GENERAL TERMS AGREEMENT
between
THE BOEING COMPANY
and
PATS, INC.
RELATING TO 737-700 BBJ AUXILIARY FUEL TANK SYSTEMS
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TABLE OF CONTENTS
SECTION TITLE PAGE
- -------- ----- -----
1.0 Definitions 2
2.0 Issuance of Purchase Orders and Acceptance 3
2.1 Issuance of Purchase Orders 3
2.2 Acceptance of Purchase Orders 4
2.3 Written Authorization to Proceed 4
2.4 Rejection of Purchase Orders 4
3.0 Technical Data/Technical Assistance 4
3.1 Technical Data to be Furnished by Buyer 4
3.2 Materials Provided by Buyer 5
4.0 Limitation on Sales of Fuel Tank Systems 5
5.0 Location of Fuel Tank System Installation 5
6.0 Aircraft Schedule 5
6.1 Aircraft Arrival 5
6.2 Development Program-Initial Period of Performance 5
6.3 Installation Time 6
6.4 Inspection Inventory 6
7.0 Redelivery 6
7.1 Operational Ground Check 6
7.2 Aircraft Receipt Form 6
7.3 Delay 6
7.4 Liquidated Damages 7
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SECTION TITLE PAGE
- -------- ----- -----
8.0 Quality Control, Inspection, Rejection and Acceptance 7
8.1 Right of Entry 7
8.2 Sellers Inspection 8
8.3 Inspection, Rejection and Acceptance 8
8.4 Sellers Disclosure 8
8.5 Product Assurance/Product Support Obligations 8
8.6 Federal Aviation Administration or Equivalent 8
8.7 Certification 8
9.0 On-Site Review and Resident Representatives 9
9.1 Review 9
9.2 Language for Technical Information 9
9.3 Resident Representative 9
10.0 Invoice and Payment and Governing Documents 9
10.1 Invoice and Payment 9
10.2 Governing Documents 10
10.2.1 Product Assurance Agreement 10
10.2.2 Product Support Requirements 10
11.0 Changes 10
11.1 General 10
11.2 Obsolescence 10
11.3 Notification of Approval of Changes 11
11.4 Examination of Records for Changes 11
12.0 Termination for Convenience 12
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SECTION TITLE PAGE
- -------- ----- -----
12.1
12.2-12.10 Basis for Termination Notice 12-13
13.0 Events of Default and Remedies 14
14.0 Excusable Delay 17
15.0 Suspension of Work 18
16.0 Termination or Cancellation: Indemnity Against
Subcontractor's Claims 18
17.0 Assurance of Performance 19
18.0 Responsibility for Property 19
20.0 Proprietary Information and Items 20
21.0 Seller's Obligation, Government Requirement 21
21.1 Seller's Obligation, Government Requirement
21.2 Seller's Obligation, Government Requirement 21
22.0 Integrity in Procurement 21
23.0 Infringement
24.0 Boeing's rights in Seller's, Patents, Copyrights,
trade Secrets & Tooling
25.0 Notices
25.1 Addresses
25.2 Effective Date
25.3 Approval or Consent
26.0 Publicity
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SECTION TITLE PAGE
- -------- ----- -----
27.0 Title and Risk of Loss of Aircraft and Goods
28.0 General/Airport Premises Liability Insurance and
Hangarskeeper Legal Liability Insurance
29.2 Certificate of Insurance
29.3 Notice of Damage or Loss
30.0 Responsibility for Performance
30.1 Subcontracting
30.2 Reliance
30.3 Assignment
31.0 Non-Waiver
32.0 Headings
33.0 Partial Invalidity
34.0 Applicable Law
35.0 Amendment
36.0 Limitation
37.1 Inclusion of Taxes in Price
37.2 Litigation
37.3 Rebates
38.0 Foreign Procurement Offset
39.0 Entire Agreement/Order of Precedence
39.1 Entire Agreement
39.2 Incorporated by Reference
39.3 Order of Precedence
39.4 Disclaimer
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GENERAL TERMS AGREEMENT
RELATING TO
BOEING PRODUCTS
THIS GENERAL TERMS AGREEMENT ("Agreement") is entered into as of November 18,
1997 by PATS, Inc. ("Seller"), a corporation, with its principal office in
Columbia, Maryland and The Boeing Company, a Delaware corporation with its
principal office in Seattle, Washington acting by and through its division the
Boeing Commercial Airplane Group ("Boeing").
RECITALS
A. Boeing produces commercial airplanes.
B. Seller desires to design, manufacture, install, test and certify auxiliary
fuel tank systems for 737-700 BBJ Aircraft, and Seller wishes to utilize
Buyer's proprietary technical requirements documents and other Buyer
proprietary technical information and data for that purpose.
C. Seller further desires to sell auxiliary fuel tank systems to Buyer and
install such systems on 737-700 BBJ Aircraft as directed by Buyer.
D. Buyer is willing to disclose its proprietary technical requirements
documents and other of its proprietary information, data and documents to
Seller and is prepared to monitor (and, at Buyer's discretion, assist with)
Seller's design, installation, testing and certification of auxiliary fuel
tank systems for 737-700 BBJ Aircraft; all on the condition that Seller
will keep such proprietary documents, information and data confidential and
not use such documents, information or data in any way in connection with
the sale of such systems to any customer other than Buyer.
E. Buyer and Seller wish to enter into an agreement establishing a framework
for facilitating (2) the design, manufacture, testing and certification of
auxiliary fuel tank systems by Seller, (2) the sale of such systems by
Seller to Buyer, and (3) the installation of such systems, when purchased
by Buyer, on aircraft owned by Buyer's customers; all in accordance with
individual purchase orders which will subsequently be issued by Buyer and
accepted by Seller.
F. Buyer and Seller entered into Special Business Provisions and Product
Support and Assurance Agreement relating to these same products.
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AGREEMENTS
1.0 DEFINITIONS
The definitions set forth below shall apply to the following
terms as they are used in this Agreements, any Order, or any
related Special Business Provisions ("SBP)"). Words importing
the singular number shall also include the plural number and
vice versa.
(a) "Aircraft" are Boeing models 737-700 BBJ Airplanes in which
Seller shall install a Fuel Tank System (as defined below)
pursuant to a contract between Buyer and Seller.
(b) Customer" means any owner, lessee and/or operator of a 737-700
BBJ Aircraft who has contracted with Buyer for the purchase
and/or installation of a fuel tank system.
(c) "Derivative" means any new 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 and (3) achieves other payload/range
combinations by changes in body length, engine thrust, or
variations in certified gross weight.
(d) "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
related thereto.
(e) "End Item Assembly" means any Product which is described by a
single part number and which is comprised of more than one
component part.
(f) "FAA" means the United States Federal Aviation Administration
or any successor agency thereto.
(g) "FAR" means the Federal Acquisition Regulations in effect on
the date of this Agreement.
(h) "Fuel Tank System" means any 737-700 BBJ Auxiliary Fuel Tank
System designed, manufactured, tested, or certified for, or
installed aboard, an aircraft through reference to or use of
any technical data and/or with technical assistance from Buyer
personnel.
(i) "Goods" means one or more fuel Tank Systems, including
services related there to, covered by a single Order.
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(j) "Materiel Representative" means the individual designated from
time to time, by Boeing as being primarily responsible for
interacting with Seller regarding this Agreement and any
Order.
(k) "Order" means each purchase order issued by Boeing and
accepted by Seller under the terms of this Agreement. Each
Order is a contract between Boeing and Seller.
(1) "Product" means goods, including components and parts thereof,
services, documents, data, software, software documentation
and other information or items furnished or to be furnished to
Boeing under any Order, including Tooling except for Rotating
Use Tools.
