's ability to deliver Products on time
and otherwise in conformance with the terms of the GTA and SBP. The report shall
contain a detailed description of the problem, impact on the program or affected
tasks, and corrective/remedial action, with a recovery schedule. Submittal of a
report in no way relieves Seller of any obligations under the GTA and SBP nor
does it constitute a waiver of any rights and remedies Boeing may have with
respect to any default.
Problem reports shall be submitted to the Boeing Procurement Representative
within twenty-four (24) hours of known problem to Seller. Where problems arise
prior to a normal status reporting date, Seller shall report said events
immediately or within 24 hours. Status reports shall include, but are not
limited to, the following topics:
A. Delivery schedule updates, schedule impact issues and corrective action;
B. Technical/manufacturing progress since the previous report period,
including significant accomplishments, breakthroughs, problems and
solutions;
C. Identification of changes to key manpower or staffing levels;
D. Identification of the critical events/activities expected within the next
month and a discussion of potential risk factors;
E. Progress on open Action Items, including closure dates;
F. Purchased components and raw material status;
G. Identification of Quality issues and resolutions;
H. Manufacturing and Quality inspection progress of First Article products;
I. Status on tool design and fabrication, as applicable, until completion;
J. Inventory status of castings and forgings procured by Seller (if
applicable).
14.5 Order Readiness Matrix (ORM)
NOT APPLICABLE
15.0 INTERNATIONAL COOPERATION
15.1 Market Access and Sales Support
Seller agrees to work with Boeing to develop a contracting strategy, which
supports Boeing's market access, and international business strategy. Boeing and
Seller agree to work together to identify countries where Seller may subcontract
in support of Boeing's market access and international business strategy. With
respect to work covered by this SBP, and if directed by Boeing, Seller agrees to
procure from subcontractors, in countries selected by Boeing, goods and services
with a value to be determined by Boeing after coordination with Seller. Such
direction may occur at any time during the performance of this SBP. Although not
required to do so, Seller may satisfy such obligation through purchases not
related to this SBP. If Seller is directed by Boeing to subcontract any part of
its Product(s) and Seller anticipates an increase or decrease to the price for
such Product(s) as a result of such direction, Seller shall immediately notify
Boeing in writing. Boeing shall respond within thirty (30) days on whether
Seller is to proceed.
15.2 Offset Assistance
Seller shall use its best reasonable efforts to cooperate with Boeing in the
fulfillment of any non-United States offset program obligation that Boeing may
have accepted as a condition of the sale of a Boeing product. In the event that
Seller is either directed by Boeing, or on its own solicits bids and/or
proposals for, or procures or offers to procure any goods or services relating
to the work covered by this SBP from any source outside of the United States,
Boeing shall be entitled, to the exclusion of all others, to all industrial
benefits and other "offset" credits which may result from such solicitations,
procurements or offers to procure. Seller shall take any actions that may be
required on its part to assure that Boeing receives such credits. . Seller shall
document on SBP Attachment 2 all offers to contract and executed contracts with
such subcontractors including the dollars contracted. Seller shall provide to
Boeing with an updated copy of SBP Attachment 2 for the six-month periods ending
June 30 and December 31 of each year. The reports shall be submitted on the 1st
of August and the 1st of February respectively. If Seller is directed by Boeing
to subcontract any part of its Product(s) to a country in which Boeing has an
offset obligation, an equitable price adjustment, increase or decrease, for
Seller's costs and expenses will be considered by Boeing.
15.3 Credit Against Aircraft Sales
NOT APPLICABLE
16.0 BOEING FURNISHED MATERIAL/SUPPLIER BANKED MATERIAL
NOT APPLICABLE
17.0 PARTICIPATION
17.1 Other Boeing Entities
Seller agrees that any Boeing division or Boeing subsidiary ("Boeing Entity")
not specifically included in this SBP may, by issuing a purchase order, work
order, or other release document, place orders under this SBP during the term
hereof or any written extension thereof, under the terms, conditions and pricing
specified by this SBP. Seller agrees that the prices set forth herein may be
disclosed by Boeing on a confidential basis to Boeing entities wishing to invoke
this SBP Section 17.1. Seller shall notify the Boeing Procurement Representative
named in SBP Section 9.0 of Boeing Entities not specifically referenced herein
who frequently use this SBP.
17.2 Boeing Subcontractors/Suppliers
Seller agrees that any subcontractor or supplier (hereinafter referred to as
"Boeing Subcontractor") performing work for a Boeing Entity, including but not
limited to inventory management, may issue an order or contract with Seller
independent of this SBP. Seller agrees to sell Products or support a schedule
and or a quantity change to such Boeing Subcontractor for its use in its
contracts with Boeing at the prices set forth herein or at a price that reflects
the pricing methodology used under this SBP. Boeing assumes no obligation,
including payment obligation, with respect to such independent contract. Seller
agrees that the prices set forth herein may be disclosed by Boeing on a
confidential basis to any Boeing Subcontractor wishing to invoke this SBP
Section 17.2. Seller may request written verification from the Boeing
Subcontractor that the Products ordered pursuant to the authority of this SBP
support Boeing requirements. Seller shall periodically inform the Boeing
Procurement Representative of each such request invoking this participation
right.
