EXHIBIT 10.28
POP-BTP
SPECIAL BUSINESS PROVISIONS
between
THE BOEING COMPANY
and
Pacific Aerospace & Electronics, Inc
U.S. Aerospace Group
European Aerospace Group
POP-65323-0519
[LOGO OF BOEING]
TABLE OF CONTENTS
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TITLE PAGE
TABLE OF CONTENTS
AMENDMENT PAGE
RECITAL PAGE
1.0 DEFINITIONS........................................................................... 7
2.0 CONTRACT FORMATION.................................................................... 7
2.1 Order........................................................................... 7
2.2 Entire Agreement................................................................ 7
2.3 Incorporated by Reference....................................................... 7
2.4 Order of Precedence............................................................. 8
3.0 PERIOD OF PERFORMANCE AND PRICES...................................................... 9
3.1 Performance..................................................................... 9
3.1.1 Period of Performance................................................... 9
3.2 Pricing......................................................................... 9
3.2.1 Product Pricing......................................................... 9
3.2.2 Manufacturing Configuration............................................. 9
3.2.3 Packaging............................................................... 9
4.0 GOVERNING QUALITY ASSURANCE REQUIREMENTS.............................................. 9
5.0 APPLICABLE LAW........................................................................ 10
6.0 PRODUCT SUPPORT AND ASSURANCE......................................................... 10
6.1 Warranty.................................................................. 10
7.0 PAYMENT............................................................................... 10
7.1 Recurring Price........................................................... 10
7.2 Non-Recurring Price/Special Charges....................................... 11
8.0 ACCELERATION/DECELERATION AT NO COST.................................................. 11
9.0 NOTICES............................................................................... 11
9.1 Addresses................................................................. 11
10.0 OBLIGATION TO PURCHASE AND SELL...................................................... 11
11.0 COST AND PERFORMANCE VISIBILITY...................................................... 12
12.0 CHANGE PROVISIONS.................................................................... 13
12.1 Reserved................................................................. 13
12.2 Computation of Equitable Adjustment...................................... 13
12.3 Obsolescence............................................................. 13
12.4 Change Absorption (Non-recurring/Recurring).............................. 13
2
12.4.1 Prior to 100% Engineering Release (Drawing Revision Level New)... 13
12.4.2 Subsequent to 100% Engineering Release........................... 14
12.5 Planning Schedule........................................................ 14
12.6 Supplier Cost Reduction Initiatives...................................... 14
12.6.1 Continuous Cost Improvement Process............................. 14
12.6.2 Continuous Improvement Initiatives.............................. 15
12.6.2.1 Submission of Cost Reduction Proposal......................... 15
12.6.2.2 Acceptance and Cost Sharing................................... 16
12.7 Reduction in Quantity to be Delivered.................................... 16
12.8 Critical Manufacturing Reorder Lead-Time................................. 16
13.0 SPARES AND OTHER PRICING............................................................. 16
13.1 Spares................................................................... 16
13.1.1 Spares Support.................................................. 17
13.1.2 Reclassification or Re-exercises................................ 18
13.1.3 Spare Pricing................................................... 18
13.1.3.1 Aircraft On Ground (AOG), Critical Spares and POA Requirement.... 18
13.1.3.2 Expedite Spare (Class 1)......................................... 18
13.1.4 Spares Special Handling.......................................... 18
13.2 Expedite of Production Requirements...................................... 19
13.3 Tooling.................................................................. 19
13.3.1 Responsible Party................................................ 19
13.3.2 Boeing Furnished Tooling......................................... 19