(m) "Purchased on Assembly Production Detail Part (POA)" means a
component part of an End Item Assembly.
(n) "Redelivery" is the delivery of the Aircraft from Seller to
Buyer or Customer after the installation of the Fuel Tank
System.
(o) "Shipset" means the total quantity of a given part number of
material necessary for production of one airplane.
(p) "Services" means Seller's services in connection with the
design, manufacture, installation, testing, or certification
of Fuel Tank Systems for, or the installation of Fuel Tank
Systems aboard, 737-700 BBJ Aircraft pursuant to an Order.
(q) "Technical Data" means any technical requirements
documents, other documents or materials, and Proprietary
Information (as defined in Clause 3.0 of this Agreement) which
are provided or disclosed to Seller under this Agreement
and/or pursuant to an Order or Orders.
2.0 ISSUANCE OF ORDERS AND ACCEPTANCE
2.1 ISSUANCE OF PURCHASE ORDERS
Boeing may issue Orders to Seller from time to time. Each Order shall
contain a description of the Products ordered, a reference to the
applicable specifications and Drawings, the quantities and prices, the
delivery schedule, the terms and place of delivery and any special
conditions.
Each Order which incorporates this Agreement shall be governed by and
be deemed to include the provisions of this Agreement. Purchase Order
Terms and Conditions, Form D1-4100-4045, Form P252T and any other
purchase order terms and conditions which may conflict with this
Agreement, do not apply to the Orders.
2.2 ACCEPTANCE OF PURCHASE ORDERS
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Each purchase order is Boeing's offer to Seller and acceptance is
strictly limited to its terms. Boeing will not be bound by and
specifically objects to any term or condition which is different from
or in addition to the provisions of the Order, whether or not such
term or condition will materially alter the Order. Seller's
commencement of performance or acceptance of the Order in any manner
shall conclusively evidence Seller's acceptance of the Order as
written. Boeing may revoke any Order prior to Boeing's receipt of
Seller's written acceptance or Seller's commencement of performance in
accordance with Section 12-1 herein.
2.3 WRITTEN-AUTHORIZATION TO PROCEED
Boeing's Materiel Representative may give written authorization to
Seller to commence performance before Boeing issues an Order. If
Boeing in its written authorization specifies that an Order will be
issued, Boeing and Seller shall proceed as if an Order had been
issued. This Agreement, the applicable SBP and the terms stated in
the written authorization shall be deemed to be part of Boeing's
offer and the parties shall promptly agree on any open Order terms.
If Boeing does not specify in its written authorization, Boeing's
obligation is strictly limited to the terms of the written
authorization that an order shall be issued. For purposes of this
Section 2.3 only, written authorization includes electronic
transmission chosen by Boeing. If Seller commences performance
before an Order is issued or without receiving Boeing's prior
authorization to proceed, such performance shall be at Seller's
expense.
2.4 REJECTION OF PURCHASE ORDER.
Any rejection by Seller of an Order shall specify the reasons for
rejection and any changes or additions that would make the Order
acceptable to Seller; provided, however, that Seller may not reject
any Order for reasons inconsistent with the provisions of this
Agreement or the applicable SBP.
3.0 TECHNICAL DATA/TECHNICAL ASSISTANCE
3.1 TECHNICAL DATA TO BE FURNISHED BY BUYER
Technical Data to be furnished by Buyer to Seller under this Agreement
shall include, but is not necessarily limited to Exhibit "A": hereto.
Other Technical Data, as well as technical assistance from Buyer
personnel, shall be provided by Buyer to Seller as and to the extent
that Buyer, in its sole and absolute discretion, deems appropriate.
3.2 MATERIALS PROVIDED BY BUYER
It is acknowledged and agreed by Seller that all technical
requirements
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documents and/or other documents or materials provided by Buyer to
Seller under this Agreement are presumed to be and will be treated as
proprietary to Buyer.
4.0 LIMITATION ON SALES OF FUEL TANK SYSTEMS
Seller desires to use Buyer's valuable Technical Data and/or receive
valuable technical assistance from Buyer's personnel in connection
with Seller's design, development, manufacture, testing, certification
and/or installation of auxiliary fuel tank systems for 737-70OBBJ
Aircraft.
In consideration of Buyer's disclosure of Technical Data and/or
providing of technical assistance to Seller under this Agreement and
of other agreements contained herein Seller agrees to sell Fuel Tank
Systems only to Buyer.
5.0 LOCATION OF FUEL TANK SYSTEM INSTALLATION
The Order shall be performed at PATs support, Inc. Georgetown,
Delaware and Seller shall not change the location of the performance
of the Order or the Aircraft without the prior written consent of
Buyer.
6.0 AIRCRAFT SCHEDULE
6.1 AIRCRAFT ARRIVAL
In each Order, Buyer shall specify an estimated arrival date of the
Aircraft. Seller acknowledges that such date is only Buyer's best
estimate and Buyer shall not be responsible for or be deemed to be in
default under the Order if an arrival date is changed. In the event an
arrival date of the Aircraft is different from the one set forth in
the Order, the parties shall negotiate a revised arrival and
Redelivery date. Notwithstanding the provision for an equitable
adjustment in Clause 11.0, "Changes," any change in arrival date
shall not entitle Seller to an equitable adjustment in the Order
price or in the installation time set forth below.
6.2 DEVELOPMENT PROGRAM - INITIAL PERIOD OF PERFORMANCE
Seller agrees that the period of performance required for the
Development Program (period from issuance of the first Order under the
Agreement to certification of the first airplane of each model for
several tank configurations) shall be as reflected in Exhibit "A".
6.3 INSTALLATION TIME
Seller acknowledges that time is of the essence in performing the
Order and the maximum time for installation of a Fuel Tank System
for each Aircraft type and Redelivery to Customer is:
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First Aircraft 67 Calendar Days
Second Aircraft 30 Calendar Days
Third Aircraft 21 Calendar Days
Fourth Aircraft and all Subsequent Aircraft 14 Calendar Days
Provided that not more than one aircraft is delivered every two weeks
(nose to tail). Schedules for Aircraft installations in excess of two
(2) per month will be agreed to on a case-by-case basis,
6.4 INSPECTION/INVENTORY
Upon arrival of the Aircraft at Seller's installation site, Seller and
Customer shall inspect the Aircraft and its equipment to identify any
obvious damage or condition either party deems notable and make an
inventory of the installed equipment, cargo and other appropriate
items aboard the Aircraft.
Following completion of the inspection and inventory, Seller will
provide to Buyer and Customer written acknowledgment of receipt of the
Aircraft, its condition and a copy of the inventory report essentially
in the form of Exhibit: "B" hereto.
7.0 REDELIVERY
7.1 OPERATIONAL GROUND CHECK
Promptly after completion of the installation of the Fuel Tank System,
Seller shall conduct an operational ground check on the Aircraft in
accordance with Seller's "Technical Order" criteria as may be
applicable for the purpose of demonstrating to Customer and Buyer that
the Fuel Tank System is operational.
7.2 AIRCRAFT RECEIPT FORM
Seller shall redeliver the recorded inventory and the Aircraft to
Customer after installation of the Fuel Tank System. Seller shall
provide Buyer an Aircraft Receipt Form essentially in the form of
Exhibit "C" hereto executed by Seller and Customer and any other forms
that may be required by Buyer, Customer or the FAA.
7.3 DELAY
Redelivery of the Aircraft with the Fuel Tank System installed shall
be strictly in accordance with the schedule and other requirements
specified in the applicable Order. Seller shall immediately notify
Buyer and
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confirm in writing of any circumstance that may cause a delay in
Redelivery, stating the estimated period of delay and the reasons
therefor. If requested by Buyer, Seller shall use additional effort
including premium effort to avoid or minimize delay to the maximum
extent possible. All additional costs resulting from such premium
effort shall be borne by the party responsible for the delay, Nothing
herein may be construed to prejudice any of the rights or remedies
provided to Buyer in the applicable Order or by law.
7.4 LIQUIDATED DAMAGES
Seller acknowledges that late delivery of Products will subject
Boeing to certain losses and damages, including possible stoppage
or interruption of the production line, utilization of additional
employee and other resources, damage to Boeing's reputation with
its customers and additional costs resulting from re-sequencing the
production line. The parties agree that such losses and damages
will be substantial, but extremely difficult and impracticable to
ascertain.
Therefore, the parties agree that if Seller fails to deliver products
in accordance with the schedule set forth in the Order, Seller will
owe liquidated damages in the amount of ten thousand United States
Dollars (U.S. $10,000.00) for each calendar day that seller is late in
delivering products after the scheduled delivery date, up to a maximum
of ten (10) calendar days.
Such amounts shall be paid and received as liquidated damages and
not as a penalty. The parties acknowledge and agree that this
amount is presently a reasonable estimate of Boeing's anticipated
losses and damages considering all of the circumstances existing on
the date of the execution of this Agreement, including the
relationship of the amount of such liquidated damages to the degree
of harm to Boeing that reasonably could be anticipated. Further,
the parties expect that proof of actual damages would be
impractical or extremely difficult. Boeing shall be entitled, but
not obligated, to offset the amount of such liquidated damages
against any amount owed to Seller.
In placing its initials in the space provided below, Seller expressly
confirms the accuracy of the statement made above and fully
understands the consequences of this provision at the time this
Agreement was made.
Initials: Seller
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8.0 QUALITY CONTROL INSPECTION, REJECTION AND ACCEPTANCE
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8.1 RIGHT OF ENTRY
Buyer, Customer's representatives and the FAA may inspect Seller's
plant, facilities, systems, equipment, testing, data, personnel and
the Goods including without limitation, work in process and
equipment manufactured for installation in the Aircraft. Such
inspection shall be performed on a non-interference basis. No
inspection, test and no delay or failure to inspect, test or to
discover any defect or other noncompliance shall relieve Seller of
any of its obligations or impair any rights or remedies of Buyer or
Customers.
8.2 SELLER'S INSPECTION
Seller shall inspect or otherwise verify that all Products and
components thereof, including those procured from or furnished by
subcontractors or Boeing, comply with the requirements of the Order
prior to shipment to Boeing or 'Customer. Seller shall be responsible
for all tests and inspections of the Product and any component thereof
during receiving, manufacture and Seller's final inspection. Seller
shall include on each packing sheet a certification that the Products
comply with the requirements of the Order.
8.3 INSPECTION, REJECTION AND ACCEPTANCE
Upon Seller's written notification that its performance under the
Order has been completed, Buyer may make a final inspection and accept
the Goods. Buyer may reject any or all of the Goods or any tender
thereof which is not strictly in conformance with the requirements of
the Order and notify Seller of such rejection. At Seller's risk and
expense, Seller shall immediately repair or replace such rejected
Goods. All repair, replacement, and other corrections shall be
completed within such time as Buyer may require.
8.4 SELLER'S DISCLOSURE
Seller will immediately notify Boeing when discrepancies in Seller's
processes or Products are discovered or suspected for Products
Seller has delivered.
8.5 PRODUCT ASSURANCE/PRODUCT SUPPORT OBLIGATIONS
Buyer's acceptance of any Goods does not alter or affect the
obligations of Seller or the rights of Buyer and Customers under the
Product Assurance and Product Support documents listed in the "Product
Assurance and Product Support," or as provided by law.
8.6 FEDERAL AVIATION ADMINISTRATION OR EQUIVALENT
Government Agency Inspection
Representatives of Boeing, the FAA or any equivalent government agency
may inspect and evaluate Seller's plant including, but not limited to,
Seller's and subcontractor's facilities, systems, data, equipment,
inventory, holding areas, procedures, personnel, testing, and all
work-in-process and completed Products. For purposes of this Section
8.6
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equivalent government agency shall mean those governmental agencies so
designated by the FAA or those agencies within individual countries
which maintain responsibility for assuring aircraft airworthiness.
8.7 CERTIFICATION
A certification shall be provided that materials and/or finished
parts have been controlled and tested in accordance with and will
meet specified Order requirements and applicable specifications and
that records are on file subject to Buyer's examination. Copies of
manufacturing planning, test and inspection results or certifications
shall be furnished to Buyer upon request.
9.0 ON SITE REVIEW AND RESIDENT REPRESENTATIVES
9.1 REVIEW
At Buyer's request, Seller shall provide at Buyer's facility, or at a
place designated by Buyer, a review explaining the status of any
Order, actions taken or planned to be taken relating to such Order and
any other relevant information. Nothing herein may be construed as a
waiver of Buyer's rights to proceed against Seller because of any
delinquency.
Boeing's authorized representatives may enter Seller's plant at all
reasonable times to conduct preliminary inspections and tests of the
Products and work-in-process. Seller shall include in it subcontracts
issued on connection with an Order a like provision giving Boeing the
right to enter the premises of Seller's subcontractors. When requested
by Boeing, Seller shall accompany Boeing to Seller's subcontractors.
9.2 LANGUAGE FOR TECHNICAL INFORMATION
All reports, drawings and other technical information submitted to
Boeing for review or approval shall be in English and shall employ
the units of measure customarily used by Boeing in the U. S. A.
9.3 RESIDENT REPRESENTATIVES
Buyer may in its discretion and for such periods as it deems
necessary assign resident personnel at Seller's facilities in addition
to the resident Quality Control personnel provided for in Clause 8.1,
"Right of Entry". The resident team will function under the guidance
of Buyer's manager who will provide program coordination within the
scope of the work authorized by any Order. The resident team will
provide communication and coordination to ensure timely performance of
any Order. Buyer's resident team shall be allowed access to all work
areas, Order status reports and management review necessary to assure
timely coordination and conformance with the requirements of each
Order. Seller, however, remains fully responsible for performing in
accordance with each Order.
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10.0 INVOICE AND PAYMENT GOVERNING DOCUMENTS
10.1 INVOICE AND PAYMENT
Unless otherwise provided in the applicable Order, invoicing and
payment shall be in accordance with SBP Attachment #7.
10.2 GOVERNING DOCUMENTS
Seller acknowledges that Buyer and Customer must be able to rely on
the Fuel Tank System performing as specified and that Seller will
provide the required support services. Accordingly, the provisions
of the following documents are incorporated herein and by this
reference made a part hereof;
10.2.1 "Product Assurance Agreement Relating to the Fuel Tank System" dated
(TBD), as revised from time to time.
10.2.2 "Produce Support Requirements Document," No. D6-41186,
_____________,dated _________ as revised from time to time.
11.0 CHANGES
11.1 GENERAL
Buyer's Materiel Representative may at any time by written change
order make reasonable changes within the general scope of an Order
in any one or more of the following: (1) Technical Data and other
technical requirements and descriptions, specifications, drawings
or designs related thereto: (b) place of delivery, inspection or
acceptance of the Goods. Seller shall proceed immediately to
perform the Order as changed. If any such change causes an
increase or decrease in the cost of or the time required for the
performance of any part of the Order, whether changed or not changed
by the change order, an equitable adjustment shall be made in the
price of or the delivery schedule for such Order, and such Order
shall be modified in writing accordingly.
Any claim by Seller for adjustment under this Clause must be
received by Buyer in writing within thirty (30) days from the date
of receipt by Seller of the written change order or within such
further time as the parties may agree in writing or such claim
shall be deemed waived. Nothing in this Clause shall excuse Seller
from proceeding with an Order as changed, including failure of the
parties to agree on any adjustment to be made under this Clause.
If Seller considers that the conduct of any of Buyer's employees has
constituted a change hereunder, Seller shall immediately notify Buyer
in writing as to the nature of such change and its effect on Seller's
performance. Pending direction from Buyer's Materiel Representative,
Seller shall take no action to implement any such change.
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11.2 OBSOLESCENCE
Claims for obsolete or surplus material and work-in-process created
by change orders issued pursuant to this Clause shall be subject to
the procedures set forth in Clause 12.0, "Termination - Convenience."
Payment for obsolete or surplus materials shall be made by check
deposited as first class mail in the United States Postal Service to
the address designated by Seller in SBP Clause 9.1, "Addresses."
Payment will be made on the tenth (10th) day of the month following
the month of the obsolescence claim settlement.
11.3 NOTIFICATION OF APPROVAL OF CHANGES
With respect to the Fuel Tank System, Seller shall notify Buyer
whenever Seller's design or development activities indicate the need
for any configuration detail or function to differ from the
configuration in Seller's approved design.
With respect to the Fuel Tank System, Seller shall obtain Buyer's
approval prior to incorporation of:
A. Changes to acceptance test procedures or equipment;
B. Changes which alter the form, fit or function of the Fuel Tank System;
C. Changes which affect the repair or replacement interchangeability of
the Fuel Tank System;
D. "Changes to processes;
E. Changes involving material or component substitutions or finish
changes;
F. Changes which alter the weight, center of gravity or moment of inertia
of the Fuel Tank System; or
G. Changes which affect the descriptions or operations outlined in
Buyer's or Seller's overhaul manuals.
11.4 EXAMINATION OF RECORDS FOR CHANGES
Seller shall maintain complete and accurate cost records related to
all changes to Orders. Such records shall support all services
performed, allowances claimed and costs incurred by Seller in the
performance of each Change Order, including, but not limited to those
factors which comprise or affect direct labor hours, material costs,
burden rates and subcontracts. Such records and other data shall be
capable of
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verification through audit and analysis by Buyer and be available to
Buyer at Seller's facility for Buyer's examination and aid at all
reasonable times from the date of the applicable Change Order until
one (1) year after final payment under such change order. Seller shall
provide assistance to interpret such data if required by Buyer. The
purpose of such examination shall be for Buyer to obtain complete
information concerning Seller's performance for use by Buyer-directed
changes and negotiation of termination; obsolescence claims. All such
information so obtained shall be treated as confidential.
12.0 TERMINATION FOR CONVENIENCE
12.1 BASIS FOR TERMINATION: NOTICE
Boeing may, from time to time and at Boeing's sole discretion,
terminate all or part of any Order issued hereunder, by written notice
to Seller. Any such written notice of termination shall specify the
effective date and the extent of any such termination. Any such notice
of termination for an individual order will not change Buyer's
requirements to purchase 120 systems.
12.2 TERMINATION INSTRUCTIONS
On receipt of a written notice of termination pursuant to GTA Section
12.1, unless otherwise directed by Boeing, Seller shall:
A. Immediately stop work as specified in the notice.
B. Immediately terminate its subcontracts and purchase orders relating to
work terminated;
C. Settle any termination claims made by its subcontractors or
suppliers; provided, that Boeing shall have approved the amount of
such termination claims prior to such settlement.
D. Preserve and protect all terminated inventory and Products;
E. At Boeing's request, transfer title (to the extent not previously
transferred) and deliver to Boeing or Boeing's designees all supplies
and materials, work-in-process, Tooling and manufacturing drawings
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and data produced or acquired by Seller for the performance of this
Agreement and any Order, all in accordance with the terms of such
request.
F. Take all reasonable steps required to return, or at Boeing's option
and with prior written approval to destroy all Boeing Proprietary
Information and Items in the possession, custody or control of Seller.
G. Take such other action as, in Boeing's reasonable opinion, may be
necessary and as Boeing shall direct in writing to facilitate
termination of this Order; and
H. Complete performance of the work not terminated.
12.3 SELLER'S CLAIM
If Boeing terminates an Order in whole or in part pursuant to Section
12.1 above, Seller shall have the right to submit a written
termination claim to Boeing in accordance with the terms of this
Section 12.3. Such termination claim shall be submitted to Boeing not
later than six (6) months after Seller's receipt of the termination
notice and shall be in the form prescribed by Boeing. Such claim must
contain sufficient detail to explain the amount claimed, including
detailed inventory schedules and a detailed breakdown of all costs
claimed separated into categories (e.g., materials, purchased parts,
finished components, labor, burden, general and administrative), and
to explain the basis for
allocation of all other costs. Seller shall be entitled to be
compensated in accordance with and to the extent allowed under the
terms of FAR 52-249-2(e)-(m) excluding (i), (as published in 48 CFR
12.4 FAILURE TO SUBMIT A CLAIM
Notwithstanding any other provision of this Section 12.0, if Seller
fails to submit a termination claim within the time period set forth
above, Seller shall be barred from submitting a claim and Boeing
shall have no obligation for payment to Seller under this Section 12.0
except for those Products previously delivered and accepted by Boeing.
12.5 PARTIAL TERMINATION
Any partial termination of an Order shall not alter or affect the
terms and conditions of the Order or any Order with respect to
Products not terminated.
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12.6 PRODUCT PRICE
Termination under any of the above paragraphs shall not result in any
change to unit prices for Products not terminated.
12.7 EXCLUSIONS OR DEDUCTIONS
A. All unliquidated advances or other payments made by Boeing to
Seller pursuant to a terminated Order.
B. Any claim which Boeing has against Seller;
C. The agreed price for scrap allowance;
D. Except for normal spoilage and any risk of loss assumed by
Boeing, the agreed fair value of property that is lost,
destroyed, stolen or damaged.
12.8 PARTIAL PAYMENT/PAYMENT
Payment, if any, to be paid under this Section 12.0 shall be made
thirty (30) days after settlement between the parties or as
otherwise agreed to between the parties. Boeing may make partial
payments and payments against costs incurred by Seller for the
terminated portion of the Order, if the total of such payments does
ont exceed the final amount determined to be due, Seller shall
repay the xecess to, Boeing upon demand.
12.9 SELLER'S ACCOUNTING PRACTICES
Boeing and Seller agree that Seller's "normal accounting practices"
used in developing the price of the Product(s) shall also be used in
determining the allocable costs at termination. For purposes of this
Section 12.9, Seller's "normal accounting practices" refers to
Seller's method of charging costs as either a direct charge, overhead
expense, general administrative expense, etc.
12.10 RECORDS
Unless otherwise provided in this Agreement or by law, Seller shall
maintain all records and documents relating to the terminated portion
of the Order for three (3) years after final settlement of
Seller's termination claim.
13.0 EVENTS OF DEFAULT AND REMEDIES
13.1 EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
A. Any failure by Seller to deliver, when and as required by this
Agreement or any Order, any Product, except as provided in GTA Section
14.0; or
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B. Any failure by Seller to provide an acceptable Assurance of
Performance within the time specified in GTA Section 17.0, or
otherwise in accordance with applicable law; or,
C. Any failure by Seller to perform or comply with any obligation set
forth in GTA Section 20.0; or
D. Seller is or has participated in the sale, purchase or manufacture of
airplane parts without the required approval of the FAA.
E. Any failure by Seller to perform or comply with any obligation (other
than as described in the foregoing Sections 13.1.A, 13.1.B, 13.1.C and
13.1.D) set forth in this Agreement and such failure shall continue
unremedied for a period of thirty (30) days or more following receipt
by Seller of notice from Boeing specifying such failure; or
F. (a) the suspension, dissolution or winding-up of Seller's business,
(b) Seller's insolvency, or its inability to pay debts, or its
nonpayment of debts, as they become due, (c) the institution of
reorganization, liquidation or other such proceedings by or against
Seller or the appointment of a custodian, trustee, receiver or
similar Person for Seller's properties or business, (d) an assignment
by Seller for the benefit of its creditors, or (e) any action of
Seller for the purpose of effecting or facilitating any of the
foregoing.
13.2 REMEDIES
If any Event of Default shall occur:
A. CANCELLATION
Boeing may, by giving written notice to Seller, immediately cancel
this Agreement and/or any Order, in whole or in part, and Boeing
shall not be required after such notice to accept the tender by
Seller of any
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Products with respect to which Boeing has elected to cancel this
Agreement.
B. COVER
Boeing may manufacture, produce or provide, or may engage any other
persons to manufacture, produce or provide, any Products in
substitution for the Products to be delivered or provided by Seller
hereunder with respect to which this Agreement or any Order has been
canceled and, in addition to any other remedies or damages available
to Boeing hereunder or at law or in equity, Boeing may recover from
Seller the difference between the price for each such Product and the
aggregate expense, including, without limitation, administrative and
other indirect costs, paid or incurred by Boeing to manufacture,
produce or provide, or engage other persons to manufacture, produce or
provide, each such Product.
C. SETOFF
Boeing shall, at its option, have the right to set off against and
apply to the payment or performance of any obligation, sum or amount
owing at any time to Boeing hereunder or under any Order, all
deposits, amounts or balances held by Boeing for the account of Seller
and any amounts owned by Boeing to Seller, regardless of whether any
such deposit, amount, balance or other amount or payment is then due
and owing.
D. TOOLING AND OTHER MATERIALS
As compensation for the additional costs which Boeing will incur as a
result of the actual physical transfer of production capabilities
from Seller to Boeing or Boeing's designee, Seller shall upon the
request of Boeing, transfer and deliver to Boeing or Boeing's
designees title to any or all (i) Tooling, (ii) Boeing-Furnished
material (iii) raw materials, parts, work-in-process, incomplete or
completed assemblies, and all other Products or parts thereof in the
possession or under the effective control of Seller or any of its
subcontractors (iv) Proprietary Information and Materials of Boeing
including without limitation planning data, drawings and other
Proprietary Information and Materials relating to the design,
production, maintenance, repair and use of Tooling, in the possession
or under the effective control of Seller or any of its subcontractors,
in each case free and clear of all liens, claims or other rights of
any person.
Seller shall be entitled to receive from Boeing reasonable
compensation for any item accepted by Boeing which has been
transferred to Boeing pursuant to this Section 13.2.E (except for any
item the price of which shall have been paid to Seller prior to such
transfer); provided, however, that such compensation shall not be paid
directly to Seller, but shall be
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accounted for as a setoff against any damages payable by Seller to
Boeing as a result of any Event of Default.
E. REMEDIES GENERALLY
No failure on the part of Boeing in exercising any right or remedy
hereunder, or as provided by law or in equity, shall impair, prejudice
or constitute a waiver of any such right or remedy, or shall be
construed as a waiver of any Event of Default or as an acquiescence
therein. No single or partial exercise of any such right or remedy
shall preclude any other or further exercise thereof or the exercise
of any other right or remedy. No acceptance of partial payment or
performance of any of Seller's obligations hereunder shall constitute
a waiver of any Event of Default or a waiver or release of payment or
performance in full by Seller of any such obligation. All rights and
remedies of Boeing hereunder and at law and in equity shall be
cumulative and not mutually exclusive and the exercise of one shall
not be deemed a waiver of the right to exercise any other. Nothing
contained in this Agreement shall be construed to limit any right or
remedy of Boeing now or hereafter existing at law or in equity.
14.0 EXCUSABLE DELAY
If delivery of any Product is delayed by unforeseeable circumstances
beyond the control and without the fault or negligence of Seller or of
its suppliers or subcontractors (any and without the fault or
negligence of Seller or of its Suppliers or subcontractors (any such
delay being hereinafter referred to as "Excusable Delay"), the
delivery of such Product shall be extended for a period to be
determined by Boeing after an assessment by Boeing of alternate work
methods. Excusable Delays may include, but are not limited to, acts of
God, war, riots, acts of government, fires, floods, epidemics,
quarantine restrictions, freight embargoes, strike or unusually severe
weather, but shall exclude Seller's noncompliance with any rule,
regulation or order promulgated by any governmental agency for or with
respect to environmental protection. However, the above
notwithstanding, Boeing expects Seller to continue production, recover
lost time and support all schedules as established under this
Agreement or any Order. Therefore, it is understood and agreed that
(i) delays of less than two (2 days' duration shall not be considered
to be Excusable Delays unless such delays shall occur within thirty
(30) days preceding the scheduled delivery date of any Product and
(ii) if delay in delivery of any Product is caused by the default of
any of Seller's subcontractors or suppliers, such delay shall not be
considered an Excusable Delay unless the supplies or services to be
provided by such subcontractor or supplier are not obtainable from
other sources in sufficient time to permit Seller to meet the
applicable delivery schedules. If delivery of any Product is delayed
by any Excusable Delay for more than three (3) months,
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Boeing may, without any additional extension, cancel all or part of
any Order with respect to the delayed Products, and exercise any of
its remedies in accordance with GTA Section 13.2 provided, however,
that Boeing shall not be entitled to monetary damages or specific
performance to the extent Seller's breach is the result of an
Excusable Delay.
15.0 SUSPENSION OF WORK
Boeing may at any time, by written order to Seller, require Seller to
stop all or any part of the work called for by this Agreement
hereafter referred to as a "Stop Work Order" issued pursuant to this
Section 15.0 On receipt of a Stop Work Order, Seller shall promptly
comply with its terms and take all reasonable steps to minimize the
occurrence of costs arising from the work covered by the Stop Work
Order during the period of work stoppage. Within the period covered by
the Stop Work Order (Including any extension thereof), but not to
exceed thirty (30) days duration, Boeing shall either (i) cancel the
Stop Work Order or (ii) terminate or cancel the work covered by the
Stop Work Order in accordance with the provisions of GTA Section 12.0
or 13.0 In the event the Stop Work Order is canceled by Boeing or the
period of the Stop Work Order (including any extension thereof)
expires, Seller shall promptly resume work in accordance with the
terms of this Agreement or any applicable Order.
16.0 TERMINATION OR CANCELLATION AND INDEMNITY AGAINST SUBCONTRACTOR CLAIMS
Boeing shall not be liable for any loss or damage resulting from any
termination for Buyer's convenience pursuant to GTA Section 12.1,
except as expressly provided in GTA Section 12.3 or any cancellation
under GTA Section 13.0 except to the extent that such cancellation
shall have been determined by Boeing and Seller to have been wrongful,
in which case such wrongful cancellations hall be deemed a termination
pursuant to GTA Section 12.1 and therefore shall be limited to the
payment to Seller of the Amount or amounts identified in GTA Section
12.37 As subcontractor claims are included in Seller's termination
claim pursuant to GTA Section 12.3, Seller shall indemnify Boeing and
hold Boeing harmless from and against (is) any and all claims, suits
and proceedings against Boeing by any subcontractor or supplier of
Seller in respect of any such termination and (ii) and any and all
costs, expenses, losses, and damages incurred by Boeing in connection
with any such claim, suit or proceeding.
17.0 ASSURANCE OF PERFORMANCE
A. SELLER TO PROVIDE ASSURANCE
If Boeing determines, at any time or from time to time, that it is not
sufficiently assured of Seller's full, timely and continuing
performance hereunder, or if for any other reason Boeing has
reasonable grounds for insecurity, Boeing may request by notice to
Seller, written assurance
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(hereafter an "Assurance of Performance") with respect to any specific
matters affecting Seller's performance hereunder, that Seller is able
to perform all of its respective obligations under this Agreement when
and as specified herein. Each Assurance of Performance shall be
delivered by Seller to Boeing as promptly as possible, but in any
event no later than 15 calendar days following Boeing's request
therefore and each Assurance of Performance shall be accompanied by
any information, reports or other materials, prepared by Seller, as
Boeing may reasonably request. Boeing may suspend all or any part of
Boeing's performance hereunder if Boeing fails to receive an Assurance
of Performance from Seller satisfactory in form and substance to
Boeing.
B. Boeing may request one or more meetings with senior management or
other employees of Seller for the purpose of discussing any request by
Boeing for Assurance of Performance or any Assurance of Performance
provided by Seller. Seller shall make such persons available to meet
with representatives of Boeing as soon as may be practicable following
a request for any such meeting by Boeing and Seller shall make
available to Boeing any additional information reports or other
materials in connection therewith as Boeing may reasonably request.
18.0 RESPONSIBILITY FOR PROPERTY
On delivery to Seller or manufacture of acquisition by it of any
materials, parts, Tooling or other property (excluding the Aircraft),
title to any of which is held by Buyer, Seller shall assume the risk
of and shall be responsible for any loss thereof or damage thereto. In
accordance with the provisions of an Order, but in any event on
completion thereof, Seller shall return such property to Buyer in the
condition in which it was received except for reasonable wear and tear
and except to the extent that such property has been incorporated in
the Products delivered under such Order or has been consumed in the
normal performance of work under such Order.
Seller warrants to Boeing that it has good title to all inventory,
work-in-process, tooling and materials to be supplied by Seller in the
performance of its obligations under any Order ("Inventory")), and
that pursuant to the provisions of such Order, it will transfer to
Boeing title to such Inventory, whether transferred separately or as
part of any Product delivered under the Order, free of any liens,
charges, encumbrances or rights of others.
20.0 PROPRIETARY INFORMATION AND ITEMS
Boeing and Seller shall each keep confidential and protect from
disclosure all (a) confidential, proprietary, and/or trade secret
information; (b) tangible items containing, conveying, or embodying
19
such information; and (c) tooling obtained from and/or belonging to
the other in connection with this Agreement or any Order
(collectively referred to as "Proprietary Information and
Materials"). Boeing and Seller shall each use Proprietary
Information and Materials of the other only in the performance
of and for the purpose of this Agreement and/or any Order.
Provided, however, that despite any other obligations or
restrictions imposed by this Section 20.0, Boeing shall
have the right to use and disclose of Seller's Proprietary
Information and Materials as approved by Seller for the purposes
of testing, certification, use, sale, or support of any products
delivered under this Agreement, an Order, or any airplane,
including such an item; and any such disclosure by
Boeing shall, whenever appropriate, include a restrictive legend as
approved by Seller for suitable to the particular circumstances.
The restrictions on disclosure or use of Proprietary Information
and Materials by Seller shall apply to all materials derived by
Seller or others from Boeing's Proprietary Information and
Materials. Upon Boeing's request at any time, and in any event upon
the completion, termination or cancellation of this Agreement,
Seller shall return all of Boeing's Proprietary Information and
Materials, and all materials
derived from Boeing's Proprietary Information and Materials to
Boeing unless specifically directed otherwise in writing by Boeing.
Seller shall not, without the prior written authorization of
Boeing, sell or dispose of(as scrap or otherwise) any parts or
other materials containing, conveying, embodying, or made in
accordance with or by reference to any Proprietary Information and
Materials of Boeing. Prior to disposing of such parts of materials
as scrap, Seller shall render them unusable. Boeing shall have the
right to audit Seller's compliance with this Section 20.0 Seller
may disclose Proprietary Information and Materials of Boeing to its
subcontractors as required for the performance of an Order,
provided that each such subcontractor first assumes by written
agreement, the same obligations imposed upon Seller under this
Section 20.0 relating to Proprietary Information and Materials; and
Seller shall be liable to Boeing for any breach of such obligation
by such subcontractor. The provisions of this Section 20.0 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 Section 20.0
shall survive the performance, completion, termination or
cancellation of this Agreement or any Order This Section 20.0
supplements any and all other prior agreements or understandings
between the parties to the extent that such agreements or
understandings relate to Boeing's obligations relative to
confidential, proprietary, and/or trade secret information, or
tangible items containing, conveying, or embodying such
information, obtained from Seller and related to any Product,
regardless of whether disclosed to the receiving party before or
after the effective date of this Agreement.
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21.0 COMPLIANCE WITH LAWS
21.1 SELLER'S OBLIGATION
Seller shall be responsible for complying with all laws, including,
but not limited to, any statute, rule, regulation, judgment, decree,
order, or permit applicable to its performance under this Agreement.
Seller further agrees (1) to notify Boeing of any obligation under
this Agreement which is prohibited under applicable environmental law.
At the earliest opportunity but in all events sufficiently in advance
of Seller's performance which obligation so as to enable the
identification of alternative methods of performance, and (2) to
notify Boeing at the earliest possible opportunity of any aspect of
its performance which becomes subject to additional environmental
regulation or which Seller reasonably believes will become subject to
additional regulation during the performance of this Agreement.
21.2 GOVERNMENT REQUIREMENTS
If any of the work to be performed under this Agreement is performed
in the United States, Seller shall, via invoice or other form
satisfactory to Boeing, certify that the Products covered by the Order
were produced in compliance with Sections 6, 7, and 12 of the Fair
Labor Standards Act (29 U.S. C. 201-291), as amended, and the
regulations and orders of the U. S. Department of Labor issued
thereunder. In addition, the following Federal Administration
Regulations are incorporated herein b this reference except
"Contractor" shall mean "Seller."
FAR 52.222-26 "Equal Opportunity"
FAR 52.222-35 "Affirmative Action for Special Disabled & Vietnam
Era Veterans"
FAR 52.222-36 "Affirmative Action for Handicapped Workers"
22.0 INTEGRITY IN PROCUREMENT
Boeing's policy is to maintain high standards of integrity in
procurement. Boeing's employees must ensure that no favorable
treatment compromises their impartiality in the procurement process.
Accordingly, B Boeing's employees must strictly refrain from
soliciting or accepting any payment, gift, favor or thing of value
which could improperly influence their judgment with respect to either
issuing an
Order or administering this Agreement. Consistent with this policy,
Seller agrees not to provide or offer to provide any employees of
Boeing any payment, gift, favor or thing of value for the purposes of
improperly obtaining or rewarding favorable treatment in connection
with any Order or this Agreement. Seller shall conduct its own
procurement practices and shall ensure that its suppliers conduct
their procurement practices consistent with these standards. If Seller
has reasonable grounds to believe that this policy may have been
violated, Seller shall immediately
21
report such possible violation to the appropriate Director of Materiel
or Ethics Advisor of Boeing.
23.0 INFRINGEMENT
Seller shall indemnify, defend and save Boeing and Customers harmless
from all claims, suits, actions, awards (including but not limited to
awards based on intentional infringement of patents known to Seller at
the time of such infringement, exceeding actual damages, and/or
including attorney's 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 (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 Boeing or Customers. Boeing and/or
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 Boeing and/or Customers.
Seller shall have no obligation under this Section 23.0 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
Section 23.0 only, the term Customer shall not include the United
States Government; and the term Boeing shall include The Boeing
Company (Boeing) and all Boeing subsidiaries and all officers,
agents, and employees of Boeing or any Boeing subsidiary. In no
event will Seller's liability hereunder extend beyond thirty-six
(36) months after First Delivery of product to Buyer.
24.0 BOEING'S RIGHTS IN SELLER'S PATENTS, COPYRIGHTS, TRADE SECRETS &
TOOLING
Seller hereby grants to Boeing an irrevocable, nonexclusive, paid-up
worldwide license to practice and/or use, and license others to
practice and/or use on Boeing's behalf, all of Seller's patents,
copyrights, trade secrets (including, without limitation, designs,
processes, drawings, technical data and tooling), industrial designs,
semiconductor mask works, and tooling (collectively hereinafter
referred to as "Licensed Property") related to the development,
production, maintenance or repair of Products. Boeing hereafter
retains all of the aforementioned license rights in Licensed Property,
but Boeing hereby covenants not to exercise such rights except in
connection with the making, having made, using and selling of Products
or products of the same kind, and then only in the event of any of the
following:
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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;
C. Boeing cancels this Agreement or any Order for default pursuant to GTA
Section 13.0 herein;
D. In Boeing's good faith judgment it becomes necessary, in order for
Seller to comply with the terms of this Agreement or any Order, for
Boeing to provide support to Seller (in the form of design,
manufacturing, or onsite personnel assistance) substantially in excess
of that which Boeing normally provides to its suppliers.
E. Seller's trustee in bankruptcy (or seller as debtor in possession)
fails to assume this Agreement and al Orders by formal entry of an
order in the bankruptcy court within sixty (60) days after entry of
an order for relief in a bankruptcy case of the Seller, or Boeing
elects to retain its rights to Licensed Property under the
bankruptcy laws;
F Seller is at any time insolvent (whether measured under a balance
sheet test or by the failure to pay debts as they come due) or the
subject of any insolvency or debt assignment proceeding under state or
nonbankruptcy 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 sixty (60) days.
As part of the license granted under this Section 24.0, Seller
shall, at the written request of Boeing and at no additional cost
to Boeing, promptly deliver to Boeing any and all Licensed Property
considered by Boeing to be necessary to satisfy Boeing's requirements
for Products and their substitutes.
25.0 NOTICE
25.1 ADDRESSES
Notices and other communications shall be given in writing by personal
delivery, mail, telex, teletype, telegram, facsimile, cable or other
electronic transmission addressed to the respective party as set forth
in the SBP Section 9.0
25.2 EFFECTIVE DATE
The date on which any such communication is received by the
addressee is the effective date of such communication.
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25.3 APPROVAL OR CONSENT
With respect to all matters subject to 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 Materiel
Representative.
26.0 PUBLICITY
Seller will not, and will require that its subcontractors and
suppliers of any tier will not, (i) cause or permit to be released any
publicity, advertisement, news release, public announcement, or denial
or confirmation of the same, in whatever form, regarding any Order or
Products, or the program to which they may pertain, or (ii) use, or
cause or permit to be used, the Boeing name or any Boeing trademark in
any form of promotion or publicity without Boeing's prior written
approval.
27.0 TITLE AND RISK OF LOSS OF AIRCRAFT AND GOODS
Title to the Aircraft shall remain at all times in Buyer or Customer
during the period of time in which the Aircraft is in the possession
of or under the care, custody or control of Seller; Seller shall be a
bailee for hire during such period of time. Risk of loss of the
Aircraft shall remain in Buyer or Customer except where Seller has
risk of loss as a bailee for hire.
28.0 GENERAL/AIRPORT PREMISES LIABILITY INSURANCE AND HANGARKEEPERS LEGAL
LIABILITY
Seller warrants and represents to Buyer at all times during the
performance of the Order, Seller shall maintain the following
insurance and shall provide to Buyer no later than thirty (30) working
days prior to delivery of the Aircraft to Seller, certificates of
insurance evidencing coverage satisfactory to Buyer in compliance with
the following:
General Liability and/or Airport Liability insurance covering premises
and operations of Seller in an amount not less than One Hundred
Million Dollars ($100,000,000) combined single limit for bodily injury
and property damage each occurrence; and Hangarkeepers Legal Liability
insurance in an amount not less than One Hundred and Sixty Million
Dollars ($160,000,000) each occurrence covering damage to, loss of or
destruction of any 737-700 BBJ Aircraft which occurs due to the
negligence of Seller while the Aircraft is in the care, custody or
control of the Seller under this Agreement. Any such policy shall be
with insurers reasonably acceptable to Boeing and shall contain a
waiver of any rights of subrogation against Customer and Buyer, their
subsidiaries and their respective directors, officers, employees and
agents.
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and whether arising out of any such Order or any other agreement
between the parties.
Boeing may settle all claims arising out of any Order, including
termination claims, directly with Seller. Boeing may unilaterally
assign any rights or title to property under the Order to any
wholly-owned subsidiary of The Boeing Company.
31.0 NON-WAIVER
Boeing's failure at any time to enforce any provision of an Order does
not constitute a waiver of such provision or prejudice Boeing's right
to enforce such provision at any subsequent time.
32.0 HEADING
Section headings used in this Agreement are for convenient reference
only and do not affect the interpretation of the Agreement.
33.0 PARTIAL INVALIDITY
If any provision of any Order is or becomes void or unenforceable by
force or operation of law, the other provisions shall remain valid and
enforceable.
34.0 APPLICABLE LAW; JURISDICTION
Each Order, including all matters of construction, validity and
performance, shall in all respects be governed by, and construed and
enforced in accordance with, the law as set forth in SBP Section 5.0
35.0 AMENDMENT
Oral statements and understandings are not valid or binding. Except,
as otherwise provided in GTA Section 10.0 and SBP Section 12.0, no
Order may be changed or modified except by a writing signed by Seller
and Boeing's Materiel Representative.
36.0 LIMITATION
Seller may not (except to provide an inventory of Products to support
delivery acceleration and to satisfy reasonable replacement and Spares
requirements) manufacture or fabricate Products or procure any goods
in advance of the reasonable flow time required to comply with the
delivery schedule in the applicable Order. Notwithstanding any other
provision of an Order, Seller is not entitled to any equitable
adjustment or other modification of such Order for any manufacture,
fabrication, or procurement of Products not in conformity with the
requirements of the Order, unless Boeing" written consent has first
been obtained. Nothing in this Section 34.0 shall be construed as
relieving Seller of any of its obligations under the Order.
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37.1 INCLUSION OF TAXES IN PRICE
All taxes, including but not limited to federal, state and local
income taxes, value added taxes, gross receipt taxes, property taxes,
and custom duties taxes are deemed to be included in the Order price,
except applicable sales or use taxes on sales to Boeing ("Sales
Taxes") for which Boeing has not supplied a valid exemption
certificate or unless otherwise indicated on the applicable Order.
37.2 LITIGATION
In the event that any taxing authority has claimed or does claim
payment for Sales Taxes, Seller shall promptly notify Boeing, and
Seller shall take such action as Boeing may direct to pay or protest
such taxes or to defend against such claim. The actual and direct
expenses, without the addition of profit and overhead, of such defense
and the amount of such taxes as ultimately determined as due and
payable shall be paid directly by Boeing or reimbursed to Seller. If
Seller or Boeing is successful in defending such claim, the amount of
such taxes recovered by Seller, which had previously been paid by
Seller and reimbursed by Boeing or paid directly by Boeing, shall be
immediately refunded to Boeing.
37.3 REBATES
If any taxes paid by Boeing are subject to rebate or reimbursement,
Seller shall take the necessary actions to secure such rebates or
reimbursement and shall promptly refund to Boeing any amount
recovered.
38.0 FOREIGN PROCUREMENT OFFSET
With respect to work covered by the Order, Seller shall use its best
efforts to cooperate with Boeing in the fulfillment of any foreign
offset program obligation that Boeing may have accepted as a condition
of the sale of Boeing's products. In the event that Seller solicits
bids or proposals for, or procures or offers to procure any goods or
services relating to the work covered by an Order 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 agrees to take any actions
that may be required on its part to assure that Boeing receives such
credits.
39.0 ENTIRE AGREEMENT/ORDER OF PREFERENCE
39.1 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
26
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.
39.2 INCORPORATED BY REFERENCE
In addition to the documents previously incorporated herein by
reference, the documents listed below are by this reference made a
part of this Agreement:
A. Engineering Drawing by Part Number and Related Outside Production
Specification Plan (OPSP).
B. Any other exhibits or documents agreed to by the parties to be a part
of this Agreement.
C. Order (excluding the documents identified in A and B above).
D. Engineering Drawing by Part Number and, if applicable, related Outside
Production Specification Plan (OPSP).
E. Administrative Agreement (if applicable)
F. Any other exhibits or documents the parties agree shall be part of
the Agreement.
39.3 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. SBP (excluding the Administrative Agreement identified in E
below) as amended February 17, 1998.
B. This General Terms Agreement (excluding the documents identified
in D and F below) as amended February 17,1998.
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29.1 INSURANCE
Seller shall maintain continuously in effect a property insurance
policy covering loss or destruction of or damage to all property in
which Boeing does or could have an insurable interest pursuant to this
Agreement, including but not limited to Tooling, Boeing-furnished
property, raw materials, parts, work-in process, incomplete, or
completed assemblies and all other products or parts thereof, and all
drawings, specifications, data and other materials relating to any of
the foregoing in each case to the extent in the possession or under
the effective care, custody or control of Seller, 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 in the form and with insurers acceptable to Boeing
and shall (i) provide for payment of loss thereunder to Boeing, as
loss payee, as its interests may appear and (ii) contain a waiver of
any rights of subrogation against Boeing, its subsidiaries, and their
respective directors, officers, employees and agents.
29.2 CERTIFICATE OF INSURANCE
Prior to commencement of this Agreement, Seller shall provide to
Boeing's Materiel Representative, for Boeing's review and approval,
certificates of insurance reflecting full compliance with the
requirements set forth in GTA Section 27.1. Such certificates shall be
kept current and in compliance throughout the period of this Agreement
and shall provide for thirty (30) days advanced written notice to
Boeing's Materiel Representative in the event of cancellation,
non-renewal or material change adversely affecting the interests of
Boeing.
29.3 NOTICE OF DAMAGE OR LOSS
Seller shall give prompt written notice to Boeing's Materiel
Representative of the occurrence of any damage or loss to any property
required to be insured herein. If any such property shall be damaged
or destroyed, in whole or in part, by an insured peril or otherwise,
and if no Event of Default shall have occurred and be continuing,
then Seller may, upon written notice to Boeing, settle, adjust, or
compromise any and all such loss or damage not in excess of Two
Hundred Fifty Thousand Dollars ($250,000) in any one occurrence and
Five Hundred Thousand Dollars ($500,000) in the aggregate. Seller may
settle, adjust or compromise any other claim by Seller only after
Boeing has given written approval, which approval shall not be
unreasonably withheld.
30.0 RESPONSIBILITY FOR PERFORMANCE
Seller shall be responsible for the requirements of this Agreement and
any Order referencing this Agreement. Seller shall bear all risks of
providing adequate facilities and equipment to perform each Order in
accordance with the terms thereof. Seller shall include as part of its
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subcontracts those elements of the Agreement which protect Boeing's
rights including but not limited to right of entry provisions,
proprietary information and rights provisions and quality control
provisions. In addition, Seller shall provide to its subcontractors
sufficient information to clearly document that the work being
performed by Seller's subcontractor is to facilitate performance under
this Agreement or any Order. Sufficient information may include but
is not limited to Order number, GTA number or the name of Boeing's
Materiel Representative. No subcontracting by seller shall relieve
Seller of its obligation under the applicable Order.
30.1 SUBCONTRACTING
Seller may not procure any Product, as defined in the applicable
Order, from a third party in a completed or a substantially completed
form without Boeing's prior written consent.
Where required by the requirements of the Order, no raw material
and/or material process may be incorporated in a Product unless: (a)
Seller uses an approved source or (b) Boeing has surveyed and
qualified Seller's receiving inspection personnel and laboratories to
test the specified raw materials and/or material process. No waiver of
survey and qualification requirements will be effective unless
granted by Boeing's Engineering and Quality Control Departments.
Utilization of a Boeing-approved raw material source does not
constitute a waiver of Seller's responsibility to meet all
specification requirements.
30.2 RELIANCE
Boeing's entering into this Agreement is in part based upon Boeing's
reliance on Seller's ability, expertise and awareness of the intended
use of the Products. Seller agrees that Boeing and Boeing's customers
may rely on Seller as an expert, and Seller will not deny any
responsibility or obligation hereunder to Boeing or Boeing's customers
on the grounds that Boeing or Boeing's customers provided
recommendations or assistance in any phase of the work involved in
producing or supporting the Products, including but not limited to
Boeing's acceptance of specifications, test date or the Products.
30.3 ASSIGNMENT
Each Order shall inure to the benefit of and be binding on each of the
parties hereto and their respective successors and assigns, provided
however, that no assignment of any rights or delegation of any duties
under such Order is binding on Boeing unless Boeing's written consent
has first been obtained. Notwithstanding the above, Seller may assign
claims for monies due or to become due under any Order provided that
Boeing may recoup or setoff any amounts covered by any such assignment
against any indebtedness of Seller to Boeing, whether arising before
or after the date of the assignment or the date of this Agreement,
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39.4 DISCLAIMER
Unless otherwise specified on the face of the applicable Order, any
CATIA Dataset or translation thereof (each or collectively "Data")
furnished by Boeing is furnished as an accommodation to Seller. It
is the Seller's responsibility to compare such Data to the
comparable two dimensional computer-aided design drawing to confirm
the accuracy of the data.
BOEING HEREBY DISCLAIMS, AND SELLER HEREBY WAIVES, ALL WARRANTIES AND
LIABILITIES OF BOEING AND ALL CLAIMS ND REMEDIES OF SELLER, EXPRESS OR
IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY DEFECT IN
ANY CATIA DATASET OR TRANSLATION THEREOF, INCLUDING, WITHOUT
LIMITATION, ANY (A) IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR
USE OR FOR A PARTICULAR PURPOSE, (B) ANY IMPLIED
WARRANTY ARISING FROM COURSE OF DEALING OR PERFORMANCE OR USAGE OF
TRADE, (C) RECOVERY BASED UPON TORT, WHETHER OR NOT ARISING FROM
DAMAGED PROPERTY, OR OTHERWISE BASED UPON DAMAGED PROPERTY, OR
OTHERWISE BASED UPON LOSS OF USE OR PROFIT OR OTHER INCIDENTAL OR
CONSEQUENTIAL DAMAGES.
EXECUTED in duplicate as of the date and year first written above by the duly
authorized representatives of the parties.
THE BOEING COMPANY PATS, Inc
by and through its Division
Boeing Commercial Airplane Group
Name: /s/ [Illegible] Name: /s/ [Illegible]
-------------------------- -------------------------
Title: Buyer Title: President
------------------------- ------------------------
Date: February 17, 1998 Date: 2/17/98
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