17.3 Notification of Contract
In the event a purchaser known by Seller to be a Boeing Entity or Boeing
Subcontractor places an order for supplies or services covered by this SBP but
fails to reference this SBP or otherwise seek the prices established by this
SBP, Seller shall notify such purchaser of the existence of this SBP and the
prices established hereunder and shall offer such prices to such purchaser.
17.4 Notification of Price Reductions
If Seller is awarded an additional order or contract by another Boeing Entity
that results in any price less than that established under this SBP, Seller
agrees to notify the Boeing Procurement Representative immediately of said price
reductions and shall extend all such price reductions to this SBP.
18.0 INVENTORY AT CONTRACT COMPLETION
Subsequent to Seller's last delivery of Product(s), Products which contain,
convey, embody or were manufactured in accordance with or by reference to
Boeing's Proprietary Materials including but not limited to finished goods,
work-in-process and detail components (hereafter "Inventory") which are in
excess of Order quantity shall be made available to Boeing for purchase. In the
event Boeing, in its sole discretion, elects not to purchase the Inventory,
Seller may scrap the Inventory. Prior to scrapping the Inventory, Seller shall
mutilate or render it unusable. Seller shall maintain, pursuant to their quality
assurance system, records certifying destruction of the applicable Inventory.
Said certification shall state the method and date of mutilation and destruction
of the subject Inventory. Boeing or applicable regulatory agencies shall have
the right to review and inspect these records at any time it deems necessary. In
the event Seller elects to maintain the Inventory, Seller shall maintain
accountability for the inventory and Seller shall not sell or provide the
Inventory to any third party without prior specific written authorization from
Boeing. Failure to comply with these requirements shall be a material breach and
grounds for default pursuant to GTA Section 13.0. Nothing in this SBP Section
18.0 prohibits Seller from making legal sales directly to the United States of
America Government.
19.0 OWNERSHIP OF INTELLECTUAL PROPERTY
19.1 Technical Work Product
All technical work product, including, but not limited to, ideas, information,
data, documents, drawings, software, software documentation, software tools,
designs, specifications, and processes produced by or for Seller, either alone
or with others, in the course of or as a result of any work performed by or for
Seller which is covered by this SBP will be the exclusive property of Boeing and
be delivered to Boeing promptly upon request.
19.2 Inventions and Patents
NOT APPLICABLE
19.3 Works of Authorship and Copyrights
NOT APPLICABLE
19.3 Pre-Existing Inventions and Works of Authorship
NOT APPLICABLE
19.4 Inapplicability
NOT APPLCABLE
20.0 ADMINISTRATIVE AGREEMENTS
Administrative Agreements are used for administrative matters not
specifically addressed elsewhere and set forth-certain obligations of the
Parties relating to the administration of each Order. The Administrative
Agreements, if any, are identified and incorporated in SBP Section 2.3.
21.0 GUARANTEED WEIGHT REQUIREMENTS
NOT APPLICALBE
22.0 SELLER DATA REQUIREMENTS
NOT APPLICABLE
23.0 DEFERRED PAYMENT
NOT APPLICABLE
24.0 SOFTWARE PROPRIETARY INFORMATION RIGHTS
NOT APPLICABLE
25.0 CONFIGURATION CONTROL
NOT APPLICABLE
26.0 INFRINGEMENT
Seller will indemnify, defend, and hold harmless Boeing and its Customers from
all claims, suits, actions, awards (including, but not limited to, awards based
on intentional infringement of patents known at the time of such infringement,
exceeding actual damages, and/or including attorneys' fees and/or costs),
liabilities, damages, costs and attorneys' fees related to the actual or alleged
infringement of any United States or foreign intellectual property right
(including, but not limited to, any right in a patent, copyright, industrial
design or semiconductor mask work, or based on misappropriation or wrongful use
of information or documents) and arising out of the manufacture, sale or use of
Products by either Boeing or its Customers. Boeing and/or its Customers will
duly notify Seller of any such claim, suit or action; and Seller will, at its
own expense, fully defend such claim, suit or action on behalf of Boeing and/or
its Customers. Seller shall have no obligation under this SBP Section 26.0 with
regard to any infringement arising from: (i) Seller's compliance with formal
specifications issued by Boeing where infringement could not be avoided in
complying with such specifications or (ii) use or sale of Products in
combination with other items when such infringement would not have occurred from
the use or sale of those Products solely for the purpose for which they were
designed or sold by Seller. For purposes of this SBP Section 26.0 only, the term
Customer shall not include the United States Government; and the term Boeing
shall include The Boeing Company and all Boeing subsidiaries and all officers,
agents, and employees of Boeing or any Boeing subsidiary.