13.4 Pricing of Boeing's Supporting Requirements.............................. 19
13.5 Pricing of Requirements for Modification or Retrofit..................... 20
13.6 Pricing of Similar Products.............................................. 20
14.0 STATUS REPORTS/REVIEWS............................................................... 20
15.0 INTERNATIONAL COOPERATION............................................................ 20
15.1 Market Access and Sales Support.......................................... 20
15.2 Offset Assistance........................................................ 21
6.0 BOEING FURNISHED MATERIAL/SUPPLIER BANKED MATERIAL................................... 21
17.0 PARTICIPATION........................................................................ 21
17.1 Other Boeing Entities.................................................... 21
17.2 Boeing Subcontractors/Suppliers.......................................... 22
17.3 Notification of Contract................................................. 22
17.4 Notification of Price Reductions......................................... 22
18.0 INVENTORY AT CONTRACT COMPLETION..................................................... 22
19.0 OWNERSHIP OF INTELLECTUAL PROPERTY................................................... 23
19.1 Technical Work Product................................................... 23
3
19.2 Inventions and Patents................................................... 23
19.3 Works of Authorship and Copyrights....................................... 23
19.4 Pre-Existing Inventions and Works of Authorship.......................... 23
19.5 Inapplicability.......................................................... 23
20.0 ADMINISTRATIVE AGREEMENTS............................................................ 23
21.0 GUARANTEED WEIGHT REQUIREMENTS....................................................... 23
22.0 SELLER DATA REQUIREMENTS............................................................. 23
23.0 DEFERRED PAYMENT..................................................................... 23
24.0 SOFTWARE PROPRIETARY INFORMATION RIGHTS.............................................. 23
25.0 CONFIGURATION CONTROL................................................................ 24
26.0 INFRINGEMENT......................................................................... 24
27.0 RAW MATERIAL PROGRAM................................................................. 24
Signature Page
Attachment 1 Work Statement and Pricing
Attachment 1A Continuous Cost Improvement Goals
Attachment 2 Foreign Procurement Report
Attachment 3 Rates and Factors
Attachment 4 Boeing AOG Coverage
Attachment 5 Boeing AOG/Critical Shipping Notification
Attachment 6 RESERVED
Attachment 7 RESERVED
Attachment 8 Commodity Listing and Terms of Sale
Attachment 9 Cost and Performance Reviews
Attachment 10 Quality Assurance Requirements
4
AMENDMENTS
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Amend Description Date Approval
Number
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1 Attachment 1C changed wording for (1) 1-5-00
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[LOGO OF XXXXXX]
XXXXXXXXXX 0X
XXXXXX - XXXXXXX XXXXXXX CASTING DIVISION
Confidential material has been intentionally omitted at this point pursuant
to a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.
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SPECIAL BUSINESS PROVISIONS
---------------------------
THESE SPECIAL BUSINESS PROVISIONS (SBP) are entered into as of December 20, 1999
by and between Pacific Aerospace & Electronics, Inc, a Washington corporation
with its principal office in Wenatchee, WA ("Seller"), and The Boeing Company, a
Delaware corporation acting by and through its Boeing Commercial Airplane
Group, Boeing North American, Incorporated, a Delaware corporation, XxXxxxxxx
Xxxxxxx Corporation, a Maryland corporation, and Boeing-Oak Ridge Company, a
Delaware corporation (collectively and individually "Boeing").
RECITALS
--------
A. Boeing and Seller entered into a General Terms Agreement ("GTA") for the
sale by Seller and purchase by Boeing of Products.
B. Boeing and Seller desire to enter into these Special Business Provisions
("SBP") relating to the sale by Seller and purchase by Boeing of Products.
Now, therefore, in consideration of the mutual covenants set forth herein, the
parties agree as follows:
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SPECIAL BUSINESS PROVISIONS
---------------------------
1.0 DEFINITIONS
The definitions used herein are the same as used in the GTA.
2.0 CONTRACT FORMATION
2.1 Order
Any Order to which these SBP shall apply shall include a statement incorporating
this SBP by reference.
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-65323-0458 dated December 20, 1999 (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
-----------
Boeing Document D33200 "Boeing Suppliers' Tooling Document"
Boeing Document D953W001, "General Operations Requirements Document For
Suppliers - External/Internal Suppliers/Program Partners"
Boeing Document M6-1025 Volume II, "Supplier Part Protection Guide"
Boeing Document D6-81628, "Shipping Label, Barcoded Preparation and Placement"
WICHITA
-------
Boeing Document D33200 "Boeing Suppliers' Tooling Document"
7
Boeing Document D953W001, "General Operations Requirements Document For
Suppliers - External/internal Suppliers/Program Partners"
Boeing Document M6-1025 Volume II, "Supplier Part Protection Guide"
Boeing Document D6-81628, "Shipping Label, Barcoded Preparation and Placement"
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") (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 Attachment 10, Quality
Assurance Requirement, of this SBP, and Document D1-4426 which is
incorporated by reference by clause 28.1 of the GTA, then
I. All documents incorporated by reference in Section 6.0, Product Support
and Assurance, of this SBP, then
J. Administrative Agreement, if any, then
K. Any other Boeing generated exhibits, attachments, forms, flysheets,
codes or documents the parties agree shall be part of the Agreement,
then lastly
L. Any Seller generated documents the parties agree shall be part of the
Agreement.
In resolving any such conflicts, these documents shall be read as a whole and in
a manner most likely to accomplish its purposes.
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Seller shall promptly report to Boeing in writing any inconsistencies in these
documents, even if the inconsistency is resolvable using the above rules.
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, 2000 and ending on December
31, 2004.
3.2 Pricing
3.2.1 Product Pricing
The prices of Products ordered under this SBP are set forth in Attachment 1.
Prices are in United States Dollars. F.O.B. point is as follows: Seller's
Plant.
3.2.2 Manufacturing Configuration
Unit pricing for each Product or part number shown in Attachment 1 is based on
the latest revisions of the engineering drawings or specifications at the time
of the signing of this SBP.
3.2.3 Packaging
The prices shown in Attachment 1 include all packaging costs. Seller shall
package Product in accordance with the applicable requirements set forth 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.
4.0 GOVERNING QUALITY ASSURANCE REQUIREMENTS
In addition to those general quality assurance requirements set forth in GTA,
the work performed under this SBP shall be in accordance with the requirements
set forth in Attachment 10.
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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 irrevocable
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
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Document M6-1124-3,
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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.
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7.2 Non-Recurring Price/Special Charges
Unless otherwise provided in the applicable Order, any non-recurring price
payable by Boeing under 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).
8.0 ACCELERATION/DECELERATION AT NO COST
Notwithstanding GTA Section 10.0, Boeing may revise the delivery schedule
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: Xxxxxx Xxxxxxxxx Mail Code: 38-KX
BOEING COMMERCIAL AIRPLANE GROUP
MATERIEL DIVISION
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
To Seller: Attention: Xxxxxx Xxxxxxxxxxx
Pacific Aerospace & Electronics, Inc
U.S. Aerospace Group
European Aerospace Group
000 Xxxx Xxxxxxx Xx
Xxxxxxxxx, XX 00000
10.0 OBLIGATION TO PURCHASE AND SELL
Boeing and Seller agree that in consideration of the prices set forth under
Attachment 1, Boeing shall issue Orders for Products from time to time to Seller
for all 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
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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. For the Products specifically designated as applicable to this clause
in Attachment 1, Boeing gives at least ninety (90) days notice to
Seller of Boeing's decision to manufacture the Products itself rather
than purchase the Products from Seller.
For purposes of this Section 10.0, Boeing is defined as those organizations,
divisions, groups or entities set forth specifically in 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 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
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and data sufficient to support the CPR process in accordance with the structure
set forth in Attachment 9.
12.0 CHANGE PROVISIONS
12.1 Reserved
12.2 Computation of Equitable Adjustment
The Rates and Factors set forth in 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 Two Thousand Five
Hundred Dollars $2,500.00 or less.
12.4 Change Absorption (Non-recurring/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, that an equitable adjustment shall be made for:
A. Any Technical Change which is a change between raw material
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classifications such as a change from aluminum to steel or titanium to
plastic. Not included as a Technical Change for purposes of this
Section are changes within a raw material classification such as a
------
change from 7050 Aluminum to 7075 Aluminum;
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.
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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 non-recurring 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
Attachment 1. For purposes of this Section, the then current unit price or
total nonrecurring price shall be the price identified in 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. 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 Supplier Cost Reduction Initiatives
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 prices, while
maintaining or improving market share, 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 this effort in the areas such as Lean Manufacturing,
Advanced Quality System, the Accelerated Improvement Workshop (AIW), value
engineering and other initiatives. Seller is not limited to the Boeing
initiatives and may implement any improvement consistent with the requirements
of the orders.
Boeing and Seller agree to establish CCIP target price reductions, and delivery
and quality performance goals, on or before December 1 of each year for the
period of
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performance of this SBP. Said target price reductions; delivery and quality
performance goals shall be set out in 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. Affect 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. Decrease Seller's costs or 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.
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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.
12.7 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
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 calendar 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 contract Administrator.
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 so this SBP without first obtaining written
consent o the contract Administrator. 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).
13.0 SPARES AND OTHER PRICING
13.1 Spares
For purposes of this Section, the following 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
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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 leadtime. 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
leadtime.
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.
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 process describing
Seller's plan for supporting AOG and Critical commitments and manufacturing
support. The process 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 Attachment 4 "Boeing AOG Coverage".
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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 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 xxxx 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
Except as set forth in subsections 13.1.3.1 and 13.1.3.2 below, the price for
Boeing Proprietary Spare(s) shall be the same as the production price for the
Products as listed on Attachment 1, in effect at the time the Spare(s) are
ordered. Detail parts shall be priced so that the sum of the prices for all
detail parts of a kit or End Item Assembly equals the applicable recurring
portion of the kit or End Item Assembly.
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 Attachment 1 in effect when such Spares are ordered.
multiplied by a factor not to exceed 1.07.
13.1.3.2 Expedite Spare (Class 1)
The price for Expedite Spares shall be the price for such Products listed on
Attachment 1 in effect when such Spares are ordered. multiplied by a factor not
to exceed 1.05.
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
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.
18
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 all costs associated with non-accountable tooling
manufactured and/or purchased by Seller necessary for the manufacture and
delivery of the Products including but not limited to rework, repair,
replacement and maintenance of the tooling. Seller shall not use tools, which
contain, convey, embody, or were made in accordance with or by reference to any
Proprietary Information and Materials of Boeing, to manufacture parts for anyone
other than Boeing without the prior written authorization of Boeing.
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
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 Section
7.2 of this SBP, 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.
13.4 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 Attachment 1.
19
13.5 Pricing of Requirements for Modification or Retrofit
Any Products required by Boeing to support a modification or retrofit program
shall be provided for not more than the applicable price as set forth in
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
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.
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. If there is a cost impact, Boeing shall respond within
thirty (30) days on whether Seller is to proceed.
20
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
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
report to Boeing any such procurement activity if and when required by Boeing.
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.
16.0 BOEING FURNISHED MATERIAL/SUPPLIER BANKED MATERIAL
Material, including but not limited to raw material, standards, detail
components and assemblies, furnished to Seller by Boeing shall be administered
in accordance with a Bonded Stores Agreement between Boeing and Seller.
Seller shall provide Boeing with required on-dock dates for all material.
Seller's notice shall provide Boeing with sufficient time to competitively
acquire the material if, in its sole and absolute discretion, it desires to do
so.
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 Section 17.1. Seller shall notify the Boeing Procurement Representative
named in the Notice section of this SBP of Boeing Entities not specifically
referenced herein who frequently use this SBP.
21
17.2 Boeing Subcontractors/Suppliers
Seller agrees that any subcontractor or supplier performing work for a Boeing
Entity, including but not limited to inventory management, (hereinafter referred
to as "Boeing Subcontractor") 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 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 immediately notify the Boeing Procurement Representative 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
22
requirements shall be a material breach and grounds for default pursuant to GTA
Section 13.0. Nothing in this 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
NOT APPLICABLE
19.2 Inventions and Patents
NOT APPLICABLE
19.3 Works of Authorship and Copyrights
NOT APPLICABLE
19.4 Pre-Existing Inventions and Works of Authorship
NOT APPLICABLE
19.5 Inapplicability
NOT APPLICABLE
20.0 ADMINISTRATIVE AGREEMENTS
NOT APPLICABLE
21.0 GUARANTEED WEIGHT REQUIREMENTS
NOT APPLICABLE
22.0 SELLER DATA REQUIREMENTS
NOT APPLICABLE
23.0 DEFERRED PAYMENT
NOT APPLICABLE
24.0 SOFTWARE PROPRIETARY INFORMATION RIGHTS
NOT APPLICABLE
23
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 to Seller 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 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 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
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 Exhibit entitled "Commodity Listing and Terms of
Sale" (Attachment 8) necessary to support any Order issued pursuant to this
Agreement. From time to time, Boeing may amend the Exhibit 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 Exhibit 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 Section.
24
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 Pacific Aerospace & Electronics, Inc
By and Through its Group U.S. Aerospace Group
Boeing Commercial Airplane Group European Aerospace Group
/s/ Xxxxxx Xxxxxxxxx /s/ Xxxxxx Xxxxxxxxxxx
-------------------- ----------------------
Name: Xxxxxx Xxxxxxxxx Name: Xxxxxx Xxxxxxxxxxx
Title: Prime Procurement Agent Title: Vice President Operations
Date: 12/20/99 Date: 12/20/99
25
ATTACHMENT 1 TO
SPECIAL BUSINESS PROVISIONS
WORK STATEMENT AND PRICING
--------------------------
Confidential material has been intentionally omitted at this point
pursuant to a request for confidential treatment, and such material has been
filed separately with the Securities and Exchange Commission.
26
ATTACHMENT 1A TO
SPECIAL BUSINESS PROVISIONS
CONTINUOUS COST IMPROVEMENT GOALS
---------------------------------
Confidential material has been intentionally omitted at this point
pursuant to a request for confidential treatment, and such material has been
filed separately with the Securities and Exchange Commission.
27
ATTACHMENT 1B
WICHITA SOW
Confidential material has been intentionally omitted at this point
pursuant to a request for confidential treatment, and such material has been
filed separately with the Securities and Exchange Commission.
28
ATTACHMENT 1C
AUBURN - AEROMET AMERICA CASTING DIVISION
Confidential material has been intentionally omitted at this point
pursuant to a request for confidential treatment, and such material has been
filed separately with the Securities and Exchange Commission.
29
ATTACHMENT 1D
TM Baseline Pricing
Confidential material has been intentionally omitted at this point
pursuant to a request for confidential treatment, and such material has been
filed separately with the Securities and Exchange Commission.
30
ATTACHMENT 1E
GROUND RULES
Confidential material has been intentionally omitted at this point
pursuant to a request for confidential treatment, and such material has been
filed separately with the Securities and Exchange Commission.
31
ATTACHMENT 1F
RAW MATERIAL
Confidential material has been intentionally omitted at this point
pursuant to a request for confidential treatment, and such material has been
filed separately with the Securities and Exchange Commission.
32
ATTACHMENT 1G
GROUND RULES
U.S. AEROSPACE GROUP
EUROPEAN AEROSPACE GROUP
Confidential material has been intentionally omitted at this point
pursuant to a request for confidential treatment, and such material has been
filed separately with the Securities and Exchange Commission.
33
ATTACHMENT 1H
WINNIPEG - Aeromet International Casting Division
Confidential material has been intentionally omitted at this point
pursuant to a request for confidential treatment, and such material has been
filed separately with the Securities and Exchange Commission.
34
ATTACHMENT 2 TO
SPECIAL BUSINESS PROVISIONS
NON-U.S. PROCUREMENT REPORT FORM
--------------------------------
(Seller to Submit)
(Reference Section 15.0)
Seller Name Country Commodity/ Bid Contracted
Nomenclature Dollars Dollars
-------------------------------------------------------------------------------
35
ATTACHMENT 3 TO
SPECIAL BUSINESS PROVISIONS
RATES AND FACTORS
-----------------
Confidential material has been intentionally omitted at this point pursuant
to a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.
36
ATTACHMENT 4 TO
SPECIAL BUSINESS PROVISIONS
BOEING AOG COVERAGE
-------------------
1 NORMAL HOURS BOEING'S MATERIEL REPRESENTATIVE(MATERIEL DIVISION)
Approximately 5:30 a.m. - 6:00 p.m.
[X] Performs all functions of procurement process.
[X] Manages formal communication with Seller.
1 SECOND SHIFT - AOG PROCUREMENT SUPPORT (MATERIEL DIVISION)
3:00 p.m. - 11:00 p.m.
[X] May place order and assist with commitment and shipping information,
working with several suppliers on a priority basis.
[X] Provides a communication link between Seller and Boeing.
. 24 HOUR AOG SERVICE - AOG CUSTOMER REPRESENTATIVE (CUSTOMER SERVICE DIVISION)
(000) 000-0000
[X] Support commitment information particularly with urgent orders.
[X] Customer Service Representative needs (if available):
1. Part Number
2. Boeing Purchase Order
3. Airline Customer & customer purchase order number
4. Boeing S.I.S. #
If Seller is unable to contact any of the above, please provide AOG/Critical
shipping information notification via FAX using Boeing AOG/Critical shipping
notification form (Attachment 5).
37
ATTACHMENT 5 TO
SPECIAL BUSINESS PROVISIONS
BOEING
------
AOG/CRITICAL
------------
SHIPPING NOTIFICATION
---------------------
To: FAX: (000) 000-0000 Phone: (000) 000-0000
----------------------------------------------------------------------
Procurement Phone:
Agent Name:
----------------------------------------------------------------------
From: Today's Date:
----------------------------------------------------------------------
Part Number: Customer P.O.:
----------------------------------------------------------------------
Customer: Ship Date:
----------------------------------------------------------------------
Qty Shipped: *SIS Number:
----------------------------------------------------------------------
Boeing P.O.: Pack Sheet:
----------------------------------------------------------------------
*Airway Xxxx: or Invoice:
----------------------------------------------------------------------
Carrier: *Flight #:
----------------------------------------------------------------------
Freight
Forwarder:
----------------------------------------------------------------------
*If Applicable
SHIPPED TO:
[X] (check one)
[_] Boeing
[_] Direct Ship to Customer
[_] Direct Ship to Seller
Remarks:
38
ATTACHMENT 6 TO
SPECIAL BUSINESS PROVISIONS
Reserved
--------
39
ATTACHMENT 7 TO
SPECIAL BUSINESS PROVISIONS
Reserved
--------
40
ATTACHMENT 8 TO
SPECIAL BUSINESS PROVISIONS
COMMODITY LISTING AND TERMS OF SALE
-----------------------------------
(Reference Section 27.0)
COMMODITY LISTING
-----------------
Aluminum Flat Rolled Products Includes aluminum sheet, aluminum plate, wing
plate, and body skins, excluding "soft" aluminum alloys.
Aluminum extrusions, all press size or circle size.
Titanium includes all wrought and un-wrought titanium mill products.
41
ATTACHMENT 8 TO
SPECIAL BUSINESS PROVISIONS
TERMS OF SALE
-------------
Parties
-------
The Seller is The Boeing Company, acting through its agent, TMX. The Customer
is a Boeing subcontractor, at any tier, who is manufacturing a product in
support of a Boeing requirement.
Sales
-----
All materials to be furnished by Seller are to be within the limits and the
sizes published by Seller and subject to Seller's standard tolerances for
variations. Seller will warrant that all materials to be supplied will conform
to the descriptions contained herein and on the face of the purchase order and
that Seller will convey good title to any such materials free from any security
interest, or other lien or encumbrance held by any other party and unknown to
the customer. THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS AND SELLER
WILL MAKE NO OTHER EXPRESS OR IMPLIED WARRANTIES EXCEPT AS STATED HEREIN.
Seller will not be liable for any incidental or consequential damages for any
breach of warranty, express or implied. Seller's liability and the Customer's
sole and exclusive remedy will be limited at Seller's option either to (a)
return of the materials and repayment of the purchase price, or (b) replacement
of nonconforming materials upon return thereof to Seller. The Customer shall be
required to notify Seller in writing of any claim of breach of warranty and no
materials shall be returned to Seller by the Customer without Seller's consent.
Payment Terms
-------------
The following payment processes will be followed for material sold to Customer
by Seller. All payments shall be in United States Dollars.
DEBIT PROCESS
-------------
The debit process will be used in all circumstances where the Customer has an
account with the Seller. The amount due is the quantity shipped multiplied by
the unit price, plus the price for any value added services. The amount due
will be collected by the Seller's applying a debit to the Customer's account.
Payment is due on the net thirtieth (30th) day from the scheduled delivery date.
The debit will be applied to the Seller's account on the payment due date. If
the debit amount exceeds the amount outstanding on the Customer's account, the
Customer will remit to The Boeing Company the amount due beyond the debit
payment due date. The foregoing debit process does not apply to Sellers who are
only performing under orders issued by the Tulsa Division of the Boeing
Commercial Airplane Group.
42
ATTACHMENT 8 TO
SPECIAL BUSINESS PROVISIONS
INVOICE PROCESS
---------------
The invoice process will be used for Customers not currently making direct sales
to Boeing; foreign countries governed by MITI laws and regulations (currently
Australia, Brazil, China, India, Japan, and Korea), and orders issued by the
Tulsa Division of the Boeing Commercial Airplane Group. The amount due is the
quantity shipped multiplied by the unit price, plus the price for any value
added services. Payment is due on the net thirtieth (30th) day after the date
of Seller's invoice, which shall be issued on the day following the date of
shipment.
LATE PAYMENT CHARGES
--------------------
Payments due Seller representing undisputed charges for material and services
that are not paid within forty-five (45) days after the date of Seller's invoice
or within fifteen days after any remittance due to Seller under the debit
process will be subject to a late payment charge. Such charge will be computed
monthly using an annual rate of interest publicly announced by Citibank N.A. New
York, New York, as its prime rate in effect on the fifteenth (15th) day of the
month, as adjusted month to month, plus two percent (2%). Such rate will be
applied on the basis of a 365-day year against the undisputed past due amount,
commencing on the forty-sixth (46th) day (or 16th day in the debit process)
after the invoice date and continuing until payment is received by Boeing.
DEBIT/INVOICE DISPUTE PROCEDURE
-------------------------------
Customer may dispute payment amounts due provided that (1) Customer contacts
Seller within 25 days of the date of the debit/ invoice, (2) Customer provides a
complete reason as to the dispute. If the action is Seller's to resolve, late
payment charges will not be assessed on amounts that are under dispute. Once a
dispute has been resolved, payment terms will be net 30 days from the date of
resolution.
FAILURE TO PAY
--------------
In the event Customer fails to make payments when due, Seller reserves the right
to assert whatever remedies it may have under law, including setoffs against
amounts due from Seller to Customer on other contracts. In such an event,
Seller may, with respect to future orders, require full payment in advance or
otherwise alter the terms of payment specified earlier.
43
ATTACHMENT 9 TO
SPECIAL BUSINESS PROVISIONS
COST AND PERFORMANCE REVIEWS
----------------------------
(Reference Section 11.1)
Cost Performance Reviews (CPR's) will occur on as needed basis (alternating
between Seller and Boeing locations unless otherwise agreed) at an agreeable
time. The detail of the CPR's will be defined at a later date between Boeing
and Seller. When they are defined, this attachment 9 will be updated.
44
ATTACHMENT 10 TO
SPECIAL BUSINESS PROVISIONS
QUALITY ASSURANCE REQUIREMENTS
A10.1 Quality System
All work performed under this SBP shall be in accordance with the following:
A. Document D1-9000 Rev A., "Advanced Quality System", Section 1 and Section 2
Advance Quality System as amended from time to time, which is incorporated
herein and made a part hereof by this reference.
A10.2 Supplemental Quality Requirements
A10.2.1 Use of Boeing Digital Datasets as Authority for Design and/or
Inspection
When a supplier receives or uses Boeing digital data as authority for design
and/or inspection, then the supplier must comply to the requirements of D6-
51991, Quality Assurance Standards Reflecting Digital Product Definition for
Boeing Suppliers Using CAD/CAM/CAI Data, or contractual requirements.
A10.2.2 Seller's Inspection Options
The supplier shall perform either 100% inspection or acceptance sampling for
receiving inspection. The supplier shall perform 100% inspection, acceptance
sampling or statistical process control for in-process inspection or final
inspection for each characteristic of a product.
A supplier that performs acceptance sampling shall have a Boeing-approved
acceptance sampling plan. The plan shall meet the requirements of Boeing
document D1-8007, Approval Guide for Supplier statistical Sampling Plans.
When statistical process control is used as an option for either in-process or
final inspection, the supplier must satisfy the requirements of D6-82479,
Addendum 1.
In all cases, inspection requirements identified by engineering drawing or
specification take precedence over the inspection options described here and in
D6-82479, Addendum 1. Boeing reserves the right to require 100% inspection for
selected characteristics.
A10.2.3 Supplier Annual Internal Quality Audit
At least annually, the supplier shall conduct an internal audit to ensure
compliance to their quality system and the controlling quality assurance
document.
45
A10.2.4 Changes Affecting Quality Control System
A10.2.4.1 Change in Quality Management Representative
The supplier shall promptly notify Boeing of any changes in the management
representative with assigned responsibility and authority for the quality
system.
A10.2.4.2 Change in Quality System Procedures
The supplier shall immediately notify Boeing in writing of any change to the
quality control system that may affect the inspection, conformity or
airworthiness of the product. After the issue of initial Boeing quality system
approval, each change to the quality control system is subject to review by
Boeing.
The supplier shall include, as part of the written notification of change to the
quality control system, a list of changed procedures identified by revision
level, a description of the intent of the changes and a signed statement that
compliance to the Boeing quality system approval has not been diminished.
A10.2.4.3 Change in Manufacturing Facility Location
The supplier shall immediately notify Boeing in writing of any change to the
manufacturing facility location of the contracted part number or assembly.
A10.2.4.4 Language
The supplier shall maintain an English language translation of (1) its quality
manual, (2) the operating instructions that implement the quality manual
requirements, and (3) an index of all other supplier procedures that contain
quality requirements. Boeing may require additional documentation to be
translated.
A10.2.5 Quality Assurance Sampling Plan
For Orders issued by Wichita or Tulsa, Seller shall submit a Quality Assurance
Sampling Plan to Boeing (less than 100 percent inspection) for all parts with
Advanced Technology Assembly (ATA) requirements. Upon Boeing approval and
Seller implementation of the Sampling Plan, Seller shall evaluate its internal
processes for cost reductions to be shared equitably (as negotiated) between
Boeing and Seller under this SBP and any Purchase Contract(s) and Order(s).
Seller and Boeing agree to review cost elements affected by the Sampling Plan,
and negotiate a mutually agreeable cost reduction. Said reductions will be
incorporated into this agreement as mutually agreed to by both Seller and Buyer.
46
A10.2.6 Advanced Technology Assembly Qualification
For Orders issued by Wichita or Tulsa, The Statement of Work and the period of
performance under this SBP and any Purchase Contract and/or Order, for all parts
with Advanced Technology Assembly (ATA) requirements, is contingent upon Seller
obtaining and maintaining ATA qualification for the term of this SBP. Seller's
failure to comply with the requirements of its ATA Qualification plan for the
term of this SBP will be grounds for cancellation of ATA item requirements
pursuant to GTA Section 13.0.
47