27.0 RAW MATERIAL PROGRAM
27.1 Boeing Raw Material Strategy
During the term of this SBP, Seller shall procure from Boeing (or its designated
service provider who will act on behalf of Boeing) all raw material of the
commodity type specified on the SBP Attachment entitled "Commodity Listing and
Terms of Sale" (SBP Attachment 8) necessary to support any Order issued pursuant
to this Agreement. From time to time, Boeing may amend the SBP Attachment
entitled "Commodity Listing and Terms of Sale" by adding or deleting commodity
types. Any such amendment, or revisions to the raw material pricing, shall be
subject to adjustment under GTA Section 10.1 (Changes), provided that Seller
shall take no action to terminate its existing supply agreements when such
termination would result in an assertion for an adjustment until the Seller has
received approval from Boeing. The provision of any raw material by Boeing to
Seller shall be according to Boeing's standard terms of sale, the text of which
is included in the SBP Attachment entitled "Commodity Listing and Terms of
Sale". Boeing shall advise Seller of any designated service provider to be used
at the time the Order is issued. Upon request by Boeing, Seller must provide to
Boeing documentation (e.g., packing slips, invoices) showing Seller's full
compliance with the obligations under this SBP Section.
27.2 Casting and Forging Strategy NOT APPLICABLE
28.0 DIGITIZATION OF PROPRIETARY INFORMATION AND MATERIALS
Seller grants, to Boeing a license under Seller's copyrights for the purpose of
converting Seller's Proprietary Informations and Materials to a digital format
("Digital Materials") and make such Digital Materials available to its employees
for company internal use through a computer data base system. Except as
otherwise specifically agreed to in writing by the parties, said license set
forth hereunder shall survive termination or cancellation of this SBP relative
to Digital Materials included in Boeing's computer data base system prior to
receipt of such notice of termination or cancellation.
29.0 INSURANCE FOR ON-SITE SUPPORT NOT APPLICABLE
29.1 Indemnification Negligence of Seller or subcontractor
29.2 Commercial General Liability
29.3 Automobile Liability
29.4 Workers' Compensation
29.5 Certificates of Insurance
29.6 Self-Assumption
29.7 Protection of Property
30.0 BOEING TECHNICAL / MANUFACTURING ASSISTANCE REGARDING SELLER'S
NONPERFORMANCE
Seller shall reimburse Boeing for all reasonable Boeing resources expended in
providing Seller and/or Seller's subcontractors technical or manufacturing
assistance in resolving Seller nonperformance issues at the established Boeing
internal wage rate, which shall include fringe benefits, multiplied by the
estimated hours recorded by Boeing, plus the estimated Material costs associated
with providing such assistance. In addition, Seller shall, at Boeing's request,
pay for normal and customary expenses relating to living expenses, travel and
any other reasonable expenses related to the provision of technical services
reasonably deemed necessary by Boeing to help resolve Seller's nonperformance
situation. For purposes of determining the necessary resources, Boeing will
coordinate with Seller prior to identifying those resources including but not
limited to the applicable numbers, estimated time frames, etc. Where Seller
disagrees with Boeing's proposed resources, Seller will provide to Boeing an
alternate resource recommendation including actions to be performed by Seller
for Boeing's review and approval. The Parties will work to agree on the resource
plan to be implemented. Such reimbursement may be offset against any pending
Seller invoice, regardless of Boeing model or program. Boeing's rights under
this clause are in addition to those available to Boeing for Seller's
nonperformance issues, including those where a demand for an Adequate Assurance
of Performance may be made under GTA Section 17.0. Seller's responsibility under
this Section 30.0 is limited to those situations which are clearly attributable
to Seller or Seller's subcontractors or supplier's failure or potential failure
to perform.
31.0 U. S. CUSTOMS INVOICE REQUIREMENTS
NOT APPLICABLE
31.1 U.S. Customs Requirements
NOT APPLICABLE
31.2 The Boeing Company Requirements
NOT APPLICABLE
32.0 STRATEGIC ALIGNMENT AND WORK MOVEMENT
32.1 Novation
Subject to the conditions set forth below, Boeing may novate this Agreement or
any Order, in whole or in part, to a third party who is under an obligation to
supply Boeing with components, kits, assemblies or systems that require the
Seller's Product. At the time of such novation, Seller releases Boeing from any
and all claims, demands and rights, which Seller has or may thereafter have
against Boeing in connection with such novated Agreement or Order. Boeing will
require that its novatee expressly assume all obligations and perform all duties
owed to Seller under the novated Agreement or Order. Promptly after the
novation, Boeing will notify Seller of the novation and its effective date.
Seller agrees to continue production of novated Products under the terms of this
Agreement through the applicable period of performance. In the event either
party (Seller and the third party) seek to alter the terms of this agreement
after novation, Seller commits to provide Products for a period not less than
six months nor more than sufficient leadtime to establish a new source unless
otherwise agreed to by the parties (Seller and the third party).
EXECUTED in duplicate as of the date and year first set forth above by the duly
authorized representatives of the Parties.
BOEING SELLER
THE BOEING COMPANY Leonard's Metal, Inc.
By and Through its Divisions
Boeing Commercial Airplanes
/s/ Peggy McDonald /s/ Rick Darrow
- ------------------------------- -------------------------------
Name: Peggy McDonald Name: Rick Darrow
Title: Procurement Agent Title: Program Manager
Date: Date: